UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07883
ICON Funds
(Exact name of registrant as specified in charter)
5299 DTC Blvd. Suite 1200 Greenwood Village, CO 80111
(Address of principal executive offices) (Zip code)
Erik L. Jonson 5299 DTC Blvd. Suite 1200 Greenwood Village, CO 80111
(Name and address of agent for service)
Registrant's telephone number, including area code: 303-790-1600
Date of fiscal year end: September 30, 2006
Date of reporting period: September 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
(GRAPHIC)
2006 Annual Report
ICON U.S. DIVERSIFIED FUNDS
Investment Update
ICON BOND FUND
ICON CORE EQUITY FUND
ICON COVERED CALL FUND
ICON EQUITY INCOME FUND
ICON LONG/SHORT FUND
(ICON LOGO)
STRENGTH
IN NUMBERS
Table of Contents
<Table>
ABOUT THIS REPORT (UNAUDITED) 2
MESSAGE FROM ICON FUNDS (UNAUDITED) 5
MANAGEMENT OVERVIEWS (UNAUDITED) AND SCHEDULES OF
INVESTMENTS 10
ICON Bond Fund 10
ICON Core Equity Fund 20
ICON Covered Call Fund 29
ICON Equity Income Fund 45
ICON Long/Short Fund 54
SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE (UNAUDITED) 64
FINANCIAL STATEMENTS 68
FINANCIAL HIGHLIGHTS 74
NOTES TO FINANCIAL STATEMENTS 78
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 91
BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED) 92
OTHER INFORMATION (UNAUDITED) 95
</Table>
About This Report
HISTORICAL RETURNS
All total returns mentioned in this report account for the change in a Fund's
per-share price, the reinvestment of any dividends and capital gain
distributions, and adjustments for financial statement purposes. If your account
is set up to receive Fund distributions in cash rather than 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, 2006, 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. Each Fund's holdings as of September 30, 2006 are
included in each Fund's Schedule of Investments.
Certain companies' stock performance during the period is mentioned throughout
the Management Overviews. While ICON's quantitative investment methodology does
not consider company-specific factors beyond financial data, those factors may
impact a stock's performance, and therefore, Fund performance. The ICON system
relies on the integrity of financial statements released to the market as part
of our analysis.
This Report contains statements regarding industry or sector themes, new market
themes, investment outlook, relative strength, value-to-price ratios, and
portfolio managers' 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,"
2 About This Report
"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, and other
factors beyond the control of our portfolio managers. 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 risk of
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. 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.
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 price, resulting in a loss. The 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
of the underlying securities, and are not suitable for all investors.
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 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.
About This Report 3
About This Report (continued)
COMPARATIVE INDEXES
The comparative indexes discussed in this report are meant to provide a basis
for judging the Funds' performance against a specific securities index. Each
index shown accounts for both change in security price and reinvestment of
dividends and distributions, 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 Composite 1500 (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.
Index returns and statistical data included in this report are provided by
Bloomberg, FactSet Research Systems, and Lehman Brothers.
4 About This Report
Message from ICON Funds
- --------------------------------------------------------------------------------
We were pleased with the Funds' industry tilting early in the period, as value
and relative strength pulled us toward cyclical, industrial even commodity-based
industries.
- --------------------------------------------------------------------------------
Dear ICON Shareholder:
We realize you are faced with many mutual fund choices as you structure your
financial plan, and we appreciate your continued commitment to diversify with
one or more of the ICON Diversified Funds. To those shareholders who are
receiving their first ICON Funds Annual Report, we welcome you.
You may have decided to invest in an ICON Diversified Fund because you were
attracted to ICON's value-based, bottom-up investment system, which pursues
industries we believe are poised to outperform the broader market. Or perhaps
you thought ICON stood out among other managers because we take a quantitative,
unemotional, and objective approach.
Whether you invest in our U.S. Diversified Funds, such as the ICON Core Equity
Fund, our Sector Funds, such as the ICON Healthcare Fund, or our International
Funds, such as the ICON Asia-Pacific Region Fund, each is powered by ICON's
unique systematic discipline. Guided by an investment system that relies
primarily on analyzing data, not speculation, we find "strength in numbers," as
our firm's slogan declares.
THE CYCLICAL MARKET THEME OF THE PAST THREE YEARS
During the third calendar quarter of 2006, there was a major shift in market
industry leadership. As a result of our industry rotation, you will see many
stocks in Funds that were not held in the Semiannual Report as of March 31,
2006. Indeed, there are many companies that have not been owned by the Funds
since late 1999 or early 2000. Before describing that rotation, let's review the
industry and sector theme of the preceding three years.
Most domestic stock market indexes hit a low on March 11, 2003 and then embarked
on a three-year bull market, hitting a peak on May 5, 2006. Table #1 shows
cumulative performance for Standard & Poor's Composite 1500 Sector Indexes over
that period. As you can see, the market leadership over that period was in the
cyclical, economically sensitive sectors of Energy, Materials, and Industrials.
These sectors include companies whose revenues are very dependent on the ups and
downs of the economy. The opposite is true of the lagging sectors; Healthcare,
Consumer Staples, and Telecommunication are generally considered to be
defensive, recession-proof sectors.
On an industry level, a few of the top performing industries over that period
included steel, metals & mining, construction materials, oil & gas exploration
and homebuilders. These industries tend to be comprised of small- and mid-sized
companies. Among the worst performing industries were brewers, pharmaceuticals,
systems software, soft drinks and packaged foods, which contrary to the previous
leaders, tend to be comprised of large, mature companies.
Message from ICON Funds 5
Message from ICON Funds (continued)
- --------------------------------------------------------------------------------
(CRAIG T. CALLAHAN PHOTO)
Craig T. Callahan
President and Chairman of the Board of Trustees
Our system is
suggesting a market
with new leadership
and an entirely new
personality.
- --------------------------------------------------------------------------------
We are proud of our discipline and our
ability to endure volatility when it is
required to capture industry leadership.
<Table>
<Caption>
TABLE 1
CUMULATIVE TOTAL RETURNS
3/11/03 - 5/5/06
S&P 1500 SECTOR INDEX RETURN %
- --------------------- --------
Energy 158.00
Materials 118.15
Industrials 105.75
Utilities 95.68
Financials 83.86
S&P COMPOSITE 1500 INDEX 79.04
Consumer Discretionary 73.89
Information Technology 68.39
Telecommunication Services 64.17
Consumer Staples 44.01
Health Care 31.64
</Table>
Data Source: FactSet Research Systems
Returns include the reinvestment of dividends and capital gain distributions.
We were pleased with the Funds' industry tilting during that period, as value
and relative strength pulled us toward cyclical, industrial even commodity-
based industries. Looking back, we believe those industries were on sale because
investors were incorrectly fearful of a slow or sluggish economy, as investors
worried that higher oil prices, war, and terrorism would hurt the economy. As
investors realized that the economy was growing and cyclical firms were
prosperous, stock prices occasionally surged to reflect fair value. From an ICON
perspective, price was trying to catch up with fair value, which over a
three-year period made for impressive returns in the leading industries.
6 Message from ICON Funds
It is interesting to note that the leading industries during that period, being
small- and mid-sized cyclical and commodity based, are inherently volatile.
While there were outstanding returns to be earned in the "sweet spot" of the
market, it required us to be tolerant of volatility and be patient during the
unpleasant ride associated with those industries.
We do not like volatility at ICON, and we certainly do not seek it, but we are
proud of our discipline and our ability to endure it when it is required to
capture industry leadership. It is also interesting to note that lower-quality
stocks tended to perform better than what many would consider high-quality
stocks over that three-year period. At ICON, quality is measured by liquidity,
debt, efficiency and consistency, and we tend to favor higher quality stocks.
Our preference for high-quality stocks slightly inhibited the Funds'
performance. Consistent with our style, however, we leave the potential higher
returns associated with speculative and riskier turnaround situations to other
investors.
ICON DETECTS A NEW MARKET THEME
For the first four months of 2006, the same sector and industry themes from the
previous three years persisted, as shown in Table #2, which highlights sector
index returns from January 1, 2006 through the market peak on May 5, 2006.
<Table>
<Caption>
TABLE 2
CUMULATIVE TOTAL RETURNS
1/1/06 - 5/5/06
S&P 1500 SECTOR INDEX RETURN %
- --------------------- --------
Energy 18.08
Materials 16.12
Industrials 14.28
Telecommunication Services 11.61
Financials 8.59
S&P COMPOSITE 1500 INDEX 7.57
Consumer Discretionary 5.77
Information Technology 5.01
Utilities 3.82
Consumer Staples 3.61
Health Care (1.97)
</Table>
Data Source: FactSet Research Systems
Returns include the reinvestment of dividends and capital gain distributions.
Generally, the same cyclical leadership was at the top and the same defensive
sectors were lagging as seen the previous three years. All market and theme
peaks are different. This time, the leading industries did not reach the extreme
overpricing typical of most peaks. They were headed toward it, but perhaps
because of investor concerns and uncertainty over terrorism, oil prices, and
even mid-term elections, stock prices did not reach lofty extremes.
During the market drop from early May through mid-June 2006, the previous
leaders fell the most, which was similar to market corrections seen in 2004 and
2005. Even the brief market bounce in late June was led by the previous
Message from ICON Funds 7
Message from ICON Funds (continued)
cyclical leadership, similar to rebounds in 2004 and 2005. Since the market low
on July 17, 2006, the market has experienced a three-month climb with entirely
new leadership. The industries that led the previous three-plus years have been
sluggish. New leadership in defensive, recession-proof industries has prevailed.
In the weeks following that sudden change on July 17, we have sold cyclical
industries and gradually invested in new industries as relative strength has met
our standards. The combination of value and relative strength has pulled us to
mature companies in defensive, steady growth industries such as pharmaceuticals,
diversified banks, electric utilities, packaged food & meats, multi-utilities,
diversified capital markets, and integrated telecommunication services.
This rotation resulted in significant sector shifts in the ICON Core Equity
Fund, which best represents our system's sector and industry positioning. The
Industrials sector was reduced from 18.0% of the Fund on June 30 to 3.7% on
September 30. Financials, Health Care, Information Technology and
Telecommunication & Utilities were all increased from 18.9%, 5.8%, 13.7% and
2.5%, respectively, to 24.8%, 14.5%, 18.2% and 9.0%. Major rotations occurred
throughout the ICON Fund family to capture the new leadership.
For most of the period, the ICON system measured long-term government bonds at
below fair value, and since they were not attractive to our system, we
concentrated the ICON Bond Fund in bonds from the short end of the maturity
spectrum. We continue to watch valuation readings for a signal to move into
long-term bonds.
As mentioned earlier, you will see equity holdings that are new in the last few
months, some not being held since late 1999 or early 2000. The ICON Funds now
look very different than they did when they participated in the theme that
prevailed in the three and a half years ending this spring. The stocks and
industries now owned in the Funds were not leaders over the last three years as
they were not preferred by investors but they were not stagnant. They were
growing their profits and the underlying value of their firms. Now, we find
attractive bargains among them as our estimate of value has grown above the
market price.
The large, mature companies that have led the recent market advance are heavily
weighted in the Funds' market-capitalization weighted benchmarks, so the indexes
gained an immediate surge off the July 17 low. The shift in leadership was
sudden, but guided by our system, we have rotated industries as they meet our
standards of value and relative strength.
STAYING TRUE TO THE ICON DISCIPLINE
Our system is suggesting a market with new leadership and an entirely new
personality. The stocks and industries we expect to lead are not as inherently
volatile as those of the previous theme. We do not know how long
8 Message from ICON Funds
this new theme will last, but given the price discounts to our estimates of fair
value, we expect it may last at least a year. To better position the ICON
Diversified Funds for the changing theme that we believe is taking place, we
will follow our value-driven process to reduce or eliminate lagging industries
and increase positions in the new leading industries.
In closing, we are most 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
holdings, and information about your account.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
Message from ICON Funds 9
Management Overview
ICON Bond Fund
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
September 30, 2006
Corporate Bonds 64.6%
Investment Grade 50.3%
Non-Investment Grade 14.3%
U.S. Governments and Agencies 30.9%
Foreign Government Bonds 2.8%
Short-Term Investments 0.3%
Percentages are based upon net assets.
PORTFOLIO HIGHLIGHTS
September 30, 2006
Number of Bonds(1) 131
Weighted average
maturity(1) 3.9 Years
Weighted average
duration(1) 3.0 Years
30-Day SEC Yield
(after expense
limitation) - Class I 4.60%
30-Day SEC Yield
(before expense
limitation) - Class I 4.43%
Yield is for the Fund's Class I shares. Yield for the Fund's other share classes
will vary due to differences in charges and expenses.
(1) Excludes cash and cash equivalents.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARK?
A. For the Fund's fiscal year ended September 30, 2006, the Lehman Brothers U.S.
Universal Index gained 4.09%, outperforming the ICON Bond Fund, which
returned 2.72% for Class I shares, 2.09% for Class C shares, and 3.06% for
Class Z shares over the same period. Total returns for other periods as of
September 30, 2006 appear in the subsequent pages of this Fund's Management
Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Throughout the period, bond investors speculated about U.S. economic growth
and how the Federal Reserve, with its new chairman Ben Bernanke, would alter
monetary policy.
We have long believed that an upward sloping yield curve is the normal
structure for the bond market, but the yield curve remains flat to inverted.
In this setting, our valuation system has identified long-term government
bonds at below fair value, with bond valuations on the short end of the yield
curve looking more attractive. Guided by these readings, we have maintained
the Fund's holdings in shorter maturity bonds. This proved to be the correct
positioning as bond yields rose steadily from September 2005 until the
Federal Reserve's second to last rate hike on May 10, 2006.
After the May meeting of the Federal Open Market Committee, however, longer
term bond yields fell quickly as investors began pricing in their
expectations of future Fed rate cuts. Due to the uncertainty of the timing of
these rate cuts, short-term bond yields failed to fall as precipitously.
This led to a full inversion of the yield curve as the Fed Funds Rate was
5.25%, Treasury bills stood at just under 5%, while 10-year bonds closed
around 4.6% as of September 30, 2006. We believe the fall in long-term bond
yields and the Fund's weighting toward the shorter end of the maturity
spectrum were the primary reasons for relative underperformance during the
period.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. Since the ICON model values bonds with the expectation of a normal
upward-sloping yield curve, this recent reversal has been a difficult one for
our system. Unfortunately, we have been in a situation where our system
identifies the best bond value on the short end of the yield curve, which
demonstrates no relative strength, and finds all the relative strength on the
long end of the yield curve, which demonstrates no value, according to our
analysis.
10 Management Overview
(TODD BURCHETT PHOTO)
Todd Burchett
Portfolio Manager
As mentioned above, long-term bonds have not shown value in the past 12
months. The Fund found value in bonds of shorter duration and was invested
there for most of the period. This positioning outperformed the Lehman
Brothers benchmark from September 2005 to May 10, 2006, then the theme
reversed as investors anticipated future Fed rate cuts. Since the Fund's
benchmark had a significantly higher duration, it made up enough ground from
May to September to overtake the Fund in performance.
The Fund's weighted average maturity over the period was 4.58 years with a
weighted duration of 3.34. This was shorter than the index, which has a
typical average maturity in excess of 7 years with an average duration around
4.7.
Credit spreads have remained historically tight, so we have been moving the
Fund toward higher credit quality issuers. Given our bond valuation readings
and continued investor fears of a slowing economy, the higher quality issues
are more attractive to us.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE BOND MARKET?
A. With the current inversion of the yield curve, the ICON bond model is not
identifying value in longer government maturities. Given their recent
performance however, these bonds tend to have the greatest relative strength.
We continue to see value on the short end of the yield curve, but these
maturities have not experienced the significant yield declines of the longer
maturities and lack relative strength.
We are keeping the Fund invested in maturities that show the greatest value,
which continue to be on the shorter end of the yield curve. As the longer
maturities have already priced in future Fed rate cuts, we believe the
shorter maturities will benefit the most if the Fed does cut rates.
Conversely, if the Fed surprises investors by raising rates, we believe the
longer maturities would suffer most.
Management Overview 11
Management Overview (continued)
ICON Bond Fund
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Fund's position in shorter-term bonds benefited performance for a
majority of the period, until longer-term bond yields started falling in May.
- - Our system is currently identifying the best bond value on the short end of
the yield curve, but shorter maturity bonds have not demonstrated the
strength of the long end of the yield curve, which we believe is overvalued.
This has led to the Fund's relative underperformance.
12 Management Overview
TOP 10 BOND HOLDINGS
September 30, 2006
<Table>
Fannie Mae, 5.25%, 8/1/12 7.7%
Fannie Mae, 5.13%, 1/2/14 6.6%
DaimlerChrysler NA Holdings, 6.50%, 11/15/13 2.8%
Household Finance Corp., 5.75%, 1/30/07 2.1%
General Motors Acceptance Corp., 6.13%, 2/1/07 1.9%
Federal Home Loan Mortgage Corp., 5.05%, 2/28/13 1.6%
Federal Home Loan Mortgage Corp., 5.16%, 2/27/15 1.6%
Fannie Mae, 5.00%, 3/9/15 1.6%
DaimlerChrysler NA Holding, 4.75%, 1/15/08 1.4%
Ford Motor Credit Co., 6.50%, 1/25/07 1.3%
</Table>
Percentages are based upon net assets.
CREDIT QUALITY DIVERSIFICATION
September 30, 2006
<Table>
Aaa 18.6%
Aa2 14.5%
Aa3 7.3%
A1 8.7%
A2 5.8%
A3 7.7%
Baa1 9.5%
Baa2 4.0%
Baa3 5.6%
Ba1 4.6%
Ba2 4.8%
Ba3 0.9%
B1 2.9%
B2 2.0%
B3 0.4%
Caa1 1.0%
</Table>
Percentages are based upon total investments less short-term investments.
Ratings based on Moody's.
Management Overview 13
Management Overview (continued)
ICON Bond Fund
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Bond Fund - Class I 9/30/02 2.72% N/A 4.31%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 4.09% N/A 4.75%
- -------------------------------------------------------------------------------------------
ICON Bond Fund - Class C 10/21/02 2.09% N/A 4.35%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 4.09% N/A 5.32%
- -------------------------------------------------------------------------------------------
ICON Bond Fund - Class Z 5/6/04 3.06% N/A 3.62%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 4.09% N/A 4.92%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
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.
Class C total returns exclude applicable sales charges. If sales charges were
included, returns would be lower.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS U.S. UNIVERSAL
ICON BOND FUND - CLASS I INDEX
------------------------ ------------------------------
9/30/02 10000.00 10000.00
10053.00 10200.00
10245.00 10385.00
10854.00 10706.00
9/30/03 10820.00 10714.00
11070.00 10795.00
11422.00 11083.00
10984.00 10812.00
9/30/04 11406.00 11186.00
11527.00 11330.00
11404.00 11266.00
11744.00 11615.00
9/30/05 11528.00 11565.00
11510.00 11639.00
11531.00 11599.00
11585.00 11587.00
9/30/06 11842.00 12039.00
</Table>
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.
14 Management Overview
Schedule of Investments
ICON Bond Fund
September 30, 2006
<Table>
<Caption>
INTEREST MATURITY
PRINCIPAL AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------
CORPORATE BONDS (64.6%)
$ 220,000 Ace INA Holdings, Inc. 8.88% 08/15/29 $ 279,859
400,000 Afc Capital Trust I 8.21 02/03/27 415,730
1,000,000 AIG International Lease Finance Corp. 5.75 02/15/07 1,000,996
1,032,000 AK Steel Corp. 7.88 02/15/09 1,028,129
275,000 Allied Waste North America 5.75 02/15/11 263,656
150,000 Allstate Life Global Fund 3.50 07/30/07 147,871
750,000 American General Finance 5.38 10/01/12 747,511
500,000 Autozone, Inc. 5.50 11/15/15 473,872
112,000 Avnet, Inc. 8.00 11/15/06 112,226
250,000 Bank One Corp. 4.13 09/01/07 246,726
297,000 Calenergy Co., Inc. 7.63 10/15/07 303,339
1,127,000 Chartered Semiconductor - YD 5.75 08/03/10 1,123,497
410,000 Chesapeake and Potomac Telephone of Maryland 8.30 08/01/31 472,492
1,020,000 Cigna Corp. 8.25 01/01/07 1,026,201
450,000 Cincinnati Financial Corp. 6.90 05/15/28 492,512
750,000 Cit Group, Inc. 4.75 12/15/10 733,297
355,000 Cit Group, Inc. 7.75 04/02/12 393,059
410,000 CNA Financial Corp. 6.60 12/15/08 419,275
400,000 Comcast Cable Communications Holdings 8.88 05/01/17 483,346
250,000 Comcast Cable Communications Holdings 8.38 03/15/13 285,172
360,000 Corestates Capital WB 6.75 11/15/06 360,339
1,000,000 Countrywide Financial 4.25 12/19/07 987,804
700,000 Countrywide Home Loan 5.50 02/01/07 700,055
1,000,000 Countrywide Home Loan 4.13 09/15/09 968,744
114,000 Cox Communications, Inc. 7.63 06/15/25 125,908
100,000 D.R. Horton, Inc. 8.00 02/01/09 104,645
470,000 DaimlerChrysler NA Holding 4.13 03/07/07 467,302
1,250,000 DaimlerChrysler NA Holding 4.75 01/15/08 1,238,005
500,000 DaimlerChrysler NA Holding 8.00 06/15/10 537,515
1,000,000 DaimlerChrysler NA Holding 7.75 01/18/11 1,071,413
250,000 DaimlerChrysler NA Holding 8.50 01/18/31 297,103
2,500,000 DaimlerChrysler NA Holdings 6.50 11/15/13 2,563,672
500,000 Deutsche Telekom International Finance - YD 8.50 06/15/10 545,447
260,000 Dillards, Inc. 9.50 09/01/09 278,850
232,000 Dillards, Inc. 9.13 08/01/11 251,430
750,000 Embratel - YD 11.00 12/15/08 823,125
500,000 Farmers Insurance Capital Notes* 7.20 07/15/48 508,654
6,000 First American Financial 7.55 04/01/28 6,569
940,000 First Chicago NBD Corp. 7.00 10/16/06 940,471
1,200,000 Ford Motor Credit Co. 6.50 01/25/07 1,199,178
500,000 Ford Motor Credit Co. 4.95 01/15/08 486,217
1,000,000 Ford Motor Credit Co. 5.63 10/01/08 959,327
500,000 Gannett Co., Inc. 5.50 04/01/07 499,159
940,000 General Electric Capital Corp. 2.80 01/15/07 933,534
441,000 General Mills, Inc. 2.63 10/24/06 440,242
</Table>
Schedule of Investments 15
Schedule of Investments (continued)
ICON Bond Fund
September 30, 2006
<Table>
<Caption>
INTEREST MATURITY
PRINCIPAL AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------
$1,750,000 General Motors Acceptance Corp. 6.13% 02/01/07 $ 1,747,623
500,000 General Motors Acceptance Corp. 6.13 08/28/07 499,288
1,000,000 GMAC LLC 5.13 05/09/08 979,931
250,000 Goldman Sachs Group, Inc. 7.35 10/01/09 264,985
500,000 Goldman Sachs Group, Inc. 6.88 01/15/11 529,936
500,000 Goldman Sachs Group, Inc. 6.60 01/15/12 527,596
650,000 GTE Southwest, Inc. 6.23 01/01/07 650,996
1,028,000 Hilton Hotels Corp. 7.95 04/15/07 1,040,850
1,950,000 Household Finance Corp. 5.75 01/30/07 1,952,381
138,000 Household Finance Corp. 7.65 05/15/07 139,838
670,000 Household Finance Corp. 5.88 02/01/09 681,074
500,000 Household Finance Corp. 7.00 05/15/12 540,609
700,000 Household Finance Corp. 6.38 11/27/12 734,373
750,000 IBM Corp. 2.38 11/01/06 748,249
250,000 IBM Corp. 3.80 02/01/08 245,234
500,000 International Lease Finance Corp. 4.75 04/30/07 498,284
1,109,000 International Lease Finance Corp. 5.63 06/01/07 1,110,434
500,000 International Lease Finance Corp. 6.38 03/15/09 512,406
294,000 International Lease Finance Corp. 4.88 09/01/10 290,482
450,000 John Hancock* 7.38 02/15/24 523,293
500,000 Johnson Controls, Inc. 5.00 11/15/06 499,509
50,000 JP Morgan Chase & Co. 6.70 11/01/07 50,646
455,000 JP Morgan Chase & Co. 6.75 08/15/08 466,750
921,000 Keycorp 3.05 11/22/06 917,812
750,000 Keycorp 2.75 02/27/07 740,696
500,000 Kraft Foods, Inc. 5.25 06/01/07 499,166
430,000 Liberty Mutual Insurance* 8.20 05/04/07 434,205
250,000 Loews Corp. 6.75 12/15/06 250,330
260,000 Marsh & Mclennan Cos, Inc. 5.38 03/15/07 259,840
500,000 McDonnell Douglas Corp. 6.88 11/01/06 500,417
288,000 Merck & Co., Inc. 2.50 03/30/07 284,155
500,000 Morgan Stanley 3.88 01/15/09 486,595
250,000 Morgan Stanley 4.25 05/15/10 241,755
500,000 Morgan Stanley 4.75 04/01/14 475,490
400,000 New Jersey Bell Telephone 7.85 11/15/29 438,817
122,000 NLV Financial Corp.* 6.50 03/15/35 114,238
929,000 Owens Illinois, Inc. 8.10 05/15/07 938,290
500,000 Pemex Project Funding Master Trust 8.50 02/15/08 517,750
270,000 Phillip Morris Co., Inc. 7.20 02/01/07 270,968
815,000 Popular NA, Inc. 6.13 10/15/06 815,172
300,000 Private Export Funding, Series B 6.49 07/15/07 302,648
200,000 Pulte Homes, Inc. 4.88 07/15/09 196,451
350,000 Royal Caribbean Cruises - YD 6.75 03/15/08 353,721
100,000 Sears Roebuck Acceptance Corp. 6.70 11/15/06 99,908
100,000 Sears Roebuck Acceptance Corp. 7.00 06/15/07 100,413
382,000 Sears Roebuck Acceptance Corp. 6.25 05/01/09 385,424
</Table>
16 Schedule of Investments
<Table>
<Caption>
INTEREST MATURITY
PRINCIPAL AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------
$ 213,000 Semco Energy, Inc. 6.40% 11/25/08 $ 203,646
650,000 St. Paul Companies, Inc. 5.75 03/15/07 651,234
40,000 Suntrust Bank 2.50 11/01/06 39,903
500,000 Target Corp. 3.38 03/01/08 488,213
350,000 Telefonica de Argentina - YD 9.13 11/07/10 371,000
500,000 Tennessee Gas Pipeline 7.00 10/15/28 497,982
450,000 Time Warner Cos., Inc. 7.48 01/15/08 461,327
630,000 Travelers Property & Casualty 6.75 11/15/06 630,508
288,000 TRW, Inc. 6.32 05/27/08 291,664
500,000 Tyco International, Ltd. - YD 6.13 11/01/08 507,304
155,000 Union Carbide Corp. 6.70 04/01/09 156,731
550,000 Union Tank Car Co. 7.13 02/01/07 552,912
1,000,000 Viacom, Inc. 5.63 05/01/07 1,000,756
500,000 Wisconsin Power & Light Co. 7.00 06/15/07 505,282
-----------
TOTAL CORPORATE BONDS
(COST $59,191,399) 58,960,964
-----------
U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY BONDS (30.9%)
270,000 Fannie Mae 3.10 07/28/08 260,945
400,000 Fannie Mae 5.50 03/15/11 409,413
7,000,000 Fannie Mae 5.25 08/01/12 7,036,588
6,000,000 Fannie Mae 5.13 01/02/14 5,983,356
1,500,000 Fannie Mae 5.00 03/09/15 1,460,877
500,000 Fannie Mae 5.00 04/17/15 486,585
1,000,000 Fannie Mae 5.00 07/09/18 956,649
700,000 Federal Farm Credit Bank 4.00 12/05/06 698,338
255,000 Federal Farm Credit Bank 5.90 08/04/08 258,951
1,000,000 Federal Home Loan Bank 4.00 02/12/10 969,066
405,000 Federal Home Loan Bank 4.80 03/19/13 394,674
750,000 Federal Home Loan Bank 5.50 02/14/20 729,044
500,000 Federal Home Loan Bank 5.50 03/03/20 486,325
500,000 Federal Home Loan Mortgage Corp. 5.75 04/15/08 505,480
1,500,000 Federal Home Loan Mortgage Corp. 5.05 02/28/13 1,475,063
370,000 Federal Home Loan Mortgage Corp. 5.00 10/29/13 362,280
457,000 Federal Home Loan Mortgage Corp. 5.00 09/15/14 446,105
1,500,000 Federal Home Loan Mortgage Corp. 5.16 02/27/15 1,470,743
400,000 Federal Home Loan Mortgage Corp. 5.00 12/15/15 388,237
550,000 Federal Home Loan Mortgage Corp. 5.00 09/09/16 532,011
975,000 Federal Home Loan Mortgage Corp. 5.25 07/27/17 950,346
</Table>
Schedule of Investments 17
Schedule of Investments (continued)
ICON Bond Fund
September 30, 2006
<Table>
<Caption>
INTEREST MATURITY
PRINCIPAL AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------
$1,000,000 US Treasury Note 3.50% 05/31/07 $ 990,312
1,000,000 US Treasury Note 3.00 02/15/08 976,289
-----------
TOTAL U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY 28,227,677
-----------
BONDS
(COST $28,345,806)
FOREIGN GOVERNMENT BOND (2.8%)
1,000,000 Federal Republic Of Brazil - YD 9.38 04/07/08 1,055,000
750,000 Federal Republic Of Brazil - YD 14.50 10/15/09 937,500
500,000 Republic of South Africa - YD 6.50 06/02/14 525,000
-----------
TOTAL FOREIGN GOVERNMENT BONDS
(COST $2,500,343) 2,517,500
-----------
SHORT-TERM INVESTMENTS (0.3%)
255,380 Brown Brothers Harriman Time
Deposit,
4.63%, 10/02/06# 255,380
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $255,380) 255,380
-----------
TOTAL INVESTMENTS
(COST $90,292,928) 98.6% 89,961,521
OTHER ASSETS LESS LIABILITIES 1.4% 1,334,202
-----------
TOTAL NET ASSETS 100.0% $91,295,723
===========
</Table>
The accompanying notes are an integral part of the financial statements.
# 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, 2006.
* Security was acquired pursuant to Rule 144A of the Securities Act of 1933 and
may be deemed to be restricted for resale. These securities are considered to
be illiquid. The aggregate value of these securities at September 30, 2006
was $1,580,390, which represented 1.73% of the Fund's Net Assets.
YD Yankee Dollar Bond.
18 Schedule of Investments
THIS PAGE INTENTIONALLY LEFT BLANK
Management Overview
ICON Core Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 98.3%
Top 10 Equity Holdings 19.9%
Number of Stocks 103
Short-Term Investments 1.5%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Microsoft Corp. 3.3%
Bank of America Corp. 2.3%
General Electric Co. 2.1%
JPMorgan Chase & Co. 2.1%
Johnson & Johnson, Inc. 2.0%
American International Group, Inc. 1.8%
Intel Corp. 1.7%
Cisco Systems, Inc. 1.6%
International Business Machines Corp. 1.5%
FPL Group, Inc. 1.5%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARK?
A. For the fiscal year ended September 30, 2006, the Fund's benchmark, the S&P
Composite 1500 Index, gained 10.32%, compared to the ICON Core Equity Fund's
return of 4.35% for Class I shares, 3.54% for Class C shares, and 4.57% for
Class Z shares. Since their inception on May 31, 2006 through September 30,
2006, the Class A shares of the Fund have returned (4.49%) (and (9.96%) with
maximum sales charge) vs. the S&P Composite 1500 Index return of 4.96% for
the same period. Total returns for other periods as of September 30, 2006
appear in the subsequent pages of this Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Strong corporate earnings and near-low long-term interest rates proved to be
the dominant forces during the first seven months of the fiscal year. The
Fund flourished in these conditions. Our emphasis on cyclical industries,
primarily from the Industrials and Materials sectors, fueled returns in the
first half. However, a major market shift -- the first significant theme
change we've seen since March 2003 -- abruptly began in May and featured more
defensive industries and mature, large-cap issues.
When the market reversal occurred, the Fund was concentrated in the small-
and mid-cap cyclical stocks that we had seen dominate the first three years
of the bull market. Those stocks rapidly became some of the worst performers
in virtually every sector, but clear leadership was vague. Consistent with
our investment style, we watched the ICON system closely during this
uncertain period, waiting for our relative strength metrics to validate the
true industry leaders. Eventually, our system discerned that more mature,
larger cap recession-proof stocks were leading.
When leadership became more evident, we gradually rotated out of cyclical
holdings into more mature, recession-proof stocks. While the ICON system's
rigorous focus on valuation identified the new theme, the Fund missed some
upside as we waited for leadership to develop clearly.
In general, the Fund's exposure to the Materials sector throughout the period
contributed to performance, but positions in the Industrials and Energy
sectors detracted from returns. While the Energy sector was a strong
performer during the first seven months of the year, Energy issues declined
sharply from early May through the end of the period, causing a significant
drag on overall performance.
20 Management Overview
(ROBERT STRAUS, CMT PHOTO)
Robert Straus, CMT
Portfolio Manager
(J.C. WALLER, III PHOTO)
J.C. Waller, III
Portfolio Manager
(DEREK ROLLINGSON PHOTO)
Derek Rollingson
Portfolio Manager
(TODD BURCHETT PHOTO)
Todd Burchett
Portfolio Manager
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. Our objective is to keep the Fund diversified among the sectors and
industries throughout the market that are demonstrating the best value and
relative strength. Guided by these parameters, we concentrated the Fund in
industries with a heavy cyclical bent, primarily in the Industrials,
Materials, and Energy sectors, until near the end of the period. As market
leadership suddenly swung in May toward more defensive industries, the Fund's
cyclical positioning hindered returns.
From an industry standpoint, the worst performing industry in the Fund was
oil & gas drilling, with the oil & gas exploration & production industry also
accounting for negative performance. The Fund's relative performance was also
hindered by its positions in the gold and semiconductor industries. The gold
industry suffered significant losses during the month of September. At the
time of the industry collapse, our system indicated both value and relative
strength in gold issues.
On a relative basis, the Fund's lack of significant exposure to companies in
the pharmaceutical industry contributed to underperformance versus it broad
benchmark. For most of the year, the industry was not attractive to our
system.
On the positive side, the steel, aluminum, internet software & services,
wireless telecommunications services, and healthcare distributors industries
added to returns during the period.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE EQUITY MARKET?
A. Despite volatile interest rate and commodity price movements, both closed the
period well below their peaks reached in the spring and summer months. We
believe the combination of relatively low long-term interest rates and
stable, growing corporate earnings continues to provide a solid foundation
for stocks. Our analysis suggests, however, that mature, blue-chip issues
will lead the market higher. We have gradually rotated into this strong
leadership as our metrics dictate, and we believe the Fund is well-positioned
to benefit should this theme endure.
Management Overview 21
Management Overview (continued)
ICON Core Equity Fund
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Fund repositioned from cyclical stocks into recession-proof, larger-cap
names late in the period but missed some gains as we waited for definitive
industry leadership to emerge.
- - The Fund's exposure to the Materials sector aided performance, but positions
in the Industrials and Energy sectors detracted from overall returns.
- - A lack of exposure to pharmaceutical companies contributed to
underperformance versus the Fund's broad benchmark.
22 Management Overview
SECTOR COMPOSITION
September 30, 2006
<Table>
Financial 24.8%
Information Technology 18.2%
Healthcare 14.5%
Consumer Discretionary 11.1%
Telecommunication and
Utilities 9.0%
Leisure and Consumer Staples 8.4%
Energy 4.7%
Materials 3.9%
Industrials 3.7%
</Table>
Percentages are based upon net assets.
Management Overview 23
Management Overview (continued)
ICON Core Equity Fund
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Pharmaceuticals 6.3%
Other Diversified Financial Services 5.5%
Systems Software 4.4%
Investment Banking & Brokerage 4.1%
Computer Hardware 3.8%
Semiconductors 3.3%
Diversified Banks 3.1%
Multi-Utilities 3.1%
Integrated Telecommunication Services 3.1%
Broadcast & Cable TV 3.0%
Health Care Distributors 3.0%
Oil & Gas Storage & Transportation 2.9%
Multi-Line Insurance 2.7%
Health Care Facilities 2.5%
Communications Equipment 2.5%
Health Care Services 2.2%
Industrial Conglomerates 2.1%
Electric Utilities 2.0%
Diversified Capital Markets 2.0%
Footwear 1.9%
General Merchandise Stores 1.9%
Apparel Accessories & Luxury Goods 1.7%
Soft Drinks 1.7%
Asset Management & Custody Banks 1.7%
IT Consulting & Other Services 1.7%
Thrifts & Mortgage Finance 1.7%
Consumer Finance 1.6%
Automobile Manufacturers 1.5%
Specialty Stores 1.5%
Department Stores 1.4%
Oil & Gas Equipment & Services 1.3%
Diversified Chemicals 1.2%
Household Products 1.0%
Gold 1.0%
Home Furnishing Retail 0.9%
Metal & Glass Containers 0.9%
Hypermarkets & Super Centers 0.9%
Property & Casualty Insurance 0.9%
Drug Retail 0.9%
Life & Health Insurance 0.9%
Wireless Telecommunication Services 0.8%
Internet Software & Services 0.8%
Mortgage Reits 0.8%
Restaurants 0.8%
Electronic Equipment Manufacturers 0.8%
Office Electronics 0.8%
Marine 0.8%
Specialty Chemicals 0.8%
Aerospace & Defense 0.6%
Oil & Gas Drilling 0.5%
Biotechnology 0.5%
Diversified Commercial & Professional
Services 0.3%
Home Building 0.2%
</Table>
Percentages are based upon net assets.
24 Management Overview
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class I 10/12/00 4.35% 9.98% 8.37%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 2.61%
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class C 11/28/00 3.54% 9.12% 6.62%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 2.45%
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class Z 5/6/04 4.57% N/A 11.89%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 10.25%
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class A* 5/31/06 N/A N/A (4.49%)
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class A
(including maximum sales charge of
5.75%)* 5/31/06 N/A N/A (9.96%)
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index* N/A N/A 4.96%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
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.
Class C total returns exclude applicable sales charges. If sales charges were
included, returns would be lower.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON CORE EQUITY FUND - CLASS I S&P COMPOSITE 1500 INDEX
------------------------------- ------------------------
10/12/00 10000.00 10000.00
11850.00 10031.00
10810.00 8861.00
12680.00 9444.00
9/30/01 10040.00 8037.00
12456.00 8963.00
13234.00 9049.00
12048.00 7887.00
9/30/02 9717.00 6525.00
9461.00 7054.00
8715.00 6818.00
10515.00 7890.00
9/30/03 11374.00 8135.00
12571.00 9140.00
13001.00 9336.00
13072.00 9498.00
9/30/04 13072.00 9320.00
14556.00 10218.00
14167.00 10015.00
14659.00 10187.00
9/30/05 15487.00 10574.00
15959.00 10798.00
17415.00 11322.00
16736.00 11127.00
9/30/06 16162.00 11665.00
</Table>
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.
Management Overview 25
Schedule of Investments
ICON Core Equity Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (98.3%)
72,400 A.C. Moore Arts &
Crafts, Inc.(a) $ 1,377,772
30,400 Agnico-Eagle
Mines, Ltd. 946,352
43,600 America Movil
S.A. de
C.V. - ADR 1,716,532
55,100 American
International
Group, Inc. 3,650,926
36,100 Ameriprise
Financial, Inc. 1,693,090
23,900 AmerisourceBergen
Corp. 1,080,280
20,400 Apple Computer,
Inc.(a) 1,571,412
50,700 AT&T, Inc. 1,650,792
85,100 Bank of America
Corp. 4,558,807
33,600 Barrick Gold
Corp. - ADR 1,032,192
82,700 Cablevision
Systems Corp. 1,878,117
29,900 Canon, Inc. - ADR 1,563,471
25,600 Caremark Rx, Inc. 1,450,752
55,500 Cash America
International,
Inc. 2,168,940
21,000 Celgene Corp.(a) 909,300
104,500 CenterPoint
Energy, Inc. 1,496,440
9,500 Centex Corp. 499,890
145,000 Cisco Systems,
Inc.(a) 3,335,000
79,600 Coca-Cola
Enterprises, Inc. 1,658,068
56,500 Comcast Corp. -
Class A(a) 2,082,025
25,900 Comerica, Inc. 1,474,228
38,400 Curtiss-Wright
Corp. 1,165,440
54,700 CVS Corp. 1,756,964
26,100 DaVita, Inc.(a) 1,510,407
15,400 Deutsche Bank
AG - ADR 1,858,780
13,700 Diamond Offshore
Drilling, Inc. 991,469
17,500 Dick's Sporting
Goods, Inc.(a) 796,600
27,400 Dominion
Resources, Inc.
of Virginia 2,095,826
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
78,700 Family Dollar
Stores, Inc. $ 2,301,188
30,700 Fannie Mae 1,716,437
25,100 Federal Home Loan
Mortgage Corp. 1,664,883
50,200 Forest
Laboratories,
Inc.(a) 2,540,622
68,800 FPL Group, Inc. 3,096,000
53,000 Frontline, Ltd. 2,041,030
122,100 General Electric
Co. 4,310,130
53,800 General Maritime
Corp. 1,968,004
32,400 General Motors
Corp. 1,077,624
4,200 Google, Inc. -
Class A(a) 1,687,980
30,200 Grant Prideco,
Inc.(a) 1,148,506
22,300 Healthcare
Services Group,
Inc. 561,068
44,500 Henry Schein,
Inc.(a) 2,231,230
156,100 Hercules, Inc.(a) 2,461,697
83,000 Hewlett-Packard
Co. 3,045,270
59,100 Honda Motor Co.,
Ltd. - ADR 1,987,533
88,800 Horace Mann
Educators Corp. 1,707,624
26,800 Infosys
Technologies,
Ltd. - ADR 1,279,164
53,300 ING Group N.V. -
ADR 2,344,134
170,100 Intel Corp. 3,498,957
38,100 International
Business Machines
Corp. 3,121,914
38,300 International
Flavors &
Fragrances, Inc. 1,514,382
62,500 Johnson &
Johnson, Inc. 4,058,750
91,100 JPMorgan Chase &
Co. 4,278,056
39,500 K-Swiss, Inc. 1,187,370
63,200 K-V
Pharmaceutical
Co.(a) 1,497,840
</Table>
26 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
48,700 Kindred
Healthcare,
Inc.(a) $ 1,447,851
48,200 Kirby Corp.(a) 1,510,106
44,600 Kohl's Corp.(a) 2,895,432
48,100 Korea Electric
Power Corp. - ADR 940,355
13,400 Lehman Brothers
Holding, Inc. 989,724
58,800 Lifepoint
Hospitals,
Inc.(a) 2,076,816
39,800 Liz Claiborne,
Inc. 1,572,498
60,300 MDU Resources
Group, Inc. 1,347,102
46,300 Mellon Financial
Corp. 1,810,330
47,200 Merck & Co., Inc. 1,977,680
24,600 Merrill Lynch &
Co., Inc. 1,924,212
30,200 MetLife, Inc. 1,711,736
242,300 Microsoft Corp. 6,622,059
26,300 Morgan Stanley 1,917,533
66,900 Motorola, Inc. 1,672,500
112,100 Myers Industries,
Inc. 1,905,700
52,500 Mylan
Laboratories,
Inc. 1,056,825
25,000 National-OilWell
Varco, Inc.(a) 1,463,750
88,000 O'Charley's,
Inc.(a) 1,669,360
129,400 Oracle Corp.(a) 2,295,556
31,100 Overseas
Shipholding
Group, Inc. 1,921,047
30,200 PetsMart, Inc. 838,050
59,100 Pfizer, Inc. 1,676,076
45,600 Philadelphia
Consolidated
Holding Corp.(a) 1,813,968
32,900 Procter & Gamble
Co. 2,039,142
134,400 PSS World
Medical, Inc.(a) 2,686,656
24,400 Quest
Diagnostics, Inc. 1,492,304
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
33,200 Redwood Trust,
Inc. $ 1,672,284
64,700 Rent-A-Center,
Inc.(a) 1,895,063
26,700 Rogers Corp.(a) 1,648,725
57,500 Satyam Computer
Services, Ltd. -
ADR 2,224,675
26,300 Sempra Energy 1,321,575
66,800 Steven Madden,
Ltd. 2,621,232
137,091 Taiwan
Semiconductor
Manufacturing
Co., Ltd. - ADR 1,316,074
26,900 Target Corp. 1,486,225
65,000 Telenor ASA - ADR 2,531,100
55,100 Texas
Instruments, Inc. 1,832,075
12,500 The Bear Stearns
Cos., Inc. 1,751,250
108,200 The DIRECTV
Group, Inc.(a) 2,129,376
9,500 The Goldman Sachs
Group, Inc. 1,607,115
52,500 The Pepsi
Bottling Group,
Inc. 1,863,750
35,200 UBS AG - ADR 2,087,712
27,200 Universal Health
Services, Inc. -
Class B 1,630,096
26,800 V.F. Corp. 1,955,060
53,500 Verizon
Communications,
Inc. 1,986,455
32,200 Wachovia Corp. 1,796,760
36,800 Wal-Mart Stores,
Inc. 1,814,976
83,200 Wells Fargo & Co. 3,010,175
22,900 World Acceptance
Corp.(a) 1,007,142
------------
TOTAL COMMON STOCKS
(COST $183,820,468) 198,760,528
</Table>
Schedule of Investments 27
Schedule of Investments (continued)
ICON Core Equity Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (1.5%)
$3,102,312 Brown Brothers
Harriman Time
Deposit, 4.63%,
10/02/06# $ 3,102,312
------------
TOTAL SHORT-TERM INVESTMENT
(COST $3,102,312) 3,102,312
TOTAL INVESTMENTS 99.8%
(COST $186,922,780) 201,862,840
OTHER ASSETS LESS LIABILITIES
0.2% 363,925
------------
TOTAL NET ASSETS 100.0% $202,226,765
============
</Table>
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, 2006.
ADR American Depositary Receipt.
28 Schedule of Investments
Management Overview
ICON Covered Call Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 103.0%
Top 10 Equity Holdings 20.8%
Number of Stocks 118
Options Purchased Put Options 0.2%
Short-Term Investments 3.3%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Microsoft Corp. 3.3%
Intel Corp. 2.6%
Bank of America Corp. 2.5%
The Goldman Sachs Group, Inc. 2.2%
Roche Holdings, Ltd. - ADR 1.9%
Cisco Systems, Inc. 1.8%
Procter & Gamble Co. 1.7%
National Grid PLC - ADR 1.6%
JPMorgan Chase & Co. 1.6%
Comcast Corp. - Class A 1.6%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARK?
A. For the Fund's fiscal year ended September 30, 2006, its benchmark, the S&P
Composite 1500 Index, gained 10.32%, while the ICON Covered Call Fund
returned 0.30% for Class I shares, (0.36%) for Class C shares, and 0.88% for
Class Z shares. Since their inception on May 31, 2006 through September 30,
2006, the Class A shares of the Fund have returned 0.51% (and (5.28%) with
maximum sales charge) compared to the S&P Composite 1500's return of 4.96%
during the same period. Total returns for other periods as of September 30,
2006 appear in the subsequent pages of this Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The Fund lagged its benchmark for the period due to three major factors.
Consistent with the Fund's strategy, we wrote covered call options on stocks
identified by the ICON system as undervalued. When equity issues performed
strongly during a market rally in the first calendar quarter of 2006, these
call positions limited the Fund's upside potential, as we would expect during
a rising market.
Secondly, relative performance was influenced by a significant market shift,
the first theme change in more than three years, which began to emerge in
May. The small- and mid-cap cyclical stocks that we had seen dominate the
recent bull market became some of the worst performers in virtually every
sector. After a number of weeks of ambiguous industry leadership, mature,
larger-cap issues with a recession-proof tilt finally began to advance
following a market low in July. As we waited patiently for the market to show
clarity, the Fund lost ground against its broad benchmark.
Finally, option premiums, as represented by the Chicago Board Options
Exchange Volatility Index (VIX), remained low relative to historical levels,
hindering returns. The VIX averaged 13.24 for the period and ended it at
11.98, well below its historical average of the past 15 years of 18.93.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. With option premium levels hovering at 15-year lows and the broad market
reaching five-year highs in early spring, we added a new tactic to the
management of the Fund. In order to provide additional downside protection,
we began purchasing out-of-the-money index put options. When the market
experienced a steep downturn in early May through mid June, these put options
help to mitigate part of the losses on the Fund's long equity positions.
Even though the Fund has an emphasis on call writing, our objective in
constructing the portfolio is to diversify among the sectors and industries
Management Overview 29
Management Overview (continued)
ICON Covered Call Fund
that are demonstrating the best value and relative strength. Focusing on our
valuation measures, we concentrated the Fund in industries with a heavy
cyclical nature, primarily in the Industrials, Materials, and Energy sectors,
until near the end of the period. After the market experienced an unclear
period, leadership finally swung toward more defensive industries, and we
gradually repositioned the Fund after our relative strength measures pointed
to more mature, recession-proof positions.
In particular, exposure to the oil & gas drilling, oil & gas exploration and
production, and coal & consumable fuel industries, all from the Energy
sector, dampened returns. Their negative performance reflected the sector's
extremely poor showing beginning with the early May sell-off and extending
through mid-June, as investors appeared to become wary of the long bull run
in Energy.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE EQUITY MARKET?
A. With option premium levels remaining low, we expect to continue buying index
put options to provide supplemental downside protection for the Fund. This
strategy would be particularly beneficial if the market continues to rally
and prices begin to approach fair value.
We are currently seeing strong combinations of value and relative strength
from a number of larger-cap, "blue chip" companies that support our analysis
that this group represents the clearest market leadership for the foreseeable
future. To capture the new theme, we began rotating into this group during
the last three months of the period as our system dictated. Looking ahead,
our metrics indicate the Fund is well-positioned to benefit should this theme
persist.
30 Management Overview
(ROBERT STRAUS, CMT PHOTO)
Robert Straus, CMT
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - When equity issues performed strongly during a market rally in the first
quarter of 2006, the Fund's call positions limited upside potential.
- - We identified a new market theme in the final fiscal quarter that featured
more defensive industries, and while we waited for clear industry leadership
to emerge, the Fund lost ground vs. its benchmark.
- - Industries within the Energy sector caused a drag on Fund returns when they
performed poorly in early summer.
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.
Management Overview 31
Management Overview (continued)
ICON Covered Call Fund
SECTOR COMPOSITION
September 30, 2006
<Table>
Financial 25.0%
Information Technology 20.6%
Healthcare 14.6%
Leisure and Consumer Staples 12.8%
Telecommunication and Utilities 11.5%
Consumer Discretionary 8.9%
Energy 5.8%
Industrials 2.3%
Materials 1.5%
</Table>
Percentages are based upon net assets.
32 Management Overview
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Pharmaceuticals 7.0%
Integrated Telecommunication Services 5.3%
Investment Banking & Brokerage 5.1%
Semiconductors 5.1%
Systems Software 5.0%
Other Diversified Financial Services 4.5%
Soft Drinks 4.1%
Oil & Gas Storage & Transportation 3.8%
Computer Hardware 3.5%
Diversified Banks 3.5%
Health Care Facilities 3.1%
Communications Equipment 3.0%
Multi-Utilities 3.0%
Regional Banks 2.9%
Broadcast & Cable TV 2.3%
Household Products 2.3%
Multi-Line Insurance 2.3%
IT Consulting & Other Services 2.2%
Wireless Telecommunication Services 2.0%
Integrated Oil & Gas 2.0%
General Merchandise Stores 1.9%
Managed Health Care 1.8%
Diversified Capital Markets 1.6%
Health Care Distributors 1.6%
Specialty Stores 1.5%
Brewers 1.5%
Apparel Accessories & Luxury Goods 1.4%
Gold 1.3%
Airlines 1.2%
Asset Management & Custody Banks 1.2%
Electric Utilities 1.2%
Department Stores 1.1%
Packaged Foods & Meats 1.1%
Mortgage Reits 1.1%
Footwear 1.0%
Aerospace & Defense 0.9%
Biotechnology 0.8%
Office Electronics 0.8%
Life & Health Insurance 0.8%
Data Processing & Outsourced Services 0.8%
Movies & Entertainment 0.7%
Thrifts & Mortgage Finance 0.7%
Property & Casualty Insurance 0.7%
Automobile Manufacturers 0.6%
Photographic Products 0.6%
Reinsurance 0.6%
Home Furnishing Retail 0.5%
Home Improvement Retail 0.5%
Internet Software & Services 0.3%
Diversified Chemicals 0.3%
Drug Retail 0.3%
Health Care Supplies 0.2%
Home Building 0.2%
Trucking 0.2%
</Table>
Percentages are based upon net assets.
Management Overview 33
Management Overview (continued)
ICON Covered Call Fund
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class I 9/30/02 0.30% N/A 10.69%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 15.63%
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class C 11/21/02 (0.36%) N/A 8.23%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 12.96%
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class Z 5/6/04 0.88% N/A 5.57%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 10.25%
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class A* 5/31/06 N/A N/A 0.51%
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class A
(including maximum sales charge of
5.75%)* 5/31/06 N/A N/A (5.28%)
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index* N/A N/A 4.96%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
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.
Class C total returns exclude applicable sales charges. If sales charges were
included, returns would be lower.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON COVERED CALL FUND - CLASS I S&P COMPOSITE 1500 INDEX
-------------------------------- ------------------------
9/30/02 10000.00 10000.00
10490.00 10811.00
10050.00 10450.00
11770.00 12093.00
9/30/03 12400.00 12469.00
13541.00 14009.00
13799.00 14308.00
13944.00 14557.00
9/30/04 13706.00 14285.00
14568.00 15661.00
14416.00 15349.00
14470.00 15613.00
9/30/05 14966.00 16206.00
14946.00 16550.00
15414.00 17353.00
15044.00 17054.00
9/30/06 15011.00 17878.00
</Table>
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.
34 Management Overview
Schedule of Investments
ICON Covered Call Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (103.0%)
22,900 A.C. Moore Arts &
Crafts, Inc.(a)x) $ 435,787
6,200 A.G. Edwards,
Inc.(x) 330,336
9,800 Alaska Air Group,
Inc.(a)x) 372,792
4,500 Allied Irish Banks
PLC - ADR 243,270
23,700 America Movil S.A.
de C.V. - ADR(x) 933,069
6,200 AmerisourceBergen
Corp.(x) 280,240
7,100 Amgen, Inc.(a)x) 507,863
25,400 AmSurg Corp.(a)x) 565,404
5,600 Apple Computer,
Inc.(a)x) 431,368
15,400 AT&T, Inc.(x) 501,424
29,800 Bank of America
Corp.(x) 1,596,386
26,300 Barrick Gold
Corp. - ADR(x) 807,936
9,200 BNP Paribas - ADR 494,426
4,900 BT Group PLC - ADR 247,793
5,100 Canon, Inc. - ADR 266,679
2,900 Centex Corp.(x) 152,598
9,500 Chevron Corp.(x) 616,170
8,200 Chubb Corp.(x) 426,072
49,700 Cisco Systems,
Inc.(a)x) 1,143,100
42,500 Coca-Cola
Enterprises,
Inc.(x) 885,275
12,300 Cognizant
Technology
Solutions
Corp.(a)x) 910,938
26,900 Comcast Corp. -
Class A(a)x) 991,265
8,300 Community Health
Systems, Inc.(a)x) 310,005
7,500 Cullen/Frost
Bankers, Inc.(x) 433,650
5,000 CVS Corp.(x) 160,600
4,600 Deutsche Bank
AG - ADR(x) 555,220
5,300 Dick's Sporting
Goods, Inc.(a)x) 241,256
8,100 Dollar Tree
Stores, Inc.(a)x) 250,776
4,900 Dominion
Resources, Inc. of
Virginia(x) 374,801
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
4,100 East-West Bancorp,
Inc.(x) $ 162,401
6,300 EchoStar
Communications
Corp. - Class
A(a)x) 206,262
4,000 Everest Re Group,
Ltd.(x) 390,120
17,800 Family Dollar
Stores, Inc.(x) 520,472
10,400 Fiserv, Inc.(a)x) 489,736
7,400 Fomento Economico
Mexicano, S.A. de
C.V. - ADR(x) 717,356
17,600 Forest
Laboratories,
Inc.(a)x) 890,736
14,500 FPL Group, Inc.(x) 652,500
11,100 Frontline, Ltd.(x) 427,461
9,600 Fuji Photo Film 350,016
23,000 General Maritime
Corp.(x) 841,340
11,800 General Motors
Corp.(x) 392,468
5,000 Gildan Activewear,
Inc. - Class A(a) 242,300
11,800 Gol - Linhas
Aereas
Inteligentes
S.A. - ADR(x) 405,330
500 Google, Inc. -
Class A(a)x) 200,950
7,200 Health Net,
Inc.(a)x) 313,344
27,500 Heineken N.V. -
ADR 628,375
2,300 Henkel KGaA - ADR 320,751
15,200 Henry Schein,
Inc.(a)x) 762,128
10,200 Hercules,
Inc.(a)x) 160,854
24,100 Hewlett-Packard
Co.(x) 884,229
9,400 Infosys
Technologies,
Ltd. - ADR(x) 448,662
4,800 ING Group N.V. -
ADR(x) 211,104
79,300 Intel Corp.(x) 1,631,201
10,800 International
Business Machines
Corp.(x) 884,952
13,700 Johnson & Johnson,
Inc.(x) 889,678
21,500 JPMorgan Chase &
Co.(x) 1,009,640
</Table>
Schedule of Investments 35
Schedule of Investments (continued)
ICON Covered Call Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
16,300 Kindred
Healthcare,
Inc.(a)x) $ 484,599
11,100 Kohl's Corp.(a)x) 720,612
5,900 Korea Electric
Power
Corp. - ADR(x) 115,345
13,700 Lifepoint
Hospitals,
Inc.(a)x) 483,884
18,000 Loews Corp.(x) 682,200
15,400 Merck & Co.,
Inc.(x) 645,260
6,000 Merrill Lynch &
Co., Inc.(x) 469,320
8,700 MetLife, Inc.(x) 493,116
76,300 Microsoft Corp.(x) 2,085,279
4,600 Molson Coors
Brewing Co. -
Class B(x) 316,940
9,900 Morgan Stanley(x) 721,809
19,100 Motorola, Inc.(x) 477,500
16,300 National Grid
PLC - ADR 1,021,847
8,100 Nestle S.A. - ADR 708,345
6,100 Newcastle
Investment Corp. 167,201
5,100 Nike, Inc. - Class
B(x) 446,862
8,000 Northrop Grumman
Corp.(x) 544,560
8,500 Novartis
AG - ADR(x) 496,740
44,700 Oracle Corp.(a)x) 792,978
12,100 Overseas
Shipholding Group,
Inc.(x) 747,417
9,000 PetsMart, Inc.(x) 249,750
7,700 Philippine Long
Distance Telephone
Co. - ADR(x) 335,412
6,200 PNC Financial
Services Group,
Inc.(x) 449,128
17,800 Procter & Gamble
Co.(x) 1,103,244
15,000 PT Telekomunikasi
Indonesia - ADR(x) 542,400
10,300 Redwood Trust,
Inc.(x) 518,811
11,300 Rent-A-Center,
Inc.(a)x) 330,977
2,500 Research in
Motion, Ltd.(a)x) 256,650
13,600 Roche Holdings,
Ltd. - ADR 1,178,440
5,200 RWE AG - ADR 480,480
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
2,400 Ryder System,
Inc.(x) $ 124,032
14,700 Schering-Plough
Corp.(x) 324,723
63,139 Siliconware
Precision
Industries Co. -
ADR(x) 375,677
4,500 Steven Madden,
Ltd.(x) 176,580
10,100 SunTrust Banks,
Inc.(x) 780,528
13,100 Symantec
Corp.(a)x) 278,768
45,833 Taiwan
Semiconductor
Manufacturing Co.,
Ltd. - ADR(x) 439,997
7,900 Target Corp.(x) 436,475
26,400 Telefonos de
Mexico S.A. de
C.V. - ADR(x) 675,312
19,700 Telenor ASA - ADR 767,118
23,600 Texas Instruments,
Inc.(x) 784,700
21,900 The Bank of New
York Co., Inc.(x) 772,194
2,300 The Bear Stearns
Cos., Inc.(x) 322,230
2,900 The Cooper Cos.,
Inc.(x) 155,150
12,500 The DIRECTV Group,
Inc.(a)x) 246,000
8,200 The Goldman Sachs
Group, Inc.(x) 1,387,193
8,700 The Hartford
Financial Services
Group, Inc.(x) 754,725
27,700 The Pepsi Bottling
Group, Inc. 983,350
5,700 The Sherwin-
Williams Co.(x) 317,946
14,200 The Walt Disney
Co.(x) 438,922
10,000 Total SA - ADR(x) 659,400
2,900 Triad Hospitals,
Inc.(a)x) 127,687
8,900 Tsakos Energy
Navigation,
Ltd.(x) 396,940
8,200 UBS AG - ADR(x) 486,342
9,300 UnitedHealth
Group, Inc.(x) 457,560
9,200 V.F. Corp.(x) 671,140
</Table>
36 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
16,100 Verizon
Communications,
Inc.(x) $ 597,793
11,100 Wachovia Corp.(x) 619,380
10,000 Washington Mutual,
Inc.(x) 434,700
4,400 Wellpoint,
Inc.(a)x) 339,020
24,200 Wells Fargo &
Co.(x) 875,556
15,600 Xerox Corp.(a)x) 242,736
-----------
TOTAL COMMON STOCKS
(COST $60,175,989) 65,017,845
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (3.3%)
$2,100,130 Brown Brothers
Harriman Time
Deposit,
4.63%, 10/02/06# $ 2,100,130
-----------
TOTAL SHORT-TERM INVESTMENT
(COST $2,100,130) 2,100,130
PUT OPTIONS PURCHASED (0.2%)
100 Midcap Spider
Trust, Expiration
December 2006,
Exercise Price
$730 146,000
-----------
TOTAL PUT OPTIONS PURCHASED
(COST $170,300) 146,000
TOTAL INVESTMENTS
(COST $62,446,419) 106.5% 67,263,975
LIABILITIES LESS OTHER ASSETS
(6.5)% (4,080,790)
-----------
TOTAL NET ASSETS 100.0% $63,183,185
===========
</Table>
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, 2006.
ADR American Depositary Receipt.
x Portion or all of this security is pledged as collateral for call options
written.
Schedule of Investments 37
Schedule of Written Options
ICON Covered Call Fund
September 30, 2006
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
A.C. Moore Arts &
Crafts, Inc.
Expiration December
2006 Exercise
Price $20.00 229 $ 28,625
A.G. Edwards, Inc.
Expiration November
2006 Exercise
Price $55.00 38 4,275
Expiration November
2006 Exercise
Price $60.00 12 180
Expiration January
2007 Exercise
Price $55.00 12 2,640
Alaska Air Group, Inc.
Expiration October
2006 Exercise
Price $40.00 98 5,145
America Movil S.A. De
C.V. - ADR
Expiration November
2006 Exercise
Price $40.00 119 20,527
Expiration January
2007 Exercise
Price $45.00 118 11,800
AmerisourceBergen
Corp.
Expiration November
2006 Exercise
Price $45.00 62 11,005
Amgen, Inc.
Expiration October
2006 Exercise
Price $75.00 45 1,125
Expiration January
2007 Exercise
Price $75.00 26 5,460
AmSurg Corp.
Expiration October
2006 Exercise
Price $25.00 200 2,500
Expiration December
2006 Exercise
Price $25.00 54 2,970
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
Apple Computer, Inc.
Expiration April
2007 Exercise
Price $90.00 56 $ 27,440
AT&T, Inc.
Expiration April
2007 Exercise
Price $32.50 133 26,267
Bank of America Corp.
Expiration January
2007 Exercise
Price $52.50 120 30,000
Barrick Gold Corp. -
ADR
Expiration January
2007 Exercise
Price $35.00 75 6,750
Expiration January
2007 Exercise
Price $37.50 137 6,508
Expiration April
2007 Exercise
Price $37.50 51 5,610
Centex Corp.
Expiration April
2007 Exercise
Price $65.00 29 6,090
Chevron Corp.
Expiration December
2006 Exercise
Price $70.00 95 8,075
Chubb Corp.
Expiration January
2007 Exercise
Price $52.50 25 4,813
Expiration January
2007 Exercise
Price $55.00 57 4,988
Cisco Systems, Inc.
Expiration January
2007 Exercise
Price $22.50 455 81,900
Expiration April
2007 Exercise
Price $25.00 42 5,145
</Table>
38 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
Coca-Cola Enterprises,
Inc.
Expiration November
2006 Exercise
Price $20.00 238 $ 28,560
Expiration November
2006 Exercise
Price $22.50 60 750
Cognizant Technology
Solutions Corp.
Expiration October
2006 Exercise
Price $70.00 41 20,500
Expiration January
2007 Exercise
Price $75.00 82 46,740
Comcast Corp. - Class
A
Expiration January
2007 Exercise
Price $37.50 269 43,040
Community Health
Systems, Inc.
Expiration December
2006 Exercise
Price $40.00 83 10,998
Cullen/Frost Bankers,
Inc.
Expiration October
2006 Exercise
Price $60.00 75 18,750
CVS Corp.
Expiration January
2007 Exercise
Price $35.00 50 4,375
Deutche Bank AG - ADR
Expiration January
2007 Exercise
Price $125.00 46 21,850
Dick's Sporting Goods,
Inc.
Expiration January
2007 Exercise
Price $45.00 53 16,960
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
Dollar Tree Stores,
Inc.
Expiration November
2006 Exercise
Price $30.00 28 $ 5,320
Expiration February
2007
Exercise Price
$32.50 53 8,215
Dominion Resources,
Inc. of Virginia
Expiration January
2007 Exercise
Price $80.00 25 4,000
Expiration January
2007 Exercise
Price $85.00 24 1,140
East-West Bancorp,
Inc.
Expiration October
2006 Exercise
Price $40.00 29 2,610
Expiration October
2006 Exercise
Price $45.00 12 150
Echostar
Communications
Corp. - Class A
Expiration March
2007 Exercise
Price $40.00 63 3,150
Everest Re Group, Ltd.
Expiration April
2007 Exercise
Price $110.00 40 9,100
Family Dollar Stores,
Inc.
Expiration October
2006 Exercise
Price $27.50 89 17,577
Expiration January
2007 Exercise
Price $30.00 89 13,795
Fiserv, Inc.
Expiration January
2007 Exercise
Price $50.00 104 13,780
</Table>
Schedule of Written Options 39
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2006
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
Fomento Economico
Mexicano, S.A. de
C.V. - ADR
Expiration October
2006 Exercise
Price $95.00 25 $ 9,000
Expiration October
2006 Exercise
Price $100.00 38 4,655
Forest Laboratories,
Inc.
Expiration November
2006 Exercise
Price $50.00 53 15,105
Expiration January
2007 Exercise
Price $50.00 46 17,940
Expiration February
2007 Exercise
Price $55.00 77 15,208
FPL Group, Inc.
Expiration December
2006 Exercise
Price $45.00 116 15,370
Frontline, Ltd.
Expiration February
2007 Exercise
Price $40.00 111 25,530
General Maritime Corp.
Expiration February
2007 Exercise
Price $40.00 230 19,550
General Motors Corp.
Expiration December
2006 Exercise
Price $35.00 118 20,945
Gol - Linehas Aereas
Inteligentes S.A. -
ADR
Expiration October
2006 Exercise
Price $40.00 118 1,180
Google, Inc. - Class A
Expiration January
2007 Exercise
Price $430.00 5 9,425
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
Health Net, Inc.
Expiration October
2006 Exercise
Price $47.50 28 $ 630
Expiration January
2007 Exercise
Price $55.00 44 1,100
Henry Schein, Inc.
Expiration October
2006 Exercise
Price $50.00 106 12,720
Expiration January
2007 Exercise
Price $55.00 26 1,950
Expiration April
2007 Exercise
Price $55.00 20 3,450
Hercules, Inc.
Expiration December
2006 Exercise
Price $15.00 20 2,800
Expiration March
2007 Exercise
Price $15.00 62 11,780
Hewlett-Packard Co.
Expiration February
2007 Exercise
Price $40.00 241 39,765
Infosys Technologies.
Ltd. - ADR
Expiration October
2006 Exercise
Price $45.00 48 18,480
Expiration April
2007 Exercise
Price $55.00 46 11,960
ING Group N.V. - ADR
Expiration January
2007 Exercise
Price $45.00 48 9,360
Intel Corp.
Expiration January
2007 Exercise
Price $20.00 387 62,887
</Table>
40 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
International Business
Machines Corp.
Expiration October
2006 Exercise
Price $85.00 56 $ 2,660
Expiration January
2007 Exercise
Price $85.00 33 6,518
Expiration January
2007 Exercise
Price $90.00 19 1,235
Johnson & Johnson,
Inc.
Expiration January
2007 Exercise
Price $65.00 110 23,100
JPMorgan Chase & Co.
Expiration December
2006 Exercise
Price $47.50 161 20,125
Expiration January
2007
Exercise Price
$45.00 54 16,740
Kindred Healthcare,
Inc.
Expiration February
2007 Exercise
Price $35.00 163 18,745
Kohl's Corp.
Expiration April
2007 Exercise
Price $75.00 111 23,865
Korea Electric Power
Corp. - ADR
Expiration December
2006 Exercise
Price $20.00 59 4,868
Lifepoint Hospitals,
Inc.
Expiration November
2006 Exercise
Price $40.00 137 3,425
Loews Corp.
Expiration December
2006 Exercise
Price $38.375 117 14,918
Expiration January
2007 Exercise
Price $40.00 63 5,513
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
Merck & Co., Inc.
Expiration January
2007 Exercise
Price $42.50 76 $ 14,060
Expiration January
2007 Exercise
Price $45.00 78 6,630
Merrill Lynch & Co.,
Inc.
Expiration April
2007 Exercise
Price $85.00 60 15,600
MetLife, Inc.
Expiration December
2006 Exercise
Price $55.00 74 22,200
Expiration March
2007 Exercise
Price $60.00 13 2,275
Microsoft Corp.
Expiration April
2007 Exercise
Price $27.50 432 72,360
Expiration April
2007 Exercise
Price $30.00 99 6,435
Molson Coors Brewing
Co. - Class B
Expiration October
2006 Exercise
Price $75.00 46 230
Morgan Stanley
Expiration January
2007 Exercise
Price $70.00 18 10,170
Expiration April
2007 Exercise
Price $75.00 81 34,830
Motorola, Inc.
Expiration April
2007 Exercise
Price $30.00 191 15,280
Nike, Inc. - Class B
Expiration January
2007 Exercise
Price $90.00 10 3,150
Expiration April
2007 Exercise
Price $90.00 41 19,680
</Table>
Schedule of Written Options 41
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2006
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
Northrop Grumman Corp.
Expiration November
2006 Exercise
Price $70.00 56 $ 5,040
Expiration November
2006 Exercise
Price $75.00 24 240
Novartis AG - ADR
Expiration January
2007 Exercise
Price $60.00 85 14,450
Oracle Corp.
Expiration March
2007 Exercise
Price $16.00 191 48,705
Overseas Shipholding
Group, Inc.
Expiration October
2006 Exercise
Price $60.00 30 8,625
Expiration October
2006 Exercise
Price $65.00 12 660
Expiration January
2007 Exercise
Price $75.00 10 525
Expiration April
2007 Exercise
Price $70.00 69 17,077
PetsMart, Inc.
Expiration October
2006 Exercise
Price $30.00 90 2,025
Philippine Long
Distance Telephone
Co. - ADR
Expiration December
2006 Exercise
Price $45.00 77 13,860
PNC Financial Services
Group, Inc.
Expiration January
2007 Exercise
Price $75.00 62 10,385
Procter & Gamble Co.
Expiration April
2007 Exercise
Price $65.00 128 26,240
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
PT Telekounikasi
Indonesia - ADR
Expiration October
2006 Exercise
Price $35.00 98 $ 16,905
Expiration January
2007 Exercise
Price $40.00 52 8,970
Redwood Trust, Inc.
Expiration October
2006 Exercise
Price $50.00 103 16,737
Rent-A-Center, Inc.
Expiration December
2006 Exercise
Price $30.00 113 21,187
Research In Motion,
Ltd.
Expiration March
2007 Exercise
Price $110.00 25 19,500
Ryder System, Inc.
Expiration November
2006
Exercise Price
$55.00 24 3,480
Schering-Plough Corp.
Expiration February
2007 Exercise
Price $22.50 147 18,375
Siliconware Precision
Industries Co. - ADR
Expiration December
2006 Exercise
Price $7.50 576 23,040
Steve Madden, Ltd.
Expiration December
2006 Exercise
Price $40.00 30(+) 15,524
SunTrust Banks, Inc.
Expiration January
2007 Exercise
Price $85.00 101 3,535
Symantec Corp.
Expiration April
2007 Exercise
Price $22.50 131 21,615
</Table>
42 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
Taiwan Semiconductor
Manufacturing Co.,
Ltd. - ADR
Expiration January
2007 Exercise
Price $11.00 390# $ 25,564
Target Corp.
Expiration April
2007 Exercise
Price $60.00 79 18,762
Telefonos de Mexico
S.A. de C.V. - ADR
Expiration October
2006 Exercise
Price $25.00 129 12,900
Expiration November
2006 Exercise
Price $22.50 135 45,900
Texas Instruments,
Inc.
Expiration October
2006 Exercise
Price $35.00 50 1,375
Expiration January
2007 Exercise
Price $32.50 25 7,250
Expiration April
2007 Exercise
Price $37.50 161 26,162
The Bank of New York
Co., Inc.
Expiration October
2006 Exercise
Price $35.00 175 14,875
Expiration October
2006 Exercise
Price $37.50 44 220
The Bear Stearns Cos., Inc.
Expiration January
2007 Exercise
Price
$155 23 5,348
The Cooper Cos., Inc.
Expiration February
2007 Exercise
Price $60.00 29 6,453
The DIRECTV Group,
Inc.
Expiration January
2007 Exercise
Price $20.00 69 6,728
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
The Goldman Sachs
Group, Inc.
Expiration October
2006
Exercise Price
$165.00 24 $ 16,080
Expiration January
2007
Exercise Price
$180.00 30 14,100
Expiration April
2007 Exercise
Price $190.00 28 14,000
The Hartford Financial
Services Group, Inc.
Expiration December
2006 Exercise
Price $95.00 30 1,650
Expiration January
2007 Exercise
Price $90.00 22 5,390
Expiration March
2007 Exercise
Price $90.00 35 12,600
The Sherwin-Williams
Co.
Expiration January
2007 Exercise
Price $55.00 46 19,780
Expiration March
2007 Exercise
Price $60.00 11 2,970
The Walt Disney Co.
Expiration April
2007 Exercise
Price $32.50 99 14,355
Total SA - ADR
Expiration October
2006 Exercise
Price $70.00 80 1,400
Expiration May 2007
Exercise Price
$70.00 20 5,800
Triad Hospitals, Inc.
Expiration November
2006 Exercise
Price $45.00 29 3,843
Tsakos Energy
Navagation, Ltd.
Expiration December
2006 Exercise
Price $50.00 89 4,005
</Table>
Schedule of Written Options 43
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2006
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
UBS AG - ADR
Expiration December
2006 Exercise
Price $60.00 82 $ 16,605
UnitedHealth Group,
Inc.
Expiration January
2007 Exercise
Price $55.00 27 3,105
Expiration January
2007 Exercise
Price $57.50 66 4,290
VF Corp.
Expiration February
2007 Exercise
Price $80.00 92 19,320
Verizon
Communications, Inc.
Expiration April
2007 Exercise
Price $37.50 129 22,897
Wachovia Corp.
Expiration January
2007 Exercise
Price $60.00 85 5,525
Expiration January
2007 Exercise
Price $65.00 26 195
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/
EXPIRATION DATE/
EXERCISE PRICE CONTRACTS* VALUE
- -----------------------------------------------
Washington Mutual,
Inc.
Expiration January
2007 Exercise
Price $50.00 100 $ 1,250
Wellpoint, Inc.
Expiration December
2006 Exercise
Price $80.00 17 3,570
Expiration December
2006 Exercise
Price $85.00 27 1,890
Wells Fargo & Co.
Expiration January
2007 Exercise
Price $37.50 190 14,250
Xerox Corp.
Expiration April
2007 Exercise
Price $17.00 133 8,645
----------
Total Options Written
(Premiums received
$2,108,685) 13,216 $2,002,352
==========
</Table>
The accompanying notes are an integral part of the financial statements.
* All written options have 100 shares per contract unless otherwise noted.
(+) Contracts have 150 shares per contract.
# Contracts have 114 shares per contract.
ADR American Depositary Receipt.
44 Schedule of Written Options
Management Overview
ICON Equity Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities
Common Stocks 94.6%
Convertible Preferred Stocks 0.7%
Top 10 Equity Holdings 19.0%
Number of Stocks 101
Options Purchased
Call Options 0.1%
Number of Securities on Which Options Have Been Purchased 2
Bonds & Short-Term Investments
Convertible Corporate Bonds 0.4%
Corporate Bonds 2.0%
U.S. Government and Agencies 2.2%
Short-Term Investments 1.2%
Number of Bonds 8
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Microsoft Corp. 3.0%
JPMorgan Chase & Co. 2.0%
Johnson & Johnson, Inc. 1.9%
AT&T, Inc. 1.9%
General Electric Co. 1.8%
American International Group, Inc. 1.8%
Procter & Gamble Co. 1.8%
Merck & Co., Inc. 1.8%
Bank of America Corp. 1.5%
Intel Corp. 1.5%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARK?
A. For the fiscal year ended September 30, 2006, the Fund's benchmark, the S&P
Composite 1500 Index, gained 10.32%, while the ICON Equity Income Fund
returned 4.02% for Class I shares, 3.03% for Class C shares, and 4.04% for
Class Z shares. Since their inception on May 31, 2006 through September 30,
2006, the Class A shares of the Fund have returned 0.46% (and (5.33%) with
maximum sales charge) compared to the S&P 1500 return of 4.96% during the
same period. Total returns for other periods as of September 30, 2006 appear
in the subsequent pages of this Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The first seven months of the fiscal year were marked by strong corporate
earnings and near historically low long-term interest rates. Guided by the
ICON valuation system, we placed an emphasis on cyclical industries,
primarily from the Industrials and Materials sectors, and this aided returns
through the first half. However, a major market shift - the first significant
theme change since March 2003 - began in May and featured more defensive
industries and mature, large-cap issues.
The small- and mid-cap cyclical stocks that we saw dominate the first three
years of the bull market rapidly became some of the worst performers in
virtually every sector after the market shift in May, but clear leadership
was elusive. We watched our system closely during this time of ambiguity,
waiting for our relative strength metrics to confirm the true industry
leaders. As we gained more confidence that a new theme was indeed taking
hold, we gradually moved away from cyclical holdings into more mature,
recession-proof stocks. While the ICON system's rigorous focus on valuation
identified the new theme, the Fund missed some upside as we waited for
leadership to clearly develop.
We have been encouraged that one outcome of the market reversal has been an
increase in the number of stocks with the combination of attractive
value/price ratios, relative strength, and dividends for the Equity Income
Fund.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. The ICON Equity Income Fund seeks diversified exposure to those sectors and
industries throughout the market that are priced below our estimate of
intrinsic value and that are showing strength relative to the broad market.
As market leadership turned in the final three months of the period to
larger, more mature companies, the Fund was able to identify more
opportunities to invest in dividend-paying stocks.
Management Overview 45
Management Overview (continued)
ICON Equity Income Fund
Early in the period, the Fund's exposure to the Financial and Materials
sectors contributed to performance, but positions in the Leisure & Consumer
Staples sector detracted from returns. While the Financials sector was the
largest contributor in terms of performance, stocks in the Fund lagged the
benchmark as holdings in the property & casualty insurance industry struggled
in the last half of the year.
On an industry level, diversified metals & mining, investment banking &
brokerage, and pharmaceuticals all performed well for the Fund. In
particular, Southern Copper Corp. surged on a sharp increase in copper
prices. With an average weight in the Fund of 1.02% during the fiscal year,
Southern Copper was up almost 89% during the holding period.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE EQUITY MARKET?
A. We continue to keep a close eye on valuations to determine the sustainability
of the new market theme. As our valuations indicate, we expect that
industries dominated by larger, blue-chip companies to lead the market higher
in the months ahead. This new leadership has opened up opportunities for the
Fund to hold more stocks and fewer convertible instruments. Since the Fund
focuses on securities that are intended to generate returns from both equity
appreciation and income, we believe the current leadership in industries
heavily composed of dividend-paying stock will be a positive for the Fund.
46 Management Overview
(DEREK ROLLINGSON PHOTO)
Derek Rollingson
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Fund missed some gains as we patiently waited for clear industry
leadership to develop following a market reversal in May.
- - The Fund's exposure to the Financial and Materials sectors contributed to
performance, but positions in the Leisure & Consumer Staples sector detracted
from returns.
- - Holdings in the diversified metals & mining, investment banking & brokerage,
and pharmaceuticals industries performed well during the period.
Management Overview 47
Management Overview (continued)
ICON Equity Income Fund
SECTOR COMPOSITION
September 30, 2006
<Table>
Financial 28.4%
Information Technology 13.1%
Healthcare 11.0%
Telecommunication and Utilities 10.4%
Leisure and Consumer Staples 9.1%
Industrials 8.1%
Consumer Discretionary 7.0%
Energy 3.8%
Materials 3.7%
</Table>
Percentages are based upon common stock positions as a percentage of net assets.
48 Management Overview
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Pharmaceuticals 7.1%
Other Diversified Financial Services 6.4%
Investment Banking & Brokerage 4.6%
Integrated Telecommunication Services 4.0%
Diversified Banks 3.5%
HOUSEHOLD PRODUCTS 3.3%
Multi-Line Insurance 3.1%
Systems Software 3.0%
Computer Hardware 2.6%
Communications Equipment 2.3%
Semiconductors 2.2%
Asset Management & Custody Banks 2.2%
Independent Power Producers & Energy Traders 1.9%
Industrial Conglomerates 1.8%
Diversified Capital Markets 1.8%
Aerospace & Defense 1.8%
Mortgage Reits 1.8%
Thrifts & Mortgage Finance 1.7%
Life & Health Insurance 1.7%
Electric Utilities 1.6%
Integrated Oil & Gas 1.5%
Oil & Gas Storage & Transportation 1.5%
Footwear 1.4%
Tobacco 1.3%
Water Utilities 1.2%
Apparel Accessories & Luxury Goods 1.1%
Automobile Manufacturers 1.1%
Health Care Services 1.1%
Construction & Farm Machinery & Heavy Trucks 1.1%
It Consulting & Other Services 1.1%
Packaged Foods & Meats 1.0%
Apparel Retail 1.0%
Multi-Utilities 1.0%
General Merchandise Stores 1.0%
Health Care Facilities 1.0%
Internet Software & Services 1.0%
Office Electronics 1.0%
Hypermarkets & Super Centers 1.0%
Motorcycle Manufacturers 1.0%
Health Care Equipment 0.9%
Regional Banks 0.9%
Restaurants 0.9%
Electrical Components & Equipment 0.9%
Broadcasting & Cable Tv 0.9%
Marine 0.8%
Health Care Distributors 0.8%
Steel 0.8%
Commodity Chemicals 0.8%
Diversified Commercial & Professional
Services 0.8%
Soft Drinks 0.8%
Oil & Gas Exploration & Production 0.8%
Gas Utilities 0.7%
Metal & Glass Containers 0.6%
Diversified Metals & Mining 0.6%
Property & Casualty Insurance 0.5%
Diversified Chemicals 0.5%
Trucking 0.5%
Airlines 0.5%
Specialized Consumer Services 0.4%
Paper Packaging 0.4%
</Table>
Percentages are based upon common stock positions as a position of net assets.
Management Overview 49
Management Overview (continued)
ICON Equity Income Fund
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class I 9/30/02 4.02% N/A 15.02%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 15.63%
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class C 11/8/02 3.03% N/A 12.68%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 13.21%
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class Z 5/10/04 4.04% N/A 10.48%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 11.52%
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class A* 5/31/06 N/A N/A 0.46%
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class A
(including maximum sales charge of
5.75%)* 5/31/06 N/A N/A (5.33)%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index* N/A N/A 4.96%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
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.
Class C total returns exclude applicable sales charges. If sales charges were
included, returns would be lower.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON EQUITY INCOME FUND - CLASS
I S&P COMPOSITE 1500 INDEX
------------------------------- ------------------------
9/30/02 10000.00 10000.00
10819.00 10811.00
10091.00 10450.00
12073.00 12093.00
9/30/03 12482.00 12469.00
14475.00 14009.00
14940.00 14308.00
15016.00 14557.00
9/30/04 14928.00 14285.00
16146.00 15661.00
15847.00 15349.00
16192.00 15613.00
9/30/05 16822.00 16206.00
16849.00 16550.00
18083.00 17353.00
17316.00 17054.00
9/30/06 17498.00 17878.00
</Table>
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.
50 Management Overview
Schedule of Investments
ICON Equity Income Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (94.6%)
20,600 A.G. Edwards,
Inc. $ 1,097,568
28,100 Abbott
Laboratories 1,364,536
26,300 Acuity Brands,
Inc. 1,194,020
39,200 Alliant Energy
Corp. 1,400,616
20,900 Allied Irish
Banks PLC - ADR 1,129,854
13,300 Altria Group,
Inc. 1,018,115
15,700 American
Financial Group,
Inc. 736,801
37,700 American
International
Group, Inc. 2,498,002
62,700 Angelica Corp. 1,066,527
79,200 AT&T, Inc. 2,578,752
77,100 Banco Santander
Central Hispano
SA - ADR 1,217,409
40,000 Bank of America
Corp. 2,142,800
33,400 Black Hills Corp. 1,122,574
25,800 Canon, Inc. - ADR 1,349,082
19,000 Caremark Rx, Inc. 1,076,730
35,300 Chesapeake Corp. 505,143
20,900 Chevron Corp. 1,355,574
84,500 Cisco Systems,
Inc.(a) 1,943,500
42,400 Citigroup, Inc. 2,106,008
38,400 Clear Channel
Communications,
Inc. 1,107,840
12,600 CNOOC, Ltd. - ADR 1,049,454
51,000 Coca-Cola
Enterprises, Inc. 1,062,330
17,100 Colgate-Palmolive
Co. 1,061,910
53,400 Companhia De
Saneamento Basico
do Estado De Sao
Paulo - ADR 1,607,340
58,900 ConAgra Foods,
Inc. 1,441,872
12,600 Cummins, Inc. 1,502,298
10,500 Deutsche Bank
AG - ADR 1,267,350
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
17,100 E.I. du Pont de
Nemours and Co. $ 732,564
23,100 Edison
International 961,884
23,500 Eli Lilly & Co. 1,339,500
21,200 Exelon Corp. 1,283,448
6,600 Express Scripts,
Inc.(a) 498,234
47,000 Family Dollar
Stores, Inc. 1,374,280
21,400 Fannie Mae 1,196,474
18,100 Federal Home Loan
Mortgage Corp. 1,200,573
20,800 Foot Locker, Inc. 525,200
11,200 Forest
Laboratories,
Inc.(a) 566,832
72,500 General Electric
Co. 2,559,250
18,400 General Maritime
Corp. 673,072
47,400 General Motors
Corp. 1,576,524
3,400 Google, Inc. -
Class A(a) 1,366,460
10,600 Greif, Inc. 849,166
21,400 Harley-Davidson,
Inc. 1,342,850
45,100 Hewlett-Packard
Co. 1,654,719
23,000 Hillenbrand
Industries, Inc. 1,310,540
27,100 Honeywell
International,
Inc. 1,108,390
53,300 Horace Mann
Educators Corp. 1,024,959
30,600 Infosys
Technologies,
Ltd. - ADR 1,460,538
40,709 ING Group N.V. -
ADR 1,790,382
104,000 Intel Corp. 2,139,280
23,100 International
Business Machines
Corp. 1,892,814
28,400 iStar Financial,
Inc. 1,184,280
18,200 Jackson Hewitt
Tax Services,
Inc. 546,182
40,800 Johnson &
Johnson, Inc. 2,649,552
</Table>
Schedule of Investments 51
Schedule of Investments (continued)
ICON Equity Income Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
60,300 JPMorgan Chase &
Co. $ 2,831,688
16,100 Kimberly-Clark
Corp. 1,052,296
22,200 Knightsbridge
Tankers, Ltd. 573,204
9,700 Lehman Brothers
Holding, Inc. 716,442
33,100 Limited Brands,
Inc. 876,819
18,500 Lincoln National
Corp. 1,148,480
26,200 Manor Care, Inc. 1,369,736
30,900 McDonald's Corp. 1,208,808
21,500 McKesson HBOC,
Inc. 1,133,480
28,700 Mellon Financial
Corp. 1,122,170
58,700 Merck & Co., Inc. 2,459,530
17,500 Merrill Lynch &
Co., Inc. 1,368,850
21,700 MetLife, Inc. 1,229,956
170,500 MFA Mortgage
Investments, Inc. 1,270,225
150,300 Microsoft Corp. 4,107,699
25,400 Morgan Stanley 1,851,914
51,700 Motorola, Inc. 1,292,500
12,400 Nike, Inc. -
Class B 1,086,488
22,900 Nordic American
Tanker Shipping,
Ltd. 796,920
17,000 NOVA Chemicals
Corp. 522,070
7,200 Petrochina Co.,
Ltd. - ADR 775,080
51,300 Pfizer, Inc. 1,454,868
31,431 Philippine Long
Distance
Telephone Co. -
ADR 1,369,134
17,700 PNC Financial
Services Group,
Inc. 1,282,188
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
17,000 Posco - ADR $ 1,103,810
40,000 Procter & Gamble
Co. 2,479,200
28,800 Raytheon Co. 1,382,688
14,000 Ryder System,
Inc. 723,520
52,000 Seaspan Corp. 1,168,960
159,822 Siliconware
Precision
Industries Co. -
ADR 950,941
27,400 SkyWest, Inc. 671,848
9,100 Southern Copper
Corp. 841,750
36,600 Southern Union
Co. 966,606
20,900 Spartech Corp. 559,493
11,100 State Street
Corp. 692,640
20,400 Steven Madden,
Ltd. 800,496
11,800 The Allstate
Corp. 740,214
33,700 The Bank of New
York Co., Inc. 1,188,262
9,900 The Bear Stearns
Cos., Inc. 1,386,990
24,500 TXU Corp. 1,531,740
21,000 UBS AG - ADR 1,245,510
23,100 Universal Corp. 843,843
21,900 V.F. Corp. 1,597,605
41,700 Verizon
Communications,
Inc. 1,548,321
25,100 Wachovia Corp. 1,400,580
27,300 Wal-Mart Stores,
Inc. 1,346,436
31,800 Wells Fargo & Co. 1,150,524
------------
TOTAL COMMON STOCKS
(COST $119,622,745) 131,034,474
</Table>
52 Schedule of Investments
<Table>
<Caption>
SHARES OR
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ----------------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.7%)
7,000 Northrop
Grumman
Corp. 7.00% 04/04/21 $ 931,000
----------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(COST $927,374) 931,000
CORPORATE BONDS (2.0%)
$1,000,000 DaimlerChrysler
AG 6.50 11/15/13 1,025,469
1,288,000 Household
Finance
Corp. 4.75 07/15/13 1,244,017
575,000 United
Rentals
NA,
Inc. 7.75 11/15/13 566,375
----------
TOTAL CORPORATE
BONDS (COST
$2,907,894) 2,835,861
U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY BONDS
(2.2%)
1,323,000 Freddie
Mac 5.16 02/27/15 1,297,196
258,000 Freddie
Mac 5.00 09/29/17 248,275
750,000 U.S.
Treasury
Note 3.13 01/31/07 745,371
750,000 U.S.
Treasury
Note 4.00 08/31/07 743,642
----------
TOTAL U.S.
GOVERNMENT AND
U.S. GOVERNMENT
AGENCY BONDS (COST
$3,057,741) 3,034,484
CONVERTIBLE CORPORATE BONDS (0.4%)
600,000 International
Rectifier
Corp. 4.25 07/15/07 592,500
----------
TOTAL CONVERTIBLE
CORPORATE BONDS
(COST $596,555) 592,500
</Table>
<Table>
<Caption>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------
CALL OPTIONS PURCHASED (0.1%)
250 Comcast Corp.
Expiration January
2008, Exercise
Price $40.00 $ 80,000
882 ExpressJet
Holdings Inc.
Expiration March
2007, Exercise
Price $7.50 59,535
------------
TOTAL CALL OPTIONS PURCHASED
(COST $124,707) 139,535
SHORT-TERM INVESTMENTS (1.2%)
$1,692,811 Brown Brothers
Harriman Time
Deposit, 4.63%,
10/02/06# 1,692,811
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,692,811) 1,692,811
TOTAL INVESTMENTS
(COST $128,929,827) 101.2% 140,260,665
LIABILITIES LESS OTHER ASSETS
(1.2%) (1,628,949)
------------
TOTAL NET ASSETS 100.0% $138,631,716
============
</Table>
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, 2006.
ADR American Depositary Receipt.
Schedule of Investments 53
Management Overview
ICON Long/Short Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 88.5%
Top 10 Long Equity Holdings 13.2%
Number of Long Stocks 114
Number of Short
Positions 14
Short-Term Investments 8.3%
Percentages are based upon net assets.
TOP 10 LONG EQUITY HOLDINGS
September 30, 2006
CIGNA Corp. 1.5%
Bank of America Corp. 1.3%
American International Group, Inc. 1.3%
International Business Machines Corp. 1.3%
Johnson & Johnson,
Inc. 1.3%
Cognizant Technology Solutions Corp. 1.3%
Morgan Stanley 1.3%
The Goldman Sachs
Group, Inc. 1.3%
Forest Laboratories, Inc. 1.3%
BT Group PLC - ADR 1.3%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARK?
A. The Fund's benchmark, the S&P Composite 1500 Index, gained 10.32% for the
fiscal year ended September 30, 2006. In comparison, the ICON Long/ Short
Fund returned only 7.50% for Class I shares, 6.65% for Class C shares, and
7.73% for Class Z shares. Since their inception on May 31, 2006 through
September 30, 2006, the Class A shares of the Fund have returned (1.94%) (and
(7.58%) with maximum sales charge) compared to the S&P Composite 1500 Index
total return of 4.96% during the same period. Total returns for other periods
as of September 30, 2006 appear in the subsequent pages of this Fund's
Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Strong corporate earnings and historically low long-term interest rates
dominated the first seven months of the fiscal year, even as investors
remained concerned about higher oil and commodity prices and Federal Reserve
interest rate hikes.
This setting was beneficial for the Fund. Our system pointed us toward
cyclical industries, primarily from the Industrials, Materials, and Financial
sectors, and this positioning aided returns in the first half. However, we
saw an abrupt market turnaround begin in May, representing the first
significant theme change since March 2003. ICON's valuation methodology
identified this emerging leadership in defensive industries and mature,
large-cap issues.
The small- and mid-cap cyclical stocks that we saw dominate the first three
years of the bull market became some of the worst performers in virtually
every sector, but clear industry leadership was hard to discern. We watched
our system closely during this period of uncertainty, waiting for our
relative strength metrics to confirm the true industry leaders. As we gained
more confidence that the new theme was indeed solidifying, we gradually moved
away from cyclical holdings into more mature, recession-proof stocks. While
the ICON system's rigorous focus on valuation identified the new theme, the
Fund gave up some of its gains as we waited for leadership to develop
clearly.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. We seek to diversify the Fund among the sectors and industries throughout the
market that are demonstrating the best value and relative strength, buying
long those stocks we identify as undervalued and selling short stocks we view
as overvalued.
During the late spring and summer, we modestly increased the Fund's short
exposure to take advantage of industries that were both overpriced
54 Management Overview
(J.C. Waller III PHOTO)
J.C. Waller, III
Portfolio Manager
and showing signs of weakness vs. the market. Stocks from the home
entertainment software and internet retail industries that were sold short
proved beneficial. We also took short positions in stocks from a handful of
other industry groups, most notably in construction & engineering.
Guided by our system's valuation metrics, we overweighted the Fund in
industries with a heavy cyclical bent until near the end of the period,
primarily in the Industrials, Materials, and Energy sectors, and this worked
in the Fund's favor until early May. Despite being underweight relative to
the benchmark, the Fund's exposure to the Financials sector also contributed
measurably to its positive performance. As market leadership shifted toward
more defensive industries in July, we started to gradually reposition but had
to wait patiently for relative strength measurements to point to the genuine
leaders.
Positions in the Energy sector brought about the largest contraction in
returns as we saw a sharp correction in energy stocks and crude oil during
the latter part of the reporting period. This drop was felt in the oil & gas
drilling, oil & gas exploration & production, and coal & consumable fuel
industries, which were the Fund's three largest detractors on an industry
level. These industries were either eliminated or significantly reduced by
the end of the period because our analysis determined declining relative
strength.
The largest contributor to performance was the Fund's overweight exposure to
the steel industry. The construction & farm machinery & heavy trucks
industry, part of the Fund's economically sensitive theme for the first three
fiscal quarters, was the second best contributor to returns.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE EQUITY MARKET?
A. Our analysis concludes that abundant value remains in the market. There is
mounting evidence in our metrics that larger companies are poised to lead and
that the cyclical leadership of the last three years has shifted to sectors
that are more recession proof and defensive in nature. Only time will tell
whether this theme will hold, but we are gradually situating the Fund to
benefit from this perceived new leadership. We continue to concentrate on
diversifying the Fund with long positions in underpriced industries and
shorting only when our system reveals overpriced areas.
Management Overview 55
Management Overview (continued)
ICON Long/Short Fund
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - Positions in the Industrials, Materials, and Energy sectors helped the Fund
until early May 2006, when a market shift began to favor more defensive
sectors and larger, more mature companies.
- - As market leadership shifted toward more defensive industries, we began to
reposition the Fund but gave up some gains as we waited for market leadership
to clarify.
- - Energy stocks were generally the poorest performers in the Fund, after a
sharp correction hurt the Energy sector during the latter part of the
reporting period.
56 Management Overview
SECTOR COMPOSITION
September 30, 2006
<Table>
Financial 25.5%
Healthcare 12.2%
Telecommunication and Utilities 11.8%
Information Technology 11.5%
Leisure and Consumer Staples 8.8%
Consumer Discretionary 6.9%
Energy 5.2%
Industrials 5.1%
Materials 1.5%
</Table>
Percentages are based upon long positions as a percentage of net assets.
Management Overview 57
Management Overview (continued)
ICON Long/Short Fund
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Regional Banks 4.9%
Pharmaceuticals 4.6%
Investment Banking & Brokerage 4.0%
Diversified Banks 3.9%
Other Diversified Financial Services 3.8%
Integrated Telecommunication Services 3.7%
Diversified Capital Markets 3.6%
IT Consulting & Other Services 3.5%
Electric Utilities 3.5%
Soft Drinks 3.2%
Semiconductors 3.1%
Multi-Line Insurance 2.8%
Oil & Gas Storage & Transportation 2.7%
Health Care Facilities 2.7%
Food Retail 2.7%
Railroads 2.5%
Managed Health Care 2.4%
Mortgage Reits 2.3%
General Merchandise Stores 2.2%
Multi-Utilities 1.9%
Distillers & Vintners 1.9%
Specialty Stores 1.7%
Trucking 1.5%
Wireless Telecommunication Services 1.4%
Water Utilities 1.3%
Apparel Accessories & Luxury Goods 1.3%
Computer Hardware 1.3%
Health Care Distributors 1.2%
Internet Software & Services 1.2%
Biotechnology 1.2%
Electronic Equipment Manufacturers 1.1%
Oil & Gas Exploration & Production 1.1%
Airlines 1.0%
Data Processing & Outsourced Services 1.0%
Oil & Gas Drilling 1.0%
Household Appliances 0.9%
Gold 0.8%
Home Furnishing Retail 0.7%
Steel 0.6%
Leisure Products 0.6%
Oil & Gas Equipment & Services 0.6%
Office Electronics 0.4%
Photographic Products 0.4%
Asset Management & Custody Banks 0.3%
</Table>
Percentages are based upon long positions as a percentage of net assets.
58 Management Overview
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund - Class I 9/30/02 7.50% N/A 15.80%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 15.63%
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund - Class C 10/17/02 6.65% N/A 13.40%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 14.44%
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund - Class Z 5/6/04 7.73% N/A 10.71%
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% N/A 10.25%
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund - Class A* 5/31/06 N/A N/A (1.94%)
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund - Class A
(including maximum sales charge of
5.75%)* 5/31/06 N/A N/A (7.58%)
- -------------------------------------------------------------------------------------------
S&P Composite 1500 Index* N/A N/A 4.96%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
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.
Class C total returns exclude applicable sales charges. If sales charges were
included, returns would be lower.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON LONG/SHORT FUND - CLASS I S&P COMPOSITE 1500 INDEX
------------------------------ ------------------------
9/30/02 10000.00 10000.00
9760.00 10811.00
8880.00 10450.00
11039.00 12093.00
9/30/03 12000.00 12469.00
13453.00 14009.00
14435.00 14308.00
14455.00 14557.00
9/30/04 14091.00 14285.00
15897.00 15661.00
15751.00 15349.00
15699.00 15613.00
9/30/05 16726.00 16206.00
16903.00 16550.00
18891.00 17353.00
18379.00 17054.00
9/30/06 17982.00 17878.00
</Table>
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.
Management Overview 59
Schedule of Investments
ICON Long/Short Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (88.5%)
100,000 99 Cents Only
Stores(a) $ 1,183,000
50,000 A.C. Moore Arts
& Crafts,
Inc.(a) 951,500
19,000 A.G. Edwards,
Inc. 1,012,320
100,000 Advanced
Semiconductor
Engineering,
Inc. - ADR(a) 467,000
20,000 Alaska Air
Group, Inc.(a) 760,800
50,000 America Movil
S.A. de C.V. -
ADR 1,968,500
45,000 American
Electric Power
Co., Inc. 1,636,650
40,000 American
International
Group, Inc. 2,650,400
22,000 AmerisourceBergen
Corp. 994,400
12,500 Amphenol
Corp. - Class A 774,125
60,000 AmSouth Bancorp. 1,742,400
75,000 AmSurg Corp.(a) 1,669,500
40,000 AstraZeneca
PLC - ADR 2,500,000
23,000 Atwood Oceanics,
Inc.(a) 1,034,310
100,000 AU Optronics
Corp. - ADR 1,425,000
50,000 Bank of America
Corp. 2,678,500
55,000 Barrick Gold
Corp. - ADR 1,689,600
16,300 Big 5 Sporting
Goods Corp. 371,640
60,000 Borders Group,
Inc. 1,224,000
50,000 BT Group PLC -
ADR 2,528,500
17,100 Burlington
Northern Santa
Fe Corp. 1,255,824
28,000 Canadian
National Railway
Co. - ADR 1,174,320
25,000 CIGNA Corp. 2,908,000
50,000 Citigroup, Inc. 2,483,500
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
75,000 Coca-Cola
Enterprises,
Inc. $ 1,562,250
35,000 Cognizant
Technology
Solutions
Corp.(a) 2,592,100
50,000 Colonial
Bancgroup, Inc. 1,225,000
25,000 Columbia
Sportswear
Co.(a) 1,395,750
25,000 Comerica, Inc. 1,423,000
70,000 Companhia De
Saneamento
Basico do Estado
De Sao Paulo -
ADR 2,107,000
30,000 Compass
Bancshares, Inc. 1,709,400
75,000 Constellation
Brands, Inc.(a) 2,158,500
42,000 Convergys
Corp.(a) 867,300
40,000 Credit Suisse
Group - ADR 2,318,000
27,000 CSG Systems
International,
Inc.(a) 713,610
20,000 Cullen/Frost
Bankers, Inc. 1,156,400
20,000 Deutsche Bank
AG - ADR 2,414,000
25,000 Deutsche Telekom
AG - ADR 396,750
53,000 Dollar Tree
Stores, Inc.(a) 1,640,880
25,000 Dominion
Resources, Inc.
of Virginia 1,912,250
40,000 East-West
Bancorp, Inc. 1,584,400
40,000 Eastman Kodak
Co. 896,000
54,000 Family Dollar
Stores, Inc. 1,578,960
7,300 Fiserv, Inc.(a) 343,757
20,000 Fomento
Economico
Mexicano, S.A.
de C.V. - ADR 1,938,800
50,000 Forest
Laboratories,
Inc.(a) 2,530,500
40,000 FPL Group, Inc. 1,800,000
50,000 Frontline, Ltd. 1,925,500
</Table>
60 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
50,000 General Maritime
Corp. $ 1,829,000
35,000 Genzyme Corp.(a) 2,361,450
45,050 HCC Insurance
Holdings, Inc. 1,481,244
40,000 Helen of Troy,
Ltd.(a) 702,400
25,000 Helix Energy
Solutions Group,
Inc.(a) 835,000
30,000 Henry Schein,
Inc.(a) 1,504,200
25,000 HSBC Holdings
PLC - ADR 2,288,250
150,000 Impac Mortgage
Holdings, Inc. 1,405,500
50,000 Infosys
Technologies,
Ltd. - ADR 2,386,500
32,000 International
Business
Machines Corp. 2,622,080
36,400 j2 Global
Communications,
Inc.(a) 988,988
40,000 Johnson &
Johnson, Inc. 2,597,600
50,000 JPMorgan Chase &
Co. 2,348,000
100,000 K2, Inc.(a) 1,173,000
65,000 Kindred
Healthcare,
Inc.(a) 1,932,450
50,000 Koninkljke Ahold
N.V. - ADR(a) 529,500
50,000 Kroger Co. 1,157,000
15,000 Lan Airlines
S.A. - ADR 571,650
25,000 Lehman Brothers
Holding, Inc. 1,846,500
50,000 Lifepoint
Hospitals,
Inc.(a) 1,766,000
30,000 Liz Claiborne,
Inc. 1,185,300
75,000 MGP Ingredients,
Inc. 1,595,250
35,000 Morgan Stanley 2,551,849
75,000 Mylan
Laboratories,
Inc. 1,509,750
19,500 National-OilWell
Varco, Inc.(a) 1,141,725
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
50,000 Newcastle
Investment Corp. $ 1,370,500
26,000 Norfolk Southern
Corp. 1,145,300
27,000 Old Dominion
Freight Line,
Inc.(a) 810,810
25,000 Overseas
Shipholding
Group, Inc. 1,544,250
50,000 PepsiAmericas,
Inc. 1,067,000
34,000 PetsMart, Inc. 943,500
40,000 Pinnacle West
Capital Corp. 1,802,000
19,000 Posco - ADR 1,233,670
60,000 PT
Telekomunikasi
Indonesia - ADR 2,169,600
50,000 Range Resources
Corp. 1,262,000
35,000 Redwood Trust,
Inc. 1,762,950
45,000 Rent-A-Center,
Inc.(a) 1,318,050
28,000 Rowan Cos., Inc. 885,640
23,500 Ryder System,
Inc. 1,214,480
50,000 Safeway, Inc. 1,517,500
50,000 Satyam Computer
Services, Ltd. -
ADR 1,934,500
250,030 Siliconware
Precision
Industries Co. -
ADR 1,487,679
29,200 SkyWest, Inc. 715,984
50,000 Southern Co. 1,723,000
40,000 Southwest Water
Co. 489,200
75,000 SUPERVALU, Inc. 2,223,750
175,048 Taiwan
Semiconductor
Manufacturing
Co., Ltd. - ADR 1,680,461
90,000 Telefonos de
Mexico S.A. de
C.V. - ADR 2,302,200
75,000 Texas
Instruments,
Inc. 2,493,750
16,500 The Bank of New
York Co., Inc. 581,790
</Table>
Schedule of Investments 61
Schedule of Investments (continued)
ICON Long/Short Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
15,000 The Goldman
Sachs Group,
Inc. $ 2,537,550
18,000 The Hartford
Financial
Services Group,
Inc. 1,561,500
50,000 The Pepsi
Bottling Group,
Inc. 1,775,000
24,000 The Stanley
Works 1,196,400
30,000 Tim
Participacoes
S.A. - ADR 835,500
50,000 Travelzoo,
Inc.(a) 1,441,000
40,000 UBS AG - ADR 2,372,400
41,000 Umpqua Holdings
Corp. 1,172,600
17,000 Union Pacific
Corp. 1,496,000
40,000 UnitedHealth
Group, Inc. 1,968,000
35,000 Wachovia Corp. 1,953,000
60,000 Wells Fargo &
Co. 2,170,800
22,000 Wintrust
Financial Corp. 1,103,300
90,000 Xcel Energy,
Inc. 1,858,500
50,000 Xerox Corp.(a) 778,000
25,000 YRC Worldwide,
Inc.(a) 926,000
------------
TOTAL COMMON STOCKS
(COST $170,197,403) 176,409,196
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (8.3%)
$16,642,494 Brown Brothers
Harriman Time
Deposit,
4.63%, 10/02/06# $ 16,642,494
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $16,642,494) 16,642,494
TOTAL INVESTMENTS (COST
$186,839,897) 96.8% 193,051,690
OTHER ASSETS LESS LIABILITIES
3.2% 6,361,400
------------
TOTAL NET ASSETS 100.0% $199,413,090
============
</Table>
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, 2006.
ADR American Depositary Receipt.
All shares held may be pledged as collateral for investment securities sold
short.
62 Schedule of Investments
Schedule of Short Securities
ICON Long/Short Fund
September 30, 2006
<Table>
<Caption>
SHARES SHORT SECURITY VALUE
- ---------------------------------------------
50,000 Affymetrix, Inc.(a) $ 1,078,000
25,000 Ditech Networks
Inc.(a) 192,750
13,500 Fluor Corp. 1,038,015
75,000 Insituform
Technologies, Inc.(a) 1,821,000
50,000 Luby's Cafeteria,
Inc.(a) 493,500
20,000 Millipore Corp.(a) 1,226,000
50,000 On Assignment, Inc.(a) 490,500
25,000 Quanta Services,
Inc.(a) 421,500
10,000 Sunoco, Inc. 621,900
25,000 Techne Corp.(a) 1,271,500
35,000 Teradyne, Inc.(a) 460,600
10,000 Tesoro Corp. 579,800
23,000 URS Corp.(a) 894,470
12,000 Washington Group
International, Inc. 706,320
-----------
TOTAL SHORT SECURITIES (PROCEEDS
$11,666,402) $11,295,855
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
Schedule of Investments 63
Six Month Hypothetical Expense Example
September 30, 2006 (unaudited)
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 (4/1/06 - 9/30/06).
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 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.
64 Expense Example
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/06 9/30/06 4/1/06-9/30/06* 4/1/06-9/30/06
- -------------------------------------------------------------------------------------------------
ICON BOND FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,026.90 $ 5.08 1.00%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.98 5.07
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual period return 1,000.00 1,023.80 8.12 1.60%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,016.98 8.09
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual period return 1,000.00 1,027.90 4.06 0.80%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,021.00 4.04
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON CORE EQUITY FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 928.00 5.99 1.24%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.79 6.27
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 924.30 9.78 2.03%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,014.83 10.25
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 929.80 4.20 0.87%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,020.65 4.40
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS A
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 955.00 24.28 7.43%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,000.00 24.84
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
</Table>
Expense Example 65
Six Month Hypothetical Expense Example (continued)
September 30, 2006 (unaudited)
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/06 9/30/06 4/1/06-9/30/06* 4/1/06-9/30/06
- -------------------------------------------------------------------------------------------------
ICON COVERED CALL FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 973.90 $ 7.29 1.47%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,017.62 7.45
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 970.30 10.99 2.22%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,013.85 11.23
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 978.20 6.05 1.22%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.88 6.17
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS A
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,005.00 4.93 1.47%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,020.00 4.96
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON EQUITY INCOME FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 967.70 6.05 1.23%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.85 6.21
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 963.10 10.82 2.20%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,013.98 11.10
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 967.80 5.92 1.20%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.98 6.08
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
</Table>
66 Expense Example
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/06 9/30/06 4/1/06-9/30/06* 4/1/06-9/30/06
- -------------------------------------------------------------------------------------------------
CLASS A
- -------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,005.00 $ 4.82 1.44%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,020.00 4.86
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON LONG/SHORT FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 951.80 6.84 1.40%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,017.99 7.08
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 947.70 11.21 2.30%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,013.49 11.59
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 952.60 5.69 1.16%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.17 5.88
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS A
- -------------------------------------------------------------------------------------------------
Actual period return 1,000.00 981.00 5.10 1.54%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,020.00 5.20
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
</Table>
* 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.
Information shown for Class A shares reflects values using expense ratios and
rates of return for the period May 31, 2006 (date of commencement of
operations) through September 30, 2006. As such, the expense ratio is
annualized, multiplied by the average account value of the period of
operation, multiplied by 122/365 to reflect the actual period.
Total returns exclude applicable sales charges. If sales charges were included
(maximum 5.75%), returns would be lower.
Expense Example 67
Statements of Assets and Liabilities
September 30, 2006
<Table>
<Caption>
ICON ICON ICON ICON
ICON CORE COVERED EQUITY LONG/SHORT
BOND FUND EQUITY FUND CALL FUND INCOME FUND FUND
----------- ------------ ----------- ------------ ------------
ASSETS
Investments, at cost $90,292,928 $186,922,780 $62,446,419 $128,929,827 $186,839,897
----------- ------------ ----------- ------------ ------------
Investments, at value 89,961,521 201,862,840 67,263,975 140,260,665 193,051,690
Cash 771,295 - 18,481 92,339 3,255,516
Deposits for short sales - - - - 13,572,316
Receivables:
Fund shares sold 428,164 300,584 68,828 243,899 1,038,570
Investments sold - 2,391,081 2,665,615 3,142,071 -
Interest 1,358,397 790 534 73,269 4,235
Dividends - 121,845 63,911 202,081 256,219
Expense reimbursements by Advisor 14,492 - 1,675 2,555 3,730
Other assets 37,241 40,276 28,612 34,469 45,932
----------- ------------ ----------- ------------ ------------
Total Assets 92,571,110 204,717,416 70,111,631 144,051,348 211,228,208
----------- ------------ ----------- ------------ ------------
LIABILITIES
Options written, at value (premiums received of
$2,108,685) - - 2,002,352 - -
Common stocks sold short, at value (proceeds of
$11,666,402) - - - - 11,295,855
Payables:
Due to custodian bank - - - - -
Interest - - 3,880 347 -
Investments bought 771,295 2,011,996 4,749,212 4,994,666 -
Fund shares redeemed 396,500 189,105 58,442 217,175 268,042
Distributions due to shareholders 6,584 - - 42,479 -
Advisory fees & fee waiver recoupment 44,850 123,910 65,583 84,621 137,056
Accrued distribution fees 18,895 96,775 13,885 29,965 52,549
Fund accounting fees 2,359 4,417 2,152 3,159 4,282
Transfer agent fees 4,725 13,660 3,945 7,347 5,490
Administration fees 3,539 7,844 2,449 5,358 7,524
Trustee fees 2,106 4,654 1,455 3,176 4,529
Accrued expenses 24,534 38,290 25,091 31,339 39,791
----------- ------------ ----------- ------------ ------------
Total Liabilities 1,275,387 2,490,651 6,928,446 5,419,632 11,815,118
----------- ------------ ----------- ------------ ------------
NET ASSETS - ALL SHARE CLASSES $91,295,723 $202,226,765 $63,183,185 $138,631,716 $199,413,090
=========== ============ =========== ============ ============
NET ASSETS - CLASS I $90,324,438 $104,965,758 $60,321,103 $133,835,464 $168,522,268
=========== ============ =========== ============ ============
NET ASSETS - CLASS C $ 967,664 $ 95,841,554 $ 2,841,776 $ 4,753,143 $ 26,763,112
=========== ============ =========== ============ ============
NET ASSETS - CLASS Z $ 3,621 $ 1,291,161 $ 5,240 $ 24,374 $ 3,306,418
=========== ============ =========== ============ ============
NET ASSETS - CLASS A $ - $ 128,292 $ 15,066 $ 18,735 $ 821,292
=========== ============ =========== ============ ============
NET ASSETS CONSIST OF
Paid-in capital $93,043,832 $173,688,216 $55,835,825 $121,735,520 $187,378,659
Accumulated undistributed net investment
income/(loss) 37,685 - - 240,595 44,891
Accumulated undistributed net realized gain/(loss)
from investments (1,454,387) 13,598,489 2,423,471 5,324,763 5,407,200
Unrealized appreciation/(depreciation) on
investments, written options and securities sold
short (331,407) 14,940,060 4,923,889 11,330,838 6,582,340
----------- ------------ ----------- ------------ ------------
NET ASSETS $91,295,723 $202,226,765 $63,183,185 $138,631,716 $199,413,090
=========== ============ =========== ============ ============
Shares outstanding (unlimited shares authorized,
no par value)
Class I 9,033,787 6,898,432 4,370,342 8,957,415 9,806,340
Class C 96,559 6,600,758 212,310 320,141 1,605,603
Class Z 362 84,790 376 1,632 191,279
Class A - 8,503 1,092 1,256 47,802
Net asset value (offering and redemption price per
share)
Class I $ 10.00 $ 15.22 $ 13.80 $ 14.94 $ 17.19
Class C $ 10.02 $ 14.52 $ 13.39 $ 14.85 $ 16.67
Class Z $ 10.00 $ 15.23 $ 13.94 $ 14.94 $ 17.29
Class A $ - $ 15.09 $ 13.80 $ 14.92 $ 17.18
Class A maximum offering price
(100%/(100%-maximum sales charge) of net asset
value adjusted to the nearest cent per share $ - $ 16.01 $ 14.64 $ 15.83 $ 18.23
</Table>
The accompanying notes are an integral part of the financial statements.
68 Financial Statements
Statements of Operations
For the year ended September 30, 2006
<Table>
<Caption>
ICON ICON ICON ICON
ICON CORE COVERED EQUITY LONG/SHORT
BOND FUND EQUITY FUND CALL FUND INCOME FUND FUND
----------- ------------ ----------- ----------- -----------
INVESTMENT INCOME
Interest $ 4,518,533 $ 157,565 $ 56,286 $ 611,065 $ 366,882
Dividends - 2,032,573 802,440 3,680,781 1,594,688
Foreign taxes withheld - (2,548) - - (1,291)
----------- ------------ ----------- ----------- -----------
Total Investment Income 4,518,533 2,187,590 858,726 4,291,846 1,960,279
----------- ------------ ----------- ----------- -----------
EXPENSES
Advisory fees 516,753 1,480,347 450,913 1,009,634 1,032,304
Distribution fees:
Class I 212,850 263,725 142,080 325,625 252,623
Class C 8,342 905,957 32,565 43,427 185,317
Class A - 34 4 5 168
Fund accounting fees 26,892 51,227 24,505 36,282 33,424
Transfer agent fees 54,702 159,810 43,813 84,228 63,676
Administration fees 39,997 91,617 27,916 62,509 56,185
Registration fees:
Class I 12,660 9,798 8,513 10,161 11,217
Class C 7,723 7,973 6,094 6,201 7,359
Class A - 1 1 1 1
Custody fees 17,135 31,082 109,002 25,965 28,861
Insurance expense 5,060 9,615 3,734 9,509 4,196
Trustee fees and expenses 8,503 16,492 6,603 11,057 11,691
Interest expense 5,203 586 14,670 1,369 1,005
Dividends on short positions - - - - 12,450
Other expenses 59,868 121,000 51,403 78,655 84,676
----------- ------------ ----------- ----------- -----------
Total expenses before expense
(reimbursement)/recoupment and transfer
agent earnings credit 975,688 3,149,264 921,816 1,704,628 1,785,153
Transfer agent earnings credit (1,457) (3,283) (1,019) (2,203) (2,935)
Expense (reimbursement)/recoupment by
Advisor due to expense limitation
agreement (101,883) - (10,037) (5,476) 133,170
----------- ------------ ----------- ----------- -----------
Net Expenses 872,348 3,145,981 910,760 1,696,949 1,915,388
----------- ------------ ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) 3,646,185 (958,391) (52,034) 2,594,897 44,891
----------- ------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized gain/(loss) from:
Investment transactions (1,371,071) 17,009,597 7,622,102 6,633,609 6,871,673
Written options - - (3,251,372) - -
Securities sold short - - - 18,970 1,296,419
----------- ------------ ----------- ----------- -----------
Total net realized gain/(loss) (1,371,071) 17,009,597 4,370,730 6,652,579 8,168,092
----------- ------------ ----------- ----------- -----------
Change in net unrealized
appreciation/(depreciation) on
investments, written options and
securities sold short 143,765 (10,215,314) (4,231,738) (4,514,597) (5,119,897)
----------- ------------ ----------- ----------- -----------
Net realized and unrealized gain/(loss) on
investments (1,227,306) 6,794,283 138,992 2,137,982 3,048,195
----------- ------------ ----------- ----------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,418,879 $ 5,835,892 $ 86,958 $4,732,879 $ 3,093,086
=========== ============ =========== =========== ===========
</Table>
The accompanying notes are an integral part of the financial statements.
Financial Statements 69
Statements of Changes in Net Assets
<Table>
<Caption>
ICON BOND FUND ICON CORE EQUITY FUND
---------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------
OPERATIONS
Net investment income/(loss) $ 3,646,185 $ 2,741,954 $ (958,391) $ (959,954)
Net realized gain/(loss) from
investment transactions, written
options and securities sold short (1,371,071) (11,900) 17,009,597 14,916,012
Change in net unrealized
appreciation/(depreciation) on
investments, written options and
securities sold short 143,765 (2,183,484) (10,215,314) 8,567,211
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets
resulting from operations 2,418,879 546,570 5,835,892 22,523,269
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income
Class I (3,568,886) (2,853,077) - -
Class C (35,016) (31,705) - -
Class Z (163) (101) - -
Class A - - - -
Net realized gains
Class I (67,629) (338,815) (3,632,925) -
Class C (720) (4,379) (3,157,999) -
Class Z (5) (6) (44,621) -
Class A - - - -
------------ ------------ ------------ ------------
Net decrease from dividends and
distributions (3,672,419) (3,228,083) (6,835,545) -
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
Shares sold
Class I 64,855,369 68,872,908 48,438,116 58,022,225
Class C 680,279 1,493,441 30,392,845 24,404,517
Class Z 3,382 4,736 144,544 1,088,280
Class A - - 126,818 -
Reinvested dividends and distributions
Class I 3,549,356 3,161,012 3,340,799 -
Class C 32,459 34,828 3,039,446 -
Class Z 169 106 44,621 -
Class A - - - -
Shares repurchased
Class I (59,254,239) (48,473,705) (40,446,108) (23,305,845)
Class C (720,554) (876,763) (14,874,966) (10,044,802)
Class Z (5,070) (181) (69,837) (7,314)
Class A - - - -
------------ ------------ ------------ ------------
Net increase/(decrease) from fund
share transactions 9,141,151 24,216,382 30,136,278 50,157,061
------------ ------------ ------------ ------------
Total net increase/(decrease) in net
assets 7,887,611 21,534,869 29,136,625 72,680,330
NET ASSETS
Beginning of period 83,408,112 61,873,243 173,090,140 100,409,810
------------ ------------ ------------ ------------
End of period $ 91,295,723 $ 83,408,112 $202,226,765 $173,090,140
============ ============ ============ ============
</Table>
70 Financial Statements
<Table>
<Caption>
ICON COVERED CALL FUND ICON EQUITY INCOME FUND ICON LONG/SHORT FUND
--------------------------------------- --------------------------------------- ---------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ (52,034) $ (269,738) $ 2,594,897 $ 2,384,761 $ 44,891 $ (365,486)
4,370,730 (929,262) 6,652,579 8,338,413 8,168,092 (1,286,092)
(4,231,738) 5,856,219 (4,514,597) 5,084,010 (5,119,897) 10,046,242
------------ ------------ ------------ ------------ ------------ ------------
86,958 4,657,219 4,732,879 15,807,184 3,093,086 8,394,664
------------ ------------ ------------ ------------ ------------ ------------
- - (3,020,514) (2,332,579) - -
- - (62,488) (30,549) - -
- - (546) (410) - -
- - (137) - - -
(466,120) (2,014,072) (8,604,004) (690,470) - (1,266,628)
(32,162) (97,417) (280,066) (13,763) - (183,354)
(31) (118) (1,603) (103) - (1,524)
- - - - - -
------------ ------------ ------------ ------------ ------------ ------------
(498,313) (2,111,607) (11,969,358) (3,067,874) - (1,451,506)
------------ ------------ ------------ ------------ ------------ ------------
21,879,443 22,320,205 35,024,898 40,993,500 155,386,607 48,606,994
471,669 2,209,902 1,641,563 2,071,831 15,396,350 10,192,112
84,618 727 5,128 9,609 3,298,177 101,583
15,074 - 18,735 - 828,559 -
459,746 1,901,482 10,796,225 2,824,292 - 1,158,739
27,565 88,746 293,967 36,636 - 163,651
31 118 2,148 513 - 1,524
- - 137 - - -
(15,996,624) (15,241,634) (34,657,379) (44,139,761) (42,414,938) (26,815,665)
(1,268,384) (751,331) (817,109) (418,636) (3,333,058) (1,348,857)
(80,654) (790) (4,693) (3,317) (54,803) (7,915)
(27) - (29) - (10,006) -
------------ ------------ ------------ ------------ ------------ ------------
5,592,457 10,527,425 12,303,591 1,374,667 129,096,888 32,052,166
------------ ------------ ------------ ------------ ------------ ------------
5,181,102 13,073,037 5,067,112 14,113,977 132,189,974 38,995,324
58,002,083 44,929,046 133,564,604 119,450,627 67,223,116 28,227,792
------------ ------------ ------------ ------------ ------------ ------------
$ 63,183,185 $ 58,002,083 $138,631,716 $133,564,604 $199,413,090 $ 67,223,116
============ ============ ============ ============ ============ ============
</Table>
Financial Statements 71
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON BOND FUND ICON CORE EQUITY FUND
---------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------
TRANSACTIONS IN FUND SHARES
Shares sold
Class I 6,497,960 6,619,646 3,111,904 4,143,039
Class C 68,321 142,887 2,023,988 1,818,535
Class Z 338 455 9,247 74,785
Class A - - 8,503 -
Reinvested dividends and distributions
Class I 355,905 304,338 223,460 -
Class C 3,232 3,347 211,758 -
Class Z 17 10 2,991 -
Class A - - - -
Shares repurchased
Class I (5,932,254) (4,658,204) (2,631,913) (1,647,530)
Class C (72,047) (84,344) (993,097) (740,648)
Class Z (505) (17) (4,524) (514)
Class A - - - -
----------- ----------- ------------ ------------
Net increase/(decrease) 920,967 2,328,118 1,962,317 3,647,667
----------- ----------- ------------ ------------
Shares outstanding beginning of period 8,209,741 5,881,623 11,630,166 7,982,499
----------- ----------- ------------ ------------
Shares outstanding end of period 9,130,708 8,209,741 13,592,483 11,630,166
=========== =========== ============ ============
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding short-term securities and written options)
Purchase of securities (including
short sale transactions) $44,043,104 $30,243,959 $309,597,013 $230,365,019
Proceeds from sales of securities
(including short sale transactions) 31,016,317 18,795,990 287,820,163 183,339,859
Purchases of long-term U.S. government
securities 14,805,946 27,647,371 - -
Proceeds from sales of long-term U.S.
government securities 11,229,676 28,497,651 - -
ACCUMULATED UNDISTRIBUTED NET
INVESTMENT INCOME/(LOSS) $ 37,685 $ (4,435) $ - $ -
=========== =========== ============ ============
</Table>
The accompanying notes are an integral part of the financial statements.
72 Financial Statements
<Table>
<Caption>
ICON COVERED CALL FUND ICON EQUITY INCOME FUND ICON LONG/SHORT FUND
--------------------------------------- --------------------------------------- ---------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
1,585,494 1,669,418 2,306,970 2,741,457 8,952,416 3,261,050
35,165 168,643 108,682 139,266 916,226 700,414
5,982 54 338 633 185,742 6,835
1,094 - 1,249 - 48,384 -
33,630 141,902 729,216 183,923 - 77,095
2,068 6,733 20,038 2,394 - 11,065
2 9 145 34 - 101
- - 9 - - -
(1,164,572) (1,138,447) (2,290,509) (2,917,378) (2,470,963) (1,771,701)
(94,159) (56,539) (54,361) (27,971) (201,278) (91,534)
(5,853) (57) (304) (219) (3,184) (524)
(2) - (2) - (582) -
------------ ----------- ------------ ------------ ------------ -----------
398,849 791,716 821,471 122,139 7,426,761 2,192,801
------------ ----------- ------------ ------------ ------------ -----------
4,185,271 3,393,555 8,458,973 8,336,834 4,224,263 2,031,462
------------ ----------- ------------ ------------ ------------ -----------
4,584,120 4,185,271 9,280,444 8,458,973 11,651,024 4,224,263
============ =========== ============ ============ ============ ===========
$101,463,973 $92,623,516 $216,358,850 $187,781,662 $213,729,009 $83,387,797
100,165,236 86,038,491 210,597,210 188,205,266 105,361,679 57,223,650
- - 3,470,308 1,564,975 - -
- - 4,539,570 - - -
$ - $ - $ 240,595 $ 485,602 $ 44,891 $ -
============ =========== ============ ============ ============ ===========
</Table>
Financial Statements 73
Financial Highlights
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
---------------------------------------- ------------------------------------------
NET ASSET NET NET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM FROM NET FROM NET TOTAL
BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT INVESTMENT REALIZED DIVIDENDS AND
OF PERIOD (LOSS)(x) ON INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
--------- ---------- -------------- ---------- ---------- ------------- -------------
ICON BOND FUND
CLASS I+
Year Ended September 30,
2006 $10.16 $ 0.42 $(0.15) $ 0.27 $(0.42) $(0.01) $(0.43)
Year Ended September 30,
2005 10.52 0.40 (0.29) 0.11 (0.41) (0.06) (0.47)
Year Ended September 30,
2004 10.41 0.45 0.10 0.55 (0.44) - (0.44)
September 30, 2002
(inception) to September
30, 2003 10.00 0.42 0.38 0.80 (0.39) - (0.39)
CLASS C
Year Ended September 30,
2006 10.18 0.36 (0.15) 0.21 (0.36) (0.01) (0.37)
Year Ended September 30,
2005 10.54 0.33 (0.28) 0.05 (0.35) (0.06) (0.41)
Year Ended September 30,
2004 10.42 0.38 0.12 0.50 (0.38) - (0.38)
October 21, 2002
(inception) to September
30, 2003 9.79 0.37 0.60 0.97 (0.34) - (0.34)
CLASS Z
Year Ended September 30,
2006 10.15 0.45 (0.15) 0.30 (0.44) (0.01) (0.45)
Year Ended September 30,
2005 10.51 0.42 (0.28) 0.14 (0.44) (0.06) (0.50)
May 6, 2004 (inception) to
September 30, 2004 10.26 0.46 (0.02) 0.44 (0.19) - (0.19)
ICON CORE EQUITY FUND
CLASS I
Year Ended September 30,
2006 15.14 (0.02) 0.67 0.65 - (0.57) (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 - - -
Year Ended September 30,
2002 10.04 (0.07) (0.20) (0.27) - (0.27) (0.27)
CLASS C
Year Ended September 30,
2006 14.58 (0.14) 0.65 0.51 - (0.57) (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 - - -
Year Ended September 30,
2002 9.98 (0.15) (0.20) (0.35) - (0.27) (0.27)
CLASS Z
Year Ended September 30,
2006 15.12 0.02 0.66 0.68 - (0.57) (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
May 31, 2006 (inception)
to September 30, 2006 15.80 (0.27) (0.44) (0.71) - - -
ICON COVERED CALL FUND
CLASS I+
Year Ended September 30,
2006 13.88 (0.01) 0.05 0.04 - (0.12) (0.12)
Year Ended September 30,
2005 13.25 (0.06) 1.26 1.20 - (0.57) (0.57)
Year Ended September 30,
2004 12.40 (0.07) 1.36 1.29 - (0.44) (0.44)
September 30, 2002
(inception) to September
30, 2003 10.00 (0.07) 2.47 2.40 - - -
CLASS C
Year Ended September 30,
2006 13.56 (0.11) 0.06 (0.05) - (0.12) (0.12)
Year Ended September 30,
2005 13.06 (0.16) 1.23 1.07 - (0.57) (0.57)
Year Ended September 30,
2004 12.32 (0.16) 1.34 1.18 - (0.44) (0.44)
November 21, 2002
(inception) to September
30, 2003 10.75 (0.17) 1.74 1.57 - - -
CLASS Z
Year Ended September 30,
2006 13.94 0.02 0.10 0.12 - (0.12) (0.12)
Year Ended September 30,
2005 13.29 (0.03) 1.25 1.22 - (0.57) (0.57)
May 6, 2004 (inception) to
September 30, 2004 12.86 (0.01) 0.44 0.43 - - -
CLASS A
May 31, 2006 (inception)
to September 30, 2006 13.73 0.03 0.04 0.07 - - -
</Table>
74 Financial Highlights
<Table>
<Caption>
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO AVERAGE NET
AVERAGE NET ASSETS(a) ASSETS(a)
------------------------ ------------------------
BEFORE AFTER BEFORE AFTER
EXPENSE EXPENSE EXPENSE EXPENSE
LIMITATION/ LIMITATION/ LIMITATION/ LIMITATION/
RECOUPMENT RECOUPMENT RECOUPMENT RECOUPMENT
AND AND AND AND
NET ASSET NET ASSETS, AVERAGE NET TRANSFER TRANSFER TRANSFER TRANSFER
VALUE, END OF ASSETS FOR AGENT AGENT AGENT AGENT PORTFOLIO
BEGINNING TOTAL PERIOD THE PERIOD EARNINGS EARNINGS EARNINGS EARNINGS TURNOVER
OF PERIOD RETURN* (IN THOUSANDS) (IN THOUSANDS) CREDIT CREDIT CREDIT CREDIT RATE(b)
--------- ------- -------------- -------------- ----------- ----------- ----------- ----------- ---------
$10.00 2.72% $90,324 $85,162 1.11% 1.01%(e) 4.14% 4.24% 66.82%
10.16 1.05% 82,415 71,253 1.18% 1.10% 3.72% 3.80% 76.28%
10.52 5.41% 61,502 46,295 1.29% 1.30% 4.28% 4.27% 37.98%
10.41 8.19% 39,338 33,787 1.45% 1.30% 4.01% 4.16% 41.65%
10.02 2.09% 968 982 3.08% 1.61%(e) 2.17% 3.64% 66.82%
10.18 0.47% 988 926 3.42% 1.69% 1.46% 3.19% 76.28%
10.54 4.83% 371 317 6.84% 1.90% 3.63% 8.57% 37.98%
10.42 9.98% 260 199 2.05% 1.90% 3.48% 3.63% 41.65%
10.00 3.06% 4 4 25.40% 0.76%(e) (20.18)% 4.47% 66.82%
10.15 1.30% 5 2 74.28% 0.84% (69.41)% 4.03% 76.28%
10.51 4.33% 1 1 0.86% 0.86% 4.60% 4.60% 37.98%
15.22 4.35% 104,966 105,521 1.23% 1.23% (0.13)% (0.13)% 148.67%
15.14 18.47% 93,780 69,660 1.27% N/A (0.33)% N/A 136.82%
12.78 14.93% 47,273 43,044 1.33% N/A (0.59)% N/A 116.26%
11.12 17.05% 37,603 34,007 1.39% N/A (0.37)% N/A 188.07%
9.50 (3.23)% 42,232 37,577 1.36% N/A (0.58)% N/A 107.82%
14.52 3.54% 95,842 90,644 2.03% 2.02% (0.91)% (0.91)% 148.67%
14.58 17.49% 78,145 66,561 2.04% N/A (1.10)% N/A 136.82%
12.41 14.06% 53,101 45,114 2.08% N/A (1.34)% N/A 116.26%
10.88 16.24% 35,428 30,459 2.14% N/A (1.12)% N/A 188.07%
9.36 (4.07)% 27,744 19,849 2.11% N/A (1.33)% N/A 107.82%
15.23 4.57% 1,291 1,281 0.99% 0.98% 0.12% 0.12% 148.67%
15.12 18.22% 1,165 229 1.76% N/A (0.94)% N/A 136.82%
12.79 5.97% 36 32 1.12% N/A (0.28)% N/A 116.26%
15.09 (4.49)% 128 40 7.44% 7.43% (5.45)% (5.44)% 148.67%
13.80 0.30% 60,321 56,848 1.47% 1.47%(e) (0.04)% (0.04)% 159.55%
13.88 9.21% 54,347 49,938 1.54% 1.45% (0.57)% (0.48)% 159.35%
13.25 10.53% 42,962 30,305 1.60% 1.45% (0.67)% (0.52)% 167.57%
12.40 24.00% 20,981 14,544 2.07% 1.45% (1.27)% (0.65)% 184.24%
13.39 (0.36)% 2,842 3,254 2.61% 2.23%(e) (1.23)% (0.85)% 159.55%
13.56 8.31% 3,652 2,914 2.80% 2.20% (1.80)% (1.20)% 159.35%
13.06 9.69% 1,964 838 3.89% 2.20% (2.93)% (1.23)% 167.57%
12.32 14.60% 148 50 2.83% 2.20% (2.13)% (1.50)% 184.24%
13.94 0.88% 5 32 3.52% 1.22%(e) (2.14)% 0.15% 159.55%
13.94 9.42% 3 3 53.94% 1.20% (52.97)% (0.23)% 159.35%
13.29 3.34% 3 2 1.12% 1.12% (0.11)% (0.11)% 167.57%
13.80 0.51% 15 5 42.18% 1.47%(e) (40.01)% 0.69% 159.55%
</Table>
Financial Highlights 75
Financial Highlights (continued)
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
---------------------------------------- ------------------------------------------
NET ASSET NET NET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM FROM NET FROM NET TOTAL
BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT INVESTMENT REALIZED DIVIDENDS AND
OF PERIOD (LOSS)(X) ON INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
--------- ---------- -------------- ---------- ---------- ------------- -------------
ICON EQUITY INCOME FUND
CLASS I+
Year Ended September 30,
2006 $15.79 $ 0.30 $ 0.29 $ 0.59 $(0.35) $(1.09) $(1.44)
Year Ended September 30,
2005 14.33 0.27 1.54 1.81 (0.27) (0.08) (0.35)
Year Ended September 30,
2004 12.22 0.31 2.09 2.40 (0.29) - (0.29)
September 30, 2002
(inception) to
September 30, 2003 10.00 0.25 2.20 2.45 (0.23) - (0.23)
CLASS C
Year Ended September 30,
2006 15.71 0.15 0.29 0.44 (0.21) (1.09) (1.30)
Year Ended September 30,
2005 14.27 0.13 1.54 1.67 (0.15) (0.08) (0.23)
Year Ended September 30,
2004 12.21 0.20 2.06 2.26 (0.20) - (0.20)
November 8, 2002
(inception) to
September 30, 2003 10.63 0.16 1.59 1.75 (0.17) - (0.17)
CLASS Z
Year Ended September 30,
2006 15.79 0.30 0.29 0.59 (0.35) (1.09) (1.44)
Year Ended September 30,
2005 14.33 0.28 1.55 1.83 (0.29) (0.08) (0.37)
May 10, 2004 (inception)
to September 30, 2004 13.43 0.39 0.70 1.09 (0.19) - (0.19)
CLASS A
May 31, 2006 (inception)
to September 30, 2006 15.04 0.08 (0.01) 0.07 (0.19) - (0.19)
ICON LONG/SHORT FUND(D)
CLASS I+
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) (0.50)
Year Ended September 30,
2004 12.00 (0.08) 2.16 2.08 - (0.16) (0.16)
September 30, 2002
(inception) to
September 30, 2003 10.00 (0.07) 2.07 2.00 - - -
CLASS C
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) (0.50)
Year Ended September 30,
2004 11.92 (0.18) 2.15 1.97 - (0.16) (0.16)
October 17, 2002
(inception) to
September 30, 2003 10.61 (0.15) 1.46 1.31 - - -
CLASS Z
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) (0.50)
May 6, 2004 (inception)
to September 30, 2004 13.99 (0.04) (0.01) (0.05) - - -
CLASS A
May 31, 2006 (inception)
to September 30, 2006 17.52 0.05 (0.39) (0.34) - - -
</Table>
(x) Calculated using the average share method.
* The total return calculation is for the period indicated and excludes any
sales charges.
(a) Annualized for periods less than a year.
(b) Portfolio turnover is calculated at the Fund level and is not annualized.
(c) The limitation on expenses for Class Z shares occurred when the Advisor
reimbursed the Fund for excise and income taxes incurred during the period
(Note 5). These expenses were extraordinary expenses not subject to the
contractual expense limitation discussed in Note 2.
(d) The Fund's operating expenses, not including dividends on short positions,
are contractually limited to 2.30% for Class C, 1.55% for Class I, 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.
(e) The Fund's operating expenses, not including interest expense, are
contractually limited to the amounts discussed in Note 2. The ratios in
these financial highlights reflect the limitation, including the interest
expense.
+ The Fund has changed its originally stated inception date of October 1, 2002
to September 30, 2002.
The accompanying notes are an integral part of the financial statements.
76 Financial Highlights
<Table>
<Caption>
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO AVERAGE NET
AVERAGE NET ASSETS(A) ASSETS(A)
------------------------ ------------------------
BEFORE AFTER BEFORE AFTER
EXPENSE EXPENSE EXPENSE EXPENSE
LIMITATION/ LIMITATION/ LIMITATION/ LIMITATION/
RECOUPMENT RECOUPMENT RECOUPMENT RECOUPMENT
AND AND AND AND
NET ASSET NET ASSETS, AVERAGE NET TRANSFER TRANSFER TRANSFER TRANSFER
VALUE, END OF ASSETS FOR AGENT AGENT AGENT AGENT PORTFOLIO
BEGINNING TOTAL PERIOD THE PERIOD EARNINGS EARNINGS EARNINGS EARNINGS TURNOVER
OF PERIOD RETURN* (IN THOUSANDS) (IN THOUSANDS) CREDIT CREDIT CREDIT CREDIT RATE(B)
--------- ------- -------------- -------------- ----------- ----------- ----------- ----------- ---------
$14.94 4.02% $133,835 $130,261 1.23% 1.23%(e) 1.96% 1.96% 162.84%
15.79 12.71% 129,681 131,412 1.27% 1.27% 1.79% 1.79% 143.82%
14.33 19.69% 117,552 88,318 1.35% 1.37% 2.25% 2.23% 51.84%
12.22 24.72% 42,474 25,288 1.72% 1.45% 2.23% 2.30% 35.17%
14.85 3.03% 4,753 4,346 2.29% 2.20%(e) 0.91% 1.00% 162.84%
15.71 11.71% 3,861 3,026 2.53% 2.20% 0.53% 0.86% 143.82%
14.27 18.56% 1,885 1,053 3.47% 2.20% 0.12% 1.40% 51.84%
12.21 16.63% 581 348 2.48% 2.20% 1.10% 1.38% 35.17%
14.94 4.04% 24 23 4.36% 1.20%(e) (1.20)% 1.96% 162.84%
15.79 12.89% 23 20 9.37% 1.20% (6.31)% 1.86% 143.82%
14.33 8.12% 14 12 1.11% 0.97%(c) 2.62% 2.76% 51.84%
14.92 0.46% 19 6 38.36% 1.44%(e) (35.18)% 1.74% 162.84%
17.19 7.50% 168,522 101,365 1.34% 1.45%(e) 0.29% 0.18% 94.62%
15.99 18.69% 53,158 47,211 1.58% 1.58% (0.53)% (0.53)% 112.06%
13.92 17.42% 24,480 14,374 2.15% 1.74% (1.03)% (0.62)% 148.32%
12.00 20.00% 9,726 6,997 3.09% 1.55% (2.20)% (0.66)% 162.25%
16.67 6.65% 26,763 18,567 2.20% 2.30%(e) (0.69)% (0.78)% 94.62%
15.63 17.68% 13,925 8,860 2.37% 2.32% (1.35)% (1.31)% 112.06%
13.73 16.61% 3,716 1,417 3.70% 2.49% (2.57)% (1.35)% 148.32%
11.92 12.35% 269 186 3.84% 2.30% (2.99)% (1.45)% 162.25%
17.29 7.73% 3,306 1,810 1.09% 1.17%(e) 0.69% 0.61% 94.62%
16.05 18.96% 140 89 3.07% 1.33% (2.07)% (0.33)% 112.06%
13.94 (0.36)% 32 29 1.98% 1.76% (0.50)% (0.28)% 148.32%
17.18 (1.94)% 821 196 2.51% 1.54%(e) (0.01)% 0.96% 94.62%
</Table>
Financial Highlights 77
Notes to Financial Statements
September 30, 2006
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Bond Fund ("Bond Fund"), ICON Core Equity Fund ("Core Equity Fund")
ICON Covered Call Fund ("Covered Call Fund"), ICON Equity Income Fund ("Equity
Income 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
Covered Call Fund is modest capital appreciation and to maximize realized gains
from writing covered call options. The investment objective of the Equity Income
Fund is modest capital appreciation and income. 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 Covered Call
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 invests short in securities;
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 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
78 Notes to Financial Statements
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 addition, 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 involves
future claims that may be made against each Fund. However, based on experience,
the Funds expect the risk of loss to be minimal.
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 as of the closing price at the
close of regular trading on the New York Stock Exchange (the "NYSE") (normally 4
p.m. Eastern time) 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 report the market value of securities in their
portfolios; if a pricing service is not able to provide a price, or the pricing
service quote of valuation is 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. The valuation assigned to fair-valued
securities for purposes of
Notes to Financial Statements 79
Notes to Financial Statements (continued)
calculating a Fund's net asset value ("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.
Lacking any sales that day, the 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 Funds' adviser 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 net asset value ("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.
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 has recently begun to evaluate the application of
the Statement to the Funds, and is not in a position at this
80 Notes to Financial Statements
time to evaluate the significance of its impact, if any, on the Funds' financial
statements.
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, 2006.
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 into U.S. dollars at the prevailing rates of exchange daily.
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 Statements of Assets and
Liabilities. Net realized gains and losses on foreign currency transactions
Notes to Financial Statements 81
Notes to Financial Statements (continued)
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 Statements of Operations. The
Funds did not enter into any forward foreign currency contracts during the year
ended September 30, 2006.
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
the 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, 2006.
OPTIONS TRANSACTIONS
The Covered Call Fund writes (sells) call options as part of its normal
investment activities. Each Fund may write (sell) put and call options only if
it owns an offsetting position in the underlying security.
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 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, a 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.
82 Notes to Financial Statements
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, 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 a sale are decreased by the
premium originally paid. Written and purchased options are non-income producing
securities.
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 equivalents 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 held by one broker. Dividend expense
on short sales is 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.
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 distributes net
investment income, if any, to shareholders quarterly. Other Funds distribute
income, if any, annually. The Funds distribute net realized capital
Notes to Financial Statements 83
Notes to Financial Statements (continued)
gains, if any, to shareholders at least annually, if not offset by capital loss
carryovers. The ICON 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 for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. Management has recently begun to
evaluate the application of the Interpretation to the Funds and is not in a
position at this time to evaluate the significance of its impact, if any, on the
Funds' financial statements.
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. 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
84 Notes to Financial Statements
all Funds in the Trust based upon relative net assets. In calculating the net
asset value per share of each class, investment income, realized and unrealized
gains and losses and expenses other than class-specific expenses are allocated
daily to each class of shares based upon the proportion of net assets.
2. 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, Covered Call and Equity Income 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:
<Table>
<Caption>
CLASS I CLASS C CLASS Z CLASS A
- --------------------------------------------------------------------------------------
ICON Bond Fund 1.00% 1.60% 0.75% N/A
ICON Covered Call Fund 1.45% 2.20% 1.20% 1.45%
ICON Equity Income Fund 1.45% 2.20% 1.20% 1.45%
ICON Long/Short Fund 1.55% 2.30% 1.30% 1.55%
</Table>
The Funds' expense limitation will continue in effect until at least January 31,
2016.
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, 2006 the following amounts were still available for
recoupment by ICON based upon their potential expiration dates:
<Table>
<Caption>
2007 2008 2009
- -----------------------------------------------------------------------------------
ICON Bond Fund $15,704 $ 90,804 $102,282
ICON Covered Call Fund 47,944 96,329 42,816
ICON Equity Income Fund 12,875 11,555 6,067
ICON Long/Short Fund -- 3,256 4,219
</Table>
Notes to Financial Statements 85
Notes to Financial Statements (continued)
TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES
BISYS Fund Services Ohio, Inc. ("BISYS") is the Fund Accounting Agent for the
Funds. For its services, the Trust pays BISYS 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, 2006, 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. Prior to that date, this agreement provided for an annual fee to ICON
of 0.05% on the Funds' first $1.5 billion of average daily net assets and 0.045%
on average daily net assets in excess of $1.5 billion. 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 BISYS pursuant to
which BISYS assists ICON with the administration and business affairs of the
Trust. For its services, ICON pays BISYS 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.
86 Notes to Financial Statements
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, 2006, 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,
has been used to offset various shareholder servicing costs incurred by the
Adviser. For the year ended September 30, 2006, this amount was $118,178.
3. 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 Covered Call Fund is limited to the lesser of $50 million or 10% of net
asset value. Interest is charged at LIBOR plus
Notes to Financial Statements 87
Notes to Financial Statements (continued)
2.00%, which was 7.32% at September 30, 2006. The average interest rate charged
for the year ended September 30, 2006 was 6.75%.
<Table>
<Caption>
AVERAGE BORROWING
(10/1/05-9/30/06)
- -------------------------------------------------------------------------------
ICON Bond Fund $522,432
ICON Core Equity Fund 172,280
ICON Covered Call Fund 480,701
ICON Equity Income Fund** 280,545
ICON Long/Short Fund 134,025
</Table>
** Fund had outstanding borrowings as of September 30, 2006.
4. OPTIONS CONTRACTS WRITTEN
The number of option contracts written and the premiums received by the ICON
Covered Call Fund during the year ended September 30, 2006, were as follows:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- -------------------------------------------------------------------------------------
Options outstanding, beginning of period 13,261 $ 2,471,399
Options written during period 69,223 19,176,827
Options expired during period (1,902) (348,845)
Options closed during period (67,366) (19,190,696)
Options exercised during period -- --
------- ------------
Options outstanding, end of period 13,216 $ 2,108,685
======= ============
</Table>
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 characteristics of dividends and distributions paid to shareholders
during the fiscal year ended September 30, 2006, were as follows:
<Table>
<Caption>
DISTRIBUTIONS PAID FROM
----------------------- TAX TOTAL
ORDINARY NET LONG- TOTAL TAXABLE TAX EXEMPT RETURN OF DISTRIBUTIONS
FUND INCOME TERM GAINS DISTRIBUTIONS DISTRIBUTIONS CAPITAL 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 Covered Call Fund - 498,313 498,313 - - 498,313
ICON Equity Income Fund 2,922,978 8,885,673 11,808,651 - - 11,808,651
</Table>
88 Notes to Financial Statements
The tax characteristics of dividends and distributions paid to shareholders
during the fiscal year ended September 30, 2005, were as follows:
<Table>
<Caption>
DISTRIBUTIONS PAID FROM
----------------------- TAX TOTAL
ORDINARY NET LONG- TOTAL TAXABLE RETURN OF DISTRIBUTIONS
FUND INCOME TERM GAINS DISTRIBUTIONS CAPITAL PAID*
- ---------------------------------------------------------------------------------------------------
ICON Bond Fund $2,799,032 $343,200 $3,142,232 $ - $3,142,232
ICON Covered Call Fund 1,404,286 707,268 2,111,554 53 2,111,607
ICON Equity Income Fund 2,443,441 704,336 3,147,777 - 3,147,777
ICON Long/Short Fund 605,334 845,915 1,451,249 257 1,451,506
</Table>
* Differences between the financial statement distributions paid and the tax
basis distributions paid were a result of accrual based accounting and cash
basis accounting used for federal tax reporting purposes.
During the year ended September 30, 2006, the following capital loss
carryforwards were used:
<Table>
ICON Covered Call Fund $ 621,989
ICON Long/Short Fund 387,875
</Table>
Net capital losses incurred after October 31 and within the taxable year are
deemed to arise on the first business day of the Funds' next taxable year. For
the year ended September 30, 2006, the fund deferred to October 1, 2006 post
October capital losses:
<Table>
<Caption>
CAPITAL
FUND LOSSES
- -------------------------------------------------------------------------
ICON Bond Fund $1,454,387
</Table>
As of September 30, 2006, the components of accumulated earnings (deficit) on a
tax basis was as follows:
<Table>
<Caption>
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 $ 359,180 $ - $ 359,180 $(321,495) $(1,454,387) $ (331,407) $(1,748,109)
ICON Core Equity Fund - 13,671,736 13,671,736 - - 14,866,813 28,538,549
ICON Covered Call
Fund 2,541,496 - 2,541,496 - - 4,805,864 7,347,360
ICON Equity Income
Fund 1,011,737 5,361,318 6,373,055 (692,817) - 11,215,958 16,896,196
ICON Long/ Short Fund 44,891 5,441,647 5,486,538 - - 6,547,893 12,034,431
</Table>
Notes to Financial Statements 89
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 difference between the book-basis and tax-basis unrealized appreciation
(depreciation) is attributable primarily to tax deferral of losses on wash sales
and straddles, recognition of tax unrealized appreciation (depreciation) of
passive foreign investment companies and contingent payment debt instruments.
As of September 30, 2006, 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:
<Table>
<Caption>
UNREALIZED UNREALIZED NET APPRECIATION
FUND COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- ---------------------------------------------------------------------------------------
ICON Bond Fund $ 90,292,928 $ 294,671 $ (626,078) $ (331,407)
ICON Core Equity Fund 186,996,027 16,347,942 (1,481,129) 14,866,813
ICON Covered Call Fund 62,318,324 5,368,277 (938,746) 4,699,531
ICON Equity Income
Fund 129,044,707 12,255,238 (1,039,280) 11,215,958
ICON Long/Short Fund 188,780,259 11,610,414 (5,062,521) 6,547,893
</Table>
6. SEGREGATED ACCOUNT AND SHORT SALE COLLATERAL
As of September 30, 2006 the ICON Long/Short Fund had securities or cash
deposits with the counterparty to the short sales in the amount of $13,572,316
as collateral for the short sales.
90 Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of the ICON Diversified Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, short securities and written 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 Covered Call Fund, ICON Equity
Income Fund, and ICON Long/Short Fund (five of the portfolios constituting ICON
Funds, hereafter referred to as "Funds") at September 30, 2006, 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, 2006 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 22, 2006
Report of Accounting Firm 91
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees ("Board") consists of six 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, 55, 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, 56. 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 Chamois Partners, a venture capital company (2004
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) 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., 57. Mr. Pomeroy has been a Trustee of the Funds since
November 2002. Mr. Pomeroy is Chief Investment Officer and Director of
Investments, Pennsylvania State University (2001 to present) and was Portfolio
Manager and Product Manager, Trinity Investment Management Corporation (1989 to
2001).
92 Trustees and Officers
GREGORY KELLAM SCOTT, 58. Mr. Scott has been a Trustee of the Funds since
November 2002. 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). Mr. Scott is also a
member of the National Board of Directors of the Constituency for Africa (1997
to present) and serves as Executive Director of Indiana Civil Rights Commission
(2005-present). Mr. Scott has been appointed to the US State Department's
Commission on the African Judiciary (2006-present).
R. MICHAEL SENTEL, 58. 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 became a
branch chief. 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).
JONATHAN F. ZESCHIN, 53. Mr. Zeschin has been a Trustee of the Funds since
November 2002. Mr. Zeschin is President and Founder of ESSENTIAL Advisers, Inc.,
a wealth management and investment advisory firm (2000 to present) and was
Managing Partner of JZ Partners LLC, a business consulting firm for investment
management companies (1998 to present). Mr. Zeschin was previously President of
Founders Asset Management LLC, an investment management company (1995 to 1998)
and Executive Vice President, INVESCO Funds Group, an investment advisory
company (1992 to 1995). Mr. Zeschin was previously a Director of the Young
Americans Education Foundation and Young Americans Bank (1998 to 2004); and was
previously a Director of the Wasatch Funds (2002 to 2004).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 55. 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.
Trustees and Officers 93
Board of Trustees and Fund Officers (continued)
(unaudited)
ERIK L. JONSON, 57. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception. 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).
DONALD SALCITO, 53. 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, 33. Ms. Schoffman serves as Assistant Vice President and
Chief Compliance Officer of the Funds (May 2004 to present). She also serves as
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, 43. Mr. Abrams serves as Anti-Money Laundering Officer of the
Funds (2005 to present). Mr. Abrams is also Associate General Counsel of ICON
Advisors, Inc. (2005 to present). Previously he was a Partner at Perkins Coie,
LLP (2004 to 2005) and Associate (2000 to 2004).
94 Trustees and Officers
Other Information (unaudited)
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 Diversified 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, Covered Call, 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 8, 2006, the Board of Trustees, including all of the Trustees who 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, 2006.
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.
Other Information 95
Other Information (continued) (unaudited)
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
from each Fund over various periods. The 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 information provided and
analyzed, 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 whether 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 are 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; and
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.
In connection with reviewing data bearing upon the costs of services to be
provided and profits to be realized by ICON and its related companies from the
relationship with the Trust, the Board considered the Lipper comparative data,
data concerning ICON's soft-dollar arrangements, costs borne by ICON in
providing advisory services to each Fund and the profitability of ICON in light
of the estimated profitability analyses which had been provided by ICON, other
benefits to ICON from serving as the Funds' adviser, and ICON's financial
statements.
96 Other Information
With respect to the soft-dollar arrangements the Board assessed all facets of
the arrangements including the quality of trade execution. It was noted that
ICON receives research assistance from the use of soft dollars generated from
Fund portfolio transactions and that such research assists ICON in providing
quality investment advisory services to the Funds and other accounts to which it
provides advisory services. The Board concluded that the arrangements are
consistent with Fund brokerage practices and benefit the Funds and their
shareholders.
The Board noted that ICON benefits from serving directly as investment adviser
and administrative agent, and through its affiliate, as the principal
underwriter for the Funds. With respect to the distribution services, the Board
noted that proceeds of the Trust's distribution plans pursuant to Rule 12b-1
under the 1940 Act for the International Equity and Diversified Funds are paid
to ICON's affiliate and that the distributor has not profited from plan proceeds
as all of the proceeds have been or will be used to cover distribution and
marketing expenses. In this regard, the Trustees noted that marketing efforts
have been successful as evidenced by Fund asset levels. With respect to the
administrative fee paid to ICON, the Board reviewed the comparative data related
to those services. The Board also considered the compliance experience in these
service areas and concluded that the services provided by ICON and its
affiliates to the Funds are satisfactory and that the profits derived from
providing the services are competitive and reasonable.
The Board also noted the risks assumed by ICON in providing investment advisory,
distribution and administrative 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 Funds
is made with the recognition that the Funds' advisory relationship with ICON can
be terminated at any time and must be renewed on an annual basis.
In making these determinations the Board of Trustees considered the following:
1. In connection with assessing data bearing upon 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:
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 for the Sector Funds were higher than
fees for similar funds; but that the Sector Funds' expense ratios were
Other Information 97
Other Information (continued) (unaudited)
competitive and in most instances lower than those of similarly managed
Funds;
C. that the Sector Funds had also imposed breakpoints on the contractual
advisory fees and that such fees were reflected in the comparison data;
D. that contractual advisory fees for the ICON Asia-Pacific Region and
Europe Funds were above the average fees for similar funds; however, the
Funds' expense ratios were competitive in light of their size;
E. that the contractual advisory fees for the ICON International Equity
Fund is below the average of similarly managed funds;
F. the contractual advisory fees for the U.S. Diversified Funds were in
line with fees for similar funds; and that, with the exception of the ICON
Bond Fund and ICON Covered Call Fund, the U.S. Diversified Funds' expense
ratios were lower than those of similarly managed Funds.
G. the contractual advisory fee for the ICON Core Equity Fund was below the
average fee for similar funds; and that its expense ratio was lower than
those of similarly managed Funds.
H. that, generally 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; however, to the extent such fees are lower, it is
due to the fact that such accounts are less costly for ICON to manage.
I. 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 solely
from such arm's-length negotiation.
3. In connection the investment performance of the Funds and ICON the Board
discussed and noted:
1. Based on the performance information provided by Lipper, Inc., of the
thirteen ICON Funds that had a track record of at least five years, ten
outperformed their respective peer groups; eight of the sixteen ICON Funds
with a track of at least 3 years outperformed their respective peer groups;
and
2. In comparing the Sector Funds to the ETFs the sector funds compared
favorably over the one, two and three year periods.
The Board considered 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. It was noted that each of the Sector
Funds had imposed investment advisory fee breakpoints in January 2006 to take
into consideration such economies that may be
98 Other Information
realized as the Funds increase in assets. Furthermore, ICON has contractually
agreed to impose expense limitations on the International Funds and the U.S.
Diversified Funds at a cost to ICON.
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, 2006, qualifies
for the corporate dividends received deduction for the following Funds:
<Table>
<Caption>
DIVIDENDS
RECEIVED
FUND DEDUCTION
- -----------------------------------------------------------------------
ICON Core Equity Fund 100%
ICON Equity Income Fund 83.40%
</Table>
For the fiscal year ended September 30, 2006, the following Funds paid qualified
dividend income:
<Table>
<Caption>
FUND AMOUNT
- ------------------------------------------------------------------------
ICON Core Equity Fund $ 16,325
ICON Equity Income Fund 2,922,979
</Table>
The Funds designate the following amounts as long-term capital gain
distributions qualifying for the maximum 15% income tax rate for individuals:
<Table>
<Caption>
FUND AMOUNT
- ------------------------------------------------------------------------
ICON Bond Fund $ 60,888
ICON Core Equity Fund 9,213,880
ICON Covered Call Fund 498,313
ICON Equity Income Fund 9,627,509
ICON Long/Short Fund 1,474,799
</Table>
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
Other Information 99
Other Information (continued) (unaudited)
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.
100 Other Information
THIS PAGE INTENTIONALLY LEFT BLANK
(ICON FUNDS LOGO)
<Table>
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, 12(th) Floor
Greenwood Village, CO 80111
On the Internet www.iconadvisers.com
By E-Mail info@iconadvisers.com
</Table>
(ICON LOGO)
1-800-764-0442
www.iconadvisers.com
FANN-DIV(9-06)
(GLOBE)
2006 Annual Report
ICON INTERNATIONAL FUNDS
Investment Update
ICON ASIA-PACIFIC REGION FUND
ICON EUROPE FUND
ICON INTERNATIONAL EQUITY FUND
(ICON LOGO)
STRENGTH
IN NUMBERS
Table of Contents
<Table>
ABOUT THIS REPORT (UNAUDITED) 2
MESSAGE FROM ICON FUNDS (UNAUDITED) 5
MANAGEMENT OVERVIEW (UNAUDITED) AND SCHEDULE OF INVESTMENTS 10
ICON Asia-Pacific Region Fund 10
ICON Europe Fund 20
ICON International Equity Fund 30
SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE (UNAUDITED) 41
FINANCIAL STATEMENTS 43
FINANCIAL HIGHLIGHTS 50
NOTES TO FINANCIAL STATEMENTS 52
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 64
BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED) 65
OTHER INFORMATION (UNAUDITED) 68
</Table>
About This Report
HISTORICAL RETURNS
All total returns mentioned in this report account for the change in a Fund's
per-share price and the reinvestment of any dividends, capital gain
distributions, and tax return of capital. 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, 2006, 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. Each Fund's holdings as of September 30, 2006 are
included in each Fund's Schedule of Investments.
Certain companies' stock performance during the period is mentioned throughout
the Management Overviews. 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
2 About This Report
brokers and issuers. The ICON system relies on the integrity of financial
statements released to the market as part of our analysis.
This Report contains statements regarding industry or sector themes, new market
themes, investment outlook, relative strength, value-to-price ratios, and
portfolio managers' 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," "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, and other factors beyond the
control of our portfolio managers. 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. Investments in foreign securities may
entail unique risks, including political, market and currency risks. 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. 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.
About This Report 3
About This Report (continued)
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.
- - The unmanaged Bloomberg European 500 Index measures the weighted average
performance in U.S. dollars of the 500 most highly capitalized European
companies.
Index returns and statistical data included in this report are provided by
Bloomberg and FactSet Research Systems.
4 About This Report
Message from ICON Funds
- --------------------------------------------------------------------------------
We were pleased with the Funds' industry tilting early in the period, as value
and relative strength pulled us toward cyclical, industrial even commodity-based
industries.
- --------------------------------------------------------------------------------
Dear ICON Shareholder:
We realize you are faced with many mutual fund choices as you structure 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.
You may have decided to invest in an ICON International Fund because you were
attracted to ICON's value-based, bottom-up investment system, which pursues
industries we believe are poised to outperform the broader market. Or perhaps
you thought ICON stood out among other managers because we take a quantitative,
unemotional, and objective approach.
Whether you invest in our International Funds, such as the ICON Europe Fund, our
U.S. Diversified Funds, such as the ICON Core Equity Fund, or our Sector Funds,
such as the ICON Healthcare Fund, each is powered by ICON's unique systematic
discipline. Guided by an investment system that relies primarily on analyzing
data, not speculation, we find "strength in numbers," as our firm's slogan
declares.
THE CYCLICAL MARKET THEME OF THE PAST THREE YEARS
During the third calendar quarter of 2006, there was a major shift in market
industry leadership. As a result of our industry rotation, you will see many
stocks in Funds that were not held in the Semiannual Report as of March 31,
2006. Indeed, there are many companies that have not been owned by the Funds
since late 1999 or early 2000. Before describing that rotation, let's review the
industry and sector theme of the preceding three years.
Most U.S. and international stock market indexes hit a low in early March 2003
and then embarked on a three-year bull market, with the MSCI ACWI ex-U.S.
peaking on May 11, 2006. Table #1 shows cumulative performance for Standard &
Poor's Composite 1500 Sector Indexes over that period. As you can see, the
market leadership over that period was in the cyclical, economically sensitive
sectors of Energy, Materials, and Industrials. These sectors include companies
whose revenues are very dependent on the ups and downs of the economy. The
opposite is true of the lagging sectors; Healthcare, Consumer Staples, and
Telecommunication are generally considered to be defensive, recession-proof
sectors.
On an industry level, a few of the top performing industries over that period
included steel, metals & mining, construction materials, oil & gas exploration
and homebuilders. These industries tend to be comprised of small- and mid-sized
companies. Among the worst performing industries were brewers, pharmaceuticals,
systems software, soft drinks and packaged foods, which contrary to the previous
leaders, tend to be comprised of large, mature companies.
Message from ICON Funds 5
Message from ICON Funds (continued)
We are proud of our discipline and our
ability to endure volatility when it is
required to capture industry leadership.
- --------------------------------------------------------------------------------
Our system is suggesting a market with new leadership and an entirely new
personality.
- --------------------------------------------------------------------------------
(CRAIG T. CALLAHAN PHOTO)
Craig T. Callahan
President and Chairman of
the Board of Trustees
<Table>
<Caption>
TABLE 1
CUMULATIVE TOTAL RETURNS
3/11/03 - 5/5/06
S&P 1500 SECTOR INDEX RETURN %
- --------------------- --------
Energy 158.00
Materials 118.15
Industrials 105.75
Utilities 95.68
Financials 83.86
S&P COMPOSITE 1500 INDEX 79.04
Consumer Discretionary 73.89
Information Technology 68.39
Telecommunication Services 64.17
Consumer Staples 44.01
Health Care 31.64
</Table>
Data Source: FactSet Research Systems
Returns include the reinvestment of dividends and capital gain distributions.
We were pleased with the Funds' industry tilting during that period, as value
and relative strength pulled us toward cyclical, industrial even commodity-
based industries. Looking back, we believe those industries were on sale because
investors were incorrectly fearful of a slow or sluggish economy, as investors
worried that higher oil prices, war, and terrorism would hurt the economy. As
investors realized that cyclical firms were prosperous, stock prices
occasionally surged to reflect fair value. From an ICON perspective, price was
trying to catch up with fair value, which over a three-year period made for
impressive returns in the leading industries.
It is interesting to note that the leading industries during that period, being
small- and mid-sized cyclical and commodity based, are inherently volatile.
6 Message from ICON Funds
While there were outstanding returns to be earned in the "sweet spot" of the
market, it required us to be tolerant of volatility and be patient during the
unpleasant ride associated with those industries.
We do not like volatility at ICON, and we certainly do not seek it, but we are
proud of our discipline and our ability to endure it when it is required to
capture industry leadership. It is also interesting to note that lower-quality
stocks tended to perform better than what many would consider high-quality
stocks over that three-year period. At ICON, quality is measured by liquidity,
debt, efficiency and consistency, and we tend to favor higher quality stocks.
Our preference for high-quality stocks slightly inhibited the Funds'
performance. Consistent with our style, however, we leave the potential higher
returns associated with speculative and riskier turnaround situations to other
investors.
ICON DETECTS A NEW MARKET THEME
For the first four months of 2006, the same sector and industry themes from the
previous three years persisted across the globe, as shown in Table #2, which
highlights U.S. sector index returns from January 1, 2006 through the market
peak on May 5, 2006.
<Table>
<Caption>
TABLE 2
CUMULATIVE TOTAL RETURNS
1/1/06 - 5/5/06
S&P 1500 SECTOR INDEX RETURN %
- --------------------- --------
Energy 18.08
Materials 16.12
Industrials 14.28
Telecommunication Services 11.61
Financials 8.59
S&P COMPOSITE 1500 INDEX 7.57
Consumer Discretionary 5.77
Information Technology 5.01
Utilities 3.82
Consumer Staples 3.61
Health Care (1.97)
</Table>
Data Source: FactSet Research Systems
Returns include the reinvestment of dividends and capital gain distributions.
Generally, the same cyclical leadership was at the top and the same defensive
sectors were lagging as seen the previous three years. All market and theme
peaks are different. This time, the leading industries did not reach the extreme
overpricing typical of most peaks. They were headed toward it, but perhaps
because of investor concerns and uncertainty, stock prices did not reach lofty
extremes.
Message from ICON Funds 7
Message from ICON Funds (continued)
During the market drop from early May through mid-June 2006, the previous
leaders fell the most, which was similar to market corrections seen in 2004 and
2005. Even the brief market bounce in late June was led by the previous cyclical
leadership, similar to rebounds in 2004 and 2005. Since the market low on July
17, 2006, the market has experienced a three-month climb with entirely new
leadership. The industries that led the previous three-plus years have been
sluggish. New leadership in defensive, recession-proof industries has prevailed.
In the weeks following that sudden change on July 17, we have sold cyclical
industries and gradually invested in new industries as relative strength has met
our standards. The combination of value and relative strength has pulled us to
mature companies in defensive, steady growth industries such as pharmaceuticals,
diversified banks, electric utilities, packaged food & meats, multi-utilities,
diversified capital markets, and integrated telecommunication services.
This rotation resulted in significant sector shifts in the ICON International
Equity Fund, which best represents our system's sector and industry positioning.
The Industrials sector was reduced from 16.9% of the Fund on June 30 to 9.3% on
September 30. Financials, Health Care, Information Technology and
Telecommunication & Utilities were all increased from 18.7%, 7.6%, 6.0% and
11.9%, respectively, to 24.9%, 8.2%, 9.5% and 14.1%. Major rotations occurred
throughout the ICON Fund family to capture the new leadership.
As mentioned earlier, you will see Fund holdings that are new in the last few
months, some not being held since late 1999 or early 2000. The ICON Funds now
look very different than they did when they participated in the theme that
prevailed in the three and a half years ending this spring. The stocks and
industries now owned in the Funds were not leaders over the last three years as
they were not preferred by investors but they were not stagnant. They were
growing their profits and the underlying value of their firms. Now, we find
attractive bargains among them as our estimate of value has grown above the
market price.
The large, mature companies that have led the recent market advance are heavily
weighted in the Funds' market-capitalization weighted benchmarks, so the indexes
gained an immediate surge off the July 17 low. The shift in leadership was
sudden, but guided by our system, we have rotated industries as they meet our
standards of value and relative strength.
STAYING TRUE TO THE ICON DISCIPLINE
Our system is suggesting a market with new leadership and an entirely new
personality. The stocks and industries we expect to lead are not as
8 Message from ICON Funds
inherently volatile as those of the previous theme. We do not know how long this
new theme will last, but given the price discounts to our estimates of fair
value, we expect it may last at least a year. To better position the ICON
International Funds for the changing theme that we believe is taking place, we
will follow our value-driven process to reduce or eliminate lagging industries
and increase positions in the new leading industries.
In closing, we are most 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
holdings, and information about your account.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
Message from ICON Funds 9
Management Overview
ICON Asia-Pacific Region Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 97.3%
Top 10 Equity Holdings 20.8%
Number of Stocks 110
Short-Term Investments 5.0%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Toyota Motor Corp. 3.0%
Foxconn International Holdings, Ltd. 2.4%
High Tech Computer Corp. 2.1%
Canon, Inc. 2.1%
Hopson Development Holdings, Ltd. 2.0%
Takeda Pharmaceutical Co., Ltd. 1.9%
Johnson Health Tech. Co., Ltd. 1.9%
Hengan International Group Co., Ltd. 1.8%
Tokyo Gas Co., Ltd. 1.8%
Mizuho Financial Group, Inc. 1.8%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARK?
A. The ICON Asia-Pacific Region Fund, Class S appreciated 17.36% for the fiscal
year ended September 30, 2006, outperforming its benchmark, the MSCI All
Country Pacific Index, which returned 15.19%. Since their inception on May
31, 2006 through September 30, 2006, the Class A shares of the Fund have
returned (2.66%) (and (8.28%) with maximum sales charge) vs. the 0.86% total
return of the MSCI All Country Pacific Index over the same period. Total
returns for other periods as of September 30, 2006 appear in the subsequent
pages of this Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Asian markets continued to perform better than U.S. stocks during the period.
Cyclical Asian industries showed strength for much of the year, and the Fund
gained from its concentration in these areas. Due to a significant market
reversal, however, cyclical-oriented industries suffered the most during a
sell-off in May and June.
Most of the Fund's gains in the fiscal year were achieved in the first fiscal
quarter, or the final calendar quarter of 2005, with Japan and South Korea
leading the way, and consumer and retail-related industries and Industrials
stocks faring well. The next quarter was fraught with volatility, however,
along with a serious accounting scandal at Livedoor, a Japanese internet
company, which collapsed as it came under investigation. The stock dropped
about 80% during the holding period. Although the Fund owned Livedoor during
the period and suffered losses when it fell, the impact on total return was
minor.
The summer months were marked by a sharp sell-off in the cyclically-oriented
sectors that had previously been leading most Asian markets, such as
Materials and Industrials. Then, we saw a new theme emerge during the last
three months of the period, with the Telecommunication & Utilities, Health
Care, and Information Technology sectors showing strength. Due to this abrupt
shift, the Fund's positions in Energy, Materials, and Industrials all
suffered, but we patiently monitored our relative strength readings to
discern the industry leaders. As a result, the Fund has migrated toward the
newly emerging theme and shifted away from cyclicals.
A reversal in country leadership occurred as well, in which we saw China and
Hong Kong emerge as the early leaders in 2006. Industry leadership in these
two countries has resulted in a tilt toward that area.
The Fund was diversified among currencies from different countries in the
region and benefited specifically from the South Korean won's appreciation
relative to the U.S. dollar. In general, though, we believe the effect of
currency on the Fund's overall return was negligible.
10 Management Overview
(SCOTT SNYDER, CMT PHOTO)
Scott Snyder, CFA
Portfolio Manager
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. The Fund takes positions in sectors and industries throughout the Asian
region that demonstrate the best value and relative strength. During the
first three quarters of the period, our system led us to invest in the
Materials sector, which contributed the most to the Fund's relative
outperformance. In particular, the Fund was aided by its holdings in the
diversified metals & mining and gold industries. In the gold industry, our
system began seeing decreasing value and relative strength numbers, which
allowed us to take gains and trim the position before a drastic price
collapse.
Several industries in the Information Technology sector, namely computer
hardware and communications equipment, showed strong combinations of value
and relative strength and contributed handily to the Fund's positive returns.
Conversely, the internet software and services industry dropped amidst the
Livedoor scandal in Japan, and volatility in the semiconductors industry
hindered returns.
Exposure to the Industrials sector, primarily the industrial machinery and
construction & engineering industries, contributed positively to overall
returns.
Several stocks in the Fund added to performance during the fiscal year: High
Tech Computer, a Taiwanese maker of mobile phone handsets, Zinifex Ltd., the
world's largest zinc producer, and Foxconn International Holdings, a Hong
Kong communications equipment company. At period-end, the Fund continued to
own all three companies.
While ICON's stock selection process disregards market capitalization, the
Fund's equity holdings had a small- to mid-cap tilt during most of the
period. This position was overweight the predominantly large-cap benchmark
and helped relative performance as stock selection in this market cap range
offered higher returns. Our system did, however, detect a shift toward
larger-cap stocks later in the fiscal year.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE ASIA-PACIFIC EQUITY MARKET?
A. The ICON system indicates that the Asia-Pacific region remains considerably
undervalued. We expect to continue repositioning the Fund to capture the new
global market theme, in which larger-cap Financials, Telecommunications &
Utilities, Information Technology and Consumer Discretionary companies are
leading. While the Fund's country weightings result primarily from our focus
on undervalued industries, Taiwan, Singapore, and Hong Kong look attractive,
based on our methodology. We continue to seek those industries throughout
Asia that show discounts and relative strength according to our analysis.
Management Overview 11
Management Overview (continued)
ICON Asia-Pacific Region Fund
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Materials sector, specifically holdings in the diversified metals &
mining industry and an eventual liquidation of the gold industry, helped the
Fund outperform its index.
- - Positions in the computer hardware and communications equipment industry
contributed to the Fund's positive returns, but internet software and
services and semiconductor stocks lagged.
- - The Fund's holdings in the Industrials sector, primarily from the industrial
machinery and construction & engineering industries, contributed positively
to overall returns.
12 Management Overview
COUNTRY COMPOSITION
September 30, 2006
<Table>
Japan 48.8%
Hong Kong 13.2%
Taiwan 12.4%
South Korea 10.0%
Singapore 6.1%
China 3.6%
Malaysia 1.4%
Indonesia 1.0%
Australia 0.8%
</Table>
Percentages are based upon net assets.
SECTOR COMPOSITION
September 30, 2006
<Table>
Information Technology 19.1%
Financial 18.2%
Consumer Discretionary 13.0%
Industrials 12.8%
Leisure and Consumer Staples 10.8%
Telecommunication and Utilities 8.7%
Healthcare 6.7%
Materials 5.2%
Energy 2.8%
</Table>
Percentages are based upon net assets.
Management Overview 13
Management Overview (continued)
ICON Asia-Pacific Region Fund
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Diversified Banks 10.9%
Automobile Manufacturers 5.0%
Real Estate Management & Development 4.7%
Semiconductors 4.3%
Construction & Farm Machinery & Heavy
Trucks 4.0%
Electric Utilities 3.7%
Computer Hardware 3.6%
Pharmaceuticals 3.5%
Leisure Products 2.8%
Office Electronics 2.8%
Education Services 2.8%
Electronic Equipment Manufacturers 2.7%
Communications Equipment 2.4%
Electronic Manufacturing Services 2.4%
Wireless Telecommunication Services 2.4%
Health Care Distributors 2.3%
Packaged Foods & Meats 2.2%
Consumer Electronics 2.1%
Regional Banks 2.0%
Steel 1.9%
Personal Products 1.8%
Gas Utilities 1.8%
Diversified Metals & Mining 1.8%
Construction & Engineering 1.8%
Electrical Components & Equipment 1.8%
</Table>
14 Management Overview
INDUSTRY COMPOSITION (CONTINUED)
<Table>
September 30, 2006
Railroads 1.8%
Photographic Products 1.5%
Tire & Rubber 1.5%
Soft Drinks 1.2%
Oil & Gas Exploration & Production 1.2%
Integrated Oil & Gas 1.0%
Commercial Printing 1.0%
Construction Materials 1.0%
Health Care Supplies 0.9%
Specialty Stores 0.8%
Marine 0.8%
Auto Parts & Equipment 0.8%
Tobacco 0.8%
Industrial Conglomerates 0.7%
Oil & Gas Equipment & Services 0.7%
Semiconductor Equipment 0.6%
Integrated Telecommunication Services 0.6%
Diversified Chemicals 0.5%
Industrial Machinery 0.5%
Property & Casualty Insurance 0.5%
Hypermarkets & Super Centers 0.4%
Trading Companies & Distributors 0.4%
Life & Health Insurance 0.3%
Independent Power Producers & Energy
Traders 0.3%
</Table>
Percentages are based upon net assets.
Management Overview 15
Management Overview (continued)
ICON Asia-Pacific Region Fund
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund - Class S 2/25/97 17.36% 14.37% 3.04%
- -------------------------------------------------------------------------------------------
MSCI All Country Pacific Index 15.19% 15.71% 3.45%
- -------------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund - Class
A* 5/31/06 N/A N/A (2.66%)
- -------------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund - Class A
(including maximum sales charge of
5.75%)* 5/31/06 N/A N/A (8.28%)
- -------------------------------------------------------------------------------------------
MSCI All Country Pacific Index* N/A N/A 0.86%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON ASIA - PACIFIC REGION FUND -
CLASS S MSCI ALL COUNTRY PACIFIC INDEX
--------------------------------- ------------------------------
2/25/97 9550 9496
11320 11163
9940 9656
9/30/97 8270 7530
8310 7839
7360 7011
6089 6079
9/30/98 7759 7789
8569 8616
9809 9715
10870 10541
9/30/99 13170 12277
11620 12234
10870 11455
10251 10133
9/30/00 9611 8764
9011 8111
8711 8183
6811 6673
9/30/01 6766 6946
6625 7264
6424 7446
5701 6499
9/30/02 6053 6356
5801 5976
6584 6819
7648 8066
9/30/03 8695 8921
9067 10020
8323 9510
8222 9291
9/30/04 9044 10578
9287 10505
9519 10439
11356 12017
9/30/05 13509 13059
13631 13978
13186 13623
9/30/06 13327 13843
</Table>
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.
16 Management Overview
Schedule of Investments
ICON Asia-Pacific Region Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (97.3%)
1,403,000 Advanced
Semiconductor
Engineering,
Inc.(a) $ 1,306,259
26,600 Aeon Co., Ltd. 652,845
19,800 Aeon Mall Co.,
Ltd. 1,048,211
25,800 Ahresty Corp. 727,269
59,000 Ajinomoto Co.,
Inc. 635,548
912,000 Angang New Steel
Company, Ltd. 723,977
32,000 Asahi Soft Drinks
Co., Ltd. 474,353
11,000 Astellas Pharma
Inc. 442,912
402,000 Au Optronics Corp. 569,135
39,000 Bridgestone Corp. 789,855
868,000 Bumiputra-
Commerce Holdings
Bhd. 1,564,768
58,550 Canon, Inc. 3,060,176
133 Central Japan
Railway Co. 1,417,521
147,000 Chiba Bank, Ltd. 1,312,232
2,978,000 China Construction
Bank 1,287,383
226,000 China Life
Insurance Co.,
Ltd. 441,563
234,000 China Mobile, Ltd. 1,651,116
706,000 China Overseas
Land & Investment,
Ltd. 543,684
1,336,000 China Petroleum &
Chemical Corp. 828,144
1,003,000 China Power
International
Development Ltd. 410,707
802,000 China Resources
Beijing Land 539,912
35,000 Chubu Electric
Power Company,
Inc. 910,181
2,062,000 CNOOC, Ltd. 1,716,783
239,600 DAH Sing Financial
Group 2,157,113
67,300 Daiichi Sankyo
Co., Ltd. 1,906,415
50,000 DBS Group
Holdings, Ltd. 603,680
213,000 Delta Electronics,
Inc. 611,680
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
12,500 Denso Corp. $ 440,099
16,500 Diamond City Co.,
Ltd. 783,000
167 East Japan Railway
Co. 1,168,245
38,400 Elpida Memory,
Inc.(a) 1,745,497
645,000 Ezra Holdings
Pte., Ltd. 1,208,417
1,168,000 Foxconn
International
Holdings, Ltd.(a) 3,592,657
12,000 FUJIFILM Holdings
Corp. 437,605
138,000 Fujikura, Ltd. 1,512,720
12,600 GS Engineering &
Construction Corp. 881,657
1,267,000 Hengan
International
Group Co., Ltd. 2,719,336
118,800 High Tech Computer
Corp. 3,143,801
18,000 Hokkaido Electric
Power Co. 436,759
315,349 Hon Hai Precision
Industry Co., Ltd. 1,921,337
54,000 Honda Motor Co.,
Ltd. 1,815,024
1,480,000 Hopson Development
Holdings, Ltd. 2,985,189
18,000 Hoya Corp. 678,945
12,400 Hyundai Heavy
Industries Co.,
Ltd. 1,717,118
12,300 Hyundai Mipo
Dockyard Co., Ltd. 1,533,528
28,300 Hyundai Steel Co. 986,309
86,900 Industrial Bank of
Korea 1,487,593
37,200 Ito En, Ltd. 1,281,707
299 Japan Tobacco,
Inc. 1,164,009
16,000 JFE Holdings, Inc. 627,668
1,447,000 Jiangxi Copper
Co., Ltd. 1,375,995
482,650 Johnson Health
Tech. Co., Ltd. 2,816,083
124,000 Kagara Zinc,
Ltd.(a) 490,440
49,000 Kansai Electric
Power Co., Inc. 1,129,952
113,000 Keppel Corp., Ltd. 1,050,484
</Table>
Schedule of Investments 17
Schedule of Investments (continued)
ICON Asia-Pacific Region Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
293,000 Kingboard Chemical
Holdings, Ltd. $ 1,053,463
36,200 Kobayashi
Pharmaceutical
Co., Ltd. 1,383,644
81,000 Komatsu, Ltd. 1,401,752
20,200 Kookmin Bank 1,582,737
650,600 KS Energy
Services, Ltd. 980,288
12,900 Kyocera Corp. 1,104,077
89,512 Largan Precision
Co., Ltd. 1,833,256
158,700 LG Telecom,
Ltd.(a) 1,853,296
1,180,000 Li Ning Co., Ltd. 1,346,394
67,000 Matsushita
Electric
Industrial Co.,
Ltd. 1,416,993
77,000 Mazda Motor Corp. 467,241
1,060,000 Mega Financial
Holding Co., Ltd. 750,178
19,200 Megastudy Co.,
Ltd. 2,168,576
702,000 Mitac
International
Corp. 740,027
50,450 Mitsui & Co., Ltd. 643,085
341 Mizuho Financial
Group, Inc. 2,647,957
176 Nippon Telegraph &
Telephone Corp. 860,536
32,000 Nissha Printing
Co., Ltd. 1,450,852
65,700 Nissin Food
Products Co., Ltd. 2,092,746
1,058,800 Osim
International,
Ltd. 1,253,031
612,000 Petrochina Co.,
Ltd. 658,812
2,052,000 PICC Property and
Casualty Co.,
Ltd.(a) 749,835
485,000 PT Semen Gresik 1,423,910
1,188,000 Raffles Education
Corp., Ltd. 1,899,548
725,000 Realtek
Semiconductor
Corp. 892,442
53,000 Ricoh Co., Ltd. 1,054,762
36,100 Samsung
Engineering Co.,
Ltd. 1,724,106
199,000 Sembcorp Marine,
Ltd. 418,032
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
68,000 Sharp Corp. $ 1,167,102
55,300 Shinko Electric
Industries Co.,
Ltd. 1,542,943
180,000 Showa Denko K.K. 777,216
763,000 Siliconware
Precision
Industries Co. 908,578
201,700 Silitech
Technology Corp. 1,087,197
14,500 Sony Corp. 585,672
131,000 Sumitomo Metal
Industries, Ltd. 502,873
214 Sumitomo Mitsui
Financial Group,
Inc. 2,247,471
122,500 Sumitomo Rubber
Industries, Ltd. 1,349,675
43,000 Suzuken Co., Ltd. 1,612,517
23,100 Suzuki Motor Corp. 587,033
45,500 Takeda
Pharmaceutical
Co., Ltd. 2,843,394
18,000 Takeuchi Mfg. Co.,
Ltd. 836,696
220,600 Tenaga Nasional
Berhad 580,339
203,000 The Bank Of
Yokohama, Ltd. 1,601,795
97,000 Toho
Pharmaceutical
Co., Ltd. 1,731,792
82,500 Tokyo Electric
Power Co. 2,375,717
12,900 Tokyo Electron,
Ltd. 953,738
533,000 Tokyo Gas Co.,
Ltd. 2,673,141
100,000 Tokyu Land Corp. 949,321
226,000 Toshiba Corp. 1,466,650
34,000 Toyo Suisan
Kaisha, Ltd. 490,215
81,600 Toyota Motor Corp. 4,440,971
42,340 TSM Tech Co., Ltd. 760,320
1,345,180 Unimicron
Technology Corp. 1,660,882
157,000 United Overseas
Bank, Ltd. 1,609,190
88,103 Zinifex, Ltd. 769,659
------------
TOTAL COMMON STOCKS (COST
$130,539,446) 143,428,269
</Table>
18 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
x
SHORT-TERM INVESTMENTS (5.0%)
$6,515,885 Brown Brothers
Harriman Time
Deposit,
4.63%, 10/02/06#v $ 6,515,885
830,696 Brown Brothers
Harriman Time
Deposit - Australian
Dollar,
4.60%, 10/02/06#v 830,696
2,316 Brown Brothers
Harriman Time
Deposit - Hong
Kong Dollar,
3.05%, 10/02/06#v 2,316
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$ 292 Brown Brothers
Harriman Time
Deposit - New
Zealand Dollar,
6.25%, 10/02/06#v $ 292
247 Brown Brothers
Harriman Time
Deposit - Singapore
Dollar,
1.95%, 10/02/06#v 247
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $7,349,436) 7,349,436
TOTAL INVESTMENTS 102.3% (COST
$137,888,882) 150,777,705
LIABILITIES LESS OTHER ASSETS
(2.3%) (3,308,977)
------------
TOTAL NET ASSETS 100.0% $147,468,728
============
</Table>
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, 2006.
v All securities were fair valued (Note 1) as of September 30, 2006 unless
noted with a v. Total value of securities fair valued was $143,428,269.
Schedule of Investments 19
Management Overview
ICON Europe Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 99.5%
Top 10 Equity Holdings 17.1%
Number of Stocks 125
Short-Term Investments 1.8%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Nestle S.A. 2.3%
Roche Holding AG 1.9%
BNP Paribas 1.8%
Man Group PLC 1.7%
Baloise Holding AG 1.7%
Sika AG 1.6%
ING Groep N.V. 1.6%
UBS AG 1.6%
AstraZeneca PLC 1.5%
Heineken N.V. 1.4%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Europe Fund, Class S appreciated 27.09% for the fiscal year ended
September 30, 2006, outperforming the 22.88% return for the benchmark MSCI
Europe Index, and the 19.75% return of the Bloomberg European 500 Index.
Since their inception on May 31, 2006 through September 30, 2006, the Class A
shares of the Fund have returned 2.12% (and (3.74%) with maximum sales
charge) vs. the 6.06% return of the MSCI Europe Index and the 5.94% gain of
the Bloomberg European 500 Index over the same period. Total returns for
other periods as of September 30, 2006 appear in the subsequent pages of this
Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Stock markets in Europe continued to lead other regions around the globe
during the period, including the United States, but Europe remained in the
economic doldrums compared to other major international regions due to high
unemployment and slower economic growth. In this setting, the European
Central Bank has tightened monetary policy in an effort to curb inflation and
is widely expected to continue increasing interest rates through the end of
2006. Even though rates remain low by historical standards, further increases
could detract from stock valuations under our system.
The Fund began the period with a worldwide pullback in equities in October
2005, but since then, a strong global rally persisted. A cyclical theme,
which has been in place for more than three years, was suddenly interrupted
by a market shift that emerged midway through 2006. Although we had to wait
patiently for market leadership to appear clearly, industries in the
Financial, Leisure & Consumer Staples, and Telecommunication & Utilities
sectors have led since May.
The new market theme also pointed to investor favor for larger-cap stocks,
which turned in strong performance in the final fiscal quarter. Although ICON
does not utilize market capitalization as an investment criterion, the Fund
had a mid- to large-cap tilt based on the its holdings but remained
underweight to the predominantly large-cap benchmark. The Fund's relative
overweighting of small- and mid-cap stocks, again a consequence of its stock
ownership, combined with effective industry and stock selection within
large-cap companies helped performance relative to the benchmark.
The Fund does not take active currency bets, but was diversified among
currencies from different countries in the European region. Currency
generally did not contribute appreciably to returns.
20 Management Overview
(SCOTT SNYDER PHOTO)
Scott Snyder, CFA
Portfolio Manager
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. Our objective is to keep the Fund diversified among the sectors and
industries throughout the European market that are demonstrating the best
value and relative strength. Guided by these parameters, we concentrated the
Fund in industries with a more cyclical bent, primarily in the Industrials
and Materials sectors, until near the end of the period. As market leadership
swung toward more defensive industries, the Fund repositioned to capture the
new theme.
The Fund's active overweighting in the Industrials sector contributed the
most to relative performance in the fiscal period, with holdings in the human
resources & employment services and industrial machinery industries
performing well while stocks in construction & engineering industry faring
more disappointingly. Exposure to the diversified metals & mining and steel
industries within the Materials sector also enhanced returns.
The Fund held positions in the Energy sector, which experienced a significant
pullback over the period, but our system's indication to underweight the
poor-performing integrated oil & gas industry added to relative
outperformance. While the Financials sector contributed positively to overall
performance, the Fund's underweighting of the diversified banks industry
detracted from relative performance.
Several specific individual holdings that contributed to returns: Vendanta
Resources PLC, a British mining company, French maker of oil & gas drilling
equipment Vallourec S.A. and Salzigitter AG, Germany's second largest steel
producer. The Fund continues to hold Vallourec.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE EUROPEAN EQUITY MARKET?
A. The ICON system suggests that Europe has greater value and relative
performance than the U.S. and Asian markets. While still showing healthy
value, the Materials and Energy sectors have become global laggards in the
new emerging theme. To continue capturing the global theme change, we have
increased portfolio exposure to larger companies in the Financial,
Telecommunications & Utilities, and Consumer Discretionary sectors, which
look attractive based on value/price and relative strength.
Management Overview 21
Management Overview (continued)
ICON Europe Fund
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - A relative overweighting of small- and mid-cap stocks combined with effective
industry and stock selection within large-cap companies helped Fund
performance relative to the benchmark.
- - Holdings in the human resources & employment services, industrial machinery,
diversified metals & mining and steel industries enhanced returns.
- - An underweight position in the poor-performing integrated oil & gas industry
added to relative performance.
22 Management Overview
COUNTRY COMPOSITION
September 30, 2006
<Table>
United Kingdom 22.0%
Switzerland 17.5%
Germany 13.2%
France 12.5%
Netherlands 10.0%
Spain 4.0%
Sweden 3.7%
Belgium 3.4%
Austria 3.2%
Finland 2.8%
Italy 1.9%
Norway 1.6%
Poland 1.4%
Denmark 1.0%
Portugal 0.5%
Hungary 0.4%
United States of America 0.4%
</Table>
Percentages are based upon net assets.
SECTOR COMPOSITION
September 30, 2006
<Table>
Financial 29.5%
Leisure and Consumer Staples 16.8%
Telecommunication and Utilities 13.3%
Healthcare 9.6%
Industrials 8.4%
Materials 7.5%
Consumer Discretionary 6.8%
Energy 4.7%
Information Technology 2.9%
</Table>
Percentages are based upon net assets.
Management Overview 23
Management Overview (continued)
ICON Europe Fund
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Diversified Banks 14.8%
Pharmaceuticals 6.9%
Integrated Telecommunication Services 4.2%
Multi-Line Insurance 3.9%
Electric Utilities 3.8%
Diversified Capital Markets 3.8%
Packaged Foods & Meats 3.7%
Multi-Utilities 2.9%
Industrial Machinery 2.7%
Household Products 2.6%
Oil & Gas Equipment & Services 2.2%
Brewers 2.1%
Department Stores 2.1%
Specialty Chemicals 2.1%
Integrated Oil & Gas 2.1%
Broadcast & Cable TV 2.0%
Tire & Rubber 1.9%
Other Diversified Financial Services 1.9%
Water Utilities 1.9%
Construction Materials 1.8%
Food Retail 1.7%
Asset Management & Custody Banks 1.7%
Tobacco 1.7%
Automobile Manufacturers 1.6%
Health Care Distributors 1.6%
Diversified Metals & Mining 1.5%
</Table>
24 Management Overview
INDUSTRY COMPOSITION (CONTINUED)
<Table>
September 30, 2006
Communications Equipment 1.3%
Reinsurance 1.3%
Air Freight & Logistics 1.3%
Agriculture Products 1.3%
Electrical Components & Equipment 1.2%
Steel 1.2%
Diversified Reits 1.1%
Health Care Equipment 1.0%
Diversified Commercial & Professional
Services 1.0%
Systems Software 1.0%
Diversified Chemicals 0.9%
Auto Parts & Equipment 0.8%
Leisure Products 0.8%
Human Resource & Employment Services 0.8%
Property & Casualty Insurance 0.6%
Movies & Entertainment 0.5%
Building Products 0.5%
Semiconductor Equipment 0.5%
Restaurants 0.5%
Thrifts & Mortgage Finance 0.5%
Heavy Electrical Equipment 0.4%
Trucking 0.4%
Oil & Gas Storage & Transportation 0.4%
Life & Health Insurance 0.3%
Electronic Equipment Manufacturers 0.3%
Home Improvement Retail 0.3%
Aerospace & Defense 0.1%
</Table>
Percentages are based upon net assets.
Management Overview 25
Management Overview (continued)
ICON Europe Fund
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Europe Fund - Class S 2/20/97 27.09% 19.70% 10.69%
- -------------------------------------------------------------------------------------------
MSCI Europe Index 22.88% 15.07% 9.88%
- -------------------------------------------------------------------------------------------
Bloomberg European 500 Index 19.75% 8.69% 9.10%
- -------------------------------------------------------------------------------------------
ICON Europe Fund - Class A* 5/31/06 N/A N/A 2.12%
- -------------------------------------------------------------------------------------------
ICON Europe Fund - Class A
(including maximum sales charge of
5.75%)* 5/31/06 N/A N/A (3.74%)
- -------------------------------------------------------------------------------------------
MSCI Europe Index* N/A N/A 6.06%
- -------------------------------------------------------------------------------------------
Bloomberg European 500 Index* N/A N/A 5.94%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
The Fund's name and investment strategy changed effective January 29, 2004. The
Fund's past performance may have been different if the current strategy had been
in effect.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON EUROPE FUND - CLASS BLOOMBERG EUROPEAN 500
S MSCI EUROPE INDEX INDEX
------------------------ ----------------- ----------------------
2/20/97 9800 10308 10154
10700 11239 11402
11899 12178 12471
9/30/97 12381 12197 12596
15104 14684 15466
15603 15450 16093
12625 13233 12886
9/30/98 15068 15722 15212
14245 15401 15808
13197 15364 16760
13435 15555 16514
9/30/99 14365 18272 20766
13848 18298 21916
14459 17732 21215
13462 16447 20888
9/30/00 14180 16784 19775
12653 14181 17706
11551 13937 18795
10794 12255 15220
9/30/01 11141 13488 17198
11980 13479 17566
12459 12905 14899
9850 9963 11517
9/30/02 10396 11049 12062
9623 10038 10728
11899 12286 12509
13097 12772 12835
9/30/03 15173 15374 14220
15812 15519 14770
16092 15898 15228
16011 16095 15131
9/30/04 18487 18662 16040
18500 18759 16828
18287 18665 17829
20869 20117 19278
9/30/05 20913 20518 20030
25282 22740 22476
25522 23395 21862
9/30/06 26522 24721 23087
</Table>
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.
26 Management Overview
Schedule of Investments
ICON Europe Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (99.5%)
34,800 Abb, Ltd. $ 458,627
18,700 ABN ARMO Holding
N.V. 545,189
51,300 Acergy S.A.(a) 879,984
18,300 Aegon N.V. 343,077
30,800 Alpha Bank A.E. 821,898
23,300 ASML Holding
N.V.(a) 542,546
24,800 AstraZeneca PLC 1,548,761
23,300 Aviva PLC 341,336
17,800 Baloise Holding
AG 1,746,451
53,400 Banc Monte Dei
Paschi di Seina
S.p.A 323,748
46,900 Banco Bilbao
Vizcaya
Argentaria S.A. 1,084,433
17,800 Banco Popolare di
Verona e Novara
Scrl 491,845
80,400 Banco Santander
Central Hispano,
S.A. 1,269,563
7,900 Bank Zachodni WBK
S.A. 485,667
113,800 Barclays PLC 1,434,898
18,400 Bayer AG 934,764
29,800 BG Group PLC 362,064
17,500 BNP Paribas 1,880,414
4,720 Boehler -
Uddeholm AG 265,660
37,500 Boliden AB 711,724
40,500 BP PLC 442,701
22,400 British American
Tobacco PLC 605,758
234,700 BT Group, PLC 1,178,857
21,500 Buzzi Unicem
S.p.A 508,508
18,600 Celesio AG 969,012
26,500 Credit Agricole
S.A. 1,161,762
23,700 Credit Suisse
Group 1,370,859
6,300 Delhaize Group 529,179
7,490 Dem Allianz AG 1,293,212
7,800 Deutsche Bank AG 940,592
25,050 Deutsche Post AG 656,466
2,500 DSV A/S 436,820
9,300 E.ON AG 1,105,456
2,920 Egis 407,977
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
116,000 Energias de
Portugal, S.A. $ 502,380
4,300 EVS Broadcast
Equipment S.A. 239,637
14,700 Fondiaria - Sai
S.p.A. 644,395
15,200 Swedbank AB 451,823
7,700 Fortis 312,319
2,250 Fresenius AG 400,895
20,700 Fugro N.V. 874,306
450 Geberit AG 548,638
43,300 GlaxoSmithKline
PLC 1,151,406
31,900 Greene King PLC 539,198
4,000 Groupe Danone 560,908
8,900 Hannover
Rueckversicherungs
AG(a) 373,968
52,300 HBOS PLC 1,034,038
32,800 Heineken N.V. 1,500,335
2,410 Helvetia Holding
AG 755,477
10,000 Henkel KGAA 1,394,428
32,100 Homeserve PLC 998,268
9,750 Iberdrola S.A. 435,327
13,600 InBev N.V. 748,990
38,800 ING Groep N.V. 1,704,909
54,980 Jumbo S.A. 833,889
4,550 KBC Groep N.V. 478,899
28,900 Koninlijke KPN
N.V. 368,186
11,000 Kudelski SA 325,262
6,700 Lafarge S.A. 864,185
210,100 Man Group PLC 1,761,807
111,070 Marks & Spencer
Group PLC 1,336,070
45,500 Michael Page
International PLC 327,432
16,300 Michelin 1,194,189
68,600 National Grid PLC 856,553
6,940 Nestle S.A. 2,418,907
24,920 Next PLC 884,185
8,200 NKT Holding A/S 619,747
9,400 Nobia AB 313,733
18,700 Nokia Oyj 368,322
46,400 Nokian Renkaat
Oyj 833,719
68,500 Nordea Bank AB 897,486
22,800 Northern Rock PLC 498,340
24,400 Novartis AG 1,423,973
</Table>
Schedule of Investments 27
Schedule of Investments (continued)
ICON Europe Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
21,500 Nutreco Holding
N.V. $ 1,324,997
27,100 Oesterrichische
Elekrizitaitswirts
AG - Class A 1,310,921
7,800 OPG Groep N.V. 747,821
41,270 Option N.V.(a) 831,315
103,389 Pennon Group PLC 987,035
11,100 Phonak Holding AG 703,379
33,075 Piraeus Bank S.A. 856,471
365 Porsche AG 377,353
40,100 ProsiebenSat.1
Media AG 1,112,684
8,100 Raiffeisen
International
Bank - Holding AG 863,195
24,700 Ramirent Oyj 1,065,210
31,800 Reckitt Benckiser
PLC 1,317,198
6,100 Red Electrica de
Espana 236,929
3,950 Renault S.A. 452,383
2,040 Rieter Holding AG 878,628
11,350 Roche Holding AG 1,961,455
725 Rolls Royce Group
PLC 6,144
12,050 RWE AG 1,111,401
7,680 Salzgitter AG 720,925
19,000 SBM Offshore N.V. 516,758
4,800 Schneider
Electric S.A. 534,506
17,500 Scottish &
Southern Energy
PLC 430,996
1,360 Sika AG(a) 1,714,035
16,300 Skandinaviska
Enskilda Banken
AB 438,454
6,565 Societe Generale 1,042,863
8,600 Software AG 525,755
16,400 Stada
Arzneimittel AG 838,605
24,440 Suez S.A. 1,073,710
1,190 Sulzer AG 949,669
70,400 Swedish Match AB 1,145,662
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
13,500 Swiss Re $ 1,032,215
67,100 Telefonica S.A. 1,161,425
35,900 Telekom Austria
AG 905,270
60,100 Telenor ASA 781,808
42,200 Temenos Group
AG(a) 540,042
186,400 Tesco PLC 1,255,852
7,700 ThyssenKrupp AG 258,805
10,200 Titan Cement Co. 483,441
18,800 TNT N.V. 713,241
21,300 Total S.A. 1,396,900
9,300 Tsakos Energy
Navigation, Ltd.v 414,780
29,000 TVN S.A.(a) 977,135
27,820 UBS AG 1,663,452
3,420 Umicore S.A. 505,451
5,720 Unibail 1,201,787
36,200 Unilever N.V. 889,861
6,870 USG People N.V. 480,199
22,495 Vacon Oyj 715,678
5,455 Vallourec S.A. 1,271,503
16,100 Vivendi Universal 579,758
10,500 Volkswagen AG 896,701
21,210 Xstrata PLC 875,528
------------
TOTAL COMMON STOCKS (COST
$94,683,805) 104,933,626
SHORT-TERM INVESTMENTS (1.8%)
$ 537,929 Brown Brothers
Harriman Time
Deposit - British
Pound,
3.62%, 10/02/06#v 537,929
195 Brown Brothers
Harriman Time
Deposit - Danish
Krone,
2.05%, 10/02/06#v 195
1,378,386 Brown Brothers
Harriman Time
Deposit - Euro,
1.87%, 10/02/06#v 1,378,386
143 Brown Brothers
Harriman Time
Deposit -
Norwegian Kroner,
1.15%, 10/02/06#v 143
</Table>
28 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$ 162 Brown Brothers
Harriman Time
Deposit - Swedish
Krona,
1.25%, 10/02/06#v $ 162
31 Brown Brothers
Harriman Time
Deposit - Swiss
Frank,
1.15%, 10/02/06#v 31
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,916,846) 1,916,846
TOTAL INVESTMENTS 101.3% (COST
$96,600,651) 106,850,472
LIABILITIES LESS OTHER ASSETS
(1.3)% (1,411,262)
------------
TOTAL NET ASSETS 100.0% $105,439,210
============
</Table>
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, 2006.
v All securities were fair valued (Note 1) as of September 30, 2006 unless
noted with a v. Total value of securities fair valued was $104,518,846.
Schedule of Investments 29
Management Overview
ICON International Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 95.9%
Top 10 Equity Holdings 14.9%
Number of Stocks 135
Short-Term Investments 3.3%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Nestle S.A. 2.0%
Roche Holding AG 1.7%
BNP Paribas 1.6%
America Movil S.A. de C.V. 1.5%
ING Groep N.V. 1.4%
AstraZeneca PLC 1.4%
Hopson Development Holdings, Ltd. 1.4%
Foxconn International Holdings, Ltd. 1.3%
Inmet Mining Corp. 1.3%
High Tech Computer Corp. 1.3%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARK?
A. For the fiscal year ended September 30, 2006, the ICON International Equity
Fund appreciated 21.20% for Class I shares, 20.09% for Class C shares, and
21.54% for Class Z shares, outpacing the 19.34% return of the MSCI All
Country World Index (ACWI) ex-U.S., the Fund's benchmark, over the same
period. Since their inception on May 31, 2006 through September 30, 2006, the
Class A shares of the Fund have returned (0.73%) (and (6.46%) with maximum
sales charge) compared to the 3.84% return of the MSCI ACWI ex.-U.S. during
the same period. Total returns for other periods as of September 30, 2006
appear in the subsequent pages of this Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The Fund benefited from strength in most international regions and outpaced
the United States market, with Asia, Europe, and Western Hemisphere regions
participating. The Asia-Pacific region led international markets as the
fiscal year began, then Europe overtook global leadership for rest of the
period. To capture this leadership, the Fund rotated away from Asia-Pacific
issues and toward European holdings throughout the year.
After a global market contraction in the summer, new industry leadership
suddenly emerged, touching off a new market theme. In Europe, our system
indicated that the Financials, Leisure & Consumer Staples, and
Telecommunications & Utilities sectors were pulling ahead, and in Asia,
leadership was showing in the Information Technology and Consumer
Discretionary sectors. On the stock level, leadership appeared prominently in
large-cap issues late in the second half. In the final quarter of the period,
we began to reposition the Fund to capture the aspects of this new theme.
While ICON does not utilize market capitalization as an investment
consideration, the Fund had a small- to mid-cap emphasis based on its
diversified holdings. This tilt was actively overweight to the predominantly
large-cap benchmark, and the Fund's relative overweighting of mid-cap stocks,
again a consequence of its composition, notably helped relative performance.
As an international portfolio, the Fund is diversified among many currencies.
Currency moves slightly helped absolute performance, primarily due to
European exposure throughout the year.
30 Management Overview
(SCOTT SNYDER PHOTO)
Scott Snyder, CFA
Portfolio Manager
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. Our system pointed us toward cyclical industries, primarily from the
Industrials, Materials, and Financial sectors in the first half, and this
positioning aided returns. ICON's valuation methodology identified an abrupt
market turnaround in which Industrials and Materials industries began to lag
in July. We waited patiently for the international markets to clearly
indicate the new leading sectors, and after a period of uncertainty, the
Financials, Leisure and Consumer Staples, and Telecommunications & Utilities
sectors advanced.
For a good part of the period, the Industrials sector continued its strong
outperformance, and the Fund's active overweighting added the most to
performance against the benchmark. Specifically, Asian and European companies
in the industrial machinery and human resource & employment services
industries provided strong returns. Holdings in the Materials sector were
also a bright spot for the Fund, with the diversified metals & mining
industry adding robust gains.
Within the Energy sector, the Fund's underweight exposure to the integrated
oil & gas industry was beneficial, as it is a large constituent of the
benchmark and underperformed throughout the year.
Several individual Fund holdings contributed notably to returns. Vedanta
Resources PLC, a British mining company, gained as higher metal prices led to
an upgraded earnings outlook. The profits of Vallourec S.A., a French maker
of steel tubing for oil & gas drilling, rose amidst higher worldwide gas
production. Finally, High Tech Computer, a Taiwanese maker of mobile phone
handsets, benefited from a steady increase in orders.
Conversely, Livedoor, a Japanese internet company, collapsed as it came under
investigation for a serious accounting scandal. We liquidated the Fund's
position in Livedoor but not before its price dropped sharply.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INTERNATIONAL EQUITY MARKET?
A. The major regions around the world are now closer to parity in our overall
valuations than in the past couple of years. The ICON system measures healthy
value worldwide, with international prices trading at about 25% below our
estimate of their intrinsic worth, as of September 30, 2006. We expect
leadership to continue in the Financials and Telecommunications & Utilities
sectors, primarily from Europe, and in the Information Technology and
Consumer Discretionary, where Asian firms are attractive. We continue to be
guided by our quantitative metrics to buy those industries showing discounts
and relative strength.
Management Overview 31
Management Overview (continued)
ICON International Equity Fund
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - Strong performance came from an overweight position in the Industrials
sector, with companies in the industrial machinery and human resource &
employment services industries adding gains.
- - Holdings in the Materials sector added to returns, particularly those in the
diversified metals & mining industry.
- - Vedanta Resources PLC, Vallourec S.A., and High Tech Computer were the Fund's
top individual holdings during the period.
32 Management Overview
COUNTRY COMPOSITION
September 30, 2006
<Table>
Japan 16.3%
United Kingdom 11.9%
Switzerland 9.1%
France 8.0%
Netherlands 7.0%
Germany 6.3%
Taiwan 6.1%
Hong Kong 5.9%
South Korea 4.2%
Canada 3.1%
Spain 2.8%
Austria 2.7%
Greece 1.8%
Singapore 1.6%
Mexico 1.5%
Norway 1.4%
Sweden 1.2%
Italy 1.1%
Belgium 1.0%
Finland 0.9%
Indonesia 0.5%
Malaysia 0.5%
Denmark 0.4%
United States of America 0.4%
China 0.2%
</Table>
Percentages are based upon net assets.
Management Overview 33
Management Overview (continued)
ICON International Equity Fund
SECTOR COMPOSITION
September 30, 2006
<Table>
Financial 24.9%
Telecommunication and Utilities 14.1%
Leisure and Consumer Staples 13.7%
Information Technology 9.5%
Industrials 9.3%
Healthcare 8.2%
Materials 5.7%
Consumer Discretionary 5.7%
Energy 4.8%
</Table>
Percentages are based upon net assets.
34 Management Overview
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Diversified Banks 11.8%
Pharmaceuticals 4.7%
Electric Utilities 3.6%
Integrated Telecommunication Services 3.2%
Diversified Capital Markets 2.8%
Packaged Foods & Meats 2.8%
Multi-Utilities 2.8%
Automobile Manufacturers 2.5%
Wireless Telecommunication Services 2.4%
Oil & Gas Equipment & Services 2.4%
Real Estate Management & Development 2.3%
Health Care Distributors 2.3%
Multi-Line Insurance 2.2%
Communications Equipment 2.1%
Diversified Metals & Mining 2.0%
Leisure Products 1.9%
Electronic Equipment Manufacturers 1.9%
Computer Hardware 1.9%
Construction Materials 1.8%
Electrical Components & Equipment 1.8%
Semiconductors 1.8%
Integrated Oil & Gas 1.7%
Construction & Farm Machinery & Heavy
Trucks 1.7%
Household Products 1.5%
Air Freight & Logistics 1.5%
Other Diversified Financial Services 1.4%
Steel 1.3%
Asset Management & Custody Banks 1.2%
Personal Products 1.2%
Brewers 1.1%
</Table>
Management Overview 35
Management Overview (continued)
ICON International Equity Fund
INDUSTRY COMPOSITION (CONTINUED)
<Table>
September 30, 2006
Gas Utilities 1.1%
Office Electronics 1.1%
Railroads 1.1%
Education Services 1.1%
Broadcast & Cable TV 1.0%
Department Stores 1.0%
Agriculture Products 1.0%
Industrial Machinery 1.0%
Food Retail 0.9%
Tobacco 0.9%
Water Utilities 0.9%
Diversified Reits 0.9%
Photographic Products 0.9%
Electronic Manufacturing Services 0.8%
Construction & Engineering 0.8%
Reinsurance 0.8%
Regional Banks 0.8%
Marine 0.7%
Property & Casualty Insurance 0.6%
Health Care Equipment 0.6%
Tire & Rubber 0.6%
Health Care Supplies 0.6%
Consumer Electronics 0.5%
Human Resource & Employment Services 0.5%
Restaurants 0.4%
Oil & Gas Storage & Transportation 0.4%
Trucking 0.4%
Specialty Chemicals 0.3%
Oil & Gas Exploration & Production 0.3%
Gold 0.3%
</Table>
Percentages are based upon net assets.
36 Management Overview
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON International Equity Fund - Class
I 2/6/04 21.20% N/A 18.14%
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S. 19.34% N/A 18.81%
- -------------------------------------------------------------------------------------------
ICON International Equity Fund - Class
C 2/19/04 20.09% N/A 15.39%
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S. 19.34% N/A 17.75%
- -------------------------------------------------------------------------------------------
ICON International Equity Fund - Class
Z 2/18/97 21.54% 19.51% 10.03%
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S. 19.34% 16.38% 7.81%
- -------------------------------------------------------------------------------------------
ICON International Equity Fund - Class
A* 5/31/06 N/A N/A (0.73%)
- -------------------------------------------------------------------------------------------
ICON International Equity Fund - Class
A
(including maximum sales charge of
5.75%)* 5/31/06 N/A N/A (6.46%)
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S.* N/A N/A 3.84%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
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. Class Z shares are available only to grandfathered and
institutional investors.
Class C Total returns exclude applicable sales charges. If sales charges were
included, returns would be lower.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON INTERNATIONAL EQUITY FUND
CLASS Z MSCI ACWI EX-U.S.
------------------------------ -----------------
2/18/97 10230.00 10028.00
10570.00 11330.00
11060.00 11225.00
9/30/97 11281.00 10258.00
12900.00 11659.00
13562.00 11486.00
11841.00 9750.00
9/30/98 13001.00 11741.00
12171.00 12019.00
12728.00 12580.00
13354.00 13008.00
9/30/99 15698.00 15370.00
15585.00 15490.00
15159.00 14858.00
14747.00 13647.00
9/30/00 14340.00 13052.00
12239.00 11337.00
12224.00 11322.00
10280.00 9650.00
9/30/01 11145.00 10508.00
11145.00 10680.00
10901.00 10397.00
8538.00 8390.00
9/30/02 9077.00 8966.00
8382.00 8312.00
10684.00 9961.00
12175.00 10826.00
9/30/03 14897.00 12678.00
15742.00 13291.00
15232.00 13199.00
15436.00 13332.00
9/30/04 17589.00 15387.00
17621.00 15438.00
17447.00 15436.00
20619.00 17262.00
9/30/05 23113.00 18020.00
25025.00 19777.00
24509.00 19818.00
9/30/06 25041.00 20599.00
</Table>
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.
Management Overview 37
Schedule of Investments
ICON International Equity Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (95.9%)
14,180 ABN ARMO Holding
N.V. $ 413,411
50,300 Acergy S.A.(a) 862,830
579,000 Advanced
Semiconductor
Engineering,
Inc.(a) 539,077
7,400 Aeon Mall Co.,
Ltd. 391,756
39,840 Alpha Bank A.E. 1,063,130
898,000 America Movil S.A.
de C.V.v 1,773,282
26,500 AstraZeneca PLC 1,654,927
254,000 Au Optronics Corp. 359,603
15,300 Baloise Holding AG 1,501,163
53,000 Banco Bilbao
Vizcaya Argentaria
S.A. 1,225,479
19,800 Banco Popolare di
Verona e Novara
Scrl 547,109
69,800 Banco Santander
Central Hispano,
S.A. 1,102,183
45,800 Barclays PLC 577,489
10,100 Barrick Gold
Corp.v 310,276
27,000 BG Group PLC 328,044
18,042 BNP Paribas 1,938,653
5,560 Boehler - Uddeholm
AG 312,939
35,500 BP PLC 388,046
26,240 British American
Tobacco PLC 709,603
168,000 BT Group, PLC 843,835
299,000 Bumiputra-
Commerce Holdings
Bhd. 539,016
14,800 Canadian National
Railway Co.v 619,150
25,300 Canon, Inc. 1,322,331
18,000 Celesio AG 937,754
446,000 China Overseas
Land & Investment,
Ltd. 343,460
460,000 China Petroleum &
Chemical Corp. 285,139
382,000 CNOOC, Ltd. 318,046
28,450 Credit Agricole
S.A. 1,247,250
19,300 Credit Suisse
Group 1,116,353
52,000 DAH Sing Financial
Group 468,155
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
135,000 Delta Electronics,
Inc. $ 387,684
5,500 Deutsche Bank AG 663,239
30,700 Deutsche Post AG 804,531
7,700 Diamond City Co.,
Ltd. 365,400
2,800 DSV A/S 489,239
10,100 E.ON AG 1,200,549
100 East Japan Railway
Co. 699,548
8,800 Elpida Memory,
Inc.(a) 400,010
5,170 EVS Broadcast
Equipment S.A. 288,121
424,000 Ezra Holdings
Pte., Ltd. 794,370
17,600 First Quantum
Minerals, Ltd.v 822,751
5,800 Flint Energy
Services, Ltd.v(a) 308,970
17,400 Fondiaria - Sai
S.p.A. 762,754
17,300 Swedbank AB 514,246
519,000 Foxconn
International
Holdings, Ltd.(a) 1,596,395
26,300 Fugro N.V. 1,110,833
61,000 Fujikura, Ltd. 668,666
25,200 GlaxoSmithKline
PLC 670,102
30,400 Greene King PLC 513,844
29,400 HBOS PLC 581,276
29,300 Heineken N.V. 1,340,237
644,000 Hengan
International
Group Co., Ltd. 1,382,204
3,200 Henkel KGAA 446,217
59,040 High Tech Computer
Corp. 1,562,374
76,000 Hon Hai Precision
Industry Co., Ltd. 463,047
11,900 Honda Motor Co.,
Ltd. 399,977
817,000 Hopson Development
Holdings, Ltd. 1,647,904
9,500 Hyundai Mipo
Dockyard Co., Ltd. 1,184,433
21,200 Industrial Bank of
Korea 362,911
38,700 ING Groep N.V. 1,700,515
</Table>
38 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
41,700 Inmet Mining
Corp.v $ 1,576,950
102 Japan Tobacco,
Inc. 397,087
18,000 JFE Holdings, Inc. 706,126
194,340 Johnson Health
Tech. Co., Ltd. 1,133,902
35,400 Jumbo S.A. 536,917
163,000 Kingboard Chemical
Holdings, Ltd. 586,056
17,900 Kobayashi
Pharmaceutical
Co., Ltd. 684,178
24,000 Komatsu, Ltd. 415,334
10,200 Kyocera Corp. 872,991
7,550 Lafarge S.A. 973,820
51,923 Largan Precision
Co., Ltd. 1,063,401
96,500 LG Telecom,
Ltd.(a) 1,126,925
552,000 Li Ning Co., Ltd. 629,839
173,400 Man Group PLC 1,454,058
28,000 Matsushita
Electric
Industrial Co.,
Ltd. 592,176
11,500 Megastudy Co.,
Ltd. 1,298,887
75 Mizuho Financial
Group, Inc. 582,395
80,400 National Grid PLC 1,003,890
6,840 Nestle S.A. 2,384,052
33,350 Next PLC 1,183,290
42 Nippon Telegraph &
Telephone Corp. 205,355
29,200 Nissin Food
Products Co., Ltd. 930,109
69,600 Nordea Bank AB 911,899
18,500 Nutreco Holding
N.V. 1,140,114
27,150 Oesterrichische
Elekrizitaitswirts
AG - Class A 1,313,340
6,600 OPG Groep N.V. 632,771
29,520 Option N.V.(a) 594,631
115,881 Pennon Group PLC 1,106,294
11,700 Phonak Holding AG 741,399
42,900 ProsiebenSat.1
Media AG 1,190,377
198,000 PT Semen Gresik 581,308
6,900 Raiffeisen
International
Bank - Holding AG 735,315
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
614,000 Realtek
Semiconductor
Corp. $ 755,806
32,800 Reckitt Benckiser
PLC 1,358,619
4,000 Renault S.A. 458,109
11,909 Roche Holding AG 2,058,061
12,250 RWE AG 1,129,848
23,800 Sampo Oyj 495,475
20,000 Samsung
Engineering Co.,
Ltd. 955,184
19,600 SBM Offshore N.V. 533,077
4,000 Schneider Electric
S.A. 445,421
24,600 Scottish &
Southern Energy
PLC 605,857
182,000 Sembcorp Marine,
Ltd. 382,321
14,000 Shinko Electric
Industries Co.,
Ltd. 390,618
85,692 Silitech
Technology Corp. 461,894
26,700 Suez S.A. 1,172,997
45 Sumitomo Mitsui
Financial Group,
Inc. 472,599
67,800 Sumitomo Rubber
Industries, Ltd. 747,004
12,100 Swiss Re 925,170
19,800 Takeda
Pharmaceutical
Co., Ltd. 1,237,345
60,800 Telefonica S.A. 1,052,379
35,200 Telekom Austria AG 887,618
58,700 Telenor ASA 763,596
165,600 Tesco PLC 1,115,713
115,000 The Bank Of
Yokohama, Ltd. 907,421
17,200 ThyssenKrupp AG 578,110
11,950 Titan Cement Co. 566,384
24,240 TNT N.V. 919,626
62,400 Toho
Pharmaceutical
Co., Ltd. 1,114,059
41,200 Tokyo Electric
Power Co. 1,186,419
269,000 Tokyo Gas Co.,
Ltd. 1,349,108
110,000 Toshiba Corp. 713,856
15,750 Total S.A. 1,032,919
</Table>
Schedule of Investments 39
Schedule of Investments (continued)
ICON International Equity Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
28,400 Toyota Motor Corp. $ 1,545,632
11,000 Tsakos Energy
Navigation, Ltd.v 490,600
25,780 UBS AG 1,541,474
2,400 Umicore S.A. 354,703
5,250 Unibail 1,103,038
419,730 Unimicron
Technology Corp. 518,237
72,000 United Overseas
Bank, Ltd. 737,973
7,810 USG People N.V. 545,903
17,430 Vacon Oyj 554,535
4,900 Vallourec S.A. 1,142,138
6,200 Volkswagen AG 529,480
2,400 Zurich Financial
Services AG 589,418
------------
TOTAL COMMON STOCKS
(COST $103,704,884) 113,882,766
SHORT-TERM INVESTMENTS (3.3%)
$1,961,333 Brown Brothers
Harriman Time
Deposit, 4.63%,
10/02/06#v 1,961,333
703 Brown Brothers
Harriman Time
Deposit - Australian
Dollar, 4.60%,
10/02/06#v 703
624,443 Brown Brothers
Harriman Time
Deposit - British
Pound, 3.615%,
10/02/06#v 624,443
241 Brown Brothers
Harriman Time
Deposit - Canadian
Dollar, 3.00%,
10/02/06#v 241
124 Brown Brothers
Harriman Time
Deposit - Danish
Krone, 2.05%,
10/02/06#v 124
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$1,296,047 Brown Brothers
Harriman Time
Deposit - Euro,
1.87%, 10/02/06#v 1,296,047
793 Brown Brothers
Harriman Time
Deposit - Hong
Kong Dollar,
3.05%, 10/02/06#v 793
2 Brown Brothers
Harriman Time
Deposit - Japanese
Yen .01%,
10/02/06#v 2
60 Brown Brothers
Harriman Time
Deposit - Norwegian
Kroner, 1.15%,
10/02/06# v 60
104 Brown Brothers
Harriman Time
Deposit - Singapore
Dollar, 1.95%,
10/02/06# v 104
70 Brown Brothers
Harriman Time
Deposit - Swedish
Krona, 1.25%,
10/02/06# v 70
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $3,883,920) 3,883,920
TOTAL INVESTMENTS 99.2%
(COST $107,588,804) 117,766,686
OTHER ASSETS AND LIABILITIES
0.8% 969,618
------------
TOTAL NET ASSETS 100.0% $118,736,304
============
</Table>
The accompanying notes are an integral part of this Schedule of Investments.
(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, 2006.
v All securities were fair valued (Note 1) as of September 30, 2006 unless
noted with a v. Total value of securities fair valued was $107,980,787.
40 Schedule of Investments
Six Month Hypothetical Expense Example
September 30, 2006 (unaudited)
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 (4/1/06 - 9/30/06).
ACTUAL EXPENSES
The first line in the table for each Fund provides information about actual
account values and actual expenses. The Example includes, but is not limited to,
management fees, 12b-1 fees, fund accounting, custody and transfer agent fees.
However, the Example does not include client specific fees, such as the $10 fee
charged to IRA accounts, or the $15 fee charged for wire redemptions. You may
use this information, together with the amount you invested, to estimate the
expenses that you paid over the period. Simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line for each Fund under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
Expense Example 41
Six Month Hypothetical Expense Example (continued)
September 30, 2006 (unaudited)
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/06 9/30/06 4/1/06-9/30/06* 4/1/06-9/30/06
- --------------------------------------------------------------------------------------------------
ICON ASIA-PACIFIC REGION
FUND
- --------------------------------------------------------------------------------------------------
CLASS S
- --------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 977.80 $ 6.99 1.41%
- --------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,017.93 7.13
(5% return before
expenses)
- --------------------------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 973.40 5.97 1.81%
- --------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.95 6.11
(5% return before
expenses)
- --------------------------------------------------------------------------------------------------
ICON EUROPE FUND
- --------------------------------------------------------------------------------------------------
CLASS S
- --------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,049.10 7.60 1.48%
- --------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,017.58 7.49
(5% return before
expenses)
- --------------------------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,021.70 6.22 1.84%
- --------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.85 6.21
(5% return before
expenses)
- --------------------------------------------------------------------------------------------------
ICON INTERNATIONAL EQUITY
FUND
- --------------------------------------------------------------------------------------------------
CLASS I
- --------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,000.00 8.47 1.69%
- --------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,016.53 8.54
(5% return before
expenses)
- --------------------------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 995.80 12.76 2.55%
- --------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,012.22 12.86
(5% return before
expenses)
- --------------------------------------------------------------------------------------------------
CLASS Z
- --------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,000.70 7.02 1.40%
- --------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,017.98 7.08
(5% return before
expenses)
- --------------------------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 993.00 5.96 1.79%
- --------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.00 6.04
(5% return before
expenses)
- --------------------------------------------------------------------------------------------------
</Table>
* 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.
Information shown for Class A shares reflects values using expense ratios and
rates of return for the period May 31, 2006 (date of commencement of operations)
through September 30, 2006. As such, the expense ratio is annualized, multiplied
by the average account value of the period of operation, multiplied by 122/365
to reflect the actual period.
Total returns exclude applicable sales charges. If sales charges were included
(maximum 5.75%), returns would be lower.
42 Expense Example
Statements of Assets and Liabilities
September 30, 2006
<Table>
<Caption>
ICON ICON
ASIA-PACIFIC ICON INTERNATIONAL
REGION FUND EUROPE FUND EQUITY FUND
------------- ------------- -------------
ASSETS
Investments, at cost $137,888,882 $ 96,600,651 $107,588,804
------------ ------------ ------------
Investments, at value 150,777,705 106,850,472 117,766,686
Cash 850,951 - 118,415
Receivables:
Fund shares sold 622,681 660,476 1,143,630
Investments sold 1,667,019 117,751 667,439
Interest 4,153 1,186 2,569
Dividends 365,547 60,175 152,108
Expense reimbursements by Advisor 584 569 5,485
Foreign tax reclaims - 89,603 49,236
Other assets 51,090 27,778 32,259
------------ ------------ ------------
Total Assets 154,339,730 107,808,010 119,937,827
------------ ------------ ------------
LIABILITIES
Payables:
Due to custodian bank - 282,847 -
Interest 5,241 3,511 1,894
Investments bought 6,486,592 1,941,568 892,569
Fund shares redeemed 189,226 9,691 131,318
Advisory fees 119,915 84,531 95,374
Accrued distribution fees 5 4 24,660
Fund accounting fees 5,237 4,409 4,772
Transfer agent fees 6,573 2,647 4,821
Administration fees 5,700 3,938 4,463
Trustee fees 3,373 2,371 2,680
Accrued expenses 49,140 33,283 38,972
------------ ------------ ------------
Total Liabilities 6,871,002 2,368,800 1,201,523
------------ ------------ ------------
NET ASSETS - ALL SHARE CLASSES $147,468,728 $105,439,210 $118,736,304
============ ============ ============
NET ASSETS - CLASS S# $147,444,424 $105,409,613 $ -
============ ============ ============
NET ASSETS - CLASS I $ - $ - $ 76,453,918
============ ============ ============
NET ASSETS - CLASS C $ - $ - $ 13,898,881
============ ============ ============
NET ASSETS - CLASS Z $ - $ - $ 28,295,025
============ ============ ============
NET ASSETS - CLASS A $ 24,304 $ 29,597 $ 88,480
============ ============ ============
NET ASSETS CONSIST OF
Paid-in capital $141,798,543 $ 93,028,494 $102,767,488
Accumulated undistributed net investment income/(loss) (270,114) 366,659 10,385
Accumulated undistributed net realized gain/(loss) from
investments (6,339,289) 2,176,795 6,303,394
Accumulated net realized gain/(loss) from foreign currency
translations (602,454) (383,968) (522,545)
Unrealized appreciation/(depreciation):
on investments and other assets and liabilities
denominated in foreign currency 12,882,042 10,251,230 10,177,582
------------ ------------ ------------
NET ASSETS $147,468,728 $105,439,210 $118,736,304
============ ============ ============
Shares outstanding (unlimited shares authorized, no par
value)
Class S# 11,179,011 5,602,424 -
Class I - - 5,118,017
Class C - - 967,626
Class Z - - 1,877,698
Class A 1,844 1,575 5,875
Net asset value (offering and redemption price per share)
Class S# $ 13.19 $ 18.82 $ -
Class I $ - $ - $ 14.94
Class C $ - $ - $ 14.36
Class Z $ - $ - $ 15.07
Class A $ 13.18 $ 18.79 $ 15.06
Class A maximum offering price (100%/(100%-maximum
sales charge) of net asset value adjusted to the
nearest cent per share $ 13.98 $ 19.94 $ 15.98
</Table>
# Class S was formerly the only class in the Fund. Multi-class operations
commenced May 31, 2006.
The accompanying notes are an integral part of the financial statements.
Financial Statements 43
Statements of Operations
For the year ended September 30, 2006
<Table>
<Caption>
ICON ICON
ASIA-PACIFIC ICON INTERNATIONAL
REGION FUND EUROPE FUND EQUITY FUND
------------ ------------ -------------
INVESTMENT INCOME
Interest $ 90,564 $ 102,101 $ 107,101
Dividends 2,131,592 1,703,791 1,811,237
Foreign taxes withheld (184,828) (197,201) (181,026)
---------- ----------- -----------
Total Investment Income 2,037,328 1,608,691 1,737,312
---------- ----------- -----------
EXPENSES
Advisory fees 1,303,863 608,320 780,711
Distribution fees:
Class I - - 117,750
Class C - - 75,172
Class A 8 6 11
Fund accounting fees 61,050 42,612 50,145
Transfer agent fees 81,028 31,078 53,669
Custody fees 154,417 110,946 124,151
Administration fees 60,395 28,082 36,119
Registration fees 40,855 20,416 26,787
Insurance expense 1,102 1,281 1,558
Trustee fees and expenses 12,088 7,754 9,177
Interest expense 62,677 14,095 9,430
Other expenses 107,142 57,591 61,717
---------- ----------- -----------
Total expenses before expense (reimbursement)/recoupment
and transfer agent earnings credit 1,884,625 922,181 1,346,397
---------- ----------- -----------
Transfer agent earnings credit (2,322) (1,547) (1,788)
Expense (reimbursement)/recoupment by Adviser due to
expense limitation agreement (722) (709) (12,627)
---------- ----------- -----------
Net Expenses 1,881,581 919,925 1,331,982
---------- ----------- -----------
NET INVESTMENT INCOME (LOSS) 155,747 688,766 405,330
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain/(loss) from investment transactions 1,094,030 2,724,355 6,781,431
Net realized gain/(loss) from foreign currency
translations (569,787) (286,266) (454,070)
Change in unrealized net appreciation/(depreciation) on
investments & foreign currency translations 6,454,824 6,903,602 4,534,281
---------- ----------- -----------
Net realized and unrealized gain/(loss) on investments 6,979,067 9,341,691 10,861,642
---------- ----------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $7,134,814 $10,030,457 $11,266,972
========== =========== ===========
</Table>
The accompanying notes are an integral part of the financial statements.
44 Financial Statements
THIS PAGE INTENTIONALLY LEFT BLANK
Statements of Changes in Net Assets
<Table>
<Caption>
ICON ASIA-PACIFIC REGION FUND
----------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ 155,747 $ 45,287
Net realized gain/(loss) from investment transactions 1,094,030 1,927,462
Net realized gain/(loss) from foreign currency
translations (569,787) (32,667)
Change in net unrealized appreciation/(depreciation) on
investments and foreign currency translations 6,454,824 4,738,359
------------- ------------
Net increase/(decrease) in net assets resulting from
operations 7,134,814 6,678,441
------------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class S# (85,846) (26,459)
Class I - -
Class C - -
Class Z - -
Class A - -
Net realized gains
Class S# - -
Class I - -
Class C - -
Class Z - -
Class A - -
------------- ------------
Net decrease from dividends and distributions (85,846) (26,459)
------------- ------------
FUND SHARE TRANSACTIONS
Shares sold
Class S# 221,387,084 39,085,269
Class I - -
Class C - -
Class Z - -
Class A 24,469 -
Reinvested dividends and distributions
Class S# 80,516 26,163
Class I - -
Class C - -
Class Z - -
Class A - -
Shares repurchased
Class S# (129,793,185) (14,089,724)
Class I - -
Class C - -
Class Z - -
Class A (26) -
------------- ------------
Net increase/(decrease) from fund share transactions 91,698,858 25,021,708
------------- ------------
Total net increase/(decrease) in net assets 98,747,826 31,673,690
NET ASSETS
Beginning of period 48,720,902 17,047,212
------------- ------------
End of period $ 147,468,728 $ 48,720,902
============= ============
</Table>
46 Financial Statements
<Table>
<Caption>
ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND
- --------------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
- ----------------------- ------------------ ------------------ ------------------
$ 688,766 $ 85,751 $ 405,330 $ 80,075
2,724,355 2,088,483 6,781,431 2,007,770
(286,266) (97,702) (454,070) (68,475)
6,903,602 1,925,390 4,534,281 4,346,469
------------ ----------- ------------ -----------
10,030,457 4,001,922 11,266,972 6,365,839
------------ ----------- ------------ -----------
- - - -
- - (24,881) -
- - - -
- - (50,351) -
- - - -
(1,340,887) - - -
- - (1,143,374) (422,167)
- - (134,889) (37,935)
- - (934,778) (1,003,360)
- - - -
------------ ----------- ------------ -----------
(1,340,887) - (2,288,273) (1,463,462)
------------ ----------- ------------ -----------
117,006,017 19,527,704 - -
- - 68,838,279 10,807,776
- - 12,648,559 1,464,926
- - 13,277,909 5,520,800
29,478 - 88,208 -
1,336,067 - - -
- - 1,133,191 407,049
- - 130,198 36,352
- - 983,433 994,866
- - - -
(44,864,637) (8,112,955) - -
- - (13,588,831) (1,176,471)
- - (915,055) (248,111)
- - (5,302,946) (2,942,011)
(36) - (29) -
------------ ----------- ------------ -----------
73,506,889 11,414,749 77,292,916 14,865,176
------------ ----------- ------------ -----------
82,196,459 15,416,671 86,271,615 19,767,553
23,242,751 7,826,080 32,464,689 12,697,136
------------ ----------- ------------ -----------
$105,439,210 $23,242,751 $118,736,304 $32,464,689
============ =========== ============ ===========
</Table>
Financial Statements 47
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON ASIA-PACIFIC REGION FUND
----------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
TRANSACTIONS IN FUND SHARES
Shares sold
Class S# 17,006,822 3,865,936
Class I - -
Class C - -
Class Z - -
Class A 1,846 -
Reinvested dividends and distributions
Class S# 6,233 2,994
Class I - -
Class C - -
Class Z - -
Class A - -
Shares repurchased
Class S# (10,164,560) (1,624,763)
Class I - -
Class C - -
Class Z - -
Class A (2) -
------------ -----------
Net increase/(decrease) 6,850,339 2,244,167
------------ -----------
Shares outstanding beginning of period 4,330,516 2,086,349
------------ -----------
Shares outstanding end of period 11,180,855 4,330,516
============ ===========
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding short-term securities)
Purchase of securities $291,355,445 $53,438,824
Proceeds from sales of securities 202,024,877 30,360,825
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ (270,114) $ 15,964
============ ===========
</Table>
# Class S was formerly the only class in the Fund. Multi-class operations
commenced May 31, 2006.
The accompanying notes are an integral part of the financial statements.
48 Financial Statements
<Table>
<Caption>
ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND
- --------------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005 SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
- ----------------------- ------------------ ------------------ ------------------
6,577,613 1,406,104 - -
- - 4,778,664 953,897
- - 892,329 131,856
- - 987,753 481,231
1,577 - 5,877 -
91,261 - - -
- - 84,133 37,655
- - 9,984 3,420
- - 72,522 91,777
- - - -
(2,549,057) (574,107) - -
- - (935,489) (104,200)
- - (64,198) (23,141)
- - (372,280) (260,880)
(2) - (2) -
------------ ----------- ------------ -----------
4,121,392 831,997 5,459,293 1,311,615
------------ ----------- ------------ -----------
1,482,607 650,610 2,509,923 1,198,308
------------ ----------- ------------ -----------
5,603,999 1,482,607 7,969,216 2,509,923
============ =========== ============ ===========
$133,003,344 $33,678,756 $168,974,479 $41,768,432
60,122,066 24,639,660 98,308,045 28,810,442
$ 366,659 $ (35,841) $ 10,385 $ (4,090)
============ =========== ============ ===========
</Table>
Financial Statements 49
Financial Highlights
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
-----------------------------------------
NET ASSET NET NET REALIZED
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM
BEGINNING INCOME/ GAINS/ (LOSSES) INVESTMENT
OF PERIOD (LOSS)(X) ON INVESTMENTS OPERATIONS
--------- ---------- --------------- ----------
ICON ASIA-PACIFIC REGION FUND
CLASS S#
Year Ended September 30, 2006 $11.25 $0.02 $1.93 $1.95
Year Ended September 30, 2005 8.17 0.03 3.08 3.11
Year Ended September 30, 2004 7.62 0.02 0.55 0.57
Year Ended September 30, 2003 5.68 0.04 1.90 1.94
Year Ended September 30, 2002 6.81 (0.19) (0.91) (1.10)
CLASS A
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, 2006 15.68 0.20 3.80 4.00
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
Year Ended September 30, 2002 8.13 (0.04) (0.67) (0.71)
CLASS A
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, 2006 12.91 0.09 2.57 2.66
Year Ended September 30, 2005 10.59 0.04 3.25 3.29
February 6, 2004 (inception) to
September 30, 2004 10.96 0.04 (0.41) (0.37)
CLASS C
Year Ended September 30, 2006 12.53 (0.03) 2.48 2.45
Year Ended September 30, 2005 10.55 (0.14) 3.09 2.95
February 19, 2004 (inception) to
September 30, 2004 11.29 (0.02) (0.72) (0.74)
CLASS Z
Year Ended September 30, 2006 13.00 0.09 2.63 2.72
Year Ended September 30, 2005 10.60 0.06 3.31 3.37
Year Ended September 30, 2004 8.41 0.01 2.24 2.25
Year Ended September 30, 2003 5.96 0.06 2.45 2.51
Year Ended September 30, 2002 7.24 0.04 (1.25) (1.21)
CLASS A
May 31, 2006 (inception) to
September 30, 2006 15.17 0.03 (0.14) (0.11)
<Caption>
LESS DIVIDENDS AND DISTRIBUTIONS
-------------------------------------------------------
DIVIDENDS DISTRIBUTIONS TOTAL
FROM NET FROM NET DIVIDENDS
INVESTMENT REALIZED RETURN AND
INCOME GAINS OF CAPITAL DISTRIBUTIONS
---------- ------------- ---------- -------------
ICON ASIA-PACIFIC REGION FUND
CLASS S#
Year Ended September 30, 2006 $(0.01) $ - $ - $(0.01)
Year Ended September 30, 2005 (0.03) - - (0.03)
Year Ended September 30, 2004 (0.02) - - (0.02)
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 - - (0.03) (0.03)
CLASS A
May 31, 2006 (inception) to
September 30, 2006 - - - -
ICON EUROPE FUND
CLASS S#
Year Ended September 30, 2006 - (0.86) - (0.86)
Year Ended September 30, 2005 - - - -
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 (0.02) - - (0.02)
CLASS A
May 31, 2006 (inception) to
September 30, 2006 - - - -
ICON INTERNATIONAL EQUITY FUND
CLASS I
Year Ended September 30, 2006 (0.01) (0.62) - (0.63)
Year Ended September 30, 2005 - (0.97) - (0.97)
February 6, 2004 (inception) to
September 30, 2004 - - - -
CLASS C
Year Ended September 30, 2006 - (0.62) - (0.62)
Year Ended September 30, 2005 - (0.97) - (0.97)
February 19, 2004 (inception) to
September 30, 2004 - - - -
CLASS Z
Year Ended September 30, 2006 (0.03) (0.62) - (0.65)
Year Ended September 30, 2005 - (0.97) - (0.97)
Year Ended September 30, 2004 (0.06) - - (0.06)
Year Ended September 30, 2003 - (0.06) - (0.06)
Year Ended September 30, 2002 (0.04) - (0.03) (0.07)
CLASS A
May 31, 2006 (inception) to
September 30, 2006 - - - -
</Table>
(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) 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 2.
The ratios in these financial highlights reflect the limitation, including the
interest expense.
The accompanying notes are an integral part of the financial statements.
50 Financial Highlights
<Table>
<Caption>
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME/(LOSS) TO AVERAGE
AVERAGE NET ASSETS(a) NET ASSETS(a)
------------------------- -------------------------
BEFORE AFTER BEFORE AFTER
EXPENSE EXPENSE EXPENSE EXPENSE
LIMITATION/ LIMITATION/ LIMITATION/ LIMITATION/
NET RECOUPMENT RECOUPMENT RECOUPMENT RECOUPMENT
ASSET AVERAGE NET AND TRANSFER AND TRANSFER AND TRANSFER AND TRANSFER
VALUE, NET ASSETS, ASSETS FOR THE AGENT AGENT AGENT AGENT PORTFOLIO
END OF TOTAL END OF PERIOD PERIOD (IN EARNINGS EARNINGS EARNINGS EARNINGS TURNOVER
PERIOD RETURN* (IN THOUSANDS) THOUSANDS) CREDIT CREDIT CREDIT CREDIT RATE(b)
------- ------- -------------- -------------- ------------ ------------ ------------ ------------ ---------
$13.19 17.36% $147,444 $130,654 1.44% 1.44% 0.12% 0.12% 159.51%
11.25 38.12% 48,721 15,225 1.93% N/A 0.30% N/A 185.84%
8.17 7.51% 17,047 14,976 1.91% N/A 0.20% N/A 58.62%
7.62 34.15% 6,084 6,683 1.98% N/A 0.68% N/A 81.44%
5.68 (16.29)% 6,927 12,142 1.66% N/A (0.23)% N/A 14.43%
13.18 (2.66)% 24 9 25.78% 1.81%(c) (23.09)% 0.88% 159.51%
18.82 27.09% 105,409 61,054 1.51% 1.51% 1.13% 1.13% 100.62%
15.68 30.34% 23,243 16,665 1.85% N/A 0.51% N/A 153.55%
12.03 22.26% 7,826 7,230 2.24% N/A (0.38)% N/A 78.57%
9.84 32.97% 9,262 6,774 1.87% N/A (0.29)% N/A 101.37%
7.40 (8.76)% 4,619 5,706 2.14% N/A (0.42)% N/A 12.26%
18.79 2.12% 30 7 33.40% 1.84%(c) (31.86)% (0.30)% 100.62%
14.94 21.20% 76,454 47,266 1.71% 1.71%(c) 0.59% 0.59% 129.31%
12.91 32.90% 15,376 7,921 2.02% 1.97% 0.27% 0.32% 139.23%
10.59 (3.38)% 3,211 1,960 2.32% N/A 0.44% N/A 117.74%
14.36 20.09% 13,899 7,550 2.76% 2.54%(c) (0.39)% (0.18)% 129.31%
12.53 29.56% 1,622 643 4.52% 3.51% (2.23)% (1.22)% 139.23%
10.55 (6.55)% 183 162 3.06% N/A (0.16)% N/A 117.74%
15.07 21.54% 28,295 23,485 1.41% 1.40%(c) 0.60% 0.61% 129.31%
13.00 33.57% 15,466 12,184 1.68% 1.68% 0.51% 0.51% 139.23%
10.60 26.79% 9,303 10,063 1.98% N/A 0.03% N/A 117.74%
8.41 42.60% 10,587 8,571 2.00% N/A 0.88% N/A 98.91%
5.96 (16.94)% 8,222 13,347 1.72% N/A 0.48% N/A 91.99%
15.06 (0.73)% 88 13 19.13% 1.79%(c) (16.62)% 0.72% 129.31%
</Table>
Financial Highlights 51
Notes to Financial Statements
September 30, 2006
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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 shareholder servicing costs and 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 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 investing, including limited product lines, less
liquidity, and small market share.
In addition, 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
52 Notes to Financial Statements
exposure involves future claims that may be made against each Fund. However,
based on experience, the Funds expect the risk of loss to be minimal.
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 report the market value of securities in their portfolios; if a pricing
service is not able to provide a price, or the pricing service quote of
valuation is 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. The valuation assigned to fair-valued securities for purposes of
calculating a Fund's net asset value ("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.
Lacking any sales that day, the 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
Notes to Financial Statements 53
Notes to Financial Statements (continued)
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 Funds' adviser determines that use of another valuation methodology
is appropriate. 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 net asset value ("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.
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 has recently begun to evaluate the application of
the Statement to the Funds, and is not in a position at this time to evaluate
the significance of its impact, if any, on the Funds' financial statements.
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
54 Notes to Financial Statements
were purchased or sold by the Funds during the year ended September 30, 2006.
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 into U.S. dollars at the prevailing rates of exchange daily.
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 Statements 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 Statements of Operations. The
Funds did not enter into any foreign currency contracts during the year ended
September 30, 2006.
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
the broker an amount of cash and/or other assets equal to a certain
Notes to Financial Statements 55
Notes to Financial Statements (continued)
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, 2006.
OPTIONS TRANSACTIONS
Each Fund may write call and put options on any security in which it may invest.
When a Fund writes a put or call option, an amount equal to the premium received
is included in the Statement of Assets and Liabilities as a liability. The
amount of the liability is subsequently marked-to-market to reflect the current
market value of the option. If an option expires on its stipulated expiration
date or if the Fund enters into a closing purchase transaction, a gain or loss
is realized. If a written call option is exercised, a gain or loss is realized
for the sale of the underlying security, and the proceeds from the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the security acquired is decreased by the premium
originally received. As a writer of an option, the Fund has no control over
whether the underlying securities are subsequently sold (call) or purchased
(put) and, as a result, bears the market risk of an unfavorable change in the
price of the security underlying the written option.
Each Fund may also purchase put and call options on any security in which it may
invest. When a Fund purchases a call or put option, an amount equal to the
premium paid is included in the Fund's Statement of Assets and Liabilities as an
investment, and is subsequently marked-to-market to reflect the current market
value of the option. If an option expires on the stipulated expiration date or
if the Fund enters into a closing sale transaction, a gain or loss is realized.
If the Fund exercises a call, the cost of the security acquired is increased by
the premium paid for the call. If the Fund exercises a put option, a gain or
loss is realized from the sale of the underlying security, and the proceeds from
such sale are decreased by the premium originally paid. Written and purchased
options are non-income producing securities. The Funds did not enter into any
option transactions during the year ended September 30, 2006.
56 Notes to Financial Statements
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 received by shareholders of the Funds which are derived from foreign
source income and foreign taxes paid by the Funds are to be treated, to the
extent allowable under the Code, as if received and paid by the shareholders of
the Funds. 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 ICON 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 for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. Management has recently begun to
evaluate the application of the Interpretation to the Funds, and is not in a
position at this time to evaluate the significance of its impact, if any, on the
Funds' financial statements.
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
Notes to Financial Statements 57
Notes to Financial Statements (continued)
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.
2. 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:
<Table>
<Caption>
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%
</Table>
The expense limitations will continue in effect until at least January 29, 2016.
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
58 Notes to Financial Statements
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, 2006 the following amounts were still available for
recoupment by ICON based upon their potential expiration dates:
<Table>
<Caption>
2007 2008 2009
- ------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund $ -- $ -- $ 722
ICON Europe Fund -- -- 709
ICON International Equity Fund -- 10,556 12,627
</Table>
TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES
BISYS Fund Services Ohio, Inc. ("BISYS") is the Fund Accounting Agent for the
Funds. For its services, the Trust pays BISYS 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, 2006, 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. Prior to that date, this agreement provided for an annual fee to ICON
of 0.05% on the Funds' first $1.5 billion of average daily net assets and 0.045%
on average daily net assets in excess of $1.5 billion. The administrative
services agreement provides that ICON will not be liable
Notes to Financial Statements 59
Notes to Financial Statements (continued)
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 BISYS pursuant to
which BISYS assists ICON with the administration and business affairs of the
Trust. For its services, ICON pays BISYS 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, Class I and Class A
shareholders of the International Equity Fund and Class A shareholders of the
Asia-Pacific Region Fund and 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, 2006, 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,
have been used to offset various Shareholder servicing costs incurred by the
Adviser. For the year ended September 30, 2006, the amount was $4,379.
60 Notes to Financial Statements
3. 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 7.32% at September 30, 2006.
The average interest rate charged for the year ended September 30, 2006 was
6.75%. All Funds had outstanding borrowings as of September 30, 2006.
<Table>
<Caption>
AVERAGE BORROWING
(10/1/05--9/30/06)
- --------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund $1,937,249
ICON Europe Fund 2,276,909
ICON International Equity Fund 623,795
</Table>
4. 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 in
the following tables represent net capital loss carryforwards as of September
30, 2006 that may be available to offset future realized capital gains and
thereby reduce future taxable income distributions.
<Table>
<Caption>
AMOUNT EXPIRATION DATE
- ------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund $1,351,390 September 30, 2007
3,254,268 September 30, 2009
1,330,946 September 30, 2010
952,529 September 30, 2011
</Table>
During the year ended September 30, 2006 the ICON Asia-Pacific Region Fund
utilized capital loss carryforwards of $898,474. For the year ended September
30, 2006, the ICON Asia-Pacific Region Fund will elect to defer post October
currency losses of $569,787.
Notes to Financial Statements 61
Notes to Financial Statements (continued)
The tax characteristics of dividends paid to shareholders during the fiscal year
ended September 30, 2006, were as follows:
<Table>
<Caption>
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
</Table>
The tax characteristics of dividends paid to shareholders during the fiscal year
ended September 30, 2005, were as follows:
<Table>
<Caption>
DISTRIBUTIONS
PAID FROM
--------------------- TOTAL
ORDINARY NET LONG- TOTAL TAXABLE DISTRIBUTIONS
FUND INCOME TERM GAINS DISTRIBUTIONS PAID
- ---------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund $26,459 $ - $ 26,459 $ 26,459
ICON International Equity Fund 66,857 1,396,605 1,463,462 1,463,462
</Table>
As of September 30, 2006, the components of accumulated earnings (deficit) on a
tax basis was as follows:
<Table>
<Caption>
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 $ 327,318 $ - $ 327,318 $(7,458,920) $12,801,787 $ 5,670,185
ICON Europe Fund 1,255,908 999,124 2,255,032 - 10,155,684 12,410,716
ICON International
Equity Fund 3,376,711 2,430,502 5,807,213 - 10,161,603 15,968,816
</Table>
*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.
The aggregate gross unrealized appreciation and depreciation of securities held
by the Funds and the total cost of securities for federal tax purposes as of
September 30, 2006, are noted below. Unrealized appreciation
62 Notes to Financial Statements
(depreciation) in the table below exclude appreciation (depreciation) on foreign
currency transactions.
<Table>
<Caption>
UNREALIZED UNREALIZED NET APPRECIATION
FUND COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- ---------------------------------------------------------------------------------------
ICON Asia-Pacific
Region Fund $137,969,136 $16,000,210 $(3,191,641) $12,808,569
ICON Europe Fund 96,696,197 11,127,081 (972,805) 10,154,276
ICON International
Equity Fund 107,604,783 11,938,649 (1,776,746) 10,161,903
</Table>
Notes to Financial Statements 63
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of the ICON International Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of ICON Asia-Pacific Region Fund, ICON
Europe Fund, and ICON International Equity Fund (three of the portfolios
constituting ICON Funds, hereafter referred to as the "Funds") at September 30,
2006, 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, 2006 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 20, 2006
64 Report of Accounting Firm
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees ("Board") consists of six 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, 55, 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, 56. 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., 57. Mr. Pomeroy has been a Trustee of the Funds since
November 2002. Mr. Pomeroy is Chief Investment Officer and Director of
Investments, Pennsylvania State University (2001 to present) and was Portfolio
Manager and Product Manager, Trinity Investment Management Corporation (1989 to
2001).
Trustees and Officers 65
Board of Trustees and Fund Officers (continued)
(unaudited)
GREGORY KELLAM SCOTT, 58. Mr. Scott has been a Trustee of the Funds since
November 2002. 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). Mr. Scott is also a
member of the National Board of Directors of the Constituency for Africa (1997
to present) and serves as Executive Director of Indiana Civil Rights Commission
(2005-present). Mr. Scott has been appointed to the US State Department's
Commission on the African Judiciary (2006-present).
R. MICHAEL SENTEL, 58. 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 became a
branch chief. 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).
JONATHAN F. ZESCHIN, 53. Mr. Zeschin has been a Trustee of the Funds since
November 2002. Mr. Zeschin is President and Founder of ESSENTIAL Advisers, Inc.,
a wealth management and investment advisory firm (2000 to present) and was
Managing Partner of JZ Partners LLC, a business consulting firm for investment
management companies (1998 to present). Mr. Zeschin was previously President of
Founders Asset Management LLC, an investment management company (1995 to 1998)
and Executive Vice President, INVESCO Funds Group, an investment advisory
company (1992 to 1995). Mr. Zeschin was previously a Director of the Young
Americans Education Foundation and Young Americans Bank (1998 to 2004); and was
previously a Director of the Wasatch Funds (2002 to 2004).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 55. 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.
66 Trustees and Officers
ERIK L. JONSON, 57. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception. 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).
DONALD SALCITO, 53. 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, 33. Ms. Schoffman serves as Assistant Vice President and
Chief Compliance Officer of the Funds (May 2004 to present). She also serves as
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, 43. Mr. Abrams serves as Anti-Money Laundering Officer of the
Funds (2005 to present). Mr. Abrams is also 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).
Trustees and Officers 67
Other Information (unaudited)
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 Diversified 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, Covered Call, 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 8, 2006, the Board of Trustees, including all of the Trustees who 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, 2006.
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.
68 Other Information
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
from each Fund over various periods. The 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 information provided and
analyzed, 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 whether 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 are 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; and
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.
In connection with reviewing data bearing upon the costs of services to be
provided and profits to be realized by ICON and its related companies from the
relationship with the Trust, the Board considered the Lipper comparative data,
data concerning ICON's soft-dollar arrangements, costs borne by ICON in
providing advisory services to each Fund and the profitability of ICON in light
of the estimated profitability analyses which had been provided by ICON, other
benefits to ICON from serving as the Funds' adviser, and ICON's financial
statements.
Other Information 69
Other Information (continued) (unaudited)
With respect to the soft-dollar arrangements the Board assessed all facets of
the arrangements including the quality of trade execution. It was noted that
ICON receives research assistance from the use of soft dollars generated from
Fund portfolio transactions and that such research assists ICON in providing
quality investment advisory services to the Funds and other accounts to which it
provides advisory services. The Board concluded that the arrangements are
consistent with Fund brokerage practices and benefit the Funds and their
shareholders.
The Board noted that ICON benefits from serving directly as investment adviser
and administrative agent, and through its affiliate, as the principal
underwriter for the Funds. With respect to the distribution services, the Board
noted that proceeds of the Trust's distribution plans pursuant to Rule 12b-1
under the 1940 Act for the International Funds and Diversified Funds are paid to
ICON's affiliate and that the distributor has not profited from plan proceeds as
all of the proceeds have been or will be used to cover distribution and
marketing expenses. In this regard, the Trustees noted that marketing efforts
have been successful as evidenced by Fund asset levels. With respect to the
administrative fee paid to ICON, the Board reviewed the comparative data related
to those services. The Board also considered the compliance experience in these
service areas and concluded that the services provided by ICON and its
affiliates to the Funds are satisfactory and that the profits derived from
providing the services are competitive and reasonable.
The Board also noted the risks assumed by ICON in providing investment advisory,
distribution and administrative 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 Funds
is made with the recognition that the Funds' advisory relationship with ICON can
be terminated at any time and must be renewed on an annual basis.
In making these determinations the Board of Trustees considered the following:
1. In connection with assessing data bearing upon 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:
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 for the Sector Funds were higher than
fees for similar funds; but that the Sector Funds' expense ratios were
70 Other Information
competitive and in most instances lower than those of similarly managed
Funds;
C. that the Sector Funds had also imposed breakpoints on the contractual
advisory fees and that such fees were reflected in the comparison data;
D. that contractual advisory fees for the ICON Asia-Pacific Region and
Europe Funds were above the average fees for similar funds; however, the
Funds' expense ratios were competitive in light of their size;
E. that the contractual advisory fees for the ICON International Equity
Fund is below the average of similarly managed funds;
F. the contractual advisory fees for the U.S. Diversified Funds were in
line with fees for similar funds; and that, with the exception of the ICON
Bond Fund and ICON Covered Call Fund, the U.S. Diversified Funds' expense
ratios were lower than those of similarly managed Funds.
G. the contractual advisory fee for the ICON Core Equity Fund was below the
average fee for similar funds; and that its expense ratio was lower than
those of similarly-managed Funds.
H. that, generally 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; however, to the extent such fees are lower, it is
due to the fact that such accounts are less costly for ICON to manage.
I. 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 solely
from such arm's-length negotiation.
3. In connection the investment performance of the Funds and ICON the Board
discussed and noted:
1. Based on the performance information provided by Lipper, Inc., of the
thirteen ICON Funds that had a track record of at least five years, ten
outperformed their respective peer groups; eight of the sixteen ICON Funds
with a track of at least 3 years outperformed their respective peer groups;
and
2. In comparing the Sector Funds to the ETFs the sector funds compared
favorably over the one, two and three year periods.
The Board considered 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. It was noted that each of the Sector
Funds had imposed investment advisory fee breakpoints in January 2006 to take
into consideration such economies that may be
Other Information 71
Other Information (continued) (unaudited)
realized as the Funds increase in assets. Furthermore, ICON has contractually
agreed to impose expense limitations on the International Funds and the U.S.
Diversified Funds at a cost to ICON.
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, 2006, qualifies
for the corporate dividends received deduction for the following Funds:
<Table>
<Caption>
FUND DIVIDENDS RECEIVED DEDUCTION
- -----------------------------------------------------------------------------------
ICON International Equity Fund 0.06%
</Table>
For the fiscal year ended September 30, 2006, the following Funds paid qualified
dividend income:
<Table>
<Caption>
FUND AMOUNT
- ----------------------------------------------------------------------
ICON Asia-Pacific Region Fund $ 85,846
ICON International Equity Fund 796,670
</Table>
The Funds designate the following amounts as long-term capital gain
distributions qualifying for the maximum 15% income tax rate for individuals:
<Table>
<Caption>
FUND AMOUNT
- ------------------------------------------------------------------------
ICON Europe Fund $2,070,045
ICON International Equity Fund $1,617,356
</Table>
72 Other Information
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
73
THIS PAGE INTENTIONALLY LEFT BLANK
(ICON FUNDS LOGO)
<Table>
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, 12(th) Floor
Greenwood Village, CO 80111
On the Internet www.iconadvisers.com
By E-Mail info@iconadvisers.com
</Table>
(ICON LOGO)
1-800-764-0442
www.iconadvisers.com
FANN-INTL(9-06)
(GRAPHIC)
2006 Annual Report
ICON SECTOR FUNDS
Investment Update
ICON CONSUMER DISCRETIONARY FUND
ICON ENERGY FUND
ICON FINANCIAL FUND
ICON HEALTHCARE FUND
ICON INDUSTRIALS FUND
ICON INFORMATION TECHNOLOGY FUND
ICON LEISURE AND CONSUMER STAPLES FUND
ICON MATERIALS FUND
ICON TELECOMMUNICATION & UTILITIES FUND
(ICON LOGO)
STRENGTH
IN NUMBERS
Table of Contents
<Table>
ABOUT THIS REPORT (UNAUDITED) 2
MESSAGE FROM ICON FUNDS (UNAUDITED) 5
MANAGEMENT OVERVIEW (UNAUDITED) AND SCHEDULE OF INVESTMENTS 10
ICON Consumer Discretionary Fund 10
ICON Energy Fund 16
ICON Financial Fund 23
ICON Healthcare Fund 29
ICON Industrials Fund 35
ICON Information Technology Fund 42
ICON Leisure and Consumer Staples Fund 49
ICON Materials Fund 54
ICON Telecommunication & Utilities Fund 59
SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE (UNAUDITED) 66
FINANCIAL STATEMENTS 68
FINANCIAL HIGHLIGHTS 76
NOTES TO FINANCIAL STATEMENTS 80
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 91
BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED) 92
OTHER INFORMATION (UNAUDITED) 95
</Table>
(RECYCLE LOGO)
About This Report
HISTORICAL RETURNS
All total returns mentioned in this report account for the change in a Fund's
per-share price and the reinvestment of any dividends, capital gain
distributions, and tax return of capital. 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, 2006, 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. Each Fund's holdings as of September 30, 2006 are
included in each Fund's Schedule of Investments.
Certain companies' stock performance during the period is mentioned throughout
the Management Overviews. While ICON's quantitative investment methodology
primarily considers financial data, various company factors may impact a stock's
performance, and therefore, Fund performance. The ICON system relies on the
integrity of financial statements released to the market as part of our
analysis.
This Report contains statements regarding industry or sector themes, new market
themes, investment outlook, relative strength, value-to-price ratios, and
portfolio managers' 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," "estimates," variations of such
words and similar expressions are intended to identify forward looking
statements, which are not statements of
2 About This Report
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, and other factors beyond the control of our portfolio managers.
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. 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.
About This Report 3
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.
4 About This Report
Message from ICON Funds
- --------------------------------------------------------------------------------
We were pleased with the Funds' industry tilting early in the period, as value
and relative strength pulled us toward cyclical, industrial even commodity-based
industries.
- --------------------------------------------------------------------------------
Dear ICON Shareholder:
We realize you are faced with many mutual fund choices as you structure 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.
You may have decided to invest in an ICON Sector Fund because you were attracted
to ICON's value-based, bottom-up investment system, which pursues industries we
believe are poised to outperform the broader market. Or perhaps you thought ICON
stood out among other managers because we take a quantitative, unemotional, and
objective approach.
Whether you invest in our Sector Funds, such as the ICON Healthcare Fund, our
International Funds, such as the ICON Asia-Pacific Region Fund, or our U.S.
Diversified Funds, such as the ICON Core Equity Fund, each is powered by ICON's
unique systematic discipline. Guided by an investment system that relies
primarily on analyzing data, not speculation, we find "strength in numbers," as
our firm's slogan declares.
THE CYCLICAL MARKET THEME OF THE PAST THREE YEARS
During the third calendar quarter of 2006, there was a major shift in market
industry leadership. As a result of our industry rotation, you will see many
stocks in Funds that were not held in the Semiannual Report as of March 31,
2006. Indeed, there are many companies that have not been owned by the Funds
since late 1999 or early 2000. Before describing that rotation, let's review the
industry and sector theme of the preceding three years.
Most domestic stock market indexes hit a low on March 11, 2003 and then embarked
on a three-year bull market, hitting a peak on May 5, 2006. Table #1 shows
cumulative performance for Standard & Poor's Composite 1500 Sector Indexes over
that period. As you can see, the market leadership over that period was in the
cyclical, economically sensitive sectors of Energy, Materials, and Industrials.
These sectors include companies whose revenues are very dependent on the ups and
downs of the economy. The opposite is true of the lagging sectors; Healthcare,
Consumer Staples, and Telecommunication are generally considered to be
defensive, recession-proof sectors.
On an industry level, a few of the top performing industries over that period
included steel, metals & mining, construction materials, oil & gas exploration
and homebuilders. These industries tend to be comprised of small- and mid-sized
companies. Among the worst performing industries were brewers, pharmaceuticals,
systems software, soft drinks and packaged foods, which contrary to the previous
leaders, tend to be comprised of large, mature companies.
Message from ICON Funds 5
Message from ICON Funds (continued)
- --------------------------------------------------------------------------------
(CRAIG T. CALLAHAN PHOTO)
Craig T. Callahan
President and Chairman of the Board of Trustees
Our system is suggesting a market with new leadership and an entirely new
personality.
- --------------------------------------------------------------------------------
We are proud of our discipline and our
ability to endure volatility when it is
required to capture industry leadership.
<Table>
<Caption>
TABLE 1
CUMULATIVE TOTAL RETURNS
3/11/03 - 5/5/06
S&P 1500 SECTOR INDEX RETURN %
- --------------------- --------
Energy 158.00
Materials 118.15
Industrials 105.75
Utilities 95.68
Financials 83.86
S&P COMPOSITE 1500 INDEX 79.04
Consumer Discretionary 73.89
Information Technology 68.39
Telecommunication Services 64.17
Consumer Staples 44.01
Health Care 31.64
</Table>
Data Source: FactSet Research Systems
Returns include the reinvestment of dividends and capital gain distributions.
We were pleased with the Funds' industry tilting during that period, as value
and relative strength pulled us toward cyclical, industrial even commodity-
based industries. Looking back, we believe those industries were on sale because
investors were incorrectly fearful of a slow or sluggish economy, as investors
worried that higher oil prices, war, and terrorism would hurt the economy. As
investors realized that the economy was growing and cyclical firms were
prosperous, stock prices occasionally surged to reflect fair value. From an ICON
perspective, price was trying to catch up with fair value, which over a
three-year period made for impressive returns in the leading industries.
6 Message from ICON Funds
It is interesting to note that the leading industries during that period, being
small- and mid-sized cyclical and commodity based, are inherently volatile.
While there were outstanding returns to be earned in the "sweet spot" of the
market, it required us to be tolerant of volatility and be patient during the
unpleasant ride associated with those industries.
We do not like volatility at ICON, and we certainly do not seek it, but we are
proud of our discipline and our ability to endure it when it is required to
capture industry leadership. It is also interesting to note that lower-quality
stocks tended to perform better than what many would consider high-quality
stocks over that three-year period. At ICON, quality is measured by liquidity,
debt, efficiency and consistency, and we tend to favor higher quality stocks.
Our preference for high-quality stocks slightly inhibited the Funds'
performance. Consistent with our style, however, we leave the potential higher
returns associated with speculative and riskier turnaround situations to other
investors.
ICON DETECTS A NEW MARKET THEME
For the first four months of 2006, the same sector and industry themes from the
previous three years persisted, as shown in Table #2, which highlights sector
index returns from January 1, 2006 through the market peak on May 5, 2006.
<Table>
<Caption>
TABLE 2
CUMULATIVE TOTAL RETURNS
1/1/06 - 5/5/06
S&P 1500 SECTOR INDEX RETURN %
- --------------------- --------
Energy 18.08
Materials 16.12
Industrials 14.28
Telecommunication Services 11.61
Financials 8.59
S&P COMPOSITE 1500 INDEX 7.57
Consumer Discretionary 5.77
Information Technology 5.01
Utilities 3.82
Consumer Staples 3.61
Health Care (1.97)
</Table>
Data Source: FactSet Research Systems
Returns include the reinvestment of dividends and capital gain distributions.
Generally, the same cyclical leadership was at the top and the same defensive
sectors were lagging as seen the previous three years. All market and theme
peaks are different. This time, the leading industries did not reach the extreme
overpricing typical of most peaks. They were headed toward it, but perhaps
because of investor concerns and uncertainty over terrorism, oil prices, and
even mid-term elections, stock prices did not reach lofty extremes.
During the market drop from early May through mid-June 2006, the previous
leaders fell the most, which was similar to market corrections seen in 2004 and
2005. Even the brief market bounce in late June was led by the previous
Message from ICON Funds 7
Message from ICON Funds (continued)
cyclical leadership, similar to rebounds in 2004 and 2005. Since the market low
on July 17, 2006, the market has experienced a three-month climb with entirely
new leadership. The industries that led the previous three-plus years have been
sluggish. New leadership in defensive, recession-proof industries has prevailed.
In the weeks following that sudden change on July 17, we have sold cyclical
industries and gradually invested in new industries as relative strength has met
our standards. The combination of value and relative strength has pulled us to
mature companies in defensive, steady growth industries such as pharmaceuticals,
diversified banks, systems software, computer hardware, household products,
communications equipment and broadcasting & cable TV.
To illustrate the magnitude of the industry rotation in the third calendar
quarter of 2006, 12 of the largest 22 holdings in the ICON Core Equity Fund were
new additions in the third quarter. As of September 30, 2006, those 12 new
stocks comprised about 23% of that Fund.
This rotation resulted in significant sector shifts in the ICON Core Equity
Fund, which best represents our system's sector and industry positioning. The
Industrials sector was reduced from 18.0% of the Fund on June 30 to 3.7% on
September 30. Financials, Health Care, Information Technology and
Telecommunication & Utilities were all increased from 18.9%, 5.8%, 13.7% and
2.5%, respectively, to 24.8%, 14.5%, 18.2% and 9.0%. Major rotations occurred
throughout the ICON Fund family to capture the new leadership.
As mentioned earlier, you will see Fund holdings that are new in the last few
months, some not being held since late 1999 or early 2000. They include IBM,
Microsoft, Intel, Procter & Gamble, General Electric, Oracle, Cisco Systems,
Bank of America, Wells Fargo, JP Morgan Chase, AIG, Johnson & Johnson, Merck,
Pfizer, Hewlett Packard, and Comcast Corp. The ICON Funds now look very
different than they did when they participated in the theme that prevailed in
the three and a half years ending this spring. The stocks and industries now
owned in the Funds were not leaders over the last three years as they were not
preferred by investors but they were not stagnant. They were growing their
profits and the underlying value of their firms. Now, we find attractive
bargains among them as our estimate of value has grown above the market price.
The large, mature companies that have led the recent market advance are heavily
weighted in the Funds' market-capitalization weighted benchmarks, so the indexes
gained an immediate surge off the July 17 low. The shift in leadership was
sudden, but guided by our system, we have rotated industries as they meet our
standards of value and relative strength.
8 Message from ICON Funds
STAYING TRUE TO THE ICON DISCIPLINE
Our system is suggesting a market with new leadership and an entirely new
personality. The stocks and industries we expect to lead are not as inherently
volatile as those of the previous theme. We do not know how long this new theme
will last, but given the price discounts to our estimates of fair value, we
expect it may last at least a year. To better position the ICON Sector Funds for
the changing theme that we believe is taking place, we will follow our
value-driven process to reduce or eliminate lagging industries and increase
positions in the new leading industries.
In closing, we are most 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
holdings, and information about your account.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
Message from ICON Funds 9
Management Overview
ICON Consumer Discretionary Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 100.6%
Top 10 Equity
Holdings 35.4%
Number of Stocks 68
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Comcast Corp. - Class A 6.4%
Target Corp. 4.5%
Kohl's Corp. 4.1%
Nike, Inc. - Class B 3.4%
General Motors Corp. 3.4%
TJX Cos., Inc. 3.2%
V.F. Corp. 3.0%
Harley-Davidson, Inc. 2.7%
J.C. Penney Co., Inc. 2.4%
Federated Department Stores, Inc. 2.3%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. For the fiscal year ended September 30, 2006, the Fund's sector-specific
benchmark, the S&P 1500 Consumer Discretionary Index, returned 7.38%, and its
broad benchmark, the S&P Composite 1500 Index, gained 10.32%. The ICON
Consumer Discretionary Fund trailed both benchmarks, appreciating 6.20%
during the same period. Total returns for other periods as of September 30,
2006 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 first three fiscal quarters, oil and other commodity prices rose
sharply, and Consumer Discretionary issues lagged the broad market as
investors seemed reluctant to participate in the sector. The prevailing
sentiment appeared to be that inflationary pressures and rising short-term
interest rates would crimp consumer spending, which, in turn, would dampen
profits for retail, home, and auto-related issues.
Earnings of companies within the sector remained healthy, and no significant
slow down in consumer spending materialized during the period. Overall,
however, the sector lagged in the S&P 1500 Index as other sectors, including
Telecommunication, Financials, and Materials, led the market higher.
During the final fiscal quarter, as oil prices and interest rates declined,
investors began to recognize the value that we had been seeing build within
the sector. This reversal was part of a broad market theme change that
featured larger-cap, more mature industries. After we detected the theme
shift in May, we patiently waited for our relative strength measurements to
point to clear industry leaders, but a lack of sustainable leadership among
the 26 industries in the sector made conditions difficult for our investment
style.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. Our objective is to position the Fund in those industries with the best
combinations of value and relative strength. During the period, we found
value and strength in the footwear, automobile manufacturers, and department
stores industries, which accounted for the majority of the Fund's overall
performance.
The Fund was hindered by exposure to the housewares & specialties, home
furnishers, and homebuilders industries. Homebuilders generally declined on
concerns that the Federal Reserve's series of interest rate hikes would curb
demand for housing. This same premise appeared to
10 Management Overview
(ROBERT STRAUS PHOTO)
Robert Straus, CMT
Portfolio Manager
cause investors to avoid what we perceived to be undervalued home furnishers,
which also suffered.
Within the motorcycle manufacturers industry Harley Davidson was among the
market leaders based on relative strength. In the department stores industry,
Kohl's Corp. and JC Penney Co., Inc. outperformed the broader market. All
three companies were among the Fund's top holdings at year-end.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE CONSUMER DISCRETIONARY SECTOR?
A. The Consumer Discretionary sector is among the most undervalued sectors of
the nine we track, and investors seem to be taking notice. Underlying
fundamentals of consumer-related companies continue to remain strong. Barring
any such sharp sustained rise in inflation and interest rates, we believe the
undervalued Consumer Discretionary sector is positioned to be a market leader
in the new theme that we believe began in the spring.
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Consumer Discretionary sector lagged in the S&P 1500 Index as other
sectors, including Telecommunication, Financials, and Materials, led the
market higher.
- - The Fund received positive performance from the footwear, automobile
manufacturers, and department stores industries.
- - Exposure to the housewares & specialties, home furnishers, and homebuilders
industries hurt returns as investors worried that interest rate hikes would
curb demand for housing.
Management Overview 11
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Apparel Accessories & Luxury Goods 11.4%
Specialty Stores 10.4%
General Merchandise Stores 9.4%
Department Stores 8.8%
Broadcast & Cable TV 8.6%
Footwear 8.0%
Automobile Manufacturers 8.0%
Apparel Retail 5.4%
Soft Drinks 4.7%
Consumer Electronics 2.9%
Home Furnishing Retail 2.8%
Motorcycle Manufacturers 2.7%
Tire & Rubber 2.4%
Home Improvement Retail 2.2%
Home Building 2.1%
Packaged Foods & Meats 1.9%
Brewers 1.6%
Automotive Retail 1.4%
Household Products 1.3%
Household Appliances 1.3%
Photographic Products 1.2%
Housewares & Specialties 1.0%
Computer & Electronics Retail 0.6%
Leisure Products 0.5%
</Table>
Percentages are based upon net assets.
12 Management Overview
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 7/9/97
- -----------------------------------------------------------------------------------------
ICON Consumer Discretionary Fund 6.20% 10.04% 4.34%
- -----------------------------------------------------------------------------------------
S&P 1500 Consumer Discretionary Index 7.38% 8.37% 6.58%
- -----------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 6.47%
- -----------------------------------------------------------------------------------------
</Table>
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 on
pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON CONSUMER S&P 1500 CONSUMER S&P COMPOSITE 1500
DISCRETIONARY FUND DISCRETIONARY INDEX INDEX
------------------ ------------------- ------------------
7/9/97 10000.00 10000.00 10000.00
9/30/97 10970.00 10892.00 10597.00
9810.00 11268.00 10852.00
11141.00 13276.00 12321.00
10851.00 14327.00 12620.00
9/30/98 7870.00 11778.00 11262.00
10360.00 15109.00 13709.00
10033.00 16371.00 14207.00
11067.00 17232.00 15312.00
9/30/99 9900.00 15612.00 14339.00
10852.00 18199.00 16485.00
10504.00 17620.00 16994.00
9797.00 16082.00 16554.00
9/30/00 9449.00 15341.00 16548.00
9603.00 14752.00 15338.00
9757.00 13937.00 13550.00
11364.00 15401.00 14440.00
9/30/01 9173.00 12045.00 12290.00
12121.00 14467.00 13705.00
13380.00 14959.00 13837.00
13605.00 13358.00 12059.00
9/30/02 10360.00 11065.00 9976.00
9807.00 11319.00 10786.00
9080.00 11069.00 10425.00
11414.00 13277.00 12064.00
9/30/03 12069.00 13661.00 12439.00
13769.00 15642.00 13976.00
14178.00 16036.00 14275.00
14095.00 15910.00 14523.00
9/30/04 13000.00 15725.00 14251.00
14535.00 17895.00 15624.00
14208.00 17079.00 15313.00
14751.00 17108.00 15576.00
9/30/05 13932.00 16766.00 16168.00
14123.00 17039.00 16511.00
15272.00 17653.00 17312.00
14477.00 17231.00 17014.00
9/30/06 14794.00 18003.00 17836.00
</Table>
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.
Management Overview 13
Schedule of Investments
ICON Consumer Discretionary Fund
September 30, 2006
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
COMMON STOCKS (100.6%)
123,400 99 Cents Only
Stores(a) $ 1,459,822
117,700 A.C. Moore Arts &
Crafts, Inc.(a) 2,239,831
9,700 Abercrombie & Fitch
Co. 673,956
11,000 AutoZone, Inc.(a) 1,136,300
35,700 Bed Bath & Beyond,
Inc.(a) 1,365,882
82,600 Big 5 Sporting Goods
Corp. 1,883,280
26,900 Borders Group, Inc. 548,760
37,500 Bridgestone Corp. -
ADR 1,515,056
12,700 Cache, Inc.(a) 227,203
16,800 Centex Corp. 884,016
64,100 Coca-Cola
Enterprises, Inc. 1,335,203
25,900 Columbia Sportswear
Co.(a) 1,445,997
191,300 Comcast Corp. -
Class A(a) 7,049,405
42,600 Cooper Tire & Rubber
Co. 428,556
42,300 Craftmade
International, Inc. 724,599
17,900 Crocs, Inc.(a) 607,705
33,600 DaimlerChrysler AG -
ADR 1,678,656
34,800 Dick's Sporting
Goods, Inc.(a) 1,584,096
79,500 Dollar Tree Stores,
Inc.(a) 2,461,320
10,500 EchoStar
Communications
Corp. - Class A(a) 343,770
53,600 Family Dollar
Stores, Inc. 1,567,264
58,800 Federated Department
Stores, Inc. 2,540,748
14,000 Fomento Economico
Mexicano, S.A. de
C.V. - ADR 1,357,160
64,200 Ford Motor Co. 519,378
38,000 Fuji Photo
Film - ADR 1,385,480
14,500 GameStop Corp. -
Class A(a) 671,060
113,300 General Motors Corp. 3,768,358
21,300 Gildan Activewear,
Inc. - Class A(a) 1,032,198
10,600 Guess, Inc.(a) 514,418
48,500 Harley-Davidson,
Inc. 3,043,375
</Table>
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
13,900 Haverty Furniture
Cos., Inc. $ 221,705
77,500 Heineken N.V. - ADR 1,770,875
10,800 Henkel KGaA - ADR 1,506,133
59,100 Honda Motor Co.,
Ltd. - ADR 1,987,533
38,600 J.C. Penney Co.,
Inc. 2,639,854
107,100 Jo-Ann Stores,
Inc.(a) 1,790,712
53,900 K-Swiss, Inc. 1,620,234
10,800 Kellwood Co. 311,364
70,700 Kohl's Corp.(a) 4,589,844
63,600 Liz Claiborne, Inc. 2,512,836
15,200 Lowe's Cos., Inc. 426,512
80,200 Matsushita Electric
Industrial Co., Ltd.
-ADR 1,694,626
25,100 Men's Wearhouse 933,971
24,200 Nestle S.A. - ADR 2,116,290
43,100 Nike, Inc. - Class B 3,776,422
53,700 Perry Ellis
International,
Inc.(a) 1,658,256
61,900 PetsMart, Inc. 1,717,725
57,400 Phillips-Van Heusen
Corp. 2,397,598
44,400 Pulte Homes, Inc. 1,414,584
51,200 Rent-A-Center,
Inc.(a) 1,499,648
57,600 Sharp Corp. - ADR 996,480
66,650 Staples, Inc. 1,621,595
19,900 Steinway Musical
Instruments, Inc.(a) 557,200
34,250 Steven Madden, Ltd. 1,343,970
120,400 Stride Rite Corp. 1,680,784
89,600 Target Corp. 4,950,400
110,600 The DIRECTV Group,
Inc.(a) 2,176,608
48,100 The Goodyear Tire &
Rubber Co.(a) 697,450
33,900 The Home Depot, Inc. 1,229,553
69,700 The Pepsi Bottling
Group, Inc. 2,474,350
13,900 The Sherwin-
Williams Co. 775,342
13,500 The Stanley Works 672,975
128,300 TJX Cos., Inc. 3,596,249
17,700 United Auto Group,
Inc. 414,180
25,200 Universal
Electronics, Inc.(a) 478,800
44,900 V.F. Corp. 3,275,455
</Table>
14 Schedule of Investments
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
27,900 Winnebago
Industries, Inc. $ 875,502
37,200 Yankee Candle Co.,
Inc. 1,088,844
------------
TOTAL INVESTMENT (COST
$101,509,519) 100.6% 111,485,311
LIABILITIES LESS OTHER ASSETS
(0.6)% (693,240)
------------
TOTAL NET ASSETS 100.0% $110,792,071
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
ADR American Depositary Receipt.
Schedule of Investments 15
Management Overview
ICON Energy Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 93.2%
Top 10 Equity
Holdings 30.3%
Number of Stocks 60
Short-Term Investments 6.8%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Petrochina Co., Ltd. - ADR 3.4%
Grant Prideco, Inc. 3.4%
National-OilWell Varco, Inc. 3.3%
Petroleo Brasileiro S.A. - ADR 3.2%
Helix Energy Solutions Group, Inc. 3.2%
Transocean, Inc. 3.0%
Nabors Industries, Ltd. 2.8%
Diamond Offshore
Drilling, Inc. 2.8%
Marathon Oil Corp. 2.7%
Weatherford
International, Ltd. 2.5%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Energy Fund declined (2.81%) for the fiscal year ended September 30,
2006, underperforming the 2.47% return of its sector-specific benchmark, the
S&P 1500 Energy Index, and the 10.32% gain of its broad benchmark, the S&P
Composite 1500 Index. Total returns for other periods as of September 30,
2006 appear in the subsequent pages of this Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The Fund was influenced by significant activity in the Energy sector during
the period. Crude oil prices, as represented by the West Texas Intermediate
Cushing Crude Oil Spot Price Index, were down (5.03%) in the year ended
September 30, 2006. After reaching highs in July and August, crude prices
fell steadily as inventories remained higher than five-year averages. From a
geopolitical perspective, Iran's and North Korea's nuclear proliferation
threats added volatility during the period.
The Fund was outperforming its narrow benchmark by more than 10% until
mid-May 2006, when we saw the Energy sector experience a significant shift in
industry leadership. From the start of the fiscal year until May 2006, the
oil & gas equipment & services industries were the leaders, and the Fund's
overweight position in this area boosted returns. However, following a sharp
correction in mid-May, larger integrated oil & gas industries started to
emerge as sector leaders, rapidly outperforming the more narrowly-focused
industries that had been performing well in the Fund. The large integrated
oil & gas companies, involved in both upstream and downstream operations,
seemed to be less affected by the drop in crude oil prices.
Although the ICON system identified the shift in leadership, the Fund's
relative performance suffered when new leadership emerged in integrated oil &
gas companies, which make up more than half of the sector benchmark and were
a smaller position in the Fund.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. Our systematic approach focuses on selecting industries for the Fund based on
value and strength. In the first half of the period, the Fund's industry
composition benefited returns, then later, a market reversal caused a swift
change in leadership, and the Fund sacrificed some gains as the ICON system
patiently waited for market clarity.
Based on our valuation measures, the Fund took a significantly overweight
position in the oil & gas equipment & services and oil & gas drilling
industries early in the period, and they were large contributors to
16 Management Overview
(J.C. WALLER III, PORTFOLIO MANAGER PHOTO)
J.C. Waller, III
Portfolio Manager
first-half performance. The integrated oil & gas industry, in which the Fund
was heavily underweighted, posted a negative return during the first half of
the reporting period, aiding Fund performance relative to the S&P 1500 Energy
Index. In addition, the Fund's lack of exposure to Exxon Mobil Corporation,
the world's largest integrated oil company, and a stalwart of the S&P 1500
Energy Index, helped in the first half of the period.
In mid-May 2006, however, industries that had helped Fund performance early
in the fiscal year, including coal & consumable fuels, oil & gas drilling,
and oil & gas exploration & production, began to decline. Coal & consumable
fuel stocks were eliminated from the Fund as we saw the industry's relative
strength weaken, but we kept the Fund significantly overweight in the oil &
gas equipment & services and oil & gas drilling industries, as our analysis
indicated an abundant amount of value.
Even though the integrated oil & gas industry demonstrated strong returns, we
held an underweight position in this group as it makes up approximately 54.4%
of the sector-specific benchmark. Additionally, our analysis indicated that
the integrated oil & gas industry did not possess as much value as other
segments of the Energy sector.
After being absent from the Fund since mid-2005, stocks from the oil & gas
storage & transportation industry were added as our system revealed that
their combination of value and strength suggested potential leadership within
the sector. Even though some new companies in the industry had re-emerged as
leaders, the industry's lackluster performance overall made a negligible
contribution to returns.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE ENERGY SECTOR?
A. A pullback in crude oil prices and energy stocks has left the Energy sector
somewhat out of favor, but we see tremendous value in the sector. The
generally healthy earnings of energy companies combined with a sharp
correction in prices have led to this sector being valued at about 40% below
our estimate of intrinsic value.
Even though we are detecting bargains in the oil & gas drilling, coal &
consumable fuels, and oil & gas equipment & services industries, we are
closely monitoring our relative strength metrics for signs of weakness.
World events could swiftly change the direction of crude and energy stocks,
but with the fundamentals of finance as our guide, we will continue to seek
the best values for the Fund.
Management Overview 17
Management Overview (continued)
ICON Energy Fund
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - A steep decline in crude oil prices negatively influenced the Fund during the
period, while geopolitical uncertainties added to volatility in the sector.
- - The Fund responded to a significant market theme reversal, in which
larger-cap integrated oil & gas companies emerged as leaders, but it did not
carry as large a position in this industry as its narrow benchmark, hampering
relative returns.
- - Coal & consumable fuel stocks weakened during the period and were eliminated
from the Fund.
The Bloomberg West Texas Intermediate Cushing Crude Oil Spot Price Index
represents the price of crude oil per barrel in U.S. dollars.
18 Management Overview
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Oil & Gas Equipment & Services 26.8%
Oil & Gas Drilling 24.4%
Integrated Oil & Gas 19.8%
Oil & Gas Exploration & Production 15.7%
Oil & Gas Storage & Transportation 6.5%
</Table>
Percentages are based upon net assets.
Management Overview 19
Management Overview (continued)
ICON Energy Fund
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 11/5/97
- -----------------------------------------------------------------------------------------
ICON Energy Fund (2.81%) 23.82% 15.60%
- -----------------------------------------------------------------------------------------
S&P 1500 Energy Index 2.47% 18.61% 10.74%
- -----------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 6.08%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
[LINE GRAPH]
<Table>
<Caption>
S&P COMPOSITE 1500
ICON ENERGY FUND S&P 1500 ENERGY INDEX INDEX
---------------- --------------------- ------------------
11/5/97 10000.00 10000.00 10000.00
9100.00 9432.00 10291.00
9330.00 9872.00 11683.00
8630.00 9603.00 11967.00
9/30/98 6350.00 8920.00 10680.00
5723.00 8937.00 13000.00
6726.00 9455.00 13472.00
8164.00 10671.00 14520.00
9/30/99 8083.00 10579.00 13597.00
8600.00 10702.00 15632.00
11092.00 11203.00 16115.00
11872.00 11539.00 15698.00
9/30/00 13361.00 12516.00 15692.00
15363.00 12651.00 14545.00
15010.00 11875.00 12849.00
14202.00 12096.00 13693.00
9/30/01 12488.00 10566.00 11654.00
14856.00 11245.00 12997.00
16385.00 12350.00 13121.00
14823.00 11769.00 11435.00
9/30/02 13117.00 9493.00 9460.00
14004.00 10190.00 10228.00
13539.00 10230.00 9886.00
14857.00 10988.00 11440.00
9/30/03 15178.00 11038.00 11796.00
18580.00 12737.00 13253.00
20154.00 13460.00 13536.00
21649.00 14547.00 13772.00
9/30/04 24165.00 16142.00 13514.00
25672.00 16862.00 14816.00
28840.00 19815.00 14521.00
29882.00 20283.00 14771.00
9/30/05 37406.00 24205.00 15332.00
36433.00 22554.00 15657.00
40700.00 24551.00 16416.00
41408.00 25628.00 16134.00
9/30/06 36356.00 24803.00 16913.00
</Table>
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.
20 Management Overview
Schedule of Investments
ICON Energy Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (93.2%)
250,000 Acergy SA -
ADR(a) $ 4,267,500
169,400 Anadarko
Petroleum Corp. 7,424,802
100,000 Apache Corp. 6,320,000
430,000 Atwood Oceanics,
Inc.(a) 19,337,100
175,000 Berry Petroleum
Co. - Class A 4,928,000
70,000 BP PLC - ADR 4,590,600
375,000 Cameron
International
Corp.(a) 18,116,250
425,000 Chesapeake
Energy Corp. 12,316,500
300,000 Chevron Corp. 19,458,000
250,000 China Petroleum
and Chemical
Corp. - ADR 15,480,000
100,000 CNOOC, Ltd. -
ADR 8,329,000
200,000 Comstock
Resources,
Inc.(a) 5,430,000
150,000 ConocoPhillips 8,929,500
300,000 Diamond Offshore
Drilling, Inc. 21,711,000
125,000 Drill-Quip,
Inc.(a) 8,460,000
325,000 El Paso Corp. 4,433,000
300,000 ENSCO
International,
Inc. 13,149,000
200,000 FMC
Technologies,
Inc.(a) 10,740,000
125,000 Frontline, Ltd. 4,813,750
150,000 General Maritime
Corp. 5,487,000
125,000 GlobalSantaFe
Corp. 6,248,750
700,000 Grant Prideco,
Inc.(a) 26,621,000
750,000 Helix Energy
Solutions Group,
Inc.(a) 25,050,000
500,000 Helmerich &
Payne, Inc. 11,515,000
125,000 Hornbeck
Offshore
Services,
Inc.(a) 4,187,500
125,000 Knightsbridge
Tankers, Ltd. 3,227,500
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
325,000 Lone Star
Technologies,
Inc.(a) $ 15,723,500
175,000 Lufkin
Industries, Inc. 9,261,000
275,050 Marathon Oil
Corp. 21,151,345
750,000 Nabors
Industries,
Ltd.(a) 22,312,500
450,000 National-OilWell
Varco, Inc.(a) 26,347,500
450,000 Newpark
Resources,
Inc.(a) 2,398,500
180,000 Noble Corp. 11,552,400
150,000 Nordic American
Tanker Shipping,
Ltd. 5,220,000
375,000 Oil States
International,
Inc.(a) 10,312,500
125,000 Overseas
Shipholding
Group, Inc. 7,721,250
625,000 Parker Drilling
Co.(a) 4,425,000
600,000 Patterson-UTI
Energy, Inc. 14,256,000
400,000 Petro-Canada -
ADR 16,132,000
250,000 Petrochina Co.,
Ltd. - ADR 26,912,500
300,000 Petroleo
Brasileiro
S.A. - ADR 25,149,000
150,000 Precision
Drilling Corp. 4,623,000
450,000 Pride
International,
Inc.(a) 12,339,000
600,000 Range Resources
Corp. 15,144,000
50,000 Repsol YPF
S.A. - ADR 1,491,500
350,000 Rowan Cos., Inc. 11,070,500
260,000 Royal Dutch
Shell - Class
A - ADR 17,186,000
125,000 Ship Finance
International,
Ltd. 2,487,500
725,000 Superior Energy
Services,
Inc.(a) 19,038,500
</Table>
Schedule of Investments 21
Schedule of Investments (continued)
ICON Energy Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
575,000 TETRA
Technologies,
Inc.(a) $ 13,892,000
500,000 The Williams
Companies, Inc. 11,935,000
275,000 Tidewater, Inc. 12,152,250
325,000 Transocean,
Inc.(a) 23,799,750
125,000 Tsakos Energy
Navigation, Ltd. 5,575,000
375,000 Ultra Petroleum
Corp.(a) - ADR 18,041,250
350,000 Unit Corp.(a) 16,089,500
125,000 W&T Offshore,
Inc. 3,651,250
250,000 W-H Energy
Services,
Inc.(a) 10,367,500
474,998 Weatherford
International,
Ltd.(a) 19,816,917
400,033 XTO Energy, Inc. 16,853,390
------------
TOTAL COMMON STOCKS (COST
$551,414,377) 734,999,554
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (6.8%)
$53,581,761 Brown Brothers
Harriman Time
Deposit, 4.63%,
10/02/06# $ 53,581,761
------------
TOTAL SHORT-TERM INVESTMENT
(COST $53,581,761) 53,581,761
TOTAL INVESTMENTS 100.0% (COST
$604,996,138) 788,581,315
LIABILITIES LESS OTHER ASSETS
(0.0)% (215,071)
------------
TOTAL NET ASSETS 100.0% $788,366,244
============
</Table>
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, 2006.
ADR American Depositary Receipt.
22 Schedule of Investments
Management Overview
ICON Financial Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 99.9%
Top 10 Equity
Holdings 36.2%
Number of Stocks 57
Short-Term Investments 4.6%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Bank of America Corp. 4.9%
JPMorgan Chase & Co. 4.9%
American International Group, Inc. 4.2%
Morgan Stanley 3.9%
The Goldman Sachs Group, Inc. 3.7%
Merrill Lynch & Co., Inc. 3.1%
UBS AG - ADR 3.0%
ING Group N.V. - ADR 2.9%
Fannie Mae 2.8%
Freddie Mac 2.8%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Financial Fund gained 15.53% for the fiscal year ended September 30,
2006, underperforming the 19.93% return of its sector-specific benchmark, the
S&P 1500 Financials Index, but outpacing the 10.32% return of its broad
benchmark, the S&P Composite 1500 Index. Total returns for other periods as
of September 30, 2006 appear in the subsequent pages of this Fund's
Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Primarily, the Fund was underweight in the other diversified financial
services and regional banks industries, which were top contributors to the
benchmark return. Poor stock selection within the diversified banks and
thrift & mortgage finance industries also reduced returns.
Secondly, the increased pace of initial public offerings (IPOs) early in 2006
ignited stocks from the investment banking & brokerage industry, but as the
year progressed, IPOs slowed and the industry suffered, hampering the Fund.
Late in the fiscal year, a new market theme began to emerge, featuring
generally large-capitalization companies and those that benefited from an
increase in trading profit. After a period of uncertain industry and company
leadership, bellwether companies finally started to dominate the Financial
sector after a market low in late July. While the Fund discerned this shift,
the lack of clear leadership dictated that we patiently monitor the ICON
system for definitive relative strength indicators. During this ambiguous
period, the Fund gave up some gains against the benchmark.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. As always, the Fund's industry composition and underlying stock holdings are
steered by our valuation readings. By the close of the period, the Fund had
gone from having minimal exposure to the other diversified financial services
industry to a 15.5% position at period-end, as it showed increasing value.
Although this industry represented a significant portion of the Fund, it was
underweight vs. the index, which worked against returns. Certain investment
industry regulations restrict the Fund from investing heavily in companies
that derive revenue from investment and brokerage services and asset
management. Companies in this industry, such as JPMorgan Chase & Co., Bank of
America Corporation, and Citigroup, Inc., comprise a significant portion of
the S&P Financials Index, but due to regulatory limits, the Fund was
incapable of fully benefiting from their strong performance in the fiscal
year.
Management Overview 23
Management Overview (continued)
ICON Financial Fund
(DEREK ROLLINGSON PHOTO)
Derek Rollingson
Portfolio Manager
The Fund's holdings in the consumer finance and life & health insurance
industries were decreased throughout the period based on declining relative
strength. These industries were positive contributors to Fund performance
while held in the portfolio.
Although the thrift and mortgage finance industry gained during the period,
poor performance by selected stocks in the Fund detracted from overall
returns. However, the Fund's lag in thrifts and mortgage stocks was offset
somewhat by the strong showing of holdings in the investment banking &
brokerage industry.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE FINANCIAL SECTOR?
A. Our value/price readings indicate there is value remaining in the Financial
sector, and it continues to demonstrate the second-highest relative strength
readings among all the sectors we study. We are maintaining the Fund's
exposure to the other diversified financial services and investment banking &
brokerage industries, which our analysis indicates are poised to lead as
Financial stocks participate in the new market theme.
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Fund's underweight position in the other diversified financial services
industry worked against relative returns as large companies such as
Citigroup, JPMorgan Chase, and Bank of America surged late in the period.
- - IPO activity early in 2006 aided the Fund's investment banking & brokerage
holdings, but as IPOs cooled, the industry lagged then later regained
traction with increased profit from trading activity.
- - The Fund's lag in thrifts and mortgage finance stocks was offset somewhat by
the strong showing of holdings in the investment banking & brokerage
industry.
24 Management Overview
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Investment Banking & Brokerage 17.0%
Other Diversified Financial
Services 15.5%
Diversified Banks 14.0%
Asset Management & Custody Banks 9.8%
Diversified Capital Markets 8.2%
Multi-Line Insurance 7.0%
Thrifts & Mortgage Insurance 6.1%
Life & Health Insurance 5.6%
Mortgage Reits 5.1%
Consumer Finance 5.1%
Property & Casualty Insurance 3.4%
Real Estate Management &
Development 1.7%
Reinsurance 1.4%
</Table>
Percentages are based upon net assets.
Management Overview 25
Management Overview (continued)
ICON Financial Fund
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 7/1/97
- -----------------------------------------------------------------------------------------
ICON Financial Fund 15.53% 10.93% 11.03%
- -----------------------------------------------------------------------------------------
S&P 1500 Financials Index 19.93% 10.10% 9.89%
- -----------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 6.67%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
[LINE GRAPH]
<Table>
<Caption>
S&P 1500 FINANCIALS S&P COMPOSITE 1500
ICON FINANCIAL FUND INDEX INDEX
------------------- ------------------- ------------------
7/1/97 10000 10000 10000
9/30/97 10510 11141 10796
10526 12020 11056
12003 13426 12552
12294 13821 12857
9/30/98 9411 10941 11474
11267 13265 13967
11878 14190 14474
12442 14931 15600
9/30/99 10357 12642 14608
11074 13668 16795
11342 13923 17314
11366 13526 16865
9/30/00 14307 16727 16858
16613 17081 15626
15598 15435 13804
17694 16730 14711
9/30/01 15675 14787 12521
17047 15904 13963
17625 16526 14097
16375 15375 12285
9/30/02 13812 12812 10164
14014 13719 10988
13011 13027 10621
16193 15404 12291
9/30/03 16899 16097 12673
19659 18038 14238
21045 18958 14543
20714 18507 14796
9/30/04 21046 18637 14519
23264 20187 15917
21736 18903 15601
22127 19777 15869
9/30/05 22788 19945 16472
23834 21511 16821
25491 22334 17637
25126 22245 17334
9/30/06 26327 23920 18171
</Table>
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.
26 Management Overview
Schedule of Investments
ICON Financial Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (99.9%)
66,800 A.G. Edwards,
Inc. $ 3,559,104
126,200 American Capital
Strategies, Ltd. 4,981,114
235,300 American
International
Group, Inc. 15,590,978
116,600 Ameriprise
Financial, Inc. 5,468,540
131,900 Ameritrade
Holdings Corp. 2,486,315
409,500 Anthracite
Capital, Inc. 5,266,170
210,200 Banco Bilbao
Vizcaya
Argentaria,
S.A. - ADR 4,861,926
327,600 Banco Santander
Central Hispano
SA - ADR 5,172,804
340,300 Bank of America
Corp. 18,229,871
61,800 Bank of
Ireland - ADR 4,868,604
94,800 BNP Paribas -
ADR 5,094,742
214,800 Cash America
International,
Inc. 8,394,384
75,900 China Life
Insurance Co.,
Ltd. - ADR 5,932,344
202,200 Citigroup, Inc. 10,043,274
43,800 Comerica, Inc. 2,493,096
166,100 Credit Suisse
Group - ADR 9,625,495
78,300 Deutsche Bank
AG - ADR 9,450,810
25,900 Everest Re
Group, Ltd. 2,526,027
183,100 Fannie Mae 10,237,121
153,900 Freddie Mac 10,208,187
76,500 Franklin
Resources, Inc. 8,089,875
114,100 Horace Mann
Educators Corp. 2,194,143
76,500 HSBC Holdings
PLC - ADR 7,002,045
174,100 ICICI Bank,
Ltd. - ADR 5,346,611
246,700 ING Group N.V. -
ADR 10,849,866
103,400 iStar Financial,
Inc. 4,311,780
74,800 Jones Lang
LaSalle, Inc. 6,393,904
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
386,300 JPMorgan Chase &
Co. $ 18,140,648
66,000 Lehman Brothers
Holdings, Inc. 4,874,760
52,500 Lincoln National
Corp. 3,259,200
146,400 Loews Corp. 5,548,560
190,700 MCG Capital
Corp. 3,114,131
130,700 Mellon Financial
Corp. 5,110,370
145,100 Merrill Lynch &
Co., Inc. 11,349,722
147,400 MetLife, Inc. 8,354,632
380,100 MFA Mortgage
Investments,
Inc. 2,831,745
196,900 Morgan Stanley 14,355,979
231,200 Newcastle
Investment Corp. 6,337,192
151,600 Philadelphia
Consolidated
Holding Corp.(a) 6,030,648
37,900 Protective Life
Corp. 1,733,925
64,900 Provident
Financial
Holdings, Inc. 1,956,086
18,400 Prudential
Financial, Inc. 1,403,000
46,600 RenaissanceRe
Holdings, Ltd. 2,590,960
43,200 State Street
Corp. 2,695,680
105,800 The Allstate
Corp. 6,636,834
186,400 The Bank of New
York Co., Inc. 6,572,464
38,100 The Bear Stearns
Cos., Inc. 5,337,810
149,400 The Charles
Schwab Corp. 2,674,260
49,000 The First
Marblehead Corp. 3,393,740
80,100 The Goldman
Sachs Group,
Inc. 13,550,516
29,800 The Hartford
Financial
Services Group,
Inc. 2,585,150
283,600 TradeStation
Group, Inc.(a) 4,273,852
187,200 UBS AG - ADR 11,102,832
75,900 US Bancorp 2,521,398
</Table>
Schedule of Investments 27
Schedule of Investments (continued)
ICON Financial Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
100,300 Wachovia Corp. $ 5,596,740
238,600 Wells Fargo &
Co. 8,632,548
154,700 World Acceptance
Corp.(a) 6,803,706
------------
TOTAL COMMON STOCKS
(COST $330,343,646) 368,048,218
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (4.6%)
$17,061,761 Brown Brothers
Harriman Time
Deposit,
4.63%, 10/02/06# $ 17,061,761
------------
TOTAL SHORT-TERM INVESTMENT
(COST $17,061,761) 17,061,761
TOTAL INVESTMENTS
(COST $347,405,407) 104.5% 385,109,979
LIABILITIES LESS OTHER ASSETS
(4.5)% (16,496,187)
------------
TOTAL NET ASSETS 100.0% $368,613,792
============
</Table>
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, 2006.
ADR American Depositary Receipt.
28 Schedule of Investments
Management Overview
ICON Healthcare Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 96.4%
Top 10 Equity
Holdings 27.8%
Number of Stocks 67
Short-Term
Investments 5.6%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Johnson & Johnson,
Inc. 3.5%
AmerisourceBergen Corp. 3.5%
Henry Schein, Inc. 2.9%
McKesson HBOC, Inc. 2.9%
Celgene Corp. 2.7%
Eli Lilly & Co. 2.6%
Forest Laboratories, Inc. 2.5%
Merck & Co., Inc. 2.4%
AstraZeneca PLC - ADR 2.4%
Mylan Laboratories,
Inc. 2.4%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. In the Fund's fiscal year ended September 30, 2006, the S&P 1500 Health Care
Index gained 6.92%, and the Fund's broad benchmark, the S&P Composite 1500
Index, returned 10.32%. The ICON Healthcare Fund underperformed both indexes,
appreciating 1.56% for the same period. Total returns for other periods as of
September 30, 2006 appear in the subsequent pages of this Fund's Management
Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Performance within the Health Care sector ebbed and flowed during the
reporting period. Early on, the economic setting appeared to favor more
economically sensitive sectors and industries, leaving the Health Care sector
behind. As the reporting period continued, fears of an economic slowdown
persisted, and Health Care stocks improved after a significant market theme
reversal that began in mid-May.
The Fund followed a similar pattern of performance. From the beginning of the
period through the last part of March 2006, the Fund trended higher as
cyclical industries led. Then, from late March through mid-July, the Fund
lagged, finally starting to rise after the value we associated with the
sector evidently began to be realized. Even so, this late lift was not enough
to outperform the benchmarks.
The Fund's 12-month results were influenced by several factors. From an
industry perspective, large-cap pharmaceuticals had largely been ignored by
investors during most of the period. But, starting in July, this industry
started to move higher at a faster pace than others within the sector. The
pharmaceuticals group was the best-performing industry in the S&P 1500 Health
Care Index for the period and is the index's largest industry weighting on a
market capitalization basis. Although pharmaceuticals was the Fund's largest
industry weighting during the period, it was still underweight vs. the
index's 46% position. This relative underweight position and weak stock
performance worked against Fund returns.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. For much of the reporting period, the ICON system indicated that smaller cap
cyclical industries were poised to be the market leaders, and even though
they were on the lower end of our quality ratings, the Fund was tilted toward
these areas based on attractive valuations. When our system detected a market
shift featuring a larger-cap defensive theme, we began to gradually
reposition the Fund toward these new leaders. Clear industry leadership was
slow to emerge, however, and the Fund missed some gains as we patiently
waited for the ambiguity to ease.
Management Overview 29
Management Overview (continued)
ICON Healthcare Fund
(J.C. WALLER III PHOTO)
J.C. Waller, III
Portfolio Manager
As mentioned, underweighted exposure to the strong-performing pharmaceuticals
industry hindered returns. While we continually increased the Fund's position
in this industry as it showed dominance, the Fund's holdings did not compete
well with the Index.
An overweight position in the health care services industry proved beneficial
during the period, but it was not enough to overcome the negative effects of
poor first-half industry performance from the Fund's healthcare equipment and
pharmaceuticals holdings. However, strong stock performance within the
biotechnology industry helped offset some of the losses from the Fund's weak
smaller-cap pharmaceuticals issues, which were largely eliminated from the
Fund due to what we perceived to be declining relative strength.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE HEALTH CARE SECTOR?
A. Value within the Health Care sector remains widespread in our opinion, and
our valuations indicate Health Care is a bargain relative to other sectors of
the market. If forecasts for a slowing economy prove to be true, it would be
logical for the Health Care sector to be a beneficiary with its more
defensive nature. As we continue to pursue the new market theme that we saw
materialize in the final three months of the fiscal year, our numbers are
indicating leadership in companies that happen to be larger-cap and
recession-proof.
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - A market shift featuring a larger-cap defensive theme motivated a significant
repositioning in the Fund's composition, and performance suffered while we
awaited clear industry leadership.
- - The Fund lagged its benchmarks due to a relative underweight position and
weak stock performance in the pharmaceuticals industry.
- - Poor first-half industry performance from health care equipment and smaller
cap pharmaceuticals was a drag on returns.
30 Management Overview
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Pharmaceuticals 28.9%
Health Care Distributors 14.0%
Health Care Services 12.7%
Biotechnology 9.0%
Managed Health Care 8.4%
Health Care Facilities 8.3%
Health Care Equipment 6.8%
Life Science Tools & Services 3.7%
Health Care Supplies 2.0%
Health Care Technology 1.4%
Drug Retail 0.8%
Specialized Consumer Services 0.4%
</Table>
Percentages are based upon net assets.
Management Overview 31
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/24/97
- -----------------------------------------------------------------------------------------
ICON Healthcare Fund 1.56% 10.74% 12.49%
- -----------------------------------------------------------------------------------------
S&P 1500 Health Care Index 6.92% 2.67% 8.31%
- -----------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 7.54%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
[LINE GRAPH]
<Table>
<Caption>
S&P 1500 HEALTH CARE S&P COMPOSITE 1500
ICON HEALTHCARE FUND INDEX INDEX
-------------------- -------------------- ------------------
2/24/97 10000.00 10000.00 10000.00
9460.00 8940.00 9368.00
11080.00 11104.00 10981.00
9/30/97 11780.00 11169.00 11933.00
11644.00 11995.00 12221.00
13319.00 14014.00 13874.00
13813.00 14945.00 14211.00
9/30/98 12224.00 14703.00 12682.00
13427.00 16953.00 15438.00
13500.00 17464.00 15999.00
13863.00 16807.00 17243.00
9/30/99 11571.00 15192.00 16147.00
13938.00 15787.00 18564.00
15234.00 16050.00 19137.00
17042.00 19693.00 18642.00
9/30/00 17976.00 19880.00 18634.00
19936.00 21802.00 17272.00
18731.00 18405.00 15258.00
20498.00 18659.00 16261.00
9/30/01 18585.00 18850.00 13839.00
19303.00 19285.00 15434.00
19845.00 19189.00 15582.00
19524.00 16124.00 13580.00
9/30/02 17540.00 14975.00 11234.00
17523.00 15629.00 12146.00
17337.00 15824.00 11740.00
20236.00 17535.00 13585.00
9/30/03 20812.00 16927.00 14008.00
22981.00 18382.00 15738.00
23895.00 18439.00 16075.00
24777.00 18954.00 16354.00
9/30/04 23201.00 17940.00 16048.00
27102.00 18998.00 17594.00
27934.00 18932.00 17244.00
29598.00 19748.00 17540.00
9/30/05 30483.00 20115.00 18207.00
30871.00 20421.00 18593.00
32198.00 20762.00 19495.00
30060.00 19707.00 19159.00
9/30/06 30956.00 21506.00 20085.00
</Table>
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.
32 Management Overview
Schedule of Investments
ICON Healthcare Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
COMMON STOCKS (96.4%)
200,000 Adams
Respiratory
Therapeutics,
Inc.(a) $ 7,318,000
25,000 Alliance
Imaging,
Inc.(a) 195,250
150,000 Alpharma,
Inc. - Class A 3,508,500
100,000 Amedisys,
Inc.(a) 3,967,000
500,000 AmerisourceBergen
Corp. 22,600,000
150,000 Amgen, Inc.(a) 10,729,500
225,000 AMN Healthcare
Services,
Inc.(a) 5,343,750
250,000 AstraZeneca
PLC - ADR 15,625,000
250,000 Barr
Pharmaceuticals,
Inc.(a) 12,985,000
100,000 Biogen Idec,
Inc.(a) 4,468,000
225,000 Biovail Corp. -
ADR 3,429,000
150,000 Cambrex Corp. 3,106,500
225,000 Cardinal
Health, Inc. 14,791,500
225,000 Caremark Rx,
Inc. 12,750,750
400,000 Celgene
Corp.(a) 17,320,000
125,000 Cerner Corp.(a) 5,675,000
125,000 CIGNA Corp. 14,540,000
250,000 Community
Health Systems,
Inc.(a) 9,337,500
150,000 Coventry Health
Care, Inc.(a) 7,728,000
150,000 CVS Corp. 4,818,000
225,000 DaVita, Inc.(a) 13,020,750
250,000 Dr. Reddy's
Laboratories,
Ltd. - ADR 3,955,000
81,500 Edwards
Lifesciences
Corp.(a) 3,797,085
300,000 Eli Lilly & Co. 17,100,000
300,000 Emdeon Corp.(a) 3,513,000
175,000 Fisher
Scientific
International,
Inc.(a) 13,692,000
325,000 Forest
Laboratories,
Inc.(a) 16,448,250
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
50,000 Genentech,
Inc.(a) $ 4,135,000
100,000 Genzyme
Corp.(a) 6,747,000
150,000 Gilead
Sciences,
Inc.(a) 10,305,000
208,500 Healthways,
Inc.(a) 9,299,100
375,000 Henry Schein,
Inc.(a) 18,802,500
200,000 Humana, Inc.(a) 13,218,000
300,000 Immucor,
Inc.(a) 6,723,000
200,000 Inventiv
Health, Inc.(a) 6,406,000
350,000 Johnson &
Johnson, Inc. 22,729,000
325,000 K-V
Pharmaceutical
Co.(a) 7,702,500
500,000 King
Pharmaceuticals,
Inc.(a) 8,515,000
125,000 Laboratory
Corp. of
America
Holdings(a) 8,196,250
200,000 LifeCell
Corp.(a) 6,444,000
150,000 Lifepoint
Hospitals,
Inc.(a) 5,298,000
100,000 Lincare
Holdings,
Inc.(a) 3,464,000
280,000 Manor Care,
Inc. 14,638,400
200,000 Martek
Biosciences
Corp.(a) 4,302,000
75,000 Matthews
International
Corp. - Class A 2,760,750
350,000 McKesson HBOC,
Inc. 18,452,000
200,000 MedcoHealth
Solutions,
Inc.(a) 12,022,000
375,000 Merck & Co.,
Inc. 15,712,500
775,000 Mylan
Laboratories,
Inc. 15,600,750
200,000 Owens & Minor,
Inc. 6,578,000
550,000 Pfizer, Inc. 15,598,000
100,000 Possis Medical,
Inc.(a) 985,000
</Table>
Schedule of Investments 33
Schedule of Investments (continued)
ICON Healthcare Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
475,000 PSS World
Medical,
Inc.(a) $ 9,495,250
200,000 Psychiatric
Solutions,
Inc.(a) 6,818,000
125,000 Quest
Diagnostics,
Inc. 7,645,000
180,000 ResMed, Inc.(a) 7,245,000
200,000 Respironics,
Inc.(a) 7,722,000
150,000 Sciele Pharma,
Inc.(a) 2,826,000
250,000 Stryker Corp. 12,397,500
225,000 Teva
Pharmaceutical
Industries,
Ltd. - ADR 7,670,250
175,000 Thermo Electron
Corp.(a) 6,882,750
100,000 United Surgical
Partners
International,
Inc.(a) 2,483,000
225,000 UnitedHealth
Group, Inc. 11,070,000
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
250,000 Universal
Health
Services,
Inc. - Class B $ 14,982,500
100,000 Wellpoint,
Inc.(a) 7,705,000
200,000 Wyeth 10,168,000
175,000 Zimmer
Holdings,
Inc.(a) 11,812,500
------------
TOTAL COMMON STOCKS (COST
$539,402,020) 623,318,835
SHORT-TERM INVESTMENTS (5.6%)
$36,047,065 Brown Brothers
Harriman Time
Deposit, 4.63%,
10/02/06# 36,047,065
------------
TOTAL SHORT TERM INVESTMENT
(COST $36,047,065) 36,047,065
TOTAL INVESTMENTS 102.0%
(COST $575,449,085) 659,365,900
LIABILITIES LESS OTHER ASSETS
(2.0)% (13,163,851)
------------
TOTAL NET ASSETS 100.0% $646,202,049
============
</Table>
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, 2006.
ADR American Depositary Receipt
34 Schedule of Investments
Management Overview
ICON Industrials Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 94.8%
Top 10 Equity
Holdings 38.1%
Number of Stocks 70
Short-Term Investments 3.3%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
General Electric Co. 15.2%
Lockheed Martin Corp. 3.0%
Ryder System, Inc. 3.0%
Bristow Group, Inc. 2.8%
Kirby Corp. 2.7%
Northrop Grumman Corp. 2.6%
Alaska Air Group, Inc. 2.4%
General Dynamics Corp. 2.3%
Gol-Linhas Aereas Inteligentes S.A. - ADR 2.1%
Raytheon Co. 2.0%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. For the Fund's fiscal year ended September 30, 2006, its sector-specific
benchmark, the S&P 1500 Industrials Index, gained 12.11%, and its broad
benchmark, the S&P Composite 1500 Index, returned 10.32%. The ICON
Industrials Fund fell behind both benchmarks with a 7.49% return. Total
returns for other periods as of September 30, 2006 appear in the subsequent
pages of this Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. For much of the fiscal year, the Fund took advantage of the cyclical theme
that has been in place since March 2003, outperforming both its broad and
narrow benchmarks, even through a steep sell-off from mid-May to mid-June
2006.
After three years of solid economic growth that greatly benefited
economically sensitive industries such as those in the Industrials sector, we
saw a sharp reversal begin in May that brought about a new theme featuring
defensive industries. Very quickly, many top-performing industries that are
more impacted by the ups and downs of the economy, especially
transportation-related industries, became some of the worst performers in the
sector.
We watched our system closely during this period, waiting for our relative
strength metrics to confirm the true industry leaders. As we gained more
confidence that a new theme was indeed taking hold, we gradually moved away
from cyclical holdings into more mature, recession-proof stocks. We saw more
defensive industries, such as commercial printing, environmental & facilities
services, and diversified commercial & professional services, emerge as the
new industry leaders. While the ICON system's rigorous focus on valuation
identified the new theme, the Fund missed some upside as we waited for
leadership to develop clearly.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. A strong point of the ICON system is its ability to recognize relative
strength and to apply its method of rotating out of weak industries into
those with improving relative strength. In July, our system began to
distinguish that a new defensive theme was emerging, but we patiently waited
for clarity from our relative strength readings to point to the new leading
industries. As we gradually repositioned the Fund's holdings into the larger,
more mature companies that represented relative strength, performance
suffered.
Management Overview 35
Management Overview (continued)
ICON Industrials Fund
Overall performance during the period was hampered by the Fund's underweight
exposure to General Electric (GE), which makes up more than 23% of the S&P
1500 Industrials Index. GE is part of the industrial conglomerates industry,
which our relative strength measures have placed near the bottom of all
industries for much of the year. Beginning in early August, GE rallied with
other larger-cap names in the sector, gaining 9% in just two months. Strong
late-period performance and GE's significant weighting in the sector-specific
index worked against relative returns.
The Fund's selection of stocks in the aerospace & defense industry, which
contributed the most to the total return of the S&P 1500 Industrials Index,
was a factor in the Fund's relative underperformance. While the Fund's
average position in the industry was only slightly underweight the benchmark,
our valuation discipline did not point us toward stronger-performing
large-cap names such as Boeing and Lockheed Martin until very late in the
period when the market was favoring more mature companies.
Finally, the Fund's overweighting in the building products industry hindered
performance. Although this industry showed attractive valuations and strength
from September 2005 through early May 2006, investor fears, particularly
concerns over a potential housing slump, negatively impacted this industry
and detracted the most from the Fund's total return.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INDUSTRIALS SECTOR?
A. Although we currently see the greatest value in economically sensitive
industries such as trucking and building products, we are finding the best
combination of relative strength and value in more defensive industries such
as commercial printing, environmental & facilities services, and diversified
commercial & professional services. Using our valuation system, we plan to
continue increasing exposure to the defensive industries that we see
beginning to show leadership within the sector while keeping our eye on
stocks with the best valuations.
36 Management Overview
(TODD BURCHETT PHOTO)
Todd Burchett
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Fund lagged because of underweight exposure to General Electric, which
contributed substantially to the benchmark's return but had poor relative
strength for most of the period, according to our analysis.
- - The Fund repositioned into stronger-performing larger-cap names in the
aerospace & defense industry late in the period but underweight positions
caused relative performance to lag.
- - Investor concerns about the housing market negatively impacted the Fund's
overweight position in the building products industry.
Management Overview 37
Management Overview (continued)
ICON Industrials Fund
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Aerospace & Defense 23.5%
Industrial Conglomerates 15.2%
Industrial Machinery 12.1%
Oil & Gas Storage & Transportation 8.4%
Marine 6.7%
Airlines 6.0%
Diversified Commercial & Professional Services 4.1%
Trucking 3.0%
Environmental & Facilities Services 2.9%
Oil & Gas Equipment & Services 2.8%
Commercial Printing 2.6%
Construction & Farm Machinery & Heavy Trucks 2.5%
Railroads 1.6%
Motorcycle Manufacturers 1.5%
Electrical Components & Equipment 1.4%
Air Freight & Logistics 0.5%
</Table>
Percentages are based upon net assets.
38 Management Overview
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 5/9/97
- -----------------------------------------------------------------------------------------
ICON Industrials Fund 7.49% 9.81% 5.34%
- -----------------------------------------------------------------------------------------
S&P 1500 Industrials Index 12.11% 8.95% 6.99%
- -----------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 7.48%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The performance of the
S&P 1500 Industrials Index includes the reinvestment of dividends and capital
gains distributions beginning on January 1, 2002. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
S&P 1500 INDUSTRIALS S&P COMPOSITE 1500
ICON INDUSTRIALS FUND INDEX INDEX
--------------------- -------------------- ------------------
5/9/97 10000.00 10000.00 10000.00
10790.00 10956.00 10767.00
9/30/97 12400.00 11623.00 11700.00
11605.00 11509.00 11982.00
12995.00 12970.00 13604.00
11819.00 12459.00 13934.00
9/30/98 9662.00 10543.00 12435.00
12226.00 12465.00 15137.00
11503.00 12572.00 15687.00
13080.00 14186.00 16907.00
9/30/99 11295.00 13339.00 15832.00
11402.00 14537.00 18202.00
11068.00 14412.00 18764.00
10568.00 14190.00 18278.00
9/30/00 10805.00 15263.00 18271.00
11888.00 15228.00 16935.00
10706.00 13632.00 14961.00
12055.00 15157.00 15943.00
9/30/01 10205.00 12296.00 13569.00
12079.00 14343.00 15133.00
13164.00 14377.00 15278.00
12114.00 12531.00 13315.00
9/30/02 9500.00 10293.00 11015.00
9536.00 10852.00 11909.00
8462.00 10266.00 11511.00
9680.00 11879.00 13320.00
9/30/03 10504.00 12492.00 13735.00
12032.00 14340.00 15431.00
12127.00 14277.00 15761.00
12807.00 15482.00 16035.00
9/30/04 12556.00 15376.00 15735.00
14466.00 17028.00 17251.00
14155.00 16729.00 16908.00
14023.00 16279.00 17198.00
9/30/05 15158.00 16832.00 17852.00
15640.00 17672.00 18230.00
18241.00 19190.00 19115.00
18117.00 19115.00 18786.00
9/30/06 16292.00 18871.00 19693.00
</Table>
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.
Management Overview 39
Schedule of Investments
ICON Industrials Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (94.8%)
40,000 AAR Corp.(a) $ 953,600
60,000 AGCO Corp.(a) 1,521,000
67,000 Alaska Air Group,
Inc.(a) 2,548,680
17,500 Alliant
Techsystems,
Inc.(a) 1,418,550
30,000 American
Commercial Lines,
Inc.(a) 1,783,500
38,300 AMR Corp.(a) 886,262
66,800 Barnes Group,
Inc. 1,173,008
85,000 Bristow Group,
Inc.(a) 2,924,000
9,000 British Airways
PLC - ADR(a) 720,180
6,000 Canadian National
Railway Co. - ADR 251,640
10,000 Canadian Pacific
Railway, Ltd. -
ADR 497,400
25,000 Ceradyne, Inc.(a) 1,027,250
15,000 Cintas Corp. 612,450
10,000 Consolidated
Graphics, Inc.(a) 601,700
17,000 CSX Corp. 558,110
50,000 Curtiss-Wright
Corp. 1,517,500
20,000 Danaher Corp. 1,373,400
50,000 Double Hull
Tankers, Inc. 687,500
10,000 Dover Corp. 474,400
26,000 DRS Technologies,
Inc. 1,135,420
22,000 Dun & Bradstreet
Corp.(a) 1,649,780
25,000 Dynamex, Inc.(a) 518,750
20,000 Eaton Corp. 1,377,000
25,000 Ennis, Inc. 541,250
14,000 Equifax, Inc. 513,940
75,000 Excel Maritime
Carriers, Ltd.(a) 888,750
15,000 Franklin Electric
Co., Inc. 797,100
25,000 Frontline, Ltd. 962,750
32,000 Gardner Denver,
Inc.(a) 1,058,560
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
34,000 General Dynamics
Corp. $ 2,436,780
457,300 General Electric
Co. 16,142,690
30,000 General Maritime
Corp. 1,097,400
65,000 Gol - Linhas
Aereas
Inteligentes
S.A. - ADR 2,232,750
25,000 Harley-Davidson,
Inc. 1,568,750
10,000 Harsco Corp. 776,500
61,700 Healthcare
Services Group,
Inc. 1,552,372
15,000 HEICO Corp. 514,500
14,800 IDEX Corp. 637,140
28,000 Ingersoll Rand
Co., Ltd. - Class
A 1,063,440
20,000 Kaydon Corp. 740,400
90,000 Kirby Corp.(a) 2,819,700
25,000 Knightsbridge
Tankers, Ltd. 645,500
15,000 L-3
Communications
Holdings, Inc. 1,174,950
19,000 Lincoln Electric
Holdings, Inc. 1,034,550
37,500 Lockheed Martin
Corp. 3,227,250
40,000 Moog, Inc.-Class
A(a) 1,386,400
40,000 Northrop Grumman
Corp. 2,722,800
50,000 OMI Corp. 1,085,500
30,000 Overseas
Shipholding
Group, Inc. 1,853,100
20,000 PACCAR, Inc. 1,140,400
10,000 Parker Hannifin
Corp. 777,300
25,000 Precision
Castparts Corp. 1,579,000
50,000 Quintana
Maritime, Ltd. 512,500
50,000 R.R. Donnelley &
Sons Co. 1,648,000
45,000 Raytheon Co. 2,160,450
15,000 Regal-Beloit
Corp. 652,500
</Table>
40 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
50,000 Republic
Services, Inc. $ 2,010,500
61,100 Ryder System,
Inc. 3,157,648
50,000 Seaspan Corp. 1,124,000
30,000 Ship Finance
International,
Ltd. 597,000
20,000 Teekay Shipping
Corp. 822,200
25,000 Teledyne
Technologies,
Inc.(a) 990,000
15,000 The Middleby
Corp.(a) 1,155,900
40,000 Timken Co. 1,191,200
25,000 Tsakos Energy
Navigation, Ltd. 1,115,000
5,000 Union Pacific
Corp. 440,000
20,000 United Industrial
Corp. 1,070,000
25,000 United
Technologies
Corp. 1,583,750
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
15,000 Waste
Connections,
Inc.(a) $ 568,650
15,000 Waste Management,
Inc. 550,200
------------
TOTAL COMMON STOCKS
(COST $91,587,836) 100,532,100
SHORT-TERM INVESTMENTS (3.3%)
$3,471,837 Brown Brothers
Harriman Time
Deposit,
4.63%, 10/02/06# 3,471,837
------------
TOTAL SHORT-TERM INVESTMENT
(COST $3,471,837) 3,471,837
TOTAL INVESTMENTS 98.1%
(COST $95,059,673) 104,003,937
OTHER ASSETS LESS LIABILITIES
1.9% 2,010,713
------------
TOTAL NET ASSETS 100.0% $106,014,650
============
</Table>
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, 2006.
ADR American Depositary Receipt.
Schedule of Investments 41
Management Overview
ICON Information Technology Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 100.2%
Top 10 Equity
Holdings 59.1%
Number of Stocks 54
Short-Term Investments 2.5%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Microsoft Corp. 12.3%
Intel Corp. 7.8%
Cisco Systems, Inc. 7.0%
International Business Machines Corp. 6.3%
Google, Inc. - Class A 5.8%
Hewlett-Packard Co. 5.6%
Oracle Corp. 4.7%
Motorola, Inc. 3.5%
Texas Instruments, Inc. 3.3%
Apple Computer, Inc. 2.8%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Information Technology Fund gained 0.23% in the fiscal year ended
September 30, 2006, trailing its narrow benchmarks, the S&P 1500 Information
Technology Index and the NASDAQ Composite Index, which returned 4.35% and
5.84%, respectively, and also underperforming its broad benchmark, the S&P
Composite 1500 Index, which returned 10.32%. Total returns for other periods
as of September 30, 2006 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 Fund entered the fiscal period, domestic technology stocks were
trading about 10% below our calculation of their intrinsic value and keeping
pace with the broader market rally. Technology gains continued through April
2006 as strong corporate earnings seemed to prevail over investor concerns
regarding rising oil and commodity prices and higher interest rates.
In early May, however, a market shift occurred. Investors sold the more
economically sensitive sectors that we had seen dominate the past three-
and-a-half years in favor of more defensive issues. The small- and mid-cap
cyclical stocks that had led the market became some of the worst performers,
and more mature, stable companies from the large-cap segment of the market
advanced, with an emphasis on industries that are less tied to the ups and
downs of the economy.
For a number of weeks, definitive market leadership was hard to discern, and
we waited for our relative strength metrics to confirm the emerging industry
leaders. As our system validated the emergence of a new theme, we gradually
moved the Fund away from cyclical holdings into more mature, recession-proof
stocks. While the ICON valuation system identified the new theme, the Fund's
relative performance suffered significantly in the third and fourth fiscal
quarters due to its underweighting in large capitalization stocks, which
comprise a large portion of the S&P 1500 Information Technology Index and
outperformed.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. The period was marked by a lack of clear and persistent industry leadership
in the sector, a difficult setting for our value-driven industry rotation
strategy. Because our quantitative analysis did not identify definitive
combinations of industry value and relative strength for most of the year,
the Fund did not take an aggressively high weighting or tilt significantly
toward any one of the 15 industries we track in the sector.
42 Management Overview
(ROBERT STRAUS, CMT PHOTO)
Robert Straus, CMT
Portfolio Manager
Entering the period, the ICON system did not perceive significant industry
discrepancies in the sector with respect to valuation. The Fund did not carry
as large a weighting in Cisco Systems, Inc. as the benchmark due to our
valuation readings. Since Cisco performed strongly during the period, as did
other large-cap technology companies, the Fund's underweight position
undermined relative performance.
Within the Fund's industry composition, absolute performance was most
hindered by exposure to the communications equipment, application software,
and semiconductors industries.
The systems software group also hurt relative performance, primarily due to
the Fund's underweight position in Microsoft, which is classified in this
industry. When our systematic approach picked up on the thematic move into
larger cap names during the final fiscal quarter, we moved aggressively into
the larger cap technology stocks such as Microsoft. By the end of the period,
Microsoft made up 12.3% of the Fund's net assets, trading at about a 20%
discount to our estimate of its intrinsic worth. Nevertheless, the relative
underweighting in this stock adversely affected returns.
Among the industries that contributed the most to absolute performance were
IT consulting & services, systems software, and computer hardware. The
internet software & services industry helped both absolute and relative
performance, particularly when the Fund avoided Yahoo, which comprises 2.1%
of the benchmark and declined approximately 25.3% for the period.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INFORMATION TECHNOLOGY SECTOR?
A. We continue to believe that the rally in the Information Technology sector
has the potential to remain in place, based on our overall valuation of the
group. We also expect the larger cap blue chip companies such as Microsoft,
Intel, and Cisco to continue to lead the sector due to their strong
combinations of value and relative strength. Accordingly, we have tilted the
Fund toward this segment as our metrics have guided us.
Management Overview 43
Management Overview (continued)
ICON Information Technology Fund
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - A lack of clear and persistent industry leadership following a market
reversal in mid-May made for a difficult setting for the Fund.
- - Relative performance suffered from an underweighting in large capitalization
stocks, which comprise a large portion of the S&P 1500 Information Technology
Index and performed strongly in the third and fourth fiscal quarters.
- - Performance was most hindered by exposure to the communications equipment,
application software, semiconductors, and systems software industries.
44 Management Overview
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Systems Software 18.7%
Semiconductors 18.7%
Computer Hardware 17.9%
Communications Equipment 16.6%
Internet Software & Services 6.3%
IT Consulting & Other Services 6.0%
Office Electronics 4.6%
Integrated Telecommunication Services 2.9%
Semiconductor Equipment 2.3%
Data Processing & Outsourced Services 1.5%
Electronic Manufacturing Services 1.4%
Electronic Equipment Manufacturers 1.2%
Computer Storage & Peripherals 0.9%
Technology Distributors 0.8%
Application Software 0.4%
</Table>
Percentages are based upon net assets.
Management Overview 45
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/19/97
- -----------------------------------------------------------------------------------------
ICON Information Technology Fund 0.23% 2.25% 10.05%
- -----------------------------------------------------------------------------------------
S&P 1500 Information Technology Index 4.35% 5.76% 5.17%
- -----------------------------------------------------------------------------------------
NASDAQ Composite Index 5.84% 9.16% 5.85%
- -----------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 7.49%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
S&P 1500
ICON INFORMATION INFORMATION NASDAQ COMPOSITE S&P COMPOSITE 1500
TECHNOLOGY FUND TECHNOLOGY INDEX INDEX INDEX
---------------- ---------------- ---------------- ------------------
2/19/97 10000.00 10000.00 10000.00 10000.00
9210.00 9036.00 8949.00 9334.00
10850.00 10958.00 10580.00 10941.00
9/30/97 12961.00 12853.00 12379.00 11890.00
10432.00 11312.00 11546.00 12176.00
11524.00 13581.00 13511.00 13824.00
11088.00 14584.00 13960.00 14160.00
9/30/98 9569.00 14126.00 12492.00 12636.00
13975.00 19383.00 16188.00 15382.00
15490.00 21379.00 18185.00 15941.00
19901.00 24062.00 19862.00 17181.00
9/30/99 21008.00 25075.00 20319.00 16088.00
29493.00 34155.00 30129.00 18496.00
36190.00 38844.00 33868.00 19068.00
33516.00 35387.00 29387.00 18574.00
9/30/00 33456.00 30971.00 27224.00 18567.00
33646.00 21169.00 18322.00 17209.00
28149.00 16075.00 13657.00 15203.00
32236.00 18117.00 16051.00 16202.00
9/30/01 22449.00 12273.00 11140.00 13789.00
29269.00 16476.00 14507.00 15378.00
29699.00 15416.00 13738.00 15525.00
23079.00 11450.00 10903.00 13530.00
9/30/02 17208.00 8437.00 8742.00 11194.00
17151.00 10296.00 9972.00 12101.00
15568.00 10196.00 10030.00 11697.00
20892.00 12127.00 12147.00 13536.00
9/30/03 23798.00 13474.00 13388.00 13957.00
25210.00 15226.00 15035.00 15681.00
25411.00 14887.00 14982.00 16016.00
24059.00 15249.00 15402.00 16295.00
9/30/04 22736.00 13698.00 14287.00 15990.00
26190.00 15568.00 16411.00 17530.00
23340.00 14420.00 15106.00 17181.00
23831.00 14661.00 15570.00 17477.00
9/30/05 25039.00 15563.00 16314.00 18141.00
25154.00 15815.00 16760.00 18525.00
26678.00 16615.00 17829.00 19424.00
24376.00 15090.00 16579.00 19090.00
9/30/06 25095.00 16240.00 17267.00 20012.00
</Table>
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.
46 Management Overview
Schedule of Investments
ICON Information Technology Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (100.2%)
627,200 Advanced
Semiconductor
Engineering,
Inc. - ADR(a) $ 2,929,024
154,100 Altera Corp.()(a) 2,832,358
26,800 Amphenol Corp. -
Class A 1,659,724
20,100 Anixter
International,
Inc. 1,135,047
87,100 Apple Computer,
Inc.()(a) 6,709,313
137,100 Applied
Materials, Inc. 2,430,783
67,600 AT&T, Inc. 2,201,056
14,500 Brother
Industries,
Ltd. - ADR 1,823,784
11,800 BT Group PLC -
ADR 596,726
99,450 Canon, Inc. - ADR 5,200,241
740,400 Cisco Systems,
Inc.(a) 17,029,200
66,700 Cognizant
Technology
Solutions
Corp.(a) 4,939,802
34,900 Convergys
Corp.(a) 720,685
198,900 Corning, Inc.(a) 4,855,149
229,700 Dell, Inc.(a) 5,246,348
33,700 Diebold, Inc. 1,466,961
40,500 eBay, Inc.(a) 1,148,580
182,700 EMC Corp.(a) 2,188,746
42,600 Fiserv, Inc.(a) 2,006,034
39,700 Global Imaging
Systems, Inc.(a) 876,179
34,800 Google, Inc. -
Class A(a) 13,986,120
54,700 Harris Corp. 2,433,603
372,500 Hewlett-Packard
Co. 13,667,025
9,900 High Tech
Computer Corp. -
GDR 1,039,500
275,700 Hon Hai Precision
Industry Co.,
Ltd. - GDRv 3,382,849
115,400 Infosys
Technologies,
Ltd. - ADR 5,508,042
918,200 Intel Corp. 18,887,374
185,400 International
Business Machines
Corp. 15,191,676
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
28,000 KLA-Tencor Corp. $ 1,245,160
11,300 Mastercard,
Inc. - Class A(a) 794,955
17,700 MEMC Electronic
Materials,
Inc.(a) 648,351
30,500 Mentor Graphics
Corp.(a) 429,440
7,100 Mettler-Toledo
International,
Inc.(a) 469,665
1,093,500 Microsoft Corp. 29,885,355
338,800 Motorola, Inc. 8,470,000
26,700 National
Semiconductor
Corp. 628,251
56,800 Nokia Corp. - ADR 1,118,392
642,600 Oracle Corp.(a) 11,399,724
109,400 Qualcomm, Inc. 3,976,690
22,100 Research in
Motion, Ltd.(a) 2,268,786
12,800 Rogers Corp.(a) 790,400
11,500 SAP AG - ADR 569,250
108,700 Satyam Computer
Services, Ltd. -
ADR 4,205,603
54,900 Silicon Image,
Inc.(a) 698,328
614,857 Siliconware
Precision
Industries Co. -
ADR 3,658,399
31,800 Standard
Microsystems
Corp.(a) 903,756
187,700 Symantec Corp.(a) 3,994,256
573,562 Taiwan
Semiconductor
Manufacturing
Co., Ltd. - ADR 5,506,195
66,900 Telenor ASA - ADR 2,605,086
35,100 Tessera
Technology,
Inc.(a) 1,220,778
236,800 Texas
Instruments, Inc. 7,873,600
52,000 Trident
Microsystems,
Inc.(a) 1,209,520
44,300 Verizon
Communications,
Inc. 1,644,859
261,700 Xerox Corp.(a) 4,072,052
------------
TOTAL COMMON STOCKS
(Cost $215,377,302) 242,378,780
</Table>
Schedule of Investments 47
Schedule of Investments (continued)
ICON Information Technology Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (2.5%)
$6,174,683 Brown Brothers
Harriman Time
Deposit, 4.63%,
10/02/06# $ 6,174,683
------------
TOTAL SHORT-TERM INVESTMENT
(COST $6,174,683) 6,174,683
TOTAL INVESTMENTS
(COST $221,551,985) 102.7% 248,553,463
LIABILITIES LESS OTHER ASSETS
(2.7)% (6,565,009)
------------
TOTAL NET ASSETS 100.0% $241,988,454
============
</Table>
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, 2006.
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
v Security was fair valued as of September 30, 2006. Total value of the
security was $3,382,849.
48 Schedule of Investments
Management Overview
ICON Leisure and Consumer Staples Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 100.2%
Top 10 Equity
Holdings 33.2%
Number of Stocks 57
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Procter & Gamble Co. 5.2%
Comcast Corp. - Class A 4.2%
Altria Group, Inc. 4.0%
The Pepsi Bottling
Group, Inc. 3.3%
The DIRECTV Group, Inc. 3.0%
McDonald's Corp. 2.9%
Coca-Cola Enterprises, Inc. 2.8%
Kroger Co. 2.7%
Bunge, Ltd. 2.6%
The Walt Disney Co. 2.5%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Leisure and Consumer Staples Fund gained 0.11% for the fiscal year
ended September 30, 2006, trailing its sector-specific benchmarks, the S&P
1500 Consumer Staples Index and the S&P 1500 Consumer Discretionary Index,
which returned 10.98% and 7.38%, respectively. Although neither index is an
ideal comparison, together they provide a suitable reference for the Fund's
overall performance in its sectors. Additionally, the Fund fell short of its
broad benchmark, the S&P Composite 1500 Index, which returned 10.32% over the
same period. Total returns for other periods as of September 30, 2006 appear
in the subsequent pages of this Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Beginning in mid-May, the small- and mid-cap cyclical stocks that we saw
dominate the first three years of the bull market rapidly became some of the
worst performers in virtually every sector, but clear leadership was elusive.
We watched our system closely during this time of ambiguity, waiting for our
relative strength metrics to confirm the true industry leaders. As we gained
more confidence that the new theme was indeed taking hold, we gradually moved
away from cyclical holdings into more mature, recession-proof stocks. While
the ICON system's rigorous focus on valuation identified the new theme, the
Fund missed some upside as we waited for leadership to develop clearly.
In addition, the Fund suffered from poor performance within several
industries, including packaged foods & meats, personal products, and food
distributors, and from severe declines among several specific holdings.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. On an industry basis, strong relative performance in the agricultural
products, hotels, resorts & cruise lines, soft drinks, and restaurant
industries was not enough to overcome the Fund's exposure to industries that
were plagued by stock-specific declines, namely packaged foods & meats,
personal products, and food distributors.
During the fiscal year, the Fund's performance was significantly hampered by
the poor showing of four individual holdings. Although these stocks initially
met our valuation and relative strength criteria, their abysmal market
performance caused meaningful losses to the Fund.
- - Inventure Group Inc., which makes snack chips, dips, and store brand snack
foods, lost 30% in one day when it announced negative earnings
Management Overview 49
Management Overview (continued)
ICON Leisure and Consumer Staples Fund
(DEREK ROLLINGSON PHOTO)
Derek Rollingson
Portfolio Manager
and an intent to acquire licenses for Mrs. Field's, a maker of brownies,
cookies, pretzels, and other baked goods.
- - Spectrum Brands Inc., which sells rechargeable and hearing aid batteries and
is the No. 3 battery maker in the United States, lost 28% in one day after it
lowered earnings guidance.
- - Wholesale food distributor Nash-Finch Company also fell drastically after
missing earnings per share estimates by 58%.
- - The Fund's returns were further weakened by disappointing performance from
United Natural Foods, Inc. and Parlux Fragrances, Inc.
All stocks mentioned above were liquidated from the Fund during the period.
The Fund's underweight position in companies such as Wal-Mart Stores, Inc. was
also a detractor to relative performance. Wal-Mart accounts for nearly 10% of
the S&P Consumer Staples Index and gained almost 14% during the last 12 months,
but we held a smaller position due to what we believed was a less than optimal
combination of value and relative strength.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE LEISURE AND CONSUMER STAPLES SECTORS?
A. The average Leisure and Consumer Staples stock in ICON's database is trading
well below our estimate of fair value, so we are encouraged from a sector
valuation perspective. We continue to make adjustments to the Fund in an
effort to capture the new market theme that emerged in the final three months
of the period. Specifically, we are being guided by the ICON system to reduce
exposure to the food distributors industry, based on declining relative
strength, and to increase the Fund's position in the broadcasting & cable TV
industry, which we see demonstrating value.
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Fund responded late in the period to the significant market reversal that
began in May, but gave up some gains while it waited for clarity in industry
leadership.
- - Positions in the poor-performing packaged foods & meats, personal products,
and food distributors industries caused the Fund to lag its benchmark.
- - An underweight position in larger companies such as Wal-Mart Stores, Inc. was
a detractor to relative performance.
50 Management Overview
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Broadcast & Cable TV 15.4%
Packaged Foods & Meats 12.4%
Soft Drinks 9.8%
Movies & Entertainment 6.6%
Household Products 5.9%
Restaurants 5.6%
Personal Products 5.4%
Food Retail 5.1%
Agriculture Products 4.2%
Tobacco 4.0%
Publishing 3.8%
Hotels, Resorts & Cruise Lines 3.6%
Hypermarkets & Super Centers 3.2%
Specialty Stores 2.9%
Drug Retail 2.4%
Distillers & Vintners 1.9%
Leisure Products 1.8%
Computer Hardware 1.5%
Internet Software & Services 1.5%
Food Distributors 1.3%
Motorcycle Manufacturers 1.0%
Construction & Farm Machinery & Heavy Trucks 0.9%
</Table>
Percentages are based upon net assets.
Management Overview 51
Management Overview (continued)
ICON Leisure and Consumer Staples Fund
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 5/9/97
- -----------------------------------------------------------------------------------------
ICON Leisure and Consumer Staples Fund 0.11% 10.12% 9.60%
- -----------------------------------------------------------------------------------------
S&P 1500 Consumer Discretionary Index 7.38% 8.37% 7.32%
- -----------------------------------------------------------------------------------------
S&P 1500 Consumer Staples Index 10.98% 7.14% 6.02%
- -----------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 7.48%
- -----------------------------------------------------------------------------------------
</Table>
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 on
pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON LEISURE AND
CONSUMER STAPLES S&P 1500 CONSUMER S&P 1500 CONSUMER S&P COMPOSITE 1500
FUND DISCRETIONARY INDEX STAPLES INDEX INDEX
---------------- ------------------- ----------------- ------------------
5/9/97 10000.00 10000.00 10000.00 10000.00
10440.00 10706.00 10532.00 10769.00
9/30/97 11350.00 11749.00 10622.00 11703.00
11555.00 12154.00 11706.00 11985.00
12688.00 14320.00 12925.00 13606.00
12347.00 15454.00 13400.00 13937.00
9/30/98 11826.00 12705.00 11479.00 12437.00
13616.00 16298.00 14093.00 15140.00
14416.00 17659.00 13631.00 15689.00
15440.00 18587.00 13776.00 16910.00
9/30/99 13571.00 16840.00 12269.00 15835.00
13002.00 19631.00 13169.00 18205.00
12647.00 19006.00 12188.00 18768.00
13559.00 17347.00 12880.00 18282.00
9/30/00 14286.00 16547.00 12860.00 18274.00
14871.00 15912.00 13891.00 16938.00
15042.00 15034.00 12860.00 14963.00
17058.00 16612.00 13581.00 15946.00
9/30/01 14609.00 12992.00 12273.00 13572.00
18594.00 15605.00 12863.00 15136.00
21074.00 16136.00 14032.00 15281.00
20035.00 14409.00 13625.00 13317.00
9/30/02 17369.00 11935.00 12199.00 11017.00
16795.00 12210.00 12350.00 11911.00
16129.00 11940.00 11560.00 11513.00
18595.00 14322.00 12639.00 13323.00
9/30/03 19262.00 14736.00 12824.00 13737.00
21387.00 16872.00 13864.00 15434.00
22999.00 17298.00 14683.00 15764.00
23512.00 17161.00 14784.00 16038.00
9/30/04 22504.00 16962.00 13930.00 15738.00
25211.00 19303.00 15074.00 17254.00
25627.00 18422.00 15205.00 16911.00
24876.00 18454.00 15159.00 17202.00
9/30/05 23632.00 18085.00 15611.00 17855.00
22656.00 18379.00 15666.00 18234.00
24351.00 19041.00 15951.00 19118.00
22887.00 18586.00 16412.00 18789.00
9/30/06 23659.00 19419.00 17326.00 19697.00
</Table>
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.
52 Management Overview
Schedule of Investments
ICON Leisure And Consumer Staples Fund
September 30, 2006
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
COMMON STOCKS (100.2%)
35,000 4Kids Entertainment,
Inc.(a) $ 577,500
52,900 A.C. Moore Arts &
Crafts, Inc.(a) 1,006,687
24,700 AGCO Corp.(a) 626,145
18,500 Alberto-Culver Co. 935,915
35,500 Altria Group, Inc. 2,717,525
94,800 American Italian
Pasta Co.(a) 737,544
24,300 BJ's Wholesale Club,
Inc.(a) 709,074
31,000 Bunge, Ltd. 1,796,450
73,100 Cablevision Systems
Corp. - Class A 1,660,101
22,300 Carnival Corp. 1,048,769
9,700 Central Garden & Pet
Co.(a) 468,122
15,400 Chattem, Inc.(a) 540,848
27,800 Clear Channel
Communications, Inc. 802,030
90,600 Coca-Cola
Enterprises, Inc. 1,887,198
77,200 Comcast Corp. - Class
A(a) 2,844,820
59,100 ConAgra Foods, Inc. 1,446,768
28,100 Constellation Brands,
Inc.(a) 808,718
32,600 Corn Products
International, Inc. 1,060,804
50,100 CVS Corp. 1,609,212
25,800 Dean Foods Co.(a) 1,084,116
21,400 Dick's Sporting
Goods, Inc.(a) 974,128
43,200 EchoStar
Communications
Corp. - Class A(a) 1,414,368
14,900 Fomento Economico
Mexicano, S.A. de
C.V. - ADR 1,444,406
2,500 Google, Inc. - Class
A(a) 1,004,750
81,500 Gruma S.A. - ADR 986,150
23,200 Grupo Televisa S.A. -
ADR 493,232
10,800 Harley-Davidson, Inc. 677,700
</Table>
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
28,400 Hewlett-Packard Co. $ 1,041,996
21,200 Hilton Hotels Corp. 590,420
30,500 Hormel Foods Corp. 1,097,390
21,300 Jack In the Box,
Inc.(a) 1,111,434
12,700 Kellogg Co. 628,904
79,000 Kroger Co. 1,828,060
20,200 Marriott
International,
Inc. - Class A 780,528
63,000 Mattel, Inc. 1,241,100
50,800 McDonald's Corp. 1,987,296
177,400 Mediacom
Communications
Corp.(a) 1,263,088
12,400 Meredith Corp. 611,692
23,000 MGP Ingredients, Inc. 489,210
33,500 NBTY, Inc.(a) 980,545
12,700 Nestle S.A. - ADR 1,110,615
51,900 News Corp. - Class A 1,019,835
37,200 O'Charley's, Inc.(a) 705,684
16,700 PepsiCo, Inc. 1,089,842
57,600 Procter & Gamble Co. 3,570,048
106,300 Rentrak Corp.(a) 1,213,946
55,400 Safeway, Inc. 1,681,390
39,500 Scholastic Corp.(a) 1,230,425
17,500 Smithfield Foods,
Inc.(a) 472,850
54,100 Spartan Stores, Inc. 914,290
102,900 The DIRECTV Group,
Inc.(a) 2,025,072
63,400 The Pepsi Bottling
Group, Inc. 2,250,700
54,900 The Walt Disney Co. 1,696,959
17,800 Thompson Corp. 717,340
53,900 Tyson Foods, Inc. -
Class A 855,932
27,700 USANA Health
Sciences, Inc.(a) 1,235,143
29,900 Wal-Mart Stores, Inc. 1,474,668
-----------
TOTAL INVESTMENTS
(COST $63,734,199) 100.2% 68,279,482
LIABILITIES LESS OTHER ASSETS
(0.2)% (143,442)
-----------
TOTAL NET ASSETS 100.0% $68,136,040
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
ADR American Depositary Receipt
Schedule of Investments 53
Management Overview
ICON Materials Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 100.5%
Top 10 Equity
Holdings 42.3%
Number of Stocks 41
Percentages are based upon net
assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
E.I. du Pont de Nemours
and Co. 7.1%
Praxair, Inc. 5.4%
Air Products & Chemical, Inc. 4.3%
Myers Industries, Inc. 4.1%
Hercules, Inc. 3.8%
PPG Industries, Inc. 3.8%
OM Group, Inc. 3.7%
International Flavors & Fragrances, Inc. 3.6%
Spartech Corp. 3.3%
Pactiv Corp. 3.2%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Materials Fund gained 11.17% for the fiscal year ended September 30,
2006, outpacing the 10.32% return of its broad benchmark, the S&P Composite
1500 Index, but underperforming the 16.52% return of its sector-specific
benchmark, the S&P 1500 Materials Index. Total returns for other periods as
of September 30, 2006 appear in the subsequent pages of this Fund's
Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The Materials sector experienced a volatile 12 months. At the outset of the
reporting period, the ICON system measured the sector at 14% below our
estimate of fair value, indicating widespread value. Following a significant
rally in the spring, driven by the rising price of steel and aluminum, the
sector began moving toward fair value. Materials stocks then declined in the
last half of the period, finishing considerably undervalued by 18%, according
to our calculations.
The Fund's overweight position in the steel industry played a large role in
its relative underperformance. For more than three years, our analysis has
indicated that steel has both value and relative strength so the Fund held a
sizeable weighting, but in the second half of the period, the industry
declined sharply.
Finally, the Fund's relative performance was also hindered by its overweight
position in the gold industry. The gold industry suffered significant losses
during the month of September. At the time of the price collapse, our system
indicated both value and relative strength in gold, and the Fund held a
substantial position.
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. The Fund relies on the ICON valuation system to determine industry
composition, based on how our model measures overpricing and underpricing
throughout the sector. Guided by valuation, the Fund's overweight and
underweight positions in several industries influenced performance.
An overweight position and skillful stock selection in the specialty
chemicals industry contributed positively as holdings such as OM Group, Inc.,
(3.7% of the Fund at year-end) which produces metal-based specialty chemicals
for the aerospace, automotive, computer, construction, and consumer
electronics industries, performed well. The Fund's overweight position in the
diversified metals & mining industry also boosted overall performance.
54 Management Overview
(DEREK ROLLINGSON PHOTO)
Derek Rollingson
Portfolio Manager
While the Fund lagged its sector benchmark, we were able to avoid additional
losses by not owning poor-performing forest stocks such as Louisiana-Pacific
Corporation and Weyerhaeuser Company during the fiscal year.
Although ICON's investment process is multi-cap and essentially indifferent
to market capitalization when selecting stocks, the Fund's composition may be
situated in a particular market cap range as a result of its holdings. As it
was with the Materials Fund, a larger position in small-cap stocks within the
steel industry detracted from performance when large-cap steel companies were
better able to withstand the industry slump.
In addition, the Fund's underweight position coupled with unfavorable stock
selection in the fertilizers & agricultural chemicals industry thwarted
returns as this industry performed well in the benchmark.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE MATERIALS SECTOR?
A. We continue to evaluate bargains in the Materials sector as a whole. Given
that we believe there is ample value, we are focusing on relative strength
measures to determine exactly which industries may lead in the future.
Specialty chemicals, metal & glass containers, and commodity chemicals are
particularly attractive.
Our analysis concludes that the steel industry theme of the previous three
years has lost some momentum as indicated by our relative strength
measurements, and we are currently reducing the Fund's exposure in the
industry. As our system has detected increased value and relative strength in
larger capitalization stocks, the diversified chemicals industry has become
more attractive.
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Fund's overweight positions in the steel and gold industries helped in
the first half but were largely responsible for its relative underperformance
during the second half of the fiscal year.
- - An underweight position coupled with unfavorable stock selection in the
fertilizers & agricultural chemicals industry hampered returns.
- - A lack of exposure to poor-performing forest products stocks helped the Fund
avoid significant losses as the industry struggled.
Management Overview 55
Management Overview (continued)
ICON Materials Fund
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Specialty Chemicals 23.8%
Diversified Chemicals 22.7%
Metal & Glass Containers 11.4%
Industrial Gases 9.6%
Steel 9.1%
Commodity Chemicals 7.0%
Paper Packaging 6.1%
Diversified Metals & Mining 3.5%
Precious Metals & Minerals 3.1%
Gold 2.8%
Paper Products 1.4%
</Table>
Percentages are based upon net assets.
56 Management Overview
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 5/5/97
- -----------------------------------------------------------------------------------------
ICON Materials Fund 11.17% 17.40% 3.16%
- -----------------------------------------------------------------------------------------
S&P 1500 Materials Index 16.52% 13.25% 6.56%
- -----------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 7.41%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
S&P COMPOSITE 1500
ICON MATERIALS FUND S&P 1500 MATERIALS INDEX INDEX
------------------- ------------------------ ------------------
5/5/97 10000.00 10000.00 10000.00
9730.00 10749.00 10707.00
9/30/97 10900.00 11391.00 11635.00
7606.00 10466.00 11916.00
8632.00 11582.00 13528.00
7586.00 11142.00 13857.00
9/30/98 6819.00 9413.00 12366.00
6800.00 9795.00 15053.00
6571.00 9728.00 15599.00
8060.00 11660.00 16813.00
9/30/99 7612.00 10685.00 15743.00
8372.00 11807.00 18100.00
7352.00 10523.00 18660.00
7092.00 9136.00 18176.00
9/30/00 6758.00 8547.00 18169.00
6400.00 10572.00 16841.00
6063.00 10046.00 14877.00
6643.00 11050.00 15855.00
9/30/01 6011.00 9755.00 13494.00
7062.00 11031.00 15048.00
8036.00 12210.00 15193.00
7814.00 11922.00 13241.00
9/30/02 6013.00 9201.00 10954.00
6184.00 10214.00 11842.00
5675.00 9429.00 11447.00
6322.00 10707.00 13246.00
9/30/03 6576.00 11335.00 13658.00
8449.00 13972.00 15345.00
8555.00 13824.00 15673.00
9098.00 14315.00 15946.00
9/30/04 9642.00 14914.00 15648.00
10914.00 16307.00 17155.00
10946.00 16578.00 16813.00
10593.00 15154.00 17103.00
9/30/05 12055.00 15598.00 17752.00
12472.00 17045.00 18129.00
14539.00 18563.00 19008.00
14333.00 18336.00 18681.00
9/30/06 13402.00 18175.00 19583.00
</Table>
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.
Management Overview 57
Schedule of Investments
ICON Materials Fund
September 30, 2006
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
COMMON STOCKS (100.5%)
47,300 Agnico-Eagle Mines,
Ltd. $ 1,472,449
86,600 Air Products &
Chemical, Inc. 5,747,642
112,900 AK Steel Holding
Corp.(a) 1,370,606
51,500 Albemarle Corp. 2,797,995
53,500 Ashland, Inc. 3,412,230
76,000 Ball Corp. 3,074,200
74,600 Barrick Gold Corp. -
ADR 2,291,712
31,700 BASF AG - ADR 2,539,170
100,000 Bemis Co., Inc. 3,286,000
218,400 Buckeye
Technologies,
Inc.(a) 1,856,400
126,400 Chesapeake Corp. 1,808,784
153,500 Compania de Minas
Buenaventura
S.A.u. - ADR 4,144,500
53,000 Cytec Industries,
Inc. 2,946,270
83,800 Dow Chemical Co. 3,266,524
224,500 E.I. du Pont de
Nemours and Co. 9,617,580
82,200 Ferro Corp. 1,461,516
25,000 FMC Corp. 1,601,750
31,900 Freeport-McMoran
Copper & Gold,
Inc. - Class B 1,698,994
66,600 Georgia Gulf Corp. 1,826,172
31,000 Greif, Inc. - Class
A 2,483,410
324,700 Hercules, Inc.(a) 5,120,519
124,300 International
Flavors &
Fragrances, Inc. 4,914,822
</Table>
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
94,600 Lubrizol Corp. $ 4,326,058
58,500 Macdermid, Inc. 1,908,270
324,900 Myers Industries,
Inc. 5,523,300
103,100 NOVA Chemicals
Corp. - ADR 3,166,201
113,400 OM Group, Inc.(a) 4,982,796
63,200 Oregon Steel Mills,
Inc.(a) 3,088,584
153,600 Pactiv Corp.(a) 4,365,312
55,100 Posco - ADR 3,577,643
75,700 PPG Industries, Inc. 5,077,956
123,200 Praxair, Inc. 7,288,512
219,400 RPM International,
Inc. 4,166,406
28,600 Sealed Air Corp. 1,547,832
143,600 Sensient
Technologies Corp. 2,810,252
49,400 Sonoco Products Co. 1,661,816
33,100 Southern Copper
Corp. 3,061,750
167,300 Spartech Corp. 4,478,621
159,027 Steel Technologies,
Inc. 3,121,700
68,300 The Valspar Corp. 1,816,780
64,200 Worthington
Industries, Inc. 1,095,252
------------
TOTAL INVESTMENTS (COST
$127,001,158) 100.5% 135,804,286
LIABILITIES LESS OTHER ASSETS
(0.5)% (706,947)
------------
TOTAL NET ASSETS 100.0% $135,097,339
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
ADR American Depositary Receipt.
58 Schedule of Investments
Management Overview
ICON Telecommunication & Utilities Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2006
Equities 99.4%
Top 10 Equity
Holdings 41.7%
Number of Stocks 97
Short-Term Investments 0.3%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2006
Verizon Communications, Inc. 9.6%
AT&T, Inc. 6.9%
BellSouth Corp. 5.9%
Telefonica S.A. - ADR 3.6%
China Mobile, Ltd. - ADR 3.4%
BT Group PLC - ADR 3.2%
America Movil S.A. de
C.V. - ADR 2.3%
Telenor ASA - ADR 2.3%
France Telecom S.A. - ADR 2.3%
Telefonos de Mexico S.A. de C.V. - ADR 2.2%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Telecommunication & Utilities Fund appreciated 7.56% for the fiscal
year ended September 30, 2006, underperforming the 25.41% return of S&P 1500
Telecommunication Services Index, but outperforming the 4.67% 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 trailed its broad
benchmark, the S&P Composite 1500 Index, which returned 10.32% over the same
period. Total returns for other periods as of September 30, 2006 appear in
the subsequent pages of this Fund's Management Overview.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The Fund underwent a large shift in composition since the last fiscal year,
in which its average weight in Telecommunications industries increased and
its average exposure to Utilities was reduced. Overall, this tilt toward
Telecommunications issues over Utilities holdings accounted for the Fund's
return.
The change in Fund composition was successful for several reasons. First, the
relatively high dividend yield stocks within the Utilities sector tend to be
negatively correlated with movements in longer term government bond yields.
These yields were very volatile during the period, leading to a rough ride
for the Utilities sector, which fell as yields rose. The sector rose sharply
since late June as government bonds yields dropped but this was not enough to
overtake the strong performance of the Telecommunication sector.
Secondly, increased merger and acquisition activity led to large gains for
many Telecom stocks. In the last 12 months, SBC acquired AT&T, Inc., formed
the new AT&T, and then announced its intention to acquire BellSouth
Corporation. Sprint announced its acquisition of Nextel Partners, while
Verizon Communications, Inc. completed its acquisition of MCI. (As of
September 30, 2006, the Fund owned Verizon, AT&T, BellSouth, and Sprint
Nextel Corporation).
Additionally, large-cap telecom stocks benefited from a flight to quality as
investors began to fear a slowing economy and sought bellwether stocks in
industries less affected by an economic downturn. Finally, we believe
investors started recognizing the deep value in telecom stocks, which had
been beaten down following the bursting of the tech bubble in 2000 and have
since failed to catch up to the overall market.
Management Overview 59
Management Overview (continued)
ICON Telecommunication & Utilities Fund
Q. HOW DID THE FUND'S COMPOSITION AFFECT PERFORMANCE?
A. As mentioned, the Fund's larger position in Telecom stocks and decreased
weighting in Utilities made the biggest difference in overall performance.
Throughout the period, the Fund's heavy average weighting of approximately
32% in the integrated telecommunication services industry served it well and
was the largest contributor to its total return. Nevertheless, the Fund
lagged the S&P 1500 Telecommunication Index primarily because it was
underweight in companies such as Verizon, Bell South, and AT&T, which make up
more than 67% of the index and each gained more than 15% over the fiscal
period.
The Fund's position in the wireless telecommunication services industry also
proved to be beneficial for performance. Our underweight holding in Sprint,
less than 1% of the Fund on average, and broad diversification among 17
domestic and international companies in this industry added to returns.
Holdings in the electric utilities, multi-utilities, water utilities, and
independent power producers & energy traders industries did not play a
significant part in the Fund's total return. Although the Utilities sector
gained traction in mid-June, a generally underweighted position in this
sector, an average exposure of just over 40% of the Fund, proved to be the
biggest advantage for the Fund.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE TELECOMMUNICATION & UTILITIES
SECTORS?
A. Our analysis of the Telecommunication and Utilities sectors still indicates
widespread value. Under our system, the industries showing the greatest value
have also shown the best relative strength and price performance recently.
Although we continue to be guided by our valuation discipline, we believe
that over the long term, the Fund will be well-positioned by having broad
exposure to the integrated telecommunication and wireless telecommunication
services industries.
60 Management Overview
(TODD BURCHETT PHOTO)
Todd Burchett
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2006
- - The Fund benefited from a significant shift in composition, in which
Telecommunication industries were overweighted.
- - Although the Fund's large weightings in the integrated telecommunication
services and wireless telecommunication services industries served it well,
the Fund still lagged the S&P 1500 Telecommunication Index due to an
underweight position in strong-performing large-cap companies such as
Verizon, Bell South, and AT&T.
- - Utilities industries contributed little to the Fund's total return, even
though they gained traction late in the period.
Management Overview 61
Management Overview (continued)
ICON Telecommunication & Utilities Fund
INDUSTRY COMPOSITION
September 30, 2006
<Table>
Integrated Telecommunication Services 49.4%
Multi-Utilities 13.8%
Electric Utilities 11.9%
Wireless Telecommunication Services 11.2%
Communications Equipment 5.1%
Independent Power Producers & Energy Traders 2.6%
Water Utilities 1.3%
Gas Utilities 1.1%
Electronic Equipment Manufacturers 1.0%
Broadcast & Cable TV 0.8%
Aerospace & Defense 0.5%
Technology Distributors 0.5%
Electronic Manufacturing Services 0.2%
</Table>
Percentages are based upon net assets.
62 Management Overview
AVERAGE ANNUAL TOTAL RETURN
September 30, 2006
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 7/9/97
- -----------------------------------------------------------------------------------------
ICON Telecommunication & Utilities Fund 7.56% 8.49% 9.47%
- -----------------------------------------------------------------------------------------
S&P 1500 Telecommunications Services Index 25.41% (2.01%) 2.42%
- -----------------------------------------------------------------------------------------
S&P 1500 Utilities Index 4.67% 7.66% 8.39%
- -----------------------------------------------------------------------------------------
S&P Composite 1500 Index 10.32% 7.73% 6.47%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2006
(LINE GRAPH)
<Table>
<Caption>
ICON S&P 1500
TELECOMMUNICATION TELECOMMUNICATIONS S&P 1500 UTILITIES S&P COMPOSITE 1500
& UTILITIES FUND SERVICES INDEX INDEX INDEX
----------------- ------------------ ------------------ ------------------
7/9/97 10000.00 10000.00 10000.00 10000.00
9/30/97 10630.00 10622.00 10417.00 10597.00
12253.00 12707.00 12118.00 10852.00
13800.00 14982.00 12775.00 12321.00
13528.00 14391.00 12766.00 12620.00
9/30/98 14231.00 15105.00 13226.00 11262.00
15927.00 19374.00 13625.00 13709.00
15110.00 20000.00 12192.00 14207.00
16924.00 22672.00 13518.00 15312.00
9/30/99 16401.00 21048.00 12967.00 14339.00
17026.00 23189.00 12330.00 16485.00
15958.00 22888.00 13585.00 16994.00
16306.00 19688.00 14281.00 16554.00
9/30/00 18858.00 17603.00 18732.00 16548.00
19039.00 14272.00 19530.00 15338.00
15995.00 14014.00 18172.00 13550.00
16564.00 13868.00 17309.00 14440.00
9/30/01 15327.00 13802.00 14540.00 12290.00
15596.00 12458.00 14271.00 13705.00
15322.00 10537.00 14813.00 13837.00
14173.00 8052.00 12587.00 12059.00
9/30/02 11948.00 5960.00 10056.00 9976.00
12737.00 8181.00 10542.00 10786.00
11625.00 7010.00 10216.00 10425.00
14077.00 8534.00 12283.00 12064.00
9/30/03 14380.00 7750.00 12292.00 12439.00
15985.00 8776.00 13319.00 13976.00
17289.00 9219.00 13956.00 14275.00
16215.00 9133.00 13832.00 14523.00
9/30/04 16906.00 9723.00 14699.00 14251.00
18497.00 10515.00 16403.00 15624.00
18497.00 9715.00 17175.00 15313.00
20075.00 10055.00 18792.00 15576.00
9/30/05 21420.00 9944.00 20094.00 16168.00
20542.00 9913.00 18900.00 16511.00
22076.00 11343.00 18864.00 17312.00
21535.00 11261.00 19881.00 17014.00
9/30/06 23038.00 12470.00 21032.00 17836.00
</Table>
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.
Management Overview 63
Schedule of Investments
ICON Telecommunication & Utilities Fund
September 30, 2006
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (99.4%)
5,000 Allegheny Energy,
Inc.(a) $ 200,850
15,000 Allete, Inc. 651,750
10,000 Alliant Energy
Corp. 357,300
26,500 Alltel Corp. 1,470,750
5,000 Ameren Corp. 263,950
69,500 America Movil
S.A. de
C.V. - ADR 2,736,215
20,000 America Telecom
S.A. de C.V. -
ADR(a) 270,940
20,000 American Electric
Power Co., Inc. 727,400
10,000 American States
Water Co. 382,500
12,500 Amphenol Corp. -
Class A 774,125
10,000 Anixter
International,
Inc. 564,700
253,000 AT&T, Inc. 8,237,680
6,000 Atmos Energy
Corp. 171,300
39,375 BCE, Inc. - ADR 1,066,669
165,700 BellSouth Corp. 7,083,675
10,000 Benchmark
Electronics,
Inc.(a) 268,800
75,000 BT Group PLC -
ADR 3,792,750
8,500 California Water
Service Group 313,905
33,600 CenterPoint
Energy, Inc. 481,152
115,000 China Mobile,
Ltd. - ADR 4,065,250
100,000 Cisco Systems,
Inc.(a) 2,300,000
8,500 Cleco Corp. 214,540
10,000 CMS Energy
Corp.(a) 144,400
25,000 Comcast Corp. -
Class A(a) 921,250
30,000 Companhia de
Saneamento Basico
de Estado de Sao
Paulo - ADR 903,000
7,000 Companhia
Energetica de
Minas Gerais -
ADR 274,750
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
12,500 Compania Anonima
Nacional
Telefonos de
Venezuela - ADR $ 237,500
17,000 Consolidated
Edison Company of
New York, Inc. 785,400
10,600 Constellation
Energy Group 627,520
25,000 Corning, Inc.(a) 610,250
5,000 CPFL Energia
S.A. - ADR 192,150
66,500 Deutsche Telekom
AG - ADR 1,055,355
25,000 Dominion
Resources, Inc.
of Virginia 1,912,250
14,000 DTE Energy Co. 581,140
28,600 Duke Energy Corp. 863,720
20,100 Edison
International 836,964
12,000 Embarq Corp. 580,440
5,000 Energen Corp. 209,350
10,000 Energy East Corp. 237,200
15,000 Entergy Corp. 1,173,450
5,000 Equitable
Resources, Inc. 174,900
30,000 Exelon Corp. 1,816,200
10,000 First Energy
Corp. 558,600
36,000 FPL Group, Inc. 1,620,000
116,800 France Telecom
S.A. - ADR 2,722,608
15,000 Golden Telecom,
Inc. 453,750
12,500 Harris Corp. 556,125
20,000 Huaneng Power
International,
Inc. - ADR 578,400
150,000 Koninklijke
(Royal) KPN
N.V. - ADR 1,914,000
30,000 Korea Electric
Power Corp. - ADR 586,500
72,000 KT Corp. - ADR 1,545,840
7,500 Lockheed Martin
Corp. 645,450
32,000 MDU Resources
Group, Inc. 714,880
35,000 Motorola, Inc. 875,000
35,000 National Grid
PLC - ADR 2,194,150
</Table>
64 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
10,000 NICE Systems,
Ltd. - ADR(a) $ 276,700
15,000 NII Holdings,
Inc.(a) 932,400
25,000 NiSource, Inc. 543,500
7,500 Nstar 250,200
85,000 Partner
Communications
Co., Ltd. - ADR 831,300
22,200 Pepco Holdings,
Inc. 536,574
30,800 PG&E Corp. 1,282,820
50,000 Philippine Long
Distance
Telephone Co. -
ADR 2,178,000
15,000 Pinnacle West
Capital Corp. 675,750
15,000 PNM Resources,
Inc. 413,550
31,000 PPL Corp. 1,019,900
6,000 Progress Energy,
Inc. 272,280
45,000 PT Telekomunikasi
Indonesia - ADR 1,627,200
5,000 Public Service
Enterprise Group,
Inc. 305,950
50,000 Puget Energy,
Inc. 1,136,500
40,000 Qualcomm, Inc. 1,454,000
7,500 Questar Corp. 613,275
7,500 Rogers Corp.(a) 463,125
13,000 RWE AG - ADR 1,201,200
5,000 SCANA Corp. 201,350
20,000 Scottish Power
PLC - ADR 971,200
17,000 Sempra Energy 854,250
56,000 Southern Co. 1,929,760
5,000 Southern Union
Co. 132,050
30,000 Sprint Nextel
Corp. 514,500
56,000 Swisscom AG - ADR 1,869,840
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
12,000 TECO Energy, Inc. $ 187,800
46,000 Telecom Italia
S.p.A. - ADR 1,303,180
17,500 Telecomunicacoes
de Sao Paulo
S.A. - ADR 390,600
82,266 Telefonica S.A. -
ADR 4,262,201
104,500 Telefonos de
Mexico S.A. de
C.V. - ADR 2,673,110
50,000 Telekom Austria
AG - ADR 2,517,000
70,000 Telenor ASA - ADR 2,725,800
23,100 Telus Corp. 1,292,907
15,000 Tim Participacoes
S.A. - ADR 417,750
30,000 TXU Corp. 1,875,600
5,000 Vectren Corp. 134,250
310,500 Verizon
Communications,
Inc. 11,528,865
22,500 Windstream Corp. 296,775
7,000 Wisconsin Energy
Corp. 301,980
7,000 WPS Resources
Corp. 347,410
40,000 Xcel Energy, Inc. 826,000
------------
TOTAL COMMON STOCKS
(COST $109,610,620) 119,067,095
SHORT-TERM INVESTMENTS (0.3%)
$ 386,860 Brown Brothers
Harriman Time
Deposit,
4.63%, 10/02/06# 386,860
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $386,860) 386,860
TOTAL INVESTMENTS 99.7%
($109,997,480) 119,453,955
OTHER ASSETS LESS LIABILITIES
0.3% 308,067
------------
TOTAL NET ASSETS 100.0% $119,762,022
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# 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, 2006.
ADR American Depositary Receipt.
Schedule of Investments 65
Six Month Hypothetical Expense Example
September 30, 2006 (unaudited)
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 (4/1/06 - 9/30/06).
ACTUAL EXPENSES
The first line in the table for each Fund provides information about actual
account values and actual expenses. The Example includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example does not include client specific fees, such as the $10 fee charged to
IRA accounts, or the $15 fee charged for wire redemptions. You may use this
information, together with the amount you invested, to estimate the expenses
that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line for each Fund under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
66 Expense Example
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/06 9/30/06 4/1/06-9/30/06* 4/1/06-9/30/06
- ------------------------------------------------------------------------------------------------
ICON CONSUMER DISCRETIONARY FUND
- ------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 968.80 $6.51 1.32%
- ------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.38 6.68
(5% return before expenses)
- ------------------------------------------------------------------------------------------------
ICON ENERGY FUND
- ------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 893.20 5.51 1.16%
- ------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.18 5.87
(5% return before expenses)
- ------------------------------------------------------------------------------------------------
ICON FINANCIAL FUND
- ------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,032.80 6.01 1.18%
- ------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.08 5.97
(5% return before expenses)
- ------------------------------------------------------------------------------------------------
ICON HEALTHCARE FUND
- ------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 961.40 5.95 1.21%
- ------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.93 6.12
(5% return before expenses)
- ------------------------------------------------------------------------------------------------
ICON INDUSTRIALS FUND
- ------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 893.20 6.07 1.28%
- ------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.58 6.48
(5% return before expenses)
- ------------------------------------------------------------------------------------------------
ICON INFORMATION TECHNOLOGY FUND
- ------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 940.70 6.23 1.28%
- ------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.58 6.48
(5% return before expenses)
- ------------------------------------------------------------------------------------------------
ICON LEISURE AND CONSUMER STAPLES
FUND
- ------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 971.50 6.97 1.41%
- ------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,017.93 7.13
(5% return before expenses)
- ------------------------------------------------------------------------------------------------
ICON MATERIALS FUND
- ------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 921.80 6.36 1.32%
- ------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.38 6.68
(5% return before expenses)
- ------------------------------------------------------------------------------------------------
ICON TELECOMMUNICATION & UTILITIES
FUND
- ------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,043.60 6.92 1.35%
- ------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.23 6.83
(5% return before expenses)
- ------------------------------------------------------------------------------------------------
</Table>
* 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.
Expense Example 67
Statements of Assets and Liabilities
September 30, 2006
<Table>
<Caption>
ICON
CONSUMER ICON ICON ICON
DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND
------------------ ------------ -------------- ---------------
ASSETS
Investments, at cost $101,509,519 $604,996,138 $347,405,407 $575,449,085
------------ ------------ ------------ ------------
Investments, at value 111,485,311 788,581,315 385,109,979 659,365,900
Cash - - - -
Receivables:
Fund shares sold 40,903 729,037 1,899,789 2,283,709
Investments sold 7,979,986 - 4,960,497 -
Interest - 13,634 4,341 9,172
Dividends 100,591 1,133,964 580,202 207,750
Other assets 35,497 104,093 47,103 70,760
------------ ------------ ------------ ------------
Total Assets 119,642,288 790,562,043 392,601,911 661,937,291
------------ ------------ ------------ ------------
LIABILITIES
Payables:
Due to custodian bank 733,069 - - -
Interest 31,489 2,040 1,357 -
Fund shares redeemed 122,351 1,333,978 433,281 669,441
Investments bought 7,819,623 - 23,191,632 14,418,085
Advisory fees 102,131 669,750 282,783 501,891
Fund accounting fees 2,800 17,232 7,107 12,866
Transfer agent fees 8,827 37,799 11,039 33,672
Administration fees 4,842 32,762 13,324 24,244
Trustee fees 3,003 19,820 7,883 14,127
Accrued expenses 22,082 82,418 39,713 60,916
------------ ------------ ------------ ------------
Total Liabilities 8,850,217 2,195,799 23,988,119 15,735,242
------------ ------------ ------------ ------------
NET ASSETS $110,792,071 $788,366,244 $368,613,792 $646,202,049
============ ============ ============ ============
NET ASSETS CONSIST OF
Paid-in Capital $103,627,457 $536,479,124 $314,588,693 $518,851,969
Accumulated undistributed net investment
income/(loss) - (167,659) 2,917,574 -
Accumulated undistributed net realized
gain/(loss) from investments (2,811,178) 68,469,602 13,402,953 43,433,265
Accumulated net realized gain/(loss) from
foreign currency translations - - - -
Unrealized appreciation/(depreciation) on
investments 9,975,792 183,585,177 37,704,572 83,916,815
------------ ------------ ------------ ------------
NET ASSETS $110,792,071 $788,366,244 $368,613,792 $646,202,049
============ ============ ============ ============
Shares outstanding (unlimited shares
authorized, no par value) 9,149,571 24,732,761 25,480,651 36,002,492
Net Asset Value (offering price and
redemption price per share) $ 12.11 $ 31.88 $ 14.47 $ 17.95
</Table>
The accompanying notes are an integral part of the financial statements.
68 Financial Statements
<Table>
<Caption>
ICON
ICON LEISURE AND ICON
ICON INFORMATION CONSUMER ICON TELECOMMUNICATION
INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND
---------------- --------------- ------------- -------------- -----------------
$ 95,059,673 $221,551,985 $63,734,199 $127,001,158 $109,997,480
------------ ------------ ----------- ------------ ------------
104,003,937 248,553,463 68,279,482 135,804,286 119,453,955
7,204 3,935 - - 13,662
55,183 193,134 37,092 216,883 157,947
4,378,153 482,369 - 10,341,432 811,061
883 1,571 - - 98
123,847 46,142 52,762 105,072 130,063
29,197 36,454 22,453 33,708 24,689
------------ ------------ ----------- ------------ ------------
108,598,404 249,317,068 68,391,789 146,501,381 120,591,475
------------ ------------ ----------- ------------ ------------
- - 82,405 6,602,937 -
31,040 2,983 1,292 10,415 -
140,798 258,986 84,384 332,596 94,167
2,265,604 6,817,739 - 4,275,569 613,250
102,534 184,919 56,078 130,308 85,693
2,935 4,875 1,604 3,405 2,393
9,646 15,152 8,799 13,608 8,183
5,000 8,893 2,629 6,173 4,033
3,060 5,065 1,581 3,814 2,277
23,137 30,002 16,977 25,217 19,457
------------ ------------ ----------- ------------ ------------
2,583,754 7,328,614 255,749 11,404,042 829,453
------------ ------------ ----------- ------------ ------------
$106,014,650 $241,988,454 $68,136,040 $135,097,339 $119,762,022
============ ============ =========== ============ ============
$ 69,252,268 $266,992,654 $63,881,153 $113,430,551 $102,451,769
16,029 - - 1,107,075 1,157,941
27,802,089 (52,005,678) (293,180) 11,778,919 6,695,837
- - 2,784 (22,334) -
8,944,264 27,001,478 4,545,283 8,803,128 9,456,475
------------ ------------ ----------- ------------ ------------
$106,014,650 $241,988,454 $68,136,040 $135,097,339 $119,762,022
============ ============ =========== ============ ============
8,019,151 27,752,586 7,397,595 11,577,790 15,644,423
$ 13.22 $ 8.72 $ 9.21 $ 11.67 $ 7.66
</Table>
Financial Statements 69
Statements of Operations
For the year ended September 30, 2006
<Table>
<Caption>
ICON
CONSUMER ICON ICON ICON
DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND
------------------ ------------- -------------- ---------------
INVESTMENT INCOME
Interest $ 136,238 $ 628,875 $ 131,600 $ 996,387
Dividends 1,218,563 8,896,095 5,965,725 3,275,941
Foreign taxes withheld - - - (11,869)
----------- ------------- ----------- ------------
Total Investment Income 1,354,801 9,524,970 6,097,325 4,260,459
----------- ------------- ----------- ------------
EXPENSES
Advisory fees 1,564,008 9,287,053 2,638,665 6,630,783
Fund accounting fees 39,951 226,606 65,144 161,267
Transfer agent fees 106,336 446,721 130,963 405,775
Administration fees 72,419 440,133 122,527 310,595
Registration fees 26,410 55,898 26,219 46,036
Insurance expense 11,753 42,140 13,328 32,110
Trustee fees and expenses 11,599 66,495 21,000 46,820
Interest expense 157,502 130,543 45,911 6,165
Other expenses 79,301 383,819 120,898 289,886
----------- ------------- ----------- ------------
Total expenses before transfer agent
earnings credit 2,069,279 11,079,408 3,184,655 7,929,437
Transfer agent earnings credit (2,854) (14,736) (4,903) (9,659)
----------- ------------- ----------- ------------
Net Expenses 2,066,425 11,064,672 3,179,752 7,919,778
----------- ------------- ----------- ------------
NET INVESTMENT INCOME (LOSS) (711,624) (1,539,702) 2,917,573 (3,659,319)
----------- ------------- ----------- ------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized gain/(loss) from investment
transactions (1,974,252) 97,201,478 19,921,934 58,118,854
Net realized gain/(loss) from foreign
currency translations - - - -
Change in unrealized
appreciation/(depreciation) on
investments (2,215,040) (135,974,290) 14,885,101 (45,909,243)
----------- ------------- ----------- ------------
Net realized and unrealized gain/(loss)
on investments (4,189,292) (38,772,812) 34,807,035 12,209,611
----------- ------------- ----------- ------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(4,900,916) $ (40,312,514) $37,724,608 $ 8,550,292
=========== ============= =========== ============
</Table>
The accompanying notes are an integral part of the financial statements.
70 Financial Statements
<Table>
<Caption>
ICON
ICON LEISURE AND ICON
ICON INFORMATION CONSUMER ICON TELECOMMUNICATION
INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND
---------------- --------------- ------------ -------------- -----------------
$ 85,829 $ 95,599 $ 28,509 $ 115,680 $ 86,697
1,944,481 1,628,930 397,054 3,004,926 2,301,804
(2,968) (22,544) - (2,331) (2,498)
------------ ----------- --------- ----------- ------------
2,027,342 1,701,985 425,563 3,118,275 2,386,003
------------ ----------- --------- ----------- ------------
2,171,220 2,634,865 504,505 1,531,465 773,299
54,784 65,353 15,271 39,055 21,266
113,800 183,263 107,323 171,046 100,657
100,857 122,395 23,390 71,009 35,975
28,452 34,027 27,914 28,289 23,683
13,599 19,013 7,193 7,234 7,101
14,951 18,674 6,934 14,054 7,303
97,437 97,816 13,108 21,584 31,477
90,002 125,287 72,186 107,741 67,630
------------ ----------- --------- ----------- ------------
2,685,102 3,300,693 777,824 1,991,477 1,068,391
(2,769) (3,536) (1,017) (2,610) (1,363)
------------ ----------- --------- ----------- ------------
2,682,333 3,297,157 776,807 1,988,867 1,067,028
------------ ----------- --------- ----------- ------------
(654,991) (1,595,172) (351,244) 1,129,408 1,318,975
------------ ----------- --------- ----------- ------------
52,064,019 2,580,097 (110,039) 20,331,914 13,921,397
- - 2,784 (22,334) -
(34,755,918) (5,472,197) 452,764 (8,247,321) (12,032,876)
------------ ----------- --------- ----------- ------------
17,308,101 (2,892,100) 345,509 12,062,259 1,888,521
------------ ----------- --------- ----------- ------------
$ 16,653,110 $(4,487,272) $ (5,735) $13,191,667 $ 3,207,496
============ =========== ========= =========== ============
</Table>
Financial Statements 71
Statements of Changes in Net Assets
<Table>
<Caption>
ICON CONSUMER
DISCRETIONARY FUND ICON ENERGY FUND
------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2006 2005 2006 2005
-------------- ------------- --------------- --------------
OPERATIONS
Net investment income/(loss) $ (711,624) $ (947,312) $ (1,539,702) $ 2,256,526
Net realized gain/(loss) from investment
transactions (1,974,252) 21,149,069 97,201,478 22,940,745
Change in unrealized
appreciation/(depreciation) on investments (2,215,040) (9,621,489) (135,974,290) 259,958,925
------------- ------------ -------------- --------------
Net increase/(decrease) in net assets
resulting from operations (4,900,916) 10,580,268 (40,312,514) 285,156,196
------------- ------------ -------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - - (2,256,525) -
Net realized gains (15,842,362) - (23,251,426) -
------------- ------------ -------------- --------------
Net decrease from dividends and
distributions (15,842,362) - (25,507,951) -
------------- ------------ -------------- --------------
FUND SHARE TRANSACTIONS
Shares sold 169,800,249 50,107,439 381,970,561 711,655,180
Reinvested dividends and distributions 15,740,469 - 24,368,155 -
Shares repurchased (223,427,131) (43,187,689) (561,109,848) (275,467,439)
------------- ------------ -------------- --------------
Net increase/(decrease) from fund share
transactions (37,886,413) 6,919,750 (154,771,132) 436,187,741
------------- ------------ -------------- --------------
Total net increase/(decrease) in net assets (58,629,691) 17,500,018 (220,591,597) 721,343,937
NET ASSETS
Beginning of period 169,421,762 151,921,744 1,008,957,841 287,613,904
------------- ------------ -------------- --------------
End of period $ 110,792,071 $169,421,762 $ 788,366,244 $1,008,957,841
============= ============ ============== ==============
TRANSACTIONS IN FUND SHARES
Shares sold 13,890,840 3,605,400 11,049,736 27,585,644
Reinvested dividends and distributions 1,362,806 - 760,300 -
Shares repurchased (18,549,943) (3,120,303) (16,964,736) (10,886,604)
------------- ------------ -------------- --------------
Net increase/(decrease) (3,296,297) 485,097 (5,154,700) 16,699,040
Shares outstanding beginning of period 12,445,868 11,960,771 29,887,461 13,188,421
------------- ------------ -------------- --------------
Shares outstanding end of period 9,149,571 12,445,868 24,732,761 29,887,461
============= ============ ============== ==============
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding short-term securities)
Purchase of securities $ 269,340,097 $270,228,278 $ 213,408,134 $ 565,978,887
Proceeds from sales of securities 323,712,014 263,033,052 408,025,665 155,874,919
ACCUMULATED UNDISTRIBUTED NET INVESTMENT
INCOME/(LOSS) $ - $ - $ (167,659) $ 2,256,526
============= ============ ============== ==============
</Table>
72 Financial Statements
<Table>
<Caption>
ICON FINANCIAL FUND ICON HEALTHCARE FUND ICON INDUSTRIALS 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,
2006 2005 2006 2005 2006 2005
-------------- -------------- -------------- -------------- -------------- -------------
$ 2,917,573 $ 1,894,706 $ (3,659,319) $ (3,785,078) $ (654,991) $ (664,614)
19,921,934 15,015,457 58,118,854 10,569,614 52,064,019 28,540,115
14,885,101 (4,980,248) (45,909,243) 96,973,294 (34,755,918) 6,079,683
------------- ------------- ------------- ------------- ------------- -------------
37,724,608 11,929,915 8,550,292 103,757,830 16,653,110 33,955,184
------------- ------------- ------------- ------------- ------------- -------------
(1,744,311) (400,204) - - - -
(16,113,682) (14,368,848) (10,591,515) (877,529) (6,835,273) -
------------- ------------- ------------- ------------- ------------- -------------
(17,857,993) (14,769,052) (10,591,515) (877,529) (6,835,273) -
------------- ------------- ------------- ------------- ------------- -------------
225,592,853 160,151,652 403,323,627 513,075,619 70,147,062 116,314,931
17,760,399 14,495,645 9,893,314 842,844 6,801,064 -
(105,489,351) (149,318,334) (447,733,008) (219,709,399) (197,386,921) (143,327,765)
------------- ------------- ------------- ------------- ------------- -------------
137,863,901 25,328,963 (34,516,067) 294,209,064 (120,438,795) (27,012,834)
------------- ------------- ------------- ------------- ------------- -------------
157,730,516 22,489,826 (36,557,290) 397,089,365 (110,620,958) 6,942,350
210,883,276 188,393,450 682,759,339 285,669,974 216,635,608 209,693,258
------------- ------------- ------------- ------------- ------------- -------------
$ 368,613,792 $ 210,883,276 $ 646,202,049 $ 682,759,339 $ 106,014,650 $ 216,635,608
============= ============= ============= ============= ============= =============
16,117,798 12,078,196 22,417,731 30,887,090 5,011,944 9,680,063
1,353,679 1,066,641 557,019 53,243 543,216 -
(7,698,732) (11,535,456) (25,034,402) (13,735,740) (14,600,539) (12,555,300)
------------- ------------- ------------- ------------- ------------- -------------
9,772,745 1,609,381 (2,059,652) 17,204,593 (9,045,379) (2,875,237)
15,707,906 14,098,525 38,062,144 20,857,551 17,064,530 19,939,767
------------- ------------- ------------- ------------- ------------- -------------
25,480,651 15,707,906 36,002,492 38,062,144 8,019,151 17,064,530
============= ============= ============= ============= ============= =============
$ 526,674,690 $ 334,005,678 $ 394,109,360 $ 493,069,662 $ 188,989,372 $ 131,854,781
404,037,325 321,445,227 446,505,389 216,184,507 319,518,181 161,003,971
$ 2,917,574 $ 1,744,312 $ - $ - $ 16,029 $ 16,028
============= ============= ============= ============= ============= =============
</Table>
Financial Statements 73
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON INFORMATION
TECHNOLOGY FUND
-------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2006 2005
-------------- -------------
OPERATIONS:
Net investment income/(loss) $ (1,595,172) $ (2,393,338)
Net realized gain/(loss) from investment transactions 2,580,097 9,986,052
Net realized gain/(loss) from foreign currency
translations - -
Change in net unrealized appreciation/(depreciation) on
investments (5,472,197) 12,306,795
------------- -------------
Net increase/(decrease) in net assets resulting from
operations (4,487,272) 19,899,509
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - -
Net realized gains - -
Return of Capital - -
------------- -------------
Net decrease from dividends and distributions - -
------------- -------------
FUND SHARE TRANSACTIONS
Shares sold 175,022,474 183,518,365
Reinvested dividends and distributions - -
Shares repurchased (148,620,178) (227,596,847)
------------- -------------
Net increase/(decrease) from fund share transactions 26,402,296 (44,078,482)
------------- -------------
Total net increase/(decrease) in net assets 21,915,024 (24,178,973)
NET ASSETS:
Beginning of period 220,073,430 244,252,403
------------- -------------
End of period $ 241,988,454 $ 220,073,430
============= =============
TRANSACTIONS IN FUND SHARES
Shares sold 20,144,351 22,003,840
Reinvested dividends and distributions - -
Shares repurchased (17,698,365) (27,607,984)
------------- -------------
Net increase/(decrease) 2,445,986 (5,604,144)
Shares outstanding beginning of period 25,306,600 30,910,744
------------- -------------
Shares outstanding end of period 27,752,586 25,306,600
============= =============
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding short-term securities)
Purchase of securities $ 432,267,414 $ 395,041,638
Proceeds from sales of securities 406,207,512 442,915,109
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ - $ -
============= =============
</Table>
The accompanying notes are an integral part of the financial statements.
74 Financial Statements
<Table>
<Caption>
ICON LEISURE AND ICON TELECOMMUNICATION &
CONSUMER STAPLES FUND ICON MATERIALS FUND UTILITIES 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,
2006 2005 2006 2005 2006 2005
------------- -------------- -------------- -------------- ------------- -------------
$ (351,244) $ (451,588) $ 1,129,408 $ 333,419 $ 1,318,975 $ 1,905,415
(110,039) 12,701,511 20,331,914 28,105,684 13,921,397 10,867,997
2,784 - (22,334) - - -
452,764 (9,663,969) (8,247,321) (7,049,729) (12,032,876) 12,025,488
------------ ------------- ------------- ------------- ------------ ------------
(5,735) 2,585,954 13,191,667 21,389,374 3,207,496 24,798,900
------------ ------------- ------------- ------------- ------------ ------------
- - (236,508) (163,349) (1,880,275) (767,065)
(9,538,955) (13,572,229) (9,051,351) - (9,640,653) -
(34,857) - - - - -
------------ ------------- ------------- ------------- ------------ ------------
(9,573,812) (13,572,229) (9,287,859) (163,349) (11,520,928) (767,065)
------------ ------------- ------------- ------------- ------------ ------------
42,533,627 156,682,191 150,400,169 89,687,347 74,670,691 93,654,010
8,013,754 13,378,405 8,769,250 160,788 11,345,862 762,535
(20,242,047) (194,686,497) (127,545,242) (151,343,125) (78,591,644) (59,123,198)
------------ ------------- ------------- ------------- ------------ ------------
30,305,334 (24,625,901) 31,624,177 (61,494,990) 7,424,909 35,293,347
------------ ------------- ------------- ------------- ------------ ------------
20,725,787 (35,612,176) 35,527,985 (40,268,965) (888,523) 59,325,182
47,410,253 83,022,429 99,569,354 139,838,319 120,650,545 61,325,363
------------ ------------- ------------- ------------- ------------ ------------
$ 68,136,040 $ 47,410,253 $ 135,097,339 $ 99,569,354 $119,762,022 $120,650,545
============ ============= ============= ============= ============ ============
4,626,945 12,172,021 12,578,419 8,775,257 10,006,996 12,890,779
900,421 1,067,710 825,717 15,794 1,644,205 106,947
(2,093,062) (14,999,963) (10,637,952) (15,426,293) (10,581,608) (7,698,688)
------------ ------------- ------------- ------------- ------------ ------------
3,434,304 (1,760,232) 2,766,184 (6,635,242) 1,069,593 5,299,038
3,963,291 5,723,523 8,811,606 15,446,848 14,574,830 9,275,792
------------ ------------- ------------- ------------- ------------ ------------
7,397,595 3,963,291 11,577,790 8,811,606 15,644,423 14,574,830
============ ============= ============= ============= ============ ============
$129,436,793 $ 261,063,086 $ 286,596,817 $ 132,449,934 $166,415,855 $149,329,103
109,381,086 299,173,481 262,570,119 191,074,580 169,449,797 113,156,179
$ - $ - $ 1,107,075 $ 236,509 $ 1,157,941 $ 1,719,241
============ ============= ============= ============= ============ ============
</Table>
Financial Statements 75
Financial Highlights
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
NET ASSET NET NET REALIZED
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM
BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT
OF PERIOD (LOSS)(X) ON INVESTMENTS OPERATIONS
--------- ---------- -------------- ----------
ICON CONSUMER DISCRETIONARY FUND
Year Ended September 30, 2006 $13.61 $(0.06) $ 0.79 $ 0.73
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
Year Ended September 30, 2002 8.96 (0.06) 1.22 1.16
ICON ENERGY FUND
Year Ended September 30, 2006 33.76 (0.06) (0.89) (0.95)
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
Year Ended September 30, 2002 11.29 (0.08) 0.65 0.57
ICON FINANCIAL FUND
Year Ended September 30, 2006 13.43 0.15 1.84 1.99
Year Ended September 30, 2005 13.36 0.13 0.99 1.12
Year Ended September 30, 2004 10.78 0.04 2.60 2.64
Year Ended September 30, 2003 8.84 0.05 1.92 1.97
Year Ended September 30, 2002 12.04 (0.01) (1.08) (1.09)
ICON HEALTHCARE FUND
Year Ended September 30, 2006 17.94 (0.10) 0.38 0.28
Year Ended September 30, 2005 13.70 (0.14) 4.42 4.28
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
Year Ended September 30, 2002 11.57 (0.12) (0.49) (0.61)
ICON INDUSTRIALS FUND
Year Ended September 30, 2006 12.70 (0.04) 0.97 0.93
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
Year Ended September 30, 2002 8.55 (0.02) (0.57) (0.59)
<Caption>
LESS DIVIDENDS AND DISTRIBUTIONS
-------------------------------------------------------
DIVIDENDS DISTRIBUTIONS TOTAL
FROM NET FROM NET DIVIDENDS
INVESTMENT REALIZED RETURN AND
INCOME GAINS OF CAPITAL DISTRIBUTIONS
---------- ------------- ---------- -------------
ICON CONSUMER DISCRETIONARY FUND
Year Ended September 30, 2006 $ - $(2.23) $ - $(2.23)
Year Ended September 30, 2005 - - - -
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 - - - -
ICON ENERGY FUND
Year Ended September 30, 2006 (0.08) (0.85) - (0.93)
Year Ended September 30, 2005 - - - -
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 (0.02) - - (0.02)
ICON FINANCIAL FUND
Year Ended September 30, 2006 (0.09) (0.86) - (0.95)
Year Ended September 30, 2005 (0.03) (1.02) - (1.05)
Year Ended September 30, 2004 (0.06) - - (0.06)
Year Ended September 30, 2003 (0.03) - - (0.03)
Year Ended September 30, 2002 - (2.11) - (2.11)
ICON HEALTHCARE FUND
Year Ended September 30, 2006 - (0.27) - (0.27)
Year Ended September 30, 2005 - (0.04) - (0.04)
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 - (0.56) (0.05) (0.61)
ICON INDUSTRIALS FUND
Year Ended September 30, 2006 - (0.41) - (0.41)
Year Ended September 30, 2005 - - - -
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 - - - -
</Table>
76 Financial Highlights
<Table>
<Caption>
RATIO OF NET
NET ASSET AVERAGE RATIO OF INVESTMENT
VALUE, NET ASSETS, NET ASSETS EXPENSES INCOME/(LOSS) PORTFOLIO
END OF TOTAL END OF PERIOD FOR THE PERIOD TO AVERAGE TO AVERAGE TURNOVER
PERIOD RETURN (IN THOUSANDS) (IN THOUSANDS) NET ASSETS NET ASSETS RATE
--------- ------ -------------- -------------- ---------- ------------- ---------
$12.11 6.20% $ 110,792 $156,240 1.32% (0.46)% 173.83%
13.61 7.17% 169,422 167,635 1.25% (0.57)% 157.94%
12.70 7.72% 151,922 178,011 1.31% (0.38)% 120.63%
11.79 16.50% 150,065 118,834 1.40% (0.79)% 174.51%
10.12 12.95% 121,640 184,174 1.29% (0.49)% 128.06%
31.88 (2.81)% 788,366 947,108 1.17% (0.16)% 22.86%
33.76 54.79% 1,008,958 602,922 1.21% 0.37% 27.51%
21.81 59.20% 287,614 127,920 1.35% (0.20)% 13.42%
13.70 15.71% 55,629 74,883 1.40% (0.29)% 42.53%
11.84 5.03% 104,220 71,434 1.35% (0.61)% 26.30%
14.47 15.53% 368,614 264,297 1.20% 1.10% 153.47%
13.43 8.29% 210,883 188,864 1.26% 1.00% 170.75%
13.36 24.53% 188,393 162,121 1.32% 0.34% 114.50%
10.78 22.35% 139,261 131,042 1.34% 0.54% 142.77%
8.84 (11.88)% 110,116 60,904 1.36% (0.06)% 69.58%
17.95 1.56% 646,202 667,967 1.19% (0.55)% 61.37%
17.94 31.39% 682,759 463,813 1.22% (0.82)% 47.88%
13.70 11.56% 285,670 244,742 1.29% (1.04)% 52.72%
12.28 18.65% 141,259 120,068 1.34% (0.84)% 85.52%
10.35 (5.63)% 93,031 44,042 1.39% (1.05)% 104.90%
13.22 7.49% 106,015 216,819 1.24% (0.30)% 89.38%
12.70 20.72% 216,636 196,295 1.24% (0.34)% 67.25%
10.52 19.55% 209,693 179,657 1.29% (0.47)% 45.77%
8.80 10.55% 132,554 70,382 1.43% (0.64)% 90.49%
7.96 (6.90)% 63,919 107,335 1.30% (0.24)% 99.22%
</Table>
Financial Highlights 77
Financial Highlights (continued)
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
---------------------------------------- ---------------------------------------
NET ASSET NET NET REALIZED DIVIDENDS DISTRIBUTIONS TOTAL
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM FROM NET FROM NET DIVIDENDS
BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT INVESTMENT REALIZED RETURN AND
OF PERIOD (LOSS)(X) ON INVESTMENTS OPERATIONS INCOME GAINS OF CAPITAL DISTRIBUTIONS
--------- ---------- -------------- ---------- ---------- ------------- ---------- -------------
ICON INFORMATION TECHNOLOGY
FUND
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 - - - -
Year Ended
September 30,
2002 7.80 (0.10) (1.72) (1.82) - - - -
ICON LEISURE AND CONSUMER
STAPLES FUND
Year Ended
September 30,
2006 11.96 (0.07) (0.01) (0.08) - (2.67) -(a) (2.67)
Year Ended
September 30,
2005 14.51 (0.06) 0.94 0.88 - (3.43) - (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 - - - -
Year Ended
September 30,
2002 9.42 (0.07) 1.85 1.78 - - - -
ICON MATERIALS FUND
Year Ended
September 30,
2006 11.30 0.09 1.09 1.18 (0.02) (0.79) - (0.81)
Year Ended
September 30,
2005 9.05 0.03 2.23 2.26 (0.01) - - (0.01)
Year Ended
September 30,
2004 6.20 0.01 2.87 2.88 (0.03) - - (0.03)
Year Ended
September 30,
2003 5.68 0.03 0.50 0.53 (0.01) - - (0.01)
Year Ended
September 30,
2002 5.70 0.02 (0.01) 0.01 (0.03) - - (0.03)
ICON TELECOMMUNICATION &
UTILITIES FUND
Year Ended
September 30,
2006 8.28 0.13 0.37 0.50 (0.18) (0.94) - (1.12)
Year Ended
September 30,
2005 6.61 0.14 1.61 1.75 (0.08) - - (0.08)
Year Ended
September 30,
2004 5.69 0.07 0.92 0.99 (0.07) - - (0.07)
Year Ended
September 30,
2003 4.78 0.10 0.87 0.97 (0.06) - - (0.06)
Year Ended
September 30,
2002 6.19 0.10 (1.45) (1.35) (0.06) - - (0.06)
</Table>
(x) Calculated using the average share method.
The accompanying notes are an integral part of the financial statements.
(a) Amount less than $0.005.
78 Financial Highlights
<Table>
<Caption>
RATIO OF NET
NET ASSET AVERAGE NET RATIO OF INVESTMENT
VALUE, NET ASSETS, ASSETS EXPENSES INCOME/(LOSS)TO PORTFOLIO
END OF TOTAL END OF PERIOD FOR THE PERIOD TO AVERAGE AVERAGE NET TURNOVER
PERIOD RETURN (IN THOUSANDS) (IN THOUSANDS) NET ASSETS ASSETS RATE
--------- ------ -------------- -------------- ---------- --------------- ---------
$ 8.72 0.23% $241,988 $263,546 1.25% (0.61)% 155.39%
8.70 10.13% 220,073 264,222 1.29% (0.91)% 152.16%
7.90 (4.47)% 244,252 282,062 1.31% (0.91)% 189.67%
8.27 38.29% 307,972 190,287 1.35% (1.16)% 155.39%
5.98 (23.33)% 75,623 189,972 1.31% (1.09)% 190.09%
9.21 0.11% 68,136 50,507 1.54% (0.70)% 215.75%
11.96 5.01% 47,410 99,988 1.30% (0.45)% 271.72%
14.51 16.83% 83,022 104,515 1.33% (0.31)% 148.43%
12.42 10.89% 82,347 80,928 1.38% (0.51)% 139.54%
11.20 18.90% 88,341 86,202 1.34% (0.55)% 90.43%
11.67 11.17% 135,097 153,244 1.30% 0.74% 176.89%
11.30 25.04% 99,569 101,971 1.31% 0.33% 128.01%
9.05 46.61% 139,838 68,497 1.37% 0.13% 59.48%
6.20 9.36% 30,376 40,156 1.47% 0.59% 130.01%
5.68 0.06% 59,020 45,917 1.36% 0.23% 74.55%
7.66 7.56% 119,762 77,327 1.38% 1.71% 209.50%
8.28 26.70% 120,651 101,129 1.26% 1.88% 112.91%
6.61 17.57% 61,325 54,232 1.37% 1.07% 108.81%
5.69 20.36% 42,509 53,219 1.41% 2.05% 158.24%
4.78 (22.05)% 66,366 20,196 1.50% 1.78% 137.81%
</Table>
Financial Highlights 79
Notes to Financial Statements
September 30, 2006
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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 industries and sectors. Each Fund is authorized
to issue an unlimited number of no par shares. The investment objective of each
of 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 addition, 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 involves
future claims that may be made against each Fund. However, based on experience,
the Funds expect the risk of loss to be minimal.
80 Notes to Financial Statements
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 report the market value of securities in
their portfolios; if a pricing service is not able to provide a price, or the
pricing service quote of valuation 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, the 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 Funds' adviser 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
Notes to Financial Statements 81
Notes to Financial Statements (continued)
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 net asset value
("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.
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 has recently begun to evaluate the application of
the Statement to the Funds, and is not in a position at this time to evaluate
the significance of its impact, if any, on the Funds' financial statements.
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, 2006.
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 into U.S. dollars at the prevailing rates of exchange daily.
Income and expenses are translated into U.S. dollars at the
82 Notes to Financial Statements
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 Statements 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 Statements of Operations. The
Funds did not enter into any foreign currency contracts during the year ended
September 30, 2006.
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
the 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
Notes to Financial Statements 83
Notes to Financial Statements (continued)
underlying hedged assets. The Funds held no financial futures contracts during
the year ended September 30, 2006.
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. As a writer of an option, a
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, 2006.
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.
84 Notes to Financial Statements
Dividends received by shareholders of the Funds which are derived from foreign
source income and foreign taxes paid by the Funds are to be treated, to the
extent allowable under the Code, as if received and paid by the shareholders of
the Funds. 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 ICON 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 for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. Management has recently begun to
evaluate the application of the Interpretation to the Funds, and is not in a
position at this time to evaluate the significance of its impact, if any, on the
Funds' financial statements.
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.
Notes to Financial Statements 85
Notes to Financial Statements (continued)
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.
2. 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. Prior to that date, ICON received a monthly management fee that was
computed daily at an annual rate of 1.00% of the Funds' average daily net
assets.
TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES
BISYS Fund Services Ohio, Inc. ("BISYS") is the Fund Accounting Agent for the
Funds. For its services, the Trust pays BISYS 0.03% on the first $1.75 billion
of average net assets, 0.0175% on the average net assets over $1.75 billion and
up to $5 billion, and 0.01% on average net assets in excess of $5 billion.
Brown Brothers Harriman ("BBH") is the custodian of the Trust's investments. For
domestic custody services, the Trust pays BBH 0.0065% on the first $50 million
of average net assets and 0.0050% on domestic assets above $50 million, plus
certain transaction charges. For foreign custody services, the Trust pays BBH
0.03% on foreign assets plus certain transaction charges.
Boston Financial Data Services, Inc. ("BFDS") is the Trust's transfer agent. For
these services, the Trust pays an account fee of $13.25 per open account, $7.00
per networked account, $1.80 per closed account, plus certain other transaction
and cusip charges.
86 Notes to Financial Statements
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, 2006, 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. Prior to that date, this agreement provided for an annual fee to ICON
of 0.05% on the Funds' first $1.5 billion of average daily net assets and 0.045%
on average daily net assets in excess of $1.5 billion. 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 BISYS pursuant to
which BISYS assists ICON with the administration and business affairs of the
Trust. For its services, ICON pays BISYS at an annual rate of 0.025% on the
first $1.75 billion of Trust assets and 0.015% on assets above $1.75 billion.
RELATED PARTIES
Certain Officers and Directors of ICON are also Officers and Trustees of the
Funds; however, such Officers and Trustees (with the exception of the Chief
Compliance Officer, "CCO") receive no compensation from the Funds. The CCO's
salary is paid 90% by the Funds and 10% by the Adviser. For the year ended
September 30, 2006, the total related amounts paid by the Trust under this
arrangement are included in Other Expenses on the Statements of Operations.
Notes to Financial Statements 87
Notes to Financial Statements (continued)
3. 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 7.32% at September 30, 2006.
The average interest rate charged for the year ended September 30, 2006 was
6.75%.
<Table>
<Caption>
AVERAGE BORROWING
(10/1/05-9/30/06)
- -------------------------------------------------------------------------------
ICON Consumer Discretionary Fund** $3,851,246
ICON Energy Fund** 7,638,061
ICON Financial Fund** 1,756,078
ICON Healthcare Fund 2,854,811
ICON Industrials Fund** 4,181,363
ICON Information Technology Fund** 2,585,079
ICON Leisure and Consumer Staples Fund** 408,158
ICON Materials Fund** 1,484,756
ICON Telecommunication & Utilities Fund 1,928,028
</Table>
**Fund had outstanding borrowings as of September 30, 2006.
4. 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, 2006 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 $51,670,054, which expires in
2011. The ICON Leisure and Consumer Staples Fund has a capital loss carryforward
of $92,773, which expires in 2014. Net capital losses incurred after October 31
and within the taxable year are deemed to arise on the first business day of the
Funds' next taxable year. For the year ended September 30, 2006, the ICON
Consumer Discretionary Fund and ICON Leisure and Consumer Staples Fund deferred
$2,665,204 and $134,547, respectively.
88 Notes to Financial Statements
The tax characteristics of dividends paid to shareholders during the fiscal year
ended September 30, 2006, were as follows:
<Table>
<Caption>
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
</Table>
The tax characteristics of dividends and distributions paid to shareholders
during the fiscal year ended September 30, 2005, were as follows:
<Table>
<Caption>
DISTRIBUTIONS PAID FROM
------------------------ TOTAL
ORDINARY NET LONG- TOTAL TAXABLE DISTRIBUTIONS
FUND INCOME TERM GAINS DISTRIBUTIONS PAID
- --------------------------------------------------------------------------------------------------------------
ICON Financial Fund $4,850,731 $ 9,918,321 $14,769,052 $14,769,052
ICON Healthcare Fund - 877,529 877,529 877,529
ICON Leisure and Consumer Staples Fund 698,297 12,873,932 13,572,229 13,572,229
ICON Materials Fund 163,349 - 163,349 163,349
ICON Telecommunication & Utilities Fund 767,065 - 767,065 767,065
</Table>
During the year ended September 30, 2006, the following capital loss
carryforwards were used:
<Table>
<Caption>
AMOUNT
- --------------------------------------------------------------------------
ICON Information Technology Fund $ 2,815,699
</Table>
Notes to Financial Statements 89
Notes to Financial Statements (continued)
As of September 30, 2006, the components of accumulated earnings (deficit) on a
tax basis was as follows:
<Table>
<Caption>
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 $ -- $ -- $ -- $ (2,665,204) $ 9,829,818 $ 7,164,614
ICON Energy Fund 4,022,979 64,453,385 68,476,364 -- 183,410,756 251,887,120
ICON Financial Fund 5,772,024 10,760,520 16,532,544 -- 37,492,555 54,025,099
ICON Healthcare Fund -- 43,433,266 43,433,266 -- 83,916,814 127,350,080
ICON Industrials Fund 9,908,129 17,893,960 27,802,089 -- 8,960,293 36,762,382
ICON Information
Technology Fund -- -- -- (51,670,054) 26,665,854 (25,004,200)
ICON Leisure and Consumer
Staples Fund -- -- -- (227,322) 4,482,209 4,254,887
ICON Materials Fund 6,831,143 6,032,690 12,863,833 -- 8,802,955 21,666,788
ICON Telecommunication &
Utilities Fund 2,742,256 5,129,258 7,871,514 -- 9,438,739 17,310,253
</Table>
*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, 2006, 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:
<Table>
<Caption>
UNREALIZED UNREALIZED NET APPRECIATION
FUND COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- ---------------------------------------------------------------------------------------
ICON Consumer
Discretionary Fund $101,655,493 $11,141,915 $(1,312,097) $ 9,829,818
ICON Energy Fund 605,170,559 203,359,155 (19,948,399) 183,410,756
ICON Financial Fund 347,617,424 38,193,425 (700,870) 37,492,555
ICON Healthcare Fund 575,449,086 96,584,179 (12,667,365) 83,916,814
ICON Industrials Fund 95,043,644 10,538,737 (1,578,444) 8,960,293
ICON Information
Technology Fund 221,887,609 28,756,333 (2,090,479) 26,665,854
ICON Leisure and
Consumer Staples
Fund 63,797,273 4,997,764 (515,555) 4,482,209
ICON Materials Fund 127,001,331 11,077,010 (2,274,055) 8,802,955
ICON Telecommunication
& Utilities Fund 110,015,216 10,023,133 (584,394) 9,438,739
</Table>
90 Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of the ICON Sector Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of ICON Consumer Discretionary Fund,
ICON Energy Fund, ICON Financial Fund, ICON Healthcare Fund, ICON Industrials
Fund, ICON Information Technology Fund, ICON Leisure and Consumer Staples Fund,
ICON Materials Fund, and ICON Telecommunication & Utilities Fund (nine of the
portfolios constituting ICON Funds, hereafter referred to as the "Funds") at
September 30, 2006, 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 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, 2006 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 20, 2006
Report of Accounting Firm 91
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees ("Board") consists of six 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, 55. 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 lo 1998) of ICON Management & Research Corporation
("IM&R"), the parent company of ICON Advisers and IDI.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 56. 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 lo 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., 57. Mr. Pomeroy has been a Trustee of the Funds since
November 2002. Mr. Pomeroy is Chief Investment Officer and Director of
Investments, Pennsylvania State University (2001 to present) and was Portfolio
Manager and Product Manager, Trinity Investment Management Corporation (1989 to
2001).
92 Trustees and Officers
GREGORY KELLAM SCOTT, 58. Mr. Scott has been a Trustee of the Funds since
November 2002. 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). Mr. Scott is also a
member of the National Board of Directors of the Constituency for Africa (1997
to present) and serves as Executive Director of Indiana Civil Rights Commission
(2005-present). Mr. Scott has been appointed to the US State Department's
Commission on the African Judiciary (2006-present).
R. MICHAEL SENTEL, 58. 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 became a
branch chief. 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).
JONATHAN F. ZESCHIN, 53. Mr. Zeschin has been a Trustee of the Funds since
November 2002. Mr. Zeschin is President and Founder of ESSENTIAL Advisers, Inc.,
a wealth management and investment advisory firm (2000 to present) and was
Managing Partner of JZ Partners LLC, a business consulting firm for investment
management companies (1998 to present). Mr. Zeschin was previously President of
Founders Asset Management LLC, an investment management company (1995 to 1998)
and Executive Vice President, INVESCO Funds Group, an investment advisory
company (1992 to 1995). Mr. Zeschin was previously a Director of the Young
Americans Education Foundation and Young Americans Bank (1998 to 2004); and was
previously a Director of the Wasatch Funds (2002 to 2004).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 55. 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.
Trustees and Officers 93
Board of Trustees and Fund Officers (continued)
(unaudited)
ERIK L. JONSON, 57. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception. 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).
DONALD SALCITO, 53. 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, 33. Ms. Schoffman serves as Assistant Vice President and
Chief Compliance Officer of the Funds (May 2004 to present). She also serves as
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, 43. Mr. Abrams serves as Anti-Money Laundering Officer of the
Funds (2005 to present). Mr. Abrams is also 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).
94 Trustees and Officers
Other Information (unaudited)
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 Diversified 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, Covered Call, 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 8, 2006, the Board of Trustees, including all of the Trustees who 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, 2006.
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.
In considering the reasonableness of the fee payable to the Adviser for managing
each Fund, the Board reviewed, among other things, financial
Other Information 95
Other Information (unaudited) (continued)
statements of the Adviser and an analysis of the profitability to the Adviser
and its affiliates from each fund over various periods. The 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 information provided and
analyzed, 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 whether 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 are 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; and
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.
In connection with reviewing data bearing upon the costs of services to be
provided and profits to be realized by ICON and its related companies from the
relationship with the Trust, the Board considered the Lipper comparative data,
data concerning ICON's soft-dollar arrangements, costs borne by ICON in
providing advisory services to each Fund and the profitability of ICON in light
of the estimated profitability analyses which had been provided by ICON, other
benefits to ICON from serving as the Funds' adviser, and ICON's financial
statements.
96 Other Information
With respect to the soft-dollar arrangements the Board assessed all facets of
the arrangements including the quality of trade execution. It was noted that
ICON receives research assistance from the use of soft dollars generated from
Fund portfolio transactions and that such research assists ICON in providing
quality investment advisory services to the Funds and other accounts to which it
provides advisory services. The Board concluded that the arrangements are
consistent with Fund brokerage practices and benefit the Funds and their
shareholders.
The Board noted that ICON benefits from serving directly as investment adviser
and administrative agent, and through its affiliate, as the principal
underwriter for the Funds. With respect to the distribution services, the Board
noted that proceeds of the Trust's distribution plans pursuant to Rule 12b-1
under the 1940 Act for the International Funds and Diversified Funds are paid to
ICON's affiliate and that the distributor has not profited from plan proceeds as
all of the proceeds have been or will be used to cover distribution and
marketing expenses. In this regard, the Trustees noted that marketing efforts
have been successful as evidenced by Fund asset levels. With respect to the
administrative fee paid to ICON, the Board reviewed the comparative data related
to those services. The Board also considered the compliance experience in these
service areas and concluded that the services provided by ICON and its
affiliates to the Funds are satisfactory and that the profits derived from
providing the services are competitive and reasonable.
The Board also noted the risks assumed by ICON in providing investment advisory,
distribution and administrative 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 Funds
is made with the recognition that the Funds' advisory relationship with ICON can
be terminated at any time and must be renewed on an annual basis.
In making these determinations the Board of Trustees considered the following:
1. In connection with assessing data bearing upon 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:
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 for the Sector Funds were higher than
fees for similar funds; but that the Sector Funds' expense ratios were
Other Information 97
Other Information (unaudited) (continued)
competitive and in most instances lower than those of similarly managed
Funds;
C. that the Sector Funds had also imposed breakpoints on the contractual
advisory fees and that such fees were reflected in the comparison data;
D. that contractual advisory fees for the ICON Asia-Pacific Region and
Europe Funds were above the average fees for similar funds; however, the
Funds' expense ratios were competitive in light of their size;
E. that the contractual advisory fees for the ICON International Equity
Fund is below the average of similarly managed funds;
F. the contractual advisory fees for the U.S. Diversified Funds were in
line with fees for similar funds; and that, with the exception of the ICON
Bond Fund and ICON Covered Call Fund, the U.S. Diversified Funds' expense
ratios were lower than those of similarly managed Funds.
G. the contractual advisory fee for the ICON Core Equity Fund was below the
average fee for similar funds; and that its expense ratio was lower than
those of similarly managed Funds.
H. that, generally 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; however, to the extent such fees are lower, it is
due to the fact that such accounts are less costly for ICON to manage.
I. 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 solely
from such arm's-length negotiation.
3. In connection the investment performance of the Funds and ICON the Board
discussed and noted:
1. Based on the performance information provided by Lipper, Inc., of the
thirteen ICON Funds that had a track record of at least five years, ten
outperformed their respective peer groups; eight of the sixteen ICON Funds
with a track of at least 3 years outperformed their respective peer groups;
and
2. In comparing the Sector Funds to the ETFs the sector funds compared
favorably over the one, two and three year periods.
The Board considered 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. It was noted that each of the Sector
Funds had imposed investment advisory fee breakpoints in January 2006 to take
into such consideration economies that may be
98 Other Information
realized as the Funds increase in assets. Furthermore, ICON has contractually
agreed to impose expense limitations on the International Equity and the U.S.
Diversified Funds at a cost to ICON.
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, 2006, qualifies
for the corporate dividends received deduction for the following Funds:
<Table>
<Caption>
DIVIDENDS
RECEIVED
FUND DEDUCTION
- -----------------------------------------------------------------------
ICON Energy Fund 47.48%
ICON Financial Fund 30.43
ICON Materials Fund 59.33
ICON Telecommunication & Utilities Fund 34.34
</Table>
For the fiscal year ended September 30, 2006, the following Funds paid qualified
dividend income:
<Table>
<Caption>
FUND AMOUNT
- ------------------------------------------------------------------------
ICON Energy Fund $2,039,804
ICON Financial Fund 1,562,104
ICON Materials Fund 236,508
ICON Telecommunication & Utilities Fund 2,171,894
</Table>
Other Information 99
Other Information (unaudited) (continued)
The Funds designate the following amounts as long-term capital gain
distributions qualifying for the maximum 15% income tax rate for individuals:
<Table>
<Caption>
FUND AMOUNT
- -------------------------------------------------------------------------
ICON Consumer Discretionary Fund $15,892,849
ICON Energy Fund 39,939,678
ICON Financial Fund 18,246,523
ICON Healthcare Fund 25,254,521
ICON Industrials Fund 26,788,242
ICON Leisure and Consumer Staples Fund 9,538,955
ICON Materials Fund 16,103,378
ICON Telecommunication & Utilities Fund 12,150,153
</Table>
100 Other Information
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
101
THIS PAGE INTENTIONALLY LEFT BLANK
(ICON FUNDS LOGO)
<Table>
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, 12(th) Floor
Greenwood Village, CO 80111
On the Internet www.iconadvisers.com
By E-Mail info@iconadvisers.com
</Table>
(ICON LOGO)
1-800-764-0442
www.iconadvisers.com
FANN-SEC(9-06)
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, Jonathan F.
Zeschin, 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 9/30/06
Registrant Covered Entities 1
---------- ------------------
(a) Audit Fees 2 $304,000 N/A
(b) Non-Audit Fees
(c) Tax Fees 3 $18,000 $60,000
(d) Total Non-Audit Fees $18,000 $60,000
Fiscal year ended 9/30/05
Registrant Covered Entities 1
---------- ------------------
(a) Audit Fees 2 $298,250 N/A
(b) Non-Audit Fees
(c) Tax Fees 3 $ 64,300 $34,650
All Other Fees 4 -- $28,400
(d) Total Non-Audit Fees $ 64,300 $63,050
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 2005 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.
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.
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 1, 2006
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 1, 2006
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 1, 2006
* Print the name and title of each signing officer under his or her
signature.