UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07883
ICON Funds
(Exact name of registrant as specified in charter)
5299 DTC Blvd. Suite 1200 Greenwood Village, CO 80111
(Address of principal executive offices) (Zip code)
Erik L. Jonson 5299 DTC Blvd. Suite 1200 Greenwood Village, CO 80111_
(Name and address of agent for service)
Registrant’s telephone number, including area code: 303-790-1600
Date of fiscal year end: September 30, 2008
Date of reporting period: September 30, 2008
EXPLANATORY NOTE:
The Registrant is filing this amendment to its Form N-CSR for the period ended September 30, 2008, originally filed with the Securities and Exchange Commission on December 5, 2008, (Accession Number 0001193125-08-205732) to amend Item 4, “Principal Accountant Fees and Services”. The purpose of the amendment is to solely include additional information pertaining to Item 4 as required because this information was inadvertently excluded in the Form N-CSR filing. The description for Item 12(a)1 is modified to accurately reflect the attachments associated with the filing. Other than the aforementioned additions, this Form N-CSR/A does not reflect events occurring after the filing of the original Form N-CSR, or modify or update the disclosures therein.
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1).
2008 Annual Report
ICON U.S. Diversified Funds
Investment Update
ICON Bond Fund
ICON Core Equity Fund
ICON Equity Income Fund
ICON Income Opportunity Fund
ICON Long/Short Fund
1-800-764-0442 ï www.iconfunds.com
AR-DIV-D, K95866
About This Report
Historical Returns
All total returns mentioned in this Report account for the change in a Fund’s per-share price and the reinvestment of any dividends, capital gain distributions, and adjustments for financial statement purposes. If your account is set up to receive Fund distributions in cash rather than to reinvest them, your actual return may differ from these figures. The Funds’ performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The Adviser may have reimbursed certain fees or expenses of some of the Funds. If not for these reimbursements, performance would have been lower. Fund results shown, unless otherwise indicated, are at net asset value. If a sales charge (maximum 5.75%) had been deducted, results would have been lower.
Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance results represent past performance, and current performance may be higher or lower. Please call 1-800-764-0442 or visit www.iconfunds.com for performance results current to the most recent month-end.
Portfolio Data
This Report reflects ICON’s views, opinions and portfolio holdings as of September 30, 2008, the end of the reporting period. The information is not a complete analysis of every aspect of any sector, industry, security or the Funds.
Opinions and forecasts regarding industries, companies and/or themes, and portfolio composition and holdings are subject to change at any time based on market and other conditions, and should not be construed as a recommendation of any specific security, industry or sector. Each Fund’s holdings as of September 30, 2008 are included in each Fund’s Schedule of Investments.
While ICON’s quantitative investment methodology primarily considers company-specific factors beyond financial data, various company factors may impact a stock’s performance, and therefore, Fund performance. Investments in foreign securities may entail unique risks, including political, market, and currency risks. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, do not exist in foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and
securities brokers and issuers. The ICON system relies on the integrity of financial statements released to the market as part of our analysis.
According to ICON, value investing is an analytical, quantitative approach to investing that employs various factors, including projecting earnings growth estimates, in an effort to determine whether securities are over- or underpriced relative to ICON’s estimates of their intrinsic value. Value investing involves risks and uncertainties and does not guarantee better performance or lower costs than other investment methodologies. ICON’s value-to-price ratio is a ratio of intrinsic value, as calculated using ICON’s proprietary valuation methodology, of a broad range of domestic and international securities within ICON’s system as compared to the current market price of those securities.
This Report contains statements regarding industry or sector themes, new market themes, investment outlook, relative strength, value-to-price ratios, and investment team expectations, beliefs, goals and the like that are based on current expectations, recent individual stock performance relative to current market prices, estimates of company values and other information supplied to the market by the companies we follow. Words such as “expects,” “suggests,” “anticipates,” “targets,” “goals,” “value,” “intrinsic value,” “indicates,” “believes,” “considers,” “estimates,” variations of such words and similar expressions are intended to identify forward looking statements, which are not statements of historical fact. Forward looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. These risks and uncertainties are based on a number of important factors, including, among others: stock price fluctuations; the integrity and accuracy of historical and projected financial and other information supplied by companies to the public; interest rates; future earnings growth rates; the risks noted in this Report and other factors beyond the control of our investment team. Therefore, actual outcome may differ materially from what is expressed in such forward looking statements.
There are risks associated with mutual fund investing, including the loss of principal. The likelihood of loss may be greater if you invest for a shorter period of time. There is no assurance that the investment process will consistently lead to successful results.
There are risks associated with selling short, including the risk that the ICON Long/Short Fund may have to cover its short position at a higher price than the short price, resulting in a loss. The ICON Long/Short Fund’s loss on a short sale is potentially unlimited as a loss occurs when the value of a security sold short increases. Call options involve certain risks, such as limited gains and lack of liquidity in the underlying securities, and are not suitable for all investors. An investment concentrated in sectors and industries may involve greater risk and
volatility than a more diversified investment. Investments in foreign securities may entail unique risks, including political, market, and currency risks.
Investing in fixed income securities such as bonds involves interest rate risk. When interest rates rise, the value of fixed income securities generally decreases. The ICON Bond Fund may invest up to 25% of its assets in high-yield bonds that are below investment grade. High-yield bonds involve a greater risk of default and price volatility than U.S. Government and other higher-quality bonds.
The prospectus and statement of additional information contain this and other information about the Funds and are available by visiting www.iconfunds.com or calling 1-800-764-0442. Please read the prospectus and statement of additional information carefully.
Comparative Indexes
The comparative indexes discussed in this Report are meant to provide a basis for judging a Fund’s performance against specific securities indexes. Each index shown accounts for both change in the security price and reinvestment of dividends and distributions (except as noted), but does not reflect the costs of managing a mutual fund. The Funds’ portfolios may significantly differ in holdings and composition from the index. Individuals cannot invest directly in an index.
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| • | The unmanaged Standard & Poor’s (“S&P”) Composite 1500 Index (“S&P Composite 1500 Index”) is a broad-based capitalization-weighted index comprising 1,500 stocks of large-cap, mid-cap, and small-cap U.S. companies. |
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| • | The Lehman Brothers (“LB”) U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, the non-ERISA portion of the Commercial Mortgage-Backed Securities (“CMBS”) Index and the CMBS High-Yield Index. All securities in this market-value weighted index have at least one year remaining to maturity and meet certain minimum issue size criteria. |
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| • | The Chicago Board Options Exchange Volatility Index (“VIX”) is an up-to-the-minute market estimate of expected volatility that is calculated by using real-time S&P 500 Index option bid/ask quotes. VIX uses nearby and second nearby options with at least 8 days left to expiration and then weights them to yield a constant, 30-day measure of the expected volatility of the S&P 500 Index. |
Index returns and statistical data included in this Report are provided by Bloomberg, FactSet Research Systems, and Lehman Brothers.
Message From ICON Funds
Dear ICON Shareholder:
Because of the discipline inherent in the ICON system, I never expected to write a letter to shareholders explaining the type of negative returns we and much of our industry have posted over the last fiscal year. Using our valuation methodology, we buy stocks we believe are on sale and we do not chase what we think are over-priced, hot trends. We screen for quality, favoring well-managed companies with healthy cash positions and lower than average debt levels. We do not underwrite or insure mortgage-backed securities. Although we have owned government agency bonds, ICON resisted the subprime mortgage-backed securities frenzy. We attempt to distance ourselves from Wall Street as we do not take any brokerage “buy, sell or hold” recommendations and we have not purchased IPOs. September 2008 was a particularly harsh month for financial stocks. In response to questions from financial advisers, we wrote the following regarding our Core Equity and Financials sector fund: “it is noteworthy that neither fund owned the following stocks as of 8/31/08; Fannie Mae, Freddie Mac, Merrill Lynch, Lehman Brothers, Washington Mutual or AIG.” We sold another headliner, Bear Stearns, in early July 2007 in the $139 per share range. Although ICON’s disciplined, value-based methodology allowed us to stay clear of these and similar problematic securities, our portfolios were dragged down by the recent financial crisis nevertheless.
We have analyzed past market peaks in an effort to identify indicators that forecast a subsequent bear market. The only recurring behavior we have identified involves valuation; that is, we discovered that stocks are priced much higher than our estimation of their intrinsic value at a typical peak. For example, stocks were significantly overpriced according to our system prior to the crash of October 1987. More recently, prices of technology and telecommunication issues were way above our estimate of intrinsic value just before their severe decline in 2000. Based on our estimation of intrinsic value, however, stocks were not overpriced in late 2007. Therefore, we had no indication of a potential severe market drop. The market behaved like quick sand, with stocks dropping in reaction to news events, even though they were not overpriced under our methodology. We take little solace in the fact that we were not alone, and that few advisers could have anticipated the panic selling that dragged the market lower as fiscal year 2008 came to a close. The damage was so widespread that investors had no place to hide in September, except in cash, which was also subject to its own risks and limitations.
If you have followed the behavior of the ICON system over the last two decades you have noticed a pattern. When stock prices dropped quickly and
Message From ICON Funds 5
were significantly below our estimate of intrinsic value, we held and even rotated into attractive industries in an effort to capture the emerging leadership. With each sudden market decline, we stated that the price drop was created by investors overreacting, and, further that we expected prices to move higher and catch up to value. For two decades our decision to remain invested in anticipation of price catching up to value has been effective and critical to our success. As we entered the fiscal year, we saw no reason to change our strategy or behavior.
In late 2007, stock prices dropped in reaction to the initial problems regarding the subprime mortgage situation. We checked all inputs to our valuation equation, such as earnings estimates and risk, and they were steady. With stocks priced below our estimate of intrinsic value, we believed investors (and, accordingly, the market) had over-reacted. In response to further developments, stock prices dropped again in January and yet again in March. With each drop, stocks continued to look cheap and inputs to our valuation equation remained steady. Each dip this fiscal year looked like an overreaction to the data available at the time, just like the sudden dips we’d seen on several occasions over the last two decades. We stuck to our system in what proved to be an unprecedented setting.
The dictates of the ICON system are pretty simple. First, when stocks are cheap, the ICON system focuses on value - not news events - and directs us to remain invested. Second, when stocks are expensive, the system favors cash. Third, the system attempts to capture industry leadership that typically lasts one to two years. By sticking rigidly to its discipline, we believe the ICON system can handle most market situations through time. We believe also that the events of the last twelve months have been extraordinary - rare, unusual, and even unlikely to reoccur. The ICON system depends in no small part on the integrity of the market. While several parties share blame for this most recent economic crisis, the evident failure of many companies to properly disclose their financial condition caught ICON and most other investment professionals off-guard. Obviously, the ICON system did not handle the last 12-months well. Frankly, few systems did.
Current Situation and Outlook
The monetarist theory of economics believes that when the money supply grows it will stimulate the economy with about a six to nine month lag. When the money supply contracts, the monetarist theory believes that contraction will slow the economy by a similar lag. One way to measure the money supply is M1, which is defined to be currency plus demand deposits (checking accounts). When a bank makes a loan, a demand deposit is created, which, by definition, creates money. In August 2007 the Federal Reserve (“FED”) eased monetary policy and injected reserves into the
6 Message From ICON Funds
banking system. Such easing normally promotes banks to make loans which, in turn, creates M1 and stimulates the economy. Despite the continued monetary easing through late 2007 and early 2008, banks did not increase their lending, partly through caution but mostly because the illiquid mortgage-backed securities they held hurt their capital ratios.
The primary goal of the Troubled Asset Relief Program or “TARP” package is for the U.S. Treasury to buy those mortgage-backed securities. The banks will record a loss on the securities, as they should, but will immediately have cash and greatly improved capital ratios, which means they can make loans again. Through loans, M1 can grow and stimulate the economy. In separate actions, the FED announced that it will pump an additional $630 billion into the global financial system through what it calls currency swaps with foreign central banks. The FED also announced its intent to buy commercial paper in the short-term money market. Finally, the U.S. Treasury Department announced it will buy stock in banks to help their capital ratios.
Over the 19 week period from late May through early October, M1 grew 11.6%. That is not annualized. It is 11.6% in 19 weeks. That is a sensational pace and is evidence banks are lending. If the lending continues and M1 continues to grow, we believe it will stimulate the economy. Typical timing would suggest that the economy might hit a bottom winter or spring 2009.
The market place seems unable to understand monetary stimulation and policy, as distinguished from fiscal policy. Fiscal policy is more obvious as it targets a specific income level, segment of the economy or industry. People can understand it. A monetary stimulus, on the other hand, is vague, broad, intangible, but, in the view of monetarists, very powerful. A monetary stimulus is just slow. It may be a few months before a monetary stimulus takes effect and it works behind the scenes, so to speak.
We believe the monetary stimulus is underway and will result in an economic recovery in 2009. We also see many of the behaviors and data typical of market bottoms falling in place. After coming through the extraordinary events of the last 12-months, investors and money managers have to do an assessment. They have to decide if they should make adjustments and changes or whether the events of the last fiscal year were anomalous and unlikely to be repeated. While investors should consult with their financial advisers regarding their unique needs and goals, generally speaking I would encourage most investors to not make major adjustments. Too many times I have seen investors set investment policy by looking in the rear view mirror, especially regarding their allocation to equities. It is usually not productive to make major changes in response to extraordinary events like those of the past 12-months.
Message From ICON Funds 7
We expect that the financial system will emerge stronger and better than before. This was not the first unanticipated problem to hit our financial and banking system; nor will it be the last. The same problems generally do not recur, although new ones arise from time to time. We fix an existing problem and move on. And that’s exactly what the financial and banking system is doing in response to this most recent crisis.
At ICON we remain convinced that our calculation of intrinsic value is valid and that valuation, in combination with industry relative strength readings, can identify industry leadership for one to two year moves. We expect that investors will continue to demonstrate the kind of overreaction to events we have recognized and avoided in the past. We will try to capitalize on that overreaction by allowing our valuation methodology to guide our buying and selling. We take the same advice we pass on to our investors: we do not believe in making major changes to our investment game-plan by looking at a bad situation in the rear view mirror. We believe our system is well designed to handle most events. Changing the system in order to handle an extreme retroactive event would hinder our ability to address most everyday situations. And while the events of the last 12-months have been nothing shy of extraordinary, we believe much of the carnage has run its course. It is difficult to predict market bottoms, but as we say at ICON, rallies do not issue invitations. Therefore, we encourage you to ride out whatever remains of the storm with us and remain invested in order to participate in any ensuing rally.
Yours truly,
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
8 Message From ICON Funds
Class I IOBIX
Class C IOBCX
Class Z IOBZX
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| Q. | How did the Fund perform relative to its benchmark? |
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| A. | For the Fund’s fiscal year ended September 30, 2008, the Lehman Brothers U.S. Universal Index gained 2.32%, outperforming the ICON Bond Fund, which returned -1.48% for Class I shares, -2.16% for Class C shares, and -1.43% for Class Z shares over the same period. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
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| Q. | What primary factors were behind the Fund’s relative performance? |
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| A. | Heightened and very real bankruptcy fears dominated the bond market this fiscal year. Credit spreads widened from the outset of the year and continued to widen further as investors witnessed the downfall of Indy Mac, Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, AIG, and Washington Mutual. As credit spreads widened, recession fears grew, inflation concerns subsided, and the Federal Reserve stepped up their rate cuts, long term US Treasuries turned in one of their best years in some time as the On-The-Run US 10 year Treasury yield fell from its 52 week high of 4.683% on October 12, 2007 to 3.825% on September 30, 2008. |
This environment proved somewhat difficult for ICON’s quantitative bond model as widening credit spreads led to an abundance of value in corporate bonds, but little relative strength. At the same time, government bonds had plenty of relative strength, but showed little value. An underweight position in longer dated US Treasuries detracted from the Fund’s relative performance.
Short term corporate bonds, especially in the Financial sector, were an exception to this quandary as they showed value with wide spreads, but also maintained strength as they appreciated toward par. Given their quality credit ratings it seemed that the bankruptcy risk baked into their spreads had been overdone. Unfortunately this was not the case and some positions discussed in more detail below hindered relative performance.
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| Q. | How did the Fund’s composition affect performance? |
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| A. | As discussed above, the Fund’s composition, which was light in US treasuries and heavy in short term financial corporate bonds, hindered performance. For a good part of the year this strategy worked well, as bonds of highly rated financial companies appreciated toward their par maturity levels. |
The Fund gave up its positive gains in September 2008, however, when small positions in Washington Mutual, AIG, and Wachovia fell precipitously as the government arranged takeovers. Other financial and non-financial corporate bond holdings fell sharply as well as bankruptcy fears and the need for liquidity pushed yields higher.
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| Q. | What is your investment outlook for the bond market? |
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| A. | Credit spreads continued to widen through September 2008 and are currently at levels not seen since the lows of the tech bubble crash. Although these spreads brought considerable value to some very highly rated corporate bonds, it has also weakened their relative strength readings. At the same time, the flight to safety has raised Treasury prices beyond their fair value while giving them considerable strength. Agency bonds seem to be somewhere in between as their spreads have narrowed after the government takeover, but are still wide enough to offer enticing value. As panic subsides from the market and bid-ask spreads narrow, we will look to reduce our corporate exposure and increase our Agency bond holdings. |
ICON Bond Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Gross
| | | | Net
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| | | | Inception
| | | | | | | | | | | | Since
| | | | Expense
| | | | Expense
| |
| | | | Date | | | | 1 Year | | | | 5 Years | | | | Inception | | | | Ratio* | | | | Ratio* | |
| ICON Bond Fund - Class I | | | | 9/30/02 | | | | | | -1.48 | % | | | | | 2.47 | % | | | | | 3.40 | % | | | | | 1.09 | % | | | | | 1.00 | % | |
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| Lehman Brothers U.S. Universal Index | | | | | | | | | | 2.32 | % | | | | | 3.90 | % | | | | | 4.43 | % | | | | | N/A | | | | | | N/A | | |
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| ICON Bond Fund - Class C | | | | 10/21/02 | | | | | | -2.16 | % | | | | | 1.87 | % | | | | | 3.21 | % | | | | | 3.15 | % | | | | | 1.60 | % | |
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| Lehman Brothers U.S. Universal Index | | | | | | | | | | 2.32 | % | | | | | 3.90 | % | | | | | 4.81 | % | | | | | N/A | | | | | | N/A | | |
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| ICON Bond Fund - Class Z | | | | 5/6/04 | | | | | | -1.43 | % | | | | | N/A | | | | | | 2.76 | % | | | | | 31.60 | % | | | | | 0.75 | % | |
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| Lehman Brothers U.S. Universal Index | | | | | | | | | | 2.32 | % | | | | | N/A | | | | | | 4.41 | % | | | | | N/A | | | | | | N/A | | |
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Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors.
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| * | Please see the January 28, 2008 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
ICON Bond Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class I shares on the Class’ inception date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund’s other share classes will vary due to differences in charges and expenses. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Bond Fund
Credit Quality Diversification
September 30, 2008
| | | | | | | |
| | Aaa | | | | 13.2 | % |
| | Aa1 | | | | 3.7 | % |
| | Aa2 | | | | 6.0 | % |
| | Aa3 | | | | 18.8 | % |
| | A1 | | | | 7.1 | % |
| | A2 | | | | 10.8 | % |
| | A3 | | | | 7.3 | % |
| | Baa1 | | | | 6.7 | % |
| | Baa2 | | | | 4.5 | % |
| | Baa3 | | | | 5.0 | % |
| | Ba2 | | | | 1.4 | % |
| | Ba3 | | | | 2.8 | % |
| | B1 | | | | 4.1 | % |
| | B2 | | | | 4.1 | % |
| | Not Rated | | | | 0.1 | % |
Percentages are based upon total investments less short-term investments.
Ratings based on Moody’s.
ICON Bond Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | | | | | | | | | |
| | | Interest
| | Maturity
| | |
| Shares or Principal Amount | | Rate | | Date | | Value |
| |
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Corporate Bonds (85.1%) |
| $ | 220,000 | | | Ace INA Holdings, Inc. | | | 8.88 | % | | | 08/15/29 | | | $ | 241,484 | |
| | 2,000,000 | | | Alabama Power Co.(a) | | | 3.00 | % | | | 08/25/09 | | | | 1,994,116 | |
| | 1,000,000 | | | Allied Waste North America | | | 6.50 | % | | | 11/15/10 | | | | 977,500 | |
| | 275,000 | | | Allied Waste North America | | | 5.75 | % | | | 02/15/11 | | | | 263,313 | |
| | 2,150,000 | | | American Express Centurion Bank(a) | | | 2.66 | % | | | 12/17/09 | | | | 2,027,663 | |
| | 1,800,000 | | | American Express Credit Co.(a) | | | 3.55 | % | | | 02/24/12 | | | | 1,521,232 | |
| | 750,000 | | | American General Finance Corp. | | | 5.38 | % | | | 10/01/12 | | | | 409,931 | |
| | 500,000 | | | AutoZone, Inc. | | | 5.50 | % | | | 11/15/15 | | | | 467,119 | |
| | 1,500,000 | | | Bank of America Corp. | | | 6.25 | % | | | 04/15/12 | | | | 1,455,436 | |
| | 1,000,000 | | | Bank of America Corp. | | | 4.88 | % | | | 09/15/12 | | | | 924,060 | |
| | 950,000 | | | Bank of America Corp.(a) | | | 3.12 | % | | | 06/15/17 | | | | 850,714 | |
| | 1,000,000 | | | BB&T Corp. | | | 6.50 | % | | | 08/01/11 | | | | 975,374 | |
| | 1,000,000 | | | Berkshire Hathaway Finance Corp. | | | 4.20 | % | | | 12/15/10 | | | | 1,015,636 | |
| | 750,000 | | | Capital One Bank USA NA | | | 4.25 | % | | | 12/01/08 | | | | 743,608 | |
| | 1,000,000 | | | Case New Holland, Inc. | | | 6.00 | % | | | 06/01/09 | | | | 972,500 | |
| | 1,000,000 | | | Caterpillar Financial Services Corp.(a) | | | 2.84 | % | | | 10/09/09 | | | | 995,366 | |
| | 150,000 | | | Centex Corp. | | | 4.55 | % | | | 11/01/10 | | | | 132,750 | |
| | 1,127,000 | | | Chartered Semiconductor - YD | | | 5.75 | % | | | 08/03/10 | | | | 1,053,067 | |
| | 450,000 | | | Cincinnati Financial Corp. | | | 6.90 | % | | | 05/15/28 | | | | 388,807 | |
| | 500,000 | | | CIT Group, Inc.(a) | | | 2.93 | % | | | 06/08/09 | | | | 427,538 | |
| | 750,000 | | | CIT Group, Inc. | | | 4.75 | % | | | 12/15/10 | | | | 488,436 | |
| | 355,000 | | | CIT Group, Inc. | | | 7.75 | % | | | 04/02/12 | | | | 194,973 | |
| | 1,000,000 | | | Citigroup, Inc.(a) | | | 2.96 | % | | | 05/18/10 | | | | 922,872 | |
| | 1,000,000 | | | Citigroup, Inc. | | | 6.00 | % | | | 02/21/12 | | | | 924,186 | |
| | 410,000 | | | CNA Financial Corp. | | | 6.60 | % | | | 12/15/08 | | | | 409,655 | |
| | 1,750,000 | | | Comcast Cable Communications Holdings | | | 8.38 | % | | | 03/15/13 | | | | 1,835,382 | |
| | 400,000 | | | Comcast Cable Communications Holdings | | | 8.88 | % | | | 05/01/17 | | | | 421,254 | |
| | 550,000 | | | Comerica Bank | | | 7.13 | % | | | 12/01/13 | | | | 495,118 | |
| | 114,000 | | | Cox Communications, Inc. | | | 7.63 | % | | | 06/15/25 | | | | 113,079 | |
| | 1,000,000 | | | Credit Suisse USA, Inc.(a) | | | 2.57 | % | | | 06/05/09 | | | | 995,105 | |
| | 1,000,000 | | | Credit Suisse USA, Inc.(a) | | | 3.00 | % | | | 03/02/11 | | | | 974,329 | |
| | 1,000,000 | | | Credit Suisse USA, Inc. | | | 6.13 | % | | | 11/15/11 | | | | 983,926 | |
| | 500,000 | | | Daimler Finance NA | | | 8.00 | % | | | 06/15/10 | | | | 522,848 | |
| | 1,000,000 | | | Daimler Finance NA | | | 7.75 | % | | | 01/18/11 | | | | 1,036,600 | |
| | 2,500,000 | | | Daimler Finance NA | | | 6.50 | % | | | 11/15/13 | | | | 2,439,705 | |
12 Schedule of Investments
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| | | Interest
| | Maturity
| | |
| Shares or Principal Amount | | Rate | | Date | | Value |
| |
| |
| $ | 500,000 | | | Deutsche Telekom International Finance - YD | | | 8.00 | % | | | 06/15/10 | | | $ | 519,040 | |
| | 260,000 | | | Dillard’s, Inc. | | | 9.50 | % | | | 09/01/09 | | | | 260,325 | |
| | 232,000 | | | Dillard’s, Inc. | | | 9.13 | % | | | 08/01/11 | | | | 222,720 | |
| | 450,000 | | | E.I. Du Pont de Nemours & Co. | | | 5.00 | % | | | 07/15/13 | | | | 443,219 | |
| | 950,000 | | | El Paso Corp. | | | 6.75 | % | | | 05/15/09 | | | | 941,812 | |
| | 750,000 | | | Embratel - YD | | | 11.00 | % | | | 12/15/08 | | | | 750,937 | |
| | 500,000 | | | Farmers Insurance Capital Notes(b) | | | 7.20 | % | | | 07/15/48 | | | | 385,633 | |
| | 6,000 | | | First American Financial Corp. | | | 7.55 | % | | | 04/01/28 | | | | 6,155 | |
| | 3,000,000 | | | Ford Motor Credit Co. | | | 5.63 | % | | | 10/01/08 | | | | 2,999,351 | |
| | 700,000 | | | General Electric Capital Corp.(a) | | | 2.86 | % | | | 03/16/09 | | | | 696,751 | |
| | 1,000,000 | | | General Electric Capital Corp.(a) | | | 2.85 | % | | | 03/12/10 | | | | 986,612 | |
| | 1,950,000 | | | General Electric Capital Corp.(a) | | | 3.25 | % | | | 02/01/11 | | | | 1,929,115 | |
| | 500,000 | | | General Electric Capital Corp. | | | 5.45 | % | | | 01/15/13 | | | | 467,124 | |
| | 1,000,000 | | | General Electric Capital Corp.(a) | | | 2.95 | % | | | 05/08/13 | | | | 924,901 | |
| | 250,000 | | | Goldman Sachs Group, Inc. | | | 7.35 | % | | | 10/01/09 | | | | 242,397 | |
| | 1,500,000 | | | Goldman Sachs Group, Inc. | | | 4.50 | % | | | 06/15/10 | | | | 1,392,418 | |
| | 1,000,000 | | | Goldman Sachs Group, Inc. | | | 5.00 | % | | | 01/15/11 | | | | 901,935 | |
| | 1,250,000 | | | Goldman Sachs Group, Inc. | | | 6.88 | % | | | 01/15/11 | | | | 1,194,896 | |
| | 1,000,000 | | | Goldman Sachs Group, Inc. | | | 6.60 | % | | | 01/15/12 | | | | 932,188 | |
| | 1,000,000 | | | Goldman Sachs Group, Inc. | | | 5.70 | % | | | 09/01/12 | | | | 861,396 | |
| | 2,000,000 | | | Honeywell International, Inc.(a) | | | 2.85 | % | | | 07/27/09 | | | | 1,991,042 | |
| | 670,000 | | | Household Finance Corp. | | | 5.88 | % | | | 02/01/09 | | | | 663,118 | |
| | 500,000 | | | Household Finance Corp. | | | 7.00 | % | | | 05/15/12 | | | | 485,901 | |
| | 1,900,000 | | | Household Finance Corp.(a) | | | 7.80 | % | | | 11/10/13 | | | | 1,780,034 | |
| | 2,000,000 | | | HSBC Finance Corp. | | | 5.00 | % | | | 06/30/15 | | | | 1,785,330 | |
| | 950,000 | | | IBM Corp. | | | 8.38 | % | | | 11/01/19 | | | | 1,100,474 | |
| | 1,000,000 | | | IBM International Group Capital(a) | | | 3.13 | % | | | 07/29/09 | | | | 982,514 | |
| | 500,000 | | | International Lease Finance Corp. | | | 6.38 | % | | | 03/15/09 | | | | 461,102 | |
| | 294,000 | | | International Lease Finance Corp. | | | 4.88 | % | | | 09/01/10 | | | | 212,636 | |
| | 450,000 | | | John Hancock(b) | | | 7.38 | % | | | 02/15/24 | | | | 481,144 | |
| | 2,000,000 | | | JP Morgan Chase & Co.(a) | | | 2.54 | % | | | 05/07/10 | | | | 1,977,914 | |
| | 2,000,000 | | | JP Morgan Chase & Co. | | | 6.75 | % | | | 02/01/11 | | | | 2,006,694 | |
| | 1,350,000 | | | JP Morgan Chase & Co. | | | 6.63 | % | | | 03/15/12 | | | | 1,326,789 | |
| | 1,000,000 | | | Kansas City Southern | | | 7.50 | % | | | 06/15/09 | | | | 1,000,000 | |
| | 500,000 | | | Kraft Foods, Inc. | | | 6.25 | % | | | 06/01/12 | | | | 502,618 | |
| | 1,000,000 | | | Massey Energy Co. | | | 6.63 | % | | | 11/15/10 | | | | 1,000,000 | |
| | 1,100,000 | | | Merrill Lynch & Co.(a) | | | 7.07 | % | | | 05/05/14 | | | | 937,552 | |
| | 500,000 | | | Morgan Stanley | | | 3.88 | % | | | 01/15/09 | | | | 460,009 | |
| | 2,900,000 | | | Morgan Stanley(a) | | | 3.07 | % | | | 01/15/10 | | | | 2,177,474 | |
| | 250,000 | | | Morgan Stanley | | | 4.25 | % | | | 05/15/10 | | | | 203,144 | |
| | 500,000 | | | Morgan Stanley | | | 4.75 | % | | | 04/01/14 | | | | 265,048 | |
Schedule of Investments 13
| | | | | | | | | | | | | | | | | |
| | | Interest
| | Maturity
| | |
| Shares or Principal Amount | | Rate | | Date | | Value |
| |
| |
| $ | 400,000 | | | New Jersey Bell Telephone | | | 7.85 | % | | | 11/15/29 | | | $ | 360,320 | |
| | 122,000 | | | NLV Financial Corp.(b) | | | 6.50 | % | | | 03/15/35 | | | | 104,478 | |
| | 2,000,000 | | | Oracle Corp.(a) | | | 2.86 | % | | | 05/14/10 | | | | 1,988,856 | |
| | 500,000 | | | Prudential Financial, Inc. | | | 4.75 | % | | | 06/13/15 | | | | 445,017 | |
| | 500,000 | | | R.R. Donnelley & Sons Co. | | | 4.95 | % | | | 04/01/14 | | | | 443,229 | |
| | 750,000 | | | Rent-A-Center, Inc.(c) | | | 7.50 | % | | | 05/01/10 | | | | 733,125 | |
| | 1,000,000 | | | Reynolds American, Inc. | | | 6.50 | % | | | 07/15/10 | | | | 1,039,722 | |
| | 1,000,000 | | | Roadway Corp. | | | 8.25 | % | | | 12/01/08 | | | | 990,000 | |
| | 500,000 | | | Ryder System, Inc. | | | 5.85 | % | | | 03/01/14 | | | | 487,110 | |
| | 382,000 | | | Sears Roebuck Acceptance Corp. | | | 6.25 | % | | | 05/01/09 | | | | 375,595 | |
| | 213,000 | | | Semco Energy, Inc. | | | 6.40 | % | | | 11/25/08 | | | | 213,510 | |
| | 1,000,000 | | | SLM Corp. | | | 4.20 | % | | | 09/15/09 | | | | 881,726 | |
| | 1,000,000 | | | Smithfield Foods, Inc. | | | 8.00 | % | | | 10/15/09 | | | | 970,000 | |
| | 700,000 | | | Standard Pacific Corp. | | | 6.50 | % | | | 10/01/08 | | | | 699,943 | |
| | 350,000 | | | Telefonica de Argentina - YD | | | 9.13 | % | | | 11/07/10 | | | | 343,875 | |
| | 500,000 | | | Tennessee Gas Pipeline | | | 7.00 | % | | | 10/15/28 | | | | 428,476 | |
| | 2,000,000 | | | The Home Depot, Inc. | | | 5.20 | % | | | 03/01/11 | | | | 1,948,272 | |
| | 2,000,000 | | | The Home Depot, Inc. | | | 5.25 | % | | | 12/16/13 | | | | 1,841,748 | |
| | 500,000 | | | Tyco International, Ltd. - YD | | | 6.13 | % | | | 11/01/08 | | | | 500,445 | |
| | 155,000 | | | Union Carbide Corp. | | | 6.70 | % | | | 04/01/09 | | | | 155,162 | |
| | 1,000,000 | | | Verizon Communications, Inc. | | | 6.88 | % | | | 06/15/12 | | | | 1,017,730 | |
| | 410,000 | | | Verizon Communications, Inc. | | | 8.30 | % | | | 08/01/31 | | | | 393,846 | |
| | 2,000,000 | | | Wachovia Corp.(a) | | | 2.99 | % | | | 08/01/13 | | | | 1,511,652 | |
| | 1,000,000 | | | Walt Disney Co.(a) | | | 2.86 | % | | | 07/16/10 | | | | 996,690 | |
| | | | | | | | | | | | | | | | | |
Total Corporate Bonds
(Cost $94,729,474) | | | 88,324,671 | |
| U.S. Government And U.S. Government Agency Bonds (9.2%) |
| | 1,000,000 | | | Fannie Mae | | | 5.25 | % | | | 08/01/12 | | | | 1,011,560 | |
| | 825,000 | | | Fannie Mae | | | 5.13 | % | | | 01/02/14 | | | | 821,560 | |
| | 500,000 | | | Fannie Mae | | | 5.00 | % | | | 04/17/15 | | | | 498,011 | |
| | 1,000,000 | | | Fannie Mae | | | 5.00 | % | | | 07/09/18 | | | | 979,107 | |
| | 1,000,000 | | | Federal Home Loan Bank | | | 4.00 | % | | | 02/12/10 | | | | 1,009,588 | |
| | 750,000 | | | Federal Home Loan Bank | | | 5.50 | % | | | 02/14/20 | | | | 740,632 | |
| | 200,000 | | | Freddie Mac | | | 5.13 | % | | | 10/15/08 | | | | 200,190 | |
| | 370,000 | | | Freddie Mac | | | 5.00 | % | | | 10/29/13 | | | | 370,098 | |
| | 457,000 | | | Freddie Mac | | | 5.00 | % | | | 09/15/14 | | | | 456,949 | |
| | 1,500,000 | | | Freddie Mac | | | 5.16 | % | | | 02/27/15 | | | | 1,504,077 | |
| | 400,000 | | | Freddie Mac | | | 5.00 | % | | | 12/15/15 | | | | 397,106 | |
| | 550,000 | | | Freddie Mac | | | 5.00 | % | | | 09/09/16 | | | | 543,294 | |
| | 975,000 | | | Freddie Mac | | | 5.25 | % | | | 07/27/17 | | | | 966,985 | |
| | | | | | | | | | | | | | | | | |
Total U.S. Government And U.S. Government Agency Bonds
(Cost $9,447,085) | | | 9,499,157 | |
14 Schedule of Investments
| | | | | | | | | | | | | | | | | |
| | | Interest
| | Maturity
| | |
| Shares or Principal Amount | | Rate | | Date | | Value |
| |
| |
Foreign Government Bonds (1.3%) |
| $ | 750,000 | | | Federal Republic of Brazil - YD | | | 14.50 | % | | | 10/15/09 | | | $ | 838,125 | |
| | 500,000 | | | Republic of South Africa - YD | | | 6.50 | % | | | 06/02/14 | | | | 490,000 | |
| | | | | | | | | | | | | | | | | |
| | | | | |
Total Foreign Government Bonds
(Cost $1,328,755) | | | 1,328,125 | |
Other Securities (0.7%) |
| | 767,228 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | | | | | | | | | | 767,228 | |
| | | | | | | | | | | | | | | | | |
Total Other Securities
(Cost $767,228) | | | 767,228 | |
Total Investments 96.3%
(Cost $106,272,542) | | | 99,919,181 | |
| Other Assets Less Liabilities 3.7% | | | 3,798,827 | |
| | | | | |
Net Assets 100.0% | | $ | 103,718,008 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Variable for Floating Rate Security. Rate disclosed is as of September 30, 2008. |
| |
| (b) | | Security was acquired pursuant to Rule 144A of the Securities Act of 1933 and may be deemed as restricted for resale. These securities are considered to be illiquid. The aggregate value of these securities at September 30, 2008 was $971,255, which represented 0.94% of the Fund’s Net Assets. |
| |
| (c) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| YD | | Yankee Dollar Bond |
Schedule of Investments 15
Class I ICNIX
Class C ICNCX
Class Z ICNZX
Class A ICNAX
| |
| Q. | How did the Fund perform relative to its benchmark? |
| |
| A. | For the fiscal year ended September 30, 2008, the Fund’s benchmark, the S&P Composite 1500 Index, lost 21.27%, compared to the ICON Core Equity Fund’s return of -25.99% for Class I shares, -26.61% for Class C shares, and -26.11% for Class Z shares. Class A shares of the Fund have returned -26.76% (and -30.99% with maximum sales charge). Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | During the fiscal year, investors were presumably influenced by many concerns. Over the 12-month period, crude oil futures rose approximately 23% (peaking on July 3, 2008 at a price of $149.29 per barrel), the subprime mortgage crisis created the need for significant write-downs and led to the collapse of some prominent financial firms, market volatility, as measured by the VIX Index, reached record levels in late September, and fears of inflationary pressure pushed gold to over $1,000 per troy ounce before closing the year up over 17%. |
The Federal Reserve responded by cutting the discount window 300 basis points (3.00%) and cutting the federal funds rate 275 basis points (2.75%) in order to combat liquidity problems. Despite these moves by the Federal Reserve, liquidity remained a significant problem during the last half of the year, resulting in significant declines within equity markets around the world.
Extreme uncertainty and worry led to high volatility and sudden sector-based theme changes. This type of environment creates a significant problem for our valued-based investing style here at ICON. In order to better explain the Fund’s response to this uncertainty, we believe the fiscal year can be viewed in five distinct time periods - three strong down markets and two sharp increases - which reflect both the volatility and the absence of sustained sector leadership during the period.
We define the three strong down markets as September 30, 2007 to March 10, 2008; May 19, 2008 to July 15, 2008; and August 11, 2008 to September 30, 2008. These three periods accounted for over a 40% decline in the value of the S&P Composite 1500 Index. The sectors leading the decline during the first two periods include Financials, Consumer Discretionary, Telecommunication & Utilities, and Industrials.
The last down market, from August 11, 2008 through September 30, 2008, featured a large decline in Materials, Information Technology, and Industrials.
The two recovery periods, which we define as March 10, 2008 to May 19, 2008 and July 15, 2008 to August 11, 2008, accounted for a 20% increase in the value of the S&P Composite 1500 Index. The best-performing sectors during the first increase were the Materials, Energy, and Telecommunication & Utilities sectors, which indicated a continuation of the old theme from the last five years. The second increase was characterized by completely different leadership with Financials, Consumer Discretionary, and Industrials sectors leading the way.
This sector-specific volatility created a challenging environment that required continual adjustments to the Fund and exposure to all nine economic sectors using selective industry allocation.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | As shown above, the ICON Core Equity Fund faced a very challenging environment in fiscal year 2008. All nine sectors produced negative returns during the time period, with the Financials, Information Technology, Energy, and Industrials sectors detracting most from absolute performance. Overweight industry positions and under-performance within these sectors created strong negative returns during the last 12-months. |
On an industry level, looking at the S&P Composite 1500 Index, only 13 of the 154 industries produced positive returns during this time period. Railroads, health care services, apparel retail, electrical components & equipment, and home furnishing retail industries contributed positively to Fund returns. These industries were significantly overweight relative to the benchmark, helping performance.
In contrast, investment banking & brokerage, managed health care, mortgage REITs, oil & gas equipment & services, and construction & farm machinery & heavy trucks detracted the most from absolute performance. The combination of the Fund’s being overweight these industries relative to the benchmark and the industries’ underperformance detracted from Fund performance.
| |
| Q. | What is your investment outlook for the equity market? |
| |
| A. | As fiscal year 2008 ended, the market was experiencing an unprecedented period of fear and volatility. The VIX Index reached new highs, many commodities continued to decline in value, and a significant flight |
| |
| to treasury securities indicates how fearful the market had become of most risk-bearing assets. That being said, the Federal Reserve, with help from the Federal Government, has taken a number of aggressive steps designed to create liquidity within the financial markets in order to decrease this market-based fear. While these are unprecedented times, ICON continues to follow a non-emotional view of current conditions. We are confident our systematic, valued-based industry rotation investing methodology will serve us well in the long run. |
Going into the end of fiscal year 2008, we had a value-to-price ratio of 1.34 for the domestic equity markets, indicating we see domestic stocks trading at an approximately 34% discount to our estimation of intrinsic value. On a sector basis, the most attractive areas within the market are the Financials, Consumer Discretionary, Industrials, Health Care, and Leisure and Consumer Staples sectors. Moving forward we will be looking for industries within these sectors that are reflecting strong combinations of both value and relative strength.
ICON Core Equity Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Financial | | | 20.1% | |
| Industrials | | | 18.2% | |
| Information Technology | | | 17.0% | |
| Consumer Discretionary | | | 12.5% | |
| Health Care | | | 9.5% | |
| Leisure and Consumer Staples | | | 8.5% | |
| Energy | | | 6.5% | |
| Telecommunications & Utilities | | | 4.0% | |
| Materials | | | 1.0% | |
Percentages are based upon net assets.
ICON Core Equity Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Other Diversified Financial Services | | | 5.9% | |
| Railroads | | | 4.2% | |
| Apparel Retail | | | 4.0% | |
| Pharmaceuticals | | | 3.8% | |
| Building Products | | | 3.7% | |
| Packaged Foods & Meats | | | 3.6% | |
| Regional Banks | | | 3.6% | |
| Integrated Oil & Gas | | | 3.5% | |
| Trading Companies & Distributors | | | 3.4% | |
| Communications Equipment | | | 3.1% | |
| Computer Hardware | | | 3.0% | |
| Consumer Finance | | | 3.0% | |
| Technology Distributors | | | 2.9% | |
| Managed Health Care | | | 2.8% | |
| Data Processing & Outsourced Services | | | 2.4% | |
| Apparel Accessories & Luxury Goods | | | 2.3% | |
| IT Consulting & Other Services | | | 2.3% | |
| Trucking | | | 2.3% | |
| Semiconductors | | | 2.2% | |
| Asset Management & Custody Banks | | | 2.2% | |
| Office Services & Supplies | | | 2.0% | |
| Health Care Distributors | | | 1.9% | |
| Life & Health Insurance | | | 1.9% | |
| Diversified Banks | | | 1.8% | |
| Restaurants | | | 1.8% | |
| Integrated Telecommunication Services | | | 1.7% | |
| Household Products | | | 1.6% | |
| Electric Utilities | | | 1.6% | |
| Oil & Gas Drilling | | | 1.3% | |
| Air Freight & Logistics | | | 1.3% | |
| Homebuilding | | | 1.3% | |
| Systems Software | | | 1.1% | |
| Thrifts & Mortgage Finance | | | 1.1% | |
| Motorcycle Manufacturers | | | 1.0% | |
| Automotive Retail | | | 1.0% | |
| Specialty Chemicals | | | 1.0% | |
| Health Care Services | | | 1.0% | |
| Cable & Satellite | | | 1.0% | |
| Housewares & Specialties | | | 1.0% | |
| Oil & Gas Refining & Marketing | | | 0.9% | |
| Oil & Gas Equipment & Services | | | 0.8% | |
| Electrical Components & Equipment | | | 0.7% | |
| Multi-Utilities | | | 0.7% | |
| Household Appliances | | | 0.7% | |
| Airlines | | | 0.6% | |
| Home Furnishing Retail | | | 0.6% | |
| Investment Banking & Brokerage | | | 0.6% | |
| Home Improvement Retail | | | 0.6% | |
| Drug Retail | | | 0.5% | |
Percentages are based upon net assets.
ICON Core Equity Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Gross
| | | | Net
| |
| | | | Inception
| | | | | | | | | | | | Since
| | | | Expense
| | | | Expense
| |
| | | | Date | | | | 1 Year | | | | 5 Years | | | | Inception | | | | Ratio* | | | | Ratio* | |
| ICON Core Equity Fund - Class I | | | | 10/12/00 | | | | | | -25.99 | % | | | | | 4.24 | % | | | | | 4.31 | % | | | | | 1.24 | % | | | | | 1.24 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | 5.65 | % | | | | | 0.86 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Core Equity Fund - Class C | | | | 11/28/00 | | | | | | -26.61 | % | | | | | 3.43 | % | | | | | 2.79 | % | | | | | 2.02 | % | | | | | 2.02 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | 5.65 | % | | | | | 0.71 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Core Equity Fund - Class Z | | | | 5/6/04 | | | | | | -26.11 | % | | | | | N/A | | | | | | 2.90 | % | | | | | 1.18 | % | | | | | 1.18 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | N/A | | | | | | 3.44 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Core Equity Fund - Class A | | | | 5/31/06 | | | | | | -26.76 | % | | | | | N/A | | | | | | -8.48 | % | | | | | 1.66 | % | | | | | 1.66 | % | |
| |
| |
| ICON Core Equity Fund - Class A (including maximum sales charge of 5.75%) | | | | 5/31/06 | | | | | | -30.99 | % | | | | | N/A | | | | | | -10.76 | % | | | | | 1.66 | % | | | | | 1.66 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | N/A | | | | | | -1.58 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Since Inception performance results for Class C shares include returns for certain time periods that were restated as of June 8, 2004. Class Z shares are available only to institutional investors.
| |
| * | Please see the January 28, 2008 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
ICON Core Equity Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class I shares on the Class’ inception date of 10/12/00 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund’s other share classes will vary due to differences in charges and expenses. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Core Equity Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (97.3%) |
| | 39,000 | | | Accenture, Ltd. - Class A | | $ | 1,482,000 | |
| | 17,600 | | | Advance Auto Parts, Inc. | | | 698,016 | |
| | 52,800 | | | Aetna, Inc. | | | 1,906,608 | |
| | 33,600 | | | AmerisourceBergen Corp. | | | 1,265,040 | |
| | 24,000 | | | AMETEK, Inc. | | | 978,480 | |
| | 34,400 | | | Anixter International, Inc.(a)(b) | | | 2,047,144 | |
| | 64,100 | | | Apogee Enterprises, Inc. | | | 963,423 | |
| | 23,200 | | | Arkansas Best Corp.(b) | | | 781,608 | |
| | 68,400 | | | Astoria Financial Corp. | | | 1,417,932 | |
| | 60,400 | | | AT&T, Inc. | | | 1,686,368 | |
| | 34,500 | | | Automatic Data Processing, Inc. | | | 1,474,875 | |
| | 5,400 | | | AutoZone, Inc.(a) | | | 666,036 | |
| | 78,100 | | | Avnet, Inc.(a) | | | 1,923,603 | |
| | 116,800 | | | Bank of America Corp. | | | 4,088,000 | |
| | 44,800 | | | Bank of New York Mellon Corp. | | | 1,459,584 | |
| | 17,700 | | | BB&T Corp.(b) | | | 669,060 | |
| | 104,600 | | | Bristol-Myers Squibb Co.(b) | | | 2,180,910 | |
| | 23,000 | | | Burlington Northern Santa Fe Corp. | | | 2,125,890 | |
| | 28,400 | | | Cameron International Corp.(a)(b) | | | 1,094,536 | |
| | 17,500 | | | Capital One Financial Corp.(b) | | | 892,500 | |
| | 24,000 | | | CBRL Group, Inc. | | | 631,200 | |
| | 26,000 | | | Chevron Corp. | | | 2,144,480 | |
| | 54,900 | | | CIGNA Corp. | | | 1,865,502 | |
| | 94,600 | | | Cisco Systems, Inc.(a) | | | 2,134,176 | |
| | 43,800 | | | Coach, Inc.(a) | | | 1,096,752 | |
| | 70,000 | | | Cognizant Technology Solutions Corp.(a) | | | 1,598,100 | |
| | 121,000 | | | Collective Brands, Inc.(a)(b) | | | 2,215,510 | |
| | 218,800 | | | Colonial Bancgroup, Inc.(b) | | | 1,719,768 | |
| | 66,600 | | | Comcast Corp. - Class A | | | 1,307,358 | |
| | 45,100 | | | Computer Sciences Corp.(a) | | | 1,809,863 | |
| | 66,000 | | | ConAgra Foods, Inc. | | | 1,284,360 | |
| | 24,100 | | | CSX Corp. | | | 1,315,137 | |
| | 18,500 | | | CVS Caremark Corp.(b) | | | 622,710 | |
| | 59,400 | | | D.R. Horton, Inc. | | | 773,388 | |
| | 62,400 | | | Darden Restaurants, Inc. | | | 1,786,512 | |
| | 7,200 | | | Diamond Offshore Drilling, Inc. | | | 742,032 | |
| | 81,400 | | | Discover Financial Services(b) | | | 1,124,948 | |
| | 89,000 | | | DPL, Inc.(b) | | | 2,207,200 | |
| | 27,500 | | | Energizer Holdings, Inc.(a) | | | 2,215,125 | |
| | 52,200 | | | Federated Investors, Inc. | | | 1,504,926 | |
| | 107,300 | | | Foot Locker, Inc. | | | 1,733,968 | |
| | 44,300 | | | Guess, Inc. | | | 1,541,197 | |
| | 36,800 | | | Harley-Davidson, Inc.(b) | | | 1,372,640 | |
| | 22,000 | | | Hewlett-Packard Co. | | | 1,017,280 | |
| | 41,500 | | | Hormel Foods Corp. | | | 1,505,620 | |
| | 94,600 | | | Intel Corp. | | | 1,771,858 | |
| | 25,900 | | | International Business Machines Corp. | | | 3,029,264 | |
| | 55,600 | | | Jarden Corp.(a)(b) | | | 1,303,820 | |
| | 85,100 | | | JPMorgan Chase & Co. | | | 3,974,170 | |
| | 86,100 | | | Knoll, Inc. | | | 1,301,832 | |
| | 13,000 | | | Lubrizol Corp. | | | 560,820 | |
22 Schedule of Investments
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 32,000 | | | Manulife Financial Corp.(b) | | $ | 1,174,080 | |
| | 121,300 | | | Masco Corp.(b) | | | 2,176,122 | |
| | 24,500 | | | McKesson Corp. | | | 1,318,345 | |
| | 29,100 | | | MedcoHealth Solutions, Inc.(a) | | | 1,309,500 | |
| | 23,900 | | | MetLife, Inc.(b) | | | 1,338,400 | |
| | 48,600 | | | Microsemi Corp.(a) | | | 1,238,328 | |
| | 39,300 | | | MSC Industrial Direct Co., Inc. - Class A(b) | | | 1,810,551 | |
| | 21,300 | | | Murphy Oil Corp. | | | 1,366,182 | |
| | 60,400 | | | NCI Building Systems, Inc.(a)(b) | | | 1,917,700 | |
| | 47,675 | | | Nestle S.A. - ADR(b) | | | 2,049,438 | |
| | 16,400 | | | Occidental Petroleum Corp. | | | 1,155,380 | |
| | 73,800 | | | Oracle Corp.(a) | | | 1,498,878 | |
| | 109,800 | | | Pacer International, Inc.(b) | | | 1,808,406 | |
| | 157,800 | | | Pfizer, Inc. | | | 2,909,832 | |
| | 40,500 | | | Pitney Bowes, Inc. | | | 1,347,030 | |
| | 85,500 | | | Polycom, Inc.(a) | | | 1,977,615 | |
| | 37,600 | | | Rent-A-Center, Inc.(a) | | | 837,728 | |
| | 23,600 | | | Ryder System, Inc. | | | 1,463,200 | |
| | 54,000 | | | SkyWest, Inc. | | | 862,920 | |
| | 35,100 | | | Sunoco, Inc.(b) | | | 1,248,858 | |
| | 8,700 | | | Telefonica S.A. - ADR | | | 621,963 | |
| | 32,200 | | | The Charles Schwab Corp.(b) | | | 837,200 | |
| | 29,400 | | | The Home Depot, Inc. | | | 761,166 | |
| | 23,300 | | | The Stanley Works(b) | | | 972,542 | |
| | 34,100 | | | The Valspar Corp. | | | 760,089 | |
| | 35,700 | | | Toll Brothers, Inc.(a)(b) | | | 900,711 | |
| | 10,100 | | | Transocean, Inc.(a) | | | 1,109,384 | |
| | 24,800 | | | U.S. Bancorp | | | 893,296 | |
| | 30,500 | | | Union Pacific Corp.(b) | | | 2,170,380 | |
| | 26,100 | | | V.F. Corp. | | | 2,017,791 | |
| | 33,200 | | | Watsco, Inc.(b) | | | 1,669,296 | |
| | 69,000 | | | Webster Financial Corp. | | | 1,742,250 | |
| | 38,200 | | | Wells Fargo & Co.(b) | | | 1,433,646 | |
| | 38,900 | | | WESCO International, Inc.(a) | | | 1,251,802 | |
| | 54,600 | | | World Acceptance Corp.(a)(b) | | | 1,965,600 | |
| | 48,800 | | | Xcel Energy, Inc. | | | 975,512 | |
| | 66,300 | | | YRC Worldwide, Inc.(a)(b) | | | 792,948 | |
| | 17,700 | | | Zions Bancorp(b) | | | 684,990 | |
| | | | | | | | | |
Total Common Stocks (Cost $136,257,549) | | | 131,382,188 | |
| |
| Short-Term Investments (3.9%) |
| | $5,301,547 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | | 5,301,547 | |
| | | | | | | | | |
| Total Short-Term Investments (Cost $5,301,547) | | | 5,301,547 | |
| |
| Other Securities (28.9%) |
| | 39,009,165 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | | 39,009,165 | |
| | | | | | | | | |
| Total Other Securities (Cost $39,009,165) | | | 39,009,165 | |
Total Investments 130.1% (Cost $180,568,261) | | | 175,692,900 | |
Liabilities Less Other Assets (30.1%) | | | (40,623,309 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 135,069,591 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
Schedule of Investments 23
Class I IOEIX
Class C IOECX
Class Z IOEZX
Class A IEQAX
| |
| Q. | How did the Fund perform relative to its benchmark? |
| |
| A. | For the fiscal year ended September 30, 2008, the Fund’s benchmark, the S&P Composite 1500 Index, lost 21.27%, while the ICON Equity Income Fund returned -17.76% for Class I shares, -18.60% for Class C shares, and -17.81% for Class Z shares. Class A shares of the Fund returned -17.98% (and -22.70% with maximum sales charge) during the same period. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | The market was dominated this fiscal year by the subprime mortgage meltdown and the financial crisis that followed. In response, the Federal Reserve and the Treasury have taken extraordinary steps to infuse liquidity and stimulate lending in the financial system. The federal funds rate target was lowered to 2.00% from 4.75% over the last year, the discount window rate was lowered from 5.25% to 2.25%, borrowing facilities were opened to investment banks and buy-outs were negotiated with the government’s assistance. |
At the close of this fiscal year the Bush Administration, in conjunction with Treasury Secretary Paulson and Federal Reserve Chairman Bernanke, proposed a $700 billion market stabilization bill. The stock market, as measured by the S&P 1500, fell 8.55% after Congress failed to pass the bill. Other market indices suffered similar dramatic declines.
Additionally, unprecedented market volatility made it difficult for the Fund to capitalize on ICON’s ability to identify themes. The VIX Index measures volatility as it relates to option pricing. That Index increased from 18 at the end of September 2007 to 39.39 at the end of September 2008.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | The Fund’s bond holdings contributed positively to performance. The Fund’s equity holdings contributed a net loss of approximately 19%. While the equity holdings alone outperformed the benchmark of -21.27%, the bonds’ positive contribution offset more than 1% of the Fund’s loss. The positive contribution was due in part to the government’s taking over Freddie Mac and Fannie Mae. Although the U.S. government implicitly backed Freddie Mac and Fannie Mae bonds, that backing became explicit |
| |
| after the takeover. The government’s action makes these bonds essentially equivalent to US treasuries in terms of default risk. |
The Fund’s equity holdings outperformed the benchmark largely because of the Fund’s stock selection and underweight position in the Health Care and Information Technology sectors. The Fund’s exposure to the Health Care sector contributed approximately -0.2% to the Fund’s return. That compares to a benchmark contribution of around -1.4% for the Index. Similarly, Information Technology contributed about 2.7% in losses to the Fund, where the benchmark, in contrast, realized about a 4% loss for the Index due to this sector.
The gains in Health Care and Information Technology were partially offset by the Fund’s being overweight the Consumer Discretionary sector. The Fund held, on average, approximately 9% within the Consumer Discretionary sector versus a 5% average position in the benchmark. This sector led to around a 2% loss in Fund performance while the benchmark’s performance declined only about 1% from this sector. The Fund’s exposure to Telecommunication and Utilities had a similar effect on Fund performance.
| |
| Q. | What is your investment outlook for the market? |
| |
| A. | As the fiscal year ends, we measure the broad equity market to be trading with a value to price ratio of 1.34, indicating upside potential. |
The Federal Reserve and the US Treasury have taken unprecedented action in addressing the liquidly issue that is dominating the current market. We believe these measures will, in time, help free up balance sheets, restore lending activity and ultimately encourage economic growth.
The steepening yield curve and high spreads between corporate and government bonds are presenting attractive risk/return scenarios for longer corporate bonds. These bonds are not yet attractive to us from a relative strength standpoint, however. If the yield curve flattens and the spread between corporate bonds and treasuries tightens, corporate bonds could present attractive opportunities for investors.
ICON Equity Income Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Financial | | | 19.9% | |
| Consumer Discretionary | | | 11.8% | |
| Industrials | | | 10.1% | |
| Leisure and Consumer Staples | | | 9.4% | |
| Information Technology | | | 8.2% | |
| Telecommunications & Utilities | | | 7.9% | |
| Health Care | | | 7.6% | |
| Energy | | | 6.1% | |
| Materials | | | 4.0% | |
Percentages are based upon common stock positions as a percentage of net assets.
ICON Equity Income Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Other Diversified Financial Services | | | 6.0% | |
| Pharmaceuticals | | | 4.5% | |
| Regional Banks | | | 4.2% | |
| Diversified Banks | | | 3.4% | |
| Trading Companies & Distributors | | | 2.8% | |
| Computer Hardware | | | 2.6% | |
| Electric Utilities | | | 2.6% | |
| Semiconductors | | | 2.5% | |
| Apparel Retail | | | 2.4% | |
| Multi-Utilities | | | 2.3% | |
| Integrated Telecommunication Services | | | 2.3% | |
| Oil & Gas Exploration & Production | | | 2.2% | |
| Integrated Oil & Gas | | | 2.0% | |
| Railroads | | | 1.9% | |
| Packaged Foods & Meats | | | 1.9% | |
| Paper Packaging | | | 1.8% | |
| Home Furnishings | | | 1.6% | |
| Leisure Products | | | 1.6% | |
| Data Processing & Outsourced Services | | | 1.6% | |
| Mortgage REITS | | | 1.6% | |
| Household Products | | | 1.5% | |
| Property & Casualty Insurance | | | 1.5% | |
| Homebuilding | | | 1.5% | |
| Diversified Chemicals | | | 1.4% | |
| Tobacco | | | 1.4% | |
| Thrifts & Mortgage Finance | | | 1.3% | |
| Oil & Gas Storage & Transportation | | | 1.3% | |
| Apparel Accessories & Luxury Goods | | | 1.2% | |
| Industrial Conglomerates | | | 1.2% | |
| Consumer Finance | | | 1.1% | |
| Health Care Equipment | | | 1.1% | |
| Health Care Distributors | | | 1.1% | |
| Trucking | | | 1.0% | |
| Building Products | | | 0.9% | |
| Health Care Supplies | | | 0.9% | |
| Motorcycle Manufacturers | | | 0.9% | |
| Food Distributors | | | 0.9% | |
| Restaurants | | | 0.8% | |
| Office Services & Supplies | | | 0.8% | |
| Metal & Glass Containers | | | 0.8% | |
| Insurance Brokers | | | 0.8% | |
| Air Freight & Logistics | | | 0.8% | |
| Homefurnishing Retail | | | 0.8% | |
| Automotive Retail | | | 0.8% | |
| Office Electronics | | | 0.8% | |
| Industrial Machinery | | | 0.7% | |
| Distributors | | | 0.7% | |
| Specialized Consumer Services | | | 0.7% | |
| Communications Equipment | | | 0.7% | |
| Wireless Telecommunication Services | | | 0.7% | |
| Soft Drinks | | | 0.7% | |
| Home Improvement Retail | | | 0.6% | |
| Household Appliances | | | 0.6% | |
| Oil & Gas Refining & Marketing | | | 0.6% | |
| Publishing | | | 0.6% | |
Percentages are based upon common stock positions as a percentage of net assets.
ICON Equity Income Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Gross
| | | | Net
| |
| | | | Inception
| | | | | | | | | | | | Since
| | | | Expense
| | | | Expense
| |
| | | | Date | | | | 1 Year | | | | 5 Years | | | | Inception | | | | Ratio* | | | | Ratio* | |
| ICON Equity Income Fund - Class I | | | | 9/30/02 | | | | | | -17.76 | % | | | | | 6.29 | % | | | | | 9.18 | % | | | | | 1.22 | % | | | | | 1.22 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | 5.65 | % | | | | | 8.61 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Equity Income Fund - Class C | | | | 11/8/02 | | | | | | -18.60 | % | | | | | 5.28 | % | | | | | 7.23 | % | | | | | 2.33 | % | | | | | 2.21 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | 5.65 | % | | | | | 6.98 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Equity Income Fund - Class Z | | | | 5/10/04 | | | | | | -17.81 | % | | | | | N/A | | | | | | 4.79 | % | | | | | 11.08 | % | | | | | 1.21 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | N/A | | | | | | 4.07 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Equity Income Fund - Class A | | | | 5/31/06 | | | | | | -17.98 | % | | | | | N/A | | | | | | -1.45 | % | | | | | 3.77 | % | | | | | 1.45 | % | |
| |
| |
| ICON Equity Income Fund - Class A (including maximum sales charge of 5.75%) | | | | 5/31/06 | | | | | | -22.70 | % | | | | | N/A | | | | | | -3.93 | % | | | | | 3.77 | % | | | | | 1.45 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | N/A | | | | | | -1.58 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors.
| |
| * | Please see the January 28, 2008 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
ICON Equity Income Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class I shares on the Class’ inception date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund’s other share classes will vary due to differences in charges and expenses. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Equity Income Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (85.0%) |
| | 8,700 | | | 3M Co. | | $ | 594,297 | |
| | 12,700 | | | Abbott Laboratories | | | 731,266 | |
| | 10,600 | | | ACE Ltd. | | | 573,778 | |
| | 76,600 | | | Aircastle, Ltd. | | | 759,106 | |
| | 5,900 | | | Alcon, Inc. | | | 952,909 | |
| | 43,500 | | | Altria Group, Inc. | | | 863,040 | |
| | 43,500 | | | Annaly Capital Management, Inc. - REIT | | | 585,075 | |
| | 92,700 | | | Anthracite Capital, Inc. - REIT | | | 496,872 | |
| | 82,900 | | | Anworth Mortgage Asset Corp. - REIT | | | 490,768 | |
| | 30,000 | | | Arkansas Best Corp. | | | 1,010,700 | |
| | 32,800 | | | Arthur J. Gallagher & Co. | | | 841,648 | |
| | 69,800 | | | Asbury Automotive Group, Inc. | | | 804,096 | |
| | 36,000 | | | Astoria Financial Corp. | | | 746,280 | |
| | 18,300 | | | AstraZeneca PLC - ADR | | | 803,004 | |
| | 24,900 | | | AT&T, Inc. | | | 695,208 | |
| | 24,500 | | | Automatic Data Processing, Inc. | | | 1,047,375 | |
| | 83,000 | | | Bank of America Corp. | | | 2,905,000 | |
| | 33,700 | | | Barclays PLC - ADR | | | 832,390 | |
| | 17,000 | | | Baxter International, Inc. | | | 1,115,710 | |
| | 19,800 | | | BB&T Corp. | | | 748,440 | |
| | 34,200 | | | Bemis Co., Inc. | | | 893,304 | |
| | 12,000 | | | BP Prudhoe Bay Royalty Trust | | | 1,115,640 | |
| | 45,100 | | | Bristol-Myers Squibb Co. | | | 940,335 | |
| | 10,000 | | | Burlington Northern Santa Fe Corp. | | | 924,300 | |
| | 20,900 | | | Canon, Inc. - ADR | | | 788,975 | |
| | 22,600 | | | Capital One Financial Corp. | | | 1,152,600 | |
| | 33,400 | | | CBRL Group, Inc. | | | 878,420 | |
| | 42,600 | | | CenterPoint Energy, Inc. | | | 620,682 | |
| | 14,400 | | | Chevron Corp. | | | 1,187,712 | |
| | 25,090 | | | Chunghwa Telecom Co., Ltd. - ADR | | | 593,881 | |
| | 43,900 | | | Citigroup, Inc. | | | 900,389 | |
| | 12,700 | | | ConocoPhillips | | | 930,275 | |
| | 13,900 | | | Consolidated Edison Company of New York, Inc. | | | 597,144 | |
| | 15,900 | | | Dominion Resources, Inc. of Virginia | | | 680,202 | |
| | 29,400 | | | Dow Chemical Co. | | | 934,332 | |
| | 24,400 | | | Embarq Corp. | | | 989,420 | |
| | 34,000 | | | Ethan Allen Interiors, Inc. | | | 952,680 | |
| | 68,600 | | | Foot Locker, Inc. | | | 1,108,576 | |
| | 19,900 | | | FPL Group, Inc. | | | 1,000,970 | |
| | 21,000 | | | GATX Corp. | | | 830,970 | |
| | 23,900 | | | General Electric Co. | | | 609,450 | |
| | 36,100 | | | General Maritime Corp. | | | 703,228 | |
| | 19,000 | | | Genuine Parts Co. | | | 763,990 | |
| | 13,000 | | | Greif, Inc. - Class A | | | 853,060 | |
| | 19,800 | | | H.J. Heinz Co. | | | 988,218 | |
| | 23,700 | | | Harley-Davidson, Inc. | | | 884,010 | |
| | 15,800 | | | Harris Corp. | | | 729,960 | |
| | 70,300 | | | Haverty Furniture Cos., Inc. | | | 804,232 | |
| | 22,700 | | | Heartland Payment Systems, Inc. | | | 580,212 | |
| | 97,100 | | | Huntington Bancshares, Inc. | | | 775,829 | |
| | 91,300 | | | Intel Corp. | | | 1,710,049 | |
| | 23,100 | | | International Business Machines Corp. | | | 2,701,776 | |
| | 48,400 | | | Jackson Hewitt Tax Service, Inc. | | | 742,456 | |
| | 16,200 | | | Johnson & Johnson, Inc. | | | 1,122,336 | |
Schedule of Investments 29
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 21,600 | | | Jones Apparel Group, Inc. | | $ | 399,816 | |
| | 56,400 | | | JPMorgan Chase & Co. | | | 2,633,880 | |
| | 34,700 | | | KB Home | | | 682,896 | |
| | 14,900 | | | Kimberly-Clark Corp. | | | 966,116 | |
| | 57,600 | | | Knoll, Inc. | | | 870,912 | |
| | 27,600 | | | Kraft Foods, Inc. - Class A | | | 903,900 | |
| | 35,300 | | | Leggett & Platt, Inc. | | | 769,187 | |
| | 54,900 | | | Lennar Corp. - Class A | | | 833,931 | |
| | 33,900 | | | Limited Brands, Inc. | | | 587,148 | |
| | 53,300 | | | Masco Corp. | | | 956,202 | |
| | 36,900 | | | Mattel, Inc. | | | 665,676 | |
| | 21,200 | | | Meredith Corp. | | | 594,660 | |
| | 39,700 | | | New York Community Bancorp, Inc. | | | 666,563 | |
| | 59,500 | | | NN, Inc. | | | 764,575 | |
| | 20,500 | | | Nordic American Tanker Shipping, Ltd. | | | 657,230 | |
| | 23,000 | | | Owens & Minor, Inc. | | | 1,115,500 | |
| | 38,500 | | | Partner Communications Co., Ltd. - ADR | | | 709,170 | |
| | 9,600 | | | PepsiCo, Inc. | | | 684,192 | |
| | 57,100 | | | Pfizer, Inc. | | | 1,052,924 | |
| | 16,000 | | | PNC Financial Services Group, Inc. | | | 1,195,200 | |
| | 21,700 | | | Polaris Industries, Inc. | | | 987,133 | |
| | 9,100 | | | PPG Industries, Inc. | | | 530,712 | |
| | 8,900 | | | Procter & Gamble Co. | | | 620,241 | |
| | 12,000 | | | Progress Energy, Inc. | | | 517,560 | |
| | 13,800 | | | Reynolds American, Inc. | | | 670,956 | |
| | 29,400 | | | San Juan Basin Royalty Trust | | | 1,118,082 | |
| | 30,300 | | | Sonoco Products Co. | | | 899,304 | |
| | 52,200 | | | Sterling Bancorp | | | 754,812 | |
| | 17,100 | | | Sunoco, Inc. | | | 608,418 | |
| | 28,500 | | | Sysco Corp. | | | 878,655 | |
| | 88,644 | | | Taiwan Semiconductor Manufacturing Co., Ltd. - ADR | | | 830,594 | |
| | 25,700 | | | The Home Depot, Inc. | | | 665,373 | |
| | 14,900 | | | The Stanley Works | | | 621,926 | |
| | 59,000 | | | TheTalbots, Inc. | | | 772,900 | |
| | 30,600 | | | U.S. Bancorp | | | 1,102,212 | |
| | 18,700 | | | UIL Holdings Corp. | | | 641,971 | |
| | 15,100 | | | Union Pacific Corp. | | | 1,074,516 | |
| | 18,200 | | | UniSource Energy Corp. | | | 531,258 | |
| | 12,800 | | | United Parcel Service, Inc. - Class B | | | 804,992 | |
| | 11,200 | | | V.F. Corp. | | | 865,872 | |
| | 26,500 | | | Watsco, Inc. | | | 1,332,420 | |
| | 34,700 | | | Webster Financial Corp. | | | 876,175 | |
| | 36,900 | | | Wells Fargo & Co. | | | 1,384,857 | |
| | 22,200 | | | Xcel Energy, Inc. | | | 443,778 | |
| | 26,000 | | | Zenith National Insurance Corp. | | | 952,640 | |
| | | | | | | | | |
| Total Common Stocks (Cost $87,218,214) | | | 87,783,610 | |
| | | | | | | | | | | | | | | | | |
| | | | | | Interest
| | | Maturity
| | | | |
| Shares or Principal Amount | | Rate | | | Date | | | Value | |
| | |
| |
| Corporate Bonds (3.7%) |
| $ | 500,000 | | | Comcast Cable Communications Holdings | | | 8.38 | % | | | 03/15/13 | | | $ | 524,395 | |
| | 1,000,000 | | | Daimler Finance NA | | | 6.50 | % | | | 11/15/13 | | | | 975,882 | |
| | 500,000 | | | Ford Motor Credit Co. LLC | | | 5.80 | % | | | 01/12/09 | | | | 474,737 | |
| | 750,000 | | | General Electric Capital Corp. - Series A | | | 6.00 | % | | | 06/15/12 | | | | 723,880 | |
| | 1,288,000 | | | Household Finance Corp. | | | 4.75 | % | | | 07/15/13 | | | | 1,158,793 | |
| | | | | | | | | | | | | | | | | |
| Total Corporate Bonds | | | | |
(Cost $4,144,441) | | | | | | | 3,857,687 | |
30 Schedule of Investments
| | | | | | | | | | | | | | | | | |
| | | | | | Interest
| | | Maturity
| | | | |
| Shares or Principal Amount | | Rate | | | Date | | | Value | |
| | |
| |
Convertible Corporate Bonds (1.4%) | | | | | | | | | | | | |
| $ | 500,000 | | | LSI Corp. | | | 4.00 | % | | | 05/15/10 | | | $ | 473,125 | |
| | 600,000 | | | Molina Healthcare, Inc. - Series H | | | 3.75 | % | | | 10/01/14 | | | | 556,500 | |
| | 500,000 | | | Xilinx, Inc. | | | 3.13 | % | | | 03/15/37 | | | | 415,000 | |
| | | | | | | | | | | | | | | | | |
| Total Convertible Corporate Bonds | | | | |
(Cost $1,554,996) | | | | | | | 1,444,625 | |
| Sovereign Agency (0.6%) |
| | 500,000 | | | Financing Corp. | | | 9.40 | % | | | 02/08/18 | | | | 667,431 | |
| | | | | | | | | | | | | | | | | |
Total Sovereign Agency
(Cost $669,504) | | | 667,431 | |
| U.S. Government And U.S. Government Agency Bonds (6.6%) |
| | 750,000 | | | Fannie Mae | | | 6.63 | % | | | 09/15/09 | | | | 773,145 | |
| | 650,000 | | | Fannie Mae | | | 8.10 | % | | | 08/12/19 | | | | 828,035 | |
| | 1,323,000 | | | Freddie Mac | | | 5.16 | % | | | 02/27/15 | | | | 1,326,596 | |
| | 1,750,000 | | | Freddie Mac | | | 5.00 | % | | | 01/16/09 | | | | 1,759,602 | |
| | 2,000,000 | | | Freddie Mac | | | 5.50 | % | | | 07/18/16 | | | | 2,116,200 | |
| | | | | | | | | | | | | | | | | |
| Total U.S. Government And U.S. Government Agency Bonds | | | | |
(Cost $6,824,756) | | | | | | | 6,803,578 | |
| | | | | | | | | |
Underlying Security/
| | | | |
Expiration Date/
| | | | |
| Exercise Price | | Contracts* | | Value |
| |
| |
Call Options Purchased (0.3%) |
| Aetna, Inc., | | | | | | | | |
| Expiration January 2009, Exercise price $45.00 | | | 222 | | | $ | 26,085 | |
| Avnet, Inc., | | | | | | | | |
| Expiration February 2009, Exercise price $30.00 | | | 330 | | | | 40,425 | |
| Rent-A-Center, | | | | | | | | |
| Expiration January 2009, Exercise price $22.50 | | | 333 | | | | 93,240 | |
| World Acceptance Corp., | | | | | | | | |
| Expiration January 2009, Exercise price $35.00 | | | 286 | | | | 168,740 | |
| | | | | | | | | |
Total Call Options Purchased
(Cost $465,153) | | | 328,490 | |
| | | | | | | |
| Shares or Principal Amount | | Value | |
| | |
Short-Term Investments (0.2%) |
| 176,827 | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | $ | 176,827 | |
| | | | | | | |
Total Short-Term Investments
(Cost $176,827) | | | 176,827 | |
Total Investments 97.8%
(Cost $101,053,891) | | | 101,062,248 | |
Other Assets Less Liabilities 2.2% | | | 2,261,334 | |
| | | | | |
Net Assets 100.0% | | $ | 103,323,582 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| * | | All options have 100 shares per contract. |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| ADR | | American Depositary Receipt |
| REIT | | Real Estate Investment Trust |
Schedule of Investments 31
Class I IOCIX
Class C IOCCX
Class Z IOCZX
Class A IOCAX
| |
| Q. | How did the Fund Perform relative to its benchmark? |
| |
| A. | The Fund outperformed its benchmark for the period. The Fund’s class I shares declined 10.04%, while the benchmark S&P Composite 1500 Index fell 21.27%. The Class C shares declined 10.85%, the Class Z shares declined 9.99% and the Class A shares of the Fund returned -10.18% (and -15.33% with maximum sales charge). Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors influenced the Fund’s relative performance during the period? |
| |
| A. | This volatile period in the U.S. equity market was marked by two factors: the subprime lending disaster and the related meltdown in housing prices. These two factors eviscerated earnings on homebuilding and sent financial related equities into a freefall. Investor concern and uncertainty over these events rippled across the entire U.S. equity market and all economic sectors fell over the period. |
As we entered the fiscal year, our quantitative, value-based model indicated that on average equities were trading at a discount to their fair or intrinsic value. By our calculations, the year began with equities priced at about a 12% discount to fair value. Nevertheless, stocks sold off broadly as the deep-seated fears related to subprime lending problems and the deterioration in the housing market depressed U.S. equity prices. Investors fled the Financials sector, causing about a 37% drop in the S&P 1500 Financials Index. Retail related stocks were also hit hard, as concerns about a possible recession evidently weighed heavily on investors’ minds. The S&P 1500 Consumer Index fell about 23% over the period.
Despite the broad decline in the U.S. equity market, the ICON Income Opportunity Fund was able to outperform its broad based benchmark. The Fund eliminated just over 11% of the fall in the benchmark. The Fund was, in addition, significantly less volatile than the S&P 1500 Composite Index, having a beta just above 0.65 for the fiscal year.
Finally, in assessing the overall performance of the Fund for the period, it is important to review the change in the VIX Index. Generally speaking, the VIX Index is a measure of what option market makers believe the future volatility of
the stock market (specifically, the S&P 500) will be. This Index has a significant influence of the performance of the Fund because the higher the value of the VIX Index, the more that option market makers are willing to pay for the calls that the Fund sells to hedge the underlying equities held.
The VIX began the period with a value of 18.00. The Index then rose above the 18.00 level and averaged 22.86 from the beginning of the period through August 22nd. Then, from August 22nd until the end of the period, the VIX rocketed higher. At the end of the fiscal year, the VIX value stood at 39.39. To provide some long-term context to the values stated above, the average value of the VIX over the past fifteen years was 19.29. The important take away from these VIX values is that due to the overall high value of the Index relative to the long-term historical average, call options could generally be sold for higher premiums than in the past. This transgression of the VIX value was therefore beneficial to the overall performance of the Fund for the period.
| |
| Q. | How did the Fund’s Composition affect performance? |
| |
| A. | Top performing sectors in the Fund relative to its broad based S&P 1500 Composite Index for the period were Consumer Discretionary, Materials, and Industrials. Combined, these three sectors contributed a positive total of 1.15% to the Fund and helped counter some of the negative impact on performance from stocks held in the seven remaining sectors. Two sectors that had a particularly negative impact on the Fund relative to its broad based benchmark were Leisure and Consumer Staples and Health Care. These sectors detracted 3.23% from the Fund’s total performance relative to its benchmark. |
At the industry level, the three top contributing industries to Fund performance relative to its S&P 1500 Composite benchmark were thrifts & mortgage finance, railroads, and multi-line insurance. These three industries had a positive total effect of 2.35% on the Fund. On the flipside, four industries in particular had a negative total effect on Fund performance. Those industries were mortgage REITs, investment banking & brokerage, construction & farm machinery & heavy trucks, and oil & gas exploration & production. Combined these four industries had a total negative effect of 3.07% to the Fund.
Overall, while the Fund’s underlying equities fell with the broader market, the strategy of writing at-the-money S&P 500 Index Call options and buying out-of-the-money S&P 500 Index put options offset a significant portion of the negative impact on performance. This past period was a prime example of how using option hedging in a falling
market can help preserve investor capital. At the same time, the Fund’s hedging efforts helped dampen some of the market’s volatility during the fiscal year.
| |
| Q. | What is the investment outlook for the equity market? |
| |
| A. | Stocks ended the period trading at about a 34 percent discount to our calculation of their intrinsic value. We therefore believe that while this bear market has gone on for almost a year now, the end may be in sight. Assuming we enter a bull market in the future, the use of options in the ICON Income Opportunity Fund may dampen a portion of the potential upside. If stocks slide despite the upside potential we currently see, however, the Fund will continue to implement its investment strategy in an effort to outperform a falling market while decreasing volatility relative to its benchmark. |
The VIX Index ended the fiscal year at historically high levels. As stated above, the higher the VIX, the more that option market makers are willing to pay for the call options we periodically sell against our long equity holdings. Of course, we cannot predict what will happen to the value of the VIX Index, but high volatility in the future could prove beneficial to the Fund.
ICON Income Opportunity Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Financial | | | 18.3% | |
| Industrials | | | 14.4% | |
| Leisure and Consumer Staples | | | 13.8% | |
| Information Technology | | | 12.4% | |
| Consumer Discretionary | | | 12.2% | |
| Health Care | | | 11.2% | |
| Energy | | | 8.7% | |
| Telecommunications & Utilities | | | 4.5% | |
| Materials | | | 3.5% | |
Percentages are based upon net assets.
ICON Income Opportunity Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Other Diversified Financial Services | | | 5.5% | |
| Integrated Oil & Gas | | | 4.0% | |
| Regional Banks | | | 3.7% | |
| Railroads | | | 3.5% | |
| Household Products | | | 3.1% | |
| Pharmaceuticals | | | 2.8% | |
| Semiconductors | | | 2.8% | |
| Data Processing & Outsourced Services | | | 2.7% | |
| Apparel Retail | | | 2.6% | |
| Health Care Services | | | 2.4% | |
| Consumer Finance | | | 2.4% | |
| Managed Health Care | | | 2.4% | |
| Electric Utilities | | | 2.1% | |
| Oil & Gas Exploration & Production | | | 2.0% | |
| Life & Health Insurance | | | 1.8% | |
| Health Care Distributors | | | 1.8% | |
| Technology Distributors | | | 1.7% | |
| Oil & Gas Refining & Marketing | | | 1.7% | |
| Restaurants | | | 1.7% | |
| Automotive Retail | | | 1.6% | |
| Computer Hardware | | | 1.6% | |
| Diversified Banks | | | 1.6% | |
| Integrated Telecommunication Services | | | 1.6% | |
| Building Products | | | 1.5% | |
| Trading Companies & Distributors | | | 1.5% | |
| Aerospace & Defense | | | 1.5% | |
| Office Services & Supplies | | | 1.4% | |
| Hypermarkets & Super Centers | | | 1.3% | |
| Hotels Resorts & Cruise Lines | | | 1.2% | |
| Systems Software | | | 1.2% | |
| Household Appliances | | | 1.2% | |
| Apparel Accessories & Luxury Goods | | | 1.2% | |
| Property & Casualty Insurance | | | 1.2% | |
| Trucking | | | 1.2% | |
| Food Distributors | | | 1.2% | |
| Cable & Satellite | | | 1.1% | |
| Tobacco | | | 1.1% | |
| Specialty Chemicals | | | 1.1% | |
| Health Care Equipment | | | 1.1% | |
| Reinsurance | | | 1.1% | |
| Specialty Stores | | | 1.0% | |
| Thrifts & Mortgage Finance | | | 1.0% | |
| Air Freight & Logistics | | | 1.0% | |
| Oil & Gas Storage & Transportation | | | 1.0% | |
| Homebuilding | | | 0.9% | |
| IT Consulting & Other Services | | | 0.9% | |
| Leisure Products | | | 0.9% | |
| Electrical Components & Equipment | | | 0.9% | |
| Home Furnishings | | | 0.9% | |
| Communications Equipment | | | 0.8% | |
| Multi-Utilities | | | 0.8% | |
ICON Income Opportunity Fund
Industry Composition (continued)
as of September 30, 2008
| | | | | |
| Drug Retail | | | 0.7% | |
| Housewares & Specialties | | | 0.7% | |
| Soft Drinks | | | 0.7% | |
| Paper Packaging | | | 0.7% | |
| Home Furnishing Retail | | | 0.7% | |
| Home Improvement Retail | | | 0.7% | |
| Diversified Chemicals | | | 0.6% | |
| Metal & Glass Containers | | | 0.6% | |
| Industrial Machinery | | | 0.6% | |
| Commodity Chemicals | | | 0.5% | |
| Diversified Support Services | | | 0.5% | |
| Biotechnology | | | 0.5% | |
| Movies & Entertainment | | | 0.4% | |
| Electronic Equipment Manufacturers | | | 0.4% | |
| Construction & Farm Machinery & Heavy Trucks | | | 0.4% | |
| Airlines | | | 0.4% | |
| Packaged Foods & Meats | | | 0.4% | |
| Department Stores | | | 0.4% | |
| Electronic Components | | | 0.3% | |
| Auto Parts & Equipment | | | 0.3% | |
| Health Care Supplies | | | 0.2% | |
Percentages are based upon net assets.
ICON Income Opportunity Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Gross
| | | | Net
| |
| | | | Inception
| | | | | | | | | | | | Since
| | | | Expense
| | | | Expense
| |
| | | | Date | | | | 1 Year | | | | 5 Years | | | | Inception | | | | Ratio* | | | | Ratio* | |
| ICON Income Opportunity Fund - Class I | | | | 9/30/02 | | | | | -10.04 | % | | | | 4.15 | % | | | | 7.22 | % | | | | 1.50 | % | | | | 1.50 | % |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | -21.27 | % | | | | 5.65 | % | | | | 8.61 | % | | | | N/A | | | | | N/A | |
| |
| |
| ICON Income Opportunity Fund - Class C | | | | 11/21/02 | | | | | -10.85 | % | | | | 3.32 | % | | | | 5.24 | % | | | | 2.76 | % | | | | 2.25 | % |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | -21.27 | % | | | | 5.65 | % | | | | 6.78 | % | | | | N/A | | | | | N/A | |
| |
| |
| ICON Income Opportunity Fund - Class Z | | | | 5/6/04 | | | | | -9.99 | % | | | | N/A | | | | | 3.35 | % | | | | 17.99 | % | | | | 1.25 | % |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | -21.27 | % | | | | N/A | | | | | 3.44 | % | | | | N/A | | | | | N/A | |
| |
| |
| ICON Income Opportunity Fund - Class A | | | | 5/31/06 | | | | | -10.18 | % | | | | N/A | | | | | 0.67 | % | | | | 7.12 | % | | | | 1.49 | % |
| |
| |
ICON Income Opportunity Fund - Class A
(including maximum sales charge of 5.75%) | | | | 5/31/06 | | | | | -15.33 | % | | | | N/A | | | | | -1.86 | % | | | | 7.12 | % | | | | 1.49 | % |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | -21.27 | % | | | | N/A | | | | | -1.58 | % | | | | N/A | | | | | N/A | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors.
| |
| * | Please see the January 28, 2008 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
ICON Income Opportunity Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class I shares on the Class’ inception date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund’s other share classes will vary due to differences in charges and expenses. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Income Opportunity Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (99.0%) |
| | 17,100 | | | Abbott Laboratories | | $ | 984,618 | |
| | 21,800 | | | Accenture, Ltd. - Class Ax | | | 828,400 | |
| | 8,600 | | | ACE Ltd. | | | 465,518 | |
| | 10,300 | | | Acuity Brands, Inc. | | | 430,128 | |
| | 33,100 | | | Aetna, Inc.x | | | 1,195,241 | |
| | 9,000 | | | Allergan, Inc. | | | 463,500 | |
| | 24,900 | | | Altera Corp.(b) | | | 514,932 | |
| | 33,000 | | | Altria Group, Inc. | | | 654,720 | |
| | 24,600 | | | AmerisourceBergen Corp. | | | 926,190 | |
| | 13,100 | | | Anixter International, Inc.(a)x | | | 779,581 | |
| | 47,300 | | | Apogee Enterprises, Inc. | | | 710,919 | |
| | 14,900 | | | Astoria Financial Corp. | | | 308,877 | |
| | 11,300 | | | AT&T, Inc. | | | 315,496 | |
| | 7,400 | | | AutoZone, Inc.(a)x | | | 912,716 | |
| | 18,700 | | | Avnet, Inc.(a)x | | | 460,581 | |
| | 70,400 | | | Bank of America Corp.x | | | 2,464,000 | |
| | 17,700 | | | Barnes & Noble, Inc. | | | 461,616 | |
| | 14,200 | | | Baxter International, Inc.x | | | 931,946 | |
| | 33,300 | | | BB&T Corp.(b) | | | 1,258,740 | |
| | 11,800 | | | Bemis Co., Inc. | | | 308,216 | |
| | 9,200 | | | BP Prudhoe Bay Royalty Trust | | | 855,324 | |
| | 43,900 | | | Brown Shoe Co., Inc.x | | | 719,082 | |
| | 13,300 | | | Capital One Financial Corp.(b) | | | 678,300 | |
| | 17,600 | | | Cash America International, Inc.(b) | | | 634,304 | |
| | 5,800 | | | Caterpillar, Inc. | | | 345,680 | |
| | 13,200 | | | CEC Entertainment, Inc.(a) | | | 438,240 | |
| | 11,700 | | | Chevron Corp. | | | 965,016 | |
| | 25,300 | | | CIGNA Corp.x | | | 859,694 | |
| | 50,900 | | | Comcast Corp. - Class A | | | 999,167 | |
| | 18,800 | | | Computer Sciences Corp.(a)x | | | 754,444 | |
| | 12,000 | | | ConocoPhillipsx | | | 879,000 | |
| | 23,700 | | | CSX Corp.x | | | 1,293,309 | |
| | 18,100 | | | Cubist Pharmaceuticals, Inc.(a) | | | 402,363 | |
| | 19,200 | | | CVS Caremark Corp.(b) | | | 646,272 | |
| | 21,600 | | | D.R. Horton, Inc. | | | 281,232 | |
| | 14,200 | | | Darden Restaurants, Inc. | | | 406,546 | |
| | 7,600 | | | Delphi Financial Group, Inc. - Class A(b) | | | 213,104 | |
| | 24,500 | | | DPL, Inc.(b) | | | 607,600 | |
| | 6,800 | | | Embarq Corp. | | | 275,740 | |
| | 8,900 | | | Energizer Holdings, Inc.(a)(b) | | | 716,895 | |
| | 27,300 | | | Ethan Allen Interiors, Inc.x | | | 764,946 | |
| | 18,300 | | | Express Scripts, Inc.(a)(b) | | | 1,350,906 | |
| | 12,400 | | | Exxon Mobil Corp. | | | 962,984 | |
| | 11,500 | | | First Midwest Bancorp, Inc.(b) | | | 278,760 | |
| | 14,000 | | | Fiserv, Inc.(a) | | | 662,480 | |
| | 42,200 | | | Foot Locker, Inc.x | | | 681,952 | |
| | 25,000 | | | General Maritime Corp.(b) | | | 487,000 | |
| | 8,200 | | | Greif, Inc. - Class Ax | | | 538,084 | |
| | 12,300 | | | Guess, Inc. | | | 427,917 | |
| | 15,900 | | | Harris Corp.x | | | 734,580 | |
| | 18,100 | | | Heartland Payment Systems, Inc.(b) | | | 462,636 | |
| | 19,800 | | | Helen of Troy, Ltd.(a) | | | 450,846 | |
| | 28,700 | | | HNI Corp.(b) | | | 727,258 | |
| | 9,500 | | | Hormel Foods Corp. | | | 344,660 | |
| | 10,700 | | | Hubbell, Inc. - Class B | | | 375,035 | |
| | 16,400 | | | Ingersoll Rand Co., Ltd. - Class A(b) | | | 511,188 | |
38 Schedule of Investments
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 20,100 | | | Insight Enterprises, Inc.(a) | | $ | 269,541 | |
| | 39,800 | | | Intel Corp.x | | | 745,454 | |
| | 12,300 | | | International Business Machines Corp.x | | | 1,438,608 | |
| | 7,200 | | | Inverness Medical Innovation, Inc.(a) | | | 216,000 | |
| | 29,900 | | | Jack in the Box, Inc.(a) | | | 630,890 | |
| | 27,400 | | | Jarden Corp.(a)(b)x | | | 642,530 | |
| | 4,600 | | | Johnson & Johnson, Inc. | | | 318,688 | |
| | 7,500 | | | Johnson Controls, Inc.(b) | | | 227,475 | |
| | 51,500 | | | JPMorgan Chase & Co.x | | | 2,405,050 | |
| | 14,000 | | | KB Home(b) | | | 275,520 | |
| | 14,000 | | | Kimberly-Clark Corp. | | | 907,760 | |
| | 14,100 | | | Knightsbridge Tankers, Ltd.(b) | | | 373,227 | |
| | 34,500 | | | Knoll, Inc. | | | 521,640 | |
| | 6,800 | | | Kohl’s Corp.(a) | | | 313,344 | |
| | 19,200 | | | Lennox International, Inc. | | | 638,784 | |
| | 5,200 | | | Lockheed Martin Corp.x | | | 570,284 | |
| | 10,000 | | | Lubrizol Corp. | | | 431,400 | |
| | 7,300 | | | M&T Bank Corp.(b) | | | 651,525 | |
| | 24,500 | | | Macrovision Solutions Corp.(a) | | | 376,810 | |
| | 16,900 | | | Marathon Oil Corp. | | | 673,803 | |
| | 24,800 | | | Marriott International, Inc. - Class A | | | 647,032 | |
| | 9,200 | | | MetLife, Inc.(b) | | | 515,200 | |
| | 22,400 | | | Microsemi Corp.(a)(b) | | | 570,752 | |
| | 26,800 | | | Microsoft Corp.(b) | | | 715,292 | |
| | 21,000 | | | Mobile Mini, Inc.(a)(b) | | | 405,930 | |
| | 15,200 | | | MSC Industrial Direct Co., Inc. - Class A(b)x | | | 700,264 | |
| | 11,700 | | | National Instruments Corp. | | | 351,585 | |
| | 14,100 | | | Novartis AG - ADR | | | 745,044 | |
| | 21,000 | | | O’Reilly Automotive, Inc.(a)(b) | | | 562,170 | |
| | 52,800 | | | Pacer International, Inc.x | | | 869,616 | |
| | 6,500 | | | PartnerRe, Ltd. | | | 434,265 | |
| | 14,400 | | | PepsiAmericas, Inc. | | | 298,368 | |
| | 4,600 | | | PepsiCo, Inc. | | | 327,842 | |
| | 18,200 | | | Polaris Industries, Inc.(b) | | | 827,918 | |
| | 9,700 | | | PPG Industries, Inc. | | | 565,704 | |
| | 15,800 | | | Procter & Gamble Co.x | | | 1,101,102 | |
| | 14,300 | | | Progress Energy, Inc. | | | 616,759 | |
| | 12,200 | | | Prudential Financial, Inc.(b)x | | | 878,400 | |
| | 33,700 | | | PSS World Medical, Inc.(a) | | | 657,150 | |
| | 14,900 | | | Quest Diagnostics, Inc. | | | 769,883 | |
| | 9,300 | | | RenaissanceRe Holdings, Ltd. | | | 483,600 | |
| | 27,300 | | | Rent-A-Center, Inc.(a)(b) | | | 608,244 | |
| | 7,000 | | | Reynolds American, Inc. | | | 340,340 | |
| | 7,200 | | | Rogers Corp.(a) | | | 266,256 | |
| | 16,800 | | | Ryder System, Inc. | | | 1,041,600 | |
| | 23,100 | | | San Juan Basin Royalty Trust(b) | | | 878,493 | |
| | 21,600 | | | SkyWest, Inc.(b) | | | 345,168 | |
| | 10,200 | | | Sonoco Products Co. | | | 302,736 | |
| | 45,300 | | | Spartech Corp.x | | | 448,470 | |
| | 20,200 | | | Staples, Inc. | | | 454,500 | |
| | 29,700 | | | Sunoco, Inc.(b) | | | 1,056,726 | |
| | 32,900 | | | Sysco Corp. | | | 1,014,307 | |
| | 11,700 | | | Telefonos de Mexico S.A.B. de C.V. - ADR(b) | | | 301,275 | |
| | 11,700 | | | Telmex Internacional S.A.B. de C.V. - ADR | | | 152,100 | |
| | 28,800 | | | The Empire District Electric Co. | | | 614,880 | |
| | 13,400 | | | The Hanover Insurance Group, Inc. | | | 609,968 | |
| | 22,900 | | | The Home Depot, Inc. | | | 592,881 | |
| | 25,100 | | | The Valspar Corp. | | | 559,479 | |
| | 28,800 | | | Time Warner, Inc.(b) | | | 377,568 | |
| | 15,700 | | | TJX Cos., Inc.x | | | 479,164 | |
| | 11,500 | | | Toll Brothers, Inc.(a) | | | 290,145 | |
| | 25,200 | | | Union Pacific Corp.(b)x | | | 1,793,232 | |
| | 11,300 | | | United Technologies Corp. | | | 678,678 | |
| | 14,000 | | | V.F. Corp.x | | | 1,082,340 | |
Schedule of Investments 39
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 10,300 | | | Verizon Communications, Inc. | | $ | 330,527 | |
| | 6,800 | | | Visa, Inc. - Class A | | | 417,452 | |
| | 18,400 | | | Wal-Mart Stores, Inc.x | | | 1,101,976 | |
| | 30,600 | | | Washington Federal, Inc. | | | 564,570 | |
| | 14,700 | | | Webster Financial Corp.x | | | 371,175 | |
| | 37,800 | | | Wells Fargo & Co.(b)x | | | 1,418,634 | |
| | 19,200 | | | WESCO International, Inc.(a)x | | | 617,856 | |
| | 8,000 | | | Whirlpool Corp.(b)x | | | 634,320 | |
| | 22,000 | | | World Acceptance Corp.(a)(b) | | | 792,000 | |
| | 19,600 | | | World Fuel Services Corp. | | | 451,388 | |
| | 30,000 | | | Wyndham Worldwide Corp. | | | 471,300 | |
| | 34,500 | | | Xcel Energy, Inc. | | | 689,655 | |
| | 21,900 | | | Xilinx, Inc.(b) | | | 513,555 | |
| | 20,000 | | | Zions Bancorp(b) | | | 774,000 | |
| | | | | | | | | |
| Total Common Stocks (Cost $89,481,718) | | | 87,217,646 | |
| | | | | | | | | | | | | |
Underlying
| | | | | | |
Securities Index/
| | | | | | |
Expiration Date/
| | | | | | |
| Exercise Price | | Contracts* | | | Value | |
| | |
| |
Put Options Purchased (1.8%) | | | | |
| S&P 500 Index Expiration November 2008, Exercise price $1,145 | | | 306 | | | $ | 1,559,070 | |
| | | | | | | | | |
Total Put Options Purchased
(Cost $1,583,045) | | | 1,559,070 | |
| | | | | | | | | | | | | |
Other Securities (20.4%) | | | | |
| | 18,003,885 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | | | | | | 18,003,885 | |
| | | | | | | | | | | | | |
Total Other Securities
(Cost $18,003,885) | | | 18,003,885 | |
Total Investments 121.2%
(Cost $109,068,648) | | | 106,780,601 | |
Liabilities Less Other Assets (21.2%) | | | (18,689,822 | ) |
| | | | | |
Net Assets 100.0% | | $ | 88,090,779 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| x | | All or a portion of security is pledged as collateral for written call options. |
| |
| * | | All options have 100 shares per contract. |
| |
| ADR | | American Depositary Receipt |
40 Schedule of Investments
Schedule of Written Call Options
September 30, 2008
| | | | | | | | | |
Underlying
| | | | | | |
Security Index/
| | | | | | |
Expiration Date/
| | | | | | |
| Exercise Price | | Contracts* | | | Value | |
| | |
| |
| S&P 500 Index, | | | | | | | | |
Expiration November 2008,
Exercise price $1,165 | | | 760 | | | $ | 4,601,800 | |
| | | | | | | | | |
Total Options Written
(Premiums received $4,557,454) | | $ | 4,601,800 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| |
| * | All written options have 100 shares per contract. |
Class I IOLIX
Class C IOLCX
Class Z IOLZX
Class A ISTAX
| |
| Q. | How did the Fund perform relative to its benchmark? |
| |
| A. | The Fund’s benchmark, the S&P Composite 1500 Index, lost 21.27% for the fiscal year ended September 30, 2008. In comparison, the ICON Long/Short Fund returned -25.43% for Class I shares, -26.09% for Class C shares, -25.45% for Class Z shares and -25.61% for Class A shares (-29.88% with maximum sales charge). Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | Mounting recession, subprime, and liquidity fears gripped the world equity markets this year. Volatility as measured by the VIX index averaged 23.45% for the fiscal year - well above the 14.37% it has averaged over the previous four fiscal years. This heightened volatility was marked by quick theme changes with recession proof sell-offs quickly followed by cyclical rallies. Themes that we expected to last from six months to two years instead fizzled in a matter of days and were replaced by new themes. This left the ICON system buying into a recession proof theme just as a cyclical theme emerged and rotating into the cyclical theme just as the recession-proof theme reemerged. |
With broad value across all sectors and most industries for much of the year, our system had difficulty finding what we thought were viable short candidates - that is, industries which lacked both value and relative strength. In a downward market environment, the Fund’s lack of short exposure detracted from performance relative to the Fund’s long/short peers. Given this underperformance in a down market, we modified our focus to short based on the overall market to price ratio. Although this modification led to an increase in our short exposure, the Fund failed to outperform some of its peers as the broader market continued to decline in spite of some attractive overall market value to price ratios.
Over the course of the year, an overweight position in the Industrials sector detracted from relative performance as the S&P 1500 Industrials sector fell 23.36% on recession fears. An underweight position in the Consumer Staples sector and an overweight position in the Consumer Discretionary sector also hindered relative performance as Staples outperformed Discretionary stocks while recession fears grew. Both short positions and cash proceeds from short positions aided the Fund’s
relative performance and the Fund increased its short exposure throughout the year.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | Several industry positions detracted from and aided the Fund’s performance. On the downside, an overweight position in the marine industry detracted the most from the Fund’s performance as the industry faced some serious headwinds from recessionary pressures. A significant average weight of around 2.6% in the managed health care industry also hurt performance as the industry fell well short of earnings expectations. Finally, a small weighting in mortgage REITs also detracted from performance as the industry continued to feel the effects of growing housing concerns. |
On the positive side, an approximate 4% average position in railroads aided performance as the industry’s shares rose despite recession fears. An overweight position in health care services also paid dividends as our holdings in this industry significantly outperformed the holdings within the index.
| |
| Q. | What is your investment outlook for the equity market? |
| |
| A. | Equity markets across the world are being punished as fear has been replaced with panic. We believe that this global sell-off has led to an opportunity where equities across all sectors are extremely undervalued. With volatility levels reaching their all time highs, we believe there is a bottom in sight. We see the broader market at a 1.34 value to price ratio and have positioned the portfolio in the expectation that stocks will rise toward this fair fundamental value. |
ICON Long/Short Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Industrials | | | 20.7% | |
| Information Technology | | | 20.3% | |
| Financial | | | 20.0% | |
| Leisure and Consumer Staples | | | 10.3% | |
| Consumer Discretionary | | | 9.6% | |
| Health Care | | | 9.3% | |
| Energy | | | 5.8% | |
| Telecommunications & Utilities | | | 3.2% | |
| Materials | | | 1.2% | |
Percentages are based upon long positions as a percentage of net assets.
ICON Long/Short Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Other Diversified Financial Services | | | 5.9% | |
| Railroads | | | 4.4% | |
| IT Consulting & Other Services | | | 4.2% | |
| Data Processing & Outsourced Services | | | 4.0% | |
| Computer Hardware | | | 3.9% | |
| Pharmaceuticals | | | 3.6% | |
| Integrated Oil & Gas | | | 3.4% | |
| Industrial Conglomerates | | | 3.0% | |
| Consumer Finance | | | 2.8% | |
| Integrated Telecommunication Services | | | 2.8% | |
| Life & Health Insurance | | | 2.8% | |
| Broadcasting & Cable TV | | | 2.4% | |
| Diversified Banks | | | 2.3% | |
| Soft Drinks | | | 2.3% | |
| Trading Companies & Distributors | | | 2.3% | |
| Semiconductors | | | 2.2% | |
| Industrial Machinery | | | 2.1% | |
| General Merchandise Stores | | | 1.9% | |
| Footwear | | | 1.9% | |
| Trucking | | | 1.7% | |
| Health Care Distributors | | | 1.6% | |
| Food Distributors | | | 1.6% | |
| Apparel Retail | | | 1.6% | |
| Regional Banks | | | 1.5% | |
| Managed Health Care | | | 1.5% | |
| Air Freight & Logistics | | | 1.4% | |
| Restaurants | | | 1.4% | |
| Oil & Gas Equipment & Services | | | 1.4% | |
| Household Products | | | 1.3% | |
| Movies & Entertainment | | | 1.3% | |
| Communications Equipment | | | 1.3% | |
| Property & Casualty Insurance | | | 1.3% | |
| Systems Software | | | 1.3% | |
| Home Entertainment Software | | | 1.3% | |
| Home Furnishing Retail | | | 1.2% | |
| Apparel Accessories & Luxury Goods | | | 1.2% | |
| Commercial Printing | | | 1.2% | |
| Health Care Services | | | 1.1% | |
| Homebuilding | | | 1.1% | |
| Electrical Components & Equipment | | | 1.0% | |
| Multi-Line Insurance | | | 0.9% | |
| Technology Distributors | | | 0.9% | |
| Building Products | | | 0.9% | |
| Mortgage REITS | | | 0.9% | |
| Paper Packaging | | | 0.8% | |
| Construction & Farm Machinery & Heavy Trucks | | | 0.8% | |
| Investment Banking & Brokerage | | | 0.8% | |
| Office Services & Supplies | | | 0.8% | |
| Oil & Gas Drilling | | | 0.8% | |
| Aerospace & Defense | | | 0.7% | |
| Housewares & Specialties | | | 0.7% | |
| Health Care Equipment | | | 0.6% | |
ICON Long/Short Fund
Industry Composition (continued)
as of September 30, 2008
| | | | | |
| Health Care Technology | | | 0.5% | |
| Office Electronics | | | 0.4% | |
| Wireless Telecommunication Services | | | 0.4% | |
| Electronic Equipment Manufacturers | | | 0.4% | |
| Life Sciences Tools & Services | | | 0.4% | |
| Reinsurance | | | 0.4% | |
| Fertilizers & Agricultural Chemicals | | | 0.4% | |
| Airlines | | | 0.4% | |
| Electronic Manufacturing Services | | | 0.4% | |
| Specialized Finance | | | 0.4% | |
| Oil & Gas Storage & Transportation | | | 0.2% | |
Percentages are based upon long positions as a percentage of net assets.
ICON Long/Short Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Gross
| | | | Net
| |
| | | | Inception
| | | | | | | | | | | | Since
| | | | Expense
| | | | Expense
| |
| | | | Date | | | | 1 Year | | | | 5 Years | | | | Inception | | | | Ratio* | | | | Ratio* | |
| ICON Long/Short Fund - Class I | | | | 9/30/02 | | | | | | -25.43 | % | | | | | 5.15 | % | | | | | 7.49 | % | | | | | 1.46 | % | | | | | 1.46 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | 5.65 | % | | | | | 8.61 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Long/Short Fund - Class C | | | | 10/17/02 | | | | | | -26.09 | % | | | | | 4.29 | % | | | | | 5.64 | % | | | | | 2.33 | % | | | | | 2.32 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | 5.65 | % | | | | | 7.81 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Long/Short Fund - Class Z | | | | 5/6/04 | | | | | | -25.45 | % | | | | | N/A | | | | | | 2.04 | % | | | | | 1.25 | % | | | | | 1.25 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | N/A | | | | | | 3.44 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Long/Short Fund - Class A | | | | 5/31/06 | | | | | | -25.61 | % | | | | | N/A | | | | | | -7.27 | % | | | | | 1.68 | % | | | | | 1.67 | % | |
| |
| |
ICON Long/Short Fund - Class A
(including maximum sales charge of 5.75%) | | | | 5/31/06 | | | | | | -29.88 | % | | | | | N/A | | | | | | -9.60 | % | | | | | 1.68 | % | | | | | 1.67 | % | |
| |
| |
| S&P Composite 1500 Index | | | | | | | | | | -21.27 | % | | | | | N/A | | | | | | -1.58 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors.
| |
| * | Please see the January 28, 2008 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
ICON Long/Short Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class I shares on the Class’ inception date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund’s other share classes will vary due to differences in charges and expenses. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Long/Short Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (100.4%) |
| | 25,000 | | | Abbott Laboratories | | $ | 1,439,500 | |
| | 90,000 | | | Accenture, Ltd. - Class Ax | | | 3,420,000 | |
| | 30,000 | | | Aetna, Inc.x | | | 1,083,300 | |
| | 15,000 | | | Aflac, Inc. | | | 881,250 | |
| | 12,000 | | | America Movil S.A.B. de C.V. - ADR | | | 556,320 | |
| | 142,600 | | | Anthracite Capital, Inc. - REIT(b) | | | 764,336 | |
| | 33,400 | | | Arbor Realty Trust, Inc. - REIT(b) | | | 334,000 | |
| | 75,000 | | | AT&T, Inc. | | | 2,094,000 | |
| | 8,700 | | | Atwood Oceanics, Inc.(a) | | | 316,680 | |
| | 47,000 | | | Avnet, Inc.(a)x | | | 1,157,610 | |
| | 100,000 | | | Bank of America Corp.x | | | 3,500,000 | |
| | 8,500 | | | BB&T Corp. | | | 321,300 | |
| | 40,000 | | | Bristol-Myers Squibb Co.(b) | | | 834,000 | |
| | 12,500 | | | Bristow Group, Inc.(a)(b) | | | 423,000 | |
| | 23,200 | | | Burlington Northern Santa Fe Corp.x | | | 2,144,376 | |
| | 15,000 | | | Canon, Inc. - ADR | | | 566,250 | |
| | 40,000 | | | Cash America International, Inc.(b)x | | | 1,441,600 | |
| | 10,000 | | | Caterpillar, Inc. | | | 596,000 | |
| | 30,000 | | | CBRL Group, Inc.(b) | | | 789,000 | |
| | 15,000 | | | Cerner Corp.(a)(b) | | | 669,600 | |
| | 40,000 | | | China Security & Surveillance Technology, Inc.(a)(b) | | | 555,200 | |
| | 75,000 | | | Citigroup, Inc. | | | 1,538,250 | |
| | 80,000 | | | Cognizant Technology Solutions Corp.(a)x | | | 1,826,400 | |
| | 70,000 | | | Computer Sciences Corp.(a)x | | | 2,809,100 | |
| | 10,000 | | | Credicorp, Ltd. | | | 599,800 | |
| | 10,000 | | | Cummins, Inc. | | | 437,200 | |
| | 35,000 | | | Darden Restaurants, Inc. | | | 1,002,050 | |
| | 30,000 | | | Desarrolladora Homex S.A. de C.V. - ADR(a)(b) | | | 1,326,600 | |
| | 2,500 | | | Diamond Offshore Drilling, Inc. | | | 257,650 | |
| | 10,000 | | | Energizer Holdings, Inc.(a)(b) | | | 805,500 | |
| | 45,000 | | | Exxon Mobil Corp. | | | 3,494,700 | |
| | 49,000 | | | Fiserv, Inc.(a)x | | | 2,318,680 | |
| | 13,000 | | | FMC Technologies, Inc.(a) | | | 605,150 | |
| | 150,000 | | | General Electric Co. | | | 3,825,000 | |
| | 50,000 | | | Grupo Televisa S.A. - ADR | | | 1,093,500 | |
| | 35,000 | | | Harris Corp.x | | | 1,617,000 | |
| | 23,900 | | | Henry Schein, Inc.(a)(b) | | | 1,286,776 | |
| | 35,000 | | | Hewlett-Packard Co. | | | 1,618,400 | |
| | 25,000 | | | Hubbell, Inc. - Class B | | | 876,250 | |
| | 100,000 | | | Huntington Bancshares, Inc. | | | 799,000 | |
| | 150,000 | | | Intel Corp.x | | | 2,809,500 | |
| | 27,500 | | | International Business Machines Corp.x | | | 3,216,400 | |
| | 50,000 | | | Jabil Circuit, Inc. | | | 477,000 | |
| | 35,000 | | | Jarden Corp.(a)x | | | 820,750 | |
| | 50,000 | | | JPMorgan Chase & Co. | | | 2,335,000 | |
| | 30,000 | | | Loews Corp. | | | 1,184,700 | |
| | 8,000 | | | Marathon Oil Corp. | | | 318,960 | |
| | 15,000 | | | McKesson Corp. | | | 807,150 | |
| | 31,700 | | | MedcoHealth Solutions, Inc.(a)x | | | 1,426,500 | |
| | 15,000 | | | Medtronic, Inc. | | | 751,500 | |
Schedule of Investments 47
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 30,000 | | | Merck & Co., Inc. | | $ | 946,800 | |
| | 15,000 | | | MetLife, Inc.(b) | | | 840,000 | |
| | 60,000 | | | Microsoft Corp. | | | 1,601,400 | |
| | 5,000 | | | Monsanto Co. | | | 494,900 | |
| | 20,000 | | | Moog, Inc. - Class A(a) | | | 857,600 | |
| | 26,300 | | | MSC Industrial Direct Co., Inc. - Class A(b) | | | 1,211,641 | |
| | 5,000 | | | Murphy Oil Corp. | | | 320,700 | |
| | 15,000 | | | Nasdaq Stock Market, Inc.(a) | | | 458,550 | |
| | 35,000 | | | NCI Building Systems, Inc.(a)(b) | | | 1,111,250 | |
| | 23,600 | | | Nike, Inc. - Class B | | | 1,578,840 | |
| | 110,000 | | | Pacer International, Inc.(b)x | | | 1,811,700 | |
| | 27,500 | | | Parker Hannifin Corp. | | | 1,457,500 | |
| | 50,000 | | | PepsiAmericas, Inc. | | | 1,036,000 | |
| | 65,000 | | | Pfizer, Inc.x | | | 1,198,600 | |
| | 30,000 | | | Pitney Bowes, Inc. | | | 997,800 | |
| | 25,000 | | | Prudential Financial, Inc.(b)x | | | 1,800,000 | |
| | 60,000 | | | R.R. Donnelley & Sons Co. | | | 1,471,800 | |
| | 10,000 | | | Reinsurance Group of America, Inc. - Class A(b) | | | 540,000 | |
| | 70,000 | | | Rent-A-Center, Inc.(a) | | | 1,559,600 | |
| | 35,000 | | | Ryder System, Inc. | | | 2,170,000 | |
| | 30,000 | | | SkyWest, Inc. | | | 479,400 | |
| | 40,000 | | | Solarfun Power Holdings Co., Ltd. - ADR(a)(b) | | | 421,200 | |
| | 35,000 | | | Sonoco Products Co. | | | 1,038,800 | |
| | 65,000 | | | Sysco Corp.x | | | 2,003,950 | |
| | 48,700 | | | Target Corp.x | | | 2,388,735 | |
| | 20,000 | | | Teekay LNG Partners L.P. | | | 314,000 | |
| | 35,000 | | | The Allstate Corp. | | | 1,614,200 | |
| | 15,000 | | | The Clorox Co.(b) | | | 940,350 | |
| | 35,000 | | | The Coca-Cola Co. | | | 1,850,800 | |
| | 70,000 | | | The DIRECTV Group, Inc.(a)x | | | 1,831,900 | |
| | 8,000 | | | The Goldman Sachs Group, Inc. | | | 1,024,000 | |
| | 55,000 | | | The Walt Disney Co.x | | | 1,687,950 | |
| | 95,000 | | | The9, Ltd. - ADR(a)(b) | | | 1,595,050 | |
| | 10,000 | | | Thermo Fisher Scientific, Inc.(a)(b) | | | 550,000 | |
| | 65,000 | | | TJX Cos., Inc.x | | | 1,983,800 | |
| | 3,250 | | | Transocean, Inc.(a) | | | 356,980 | |
| | 30,500 | | | U.S. Bancorp(b) | | | 1,098,610 | |
| | 47,000 | | | Union Pacific Corp.(b)x | | | 3,344,520 | |
| | 19,900 | | | V.F. Corp.x | | | 1,538,469 | |
| | 45,000 | | | Verizon Communications, Inc.x | | | 1,444,050 | |
| | 43,000 | | | Watts Water Technologies, Inc. - Class A(b) | | | 1,176,050 | |
| | 28,700 | | | Weatherford International, Ltd.(a) | | | 721,518 | |
| | 15,000 | | | WellPoint, Inc.(a) | | | 701,550 | |
| | 31,750 | | | Wells Fargo & Co.x | | | 1,191,578 | |
| | 50,000 | | | WESCO International, Inc.(a) | | | 1,609,000 | |
| | 30,000 | | | Wolverine World Wide, Inc. | | | 794,100 | |
| | 60,000 | | | World Acceptance Corp.(a)(b)x | | | 2,160,000 | |
| | 20,000 | | | Zions Bancorp | | | 774,000 | |
| | | | | | | | | |
Total Common Stocks (Cost $134,157,168) | | | 126,271,029 | |
48 Schedule of Investments
| | | | | | | | | |
| Shares or Principal Amount | | Value | |
| | |
| |
| | | | | |
| Other Securities (14.4%) | | | | |
| | 18,113,649 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | $ | 18,113,649 | |
| | | | | | | | | |
| Total Other Securities (Cost $18,113,649) | | | 18,113,649 | |
| Total Investments 114.8% (Cost $152,270,817) | | | 144,384,678 | |
| Liabilities Less Other Assets (14.8%) | | | (18,594,567 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 125,790,111 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| x | | All or a portion of the security is pledged as collateral for securities sold short. |
| |
| ADR | | American Depositary Receipt |
| |
| REIT | | Real Estate Investment Trust |
Schedule of Investments 49
Schedule of Securities Sold Short
September 30, 2008
| | | | | | | | | |
| Shares | | | Short Security | | Value | |
| | |
| |
| | | | | | | | | |
| | 5,000 | | | Acadia Realty Trust | | $ | 126,400 | |
| | 5,000 | | | Agnico-Eagle Mines, Ltd. | | | 275,350 | |
| | 15,000 | | | Alexandria Real Estate Equities, Inc. | | | 1,696,200 | |
| | 22,500 | | | AMB Property Corp. | | | 1,019,250 | |
| | 10,000 | | | BioMed Realty Trust, Inc. | | | 264,500 | |
| | 5,000 | | | BRE Properties, Inc. | | | 245,000 | |
| | 15,000 | | | Brookfield Asset Management, Inc. - Class A | | | 411,600 | |
| | 30,000 | | | Brookfield Properties Corp. | | | 475,200 | |
| | 35,000 | | | Coinstar, Inc.(a) | | | 1,120,000 | |
| | 5,000 | | | Corporate Office Properties Trust | | | 201,750 | |
| | 10,000 | | | Equity Residential | | | 444,100 | |
| | 7,500 | | | Forest City Enterprises, Inc. - Class A | | | 230,025 | |
| | 5,000 | | | Goldcorp, Inc. | | | 158,150 | |
| | 15,000 | | | iShares Russell 3000 Index Fund | | | 1,031,850 | |
| | 8,000 | | | iShares S&P Midcap 400 Index Fund | | | 578,880 | |
| | 35,000 | | | iShares S&P Smallcap 600 Index Fund | | | 2,082,850 | |
| | 10,000 | | | Kimco Realty Corp. | | | 369,400 | |
| | 15,000 | | | Kinross Gold Corp. | | | 241,800 | |
| | 15,000 | | | Laclede Group, Inc. | | | 727,350 | |
| | 5,000 | | | Lihir Gold, Ltd. - ADR(a) | | | 104,500 | |
| | 12,500 | | | Mid-America Apartment Communities, Inc. | | | 614,250 | |
| | 7,500 | | | Parkway Properties, Inc. | | | 283,950 | |
| | 25,000 | | | Phase Forward, Inc.(a) | | | 522,750 | |
| | 20,000 | | | Pinnacle Entertainment, Inc.(a) | | | 151,200 | |
| | 4,000 | | | ProLogis | | | 165,080 | |
| | 4,000 | | | PS Business Parks, Inc. | | | 230,400 | |
| | 3,000 | | | Regency Centers Corp. | | | 200,070 | |
| | 5,000 | | | Sears Holdings Corp.(a) | | | 467,500 | |
| | 2,000 | | | Simon Property Group, Inc. | | | 194,000 | |
| | 2,000 | | | SL Green Realty Corp. | | | 129,600 | |
| | 28,500 | | | SPDR Trust - Series 1 | | | 3,306,570 | |
| | 22,500 | | | St. Joe Corp.(a) | | | 879,525 | |
| | 20,000 | | | Vital Images, Inc.(a) | | | 300,000 | |
| | 3,000 | | | Vornado Realty Trust | | | 272,850 | |
| | 10,000 | | | Weyerhaeuser Co. | | | 605,800 | |
| | | | | | | | | |
| Total Securities Sold Short (Proceeds $21,185,914) | | $ | 20,127,700 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| ADR | | American Depositary Receipt |
50 Schedule of Securities Sold Short
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Statements of Assets and Liabilities
September 30, 2008
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | ICON
| | | | |
| | | ICON
| | | ICON
| | | ICON
| | | Income
| | | ICON
| |
| | | Bond
| | | Core Equity
| | | Equity Income
| | | Opportunity
| | | Long/Short
| |
| | | Fund | | | Fund | | | Fund | | | Fund | | | Fund | |
Assets | | | | | | | | | | | | | | | | | | | | |
| Investments, at cost | | $ | 106,272,542 | | | $ | 180,568,261 | | | $ | 101,053,891 | | | $ | 109,068,648 | | | $ | 152,270,817 | |
| | | | | | | | | | | | | | | | | | | | | |
| Investments, at value† | | | 99,919,181 | | | | 175,692,900 | | | | 101,062,248 | | | | 106,780,601 | | | | 144,384,678 | |
| Cash | | | 137,402 | | | | - | | | | - | | | | 5,461,604 | | | | - | |
| Deposits for short sales | | | - | | | | - | | | | - | | | | - | | | | 22,706,194 | |
| Receivables: | | | | | | | | | | | | | | | | | | | | |
| Fund shares sold | | | 3,244,251 | | | | 175,052 | | | | 1,485,757 | | | | 1,252,857 | | | | 72,898 | |
| Investments sold | | | 197,500 | | | | 4,742,628 | | | | 2,121,806 | | | | 6,940,071 | | | | 7,251,114 | |
| Interest | | | 1,346,408 | | | | 48,702 | | | | 142,008 | | | | 24,927 | | | | 27,352 | |
| Dividends | | | - | | | | 104,441 | | | | 258,765 | | | | 70,258 | | | | 207,506 | |
| Expense reimbursements by Adviser | | | 3,833 | | | | - | | | | 1,259 | | | | 1,160 | | | | - | |
Expense reimbursements by Sub-Administrator | | | - | | | | - | | | | 46,846 | | | | - | | | | - | |
| Other assets | | | 46,664 | | | | 53,523 | | | | 51,608 | | | | 53,700 | | | | 69,501 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Assets | | | 104,895,239 | | | | 180,817,246 | | | | 105,170,297 | | | | 120,585,178 | | | | 174,719,243 | |
| | | | | | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | |
| Options written, at value (premiums received of $4,557,454) | | | - | | | | - | | | | - | | | | 4,601,800 | | | | - | |
| Securities sold short, at value (proceeds of $21,185,914) | | | - | | | | - | | | | - | | | | - | | | | 20,127,700 | |
| Payable for income on short positions | | | - | | | | - | | | | - | | | | - | | | | 59,090 | |
| Payables: | | | | | | | | | | | | | | | | | | | | |
| Due to custodian bank | | | - | | | | - | | | | - | | | | - | | | | 1,650,181 | |
| Interest | | | 72 | | | | - | | | | 174 | | | | 320 | | | | 5,663 | |
| Investments bought | | | - | | | | 6,174,025 | | | | 1,448,254 | | | | 9,565,003 | | | | 7,207,975 | |
| Payable for collateral received on securities loaned | | | 767,228 | | | | 39,009,165 | | | | - | | | | 18,003,885 | | | | 18,113,649 | |
| Fund shares redeemed | | | 287,020 | | | | 346,005 | | | | 182,249 | | | | 193,571 | | | | 1,548,378 | |
| Distributions due to shareholders | | | 3,853 | | | | - | | | | 27,567 | | | | 4,265 | | | | - | |
| Advisory fees and fee waiver recoupment | | | 51,845 | | | | 89,647 | | | | 66,277 | | | | 57,137 | | | | 98,243 | |
| Accrued distribution fees | | | 22,997 | | | | 66,156 | | | | 24,930 | | | | 21,624 | | | | 46,850 | |
| Fund accounting fees | | | 239 | | | | 425 | | | | 303 | | | | 275 | | | | 89 | |
| Transfer agent fees | | | 4,650 | | | | 12,246 | | | | 4,820 | | | | 3,408 | | | | 10,531 | |
| Administration fees | | | 4,058 | | | | 5,746 | | | | 4,226 | | | | 3,588 | | | | 5,302 | |
| Trustee fees | | | 2,361 | | | | 3,256 | | | | 2,410 | | | | 2,074 | | | | 3,138 | |
| Accrued legal expenses for tax matter (Note 6) | | | - | | | | - | | | | 46,846 | | | | - | | | | - | |
| Accrued expenses | | | 32,908 | | | | 40,984 | | | | 38,659 | | | | 37,449 | | | | 52,343 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities | | | 1,177,231 | | | | 45,747,655 | | | | 1,846,715 | | | | 32,494,399 | | | | 48,929,132 | |
| | | | | | | | | | | | | | | | | | | | | |
Net Assets - all share classes | | $ | 103,718,008 | | | $ | 135,069,591 | | | $ | 103,323,582 | | | $ | 88,090,779 | | | $ | 125,790,111 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | ICON
| | | | |
| | | ICON
| | | ICON
| | | ICON
| | | Income
| | | ICON
| |
| | | Bond
| | | Core Equity
| | | Equity Income
| | | Opportunity
| | | Long/Short
| |
| | | Fund | | | Fund | | | Fund | | | Fund | | | Fund | |
Net Assets - Class I | | $ | 100,985,145 | | | $ | 76,606,060 | | | $ | 98,500,888 | | | $ | 82,599,051 | | | $ | 93,243,360 | |
| | | | | | | | | | | | | | | | | | | | | |
Net Assets - Class C | | $ | 2,725,018 | | | $ | 55,363,795 | | | $ | 4,461,204 | | | $ | 4,206,754 | | | $ | 27,147,675 | |
| | | | | | | | | | | | | | | | | | | | | |
Net Assets - Class Z | | $ | 7,845 | | | $ | 1,221,510 | | | $ | 80,721 | | | $ | 422,415 | | | $ | 539,735 | |
| | | | | | | | | | | | | | | | | | | | | |
Net Assets - Class A | | $ | - | | | $ | 1,878,226 | | | $ | 280,769 | | | $ | 862,559 | | | $ | 4,859,341 | |
| | | | | | | | | | | | | | | | | | | | | |
Net Assets Consist of | | | | | | | | | | | | | | | | | | | | |
| Paid-in capital | | $ | 111,312,656 | | | $ | 153,991,381 | | | $ | 113,322,996 | | | $ | 98,510,212 | | | $ | 163,107,436 | |
| Accumulated undistributed net investment income/(loss) | | | (297,908 | ) | | | 702,010 | | | | 10,408 | | | | (9,707 | ) | | | 1,164,664 | |
| Accumulated undistributed net realized gain/(loss) from investment , Written Options and Securities Sold Short transactions | | | (943,379 | ) | | | (14,748,439 | ) | | | (10,018,179 | ) | | | (8,077,333 | ) | | | (31,654,064 | ) |
| Unrealized net appreciation/(depreciation) on investments, written options and securities sold short | | | (6,353,361 | ) | | | (4,875,361 | ) | | | 8,357 | | | | (2,332,393 | ) | | | (6,827,925 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Net Assets | | $ | 103,718,008 | | | $ | 135,069,591 | | | $ | 103,323,582 | | | $ | 88,090,779 | | | $ | 125,790,111 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shares outstanding (unlimited shares authorized, no par value) | | | | | | | | | | | | | | | | | | | | |
| Class I | | | 10,698,839 | | | | 6,818,114 | | | | 8,301,700 | | | | 7,324,144 | | | | 6,778,855 | |
| Class C | | | 288,107 | | | | 5,293,412 | | | | 380,263 | | | | 392,499 | | | | 2,066,923 | |
| Class Z | | | 833 | | | | 108,658 | | | | 6,817 | | | | 36,856 | | | | 39,085 | |
| Class A | | | - | | | | 171,927 | | | | 23,795 | | | | 76,674 | | | | 355,085 | |
| Net asset value (offering and redemption price per share) | | | | | | | | | | | | | | | | | | | | |
| Class I | | $ | 9.44 | | | $ | 11.24 | | | $ | 11.87 | | | $ | 11.28 | | | $ | 13.76 | |
| Class C | | $ | 9.46 | | | $ | 10.46 | | | $ | 11.73 | | | $ | 10.72 | | | $ | 13.13 | |
| Class Z | | $ | 9.42 | | | $ | 11.24 | | | $ | 11.84 | | | $ | 11.46 | | | $ | 13.81 | |
| Class A | | $ | - | | | $ | 10.92 | | | $ | 11.80 | | | $ | 11.25 | | | $ | 13.69 | |
| Class A maximum offering price (100%/(100%-maximum sales charge)) of net asset value adjusted to the nearest cent per share | | $ | - | | | $ | 11.59 | | | $ | 12.52 | | | $ | 11.94 | | | $ | 14.53 | |
| |
| † | Includes securities on loan of $725,305, $39,582,180, $0, $18,389,492, and $18,414,932. |
The accompanying notes are an integral part of the financial statements.
Statements of Operations
For the year ended September 30, 2008
| | | | | | | | | |
| | | ICON
| | | ICON
| |
| | | Bond
| | | Core Equity
| |
| | | Fund | | | Fund | |
Investment Income | | | | | | | | |
| Interest | | $ | 6,118,641 | | | $ | 34,222 | |
| Dividends | | | - | | | | 2,629,952 | |
| Income from securities lending, net | | | 13,189 | | | | 347,233 | |
| Foreign taxes withheld | | | - | | | | (4,663 | ) |
| | | | | | | | | |
| Total Investment Income | | | 6,131,830 | | | | 3,006,744 | |
| | | | | | | | | |
Expenses | | | | | | | | |
| Advisory fees | | | 716,307 | | | | 1,158,005 | |
| Distribution fees: | | | | | | | | |
| Class I | | | 292,553 | | | | 190,488 | |
| Class C | | | 20,064 | | | | 752,566 | |
| Class A | | | - | | | | 4,045 | |
| Fund accounting fees | | | 38,885 | | | | 41,372 | |
| Transfer agent fees | | | 78,236 | | | | 178,763 | |
| Administration fees | | | 56,078 | | | | 72,476 | |
| Registration fees: | | | | | | | | |
| Class I | | | 21,617 | | | | 12,682 | |
| Class C | | | 11,729 | | | | 12,356 | |
| Class A | | | - | | | | 7,687 | |
| Insurance expense | | | 9,235 | | | | 13,015 | |
| Trustee fees and expenses | | | 9,748 | | | | 12,035 | |
| Interest expense | | | 1,816 | | | | 4,002 | |
| Other expenses | | | 64,481 | | | | 97,873 | |
| Dividends on short positions | | | - | | | | - | |
| Recoupment of previously reimbursed expenses | | | - | | | | - | |
| Legal expenses related to tax matter (Note 6) | | | - | | | | - | |
| | | | | | | | | |
| Total expenses before expense reimbursement and transfer agent earnings credit | | | 1,320,749 | | | | 2,557,365 | |
| Transfer agent earnings credit | | | (2,500 | ) | | | (3,269 | ) |
| Expense reimbursement by Adviser due to expense limitation agreement | | | (109,034 | ) | | | - | |
Expense reimbursement of legal expenses by the Sub-Administrator | | | - | | | | - | |
| | | | | | | | | |
| Net Expenses | | | 1,209,215 | | | | 2,554,096 | |
| | | | | | | | | |
Net Investment Income/(Loss) | | | 4,922,615 | | | | 452,648 | |
| | | | | | | | | |
Net Realized and Unrealized Gain/(Loss) on Investments, Written Options and Securities Sold Short | | | | | | | | |
| Net realized gain/(loss) from investment transactions | | | 669,257 | | | | (14,748,439 | ) |
| Net realized gain/(loss) from written options transactions | | | - | | | | - | |
| Net realized gain/(loss) from securities sold short | | | - | | | | - | |
| Change in unrealized net appreciation/(depreciation) on investments | | | (6,778,176 | ) | | | (31,524,489 | ) |
| Change in unrealized net appreciation/(depreciation) on written options and securities sold short | | | - | | | | - | |
| | | | | | | | | |
| Net Realized and Unrealized Gain/(Loss) on Investments, Written Options and Securities Sold Short | | | (6,108,919 | ) | | | (46,272,928 | ) |
| | | | | | | | | |
Net Increase/(Decrease) in Net Assets Resulting From Operations | | $ | (1,186,304 | ) | | $ | (45,820,280 | ) |
| | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | |
| | | | ICON
| | | | |
ICON
| | | Income
| | | ICON
| |
Equity Income
| | | Opportunity
| | | Long/Short
| |
| Fund | | | Fund | | | Fund | |
| | | | | | | | | | | |
| $ | 674,481 | | | $ | 22,766 | | | $ | 94,830 | |
| | 3,698,138 | | | | 1,708,597 | | | | 4,587,651 | |
| | - | | | | 156,799 | | | | 524,277 | |
| | (2,205 | ) | | | (1,403 | ) | | | (30 | ) |
| | | | | | | | | | | |
| | 4,370,414 | | | | 1,886,759 | | | | 5,206,728 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | 883,648 | | | | 634,541 | | | | 1,966,513 | |
| | | | | | | | | | | |
| | 281,206 | | | | 201,680 | | | | 465,768 | |
| | 49,722 | | | | 32,569 | | | | 383,725 | |
| | 775 | | | | 1,278 | | | | 15,430 | |
| | 33,367 | | | | 24,925 | | | | 60,388 | |
| | 91,121 | | | | 64,709 | | | | 131,114 | |
| | 55,337 | | | | 39,784 | | | | 108,459 | |
| | | | | | | | | | | |
| | 14,414 | | | | 16,225 | | | | 31,514 | |
| | 10,507 | | | | 10,700 | | | | 13,896 | |
| | 7,661 | | | | 7,938 | | | | 8,264 | |
| | 9,150 | | | | 5,727 | | | | 20,054 | |
| | 9,712 | | | | 7,905 | | | | 15,317 | |
| | 792 | | | | 6,607 | | | | 20,827 | |
| | 77,202 | | | | 71,091 | | | | 139,108 | |
| | - | | | | - | | | | 355,922 | |
| | - | | | | 4,695 | | | | - | |
| | 235,145 | | | | - | | | | - | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | 1,759,759 | | | | 1,130,374 | | | | 3,736,299 | |
| | (2,459 | ) | | | (1,707 | ) | | | (5,089 | ) |
| | | | | | | | | | | |
| | (25,282 | ) | | | - | | | | (4,480 | ) |
| | | | | | | | | | | |
| | (235,145 | ) | | | - | | | | - | |
| | | | | | | | | | | |
| | 1,496,873 | | | | 1,128,667 | | | | 3,726,730 | |
| | | | | | | | | | | |
| | 2,873,541 | | | | 758,092 | | | | 1,479,998 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | (9,999,212 | ) | | | (11,255,239 | ) | | | (30,396,997 | ) |
| | - | | | | 13,154,349 | | | | - | |
| | - | | | | - | | | | 3,900,077 | |
| | (15,900,667 | ) | | | (11,467,881 | ) | | | (37,595,003 | ) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | - | | | | (840,955 | ) | | | 183,889 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | (25,899,879 | ) | | | (10,409,726 | ) | | | (63,908,034 | ) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| $ | (23,026,338 | ) | | $ | (9,651,634 | ) | | $ | (62,428,036 | ) |
| | | | | | | | | | | |
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | |
| | | ICON Bond Fund | | | ICON Core Equity Fund | |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| |
Operations | | | | | | | | | | | | | | | | |
| Net investment income/(loss) | | $ | 4,922,615 | | | $ | 4,602,241 | | | $ | 452,648 | | | $ | (534,514 | ) |
| Net realized gain/(loss) from investment transactions and written options | | | 669,257 | | | | (158,250 | ) | | | (14,748,439 | ) | | | 19,681,940 | |
| Change in net unrealized appreciation/(depreciation) on investments | | | (6,778,176 | ) | | | 756,222 | | | | (31,524,489 | ) | | | 11,709,068 | |
| | | | | | | | | | | | | | | | | |
| Net increase/(decrease) in net assets resulting from operations | | | (1,186,304 | ) | | | 5,200,213 | | | | (45,820,280 | ) | | | 30,856,494 | |
| | | | | | | | | | | | | | | | | |
Dividends and Distributions to Shareholders | | | | | | | | | | | | | | | | |
| Net investment income | | | | | | | | | | | | | | | | |
| Class I | | | (5,247,750 | ) | | | (4,626,599 | ) | | | - | | | | - | |
| Class C | | | (88,949 | ) | | | (46,277 | ) | | | - | | | | - | |
| Class Z | | | (142 | ) | | | (527 | ) | | | - | | | | - | |
| Class A | | | - | | | | - | | | | - | | | | - | |
| Net realized gains | | | | | | | | | | | | | | | | |
| Class I | | | - | | | | - | | | | (7,187,602 | ) | | | (7,580,907 | ) |
| Class C | | | - | | | | - | | | | (7,656,597 | ) | | | (7,230,668 | ) |
| Class Z | | | - | | | | - | | | | (109,019 | ) | | | (94,989 | ) |
| Class A | | | - | | | | - | | | | (124,615 | ) | | | (36,638 | ) |
| | | | | | | | | | | | | | | | | |
| Net decrease from dividends and distributions | | | (5,336,841 | ) | | | (4,673,403 | ) | | | (15,077,833 | ) | | | (14,943,202 | ) |
| | | | | | | | | | | | | | | | | |
Fund Share Transactions | | | | | | | | | | | | | | | | |
| Shares sold | | | | | | | | | | | | | | | | |
| Class I | | | 52,872,632 | | | | 68,988,664 | | | | 40,848,727 | | | | 23,824,919 | |
| Class C | | | 2,345,458 | | | | 917,781 | | | | 5,417,694 | | | | 8,551,109 | |
| Class Z | | | 10,634 | | | | 48,144 | | | | 375,126 | | | | 133,685 | |
| Class A | | | - | | | | - | | | | 1,883,178 | | | | 1,422,196 | |
| Reinvested dividends and distributions | | | | | | | | | | | | | | | | |
| Class I | | | 5,171,793 | | | | 4,481,263 | | | | 6,810,276 | | | | 6,749,960 | |
| Class C | | | 86,070 | | | | 44,325 | | | | 7,380,164 | | | | 6,925,661 | |
| Class Z | | | 142 | | | | 525 | | | | 107,124 | | | | 92,041 | |
| Class A | | | - | | | | - | | | | 112,656 | | | | 32,501 | |
| Shares repurchased | | | | | | | | | | | | | | | | |
| Class I | | | (73,834,034 | ) | | | (41,215,819 | ) | | | (28,889,006 | ) | | | (55,610,067 | ) |
| Class C | | | (1,002,203 | ) | | | (441,608 | ) | | | (20,488,331 | ) | | | (26,377,163 | ) |
| Class Z | | | (13,684 | ) | | | (41,463 | ) | | | (68,187 | ) | | | (299,637 | ) |
| Class A | | | - | | | | - | | | | (827,329 | ) | | | (279,650 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase/(decrease) from fund share transactions | | | (14,363,192 | ) | | | 32,781,812 | | | | 12,662,092 | | | | (34,834,445 | ) |
| | | | | | | | | | | | | | | | | |
| Total net increase/(decrease) in net assets | | | (20,886,337 | ) | | | 33,308,622 | | | | (48,236,021 | ) | | | (18,921,153 | ) |
Net Assets | | | | | | | | | | | | | | | | |
| Beginning of period | | | 124,604,345 | | | | 91,295,723 | | | | 183,305,612 | | | | 202,226,765 | |
| | | | | | | | | | | | | | | | | |
| End of period | | $ | 103,718,008 | | | $ | 124,604,345 | | | $ | 135,069,591 | | | $ | 183,305,612 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| ICON Equity Income Fund | | | ICON Income Opportunity Fund | | | ICON Long/Short Fund | |
Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| |
| 2008 | | | 2007 | | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| |
| | | | | | | | | | | | | | | | | | | | | | | |
| $ | 2,873,541 | | | $ | 2,521,140 | | | $ | 758,092 | | | $ | (91,815 | ) | | $ | 1,479,998 | | | $ | 655,127 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (9,999,212 | ) | | | 15,603,497 | | | | 1,899,110 | | | | 2,785,990 | | | | (26,496,920 | ) | | | 7,336,230 | |
| |
(15,900,667 | ) | | | 4,578,186 | | | | (12,308,836 | ) | | | 5,052,554 | | | | (37,411,114 | ) | | | 24,000,849 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (23,026,338 | ) | | | 22,702,823 | | | | (9,651,634 | ) | | | 7,746,729 | | | | (62,428,036 | ) | | | 31,992,206 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (2,634,085 | ) | | | (2,854,133 | ) | | | (730,001 | ) | | | (46,145 | ) | | | (399,948 | ) | | | (394,093 | ) |
| | (74,308 | ) | | | (70,223 | ) | | | (17,592 | ) | | | - | | | | - | | | | - | |
| | (1,668 | ) | | | (787 | ) | | | (1,990 | ) | | | - | | | | - | | | | (13,175 | ) |
| | (6,596 | ) | | | (3,730 | ) | | | (4,914 | ) | | | (41 | ) | | | (7,652 | ) | | | (7,001 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (12,299,870 | ) | | | (5,844,508 | ) | | | (3,156,831 | ) | | | (10,443,229 | ) | | | (9,426,798 | ) | | | (4,519,604 | ) |
| | (509,032 | ) | | | (206,407 | ) | | | (103,778 | ) | | | (411,998 | ) | | | (1,802,594 | ) | | | (791,906 | ) |
| | (4,033 | ) | | | (971 | ) | | | (2,015 | ) | | | (3,627 | ) | | | (8,704 | ) | | | (82,900 | ) |
| | (33,610 | ) | | | (2,660 | ) | | | (13,118 | ) | | | (5,517 | ) | | | (264,846 | ) | | | (47,236 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (15,563,202 | ) | | | (8,983,419 | ) | | | (4,030,239 | ) | | | (10,910,557 | ) | | | (11,910,542 | ) | | | (5,855,915 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 32,408,389 | | | | 20,775,427 | | | | 44,002,873 | | | | 32,396,237 | | | | 71,979,977 | | | | 124,049,120 | |
| | 1,321,434 | | | | 879,642 | | | | 2,960,233 | | | | 350,569 | | | | 7,910,378 | | | | 18,629,284 | |
| | 55,480 | | | | 21,895 | | | | 446,647 | | | | 29,639 | | | | 504,312 | | | | 287,714 | |
| | 186,596 | | | | 289,568 | | | | 687,944 | | | | 269,504 | | | | 3,456,617 | | | | 6,279,254 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 14,280,781 | | | | 8,210,633 | | | | 3,844,378 | | | | 10,266,374 | | | | 9,338,356 | | | | 4,670,355 | |
| | 550,445 | | | | 256,742 | | | | 119,074 | | | | 379,286 | | | | 1,686,440 | | | | 745,754 | |
| | 5,700 | | | | 1,757 | | | | 4,005 | | | | 3,627 | | | | 8,484 | | | | 96,075 | |
| | 40,115 | | | | 6,277 | | | | 17,075 | | | | 5,556 | | | | 218,920 | | | | 43,032 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (35,964,387 | ) | | | (51,367,295 | ) | | | (29,452,929 | ) | | | (22,746,946 | ) | | | (167,590,194 | ) | | | (80,032,782 | ) |
| | (1,164,749 | ) | | | (1,040,584 | ) | | | (604,737 | ) | | | (1,156,174 | ) | | | (13,749,105 | ) | | | (5,843,771 | ) |
| | (1,352 | ) | | | (11,598 | ) | | | (26,662 | ) | | | (89 | ) | | | (271,710 | ) | | | (3,639,251 | ) |
| | (166,362 | ) | | | (12,552 | ) | | | (42,105 | ) | | | (84 | ) | | | (3,220,063 | ) | | | (977,888 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
11,552,090 | | | | (21,990,088 | ) | | | 21,955,796 | | | | 19,797,499 | | | | (89,727,588 | ) | | | 64,306,896 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (27,037,450 | ) | | | (8,270,684 | ) | | | 8,273,923 | | | | 16,633,671 | | | | (164,066,166 | ) | | | 90,443,187 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 130,361,032 | | | | 138,631,716 | | | | 79,816,856 | | | | 63,183,185 | | | | 289,856,277 | | | | 199,413,090 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| $ | 103,323,582 | | | $ | 130,361,032 | | | $ | 88,090,779 | | | $ | 79,816,856 | | | $ | 125,790,111 | | | $ | 289,856,277 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Statements of Changes in Net Assets (continued)
| | | | | | | | | | | | | | | | | |
| | | ICON Bond Fund | | | ICON Core Equity Fund | |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| |
Transactions in Fund Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | | | | | | | | | | | | | | |
| Class I | | | 5,266,742 | | | | 6,930,357 | | | | 3,159,841 | | | | 1,521,324 | |
| Class C | | | 230,968 | | | | 91,548 | | | | 415,353 | | | | 576,959 | |
| Class Z | | | 1,071 | | | | 4,870 | | | | 26,683 | | | | 8,541 | |
| Class A | | | - | | | | - | | | | 141,172 | | | | 92,820 | |
| Reinvested dividends and distributions | | | | | | | | | | | | | | | | |
| Class I | | | 514,757 | | | | 448,497 | | | | 459,223 | | | | 447,314 | |
| Class C | | | 8,598 | | | | 4,422 | | | | 531,329 | | | | 483,635 | |
| Class Z | | | 14 | | | | 53 | | | | 7,238 | | | | 6,091 | |
| Class A | | | - | | | | - | | | | 7,775 | | | | 2,184 | |
| Shares repurchased | | | | | | | | | | | | | | | | |
| Class I | | | (7,363,485 | ) | | | (4,131,816 | ) | | | (2,118,855 | ) | | | (3,549,165 | ) |
| Class C | | | (99,871 | ) | | | (44,117 | ) | | | (1,552,228 | ) | | | (1,762,394 | ) |
| Class Z | | | (1,359 | ) | | | (4,178 | ) | | | (4,689 | ) | | | (19,996 | ) |
| Class A | | | - | | | | - | | | | (62,207 | ) | | | (18,320 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase/(decrease) | | | (1,442,565 | ) | | | 3,299,636 | | | | 1,010,635 | | | | (2,211,007 | ) |
| | | | | | | | | | | | | | | | | |
| Shares outstanding, beginning of period | | | 12,430,344 | | | | 9,130,708 | | | | 11,381,476 | | | | 13,592,483 | |
| | | | | | | | | | | | | | | | | |
| Shares outstanding, end of period | | | 10,987,779 | | | | 12,430,344 | | | | 12,392,111 | | | | 11,381,476 | |
| | | | | | | | | | | | | | | | | |
Purchase and Sales of Investment Securities
(excluding short-term securities and written options) |
| Purchases of securities (including short sale transactions) | | $ | 56,663,792 | | | $ | 21,614,156 | | | $ | 267,302,362 | | | $ | 228,139,282 | |
| Proceeds from sales of securities (including short sale transactions) | | | 18,607,395 | | | | 25,763,927 | | | | 272,214,554 | | | | 275,726,296 | |
| Purchases of long-term U.S. government securities | | | 23,532,812 | | | | 43,613,130 | | | | - | | | | - | |
Proceeds from sales of long-term U.S. government securities | | | 72,648,246 | | | | 5,421,100 | | | | - | | | | - | |
Accumulated undistributed net investment income/(loss) | | $ | (297,908 | ) | | $ | (33,477 | ) | | $ | 702,010 | | | $ | - | |
| | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | | | | | |
| ICON Equity Income Fund | | | ICON Income Opportunity Fund | | | ICON Long/Short Fund | |
Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| |
| 2008 | | | 2007 | | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 2,409,932 | | | | 1,331,983 | | | | 3,538,611 | | | | 2,383,848 | | | | 4,122,378 | | | | 6,741,937 | |
| | 99,285 | | | | 56,569 | | | | 251,905 | | | | 26,619 | | | | 476,043 | | | | 1,050,920 | |
| | 4,082 | | | | 1,408 | | | | 35,779 | | | | 2,101 | | | | 30,543 | | | | 15,636 | |
| | 13,938 | | | | 18,766 | | | | 56,323 | | | | 20,879 | | | | 205,076 | | | | 340,691 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
1,018,360 | | | | 536,569 | | | | 306,393 | | | | 776,387 | | | | 528,188 | | | | 266,877 | |
| | 39,498 | | | | 16,958 | | | | 9,910 | | | | 29,724 | | | | 99,261 | | | | 43,971 | |
| | 416 | | | | 114 | | | | 325 | | | | 274 | | | | 478 | | | | 5,462 | |
| | 2,873 | | | | 405 | | | | 1,372 | | | | 424 | | | | 12,424 | | | | 2,463 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | (2,691,935 | ) | | | (3,260,624 | ) | | | (2,379,180 | ) | | | (1,672,257 | ) | | | (10,278,275 | ) | | | (4,408,590 | ) |
| | (84,944 | ) | | | (67,244 | ) | | | (50,918 | ) | | | (87,051 | ) | | | (880,400 | ) | | | (328,475 | ) |
| | (101 | ) | | | (734 | ) | | | (1,992 | ) | | | (7 | ) | | | (15,100 | ) | | | (189,213 | ) |
| | (12,649 | ) | | | (794 | ) | | | (3,410 | ) | | | (6 | ) | | | (199,994 | ) | | | (53,377 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 798,755 | | | | (1,366,624 | ) | | | 1,765,118 | | | | 1,480,935 | | | | (5,899,378 | ) | | | 3,488,302 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
7,913,820 | | | | 9,280,444 | | | | 6,065,055 | | | | 4,584,120 | | | | 15,139,326 | | | | 11,651,024 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
8,712,575 | | | | 7,913,820 | | | | 7,830,173 | | | | 6,065,055 | | | | 9,239,948 | | | | 15,139,326 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| $ | 148,316,806 | | | $ | 154,997,733 | | | $ | 187,288,186 | | | $ | 109,635,674 | | | $ | 376,092,000 | | | $ | 324,247,248 | |
| |
147,489,456 | | | | 192,524,496 | | | | 156,047,068 | | | | 104,042,037 | | | | 465,387,277 | | | | 246,986,193 | |
| |
3,975,018 | | | | 7,570,798 | | | | - | | | | - | | | | - | | | | - | |
| |
5,660,610 | | | | 750,000 | | | | - | | | | - | | | | - | | | | - | |
$ | 10,408 | | | $ | (146,553 | ) | | $ | (9,707 | ) | | $ | - | | | $ | 1,164,664 | | | $ | 338,387 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Income from investment operations | | | Less dividends and | |
| | | Net asset
| | | Net
| | | Net realized
| | | | | | Dividends
| | | Distributions
| |
| | | value,
| | | investment
| | | and unrealized
| | | Total from
| | | from net
| | | from net
| |
| | | beginning
| | | income/
| | | gains/(losses)
| | | investment
| | | investment
| | | realized
| |
| | | of period | | | (loss)(x) | | | on investments | | | operations | | | income | | | gains | |
| |
ICON Bond Fund | | | | | | | | | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | $ | 10.02 | | | $ | 0.42 | | | $ | (0.55 | ) | | $ | (0.13 | ) | | $ | (0.45 | ) | | $ | - | |
| Year Ended September 30, 2007 | | | 10.00 | | | | 0.44 | | | | 0.03 | | | | 0.47 | | | | (0.45 | ) | | | - | |
| Year Ended September 30, 2006 | | | 10.16 | | | | 0.42 | | | | (0.15 | ) | | | 0.27 | | | | (0.42 | ) | | | (0.01 | ) |
| Year Ended September 30, 2005 | | | 10.52 | | | | 0.40 | | | | (0.29 | ) | | | 0.11 | | | | (0.41 | ) | | | (0.06 | ) |
| Year Ended September 30, 2004 | | | 10.41 | | | | 0.45 | | | | 0.10 | | | | 0.55 | | | | (0.44 | ) | | | - | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 10.05 | | | | 0.35 | | | | (0.55 | ) | | | (0.20 | ) | | | (0.39 | ) | | | - | |
| Year Ended September 30, 2007 | | | 10.02 | | | | 0.38 | | | | 0.04 | | | | 0.42 | | | | (0.39 | ) | | | - | |
| Year Ended September 30, 2006 | | | 10.18 | | | | 0.36 | | | | (0.15 | ) | | | 0.21 | | | | (0.36 | ) | | | (0.01 | ) |
| Year Ended September 30, 2005 | | | 10.54 | | | | 0.33 | | | | (0.28 | ) | | | 0.05 | | | | (0.35 | ) | | | (0.06 | ) |
| Year Ended September 30, 2004 | | | 10.42 | | | | 0.38 | | | | 0.12 | | | | 0.50 | | | | (0.38 | ) | | | - | |
Class Z | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 10.02 | | | | 0.44 | | | | (0.57 | ) | | | (0.13 | ) | | | (0.47 | ) | | | - | |
| Year Ended September 30, 2007 | | | 10.00 | | | | 0.46 | | | | 0.03 | | | | 0.49 | | | | (0.47 | ) | | | - | |
| Year Ended September 30, 2006 | | | 10.15 | | | | 0.45 | | | | (0.15 | ) | | | 0.30 | | | | (0.44 | ) | | | (0.01 | ) |
| Year Ended September 30, 2005 | | | 10.51 | | | | 0.42 | | | | (0.28 | ) | | | 0.14 | | | | (0.44 | ) | | | (0.06 | ) |
| May 6, 2004 (inception) to September 30, 2004 | | | 10.26 | | | | 0.46 | | | | (0.02 | ) | | | 0.44 | | | | (0.19 | ) | | | - | |
ICON Core Equity Fund | | | | | | | | | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 16.59 | | | | 0.09 | | | | (4.07 | ) | | | (3.98 | ) | | | - | | | | (1.37 | ) |
| Year Ended September 30, 2007 | | | 15.22 | | | | 0.02 | | | | 2.46 | | | | 2.48 | | | | - | | | | (1.11 | ) |
| Year Ended September 30, 2006 | | | 15.14 | | | | (0.02 | ) | | | 0.67 | | | | 0.65 | | | | - | | | | (0.57 | ) |
| Year Ended September 30, 2005 | | | 12.78 | | | | (0.05 | ) | | | 2.41 | | | | 2.36 | | | | - | | | | - | |
| Year Ended September 30, 2004 | | | 11.12 | | | | (0.07 | ) | | | 1.73 | | | | 1.66 | | | | - | | | | - | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 15.66 | | | | (0.01 | ) | | | (3.82 | ) | | | (3.83 | ) | | | - | | | | (1.37 | ) |
| Year Ended September 30, 2007 | | | 14.52 | | | | (0.10 | ) | | | 2.35 | | | | 2.25 | | | | - | | | | (1.11 | ) |
| Year Ended September 30, 2006 | | | 14.58 | | | | (0.14 | ) | | | 0.65 | | | | 0.51 | | | | - | | | | (0.57 | ) |
| Year Ended September 30, 2005 | | | 12.41 | | | | (0.15 | ) | | | 2.32 | | | | 2.17 | | | | - | | | | - | |
| Year Ended September 30, 2004 | | | 10.88 | | | | (0.16 | ) | | | 1.69 | | | | 1.53 | | | | - | | | | - | |
Class Z | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 16.62 | | | | 0.09 | | | | (4.10 | ) | | | (4.01 | ) | | | - | | | | (1.37 | ) |
| Year Ended September 30, 2007 | | | 15.23 | | | | 0.03 | | | | 2.47 | | | | 2.50 | | | | - | | | | (1.11 | ) |
| Year Ended September 30, 2006 | | | 15.12 | | | | 0.02 | | | | 0.66 | | | | 0.68 | | | | - | | | | (0.57 | ) |
| Year Ended September 30, 2005 | | | 12.79 | | | | (0.14 | ) | | | 2.47 | | | | 2.33 | | | | - | | | | - | |
| May 6, 2004 (inception) to September 30, 2004 | | | 12.07 | | | | (0.03 | ) | | | 0.75 | | | | 0.72 | | | | - | | | | - | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 16.32 | | | | (0.01 | ) | | | (4.02 | ) | | | (4.03 | ) | | | - | | | | (1.37 | ) |
| Year Ended September 30, 2007 | | | 15.09 | | | | (0.06 | ) | | | 2.40 | | | | 2.34 | | | | - | | | | (1.11 | ) |
| May 31, 2006 (inception) to September 30, 2006 | | | 15.80 | | | | (0.27 | ) | | | (0.44 | ) | | | (0.71 | ) | | | - | | | | - | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Ratio of expenses to
| | | Ratio of net investment
| | | | |
| | | | | | | | | | | | | average net assets(a) | | | income to average net assets(a) | | | | |
| | | | | | | | | | | | | Before
| | | After
| | | Before
| | | After
| | | | |
| | | | | | | | | | | | | expense
| | | expense
| | | expense
| | | expense
| | | | |
| | | | | | | | | | | | | limitation/
| | | limitation/
| | | limitation/
| | | limitation/
| | | | |
| distributions | | | | | | | | | | | | recoupment
| | | recoupment
| | | recoupment
| | | recoupment
| | | | |
Total
| | | | | | | | | Net assets,
| | | and transfer
| | | and transfer
| | | and transfer
| | | and transfer
| | | | |
dividends
| | | Net asset
| | | | | | end of
| | | agent
| | | agent
| | | agent
| | | agent
| | | Portfolio
| |
and
| | | value, end
| | | Total
| | | period (in
| | | earnings
| | | earnings
| | | earnings
| | | earnings
| | | turnover
| |
| distributions | | | of period | | | return* | | | thousands) | | | credit | | | credit | | | credit | | | credit | | | rate(b) | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | (0.45 | ) | | $ | 9.44 | | | | (1.48 | )% | | $ | 100,985 | | | | 1.08% | | | | 1.00 | %(c) | | | 4.06 | % | | | 4.14 | % | | | 73.47 | % |
| | (0.45 | ) | | | 10.02 | | | | 4.80 | % | | | 123,102 | | | | 1.09% | | | | 1.00 | %(c) | | | 4.34 | % | | | 4.42 | % | | | 34.40 | % |
| | (0.43 | ) | | | 10.00 | | | | 2.72 | % | | | 90,324 | | | | 1.11% | | | | 1.01 | %(c) | | | 4.14 | % | | | 4.24 | % | | | 66.82 | % |
| | (0.47 | ) | | | 10.16 | | | | 1.05 | % | | | 82,415 | | | | 1.18% | | | | 1.10 | % | | | 3.72 | % | | | 3.80 | % | | | 76.28 | % |
| | (0.44 | ) | | | 10.52 | | | | 5.41 | % | | | 61,502 | | | | 1.29% | | | | 1.30 | % | | | 4.28 | % | | | 4.27 | % | | | 37.98 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.39 | ) | | | 9.46 | | | | (2.16 | )% | | | 2,725 | | | | 2.42% | | | | 1.60 | %(c) | | | 2.71 | % | | | 3.53 | % | | | 73.47 | % |
| | (0.39 | ) | | | 10.05 | | | | 4.27 | % | | | 1,491 | | | | 3.15% | | | | 1.60 | %(c) | | | 2.28 | % | | | 3.82 | % | | | 34.40 | % |
| | (0.37 | ) | | | 10.02 | | | | 2.09 | % | | | 968 | | | | 3.08% | | | | 1.61 | %(c) | | | 2.17 | % | | | 3.64 | % | | | 66.82 | % |
| | (0.41 | ) | | | 10.18 | | | | 0.47 | % | | | 988 | | | | 3.42% | | | | 1.69 | % | | | 1.46 | % | | | 3.19 | % | | | 76.28 | % |
| | (0.38 | ) | | | 10.54 | | | | 4.83 | % | | | 371 | | | | 6.84% | | | | 1.90 | % | | | 3.63 | % | | | 8.57 | % | | | 37.98 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.47 | ) | | | 9.42 | | | | (1.43 | )% | | | 8 | | | | 186.00% | | | | 0.75 | %(c) | | | (180.79 | )% | | | 4.46 | % | | | 73.47 | % |
| | (0.47 | ) | | | 10.02 | | | | 5.02 | % | | | 11 | | | | 31.60% | | | | 0.75 | %(c) | | | (26.18 | )% | | | 4.67 | % | | | 34.40 | % |
| | (0.45 | ) | | | 10.00 | | | | 3.06 | % | | | 4 | | | | 25.40% | | | | 0.76 | %(c) | | | (20.18 | )% | | | 4.47 | % | | | 66.82 | % |
| | (0.50 | ) | | | 10.15 | | | | 1.30 | % | | | 5 | | | | 74.28% | | | | 0.84 | % | | | (69.41 | )% | | | 4.03 | % | | | 76.28 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.19 | ) | | | 10.51 | | | | 4.33 | % | | | 1 | | | | 0.86% | | | | 0.86 | % | | | 4.60 | % | | | 4.60 | % | | | 37.98 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.37 | ) | | | 11.24 | | | | (25.99 | )% | | | 76,606 | | | | 1.27% | | | | 1.27 | % | | | 0.67 | % | | | 0.67 | % | | | 173.81 | % |
| | (1.11 | ) | | | 16.59 | | | | 17.05 | % | | | 88,246 | | | | 1.24% | | | | 1.23 | % | | | 0.12 | % | | | 0.13 | % | | | 116.81 | % |
| | (0.57 | ) | | | 15.22 | | | | 4.35 | % | | | 104,966 | | | | 1.23% | | | | 1.23 | % | | | (0.13 | )% | | | (0.13 | )% | | | 148.67 | % |
| | - | | | | 15.14 | | | | 18.47 | % | | | 93,780 | | | | 1.27% | | | | N/A | | | | (0.33 | )% | | | N/A | | | | 136.82 | % |
| | - | | | | 12.78 | | | | 14.93 | % | | | 47,273 | | | | 1.33% | | | | N/A | | | | (0.59 | )% | | | N/A | | | | 116.26 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.37 | ) | | | 10.46 | | | | (26.61 | )% | | | 55,364 | | | | 2.05% | | | | 2.05 | % | | | (0.09 | )% | | | (0.09 | )% | | | 173.81 | % |
| | (1.11 | ) | | | 15.66 | | | | 16.25 | % | | | 92,350 | | | | 2.02% | | | | 2.02 | % | | | (0.68 | )% | | | (0.67 | )% | | | 116.81 | % |
| | (0.57 | ) | | | 14.52 | | | | 3.54 | % | | | 95,842 | | | | 2.03% | | | | 2.02 | % | | | (0.91 | )% | | | (0.91 | )% | | | 148.67 | % |
| | - | | | | 14.58 | | | | 17.49 | % | | | 78,145 | | | | 2.04% | | | | N/A | | | | (1.10 | )% | | | N/A | | | | 136.82 | % |
| | - | | | | 12.41 | | | | 14.06 | % | | | 53,101 | | | | 2.08% | | | | N/A | | | | (1.34 | )% | | | N/A | | | | 116.26 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.37 | ) | | | 11.24 | | | | (26.11 | )% | | | 1,222 | | | | 1.34% | | | | 1.34 | % | | | 0.65 | % | | | 0.65 | % | | | 173.81 | % |
| | (1.11 | ) | | | 16.62 | | | | 17.18 | % | | | 1,320 | | | | 1.18% | | | | 1.18 | % | | | 0.17 | % | | | 0.17 | % | | | 116.81 | % |
| | (0.57 | ) | | | 15.23 | | | | 4.57 | % | | | 1,291 | | | | 0.99% | | | | 0.98 | % | | | 0.12 | % | | | 0.12 | % | | | 148.67 | % |
| | - | | | | 15.12 | | | | 18.22 | % | | | 1,165 | | | | 1.76% | | | | N/A | | | | (0.94 | )% | | | N/A | | | | 136.82 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 12.79 | | | | 5.97 | % | | | 36 | | | | 1.12% | | | | N/A | | | | (0.28 | )% | | | N/A | | | | 116.26 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.37 | ) | | | 10.92 | | | | (26.76 | )% | | | 1,878 | | | | 2.09% | | | | 2.09 | % | | | (0.08 | )% | | | (0.08 | )% | | | 173.81 | % |
| | (1.11 | ) | | | 16.32 | | | | 16.25 | % | | | 1,390 | | | | 1.66% | | | | 1.65 | % | | | (0.42 | )% | | | (0.41 | )% | | | 116.81 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 15.09 | | | | (4.49 | )% | | | 128 | | | | 7.44% | | | | 7.43 | % | | | (5.45 | )% | | | (5.44 | )% | | | 148.67 | % |
Financial Highlights (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Income from investment operations | | | Less dividends and | |
| | | Net asset
| | | Net
| | | Net realized
| | | | | | Dividends
| | | Distributions
| |
| | | value,
| | | investment
| | | and unrealized
| | | Total from
| | | from net
| | | from net
| |
| | | beginning
| | | income/
| | | gains/(losses)
| | | investment
| | | investment
| | | realized
| |
| | | of period | | | (loss)(x) | | | on investments | | | operations | | | income | | | gains | |
| |
ICON Equity Income Fund | | | | | | | | | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 16.48 | | | | 0.34 | | | | (3.00 | ) | | | (2.66 | ) | | | (0.31 | ) | | | (1.64 | ) |
| Year Ended September 30, 2007 | | | 14.94 | | | | 0.29 | | | | 2.26 | | | | 2.55 | | | | (0.34 | ) | | | (0.67 | ) |
| Year Ended September 30, 2006 | | | 15.79 | | | | 0.30 | | | | 0.29 | | | | 0.59 | | | | (0.35 | ) | | | (1.09 | ) |
| Year Ended September 30, 2005 | | | 14.33 | | | | 0.27 | | | | 1.54 | | | | 1.81 | | | | (0.27 | ) | | | (0.08 | ) |
| Year Ended September 30, 2004 | | | 12.22 | | | | 0.31 | | | | 2.09 | | | | 2.40 | | | | (0.29 | ) | | | - | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 16.33 | | | | 0.21 | | | | (2.97 | ) | | | (2.76 | ) | | | (0.20 | ) | | | (1.64 | ) |
| Year Ended September 30, 2007 | | | 14.85 | | | | 0.14 | | | | 2.23 | | | | 2.37 | | | | (0.22 | ) | | | (0.67 | ) |
| Year Ended September 30, 2006 | | | 15.71 | | | | 0.15 | | | | 0.29 | | | | 0.44 | | | | (0.21 | ) | | | (1.09 | ) |
| Year Ended September 30, 2005 | | | 14.27 | | | | 0.13 | | | | 1.54 | | | | 1.67 | | | | (0.15 | ) | | | (0.08 | ) |
| Year Ended September 30, 2004 | | | 12.21 | | | | 0.20 | | | | 2.06 | | | | 2.26 | | | | (0.20 | ) | | | - | |
Class Z | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 16.46 | | | | 0.38 | | | | (3.04 | ) | | | (2.66 | ) | | | (0.32 | ) | | | (1.64 | ) |
| Year Ended September 30, 2007 | | | 14.94 | | | | 0.30 | | | | 2.26 | | | | 2.56 | | | | (0.37 | ) | | | (0.67 | ) |
| Year Ended September 30, 2006 | | | 15.79 | | | | 0.30 | | | | 0.29 | | | | 0.59 | | | | (0.35 | ) | | | (1.09 | ) |
| Year Ended September 30, 2005 | | | 14.33 | | | | 0.28 | | | | 1.55 | | | | 1.83 | | | | (0.29 | ) | | | (0.08 | ) |
| May 10, 2004 (inception) to September 30, 2004 | | | 13.43 | | | | 0.39 | | | | 0.70 | | | | 1.09 | | | | (0.19 | ) | | | - | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 16.40 | | | | 0.31 | | | | (2.99 | ) | | | (2.68 | ) | | | (0.28 | ) | | | (1.64 | ) |
| Year Ended September 30, 2007 | | | 14.92 | | | | 0.27 | | | | 2.22 | | | | 2.49 | | | | (0.34 | ) | | | (0.67 | ) |
| May 31, 2006 (inception) to September 30, 2006 | | | 15.04 | | | | 0.08 | | | | (0.01 | ) | | | 0.07 | | | | (0.19 | ) | | | - | |
ICON Income Opportunity Fund | | | | | | | | | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 13.18 | | | | 0.12 | | | | (1.39 | ) | | | (1.27 | ) | | | (0.10 | ) | | | (0.53 | ) |
| Year Ended September 30, 2007 | | | 13.80 | | | | (0.02 | ) | | | 1.64 | | | | 1.62 | | | | (0.01 | ) | | | (2.23 | ) |
| Year Ended September 30, 2006 | | | 13.88 | | | | (0.01 | ) | | | 0.05 | | | | 0.04 | | | | - | | | | (0.12 | ) |
| Year Ended September 30, 2005 | | | 13.25 | | | | (0.06 | ) | | | 1.26 | | | | 1.20 | | | | - | | | | (0.57 | ) |
| Year Ended September 30, 2004 | | | 12.40 | | | | (0.07 | ) | | | 1.36 | | | | 1.29 | | | | - | | | | (0.44 | ) |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 12.61 | | | | 0.01 | | | | (1.32 | ) | | | (1.31 | ) | | | (0.05 | ) | | | (0.53 | ) |
| Year Ended September 30, 2007 | | | 13.39 | | | | (0.11 | ) | | | 1.56 | | | | 1.45 | | | | - | | | | (2.23 | ) |
| Year Ended September 30, 2006 | | | 13.56 | | | | (0.11 | ) | | | 0.06 | | | | (0.05 | ) | | | - | | | | (0.12 | ) |
| Year Ended September 30, 2005 | | | 13.06 | | | | (0.16 | ) | | | 1.23 | | | | 1.07 | | | | - | | | | (0.57 | ) |
| Year Ended September 30, 2004 | | | 12.32 | | | | (0.16 | ) | | | 1.34 | | | | 1.18 | | | | - | | | | (0.44 | ) |
Class Z | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 13.37 | | | | 0.15 | | | | (1.43 | ) | | | (1.28 | ) | | | (0.10 | ) | | | (0.53 | ) |
| Year Ended September 30, 2007 | | | 13.94 | | | | 0.01 | | | | 1.65 | | | | 1.66 | | | | - | | | | (2.23 | ) |
| Year Ended September 30, 2006 | | | 13.94 | | | | 0.02 | | | | 0.10 | | | | 0.12 | | | | - | | | | (0.12 | ) |
| Year Ended September 30, 2005 | | | 13.29 | | | | (0.03 | ) | | | 1.25 | | | | 1.22 | | | | - | | | | (0.57 | ) |
| May 6, 2004 (inception) to September 30, 2004 | | | 12.86 | | | | (0.01 | ) | | | 0.44 | | | | 0.43 | | | | - | | | | - | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Ratio of net investment
| | | | |
| | | | | | | | | | | | | Ratio of expenses to average net assets(a) | | | income to average net assets(a) | | | | |
| | | | | | | | | | | | | Before
| | | After
| | | Before
| | | After
| | | | |
| | | | | | | | | | | | | expense
| | | expense
| | | expense
| | | expense
| | | | |
| | | | | | | | | | | | | limitation/
| | | limitation/
| | | limitation/
| | | limitation/
| | | | |
| distributions | | | | | | | | | | | | recoupment
| | | recoupment
| | | recoupment
| | | recoupment
| | | | |
Total
| | | | | | | | | Net assets,
| | | and transfer
| | | and transfer
| | | and transfer
| | | and transfer
| | | | |
dividends
| | | Net asset
| | | | | | end of
| | | agent
| | | agent
| | | agent
| | | agent
| | | Portfolio
| |
and
| | | value, end
| | | Total
| | | period (in
| | | earnings
| | | earnings
| | | earnings
| | | earnings
| | | turnover
| |
| distributions | | | of period | | | return* | | | thousands) | | | credit | | | credit | | | credit | | | credit | | | rate(b) | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.95 | ) | | | 11.87 | | | | (17.76 | )% | | | 98,501 | | | | 1.23 | %(g) | | | 1.23 | %(c) | | | 2.48 | % | | | 2.48 | % | | | 132.93 | % |
| | (1.01 | ) | | | 16.48 | | | | 17.67 | % | | | 124,668 | | | | 1.23 | %(h) | | | 1.22 | %(c) | | | 1.86 | % | | | 1.86 | % | | | 121.30 | % |
| | (1.44 | ) | | | 14.94 | | | | 4.02 | % | | | 133,835 | | | | 1.23 | % | | | 1.23 | %(c) | | | 1.96 | % | | | 1.96 | % | | | 162.84 | % |
| | (0.35 | ) | | | 15.79 | | | | 12.71 | % | | | 129,681 | | | | 1.27 | % | | | 1.27 | % | | | 1.79 | % | | | 1.79 | % | | | 143.82 | % |
| | (0.29 | ) | | | 14.33 | | | | 19.69 | % | | | 117,552 | | | | 1.35 | % | | | 1.37 | % | | | 2.25 | % | | | 2.23 | % | | | 51.84 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.84 | ) | | | 11.73 | | | | (18.60 | )% | | | 4,461 | | | | 2.34 | %(g) | | | 2.20 | %(c) | | | 1.40 | % | | | 1.54 | % | | | 132.93 | % |
| | (0.89 | ) | | | 16.33 | | | | 16.45 | % | | | 5,331 | | | | 2.33 | %(h) | | | 2.21 | %(c) | | | 0.75 | % | | | 0.87 | % | | | 121.30 | % |
| | (1.30 | ) | | | 14.85 | | | | 3.03 | % | | | 4,753 | | | | 2.29 | % | | | 2.20 | %(c) | | | 0.91 | % | | | 1.00 | % | | | 162.84 | % |
| | (0.23 | ) | | | 15.71 | | | | 11.71 | % | | | 3,861 | | | | 2.53 | % | | | 2.20 | % | | | 0.53 | % | | | 0.86 | % | | | 143.82 | % |
| | (0.20 | ) | | | 14.27 | | | | 18.56 | % | | | 1,885 | | | | 3.47 | % | | | 2.20 | % | | | 0.12 | % | | | 1.40 | % | | | 51.84 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.96 | ) | | | 11.84 | | | | (17.81 | )% | | | 81 | | | | 11.18 | %(g) | | | 1.20 | %(c) | | | (7.14 | )% | | | 2.84 | % | | | 132.93 | % |
| | (1.04 | ) | | | 16.46 | | | | 17.74 | % | | | 40 | | | | 11.08 | %(h) | | | 1.21 | %(c) | | | (7.96 | )% | | | 1.92 | % | | | 121.30 | % |
| | (1.44 | ) | | | 14.94 | | | | 4.04 | % | | | 24 | | | | 4.36 | % | | | 1.20 | %(c) | | | (1.20 | )% | | | 1.96 | % | | | 162.84 | % |
| | (0.37 | ) | | | 15.79 | | | | 12.89 | % | | | 23 | | | | 9.37 | % | | | 1.20 | % | | | (6.31 | )% | | | 1.86 | % | | | 143.82 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.19 | ) | | | 14.33 | | | | 8.12 | % | | | 14 | | | | 1.11 | % | | | 0.97 | %(d) | | | 2.62 | % | | | 2.76 | % | | | 51.84 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.92 | ) | | | 11.80 | | | | (17.98 | )% | | | 281 | | | | 5.40 | %(g) | | | 1.44 | %(c) | | | (1.67 | )% | | | 2.29 | % | | | 132.93 | % |
| | (1.01 | ) | | | 16.40 | | | | 17.29 | % | | | 322 | | | | 3.77 | %(h) | | | 1.45 | %(c) | | | (0.60 | )% | | | 1.73 | % | | | 121.30 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.19 | ) | | | 14.92 | | | | 0.46 | % | | | 19 | | | | 38.36 | % | | | 1.44 | %(c) | | | (35.18 | )% | | | 1.74 | % | | | 162.84 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.63 | ) | | | 11.28 | | | | (10.04 | )% | | | 82,599 | | | | 1.30 | % | | | 1.30 | %(c) | | | 0.93 | % | | | 0.93 | % | | | 184.47 | % |
| | (2.24 | ) | | | 13.18 | | | | 12.51 | % | | | 77,195 | | | | 1.50 | % | | | 1.50 | %(c) | | | (0.11 | )% | | | (0.11 | )% | | | 150.42 | % |
| | (0.12 | ) | | | 13.80 | | | | 0.30 | % | | | 60,321 | | | | 1.47 | % | | | 1.47 | %(c) | | | (0.04 | )% | | | (0.04 | )% | | | 159.55 | % |
| | (0.57 | ) | | | 13.88 | | | | 9.21 | % | | | 54,347 | | | | 1.54 | % | | | 1.45 | % | | | (0.57 | )% | | | (0.48 | )% | | | 159.35 | % |
| | (0.44 | ) | | | 13.25 | | | | 10.53 | % | | | 42,962 | | | | 1.60 | % | | | 1.45 | % | | | (0.67 | )% | | | (0.52 | )% | | | 167.57 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.58 | ) | | | 10.72 | | | | (10.85 | )% | | | 4,207 | | | | 2.52 | % | | | 2.21 | %(c) | | | (0.24 | )% | | | 0.07 | % | | | 184.47 | % |
| | (2.23 | ) | | | 12.61 | | | | 11.53 | % | | | 2,291 | | | | 2.76 | % | | | 2.25 | %(c) | | | (1.34 | )% | | | (0.83 | )% | | | 150.42 | % |
| | (0.12 | ) | | | 13.39 | | | | (0.36 | )% | | | 2,842 | | | | 2.61 | % | | | 2.23 | %(c) | | | (1.23 | )% | | | (0.85 | )% | | | 159.55 | % |
| | (0.57 | ) | | | 13.56 | | | | 8.31 | % | | | 3,652 | | | | 2.80 | % | | | 2.20 | % | | | (1.80 | )% | | | (1.20 | )% | | | 159.35 | % |
| | (0.44 | ) | | | 13.06 | | | | 9.69 | % | | | 1,964 | | | | 3.89 | % | | | 2.20 | % | | | (2.93 | )% | | | (1.23 | )% | | | 167.57 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.63 | ) | | | 11.46 | | | | (9.99 | )% | | | 422 | | | | 4.39 | % | | | 1.21 | %(c) | | | (1.98 | )% | | | 1.20 | % | | | 184.47 | % |
| | (2.23 | ) | | | 13.37 | | | | 12.67 | % | | | 37 | | | | 17.99 | % | | | 1.25 | %(c) | | | (16.64 | )% | | | 0.10 | % | | | 150.42 | % |
| | (0.12 | ) | | | 13.94 | | | | 0.88 | % | | | 5 | | | | 3.52 | % | | | 1.22 | %(c) | | | (2.14 | )% | | | 0.15 | % | | | 159.55 | % |
| | (0.57 | ) | | | 13.94 | | | | 9.42 | % | | | 3 | | | | 53.94 | % | | | 1.20 | % | | | (52.97 | )% | | | (0.23 | )% | | | 159.35 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 13.29 | | | | 3.34 | % | | | 3 | | | | 1.12 | % | | | 1.12 | % | | | (0.11 | )% | | | (0.11 | )% | | | 167.57 | % |
Financial Highlights (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Income from investment operations | | | Less dividends and | |
| | | Net asset
| | | Net
| | | Net realized
| | | | | | Dividends
| | | Distributions
| |
| | | value,
| | | investment
| | | and unrealized
| | | Total from
| | | from net
| | | from net
| |
| | | beginning
| | | income/
| | | gains/(losses)
| | | investment
| | | investment
| | | realized
| |
| | | of period | | | (loss)(x) | | | on investments | | | operations | | | income | | | gains | |
| |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 13.15 | | | | 0.10 | | | | (1.38 | ) | | | (1.28 | ) | | | (0.09 | ) | | | (0.53 | ) |
| Year Ended September 30, 2007 | | | 13.80 | | | | (0.03 | ) | | | 1.65 | | | | 1.62 | | | | (0.04 | ) | | | (2.23 | ) |
| May 31, 2006 (inception) to September 30, 2006 | | | 13.73 | | | | 0.03 | | | | 0.04 | | | | 0.07 | | | | - | | | | - | |
ICON Long/Short Fund(e) | | | | | | | | | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 19.26 | | | | 0.13 | | | | (4.86 | ) | | | (4.73 | ) | | | (0.03 | ) | | | (0.74 | ) |
| Year Ended September 30, 2007 | | | 17.19 | | | | 0.07 | | | | 2.47 | | | | 2.54 | | | | (0.04 | ) | | | (0.43 | ) |
| Year Ended September 30, 2006 | | | 15.99 | | | | 0.03 | | | | 1.17 | | | | 1.20 | | | | - | | | | - | |
| Year Ended September 30, 2005 | | | 13.92 | | | | (0.08 | ) | | | 2.65 | | | | 2.57 | | | | - | | | | (0.50 | ) |
| Year Ended September 30, 2004 | | | 12.00 | | | | (0.08 | ) | | | 2.16 | | | | 2.08 | | | | - | | | | (0.16 | ) |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 18.54 | | | | - | | | | (4.67 | ) | | | (4.67 | ) | | | - | | | | (0.74 | ) |
| Year Ended September 30, 2007 | | | 16.67 | | | | (0.08 | ) | | | 2.38 | | | | 2.30 | | | | - | | | | (0.43 | ) |
| Year Ended September 30, 2006 | | | 15.63 | | | | (0.13 | ) | | | 1.17 | | | | 1.04 | | | | - | | | | - | |
| Year Ended September 30, 2005 | | | 13.73 | | | | (0.19 | ) | | | 2.59 | | | | 2.40 | | | | - | | | | (0.50 | ) |
| Year Ended September 30, 2004 | | | 11.92 | | | | (0.18 | ) | | | 2.15 | | | | 1.97 | | | | - | | | | (0.16 | ) |
Class Z | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 19.30 | | | | 0.18 | | | | (4.93 | ) | | | (4.75 | ) | | | - | | | | (0.74 | ) |
| Year Ended September 30, 2007 | | | 17.29 | | | | 0.10 | | | | 2.41 | | | | 2.51 | | | | (0.07 | ) | | | (0.43 | ) |
| Year Ended September 30, 2006 | | | 16.05 | | | | 0.11 | | | | 1.13 | | | | 1.24 | | | | - | | | | - | |
| Year Ended September 30, 2005 | | | 13.94 | | | | (0.05 | ) | | | 2.66 | | | | 2.61 | | | | - | | | | (0.50 | ) |
| May 6, 2004 (inception) to September 30, 2004 | | | 13.99 | | | | (0.04 | ) | | | (0.01 | ) | | | (0.05 | ) | | | - | | | | - | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 19.20 | | | | 0.10 | | | | (4.85 | ) | | | (4.75 | ) | | | (0.02 | ) | | | (0.74 | ) |
| Year Ended September 30, 2007 | | | 17.18 | | | | 0.05 | | | | 2.46 | | | | 2.51 | | | | (0.06 | ) | | | (0.43 | ) |
| May 31, 2006 (inception) to September 30, 2006 | | | 17.52 | | | | 0.05 | | | | (0.39 | ) | | | (0.34 | ) | | | - | | | | - | |
| |
| (x) | Calculated using the average shares method. |
| * | The total return calculation is for the period indicated and excludes any sales charges. |
| (a) | Annualized for periods less than a year. |
| (b) | Portfolio turnover is calculated at the Fund level and is not annualized. |
| (c) | The Fund’s operating expenses, not including interest expense, are contractually limited to the amounts discussed in Note 3. The ratios in these financial highlights reflect the limitation, including the interest expense. |
| (d) | The limitation on expenses for Class Z shares occurred when the Adviser reimbursed the Fund for excise and income taxes incurred during the period. These expenses were extraordinary expenses not subject to the contractual expense limitation discussed in Note 3. |
| (e) | The Fund’s operating expenses, not including dividends on short positions, are contractually limited to 1.55% for Class I, 2.30% for Class C, 1.30% for Class Z and 1.55% for Class A. The ratios in these financial highlights reflect the limitation, including the dividends on short positions. |
| (f) | Prior disclosures were reclassified to be consistent with current presentation. |
| (g) | The ratio of expenses to average net assets before expense limitation and transfer agent earnings credit including legal expenses related to a tax matter were 1.43%, 2.54%, 11.38% and 5.60% for Class I, C, Z and A, respectively. See Note 6. |
| (h) | The ratio of expenses to average net assets before expense limitation and transfer agent earnings credit including a potential Internal Revenue Code section 860 deficiency dividend expense were 1.81%, 2.91%, 11.66% and 4.35% for Class I, C, Z and A, respectively. |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Ratio of net investment
| | | | |
| | | | | | | | | | | | | Ratio of expenses to average net assets(a) | | | income to average net assets(a) | | | | |
| | | | | | | | | | | | | Before
| | | After
| | | Before
| | | After
| | | | |
| | | | | | | | | | | | | expense
| | | expense
| | | expense
| | | expense
| | | | |
| | | | | | | | | | | | | limitation/
| | | limitation/
| | | limitation/
| | | limitation/
| | | | |
| distributions | | | | | | | | | | | | recoupment
| | | recoupment
| | | recoupment
| | | recoupment
| | | | |
Total
| | | | | | | | | Net assets,
| | | and transfer
| | | and transfer
| | | and transfer
| | | and transfer
| | | | |
dividends
| | | Net asset
| | | | | | end of
| | | agent
| | | agent
| | | agent
| | | agent
| | | Portfolio
| |
and
| | | value, end
| | | Total
| | | period (in
| | | earnings
| | | earnings
| | | earnings
| | | earnings
| | | turnover
| |
| distributions | | | of period | | | return* | | | thousands) | | | credit | | | credit | | | credit | | | credit | | | rate(b) | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.62 | ) | | | 11.25 | | | | (10.18 | )% | | | 863 | | | | 3.75 | % | | | 1.46 | %(c) | | | (1.44 | )% | | | 0.85 | % | | | 184.47 | % |
| | (2.27 | ) | | | 13.15 | | | | 12.51 | % | | | 294 | | | | 7.12 | % | | | 1.49 | %(c) | | | (5.85 | )% | | | (0.22 | )% | | | 150.42 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 13.80 | | | | 0.51 | % | | | 15 | | | | 42.18 | % | | | 1.47 | %(c) | | | (40.01 | )% | | | 0.69 | % | | | 159.55 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.77 | ) | | | 13.76 | | | | (25.43 | )% | | | 93,243 | | | | 1.47 | % | | | 1.47 | %(c) | | | 0.78 | % | | | 0.78 | % | | | 174.59 | % |
| | (0.47 | ) | | | 19.26 | | | | 15.05 | % | | | 238,943 | | | | 1.46 | % | | | 1.46 | %(c) | | | 0.39 | % | | | 0.39 | % | | | 105.00 | % |
| | - | | | | 17.19 | | | | 7.50 | % | | | 168,522 | | | | 1.45 | %(f) | | | 1.45 | %(c) | | | 0.18 | %(f) | | | 0.18 | % | | | 94.62 | % |
| | (0.50 | ) | | | 15.99 | | | | 18.69 | % | | | 53,158 | | | | 1.58 | % | | | 1.58 | % | | | (0.53 | )% | | | (0.53 | )% | | | 112.06 | % |
| | (0.16 | ) | | | 13.92 | | | | 17.42 | % | | | 24,480 | | | | 2.15 | % | | | 1.74 | % | | | (1.03 | )% | | | (0.62 | )% | | | 148.32 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.74 | ) | | | 13.13 | | | | (26.09 | )% | | | 27,148 | | | | 2.31 | % | | | 2.31 | %(c) | | | (0.01 | )% | | | (0.01 | )% | | | 174.59 | % |
| | (0.43 | ) | | | 18.54 | | | | 14.05 | % | | | 43,986 | | | | 2.33 | % | | | 2.32 | %(c) | | | (0.48 | )% | | | (0.47 | )% | | | 105.00 | % |
| | - | | | | 16.67 | | | | 6.65 | % | | | 26,763 | | | | 2.30 | %(f) | | | 2.30 | %(c) | | | (0.78 | )%(f) | | | (0.78 | )% | | | 94.62 | % |
| | (0.50 | ) | | | 15.63 | | | | 17.68 | % | | | 13,925 | | | | 2.37 | % | | | 2.32 | % | | | (1.35 | )% | | | (1.31 | )% | | | 112.06 | % |
| | (0.16 | ) | | | 13.73 | | | | 16.61 | % | | | 3,716 | | | | 3.70 | % | | | 2.49 | % | | | (2.57 | )% | | | (1.35 | )% | | | 148.32 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.74 | ) | | | 13.81 | | | | (25.45 | )% | | | 540 | | | | 2.37 | % | | | 1.44 | %(c) | | | 0.16 | % | | | 1.09 | % | | | 174.59 | % |
| | (0.50 | ) | | | 19.30 | | | | 14.81 | % | | | 447 | | | | 1.25 | % | | | 1.25 | %(c) | | | 0.55 | % | | | 0.55 | % | | | 105.00 | % |
| | - | | | | 17.29 | | | | 7.73 | % | | | 3,306 | | | | 1.17 | %(f) | | | 1.17 | %(c) | | | 0.61 | %(f) | | | 0.61 | % | | | 94.62 | % |
| | (0.50 | ) | | | 16.05 | | | | 18.96 | % | | | 140 | | | | 3.07 | % | | | 1.33 | % | | | (2.07 | )% | | | (0.33 | )% | | | 112.06 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 13.94 | | | | (0.36 | )% | | | 32 | | | | 1.98 | % | | | 1.76 | % | | | (0.50 | )% | | | (0.28 | )% | | | 148.32 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.76 | ) | | | 13.69 | | | | (25.61 | )% | | | 4,859 | | | | 1.72 | % | | | 1.72 | %(c) | | | 0.63 | % | | | 0.63 | % | | | 174.59 | % |
| | (0.49 | ) | | | 19.20 | | | | 14.94 | % | | | 6,481 | | | | 1.68 | % | | | 1.67 | %(c) | | | 0.27 | % | | | 0.26 | % | | | 105.00 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 17.18 | | | | (1.94 | )% | | | 821 | | | | 2.51 | % | | | 1.54 | %(c) | | | (0.01 | )% | | | 0.96 | % | | | 94.62 | % |
Notes to Financial Statements
September 30, 2008
1. Organization
The ICON Bond Fund (“Bond Fund”), ICON Core Equity Fund (“Core Equity Fund”), ICON Equity Income Fund (“Equity Income Fund”), ICON Income Opportunity Fund (“Income Opportunity Fund”) and ICON Long/Short Fund (“Long/Short Fund”) are series funds (individually a “Fund” and collectively, the “Funds”). The Funds are part of the ICON Funds (the “Trust”), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as an open-end investment management company. Each Fund offers four classes of shares, Class I, Class C, Class Z and Class A with the exception of Bond Fund, which offers three classes of shares, Class I, Class C and Class Z. All classes have equal rights as to earnings, assets and voting privileges except that each Class may bear different distribution fees, registration costs and shareholder servicing costs and each Class has exclusive voting rights with respect to its distribution plan. There are currently 12 other active funds within the Trust. Those Funds are covered by separate prospectuses and shareholder reports.
Each Fund is authorized to issue an unlimited number of no par shares. The investment objective of the Bond Fund is maximum total return. The investment objective of the Core Equity Fund is long-term capital appreciation with a secondary objective of capital preservation. The investment objective of the Equity Income Fund is modest capital appreciation and income. The investment objective of the Income Opportunity Fund is modest capital appreciation and to maximize realized gains. The investment objective of the Long/Short Fund is capital appreciation.
The Funds may have elements of risk, including the risk of loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment. Investing in fixed income securities such as bonds involves interest rate risk. When interest rates rise, the value of fixed income securities generally decreases. Additionally, the Bond Fund may invest in medium-and lower-quality debt securities. High-yield bonds involve a greater risk of default and price volatility than U.S. government and other high-quality bonds. The Income Opportunity Fund invests in call options; call options involve certain risks, such as limited gains and lack of liquidity of the underlying securities, and are not suitable for all investors. The Long/Short Fund engages in short selling; there are risks associated with selling short, including the risk that
66 Notes to Financial Statements
the Long/Short Fund may have to cover its short position at a higher price than the short sale, resulting in a loss. The Long/Short Fund’s loss on a short sale is potentially unlimited as a loss occurs when the value of a security sold short increases. There are also risks associated with small and mid-cap investing, including limited product lines, less liquidity and small market share. Investments in foreign securities and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar-denominated transactions as a result of, among other factors, the possibility of lower government supervision and regulation of foreign securities markets and the possibility of political or economic instability. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, do not exist in foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers.
In the normal course of business, the Funds may enter into various agreements that provide for general indemnifications. Each Fund’s maximum exposure under these arrangements is unknown as any potential exposure involving future claims that may be made against each Fund is unknown. However, based on experience, the Funds expect the risk of loss to be minimal.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results may differ from these estimates.
Investment Valuation
The Funds’ securities and other assets, excluding options on securities indexes, are valued as of the closing price at the close of regular trading on the New York Stock Exchange (the “NYSE”) (normally 4 p.m. Eastern time)
Notes to Financial Statements 67
Notes to Financial Statements (continued)
each day the NYSE is open, except that securities traded primarily on the NASDAQ Stock Market (“NASDAQ”) are normally valued by the Funds at the NASDAQ Official Closing Price provided by NASDAQ each business day. Options on securities indexes are generally valued at 4:15 p.m. Eastern time each day the NYSE is open.
The Funds use pricing services to obtain the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service’s valuation quote is considered inaccurate or does not reflect the market value of the security, prices may be obtained through market quotations from independent broker/dealers. If market quotations from these sources are not readily available, the Funds’ securities or other assets are valued at fair value as determined in good faith by the Funds’ Board of Trustees (“Board”) or pursuant to procedures approved by the Board.
Lacking any sales that day, a security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes obtained from dealers making a market for the security. Options are valued at their closing mid-price on the market with the most volume. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than 60 days are valued in accordance with the evaluated bid price supplied by the pricing service. The evaluated bid price supplied by the pricing service is a matrix system which considers such factors as security prices, yields, maturities and ratings. Short-term securities with remaining maturities of 60 days or less are generally valued at amortized cost or original cost plus accrued interest, which approximates market value. Currency rates as of the close of the NYSE are used to convert foreign security values into U.S. dollars.
The Funds’ securities traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Board determines that use of another valuation methodology is appropriate. The purposes of daily fair valuation are to avoid stale prices and to take into account, among other things, any significant events occurring after the close of foreign markets. The pricing service uses statistical analyses and quantitative models to adjust local market prices using factors such as subsequent movements and changes in the prices of indexes, securities and exchange rates in other markets to determine fair value as of the time a Fund calculates its net asset value (“NAV”). The valuation assigned to fair-value securities for purposes of calculating a Fund’s NAV may differ from the security’s most recent closing market price and from the prices used by other mutual funds to calculate their NAVs.
68 Notes to Financial Statements
New Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”). This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS 157 applies to fair value measurements already required or permitted by existing standards. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current generally accepted accounting principles from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management does not believe the adoption of SFAS 157 will impact the financial statement amounts; however, additional disclosures will be required about the inputs used to develop the measurements and the effect of certain measurements on changes in net assets for the period. Management intends to adopt SFAS 157 during the fiscal year ending September 30, 2009, as required.
In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about the Funds’ derivative and hedging activities, including how such activities are accounted for and their effect on the Funds’ financial position, performance and cash flows. Management intends to adopt SFAS 161 during the fiscal year ending September 30, 2009.
Repurchase Agreements
Repurchase agreements, if held by the Funds, are fully collateralized by U.S. Government securities and such collateral is in the possession of the Funds’ custodian. The collateral is evaluated daily to ensure its market value exceeds the current market value of the repurchase agreements including accrued interest. In the event of default on the obligation to purchase, the Funds have the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. No repurchase agreements were purchased or sold by the Funds during the year ended September 30, 2008.
Notes to Financial Statements 69
Notes to Financial Statements (continued)
Foreign Currency Translation
The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated daily into U.S. dollars at the prevailing rates of exchange. Income and expenses are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Purchases and sales of securities are translated into U.S. dollars at the contractual currency exchange rates established at the time of each trade.
The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Net unrealized appreciation or depreciation on investments and foreign currency translations arise from changes in the value of assets and liabilities, resulting from changes in the exchange rates and changes in market prices of securities held.
Forward Foreign Currency Contracts
The Funds may enter into short-term forward foreign currency contracts. A forward foreign currency contract is an agreement between contracting parties to exchange an amount of currency at some future time at an agreed upon rate.
These contracts are marked-to-market daily. The related appreciation or depreciation of the contract is presented on the Statement of Assets and Liabilities. Net realized gains and losses on foreign currency transactions represent disposition of foreign currencies, and the difference between the amount recorded at the time of the transaction and the U.S. dollar amount actually received. Any realized gain or loss incurred by the Funds due to foreign currency translation is included on the Statement of Operations. The Funds did not enter into any forward foreign currency contracts during the year ended September 30, 2008.
Futures Contracts
The Funds may invest in financial futures contracts for the purpose of hedging their existing securities or securities they intend to purchase against fluctuations in fair value caused by changes in prevailing markets. Upon entering into a financial futures contract, the Fund is required to pledge to a broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent
70 Notes to Financial Statements
payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the fair value of the underlying security. The Fund recognizes a gain or loss equal to the daily variation margin. Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts and the underlying hedged assets. The Funds held no financial futures contracts during the year ended September 30, 2008.
Options Transactions
The Income Opportunity Fund writes (sells) call options as part of its normal investment activities. Each Fund may write (sell) put and call options on individual securities and on securities indexes.
When a Fund writes a put or call option, an amount equal to the premium received is included on the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. Such liability is subject to off balance sheet risks to the extent of any future increases in market value of the written options. If an option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option on an individual security is exercised, a gain or loss is realized for the sale of the underlying security, and the proceeds from the sale are increased by the premium originally received. If a written call option on a securities index is exercised, a gain or loss is realized as determined by the premium originally received, the exercise price and the market value of the index. If a written put option on an individual security is exercised, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, a Fund bears the market risk of an unfavorable change in the price of the individual security or securities index underlying the written option.
Each Fund may also purchase put and call options. When a Fund purchases a put or call option, an amount equal to the premium paid is included on the Fund’s Statement of Assets and Liabilities as an investment, and is subsequently marked-to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If the fund exercises a call option on an individual security, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises
Notes to Financial Statements 71
Notes to Financial Statements (continued)
a put option on an individual security, a gain or loss is realized from the sale of the underlying security, and the proceeds from such a sale are decreased by the premium originally paid. If the Fund exercises a put option on a security index, a gain or loss is realized as determined by the premium originally paid, the exercise price and the market value of the index. Written and purchased options are non-income producing securities.
The Income Opportunity Fund’s written options are collateralized by cash and/or securities held with the Fund’s prime broker and in a segregated account at the Fund’s custodian. Such collateral for the Fund is restricted from use. The cash collateral or borrowings from the prime broker are included on the Statement of Assets and Liabilities. The securities pledged as collateral are included on the Schedule of Investments.
As of September 30, 2008, the Equity Income Fund and the Income Opportunity Fund engaged in options transactions which are included on each Fund’s Schedule of Investments.
Short Sales
The Long/Short Fund may engage in short sales (selling securities it does not own) as part of its normal investment activities. These short sales are collateralized by cash and/or securities held with the Fund’s prime broker and in a segregated account at the Fund’s custodian. The collateral required is determined daily by reference to the market value of the short positions. Such collateral for the Fund is restricted from use. The cash collateral that is restricted from use is included on the Statement of Assets and Liabilities as “Deposits for short sales.” The securities pledged as collateral that are restricted from use are included on the Schedule of Investments. Dividends received on short sales are treated as an expense on the Statement of Operations. Liabilities for securities sold short are reported at market value on the Statement of Assets and Liabilities. Such liabilities are subject to off-balance sheet risk to the extent of any future increases in market value of the securities sold short. The ultimate liability for securities sold short may exceed the liabilities recorded on the Statement of Assets and Liabilities. Liabilities for securities sold short are closed out by purchasing the applicable securities for delivery to the Fund’s prime broker. As of September 30, 2008, the Long/Short Fund engaged in short selling. The short positions are included in the Schedule of Securities Sold Short on the Schedule of Investments.
72 Notes to Financial Statements
Securities Lending
Under procedures adopted by the Board, the Funds may lend securities to non-affiliated qualified parties. The Funds seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security. The Funds do not have the right to vote on securities while they are on loan; however, the Funds may attempt to call back the loan and vote the proxy.
All loans will be continuously secured by collateral which consists of cash. Brown Brothers Harriman (the “Lending Agent”) may invest the cash collateral in the Securities Lending Investment Fund of Brown Brothers Harriman Trust, which complies with Rule 2a-7 of the 1940 Act relating to money market funds.
The cash collateral invested by the Lending Agent is disclosed on the Schedule of Investments. The lending fees received and the Funds’ portion of the interest income earned on cash collateral are included on the Statement of Operations, if applicable.
As of September 30, 2008, the following Funds had securities with the following values on loans:
| | | | | | | | | |
| | | Value of
| | | Value of
| |
| Fund | | Loaned Securities | | | Collateral | |
| | |
| |
| ICON Bond Fund | | $ | 725,305 | | | $ | 767,228 | |
| ICON Core Equity Fund | | | 39,582,180 | | | | 39,009,165 | |
| ICON Income Opportunity Fund | | | 18,389,492 | | | | 18,003,885 | |
| ICON Long/Short Fund | | | 18,414,932 | | | | 18,113,649 | |
The value of the collateral above could include collateral held for securities that were sold on or before September 30, 2008.
Income Taxes
The Funds intend to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code and, accordingly, the Funds will generally not be subject to federal and state income taxes, or federal excise taxes to the extent that they intend to make sufficient distributions of net investment income and net realized capital gains.
Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders.
Notes to Financial Statements 73
Notes to Financial Statements (continued)
Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. The Bond Fund distributes net investment income, if any, to shareholders monthly. The Equity Income Fund and the Income Opportunity Fund distribute net investment income, if any, to shareholders quarterly. Other Funds distribute income, if any, annually. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryovers. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America.
The Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Funds did not record any liabilities for unrecognized tax benefits in connection with the adoption of FIN 48. At September 30, 2008, the Funds have recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.
The Funds file U.S. tax returns. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years from 2005-2007, no examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Investment Income
Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Certain dividends from foreign securities are recorded as soon as the Funds are informed of the dividend if such information is obtained subsequent to the ex-dividend date. Discounts and premiums on securities purchased are amortized over the life of the respective securities.
74 Notes to Financial Statements
Investment Transactions
Security transactions are accounted for no later than one business day after the trade date. However, for financial reporting purposes, security transactions are accounted for on the trade date. Gains and losses on securities sold are determined on the basis of identified cost.
Allocation of Income and Expenses
Each class of a Fund’s shares bears expenses incurred specifically on its behalf and, in addition, each class bears a portion of general expenses, based upon relative net assets of each class. Expenses which cannot be directly attributed to a specific Fund in the Trust are apportioned between all Funds in the Trust based upon relative net assets. In calculating the net asset value per share of each class, investment income, realized and unrealized gains and losses and expenses other than class-specific expenses are allocated daily to each class of shares based upon the proportion of net assets.
3. Fees and Other Transactions with Affiliates
Investment Advisory Fees
ICON Advisers, Inc. (“ICON”) serves as investment adviser to the Funds and is responsible for managing the Funds’ portfolios of securities. ICON receives a monthly management fee that is computed daily at an annual rate of 0.60% of average daily nets assets of the Bond Fund, 0.75% of average daily net assets of the Core Equity, Equity Income and Income Opportunity Funds, and 0.85% of average daily net assets of the Long/Short Fund.
ICON has contractually agreed to limit its investment advisory fee and/or reimburse certain of the Funds’ operating expenses (exclusive of brokerage, interest, taxes, and extraordinary expenses) to the extent necessary to ensure that the Funds’ operating expenses do not exceed the following amounts:
| | | | | | | | | | | | | | | | | |
| Fund | | Class I | | | Class C | | | Class Z | | | Class A | |
| | |
| ICON Bond Fund | | | 1.00% | | | | 1.60% | | | | 0.75% | | | | N/A | |
| ICON Equity Income Fund | | | 1.45% | | | | 2.20% | | | | 1.20% | | | | 1.45 | % |
| ICON Income Opportunity Fund | | | 1.45% | | | | 2.20% | | | | 1.20% | | | | 1.45 | % |
| ICON Long/Short Fund | | | 1.55% | | | | 2.30% | | | | 1.25% | | | | 1.55 | % |
The Funds’ expense limitation will continue in effect until at least January 31, 2019.
Notes to Financial Statements 75
Notes to Financial Statements (continued)
To the extent ICON reimburses or absorbs fees and expenses, it may seek payment of such amounts for up to three years after the expenses were reimbursed or absorbed. A Fund will make no such payment, however, if the total Fund operating expenses exceed the expense limits in effect at the time the expenses were reimbursed or at the time these payments are proposed.
As of September 30, 2008 the following amounts were still available for recoupment by ICON based upon their potential expiration dates:
| | | | | | | | | | | | | |
| Fund | | 2009 | | | 2010 | | | 2011 | |
| | |
| ICON Bond Fund | | $ | 102,270 | | | $ | 101,907 | | | $ | 110,767 | |
| ICON Equity Income Fund | | | 6,068 | | | | 13,070 | | | | 25,398 | |
| ICON Income Opportunity Fund | | | 14,230 | | | | 20,262 | | | | 27,551 | |
| ICON Long/Short Fund | | | - | | | | - | | | | 4,673 | |
Accounting, Custody and Transfer Agent Fees
Citi Fund Services Ohio, Inc. (“Citi”) is the fund accounting agent for the Funds. For its services, the Trust pays Citi 0.03% on the first $1.75 billion of net assets, 0.0175% on net assets over $1.75 billion and up to $5 billion, and 0.01% on net assets in excess of $5 billion.
Brown Brothers Harriman (“BBH”) is the custodian of the Trust’s investments. For domestic custody services, the Trust pays BBH 0.0065% on the first $50 million of average net assets and 0.0050% on domestic assets above $50 million, plus certain transaction charges. For foreign custody services, the Trust pays BBH 0.03% on foreign assets plus certain transaction charges.
Boston Financial Data Services, Inc. (“BFDS”) is the Trust’s transfer agent. For these services, the Trust pays an account fee of $13.25 per open account, $7.00 per networked account, $1.80 per closed account, plus certain other transaction and cusip charges.
Transfer agent earnings credits are credits received for interest which results from overnight balances used by the transfer agent, BFDS, for clearing shareholder transactions. During the year ended September 30, 2008, the Funds received transfer agent earnings credits which are included on the Statement of Operations.
Administrative Services
The Trust has entered into an administrative services agreement with ICON pursuant to which ICON oversees the administration of the Trust’s business
76 Notes to Financial Statements
and affairs. This agreement provides for an annual fee of 0.05% on the Trust’s first $1.5 billion of average daily net assets, 0.045% on the next $1.5 billion of average daily net assets, 0.040% on the next $2 billion of average daily net assets and 0.030% on average daily net assets over $5 billion. During the year ended September 30, 2008, the Funds’ payment for administrative services to ICON is included on the Statement of Operations. The administrative services agreement provides that ICON will not be liable for any error of judgment, mistake of law, or any loss suffered by the Trust in connection with matters to which the administrative services agreement relates, except for a loss resulting from willful misfeasance, bad faith or negligence by ICON in the performance of its duties.
ICON has entered into a sub-administration agreement with Citi pursuant to which Citi assists ICON with the administration and business affairs of the Trust. For its services, ICON pays Citi at an annual rate of 0.025% on the first $1.75 billion of Trust assets and 0.015% on assets above $1.75 billion.
Distribution Fees
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act (“12b-1 Plan”) under which the Funds are authorized to compensate the Funds’ distributor, ICON Distributors, Inc. (“IDI”) (an affiliate of the adviser) for the sale and distribution of shares. Under the 12b-1 Plan, Bond Fund Class C shareholders pay an annual 12b-1 and service fee of 0.85% of average daily net assets and Class I shareholders pay an annual 12b-1 fee of 0.25% of average daily net assets. The shareholders of the other Funds pay an annual 12b-1 and service fee of 1.00% of average daily net assets for Class C shares and an annual 12b-1 and service fee of 0.25% of average daily net assets for Class I shares and Class A shares. The total amount paid under the 12b-1 plans by the Funds is shown on the Statement of Operations.
Related Parties
Certain Officers and Directors of ICON are also Officers and Trustees of the Funds; however, such Officers and Trustees (with the exception of the Chief Compliance Officer, “CCO”) receive no compensation from the Funds. The CCO’s salary is paid 90% by the Funds and 10% by the Adviser. For the year ended September 30, 2008, the total related amounts paid by the Trust under this arrangement are included in Other Expenses on the Statements of Operations. Subsequent to September 30, 2008, the CCO’s salary will be paid 100% by the Funds.
Notes to Financial Statements 77
Notes to Financial Statements (continued)
Some of the 12b-1 amounts received by IDI, discussed in the Distribution Fees section above, have been used to offset various shareholder servicing costs incurred by ICON. For the year ended September 30, 2008, this amount was $175,621.
4. Line of Credit
The Funds have entered into Lines of Credit agreements with BBH and the prime broker. At BBH, the maximum borrowing is limited to the lesser of $50 million or 25% of the net asset value in the Fund subject to a maximum borrowing limit by the Trust of $150 million. Effective January 30, 2008, interest on domestic borrowings with BBH is charged at LIBOR plus 1.50%, which was 5.43% at September 30, 2008. Prior to January 30, 2008, interest on domestic borrowings was charged at LIBOR plus 2.00%. Interest on domestic borrowings with the prime broker is charged at the Fed Funds rate plus 50 basis points, which was 2.50% at September 30, 2008. The average interest rate charged for the year ended September 30, 2008, was 4.03%.
| | | | | |
| | | Average Borrowing
| |
| Fund | | (10/1/07-9/30/08) | |
| | |
| ICON Bond Fund | | $ | 1,065,826 | |
| ICON Core Equity Fund | | | 563,604 | |
| ICON Equity Income Fund | | | 224,327 | |
| ICON Income Opportunity Fund | | | 743,688 | |
| ICON Long/Short Fund** | | | 992,214 | |
**Fund had outstanding borrowings as of September 30, 2008.
Average borrowing is calculated using only the days there was a borrowing. It is not an annualized number.
5. Options Contracts Written
The number of option contracts written and the premiums received by the Income Opportunity Fund during the year ended September 30, 2008, were as follows:
| | | | | | | | | |
| | | Number of
| | | Premiums
| |
| | | Contracts | | | Received | |
| | |
| Options outstanding, beginning of year | | | 527 | | | $ | 2,000,804 | |
| Options written during year | | | 28,189 | | | | 109,859,216 | |
| Options expired during year | | | - | | | | - | |
| Options closed during year | | | (27,956 | ) | | | (107,302,566 | ) |
| Options exercised during year | | | - | | | | - | |
| | | | | | | | | |
| Options outstanding, end of year | | | 760 | | | $ | 4,557,454 | |
| | | | | | | | | |
78 Notes to Financial Statements
6. Federal Income Tax
Income and capital gain distributions are determined in accordance with income tax regulations that may differ from accounting principles that are generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferrals of wash losses, foreign currency transactions, net investment losses, and capital loss carryforwards.
The tax components of capital shown in the following tables represent losses or deductions the Funds may be able to offset against income and gains recognized in future years and post October loss deferrals. The accumulated losses noted represent net capital loss carryforwards as of September 30, 2008 that may be available to offset future realized capital gains and thereby reduce future taxable income distributions. During the year ended September 30, 2008 the ICON Bond Fund utilized capital loss carryforwards in the amount of $1,011,657.
For the year ended September 30, 2008 the following Funds had capital loss carryforwards:
| | | | | | | | | |
| Fund | | Amounts | | | Expires | |
| | |
| ICON Bond Fund | | $ | 442,729 | | | | 2015 | |
| ICON Core Equity Fund | | | 1,364,078 | | | | 2016 | |
| ICON Equity Income Fund | | | 77,639 | | | | 2016 | |
| ICON Income Opportunity Fund | | | 260,291 | | | | 2016 | |
For the year ended September 30, 2008 the Funds will elect to defer post October losses:
| | | | | |
| | | Post
| |
| | | October
| |
| Fund | | Losses | |
| | |
| ICON Bond Fund | | $ | 500,650 | |
| ICON Core Equity Fund | | | 12,826,769 | |
| ICON Equity Income Fund | | | 8,840,408 | |
| ICON Income Opportunity Fund | | | 5,979,260 | |
| ICON Long/Short Fund | | | 31,450,976 | |
Notes to Financial Statements 79
Notes to Financial Statements (continued)
The tax characteristics of dividends and distributions paid to shareholders during the fiscal year ended September 30, 2008, were as follows:
| | | | | | | | | | | | | | | | | |
| | | Distributions paid from | | | | | | Total
| |
| | | Ordinary
| | | Net Long-
| | | Total Taxable
| | | Distributions
| |
| Fund | | Income | | | Term Gains | | | Distributions | | | Paid | |
| | |
| ICON Bond Fund | | $ | 5,417,996 | | | $ | - | | | $ | 5,417,996 | | | $ | 5,417,996 | |
| ICON Core Equity Fund | | | 8,394,127 | | | | 6,683,706 | | | | 15,077,833 | | | | 15,077,833 | |
| ICON Equity Income Fund | | | 8,635,510 | | | | 6,462,123 | | | | 15,097,633 | | | | 15,097,633 | |
| ICON Income Opportunity Fund | | | 3,751,879 | | | | - | | | | 3,751,879 | | | | 3,751,879 | |
| ICON Long/Short Fund | | | 5,569,851 | | | | 6,340,691 | | | | 11,910,542 | | | | 11,910,542 | |
The tax characteristics of dividends and distributions paid to shareholders during the fiscal year ended September 30, 2007, were as follows:
| | | | | | | | | | | | | | | | | |
| | | Distributions paid from | | | | | | Total
| |
| | | Ordinary
| | | Net Long-
| | | Total Taxable
| | | Distributions
| |
| Fund | | Income | | | Term Gains | | | Distributions | | | Paid | |
| | |
| ICON Bond Fund | | $ | 4,558,618 | | | $ | - | | | $ | 4,558,618 | | | $ | 4,558,618 | |
| ICON Core Equity Fund | | | 282,034 | | | | 14,661,168 | | | | 14,943,202 | | | | 14,943,202 | |
| ICON Equity Income Fund | | | 3,096,011 | | | | 6,054,545 | | | | 9,150,556 | | | | 9,150,556 | |
| ICON Income Opportunity Fund | | | 10,910,557 | | | | - | | | | 10,910,557 | | | | 10,910,557 | |
| ICON Long/Short Fund | | | 414,269 | | | | 5,441,646 | | | | 5,855,915 | | | | 5,855,915 | |
As of September 30, 2008, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Total
| |
| | | Undistributed
| | | Undistributed
| | | | | | | | | Accumulated
| | | Unrealized
| | | Accumulated
| |
| | | Ordinary
| | | Net Long-
| | | Accumulated
| | | Distributions
| | | Capital and
| | | Appreciation
| | | Earnings
| |
| Fund | | Income | | | Term Gains | | | Earnings | | | Payable* | | | Other Losses | | | (Depreciation)** | | | (Deficit) | |
| | |
| ICON Bond Fund | | $ | - | | | $ | - | | | $ | - | | | $ | (355,126 | ) | | $ | (943,379 | ) | | $ | (6,353,361 | ) | | $ | (7,651,866 | ) |
| ICON Core Equity Fund | | | - | | | | - | | | | - | | | | - | | | | (14,190,847 | ) | | | (5,432,953 | ) | | | (19,623,800 | ) |
| ICON Equity Income Fund | | | 948,243 | | | | - | | | | 948,243 | | | | (991,249 | ) | | | (8,918,047 | ) | | | (1,038,361 | ) | | | (9,999,414 | ) |
| ICON Income Opportunity Fund | | | - | | | | - | | | | - | | | | (278,360 | ) | | | (6,239,551 | ) | | | (4,149,788 | ) | | | (10,667,699 | ) |
| ICON Long/Short Fund | | | 239,054 | | | | - | | | | 239,054 | | | | - | | | | (31,450,976 | ) | | | (7,031,013 | ) | | | (38,242,935 | ) |
| | |
| * | | Differences between the financial statement distribution payable and the tax basis distribution payable are a result of accrual based accounting and cash basis accounting used for federal tax reporting purposes. |
| |
| ** | | Differences between the book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to tax deferral of losses on wash sales and recognition of tax unrealized appreciation/ (depreciation) of passive foreign investment companies. |
80 Notes to Financial Statements
As of September 30, 2008, book cost for financial reporting purposes is substantially the same for federal income tax purposes and differs from fair value by net unrealized appreciation/(depreciation) of securities as follows:
| | | | | | | | | | | | | | | | | |
| | | | | | Unrealized
| | | Unrealized
| | | Net Appreciation/
| |
| Fund | | Cost | | | Appreciation | | | (Depreciation) | | | (Depreciation) | |
| | |
| ICON Bond Fund | | $ | 106,272,542 | | | $ | 115,233 | | | $ | (6,468,594 | ) | | $ | (6,353,361 | ) |
| ICON Core Equity Fund | | | 181,125,853 | | | | 6,685,754 | | | | (12,118,707 | ) | | | (5,432,953 | ) |
| ICON Equity Income Fund | | | 102,100,609 | | | | 4,843,031 | | | | (5,881,392 | ) | | | (1,038,361 | ) |
| ICON Income Opportunity Fund | | | 110,886,043 | | | | 3,811,100 | | | | (7,916,542 | ) | | | (4,105,442 | ) |
| ICON Long/Short Fund | | | 152,473,908 | | | | 5,903,082 | | | | (13,992,312 | ) | | | (8,089,230 | ) |
The Equity Income Fund incurred $235,145 in legal expenses as a result of consultations on a tax matter that will be fully reimbursed by Citi, the sub-administrator. The remaining legal expenses payable and offsetting indemnification receivable have been included on the Statement of Assets and Liabilities. The related legal expenses and the offsetting reimbursement have been included on the Statement of Operations.
Notes to Financial Statements 81
Report of Independent Registered Public
Accounting Firm
To the Board of Trustees and Shareholders of the ICON Diversified Funds:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, short securities and written call options, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of ICON Bond Fund, ICON Core Equity Fund, ICON Equity Income Fund, ICON Income Opportunity Fund and ICON Long/Short Fund (five of the portfolios constituting ICON Funds, hereafter referred to as the “Funds”) at September 30, 2008, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
Denver, Colorado
November 19, 2008
82 Report of Accounting Firm
Six Month Hypothetical Expense Example
September 30, 2008 (unaudited)
Example
As a shareholder of a Fund you may pay two types of fees: transaction fees and fund-related fees. Certain funds charge transaction fees, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees. Funds also incur various ongoing expenses, including management fees, distribution and/or service fees, and other fund expenses, which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars) of investing in the various ICON Funds and to compare these costs with the ongoing costs of investing in other mutual funds. This Example is based on an investment of $1,000 invested at the beginning of the period and held for the six-month period (4/1/08-9/30/08).
Actual Expenses
The first set of lines in the table for each Fund provides information about actual account values and actual expenses. The Example includes, but is not limited to, management fees, 12b-1 fees, fund accounting, custody and transfer agent fees. However, the Example does not include client specific fees, such as the $10 fee charged to IRA accounts, or the $15 fee charged for wire redemptions. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for each Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second set of lines in the table for each Fund provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees that may be charged by other funds. Therefore, this information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | | Ending
| | | Expenses Paid
| | | Annualized
| |
| | | Account Value
| | | Account Value
| | | During Period
| | | Expense Ratio
| |
| | | 4/1/08 | | | 9/30/08 | | | 4/1/08-9/30/08* | | | 4/1/08-9/30/08 | |
| | |
ICON Bond Fund | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | |
| Actual Expenses | | $ | 1,000.00 | | | $ | 950.40 | | | $ | 4.88 | | | | 1.00% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,020.00 | | | | 5.05 | | | | | |
Class C | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 947.70 | | | | 7.79 | | | | 1.60% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,017.00 | | | | 8.07 | | | | | |
Class Z | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 952.10 | | | | 3.61 | | | | 0.74% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,021.30 | | | | 3.74 | | | | | |
ICON Core Equity Fund | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 852.80 | | | | 5.70 | | | | 1.23% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.85 | | | | 6.21 | | | | | |
Class C | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 849.70 | | | | 9.20 | | | | 1.99% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,015.05 | | | | 10.02 | | | | | |
Class Z | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 854.10 | | | | 4.13 | | | | 0.89% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,020.55 | | | | 4.50 | | | | | |
Class A | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 849.10 | | | | 8.18 | | | | 1.77% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,016.15 | | | | 8.92 | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | | Ending
| | | Expenses Paid
| | | Annualized
| |
| | | Account Value
| | | Account Value
| | | During Period
| | | Expense Ratio
| |
| | | 4/1/08 | | | 9/30/08 | | | 4/1/08-9/30/08* | | | 4/1/08-9/30/08 | |
| | |
ICON Equity Income Fund | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | |
| Actual Expenses | | $ | 1,000.00 | | | $ | 929.40 | | | $ | 5.74 | | | | 1.19% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,019.05 | | | | 6.01 | | | | | |
Class C | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 924.40 | | | | 10.58 | | | | 2.20% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,014.00 | | | | 11.08 | | | | | |
Class Z | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 928.70 | | | | 5.79 | | | | 1.20% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,019.00 | | | | 6.06 | | | | | |
Class A | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 927.80 | | | | 6.84 | | | | 1.42% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,017.90 | | | | 7.16 | | | | | |
ICON Income Opportunity Fund | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 942.70 | | | | 5.68 | | | | 1.17% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,019.15 | | | | 5.91 | | | | | |
Class C | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 937.90 | | | | 10.71 | | | | 2.21% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,013.95 | | | | 11.13 | | | | | |
Class Z | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 941.90 | | | | 5.87 | | | | 1.21% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.95 | | | | 6.11 | | | | | |
Class A | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 941.30 | | | | 7.04 | | | | 1.45% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,017.75 | | | | 7.31 | | | | | |
ICON Long/Short Fund | | | | | | | | | | | | | | | | |
Class I | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 863.20 | | | | 6.94 | | | | 1.49% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,017.55 | | | | 7.52 | | | | | |
Class C | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 858.70 | | | | 10.73 | | | | 2.31% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,013.45 | | | | 11.63 | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | | Ending
| | | Expenses Paid
| | | Annualized
| |
| | | Account Value
| | | Account Value
| | | During Period
| | | Expense Ratio
| |
| | | 4/1/08 | | | 9/30/08 | | | 4/1/08-9/30/08* | | | 4/1/08-9/30/08 | |
| | |
Class Z | | | | | | | | | | | | | | | | |
| Actual Expenses | | $ | 1,000.00 | | | $ | 863.10 | | | $ | 6.80 | | | | 1.46% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,017.70 | | | | 7.36 | | | | | |
Class A | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 862.10 | | | | 8.05 | | | | 1.73% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,016.35 | | | | 8.72 | | | | | |
| | |
| * | | Expenses are equal to the Fund’s six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. |
Total returns exclude applicable sales charges. If sales charges were included (maximum 5.75%), returns would be lower.
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees (“Board”) consists of five Trustees who oversee the 17 ICON Funds (the “Funds”). The Board is responsible for general oversight of the Funds’ business and for assuring that the Funds are managed in the best interest of the Funds’ shareholders. The Trustees, and their ages, and principal occupations are set forth below. The address of the Trustees is 5299 DTC Blvd., Suite 1200, Greenwood Village, CO 80111. Trustees have no official term of office and generally serve until they resign or are not re-elected.
Interested Trustee
Craig T. Callahan, 57. Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as President (1998 to present) and served as the Chief Investment Officer (1991 to 2005) of ICON Advisers, Inc. (“ICON Advisers”), the Funds’ Investment Adviser. Dr. Callahan is also President (1998 to 2005); Director (1991 to present); and was previously Vice President (1991 to 1998) of ICON Distributors, Inc. (“IDI”), the Funds’ Distributor, and is President and Director of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan also serves as the President (1998 to present) of ICON Management & Research Corporation (“IM&R”), the parent company of ICON Advisers and IDI.
Independent Trustees
Glen F. Bergert, 58. Mr. Bergert has been a Trustee of the Funds since 1999. Mr. Bergert is President of Venture Capital Management LLC (1997 to present); General Partner of SOGNO Partners LP, a venture capital company (2001 to present); General Partner of Bergert Properties, LLP, a real estate holding company (1997 to present); and General Partner of Pyramid Real Estate Partnership, a real estate development company (1998 to present); General Partner of Chamois Partners, LP, a venture capital company (2004 to present); and was previously a General Partner with KPMG Peat Marwick, LLP (1979 to 1997). Mr. Bergert is also a Director of Herre Bros, Inc., a contracting company (1998 to present); Delta Dental of Pennsylvania, an insurance company (1998 to 2002 and 2003 to present); Delta Dental of California, an insurance company (2006 to present); and Delta Reinsurance Corporation (2000 to 2002 and 2003 to present).
John C. Pomeroy, Jr., 61. Mr. Pomeroy has been a Trustee of the Funds since November 2002. Mr. Pomeroy is Chief Investment Officer and Director of Investments, Pennsylvania State University (2001 to present) and was Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).
Gregory Kellam Scott, 60. Mr. Scott has been a Trustee of the Funds since November 2002. Mr. Scott currently is employed as Assistant to the President for Diversity and Community Relations of Ivy Tech Community College (April 2008 to present). Prior to his current employment, he served as Executive Director of the Indiana Civil Rights Commission (2005 to 2008) and is a member of the U.S. State Department’s Advisory Committee on the African Judiciary (2006 to present). Mr. Scott was Senior Vice President - Law, General Counsel and Secretary of GenCorp, Inc., a multinational technology-based manufacturing company (2002 to 2004); Vice President and General Counsel of Kaiser-Hill Company, LLC, a nuclear clean-up and environmental remediation company (2000 to 2002). He served as a Justice on the Colorado Supreme Court (1993 to 2000). From 1980 until 1993, he was a member of the faculty of the University Of Denver College Of Law.
R. Michael Sentel, 60. Mr. Sentel has been a Trustee of the Funds since their inception. Mr. Sentel is a Senior Attorney with the U.S. Department of Education (1996 to present). Mr. Sentel also provides legal representation as a sole practitioner with an emphasis on corporate and transactional law. He served as general counsel to numerous public companies and served on the board of directors of one of these clients. Mr. Sentel began his legal career with the U.S. Securities and Exchange Commission’s Division of Enforcement and served as a Branch Chief (1980 to 1981). Later he served as the Section Chief for the Professional Liability Section of the Federal Deposit Insurance Corp. with responsibility for the Rocky Mountain Region (1991 to 1994).
The Officers of the Funds are:
Craig T. Callahan, 57. Dr. Callahan has been President of the Funds since their inception in 1996. Dr. Callahan also serves as ICON Advisers’ President (1998 to present) and served as the Chief Investment Officer (1991 to 2005). Dr. Callahan is also President (1998 to 2005), Director (1991 to present) and was previously Vice President (1991 to 1998) of IDI, and is President and Director of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan is also the President (1998 to present) of IM&R.
Erik L. Jonson, 58. Mr. Jonson has been a Vice President and Principal Financial Officer/Treasurer of the Funds since their inception in 1996. Mr. Jonson is also Chief Financial Officer (1996 to present) and Executive Vice President (2004 to present) and was previously Vice President (1998 to 2004) of ICON Advisers; Chief Financial Officer, Secretary and Director (1996 to present) of IM&R; and Executive Vice President (2004 to present) and Treasurer (2002 to present) and was previously Secretary/Treasurer, (1998 to 2002) and Vice President, (2002 to 2004) of IDI; and Executive Vice President and Treasurer of ICON Insurance Agency, Inc. (2004 to present).
Jessica Seidlitz, 30. Ms. Seidlitz serves as Assistant Treasurer of the Funds (2007 to present). She also serves as Mutual Fund Controller of ICON Advisers, Inc. (2005 to present). Previously, she was a Senior Associate/Associate at PricewaterhouseCoopers LLP, (2001 to 2004).
Donald Salcito, 55. Mr. Salcito serves as Vice President and Secretary of the Funds since November 15, 2006. Mr. Salcito is also Executive Vice President and General Counsel (September 2005 to present) of ICON Advisers, Inc.; Director of ICON Management & Research (2005 to present); Executive Vice President, Secretary, General Counsel, for IDI (2005 to present); Chief Compliance Officer of IDI (2005 to 2007); Executive Vice President and Secretary of ICON Insurance Agency, Inc. (2005 to present). Previously he was a Partner in the law firm of Perkins Coie, LLP. (2000 to 2005).
Carrie M. Schoffman, 35. Ms. Schoffman served as Assistant Vice President and Chief Compliance Officer of the Funds (2004 to September 21, 2008). She serves as Vice President and Chief Compliance Officer of ICON Advisers, Inc. (2004 to present) and Chief Operating Officer (2008 to present). Previously she was a staff accountant with the U.S. Securities and Exchange Commission (2003 to 2004). She also was a Manager (2001 to 2003) and Senior Associate/Associate (1996 to 2001) at PricewaterhouseCoopers LLP.
Brian Harding, 29. Mr. Harding serves as Chief Compliance Officer of the Funds (September 22, 2008 to present). Previously he was a Manager (2007 to 2008) and Senior Associate/Associate (2001 to 2007) at PricewaterhouseCoopers LLP.
Stephen Abrams, 45. Mr. Abrams serves as Anti-Money Laundering Officer of the Funds (2005 to present). Mr. Abrams is also Vice President and Associate General Counsel of ICON Advisers, Inc. (2005 to present). Mr. Abrams also serves as the Chief Compliance Officer of IDI (2007 to present). Previously he was a Partner (2004 to 2005) and Associate (2000 to 2004) at Perkins Coie, LLP.
Other Information (unaudited)
Renewal of Investment Advisory Agreements
In determining to renew the investment advisory agreements between the ICON Funds (the “Trust”) and ICON Advisers, Inc. (“ICON” or the “Adviser”) the Board requested, was provided with and reviewed data with respect to ICON, its personnel, and the services to be provided to each Fund by ICON under the Trust’s Investment Advisory Agreement dated October 9, 1996, as amended (related to the Sector, International and Core Equity Funds) and under the Trust’s Investment Advisory Agreement dated July 9, 2002 and effective October 1, 2002, as amended (related to the U.S. Diversified Funds - Bond, Income Opportunity, Equity Income and Long/Short Funds) (collectively, the “Advisory Agreements”). The data included information concerning advisory, distribution and administrative services provided to the Funds by ICON and its related companies; information concerning other businesses of those companies; comparative data related to other funds versus the Sector Funds; and comparative data obtained from Lipper Analytical Services related to Fund performance and Fund expenses.
On August 11, 2008, the Board of Trustees, including the four Trustees that are not “interested persons” of the Trust (the “Independent Trustees”), approved continuation of the Advisory Agreements with the Adviser for each Fund for an additional one-year term commencing October 1, 2008.
The Independent Trustees were represented by independent legal counsel throughout the process. Prior to acting on the matter, the Independent Trustees met separately as a group in private sessions with their independent legal counsel to review and discuss the foregoing information. Based on these discussions, independent legal counsel and/or the Lead Independent Trustee also contacted management to request additional information and to discuss responses to questions raised during the process. In addition, the Independent Trustees received materials from their independent legal counsel discussing the legal standards applicable to their consideration of the agreements.
In considering the nature, extent and quality of the services provided by the Adviser, the Board reviewed information relating to ICON’s operations and personnel. Among other things, the Adviser provided biographical information on its professional staff and descriptions of its organizational and management structure. In the course of their deliberations the Board evaluated, among other things, information relating to the investment philosophy, strategies and techniques used in managing each Fund, the qualifications and experience of ICON’s investment personnel, ICON’s compliance programs, ICON’s brokerage practices, including the extent to which the Adviser obtains research through “soft dollar” arrangements with
the Funds’ brokerage, and the financial and non-financial resources available to provide services required under the Advisory Agreement.
The Board of Trustees noted that the market value of domestic and international securities have dropped dramatically during the past year as a result of numerous crises in the financial, credit and commodities markets. The Board also noted that the performance of essentially all Funds has been negative, declining along with the markets in general. In light of such, the Board considered ICON’s investment methodology and whether the ICON’s methodology or system is appropriate. It was noted that ICON’s investment approach is not designed to fit into a box defined by “value,” “growth,” and “large, mid or small cap” stock categories. On the other hand, it was noted that the approach is most similar to “value investing.” In this regard it was noted that performance of value investing in general has been negative and that ICON’s performance is in line with the group. Performance in the current period was compared to prior periods where the Funds confronted significant market declines and volatility - including an assessment of financial, geopolitical and psychological reasons for the market behavior; and it was compared to periods when those factors were not prevalent. After consideration of this information the Board concluded that ICON’s investment methodology or system is appropriate for the Funds in the long-term. In light of such, the Board asked and ICON confirmed that it does not change its system in response to current issues and that it will follow its stated investment style, using a disciplined approach to managing the Funds’ portfolios.
In connection with reviewing data bearing upon the nature, quality, and extent of services furnished by ICON to each Fund, the Board assessed data concerning ICON’s staffing, systems and facilities. The Board also assessed ICON’s non-Trust business to see if there are any initiatives that would dilute service to the Trust. It was noted:
A. That the breadth and the quality of investment advisory and other services being provided to each Fund is satisfactory, as evidenced in part by the performance record of each Fund compared with the performance records of a peer group of comparable funds and markets in general;
B. That ICON has made significant expenditures in the past year and in prior years to ensure that it has the sophisticated systems and the highly trained personnel necessary for it to be able to continue to provide quality service to the Funds’ shareholders, including the dedication of substantial resources to ICON’s investment and trading departments;
C. That the Board is satisfied with the research, portfolio management, and trading services, among others, being provided by ICON to the Funds, and is charging fair, reasonable, and competitive fees; and
D. The risks assumed by ICON in providing investment advisory services to each Fund including the capital commitments which have been made in the past and which continue to be made by ICON to ensure the continuation of the highest quality of service to the Trust is made with the recognition that the Trust’s advisory relationship with ICON can be terminated at any time and must be renewed on an annual basis.
In considering the reasonableness of the fee payable to the Adviser for managing each Fund, the Board reviewed, among other things, financial statements of the Adviser and an analysis of the profitability to the Adviser and its affiliates of their relationship with each Fund over various time periods, which analysis identified all revenues and other benefits received by the Adviser and its affiliates from managing each Fund, the costs associated with providing such services and the resulting profitability to the Adviser and its affiliates.
The Board considered the current and anticipated asset levels of each Fund and the willingness of the Adviser to waive fees and pay expenses of the Funds from time to time to limit the total expenses of the Funds. It was noted that most of the Funds have had net redemptions and that aggregate assets covered by the Advisory Agreements have declined significantly. ICON’s ability to provide the services called for under the Advisory Agreements was assessed in light of current and projected asset levels. Fund expenses and expense ratios were also assessed in light of current and projected asset levels. The Board concluded that the Adviser has the resources necessary to provide the services called for under the Advisory Agreements; that profitability to the Adviser and its affiliates from their relationship with the Funds is not excessive; and that the Adviser is not realizing material benefits from economies of scale that would warrant adjustments to the fees for any Fund at this time. The Board of Trustees concluded that, in light of the nature, extent and quality of the services provided by the Adviser and the levels of profitability associated with providing these services, the fees charged by the Adviser under the Advisory Agreements to each Fund are reasonable.
In connection with assessing data bearing the fairness of fee arrangements, the Board used data from Lipper Analytical Services concerning funds of
similar size and funds of larger size, as well as data concerning ICON’s other clients and noted:
A. The advisory fee structures of the Funds were considered in comparison with advisory fees and expense ratios of other similarly managed funds as set forth in the comparative data;
B. That contractual advisory fees of the Sector Funds were higher than fees for similar funds; but that the Sector Funds’ expense ratios were competitive and in most instances lower than those of similarly managed Funds;
C. That contractual advisory fees for the International Funds were above the average fees for similar funds; and that the Funds’ expense ratios were competitive in light of their size;
D. That ICON has contractually agreed to impose expense limitations on certain Funds at a cost to ICON;
E. That the advisory and other fees payable by the Funds to ICON are essentially fees which would be similar to those which would have resulted solely from “arm’s-length” bargaining, and may well be lower than fees arrived at solely from such arm’s-length negotiation;
F. That, the fees paid to ICON for managing other institutional accounts (such as pension plans) are not lower than the fees paid by similarly-managed funds; and to the extent such fees of those accounts are lower, the reasons are that such accounts are less costly for ICON to manage; and
G. That ICON has contractually committed to breakpoints in its fees so that economies of scale could be realized as a Fund grows in assets for the benefit of Fund shareholders.
In connection with the direct and indirect benefits to ICON from serving as the Funds’ adviser, the Board discussed and noted:
A. That ICON benefits from serving directly or through affiliates as the principal underwriter and administrative agent for the Funds; that services provided by ICON and its affiliates to the Funds are satisfactory, and that profits derived from providing the services are competitive and reasonable; and
B. That ICON receives research assistance from the use of soft dollars generated from Fund portfolio transactions; that such research assists ICON in providing quality to which it provides advisory services; and that the Board concluded that the arrangements are consistent with Fund brokerage practices and benefit the Funds and their shareholders.
Based on these considerations, among others, the Board, including all of the Independent Trustees, concluded that the continuation of the Advisory Agreements was in the best interests of each Fund and its shareholders, the services to be performed under the agreements were services required for the operation of the Funds, ICON had provided satisfactory advisory services to the Funds in the past, and the fees for the advisory services which ICON would perform and other benefits from the relationship with the Trust and consistent with fees paid by similar funds, are reasonable in light of the comparative data, and would be within the range of what would have been negotiated at arm’s length in light of the circumstances.
Supplemental Tax Information
For corporate shareholders, the following percentage of the total ordinary income dividends paid during the fiscal year ended September 30, 2008, qualifies for the corporate dividends received deduction for the following Funds:
| | | | | |
| | | Dividends
| |
| | | Received
| |
| Fund | | Deduction | |
| | |
| ICON Core Equity Fund | | | 23.10 | % |
| ICON Equity Income Fund | | | 45.42 | % |
| ICON Income Opportunity Fund | | | 17.91 | % |
| ICON Long/Short Fund | | | 66.03 | % |
For the fiscal year ended September 30, 2008, the following Funds paid qualified dividend income:
| | | | | |
| Fund | | Amount | |
| | |
| ICON Core Equity Fund | | | 26.54 | % |
| ICON Equity Income Fund | | | 49.50 | % |
| ICON Income Opportunity Fund | | | 19.16 | % |
| ICON Long/Short Fund | | | 89.78 | % |
The Funds designate the following amounts as long-term capital gain distributions qualifying for the maximum 15% income tax rate for individuals:
| | | | | |
| Fund | | Amount | |
| | |
| ICON Core Equity Fund | | $ | 6,683,893 | |
| ICON Equity Income Fund | | | 6,462,123 | |
| ICON Long/Short Fund | | | 6,362,889 | |
Portfolio Holdings
A list of each ICON Fund’s Top 10 holdings is available at www.iconfunds.com on or about 15 days following each month-end. Each ICON Fund also files a complete schedule of portfolio holdings for the first and third quarters of its fiscal year with the SEC on Form N-Q. The ICON Funds’ Forms N-Q are available at www.sec.gov or may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Proxy Voting
A summarized description of the policies and procedures the ICON Funds use to vote proxies is available free of charge at www.iconfunds.com or by calling 1-800-764-0442.
Information about how the ICON Funds voted proxies related to each Fund’s portfolio securities during the 12-month period ended June 30 is available free of charge at www.iconfunds.com or on the SEC’s website at www.sec.gov.
For More Information
This report is for the general information of the Funds’ shareholders and is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. You may obtain a copy of the prospectus, which contains information about the investment objectives, risks, charges, expenses, and share classes of each ICON Fund, by visiting www.iconfunds.com or by calling 1-800-764-0442. Please read the prospectus carefully before investing.
ICON Distributors, Inc., Distributor.
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| | | |
| |
| For more information about the ICON Funds, contact us: |
| | | |
| By Telephone | | 1-800-764-0442 |
| | | |
| By Mail | | ICON Funds
P.O. Box 55452
Boston, MA 02205-8165 |
| | | |
| In Person | | ICON Funds
5299 DTC Boulevard, 12th Floor
Greenwood Village, CO 80111 |
| | | |
| On the Internet | | www.iconfunds.com |
| | | |
| By E-Mail | | info@iconadvisers.com |
2008 Annual Report
ICON International Funds
Investment Update
ICON Asia-Pacific Region Fund
ICON Europe Fund
ICON International Equity Fund
1-800-764-0442 ï www.iconfunds.com
AR-INTL-D, K95865
Table of Contents
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| | | 18 | |
| | | 26 | |
| | | | | |
| | | 36 | |
| | | | | |
| | | 42 | |
| | | | | |
| | | 46 | |
| | | | | |
| | | 59 | |
| | | | | |
| | | 60 | |
| | | | | |
| | | 63 | |
| | | | | |
| | | 66 | |
Historical Returns
All total returns mentioned in this Report account for the change in a Fund’s per-share price and the reinvestment of any dividends, capital gain distributions, and adjustments for financial statement purposes. If your account is set up to receive Fund distributions in cash rather than to reinvest them, your actual return may differ from these figures. The Funds’ performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The Adviser may have reimbursed certain fees or expenses of some of the Funds. If not for these reimbursements, performance would have been lower. Fund results shown, unless otherwise indicated, are at net asset value. If a sales charge (maximum 5.75%) had been deducted, results would have been lower.
Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance results represent past performance, and current performance may be higher or lower. Please call 1-800-764-0442 or visit www.iconfunds.com for performance results current to the most recent month-end.
Portfolio Data
This Report reflects ICON’s views, opinions and portfolio holdings as of September 30, 2008, the end of the reporting period. The information is not a complete analysis of every aspect of any sector, industry, security or the Funds.
Opinions and forecasts regarding industries, companies and/or themes, and portfolio composition and holdings are subject to change at any time based on market and other conditions, and should not be construed as a recommendation of any specific security, industry or sector. Each Fund’s holdings as of September 30, 2008 are included in each Fund’s Schedule of Investments.
While ICON’s quantitative investment methodology primarily considers company-specific factors beyond financial data, various company factors may impact a stock’s performance, and therefore, Fund performance. Investments in foreign securities may entail unique risks, including political, market, and currency risks. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, do not exist in foreign
countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers. The ICON system relies on the integrity of financial statements released to the market as part of our analysis.
There are risks associated with mutual fund investing, including the loss of principal. The likelihood of loss may be greater if you invest for a shorter period of time. There is no assurance that the investment process will consistently lead to successful results.
An investment in a region fund may involve greater risk and volatility than a diversified fund. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment.
According to ICON, value investing is an analytical, quantitative approach to investing that employs various factors, including projecting earnings growth estimates, in an effort to determine whether securities are over- or underpriced relative to ICON’s estimates of their intrinsic value. Value investing involves risks and uncertainties and does not guarantee better performance or lower costs than other investment methodologies. ICON’s value-to-price ratio is a ratio of intrinsic value, as calculated using ICON’s proprietary valuation methodology, of a broad range of domestic and international securities within ICON’s system as compared to the current market price of those securities.
This Report contains statements regarding industry or sector themes, new market themes, investment outlook, relative strength, value-to-price ratios, and investment team expectations, beliefs, goals and the like that are based on current expectations, recent individual stock performance relative to current market prices, estimates of company values and other information supplied to the market by the companies we follow. Words such as “expects,” “suggests,” “anticipates,” “targets,” “goals,” “value,” “intrinsic value,” “indicates,” “believes,” “considers,” “estimates,” variations of such words and similar expressions are intended to identify forward looking statements, which are not statements of historical fact. Forward looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. These risks and uncertainties are based on a number of important factors, including, among others: stock price fluctuations; the integrity and accuracy of historical and projected financial and other information supplied by companies to the public; interest rates; future earnings growth rates; the risks noted in this report and other factors beyond the control of our investment team. Therefore, actual outcome may differ materially from what is expressed in such forward looking statements.
The prospectus and statement of additional information contain this and other information about the Funds and are available by visiting www.iconfunds.com or calling 1-800-764-0442. Please read the prospectus and statement of additional information carefully.
Comparative Indexes
The comparative indexes discussed in this Report are meant to provide a basis for judging a Fund’s performance against specific securities indexes. Each index shown accounts for both change in the security price and reinvestment of dividends and distributions (except as noted), but does not reflect the costs of managing a mutual fund. The total return figures for the Morgan Stanley Capital International (“MSCI”) indexes assume change in security prices and the deduction of local taxes. The Funds’ portfolios may significantly differ in holdings and composition from the indexes. Individuals cannot invest directly in an index.
| |
| • | The unmanaged MSCI All Country Pacific Index comprises stocks traded in the developed and emerging markets of the Pacific Basin (Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand). The capitalization-weighted index attempts to capture at least 60% of investable capitalization in those markets subject to constraints governed by industry representation, maximum liquidity, maximum float, and minimum cross-ownership. |
| |
| • | The unmanaged MSCI Europe Index comprises approximately 600 stocks traded in developed markets from 15 European countries. The capitalization-weighted index attempts to capture at least 60% of investable capitalization in those markets subject to constraints governed by industry representation, maximum liquidity, maximum float, and minimum cross-ownership. |
| |
| • | The MSCI All Country World Index ex-United States (“ACWI ex-U.S.”) is a leading unmanaged benchmark of international stock performance. The capitalization-weighted index is representative of the performance of securities of companies located in developed and emerging markets outside of the United States. |
Index returns and statistical data included in this Report are provided by Bloomberg and FactSet Research Systems.
Message From ICON Funds
Dear ICON Shareholder:
Because of the discipline inherent in the ICON system, I never expected to write a letter to shareholders explaining the type of negative returns we and much of our industry have posted over the last fiscal year. Using our valuation methodology, we buy stocks we believe are on sale and we do not chase what we think are over-priced, hot trends. We screen for quality, favoring well-managed companies with healthy cash positions and lower than average debt levels. We do not underwrite or insure mortgage-backed securities. Although we have owned government agency bonds, ICON resisted the subprime mortgage-backed securities frenzy. We attempt to distance ourselves from Wall Street as we do not take any brokerage “buy, sell or hold” recommendations and we have not purchased IPOs. September 2008 was a particularly harsh month for financial stocks. In response to questions from financial advisers, we wrote the following regarding our Core Equity and Financials sector fund: “it is noteworthy that neither fund owned the following stocks as of 8/31/08; Fannie Mae, Freddie Mac, Merrill Lynch, Lehman Brothers, Washington Mutual or AIG.” We sold another headliner, Bear Stearns, in early July 2007 in the $139 per share range. Although ICON’s disciplined, value-based methodology allowed us to stay clear of these and similar problematic securities, our portfolios were dragged down by the recent financial crisis nevertheless.
We have analyzed past market peaks in an effort to identify indicators that forecast a subsequent bear market. The only recurring behavior we have identified involves valuation; that is, we discovered that stocks are priced much higher than our estimation of their intrinsic value at a typical peak. For example, stocks were significantly overpriced according to our system prior to the crash of October 1987. More recently, prices of technology and telecommunication issues were way above our estimate of intrinsic value just before their severe decline in 2000. Based on our estimation of intrinsic value, however, stocks were not overpriced in late 2007. Therefore, we had no indication of a potential severe market drop. The market behaved like quick sand, with stocks dropping in reaction to news events, even though they were not overpriced under our methodology. We take little solace in the fact that we were not alone, and that few advisers could have anticipated the panic selling that dragged the market lower as fiscal year 2008 came to a close. The damage was so widespread that investors had no place to hide in September, except in cash, which was also subject to its own risks and limitations.
If you have followed the behavior of the ICON system over the last two decades you have noticed a pattern. When stock prices dropped quickly and
Message From ICON Funds 5
were significantly below our estimate of intrinsic value, we held and even rotated into attractive industries in an effort to capture the emerging leadership. With each sudden market decline, we stated that the price drop was created by investors overreacting, and, further that we expected prices to move higher and catch up to value. For two decades our decision to remain invested in anticipation of price catching up to value has been effective and critical to our success. As we entered the fiscal year, we saw no reason to change our strategy or behavior.
In late 2007, stock prices dropped in reaction to the initial problems regarding the subprime mortgage situation. We checked all inputs to our valuation equation, such as earnings estimates and risk, and they were steady. With stocks priced below our estimate of intrinsic value, we believed investors (and, accordingly, the market) had over-reacted. In response to further developments, stock prices dropped again in January and yet again in March. With each drop, stocks continued to look cheap and inputs to our valuation equation remained steady. Each dip this fiscal year looked like an overreaction to the data available at the time, just like the sudden dips we’d seen on several occasions over the last two decades. We stuck to our system in what proved to be an unprecedented setting.
The dictates of the ICON system are pretty simple. First, when stocks are cheap, the ICON system focuses on value - not news events - and directs us to remain invested. Second, when stocks are expensive, the system favors cash. Third, the system attempts to capture industry leadership that typically lasts one to two years. By sticking rigidly to its discipline, we believe the ICON system can handle most market situations through time. We believe also that the events of the last twelve months have been extraordinary - rare, unusual, and even unlikely to reoccur. The ICON system depends in no small part on the integrity of the market. While several parties share blame for this most recent economic crisis, the evident failure of many companies to properly disclose their financial condition caught ICON and most other investment professionals off-guard. Obviously, the ICON system did not handle the last 12-months well. Frankly, few systems did.
Current Situation and Outlook
The monetarist theory of economics believes that when the money supply grows it will stimulate the economy with about a six to nine month lag. When the money supply contracts, the monetarist theory believes that contraction will slow the economy by a similar lag. One way to measure the money supply is M1, which is defined to be currency plus demand deposits (checking accounts). When a bank makes a loan, a demand deposit is created, which, by definition, creates money. In August 2007 the Federal Reserve (“FED”) eased monetary policy and injected reserves into the
6 Message From ICON Funds
banking system. Such easing normally promotes banks to make loans which, in turn, creates M1 and stimulates the economy. Despite the continued monetary easing through late 2007 and early 2008, banks did not increase their lending, partly through caution but mostly because the illiquid mortgage-backed securities they held hurt their capital ratios.
The primary goal of the Troubled Asset Relief Program or “TARP” package is for the U.S. Treasury to buy those mortgage-backed securities. The banks will record a loss on the securities, as they should, but will immediately have cash and greatly improved capital ratios, which means they can make loans again. Through loans, M1 can grow and stimulate the economy. In separate actions, the FED announced that it will pump an additional $630 billion into the global financial system through what it calls currency swaps with foreign central banks. The FED also announced its intent to buy commercial paper in the short-term money market. Finally, the U.S. Treasury Department announced it will buy stock in banks to help their capital ratios.
Over the 19 week period from late May through early October, M1 grew 11.6%. That is not annualized. It is 11.6% in 19 weeks. That is a sensational pace and is evidence banks are lending. If the lending continues and M1 continues to grow, we believe it will stimulate the economy. Typical timing would suggest that the economy might hit a bottom winter or spring 2009.
The market place seems unable to understand monetary stimulation and policy, as distinguished from fiscal policy. Fiscal policy is more obvious as it targets a specific income level, segment of the economy or industry. People can understand it. A monetary stimulus, on the other hand, is vague, broad, intangible, but, in the view of monetarists, very powerful. A monetary stimulus is just slow. It may be a few months before a monetary stimulus takes effect and it works behind the scenes, so to speak.
We believe the monetary stimulus is underway and will result in an economic recovery in 2009. We also see many of the behaviors and data typical of market bottoms falling in place. After coming through the extraordinary events of the last 12-months, investors and money managers have to do an assessment. They have to decide if they should make adjustments and changes or whether the events of the last fiscal year were anomalous and unlikely to be repeated. While investors should consult with their financial advisers regarding their unique needs and goals, generally speaking I would encourage most investors to not make major adjustments. Too many times I have seen investors set investment policy by looking in the rear view mirror, especially regarding their allocation to equities. It is usually not productive to make major changes in response to extraordinary events like those of the past 12-months.
Message From ICON Funds 7
We expect that the financial system will emerge stronger and better than before. This was not the first unanticipated problem to hit our financial and banking system; nor will it be the last. The same problems generally do not recur, although new ones arise from time to time. We fix an existing problem and move on. And that’s exactly what the financial and banking system is doing in response to this most recent crisis.
At ICON we remain convinced that our calculation of intrinsic value is valid and that valuation, in combination with industry relative strength readings, can identify industry leadership for one to two year moves. We expect that investors will continue to demonstrate the kind of overreaction to events we have recognized and avoided in the past. We will try to capitalize on that overreaction by allowing our valuation methodology to guide our buying and selling. We take the same advice we pass on to our investors: we do not believe in making major changes to our investment game-plan by looking at a bad situation in the rear view mirror. We believe our system is well designed to handle most events. Changing the system in order to handle an extreme retroactive event would hinder our ability to address most everyday situations. And while the events of the last 12-months have been nothing shy of extraordinary, we believe much of the carnage has run its course. It is difficult to predict market bottoms, but as we say at ICON, rallies do not issue invitations. Therefore, we encourage you to ride out whatever remains of the storm with us and remain invested in order to participate in any ensuing rally.
Yours truly,
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
8 Message From ICON Funds
Class S ICARX
Class I ICPIX
Class C ICPCX
Class Z ICPZX
Class A IPCAX
Management Overview
ICON Asia-Pacific Region Fund
| |
| Q. | How did the Fund perform relative to its benchmark? |
| |
| A. | The ICON Asia-Pacific Region Fund, Class S returned -41.26% for the fiscal year ended September 30, 2008, underperforming its benchmark, the MSCI All Country Pacific Index, which returned -32.39%. Class A shares of the Fund returned -41.53% (and -44.88% with maximum sales charge) during the same period. Since their inception dates, Class I, Class C and Class Z returned -31.17%, -31.46% and -30.95%, respectively. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | In the 12-months ended September 30, 2008, the Asia-Pacific region underperformed the broad U.S. market. The region experienced its peak in late October 2007 and has since fallen off precipitously primarily due to the global credit crisis that began just prior to the summer of 2007. The last 12-months have been marked by short periods of sector leadership with sudden and dramatic shifts to new areas of leadership. Our investment strategy focuses on identifying one to two year trends of industry leadership. The period’s volatility and rapid changes in leadership proved challenging to our system. |
Guided by ICON’s value and relative strength readings, the Fund shifted away from Singapore and Malaysia, as the Industrials and Financials sectors saw declines. We increased the Fund’s exposure to Japan and Australia as we identified Consumer Discretionary industries as attractive opportunities.
As a multi-cap manager, we do not consider investments based on market capitalization. However, our valuations resulted in a concentration in mid- to small-cap companies during the 12-month period. These allocations were overweight the predominantly large-cap benchmark, and the overweighting of small-cap stocks in particular hindered performance as they were the worst performing group over this period.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | From an industry perspective, Fund holdings that were concentrated in the defensive, non-cyclical part of the market, including an overweight in the integrated telecommunications services and health care distributors industries, contributed positively to relative performance. Additionally, overweights in the Consumer Discretionary industries home furnishing retail and housewares & specialties contributed positively. Underweights in the diversified real estate activities and steel industries also aided relative performance. |
The US Dollar deteriorated in value relative to many of the region’s currencies, such as the Japanese Yen and Singapore Dollar, during the fiscal year before rebounding in late spring 2008. The Fund employed currency hedges to combat adverse currency moves, which contributed positively to the Fund’s performance.
Conversely, the Industrials sector was the largest detractor to performance during the period. The primary contributors to this sector’s underperformance were overweights in the marine and construction & farm machinery & heavy trucks industries.
From the country perspective, overweights in Thailand and Malaysia contributed positively to performance. The Fund’s overweight in Hong Kong and underweight in the outperforming country of Japan hindered relative performance.
| |
| Q. | What is your investment outlook for the Asia-Pacific equity market? |
| |
| A. | Although the period was extremely volatile and the region underperformed, the Asia-Pacific region remains attractive. According to our calculations, we estimate that stocks in the region are trading with a 27% upside to fair value as of fiscal year end. We believe the defensive market theme that emerged in 2008 remains in place with sectors like Health Care and Leisure and Consumer Staples showing relative strength amidst the market turbulence. |
With value as our core investment tenet, we also look to areas of the market that are trading at deep discounts for possible future leadership. While not showing much relative strength under our methodology, Energy and Materials are the two sectors showing the best value. Additionally, certain industries in the Information Technology and Consumer Discretionary sectors show potential upside.
From a country perspective, Japan, South Korea, and Australia are the most attractive and have warranted increased weightings. Most countries in the region, especially Hong Kong, China, and Taiwan, show significant value but lack the relative strength to warrant increased exposure at this time.
As 2008 comes to a close, we are doing what we have always done by continuing to seek out industries that trade at a discount to our estimation of fair value and show relative strength. By using value as a guide in our systematic and non-emotional discipline, we see numerous opportunities amidst the turbulence and volatility. We believe that it is nearly impossible to accurately time bottoms and that rallies do not offer invitations. With favorable valuations we remain fully invested and we will make adjustments as market conditions dictate.
ICON Asia–Pacific Region Fund
Country Composition
as of September 30, 2008
| | | | | |
| Japan | | | 35.6% | |
| Hong Kong | | | 13.3% | |
| South Korea | | | 12.9% | |
| Taiwan | | | 11.0% | |
| Australia | | | 5.7% | |
| China | | | 4.1% | |
| Singapore | | | 3.7% | |
| Cayman Islands | | | 3.3% | |
| Thailand | | | 2.5% | |
| Indonesia | | | 1.9% | |
| Bermuda | | | 1.4% | |
| Malaysia | | | 1.1% | |
| United States of America | | | 0.4% | |
Percentages are based upon net assets.
ICON Asia–Pacific Region Fund
Sector Diversification
as of September 30, 2008
| | | | | |
| Information Technology | | | 22.6% | |
| Consumer Discretionary | | | 21.0% | |
| Financial | | | 14.7% | |
| Materials | | | 12.6% | |
| Leisure and Consumer Staples | | | 7.6% | |
| Industrials | | | 5.8% | |
| Energy | | | 5.6% | |
| Telecommunications & Utilities | | | 4.4% | |
| Health Care | | | 2.6% | |
Percentages are based upon net assets.
ICON Asia–Pacific Region Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Diversified Banks | | | 13.4% | |
| Automobile Manufacturers | | | 9.2% | |
| Computer Hardware | | | 4.9% | |
| Wireless Telecommunication Services | | | 4.4% | |
| Diversified Chemicals | | | 3.7% | |
| Semiconductors | | | 3.4% | |
| Home Entertainment Software | | | 3.2% | |
| Coal & Consumable Fuels | | | 3.2% | |
| Trading Companies & Distributors | | | 3.0% | |
| Agricultural Products | | | 2.7% | |
| Electronic Manufacturing Services | | | 2.5% | |
| Computer & Electronics Retail | | | 2.4% | |
| Diversified Metals & Mining | | | 2.3% | |
| IT Consulting & Other Services | | | 2.0% | |
| Apparel Accessories & Luxury Goods | | | 2.0% | |
| Fertilizers & Agricultural Chemicals | | | 1.8% | |
| Oil & Gas Equipment & Services | | | 1.7% | |
| Specialty Chemicals | | | 1.7% | |
| Application Software | | | 1.6% | |
| Internet Software & Services | | | 1.5% | |
| Packaged Foods & Meats | | | 1.5% | |
| Specialty Stores | | | 1.5% | |
| Steel | | | 1.4% | |
| Drug Retail | | | 1.3% | |
| Property & Casualty Insurance | | | 1.3% | |
| Home Furnishing Retail | | | 1.3% | |
| Commodity Chemicals | | | 1.2% | |
| Tires & Rubber | | | 1.2% | |
| Health Care Supplies | | | 1.2% | |
| Computer Storage & Peripherals | | | 1.2% | |
| Photographic Products | | | 1.2% | |
| Construction & Farm Machinery & Heavy Trucks | | | 1.1% | |
| Education Services | | | 1.0% | |
| Electronic Equipment Manufacturers | | | 1.0% | |
| General Merchandise Stores | | | 0.9% | |
| Leisure Products | | | 0.9% | |
| Pharmaceuticals | | | 0.8% | |
| Integrated Oil & Gas | | | 0.7% | |
| Apparel Retail | | | 0.7% | |
| Electronic Components | | | 0.7% | |
| Electrical Components & Equipment | | | 0.6% | |
| Office Electronics | | | 0.6% | |
| Research & Consulting Services | | | 0.6% | |
| Health Care Services | | | 0.6% | |
| Footwear | | | 0.5% | |
| Trucking | | | 0.5% | |
| Paper Products | | | 0.5% | |
| Home Improvement Retail | | | 0.3% | |
Percentages are based upon net assets.
ICON Asia–Pacific Region Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Gross
| | | Net
| |
| | | | Inception
| | | | | | | | | | | | | | | | Since
| | | Expense
| | | Expense
| |
| | | | Date | | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | Inception | | | Ratio* | | | Ratio* | |
| ICON Asia-Pacific Region Fund - Class S | | | | 2/25/97 | | | | | | -41.26 | % | | | | | 7.92 | % | | | | | 6.28 | % | | | | | 0.98 | % | | | | 1.38 | % | | | | 1.38 | % | |
| |
| |
| MSCI All Country Pacific Index | | | | | | | | | | -32.39 | % | | | | | 8.35 | % | | | | | 7.08 | % | | | | | 1.62 | % | | | | N/A | | | | | N/A | | |
| |
| |
| ICON Asia-Pacific Region Fund - Class I | | | | 1/25/08 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -31.17 | % | | | | 1.63 | % | | | | 1.63 | % | |
| |
| |
| MSCI All Country Pacific Index | | | | | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -23.88 | % | | | | N/A | | | | | N/A | | |
| |
| |
| ICON Asia-Pacific Region Fund - Class C | | | | 1/25/08 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -31.46 | % | | | | 2.38 | % | | | | 2.38 | % | |
| |
| |
| MSCI All Country Pacific Index | | | | | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -23.88 | % | | | | N/A | | | | | N/A | | |
| |
| |
| ICON Asia-Pacific Region Fund - Class Z | | | | 1/25/08 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -30.95 | % | | | | 1.38 | % | | | | 1.25 | % | |
| |
| |
| MSCI All Country Pacific Index | | | | | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -23.88 | % | | | | N/A | | | | | N/A | | |
| |
| |
| ICON Asia-Pacific Region Fund - Class A | | | | 5/31/06 | | | | | | -41.53 | % | | | | | N/A | | | | | | N/A | | | | | | -8.61 | % | | | | 3.26 | % | | | | 1.85 | % | |
| |
| |
| ICON Asia-Pacific Region Fund - Class A (including maximum sales charge of 5.75%) | | | | 5/31/06 | | | | | | -44.88 | % | | | | | N/A | | | | | | N/A | | | | | | -10.91 | % | | | | 3.26 | % | | | | 1.85 | % | |
| |
| |
| MSCI All Country Pacific Index | | | | | | | | | | -32.39 | % | | | | | N/A | | | | | | N/A | | | | | | -5.44 | % | | | | N/A | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Adviser has agreed to limit certain expenses on Class I, Class C, Class Z and Class A shares; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors.
| |
| * | Please see the January 28, 2008 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
ICON Asia–Pacific Region Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Funds’ Class S shares on the Class’ inception date of 2/25/97 to a $10,000 investment made in an unmanaged securities index on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends, capital gain distributions and tax return of capital but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Asia-Pacific Region Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (96.9%) |
| | 804,895 | | | Acer, Inc. | | $ | 1,370,925 | |
| | 107,000 | | | Asahi Kasei Corp. | | | 450,257 | |
| | 1,800 | | | Baidu.com, Inc. - ADR(a)* | | | 446,814 | |
| | 389,800 | | | Bangkok Bank Public Co., Ltd. | | | 1,192,116 | |
| | 4,550,000 | | | Bank of China, Ltd. - Class H(b) | | | 1,763,299 | |
| | 46,000 | | | BHP Billiton, Ltd. | | | 1,189,675 | |
| | 31,700 | | | Cheil Industries, Inc. | | | 1,392,704 | |
| | 2,162,000 | | | China Agri-Industries Holdings, Ltd.(a) | | | 1,132,999 | |
| | 1,135,000 | | | China CITIC Bank Corp., Ltd. - Class H(b) | | | 510,277 | |
| | 349,000 | | | China Coal Energy Co. - Class H | | | 368,974 | |
| | 3,018,000 | | | China Construction Bank Corp. - Class H(b) | | | 2,013,875 | |
| | 122,000 | | | China Mobile, Ltd. | | | 1,222,196 | |
| | 608,000 | | | China Petroleum & Chemical Corp. | | | 479,869 | |
| | 355,000 | | | China Yurun Food Group, Ltd.(b) | | | 462,928 | |
| | 2,363,000 | | | CSE Global, Ltd. | | | 1,414,485 | |
| | 14,100 | | | Daewoo Shipbuilding & Marine Engineering Co., Ltd. | | | 355,961 | |
| | 23,000 | | | Daiichi Sankyo Co., Ltd. | | | 592,712 | |
| | 822,000 | | | Daphne International Holdings, Ltd. | | | 363,383 | |
| | 6,530 | | | DC Chemical Co., Ltd.(b) | | | 1,795,626 | |
| | 165,000 | | | Denki Kagaku Kogyo Kabushiki Kaisha | | | 434,143 | |
| | 36,700 | | | Don Quijote Co., Ltd.(b) | | | 656,505 | |
| | 17,500 | | | Dongkuk Steel Mill Co., Ltd. | | | 540,507 | |
| | 43,400 | | | Energy Resources of Australia, Ltd.(b) | | | 590,264 | |
| | 2,282,000 | | | Global Bio-Chem Technology Group Co., Ltd. | | | 738,120 | |
| | 62,100 | | | Hankook Tire Co., Ltd. | | | 871,464 | |
| | 99,000 | | | High Tech Computer Corp. | | | 1,537,083 | |
| | 28,000 | | | Hitachi Transport System, Ltd. | | | 353,194 | |
| | 481,410 | | | Hon Hai Precision Industry Co., Ltd. | | | 1,724,800 | |
| | 61,200 | | | Honda Motor Co., Ltd. | | | 1,856,627 | |
| | 19,700 | | | Hyundai Motor Co., Ltd.(b) | | | 1,232,967 | |
| | 70,000 | | | Incitec Pivot, Ltd.* | | | 294,197 | |
| | 276,000 | | | Indo Tambangraya Megah PT | | | 636,465 | |
| | 1,964,000 | | | Industrial & Commercial Bank of China, Ltd. - Class H(b) | | | 1,187,071 | |
| | 37,700 | | | JB Hi-Fi, Ltd.(b) | | | 372,738 | |
| | 13,100 | | | JFE Holdings, Inc. | | | 406,369 | |
| | 90 | | | KDDI Corp. | | | 509,892 | |
| | 133,000 | | | Kingboard Chemical Holdings, Ltd. | | | 454,141 | |
| | 2,008,100 | | | KNM Group Bhd. | | | 744,563 | |
| | 27,700 | | | Kobayashi Pharmaceutical Co., Ltd. | | | 846,517 | |
14 Schedule of Investments
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 7,600 | | | Komeri Co., Ltd. | | $ | 215,480 | |
| | 399,000 | | | KS Energy Services, Ltd.(b) | | | 415,612 | |
| | 78,540 | | | Largan Precision Co., Ltd. | | | 824,085 | |
| | 9,400 | | | LDK Solar Co., Ltd. - ADR(a)(b)* | | | 282,188 | |
| | 339,000 | | | Li Ning Co., Ltd.(b) | | | 594,741 | |
| | 33,860 | | | LIG Insurance Co., Ltd.* | | | 681,802 | |
| | 48,300 | | | Matsumotokiyoshi Holdings Co., Ltd. | | | 924,413 | |
| | 15,400 | | | Meitec Corp. | | | 412,564 | |
| | 34,100 | | | Meritz Fire & Marine Insurance Co., Ltd. | | | 240,769 | |
| | 58,700 | | | Mitsubishi Corp. | | | 1,224,663 | |
| | 55,000 | | | Mitsubishi UFJ Financial Group, Inc. | | | 479,681 | |
| | 68,450 | | | Mitsui & Co., Ltd. | | | 849,880 | |
| | 17,400 | | | National Australia Bank, Ltd. | | | 351,064 | |
| | 112,000 | | | NEC Corp. | | | 478,769 | |
| | 2,500 | | | Nintendo Co., Ltd. | | | 1,060,584 | |
| | 86,000 | | | Nissan Chemical Industries, Ltd. | | | 789,809 | |
| | 15,500 | | | Nitori Co., Ltd. | | | 921,053 | |
| | 327 | | | NTT DoCoMo, Inc. | | | 523,502 | |
| | 236,000 | | | PaperlinX, Ltd.* | | | 326,271 | |
| | 11,900 | | | Point, Inc.(b) | | | 455,666 | |
| | 95,000 | | | Primary Health Care, Ltd. | | | 395,803 | |
| | 683,000 | | | PT Tambang Batubara Bukit Asam Tbk | | | 669,831 | |
| | 1,449,000 | | | Raffles Education Corp., Ltd. | | | 730,356 | |
| | 30,000 | | | Ricoh Co., Ltd. | | | 421,888 | |
| | 6,700 | | | Rio Tinto, Ltd. | | | 451,319 | |
| | 3,458,000 | | | Sa Sa International Holdings, Ltd. | | | 1,030,306 | |
| | 3,300 | | | Samsung Electronics Co., Ltd. | | | 1,512,426 | |
| | 15,700 | | | Samsung Heavy Industries Co., Ltd.(b) | | | 418,103 | |
| | 89,000 | | | Shimadzu Corp. | | | 721,293 | |
| | 14,600 | | | Shin-Etsu Chemical Co., Ltd. | | | 694,338 | |
| | 251,900 | | | Simplo Technology Co., Ltd. | | | 830,476 | |
| | 17,900 | | | SINA Corp.(a)* | | | 630,080 | |
| | 1,904,000 | | | Sinofert Holdings, Ltd. | | | 959,859 | |
| | 20,000 | | | Square Enix Co., Ltd. | | | 584,987 | |
| | 108,000 | | | Sumitomo Bakelite Co., Ltd. | | | 461,942 | |
| | 244 | | | Sumitomo Mitsui Financial Group, Inc. | | | 1,530,014 | |
| | 561,361 | | | Taiwan Mobile Co., Ltd. | | | 900,069 | |
| | 320,900 | | | Taiwan Semiconductor Manufacturing Co., Ltd. | | | 538,327 | |
| | 1,016,000 | | | Thai Union Frozen Products Public Co., Ltd. | | | 591,742 | |
| | 56,000 | | | The Sumitomo Trust & Banking Co., Ltd. | | | 373,150 | |
| | 38,200 | | | The9, Ltd. - ADR(a)(b)* | | | 641,378 | |
| | 77,200 | | | Toyota Motor Corp. | | | 3,300,959 | |
| | 1,287 | | | Works Applications Co., Ltd. | | | 1,101,177 | |
| | 17,800 | | | Yamada Denki Co., Ltd. | | | 1,349,410 | |
| | 607,000 | | | Zhuzhou CSR Times Electric Co., Ltd. - Class H | | | 432,299 | |
| | | | | | | | | |
Total Common Stocks
(Cost $85,441,725) | | | 67,830,830 | |
Schedule of Investments 15
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Short-Term Investments (0.0%) |
| $ | 537 | | | Brown Brothers Harriman Time Deposit - Australian Dollar, 4.54%, 10/01/08# * | | $ | 537 | |
| | | | | | | | | |
Total Short-Term Investments
(Cost $537) | | | 537 | |
| Other Securities (15.0%) |
| | 10,509,338 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07%* | | | 10,509,338 | |
| | | | | | | | | |
| Total Other Securities (Cost $10,509,338) | | | 10,509,338 | |
| Total Investments 111.9% (Cost $95,951,600) | | | 78,340,705 | |
| Liabilities Less Other Assets (11.9%) | | | (8,361,070 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 69,979,635 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| * | | All securities were fair valued (Note 2) as of September 30, 2008 unless noted with a *. Total value of securities fair valued was $64,528,100. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
16 Schedule of Investments
ICON Asia-Pacific Region Fund
As of September 30, 2008, the Fund had the following forward currency contracts outstanding:
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Unrealized
| |
| | | | | Delivery
| | Contract
| | | Market
| | | Appreciation/
| |
| | | Currency | | Date | | Value | | | Value | | | (Depreciation) | |
| | |
| |
Contracts to Sell: | | | | | | | | | | | | | | | | | | |
| (10,500,000,000) | | Korean Won | | | 04/02/09 | | | $ | (8,649,094 | ) | | $ | (8,839,709 | ) | | $ | (190,615 | ) |
| (8,700,000) | | Malaysian Ringgit | | | 01/30/09 | | | | (2,667,893 | ) | | | (2,555,273 | ) | | | 112,620 | |
| (8,600,000) | | Singapore Dollar | | | 01/30/09 | | | | (6,314,707 | ) | | | (6,025,346 | ) | | | 289,361 | |
| (396,000,000) | | Taiwan Dollar | | | 01/30/09 | | | | (12,963,205 | ) | | | (12,330,378 | ) | | | 632,827 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | $ | (30,594,899 | ) | | $ | (29,750,706 | ) | | $ | 844,193 | |
| | | | | | | | | | | | | | | | | | | |
Contracts to Buy: | | | | | | | | | | | | | | | | | | |
| 3,700,000 | | Malaysian Ringgit | | | 01/30/09 | | | $ | 1,113,117 | | | $ | 1,086,726 | | | $ | (26,391 | ) |
| 5,000,000 | | Malaysian Ringgit | | | 01/30/09 | | | | 1,468,860 | | | | 1,468,548 | | | | (312 | ) |
| 1,200,000 | | Singapore Dollar | | | 01/30/09 | | | | 858,615 | | | | 840,746 | | | | (17,869 | ) |
| 26,000,000 | | Taiwan Dollar | | | 01/30/09 | | | | 838,709 | | | | 809,570 | | | | (29,139 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | $ | 4,279,301 | | | $ | 4,205,590 | | | $ | (73,711 | ) |
| | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
Schedule of Investments 17
Class S ICSEX
Class I ICUIX
Class C ICUCX
Class Z ICUZX
Class A IERAX
| |
| Q. | How did the Fund perform relative to its benchmark? |
| |
| A. | The ICON Europe Fund, Class S returned -36.83% for the fiscal year ended September 30, 2008, underperforming the -30.50% return for the MSCI Europe Index. Class A shares of the Fund returned -37.17% (and -40.79% with maximum sales charge) over the same period. Since their inception dates, Class I, Class C and Class Z returned -26.41%, -26.74% and -26.07%, respectively. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | Europe’s economic situation deteriorated relative to other major global regions during the fiscal year. Economic growth slowed, unemployment rates increased, and inflationary pressures peaked higher. |
The fiscal year opened with the European region priced at 16% below our calculation of intrinsic value. Early gains over the year were short-lived, as the global markets entered a highly turbulent and volatile environment. The subprime loan problems soon evolved into a broad financial credit crisis and its global effects were felt across the region. The Financials and Consumer Discretionary sectors suffered the largest losses, as investors expressed concern about the strength of the banking system and its resulting effect on consumers and their spending habits. Amidst record high crude oil and gold prices, the commodities markets and the related economic sectors of Energy and Materials showed relative strength up to July 2008. These sectors subsequently suffered sharp losses, however, as concerns about slowing global growth and decreased future demand crept into view.
Unsurprisingly, investors sought out the perceived safety of sectors that are viewed as historically defensive and less sensitive to economic cycles such as Health Care, Consumer Staples, and Utilities. While these groups fared better during this environment, they still posted losses on an absolute basis as the resulting bear market left participants with no place to hide. Amidst the market turmoil, the European Central Bank raised interest rates to combat rising inflation and the resulting corporate interest rates (used to calculate intrinsic value for our universe of stocks) remained at three year highs. Despite the higher interest rates, governments moved to enact legislation designed to increase liquidity and central bank lending as global commercial banks tightened their lending practices. We ended fiscal year 2008 with stock prices in the
European region showing on average a 50% upside to our estimate of intrinsic value, representing the best bargains across the globe.
Foreign Currency exchange rates oscillated dramatically over the last 12-months as well. The U.S. dollar weakened relative to most of the major European currencies during the early part of the year. The dollar reversed its anemic course late in the fiscal year, however, as investors flocked back to what some evidently perceived to be a safer currency amidst the global financial turmoil. This U.S. dollar rebound from July 2008 through the end of fiscal year 2008 hindered Fund returns and compounded the stock price declines experienced over this period.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | From an industry perspective, holdings that were concentrated in the defensive, non-cyclical part of the market contributed positively to relative performance. In the Health Care sector, life sciences tools & services contributed positively to relative performance. Similarly, in the Leisure and Consumer Staples sector, the food retail industry aided performance. |
Fund returns also benefited from minimizing larger benchmark industry laggards. Underweights in the Information Technology sector’s communications equipment industry benefited the Fund’s returns. Likewise, the reduced exposure to the diversified capital markets industry within the Financials sector proved beneficial as well.
Conversely, the Fund’s exposure to the Materials sector detracted from performance. Specifically, the diversified metals & mining, fertilizers & agricultural chemicals, and construction materials industries hurt performance. Fund returns were also hurt by an underweighting of the integrated oil & gas and pharmaceuticals industries, which performed better than the benchmark.
Regarding country composition, an overweight in Switzerland helped performance, but the Fund’s overweight holdings in Germany and underweight holdings in the United Kingdom detracted from relative performance.
| |
| Q. | What is your investment outlook for the European equity market? |
| |
| A. | Our analysis suggests that the fear and volatility that has gripped the global financial markets has created equity bargains for the European regions. As fiscal year 2008 ended, we estimated that fair value for European equities was 50% higher, on average, than where prices were currently trading. Under our methodology, this region has the best values relative to all other regions we track globally. Accordingly, we |
| |
| remain optimistic and we see potential for considerable upside at these levels. We believe the defensive market theme that emerged in 2008 remains in place with sectors like Health Care and Leisure and Consumer Staples showing relative strength amidst the market turbulence. |
With value as our core investment tenet, we also look to areas of the market that are trading at deep discounts for possible future leadership. While not showing much relative strength, the Energy and Materials sectors show the best value under our methodology. Additionally, the Financials sector is another area with industries that show some attractive upside at these current levels.
As our fiscal year comes to an end, we are doing what we have always done by continuing to seek out industries that trade at a discount to our estimation of fair value and show relative strength. By using value as a guide in our systematic and non-emotional discipline, we see numerous opportunities amidst the turbulence and volatility. We believe that it is nearly impossible to accurately time bottoms and that rallies do not offer invitations. With favorable valuations we remain fully invested and we will make adjustments as market conditions dictate.
ICON Europe Fund
Country Composition
as of September 30, 2008
| | | | | |
| Germany | | | 22.4% | |
| United Kingdom | | | 21.6% | |
| Switzerland | | | 19.0% | |
| France | | | 12.1% | |
| Netherlands | | | 7.4% | |
| Spain | | | 5.1% | |
| Sweden | | | 3.7% | |
| Turkey | | | 2.7% | |
| Italy | | | 1.9% | |
| Denmark | | | 1.6% | |
| Norway | | | 0.8% | |
| Greece | | | 0.7% | |
| Bermuda | | | 0.5% | |
| Ireland | | | 0.5% | |
| Austria | | | 0.4% | |
Percentages are based upon net assets.
ICON Europe Fund
Sector Diversification
as of September 30, 2008
| | | | | |
| Financial | | | 27.6% | |
| Leisure and Consumer Staples | | | 17.3% | |
| Energy | | | 14.4% | |
| Health Care | | | 12.5% | |
| Industrials | | | 9.4% | |
| Materials | | | 6.5% | |
| Consumer Discretionary | | | 5.6% | |
| Information Technology | | | 5.3% | |
| Telecommunications & Utilities | | | 1.8% | |
Percentages are based upon net assets.
ICON Europe Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Diversified Banks | | | 13.4% | |
| Integrated Oil & Gas | | | 11.5% | |
| Multi-Line Insurance | | | 7.8% | |
| Packaged Foods & Meats | | | 5.3% | |
| Food Retail | | | 4.9% | |
| Apparel Accessories & Luxury Goods | | | 4.6% | |
| Pharmaceuticals | | | 4.4% | |
| Specialty Chemicals | | | 2.9% | |
| Distillers & Vintners | | | 2.8% | |
| Health Care Equipment | | | 2.7% | |
| Industrial Conglomerates | | | 2.7% | |
| Fertilizers & Agricultural Chemicals | | | 2.5% | |
| Heavy Electrical Equipment | | | 2.4% | |
| Oil & Gas Equipment & Services | | | 2.4% | |
| Diversified Capital Markets | | | 2.3% | |
| Diversified Metals & Mining | | | 2.3% | |
| Application Software | | | 2.2% | |
| Electrical Components & Equipment | | | 2.2% | |
| Reinsurance | | | 2.1% | |
| Systems Software | | | 2.1% | |
| Agricultural Products | | | 1.7% | |
| Health Care Distributors | | | 1.2% | |
| Other Diversified Financial Services | | | 1.2% | |
| Biotechnology | | | 1.2% | |
| Publishing | | | 1.1% | |
| Apparel Retail | | | 1.0% | |
| Communications Equipment | | | 1.0% | |
| Integrated Telecommunication Services | | | 0.9% | |
| Metal & Glass Containers | | | 0.9% | |
| Security & Alarm Services | | | 0.9% | |
| Personal Products | | | 0.9% | |
| Alternative Carriers | | | 0.9% | |
| Life & Health Insurance | | | 0.8% | |
| Human Resource & Employment Services | | | 0.7% | |
| Household Products | | | 0.6% | |
| Research & Consulting Services | | | 0.5% | |
| Oil & Gas Drilling | | | 0.5% | |
| Life Sciences Tools & Services | | | 0.5% | |
| Steel | | | 0.4% | |
Percentages are based upon net assets.
ICON Europe Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Gross
| | | | Net
| |
| | | | Inception
| | | | | | | | | | | | | | | | Since
| | | | Expense
| | | | Expense
| |
| | | | Date | | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | Inception | | | | Ratio* | | | | Ratio* | |
| |
| |
| ICON Europe Fund - Class S | | | | 2/20/97 | | | | | | -36.83 | % | | | | | 10.66 | % | | | | | 5.58 | % | | | | | 6.91 | % | | | | | 1.35 | % | | | | | 1.35 | % | |
| |
| |
| MSCI Europe Index | | | | | | | | | | -30.50 | % | | | | | 11.50 | % | | | | | 5.22 | % | | | | | 7.03 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Europe Fund - Class I | | | | 1/25/08 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -26.41 | % | | | | | 1.60 | % | | | | | 1.60 | % | |
| |
| |
| MSCI Europe Index | | | | | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -21.56 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Europe Fund - Class C | | | | 1/25/08 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -26.74 | % | | | | | 2.35 | % | | | | | 2.35 | % | |
| |
| |
| MSCI Europe Index | | | | | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -21.56 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Europe Fund - Class Z | | | | 1/25/08 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -26.07 | % | | | | | 1.35 | % | | | | | 1.25 | % | |
| |
| |
| MSCI Europe Index | | | | | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -21.56 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| ICON Europe Fund - Class A | | | | 5/31/06 | | | | | | -37.17 | % | | | | | N/A | | | | | | N/A | | | | | | -7.74 | % | | | | | 2.43 | % | | | | | 1.84 | % | |
| |
| |
| ICON Europe Fund - Class A (including maximum sales charge of 5.75%) | | | | 5/31/06 | | | | | | -40.79 | % | | | | | N/A | | | | | | N/A | | | | | | -10.04 | % | | | | | 2.43 | % | | | | | 1.84 | % | |
| |
| |
| MSCI Europe Index | | | | | | | | | | -30.50 | % | | | | | N/A | | | | | | N/A | | | | | | -2.43 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Fund’s name and investment strategy changed effective January 29, 2004. The Fund’s past performance would have been different if the current strategy had been in effect. The Adviser has agreed to limit certain expenses on Class I, Class C, Class Z and Class A shares; without these limitations, returns would be lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors.
* Please see the January 28, 2008 prospectus for details.
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
ICON Europe Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Funds’ Class S shares on the Class’ inception date of 2/20/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Europe Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (100.4%) |
| | 7,700 | | | Actelion, Ltd.(a) | | $ | 396,876 | |
| | 12,800 | | | Adecco S.A. | | | 556,200 | |
| | 37,400 | | | Adidas AG | | | 2,001,322 | |
| | 12,775 | | | Allianz AG(b) | | | 1,759,910 | |
| | 8,400 | | | Alstom | | | 637,547 | |
| | 18,800 | | | Anglo American PLC | | | 634,964 | |
| | 6,300 | | | ArcelorMittal - Class A(b) | | | 318,833 | |
| | 10,650 | | | Aryzta AG(a)* | | | 415,249 | |
| | 147,600 | | | Aviva PLC | | | 1,283,670 | |
| | 67,000 | | | AXA | | | 2,192,888 | |
| | 141,100 | | | Banco Santander Central Hispano S.A. | | | 2,115,395 | |
| | 47,900 | | | BG Group PLC | | | 868,589 | |
| | 26,200 | | | BHP Billiton PLC | | | 593,452 | |
| | 41,500 | | | BIM Birlesik Magazalar A.S. | | | 1,287,858 | |
| | 27,050 | | | BNP Paribas | | | 2,581,755 | |
| | 280,800 | | | BP PLC | | | 2,338,241 | |
| | 248,700 | | | Cable & Wireless PLC | | | 738,444 | |
| | 11,350 | | | Celesio AG | | | 494,788 | |
| | 4,500 | | | Christian Dior S.A. | | | 341,241 | |
| | 43,800 | | | Commerzbank AG | | | 674,783 | |
| | 19,600 | | | Credit Suisse Group | | | 915,603 | |
| | 49,800 | | | Daily Mail & General Trust PLC - Class A | | | 287,355 | |
| | 4,900 | | | Deutsche Bank AG | | | 355,752 | |
| | 73,300 | | | Diageo PLC | | | 1,250,275 | |
| | 258,000 | | | Dogan Sirketler Grubu Holdings A.S.(a) | | | 299,103 | |
| | 15,700 | | | Draegerwerk AG & Co. KGaA | | | 849,700 | |
| | 37,500 | | | Eni S.p.A.(b) | | | 993,835 | |
| | 4,600 | | | Fresenius SE | | | 337,559 | |
| | 14,100 | | | Fugro N.V. | | | 832,520 | |
| | 1,530 | | | Galenica AG | | | 547,274 | |
| | 66,300 | | | Gerry Weber International AG | | | 1,505,798 | |
| | 53,900 | | | Getinge AB - Class B(b) | | | 1,111,349 | |
| | 13,200 | | | GFK AG | | | 404,693 | |
| | 24,100 | | | Grifols S.A. | | | 615,700 | |
| | 14,000 | | | Henkel AG & KGaA | | | 511,579 | |
| | 21,100 | | | Hennes & Mauritz AB - Class B(b) | | | 864,256 | |
| | 209,000 | | | HSBC Holdings PLC | | | 3,380,759 | |
| | 48,600 | | | ING Groep N.V. | | | 1,041,727 | |
| | 17,530 | | | K+S AG | | | 1,248,019 | |
| | 104,840 | | | Koninklijke Ahold N.V. | | | 1,210,909 | |
| | 8,000 | | | Koninklijke DSM N.V. | | | 378,343 | |
| | 11,500 | | | Leoni AG | | | 350,257 | |
| | 17,200 | | | Lonza Group AG | | | 2,158,681 | |
| | 9,300 | | | Merck KGaA | | | 991,640 | |
| | 9,500 | | | Muenchener Rueckversicherungs-Gesellschaft AG | | | 1,437,407 | |
| | 14,560 | | | National Bank of Greece S.A. | | | 589,953 | |
| | 104,050 | | | Nestle S.A. | | | 4,497,985 | |
| | 27,700 | | | Novartis AG | | | 1,458,782 | |
| | 21,900 | | | Nutreco Holding N.V. | | | 1,030,743 | |
| | 16,000 | | | Oriflame Cosmetics S.A. | | | 741,471 | |
| | 12,700 | | | Pernod Ricard S.A. | | | 1,118,596 | |
| | 45,900 | | | Petrofac, Ltd. | | | 479,537 | |
| | 21,700 | | | Prosegur Compania de Seguridad S.A. | | | 754,699 | |
| | 77,800 | | | Prudential PLC | | | 709,275 | |
| | 20,400 | | | QIAGEN N.V.(a) | | | 401,912 | |
| | 5,000 | | | Raiffeisen International Bank Holding AG(b) | | | 361,079 | |
| | 23,300 | | | Reed Elsevier N.V. | | | 345,606 | |
| | 110,410 | | | Rexam PLC | | | 784,334 | |
| | 11,710 | | | Rio Tinto PLC | | | 734,803 | |
24 Schedule of Investments
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 8,030 | | | Roche Holding AG | | $ | 1,257,367 | |
| | 89,600 | | | Royal Dutch Shell PLC - Class B | | | 2,516,747 | |
| | 21,500 | | | Saipem S.p.A. | | | 643,210 | |
| | 35,500 | | | SAP AG | | | 1,888,915 | |
| | 19,400 | | | Seadrill, Ltd. | | | 402,114 | |
| | 21,130 | | | Siemens AG | | | 1,987,145 | |
| | 11,800 | | | Societe Generale | | | 1,059,838 | |
| | 11,800 | | | Software AG | | | 676,032 | |
| | 34,700 | | | Solarworld AG | | | 1,512,985 | |
| | 26,800 | | | StatoilHydro ASA | | | 637,145 | |
| | 6,700 | | | Swiss Re | | | 371,986 | |
| | 3,970 | | | Syngenta AG | | | 837,433 | |
| | 48,000 | | | Telefonaktiebolaget LM Ericsson - Class B | | | 456,004 | |
| | 33,900 | | | Telefonica S.A. | | | 805,944 | |
| | 57,505 | | | Temenos Group AG(a)(b) | | | 1,096,532 | |
| | 247,900 | | | Tesco PLC | | | 1,723,888 | |
| | 22,000 | | | TKH Group N.V. | | | 408,000 | |
| | 38,000 | | | Total S.A. | | | 2,308,167 | |
| | 101,000 | | | Turkiye Is Bankasi - Class C | | | 419,029 | |
| | 170,000 | | | Turkiye Vakiflar Bankasi T.A.O. - Class D | | | 278,283 | |
| | 42,000 | | | UBS AG(a) | | | 718,074 | |
| | 15,200 | | | Vestas Wind Systems A/S(a) | | | 1,326,956 | |
| | 16,100 | | | Wolters Kluwer N.V. | | | 326,271 | |
| | 4,750 | | | Zurich Financial Services AG | | | 1,315,724 | |
| | | | | | | | | |
| Total Common Stocks (Cost $103,487,092) | | | 85,094,662 | |
Short-Term Investments (0.0%) | | | | |
| $ | 18 | | | Brown Brothers Harriman Time Deposit - British Pound, 3.92%, 10/01/08#* | | | 18 | |
| | 540 | | | Brown Brothers Harriman Time Deposit - Euro, 3.10%, 10/01/08#* | | | 540 | |
| | 9 | | | Brown Brothers Harriman Time Deposit - Norwegian Kroner, 4.81%, 10/01/08#* | | | 9 | |
| | 4 | | | Brown Brothers Harriman Time Deposit - Swedish Krona, 4.14%, 10/01/08#* | | | 4 | |
| | 36 | | | Brown Brothers Harriman Time Deposit - Swiss Frank, 1.51%, 10/01/08#* | | | 36 | |
| | | | | | | | | |
| | | | | |
| Total Short-Term Investments (Cost $607) | | | 607 | |
| Other Securities (5.6%) |
| | 4,730,083 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07%* | | | 4,730,083 | |
| | | | | | | | | |
Total Other Securities
(Cost $4,730,083) | | | 4,730,083 | |
Total Investments 106.0%
(Cost $108,217,782) | | | 89,825,352 | |
| Liabilities Less Other Assets (6.0%) | | | (5,100,365 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 84,724,987 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| * | | All securities were fair valued (Note 2) as of September 30, 2008 unless noted with a *. Total value of securities fair valued was $84,679,413. |
Schedule of Investments 25
Class S ICESX
Class I IIQIX
Class C IIQCX
Class Z ICNEX
Class A IIQAX
Class Q ICEQX
| |
| Q. | How did the Fund perform relative to its benchmark? |
| |
| A. | For the fiscal year ended September 30, 2008, the ICON International Equity Fund returned -39.85% for Class I shares, -40.38% for Class C shares and -39.66% for Class Z shares, underperforming the -29.98% return of the MSCI All Country World Index (ACWI) ex-U.S., the Fund’s benchmark. Class A shares of the Fund returned -39.95% (and -43.39% with maximum sales charge) during the same period. Since their inception dates, Class S and Class Q returned -28.92% and -29.66%, respectively. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | During the period, international markets underperformed U.S. equities. The Fund saw broad declines among the major regions, but the Western Hemisphere region, highlighted by Canada, Brazil, and Mexico, performed relatively better than the Asia-Pacific and European regions. The last 12-months have been marked by short periods of sector leadership with sudden and dramatic shifts to new areas of leadership. Our investment strategy focuses on identifying one to two year trends of industry leadership. The period’s volatility and rapid changes in leadership proved challenging to our system. |
The most significant reallocation in the Fund during the period was an increased weighting in Europe and a decreased position in Asia-Pacific. Driven by falling valuations in the Asia-Pacific region and declines in Industrials and other cyclical stocks during this defensive-themed period, the Fund was gradually pulled toward the Europe region. Relative strength also led to slight increases to Western Hemisphere exposure.
As a multi-cap manager, we do not consider investments based on market capitalization. However, our valuations resulted in a concentration in mid- to small-cap companies during this 12-month period. These allocations were overweight the predominantly large-cap benchmark, and the overweighting of small-cap stocks in particular hindered performance as large-cap stocks outperformed during this period.
Currency movements worldwide throughout the fiscal year had a negative effect on returns. The U.S. dollar experienced a rebound in the last months of the fiscal year, and the Fund was able to benefit from
currency hedging activities on the Taiwan Dollar, Singapore Dollar, and Malaysian Ringgit.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | The Fund’s overweighting of Asia-Pacific Industrials and Information Technology sectors proved to be detrimental as these areas saw sharp declines in the wake of the global market downturn. From a country perspective, overweights in Switzerland and underweights in Australia helped relative returns. In contrast, overweights in China, South Korea, and Hong Kong were a drag on performance as those markets suffered more over this time period. |
From a sector perspective, the Fund’s active underweighting in the Financials sector proved effective as this group’s declines outpaced those of the benchmark. Overweighting the multi-line insurance industry and underweighting the diversified capital markets and diversified real estate activities industries helped relative performance.
Conversely, the prior year’s standout leaders in the Industrials sector, marine shipping and shipbuilding stocks, were large detractors as those groups underperformed over the last 12-months. Further, underweightings in the Energy sector also hindered Fund returns as Energy stocks and industries held up better than the benchmark over this period of declines.
| |
| Q. | What is your investment outlook for the international equity market? |
| |
| A. | With our analysis showing continued parity in value across the major international regions during the past fiscal year, we still see opportunity worldwide, albeit less than in years past. Our analysis suggests that the fear and volatility that has gripped the global financial markets has created bargains in international equities. We estimate that at fiscal year end fair value for international equities is 36% higher on average than where prices are trading. |
We believe the defensive market theme that emerged in 2008 remains in place, with sectors like Health Care and Leisure and Consumer Staples showing relative strength amidst the market turbulence. Our calculations suggest that leadership could be imminent in the Information Technology, Materials, and Energy sectors, but our relative strength metrics have not yet confirmed that expectation.
While we do not target countries as a primary investment decision, it is a secondary factor that we monitor. Switzerland and the United Kingdom remain the most attractive countries in the European region, according
to our analysis. Within the Western Hemisphere, Canada looks attractive and Japan currently leads in the Asia-Pacific region.
Presently, we are doing what we have always done by continuing to seek out industries that trade at a discount to our estimation of fair value and show relative strength. By using value as a guide in our systematic and non-emotional discipline, we see numerous opportunities amidst the turbulence and volatility. We believe that it is nearly impossible to accurately time bottoms and that rallies do not offer invitations. With favorable valuations we remain fully invested and we will make adjustments as market conditions dictate.
ICON International Equity Fund
Country Composition
as of September 30, 2008
| | | | | |
| Switzerland | | | 14.6% | |
| Germany | | | 14.1% | |
| Canada | | | 12.3% | |
| United Kingdom | | | 10.4% | |
| France | | | 6.7% | |
| Japan | | | 5.8% | |
| Hong Kong | | | 4.1% | |
| Spain | | | 3.0% | |
| Taiwan | | | 3.0% | |
| Netherlands | | | 2.8% | |
| South Korea | | | 2.6% | |
| Singapore | | | 2.0% | |
| Turkey | | | 1.8% | |
| Sweden | | | 1.6% | |
| Brazil | | | 1.5% | |
| China | | | 1.5% | |
| Israel | | | 1.3% | |
| South Africa | | | 1.3% | |
| Denmark | | | 1.2% | |
| Italy | | | 1.1% | |
| Indonesia | | | 0.9% | |
| Malaysia | | | 0.7% | |
| Australia | | | 0.6% | |
| Norway | | | 0.5% | |
| Ireland | | | 0.4% | |
| Austria | | | 0.3% | |
Percentages are based upon net assets.
ICON International Equity Fund
Sector Diversification
as of September 30, 2008
| | | | | |
| Financial | | | 26.9% | |
| Leisure and Consumer Staples | | | 14.4% | |
| Health Care | | | 12.6% | |
| Energy | | | 11.1% | |
| Information Technology | | | 9.3% | |
| Industrials | | | 7.4% | |
| Consumer Discretionary | | | 6.2% | |
| Materials | | | 6.0% | |
| Telecommunications & Utilities | | | 2.2% | |
Percentages are based upon net assets.
ICON International Equity Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Diversified Banks | | | 13.4% | |
| Integrated Oil & Gas | | | 6.7% | |
| Multi-Line Insurance | | | 6.0% | |
| Packaged Foods & Meats | | | 4.9% | |
| Pharmaceuticals | | | 4.5% | |
| Life & Health Insurance | | | 3.0% | |
| Application Software | | | 2.8% | |
| Diversified Capital Markets | | | 2.7% | |
| Health Care Equipment | | | 2.5% | |
| Broadcasting & Cable TV | | | 2.4% | |
| Diversified Metals & Mining | | | 2.4% | |
| Specialty Chemicals | | | 2.3% | |
| Drug Retail | | | 2.3% | |
| Agricultural Products | | | 2.2% | |
| Industrial Conglomerates | | | 2.2% | |
| Apparel Accessories & Luxury Goods | | | 2.1% | |
| Automobile Manufacturers | | | 2.1% | |
| Food Retail | | | 1.9% | |
| Fertilizers & Agricultural Chemicals | | | 1.9% | |
| Oil & Gas Equipment & Services | | | 1.9% | |
| Coal & Consumable Fuels | | | 1.7% | |
| Biotechnology | | | 1.6% | |
| Wireless Telecommunication Services | | | 1.6% | |
| Computer Hardware | | | 1.4% | |
| Diversified Chemicals | | | 1.4% | |
| IT Consulting & Other Services | | | 1.2% | |
| Electronic Manufacturing Services | | | 1.2% | |
| Heavy Electrical Equipment | | | 1.2% | |
| Railroads | | | 1.1% | |
| Systems Software | | | 1.1% | |
| Electrical Components & Equipment | | | 1.0% | |
| Reinsurance | | | 1.0% | |
| Health Care Distributors | | | 1.0% | |
| Semiconductors | | | 1.0% | |
| Other Diversified Financial Services | | | 0.8% | |
| Oil & Gas Drilling | | | 0.8% | |
| Apparel Retail | | | 0.7% | |
| Education Services | | | 0.7% | |
| Aerospace & Defense | | | 0.7% | |
| Life Sciences Tools & Services | | | 0.7% | |
| Alternative Carriers | | | 0.6% | |
| Home Entertainment Software | | | 0.6% | |
| Security & Alarm Services | | | 0.5% | |
| Trading Companies & Distributors | | | 0.4% | |
| Footwear | | | 0.4% | |
| Publishing | | | 0.4% | |
| Construction & Engineering | | | 0.3% | |
| Steel | | | 0.3% | |
| Cable & Satellite | | | 0.3% | |
| Computer & Electronics Retail | | | 0.2% | |
Percentages are based upon net assets.
ICON International Equity Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Gross
| | | Net
| |
| | | | Inception
| | | | | | | | | | | | | | | | Since
| | | Expense
| | | Expense
| |
| | | | Date | | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | Inception | | | Ratio* | | | Ratio* | |
| ICON International Equity Fund - Class S | | | | 1/25/08 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -28.92 | % | | | | 1.26 | % | | | | 1.26 | % | |
| |
| |
| MSCI ACWI ex-U.S. | | | | | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -22.02 | % | | | | N/A | | | | | N/A | | |
| |
| |
| ICON International Equity Fund - Class I | | | | 2/6/04 | | | | | | -39.85 | % | | | | | N/A | | | | | | N/A | | | | | | 5.99 | % | | | | 1.54 | % | | | | 1.54 | % | |
| |
| |
| MSCI ACWI ex-U.S. | | | | | | | | | | -29.98 | % | | | | | N/A | | | | | | N/A | | | | | | 8.29 | % | | | | N/A | | | | | N/A | | |
| |
| |
| ICON International Equity Fund - Class C | | | | 2/19/04 | | | | | | -40.38 | % | | | | | N/A | | | | | | N/A | | | | | | 4.08 | % | | | | 2.57 | % | | | | 2.56 | % | |
| |
| |
| MSCI ACWI ex-U.S. | | | | | | | | | | -29.98 | % | | | | | N/A | | | | | | N/A | | | | | | 7.67 | % | | | | N/A | | | | | N/A | | |
| |
| |
| ICON International Equity Fund - Class Z | | | | 2/18/97 | | | | | | -39.66 | % | | | | | 11.79 | % | | | | | 6.02 | % | | | | | 6.71 | % | | | | 1.26 | % | | | | 1.26 | % | |
| |
| |
| MSCI ACWI ex-U.S. | | | | | | | | | | -29.98 | % | | | | | 11.79 | % | | | | | 6.84 | % | | | | | 5.63 | % | | | | N/A | | | | | N/A | | |
| |
| |
| ICON International Equity Fund - Class A | | | | 5/31/06 | | | | | | -39.95 | % | | | | | N/A | | | | | | N/A | | | | | | -7.47 | % | | | | 1.70 | % | | | | 1.69 | % | |
| |
| |
| ICON International Equity Fund - Class A (including maximum sales charge of 5.75%) | | | | 5/31/06 | | | | | | -43.39 | % | | | | | N/A | | | | | | N/A | | | | | | -9.79 | % | | | | 1.70 | % | | | | 1.69 | % | |
| |
| |
| MSCI ACWI ex-U.S. | | | | | | | | | | -29.98 | % | | | | | N/A | | | | | | N/A | | | | | | -2.05 | % | | | | N/A | | | | | N/A | | |
| |
| |
| ICON International Equity Fund - Class Q | | | | 1/28/08 | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -29.66 | % | | | | 1.26 | % | | | | 1.26 | % | |
| |
| |
| MSCI ACWI ex-U.S. | | | | | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | -22.02 | % | | | | N/A | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Fund’s name and investment strategy changed effective January 29, 2004. The Fund’s past performance would have been different if the current strategy had been in effect. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Q shares are closed to new investors and are only available to grandfathered investors. Class Z shares are only available to institutional investors.
| |
| * | Please see the January 28, 2008 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
ICON International Equity Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class Z shares on the Class’ inception date of 2/18/97 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund’s other share classes will vary due to differences in charges and expenses. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends, capital gain distributions and tax return of capital but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON International Equity Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (95.5%) |
| | 1,351,980 | | | Acer, Inc. | | $ | 2,302,739 | |
| | 16,900 | | | Actelion, Ltd.(a) | | | 871,064 | |
| | 39,700 | | | Adidas AG | | | 2,124,398 | |
| | 19,520 | | | Allianz AG | | | 2,689,115 | |
| | 26,900 | | | Anglo American PLC | | | 908,539 | |
| | 16,800 | | | Aryzta AG(a)* | | | 655,040 | |
| | 67,200 | | | Astral Media, Inc.* | | | 2,016,632 | |
| | 229,200 | | | Aviva PLC | | | 1,993,340 | |
| | 105,500 | | | AXA | | | 3,452,980 | |
| | 156,400 | | | Banco Santander Central Hispano S.A. | | | 2,344,776 | |
| | 6,334,000 | | | Bank of China, Ltd. - Class H(b) | | | 2,454,667 | |
| | 17,600 | | | Bank of Nova Scotia* | | | 793,985 | |
| | 53,800 | | | BHP Billiton PLC | | | 1,218,616 | |
| | 41,800 | | | Bidvest Group Ltd. | | | 535,698 | |
| | 39,500 | | | BIM Birlesik Magazalar A.S. | | | 1,225,793 | |
| | 40,100 | | | BNP Paribas | | | 3,827,297 | |
| | 219,600 | | | Bombardier, Inc. - Class B* | | | 1,192,940 | |
| | 276,400 | | | BP PLC | | | 2,301,601 | |
| | 356,100 | | | Cable & Wireless PLC | | | 1,057,338 | |
| | 39,800 | | | Canadian National Railway Co.* | | | 1,899,477 | |
| | 19,500 | | | Celesio AG | | | 850,076 | |
| | 3,570,000 | | | China Agri-Industries Holdings, Ltd.(a)(b) | | | 1,870,864 | |
| | 2,244,000 | | | China CITIC Bank Corp., Ltd. - Class H(b) | | | 1,008,866 | |
| | 615,000 | | | China Coal Energy Co. - Class H | | | 650,197 | |
| | 2,833,000 | | | China Construction Bank Corp. - Class H(b) | | | 1,890,427 | |
| | 82,000 | | | China Mobile, Ltd. | | | 821,476 | |
| | 52,100 | | | Cogeco Cable, Inc.* | | | 1,951,302 | |
| | 67,200 | | | Commerzbank AG | | | 1,035,283 | |
| | 45,100 | | | Credit Suisse Group | | | 2,106,821 | |
| | 3,415,000 | | | CSE Global, Ltd. | | | 2,044,210 | |
| | 107,600 | | | Daily Mail & General Trust PLC - Class A | | | 620,871 | |
| | 1,492,000 | | | Daphne International Holdings, Ltd. | | | 659,570 | |
| | 8,210 | | | DC Chemical Co., Ltd.(b) | | | 2,257,594 | |
| | 10,900 | | | Deutsche Bank AG | | | 791,368 | |
| | 424,000 | | | Dogan Sirketler Grubu Holdings A.S.(a) | | | 491,549 | |
| | 28,700 | | | Draegerwerk AG & Co. KGaA | | | 1,553,273 | |
| | 47,800 | | | Energy Resources of Australia, Ltd.(b) | | | 650,107 | |
| | 35,300 | | | Eni S.p.A.(b) | | | 935,530 | |
| | 111,700 | | | Foschini Limited | | | 541,922 | |
| | 9,400 | | | Fresenius SE | | | 689,795 | |
| | 18,800 | | | Fugro N.V. | | | 1,110,027 | |
| | 2,140 | | | Galenica AG | | | 765,468 | |
| | 60,900 | | | Gerry Weber International AG | | | 1,383,154 | |
| | 93,600 | | | Getinge AB - Class B | | | 1,929,911 | |
32 Schedule of Investments
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 71,700 | | | Grifols S.A. | | $ | 1,831,771 | |
| | 81,400 | | | Group Five | | | 565,411 | |
| | 17,300 | | | Hennes & Mauritz AB - Class B(b) | | | 708,608 | |
| | 555,450 | | | Hon Hai Precision Industry Co., Ltd. | | | 1,990,071 | |
| | 191,100 | | | HSBC Holdings PLC | | | 3,091,211 | |
| | 17,500 | | | Hyundai Motor Co., Ltd.(b) | | | 1,095,275 | |
| | 665,000 | | | Indo Tambangraya Megah PT | | | 1,533,511 | |
| | 64,000 | | | ING Groep N.V. | | | 1,371,822 | |
| | 41,800 | | | JB Hi-Fi, Ltd.(b) | | | 413,275 | |
| | 26,720 | | | K+S AG | | | 1,902,286 | |
| | 3,098,000 | | | KNM Group Bhd. | | | 1,148,676 | |
| | 31,100 | | | Lonza Group AG | | | 3,903,197 | |
| | 87,100 | | | Manulife Financial Corp.* | | | 3,133,635 | |
| | 104,000 | | | Matsumotokiyoshi Holdings Co., Ltd. | | | 1,990,455 | |
| | 16,300 | | | Merck KGaA | | | 1,738,036 | |
| | 34,000 | | | Metalurgica Gerdau S.A.* | | | 524,727 | |
| | 79,800 | | | Mitsubishi UFJ Financial Group, Inc. | | | 695,974 | |
| | 58,000 | | | Mitsui & Co., Ltd. | | | 720,132 | |
| | 11,200 | | | Muenchener Rueckversicherungs-Gesellschaft AG | | | 1,694,628 | |
| | 25,700 | | | Naspers Limited | | | 508,408 | |
| | 187,200 | | | Nestle S.A. | | | 8,092,483 | |
| | 2,300 | | | Nintendo Co., Ltd. | | | 975,737 | |
| | 33,740 | | | Novartis AG | | | 1,776,870 | |
| | 24,300 | | | Nutreco Holding N.V. | | | 1,143,701 | |
| | 42,500 | | | Petro-Canada* | | | 1,414,004 | |
| | 54,200 | | | Petroleo Brasiliero S.A.* | | | 984,626 | |
| | 9,800 | | | Potash Corp. of Saskatchewan, Inc.* | | | 1,270,776 | |
| | 77,400 | | | Precision Drilling Corp.(b)* | | | 1,273,026 | |
| | 24,800 | | | Prosegur Compania de Seguridad S.A. | | | 862,513 | |
| | 91,800 | | | Prudential PLC | | | 836,909 | |
| | 55,900 | | | QIAGEN N.V.(a) | | | 1,101,317 | |
| | 2,439,000 | | | Raffles Education Corp., Ltd. | | | 1,229,356 | |
| | 6,440 | | | Raiffeisen International Bank Holding AG(b) | | | 465,070 | |
| | 16,650 | | | Rio Tinto PLC | | | 1,044,788 | |
| | 10,440 | | | Roche Holding AG | | | 1,634,734 | |
| | 57,200 | | | Rogers Communications, Inc. - Class B* | | | 1,855,774 | |
| | 19,300 | | | Royal Bank of Canada* | | | 916,024 | |
| | 77,300 | | | Royal Dutch Shell PLC - Class B | | | 2,171,256 | |
| | 27,800 | | | Saipem S.p.A. | | | 831,686 | |
| | 2,080 | | | Samsung Electronics Co., Ltd. | | | 953,286 | |
| | 48,900 | | | SAP AG | | | 2,601,914 | |
| | 37,000 | | | Shoppers Drug Mart Corp.* | | | 1,785,667 | |
| | 28,000 | | | Siemens AG | | | 2,633,226 | |
| | 17,600 | | | Societe Generale | | | 1,580,776 | |
| | 39,300 | | | Solarworld AG | | | 1,713,553 | |
| | 36,000 | | | StatoilHydro ASA | | | 855,866 | |
| | 136 | | | Sumitomo Mitsui Financial Group, Inc. | | | 852,795 | |
| | 29,200 | | | Sun Life Financial, Inc.* | | | 1,020,902 | |
Schedule of Investments 33
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 372,564 | | | Taiwan Semiconductor Manufacturing Co., Ltd. | | $ | 624,996 | |
| | 97,800 | | | Temenos Group AG(a)(b) | | | 1,864,896 | |
| | 296,800 | | | Tesco PLC | | | 2,063,937 | |
| | 49,000 | | | Teva Pharmaceutical Industries, Ltd. - ADR(b)* | | | 2,243,710 | |
| | 38,055 | | | Total S.A. | | | 2,311,508 | |
| | 56,200 | | | Toyota Motor Corp. | | | 2,403,030 | |
| | 296,000 | | | Turkiye Is Bankasi - Class C | | | 1,228,044 | |
| | 84,300 | | | UBS AG(a) | | | 1,441,278 | |
| | 22,100 | | | Vestas Wind Systems A/S(a) | | | 1,929,324 | |
| | 2,419 | | | Works Applications Co., Ltd.(b) | | | 2,069,734 | |
| | 6,510 | | | Zurich Financial Services AG | | | 1,803,234 | |
| | | | | | | | | |
| Total Common Stocks (Cost $196,909,222) | | | 158,899,131 | |
| |
| Preferred Stock (0.6%) |
| | 60,600 | | | Companhia Vale do Rio Doce - Class A* | | | 1,028,900 | |
| | | | | | | | | |
| Total Preferred Stocks (Cost $1,827,804) | | | 1,028,900 | |
| Short-Term Investments (0.9%) |
| $ | 1 | | | Brown Brothers Harriman Time Deposit - British Pound, 3.92%, 10/01/08*# | | | 1 | |
| | 2,958 | | | Brown Brothers Harriman Time Deposit - Euro, 3.10%, 10/01/08*# | | | 2,958 | |
| | 1 | | | Brown Brothers Harriman Time Deposit - Japanese Yen, 0.01%, 10/01/08*# | | | 1 | |
| | 1,463,669 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08*# | | | 1,463,669 | |
| | | | | | | | | |
Total Short-Term Investments
(Cost $1,466,629) | | | 1,466,629 | |
| |
| Other Securities (10.0%) |
| | 16,673,069 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07%* | | | 16,673,069 | |
| | | | | | | | | |
| Total Other Securities (Cost $16,673,069) | | | 16,673,069 | |
| Total Investments 107.0% (Cost $216,876,724) | | | 178,067,729 | |
| Liabilities Less Other Assets (7.0%) | | | (11,675,728 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 166,392,001 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| * | | All securities were fair valued (Note 2) as of September 30, 2008 unless noted with a “*”. Total value of securities fair valued was $133,966,884. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
34 Schedule of Investments
ICON International Equity Fund
As of September 30, 2008, the Fund had the following forward currency contracts outstanding:
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Unrealized
| |
| | | | | Delivery
| | Contract
| | | Market
| | | Appreciation/
| |
| | | Currency | | Date | | Value | | | Value | | | (Depreciation) | |
| | |
| |
Contracts to Sell: | | | | | | | | | | | | | | | | | | |
| (5,000,000,000) | | Korean Won | | | 04/02/09 | | | $ | (4,118,616 | ) | | $ | (4,209,385 | ) | | $ | (90,769 | ) |
| (8,300,000) | | Malaysian Ringgit | | | 01/30/09 | | | | (2,545,232 | ) | | | (2,437,790 | ) | | | 107,442 | |
| (9,900,000) | | Singapore Dollar | | | 01/30/09 | | | | (7,269,256 | ) | | | (6,936,154 | ) | | | 333,102 | |
| (229,000,000) | | Taiwan Dollar | | | 01/30/09 | | | | (7,496,399 | ) | | | (7,130,446 | ) | | | 365,953 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | $ | (21,429,503 | ) | | $ | (20,713,775 | ) | | $ | 715,728 | |
| | | | | | | | | | | | | | | | | | | |
Contracts to Buy: | | | | | | | | | | | | | | | | | | |
| 1,500,000 | | Malaysian Ringgit | | | 01/30/09 | | | $ | 451,263 | | | $ | 440,564 | | | $ | (10,699 | ) |
| 6,800,000 | | Malaysian Ringgit | | | 01/30/09 | | | | 1,997,650 | | | | 1,997,226 | | | | (424 | ) |
| 1,100,000 | | Singapore Dollar | | | 01/30/09 | | | | 787,064 | | | | 770,684 | | | | (16,380 | ) |
| 9,000,000 | | Taiwan Dollar | | | 01/30/09 | | | | 290,323 | | | | 280,236 | | | | (10,087 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | $ | 3,526,300 | | | $ | 3,488,710 | | | $ | (37,590 | ) |
| | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
Schedule of Investments 35
Statements of Assets and Liabilities
September 30, 2008
| | | | | | | | | | | | | |
| | | ICON
| | | | | | | |
| | | Asia-Pacific
| | | ICON
| | | ICON
| |
| | | Region
| | | Europe
| | | International
| |
| | | Fund | | | Fund | | | Equity Fund | |
| |
Assets | | | | | | | | | | | | |
| Investments, at cost | | $ | 95,951,600 | | | $ | 108,217,782 | | | $ | 216,876,724 | |
| | | | | | | | | | | | | |
| Investments, at value† | | | 78,340,705 | | | | 89,825,352 | | | | 178,067,729 | |
| Cash | | | - | | | | - | | | | 8,586 | |
| Foreign currency, at value (cost $310,516, $267,775 and $1,176,749) | | | 307,277 | | | | 267,876 | | | | 1,173,747 | |
| Unrealized appreciation on forward foreign currency exchange contracts | | | 1,034,808 | | | | - | | | | 806,497 | |
| Receivables: | | | | | | | | | | | | |
| Fund shares sold | | | 77,651 | | | | 48,642 | | | | 154,703 | |
| Investments sold | | | 3,456,254 | | | | 2,423,646 | | | | 5,504,003 | |
| Interest | | | 12,569 | | | | 3,802 | | | | 19,614 | |
| Dividends | | | 272,537 | | | | 119,687 | | | | 380,417 | |
| Expense reimbursements by Adviser | | | 2,021 | | | | 1,557 | | | | - | |
| Foreign tax reclaims | | | - | | | | 51,520 | | | | 149,875 | |
| Other assets | | | 49,549 | | | | 49,320 | | | | 69,631 | |
| | | | | | | | | | | | | |
| Total Assets | | | 83,553,371 | | | | 92,791,402 | | | | 186,334,802 | |
| | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | |
| Payables: | | | | | | | | | | | | |
| Due to custodian bank | | | 1,134,605 | | | | 786,492 | | | | 1,924 | |
| Interest | | | 7,379 | | | | 6,896 | | | | 787 | |
| Investments bought | | | 1,209,709 | | | | 2,123,476 | | | | 2,542,185 | |
| Payable for collateral received on securities loaned | | | 10,509,338 | | | | 4,730,083 | | | | 16,673,069 | |
| Fund shares redeemed | | | 308,363 | | | | 261,145 | | | | 301,372 | |
| Advisory fees | | | 70,149 | | | | 78,420 | | | | 152,043 | |
| Accrued distribution fees | | | 144 | | | | 100 | | | | 46,900 | |
| Fund accounting fees | | | 96 | | | | 98 | | | | 232 | |
| Transfer agent fees | | | 6,318 | | | | 5,961 | | | | 12,098 | |
| Administration fees | | | 3,347 | | | | 3,610 | | | | 7,014 | |
| Trustee fees | | | 1,897 | | | | 2,128 | | | | 4,129 | |
| Accrued expenses | | | 58,065 | | | | 68,006 | | | | 72,689 | |
| Unrealized depreciation on forward foreign currency contracts | | | 264,326 | | | | - | | | | 128,359 | |
| | | | | | | | | | | | | |
| Total Liabilities | | | 13,573,736 | | | | 8,066,415 | | | | 19,942,801 | |
| | | | | | | | | | | | | |
Net Assets - All Share Classes | | $ | 69,979,635 | | | $ | 84,724,987 | | | $ | 166,392,001 | |
| | | | | | | | | | | | | |
Net Assets - Class S | | $ | 69,519,411 | | | $ | 84,319,527 | | | $ | 1,514,815 | |
| | | | | | | | | | | | | |
Net Assets - Class I | | $ | 9,963 | | | $ | 16,131 | | | $ | 110,029,498 | |
| | | | | | | | | | | | | |
Net Assets - Class C | | $ | 32,968 | | | $ | 15,768 | | | $ | 22,194,392 | |
| | | | | | | | | | | | | |
Net Assets - Class Z | | $ | 4,932 | | | $ | 3,693 | | | $ | 13,580,223 | |
| | | | | | | | | | | | | |
Net Assets - Class A | | $ | 412,361 | | | $ | 369,868 | | | $ | 7,000,598 | |
| | | | | | | | | | | | | |
Net Assets - Class Q | | $ | - | | | | - | | | $ | 12,072,475 | |
| | | | | | | | | | | | | |
Net Assets Consist of | | | | | | | | | | | | |
| Paid-in capital | | $ | 98,920,738 | | | $ | 124,018,482 | | | $ | 247,370,086 | |
| Accumulated undistributed net investment income/(loss) | | | (188,570 | ) | | | 1,776,910 | | | | 2,145,865 | |
| Accumulated undistributed net realized gain/(loss) from investment and foreign currency transactions | | | (11,924,745 | ) | | | (22,693,871 | ) | | | (44,954,730 | ) |
| Unrealized appreciation/(depreciation) on investments and other assets and liabilities denominated in foreign currency | | | (16,827,788 | ) | | | (18,376,534 | ) | | | (38,169,220 | ) |
| | | | | | | | | | | | | |
Net Assets | | $ | 69,979,635 | | | $ | 84,724,987 | | | $ | 166,392,001 | |
| Shares outstanding (unlimited shares authorized, no par value) | | | | | | | | | | | | |
| Class S | | | 7,338,573 | | | | 6,373,907 | | | | 139,725 | |
| Class I | | | 1,054 | | | | 1,224 | | | | 10,269,563 | |
| Class C | | | 3,505 | | | | 1,202 | | | | 2,196,642 | |
| Class Z | | | 520 | | | | 279 | | | | 1,248,763 | |
| Class A | | | 43,944 | | | | 28,148 | | | | 649,207 | |
| Class Q | | | - | | | | - | | | | 1,111,286 | |
| Net asset value (offering and redemption price per share) | | | | | | | | | | | | |
| Class S | | $ | 9.47 | | | $ | 13.23 | | | $ | 10.84 | |
| Class I | | $ | 9.45 | | | $ | 13.18 | | | $ | 10.71 | |
| Class C | | $ | 9.41 | | | $ | 13.12 | | | $ | 10.10 | |
| Class Z | | $ | 9.48 | | | $ | 13.24 | | | $ | 10.87 | |
| Class A | | $ | 9.38 | | | $ | 13.14 | | | $ | 10.78 | |
| Class Q | | $ | - | | | $ | - | | | $ | 10.86 | |
| Class A maximum offering price (100%/(100%-maximum sales charge)) of net asset value adjusted to the nearest cent per share | | $ | 9.95 | | | $ | 13.94 | | | $ | 11.44 | |
| |
| † | Includes securities on loan of $10,019,565, $4,156,323, and $15,482,662. |
The accompanying notes are an integral part of the financial statements.
Statements of Operations
For the year ended September 30, 2008
| | | | | | | | | | | | | |
| | | ICON
| | | | | | ICON
| |
| | | Asia-Pacific
| | | ICON
| | | International
| |
| | | Region
| | | Europe
| | | Equity
| |
| | | Fund | | | Fund | | | Fund | |
Investment Income | | | | | | | | | | | | |
| Interest | | $ | 29,878 | | | $ | 25,344 | | | $ | 61,720 | |
| Dividends | | | 3,292,401 | | | | 4,735,957 | | | | 7,880,426 | |
| Income from securities lending, net | | | 54,608 | | | | 163,587 | | | | 249,360 | |
| Foreign taxes withheld | | | (276,561 | ) | | | (479,958 | ) | | | (789,582 | ) |
| | | | | | | | | | | | | |
| Total Investment Income | | | 3,100,326 | | | | 4,444,930 | | | | 7,401,924 | |
| | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | |
| Advisory fees | | | 1,466,628 | | | | 1,372,555 | | | | 2,519,982 | |
| Distribution fees: | | | | | | | | | | | | |
| Class I | | | 15 | | | | 31 | | | | 436,292 | |
| Class C | | | 149 | | | | 64 | | | | 303,364 | |
| Class A | | | 2,965 | | | | 1,332 | | | | 21,826 | |
| Fund accounting fees | | | 66,117 | | | | 64,177 | | | | 92,373 | |
| Transfer agent fees | | | 114,663 | | | | 99,974 | | | | 154,538 | |
| Custody fees | | | 114,898 | | | | 93,770 | | | | 155,628 | |
| Administration fees | | | 68,780 | | | | 64,424 | | | | 118,374 | |
| Registration fees: | | | | | | | | | | | | |
| Class S | | | 28,373 | | | | 28,798 | | | | 1,599 | |
| Class I | | | 461 | | | | 464 | | | | 21,557 | |
| Class C | | | 461 | | | | 461 | | | | 21,758 | |
| Class Z | | | 339 | | | | 339 | | | | - | |
| Class A | | | 9,711 | | | | 9,223 | | | | 8,946 | |
| Class Q | | | - | | | | - | | | | 359 | |
| Insurance expense | | | 13,035 | | | | 10,366 | | | | 14,957 | |
| Trustee fees and expenses | | | 10,626 | | | | 10,558 | | | | 17,407 | |
| Interest expense | | | 111,667 | | | | 42,271 | | | | 86,961 | |
| Other expenses | | | 99,775 | | | | 83,309 | | | | 108,294 | |
| Recoupment of previously reimbursed expenses | | | - | | | | - | | | | 2,692 | |
| | | | | | | | | | | | | |
Total expenses before expense reimbursement
and transfer agent earnings credit | | | 2,108,663 | | | | 1,882,116 | | | | 4,086,907 | |
| Transfer agent earnings credit | | | (3,168 | ) | | | (2,928 | ) | | | (5,195 | ) |
| Expense reimbursement by Adviser due to expense limitation agreement | | | (21,793 | ) | | | (22,551 | ) | | | - | |
| | | | | | | | | | | | | |
| Net Expenses | | | 2,083,702 | | | | 1,856,637 | | | | 4,081,712 | |
| | | | | | | | | | | | | |
Net Investment Income/(Loss) | | | 1,016,624 | | | | 2,588,293 | | | | 3,320,212 | |
| | | | | | | | | | | | | |
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency Transactions | | | | | | | | | | | | |
| Net realized gain/(loss) from investment transactions | | | (5,390,874 | ) | | | (19,985,274 | ) | | | (42,436,248 | ) |
| Net realized gain/(loss) from foreign currency transactions | | | (468,780 | ) | | | (315,187 | ) | | | (927,844 | ) |
| Change in unrealized net appreciation/(depreciation) on investments & foreign currency translations | | | (61,368,762 | ) | | | (39,200,115 | ) | | | (77,067,637 | ) |
| | | | | | | | | | | | | |
| Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency Transactions | | | (67,228,416 | ) | | | (59,500,576 | ) | | | (120,431,729 | ) |
| | | | | | | | | | | | | |
Net Increase/(Decrease) in Net Assets Resulting From Operations | | $ | (66,211,792 | ) | | $ | (56,912,283 | ) | | $ | (117,111,517 | ) |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
Statements of Changes in Net Assets
| | | | | | | | | |
| | | ICON Asia-Pacific Region Fund | |
| | | Year Ended
| | | Year Ended
| |
| | | September 30,
| | | September 30,
| |
| | | 2008 | | | 2007 | |
Operations | | | | | | | | |
| Net investment income/(loss) | | $ | 1,016,624 | | | $ | 1,521,881 | |
| Net realized gain/(loss) from investment transactions | | | (5,390,874 | ) | | | 24,898,211 | |
| Net realized gain/(loss) from foreign currency translations | | | (468,780 | ) | | | (63,187 | ) |
| Change in net unrealized appreciation/(depreciation) on investments and foreign currency translations | | | (61,368,762 | ) | | | 31,658,932 | |
| | | | | | | | | |
| Net increase/(decrease) in net assets resulting from operations | | | (66,211,792 | ) | | | 58,015,837 | |
| | | | | | | | | |
Dividends and Distributions to Shareholders | | | | | | | | |
| Net investment income | | | | | | | | |
| Class S | | | (1,159,659 | ) | | | (327,103 | ) |
| Class I | | | - | | | | - | |
| Class C | | | - | | | | - | |
| Class Z | | | - | | | | - | |
| Class A | | | (7,875 | ) | | | (214 | ) |
| Net realized gains | | | | | | | | |
| Class S | | | (21,792,618 | ) | | | - | |
| Class I | | | - | | | | - | |
| Class C | | | - | | | | - | |
| Class Z | | | - | | | | - | |
| Class A | | | (177,023 | ) | | | - | |
| | | | | | | | | |
| Net decrease from dividends and distributions | | | (23,137,175 | ) | | | (327,317 | ) |
| | | | | | | | | |
Fund Share Transactions | | | | | | | | |
| Shares sold | | | | | | | | |
| Class S | | | 53,849,697 | | | | 89,318,346 | |
| Class I | | | 14,400 | | | | - | |
| Class C | | | 65,721 | | | | - | |
| Class Z | | | 7,100 | | | | - | |
| Class A | | | 2,156,577 | | | | 981,784 | |
| Class Q | | | - | | | | - | |
| Reinvested dividends and distributions | | | | | | | | |
| Class S | | | 22,106,280 | | | | 303,437 | |
| Class I | | | - | | | | - | |
| Class C | | | - | | | | - | |
| Class Z | | | - | | | | - | |
| Class A | | | 156,269 | | | | 174 | |
| Shares repurchased | | | | | | | | |
| Class S | | | (123,177,916 | ) | | | (89,329,345 | ) |
| Class I | | | - | | | | - | |
| Class C | | | (18,434 | ) | | | - | |
| Class Z | | | - | | | | - | |
| Class A | | | (2,136,060 | ) | | | (126,676 | ) |
| Class Q | | | - | | | | - | |
| | | | | | | | | |
| Net increase/(decrease) from fund share transactions | | | (46,976,366 | ) | | | 1,147,720 | |
| | | | | | | | | |
| Total net increase/(decrease) in net assets | | | (136,325,333 | ) | | | 58,836,240 | |
Net Assets | | | | | | | | |
| Beginning of period | | | 206,304,968 | | | | 147,468,728 | |
| | | | | | | | | |
| End of period | | $ | 69,979,635 | | | $ | 206,304,968 | |
| | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | |
| ICON Europe Fund | | | ICON International Equity Fund | |
Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| |
| 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | |
| $ | 2,588,293 | | | $ | 1,470,862 | | | $ | 3,320,212 | | | $ | 1,568,683 | |
| | (19,985,274 | ) | | | 25,312,930 | | | | (42,436,248 | ) | | | 27,661,435 | |
| | (315,187 | ) | | | (409,192 | ) | | | (927,844 | ) | | | (277,388 | ) |
| |
(39,200,115 | ) | | | 10,572,351 | | | | (77,067,637 | ) | | | 28,720,835 | |
| | | | | | | | | | | | | | | |
| | (56,912,283 | ) | | | 36,946,951 | | | | (117,111,517 | ) | | | 57,673,565 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | (1,423,883 | ) | | | (366,098 | ) | | | - | | | | - | |
| | - | | | | - | | | | (1,286,755 | ) | | | (10,385 | ) |
| | - | | | | - | | | | (4,422 | ) | | | - | |
| | - | | | | - | | | | (312,185 | ) | | | - | |
| | (2,786 | ) | | | (553 | ) | | | (62,758 | ) | | | - | |
| | | | | | | | | | | | | | | |
| | (18,793,180 | ) | | | (1,940,765 | ) | | | - | | | | - | |
| | - | | | | - | | | | (19,127,601 | ) | | | (3,723,882 | ) |
| | - | | | | - | | | | (3,423,110 | ) | | | (724,596 | ) |
| | - | | | | - | | | | (3,637,063 | ) | | | (1,230,878 | ) |
| | (67,852 | ) | | | (3,610 | ) | | | (931,990 | ) | | | (117,472 | ) |
| | | | | | | | | | | | | | | |
| | (20,287,701 | ) | | | (2,311,026 | ) | | | (28,785,884 | ) | | | (5,807,213 | ) |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | 73,628,287 | | | | 113,256,468 | | | | 2,400,225 | | | | - | |
| | 22,500 | | | | - | | | | 97,739,179 | | | | 77,455,420 | |
| | 20,157 | | | | - | | | | 14,385,146 | | | | 11,921,728 | |
| | 5,000 | | | | - | | | | 23,922,897 | | | | 6,829,087 | |
| | 189,257 | | | | 575,800 | | | | 11,423,858 | | | | 8,691,180 | |
| | - | | | | - | | | | 25,433,899 | | | | - | |
| | | | | | | | | | | | | | | |
| | 19,745,712 | | | | 2,085,318 | | | | - | | | | - | |
| | - | | | | - | | | | 19,925,371 | | | | 3,619,722 | |
| | - | | | | - | | | | 3,142,931 | | | | 666,173 | |
| | - | | | | - | | | | 3,880,524 | | | | 1,228,139 | |
| | 58,430 | | | | 4,163 | | | | 919,493 | | | | 116,347 | |
| | | | | | | | | | | | | | | |
| | (71,225,916 | ) | | | (116,233,754 | ) | | | (241,380 | ) | | | - | |
| | - | | | | - | | | | (77,547,995 | ) | | | (22,357,920 | ) |
| | - | | | | - | | | | (6,372,588 | ) | | | (3,263,458 | ) |
| | - | | | | - | | | | (36,410,408 | ) | | | (8,285,805 | ) |
| | (252,653 | ) | | | (28,933 | ) | | | (6,748,398 | ) | | | (3,202,753 | ) |
| | - | | | | - | | | | (7,583,868 | ) | | | - | |
| | | | | | | | | | | | | | | |
| | 22,190,774 | | | | (340,938 | ) | | | 68,268,886 | | | | 73,417,860 | |
| | | | | | | | | | | | | | | |
| | (55,009,210 | ) | | | 34,294,987 | | | | (77,628,515 | ) | | | 125,284,212 | |
| | | | | | | | | | | | | | | |
| | 139,734,197 | | | | 105,439,210 | | | | 244,020,516 | | | | 118,736,304 | |
| | | | | | | | | | | | | | | |
| $ | 84,724,987 | | | $ | 139,734,197 | | | $ | 166,392,001 | | | $ | 244,020,516 | |
| | | | | | | | | | | | | | | |
Statements of Changes in Net Assets (continued)
| | | | | | | | | |
| | | ICON Asia-Pacific Region Fund | |
| | | Year Ended
| | | Year Ended
| |
| | | September 30,
| | | September 30,
| |
| | | 2008 | | | 2007 | |
Transactions in Fund Shares | | | | | | | | |
| Shares sold | | | | | | | | |
| Class S | | | 3,584,171 | | | | 5,692,452 | |
| Class I | | | 1,054 | | | | - | |
| Class C | | | 5,015 | | | | - | |
| Class Z | | | 520 | | | | - | |
| Class A | | | 138,278 | | | | 57,467 | |
| Class Q | | | - | | | | - | |
| Reinvested dividends and distributions | | | | | | | | |
| Class S | | | 1,502,859 | | | | 21,264 | |
| Class I | | | - | | | | - | |
| Class C | | | - | | | | - | |
| Class Z | | | - | | | | - | |
| Class A | | | 10,689 | | | | 12 | |
| Shares repurchased | | | | | | | | |
| Class S | | | (8,661,436 | ) | | | (5,979,748 | ) |
| Class I | | | - | | | | - | |
| Class C | | | (1,510 | ) | | | - | |
| Class Z | | | - | | | | - | |
| Class A | | | (156,998 | ) | | | (7,348 | ) |
| Class Q | | | - | | | | - | |
| | | | | | | | | |
| Net increase/(decrease) | | | (3,577,358 | ) | | | (215,901 | ) |
| | | | | | | | | |
| Shares outstanding, beginning of period | | | 10,964,954 | | | | 11,180,855 | |
| | | | | | | | | |
| Shares outstanding, end of period | | | 7,387,596 | | | | 10,964,954 | |
| | | | | | | | | |
| Purchase and Sales of Investment Securities | | | | | | | | |
| (excluding short-term securities) | | | | | | | | |
| Purchases of securities | | $ | 245,501,955 | | | $ | 207,034,481 | |
| Proceeds from sales of securities | | | 311,754,927 | | | | 205,128,051 | |
Accumulated undistributed net investment income/(loss) | | $ | (188,570 | ) | | $ | 1,112,505 | |
| | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | |
| ICON Europe Fund | | | ICON International Equity Fund | |
Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| |
| 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | 3,521,445 | | | | 5,325,734 | | | | 156,261 | | | | - | |
| | 1,224 | | | | - | | | | 5,932,009 | | | | 4,426,226 | |
| | 1,202 | | | | - | | | | 910,029 | | | | 722,425 | |
| | 279 | | | | - | | | | 1,499,033 | | | | 362,014 | |
| | 9,019 | | | | 27,337 | | | | 673,802 | | | | 496,277 | |
| | - | | | | - | | | | 1,645,599 | | | | - | |
| | | | | | | | | | | | | | | |
| | 984,824 | | | | 100,015 | | | | - | | | | - | |
| | - | | | | - | | | | 1,204,832 | | | | 228,951 | |
| | - | | | | - | | | | 200,187 | | | | 43,972 | |
| | - | | | | - | | | | 231,812 | | | | 76,903 | |
| | 2,920 | | | | 200 | | | | 55,159 | | | | 7,295 | |
| | | | | | | | | | | | | | | |
| | (3,918,107 | ) | | | (5,242,428 | ) | | | (16,536 | ) | | | - | |
| | - | | | | - | | | | (5,346,734 | ) | | | (1,293,738 | ) |
| | - | | | | - | | | | (446,685 | ) | | | (200,912 | ) |
| | - | | | | - | | | | (2,332,032 | ) | | | (466,665 | ) |
| | (11,624 | ) | | | (1,279 | ) | | | (412,986 | ) | | | (176,215 | ) |
| | - | | | | - | | | | (534,313 | ) | | | - | |
| | | | | | | | | | | | | | | |
| | 591,182 | | | | 209,579 | | | | 3,419,437 | | | | 4,226,533 | |
| | | | | | | | | | | | | | | |
| | 5,813,578 | | | | 5,603,999 | | | | 12,195,749 | | | | 7,969,216 | |
| | | | | | | | | | | | | | | |
| | 6,404,760 | | | | 5,813,578 | | | | 15,615,186 | | | | 12,195,749 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| $ | 250,402,525 | | | $ | 195,767,756 | | | $ | 509,928,846 | | | $ | 289,490,635 | |
| | 245,744,539 | | | | 196,894,045 | | | | 467,835,301 | | | | 221,259,001 | |
| | | | | | | | | | | | | | | |
| $ | 1,776,910 | | | $ | 1,213,565 | | | $ | 2,145,865 | | | $ | 1,624,228 | |
| | | | | | | | | | | | | | | |
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Income from investment operations | | | Less dividends and | |
| | | Net asset
| | | Net
| | | Net realized
| | | | | | Dividends
| | | Distributions
| |
| | | value,
| | | investment
| | | and unrealized
| | | Total from
| | | from net
| | | from net
| |
| | | beginning
| | | income/
| | | gains/(losses)
| | | investment
| | | investment
| | | realized
| |
| | | of period | | | (loss)(x) | | | on investments | | | operations | | | income | | | gains | |
| |
ICON Asia-Pacific Region Fund | | | | | | | | | | | | | | | | | | | | | | | | |
Class S | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | $ | 18.82 | | | $ | 0.10 | | | $ | (6.99 | ) | | $ | (6.89 | ) | | $ | (0.12 | ) | | $ | (2.34 | ) |
| Year Ended September 30, 2007 | | | 13.19 | | | | 0.15 | | | | 5.51 | | | | 5.66 | | | | (0.03 | ) | | | - | |
| Year Ended September 30, 2006 | | | 11.25 | | | | 0.02 | | | | 1.93 | | | | 1.95 | | | | (0.01 | ) | | | - | |
| Year Ended September 30, 2005 | | | 8.17 | | | | 0.03 | | | | 3.08 | | | | 3.11 | | | | (0.03 | ) | | | - | |
| Year Ended September 30, 2004 | | | 7.62 | | | | 0.02 | | | | 0.55 | | | | 0.57 | | | | (0.02 | ) | | | - | |
Class I | | | | | | | | | | | | | | | | | | | | | | | | |
| January 25, 2008 (inception) to September 30, 2008 | | | 13.73 | | | | 0.10 | | | | (4.38 | ) | | | (4.28 | ) | | | - | | | | - | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| January 25, 2008 (inception) to September 30, 2008 | | | 13.73 | | | | 0.05 | | | | (4.37 | ) | | | (4.32 | ) | | | - | | | | - | |
Class Z | | | | | | | | | | | | | | | | | | | | | | | | |
| January 25, 2008 (inception) to September 30, 2008 | | | 13.73 | | | | 0.15 | | | | (4.40 | ) | | | (4.25 | ) | | | - | | | | - | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 18.72 | | | | 0.03 | | | | (6.93 | ) | | | (6.90 | ) | | | (0.10 | ) | | | (2.34 | ) |
| Year Ended September 30, 2007 | | | 13.18 | | | | 0.27 | | | | 5.30 | | | | 5.57 | | | | (0.03 | ) | | | - | |
| May 31, 2006 (inception) to September 30, 2006 | | | 13.54 | | | | 0.04 | | | | (0.40 | ) | | | (0.36 | ) | | | - | | | | - | |
ICON Europe Fund | | | | | | | | | | | | | | | | | | | | | | | | |
Class S | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 24.04 | | | | 0.36 | | | | (8.21 | ) | | | (7.85 | ) | | | (0.21 | ) | | | (2.75 | ) |
| Year Ended September 30, 2007 | | | 18.82 | | | | 0.21 | | | | 5.33 | | | | 5.54 | | | | (0.05 | ) | | | (0.27 | ) |
| Year Ended September 30, 2006 | | | 15.68 | | | | 0.20 | | | | 3.80 | | | | 4.00 | | | | - | | | | (0.86 | ) |
| Year Ended September 30, 2005 | | | 12.03 | | | | 0.07 | | | | 3.58 | | | | 3.65 | | | | - | | | | - | |
| Year Ended September 30, 2004 | | | 9.84 | | | | (0.04 | ) | | | 2.23 | | | | 2.19 | | | | - | | | | - | |
Class I | | | | | | | | | | | | | | | | | | | | | | | | |
| January 25, 2008 (inception) to September 30, 2008 | | | 17.91 | | | | 0.33 | | | | (5.06 | ) | | | (4.73 | ) | | | - | | | | - | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| January 25, 2008 (inception) to September 30, 2008 | | | 17.91 | | | | 0.07 | | | | (4.86 | ) | | | (4.79 | ) | | | - | | | | - | |
Class Z | | | | | | | | | | | | | | | | | | | | | | | | |
| January 25, 2008 (inception) to September 30, 2008 | | | 17.91 | | | | 0.36 | | | | (5.03 | ) | | | (4.67 | ) | | | - | | | | - | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 23.91 | | | | 0.26 | | | | (8.17 | ) | | | (7.91 | ) | | | (0.11 | ) | | | (2.75 | ) |
| Year Ended September 30, 2007 | | | 18.79 | | | | 0.15 | | | | 5.28 | | | | 5.43 | | | | (0.04 | ) | | | (0.27 | ) |
| May 31, 2006 (inception) to September 30, 2006 | | | 18.40 | | | | (0.02 | ) | | | 0.41 | | | | 0.39 | | | | - | | | | - | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Ratio of expenses to average net assets(d) | | | Ratio of net investment income/(loss) to average net assets(d) | | | | |
| | | | | | | | | | | | | Before
| | | After
| | | Before
| | | After
| | | | |
| | | | | | | | | | | | | expense
| | | expense
| | | expense
| | | expense
| | | | |
| | | | | | | | | | | | | limitation/
| | | limitation/
| | | limitation/
| | | limitation/
| | | | |
| distributions | | | | | | | | | | | | recoupment
| | | recoupment
| | | recoupment
| | | recoupment
| | | | |
Total
| | | Net asset
| | | | | | Net assets,
| | | and transfer
| | | and transfer
| | | and transfer
| | | and transfer
| | | | |
dividends
| | | value,
| | | | | | end of
| | | agent
| | | agent
| | | agent
| | | agent
| | | Portfolio
| |
and
| | | end of
| | | Total
| | | period (in
| | | earnings
| | | earnings
| | | earnings
| | | earnings
| | | turnover
| |
| distributions | | | period | | | return* | | | thousands) | | | credit | | | credit | | | credit | | | credit | | | rate(a) | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | (2.46 | ) | | $ | 9.47 | | | | (41.26 | )% | | $ | 69,519 | | | | 1.42% | | | | 1.42 | % | | | 0.70 | % | | | 0.70 | % | | | 168.42 | % |
| | (0.03 | ) | | | 18.82 | | | | 43.03 | % | | | 205,332 | | | | 1.38% | | | | 1.38 | % | | | 0.96 | % | | | 0.97 | % | | | 130.84 | % |
| | (0.01 | ) | | | 13.19 | | | | 17.36 | % | | | 147,444 | | | | 1.44% | | | | 1.44 | % | | | 0.12 | % | | | 0.12 | % | | | 159.51 | % |
| | (0.03 | ) | | | 11.25 | | | | 38.12 | % | | | 48,721 | | | | 1.93% | | | | N/A | | | | 0.30 | % | | | N/A | | | | 185.84 | % |
| | (0.02 | ) | | | 8.17 | | | | 7.51 | % | | | 17,047 | | | | 1.91% | | | | N/A | | | | 0.20 | % | | | N/A | | | | 58.62 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 9.45 | | | | (31.17 | )% | | | 10 | | | | 51.45% | | | | 1.91 | %(b) | | | (48.29 | )% | | | 1.25 | % | | | 168.42 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 9.41 | | | | (31.46 | )% | | | 33 | | | | 23.58% | | | | 2.64 | %(b) | | | (20.28 | )% | | | 0.66 | % | | | 168.42 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 9.48 | | | | (30.95 | )% | | | 5 | | | | 77.18% | | | | 1.37 | %(b) | | | (74.04 | )% | | | 1.77 | % | | | 168.42 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (2.44 | ) | | | 9.38 | | | | (41.53 | )% | | | 412 | | | | 2.94% | | | | 1.88 | %(b) | | | (0.82 | )% | | | 0.24 | % | | | 168.42 | % |
| | (0.03 | ) | | | 18.72 | | | | 42.38 | % | | | 973 | | | | 3.26% | | | | 1.85 | %(b) | | | 0.24 | % | | | 1.65 | % | | | 130.84 | % |
| | - | | | | 13.18 | | | | (2.66 | )% | | | 24 | | | | 25.78% | | | | 1.81 | %(b) | | | (23.09 | )% | | | 0.88 | % | | | 159.51 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (2.96 | ) | | | 13.23 | | | | (36.83 | )% | | | 84,320 | | | | 1.35% | | | | 1.35 | % | | | 1.89 | % | | | 1.89 | % | | | 181.83 | % |
| | (0.32 | ) | | | 24.04 | | | | 29.69 | % | | | 139,069 | | | | 1.35% | | | | 1.35 | % | | | 0.97 | % | | | 0.97 | % | | | 133.36 | % |
| | (0.86 | ) | | | 18.82 | | | | 27.09 | % | | | 105,409 | | | | 1.51% | | | | 1.51 | % | | | 1.13 | % | | | 1.13 | % | | | 100.62 | % |
| | - | | | | 15.68 | | | | 30.34 | % | | | 23,243 | | | | 1.85% | | | | N/A | | | | 0.51 | % | | | N/A | | | | 153.55 | % |
| | - | | | | 12.03 | | | | 22.26 | % | | | 7,826 | | | | 2.24% | | | | N/A | | | | (0.38 | )% | | | N/A | | | | 78.57 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 13.18 | | | | (26.41 | )% | | | 16 | | | | 26.07% | | | | 1.83 | %(b) | | | (21.42 | )% | | | 2.82 | % | | | 181.83 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 13.12 | | | | (26.74 | )% | | | 16 | | | | 51.24% | | | | 2.58 | %(b) | | | (48.03 | )% | | | 0.63 | % | | | 181.83 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 13.24 | | | | (26.07 | )% | | | 4 | | | | 92.86% | | | | 1.32 | %(b) | | | (88.52 | )% | | | 3.02 | % | | | 181.83 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (2.86 | ) | | | 13.14 | | | | (37.17 | )% | | | 370 | | | | 4.36% | | | | 1.83 | %(b) | | | (1.18 | )% | | | 1.35 | % | | | 181.83 | % |
| | (0.31 | ) | | | 23.91 | | | | 29.14 | % | | | 666 | | | | 2.43% | | | | 1.84 | %(b) | | | 0.09 | % | | | 0.69 | % | | | 133.36 | % |
| | - | | | | 18.79 | | | | 2.12 | % | | | 30 | | | | 33.40% | | | | 1.84 | %(b) | | | (31.86 | )% | | | (0.30 | )% | | | 100.62 | % |
Financial Highlights (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | | | | | | | | | | | | | | | |
| | |
| | | | | | | | | | | | | | | | |
| | |
| | | Income from investment operations | | | Less dividends and | |
| | | Net asset
| | | Net
| | | Net realized
| | | | | | Dividends
| | | Distributions
| |
| | | value,
| | | investment
| | | and unrealized
| | | Total from
| | | from net
| | | from net
| |
| | | beginning
| | | income/
| | | gains/(losses)
| | | investment
| | | investment
| | | realized
| |
| | | of period | | | (loss)(x) | | | on investments | | | operations | | | income | | | gains | |
| |
ICON International Equity Fund | | | | | | | | | | | | | | | | | | | | | | | | |
Class S | | | | | | | | | | | | | | | | | | | | | | | | |
| January 25, 2008 (inception) to September 30, 2008 | | $ | 15.25 | | | $ | 0.20 | | | $ | (4.61 | ) | | $ | (4.41 | ) | | $ | - | | | $ | - | |
Class I | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 20.09 | | | | 0.22 | | | | (7.48 | ) | | | (7.26 | ) | | | (0.13 | ) | | | (1.99 | ) |
| Year Ended September 30, 2007 | | | 14.94 | | | | 0.18 | | | | 5.63 | | | | 5.81 | | | | - | (c) | | | (0.66 | ) |
| Year Ended September 30, 2006 | | | 12.91 | | | | 0.09 | | | | 2.57 | | | | 2.66 | | | | (0.01 | ) | | | (0.62 | ) |
| Year Ended September 30, 2005 | | | 10.59 | | | | 0.04 | | | | 3.25 | | | | 3.29 | | | | - | | | | (0.97 | ) |
| February 6, 2004 (inception) to September 30, 2004 | | | 10.96 | | | | 0.04 | | | | (0.41 | ) | | | (0.37 | ) | | | - | | | | - | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 19.09 | | | | 0.07 | | | | (7.07 | ) | | | (7.00 | ) | | | - | (c) | | | (1.99 | ) |
| Year Ended September 30, 2007 | | | 14.36 | | | | - | (c) | | | 5.39 | | | | 5.39 | | | | - | | | | (0.66 | ) |
| Year Ended September 30, 2006 | | | 12.53 | | | | (0.03 | ) | | | 2.48 | | | | 2.45 | | | | - | | | | (0.62 | ) |
| Year Ended September 30, 2005 | | | 10.55 | | | | (0.14 | ) | | | 3.09 | | | | 2.95 | | | | - | | | | (0.97 | ) |
| February 19, 2004 (inception) to September 30, 2004 | | | 11.29 | | | | (0.02 | ) | | | (0.72 | ) | | | (0.74 | ) | | | - | | | | - | |
Class Z | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 20.34 | | | | 0.22 | | | | (7.53 | ) | | | (7.31 | ) | | | (0.17 | ) | | | (1.99 | ) |
| Year Ended September 30, 2007 | | | 15.07 | | | | 0.20 | | | | 5.73 | | | | 5.93 | | | | - | | | | (0.66 | ) |
| Year Ended September 30, 2006 | | | 13.00 | | | | 0.09 | | | | 2.63 | | | | 2.72 | | | | (0.03 | ) | | | (0.62 | ) |
| Year Ended September 30, 2005 | | | 10.60 | | | | 0.06 | | | | 3.31 | | | | 3.37 | | | | - | | | | (0.97 | ) |
| Year Ended September 30, 2004 | | | 8.41 | | | | 0.01 | | | | 2.24 | | | | 2.25 | | | | (0.06 | ) | | | - | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 20.24 | | | | 0.18 | | | | (7.52 | ) | | | (7.34 | ) | | | (0.13 | ) | | | (1.99 | ) |
| Year Ended September 30, 2007 | | | 15.06 | | | | 0.17 | | | | 5.67 | | | | 5.84 | | | | - | | | | (0.66 | ) |
| May 31, 2006 (inception) to September 30, 2006 | | | 15.17 | | | | 0.03 | | | | (0.14 | ) | | | (0.11 | ) | | | - | | | | - | |
Class Q | | | | | | | | | | | | | | | | | | | | | | | | |
| January 28, 2008 (inception) to September 30, 2008 | | | 15.44 | | | | 0.23 | | | | (4.81 | ) | | | (4.58 | ) | | | - | | | | - | |
| |
| (x) | Calculated using the average share method. |
| * | The total return calculation is for the period indicated and excludes any sales charges. |
| (a) | Portfolio turnover is calculated at the Fund level and is not annualized. |
| (b) | The Fund’s operating expenses, not including interest expense, are contractually limited to the amounts discussed in Note 3. The ratios in these financial highlights reflect the limitation, including the interest expense. |
| (c) | Amount less than $0.005. |
| (d) | Annualized for periods less than a year. |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Ratio of expenses to
| | | | | | | |
| | | | | | | | | | | | | average net assets(d) | | | Ratio of net investment income/(loss) to average net assets(d) | | | | |
| | | | | | | | | | | | | Before
| | | After
| | | Before
| | | After
| | | | |
| | | | | | | | | | | | | expense
| | | expense
| | | expense
| | | expense
| | | | |
| | | | | | | | | | | | | limitation/
| | | limitation/
| | | limitation/
| | | limitation/
| | | | |
| distributions | | | | | | | | | | | | recoupment
| | | recoupment
| | | recoupment
| | | recoupment
| | | | |
Total
| | | Net asset
| | | | | | Net assets,
| | | and transfer
| | | and transfer
| | | and transfer
| | | and transfer
| | | | |
dividends
| | | value,
| | | | | | end of
| | | agent
| | | agent
| | | agent
| | | agent
| | | Portfolio
| |
and
| | | end of
| | | Total
| | | period (in
| | | earnings
| | | earnings
| | | earnings
| | | earnings
| | | turnover
| |
| distributions | | | period | | | return* | | | thousands) | | | credit | | | credit | | | credit | | | credit | | | rate(a) | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | - | | | $ | 10.84 | | | | (28.92 | )% | | $ | 1,515 | | | | 1.62% | | | | 1.62 | %(b) | | | 2.08 | % | | | 2.08 | % | | | 188.73 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (2.12 | ) | | | 10.71 | | | | (39.85 | )% | | | 110,029 | | | | 1.55% | | | | 1.55 | %(b) | | | 1.39 | % | | | 1.39 | % | | | 188.73 | % |
| | (0.66 | ) | | | 20.09 | | | | 40.11 | % | | | 170,383 | | | | 1.54% | | | | 1.54 | %(b) | | | 1.02 | % | | | 1.03 | % | | | 132.30 | % |
| | (0.63 | ) | | | 14.94 | | | | 21.20 | % | | | 76,454 | | | | 1.71% | | | | 1.71 | %(b) | | | 0.59 | % | | | 0.59 | % | | | 129.31 | % |
| | (0.97 | ) | | | 12.91 | | | | 32.90 | % | | | 15,376 | | | | 2.02% | | | | 1.97 | % | | | 0.27 | % | | | 0.32 | % | | | 139.23 | % |
| | - | | | | 10.59 | | | | (3.38 | )% | | | 3,211 | | | | 2.32% | | | | N/A | | | | 0.44 | % | | | N/A | | | | 117.74 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.99 | ) | | | 10.10 | | | | (40.38 | )% | | | 22,194 | | | | 2.44% | | | | 2.44 | %(b) | | | 0.47 | % | | | 0.47 | % | | | 188.73 | % |
| | (0.66 | ) | | | 19.09 | | | | 38.74 | % | | | 29,274 | | | | 2.57% | | | | 2.56 | %(b) | | | (0.04 | )% | | | (0.03 | )% | | | 132.30 | % |
| | (0.62 | ) | | | 14.36 | | | | 20.09 | % | | | 13,899 | | | | 2.76% | | | | 2.54 | %(b) | | | (0.39 | )% | | | (0.18 | )% | | | 129.31 | % |
| | (0.97 | ) | | | 12.53 | | | | 29.56 | % | | | 1,622 | | | | 4.52% | | | | 3.51 | % | | | (2.23 | )% | | | (1.22 | )% | | | 139.23 | % |
| | - | | | | 10.55 | | | | (6.55 | )% | | | 183 | | | | 3.06% | | | | N/A | | | | (0.16 | )% | | | N/A | | | | 117.74 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (2.16 | ) | | | 10.87 | | | | (39.66 | )% | | | 13,580 | | | | 1.27% | | | | 1.27 | %(b) | | | 1.31 | % | | | 1.31 | % | | | 188.73 | % |
| | (0.66 | ) | | | 20.34 | | | | 40.56 | % | | | 37,619 | | | | 1.26% | | | | 1.26 | %(b) | | | 1.16 | % | | | 1.16 | % | | | 132.30 | % |
| | (0.65 | ) | | | 15.07 | | | | 21.54 | % | | | 28,295 | | | | 1.41% | | | | 1.40 | %(b) | | | 0.60 | % | | | 0.61 | % | | | 129.31 | % |
| | (0.97 | ) | | | 13.00 | | | | 33.57 | % | | | 15,466 | | | | 1.68% | | | | 1.68 | % | | | 0.51 | % | | | 0.51 | % | | | 139.23 | % |
| | (0.06 | ) | | | 10.60 | | | | 26.79 | % | | | 9,303 | | | | 1.98% | | | | N/A | | | | 0.03 | % | | | N/A | | | | 117.74 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (2.12 | ) | | | 10.78 | | | | (39.95 | )% | | | 7,001 | | | | 1.73% | | | | 1.73 | %(b) | | | 1.17 | % | | | 1.17 | % | | | 188.73 | % |
| | (0.66 | ) | | | 20.24 | | | | 39.97 | % | | | 6,744 | | | | 1.70% | | | | 1.69 | %(b) | | | 0.98 | % | | | 0.99 | % | | | 132.30 | % |
| | - | | | | 15.06 | | | | (0.73 | )% | | | 88 | | | | 19.13% | | | | 1.79 | %(b) | | | (16.62 | )% | | | 0.72 | % | | | 129.31 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 10.86 | | | | (29.66 | )% | | | 12,072 | | | | 1.31% | | | | 1.31 | %(b) | | | 2.36 | % | | | 2.36 | % | | | 188.73 | % |
Notes to Financial Statements
September 30, 2008
1. Organization
The ICON Asia-Pacific Region Fund (“Asia-Pacific Region Fund”), ICON Europe Fund (“Europe Fund”) and ICON International Equity Fund (“International Equity Fund”) are series funds (individually a “Fund” and collectively, the “Funds”). The Funds are part of the ICON Funds (the “Trust”), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as an open-end investment management company. The Asia-Pacific Region Fund and the Europe Fund offer five classes of shares, Class S, Class I, Class C, Class Z and Class A. The International Equity Fund offers six classes of shares, Class S, Class I, Class C, Class Z, Class A, and Class Q. All classes have equal rights as to earnings, assets and voting privileges except that each Class may bear different distribution fees, registration costs and transfer agent costs and that each Class has exclusive voting rights with respect to its distribution plan. There are 14 other active funds within the Trust. Those Funds are covered by separate prospectuses and shareholder reports.
Each Fund is authorized to issue an unlimited number of no par shares. The Funds primarily invest in foreign securities; the Asia-Pacific Region Fund and the Europe Fund primarily invest in companies whose principal business activities fall within specific regions. The investment objective of each Fund is long-term capital appreciation.
The Funds may have elements of risk, including the loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment. Investments in foreign securities and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar-denominated transactions as a result of, among other factors, the possibility of lower government supervision and regulation of foreign securities markets and the possibility of political or economic instability. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, do not exist in foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers. There are also risks associated with small-and mid-cap
46 Notes to Financial Statements
investing, including limited product lines, less liquidity, and small market share.
In the normal course of business, the Funds may enter into various agreements that provide for general indemnifications. Each Fund’s maximum exposure under these arrangements is unknown as any potential exposure involving future claims that may be made against each Fund is unknown. However, based on experience, the Funds expect the risk of loss to be minimal.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results may differ from these estimates.
Investment Valuation
The Funds’ securities and other assets are valued at the closing price at the close of the regular trading session of the New York Stock Exchange (the “NYSE”) (normally 4 p.m. Eastern time) each day the NYSE is open, except that (a) securities traded primarily on the NASDAQ Stock Market (“NASDAQ”) are normally valued by the Funds at the NASDAQ Official Closing Price provided by NASDAQ each business day; and (b) foreign securities in the Funds traded in countries outside of the Western Hemisphere are fair valued daily based on procedures established by the Funds’ Board of Trustees (“Board”) to avoid stale prices and to take into account, among other things, any significant events occurring after the close of a foreign market in those regions.
The Funds use pricing services to obtain the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service’s valuation quote is considered inaccurate or does not reflect the market value of the security, prices may be obtained through market quotations from independent broker/dealers. If market quotations from these sources are not readily available, the Funds’ securities or other assets
Notes to Financial Statements 47
Notes to Financial Statements (continued)
are valued at fair value as determined in good faith by the Board or pursuant to procedures approved by the Board.
Lacking any sales that day, a security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes from dealers making a market for the security. Options are valued at their closing mid-price on the market with the most volume. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than 60 days are valued in accordance with the evaluated bid price supplied by the pricing service. The evaluated bid price supplied by the pricing service is a matrix system which considers such factors as security prices, yields, maturities and ratings. Short-term securities with remaining maturities of 60 days or less are generally valued at amortized cost or original cost plus accrued interest, which approximates market value. Currency rates as of the close of the NYSE are used to convert foreign security values into U.S. dollars.
The Funds’ securities traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Board determines that use of another valuation methodology is appropriate. The purposes of daily fair valuation are to avoid stale prices and to take into account, among other things, any significant events occurring after the close of foreign markets. The pricing service uses statistical analyses and quantitative models to adjust local market prices using factors such as subsequent movements and changes in the prices of indexes and securities and exchange rates in other markets to determine fair value as of the time a Fund calculates its net asset value (“NAV”). The valuation assigned to fair-valued securities for purposes of calculating a Fund’s NAV may differ from the security’s most recent closing market price and from the prices used by other mutual funds to calculate their NAVs.
New Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”). This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS 157 applies to fair value measurements already required or permitted by existing standards. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current generally accepted accounting principles
48 Notes to Financial Statements
from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management does not believe the adoption of SFAS 157 will impact the financial statement amounts, however, additional disclosures will be required about the inputs used to develop the measurements and the effect of certain measurements on changes in net assets for the period. Management intends to adopt SFAS 157 during the fiscal year ending September 30, 2009, as required.
In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about the Funds’ derivative and hedging activities, including how such activities are accounted for and their effect on the Funds’ financial position, performance and cash flows. Management intends to adopt SFAS 161 during the fiscal year ending September 30, 2009.
Repurchase Agreements
Repurchase agreements, if held by the Funds, are fully collateralized by U.S. Government securities and such collateral is in the possession of the Funds’ custodian. The collateral is evaluated daily to ensure its market value exceeds the current market value of the repurchase agreements including accrued interest. In the event of default on the obligation to repurchase, the Funds have the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. No repurchase agreements were purchased or sold by the Funds during the year ended September 30, 2008.
Foreign Currency Translation
The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated daily into U.S. dollars at the prevailing rates of exchange. Income and expenses are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Purchases and sales of securities are translated into U.S. dollars at the contractual currency exchange rates established at the time of each trade.
Notes to Financial Statements 49
Notes to Financial Statements (continued)
The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Net unrealized appreciation or depreciation on investments and foreign currency translations arise from changes in the value of assets and liabilities, resulting from changes in the exchange rates and changes in market prices of securities held.
Forward Foreign Currency Contracts
The Funds may enter into short-term forward foreign currency contracts. A forward foreign currency contract is an agreement between contracting parties to exchange an amount of currency at some future time at an agreed upon rate.
These contracts are marked-to-market daily and the related appreciation or depreciation of the contract is presented in the Statement of Assets and Liabilities. Net realized gains and losses on foreign currency transactions represent disposition of foreign currencies, and the difference between the amount recorded at the time of the transaction and the U.S. dollar amount actually received. Any realized gain or loss incurred by the Funds due to foreign currency translation is included on the Statement of Operations. At September 30, 2008, the Funds had outstanding forward foreign currency contracts that are listed in the Schedules of Investments.
Futures Contracts
The Funds may invest in financial futures contracts for the purpose of hedging their existing securities or securities they intend to purchase against fluctuations in fair value caused by changes in prevailing markets. Upon entering into a financial futures contract, the Fund is required to pledge to a broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the fair value of the underlying security. The Fund recognizes a gain or loss equal to the daily variation margin. Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts and the underlying hedged assets. The Funds held no financial futures contracts during the year ended September 30, 2008.
50 Notes to Financial Statements
Options Transactions
Each Fund may write call and put options on any security in which it may invest. When a Fund writes a put or call option, an amount equal to the premium received is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. If an option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security, and the proceeds from the sale are increased by the premium originally received. If a written put option is exercised, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, the Fund has no control over whether the underlying securities are subsequently sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the security underlying the written option.
Each Fund may also purchase put and call options on any security in which it may invest. When a Fund purchases a call or put option, an amount equal to the premium paid is included in the Fund’s Statement of Assets and Liabilities as an investment, and is subsequently marked-to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If the Fund exercises a call, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Written and purchased options are non-income producing securities. The Funds did not enter into any options transactions during the year ended September 30, 2008.
Securities Lending
Under procedures adopted by the Board, the Funds may lend securities to non-affiliated qualified parties. The Funds seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security. The Funds do not have the right to vote on securities while they are on loan; however, the Funds may attempt to call back the loan and vote the proxy.
All loans will be continuously secured by collateral which consists of cash. Brown Brothers Harriman (the “Lending Agent”) may invest the cash
Notes to Financial Statements 51
Notes to Financial Statements (continued)
collateral in the Securities Lending Investment Fund of Brown Brothers Harriman Trust, which complies with Rule 2a-7 of the 1940 Act relating to money market funds.
The cash collateral invested by the Lending Agent is disclosed in the Schedule of Investments. The lending fees received and the Funds’ portion of the interest income earned on cash collateral are included on the Statement of Operations, if applicable.
As of September 30, 2008, the following Funds had securities with the following values on loan:
| | | | | | | | | |
| | | Value of
| | | Value of
| |
| Fund | | Loaned Securities | | | Collateral | |
| | |
| ICON Asia-Pacific Region Fund | | $ | 10,019,565 | | | $ | 10,509,338 | |
| ICON Europe Fund | | | 4,156,323 | | | | 4,730,083 | |
| ICON International Equity Fund | | | 15,482,662 | | | | 16,673,069 | |
The value of the collateral above could include collateral held for securities that were sold on or before September 30, 2008.
Income Taxes
The Funds intend to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code and, accordingly, the Funds will generally not be subject to federal and state income taxes or federal excise taxes to the extent that they intend to make sufficient distributions of net investment income and net realized capital gains.
Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders.
Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryovers. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America.
52 Notes to Financial Statements
The Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Funds did not record any liabilities for unrecognized tax benefits in connection with the adoption of FIN 48. At September 30, 2008, the Funds have recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.
The Funds file U.S. tax returns. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years from 2005-2007, no examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Investment Income
Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Certain dividends from foreign securities are recorded as soon as the Funds are informed of the dividend if such information is obtained subsequent to the ex-dividend date. Discounts and premiums on securities purchased are amortized over the life of the respective securities.
Investment Transactions
Security transactions are accounted for no later than one business day after the trade date. However, for financial reporting purposes, security transactions are accounted for on the trade date. Gains and losses on securities sold are determined on the basis of identified cost.
Allocation of Income and Expenses
Each class of a Fund’s shares bears expenses incurred specifically on its behalf and, in addition, each class bears a portion of general expenses, based upon relative net assets of each class. Expenses which cannot be directly attributed to a specific Fund in the Trust are apportioned between all Funds based upon relative net assets. In calculating the net asset value of the shares in the various classes of the Funds, investment income, realized
Notes to Financial Statements 53
Notes to Financial Statements (continued)
and unrealized gains and losses and expenses other than class-specific expenses are allocated daily to each class of shares based upon the proportion of net assets.
3. Fees and Other Transactions with Affiliates
Investment Advisory Fees
ICON Advisers, Inc. (“ICON”) serves as the investment adviser to the Funds and is responsible for managing the Funds’ portfolios of securities. ICON receives a monthly management fee that is computed daily at an annual rate of 1.00% of each Fund’s average daily net assets.
ICON has contractually agreed to limit its investment advisory fee and/or reimburse certain of the Funds’ operating expenses (exclusive of brokerage, interest, taxes, and extraordinary expenses) to the extent necessary to ensure that the Funds’ operating expenses do not exceed the following amounts:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Fund | | Class S | | | Class I | | | Class C | | | Class Z | | | Class A | | | Class Q | |
| | |
| ICON Asia-Pacific Region Fund | | | - | | | | 1.80% | | | | 2.55% | | | | 1.25% | | | | 1.80% | | | | N/A | |
| ICON Europe Fund | | | - | | | | 1.80% | | | | 2.55% | | | | 1.25% | | | | 1.80% | | | | N/A | |
| ICON International Equity Fund | | | 1.80% | | | | 1.80% | | | | 2.55% | | | | 1.25% | | | | 1.80% | | | | 1.55% | |
The expense limitations will continue in effect until at least January 31, 2019. To the extent ICON reimburses or absorbs fees and expenses, it may seek payment of such amounts for up to three years after the expenses were reimbursed or absorbed. A Fund will make no such payment, however, if the total Fund operating expenses exceed the expense limits in effect at the time the expenses were reimbursed or at the time these payments are proposed.
As of September 30, 2008 the following amounts were still available for recoupment by ICON based upon their potential expiration dates:
| | | | | | | | | | | | | |
| Fund | | 2009 | | | 2010 | | | 2011 | |
| | |
| ICON Asia-Pacific Region Fund | | $ | 721 | | | $ | 3,131 | | | $ | 21,793 | |
| ICON Europe Fund | | | 709 | | | | 2,624 | | | | 22,551 | |
| ICON International Equity Fund | | | - | | | | - | | | | 123 | |
Accounting, Custody and Transfer Agent Fees
Citi Fund Services Ohio, Inc. (“Citi”) is the fund accounting agent for the Funds. For its services, the Trust pays Citi 0.03% on the first $1.75 billion of
54 Notes to Financial Statements
net assets, 0.0175% on net assets over $1.75 billion and up to $5 billion, and 0.01% on net assets in excess of $5 billion.
Brown Brothers Harriman (“BBH”) is the custodian of the Trust’s investments. For domestic custody services, the Trust pays BBH 0.0065% on the first $50 million of average net assets and 0.0050% on domestic assets above $50 million, plus certain transaction charges. For foreign custody services, the Trust pays BBH 0.03% on foreign assets plus certain transaction charges.
Boston Financial Data Services, Inc. (“BFDS”) is the Trust’s transfer agent. For these services, the Trust pays an account fee of $13.25 per open account, $7.00 per networked account, $1.80 per closed account, plus certain other transaction and cusip charges.
Transfer agent earnings credits are credits received for interest which results from overnight balances used by the transfer agent, BFDS, for clearing shareholder transactions. During the year ended September 30, 2008, the Funds received transfer agent earnings credits which are included on the Statement of Operations.
Administrative Services
The Trust has entered into an administrative services agreement with ICON pursuant to which ICON oversees the administration of the Trust’s business and affairs. This agreement provides for an annual fee of 0.05% on the Trust’s first $1.5 billion of average daily net assets, 0.045% on the next $1.5 billion of average daily net assets, 0.040% on the next $2 billion of average daily net assets and 0.030% on average daily net assets over $5 billion. During the year ended September 30, 2008, the Funds payment for administrative services to ICON is included in the Statement of Operations. The administrative services agreement provides that ICON will not be liable for any error of judgment, mistake of law, or any loss suffered by the Trust in connection with matters to which the administrative services agreement relates, except for a loss resulting from willful misfeasance, bad faith or negligence by ICON in the performance of its duties.
ICON has entered into a sub-administration agreement with Citi pursuant to which Citi assists ICON with the administration and business affairs of the Trust. For its services, ICON pays Citi at an annual rate of 0.025% on the first $1.75 billion of Trust assets and 0.015% on assets above $1.75 billion.
Notes to Financial Statements 55
Notes to Financial Statements (continued)
Distribution Fees
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act (“12b-1 Plan”) under which the Funds are authorized to compensate the Funds’ distributor, ICON Distributors, Inc. (“IDI”) (an affiliate of the adviser) for the sale and distribution of shares. Under the 12b-1 Plan, Class I and Class A shareholders pay an annual 12b-1 and service fee of 0.25% of average daily net assets. The Class C shareholders pay an annual 12b-1 and service fee of 1.00% of average daily net assets. The total amount paid under 12b-1 plans is shown on the Statement of Operations.
Related Parties
Certain Officers and Directors of ICON are also Officers and Trustees of the Funds; however, such Officers and Trustees (with the exception of the Chief Compliance Officer, “CCO”) receive no compensation from the Funds. The CCO’s salary is paid 90% by the Funds and 10% by the Adviser. For the year ended September 30, 2008, the total related amounts paid by the Trust under this agreement are included in Other Expenses on the Statement of Operations. Subsequent to September 30, 2008, the CCO’s salary will be paid 100% by the Funds.
Some of the 12b-1 amounts received by IDI, discussed in the Distribution Fees section above, have been used to offset various shareholder servicing costs incurred by ICON. For the year ended September 30, 2008, the amount was $40,326.
4. Line of Credit
The Funds have entered into Lines of Credit agreements with BBH. The maximum borrowing is limited to the lesser of $50 million or 25% of the net asset value in the Fund subject to a maximum borrowing limit by the Trust of $150 million. Effective January 30, 2008, interest on domestic borrowings is charged at LIBOR plus 1.50%, which was 5.43% at September 30, 2008. Prior to January 30, 2008, interest on domestic borrowings was charged at
56 Notes to Financial Statements
LIBOR plus 2.00%. The average interest rate charged for the year ended September 30, 2008, was 8.71%.
| | | | | |
| | | Average Borrowing
| |
| Fund | | (10/1/07 - 9/30/08) | |
| | |
| ICON Asia-Pacific Region Fund** | | $ | 1,614,035 | |
| ICON Europe Fund** | | | 503,224 | |
| ICON International Equity Fund** | | | 965,961 | |
**Fund had outstanding borrowings as of September 30, 2008.
Average borrowing is calculated using only the days there was a borrowing. It is not an annualized number.
5. Federal Income Tax
Income and capital gain distributions are determined in accordance with income tax regulations that may differ from accounting principles that are generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferrals of wash losses, foreign currency transactions, net investment losses, and capital loss carryforwards.
The tax components of capital shown in the following tables represent losses or deductions the Funds may be able to offset against income and gains recognized in future years and post October loss deferrals.
During the year ended September 30, 2008 no capital loss carryforwards were utilized. For the year ended September 30, 2008 the ICON Asia-Pacific Region Fund, the ICON Europe Fund and the ICON International Equity Fund will elect to defer post October losses of $12,130,307, $23,014,349 and $45,547,724, respectively.
The tax characteristics of dividends and distributions paid to shareholders during the fiscal year ended September 30, 2008, were as follows:
| | | | | | | | | | | | | | | | | |
| | | Distributions paid from | | | | | | Total
| |
| | | Ordinary
| | | Net Long-
| | | Total Taxable
| | | Distributions
| |
| Fund | | Income | | | Term Gains | | | Distributions | | | Paid | |
| | |
| |
| ICON Asia-Pacific Region Fund | | $ | 10,546,038 | | | $ | 12,591,137 | | | $ | 23,137,175 | | | $ | 23,137,175 | |
| ICON Europe Fund | | | 16,140,539 | | | | 4,147,162 | | | | 20,287,701 | | | | 20,287,701 | |
| ICON International Equity Fund | | | 17,249,628 | | | | 11,536,256 | | | | 28,785,884 | | | | 28,785,884 | |
Notes to Financial Statements 57
Notes to Financial Statements (continued)
The tax characteristics of dividends and distributions paid to shareholders during the fiscal year ended September 30, 2007, were as follows:
| | | | | | | | | | | | | | | | | |
| | | Distributions paid from | | | | | | Total
| |
| | | Ordinary
| | | Net Long-
| | | Total Taxable
| | | Distributions
| |
| Fund | | Income | | | Term Gains | | | Distributions | | | Paid | |
| | |
| |
| ICON Asia-Pacific Region Fund | | $ | 327,317 | | | $ | - | | | $ | 327,317 | | | $ | 327,317 | |
| ICON Europe Fund | | | 1,255,900 | | | | 1,055,126 | | | | 2,311,026 | | | | 2,311,026 | |
| ICON International Equity Fund | | | 3,376,711 | | | | 2,430,502 | | | | 5,807,213 | | | | 5,807,213 | |
As of September 30, 2008, the components of accumulated earnings (deficit) on a tax basis was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Undistributed
| | | | | | Accumulated
| | | | | | Total
| |
| | | Undistributed
| | | Net
| | | | | | capital
| | | Unrealized
| | | Accumulated
| |
| | | Ordinary
| | | Long-Term
| | | Accumulated
| | | and other
| | | Appreciation
| | | Earnings
| |
| Fund | | Income | | | Gains | | | Earnings | | | losses | | | (Depreciation) | | | (Deficits) | |
| | |
| ICON Asia-Pacific | | | | | | | | | | | | | | | | | | | | | | | | |
| Region Fund | | $ | 66,908 | | | $ | - | | | $ | 66,908 | | | $ | (12,130,307 | ) | | | $(16,973,854 | ) | | $ | (29,037,253 | ) |
| ICON Europe Fund | | | 1,982,357 | | | | - | | | | 1,982,357 | | | | (23,014,349 | ) | | | (18,435,256 | ) | | | (39,467,248 | ) |
| ICON International | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity Fund | | | 2,390,401 | | | | - | | | | 2,390,401 | | | | (45,547,724 | ) | | | (38,181,697 | ) | | | (81,339,020 | ) |
As of September 30, 2008, book cost for financial reporting purposes is substantially the same for federal income tax purposes and differs from fair value by net unrealized appreciation/(depreciation) of securities as follows:
| | | | | | | | | | | | | | | | | |
| | | | | | Unrealized
| | | Unrealized
| | | Net Appreciation/
| |
| Fund | | Cost | | | Appreciation | | | (Depreciation) | | | (Depreciation) | |
| | |
| ICON Asia-Pacific | | | | | | | | | | | | | | | | |
| Region Fund | | $ | 96,097,673 | | | $ | - | | | $ | (17,756,968 | ) | | $ | (17,756,968 | ) |
| ICON Europe Fund | | | 108,275,586 | | | | 1,287,777 | | | | (19,737,831 | ) | | | (18,450,054 | ) |
| ICON International | | | | | | | | | | | | | | | | |
| Equity Fund | | | 216,889,201 | | | | - | | | | (38,821,472 | ) | | | (38,821,472 | ) |
58 Notes to Financial Statements
Report of Independent Registered Public
Accounting Firm
To the Board of Trustees and Shareholders of the ICON International Funds:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of ICON Asia-Pacific Region Fund, ICON Europe Fund, and ICON International Equity Fund (three of the portfolios constituting ICON Funds, hereafter referred to as the “Funds”) at September 30, 2008, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
Denver, Colorado
November 19, 2008
Report of Independent Registered Public Accounting Firm 59
Six Month Hypothetical Expense Example
September 30, 2008 (Unaudited)
Example
As a shareholder of a Fund you may pay two types of fees: transaction fees and fund-related fees. Certain funds charge transaction fees, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees. Funds also incur various ongoing expenses, including management fees, distribution and/or service fees, and other fund expenses, which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars) of investing in the various ICON Funds and to compare these costs with the ongoing costs of investing in other mutual funds. This Example is based on an investment of $1,000 invested at the beginning of the period and held for the six-month period (4/1/08 - 9/30/08).
Actual Expenses
The first line in the table for each Fund provides information about actual account values and actual expenses. The Example includes, but is not limited to, management fees, 12b-1 fees, fund accounting, custody and transfer agent fees. However, the Example does not include client specific fees, such as the $10 fee charged to IRA accounts, or the $15 fee charged for wire redemptions. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for each Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the table for each Fund provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees that may be charged by other funds. Therefore, this information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | | | | | | |
| | | | | | | | | Expenses
| | | | |
| | | | | | | | | Paid
| | | Annualized
| |
| | | Beginning
| | | Ending
| | | During
| | | Expense
| |
| | | Account
| | | Account
| | | Period
| | | Ratio
| |
| | | Value
| | | Value
| | | 4/1/08 -
| | | 4/1/08 -
| |
| | | 4/1/08 | | | 9/30/08 | | | 9/30/08* | | | 9/30/08 | |
| | |
| |
ICON Asia-Pacific Region Fund | | | | | | | | | | | | | | | | |
Class S | | | | | | | | | | | | | | | | |
| Actual Expenses | | $ | 1,000.00 | | | $ | 717.40 | | | $ | 6.01 | | | | 1.40 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.00 | | | | 7.06 | | | | | |
Class I | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 715.40 | | | | 8.23 | | | | 1.92 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,015.40 | | | | 9.67 | | | | | |
Class C | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 714.00 | | | | 11.01 | | | | 2.57 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,012.15 | | | | 12.93 | | | | | |
Class Z | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 717.60 | | | | 5.50 | | | | 1.28 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.60 | | | | 6.46 | | | | | |
Class A | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 715.50 | | | | 7.85 | | | | 1.83 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,015.85 | | | | 9.22 | | | | | |
ICON Europe Fund | | | | | | | | | | | | | | | | |
Class S | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 708.97 | | | | 5.77 | | | | 1.35 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.25 | | | | 6.81 | | | | | |
Class I | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 707.10 | | | | 7.77 | | | | 1.82 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,015.90 | | | | 9.17 | | | | | |
Class C | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 704.60 | | | | 11.12 | | | | 2.61 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,011.95 | | | | 13.13 | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | Expenses
| | | | |
| | | | | | | | | Paid
| | | Annualized
| |
| | | Beginning
| | | Ending
| | | During
| | | Expense
| |
| | | Account
| | | Account
| | | Period
| | | Ratio
| |
| | | Value
| | | Value
| | | 4/1/08 -
| | | 4/1/08 -
| |
| | | 4/1/08 | | | 9/30/08 | | | 9/30/08* | | | 9/30/08 | |
| | |
| |
Class Z | | | | | | | | | | | | | | | | |
| Actual Expenses | | $ | 1,000.00 | | | $ | 709.90 | | | $ | 5.43 | | | | 1.27 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.65 | | | | 6.41 | | | | | |
Class A | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 706.50 | | | | 7.89 | | | | 1.85 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,015.75 | | | | 9.32 | | | | | |
ICON International Equity Fund | | | | | | | | | | | | | | | | |
Class S | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 712.20 | | | | 7.06 | | | | 1.65 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,016.75 | | | | 8.32 | | | | | |
Class I | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 712.10 | | | | 6.72 | | | | 1.57 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,017.15 | | | | 7.92 | | | | | |
Class C | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 709.30 | | | | 10.47 | | | | 2.45 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1012.75 | | | | 12.33 | | | | | |
Class Z | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 713.90 | | | | 5.53 | | | | 1.29 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.55 | | | | 6.51 | | | | | |
Class A | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 712.00 | | | | 7.36 | | | | 1.72 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,016.40 | | | | 8.67 | | | | | |
Class Q | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 713.10 | | | | 5.65 | | | | 1.32 | % |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.40 | | | | 6.66 | | | | | |
| |
| * | Expenses are equal to the Fund’s six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. |
Total returns exclude applicable sales charges. If sales charges were included (maximum 5.75%), returns would be lower.
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees (“Board”) consists of five Trustees who oversee the 17 ICON Funds (the “Funds”). The Board is responsible for general oversight of the Funds’ business and for assuring that the Funds are managed in the best interest of the Funds’ shareholders. The Trustees, and their ages, and principal occupations are set forth below. The address of the Trustees is 5299 DTC Blvd., Suite 1200, Greenwood Village, CO 80111. Trustees have no official term of office and generally serve until they resign or are not re-elected.
Interested Trustee
Craig T. Callahan, 57, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as President (1998 to present) and served as the Chief Investment Officer (1991 to 2005) of ICON Advisers, Inc. (“ICON Advisers”), the Funds’ Investment Adviser. Dr. Callahan is also President (1998 to 2005); Director (1991 to present); and was previously Vice President (1991 to 1998) of ICON Distributors, Inc. (“IDI”), the Funds’ Distributor, and is President and Director of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan also serves as the President (1998 to present) of ICON Management & Research Corporation (“IM&R”), the parent company of ICON Advisers and IDI.
Independent Trustees
Glen F. Bergert, 58. Mr. Bergert has been a Trustee of the Funds since 1999. Mr. Bergert is President of Venture Capital Management LLC (1997 to present); General Partner of SOGNO Partners LP, a venture capital company (2001 to present); General Partner of Bergert Properties, LLP, a real estate holding company (1997 to present); and General Partner of Pyramid Real Estate Partnership, a real estate development company (1998 to present); General Partner of Chamois Partners, LP, a venture capital company (2004 to present); and was previously a General Partner with KPMG Peat Marwick, LLP (1979 to 1997). Mr. Bergert is also a Director of Herre Bros, Inc., a contracting company (1998 to present); Delta Dental of Pennsylvania, an insurance company (1998 to 2002 and 2003 to present); Delta Dental of California, an insurance company (2006 to present); and Delta Reinsurance Corporation (2000 to 2002 and 2003 to present).
John C. Pomeroy, Jr., 61. Mr. Pomeroy has been a Trustee of the Funds since November 2002. Mr. Pomeroy is Chief Investment Officer and Director of Investments, Pennsylvania State University (2001 to present) and was Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).
Gregory Kellam Scott, 60. Mr. Scott has been a Trustee of the Funds since November 2002. Mr. Scott currently is employed as Assistant to the President for Diversity and Community Relations of Ivy Tech Community College (April 2008 to present). Prior to his current employment, he served as Executive Director of the Indiana Civil Rights Commission (2005 to 2008) and is a member of the U.S. State Department’s Advisory Committee on the African Judiciary (2006 to present). Mr. Scott was Senior Vice President - Law, General Counsel and Secretary of GenCorp, Inc., a multinational technology-based manufacturing company (2002 to 2004); Vice President and General Counsel of Kaiser-Hill Company, LLC, a nuclear clean-up and environmental remediation company (2000 to 2002). He served as a Justice on the Colorado Supreme Court (1993 to 2000). From 1980 until 1993, he was a member of the faculty of the University Of Denver College Of Law.
R. Michael Sentel, 60. Mr. Sentel has been a Trustee of the Funds since their inception. Mr. Sentel is a Senior Attorney with the U.S. Department of Education (1996 to present). Mr. Sentel also provides legal representation as a sole practitioner with an emphasis on corporate and transactional law. He served as general counsel to numerous public companies and served on the board of directors of one of these clients. Mr. Sentel began his legal career with the U.S. Securities and Exchange Commission’s Division of Enforcement and served as a Branch Chief (1980 to 1981). Later he served as the Section Chief for the Professional Liability Section of the Federal Deposit Insurance Corp. with responsibility for the Rocky Mountain Region (1991 to 1994).
The Officers of the Funds are:
Craig T. Callahan, 57. Dr. Callahan has been President of the Funds since their inception in 1996. Dr. Callahan also serves as ICON Advisers’ President (1998 to present) and served as the Chief Investment Officer (1991 to 2005). Dr. Callahan is also President (1998 to 2005), Director (1991 to present) and was previously Vice President (1991 to 1998) of IDI, and is President and Director of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan is also the President (1998 to present) of IM&R.
Erik L. Jonson, 58. Mr. Jonson has been a Vice President and Principal Financial Officer/Treasurer of the Funds since their inception in 1996. Mr. Jonson is also Chief Financial Officer (1996 to present) and Executive Vice President (2004 to present) and was previously Vice President (1998 to 2004) of ICON Advisers; Chief Financial Officer, Secretary and Director (1996 to present) of IM&R; and Executive Vice President (2004 to present) and Treasurer (2002 to present) and was previously Secretary/Treasurer, (1998 to 2002) and Vice President, (2002 to 2004) of IDI; and Executive Vice President and Treasurer of ICON Insurance Agency, Inc. (2004 to present).
Jessica Seidlitz, 30. Ms. Seidlitz serves as Assistant Treasurer of the Funds (2007 to present). She also serves as Mutual Fund Controller of ICON Advisers, Inc. (2005 to present). Previously, she was a Senior Associate/Associate at PricewaterhouseCoopers LLP (2001 to 2004).
Donald Salcito, 55. Mr. Salcito serves as Vice President and Secretary of the Funds since November 15, 2006. Mr. Salcito is also Executive Vice President and General Counsel (September 2005 to present) of ICON Advisers, Inc.; Director of ICON Management & Research (2005 to present); Executive Vice President, Secretary, General Counsel, for IDI (2005 to present); Chief Compliance Officer of IDI (2005 to 2007); Executive Vice President and Secretary of ICON Insurance Agency, Inc. (2005 to present). Previously he was a Partner in the law firm of Perkins Coie, LLP. (2000 to 2005).
Carrie M. Schoffman, 35. Ms. Schoffman served as Assistant Vice President and Chief Compliance Officer of the Funds (2004 to September 21, 2008). She serves as Vice President and Chief Compliance Officer of ICON Advisers, Inc. (2004 to present) and Chief Operating Officer (2008 to present). Previously she was a staff accountant with the U.S. Securities and Exchange Commission (2003 to 2004). She also was a Manager (2001 to 2003) and Senior Associate/Associate (1996 to 2001) at PricewaterhouseCoopers LLP.
Brian Harding, 29. Mr. Harding serves as Chief Compliance Officer of the Funds (September 22, 2008 to present). Previously he was a Manager (2007 to 2008) and Senior Associate/Associate (2001 to 2007) at PricewaterhouseCoopers LLP.
Stephen Abrams, 45. Mr. Abrams serves as Anti-Money Laundering Officer of the Funds (2005 to present). Mr. Abrams is also Vice President and Associate General Counsel of ICON Advisers, Inc. (2005 to present). Mr. Abrams also serves as the Chief Compliance Officer of IDI (2007 to present). Previously he was a Partner (2004 to 2005) and Associate (2000 to 2004) at Perkins Coie, LLP.
Other Information (unaudited)
Renewal of Investment Advisory Agreements
In determining to renew the investment advisory agreements between the ICON Funds (the “Trust”) and ICON Advisers, Inc. (“ICON” or the “Adviser”) the Board requested, was provided with and reviewed data with respect to ICON, its personnel, and the services to be provided to each Fund by ICON under the Trust’s Investment Advisory Agreement dated October 9, 1996, as amended (related to the Sector, International and Core Equity Funds) and under the Trust’s Investment Advisory Agreement dated July 9, 2002 and effective October 1, 2002, as amended (related to the U.S. Diversified Funds — Bond, Income Opportunity, Equity Income and Long/Short Funds) (collectively, the “Advisory Agreements”). The data included information concerning advisory, distribution and administrative services provided to the Funds by ICON and its related companies; information concerning other businesses of those companies; comparative data related to other funds versus the Sector Funds; and comparative data obtained from Lipper Analytical Services related to Fund performance and Fund expenses.
On August 11, 2008, the Board of Trustees, including the four Trustees that are not “interested persons” of the Trust (the “Independent Trustees”), approved continuation of the Advisory Agreements with the Adviser for each Fund for an additional one-year term commencing October 1, 2008.
The Independent Trustees were represented by independent legal counsel throughout the process. Prior to acting on the matter, the Independent Trustees met separately as a group in private sessions with their independent legal counsel to review and discuss the foregoing information. Based on these discussions, independent legal counsel and/or the Lead Independent Trustee also contacted management to request additional information and to discuss responses to questions raised during the process. In addition, the Independent Trustees received materials from their independent legal counsel discussing the legal standards applicable to their consideration of the agreements.
In considering the nature, extent and quality of the services provided by the Adviser, the Board reviewed information relating to ICON’s operations and personnel. Among other things, the Adviser provided biographical information on its professional staff and descriptions of its organizational and management structure. In the course of their deliberations the Board evaluated, among other things, information relating to the investment philosophy, strategies and techniques used in managing each Fund, the qualifications and experience of ICON’s investment personnel, ICON’s compliance programs, ICON’s brokerage practices, including the extent to which the Adviser obtains research through “soft dollar” arrangements with
the Funds’ brokerage, and the financial and non-financial resources available to provide services required under the Advisory Agreement.
The Board of Trustees noted that the market value of domestic and international securities have dropped dramatically during the past year as a result of numerous crises in the financial, credit and commodities markets. The Board also noted that the performance of essentially all Funds has been negative, declining along with the markets in general. In light of such, the Board considered ICON’s investment methodology and whether the ICON’s methodology or system is appropriate. It was noted that ICON’s investment approach is not designed to fit into a box defined by “value,” “growth,” and “large, mid or small cap” stock categories. On the other hand, it was noted that the approach is most similar to “value investing.” In this regard it was noted that performance of value investing in general has been negative and that ICON’s performance is in line with the group. Performance in the current period was compared to prior periods where the Funds confronted significant market declines and volatility — including an assessment of financial, geopolitical and psychological reasons for the market behavior; and it was compared to periods when those factors were not prevalent. After consideration of this information the Board concluded that ICON’s investment methodology or system is appropriate for the Funds in the long-term. In light of such, the Board asked and ICON confirmed that it does not change its system in response to current issues and that it will follow its stated investment style, using a disciplined approach to managing the Funds’ portfolios.
In connection with reviewing data bearing upon the nature, quality, and extent of services furnished by ICON to each Fund, the Board assessed data concerning ICON’s staffing, systems and facilities. The Board also assessed ICON’s non-Trust business to see if there are any initiatives that would dilute service to the Trust. It was noted:
A. That the breadth and the quality of investment advisory and other services being provided to each Fund is satisfactory, as evidenced in part by the performance record of each Fund compared with the performance records of a peer group of comparable funds and markets in general;
B. That ICON has made significant expenditures in the past year and in prior years to ensure that it has the sophisticated systems and the highly trained personnel necessary for it to be able to continue to provide quality service to the Funds’ shareholders, including the dedication of substantial resources to ICON’s investment and trading departments;
C. That the Board is satisfied with the research, portfolio management, and trading services, among others, being provided by ICON to the Funds, and is charging fair, reasonable, and competitive fees; and
D. The risks assumed by ICON in providing investment advisory services to each Fund including the capital commitments which have been made in the past and which continue to be made by ICON to ensure the continuation of the highest quality of service to the Trust is made with the recognition that the Trust’s advisory relationship with ICON can be terminated at any time and must be renewed on an annual basis.
In considering the reasonableness of the fee payable to the Adviser for managing each Fund, the Board reviewed, among other things, financial statements of the Adviser and an analysis of the profitability to the Adviser and its affiliates of their relationship with each Fund over various time periods, which analysis identified all revenues and other benefits received by the Adviser and its affiliates from managing each Fund, the costs associated with providing such services and the resulting profitability to the Adviser and its affiliates.
The Board considered the current and anticipated asset levels of each Fund and the willingness of the Adviser to waive fees and pay expenses of the Funds from time to time to limit the total expenses of the Funds. It was noted that most of the Funds have had net redemptions and that aggregate assets covered by the Advisory Agreements have declined significantly. ICON’s ability to provide the services called for under the Advisory Agreements was assessed in light of current and projected asset levels. Fund expenses and expense ratios were also assessed in light of current and projected asset levels. The Board concluded that the Adviser has the resources necessary to provide the services called for under the Advisory Agreements; that profitability to the Adviser and its affiliates from their relationship with the Funds is not excessive; and that the Adviser is not realizing material benefits from economies of scale that would warrant adjustments to the fees for any Fund at this time. The Board of Trustees concluded that, in light of the nature, extent and quality of the services provided by the Adviser and the levels of profitability associated with providing these services, the fees charged by the Adviser under the Advisory Agreements to each Fund are reasonable.
In connection with assessing data bearing the fairness of fee arrangements, the Board used data from Lipper Analytical Services concerning funds of
similar size and funds of larger size, as well as data concerning ICON’s other clients and noted:
A. The advisory fee structures of the Funds were considered in comparison with advisory fees and expense ratios of other similarly managed funds as set forth in the comparative data;
B. That contractual advisory fees of the Sector Funds were higher than fees for similar funds; but that the Sector Funds’ expense ratios were competitive and in most instances lower than those of similarly managed Funds;
C. That contractual advisory fees for the International Funds were above the average fees for similar funds; and that the Funds’ expense ratios were competitive in light of their size;
D. That ICON has contractually agreed to impose expense limitations on certain Funds at a cost to ICON;
E. That the advisory and other fees payable by the Funds to ICON are essentially fees which would be similar to those which would have resulted solely from “arm’s-length” bargaining, and may well be lower than fees arrived at solely from such arm’s-length negotiation;
F. That, the fees paid to ICON for managing other institutional accounts (such as pension plans) are not lower than the fees paid by similarly-managed funds; and to the extent such fees of those accounts are lower, the reasons are that such accounts are less costly for ICON to manage; and
G. That ICON has contractually committed to breakpoints in its fees so that economies of scale could be realized as a Fund grows in assets for the benefit of Fund shareholders.
In connection with the direct and indirect benefits to ICON from serving as the Funds’ adviser, the Board discussed and noted:
A. That ICON benefits from serving directly or through affiliates as the principal underwriter and administrative agent for the Funds; that services provided by ICON and its affiliates to the Funds are satisfactory, and that profits derived from providing the services are competitive and reasonable; and
B. That ICON receives research assistance from the use of soft dollars generated from Fund portfolio transactions; that such research assists ICON in providing quality to which it provides advisory services; and that the Board concluded that the arrangements are consistent with Fund brokerage practices and benefit the Funds and their shareholders.
Based on these considerations, among others, the Board, including all of the Independent Trustees, concluded that the continuation of the Advisory Agreements was in the best interests of each Fund and its shareholders, the services to be performed under the agreements were services required for the operation of the Funds, ICON had provided satisfactory advisory services to the Funds in the past, and the fees for the advisory services which ICON would perform and other benefits from the relationship with the Trust and consistent with fees paid by similar funds, are reasonable in light of the comparative data, and would be within the range of what would have been negotiated at arm’s length in light of the circumstances.
Supplemental Tax Information
For corporate shareholders, none of the Funds’ ordinary income distributions during the fiscal year ended September 30, 2008 qualify for the corporate dividends received deduction.
For the fiscal year ended September 30, 2008, the following Funds paid qualified dividend income:
| | | | | |
| Fund | | Amount | |
| | |
| ICON Asia-Pacific Region Fund | | | 41.81% | |
| ICON Europe Fund | | | 22.89% | |
| ICON International Equity Fund | | | 30.77% | |
The Funds designate the following amounts as long-term capital gain distributions qualifying for the maximum 15% income tax rate for individuals:
| | | | | |
| Fund | | Amount | |
| | |
| ICON Asia-Pacific Region Fund | | $ | 12,750,288 | |
| ICON Europe Fund | | | 4,201,568 | |
| ICON International Equity Fund | | | 11,750,380 | |
Portfolio Holdings
A list of each ICON Fund’s Top 10 holdings is available at www.iconfunds.com on or about 15 days following each month end. Each ICON Fund also files a complete schedule of portfolio holdings for the first and third quarters of its fiscal year with the SEC on Form N-Q. The ICON Funds’ Forms N-Q are available at www.sec.gov or may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Proxy Voting
A summarized description of the policies and procedures the ICON Funds use to vote proxies is available free of charge at www.iconfunds.com or by calling 1-800-764-0442.
Information about how the ICON Funds voted proxies related to each Fund’s portfolio securities during the 12-month period ended June 30 is available free of charge at www.iconfunds.com or on the SEC’s website at www.sec.gov.
For More Information
This report is for the general information of the Funds’ shareholders and is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. You may obtain a copy of the prospectus, which contains information about the investment objectives, risks, charges, expenses, and share classes of each ICON Fund, by visiting www.iconfunds.com or by calling 1-800-764-0442. Please read the prospectus carefully before investing.
ICON Distributors, Inc., Distributor
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| For more information about the ICON Funds, contact us: |
| | | |
| By Telephone | | 1-800-764-0442 |
| | | |
| By Mail | | ICON Funds
P.O. Box 55452
Boston, MA 02205-8165 |
| | | |
| In Person | | ICON Funds
5299 DTC Boulevard, 12th Floor
Greenwood Village, CO 80111 |
| | | |
| On the Internet | | www.iconfunds.com |
| | | |
| By E-Mail | | info@iconadvisers.com |
2008 Annual Report
ICON Sector Funds
Investment Update
ICON Consumer Discretionary Fund
ICON Energy Fund
ICON Financial Fund
ICON Healthcare Fund
ICON Industrials Fund
ICON Information Technology Fund
ICON Leisure and Consumer Staples Fund
ICON Materials Fund
ICON Telecommunication & Utilities Fund
1-800-764-0442 ï www.iconfunds.com
AR-SECT-D, K95864
Table of Contents
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About This Report
Historical Returns
All total returns mentioned in this Report account for the change in a Fund’s per-share price and the reinvestment of any dividends, capital gain distributions and adjustments for financial statement purposes. If your account is set up to receive Fund distributions in cash rather than to reinvest them, your actual return may differ from these figures. The Funds’ performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Fund results shown, unless otherwise indicated, are at net asset value.
Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance results represent past performance, and current performance may be higher or lower. Please call 1-800-764-0442 or visit www.iconfunds.com for performance results current to the most recent month-end.
Portfolio Data
This Report reflects ICON’s views, opinions and portfolio holdings as of September 30, 2008, the end of the reporting period. The information is not a complete analysis of every aspect of any sector, industry, security or the Funds.
Opinions and forecasts regarding industries, companies and/or themes, and portfolio composition and holdings are subject to change at any time based on market and other conditions, and should not be construed as a recommendation of any specific security, industry or sector. Each Fund’s holdings as of September 30, 2008 are included in each Fund’s Schedule of Investments.
According to ICON, value investing is an analytical, quantitative approach to investing that employs various factors, including projecting earnings growth estimates, in an effort to determine whether securities are over- or underpriced relative to ICON’s estimates of their intrinsic value. Value investing involves risks and uncertainties and does not guarantee better performance or lower costs than other investment methodologies. ICON’s value-to-price ratio is a ratio of intrinsic value, as calculated using ICON’s proprietary valuation methodology, of a broad range of domestic and international securities within ICON’s system as compared to the current market price of those securities. The ICON system relies on the integrity of financial statements released to the market as part of our analysis.
This Report contains statements regarding industry or sector themes, new market themes, investment outlook, relative strength, value-to-price ratios, and investment team expectations, beliefs, goals and the like that are based on current expectations, recent individual stock performance relative to current market prices, estimates of company values and other information supplied to the market by the companies we follow. Words such as “expects,” “suggests,” “anticipates,” “targets,” “goals,” “value,” “intrinsic value,” “indicates,” “believes,” “considers,” “estimates,” variations of such words and similar expressions are intended to identify forward looking statements, which are not statements of historical fact. Forward looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. These risks and uncertainties are based on a number of important factors, including, among others: stock price fluctuations; the integrity and accuracy of historical and projected financial and other information supplied by companies to the public; interest rates; future earnings growth rates; the risks noted in this Report and other factors beyond the control of our investment team. Therefore, actual outcome may differ materially from what is expressed in such forward looking statements.
There are risks associated with mutual fund investing, including the loss of principal. The likelihood of loss may be greater if you invest for a shorter period of time. There is no assurance that the investment process will consistently lead to successful results.
An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment, and the Technology sector has been among the most volatile in the market. Investments in foreign securities may entail unique risks, including political, market, and currency risks. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, do not exist in foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers.
The prospectus and statement of additional information contain this and other information about the Funds and are available by visiting www.iconfunds.com or calling 1-800-764-0442. Please read the prospectus and statement of additional information carefully.
Comparative Indexes
The comparative indexes discussed in this Report are meant to provide a basis for judging the Funds’ performance against specific securities indexes. Each index shown accounts for both change in security price and reinvestment of dividends and distributions (except as noted), but does not reflect the costs of managing a mutual fund. The Funds’ portfolios may significantly differ in holdings and composition from the indexes. Individuals cannot invest directly in an index.
| |
| • | The unmanaged Standard & Poor’s (“S&P”) Composite 1500 Index (“S&P Composite 1500 Index”) is a broad-based capitalization-weighted index comprising 1,500 stocks of large-cap, mid-cap, and small-cap U.S. companies. |
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| • | The capitalization-weighted S&P 1500 Sector and Industry Indexes are based on specific classifications determined by S&P. |
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| • | The unmanaged NASDAQ Composite (“NASDAQ”) Index is a broad-based capitalization-weighted index of all NASDAQ National Market and Small-Cap stocks. |
Index returns and statistical data included in this Report are provided by Bloomberg and FactSet Research Systems.
Message From ICON Funds
Dear ICON Shareholder:
Because of the discipline inherent in the ICON system, I never expected to write a letter to shareholders explaining the type of negative returns we and much of our industry have posted over the last fiscal year. Using our valuation methodology, we buy stocks we believe are on sale and we do not chase what we think are over-priced, hot trends. We screen for quality, favoring well-managed companies with healthy cash positions and lower than average debt levels. We do not underwrite or insure mortgage-backed securities. Although we have owned government agency bonds, ICON resisted the subprime mortgage-backed securities frenzy. We attempt to distance ourselves from Wall Street as we do not take any brokerage “buy, sell or hold” recommendations and we have not purchased IPOs. September 2008 was a particularly harsh month for financial stocks. In response to questions from financial advisers, we wrote the following regarding our Core Equity and Financials sector fund: “it is noteworthy that neither fund owned the following stocks as of 8/31/08; Fannie Mae, Freddie Mac, Merrill Lynch, Lehman Brothers, Washington Mutual or AIG.” We sold another headliner, Bear Stearns, in early July 2007 in the $139 per share range. Although ICON’s disciplined, value-based methodology allowed us to stay clear of these and similar problematic securities, our portfolios were dragged down by the recent financial crisis nevertheless.
We have analyzed past market peaks in an effort to identify indicators that forecast a subsequent bear market. The only recurring behavior we have identified involves valuation; that is, we discovered that stocks are priced much higher than our estimation of their intrinsic value at a typical peak. For example, stocks were significantly overpriced according to our system prior to the crash of October 1987. More recently, prices of technology and telecommunication issues were way above our estimate of intrinsic value just before their severe decline in 2000. Based on our estimation of intrinsic value, however, stocks were not overpriced in late 2007. Therefore, we had no indication of a potential severe market drop. The market behaved like quick sand, with stocks dropping in reaction to news events, even though they were not overpriced under our methodology. We take little solace in the fact that we were not alone, and that few advisers could have anticipated the panic selling that dragged the market lower as fiscal year 2008 came to a close. The damage was so widespread that investors had no place to hide in September, except in cash, which was also subject to its own risks and limitations.
If you have followed the behavior of the ICON system over the last two decades you have noticed a pattern. When stock prices dropped quickly and
Message From ICON Funds 5
were significantly below our estimate of intrinsic value, we held and even rotated into attractive industries in an effort to capture the emerging leadership. With each sudden market decline, we stated that the price drop was created by investors overreacting, and, further that we expected prices to move higher and catch up to value. For two decades our decision to remain invested in anticipation of price catching up to value has been effective and critical to our success. As we entered the fiscal year, we saw no reason to change our strategy or behavior.
In late 2007, stock prices dropped in reaction to the initial problems regarding the subprime mortgage situation. We checked all inputs to our valuation equation, such as earnings estimates and risk, and they were steady. With stocks priced below our estimate of intrinsic value, we believed investors (and, accordingly, the market) had over-reacted. In response to further developments, stock prices dropped again in January and yet again in March. With each drop, stocks continued to look cheap and inputs to our valuation equation remained steady. Each dip this fiscal year looked like an overreaction to the data available at the time, just like the sudden dips we’d seen on several occasions over the last two decades. We stuck to our system in what proved to be an unprecedented setting.
The dictates of the ICON system are pretty simple. First, when stocks are cheap, the ICON system focuses on value - not news events - and directs us to remain invested. Second, when stocks are expensive, the system favors cash. Third, the system attempts to capture industry leadership that typically lasts one to two years. By sticking rigidly to its discipline, we believe the ICON system can handle most market situations through time. We believe also that the events of the last twelve months have been extraordinary - rare, unusual, and even unlikely to reoccur. The ICON system depends in no small part on the integrity of the market. While several parties share blame for this most recent economic crisis, the evident failure of many companies to properly disclose their financial condition caught ICON and most other investment professionals off-guard. Obviously, the ICON system did not handle the last 12-months well. Frankly, few systems did.
Current Situation and Outlook
The monetarist theory of economics believes that when the money supply grows it will stimulate the economy with about a six to nine month lag. When the money supply contracts, the monetarist theory believes that contraction will slow the economy by a similar lag. One way to measure the money supply is M1, which is defined to be currency plus demand deposits (checking accounts). When a bank makes a loan, a demand deposit is created, which, by definition, creates money. In August 2007 the Federal Reserve (“FED”) eased monetary policy and injected reserves into the
6 Message From ICON Funds
banking system. Such easing normally promotes banks to make loans which, in turn, creates M1 and stimulates the economy. Despite the continued monetary easing through late 2007 and early 2008, banks did not increase their lending, partly through caution but mostly because the illiquid mortgage-backed securities they held hurt their capital ratios.
The primary goal of the Troubled Asset Relief Program or “TARP” package is for the U.S. Treasury to buy those mortgage-backed securities. The banks will record a loss on the securities, as they should, but will immediately have cash and greatly improved capital ratios, which means they can make loans again. Through loans, M1 can grow and stimulate the economy. In separate actions, the FED announced that it will pump an additional $630 billion into the global financial system through what it calls currency swaps with foreign central banks. The FED also announced its intent to buy commercial paper in the short-term money market. Finally, the U.S. Treasury Department announced it will buy stock in banks to help their capital ratios.
Over the 19 week period from late May through early October, M1 grew 11.6%. That is not annualized. It is 11.6% in 19 weeks. That is a sensational pace and is evidence banks are lending. If the lending continues and M1 continues to grow, we believe it will stimulate the economy. Typical timing would suggest that the economy might hit a bottom winter or spring 2009.
The market place seems unable to understand monetary stimulation and policy, as distinguished from fiscal policy. Fiscal policy is more obvious as it targets a specific income level, segment of the economy or industry. People can understand it. A monetary stimulus, on the other hand, is vague, broad, intangible, but, in the view of monetarists, very powerful. A monetary stimulus is just slow. It may be a few months before a monetary stimulus takes effect and it works behind the scenes, so to speak.
We believe the monetary stimulus is underway and will result in an economic recovery in 2009. We also see many of the behaviors and data typical of market bottoms falling in place. After coming through the extraordinary events of the last 12-months, investors and money managers have to do an assessment. They have to decide if they should make adjustments and changes or whether the events of the last fiscal year were anomalous and unlikely to be repeated. While investors should consult with their financial advisers regarding their unique needs and goals, generally speaking I would encourage most investors to not make major adjustments. Too many times I have seen investors set investment policy by looking in the rear view mirror, especially regarding their allocation to equities. It is usually not productive to make major changes in response to extraordinary events like those of the past 12-months.
Message From ICON Funds 7
We expect that the financial system will emerge stronger and better than before. This was not the first unanticipated problem to hit our financial and banking system; nor will it be the last. The same problems generally do not recur, although new ones arise from time to time. We fix an existing problem and move on. And that’s exactly what the financial and banking system is doing in response to this most recent crisis.
At ICON we remain convinced that our calculation of intrinsic value is valid and that valuation, in combination with industry relative strength readings, can identify industry leadership for one to two year moves. We expect that investors will continue to demonstrate the kind of overreaction to events we have recognized and avoided in the past. We will try to capitalize on that overreaction by allowing our valuation methodology to guide our buying and selling. We take the same advice we pass on to our investors: we do not believe in making major changes to our investment game-plan by looking at a bad situation in the rear view mirror. We believe our system is well designed to handle most events. Changing the system in order to handle an extreme retroactive event would hinder our ability to address most everyday situations. And while the events of the last 12-months have been nothing shy of extraordinary, we believe much of the carnage has run its course. It is difficult to predict market bottoms, but as we say at ICON, rallies do not issue invitations. Therefore, we encourage you to ride out whatever remains of the storm with us and remain invested in order to participate in any ensuing rally.
Yours truly,
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
8 Message From ICON Funds
ICCCX
Management Overview
ICON Consumer Discretionary Fund
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| Q. | How did the Fund Perform relative to its benchmark? |
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| A. | The Fund underperformed its benchmark for the period. The Fund declined 24.21%, while the benchmark S&P 1500 Consumer Discretionary Index fell 22.96%. |
Additionally, the Fund lagged its broad benchmark, the S&P Composite 1500 Index, which lost 21.27% over the same period. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview.
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| Q. | What primary factors influenced the Fund’s relative performance during the period? |
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| A. | The Fund’s relative performance - and the performance of the U.S. equity market in general - was shaped primarily by two factors: the subprime lending disaster and the related meltdown in housing prices. These two factors eviscerated earnings on homebuilding and sent financial related equities into a freefall. |
The subprime lending and housing crises sent ripples across all market sectors. Every sector experienced sharp declines, except Consumer Staples issues, which, though down, held up better than equities in all other sectors of the market. Although we saw value in the Consumer Discretionary sector at the start of the fiscal year, investor fear based on the subprime lending crisis crushed investor sentiment across the entire market. The Consumer Discretionary sector, like every other sector, suffered significant declines.
Amid this backdrop of pervasive fear concerning the economic outlook, investors shunned areas of the market with even a hint of a cyclical bent. Industries in the Consumer Discretionary sector were hit particularly hard. Investors were evidently concerned about the prospect for a drop in consumer spending, as the possibility of a recession loomed over the market. Consequently, the Consumer Discretionary sector, as measured by the S&P 1500 Consumer Discretionary Index, fell more than the broader market Index - the S&P 1500 Composite.
In addition, stocks recognized as “value” plays underperformed stocks recognized as “growth” investments. The S&P 500 Growth Index (SGX) was down 19.44% during the fiscal year while the S&P 500 Value Index (SVX) declined 24.50%. Since our investment style at ICON is
predominantly value based, our Consumer Discretionary Fund faced a general headwind that made it difficult to outperform our sector index.
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| Q. | How did the Fund’s Composition affect performance? |
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| A. | At ICON we focus on industry selection based on value and relative strength. When we identify industries we believe have value and are leading the market higher, we naturally tilt our sector fund to those industries. Within the Consumer Discretionary Sector Fund we track 25 separate and distinct industries. Over the past year, over- and underweight positions affected the Fund’s performance. |
On the positive side, there were three industries in particular that had a positive impact on the Fund: apparel retail, homefurnishing retail, and general merchandise stores. Combined, these industries accounted for around 5.5% of positive relative performance versus the Fund’s S&P 1500 Consumer Discretionary Composite Index.
The Fund’s performance relative to its S&P 1500 Consumer Discretionary Composite Index was also negatively impacted by three industries: homebuilding, apparel accessories & luxury goods, and auto parts & equipment. Combined, these industries accounted for approximately 4.4% of negative relative performance versus the Fund’s S&P 1500 Consumer Discretionary Composite Index.
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| Q. | What is your investment outlook for the equity market? |
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| A. | As this extremely turbulent and volatile period in the U.S. equity market came to a close, it appeared that fear and pessimism led investors to sell stocks well below our calculation of intrinsic value. As a result, we believe we’ve entered a new period - one that, by our estimation, may present investors with many bargains in the market. These bargains exist across the spectrum of economic sectors we track, including the Consumer Discretionary sector. |
In fact, as this fiscal year ended, the average Consumer Discretionary stock in our database was trading at about a 35% discount to our calculation of its intrinsic value. Accordingly, we believe Consumer Discretionary issues now have significant upside potential.
ICON Consumer Discretionary Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Apparel Retail | | | 20.2% | |
| Apparel Accessories & Luxury Goods | | | 9.5% | |
| Automotive Retail | | | 8.3% | |
| Home Improvement Retail | | | 8.0% | |
| Specialty Stores | | | 7.3% | |
| General Merchandise Stores | | | 5.3% | |
| Homebuilding | | | 4.9% | |
| Home Furnishings | | | 4.7% | |
| Household Appliances | | | 4.4% | |
| Computer & Electronics Retail | | | 4.2% | |
| Housewares & Specialties | | | 4.0% | |
| Home Furnishing Retail | | | 3.1% | |
| Footwear | | | 2.6% | |
| Education Services | | | 2.5% | |
| Motorcycle Manufacturers | | | 2.3% | |
| Specialized Consumer Services | | | 1.7% | |
| Hotels Resorts & Cruise Lines | | | 1.4% | |
| Internet Retail | | | 1.1% | |
| Department Stores | | | 1.1% | |
| Auto Parts & Equipment | | | 1.0% | |
| Consumer Electronics | | | 0.6% | |
| | | | | |
| | | | 98.2% | |
| | | | | |
Percentages are based upon net assets.
ICON Consumer Discretionary Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Consumer Discretionary | | | 96.8% | |
| Leisure and Consumer Staples | | | 1.4% | |
| | | | | |
| | | | 98.2% | |
| | | | | |
Percentages are based upon net assets.
ICON Consumer Discretionary Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Since
| | | | Gross
| | | | Net
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| | | | | | | | | | | | | | | | Inception
| | | | Expense
| | | | Expense
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| | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | 7/9/97 | | | | Ratio* | | | | Ratio* | |
| ICON Consumer Discretionary Fund | | | | -24.21 | % | | | | | -0.38 | % | | | | | 4.17 | % | | | | | 1.52 | % | | | | | 1.30 | % | | | | | 1.30 | % | |
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| S&P 1500 Consumer Discretionary Index | | | | -22.96 | % | | | | | 1.46 | % | | | | | 2.23 | % | | | | | 3.48 | % | | | | | N/A | | | | | | N/A | | |
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| S&P Composite 1500 Index | | | | -21.27 | % | | | | | 5.65 | % | | | | | 3.81 | % | | | | | 4.49 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. The performance of the S&P 1500 Consumer Discretionary Index includes the reinvestment of dividends and capital gain distributions beginning on January 1, 2002. Additional information about these performance results and the comparative indexes can be found in the About This Report section.
| |
| * | Please see the January 28, 2008 prospectus for details. |
ICON Consumer Discretionary Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund on its inception date of 7/9/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Consumer Discretionary Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (98.2%) |
| | 34,700 | | | Advance Auto Parts, Inc. | | $ | 1,376,202 | |
| | 45,100 | | | Aeropostale, Inc.(a)(b) | | | 1,448,161 | |
| | 11,300 | | | Amazon.com, Inc.(a) | | | 822,188 | |
| | 46,800 | | | American Greetings Corp. - Class A | | | 715,572 | |
| | 60,600 | | | Asbury Automotive Group, Inc. | | | 698,112 | |
| | 22,200 | | | AutoZone, Inc.(a) | | | 2,738,148 | |
| | 20,100 | | | Bed Bath & Beyond, Inc.(a)(b) | | | 631,341 | |
| | 71,300 | | | Best Buy Co., Inc. | | | 2,673,750 | |
| | 115,900 | | | Big 5 Sporting Goods Corp.(b) | | | 1,196,088 | |
| | 101,200 | | | Brown Shoe Co., Inc.(b) | | | 1,657,656 | |
| | 33,000 | | | Coach, Inc.(a) | | | 826,320 | |
| | 41,500 | | | Collective Brands, Inc.(a)(b) | | | 759,865 | |
| | 90,700 | | | D.R. Horton, Inc. | | | 1,180,914 | |
| | 37,100 | | | DeVry, Inc. | | | 1,837,934 | |
| | 26,200 | | | Dick’s Sporting Goods, Inc.(a) | | | 512,996 | |
| | 76,100 | | | Ethan Allen Interiors, Inc.(b) | | | 2,132,322 | |
| | 114,700 | | | Foot Locker, Inc. | | | 1,853,552 | |
| | 33,000 | | | Fossil, Inc.(a) | | | 931,590 | |
| | 40,000 | | | Fred’s, Inc. - Class A | | | 568,800 | |
| | 10,500 | | | GameStop Corp. - Class A(a) | | | 359,205 | |
| | 18,500 | | | Guess, Inc. | | | 643,615 | |
| | 56,100 | | | H&R Block, Inc. | | | 1,265,055 | |
| | 45,400 | | | Harley-Davidson, Inc.(b) | | | 1,693,420 | |
| | 67,500 | | | Helen of Troy, Ltd.(a) | | | 1,536,975 | |
| | 14,200 | | | Hibbett Sports, Inc.(a)(b) | | | 284,284 | |
| | 116,800 | | | Hot Topic, Inc.(a) | | | 772,048 | |
| | 61,500 | | | Jarden Corp.(a) | | | 1,442,175 | |
| | 24,800 | | | Johnson Controls, Inc. | | | 752,184 | |
| | 58,500 | | | KB Home(b) | | | 1,151,280 | |
| | 17,400 | | | Kohl’s Corp.(a) | | | 801,792 | |
| | 59,100 | | | Leggett & Platt, Inc.(b) | | | 1,287,789 | |
| | 85,300 | | | Limited Brands, Inc. | | | 1,477,396 | |
| | 106,900 | | | Lowe’s Cos., Inc. | | | 2,532,461 | |
| | 23,300 | | | Matsushita Electric Industrial Co., Ltd. - ADR | | | 403,789 | |
| | 39,900 | | | Newell Rubbermaid, Inc. | | | 688,674 | |
| | 23,020 | | | Nike, Inc. - Class B | | | 1,540,038 | |
| | 44,500 | | | O’Reilly Automotive, Inc.(a)(b) | | | 1,191,265 | |
| | 56,000 | | | Oxford Industries, Inc.(b) | | | 1,446,480 | |
| | 23,500 | | | Polo Ralph Lauren Corp. | | | 1,566,040 | |
| | 70,100 | | | Rent-A-Center, Inc.(a)(b) | | | 1,561,828 | |
| | 10,000 | | | Ross Stores, Inc. | | | 368,100 | |
| | 21,000 | | | Skechers U.S.A., Inc. - Class A(a) | | | 353,430 | |
| | 98,450 | | | Staples, Inc.(b) | | | 2,215,125 | |
| | 65,600 | | | Target Corp. | | | 3,217,680 | |
Schedule of Investments 13
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 70,700 | | | The Finish Line, Inc. - Class A | | $ | 706,293 | |
| | 124,900 | | | The Home Depot, Inc. | | | 3,233,661 | |
| | 87,800 | | | TJX Cos., Inc. | | | 2,679,656 | |
| | 48,300 | | | Toll Brothers, Inc.(a) | | | 1,218,609 | |
| | 24,500 | | | Tractor Supply Co.(a) | | | 1,030,225 | |
| | 67,500 | | | Urban Outfitters, Inc.(a) | | | 2,151,225 | |
| | 27,200 | | | V.F. Corp. | | | 2,102,832 | |
| | 21,400 | | | Whirlpool Corp.(b) | | | 1,696,806 | |
| | 62,700 | | | Wyndham Worldwide Corp. | | | 985,017 | |
| | | | | | | | | |
| Total Common Stocks (Cost $70,550,533) | | | 70,917,963 | |
| |
| Short-Term Investments (0.9%) |
| $ | 684,361 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | $ | 684,361 | |
| | | | | | | | | |
| Total Short-Term Investments (Cost $684,361) | | | 684,361 | |
| |
| Other Securities (23.1%) |
| | 16,672,869 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | | 16,672,869 | |
| | | | | | | | | |
| Total Other Securities (Cost $16,672,869) | | | 16,672,869 | |
| Total Investments 122.2% (Cost $87,907,763) | | | 88,275,193 | |
| Liabilities Less Other Assets (22.2%) | | | (16,033,338 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 72,241,855 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
14 Schedule of Investments
ICENX
Management Overview
ICON Energy Fund
| |
| Q. | How did the Fund perform relative to its benchmarks? |
| |
| A. | For the fiscal year ended September 30, 2008, the ICON Energy Fund depreciated 14.62%, underperforming its sector-specific benchmark, the S&P 1500 Energy Index, which lost 13.45%, and outperforming its broad benchmark, the S&P Composite 1500 Index, which lost 21.27%. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | A weakening economy and chaos in the financial sector took a strong toll on energy over the past year. Throughout the period, crude oil futures were extremely volatile, which led to volatility in the energy equity market as a whole. Crude oil futures ended the period up 23%, a small portion of its near 78% increase at its peak in early July. A rapid sell off occurred towards the end of the summer as several large financial institutions entered distress and failure as a result of the subprime mortgage crisis. Energy stocks were hit hard by investors’ fears about the crisis and prices rapidly retreated. |
Amid significant volatility in both the broad equity market and the price of oil, the ICON Energy Fund rose gradually through the middle portion of the fiscal year. From January 17 to June 30, 2008, the Fund rose 28%. Subsequently, however, in the final quarter of fiscal year 2008, energy stocks and oil futures fell dramatically. During that timeframe, the Fund declined 27.10%.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | Of the seven industries we track in the Energy sector, three contributed positively to performance versus the S&P 1500 Energy Index: coal & consumable fuels, oil & gas drilling, and oil & gas refining & marketing. Coal & consumable fuels was the only industry position to make a positive contribution to returns, adding approximately 2% to the Fund’s return. These outperforming industries, however, did little to counteract the overall negative returns of the Fund. |
The largest detractor from the Fund’s performance came from our holdings in oil & gas equipment & services. The Fund took on an overweight position in this industry based on our research showing strong value and leadership. These holdings unfortunately detracted significantly from relative performance, reducing returns approximately an additional 2% below the S&P energy benchmark.
| |
| Q. | What is your investment outlook for the Energy sector? |
| |
| A. | With the negative overall performance of the Energy sector this year, our research shows strong levels of value in the market. While our valuations indicate there is great upside potential, we also anticipate ongoing volatility as the market sorts itself out of the current financial crisis. Starting at the beginning of September 2008, we have been gradually increasing cash levels as a defensive move against this volatility. We continue to wait for industries to show clear leadership out of the current lows to reinvest our cash holdings. |
The Fund ended the fiscal year with a heavy position in integrated oil and gas, specifically in the large cap companies. We look to keep this industry close to benchmark levels. As of the fiscal year end, the Fund held no positions in coal and consumable fuels as that industry lagged in market leadership and performance.
ICON Energy Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Integrated Oil & Gas | | | 48.0% | |
| Oil & Gas Equipment & Services | | | 9.5% | |
| Oil & Gas Refining & Marketing | | | 6.8% | |
| Oil & Gas Storage & Transportation | | | 6.0% | |
| Industrial Machinery | | | 5.7% | |
| Railroads | | | 4.5% | |
| Oil & Gas Exploration & Production | | | 4.1% | |
| Airlines | | | 2.5% | |
| Electrical Components & Equipment | | | 2.0% | |
| Oil & Gas Drilling | | | 1.5% | |
| | | | | |
| | | | 90.6% | |
| | | | | |
Percentages are based upon net assets.
ICON Energy Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Energy | | | 75.9% | |
| Industrials | | | 14.7% | |
| | | | | |
| | | | 90.6% | |
| | | | | |
Percentages are based upon net assets.
ICON Energy Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Since
| | | | Gross
| | | Net
| |
| | | | | | | | | | | | | | | | Inception
| | | | Expense
| | | Expense
| |
| | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | 11/5/97 | | | | Ratio* | | | Ratio* | |
| ICON Energy Fund | | | | -14.62 | % | | | | | 24.05 | % | | | | | 21.51 | % | | | | | 14.69 | % | | | | | 1.18 | % | | | | 1.18 | % | |
| |
| |
| S&P 1500 Energy Index | | | | -13.45 | % | | | | | 22.64 | % | | | | | 13.13 | % | | | | | 10.81 | % | | | | | N/A | | | | | N/A | | |
| |
| |
| S&P Composite 1500 Index | | | | -21.27 | % | | | | | 5.65 | % | | | | | 3.81 | % | | | | | 4.12 | % | | | | | N/A | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section.
| |
| * | Please see the January 28, 2008 prospectus for details. |
ICON Energy Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund on its inception date of 11/5/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Energy Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (90.6%) |
| | 171,600 | | | Apache Corp. | | $ | 17,894,448 | |
| | 12,365 | | | BP Prudhoe Bay Royalty Trust | | | 1,149,574 | |
| | 119,300 | | | Burlington Northern Santa Fe Corp. | | | 11,026,899 | |
| | 159,300 | | | Cameron International Corp.(a)(b) | | | 6,139,422 | |
| | 772,700 | | | Chevron Corp. | | | 63,732,296 | |
| | 671,800 | | | ConocoPhillips | | | 49,209,350 | |
| | 783,400 | | | Delta Air Lines, Inc.(a)(b) | | | 5,836,330 | |
| | 200,900 | | | Dover Corp. | | | 8,146,495 | |
| | 296,500 | | | Dresser-Rand Group, Inc.(a) | | | 9,330,855 | |
| | 301,300 | | | EnPro Industries, Inc.(a) | | | 11,196,308 | |
| | 963,500 | | | Exxon Mobil Corp. | | | 74,825,410 | |
| | 282,200 | | | Frontier Oil Corp. | | | 5,198,124 | |
| | 727,000 | | | General Maritime Corp.(b) | | | 14,161,960 | |
| | 315,000 | | | Kennametal, Inc.(b) | | | 8,542,800 | |
| | 240,200 | | | Knightsbridge Tankers, Ltd.(b) | | | 6,358,094 | |
| | 502,800 | | | Marathon Oil Corp. | | | 20,046,636 | |
| | 76,700 | | | Murphy Oil Corp. | | | 4,919,538 | |
| | 283,700 | | | Nordic American Tanker Shipping, Ltd. | | | 9,095,422 | |
| | 337,600 | | | Occidental Petroleum Corp. | | | 23,783,920 | |
| | 33,200 | | | San Juan Basin Royalty Trust | | | 1,262,596 | |
| | 369,700 | | | Schlumberger, Ltd. | | | 28,869,873 | |
| | 393,800 | | | SkyWest, Inc. | | | 6,292,924 | |
| | 41,900 | | | Smith International, Inc. | | | 2,457,016 | |
| | 428,900 | | | Sunoco, Inc.(b) | | | 15,260,262 | |
| | 272,100 | | | Suntech Power Holdings Co., Ltd. - ADR(a)(b) | | | 9,760,227 | |
| | 358,900 | | | Tesoro Corp.(b) | | | 5,918,261 | |
| | 68,890 | | | Transocean, Inc.(a) | | | 7,566,878 | |
| | 158,400 | | | Union Pacific Corp.(b) | | | 11,271,744 | |
| | 231,300 | | | Valero Energy Corp. | | | 7,008,390 | |
| | | | | | | | | |
| Total Common Stocks (Cost $476,465,157) | | | 446,262,052 | |
| |
| Short-Term Investments (6.2%) |
| $ | 30,359,918 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | | 30,359,918 | |
| | | | | | | | | |
Total Short-Term Investments
(Cost $30,359,918) | | | 30,359,918 | |
| | | | | |
| Other Securities (15.2%) | | | | |
| | 75,081,355 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | | 75,081,355 | |
| | | | | | | | | |
| Total Other Securities (Cost $75,081,355) | | | 75,081,355 | |
| Total Investments 112.0% (Cost $581,906,430) | | | 551,703,325 | |
| Liabilities Less Other Assets (12.0%) | | | (59,066,236 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 492,637,089 | |
| | | | | |
Schedule of Investments 19
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
20 Schedule of Investments
ICFSX
| |
| Q. | How did the Fund perform relative to its benchmarks? |
| |
| A. | The ICON Financial Fund lost 31.93% for the fiscal year ended September 30, 2008, outperforming its sector-specific benchmark, the S&P 1500 Financials Index, which lost 36.83%, but lagging its broad benchmark, the S&P Composite 1500 Index, which eroded 21.27%. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | The Financials sector lagged the broad equity market during the fiscal year as the subprime mortgage debacle led to a broader financial crisis. Asset write-downs eroded the capital structure of numerous commercial and investment banks and changes in capital structure ultimately led to the collapse of several venerable financial institutions including Bear Stearns, Washington Mutual, Lehman Brothers and IndyMac Bank. Excluding investment banks, the FDIC reported 14 bank failures during fiscal year 2008, including Washington Mutual, the largest bank failure in history. |
The Federal Reserve and the Treasury have taken extraordinary steps to infuse liquidity and stimulate lending. The federal funds rate target was lowered to 2.00% from 4.75% over the last year, the discount window rate was lowered from 5.25% to 2.25%, borrowing facilities were opened to investment banks and buy-outs were negotiated with federal assistance.
At the close of this fiscal year the Bush Administration, in conjunction with Treasury Secretary Paulson and Federal Reserve Chairman Bernanke, proposed a $700 billion market stabilization bill. The S&P 1500 fell 8.55% after Congress failed to pass the bill. Other market indices suffered similar dramatic declines.
Additionally, market volatility, especially in the Financials sector, made it difficult for the Fund to capitalize on ICON’s ability to identify themes. Nearly 23% of the trade days during this fiscal year resulted in movements of more then 3% in either direction.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | The Fund’s performance for the past fiscal year has been more about what the Fund did not hold rather then what the Fund did hold. |
For example, the consumer finance industry accounted for approximately 7.4% of the Fund, with an average return of around -16.6%. The Fund’s consumer finance position was overweight when compared to the S&P 1500 Financials Index, which had an average weight of only 4.2%. Nonetheless, the Fund’s consumer finance holdings outperformed the Index holdings within this industry. Most of the out-performance within the industry can be ascribed to the Fund’s underexposure to American Express, which alone accounted for around 1% of the Index’s losses for the fiscal year. The Fund likewise benefited by its lack of or under-exposure to Bear Stearns, Wachovia Corp., Fannie Mae and Freddie Mac.
Unfortunately, this favorable performance relative to the benchmark was offset by the Fund’s position in mortgage REITs. Mortgage REITs initially performed well off what we hoped would be significant market bottoms. As the credit crisis worsened, however, mortgage REIT performance eroded, accounting for over 4% of the Fund’s losses.
| |
| Q. | What is your investment outlook for the Financials sector? |
| |
| A. | At fiscal year end we estimated the Financials sector’s value to price ratio to be 1.31, suggesting there are opportunities for favorable industry moves toward fair value. |
The Federal Reserve and the US Treasury have taken unprecedented action in addressing the liquidly issue that is dominating the current market. We believe these measures will, in time, help free up balance sheets and restore lending activity.
The Fund will continue to focus on the financial industries we believe have favorable value to price and relative strength ratios. As of September 30, 2008, the Fund has notable positions in regional banks and other diversified financial services. In accordance with our sell discipline, we will pare our positions in these industries if they do not meet our value and relative strength requirements.
ICON Financial Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Other Diversified Financial Services | | | 25.8% | |
| Diversified Banks | | | 12.9% | |
| Regional Banks | | | 12.2% | |
| Investment Banking & Brokerage | | | 9.8% | |
| Consumer Finance | | | 8.7% | |
| Life & Health Insurance | | | 6.2% | |
| Thrifts & Mortgage Finance | | | 5.8% | |
| Asset Management & Custody Banks | | | 3.6% | |
| Specialized Finance | | | 3.4% | |
| Property & Casualty Insurance | | | 2.7% | |
| Mortgage Reits | | | 1.1% | |
| Multi-Line Insurance | | | 0.8% | |
| | | | | |
| | | | 93.0% | |
| | | | | |
Percentages are based upon net assets.
ICON Financial Fund
Sector Composition
as of September 30, 2008
Percentages are based upon net assets.
ICON Financial Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Since
| | | | Gross
| | | Net
| |
| | | | | | | | | | | | | | | | Inception
| | | | Expense
| | | Expense
| |
| | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | 7/1/97 | | | | Ratio* | | | Ratio* | |
| ICON Financial Fund | | | | -31.93 | % | | | | | 1.95 | % | | | | | 7.06 | % | | | | | 5.68 | % | | | | | 1.21 | % | | | | 1.21 | % | |
| |
| |
| S&P 1500 Financials Index | | | | -36.83 | % | | | | | -0.97 | % | | | | | 3.43 | % | | | | | 3.87 | % | | | | | N/A | | | | | N/A | | |
| |
| |
| S&P Composite 1500 Index | | | | -21.27 | % | | | | | 5.65 | % | | | | | 3.81 | % | | | | | 4.65 | % | | | | | N/A | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section.
| |
| * | Please see the January 28, 2008 prospectus for details. |
ICON Financial Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund on its inception date of 7/1/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Financial Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (93.0%) |
| | 14,000 | | | Affiliated Managers Group, Inc.(a) | | $ | 1,159,900 | |
| | 36,100 | | | Aflac, Inc. | | | 2,120,875 | |
| | 29,200 | | | Ameriprise Financial, Inc. | | | 1,115,440 | |
| | 47,600 | | | Annaly Capital Management,
Inc. - REIT | | | 640,220 | |
| | 121,400 | | | Anworth Mortgage Asset Corp. - REIT | | | 718,688 | |
| | 66,800 | | | Astoria Financial Corp. | | | 1,384,764 | |
| | 389,000 | | | Bank of America Corp. | | | 13,615,000 | |
| | 49,200 | | | Barclays PLC - ADR | | | 1,215,240 | |
| | 53,400 | | | BB&T Corp. | | | 2,018,520 | |
| | 41,000 | | | Capital One Financial Corp. | | | 2,091,000 | |
| | 49,700 | | | Cash America International, Inc. | | | 1,791,188 | |
| | 453,600 | | | Citigroup, Inc. | | | 9,303,336 | |
| | 259,800 | | | Colonial Bancgroup, Inc. | | | 2,042,028 | |
| | 120,900 | | | Discover Financial Services | | | 1,670,838 | |
| | 148,500 | | | EZCORP, Inc. - Class A(a) | | | 2,791,800 | |
| | 12,100 | | | Franklin Resources, Inc. | | | 1,066,373 | |
| | 56,200 | | | Hudson City Bancorp, Inc. | | | 1,036,890 | |
| | 128,100 | | | Huntington Bancshares, Inc. | | | 1,023,519 | |
| | 64,400 | | | Invesco, Ltd. | | | 1,351,112 | |
| | 217,900 | | | JPMorgan Chase & Co. | | | 10,175,930 | |
| | 26,800 | | | Loews Corp. | | | 1,058,332 | |
| | 19,900 | | | M&T Bank Corp. | | | 1,776,075 | |
| | 26,800 | | | Manulife Financial Corp. | | | 983,292 | |
| | 134,600 | | | Merrill Lynch & Co., Inc. | | | 3,405,380 | |
| | 38,200 | | | MetLife, Inc. | | | 2,139,200 | |
| | 79,400 | | | MGIC Investment Corp. | | | 558,182 | |
| | 61,100 | | | Nasdaq Stock Market, Inc.(a) | | | 1,867,827 | |
| | 97,300 | | | New York Community Bancorp, Inc. | | | 1,633,667 | |
| | 21,400 | | | PNC Financial Services Group, Inc. | | | 1,598,580 | |
| | 50,700 | | | Portfolio Recovery Associates, Inc.(a) | | | 2,465,541 | |
| | 96,020 | | | Provident Bankshares Corp. | | | 932,355 | |
| | 293,700 | | | Radian Group, Inc. | | | 1,480,248 | |
| | 88,800 | | | Regions Financial Corp. | | | 852,480 | |
| | 53,100 | | | StanCorp Financial Group, Inc. | | | 2,638,008 | |
| | 102,900 | | | Sterling Bancorp | | | 1,487,934 | |
| | 110,300 | | | TD Ameritrade Holding Corp.(a) | | | 1,786,860 | |
| | 200,600 | | | The Charles Schwab Corp. | | | 5,215,600 | |
| | 16,200 | | | The Goldman Sachs Group, Inc. | | | 2,073,600 | |
| | 39,100 | | | The Hanover Insurance Group, Inc. | | | 1,779,832 | |
| | 137,000 | | | U.S. Bancorp | | | 4,934,740 | |
| | 293,400 | | | UCBH Holdings, Inc. | | | 1,880,694 | |
| | 71,200 | | | Washington Federal, Inc. | | | 1,313,640 | |
| | 281,400 | | | Wells Fargo & Co. | | | 10,560,942 | |
| | 79,600 | | | World Acceptance Corp.(a) | | | 2,865,600 | |
| | 43,900 | | | Zenith National Insurance Corp. | | | 1,608,496 | |
Schedule of Investments 25
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 48,700 | | | Zions Bancorp | | $ | 1,884,690 | |
| | | | | | | | | |
| Total Common Stocks (Cost $111,251,122) | | | 119,114,456 | |
| | | | | |
| Mutual Funds (4.9%) | | | | |
| | 106,875 | | | SPDR KBW Bank ETF | | | 3,591,000 | |
| | 74,657 | | | SPDR KBW Regional Banking ETF | | | 2,686,159 | |
| | | | | | | | | |
| Total Mutual Funds (Cost $5,599,680) | | | 6,277,159 | |
| |
| Short-Term Investments (0.6%) |
| $ | 804,912 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | $ | 804,912 | |
| | | | | | | | | |
| Total Short-Term Investments (Cost $804,912) | | | 804,912 | |
| Total Investments 98.5% (Cost $117,655,714) | | | 126,196,527 | |
| Other Assets Less Liabilities 1.5% | | | 1,978,054 | |
| | | | | |
| Net Assets 100.0% | | $ | 128,174,581 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
| |
| REIT | | Real Estate Investment Trust |
26 Schedule of Investments
ICHCX
Management Overview
ICON Healthcare Fund
| |
| Q. | How did the Fund perform relative to its benchmarks? |
| |
| A. | For the fiscal year ended September 30, 2008, the Fund’s sector-specific benchmark, the S&P 1500 Health Care Index, dropped 11.76%, and its broad benchmark, the S&P Composite 1500 Index, lost 21.27%. The ICON Healthcare Fund trailed its sector-specific benchmark, depreciating 16.43% during the same period, but outperformed its broad benchmark. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | A volatile year in equities led to a difficult year for the Health Care sector. A weakening US economy, credit fears, and the failure of several large financial institutions all led to a strong decline of the broad equity market. Fortunately, as the health care sector typically outperforms the market during times of slowdown and recession, losses in the sector were less drastic than those of the broad benchmark. |
Rallies in health care were typically a result of investors looking for safety from a steeply declining market. The sector experienced a strong rally in July through mid-August, but fell roughly 9% from August 15, 2008 through the end of the fiscal year as credit crisis fears and the federal bailout plan took its toll on the market. This pattern of volatility led to quick theme changes between cyclical and defensive Health Care industries.
It was difficult for the ICON system to identify sustained industry leadership in this setting. Of the 10 industries we follow in the sector, not one was able to maintain a favorable relative strength reading for more than half of the 12-month period. Industry leaders at the outset of the fiscal year quickly became laggards, and conversely, industries that began the fiscal period as laggards eventually led, only to see their strength fade.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | The fiscal year witnessed numerous changes and reversals in leadership throughout the Health Care sector. At the outset of the fiscal year, the managed healthcare industry offered the best combination of value and strength according to our analysis, and continued to show increasing strength through the first half of the year. This leadership led to an overweight position in this industry relative to the healthcare benchmark. |
Within a two-day period in March 2008, two of the largest managed healthcare companies announced that they would miss their earnings target, causing a sharp drop within the industry. On March 11, 2008 the managed healthcare industry dropped more than 17% in one day. Over the course of the entire year managed healthcare declined just over 42%. Our overweight position in the industry led to significant losses in the Fund, causing us to lag the benchmark through the remainder of the year.
| |
| Q. | What is your investment outlook for the Healthcare sector? |
| |
| A. | Despite a difficult fiscal year for the Health Care sector, we are pleased with the Fund’s long-term track record. Our calculations indicate the Health Care sector continues to have significant upside, trading at a 22% discount to our measurement of intrinsic value. In addition, the sector continues to show great leadership over the rest of the market as reflected in its high relative strength values. |
In particular, we think the healthcare distributors, managed health care and pharmaceuticals industries continue to show value and leadership. The Fund ended the fiscal year with an overweight position in distributors and, as fiscal year 2008 comes to a close, we see value in pharmaceuticals as well.
ICON Healthcare Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Pharmaceuticals | | | 31.4% | |
| Biotechnology | | | 14.9% | |
| Health Care Equipment | | | 13.3% | |
| Health Care Distributors | | | 12.7% | |
| Health Care Services | | | 7.3% | |
| Managed Health Care | | | 6.6% | |
| Life Sciences Tools & Services | | | 3.7% | |
| Health Care Facilities | | | 1.5% | |
| Life & Health Insurance | | | 1.3% | |
| Household Products | | | 1.1% | |
| Drug Retail | | | 0.9% | |
| | | | | |
| | | | 94.7% | |
| | | | | |
Percentages are based upon net assets.
ICON Healthcare Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Health Care | | | 91.4% | |
| Leisure and Consumer Staples | | | 2.0% | |
| Financial | | | 1.3% | |
| | | | | |
| | | | 94.7% | |
| | | | | |
Percentages are based upon net assets.
ICON Healthcare Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Since
| | | | Gross
| | | | Net
| |
| | | | | | | | | | | | | | | | Inception
| | | | Expense
| | | | Expense
| |
| | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | 2/24/97 | | | | Ratio* | | | | Ratio* | |
| ICON Healthcare Fund | | | | -16.43 | % | | | | | 5.91 | % | | | | | 8.53 | % | | | | | 9.19 | % | | | | | 1.21 | % | | | | | 1.21 | % | |
| |
| |
| S&P 1500 Health Care Index | | | | -11.76 | % | | | | | 4.20 | % | | | | | 3.53 | % | | | | | 6.52 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| S&P Composite 1500 Index | | | | -21.27 | % | | | | | 5.65 | % | | | | | 3.81 | % | | | | | 5.42 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section.
| |
| * | Please see the January 28, 2008 prospectus for details. |
ICON Healthcare Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund on its inception date of 2/24/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Healthcare Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (94.7%) |
| | 125,000 | | | Abbott Laboratories | | $ | 7,197,500 | |
| | 90,000 | | | Aetna, Inc. | | | 3,249,900 | |
| | 35,000 | | | Aflac, Inc. | | | 2,056,250 | |
| | 25,434 | | | Amedisys, Inc.(a)(b) | | | 1,237,873 | |
| | 80,000 | | | AmerisourceBergen Corp. | | | 3,012,000 | |
| | 100,000 | | | Amgen, Inc.(a) | | | 5,927,000 | |
| | 60,000 | | | Baxter International, Inc. | | | 3,937,800 | |
| | 10,000 | | | Bayer AG - ADR(b) | | | 729,295 | |
| | 25,000 | | | Becton, Dickinson & Co. | | | 2,006,500 | |
| | 225,000 | | | Bristol-Myers Squibb Co.(b) | | | 4,691,250 | |
| | 30,000 | | | C.R. Bard, Inc.(b) | | | 2,846,100 | |
| | 65,000 | | | Cardinal Health, Inc. | | | 3,203,200 | |
| | 85,000 | | | Celgene Corp.(a) | | | 5,378,800 | |
| | 40,000 | | | Cephalon, Inc.(a)(b) | | | 3,099,600 | |
| | 44,200 | | | CIGNA Corp. | | | 1,501,916 | |
| | 12,500 | | | Colgate-Palmolive Co. | | | 941,875 | |
| | 45,000 | | | Community Health Systems, Inc.(a) | | | 1,318,950 | |
| | 35,000 | | | Covance, Inc.(a)(b) | | | 3,094,350 | |
| | 100,000 | | | Cubist Pharmaceuticals, Inc.(a)(b) | | | 2,223,000 | |
| | 162,500 | | | Eli Lilly & Co. | | | 7,154,875 | |
| | 45,000 | | | Express Scripts, Inc.(a)(b) | | | 3,321,900 | |
| | 90,000 | | | Genzyme Corp.(a) | | | 7,280,100 | |
| | 80,000 | | | Henry Schein, Inc.(a)(b) | | | 4,307,200 | |
| | 45,000 | | | Humana, Inc.(a) | | | 1,854,000 | |
| | 210,800 | | | Johnson & Johnson, Inc. | | | 14,604,224 | |
| | 79,400 | | | K-V Pharmaceutical Co.(a) | | | 1,803,174 | |
| | 11,700 | | | Kimberly-Clark Corp. | | | 758,628 | |
| | 45,000 | | | Laboratory Corp. of America Holdings(a)(b) | | | 3,127,500 | |
| | 50,000 | | | McKesson Corp. | | | 2,690,500 | |
| | 85,000 | | | MedcoHealth Solutions, Inc.(a) | | | 3,825,000 | |
| | 100,000 | | | Medtronic, Inc. | | | 5,010,000 | |
| | 25,000 | | | Mentor Corp.(b) | | | 596,500 | |
| | 170,700 | | | Mylan Laboratories, Inc.(a)(b) | | | 1,949,394 | |
| | 90,000 | | | Owens & Minor, Inc.(b) | | | 4,365,000 | |
| | 115,000 | | | PerkinElmer, Inc. | | | 2,871,550 | |
| | 507,500 | | | Pfizer, Inc. | | | 9,358,300 | |
| | 45,000 | | | Pharmaceutical Product Development, Inc. | | | 1,860,750 | |
| | 140,000 | | | PSS World Medical, Inc.(a)(b) | | | 2,730,000 | |
| | 20,000 | | | Sanofi-Aventis - ADR | | | 657,400 | |
| | 45,000 | | | St. Jude Medical, Inc.(a) | | | 1,957,050 | |
| | 30,000 | | | Stryker Corp. | | | 1,869,000 | |
| | 50,000 | | | Teva Pharmaceutical Industries, Ltd. - ADR(b) | | | 2,289,500 | |
| | 17,500 | | | Thermo Fisher Scientific, Inc.(a)(b) | | | 962,500 | |
| | 40,000 | | | VCA Antech, Inc.(a)(b) | | | 1,178,800 | |
| | 45,000 | | | Walgreen Co. | | | 1,393,200 | |
| | 22,500 | | | WellCare Health Plans, Inc.(a)(b) | | | 810,000 | |
Schedule of Investments 31
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 70,000 | | | WellPoint, Inc.(a) | | $ | 3,273,900 | |
| | | | | | | | | |
| Total Common Stocks (Cost $147,348,120) | | | 151,513,104 | |
| |
| Short-Term Investments (1.9%) |
| $ | 3,102,079 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | | 3,102,079 | |
| | | | | | | | | |
| Total Short-Term Investments (Cost $3,102,079) | | | 3,102,079 | |
| |
| Other Securities (24.0%) |
| | 38,382,439 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | $ | 38,382,439 | |
| | | | | | | | | |
| Total Other Securities (Cost $38,382,439) | | | 38,382,439 | |
| Total Investments 120.6% (Cost $188,832,638) | | | 192,997,622 | |
| Liabilities Less Other Assets (20.6%) | | | (32,914,806 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 160,082,816 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
32 Schedule of Investments
ICTRX
| |
| Q. | How did the Fund perform relative to its benchmarks? |
| |
| A. | The ICON Industrials Fund lost 21.72% for the fiscal year ended September 30, 2008, outperforming its sector-specific benchmark, the S&P 1500 Industrials Index, which lost 23.33%, but not the broad benchmark, the S&P Composite 1500 Index, which lost 21.27%. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | At the beginning of the fiscal year, the Industrials sector was trading at about a 14% discount to our measurement of intrinsic value. According to our calculations, 16 of the 21 industries we follow in the sector were undervalued, providing ample opportunity for value-based diversification. |
Volatility was a major theme during fiscal year 2008, both in the overall market and within the Industrials sector. The VIX Index, which measures overall market volatility, averaged 23.44 during fiscal year 2008 while its five-year average value is around 16. Additionally, the VIX Index spiked on September 29, 2008 at 46.72 - its highest level since inception of the Index in 1990. This extreme volatility was also seen on an industry basis within the Industrials sector. The fiscal year opened with a 16.5% decline in the Industrials Fund between September 30, 2007 and March 10, 2008. The decline was led by industries such as building products, trading companies & distributors, industrial machinery, construction & farm machinery & heavy trucks, and marine. These industries are economically cyclical and were sold off aggressively in anticipation of a recession.
Subsequently, between March 10, 2008 and May 19, 2008, the Industrials Fund rallied, returning over 16.6%. This advance was led by industries that included coal & consumable fuels, marine, heavy electrical equipment, electrical components & equipment, and industrial machinery. Unfortunately, this advance was short lived, as the Fund again fell over 15.5% in just over a month and a half between May 19, 2008 and July 2, 2008. This decline was almost an exact mirror of the prior rally, with the marine, construction & farm machinery & heavy trucks, and electrical components & equipment industries leading the way down.
The year came to a close with two more sharp movements. Between July 2, 2008 and August 15, 2008, the Fund advanced over 12% with the
trucking, building products, and aerospace & defense industries accounting for much of those gains. And, finally, between August 15, 2008 and September 30, 2008, the Industrials Fund fell over 14.9% with the marine, trucking, construction & farm machinery & heavy trucks, and airline industries leading the decline.
Throughout the fiscal year, many of the same industries that led the Industrials sector on the upside would subsequently fall the most on the downside. This lack of a sustainable industry-based theme proved especially challenging for the ICON system.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | On an industry basis, only five industries produced positive returns during fiscal year 2008: railroads, coal & consumable fuels, environmental & facilities, heavy electrical equipment, and diversified support services. Out of these five industries, the Fund’s large railroads industry allocation (an allocation based on solid combinations of value and relative strength) contributed significantly to absolute performance. |
Seventeen of the 21 industries that were allocated to the Fund during fiscal year 2008 produced negative returns. This statistic reflects the overall breadth of the sell-off within the Industrials sector. Out of those 17 industries, the industrials conglomerates, aerospace & defense, construction & farm machinery & heavy trucks, marine, and industrial machinery industries detracted the most from absolute Fund performance. The average position held in these industries over the course of the year constituted about 59% of the Industrials Fund.
| |
| Q. | What is your investment outlook for the Industrials sector? |
| |
| A. | At the close of the fiscal year, the Industrials sector was the third most undervalued of the nine sectors we track, with a value-to-price ratio of 1.41. Additionally, this valuation was very broad, as all 23 industries that we track within the Industrials sector were trading at a discount to our calculation of intrinsic value. We will closely monitor valuations at the company level, however, as the Industrials sector is tied to the economic cycle and any type of global slowdown could cause significant decreases in long-term growth rates. Nonetheless, with its broad-based value and diversity of businesses, we believe the Industrials sector will present opportunities for many investors. |
ICON Industrials Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Railroads | | | 14.8% | |
| Industrial Conglomerates | | | 11.3% | |
| Trading Companies & Distributors | | | 10.5% | |
| Industrial Machinery | | | 10.4% | |
| Aerospace & Defense | | | 10.3% | |
| Building Products | | | 6.9% | |
| Construction & Farm Machinery & Heavy Trucks | | | 6.9% | |
| Air Freight & Logistics | | | 6.7% | |
| Trucking | | | 6.1% | |
| Electrical Components & Equipment | | | 5.5% | |
| Office Services & Supplies | | | 4.7% | |
| Airlines | | | 2.1% | |
| Human Resource & Employment Services | | | 1.3% | |
| Research & Consulting Services | | | 0.8% | |
| | | | | |
| | | | 98.3% | |
| | | | | |
Percentages are based upon net assets.
ICON Industrials Fund
Sector Composition
as of September 30, 2008
Percentages are based upon net assets.
ICON Industrials Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Since
| | | | Gross
| | | Net
| |
| | | | | | | | | | | | | | | | Inception
| | | | Expense
| | | Expense
| |
| | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | 5/9/97 | | | | Ratio* | | | Ratio* | |
| ICON Industrials Fund | | | | -21.72 | % | | | | 9.35 | % | | | | 5.45 | % | | | | 4.45 | % | | | | 1.28 | % | | | 1.28 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| S&P 1500 Industrials Index | | | | -23.33 | % | | | | 7.74 | % | | | | 5.58 | % | | | | 5.36 | % | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| S&P Composite 1500 Index | | | | -21.27 | % | | | | 5.65 | % | | | | 3.81 | % | | | | 5.33 | % | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section.
| |
| * | Please see the January 28, 2008 prospectus for details. |
ICON Industrials Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund on its inception date of 5/9/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
Icon Industrials Fund
Schedule Of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks(98.3%) |
| | 25,000 | | | 3M Co. | | $ | 1,707,750 | |
| | 50,000 | | | Actuant Corp. - Class A(b) | | | 1,262,000 | |
| | 40,000 | | | Acuity Brands, Inc. | | | 1,670,400 | |
| | 30,000 | | | AMETEK, Inc. | | | 1,223,100 | |
| | 100,000 | | | Apogee Enterprises, Inc. | | | 1,503,000 | |
| | 25,800 | | | Arkansas Best Corp.(b) | | | 869,202 | |
| | 23,500 | | | Astec Industries, Inc.(a)(b) | | | 724,505 | |
| | 30,000 | | | Avery Dennison Corp.(b) | | | 1,334,400 | |
| | 51,800 | | | Briggs & Stratton Corp.(b) | | | 838,124 | |
| | 70,000 | | | Burlington Northern Santa Fe Corp.(b) | | | 6,470,100 | |
| | 50,000 | | | Canadian National Railway Co. - ADR | | | 2,391,500 | |
| | 80,000 | | | Caterpillar, Inc. | | | 4,768,000 | |
| | 45,000 | | | Con-way, Inc. | | | 1,984,950 | |
| | 50,000 | | | Cooper Industries, Ltd. - Class A(b) | | | 1,997,500 | |
| | 60,000 | | | CSX Corp. | | | 3,274,200 | |
| | 50,000 | | | Cummins, Inc. | | | 2,186,000 | |
| | 25,000 | | | Danaher Corp.(b) | | | 1,735,000 | |
| | 75,000 | | | Delta Air Lines, Inc.(a)(b) | | | 558,750 | |
| | 50,000 | | | Dover Corp. | | | 2,027,500 | |
| | 40,000 | | | Dynamex, Inc.(a) | | | 1,138,400 | |
| | 16,000 | | | Eaton Corp. | | | 898,880 | |
| | 30,000 | | | EnPro Industries, Inc.(a)(b) | | | 1,114,800 | |
| | 16,000 | | | Esterline Technologies Corp.(a) | | | 633,440 | |
| | 30,000 | | | FedEx Corp. | | | 2,371,200 | |
| | 40,000 | | | GATX Corp. | | | 1,582,800 | |
| | 460,000 | | | General Electric Co. | | | 11,730,000 | |
| | 50,000 | | | Houston Wire & Cable Co.(b) | | | 858,500 | |
| | 50,000 | | | Illinois Tool Works, Inc. | | | 2,222,500 | |
| | 70,000 | | | Kennametal, Inc.(b) | | | 1,898,400 | |
| | 50,000 | | | Kforce, Inc.(a) | | | 510,500 | |
| | 100,000 | | | Knoll, Inc. | | | 1,512,000 | |
| | 10,000 | | | L-3 Communications Holdings, Inc. | | | 983,200 | |
| | 40,000 | | | Lockheed Martin Corp. | | | 4,386,800 | |
| | 150,000 | | | Masco Corp.(b) | | | 2,691,000 | |
| | 60,000 | | | MSC Industrial Direct Co., Inc. - Class A(b) | | | 2,764,200 | |
| | 110,000 | | | NCI Building Systems, Inc.(a)(b) | | | 3,492,500 | |
| | 200,000 | | | Pacer International, Inc.(b) | | | 3,294,000 | |
| | 10,000 | | | Parker Hannifin Corp. | | | 530,000 | |
| | 50,000 | | | Pitney Bowes, Inc. | | | 1,663,000 | |
| | 7,000 | | | Precision Castparts Corp. | | | 551,460 | |
| | 35,000 | | | Raytheon Co. | | | 1,872,850 | |
| | 45,000 | | | Resources Connection, Inc.(a) | | | 1,013,850 | |
| | 18,000 | | | Robert Half International, Inc.(b) | | | 445,500 | |
Schedule of Investments 37
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 12,000 | | | Rockwell Collins, Inc. | | $ | 577,080 | |
| | 25,000 | | | Roper Industries, Inc. | | | 1,424,000 | |
| | 35,000 | | | Ryder System, Inc.(b) | | | 2,170,000 | |
| | 68,900 | | | Saia, Inc.(a) | | | 914,992 | |
| | 6,000 | | | Siemens AG - ADR | | | 563,340 | |
| | 38,400 | | | Simpson Manufacturing Co., Inc.(b) | | | 1,040,256 | |
| | 100,000 | | | SkyWest, Inc.(b) | | | 1,598,000 | |
| | 16,200 | | | Suntech Power Holdings Co., Ltd. - ADR(a)(b) | | | 581,094 | |
| | 60,000 | | | Sykes Enterprises, Inc.(a) | | | 1,317,600 | |
| | 25,000 | | | The Toro Co. | | | 1,032,500 | |
| | 13,800 | | | Triumph Group, Inc. | | | 630,798 | |
| | 35,000 | | | TrueBlue, Inc.(a) | | | 565,600 | |
| | 50,000 | | | UAL Corp. | | | 439,500 | |
| | 90,000 | | | Union Pacific Corp.(b) | | | 6,404,400 | |
| | 25,000 | | | United Parcel Service, Inc. - Class B | | | 1,572,250 | |
| | 55,000 | | | United Technologies Corp. | | | 3,303,300 | |
| | 25,000 | | | W.W. Grainger, Inc.(b) | | | 2,174,250 | |
| | 70,000 | | | Watsco, Inc.(b) | | | 3,519,600 | |
| | 20,000 | | | Watts Water Technologies, Inc. - Class A(b) | | | 547,000 | |
| | 70,000 | | | WESCO International, Inc.(a) | | | 2,252,600 | |
| | 150,000 | | | YRC Worldwide, Inc.(a)(b) | | | 1,794,000 | |
| | | | | | | | | |
| Total Common Stocks (Cost $135,477,009) | | | 123,107,921 | |
| |
| Short-Term Investments (0.8%) |
| $ | 1,046,370 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | | 1,046,370 | |
| | | | | | | | | |
| Total Short-Term Investments (Cost $1,046,370) | | | 1,046,370 | |
| |
| Other Securities (29.6%) |
| | 37,121,275 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | | 37,121,275 | |
| | | | | | | | | |
| Total Other Securities (Cost $37,121,275) | | | 37,121,275 | |
| Total Investments 128.7% (Cost $173,644,654) | | | 161,275,566 | |
| Liabilities Less Other Assets (28.7%) | | | (35,989,233 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 125,286,333 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
38 Schedule of Investments
ICTEX
| |
| Q. | How did the Fund perform relative to its benchmark? |
| |
| A. | The Fund underperformed its benchmark for the fiscal year ended September 30, 2008. The Fund declined 28.68%, while its benchmark, the S&P 1500 Information Technology Composite Index, fell 23.54%. |
Additionally, the Fund lagged its broad benchmark, the S&P Composite 1500 Index, which lost 21.27% over the same period and the NASDAQ Composite Index which lost 21.92% for the period. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview.
| |
| Q. | What primary factors influenced the Fund’s relative performance during the period? |
| |
| A. | This volatile period in the U.S. equity market was marked by two factors: the subprime lending disaster and the related meltdown in housing prices. These two factors eviscerated earnings on homebuilding and sent financial-related equities into a freefall. |
The subprime lending and housing debacles sent ripples across all market sectors. Every sector experienced sharp declines, except consumer staples issues, which, though down, held up better than equities in all other sectors of the market. Although we saw value in the Technology sector at the start of the fiscal year, investor fear based on the subprime lending crisis crushed investor sentiment across the entire market and technology stocks were not spared.
Amid this backdrop of pervasive fear concerning the economic outlook, investors shunned areas of the market having even a hint of a cyclical bent. Consequently, the Technology sector fell more than the broader market as defined by the S&P 1500 Composite Index. In addition, stocks recognized as “value” plays underperformed stocks recognized as “growth” investments. The S&P 500 Growth Index (SGX) was down 19.44% for fiscal year 2008, while the S&P 500 Value Index (SVX) declined 24.50%. Since our investment style at ICON is predominantly value based, our Information Technology Fund faced a general headwind that made it difficult to outperform our sector index.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | At ICON we focus on industry selection based on our estimation of value and relative strength. When we identify industries that have value and which are leading the market higher, we naturally tilt our sector fund to those industries. Within the Information Technology Sector Fund we track fifteen separate and distinct industries. Over the past year, the Fund’s over- and underweight positions affected its performance. |
On the positive side, the Fund’s performance relative to the S&P 1500 Information Technology Composite Index was favorably influenced by two industries: communications equipment and computer storage & peripherals. These two industries combined accounted for approximately 2.6% of positive relative performance versus the S&P 1500 Information Technology Composite Index.
The Fund’s performance relative to its benchmark was negatively impacted by four industries, however: internet software & services, computer hardware, systems software, and technology distributors. Combined, these industries accounted for around 7.4% of negative relative performance versus the S&P 1500 Information Technology Composite Index.
| |
| Q. | What is your investment outlook for the Information Technology Sector. |
| |
| A. | As this volatile 12-month period in the U.S. equity market came to a close, fear and pessimism evidently caused investors to sell stocks well below our calculation of intrinsic value. As a result, we believe we’ve entered a new period - one that, by our estimation, may present investors with many bargains in the market. We believe bargains exist across the spectrum of the economic sectors we track, including the Technology sector. |
In fact, as the fiscal year ended, the average technology stock in our database was trading at about a 28% discount to our calculation of its intrinsic value. Accordingly, we believe information technology issues now have significant upside potential.
ICON Information Technology Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Computer Hardware | | | 16.2% | |
| Systems Software | | | 13.1% | |
| Data Processing & Outsourced Services | | | 10.5% | |
| Semiconductors | | | 9.4% | |
| Communications Equipment | | | 9.2% | |
| Technology Distributors | | | 8.0% | |
| IT Consulting & Other Services | | | 7.0% | |
| Internet Software & Services | | | 6.7% | |
| Electronic Equipment Manufacturers | | | 5.3% | |
| Application Software | | | 3.4% | |
| Office Services & Supplies | | | 2.6% | |
| Electronic Manufacturing Services | | | 1.4% | |
| Computer Storage & Peripherals | | | 1.2% | |
| | | | | |
| | | | 94.0% | |
| | | | | |
Percentages are based upon net assets.
ICON Information Technology Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Information Technology | | | 91.4% | |
| Industrials | | | 2.6% | |
| | | | | |
| | | | 94.0% | |
| | | | | |
Percentages are based upon net assets.
ICON Information Technology Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Since
| | | | Gross
| | | | Net
| |
| | | | | | | | | | | | | | | | Inception
| | | | Expense
| | | | Expense
| |
| | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | 2/19/97 | | | | Ratio* | | | | Ratio* | |
| ICON Information Technology Fund | | | | -28.68 | % | | | | | -1.01 | % | | | | | 8.98 | % | | | | | 7.28 | % | | | | | 1.23 | % | | | | | 1.23 | % | |
| |
| |
| S&P 1500 Information Technology Index | | | | -23.54 | % | | | | | 2.59 | % | | | | | 0.81 | % | | | | | 3.74 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| NASDAQ Composite Index | | | | -21.92 | % | | | | | 3.95 | % | | | | | 2.66 | % | | | | | 4.27 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| S&P Composite 1500 Index | | | | -21.27 | % | | | | | 5.65 | % | | | | | 3.81 | % | | | | | 5.38 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section.
| |
| * | Please see the January 28, 2008 prospectus for details. |
ICON Information Technology Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund on its inception date of 2/19/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Information Technology Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (94.0%) |
| | 126,100 | | | Accenture, Ltd. - Class A | | $ | 4,791,800 | |
| | 106,500 | | | Altera Corp.(b) | | | 2,202,420 | |
| | 62,300 | | | Anixter International, Inc.(a)(b) | | | 3,707,473 | |
| | 91,500 | | | Arrow Electronics, Inc.(a) | | | 2,399,130 | |
| | 108,600 | | | Avnet, Inc.(a) | | | 2,674,818 | |
| | 5,700 | | | Baidu.com, Inc. - ADR(a) | | | 1,414,911 | |
| | 108,700 | | | Benchmark Electronics, Inc.(a)(b) | | | 1,530,496 | |
| | 116,500 | | | Blue Coat Systems, Inc.(a)(b) | | | 1,653,135 | |
| | 84,200 | | | CACI International, Inc. - Class A(a)(b) | | | 4,218,420 | |
| | 277,900 | | | Cisco Systems, Inc.(a) | | | 6,269,424 | |
| | 95,700 | | | Cognex Corp.(b) | | | 1,929,312 | |
| | 38,700 | | | Coherent, Inc.(a) | | | 1,375,785 | |
| | 199,800 | | | Commvault Systems, Inc.(a) | | | 2,407,590 | |
| | 74,300 | | | Computer Sciences Corp.(a) | | | 2,981,659 | |
| | 153,200 | | | Convergys Corp.(a) | | | 2,264,296 | |
| | 120,700 | | | CSG Systems International, Inc.(a) | | | 2,115,871 | |
| | 70,800 | | | CTS Corp. | | | 904,824 | |
| | 81,100 | | | Daktronics, Inc.(b) | | | 1,351,126 | |
| | 43,900 | | | FactSet Research Systems, Inc.(b) | | | 2,293,775 | |
| | 113,000 | | | Fiserv, Inc.(a) | | | 5,347,160 | |
| | 79,000 | | | FLIR Systems, Inc.(a) | | | 3,035,180 | |
| | 150,000 | | | Gartner, Inc.(a) | | | 3,402,000 | |
| | 186,300 | | | Gevity HR, Inc. | | | 1,356,264 | |
| | 7,900 | | | Google, Inc. - Class A(a) | | | 3,164,108 | |
| | 83,900 | | | Harris Corp. | | | 3,876,180 | |
| | 103,300 | | | Heartland Payment Systems, Inc.(b) | | | 2,640,348 | |
| | 232,400 | | | Hewlett-Packard Co. | | | 10,746,176 | |
| | 217,900 | | | Insight Enterprises, Inc.(a) | | | 2,922,039 | |
| | 505,300 | | | Intel Corp. | | | 9,464,269 | |
| | 129,400 | | | International Business Machines Corp. | | | 15,134,624 | |
| | 261,600 | | | Macrovision Solutions Corp.(a) | | | 4,023,408 | |
| | 96,800 | | | Microsemi Corp.(a)(b) | | | 2,466,464 | |
| | 399,400 | | | Microsoft Corp.(b) | | | 10,659,986 | |
| | 60,400 | | | National Instruments Corp. | | | 1,815,020 | |
| | 142,000 | | | NCR Corp.(a) | | | 3,131,100 | |
| | 122,300 | | | NETGEAR, Inc.(a) | | | 1,834,500 | |
| | 75,200 | | | Open Text Corp.(a)(b) | | | 2,600,416 | |
| | 202,100 | | | Oracle Corp.(a) | | | 4,104,651 | |
| | 125,600 | | | Polycom, Inc.(a) | | | 2,905,128 | |
| | 69,900 | | | SAP AG - ADR(b) | | | 3,734,757 | |
| | 91,900 | | | ScanSource, Inc.(a) | | | 2,645,801 | |
| | 20,300 | | | SINA Corp.(a) | | | 714,560 | |
| | 37,300 | | | Sohu.com, Inc.(a)(b) | | | 2,079,475 | |
| | 210,300 | | | Sykes Enterprises, Inc.(a)(b) | | | 4,618,188 | |
| | 70,950 | | | Synaptics, Inc.(a)(b) | | | 2,144,109 | |
| | 119,779 | | | Taiwan Semiconductor Manufacturing Co., Ltd. - ADR(b) | | | 1,122,329 | |
| | 230,300 | | | VASCO Data Security International, Inc.(a)(b) | | | 2,385,908 | |
Schedule of Investments 43
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 28,700 | | | Visa, Inc. - Class A(b) | | $ | 1,761,893 | |
| | 53,900 | | | VistaPrint, Ltd.(a) | | | 1,770,076 | |
| | 70,800 | | | Xilinx, Inc.(b) | | | 1,660,260 | |
| | | | | | | | | |
| Total Common Stocks (Cost $172,655,738) | | | 167,752,642 | |
| |
| Short-Term Investments (10.7%) |
| $ | 19,015,975 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | | 19,015,975 | |
| | | | | | | | | |
| Total Short-Term Investments (Cost $19,015,975) | | | 19,015,975 | |
| |
| Other Securities (22.9%) |
| | 40,937,108 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | $ | 40,937,108 | |
| | | | | | | | | |
| Total Other Securities (Cost $40,937,108) | | | 40,937,108 | |
| Total Investments 127.6% (Cost $232,608,821) | | | 227,705,725 | |
| Liabilities Less Other Assets (27.6%) | | | (49,255,237 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 178,450,488 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
44 Schedule of Investments
ICLEX
Management Overview
ICON Leisure and Consumer Staples Fund
| |
| Q. | How did the Fund perform relative to its benchmarks? |
| |
| A. | The ICON Leisure and Consumer Staples Fund lost 17.40% for the fiscal year ended September 30, 2008. The Fund thus underperformed one of its sector-specific benchmarks, the S&P 1500 Consumer Staples Index, which returned 0.36%, but outperformed its other sector specific benchmark, the S&P 1500 Consumer Discretionary Index, which returned -22.96%. Although neither index is an ideal comparison, together they provide a suitable reference for the Fund’s overall performance in its sectors. |
The Fund outperformed its broad benchmark, the S&P Composite 1500 Index, which lost 21.27% over the same period. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview.
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | The market was dominated this fiscal year by the subprime mortgage meltdown, the financial crisis that followed, and fear that the crisis would spread beyond the financial sector. |
At the close of this fiscal year the Bush Administration, in conjunction with Treasury Secretary Paulson and Federal Reserve Chairman Bernanke, proposed a $700 billion market stabilization bill. The stock market, as measured by the S&P 1500, fell 8.55% after Congress failed to pass the bill. Other market indices suffered similar dramatic declines.
Additionally, unprecedented market volatility made it difficult for the Fund to capitalize on ICON’s ability to identify themes. The VIX Index measures volatility as it relates to option pricing. The VIX increased from 18 at the end of September 2007 to 39.39 at the end of September 2008. Throughout the year discretionary industries like restaurant and leisure products struggled to lead the market, but would inevitably (and often quickly) give way to leadership from staples industries like tobacco. These sharp theme reversals had an adverse effect on Fund performance, as we had difficulty identifying clear and consistent leadership within this volatile environment.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | Several industries had a notable effect on Fund performance. The movies & entertainment industry was the Fund’s largest detractor, accounting for about 2.6% of the Fund’s losses. Strong sell-offs in News Corp. and Viacom Inc. during the fiscal year led the industry lower. Restaurants - in particular Ruby Tuesday’s and Sonic Corp. - were the Fund’s second largest detractor, accounting for approximately 2.3% of the Fund’s losses. |
The Fund’s largest contributors included Wal-Mart and the other hypermarkets, which helped offset losses by almost 1%. Brewers also helped offset some of the Fund’s losses.
| |
| Q. | What is your investment outlook for the Leisure and Consumer Staples sector? |
| |
| A. | At fiscal year end, we measure the Leisure and Consumer Staples sector to be trading with a value to price ratio of 1.29, indicating upside potential. |
The Federal Reserve and the US Treasury have taken unprecedented action in addressing the liquidly issue that is dominating the current market. We believe these measures will, in time, help free up balance sheets, restore lending activity and ultimately encourage economic growth. This growth should be a positive development for the Leisure and Consumer Staples sector.
The Fund will continue to focus on the industries we determine have favorable value to price and relative strength ratios. As fiscal year 2008 comes to a close, the Fund has notable positions in house hold products and restaurants. In accordance with our sell discipline, we will pare our positions in these industries if they do not meet our relative strength requirements.
ICON Leisure and Consumer Staples Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Household Products | | | 13.9% | |
| Restaurants | | | 10.3% | |
| Movies & Entertainment | | | 9.7% | |
| Leisure Products | | | 8.7% | |
| Packaged Foods & Meats | | | 6.6% | |
| Soft Drinks | | | 5.1% | |
| Hypermarkets & Super Centers | | | 4.6% | |
| Tobacco | | | 4.5% | |
| Cable & Satellite | | | 4.3% | |
| Hotels Resorts & Cruise Lines | | | 4.1% | |
| Leisure Facilities | | | 3.8% | |
| Drug Retail | | | 3.6% | |
| Specialty Stores | | | 3.3% | |
| Broadcasting & Cable TV | | | 3.1% | |
| Publishing | | | 3.1% | |
| Personal Products | | | 2.0% | |
| Food Retail | | | 1.9% | |
| Casinos & Gaming | | | 1.9% | |
| Food Distributors | | | 1.4% | |
| Motorcycle Manufacturers | | | 1.3% | |
| Distillers & Vintners | | | 1.0% | |
| | | | | |
| | | | 98.2% | |
| | | | | |
Percentages are based upon net assets.
ICON Leisure and Consumer Staples Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Leisure and Consumer Staples | | | 93.6% | |
| Consumer Discretionary | | | 4.6% | |
| | | | | |
| | | | 98.2% | |
| | | | | |
Percentages are based upon net assets.
ICON Leisure and Consumer Staples Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Since
| | | | Gross
| | | | Net
| |
| | | | | | | | | | | | | | | | Inception
| | | | Expense
| | | | Expense
| |
| | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | 5/9/97 | | | | Ratio* | | | | Ratio* | |
| ICON Leisure and Consumer Staples Fund | | | | -17.40 | % | | | | | 3.24 | % | | | | | 6.69 | % | | | | | 7.41 | % | | | | | 1.41 | % | | | | | 1.41 | % | |
| |
| |
| S&P 1500 Consumer Discretionary Index | | | | -22.96 | % | | | | | 1.46 | % | | | | | 2.23 | % | | | | | 4.12 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| S&P 1500 Consumer Staples Index | | | | 0.36 | % | | | | | 9.13 | % | | | | | 5.63 | % | | | | | 6.20 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| S&P Composite 1500 Index | | | | -21.27 | % | | | | | 5.65 | % | | | | | 3.81 | % | | | | | 5.34 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. The performance of the S&P 1500 Consumer Discretionary Index includes the reinvestment of dividends and capital gain distributions beginning on January 1, 2002. Additional information about these performance results and the comparative indexes can be found in the About This Report section.
| |
| * | Please see the January 28, 2008 prospectus for details. |
ICON Leisure and Consumer Staples Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund on its inception date of 5/9/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Leisure and Consumer Staples Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (98.2%) |
| | 30,600 | | | Altria Group, Inc. | | $ | 607,104 | |
| | 20,500 | | | Avon Products, Inc. | | | 852,185 | |
| | 16,200 | | | Bally Technologies, Inc.(a) | | | 490,536 | |
| | 66,700 | | | Big 5 Sporting Goods Corp. | | | 688,344 | |
| | 19,700 | | | Bob Evans Farms, Inc.(b) | | | 537,613 | |
| | 48,600 | | | Borders Group, Inc. | | | 318,816 | |
| | 44,600 | | | Brinker International, Inc. | | | 797,894 | |
| | 9,400 | | | British American Tobacco PLC - ADR | | | 582,800 | |
| | 42,500 | | | Callaway Golf Co.(b) | | | 597,975 | |
| | 26,700 | | | CBRL Group, Inc.(b) | | | 702,210 | |
| | 6,700 | | | CEC Entertainment, Inc.(a) | | | 222,440 | |
| | 12,400 | | | Church & Dwight Co., Inc.(b) | | | 769,916 | |
| | 52,000 | | | CKE Restaurants, Inc. | | | 551,200 | |
| | 92,600 | | | Comcast Corp. - Class A | | | 1,817,738 | |
| | 31,600 | | | ConAgra Foods, Inc. | | | 614,936 | |
| | 19,100 | | | Constellation Brands, Inc.(a) | | | 409,886 | |
| | 23,800 | | | CVS Caremark Corp. | | | 801,108 | |
| | 27,800 | | | Darden Restaurants, Inc. | | | 795,914 | |
| | 19,600 | | | Dick’s Sporting Goods, Inc.(a) | | | 383,768 | |
| | 14,600 | | | Energizer Holdings, Inc.(a)(b) | | | 1,176,030 | |
| | 4,600 | | | Fomento Economico Mexicano S.A.B. de C.V. - ADR | | | 175,444 | |
| | 10,200 | | | H.J. Heinz Co. | | | 509,082 | |
| | 14,800 | | | Harley-Davidson, Inc.(b) | | | 552,040 | |
| | 9,900 | | | Hormel Foods Corp. | | | 359,172 | |
| | 19,900 | | | Jack in the Box, Inc.(a) | | | 419,890 | |
| | 14,600 | | | Kimberly-Clark Corp. | | | 946,664 | |
| | 17,500 | | | Kraft Foods, Inc. - Class A | | | 573,125 | |
| | 29,100 | | | Kroger Co. | | | 799,668 | |
| | 20,200 | | | Life Time Fitness, Inc.(a)(b) | | | 631,654 | |
| | 24,700 | | | Marriott International, Inc. - Class A | | | 644,423 | |
| | 43,500 | | | Mattel, Inc. | | | 784,740 | |
| | 9,000 | | | McCormick & Co., Inc. | | | 346,050 | |
| | 29,700 | | | Meredith Corp.(b) | | | 833,085 | |
| | 26,900 | | | Monarch Casino & Resort, Inc.(a) | | | 306,391 | |
| | 91,900 | | | Nautilus, Inc.(a)(b) | | | 419,983 | |
| | 30,036 | | | News Corp. - Class A | | | 360,132 | |
| | 18,600 | | | PepsiAmericas, Inc. | | | 385,392 | |
| | 12,800 | | | PepsiCo, Inc. | | | 912,256 | |
| | 25,100 | | | Polaris Industries, Inc.(b) | | | 1,141,799 | |
Schedule of Investments 49
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 31,200 | | | Pool Corp.(b) | | $ | 727,896 | |
| | 36,100 | | | Procter & Gamble Co. | | | 2,515,809 | |
| | 46,100 | | | Rentrak Corp.(a) | | | 637,563 | |
| | 15,100 | | | Reynolds American, Inc. | | | 734,162 | |
| | 25,300 | | | Royal Caribbean Cruises, Ltd.(b) | | | 524,975 | |
| | 12,400 | | | Spartan Stores, Inc. | | | 308,512 | |
| | 21,800 | | | Speedway Motorsports, Inc. | | | 424,664 | |
| | 20,800 | | | Starbucks Corp.(a) | | | 309,296 | |
| | 6,700 | | | The Clorox Co.(b) | | | 420,023 | |
| | 50,600 | | | The DIRECTV Group, Inc.(a) | | | 1,324,202 | |
| | 23,500 | | | The Pepsi Bottling Group, Inc. | | | 685,495 | |
| | 17,500 | | | The Thomson Corp.(b) | | | 477,225 | |
| | 67,470 | | | The Walt Disney Co. | | | 2,070,654 | |
| | 76,300 | | | Time Warner, Inc. | | | 1,000,293 | |
| | 12,800 | | | Unilever PLC - ADR | | | 348,288 | |
| | 12,500 | | | United Natural Foods, Inc.(a)(b) | | | 312,375 | |
| | 15,900 | | | Vail Resorts, Inc.(a)(b) | | | 555,705 | |
| | 32,600 | | | Wal-Mart Stores, Inc.(b) | | | 1,952,414 | |
| | 22,800 | | | Walgreen Co. | | | 705,888 | |
| | 34,400 | | | Wyndham Worldwide Corp. | | | 540,424 | |
| | | | | | | | | |
| Total Common Stocks (Cost $43,318,673) | | | 41,395,266 | |
| |
Short-Term Investments (1.7%) |
| $ | 714,380 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | | 714,380 | |
| | | | | | | | | |
| Total Short-Term Investments (Cost $714,380) | | | 714,380 | |
| |
| Other Securities (26.8%) |
| | 11,291,030 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | | 11,291,030 | |
| | | | | | | | | |
| Total Other Securities (Cost $11,291,030) | | | 11,291,030 | |
| Total Investments 126.7% (Cost $55,324,083) | | | 53,400,676 | |
| Liabilities Less Other Assets (26.7%) | | | (11,261,445 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 42,139,231 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
50 Schedule of Investments
ICBMX
| |
| Q. | How did the Fund perform relative to its benchmarks? |
| |
| A. | The ICON Materials Fund lost 23.79% for the fiscal year ended September 30, 2008, while its sector-specific benchmark, the S&P 1500 Materials Index, lost 21.17%, and its broad benchmark, the S&P Composite 1500 Index, lost 21.27%. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview. |
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | Fiscal year 2008 proved to be a very challenging year for the ICON Materials Fund. With unprecedented volatility and industry theme reversals, the ICON Materials Fund lagged both its sector-specific benchmark and its broad market benchmark. |
The Fund entered the fiscal year with the Materials sector reflecting a value-to-price ratio of 0.97. Under the ICON methodology, this value-to-price ratio suggests that for each dollar invested you would receive only 0.97 cents in value. While the majority of the industries within the Materials sector had not reached our value-based sell discipline, the Fund’s holdings were diversified into other sectors, such as Industrials and Energy, where we determined value was more prevalent. Additionally, we also established a larger cash position in order to mitigate the risk of holding overvalued stocks and industries. Over the course of the fiscal year, these positions were adjusted as strong combinations of both value and relative strength became available within the Materials sector.
Volatility was a major theme during fiscal year 2008, both in the overall market and within the Materials sector. The VIX Index, which measures overall market volatility, averaged 23.44 during fiscal year 2008 while its 5 year average is around 16. Additionally, the VIX Index spiked on September 29, 2008 at a value of 46.72 which, at the time, was the highest level seen since the inception of the Index in 1990. Moreover, physical commodities, which the Materials sector is closely tied to, experienced significant price movements. Gold opened the fiscal year trading at 747.20, spiked up to 1002.95 on March 14, 2008, sold off all the way down to 745.28 on September 11, 2008, and finished the fiscal year up 16.56% at 870.95. The RJ/CRB Commodity Price Index - which follows 19 different types of commodities including copper, oil, and
aluminum - opened the year trading at 332.32, increased over 42% to close at 473.52 on July 2, 2008, and fell over 27% to close the fiscal year up only 3.97% at 345.50.
ICON utilizes value-based, industry-rotation to lock onto market themes. Extreme volatility of the sort we’ve experienced over the last six to nine months makes it difficult for ICON to identify a consistent theme and presents a challenge in the short-term for our system.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | In order to better analyze Fund performance for fiscal year 2008, it is important to look at the year over two distinct time periods. |
The first time period is from September 30, 2007 through May 16, 2008. During these seven and a half months, the ICON Materials Fund returned 9.61% compared to the broad market S&P 1500 Index which lost 4.99%. The top Materials industries that contributed the most to absolute performance include fertilizers & agricultural chemicals, industrial gases, aluminum, diversified metals & mining, and steel. These four industries on average comprised approximately 58% of the ICON Materials Fund during this time period. Additionally, industries within both the Industrials and Energy sectors - railroads, trucking, oil & gas drilling, and industrial machinery - contributed positively to overall performance.
Materials industries that detracted from overall performance during this time period include commodity chemicals, gold, and specialty chemicals.
The second time period is from May 19, 2008 through September 30, 2008. During this four and a half month period the ICON Materials Fund declined 29.98% while the S&P 1500 Index declined 17.18%. Additionally, the sell off was broad based during this time, as only two industries - industrial machinery and metal & glass containers - produced positive returns, while all other industries within the Materials sector produced double digit declines.
Materials industries that detracted the most from overall performance during this time period include fertilizers & agricultural chemicals, diversified metals & mining, steel, aluminum, and industrial gases. Interestingly enough, the same industry positions that contributed the most to overall performance during the first time period were the same industries that declined the most during the second time period. This unusual volatility reflects the lack of a sustainable theme and emphasizes the challenges presented during this fiscal year.
Looking at the full time period, industries that contributed to absolute performance were metal & glass containers, railroads, and industrial
machinery. These three industries constituted approximately 7.5% of Fund assets on average during the fiscal year.
Industries that detracted the most from absolute performance during the full fiscal year include diversified metals & mining, steel, fertilizers & agricultural chemicals, aluminum, and specialty chemicals. These five industries constituted approximately 58.5% of the Fund’s assets on average during the fiscal year.
| |
| Q. | What is your investment outlook for the Materials sector? |
| |
| A. | At the close of the fiscal year, the Materials sector was the second most undervalued of the nine we track, with a value-to-price ratio of 1.42. However, the Materials sector also exhibited the second lowest relative strength reading at 0.89. Because of this discrepancy between value and relative strength, the Fund ended fiscal year 2008 with a more defensive strategy of establishing a large cash position while continuing to allocate into other sectors that display better combinations of both value and relative strength. Additionally, company-based valuations will be monitored closely as any type of global economic slowdown could significantly influence company growth estimates within the Materials sector. |
That said, we have not seen a value-to-price ratio above 1.40 since June 30, 2003 - which was the beginning of the last bull market rally within this sector. By establishing a large cash position in the Fund we hope to be able to take advantage of any future upside by aggressively allocating towards areas that reflect strong combinations of value and relative strength.
ICON Materials Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Fertilizers & Agricultural Chemicals | | | 18.4% | |
| Diversified Chemicals | | | 18.2% | |
| Specialty Chemicals | | | 10.0% | |
| Paper Packaging | | | 8.5% | |
| Industrial Gases | | | 8.3% | |
| Metal & Glass Containers | | | 7.0% | |
| Railroads | | | 6.7% | |
| Building Products | | | 4.9% | |
| Trucking | | | 3.6% | |
| Aluminum | | | 3.0% | |
| Diversified Metals & Mining | | | 2.2% | |
| Construction Materials | | | 1.5% | |
| Commodity Chemicals | | | 1.0% | |
| Steel | | | 0.5% | |
| | | | | |
| | | | 93.8% | |
| | | | | |
Percentages are based upon net assets.
ICON Materials Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Materials | | | 78.6% | |
| Industrials | | | 15.2% | |
| | | | | |
| | | | 93.8% | |
| | | | | |
Percentages are based upon net assets.
ICON Materials Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Since
| | | | Gross
| | | | Net
| |
| | | | | | | | | | | | | | | | Inception
| | | | Expense
| | | | Expense
| |
| | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | 5/5/97 | | | | Ratio* | | | | Ratio* | |
| ICON Materials Fund | | | | -23.79 | % | | | | | 18.21 | % | | | | | 8.33 | % | | | | | 3.73 | % | | | | | 1.33 | % | | | | | 1.33 | % | |
| |
| |
| S&P 1500 Materials Index | | | | -21.17 | % | | | | | 11.63 | % | | | | | 7.64 | % | | | | | 6.10 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
| S&P Composite 1500 Index | | | | -21.27 | % | | | | | 5.65 | % | | | | | 3.81 | % | | | | | 5.28 | % | | | | | N/A | | | | | | N/A | | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section.
| |
| * | Please see the January 28, 2008 prospectus for details. |
ICON Materials Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund on its inception date of 5/5/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Materials Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (93.8%) |
| | 25,000 | | | Agrium, Inc. | | $ | 1,402,000 | |
| | 100,000 | | | Air Products & Chemical, Inc. | | | 6,849,000 | |
| | 60,000 | | | Airgas, Inc. | | | 2,979,000 | |
| | 75,000 | | | Albemarle Corp. | | | 2,313,000 | |
| | 160,000 | | | Alcoa, Inc. | | | 3,612,800 | |
| | 30,000 | | | Anglo American PLC - ADR | | | 501,900 | |
| | 70,600 | | | Apogee Enterprises, Inc. | | | 1,061,118 | |
| | 70,000 | | | Arch Chemicals, Inc.(b) | | | 2,471,000 | |
| | 30,000 | | | Ashland, Inc. | | | 877,200 | |
| | 100,000 | | | Bemis Co., Inc. | | | 2,612,000 | |
| | 20,000 | | | BHP Billiton PLC - ADR(b) | | | 918,200 | |
| | 25,000 | | | Burlington Northern Santa Fe Corp.(b) | | | 2,310,750 | |
| | 75,000 | | | Cabot Corp. | | | 2,383,500 | |
| | 35,001 | | | Cemex S.A.B. de C.V - ADR(a)(b) | | | 602,717 | |
| | 20,000 | | | CF Industries Holdings, Inc. | | | 1,829,200 | |
| | 60,000 | | | Companhia Vale do Rio Doce - ADR(b) | | | 1,149,000 | |
| | 30,000 | | | Con-way, Inc. | | | 1,323,300 | |
| | 28,000 | | | CRH PLC - ADR(b) | | | 596,960 | |
| | 45,000 | | | CSX Corp. | | | 2,455,650 | |
| | 275,000 | | | Dow Chemical Co.(b) | | | 8,739,500 | |
| | 150,000 | | | E.I. du Pont de Nemours and Co. | | | 6,045,000 | |
| | 50,000 | | | Greif, Inc. - Class A | | | 3,281,000 | |
| | 50,000 | | | International Flavors & Fragrances, Inc. | | | 1,973,000 | |
| | 45,000 | | | Lubrizol Corp. | | | 1,941,300 | |
| | 133,300 | | | Masco Corp.(b) | | | 2,391,402 | |
| | 160,000 | | | Monsanto Co. | | | 15,836,800 | |
| | 215,000 | | | Myers Industries, Inc. | | | 2,711,150 | |
| | 75,000 | | | NCI Building Systems, Inc.(a)(b) | | | 2,381,250 | |
| | 90,000 | | | Pactiv Corp.(a) | | | 2,234,700 | |
| | 10,000 | | | Potash Corp. of Saskatchewan, Inc. | | | 1,320,100 | |
| | 60,000 | | | PPG Industries, Inc. | | | 3,499,200 | |
| | 100,000 | | | RPM International, Inc. | | | 1,934,000 | |
| | 30,000 | | | Ryder System, Inc.(b) | | | 1,860,000 | |
| | 160,000 | | | Sealed Air Corp.(b) | | | 3,518,400 | |
| | 130,000 | | | Sonoco Products Co. | | | 3,858,400 | |
| | 120,000 | | | Spartech Corp. | | | 1,188,000 | |
| | 30,000 | | | Terra Industries, Inc. | | | 882,000 | |
| | 15,000 | | | Texas Industries, Inc.(b) | | | 612,900 | |
| | 25,000 | | | The Scotts Miracle-Gro Co. | | | 591,000 | |
| | 59,000 | | | The Valspar Corp. | | | 1,315,110 | |
| | 45,000 | | | Union Pacific Corp.(b) | | | 3,202,200 | |
| | 40,000 | | | Worthington Industries, Inc.(b) | | | 597,600 | |
56 Schedule of Investments
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| | 85,000 | | | YRC Worldwide, Inc.(a)(b) | | $ | 1,016,600 | |
| | | | | | | | | |
| Total Common Stocks (Cost $118,117,754) | | | 111,178,907 | |
| |
| Short-Term Investments (6.9%) |
| $ | 8,151,642 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | | 8,151,642 | |
| | | | | | | | | |
| Total Short-Term Investments (Cost $8,151,642) | | | 8,151,642 | |
| |
| Other Securities (15.1%) |
| | 17,967,153 | | | Brown Brothers Harriman Securities Lending Investment Fund, 3.07% | | $ | 17,967,153 | |
| | | | | | | | | |
| Total Other Securities (Cost $17,967,153) | | | 17,967,153 | |
| Total Investments 115.8% (Cost $144,236,549) | | | 137,297,702 | |
| Liabilities Less Other Assets (15.8%) | | | (18,775,283 | ) |
| | | | | |
| Net Assets 100.0% | | $ | 118,522,419 | |
| | | | | |
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| (b) | | All or a portion of the security was on loan as of September 30, 2008. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
Schedule of Investments 57
ICTUX
| |
| Q. | How did the Fund perform relative to its benchmarks? |
| |
| A. | The ICON Telecommunication & Utilities Fund lost 23.01% for the fiscal year ended September 30, 2008, outperforming the 33.25% loss of the S&P 1500 Telecommunication Services Index and underperforming the 12.72% loss of the S&P 1500 Utilities Index. Although neither sector-specific benchmark is an ideal comparison, together they provide a suitable reference for the Fund’s overall performance in its sectors. |
Additionally, the Fund lagged its broad benchmark, the S&P Composite 1500 Index, which lost 21.27% over the same period. Total returns for other periods as of September 30, 2008 appear in the subsequent pages of this Fund’s Management Overview.
| |
| Q. | What primary factors were behind the Fund’s relative performance? |
| |
| A. | The Telecommunications and Utilities sectors were not impervious to the recession fears and the credit crunch that gripped the global financial markets this year. As seen from the returns above, the Utility sector proved to be more recession proof than the Telecommunication Services sectors and this fact detracted from the Fund’s relative performance as we leaned toward what we perceived to be greater value in the Telecommunication Services sector. |
Despite the fact that our major Telecommunication Services holdings, mainly Verizon and AT&T, experienced positive growing earnings over the year, the market still punished their shares on fears these earnings would eventually decline in the face of a much anticipated recession. As recession fears rose, utilities outperformed the overall market, with investors seeking the perceived safety of that sector’s earnings and dividends.
| |
| Q. | How did the Fund’s composition affect performance? |
| |
| A. | Although seven of the eight industry groups within the Telecommunication Services and Utility sectors experienced double digit losses over the year, the Utility sector fared slightly better and an underweight position here detracted from the Fund’s performance. The Multi-Utility industry led all industries within the two sectors with a loss of approximately 8.4%, and an underweight position within this industry hindered performance. Both the Electric Utility and Gas Utility Industries fell by just over 10% and underweight positions here also negatively affected |
| |
| performance. Despite the Utility sector’s better overall performance, the sector also held the worst performing industry, Independent Power Producers & Energy Traders, and the Fund’s underweight and outperforming position in this industry aided performance. |
In the Telecommunications Services sector, the S&P 1500 Wireless Industry fell about 54% and the Fund’s underweight and outperforming industry position aided performance. However the Integrated Telecommunication Services Industry also fell nearly 30% on recession fears and a large position here weighed down the Fund’s performance. Small positions in outside related industries, Aerospace & Defense, Alternative Carriers, Coal & Consumable Fuels, and Computer Hardware, generated positive returns and added slightly to performance.
| |
| Q. | What is your investment outlook for the Telecommunication & Utilities sectors? |
| |
| A. | Given that these two “recession proof” sectors have been dragged down with the rest of the financial world by recession and credit concerns, and given that their stocks have not seen a significant reduction in earnings or forward looking earnings, we see more value in the Telecommunication & Utilities sectors than we have seen in some time. At fiscal year end, the overall value to price ratio for the combined sectors stands at 1.27. Although we believe the Utility industries continue to carry less value than their Telecommunication Services peers, their robust relative strength in one of the most difficult equity market environments in history makes them extremely attractive. Going forward we expect to allocate more funds toward these Utility industries and away from their more discretionary Telecommunication Services peers. |
ICON Telecommunication & Utilities Fund
Industry Composition
as of September 30, 2008
| | | | | |
| Integrated Telecommunication Services | | | 39.1% | |
| Electric Utilities | | | 32.2% | |
| Multi-Utilities | | | 16.3% | |
| Communications Equipment | | | 1.9% | |
| Aerospace & Defense | | | 1.7% | |
| Alternative Carriers | | | 1.4% | |
| Wireless Telecommunication Services | | | 0.8% | |
| Water Utilities | | | 0.5% | |
| Gas Utilities | | | 0.3% | |
| | | | | |
| | | | 94.2% | |
| | | | | |
Percentages are based upon net assets.
ICON Telecommunication & Utilities Fund
Sector Composition
as of September 30, 2008
| | | | | |
| Telecommunications & Utilities | | | 90.6% | |
| Information Technology | | | 1.9% | |
| Industrials | | | 1.7% | |
| | | | | |
| | | | 94.2% | |
| | | | | |
Percentages are based upon net assets.
ICON Telecommunication & Utilities Fund
Average Annual Total Return
as of September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Since
| | | | Gross
| | | | Net
| |
| | | | | | | | | | | | | | | | Inception
| | | | Expense
| | | | Expense
| |
| | | | 1 Year | | | | 5 Years | | | | 10 Years | | | | 7/9/97 | | | | Ratio* | | | | Ratio* | |
| ICON Telecommunication & Utilities Fund | | | | -23.01 | % | | | | 10.17 | % | | | | 5.07 | % | | | | 7.84 | % | | | | 1.33 | % | | | | 1.33 | % |
| |
| |
| S&P 1500 Telecommunications Services Index | | | | -33.25 | % | | | | 6.63 | % | | | | -3.40 | % | | | | 0.59 | % | | | | N/A | | | | | N/A | |
| |
| |
| S&P 1500 Utilities Index | | | | -12.72 | % | | | | 12.20 | % | | | | 5.15 | % | | | | 7.21 | % | | | | N/A | | | | | N/A | |
| |
| |
| S&P Composite 1500 Index | | | | -21.27 | % | | | | 5.65 | % | | | | 3.81 | % | | | | 4.49 | % | | | | N/A | | | | | N/A | |
| |
| |
Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section.
| |
| * | Please see the January 28, 2008 prospectus for details. |
ICON Telecommunication & Utilities Fund
Value of a $10,000 Investment
through September 30, 2008
Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund on its inception date of 7/9/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.
ICON Telecommunication & Utilities Fund
Schedule of Investments
September 30, 2008
| | | | | | | | | |
| Shares or Principal Amount | | Value |
| |
| |
| Common Stocks (94.2%) |
| | 15,000 | | | Allegheny Energy, Inc. | | $ | 551,550 | |
| | 4,006 | | | America Movil S.A.B. de C.V. - ADR | | | 185,718 | |
| | 40,000 | | | American Electric Power Co., Inc. | | | 1,483,200 | |
| | 230,600 | | | AT&T, Inc. | | | 6,438,352 | |
| | 15,300 | | | Cisco Systems, Inc.(a) | | | 345,168 | |
| | 5,000 | | | Companhia de Saneamento Basico do Estado de Sao Paulo - ADR | | | 141,750 | |
| | 45,000 | | | Dominion Resources, Inc. of Virginia | | | 1,925,100 | |
| | 29,000 | | | Edison International | | | 1,157,100 | |
| | 65,000 | | | El Paso Electric Co.(a) | | | 1,365,000 | |
| | 7,500 | | | Entergy Corp. | | | 667,575 | |
| | 10,000 | | | First Energy Corp. | | | 669,900 | |
| | 21,700 | | | FPL Group, Inc. | | | 1,091,510 | |
| | 10,500 | | | France Telecom S.A. - ADR | | | 294,105 | |
| | 5,100 | | | Harris Corp. | | | 235,620 | |
| | 9,600 | | | Hawaiian Electric Industries, Inc. | | | 278,496 | |
| | 2,000 | | | L-3 Communications Holdings, Inc. | | | 196,640 | |
| | 2,700 | | | Lockheed Martin Corp. | | | 296,109 | |
| | 5,000 | | | MetroPCS Communications, Inc.(a) | | | 69,950 | |
| | 20,000 | | | Pepco Holdings, Inc. | | | 458,200 | |
| | 29,500 | | | Premiere Global Services, Inc.(a) | | | 414,770 | |
| | 5,900 | | | Progress Energy, Inc. | | | 254,467 | |
| | 45,000 | | | Public Service Enterprise Group, Inc. | | | 1,475,550 | |
| | 2,300 | | | Questar Corp. | | | 94,116 | |
| | 9,000 | | | Sempra Energy | | | 454,230 | |
| | 39,800 | | | Southern Co. | | | 1,500,062 | |
| | 7,500 | | | Swisscom AG - ADR | | | 221,739 | |
| | 10,100 | | | Tele Norte Leste Participacoes S.A. - ADR | | | 176,346 | |
| | 2,666 | | | Telefonica S.A. - ADR | | | 190,593 | |
| | 18,700 | | | Telefonos de Mexico S.A.B. de C.V. - ADR | | | 481,525 | |
| | 15,000 | | | The Empire District Electric Co. | | | 320,250 | |
| | 126,600 | | | Verizon Communications, Inc. | | | 4,062,594 | |
| | 55,000 | | | Xcel Energy, Inc. | | | 1,099,450 | |
| | | | | | | | | |
Total Common Stocks
(Cost $30,249,698) | | | 28,596,735 | |
| |
| Short-Term Investments (4.9%) |
| $ | 1,471,417 | | | Brown Brothers Harriman Time Deposit - U.S. Dollar, 3.47%, 10/01/08# | | | 1,471,417 | |
| | | | | | | | | |
Total Short-Term Investments
(Cost $1,471,417) | | | 1,471,417 | |
Total Investments 99.1%
(Cost $31,721,115) | | | 30,068,152 | |
| Other Assets Less Liabilities 0.9% | | | 267,291 | |
| | | | | |
| Net Assets 100.0% | | $ | 30,335,443 | |
| | | | | |
62 Schedule of Investments
The accompanying notes are an integral part of the financial statements.
| | |
| (a) | | Non-income producing security. |
| |
| # | | BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2008. |
| |
| ADR | | American Depositary Receipt |
Schedule of Investments 63
Statements of Assets and Liabilities
September 30, 2008
| | | | | | | | | | | | | | | | | |
| | | ICON
| | | | | | | | | | |
| | | Consumer
| | | ICON
| | | ICON
| | | ICON
| |
| | | Discretionary
| | | Energy
| | | Financial
| | | Healthcare
| |
| | | Fund | | | Fund | | | Fund | | | Fund | |
| |
Assets | | | | | | | | | | | | | | | | |
| Investments, at cost | | $ | 87,907,763 | | | $ | 581,906,430 | | | $ | 117,655,714 | | | $ | 188,832,638 | |
| | | | | | | | | | | | | | | | | |
| Investments, at value† | | | 88,275,193 | | | | 551,703,325 | | | | 126,196,527 | | | | 192,997,622 | |
| Cash | | | - | | | | - | | | | - | | | | - | |
Foreign currency, at value
(cost $12) | | | - | | | | 10 | | | | - | | | | - | |
| Receivables: | | | | | | | | | | | | | | | | |
| Fund shares sold | | | 58,545 | | | | 701,910 | | | | 196,758 | | | | 7,058,145 | |
| Investments sold | | | 713,597 | | | | 20,904,511 | | | | 4,384,657 | | | | 758,341 | |
| Interest | | | 9,044 | | | | 116,928 | | | | 36 | | | | 10,618 | |
| Dividends | | | 68,081 | | | | 268,499 | | | | 189,182 | | | | 39,936 | |
| Other assets | | | 33,157 | | | | 94,137 | | | | 45,854 | | | | 47,759 | |
| | | | | | | | | | | | | | | | | |
| Total Assets | | | 89,157,617 | | | | 573,789,320 | | | | 131,013,014 | | | | 200,912,421 | |
| | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | |
| Payables: | | | | | | | | | | | | | | | | |
| Interest | | | - | | | | - | | | | - | | | | - | |
| Investments bought | | | - | | | | 3,491,415 | | | | 2,370,109 | | | | - | |
| Payable for collateral received on securities loaned | | | 16,672,869 | | | | 75,081,355 | | | | - | | | | 38,382,439 | |
| Fund shares redeemed | | | 144,342 | | | | 2,019,889 | | | | 318,095 | | | | 2,234,817 | |
| Advisory fees | | | 64,911 | | | | 441,532 | | | | 109,234 | | | | 133,483 | |
| Fund accounting fees | | | 261 | | | | 1,572 | | | | 390 | | | | 743 | |
| Transfer agent fees | | | 2,424 | | | | 21,930 | | | | 2,492 | | | | 24,994 | |
| Administration fees | | | 3,170 | | | | 21,490 | | | | 5,281 | | | | 6,865 | |
| Trustee fees | | | 1,770 | | | | 12,046 | | | | 2,985 | | | | 3,647 | |
| Accrued expenses | | | 26,015 | | | | 61,002 | | | | 29,847 | | | | 42,617 | |
| | | | | | | | | | | | | | | | | |
| Total Liabilities | | | 16,915,762 | | | | 81,152,231 | | | | 2,838,433 | | | | 40,829,605 | |
| | | | | | | | | | | | | | | | | |
Net Assets | | $ | 72,241,855 | | | $ | 492,637,089 | | | $ | 128,174,581 | | | $ | 160,082,816 | |
| | | | | | | | | | | | | | | | | |
Net Assets Consist of | | | | | | | | | | | | | | | | |
| Paid-in capital | | $ | 78,905,993 | | | $ | 386,182,100 | | | $ | 182,976,445 | | | $ | 155,046,894 | |
| Accumulated undistributed net investment income/(loss) | | | 328,935 | | | | 3,732,521 | | | | 3,549,040 | | | | 1,033,992 | |
| Accumulated undistributed net realized gain/(loss) from investment transactions | | | (7,360,503 | ) | | | 132,925,575 | | | | (66,891,717 | ) | | | (163,054 | ) |
| Unrealized appreciation/(depreciation) on investments and foreign currency | | | 367,430 | | | | (30,203,107 | ) | | | 8,540,813 | | | | 4,164,984 | |
| | | | | | | | | | | | | | | | | |
Net Assets | | $ | 72,241,855 | | | $ | 492,637,089 | | | $ | 128,174,581 | | | $ | 160,082,816 | |
| | | | | | | | | | | | | | | | | |
| Shares outstanding (unlimited shares authorized no par value) | | | 10,053,134 | | | | 18,207,571 | | | | 14,993,869 | | | | 11,868,423 | |
| Net asset value (offering and redemption price per share) | | $ | 7.19 | | | $ | 27.06 | | | $ | 8.55 | | | $ | 13.49 | |
| | |
| † | | Includes securities on loan of $16,446,929, $72,575,105, $0, $38,352,462, $36,766,744, $41,608,595, $10,876,414, $17,035,801, and $0. |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | |
| | | | ICON
| | | ICON
| | | | | | ICON
| |
ICON
| | | Information
| | | Leisure and
| | | ICON
| | | Telecommunication
| |
Industrials
| | | Technology
| | | Consumer
| | | Materials
| | | & Utilities
| |
| Fund | | | Fund | | | Staples Fund | | | Fund | | | Fund | |
| |
| | | | | | | | | | | | | | | | | | | |
| $ | 173,644,654 | | | $ | 232,608,821 | | | $ | 55,324,083 | | | $ | 144,236,549 | | | $ | 31,721,115 | |
| | | | | | | | | | | | | | | | | | | |
| | 161,275,566 | | | | 227,705,725 | | | | 53,400,676 | | | | 137,297,702 | | | | 30,068,152 | |
| | 11,402 | | | | - | | | | - | | | | - | | | | - | |
| |
- | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | |
| | 91,888 | | | | 116,046 | | | | 10,927 | | | | 101,387 | | | | 39,139 | |
| | 2,160,446 | | | | 10,306,126 | | | | 1,869,463 | | | | 7,301,792 | | | | 334,939 | |
| | 27,864 | | | | 21,170 | | | | 22,202 | | | | 11,586 | | | | 65 | |
| | 248,550 | | | | 6,536 | | | | 39,396 | | | | 250,512 | | | | 47,879 | |
| | 41,129 | | | | 48,574 | | | | 21,672 | | | | 42,259 | | | | 32,805 | |
| | | | | | | | | | | | | | | | | | | |
| | 163,856,845 | | | | 238,204,177 | | | | 55,364,336 | | | | 145,005,238 | | | | 30,522,979 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | - | | | | - | | | | 141 | | | | 644 | | | | - | |
| | 1,075,161 | | | | 18,326,160 | | | | 1,794,579 | | | | 7,352,372 | | | | - | |
| | | | | | | | | | | | | | | | | | | |
| | 37,121,275 | | | | 40,937,108 | | | | 11,291,030 | | | | 17,967,153 | | | | - | |
| | 224,521 | | | | 289,795 | | | | 69,420 | | | | 1,007,598 | | | | 122,074 | |
| | 113,275 | | | | 158,874 | | | | 37,399 | | | | 113,099 | | | | 27,139 | |
| | 450 | | | | 605 | | | | 118 | | | | 310 | | | | - | |
| | 2,219 | | | | 4,480 | | | | 3,256 | | | | 4,929 | | | | 8,776 | |
| | 5,513 | | | | 7,700 | | | | 1,774 | | | | 5,390 | | | | 1,223 | |
| | 3,081 | | | | 4,319 | | | | 1,020 | | | | 3,068 | | | | 738 | |
| | 25,017 | | | | 24,648 | | | | 26,368 | | | | 28,256 | | | | 27,586 | |
| | | | | | | | | | | | | | | | | | | |
| | 38,570,512 | | | | 59,753,689 | | | | 13,225,105 | | | | 26,482,819 | | | | 187,536 | |
| | | | | | | | | | | | | | | | | | | |
| $ | 125,286,333 | | | $ | 178,450,488 | | | $ | 42,139,231 | | | $ | 118,522,419 | | | $ | 30,335,443 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| $ | 140,788,670 | | | $ | 219,113,694 | | | $ | 46,662,081 | | | $ | 135,442,938 | | | $ | 38,647,493 | |
| | | | | | | | | | | | | | | | | | | |
| | 781,811 | | | | 718,614 | | | | 200,402 | | | | 743,528 | | | | 1,597,627 | |
| | | | | | | | | | | | | | | | | | | |
| | (3,915,060 | ) | | | (36,478,724 | ) | | | (2,799,845 | ) | | | (10,725,200 | ) | | | (8,256,714 | ) |
| | | | | | | | | | | | | | | | | | | |
| | (12,369,088 | ) | | | (4,903,096 | ) | | | (1,923,407 | ) | | | (6,938,847 | ) | | | (1,652,963 | ) |
| | | | | | | | | | | | | | | | | | | |
| $ | 125,286,333 | | | $ | 178,450,488 | | | $ | 42,139,231 | | | $ | 118,522,419 | | | $ | 30,335,443 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | 15,360,992 | | | | 22,711,780 | | | | 5,718,764 | | | | 12,080,455 | | | | 4,781,884 | |
| | | | | | | | | | | | | | | | | | | |
| $ | 8.16 | | | $ | 7.86 | | | $ | 7.37 | | | $ | 9.81 | | | $ | 6.34 | |
Statements of Operations
For the year ended September 30, 2008
| | | | | | | | | | | | | | | | | |
| | | ICON
| | | | | | | | | | |
| | | Consumer
| | | ICON
| | | ICON
| | | ICON
| |
| | | Discretionary
| | | Energy
| | | Financial
| | | Healthcare
| |
| | | Fund | | | Fund | | | Fund | | | Fund | |
| |
Investment Income | | | | | | | | | | | | | | | | |
| Interest | | $ | 38,937 | | | $ | 267,833 | | | $ | 66,369 | | | $ | 145,739 | |
| Dividends | | | 785,840 | | | | 11,229,501 | | | | 5,773,414 | | | | 3,036,954 | |
| Income from securities lending, net | | | 91,732 | | | | 551,631 | | | | 3,363 | | | | 180,749 | |
| Foreign taxes withheld | | | - | | | | - | | | | (5,799 | ) | | | - | |
| | | | | | | | | | | | | | | | | |
| Total Investment Income | | | 916,509 | | | | 12,048,965 | | | | 5,837,347 | | | | 3,363,442 | |
| | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | |
| Advisory fees | | | 689,056 | | | | 6,822,165 | | | | 1,851,601 | | | | 2,995,552 | |
| Fund accounting fees | | | 19,793 | | | | 170,734 | | | | 48,110 | | | | 75,247 | |
| Transfer agent fees | | | 85,183 | | | | 319,571 | | | | 112,192 | | | | 249,508 | |
| Administration fees | | | 32,484 | | | | 324,896 | | | | 86,992 | | | | 140,174 | |
| Registration fees | | | 27,095 | | | | 49,949 | | | | 30,997 | | | | 42,827 | |
| Insurance expense | | | 7,379 | | | | 53,301 | | | | 14,165 | | | | 33,852 | |
| Trustee fees and expenses | | | 7,116 | | | | 43,484 | | | | 13,710 | | | | 18,256 | |
| Interest expense | | | 25,034 | | | | 14,477 | | | | 37,245 | | | | 56,950 | |
| Other expenses | | | 54,799 | | | | 205,466 | | | | 60,505 | | | | 117,115 | |
| | | | | | | | | | | | | | | | | |
| Total expenses before transfer agent earnings credit | | | 947,939 | | | | 8,004,043 | | | | 2,255,517 | | | | 3,729,481 | |
| Transfer agent earnings credit | | | (1,233 | ) | | | (14,418 | ) | | | (3,904 | ) | | | (6,991 | ) |
| | | | | | | | | | | | | | | | | |
| Net Expenses | | | 946,706 | | | | 7,989,625 | | | | 2,251,613 | | | | 3,722,490 | |
| | | | | | | | | | | | | | | | | |
Net Investment Income/(Loss) | | | (30,197 | ) | | | 4,059,340 | | | | 3,585,734 | | | | (359,048 | ) |
| | | | | | | | | | | | | | | | | |
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency Transactions | | | | | | | | | | | | | | | | |
| Net realized gain/(loss) from investment transactions | | | (5,264,324 | ) | | | 219,827,955 | | | | (66,546,769 | ) | | | 6,635,806 | |
| Net realized gain/(loss) from foreign currency transactions | | | - | | | | 270 | | | | - | | | | - | |
| Change in unrealized net appreciation/(depreciation) on investments and foreign currency translations | | | (8,052,981 | ) | | | (313,719,016 | ) | | | (10,271,581 | ) | | | (75,394,705 | ) |
| | | | | | | | | | | | | | | | | |
| Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency Transactions | | | (13,317,305 | ) | | | (93,890,791 | ) | | | (76,818,350 | ) | | | (68,758,899 | ) |
| | | | | | | | | | | | | | | | | |
Net Increase/(Decrease) in Net Assets Resulting From Operations | | $ | (13,347,502 | ) | | $ | (89,831,451 | ) | | $ | (73,232,616 | ) | | $ | (69,117,947 | ) |
| | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | |
| | | | | | | ICON
| | | | | | | |
| | | | ICON
| | | Leisure and
| | | | | | ICON
| |
ICON
| | | Information
| | | Consumer
| | | ICON
| | | Telecommunication
| |
Industrials
| | | Technology
| | | Staples
| | | Materials
| | | & Utilities
| |
| Fund | | | Fund | | | Fund | | | Fund | | | Fund | |
| |
| | | | | | | | | | | | | | | | | | | |
| $ | 77,049 | | | $ | 59,055 | | | $ | 22,930 | | | $ | 79,206 | | | $ | 101,008 | |
| | 2,205,834 | | | | 1,273,698 | | | | 575,949 | | | | 2,429,312 | | | | 3,084,956 | |
| | 268,744 | | | | 302,376 | | | | 149,661 | | | | 148,173 | | | | - | |
| | (1,219 | ) | | | (19,159 | ) | | | (4 | ) | | | - | | | | (254 | ) |
| | | | | | | | | | | | | | | | | | | |
| | 2,550,408 | | | | 1,615,970 | | | | 748,536 | | | | 2,656,691 | | | | 3,185,710 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | 1,420,218 | | | | 1,952,436 | | | | 422,644 | | | | 1,430,277 | | | | 1,032,479 | |
| | 37,943 | | | | 50,197 | | | | 13,460 | | | | 37,876 | | | | 27,922 | |
| | 97,298 | | | | 123,864 | | | | 84,323 | | | | 126,428 | | | | 118,253 | |
| | 66,650 | | | | 91,555 | | | | 19,863 | | | | 67,271 | | | | 48,348 | |
| | 34,246 | | | | 33,538 | | | | 19,366 | | | | 30,717 | | | | 37,514 | |
| | 11,014 | | | | 17,978 | | | | 2,142 | | | | 8,154 | | | | 7,835 | |
| | 11,648 | | | | 14,403 | | | | 5,248 | | | | 11,467 | | | | 7,581 | |
| | 39,854 | | | | 60,279 | | | | 265 | | | | 6,590 | | | | 46,113 | |
| | 60,089 | | | | 69,868 | | | | 51,874 | | | | 82,743 | | | | 66,424 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | 1,778,960 | | | | 2,414,118 | | | | 619,185 | | | | 1,801,523 | | | | 1,392,469 | |
| | (2,935 | ) | | | (4,066 | ) | | | (910 | ) | | | (2,825 | ) | | | (2,427 | ) |
| | | | | | | | | | | | | | | | | | | |
| | 1,776,025 | | | | 2,410,052 | | | | 618,275 | | | | 1,798,698 | | | | 1,390,042 | |
| | | | | | | | | | | | | | | | | | | |
| | 774,383 | | | | (794,082 | ) | | | 130,261 | | | | 857,993 | | | | 1,795,668 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | (3,917,940 | ) | | | (7,056,250 | ) | | | (2,758,715 | ) | | | (9,284,326 | ) | | | (7,495,950 | ) |
| | | | | | | | | | | | | | | | | | | |
| | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | (37,141,255 | ) | | | (66,323,367 | ) | | | (6,521,918 | ) | | | (34,719,071 | ) | | | (18,700,947 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | (41,059,195 | ) | | | (73,379,617 | ) | | | (9,280,633 | ) | | | (44,003,397 | ) | | | (26,196,897 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| $ | (40,284,812 | ) | | $ | (74,173,699 | ) | | $ | (9,150,372 | ) | | $ | (43,145,404 | ) | | $ | (24,401,229 | ) |
| | | | | | | | | | | | | | | | | | | |
Statements of Changes in Net Assets
| | | | | | | | | |
| | | ICON Consumer Discretionary Fund | |
| | | Year Ended
| | | Year Ended
| |
| | | September 30,
| | | September 30,
| |
| | | 2008 | | | 2007 | |
Operations | | | | | | | | |
| Net investment income/(loss) | | $ | (30,197 | ) | | $ | (434,551 | ) |
| Net realized gain/(loss) from investment transactions | | | (5,264,324 | ) | | | 9,399,406 | |
| Net realized gain/(loss) from foreign currency transactions | | | - | | | | - | |
| Change in net unrealized appreciation/(depreciation) on investments and foreign currency translations | | | (8,052,981 | ) | | | (1,555,381 | ) |
| | | | | | | | | |
| Net increase/(decrease) in net assets resulting from operations | | | (13,347,502 | ) | | | 7,409,474 | |
| | | | | | | | | |
Dividends and Distributions to Shareholders | | | | | | | | |
| Net investment income | | | - | | | | - | |
| Net realized gains | | | (5,715,433 | ) | | | - | |
| | | | | | | | | |
| Net decrease from dividends and distributions | | | (5,715,433 | ) | | | - | |
| | | | | | | | | |
Fund Share Transactions | | | | | | | | |
| Shares sold | | | 94,454,604 | | | | 89,592,479 | |
| Reinvested dividends and distributions | | | 5,647,506 | | | | - | |
| Shares repurchased | | | (103,274,555 | ) | | | (113,316,789 | ) |
| | | | | | | | | |
| Net increase/(decrease) from fund share transactions | | | (3,172,445 | ) | | | (23,724,310 | ) |
| | | | | | | | | |
| Total net increase/(decrease) in net assets | | | (22,235,380 | ) | | | (16,314,836 | ) |
Net Assets | | | | | | | | |
| Beginning of period | | | 94,477,235 | | | | 110,792,071 | |
| | | | | | | | | |
| End of period | | $ | 72,241,855 | | | $ | 94,477,235 | |
| | | | | | | | | |
Transactions in Fund Shares | | | | | | | | |
| Shares sold | | | 11,901,384 | | | | 6,847,754 | |
| Reinvested dividends and distributions | | | 657,451 | | | | - | |
| Shares repurchased | | | (9,890,815 | ) | | | (8,612,211 | ) |
| | | | | | | | | |
| Net increase/(decrease) | | | 2,668,020 | | | | (1,764,457 | ) |
| Shares outstanding, beginning of period | | | 7,385,114 | | | | 9,149,571 | |
| | | | | | | | | |
| Shares outstanding, end of period | | | 10,053,134 | | | | 7,385,114 | |
| | | | | | | | | |
Purchases and Sales of Investment Securities
(excluding short-term securities) | | | | | | | | |
| Purchases of securities | | $ | 148,193,382 | | | $ | 200,968,196 | |
| Proceeds from sales of securities | | $ | 158,758,483 | | | | 225,414,872 | |
Accumulated undistributed net investment income/(loss) | | $ | 328,935 | | | $ | - | |
| | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | |
| ICON Energy Fund | | | ICON Financial Fund | |
Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| |
| 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | |
| $ | 4,059,340 | | | $ | 1,729,511 | | | $ | 3,585,734 | | | $ | 2,783,883 | |
| | 219,827,955 | | | | 148,157,856 | | | | (66,546,769 | ) | | | 32,263,708 | |
| | 270 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | |
| | (313,719,016 | ) | | | 99,930,732 | | | | (10,271,581 | ) | | | (18,892,178 | ) |
| | | | | | | | | | | | | | | |
| | (89,831,451 | ) | | | 249,818,099 | | | | (73,232,616 | ) | | | 16,155,413 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | (2,043,462 | ) | | | - | | | | (1,809,844 | ) | | | (3,859,545 | ) |
| | (177,660,859 | ) | | | (71,884,906 | ) | | | (19,270,780 | ) | | | (15,342,221 | ) |
| | | | | | | | | | | | | | | |
| | (179,704,321 | ) | | | (71,884,906 | ) | | | (21,080,624 | ) | | | (19,201,766 | ) |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | 106,327,332 | | | | 240,156,174 | | | | 164,671,288 | | | | 72,560,984 | |
| | 172,298,136 | | | | 66,740,457 | | | | 20,824,424 | | | | 18,814,482 | |
| | (332,527,571 | ) | | | (457,121,104 | ) | | | (163,096,823 | ) | | | (256,853,973 | ) |
| | | | | | | | | | | | | | | |
| | (53,902,103 | ) | | | (150,224,473 | ) | | | 22,398,889 | | | | (165,478,507 | ) |
| | | | | | | | | | | | | | | |
| | (323,437,875 | ) | | | 27,708,720 | | | | (71,914,351 | ) | | | (168,524,860 | ) |
| | | | | | | | | | | | | | | |
| | 816,074,964 | | | | 788,366,244 | | | | 200,088,932 | | | | 368,613,792 | |
| | | | | | | | | | | | | | | |
| $ | 492,637,089 | | | $ | 816,074,964 | | | $ | 128,174,581 | | | $ | 200,088,932 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | 3,170,690 | | | | 6,798,155 | | | | 15,099,515 | | | | 4,850,768 | |
| | 5,426,713 | | | | 2,077,847 | | | | 1,728,168 | | | | 1,267,822 | |
| | (10,071,174 | ) | | | (13,927,421 | ) | | | (15,827,527 | ) | | | (17,605,528 | ) |
| | | | | | | | | | | | | | | |
| | (1,473,771 | ) | | | (5,051,419 | ) | | | 1,000,156 | | | | (11,486,938 | ) |
| | 19,681,342 | | | | 24,732,761 | | | | 13,993,713 | | | | 25,480,651 | |
| | | | | | | | | | | | | | | |
| | 18,207,571 | | | | 19,681,342 | | | | 14,993,869 | | | | 13,993,713 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| $ | 811,679,635 | | | $ | 392,001,086 | | | $ | 404,982,417 | | | $ | 292,616,174 | |
| | 1,065,904,840 | | | | 574,733,632 | | | | 400,641,683 | | | | 477,406,026 | |
| $ | 3,732,521 | | | $ | 2,043,509 | | | $ | 3,549,040 | | | $ | 1,841,912 | |
| | | | | | | | | | | | | | | |
Statements of Changes in Net Assets (continued)
| | | | | | | | | |
| | | ICON Healthcare Fund | |
| | | Year Ended
| | | Year Ended
| |
| | | September 30,
| | | September 30,
| |
| | | 2008 | | | 2007 | |
Operations | | | | | | | | |
| Net investment income/(loss) | | $ | (359,048 | ) | | $ | 45,860 | |
| Net realized gain/(loss) from investment transactions | | | 6,635,806 | | | | 38,078,093 | |
| Net realized gain/(loss) from foreign currency transactions | | | - | | | | - | |
| Change in net unrealized appreciation/(depreciation) on investments and foreign currency translations | | | (75,394,705 | ) | | | (4,357,126 | ) |
| | | | | | | | | |
| Net increase/(decrease) in net assets resulting from operations | | | (69,117,947 | ) | | | 33,766,827 | |
| | | | | | | | | |
Dividends and Distributions to Shareholders | | | | | | | | |
| Net investment income | | | - | | | | - | |
| Net realized gains | | | (35,443,355 | ) | | | (43,433,266 | ) |
| | | | | | | | | |
| Net decrease from dividends and distributions | | | (35,443,355 | ) | | | (43,433,266 | ) |
| | | | | | | | | |
Fund Share Transactions | | | | | | | | |
| Shares sold | | | 132,311,153 | | | | 181,868,544 | |
| Reinvested dividends and distributions | | | 33,320,610 | | | | 39,813,766 | |
| Shares repurchased | | | (374,274,158 | ) | | | (384,931,407 | ) |
| | | | | | | | | |
| Net increase/(decrease) from fund share transactions | | | (208,642,395 | ) | | | (163,249,097 | ) |
| | | | | | | | | |
| Total net increase/(decrease) in net assets | | | (313,203,697 | ) | | | (172,915,536 | ) |
Net Assets | | | | | | | | |
| Beginning of period | | | 473,286,513 | | | | 646,202,049 | |
| | | | | | | | | |
| End of period | | $ | 160,082,816 | | | $ | 473,286,513 | |
| | | | | | | | | |
Transactions in Fund Shares | | | | | | | | |
| Shares sold | | | 8,446,706 | | | | 10,331,471 | |
| Reinvested dividends and distributions | | | 2,093,003 | | | | 2,401,313 | |
| Shares repurchased | | | (25,442,656 | ) | | | (21,963,906 | ) |
| | | | | | | | | |
| Net increase/(decrease) | | | (14,902,947 | ) | | | (9,231,122 | ) |
| Shares outstanding, beginning of period | | | 26,771,370 | | | | 36,002,492 | |
| | | | | | | | | |
| Shares outstanding, end of period | | | 11,868,423 | | | | 26,771,370 | |
| | | | | | | | | |
| Purchases and Sales of Investment Securities | | | | | | | | |
| (excluding short-term securities) | | | | | | | | |
| Purchases of securities | | $ | 181,152,157 | | | $ | 129,819,228 | |
| Proceeds from sales of securities | | | 431,555,287 | | | | 316,128,173 | |
Accumulated undistributed net investment income/(loss) | | $ | 1,033,992 | | | $ | 45,860 | |
| | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | |
| ICON Industrials Fund | | | ICON Information Technology Fund | |
Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| |
| 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | |
| $ | 774,383 | | | $ | 181,434 | | | $ | (794,082 | ) | | $ | (1,190,645 | ) |
| | (3,917,940 | ) | | | 10,093,733 | | | | (7,056,250 | ) | | | 22,583,204 | |
| | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | |
| | (37,141,255 | ) | | | 15,827,903 | | | | (66,323,367 | ) | | | 34,418,793 | |
| | | | | | | | | | | | | | | |
| | (40,284,812 | ) | | | 26,103,070 | | | | (74,173,699 | ) | | | 55,811,352 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | (125,130 | ) | | | (29,288 | ) | | | - | | | | - | |
| | (5,678,288 | ) | | | (30,562,108 | ) | | | - | | | | - | |
| | | | | | | | | | | | | | | |
| | (5,803,418 | ) | | | (30,591,396 | ) | | | - | | | | - | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | 134,429,676 | | | | 102,467,349 | | | | 139,642,245 | | | | 102,161,768 | |
| | 5,764,952 | | | | 30,151,213 | | | | - | | | | - | |
| | (124,558,586 | ) | | | (78,406,365 | ) | | | (153,982,840 | ) | | | (132,996,792 | ) |
| | | | | | | | | | | | | | | |
| | 15,636,042 | | | | 54,212,197 | | | | (14,340,595 | ) | | | (30,835,024 | ) |
| | | | | | | | | | | | | | | |
| | (30,452,188 | ) | | | 49,723,871 | | | | (88,514,294 | ) | | | 24,976,328 | |
| | | | | | | | | | | | | | | |
| | 155,738,521 | | | | 106,014,650 | | | | 266,964,782 | | | | 241,988,454 | |
| | | | | | | | | | | | | | | |
| $ | 125,286,333 | | | $ | 155,738,521 | | | $ | 178,450,488 | | | $ | 266,964,782 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | 13,326,003 | | | | 10,027,742 | | | | 14,365,857 | | | | 10,238,362 | |
| | 571,353 | | | | 3,426,275 | | | | - | | | | - | |
| | (13,003,410 | ) | | | (7,006,122 | ) | | | (15,874,267 | ) | | | (13,770,758 | ) |
| | | | | | | | | | | | | | | |
| | 893,946 | | | | 6,447,895 | | | | (1,508,410 | ) | | | (3,532,396 | ) |
| | 14,467,046 | | | | 8,019,151 | | | | 24,220,190 | | | | 27,752,586 | |
| | | | | | | | | | | | | | | |
| | 15,360,992 | | | | 14,467,046 | | | | 22,711,780 | | | | 24,220,190 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| $ | 213,976,364 | | | $ | 167,987,214 | | | $ | 333,130,725 | | | $ | 191,800,451 | |
| | 203,515,169 | | | | 140,686,846 | | | | 357,153,750 | | | | 225,844,274 | |
| $ | 781,811 | | | $ | 135,503 | | | $ | 718,614 | | | $ | - | |
| | | | | | | | | | | | | | | |
Statements of Changes in Net Assets (continued)
| | | | | | | | | |
| | | ICON Leisure and Consumer Staples Fund | |
| | | Year Ended
| | | Year Ended
| |
| | | September 30,
| | | September 30,
| |
| | | 2008 | | | 2007 | |
Operations | | | | | | | | |
| Net investment income/(loss) | | $ | 130,261 | | | $ | 749,754 | |
| Net realized gain/(loss) from investment transactions | | | (2,758,715 | ) | | | 12,220,864 | |
| Net realized gain/(loss) from foreign currency transactions | | | - | | | | - | |
| Change in net unrealized appreciation/(depreciation) on investments and foreign currency translations | | | (6,521,918 | ) | | | 53,228 | |
| | | | | | | | | |
| Net increase/(decrease) in net assets resulting from operations | | | (9,150,372 | ) | | | 13,023,846 | |
| | | | | | | | | |
Dividends and Distributions to Shareholders | | | | | | | | |
| Net investment income | | | (530,094 | ) | | | (219,627 | ) |
| Net realized gains | | | (6,370,211 | ) | | | (38,584 | ) |
| | | | | | | | | |
| Net decrease from dividends and distributions | | | (6,900,305 | ) | | | (258,211 | ) |
| | | | | | | | | |
Fund Share Transactions | | | | | | | | |
| Shares sold | | | 35,257,565 | | | | 38,286,389 | |
| Reinvested dividends and distributions | | | 6,759,578 | | | | 238,048 | |
| Shares repurchased | | | (15,398,164 | ) | | | (87,855,183 | ) |
| | | | | | | | | |
| Net increase/(decrease) from fund share transactions | | | 26,618,979 | | | | (49,330,746 | ) |
| | | | | | | | | |
| Total net increase/(decrease) in net assets | | | 10,568,302 | | | | (36,565,111 | ) |
Net Assets | | | | | | | | |
| Beginning of period | | | 31,570,929 | | | | 68,136,040 | |
| | | | | | | | | |
| End of period | | $ | 42,139,231 | | | $ | 31,570,929 | |
| | | | | | | | | |
Transactions in Fund Shares | | | | | | | | |
| Shares sold | | | 3,776,876 | | | | 4,103,651 | |
| Reinvested dividends and distributions | | | 765,524 | | | | 23,949 | |
| Shares repurchased | | | (1,797,011 | ) | | | (8,551,820 | ) |
| | | | | | | | | |
| Net increase/(decrease) | | | 2,745,389 | | | | (4,424,220 | ) |
| Shares outstanding, beginning of period | | | 2,973,375 | | | | 7,397,595 | |
| | | | | | | | | |
| Shares outstanding, end of period | | | 5,718,764 | | | | 2,973,375 | |
| | | | | | | | | |
| Purchases and Sales of Investment Securities | | | | | | | | |
| (excluding short-term securities) | | | | | | | | |
| Purchases of securities | | $ | 74,776,933 | | | $ | 108,060,147 | |
| Proceeds from sales of securities | | | 54,994,360 | | | | 157,645,145 | |
Accumulated undistributed net investment income/(loss) | | $ | 200,402 | | | $ | 530,127 | |
| | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | |
| ICON Materials Fund | | | ICON Telecommunication & Utilities Fund | |
Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
September 30,
| | | September 30,
| | | September 30,
| | | September 30,
| |
| 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | |
| $ | 857,993 | | | $ | 721,000 | | | $ | 1,795,668 | | | $ | 1,332,560 | |
| | (9,284,326 | ) | | | 28,330,381 | | | | (7,495,950 | ) | | | 24,415,452 | |
| | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | |
| | (34,719,071 | ) | | | 18,977,096 | | | | (18,700,947 | ) | | | 7,591,509 | |
| | | | | | | | | | | | | | | |
| | (43,145,404 | ) | | | 48,028,477 | | | | (24,401,229 | ) | | | 33,339,521 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | (495,395 | ) | | | (1,332,635 | ) | | | (1,083,543 | ) | | | (1,406,911 | ) |
| | (20,315,377 | ) | | | (11,756,758 | ) | | | (15,519,409 | ) | | | (8,089,030 | ) |
| | | | | | | | | | | | | | | |
| | (20,810,772 | ) | | | (13,089,393 | ) | | | (16,602,952 | ) | | | (9,495,941 | ) |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | 117,897,877 | | | | 72,893,695 | | | | 105,784,266 | | | | 108,372,109 | |
| | 19,305,814 | | | | 12,497,890 | | | | 15,458,710 | | | | 9,342,455 | |
| | (86,045,802 | ) | | | (124,107,302 | ) | | | (159,411,942 | ) | | | (151,811,576 | ) |
| | | | | | | | | | | | | | | |
| | 51,157,889 | | | | (38,715,717 | ) | | | (38,168,966 | ) | | | (34,097,012 | ) |
| | | | | | | | | | | | | | | |
| | (12,798,287 | ) | | | (3,776,633 | ) | | | (79,173,147 | ) | | | (10,253,432 | ) |
| | | | | | | | | | | | | | | |
| | 131,320,706 | | | | 135,097,339 | | | | 109,508,590 | | | | 119,762,022 | |
| | | | | | | | | | | | | | | |
| $ | 118,522,419 | | | $ | 131,320,706 | | | $ | 30,335,443 | | | $ | 109,508,590 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | 8,803,416 | | | | 5,551,693 | | | | 12,220,438 | | | | 12,870,519 | |
| | 1,551,914 | | | | 1,084,886 | | | | 1,860,254 | | | | 1,207,036 | |
| | (6,809,964 | ) | | | (9,679,280 | ) | | | (21,208,177 | ) | | | (17,812,609 | ) |
| | | | | | | | | | | | | | | |
| | 3,545,366 | | | | (3,042,701 | ) | | | (7,127,485 | ) | | | (3,735,054 | ) |
| | 8,535,089 | | | | 11,577,790 | | | | 11,909,369 | | | | 15,644,423 | |
| | | | | | | | | | | | | | | |
| | 12,080,455 | | | | 8,535,089 | | | | 4,781,884 | | | | 11,909,369 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| $ | 184,096,288 | | | $ | 130,657,599 | | | $ | 101,721,932 | | | $ | 165,662,385 | |
| | 155,638,369 | | | | 186,180,196 | | | | 154,661,075 | | | | 208,944,366 | |
| $ | 743,528 | | | $ | 495,440 | | | $ | 1,597,627 | | | $ | 1,083,590 | |
| | | | | | | | | | | | | | | |
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Income from investment operations | | | Less dividends | |
| | | Net asset
| | | Net
| | | Net realized
| | | | | | Dividends
| | | Distributions
| |
| | | value,
| | | investment
| | | and unrealized
| | | Total from
| | | from net
| | | from net
| |
| | | beginning
| | | income/
| | | gains/ (losses)
| | | investment
| | | investment
| | | realized
| |
| | | of period | | | (loss)(x) | | | on investments | | | operations | | | income | | | gains | |
| |
ICON Consumer Discretionary Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | $ | 12.79 | | | $ | - | (a) | | $ | (2.61 | ) | | $ | (2.61 | ) | | $ | - | | | $ | (2.99 | ) |
| Year Ended September 30, 2007 | | | 12.11 | | | | (0.04 | ) | | | 0.72 | | | | 0.68 | | | | - | | | | - | |
| Year Ended September 30, 2006 | | | 13.61 | | | | (0.06 | ) | | | 0.79 | | | | 0.73 | | | | - | | | | (2.23 | ) |
| Year Ended September 30, 2005 | | | 12.70 | | | | (0.08 | ) | | | 0.99 | | | | 0.91 | | | | - | | | | - | |
| Year Ended September 30, 2004 | | | 11.79 | | | | (0.05 | ) | | | 0.96 | | | | 0.91 | | | | - | | | | - | |
ICON Energy Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 41.46 | | | | 0.20 | | | | (4.82 | ) | | | (4.62 | ) | | | (0.11 | ) | | | (9.67 | ) |
| Year Ended September 30, 2007 | | | 31.88 | | | | 0.08 | | | | 12.86 | | | | 12.94 | | | | - | | | | (3.36 | ) |
| Year Ended September 30, 2006 | | | 33.76 | | | | (0.06 | ) | | | (0.89 | ) | | | (0.95 | ) | | | (0.08 | ) | | | (0.85 | ) |
| Year Ended September 30, 2005 | | | 21.81 | | | | 0.10 | | | | 11.85 | | | | 11.95 | | | | - | | | | - | |
| Year Ended September 30, 2004 | | | 13.70 | | | | (0.04 | ) | | | 8.15 | | | | 8.11 | | | | - | | | | - | |
ICON Financial Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 14.30 | | | | 0.21 | | | | (4.29 | ) | | | (4.08 | ) | | | (0.14 | ) | | | (1.53 | ) |
| Year Ended September 30, 2007 | | | 14.47 | | | | 0.13 | | | | 0.45 | | | | 0.58 | | | | (0.15 | ) | | | (0.60 | ) |
| Year Ended September 30, 2006 | | | 13.43 | | | | 0.15 | | | | 1.84 | | | | 1.99 | | | | (0.09 | ) | | | (0.86 | ) |
| Year Ended September 30, 2005 | | | 13.36 | | | | 0.13 | | | | 0.99 | | | | 1.12 | | | | (0.03 | ) | | | (1.02 | ) |
| Year Ended September 30, 2004 | | | 10.78 | | | | 0.04 | | | | 2.60 | | | | 2.64 | | | | (0.06 | ) | | | - | |
| |
| (x) | Calculated using the average share method. |
| (a) | Amount less than $0.005. |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Ratio of net
| | | | |
| | | | | | | | | | | | | | | | | | | investment
| | | | |
| | | | | | | | | | | | | Ratio of expenses
| | | income/(loss) to
| | | | |
| | | | | | | | | | | | | to average net assets | | | average net assets | | | | |
| and distributions | | | | | | | | | | | | Before
| | | After
| | | Before
| | | After
| | | | |
Total
| | | | | | | | | Net assets,
| | | transfer
| | | transfer
| | | transfer
| | | transfer
| | | | |
dividends
| | | Net asset
| | | | | | end of
| | | agent
| | | agent
| | | agent
| | | agent
| | | Portfolio
| |
and
| | | value, end
| | | Total
| | | period (in
| | | earnings
| | | earnings
| | | earnings
| | | earnings
| | | turnover
| |
| distributions | | | of period | | | return | | | thousands) | | | credit | | | credit | | | credit | | | credit | | | rate | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | (2.99 | ) | | $ | 7.19 | | | | (24.21 | )% | | $ | 72,242 | | | | 1.38 | % | | | 1.38 | % | | | (0.04 | )% | | | (0.04 | )% | | | 218.32 | % |
| | - | | | | 12.79 | | | | 5.62 | % | | | 94,477 | | | | 1.30 | % | | | 1.30 | % | | | (0.31 | )% | | | (0.31 | )% | | | 144.89 | % |
| | (2.23 | ) | | | 12.11 | | | | 6.20 | % | | | 110,792 | | | | N/A | | | | 1.32 | % | | | N/A | | | | (0.46 | )% | | | 173.83 | % |
| | - | | | | 13.61 | | | | 7.17 | % | | | 169,422 | | | | N/A | | | | 1.25 | % | | | N/A | | | | (0.57 | )% | | | 157.94 | % |
| | - | | | | 12.70 | | | | 7.72 | % | | | 151,922 | | | | N/A | | | | 1.31 | % | | | N/A | | | | (0.38 | )% | | | 120.63 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (9.78 | ) | | | 27.06 | | | | (14.62 | )% | | | 492,637 | | | | 1.16 | % | | | 1.16 | % | | | 0.59 | % | | | 0.59 | % | | | 119.87 | % |
| | (3.36 | ) | | | 41.46 | | | | 43.64 | % | | | 816,075 | | | | 1.18 | % | | | 1.17 | % | | | 0.23 | % | | | 0.24 | % | | | 54.75 | % |
| | (0.93 | ) | | | 31.88 | | | | (2.81 | )% | | | 788,366 | | | | N/A | | | | 1.17 | % | | | N/A | | | | (0.16 | )% | | | 22.86 | % |
| | - | | | | 33.76 | | | | 54.79 | % | | | 1,008,958 | | | | N/A | | | | 1.21 | % | | | N/A | | | | 0.37 | % | | | 27.51 | % |
| | - | | | | 21.81 | | | | 59.20 | % | | | 287,614 | | | | N/A | | | | 1.35 | % | | | N/A | | | | (0.20 | )% | | | 13.42 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (1.67 | ) | | | 8.55 | | | | (31.93 | )% | | | 128,175 | | | | 1.22 | % | | | 1.22 | % | | | 1.94 | % | | | 1.94 | % | | | 220.83 | % |
| | (0.75 | ) | | | 14.30 | | | | 3.84 | % | | | 200,089 | | | | 1.21 | % | | | 1.21 | % | | | 0.86 | % | | | 0.86 | % | | | 93.04 | % |
| | (0.95 | ) | | | 14.47 | | | | 15.53 | % | | | 368,614 | | | | N/A | | | | 1.20 | % | | | N/A | | | | 1.10 | % | | | 153.47 | % |
| | (1.05 | ) | | | 13.43 | | | | 8.29 | % | | | 210,883 | | | | N/A | | | | 1.26 | % | | | N/A | | | | 1.00 | % | | | 170.75 | % |
| | (0.06 | ) | | | 13.36 | | | | 24.53 | % | | | 188,393 | | | | N/A | | | | 1.32 | % | | | N/A | | | | 0.34 | % | | | 114.50 | % |
Financial Highlights (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Income from investment operations | | | Less dividends | |
| | | Net asset
| | | Net
| | | Net realized
| | | | | | Dividends
| | | Distributions
| |
| | | value,
| | | investment
| | | and unrealized
| | | Total from
| | | from net
| | | from net
| |
| | | beginning
| | | income/
| | | gains/ (losses) on
| | | investment
| | | investment
| | | realized
| |
| | | of period | | | (loss)(x) | | | investments | | | operations | | | income | | | gains | |
| |
ICON Healthcare Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | $ | 17.68 | | | $ | (0.02 | ) | | $ | (2.65 | ) | | $ | (2.67 | ) | | $ | - | | | $ | (1.52 | ) |
| Year Ended September 30, 2007 | | | 17.95 | | | | - | (a) | | | 1.19 | | | | 1.19 | | | | - | | | | (1.46 | ) |
| Year Ended September 30, 2006 | | | 17.94 | | | | (0.10 | ) | | | 0.38 | | | | 0.28 | | | | - | | | | (0.27 | ) |
| Year Ended September 30, 2005 | | | 13.70 | | | | (0.14 | ) | | | 4.42 | | | | 4.28 | | | | - | | | | (0.04 | ) |
| Year Ended September 30, 2004 | | | 12.28 | | | | (0.14 | ) | | | 1.56 | | | | 1.42 | | | | - | | | | - | |
ICON Industrials Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 10.77 | | | | 0.05 | | | | (2.32 | ) | | | (2.27 | ) | | | (0.01 | ) | | | (0.33 | ) |
| Year Ended September 30, 2007 | | | 13.22 | | | | 0.02 | | | | 2.63 | | | | 2.65 | | | | - | (a) | | | (5.10 | ) |
| Year Ended September 30, 2006 | | | 12.70 | | | | (0.04 | ) | | | 0.97 | | | | 0.93 | | | | - | | | | (0.41 | ) |
| Year Ended September 30, 2005 | | | 10.52 | | | | (0.04 | ) | | | 2.22 | | | | 2.18 | | | | - | | | | - | |
| Year Ended September 30, 2004 | | | 8.80 | | | | (0.05 | ) | | | 1.77 | | | | 1.72 | | | | - | | | | - | |
ICON Information Technology Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 11.02 | | | | (0.04 | ) | | | (3.12 | ) | | | (3.16 | ) | | | - | | | | - | |
| Year Ended September 30, 2007 | | | 8.72 | | | | (0.05 | ) | | | 2.35 | | | | 2.30 | | | | - | | | | - | |
| Year Ended September 30, 2006 | | | 8.70 | | | | (0.05 | ) | | | 0.07 | | | | 0.02 | | | | - | | | | - | |
| Year Ended September 30, 2005 | | | 7.90 | | | | (0.08 | ) | | | 0.88 | | | | 0.80 | | | | - | | | | - | |
| Year Ended September 30, 2004 | | | 8.27 | | | | (0.08 | ) | | | (0.29 | ) | | | (0.37 | ) | | | - | | | | - | |
| |
| (x) | Calculated using the average share method. |
| (a) | Amount less than $0.005. |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Ratio of net
| | | | |
| | | | | | | | | | | | | Ratio of
| | | investment
| | | | |
| | | | | | | | | | | | | expenses to
| | | income/(loss) to
| | | | |
| | | | | | | | | | | | | average net assets | | | average net assets | | | | |
| and distributions | | | | | | | | | | | | Before
| | | After
| | | Before
| | | After
| | | | |
Total
| | | | | | | | | Net assets,
| | | transfer
| | | transfer
| | | transfer
| | | transfer
| | | | |
dividends
| | | Net asset
| | | | | | end of
| | | agent
| | | agent
| | | agent
| | | agent
| | | Portfolio
| |
and
| | | value, end
| | | Total
| | | period (in
| | | earnings
| | | earnings
| | | earnings
| | | earnings
| | | turnover
| |
| distributions | | | of period | | | return | | | thousands) | | | credit | | | credit | | | credit | | | credit | | | rate | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | (1.52 | ) | | $ | 13.49 | | | | (16.43 | )% | | $ | 160,083 | | | | 1.25 | % | | | 1.25 | % | | | (0.12 | )% | | | (0.12 | )% | | | 61.44 | % |
| | (1.46 | ) | | | 17.68 | | | | 7.17 | % | | | 473,287 | | | | 1.21 | % | | | 1.20 | % | | | 0.00 | % | | | 0.01 | % | | | 24.56 | % |
| | (0.27 | ) | | | 17.95 | | | | 1.56 | % | | | 646,202 | | | | N/A | | | | 1.19 | % | | | N/A | | | | (0.55 | )% | | | 61.37 | % |
| | (0.04 | ) | | | 17.94 | | | | 31.39 | % | | | 682,759 | | | | N/A | | | | 1.22 | % | | | N/A | | | | (0.82 | )% | | | 47.88 | % |
| | - | | | | 13.70 | | | | 11.56 | % | | | 285,670 | | | | N/A | | | | 1.29 | % | | | N/A | | | | (1.04 | )% | | | 52.72 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.34 | ) | | | 8.16 | | | | (21.72 | )% | | | 125,286 | | | | 1.25 | % | | | 1.25 | % | | | 0.55 | % | | | 0.55 | % | | | 143.40 | % |
| | (5.10 | ) | | | 10.77 | | | | 28.73 | % | | | 155,739 | | | | 1.28 | % | | | 1.27 | % | | | 0.15 | % | | | 0.16 | % | | | 125.44 | % |
| | (0.41 | ) | | | 13.22 | | | | 7.49 | % | | | 106,015 | | | | N/A | | | | 1.24 | % | | | N/A | | | | (0.30 | )% | | | 89.38 | % |
| | - | | | | 12.70 | | | | 20.72 | % | | | 216,636 | | | | N/A | | | | 1.24 | % | | | N/A | | | | (0.34 | )% | | | 67.25 | % |
| | - | | | | 10.52 | | | | 19.55 | % | | | 209,693 | | | | N/A | | | | 1.29 | % | | | N/A | | | | (0.47 | )% | | | 45.77 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | - | | | | 7.86 | | | | (28.68 | )% | | | 178,450 | | | | 1.24 | % | | | 1.24 | % | | | (0.41 | )% | | | (0.41 | )% | | | 171.22 | % |
| | - | | | | 11.02 | | | | 26.38 | % | | | 266,965 | | | | 1.23 | % | | | 1.23 | % | | | (0.49 | )% | | | (0.49 | )% | | | 78.66 | % |
| | - | | | | 8.72 | | | | 0.23 | % | | | 241,988 | | | | N/A | | | | 1.25 | % | | | N/A | | | | (0.61 | )% | | | 155.39 | % |
| | - | | | | 8.70 | | | | 10.13 | % | | | 220,073 | | | | N/A | | | | 1.29 | % | | | N/A | | | | (0.91 | )% | | | 152.16 | % |
| | - | | | | 7.90 | | | | (4.47 | )% | | | 244,252 | | | | N/A | | | | 1.31 | % | | | N/A | | | | (0.91 | )% | | | 189.67 | % |
Financial Highlights (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Income from investment operations | | | Less dividends | |
| | | Net asset
| | | Net
| | | Net realized
| | | | | | Dividends
| | | Distributions
| |
| | | value,
| | | investment
| | | and unrealized
| | | Total from
| | | from net
| | | from net
| |
| | | beginning
| | | income/
| | | gains/(losses) on
| | | investment
| | | investment
| | | realized
| |
| | | of period | | | (loss)(x) | | | investments | | | operations | | | income | | | gains | |
| |
ICON Leisure and Consumer Staples Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | $ | 10.62 | | | $ | 0.03 | | | $ | (1.60 | ) | | $ | (1.57 | ) | | $ | (0.13 | ) | | $ | (1.55 | ) |
| Year Ended September 30, 2007 | | | 9.21 | | | | 0.10 | | | | 1.33 | | | | 1.43 | | | | (0.02 | ) | | | - | (a) |
| Year Ended September 30, 2006 | | | 11.96 | | | | (0.07 | ) | | | (0.01 | ) | | | (0.08 | ) | | | - | | | | (2.67 | ) |
| Year Ended September 30, 2005 | | | 14.51 | | | | (0.06 | ) | | | 0.94 | | | | 0.88 | | | | - | | | | (3.43 | ) |
| Year Ended September 30, 2004 | | | 12.42 | | | | (0.04 | ) | | | 2.13 | | | | 2.09 | | | | - | | | | - | |
ICON Materials Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 15.39 | | | | 0.08 | | | | (3.23 | ) | | | (3.15 | ) | | | (0.06 | ) | | | (2.37 | ) |
| Year Ended September 30, 2007 | | | 11.67 | | | | 0.08 | | | | 5.10 | | | | 5.18 | | | | (0.15 | ) | | | (1.31 | ) |
| Year Ended September 30, 2006 | | | 11.30 | | | | 0.09 | | | | 1.09 | | | | 1.18 | | | | (0.02 | ) | | | (0.79 | ) |
| Year Ended September 30, 2005 | | | 9.05 | | | | 0.03 | | | | 2.23 | | | | 2.26 | | | | (0.01 | ) | | | - | |
| Year Ended September 30, 2004 | | | 6.20 | | | | 0.01 | | | | 2.87 | | | | 2.88 | | | | (0.03 | ) | | | - | |
ICON Telecommunication & Utilities Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended September 30, 2008 | | | 9.20 | | | | 0.14 | | | | (2.03 | ) | | | (1.89 | ) | | | (0.06 | ) | | | (0.91 | ) |
| Year Ended September 30, 2007 | | | 7.66 | | | | 0.10 | | | | 2.18 | | | | 2.28 | | | | (0.11 | ) | | | (0.63 | ) |
| Year Ended September 30, 2006 | | | 8.28 | | | | 0.13 | | | | 0.37 | | | | 0.50 | | | | (0.18 | ) | | | (0.94 | ) |
| Year Ended September 30, 2005 | | | 6.61 | | | | 0.14 | | | | 1.61 | | | | 1.75 | | | | (0.08 | ) | | | - | |
| Year Ended September 30, 2004 | | | 5.69 | | | | 0.07 | | | | 0.92 | | | | 0.99 | | | | (0.07 | ) | | | - | |
| |
| (x) | Calculated using the average share method. |
| (a) | Amount less than $0.005. |
The accompanying notes are an integral part of the financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Ratio of net
| | |
| | | | | | | | | Ratio of
| | investment
| | |
| | | | | | | | | expenses to
| | income/(loss) to
| | |
| | | | | | | | | average net assets | | average net assets | | |
| and distributions | | | | | | | | Before
| | After
| | Before
| | After
| | |
Total
| | | | | | Net assets,
| | transfer
| | transfer
| | transfer
| | transfer
| | |
dividends
| | Net asset
| | | | end of
| | agent
| | agent
| | agent
| | agent
| | Portfolio
|
and
| | value, end
| | Total
| | period (in
| | earnings
| | earnings
| | earnings
| | earnings
| | turnover
|
| distributions | | of period | | return | | thousands) | | credit | | credit | | credit | | credit | | rate |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| $ | (1.68 | ) | | $ | 7.37 | | | | (17.40 | )% | | $ | 42,139 | | | | 1.46 | % | | | 1.46% | | | | 0.31 | % | | | 0.31 | % | | | 132.40% | |
| | (0.02 | ) | | | 10.62 | | | | 15.61 | % | | | 31,571 | | | | 1.41 | % | | | 1.41% | | | | 1.02 | % | | | 1.02 | % | | | 150.72% | |
| | (2.67 | ) | | | 9.21 | | | | 0.11 | % | | | 68,136 | | | | N/A | | | | 1.54% | | | | N/A | | | | (0.70 | )% | | | 215.75% | |
| | (3.43 | ) | | | 11.96 | | | | 5.01 | % | | | 47,410 | | | | N/A | | | | 1.30% | | | | N/A | | | | (0.45 | )% | | | 271.72% | |
| | - | | | | 14.51 | | | | 16.83 | % | | | 83,022 | | | | N/A | | | | 1.33% | | | | N/A | | | | (0.31 | )% | | | 148.43% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (2.43 | ) | | | 9.81 | | | | (23.79 | )% | | | 118,522 | | | | 1.26 | % | | | 1.26% | | | | 0.60 | % | | | 0.60 | % | | | 111.26% | |
| | (1.46 | ) | | | 15.39 | | | | 48.63 | % | | | 131,321 | | | | 1.33 | % | | | 1.33% | | | | 0.59 | % | | | 0.59 | % | | | 109.10% | |
| | (0.81 | ) | | | 11.67 | | | | 11.17 | % | | | 135,097 | | | | N/A | | | | 1.30% | | | | N/A | | | | 0.74 | % | | | 176.89% | |
| | (0.01 | ) | | | 11.30 | | | | 25.04 | % | | | 99,569 | | | | N/A | | | | 1.31% | | | | N/A | | | | 0.33 | % | | | 128.01% | |
| | (0.03 | ) | | | 9.05 | | | | 46.61 | % | | | 139,838 | | | | N/A | | | | 1.37% | | | | N/A | | | | 0.13 | % | | | 59.48% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (0.97 | ) | | | 6.34 | | | | (23.01 | )% | | | 30,335 | | | | 1.35 | % | | | 1.35% | | | | 1.74 | % | | | 1.74 | % | | | 102.65% | |
| | (0.74 | ) | | | 9.20 | | | | 31.60 | % | | | 109,509 | | | | 1.33 | % | | | 1.33% | | | | 1.20 | % | | | 1.20 | % | | | 154.99% | |
| | (1.12 | ) | | | 7.66 | | | | 7.56 | % | | | 119,762 | | | | N/A | | | | 1.38% | | | | N/A | | | | 1.71 | % | | | 209.50% | |
| | (0.08 | ) | | | 8.28 | | | | 26.70 | % | | | 120,651 | | | | N/A | | | | 1.26% | | | | N/A | | | | 1.88 | % | | | 112.91% | |
| | (0.07 | ) | | | 6.61 | | | | 17.57 | % | | | 61,325 | | | | N/A | | | | 1.37% | | | | N/A | | | | 1.07 | % | | | 108.81% | |
Notes to Financial Statements
September 30, 2008
1. Organization
The ICON Consumer Discretionary Fund (“Consumer Discretionary Fund”), ICON Energy Fund (“Energy Fund”), ICON Financial Fund (“Financial Fund”), ICON Healthcare Fund (“Healthcare Fund”), ICON Industrials Fund (“Industrials Fund”), ICON Information Technology Fund (“Information Technology Fund”), ICON Leisure and Consumer Staples Fund (“Leisure and Consumer Staples Fund”), ICON Materials Fund (“Materials Fund”), and ICON Telecommunication & Utilities Fund (“Telecommunication & Utilities Fund”) are series funds (individually a “Fund” and collectively, the “Funds”). The Funds are part of the ICON Funds (the “Trust”), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end investment management company. There are eight other active Funds within the Trust. Those Funds are covered by separate prospectuses and shareholder reports.
The Funds invest primarily in securities of companies whose principal business activities fall within specific sectors and industries. Each Fund is authorized to issue an unlimited number of no par shares. The investment objective of each Fund is to provide long-term capital appreciation.
The Funds may have elements of risk, including the loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment in a non-diversified sector fund may involve greater risk and volatility than a diversified fund. Investments in foreign securities and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar-denominated transactions as a result of, among other factors, the possibility of lower government supervision and regulation of foreign securities markets and the possibility of political or economic instability. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, do not exist in foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers. There are also risks associated with small-and mid-cap investing, including limited product lines, less liquidity and small market share.
In the normal course of business, the Funds may enter into various agreements that provide for general indemnifications. Each Fund’s maximum exposure under these arrangements is unknown as any potential exposure
80 Notes to Financial Statements
involving future claims that may be made against each Fund is unknown. However, based on experience, the Funds expect the risk of loss to be minimal.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results may differ from these estimates.
Investment Valuation
The Funds’ securities and other assets are valued at the closing price at the close of the regular trading session of the New York Stock Exchange (the “NYSE”) (normally 4 p.m. Eastern time) each day the NYSE is open, except that securities traded primarily on the NASDAQ Stock Market (“NASDAQ”) are normally valued by the Funds at the NASDAQ Official Closing Price provided by NASDAQ each business day. The Funds use pricing services to obtain the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service’s valuation quote is considered inaccurate or does not reflect the market value of the security, prices may be obtained through market quotations from independent broker/dealers. If market quotations from these sources are not readily available, the Funds’ securities or other assets are valued at fair value as determined in good faith by the Funds’ Board of Trustees (“Board”) or pursuant to procedures approved by the Board.
Lacking any sales that day, a security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes from dealers making a market for the security. Options are valued at their closing mid-price on the market with the most volume. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than 60 days are valued in accordance with the evaluated bid price supplied by the pricing service. The evaluated bid price supplied by the pricing service is a matrix system which considers such factors as security prices, yields, maturities and ratings. Short-term securities with remaining
Notes to Financial Statements 81
Notes to Financial Statements (continued)
maturities of 60 days or less are generally valued at amortized cost or original cost plus accrued interest, which approximates market value. Currency rates as of the close of the NYSE are used to convert foreign security values into U.S. dollars.
The Funds’ securities traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Board determines that use of another valuation methodology is appropriate. The purposes of daily fair valuation are to avoid stale prices and to take into account, among other things, any significant events occurring after the close of foreign markets. The pricing service uses statistical analyses and quantitative models to adjust local market prices using factors such as subsequent movements and changes in the prices of indexes and securities and exchange rates in other markets to determine fair value as of the time a Fund calculates its net asset value (“NAV”). The valuation assigned to fair-valued securities for purposes of calculating a Fund’s NAV may differ from the security’s most recent closing market price and from the prices used by other mutual funds to calculate their NAVs.
New Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”). This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS 157 applies to fair value measurements already required or permitted by existing standards. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current generally accepted accounting principles from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management does not believe the adoption of SFAS 157 will impact the financial statement amounts, however, additional disclosures will be required about the inputs used to develop the measurements and the effect of certain measurements on changes in net assets for the period. Management intends to adopt SFAS 157 during the fiscal year ending September 30, 2009, as required.
In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 is effective for fiscal years and interim periods
82 Notes to Financial Statements
beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about the Funds’ derivative and hedging activities, including how such activities are accounted for and their effect on the Funds’ financial position, performance and cash flows. Management intends to adopt SFAS 161 during the fiscal year ending September 30, 2009.
Repurchase Agreements
Repurchase agreements, if held by the Funds, are fully collateralized by U.S. Government securities and such collateral is in the possession of the Funds’ custodian. The collateral is evaluated daily to ensure its market value exceeds the current market value of the repurchase agreements including accrued interest. In the event of default on the obligation to repurchase, the Funds have the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. No repurchase agreements were purchased or sold by the Funds during the year ended September 30, 2008.
Foreign Currency Translation
The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated daily into U.S. dollars at the prevailing rates of exchange. Income and expenses are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Purchases and sales of securities are translated into U.S. dollars at the contractual currency exchange rates established at the time of each trade.
The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Net unrealized appreciation or depreciation on investments and foreign currency translations arise from changes in the value of assets and liabilities, resulting from changes in the exchange rates and changes in market prices of securities held.
Forward Foreign Currency Contracts
The Funds may enter into short-term forward foreign currency contracts. A forward foreign currency contract is an agreement between contracting
Notes to Financial Statements 83
Notes to Financial Statements (continued)
parties to exchange an amount of currency at some future time at an agreed upon rate.
These contracts are marked-to-market daily and the related appreciation or depreciation of the contract is presented on the Statement of Assets and Liabilities. Net realized gains and losses on foreign currency transactions represent disposition of foreign currencies, and the difference between the amount recorded at the time of the transaction and the U.S. dollar amount actually received. Any realized gain or loss incurred by the Funds due to foreign currency translation is included on the Statement of Operations. The Funds did not enter into any forward foreign currency contracts during the year ended September 30, 2008.
Futures Contracts
The Funds may invest in financial futures contracts for the purpose of hedging their existing securities or securities they intend to purchase against fluctuations in fair value caused by changes in prevailing markets. Upon entering into a financial futures contract, the Fund is required to pledge to a broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the fair value of the underlying security. The Fund recognizes a gain or loss equal to the daily variation margin. Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts and the underlying hedged assets. The Funds held no financial futures contracts during the year ended September 30, 2008.
Options Transactions
Each Fund may write call and put options on any security in which it may invest. When a Fund writes a put or call option, an amount equal to the premium received is included on the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. If an option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security, and the proceeds from the sale are increased by the premium originally received. If
84 Notes to Financial Statements
a written put option is exercised, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, the Fund has no control over whether the underlying securities are subsequently sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the security underlying the written option.
Each Fund may also purchase put and call options on any security in which it may invest. When a Fund purchases a call or put option, an amount equal to the premium paid is included on the Fund’s Statement of Assets and Liabilities as an investment, and is subsequently marked-to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If the Fund exercises a call, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Written and purchased options are non-income producing securities. The Financial Fund purchased put options during the year ended September 30, 2008. The Funds did not enter into any written option transactions during the year ended September 30, 2008.
Securities Lending
Under procedures adopted by the Board, the Funds may lend securities to non-affiliated qualified parties. The Funds seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security. The Funds do not have the right to vote on securities while they are on loan; however, the Funds may attempt to call back the loan and vote the proxy.
All loans will be continuously secured by collateral which consists of cash. Brown Brothers Harriman (the “Lending Agent”) may invest the cash collateral in the Securities Lending Investment Fund of Brown Brothers Harriman Trust, which complies with Rule 2a-7 of the 1940 Act relating to money market funds.
The cash collateral invested by the Lending Agent is disclosed on the Schedule of Investments. The lending fees received and the Funds’ portion of the interest income earned on cash collateral are included on the Statement of Operations, if applicable.
Notes to Financial Statements 85
Notes to Financial Statements (continued)
As of September 30, 2008, the following Funds had securities with the following values on loan:
| | | | | | | | | |
| | | Value of
| | | Value of
| |
| Fund | | Loaned Securities | | | Collateral | |
| | |
| ICON Consumer Discretionary Fund | | $ | 16,446,929 | | | $ | 16,672,869 | |
| ICON Energy Fund | | | 72,575,105 | | | | 75,081,355 | |
| ICON Healthcare Fund | | | 38,352,462 | | | | 38,382,439 | |
| ICON Industrials Fund | | | 36,766,744 | | | | 37,121,275 | |
| ICON Information Technology Fund | | | 41,608,595 | | | | 40,937,108 | |
| ICON Leisure and Consumer Staples Fund | | | 10,876,414 | | | | 11,291,030 | |
| ICON Materials Fund | | | 17,035,801 | | | | 17,967,153 | |
The value of the collateral above could include collateral for securities that were sold on or before September 30, 2008.
Income Taxes
The Funds intend to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code and, accordingly, the Funds will generally not be subject to federal and state income taxes, or federal excise taxes to the extent that they intend to make sufficient distributions of net investment income and net realized capital gains.
Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders.
Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryovers. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America.
The Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Funds did not record any liabilities for unrecognized
86 Notes to Financial Statements
tax benefits in connection with the adoption of FIN 48. At September 30, 2008, the Funds have recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.
The Funds file U.S. tax returns. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years from 2005-2007, no examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Investment Income
Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Certain dividends from foreign securities are recorded as soon as the Funds are informed of the dividend if such information is obtained subsequent to the ex-dividend date. Discounts and premiums on securities purchased are amortized over the life of the respective securities.
Investment Transactions
Security transactions are accounted for no later than one business day after the trade date. However, for financial reporting purposes, security transactions are accounted for on the trade date. Gains and losses on securities sold are determined on the basis of identified cost.
Allocation of Income and Expenses
Expenses which cannot be directly attributed to a specific Fund in the Trust are apportioned between all Funds in the Trust based upon relative net assets.
3. Fees and Other Transactions with Affiliates
Investment Advisory Fees
ICON Advisers, Inc. (“ICON”) serves as the investment adviser to the Funds and is responsible for managing the Funds’ portfolios of securities. The Funds are obligated to pay ICON management fees computed daily at an annual rate of 1.00% on the first $500 million of average daily net assets,
Notes to Financial Statements 87
Notes to Financial Statements (continued)
0.95% on the next $250 million, 0.925% on the next $750 million, 0.90% on the next $3.5 billion, and 0.875% on average daily net assets over $5 billion.
Accounting, Custody and Transfer Agent Fees
Citi Fund Services Ohio, Inc. (“Citi”) is the fund accounting agent for the Funds. For its services, the Trust pays Citi 0.03% on the first $1.75 billion of average net assets, 0.0175% on the average net assets over $1.75 billion and up to $5 billion, and 0.01% on average net assets in excess of $5 billion.
Brown Brothers Harriman (“BBH”) is the custodian of the Trust’s investments. For domestic custody services, the Trust pays BBH 0.0065% on the first $50 million of average net assets and 0.0050% on domestic assets above $50 million, plus certain transaction charges. For foreign custody services, the Trust pays BBH 0.03% on foreign assets plus certain transaction charges.
Boston Financial Data Services, Inc. (“BFDS”) is the Trust’s transfer agent. For these services, the Trust pays an account fee of $13.25 per open account, $7.00 per networked account, $1.80 per closed account, plus certain other transaction and cusip charges.
Transfer agent earnings credits are credits received for interest which results from overnight balances used by the transfer agent, BFDS, for clearing shareholder transactions. During the year ended September 30, 2008, the Funds received transfer agent earnings credits which are included on the Statement of Operations.
Administrative Services
The Trust has entered into an administrative services agreement with ICON pursuant to which ICON oversees the administration of the Trust’s business and affairs. This agreement provides for an annual fee of 0.05% on the Trust’s first $1.5 billion of average daily net assets, 0.045% on the next $1.5 billion of average daily net assets, 0.040% on the next $2 billion of average daily net assets and 0.030% on average daily net assets over $5 billion. During the year ended September 30, 2008, the Funds’ payment for administrative services to ICON is included on the Statement of Operations. The administrative services agreement provides that ICON will not be liable for any error of judgment, mistake of law, or any loss suffered by the Trust in connection with matters to which the administrative services agreement relates, except for a loss resulting from willful misfeasance, bad faith or negligence by ICON in the performance of its duties.
88 Notes to Financial Statements
ICON has entered into a sub-administration agreement with Citi pursuant to which Citi assists ICON with the administration and business affairs of the Trust. For its services, ICON pays Citi at an annual rate of 0.025% on the first $1.75 billion of Trust assets and 0.015% on assets above $1.75 billion.
Related Parties
Certain Officers and Directors of ICON are also Officers and Trustees of the Funds; however, such Officers and Trustees (with the exception of the Chief Compliance Officer, “CCO”) receive no compensation from the Funds. The CCO’s salary is paid 90% by the Funds and 10% by the Adviser. For the year ended September 30, 2008, the total related amounts paid by the Trust under this arrangement are included in Other Expenses on the Statements of Operations. Subsequent to September 30, 2008, the CCO’s salary will be paid 100% by the Funds.
4. Line of Credit
The Funds have entered into Lines of Credit agreements with BBH. The maximum borrowing is limited to the lesser of $50 million or 25% of the net asset value in the Fund subject to a maximum borrowing limit by the Trust of $150 million. Effective January 30, 2008, interest on domestic borrowings is charged at LIBOR plus 1.50%, which was 5.43% at September 30, 2008. Prior to January 30, 2008, interest on domestic borrowings was charged at LIBOR plus 2.00%. The average interest rate charged for the year ended September 30, 2008, was 5.19%.
| | | | | |
| | | Average Borrowing
| |
| Fund | | (10/1/07-9/30/08) | |
| | |
| ICON Consumer Discretionary Fund | | $ | 2,761,682 | |
| ICON Energy Fund | | | 5,354,149 | |
| ICON Financial Fund | | | 4,483,371 | |
| ICON Healthcare Fund | | | 6,991,500 | |
| ICON Industrials Fund | | | 20,009,802 | |
| ICON Information Technology Fund | | | 2,341,163 | |
| ICON Leisure and Consumer Staples Fund | | | 108,902 | |
| ICON Materials Fund | | | 1,042,309 | |
| ICON Telecommunication & Utilities Fund | | | 7,300,611 | |
Average borrowing is calculated using only the days there was a borrowing. It is not an annualized number.
Notes to Financial Statements 89
Notes to Financial Statements (continued)
5. Federal Income Tax
Income and capital gain distributions are determined in accordance with income tax regulations that may differ from accounting principles that are generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferrals of wash losses, foreign currency transactions, net investment losses, and capital loss carryovers.
The tax components of capital shown in the following tables represent losses or deductions the Funds may be able to offset against income and gains recognized in future years and post October loss deferrals. The accumulated losses noted in the following tables represent net capital loss carryforwards as of September 30, 2008 that may be available to offset future realized capital gains and thereby reduce future taxable income distributions. During the year ended September 30, 2008 no capital loss carryforwards were used.
For the year ended September 30, 2008 the following Funds had capital loss carryforwards:
| | | | | | | | | |
| Fund | | Amounts | | | Expires | |
| ICON Financial Fund | | $ | 1,846,560 | | | | 2016 | |
| ICON Industrials Fund | | | 694,762 | | | | 2016 | |
| ICON Information Technology Fund | | | 29,035,041 | | | | 2011 | |
| ICON Information Technology Fund | | | 21,080 | | | | 2016 | |
For the year ended September 30, 2008 the Funds will elect to defer post October losses:
| | | | | | | | | |
| | | Post
| | |
| | | October
| | |
| Fund | | Losses | | |
| ICON Consumer Discretionary Fund | | $ | 7,031,175 | | | | | |
| ICON Financial Fund | | | 56,268,862 | | | | | |
| ICON Industrials Fund | | | 2,961,025 | | | | | |
| ICON Information Technology Fund | | | 7,378,932 | | | | | |
| ICON Leisure and Consumer Staples Fund | | | 2,358,645 | | | | | |
| ICON Materials Fund | | | 10,502,156 | | | | | |
| ICON Telecommunications & Utilities Fund | | | 7,370,008 | | | | | |
90 Notes to Financial Statements
The tax characteristics of dividends and distributions paid to shareholders during the fiscal year ended September 30, 2008, were as follows:
| | | | | | | | | | | | | | | | | |
| | | Distributions Paid From | | | | | | Total
| |
| | | Ordinary
| | | Net Long-
| | | Total Taxable
| | | Distributions
| |
| Fund | | Income | | | Term Gains | | | Distributions | | | Paid | |
| ICON Consumer Discretionary Fund | | $ | - | | | $ | 5,715,433 | | | $ | 5,715,433 | | | $ | 5,715,433 | |
| ICON Energy Fund | | | 6,480,116 | | | | 173,224,205 | | | | 179,704,321 | | | | 179,704,321 | |
| ICON Financial Fund | | | 6,509,842 | | | | 14,570,782 | | | | 21,080,624 | | | | 21,080,624 | |
| ICON Healthcare Fund | | | - | | | | 35,443,355 | | | | 35,443,355 | | | | 35,443,355 | |
| ICON Industrials Fund | | | 1,529,774 | | | | 4,273,644 | | | | 5,803,419 | | | | 5,803,418 | |
| ICON Information Technology Fund | | | - | | | | - | | | | - | | | | - | |
| ICON Leisure and Consumer Staples Fund | | | 6,697,320 | | | | 202,985 | | | | 6,900,305 | | | | 6,900,305 | |
| ICON Materials Fund | | | 17,631,775 | | | | 3,178,997 | | | | 20,810,772 | | | | 20,810,772 | |
| ICON Telecommunication & Utilities Fund | | | 16,542,405 | | | | 60,547 | | | | 16,602,952 | | | | 16,602,952 | |
The tax characteristics of dividends and distributions paid to shareholders during the fiscal year ended September 30, 2007, were as follows:
| | | | | | | | | | | | | | | | | |
| | | Distributions Paid From | | | | | | Total
| |
| | | Ordinary
| | | Net Long-
| | | Total Taxable
| | | Distributions
| |
| Fund | | Income | | | Term Gains | | | Distributions | | | Paid | |
| ICON Energy Fund | | $ | 4,022,978 | | | $ | 67,861,928 | | | $ | 71,884,906 | | | $ | 71,884,906 | |
| ICON Financial Fund | | | 6,713,996 | | | | 12,487,770 | | | | 19,201,766 | | | | 19,201,766 | |
| ICON Healthcare Fund | | | - | | | | 43,433,266 | | | | 43,433,266 | | | | 43,433,266 | |
| ICON Industrials Fund | | | 10,971,411 | | | | 19,619,985 | | | | 30,591,396 | | | | 30,591,396 | |
| ICON Leisure and Consumer Staples Fund | | | 219,627 | | | | 38,584 | | | | 258,211 | | | | 258,211 | |
| ICON Materials Fund | | | 7,056,703 | | | | 6,032,690 | | | | 13,089,393 | | | | 13,089,393 | |
| ICON Telecommunication & Utilities Fund | | | 3,703,321 | | | | 5,792,620 | | | | 9,495,941 | | | | 9,495,941 | |
Notes to Financial Statements 91
Notes to Financial Statements (continued)
As of September 30, 2008, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Total
| |
| | | Undistributed
| | | Undistributed
| | | | | | Accumulated
| | | Unrealized
| | | Accumulated
| |
| | | Ordinary
| | | Net Long-
| | | Accumulated
| | | Capital and
| | | Appreciation
| | | Earnings
| |
| Fund | | Income | | | Term Gains | | | Earnings | | | Other Losses | | | (Depreciation) | | | (Deficit) | |
| | |
| ICON Consumer Discretionary Fund | | $ | - | | | $ | - | | | $ | - | | | $ | (7,031,175 | ) | | $ | 38,102 | | | $ | (6,993,073 | ) |
| ICON Energy Fund | | | 9,296,030 | | | | 126,905,412 | | | | 136,201,442 | | | | - | | | | (31,485,943 | ) | | | 104,715,499 | |
| ICON Financial Fund | | | 3,548,622 | | | | - | | | | 3,548,622 | | | | (58,115,422 | ) | | | (235,482 | ) | | | (54,802,282 | ) |
| ICON Healthcare Fund | | | - | | | | - | | | | - | | | | - | | | | 4,001,931 | | | | 4,001,931 | |
| ICON Industrials Fund | | | 82,927 | | | | - | | | | 82,927 | | | | (3,655,787 | ) | | | (12,608,621 | ) | | | (16,181,481 | ) |
| ICON Information Technology Fund | | | - | | | | - | | | | - | | | | (36,435,053 | ) | | | (4,946,767 | ) | | | (41,381,820 | ) |
| ICON Leisure and Consumer Staples Fund | | | 9,922 | | | | - | | | | 9,922 | | | | (2,358,645 | ) | | | (2,374,529 | ) | | | (4,723,252 | ) |
| ICON Materials Fund | | | 80,811 | | | | - | | | | 80,811 | | | | (10,502,156 | ) | | | (7,161,891 | ) | | | (17,583,236 | ) |
| ICON Telecommunication & Utilities Fund | | | 1,597,627 | | | | - | | | | 1,597,627 | | | | (7,370,008 | ) | | | (2,539,669 | ) | | | (8,312,050 | ) |
As of September 30, 2008, book cost for financial reporting purposes is substantially the same for federal income tax purposes and differs from market value by net unrealized appreciation/(depreciation) of securities as follows:
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Net
| |
| | | | | | Unrealized
| | | Unrealized
| | | Appreciation/
| |
| Fund | | Cost | | | Appreciation | | | (Depreciation) | | | (Depreciation) | |
| | |
| ICON Consumer Discretionary Fund | | $ | 88,237,091 | | | $ | 3,824,556 | | | $ | (3,786,454 | ) | | $ | 38,102 | |
| ICON Energy Fund | | | 583,189,264 | | | | 14,848,524 | | | | (46,334,465 | ) | | | (31,485,941 | ) |
| ICON Financial Fund | | | 126,432,008 | | | | 3,820,308 | | | | (4,055,789 | ) | | | (235,481 | ) |
| ICON Healthcare Fund | | | 188,995,691 | | | | 14,557,375 | | | | (10,555,444 | ) | | | 4,001,931 | |
| ICON Industrials Fund | | | 173,884,187 | | | | 19,740 | | | | (12,628,361 | ) | | | (12,608,621 | ) |
| ICON Information Technology Fund | | | 232,652,492 | | | | 9,448,139 | | | | (14,394,906 | ) | | | (4,946,767 | ) |
| ICON Leisure and Consumer Staples Fund | | | 55,775,205 | | | | 1,356,853 | | | | (3,731,382 | ) | | | (2,374,529 | ) |
| ICON Materials Fund | | | 144,459,593 | | | | 9,165,607 | | | | (16,327,498 | ) | | | (7,161,891 | ) |
| ICON | | | | | | | | | | | | | | | | |
| Telecommunication & Utilities Fund | | | 32,607,821 | | | | 1,502,664 | | | | (4,042,333 | ) | | | (2,539,669 | ) |
92 Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of the ICON Sector Funds:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of ICON Consumer Discretionary Fund, ICON Energy Fund, ICON Financial Fund, ICON Healthcare Fund, ICON Industrials Fund, ICON Information Technology Fund, ICON Leisure and Consumer Staples Fund, ICON Materials Fund, and ICON Telecommunication & Utilities Fund (nine of the portfolios constituting ICON Funds, hereafter referred to as the “Funds”) at September 30, 2008, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
Denver, Colorado
November 19, 2008
Report of Accounting Firm 93
Six Month Hypothetical Expense Example
September 30, 2008 (unaudited)
Example
As a shareholder of a Fund you may pay two types of fees: transaction fees and fund-related fees. Certain funds charge transaction fees, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees. Funds also incur various ongoing expenses, including management fees, distribution and/or service fees, and other fund expenses, which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars) of investing in the various ICON Funds and to compare these costs with the ongoing costs of investing in other mutual funds. This Example is based on an investment of $1,000 invested at the beginning of the period and held for the six-month period (4/1/08-9/30/08).
Actual Expenses
The first line in the table for each Fund provides information about actual account values and actual expenses. The Example includes, but is not limited to, management fees, fund accounting, custody and transfer agent fees. However, the Example does not include client specific fees, such as the $10 fee charged to IRA accounts, or the $15 fee charged for wire redemptions. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for each Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the table for each Fund provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees that may be charged by other funds. Therefore, this information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | | Ending
| | | | | | | |
| | | Account
| | | Account
| | | Expenses Paid
| | | Annualized
| |
| | | Value
| | | Value
| | | During Period
| | | Expense Ratio
| |
| | | 4/1/08 | | | 9/30/08 | | | 4/1/08-9/30/08* | | | 4/1/08-9/30/08 | |
| | |
| |
ICON Consumer Discretionary Fund | | | | | | | | | | | | | | | | |
| Actual Expenses | | $ | 1,000.00 | | | $ | 924.20 | | | $ | 6.06 | | | | 1.26% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.70 | | | | 6.36 | | | | | |
ICON Energy Fund | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 905.60 | | | | 5.57 | | | | 1.17% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,019.15 | | | | 5.91 | | | | | |
ICON Financial Fund | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 839.90 | | | | 5.75 | | | | 1.25% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.75 | | | | 6.31 | | | | | |
ICON Healthcare Fund | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 1,003.70 | | | | 6.61 | | | | 1.32% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.40 | | | | 6.66 | | | | | |
ICON Industrials Fund | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 871.80 | | | | 5.57 | | | | 1.19% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,019.05 | | | | 6.01 | | | | | |
ICON Information Technology Fund | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 866.60 | | | | 5.46 | | | | 1.17% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,019.15 | | | | 5.91 | | | | | |
ICON Leisure and Consumer Staples Fund | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 898.80 | | | | 6.31 | | | | 1.33% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.35 | | | | 6.71 | | | | | |
ICON Materials Fund | | | | | | | | | | | | | | | | |
| Actual Expenses | | | 1,000.00 | | | | 799.50 | | | | 5.53 | | | | 1.23% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.85 | | | | 6.21 | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | | Ending
| | | | | | | |
| | | Account
| | | Account
| | | Expenses Paid
| | | Annualized
| |
| | | Value
| | | Value
| | | During Period
| | | Expense Ratio
| |
| | | 4/1/08 | | | 9/30/08 | | | 4/1/08-9/30/08* | | | 4/1/08-9/30/08 | |
| | |
| |
ICON Telecommunication & Utilities Fund | | | | | | | | | | | | | | | | |
| Actual Expenses | | $ | 1,000.00 | | | $ | 836.40 | | | $ | 6.24 | | | | 1.36% | |
Hypothetical Example
(5% return before expenses) | | | 1,000.00 | | | | 1,018.20 | | | | 6.86 | | | | | |
| |
| * | Expenses are equal to the Fund’s six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 183/366 to reflect the one-half year period. |
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees (“Board”) consists of five Trustees who oversee the 17 ICON Funds (the “Funds”). The Board is responsible for general oversight of the Funds’ business and for assuring that the Funds are managed in the best interest of the Funds’ shareholders. The Trustees, and their ages, and principal occupations are set forth below. The address of the Trustees is 5299 DTC Blvd., Suite 1200, Greenwood Village, CO 80111. Trustees have no official term of office and generally serve until they resign or are not re-elected.
Interested Trustee
Craig T. Callahan, 57, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as President (1998 to present) and served as the Chief Investment Officer (1991 to 2005) of ICON Advisers, Inc. (“ICON Advisers”), the Funds’ Investment Adviser. Dr. Callahan is also President (1998 to 2005); Director (1991 to present); and was previously Vice President (1991 to 1998) of ICON Distributors, Inc. (“IDI”), the Funds’ Distributor, and is President and Director of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan also serves as the President (1998 to present) of ICON Management & Research Corporation (“IM&R”), the parent company of ICON Advisers and IDI.
Independent Trustees
Glen F. Bergert, 58. Mr. Bergert has been a Trustee of the Funds since 1999. Mr. Bergert is President of Venture Capital Management LLC (1997 to present); General Partner of SOGNO Partners LP, a venture capital company (2001 to present); General Partner of Bergert Properties, LLP, a real estate holding company (1997 to present); and General Partner of Pyramid Real Estate Partnership, a real estate development company (1998 to present); General Partner of Chamois Partners, LP, a venture capital company (2004 to present); and was previously a General Partner with KPMG Peat Marwick, LLP (1979 to 1997). Mr. Bergert is also a Director of Herre Bros, Inc., a contracting company (1998 to present); Delta Dental of Pennsylvania, an insurance company (1998 to 2002 and 2003 to present); Delta Dental of California, an insurance company (2006 to present); and Delta Reinsurance Corporation (2000 to 2002 and 2003 to present).
John C. Pomeroy, Jr., 61. Mr. Pomeroy has been a Trustee of the Funds since November 2002. Mr. Pomeroy is Chief Investment Officer and Director of Investments, Pennsylvania State University (2001 to present) and was Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).
Gregory Kellam Scott, 60. Mr. Scott has been a Trustee of the Funds since November 2002. Mr. Scott currently is employed as Assistant to the President for Diversity and Community relations of Ivy Tech Community College (April 2008 to present). Prior to his current employment, he served as Executive Director of the Indiana Civil Rights Commission (2005 to 2008) and is a member of the U.S. State Department’s Advisory Committee on the African Judiciary (2006 to present). Mr. Scott was Senior Vice President - Law, General Counsel and Secretary of GenCorp, Inc., a multinational technology-based manufacturing company (2002 to 2004); Vice President and General Counsel of Kaiser-Hill Company, LLC, a nuclear clean-up and environmental remediation company (2000 to 2002). He served as a Justice on the Colorado Supreme Court (1993 to 2000). From 1980 until 1993, he was a member of the faculty of the University Of Denver College Of Law.
R. Michael Sentel, 60. Mr. Sentel has been a Trustee of the Funds since their inception. Mr. Sentel is a Senior Attorney with the U.S. Department of Education (1996 to present). Mr. Sentel also provides legal representation as a sole practitioner with an emphasis on corporate and transactional law. He served as general counsel to numerous public companies and served on the board of directors of one of these clients. Mr. Sentel began his legal career with the U.S. Securities and Exchange Commission’s Division of Enforcement and served as a Branch Chief (1980 to 1981). Later he served as the section chief for the Professional Liability Section of the Federal Deposit Insurance Corp. with responsibility for the Rocky Mountain Region (1991 to 1994).
The Officers of the Funds are:
Craig T. Callahan, 57. Dr. Callahan has been President of the Funds since their inception in 1996. Dr. Callahan also serves as ICON Advisers’ President (1998 to present) and served as the Chief Investment Officer (1991 to 2005). Dr. Callahan is also President (1998 to 2005), Director (1991 to present) and was previously Vice President (1991 to 1998) of IDI, and is President and Director of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan is also the President (1998 to present) of IM&R.
Erik L. Jonson, 58. Mr. Jonson has been a Vice President and Principal Financial Officer/Treasurer of the Funds since their inception in 1996. Mr. Jonson is also Chief Financial Officer (1996 to present) and Executive Vice President (2004 to present) and was previously Vice President (1998 to 2004) of ICON Advisers; Chief Financial Officer, Secretary and Director (1996 to present) of IM&R; and Executive Vice President (2004 to present) and Treasurer (2002 to present) and was previously Secretary/Treasurer, (1998 to 2002) and Vice President, (2002 to 2004) of IDI; and Executive Vice President and Treasurer of ICON Insurance Agency, Inc. (2004 to present).
Jessica Seidlitz, 30. Ms. Seidlitz serves as Assistant Treasurer of the Funds (2007 to present). She also serves as Mutual Fund Controller of ICON Advisers, Inc. (2005 to present). Previously, she was a Senior Associate/Associate at PricewaterhouseCoopers LLP (2001 to 2004).
Donald Salcito, 55. Mr. Salcito serves as Vice President and Secretary of the Funds since November 15, 2006. Mr. Salcito is also Executive Vice President and General Counsel (September 2005 to present) of ICON Advisers, Inc.; Director of ICON Management & Research (2005 to present); Executive Vice President, Secretary, General Counsel, for IDI (2005 to present); Chief Compliance Officer of IDI (2005 to 2007); Executive Vice President and Secretary of ICON Insurance Agency, Inc. (2005 to present). Previously he was a Partner in the law firm of Perkins Coie, LLP. (2000 to 2005).
Carrie M. Schoffman, 35. Ms. Schoffman served as Assistant Vice President and Chief Compliance Officer of the Funds (2004 to September 21, 2008). She serves as Vice President and Chief Compliance Officer of ICON Advisers, Inc. (2004 to present) and Chief Operating Officer (2008 to present). Previously she was a staff accountant with the U.S. Securities and Exchange Commission (2003 to 2004). She also was a Manager (2001 to 2003) and Senior Associate/Associate (1996 to 2001) at PricewaterhouseCoopers LLP.
Brian Harding, 29. Mr. Harding serves as Chief Compliance Officer of the Funds (September 22, 2008 to present). Previously he was a Manager (2007 to 2008) and Senior Associate/Associate (2001 to 2007) at PricewaterhouseCoopers LLP.
Stephen Abrams, 45. Mr. Abrams serves as Anti-Money Laundering Officer of the Funds (2005 to present). Mr. Abrams is also Vice President and Associate General Counsel of ICON Advisers, Inc. (2005 to present). Mr. Abrams also serves as the Chief Compliance Officer of IDI (2007 to present). Previously he was a Partner (2004 to 2005) and Associate (2000 to 2004) at Perkins Coie, LLP.
Other Information (unaudited)
Renewal of Investment Advisory Agreements
In determining to renew the investment advisory agreements between the ICON Funds (the “Trust”) and ICON Advisers, Inc. (“ICON” or the “Adviser”) the Board requested, was provided with and reviewed data with respect to ICON, its personnel, and the services to be provided to each Fund by ICON under the Trust’s Investment Advisory Agreement dated October 9, 1996, as amended (related to the Sector, International and Core Equity Funds) and under the Trust’s Investment Advisory Agreement dated July 9, 2002 and effective October 1, 2002, as amended (related to the U.S. Diversified Funds - Bond, Income Opportunity, Equity Income and Long/Short Funds) (collectively, the “Advisory Agreements”). The data included information concerning advisory, distribution and administrative services provided to the Funds by ICON and its related companies; information concerning other businesses of those companies; comparative data related to other funds versus the Sector Funds; and comparative data obtained from Lipper Analytical Services related to Fund performance and Fund expenses.
On August 11, 2008, the Board of Trustees, including the four Trustees that are not “interested persons” of the Trust (the “Independent Trustees”), approved continuation of the Advisory Agreements with the Adviser for each Fund for an additional one-year term commencing October 1, 2008.
The Independent Trustees were represented by independent legal counsel throughout the process. Prior to acting on the matter, the Independent Trustees met separately as a group in private sessions with their independent legal counsel to review and discuss the foregoing information. Based on these discussions, independent legal counsel and/or the Lead Independent Trustee also contacted management to request additional information and to discuss responses to questions raised during the process. In addition, the Independent Trustees received materials from their independent legal counsel discussing the legal standards applicable to their consideration of the agreements.
In considering the nature, extent and quality of the services provided by the Adviser, the Board reviewed information relating to ICON’s operations and personnel. Among other things, the Adviser provided biographical information on its professional staff and descriptions of its organizational and management structure. In the course of their deliberations the Board evaluated, among other things, information relating to the investment philosophy, strategies and techniques used in managing each Fund, the qualifications and experience of ICON’s investment personnel, ICON’s compliance programs, ICON’s brokerage practices, including the extent to
which the Adviser obtains research through “soft dollar” arrangements with the Funds’ brokerage, and the financial and non-financial resources available to provide services required under the Advisory Agreement.
The Board of Trustees noted that the market value of domestic and international securities have dropped dramatically during the past year as a result of numerous crises in the financial, credit and commodities markets. The Board also noted that the performance of essentially all Funds has been negative, declining along with the markets in general. In light of such, the Board considered ICON’s investment methodology and whether the ICON’s methodology or system is appropriate. It was noted that ICON’s investment approach is not designed to fit into a box defined by “value,” “growth,” and “large, mid or small cap” stock categories. On the other hand, it was noted that the approach is most similar to “value investing.” In this regard it was noted that performance of value investing in general has been negative and that ICON’s performance is in line with the group. Performance in the current period was compared to prior periods where the Funds confronted significant market declines and volatility - including an assessment of financial, geopolitical and psychological reasons for the market behavior; and it was compared to periods when those factors were not prevalent. After consideration of this information the Board concluded that ICON’s investment methodology or system is appropriate for the Funds in the long-term. In light of such, the Board asked and ICON confirmed that it does not change its system in response to current issues and that it will follow its stated investment style, using a disciplined approach to managing the Funds’ portfolios.
In connection with reviewing data bearing upon the nature, quality, and extent of services furnished by ICON to each Fund, the Board assessed data concerning ICON’s staffing, systems and facilities. The Board also assessed ICON’s non-Trust business to see if there are any initiatives that would dilute service to the Trust. It was noted:
A. That the breadth and the quality of investment advisory and other services being provided to each Fund is satisfactory, as evidenced in part by the performance record of each Fund compared with the performance records of a peer group of comparable funds and markets in general;
B. That ICON has made significant expenditures in the past year and in prior years to ensure that it has the sophisticated systems and the highly trained personnel necessary for it to be able to continue to provide quality service to the Funds’ shareholders, including the dedication of substantial resources to ICON’s investment and trading departments;
C. That the Board is satisfied with the research, portfolio management, and trading services, among others, being provided by ICON to the Funds, and is charging fair, reasonable, and competitive fees; and
D. The risks assumed by ICON in providing investment advisory services to each Fund including the capital commitments which have been made in the past and which continue to be made by ICON to ensure the continuation of the highest quality of service to the Trust is made with the recognition that the Trust’s advisory relationship with ICON can be terminated at any time and must be renewed on an annual basis.
In considering the reasonableness of the fee payable to the Adviser for managing each Fund, the Board reviewed, among other things, financial statements of the Adviser and an analysis of the profitability to the Adviser and its affiliates of their relationship with each Fund over various time periods, which analysis identified all revenues and other benefits received by the Adviser and its affiliates from managing each Fund, the costs associated with providing such services and the resulting profitability to the Adviser and its affiliates.
The Board considered the current and anticipated asset levels of each Fund and the willingness of the Adviser to waive fees and pay expenses of the Funds from time to time to limit the total expenses of the Funds. It was noted that most of the Funds have had net redemptions and that aggregate assets covered by the Advisory Agreements have declined significantly. ICON’s ability to provide the services called for under the Advisory Agreements was assessed in light of current and projected asset levels. Fund expenses and expense ratios were also assessed in light of current and projected asset levels. The Board concluded that the Adviser has the resources necessary to provide the services called for under the Advisory Agreements; that profitability to the Adviser and its affiliates from their relationship with the Funds is not excessive; and that the Adviser is not realizing material benefits from economies of scale that would warrant adjustments to the fees for any Fund at this time. The Board of Trustees concluded that, in light of the nature, extent and quality of the services provided by the Adviser and the levels of profitability associated with providing these services, the fees charged by the Adviser under the Advisory Agreements to each Fund are reasonable.
In connection with assessing data bearing the fairness of fee arrangements, the Board used data from Lipper Analytical Services concerning funds of
similar size and funds of larger size, as well as data concerning ICON’s other clients and noted:
A. The advisory fee structures of the Funds were considered in comparison with advisory fees and expense ratios of other similarly managed funds as set forth in the comparative data;
B. That contractual advisory fees of the Sector Funds were higher than fees for similar funds; but that the Sector Funds’ expense ratios were competitive and in most instances lower than those of similarly managed Funds;
C. That contractual advisory fees for the International Funds were above the average fees for similar funds; and that the Funds’ expense ratios were competitive in light of their size;
D. That ICON has contractually agreed to impose expense limitations on certain Funds at a cost to ICON;
E. That the advisory and other fees payable by the Funds to ICON are essentially fees which would be similar to those which would have resulted solely from “arm’s-length” bargaining, and may well be lower than fees arrived at solely from such arm’s-length negotiation;
F. That, the fees paid to ICON for managing other institutional accounts (such as pension plans) are not lower than the fees paid by similarly-managed funds; and to the extent such fees of those accounts are lower, the reasons are that such accounts are less costly for ICON to manage; and
G. That ICON has contractually committed to breakpoints in its fees so that economies of scale could be realized as a Fund grows in assets for the benefit of Fund shareholders.
In connection with the direct and indirect benefits to ICON from serving as the Funds’ adviser, the Board discussed and noted:
A. That ICON benefits from serving directly or through affiliates as the principal underwriter and administrative agent for the Funds; that services provided by ICON and its affiliates to the Funds are satisfactory, and that profits derived from providing the services are competitive and reasonable; and
B. That ICON receives research assistance from the use of soft dollars generated from Fund portfolio transactions; that such research assists ICON in providing quality to which it provides advisory services; and that the Board concluded that the arrangements are consistent with Fund brokerage practices and benefit the Funds and their shareholders.
Based on these considerations, among others, the Board, including all of the Independent Trustees, concluded that the continuation of the Advisory Agreements was in the best interests of each Fund and its shareholders, the services to be performed under the agreements were services required for the operation of the Funds, ICON had provided satisfactory advisory services to the Funds in the past, and the fees for the advisory services which ICON would perform and other benefits from the relationship with the Trust and consistent with fees paid by similar funds, are reasonable in light of the comparative data, and would be within the range of what would have been negotiated at arm’s length in light of the circumstances.
Supplemental Tax Information
For corporate shareholders, the following percentage of the total ordinary income dividends paid during the fiscal year ended September 30, 2008 qualifies for the corporate dividends received deduction for the following Funds:
| | | | | | |
| | | Dividends
| |
| | | Received
| |
| Fund | | Deduction | |
| | |
| |
| ICON Energy Fund | | | 66 | .99 | % |
| ICON Financial Fund | | | 52 | .03 | % |
| ICON Industrials Fund | | | 35 | .58 | % |
| ICON Leisure and Consumer Staples Fund | | | 20 | .96 | % |
| ICON Materials Fund | | | 17 | .47 | % |
| ICON Telecommunication & Utilities Fund | | | 45 | .81 | % |
For the fiscal year ended September 30, 2008, the following Funds paid qualified dividend income:
| | | | | |
| Fund | | Amount | |
| | |
| |
| ICON Energy Fund | | | 65.03 | % |
| ICON Financial Fund | | | 67.74 | % |
| ICON Industrials Fund | | | 48.34 | % |
| ICON Leisure and Consumer Staples Fund | | | 22.46 | % |
| ICON Materials Fund | | | 20.59 | % |
| ICON Telecommunication & Utilities Fund | | | 45.64 | % |
The Funds designate the following amounts as long-term capital gain distributions qualifying for the maximum 15% income tax rate for individuals:
| | | | | |
| Fund | | Amount | |
| | |
| |
| ICON Consumer Discretionary Fund | | $ | 6,366,023 | |
| ICON Energy Fund | | | 208,365,094 | |
| ICON Financial Fund | | | 14,570,782 | |
| ICON Healthcare Fund | | | 37,424,119 | |
| ICON Industrials Fund | | | 4,273,696 | |
| ICON Leisure and Consumer Staples Fund | | | 228,358 | |
| ICON Materials Fund | | | 3,216,069 | |
| ICON Telecommunication & Utilities Fund | | | 66,771 | |
Portfolio Holdings
A list of each ICON Fund’s Top 10 holdings is available at www.iconfunds.com on or about 15 days following each month end. Each ICON Fund also files a complete schedule of portfolio holdings for the first and third quarters of its fiscal year with the SEC on Form N-Q. The ICON Funds’ Forms N-Q are available at www.sec.gov or may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Proxy Voting
A summarized description of the policies and procedures the ICON Funds use to vote proxies is available free of charge at www.iconfunds.com or by calling 1-800-764-0442.
Information about how the ICON Funds voted proxies related to each Fund’s portfolio securities during the 12-month period ended June 30 is available free of charge at www.iconfunds.com or on the SEC’s website at www.sec.gov.
For More Information
This report is for the general information of the Funds’ shareholders and is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. You may obtain a copy of the prospectus, which contains information about the investment objectives, risks, charges, expenses, and share classes of each ICON Fund, by visiting www.iconfunds.com or by calling 1-800-764-0442. Please read the prospectus carefully before investing.
ICON Distributors, Inc., Distributor
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| | | |
| |
| For more information about the ICON Funds, contact us: |
| | | |
| By Telephone | | 1-800-764-0442 |
| | | |
| By Mail | | ICON Funds
P.O. Box 55452
Boston, MA 02205-8165 |
| | | |
| In Person | | ICON Funds
5299 DTC Boulevard, 12th Floor
Greenwood Village, CO 80111 |
| | | |
| On the Internet | | www.iconfunds.com |
| | | |
| By E-Mail | | info@iconadvisers.com |
Item 2. Code of Ethics.
During the period covered by the report, with respect to the registrant’s code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions; there have been no amendments to, nor any waivers granted from, a provision that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item 2. This code of ethics is included as an Exhibit.
Item 3. Audit Committee Financial Expert.
3(a)(1) The registrant’s board of directors has determined that the registrant has at least one audit committee financial expert serving on its audit committee.
3(a)(2) The audit committee financial experts are Glen F Bergert, Gregory Kellam Scott and R. Michael Sentel, who are “independent” for purposes of this Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Fiscal year ended 9/30/08
| | | | | | | | | |
| | | Registrant | | Covered Entities 1 |
| (a) Audit Fees 2 | | $ | 365,650 | | | | N/A | |
| | | | | | | | | |
| (b) Non-Audit Fees | | | | | | | | |
| | | | | | | | | |
| (c) Tax Fees 3 | | $ | 113,650 | | | $ | 45,000 | |
| All Other Fees 4 | | | N/A | | | | N/A | |
| (d) Total Non-Audit Fees | | $ | 113,650 | | | $ | 45,000 | |
Fiscal year ended 9/30/07
| | | | | | | | | |
| | | Registrant | | Covered Entities 1 |
| (a) Audit Fees 2 | | $ | 324,500 | | | | N/A | |
| | | | | | | | | |
| (b) Non-Audit Fees | | | | | | | | |
| | | | | | | | | |
| (c) Tax Fees 3 | | $ | 93,000 | | | $ | 11,510 | |
| All Other Fees 4 | | | | | | $ | 60,000 | |
| (d) Total Non-Audit Fees | | $ | 93,000 | | | $ | 71,510 | |
| | |
| 1. | | Covered Entities include ICON Advisers, Inc. (“ICON Advisers”), investment adviser and administrator to the Registrant, as well as ICON Advisers’ affiliated entities. |
| |
| 2. | | “Audit Fees” represents fees for performing an audit of the Registrant’s annual financial statements or services that are normally provided by the independent accountants in connection with statuatory and regulatory filings. |
| |
| 3. | | “Tax Fees” represent fees for tax return preparation, excise distribution calculations, quarterly tax compliance reviews, and tax planning and tax advice services provided in connection with the preparation and review of the Registrant’s tax returns. |
| |
| 4. | | “All Other Fees” paid by the Registrant in fiscal year 2007 were related to multi-class issues. |
(e) (1) The Audit Committee of the Registrant’s Board of Trustees (“Board”) is required to review and pre-approve all services to be provided by the independent accountants to the Registrant and Covered Entities to determine whether the services performed by the independent accountants impair their independence for the Registrant. The Audit Committee has delegated preapproval authority to the Chairman of the Audit Committee, subject to review and ratification by the full Audit Committee.
(e) (2) All of the principal accountants’ hours spent on auditing the Registrant’s financial statements were attributed to work performed by full-time permanent employees of the independent accountants. 100% of the non-audit services provided by the independent accountants to either the Registrant or the Covered Entities were pre-approved by the Audit Committee.
(f) Not applicable.
(g) The Audit Committee of the Registrant’s Board has considered whether the provision of services other than audit services performed by the independent accountants to the Registrant and Covered Entities is compatible with maintaining the independent accountants’ independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b) There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1) The Code of ethics that is the subject of the disclosure required by item 2 is furnished herewith.
(a)(2) Certifications pursuant to Rule 30a-2(a) are attached hereto.
(a)(3)
Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) are furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) ICON Funds
| | | | | |
| By (Signature and Title)* | | /s/ Craig T. Callahan | | |
| | | Craig T. Callahan, President and Chief Executive Officer (Principal Executive Officer) | | |
Date December 5, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | |
| By (Signature and Title)* | | /s/ Craig T. Callahan | | |
| | | Craig T. Callahan, President and Chief Executive Officer (Principal Executive Officer) | | |
Date December 5, 2008
| | | | | |
| By (Signature and Title)* | | /s/ Erik L. Jonson | | |
| | | Erik L. Jonson, Vice President, Chief Financial Officer and Treasurer | | |
| | | (Principal Financial Officer and Principal Accounting Officer) | | |
Date December 5, 2008
| | |
| * | | Print the name and title of each signing officer under his or her signature. |
