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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
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)
(Name and address of agent for service)
Registrant’s telephone number, including area code: 303-790-1600
Date of fiscal year end: September 30, 2007
Date of reporting period: September 30, 2007
Item 1. Reports to Stockholders.
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2007 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
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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, tax return of capital, 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.iconadvisers.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, 2007, 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, 2007 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 tend to 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,
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there is 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 Annual 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
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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 contains this and other information about the Funds and is available by visiting www.iconadvisers.com or calling 1-800-764-0442. Please read the prospectus 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.
• | 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. |
• | 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. |
• | 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.
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Dear ICON Shareholder:
We realize you are faced with many mutual fund choices as you construct your financial plan, and we appreciate your continued commitment to one or more of the ICON Diversified Funds. To those shareholders who are receiving their first ICON Funds Annual Report, we welcome you.
Investing lore is replete with sayings that communicate the wisdom that comes only from long-term experience. During the past five years, I have been reminded of the expression, “Wall Street climbs a wall of worry.” As the saying goes, market advances need to climb the proverbial “wall of worry” in order to keep going higher.
Many investors believe they have plenty to worry about: the sub-prime mortgage crisis, interest rates, oil prices, consumer spending, and inflation, not to mention the anxieties of terrorism, the Iraq war, environmental issues, and the weakness of the dollar. Amid these concerns, investors are inundated with news and theories about the stock market, leading to confusion, fear, and poor investment decisions.
Second-guessing the Federal Reserve (the Fed) seems to be a popular activity lately for many investors. Some argue the Fed waited too long to ease. Some argue the Fed should not be easing at all. Others believe the Fed should ease monetary policy even more.
We believe the debates regarding the economy and the stock market are a distraction for investment purposes. At ICON, we do not waste energy trying to predict what the Fed will do. Fed economists have direct access to economic statistics and banking activity. They are in the best position to make decisions regarding interest rates.
Debate also centers on the economy as people guess whether there will be a recession. They focus particular attention on the housing market and argue over when it might rebound. Again, this debate is irrelevant to the ICON system, as we avoid conjecture about the economy and housing market when making investment decisions.
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A Strong Equity Market
Despite worrisome headlines and gloomy expectations, it may be surprising to know how well the equity markets have performed over the last five years. Below are cumulative and annualized rates of return for a few popular indexes for the five-year period ended September 30, 2007.
Index Returns, 9/30/02 - 9/30/07
Index | Cumulative Return | Annualized Return | ||||||
Dow Jones Industrial Average | 105.03% | 15.44% | ||||||
NASDAQ Composite Index | 138.06% | 18.94% | ||||||
S&P 500 Index | 105.13% | 15.45% | ||||||
S&P MidCap 400 Index | 130.45% | 18.17% | ||||||
S&P SmallCap 600 Index | 135.93% | 18.73% |
The unmanaged Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks, primarily industrials. The unmanaged NASDAQ Composite (“NASDAQ”) Index is a broad-based capitalization-weighted index of all NASDAQ National Market and Small-Cap stocks. The unmanaged Standard & Poor’s (S&P) 500 Index is a market value-weighted index of large-cap common stocks considered representative of the broad market. The unmanaged S&P SmallCap 600 Index is an unmanaged index of 600 domestic stocks chosen for their market capitalization, liquidity, financial viability, and sector representation. The unmanaged S&P MidCap 400 Index is a widely recognized unmanaged mid-cap index of 400 domestic stocks chosen for their market capitalization, liquidity, and industry group representations. Total returns for the unmanaged indexes include the reinvestment of dividends and capital gain distributions, except as noted, but do not reflect the costs of managing a mutual fund. The Funds’ composition may differ significantly from the indexes. Individuals cannot invest directly in an index.
Sources: FactSet Research Systems, Bloomberg
We think these are impressive rates of returns and are above-average by historic standards. A 100% cumulative return means the investment has doubled during the period. Yet analysts, observers, and investors have doubted the strength of this market. But, as the adage says, as they worried, the market kept climbing.
The past five years are significant to ICON because we opened four new funds in September 2002. ICON Long/Short, ICON Equity Income, ICON Income Opportunity, and ICON Bond Funds recently reached their five-year performance track records. Additionally, the ICON Core Equity Fund has seven years of performance as of mid-October, and most of the ICON Sector and International Funds now boast 10-year track records.
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Guided by Valuation
As always, our valuation readings have been our guide. According to our methodology, stocks have, on average, been priced below our estimate of intrinsic value over the course of the fiscal year. Our valuations dictate being invested.
While investors worry about current events, they have been giving us stocks at bargain prices. In our view, the impressive rates of return seen in market indexes are simply the result of prices trying to catch up with intrinsic value.
At ICON, we invest in industries that our methodology identifies as underpriced. Our quantitative process keeps us on track when many other investors are doubtful and worried. We continue to uncover companies we think are healthy and well-managed. These companies seem to be succeeding even amidst investor fear and worry.
Our discipline directed us to stay invested during the fiscal year, allowing the ICON Funds to take advantage of this rising market. In our regular communications, we have been steady in our message that it has been best to be invested in underpriced stocks and ride through short-term setbacks. You should be commended for your resolve to stick with the ICON system, and we believe you should be proud if you have participated in the advance.
In closing, we are grateful for the privilege of playing a role in your investment portfolio. In addition to reading this report on your Funds and communicating with your financial adviser, we invite you to visit our website at www.iconadvisers.com for current market updates, up-to-date Fund performance, and other information about your account.
Yours truly,
![-s- Craig T. Callahan](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913callahct.gif)
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
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Class I IOBIX
Class C IOBCX
Class Z IOBZX
Class C IOBCX
Class Z IOBZX
Q. | How did the Fund perform relative to its benchmark? |
A. | For the Fund’s fiscal year ended September 30, 2007, the Lehman Brothers U.S. Universal Index gained 5.31%, outperforming the ICON Bond Fund, which returned 4.80% for Class I shares, 4.27% for Class C shares, and 5.02% for Class Z shares over the same period. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
Q. | What primary factors were behind the Fund’s relative performance? |
A. | Bond yields, credit spreads, and the yield curve itself experienced wide swings over the 12-month period. |
Yields on 10-year Treasuries, which started off the fiscal year trading around 4.6%, illustrate the fluctuation during the year. With a federal funds rate of 5.25%, the bond market was expecting several rate cuts. As the economy held its ground but inflation continued to creep higher, some investors believed the likelihood and timing of a rate cut seemed distant. The yield on 10-year Treasuries rose to 5.29% by mid-June 2007 (the highest yield for 10-year Treasuries since the Fed made its last rate hike on June 29, 2006).
This trend quickly reversed as the 10-year yield fell to 4.33% by early September 2007 as concerns about sub-prime mortgages caused a flight to liquidity and quality and increased expectation of significant Fed rate cuts. One such cut came on September 18, 2007, which led to a slight up-tick in yields to 4.70% by September 20, 2007.
Credit spreads also endured 12 months of fluctuations. After years of tight credit spreads, spreads widened almost overnight in mid-July 2007 as fears about sub-prime mortgages led to a lack of liquidity. Junk yields widened with option-adjusted spreads averaging around 450 basis points in June 2007 to a range of 550-990 basis points by August 2007. Bonds of mortgage-related companies saw their prices drop in a matter of weeks from approximately 90 cents on the dollar to around 60 cents on the dollar.
Given this environment, the yield curve also oscillated, starting the period inverted and then moving to a slight upward slope in June 2007.
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Q. | How did the Fund’s composition affect performance? |
A. | In light of our expectation of a normal upwards-sloping yield curve, the Fund was positioned on the short end of the curve for the greater part of the year. |
The Fund’s weighted average duration was below 4.0 for the fiscal year while the benchmark’s weighted average duration was above 4.5. This allowed the Fund to minimize the negative effects of rising yields for the first three quarters of the year. However, this positioning also hampered the Fund from participating in the strong performance that higher-quality longer durations delivered from mid-June 2007 to the end of the fiscal year.
With historically tight credit spreads for the greater part of the fiscal year and our expectation of normal credit spreads, we positioned the Fund in high-quality instruments. The Fund’s weighting in non-investment grade instruments started the fiscal year at 16.7% of assets, but was reduced to less than 10% in the final fiscal quarter when credit spreads widened. Furthermore, the Fund avoided mortgage-backed securities, which saw valuations drop precipitously during this period of time.
Q. | What is your investment outlook for the bond market? |
A. | Although the federal funds rate of 4.75% is still above the yield for 10-year Treasuries, the yield curve has taken on a more normal slightly upward sloping curve. Given this yield curve, we expect to see more opportunities to increase the Fund’s duration. |
Furthermore, notwithstanding that credit spreads have widened and we are beginning to see more attractive valuations in riskier fixed-income investments, our relative strength indicators have yet to confirm the leadership of these corporate bonds.
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Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Gross | Net | |||||||||||||||||||||||||||||
Inception | Since | Expense | Expense | |||||||||||||||||||||||||||
Date | 1 Year | 5 Years | Inception | Ratio* | Ratio* | |||||||||||||||||||||||||
ICON Bond Fund - Class I | 9/30/02 | 4.80% | 4.41 | % | 4.41% | 1.11 | % | 1.01 | % | |||||||||||||||||||||
Lehman Brothers U.S. Universal Index | 5.31% | 4.86 | % | 4.86% | N/A | N/A | ||||||||||||||||||||||||
ICON Bond Fund - Class C | 10/21/02 | 4.27% | N/A | 4.33% | 3.08 | % | 1.61 | % | ||||||||||||||||||||||
Lehman Brothers U.S. Universal Index | 5.31% | N/A | 5.32% | N/A | N/A | |||||||||||||||||||||||||
ICON Bond Fund - Class Z | 5/6/04 | 5.02% | N/A | 4.04% | 25.40 | % | 0.76 | % | ||||||||||||||||||||||
Lehman Brothers U.S. Universal Index | 5.31% | N/A | 5.04% | 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 29, 2007 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020001.gif)
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.
Credit Quality Diversification
Aaa | 43.4% | |||
Aa1 | 4.4% | |||
Aa2 | 12.7% | |||
Aa3 | 4.8% | |||
A1 | 3.1% | |||
A2 | 3.6% | |||
A3 | 6.6% | |||
Baa1 | 2.8% | |||
Baa2 | 3.6% | |||
Baa3 | 3.8% | |||
Ba1 | 2.8% | |||
Ba2 | 1.3% | |||
Ba3 | 1.1% | |||
B1 | 4.2% | |||
B2 | 0.3% |
Percentages are based upon total investments less short-term investments.
Ratings based on Moody’s.
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ICON Bond Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Interest | Maturity | |||||||||||||||
Shares or Principal Amount | Rate | Date | Value | |||||||||||||
Corporate Bonds (41.1%) | ||||||||||||||||
$ | 220,000 | Ace INA Holdings, Inc. | 8.88 | % | 08/15/29 | $ | 282,971 | |||||||||
275,000 | Allied Waste North America | 5.75 | % | 02/15/11 | 270,188 | |||||||||||
750,000 | American General Finance | 5.38 | % | 10/01/12 | 738,215 | |||||||||||
500,000 | American Standard, Inc. | 7.38 | % | 02/01/08 | 502,373 | |||||||||||
500,000 | AutoZone, Inc. | 5.50 | % | 11/15/15 | 486,897 | |||||||||||
2,000,000 | Bank of America Corp. | 6.25 | % | 04/15/12 | 2,072,184 | |||||||||||
500,000 | Bank of America Corp. | 4.88 | % | 01/15/13 | 488,076 | |||||||||||
3,000,000 | Bank of America Corp. | 5.38 | % | 06/15/14 | 2,966,700 | |||||||||||
297,000 | Calenergy Co., Inc. | 7.63 | % | 10/15/07 | 297,220 | |||||||||||
250,000 | Centex Corp. | 4.55 | % | 11/01/10 | 229,646 | |||||||||||
250,000 | Centex Corp. | 5.25 | % | 06/15/15 | 212,681 | |||||||||||
1,127,000 | Chartered Semiconductor - YD | 5.75 | % | 08/03/10 | 1,132,443 | |||||||||||
450,000 | Cincinnati Financial Corp. | 6.90 | % | 05/15/28 | 476,783 | |||||||||||
1,000,000 | CIT Group, Inc. | 5.50 | % | 11/30/07 | 997,660 | |||||||||||
750,000 | CIT Group, Inc. | 4.75 | % | 12/15/10 | 713,800 | |||||||||||
355,000 | CIT Group, Inc. | 7.75 | % | 04/02/12 | 368,337 | |||||||||||
410,000 | CNA Financial Corp. | 6.60 | % | 12/15/08 | 414,590 | |||||||||||
1,750,000 | Comcast Cable Communications Holdings | 8.38 | % | 03/15/13 | 1,961,466 | |||||||||||
400,000 | Comcast Cable Communications Holdings | 8.88 | % | 05/01/17 | 472,280 | |||||||||||
500,000 | Countrywide Financial | 4.25 | % | 12/19/07 | 494,213 | |||||||||||
1,000,000 | Countrywide Home Loan | 4.13 | % | 09/15/09 | 919,084 | |||||||||||
114,000 | Cox Communications, Inc. | 7.63 | % | 06/15/25 | 126,586 | |||||||||||
100,000 | D.R. Horton, Inc. | 8.00 | % | 02/01/09 | 99,299 | |||||||||||
2,500,000 | DaimlerChrysler AG | 6.50 | % | 11/15/13 | 2,592,310 | |||||||||||
1,250,000 | DaimlerChrysler NA Holding | 4.75 | % | 01/15/08 | 1,246,604 | |||||||||||
500,000 | DaimlerChrysler NA Holding | 8.00 | % | 06/15/10 | 534,152 | |||||||||||
1,000,000 | DaimlerChrysler NA Holding | 7.75 | % | 01/18/11 | 1,071,322 | |||||||||||
500,000 | Deutsche Telekom International Finance - YD | 8.00 | % | 06/15/10 | 535,590 | |||||||||||
450,000 | Deutsche Telekom International Finance - YD | 8.25 | % | 06/15/30 | 550,873 | |||||||||||
260,000 | Dillard’s, Inc. | 9.50 | % | 09/01/09 | 264,875 | |||||||||||
232,000 | Dillard’s, Inc. | 9.13 | % | 08/01/11 | 237,581 | |||||||||||
500,000 | Donnelley (R.R.) & Sons | 4.95 | % | 04/01/14 | 471,568 | |||||||||||
750,000 | Embratel - YD | 11.00 | % | 12/15/08 | 794,062 | |||||||||||
500,000 | Farmers Insurance Capital Notes(a) | 7.20 | % | 07/15/48 | 487,773 | |||||||||||
6,000 | First American Financial Corp. | 7.55 | % | 04/01/28 | 6,377 |
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Interest | Maturity | |||||||||||||||
Shares or Principal Amount | Rate | Date | Value | |||||||||||||
$ | 2,500,000 | Ford Motor Credit Co. | 4.95 | % | 01/15/08 | $ | 2,483,985 | |||||||||
2,000,000 | Ford Motor Credit Co. | 5.63 | % | 10/01/08 | 1,954,124 | |||||||||||
500,000 | General Electric Corp. | 5.45 | % | 01/15/13 | 504,679 | |||||||||||
900,000 | General Mills, Inc. | 3.88 | % | 11/30/07 | 897,638 | |||||||||||
1,500,000 | GMAC LLC(b) | 5.13 | % | 05/09/08 | 1,488,126 | |||||||||||
226,000 | Goldman Sachs Group, Inc. | 4.13 | % | 01/15/08 | 225,069 | |||||||||||
250,000 | Goldman Sachs Group, Inc. | 7.35 | % | 10/01/09 | 261,070 | |||||||||||
1,250,000 | Goldman Sachs Group, Inc. | 6.88 | % | 01/15/11 | 1,308,267 | |||||||||||
1,000,000 | Goldman Sachs Group, Inc. | 6.60 | % | 01/15/12 | 1,047,926 | |||||||||||
670,000 | Household Finance Corp. | 5.88 | % | 02/01/09 | 675,130 | |||||||||||
500,000 | Household Finance Corp. | 7.00 | % | 05/15/12 | 525,688 | |||||||||||
250,000 | IBM Corp. | 3.80 | % | 02/01/08 | 248,824 | |||||||||||
950,000 | IBM Corp. | 8.38 | % | 11/01/19 | 1,160,260 | |||||||||||
500,000 | International Lease Finance Corp. | 6.38 | % | 03/15/09 | 509,753 | |||||||||||
294,000 | International Lease Finance Corp. | 4.88 | % | 09/01/10 | 291,995 | |||||||||||
450,000 | John Hancock(a) | 7.38 | % | 02/15/24 | 501,959 | |||||||||||
50,000 | JP Morgan Chase & Co. | 6.70 | % | 11/01/07 | 50,029 | |||||||||||
200,000 | JP Morgan Chase & Co. | 4.00 | % | 02/01/08 | 199,271 | |||||||||||
455,000 | JP Morgan Chase & Co. | 6.75 | % | 08/15/08 | 459,952 | |||||||||||
500,000 | Kraft Foods, Inc. | 6.25 | % | 06/01/12 | 516,225 | |||||||||||
218,000 | Morgan Stanley | 3.63 | % | 04/01/08 | 216,547 | |||||||||||
500,000 | Morgan Stanley | 3.88 | % | 01/15/09 | 492,447 | |||||||||||
250,000 | Morgan Stanley | 4.25 | % | 05/15/10 | 244,458 | |||||||||||
500,000 | Morgan Stanley | 4.75 | % | 04/01/14 | 469,661 | |||||||||||
400,000 | New Jersey Bell Telephone | 7.85 | % | 11/15/29 | 453,230 | |||||||||||
122,000 | NLV Financial Corp.(a) | 6.50 | % | 03/15/35 | 112,726 | |||||||||||
500,000 | Pemex Project Funding Master Trust | 8.50 | % | 02/15/08 | 505,000 | |||||||||||
500,000 | Prudential Financial, Inc. | 4.75 | % | 06/13/15 | 470,032 | |||||||||||
250,000 | Pulte Homes, Inc. | 5.20 | % | 02/15/15 | 208,455 | |||||||||||
1,000,000 | Rockwell Automation, Inc. | 6.15 | % | 01/15/08 | 1,002,370 | |||||||||||
350,000 | Royal Caribbean Cruises - YD | 6.75 | % | 03/15/08 | 350,889 | |||||||||||
500,000 | Ryder System, Inc. | 5.85 | % | 03/01/14 | 504,013 | |||||||||||
382,000 | Sears Roebuck Acceptance Corp. | 6.25 | % | 05/01/09 | 387,356 | |||||||||||
213,000 | Semco Energy, Inc. | 6.40 | % | 11/25/08 | 211,706 | |||||||||||
700,000 | Standard Pacific Corp. | 6.50 | % | 10/01/08 | 623,000 | |||||||||||
500,000 | Target Corp. | 3.38 | % | 03/01/08 | 495,879 | |||||||||||
350,000 | Telefonica de Argentina - YD | 9.13 | % | 11/07/10 | 363,475 | |||||||||||
500,000 | Tennessee Gas Pipeline | 7.00 | % | 10/15/28 | 508,947 | |||||||||||
450,000 | Time Warner Cos., Inc. | 7.48 | % | 01/15/08 | 452,502 | |||||||||||
288,000 | TRW, Inc. | 6.32 | % | 05/27/08 | 288,845 | |||||||||||
500,000 | Tyco International, Ltd. - YD | 6.13 | % | 11/01/08 | 505,477 |
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Interest | Maturity | |||||||||||||||
Shares or Principal Amount | Rate | Date | Value | |||||||||||||
$ | 155,000 | Union Carbide Corp. | 6.70 | % | 04/01/09 | $ | 155,471 | |||||||||
410,000 | Verizon, Inc. | 8.30 | % | 08/01/31 | 493,744 | |||||||||||
1,000,000 | Washington Mutual Bank | 5.13 | % | 01/15/15 | 931,398 | |||||||||||
Total Corporate Bonds (Cost $51,797,226) | 51,274,377 | |||||||||||||||
U.S. Government And U.S. Government Agency Bonds (55.4%) | ||||||||||||||||
750,000 | Fannie Mae | 2.50 | % | 06/15/08 | 738,342 | |||||||||||
270,000 | Fannie Mae | 3.10 | % | 07/28/08 | 266,425 | |||||||||||
500,000 | Fannie Mae | 4.00 | % | 09/02/08 | 497,182 | |||||||||||
3,000,000 | Fannie Mae | 5.00 | % | 02/16/12 | 3,045,360 | |||||||||||
8,000,000 | Fannie Mae | 5.25 | % | 08/01/12 | 8,163,272 | |||||||||||
5,000,000 | Fannie Mae | 4.38 | % | 03/15/13 | 4,927,020 | |||||||||||
6,825,000 | Fannie Mae | 5.13 | % | 01/02/14 | 6,891,264 | |||||||||||
1,500,000 | Fannie Mae | 5.00 | % | 03/09/15 | 1,478,196 | |||||||||||
500,000 | Fannie Mae | 5.00 | % | 04/17/15 | 492,284 | |||||||||||
9,000,000 | Fannie Mae | 5.25 | % | 09/15/16 | 9,175,149 | |||||||||||
1,000,000 | Fannie Mae | 5.00 | % | 07/09/18 | 967,044 | |||||||||||
255,000 | Federal Farm Credit Bank | 5.90 | % | 08/04/08 | 257,538 | |||||||||||
1,000,000 | Federal Home Loan Bank | 4.00 | % | 02/12/10 | 990,188 | |||||||||||
405,000 | Federal Home Loan Bank | 4.80 | % | 03/19/13 | 400,880 | |||||||||||
750,000 | Federal Home Loan Bank | 5.50 | % | 02/14/20 | 735,298 | |||||||||||
500,000 | Federal Home Loan Bank | 5.50 | % | 03/03/20 | 490,539 | |||||||||||
500,000 | Federal Home Loan Mortgage Corp. | 5.75 | % | 04/15/08 | 502,322 | |||||||||||
3,000,000 | Federal Home Loan Mortgage Corp. | 3.88 | % | 06/15/08 | 2,981,601 | |||||||||||
200,000 | Federal Home Loan Mortgage Corp. | 5.13 | % | 10/15/08 | 201,357 | |||||||||||
3,000,000 | Federal Home Loan Mortgage Corp. | 4.63 | % | 12/19/08 | 3,003,459 | |||||||||||
3,000,000 | Federal Home Loan Mortgage Corp. | 4.88 | % | 02/17/09 | 3,015,579 | |||||||||||
1,000,000 | Federal Home Loan Mortgage Corp. | 3.38 | % | 04/15/09 | 984,249 | |||||||||||
2,000,000 | Federal Home Loan Mortgage Corp. | 6.00 | % | 06/15/11 | 2,100,720 | |||||||||||
5,900,000 | Federal Home Loan Mortgage Corp. | 5.75 | % | 01/15/12 | 6,162,343 | |||||||||||
1,500,000 | Federal Home Loan Mortgage Corp. | 5.05 | % | 02/28/13 | 1,494,555 | |||||||||||
370,000 | Federal Home Loan Mortgage Corp. | 5.00 | % | 10/29/13 | 367,089 | |||||||||||
457,000 | Federal Home Loan Mortgage Corp. | 5.00 | % | 09/15/14 | 452,077 | |||||||||||
1,500,000 | Federal Home Loan Mortgage Corp. | 5.16 | % | 02/27/15 | 1,488,165 | |||||||||||
400,000 | Federal Home Loan Mortgage Corp. | 5.00 | % | 12/15/15 | 392,997 | |||||||||||
550,000 | Federal Home Loan Mortgage Corp. | 5.00 | % | 09/09/16 | 538,518 | |||||||||||
975,000 | Federal Home Loan Mortgage Corp. | 5.25 | % | 07/27/17 | 962,518 | |||||||||||
1,500,000 | Federal Home Loan Mortgage Corp. | 6.75 | % | 09/15/29 | 1,788,951 | |||||||||||
85,000 | US Treasury Note | 4.38 | % | 01/31/08 | 85,093 | |||||||||||
2,000,000 | US Treasury Note | 4.63 | % | 03/31/08 | 2,004,688 |
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Interest | Maturity | |||||||||||||||
Shares or Principal Amount | Rate | Date | Value | |||||||||||||
$ | 973,000 | US Treasury Note Strips | 9.88 | % | 05/15/08 | $ | 949,084 | |||||||||
Total U.S. Government And U.S. Government Agency Bonds (Cost $68,070,998) | 68,991,346 | |||||||||||||||
Foreign Government Bonds (2.0%) | ||||||||||||||||
1,000,000 | Federal Republic of Brazil - YD | 9.38 | % | 04/07/08 | 1,019,500 | |||||||||||
750,000 | Federal Republic of Brazil - YD | 14.50 | % | 10/15/09 | 889,125 | |||||||||||
500,000 | Republic of South Africa - YD | 6.50 | % | 06/02/14 | 526,250 | |||||||||||
Total Foreign Government Bonds (Cost $2,407,559) | 2,434,875 | |||||||||||||||
Short-Term Investment (0.2%) | ||||||||||||||||
262,467 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07# | 262,467 | ||||||||||||||
Total Short-Term Investments (Cost $262,467) | 262,467 | |||||||||||||||
Other Securities (1.2%) | ||||||||||||||||
1,532,004 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | 1,532,004 | ||||||||||||||
Total Other Securities (Cost $1,532,004) | 1,532,004 | |||||||||||||||
Total Investments 99.9% (Cost $124,070,254) | 124,495,069 | |||||||||||||||
Other Assets Less Liabilities 0.1% | 109,276 | |||||||||||||||
Net Assets 100.0% | $ | 124,604,345 | ||||||||||||||
The accompanying notes are an integral part of the financial statements.
(a) | Security was acquired pursuant to rule 144A of the Securities Act of 1933 and may be deemed to be restricted for resale. The securities are considered to be illiquid. The aggregate value of these securities at September 30, 2007 was $1,102,458 which represented 0.88% of the Fund’s Net Assets. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
YD | Yankee Dollar Bond |
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Class I ICNIX
Class C ICNCX
Class Z ICNZX
Class A ICNAX
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, 2007, the Fund’s benchmark, the S&P Composite 1500 Index, gained 16.59%, compared to the ICON Core Equity Fund’s return of 17.05% for Class I shares, 16.25% for Class C shares, and 17.18% for Class Z shares. Class A shares of the Fund have returned 16.25% (and 9.57% with maximum sales charge). Total returns for other periods as of September 30, 2007 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. In those 12 months, crude oil futures rose approximately 30%, sub-prime mortgage issues created fears of recession, market volatility reached levels not seen since 2003, and U.S. Dollar Index decreased in value by approximately 9%. |
The Federal Reserve responded by cutting the discount window by a total of 100 basis points and cutting the federal funds rate by 50 basis points in order to combat liquidity problems. In spite of news headlines that may have distracted investors, we maintained a disciplined focus on industries that we thought offered attractive combinations of value and relative strength, helping the Fund navigate this turbulence.
We believe the fiscal year can be viewed in five distinct time periods — three strong up markets and two sharp drops — which reflect both the volatility and the absence of sustained sector leadership during the period.
The three strong up markets (from the start of the period to February 23, 2007; March 2, 2007 to July 19, 2007; and August 16, 2007 to the end of the period) accounted for a 31.05% gain in the S&P 1500 Index. The leading sectors during these three time periods consistently were Materials, Energy, Industrials, and Information Technology.
The two correction periods (from February 23, 2007 to March 2, 2007 and July 19, 2007 to August 16, 2007) accounted for a (13.62%) loss in the S&P 1500 Index. The worst-performing sectors during these time periods practically mirrored the best-performing sectors during the advancing markets: Materials, Consumer Discretionary, Energy, and Industrials.
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This sector-specific volatility created a challenging environment that required the Fund to maintain exposure to all nine economic sectors while using selective industry allocation.
Q. | How did the Fund’s composition affect performance? |
A. | The ICON Core Equity Fund steered through a volatile year. Leading sector contributors to performance were Information Technology, Industrials, and Telecommunication & Utilities. All three sectors were approximately equal-weight to the benchmark, but the Fund was aided by value-driven industry overweights. |
On an industry level, the oil & gas equipment & services, computer hardware, construction & farm machinery & heavy trucks, integrated telecommunication services, and oil & gas drilling industries contributed positively to returns. These industries were significantly overweight relative to the benchmark during the period, boosting performance.
In contrast, the Consumer Discretionary, Healthcare, and Leisure & Consumer Staples sectors detracted from returns. Both Healthcare and Consumer Discretionary were overweight due to our valuations, but showed weak performance. Additionally, the Fund’s lack of exposure to the strong-performing integrated oil & gas industry within the Energy sector detracted from overall returns.
In general, the coal & consumable fuels, healthcare facilities, housewares & specialties, automotive retail, and homebuilding industries had a negative impact on Fund performance during the fiscal period.
Q. | What is your investment outlook for the equity market? |
A. | Our experience indicates that significant spikes in market volatility, such as we’ve witnessed recently, may herald a change in sector leadership. |
Since 2003, we have seen cyclically-sensitive sectors such as Energy, Materials, and Industrials lead the market. The market’s recent volatility, coupled with our determination of value in sectors such as Financials and Consumer Discretionary, lead us to believe that we might be in the midst of a theme change.
While we are watching our system for indications of a possible theme shift, we are waiting for more definitive indicators before aggressively targeting other sectors that reflect what we believe to be the most attractive combinations of value and relative strength.
The U.S. Dollar Index indicates the general international value of the U.S. dollar by averaging the exchange rates between the dollar and six major world currencies. An individual cannot invest in the index.
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Sector Composition
as of September 30, 2007
as of September 30, 2007
Information Technology | 20.8% | ||
Industrials | 20.0% | ||
Financial | 17.0% | ||
Healthcare | 13.5% | ||
Telecommunication and Utilities | 7.9% | ||
Energy | 7.5% | ||
Consumer Discretionary | 6.5% | ||
Materials | 4.7% | ||
Leisure and Consumer Staples | 1.7% |
Percentages are based upon net assets.
Industry Composition
as of September 30, 2007
as of September 30, 2007
Computer Hardware | 5.1% | ||
Aerospace & Defense | 4.8% | ||
Construction & Farm Machinery & Heavy Trucks | 4.7% | ||
Oil & Gas Equipment & Services | 4.5% | ||
Wireless Telecommunication Services | 4.5% | ||
Managed Health Care | 4.1% | ||
Technology Distributors | 4.0% | ||
Other Diversified Financial Services | 3.9% | ||
Railroads | 3.7% | ||
Marine | 3.6% | ||
Internet Software Services | 3.5% | ||
Pharmaceuticals | 3.5% | ||
Integrated Telecommunication Services | 3.4% | ||
Auto Parts & Equipment | 3.1% | ||
Communications Equipment | 3.1% | ||
Health Care Services | 3.0% | ||
Life & Health Insurance | 2.9% | ||
Industrial Conglomerates | 2.8% | ||
Investment Banking & Brokerage | 2.5% | ||
Multi-Line Insurance | 2.5% | ||
Diversified Banks | 2.3% | ||
Fertilizers & Agricultural Chemicals | 2.3% | ||
Reinsurance | 2.2% | ||
Health Care Equipment | 2.1% | ||
Oil & Gas Drilling | 2.0% | ||
Semiconductor Equipment | 1.6% | ||
Systems Software | 1.6% | ||
Diversified Metals & Mining | 1.5% | ||
Agriculture Products | 1.2% | ||
Household Appliances | 1.1% | ||
Integrated Oil & Gas | 1.0% | ||
Semiconductors | 1.0% | ||
Automotive Retail | 0.9% | ||
Electronic Equipment Manufacturers | 0.9% | ||
Home Improvement Retail | 0.9% | ||
Metal & Glass Containers | 0.9% | ||
Biotechnology | 0.8% | ||
Diversified Capital Markets | 0.7% | ||
Housewares & Specialties | 0.5% | ||
Movies & Entertainment | 0.5% | ||
Trading Companies & Distributors | 0.4% | ||
Percentages are based upon net assets.
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Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Gross | Net | |||||||||||||||||||||||||||||
Inception | Since | Expense | Expense | |||||||||||||||||||||||||||
Date | 1 Year | 5 Years | Inception | Ratio* | Ratio* | |||||||||||||||||||||||||
ICON Core Equity Fund - Class I | 10/12/00 | 17.05% | 14.25 | % | 9.58% | 1.23 | % | 1.23 | % | |||||||||||||||||||||
S&P Composite 1500 Index | 16.59% | 15.82 | % | 4.51% | N/A | N/A | ||||||||||||||||||||||||
ICON Core Equity Fund - Class C | 11/28/00 | 16.25% | 13.39 | % | 7.98% | 2.03 | % | 2.02 | % | |||||||||||||||||||||
S&P Composite 1500 Index | 16.59% | 15.82 | % | 4.40% | N/A | N/A | ||||||||||||||||||||||||
ICON Core Equity Fund - Class Z | 5/6/04 | 17.18% | N/A | 13.42% | 0.99 | % | 0.98 | % | ||||||||||||||||||||||
S&P Composite 1500 Index | 16.59% | N/A | 12.08% | N/A | N/A | |||||||||||||||||||||||||
ICON Core Equity Fund - Class A | 5/31/06 | 16.25% | N/A | 8.16% | 7.44 | % | 7.43 | % | ||||||||||||||||||||||
ICON Core Equity Fund - Class A (including maximum sales charge of 5.75%) | 5/31/06 | 9.57% | N/A | 3.48% | 7.44 | % | 7.43 | % | ||||||||||||||||||||||
S&P Composite 1500 Index | 16.59% | N/A | 16.34% | 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 29, 2007 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020002.gif)
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.
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ICON Core Equity Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (99.6%) | ||||||||
35,500 | AAR Corp.(a) | $ | 1,077,070 | |||||
58,900 | Aflac, Inc. | 3,359,656 | ||||||
66,500 | Amedisys, Inc.(a) | 2,554,930 | ||||||
59,100 | America Movil S.A.B. de C.V. - ADR | 3,782,400 | ||||||
68,800 | American International Group, Inc. | 4,654,320 | ||||||
40,900 | Amphenol Corp. - Class A | 1,626,184 | ||||||
28,600 | Anixter International, Inc.(a)(b) | 2,358,070 | ||||||
7,700 | Apple Computer, Inc.(a) | 1,182,258 | ||||||
48,200 | Arrow Electronics, Inc.(a) | 2,049,464 | ||||||
25,000 | Astec Industries, Inc.(a) | 1,436,250 | ||||||
107,700 | AT&T, Inc. | 4,556,787 | ||||||
23,400 | Atwood Oceanics, Inc.(a) | 1,791,504 | ||||||
14,900 | AutoZone, Inc.(a) | 1,730,486 | ||||||
72,800 | Avnet, Inc.(a) | 2,901,808 | ||||||
29,300 | Ball Corp. | 1,574,875 | ||||||
84,500 | Banco Santander Central Hispano S.A. - ADR | 1,631,695 | ||||||
86,400 | Bank of America Corp. | 4,343,328 | ||||||
70,100 | BE Aerospace, Inc.(a) | 2,911,253 | ||||||
19,800 | BorgWarner, Inc. | 1,812,294 | ||||||
24,200 | Burlington Northern Santa Fe Corp. | 1,964,314 | ||||||
40,000 | Cameron International Corp.(a) | 3,691,600 | ||||||
21,000 | Celgene Corp.(a) | 1,497,510 | ||||||
21,000 | CIGNA Corp. | 1,119,090 | ||||||
49,000 | Corn Products International, Inc. | 2,247,630 | ||||||
20,300 | Credit Suisse Group - ADR | 1,346,499 | ||||||
17,200 | Cummins, Inc. | 2,199,708 | ||||||
38,400 | Curtiss-Wright Corp. | 1,824,000 | ||||||
102,000 | Dell, Inc.(a) | 2,815,200 | ||||||
16,400 | Diamond Offshore Drilling, Inc. | 1,857,956 | ||||||
63,900 | eBay, Inc.(a) | 2,493,378 | ||||||
18,200 | Everest Re Group, Ltd. | 2,006,368 | ||||||
50,900 | Express Scripts, Inc.(a) | 2,841,238 | ||||||
25,500 | Freeport-McMoran Copper & Gold, Inc. - Class B(b) | 2,674,695 | ||||||
79,100 | General Electric Co. | 3,274,740 | ||||||
6,900 | Google, Inc. - Class A(a) | 3,914,163 | ||||||
41,700 | Grant Prideco, Inc.(a) | 2,273,484 | ||||||
34,900 | Harris Corp. | 2,016,871 | ||||||
34,700 | Humana, Inc.(a) | 2,424,836 | ||||||
70,600 | Intel Corp. | 1,825,716 | ||||||
47,400 | International Business Machines Corp. | 5,583,720 | ||||||
23,200 | Johnson & Johnson, Inc. | 1,524,240 | ||||||
32,600 | Johnson Controls, Inc. | 3,850,386 | ||||||
58,800 | JPMorgan Chase & Co. | 2,694,216 | ||||||
63,200 | K-V Pharmaceutical Co.(a) | 1,807,520 | ||||||
48,200 | Kirby Corp.(a) | 2,127,548 | ||||||
18,200 | KLA-Tencor Corp. | 1,015,196 | ||||||
46,100 | Lifetime Brands, Inc.(b) | 935,369 | ||||||
59,300 | Lowe’s Cos., Inc. | 1,661,586 | ||||||
29,900 | Memc Electronic Materials, Inc.(a) | 1,759,914 | ||||||
30,700 | Merck & Co., Inc. | 1,586,883 | ||||||
30,200 | MetLife, Inc. | 2,105,846 |
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Shares or Principal Amount | Value | |||||||
22,300 | MICROS Systems, Inc.(a) | $ | 1,451,061 | |||||
50,000 | Monsanto Co. | 4,287,000 | ||||||
27,300 | Morgan Stanley | 1,719,900 | ||||||
16,100 | MSC Industrial Direct Co., Inc. - Class A | 814,499 | ||||||
26,700 | Murphy Oil Corp. | 1,866,063 | ||||||
223,000 | Navios Maritime Holdings, Inc. | 2,930,220 | ||||||
25,100 | NII Holdings, Inc.(a) | 2,061,965 | ||||||
45,600 | Norfolk Southern Corp. | 2,367,096 | ||||||
67,500 | Oracle Corp.(a) | 1,461,375 | ||||||
45,500 | Oshkosh Truck Corp. | 2,819,635 | ||||||
32,900 | QUALCOMM, Inc. | 1,390,354 | ||||||
80,600 | Quintana Maritime, Ltd. - ADR | 1,537,042 | ||||||
32,100 | RenaissanceRe Holdings, Ltd. | 2,099,661 | ||||||
21,800 | Research In Motion, Ltd.(a) | 2,148,390 | ||||||
52,000 | Rogers Communications, Inc. - Class B | 2,367,560 | ||||||
46,900 | Schering-Plough Corp. | 1,483,447 | ||||||
21,900 | Schlumberger, Ltd.(b) | 2,299,500 | ||||||
13,700 | Siemens AG - ADR | 1,880,325 | ||||||
30,500 | Stryker Corp. | 2,097,180 | ||||||
18,800 | Telefonica S.A. - ADR | 1,575,064 | ||||||
27,300 | The Boeing Co. | 2,866,227 | ||||||
13,100 | The Goldman Sachs Group, Inc. | 2,839,294 | ||||||
28,100 | The Walt Disney Co. | 966,359 | ||||||
20,850 | Union Pacific Corp. | 2,357,301 | ||||||
46,800 | UnitedHealth Group, Inc. | 2,266,524 | ||||||
57,300 | Wabtec Corp. | 2,146,458 | ||||||
23,200 | WellPoint, Inc.(a) | 1,830,944 | ||||||
71,800 | Wells Fargo & Co. | 2,557,516 | ||||||
22,100 | Whirlpool Corp. | 1,969,110 | ||||||
22,400 | Zimmer Holdings, Inc.(a) | 1,814,176 | ||||||
Total Common Stocks (Cost $155,918,170) | 182,567,298 | |||||||
Other Securities (3.9%) | ||||||||
7,148,566 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | 7,148,566 | ||||||
Total Other Securities (Cost $7,148,566) | 7,148,566 | |||||||
Total Investments 103.5% (Cost $163,066,736) | 189,715,864 | |||||||
Liabilities Less Other Assets (3.5)% | (6,410,252 | ) | ||||||
Net Assets 100.0% | $ | 183,305,612 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
ADR | American Depositary Receipt |
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Class I IOEIX
Class C IOECX
Class Z IOEZX
Class A IEQAX
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, 2007, the Fund’s benchmark, the S&P Composite 1500 Index, gained 16.59%, while the ICON Equity Income Fund returned 17.67% for Class I shares, 16.45% for Class C shares, and 17.74% for Class Z shares. Class A shares of the Fund returned 17.29% (and 10.55% with maximum sales charge) during the same period. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
Q. | What primary factors were behind the Fund’s relative performance? |
A. | The broad market was dominated during the fiscal year by strong demand for Materials and Energy stocks as global growth, especially in China, fueled consumption. |
The strong performance of the equity market, relative stability in the Moody’s AAA bond yield, and moderate growth in earnings per share has led to a decline of value-to-price ratios for the domestic market. The result has been a need to focus the Fund’s holdings on optimal combinations of value and relative strength.
Despite Federal Reserve policy activity during the fiscal period, 10-year Treasury bond yields ended the fiscal period very close to where they started at around 4.6%. The Fund’s fixed-income positions generally produced a return consistent with the stated coupon yield of the bonds held.
The Fund’s overweighting of the Industrials sector served it well during the period. More than half of this sector’s contribution to performance was a result of the Fund’s holdings in the marine industry.
The Fund’s position in the Materials sector also was beneficial for returns, with particularly strong performance from the diversified metals & mining, steel, and aluminum industries.
While the Information Technology sector generally did well during the period, the lack of dividend-paying stocks from this group limited the Fund’s ability to have a meaningful position in this sector, causing relative underperformance.
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Q. | How did the Fund’s composition affect performance? |
A. | The Fund established a large position in the marine industry based on our estimation of the industry’s strong value, good relative strength, and active dividend yields. Marine stocks seemed to be driven by a global demand to move goods between countries. The industry had a weighted average holding of approximately 2.5% and contributed significantly to fiscal-year returns. |
Conversely, the thrifts & mortgage finance industry hampered returns as sub-prime default fears gripped these stocks. Even with a minimal weighted average position size, this industry made a negative contribution to performance.
In general, having determined that REITs lacked the relative strength ICON looks for, we sold mortgage REIT holdings before the brunt of the mortgage crisis decimated them. The Fund’s mortgage REIT holdings returned about 3% while the S&P 1500 Index’s holdings lost approximately (85%). Given the active dividend yield in this industry group, it would not be unusual for the Fund to have a notably larger position than the benchmark when valuation and relative strength criteria are met.
Although it was an underweight position, the Fund enjoyed strong performance from the integrated oil & gas industry. Holdings in the diversified metals and mining and computer hardware industries also aided Fund returns during the period.
Q. | What is your investment outlook for the market? |
A. | We measure the broad equity market to be undervalued by 12% relative to our estimate of intrinsic worth, indicating upside potential. |
The Financials sector has performed well off of the market’s low on August 15, 2007. Given that sector’s active valuations and relatively high dividend yield, we are monitoring our metrics closely and will increase the sector’s weighting if we believe it is warranted in an effort to augment income generated by the portfolio.
The Consumer Discretionary sector also closed the period with what we consider to be an attractive valuation, and we will watch this group for signs of leadership.
The steepening yield curve is presenting more active risk/return for longer bonds. If rates for longer bonds start to decline, the Fund may be able to take advantage of this relative strength by increasing exposure to the debt sector.
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Sector Composition
as of September 30, 2007
as of September 30, 2007
Financial | 19.3% | ||
Industrials | 17.2% | ||
Information Technology | 11.2% | ||
Telecommunication and Utilities | 10.0% | ||
Healthcare | 7.2% | ||
Energy | 6.8% | ||
Consumer Discretionary | 6.1% | ||
Leisure and Consumer Staples | 4.4% | ||
Materials | 4.4% |
Percentages are based upon common stock positions as a percentage of net assets.
Industry Composition
as of September 30, 2007
as of September 30, 2007
Pharmaceuticals | 4.6% | ||
Computer Hardware | 3.8% | ||
Industrial Conglomerates | 3.8% | ||
Other Diversified Financial Services | 3.8% | ||
Integrated Telecommunication Services | 3.5% | ||
Integrated Oil & Gas | 3.3% | ||
Semiconductors | 3.3% | ||
Life & Health Insurance | 3.0% | ||
Reinsurance | 2.7% | ||
Aerospace & Defense | 2.6% | ||
Wireless Telecommunication Services | 2.4% | ||
Diversified Banks | 2.3% | ||
Railroads | 2.3% | ||
Systems Software | 2.1% | ||
Industrial Machinery | 2.0% | ||
Auto Parts & Equipment | 1.8% | ||
Household Products | 1.6% | ||
Marine | 1.6% | ||
Trading Companies & Distributors | 1.5% | ||
Independent Power Producers & Energy Traders | 1.5% | ||
Oil & Gas Equipment & Services | 1.5% | ||
Health Care Equipment | 1.4% | ||
Agriculture Products | 1.3% | ||
Diversified Metals & Mining | 1.3% | ||
Internet Software Services | 1.3% | ||
Regional Banks | 1.3% | ||
Oil & Gas Exploration & Production | 1.2% | ||
Construction & Farm Machinery & Heavy Trucks | 1.1% | ||
Consumer Finance | 1.1% | ||
Footwear | 1.1% | ||
Multi-Line Insurance | 1.1% | ||
Metal & Glass Containers | 1.0% | ||
Steel | 0.9% | ||
Electric Utilities | 0.9% | ||
Insurance Brokers | 0.9% | ||
Oil & Gas Storage & Transportation | 0.9% | ||
Asset Management & Custody Banks | 0.8% | ||
Electrical Components & Equipment | 0.8% | ||
Investment Banking & Brokerage | 0.8% | ||
Multi-Utilities | 0.8% | ||
Trucking | 0.8% | ||
Water Utilities | 0.8% | ||
Air Freight & Logistics | 0.7% | ||
Communications Equipment | 0.7% | ||
Food Retail | 0.7% | ||
Household Appliances | 0.7% | ||
Life Sciences & Services | 0.7% | ||
Soft Drinks | 0.7% | ||
Specialty Chemicals | 0.7% | ||
Automobile Manufacturers | 0.6% | ||
Diversified Chemicals | 0.6% | ||
General Merchandise Stores | 0.6% | ||
Health Care Facilities | 0.6% | ||
Home Improvement Retail | 0.6% | ||
Housewares & Specialties | 0.6% | ||
Mortgage Reits | 0.5% | ||
Property & Casualty Insurance | 0.5% | ||
Thrifts & Mortgage Finance | 0.5% |
Percentages are based upon common stock positions as a percentage of net assets.
Table of Contents
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Gross | Net | |||||||||||||||||||||||||||||
Inception | Since | Expense | Expense | |||||||||||||||||||||||||||
Date | 1 Year | 5 Years | Inception | Ratio* | Ratio* | |||||||||||||||||||||||||
ICON Equity Income Fund - Class I | 9/30/02 | 17.67 | % | 15.54 | % | 15.54 | % | 1.23 | % | 1.23 | % | |||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | 15.82 | % | 15.82 | % | N/A | N/A | ||||||||||||||||||||||
ICON Equity Income Fund - Class C | 11/8/02 | 16.45 | % | N/A | 13.44 | % | 2.29 | % | 2.20 | % | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | N/A | 13.89 | % | N/A | N/A | |||||||||||||||||||||||
ICON Equity Income Fund - Class Z | 5/10/04 | 17.74 | % | N/A | 12.57 | % | 4.36 | % | 1.20 | % | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | N/A | 12.99 | % | N/A | N/A | |||||||||||||||||||||||
ICON Equity Income Fund - Class A | 5/31/06 | 17.29 | % | N/A | 13.09 | % | 38.36 | % | 1.44 | % | ||||||||||||||||||||
ICON Equity Income Fund - Class A (including maximum sales charge of 5.75%) | 5/31/06 | 10.55 | % | N/A | 8.17 | % | 38.36 | % | 1.44 | % | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | N/A | 16.34 | % | 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 29, 2007 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
Table of Contents
Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020003.gif)
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.
Table of Contents
ICON Equity Income Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (86.6%) | ||||||||
8,700 | 3M Co. | $ | 814,146 | |||||
20,300 | Abbott Laboratories | 1,088,486 | ||||||
10,600 | ACE Ltd. | 642,042 | ||||||
28,900 | Aflac, Inc. | 1,648,456 | ||||||
26,600 | Aircastle, Ltd. | 888,972 | ||||||
19,700 | Ameren Corp. | 1,034,250 | ||||||
20,600 | American International Group, Inc. | 1,393,590 | ||||||
7,000 | Apache Corp. | 630,420 | ||||||
23,200 | Archer Daniels Midland Co. | 767,456 | ||||||
65,900 | AT&T, Inc. | 2,788,229 | ||||||
9,500 | Ball Corp. | 510,625 | ||||||
49,200 | Bank of America Corp. | 2,473,284 | ||||||
35,700 | Barnes Group, Inc. | 1,139,544 | ||||||
18,600 | Baxter International, Inc. | 1,046,808 | ||||||
21,500 | BB&T Corp. | 868,385 | ||||||
23,800 | BCE, Inc. - ADR | 953,190 | ||||||
9,700 | BHP Billiton, Ltd. - ADR | 762,420 | ||||||
12,200 | BP PLC - ADR | 846,070 | ||||||
43,200 | Bristol-Myers Squibb Co. | 1,245,024 | ||||||
14,200 | BT Group PLC - ADR | 892,186 | ||||||
17,800 | Canadian National Railway Co. - ADR | 1,014,600 | ||||||
18,700 | Caterpillar, Inc. | 1,466,641 | ||||||
12,400 | Chevron Corp. | 1,160,392 | ||||||
19,700 | China Medical Technologies, Inc. | 842,963 | ||||||
27,200 | Citigroup, Inc. | 1,269,424 | ||||||
5,900 | CNOOC, Ltd. - ADR | 981,937 | ||||||
21,800 | Companhia de Saneamento Basico do Estado de Sao Paulo - ADR | 1,076,920 | ||||||
16,800 | ConocoPhillips | 1,474,536 | ||||||
14,500 | Constellation Energy Group | 1,243,955 | ||||||
19,800 | Corn Products International, Inc. | 908,226 | ||||||
21,100 | Credicorp Ltd. | 1,428,470 | ||||||
17,500 | Dow Chemical Co. | 753,550 | ||||||
17,900 | Drew Industries, Inc.(a) | 728,172 | ||||||
7,600 | Eaton Corp. | 752,704 | ||||||
20,800 | Emerson Electric Co. | 1,106,976 | ||||||
9,200 | Everest Re Group, Ltd. | 1,014,208 | ||||||
70,800 | Flagstar Bancorp, Inc. | 688,884 | ||||||
19,900 | FPL Group, Inc. | 1,211,512 | ||||||
9,000 | Freeport-McMoran Copper & Gold, Inc. - Class B | 944,010 | ||||||
16,600 | Genco Shipping & Trading, Ltd. | 1,087,798 | ||||||
99,800 | General Electric Co. | 4,131,720 | ||||||
22,900 | General Motors Corp. | 840,430 | ||||||
2,900 | Google, Inc. - Class A(a) | 1,645,083 | ||||||
13,000 | Greif, Inc., Class A | 788,840 | ||||||
45,100 | Hewlett-Packard Co. | 2,245,529 | ||||||
13,400 | Huaneng Power International, Inc. - ADR | 707,252 | ||||||
18,700 | IDEX Corp. | 680,493 | ||||||
77,100 | Intel Corp. | 1,993,806 | ||||||
23,100 | International Business Machines Corp. | 2,721,180 | ||||||
40,300 | JB Hunt Transport Services, Inc. | 1,059,890 | ||||||
15,400 | Johnson & Johnson, Inc. | 1,011,780 |
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Shares or Principal Amount | Value | |||||||
13,700 | Johnson Controls, Inc. | $ | 1,618,107 | |||||
26,400 | JPMorgan Chase & Co. | 1,209,648 | ||||||
30,400 | Kaman Corp. - Class A | 1,050,624 | ||||||
33,600 | Kroger Co. | 958,272 | ||||||
8,900 | L-3 Communications Holdings, Inc. | 909,046 | ||||||
11,900 | Manor Care, Inc. | 766,360 | ||||||
23,000 | Merck & Co., Inc. | 1,188,870 | ||||||
15,300 | MetLife, Inc. | 1,066,869 | ||||||
86,200 | MFA Mortgage Investments, Inc. - REIT | 691,324 | ||||||
91,800 | Microsoft Corp. | 2,704,428 | ||||||
16,000 | Morgan Stanley | 1,008,000 | ||||||
21,700 | National Financial Partners Corp. | 1,149,666 | ||||||
24,800 | Nike, Inc. - Class B | 1,454,768 | ||||||
16,800 | Norfolk Southern Corp. | 872,088 | ||||||
12,600 | Occidental Petroleum Corp. | 807,408 | ||||||
38,500 | Partner Communications Co., Ltd. | 637,560 | ||||||
14,200 | PartnerRe, Ltd. | 1,121,658 | ||||||
12,700 | PepsiCo, Inc. | 930,402 | ||||||
29,400 | PerkinElmer, Inc. | 858,774 | ||||||
15,231 | Philippine Long Distance Telephone Co. - ADR | 979,962 | ||||||
12,800 | PNC Financial Services Group, Inc. | 871,680 | ||||||
30,200 | Procter & Gamble Co. | 2,124,268 | ||||||
12,000 | Prudential Financial, Inc. | 1,170,960 | ||||||
21,600 | QUALCOMM, Inc. | 912,816 | ||||||
12,500 | Quanex Corp. | 587,250 | ||||||
51,400 | Quintana Maritime, Ltd. | 980,198 | ||||||
21,300 | Raytheon Co. | 1,359,366 | ||||||
21,500 | RenaissanceRe Holdings, Ltd. | 1,406,315 | ||||||
36,100 | RPM International, Inc. | 864,595 | ||||||
44,000 | Schering-Plough Corp. | 1,391,720 | ||||||
193,261 | Siliconware Precision Industries Co. - ADR | 2,338,458 | ||||||
25,200 | SK Telecom Co., Ltd. - ADR | 748,440 | ||||||
15,400 | Smith International, Inc. | 1,099,560 | ||||||
11,900 | Steel Dynamics, Inc. | 555,730 | ||||||
11,700 | Target Corp. | 743,769 | ||||||
10,300 | The Boeing Co. | 1,081,397 | ||||||
25,400 | The Home Depot, Inc. | 823,976 | ||||||
16,800 | The Stanley Works | 942,984 | ||||||
12,700 | Tidewater, Inc. | 798,068 | ||||||
15,900 | Tsakos Energy Navigation, Ltd. | 1,119,519 | ||||||
25,500 | Tupperware Brands Corp. | 802,995 | ||||||
9,900 | Union Pacific Corp. | 1,119,294 | ||||||
12,800 | United Parcel Service, Inc. - Class B | 961,280 | ||||||
28,600 | US Bancorp | 930,358 | ||||||
19,600 | Vodafone Group PLC - ADR | 711,480 | ||||||
38,700 | Waddell & Reed Financial, Inc. - Class A | 1,046,061 | ||||||
58,100 | Wells Fargo & Co. | 2,069,522 | ||||||
Total Common Stocks (Cost $97,126,274) | 112,961,357 |
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Interest | Maturity | |||||||||||||||
Shares or Principal Amount | Rate | Date | Value | |||||||||||||
Convertible Preferred Stocks (0.8%) | ||||||||||||||||
7,000 | Northrop Grumman Corp. | 7.00 | % | 04/04/21 | $ | 1,008,000 | ||||||||||
Total Convertible Preferred Stocks (Cost $927,374) | 1,008,000 | |||||||||||||||
Corporate Bonds (2.2%) | ||||||||||||||||
$ | 1,000,000 | DaimlerChrysler AG | 6.50 | % | 11/15/13 | 1,036,924 | ||||||||||
1,288,000 | Household Finance Corp. | 4.75 | % | 07/15/13 | 1,225,823 | |||||||||||
575,000 | United Rentals NA, Inc. | 7.75 | % | 11/15/13 | 592,250 | |||||||||||
Total Corporate Bonds | ||||||||||||||||
(Cost $2,902,552) | 2,854,997 | |||||||||||||||
U.S. Government And U.S. Government Agency Bonds (8.5%) | ||||||||||||||||
1,000,000 | Fannie Mae | 6.63 | % | 10/15/07 | 1,000,704 | |||||||||||
1,000,000 | Fannie Mae | 3.25 | % | 01/15/08 | 994,491 | |||||||||||
1,000,000 | Fannie Mae | 5.25 | % | 01/15/09 | 1,009,196 | |||||||||||
750,000 | Fannie Mae | 6.63 | % | 09/15/09 | 781,006 | |||||||||||
750,000 | Fannie Mae | 6.13 | % | 03/15/12 | 795,655 | |||||||||||
3,000,000 | Freddie Mac | 5.00 | % | 01/16/09 | 3,020,622 | |||||||||||
1,323,000 | Freddie Mac | 5.16 | % | 02/27/15 | 1,312,562 | |||||||||||
258,000 | Freddie Mac | 5.00 | % | 09/29/17 | 251,677 | |||||||||||
1,000,000 | Federal Home Loan Bank | 2.75 | % | 03/14/08 | 990,429 | |||||||||||
1,000,000 | Federal Home Loan Bank | 5.80 | % | 09/02/08 | 1,010,371 | |||||||||||
Total U.S. Government And U.S. Government Agency Bonds | ||||||||||||||||
(Cost $11,139,821) | 11,166,713 |
Table of Contents
Underlying Security/ | ||||||||
Expiration Date/ | ||||||||
Exercise Price | Contracts | Value | ||||||
Call Option Purchased (0.4%) | ||||||||
Anixter International Inc., Expiration January 2009, Exercise Price $75 | 133 | $ | 238,070 | |||||
Avnet Inc., Expiration January 2009, Exercise Price $50 | 200 | 71,000 | ||||||
Harris Corp Option, Expiration February 2008, Exercise Price $60 | 167 | 60,955 | ||||||
Kinetic Concepts, Inc., Expiration January 2008, Exercise Price $50 | 100 | 88,000 | ||||||
MEMC Electronic Materials, Inc., Expiration January 2008, Exercise Price $65 | 154 | 58,520 | ||||||
Total Call Options Purchased (Cost $502,567) | 516,545 |
Shares or Principal Amount | Value | |||||
Short-Term Investments (1.3%) | ||||||
$ 1,650,639 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07 # | $ | 1,650,639 | |||
Total Short-Term Investments (Cost $1,650,639) | 1,650,639 | |||||
Total Investments 99.8% (Cost $114,249,227) | 130,158,251 | |||||
Other Assets Less Liabilities 0.2% | 202,781 | |||||
Net Assets 100.0% | $ | 130,361,032 | ||||
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, 2007. | |
ADR | American Depositary Receipt | |
REIT | Real Estate Investment Trust |
Table of Contents
Class I IOCIX
Class C IOCCX
Class Z IOCZX
Class A IOCAX
Class C IOCCX
Class Z IOCZX
Class A IOCAX
Q. | How did the Fund perform relative to its benchmark? |
A. | For the fiscal year ended September 30, 2007, the S&P Composite 1500 Index gained 16.59%, while the ICON Income Opportunity Fund returned 12.51% for Class I shares, 11.53% for Class C shares, and 12.67% for Class Z shares. Class A shares of the Fund returned 12.51% (and 6.05% with maximum sales charge) during the same period. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
Q. | What primary factors were behind the Fund’s relative performance? |
A. | Volatility in the U.S. equity market rose sharply during the fiscal period, driven, we think, by investors’ fears over oil prices, the housing slowdown, consumer spending, and the sub-prime mortgage lending debacle. |
These worries were the backdrop for a short-term sell-off from July 19, 2007 to August 16, 2007, in which the S&P 1500 Index lost (9.15%), a correction that interrupted what we believe is an ongoing bull market.
The CBOE Volatility Index (VIX), a measure of the market’s forecast of future volatility, reflected the fear and uncertainty behind this environment. The VIX started the period at a value of 11.98, well below its 15-year average of 18.61. By early March 2007, on the heels of a global equity decline sparked by a free-fall in the Chinese market, the VIX spiked to a high of 19.63.
During the ensuing four months leading up to the sharp correction that began on July 19, market concerns mounted over the sub-prime lending crisis and the slowdown in the U.S. housing market. As investors’ anxiety seemed to increase, so too did the VIX. On August 16, as the market was in the final stage of forming a near-term bottom, the VIX skyrocketed to a period-high of 30.83.
We believe the intense rise in volatility over the period was positive for the ICON Income Opportunity Fund. Increases in stock market volatility generally raise the amount of premium market-makers are willing to pay for call options. Since the Fund writes S&P 500 Index options, the Fund generally received more for options toward the end of this fiscal period than it had since early in the bull market.
Table of Contents
The Fund participated in 60.3% of the S&P 1500 Index’s upside return for the fiscal year, while dampening volatility and providing a downside cushion along the way.
Q. | How did the Fund’s composition affect performance? |
A. | While all nine economic sectors contributed positively to overall Fund performance, the top-contributing sectors for the period included Telecommunication & Utilities, Information Technology, and Energy. These three sectors comprised approximately 33% of the Fund on average over the period. In contrast, the Consumer Discretionary sector, comprising about 9% of the Fund on average over the period, made only a negligible contribution to performance. |
At the industry level, the three top contributing groups to Fund performance were oil & gas equipment & services, integrated telecommunication services, and communications equipment. Two of the Fund’s largest industry detractors were housewares & specialties and coal & consumable fuels.
Overall, the Fund’s strategy of writing at-the-money S&P 500 Index call options and buying out-of-the-money S&P 500 Index put options limited the upside potential of the underlying equities. On the other hand, consistent with the recently changed investment strategy of the Fund, the implementation of this index option approach decreased the overall volatility of the Fund, while at the same time providing downside protection during market downturns over the course of the fiscal period.
Q. | What is your investment outlook for the equity market? |
A. | Domestic stocks ended the period trading at about a 12% discount to our calculation of their intrinsic value, indicating to us that the bull market has the potential to continue. |
While we do not consider market capitalization when making investment decisions, our system has noted the strength of large-capitalization stocks. Since summer 2006, large-cap stocks have outperformed their small- and mid-cap counterparts. Our value and relative strength metrics have pulled us toward many of these issues as they have demonstrated leadership in the marketplace, particularly large-cap Technology and Financial stocks.
While we cannot be certain where option premium levels will go from here, recent levels on the VIX are more in keeping with historical averages. Should these levels continue, we believe it would benefit the Fund: relatively higher values on the VIX have historically translated into higher option premiums, which, in turn, help diminish the Fund’s volatility and enhance its downside protection.
Table of Contents
Sector Composition
as of September 30, 2007
as of September 30, 2007
Information Technology | 20.0% | |||
Financial | 19.7% | |||
Industrials | 18.7% | |||
Healthcare | 11.4% | |||
Energy | 8.3% | |||
Telecommunication and Utilities | 8.0% | |||
Consumer Discretionary | 6.3% | |||
Leisure and Consumer Staples | 5.6% | |||
Materials | 4.2% |
Percentages are based upon net assets.
Industry Composition
as of September 30, 2007
as of September 30, 2007
Computer Hardware | 6.2% | ||
Diversified Banks | 4.8% | ||
Aerospace & Defense | 4.5% | ||
Construction & Farm Machinery & Heavy Trucks | 4.4% | ||
Wireless Telecommunication Services | 4.3% | ||
Managed Health Care | 4.1% | ||
Industrial Conglomerates | 4.0% | ||
Oil & Gas Equipment & Services | 4.0% | ||
Other Diversified Financial Services | 4.0% | ||
Pharmaceuticals | 3.6% | ||
Integrated Oil & Gas | 3.4% | ||
Integrated Telecommunication Services | 3.3% | ||
Life & Health Insurance | 3.1% | ||
Semiconductors | 3.1% | ||
Household Products | 2.9% | ||
Internet Software Services | 2.9% | ||
Technology Distributors | 2.7% | ||
Auto Parts & Equipment | 2.6% | ||
Multi-Line Insurance | 2.6% | ||
Health Care Equipment | 2.5% | ||
Marine | 2.5% | ||
Systems Software | 2.3% | ||
Investment Banking & Brokerage | 2.2% | ||
Railroads | 2.0% | ||
Reinsurance | 2.0% | ||
Communications Equipment | 1.8% | ||
Fertilizers & Agricultural Chemicals | 1.5% | ||
Metal & Glass Containers | 1.4% | ||
Industrial Machinery | 1.3% | ||
Home Improvement Retail | 1.2% | ||
General Merchandise Stores | 1.0% | ||
Semiconductor Equipment | 1.0% | ||
Oil & Gas Drilling | 0.9% | ||
Automotive Retail | 0.8% | ||
Gold | 0.8% | ||
Soft Drinks | 0.8% | ||
Agriculture Products | 0.7% | ||
Food Distributors | 0.7% | ||
Health Care Services | 0.7% | ||
Household Appliances | 0.7% | ||
Biotechnology | 0.5% | ||
Distillers & Vintners | 0.5% | ||
Diversified Metals & Mining | 0.5% | ||
Regional Banks | 0.5% | ||
Thrifts & Mortgage Finance | 0.5% | ||
Electric Utilities | 0.4% |
Percentages are based upon net assets.
Table of Contents
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Gross | Net | |||||||||||||||||||||||||||||
Inception | Since | Expense | Expense | |||||||||||||||||||||||||||
Date | 1 Year | 5 Years | Inception | Ratio* | Ratio* | |||||||||||||||||||||||||
ICON Income Opportunity Fund - Class I | 9/30/02 | 12.51 | % | 11.05 | % | 11.05 | % | 1.47 | % | 1.47 | % | |||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | 15.82 | % | 15.82 | % | N/A | N/A | ||||||||||||||||||||||
ICON Income Opportunity Fund - Class C | 11/21/02 | 11.53 | % | N/A | 8.90 | % | 2.61 | % | 2.23 | % | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | N/A | 13.70 | % | N/A | N/A | |||||||||||||||||||||||
ICON Income Opportunity Fund - Class Z | 5/6/04 | 12.67 | % | N/A | 7.63 | % | 3.52 | % | 1.22 | % | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | N/A | 12.08 | % | N/A | N/A | |||||||||||||||||||||||
ICON Income Opportunity Fund - Class A | 5/31/06 | 12.51 | % | N/A | 9.65 | % | 42.18 | % | 1.47 | % | ||||||||||||||||||||
Income Opportunity Fund - Class A (include maximum sales charge of 5.75%) | 5/31/06 | 6.05 | % | N/A | 4.88 | % | 42.18 | % | 1.47 | % | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | N/A | 16.34 | % | 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 on 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 29, 2007 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
Table of Contents
Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020004.gif)
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.
Table of Contents
ICON Income Opportunity Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (102.2%) | ||||||||
17,500 | Aetna, Incx | $ | 949,725 | |||||
18,000 | Aflac, Inc. | 1,026,720 | ||||||
6,600 | Allegheny Energy, Inc.(a) | 344,916 | ||||||
19,600 | America Movil S.A.B. de C.V. - ADRx | 1,254,400 | ||||||
14,800 | American International Group, Inc.x | 1,001,220 | ||||||
9,200 | Anixter International, Inc.(a)(b) | 758,540 | ||||||
3,000 | Apple Computer, Inc.(a) | 460,620 | ||||||
17,500 | Arrow Electronics, Inc.(a)x | 744,100 | ||||||
16,000 | Astec Industries, Inc.(a) | 919,200 | ||||||
42,600 | AT&T, Inc.x | 1,802,406 | ||||||
688 | AU Optronics Corp. - ADR(b) | 11,641 | ||||||
5,500 | AutoZone, Inc.(a)x | 638,770 | ||||||
17,000 | Avnet, Inc.(a) | 677,620 | ||||||
10,200 | Ball Corp. | 548,250 | ||||||
41,200 | Banco Santander Central Hispano S.A. - ADRx | 795,572 | ||||||
30,400 | Bank of America Corp.x | 1,528,208 | ||||||
31,500 | Barnes Group, Inc. | 1,005,480 | ||||||
9,700 | BB&T Corp. | 391,783 | ||||||
21,700 | BE Aerospace, Inc.(a) | 901,201 | ||||||
10,500 | BP PLC - ADR | 728,175 | ||||||
8,900 | Cameron International Corp.(a)x | 821,381 | ||||||
12,800 | Caterpillar, Inc. | 1,003,904 | ||||||
5,500 | Celgene Corp.(a) | 392,205 | ||||||
9,000 | Central European Distribution Corp.(a) | 431,190 | ||||||
16,500 | CIGNA Corp.x | 879,285 | ||||||
330 | Citadel Broadcasting Corp.x | 1,373 | ||||||
14,800 | Citigroup, Inc. | 690,716 | ||||||
8,800 | ConocoPhillips | 772,376 | ||||||
12,800 | Corn Products International, Inc. | 587,136 | ||||||
68,900 | Dell, Inc.(a)x | 1,901,640 | ||||||
6,000 | Diamond Offshore Drilling, Inc.x | 679,740 | ||||||
11,800 | Drew Industries, Inc.(a) | 480,024 | ||||||
16,800 | eBay, Inc.(a)x | 655,536 | ||||||
7,200 | Everest Re Group, Ltd. | 793,728 | ||||||
9,800 | Express Scripts, Inc.(a) | 547,036 | ||||||
3,800 | Freeport-McMoran Copper & Gold, Inc. - Class B | 398,582 | ||||||
77,600 | General Electric Co.x | 3,212,640 | ||||||
33,500 | Gold Fields Ltd., - ADR | 606,015 | ||||||
2,900 | Google, Inc. - Class A(a)x | 1,645,083 | ||||||
9,600 | Greif, Inc., Class A | 582,528 | ||||||
10,500 | Halliburton Co. | 403,200 | ||||||
11,300 | Harris Corp. | 653,027 | ||||||
16,500 | Health Net, Inc.(a)x | 891,825 | ||||||
8,300 | Hewlett-Packard Co. | 413,257 | ||||||
4,400 | HSBC Holdings PLC - ADR | 407,440 | ||||||
7,900 | Humana, Inc.(a) | 552,052 | ||||||
75,000 | Intel Corp. | 1,939,500 | ||||||
18,600 | International Business Machines Corp.x | 2,191,080 | ||||||
19,600 | Johnson & Johnson, Inc. | 1,287,720 | ||||||
13,300 | Johnson Controls, Inc.x | 1,570,863 | ||||||
21,500 | JPMorgan Chase & Co.x | 985,130 | ||||||
6,400 | Kimberly-Clark Corp. | 449,664 |
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Shares or Principal Amount | Value | |||||||
17,600 | Kirby Corp.(a) | $ | 776,864 | |||||
15,100 | Lam Research Corp.(a) | 804,226 | ||||||
9,200 | Loews Corp. | 444,820 | ||||||
18,600 | Lowe’s Cos., Inc. | 521,172 | ||||||
19,500 | Manulife Financial Corp. | 804,570 | ||||||
22,600 | Medtronic, Inc. | 1,274,866 | ||||||
8,700 | MetLife, Inc.x | 606,651 | ||||||
30,900 | Microsoft Corp.x | 910,314 | ||||||
13,600 | Monsanto Co. | 1,166,064 | ||||||
14,400 | Morgan Stanleyx | 907,200 | ||||||
5,900 | Murphy Oil Corp. | 412,351 | ||||||
32,000 | National Bank Of Greece S.A. - ADR | 413,120 | ||||||
3,600 | National Oilwell Varco, Inc.(a) | 520,200 | ||||||
93,900 | Navios Maritime Holdings, Inc. | 1,233,846 | ||||||
5,200 | NII Holdings, Inc.(a) | 427,180 | ||||||
15,500 | Norfolk Southern Corp. | 804,605 | ||||||
3,300 | Northrop Grumman Corp. | 257,400 | ||||||
12,400 | Occidental Petroleum Corp.x | 794,592 | ||||||
42,600 | Oracle Corp.(a) | 922,290 | ||||||
11,700 | Oshkosh Truck Corp.x | 725,049 | ||||||
26,500 | Procter & Gamble Co.x | 1,864,010 | ||||||
8,600 | PT Telekomunikasi Indonesia - ADR(b) | 419,852 | ||||||
19,400 | Raytheon Co. | 1,238,108 | ||||||
12,600 | RenaissanceRe Holdings, Ltd. | 824,166 | ||||||
8,000 | Research In Motion, Ltd.(a) | 788,400 | ||||||
17,600 | Rogers Communications, Inc. - Class B | 801,328 | ||||||
41,500 | Schering-Plough Corp.x | 1,312,645 | ||||||
5,100 | Schlumberger, Ltd.(b) | 535,500 | ||||||
13,600 | Sciele Pharma, Inc.(a) | 353,872 | ||||||
48,500 | Siliconware Precision Industries Co. - ADR(b) | 586,850 | ||||||
10,700 | Stryker Corp. | 735,732 | ||||||
15,700 | Sysco Corp. | 558,763 | ||||||
12,200 | Target Corp. | 775,554 | ||||||
11,700 | Telefonos de Mexico S.A. de C.V. - ADR | 384,579 | ||||||
7,900 | The Boeing Co. | 829,421 | ||||||
3,900 | The Goldman Sachs Group, Inc. | 845,286 | ||||||
5,700 | The Hartford Financial Services Group, Inc. | 527,535 | ||||||
12,700 | The Home Depot, Inc. | 411,988 | ||||||
17,100 | The Pepsi Bottling Group, Inc. | 635,607 | ||||||
4,900 | Triumph Group, Inc. | 400,379 | ||||||
7,100 | Union Pacific Corp. | 802,726 | ||||||
36,500 | Vimpel-Communications - ADRx | 986,960 | ||||||
21,300 | Wabtec Corp. | 797,898 | ||||||
7,900 | Wachovia Corp. | 396,185 | ||||||
11,400 | Washington Mutual, Inc. | 402,534 | ||||||
13,600 | Weatherford International, Ltd.(a) | 913,648 | ||||||
51,100 | Wells Fargo & Co.x | 1,820,182 | ||||||
6,700 | Whirlpool Corp. | 596,970 | ||||||
Total Common Stocks (Cost $72,299,220) | 81,589,481 | |||||||
Short-Term Investments (0.0%) | ||||||||
$ | 11,395 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07 # | 11,395 | |||||
Total Short-Term Investments (Cost $11,395) | 11,395 |
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Underlying Securities Index/ | ||||||||||||
Expiration Date/ | ||||||||||||
Exercise Price | Contracts | Value | ||||||||||
Put Options Purchased (0.4%) | ||||||||||||
S&P Index Oct 1515 Put, Expiration October 2007, Exercise Price $1515 | 211 | $ | 354,480 | |||||||||
Total Put Options Purchased (Cost $464,907) | 354,480 |
Shares or Principal Amount | Value | |||||||||||
Other Securities (2.8%) | ||||||||||||
2,214,204 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | $ | 2,214,204 | |||||||||
Total Other Securities (Cost $2,214,204) | 2,214,204 | |||||||||||
Total Investments 105.4% (Cost $74,989,726) | 84,169,560 | |||||||||||
Liabilities Less Other Assets (5.4)% | (4,352,704 | ) | ||||||||||
Net Assets 100.0% | $ | 79,816,856 | ||||||||||
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
x | A portion or all of the security is pledged as collateral for all options written. | |
ADR | American Depositary Receipt |
The accompanying notes are an integral part of the financial statements.
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Schedule of Written Call Options
September 30, 2007
September 30, 2007
Underlying Security/ | ||||||||
Expiration Date/ | ||||||||
Exercise Price | Contracts* | Value | ||||||
S&P Index Oct 1530 Call, Expiration October 2007, Exercise Price $1530 | 527 | $ | 1,204,195 | |||||
Total Options Written (Premiums received $2,000,804) | $ | 1,204,195 | ||||||
* | All written options have 100 shares per contract. |
The accompanying notes are an integral part of the financial statements.
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Class I IOLIX
Class C IOLCX
Class Z IOLZX
Class A ISTAX
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, gained 16.59% for the fiscal year ended September 30, 2007. In comparison, the ICON Long/Short Fund returned 15.05% for Class I shares, 14.05% for Class C shares, and 14.81% for Class Z shares. Class A shares of the Fund returned 14.94% (and 8.32% with maximum sales charge) during the same period. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
Q. | What primary factors were behind the Fund’s relative performance? |
A. | The stock market climbed a wall of worry during the fiscal year. Concerns over recession, inflation, a sell-off in the Chinese market, housing, and sub-prime mortgages dominated the headlines. The sector leaders of the year, Energy, Materials, and Industrials, are hardly the defensive sectors that investors favor in the face of such fears. |
The Financials sector produced the most disappointing returns within the S&P 1500 Index, gaining a meager 1.48% for the fiscal year. At the outset of the year, our system suggested the Financials sector demonstrated the best combination of value and strength. Unfortunately, this value was never realized as the sector was rocked by sub-prime fears and lack of liquidity in the structured credit market. Considering that the Financials sector makes up more than 20% of the S&P 1500 Index, this sector was a drag on both benchmark and Fund returns.
The Consumer Discretionary sector, which we similarly calculated was undervalued at the beginning of the fiscal year, also failed to perform as we’d anticipated. This sector was dragged down by the sub-prime fears, the slowdown in the housing market, and concerns over slowing U.S. consumer spending.
Despite the weak returns from the Financials and Consumer Discretionary sectors, strong economic and earnings growth, low inflation, and moderate bond yields led the market higher during the period.
Q. | How did the Fund’s composition affect performance? |
A. | When the fiscal year began, relative strength indicators led the Fund to underweight positions in the leading cyclical sectors: Energy, Materials, and Industrials. However, these sectors contradicted their weak relative |
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strength metrics and led the market higher from the beginning of October 2006 through the end of 2006. |
Although the Fund was underweight the Materials, Energy, and Industrials sectors at the beginning of the period, our discipline and relative strength analysis guided us to add to these sectors throughout the year and participate in their returns.
We reduced the Fund’s short positions following the market sell-off, which bottomed out in mid-August 2007. We believe this sell-off, accompanied by a reduction in the federal funds rate, brought value back to the marketplace and reduced the Fund’s short opportunities.
The Financial sector showed value and relative strength at the beginning of the period, but its overweight position did little to enhance Fund returns as the sector was dragged down by sub-prime mortgage fears and liquidity issues.
Our relative strength indicators, as well as some shorting opportunities in the REIT industry, allowed us to reduce the Fund’s exposure to Financials, but the Fund’s weightings at the beginning of the fiscal year contributed to relative underperformance.
An overweight position in the Consumer Discretionary sector also hampered fiscal-year returns. The Fund’s average weight in the sector was about 7.5% versus an average weight of approximately 6% for the benchmark, but our relative strength readings led us to reduce the Fund’s position in this sector throughout the year. Holdings in the homebuilding and home improvement retail industries, which appeared to offer significant value, were hit especially hard by the housing slowdown.
Q. | What is your investment outlook for the equity market? |
A. | We expect to maintain the Fund’s overweight long positions in the Energy and Industrials sectors since our system indicates they are demonstrating value and strength against the broad market. We continue to watch for recognition by the market of the value we see in the Financials and Consumer Discretionary sectors. |
Although the Fund’s short positions were reduced toward the end of the fiscal year, we continue to monitor valuations to detect any signs of sector and industry overpricing. Should we see value diminishing, we will add short positions as our metrics warrant.
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Sector Composition
as of September 30, 2007
as of September 30, 2007
Financial | 19.4% | |||
Information Technology | 15.9% | |||
Energy | 15.6% | |||
Healthcare | 15.4% | |||
Industrials | 14.5% | |||
Telecommunication and Utilities | 5.6% | |||
Materials | 5.1% | |||
Consumer Discretionary | 3.3% | |||
Leisure and Consumer Staples | 3.0% |
Percentages are based upon long positions as a percentage of net assets.
Industry Composition
as of September 30, 2007
as of September 30, 2007
Oil & Gas Equipment & Services | 7.0% | ||
Managed Health Care | 5.5% | ||
Computer Hardware | 5.4% | ||
Other Diversified Financial Services | 5.2% | ||
Technology Distributors | 4.8% | ||
Health Care Services | 4.7% | ||
Oil & Gas Drilling | 4.7% | ||
Diversified Banks | 3.9% | ||
Aerospace & Defense | 3.4% | ||
Wireless Telecommunication Services | 3.0% | ||
Construction & Farm Machinery & Heavy Trucks | 2.8% | ||
Health Care Distributors | 2.8% | ||
Life & Health Insurance | 2.8% | ||
Steel | 2.7% | ||
Integrated Telecommunication Services | 2.6% | ||
Railroads | 2.6% | ||
Pharmaceuticals | 2.4% | ||
Electronic Equipment Manufacturers | 2.2% | ||
Diversified Metals & Mining | 2.1% | ||
Industrial Machinery | 2.0% | ||
Marine | 2.0% | ||
Reinsurance | 2.0% | ||
Investment Banking & Brokerage | 1.9% | ||
Regional Banks | 1.9% | ||
Multi-Line Insurance | 1.7% | ||
Oil & Gas Exploration & Production | 1.7% | ||
Systems Software | 1.7% | ||
Household Products | 1.5% | ||
Home Improvement Retail | 1.4% | ||
Integrated Oil & Gas | 1.4% | ||
Auto Parts & Equipment | 1.1% | ||
Internet Software Services | 1.0% | ||
Soft Drinks | 1.0% | ||
Metal & Glass Containers | 0.9% | ||
Coal & Consumable Fuels | 0.8% | ||
General Merchandise Stores | 0.8% | ||
Semiconductor Equipment | 0.8% | ||
Marine Ports & Services | 0.6% | ||
Distillers & Vintners | 0.5% | ||
Trading Companies & Distributors | 0.5% |
Percentages are based upon long positions as a percentage of net assets.
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Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Gross | Net | |||||||||||||||||||||||||||||
Inception | Since | Expense | Expense | |||||||||||||||||||||||||||
Date | 1 Year | 5 Years | Inception | Ratio* | Ratio* | |||||||||||||||||||||||||
ICON Long/Short Fund - Class I | 9/30/02 | 15.05 | % | 15.65 | % | 15.65 | % | 1.45 | % | 1.45 | % | |||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | 15.82 | % | 15.82 | % | N/A | N/A | ||||||||||||||||||||||
ICON Long/Short Fund - Class C | 10/17/02 | 14.05 | % | N/A | 13.54 | % | 2.30 | % | 2.30 | % | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | N/A | 14.87 | % | N/A | N/A | |||||||||||||||||||||||
ICON Long/Short Fund - Class Z | 5/6/04 | 14.81 | % | N/A | 11.90 | % | 1.17 | % | 1.17 | % | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | N/A | 12.08 | % | N/A | N/A | |||||||||||||||||||||||
ICON Long/Short Fund - Class A | 5/31/06 | 14.94 | % | N/A | 9.38 | % | 2.51 | % | 1.54 | % | ||||||||||||||||||||
ICON Long/Short Fund - Class A (include maximum sales charge of 5.75%) | 5/31/06 | 8.32 | % | N/A | 4.62 | % | 2.51 | % | 1.54 | % | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | N/A | 16.34 | % | 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 29, 2007 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020005.gif)
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.
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ICON Long/Short Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (97.8%) | ||||||||
60,000 | AAR Corp.(a) | $ | 1,820,400 | |||||
100,000 | Acergy S.A. - ADR | 2,970,000 | ||||||
50,000 | Aegean Marine Petroleum Network, Inc. | 1,813,000 | ||||||
70,000 | Aetna, Inc.x | 3,798,900 | ||||||
52,600 | Aflac, Inc. | 3,000,304 | ||||||
148,200 | Amedisys, Inc.(a)x | 5,693,844 | ||||||
72,500 | America Movil S.A.B. de C.V. - ADR | 4,640,000 | ||||||
29,400 | American International Group, Inc. | 1,988,910 | ||||||
92,000 | Amphenol Corp. - Class A | 3,657,920 | ||||||
60,000 | Anixter International, Inc.(a)x | 4,947,000 | ||||||
28,000 | Apache Corp. | 2,521,680 | ||||||
95,000 | Arrow Electronics, Inc.(a) | 4,039,400 | ||||||
85,000 | AT&T, Inc.x | 3,596,350 | ||||||
55,000 | Atwood Oceanics, Inc.(a) | 4,210,800 | ||||||
75,000 | Avnet, Inc.(a) | 2,989,500 | ||||||
50,000 | Ball Corp. | 2,687,500 | ||||||
160,800 | Bank of America Corp.x | 8,083,416 | ||||||
68,300 | BB&T Corp. | 2,758,637 | ||||||
41,800 | BP PLC - ADR | 2,898,830 | ||||||
55,000 | Bristow Group, Inc.(a)(b)x | 2,404,050 | ||||||
19,500 | BT Group PLC - ADR | 1,225,185 | ||||||
30,000 | Burlington Northern Santa Fe Corp. | 2,435,100 | ||||||
75,000 | CIGNA Corp.x | 3,996,750 | ||||||
75,300 | Citigroup, Inc. | 3,514,251 | ||||||
27,100 | CONSOL Energy, Inc. | 1,262,860 | ||||||
60,000 | Constellation Brands, Inc.(a) | 1,452,600 | ||||||
200,000 | Dell, Inc.(a)x | 5,520,000 | ||||||
40,000 | Diamond Offshore Drilling, Inc.x | 4,531,600 | ||||||
75,000 | eBay, Inc.(a) | 2,926,500 | ||||||
62,000 | ENSCO International, Inc. | 3,478,200 | ||||||
26,400 | Everest Re Group, Ltd. | 2,910,336 | ||||||
59,000 | Express Scripts, Inc.(a) | 3,293,380 | ||||||
69,200 | FMC Technologies, Inc.(a) | 3,990,072 | ||||||
42,500 | Freeport-McMoran Copper & Gold, Inc. - Class B | 4,457,825 | ||||||
44,150 | HCC Insurance Holdings, Inc. | 1,264,456 | ||||||
56,700 | Helix Energy Solutions Group, Inc.(a) | 2,407,482 | ||||||
73,500 | Henry Schein, Inc.(a) | 4,471,740 | ||||||
43,400 | Hercules Offshore, Inc.(a)(b) | 1,133,174 | ||||||
102,200 | Hewlett-Packard Co. | 5,088,538 | ||||||
31,700 | HSBC Holdings PLC - ADR(b) | 2,935,420 | ||||||
40,000 | Humana, Inc.(a) | 2,795,200 | ||||||
42,400 | International Business Machines Corp. | 4,994,720 | ||||||
65,000 | Johnson & Johnson, Inc. | 4,270,500 | ||||||
28,000 | Johnson Controls, Inc. | 3,307,080 | ||||||
78,200 | JPMorgan Chase & Co. | 3,583,124 | ||||||
40,000 | Kennametal, Inc. | 3,359,200 | ||||||
25,500 | Kimberly-Clark Corp. | 1,791,630 | ||||||
57,500 | Kirby Corp.(a) | 2,538,050 | ||||||
55,000 | KT Corp. - ADR(b) | 1,377,750 | ||||||
20,000 | Lam Research Corp.(a) | 1,065,200 |
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Shares or Principal Amount | Value | |||||||
13,200 | Lehman Brothers Holding, Inc.(b) | $ | 814,836 | |||||
72,800 | Lowe’s Cos., Inc. | 2,039,856 | ||||||
50,100 | MedcoHealth Solutions, Inc.(a) | 4,528,539 | ||||||
19,000 | MEMC Electronic Materials, Inc.(a) | 1,118,340 | ||||||
50,000 | Merck & Co., Inc. | 2,584,500 | ||||||
38,500 | MetLife, Inc. | 2,684,605 | ||||||
75,000 | Microsoft Corp. | 2,209,500 | ||||||
40,000 | Moog, Inc. - Class A(a) | 1,757,600 | ||||||
11,700 | Morgan Stanley | 737,100 | ||||||
30,000 | MSC Industrial Direct Co., Inc. - Class A | 1,517,700 | ||||||
64,300 | Mueller Industries, Inc. | 2,323,802 | ||||||
40,000 | National Oilwell Varco, Inc.(a) | 5,780,000 | ||||||
232,600 | Navios Maritime Holdings, Inc. | 3,056,364 | ||||||
45,000 | Norfolk Southern Corp. | 2,335,950 | ||||||
45,000 | Northwest Pipe Co.(a) | 1,701,900 | ||||||
80,000 | Oracle Corp.(a) | 1,732,000 | ||||||
50,000 | Oshkosh Truck Corp. | 3,098,500 | ||||||
75,000 | Partner Communications Co., Ltd.(b) | 1,242,000 | ||||||
95,100 | Patterson Cos., Inc.(a) | 3,671,811 | ||||||
24,700 | Peabody Energy Corp. | 1,182,389 | ||||||
40,300 | PNC Financial Services Group, Inc. | 2,744,430 | ||||||
37,700 | Procter & Gamble Co. | 2,651,818 | ||||||
25,500 | Prudential Financial, Inc. | 2,488,290 | ||||||
30,000 | PT Telekomunikasi Indonesia - ADR(b) | 1,464,600 | ||||||
62,500 | Quanex Corp. | 2,936,250 | ||||||
55,000 | Reliance Steel & Aluminum Co.x | 3,109,700 | ||||||
5,000 | Rio Tinto PLC - ADR | 1,717,000 | ||||||
38,300 | Rofin-Sinar Technologies, Inc.(a) | 2,689,043 | ||||||
65,300 | Rogers Communications, Inc. - Class B | 2,973,109 | ||||||
12,400 | Suncor Energy, Inc. ADR | 1,175,644 | ||||||
50,000 | Symantec Corp.(a) | 969,000 | ||||||
103,000 | SYNNEX Corp.(a) | 2,117,680 | ||||||
35,000 | Target Corp. | 2,224,950 | ||||||
75,000 | Tata Motors, Ltd. - ADR(b) | 1,435,500 | ||||||
40,000 | Terex Corp.(a) | 3,560,800 | ||||||
60,000 | The Boeing Co.x | 6,299,400 | ||||||
17,100 | The Goldman Sachs Group, Inc. | 3,706,254 | ||||||
18,400 | The Hartford Financial Services Group, Inc. | 1,702,920 | ||||||
63,900 | The Home Depot, Inc. | 2,072,916 | ||||||
80,000 | The Pepsi Bottling Group, Inc. | 2,973,600 | ||||||
30,000 | Tidewater, Inc. | 1,885,200 | ||||||
39,600 | Transatlantic Holdings, Inc.x | 2,785,068 | ||||||
25,000 | Union Pacific Corp. | 2,826,500 | ||||||
60,000 | UnitedHealth Group, Inc. | 2,905,800 | ||||||
55,500 | Wachovia Corp. | 2,783,325 | ||||||
50,000 | Weatherford International, Ltd.(a)x | 3,359,000 | ||||||
30,000 | WellPoint, Inc.(a) | 2,367,600 | ||||||
157,700 | Wells Fargo & Co. | 5,617,274 | ||||||
Total Common Stocks (Cost $253,849,463) | 283,558,327 |
Short-Term Investments (1.1%) | ||||||||
$ | 2,997,163 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07# | 2,997,163 | |||||
Total Short-Term Investments (Cost $2,997,163) | 2,997,163 |
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Shares or Principal Amount | Value | |||||||
Other Securities (3.8%) | ||||||||
11,012,588 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | $ | 11,012,588 | |||||
Total Other Securities (Cost $11,012,588) | 11,012,588 | |||||||
Total Investments 102.7% (Cost $267,859,214) | 297,568,078 | |||||||
Liabilities Less Other Assets (2.7)% | (7,711,801 | ) | ||||||
Net Assets 100.0% | $ | 289,856,277 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
x | A portion or all of the security is pledged as collateral for securities sold short. | |
ADR | American Depositary Receipt |
Table of Contents
Schedule of Securities Sold Short
September 30, 2007
September 30, 2007
Shares | Short Security | Value | ||||||
45,000 | Advanced Micro Devices, Inc.(a) | $ | 594,000 | |||||
17,500 | BJ’s Wholesale Club, Inc.(a) | 580,300 | ||||||
15,600 | Brookfield Asset Management, Inc. - Class A | 600,600 | ||||||
23,000 | Brookfield Properties Corp. | 572,700 | ||||||
9,700 | BRE Properties, Inc. | 542,521 | ||||||
8,600 | Coinstar, Inc.(a) | 276,662 | ||||||
10,000 | Companhia Brasileira De Distribuicao Grupo - ADR | 303,200 | ||||||
6,600 | Corporate Office Properties Trust | 274,758 | ||||||
2,400 | Essex Property Trust, Inc. | 282,168 | ||||||
12,700 | Equity Residential | 537,972 | ||||||
104,000 | Genesis Microchip, Inc.(a) | 815,360 | ||||||
6,500 | Hittite Microwave Corp.(a) | 286,975 | ||||||
17,600 | Host Hotels & Resorts, Inc. | 394,944 | ||||||
30,200 | Hutchinson Technology, Inc.(a) | 742,920 | ||||||
126,600 | Ikanos Communications, Inc.(a) | 705,162 | ||||||
50,400 | Interpublic Group of Cos., Inc.(a) | 523,152 | ||||||
50,000 | Isle of Capri Casinos, Inc.(a) | 972,500 | ||||||
49,900 | LaserCard Corp.(a) | 554,389 | ||||||
75,100 | Louisiana-Pacific Corp. | 1,274,447 | ||||||
15,300 | Lexmark International, Inc.(a) | 635,409 | ||||||
47,600 | Micron Technology, Inc.(a) | 528,360 | ||||||
75,000 | Multimedia Games, Inc.(a) | 639,000 | ||||||
3,600 | Public Storage | 283,140 | ||||||
50,500 | Rackable Systems, Inc.(a) | 654,985 | ||||||
3,600 | SL Green Realty Corp. | 420,372 | ||||||
6,000 | Sovran Self Storage, Inc. | 275,040 | ||||||
60,000 | Stillwater Mining Co.(a) | 617,400 | ||||||
10,000 | Temple-Inland, Inc. | 526,300 | ||||||
21,800 | UDR, Inc. | 530,176 | ||||||
20,700 | Weyerhaeuser Co. | 1,496,610 | ||||||
Total Securities Sold Short (Proceeds $18,315,847) | $ | 17,441,522 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
ADR | American Depositary Receipt |
Table of Contents
Statements of Assets and Liabilities
September 30, 2007
September 30, 2007
ICON | ICON | ICON | ||||||||||||||||||
ICON | Core | Equity | Income | ICON | ||||||||||||||||
Bond | Equity | Income | Opportunity | Long/Short | ||||||||||||||||
Fund | Fund | Fund | Fund* | Fund | ||||||||||||||||
Assets | ||||||||||||||||||||
Investments, at cost | $ | 124,070,254 | $ | 163,066,736 | $ | 114,249,227 | $ | 74,989,726 | $ | 267,859,214 | ||||||||||
Investments, at value† | 124,495,069 | 189,715,864 | 130,158,251 | 84,169,560 | 297,568,078 | |||||||||||||||
Cash | 6,527 | — | 1,693 | — | 132,843 | |||||||||||||||
Deposits for short sales | — | — | — | — | 18,695,984 | |||||||||||||||
Receivables: | ||||||||||||||||||||
Fund shares sold | 282,251 | 164,460 | 156,537 | 186,351 | 1,328,219 | |||||||||||||||
Investments sold | — | 3,397,976 | — | 2,937,513 | 7,398,945 | |||||||||||||||
Interest | 1,574,056 | 3,711 | 158,046 | 741 | 29,183 | |||||||||||||||
Dividends | — | 74,280 | 185,304 | 54,198 | 120,576 | |||||||||||||||
Expense reimbursements by Adviser | 13,520 | — | 2,986 | 3,626 | — | |||||||||||||||
Expense reimbursement by Sub-Administrator | — | — | 807,370 | — | — | |||||||||||||||
Other assets | 43,687 | 45,707 | 40,811 | 42,453 | 63,434 | |||||||||||||||
Total Assets | 126,415,110 | 193,401,998 | 131,510,998 | 87,394,442 | 325,337,262 | |||||||||||||||
Liabilities | ||||||||||||||||||||
Options written, at value (premiums received of $2,000,804) | — | — | — | 1,204,195 | — | |||||||||||||||
Common stocks sold short, at value (proceeds of $18,315,847) | — | — | — | — | 17,441,522 | |||||||||||||||
Payables: | ||||||||||||||||||||
Due to custodian bank | — | 20,021 | — | 272,902 | — | |||||||||||||||
Due to prime broker | — | — | — | 1,215,297 | — | |||||||||||||||
Interest | 127 | 586 | 522 | 1,435 | — | |||||||||||||||
Investments bought | — | 1,846,487 | — | 2,446,967 | 6,451,046 | |||||||||||||||
Payable for collateral received on securities loaned | 1,532,004 | 7,148,566 | — | 2,214,204 | 11,012,588 | |||||||||||||||
Fund shares redeemed | 146,150 | 814,209 | 163,476 | 110,667 | 225,826 | |||||||||||||||
Distributions due to shareholders | 6,645 | — | 24,612 | — | — | |||||||||||||||
Advisory fees and fee waiver recoupment | 61,998 | 112,384 | 79,201 | 58,945 | 195,751 | |||||||||||||||
Accrued distribution fees | 26,557 | 94,274 | 29,641 | 17,676 | 83,686 | |||||||||||||||
Fund accounting fees | 3,010 | 3,977 | 2,975 | 1,939 | 5,858 | |||||||||||||||
Transfer agent fees | 6,585 | 16,908 | 8,198 | 5,292 | 11,450 | |||||||||||||||
Administration fees | 4,856 | 7,143 | 5,028 | 3,063 | 10,721 | |||||||||||||||
Trustee fees | 1,755 | 2,532 | 1,782 | 1,098 | 3,876 | |||||||||||||||
Code 860 expense | — | — | 807,370 | — | — | |||||||||||||||
Accrued expenses | 21,078 | 29,299 | 27,161 | 23,906 | 38,661 | |||||||||||||||
Total Liabilities | 1,810,765 | 10,096,386 | 1,149,966 | 7,577,586 | 35,480,985 | |||||||||||||||
Net Assets - all share classes | $ | 124,604,345 | $ | 183,305,612 | $ | 130,361,032 | $ | 79,816,856 | $ | 289,856,277 | ||||||||||
Net Assets - Class I | $ | 123,102,023 | $ | 88,245,937 | $ | 124,668,453 | $ | 77,195,306 | $ | 238,942,827 | ||||||||||
Net Assets - Class C | $ | 1,491,231 | $ | 92,349,635 | $ | 5,330,728 | $ | 2,290,521 | $ | 43,985,878 | ||||||||||
Net Assets - Class Z | $ | 11,091 | $ | 1,319,978 | $ | 39,822 | $ | 36,688 | $ | 447,008 | ||||||||||
Net Assets - Class A | $ | — | $ | 1,390,062 | $ | 322,029 | $ | 294,341 | $ | 6,480,564 | ||||||||||
Table of Contents
ICON | ICON | ICON | ||||||||||||||||||
ICON | Core | Equity | Income | ICON | ||||||||||||||||
Bond | Equity | Income | Opportunity | Long/Short | ||||||||||||||||
Fund | Fund | Fund | Fund* | Fund | ||||||||||||||||
Net Assets Consist of | ||||||||||||||||||||
Paid-in capital | $ | 125,825,644 | $ | 141,578,469 | $ | 101,770,909 | $ | 76,541,086 | $ | 252,545,042 | ||||||||||
Accumulated undistributed net investment income/(loss) | (33,477 | ) | — | (146,553 | ) | — | 338,387 | |||||||||||||
Accumulated undistributed net realized gain/(loss) from investments, written options, and securities sold short | (1,612,637 | ) | 15,078,015 | 12,827,652 | (6,700,673 | ) | 6,389,659 | |||||||||||||
Unrealized appreciation/ (depreciation) on investments, written options and securities sold short | 424,815 | 26,649,128 | 15,909,024 | 9,976,443 | 30,583,189 | |||||||||||||||
Net Assets | $ | 124,604,345 | $ | 183,305,612 | $ | 130,361,032 | $ | 79,816,856 | $ | 289,856,277 | ||||||||||
Shares outstanding (unlimited shares authorized, no par value) | ||||||||||||||||||||
Class I | 12,280,825 | 5,317,905 | 7,565,343 | 5,858,320 | 12,406,564 | |||||||||||||||
Class C | 148,412 | 5,898,958 | 326,424 | 181,602 | 2,372,019 | |||||||||||||||
Class Z | 1,107 | 79,426 | 2,420 | 2,744 | 23,164 | |||||||||||||||
Class A | — | 85,187 | 19,633 | 22,389 | 337,579 | |||||||||||||||
Net asset value (offering and redemption price per share) | ||||||||||||||||||||
Class I | $ | 10.02 | $ | 16.59 | $ | 16.48 | $ | 13.18 | $ | 19.26 | ||||||||||
Class C | $ | 10.05 | $ | 15.66 | $ | 16.33 | $ | 12.61 | $ | 18.54 | ||||||||||
Class Z | $ | 10.02 | $ | 16.62 | $ | 16.46 | $ | 13.37 | $ | 19.30 | ||||||||||
Class A | $ | — | $ | 16.32 | $ | 16.40 | $ | 13.15 | $ | 19.20 | ||||||||||
Class A maximum offering price (100%/(100%-maximum sales charge)) of net asset value adjusted to the nearest cent per share | $ | — | $ | 17.32 | $ | 17.40 | $ | 13.95 | $ | 20.37 |
* | Formerly the ICON Covered Call Fund. |
† | Includes securities on loan of $1,472,749, $7,008,015, $0, $2,168,286 and $10,733,407. |
The accompanying notes are an integral part of the financial statements.
Table of Contents
Statements of Operations
For the year ended September 30, 2007
For the year ended September 30, 2007
ICON | ICON | ICON | ||||||||||||||||||
ICON | Core | Equity | Income | ICON | ||||||||||||||||
Bond | Equity | Income | Opportunity | Long/Short | ||||||||||||||||
Fund | Fund | Fund | Fund* | Fund | ||||||||||||||||
Investment Income | ||||||||||||||||||||
Interest | $ | 5,654,249 | $ | 76,721 | $ | 590,706 | $ | 65,195 | $ | 1,216,131 | ||||||||||
Dividends | — | 2,596,002 | 3,673,601 | 890,566 | 3,347,330 | |||||||||||||||
Income from securities lending, net | 490 | 10,019 | — | 1,667 | 21,508 | |||||||||||||||
Foreign taxes withheld | — | — | (4,846 | ) | — | — | ||||||||||||||
Total Investment Income | 5,654,739 | 2,682,742 | 4,259,461 | 957,428 | 4,584,969 | |||||||||||||||
Expenses | ||||||||||||||||||||
Advisory fees | 624,637 | 1,489,598 | 1,036,497 | 514,294 | 2,104,848 | |||||||||||||||
Distribution fees: | ||||||||||||||||||||
Class I | 257,261 | 246,286 | 332,349 | 164,855 | 510,984 | |||||||||||||||
Class C | 10,114 | 977,851 | 50,750 | 25,399 | 364,366 | |||||||||||||||
Class A | — | 2,514 | 380 | 177 | 9,144 | |||||||||||||||
Fund accounting fees | 30,762 | 50,967 | 37,310 | 22,104 | 63,305 | |||||||||||||||
Transfer agent fees | 67,508 | 186,477 | 90,010 | 54,584 | 118,634 | |||||||||||||||
Administration fees | 48,082 | 91,744 | 63,839 | 31,674 | 114,388 | |||||||||||||||
Registration fees: | ||||||||||||||||||||
Class I | 19,161 | 13,017 | 14,620 | 14,591 | 23,196 | |||||||||||||||
Class C | 11,396 | 12,982 | 9,854 | 9,945 | 12,878 | |||||||||||||||
Class A | — | 1,905 | 1,978 | 2,289 | 2,043 | |||||||||||||||
Insurance expense | 5,376 | 11,917 | 7,915 | 3,693 | 11,388 | |||||||||||||||
Trustee fees and expenses | 9,757 | 17,992 | 12,854 | 8,110 | 21,576 | |||||||||||||||
Interest expense | 4,347 | 8,403 | 9,769 | 35,980 | 795 | |||||||||||||||
Other expenses | 71,217 | 115,406 | 89,726 | 93,363 | 134,299 | |||||||||||||||
Dividends on short positions | — | — | — | — | 442,961 | |||||||||||||||
Recoupment of previously reimbursed expenses | — | — | — | 71,582 | 7,478 | |||||||||||||||
Code 860 expense | — | — | 807,370 | — | — | |||||||||||||||
Total expenses before expense reimbursement and transfer agent earnings credit | 1,159,618 | 3,227,059 | 2,565,221 | 1,052,640 | 3,942,283 | |||||||||||||||
Transfer agent earnings credit | (5,213 | ) | (9,803 | ) | (6,830 | ) | (3,397 | ) | (12,441 | ) | ||||||||||
Expense reimbursement by Adviser due to expense limitation agreement | (101,907 | ) | — | (12,700 | ) | — | — | |||||||||||||
Expense reimbursement of Code 860 expense by the Sub-Administrator | — | — | (807,370 | ) | — | — | ||||||||||||||
Net Expenses | 1,052,498 | 3,217,256 | 1,738,321 | 1,049,243 | 3,929,842 | |||||||||||||||
Net Investment Income/(Loss) | 4,602,241 | (534,514 | ) | 2,521,140 | (91,815 | ) | 655,127 | |||||||||||||
Net Realized and Unrealized Gain/(Loss) on Investments | ||||||||||||||||||||
Net realized gain/(loss) from investment transactions | (158,250 | ) | 19,681,940 | 15,603,497 | 4,877,476 | 6,388,241 | ||||||||||||||
Net realized gain (loss) from written option transactions | — | — | — | (2,091,486 | ) | — | ||||||||||||||
Net realized gain/(loss) from securities sold short | — | — | — | — | 947,989 | |||||||||||||||
Change in unrealized net appreciation/(depreciation) on investments | 756,222 | 11,709,068 | 4,578,186 | 4,362,278 | 23,497,071 | |||||||||||||||
Change in unrealized appreciation/(depreciation) on written options and securities sold short | — | — | — | 690,276 | 503,778 | |||||||||||||||
Net realized and unrealized gain/(loss) on investments | 597,972 | 31,391,008 | 20,181,683 | 7,838,544 | 31,337,079 | |||||||||||||||
Net Increase/(Decrease) in Net Assets Resulting From Operations | $ | 5,200,213 | $ | 30,856,494 | $ | 22,702,823 | $ | 7,746,729 | $ | 31,992,206 | ||||||||||
* | Formerly the ICON Covered Call Fund. |
The accompanying notes are an integral part of the financial statements.
Table of Contents
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Table of Contents
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, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations | ||||||||||||||||
Net investment income/(loss) | $ | 4,602,241 | $ | 3,646,185 | $ | (534,514 | ) | $ | (958,391 | ) | ||||||
Net realized gain/(loss) from investment transactions, written options and securities sold short | (158,250 | ) | (1,371,071 | ) | 19,681,940 | 17,009,597 | ||||||||||
Change in net unrealized appreciation/(depreciation) on investments, written options and securities sold short | 756,222 | 143,765 | 11,709,068 | (10,215,314 | ) | |||||||||||
Net increase/(decrease) in net assets resulting from operations | 5,200,213 | 2,418,879 | 30,856,494 | 5,835,892 | ||||||||||||
Dividends and Distributions to Shareholders | ||||||||||||||||
Net investment income | ||||||||||||||||
Class I | (4,626,599 | ) | (3,568,886 | ) | — | — | ||||||||||
Class C | (46,277 | ) | (35,016 | ) | — | — | ||||||||||
Class Z | (527 | ) | (163 | ) | — | — | ||||||||||
Class A | — | — | — | — | ||||||||||||
Net realized gains | ||||||||||||||||
Class I | — | (67,629 | ) | (7,580,907 | ) | (3,632,925 | ) | |||||||||
Class C | — | (720 | ) | (7,230,668 | ) | (3,157,999 | ) | |||||||||
Class Z | — | (5 | ) | (94,989 | ) | (44,621 | ) | |||||||||
Class A | — | — | (36,638 | ) | — | |||||||||||
Net decrease from dividends and distributions | (4,673,403 | ) | (3,672,419 | ) | (14,943,202 | ) | (6,835,545 | ) | ||||||||
Fund Share Transactions | ||||||||||||||||
Shares sold | ||||||||||||||||
Class I | 68,988,664 | 64,855,369 | 23,824,919 | 48,438,116 | ||||||||||||
Class C | 917,781 | 680,279 | 8,551,109 | 30,392,845 | ||||||||||||
Class Z | 48,144 | 3,382 | 133,685 | 144,544 | ||||||||||||
Class A | — | — | 1,422,196 | 126,818 | ||||||||||||
Reinvested dividends and distributions | ||||||||||||||||
Class I | 4,481,263 | 3,549,356 | 6,749,960 | 3,340,799 | ||||||||||||
Class C | 44,325 | 32,459 | 6,925,661 | 3,039,446 | ||||||||||||
Class Z | 525 | 169 | 92,041 | 44,621 | ||||||||||||
Class A | — | — | 32,501 | — | ||||||||||||
Shares repurchased | ||||||||||||||||
Class I | (41,215,819 | ) | (59,254,239 | ) | (55,610,067 | ) | (40,446,108 | ) | ||||||||
Class C | (441,608 | ) | (720,554 | ) | (26,377,163 | ) | (14,874,966 | ) | ||||||||
Class Z | (41,463 | ) | (5,070 | ) | (299,637 | ) | (69,837 | ) | ||||||||
Class A | — | — | (279,650 | ) | — | |||||||||||
Net increase/(decrease) from fund share transactions | 32,781,812 | 9,141,151 | (34,834,445 | ) | 30,136,278 | |||||||||||
Total net increase/(decrease) in net assets | 33,308,622 | 7,887,611 | (18,921,153 | ) | 29,136,625 | |||||||||||
Net Assets | ||||||||||||||||
Beginning of period | 91,295,723 | 83,408,112 | 202,226,765 | 173,090,140 | ||||||||||||
End of period | $ | 124,604,345 | $ | 91,295,723 | $ | 183,305,612 | $ | 202,226,765 | ||||||||
Table of Contents
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, | |||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||
$ | 2,521,140 | $ | 2,594,897 | $ | (91,815 | ) | $ | (52,034 | ) | $ | 655,127 | $ | 44,891 | |||||||||
15,603,497 | 6,652,579 | 2,785,990 | 4,370,730 | 7,336,230 | 8,168,092 | |||||||||||||||||
4,578,186 | (4,514,597 | ) | 5,052,554 | (4,231,738 | ) | 24,000,849 | (5,119,897 | ) | ||||||||||||||
22,702,823 | 4,732,879 | 7,746,729 | 86,958 | 31,992,206 | 3,093,086 | |||||||||||||||||
(2,854,133 | ) | (3,020,514 | ) | (46,145 | ) | — | (394,093 | ) | — | |||||||||||||
(70,223 | ) | (62,488 | ) | — | — | — | — | |||||||||||||||
(787 | ) | (546 | ) | — | — | (13,175 | ) | — | ||||||||||||||
(3,730 | ) | (137 | ) | (41 | ) | — | (7,001 | ) | — | |||||||||||||
(5,844,508 | ) | (8,604,004 | ) | (10,443,229 | ) | (466,120 | ) | (4,519,604 | ) | — | ||||||||||||
(206,407 | ) | (280,066 | ) | (411,998 | ) | (32,162 | ) | (791,906 | ) | — | ||||||||||||
(971 | ) | (1,603 | ) | (3,627 | ) | (31 | ) | (82,900 | ) | — | ||||||||||||
(2,660 | ) | — | (5,517 | ) | — | (47,236 | ) | — | ||||||||||||||
(8,983,419 | ) | (11,969,358 | ) | (10,910,557 | ) | (498,313 | ) | (5,855,915 | ) | — | ||||||||||||
20,775,427 | 35,024,898 | 32,396,237 | 21,879,443 | 124,049,120 | 155,386,607 | |||||||||||||||||
879,642 | 1,641,563 | 350,569 | 471,669 | 18,629,284 | 15,396,350 | |||||||||||||||||
21,895 | 5,128 | 29,639 | 84,618 | 287,714 | 3,298,177 | |||||||||||||||||
289,568 | 18,735 | 269,504 | 15,074 | 6,279,254 | 828,559 | |||||||||||||||||
8,210,633 | 10,796,225 | 10,266,374 | 459,746 | 4,670,355 | — | |||||||||||||||||
256,742 | 293,967 | 379,286 | 27,565 | 745,754 | — | |||||||||||||||||
1,757 | 2,148 | 3,627 | 31 | 96,075 | — | |||||||||||||||||
6,277 | 137 | 5,556 | — | 43,032 | — | |||||||||||||||||
(51,367,295 | ) | (34,657,379 | ) | (22,746,946 | ) | (15,996,624 | ) | (80,032,782 | ) | (42,414,938 | ) | |||||||||||
(1,040,584 | ) | (817,109 | ) | (1,156,174 | ) | (1,268,384 | ) | (5,843,771 | ) | (3,333,058 | ) | |||||||||||
(11,598 | ) | (4,693 | ) | (89 | ) | (80,654 | ) | (3,639,251 | ) | (54,803 | ) | |||||||||||
(12,552 | ) | (29 | ) | (84 | ) | (27 | ) | (977,888 | ) | (10,006 | ) | |||||||||||
(21,990,088 | ) | 12,303,591 | 19,797,499 | 5,592,457 | 64,306,896 | 129,096,888 | ||||||||||||||||
(8,270,684 | ) | 5,067,112 | 16,633,671 | 5,181,102 | 90,443,187 | 132,189,974 | ||||||||||||||||
138,631,716 | 133,564,604 | 63,183,185 | 58,002,083 | 199,413,090 | 67,223,116 | |||||||||||||||||
$ | 130,361,032 | $ | 138,631,716 | $ | 79,816,856 | $ | 63,183,185 | $ | 289,856,277 | $ | 199,413,090 | |||||||||||
Table of Contents
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, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Transactions in Fund Shares | ||||||||||||||||
Shares Sold | ||||||||||||||||
Class I | 6,930,357 | 6,497,960 | 1,521,324 | 3,111,904 | ||||||||||||
Class C | 91,548 | 68,321 | 576,959 | 2,023,988 | ||||||||||||
Class Z | 4,870 | 338 | 8,541 | 9,247 | ||||||||||||
Class A | — | — | 92,820 | 8,503 | ||||||||||||
Reinvested dividends and distributions | ||||||||||||||||
Class I | 448,497 | 355,905 | 447,314 | 223,460 | ||||||||||||
Class C | 4,422 | 3,232 | 483,635 | 211,758 | ||||||||||||
Class Z | 53 | 17 | 6,091 | 2,991 | ||||||||||||
Class A | — | — | 2,184 | — | ||||||||||||
Shares repurchased | ||||||||||||||||
Class I | (4,131,816 | ) | (5,932,254 | ) | (3,549,165 | ) | (2,631,913 | ) | ||||||||
Class C | (44,117 | ) | (72,047 | ) | (1,762,394 | ) | (993,097 | ) | ||||||||
Class Z | (4,178 | ) | (505 | ) | (19,996 | ) | (4,524 | ) | ||||||||
Class A | — | — | (18,320 | ) | — | |||||||||||
Net increase/(decrease) | 3,299,636 | 920,967 | (2,211,007 | ) | 1,962,317 | |||||||||||
Shares outstanding beginning of period | 9,130,708 | 8,209,741 | 13,592,483 | 11,630,166 | ||||||||||||
Shares outstanding end of period | 12,430,344 | 9,130,708 | 11,381,476 | 13,592,483 | ||||||||||||
Purchase and Sales of Investment Securities (excluding short-term securities and written options) | ||||||||||||||||
Purchase of securities (including short sale transactions) | $ | 21,614,156 | $ | 44,043,104 | $ | 228,139,282 | $ | 309,597,013 | ||||||||
Proceeds from sales of securities (including short sale transactions) | 25,763,927 | 31,016,317 | 275,726,296 | 287,820,163 | ||||||||||||
Purchases of long-term U.S. government securities | 43,613,130 | 14,805,946 | — | — | ||||||||||||
Proceeds from sales of long-term U.S. government securities | 5,421,100 | 11,229,676 | — | — | ||||||||||||
Accumulated undistributed net investment income/(loss) | $ | (33,477 | ) | $ | 37,685 | $ | — | $ | — | |||||||
* | Formerly the ICON Covered Call Fund |
The accompanying notes are an integral part of the financial statements.
Table of Contents
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, | |||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||
1,331,983 | 2,306,970 | 2,383,848 | 1,585,494 | 6,741,937 | 8,952,416 | |||||||||||||||||
56,569 | 108,682 | 26,619 | 35,165 | 1,050,920 | 916,226 | |||||||||||||||||
1,408 | 338 | 2,101 | 5,982 | 15,636 | 185,742 | |||||||||||||||||
18,766 | 1,249 | 20,879 | 1,094 | 340,691 | 48,384 | |||||||||||||||||
536,569 | 729,216 | 776,387 | 33,630 | 266,877 | — | |||||||||||||||||
16,958 | 20,038 | 29,724 | 2,068 | 43,971 | — | |||||||||||||||||
114 | 145 | 274 | 2 | 5,462 | — | |||||||||||||||||
405 | 9 | 424 | — | 2,463 | — | |||||||||||||||||
(3,260,624 | ) | (2,290,509 | ) | (1,672,257 | ) | (1,164,572 | ) | (4,408,590 | ) | (2,470,963 | ) | |||||||||||
(67,244 | ) | (54,361 | ) | (87,051 | ) | (94,159 | ) | (328,475 | ) | (201,278 | ) | |||||||||||
(734 | ) | (304 | ) | (7 | ) | (5,853 | ) | (189,213 | ) | (3,184 | ) | |||||||||||
(794 | ) | (2 | ) | (6 | ) | (2 | ) | (53,377 | ) | (582 | ) | |||||||||||
(1,366,624 | ) | 821,471 | 1,480,935 | 398,849 | 3,488,302 | 7,426,761 | ||||||||||||||||
9,280,444 | 8,458,973 | 4,584,120 | 4,185,271 | 11,651,024 | 4,224,263 | |||||||||||||||||
7,913,820 | 9,280,444 | 6,065,055 | 4,584,120 | 15,139,326 | 11,651,024 | |||||||||||||||||
$ | 154,997,733 | $ | 216,358,850 | $ | 109,635,674 | $ | 101,463,973 | $ | 324,247,248 | $ | 213,729,009 | |||||||||||
192,524,496 | 210,597,210 | 104,042,037 | 100,165,236 | 246,986,193 | 105,361,679 | |||||||||||||||||
7,570,798 | 3,470,308 | — | — | — | — | |||||||||||||||||
750,000 | 4,539,570 | — | — | — | — | |||||||||||||||||
$ | (146,553 | ) | $ | 240,595 | $ | — | $ | — | $ | 338,387 | $ | 44,891 | ||||||||||
Table of Contents
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 of | income/ | gains/(losses) | investment | investment | realized | |||||||||||||||||||
period | (loss)(x) | on investments | operations | income | gains | |||||||||||||||||||
ICON Bond Fund | ||||||||||||||||||||||||
Class I† | ||||||||||||||||||||||||
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 | ) | — | |||||||||||||||||
September 30, 2002 (inception) to September 30, 2003 | 10.00 | 0.42 | 0.38 | 0.80 | (0.39 | ) | — | |||||||||||||||||
Class C | ||||||||||||||||||||||||
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 | ) | — | |||||||||||||||||
October 21, 2002 (inception) to September 30, 2003 | 9.79 | 0.37 | 0.60 | 0.97 | (0.34 | ) | — | |||||||||||||||||
Class Z | ||||||||||||||||||||||||
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, 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 | — | — | |||||||||||||||||
Year Ended September 30, 2003 | 9.50 | (0.04 | ) | 1.66 | 1.62 | — | — | |||||||||||||||||
Class C | ||||||||||||||||||||||||
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 | — | — | |||||||||||||||||
Year Ended September 30, 2003 | 9.36 | (0.11 | ) | 1.63 | 1.52 | — | — | |||||||||||||||||
Class Z | ||||||||||||||||||||||||
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, 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.
Table of Contents
Ratio of net investment | ||||||||||||||||||||||||||||||||||
Ratio of expenses to average net assets(a) | income to avg net assets(a) | |||||||||||||||||||||||||||||||||
Before | After | Before | After | |||||||||||||||||||||||||||||||
expense | expense | expense | expense | |||||||||||||||||||||||||||||||
distributions | limitation | limitation | limitation | limitation | ||||||||||||||||||||||||||||||
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 | ) | $ | 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 | ) | 10.41 | 8.19 | % | 39,338 | 1.45% | 1.30 | % | 4.01 | % | 4.16 | % | 41.65 | % | ||||||||||||||||||||
(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 | % | ||||||||||||||||||||
(0.34 | ) | 10.42 | 9.98 | % | 260 | 2.05% | 1.90 | % | 3.48 | % | 3.63 | % | 41.65 | % | ||||||||||||||||||||
(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 | % | ||||||||||||||||||||
(1.11 | ) | 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 | % | |||||||||||||||||||||||
— | 11.12 | 17.05 | % | 37,603 | 1.39% | N/A | (0.37 | )% | N/A | 188.07 | % | |||||||||||||||||||||||
(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 | % | |||||||||||||||||||||||
— | 10.88 | 16.24 | % | 35,428 | 2.14% | N/A | (1.12 | )% | N/A | 188.07 | % | |||||||||||||||||||||||
(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 | % | |||||||||||||||||||||||
(1.11 | ) | 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 | % |
Table of Contents
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 of | income/ | gains/(losses) | investment | investment | realized | |||||||||||||||||||
period | (loss)(x) | on investments | operations | income | gains | |||||||||||||||||||
ICON Equity Income Fund | ||||||||||||||||||||||||
Class I† | ||||||||||||||||||||||||
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 | ) | — | |||||||||||||||||
September 30, 2002 (inception) to September 30, 2003 | 10.00 | 0.25 | 2.20 | 2.45 | (0.23 | ) | — | |||||||||||||||||
Class C | ||||||||||||||||||||||||
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 | ) | — | |||||||||||||||||
November 8, 2002 (inception) to September 30, 2003 | 10.63 | 0.16 | 1.59 | 1.75 | (0.17 | ) | — | |||||||||||||||||
Class Z | ||||||||||||||||||||||||
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, 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, 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 | ) | ||||||||||||||||
September 30, 2002 (inception) to September 30, 2003 | 10.00 | (0.07 | ) | 2.47 | 2.40 | — | — | |||||||||||||||||
Class C | ||||||||||||||||||||||||
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 | ) | ||||||||||||||||
November 21, 2002 (inception) to September 30, 2003 | 10.75 | (0.17 | ) | 1.74 | 1.57 | — | — | |||||||||||||||||
Class Z | ||||||||||||||||||||||||
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.
Table of Contents
Ratio of net investment | ||||||||||||||||||||||||||||||||||
Ratio of expenses to average net assets(a) | income to avg net assets(a) | |||||||||||||||||||||||||||||||||
Before | After | Before | After | |||||||||||||||||||||||||||||||
expense | expense | expense | expense | |||||||||||||||||||||||||||||||
distributions | limitation | limitation | limitation | limitation | ||||||||||||||||||||||||||||||
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) | ||||||||||||||||||||||||||
(1.01 | ) | 16.48 | 17.67 | % | $ | 124,668 | 1.23 | %(g) | 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 | % | |||||||||||||||||||
(0.23 | ) | 12.22 | 24.72 | % | 42,474 | 1.72 | % | 1.45 | % | 2.23 | % | 2.30 | % | 35.17 | % | |||||||||||||||||||
(0.89 | ) | 16.33 | 16.45 | % | 5,331 | 2.33 | %(g) | 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 | % | |||||||||||||||||||
(0.17 | ) | 12.21 | 16.63 | % | 581 | 2.48 | % | 2.20 | % | 1.10 | % | 1.38 | % | 35.17 | % | |||||||||||||||||||
(1.04 | ) | 16.46 | 17.74 | % | 40 | 11.08 | %(g) | 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 | % | |||||||||||||||||||
(1.01 | ) | 16.40 | 17.29 | % | 322 | 3.77 | %(g) | 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 | % | |||||||||||||||||||
(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 | % | |||||||||||||||||||
— | 12.40 | 24.00 | % | 20,981 | 2.07 | % | 1.45 | % | (1.27 | )% | (0.65 | )% | 184.24 | % | ||||||||||||||||||||
(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 | % | |||||||||||||||||||
— | 12.32 | 14.60 | % | 148 | 2.83 | % | 2.20 | % | (2.13 | )% | (1.50 | )% | 184.24 | % | ||||||||||||||||||||
(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 | % |
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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 of | income/ | gains/(losses) | investment | investment | realized | |||||||||||||||||||
period | (loss)(x) | on investments | operations | income | gains | |||||||||||||||||||
Income Opportunity Fund# | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||
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, 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 | ) | ||||||||||||||||
September 30, 2002 (inception) to September 30, 2003 | 10.00 | (0.07 | ) | 2.07 | 2.00 | — | — | |||||||||||||||||
Class C | ||||||||||||||||||||||||
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 | ) | ||||||||||||||||
October 17, 2002 (inception) to September 30, 2003 | 10.61 | (0.15 | ) | 1.46 | 1.31 | — | — | |||||||||||||||||
Class Z | ||||||||||||||||||||||||
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, 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 share method. |
* | The total return calculation is for the period indicated and excludes any sales charges. |
† | The Fund has changed its originally stated inception date of October 1, 2002 to September 30, 2002. |
(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. |
# | Formerly the ICON Covered Call Fund. |
(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 non-recurring Code 860 expense were 1.81%, 2.91%, 11.66% and 4.35% for Class I, C, Z and A, respectively. See Note 6. |
The accompanying notes are an integral part of the financial statements.
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Ratio of net investment | ||||||||||||||||||||||||||||||||||
Ratio of expenses to average net assets(a) | income to avg net assets(a) | |||||||||||||||||||||||||||||||||
Before | After | Before | After | |||||||||||||||||||||||||||||||
expense | expense | expense | expense | |||||||||||||||||||||||||||||||
distributions | limitation | limitation | limitation | limitation | ||||||||||||||||||||||||||||||
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) | ||||||||||||||||||||||||||
(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 | % | ||||||||||||||||||||
(0.47 | ) | 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 | % | |||||||||||||||||||
— | 12.00 | 20.00 | % | 9,726 | 3.09 | % | 1.55 | % | (2.20 | )% | (0.66 | )% | 162.25 | % | ||||||||||||||||||||
(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 | % | |||||||||||||||||||
— | 11.92 | 12.35 | % | 269 | 3.84 | % | 2.30 | % | (2.99 | )% | (1.45 | )% | 162.25 | % | ||||||||||||||||||||
(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 | % | ||||||||||||||||||||
(0.49 | ) | 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 | % |
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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”, formerly, the ICON Covered Call 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
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selling; there are risks associated with selling short, including the risk that 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 tend to 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 is 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
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Notes to Financial Statements (continued)
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. 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 principal market where the option is traded. 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. 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.
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New Accounting Pronouncement
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements.” 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 No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 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 No. 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.
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, 2007.
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.
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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 in connection with planned purchases or sales of securities as a hedge against fluctuations in foreign exchange rates pending the settlement of transactions in foreign securities. 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 in the Statement of Operations. The Funds did not enter into any forward foreign currency contracts during the year ended September 30, 2007.
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
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underlying hedged assets. The Funds held no financial futures contracts during the year ended September 30, 2007.
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 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. 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 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 on an individual security, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises 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.
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Notes to Financial Statements (continued)
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, 2007, the Equity Income Fund and the Income Opportunity Fund engaged in option transactions which are included on each Funds’ 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 is 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 in 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 in 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, 2007, 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.
Securities Lending
Under procedures adopted by the Trustees, the Funds may lend securities to non-affiliated qualified parties. The Funds may 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 being lent; however, the Funds may attempt to call back the loan and vote the proxy.
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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 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, 2007, the following Funds had securities with the following values on loans:
Value of | Value of | |||||||
Fund | Loaned Securities | Collateral | ||||||
ICON Bond Fund | $ | 1,472,749 | $ | 1,532,004 | ||||
ICON Core Equity Fund | 7,008,015 | 7,148,566 | ||||||
ICON Income Opportunity Fund | 2,168,286 | 2,214,204 | ||||||
ICON Long/Short Fund | 10,733,407 | 11,012,588 |
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 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
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Notes to Financial Statements (continued)
accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America.
On July 13, 2006, the Financial Accounting Standards Board (“FASB”) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds’ tax return to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required no later than the last business day of the first financial statement reporting period for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications, if any, of FIN 48. Its impact to the financial statements has not yet been determined.
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 in the Trust based upon relative net assets. In calculating the net
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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:
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% | 1.30% | 1.55 | % |
The Funds’ expense limitation will continue in effect until at least January 31, 2017.
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, 2007 the following amounts were still available for recoupment by ICON based upon their potential expiration dates:
2008 | 2009 | 2010 | ||||||||||
ICON Bond Fund | $ | 90,804 | $ | 102,270 | $ | 101,907 | ||||||
ICON Equity Income Fund | 11,555 | 6,067 | 13,070 | |||||||||
ICON Income Opportunity Fund | 22,209 | 42,816 | 20,262 |
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Notes to Financial Statements (continued)
Accounting, Custody and Transfer Agent Fees
Citi Fund Services Ohio, Inc. (“Citi”) is the Fund Accounting Agent for the Funds. Effective August 1, 2007, The BISYS Group, Inc., and its subsidiaries, was acquired by and became a wholly-owned subsidiary of Citi. 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 is a result from overnight balances used by the transfer agent, BFDS, for clearing shareholder transactions. During the year ended September 30, 2007, 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. As of January 31, 2006, this agreement provides for an annual fee of 0.05% on the Funds’ 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, 2007, 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.
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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. Effective August 1, 2007, The BISYS Group, Inc., and its subsidiaries, was acquired by and became a wholly-owned subsidiary of Citi. 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 in 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, 2007, the total related amounts paid by the Trust under this arrangement are included in Other Expenses on the Statements of Operations.
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, 2007, this amount was $202,954.
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. The ICON Income Opportunity Fund is limited to the lesser
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Notes to Financial Statements (continued)
of $50 million or 10% of net asset value. Interest on domestic borrowings with BBH is charged at LIBOR plus 2.00%, which was 7.12% at September 30, 2007. Interest on domestic borrowings with the prime broker is charged at the Fed Funds rate plus 50 basis points, which was 5.75% at September 30, 2007. The average interest rate charged for the year ended September 30, 2007 was 6.96%.
Average Borrowing | ||||
(10/1/06-9/30/07) | ||||
ICON Bond Fund | $ | 1,643,695 | ||
ICON Core Equity Fund** | 1,118,090 | |||
ICON Equity Income Fund** | 715,467 | |||
ICON Income Opportunity Fund** | 716,525 | |||
ICON Long/Short Fund | 176,140 |
**Fund had outstanding borrowings as of September 30, 2007.
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, 2007, were as follows:
Number of | Premiums | |||||||
Contracts | Received | |||||||
Options outstanding, beginning of year | 13,216 | $ | 2,108,685 | |||||
Options written during year | 25,686 | 32,716,751 | ||||||
Options expired during year | (1,745 | ) | (215,172 | ) | ||||
Options closed during year | (36,630 | ) | (32,609,460 | ) | ||||
Options exercised during year | - | - | ||||||
Options outstanding, end of year | 527 | $ | 2,000,804 | |||||
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,
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2007 that may be available to offset future realized capital gains and thereby reduce future taxable income distributions. The ICON Bond Fund has a capital loss carryforward of $1,454,386, which expires in 2015.
For the year ended September 30, 2007 the ICON Bond Fund also elected to defer post October losses of $158,250.
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 |
The tax characteristics of dividends and distributions paid to shareholders during the fiscal year ended September 30, 2006, were as follows:
Distributions paid from | Total | |||||||||||||||
Ordinary | Net Long- | Total Taxable | Distributions | |||||||||||||
Fund | Income | Term Gains | Distributions | Paid | ||||||||||||
ICON Bond Fund | $ | 3,571,906 | $ | 57,888 | $ | 3,629,794 | $ | 3,629,794 | ||||||||
ICON Core Equity Fund | 16,325 | 6,819,220 | 6,835,545 | 6,835,545 | ||||||||||||
ICON Equity Income Fund | 2,922,978 | 8,885,673 | 11,808,651 | 11,808,651 | ||||||||||||
ICON Income Opportunity Fund | — | 498,313 | 498,313 | 498,313 |
As of September 30, 2007, the components of accumulated earnings (deficit) on a tax basis was 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) ** | (Deficits) | |||||||||||||||||||||
ICON Bond Fund | $ | 402,803 | $ | — | $ | 402,803 | $ | (436,281 | ) | $ | (1,612,636 | ) | $ | 424,815 | $ | (1,221,299 | ) | |||||||||||
ICON Core Equity Fund | 8.394,122 | 6,683,893 | 15,078,015 | — | — | 26,649,128 | 41,727,143 | |||||||||||||||||||||
ICON Equity Income Fund | 6,768,155 | 6,457,591 | 13,225,746 | (525,680 | ) | 15,890,057 | 28,590,123 | |||||||||||||||||||||
ICON Income Opportunity Fund | 3,275,770 | — | 3,275,770 | — | — | — | 3,275,770 | |||||||||||||||||||||
ICON Long/Short Fund | 2,326,351 | 4,487,674 | 6,814,025 | — | — | 30,497,210 | 37,311,235 |
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Notes to Financial Statements (continued)
* | Differences between the financial statement distribution payable and the tax basis distribution payable is a result of accrual based accounting and cash basis accounting used for federal tax reporting purposes. | |
** | The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales and recognition of tax unrealized appreciation (depreciation) of passive foreign investment companies. |
As of September 30, 2007, 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 | $ | 124,070,254 | $ | 1,189,902 | $ | (765,087 | ) | $ | 424,815 | |||||||
ICON Core Equity Fund | 163,066,736 | 28,705,539 | (2,056,411 | ) | 26,649,128 | |||||||||||
ICON Equity Income Fund | 114,268,194 | 17,250,848 | (1,360,791 | ) | 15,890,057 | |||||||||||
ICON Income Opportunity Fund | 84,966,168 | — | (796,608 | ) | (796,608 | ) | ||||||||||
ICON Long/Short Fund | 267,945,193 | 33,207,597 | (3,584,712 | ) | 29,622,885 |
Due to a potential late dividend declaration for the year ended September 30, 2006 requiring a Code Section 860 deficiency dividend, the Equity Income Fund may be required to pay penalties and interest estimated to be $807,370. The Equity Income Fund has been fully indemnified for any amounts that may be paid by the Sub-Administrator of the Fund. This estimated Code Section 860 liability and the offsetting indemnification receivable have been included on the Statement of Assets and Liabilities and the Code 860 expense and the offsetting reimbursement have been included on the Statement of Operations.
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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 (formerly known as ICON Covered Call Fund) and ICON Long/Short Fund (five of the portfolios constituting ICON Funds, hereafter referred to as the “Funds”) at September 30, 2007, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
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Denver, Colorado
November 20, 2007
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Example
As a shareholder of a Fund you may pay two types of fees: transaction fees and fund-related fees. Certain funds charge transactions 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 (4/1/07 - 9/30/07).
Actual Expenses
The first set of lines in the table for each Fund provide 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
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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 | |||||||||||||
4/1/07 | 9/30/07 | 4/1/07 - 9/30/07* | 4/1/07-9/30/07 | |||||||||||||
ICON Bond Fund | ||||||||||||||||
Class I | ||||||||||||||||
Actual Expenses | $ | 1,000.00 | $ | 1,021.40 | $ | 5.12 | 1.01% | |||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,019.94 | 5.11 | |||||||||||||
Class C | ||||||||||||||||
Actual period return | 1,000.00 | 1,019.30 | 8.10 | 1.60% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,016.98 | 8.09 | |||||||||||||
Class Z | ||||||||||||||||
Actual period return | 1,000.00 | 1,023.40 | 3.85 | 0.76% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,021.19 | 3.85 | |||||||||||||
ICON Core Equity Fund | ||||||||||||||||
Class I | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,102.30 | 6.48 | 1.23% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.83 | 6.22 | |||||||||||||
Class C | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,098.90 | 10.47 | 1.99% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,015.02 | 10.05 | |||||||||||||
Class Z | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,102.10 | 7.17 | 1.36% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.18 | 6.88 | |||||||||||||
Class A | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,100.50 | 8.74 | 1.66% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,016.68 | 8.39 | |||||||||||||
ICON Equity Income Fund | ||||||||||||||||
Class I | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,101.00 | 6.48 | 1.23% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.83 | 6.22 | |||||||||||||
Class C | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,095.20 | 11.56 | 2.20% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,013.97 | 11.11 | |||||||||||||
Class Z | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,101.10 | 6.37 | 1.21% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.93 | 6.12 |
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Beginning | Ending | Expenses Paid | Annualized | |||||||||||||
Account Value | Account Value | During Period | Expense Ratio | |||||||||||||
4/1/07 | 9/30/07 | 4/1/07 - 9/30/07* | 4/1/07-9/30/07 | |||||||||||||
Class A | ||||||||||||||||
Actual Expenses | $ | 1,000.00 | $ | 1,099.60 | $ | 7.63 | 1.45% | |||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,017.73 | 7.33 | |||||||||||||
ICON Income Opportunity Fund | ||||||||||||||||
Class I | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,068.90 | 7.57 | 1.46% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,017.68 | 7.38 | |||||||||||||
Class C | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,064.20 | 11.44 | 2.21% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,013.92 | 11.16 | |||||||||||||
Class Z | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,070.30 | 6.28 | 1.21% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.93 | 6.12 | |||||||||||||
Class A | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,069.10 | 7.47 | 1.44% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,017.78 | 7.28 | |||||||||||||
ICON Long/Short Fund | ||||||||||||||||
Class I | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,070.00 | 8.30 | 1.60% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,016.98 | 8.09 | |||||||||||||
Class C | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,065.50 | 12.48 | 2.41% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,012.92 | 12.16 | |||||||||||||
Class Z | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,066.30 | 7.82 | 1.51% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,017.43 | 7.64 | |||||||||||||
Class A | ||||||||||||||||
Actual period return | 1,000.00 | 1,069.60 | 9.13 | 1.76% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,016.18 | 8.90 |
* | Expenses are equal to the Fund’s six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 183/365 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.
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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, 56, 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 2004) of ICON Advisers, Inc. (“ICON Advisers”), the Funds’ Investment Adviser. Dr. Callahan is also President (1998 to present); Director (1991 to present); and was previously Vice President (1991 to 1998) of ICON Distributors, Inc. (“IDI”), the Funds’ Distributor, and is President of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan also serves as the Director (1994 to present), and was previously Secretary/Treasurer (1994 to 1998) of ICON Management & Research Corporation (“IM&R”), the parent company of ICON Advisers and IDI.
Independent Trustees
Glen F. Bergert, 57. 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, 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, 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 present); Delta Dental of California, an insurance company (2006 to present); and Delta Reinsurance Corporation (2000 to present).
John C. Pomeroy, Jr., 60. 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
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Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).
Gregory Kellam Scott, 59. Mr. Scott has been a Trustee of the Funds since November 2002. Mr. Scott currently serves as Executive Director of the Indiana Civil Rights Commission (2005 to present) and has been appointed to 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) and a Colorado Supreme Court Justice (1993 to 2000).
R. Michael Sentel, 59. 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 (1980-1981). 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, 56. 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 2004). Dr. Callahan is also President (1998 to present), Director (1991 to present) and was previously Vice President (1991 to 1998) of IDI, and is President of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan is also the Director (1994 to present), and was previously Secretary/Treasurer (1994 to 1998) of IM&R.
Erik L. Jonson, 58. Mr. Jonson has been a Vice President and Chief Financial Officer 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).
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Donald Salcito, 54. 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 and Chief Compliance Officer, for ICON Distributors, Inc. (2005 to present); 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. (2000-2005).
Carrie M. Schoffman, 34. Ms. Schoffman serves as Assistant Vice President and Chief Compliance Officer of the Funds (May 2004 to present). She also serves as Vice President and Chief Compliance Officer of ICON Advisers, Inc. (May 2004 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.
Stephen Abrams, 44. 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). Previously he was a Partner at Perkins Coie, LLP (2004-2005) and Associate (2000 to 2004).
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Renewal of Investment Advisory Agreement
In determining to renew the investment advisory agreements between 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 exchange traded funds versus the Sector Funds; and comparative data obtained from Lipper Analytical Services related to Fund performance and Fund expenses.
On August 14, 2007, the Board of Trustees, including all of the 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, 2007.
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 and also met with management 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 agreement.
In considering the nature, extent and quality of the services provided by the Adviser, the Board reviewed information relating to the Adviser’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 the Adviser’s investment personnel, the Adviser’s compliance programs, the Adviser’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.
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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. The Board concluded that the 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 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;
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 be terminated at any time and must be renewed on an annual basis.
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In connection with assessing data bearing the fairness of fee arrangements, the Board used data from Lipper, Inc. 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 ICON has contractually agreed to impose expense limitations on certain Funds at a cost to ICON;
D. 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;
E. 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 why such accounts are less costly for ICON to manage.
F. the extent to which economies of scale could be realized as a Fund grows in assets and whether the Fund’s fees reflect these economies of scale for the benefit of Fund shareholders.
In connection with profitability, the Board reviewed the costs borne by ICON in providing advisory services to each Fund and the profitability of ICON in light of the estimated profitability analysis.
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; the services provided by ICON and its affiliates to the Funds are satisfactory, and whether the 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; the Trustees noted that such research assists ICON in providing quality to which it provides advisory services.
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Based on these considerations, among others, the Board, including all of the Independent Trustees, concluded that the continuation of the Advisory Agreement was in the best interests of each Fund and its shareholders, the services to be performed under the agreement 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, 2007 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 | 53.08 | |||
ICON Income Opportunity Fund | 4.33 | |||
ICON Long/Short Fund | 39.88 |
For the fiscal year ended September 30, 2007, the following Funds paid qualified dividend income:
Fund | Amount | |||
ICON Core Equity Fund | $ | 74,860 | ||
ICON Equity Income Fund | 1,751,682 | |||
ICON Income Opportunity Fund | 592,693 | |||
ICON Long/Short Fund | 350,120 |
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 | $ | 16,421,849 | ||
ICON Equity Income Fund | 7,096,418 | |||
ICON Long/Short Fund | 6,001,607 |
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Portfolio Holdings
A list of each ICON Fund’s Top 10 holdings is available at www.iconadvisers.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.iconadvisers.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.iconadvisers.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.iconadvisers.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.iconadvisers.com | |
By E-Mail | info@iconadvisers.com |
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1-800-764-0442
www.iconadvisers.com
FANN-DIV (09/07)
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2007 Annual Report
ICON International Funds
Investment Update
ICON Asia-Pacific Region Fund
ICON Europe Fund
ICON International Equity Fund
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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, tax return of capital, 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.iconadvisers.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, 2007, 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, 2007 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 tend to be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the
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integrity of public information in the United States, do not exist in foreign countries. In general, there is 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 Annual 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 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.
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The prospectus contains this and other information about the Funds and is available by visiting www.iconadvisers.com or calling 1-800-764-0442. Please read the prospectus 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 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 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 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.
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Dear ICON Shareholder:
We realize you are faced with many mutual fund choices as you construct your financial plan, and we appreciate your continued commitment to diversify with one or more of the ICON International Funds. To those shareholders who are receiving their first ICON Funds Annual Report, we welcome you.
Investing lore is replete with sayings that communicate the wisdom that comes only from long-term experience. During the past five years, I have been reminded of the expression, “Wall Street climbs a wall of worry.” As the saying goes, market advances need to climb the proverbial “wall of worry” in order to keep going higher. We have seen this to be true in the international markets as well.
Many investors believe they have plenty to worry about: interest rates, oil prices, and currency, not to mention the anxieties of terrorism, the Iraq war, and environmental issues. Amid these concerns, investors are inundated with news and theories about international stock markets, leading to confusion, fear, and poor investment decisions.
We believe the debates regarding the global economies and stock markets are a distraction for investment purposes. At ICON, we do not waste energy trying to predict what the central banks will do. Bank economists have direct access to statistics and banking activity. They are in the best position to make decisions regarding interest rates.
Debate also centers on global economies as people guess whether there will be a recession. Again, this debate is irrelevant to the ICON system, as we avoid conjecture about world economies when making investment decisions.
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A Strong Equity Market
Despite worrisome headlines and gloomy expectations, it may be surprising to know how well the international equity markets have performed over the last five years relative to the U.S. market. Below are cumulative and annualized rates of returns for a few domestic and international indexes for the five-year period ended September 30, 2007.
Index Returns, 9/30/02 - 9/30/07
Index | Cumulative Return | Annualized Return | ||||||
MSCI ACWI ex-U.S. | 221.81 | % | 26.33 | % | ||||
MSCI AC Pacific Index | 174.19 | % | 22.35 | % | ||||
MSCI Europe Index | 217.87 | % | 26.02 | % | ||||
Dow Jones Industrial Average | 105.02 | % | 15.44 | % | ||||
S&P 500 Index | 105.13 | % | 15.45 | % |
The unmanaged Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks, primarily industrials. The unmanaged Standard & Poor’s (S&P) 500 Index is a market value-weighted index of large-cap common stocks considered representative of the broad market. Total returns for the unmanaged indexes include the reinvestment of dividends and capital gain distributions but do not reflect the costs of managing a mutual fund.
The Funds’ composition may differ significantly from the indexes. Individuals cannot invest directly in an index.
Sources: FactSet Research Systems, Bloomberg
We think these are impressive rates of returns and are above-average by historic standards. A 100% cumulative return means the investment has doubled during the period. Yet analysts, observers, and investors have doubted the strength of international markets. But, as the adage says, as they worried, the markets kept climbing.
The ICON International Funds now boast 10-year track records, reflecting our experience in navigating international markets. The past five years are also significant to ICON because we opened four new funds in October 2002. ICON Long/Short, ICON Equity Income, ICON Income Opportunity, and ICON Bond Funds recently reached their five-year performance track records. Additionally, the ICON Core Equity Fund has seven years of performance as of mid-October, and most of the ICON Sector Funds have 10-years of performance.
Guided by Valuation
As always, our valuation readings have been our guide. According to our methodology, international stocks have, on average, been priced below our
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estimate of intrinsic value over the course of the fiscal year. Our valuations dictate being invested.
While investors worry about current events, they have been giving us international stocks at bargain prices. In our view, the impressive rates of return seen in international market indexes are simply the result of prices trying to catch up with intrinsic value.
At ICON, we invest in industries that our methodology identifies as underpriced. Our quantitative process keeps us on track when many other investors are doubtful and worried. We continue to uncover overseas companies that we think are healthy and well-managed. These companies seem to be succeeding even amidst investor fear and worry.
Our discipline directed us to stay invested during the fiscal year, allowing the ICON Funds to take advantage of a rising international market. In our regular communications, we have been steady in our message that it has been best to be invested in underpriced stocks and ride through short-term setbacks. You should be commended for your resolve to stick with the ICON system, and we believe you should be proud if you have participated in the advance.
In closing, we are grateful for the privilege of playing a role in your investment portfolio. In addition to reading this report on your Funds and communicating with your financial adviser, we invite you to visit our website at www.iconadvisers.com for current market updates, up-to-date Fund performance and other information about your account.
Yours truly,
![-s- Craig T. Callahan](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913callahct.gif)
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
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Class A IPCAX
Class S ICARX
Class S ICARX
Q. | How did the Fund perform relative to its benchmark? |
A. | The ICON Asia-Pacific Region Fund, Class S appreciated 43.03% for the fiscal year ended September 30, 2007, outperforming its benchmark, the MSCI All Country Pacific Index, which returned 28.72%. Class A shares of the Fund returned 42.38% (and 34.23% with maximum sales charge) during the same period. Total returns for other periods as of September 30, 2007 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, 2007, the Asia-Pacific region continued to outperform the broad U.S. market. The beginning of the fiscal period started out strongly, but was interrupted by a sharp global sell-off in February 2007, which was presumably sparked by proposed government restrictions on personal securities trading in China. Most markets recovered by the spring, but volatility ensued as the sub-prime mortgage crisis in the United States rattled many overseas markets. The Fund was able to navigate this turbulence and outperform its benchmark. |
Guided by ICON’s value and relative strength readings, the Fund shifted away from holdings in Japan, decreasing its position in Japan from about 48% at the beginning of the period to approximately 26% at fiscal year-end. Assets were deployed to industries in China, Malaysia, Singapore, Thailand, and Taiwan— areas which appeared more attractive to our system.
While we do not consider market capitalization when making investment decisions, the Fund continued to have a small- to mid-cap tilt based on its holdings. As in the previous fiscal year, the Fund’s small- and mid-cap positions were overweight relative to the predominantly large-cap benchmark. The Fund’s average weight was about 14% small-cap versus the benchmark’s 2%, and approximately 25% mid-cap versus the benchmark’s 15%. However, to take advantage of the continued strength our system detected in large-cap companies, the Fund maintained an average large-cap weighting of approximately 60% compared to the index’s large-cap weighting of about 83%.
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Q. | How did the Fund’s composition affect performance? |
A. | An overweighting of the Industrials sector represented the most significant and most successful sector allocation within the Fund during the fiscal year. Holdings in Industrials nearly doubled during the period to represent approximately 25% of net assets by the end of the fiscal year. This sector was also the largest contributor to overall Fund performance, led by positions in the construction & farm machinery and marine industries. |
The Fund’s position in the Materials sector was also increased during the period to about 10% of the portfolio. The diversified metals & mining industry, the Fund’s second largest holding in the Materials sector, continued to dominate due, we believe, to increasing global commodities demand.
Industries in the Information Technology sector added to relative performance, with the semiconductors and home entertainment software industries contributing to overall returns.
Conversely, Fund performance during the fiscal year was hampered by holdings in the computer hardware, photographic products, and electrical components & equipment industries.
As for country allocation, the Fund’s overweight positions in South Korea and Singapore and its underweight in Japan contributed positively to relative performance, but its underweight in Australia detracted from performance.
Q. | What is your investment outlook for the Asia-Pacific equity market? |
A. | The Asia-Pacific region remains attractive according to our calculations, with stocks priced at about 13% below our estimate of intrinsic value at the close of the fiscal year. |
As for sector leadership, our analysis continues to favor the Industrials sector, while the Energy and Materials sectors have declined in value. The Information Technology and Consumer Discretionary sectors could prove to be leaders if a new theme shift takes place, but we haven’t seen the relative strength readings we need to indicate a theme change.
From a country perspective, although China continues to be the strongest performer in the region, our numbers indicate the country is slightly overvalued. In contrast, while Japan struggled during the past 12 months, our metrics suggest that the country may be undervalued, and we continue to watch closely for signs of a recovery. By our estimation, Taiwan and Singapore have both shown abundant value, warranting increased weightings.
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Country Composition
as of September 30, 2007
as of September 30, 2007
Japan | 25.9% | ||
Taiwan | 15.5% | ||
Singapore | 14.0% | ||
China | 10.2% | ||
South Korea | 10.2% | ||
Malaysia | 8.1% | ||
Hong Kong | 7.6% | ||
Thailand | 3.0% | ||
Australia | 2.3% | ||
Cayman Islands | 0.7% | ||
Indonesia | 0.3% |
Percentages are based upon net assets.
Sector Composition
as of September 30, 2007
as of September 30, 2007
Industrials | 24.9% | |||
Information Technology | 17.1% | |||
Financial | 14.8% | |||
Consumer Discretionary | 13.1% | |||
Materials | 10.3% | |||
Energy | 7.2% | |||
Healthcare | 4.4% | |||
Telecommunication and Utilities | 3.4% | |||
Leisure and Consumer Staples | 2.6% |
Percentages are based upon net assets.
Industry Composition
As of September 30, 2007
As of September 30, 2007
Marine | 7.1% | ||
Diversified Banks | 6.7% | ||
Real Estate Management & Development | 5.9% | ||
Construction & Farm Machinery & Heavy Trucks | 5.7% | ||
Steel | 4.0% | ||
Automobile Manufacturers | 4.0% | ||
Oil & Gas Equipment & Services | 3.6% | ||
Trading Companies & Distributors | 3.3% | ||
Electronic Equipment Manufacturers | 3.2% | ||
Industrial Conglomerates | 2.6% | ||
Computer Hardware | 2.4% | ||
Semiconductors | 2.4% | ||
Diversified Metals & Mining | 2.3% | ||
Health Care Equipment | 2.3% | ||
Commodity Chemicals | 2.2% | ||
Construction & Engineering | 2.1% | ||
Electronic Manufacturing Services | 2.1% | ||
Office Electronics | 2.1% | ||
Pharmaceuticals | 2.1% | ||
Textiles | 2.0% | ||
Oil & Gas Refining & Marketing | 1.9% | ||
Personal Products | 1.9% | ||
Independent Power Producers & Energy Traders | 1.8% | ||
Coal & Consumable Fuels | 1.7% | ||
Tire & Rubber | 1.6% | ||
Consumer Electronics | 1.5% | ||
Property & Casualty Insurance | 1.4% | ||
Computer Storage & Peripherals | 1.4% | ||
Education Services | 1.4% | ||
Home Entertainment Software | 1.3% | ||
Electrical Components & Equipment | 1.3% | ||
Internet Software Services | 1.2% | ||
Integrated Telecommunication Services | 1.0% | ||
Apparel Retail | 0.9% | ||
Auto Parts & Equipment | 0.9% | ||
Footwear | 0.9% | ||
Industrial Gases | 0.8% | ||
Aerospace & Defense | 0.7% | ||
Communications Equipment | 0.7% | ||
Construction Materials | 0.7% | ||
Other Diversified Financial Services | 0.7% | ||
Electric Utilities | 0.6% | ||
Industrial Machinery | 0.6% | ||
Airport Services | 0.5% | ||
Railroads | 0.5% | ||
Airlines | 0.4% | ||
Food Distributors | 0.4% | ||
Technology Distributors | 0.4% | ||
Agriculture Products | 0.3% | ||
Diversified Chemicals | 0.3% |
Percentages are based upon net assets.
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Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
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 | 43.03% | 27.31% | 6.73% | 6.28% | 1.44% | 1.44% | ||||||||||||||||||||||||||||
MSCI All Country Pacific Index | 28.72% | 22.35% | 6.32% | 5.60% | N/A | N/A | |||||||||||||||||||||||||||||
ICON Asia-Pacific Region Fund - Class A | 5/31/06 | 42.38% | N/A | N/A | 27.71% | 25.78% | 1.81% | ||||||||||||||||||||||||||||
ICON Asia-Pacific Region Fund - Class A (including maximum sales charge of 5.75%) | 5/31/06 | 34.23% | N/A | N/A | 22.14% | 25.78% | 1.81% | ||||||||||||||||||||||||||||
MSCI All Country Pacific Index | 28.72% | N/A | N/A | 21.61% | 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 A shares; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future.
* | Please see the January 29, 2007 prospectus for details. |
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5019901.gif)
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.
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ICON Asia - Pacific Region Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (97.8%) | ||||||||
43,600 | Aeon Mall Co., Ltd. | $ | 1,325,240 | |||||
434,000 | Agile Property Holdings, Ltd. | 909,996 | ||||||
1,666,000 | Allgreen Properties, Ltd. | 2,145,818 | ||||||
1,124,600 | AMMB Holdings Bhd.(a) | 1,430,785 | ||||||
103,000 | ASICS Corp. | 1,585,247 | ||||||
15,000 | Astellas Pharma, Inc. | 716,933 | ||||||
246,000 | Asustek Computer, Inc. | 747,340 | ||||||
240,000 | Bangkok Bank Public Co., Ltd. | 811,565 | ||||||
230,000 | Banpu Public Co., Ltd. | 2,332,110 | ||||||
1,810,000 | Beauty China Holdings, Ltd. | 1,494,232 | ||||||
120,100 | BHP Billiton, Ltd. | 4,688,359 | ||||||
62,950 | Canon, Inc. | 3,416,453 | ||||||
2,344,000 | China Construction Bank Corp. | 2,131,712 | ||||||
1,566,000 | China Energy, Ltd.(a) | 1,597,687 | ||||||
267,000 | China Hongxing Sports, Ltd. | 184,688 | ||||||
6,739,000 | China Oriental Group Co., Ltd. | 3,847,075 | ||||||
1,940,000 | China Power International Development, Ltd. | 1,011,123 | ||||||
986,000 | China Sky Chemical Fibre Co., Ltd. | 1,430,752 | ||||||
2,600,450 | China Steel Corp. | 3,801,305 | ||||||
465,000 | China Vanke Co., Ltd. | 1,311,131 | ||||||
1,664,385 | Compal Electronics, Inc. | 1,885,666 | ||||||
548,760 | D-Link Corp. | 1,364,155 | ||||||
57,400 | DAH Sing Financial Group | 441,742 | ||||||
53,000 | Daiichi Sankyo Co., Ltd. | 1,589,125 | ||||||
11,200 | Daum Communications Corp.(a) | 841,108 | ||||||
41,000 | DBS Group Holdings, Ltd. | 594,246 | ||||||
503,500 | Delta Electronics, Inc. | 1,942,916 | ||||||
50,600 | Denso Corp. | 1,898,129 | ||||||
1,390,000 | Digital China Holdings, Ltd. | 805,225 | ||||||
34,100 | Dongbu Insurance Co., Ltd. | 1,424,212 | ||||||
75 | East Japan Railway Co. | 591,356 | ||||||
209,900 | Electricity Generating Public Co., Ltd. | 710,964 | ||||||
120,000 | Esprit Holdings, Ltd. | 1,901,599 | ||||||
649,000 | Ezra Holdings Pte., Ltd. | 2,791,711 | ||||||
742,000 | Formosa Chemicals & Fibre Corp. | 1,899,123 | ||||||
3,792,000 | Fountain Set Holdings, Ltd. | 1,379,878 | ||||||
46,900 | FUJIFILM Holdings Corp. | 2,155,061 | ||||||
878,000 | Great Wall Motor Co., Ltd. | 1,292,060 | ||||||
694,000 | Guangzhou R&F Properties Co., Ltd. | 3,271,339 | ||||||
38,100 | Hankook Tire Co., Ltd. | 778,631 |
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Shares or Principal Amount | Value | |||||||
640,000 | Hengan International Group Co., Ltd. | $ | 2,400,744 | |||||
576,618 | Hon Hai Precision Industry Co., Ltd. | 4,343,977 | ||||||
49,000 | Honda Motor Co., Ltd. | 1,631,967 | ||||||
712,400 | Hong Leong Financial Group Bhd. | 1,211,932 | ||||||
334,000 | Hopson Development Holdings, Ltd. | 1,107,034 | ||||||
3,114,000 | Huadian Power International Corp., Ltd. | 1,988,508 | ||||||
9,700 | Hyundai Heavy Industries Co., Ltd. | 4,463,245 | ||||||
15,500 | Hyundai Mipo Dockyard Co., Ltd. | 5,311,495 | ||||||
35,880 | Industrial Bank of Korea | 772,301 | ||||||
290,115 | Innolux Display Corp. | 1,239,590 | ||||||
91,557 | Itochu Enex Co., Ltd. | 618,566 | ||||||
22,500 | JA Solar Holdings Co., Ltd. - ADR(a)* | 1,011,375 | ||||||
406,000 | Keppel Corp., Ltd. | 3,929,965 | ||||||
2,530,000 | KNM Group Bhd. | 3,426,350 | ||||||
9,600 | Kookmin Bank | 792,066 | ||||||
26,400 | Korea Electric Power Corp. | 1,229,839 | ||||||
1,496,600 | KS Energy Services, Ltd. | 4,007,667 | ||||||
176,000 | Kuala Lumpur Kepong Bhd. | 681,614 | ||||||
12,900 | Kyocera Corp. | 1,203,032 | ||||||
1,338,000 | Mah Sing Group Bhd. | 741,376 | ||||||
130,300 | MediaTek, Inc. | 2,342,673 | ||||||
2,000 | Megastudy Co., Ltd. | 608,067 | ||||||
143,600 | Meritz Fire & Marine Insurance Co., Ltd. | 1,559,200 | ||||||
62,000 | Mitsubishi Chemical Holdings Corp. | 538,494 | ||||||
81,400 | Mitsubishi Corp. | 2,564,029 | ||||||
190,000 | Mitsubishi Heavy Industries, Ltd. | 1,235,416 | ||||||
174,450 | Mitsui & Co., Ltd. | 4,219,430 | ||||||
823,000 | Nan Ya Plastics Corp. | 2,141,457 | ||||||
7,100 | NHN Corp.(a) | 1,635,400 | ||||||
3,500 | Nintendo Co., Ltd. | 1,807,301 | ||||||
90,000 | Nippon Mining Holdings, Inc. | 897,468 | ||||||
85,000 | Nippon Yusen Kabushiki Kaisha | 825,561 | ||||||
376,000 | Olam International, Ltd. | 794,385 | ||||||
44,000 | Olympus Corp. | 1,800,819 | ||||||
2,812,000 | Pacific Basin Shipping, Ltd. | 5,876,302 | ||||||
952,000 | Petronas Dagangan Bhd. | 2,457,485 | ||||||
990,000 | PT Bank Rakyat Indonesia | 713,782 | ||||||
282,000 | Public Bank Bhd. | 822,911 | ||||||
1,512,000 | Raffles Education Corp., Ltd. | 2,333,596 | ||||||
13,625 | Realtek Semiconductor Corp. | 61,664 | ||||||
40,000 | Ricoh Co., Ltd. | 841,949 | ||||||
672,800 | Sembcorp Marine, Ltd. | 2,082,134 | ||||||
25,400 | Shinhan Financial Group, Ltd. | 1,645,520 | ||||||
296,000 | SIA Engineering Co., Ltd. | 976,345 | ||||||
993,000 | Siam Commercial Bank Public Co., Ltd. | 2,285,146 |
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Shares or Principal Amount | Value | |||||||
1,114,542 | Siliconware Precision Industries Co. | $ | 2,520,461 | |||||
59,740 | Singapore Airlines, Ltd. | 746,709 | ||||||
530,000 | Singapore Technologies Engineering, Ltd. | 1,388,674 | ||||||
744,000 | Singapore Telecommunications, Ltd. | 2,010,519 | ||||||
65,400 | Sony Corp. | 3,144,222 | ||||||
29,000 | Square Enix Co., Ltd. | 957,086 | ||||||
112,000 | Sumitomo Metal Industries, Ltd. | 649,364 | ||||||
105,000 | Sumitomo Rubber Industries, Ltd. | 1,316,557 | ||||||
376,000 | Taiheiyo Cement Corp. | 1,424,523 | ||||||
28,700 | Takeda Pharmaceutical Co., Ltd. | 2,013,021 | ||||||
58,200 | Terumo Corp. | 2,929,880 | ||||||
174,000 | The Yokohama Rubber Co., Ltd. | 1,298,737 | ||||||
208,000 | Toshiba Corp.(b) | 1,933,087 | ||||||
84,000 | Tosoh Corp. | 542,368 | ||||||
89,500 | Toyota Motor Corp. | 5,236,644 | ||||||
1,150,000 | TPV Technology, Ltd. | 825,027 | ||||||
324,060 | Tripod Technology Corp. | 1,325,101 | ||||||
1,546,000 | U-Ming Marine Transport Corp. | 5,069,629 | ||||||
105,000 | United Overseas Bank, Ltd. | 1,559,519 | ||||||
2,598,000 | Wasion Meters Group, Ltd. | 1,599,953 | ||||||
1,931,943 | WCT Engineering Bhd. | 4,358,362 | ||||||
650,000 | Weiqiao Textile Co., Ltd. | 1,217,746 | ||||||
104 | West Japan Railway Co. | 495,560 | ||||||
662,000 | Wing Tai Holdings, Ltd. | 1,716,993 | ||||||
668,000 | Wistron Corp. | 1,204,292 | ||||||
566,000 | Yanzhou Coal Mining Co., Ltd. | 1,157,573 | ||||||
1,900,000 | YNH Property Bhd. | 1,488,814 | ||||||
Total Common Stocks (Cost $157,243,241) | 201,787,395 | |||||||
Short-Term Investments (3.5%) | ||||||||
$ | 2,730,056 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07#* | 2,730,056 | |||||
4,987 | Brown Brothers Harriman Time Deposit - Australian Dollar, 5.50%, 10/01/07#* | 4,987 | ||||||
6,537 | Brown Brothers Harriman Time Deposit - Hong Kong Dollar, 4.55%, 10/01/07#* | 6,537 | ||||||
44 | Brown Brothers Harriman Time Deposit - Japanese Yen, 0.01%, 10/01/07#* | 44 | ||||||
524,904 | Brown Brothers Harriman Time Deposit - Malaysian Ringgit, 0%, 10/01/07#* | 524,904 | ||||||
383 | Brown Brothers Harriman Time Deposit - New Zealand Dollar, 6.30%, 10/01/07#* | 383 | ||||||
763 | Brown Brothers Harriman Time Deposit - Singapore Dollar, 1.25%, 10/01/07#* | 763 |
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Shares or Principal Amount | Value | |||||||
$ | 3,855,985 | Brown Brothers Harriman Time Deposit - Taiwan Dollar, 0%, 10/01/07#* | $ | 3,855,985 | ||||
Total Short-Term Investments (Cost $7,123,659) | 7,123,659 | |||||||
Other Securities (0.9%) | ||||||||
1,910,700 | Brown Brothers Harriman Securities Lending Investment Fund*, 5.24% | 1,910,700 | ||||||
Total Other Securities (Cost $1,910,700) | 1,910,700 | |||||||
Total Investments (Cost $166,277,600) 102.2% | 210,821,754 | |||||||
Liabilities Less Other Assets (2.2)% | (4,516,786 | ) | ||||||
Net Assets 100.0% | $ | 206,304,968 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
* | All securities were fair valued (Note 2) as of September 30, 2007 unless noted with a *. Total value of securities fair valued was $200,776,020. | |
# | 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, 2007. | |
ADR | American Depositary Receipt |
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Class A IERAX
Class S ICSEX
Class S ICSEX
Q. | How did the Fund perform relative to its benchmark? |
A. | The ICON Europe Fund, Class S appreciated 29.69% for the fiscal year ended September 30, 2007, outperforming the 28.11% return for the MSCI Europe Index. Class A shares of the Fund returned 29.14% (and 21.69% with maximum sales charge) over the same period. Total returns for other periods as of September 30, 2007 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 strengthened relative to other major global regions during the fiscal year. Economic growth picked up, employment improved, and inflationary pressures remained at bay. |
Throughout the period, the Fund participated in a cyclical theme, which has been in place for more than four years, with the Materials, Industrials, and Telecommunications & Utilities sectors leading. Weakness was seen in the Financials and Health Care sectors.
The period opened with the European region priced at 25% below our calculation of intrinsic value. Investors took advantage of bargain stocks that followed a sell-off in May 2006, and strong performance continued until February 2007, when worldwide equities sold off in apparent response to proposed government regulation of Chinese loans and stock purchases.
Investors who were evidently fearful about the global contagion of the U.S. sub-prime loan crisis brought declines to European stocks. We measured the region at near fair value in July 2007 as interest rates in the region climbed, with the Materials, Industrials, and Energy sectors suffering heavier losses during the summer correction. Nevertheless, the fiscal year ended on an upswing with the Materials, Industrials, Energy, and Information Technology sectors leading the way.
Q. | How did the Fund’s composition affect performance? |
A. | Globally, the Industrials sector continued to outperform, and the Fund’s overweight position in the sector aided performance, led by the heavy electrical equipment industry. |
Fund returns also benefited from global strength in the Energy sector, with its overweight holding in the oil & gas equipment & services industry
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contributing significantly. In the Consumer Discretionary sector, the tires & rubber industry aided performance.
Conversely, the Fund’s underweight in the strong-performing Telecommunication & Utilities sector detracted from 12-month returns, especially during sell-offs over the course of the year. An overweighting of the weak human resources & employment services industry from the Industrials sector also hindered returns. Performance was also hampered by an underweight position in the automobile manufacturers industry.
Regarding country composition, an overweight in the Netherlands and an underweight in the United Kingdom helped performance, but the Fund’s overweight holdings in Switzerland detracted from relative performance.
Q. | What is your investment outlook for the European equity market? |
A. | Our analysis indicates that the European region remains undervalued by about 16%, thus demonstrating greater value than the U.S. equity market, which we estimate to be undervalued by 12%. We believe the defensive market theme that emerged in 2006 has dissipated and returned to the sector leadership of the past three or more years: Energy, Materials, and Telecommunications & Utilities. |
We believe volatility and fallout from the U.S. sub-prime mortgage and credit problems have spread to European Financials stocks, creating value. Although Financials has yet to show strength, our system indicates that this sector, as well as Consumer Discretionary, may be future leaders.
Table of Contents
Country Composition
as of September 30, 2007
as of September 30, 2007
Switzerland | 23.3% | ||
Germany | 18.8% | ||
Netherlands | 10.3% | ||
United Kingdom | 9.1% | ||
France | 7.4% | ||
Greece | 6.5% | ||
Finland | 4.9% | ||
Belgium | 4.7% | ||
Spain | 3.7% | ||
Austria | 2.6% | ||
Russia | 1.6% | ||
Denmark | 1.3% | ||
Italy | 1.1% | ||
Portugal | 1.1% | ||
Ireland | 1.0% | ||
Chech Republic | 0.9% | ||
Luxembourg | 0.8% | ||
Sweden | 0.8% |
Percentages are based upon net assets.
Sector Composition
as of September 30, 2007
as of September 30, 2007
Financial | 26.9% | ||
Leisure and Consumer Staples | 16.9% | ||
Industrials | 12.2% | ||
Healthcare | 10.9% | ||
Consumer Discretionary | 9.4% | ||
Telecommunication and Utilities | 8.5% | ||
Materials | 6.3% | ||
Information Technology | 5.4% | ||
Energy | 3.4% |
Percentages are based upon net assets.
Industry Composition
as of September 30, 2007
as of September 30, 2007
Diversified Banks | 18.9% | ||
Pharmaceuticals | 7.2% | ||
Packaged Foods & Meats | 5.4% | ||
Brewers | 4.1% | ||
Electric Utilities | 3.7% | ||
Electrical Components & Equipment | 3.6% | ||
Automobile Manufacturers | 3.4% | ||
Oil & Gas Equipment & Services | 3.4% | ||
Apparel Accessories & Luxury Goods | 3.0% | ||
Heavy Electrical Equipment | 3.0% | ||
Tire & Rubber | 2.9% | ||
Health Care Distributors | 2.7% | ||
Multi-Line Insurance | 2.7% | ||
Food Retail | 2.6% | ||
Systems Software | 2.6% | ||
Industrial Conglomerates | 2.5% | ||
Multi-Utilities | 2.2% | ||
Communications Equipment | 2.0% | ||
Construction Materials | 2.0% | ||
Wireless Telecommunication Services | 2.0% | ||
Diversified Capital Markets | 1.9% | ||
Diversified Metals & Mining | 1.9% | ||
Food Distributors | 1.8% | ||
Reinsurance | 1.5% | ||
Steel | 1.5% | ||
Other Diversified Financial Services | 1.4% | ||
Leisure Products | 1.3% | ||
Health Care Equipment | 1.0% | ||
Marine | 1.0% | ||
Specialty Chemicals | 0.9% | ||
Computer Storage & Peripherals | 0.8% | ||
Construction & Farm Machinery & Heavy Trucks | 0.8% | ||
Agriculture Products | 0.7% | ||
Industrial Machinery | 0.7% | ||
Alternative Carriers | 0.6% | ||
Movies & Entertainment | 0.6% | ||
Soft Drinks | 0.6% | ||
Asset Management & Custody Banks | 0.5% | ||
Building Products | 0.5% |
Percentages are based upon net assets.
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Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Gross | Net | ||||||||||||||||||||||||||||||||||
Inception | Since | Expense | Expense | ||||||||||||||||||||||||||||||||
Date | 1 Year | 5 Years | 10 Years | Inception | Ratio* | Ratio* | |||||||||||||||||||||||||||||
ICON Europe Fund - Class S | 2/20/97 | 29.69% | 28.42% | 11.20% | 12.35% | 1.51% | 1.51% | ||||||||||||||||||||||||||||
MSCI Europe Index | 28.11% | 26.02% | 10.03% | 11.48% | N/A | N/A | |||||||||||||||||||||||||||||
ICON Europe Fund - Class A | 5/31/06 | 29.14% | N/A | N/A | 23.05% | 33.40% | 1.84% | ||||||||||||||||||||||||||||
ICON Europe Fund - Class A (including maximum sales charge of 5.75%) | 5/31/06 | 21.69% | N/A | N/A | 17.72% | 33.40% | 1.84% | ||||||||||||||||||||||||||||
MSCI Europe Index | 28.11% | N/A | N/A | 25.83% | 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 A shares; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future.
* Please see the January 29, 2007 prospectus for details.
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5019902.gif)
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.
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ICON Europe Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (99.9%) | ||||||||
136,900 | Abb, Ltd. | $ | 3,592,015 | |||||
14,400 | ABN ARMO Holding N.V. | 756,682 | ||||||
40,600 | Adidas AG | 2,661,448 | ||||||
43,000 | Aleo Solar AG(a)(b) | 957,891 | ||||||
17,200 | Allied Irish Banks PLC | 416,507 | ||||||
31,423 | Anglo Irish Bank Corp. PLC | 582,438 | ||||||
13,500 | ArcelorMittal | 1,061,087 | ||||||
49,300 | Banco Bilbao Vizcaya Argentaria S.A. | 1,156,221 | ||||||
68,400 | Banco Espirito Santo S.A. | 1,557,151 | ||||||
54,935 | Banco Popular Espanol S.A. | 947,127 | ||||||
106,600 | Banco Santander Central Hispano, S.A. | 2,075,905 | ||||||
23,400 | Bank of Ireland | 436,134 | ||||||
109,800 | Barclays PLC | 1,334,628 | ||||||
36,400 | BHP Billiton PLC | 1,302,048 | ||||||
26,700 | BNP Paribas | 2,921,633 | ||||||
12,300 | Bouygues S.A. | 1,061,233 | ||||||
208,000 | Cable & Wireless PLC | 780,848 | ||||||
40,500 | Celesio AG | 2,570,597 | ||||||
20,200 | CEZ A.S. | 1,238,820 | ||||||
14,600 | Coca-Cola Hellenic Bottling Co. S.A. | 844,532 | ||||||
6,400 | Compagnie de Saint-Gobain | 668,212 | ||||||
16,700 | Credit Suisse Group | 1,110,187 | ||||||
21,100 | DaimlerChrysler AG | 2,115,873 | ||||||
5,700 | Delhaize Group | 547,090 | ||||||
7,040 | Dem Allianz AG | 1,639,672 | ||||||
33,000 | Dexia S.A. | 999,033 | ||||||
16,300 | E.ON AG | 3,003,671 | ||||||
10,200 | Erste Bank der oesterreichischen Sparkassen AG | 777,370 | ||||||
17,900 | Fortis | 527,712 | ||||||
39,200 | Fugro N.V. | 3,179,264 | ||||||
3,000 | Galenica AG | 1,283,936 | ||||||
49,100 | Gerry Weber International AG | 1,580,923 | ||||||
29,700 | HBOS PLC | 555,734 | ||||||
42,800 | Heineken N.V. | 2,807,324 | ||||||
12,900 | Holcim, Ltd. | 1,423,177 | ||||||
112,000 | HSBC Holdings PLC | 2,068,147 | ||||||
17,000 | Iberdrola S.A. | 996,683 | ||||||
31,400 | InBev N.V. | 2,843,131 | ||||||
31,800 | ING Groep N.V. | 1,413,030 | ||||||
54,900 | Jumbo S.A. | 1,878,744 | ||||||
12,300 | KBC Groep N.V. | 1,689,892 | ||||||
79,840 | Koninklijke Ahold N.V.(a) | 1,204,752 | ||||||
14,400 | Kuehne & Nagel International AG | 1,418,303 | ||||||
9,100 | Lafarge S.A. | 1,410,203 | ||||||
36,900 | Logitech International S.A.(a) | 1,095,715 | ||||||
65,700 | Man Group PLC | 744,189 | ||||||
10,600 | Michelin - Class B | 1,429,150 | ||||||
59,400 | National Bank of Greece S.A. | 3,788,854 | ||||||
75,500 | National Grid PLC | 1,207,714 | ||||||
11,760 | Nestle S.A. | 5,273,030 | ||||||
75,500 | Nokia Oyj | 2,864,441 | ||||||
66,300 | Nokian Renkaat Oyj | 2,600,466 | ||||||
46,000 | Novartis AG | 2,531,156 |
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Shares or Principal Amount | Value | |||||||
15,000 | Novo Nordisk A/S - Class B | $ | 1,814,312 | |||||
13,300 | Nutreco Holding N.V. | 938,673 | ||||||
13,700 | Phonak Holding AG | 1,371,862 | ||||||
44,575 | Piraeus Bank S.A. | 1,589,418 | ||||||
900 | Porsche AG | 1,919,486 | ||||||
8,800 | PSA Peugeot Citroen | 727,537 | ||||||
10,100 | Raiffeisen International Bank Holding AG | 1,477,050 | ||||||
15,500 | Rio Tinto PLC | 1,333,897 | ||||||
17,070 | Roche Holding AG | 3,091,564 | ||||||
150,100 | Royal Bank of Scotland Group PLC | 1,619,387 | ||||||
14,200 | RWE AG | 1,780,714 | ||||||
37,400 | Saipem S.p.A | 1,594,298 | ||||||
45,200 | Scania AB - B Shares | 1,098,561 | ||||||
14,600 | Schindler Holding AG | 922,511 | ||||||
10,200 | Schneider Electric S.A. | 1,287,801 | ||||||
45,200 | Sidenor S.A. | 932,832 | ||||||
25,800 | Siemens AG | 3,531,981 | ||||||
615 | Sika AG | 1,197,351 | ||||||
55,700 | Sligro Food Group N.V. | 2,541,166 | ||||||
13,000 | Software AG | 1,218,218 | ||||||
5,685 | Solon AG fuer Solartechnik(a)(b) | 629,127 | ||||||
39,500 | Stada Arzneimittel AG | 2,576,002 | ||||||
23,900 | Swiss Re | 2,125,856 | ||||||
101,700 | Temenos Group AG(a) | 2,372,567 | ||||||
200,700 | Tesco PLC | 1,798,771 | ||||||
29,120 | UBS AG | 1,564,886 | ||||||
52,100 | Unilever N.V. | 1,606,729 | ||||||
28,595 | Vacon Oyj | 1,427,712 | ||||||
64,600 | Vimpel-Communications - ADR* | 1,746,784 | ||||||
18,200 | Vivendi Universal | 768,981 | ||||||
4,750 | Wimm-Bill-Dann Foods OJSC - ADR* | 519,365 | ||||||
35,700 | Zumtobel AG | 1,358,645 | ||||||
7,000 | Zurich Financial Services AG | 2,098,873 | ||||||
Total Common Stocks (Cost $118,700,958) | 139,514,640 | |||||||
Rights (0.0%) | ||||||||
10,100 | Raiffeisen International Bank Holding AG Rights | 0 | ||||||
Total Rights (Cost $0) | 0 | |||||||
Short-Term Investments (0.0%) | ||||||||
$ | 7,474 | Brown Brothers Harriman Time Deposit - British Pound, 4.80%, 10/01/07#* | 7,474 | |||||
641 | Brown Brothers Harriman Time Deposit - Danish Krone, 3.05%, 10/01/07#* | 641 | ||||||
41,815 | Brown Brothers Harriman Time Deposit - Euro, 3.05%, 10/01/07#* | 41,815 | ||||||
413 | Brown Brothers Harriman Time Deposit - Norwegian Kroner, 3.95%, 10/01/07#* | 413 | ||||||
1,134 | Brown Brothers Harriman Time Deposit - Swedish Krona, 2.85%, 10/01/07#* | 1,134 | ||||||
Total Short-Term Investments (Cost $51,477) | $ | 51,477 |
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Shares or Principal Amount | Value | |||||||
Other Securities (0.8%) | ||||||||
1,122,560 | Brown Brothers Harriman Securities Lending Investment Fund*, 5.24% | $ | 1,122,560 | |||||
Total Other Securities (Cost $1,122,560) | 1,122,560 | |||||||
Total Investments (Cost $119,874,995) 100.7% | 140,688,677 | |||||||
Liabilities Less Other Assets (0.7)% | (954,480 | ) | ||||||
Net Assets 100.0% | $ | 139,734,197 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
* | All securities were fair valued (Note 2) as of September 30, 2007 unless noted with a *. Total value of securities fair valued was $137,248,491. | |
ADR | American Depositary Receipt |
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Class I IIQIX
Class C IIQCX
Class Z ICNEX
Class A IIQAX
Class C IIQCX
Class Z ICNEX
Class A IIQAX
Q. | How did the Fund perform relative to its benchmark? |
A. | For the fiscal year ended September 30, 2007, the ICON International Equity Fund appreciated 40.11% for Class I shares, 38.74% for Class C shares, and 40.56% for Class Z shares, outpacing the 31.06% return of the MSCI All Country World Index (ACWI) ex-U.S., the Fund’s benchmark. Class A shares of the Fund returned 39.97% (and 31.91% with maximum sales charge) during the same period. Total returns for other periods as of September 30, 2007 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 outperformed U.S. equities. The Fund benefited from broad participation among the Asia-Pacific, European, and Western Hemisphere regions, with Brazil and Canada showing particular strength. |
The most significant reallocation in the Fund during the period was an increased weighting in Asia and a decreased position in Europe. Driven by declines in Telecommunications and Utilities stocks, increases in Industrials stocks, and falling valuations in Europe, the Fund was gradually pulled toward the Asia-Pacific region.
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 period. These allocations were overweight the predominantly large-cap benchmark, and the overweighting of mid-cap stocks in particular helped performance.
Currency movements worldwide throughout the fiscal year helped absolute performance, primarily due to the Fund’s European and Western Hemisphere exposure.
Q. | How did the Fund’s composition affect performance? |
A. | The Fund’s increased allocation of assets toward Asia and a decreased weighting in Europe were positive for fiscal-year returns. Further, overweight positions in South Korea and Hong Kong and a notable underweighting in Japan helped performance. The Fund’s underweight position in the United Kingdom and its overweight holdings in Brazil also helped overall returns. |
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In contrast, the Fund’s overweight position in Switzerland and underweight position in Australia were a drag on performance.
From a sector perspective, the Fund’s active overweighting in the Industrials sector proved effective as this group continued to outperform the benchmark. Within Industrials, performance standouts were primarily in Asia due to strength in the shipbuilders and marine stocks.
The Fund’s Materials sector allocation also contributed to 12-month returns, led by the diversified metals & mining and steel industries. Conversely, the Fund’s underweight position in the wireless telecommunication services industry detracted from relative performance.
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. |
We believe the cyclical theme that has driven returns since 2003 remains in place, with the Industrials sector standing tall globally. The Energy and Materials sectors also continue to lead despite declining value. Our calculations suggest that leadership could be imminent in the Information Technology and Consumer Discretionary sectors in Asia and in Financials in Europe, but our relative strength metrics have not yet indicated that expectation.
While we do not target countries as a primary investment decision, it is a secondary factor that we monitor. Taiwan and Singapore remain the most attractive countries in the Asia-Pacific region, according to our analysis. Within Europe, Switzerland, Germany, and the Netherlands look attractive to our system, and Brazil still leads in the Western Hemisphere region.
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Country Composition
as of September 30, 2007
as of September 30, 2007
Switzerland | 11.4% | ||
Taiwan | 9.9% | ||
Germany | 9.2% | ||
Japan | 8.4% | ||
Singapore | 8.2% | ||
Canada | 5.3% | ||
United Kingdom | 5.1% | ||
Hong Kong | 4.9% | ||
Brazil | 4.6% | ||
South Korea | 4.5% | ||
Malaysia | 4.0% | ||
France | 3.3% | ||
China | 2.7% | ||
Netherlands | 2.4% | ||
Greece | 1.8% | ||
Mexico | 1.8% | ||
Finland | 1.7% | ||
Belgium | 1.5% | ||
Spain | 1.2% | ||
Australia | 0.9% | ||
Austria | 0.7% | ||
Chech Republic | 0.7% | ||
Thailand | 0.7% | ||
United States of America | 0.7% | ||
Luxembourg | 0.6% | ||
Cayman Islands | 0.5% | ||
Italy | 0.3% | ||
Poland | 0.3% | ||
Russia | 0.3% |
Percentages are based upon net assets.
Sector Composition
as of September 30, 2007
as of September 30, 2007
Industrials | 22.5% | ||
Financial | 18.7% | ||
Information Technology | 10.2% | ||
Materials | 9.5% | ||
Telecommunication and Utilities | 9.2% | ||
Leisure and Consumer Staples | 7.9% | ||
Consumer Discretionary | 7.8% | ||
Energy | 6.1% | ||
Healthcare | 5.7% |
Percentages are based upon net assets.
Industry Composition
as of September 30, 2007
as of September 30, 2007
Diversified Banks | 12.3% | ||
Marine | 5.6% | ||
Oil & Gas Equipment & Services | 3.9% | ||
Construction & Farm Machinery & Heavy Trucks | 3.6% | ||
Industrial Conglomerates | 3.2% | ||
Diversified Metals & Mining | 3.1% | ||
Packaged Foods & Meats | 3.0% | ||
Steel | 3.0% | ||
Pharmaceuticals | 2.7% | ||
Automobile Manufacturers | 2.6% | ||
Electric Utilities | 2.5% | ||
Integrated Telecommunication Services | 2.4% | ||
Real Estate Management & Development | 2.4% | ||
Electrical Components & Equipment | 2.1% | ||
Trading Companies & Distributors | 2.1% | ||
Health Care Distributors | 2.0% | ||
Apparel Accessories & Luxury Goods | 1.9% | ||
Construction & Engineering | 1.9% | ||
Electronic Manufacturing Services | 1.9% | ||
Semiconductors | 1.9% | ||
Multi-Utilities | 1.8% | ||
Wireless Telecommunication Services | 1.8% |
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Industry Composition (continued)
as of September 30, 2007
as of September 30, 2007
Electronic Equipment Manufacturers | 1.7% | ||
Brewers | 1.6% | ||
Heavy Electrical Equipment | 1.6% | ||
Personal Products | 1.5% | ||
Computer Hardware | 1.4% | ||
Construction Materials | 1.4% | ||
Oil & Gas Drilling | 1.3% | ||
Education Services | 1.2% | ||
Communications Equipment | 1.1% | ||
Consumer Electronics | 1.1% | ||
Food Retail | 1.1% | ||
Office Electronics | 1.1% | ||
Health Care Equipment | 1.0% | ||
Industrial Machinery | 1.0% | ||
Diversified Capital Markets | 0.9% | ||
Multi-Line Insurance | 0.9% | ||
Oil & Gas Refining & Marketing | 0.9% | ||
Railroads | 0.9% | ||
Commodity Chemicals | 0.8% | ||
Industrial Gases | 0.8% | ||
Life & Health Insurance | 0.8% | ||
Reinsurance | 0.8% | ||
Water Utilities | 0.8% | ||
Systems Software | 0.7% | ||
Specialty Chemicals | 0.5% | ||
Textiles | 0.5% | ||
Tire & Rubber | 0.5% | ||
Agriculture Products | 0.4% | ||
Asset Management & Custody Banks | 0.4% | ||
Building Products | 0.4% | ||
Computer Storage & Peripherals | 0.4% | ||
Home Entertainment Software | 0.4% |
Percentages are based upon net assets.
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Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Gross | Net | ||||||||||||||||||||||||||||||||||
Inception | Since | Expense | Expense | ||||||||||||||||||||||||||||||||
Date | 1 Year | 5 Years | 10 Years | Inception | Ratio* | Ratio* | |||||||||||||||||||||||||||||
ICON International Equity Fund - Class I | 2/6/04 | 40.11% | N/A | N/A | 23.79% | 1.71% | 1.71% | ||||||||||||||||||||||||||||
MSCI ACWI ex-U.S. | 31.06% | N/A | N/A | 22.05% | N/A | N/A | |||||||||||||||||||||||||||||
ICON International Equity Fund - Class C | 2/19/04 | 38.74% | N/A | N/A | 21.43% | 2.76% | 2.54% | ||||||||||||||||||||||||||||
MSCI ACWI ex-U.S. | 31.06% | N/A | N/A | 21.29% | N/A | N/A | |||||||||||||||||||||||||||||
ICON International Equity Fund - Class Z | 2/18/97 | 40.56% | 32.77% | 12.28% | 12.60% | 1.41% | 1.40% | ||||||||||||||||||||||||||||
MSCI ACWI ex-U.S. | 31.06% | 26.33% | 9.17% | 9.81% | N/A | N/A | |||||||||||||||||||||||||||||
ICON International Equity Fund - Class A | 5/31/06 | 39.97% | N/A | N/A | 27.96% | 19.13% | 1.79% | ||||||||||||||||||||||||||||
ICON International Equity Fund - Class A (including maximum sales charge of 5.75%) | 5/31/06 | 31.91% | N/A | N/A | 22.38% | 19.13% | 1.79% | ||||||||||||||||||||||||||||
MSCI ACWI ex-U.S. | 31.06% | N/A | N/A | 25.97% | 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 Z shares are available only to grandfathered and institutional investors.
* | Please see the January 29, 2007 prospectus for details. |
Class C total returns exclude applicable sales charges. If sales charges were included, returns would be lower.
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5019903.gif)
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.
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ICON International Equity Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (97.6%) | ||||||||
118,300 | Abb, Ltd. | $ | 3,103,984 | |||||
32,000 | Adidas AG | 2,097,693 | ||||||
420,000 | Agile Property Holdings, Ltd. | 880,642 | ||||||
46,800 | Aleo Solar AG(a)(b) | 1,042,542 | ||||||
1,355,500 | America Movil S.A. de C.V.* | 4,338,592 | ||||||
18,500 | ArcelorMittal | 1,454,082 | ||||||
10,900 | Atwood Oceanics, Inc.(a)* | 834,504 | ||||||
32,900 | Banco Bilbao Vizcaya Argentaria S.A. | 771,596 | ||||||
30,000 | Banco Itau Holding Financeir S.A.* | 1,516,376 | ||||||
109,800 | Banco Santander Central Hispano S.A. | 2,138,221 | ||||||
17,600 | Bank of Nova Scotia(b)* | 924,779 | ||||||
7,600 | Bank Zachodni WBK S.A. | 725,197 | ||||||
69,021 | Barclays PLC | 838,956 | ||||||
1,492,000 | Beauty China Holdings, Ltd. | 1,231,710 | ||||||
53,900 | BHP Billiton, Ltd. | 2,104,101 | ||||||
27,600 | BNP Paribas | 3,020,115 | ||||||
288,900 | Brasil Telecom Participacoes S.A.* | 4,298,807 | ||||||
8,600 | Canadian Imperial Bank of Commerce* | 859,308 | ||||||
38,300 | Canadian National Railway Co.* | 2,186,150 | ||||||
49,500 | Canon, Inc. | 2,686,488 | ||||||
55,200 | Celesio AG | 3,503,628 | ||||||
25,900 | CEZ A.S. | 1,588,389 | ||||||
2,001,000 | China Energy, Ltd.(a) | 2,041,489 | ||||||
5,185,000 | China Oriental Group Co., Ltd. | 2,959,947 | ||||||
1,880,460 | China Steel Corp. | 2,748,833 | ||||||
517,500 | China Vanke Co., Ltd. | 1,459,162 | ||||||
9,600 | Compagnie de Saint-Gobain | 1,002,317 | ||||||
1,684,445 | Compal Electronics, Inc. | 1,908,393 | ||||||
79,200 | Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP* | 1,976,541 | ||||||
123,400 | Companhia Vale do Rio Doce - Class A* | 3,526,195 | ||||||
16,187 | Credit Suisse Group | 1,076,083 | ||||||
14,400 | DaimlerChrysler AG | 1,444,008 | ||||||
590,300 | Delta Electronics, Inc. | 2,277,861 | ||||||
27,300 | Dexia S.A. | 826,472 | ||||||
24,100 | E.ON AG | 4,441,011 | ||||||
75,300 | Ensign Energy Services, Inc.* | 1,422,098 | ||||||
654,000 | Ezra Holdings Pte., Ltd. | 2,813,219 | ||||||
718,000 | Formosa Chemicals & Fibre Corp. | 1,837,696 | ||||||
3,154,501 | Fountain Set Holdings, Ltd. | 1,147,897 | ||||||
36,800 | Fugro N.V. | 2,984,615 |
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Shares or Principal Amount | Value | |||||||
19,100 | FUJIFILM Holdings Corp. | $ | 877,647 | |||||
3,500 | Galenica AG | 1,497,926 | ||||||
62,600 | Gildan Activewear, Inc.*(a) | 2,479,700 | ||||||
29,000 | Heineken N.V. | 1,902,159 | ||||||
674,000 | Hengan International Group Co., Ltd. | 2,528,284 | ||||||
15,300 | Holcim, Ltd. | 1,687,954 | ||||||
629,400 | Hon Hai Precision Industry Co., Ltd. | 4,741,612 | ||||||
742,200 | Hong Leong Financial Group Bhd. | 1,262,628 | ||||||
496,000 | Hopson Development Holdings, Ltd. | 1,643,979 | ||||||
159,000 | HSBC Holdings PLC | 2,936,029 | ||||||
7,000 | Hyundai Heavy Industries Co., Ltd. | 3,220,899 | ||||||
16,450 | Hyundai Mipo Dockyard Co., Ltd. | 5,637,038 | ||||||
22,100 | InBev N.V. | 2,001,057 | ||||||
48,246 | Itochu Enex Co., Ltd. | 325,954 | ||||||
6,600 | KBC Groep N.V. | 906,772 | ||||||
424,000 | Keppel Corp., Ltd. | 4,104,200 | ||||||
1,614,000 | KNM Group Bhd. | 2,185,821 | ||||||
1,652,000 | KS Energy Services, Ltd. | 4,423,805 | ||||||
10,750 | Lafarge S.A. | 1,665,899 | ||||||
1,335,000 | Mah Sing Group Bhd. | 739,714 | ||||||
75,900 | Man Group PLC | 859,726 | ||||||
44,900 | Manulife Financial Corp.(b)* | 1,851,719 | ||||||
67,300 | Martinrea International, Inc.* | 1,157,311 | ||||||
89,150 | MediaTek, Inc. | 1,602,834 | ||||||
2,300 | Megastudy Co., Ltd. | 699,277 | ||||||
65,000 | Mitsubishi Corp. | 2,047,443 | ||||||
193,000 | Mitsubishi Heavy Industries, Ltd. | 1,254,923 | ||||||
126,300 | Mitsui & Co., Ltd. | 3,054,824 | ||||||
68,000 | National Bank of Greece S.A. | 4,337,409 | ||||||
118,900 | National Grid PLC | 1,901,950 | ||||||
14,310 | Nestle S.A. | 6,416,416 | ||||||
1,800 | Nintendo Co., Ltd. | 929,469 | ||||||
70,600 | Nokia Oyj | 2,678,537 | ||||||
25,600 | Novartis AG | 1,408,643 | ||||||
12,800 | Nutreco Holding N.V. | 903,384 | ||||||
25,000 | Olympus Corp. | 1,023,193 | ||||||
2,843,000 | Pacific Basin Shipping, Ltd. | 5,941,084 | ||||||
723,000 | Petronas Dagangan Bhd. | 1,866,346 | ||||||
13,000 | Phonak Holding AG | 1,301,767 | ||||||
880 | Porsche AG | 1,876,831 | ||||||
12,500 | PSA Peugeot Citroen | 1,033,433 | ||||||
1,465,000 | Raffles Education Corp., Ltd. | 2,261,057 | ||||||
11,240 | Raiffeisen International Bank Holding AG | 1,643,766 | ||||||
9,400 | Realtek Semiconductor Corp. | 42,542 | ||||||
24,100 | Rio Tinto PLC | 2,073,995 | ||||||
16,459 | Roche Holding AG | 2,980,906 | ||||||
19,300 | Royal Bank of Canada* | 1,068,448 | ||||||
105,800 | Royal Bank of Scotland Group PLC | 1,141,447 | ||||||
19,000 | RWE AG | 2,382,646 |
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Shares or Principal Amount | Value | |||||||
11,930 | Schneider Electric S.A. | $ | 1,506,222 | |||||
22,400 | Shinhan Financial Group, Ltd. | 1,451,167 | ||||||
744,900 | Siam Commercial Bank Public Co., Ltd. | 1,714,205 | ||||||
26,200 | Siemens AG | 3,586,741 | ||||||
600 | Sika AG | 1,168,148 | ||||||
1,306,837 | Siliconware Precision Industries Co. | 2,955,323 | ||||||
566,000 | Singapore Telecommunications, Ltd. | 1,529,508 | ||||||
7,660 | Solon AG fuer Solartechnik(a)(b) | 847,689 | ||||||
55,100 | Sony Corp. | 2,649,031 | ||||||
19,700 | Stada Arzneimittel AG | 1,284,740 | ||||||
29,900 | Stantec, Inc.* | 979,327 | ||||||
23,200 | Swiss Re | 2,063,592 | ||||||
12,600 | Takeda Pharmaceutical Co., Ltd. | 883,765 | ||||||
76,500 | Temenos Group AG(a) | 1,784,674 | ||||||
295,800 | Tesco PLC | 2,651,104 | ||||||
174,000 | The Yokohama Rubber Co., Ltd. | 1,298,737 | ||||||
160,000 | Toshiba Corp.(b) | 1,486,990 | ||||||
33,300 | Toyota Motor Corp. | 1,948,383 | ||||||
1,300,000 | TPV Technology, Ltd. | 932,639 | ||||||
8,000 | Transocean, Inc.(a)* | 904,400 | ||||||
217,260 | Tripod Technology Corp. | 888,389 | ||||||
1,564,000 | U-Ming Marine Transport Corp. | 5,128,655 | ||||||
23,074 | UBS AG | 1,239,978 | ||||||
99,000 | Unicredito Italiano S.p.A. | 847,432 | ||||||
96,000 | United Overseas Bank, Ltd. | 1,425,846 | ||||||
28,430 | Vacon Oyj | 1,419,474 | ||||||
1,794,000 | Wasion Meters Group, Ltd. | 1,104,817 | ||||||
1,617,866 | WCT Engineering Bhd. | 3,649,821 | ||||||
7,650 | Wimm-Bill-Dann Foods OJSC - ADR* | 836,451 | ||||||
542,000 | Wing Tai Holdings, Ltd. | 1,405,755 | ||||||
6,930 | Zurich Financial Services AG | 2,077,885 | ||||||
Total Common Stocks (Cost $199,311,165) | 238,200,988 | |||||||
Rights (0.0%) | ||||||||
11,240 | Raiffeisen International Bank Holding AG Rights | 0 | ||||||
Total Rights (Cost $0) | 0 | |||||||
Short-Term Investments (2.4%) | ||||||||
$ | 1,799,962 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07#* | 1,799,962 | |||||
1,319 | Brown Brothers Harriman Time Deposit - Australian Dollar, 5.50%, 10/01/07#* | 1,319 | ||||||
4,434 | Brown Brothers Harriman Time Deposit - British Pound, 4.80%, 10/01/07#* | 4,434 | ||||||
1,213 | Brown Brothers Harriman Time Deposit - Canadian Dollar, 3.55%, 10/01/07#* | 1,213 |
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Shares or Principal Amount | Value | |||||||
$ | 289 | Brown Brothers Harriman Time Deposit - Danish Krone, 3.05%, 10/01/07#* | $ | 289 | ||||
685,241 | Brown Brothers Harriman Time Deposit - Euro, 3.05%, 10/01/07#* | 685,241 | ||||||
3,337 | Brown Brothers Harriman Time Deposit - Hong Kong Dollar, 4.55%, 10/01/07#* | 3,337 | ||||||
174 | Brown Brothers Harriman Time Deposit - Norwegian Kroner, 3.95%, 10/01/07#* | 174 | ||||||
160 | Brown Brothers Harriman Time Deposit - Singapore Dollar, 1.25%, 10/01/07#* | 160 | ||||||
395 | Brown Brothers Harriman Time Deposit - Swedish Krona, 2.85%, 10/01/07#* | 395 | ||||||
57 | Brown Brothers Harriman Time Deposit - Swiss Frank, 1.46%, 10/01/07#* | 57 | ||||||
3,358,520 | Brown Brothers Harriman Time Deposit - Taiwan Dollar, 0%, 10/01/07#* | 3,358,520 | ||||||
Total Short-Term Investments (Cost $5,855,101) | $ | 5,855,101 | ||||||
Other Securities (2.3%) | ||||||||
5,565,319 | Brown Brothers Harriman Securities Lending Investment Fund*, 5.24% | 5,565,319 | ||||||
Total Other Securities (Cost $5,565,319) | 5,565,319 | |||||||
Total Investments (Cost $210,731,585) 102.3% | 249,621,408 | |||||||
Liabilities Less Other Assets (2.3)% | (5,600,892 | ) | ||||||
Net Assets 100.0% | $ | 244,020,516 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
* | All securities were fair valued (Note 2) as of September 30, 2007 unless noted with a *. Total value of securities fair valued was $207,040,282. |
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Statements of Assets and Liabilities
September 30, 2007
September 30, 2007
ICON | ||||||||||||
Asia-Pacific | ICON | ICON | ||||||||||
Region | Europe | International | ||||||||||
Fund | Fund | Equity Fund | ||||||||||
Assets | ||||||||||||
Investments, at cost | $ | 166,277,600 | $ | 119,874,995 | $ | 210,731,585 | ||||||
Investments, at value† | 210,821,754 | 140,688,677 | 249,621,408 | |||||||||
Foreign currency, at value (cost $101,437, $641,701 and $913,251; respectively) | 101,363 | 645,045 | 917,891 | |||||||||
Receivables: | ||||||||||||
Fund shares sold | 1,068,933 | 397,625 | 2,118,227 | |||||||||
Investments sold | 3,997,193 | 1,129,379 | 5,293,004 | |||||||||
Interest | 1,192 | 4,652 | 9,451 | |||||||||
Dividends | 737,923 | 79,182 | 517,912 | |||||||||
Expense reimbursements by Adviser | 960 | 1,059 | - | |||||||||
Foreign tax reclaims | - | 256,730 | 142,186 | |||||||||
Other assets | 43,212 | 36,342 | 48,450 | |||||||||
Total Assets | 216,772,530 | 143,238,691 | 258,668,529 | |||||||||
Liabilities | ||||||||||||
Payables: | ||||||||||||
Due to custodian bank | 3,907,454 | 331,625 | 2,897,578 | |||||||||
Interest | 4,087 | 10,747 | 4,333 | |||||||||
Investments bought | 4,298,496 | 1,691,933 | 5,684,663 | |||||||||
Payable for collateral received on securities loaned | 1,910,700 | 1,122,560 | 5,565,319 | |||||||||
Fund shares redeemed | 125,368 | 176,219 | 178,681 | |||||||||
Advisory fees and fee waiver recoupment | 157,837 | 112,553 | 188,270 | |||||||||
Accrued distribution fees | 155 | 131 | 54,746 | |||||||||
Fund accounting fees | 6,600 | 5,215 | 7,091 | |||||||||
Transfer agent fees | 9,218 | 7,106 | 9,256 | |||||||||
Administration fees | 7,460 | 5,237 | 8,509 | |||||||||
Trustee fees | 2,638 | 1,900 | 3,046 | |||||||||
Accrued expenses | 37,549 | 39,268 | 46,521 | |||||||||
Total Liabilities | 10,467,562 | 3,504,494 | 14,648,013 | |||||||||
Net Assets — all share classes | $ | 206,304,968 | $ | 139,734,197 | $ | 244,020,516 | ||||||
Net Assets — Class S | $ | 205,331,915 | $ | 139,068,643 | $ | - | ||||||
Net Assets — Class I | $ | - | $ | - | $ | 170,382,746 | ||||||
Net Assets — Class C | $ | - | $ | - | $ | 29,274,092 | ||||||
Net Assets — Class Z | $ | - | $ | - | $ | 37,619,436 | ||||||
Net Assets — Class A | $ | 973,053 | $ | 665,554 | $ | 6,744,242 | ||||||
Net Assets Consist of | ||||||||||||
Paid-in capital | $ | 145,079,865 | $ | 101,602,036 | $ | 178,750,387 | ||||||
Accumulated undistributed net investment income/(loss) | 1,112,505 | 1,213,565 | 1,624,228 | |||||||||
Accumulated undistributed net realized gain/(loss) from investments and foreign currency transactions | 15,571,624 | 16,095,015 | 24,747,484 | |||||||||
Unrealized appreciation/(depreciation) on investments and other assets and liabilities denominated in foreign currency | 44,540,974 | 20,823,581 | 38,898,417 | |||||||||
Net Assets | $ | 206,304,968 | $ | 139,734,197 | $ | 244,020,516 | ||||||
Shares outstanding (unlimited shares authorized, no par value) | ||||||||||||
Class S | 10,912,979 | 5,785,745 | - | |||||||||
Class I | - | - | 8,479,456 | |||||||||
Class C | - | - | 1,533,111 | |||||||||
Class Z | - | - | 1,849,950 | |||||||||
Class A | 51,975 | 27,833 | 333,232 | |||||||||
Net asset value (offering and redemption price per share) | ||||||||||||
Class S | $ | 18.82 | $ | 24.04 | $ | - | ||||||
Class I | $ | - | $ | - | $ | 20.09 | ||||||
Class C | $ | - | $ | - | $ | 19.09 | ||||||
Class Z | $ | - | $ | - | $ | 20.34 | ||||||
Class A | $ | 18.72 | $ | 23.91 | $ | 20.24 | ||||||
Class A maximum offering price (100%/(100%-maximum sales charge)) of net asset value adjusted to the nearest cent per share | $ | 19.86 | $ | 25.37 | $ | 21.47 |
† Includes securities on loan of $1,840,150, $1,065,252 and $5,301,633.
The accompanying notes are an integral part of the financial statements.
Table of Contents
Statements of Operations
For the year ended September 30, 2007
For the year ended September 30, 2007
ICON | ICON | |||||||||||
Asia-Pacific | ICON | International | ||||||||||
Region | Europe | Equity | ||||||||||
Fund | Fund | Fund | ||||||||||
Investment Income | ||||||||||||
Interest | $ | 57,097 | $ | 167,568 | $ | 128,856 | ||||||
Dividends | 4,096,962 | 3,758,754 | 4,704,376 | |||||||||
Income from securities lending, net | 3,387 | 11,583 | 13,705 | |||||||||
Foreign taxes withheld | (460,233 | ) | (417,135 | ) | (546,543 | ) | ||||||
Total Investment Income | 3,697,213 | 3,520,770 | 4,300,394 | |||||||||
Expenses | ||||||||||||
Advisory fees | 1,568,603 | 1,513,899 | 1,691,488 | |||||||||
Distribution fees: | ||||||||||||
Class I | - | - | 285,658 | |||||||||
Class C | - | - | 200,771 | |||||||||
Class A | 550 | 1,096 | 6,767 | |||||||||
Fund accounting fees | 70,885 | 72,600 | 75,798 | |||||||||
Transfer agent fees | 101,085 | 77,643 | 96,423 | |||||||||
Custody fees | 119,245 | 125,542 | 135,730 | |||||||||
Administration fees | 72,461 | 69,934 | 78,141 | |||||||||
Registration fees: | ||||||||||||
Class S | 39,946 | 27,141 | - | |||||||||
Class I | - | - | 17,373 | |||||||||
Class C | - | - | 17,347 | |||||||||
Class A | 1,855 | 1,741 | 1,744 | |||||||||
Insurance expense | 8,899 | 5,967 | 6,930 | |||||||||
Trustee fees and expenses | 13,952 | 15,213 | 15,646 | |||||||||
Interest expense | 107,384 | 70,867 | 9,480 | |||||||||
Other expenses | 81,506 | 78,553 | 80,482 | |||||||||
Recoupment of previously reimbursed expenses | - | - | 20,536 | |||||||||
Total expenses before expense reimbursement and transfer agent earnings credit | 2,186,371 | 2,060,196 | 2,740,314 | |||||||||
Transfer agent earnings credit | (7,908 | ) | (7,664 | ) | (8,603 | ) | ||||||
Expense reimbursement by Adviser due to expense limitation agreement | (3,131 | ) | (2,624 | ) | - | |||||||
Net Expenses | 2,175,332 | 2,049,908 | 2,731,711 | |||||||||
Net Investment Income/(Loss) | 1,521,881 | 1,470,862 | 1,568,683 | |||||||||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency Translations | ||||||||||||
Net realized gain/(loss) from investment transactions | 24,898,211 | 25,312,930 | 27,661,435 | |||||||||
Net realized gain/(loss) from foreign currency translations | (63,187 | ) | (409,192 | ) | (277,388 | ) | ||||||
Change in unrealized net appreciation/(depreciation) on investments & foreign currency translations | 31,658,932 | 10,572,351 | 28,720,835 | |||||||||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency translations | 56,493,956 | 35,476,089 | 56,104,882 | |||||||||
Net Increase/(Decrease) in Net Assets Resulting From Operations | $ | 58,015,837 | $ | 36,946,951 | $ | 57,673,565 | ||||||
The accompanying notes are an integral part of the financial statements.
Table of Contents
Statements of Changes in Net Assets
ICON Asia-Pacific Region Fund | ||||||||
Year Ended | Year Ended | |||||||
September 30, | September 30, | |||||||
2007 | 2006 | |||||||
Operations | ||||||||
Net investment income/(loss) | $ | 1,521,881 | $ | 155,747 | ||||
Net realized gain/(loss) from investment transactions | 24,898,211 | 1,094,030 | ||||||
Net realized gain/(loss) from foreign currency translations | (63,187 | ) | (569,787 | ) | ||||
Change in net unrealized appreciation/(depreciation) on investments and foreign currency translations | 31,658,932 | 6,454,824 | ||||||
Net increase/(decrease) in net assets resulting from operations | 58,015,837 | 7,134,814 | ||||||
Dividends and Distributions to Shareholders | ||||||||
Net investment income | ||||||||
Class S | (327,103 | ) | (85,846 | ) | ||||
Class A | (214 | ) | - | |||||
Net decrease from dividends and distributions | (327,317 | ) | (85,846 | ) | ||||
Fund Share Transactions | ||||||||
Shares sold | ||||||||
Class S | 89,318,346 | 221,387,084 | ||||||
Class A | 981,784 | 24,469 | ||||||
Reinvested dividends and distributions | ||||||||
Class S | 303,437 | 80,516 | ||||||
Class A | 174 | - | ||||||
Shares repurchased | ||||||||
Class S | (89,329,345 | ) | (129,793,185 | ) | ||||
Class A | (126,676 | ) | (26 | ) | ||||
Net increase/(decrease) from fund share transactions | 1,147,720 | 91,698,858 | ||||||
Total net increase/(decrease) in net assets | 58,836,240 | 98,747,826 | ||||||
Net Assets | ||||||||
Beginning of period | 147,468,728 | 48,720,902 | ||||||
End of period | $ | 206,304,968 | $ | 147,468,728 | ||||
The accompanying notes are an integral part of the financial statements.
Table of Contents
Statements of Changes in Net Assets
ICON Europe Fund | ICON International Equity Fund | |||||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Operations | ||||||||||||||||
Net investment income/(loss) | $ | 1,470,862 | $ | 688,766 | $ | 1,568,683 | $ | 405,330 | ||||||||
Net realized gain/(loss) from investment transactions | 25,312,930 | 2,724,355 | 27,661,435 | 6,781,431 | ||||||||||||
Net realized gain/(loss) from foreign currency translations | (409,192 | ) | (286,266 | ) | (277,388 | ) | (454,070 | ) | ||||||||
Change in net unrealized appreciation/(depreciation) on investments and foreign currency translations | 10,572,351 | 6,903,602 | 28,720,835 | 4,534,281 | ||||||||||||
Net increase/(decrease) in net assets resulting from operations | 36,946,951 | 10,030,457 | 57,673,565 | 11,266,972 | ||||||||||||
Dividends and Distributions to Shareholders | ||||||||||||||||
Net investment income | ||||||||||||||||
Class S | (366,098 | ) | - | - | - | |||||||||||
Class I | - | - | (10,385 | ) | (24,881 | ) | ||||||||||
Class C | - | - | - | - | ||||||||||||
Class Z | - | - | - | (50,351 | ) | |||||||||||
Class A | (553 | ) | - | - | - | |||||||||||
Net realized gains | ||||||||||||||||
Class S | (1,940,765 | ) | (1,340,887 | ) | - | - | ||||||||||
Class I | - | - | (3,723,882 | ) | (1,143,374 | ) | ||||||||||
Class C | - | - | (724,596 | ) | (134,889 | ) | ||||||||||
Class Z | - | - | (1,230,878 | ) | (934,778 | ) | ||||||||||
Class A | (3,610 | ) | - | (117,472 | ) | - | ||||||||||
Net decrease from dividends and distributions | (2,311,026 | ) | (1,340,887 | ) | (5,807,213 | ) | (2,288,273 | ) | ||||||||
Fund Share Transactions | ||||||||||||||||
Shares sold | ||||||||||||||||
Class S | 113,256,468 | 117,006,017 | - | - | ||||||||||||
Class I | - | - | 77,455,420 | 68,838,279 | ||||||||||||
Class C | - | - | 11,921,728 | 12,648,559 | ||||||||||||
Class Z | - | - | 6,829,087 | 13,277,909 | ||||||||||||
Class A | 575,800 | 29,478 | 8,691,180 | 88,208 | ||||||||||||
Reinvested dividends and distributions | ||||||||||||||||
Class S | 2,085,318 | 1,336,067 | - | - | ||||||||||||
Class I | - | - | 3,619,722 | 1,133,191 | ||||||||||||
Class C | - | - | 666,173 | 130,198 | ||||||||||||
Class Z | - | - | 1,228,139 | 983,433 | ||||||||||||
Class A | 4,163 | - | 116,347 | - | ||||||||||||
Shares repurchased | ||||||||||||||||
Class S | (116,233,754 | ) | (44,864,637 | ) | - | - | ||||||||||
Class I | - | - | (22,357,920 | ) | (13,588,831 | ) | ||||||||||
Class C | - | - | (3,263,458 | ) | (915,055 | ) | ||||||||||
Class Z | - | - | (8,285,805 | ) | (5,302,946 | ) | ||||||||||
Class A | (28,933 | ) | (36 | ) | (3,202,753 | ) | (29 | ) | ||||||||
Net increase/(decrease) from fund share transactions | (340,938 | ) | 73,506,889 | 73,417,860 | 77,292,916 | |||||||||||
Total net increase/(decrease) in net assets | 34,294,987 | 82,196,459 | 125,284,212 | 86,271,615 | ||||||||||||
Net Assets | ||||||||||||||||
Beginning of period | 105,439,210 | 23,242,751 | 118,736,304 | 32,464,689 | ||||||||||||
End of period | $ | 139,734,197 | $ | 105,439,210 | $ | 244,020,516 | $ | 118,736,304 | ||||||||
The accompanying notes are an integral part of the financial statements.
Table of Contents
Statements of Changes in Net Assets (continued)
ICON Asia-Pacific Region Fund | ||||||||
Year Ended | Year Ended | |||||||
September 30, | September 30, | |||||||
2007 | 2006 | |||||||
Transactions in Fund Shares | ||||||||
Shares Sold | ||||||||
Class S | 5,692,452 | 17,006,822 | ||||||
Class A | 57,467 | 1,846 | ||||||
Reinvested dividends and distributions | ||||||||
Class S | 21,264 | 6,233 | ||||||
Class A | 12 | - | ||||||
Shares repurchased | ||||||||
Class S | (5,979,748 | ) | (10,164,560 | ) | ||||
Class A | (7,348 | ) | (2 | ) | ||||
Net increase/(decrease) | (215,901 | ) | 6,850,339 | |||||
Shares outstanding beginning of period | 11,180,855 | 4,330,516 | ||||||
Shares outstanding end of period | 10,964,954 | 11,180,855 | ||||||
Purchase and Sales of Investment Securities (excluding short-term securities) | ||||||||
Purchase of securities | $ | 207,034,481 | $ | 291,355,445 | ||||
Proceeds from sales of securities | 205,128,051 | 202,024,877 | ||||||
Accumulated undistributed net investment income/(loss) | $ | 1,112,505 | $ | (270,114 | ) | |||
The accompanying notes are an integral part of the financial statements.
Table of Contents
Statements of Changes in Net Assets (continued)
ICON Europe Fund | ICON International Equity Fund | |||||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Transactions in Fund Shares | ||||||||||||||||
Shares Sold | ||||||||||||||||
Class S | 5,325,734 | 6,577,613 | - | - | ||||||||||||
Class I | - | - | 4,426,226 | 4,778,664 | ||||||||||||
Class C | - | - | 722,425 | 892,329 | ||||||||||||
Class Z | - | - | 362,014 | 987,753 | ||||||||||||
Class A | 27,337 | 1,577 | 496,277 | 5,877 | ||||||||||||
Reinvested dividends and distributions | ||||||||||||||||
Class S | 100,015 | 91,261 | - | - | ||||||||||||
Class I | - | - | 228,951 | 84,133 | ||||||||||||
Class C | - | - | 43,972 | 9,984 | ||||||||||||
Class Z | - | - | 76,903 | 72,522 | ||||||||||||
Class A | 200 | - | 7,295 | - | ||||||||||||
Shares repurchased | ||||||||||||||||
Class S | (5,242,428 | ) | (2,549,057 | ) | - | - | ||||||||||
Class I | - | - | (1,293,738 | ) | (935,489 | ) | ||||||||||
Class C | - | - | (200,912 | ) | (64,198 | ) | ||||||||||
Class Z | - | - | (466,665 | ) | (372,280 | ) | ||||||||||
Class A | (1,279 | ) | (2 | ) | (176,215 | ) | (2 | ) | ||||||||
Net increase/(decrease) | 209,579 | 4,121,392 | 4,226,533 | 5,459,293 | ||||||||||||
Shares outstanding beginning of period | 5,603,999 | 1,482,607 | 7,969,216 | 2,509,923 | ||||||||||||
Shares outstanding end of period | 5,813,578 | 5,603,999 | 12,195,749 | 7,969,216 | ||||||||||||
Purchase and Sales of Investment Securities (excluding short-term securities) | ||||||||||||||||
Purchase of securities | $ | 195,767,756 | $ | 133,003,344 | $ | 289,490,635 | $ | 168,974,479 | ||||||||
Proceeds from sales of securities | 196,894,045 | 60,122,066 | 221,259,001 | 98,308,045 | ||||||||||||
Accumulated undistributed net investment income/(loss) | $ | 1,213,565 | $ | 366,659 | $ | 1,624,228 | $ | 10,385 | ||||||||
The accompanying notes are an integral part of the financial statements.
Table of Contents
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Table of Contents
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| 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, 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 | ) | - | |||||||||||||||||
Year Ended September 30, 2003 | 5.68 | 0.04 | 1.90 | 1.94 | - | - | ||||||||||||||||||
Class A | ||||||||||||||||||||||||
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, 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 | - | - | |||||||||||||||||
Year Ended September 30, 2003 | 7.40 | (0.02 | ) | 2.46 | 2.44 | - | - | |||||||||||||||||
Class A | ||||||||||||||||||||||||
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 | - | - | |||||||||||||||||
ICON International Equity Fund | ||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||
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, 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, 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 | ) | - | |||||||||||||||||
Year Ended September 30, 2003 | 5.96 | 0.06 | 2.45 | 2.51 | - | (0.06 | ) | |||||||||||||||||
Class A | ||||||||||||||||||||||||
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 | ) | - | - |
(x) | Calculated using the average share method. |
* | The total return calculation is for the period indicated and excludes any sales charges. |
# | Class S was formerly the only class in the Fund. Multi-class operations commenced May 31, 2006. |
(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.
Table of Contents
Ratio of net investment | ||||||||||||||||||||||||||||||||||
Ratio of expenses to | income to average net | |||||||||||||||||||||||||||||||||
average net assets(d) | assets(d) | |||||||||||||||||||||||||||||||||
Before | After | Before | After | |||||||||||||||||||||||||||||||
expense | expense | expense | expense | |||||||||||||||||||||||||||||||
distributions | limitation | limitation | limitation | limitation | ||||||||||||||||||||||||||||||
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) | ||||||||||||||||||||||||||
$ | (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 | % | ||||||||||||||||||||||
- | 7.62 | 34.15 | % | 6,084 | 1.98% | N/A | 0.68 | % | N/A | 81.44 | % | |||||||||||||||||||||||
(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 | % | |||||||||||||||||||||
(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 | % | |||||||||||||||||||||||
- | 9.84 | 32.97 | % | 9,262 | 1.87% | N/A | (0.29 | )% | N/A | 101.37 | % | |||||||||||||||||||||||
(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 | % | |||||||||||||||||||||
(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 | % | |||||||||||||||||||||||
(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 | % | |||||||||||||||||||||||
(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 | % | ||||||||||||||||||||||
(0.06 | ) | 8.41 | 42.60 | % | 10,587 | 2.00% | N/A | 0.88 | % | N/A | 98.91 | % | ||||||||||||||||||||||
(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 | % |
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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 two classes of shares, Class S and Class A. The International Equity Fund offers four classes of shares, Class I, Class C, Class Z and Class A. 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 tend to 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 is less governmental supervision of foreign stock exchanges and securities brokers and issuers. There are also risks associated with small- and mid-cap
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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 are valued at fair value as determined in good faith by the Funds’ Board or pursuant to procedures approved by the Board.
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Notes to Financial Statements (continued)
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 principal market where the option is traded. 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. 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 Pronouncement
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements.” 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 No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 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
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SFAS No. 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.
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, 2007.
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 in connection with planned purchases or sales of securities as a hedge against fluctuations in foreign exchange rates pending the settlement of transactions in foreign securities. A forward foreign currency contract is an agreement
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Notes to Financial Statements (continued)
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 in the Statement of Operations. The Funds did not enter into any forward foreign currency contracts during the year ended September 30, 2007.
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, 2007.
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
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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 option transactions during the year ended September 30, 2007.
Securities Lending
Under procedures adopted by the Trustees, the Funds may lend securities to non-affiliated qualified parties. The Funds may 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 being lent; 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 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.
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Notes to Financial Statements (continued)
As of September 30, 2007, the following Funds had securities with the following values on loan:
Value of | Value of | |||||||
Fund | Loaned Securities | Collateral | ||||||
ICON Asia-Pacific Region Fund | $ | 1,840,150 | $ | 1,910,700 | ||||
ICON Europe Fund | 1,065,252 | 1,122,560 | ||||||
ICON International Equity Fund | 5,301,633 | 5,565,319 |
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.
On July 13, 2006, the Financial Accounting Standards Board (“FASB”) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds’ tax return to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required no later than the last business day of the first financial statement reporting period for fiscal years beginning after December 15, 2006 and is to be applied to all open tax
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years as of the effective date. At this time, management is evaluating the implications, if any, of FIN 48. Its impact to the financial statements has not yet been determined.
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 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.
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Notes to Financial Statements (continued)
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:
Class S | Class I | Class C | Class Z | Class A | ||||||||||||||||
ICON Asia-Pacific Region Fund | - | N/A | N/A | N/A | 1.80% | |||||||||||||||
ICON Europe Fund | - | N/A | N/A | N/A | 1.80% | |||||||||||||||
ICON International Equity Fund | N/A | 1.80% | 2.55% | 1.55% | 1.80% |
The expense limitations will continue in effect until at least January 29, 2017. 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, 2007 the following amounts were still available for recoupment by ICON based upon their potential expiration dates:
2008 | 2009 | 2010 | ||||||||||
ICON Asia-Pacific Region Fund | $ | - | $ | 722 | $ | 3,131 | ||||||
ICON Europe Fund | - | 709 | 2,624 | |||||||||
ICON International Equity Fund | - | - | 2,647 |
Accounting, Custody and Transfer Agent Fees
Citi Fund Services Ohio, Inc. (“Citi”) is the Fund Accounting Agent for the Funds. Effective August 1, 2007, The BISYS Group, Inc., and its subsidiaries, was acquired by and became a wholly-owned subsidiary of Citi. 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.
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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 is a result from overnight balances used by the transfer agent, BFDS, for clearing shareholder transactions. During the year ended September 30, 2007, 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. As of January 31, 2006, this agreement provides for an annual fee of 0.05% on the Funds’ 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, 2007, 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. Effective August 1, 2007, The BISYS Group, Inc., and its subsidiaries, was acquired by and became a wholly-owned subsidiary of Citi. 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.
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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 of the International Equity Fund and Class A shareholders of the Asia-Pacific Region Fund and the Europe Fund pay an annual 12b-1 and service fee of 0.25% of average daily net assets. The Class C shareholders of the International Equity Fund pay an annual 12b-1 and service fee of 1.00% of average daily net assets.
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, 2007, the total related amounts paid by the Trust under this agreement are included in Other Expenses on the Statement of Operations.
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, 2007, the amount was $15,423.
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. Interest on domestic borrowings is charged at LIBOR plus 2.00% which was 7.12% at September 30, 2007. The average interest rate charged for the year ended September 30, 2007 was 6.82%.
Average Borrowing | ||||
(10/1/06 - 9/30/07) | ||||
ICON Asia-Pacific Region Fund** | $ | 1,368,095 | ||
ICON Europe Fund** | 2,806,906 | |||
ICON International Equity Fund** | 230,647 |
**Fund had outstanding borrowings as of September 30, 2007.
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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, 2007 the ICON Asia-Pacific Region Fund utilized capital loss carryforwards of $6,889,133. For the year ended September 30, 2007, the ICON Asia-Pacific Region Fund and the ICON Europe Fund will elect to defer post October currency losses of $21,330 and $213,173, respectively.
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 |
The tax characteristics of dividends and distributions paid to shareholders during the fiscal year ended September 30, 2006, were as follows:
Distributions paid from | Total | |||||||||||||||
Ordinary | Net Long- | Total Taxable | Distributions | |||||||||||||
Fund | Income | Term Gains | Distributions | Paid | ||||||||||||
ICON Asia-Pacific Region Fund | $ | 85,846 | $ | - | $ | 85,846 | $ | 85,846 | ||||||||
ICON Europe Fund | - | 1,340,887 | 1,340,887 | 1,340,887 | ||||||||||||
ICON International Equity Fund | 952,037 | 1,336,236 | 2,288,273 | 2,288,273 |
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Notes to Financial Statements (continued)
As of September 30, 2007, the components of accumulated earnings (deficit) on a tax basis was as follows:
Total | ||||||||||||||||||||||||
Undistributed | Undistributed | Accumulated | Unrealized | Accumulated | ||||||||||||||||||||
Ordinary | Net Long- | Accumulated | capital and | Appreciation | Earnings | |||||||||||||||||||
Fund | Income | Term Gains | Earnings | other losses | (Depreciation) | (Deficits) | ||||||||||||||||||
ICON Asia-Pacific Region Fund | $ | 4,690,147 | $ | 12,015,312 | $ | 16,705,459 | $ | (21,330 | ) | $44,540,974 | $ | 61,225,103 | ||||||||||||
ICON Europe Fund | 15,002,307 | 2,578,368 | 17,580,675 | (213,173 | ) | 20,764,659 | 38,132,161 | |||||||||||||||||
ICON International Equity Fund | 15,951,878 | 10,512,656 | 26,464,534 | - | 38,805,595 | 65,270,129 |
As of September 30, 2007, book cost for financial reporting purposes is substantially the same for federal income tax puposes 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 | $ | 166,277,600 | $ | 46,259,945 | $ | (1,715,791 | ) | $ | 44,544,154 | |||||||
ICON Europe Fund | 119,933,917 | 22,448,563 | (1,693,803 | ) | 20,754,760 | |||||||||||
ICON International Equity Fund | 210,824,407 | 41,562,641 | (2,765,640 | ) | 38,797,001 |
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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, 2007, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
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Denver, Colorado
November 20, 2007
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Example
As a shareholder of a Fund you may pay two types of fees: transaction fees and fund-related fees. Certain funds charge transactions 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 (4/1/07 - 9/30/07).
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),
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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 | 4/1/07 - | 4/1/07 - | |||||||||||||
4/1/07 | 9/30/07 | 9/30/07* | 9/30/07 | |||||||||||||
ICON Asia-Pacific Region Fund | ||||||||||||||||
Class S | ||||||||||||||||
Actual Expenses | $ | 1,000.00 | $ | 1,252.20 | $ | 7.43 | 1.32 | % | ||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.38 | 6.68 | |||||||||||||
Class A | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,248.80 | 10.20 | 1.81 | % | |||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,015.93 | 9.15 | |||||||||||||
ICON Europe Fund | ||||||||||||||||
Class S | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,100.20 | 7.16 | 1.36 | % | |||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.18 | 6.88 | |||||||||||||
Class A | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,097.30 | 9.67 | 1.84 | % | |||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,015.77 | 9.30 | |||||||||||||
ICON International Equity Fund | ||||||||||||||||
Class I | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,208.10 | 8.41 | 1.52 | % | |||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,017.38 | 7.69 | |||||||||||||
Class C | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,201.40 | 14.18 | 2.57 | % | |||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,012.11 | 12.96 | |||||||||||||
Class Z | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,210.00 | 6.93 | 1.25 | % | |||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.73 | 6.33 | |||||||||||||
Class A | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,206.20 | 9.84 | 1.78 | % | |||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,016.08 | 9.00 |
* | Expenses are equal to the Fund’s six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 183/365 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.
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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, 56, 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 2004) of ICON Advisers, Inc. (“ICON Advisers”), the Funds’ Investment Adviser. Dr. Callahan is also President (1998 to present); Director (1991 to present); and was previously Vice President (1991 to 1998) of ICON Distributors, Inc. (“IDI”), the Funds’ Distributor, and is President of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan also serves as the Director (1994 to present), and was previously Secretary/Treasurer (1994 to 1998) of ICON Management & Research Corporation (“IM&R”), the parent company of ICON Advisers and IDI.
Independent Trustees
Glen F. Bergert, 57. 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, 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, 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 present); Delta Dental of California, an insurance company (2006 to present); and Delta Reinsurance Corporation (2000 to present).
John C. Pomeroy, Jr., 60. 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
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Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).
Gregory Kellam Scott, 59. Mr. Scott has been a Trustee of the Funds since November 2002. Mr. Scott currently serves as Executive Director of the Indiana Civil Rights Commission (2005 to present) and has been appointed to 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) and a Colorado Supreme Court Justice (1993 to 2000).
R. Michael Sentel, 59. 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 (1980-1981). 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, 56. 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 2004). Dr. Callahan is also President (1998 to present), Director (1991 to present) and was previously Vice President (1991 to 1998) of IDI, and is President of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan is also the Director (1994 to present), and was previously Secretary/Treasurer (1994 to 1998) of IM&R.
Erik L. Jonson, 58. Mr. Jonson has been a Vice President and Chief Financial Officer 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).
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Donald Salcito, 54. 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 and Chief Compliance Officer, for ICON Distributors, Inc. (2005 to present); 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. (2000-2005).
Carrie M. Schoffman, 34. Ms. Schoffman serves as Assistant Vice President and Chief Compliance Officer of the Funds (May 2004 to present). She also serves as Vice President and Chief Compliance Officer of ICON Advisers, Inc. (May 2004 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.
Stephen Abrams, 44. 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). Previously he was a Partner at Perkins Coie, LLP (2004-2005) and Associate (2000 to 2004).
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Renewal of Investment Advisory Agreement
In determining to renew the investment advisory agreements between 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 exchange traded funds versus the Sector Funds; and comparative data obtained from Lipper Analytical Services related to Fund performance and Fund expenses.
On August 14, 2007, the Board of Trustees, including all of the 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, 2007.
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 and also met with management 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 agreement.
In considering the nature, extent and quality of the services provided by the Adviser, the Board reviewed information relating to the Adviser’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 the Adviser’s investment personnel, the Adviser’s compliance programs, the Adviser’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.
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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. The Board concluded that the 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 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;
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 be terminated at any time and must be renewed on an annual basis.
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In connection with assessing data bearing the fairness of fee arrangements, the Board used data from Lipper, Inc. 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 ICON has contractually agreed to impose expense limitations on certain Funds at a cost to ICON;
D. 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;
E. 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 why such accounts are less costly for ICON to manage.
F. the extent to which economies of scale could be realized as a Fund grows in assets and whether the Fund’s fees reflect these economies of scale for the benefit of Fund shareholders.
In connection with profitability, the Board reviewed the costs borne by ICON in providing advisory services to each Fund and the profitability of ICON in light of the estimated profitability analysis.
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; the services provided by ICON and its affiliates to the Funds are satisfactory, and whether the 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; the Trustees noted that such research assists ICON in providing quality to which it provides advisory services.
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Based on these considerations, among others, the Board, including all of the Independent Trustees, concluded that the continuation of the Advisory Agreement was in the best interests of each Fund and its shareholders, the services to be performed under the agreement 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, 2007 qualifies for the corporate dividends received deduction for the following Funds:
Dividends Received | ||||
Fund | Deduction | |||
ICON International Equity Fund | 0.06 | % |
For the fiscal year ended September 30, 2007, the following Funds paid qualified dividend income:
Fund | Amount | |||
ICON International Equity Fund | $ | 12,156 |
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 | $ | 1,612,474 | ||
ICON Europe Fund | 8,302,676 | |||
ICON International Equity Fund | 3,223,111 |
Portfolio Holdings
A list of each ICON Fund’s Top 10 holdings is available at www.iconadvisers.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.
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Proxy Voting
A summarized description of the policies and procedures the ICON Funds use to vote proxies is available free of charge at www.iconadvisers.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.iconadvisers.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.iconadvisers.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.iconadvisers.com | |
By E-Mail | info@iconadvisers.com |
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1-800-764-0442
www.iconadvisers.com
FANN-INT (09/07)
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2007 Annual Report
ICON Sector Funds
Investment Update
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
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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, tax return of capital, 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.iconadvisers.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, 2007, 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, 2007 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 tend to 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 is less governmental supervision of foreign stock exchanges and securities brokers and issuers. The ICON system relies on the
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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 Annual 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. Investments in foreign securities may entail unique risks, including political, market, and currency risks.
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The prospectus contains this and other information about the Funds and is available by visiting www.iconadvisers.com or calling 1-800-764-0442. Please read the prospectus 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. |
• | The capitalization-weighted S&P 1500 Sector and Industry Indexes are based on specific classifications determined by S&P. |
• | 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.
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Dear ICON Shareholder:
We realize you are faced with many mutual fund choices as you construct your financial plan, and we appreciate your continued commitment to diversify with one or more of the ICON Sector Funds. To those shareholders who are receiving their first ICON Funds Annual Report, we welcome you.
Investing lore is replete with sayings that communicate the wisdom that comes only from long-term experience. During the past five years, I have been reminded of the expression, “Wall Street climbs a wall of worry.” As the saying goes, market advances need to climb the proverbial “wall of worry” in order to keep going higher.
Many investors believe they have plenty to worry about: the sub-prime mortgage crisis, interest rates, oil prices, consumer spending, and inflation, not to mention the anxieties of terrorism, the Iraq war, environmental issues, and the weakness of the dollar. Amid these concerns, investors are inundated with news and theories about the stock market, leading to confusion, fear, and poor investment decisions.
Second-guessing the Federal Reserve (the Fed) seems to be a popular activity lately for many investors. Some argue the Fed waited too long to ease. Some argue the Fed should not be easing at all. Others believe the Fed should ease monetary policy even more.
We believe the debates regarding the economy and the stock market are a distraction for investment purposes. At ICON, we do not waste energy trying to predict what the Fed will do. Fed economists have direct access to economic statistics and banking activity. They are in the best position to make decisions regarding interest rates.
Debate also centers on the economy as people guess whether there will be a recession. They focus particular attention on the housing market and argue over when it might rebound. Again, this debate is irrelevant to the ICON system, as we avoid conjecture about the economy and housing market when making investment decisions.
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A Strong Equity Market
Despite worrisome headlines and gloomy expectations, it may be surprising to know how well the equity markets have performed over the last five years. Below are cumulative and annualized rates of return for a few popular indexes for the five-year period ended September 30, 2007.
Index Returns, 9/30/02 - 9/30/07
Index | Cumulative Return | Annualized Return | ||||||
Dow Jones Industrial Average | 105.02 | % | 15.44 | % | ||||
NASDAQ Composite Index | 138.06 | % | 18.94 | % | ||||
S&P 500 Index | 105.13 | % | 15.45 | % | ||||
S&P MidCap 400 Index | 130.45 | % | 18.17 | % | ||||
S&P SmallCap 600 Index | 135.93 | % | 18.73 | % |
The unmanaged Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks, primarily industrials. The unmanaged NASDAQ Composite (“NASDAQ”) Index is a broad-based capitalization-weighted index of all NASDAQ National Market and Small-Cap stocks. The unmanaged Standard & Poor’s (S&P) 500 Index is a market value-weighted index of large-cap common stocks considered representative of the broad market. The unmanaged S&P SmallCap 600 Index is an unmanaged index of 600 domestic stocks chosen for their market capitalization, liquidity, financial viability, and sector representation. The unmanaged S&P MidCap 400 Index is a widely recognized unmanaged mid-cap index of 400 domestic stocks chosen for their market capitalization, liquidity, and industry group representations. Total returns for the unmanaged indexes include the reinvestment of dividends and capital gain distributions, except as noted, but do not reflect the costs of managing a mutual fund. The Funds’ composition may differ significantly from the indexes. Individuals cannot invest directly in an index.
Sources: FactSet Research Systems, Bloomberg
We think these are impressive rates of returns and are above-average by historic standards. A 100% cumulative return means the investment has doubled during the period. Yet analysts, observers, and investors have doubted the strength of this market. But, as the adage says, as they worried, the market kept climbing.
The past five years are significant to ICON because we opened four new funds in September 2002. ICON Long/Short, ICON Equity Income, ICON Income Opportunity, and ICON Bond Funds recently reached their five-year performance track records. Additionally, the ICON Core Equity Fund has seven years of performance as of mid-October, and most of the ICON Sector and International Funds now boast 10-year track records.
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Guided by Valuation
As always, our valuation readings have been our guide. According to our methodology, stocks have, on average, been priced below our estimate of intrinsic value over the course of the fiscal year. Our valuations dictate being invested.
While investors worry about current events, they have been giving us stocks at bargain prices. In our view, the impressive rates of return seen in market indexes are simply the result of prices trying to catch up with intrinsic value.
At ICON, we invest in industries that our methodology identifies as underpriced. Our quantitative process keeps us on track when many other investors are doubtful and worried. We continue to uncover companies we think are healthy and well-managed. These companies seem to be succeeding even amidst investor fear and worry.
Our discipline directed us to stay invested during the fiscal year, allowing the ICON Funds to take advantage of this rising market. In our regular communications, we have been steady in our message that it has been best to be invested in underpriced stocks and ride through short-term setbacks. You should be commended for your resolve to stick with the ICON system, and we believe you should be proud if you have participated in the advance.
In closing, we are grateful for the privilege of playing a role in your investment portfolio. In addition to reading this report on your Funds and communicating with your financial adviser, we invite you to visit our website at www.iconadvisers.com for current market updates, up-to-date Fund performance, and other information about your account.
Yours truly,
![-s- Craig T. Callahan](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913callahct.gif)
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
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ICCCX
Q. | How did the Fund perform relative to its benchmarks? |
A. | For the fiscal year ended September 30, 2007, the Fund’s sector-specific benchmark, the S&P 1500 Consumer Discretionary Index, returned 5.92%, and its broad benchmark, the S&P Composite 1500 Index, gained 16.59%. The ICON Consumer Discretionary Fund trailed both benchmarks, appreciating 5.62% during the same period. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
Q. | What primary factors were behind the Fund’s relative performance? |
A. | We believe investor concerns over rising oil prices, the sub-prime mortgage debacle, the slowdown in housing, and concerns over the possibility of inflation all weighed heavily on the Consumer Discretionary sector during the period. With oil, gold, and other commodity prices rising sharply, investors apparently doubted the ability of consumers to continue spending, which, in turn, would dampen profits for retail, home, and auto-related issues. |
Investors appeared reluctant to buy shares of Consumer Discretionary stocks in spite of the significant value they held based on our calculations. At the start of the fiscal period, our analysis indicated the Consumer Discretionary sector was trading at about a 30% discount to our estimation of its intrinsic value.
Despite investor concerns, earnings of companies within this sector remained generally strong, and a slowdown in consumer spending did not materialize during the period.
Amid this backdrop, Consumer Discretionary stocks struggled relative to the broader market, while trading in the sector was quite volatile. To illustrate, from the beginning of the period to February 20, 2007, the S&P 1500 Consumer Discretionary Index rose 15.60%. Then, from February 20 to March 5, 2007, the Index fell (7.28%), and from March 5 to June 4, 2007, the Index bounced back, rising 9.08%. Finally, after a short period of sideways movement, the Consumer Discretionary Index dropped (12.50%) from July 19 to August 15, 2007.
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Q. | How did the Fund’s composition affect performance? |
A. | Our valuation system directs us to invest in industries that are demonstrating the best combination of value and strength relative to the broad market. During the period, several industries in particular contributed to absolute performance, including footwear, auto parts & equipment, apparel accessories & luxury goods, broadcasting & cable TV, and general merchandise stores. Together, these industries comprised about 35% of average Fund assets in the fiscal year. |
Conversely, the home improvement retail, household appliances, and homebuilder industries detracted from fiscal-year returns, accounting for approximately 12% on average of the total assets of the Fund in the period. These housing-related groups, while offering significant value based on our calculations, fell as investors appeared overwhelmed by the constant negative headlines related to consumer spending over the period.
Q. | What is your investment outlook for the Consumer Discretionary sector? |
A. | According to our methodology, the Consumer Discretionary sector is the most undervalued sector of the nine we track, with a value-to-price ratio of 1.31 at the close of the fiscal year. Inopportunely, while the sector has a high value-to-price ratio, our calculations reveal it also has the lowest relative strength ranking among the sectors we follow. |
We believe this sector is well positioned to lead the broad market higher, and our experience indicates that the Consumer Discretionary sector has fared well following Federal Reserve rate cuts. However, we need to see an increase in its relative strength metric before more broadly diversifying across the sector.
Based on our quantitative analysis, the underlying company fundamentals of consumer-related issues remain generally strong. Until investors’ fears subside regarding the ability of the consumer to continue spending briskly, however, we believe these stocks will lack relative strength.
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Industry Composition
as of September 30, 2007
as of September 30, 2007
Auto Parts & Equipment | 14.6% | ||
Footwear | 7.9% | ||
Home Improvement Retail | 7.3% | ||
Apparel Accessories & Luxury Goods | 7.0% | ||
Housewares & Specialties | 7.0% | ||
General Merchandise Stores | 6.2% | ||
Household Appliances | 5.7% | ||
Automotive Retail | 5.2% | ||
Computer Hardware | 4.4% | ||
Apparel Retail | 4.0% | ||
Education Services | 3.7% | ||
Home Entertainment Software | 3.4% | ||
Distributors | 3.0% | ||
Specialty Stores | 2.8% | ||
Household Products | 2.4% | ||
Automobile Manufacturers | 2.3% | ||
Internet Software Services | 2.3% | ||
Computer & Electronics Retail | 1.7% | ||
Consumer Electronics | 1.6% | ||
Food Distributors | 1.6% | ||
Soft Drinks | 1.6% | ||
Agriculture Products | 1.4% | ||
Drug Retail | 1.3% | ||
Semiconductors | 1.2% | ||
Internet Retail | 0.9% |
Percentages are based upon net assets.
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Since | |||||||||||||||||||||||||
Inception | Expense | ||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | 7/9/97 | Ratio* | |||||||||||||||||||||
ICON Consumer Discretionary Fund | 5.62% | 8.57% | 3.60% | 4.46% | 1.32 | % | |||||||||||||||||||
S&P 1500 Consumer Discretionary Index | 5.92% | 11.50% | 5.76% | 6.51% | N/A | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59% | 15.82% | 6.97% | 7.42% | 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 29, 2007 prospectus for details. |
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(Graph)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020101.gif)
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.
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ICON Consumer Discretionary Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (100.5%) | ||||||||
13,500 | Abercrombie & Fitch Co. | $ | 1,089,450 | |||||
16,600 | AutoZone, Inc.(a) | 1,927,924 | ||||||
35,400 | Best Buy Co., Inc. | 1,629,108 | ||||||
32,500 | BorgWarner, Inc. | 2,974,725 | ||||||
50,900 | Bright Horizons Family Solutions, Inc.(a) | 2,180,556 | ||||||
23,800 | Capella Education Co.(a) | 1,330,658 | ||||||
21,900 | Coach, Inc.(a) | 1,035,213 | ||||||
28,500 | Corn Products International, Inc. | 1,307,295 | ||||||
31,600 | CVS Caremark Corp. | 1,252,308 | ||||||
149,000 | Dell, Inc.(a) | 4,112,400 | ||||||
115,900 | Drew Industries, Inc.(a) | 4,714,812 | ||||||
55,300 | eBay, Inc.(a) | 2,157,806 | ||||||
58,100 | General Motors Corp.(b) | 2,132,270 | ||||||
100,800 | Gildan Activewear, Inc. - Class A(a) | 3,970,512 | ||||||
65,700 | Iconix Brand Group, Inc.(a) | 1,563,003 | ||||||
45,600 | Intel Corp. | 1,179,216 | ||||||
51,600 | Johnson Controls, Inc. | 6,094,476 | ||||||
93,400 | Libbey, Inc.(b) | 1,636,368 | ||||||
129,900 | Lifetime Brands, Inc.(b) | 2,635,671 | ||||||
82,200 | LKQ Corp.(a) | 2,861,382 | ||||||
119,600 | Lowe’s Cos., Inc. | 3,351,192 | ||||||
99,120 | Nike, Inc. - Class B | 5,814,379 | ||||||
31,500 | Nintendo Co., Ltd. - ADR | 2,031,750 | ||||||
18,400 | NutriSystem, Inc.(a)(b) | 862,776 | ||||||
91,100 | O’Reilly Automotive, Inc.(a) | 3,043,651 | ||||||
43,300 | PetSmart, Inc. | 1,381,270 | ||||||
32,200 | Procter & Gamble Co. | 2,264,948 | ||||||
30,200 | Shanda Interactive Entertainment, Ltd.(a) | 1,123,742 | ||||||
31,100 | Sony Corp. - ADR(b) | 1,494,666 | ||||||
56,450 | Staples, Inc. | 1,213,111 | ||||||
43,800 | Sysco Corp. | 1,558,842 | ||||||
92,400 | Target Corp. | 5,873,868 | ||||||
111,400 | The Home Depot, Inc. | 3,613,816 | ||||||
39,600 | The Pepsi Bottling Group, Inc. | 1,471,932 | ||||||
28,400 | The Stanley Works | 1,594,092 | ||||||
91,600 | TJX Cos., Inc. | 2,662,812 | ||||||
75,400 | Tupperware Brands Corp. | 2,374,346 | ||||||
37,200 | Volcom, Inc.(a) | 1,581,744 | ||||||
42,700 | Whirlpool Corp. | 3,804,570 | ||||||
Total Common Stocks (Cost $86,482,249) | 94,902,660 | |||||||
Other Securities (9.0%) | ||||||||
8,489,276 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | 8,489,276 | ||||||
Total Other Securities (Cost $8,489,276) | 8,489,276 | |||||||
Total Investments 109.5% (Cost $94,971,525) | 103,391,936 | |||||||
Liabilities Less Other Assets (9.5)% | (8,914,701 | ) | ||||||
Net Assets 100.0% | $ | 94,477,235 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
ADR | American Depositary Receipt |
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ICENX
Q. | How did the Fund perform relative to its benchmarks? |
A. | For the fiscal year ended September 30, 2007, the ICON Energy Fund appreciated 43.64%, outperforming its sector-specific benchmark, the S&P 1500 Energy Index, which returned 42.66%, and its broad benchmark, the S&P Composite 1500 Index, which gained 16.59%. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
Q. | What primary factors were behind the Fund’s relative performance? |
A. | Amid significant volatility in both the broad equity market and the price of oil, the ICON Energy Fund rose sharply during the fiscal period. These strong gains came as investors were evidently concerned not only about the rising price of oil, but also about the slowdown in the housing market and the deterioration in the sub-prime lending market. Despite these fears, the market advanced over the last 12 months, led by the Energy sector. |
Throughout the period, crude oil futures drove Energy stock prices higher, with futures starting the period at $62.91 per barrel and ending at $81.66 per barrel on September 30, 2007, an increase of nearly 30%.
The Fund’s fiscal-year appreciation was not without volatility. From the start of the period to December 14, 2006, the Fund rose 15.75%. Subsequently, in less than a month, from December 14, 2006 to January 11, 2007, Energy stocks and oil futures both fell dramatically. During that timeframe, the Fund declined (13.32%).
Nearly all of the Fund’s gains for the period came in a time of relative calm as oil prices advanced steadily between mid-January and late July 2007. From January 11, 2007 to July 23, 2007, the ICON Energy Fund charged higher, returning 42.99%.
Q. | How did the Fund’s composition affect performance? |
A. | Of the seven industries we track in the Energy sector, only two outperformed the S&P 1500 Energy Index: oil & gas equipment & services and integrated oil & gas. |
The integrated oil & gas industry, comprised predominantly of large-cap global oil companies such as Exxon Mobil, rose approximately 44% during the 12 months ended September 30, 2007, versus the 42.66% return of
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the S&P 1500 Energy Index. While the Fund maintained a significant weight in this industry on an absolute basis (about 22% on average during the period), the integrated oil & gas industry position was largely underweight relative to the benchmark due to what we saw as its lack of value. However, this group advanced on momentum, and the Fund’s underweight position was a drag on relative performance.
The oil & gas equipment & services industry, comprising a mix of small- to large-cap companies, was the best-performing Energy industry in the fiscal year, rising around 60%. The Fund was significantly overweight this industry relative to the S&P 1500 Energy Index, about 31% on average during the period versus approximately 16% in the benchmark. The Fund held an overweight position in this industry based on our calculation of its strong value and relative strength metrics, and this active overweight was the primary contributor to the Fund’s relative outperformance.
Q. | What is your investment outlook for the Energy sector? |
A. | Despite the strong rise in Energy stocks during the fiscal year, prices of Energy shares have yet to catch up with our estimate of their intrinsic value. Based on our quantitative methodology, the Energy sector ended the period trading at a 15% discount to our calculation of fair value. |
Of course, the price of oil futures can have a significant impact of the fortunes of Energy companies, and we do not believe that analysts can accurately and consistently predict the future price of oil. While our research indicates there is upside potential in this sector, we also anticipate ongoing volatility as expectations over the future price of oil can change abruptly and dramatically.
The Fund enters the new fiscal year with a continued overweight in the oil & gas equipment & services industry. Although the Fund remains underweight the integrated oil & gas industry, we have increased the Fund’s position based on our valuation and relative strength metric.
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Industry Composition
as of September 30, 2007
as of September 30, 2007
Integrated Oil & Gas | 32.8% | ||
Oil & Gas Equipment & Services | 30.6% | ||
Oil & Gas Drilling | 15.1% | ||
Oil & Gas Exploration & Production | 12.3% | ||
Oil & Gas Refining & Marketing | 3.8% | ||
Oil & Gas Storage & Transportation | 2.3% | ||
Coal & Consumable Fuels | 1.2% |
Percentages are based upon net assets.
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Since | ||||||||||||||||||||
Inception | Expense | |||||||||||||||||||
1 Year | 5 Years | 11/5/97 | Ratio* | |||||||||||||||||
ICON Energy Fund | 43.64% | 31.82% | �� | 18.16% | 1.17% | |||||||||||||||
S&P 1500 Energy Index | 42.66% | 30.10% | 13.61% | N/A | ||||||||||||||||
S&P Composite 1500 Index | 16.59% | 15.82% | 7.10% | 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 29, 2007 prospectus for details. |
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020102.gif)
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.
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ICON Energy Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (98.1%) | ||||||||
250,000 | Acergy S.A. - ADR | $ | 7,425,000 | |||||
413,800 | Alpha Natural Resources, Inc.(a) | 9,612,574 | ||||||
139,900 | Apache Corp. | 12,599,394 | ||||||
169,300 | Atwood Oceanics, Inc.(a) | 12,961,608 | ||||||
206,500 | Baker Hughes, Inc. | 18,661,405 | ||||||
632,400 | Bois d’Arc Energy, Inc.(a) | 12,123,108 | ||||||
389,600 | BP PLC - ADR | 27,018,760 | ||||||
349,400 | Cameron International Corp.(a) | 32,246,126 | ||||||
543,800 | Chevron Corp. | 50,888,804 | ||||||
92,900 | China Petroleum and Chemical Corp. - ADR(b) | 11,436,919 | ||||||
100,000 | CNOOC, Ltd. - ADR(b) | 16,643,000 | ||||||
915,800 | ConocoPhillips | 80,379,766 | ||||||
284,600 | Diamond Offshore Drilling, Inc. | 32,242,334 | ||||||
138,300 | Dril-Quip, Inc.(a) | 6,825,105 | ||||||
300,000 | El Paso Corp. | 5,091,000 | ||||||
388,200 | FMC Technologies, Inc.(a) | 22,383,612 | ||||||
490,900 | Grant Prideco, Inc.(a) | 26,763,868 | ||||||
320,900 | Halliburton Co. | 12,322,560 | ||||||
407,200 | Helix Energy Solutions Group, Inc.(a) | 17,289,712 | ||||||
400,000 | Helmerich & Payne, Inc. | 13,132,000 | ||||||
15,200 | Lufkin Industries, Inc. | 836,304 | ||||||
266,200 | Marathon Oil Corp. | 15,178,724 | ||||||
51,600 | Murphy Oil Corp. | 3,606,324 | ||||||
295,200 | National Oilwell Varco, Inc.(a) | 42,656,400 | ||||||
377,400 | Noble Corp. | 18,511,470 | ||||||
802,100 | Occidental Petroleum Corp. | 51,398,568 | ||||||
350,000 | Oil States International, Inc.(a) | 16,905,000 | ||||||
400,000 | Pride International, Inc.(a) | 14,620,000 | ||||||
575,000 | Range Resources Corp. | 23,379,500 | ||||||
332,800 | Royal Dutch Shell PLC - Class A - ADR | 27,349,504 | ||||||
103,600 | Schlumberger, Ltd. | 10,878,000 | ||||||
127,800 | Sunoco, Inc. | 9,045,684 | ||||||
379,300 | Superior Energy Services, Inc.(a) | 13,442,392 | ||||||
175,000 | The Williams Companies, Inc. | 5,960,500 | ||||||
173,900 | Tidewater, Inc. | 10,927,876 | ||||||
275,000 | Transocean, Inc.(a) | 31,088,750 | ||||||
114,100 | Tsakos Energy Navigation, Ltd. | 8,033,781 | ||||||
325,700 | Valero Energy Corp. | 21,880,526 | ||||||
179,000 | W-H Energy Services, Inc.(a) | 13,201,250 | ||||||
212,498 | Weatherford International, Ltd.(a) | 14,275,615 | ||||||
308,833 | XTO Energy, Inc. | 19,098,233 | ||||||
Total Common Stocks (Cost $516,805,147) | 800,321,056 |
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Shares or Principal Amount | Value | |||||||
Short-Term Investments (2.1%) | ||||||||
$ | 17,009,417 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07# | $ | 17,009,417 | ||||
Total Short-Term Investments (Cost $17,009,417) | 17,009,417 | |||||||
Other Securities (3.4%) | ||||||||
28,147,480 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | 28,147,480 | ||||||
Total Other Securities (Cost $28,147,480) | 28,147,480 | |||||||
Total Investments 103.6% (Cost $561,962,044) | 845,477,953 | |||||||
Liabilities Less Other Assets (3.6)% | (29,402,989 | ) | ||||||
Net Assets 100.0% | $ | 816,074,964 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
ADR | American Depositary Receipt |
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ICFSX
Q. | How did the Fund perform relative to its benchmarks? |
A. | The ICON Financial Fund appreciated 3.84% for the fiscal year ended September 30, 2007, outperforming its sector-specific benchmark, the S&P 1500 Financials Index, which returned 1.47%, but lagging its broad benchmark, the S&P Composite 1500 Index, which gained 16.59%. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
Q. | What primary factors were behind the Fund’s relative performance? |
A. | The Financial sector lagged the broad equity market during the fiscal year. Late in the period, the Federal Reserve (Fed) Open Market Committee lowered the Federal Funds rate for the first time since June 2003, cutting it 0.50% in response to the increasing economic threat of defaults on sub-prime mortgages. |
Sub-prime mortgage concerns also drove the Fed to attempt to infuse liquidity into the market by making an additional 50-point decrease in the discount window after a previous 50-point cut.
After this Fed activity, the yield curve migrated from flat to upward-sloping. The three-month Treasury fell more than 100 basis points, beginning the period at 4.88% and closing out the period at 3.81%.
Mortgage lenders suffered as sub-prime and Alt-A mortgages declined sharply toward the close of the period. These types of mortgages are granted to borrowers whose credit history is not sufficient to get a conventional mortgage. Often these borrowers have impaired or even no credit history and may be likely to default when the housing market declines. Mortgage declines pulled down the Financial sector overall as investors feared that other financial firms had significant exposure to the sub-prime and Alt-A markets.
Q. | How did the Fund’s composition affect performance? |
A. | While the Fund owned holdings in the distressed mortgage REITs industry, we sold the positions due to low relative strength. Toward the end of the period, we re-initiated a position in the REITs industry after our system detected emerging leadership against the broad market. |
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The Fund’s mortgage REIT holdings lost about (5%) while they were held, while mortgage REIT holdings in the S&P 1500 Financials Index lost a market-weighted average of approximately (80%) during the fiscal year.
The Fund enjoyed solid gains from the investment banking & brokerage industry, its most heavily weighted industry, as well as from the asset management industry. We pared the investment banking & brokerage industry as relative strength started to decline.
However, gains from the investment banking & brokerage industry were partially offset by losses in the overweighted specialized finance industry and the consumer finance industry.
The Fund initiated a position in the insurance brokers industry when the industry began to demonstrate leadership. The Fund’s weighting in the life & health insurance industry more than doubled during the fiscal year as its relative strength increased. Both industries contributed positively to the Fund’s fiscal-year return.
Q. | What is your investment outlook for the Financial sector? |
A. | With the Financial sector priced at 17% below our measurement of its intrinsic value, our analysis suggests there may be opportunities for favorable industry moves toward fair value. |
Since the Financial sector low on August 15, 2007, there has been strong industry leadership within the Fund, particularly in the investment banking & brokerage, reinsurance, and life & health insurance industries. We will be watching the earnings-per-share growth estimates of these industries, as well as other industry fundamentals.
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Industry Composition
as of September 30, 2007
as of September 30, 2007
Investment Banking & Brokerage | 15.9% | ||
Other Diversified Financial Services | 11.9% | ||
Reinsurance | 11.6% | ||
Life & Health Insurance | 11.4% | ||
Diversified Banks | 10.8% | ||
Asset Management & Custody Banks | 7.9% | ||
Insurance Brokers | 4.6% | ||
Specialized Finance | 4.3% | ||
Multi-Line Insurance | 4.2% | ||
Diversified Commercial & Professional Services | 3.5% | ||
Thrifts & Mortgage Insurance | 2.8% | ||
Consumer Finance | 2.6% | ||
Publishing | 2.5% | ||
Diversified Capital Markets | 1.9% | ||
Property & Casualty Insurance | 1.4% | ||
Mortgage Reits | 1.0% |
Percentages are based upon net assets.
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Since | |||||||||||||||||||||||||
Inception | Expense | ||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | 7/1/97 | Ratio* | |||||||||||||||||||||
ICON Financial Fund | 3.84% | 14.63% | 10.03% | 10.31% | 1.20 | % | |||||||||||||||||||
S&P 1500 Financials Index | 1.47% | 13.63% | 8.10% | 9.04% | N/A | ||||||||||||||||||||
S&P Composite 1500 Index | 16.59% | 15.82% | 6.97% | 7.60% | 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 29, 2007 prospectus for details. |
Table of Contents
Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020103.gif)
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.
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ICON Financial Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (98.3%) | ||||||||
118,900 | Aflac, Inc. | $ | 6,782,056 | |||||
55,000 | American Express Co. | 3,265,350 | ||||||
63,100 | American International Group, Inc. | 4,268,715 | ||||||
86,100 | Aon Corp. | 3,858,141 | ||||||
86,900 | Banco Bilbao Vizcaya Argentaria, S.A. - ADR | 2,023,032 | ||||||
111,700 | Banco Santander Central Hispano, S.A. - ADR | 2,156,927 | ||||||
195,400 | Bank of America Corp. | 9,822,758 | ||||||
93,400 | Bank of New York Mellon Corp. | 4,122,676 | ||||||
26,500 | Cash America International, Inc. | 996,400 | ||||||
98,400 | Citigroup, Inc. | 4,592,328 | ||||||
113,700 | Credicorp Ltd. | 7,697,490 | ||||||
56,800 | Credit Suisse Group - ADR | 3,767,544 | ||||||
32,900 | Dun & Bradstreet Corp. | 3,244,269 | ||||||
72,600 | Everest Re Group, Ltd. | 8,003,424 | ||||||
75,000 | EZCORP, Inc.(a) | 1,008,750 | ||||||
127,700 | Financial Federal Corp. | 3,576,877 | ||||||
146,200 | Flagstar Bancorp, Inc. | 1,422,526 | ||||||
49,400 | Franklin Resources, Inc. | 6,298,500 | ||||||
71,100 | Freddie Mac | 4,195,611 | ||||||
76,900 | FTI Consulting, Inc.(a) | 3,868,839 | ||||||
75,800 | GFI Group, Inc.(a) | 6,527,896 | ||||||
67,200 | ING Group N.V. - ADR | 2,977,632 | ||||||
139,900 | JPMorgan Chase & Co. | 6,410,218 | ||||||
86,700 | Loews Corp. | 4,191,945 | ||||||
93,400 | MetLife, Inc. | 6,512,782 | ||||||
244,100 | MFA Mortgage Investments, Inc. - REIT | 1,957,682 | ||||||
112,200 | Morgan Stanley | 7,068,600 | ||||||
47,700 | Morningstar, Inc.(a) | 2,928,780 | ||||||
102,900 | National Financial Partners Corp. | 5,451,642 | ||||||
157,400 | optionsXpress Holdings, Inc. | 4,114,436 | ||||||
43,200 | PartnerRe, Ltd. | 3,412,368 | ||||||
95,125 | Portfolio Recovery Associates Inc. | 5,048,284 | ||||||
46,300 | Prudential Financial, Inc. | 4,517,954 | ||||||
87,900 | RenaissanceRe Holdings, Ltd. | 5,749,539 | ||||||
97,600 | StanCorp Financial Group, Inc. | 4,832,176 | ||||||
38,100 | State Street Corp. | 2,596,896 | ||||||
145,100 | TD Ameritrade Holding Corp.(a) | 2,643,722 | ||||||
48,400 | The Allstate Corp. | 2,767,996 | ||||||
219,500 | The Charles Schwab Corp. | 4,741,200 | ||||||
30,600 | The Goldman Sachs Group, Inc. | 6,632,244 | ||||||
48,200 | The Thomson Corp. | 2,021,026 | ||||||
85,800 | Transatlantic Holdings, Inc. | 6,034,314 |
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Shares or Principal Amount | Value | |||||||
101,600 | Waddell & Reed Financial, Inc. - Class A | $ | 2,746,248 | |||||
275,000 | Wells Fargo & Co. | 9,795,500 | ||||||
Total Common Stocks (Cost $177,840,899) | 196,653,293 | |||||||
Short-Term Investments (1.8%) | ||||||||
$ | 3,671,874 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07# | 3,671,874 | |||||
Total Short-Term Investments (Cost $3,671,874) | 3,671,874 | |||||||
Total Investments 100.1% (Cost $181,512,773) | 200,325,167 | |||||||
Liabilities Less Other Assets (0.1)% | (236,235 | ) | ||||||
Net Assets 100.0% | $ | 200,088,932 | ||||||
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, 2007. | |
ADR | American Depositary Receipt | |
REIT | Real Estate Investment Trust |
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ICHCX
Q. | How did the Fund perform relative to its benchmarks? |
A. | For the fiscal year ended September 30, 2007, the Fund’s sector-specific benchmark, the S&P 1500 Health Care Index, returned 9.57%, and its broad benchmark, the S&P Composite 1500 Index, gained 16.59%. The ICON Healthcare Fund trailed both benchmarks, appreciating 7.17% during the same period. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
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. As the market rallied at the outset of the fiscal year, the S&P 1500 Health Care Index was negative through mid-November 2006. Even though the sector began to participate in the broad rally that continued through late February 2007, it evidently was not immune to a global sell-off, a housing market downturn, and recession fears that combined to rock the world markets in February 2007. |
The sector rallied again through mid-July, but fell more than 5% from July 19, 2007 to August 15, 2007 as the sub-prime mortgage crisis roiled markets. 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.
Although our research indicated the pharmaceutical industry was weakening during the period, large-cap pharmaceuticals began to outperform in mid-April, and the Fund began to lag its benchmark. Johnson and Johnson, Merck & Co., Eli Lilly & Co., Schering-Plough Corp., Bristol-Myers Squibb Co., and Allergan Inc., which together comprised more than 25% of the market-cap weighted S&P 1500 Health Care Index as of September 30, 2007, outperformed the benchmark from April 16 to September 30, 2007. While the Fund owned the first four companies mentioned, underweight positions muted gains.
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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 health care facilities industry offered the best combination of value and strength according to our analysis, but this leadership quickly disappeared, and the industry reached our sell breakpoint by November 2006. |
The industry regained leadership, becoming the strongest industry by March 2007, only to fall back out of favor and again below our sell target in August 2007. This fluctuation caused the health care facilities industry to detract from the Fund’s performance relative to its benchmark.
The Fund’s holding in the pharmaceuticals industry also was a detractor to returns relative to the benchmark, leading from September 2006 through February 2007, but producing disappointing returns for the second half of the period. The Fund’s positions in Johnson and Johnson, Merck & Co., Eli Lilly & Co., Schering-Plough Corp., while meaningful, were underweight the benchmark, contributing significantly to underperformance.
Conversely, overweight industry positions and careful stock selection led to positive gains versus the benchmark in the biotechnology and managed health care industries.
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 12% discount to our measurement of intrinsic value. |
In particular, we think the managed health care and biotechnology industries continue to show value and leadership.
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Industry Composition
as of September 30, 2007
as of September 30, 2007
Pharmaceuticals | 33.6% | ||
Biotechnology | 19.1% | ||
Managed Health Care | 18.9% | ||
Health Care Equipment | 13.2% | ||
Health Care Services | 10.2% | ||
Health Care Distributors | 4.5% |
Percentages are based upon net assets.
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Since | |||||||||||||||||||||||||
Inception | Expense | ||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | 2/24/97 | Ratio* | |||||||||||||||||||||
ICON Healthcare Fund | 7.17 | % | 13.59 | % | 10.91 | % | 11.98 | % | 1.19 | % | |||||||||||||||
S&P 1500 Health Care Index | 9.57 | % | 9.49 | % | 7.75 | % | 8.42 | % | N/A | ||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | 15.82 | % | 6.97 | % | 8.36 | % | 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 29, 2007 prospectus for details. |
Table of Contents
Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020104.gif)
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.
Table of Contents
ICON Healthcare Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (99.5%) | ||||||||
184,000 | Aetna, Inc. | $ | 9,985,680 | |||||
20,000 | Air Methods Corp.(a) | 924,000 | ||||||
200,034 | Amedisys, Inc.(a) | 7,685,306 | ||||||
85,000 | AmerisourceBergen Corp. | 3,853,050 | ||||||
275,000 | Amgen, Inc.(a) | 15,556,750 | ||||||
25,000 | AMN Healthcare Services, Inc.(a) | 468,250 | ||||||
48,100 | AstraZeneca PLC - ADR | 2,408,367 | ||||||
250,000 | Barr Pharmaceuticals, Inc.(a) | 14,227,500 | ||||||
100,000 | Biogen Idec, Inc.(a) | 6,633,000 | ||||||
140,000 | Biovail Corp. - ADR(b) | 2,431,800 | ||||||
50,000 | Cardinal Health, Inc. | 3,126,500 | ||||||
400,000 | Celgene Corp.(a) | 28,524,000 | ||||||
70,000 | Cephalon, Inc.(a)(b) | 5,114,200 | ||||||
375,000 | CIGNA Corp. | 19,983,750 | ||||||
138,700 | Coventry Health Care, Inc.(a) | 8,628,527 | ||||||
100,000 | Cubist Pharmaceuticals, Inc.(a) | 2,113,000 | ||||||
125,000 | DaVita, Inc.(a) | 7,897,500 | ||||||
250,000 | Dr. Reddy’s Laboratories, Ltd. - ADR(b) | 4,090,000 | ||||||
325,000 | Eli Lilly & Co. | 18,502,250 | ||||||
150,000 | Endo Pharmaceuticals Holdings, Inc.(a)(b) | 4,651,500 | ||||||
100,000 | Express Scripts, Inc.(a) | 5,582,000 | ||||||
87,000 | Forest Laboratories, Inc.(a) | 3,244,230 | ||||||
60,000 | Genentech, Inc.(a) | 4,681,200 | ||||||
50,000 | Gentiva Health Services, Inc.(a) | 960,500 | ||||||
175,000 | Genzyme Corp.(a) | 10,843,000 | ||||||
250,000 | Gilead Sciences, Inc.(a) | 10,217,500 | ||||||
63,800 | Health Net, Inc.(a) | 3,448,390 | ||||||
125,000 | HealthSpring, Inc.(a) | 2,437,500 | ||||||
100,000 | Henry Schein, Inc.(a) | 6,084,000 | ||||||
215,000 | Humana, Inc.(a) | 15,024,200 | ||||||
425,000 | Johnson & Johnson, Inc. | 27,922,500 | ||||||
325,000 | K-V Pharmaceutical Co.(a) | 9,295,000 | ||||||
175,000 | LifeCell Corp.(a)(b) | 6,574,750 | ||||||
100,000 | Lincare Holdings, Inc.(a) | 3,665,000 | ||||||
50,000 | Matria Healthcare, Inc.(a) | 1,308,000 | ||||||
110,000 | McKesson HBOC, Inc. | 6,466,900 | ||||||
150,000 | MedcoHealth Solutions, Inc.(a) | 13,558,500 | ||||||
75,000 | Medtronic, Inc. | 4,230,750 | ||||||
425,000 | Merck & Co., Inc. | 21,968,250 | ||||||
350,000 | Mylan Laboratories, Inc. | 5,586,000 | ||||||
550,000 | Pfizer, Inc. | 13,436,500 | ||||||
75,000 | PSS World Medical, Inc.(a) | 1,434,750 |
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Shares or Principal Amount | Value | |||||||
100,000 | Quest Diagnostics, Inc. | $ | 5,777,000 | |||||
150,000 | ResMed, Inc.(a) | 6,430,500 | ||||||
200,000 | Respironics, Inc.(a) | 9,606,000 | ||||||
350,000 | Schering-Plough Corp. | 11,070,500 | ||||||
140,000 | Sciele Pharma, Inc.,(a)(b) | 3,642,800 | ||||||
125,000 | St. Jude Medical, Inc.(a) | 5,508,750 | ||||||
275,000 | Stryker Corp. | 18,909,000 | ||||||
104,500 | Syneron Medical, Ltd. | 2,470,380 | ||||||
175,000 | Teva Pharmaceutical Industries, Ltd. - ADR | 7,782,250 | ||||||
250,000 | UnitedHealth Group, Inc. | 12,107,500 | ||||||
46,400 | WellCare Health Plans, Inc.(a) | 4,891,952 | ||||||
175,000 | WellPoint, Inc.(a) | 13,811,000 | ||||||
200,000 | Wyeth | 8,910,000 | ||||||
185,000 | Zimmer Holdings, Inc.(a) | 14,983,150 | ||||||
Total Common Stocks (Cost $391,115,443) | 470,675,132 | |||||||
Short-Term Investments (0.5%) | ||||||||
$ | 2,430,680 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07# | 2,430,680 | |||||
Total Short-Term Investments (Cost $2,430,680) | 2,430,680 | |||||||
Other Securities (5.2%) | ||||||||
24,723,419 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | 24,723,419 | ||||||
Total Other Securities (Cost $24,723,419) | 24,723,419 | |||||||
Total Investments 105.2% (Cost $418,269,542) | 497,829,231 | |||||||
Liabilities Less Other Assets (5.2)% | (24,542,718 | ) | ||||||
Net Assets 100.0% | $ | 473,286,513 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
ADR | American Depositary Receipt |
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ICTRX
Q. | How did the Fund perform relative to its benchmarks? |
A. | The ICON Industrials Fund gained 28.73% for the fiscal year ended September 30, 2007, outperforming its sector-specific benchmark, the S&P 1500 Industrials Index, which returned 25.38%, and its broad benchmark, the S&P Composite 1500 Index, which appreciated 16.59%. Total returns for other periods as of September 30, 2007 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 a 19% discount to our measurement of intrinsic value, and 19 of the 20 industries we follow in the sector were undervalued according to our calculations, providing ample opportunity for diversification. |
While producing a solid gain for the fiscal year, the Industrials sector experienced volatility as concerns about the economy evidently affected the equity market as a whole. From the beginning of the period through July 19, 2007, the Industrials sector gained more than 26%, and the Fund was able to benefit from strong combinations of value and relative strength in the marine, heavy electrical equipment, and construction & farm machinery & heavy trucks industries. Positions in these industries enabled the Fund to outperform the sector as a whole with a total return of more than 33%.
From July 19, 2007 through August 15, 2007, sub-prime mortgage issues contributed to fears of recession and decreased spending on industrial growth. During this time period, the Industrials Fund declined by more than 10%, hampered by weakness in the railroads, trucking and electrical components and equipment industries. Once the fear-based sell-off subsided, Industrials rallied for the last month and a half of the period, with the Fund gaining particular strength from the marine ports & services, marine, and heavy electrical equipment industries.
Q. | How did the Fund’s composition affect performance? |
A. | On an industry basis, the aerospace & defense, marine, industrial machinery, construction & farm machinery & heavy trucks, electrical components & equipment, and industrial conglomerates industries contributed most to the Fund’s absolute return for the period. |
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While the Fund remained diversified in every industry in the Industrials sector during the period, the six industries identified above comprised about 65% of Fund assets on average and contributed measurably to performance. Specifically, a significant overweight in the marine industry aided performance as strong earnings growth within the dry bulk shipping sector produced returns of approximately 150% during the period.
Five of the 28 industries in the Fund — specifically air freight & logistics, trucking, oil & gas equipment & services, oil & gas storage & transportation, and office services & supplies — detracted from overall performance in the fiscal year. Three of these industries are in the Industrials sector while two are in the Energy sector and were added based on strong combinations of value and relative strength. The average position held in the air freight & logistics, trucking, oil & gas equipment & services, oil & gas storage & transportation, and office services & supplies industries was about 5%, limiting the negative impact to the Fund.
Q. | What is your investment outlook for the Industrials sector? |
A. | Even after a strong year, the Industrials sector continued to trade at a 14% discount to our measurement of its intrinsic value. This suggests that the sector will continue to grow at a pace that makes it difficult for market prices to catch up to our estimation of intrinsic value. |
Therefore, we remain generally bullish on the sector, and we continue to look for industries that demonstrate strong combinations of value and relative strength. Currently, the Fund’s largest weightings are in the aerospace & defense, industrial conglomerates, and construction & farm machinery & heavy trucks industries.
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Industry Composition
as of September 30, 2007
as of September 30, 2007
Aerospace & Defense | 25.9% | ||
Industrial Conglomerates | 13.1% | ||
Construction & Farm Machinery & Heavy Trucks | 12.4% | ||
Industrial Machinery | 9.2% | ||
Railroads | 9.2% | ||
Marine | 6.5% | ||
Electrical Components & Equipment | 6.1% | ||
Trading Companies & Distributors | 3.6% | ||
Diversified Commercial & Professional Services | 3.5% | ||
Building Products | 3.3% | ||
Air Freight & Logistics | 2.2% | ||
Heavy Electrical Equipment | 1.4% | ||
Marine Ports & Services | 0.9% | ||
Trucking | 0.8% | ||
Metal & Glass Containers | 0.7% |
Percentages are based upon net assets.
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Since | |||||||||||||||||||||||||
Inception | Expense | ||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | 5/9/97 | Ratio* | |||||||||||||||||||||
ICON Industrials Fund | 28.73 | % | 17.16 | % | 5.40 | % | 7.39 | % | 1.24 | % | |||||||||||||||
S&P 1500 Industrials Index | 25.38 | % | 18.11 | % | 7.37 | % | 8.64 | % | N/A | ||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | 15.82 | % | 6.97 | % | 8.33 | % | 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 29, 2007 prospectus for details. |
Table of Contents
Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020105.gif)
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.
Table of Contents
ICON Industrials Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (98.8%) | ||||||||
70,500 | A.O. Smith Corp.(b) | $ | 3,093,540 | |||||
76,500 | AAON, Inc. | 1,509,345 | ||||||
54,100 | AAR Corp.(a) | 1,641,394 | ||||||
82,500 | ABB, Ltd. - ADR | 2,163,975 | ||||||
8,600 | Actuant Corp. - Class A | 558,742 | ||||||
11,800 | Acuity Brands, Inc. | 595,664 | ||||||
40,000 | Aegean Marine Petroleum Network, Inc. | 1,450,400 | ||||||
29,800 | AerCap Holdings NV(a) | 741,722 | ||||||
50,000 | Aircastle, Ltd. | 1,671,000 | ||||||
10,000 | Alliant Techsystems, Inc.(a)(b) | 1,093,000 | ||||||
25,000 | Ameron International Corp.(b) | 2,644,250 | ||||||
15,000 | AMETEK, Inc. | 648,300 | ||||||
33,100 | Apogee Enterprises, Inc. | 858,614 | ||||||
60,000 | Astec Industries, Inc.(a) | 3,447,000 | ||||||
15,000 | Baldor Electric Co. | 599,250 | ||||||
20,000 | Ball Corp. | 1,075,000 | ||||||
100,000 | Barnes Group, Inc. | 3,192,000 | ||||||
60,000 | BE Aerospace, Inc.(a) | 2,491,800 | ||||||
50,000 | Burlington Northern Santa Fe Corp. | 4,058,500 | ||||||
30,000 | Canadian National Railway Co. | 1,710,000 | ||||||
48,800 | Carlisle Cos., Inc. | 2,371,680 | ||||||
60,000 | Caterpillar, Inc. | 4,705,800 | ||||||
10,000 | CRA International, Inc.(a) | 481,900 | ||||||
28,300 | CSX Corp. | 1,209,259 | ||||||
15,800 | Cummins, Inc. | 2,020,662 | ||||||
30,400 | Curtiss-Wright Corp. | 1,444,000 | ||||||
10,100 | Danaher Corp. | 835,371 | ||||||
5,400 | DRS Technologies, Inc. | 297,648 | ||||||
30,000 | DryShips, Inc.(b) | 2,725,500 | ||||||
19,000 | Dun & Bradstreet Corp. | 1,873,590 | ||||||
38,200 | Dynamex, Inc.(a) | 978,684 | ||||||
8,600 | Eaton Corp. | 851,744 | ||||||
15,000 | EnPro Industries, Inc.(a) | 609,000 | ||||||
24,400 | Excel Maritime Carriers, Ltd.(b) | 1,361,520 | ||||||
9,000 | FedEx Corp. | 942,750 | ||||||
15,000 | First Solar, Inc.(a) | 1,766,100 | ||||||
38,200 | FTI Consulting, Inc.(a) | 1,921,842 | ||||||
18,000 | Genco Shipping & Trading, Ltd.(b) | 1,179,540 | ||||||
25,000 | General Dynamics Corp. | 2,111,750 | ||||||
325,000 | General Electric Co. | 13,455,000 | ||||||
65,000 | Healthcare Services Group, Inc.(b) | 1,317,550 | ||||||
24,800 | Hub Group, Inc. - Class A(a) | 744,744 | ||||||
19,500 | IDEX Corp. | 709,605 | ||||||
25,000 | Illinois Tool Works, Inc. | 1,491,000 | ||||||
22,000 | Ingersoll Rand Co., Ltd. - Class A | 1,198,340 | ||||||
40,000 | JA Solar Holdings Co., Ltd. - ADR(a) | 1,798,000 | ||||||
10,000 | Kennametal, Inc. | 839,800 | ||||||
37,500 | Kirby Corp.(a) | 1,655,250 | ||||||
50,000 | L-3 Communications Holdings, Inc. | 5,107,000 | ||||||
9,600 | Lincoln Electric Holdings, Inc. | 745,056 | ||||||
35,000 | Lockheed Martin Corp. | 3,797,150 | ||||||
25,000 | Middleby Corp.(a) | 1,613,500 | ||||||
60,000 | Moog, Inc. - Class A(a) | 2,636,400 |
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Shares or Principal Amount | Value | |||||||
25,400 | MSC Industrial Direct Co., Inc. - Class A | $ | 1,284,986 | |||||
20,000 | Mueller Industries, Inc. | 722,800 | ||||||
171,200 | Navios Maritime Holdings, Inc. | 2,249,568 | ||||||
65,000 | Norfolk Southern Corp. | 3,374,150 | ||||||
30,000 | Northrop Grumman Corp. | 2,340,000 | ||||||
60,000 | Oshkosh Truck Corp. | 3,718,200 | ||||||
25,000 | Precision Castparts Corp. | 3,699,500 | ||||||
40,000 | Quintana Maritime, Ltd. | 762,800 | ||||||
37,800 | Raytheon Co. | 2,412,396 | ||||||
12,500 | Rockwell Collins, Inc. | 913,000 | ||||||
25,000 | Ryder System, Inc. | 1,225,000 | ||||||
20,000 | Siemens AG - ADR | 2,745,000 | ||||||
25,000 | Suntech Power Holdings Co., Ltd. - ADR(a) | 997,500 | ||||||
15,000 | Tata Motors, Ltd. - ADR(b) | 287,100 | ||||||
17,500 | Terex Corp.(a) | 1,557,850 | ||||||
30,000 | Textron, Inc. | 1,866,300 | ||||||
60,000 | The Boeing Co. | 6,299,400 | ||||||
36,200 | The Manitowoc Co., Inc. | 1,602,936 | ||||||
20,000 | The Toro Co. | 1,176,600 | ||||||
18,400 | TransDigm Group, Inc.(a) | 841,064 | ||||||
35,000 | Union Pacific Corp. | 3,957,100 | ||||||
10,100 | United Parcel Service, Inc. - Class B | 758,510 | ||||||
40,000 | United Technologies Corp. | 3,219,200 | ||||||
10,000 | Valmont Industries, Inc. | 848,500 | ||||||
14,400 | W.W. Grainger, Inc. | 1,313,136 | ||||||
22,500 | Wabtec Corp. | 842,850 | ||||||
15,000 | Watsco, Inc. | 696,450 | ||||||
Total Common Stocks (Cost $128,979,960) | 153,752,127 | |||||||
Short-Term Investments (1.1%) | ||||||||
$ | 1,727,526 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, | ||||||
10/01/07# | 1,727,526 | |||||||
Total Short-Term Investments (Cost $1,727,526) | 1,727,526 | |||||||
Other Securities (4.3%) | ||||||||
6,824,486 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | 6,824,486 | ||||||
Total Other Securities (Cost $6,824,486) | 6,824,486 | |||||||
Total Investments 104.2% (Cost $137,531,972) | 162,304,139 | |||||||
Liabilities Less Other Assets (4.2)% | (6,565,618 | ) | ||||||
Net Assets 100.0% | $ | 155,738,521 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
ADR | American Depositary Receipt |
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ICTEX
Q. | How did the Fund perform relative to its benchmarks? |
A. | The ICON Information Technology Fund gained 26.38% for the fiscal year ended September 30, 2007, outpacing its sector-specific benchmark, the S&P 1500 Information Technology Index, which returned 23.30%, and its broad benchmarks, the NASDAQ Composite Index and the S&P Composite 1500 Index, which rose 20.52% and 16.59% respectively. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
Q. | What primary factors were behind the Fund’s relative performance? |
A. | As the period opened, Technology stocks were trading at about a 21% discount to our calculation of their intrinsic value, indicating significant upside potential. |
After trading in a sideways pattern at the beginning of the fiscal period, Technology issues began to move higher in early March 2007. From March 5 to July 19, 2007, the Technology sector advanced as investors shook off concerns over a severe downturn in global equity markets in late February.
From March 5 to July 19, 2007, the ICON Information Technology Fund outpaced its benchmark by approximately 3% as the Fund’s industry composition worked in its favor.
For the first time this decade, the Fund had a heavy tilt toward the large-cap segment of the Technology sector. Our quantitative investment process pulled us in this direction based on value and relative strength metrics. Blue chip technology companies including Microsoft, Cisco, IBM, and Intel were added to the Fund as our research suggested they were trading at generally significant discounts to their intrinsic worth and were, on balance, exhibiting attractive relative strength according to our calculations.
While large-cap issues in general had not been favorable for most of this decade, our system identified attractive combinations of value and relative strength in these neglected blue chip issues and, accordingly, we tilted the Fund toward them.
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Q. | How did the Fund’s composition affect performance? |
A. | Among the industries that contributed to absolute Fund performance during the fiscal year were computer hardware, communications equipment, internet software & services, and semiconductors. Guided by our valuation metrics, each of these industries was represented in the Fund with large-cap blue chip companies: IBM in computer hardware, Cisco in communications equipment, Google in internet software & services, and Intel in semiconductors. These four industries comprised an average of approximately 60% of net assets during the period. |
With a positive return for the period, most industry holdings in the Fund contributed to its overall total return. However, computer storage & peripherals and electronic manufacturing services were two industries that slightly hampered returns.
The largest industry overweight relative to the Fund’s benchmark was in computer hardware. The Fund’s average weight in this industry during the fiscal year was about 5% greater than the average computer hardware position in the S&P 1500 Information Technology Index. This overweight proved beneficial to the Fund as the computer hardware industry was the best-performing industry in the sector over the period.
The Fund was underweight relative to its benchmark in the communications equipment industry, with an underweight in this industry over the period of approximately 4% versus the S&P 1500 Information Technology Index. This positioning also worked in the Fund’s favor as the communications equipment industry underperformed the sector benchmark for the period.
Q. | What is your investment outlook for the Information Technology sector? |
A. | Due to the sharp rise in Technology issues throughout the period, our value-to-price ratio for the sector at the end of the fiscal period was 1.03, indicating the sector is approaching our estimation of fair value. Nevertheless, we anticipate opportunity within the sector when we analyze its constituent industries. |
While we do not base investment decisions on market capitalization, we recognize that larger companies generally lagged this decade but started demonstrating leadership in the summer of 2006. Based on our valuation, we believe they continue to have upside potential.
With proper industry selection based on our value and relative strength calculations, we believe the Information Technology sector remains an attractive area of the U.S. equity market.
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Industry Composition
as of September 30, 2007
as of September 30, 2007
Computer Hardware | 26.5% | ||
Communications Equipment | 14.9% | ||
Internet Software Services | 13.8% | ||
Systems Software | 11.7% | ||
Semiconductors | 10.5% | ||
Technology Distributors | 6.1% | ||
Application Software | 4.1% | ||
Semiconductor Equipment | 3.9% | ||
Home Entertainment Software | 2.6% | ||
Electronic Manufacturing Services | 2.4% | ||
Data Processing & Outsourced Services | 1.4% | ||
IT Consulting & Other Services | 0.8% | ||
Office Electronics | 0.7% |
Percentages are based upon net assets.
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Since | |||||||||||||||||||||||||
Inception | Expense | ||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | 2/19/97 | Ratio* | |||||||||||||||||||||
ICON Information Technology Fund | 26.38 | % | 13.00 | % | 9.36 | % | 11.49 | % | 1.25 | % | |||||||||||||||
S&P 1500 Information Technology Index | 23.30 | % | 18.87 | % | 4.53 | % | 6.76 | % | N/A | ||||||||||||||||
NASDAQ Composite Index | 20.52 | % | 18.94 | % | 5.33 | % | 7.15 | % | N/A | ||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | 15.82 | % | 6.97 | % | 8.31 | % | 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 29, 2007 prospectus for details. |
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020106.gif)
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.
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ICON Information Technology Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (99.4%) | ||||||||
72,400 | Altera Corp. | $ | 1,743,392 | |||||
49,800 | Analog Devices, Inc. | 1,800,768 | ||||||
63,300 | Anixter International, Inc.(a)(b) | 5,219,085 | ||||||
81,400 | Apple Computer, Inc.(a) | 12,498,156 | ||||||
107,700 | Arrow Electronics, Inc.(a) | 4,579,404 | ||||||
4,393 | AU Optronics Corp. - ADR(b) | 74,329 | ||||||
30,900 | AutoDesk, Inc.(a) | 1,544,073 | ||||||
129,500 | Avnet, Inc.(a) | 5,161,870 | ||||||
95,300 | Brightpoint, Inc.(a) | 1,430,453 | ||||||
13,700 | Brother Industries, Ltd. - ADR | 1,750,989 | ||||||
659,400 | Cisco Systems, Inc.(a) | 21,832,734 | ||||||
26,970 | Cognizant Technology Solutions Corp.(a) | 2,151,397 | ||||||
536,900 | Dell, Inc.(a) | 14,818,440 | ||||||
75,000 | Diebold, Inc. | 3,406,500 | ||||||
298,400 | eBay, Inc.(a) | 11,643,568 | ||||||
181,100 | Epiq Systems, Inc.(a) | 3,408,302 | ||||||
251,700 | GigaMedia, Ltd.(a) | 4,067,472 | ||||||
33,300 | Google, Inc. - Class A(a) | 18,890,091 | ||||||
88,500 | Harris Corp. | 5,114,415 | ||||||
149,800 | Heartland Payment Systems, Inc.(b) | 3,849,860 | ||||||
323,300 | Hewlett-Packard Co. | 16,097,107 | ||||||
302,040 | Hon Hai Precision Industry Co., Ltd. - GDR* | 4,483,098 | ||||||
703,700 | Intel Corp. | 18,197,682 | ||||||
203,200 | International Business Machines Corp. | 23,936,960 | ||||||
58,700 | KLA-Tencor Corp. | 3,274,286 | ||||||
74,700 | Lam Research Corp.(a) | 3,978,522 | ||||||
56,400 | Memc Electronic Materials, Inc.(a) | 3,319,704 | ||||||
90,700 | MICROS Systems, Inc.(a) | 5,901,849 | ||||||
625,800 | Microsoft Corp. | 18,436,068 | ||||||
55,100 | Nintendo Co., Ltd. - ADR | 3,553,950 | ||||||
58,400 | Nokia Corp. - ADR | 2,215,112 | ||||||
167,500 | ON Semiconductor Corp.(a) | 2,103,800 | ||||||
80,400 | Open Text Corp.(a)(b) | 2,087,988 | ||||||
588,600 | Oracle Corp.(a) | 12,743,190 | ||||||
68,700 | Plexus Corp.(a) | 1,882,380 | ||||||
119,800 | QUALCOMM, Inc. | 5,062,748 | ||||||
56,700 | Research In Motion, Ltd.(a) | 5,587,785 | ||||||
94,400 | Shanda Interactive Entertainment, Ltd.(a) | 3,512,624 | ||||||
329,369 | Siliconware Precision Industries Co. - ADR(b) | 3,985,365 | ||||||
Total Common Stocks (Cost $203,925,245) | 265,345,516 | |||||||
Short-Term Investments (0.1%) | ||||||||
$ | 397,279 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07# | 397,279 | |||||
Total Short-Term Investments (Cost $397,279) | 397,279 |
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Shares or Principal Amount | Value | |||||||
Other Securities (4.2%) | ||||||||
11,287,173 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | $ | 11,287,173 | |||||
Total Other Securities (Cost $11,287,173) | 11,287,173 | |||||||
Total Investments 103.7% (Cost $215,609,697) | 277,029,968 | |||||||
Liabilities Less Other Assets (3.7)% | (10,065,186 | ) | ||||||
Net Assets 100.0% | $ | 266,964,782 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
* | Security was fair valued (Note 2) as of September 30, 2007. | |
ADR | American Depositary Receipt | |
GDR | Global Depositary Receipt |
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ICLEX
Q. | How did the Fund perform relative to its benchmarks? |
A. | The ICON Leisure and Consumer Staples Fund gained 15.61% for the fiscal year ended September 30, 2007, outperforming its sector-specific benchmarks, the S&P 1500 Consumer Staples Index and the S&P 1500 Consumer Discretionary Index, which returned 14.15% and 5.92%, respectively. Although neither index is an ideal comparison, together they provide a suitable reference for the Fund’s overall performance in its sectors. |
In contrast, the Fund fell short of its broad benchmark, the S&P Composite 1500 Index, which returned 16.59% over the same period. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview.
Q. | What primary factors were behind the Fund’s relative performance? |
A. | The strong performance of the broad market, relative stability in the Moody’s AAA bond yield, and moderate growth in earnings led to a decline in our calculation of value for the domestic equity market in general and for the Leisure and Consumer Staples sector in particular. |
As a result of these thinning valuations, we focused the Fund’s composition on companies we determined were the optimal combination of value and relative strength. Over the past 12 months, the Fund’s total positions were reduced from 57 to 41 as of September 30, 2007.
The equity market was dominated during the fiscal period by strong demand for Materials and Energy stocks as global growth fueled consumption of these goods, especially as China builds the infrastructure to support its growing economy. These global trends shifted investors’ preferences away from Leisure and Consumer Staples stocks.
Market performance was also driven by a strong energy market, propelling returns of ethanol producers in the agricultural products industry and contributing to relative performance. The Fund began the period with an approximately 4% weighting in agricultural products, but steadily increased its agricultural holdings to end the year overweight the benchmark with a more than 14% position.
Q. | How did the Fund’s composition affect performance? |
A. | The Fund’s overweight position in the strong-performing agricultural products industry contributed to relative returns. Agricultural products |
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comprised about 2% of the market-cap weighted S&P 1500 Consumer Staples Index, but represented a weighted average holding of around 7.5% of the Fund’s assets. |
The broadcasting & cable TV industry delivered solid returns, aided by the purchase of Cablevision System Corporation by a private company. The Fund owned Cablevision System at the time of the acquisition announcement but later liquidated the position.
The Fund began the fiscal year with a 15.4% holding in the broadcasting and cable TV industry, but pared it back to 2.2% by the end of the period. While the industry still demonstrates value based on our methodology, we decreased its weighting when we determined it no longer had potential as a market leader.
The Fund’s broadcasting & cable TV reallocation helped relative performance by maximizing the Fund’s exposure while the industry was doing well and minimizing declines during the industry’s recent downturn.
Fund performance benefited during the period from the packaged foods and meats, distillers and vintners, and soft drinks industries. While the soft drinks industry was a notable contributor to Fund returns, our metrics suggested that Coca-Cola Co. and PepsiCo Inc. lacked relative strength. The fact that the Fund was underweight the soft drinks industry compared with the S&P 1500 Consumer Staples Index muted gains.
Holdings in the publishing, hypermarkets & super centers, and photographic products industries detracted from fiscal-year returns.
Q. | What is your investment outlook for the Leisure and Consumer Staples sector? |
A. | While overall equity valuations thinned toward the end of the fiscal year, our system continued to find value in the Leisure and Consumer Staples sector. Of the 21 industries that we track in these sectors, only eight are overpriced according to our calculations. |
The broadcasting & cable TV industry, a former leader in this sector, is again showing an attractive valuation. We are watching this industry closely for signs of leadership and will increase this position if its metrics meet our targets.
Given that value is not as robust as we have seen in recent years, we have become more selective in the construction of the Fund. As a result, we anticipate the Fund may become more concentrated in certain industries as it has during the past fiscal year.
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Industry Composition
as of September 30, 2007
as of September 30, 2007
Agriculture Products | 14.6% | ||
Soft Drinks | 12.9% | ||
Packaged Foods & Meats | 9.6% | ||
Household Products | 7.9% | ||
Publishing | 7.4% | ||
Movies & Entertainment | 6.7% | ||
Distillers & Vintners | 5.6% | ||
Drug Retail | 5.6% | ||
Leisure Products | 5.5% | ||
Food Retail | 4.1% | ||
Food Distributors | 3.0% | ||
Restaurants | 3.0% | ||
Leisure Facilities | 2.6% | ||
Broadcast & Cable TV | 2.2% | ||
Brewers | 2.0% | ||
Home Entertainment Software | 2.0% | ||
Wireless Telecommunication Services | 1.6% | ||
Specialty Stores | 1.0% | ||
Computer Hardware | 0.8% |
Percentages are based upon net assets.
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Since | |||||||||||||||||||||||||
Inception | Expense | ||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | 5/9/97 | Ratio* | |||||||||||||||||||||
ICON Leisure and Consumer Staples Fund | 15.61 | % | 9.50 | % | 9.19 | % | 10.16 | % | 1.54 | % | |||||||||||||||
S&P 1500 Consumer Discretionary Index | 5.92 | % | 11.50 | % | 5.76 | % | 7.18 | % | N/A | ||||||||||||||||
S&P 1500 Consumer Staples Index | 14.15 | % | 10.15 | % | 6.41 | % | 6.78 | % | N/A | ||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | 15.82 | % | 6.97 | % | 8.33 | % | 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 29, 2007 prospectus for details. |
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Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020107.gif)
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.
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ICON Leisure and Consumer Staples Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (98.1%) | ||||||||
1,700 | Apple Computer, Inc.(a) | $ | 261,018 | |||||
14,200 | Archer Daniels Midland Co. | 469,736 | ||||||
11,600 | Bunge, Ltd. | 1,246,420 | ||||||
23,600 | Central European Distribution Corp.(a) | 1,130,676 | ||||||
16,500 | ConAgra Foods, Inc. | 431,145 | ||||||
25,700 | Constellation Brands, Inc.(a) | 622,197 | ||||||
40,800 | Corn Products International, Inc. | 1,871,496 | ||||||
24,500 | CVS Caremark Corp. | 970,935 | ||||||
13,100 | Darden Restaurants, Inc. | 548,366 | ||||||
15,000 | EchoStar Communications Corp. - Class A(a) | 702,150 | ||||||
4,200 | Energizer Holdings, Inc.(a) | 465,570 | ||||||
36,200 | Fresh Del Monte Produce, Inc.(b) | 1,040,750 | ||||||
34,130 | Global Sources, Ltd.(a)(b) | 756,662 | ||||||
25,600 | Hansen Natural Corp.(a) | 1,451,008 | ||||||
34,500 | Kroger Co. | 983,940 | ||||||
8,200 | Life Time Fitness, Inc.(a)(b) | 502,988 | ||||||
19,300 | Meredith Corp. | 1,105,890 | ||||||
6,400 | Molson Coors Brewing Co. | 637,888 | ||||||
9,800 | Nintendo Co., Ltd. — ADR | 632,100 | ||||||
11,000 | PepsiAmericas, Inc. | 356,840 | ||||||
15,100 | PepsiCo, Inc. | 1,106,226 | ||||||
19,500 | Performance Food Group Co.(a) | 587,535 | ||||||
9,800 | PetSmart, Inc. | 312,620 | ||||||
9,900 | Polaris Industries, Inc.(b) | 431,838 | ||||||
28,900 | Procter & Gamble Co. | 2,032,826 | ||||||
10,900 | Rogers Communications, Inc. - Class B | 496,277 | ||||||
9,700 | Safeway, Inc. | 321,167 | ||||||
13,300 | Scholastic Corp.(a) | 463,638 | ||||||
44,200 | Smith & Wesson Holding Corp.(a)(b) | 843,778 | ||||||
26,400 | Smithfield Foods, Inc.(a) | 831,600 | ||||||
14,800 | Steinway Musical Instruments, Inc. | 438,376 | ||||||
7,200 | The Andersons, Inc.(b) | 345,744 | ||||||
31,000 | The Pepsi Bottling Group, Inc. | 1,152,270 | ||||||
27,300 | The Walt Disney Co. | 938,847 | ||||||
18,500 | Time Warner, Inc. | 339,660 | ||||||
20,100 | Unilever PLC — ADR | 636,567 | ||||||
5,300 | Vail Resorts, Inc.(a) | 330,137 | ||||||
21,400 | Viacom, Inc. Class B(a) | 833,958 | ||||||
16,500 | Walgreen Co. | 779,460 | ||||||
10,400 | Wimm-Bill-Dann Foods OJSC - ADR | 1,137,136 | ||||||
12,400 | Yum! Brands, Inc. | 419,492 | ||||||
Total Common Stocks (Cost $26,368,416) | 30,966,927 |
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Shares or Principal Amount | Value | |||||||
Short-Term Investments (2.1%) | ||||||||
$ | 646,666 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07# | $ | 646,666 | ||||
Total Short-Term Investments (Cost $646,666) | 646,666 | |||||||
Other Securities (11.9%) | ||||||||
3,751,015 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | 3,751,015 | ||||||
Total Other Securities (Cost $3,751,015) | 3,751,015 | |||||||
Total Investments 112.1% (Cost $30,766,097) | 35,364,608 | |||||||
Liabilities Less Other Assets (12.1)% | (3,793,679 | ) | ||||||
Net Assets 100.0% | $ | 31,570,929 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
ADR | American Depositary Receipt |
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ICBMX
Q. | How did the Fund perform relative to its benchmarks? |
A. | The ICON Materials Fund gained 48.63% for the fiscal year ended September 30, 2007, beating its sector-specific benchmark, the S&P 1500 Materials Index, which returned 37.14%, and its broad benchmark, the S&P Composite 1500 Index, which gained 16.59%. Total returns for other periods as of September 30, 2007 appear in the subsequent pages of this Fund’s Management Overview. |
Q. | What primary factors were behind the Fund’s relative performance? |
A. | Eleven of the 15 industries we track in the Materials sector produced double-digit returns during the fiscal year, indicating a broad sector rally. |
Although qualitative factors do not have a role in our investment analysis, we observed that the combination of increasing commodity prices, substantial foreign demand (specifically from China and India), and merger and acquisition activity helped produce robust company earnings in the Materials sector.
The Fund entered the fiscal year with the Materials sector trading at about a 19% discount to our calculation of intrinsic value, slightly below our valuation of the broad domestic market. The right combinations of value and relative strength drew the Fund to industries such as specialty chemicals, metal & glass containers, and diversified chemicals.
Over the course of the year, however, solid market returns slowly decreased our estimation of the intrinsic value of Materials stocks to the point of measuring the sector’s lowest value-to-price ratio of the year, 0.90, on July 13, 2007. At that time, not a single industry within the sector was valued above 1.00, according to our methodology.
Combinations of value and relative strength were difficult for our system to find. In order to generate some downside protection, the Fund purchased Materials sector index put options in early July. This strategy proved to be advantageous as the ICON Materials Fund was able to reduce declines when the S&P 1500 Materials Index dropped more than 16% from July 19, 2007 to August 16, 2007.
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Q. | How did the Fund’s composition affect performance? |
A. | Industries that contributed significantly to absolute performance were diversified metals & mining, specialty chemicals, steel, metal & glass containers, and diversified chemicals. These five industries constituted approximately 60% of Fund assets on average during the fiscal year. |
In order to help minimize valuation risk and diversify holdings, the Fund initiated industry positions within the Industrials and Energy sectors that demonstrated value. These positions contributed positively to performance overall.
Our research suggested that from August 16, 2007 through the end of the fiscal year, a distinctly new theme emerged in the Materials sector, led by the diversified metals & mining and fertilizers & agricultural chemicals industries. Our system recognized this theme and through aggressive overweight positions, the Fund outperformed the benchmark by more than 5% during this time period.
A few industries detracted from absolute performance during the fiscal year, including coal & consumable fuels, commodity chemicals, and precious metals & minerals. The Fund held nominal positions in these industries, minimizing the impact to overall Fund returns.
Q. | What is your investment outlook for the Materials sector? |
A. | At the close of the fiscal year, the Materials sector was the most overvalued of the nine we track with a value-to-price ratio of 0.97. Lower valuations demand that we utilize an especially selective approach on both an industry and stock level. Additionally, we believe diversifying among other sector holdings during periods of overvaluation will provide an opportunity to invest in industries that reflect better value and relative strength. |
Our experience suggests that commodity-based industries and sectors, like the Materials sector, have performed well when interest rates are cut. Based on recent Federal Reserve monetary policy, we have positioned the Fund to fully participate in potential market rallies.
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Industry Composition
as of September 30, 2007
as of September 30, 2007
Diversified Metals & Mining | 18.6% | ||
Fertilizers & Agricultural Chemicals | 16.7% | ||
Steel | 11.9% | ||
Specialty Chemicals | 10.6% | ||
Diversified Chemicals | 9.7% | ||
Industrial Gases | 8.9% | ||
Metal & Glass Containers | 6.4% | ||
Construction Materials | 2.8% | ||
Railroads | 2.5% | ||
Oil & Gas Equipment & Services | 2.4% | ||
Construction & Farm Machinery & Heavy Trucks | 2.2% | ||
Oil & Gas Drilling | 2.0% | ||
Marine | 1.9% |
Percentages are based upon net assets.
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Since | |||||||||||||||||||||||||
Inception | Expense | ||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | 5/5/97 | Ratio* | |||||||||||||||||||||
ICON Materials Fund | 48.63 | % | 27.07 | % | 6.22 | % | 6.85 | % | 1.30 | % | |||||||||||||||
S&P 1500 Materials Index | 37.14 | % | 22.05 | % | 8.15 | % | 9.17 | % | N/A | ||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | 15.82 | % | 6.97 | % | 8.26 | % | 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 29, 2007 prospectus for details. |
Table of Contents
Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(Graph)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020108.gif)
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.
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ICON Materials Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (96.6%) | ||||||||
65,900 | Air Products & Chemical, Inc. | $ | 6,442,384 | |||||
40,000 | Airgas, Inc. | 2,065,200 | ||||||
103,000 | Albemarle Corp. | 4,552,600 | ||||||
30,000 | AMCOL International Corp.(b) | 992,700 | ||||||
40,000 | Arcelor Mittal - Class A(b) | 3,134,400 | ||||||
60,000 | Arch Chemicals, Inc. | 2,812,800 | ||||||
76,000 | Ball Corp. | 4,085,000 | ||||||
37,100 | BHP Billiton Ltd. - ADR(b) | 2,916,060 | ||||||
18,800 | Brush Engineered Materials, Inc.(a) | 975,532 | ||||||
15,600 | Burlington Northern Santa Fe Corp. | 1,266,252 | ||||||
36,600 | Caterpillar, Inc. | 2,870,538 | ||||||
32,500 | Claymont Steel Holdings, Inc.(a) | 658,125 | ||||||
16,100 | Cleveland-Cliffs, Inc.(b) | 1,416,317 | ||||||
80,800 | Companhia Vale do Rio Doce - ADR(b) | 2,741,544 | ||||||
20,000 | Crown Holdings, Inc.(a) | 455,200 | ||||||
11,900 | Diamond Offshore Drilling, Inc. | 1,348,151 | ||||||
110,000 | Dow Chemical Co. | 4,736,600 | ||||||
14,700 | DryShips, Inc.(b) | 1,335,495 | ||||||
42,000 | FMC Corp. | 2,184,840 | ||||||
120,000 | Freeport-McMoran Copper & Gold, Inc. - Class B(b) | 12,586,800 | ||||||
55,900 | Gerdau Ameristeel Corp. | 668,005 | ||||||
20,800 | Grant Prideco, Inc.(a) | 1,134,016 | ||||||
65,000 | Greif, Inc. - Class A | 3,944,200 | ||||||
25,000 | Haynes International, Inc.(a) | 2,134,250 | ||||||
80,000 | Hercules, Inc. | 1,681,600 | ||||||
49,300 | Lafarge S.A. - ADR(b) | 1,905,445 | ||||||
25,000 | Lubrizol Corp. | 1,626,500 | ||||||
14,300 | Martin Marietta Materials, Inc.(b) | 1,909,765 | ||||||
210,000 | Monsanto Co. | 18,005,400 | ||||||
13,500 | National Oilwell Varco, Inc.(a) | 1,950,750 | ||||||
94,600 | Navios Maritime Holdings, Inc. | 1,243,044 | ||||||
12,400 | Norfolk Southern Corp. | 643,684 | ||||||
15,900 | PotashCorp of Saskatchewan, Inc. | 1,680,630 | ||||||
53,900 | PPG Industries, Inc. | 4,072,145 | ||||||
37,900 | Praxair, Inc. | 3,174,504 | ||||||
26,100 | Quaker Chemical Corp. | 613,872 | ||||||
65,000 | Quanex Corp. | 3,053,700 | ||||||
65,000 | Reliance Steel & Aluminum Co. | 3,675,100 | ||||||
4,300 | Rio Tinto PLC - ADR | 1,476,620 | ||||||
180,000 | RPM International, Inc. | 4,311,000 | ||||||
16,300 | RTI International Metals, Inc.(a) | 1,291,938 | ||||||
11,200 | Southern Copper Corp.(b) | 1,386,896 |
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Shares or Principal Amount | Value | |||||||
20,000 | Steel Dynamics, Inc. | $ | 934,000 | |||||
26,700 | Syngenta AG - ADR(b) | 1,156,911 | ||||||
25,000 | The Scotts Miracle-Gro Co. | 1,068,750 | ||||||
11,200 | Transocean, Inc.(a) | 1,266,160 | ||||||
11,300 | Union Pacific Corp. | 1,277,578 | ||||||
Total Common Stocks (Cost $99,082,777) | 126,863,001 | |||||||
Short-Term Investments (4.2%) | ||||||||
$ | 5,510,356 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07# | 5,510,356 | |||||
Total Short-Term Investments (Cost $5,510,356) | 5,510,356 | |||||||
Other Securities (18.0%) | ||||||||
23,686,477 | Brown Brothers Harriman Securities Lending Investment Fund, 5.24% | 23,686,477 | ||||||
Total Other Securities (Cost $23,686,477) | 23,686,477 | |||||||
Total Investments 118.8% (Cost $128,279,610) | 156,059,834 | |||||||
Liabilities Less Other Assets (18.8)% | (24,739,128 | ) | ||||||
Net Assets 100.0% | $ | 131,320,706 | ||||||
The accompanying notes are an integral part of the financial statements.
(a) | Non-income producing security. | |
(b) | A portion or all of the security was on loan as of September 30, 2007. | |
# | 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, 2007. | |
ADR | American Depositary Receipt |
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ICTUX
Q. | How did the Fund perform relative to its benchmarks? |
A. | The ICON Telecommunication & Utilities Fund appreciated 31.60% for the fiscal year ended September 30, 2007, outperforming the 28.37% return of S&P 1500 Telecommunication Services Index and the 19.04% return 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 outpaced its broad benchmark, the S&P Composite 1500 Index, which returned 16.59% over the same period. Total returns for other periods as of September 30, 2007 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 enjoyed an impressive year. Seven out of the eight industry groups within these two sectors delivered double-digit returns over the fiscal year, advancing with the strong equity market and led by the integrated telecommunications industry, which gained approximately 30% during the period. |
We believe the strength of the integrated telecommunications industry was driven by price trying to catch up to value, as the industry suffered more than the broad market following the tech bubble’s bursting in 2000 and has yet to reach our calculation of its intrinsic value. In addition, the few large-cap firms which dominate this industry surprised analysts as they completed major acquisitions and delivered positive earnings surprises.
The electric utility industry also performed well, returning approximately 22%. The industry benefited from a setting in which corporations turned in strong earnings, interest rates remained relatively low, and inflation and recession fears subsided. It also held up much better than the overall market during the February 2007 and July 2007 fear-based sell-offs.
Finally, the wireless telecommunications services industry appreciated considerably, gaining strength from mergers and acquisitions and the extremely rapid growth of wireless customers in developing global markets.
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Q. | How did the Fund’s composition affect performance? |
A. | Guided by ICON’s value and relative strength calculations, the Fund was weighted in some of the top-performing industries within the benchmarks. |
Specifically, the integrated telecommunications industry was both the most heavily weighted industry within the Fund, with an average weight of around 40% of net assets, and the top-performing industry within the benchmark. This allocation contributed more than any other industry to the Fund’s total return during the fiscal year. Furthermore, the Fund’s individual holdings in this industry outperformed the benchmark’s holdings on a weighted average.
The Fund’s next largest industry position was in the second best-performing industry within the benchmark, electric utilities. As with the integrated telecommunications industry, stock selection among electric utilities (which was the second largest contributor to fiscal-year returns) aided the Fund’s relative performance.
The Fund’s other top industry holdings were independent power producers & energy traders, with about a 9% average weight, and wireless telecommunication services, with an average weight of around 8%. These industries were also among the top performers for the benchmark.
Q. | What is your investment outlook for the Telecommunication & Utilities sectors? |
A. | Our analysis of the Telecommunication and Utilities sectors continues to indicate widespread value. |
Our calculations suggest that the integrated telecommunications and wireless telecommunication services industries show more value and leadership than industries in the Utilities sector, and we expect to keep the Fund more heavily weighted toward the Telecommunications sector until our valuation measurements suggest a shift.
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Industry Composition
as of September 30, 2007
as of September 30, 2007
Integrated Telecommunication Services | 35.3% | ||
Electric Utilities | 18.3% | ||
Wireless Telecommunication Services | 15.0% | ||
Independent Power Producers & Energy Traders | 12.0% | ||
Electrical Components & Equipment | 4.0% | ||
Aerospace & Defense | 3.5% | ||
Gas Utilities | 2.6% | ||
Technology Distributors | 2.3% | ||
Alternative Carriers | 1.4% | ||
Water Utilities | 1.1% | ||
Communications Equipment | 0.7% | ||
Computer Hardware | 0.7% | ||
Coal & Consumable Fuels | 0.6% | ||
Industrial Conglomerates | 0.5% | ||
Broadcast & Cable TV | 0.4% |
Percentages are based upon net assets.
Average Annual Total Return
as of September 30, 2007
as of September 30, 2007
Since | |||||||||||||||||||||||||
Inception | Expense | ||||||||||||||||||||||||
1 Year | 5 Years | 10 Years | 7/9/97 | Ratio* | |||||||||||||||||||||
ICON Telecommunication & Utilities Fund | 31.60 | % | 20.47 | % | 11.05 | % | 11.46 | % | 1.38 | % | |||||||||||||||
S&P 1500 Telecommunications Services Index | 28.37 | % | 21.85 | % | 4.19 | % | 4.71 | % | N/A | ||||||||||||||||
S&P 1500 Utilities Index | 19.04 | % | 20.02 | % | 9.17 | % | 9.39 | % | N/A | ||||||||||||||||
S&P Composite 1500 Index | 16.59 | % | 15.82 | % | 6.97 | % | 7.42 | % | 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 29, 2007 prospectus for details. |
Table of Contents
Value of a $10,000 Investment
through September 30, 2007
through September 30, 2007
![(Graph)](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020109.gif)
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.
Table of Contents
ICON Telecommunication & Utilities Fund
Schedule of Investments
September 30, 2007
Schedule of Investments
September 30, 2007
Shares or Principal Amount | Value | |||||||
Common Stocks (98.4%) | ||||||||
66,400 | Allegheny Energy, Inc.(a) | $ | 3,470,064 | |||||
60,706 | America Movil S.A.B. de C.V. - ADR | 3,885,184 | ||||||
10,000 | American States Water Co. | 390,000 | ||||||
15,000 | Anixter International, Inc.(a) | 1,236,750 | ||||||
5,000 | Apple Computer, Inc.(a) | 767,700 | ||||||
20,000 | Arrow Electronics, Inc.(a) | 850,400 | ||||||
586,400 | AT&T, Inc. | 24,810,584 | ||||||
15,000 | Atmos Energy Corp. | 424,800 | ||||||
19,000 | Belden CDT, Inc. | 891,290 | ||||||
30,000 | Brightpoint, Inc.(a) | 450,300 | ||||||
7,500 | BT Group PLC - ADR | 471,225 | ||||||
5,000 | China Mobile, Ltd. - ADR | 410,200 | ||||||
22,500 | Cisco Systems, Inc.(a) | 744,975 | ||||||
19,950 | Comcast Corp. - Class A(a) | 482,391 | ||||||
5,000 | Companhia de Saneamento Basico do Estado de Sao Paulo - ADR | 247,000 | ||||||
65,000 | Constellation Energy Group | 5,576,350 | ||||||
20,600 | DRS Technologies, Inc. | 1,135,472 | ||||||
52,600 | Edison International | 2,916,670 | ||||||
15,000 | El Paso Electric Co.(a) | 346,950 | ||||||
50,000 | Encore Wire Corp. | 1,256,500 | ||||||
12,300 | Entergy Corp. | 1,331,967 | ||||||
66,200 | Exelon Corp. | 4,988,832 | ||||||
16,000 | First Energy Corp. | 1,013,440 | ||||||
43,000 | FPL Group, Inc. | 2,617,840 | ||||||
35,000 | France Telecom S.A. - ADR | 1,170,400 | ||||||
50,000 | Gilat Satellite Networks, Ltd.(a) | 510,000 | ||||||
60,000 | Hong Kong Electric Holdings, Ltd. - ADR | 306,000 | ||||||
25,000 | Huaneng Power International, Inc. - ADR | 1,319,500 | ||||||
15,000 | Hubbell, Inc. - Class B | 856,800 | ||||||
35,000 | II-VI, Inc.(a) | 1,208,550 | ||||||
70,000 | Korea Electric Power Corp. - ADR | 1,620,500 | ||||||
30,000 | KT Corp. - ADR | 751,500 | ||||||
10,000 | L-3 Communications Holdings, Inc. | 1,021,400 | ||||||
16,300 | Lockheed Martin Corp. | 1,768,387 | ||||||
15,100 | Mobile TeleSystems - ADR | 1,046,581 | ||||||
18,100 | NII Holdings, Inc.(a) | 1,486,915 | ||||||
141,500 | NRG Energy, Inc.(a) | 5,984,035 | ||||||
10,000 | ONEOK, Inc. | 474,000 | ||||||
60,600 | Partner Communications Co., Ltd. | 1,003,536 | ||||||
14,400 | Peabody Energy Corp. | 689,328 | ||||||
12,500 | Pepco Holdings, Inc. | 338,500 | ||||||
75,000 | Premiere Global Services, Inc.(a) | 948,750 | ||||||
10,000 | PT Telekomunikasi Indonesia - ADR | 488,200 | ||||||
30,000 | Questar Corp. | 1,575,900 | ||||||
75,500 | Rogers Communications, Inc. - Class B | 3,437,515 |
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Shares or Principal Amount | Value | |||||||
4,000 | Siemens AG - ADR | $ | 549,000 | |||||
30,000 | SK Telecom Co., Ltd. - ADR | 891,000 | ||||||
28,900 | Southern Co. | 1,048,492 | ||||||
42,500 | Southwest Water Co. | 536,775 | ||||||
5,000 | Suntech Power Holdings Co., Ltd. - ADR(a) | 199,500 | ||||||
62,366 | Telefonica S.A. - ADR | 5,225,024 | ||||||
17,500 | Telefonos de Mexico S.A. de C.V. - ADR | 575,225 | ||||||
14,000 | Telekom Austria AG - ADR | 728,700 | ||||||
12,500 | Telemig Celular Participacoes S.A. - ADR | 732,500 | ||||||
50,000 | Telenor ASA - ADR | 2,995,000 | ||||||
5,000 | Telus Corp. | 280,750 | ||||||
10,000 | The AES Corp.(a) | 200,400 | ||||||
15,200 | UGI Corp. | 394,896 | ||||||
20,000 | US Cellular Corp.(a) | 1,964,000 | ||||||
25,000 | Verizon Communications, Inc. | 1,107,000 | ||||||
60,000 | Vimpel-Communications - Sp ADR | 1,622,400 | ||||||
Total Common Stocks (Cost $90,725,859) | 107,773,843 | |||||||
Short-Term Investments (0.8%) | ||||||||
$ | 885,953 | Brown Brothers Harriman Time Deposit - U.S. Dollar, 4.37%, 10/01/07# | 885,953 | |||||
Total Short-Term Investments (Cost $885,953) | 885,953 | |||||||
Total Investments 99.2% (Cost $91,611,812) | 108,659,796 | |||||||
Other Assets Less Liabilities 0.8% | 848,794 | |||||||
Net Assets 100.0% | $ | 109,508,590 | ||||||
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, 2007. | |
ADR | American Depositary Receipt |
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Table of Contents
Statements of Assets and Liabilities
September 30, 2007
September 30, 2007
ICON | ||||||||||||||||
Consumer | ICON | ICON | ICON | |||||||||||||
Discretionary | Energy | Financial | Healthcare | |||||||||||||
Fund | Fund | Fund | Fund | |||||||||||||
Assets | ||||||||||||||||
Investments, at cost | $ | 94,971,525 | $ | 561,962,044 | $ | 181,512,773 | $ | 418,269,542 | ||||||||
Investments, at value† | 103,391,936 | 845,477,953 | 200,325,167 | 497,829,231 | ||||||||||||
Cash | - | - | - | - | ||||||||||||
Receivables: | ||||||||||||||||
Fund shares sold | 50,465 | 856,815 | 101,447 | 286,932 | ||||||||||||
Investments sold | 3,821,160 | 2,428,655 | - | 1,229,632 | ||||||||||||
Interest | 7,700 | 19,620 | 1,276 | 6,656 | ||||||||||||
Dividends | 55,075 | 461,679 | 45,296 | 177,850 | ||||||||||||
Other assets | 30,830 | 89,113 | 38,339 | 65,430 | ||||||||||||
Total Assets | $ | 107,357,166 | $ | 849,333,835 | $ | 200,511,525 | $ | 499,595,731 | ||||||||
Liabilities | ||||||||||||||||
Payables: | ||||||||||||||||
Due to custodian bank | 1,423,267 | - | - | - | ||||||||||||
Interest | 5,233 | - | - | 173 | ||||||||||||
Investments bought | 2,765,536 | 3,592,051 | - | - | ||||||||||||
Payable for collateral received on securities loaned | 8,489,276 | 28,147,480 | - | 24,723,419 | ||||||||||||
Fund shares redeemed | 79,070 | 702,261 | 187,046 | 1,072,965 | ||||||||||||
Advisory fees | 77,462 | 640,981 | 163,601 | 388,463 | ||||||||||||
Fund accounting fees | 2,116 | 16,431 | 4,258 | 10,035 | ||||||||||||
Transfer agent fees | 9,135 | 34,335 | 12,825 | 29,839 | ||||||||||||
Administration fees | 3,708 | 31,377 | 7,827 | 18,826 | ||||||||||||
Trustee fees | 1,309 | 11,021 | 2,767 | 6,572 | ||||||||||||
Accrued expenses | 23,819 | 82,934 | 44,269 | 58,926 | ||||||||||||
Total Liabilities | 12,879,931 | 33,258,871 | 422,593 | 26,309,218 | ||||||||||||
Net Assets | $ | 94,477,235 | $ | 816,074,964 | $ | 200,088,932 | $ | 473,286,513 | ||||||||
Net Assets Consist of | ||||||||||||||||
Paid-in capital | $ | 81,786,981 | $ | 403,417,465 | $ | 160,508,722 | $ | 364,252,705 | ||||||||
Accumulated undistributed net investment income/(loss) | - | 2,043,509 | 1,841,912 | 45,860 | ||||||||||||
Accumulated undistributed net realized gain/(loss) from investment transactions | 4,269,843 | 127,098,081 | 18,925,904 | 29,428,259 | ||||||||||||
Unrealized appreciation/ (depreciation) on investments | 8,420,411 | 283,515,909 | 18,812,394 | 79,559,689 | ||||||||||||
Net Assets | $ | 94,477,235 | $ | 816,074,964 | $ | 200,088,932 | $ | 473,286,513 | ||||||||
Shares outstanding (unlimited shares authorized no par value) | 7,385,114 | 19,681,342 | 13,993,713 | 26,771,370 | ||||||||||||
Net asset value (offering and redemption price per share) | $ | 12.79 | $ | 41.46 | $ | 14.30 | $ | 17.68 |
† | Includes securities on loan of $8,277,668, $27,557,377, $0, $24,119,424, $6,661,041, $10,791,244, $3,651,227, $23,148,452, and $0. |
The accompanying notes are an integral part of the financial statements.
Table of Contents
ICON | ICON | |||||||||||||||||
ICON | Information | Leisure and | ICON | ICON | ||||||||||||||
Industrials | Technology | Consumer | Materials | Telecommunication | ||||||||||||||
Fund | Fund | Staples Fund | Fund | & Utilities Fund | ||||||||||||||
$ | 137,531,972 | $ | 215,609,697 | $ | 30,766,097 | $ | 128,279,610 | $ | 91,611,812 | |||||||||
162,304,139 | 277,029,968 | 35,364,608 | 156,059,834 | 108,659,796 | ||||||||||||||
5,939 | - | - | 19,786 | - | ||||||||||||||
101,521 | 1,593,348 | 9,888 | 656,513 | 35,952 | ||||||||||||||
668,360 | - | - | - | 949,865 | ||||||||||||||
3,227 | 38,716 | 3,694 | 8,743 | 308 | ||||||||||||||
186,462 | 97,132 | 3,938 | 122,114 | 69,910 | ||||||||||||||
34,747 | 46,102 | 19,476 | 32,211 | 41,108 | ||||||||||||||
$ | 163,304,395 | $ | 278,805,266 | $ | 35,401,604 | $ | 156,899,201 | $ | 109,756,939 | |||||||||
- | - | - | - | - | ||||||||||||||
- | 3,458 | - | - | - | ||||||||||||||
426,011 | - | - | 1,702,545 | - | ||||||||||||||
6,824,486 | 11,287,173 | 3,751,015 | 23,686,477 | - | ||||||||||||||
145,775 | 269,542 | 30,443 | 49,973 | 122,926 | ||||||||||||||
124,721 | 214,678 | 25,684 | 100,303 | 88,071 | ||||||||||||||
3,464 | 5,500 | 854 | 2,697 | 2,395 | ||||||||||||||
8,528 | 13,188 | 8,336 | 12,893 | 9,853 | ||||||||||||||
6,026 | 10,265 | 1,229 | 4,798 | 4,146 | ||||||||||||||
2,099 | 3,617 | 434 | 1,673 | 1,483 | ||||||||||||||
24,764 | 33,063 | 12,680 | 17,136 | 19,475 | ||||||||||||||
7,565,874 | 11,840,484 | 3,830,675 | 25,578,495 | 248,349 | ||||||||||||||
$ | 155,738,521 | $ | 266,964,782 | $ | 31,570,929 | $ | 131,320,706 | $ | 109,508,590 | |||||||||
$ | 125,152,367 | $ | 234,966,985 | $ | 20,072,049 | $ | 84,128,217 | $ | 76,612,020 | |||||||||
135,503 | - | 530,127 | 495,440 | 1,083,590 | ||||||||||||||
5,678,484 | (29,422,474 | ) | 6,370,242 | 18,916,825 | 14,764,996 | |||||||||||||
24,772,167 | 61,420,271 | 4,598,511 | 27,780,224 | 17,047,984 | ||||||||||||||
$ | 155,738,521 | $ | 266,964,782 | $ | 31,570,929 | $ | 131,320,706 | $ | 109,508,590 | |||||||||
14,467,046 | 24,220,190 | 2,973,375 | 8,535,089 | 11,909,369 | ||||||||||||||
$ | 10.77 | $ | 11.02 | $ | 10.62 | $ | 15.39 | $ | 9.20 |
Table of Contents
Statements of Operations
For the year ended September 30, 2007
For the year ended September 30, 2007
ICON | ||||||||||||||||
Consumer | ICON | ICON | ICON | |||||||||||||
Discretionary | Energy | Financial | Healthcare | |||||||||||||
Fund | Fund | Fund | Fund | |||||||||||||
Investment Income | ||||||||||||||||
Interest | $ | 49,277 | $ | 611,821 | $ | 97,043 | $ | 542,720 | ||||||||
Dividends | 1,329,962 | 9,584,535 | 6,580,100 | 6,033,132 | ||||||||||||
Income from securities lending, net | 23,995 | 22,712 | - | 9,655 | ||||||||||||
Foreign taxes withheld | (9,462 | ) | - | - | (33,750 | ) | ||||||||||
Total Investment Income | 1,393,772 | 10,219,068 | 6,677,143 | 6,551,757 | ||||||||||||
Expenses | ||||||||||||||||
Advisory fees | 1,411,227 | 7,132,345 | 3,233,805 | 5,397,290 | ||||||||||||
Fund accounting fees | 36,705 | 173,515 | 79,364 | 130,939 | ||||||||||||
Transfer agent fees | 107,701 | 387,140 | 159,661 | 350,711 | ||||||||||||
Administration fees | 65,195 | 334,813 | 149,366 | 250,392 | ||||||||||||
Registration fees | 31,967 | 54,243 | 35,172 | 49,472 | ||||||||||||
Insurance expense | 8,266 | 55,951 | 19,753 | 35,073 | ||||||||||||
Trustee fees and expenses | 14,720 | 57,667 | 30,203 | 46,976 | ||||||||||||
Interest expense | 84,528 | 63,664 | 85,021 | 60,864 | ||||||||||||
Other expenses | 75,046 | 266,165 | 116,503 | 210,675 | ||||||||||||
Total expenses before transfer agent earnings credit | 1,835,355 | 8,525,503 | 3,908,848 | 6,532,392 | ||||||||||||
Transfer agent earnings credit | (7,032 | ) | (35,946 | ) | (15,588 | ) | (26,495 | ) | ||||||||
Net Expenses | 1,828,323 | 8,489,557 | 3,893,260 | 6,505,897 | ||||||||||||
Net Investment Income/(Loss) | (434,551 | ) | 1,729,511 | 2,783,883 | 45,860 | |||||||||||
Net Realized and Unrealized Gain/(Loss) on Investments | ||||||||||||||||
Net realized gain/(loss) from investment transactions | 9,399,406 | 148,157,856 | 32,263,708 | 38,078,093 | ||||||||||||
Change in unrealized net appreciation/(depreciation) on investments | (1,555,381 | ) | 99,930,732 | (18,892,178 | ) | (4,357,126 | ) | |||||||||
Net Realized and Unrealized Gain/(Loss) on Investments | 7,844,025 | 248,088,588 | 13,371,530 | 33,720,967 | ||||||||||||
Net Increase/(Decrease) in Net Assets Resulting From Operations | $ | 7,409,474 | $ | 249,818,099 | $ | 16,155,413 | $ | 33,766,827 | ||||||||
The accompanying notes are an integral part of the financial statements.
Table of Contents
ICON | ICON | |||||||||||||||||
ICON | Information | Leisure and | ICON | ICON | ||||||||||||||
Industrials | Technology | Consumer | Materials | Telecommunication | ||||||||||||||
Fund | Fund | Staples Fund | Fund | & Utilities Fund | ||||||||||||||
$ | 130,598 | $ | 61,105 | $ | 43,504 | $ | 172,813 | $ | 165,572 | |||||||||
1,488,347 | 1,672,612 | 1,736,346 | 2,152,333 | 2,639,021 | ||||||||||||||
10,205 | 85,143 | 11,363 | 15,697 | - | ||||||||||||||
- | (9,178 | ) | (3,924 | ) | (1,885 | ) | (2,103 | ) | ||||||||||
1,629,150 | 1,809,682 | 1,787,289 | 2,338,958 | 2,802,490 | ||||||||||||||
1,135,275 | 2,441,105 | 739,260 | 1,221,027 | 1,106,753 | ||||||||||||||
31,290 | 60,399 | 20,862 | 31,887 | 29,853 | ||||||||||||||
93,345 | 150,838 | 111,320 | 148,615 | 113,428 | ||||||||||||||
52,440 | 112,757 | 34,153 | 56,408 | 51,131 | ||||||||||||||
25,631 | 32,833 | 22,220 | 30,330 | 28,452 | ||||||||||||||
8,610 | 11,807 | 3,629 | 10,136 | 4,859 | ||||||||||||||
11,708 | 22,297 | 9,558 | 12,962 | 12,178 | ||||||||||||||
16,655 | 73,515 | 39,195 | 31,470 | 52,503 | ||||||||||||||
78,498 | 106,900 | 60,951 | 81,208 | 76,296 | ||||||||||||||
1,453,452 | 3,012,451 | 1,041,148 | 1,624,043 | 1,475,453 | ||||||||||||||
(5,736 | ) | (12,124 | ) | (3,613 | ) | (6,085 | ) | (5,523 | ) | |||||||||
1,447,716 | 3,000,327 | 1,037,535 | 1,617,958 | 1,469,930 | ||||||||||||||
181,434 | (1,190,645 | ) | 749,754 | 721,000 | 1,332,560 | |||||||||||||
10,093,733 | 22,583,204 | 12,220,864 | 28,330,381 | 24,415,452 | ||||||||||||||
15,827,903 | 34,418,793 | 53,228 | 18,977,096 | 7,591,509 | ||||||||||||||
25,921,636 | 57,001,997 | 12,274,092 | 47,307,477 | 32,006,961 | ||||||||||||||
$ | 26,103,070 | $ | 55,811,352 | $ | 13,023,846 | $ | 48,028,477 | $ | 33,339,521 | |||||||||
Table of Contents
Statements of Changes in Net Assets
ICON Consumer Discretionary Fund | ||||||||
Year Ended | Year Ended | |||||||
September 30, | September 30, | |||||||
2007 | 2006 | |||||||
Operations | ||||||||
Net investment income/(loss) | $ | (434,551 | ) | $ | (711,624 | ) | ||
Net realized gain/(loss) from investment transactions | 9,399,406 | (1,974,252 | ) | |||||
Change in net unrealized appreciation/(depreciation) on investments | (1,555,381 | ) | (2,215,040 | ) | ||||
Net increase/(decrease) in net assets resulting from operations | 7,409,474 | (4,900,916 | ) | |||||
Dividends and Distributions to Shareholders | ||||||||
Net investment income | - | - | ||||||
Net realized gains | - | (15,842,362 | ) | |||||
Net decrease from dividends and distributions | - | (15,842,362 | ) | |||||
Fund Share Transactions | ||||||||
Shares sold | 89,592,479 | 169,800,249 | ||||||
Reinvested dividends and distributions | - | 15,740,469 | ||||||
Shares repurchased | (113,316,789 | ) | (223,427,131 | ) | ||||
Net increase/(decrease) from fund share transactions | (23,724,310 | ) | (37,886,413 | ) | ||||
Total net increase/(decrease) in net assets | (16,314,836 | ) | (58,629,691 | ) | ||||
Net Assets | ||||||||
Beginning of period | 110,792,071 | 169,421,762 | ||||||
End of period | $ | 94,477,235 | $ | 110,792,071 | ||||
Transactions in Fund Shares | ||||||||
Shares Sold | 6,847,754 | 13,890,840 | ||||||
Reinvested dividends and distributions | - | 1,362,806 | ||||||
Shares repurchased | (8,612,211 | ) | (18,549,943 | ) | ||||
Net increase/(decrease) | (1,764,457 | ) | (3,296,297 | ) | ||||
Shares outstanding beginning of period | 9,149,571 | 12,445,868 | ||||||
Shares outstanding end of period | 7,385,114 | 9,149,571 | ||||||
Purchase and Sales of Investment Securities | ||||||||
(excluding short-term securities) | ||||||||
Purchase of securities | $ | 200,968,196 | $ | 269,340,097 | ||||
Proceeds from sales of securities | 225,414,872 | 323,712,014 | ||||||
Accumulated undistributed net investment income/(loss) | $ | - | $ | - | ||||
The accompanying notes are an integral part of the financial statements.
Table of Contents
ICON Energy Fund | ICON Financial Fund | |||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
$ | 1,729,511 | $ | (1,539,702 | ) | $ | 2,783,883 | $ | 2,917,573 | ||||||
148,157,856 | 97,201,478 | 32,263,708 | 19,921,934 | |||||||||||
99,930,732 | (135,974,290 | ) | (18,892,178 | ) | 14,885,101 | |||||||||
249,818,099 | (40,312,514 | ) | 16,155,413 | 37,724,608 | ||||||||||
- | (2,256,525 | ) | (3,859,545 | ) | (1,744,311 | ) | ||||||||
(71,884,906 | ) | (23,251,426 | ) | (15,342,221 | ) | (16,113,682 | ) | |||||||
(71,884,906 | ) | (25,507,951 | ) | (19,201,766 | ) | (17,857,993 | ) | |||||||
240,156,174 | 381,970,561 | 72,560,984 | 225,592,853 | |||||||||||
66,740,457 | 24,368,155 | 18,814,482 | 17,760,399 | |||||||||||
(457,121,104 | ) | (561,109,848 | ) | (256,853,973 | ) | (105,489,351 | ) | |||||||
(150,224,473 | ) | (154,771,132 | ) | (165,478,507 | ) | 137,863,901 | ||||||||
27,708,720 | (220,591,597 | ) | (168,524,860 | ) | 157,730,516 | |||||||||
788,366,244 | 1,008,957,841 | 368,613,792 | 210,883,276 | |||||||||||
$ | 816,074,964 | $ | 788,366,244 | $ | 200,088,932 | $ | 368,613,792 | |||||||
6,798,155 | 11,049,736 | 4,850,768 | 16,117,798 | |||||||||||
2,077,847 | 760,300 | 1,267,822 | 1,353,679 | |||||||||||
(13,927,421 | ) | (16,964,736 | ) | (17,605,528 | ) | (7,698,732 | ) | |||||||
(5,051,419 | ) | (5,154,700 | ) | (11,486,938 | ) | 9,772,745 | ||||||||
24,732,761 | 29,887,461 | 25,480,651 | 15,707,906 | |||||||||||
19,681,342 | 24,732,761 | 13,993,713 | 25,480,651 | |||||||||||
$ | 392,001,086 | $ | 213,408,134 | $ | 292,616,174 | $ | 526,674,690 | |||||||
574,733,632 | 408,025,665 | 477,406,026 | 404,037,325 | |||||||||||
$ | 2,043,509 | $ | (167,659 | ) | $ | 1,841,912 | $ | 2,917,574 | ||||||
Table of Contents
Statements of Changes in Net Assets
ICON Healthcare Fund | ||||||||
Year Ended | Year Ended | |||||||
September 30, | September 30, | |||||||
2007 | 2006 | |||||||
Operations | ||||||||
Net investment income/(loss) | $ | 45,860 | $ | (3,659,319 | ) | |||
Net realized gain/(loss) from investment transactions | 38,078,093 | 58,118,854 | ||||||
Change in net unrealized appreciation/(depreciation) on investments | (4,357,126 | ) | (45,909,243 | ) | ||||
Net increase/(decrease) in net assets resulting from operations | 33,766,827 | 8,550,292 | ||||||
Dividends and Distributions to Shareholders | ||||||||
Net investment income | - | - | ||||||
Net realized gains | (43,433,266 | ) | (10,591,515 | ) | ||||
Net decrease from dividends and distributions | (43,433,266 | ) | (10,591,515 | ) | ||||
Fund Share Transactions | ||||||||
Shares sold | 181,868,544 | 403,323,627 | ||||||
Reinvested dividends and distributions | 39,813,766 | 9,893,314 | ||||||
Shares repurchased | (384,931,407 | ) | (447,733,008 | ) | ||||
Net increase/(decrease) from fund share transactions | (163,249,097 | ) | (34,516,067 | ) | ||||
Total net increase/(decrease) in net assets | (172,915,536 | ) | (36,557,290 | ) | ||||
Net Assets | ||||||||
Beginning of period | 646,202,049 | 682,759,339 | ||||||
End of period | $ | 473,286,513 | $ | 646,202,049 | ||||
Transactions in Fund Shares | ||||||||
Shares Sold | 10,331,471 | 22,417,731 | ||||||
Reinvested dividends and distributions | 2,401,313 | 557,019 | ||||||
Shares repurchased | (21,963,906 | ) | (25,034,402 | ) | ||||
Net increase/(decrease) | (9,231,122 | ) | (2,059,652 | ) | ||||
Shares outstanding beginning of period | 36,002,492 | 38,062,144 | ||||||
Shares outstanding end of period | 26,771,370 | 36,002,492 | ||||||
Purchase and Sales of Investment Securities (excluding short-term securities) | ||||||||
Purchase of securities | $ | 129,819,228 | $ | 394,109,360 | ||||
Proceeds from sales of securities | 316,128,173 | 446,505,389 | ||||||
Accumulated undistributed net investment income/(loss) | $ | 45,860 | $ | - | ||||
The accompanying notes are an integral part of the financial statements.
Table of Contents
ICON Industrials Fund | ICON Information Technology Fund | |||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
$ | 181,434 | $ | (654,991 | ) | $ | (1,190,645 | ) | $ | (1,595,172 | ) | ||||
10,093,733 | 52,064,019 | 22,583,204 | 2,580,097 | |||||||||||
15,827,903 | (34,755,918 | ) | 34,418,793 | (5,472,197 | ) | |||||||||
26,103,070 | 16,653,110 | 55,811,352 | (4,487,272 | ) | ||||||||||
(29,288 | ) | - | - | - | ||||||||||
(30,562,108 | ) | (6,835,273 | ) | - | - | |||||||||
(30,591,396 | ) | (6,835,273 | ) | - | - | |||||||||
102,467,349 | 70,147,062 | 102,161,768 | 175,022,474 | |||||||||||
30,151,213 | 6,801,064 | - | - | |||||||||||
(78,406,365 | ) | (197,386,921 | ) | (132,996,792 | ) | (148,620,178 | ) | |||||||
54,212,197 | (120,438,795 | ) | (30,835,024 | ) | 26,402,296 | |||||||||
49,723,871 | (110,620,958 | ) | 24,976,328 | 21,915,024 | ||||||||||
106,014,650 | 216,635,608 | 241,988,454 | 220,073,430 | |||||||||||
$ | 155,738,521 | $ | 106,014,650 | $ | 266,964,782 | $ | 241,988,454 | |||||||
10,027,742 | 5,011,944 | 10,238,362 | 20,144,351 | |||||||||||
3,426,275 | 543,216 | – | – | |||||||||||
(7,006,122 | ) | (14,600,539 | ) | (13,770,758 | ) | (17,698,365 | ) | |||||||
6,447,895 | (9,045,379 | ) | (3,532,396 | ) | 2,445,986 | |||||||||
8,019,151 | 17,064,530 | 27,752,586 | 25,306,600 | |||||||||||
14,467,046 | 8,019,151 | 24,220,190 | 27,752,586 | |||||||||||
$ | 167,987,214 | $ | 188,989,372 | $ | 191,800,451 | $ | 432,267,414 | |||||||
140,686,846 | 319,518,181 | 225,844,274 | 406,207,512 | |||||||||||
$ | 135,503 | $ | 16,029 | $ | - | $ | - | |||||||
Table of Contents
Statements of Changes in Net Assets (continued)
ICON Leisure and Consumer | ||||||||
Staples Fund | ||||||||
Year Ended | Year Ended | |||||||
September 30, | September 30, | |||||||
2007 | 2006 | |||||||
Operations | ||||||||
Net investment income/(loss) | $ | 749,754 | $ | (351,244 | ) | |||
Net realized gain/(loss) from investment transactions | 12,220,864 | (110,039 | ) | |||||
Net realized gain/(loss) from foreign currency translations | - | 2,784 | ||||||
Change in net unrealized appreciation/(depreciation) on investments | 53,228 | 452,764 | ||||||
Net increase/(decrease) in net assets resulting from operations | 13,023,846 | (5,735 | ) | |||||
Dividends and Distributions to Shareholders | ||||||||
Net investment income | (219,627 | ) | - | |||||
Net realized gains | (38,584 | ) | (9,538,955 | ) | ||||
Tax return of capital | - | (34,857 | ) | |||||
Net decrease from dividends and distributions | (258,211 | ) | (9,573,812 | ) | ||||
Fund Share Transactions | ||||||||
Shares sold | 38,286,389 | 42,533,627 | ||||||
Reinvested dividends and distributions | 238,048 | 8,013,754 | ||||||
Shares repurchased | (87,855,183 | ) | (20,242,047 | ) | ||||
Net increase/(decrease) from fund share transactions | (49,330,746 | ) | 30,305,334 | |||||
Total net increase/(decrease) in net assets | (36,565,111 | ) | 20,725,787 | |||||
Net Assets | ||||||||
Beginning of period | 68,136,040 | 47,410,253 | ||||||
End of period | $ | 31,570,929 | $ | 68,136,040 | ||||
Transactions in Fund Shares | ||||||||
Shares Sold | 4,103,651 | 4,626,945 | ||||||
Reinvested dividends and distributions | 23,949 | 900,421 | ||||||
Shares repurchased | (8,551,820 | ) | (2,093,062 | ) | ||||
Net increase/(decrease) | (4,424,220 | ) | 3,434,304 | |||||
Shares outstanding beginning of period | 7,397,595 | 3,963,291 | ||||||
Shares outstanding end of period | 2,973,375 | 7,397,595 | ||||||
Purchase and Sales of Investment Securities (excluding short-term securities) | ||||||||
Purchase of securities | $ | 108,060,147 | $ | 129,436,793 | ||||
Proceeds from sales of securities | 157,645,145 | 109,381,086 | ||||||
Accumulated undistributed net investment income/(loss) | $ | 530,127 | $ | - | ||||
The accompanying notes are an integral part of the financial statements.
Table of Contents
ICON Telecommunication & | ||||||||||||||
ICON Materials Fund | Utilities Fund | |||||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
$ | 721,000 | $ | 1,129,408 | $ | 1,332,560 | $ | 1,318,975 | |||||||
28,330,381 | 20,331,914 | 24,415,452 | 13,921,397 | |||||||||||
- | (22,334 | ) | - | - | ||||||||||
18,977,096 | (8,247,321 | ) | 7,591,509 | (12,032,876 | ) | |||||||||
48,028,477 | 13,191,667 | 33,339,521 | 3,207,496 | |||||||||||
(1,332,635 | ) | (236,508 | ) | (1,406,911 | ) | (1,880,275 | ) | |||||||
(11,756,758 | ) | (9,051,351 | ) | (8,089,030 | ) | (9,640,653 | ) | |||||||
- | - | - | - | |||||||||||
(13,089,393 | ) | (9,287,859 | ) | (9,495,941 | ) | (11,520,928 | ) | |||||||
72,893,695 | 150,400,169 | 108,372,109 | 74,670,691 | |||||||||||
12,497,890 | 8,769,250 | 9,342,455 | 11,345,862 | |||||||||||
(124,107,302 | ) | (127,545,242 | ) | (151,811,576 | ) | (78,591,644 | ) | |||||||
(38,715,717 | ) | 31,624,177 | (34,097,012 | ) | 7,424,909 | |||||||||
(3,776,633 | ) | 35,527,985 | (10,253,432 | ) | (888,523 | ) | ||||||||
135,097,339 | 99,569,354 | 119,762,022 | 120,650,545 | |||||||||||
$ | 131,320,706 | $ | 135,097,339 | $ | 109,508,590 | $ | 119,762,022 | |||||||
5,551,693 | 12,578,419 | 12,870,519 | 10,006,996 | |||||||||||
1,084,886 | 825,717 | 1,207,036 | 1,644,205 | |||||||||||
(9,679,280 | ) | (10,637,952 | ) | (17,812,609 | ) | (10,581,608 | ) | |||||||
(3,042,701 | ) | 2,766,184 | (3,735,054 | ) | 1,069,593 | |||||||||
11,577,790 | 8,811,606 | 15,644,423 | 14,574,830 | |||||||||||
8,535,089 | 11,577,790 | 11,909,369 | 15,644,423 | |||||||||||
$ | 130,657,599 | $ | 286,596,817 | $ | 165,662,385 | $ | 166,415,855 | |||||||
186,180,196 | 262,570,119 | 208,944,366 | 169,449,797 | |||||||||||
$ | 495,440 | $ | 1,107,075 | $ | 1,083,590 | $ | 1,157,941 | |||||||
Table of Contents
Income from investment operations | Less dividends | |||||||||||||||||||||||
Net asset | Net | Net realized | Dividends | Distributions | ||||||||||||||||||||
value, | investment | and unrealized | Total from | from net | from net | |||||||||||||||||||
beginning of | income/ | gains/ (losses) | investment | investment | realized | |||||||||||||||||||
period | (loss)(x) | on investments | operations | income | gains | |||||||||||||||||||
ICON Consumer Discretionary Fund | ||||||||||||||||||||||||
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 | - | - | |||||||||||||||||
Year Ended September 30, 2003 | 10.12 | (0.08 | ) | 1.75 | 1.67 | - | - | |||||||||||||||||
ICON Energy Fund | ||||||||||||||||||||||||
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 | - | - | |||||||||||||||||
Year Ended September 30, 2003 | 11.84 | (0.04 | ) | 1.90 | 1.86 | - | - | |||||||||||||||||
ICON Financial Fund | ||||||||||||||||||||||||
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 | ) | - | |||||||||||||||||
Year Ended September 30, 2003 | 8.84 | 0.05 | 1.92 | 1.97 | (0.03 | ) | - |
(x) | Calculated using the average share method. |
The accompanying notes are an integral part of the financial statements.
Table of Contents
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, | Total | period | earnings | earnings | earnings | earnings | turnover | ||||||||||||||||||||||||||
distributions | end of period | return | (in thousands) | credit | credit | credit | credit | rate | ||||||||||||||||||||||||||
$ | - | $ | 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 | % | ||||||||||||||||||||||
- | 11.79 | 16.50 | % | 150,065 | N/A | 1.40 | % | N/A | (0.79) | % | 174.51 | % | ||||||||||||||||||||||
(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 | % | ||||||||||||||||||||||
- | 13.70 | 15.71 | % | 55,629 | N/A | 1.40 | % | N/A | (0.29) | % | 42.53 | % | ||||||||||||||||||||||
(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 | % | |||||||||||||||||||||
(0.03 | ) | 10.78 | 22.35 | % | 139,261 | N/A | 1.34 | % | N/A | 0.54 | % | 142.77 | % |
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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 of | income/ | gains/ (losses) on | investment | investment | realized | |||||||||||||||||||
period | (loss)(x) | investments | operations | income | gains | |||||||||||||||||||
ICON Healthcare Fund | ||||||||||||||||||||||||
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 | - | - | |||||||||||||||||
Year Ended September 30, 2003 | 10.35 | (0.09 | ) | 2.02 | 1.93 | - | - | |||||||||||||||||
ICON Industrials Fund | ||||||||||||||||||||||||
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 | - | - | |||||||||||||||||
Year Ended September 30, 2003 | 7.96 | (0.05 | ) | 0.89 | 0.84 | - | - | |||||||||||||||||
ICON Information Technology Fund | ||||||||||||||||||||||||
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 | ) | - | - | |||||||||||||||
Year Ended September 30, 2003 | 5.98 | (0.08 | ) | 2.37 | 2.29 | - | - |
(x) | Calculated using the average share method. |
(a) | Amount less than $0.005. |
The accompanying notes are an integral part of the financial statements.
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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, | Total | period | earnings | earnings | earnings | earnings | turnover | ||||||||||||||||||||||||||
distributions | end of period | return | (in thousands) | credit | credit | credit | credit | rate | ||||||||||||||||||||||||||
$ | (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 | % | ||||||||||||||||||||||
- | 12.28 | 18.65 | % | 141,259 | N/A | 1.34 | % | N/A | (0.84) | % | 85.52 | % | ||||||||||||||||||||||
(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 | % | ||||||||||||||||||||||
- | 8.80 | 10.55 | % | 132,554 | N/A | 1.43 | % | N/A | (0.64) | % | 90.49 | % | ||||||||||||||||||||||
- | 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 | % | ||||||||||||||||||||||
- | 8.27 | 38.29 | % | 307,972 | N/A | 1.35 | % | N/A | (1.16) | % | 155.39 | % |
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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 of | income/ | gains/(losses) on | investment | investment | realized | |||||||||||||||||||
period | (loss)(x) | investments | operations | income | gains | |||||||||||||||||||
ICON Leisure and Consumer Staples Fund | ||||||||||||||||||||||||
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 | - | - | |||||||||||||||||
Year Ended September 30, 2003 | 11.20 | (0.06 | ) | 1.28 | 1.22 | - | - | |||||||||||||||||
ICON Materials Fund | ||||||||||||||||||||||||
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 | ) | - | |||||||||||||||||
Year Ended September 30, 2003 | 5.68 | 0.03 | 0.50 | 0.53 | (0.01 | ) | - | |||||||||||||||||
ICON Telecommunication & Utilities Fund | ||||||||||||||||||||||||
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 | ) | - | |||||||||||||||||
Year Ended September 30, 2003 | 4.78 | 0.10 | 0.87 | 0.97 | (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.
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Ratio of net | ||||||||||||||||||||||||||||||||||||||
Ratio of | investment | |||||||||||||||||||||||||||||||||||||
expenses to | income/(loss) to | |||||||||||||||||||||||||||||||||||||
average net assets | average net assets | |||||||||||||||||||||||||||||||||||||
Before | After | Before | After | |||||||||||||||||||||||||||||||||||
Total | Net assets, | transfer | transfer | transfer | transfer | |||||||||||||||||||||||||||||||||
and distributions | dividends | Net asset | end of | agent | agent | agent | agent | Portfolio | ||||||||||||||||||||||||||||||
Return of | and | value, end of | Total | period | earnings | earnings | earnings | earnings | turnover | |||||||||||||||||||||||||||||
capital | distributions | period | return | (in thousands) | credit | credit | credit | credit | rate | |||||||||||||||||||||||||||||
$ | - | $ | (0.02 | ) | $ | 10.62 | 15.61% | $ | 31,571 | 1.41% | 1.41% | 1.02% | 1.02% | 150.72% | ||||||||||||||||||||||||
- | (a) | (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% | |||||||||||||||||||||||||||||
- | - | 12.42 | 10.89% | 82,347 | N/A | 1.38% | N/A | (0.51)% | 139.54% | |||||||||||||||||||||||||||||
- | (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% | ||||||||||||||||||||||||||||
- | (0.01 | ) | 6.20 | 9.36% | 30,376 | N/A | 1.47% | N/A | 0.59% | 130.01% | ||||||||||||||||||||||||||||
- | (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% | ||||||||||||||||||||||||||||
- | (0.06 | ) | 5.69 | 20.36% | 42,509 | N/A | 1.41% | N/A | 2.05% | 158.24% |
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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 tend to 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 is 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
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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 principal market where the option is traded. 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
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Notes to Financial Statements (continued)
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. 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 Pronouncement
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements.” 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 No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 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 No. 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.
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’
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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, 2007.
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 in connection with planned purchases or sales of securities as a hedge against fluctuations in foreign exchange rates pending the settlement of transactions in foreign securities. 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 in the Statement of Operations. The
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Notes to Financial Statements (continued)
Funds did not enter into any forward foreign currency contracts during the year ended September 30, 2007.
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, 2007.
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
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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 Materials Fund and Financial Fund purchased put options during the year ended September 30, 2007.
Securities Lending
Under procedures adopted by the Trustees, the Funds may lend securities to non-affiliated qualified parties. The Funds may 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 being lent; 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 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, 2007, the following Funds had securities with the following values on loan:
Value of | Value of | |||||||
Fund | Loaned Securities | Collateral | ||||||
ICON Consumer Discretionary Fund | $ | 8,277,668 | $ | 8,489,276 | ||||
ICON Energy Fund | 27,557,377 | 28,147,480 | ||||||
ICON Healthcare Fund | 24,119,424 | 24,723,419 | ||||||
ICON Industrials Fund | 6,661,041 | 6,824,486 | ||||||
ICON Information Technology Fund | 10,791,244 | 11,287,173 | ||||||
ICON Leisure and Consumer Staples Fund | 3,651,227 | 3,751,015 | ||||||
ICON Materials Fund | 23,148,452 | 23,686,477 |
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Notes to Financial Statements (continued)
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.
On July 13, 2006, the Financial Accounting Standards Board (“FASB”) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds’ tax return to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required no later than the last business day of the first financial statement reporting period for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications, if any, of FIN 48. Its impact to the financial statements has not yet been determined.
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
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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. Effective January 31, 2006, the Funds are obligated to pay ICON management fees computed daily at an annual rate of 1.00% of the first $500 million of average daily net assets, 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, Transfer Agent and Custody Fees
Citi Fund Services Ohio, Inc. (“Citi”) is the Fund Accounting Agent for the Funds. Effective August 1, 2007, The BISYS Group, Inc., and its subsidiaries, was acquired by and became a wholly-owned subsidiary of Citi. 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
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Notes to Financial Statements (continued)
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 is a result from overnight balances used by the transfer agent, BFDS, for clearing shareholder transactions. During the year ended September 30, 2007, 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. As of January 31, 2006, this agreement provides for an annual fee of 0.05% on the Funds’ 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, 2007, 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. Effective August 1, 2007, The BISYS Group, Inc., and its subsidiaries, was acquired by and became a wholly-owned subsidiary of Citi. 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
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ended September 30, 2007, the total related amounts paid by the Trust under this arrangement are included in Other Expenses on the Statements of Operations.
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. Interest is charged at LIBOR plus 2.00%, which was 7.12% at September 30, 2007. The average interest rate charged for the period ended September 30, 2007 was 7.35%.
Average Borrowing | ||||
(10/1/06-9/30/07) | ||||
ICON Consumer Discretionary Fund** | $ | 1,437,856 | ||
ICON Energy Fund | 13,608,997 | |||
ICON Financial Fund** | 5,887,714 | |||
ICON Healthcare Fund** | 5,748,002 | |||
ICON Industrials Fund | 2,480,480 | |||
ICON Information Technology Fund** | 1,735,016 | |||
ICON Leisure and Consumer Staples Fund | 2,379,468 | |||
ICON Materials Fund | 2,417,044 | |||
ICON Telecommunication & Utilities Fund | 5,268,594 |
**Fund had outstanding borrowings as of September 30, 2007.
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, 2007 that may be available to offset future realized capital gains and thereby reduce future taxable income distributions. The ICON Information Technology Fund has a capital loss carryforward of $29,035,041, which expires in 2011. During the year ended September 30, 2007, the following capital loss carryforwards were used:
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Notes to Financial Statements (continued)
ICON Information Technology Fund | $ | 22,635,013 | ||
ICON Leisure and Consumer Staples Fund | 92,773 |
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 |
The tax characteristics of dividends and distributions paid to shareholders during the fiscal year ended September 30, 2006, were as follows:
Distributions Paid From | Tax | Total | ||||||||||||||||||
Ordinary | Net Long- | Total Taxable | Return of | Distributions | ||||||||||||||||
Fund | Income | Term Gains | Distributions | Capital | Paid | |||||||||||||||
ICON Consumer Discretionary Fund | $ | — | $ | 15,842,362 | $ | 15,842,362 | $ | — | $ | 15,842,362 | ||||||||||
ICON Energy Fund | 4,296,329 | 21,211,622 | 25,507,951 | — | 25,507,951 | |||||||||||||||
ICON Financial Fund | 2,441,494 | 15,416,499 | 17,857,993 | — | 17,857,993 | |||||||||||||||
ICON Healthcare Fund | — | 10,591,515 | 10,591,515 | — | 10,591,515 | |||||||||||||||
ICON Industrials Fund | — | 6,835,273 | 6,835,273 | — | 6,835,273 | |||||||||||||||
ICON Leisure and Consumer Staples Fund | — | 9,538,955 | 9,538,955 | 34,857 | 9,573,812 | |||||||||||||||
ICON Materials Fund | 236,508 | 9,051,351 | 9,287,859 | — | 9,287,859 | |||||||||||||||
ICON Telecommunication & Utilities Fund | 2,571,472 | 8,949,456 | 11,520,928 | — | 11,520,928 |
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As of September 30, 2007, the components of accumulated earnings (deficit) on a tax basis was as follows:
Total | ||||||||||||||||||||||||
Undistributed | Undistributed | Accumulated | Unrealized | Accumulated | ||||||||||||||||||||
Ordinary | Net Long- | Accumulated | Capital and | Appreciation | Earnings | |||||||||||||||||||
Fund | Income | Term Gains | Earnings | Other Losses | (Depreciation) | (Deficits) | ||||||||||||||||||
ICON Consumer Discretionary Fund | $ | - | $ | 4,638,589 | $ | 4,638,589 | $ | - | $ | 8,051,665 | $ | 12,690,254 | ||||||||||||
ICON Energy Fund | 2,043,509 | 129,269,655 | 131,313,164 | - | 281,344,335 | 412,657,499 | ||||||||||||||||||
ICON Financial Fund | 6,499,707 | 14,581,098 | 21,080,805 | - | 18,499,405 | 39,580,210 | ||||||||||||||||||
ICON Healthcare Fund | 45,860 | 29,428,260 | 29,474,120 | - | 79,559,688 | 109,033,808 | ||||||||||||||||||
ICON Industrials Fund | 1,529,982 | 4,273,697 | 5,803,679 | - | 24,782,475 | 30,586,154 | ||||||||||||||||||
ICON Information Technology Fund | - | - | - | (29,035,041 | ) | 61,032,838 | 31,997,797 | |||||||||||||||||
ICON Leisure and Consumer Staples Fund | 6,697,369 | 203,000 | 6,900,369 | - | 4,598,511 | 11,498,880 | ||||||||||||||||||
ICON Materials Fund | 16,634,753 | 2,903,681 | 19,538,434 | - | 27,654,055 | 47,192,489 | ||||||||||||||||||
ICON Telecommunication & Utilities Fund | 15,935,043 | - | 15,935,043 | - | 16,961,527 | 32,896,570 |
As of September 30, 2007, 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 | $ | 95,340,271 | $ | 11,636,871 | $ | (3,585,206 | ) | $ | 8,051,665 | |||||||
ICON Energy Fund | 564,133,618 | 284,228,780 | (2,884,445 | ) | 281,344,335 | |||||||||||
ICON Financial Fund | 181,825,762 | 20,568,348 | (2,068,943 | ) | 18,499,405 | |||||||||||
ICON Healthcare Fund | 418,269,543 | 92,896,741 | (13,337,053 | ) | 79,559,688 | |||||||||||
ICON Industrials Fund | 137,521,664 | 26,537,925 | (1,755,450 | ) | 24,782,475 | |||||||||||
ICON Information Technology Fund | 215,997,130 | 62,074,216 | (1,041,378 | ) | 61,032,838 | |||||||||||
ICON Leisure and Consumer Staples Fund | 30,766,097 | 4,797,056 | (198,545 | ) | 4,598,511 | |||||||||||
ICON Materials Fund | 128,405,779 | 29,059,887 | (1,405,832 | ) | 27,654,055 | |||||||||||
ICON Telecommunication & Utilities Fund | 91,698,269 | 17,619,868 | (658,341 | ) | 16,961,527 |
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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, 2007, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
![-s- PricewaterhouseCoopers LLP](https://capedge.com/proxy/N-CSR/0001035704-07-000807/d51913d5020110.gif)
Denver, Colorado
November 20, 2007
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As a shareholder of a Fund you may pay two types of fees: transaction fees and fund-related fees. Certain funds charge transactions 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 (4/1/07 - 9/30/07).
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
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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 | |||||||||||||
4/1/07 | 9/30/07 | 4/1/07 - 9/30/07* | 4/1/07 - 9/30/07 | |||||||||||||
ICON Consumer Discretionary Fund | ||||||||||||||||
Actual Expenses | $ | 1,000.00 | $ | 984.60 | $ | 6.57 | 1.32% | |||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.38 | 6.68 | |||||||||||||
ICON Energy Fund | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,241.70 | 6.41 | 1.14% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,019.28 | 5.77 | |||||||||||||
ICON Financial Fund | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,000.00 | 6.17 | 1.23% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.83 | 6.22 | |||||||||||||
ICON Healthcare Fund | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,037.60 | 5.98 | 1.17% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,019.13 | 5.92 | |||||||||||||
ICON Industrials Fund | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,169.40 | 6.58 | 1.21% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.93 | 6.12 | |||||||||||||
ICON Information Technology Fund | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,197.80 | 6.67 | 1.21% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.93 | 6.12 | |||||||||||||
ICON Leisure and Consumer Staples Fund | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,066.30 | 7.93 | 1.53% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,017,33 | 7.74 | |||||||||||||
ICON Materials Fund | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,221.40 | 6.96 | 1.25% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.73 | 6.33 | |||||||||||||
ICON Telecommunication & Utilities Fund | ||||||||||||||||
Actual Expenses | 1,000.00 | 1,101.80 | 6.95 | 1.32% | ||||||||||||
Hypothetical Example (5% return before expenses) | 1,000.00 | 1,018.38 | 6.68 |
* | Expenses are equal to the Fund’s six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 183/365 to reflect the one-half year period. |
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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, 56, 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 2004) of ICON Advisers, Inc. (“ICON Advisers”), the Funds’ Investment Adviser. Dr. Callahan is also President (1998 to present); Director (1991 to present); and was previously Vice President (1991 to 1998) of ICON Distributors, Inc. (“IDI”), the Funds’ Distributor, and is President of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan also serves as the Director (1994 to present), and was previously Secretary/Treasurer (1994 to 1998) of ICON Management & Research Corporation (“IM&R”), the parent company of ICON Advisers and IDI.
Independent Trustees
Glen F. Bergert, 57. 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, 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, 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 present); Delta Dental of California, an insurance company (2006 to present); and Delta Reinsurance Corporation (2000 to present).
John C. Pomeroy, Jr., 60. 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
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Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).
Gregory Kellam Scott, 59. Mr. Scott has been a Trustee of the Funds since November 2002. Mr. Scott currently serves as Executive Director of the Indiana Civil Rights Commission (2005 to present) and has been appointed to 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) and a Colorado Supreme Court Justice (1993 to 2000).
R. Michael Sentel, 59. 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 (1980-1981). 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, 56. 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 2004). Dr. Callahan is also President (1998 to present), Director (1991 to present) and was previously Vice President (1991 to 1998) of IDI, and is President of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan is also the Director (1994 to present), and was previously Secretary/Treasurer (1994 to 1998) of IM&R.
Erik L. Jonson, 58. Mr. Jonson has been a Vice President and Chief Financial Officer 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).
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Donald Salcito, 54. 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 and Chief Compliance Officer, for ICON Distributors, Inc. (2005 to present); 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. (2000-2005).
Carrie M. Schoffman, 34. Ms. Schoffman serves as Assistant Vice President and Chief Compliance Officer of the Funds (May 2004 to present). She also serves as Vice President and Chief Compliance Officer of ICON Advisers, Inc. (May 2004 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.
Stephen Abrams, 44. 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). Previously he was a Partner at Perkins Coie, LLP (2004-2005) and Associate (2000 to 2004).
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Renewal of Investment Advisory Agreement
In determining to renew the investment advisory agreements between 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 exchange traded funds versus the Sector Funds; and comparative data obtained from Lipper Analytical Services related to Fund performance and Fund expenses.
On August 14, 2007, the Board of Trustees, including all of the 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, 2007.
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 and also met with management 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 agreement.
In considering the nature, extent and quality of the services provided by the Adviser, the Board reviewed information relating to the Adviser’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 the Adviser’s investment personnel, the Adviser’s compliance programs, the Adviser’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.
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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. The Board concluded that the 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 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;
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 be terminated at any time and must be renewed on an annual basis.
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In connection with assessing data bearing the fairness of fee arrangements, the Board used data from Lipper, Inc. 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 ICON has contractually agreed to impose expense limitations on certain Funds at a cost to ICON;
D. 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;
E. 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 why such accounts are less costly for ICON to manage.
F. the extent to which economies of scale could be realized as a Fund grows in assets and whether the Fund’s fees reflect these economies of scale for the benefit of Fund shareholders.
In connection with profitability, the Board reviewed the costs borne by ICON in providing advisory services to each Fund and the profitability of ICON in light of the estimated profitability analysis.
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; the services provided by ICON and its affiliates to the Funds are satisfactory, and whether the 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; the Trustees noted that such research assists ICON in providing quality to which it provides advisory services.
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Based on these considerations, among others, the Board, including all of the Independent Trustees, concluded that the continuation of the Advisory Agreement was in the best interests of each Fund and its shareholders, the services to be performed under the agreement 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, 2007 qualifies for the corporate dividends received deduction for the following Funds:
Dividends | ||||
Received | ||||
Fund | Deduction | |||
ICON Energy Fund | 100 | .00% | ||
ICON Financial Fund | 76 | .96 | ||
ICON Industrials Fund | 3 | .45 | ||
ICON Leisure and Consumer Staples Fund | 20 | .96 | ||
ICON Materials Fund | 36 | .75 | ||
ICON Telecommunication & Utilities Fund | 43 | .07 |
For the fiscal year ended September 30, 2007, the following Funds paid qualified dividend income:
Fund | Amount | ||
ICON Energy Fund | $ | 4,022,978 | |
ICON Financial Fund | 5,218,540 | ||
ICON Industrials Fund | 513,983 | ||
ICON Leisure and Consumer Staples Fund | 49,326 | ||
ICON Materials Fund | 2,532,026 | ||
ICON Telecommunication & Utilities Fund | 1,588,426 |
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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 | $ | 2,318,385 | |
ICON Energy Fund | 85,024,742 | ||
ICON Financial Fund | 23,059,453 | ||
ICON Healthcare Fund | 52,083,099 | ||
ICON Industrials Fund | 21,019,746 | ||
ICON Leisure and Consumer Staples Fund | 4,791,671 | ||
ICON Materials Fund | 13,572,705 | ||
ICON Telecommunication & Utilities Fund | 12,172,537 |
Portfolio Holdings
A list of each ICON Fund’s Top 10 holdings is available at www.iconadvisers.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.iconadvisers.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.iconadvisers.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.iconadvisers.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.iconadvisers.com | |
By E-Mail | info@iconadvisers.com |
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1-800-764-0442
www.iconadvisers.com
FANN-SEC (9/07)
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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.
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, John C. Pomeroy, 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 9/30/07
Registrant | Covered Entities 1 | |||||||||
(a) | Audit Fees 2 | $ | 334,600 | N/A | ||||||
(b) | Non-Audit Fees | |||||||||
(c) | Tax Fees 3 | $ | 93,020 | $ | 11,510 | |||||
All Other Fees 4 | $ | 60,000 | ||||||||
(d) | Total Non-Audit Fees | $ | 93,020 | $ | 71,510 |
Fiscal year ended 9/30/06
Registrant | Covered Entities 1 | |||||||||
(a) | Audit Fees 2 | $ | 304,000 | N/A | ||||||
(b) | Non-Audit Fees | |||||||||
(c) | Tax Fees 3 | $ | 98,000 | $ | 60,000 | |||||
All Other Fees | — | |||||||||
(d) | Total Non-Audit Fees | $ | 98,000 | $ | 60,000 |
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. ICON Advisers pays $1,000 under its Administration Agreement with the Registrant. | |
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 from 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.
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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 (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) 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 furnished herewith. | |
(a)(3) | Not applicable. | |
(b) | Certifications pursuant to Rule 30a-2(b) are furnished herewith. |
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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 4, 2007 |
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 4, 2007 | ||||
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 4, 2007 |
* | Print the name and title of each signing officer under his or her signature. |