UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER RECEIPT 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)
Andra C. Ozols
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: 09/30
Date of reporting period: 09/30/2003
Item 1 - Reports to Stockholders
INVESTMENT UPDATE
SEPTEMBER 30, 2003
ICON SECTOR AND REGION FUNDS
[PHOTO]
ANNUAL REPORT
[ICON FUNDS LOGOS]
Table of Contents
<Table>
<Caption>
ABOUT THIS REPORT ............................................2
MESSAGE FROM ICON FUNDS ............................................4
MANAGEMENT OVERVIEWS
AND SCHEDULES OF INVESTMENTS ............................................6
Sector Funds
ICON Consumer Discretionary Fund ............................................6
ICON Energy Fund ...........................................10
ICON Financial Fund ...........................................14
ICON Healthcare Fund ...........................................17
ICON Industrials Fund ...........................................21
ICON Information Technology Fund ...........................................25
ICON Leisure and Consumer Staples
Fund ...........................................29
ICON Materials Fund ...........................................32
ICON Telecommunication & Utilities
Fund ...........................................35
ICON Short-Term Fixed Income Fund ...........................................38
Region Funds
ICON Asia-Pacific Region Fund ...........................................41
ICON North Europe Region Fund ...........................................45
ICON South Europe Region Fund ...........................................49
FINANCIAL STATEMENTS ...........................................54
FINANCIAL HIGHLIGHTS ...........................................62
NOTES TO FINANCIAL STATEMENTS ...........................................71
REPORT OF INDEPENDENT AUDITORS ...........................................77
BOARD OF TRUSTEES AND FUND OFFICERS
(UNAUDITED) ...........................................78
OTHER INFORMATION (UNAUDITED) ...........................................80
</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.
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. Due to market volatility,
current performance may differ from the figures shown. Please call
1-800-764-0442 or visit www.iconfunds.com for the most recent returns.
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PORTFOLIO DATA
- --------------------------------------------------------------------------------
Opinions and forecasts regarding industries, companies and 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 percentage holdings as of September 30, 2003 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 investment methodology does
not consider company-specific factors, they may impact a stock's performance,
and therefore, Fund performance.
In April 2003, Standard & Poor's made revisions to its Global Industry
Classification Standard, including changes in industry categories and
definitions. The Schedules of Investments reflect these changes.
There are risks associated with mutual fund investing, including the risk
of loss of principal. An investment in a non-diversified sector or region fund
may involve greater risk and volatility than a diversified fund. Investments in
foreign securities may entail unique risks, including political, market and
currency risks. There are also risks associated with small- and mid-cap
investing, including limited product lines, less liquidity and small market
share.
2
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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 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 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 the indexes.
- - The unmanaged Standard & Poor's (S&P) 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 Standard & Poor's.
- - The unmanaged NASDAQ Composite ("NASDAQ") Index is a broad-based
capitalization-weighted index of all NASDAQ National Market and Small-Cap
stocks.
- - The unmanaged Morgan Stanley Capital International (MSCI) Europe 15 Index
comprises 599 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 Pacific Index comprises stocks traded in the developed
markets of the Pacific Basin (Australia, Hong Kong, Japan, Malaysia, New
Zealand and Singapore). The capitalization-weighted index is structured 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 Bloomberg European 500 Index measures the weighted average
performance in U.S. dollars of the 500 most highly capitalized European
companies.
- - The unmanaged Merrill Lynch 3-Month U.S. Treasury Bill Index comprises a
single issue with a maturity date closest to, but not beyond, three months
from the last day of the previous month. The unmanaged Merrill Lynch
6-Month U.S. Treasury Bill Index consists of a single issue with a maturity
date closest to, but not beyond, six months from the last day of the
previous month. The unmanaged Merrill Lynch 1-Year U.S. Treasury Bill Index
consists of a single issue with the longest maturity. The issues in these
indexes are replaced on a monthly basis to maintain the characteristics of
each respective index.
Index returns and statistical data included in this report are provided by
Bloomberg, FactSet and Lehman Brothers.
3
Message from ICON Funds
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
[PHOTO]
- --------------------------------------------------------------------------------
In looking back over the past 12 months, several statements from previous annual
reports provide an interesting insight into the events that unfolded during the
period.
FEAR, DISGUST AND GREAT BARGAINS
To begin, I recall the ICON annual report for the fiscal year ended September
30, 2002. In our letter to shareholders, we remarked that "the current
environment has all the characteristics of a market bottom -- fear, disgust,
negative news, and great bargains." We went on to say that "we anticipate a
broad-based advance when the market emerges from its current cycle."
Shortly after that was written, on October 9, 2002, the market indeed hit a
bottom, reeling from the emotional stranglehold of impending war and corporate
governance scandals. Amid the uncertainty that permeated the landscape, a
speculative relief rally took hold during the fourth quarter of 2002. While not
the broad advance we were expecting, stocks moved decisively higher though
remained widely disconnected from our estimate of fair value for longer than
we've experienced.
From that October low through September 30, 2003, the S&P 1500 Index, the
Funds' primary domestic benchmark, rallied dramatically, gaining an impressive
31.39%. While this reversal was certainly an accurate call by our system, we
admit that it was neither clairvoyance nor providence on our part. It was simply
the inherent nature of sticking to ICON's valuation discipline.
Having calculated in October 2002 that stocks on average were priced 55%
below fair value, we thought it best to capitalize on that opportunity and be
patient. Although we may have been early, our investment methodology dictated
that we be invested to participate. At the same time, it meant we had to look
past the headlines and at times take the market's punishment. Other investors
chose to wait for the return of clarity and better economic conditions before
leaving the sidelines; by then, however, it may have been too late.
A MOVE TOWARD FAIR VALUE
Following the pre-war jitters that sent the market to yet another low on March
11, 2003, stocks embarked upon a broad six-month rally. However, even in the
context of this all-encompassing advance, some sectors were more eager than
others. Favored groups, such as Information Technology, Consumer Discretionary,
Financials, and Industrials, led the market's ascent. In the natural ebb and
flow of business cycles, these moves would be historically consistent with the
start of an economic expansion. Yet, if asked whether they were based on the
expectation of a recovery or some other triggering event, we would say no.
We believe the recent surge in stock prices is nothing more than a move
toward fair value. Put another way, we view it as an acknowledgement by many
investors that the macro setting was not as discouraging as they initially
thought. Stocks were simply oversold, and investors came to realize they were
wrong for taking them to extreme lows.
[SIDENOTE]
"With stocks priced 55% below fair value based on our model, we thought it best
to capitalize on that opportunity and be patient."
[SIDENOTE]
"Stocks were simply oversold, and investors came to realize they were wrong for
taking them to extreme lows."
4
While economic conditions have certainly improved in the past year, we do
not believe that a strong recovery or boom is necessary to prolong the rally.
Our experience tells us it is simply the natural behavior of a rational market.
There have been few newsworthy events that have boosted the market since the
March 2003 bottom. We do not expect that any are needed for the move toward fair
value to continue.
RIDING THE THEME
As prices resume the march toward fair value, and investors' skepticism gives
way to optimism, we may in fact see the return of a momentum mentality. Were
this to occur, it would not surprise us to see stocks exceed fair value by the
end of the calendar year. At present, however, we believe the market has not
gotten ahead of itself and the broad representation of sector and industry
leadership makes sense to our system. In the meantime, we expect prices will
gradually continue their move toward fair value despite the prognostications of
naysayers and the traditional "wall of worry" that resides on Wall Street.
Recently, the mutual fund industry has been tarnished by the actions of
some brokers and personnel at advisory firms. We find these reports deeply
troubling and want you to know ICON's position on the issues facing mutual
funds:
- - we do not and have not had agreements that permit the illegal practice of
buying Fund shares after the market close
- we are not aware of any ICON personnel who have participated in timing
the Funds
- we do not knowingly permit excessive trading in the ICON Funds, and we
take aggressive steps to restrict market timing. Only time will tell how the
industry will overcome these scandals.
You hire us to implement a strict management discipline, and our service staff
is equally committed to implementing a rigid system of monitoring the Funds for
any sign of activity that would negatively impact shareholders.
I'd like to close with a story that characterizes our investment
methodology. While making a presentation at an investor seminar some years ago,
an attendee commented that the ICON approach to investing seemed much like
piloting a plane. When I asked what he meant by that, he observed that take-offs
and landings are critical, and in between it is fairly routine. In our system,
capturing industry leadership is critical and in between those rotations, we
ride the theme. As of this writing, we consider ourselves to be at cruising
altitude.
We witnessed an unusual market during the past 12 months. Thank you for
giving ICON the opportunity to help guide you through it.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, D.B.A.
Chairman of the Board of Trustees and Chief Investment Officer of the Adviser
[SIDENOTE]
"We do not expect that newsworthy events are needed for the move toward fair
value to continue."
5
Management Overview
ICON CONSUMER DISCRETIONARY FUND
A discussion with Robert Straus, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Consumer Discretionary Fund appreciated 16.50% for the one-year period
ended September 30, 2003. This compares to a 23.46% return for its
sector-specific benchmark, the S&P 1500 Consumer Discretionary Index and a
24.69% return for its broad benchmark, the S&P 1500 Index.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
Ongoing concerns about the state of the economy weighed heavily on consumer
confidence, even as corporate earnings and gross domestic product continued to
trend higher. While stocks sold off sharply in the months preceding the Iraq
war, they abruptly reversed course in mid-March 2003 just prior to the onset of
military action. With the overhang of war removed, and an acknowledgement of
economic recovery mounting, stocks rallied strongly despite widespread
skepticism surrounding the veracity of the new bull market.
This skepticism was fueled by mixed economic reports, most notably rising
unemployment and deflation risks. Nevertheless, as the rally emerged from the
lows of March 11 and proceeded to gain steam, many investors remained uncertain
in the face of a "jobless" recovery.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Although the Fund produced a positive absolute return during the period, it fell
short of its benchmark. The Fund's relative underperformance from the beginning
of the fiscal year until March 31, 2003 was attributable to two primary factors.
First, there was an absence of clear, sustainable industry leadership within the
sector during the first half of the fiscal year, and our system is based on
attempting to capture leadership. Second, while a handful of industries within
the sector logged positive returns from the market low on October 9, 2002
through the end of March 2003, nearly twice as many suffered setbacks. In this
environment, the Fund posted a six-month return of -12.35% for the period ended
March 31, 2003 compared to a gain of 0.04% in the S&P 1500 Consumer
Discretionary Index.
Following the March 11 low, clear industry leadership emerged, providing a
more favorable setting for our system. By the end of the fiscal year, 22 of the
23 industries in the Consumer Discretionary sector had advanced. While
leadership was broad, the Fund was tilted toward several standouts, including
catalog retailers, consumer electronics, homebuilders, computer & electronics
retailers, auto manufacturers, and specialty store retailers.
The most significant industry adjustment during the fiscal year was a
gradual increase in specialty stores from 7.2% of the Fund at the beginning of
the period to 24.7% at period-end. Although a concentrated position in one
industry, we believed the value and relative strength across this relatively
large group (44 of the 207 stocks in the Consumer Discretionary sector are
specialty store retailers) warranted the larger weighting.
Among the Fund's top individual contributors, recreational vehicle
manufacturer Thor Industries Inc. gained 55.60% during the fiscal year. As our
most heavily weighted holding in the automobile manufacturers industry, the
stock featured strong value, relative strength and management quality ratings.
Tractor Supply Co., a retailer of farm supplies, gained 106.5% on strong sales
growth, consistent double-digit return on equity, and increasing inventory
turnover.
Consumer electronics retailer Best Buy Co. Inc. gained 113.0%, having
reported its fifth consecutive quarter of 20% or greater return on equity.
Moreover, the company maintains a strong balance sheet with twice as much cash
as long-term debt.
In contrast, household appliance manufacturer Maytag Corp. declined 16% in
one day when the company warned in early March of sluggish sales and a higher-
than-expected profit shortfall. Meanwhile, J. Jill Group Inc., the women's
apparel catalog retailer, fell sharply in mid-July on an analyst downgrade, as
did "tween" girls apparel retailer Too Inc., which tumbled in early December on
lowered earnings-per-share estimates. At the end of the period, the Fund did not
own Maytag and Too, Inc.
WHAT IS THE INVESTMENT OUTLOOK FOR THE CONSUMER DISCRETIONARY SECTOR?
As investors grow more confident and acknowledge the underlying strength of the
U.S. economy, we believe economically sensitive sectors and industries may
continue to command attention. Consumer Discretionary issues have been among the
leaders since the most recent market low in early March 2003. With corporate
earnings on the rise and cost-cutting efforts already in place, these
undervalued, cyclically oriented stocks appear poised to continue their march
higher.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 97.6%
Top 10 Equity Holdings 27.8%
Number of Stocks 58
Cash Equivalents 2.5%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Thor Industries, Inc. 4.0%
Best Buy Co., Inc. 3.3%
Michaels Stores, Inc. 3.1%
Winnebago Industries, Inc. 2.6%
Dollar Tree Stores, Inc. 2.6%
Barnes & Noble, Inc. 2.6%
Dollar General Corporation 2.5%
Electronics Boutique Holdings Corp. 2.4%
Harman International Industries, Incorporated 2.4%
Family Dollar Stores, Inc. 2.3%
Percentages are based upon net assets.
6
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Specialty Stores 24.7%
Apparel Retail 13.0%
Automobile Manufacturers 12.2%
General Merchandise Stores 11.4%
Homebuilding 8.7%
Department Stores 6.3%
Computer & Electronics Retail 5.7%
Home Furnishings 3.2%
Consumer Electronics 2.4%
Auto Parts & Equipment 1.7%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 7/9/97
- --------------------------------------------------------------------------------
ICON Consumer Discretionary
Fund 16.50% 8.93% 3.07%
- --------------------------------------------------------------------------------
S&P 1500 Consumer
Discretionary Index 23.46% 3.01% 5.13%
- --------------------------------------------------------------------------------
S&P 1500 Index 24.69% 2.01% 3.57%
- --------------------------------------------------------------------------------
</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 performances results and the comparative indexes can be found on
pages 2 and 3.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON CONSUMER DISCRETIONARY FUND S&P 1500 CONSUMER DISCRETIONARY INDEX S&P 1500 INDEX
-------------------------------- ------------------------------------- --------------
7/9/97 10000 10000 10000
9/30/97 10970 10892 10597
9/30/98 7870 11778 11262
9/30/99 9899 15612 14339
9/30/00 9449 15341 16548
9/30/01 9172 12045 12290
9/30/02 10360 11065 9976
9/30/03 12069 13661 12439
</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.
7
Schedule of Investments
September 30, 2003
ICON CONSUMER DISCRETIONARY FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 97.6%
CONSUMER DISCRETIONARY 96.5%
ADVERTISING 1.1%
23,000 Omnicom Group Inc. $ 1,652,550
APPAREL, ACCESSORIES & LUXURY
GOODS 1.2%
71,100 Fossil, Inc.(a) 1,727,730
APPAREL RETAIL 13.0%
47,900 Abercrombie & Fitch Co.(a) 1,327,309
65,400 Aeropostale, Inc.(a) 1,769,070
73,400 Chico's FAS, Inc.(a) 2,248,976
109,500 Christopher & Banks
Corporation 2,612,670
86,100 The Gap, Inc. 1,474,032
50,500 Jos. A. Bank Clothiers,
Inc.(a) 2,220,485
92,100 Limited Brands 1,388,868
134,925 Pacific Sunwear of
California, Inc.(a) 2,787,551
47,200 Ross Stores, Inc. 2,189,608
74,000 The TJX Companies, Inc. 1,437,080
- -----------------------------------------------------
19,455,649
AUTO PARTS & EQUIPMENT 1.7%
37,400 BorgWarner, Inc. 2,537,590
AUTOMOBILE MANUFACTURERS 12.2%
238,800 Ford Motor Company 2,571,876
60,200 General Motors Corporation 2,463,986
201,500 Monaco Coach
Corporation(a) 3,334,825
111,800 Thor Industries, Inc. 6,039,436
88,800 Winnebago Industries, Inc. 3,958,704
- -----------------------------------------------------
18,368,827
CATALOG RETAIL 1.6%
212,700 J. Jill Group Inc.(a) 2,446,050
COMPUTER & ELECTRONICS RETAIL 5.7%
103,900 Best Buy Co., Inc.(a) 4,937,328
128,500 Electronics Boutique
Holdings Corp.(a) 3,671,245
- -----------------------------------------------------
8,608,573
CONSUMER ELECTRONICS 2.4%
37,000 Harman International
Industries, Incorporated 3,638,950
DEPARTMENT STORES 6.3%
79,300 Federated Department
Stores, Inc. 3,322,670
76,600 The Neiman Marcus Group,
Inc.(a) 3,194,220
67,200 Sears, Roebuck and Co. 2,938,656
- -----------------------------------------------------
9,455,546
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
GENERAL MERCHANDISE STORES 11.4%
106,100 99 Cents Only Stores(a) $ 3,431,274
187,900 Dollar General Corporation 3,758,000
116,600 Dollar Tree Stores,
Inc.(a) 3,911,930
88,100 Family Dollar Stores, Inc. 3,514,309
88,000 Tuesday Morning
Corporation(a) 2,450,800
- -----------------------------------------------------
17,066,313
HOMEBUILDING 8.7%
34,100 Centex Corporation 2,655,708
65,800 D.R. Horton, Inc. 2,151,660
39,800 Hovnanian Enterprises,
Inc.(a) 2,561,926
38,100 Meritage Corporation(a) 1,800,225
24,900 Pulte Homes, Inc. 1,693,449
29,300 The Ryland Group, Inc. 2,142,123
- -----------------------------------------------------
13,005,091
HOME FURNISHINGS 3.2%
30,300 Ethan Allen Interiors Inc. 1,090,800
61,100 Furniture Brands
International, Inc.(a) 1,472,510
31,100 Mohawk Industries, Inc.(a) 2,218,052
- -----------------------------------------------------
4,781,362
HOME IMPROVEMENT RETAIL 0.7%
21,300 Lowe's Companies, Inc. 1,105,470
HOUSEHOLD APPLIANCES 1.2%
27,600 Whirlpool Corporation 1,870,452
INTERNET RETAIL 1.4%
39,300 eBay Inc.(a) 2,102,550
SPECIALTY STORES 24.7%
60,000 A.C. Moore Arts & Crafts,
Inc.(a) 1,336,800
28,500 AutoZone, Inc.(a) 2,551,605
153,000 Barnes & Noble, Inc.(a) 3,887,730
42,200 Bed Bath & Beyond Inc.(a) 1,612,462
55,600 Carmax, Inc.(a) 1,815,896
37,700 Dick's Sporting Goods,
Inc.(a) 1,407,718
48,500 Linens 'n Things, Inc.(a) 1,153,330
114,800 Michaels Stores, Inc. 4,679,248
150,000 PETsMART, Inc. 3,414,000
90,900 The Sports Authority,
Inc.(a) 2,859,714
85,100 Staples, Inc.(a) 2,023,678
101,600 Tractor Supply Company(a) 3,333,496
105,000 United Auto Group, Inc.(a) 2,415,000
98,000 West Marine, Inc.(a) 1,866,900
59,500 Zale Corporation(a) 2,642,395
- -----------------------------------------------------
36,999,972
- -----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 144,822,675
</Table>
8
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
INDUSTRIALS 1.1%
DIVERSIFIED COMMERCIAL SERVICES 1.1%
61,000 School Specialty, Inc.(a) $ 1,720,810
- -----------------------------------------------------
TOTAL INDUSTRIALS 1,720,810
- -----------------------------------------------------
TOTAL COMMON STOCKS (COST $118,340,983) 146,543,485
SHORT-TERM INVESTMENTS 2.5%
U.S. GOVERNMENT AGENCIES 1.1%
$1,594,000 FHLB Discount Note,
0.850%, 10-1-03 $ 1,594,000
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 1,594,000
VARIABLE RATE DEMAND NOTE 1.4%
2,079,965 American Family Demand
Note, 0.741%(#) 2,079,965
- -----------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 2,079,965
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $3,673,965) 3,673,965
- -----------------------------------------------------
TOTAL INVESTMENTS 100.1%
(COST $122,014,948) 150,217,450
- -----------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.1%) (152,727)
- -----------------------------------------------------
NET ASSETS 100.0% $150,064,723
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes 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, 2003.
9
Management Overview
ICON ENERGY FUND
A discussion with J.C. Waller III, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Energy Fund gained 15.71% for the fiscal year ended September 30, 2003,
narrowly underperforming the 16.28% gain of its sector-specific benchmark, the
S&P 1500 Energy Index and trailing the 24.69% advance of its broad benchmark,
the S&P 1500 Index.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
Global conditions proved especially challenging during the period, as the Energy
sector was riddled with turbulence. Oil exports from war-torn Iraq and strike-
hobbled Venezuela dwindled. Unseasonably cold winter weather pressured falling
inventories. Production cuts led to summertime gasoline shortages. However, even
as prices surged, it seems to have had little effect on investor confidence.
Forward earnings estimates were lowered, and the group lagged the move back
toward fair value, as investors favored more economically sensitive sectors.
Within the group, industry leadership over the one-year period remained
relatively consistent. The top-performing industry based on S&P 1500 Energy
Index returns was oil & gas refining & marketing & transportation, which assumed
and retained its leadership role off the market low of October 9, 2002. Since
few constituent companies make up this industry, we tended to hold a mid-level
weighting in the Fund, having increased it significantly as the industry
demonstrated improving relative strength. Oil & gas equipment & services, also a
mid-level weighting, was the second best performing industry, despite sliding
over the latter part of the reporting period. WHAT FACTORS CONTRIBUTED TO THE
FUND'S PERFORMANCE? Our measurements of valuation and relative strength led us
to make several industry rotations during the period. The most notable of these
moves involved the shifting of assets into the integrated oil & gas industry
while significantly reducing the Fund's exposure to the oil & gas drilling
industry.
The increase in the integrated oil & gas weighting benefited from the
addition of energy-related American Depository Receipts (ADRs), or
dollar-denominated foreign securities, which outperformed both the S&P 1500
Energy Index and the S&P 1500 Integrated Oil & Gas Index. While neither a
component nor a reflection of strength within the industry-specific index, these
holdings were identified as favorable by our system, thereby warranting their
inclusion.
Meanwhile, the reduction in oil & gas drilling securities that first
occurred between December 2002 and January 2003, continued into July 2003.
Despite sporadic spurts during the fiscal year, overall deterioration in
relative strength caused the industry to finish at the bottom of the sector.
In other moves, several Industrials sector stocks whose businesses are tied
to the Energy sector were added during the latter part of the reporting period.
Although in aggregate these holdings comprised a small percentage of the Fund's
overall weighting, they rapidly pursued their calculated intrinsic value.
Furthermore, the Fund accumulated a sizable cash position during the summer
months as the Energy sector lagged the extended market advance.
Among the stocks that had a measurable impact on Fund performance during
the period, Patina Oil & Gas Corp. reported strong results as acquisitions
boosted average daily production and earnings per share. The same was true about
Petroleo Brasileiro S.A., Brazil's national oil company, whose rising revenues
reflected higher prices and production volumes. Ultra Petroleum Corp. also
gained, demonstrating similar characteristics, while announcing operational
successes in Wyoming and China.
Detractors included carrier Knightsbridge Tankers Ltd., which tumbled when
a large customer chose not to renew its charters. Meanwhile, Veritas DGC Inc.
plummeted when it warned that contract delays would result in surprise losses
for the provider of integrated geophysical services. The Fund did not own either
of these stocks at the end of the period.
WHAT IS THE INVESTMENT OUTLOOK FOR THE ENERGY SECTOR?
Although valuations within the Energy sector are attractive, investors have
instead focused on more cyclical sectors. Once this value is recognized and the
sector takes its turn in the spotlight, our quantitative model indicates that
the oil & gas equipment & services and the integrated oil & gas industries may
be among the leaders.
However, if earnings contract going forward, as has been forecast,
valuations and stock prices could suffer. Based on current valuations, the
Energy sector appears to be on sale but investors have been reluctant to
acknowledge the bargains. We believe it simply is not yet their time.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 88.0%
Top 10 Equity Holdings 30.4%
Number of Stocks 48
Cash Equivalents 11.7%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Patina Oil & Gas Corporation 5.1%
Repsol YPF, S.A. 3.5%
Overseas Shipholding Group, Inc. 3.3%
Petroleo Brasileiro S.A. 3.3%
Cimarex Energy Co. 2.7%
Ashland Inc. 2.6%
Pogo Producing Company 2.5%
PetroKazakhstan Inc. 2.5%
TETRA Technologies, Inc. 2.5%
Newfield Exploration Company 2.4%
Percentages are based upon net assets.
10
- --------------------------------------------------------------------------------
TOP INDUSTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Oil & Gas Exploration & Production 28.9%
Integrated Oil & Gas 20.1%
Oil & Gas Equipment & Services 17.5%
Oil & Gas Refining & Marketing & Transportation 13.4%
Construction & Engineering 3.3%
Oil & Gas Drilling 2.7%
Industrial Machinery 2.1%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 11/5/97
- --------------------------------------------------------------------------------
ICON Energy Fund 15.71% 19.03% 7.32%
- --------------------------------------------------------------------------------
S&P 1500 Energy Index 16.28% 4.35% 1.69%
- --------------------------------------------------------------------------------
S&P 1500 Index 24.69% 2.01% 2.84%
- --------------------------------------------------------------------------------
</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.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON ENERGY FUND S&P 1500 ENERGY INDEX S&P 1500 INDEX
---------------- --------------------- --------------
11/5/97 10000 10000 10000
9/30/98 6350 8920 10680
9/30/99 8082 10579 13597
9/30/00 13359 12516 15692
9/30/01 12486 10566 11654
9/30/02 13115 9493 9460
9/30/03 15176 11038 11796
</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.
11
Schedule of Investments
ICON ENERGY FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 88.0%
ENERGY 82.6%
INTEGRATED OIL & GAS 20.1%
23,300 China Petroleum and
Chemical Corporation -- ADR $ 637,954
15,800 ConocoPhillips 865,050
34,400 Marathon Oil Corporation 980,400
15,700 Murphy Oil Corporation 922,375
24,200 Occidental Petroleum
Corporation 852,566
13,600 Petro-Canada(f) 528,904
36,500 PetroChina Company
Limited -- ADR 1,224,575
66,300 PetroKazakhstan Inc.(a)(f) 1,385,670
80,100 Petroleo Brasileiro
S.A. -- ADR 1,836,693
118,900 Repsol YPF, S.A. -- ADR 1,958,283
- -----------------------------------------------------
11,192,470
OIL & GAS DRILLING 2.7%
19,100 Helmerich & Payne, Inc. 499,274
15,600 Noble Corporation(a)(f) 530,244
25,100 Unit Corporation(a) 472,884
- -----------------------------------------------------
1,502,402
OIL & GAS EQUIPMENT & SERVICES 17.5%
13,300 BJ Services Company(a) 454,461
81,600 Core Laboratories N.V.(a)(f) 1,146,480
54,400 FMC Technologies, Inc.(a) 1,165,248
37,500 National-Oilwell, Inc.(a) 680,250
29,200 Oceaneering International,
Inc.(a) 686,784
35,100 Offshore Logistics, Inc.(a) 712,530
16,600 Schlumberger Limited(f) 803,440
21,200 SEACOR SMIT Inc.(a) 766,804
66,300 TETRA Technologies, Inc.(a) 1,367,106
26,800 Tidewater Inc. 758,440
69,000 Varco International,
Inc.(a) 1,166,790
- -----------------------------------------------------
9,708,333
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
OIL & GAS EXPLORATION & PRODUCTION 28.9%
11,700 Anadarko Petroleum
Corporation $ 488,592
112,800 Chesapeake Energy
Corporation 1,215,984
76,414 Cimarex Energy Co.(a) 1,497,715
58,900 Comstock Resources, Inc.(a) 786,904
301 Cross Timbers Royalty Trust 6,321
40,500 Denbury Resources Inc.(a) 500,580
46,800 Evergreen Resources,
Inc.(a) 1,263,600
33,900 Newfield Exploration
Company(a) 1,307,523
21,200 Noble Energy, Inc. 811,960
77,718 Patina Oil & Gas
Corporation 2,816,500
30,800 Pogo Producing Company 1,394,624
42,700 Prima Energy Corporation(a) 1,086,715
42,300 Remington Oil & Gas
Corporation(a) 767,745
93,300 Ultra Petroleum Corp.(a)(f) 1,301,535
40,700 XTO Energy, Inc. 854,293
- -----------------------------------------------------
16,100,591
OIL & GAS REFINING & MARKETING &
TRANSPORTATION 13.4%
43,800 Ashland Inc. 1,438,830
66,500 Frontier Oil Corporation 977,550
71,200 Overseas Shipholding Group,
Inc. 1,840,520
30,400 Sunoco, Inc. 1,222,688
27,300 Teekay Shipping
Corporation(f) 1,154,790
21,300 Valero Energy Corporation 815,151
- -----------------------------------------------------
7,449,529
- -----------------------------------------------------
TOTAL ENERGY 45,953,325
INDUSTRIALS 5.4%
CONSTRUCTION & ENGINEERING 3.3%
31,800 Chicago Bridge & Iron
Company N.V. -- ADR 863,688
51,100 URS Corporation(a) 991,340
- -----------------------------------------------------
1,855,028
INDUSTRIAL MACHINERY 2.1%
55,900 Flowserve Corporation(a) 1,134,770
- -----------------------------------------------------
TOTAL INDUSTRIALS 2,989,798
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $40,561,630) 48,943,123
SHORT-TERM INVESTMENTS 11.7%
U.S. GOVERNMENT AGENCIES 7.8%
$4,345,000 FHLB Discount Note,
0.850%, 10-1-03 4,345,000
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 4,345,000
</Table>
12
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
VARIABLE RATE DEMAND NOTE 3.9%
$2,145,927 American Family Demand
Note, 0.741%(#) $ 2,145,927
- -----------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 2,145,927
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $6,490,927) 6,490,927
- -----------------------------------------------------
TOTAL INVESTMENTS 99.7%
(COST $47,052,557) 55,434,050
- -----------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.3% 194,981
- -----------------------------------------------------
NET ASSETS 100.0% $55,629,031
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
f Foreign security
13
Management Overview
ICON FINANCIAL FUND
A discussion with Derek Rollingson, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Financial Fund appreciated 22.35% for the one-year period ended
September 30, 2003. This compares to a 25.64% gain for its narrow benchmark, the
S&P 1500 Financials Index, and a 24.69% return for its broad-based benchmark,
the S&P 1500 Index.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
A difficult first half followed by a more favorable second half characterized
the investment environment during the fiscal year. In a broad sense, the
detachment of stock prices from financial fundamentals led to a perception of
economic stagnation. This was hardly the case as both corporate earnings and
gross domestic product demonstrated incremental improvements. Nevertheless,
war-related fear and pessimism continued to dominate the market, pushing
valuations to depressed levels. A bottom was reached in mid-March 2003 amid
anticipation of an economic recovery. As the overhang of war subsided, a broad
and sustained rally ensued, driven by sentiment that the worst was finally
behind us. Within the Financials sector, a number of industry-specific pressures
exacerbated the sense of uncertainty. Exposure to corporate bankruptcies, credit
quality concerns, stricter loan-loss guidelines, and increased regulatory
scrutiny all weighed heavily on the sector. In contrast, low interest rates
continued to provide a boost, as mortgage refinance activity remained strong. A
change in the S&P Global Industry Classification Standard resulted in the
restructuring of the diversified financial services and banks industries. These
changes were welcomed by Fund management and enable us to value industries with
greater precision.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Although the Fund was positioned at the outset of the period for a fundamentally
driven, quality-led advance, the rally that emerged in October 2002 featured
lower-quality, high-debt companies that did not meet our investment criteria.
Consequently, the Fund failed to participate in this brief surge, but instead
turned a corner when a higher-quality rebound materialized in mid-March 2003.
While recouping earlier losses and producing a favorable absolute return,
the Fund continued to lag its benchmarks. A sizable early-period weighting in
the slumping consumer finance industry also detracted from performance. However,
in demonstrating both value and relative strength, an increased industry
weighting in consumer finance enabled the Fund to more fully capture its
impressive second-half turnaround.
In light of the sustained second-half rally, the Fund was increasingly
tilted toward industries that possessed attractive value-to-price and relative
strength characteristics following the mid-March market low. Based on these
measures, the consumer finance industry was increased 22.4% at period-end, while
the asset management & custody banks industry rose to 9.5% of the Fund. Lack of
leadership led us to pull back the Fund's weighting in the regional banks
industry and thrifts & mortgage finance.
As for the Fund's measurable contributors to performance, consumer lender
Providian Financial Corp. advanced as the company took meaningful steps to lower
credit losses and enhance profitability. Pawn shop operator Cash America
International Inc. also traded higher as rising loan demand resulted in higher
fee and service charge income. Meanwhile, financial services giant Citigroup
Inc. benefited from ongoing strength in its global consumer business coupled
with signs of a rebound in corporate banking.
In contrast, mortgage lender NovaStar Financial Inc. fell amid concerns
that rising interest rates would curb refinancing activity. World Acceptance
Corp., a firm specializing in small loan consumer finance, also retreated when
the company reported an increase in delinquencies. Elsewhere, Dutch insurer ING
Groep slid as Wall Street analysts warned of weaker U.S. margins and lower
profitability. However, these stocks did not meet the Fund's sell discipline and
we continued to own them at period-end.
WHAT IS THE INVESTMENT OUTLOOK FOR THE FINANCIAL SECTOR?
Although current valuations seem to support further upside potential in the
sector, we are keeping a close eye on the asset management & custody banks and
investment banking & brokerage industries, both of which appear to be
approaching fair value. Nevertheless, we have positioned the Fund to continue to
participate in any extended rally by focusing on those industries that continue
to model attractive valuation and relative strength metrics.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 99.5%
Top 10 Equity Holdings 35.9%
Number of Stocks 36
Cash Equivalents 0.4%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
A.G. Edwards, Inc. 4.1%
Citigroup Inc. 4.0%
J.P. Morgan Chase & Co. 4.0%
AmeriCredit Corp. 3.7%
Morgan Stanley 3.6%
Providian Financial Corporation 3.5%
FleetBoston Financial Corporation 3.4%
Mellon Financial Corporation 3.3%
Investors Financial Services Corp. 3.2%
GATX Corporation 3.1%
Percentages are based upon net assets.
14
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Consumer Finance 22.4%
Investment Banking & Brokerage 10.6%
Life & Health Insurance 10.2%
Asset Management & Custody Banks 9.5%
Regional Banks 7.6%
Other Diversified Financial Services 6.6%
Specialized Finance 6.0%
Diversified Banks 5.8%
Property & Casualty Insurance 5.6%
Diversified Capital Markets 4.0%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 7/1/97
- --------------------------------------------------------------------------------
ICON Financial Fund 22.35% 12.42% 8.76%
- --------------------------------------------------------------------------------
S&P 1500 Financials
Index 25.64% 8.03% 7.91%
- --------------------------------------------------------------------------------
S&P 1500 Index 24.69% 2.01% 3.86%
- --------------------------------------------------------------------------------
</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.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON FINANCIAL FUND S&P 1500 FINANCIALS INDEX S&P 1500 INDEX
------------------- ------------------------- --------------
7/1/97 10000 10000 10000
9/30/97 10510 11141 10796
9/30/98 9411 10941 11474
9/30/99 10357 12642 14608
9/30/00 14307 16727 16858
9/30/01 15676 14787 12521
9/30/02 13813 12812 10164
9/30/03 16900 16097 12673
</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.
15
Schedule of Investments
ICON FINANCIAL FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 99.5%
FINANCIAL 99.5%
ASSET MANAGEMENT & CUSTODY BANKS 9.5%
141,300 The Bank of New York
Company, Inc. $ 4,113,243
141,300 Investors Financial Services
Corp. 4,456,602
153,500 Mellon Financial Corporation 4,626,490
- -----------------------------------------------------
13,196,335
CONSUMER FINANCE 22.4%
502,700 AmeriCredit Corp.(a) 5,177,810
64,900 Capital One Financial
Corporation 3,701,896
164,600 Cash America International,
Inc. 2,699,440
178,900 CompuCredit Corporation(a) 3,130,750
194,300 First Cash Financial
Services, Inc.(a) 3,891,829
183,100 MBNA Corporation 4,174,680
413,400 Providian Financial
Corporation(a) 4,873,986
261,500 World Acceptance
Corporation(a) 3,543,325
- -----------------------------------------------------
31,193,716
DIVERSIFIED BANKS 5.8%
157,000 FleetBoston Financial
Corporation 4,733,550
79,600 Wachovia Corporation 3,278,724
- -----------------------------------------------------
8,012,274
DIVERSIFIED CAPITAL MARKETS 4.0%
160,500 J.P. Morgan Chase & Co. 5,509,965
INVESTMENT BANKING & BROKERAGE 10.6%
147,100 A.G. Edwards, Inc. 5,650,111
214,100 Investment Technology Group,
Inc.(a) 4,106,438
99,000 Morgan Stanley 4,995,540
- -----------------------------------------------------
14,752,089
LIFE & HEALTH INSURANCE 10.2%
73,400 Delphi Financial Group, Inc. 3,414,568
101,900 Lincoln National Corporation 3,605,222
281,800 UICI(a) 3,533,772
250,000 UnumProvident Corporation 3,692,500
- -----------------------------------------------------
14,246,062
MULTI-LINE INSURANCE 2.5%
145,500 Allmerica Financial
Corporation(a) 3,464,355
OTHER DIVERSIFIED FINANCIAL
SERVICES 6.6%
122,400 Citigroup Inc. 5,570,424
198,000 ING Groep N.V. -- ADR 3,663,000
- -----------------------------------------------------
9,233,424
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
PROPERTY & CASUALTY INSURANCE 5.6%
58,200 Ambac Financial Group, Inc. $ 3,724,800
75,000 MBIA Inc. 4,122,750
- -----------------------------------------------------
7,847,550
REAL ESTATE INVESTMENT TRUSTS 1.9%
45,200 Novastar Financial, Inc. 2,597,644
REGIONAL BANKS 7.6%
166,000 The Colonial BancGroup, Inc. 2,397,040
111,400 FirstMerit Corporation 2,756,036
92,600 UCBH Holdings, Inc. 2,798,372
46,300 Zions Bancorporation 2,592,337
- -----------------------------------------------------
10,543,785
REINSURANCE 3.0%
55,600 Everest Re Group. Ltd.(f) 4,178,896
SPECIALIZED FINANCE 6.0%
143,300 CIT Group Inc. 4,121,308
201,200 GATX Corporation 4,255,380
- -----------------------------------------------------
8,376,688
THRIFTS & MORTGAGE FINANCE 3.8%
81,500 The PMI Group, Inc. 2,750,625
61,300 Radian Group Inc. 2,721,720
- -----------------------------------------------------
5,472,345
- -----------------------------------------------------
TOTAL FINANCIAL 138,625,128
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $124,254,414) 138,625,128
SHORT-TERM INVESTMENT 0.4%
VARIABLE RATE DEMAND NOTE
$501,296 American Family Demand Note,
0.741%# 501,296
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $501,296) 501,296
- -----------------------------------------------------
TOTAL INVESTMENTS 99.9%
(COST $124,755,710) 139,126,424
- -----------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.1% 134,700
- -----------------------------------------------------
NET ASSETS 100.0% $139,261,124
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
f Foreign security
16
Management Overview
ICON HEALTHCARE FUND
A discussion with J.C. Waller III, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Healthcare Fund appreciated 18.65% for the fiscal year ended September
30, 2003. The Fund outpaced its narrowly focused benchmark, the S&P 1500
Healthcare Index, which returned 13.03% over the same time period, but fell
short of the 24.69% return for its broad-based benchmark, the S&P 1500 Index.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
The ICON Healthcare Fund navigated a host of industry-specific trends during the
period, ranging from increased regulatory scrutiny to slowing pharmaceutical
sales. On a larger scale, the healthcare group lagged a broad second-half move
toward fair value as investors favored more economically sensitive sectors.
While the Information Technology, Consumer Discretionary and Industrials sectors
led this advance, Healthcare, considered somewhat insulated from the broader
macroeconomic environment, finished the reporting period near the bottom.
Against this backdrop, biotechnology and pharmaceuticals were the leading
industries early in the fiscal year, as managed healthcare and healthcare
facilities weakened considerably and were removed from the Fund. While
biotechnology remained the clear leader throughout the entire period,
pharmaceuticals wavered in strength over the second half amid weakness in
ultra-large-cap drug stocks. Subsequently, managed healthcare and healthcare
facilities reappeared during this time as increases in relative strength
complemented their already attractive valuations. The healthcare supplies
industry, composed primarily of smaller-cap issues, proved to be a consistent
performer during the reporting period. Smaller names, including those within the
pharmaceuticals industry, tended to outperform the broader market during the
period. In contrast, healthcare distributors & services encountered
difficulties, attributed to concerns over operational practices, and its
weighting was scaled back. As part of an S&P industry reclassification,
healthcare distributors & services was separated into healthcare distributors
and healthcare services on April 1, 2003.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
The Fund benefited from positions in biotechnology and pharmaceuticals, which
were among the largest industry weightings for most of the reporting period. As
biotechnology experienced a broad move higher throughout the fiscal year,
several of the Fund's larger-cap holdings became richly valued and were trimmed
on a consistent basis. While proceeds were allocated to industries reporting
strong earnings growth, such as managed healthcare and healthcare facilities,
small- and mid-cap biotechnology companies continued to be priced below fair
value. Even among large-cap pharmaceuticals, relatively smaller issues
outperformed. Industry giants, on the other hand, came under increasing pressure
and were eliminated from the Fund.
Specific stocks that bolstered Fund performance included biopharmaceutical
firm Genzyme Corp., which continued to execute on its profitable
drug-development business model targeting rare genetic disorders. Meanwhile, a
newly streamlined FDA approval process benefited generic drugmaker Mylan
Laboratories Inc., as did the launch of several new treatments. Barr
Laboratories Inc. also advanced, as its expertise in patent challenges and
hard-to-copy pharmaceuticals boosted its robust generic pipeline to more than 30
drugs.
In contrast, measurable detractors included specialized drug distributor
Accredo Health Inc., which plunged nearly 45% in one day when it lowered its
2003 full-year outlook. Elsewhere, Impath Inc., a supplier of cancer data and
analyses, sold off sharply when the company initiated an internal probe into
possible accounting irregularities. We subsequently sold both of these stocks
when our model indicated other companies showing relative strength.
WHAT IS THE INVESTMENT OUTLOOK FOR THE HEALTHCARE SECTOR?
Value is widespread in the Healthcare sector but our valuation model indicates
it is far from being fully recognized by investors. Although the constituent
industries appear to be advancing as a group, some are further along in their
move toward fair value. Judging from our fair value methodology, it is highly
conceivable that the healthcare sector could participate in a market advance --
not necessarily as a leader or laggard of the broader market, but as a
participant nonetheless.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 96.4%
Top 10 Equity Holdings 24.2%
Number of Stocks 67
Cash Equivalents 3.6%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Barr Laboratories, Inc. 3.1%
Mylan Laboratories Inc. 2.8%
AdvancePCS 2.7%
The Cooper Companies, Inc. 2.6%
Forest Laboratories, Inc. 2.3%
IDEXX Laboratories, Inc. 2.2%
PacifiCare Health Systems, Inc. 2.2%
eResearch Technology, Inc. 2.1%
Coventry Health Care, Inc. 2.1%
Omnicare, Inc. 2.1%
Percentages are based upon net assets.
17
- --------------------------------------------------------------------------------
TOP INDUSTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Pharmaceuticals 20.8%
Managed Health Care 20.5%
Health Care Equipment 11.7%
Biotechnology 11.0%
Health Care Services 10.9%
Health Care Facilities 10.7%
Health Care Supplies 7.3%
Health Care Distributors 3.5%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 2/24/97
- --------------------------------------------------------------------------------
ICON Healthcare Fund 18.65% 11.23% 11.75%
- --------------------------------------------------------------------------------
S&P 1500 Healthcare
Index 13.03% 2.86% 8.30%
- --------------------------------------------------------------------------------
S&P 1500 Index 24.69% 2.01% 5.24%
- --------------------------------------------------------------------------------
</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, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON HEALTHCARE FUND S&P 1500 INDEX S&P 1500 HEALTHCARE INDEX
-------------------- -------------- -------------------------
2/24/97 10000 10000 10000
9/30/97 11780 11933 11169
9/30/98 12224 12682 14703
9/30/99 11571 16147 15192
9/30/00 17976 18634 19880
9/30/01 18585 13839 18850
9/30/02 17540 11234 14975
9/30/03 20812 14008 16927
</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, 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.
18
Schedule of Investments
ICON HEALTHCARE FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 96.4%
HEALTH CARE 96.4%
BIOTECHNOLOGY 11.0%
30,000 Amgen Inc.(a) $ 1,937,700
52,200 Biogen, Inc.(a) 1,990,386
39,800 Chiron Corporation(a) 2,058,854
56,000 Genencor International
Inc.(a) 878,640
43,200 Genzyme Corporation(a) 2,000,592
73,000 IDEXX Laboratories,
Inc.(a) 3,101,770
172,500 Serologicals
Corporation(a) 2,268,375
79,100 Serono SA -- ADR 1,295,658
- -----------------------------------------------------
15,531,975
HEALTH CARE DISTRIBUTORS 3.5%
82,200 Omnicare, Inc. 2,964,132
83,300 Owens & Minor, Inc. 2,007,530
- -----------------------------------------------------
4,971,662
HEALTH CARE EQUIPMENT 11.7%
48,600 Becton, Dickinson and
Company 1,755,432
35,500 Biosite Incorporated(a) 1,004,650
37,800 Guidant Corporation 1,770,930
37,000 Hillenbrand Industries,
Inc. 2,087,540
47,600 Invacare Corporation 1,788,808
69,700 Mentor Corporation 1,589,160
59,300 ResMed Inc.(a) 2,608,014
55,900 Respironics, Inc.(a) 2,338,297
21,700 Stryker Corporation 1,634,227
- -----------------------------------------------------
16,577,058
HEALTH CARE FACILITIES 10.7%
83,800 Dynacq International,
Inc.(a) 1,515,942
83,600 Health Management
Associates, Inc. 1,823,316
71,900 LifePoint Hospitals,
Inc.(a) 1,729,195
61,400 Manor Care, Inc. 1,842,000
168,800 Province Healthcare
Company(a) 2,185,960
60,600 Triad Hospitals, Inc.(a) 1,834,968
74,600 United Surgical Partners
International, Inc.(a) 2,111,180
41,000 Universal Health Services,
Inc.(a) 2,027,450
- -----------------------------------------------------
15,070,011
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
HEALTH CARE SERVICES 10.9%
84,300 AdvancePCS(a) $ 3,841,551
111,900 Cross Country Healthcare,
Inc.(a) 1,576,671
87,200 eResearch Technology,
Inc.(a) 3,023,224
41,300 Express Scripts, Inc.(a) 2,524,669
35,700 Lincare Holdings Inc.(a) 1,306,977
40,100 Pharmaceutical Product
Development, Inc.(a) 961,999
42,800 Renal Care Group, Inc.(a) 1,461,620
25,000 SFBC International,
Inc.(a) 710,800
- -----------------------------------------------------
15,407,511
HEALTH CARE SUPPLIES 7.3%
25,800 Arrow International, Inc. 593,400
89,100 The Cooper Companies, Inc. 3,630,825
55,600 Immucor, Inc.(a) 1,498,420
31,000 Ocular Sciences, Inc.(a) 689,440
26,900 Osteotech, Inc.(a) 221,925
72,600 SurModics, Inc.(a) 1,948,584
66,500 Sybron Dental Specialties,
Inc.(a) 1,667,155
- -----------------------------------------------------
10,249,749
MANAGED HEALTH CARE 20.5%
30,000 Aetna Inc. 1,830,900
32,600 Anthem, Inc.(a) 2,325,358
57,000 Centene Corporation(a) 1,732,230
48,300 CIGNA Corporation 2,156,595
56,300 Coventry Health Care,
Inc.(a) 2,969,262
64,000 Health Net Inc.(a) 2,026,880
162,600 Humana Inc.(a) 2,934,930
67,900 Oxford Health Plans,
Inc.(a) 2,804,949
63,300 PacifiCare Health Systems,
Inc.(a) 3,089,040
116,700 Sierra Health Services,
Inc.(a) 2,398,185
51,700 UnitedHealth Group
Incorporated 2,601,544
27,400 WellPoint Health Networks
Inc.(a) 2,111,992
- -----------------------------------------------------
28,981,865
</Table>
19
Schedule of Investments (continued)
ICON HEALTHCARE FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
PHARMACEUTICALS 20.8%
65,600 aaiPharma Inc.(a) $ 1,121,760
32,400 Abbott Laboratories 1,378,620
63,600 American Pharmaceutical
Partners, Inc.(a) 1,993,860
64,550 Barr Laboratories, Inc.(a) 4,402,955
49,100 Biovail Corporation(a)(f) 1,824,065
90,500 Bristol-Myers Squibb
Company 2,322,230
63,600 Forest Laboratories,
Inc.(a) 3,272,220
16,200 Galen Holdings PLC ADR(f) 737,100
124,800 ICN Pharmaceuticals, Inc. 2,141,568
102,050 Mylan Laboratories Inc. 3,944,233
80,400 Shire Pharmaceuticals
Group PLC(a) -- ADR 1,777,644
39,700 Taro Pharmaceutical
Industries Ltd.(a)(f) 2,237,492
39,000 Teva Pharmaceutical
Industries Ltd. -- ADR 2,230,800
- -----------------------------------------------------
29,384,547
- -----------------------------------------------------
TOTAL HEALTH CARE 136,174,378
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $109,941,191) 136,174,378
SHORT-TERM INVESTMENTS 3.6%
U.S. GOVERNMENT AGENCIES 1.9%
$2,713,000 FHLB Discount Note,
0.850%, 10-1-03 2,713,000
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 2,713,000
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
VARIABLE RATE DEMAND NOTE 1.7%
$2,315,010 American Family Demand
Note, 0.741%(#) $ 2,315,010
- -----------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 2,315,010
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $5,028,010) 5,028,010
- -----------------------------------------------------
TOTAL INVESTMENTS 100.0%
(COST $114,969,201) 141,202,388
- -----------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.0% 56,503
- -----------------------------------------------------
NET ASSETS 100.0% $141,258,891
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
f Foreign security
Dates shown on securities are the due dates of the obligation.
20
Management Overview
ICON INDUSTRIALS FUND
A discussion with J.C. Waller III, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Industrials Fund appreciated 10.55% for the fiscal year ended September
30, 2003. This compares to a 21.36% return for its narrowly focused benchmark,
the S&P 1500 Industrials Index, and a 24.69% return for its broad-based
benchmark, the S&P 1500 Index, over the same period.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
A difficult first half followed by a more accommodating second half
characterized the investment environment for the ICON Industrials Fund. During
the initial six months, investors recoiled as economic uncertainty, geopolitical
tensions, and a manufacturing recession weighed heavily on cyclical industries.
A speculative rally off the market low of early October 2002 also failed to
boost the sector as lower-quality issues led the advance.
Rationality finally returned to the market in mid-March 2003 when investors
concluded that conditions may not have been as dire as they may have originally
believed. With anticipation of economic recovery driving the market, the
higher-quality companies we favor were attractively priced and poised for the
broad second-half surge.
On an industry level, airlines were selling at discounts during the period.
Because our quality ratings indicated that major airlines continued to struggle,
they were not owned in the Fund, though select regional and discount carriers
benefited as investors came to recognize their fundamental strength. Due to the
relative strength of the smaller air carriers, we included them in the Fund.
Trucking experienced a few bumps along the way, but continued to steer
toward fair value. Railroads, which showed few signs of life early in the
period, accelerated in mid-March 2003 only to lose steam shortly thereafter.
Despite unsettling unemployment numbers and talk of a jobless recovery,
employment services was a clear leader following the mid-March market low.
Absolute declines in employment led many displaced workers back to the
classroom, boosting education-related stocks in the diversified commercial
services industry. Industrial machinery sold off during the first half but
seemed to improve as manufacturing and production data strengthened. Likewise,
construction & engineering and construction & farm machinery advanced on
second-half jumps in capital spending. WHAT FACTORS CONTRIBUTED TO THE FUND'S
PERFORMANCE? Significant value within the sector led to extremely broad industry
representation. Standouts included diversified commercial services, a leader
throughout the period as well as the Fund's highest weighted industry at
period-end. Education-related stocks, a key industry segment, performed
particularly well for the Fund.
One notable adjustment was the Fund's increased exposure to industrial
machinery, which by period-end had become its second largest weighting.
Depressed valuations combined with a pickup in economic activity made for
attractive purchasing conditions.
Although the Fund's employment services weighting fluctuated during the
period, we captured industry gains as investors shrugged off less-than-favorable
employment reports, while bidding up shares of smaller companies. Building
products and construction & engineering took on larger allocations, having
traded at extreme discounts to industry peers. One group, data processing and
outsourced services, was reclassified by S&P in April 2003, yet retained a
modest weighting in the Fund.
Specific contributors to Fund returns included Career Education Corp., a
provider of private post-secondary education. The stock surged after the company
reported a near doubling of profits and a seven-fold increase in online
students. Meanwhile, Graco Inc., a global supplier of fluid-technology products,
benefited from recent strength in the housing market. Discount airline JetBlue
Airways Corp. also advanced, having maintained impressive growth in a difficult
operating environment.
Among the Fund's detractors, electronic transaction processor Concord EFS
Inc. tumbled when pricing pressures and economic weakness forced the company to
entertain buyout offers. Elsewhere, defense contractor Northrop Grumman Corp.
retreated after acquisition-related concerns resulted in a lowered earnings
outlook. At the end of the reporting period, the Fund did not own these stocks.
The Fund suffered by not owning General Electric, which accounts for nearly 25%
of the S&P 1500 Industrials Index, and returned 24.43% during the period.
WHAT IS THE INVESTMENT OUTLOOK FOR THE INDUSTRIALS SECTOR?
We would anticipate leadership to narrow somewhat but to remain in the
industries that distinguished themselves as leaders in the second-half market
advancement. Assuming the rally proves sustainable, we expect that the disparity
between leaders and laggards would increase. As investors recognize these
disparities, capital will most likely be reallocated. Given ongoing expansion in
the economy, we expect industry rotations to benefit the Industrials sector.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 96.2%
Top 10 Equity Holdings 17.9%
Number of Stocks 91
Cash Equivalents 2.9%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
University of Phoenix Online 2.3%
Corinthian Colleges, Inc. 2.1%
Graco Inc. 1.8%
Labor Ready, Inc. 1.8%
JLG Industries, Inc. 1.7%
ITT Educational Services, Inc. 1.7%
Career Education Corporation 1.7%
York International Corporation 1.6%
Flowserve Corporation 1.6%
JetBlue Airways Corporation 1.6%
Percentages are based upon net assets.
21
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Diversified Commercial Services 17.6%
Industrial Machinery 15.0%
Building Products 9.1%
Construction & Engineering 8.0%
Airlines 7.9%
Aerospace & Defense 7.1%
Employment Services 7.0%
Trucking 6.6%
Data Processing & Outsourced Services 4.5%
Electrical Components & Equipment 3.1%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 5/9/97
- --------------------------------------------------------------------------------
ICON Industrials Fund 10.55% 1.69% 0.77%
- --------------------------------------------------------------------------------
S&P 1500 Industrials
Index 21.36% 3.45% 3.54%
- --------------------------------------------------------------------------------
S&P 1500 Index 24.69% 2.01% 5.09%
- --------------------------------------------------------------------------------
</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, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON INDUSTRIALS FUND S&P 1500 INDUSTRIALS INDEX S&P 1500 INDEX
--------------------- -------------------------- --------------
5/9/97 10000.00 10000.00 10000.00
9/30/97 12400.00 11623.00 11700.00
9/30/98 9663.00 10543.00 12435.00
9/30/99 11295.00 13339.00 15832.00
9/30/00 10807.00 15263.00 18271.00
9/30/01 10207.00 12296.00 13569.00
9/30/02 9501.00 10293.00 11015.00
9/30/03 10505.00 12492.00 13735.00
</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.
22
Schedule of Investments
ICON INDUSTRIALS FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 96.2%
ENERGY 1.1%
OIL & GAS EQUIPMENT & SERVICES 1.1%
74,600 Tetra Tech, Inc.(a) $ 1,490,508
- -----------------------------------------------------
TOTAL ENERGY 1,490,508
INDUSTRIALS 90.1%
AEROSPACE & DEFENSE 7.1%
110,000 Armor Holdings, Inc.(a) 1,842,500
22,600 Engineered Support
Systems, Inc. 1,367,074
169,500 GenCorp. Inc. 1,517,025
20,400 General Dynamics
Corporation 1,592,424
67,700 Goodrich Corporation 1,641,048
34,800 L-3 Communications
Holdings, Inc.(a) 1,505,100
- -----------------------------------------------------
9,465,171
AIRLINES 7.9%
197,600 Atlantic Coast Airlines
Holdings, Inc.(a) 1,681,576
133,200 ExpressJet Holdings,
Inc.(a) 1,838,160
34,400 JetBlue Airways
Corporation(a) 2,094,272
155,300 Mesa Air Group, Inc.(a) 1,726,936
35,200 Ryanair Holdings
plc(a) -- ADR 1,425,600
101,200 SkyWest, Inc. 1,752,784
- -----------------------------------------------------
10,519,328
BUILDING PRODUCTS 9.1%
14,200 American Standard
Companies Inc.(a) 1,196,350
25,000 American Woodmark
Corporation 1,119,000
68,200 ElkCorp. 1,606,792
87,100 Griffon Corporation(a) 1,564,316
65,800 Masco Corporation 1,610,784
36,100 Simpson Manufacturing Co.,
Inc.(a) 1,476,129
53,800 Universal Forest Products,
Inc. 1,305,726
61,600 York International
Corporation 2,130,744
- -----------------------------------------------------
12,009,841
CONSTRUCTION & ENGINEERING 8.0%
48,600 Chicago Bridge & Iron
Company N.V. -- ADR 1,319,976
73,600 Dycom Industries, Inc.(a) 1,500,704
37,900 Fluor Corporation 1,414,807
70,300 Granite Construction
Incorporated 1,313,204
102,600 Insituform Technologies,
Inc.(a) 1,822,176
34,700 Jacobs Engineering Group
Inc.(a) 1,564,970
82,700 URS Corporation(a) 1,604,380
- -----------------------------------------------------
10,540,217
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
CONSTRUCTION, FARM MACHINERY & HEAVY
TRUCKS 1.9%
14,000 Caterpillar Inc. $ 963,760
31,600 Lindsay Manufacturing Co. 635,160
24,600 Oshkosh Truck Corporation 974,406
- -----------------------------------------------------
2,573,326
DIVERSIFIED COMMERCIAL SERVICES 17.6%
31,200 Apollo Group, Inc.(a) 2,060,136
42,600 Bright Horizons Family
Solutions, Inc.(a) 1,701,870
49,800 Career Education
Corporation(a) 2,255,940
32,200 ChoicePoint Inc.(a) 1,078,700
49,300 Corinthian Colleges,
Inc.(a) 2,817,988
30,100 Education Management
Corporation(a) 1,735,867
42,400 Equifax Inc. 944,248
47,400 ITT Educational Services,
Inc.(a) 2,271,408
87,100 Mobile Mini, Inc.(a) 1,681,901
77,700 NCO Group, Inc.(a) 1,814,295
26,200 Portfolio Recovery
Associates, Inc.(a) 666,004
55,100 SOURCECORP,
Incorporated(a) 1,281,075
45,400 University of Phoenix
Online(a) 3,026,818
- -----------------------------------------------------
23,336,250
ELECTRICAL COMPONENTS & EQUIPMENT 3.1%
30,800 AMETEK, Inc. 1,320,088
23,000 A.O. Smith Corporation 644,230
15,400 Cooper Industries, Ltd.(f) 739,662
21,300 Hubbell Incorporated 777,237
27,700 Regal-Beloit Corporation 565,080
- -----------------------------------------------------
4,046,297
EMPLOYMENT SERVICES 7.0%
63,200 Administaff, Inc.(a) 561,848
85,300 Gevity HR, Inc. 1,252,204
231,500 Labor Ready, Inc.(a) 2,326,575
33,000 Manpower Inc. 1,224,300
127,900 On Assignment, Inc.(a) 675,312
57,700 Resources Connection,
Inc.(a) 1,389,993
179,200 Spherion Corporation(a) 1,247,232
38,500 Volt Information Sciences,
Inc.(a) 635,250
- -----------------------------------------------------
9,312,714
</Table>
23
Schedule of Investments (continued)
ICON INDUSTRIALS FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
INDUSTRIAL MACHINERY 15.0%
28,300 Briggs & Stratton
Corporation $ 1,662,908
10,200 Eaton Corporation 903,924
103,200 Flowserve Corporation(a) 2,094,960
63,375 Graco Inc. 2,379,731
31,400 Harsco Corporation 1,207,958
35,300 Ingersoll-Rand Company(f) 1,886,432
200,700 JLG Industries, Inc. 2,312,064
62,700 Kaydon Corporation 1,488,498
63,100 The Manitowoc Company,
Inc. 1,368,639
70,600 Reliance Steel & Aluminum
Co. 1,566,614
35,200 SPX Corporation(a) 1,593,856
91,600 Stewart & Stevenson
Services, Inc. 1,375,832
- -----------------------------------------------------
19,841,416
MARINE 2.0%
27,400 Alexander & Baldwin, Inc. 770,762
47,800 CP Ships Limited(f) 1,006,190
28,000 Kirby Corporation(a) 803,600
- -----------------------------------------------------
2,580,552
OFFICE SERVICES & SUPPLIES 2.5%
31,000 Brady Corporation 986,110
23,500 HON INDUSTRIES Inc. 868,560
39,700 United Stationers Inc.(a) 1,496,293
- -----------------------------------------------------
3,350,963
RAILROADS 2.3%
44,000 CP Railway Limited(f) 1,038,840
25,800 CSX Corporation 754,650
53,500 Genesee & Wyoming Inc.(a) 1,268,485
- -----------------------------------------------------
3,061,975
TRUCKING 6.6%
38,400 Heartland Express, Inc. 922,368
58,700 Knight Transportation,
Inc.(a) 1,479,827
14,800 Landstar System, Inc.(a) 903,096
22,050 Old Dominion Freight Line,
Inc.(a) 641,435
72,700 Swift Transportation Co.,
Inc.(a) 1,649,563
55,400 USF Corporation 1,750,086
61,800 Werner Enterprises, Inc. 1,415,838
- -----------------------------------------------------
8,762,213
- -----------------------------------------------------
TOTAL INDUSTRIALS 119,400,263
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
INFORMATION TECHNOLOGY 5.0%
DATA PROCESSING & OUTSOURCED
SERVICES 4.5%
42,100 CSG Systems International,
Inc.(a) $ 621,817
31,300 DST Systems, Inc.(a) 1,176,880
88,500 eFunds Corporation(a) 1,092,975
40,000 First Data Corporation 1,598,400
41,600 Fiserv, Inc.(a) 1,508,416
- -----------------------------------------------------
5,998,488
ELECTRONIC EQUIPMENT MANUFACTURERS 0.5%
53,500 Paxar Corporation(a) 684,800
- -----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 6,683,288
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $112,125,204) 127,574,059
SHORT-TERM INVESTMENT 2.9%
VARIABLE RATE DEMAND NOTE
$3,824,836 American Family Demand
Note, 0.741%(#) 3,824,836
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $3,824,836) 3,824,836
- -----------------------------------------------------
TOTAL INVESTMENTS 99.1%
(COST $115,950,040) 131,398,895
- -----------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.9% 1,155,418
- -----------------------------------------------------
NET ASSETS 100.0% $132,554,313
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
f Foreign security
24
Management Overview
ICON INFORMATION TECHNOLOGY FUND
A discussion with Robert Straus, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Information Technology Fund advanced 38.29% for the one-year period
ended September 30, 2003, trailing its narrowly focused benchmarks, the S&P 1500
Information Technology Index and the technology-laden Nasdaq Composite Index,
which returned 59.69% and 53.15%, respectively, but handily outpacing its broad
benchmark, the S&P 1500 Index, which returned 24.69%.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
During the first half of the Fund's fiscal year, fear and pessimism exerted a
strong grip on the broad market, and the volatile technology sector bore the
brunt. Although prices fell to irrational levels in early October 2002, many of
the sector's constituent industries lacked strength.
Nevertheless, it was only a matter of time before depressed technology
shares began their move back toward fair value. While the sudden and sharp
reversal in technology was driven primarily by lower-quality issues that did not
meet our investment criteria, we took the opportunity to adjust the Fund's
holdings, focusing on the emerging industry leadership our system identified.
In late fall and into early winter, we gradually tilted the Fund toward
three industries: semiconductors, semiconductor equipment, and Internet software
& services. While buying into weakness as these industries subsequently
corrected, we were following our disciplined approach of investing in
undervalued industries that are demonstrating leadership. This systematic
methodology worked to the Fund's advantage when on March 11, 2003, the market
bottomed. The technology sector re-emerged as the clear market leader and this
time, the Fund participated.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Sometimes, as occurred last fall, the Fund does not capitalize on a swift and
sudden rally because the rally features lower-quality stocks that do not meet
our investment standards. At that time, the Fund lacked exposure to
semiconductor stocks that were driving the advance. Our investment mandate
dictates that we screen for well-managed companies with high cash positions and
low debt levels. Because of their speculative nature, many stocks that led the
Fall 2002 rally simply did not meet our quality screen. In turn, semiconductors,
while undervalued, failed to demonstrate longer-term relative strength.
That changed in mid to late December 2002, when we began to tilt the Fund
toward semiconductor and semiconductor equipment manufacturers, as well as
Internet software & service companies. We used pullbacks in December and January
to build positions, yet the Fund suffered as prices in these industries
continued their decline. However, from the March 11 low to the end of the fiscal
year, these groups comprised three of the four top-performing industries as
represented by the S&P 1500 Information Technology Index.
Individual holdings that contributed to performance included J2 Global
Communications Inc., an Internet-based messaging services provider that rose
280.4% during the past 12 months. A strong balance sheet and expanding profit
margins bolstered this undervalued company. OmniVision Technologies Inc., a
maker of semiconductors for digital cameras, was a strong performer, gaining
540.5% over the period. OmniVision displayed strong sales growth, expanding
margins and a cash-rich balance sheet. United Online Inc., a low-cost Internet
service provider, demonstrated similar characteristics, while recently turning
profitable.
Among the Fund's performance detractors, application software provider
Verisity Ltd. declined in mid-January on news that first-quarter profit and
sales would fall short of analysts' forecasts. WebEx, the Internet-based video
conferencing provider, also fell abruptly in mid-January on fears that it was
vulnerable to market share losses and profit pressures. At that time, we sold
both Verisity and WebEx to allocate assets to stocks that were demonstrating
more favorable valuations and relative strength. Video game software provider
Activision slid sharply during the fourth quarter amid concerns of slowing
industry growth.
WHAT IS THE INVESTMENT OUTLOOK FOR THE INFORMATION TECHNOLOGY SECTOR?
The sell-off in technology stocks late in September 2003 was likely driven by
profit-taking as investors braced for third-quarter earnings. From our
perspective, this correction appeared to be little more than a speed bump in
what we believe is a sustainable rally. It is important to point out that prices
could trade beyond fair value given the tech sector's inherent strength. Our
overall valuation measures are based on conservative long-term growth rates.
Should technology issues post earnings-per-share growth closer to consensus
figures, any move higher could exceed our fair value estimates. In that case, we
would continue to hold those industries showing the greatest leadership.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 100.2%
Top 10 Equity Holdings 36.5%
Number of Stocks 54
Cash Equivalents 0.0%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
j2 Global Communications, Inc. 5.7%
United Online, Inc. 4.4%
OmniVision Technologies, Inc. 4.4%
Silicon Laboratories Inc. 4.0%
Marvell Technology Group Ltd. 3.4%
UTStarcom, Inc. 3.2%
Cognizant Technology Solutions Corporation 3.1%
VeriSign, Inc. 2.9%
Stratasys, Inc. 2.7%
Digital Insight Corporation 2.7%
Percentages are based upon net assets.
25
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Semiconductors 25.5%
Internet Software & Services 24.7%
Application Software 8.7%
IT Consulting & Other Services 6.0%
Communications Equipment 6.0%
Computer Hardware 5.9%
Semiconductor Equipment 5.9%
Computer Storage & Peripherals 5.7%
Electronic Equipment Manufacturers 4.4%
Technology Distributors 2.7%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 2/19/97
- --------------------------------------------------------------------------------
ICON Information Technology Fund 38.29% 19.99% 14.01%
- --------------------------------------------------------------------------------
S&P 1500 Technology
Index 59.69% -0.94% 4.61%
- --------------------------------------------------------------------------------
NASDAQ Composite Index 53.15% 1.39% 4.51%
- --------------------------------------------------------------------------------
S&P 1500 Index 24.69% 2.01% 5.17%
- --------------------------------------------------------------------------------
</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, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON INFORMATION TECHNOLOGY FUND NASDAQ COMPOSITE INDEX S&P 1500 INDEX
-------------------------------- ---------------------- --------------
2/19/97 10000 10000 10000
9/30/97 12960 12379 11890
9/30/98 9569 12492 12636
9/30/99 21006 20319 16088
9/30/00 33451 27224 18567
9/30/01 22447 11140 13789
9/30/02 17206 8742 11194
9/30/03 23796 13388 13957
<Caption>
S&P 1500 INFORMATION TECHNOLOGY
INDEX
-------------------------------
2/19/97 10000
9/30/97 12853
9/30/98 14126
9/30/99 25075
9/30/00 30971
9/30/01 12273
9/30/02 8437
9/30/03 13474
</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.
26
Schedule of Investments
ICON INFORMATION TECHNOLOGY FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 100.2%
INFORMATION TECHNOLOGY 100.2%
APPLICATION SOFTWARE 8.7%
60,100 BARRA, Inc.(a) $ 2,254,952
114,700 FactSet Research Systems
Inc. 5,086,945
287,800 Jack Henry & Associates,
Inc. 5,004,842
55,500 Kronos Incorporated(a) 2,936,505
374,700 Magma Design Automation,
Inc.(a) 7,351,614
233,400 Mentor Graphics
Corporation(a) 4,091,502
- -----------------------------------------------------
26,726,360
COMMUNICATIONS EQUIPMENT 6.0%
121,000 Cisco Systems, Inc.(a) 2,371,600
49,000 QLogic Corporation(a) 2,302,020
105,500 SafeNet, Inc.(a) 3,811,715
310,000 UTStarcom, Inc.(a) 9,858,000
- -----------------------------------------------------
18,343,335
COMPUTER HARDWARE 5.9%
500,000 Cray, Inc.(a) 5,475,000
258,900 Neoware Systems, Inc.(a) 4,419,423
196,800 Stratasys, Inc.(a) 8,387,616
- -----------------------------------------------------
18,282,039
COMPUTER STORAGE & PERIPHERALS 5.7%
135,000 Avid Technology, Inc.(a) 7,155,000
110,000 SanDisk Corporation(a) 7,011,400
261,000 Western Digital
Corporation(a) 3,364,290
- -----------------------------------------------------
17,530,690
DATA PROCESSING & OUTSOURCED
SERVICES 1.4%
159,000 SunGard Data Systems Inc.(a) 4,183,290
ELECTRONIC EQUIPMENT MANUFACTURERS 4.4%
273,600 Nam Tai Electronics, Inc.(f) 7,422,768
150,000 Rofin-Sinar Technologies,
Inc.(a) 3,153,000
175,000 Vishay Intertechnology,
Inc.(a) 3,066,000
- -----------------------------------------------------
13,641,768
ELECTRONIC MANUFACTURING SERVICES 1.2%
300,000 CTS Corporation 3,693,000
HOME ENTERTAINMENT SOFTWARE 1.2%
110,000 Take-Two Interactive
Software, Inc.(a) 3,757,600
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
INTERNET SOFTWARE & SERVICES 24.7%
416,400 Digital Insight
Corporation(a) $ 8,286,360
191,400 Digital River, Inc.(a) 5,238,618
322,900 FindWhat.com(a) 5,582,941
464,600 j2 Global Communications,
Inc.(a) 17,575,818
114,500 Netease.com Inc.(a) -- ADR 6,391,390
68,000 SINA Corp(a)f) 2,428,960
111,900 Sohu.com Inc.(a) 3,485,685
391,000 United Online, Inc.(a) 13,602,890
656,700 VeriSign, Inc.(a) 8,858,883
250,000 WebEx Communications,
Inc.(a) 4,747,500
- -----------------------------------------------------
76,199,045
IT CONSULTING & OTHER SERVICES 6.0%
145,000 CACI International Inc.(a) 6,213,250
350,000 CIBER, Inc.(a) 2,660,000
261,000 Cognizant Technology
Solutions Corporation(a) 9,516,060
- -----------------------------------------------------
18,389,310
SEMICONDUCTOR EQUIPMENT 5.9%
125,500 Cabot Microelectronics
Corporation(a) 6,981,565
71,600 KLA-Tencor Corporation(a) 3,688,116
229,700 Teradyne, Inc.(a) 4,272,420
306,000 White Electronic Designs
Corporation(a) 3,289,500
- -----------------------------------------------------
18,231,601
SEMICONDUCTORS 25.5%
134,300 Artisan Components, Inc.(a) 2,256,240
456,500 Cypress Semiconductor
Corporation(a) 8,070,920
148,300 DSP Group, Inc.(a) 3,695,636
116,100 Intel Corporation 3,195,072
197,900 International Rectifier
Corporation(a) 7,409,376
274,000 Marvell Technology Group
Ltd.(a)f) 10,343,500
322,100 NVIDIA Corporation(a) 5,124,933
198,000 02Micro International
Limited(a)f) 2,861,100
318,700 OmniVision Technologies,
Inc.(a) 13,455,514
272,800 Silicon Laboratories Inc.(a) 12,259,632
108,000 Xilinx, Inc.(a) 3,069,360
348,800 Zoran Corporation(a) 6,801,600
- -----------------------------------------------------
78,542,883
SYSTEMS SOFTWARE 0.9%
105,000 Computer Associates
International, Inc. 2,741,550
</Table>
27
Schedule of Investments (continued)
ICON INFORMATION TECHNOLOGY FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
TECHNOLOGY DISTRIBUTORS 2.7%
200,000 Arrow Electronics, Inc.(a) $ 3,678,000
275,000 Avnet, Inc.(a) 4,543,000
- -----------------------------------------------------
8,221,000
- -----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 308,483,471
- -----------------------------------------------------
TOTAL INVESTMENTS 100.2%
(COST $247,182,985) 308,483,471
- -----------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.2%) (510,981)
- -----------------------------------------------------
NET ASSETS 100.0% $307,972,490
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
ADR -- American Depositary Receipt
f Foreign security
28
Management Overview
ICON LEISURE AND CONSUMER STAPLES FUND
A discussion with Derek Rollingson, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Leisure and Consumer Staples Fund advanced 10.89% for the one-year
period ended September 30, 2003. At the same time, the Fund's sector-specific
benchmarks, the S&P 1500 Consumer Discretionary Index and the S&P 1500 Consumer
Staples Index, returned 23.46% and 5.12%, respectively. Although neither index
is an ideal comparison individually, together they provide a suitable reference
for the Fund's overall performance. The Fund trailed the 24.69% gain for its
broad benchmark, the S&P 1500 Index.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
Fear and pessimism dominated the first half of the fiscal year, as mounting war
concerns and rising unemployment weighed heavily on consumer confidence. Stock
prices reflected these pressures, falling sharply below their intrinsic values
despite incremental improvements in corporate earnings and gross domestic
product. Following the market low of mid-March 2003, stocks improved as the
economic outlook brightened and the overhang of war subsided. A broad
second-half rally ensued, driven by expectations that the worst was finally
behind us. Nevertheless, performance within the Leisure and Consumer Staples
sector was highly mixed. Leisure industries demonstrated considerable strength
as evidenced by the 40.70% jump in the S&P 1500 Hotels, Resorts & Cruise Lines
Index, a 27.82% rise in the S&P 1500 Broadcasting & Cable TV Index, a 23.26%
advance in the S&P 1500 Restaurants Index, and a 19.82% gain in the S&P 1500
Personal Products Index. Consolidation and shareholder value proved stabilizing
forces for the broadcasting & cable TV industry, whereas hotels, resorts &
cruise lines and leisure products received a boost from depressed valuations.
Restaurants benefited from the recovering economy.
In contrast, Consumer Staples, whose defensive posture benefited the group
during the three-year downturn, weakened on speculation that the theme had run
its course. This was borne out by lower relative returns for the food retail,
drug retail and soft drinks industries. WHAT FACTORS CONTRIBUTED TO THE FUND'S
PERFORMANCE? The Fund was positioned early in the fiscal period for a
fundamentally driven, quality-led rally. However, the rally that emerged in
October 2002 featured lower-quality, high-debt companies that did not meet our
investment criteria. Consequently, the Fund did not participate in this brief
surge, but turned a corner when a higher-quality rebound materialized in
mid-March 2003. Although the Fund recouped earlier losses and produced a
favorable absolute return, it was unable to compensate for missing the initial
advance.
In light of this more sustainable second-half rally, the Fund was
increasingly tilted toward cyclical industries that have historically led during
an economic recovery. Based on relative strength metrics and projected
earnings-per-share growth, the hotels, resorts & cruise lines and restaurant
industries were increased during the period. Movies & entertainment, which was
absent from the Fund at the beginning of the fiscal year, was a meaningful
position by period-end. Meanwhile, publishing, tobacco, and packaged foods &
meats industries had all been liquidated by the close of the reporting period
because they no longer demonstrated relative strength.
Leading individual contributors included cruise operator Royal Caribbean
Cruises Ltd., which reported better-than-expected earnings amid the war-related
travel slowdown. Pool supply distributor SCP Pool Corp. benefited from industry
consolidation as well as strong revenue growth and widening profit margins.
Direct broadcast satellite provider EchoStar Communications Corp., better known
as DISH Network, also moved higher, after achieving positive free cash flow.
Elsewhere, fast food giant McDonald's Corp. capitalized on its ambitious
turnaround efforts, posting consecutive quarters of positive results.
Among the Fund's detractors, specialty stores Toys "R" Us Inc. and Big 5
Sporting Goods Corp. faced a challenging retail environment as well as fierce
competition from deep discounters. Supermarket operator and wholesaler
distributor Nash-Finch Co. also fell, citing weak retail sales, competitive
pressures and profit shortfalls. Even so, these stocks did not reach our sell
criteria, and we continued to hold them at the end of the period.
WHAT IS THE INVESTMENT OUTLOOK FOR THE LEISURE AND CONSUMER STAPLES SECTOR?
Despite strong gains since the mid-March 2003 market low, current valuations
support further upside potential within the sector. We believe the Fund is
positioned to capitalize on a sustained cyclical rebound, assuming the rally
continues. We anticipate ongoing leadership from the hotels, resorts & cruise
lines industry, but will keep a close eye on valuations in light of its recent
run-up.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 100.1%
Top 10 Equity Holdings 34.8%
Number of Stocks 37
Cash Equivalents 0.0%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Starwood Hotels & Resorts Worldwide, Inc. 4.0%
Marriott International, Inc. 3.9%
The Walt Disney Company 3.8%
Leapfrog Enterprises, Inc. 3.6%
Prime Hospitality Corp. 3.5%
SCP Pool Corporation 3.4%
BJ's Wholesale Club, Inc. 3.3%
CEC Entertainment Inc. 3.2%
Callaway Golf Company 3.1%
Panera Bread Company 3.0%
Percentages are based upon net assets.
29
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Hotels, Resorts & Cruise Lines 19.1%
Restaurants 16.4%
Leisure Products 15.1%
Movies & Entertainment 13.9%
Specialty Stores 8.6%
Broadcasting & Cable TV 6.4%
Food Distributors 5.3%
Casinos & Gaming 4.8%
Hypermarkets & Super Centers 3.2%
Leisure Facilities 2.8%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 5/9/97
- --------------------------------------------------------------------------------
ICON Leisure and Consumer
Staples Fund 10.89% 10.25% 10.79%
- --------------------------------------------------------------------------------
S&P 1500 Consumer Discretionary
Index 23.46% 3.01% 6.25%
- --------------------------------------------------------------------------------
S&P 1500 Consumer Staples Index 5.12% 2.24% 3.96%
- --------------------------------------------------------------------------------
S&P 1500 Index 24.69% 2.01% 5.09%
- --------------------------------------------------------------------------------
</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, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON LEISURE AND CONSUMER S&P 1500 CONSUMER S&P 1500 CONSUMER STAPLES
STAPLES FUND DISCRETIONARY INDEX S&P 1500 INDEX INDEX
------------------------- ------------------- -------------- -------------------------
5/9/97 10000 10000 10000 10000
9/30/97 11350 11749 11703 10622
9/30/98 11825 12705 12437 11479
9/30/99 13570 16840 15835 12269
9/30/00 14285 16547 18274 12860
9/30/01 14607 12992 13572 12273
9/30/02 17367 11935 11017 12199
9/30/03 19260 14736 13737 12824
</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.
30
Schedule of Investments
ICON LEISURE AND CONSUMER STAPLES FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 100.1%
CONSUMER DISCRETIONARY 11.0%
CONSUMER ELECTRONICS 2.4%
20,300 Harman International
Industries, Incorporated $ 1,996,505
SPECIALTY STORES 8.6%
87,600 Big 5 Sporting Goods
Corporation(a) 1,338,528
66,500 The Sports Authority, Inc.(a) 2,092,090
141,600 Toys "R" Us, Inc.(a) 1,703,448
337,900 Trans World Entertainment
Corporation(a) 1,909,135
- -----------------------------------------------------
7,043,201
- -----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 9,039,706
LEISURE AND CONSUMER STAPLES 89.1%
BROADCASTING & CABLE TV 6.4%
37,100 Clear Channel Communications,
Inc. 1,420,930
60,300 EchoStar Communications
Corporation(a) 2,309,490
76,700 Emmis Communications
Corporation(a) 1,547,806
- -----------------------------------------------------
5,278,226
CASINOS & GAMING 4.8%
54,000 Harrah's Entertainment, Inc. 2,273,940
61,900 Shuffle Master, Inc.(a) 1,682,442
- -----------------------------------------------------
3,956,382
FOOD DISTRIBUTORS 5.3%
138,700 Nash Finch Company 2,149,850
54,000 Performance Food Group
Company(a) 2,199,420
- -----------------------------------------------------
4,349,270
FOOD RETAIL 2.1%
73,500 SUPERVALU INC. 1,753,710
HOTELS, RESORTS & CRUISE LINES 19.1%
67,300 Carnival Corporation(f) 2,213,497
112,010 Hilton Hotels Corporation 1,816,802
73,700 Marriott International, Inc. 3,171,311
335,300 Prime Hospitality Corp.(a) 2,913,757
82,600 Royal Caribbean Cruises
Ltd.(f) 2,321,886
95,100 Starwood Hotels & Resorts
Worldwide, Inc. 3,309,480
- -----------------------------------------------------
15,746,733
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
HYPERMARKETS & SUPER CENTERS 3.2%
138,700 BJ's Wholesale Club, Inc.(a) $ 2,686,619
LEISURE FACILITIES 2.8%
265,700 Bally Total Fitness Holding
Corporation(a) 2,298,305
LEISURE PRODUCTS 15.1%
72,800 Action Performance Companies,
Inc. 1,779,232
90,500 Brunswick Corporation 2,324,040
178,500 Callaway Golf Company 2,547,195
77,700 Leapfrog Enterprises, Inc.(a) 2,952,600
100,950 SCP Pool Corporation(a) 2,808,429
- -----------------------------------------------------
12,411,496
MOVIES & ENTERTAINMENT 13.9%
133,700 AOL Time Warner Inc.(a) 2,020,207
77,000 4Kids Entertainment Inc(a) 1,624,700
86,000 Fox Entertainment Group,
Inc.(a) 2,407,140
68,200 The News Corporation
Limited -- ADR 2,236,960
155,000 The Walt Disney Company 3,126,350
- -----------------------------------------------------
11,415,357
RESTAURANTS 16.4%
55,900 CBRL Group, Inc. 1,987,804
66,800 CEC Entertainment Inc.(a) 2,618,560
303,600 CKE Restaurants, Inc.(a) 1,958,220
105,000 McDonald's Corporation 2,471,700
60,500 Panera Bread Company(a) 2,481,105
134,400 The Steak n Shake Company(a) 2,002,560
- -----------------------------------------------------
13,519,949
- -----------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 73,416,047
- -----------------------------------------------------
TOTAL INVESTMENTS 100.1%
(COST $70,998,867) 82,455,753
- -----------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.1%) (108,440)
- -----------------------------------------------------
NET ASSETS 100.0% $82,347,313
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
ADR -- American Depositary Receipt
f Foreign security
31
Management Overview
ICON MATERIALS FUND
A discussion with Derek Rollingson, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Materials Fund gained 9.36% for the one-year ended September 30, 2003,
trailing its sector benchmark, the S&P 1500 Materials Index, which returned
23.19%, and its broad-based benchmark, the S&P 1500 Index, which gained 24.69%.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
Perceived economic stagnation worked against the Materials sector during the
first half of the fiscal year, as mounting war concerns and higher energy costs
drove lackluster results. However, cautious optimism prevailed during the second
half, raising the sector's constituent industries in unison with a broad
mid-March 2003 turnaround. As military action in Iraq ended, investors embraced
a brighter economic outlook, and the rally extended into late September before
cooling slightly. Nevertheless, performance within the sector was mixed, in part
due to sluggishness in industrial production.
On one hand, the diversified metals & mining industry topped both benchmark
indexes, supported by production cuts and expectations of rising demand. Gold
also outperformed, as futures hit a seven-year intraday high amid industry
consolidation and anticipation of a global recovery. In contrast, pricing
pressures and oversupply caused steel to lag. Meanwhile, sector-wide efforts to
balance supply and demand factors positioned the group to participate more fully
once the economy stabilizes.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Much of the Fund's relative underperformance was attributed to its lack of
exposure to gold as well as its sizable weighting in steel. Although gold
advanced on strength throughout much of the period, elevated prices convinced us
to seek more compelling value elsewhere. That led us to the steel industry,
where the Fund was heavily weighted based on its historically high value-to-
price ratio.
However, valuation discrepancies were widespread, and the Fund was invested
across a broad range of industries. For example, aluminum and paper products,
each absent from the Fund at the start of the period, grew to 7.4% and 9.7%,
respectively, by period-end. Both were added on the basis of valuation and
strong performance compared to the broader market. Likewise, construction
materials, which was reduced on signs of erosion during the first half, was
increased during the second half on renewed strength.
Specific stocks that contributed to Fund performance during the 12 months
included Florida Rock Industries Inc., a leading producer of construction
aggregates and concrete products, which benefited from ongoing strength in new
home construction. Specialty packaging provider Chesapeake Corp. also advanced,
having raised its profit outlook for 2003 while reporting higher net sales. In
addition, paper products giant Georgia-Pacific Corp. beat Wall Street earnings
estimates on better-than-expected results in its building products and packaging
businesses.
Among the Fund's detractors from performance, container manufacturer Crown
Holdings Inc. came under pressure as pricing difficulties and higher pension
expenses eroded profits. Elsewhere, specialty paper purveyor Glatfelter tumbled
upon reporting a 96% drop in second-quarter earnings, forcing it to slash its
dividend and cut costs. Steel distributor Ryerson Tull Inc. also retreated as
the company struggled with net quarterly losses and lackluster durable goods
orders. Despite these factors, the stocks had not reached our sell criteria and
we continued to hold them at period-end.
WHAT IS THE INVESTMENT OUTLOOK FOR THE MATERIALS SECTOR?
In an environment favoring growth-oriented cyclical areas, the Materials sector
has lagged in its move back toward fair value. However, as the economic recovery
gains traction and industrial production stabilizes, demand throughout much of
the sector may accelerate. With that, we may see an overall improvement in the
earnings outlook coupled with emerging leadership in the steel and construction
materials industries.
Given current valuation and relative strength measures for the sector,
which point to upside potential, we believe the Fund is positioned to
participate.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 99.2%
[SIDENOTE]
Top 10 Equity Holdings 36.0%
Number of Stocks 36
Cash Equivalents 0.6%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2003
Alcoa Inc. 4.3%
Crown Holdings, Inc. 4.1%
OM Group, Inc. 3.8%
Florida Rock Industries, Inc. 3.7%
Cabot Corporation 3.7%
Sealed Air Corporation 3.7%
Texas Industries, Inc. 3.2%
Cytec Industries Inc. 3.2%
FMC Corporation 3.2%
Carpenter Technology Corporation 3.1%
Percentages are based upon net assets.
32
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Steel 16.9%
Specialty Chemcials 12.7%
Construction Materials 12.1%
Diversified Chemicals 12.1%
Paper Products 11.7%
Paper Packaging 8.2%
Aluminum 7.4%
Metal & Glass Containers 7.2%
Precious Metals & Minerals 2.6%
Homebuilding 2.3%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 5/5/97
- --------------------------------------------------------------------------------
ICON Materials Fund 9.36% -0.72% -6.33%
- --------------------------------------------------------------------------------
S&P 1500 Materials Index 23.19% 3.79% 1.98%
- --------------------------------------------------------------------------------
S&P 1500 Index 24.69% 2.01% 4.99%
- --------------------------------------------------------------------------------
</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, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON MATERIALS FUND S&P 1500 MATERIALS INDEX S&P 1500 INDEX
------------------- ------------------------ --------------
5/5/97 10000 10000 10000
9/30/97 10900 11391 11635
9/30/98 6818 9413 12366
9/30/99 7613 10685 15743
9/30/00 6759 8547 18169
9/30/01 6010 9755 13494
9/30/02 6013 9201 10954
9/30/03 6576 11335 13658
</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.
33
Schedule of Investments
ICON MATERIALS FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 99.2%
CONSUMER DISCRETIONARY 2.3%
HOMEBUILDING 2.3%
18,600 Standard Pacific Corp. $ 704,940
- -----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 704,940
INDUSTRIALS 2.3%
TRADING COMPANIES & DISTRIBUTORS 2.3%
21,200 Hughes Supply, Inc. 687,940
- -----------------------------------------------------
TOTAL INDUSTRIALS 687,940
MATERIALS 94.6%
ALUMINUM 7.4%
24,900 Alcan Inc.(f) 952,674
49,800 Alcoa Inc. 1,302,768
- -----------------------------------------------------
2,255,442
COMMODITY CHEMICALS 2.1%
49,800 Lyondell Chemical Company 636,444
CONSTRUCTION MATERIALS 12.1%
22,750 Florida Rock Industries, Inc. 1,128,400
18,700 Lafarge North America Inc. 650,760
25,100 Martin Marietta Materials,
Inc. 914,895
40,100 Texas Industries, Inc. 986,460
- -----------------------------------------------------
3,680,515
DIVERSIFIED CHEMICALS 12.1%
39,400 Cabot Corporation 1,123,294
38,200 FMC Corporation(a) 962,640
71,000 Hercules Incorporated(a) 804,430
193,700 Solutia Inc. 772,863
- -----------------------------------------------------
3,663,227
FOREST PRODUCTS 1.6%
35,700 Louisiana-Pacific
Corporation(a) 491,946
METAL & GLASS CONTAINERS 7.2%
185,700 Crown Holdings, Inc.(a) 1,253,475
29,500 Silgan Holdings Inc.(a) 944,000
- -----------------------------------------------------
2,197,475
PAPER PACKAGING 8.2%
33,100 Chesapeake Corporation 746,074
42,600 Rock-Tenn Company 621,108
23,500 Sealed Air Corporation(a) 1,109,905
- -----------------------------------------------------
2,477,087
PAPER PRODUCTS 11.7%
22,100 Aracruz Celulose S.A. -- ADR 603,330
99,800 Buckeye Technologies Inc.(a) 907,182
27,000 Georgia-Pacific Corp. 654,480
44,000 Glatfelter 518,320
71,400 Wausau-Mosinee Paper
Corporation 871,794
- -----------------------------------------------------
3,555,106
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
PRECIOUS METALS & MINERALS 2.6%
127,400 Stillwater Mining Company(a) $ 802,620
SPECIALTY CHEMICALS 12.7%
31,100 Albemarle Corporation 853,695
55,400 A. Schulman, Inc. 879,198
26,400 Cytec Industries Inc.(a) 963,600
78,500 OM Group, Inc.(a) 1,149,240
- -----------------------------------------------------
3,845,733
STEEL 16.9%
114,700 Allegheny Technologies, Inc. 751,285
44,500 Carpenter Technology
Corporation 954,080
39,200 Commercial Metals Company 720,104
48,400 NN, Inc. 622,424
14,600 Nucor Corporation 669,848
95,500 Ryerson Tull, Inc. 744,900
44,600 Steel Dynamics, Inc.(a) 677,474
- -----------------------------------------------------
5,140,115
- -----------------------------------------------------
TOTAL MATERIALS 28,745,710
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $28,103,715) 30,138,590
SHORT-TERM INVESTMENT 0.6%
VARIABLE RATE DEMAND NOTE
$171,639 American Family Demand Note,
0.741%(#) 171,639
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $171,639) 171,639
- -----------------------------------------------------
TOTAL INVESTMENTS 99.8%
(COST $28,275,354) 30,310,229
- -----------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.2% 66,022
- -----------------------------------------------------
NET ASSETS 100.0% $30,376,251
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
f Foreign security
34
Management Overview
ICON TELECOMMUNICATION & UTILITIES FUND
A discussion with Robert Straus, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Telecommunication & Utilities Fund appreciated 20.36% for the fiscal
year ended September 30, 2003. In comparison, the Fund's sector-specific
benchmarks, the S&P 1500 Telecommunication Services Index and the S&P 1500
Utilities Index, returned 30.04% and 22.24%, respectively, while its broad
benchmark, the S&P 1500, gained 24.69%.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
The Telecommunication & Utilities sector, much like the broader market, rose
sharply off the October 2002 market low as investors scooped up deeply
discounted, lower-quality issues within the wireless telecommunication services
and multi-utilities & unregulated power industries. The focus then shifted to
large-capitalization regional operating companies, which rallied on the
anticipated passage of sweeping deregulation proposed by the Federal
Communications Commission (FCC). However, in an unexpected reversal, the FCC
defeated the measure in mid-February 2003, sending the Baby Bells into a
tailspin before they stabilized in early- to mid-March.
Having seemingly reached a bottom in mid-March, stocks then embarked upon
what now appears to be the second leg a new bull market. Despite widespread
skepticism, amid the overhang of war and perceived economic uncertainty,
Telecommunication & Utilities stocks surged higher. This time, however, the
broad rally featured higher-quality companies, with the wireless
telecommunication services and multi-utilities & unregulated power industries
leading by a wide margin. The more defensive electric, gas and water utilities
held up the rear, as the emergent economic recovery favored companies possessing
an early-cycle orientation.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
The Fund struggled during the first half of the fiscal year due to leadership
among speculative issues that were inconsistent with our investment methodology.
Although the Fund was well positioned in the top-performing integrated
telecommunication services industry, the market's embrace of distressed
companies and the sharp decline in the high-quality Baby Bells prevented the
Fund from participating in those gains. The situation was much the same for the
multi-utilities & unregulated power industry, where the Fund avoided the
questionable stocks that drove performance in the aftermath of the Enron
corporate collapse.
The second half of the fiscal year saw the Fund steadily increase its
exposure to the wireless telecommunication services industry. Based on the
group's valuation and relative strength metrics, its allocation grew to 28.6%,
making it the largest industry weighting at period-end. Moreover, as the
top-performing industry over the six-month period, the aggressive move into this
group helped bolster Fund performance.
At the same time, the Fund's continued avoidance of lower-quality
multi-utilities & unregulated power stocks, as well as a sizable exposure to
integrated telecommunication services worked against Fund performance. Despite
its healthy bounce off the mid-March low, integrated telecommunication services
lagged its related industries. As a result, the group's weighting was reduced
and the assets shifted to the more attractive wireless telecommunication
services industry.
Finally, we continued to maintain a significant weighting in the
communications equipment industry. Although technically classified outside the
Telecommunication & Utilities sector, the industry is thematically linked to the
Fund's investment universe. For that reason, market leadership and compelling
valuations warranted its inclusion in the Fund.
Specific holdings that contributed to performance included AO VimpelCom, a
leading Russia-based wireless services provider, which benefited from strong
sales growth and expanding profit margins. Meanwhile, wireless equipment
manufacturer UTStarcom Inc. gained on strong handset sales in its core, rapidly
growing market of Mainland China.
Among the Fund's individual detractors, American Electric Power Company
Inc., a leader in the wholesale energy market, fell on the announcement that the
utility was cutting its dividend. Elsewhere, local phone giant SBC
Communications Inc. retreated due to an increasingly difficult competitive
environment for the once-dominant Baby Bell. Nevertheless, SBC did not meet our
sell discipline and we continued to own the stock at period-end.
WHAT IS THE INVESTMENT OUTLOOK FOR THE TELECOMMUNICATION & UTILITIES SECTOR?
The Telecommunication & Utilities sector remains undervalued, as fear and
pessimism have kept prices at depressed levels for an extended period. While we
expect the sector to participate in any continued march toward fair value, we
still do not foresee it emerging as a market leader in the near future.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 99.4%
Top 10 Equity Holdings 47.7%
Number of Stocks 35
Cash Equivalents 0.4%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Mobile Telesystems 6.5%
America Movil S.A. de C.V. 6.2%
AO VimpelCom 6.1%
Nextel Communications, Inc. 5.1%
Golden Telecom, Inc. 4.5%
UTStarcom, Inc. 4.4%
Sprint Corporation 4.2%
Public Service Enterprise Group Incorporated 3.8%
j2 Global Communications, Inc. 3.5%
Sempra Energy 3.4%
Percentages are based upon net assets.
35
- --------------------------------------------------------------------------------
TOP INDUSTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Wireless Telecommunication Services 28.6%
Integrated Telecommunication Services 20.9%
Electric Utilities 16.8%
Communications Equipment 10.4%
Gas Utilities 9.9%
Internet Software & Services 5.4%
Multi-Utilities & Unregulated Power 4.8%
Data Processing & Outsourced Services 2.6%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 7/9/97
- --------------------------------------------------------------------------------
ICON Telecommunication
& Utilities Fund 20.36% 0.21% 6.01%
- --------------------------------------------------------------------------------
S&P 1500 Telecommunications
Services Index 30.04% -12.49% -4.01%
- --------------------------------------------------------------------------------
S&P 1500 Utilities
Index 22.24% -1.45% 3.37%
- --------------------------------------------------------------------------------
S&P 1500 Index 24.69% 2.01% 3.57%
- --------------------------------------------------------------------------------
</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, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON TELECOMMUNICATION & S&P 1500 TELECOMMUNICATION
UTILITIES FUND S&P 1500 INDEX SERVICES INDEX
------------------------ -------------- --------------------------
7/9/97 10000 10000 10000
9/30/97 10630 10597 10622
9/30/98 14232 11262 15105
9/30/99 16402 14339 21048
9/30/00 18860 16548 17603
9/30/01 15327 12290 13802
9/30/02 11948 9976 5960
9/30/03 14380 12439 7750
<Caption>
S&P 1500 UTILITIES INDEX
------------------------
7/9/97 10000
9/30/97 10417
9/30/98 13226
9/30/99 12967
9/30/00 18732
9/30/01 14540
9/30/02 10056
9/30/03 12292
</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.
36
Schedule of Investments
ICON TELECOMMUNICATION & UTILITIES FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 99.4%
INFORMATION TECHNOLOGY 18.4%
COMMUNICATIONS EQUIPMENT 10.4%
76,800 Cable Design Technologies
Corporation(a) $ 614,400
25,200 InterDigital Communications
Corporation(a) 378,000
15,800 QUALCOMM Inc. 658,544
25,000 SafeNet, Inc.(a) 903,250
58,500 UTStarcom, Inc.(a) 1,860,300
- -----------------------------------------------------
4,414,494
DATA PROCESSING & OUTSOURCED
SERVICES 2.6%
48,200 Intrado Inc.(a) 1,097,996
INTERNET SOFTWARE & SERVICES 5.4%
39,600 j2 Global Communications,
Inc.(a) 1,498,068
23,600 United Online, Inc.(a) 821,044
- -----------------------------------------------------
2,319,112
- -----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 7,831,602
TELECOMMUNICATION & UTILITIES 81.0%
ELECTRIC UTILITIES 16.8%
56,500 Alliant Energy Corporation 1,243,000
29,700 Black Hills Corporation 916,542
74,400 Cleco Corporation 1,215,696
21,200 FirstEnergy Corp. 676,280
10,400 FPL Group, Inc. 657,280
23,100 Pinnacle West Capital
Corporation 820,050
38,700 Public Service Enterprise
Group Incorporated 1,625,400
- -----------------------------------------------------
7,154,248
GAS UTILITIES 9.9%
25,200 Kinder Morgan, Inc. 1,361,052
39,600 Nicor Inc. 1,391,544
48,800 Sempra Energy 1,432,768
- -----------------------------------------------------
4,185,364
INTEGRATED TELECOMMUNICATION
SERVICES 20.9%
9,100 ALLTEL Corporation 421,694
41,800 BellSouth Corporation 989,824
33,600 CenturyTel, Inc. 1,138,704
70,600 Golden Telecom, Inc.(a) 1,930,204
43,000 Philippine Long Distance
Telephone Company(a) -- ADR 507,400
48,000 SBC Communications Inc. 1,068,000
117,200 Sprint Corporation 1,769,720
10,100 Telefonos de Mexico SA de
CV -- ADR 308,555
23,400 Verizon Communications Inc. 759,096
- -----------------------------------------------------
8,893,197
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
MULTI-UTILITIES & UNREGULATED POWER 4.8%
28,000 Constellation Energy Group,
Inc. $ 1,001,840
57,600 Duke Energy Corporation 1,025,856
- -----------------------------------------------------
2,027,696
WIRELESS TELECOMMUNICATION
SERVICES 28.6%
113,500 America Movil S.A. de C.V. --
ADR 2,622,985
42,600 AO VimpelCom(a) -- ADR 2,592,636
37,300 Mobile Telesystems -- ADR 2,743,415
110,300 Nextel Communications,
Inc.(a) 2,174,013
19,600 NII Holdings Inc.(a) 1,172,080
77,000 STET Hellas
Telecommunications
S.A. -- ADR 863,940
- -----------------------------------------------------
12,169,069
- -----------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 34,429,574
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $36,235,177) 42,261,176
SHORT-TERM INVESTMENT 0.4%
VARIABLE RATE DEMAND NOTE
$167,285 American Family Demand Note,
0.741%(#) 167,285
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $167,285) 167,285
- -----------------------------------------------------
TOTAL INVESTMENTS 99.8%
(COST $36,402,462) 42,428,461
- -----------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.2% 80,733
- -----------------------------------------------------
NET ASSETS 100.0% $42,509,194
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
37
Management Overview
ICON SHORT-TERM FIXED INCOME FUND
A discussion with the Portfolio Management Team
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Short-Term Fixed Income Fund returned -0.02% for the one-year period
ended September 30, 2003, underperforming its unmanaged benchmarks, the Merrill
Lynch Treasury Bill Indexes. In comparison, the Merrill Lynch 3-Month U.S.
Treasury Bill Index returned 1.32%, the Merrill Lynch 6-Month U.S. Treasury Bill
Index returned 1.45%, and the Merrill Lynch 1-Year U.S. Treasury Bill Index
returned 1.82%.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
Economic uncertainty, geopolitical tensions, and lackluster business investment
pushed short-term interest rates to historical lows during the period. After
keeping rates unchanged for most of 2002, the Federal Reserve Board resumed its
accommodative monetary policy amid signs that war posed a threat to the subdued
recovery. The overnight lending rate was cut by one-half percent in November
2002, and again by one-quarter percent in June 2003, bringing the target rate to
a 45-year nadir of 1.00%.
Although no further reductions were expected, it was implied that
short-term rates could remain at these levels for the foreseeable future. In
light of modest economic expansion, job growth concerns and deflation risks,
short rates held steady as the fiscal year came to a close.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
The Fund's negative return for the fiscal year was the result of the ongoing
decline in short-term interest rates. Using 6-Month U.S. Treasury Bills as an
example, yields slid from just over 1.50% at the beginning of the period to a
low of 0.811% in June 2003. While trending slightly higher since then, yields
for the 6-Month T-Bill remained just over 1.00% at period-end.
In keeping with its primary objective of seeking high current income
consistent with preservation of capital, the Fund saw limited activity over the
past 12 months. Nevertheless, its relative underperformance, while
disappointing, was largely unavoidable. With short-term yields already at
near-historical lows, and factoring in additional rate cuts of 75 basis points
during the period, the Fund's operating expenses had an increasingly profound
effect on overall returns.
WHAT IS THE INVESTMENT OUTLOOK FOR THE SHORT-TERM FIXED INCOME MARKET?
We would expect short-term rates to rise as the economy ultimately improves and
investors continue to seek higher rates of return from the stock market.
However, given the current low-inflation environment it is unlikely that any
increase would be overly dramatic.
In hopes of increasing the Fund's yield, we have extended the time to
maturity by increasing the Fund's exposure to higher-yielding 2-Year U.S.
Treasury Notes. Although the Fund's duration typically ranges from six months to
18 months, this is consistent with ICON's policy of investing in high-quality,
short-term securities that offer a prudent combination of income potential and
interest rate sensitivity.
38
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 2/7/97
- --------------------------------------------------------------------------------
ICON Short-Term Fixed Income
Fund -0.02% 2.40% 3.25%
- --------------------------------------------------------------------------------
Merrill Lynch 3-Month T-Bill
Index 1.32% 3.84% 4.21%
- --------------------------------------------------------------------------------
Merrill Lynch
6-Month T-Bill Index 1.45% 4.12% 4.51%
- --------------------------------------------------------------------------------
Merrill Lynch 1-Year T-Bill
Index 1.82% 4.53% 4.95%
- --------------------------------------------------------------------------------
</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 a portion of its advisory fee on any day that
income from the Fund's investments is not adequate to cover daily expenses. The
Fund's total return would have been lower if this waiver had not been in place.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON SHORT-TERM FIXED INCOME MERRILL LYNCH 3-MONTH U.S. MERRILL LYNCH 6-MONTH U.S.
FUND TREASURY BILL TREASURY BILL
---------------------------- -------------------------- --------------------------
2/7/97 10000 10000 10000
9/30/97 10307 10345 10364
9/30/98 10984 10899 10960
9/30/99 11372 11414 11463
9/30/00 11878 12075 12138
9/30/01 12253 12732 12896
9/30/02 12370 12986 13216
9/30/03 12368 13157 13409
<Caption>
MERRILL LYNCH 1-YEAR U.S.
TREASURY BILL
-------------------------
2/7/97 10000
9/30/97 10386
9/30/98 11046
9/30/99 11516
9/30/00 12130
9/30/01 13050
9/30/02 13540
9/30/03 13786
</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 2/7/97 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.
39
Schedule of Investments
ICON SHORT-TERM FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
U.S. GOVERNMENT AGENCIES 42.6%
$2,625,000 Federal Home Loan Bank
Discount Note, 0.811%,
10-01-03 $2,625,000
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 2,625,000
U.S. GOVERNMENT OBLIGATIONS 57.2%
2,499,000 U.S. Treasury Note, 3.000%,
2-29-04 2,519,499
1,000,000 U.S. Treasury Note, 2.000%,
8-31-05 1,010,781
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS 3,530,280
- -----------------------------------------------------
TOTAL INVESTMENTS 99.8%
(AMORTIZED COST $6,129,746) 6,155,280
- -----------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.2% 10,725
- -----------------------------------------------------
NET ASSETS 100.0% $6,166,005
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
Dates shown on each security are due dates of the obligation.
40
Management Overview
ICON ASIA-PACIFIC REGION FUND
A discussion with J.C. Waller III, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Asia-Pacific Region Fund gained 34.15% for the one-year period ended
September 30, 2003, significantly outperforming its benchmark, the MSCI Pacific
Index, which returned 20.26% over the same period.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
Asian markets encountered stiff headwinds during the first half of the fiscal
year as Japanese economic malaise, North Korean military posturing, and the SARS
epidemic took their toll. China, Hong Kong, and Singapore bore the brunt of the
health crisis, with already troubled industries such as airlines, retailing, and
lodging exacerbating their decline. While global weakness proved a drag on
cyclical sectors throughout the region, New Zealand escaped much of the damage
due to the more defensive nature of its economy.
The mid-March 2003 resurgence in U.S. and European markets had little
impact on the Asia-Pacific region, which continued to struggle before hitting a
SARS-related bottom in April. With the subsequent containment of SARS, investors
bid shares higher on recognition of improving economic conditions.
Japanese technology stocks, in particular, led the advance as encouraging
economic reports and long-awaited banking reforms provided a much-needed boost.
Also participating were consumer and industrial issues, whose value remained
widespread despite the broad-based rally. With stock prices still trading below
our estimates of intrinsic value, companies remained committed to enhancing
capital flows into the region.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Changing market conditions prompted several noteworthy country rotations during
the period. Based on our value-to-price and relative strength measures,
weightings in Australia and Hong Kong were bolstered earlier in the period,
while positions in Japan, New Zealand and Singapore were trimmed. Once the
market rally ensued and leadership shifted to Japan, Hong Kong, and Singapore,
the Fund's New Zealand weighting was further reduced. Proceeds were reallocated
to Japan and Hong Kong, which stood to benefit from emerging strength in
cyclical sectors such as Information Technology, Consumer Discretionary and
Industrials. Japanese technology stocks were the clear leader, and the Fund
benefited from increased exposure in the sector.
In an effort to capture industry leadership, the Fund also invested in
American Depository Receipts (ADRs) of some companies operating in the Chinese
Internet segment. As the Internet software & services industry demonstrated
considerable strength during the second half, these dollar-denominated foreign
securities were among the Fund's top performers.
Other measurable contributors to performance included Japanese manufacturer
NIDEC Corp., which benefited from upbeat sales of precision hard disk drive
motors. Meanwhile, Hong Kong-based drugmaker China Pharmaceutical Enterprise &
Investment Corp. Ltd. rose on the strength of its substantial operations in
Mainland China.
Among the Fund's principal detractors, Japanese furniture and household
product retailer Shimachu Co. Ltd. retreated amid SARS-related weakness in its
chain store operations and when it reached our sell criteria, we sold it from
the Fund. Elsewhere, consumer electronics giant Sony Corp. slid as currency rate
fluctuations pressured Japanese exporters. The Fund did not own this stock at
the end of the reporting period.
WHAT IS THE INVESTMENT OUTLOOK FOR THE ASIA-PACIFIC REGION?
For investors looking to diversify, the Asia-Pacific Region presents a source of
value and leadership. Our quantitative system indicates attractive values across
Hong Kong, Japan, and Singapore, with ongoing leadership coming from the
economically sensitive Information Technology, Consumer Discretionary, and
Industrials sectors.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 100.1%
Top 10 Equity Holdings 32.6%
Number of Stocks 49
Cash Equivalents 0.2%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Denway Motors Limited 4.4%
NIDEC CORPORATION 3.5%
OLYMPUS OPTICAL CO., LTD. 3.5%
NISSAN MOTOR CO., LTD. 3.4%
Sharp Corporation 3.3%
CANON INC. 3.1%
SHIMANO INC. 2.9%
ROHM COMPANY LIMITED 2.9%
China Merchants Holdings International Company Limited 2.8%
China Pharmaceutical Group Limited 2.8%
Percentages are based upon net assets.
41
- --------------------------------------------------------------------------------
TOP COUNTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Japan 55.2%
Hong Kong 23.8%
Singapore 7.0%
China 6.4%
Australia 6.0%
New Zealand 1.7%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 2/25/97
- --------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund 34.15% 4.66% -3.99%
- --------------------------------------------------------------------------------
MSCI Pacific Index 20.26% 3.17% -4.61%
- --------------------------------------------------------------------------------
</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.
Total returns for the index for the periods through July 31, 2002 do not include
the reinvestment of any dividends or distributions.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON ASIA-PACIFIC REGION FUND MSCI PACIFIC INDEX
----------------------------- ------------------
2/25/97 10000 10000
9/30/97 9940 9840
9/30/98 6090 6264
9/30/99 10870 10610
9/30/00 10250 10380
9/30/01 6810 6730
9/30/02 5700 6089
9/30/03 7647 7322
</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 2/25/97 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.
42
Schedule of Investments
ICON ASIA-PACIFIC REGION FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ----------------------------------------------------
COMMON STOCKS (FOREIGN) 100.1%
CONSUMER DISCRETIONARY 21.9%
APPAREL RETAIL 2.3%
2,000 SHIMAMURA CO., LTD. (JP) $ 140,536
AUTOMOBILE MANUFACTURERS 12.9%
446,000 Denway Motors Limited (HK) 270,694
3,700 HONDA MOTOR CO., LTD. (JP) 148,046
19,200 NISSAN MOTOR CO., LTD. (JP) 207,099
5,400 Toyota Motor Corporation (JP) 158,546
- ----------------------------------------------------
784,385
CONSUMER ELECTRONICS 3.3%
13,700 Sharp Corporation (JP) 200,506
FOOTWEAR 1.0%
20,000 Yue Yuen Industrial (Holdings)
Limited (HK) 59,661
HOUSEHOLD APPLIANCES 1.2%
30,000 Techtronic Industries Company
Limited (HK) 73,414
TEXTILES 1.2%
94,000 Fountain Set (Holdings)
Limited (HK) 74,046
- ----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 1,332,548
ENERGY 1.5%
INTEGRATED OIL & GAS 1.5%
2,700 PetroChina Company Limited --
ADR 90,585
- ----------------------------------------------------
TOTAL ENERGY 90,585
FINANCIAL 4.9%
DIVERSIFIED BANKS 1.6%
12,679 United Overseas Bank Limited
(SG) 98,289
MULTI-SECTOR HOLDINGS 1.7%
113,700 Swire Pacific Limited (HK) 102,779
PROPERTY & CASUALTY INSURANCE 1.6%
14,000 QBE Insurance Group Limited
(AU) 94,380
- ----------------------------------------------------
TOTAL FINANCIAL 295,448
HEALTH CARE 8.0%
HEALTH CARE EQUIPMENT 5.2%
12,157 Fisher & Paykel Appliances
Holdings Limited (NZ) 104,338
9,000 OLYMPUS OPTICAL CO., LTD. (JP) 214,295
- ----------------------------------------------------
318,633
PHARMACEUTICALS 2.8%
523,000 China Pharmaceutical Group
Limited (HK) 168,845
- ----------------------------------------------------
TOTAL HEALTH CARE 487,478
INDUSTRIALS 16.2%
AIRLINES 1.7%
59,800 Cathay Pacific Airways Limited
(HK) 101,162
CONSTRUCTION & FARM MACHINERY 1.4%
16,000 KOMATSU LTD. (JP) 83,355
</Table>
<Table>
- ----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
INDUSTRIAL CONGLOMERATES 4.6%
150,000 China Merchants Holdings
International Company Limited
(HK) $ 172,396
59,000 Shanghai Industrial Holdings
Limited (HK) 106,285
- ----------------------------------------------------
278,681
INDUSTRIAL MACHINERY 3.0%
10,000 KOYO SEIKO CO., LTD. (JP) 93,273
43,000 SUMITOMO HEAVY INDUSTRIES,
LTD. (JP)(a) 90,454
- ----------------------------------------------------
183,727
MARINE 3.9%
190,000 China Shipping Development
Company Limited (HK) 93,236
42,000 Kawasaki Kisen Kaisha, Ltd.
(JP) 143,239
- ----------------------------------------------------
236,475
MARINE PORTS & SERVICES 1.6%
16,000 Kamigumi Co., Ltd. (JP) 100,828
- ----------------------------------------------------
TOTAL INDUSTRIALS 984,228
INFORMATION TECHNOLOGY 34.9%
COMPUTER HARDWARE 3.9%
350,000 Legend Group Limited (HK) 140,112
13,000 NEC Corporation (JP)(a) 97,749
- ----------------------------------------------------
237,861
COMPUTER STORAGE & PERIPHERALS 1.6%
9,000 Creative Technology Limited
(SG) 98,406
ELECTRONIC EQUIPMENT MANUFACTURERS 8.5%
6,600 ALPS ELECTRIC CO., LTD. (JP) 107,051
900 HIROSE ELECTRIC CO., LTD. (JP) 92,244
1,300 HOYA CORPORATION (JP) 100,658
2,600 NIDEC CORPORATION (JP) 215,745
- ----------------------------------------------------
515,698
ELECTRONIC MANUFACTURING SERVICES 2.5%
13,200 Venture Corporation Limited
(SG) 152,729
INTERNET SOFTWARE & SERVICES 6.8%
3,000 Netease.com Inc. -- ADR(a) 167,460
2,000 SINA CORP(a) (CH) 71,440
2,600 SOFTBANK CORP. (JP) 109,851
2,000 Sohu.com Inc.(a) (CH) 62,300
- ----------------------------------------------------
411,051
IT CONSULTING & OTHER SERVICES 1.5%
3,200 TIS Inc. (JP) 93,094
OFFICE ELECTRONICS 3.0%
3,800 CANON INC. (JP) 185,723
SEMICONDUCTOR EQUIPMENT 2.4%
2,200 ADVANTEST CORPORATION (JP) 145,925
SEMICONDUCTORS 2.9%
1,350 ROHM COMPANY LIMITED (JP) 175,223
</Table>
43
Schedule of Investments (continued)
ICON ASIA-PACIFIC REGION FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ----------------------------------------------------
SYSTEMS SOFTWARE 1.8%
4,500 FUJI SOFT ABC INCORPORATED
(JP) $ 111,579
- ----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 2,127,289
LEISURE AND CONSUMER STAPLES 5.6%
BREWERS 1.3%
13,335 Fraser & Neave Limited (SG) 79,460
HOTELS RESORTS & CRUISE LINES 1.4%
140,000 The Hongkong and Shanghai
Hotels, Limited (HK) 84,519
LEISURE PRODUCTS 2.9%
9,300 SHIMANO INC. (JP) 175,652
- ----------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 339,631
MATERIALS 7.1%
ALUMINUM 2.3%
41,000 Alumina Limited (AU) 141,529
DIVERSIFIED CHEMICALS 2.1%
15,600 Orica Limited (AU) 126,706
STEEL 2.7%
45,000 NIPPON STEEL CORPORATION (JP) 80,159
97,000 Sumitomo Metal Industries,
Ltd. (JP) 85,092
- ----------------------------------------------------
165,251
- ----------------------------------------------------
TOTAL MATERIALS 433,486
- ----------------------------------------------------
TOTAL COMMON STOCKS (FOREIGN)
(COST $4,517,379) 6,090,693
</Table>
<Table>
- ----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
SHORT-TERM INVESTMENT 0.2%
$11,427 J.P. Morgan Chase Interest
Bearing Demand Deposit Account $ 11,427
- ----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $11,427) 11,427
- ----------------------------------------------------
TOTAL INVESTMENTS 100.3% (COST
$4,528,806) 6,102,120
- ----------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.3%) (17,910)
- ----------------------------------------------------
NET ASSETS 100.0% $6,084,210
- ----------------------------------------------------
</Table>
GUIDE TO UNDERSTANDING FOREIGN HOLDINGS
The following abbreviations are used throughout the Schedule of Investments to
indicate the country of origin of non-U.S. holdings:
<Table>
AU Australia JP Japan
CH China NZ New Zealand
HK Hong Kong SG Singapore
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
ADR -- American Depositary Receipt
44
Management Overview
ICON NORTH EUROPE REGION FUND
A discussion with Robert Straus, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON North Europe Region Fund appreciated 42.60% for the one-year period
ended September 30, 2003, significantly outpacing its benchmarks, the MSCI
Europe 15 Index, which returned 24.16% and the Bloomberg European 500 Index,
which gained 11.44% over the same period.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
European stocks followed their U.S. counterparts out of the depths of despair
last fall, overcoming weakening economic fundamentals, rising unemployment, and
waning consumer confidence. The advance was short-lived, however, as markets
again retreated amid escalating war concerns. In mid-March 2003, just one day
after the U.S. market reached a climactic low, European bourses followed suit.
Global markets then rocketed higher on raised hopes that the worst of the
three-year downturn was finally behind us -- a sentiment bolstered by a swift
victory in Iraq.
By the end of the fiscal year, signs of improving economic conditions were
beginning to surface throughout the North Europe Region. The major gauge of
consumer confidence in Germany, Europe's largest economy, showed steady gains
during the second half of the fiscal year. The IFO Business Confidence Index
rose for each of the five final months in the reporting period. During the third
calendar quarter of 2003, the pace of earnings-per-share upgrades accelerated.
While growth in EuroZone gross domestic product remains uninspiring -- it is
expected to come in at 0.5% this year -- expectations for next year are
encouraging. At the same time, a weaker U.S. dollar could continue to dampen
exports as well as corporate profits.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Sector and industry allocation were primary factors in the Fund's outperformance
during the period. In the past, country fundamentals played the most critical
role in determining where to allocate investment capital. Since the introduction
of the Euro currency and in conjunction with an increasingly correlated world
economy, we are more cognizant of industry and sector themes that cut across
worldwide borders. We have therefore been paying close attention to leading
European sectors and industries just as we do in our U.S. investment model.
Based on our valuation and relative strength measures, the Information
Technology and Consumer Discretionary sectors were the most heavily weighted
sectors in our core domestic model during the fiscal year. As such, we saw a
similar theme taking hold in European markets coming off the lows last fall and
again in the spring. In tilting the Fund toward these sectors throughout the
reporting period, we built a position of nearly 53% in these sectors at
year-end. Consequently, these sector weights were key drivers in the Fund's
strong performance, as was the Fund's significant weighting in the Financials
sector.
Individual holdings that contributed to positive performance included ASML
Holding N.V., the Netherlands-based semiconductor equipment manufacturer, which
gained 113.6% for the period on a cyclical rebound in ordering trends.
Meanwhile, OM Hex AB, a Swedish company offering technology-based solutions
primarily to securities exchanges, rose 193.9% as financial markets experienced
higher trading volume during the period.
In contrast, Danish brewer Carlsberg A/S encountered unfavorable market
conditions, as consumer spending fell in the wake of economic uncertainty.
Elsewhere, Finnish pharmaceutical firm Orion Yhtyma Oyj shed more than 20% after
the firm halted development of a key drug, which proved ineffective in clinical
tests. As of the end of the fiscal year, the Fund did not own either of these
lagging stocks.
WHAT IS THE INVESTMENT OUTLOOK FOR THE NORTH EUROPE REGION?
Not unlike the U.S. market, we believe the North Europe Region remains
undervalued as we head into the new fiscal year. Economic conditions continue to
show signs of improvement, which should gradually draw pessimistic and fearful
investors off the sidelines. In turn, we would expect ongoing strength in
economically sensitive sectors, namely Information Technology and Consumer
Discretionary. As the global economy strengthens, we would also expect the
Industrials sector to exhibit leadership.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 99.3%
Top 10 Equity Holdings 39.1%
Number of Stocks 51
Cash Equivalents 0.9%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
ASML Holding N.V. 6.0%
Amvescap Plc 4.3%
ARM Holdings plc 4.3%
LogicaCMG plc 4.0%
Epcos AG 3.9%
Schroders PLC 3.9%
OM HEX AB 3.8%
Metro AG 3.3%
Nokia Oyj 2.9%
SAP AG 2.7%
Percentages are based upon net assets.
The IFO Business Confidence Index is a monthly survey of 7,000 German companies
that measures executives' expectations about the economic climate.
45
- --------------------------------------------------------------------------------
TOP COUNTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Germany 32.6%
United Kingdom 30.6%
Netherlands 12.6%
Sweden 10.3%
Finland 4.3%
Belgium 3.2%
Norway 2.9%
Denmark 2.8%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 2/18/97
- --------------------------------------------------------------------------------
ICON North Europe Region Fund 42.60% 0.56% 3.02%
- --------------------------------------------------------------------------------
MSCI Europe 15 Index 24.16% -2.94% 1.55%
- --------------------------------------------------------------------------------
Bloomberg European 500
Index 11.44% -0.08% 3.80%
- --------------------------------------------------------------------------------
</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.
Total returns for the MSCI index for the periods through July 31, 2002 do not
include the reinvestment of any dividends or distributions.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON NORTH EUROPE REGION FUND BLOOMBERG EUROPEAN 500 INDEX MSCI EUROPE 15 INDEX
----------------------------- ---------------------------- --------------------
2/18/97 10000.00 10126.00 10000.00
9/30/97 11060.00 12561.40 12053.00
9/30/98 11834.00 15170.00 12850.00
9/30/99 13346.00 20708.50 14826.00
9/30/00 14739.00 19720.30 15418.00
9/30/01 10274.00 17150.20 11224.00
9/30/02 8533.00 12028.50 8915.00
9/30/03 12168.00 12799.70 11069.00
</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 2/18/97 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.
46
Schedule of Investments
ICON NORTH EUROPE REGION FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS (FOREIGN) 99.3%
CONSUMER DISCRETIONARY 14.6%
ADVERTISING 1.9%
23,679 WPP Group plc (UK) $ 199,652
APPAREL & ACCESSORIES 1.4%
7,596 Hugo Boss AG (GR) 144,188
AUTOMOBILE MANUFACTURERS 1.1%
3,358 DaimlerChrysler AG (GR) 117,317
CATALOG RETAIL 2.1%
20,782 GU.S. plc (UK) 226,498
CONSUMER ELECTRONICS 2.1%
9,764 Koninklijke (Royal) Philips
Electronics N.V. (NE) 221,273
DEPARTMENT STORES 1.3%
5,442 KarstadtQuelle AG (GR) 137,840
HOUSEHOLD APPLIANCES 0.8%
4,032 Electrolux AB (SW) 87,829
SPECIALTY STORES 2.3%
8,509 Douglas Holding AG (GR) 241,684
TIRES & RUBBER 1.6%
5,865 Continental AG (GR) 169,249
- -----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 1,545,530
FINANCIAL 21.5%
ASSET MANAGEMENT & CUSTODY BANKS 8.2%
60,539 Amvescap Plc (UK) 458,140
37,022 Schroders PLC (UK) 412,721
- -----------------------------------------------------
870,861
DIVERSIFIED BANKS 3.5%
16,745 Barclays PLC (UK) 128,459
6,245 Danske Bank A/S (DE) 119,000
3,358 KBC Bankverzekeringsholding
(BE) 127,875
- -----------------------------------------------------
375,334
DIVERSIFIED CAPITAL MARKETS 2.3%
4,043 Deutsche Bank AG (GR) 245,301
LIFE & HEALTH INSURANCE 3.7%
8,349 Aegon N.V. (NE) 97,131
55,813 Legal & General Group plc (UK) 85,541
65,066 Skandia Forsakrings AB (SW) 205,240
- -----------------------------------------------------
387,912
SPECIALIZED FINANCE 3.8%
40,166 OM HEX AB (SW) 399,822
- -----------------------------------------------------
TOTAL FINANCIAL 2,279,230
HEALTH CARE 3.6%
BIOTECHNOLOGY 2.2%
21,000 QIAGEN N.V. (GR)(a) 229,638
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
PHARMACEUTICALS 1.4%
1,895 AstraZeneca PLC (UK) $ 80,031
1,611 Schering AG (GR) 69,791
- -----------------------------------------------------
149,822
- -----------------------------------------------------
TOTAL HEALTH CARE 379,460
INDUSTRIALS 5.6%
AIR FREIGHT & COURIERS 1.2%
6,607 TPG NV (NE) 124,877
AIRLINES 1.8%
14,904 Deutsche Lufthansa AG (GR) 195,260
CONSTRUCTION & FARM MACHINERY 0.8%
3,688 Volvo AB (SW) 85,342
INDUSTRIAL CONGLOMERATES 1.8%
3,093 Siemens AG (GR) 183,700
- -----------------------------------------------------
TOTAL INDUSTRIALS 589,179
INFORMATION TECHNOLOGY 34.3%
APPLICATION SOFTWARE 2.7%
2,364 SAP AG (GR) 289,065
COMMUNICATIONS EQUIPMENT 4.8%
100,000 Nera ASA (NW)(a) 192,746
20,255 Nokia Oyj (FI) 311,833
- -----------------------------------------------------
504,579
ELECTRONIC EQUIPMENT MANUFACTURERS 5.9%
3,087 Barco NV (BE) 207,070
25,009 Epcos AG (GR)(a) 415,020
- -----------------------------------------------------
622,090
HOME ENTERTAINMENT SOFTWARE 0.9%
42,588 Eidos plc (UK)(a) 94,636
IT CONSULTING & OTHER SERVICES 7.4%
106,619 LogicaCMG plc (UK) 423,357
7,163 TietoEnator Oyj (FI) 144,728
131,636 WM-data AB (SW)(a) 219,524
- -----------------------------------------------------
787,609
OFFICE ELECTRONICS 1.5%
11,534 Oce N.V. (NE) 159,034
SEMICONDUCTOR EQUIPMENT 6.0%
48,171 ASML Holding N.V. (NE)(a) 631,097
SEMICONDUCTORS 4.3%
281,172 ARM Holdings plc (UK)(a) 457,796
TECHNOLOGY DISTRIBUTORS 0.8%
16,341 Electrocomponents plc (UK) 87,284
- -----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 3,633,190
LEISURE AND CONSUMER STAPLES 11.2%
BROADCASTING & CABLE TV 2.6%
103,232 Carlton Communications plc
(UK) 276,988
CASINOS & GAMING 1.8%
65,448 Hilton Group plc (UK) 195,452
</Table>
47
Schedule of Investments
ICON NORTH EUROPE REGION FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
HOTELS, RESORTS & CRUISE LINES 2.4%
15,153 TUI AG (GR) $ 251,638
HYPERMARKETS & SUPER CENTERS 3.3%
9,573 Metro AG (GR) 345,595
PUBLISHING 1.1%
7,001 Schibsted ASA (NW) 113,113
- -----------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 1,182,786
MATERIALS 4.1%
DIVERSIFIED CHEMICALS 3.1%
3,366 Akzo Nobel N.V. (NE) 104,935
5,247 BASF AG (GR) 228,284
- -----------------------------------------------------
333,219
INDUSTRIAL GASES 1.0%
2,351 Linde AG (GR) 96,373
- -----------------------------------------------------
TOTAL MATERIALS 429,592
TELECOMMUNICATION & UTILITIES 4.4%
INTEGRATED TELECOMMUNICATION 3.4%
6,108 Deutsche Telekom AG (GR)(a) 87,846
5,720 TDC A/S (DE) 175,829
2,149 Tele2 AB (SW)(a) 93,901
- -----------------------------------------------------
357,576
WATER UTILITIES 1.0%
14,061 AWG plc (UK) 112,716
- -----------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 470,292
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $7,758,166) 10,509,259
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
SHORT-TERM INVESTMENT 0.9%
$93,838 J.P. Morgan Chase Interest
Bearing Demand Deposit Account $ 93,838
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $93,838) 93,838
- -----------------------------------------------------
TOTAL INVESTMENTS 100.2%
(COST $7,852,004) 10,603,097
- -----------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.2%) (15,598)
- -----------------------------------------------------
NET ASSETS 100.0% $10,587,499
- -----------------------------------------------------
</Table>
GUIDE TO UNDERSTANDING FOREIGN HOLDINGS
The following abbreviations are used throughout the Schedule of Investments to
indicate the country of origin of non-U.S. holdings:
<Table>
BE Belgium NE Netherlands
DE Denmark NW Norway
FI Finland SW Sweden
GR Germany UK United Kingdom
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
48
Management Overview
ICON SOUTH EUROPE REGION FUND
A discussion with Derek Rollingson, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON South Europe Region Fund gained 32.97% for the fiscal year ended
September 30, 2003, outpacing its benchmark, the MSCI Europe 15 Index, which
returned 24.16% and the Bloomberg European 500 Index, which gained 11.44% over
the same period.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE OVER THE PAST YEAR?
Global markets were highly correlated throughout the fiscal year as conditions
in the South Europe Region mirrored those of the United States. For much of the
period, Eurostat gross domestic product continued to grow at a meager rate,
while leading regional markets France and Switzerland struggled with economic
contraction. As concerns mounted over rising joblessness, the European Central
Bank slashed interest rates to historic lows. At the same time, European
currencies surged higher amid widening U.S. budget deficits.
Against this difficult backdrop, a swift victory in Iraq raised hopes for a
cyclical rebound, offsetting the excessive gloom that had permeated the region.
Bolstered by low interest rates, proposed tax cuts, pension overhaul, and
structural reforms, signs of economic stabilization began to emerge. However,
even as stocks advanced, currency gains threatened to dampen exports as well as
dollar-denominated earnings.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Sector and industry allocation were primary factors in the Fund's
benchmark-topping performance during the period. In the past, country
fundamentals played the most critical role in determining where to allocate
investment capital. Since the introduction of the euro currency and in
conjunction with an increasingly correlated world economy, we are more cognizant
of industry and sector themes cutting across worldwide borders. We have
therefore begun to pay careful attention to leading sectors and industries just
as we do in our U.S. investment model.
Another contributing factor was the impact of currency rate fluctuations.
Although currency gains may detract from reported financial results, they can
also help boost returns in the underlying equities. The most notable of these
fiscal-year gains was realized by the euro, the common currency of the European
Monetary Union (EMU), which appreciated 18.14% against the U.S. dollar during
the 12 months. Likewise, the Swiss franc also strengthened, registering a 10.57%
advance in its exchange rate. Since the Fund does not hedge currency risk, it
benefited from direct exposure to these gains. Country performance also
benefited, with EMU member France's CAC 40 Index appreciating 36.54% while
Switzerland's Swiss Market Index rose 20.30%.
On an individual level, measurable contributors to Fund performance
included Austrian brewer BBAG Oesterreichische Brau-Beteiligungs AG, which
doubled during the period and was sold when the company agreed to be acquired.
Meanwhile, Banca Intesa SpA, Italy's largest banking company, reported robust
profitability despite an unfavorable economic environment. Financial services
provider FinecoGroup SpA also advanced, having benefited from consolidation and
deregulation in Italy's banking system.
In contrast, economic uncertainty pressured several of the Fund's Swiss
holdings, including hotel operator Kuoni Reisen Holding AG and media giant
PubliGroupe AG. Losing 35.39% and 31.58%, respectively, these stocks fell victim
to slowdowns in travel and advertising spending. Nevertheless, at the end of the
period, neither stock had reached our sell discipline and we continued to hold
them.
WHAT IS THE INVESTMENT OUTLOOK FOR THE SOUTH EUROPE REGION?
Signs of economic stabilization have raised our expectations that European
markets can participate in a global recovery. Despite the robust gains of the
past year, our valuation models continue to detect widespread upside potential,
and the markets of South Europe are no exception. Given this more upbeat
outlook, and the emergence of relative strength on both a country and industry
level, we believe the setting appears poised for a rebound in the South Europe
Region.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 91.0%
Top 10 Equity Holdings 30.1%
Number of Stocks 38
Exchange Traded Funds 3.4%
Cash Equivalents 5.4%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Ascom Holding AG 4.0%
Charles Voegele Holding AG 3.4%
Cap Gemini SA 3.0%
Trigano 3.0%
Banca Intesa S.p.A 2.9%
Sol Melia, S.A. 2.8%
Credit Suisse Group 2.8%
Marionnaud Parfumeries 2.8%
PubliGroupe S.A. 2.7%
Unaxis Holding AG 2.7%
Percentages are based upon net assets.
The CAC 40 Index in France is a narrow-based, modified capitalization-weighted
index of 40 companies listed on the Paris Bourse. The Swiss Market Index is a
capitalization-weighted index of the largest and most liquid stocks traded on
the Electronic Bourse System.
49
- --------------------------------------------------------------------------------
TOP COUNTRIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
France 36.9%
Switzerland 22.6%
Italy 15.9%
Spain 11.1%
Austria 4.5%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
ONE FIVE INCEPTION
YEAR YEARS 2/20/97
- --------------------------------------------------------------------------------
ICON South Europe Region Fund 32.97% 0.73% 4.17%
- --------------------------------------------------------------------------------
MSCI Europe 15 Index 24.16% -2.94% 1.55%
- --------------------------------------------------------------------------------
Bloomberg European 500
Index 11.44% -0.08% 3.85%
- --------------------------------------------------------------------------------
</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.
Total returns for the MSCI index for the periods through July 31, 2002 do not
include the reinvestment of any dividends or distributions.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON SOUTH EUROPE REGION FUND BLOOMBERG EUROPEAN 500 INDEX MSCI EUROPE 15 INDEX
----------------------------- ---------------------------- --------------------
2/20/97 10000.00 10154.00 10000.00
9/30/97 11900.00 12596.10 12051.00
9/30/98 12627.00 15212.00 12847.00
9/30/99 13437.00 20765.80 14823.00
9/29/00 13464.00 19774.80 15415.00
9/30/01 10795.00 17197.60 11222.00
9/30/02 9850.00 12061.80 8913.00
9/30/03 13098.00 12835.10 11067.00
</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 2/20/97 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.
50
Schedule of Investments
ICON SOUTH EUROPE REGION FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS (FOREIGN) 91.0%
CONSUMER DISCRETIONARY 15.9%
ADVERTISING 2.8%
1,026 PubliGroupe S.A. (SZ)(a) $ 252,499
APPAREL RETAIL 5.4%
2,570 Camaieu (FR) 184,961
7,600 Charles Voegele Holding AG
(SZ)(a) 316,811
- -----------------------------------------------------
501,772
AUTO PARTS & EQUIPMENT 2.4%
6,100 Valeo SA (FR) 222,703
DEPARTMENT STORES 2.5%
2,850 Pinault-Printemps-Redoute SA
(FR) 233,987
SPECIALTY STORES 2.8%
6,279 Marionnaud Parfumeries (FR) 257,536
- -----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 1,468,497
FINANCIAL 18.8%
DIVERSIFIED BANKS 11.4%
87,945 Banca Intesa S.p.A (IT) 266,283
24,500 Banco Santander Central
Hispano SA (SP) 207,709
4,000 BNP Paribas SA (FR) 196,110
18,674 Sanpaolo IMI S.p.A (IT) 186,153
3,000 Societe Generale (FR) 199,837
- -----------------------------------------------------
1,056,092
DIVERSIFIED CAPITAL MARKETS 4.9%
8,160 Credit Suisse Group (SZ) 261,063
3,444 UBS AG (SZ) 193,246
- -----------------------------------------------------
454,309
OTHER DIVERSIFIED FINANCIAL SERVICES 2.5%
358,024 FinecoGroup S.p.A (IT)(a) 231,400
- -----------------------------------------------------
TOTAL FINANCIAL 1,741,801
HEALTHCARE 2.4%
PHARMACEUTICALS 2.4%
2,667 Roche Holding AG (SZ) 221,139
- -----------------------------------------------------
TOTAL HEALTHCARE 221,139
INDUSTRIALS 17.2%
AEROSPACE & DEFENSE 2.4%
8,452 Zodiac SA (FR) 223,333
BUILDING PRODUCTS 1.9%
4,800 Compagnie de Saint-Gobain (FR) 176,471
CONSTRUCTION & ENGINEERING 6.1%
4,250 ACS, Actividades de
Construccion y Servicios, S.A.
(SP) 180,007
6,400 Fomento de Contrucciones y
Contratas S.A. (SP) 197,582
308,147 Impregilo S.p.A (IT) 187,680
- -----------------------------------------------------
565,269
DIVERSIFIED COMMERCIAL SERVICES 2.0%
11,400 Prosegur, Compania de
Seguridad SA (SP)(r) 181,879
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
HIGHWAYS & RAILTRACKS 2.3%
15,318 Autostrade - Concessioni e
Construzioni Autostrade S.p.A
(IT)(a) $ 215,312
INDUSTRIAL MACHINERY 2.5%
8,100 VA Technologie AG (AT)(a) 233,935
- -----------------------------------------------------
TOTAL INDUSTRIALS 1,596,199
INFORMATION TECHNOLOGY 12.1%
COMMUNICATIONS EQUIPMENT 4.0%
55,819 Ascom Holding AG (SZ)(a) 368,999
IT CONSULTING & OTHER SERVICES 3.0%
6,700 Cap Gemini SA (FR)(a) 277,769
SEMICONDUCTOR EQUIPMENT 2.7%
2,100 Unaxis Holding AG (SZ) 248,864
SEMICONDUCTORS 2.4%
9,200 STMicroelectronics N.V. (FR) 222,313
- -----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 1,117,945
LEISURE AND CONSUMER STAPLES 14.7%
BROADCASTING & CABLE TV 2.2%
21,884 Mediaset S.p.A (IT) 200,312
FOOD RETAIL 2.0%
2,150 Casino Guichard-Perrachon SA
(FR) 190,663
HOTELS, RESORTS & CRUISE LINES 5.3%
810 Kuoni Reisen Holding AG (SZ) 229,396
36,600 Sol Melia, S.A. (SP) 261,702
- -----------------------------------------------------
491,098
LEISURE PRODUCTS 3.0%
6,950 Trigano (FR) 275,911
MOVIES & ENTERTAINMENT 2.2%
11,687 Vivendi Universal SA (FR)(a) 206,873
- -----------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 1,364,857
MATERIALS 8.0%
CONSTRUCTION MATERIALS 5.4%
18,220 Buzzi Unicem S.p.A (IT) 184,597
2,000 Lafarge SA (FR) 129,614
13,000 RHI AG (AT)(a) 183,032
- -----------------------------------------------------
497,243
STEEL 2.6%
19,600 Arcelor (FR) 238,295
- -----------------------------------------------------
TOTAL MATERIALS 735,538
TELECOMMUNICATION & UTILITIES 1.9%
WIRELESS TELECOMMUNICATION SERVICES 1.9%
6,755 Bouygues SA (FR) 177,862
- -----------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 177,862
- -----------------------------------------------------
TOTAL COMMON STOCKS (FOREIGN)
(COST $7,374,701) 8,423,838
</Table>
51
Schedule of Investments (continued)
ICON SOUTH EUROPE REGION FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
EXCHANGE-TRADED FUNDS 3.4%
9,100 iShares MSCI France Index Fund $ 155,155
12,800 iShares MSCI Switzerland Index
Fund 163,584
- -----------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS
(COST $311,247) 318,739
SHORT-TERM INVESTMENT 5.4%
$499,252 J.P. Morgan Chase Interest
Bearing Demand Deposit
Account, 0.025% 499,252
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $499,252) 499,252
- -----------------------------------------------------
TOTAL INVESTMENTS 99.8%
(COST $8,185,200) 9,241,829
- -----------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.2% 20,620
- -----------------------------------------------------
NET ASSETS 100.0% $9,262,449
- -----------------------------------------------------
</Table>
GUIDE TO UNDERSTANDING FOREIGN HOLDINGS
The following abbreviations are used throughout the Schedule of Investments to
indicate the country of origin of non-U.S. holdings:
AT Austria
FR France
IT Italy
SP Spain
SZ Switzerland
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
(r) Restricted security
Date acquired 9-11-03
Cost $175,265
52
THIS PAGE INTENTIONALLY LEFT BLANK
53
Statements of Assets and Liabilities
<Table>
<Caption>
------------------ -------------- -------------- -------------- --------------
SEPTEMBER 30, 2003 ICON ICON ICON ICON ICON
CONSUMER ENERGY FINANCIAL HEALTHCARE INDUSTRIALS
DISCRETIONARY FUND FUND FUND FUND FUND
------------------ -------------- -------------- -------------- --------------
ASSETS
Investments, at cost $122,014,948 $47,052,557 $124,755,710 $114,969,201 $115,950,040
------------------ -------------- -------------- -------------- --------------
Investments, at value 150,217,450 55,434,050 139,126,424 141,202,388 131,398,895
Cash - 954 - - 1,458
Receivables:
Fund shares sold 480,368 286,098 318,079 357,188 331,467
Investments sold - - - - 1,003,389
Interest 260 1,357 481 1,431 1,645
Dividends 63,398 69,999 117,630 30,387 63,042
Other assets 11,167 5,215 12,632 10,130 6,650
------------------ -------------- -------------- -------------- --------------
Total Assets 150,772,643 55,797,673 139,575,246 141,601,524 132,806,546
------------------ -------------- -------------- -------------- --------------
LIABILITIES
Payables:
Due to custodian bank - - - - -
Fund shares redeemed 478,292 67,431 100,779 127,030 48,686
Advisory fees 129,082 45,934 116,471 115,990 111,453
Fund accounting, custodial and
transfer agent fees 44,426 16,183 40,865 40,024 36,906
Administration fees 6,443 2,295 5,821 5,806 5,577
Distributions due to shareholders - - - - -
Accrued expenses 49,677 36,799 50,186 53,783 49,611
------------------ -------------- -------------- -------------- --------------
Total Liabilities 707,920 168,642 314,122 342,633 252,233
------------------ -------------- -------------- -------------- --------------
NET ASSETS $150,064,723 $55,629,031 $139,261,124 $141,258,891 $132,554,313
================== ============== ============== ============== ==============
Shares outstanding (unlimited shares
authorized, no par value) 12,728,806 4,060,830 12,920,873 11,504,849 15,066,823
Net asset value (offering price and
redemption price per share) $ 11.79 $ 13.70 $ 10.78 $ 12.28 $ 8.80
</Table>
The accompanying notes are an integral part of the financial statements.
54
<Table>
<Caption>
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
ICON ICON LEISURE ICON ICON ICON ICON ICON
INFORMATION AND CONSUMER MATERIALS TELECOMMUNICATION SHORT-TERM FIXED ASIA-PACIFIC NORTH EUROPE
TECHNOLOGY FUND STAPLES FUND FUND & UTILITIES FUND INCOME FUND REGION FUND REGION FUND
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
$247,182,985 $70,998,867 $28,275,354 $36,402,462 $6,129,746 $4,528,806 $ 7,852,004
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
308,483,471 82,455,753 30,310,229 42,428,461 6,155,280 6,102,120 10,603,097
- - - - 81 - -
1,341,413 227,636 125,898 126,453 34,175 538 7,909
1,263,580 - - - - - -
351 237 129 81 8,088 60 42
22,680 26,076 12,962 66,091 - 15,965 28,098
19,097 7,261 4,430 3,354 825 707 669
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
311,130,592 82,716,963 30,453,648 42,624,440 6,198,449 6,119,390 10,639,815
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
1,278,378 82,132 - - - - -
1,395,938 151,502 15,288 35,129 6,041 7,325 12,163
273,299 70,701 25,708 35,746 3,302 5,714 9,570
90,077 24,290 8,852 12,257 1,776 3,576 6,419
13,654 3,531 1,284 1,787 254 285 478
- - - - 2,714 - -
106,756 37,494 26,265 30,327 18,357 18,280 23,686
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
3,158,102 369,650 77,397 115,246 32,444 35,180 52,316
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
$307,972,490 $82,347,313 $30,376,251 $42,509,194 $6,166,005 $6,084,210 $10,587,499
=============== ============== ============== ================= ================ ============== ==============
37,238,836 6,632,517 4,895,495 7,476,448 675,595 797,931 1,259,354
$ 8.27 $ 12.42 $ 6.20 $ 5.69 $ 9.13 $ 7.62 $ 8.41
<Caption>
--------------
ICON
SOUTH EUROPE
REGION FUND
--------------
$8,185,200
--------------
9,241,829
-
48,877
-
76
11,850
641
--------------
9,303,273
--------------
-
7,220
7,529
4,733
377
-
20,965
--------------
40,824
--------------
$9,262,449
==============
941,153
$ 9.84
</Table>
55
Statements of Operations
<Table>
<Caption>
------------------ -------------- -------------- -------------- --------------
FOR THE YEAR ENDED SEPTEMBER 30, 2003 ICON ICON ICON ICON ICON
CONSUMER ENERGY FINANCIAL HEALTHCARE INDUSTRIALS
DISCRETIONARY FUND FUND FUND FUND FUND
------------------ -------------- -------------- -------------- --------------
INVESTMENT INCOME
Interest $ 8,288 $ 36,852 $ 15,913 $ 25,052 $ 21,713
Dividends 723,481 803,173 2,444,610 573,574 539,320
Foreign taxes withheld - (10,066) (2,290) (1,015) (3,098)
------------------ -------------- -------------- -------------- --------------
Total Investment Income 731,769 829,959 2,458,233 597,611 557,935
------------------ -------------- -------------- -------------- --------------
EXPENSES
Advisory fees 1,187,927 748,361 1,310,268 1,200,639 703,766
Fund accounting, custodial and transfer
agent fees 192,253 115,697 209,282 192,507 118,773
Administration fees 53,985 33,862 59,408 54,543 32,843
Audit fees 18,948 11,908 20,897 19,154 11,247
Registration fees 31,124 26,184 24,913 28,606 23,850
Legal fees 13,195 8,637 14,019 13,193 8,055
Insurance expense 15,420 6,247 5,012 3,156 8,157
Trustee fees and expenses 9,674 6,029 9,086 8,566 5,939
Shareholder reports 30,546 25,780 33,861 33,562 16,775
Interest expense 19,369 12,702 4,236 4,161 5,035
Other expenses 93,466 53,718 64,280 53,932 74,284
------------------ -------------- -------------- -------------- --------------
Total Expenses 1,665,907 1,049,125 1,755,262 1,612,019 1,008,724
Fees waived (Note 2) - - - - -
------------------ -------------- -------------- -------------- --------------
Net expenses 1,665,907 1,049,125 1,755,262 1,612,019 1,008,724
------------------ -------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) (934,138) (219,166) 702,971 (1,014,408) (450,789)
------------------ -------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS
Net realized gain/(loss) from
investment transactions (3,833,114) (5,971,578) 557,118 (6,819,268) (6,100,761)
Net realized gain/(loss) from foreign
currency translations - - - - -
Change in unrealized net appreciation/
(depreciation):
on securities 24,416,611 15,279,562 26,857,798 24,785,530 15,072,214
on other assets and liabilities
denominated in foreign currency - - - - -
------------------ -------------- -------------- -------------- --------------
Net realized and unrealized gain/(loss)
on investments 20,583,497 9,307,984 27,414,916 17,966,262 8,971,453
------------------ -------------- -------------- -------------- --------------
NET INCREASE/(DECREASE) IN
NET ASSETS RESULTING FROM OPERATIONS $19,649,359 $ 9,088,818 $28,117,887 $16,951,854 $ 8,520,664
================== ============== ============== ============== ==============
</Table>
The accompanying notes are an integral part of the financial statements.
56
<Table>
<Caption>
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
ICON ICON LEISURE ICON ICON ICON ICON ICON
INFORMATION AND CONSUMER MATERIALS TELECOMMUNICATION SHORT-TERM FIXED ASIA-PACIFIC NORTH EUROPE
TECHNOLOGY FUND STAPLES FUND FUND & UTILITIES FUND INCOME FUND REGION FUND REGION FUND
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
$ 27,215 $ 7,418 $ 4,921 $ 6,563 $122,590 $ - $ -
342,077 700,930 841,499 1,838,496 - 201,246 284,261
(8,858) (785) (18,516) (6,319) - (23,185) (37,723)
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
360,434 707,563 827,904 1,838,740 122,590 178,061 246,538
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
1,902,446 809,237 401,496 532,023 47,087 66,809 85,690
316,803 129,405 63,754 82,421 11,255 18,234 23,175
86,751 36,691 18,164 24,087 3,285 3,033 3,896
30,427 12,894 6,386 8,469 1,155 1,065 1,367
27,047 24,186 21,048 21,854 14,327 15,371 15,853
19,625 9,060 4,580 6,066 784 734 913
15,421 7,276 3,622 1,388 1,079 578 469
12,573 6,325 3,347 4,035 535 510 646
38,616 23,045 13,298 18,365 2,364 2,330 2,484
11,190 12,447 19,578 17,609 - 2,645 2,177
114,835 49,914 35,972 33,881 21,597 21,223 34,387
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
2,575,734 1,120,480 591,245 750,198 103,468 132,532 171,057
- - - - (232) - -
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
2,575,734 1,120,480 591,245 750,198 103,236 132,532 171,057
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
(2,215,300) (412,917) 236,659 1,088,542 19,354 45,529 75,481
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
3,753,887 (1,107,203) (3,456,930) (2,316,365) - 745,694 120,749
- - - - - (1,457) 3,777
69,595,068 9,588,234 5,930,581 9,090,560 (23,336) 868,576 2,996,803
- - - - - (56) 750
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
73,348,955 8,481,031 2,473,651 6,774,195 (23,336) 1,612,757 3,122,079
--------------- -------------- -------------- ----------------- ---------------- -------------- --------------
$71,133,655 $ 8,068,114 $ 2,710,310 $ 7,862,737 $ (3,982) $1,658,286 $3,197,560
=============== ============== ============== ================= ================ ============== ==============
<Caption>
--------------
ICON
SOUTH EUROPE
REGION FUND
--------------
$ 1,037
124,971
(19,003)
--------------
107,005
--------------
67,723
18,204
3,081
1,082
14,159
750
635
478
1,962
-
18,755
--------------
126,829
-
--------------
126,829
--------------
(19,824)
--------------
558,317
691
1,567,835
234
--------------
2,127,077
--------------
$2,107,253
==============
</Table>
57
Statements of Changes in Net Assets
<Table>
<Caption>
------------------------------- -------------------------------
ICON CONSUMER ICON
DISCRETIONARY FUND ENERGY FUND
------------------------------- -------------------------------
Year Ended September 30, Year Ended September 30,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
OPERATIONS
Net investment income/(loss) $ (934,138) $ (898,691) $ (219,166) $ (437,299)
Net realized gain/(loss) from investment transactions (3,833,114) (8,076,438) (5,971,578) (3,519,879)
Change in unrealized appreciation/(depreciation) on
securities and foreign currency translations 24,416,611 15,403,956 15,279,562 (2,560,175)
-------------- -------------- -------------- --------------
Net increase/(decrease) in net assets resulting from
operations 19,649,359 6,428,827 9,088,818 (6,517,353)
-------------- -------------- -------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - - - (72,001)
Net realized gains - - - -
Return of capital - - - -
-------------- -------------- -------------- --------------
Net decrease from dividends and distributions - - - (72,001)
-------------- -------------- -------------- --------------
FUND SHARE TRANSACTIONS
Shares sold 74,163,195 186,031,641 43,780,341 150,788,537
Reinvested dividends and distributions - - - 67,141
Shares repurchased (65,388,174) (177,895,611) (101,459,945) (76,991,391)
-------------- -------------- -------------- --------------
Net increase/(decrease) from fund share transactions 8,775,021 8,136,030 (57,679,604) 73,864,287
-------------- -------------- -------------- --------------
Total net increase/(decrease) in net assets 28,424,380 14,564,857 (48,590,786) 67,274,933
NET ASSETS
Beginning of period 121,640,343 107,075,486 104,219,817 36,944,884
-------------- -------------- -------------- --------------
End of period $150,064,723 $ 121,640,343 $ 55,629,031 $104,219,817
-------------- -------------- -------------- --------------
NET ASSETS CONSIST OF
Paid-in capital $145,945,175 $ 138,104,292 $ 61,272,499 $119,165,040
Accumulated undistributed net investment income/(loss) - - - -
Accumulated undistributed net realized gain/(loss) from
investments (24,082,954) (20,249,840) (14,024,961) (8,047,154)
Unrealized appreciation/(depreciation):
on securities 28,202,502 3,785,891 8,381,493 (6,898,069)
-------------- -------------- -------------- --------------
Net Assets $150,064,723 $ 121,640,343 $ 55,629,031 $104,219,817
============== ============== ============== ==============
TRANSACTIONS IN FUND SHARES
Shares sold 7,144,559 14,730,684 3,435,224 11,313,498
Reinvested dividends and distributions - - - 5,402
Shares repurchased (6,440,247) (14,658,786) (8,177,227) (5,788,706)
-------------- -------------- -------------- --------------
Net increase/(decrease) 704,312 71,898 (4,742,003) 5,530,194
Shares outstanding beginning of period 12,024,494 11,952,596 8,802,833 3,272,639
-------------- -------------- -------------- --------------
Shares outstanding end of period 12,728,806 12,024,494 4,060,830 8,802,833
============== ============== ============== ==============
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $215,314,229 $ 234,764,135 $ 30,459,479 $ 97,284,181
Proceeds from sales of securities 209,236,884 228,264,566 93,961,245 18,435,223
</Table>
The accompanying notes are an integral part of the financial statements.
58
<Table>
<Caption>
------------------------------- ------------------------------- -------------------------------
ICON ICON ICON
FINANCIAL FUND HEALTHCARE FUND INDUSTRIALS FUND
------------------------------- ------------------------------- -------------------------------
Year Ended September 30, Year Ended September 30, Year Ended September 30,
2003 2002 2003 2002 2003 2002
-------------- -------------- -------------- -------------- -------------- --------------
$ 702,971 $ (35,681) $ (1,014,408) $ (462,004) $ (450,789) $ (260,974)
557,118 (6,058,331) (6,819,268) (2,786,767) (6,100,761) (18,881,122)
26,857,798 (8,960,768) 24,785,530 (382,447) 15,072,214 6,158,770
-------------- -------------- -------------- -------------- -------------- --------------
28,117,887 (15,054,780) 16,951,854 (3,631,218) 8,520,664 (12,983,326)
-------------- -------------- -------------- -------------- -------------- --------------
(399,824) - - - - -
- (9,102,759) - (1,940,710) - -
- - - (183,886) - -
-------------- -------------- -------------- -------------- -------------- --------------
(399,824) (9,102,759) - (2,124,596) - -
-------------- -------------- -------------- -------------- -------------- --------------
76,466,734 116,964,494 116,684,705 130,471,687 90,962,271 122,524,084
392,348 8,842,462 - 2,048,942 - -
(75,431,900) (45,851,844) (85,408,913) (67,379,434) (30,848,064) (121,946,720)
-------------- -------------- -------------- -------------- -------------- --------------
1,427,182 79,955,112 31,275,792 65,141,195 60,114,207 577,364
-------------- -------------- -------------- -------------- -------------- --------------
29,145,245 55,797,573 48,227,646 59,385,381 68,634,871 (12,405,962)
110,115,879 54,318,306 93,031,245 33,645,864 63,919,442 76,325,404
-------------- -------------- -------------- -------------- -------------- --------------
$139,261,124 $110,115,879 $141,258,891 $ 93,031,245 $132,554,313 $ 63,919,442
-------------- -------------- -------------- -------------- -------------- --------------
$129,994,648 $128,569,890 $124,911,335 $ 94,649,951 $147,100,304 $ 87,436,886
290,474 - - - - -
(5,394,712) (5,966,927) (9,885,631) (3,066,363) (29,994,846) (23,894,085)
14,370,714 (12,487,084) 26,233,187 1,447,657 15,448,855 376,641
-------------- -------------- -------------- -------------- -------------- --------------
$139,261,124 $110,115,879 $141,258,891 $ 93,031,245 $132,554,313 $ 63,919,442
============== ============== ============== ============== ============== ==============
8,155,031 11,396,392 10,595,794 11,850,102 10,993,513 12,073,210
42,462 837,354 - 183,268 - -
(7,737,576) (4,283,511) (8,078,236) (5,953,546) (3,954,112) (12,973,529)
-------------- -------------- -------------- -------------- -------------- --------------
459,917 7,950,235 2,517,558 6,079,824 7,039,401 (900,319)
12,460,956 4,510,721 8,987,291 2,907,467 8,027,422 8,927,741
-------------- -------------- -------------- -------------- -------------- --------------
12,920,873 12,460,956 11,504,849 8,987,291 15,066,823 8,027,422
============== ============== ============== ============== ============== ==============
$188,775,243 $112,577,055 $126,928,736 $107,971,251 $119,495,145 $ 106,211,157
184,312,033 42,550,278 99,893,688 45,095,971 64,553,264 101,137,669
<Caption>
-------------------------------
ICON INFORMATION
TECHNOLOGY FUND
-------------------------------
Year Ended September 30,
2003 2002
-------------- --------------
$ (2,215,300) $ (2,070,695)
3,753,887 (94,791,287)
69,595,068 36,951,449
-------------- --------------
71,133,655 (59,910,533)
-------------- --------------
- -
- -
- -
-------------- --------------
- -
-------------- --------------
267,777,926 372,980,609
- -
(106,562,014) (356,298,439)
-------------- --------------
161,215,912 16,682,170
-------------- --------------
232,349,567 (43,228,363)
75,622,923 118,851,286
-------------- --------------
$ 307,972,490 $ 75,622,923
-------------- --------------
$ 342,120,062 $ 183,119,450
- -
(95,448,058) (99,201,945)
61,300,486 (8,294,582)
-------------- --------------
$ 307,972,490 $ 75,622,923
============== ==============
39,746,545 39,461,468
- -
(15,146,622) (42,052,819)
-------------- --------------
24,599,923 (2,591,351)
12,638,913 15,230,264
-------------- --------------
37,238,836 12,638,913
============== ==============
$ 453,451,611 $ 360,985,881
293,739,149 345,744,077
</Table>
59
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
----------------------------- ----------------------------- -----------------------------
ICON LEISURE AND ICON ICON TELECOMMUNICATION &
CONSUMER STAPLES FUND MATERIALS FUND UTILITIES FUND
----------------------------- ----------------------------- -----------------------------
Year Ended September 30, Year Ended September 30, Year Ended September 30,
2003 2002 2003 2002 2003 2002
------------- ------------- ------------- ------------- ------------- -------------
OPERATIONS
Net investment income/(loss) $ (412,917) $ (476,102) $ 236,659 $ 105,771 $ 1,088,542 $ 359,364
Net realized gain/(loss) from
investment transactions (1,107,203) 401,865 (3,456,930) (2,529,707) (2,316,365) (5,419,221)
Net realized gain/(loss) from
foreign currency translations - - - - - -
Change in unrealized
appreciation/(depreciation) on
securities and foreign
currency translations 9,588,234 2,499,224 5,930,581 (3,098,987) 9,090,560 (1,670,200)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) in net
assets resulting from
operations 8,068,114 2,424,987 2,710,310 (5,522,923) 7,862,737 (6,730,057)
------------- ------------- ------------- ------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income - - (93,225) (142,573) (888,104) (166,008)
Return of capital - - - - - -
------------- ------------- ------------- ------------- ------------- -------------
Net decrease from dividends and
distributions - - (93,225) (142,573) (888,104) (166,008)
------------- ------------- ------------- ------------- ------------- -------------
FUND SHARE TRANSACTIONS
Shares sold 39,239,478 140,737,296 14,151,946 70,609,621 28,972,038 73,160,431
Reinvested dividends and
distributions - - 92,665 142,060 886,340 165,833
Shares repurchased (53,301,166) (95,983,544) (45,505,812) (35,265,418) (60,690,304) (16,600,992)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) from
fund share transactions (14,061,688) 44,753,752 (31,261,201) 35,486,263 (30,831,926) 56,725,272
------------- ------------- ------------- ------------- ------------- -------------
Total net increase/(decrease) in
net assets (5,993,574) 47,178,739 (28,644,116) 29,820,767 (23,857,293) 49,829,207
NET ASSETS
Beginning of period 88,340,887 41,162,148 59,020,367 29,199,600 66,366,487 16,537,280
------------- ------------- ------------- ------------- ------------- -------------
End of period $ 82,347,313 $ 88,340,887 $ 30,376,251 $ 59,020,367 $ 42,509,194 $ 66,366,487
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS CONSIST OF
Paid-in capital $ 72,364,340 $ 86,838,945 $ 49,280,564 $ 80,541,765 $ 44,661,874 $ 75,493,800
Accumulated undistributed net
investment income/(loss) - - 178,021 34,587 559,802 359,364
Accumulated undistributed net
realized gain/(loss) from
investments (1,473,913) (366,710) (21,117,209) (17,660,279) (8,738,481) (6,422,116)
Accumulated net realized
gain/(loss) from foreign
currency translations - - - - - -
Unrealized
appreciation/(depreciation):
on securities 11,456,886 1,868,652 2,034,875 (3,895,706) 6,025,999 (3,064,561)
on other assets and
liabilities denominated in
foreign currency - - - - - -
------------- ------------- ------------- ------------- ------------- -------------
Net Assets $ 82,347,313 $ 88,340,887 $ 30,376,251 $ 59,020,367 $ 42,509,194 $ 66,366,487
============= ============= ============= ============= ============= =============
TRANSACTIONS IN FUND SHARES
Shares sold 3,467,652 11,016,203 2,446,314 10,267,215 5,787,036 14,210,465
Reinvested dividends and
distributions - - 15,406 21,822 174,133 27,141
Shares repurchased (4,724,938) (7,497,090) (7,953,735) (5,022,326) (12,373,258) (3,020,382)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) (1,257,286) 3,519,113 (5,492,015) 5,266,711 (6,412,089) 11,217,224
Shares outstanding beginning of
period 7,889,803 4,370,690 10,387,510 5,120,799 13,888,537 2,671,313
------------- ------------- ------------- ------------- ------------- -------------
Shares outstanding end of period 6,632,517 7,889,803 4,895,495 10,387,510 7,476,448 13,888,537
============= ============= ============= ============= ============= =============
PURCHASE AND SALES OF INVESTMENT
SECURITIES
(excluding Short-Term
Securities)
Purchase of securities $112,992,030 $120,197,753 $ 52,868,818 $ 65,920,440 $ 83,676,470 $ 86,033,626
Proceeds from sales of
securities 125,691,402 75,940,055 80,253,664 32,913,425 114,328,699 28,626,267
Purchases of long-term U.S.
government securities - - - - - -
Proceeds from sales of long-term
U.S. government securities - - - - - -
</Table>
The accompanying notes are an integral part of the financial statements.
60
<Table>
<Caption>
------------------------------ ------------------------------ ------------------------------
ICON SHORT-TERM ICON ASIA-PACIFIC ICON NORTH EUROPE
FIXED INCOME FUND REGION FUND REGION FUND
------------------------------ ------------------------------ ------------------------------
Year Ended September 30, Year Ended September 30, Year Ended September 30,
2003 2002 2003 2002 2003 2002
------------- ------------- ------------- ------------- ------------- -------------
$ 19,354 $ 39,436 $ 45,529 $ (27,574) $ 75,481 $ 63,605
- (3,820) 745,694 (1,521,036) 120,749 (1,986,214)
- - (1,457) (4,976) 3,777 (2,705)
(23,336) 48,870 868,520 2,635,195 2,997,553 2,022,875
------------- ------------- ------------- ------------- ------------- -------------
(3,982) 84,486 1,658,286 1,081,609 3,197,560 97,561
------------- ------------- ------------- ------------- ------------- -------------
(20,760) (49,945) - - (84,595) (50,812)
- - - (39,502) - (50,523)
------------- ------------- ------------- ------------- ------------- -------------
(20,760) (49,945) - (39,502) (84,595) (101,335)
------------- ------------- ------------- ------------- ------------- -------------
23,499,482 255,440,821 6,269,616 275,462,846 10,203,582 229,035,353
20,010 61,365 - 39,097 84,466 100,688
(24,993,710) (268,209,859) (8,770,250) (289,291,282) (11,035,500) (235,105,995)
------------- ------------- ------------- ------------- ------------- -------------
(1,474,218) (12,707,673) (2,500,634) (13,789,339) (747,452) (5,969,954)
------------- ------------- ------------- ------------- ------------- -------------
(1,498,960) (12,673,132) (842,348) (12,747,232) 2,365,513 (5,973,728)
7,664,965 20,338,097 6,926,558 19,673,790 8,221,986 14,195,714
------------- ------------- ------------- ------------- ------------- -------------
$ 6,166,005 $ 7,664,965 $ 6,084,210 $ 6,926,558 $ 10,587,499 $ 8,221,986
------------- ------------- ------------- ------------- ------------- -------------
$ 6,144,408 $ 7,618,626 $14,398,301 $ 16,898,935 $ 10,269,565 $ 11,025,148
(117) 1,289 39,163 (4,909) - (3,022)
(3,820) (3,820) (9,207,477) (9,954,628) (1,759,346) (1,876,090)
- - (719,035) (717,578) (674,563) (678,340)
25,534 48,870 1,573,314 704,738 2,751,093 (245,710)
- - (56) - 750 -
------------- ------------- ------------- ------------- ------------- -------------
$ 6,166,005 $ 7,664,965 $ 6,084,210 $ 6,926,558 $ 10,587,499 $ 8,221,986
============= ============= ============= ============= ============= =============
2,570,121 28,068,293 879,754 41,283,013 1,344,165 30,479,121
2,181 6,734 - 5,801 13,781 13,231
(2,733,550) (29,463,335) (1,302,144) (42,957,850) (1,478,885) (31,072,840)
------------- ------------- ------------- ------------- ------------- -------------
(161,248) (1,388,308) (422,390) (1,669,036) (120,939) (580,488)
836,843 2,225,151 1,220,321 2,889,357 1,380,293 1,960,781
------------- ------------- ------------- ------------- ------------- -------------
675,595 836,843 797,931 1,220,321 1,259,354 1,380,293
============= ============= ============= ============= ============= =============
$ - $ - $ 5,375,821 $ 1,257,757 $ 8,232,853 $ 10,090,144
- - 7,711,768 5,312,778 8,866,056 12,984,070
1,005,625 2,500,562 - - - -
- - - - - -
<Caption>
------------------------------
ICON SOUTH EUROPE
REGION FUND
------------------------------
Year Ended September 30,
2003 2002
------------- -------------
$ (19,824) $ (24,109)
558,317 (624,140)
691 (136,138)
1,568,069 480,804
------------- -------------
2,107,253 (303,583)
------------- -------------
- (13,920)
- -
------------- -------------
- (13,920)
------------- -------------
21,160,657 15,771,813
- 13,904
(18,624,601) (18,245,944)
------------- -------------
2,536,056 (2,460,227)
------------- -------------
4,643,309 (2,777,730)
4,619,140 7,396,870
------------- -------------
$ 9,262,449 $ 4,619,140
------------- -------------
$ 10,282,481 $ 7,901,710
- (136,811)
(1,722,482) (2,279,449)
(354,413) (355,104)
1,056,629 (511,206)
234 -
------------- -------------
$ 9,262,449 $ 4,619,140
============= =============
2,507,561 1,875,759
- 1,655
(2,190,470) (2,162,806)
------------- -------------
317,091 (285,392)
624,062 909,454
------------- -------------
941,153 624,062
============= =============
$ 8,271,751 $ 643,683
6,013,474 1,404,254
- -
- -
</Table>
61
Financial Highlights
<Table>
<Caption>
-------------------------------------------------------------
ICON CONSUMER DISCRETIONARY FUND
-------------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 10.12 $ 8.96 $ 9.23 $ 9.67 $ 7.87
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.08) (0.06) (0.01) (0.02) -
Net realized and unrealized gains/(losses) on investments 1.75 1.22 (0.26) (0.42) 2.04
--------- --------- --------- --------- ---------
Total from investment operations 1.67 1.16 (0.27) (0.44) 2.04
--------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - - - -
Distributions from net realized gains - - - - (0.24)
--------- --------- --------- --------- ---------
Total distributions - - - - (0.24)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.79 $ 10.12 $ 8.96 $ 9.23 $ 9.67
========= ========= ========= ========= =========
Total return 16.50% 12.95% (2.93)% (4.55)% 25.78%
Net assets, end of period (in thousands) $150,065 $121,640 $107,075 $40,894 $54,351
Average net assets for the period (in thousands) 118,834 184,174 78,281 46,246 58,294
Ratio of expenses to average net assets 1.40% 1.29% 1.37% 1.35% 1.35%
Ratio of net investment income/(loss) to average net assets (0.79)% (0.49)% (0.10)% (0.27)% (0.46)%
Portfolio turnover rate 174.51% 128.06% 88.20% 88.44% 27.83%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
62
<Table>
<Caption>
---------------------------------------------------------
ICON ENERGY FUND
---------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
$ 11.84 $ 11.29 $ 13.19 $ 7.98 $ 6.35
--------- --------- --------- --------- ---------
(0.04) (0.08) 0.07 0.04 0.01
1.90 0.65 (0.76) 5.17 1.69
--------- --------- --------- --------- ---------
1.86 0.57 (0.69) 5.21 1.70
--------- --------- --------- --------- ---------
- (0.02) (0.09) - (0.07)
- - (1.12) - -
--------- --------- --------- --------- ---------
- (0.02) (1.21) - (0.07)
--------- --------- --------- --------- ---------
$ 13.70 $ 11.84 $ 11.29 $ 13.19 $ 7.98
========= ========= ========= ========= =========
15.71% 5.03% (6.53)% 65.29% 27.28%
$55,629 $104,220 $36,945 $44,294 $19,230
74,883 71,434 49,195 29,564 13,801
1.40% 1.35% 1.39% 1.36% 1.45%
(0.29)% (0.61)% 0.54% 0.43% (0.26)%
42.53% 26.30% 134.77% 123.70% 34.41%
<Caption>
---------------------------------------------------------
ICON FINANCIAL FUND
---------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
$ 8.84 $ 12.04 $ 12.26 $ 8.99 $ 9.37
--------- --------- --------- --------- ---------
0.05 (0.01) 0.06 0.11 0.02
1.92 (1.08) 1.13 3.28 1.05
--------- --------- --------- --------- ---------
1.97 (1.09) 1.19 3.39 1.07
--------- --------- --------- --------- ---------
(0.03) - (1.41) (0.12) (0.06)
- (2.11) - - (1.39)
--------- --------- --------- --------- ---------
(0.03) (2.11) (1.41) (0.12) (1.45)
--------- --------- --------- --------- ---------
$ 10.78 $ 8.84 $ 12.04 $ 12.26 $ 8.99
========= ========= ========= ========= =========
22.35% (11.88)% 9.57% 38.14% 10.05%
$139,261 $110,116 $54,318 $100,404 $ 5,483
131,042 60,904 59,425 43,690 10,415
1.34% 1.36% 1.41% 1.33% 1.58%
0.54% (0.06)% 0.51% 1.14% 0.09%
142.77% 69.58% 174.41% 28.99% 53.29%
</Table>
63
Financial Highlights (continued)
<Table>
<Caption>
-------------------------------------------------------------
ICON HEALTHCARE FUND
-------------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 10.35 $ 11.57 $ 11.93 $ 7.98 $ 11.39
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.09) (0.12) (0.10) (0.08) -
Net realized and unrealized gains/(losses) on investments 2.02 (0.49) 0.51 4.34 (0.25)
--------- --------- --------- --------- ---------
Total from investment operations 1.93 (0.61) 0.41 4.26 (0.25)
--------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - - - -
Distributions from net realized gains - (0.56) (0.77) (0.31) (3.16)
Return of capital - (0.05) - - -
--------- --------- --------- --------- ---------
Total distributions - (0.61) (0.77) (0.31) (3.16)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 12.28 $ 10.35 $ 11.57 $ 11.93 $ 7.98
========= ========= ========= ========= =========
Total return 18.65% (5.63)% 3.39% 55.35% (5.34)%
Net assets, end of period (in thousands) $141,259 $93,031 $33,646 $49,066 $24,550
Average net assets for the period (in thousands) 120,068 44,042 35,981 38,688 29,272
Ratio of expenses to average net assets 1.34% 1.39% 1.45% 1.38% 1.40%
Ratio of net investment income/(loss) to average net assets (0.84)% (1.05)% (0.98)% (0.74)% (0.83)%
Portfolio turnover rate 85.52% 104.90% 145.08% 115.05% 85.99%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
64
<Table>
<Caption>
-------------------------------------------------------------
ICON INDUSTRIALS FUND
-------------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
$ 7.96 $ 8.55 $ 9.07 $ 10.31 $ 9.45
--------- --------- --------- --------- ---------
(0.05) (0.02) (0.02) 0.03 0.01
0.89 (0.57) (0.48) (0.47) 1.63
--------- --------- --------- --------- ---------
0.84 (0.59) (0.50) (0.44) 1.64
--------- --------- --------- --------- ---------
- - (0.02) - (0.02)
- - - (0.80) (0.76)
- - - - -
--------- --------- --------- --------- ---------
- - (0.02) (0.80) (0.78)
--------- --------- --------- --------- ---------
$ 8.80 $ 7.96 $ 8.55 $ 9.07 $ 10.31
========= ========= ========= ========= =========
10.55% (6.90)% (5.55)% (4.32)% 16.89%
$132,554 $ 63,919 $76,325 $22,068 $21,004
70,382 107,335 55,928 21,220 24,387
1.43% 1.30% 1.38% 1.38% 1.41%
(0.64)% (0.24)% (0.16)% 0.34% 0.10%
90.49% 99.22% 72.65% 72.90% 47.97%
<Caption>
-------------------------------------------------------------
ICON INFORMATION TECHNOLOGY FUND
-------------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
$ 5.98 $ 7.80 $ 22.13 $ 19.00 $ 9.20
--------- --------- --------- --------- ---------
(0.08) (0.10) (0.10) (0.05) -
2.37 (1.72) (4.03) 9.62 10.58
--------- --------- --------- --------- ---------
2.29 (1.82) (4.13) 9.57 10.58
--------- --------- --------- --------- ---------
- - - - -
- - (10.20) (6.44) (0.78)
- - - - -
--------- --------- --------- --------- ---------
- - (10.20) (6.44) (0.78)
--------- --------- --------- --------- ---------
$ 8.27 $ 5.98 $ 7.80 $ 22.13 $ 19.00
========= ========= ========= ========= =========
38.29% (23.33)% (32.90)% 59.24% 119.53%
$307,972 $ 75,623 $118,851 $46,689 $55,126
190,287 189,972 99,875 56,279 66,977
1.35% 1.31% 1.37% 1.35% 1.37%
(1.16)% (1.09)% (0.90)% (0.23)% (1.06)%
155.39% 190.09% 70.32% 137.69% 31.75%
</Table>
65
Financial Highlights (continued)
<Table>
<Caption>
-------------------------------------------------------------
ICON LEISURE AND CONSUMER STAPLES FUND
-------------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 11.20 $ 9.42 $ 9.24 $ 12.05 $ 11.79
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.06) (0.07) (0.05) 0.01 0.10
Net realized and unrealized gains/(losses) on investments 1.28 1.85 0.26 0.25 1.61
--------- --------- --------- --------- ---------
Total from investment operations 1.22 1.78 0.21 0.26 1.71
--------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - (0.01) - (0.27)
Distributions from net realized gains - - (0.02) (3.07) (1.18)
--------- --------- --------- --------- ---------
Total distributions - - (0.03) (3.07) (1.45)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 12.42 $ 11.20 $ 9.42 $ 9.24 $ 12.05
========= ========= ========= ========= =========
Total return 10.89% 18.90% 2.26% 5.27% 14.76%
Net assets, end of period (in thousands) $82,347 $88,341 $41,162 $ 7,765 $31,559
Average net assets for the period (in thousands) 80,928 86,202 41,086 18,029 40,054
Ratio of expenses to average net assets 1.38% 1.34% 1.40% 1.51% 1.38%
Ratio of net investment income/(loss) to average net assets (0.51)% (0.55)% (0.50)% 0.13% (0.12)%
Portfolio turnover rate 139.54% 90.43% 148.23% 24.50% 49.22%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
66
<Table>
<Caption>
-------------------------------------------------------------
ICON MATERIALS FUND
-------------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
$ 5.68 $ 5.70 $ 6.49 $ 7.31 $ 6.58
--------- --------- --------- --------- ---------
0.03 0.02 0.02 0.03 0.02
0.50 (0.01) (0.74) (0.85) 0.74
--------- --------- --------- --------- ---------
0.53 0.01 (0.72) (0.82) 0.76
--------- --------- --------- --------- ---------
(0.01) (0.03) (0.07) - (0.03)
- - - - -
--------- --------- --------- --------- ---------
(0.01) (0.03) (0.07) - (0.03)
--------- --------- --------- --------- ---------
$ 6.20 $ 5.68 $ 5.70 $ 6.49 $ 7.31
========= ========= ========= ========= =========
9.36% 0.06% (11.07)% (11.22)% 11.65%
$30,376 $59,020 $29,200 $18,162 $26,373
40,156 45,917 24,544 23,620 17,145
1.47% 1.36% 1.47% 1.41% 1.45%
0.59% 0.23% 0.40% 0.42% 0.16%
130.01% 74.55% 91.28% 91.76% 118.29%
<Caption>
-------------------------------------------------------------
ICON TELECOMMUNICATION & UTILITIES FUND
-------------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
$ 4.78 $ 6.19 $ 8.13 $10.04 $14.17
--------- --------- --------- --------- ---------
0.10 0.10 0.09 0.20 0.83
0.87 (1.45) (1.52) 0.99 1.18
--------- --------- --------- --------- ---------
0.97 (1.35) (1.43) 1.19 2.01
--------- --------- --------- --------- ---------
(0.06) (0.06) (0.11) (0.16) (1.02)
- - (0.40) (2.94) (5.12)
--------- --------- --------- --------- ---------
(0.06) (0.06) (0.51) (3.10) (6.14)
--------- --------- --------- --------- ---------
$ 5.69 $ 4.78 $ 6.19 $ 8.13 $10.04
========= ========= ========= ========= =========
20.36% (22.05)% (18.74)% 14.99% 15.25%
$42,509 $66,366 $16,537 $8,619 $7,129
53,219 20,196 13,554 7,231 9,825
1.41% 1.50% 1.54% 1.53% 1.59%
2.05% 1.78% 1.22% 2.43% 1.84%
158.24% 137.81% 46.10% 41.86% 18.85%
</Table>
67
Financial Highlights (continued)
<Table>
<Caption>
-------------------------------------------------------------
ICON SHORT-TERM FIXED INCOME FUND
-------------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 9.16 $ 9.14 $ 9.14 $ 9.15 $ 9.79
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) 0.02 0.05 0.26 0.39 0.43
Net realized and unrealized gains/(losses) on investments (0.02) (0.00) 0.02 0.02 (0.12)
--------- --------- --------- --------- ---------
Total from investment operations - 0.05 0.28 0.41 0.31
--------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.28) (0.39) (0.65)
Distributions from net realized gains - - - (0.03) (0.30)
Return of capital - - - - -
--------- --------- --------- --------- ---------
Total distributions (0.03) (0.03) (0.28) (0.42) (0.95)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 9.13 $ 9.16 $ 9.14 $ 9.14 $ 9.15
========= ========= ========= ========= =========
Total return (0.02)% 0.96% 3.15% 4.45% 3.54%
Net assets, end of period (in thousands) $6,166 $7,665 $20,338 $5,386 $5,111
Average net assets for the period (in thousands) 7,255 7,643 6,276 5,367 4,658
Ratio of expenses to average net assets 1.42%+ 1.35%+ 1.52% 1.52% 1.06%++
Ratio of net investment income/(loss) to average net assets 0.27%+ 0.52%+ 2.85% 4.16% 4.42%++
Portfolio turnover rate 0.00% 0.00% 0.00% 53.26% 53.22%
</Table>
(x) Calculated using the average share method
++ Includes change in accounting estimate; see notes. If this change had not
been made, the ratio of expenses to average net assets would have been
1.48% and the ratio of net investment income to average net assets would
have been 4.00%.
+ Includes advisory fees waiver (Note 2). If this waiver had not been made,
the ratio of expenses to average net assets would have been 1.43% in 2003
and 1.41% in 2002 and the ratio of net investment income to average net
assets would have been 0.26% in 2003 and 0.58% in 2002.
The accompanying notes are an integral part of the financial statements.
68
<Table>
<Caption>
---------------------------------------------------------
ICON ASIA-PACIFIC REGION FUND
---------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
$ 5.68 $ 6.81 $ 10.25 $ 10.87 $ 6.09
--------- --------- --------- --------- ---------
0.04 (0.19) 0.07 0.03 (0.01)
1.90 (0.91) (3.51) (0.65) 4.79
--------- --------- --------- --------- ---------
1.94 (1.10) (3.44) (0.62) 4.78
--------- --------- --------- --------- ---------
- - - - -
- - - - -
- (0.03) - - -
--------- --------- --------- --------- ---------
- (0.03) - - -
--------- --------- --------- --------- ---------
$ 7.62 $ 5.68 $ 6.81 $ 10.25 $ 10.87
========= ========= ========= ========= =========
34.15% (16.29)% (33.56)% (5.70)% 78.49%
$6,084 $ 6,927 $19,684 $25,710 $33,564
6,683 12,142 18,749 32,629 29,191
1.98% 1.66% 1.70% 1.53% 1.59%
0.68% (0.23)% 0.75% 0.24% (0.57)%
81.44% 14.43% 55.58% 101.88% 62.82%
<Caption>
---------------------------------------------------------
ICON NORTH EUROPE REGION FUND
---------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
$ 5.96 $ 7.24 $ 11.79 $ 11.74 $ 11.63
--------- --------- --------- --------- ---------
0.06 0.04 0.09 0.04 (0.05)
2.45 (1.25) (3.31) 1.21 1.51
--------- --------- --------- --------- ---------
2.51 (1.21) (3.22) 1.25 1.46
--------- --------- --------- --------- ---------
- (0.04) - - (0.17)
(0.06) - (1.33) (1.20) (1.18)
- (0.03) - - -
--------- --------- --------- --------- ---------
(0.06) (0.07) (1.33) (1.20) (1.35)
--------- --------- --------- --------- ---------
$ 8.41 $ 5.96 $ 7.24 $ 11.79 $ 11.74
========= ========= ========= ========= =========
42.60% (16.94)% (30.29)% 10.43% 12.78%
$10,587 $ 8,222 $14,196 $33,315 $23,971
8,571 13,347 18,204 29,412 30,993
2.00% 1.72% 1.65% 1.52% 1.59%
0.88% 0.48% 0.97% 0.30% 0.25%
98.91% 91.99% 41.67% 34.24% 50.36%
</Table>
69
Financial Highlights (continued)
<Table>
<Caption>
-------------------------------------------------------------
ICON SOUTH EUROPE REGION FUND
-------------------------------------------------------------
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 7.40 $ 8.13 $10.14 $10.12 $11.87
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.02) (0.04) 0.05 0.02 0.02
Net realized and unrealized gains/(losses) on investments 2.46 (0.67) (2.06) - 1.06
--------- --------- --------- --------- ---------
Total from investment operations 2.44 (0.71) (2.01) 0.02 1.08
--------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - (0.02) - - (0.03)
Distributions from net realized gains - - - - (2.80)
--------- --------- --------- --------- ---------
Total distributions - (0.02) - - (2.83)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 9.84 $ 7.40 $ 8.13 $10.14 $10.12
========= ========= ========= ========= =========
Total return 32.97% (8.76)% (19.82)% 0.20% 6.41%
Net assets, end of period (in thousands) $9,262 $4,619 $7,397 $6,560 $5,298
Average net assets for the period (in thousands) 6,774 5,706 7,935 7,109 8,107
Ratio of expenses to average net assets* 1.87% 2.14% 1.96% 1.80% 1.81%
Ratio of net investment income/(loss) to average net assets* (0.29)% (0.42)% 0.55% 0.18% (0.53)%
Portfolio turnover rate 101.37% 12.26% 84.49% 62.17% 70.65%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
70
Notes to Financial Statements
SEPTEMBER 30, 2003
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Consumer Discretionary Fund ("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"), ICON Telecommunication & Utilities Fund ("Telecomm &
Utilities Fund"), (collectively, the "Domestic Funds"), and ICON Asia-Pacific
Region Fund ("Asia-Pacific Region Fund"), ICON North Europe Region Fund ("N.
Europe Region Fund"), ICON South Europe Region Fund ("S. Europe Region Fund")
(collectively, the "International Funds") and ICON Short-Term Fixed Income Fund
("Short-Term Fixed Income 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, which is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end investment management
company. There are five other active funds within the Trust. Those funds are
covered by separate prospectuses and shareholder reports.
The Domestic and International Funds invest primarily in securities of
companies whose principal business activities fall within specific industries or
regions. The Short-Term Fixed Income Fund invests primarily in short-term U.S.
Treasury and U.S. Government Agency instruments. Each Fund is authorized to
issue an unlimited number of no par shares. The investment objective of the
Domestic and International Funds is to provide long-term capital appreciation.
The investment objective of the Short-Term Fixed Income Fund is to seek high
current income consistent with the preservation of capital.
The Funds may have elements of risk, including the risk of loss of
principal. An investment in a non-diversified sector or region fund may involve
greater risk and volatility than a diversified fund. Investments in foreign
securities may entail unique risks, including political, market and currency
risks. There are also risks associated with small- and mid-cap investing,
including limited product lines, less liquidity and small market share.
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 could differ from these estimates.
71
Notes to Financial Statements (continued)
Investment Valuation.
The Funds' securities and other assets are valued at the close of the regular
trading session of the New York Stock Exchange (the "Exchange") (normally 4 p.m.
Eastern time) each day the Exchange is open. A security listed or traded
primarily on a securities exchange or in the over-the-counter market is valued
at its last sale price on the exchange or market where it is principally traded.
Lacking any sales that day, the security is valued at the current closing bid
price or based on quotes from dealers making a market for the security if the
closing bid price is not available. Options are valued at their closing
mid-price on the principal market where the option is traded. Mid-price is the
average of the sum of the closing bid and closing ask prices. The market value
of individual securities held by the Funds is determined by using pricing
services that provide market prices to other mutual funds or, as needed, by
obtaining market quotations from independent broker/dealers. Securities and
assets for which quotations are not readily available are valued at fair value
determined in good faith pursuant to consistently applied procedures established
by the Trust's Board of Trustees. Short-term securities with remaining
maturities of 60 days or less are generally valued at amortized cost or original
cost plus accrued interest, both of which approximate market value. London
closing quotes for exchange rates are used to convert foreign security values
into U.S. dollars.
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.
There were no repurchase agreements purchased or sold by the Funds during
the year ended September 30, 2003.
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.
Forward Foreign Currency Contracts.
The International 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 with 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 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 at fiscal
year-end. Net unrealized appreciation or depreciation on investments and foreign
currency translations arise from changes in the value of assets and liabilities,
including investments in securities at fiscal year-end, resulting from changes
in the exchange rates and changes in market prices of securities held.
72
Options Transactions.
Each Fund (other than the Short-Term Fixed Income Fund) may write put and call
options only if it, among other things, (i) owns an offsetting position in the
underlying security or (ii) maintains cash or other liquid assets in an amount
equal to or greater than its obligation under the option.
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, 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. 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 a sale are decreased by the
premium originally paid. Written and purchased options are non-income producing
securities.
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 gain. (See Note 6 -- Tax Matter.)
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 Short-Term Fixed Income Fund distributes
net investment income, if any, monthly. The Funds distribute net realized
capital gains, if any, to shareholders at least annually, if not offset by
capital loss carryovers. Income distributions and capital gain distributions are
determined in accordance with income tax regulations, which may differ from
generally accepted accounting principles generally accepted in the United States
of America.
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 will be recorded as soon as the Funds are informed of
the dividend if such information is obtained subsequent to the ex-dividend date.
Investment Transactions.
Security transactions are accounted for as of trade date. Gains and losses on
securities sold are determined on the basis of identified cost.
73
Notes to Financial Statements (continued)
Expenses.
Expenses which cannot be directly attributed to a specific fund in the Trust are
apportioned between all funds based upon relative net assets.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fees.
Meridian Investment Management Corporation ("Meridian") serves as the investment
adviser to the Funds and is responsible for managing the Funds' portfolios of
securities. Meridian receives a monthly management fee that is computed daily at
an annual rate of 1.00% of the Domestic and International Funds' average net
assets and 0.65% of the Short-Term Fixed Income Fund's average net assets. Due
to the current low interest rates on the investments in the Short-Term Fixed
Income Fund, Meridian has contractually agreed to waive its advisory fee on any
day the income from these investments is not adequate to cover the Short-Term
Fixed Income Fund's daily expenses. Meridian waived advisory fees of $232 for
the period ended September 30, 2003.
Transfer Agent, Custody and Accounting Fees.
U.S. Bank N.A. ("U.S. Bank") and U.S. Bancorp Fund Services, LLC ("U.S.
Bancorp") provide domestic custodial services, transfer agent services and fund
accounting for the Funds. The Funds pay a fund accounting fee at an annual rate
of 0.1025% on the Trust's first $500 million of average daily net assets,
0.0875% on the next $500 million of average daily net assets, and 0.05% on the
balance of average daily net assets in excess of $1 billion for these services.
Transfer agency and domestic custody are paid at an annual rate of 0.065% on the
Trust's first $500 million of daily average net assets, 0.06% on the next $1
billion of average daily net assets, and 0.05% on the balance of average daily
net assets in excess of $1.5 billion. The Funds also pay for various
out-of-pocket costs incurred by U.S. Bancorp that are estimated to be 0.02% of
average daily net assets.
On behalf of the International Funds, U.S. Bancorp has entered into an
agreement with JP Morgan Chase Co. ("Chase") to provide international custodial
services. The International Funds pay an annual rate of 0.125% of average daily
net assets plus a per trade transaction cost for these custodial services.
Administrative Services
The Trust has entered into an administrative services agreement with Meridian.
This agreement provided for an annual fee of 0.05% on the Funds' first $500
million of average daily net assets and 0.04% on average daily net assets in
excess of $500 million for the period October 1, 2002 to August 31, 2003. For
the period starting September 1, 2003 the agreement provides for an annual fee
of 0.05% on the first $1.5 billion of average daily net assets and 0.045% on
average daily net assets in excess of $1.5 billion.
Related Parties.
Certain officers and directors of Meridian are also officers and trustees of the
Funds; however, such officers and trustees receive no compensation from the
Funds.
3. 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 carryovers as of
September 30, 2003 that may be available to offset future realized capital gains
and thereby reduce future taxable income distributions. These carryovers expire
between September 30, 2007 and September 30, 2011.
74
In 2003, the Funds noted below incurred "post October" losses during the
period from November 1, 2002 through September 30, 2003. These losses will be
deferred for tax purposes and recognized in the year ending September 30, 2004.
<Table>
<Caption>
ACCUMULATED POST OCTOBER
CAPITAL LOSSES DEFERRALS
ICON Consumer Discretionary $(23,539,098) $ 0
ICON Energy Fund (8,047,287) (5,865,468)
ICON Financial Fund (Note 6) (3,207,869) 0
ICON Healthcare Fund (3,187,635) (6,683,043)
ICON Industrials Fund (24,988,739) (4,972,388)
ICON Information Technology Fund (94,440,205) 0
ICON Leisure and Consumer Staples Fund (1,473,913) 0
ICON Materials Fund (20,433,121) (362,259)
ICON Telecommunication & Utilities Fund (6,262,905) (2,441,985)
ICON Short-Term Fixed Income Fund (3,820) 0
ICON Asia-Pacific Region Fund (9,769,168) 0
ICON North Europe Region Fund (2,433,905) 0
ICON South Europe Fund (2,076,909) 0
</Table>
The difference between book and tax net appreciation and depreciation of
investments is wash sale loss deferrals and corporate actions. The Financial
Fund, the Materials Fund, and the Asia-Pacific Region Fund had significant wash
sale deferrals of $2,186,843, $321,830, and $138,690 respectively. The aggregate
composition by Fund of unrealized appreciation and depreciation of investment
securities for federal income tax purposes as of September 30, 2003 are as
follows:
<Table>
<Caption>
FEDERAL TAX UNREALIZED UNREALIZED NET APPRECIATION
COST APPRECIATION DEPRECIATION (DEPRECIATION)
ICON Consumer Discretionary Fund $122,558,803 $31,878,117 $ (4,219,470) $27,658,647
ICON Energy Fund 47,164,763 9,023,342 (754,054) 8,269,288
ICON Financial Fund 126,942,553 14,931,416 (2,747,545) 12,183,871
ICON Healthcare Fund 114,984,157 29,028,837 (2,810,606) 26,218,231
ICON Industrials Fund 115,983,759 18,944,664 (3,529,528) 15,415,136
ICON Information Technology Fund 248,190,837 71,201,124 (10,908,490) 60,292,634
ICON Leisure and Consumer Staples Fund 70,998,867 12,863,782 (1,406,896) 11,456,886
ICON Materials Fund 28,597,184 2,851,075 (1,138,030) 1,713,045
ICON Telecommunication & Utilities Fund 36,436,052 6,922,286 (929,877) 5,992,409
ICON Short-Term Fixed Income Fund 6,129,746 25,534 -- 25,534
ICON Asia-Pacific Region Fund 4,667,496 1,501,912 (67,344) 1,434,568
ICON North Europe Region Fund 7,852,004 2,777,680 (25,837) 2,751,843
ICON South Europe Region Fund 8,185,200 1,230,289 (173,426) 1,056,863
</Table>
75
Notes to Financial Statements (continued)
The tax composition of distributions from ordinary income and return of capital
for the year ended September 30, 2003 were as follows:
<Table>
<Caption>
ORDINARY INCOME RETURN OF
DISTRIBUTIONS CAPITAL
ICON Financial Fund $399,824 --
ICON Materials Fund 93,225 --
ICON North Europe
Region Fund 76,465 $8,130
ICON Short-Term Fixed
Income Fund 20,760 --
ICON Telecommunication
& Utilities Fund 888,104 --
</Table>
4. CHANGE IN ACCOUNTING ESTIMATE
The ICON Short-Term Fixed Income Fund had an estimated net overaccrual of
expenses of approximately $157,000 as of September 30, 1997, which was not
material to the financial statements as of that date. However, due to the
substantial decrease in the net assets of the Fund during the year ended
September 30, 1998, the net estimated remaining overaccrual of $127,000 became
material to the financial statements of the Fund. The Fund determined that it
received a net benefit due to this estimated overaccrual and has identified and
reimbursed shareholders who provided the benefit.
During the year ended September 30, 1999, as the shareholders who provided
the benefit were being identified, and as a result of additional information, a
change in the estimate reduced the amount to $57,539, which was paid to
shareholders in the year ended September 30, 2000. This was accounted for as a
change in accounting estimate.
5. OPTIONS CONTRACTS WRITTEN
The number of option contracts written and the premiums received by the ICON
Information Technology Fund during the 12 months ended September 30, 2003, were
as follows:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
Options outstanding,
beginning of period 300 $ 78,697
Options written during
period - -
Options expired during
period - -
Options closed during
period - -
Options exercised during
period (300) $(78,697)
---- --------
Options outstanding, end of
period 0 $ 0
==== ========
</Table>
6. TAX MATTER -- FINANCIAL FUND
For the year ended September 30, 2002 the Financial Fund ("Fund") did not
qualify as a Regulated Investment Company ("RIC"), under Subchapter M of the
Internal Revenue Code but no income tax expense resulted because the Fund
incurred ordinary and capital losses for that year. The Fund requalified as a
RIC in the year ended September 30, 2003, and therefore incurred no income tax
expense.
76
Report of Independent Auditors
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE ICON 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, ICON Telecommunication & Utilities Fund, ICON Short-Term
Fixed Income Fund, ICON Asia-Pacific Region Fund, ICON North Europe Region Fund,
and ICON South Europe Region Fund (thirteen of the portfolios constituting ICON
Funds, hereafter referred to as the "Funds") at September 30, 2003, the results
of each of their operations for the year then ended, the changes in each of
their net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's 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 auditing standards generally accepted in the United States of
America, which 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, 2003 by
correspondence with the custodians, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 12, 2003
77
Board of Trustees and Fund Officers
(unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 18 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, addresses and
principal occupations are set forth below. Trustees have no official term of
office and generally serve until they resign or are not re-elected.
INTERESTED TRUSTEE
CRAIG T. CALLAHAN, 52, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception in 1996. Dr. Callahan also serves as President
(1998 to present) and Chief Investment Officer (1991 to present) of Meridian
Investment Management Corporation ("Meridian"), 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 Meridian Clearing
Corporation ("MCC"), the Funds' Distributor. Dr. Callahan also serves as the
Chief Investment Officer and Director (1994 to present), and was previously
Secretary/Treasurer (1994 to 1998) of Meridian Management & Research Corporation
("MM&R"), the parent company of Meridian and MCC.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 53. 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); 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); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 56. 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).
78
GREGORY KELLAM SCOTT, 54. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott is Senior Vice President -- Law, General Counsel and
Secretary, GenCorp, Inc., a multinational technology-based manufacturing company
(2002 to present). Mr. Scott was previously 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).
R. MICHAEL SENTEL, 55. 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 FDIC with responsibility for the Rocky Mountain Region
(1991-1994).
JONATHAN F. ZESCHIN, 50. 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 2002). 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 is also a Director of the Wasatch Funds
(2002 to present); and a Director of the Young Americans Education Foundation
and Young Americans Bank (1998 to present).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 52. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as Meridian's President (1998 to
present) and Chief Investment Officer (1991 to present). Dr. Callahan is also
President (1998 to present), Director (1991 to present) and was previously Vice
President (1991 to 1998) of MCC. Dr. Callahan is also the Chief Investment
Officer and Director (1994 to present), and was previously Secretary/ Treasurer
(1994 to 1998) of MM&R.
ERIK L. JONSON, 54. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception in 1996. Mr. Jonson is also Chief
Financial Officer (1996 to present) and Vice President (1998 to present) of
Meridian; Chief Financial Officer, Secretary and Director (1996 to present) of
MM&E; and Vice President and Treasurer (March 2002 to present) and was
previously Secretary/Treasurer, (1998 to 2002) of MCC.
ANDRA C. OZOLS, 42. Ms. Ozols has been a Vice President and Secretary of the
Funds since March 2002. She previously served in that capacity in 1998. Ms.
Ozols is also Vice President, General Counsel and Secretary (March 2002 to
present and January 1998 to October 1998) of Meridian; Vice President and
Secretary (March 2002 to present) of MCC and Director (June 2003 to present) of
MM&R. Ms. Ozols was previously Vice President (1999 to 2002) and Assistant
General Counsel (October 1998 to February 2002) of Founders Asset Management
LLC; and was previously a Branch Chief (1993 to 1995) and Enforcement Attorney
(1990 to 1995 and 1996 to 1998) with the U.S. Securities and Exchange
Commission.
The Trustees and Officers of the Funds may be contacted at 5299 DTC
Boulevard, Suite 1200, Greenwood Village, Colorado 80111.
Additional information about the Funds' Trustees and Officers is available
in the Funds' Statement of Additional Information, which can be obtained free of
charge by calling 1-800-764-0442.
79
Other Information
(unaudited)
PROXY VOTING BY THE FUNDS
A description of the policies and procedures that the Funds use to determine how
to vote proxies related to portfolio securities can be obtained free of charge
by calling 1-800-764-0442 or by visiting www.iconfunds.com or www.sec.gov.
Information regarding how the Funds voted proxies relating to portfolio
securities will be available free of charge no later than August 31, 2004 by
calling 1-800-764-0442 or by visiting www.iconfunds.com or www.sec.gov.
80
[ICON FUNDS LOGOS]
FOR MORE INFORMATION ABOUT THE ICON FUNDS, CONTACT US:
BY TELEPHONE 1-800-764-0442
BY MAIL ICON Funds
P.O. Box 701
Milwaukee, WI 53201-0701
IN PERSON ICON Funds
5299 DTC Boulevard, Suite 1200
Greenwood Village, CO 80111
BY E-MAIL ICON@mimcorp.com
ON THE INTERNET www.iconfunds.com
This report is for the general information of the Funds' shareholders. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus. Please call 1-800-764-0442 or
visit www.iconfunds.com for a current prospectus, which contains more complete
information, including charges, expenses, share classes, and risks. Please read
the prospectus carefully before you invest or send money. Meridian Clearing
Corp., Distributor.
I-117-SEC
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
SEPTEMBER 30, 2003
ICON CORE EQUITY FUND
[PHOTO]
ANNUAL REPORT
[ICON FUNDS LOGOS]
Table of Contents
<Table>
<Caption>
ABOUT THIS REPORT ............................................2
MESSAGE FROM ICON FUNDS ............................................4
MANAGEMENT OVERVIEW ............................................6
SCHEDULE OF INVESTMENTS ............................................8
FINANCIAL STATEMENTS ...........................................11
FINANCIAL HIGHLIGHTS ...........................................13
NOTES TO FINANCIAL STATEMENTS ...........................................14
REPORT OF INDEPENDENT AUDITORS ...........................................17
BOARD OF TRUSTEES AND FUND OFFICERS
(UNAUDITED) ...........................................18
OTHER INFORMATION (UNAUDITED) ...........................................20
</Table>
About This Report
- --------------------------------------------------------------------------------
HISTORICAL RETURNS
- --------------------------------------------------------------------------------
All total returns mentioned in this report account for the change in the Fund's
per-share price and the reinvestment of any dividends and capital gain
distributions. 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 Fund's performance results do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or on the redemption of Fund shares.
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. Due to market volatility,
current performance may differ from the figures shown. Please call
1-800-764-0442 or visit www.iconfunds.com for the most recent returns.
- --------------------------------------------------------------------------------
PORTFOLIO DATA
- --------------------------------------------------------------------------------
Opinions and forecasts regarding industries, companies and 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. The Fund's percentage holdings as of September 30, 2003 are
included in the Schedule of Investments.
In April 2003, Standard & Poor's made revisions to its Global Industry
Classification Standard, including changes in industry categories and
definitions. The Schedule of Investments reflects these changes.
Certain companies' stock performance during the period is mentioned in the
Management Overview. While ICON's investment methodology does not consider
company-specific factors, they may impact a stock's performance, and therefore,
Fund performance.
There are risks associated with mutual fund investing including the risk of
loss of principal. An investment concentrated in sectors and industries may
involve greater risk and volatility than a diversified investment. There are
also risks associated with small- and mid-cap investing, including limited
product lines, less liquidity and small market share. Investments in foreign
securities may entail unique risks, including political, market, and currency
risks.
2
- --------------------------------------------------------------------------------
COMPARATIVE INDEX
- --------------------------------------------------------------------------------
The comparative index discussed in this report is meant to provide a basis for
judging the Fund's performance against a specific securities index. The 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
Fund's portfolio may significantly differ in holdings and composition from the
index. Individuals cannot invest directly in the index.
The unmanaged Standard & Poor's SuperComposite 1500 (S&P 1500) Index is a
broad-based capitalization-weighted index comprising 1,500 stocks of large-cap,
mid-cap, and small-cap U.S. companies.
This report also includes certain industry performance which is based on
the returns of the capitalization-weighted S&P 1500 Sector and Industry Indexes.
These Industry Indexes are based on specific classifications determined by
Standard & Poor's.
Index returns and statistical data included in this report are provided by
Bloomberg.
3
Message from ICON Funds
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
[PHOTO]
- --------------------------------------------------------------------------------
In looking back over the past 12 months, several statements from previous annual
reports provide an interesting insight into the events that unfolded during the
period.
FEAR, DISGUST AND GREAT BARGAINS
To begin, I recall the ICON annual report for the fiscal year ended September
30, 2002. In our letter to shareholders, we remarked that "the current
environment has all the characteristics of a market bottom -- fear, disgust,
negative news, and great bargains." We went on to say that "we anticipate a
broad-based advance when the market emerges from its current cycle."
Shortly after that was written, on October 9, 2002, the market indeed hit a
bottom, reeling from the emotional stranglehold of impending war and corporate
governance scandals. Amid the uncertainty that permeated the landscape, a
speculative relief rally took hold during the fourth quarter of 2002. While not
the broad advance we were expecting, stocks moved decisively higher though
remained widely disconnected from our estimate of fair value for longer than
we've experienced.
From that October low through September 30, 2003, the S&P 1500 Index, the
Funds' primary domestic benchmark, rallied dramatically, gaining an impressive
31.39%. While this reversal was certainly an accurate call by our system, we
admit that it was neither clairvoyance nor providence on our part. It was simply
the inherent nature of sticking to ICON's valuation discipline.
Having calculated in October 2002 that stocks on average were priced 55%
below fair value, we thought it best to capitalize on that opportunity and be
patient. Although we may have been early, our investment methodology dictated
that we be invested to participate. At the same time, it meant we had to look
past the headlines and at times take the market's punishment. Other investors
chose to wait for the return of clarity and better economic conditions before
leaving the sidelines; by then, however, it may have been too late.
A MOVE TOWARD FAIR VALUE
Following the pre-war jitters that sent the market to yet another low on March
11, 2003, stocks embarked upon a broad six-month rally. However, even in the
context of this all-encompassing advance, some sectors were more eager than
others. Favored groups, such as Information Technology, Consumer Discretionary,
Financials, and Industrials, led the market's ascent. In the natural ebb and
flow of business cycles, these moves would be historically consistent with the
start of an economic expansion. Yet, if asked whether they were based on the
expectation of a recovery or some other triggering event, we would say no.
We believe the recent surge in stock prices is nothing more than a move
toward fair value. Put another way, we view it as an acknowledgement by many
investors that the macro setting was not as discouraging as they initially
thought. Stocks were simply oversold, and investors came to realize they were
wrong for taking them to extreme lows.
[SIDENOTE]
"With stocks priced 55% below fair value based on our model, we thought it best
to capitalize on that opportunity and be patient."
[SIDENOTE]
"Stocks were simply oversold, and investors came to realize they were wrong for
taking them to extreme lows."
4
While economic conditions have certainly improved in the past year, we do
not believe that a strong recovery or boom is necessary to prolong the rally.
Our experience tells us it is simply the natural behavior of a rational market.
There have been few newsworthy events that have boosted the market since the
March 2003 bottom. We do not expect that any are needed for the move toward fair
value to continue.
RIDING THE THEME
As prices resume the march toward fair value, and investors' skepticism gives
way to optimism, we may in fact see the return of a momentum mentality. Were
this to occur, it would not surprise us to see stocks exceed fair value by the
end of the calendar year. At present, however, we believe the market has not
gotten ahead of itself, and the broad representation of sector and industry
leadership makes sense to our system. In the meantime, we expect prices will
gradually continue their move toward fair value despite the prognostications of
naysayers and the traditional "wall of worry" that resides on Wall Street.
Recently, the mutual fund industry has been tarnished by the actions of
some brokers and personnel at advisory firms. We find these reports deeply
troubling and want you to know ICON's position on the issues facing mutual
funds:
- - we do not and have not had agreements that permit the illegal practice of
buying Fund shares after the market close
- - we are not aware of any ICON personnel who have participated in timing the
Funds
- - we do not knowingly permit excessive trading in the ICON Funds, and we take
aggressive steps to restrict market timing. Only time will tell how the
industry will overcome these scandals. You hire us to implement a strict
management discipline, and our service staff is equally committed to
implementing a rigid system of monitoring Fund activity for any sign of
activity that would negatively impact shareholders.
I'd like to close with a story that characterizes our investment
methodology. While making a presentation at an investor seminar some years ago,
an attendee commented that the ICON approach to investing seemed much like
piloting a plane. When I asked what he meant by that, he observed that take-offs
and landings are critical, and in between it is fairly routine. In our system,
capturing industry leadership is critical and in between those rotations, we
ride the theme. As of this writing, we consider ourselves to be at cruising
altitude.
We witnessed an unusual market during the past 12 months. Thank you for
giving ICON the opportunity to help guide you through it.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, D.B.A.
Chairman of the Board of Trustees and Chief Investment Officer of the Adviser
[SIDENOTE]
"We do not expect that newsworthy events are needed for the move toward fair
value to continue."
5
Management Overview
ICON CORE EQUITY FUND
A discussion with the Portfolio Management Team
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Core Equity Fund, Class I rose 17.05% for the fiscal year ended
September 30, 2003, while its Class C shares appreciated 16.24%. Although we
were pleased with the Fund's absolute returns, performance fell short of the
Fund's benchmark, the S&P 1500 Index, which returned 24.69% over the same time
period.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
The market experienced two distinct themes during the reporting period. The
first, a speculative eight-week surge off the market low of early October 2002,
featured lower-quality companies that were inconsistent with the Fund's
investment methodology. For that reason, the Fund was not positioned to capture
what at the time appeared to be unsustainable gains. A pullback between December
2002 and early-March 2003 confirmed these assumptions as industry leadership
proved both intermittent and fear-based.
Amid the market bottom of mid-March, geopolitical concerns inexplicably
transformed into cautious optimism. In the absence of a triggering event, a
second theme emerged as a broad market rally ensued. This time, however, the
advance was driven by higher-quality companies and emphasized economically
sensitive sectors such as Information Technology, Consumer Discretionary and
Financials. As victory in Iraq enabled war-fixated investors to acknowledge
improving economic fundamentals, the rally extended into late September before
cooling slightly.
Against this backdrop, value was widespread within the market, reaching
record highs by our calculations during the fall 2002 and spring 2003 periods.
While the Fund emphasized economically sensitive sectors demonstrating both
value and relative strength, shifts in market themes were sudden and swift.
Consequently, a broad positioning was maintained in an attempt to capture
leadership wherever it emerged. WHAT FACTORS CONTRIBUTED TO THE FUND'S
PERFORMANCE? Our goal is to keep the Core Equity Fund diversified among sectors
and industries. Although positioned for a broad rally, the Fund was adjusted
slightly following the October 2002 market low to increase its exposure to
economically sensitive sectors. January 2003 saw a more significant shift as
Energy and Healthcare were substantially reduced while Information Technology
and Consumer Discretionary were more heavily weighted. By March 2003, leadership
had further concentrated as relative strength finally emerged across a number of
cyclical industries, including consumer finance, diversified financial services,
Internet software & services, semiconductors and specialty stores. These
rotations proved advantageous for the Fund as cyclical stocks rallied on
post-war optimism and a brighter economic outlook.
With this resurgence in cyclical stocks following the mid-March market
bottom, the Energy sector lagged in the move back toward fair value and was
removed from the Fund. Numerous challenges dampened investor interest, even as
energy prices surged late in the period. Healthcare also encountered
difficulties, ranging from increased regulatory scrutiny to slowing
pharmaceutical sales. Fortunately, the Fund maintained limited exposure to the
sector, which at period-end centered on the increasingly attractive managed
healthcare industry.
Measurable individual contributors to Fund performance for the period
included OmniVision Technologies, Inc., a maker of semiconductor imaging
devices. The company easily topped Wall Street earnings and revenue forecasts
while raising its outlook on strong demand. Meanwhile, audio equipment
manufacturer Harman International Industries Inc. advanced as it continued to
gain market share in its automotive platforms.
Among the Fund's performance laggards, discount lodging provider Hotels.com
trimmed its near-term guidance, citing lower sales and higher marketing costs.
Elsewhere, Web security firm Internet Security Systems Inc., tumbled after
missing Wall Street consensus estimates on lower revenue. By the end of the
period, both of these stocks had been sold.
WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC MARKET?
Despite robust gains in the market during the period, valuation readings still
point to a sizable gap between stock prices and fair value. Assuming this gap
continues to close, leadership may come from the economically sensitive Consumer
Discretionary and Industrials sectors, which continue to demonstrate relative
strength against the broader market.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 98.7%
Top 10 Equity Holdings 17.3%
Number of Stocks 86
Cash Equivalents 1.4%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Michaels Stores, Inc. 1.9%
Labor Ready, Inc. 1.8%
Dollar Tree Stores, Inc. 1.8%
j2 Global Communications, Inc. 1.8%
Providian Financial Corporation 1.7%
Citigroup Inc. 1.7%
University of Phoenix Online 1.7%
JetBlue Airways Corporation 1.7%
Georgia-Pacific Corp. 1.6%
Stratasys, Inc. 1.6%
Percentages are based upon net assets.
6
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Consumer Discretionary 21.3%
Information Technology 20.4%
Industrials 19.2%
Financial 16.8%
Leisure and Consumer Staples 8.4%
Materials 5.2%
Healthcare 4.2%
Telecommunication & Utilities 3.2%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
INCEPTION ONE FIVE SINCE
DATE YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class I 10/12/00 17.05% N/A 4.43%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 24.69% N/A -6.72%
- ------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class C 11/27/00 16.24% N/A 3.84%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 24.69% N/A -6.72%
- ------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative index can be found on pages 2 and 3.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON CORE EQUITY FUND - CLASS I S&P 1500 INDEX
------------------------------- --------------
10/12/00 10000 10000
3/31/01 10810 8861
9/30/01 10040 8037
3/31/02 13234 9049
9/30/02 9717 6525
3/31/03 8715 6818
9/30/03 11374 8135
</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. 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. The Fund also offers Class C
shares. These figures do not reflect the charges applicable to Class C shares of
the Fund. Applying these charges would result in lower returns.
7
Schedule of Investments
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 98.7%
CONSUMER DISCRETIONARY 21.3%
APPAREL RETAIL 4.4%
18,500 Abercrombie & Fitch Co.(a) $ 512,635
23,100 Chico's FAS, Inc.(a) 707,784
25,300 Christopher & Banks
Corporation 603,658
16,200 Jos. A. Bank Clothiers,
Inc.(a) 712,314
32,100 Pacific Sunwear of
California, Inc.(a) 663,186
- -----------------------------------------------------
3,199,577
AUTOMOBILE MANUFACTURERS 1.2%
19,500 Winnebago Industries, Inc. 869,310
CATALOG RETAIL 0.8%
51,800 J. Jill Group Inc.(a) 595,700
COMPUTER & ELECTRONICS RETAIL 1.8%
14,100 Best Buy Co., Inc.(a) 670,032
22,200 Electronics Boutique
Holdings Corp.(a) 634,254
- -----------------------------------------------------
1,304,286
CONSUMER ELECTRONICS 1.6%
11,700 Harman International
Industries, Incorporated 1,150,695
DEPARTMENT STORES 1.0%
17,000 Federated Department
Stores, Inc. 712,300
GENERAL MERCHANDISE STORES 1.8%
39,300 Dollar Tree Stores, Inc.(a) 1,318,515
HOMEBUILDING 1.9%
9,500 Centex Corporation 739,860
10,300 Hovnanian Enterprises,
Inc.(a) 663,011
- -----------------------------------------------------
1,402,871
INTERNET RETAIL 1.5%
20,300 eBay Inc.(a) 1,086,050
SPECIALTY STORES 5.3%
6,100 AutoZone, Inc.(a) 546,133
33,500 Michaels Stores, Inc. 1,365,460
22,400 The Sports Authority,
Inc.(a) 704,704
28,900 United Auto Group, Inc.(a) 664,700
14,700 Zale Corporation(a) 652,827
- -----------------------------------------------------
3,933,824
- -----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 15,573,128
FINANCIAL 16.8%
ASSET MANAGEMENT & CUSTODY BANKS 1.1%
28,000 The Bank of New York
Company, Inc. 815,080
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
CONSUMER FINANCE 5.6%
97,400 AmeriCredit Corp.(a) $ 1,003,220
20,000 Capital One Financial
Corporation 1,140,800
35,200 First Cash Financial
Services, Inc.(a) 705,056
105,700 Providian Financial
Corporation(a) 1,246,203
- -----------------------------------------------------
4,095,279
DIVERSIFIED BANKS 1.1%
26,600 FleetBoston Financial
Corporation 801,990
DIVERSIFIED CAPITAL MARKETS 1.3%
28,300 J.P. Morgan Chase & Co. 971,539
INVESTMENT BANKING & BROKERAGE 2.1%
11,700 Lehman Brothers Holdings
Inc. 808,236
14,800 Morgan Stanley 746,808
- -----------------------------------------------------
1,555,044
LIFE & HEALTH INSURANCE 1.9%
18,800 Lincoln National
Corporation 665,144
49,200 UnumProvident Corporation 726,684
- -----------------------------------------------------
1,391,828
OTHER DIVERSIFIED FINANCIAL
SERVICES 1.7%
27,100 Citigroup Inc. 1,233,321
PROPERTY & CASUALTY INSURANCE 1.2%
15,800 MBIA Inc. 868,526
THRIFTS & MORTGAGE FINANCE 0.8%
15,600 The PMI Group, Inc. 526,500
- -----------------------------------------------------
TOTAL FINANCIAL 12,259,107
HEALTHCARE 4.2%
MANAGED HEALTH CARE 4.2%
20,300 Coventry Health Care,
Inc.(a) 1,070,622
62,100 Humana Inc.(a) 1,120,905
18,200 PacifiCare Health Systems,
Inc.(a) 888,160
- -----------------------------------------------------
3,079,687
- -----------------------------------------------------
TOTAL HEALTHCARE 3,079,687
INDUSTRIALS 19.2%
AIRLINES 4.4%
74,100 ExpressJet Holdings,
Inc.(a) 1,022,580
19,900 JetBlue Airways
Corporation(a) 1,211,512
55,500 SkyWest, Inc. 961,260
- -----------------------------------------------------
3,195,352
CONSTRUCTION & ENGINEERING 4.7%
31,700 Chicago Bridge & Iron
Company N.V. -- ADR 860,972
24,600 Fluor Corporation 918,318
16,400 Jacobs Engineering Group
Inc.(a) 739,640
47,000 URS Corporation(a) 911,800
- -----------------------------------------------------
3,430,730
</Table>
8
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
DIVERSIFIED COMMERCIAL SERVICES 7.4%
15,900 Apollo Group, Inc.(a) $ 1,049,877
26,000 Career Education
Corporation(a) 1,177,800
18,800 Corinthian Colleges,
Inc.(a) 1,074,608
15,200 Education Management
Corporation(a) 876,584
18,300 University of Phoenix
Online(a) 1,220,061
- -----------------------------------------------------
5,398,930
EMPLOYMENT SERVICES 2.7%
23,000 Gevity HR, Inc. 337,640
131,500 Labor Ready, Inc.(a) 1,321,575
13,400 Resources Connection,
Inc(a) 322,806
- -----------------------------------------------------
1,982,021
- -----------------------------------------------------
TOTAL INDUSTRIALS 14,007,033
INFORMATION TECHNOLOGY 20.4%
APPLICATION SOFTWARE 0.9%
35,200 Magma Design Automation,
Inc.(a) 690,624
COMMUNICATIONS EQUIPMENT 3.0%
26,700 Cisco Systems, Inc.(a) 523,320
20,200 SafeNet, Inc.(a) 729,826
30,400 UTStarcom, Inc.(a) 966,720
- -----------------------------------------------------
2,219,866
COMPUTER HARDWARE 3.0%
59,300 Neoware Systems, Inc.(a) 1,012,251
27,700 Stratasys, Inc.(a) 1,180,574
- -----------------------------------------------------
2,192,825
COMPUTER STORAGE & PERIPHERALS 1.1%
15,000 Avid Technology, Inc.(a) 795,000
INTERNET SOFTWARE & SERVICES 6.4%
32,700 Digital Insight
Corporation(a) 650,730
29,100 FindWhat.com(a) 503,139
34,100 j2 Global Communications,
Inc.(a) 1,290,003
14,700 Sohu.com Inc.(a) 457,905
28,900 United Online, Inc.(a) 1,005,431
36,000 Websense, Inc.(a) 765,720
- -----------------------------------------------------
4,672,928
IT CONSULTING & OTHER SERVICES 1.5%
30,700 Cognizant Technology
Solutions Corporation(a) 1,119,322
SEMICONDUCTOR EQUIPMENT 0.9%
11,200 Cabot Microelectronics
Corporation(a) 623,056
SEMICONDUCTORS 3.6%
18,200 International Rectifier
Corporation(a) 681,408
26,400 OmniVision Technologies,
Inc.(a) 1,114,608
41,000 Zoran Corporation(a) 799,500
- -----------------------------------------------------
2,595,516
- -----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 14,909,137
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
LEISURE AND CONSUMER STAPLES 8.4%
BROADCASTING & CABLE TV 1.2%
23,100 EchoStar Communications
Corporation(a) $ 884,730
CASINOS & GAMING 0.9%
15,500 Harrah's Entertainment,
Inc. 652,705
HOTELS, RESORTS & CRUISE LINES 2.0%
72,100 Prime Hospitality Corp.(a) 626,549
30,200 Royal Caribbean Cruises
Ltd.(f) 848,922
- -----------------------------------------------------
1,475,471
LEISURE PRODUCTS 1.4%
40,200 Action Performance
Companies, Inc. 982,488
MOVIES & ENTERTAINMENT 2.0%
26,100 Fox Entertainment Group,
Inc.(a) 730,539
36,400 The Walt Disney Company 734,188
- -----------------------------------------------------
1,464,727
RESTAURANTS 0.9%
16,600 CEC Entertainment Inc.(a) 650,720
- -----------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 6,110,841
MATERIALS 5.2%
METAL & GLASS CONTAINERS 1.0%
103,600 Crown Holdings, Inc.(a) 699,300
PAPER PRODUCTS 1.6%
48,800 Georgia-Pacific Corp. 1,182,912
SPECIALTY CHEMICALS 0.6%
12,200 Cytec Industries Inc.(a) 445,300
STEEL 2.0%
96,800 Allegheny Technologies,
Inc. 634,040
37,100 Carpenter Technology
Corporation 795,424
- -----------------------------------------------------
1,429,464
- -----------------------------------------------------
TOTAL MATERIALS 3,756,976
TELECOMMUNICATION & UTILITIES 3.2%
WIRELESS TELECOMMUNICATION SERVICES 3.2%
32,500 America Movil S.A. de
C.V. -- ADR 751,075
13,600 AO VimpelCom(a) -- ADR 827,696
39,200 Nextel Communications,
Inc.(a) 772,632
- -----------------------------------------------------
2,351,403
- -----------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 2,351,403
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $62,065,121) 72,047,312
</Table>
9
Schedule of Investments (continued)
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
SHORT-TERM INVESTMENT 1.4%
$1,014,382 American Family Demand
Note, 0.741%# $ 1,014,382
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $1,014,382) 1,014,382
- -----------------------------------------------------
TOTAL INVESTMENTS 100.1%
(COST $63,079,503) 73,061,694
- -----------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.1%) (30,714)
- -----------------------------------------------------
NET ASSETS 100.0% $73,030,980
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
(f) Foreign security
10
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
<Table>
<Caption>
SEPTEMBER 30, 2003
ASSETS
Investments, at cost $63,079,503
--------------
Investments, at value 73,061,694
Cash 951
Receivables:
Fund shares sold 115,936
Interest 504
Dividends 28,942
Other assets 5,981
--------------
Total Assets 73,214,008
--------------
LIABILITIES
Payables:
Fund shares redeemed 45,123
Advisory fees 46,736
Accrued distribution fees 38,438
Fund accounting, custodial and transfer
agent fees 14,935
Administration fees 3,107
Accrued expenses 34,689
--------------
Total Liabilities 183,028
--------------
Net Assets -- all share classes $73,030,980
--------------
Net Assets -- Class I $37,603,252
--------------
Net Assets -- Class C $35,427,728
--------------
Shares outstanding
(unlimited shares authorized, no par
value)
Class I 3,380,149
Class C 3,256,158
Net asset value
(offering price and redemption price per
share)
Class I $ 11.12
Class C $ 10.88
</Table>
STATEMENT OF OPERATIONS
<Table>
<Caption>
FOR THE YEAR ENDED SEPTEMBER 30, 2003
INVESTMENT INCOME
Interest $ 7,621
Dividends 650,113
--------------
Total Investment Income 657,734
--------------
EXPENSES
Advisory fees 483,554
Distribution fees:
Class I 85,613
Class C 304,612
Fund accounting, custodial and transfer
agent fees 77,710
Administration fees 29,253
Audit fees 17,500
Registration fees 26,784
Legal fees 6,726
Insurance expense 4,510
Trustee fees and expenses 5,036
Shareholder reports 20,742
Interest expense 7,421
Other expenses 56,183
--------------
Total Expenses 1,125,644
--------------
NET INVESTMENT LOSS (467,910)
--------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized loss from investment
transactions (3,558,157)
Change in net unrealized appreciation on
securities 13,315,101
--------------
Net realized and unrealized gain on
investments 9,756,944
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 9,289,034
==============
</Table>
The accompanying notes are an integral part of the financial statements.
11
Financials Statements (continued)
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2003 SEPTEMBER 30, 2002
------------------ ------------------
OPERATIONS
Net investment loss $ (467,910) $ (480,772)
Net realized loss from investment transactions (3,558,157) (10,021,608)
Change in unrealized appreciation on securities 13,315,101 443,874
------------------ ------------------
Net increase (decrease) in net assets resulting from
operations 9,289,034 (10,058,506)
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net capital gains - (1,006,043)
------------------ ------------------
Net decrease from dividends and distributions - (1,006,043)
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold
Class I 15,777,863 34,716,434
Class C 17,459,010 31,557,074
Reinvested dividends and distributions
Class I - 721,301
Class C - 258,376
Shares repurchased
Class I (25,007,736) (11,255,160)
Class C (14,463,137) (4,542,647)
------------------ ------------------
Net (decrease)/increase from fund share transactions (6,234,000) 51,455,378
------------------ ------------------
Total net increase in net assets 3,055,034 40,390,829
------------------ ------------------
NET ASSETS
Beginning of period 69,975,946 29,585,117
------------------ ------------------
End of period $ 73,030,980 $ 69,975,946
------------------ ------------------
NET ASSETS CONSIST OF
Paid-in capital $ 76,607,158 $ 83,333,008
Accumulated undistributed net investment loss - -
Accumulated undistributed net realized loss from
investments (13,558,369) (10,024,152)
Unrealized appreciation/(depreciation) on securities 9,982,191 (3,332,910)
------------------ ------------------
Net Assets $ 73,030,980 $ 69,975,946
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold
Class I 1,599,134 3,071,043
Class C 1,836,853 2,737,279
Reinvested dividends and distributions
Class I - 59,809
Class C - 21,603
Shares repurchased
Class I (2,665,419) (1,000,690)
Class C (1,544,876) (428,625)
------------------ ------------------
Net (decrease)/increase (774,308) 4,460,419
------------------ ------------------
Shares outstanding beginning of period 7,410,615 2,950,196
------------------ ------------------
Shares outstanding end of period 6,636,307 7,410,615
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $121,427,409 $111,655,519
Proceeds from sales of securities 129,023,828 60,207,796
</Table>
The accompanying notes are an integral part of the financial statements.
12
Financial Highlights
<Table>
<Caption>
CLASS I CLASS I CLASS I CLASS C CLASS C
FOR THE YEAR FOR THE YEAR FOR THE PERIOD FOR THE YEAR FOR THE YEAR
ENDED ENDED OCTOBER 12, 2000 ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, (INCEPTION) TO SEPTEMBER 30, SEPTEMBER 30,
2003 2002 SEPTEMBER 30, 2001 2003 2002
------------- ------------- ------------------ ------------- -------------
Net asset value, beginning of
period $ 9.50 $ 10.04 $ 10.00 $ 9.36 $ 9.98
------------- ------------- ------------------ ------------- -------------
INCOME FROM INVESTMENT
OPERATIONS
Net investment loss(x) (0.04) (0.07) (0.05) (0.11) (0.15)
Net realized and unrealized
gains/(losses) on
investments 1.66 (0.20) 0.09 1.63 (0.20)
------------- ------------- ------------------ ------------- -------------
Total from investment
operations 1.62 (0.27) 0.04 1.52 (0.35)
------------- ------------- ------------------ ------------- -------------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income 0.00 0.00 0.00 0.00 0.00
Distributions from net
realized gains 0.00 (0.27) 0.00 0.00 (0.27)
------------- ------------- ------------------ ------------- -------------
Total distributions 0.00 (0.27) 0.00 0.00 (0.27)
------------- ------------- ------------------ ------------- -------------
Net asset value, end of period $ 11.12 $ 9.50 $ 10.04 $ 10.88 $ 9.36
============= ============= ================== ============= =============
Total return 17.05% (3.23)% 0.40%(b) 16.24% (4.07)%
Net assets, end of period (in
thousands) $37,603 $42,232 $23,261 $35,428 $27,744
Average net assets for the
period (in thousands) $34,007 $37,577 $23,802 $30,459 $19,849
Ratio of expenses to average
net assets 1.39% 1.36% 1.60%* 2.14% 2.11%
Ratio of net investment loss
to average net assets (0.37)% (0.58)% (0.36)%* (1.12)% (1.33)%
Portfolio turnover rate 188.07% 107.82% 124.61%(a) 188.07% 107.82%
<Caption>
CLASS C
FOR THE PERIOD
NOVEMBER 28, 2000
(INCEPTION) TO
SEPTEMBER 30, 2001
------------------
Net asset value, beginning of
period $ 10.62
------------------
INCOME FROM INVESTMENT
OPERATIONS
Net investment loss(x) (0.10)
Net realized and unrealized
gains/(losses) on
investments (0.54)
------------------
Total from investment
operations (0.64)
------------------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income 0.00
Distributions from net
realized gains 0.00
------------------
Total distributions 0.00
------------------
Net asset value, end of period $ 9.98
==================
Total return (0.20)%(b)
Net assets, end of period (in
thousands) $ 6,324
Average net assets for the
period (in thousands) $ 2,920
Ratio of expenses to average
net assets 2.23%*
Ratio of net investment loss
to average net assets (1.24)%*
Portfolio turnover rate 124.61%(a)
</Table>
* Annualized for periods less than a year
(x) Calculated using the average share method
(a) Portfolio turnover is calculated at the Fund level and therefore represents
the period October 12, 2000 (inception) to September 30, 2001.
(b) Since the Fund was in existence for less than one year in 2001, the total
return calculation is for the period indicated.
13
Notes to Financial Statements
SEPTEMBER 30, 2003
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Core Equity Fund (the "Fund") is a series fund 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 Fund commenced operations on October 12, 2000 and offers two
classes of shares. There are currently 17 other active funds within the Trust.
Those funds are covered by separate prospectuses and shareholder reports.
The Fund is authorized to issue an unlimited number of no par shares. The
investment objective of the Fund is to provide long-term capital appreciation
with a secondary objective of capital preservation. The Fund may have elements
of risk, including the risk of loss of principal. Additionally, an investment
concentrated in sectors and industries may involve greater risk and volatility
than a more diversified investment. There are also risks associated with small-
and mid-cap investing, including limited product lines, less liquidity and small
market share. Investments in foreign securities may entail unique risks,
including political, market, and currency risks.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its 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 could differ from these estimates.
Investment Valuation.
The Fund's securities and other assets are valued at the close of the regular
trading session of the New York Stock Exchange (the "Exchange") (normally 4 p.m.
Eastern time) each day the Exchange is open. A security listed or traded
primarily on a securities exchange or in the over-the-counter market is valued
at its last sale price on the exchange or market where it is principally traded.
Lacking any sales that day, the security is valued at the current closing bid
price or based on quotes from dealers making a market for the security if the
closing bid price is not available. The market value of individual securities
held by the Fund is determined by using pricing services that provide market
prices to other mutual funds or, as needed, by obtaining market quotations from
independent broker/dealers. Securities and assets for which quotations are not
readily available are valued at fair value determined in good faith pursuant to
consistently applied procedures established by the Trust's Board of Trustees.
Short-term securities with remaining maturities of 60 days or less are generally
valued at amortized cost or original cost plus accrued interest, both of which
approximate market value. London closing quotes for exchange rates are used to
convert foreign security values into U.S. dollars.
Repurchase Agreements.
Repurchase agreements, if held by the Fund, are fully collateralized by U.S.
Government securities and such collateral is in the possession of the Fund's
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 Fund has
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 Fund during the year
ended September 30, 2003.
14
Income Taxes.
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code and, accordingly, the Fund will generally not be
subject to federal and state income taxes, or federal excise taxes to the extent
that it intends to make sufficient distributions of net investment income and
net realized capital gain.
Dividends paid by the Fund 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 Fund on the
ex-dividend/distribution date. The Fund distributes net realized capital gains,
if any, to shareholders at least annually, if not offset by capital loss
carryovers. Income distributions and capital gain distributions are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles generally accepted in the United States of
America.
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.
Investment Transactions.
Security transactions are accounted for as of trade date. Gains and losses on
securities sold are determined on the basis of identified cost.
Expenses.
Each class of the 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 attributable 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.
Meridian Investment Management Corporation ("Meridian") serves as the investment
adviser to the Fund and is responsible for managing the Fund's portfolios of
securities. Meridian receives a monthly management fee that is computed daily at
an annual rate of 0.75% of the Fund's average daily net assets.
Transfer Agent, Custody and Accounting Fees.
U.S. Bank N.A. ("U.S. Bank") and U.S. Bancorp Fund Services, LLC ("U.S.
Bancorp") provide domestic custodial services, transfer agent services and fund
accounting for the Fund. The Trust pays a fee for transfer agent and custody
services at an annual rate of 0.065% on the Trust's first $500 million of
average daily net assets, 0.06% on the next $1.5 billion of average daily net
assets, and 0.05% on the average daily net assets in excess of $2 billion. The
Trust pays a minimum fee for fund accounting of $37,500 on the first $100
million of average daily net assets, 0.0125% on the next $200 million and
0.0075% on the average daily net assets in excess of $300 million. The Trust
also pays for various out-of-pocket costs incurred by U.S. Bancorp that are
estimated to be 0.02% of the average daily net assets.
Administrative Services.
The Trust has entered into an administrative services agreement with Meridian.
This agreement provided for an annual fee of 0.05% on the Trust's first $500
million of average daily net assets and 0.04% on average daily net assets in
excess of $500 million for the period October 1, 2002 to August 31, 2003 and
0.05% on the Trust's first $1.5 billion of average daily net assets and 0.045%
on the average daily net assets in excess of $1.5 billion for the period
starting September 1, 2003.
15
Notes to Financial Statements (continued)
Distribution Fees.
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act ("12b-1 Plan") under which the Fund is authorized to compensate the Fund's
distributor, Meridian Clearing Corp. ("MCC") (an affiliate of the adviser) for
the sale and distribution of shares. Under the 12b-1 Plan, Class C shareholders
pay an annual 12b-1 and service fee of 1.00% of average daily net assets and
Class I shareholders pay an annual 12b-1 fee of 0.25% of average daily net
assets. For the year ended September 30, 2003 the total amounts paid or payable
to MCC pursuant to the 12b-1 Plan were $304,612 on the Class C shares and
$85,613 on the Class I shares.
Related parties.
Certain officers and directors of Meridian and MCC are also officers and
trustees of the Funds; however, such officers and trustees receive no
compensation from the Funds.
3. 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 difference between book and tax net appreciation or depreciation of
investment is wash sale loss deferrals and corporate actions. The aggregate
composition of unrealized appreciation and depreciation of investment securities
for federal income tax purposes as of September 30, 2003 are as follows:
<Table>
Federal Tax Cost $63,079,503
Unrealized Appreciation $11,965,773
Unrealized Depreciation $(1,983,582)
Net Appreciation $ 9,982,191
</Table>
The tax components of capital shown in the table below represent: (1)
losses or deductions the portfolio may be able to offset against income and
gains recognized in future years, and (2) post October loss deferrals.
Accumulated capital losses noted below represent net capital loss
carryovers as of September 30, 2003 that may be available to offset future
realized capital gains and thereby reduce future taxable income distributions.
These carryovers expire on September 30, 2010 and 2011.
In 2003, the portfolio incurred "post October" losses during the period
from November 1, 2002 through September 30, 2003. These losses will be deferred
for tax purposes and recognized in the year ending September 30, 2004.
<Table>
Accumulated Capital Losses $(11,898,396)
Post October Deferrals $ (1,659,973)
</Table>
16
Report of Independent Auditors
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF ICON FUNDS:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule 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 Core Equity Fund (one of the
portfolios constituting ICON Funds, hereafter referred to as the "Fund") at
September 30, 2003, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated, 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 Fund's 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 auditing standards generally accepted in the United States of America,
which 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, 2003 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 12, 2003
17
Board of Trustees and Fund Officers
(unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 18 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, addresses and
principal occupations are set forth below. Trustees have no official term of
office and generally serve until they resign or are not re-elected.
INTERESTED TRUSTEE
CRAIG T. CALLAHAN, 52, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception in 1996. Dr. Callahan also serves as President
(1998 to present) and Chief Investment Officer (1991 to present) of Meridian
Investment Management Corporation ("Meridian"), 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 Meridian Clearing
Corporation ("MCC"), the Funds' Distributor. Dr. Callahan also serves as the
Chief Investment Officer and Director (1994 to present), and was previously
Secretary/Treasurer (1994 to 1998) of Meridian Management & Research Corporation
("MM&R"), the parent company of Meridian and MCC.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 53. 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); 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); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 56. 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).
18
GREGORY KELLAM SCOTT, 54. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott is Senior Vice President -- Law, General Counsel and
Secretary, GenCorp, Inc., a multinational technology-based manufacturing company
(2002 to present). Mr. Scott was previously 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).
R. MICHAEL SENTEL, 55. 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 FDIC with responsibility for the Rocky Mountain Region
(1991-1994).
JONATHAN F. ZESCHIN, 50. 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 2002). 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 is also a Director of the Wasatch Funds
(2002 to present); and a Director of the Young Americans Education Foundation
and Young Americans Bank (1998 to present).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 52. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as Meridian's President (1998 to
present) and Chief Investment Officer (1991 to present). Dr. Callahan is also
President (1998 to present), Director (1991 to present) and was previously Vice
President (1991 to 1998) of MCC. Dr. Callahan is also the Chief Investment
Officer and Director (1994 to present), and was previously Secretary/ Treasurer
(1994 to 1998) of MM&R.
ERIK L. JONSON, 54. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception in 1996. Mr. Jonson is also Chief
Financial Officer (1996 to present) and Vice President (1998 to present) of
Meridian; Chief Financial Officer, Secretary and Director (1996 to present) of
MM&R; and Vice President and Treasurer (March 2002 to present) and was
previously Secretary/Treasurer, (1998 to 2002) of MCC.
ANDRA C. OZOLS, 42. Ms. Ozols has been a Vice President and Secretary of the
Funds since March 2002. She previously served in that capacity in 1998. Ms.
Ozols is also Vice President, General Counsel and Secretary (March 2002 to
present and January 1998 to October 1998) of Meridian; Vice President and
Secretary (March 2002 to present) of MCC and Director (June 2003 to present) of
MM&R. Ms. Ozols was previously Vice President (1999 to 2002) and Assistant
General Counsel (October 1998 to February 2002) of Founders Asset Management
LLC; and was previously a Branch Chief (1993 to 1995) and Enforcement Attorney
(1990 to 1995 and 1996 to 1998) with the U.S. Securities and Exchange
Commission.
The Trustees and Officers of the Funds may be contacted at 5299 DTC
Boulevard, Suite 1200, Greenwood Village, Colorado 80111.
Additional information about the Funds' Trustees and Officers is available
in the Funds' Statement of Additional Information, which can be obtained free of
charge by calling 1-800-764-0442.
19
Other Information
(unaudited)
PROXY VOTING BY THE FUND
A description of the policies and procedures that the Fund uses to determine how
to vote proxies related to portfolio securities can be obtained free of charge
by calling 1-800-764-0442 or by visiting www.iconfunds.com or www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities will be available free of charge no later than August 31, 2004 by
calling 1-800-764-0442 or by visiting www.iconfunds.com or www.sec.gov.
20
[ICON FUNDS LOGOS]
FOR MORE INFORMATION ABOUT THE ICON FUNDS, CONTACT US:
BY TELEPHONE 1-800-764-0442
BY MAIL ICON Funds
P.O. Box 701
Milwaukee, WI 53201-0701
IN PERSON ICON Funds
5299 DTC Boulevard, Suite 1200
Greenwood Village, CO 80111
BY E-MAIL ICON@mimcorp.com
ON THE INTERNET www.iconfunds.com
This report is for the general information of the Fund's shareholders. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus. Please call 1-800-764-0442 or
visit www.iconfunds.com for a current prospectus, which contains more complete
information, including charges, expenses, share classes, and risks. Please read
the prospectus carefully before you invest or send money. Meridian Clearing
Corp., Distributor.
I-118-CEQ
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
SEPTEMBER 30, 2003
ICON BOND FUND
[PHOTO]
ANNUAL REPORT
[ICON FUNDS LOGOS]
Table of Contents
<Table>
<Caption>
ABOUT THIS REPORT ............................................2
MESSAGE FROM ICON FUNDS ............................................4
MANAGEMENT OVERVIEW ............................................6
SCHEDULE OF INVESTMENTS ............................................8
FINANCIAL STATEMENTS ...........................................10
FINANCIAL HIGHLIGHTS ...........................................12
NOTES TO FINANCIAL STATEMENTS ...........................................13
REPORT OF INDEPENDENT AUDITORS ...........................................16
BOARD OF TRUSTEES AND FUND OFFICERS
(UNAUDITED) ...........................................17
OTHER INFORMATION (UNAUDITED) ...........................................19
</Table>
About This Report
- --------------------------------------------------------------------------------
HISTORICAL RETURNS
- --------------------------------------------------------------------------------
All total returns mentioned in this report account for the change in the Fund's
per-share price and the reinvestment of any dividends and capital gains
distributions. 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 Fund's performance results do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or on the redemption of Fund shares.
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. Due to market volatility,
current performance may differ from the figures shown. Please call
1-800-764-0442 or visit www.iconfunds.com for the most recent returns.
- --------------------------------------------------------------------------------
PORTFOLIO DATA
- --------------------------------------------------------------------------------
Opinions and forecasts regarding industries, companies and 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. The Fund's percentage holdings as of September 30, 2003 are
included in the Schedule of Investments.
There are risks associated with mutual fund investing, including the risk
of loss of principal. The Fund may invest in medium- and lower-quality debt
securities. These high-yield bonds involve a greater risk of default and price
volatility than U.S. Government and other high-quality bonds.
High-yield/high-risk bonds can experience sudden and sharp price swings which
will affect net asset value. Investments in foreign securities may entail unique
risks, including political, market, and currency risks.
2
- --------------------------------------------------------------------------------
COMPARATIVE INDEX
- --------------------------------------------------------------------------------
The comparative index discussed in this report is meant to provide a basis for
judging the Fund's performance against a specific securities index. The
benchmark 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 Fund's portfolio may significantly differ in holdings and composition
from the index. Individuals cannot invest directly in the index.
The unmanaged Lehman Brothers 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 and Lehman Brothers.
3
Message from ICON Funds
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
[PHOTO]
- --------------------------------------------------------------------------------
A year has passed since the launch of the ICON Bond Fund, and we are pleased to
report that this alternative for increasingly difficult and volatile markets has
exceeded expectations. Not by guessing where interest rates or the economy are
headed. Rather, by employing a disciplined methodology of sector rotation and
strict valuation analysis. In viewing the bond market as one asset class, we
rotate around the duration and quality grid, selling sectors that appear
overpriced and buying those that appear underpriced.
Looking back over the fiscal year, several statements from the ICON Bond
Fund semiannual report for the six-month period ended March 31, 2003 provide an
interesting insight into the events that later unfolded.
THE BENEFICIARY OF PESSIMISM
At the time, we commented that "the bond market was the beneficiary of the
pessimism, uncertainty and fear that permeated the investment community." With
investors fixated on impending war and perceived economic stagnation, stock and
bond prices became detached from intrinsic value. While stocks were trading as
high as 55% below our estimate of fair value, U.S. Treasury securities were in
the midst of a flight-to-quality rally that boosted their valuations to lofty
levels.
Corporate bonds, meanwhile, had languished amid economic and default
concerns. We went on to say that "by favoring the comfort of government bonds,
investors were allowing corporate and lower-quality bonds to be priced at
discounts to our estimate of fair value." However, as stocks rebounded off the
market lows of October 2002 and March 2003, Treasuries bid a hasty retreat. In
contrast, lower-grade corporate bonds mirrored relief-based advances in the
stock market. One other observation from the semiannual report bears mentioning.
"Yet even in the context of this rotation-driven rally, the mispriced corporate
sector appeared much more eager in its surge back toward fair value." This surge
was no more apparent than in the second half of the fiscal year. As the end of
military action in Iraq gave way to a brighter economic outlook, corporate bonds
strengthened in light of better-than-expected company profits and rising stock
prices. While this reversal was certainly an accurate call by our system, we
admit that it was neither clairvoyance nor providence on our part. It was simply
the inherent nature of sticking to ICON's valuation discipline.
[SIDENOTE]
"With investors fixated on impending war and perceived economic stagnation,
stock and bond prices became detached from intrinsic value."
4
A MOVE TOWARD FAIR VALUE
We believe the recent surge in corporate bond prices is nothing more than a move
toward fair value. Put another way, we view it as an acknowledgement by many
investors that the macro setting was not as discouraging as they initially
thought. Corporate and high-yield bonds were simply oversold, and investors came
to realize they were wrong for taking them to extreme lows.
While economic conditions have certainly improved in the past year, we do
not believe that a strong recovery or boom is necessary to prolong the rally.
Our experience tells us it is simply the natural behavior of a rational market.
There have been few newsworthy events that have boosted the market since the
March 2003 bottom. We do not expect that any are needed for the move toward fair
value to continue.
RECENT PRESS ON MUTUAL FUNDS
Recently, the mutual fund industry has been tarnished by the actions of some
brokers and personnel at advisory firms. We find these reports deeply troubling
and want you to know ICON's position on the issues facing mutual funds:
- - we do not and have not had agreements that permit the illegal practice of
buying Fund shares after the market close
- - we are not aware of any ICON personnel who have participated in timing the
Funds
- - we do not knowingly permit excessive trading in the ICON Funds, and we take
aggressive steps to restrict market timing.
Only time will tell how the industry will overcome these scandals. You hire
us to implement a strict management discipline, and our service staff is equally
committed to implementing a rigid system of monitoring the Fund for any sign of
activity that would negatively impact shareholders.
RIDING THE THEME
I'd like to close with a story that characterizes our investment methodology.
While making a presentation at an investor seminar some years ago, an attendee
commented that the ICON approach to investing seemed much like piloting a plane.
When I asked what he meant by that, he observed that take-offs and landings are
critical, and in between it is fairly routine. In our system, capturing sector
leadership is critical and in between those rotations, we ride the theme. As of
this writing, we consider ourselves to be at cruising altitude.
We witnessed an unusual market during the past 12 months. Thank you for
giving ICON the opportunity to help guide you through it.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, D.B.A.
Chairman of the Board of Trustees and Chief Investment Officer of the Adviser
[SIDENOTE]
"The recent surge in corporate bond prices is an acknowledgement by many
investors that the macro setting was not as discouraging as they initially
thought."
5
Management Overview
ICON BOND FUND
A discussion with Derek Rollingson, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
For the fiscal year ended September 30, 2003, the ICON Bond Fund, Class I
climbed 8.19% versus a one-year return of 7.12% for its benchmark, the Lehman
Brothers U.S. Universal Index. Moreover, the Fund's Class C shares appreciated
9.98% since their October 21, 2002 inception, while the Index returned 8.96%
over the same time period.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
A seesaw rotation marked the first half of the fiscal year, as investors shifted
between the safety of U.S. Treasuries and the higher yields of corporate bonds.
In both cases, robust demand propelled prices higher, sending yields lower
across the entire maturity spectrum.
Despite mostly favorable conditions for government and agency securities,
signs emerged that the rally may have run its course. Amid growing concern that
an improving economic and geopolitical outlook could produce a sharp reversal in
the overbought Treasury market, lower-quality investment-grade bonds and
high-yield debt enjoyed a strong resurgence, benefiting from wider yield
spreads.
As the second half got underway, investors continued to abandon Treasuries
in light of better-than-expected corporate earnings and higher stock prices.
Higher-yielding fixed-income securities assumed leadership before retreating
abruptly in late June 2003, as the bond market reacted to a disappointing
reduction in the overnight lending rate. Nevertheless, rates remained near
historic lows until late June, when a spate of positive economic reports
exacerbated the sell-off, pushing Treasury yields dramatically higher before
moderating later in the period.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Early in the reporting period our valuation model indicated a significant
pricing disconnect in the corporate bond market, particularly within the
lower-quality investment-grade and high-yield debt sectors. The Fund purchased
these issues within its investment limitations at sizable discounts to
historical averages. However, the Fund was early in rotating from overvalued
government and agency bonds to more attractively valued corporate credits. As
Treasuries rallied amid stock market weakness, corporate bonds backpedaled,
causing a drag on performance.
Despite this near-term setback, our valuation and relative strength
readings continued to suggest that corporates were poised to outperform going
forward. Higher-yielding corporate bonds outpaced government issues, coinciding
with a sustained post-war surge in stocks and a tightening of credit spreads.
This upward move was not without its bumps as corporates retreated in unison
with the July spike in the 10-year Treasury yield. However, the bond market
rebounded strongly in August and September as investors capitalized on
attractive valuations, improving credit fundamentals, and declining default
risk.
WHAT IS THE INVESTMENT OUTLOOK FOR THE BOND MARKET?
Although improving economic conditions have pushed bond yields off their
historical lows, we believe the current low-inflation environment could very
well support sustainable growth without a corresponding rise in interest rates.
While higher yields paid by lower-quality investment-grade and high-yield
corporate bonds could offset the dilutive effects of rising rates, we have taken
steps to lessen our interest rate exposure by shortening the Fund's average
duration. Under these conditions, and based on our model, it is our belief that
corporate bonds may outperform their government counterparts for the foreseeable
future.
[SIDENOTE]
PORTFOLIO COMPOSITION
September 30, 2003
Corporate Bonds 67.5%
Convertible Bonds 1.8%
U.S. Government 9.7%
U.S. Agency 10.2%
Investment Grade+ 75.6%
High-Yield/High-Risk+ 24.4%
Equities 1.0%
Short-Term Investments 8.5%
+ Percentages are based upon total bond holdings.
Percentages are based upon net assets.
[SIDENOTE]
PORTFOLIO HIGHLIGHTS
September 30, 2003
Number of Bonds 78
Number of Equities 1
Weighted average maturity* 10.37 years
Weighted average duration* 6.07 years
30-Day Current Yield
(after expense limitation) 3.75%
30-Day Current Yield
(before expense limitation) 3.17%
* Excluding cash and equivalents.
Yield will fluctuate.
6
- --------------------------------------------------------------------------------
TOP 10 BOND HOLDINGS
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
U.S. Treasury, 5.000%, 2-15-11 2.8%
Tennessee Valley Authority, 5.625%, 1-18-11 2.2%
Federal National Mortgage Association (FNMA) Notes, 7.125%, 1-15-30 2.2%
Owens-Illinois Inc. Senior Notes, 8.100%, 5-15-07 2.1%
Computer Associates International Inc. Senior Notes, 6.375%, 4-15-05 2.1%
U.S. Treasury, 4.875%, 2-15-12 1.8%
Ford Motor Company Notes, 7.450%, 7-16-31 1.8%
Hertz Corp. Senior Notes, 7.625%, 6-1-12 1.8%
PSEG Power LLC Guaranteed, 6.950%, 6-1-12 1.7%
U.S. Treasury, 6.625%, 5-15-07 1.6%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
INCEPTION ONE FIVE SINCE
DATE YEAR YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Bond Fund - Class I 10/1/02 8.19% N/A 8.19%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 7.12% N/A 7.12%
- -------------------------------------------------------------------------------------------
ICON Bond Fund - Class C 10/21/02 N/A N/A 9.98%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index N/A N/A 8.96%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative index can be found on pages 2 and 3. The
Adviser has agreed to limit a portion of the Fund's expenses if they exceed the
designated cap. The Fund's total return would have been lower if this expense
limitation had not been in place.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON BOND FUND - CLASS I LEHMAN BROTHERS U.S. UNIVERSAL INDEX
------------------------ ------------------------------------
10/1/02 10000 10000
12/31/02 10053 10199
3/31/03 10245 10383
6/30/03 10854 10703
9/30/03 10819 10712
</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 10/1/02 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 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. The Fund also offers Class C
shares. These figures do not reflect the charges applicable to Class C shares of
the Fund. Applying these charges would result in lower returns.
7
Schedule of Investments
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
BONDS 89.2%
CORPORATE BONDS 67.5%
$ 450,000 Allied Waste North America
Inc. Guaranteed, 10.000%,
8-1-09 $ 487,688
372,000 AT&T Corporation Notes,
7.750%, 3-1-07 421,480
450,000 AT&T Wireless Services Inc.
Senior Notes, 8.750%,
3-1-31 556,578
500,000 Boeing Co. Debentures,
8.750%, 8-15-21 632,070
350,000 Capital One Financial Corp.
Senior Notes, 6.875%,
2-1-06 380,716
400,000 Capital One Financial Corp.
Notes, 6.500%, 7-30-04 414,240
391,000 Cendant Corp. Senior Notes,
7.375%, 1-15-13 450,771
525,000 CITGroup Inc. Senior Notes,
7.750%, 4-2-12 623,105
400,000 Comcast Corp. Notes,
8.875%, 5-1-17 521,136
500,000 Comcast Corp. Notes,
6.200%, 11-15-08 552,559
800,000 Computer Associates
International Inc. Senior
Notes, 6.375%, 4-15-05 844,000
300,000 Cox Communications Inc.
Notes, 7.750%,11-1-10 358,317
500,000 CSC Holdings Inc. Senior
Notes, 7.250%, 7-15-08 498,750
600,000 Echostar Communications
Corp. Senior Notes, 9.375%,
2-1-09 639,750
260,000 FairFax Financial Holdings
Notes, 7.375%, 3-15-06(f) 260,000
6,000 First American Corp.
Debentures, 7.550%, 4-1-28 6,617
783,000 Ford Motor Company Notes,
7.450%, 7-16-31 722,111
350,000 Ford Motor Credit Co.
Notes, 7.375%, 10-28-09 373,066
185,000 GTE North Inc. Debentures,
6.940%, 4-15-28 198,788
300,000 The Gap Inc. Notes,
10.550%, 12-15-08 360,750
350,000 The Gap Inc. Notes, 6.900%,
9-15-07 376,250
410,000 General Electric Capital
Corp. Notes,
6.750%, 3-15-32 462,689
354,000 General Electric Capital
Corp. Notes, 7.375%,
1-19-10 420,375
600,000 General Motors Acceptance
Co. Notes, 6.125%, 8-28-07 634,360
537,000 General Motors Acceptance
Co. Notes, 7.200%, 1-15-11 565,857
240,000 Georgia-Pacific Corp.
Notes, 8.875%, 5-15-31 241,200
350,000 Georgia-Pacific Corp.
Debentures, 7.375%, 12-1-25 309,750
300,000 Goldman Sachs Group Inc.
Notes, 6.600%, 1-15-12 339,541
</Table>
<Table>
- -----------------------------------------------------
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
$ 600,000 Halliburton Company Notes,
6.000%, 8-1-06 $ 621,000
680,000 Hertz Corp. Senior Notes,
7.625%, 6-1-12 711,198
300,000 Hilton Hotels Corp. Senior
Notes, 7.500%, 12-15-17 304,500
500,000 Household Finance Corp.
Senior Unsubordinated,
5.875%, 2-1-09 548,271
400,000 JC Penney Co. Inc.
Debentures, 7.950%, 4-1-17 422,000
455,000 J.P. Morgan Chase & Co.
Subordinated Notes, 6.750%,
8-15-08 522,950
500,000 Liberty Media Corp.
Debentures, 8.250%, 2-1-30 578,843
250,000 Marsh Supermarket Inc.
Guaranteed, 8.875%, 8-1-07 235,000
500,000 Mediacom Broadband LLC
Guaranteed, 11.000%,
7-15-13 526,250
500,000 Morgan Stanley Notes,
7.250%, 4-1-32 584,072
500,000 Motorola Inc. Debentures,
6.500%, 11-15-28 481,875
440,000 News American Holdings Inc.
Debentures, 7.750%, 2-1-24 514,851
300,000 News America Holdings
Guaranteed, 8.150%,
10-17-36 368,864
575,000 Nextel Communications Inc.
Senior Notes, 9.375%,
11-15-09 623,875
829,000 Owens-Illinois Inc. Senior
Notes, 8.100%, 5-15-07 850,761
345,000 Pep Boys Manny Moe & Jack
Notes, 7.000%, 6-1-05 350,175
300,000 Phillips Petroleum Notes,
8.750%, 5-25-10 380,954
600,000 PSEG Power LLC Guaranteed,
6.950%, 6-1-12 677,329
350,000 Royal Caribbean Cruises
Ltd. Senior Notes, 6.750%,
3-15-08(f) 353,500
382,000 SBC Communications Inc.
Notes, 6.250%, 3-15-11 426,724
160,000 SEMCO Energy Senior Notes,
8.000%, 6-30-16 158,400
300,000 Sears Roebuck & Co. Notes,
6.500%, 12-1-28 309,030
305,000 Sears Roebuck & Co. Notes,
6.700%, 4-15-12 345,939
300,000 Starwood Hotels & Resorts
Worldwide Inc. Guaranteed,
7.875%, 5-1-12 328,500
515,000 Tesoro Petroleum Corp.
Guaranteed, 9.000%, 7-1-08 502,125
399,000 Time Warner Inc.
Debentures, 7.570%, 2-1-24 448,336
350,000 Toys R Us Inc. Notes,
7.625%, 8-1-11 381,053
250,000 Tyco International Ltd.
Guaranteed, 6.125%,
11-1-08(f) 261,250
560,000 Verizon New Jersey Inc.
Debentures, 5.875%, 1-17-12 607,899
</Table>
8
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
w$ 300,000 Winn Dixie Stores Inc.
Guaranteed, 8.875%, 4-1-08 $ 310,500
300,000 Wisconsin Power & Light Co.
Notes, 7.000%, 6-15-07 338,815
- -----------------------------------------------------
TOTAL CORPORATE BONDS 26,727,353
CONVERTIBLE BONDS 1.8%
223,000 GTECH Holdings Corp.,
1.750%, 12-15-21 $ 359,588
400,000 Providian Financial Corp.,
3.250%, 8-15-05 374,000
- -----------------------------------------------------
TOTAL CONVERTIBLE BONDS 733,588
U.S. GOVERNMENT AND U.S. GOVERNMENT
AGENCY BONDS 19.9%
200,000 Federal Farm Credit Bank
Notes, 5.900%, 7-21-08 225,231
255,000 Federal Farm Credit Bank
Notes, 5.900%, 8-4-08 287,264
210,000 Federal Home Loan Bank
(FHLB), 5.945%, 7-28-08 236,658
450,000 Federal Home Loan Bank
(FHLB), 5.875%, 2-15-11 497,915
588,000 Federal Home Loan Mortgage
Corporation (FHLMC) Notes,
5.125%, 7-15-12 625,095
700,000 Federal National Mortgage
Association (FNMA) Notes,
7.125%, 1-15-30 859,651
300,000 Private Export Funding
Guaranteed, 6.490%, 7-15-07 341,857
800,000 Tennessee Valley Authority,
5.625%, 1-18-11 885,623
390,000 Tennessee Valley Authority
Notes, 6.875%, 12-15-43 409,710
669,000 U.S. Treasury, 4.875%,
2-15-12 724,009
1,000,000 U.S. Treasury, 5.000%,
2-15-11 1,096,562
500,000 U.S. Treasury, 5.750%,
8-15-10 572,441
559,000 U.S. Treasury, 6.625%,
5-15-07 643,789
321,000 U.S. Treasury, 8.750%,
5-15-17 461,362
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AND U.S.
GOVERNMENT AGENCY BONDS 7,867,167
- -----------------------------------------------------
TOTAL BONDS
(COST $33,522,261) 35,328,108
SHARES MARKET VALUE
- -----------------------------------------------------
W
COMMON STOCKS 1.0%
FINANCIAL 1.0%
REAL ESTATE INVESTMENT TRUSTS
7,000 Novastar Financial Inc. $ 402,290
- -----------------------------------------------------
TOTAL FINANCIAL 402,290
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $346,620) 402,290
PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
W
SHORT-TERM INVESTMENTS 8.5%
U.S. GOVERNMENT AGENCIES 2.3%
$ 892,000 Federal Home Loan Bank
(FHLB) Discount Note,
0.850%, 10-1-03 $ 892,000
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 892,000
SHORT-TERM CORPORATE BONDS 2.6%
72,000 CMS Energy Corp. Senior
Notes, 6.750%, 1-15-04 72,000
400,000 Ford Motor Credit Co.
Senior Notes, 5.750%,
2-23-04 406,540
550,000 Xerox Corp. Notes, 5.500%,
11-15-03 551,375
- -----------------------------------------------------
TOTAL SHORT-TERM CORPORATE BONDS 1,029,915
VARIABLE RATE DEMAND NOTE 3.6%
1,443,253 American Family Demand
Note, 0.741%# 1,443,253
- -----------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 1,443,253
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $3,358,253) 3,365,168
- -----------------------------------------------------
TOTAL INVESTMENTS 98.7%
(COST $37,227,134) 39,095,566
- -----------------------------------------------------
OTHER ASSETS LESS LIABILITIES 1.3% 502,415
- -----------------------------------------------------
NET ASSETS 100.0% $39,597,981
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
# Variable rate demand notes 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, 2003.
(f) Foreign security
Dates shown on each security are due dates of the obligations.
9
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
<Table>
<Caption>
SEPTEMBER 30, 2003
ASSETS
Investments, at cost $37,227,134
--------------
Investments, at value 39,095,566
Receivables:
Fund shares sold 267,431
Interest 609,209
Expense reimbursement by Adviser 14,990
Other assets 3,703
--------------
Total Assets 39,990,899
--------------
LIABILITIES
Payables:
Fund shares redeemed 147,920
Advisory fees 19,144
Accrued distribution fees 8,104
Fund accounting, custodial and transfer
agent fees 11,137
Administration fees 1,598
Distributions due to shareholders 141,779
Accrued expenses 63,236
--------------
Total Liabilities 392,918
--------------
Net Assets -- all share classes $39,597,981
--------------
Net Assets -- Class I $39,338,262
--------------
Net Assets -- Class C $ 259,719
--------------
Shares outstanding
(unlimited shares authorized, no par
value)
Class I 3,777,832
Class C 24,914
Net asset value
(offering price and redemption price per
share)
Class I $ 10.41
Class C $ 10.42
</Table>
STATEMENT OF OPERATIONS
<Table>
<Caption>
FOR THE YEAR ENDED SEPTEMBER 30, 2003
INVESTMENT INCOME
Interest $1,802,362
Dividends 37,500
--------------
Total Investment Income 1,839,862
--------------
EXPENSES
Advisory fees 202,155
Distribution fees:
Class I 84,670
Class C 1,603
Fund accounting, custodial and transfer
agent fees 63,890
Administration fees 15,399
Audit fees 21,019
Registration fees 27,810
Legal fees 3,334
Insurance expense 335
Trustee fees and expenses 1,950
Shareholder reports 20,034
Interest expense 3,119
Other expenses 43,918
--------------
Total expenses 489,236
Expense reimbursement by Adviser (50,621)
--------------
Net Expenses 438,615
--------------
NET INVESTMENT INCOME 1,401,247
--------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized loss from investment
transactions (294,006)
Change in net unrealized appreciation on
securities 1,868,432
--------------
Net realized and unrealized gain on
investments 1,574,426
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $2,975,673
==============
</Table>
The accompanying notes are an integral part of the financial statements.
10
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEAR
OCTOBER 1, 2002*
(INCEPTION) TO
SEPTEMBER 30, 2003
------------------
OPERATIONS
Net investment income $ 1,401,247
Net realized loss from investment transactions (294,006)
Change in unrealized appreciation on securities 1,868,432
------------------
Net increase in net assets resulting from operations 2,975,673
------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (1,394,730)
------------------
Net decrease from dividends and distributions (1,394,730)
------------------
FUND SHARE TRANSACTIONS
Shares sold
Class I 56,519,622
Class C 372,769
Reinvested dividends and distributions
Class I 1,384,911
Class C 7,462
Shares repurchased
Class I (20,136,882)
Class C (130,844)
------------------
Net increase from fund share transactions 38,017,038
------------------
Total net increase in net assets 39,597,981
NET ASSETS
Beginning of period -
------------------
End of period $ 39,597,981
------------------
NET ASSETS CONSIST OF
Paid-in capital $ 38,017,038
Accumulated undistributed net investment income 12,040
Accumulated undistributed net realized loss from
investments (299,529)
Unrealized appreciation on securities 1,868,432
------------------
Net Assets $ 39,597,981
==================
TRANSACTIONS IN FUND SHARES
Shares sold
Class I 5,630,081
Class C 36,999
Reinvested dividends and distributions
Class I 135,559
Class C 726
Shares repurchased
Class I (1,987,808)
Class C (12,811)
------------------
Net increase 3,802,746
------------------
Shares outstanding beginning of period -
------------------
Shares outstanding end of period 3,802,746
==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $ 32,843,432
Proceeds from sales of securities 4,586,062
Purchases of long-term U.S. government securities 14,995,428
Proceeds from sales of long-term U.S. government
securities 8,399,209
</Table>
* The offering of Class I shares commenced on October 1, 2002 and Class C shares
on October 21, 2002.
The accompanying notes are an integral part of the financial statements.
11
Financial Highlights
<Table>
<Caption>
CLASS I CLASS C
FOR THE YEAR FOR THE PERIOD
OCTOBER 1, 2002 OCTOBER 21, 2002
(INCEPTION) TO (INCEPTION) TO
SEPTEMBER 30, 2003 SEPTEMBER 30, 2003
------------------ ------------------
Net asset value, beginning of period $ 10.00 $ 9.79
------------------ ------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(x) 0.42 0.37
Net realized and unrealized gains on investments 0.38 0.60
------------------ ------------------
Total from investment operations 0.80 0.97
------------------ ------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.39) (0.34)
Distributions from net realized gains 0.00 0.00
------------------ ------------------
Total distributions (0.39) (0.34)
------------------ ------------------
Net asset value, end of period $ 10.41 $10.42
================== ==================
Total return 8.19% 9.98%(b)
Net assets, end of period (in thousands) $39,338 $ 260
Average net assets for the period (in thousands) $33,787 $ 199
Ratio of expenses to average net assets*
Before expense waiver 1.45% 2.05%
After expense waiver 1.30% 1.90%
Ratio of net investment income to average net assets*
Before expense waiver 4.01% 3.48%
After expense waiver 4.16% 3.63%
Portfolio turnover rate 41.65%(a) 41.65%(a)
</Table>
* Annualized for periods less than a year
(a) Portfolio turnover is calculated at the Fund level and therefore represents
the year October 1, 2002 (inception) to September 30, 2003.
(b) The total return calculation is for the period indicated.
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
12
Notes to Financial Statements
SEPTEMBER 30, 2003
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Bond Fund (the "Bond Fund" or "Fund") is a series fund of the ICON
Funds (the "Trust"), a Massachusetts business trust, which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
investment management company. The Bond Fund commenced operations on October 1,
2002 and offers two classes of shares. There are currently 17 other active funds
within the Trust. Those funds are covered by separate prospectuses and
shareholder reports.
The Fund is authorized to issue an unlimited number of no par shares. The
investment objective of the Fund is maximum total return. The Fund may have
elements of risk, including the risk of loss of principal. Additionally, the
Bond Fund may invest in medium- and lower-quality debt securities. These
high-yield bonds involve a greater risk of default and price volatility than
U.S. Government and other high-quality bonds. High-yield/high-risk bonds can
experience sudden and sharp price swings which will affect net asset value.
Investments in foreign securities may entail unique risks, including political,
market, and currency risks.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its 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 could differ from these estimates.
Investment Valuation.
The Fund's securities and other assets are valued at the close of the regular
trading session of the New York Stock Exchange (the "Exchange") (normally 4 p.m.
Eastern time) each day the Exchange is open. A security listed or traded
primarily on a securities exchange or in the over-the-counter market is valued
at its last sale price on the exchange or market where it is principally traded.
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 or by a pricing service approved by the Trust's
Board of Trustees. The market value of individual securities held by the Fund is
determined by using pricing services that provide market prices to other mutual
funds or, as needed, by obtaining market quotations from independent
broker/dealers. Securities and assets for which quotations are not readily
available are valued at fair value as determined in good faith pursuant to
consistently applied procedures established by the Trust's Board. Short-term
securities with remaining maturities of 60 days or less are generally valued at
amortized cost or original cost plus accrued interest, both of which approximate
market value.
Repurchase Agreements.
Repurchase agreements, if held by the Fund, are fully collateralized by U.S.
Government securities and such collateral is in the possession of the Fund's
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 Fund has
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 Fund during the year
ended September 30, 2003.
13
Notes to Financial Statements (continued)
Income Taxes.
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code and, accordingly, the Fund will generally not be
subject to federal and state income taxes, or federal excise taxes to the extent
that it intends to make sufficient distributions of net investment income and
net realized capital gain.
Dividends paid by the Fund 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 Fund on the
ex-dividend/distribution date. The Fund distributes net investment income, if
any, monthly to shareholders, and net realized capital gains, if not offset by
capital loss carryovers if any, to shareholders at least annually. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles generally accepted in the United States of America.
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.
Investment Transactions.
Security transactions are accounted for as of trade date. Gains and losses on
securities sold are determined on the basis of identified cost.
Expenses.
Each class of the 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 attributable 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.
Meridian Investment Management Corporation ("Meridian") serves as investment
adviser to the Fund and is responsible for managing the Fund's portfolio of
investments. Meridian receives a monthly management fee that is computed daily
at an annual rate of 0.60% of the Fund's average daily net assets.
For the period ended September 30, 2003, Meridian contractually agreed to
limit its investment advisory fee and/or reimburse the Fund's operating expenses
(exclusive of brokerage, interest, taxes, and extraordinary expenses) to the
extent necessary to ensure that the Fund's operating expenses do not exceed
1.90% for Class C and 1.30% for Class I. To the extent Meridian 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. The Fund will make no such
payment, however, if the total annual Fund operating expenses exceed the expense
limits in effect at the time the expenses were reimbursed or at the time these
payments are proposed. For the year or period ended September 30, 2003, Meridian
reimbursed/absorbed $50,359 on the Class I shares and $262 on the Class C
shares. These expenses are subject to recovery by Meridian based on a rolling
three-year period.
Transfer Agency, Custody and Accounting Fees.
U.S. Bank N.A. ("U.S. Bank") and U.S. Bancorp Fund Services, LLC ("U.S.
Bancorp") provide domestic custodial services, transfer agent services and fund
accounting for the Fund. For these services the Trust pays a fee for transfer
agent and custody services at an annual rate of 0.065% on the first $500 million
of average daily net assets, 0.06% on the next $1 billion of average daily net
assets, and 0.05% on the daily average net assets in excess of $1.5 billion. The
Fund pays a minimum fee for fund accounting of $39,000 on the first $100 million
of average daily net assets, 0.025% on the next $200 million of average daily
net assets and 0.0125% on the daily average net assets in excess of $300
million. The Trust also pays for various out-of-pocket costs incurred by U.S.
Bancorp that are estimated to be 0.02% of average daily net assets.
14
Administrative Services.
The Trust has entered into an administrative services agreement with Meridian.
This agreement provided for an annual fee of 0.05% on the Trust's first $500
million of average daily net assets and 0.04% on average daily net assets in
excess of $500 million for the period October 1, 2002 to August 31, 2003, and
0.05% on the Trust's first $1.5 billion of average daily net assets and 0.045%
on the average daily net assets in excess of $1.5 billion for the period
starting September 1, 2003.
Distribution Fees.
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act ("12b-1 Plan") under which the Fund is authorized to compensate the Fund's
distributor, Meridian Clearing Corp. ("MCC") (an affiliate of the adviser) for
the sale and distribution of shares. Under the 12b-1 Plan, 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. For the year ended September 30, 2003 the total amounts paid or payable
to MCC by the Fund pursuant to the 12b-1 Plan were $84,670 on the Class I shares
and $1,603 on the Class C shares.
Related Parties.
Certain officers and directors of Meridian and MCC are also officers and/or
trustees of the Trust; however such officers and trustees receive no
compensation from the Funds.
3. 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.
All distributions to date have been from net investment income.
The aggregate composition for the Fund of unrealized capital appreciation
and depreciation of investment securities for federal income tax purposes as of
September 30, 2003 are as follows:
<Table>
Federal Tax Cost $37,229,445
Unrealized Appreciation $ 1,979,755
Unrealized Depreciation $ (113,634)
Net Appreciation $ 1,866,121
</Table>
Accumulated capital losses of $716 represent net capital loss carryovers as
of September 30, 2003 that may be available to offset future realized capital
gains and thereby reduce future taxable income distributions. This carryover
will expire on September 30, 2011.
The Fund incurred "post October" losses during the period November 1, 2002
through September 30, 2003. These losses of $296,502 will be deferred for tax
purposes and recognized in the year ending September 30, 2004.
The distributions from ordinary income for the year ended September 30,
2003 were $1,394,730.
15
Report of Independent Auditors
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE ICON FUNDS:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statement 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 (one of the
portfolios constituting ICON Funds, hereafter referred to as the "Fund") at
September 30, 2003, and the results of each of their operations, the changes in
each of their net assets and the financial highlights for the year from October
1, 2002 (commencement of operations) through September 30, 2003, 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 Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which 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 audit, which included
confirmation of securities at September 30, 2003 by correspondence with the
custodian, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 12, 2003
16
Board of Trustees and Fund Officers
(unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 18 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, addresses and
principal occupations are set forth below. Trustees have no official term of
office and generally serve until they resign or are not re-elected.
INTERESTED TRUSTEE
CRAIG T. CALLAHAN, 52, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception in 1996. Dr. Callahan also serves as President
(1998 to present) and Chief Investment Officer (1991 to present) of Meridian
Investment Management Corporation ("Meridian"), 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 Meridian Clearing
Corporation ("MCC"), the Funds' Distributor. Dr. Callahan also serves as the
Chief Investment Officer and Director (1994 to present), and was previously
Secretary/Treasurer (1994 to 1998) of Meridian Management & Research Corporation
("MM&R"), the parent company of Meridian and MCC.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 53. 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); 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); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 56. 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).
17
Board of Trustees and Fund Officers (continued)
(unaudited)
GREGORY KELLAM SCOTT, 54. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott is Senior Vice President -- Law, General Counsel and
Secretary, GenCorp, Inc., a multinational technology-based manufacturing company
(2002 to present). Mr. Scott was previously 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).
R. MICHAEL SENTEL, 55. 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 FDIC with responsibility for the Rocky Mountain Region
(1991-1994).
JONATHAN F. ZESCHIN, 50. 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 2002). 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 is also a Director of the Wasatch Funds
(2002 to present); and a Director of the Young Americans Education Foundation
and Young Americans Bank (1998 to present).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 52. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as Meridian's President (1998 to
present) and Chief Investment Officer (1991 to present). Dr. Callahan is also
President (1998 to present), Director (1991 to present) and was previously Vice
President (1991 to 1998) of MCC. Dr. Callahan is also the Chief Investment
Officer and Director (1994 to present), and was previously Secretary/ Treasurer
(1994 to 1998) of MM&R.
ERIK L. JONSON, 54. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception in 1996. Mr. Jonson is also Chief
Financial Officer (1996 to present) and Vice President (1998 to present) of
Meridian; Chief Financial Officer, Secretary and Director (1996 to present) of
MM&R; and Vice President and Treasurer (March 2002 to present) and was
previously Secretary/Treasurer, (1998 to 2002) of MCC.
ANDRA C. OZOLS, 42. Ms. Ozols has been a Vice President and Secretary of the
Funds since March 2002. She previously served in that capacity in 1998. Ms.
Ozols is also Vice President, General Counsel and Secretary (March 2002 to
present and January 1998 to October 1998) of Meridian; Vice President and
Secretary (March 2002 to present) of MCC and Director (June 2003 to present) of
MM&R. Ms. Ozols was previously Vice President (1999 to 2002) and Assistant
General Counsel (October 1998 to February 2002) of Founders Asset Management
LLC; and was previously a Branch Chief (1993 to 1995) and Enforcement Attorney
(1990 to 1995 and 1996 to 1998) with the U.S. Securities and Exchange
Commission.
The Trustees and Officers of the Funds may be contacted at 5299 DTC
Boulevard, Suite 1200, Greenwood Village, Colorado 80111.
Additional information about the Funds' Trustees and Officers is available
in the Funds' Statement of Additional Information, which can be obtained free of
charge by calling 1-800-764-0442.
18
Other Information
(unaudited)
QUALIFIED DIVIDEND INCOME
Of the amount distributed in the fiscal year ending September 30, 2003 for the
Bond Fund, 2.67% represents qualified dividend income.
PROXY VOTING BY THE ICON FUNDS
A description of the policies and procedures that the Funds use to determine how
to vote proxies related to portfolio securities can be obtained free of charge
by calling 1-800-764-0442 or by visiting www.iconfunds.com or www.sec.gov.
Information regarding how the Funds voted proxies relating to portfolio
securities will be available free of charge no later than August 31, 2004 by
calling 1-800-764-0442 or by visiting www.iconfunds.com or www.sec.gov.
19
THIS PAGE INTENTIONALLY LEFT BLANK
[ICON FUNDS LOGOS]
FOR MORE INFORMATION ABOUT THE ICON FUNDS, CONTACT US:
BY TELEPHONE 1-800-764-0442
BY MAIL ICON Funds
P.O. Box 701
Milwaukee, WI 53201-0701
IN PERSON ICON Funds
5299 DTC Boulevard, Suite 1200
Greenwood Village, CO 80111
BY E-MAIL ICON@mimcorp.com
ON THE INTERNET www.iconfunds.com
This report is for the general information of the Fund's shareholders. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus. Please call 1-800-764-0442 or
visit www.iconfunds.com for a current prospectus, which contains more complete
information, including charges, expenses, share classes, and risks. Please read
the prospectus carefully before you invest or send money. Meridian Clearing
Corp., Distributor.
I-119-BOND
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
SEPTEMBER 30, 2003
ICON SPECIALTY FUNDS
[PHOTO]
ANNUAL REPORT
[ICON FUNDS LOGOS]
Table of Contents
<Table>
<Caption>
ABOUT THIS REPORT ...................................................2
MESSAGE FROM ICON FUNDS ...................................................4
MANAGEMENT OVERVIEWS AND SCHEDULES OF
INVESTMENTS ...................................................7
Specialty Funds
ICON Covered Call Fund ...................................................7
ICON Equity Income Fund ..................................................15
ICON Long/Short Fund ..................................................20
FINANCIAL STATEMENTS ..................................................25
FINANCIAL HIGHLIGHTS ..................................................28
NOTES TO
FINANCIAL STATEMENTS ..................................................29
REPORT OF INDEPENDENT AUDITORS ..................................................34
BOARD OF TRUSTEES AND
FUND OFFICERS (UNAUDITED) ..................................................35
OTHER INFORMATION (UNAUDITED) ..................................................37
</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
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.
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. Due to market volatility,
current performance may differ from the figures shown. Please call
1-800-764-0442 or visit www.iconfunds.com for the most recent returns.
- --------------------------------------------------------------------------------
PORTFOLIO DATA
- --------------------------------------------------------------------------------
Opinions and forecasts regarding industries, companies and 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 percentage holdings as of September 30, 2003 are
included in each Fund's Schedule of Investments.
In April 2003, Standard & Poor's made revisions to its Global Industry
Classification Standard, including changes in industry categories and
definitions. The Schedules of Investments reflect these changes.
Certain companies' stock performance during the period is mentioned
throughout the Management Overviews. While ICON's investment methodology does
not consider company-specific factors, they may impact a stock's performance,
and therefore, Fund performance.
There are risks associated with mutual fund investing, including the risk
of loss of principal. An investment concentrated in sectors and industries may
involve greater risk and volatility than a more diversified investment. There
are also risks associated with small- and mid-cap investing, including limited
product lines, less liquidity and small market share. There are risks associated
with selling short, including the risk that the Fund may have to cover its short
position at a higher price than the short price, resulting in a loss. Call
options involve certain risks and are not suitable for all investors.
Investments in foreign securities may entail unique risks, including political,
market, and currency risks.
The Funds may invest in medium-and lower-quality debt securities. These
high-yield bonds involve a greater risk of default and price volatility than
U.S. Government and other high-quality bonds. High-yield/high-risk bonds can
experience sudden and sharp price swings which will affect net asset value.
2
- --------------------------------------------------------------------------------
COMPARATIVE INDEX
- --------------------------------------------------------------------------------
The comparative index discussed in this report is meant to provide a basis for
judging the Funds' performance against a specific securities index. The 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 the index.
The unmanaged Standard & Poor's SuperComposite 1500 (S&P 1500) Index is a
broad-based capitalization-weighted index comprising 1,500 stocks of large-cap,
mid-cap, and small-cap U.S. companies.
This report also includes certain industry performance which is based on
the returns of the capitalization-weighted S&P 1500 Industry Indexes. These
Industry Indexes are based on specific industry classifications determined by
Standard & Poor's and include the reinvestment of dividends and capital gain
distributions.
Index returns and statistical data included in this report are provided by
Bloomberg.
3
Message from ICON Funds
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
[PHOTO]
- --------------------------------------------------------------------------------
A year has come and gone since the launch of the ICON Specialty Funds, and we
are pleased to report that these alternatives for the new market paradigm have
lived up to expectations. Each has participated in market upside while helping
to shield investors from downside risk. In fact, ICON Covered Call Fund and ICON
Equity Income Fund kept pace with the broader market. ICON Long/Short Fund, on
the other hand, was limited in its ability to profit from downside movement,
although we have confidence in the Fund's fundamental methodology over the long
term.
In looking back over the past 12 months, several statements from previous
ICON annual reports provide an interesting insight into the events that unfolded
during the period and how they affected these new funds.
FEAR, DISGUST AND GREAT BARGAINS
To begin, I recall the ICON annual report for the fiscal year ended September
30, 2002. In our letter to shareholders, we remarked that "the current
environment has all the characteristics of a market bottom -- fear, disgust,
negative news, and great bargains." We went on to say that "we anticipate a
broad-based advance when the market emerges from its current cycle."
Shortly after that was written and just following the Funds' opening, on
October 9, 2002, the market indeed hit a bottom, reeling from the emotional
stranglehold of impending war and corporate governance scandals. Amid the
uncertainty that permeated the landscape, a speculative relief rally took hold
during the fourth quarter of 2002. While not the broad advance we were
expecting, stocks moved decisively higher though remained widely disconnected
from our estimate of fair value for longer than we've experienced.
From that October low through September 30, 2003, the S&P 1500 Index, the
Funds' primary domestic benchmark, rallied dramatically, gaining an impressive
31.39%. While this reversal was certainly an accurate call by our system, we
admit that it was neither clairvoyance nor providence on our part. It was simply
the inherent nature of sticking to ICON's valuation discipline.
Having calculated in October 2002 that stocks on average were priced 55%
below fair value, we thought it best to capitalize on that opportunity and be
patient. Although we may have been early, our investment methodology dictated
that we be invested to participate. At the same time, it meant we had to look
past the headlines and at times take the market's punishment. Other investors
chose to wait for the return of clarity and better economic conditions before
leaving the sidelines; by then, however, it may have been too late.
[SIDENOTE]
"With stocks priced 55% below fair value, based on our model, we thought it best
to capitalize on that opportunity and be patient."
[SIDENOTE]
"Stocks were simply oversold, and investors came to realize they were wrong for
taking them to extreme lows."
4
A MOVE TOWARD FAIR VALUE
Following the pre-war jitters that sent the market to yet another low on March
11, 2003, stocks embarked upon a broad six-month rally. However, even in the
context of this all-encompassing advance, some sectors were more eager than
others. Favored groups, such as Information Technology, Consumer Discretionary,
Financials, and Industrials, led the market's ascent. In the natural ebb and
flow of business cycles, these moves would be historically consistent with the
start of an economic expansion. Yet, if asked whether they were based on the
expectation of a recovery or some other triggering event, we would say no.
We believe the recent surge in stock prices is nothing more than a move
toward fair value. Put another way, we view it as an acknowledgement by many
investors that the macro setting was not as discouraging as they initially
thought. Stocks were simply oversold, and investors came to realize they were
wrong for taking them to extreme lows.
While economic conditions have certainly improved in the past year, we do
not believe that a strong recovery or boom is necessary to prolong the rally.
Our experience tells us it is simply the natural behavior of a rational market.
There have been few newsworthy events that have boosted the market since the
March 2003 bottom. We do not expect that any are needed for the move toward fair
value to continue.
RIDING THE THEME
As prices resume the march toward fair value, and investors' skepticism gives
way to optimism, we may in fact see the return of a momentum mentality. Were
this to occur, it would not surprise us to see stocks exceed fair value by the
end of the calendar year. At present, however, we believe the market has not
gotten ahead of itself, and the broad representation of sector and industry
leadership makes sense to our system. In the meantime, we expect prices will
gradually continue their move toward fair value despite the prognostications of
naysayers and the traditional "wall of worry" that resides on Wall Street.
Recently, the mutual fund industry has been tarnished by the actions of
some brokers and personnel at advisory firms. We find these reports deeply
troubling and want you to know ICON's position on the issues facing mutual
funds:
- - we do not and have not had agreements that permit the illegal practice of
buying Fund shares after the market close
- - we are not aware of any ICON personnel who have participated in timing the
Funds
- - we do not knowingly permit excessive trading in the ICON Funds, and we take
aggressive steps to restrict market timing.
Only time will tell how the industry will overcome these scandals. You hire
us to implement a strict management discipline, and our service staff is equally
committed to implementing a rigid system of monitoring the Funds for any sign of
activity that would negatively impact shareholders.
[SIDENOTE]
"We do not expect that newsworthy events are needed for the move toward fair
value to continue."
5
Message from ICON Funds (continued)
I'd like to close with a story that characterizes our investment
methodology. While making a presentation at an investor seminar some years ago,
an attendee commented that the ICON approach to investing seemed much like
piloting a plane. When I asked what he meant by that, he observed that take-offs
and landings are critical, and in between it is fairly routine. In our system,
capturing industry leadership is critical and in between those rotations, we
ride the theme. As of this writing, we consider ourselves to be at cruising
altitude.
We witnessed an unusual market during the past 12 months. Thank you for
giving ICON the opportunity to help guide you through it.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, D.B.A.
Chairman of the Board of Trustees and Chief Investment Officer of the Adviser
6
Management Overview
ICON COVERED CALL FUND
A discussion with Robert Straus, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Covered Call Fund, Class I gained 24.00% for the fiscal year ended
September 30, 2003, keeping pace with the 24.69% return of it benchmark, the S&P
1500 Index. The Fund's Class C shares also fared well, appreciating 14.60% since
their November 21, 2002 inception, while the Index returned 11.59% over the same
period.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
Ongoing concerns about the state of the economy weighed heavily on investor
confidence, even as corporate earnings and gross domestic product continued to
trend higher. Amid perceived economic uncertainty and mounting war fears, stock
prices fell to irrational levels in early October 2002 and again in mid-March
2003. The October low quickly reversed itself, yet was driven by speculative
issues that did not meet our investment criteria. Although the Fund did not
participate in this lower-quality advance, it was well positioned for the broad
mid-March bounce that preceded the U.S.-led invasion of Iraq.
Ultimately, the end of combat helped to restore clarity in the marketplace.
With the fear of war removed, and investors acknowledging an economic recovery,
stocks continued to rally despite widespread skepticism surrounding the veracity
of the new bull market. This skepticism was fueled by mixed economic data, most
notably rising unemployment and deflation risks. Nevertheless, as stocks climbed
off the lows of March 11, 2003 and steadily gained steam, many investors
remained on the sidelines, fretting over reports of a "jobless" recovery.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Significant stock market fluctuations translated into higher premiums as
investors bid option prices higher. Against this highly volatile backdrop,
rising premiums worked to the benefit of option writers as buyers anticipated
that the underlying stock would rise above its strike price prior to expiration.
Because our valuation model indicated that the market was so profoundly
undervalued during much of the period, calls were written with an emphasis on
capturing as much upside potential as possible, while still collecting
sufficient option income to provide a modest amount of downside cushion. To that
end, not only was our call writing strategy successful in easing relative
volatility, it also captured the gains registered by the broader market.
The Fund's narrow underperformance over the course of the fiscal year was
directly related to the sharp second-half move toward fair value. When the
market advances rapidly, stock prices can rocket through their strike prices,
often at the expense of upside opportunity. Although this trade-off comes as no
surprise, the ceiling it imposes can limit the Fund's ability to fully
participate in a dramatic rally. At the same time, a disciplined call writing
strategy may enhance stock market returns during sideways markets, while
providing a level of downside cushion in declining markets.
Stock selection on a sector and company level also contributed to the
Fund's strong performance. The Fund was heavily tilted toward economically
sensitive sectors such as Information Technology and Consumer Discretionary,
which led in the post-war rally. Individual contributors to Fund performance
included Internet messaging services provider J2 Global Communications, which
benefited from its strong balance sheet, expanding profit margins and attractive
valuations. SanDisk Corp. also advanced, driven by high demand for its flash
memory storage products.
Among the Fund's performance laggards, packaged foods company Interstate
Bakeries Corp. faced a difficult operating environment as rising costs pressured
profitability. Likewise, agricultural chemical producer IMC Global Inc. also
struggled, citing sharply higher raw material costs. Both of these stocks were
liquidated from the Fund.
WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC MARKET?
Based on our valuation readings, the market still retains considerable upside
potential. In light of this, we continue to emphasize capital appreciation in
the Fund's underlying securities while generating reasonable premium income.
Should stock prices rise to a level that approaches fair value, we would
anticipate a shift in strategy that would increasingly focus on capturing higher
option premiums. Either way, the income the Fund derives from writing covered
call options serves to enhance prospective realized gains while offsetting
potential downside risk.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 100.0%
Top 10 Equity Holdings 17.1%
Number of Stocks 90
Number of Calls Outstanding 75
Cash Equivalents 0.8%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Electronics Boutique Holdings Corp. 2.0%
J.P. Morgan Chase & Co. 1.9%
United Online, Inc. 1.8%
Alcoa Inc. 1.7%
University of Phoenix Online 1.7%
Capital One Financial Corporation 1.6%
j2 Global Communications, Inc. 1.6%
SanDisk Corporation 1.6%
Career Education Corporation 1.6%
Cognizant Technology Solutions Corporation 1.6%
Percentages are based upon net assets.
7
Management Overview (continued)
ICON COVERED CALL FUND
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Consumer Discretionary 23.4%
Information Technology 21.8%
Industrials 20.6%
Financial 15.2%
Health Care 6.7%
Leisure and Consumer Staples 5.5%
Materials 3.4%
Telecommunication & Utilities 3.4%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
INCEPTION ONE FIVE SINCE
DATE YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class I 10/1/02 24.00% N/A 24.00%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 24.69% N/A 24.69%
- ------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class C 11/21/02 N/A N/A 14.60%
- ------------------------------------------------------------------------------------------
S&P 1500 Index N/A N/A 11.59%
- ------------------------------------------------------------------------------------------
</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 a portion of the Fund's expenses if they exceed
the designated cap. The Fund's total return would have been lower if this
expense limitation had not been in place.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON COVERED CALL FUND - CLASS I S&P 1500 INDEX
-------------------------------- --------------
10/1/02 10000 10000
12/31/02 10490 10811
3/31/03 10050 10450
6/30/03 11770 12093
9/30/03 12400 12469
</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 10/1/02 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 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. The Fund also offers Class C
charges. These figures do not reflect the charges applicable on Class C shares
of the Fund. Applying these charges would result in lower returns.
8
Schedule of Investments
ICON COVERED CALL FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 100.0%
CONSUMER DISCRETIONARY 23.4%
APPAREL RETAIL 2.2%
11,000 Aeropostale, Inc.(a) $ 297,550
6,900 Christopher & Banks
Corporation 164,634
- -----------------------------------------------------
462,184
AUTOMOBILE MANUFACTURERS 2.3%
5,500 Thor Industries, Inc. 297,110
4,500 Winnebago Industries, Inc. 200,610
- -----------------------------------------------------
497,720
COMPUTER & ELECTRONICS RETAIL 3.2%
5,000 Best Buy Co., Inc.(a) 237,600
15,000 Electronics Boutique Holdings
Corp.(a) 428,550
- -----------------------------------------------------
666,150
DEPARTMENT STORES 1.2%
6,000 Federated Department Stores,
Inc. 251,400
GENERAL MERCHANDISE STORES 1.7%
5,500 Dollar Tree Stores, Inc.(a) 184,525
6,500 Tuesday Morning
Corporation(a) 181,025
- -----------------------------------------------------
365,550
HOMEBUILDING 2.1%
3,100 Centex Corporation 241,428
3,000 Hovnanian Enterprises,
Inc.(a) 193,110
- -----------------------------------------------------
434,538
HOME IMPROVEMENT RETAIL 1.2%
5,000 Lowe's Companies, Inc. 259,500
INTERNET RETAIL 1.3%
5,000 eBay Inc.(a) 267,500
SPECIALTY STORES 8.2%
4,700 Cost Plus, Inc.(a) 173,900
8,800 Guitar Center, Inc.(a) 283,008
6,700 Michaels Stores, Inc. 273,092
9,900 PETsMART, Inc. 225,324
7,700 Sharper Image Corporation(a) 178,255
7,000 The Sports Authority, Inc.(a) 220,220
6,100 Tractor Supply Company(a) 200,141
3,900 Zale Corporation(a) 173,199
- -----------------------------------------------------
1,727,139
- -----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 4,931,681
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
FINANCIAL 15.2%
ASSET MANAGEMENT & CUSTODY BANKS 1.3%
9,000 Mellon Financial Corporation $ 271,260
CONSUMER FINANCE 5.5%
6,000 Capital One Financial
Corporation 342,240
12,500 CompuCredit Corporation(a) 218,750
10,000 First Cash Financial
Services, Inc.(a) 200,300
9,000 MBNA Corporation 205,200
17,500 Providian Financial
Corporation(a) 206,325
- -----------------------------------------------------
1,172,815
DIVERSIFIED CAPITAL MARKETS 1.9%
11,500 J.P. Morgan Chase & Co. 394,795
INVESTMENT BANKING & BROKERAGE 3.8%
7,500 A.G. Edwards, Inc. 288,075
3,000 The Bear Stearns Companies
Inc. 224,400
15,000 Investment Technology Group,
Inc.(a) 287,700
- -----------------------------------------------------
800,175
LIFE & HEALTH INSURANCE 1.2%
7,100 Lincoln National Corporation 251,198
OTHER DIVERSIFIED FINANCIAL
SERVICES 1.5%
7,000 Citigroup Inc. 318,570
- -----------------------------------------------------
TOTAL FINANCIAL 3,208,813
HEALTH CARE 6.7%
BIOTECHNOLOGY 1.5%
20,000 QLT Inc.(a)(f) 319,400
HEALTH CARE FACILITIES 0.5%
6,300 Dynacq International, Inc.(a) 113,967
HEALTH CARE SERVICES 2.0%
7,600 eResearch Technology, Inc.(a) 263,492
5,500 SFBC International, Inc.(a) 156,376
- -----------------------------------------------------
419,868
MANAGED HEALTH CARE 2.7%
3,700 Coventry Health Care, Inc.(a) 195,138
4,300 Oxford Health Plans, Inc.(a) 177,633
4,000 PacifiCare Health Systems,
Inc.(a) 195,200
- -----------------------------------------------------
567,971
- -----------------------------------------------------
TOTAL HEALTH CARE 1,421,206
INDUSTRIALS 20.6%
AEROSPACE & DEFENSE 1.8%
3,000 Engineered Support Systems,
Inc. 181,470
2,500 General Dynamics Corporation 195,150
- -----------------------------------------------------
376,620
AIRLINES 3.3%
13,400 ExpressJet Holdings, Inc.(a) 184,920
4,000 JetBlue Airways
Corporation(a) 243,520
25,400 Mesa Air Group, Inc.(a) 282,448
- -----------------------------------------------------
710,888
</Table>
9
Schedule of Investments (continued)
ICON COVERED CALL FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
CONSTRUCTION & ENGINEERING 2.7%
10,000 Dycom Industries, Inc.(a) $ 203,900
9,000 Granite Construction
Incorporated 168,120
4,300 Jacobs Engineering Group
Inc.(a) 193,930
- -----------------------------------------------------
565,950
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS 2.7%
6,000 Cummins Inc. 266,580
7,500 Oshkosh Truck Corporation 297,075
- -----------------------------------------------------
563,655
DIVERSIFIED COMMERCIAL SERVICES 4.5%
7,300 Career Education
Corporation(a) 330,690
4,500 Corinthian Colleges, Inc.(a) 257,220
5,500 University of Phoenix
Online(a) 366,685
- -----------------------------------------------------
954,595
ELECTRICAL COMPONENTS & EQUIPMENT 0.9%
4,500 Roper Industries, Inc. 195,975
EMPLOYMENT SERVICES 2.0%
8,400 Gevity HR, Inc. 123,312
16,700 Labor Ready, Inc.(a) 167,835
5,300 Resources Connection, Inc.(a) 127,677
- -----------------------------------------------------
418,824
INDUSTRIAL MACHINERY 2.7%
10,000 Flowserve Corporation(a) 203,000
3,500 Ingersoll-Rand Company(f) 187,040
12,000 Stewart & Stevenson Services,
Inc. 180,240
- -----------------------------------------------------
570,280
- -----------------------------------------------------
TOTAL INDUSTRIALS 4,356,787
INFORMATION TECHNOLOGY 21.8%
APPLICATION SOFTWARE 1.8%
4,000 FactSet Research Systems Inc. 177,400
10,000 Magma Design Automation,
Inc.(a) 196,200
- -----------------------------------------------------
373,600
COMMUNICATIONS EQUIPMENT 0.9%
5,800 UTStarcom, Inc.(a) 184,440
COMPUTER HARDWARE 0.8%
10,200 Neoware Systems, Inc.(a) 174,114
COMPUTER STORAGE & PERIPHERALS 2.7%
4,500 Avid Technology, Inc.(a) 238,500
5,300 SanDisk Corporation(a) 337,822
- -----------------------------------------------------
576,322
ELECTRONIC EQUIPMENT MANUFACTURERS 1.0%
7,700 Nam Tai Electronics, Inc.(f) 208,901
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
INTERNET SOFTWARE & SERVICES 6.7%
10,000 Digital Insight
Corporation(a) $ 199,000
11,000 FindWhat.com(a) 190,190
9,000 j2 Global Communications,
Inc.(a) 340,470
5,600 Netease.com Inc.(a) -- ADR 312,592
11,000 United Online, Inc.(a) 382,690
- -----------------------------------------------------
1,424,942
IT CONSULTING & OTHER SERVICES 1.6%
9,000 Cognizant Technology
Solutions Corporation(a) 328,140
SEMICONDUCTOR EQUIPMENT 0.9%
3,700 KLA-Tencor Corporation(a) 190,587
SEMICONDUCTORS 4.4%
6,000 Integrated Circuit Systems,
Inc.(a) 180,240
7,500 International Rectifier
Corporation(a) 280,800
5,100 OmniVision Technologies,
Inc.(a) 215,322
5,500 Silicon Laboratories Inc.(a) 247,170
- -----------------------------------------------------
923,532
TECHNOLOGY DISTRIBUTORS 1.0%
12,800 Avnet, Inc.(a) 211,456
- -----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 4,596,034
LEISURE AND CONSUMER STAPLES 5.5%
CASINOS & GAMING 1.3%
10,000 Shuffle Master, Inc.(a) 271,800
HOTELS, RESORTS & CRUISE LINES 2.3%
5,200 Carnival Corporation(f) 171,028
11,000 Royal Caribbean Cruises
Ltd.(f) 309,210
- -----------------------------------------------------
480,238
LEISURE PRODUCTS 1.0%
5,500 Leapfrog Enterprises, Inc.(a) 209,000
RESTAURANTS 0.9%
5,000 Panera Bread Company(a) 205,050
- -----------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 1,166,088
MATERIALS 3.4%
ALUMINUM 1.7%
14,100 Alcoa Inc. 368,856
DIVERSIFIED METALS & MINING 0.7%
4,200 Freeport-McMoRan Copper &
Gold, Inc. 139,020
PAPER PRODUCTS 1.0%
9,000 Georgia-Pacific Corp. 218,160
- -----------------------------------------------------
TOTAL MATERIALS 726,036
</Table>
10
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
TELECOMMUNICATION & UTILITIES 3.4%
WIRELESS TELECOMMUNICATION SERVICES 3.4%
4,900 AO VimpelCom(a) -- ADR $ 298,214
3,000 Mobile Telesystems -- ADR 220,650
10,000 Nextel Communications,
Inc.(a) 197,100
- -----------------------------------------------------
715,964
- -----------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 715,964
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $18,595,752) 21,122,609
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
SHORT-TERM INVESTMENT 0.8%
$179,131 American Family Demand Note,
0.741%(#) $ 179,131
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $179,131) 179,131
- -----------------------------------------------------
TOTAL INVESTMENTS 100.8%
(COST $18,774,883) 21,301,740
- -----------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.8%) (172,793)
- -----------------------------------------------------
NET ASSETS 100.0% $21,128,947
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
(#) Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
(f) Foreign security
- --------------------------------------------------------------------------------
SCHEDULE OF WRITTEN OPTIONS
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
CONTRACTS
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE (100 SHARES PER CONTRACT) MARKET VALUE
- ---------------------------------------------------------------------------------------------------
CALL OPTIONS
Alcoa Inc.
Expiration November 2003, Exercise Price $30.00 75 $ 2,063
AO VimpelCom
Expiration October 2003, Exercise Price $60.00 49 12,985
Avid Technology, Inc.
Expiration November 2003, Exercise Price $65.00 25 1,688
Avnet, Inc.
Expiration November 2003, Exercise Price $20.00 45 563
The Bear Stearns Companies Inc.
Expiration October 2003, Exercise Price $80.00 15 338
Best Buy Co., Inc.
Expiration November 2003, Exercise Price $60.00 35 263
Capital One Financial Corporation
Expiration December 2003, Exercise Price $75.00 40 1,100
Career Education Corporation
Expiration October 2003, Exercise Price $50.00 43 1,720
Carnival Corporation
Expiration November 2003, Exercise Price $37.50 20 250
Centex Corporation
Expiration November 2003, Exercise Price $85.00 31 4,805
Christopher & Banks Corporation
Expiration December 2003, Exercise Price $35.00 25 313
Citigroup Inc.
Expiration October 2003, Exercise Price $47.50 35 963
Cognizant Technology Solutions Corporation
Expiration October 2003, Exercise Price $40.00 30 2,325
</Table>
11
Schedule of Investments (continued)
ICON COVERED CALL FUND
SCHEDULE OF
WRITTEN OPTIONS
September 30, 2003
<Table>
<Caption>
CONTRACTS
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE (100 SHARES PER CONTRACT) MARKET VALUE
- ---------------------------------------------------------------------------------------------------
Corinthian Colleges, Inc.
Expiration November 2003, Exercise Price $65.00 45 $ 2,813
Cost Plus, Inc.
Expiration October 2003, Exercise Price $40.00 20 350
Coventry Health Care, Inc.
Expiration November 2003, Exercise Price $60.00 37 1,758
Cummins Inc.
Expiration November 2003, Exercise Price $50.00 30 2,025
Dollar Tree Stores, Inc.
Expiration November 2003, Exercise Price $37.50 35 1,838
Dycom Industries, Inc.
Expiration December 2003, Exercise Price $25.00 50 1,375
eBay Inc.
Expiration October 2003, Exercise Price $57.50 50 2,625
Electronics Boutique Holdings Corp.
Expiration October 2003, Exercise Price $30.00 115 8,912
Engineered Support Systems, Inc.
Expiration October 2003, Exercise Price $65.00 20 1,650
eResearch Technology, Inc.
Expiration November 2003, Exercise Price $37.50 40 9,800
ExpressJet Holdings, Inc.
Expiration November 2003, Exercise Price $15.00 54 2,565
FactSet Research Systems Inc.
Expiration October 2003, Exercise Price $50.00 30 525
Federated Department Stores, Inc.
Expiration November 2003, Exercise Price $47.50 45 1,463
FindWhat.com
Expiration October 2003, Exercise Price $25.00 75 938
Flowserve Corporation
Expiration October 2003, Exercise Price $22.50 35 438
Freeport-McMoRan Copper & Gold, Inc.
Expiration October 2003, Exercise Price $35.00 15 488
General Dynamics Corporation
Expiration November 2003, Exercise Price $90.00 25 500
Georgia-Pacific Corp.
Expiration October 2003, Exercise Price $25.00 30 1,650
Granite Construction Incorporated
Expiration October 2003, Exercise Price $20.00 30 375
Guitar Center, Inc.
Expiration October 2003, Exercise Price $35.00 88 1,320
Hovnanian Enterprises, Inc.
Expiration October 2003, Exercise Price $60.00 30 15,450
Ingersoll-Rand Company
Expiration December 2003, Exercise Price $65.00 25 437
Integrated Circuit Systems, Inc.
Expiration November 2003, Exercise Price $40.00 40 700
International Rectifier Corporation
Expiration December 2003, Exercise Price $55.00 50 625
</Table>
12
SCHEDULE OF
WRITTEN OPTIONS
September 30, 2003
<Table>
<Caption>
CONTRACTS
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE (100 SHARES PER CONTRACT) MARKET VALUE
- ---------------------------------------------------------------------------------------------------
Investment Technology Group, Inc.
Expiration October 2003, Exercise Price $20.00 75 $ 3,562
j2 Global Communications, Inc.
Expiration October 2003, Exercise Price $50.00 60 1,350
Jacobs Engineering Group Inc.
Expiration November 2003, Exercise Price $50.00 25 812
JetBlue Airways Corporation
Expiration November 2003, Exercise Price $70.00 30 2,550
J.P. Morgan Chase & Co.
Expiration November 2003, Exercise Price $37.50 55 2,200
KLA-Tencor Corporation
Expiration November 2003, Exercise Price $65.00 20 600
Leapfrog Enterprises, Inc.
Expiration November 2003, Exercise Price $45.00 30 1,725
Lincoln National Corporation
Expiration October 2003, Exercise Price $35.00 71 6,922
Lowe's Companies, Inc.
Expiration October 2003, Exercise Price $55.00 50 1,875
Magma Design Automation, Inc.
Expiration November 2003, Exercise Price $25.00 50 1,125
MBNA Corporation
Expiration November 2003, Exercise Price $25.00 30 1,050
Mesa Air Group, Inc.
Expiration October 2003, Exercise Price $12.50 85 1,912
Michaels Stores, Inc.
Expiration November 2003, Exercise Price $50.00 45 562
Nam Tai Electronics, Inc.
Expiration October 2003, Exercise Price $30.00 37 4,440
Neoware Systems, Inc.
Expiration October 2003, Exercise Price $20.00 102 2,805
Netease.com Inc.
Expiration November 2003, Exercise Price $70.00 30 6,375
Nextel Communications, Inc.
Expiration November 2003, Exercise Price $22.50 33 1,732
OmniVision Technologies, Inc.
Expiration November 2003, Exercise Price $60.00 35 1,312
Oxford Health Plans, Inc.
Expiration November 2003, Exercise Price $45.00 43 4,192
PacifiCare Health Systems, Inc.
Expiration November 2003, Exercise Price $60.00 30 825
Panera Bread Company
Expiration November 2003, Exercise Price $50.00 20 350
Providian Financial Corporation
Expiration November 2003, Exercise Price $12.50 130 7,475
QLT Inc.
Expiration November 2003, Exercise Price $20.00 75 2,437
Roper Industries, Inc.
Expiration October 2003, Exercise Price $45.00 45 1,912
</Table>
13
Schedule of Investments (continued)
ICON COVERED CALL FUND
SCHEDULE OF
WRITTEN OPTIONS
September 30, 2003
<Table>
<Caption>
CONTRACTS
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE (100 SHARES PER CONTRACT) MARKET VALUE
- ---------------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd.
Expiration November 2003, Exercise Price $35.00 40 $ 500
SanDisk Corporation
Expiration November 2003, Exercise Price $80.00 30 2,775
Sharper Image Corporation
Expiration October 2003, Exercise Price $30.00 77 770
Shuffle Master, Inc.
Expiration November 2003, Exercise Price $30.00 50 3,875
Silicon Laboratories Inc.
Expiration November 2003, Exercise Price $60.00 35 612
The Sports Authority, Inc.
Expiration November 2003, Exercise Price $35.00 70 3,325
Stewart & Stevenson Services, Inc.
Expiration October 2003, Exercise Price $17.50 120 1,500
Thor Industries, Inc.
Expiration October 2003, Exercise Price $60.00 35 1,137
Tractor Supply Company
Expiration October 2003, Exercise Price $37.50 31 697
United Online, Inc.
Expiration December 2003, Exercise Price $50.00 40 2,500
University of Phoenix Online
Expiration November 2003, Exercise Price $75.00 15 1,838
UTStarcom, Inc.
Expiration October 2003, Exercise Price $45.00 58 435
Winnebago Industries, Inc.
Expiration November 2003, Exercise Price $55.00 25 437
Zale Corporation
Expiration October 2003, Exercise Price $50.00 20 250
- ---------------------------------------------------------------------------------------------------
TOTAL OPTIONS WRITTEN (PREMIUMS RECEIVED $241,662) 3,334 $170,747
</Table>
The accompanying notes are an integral part of the financial statements.
14
Management Overview
ICON EQUITY INCOME FUND
A discussion with the Portfolio Management Team
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
For the fiscal year ended September 30, 2003, the ICON Equity Income Fund, Class
I advanced 24.72%, competitive with its benchmark, the S&P 1500 Index, which
returned 24.69%. The Fund's C shares also performed strongly, appreciating
16.63% since their November 8, 2002 inception and outpacing the Index, which
returned 13.05% over the same period.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
Fear and pessimism dominated the first half of the fiscal year, as mounting war
concerns and rising unemployment weighed heavily on investor confidence. Stock
prices reflected these pressures, falling sharply below their intrinsic values
despite incremental improvements in corporate earnings and gross domestic
product. Following the market bottom of mid-March 2003, stocks reversed course
as the overhang of war subsided and investors acknowledged the brighter economic
outlook. A broad second-half rally ensued, driven by expectations that the worst
was finally behind us. Dividend activity played a key role in this rebound as a
growing number of companies raised their payouts, seeking to cushion volatility
and enhance returns. In the aftermath of accounting scandals and the three-year
bear market, investors applauded these moves. However, added incentive came in
the form of the May 2003 passage of the Jobs and Growth Tax Relief Act, which
lowered the maximum tax on dividends to 15% from personal income rates as high
as 38.6%. With this barrier removed, companies moved quickly to initiate new
dividend programs or improve existing ones. For example, software giant
Microsoft Corp. (not owned by the Fund at period-end), which had traditionally
shunned dividends, declared its first payout in January 2003 and doubled it in
September.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
As the Fund took shape during its first year of operation, the portfolio was
heavily weighted toward dividend-yielding common stocks followed to a lesser
degree by preferred stocks and convertible bonds. Within the common stock
allocation, the Consumer Discretionary sector commanded significant exposure
given its depressed valuations. However, as fear-based selling permeated the
market during the first half of the fiscal year, sustainable industry leadership
within the sector proved fleeting. While a handful of industries logged positive
returns, nearly twice as many suffered setbacks. In contrast, a rotation into
the Information Technology sector starting in January came amid increasingly
favorable conditions and worked to the Fund's advantage.
Nevertheless, dividend-yielding stocks are the exception rather than the rule
within the Information Technology sector, even among the highest-quality
companies. Recognizing this fact, the Fund was tilted toward the Consumer
Discretionary sector and more recently the Industrials sector, where we have
seen increasing growth potential. Following the March market bottom, clear
industry leadership emerged within the Consumer Discretionary sector, providing
a more favorable setting for our system. By period-end, 22 of the 23 constituent
industries had advanced. Meanwhile, a brighter economic outlook provided a boost
for the highly cyclical Industrials sector, where value remained widespread.
Individual holdings that contributed to Fund performance included footwear
manufacturer and retailer Brown Shoe Company Inc., whose efforts to improve
operations led to significant margin expansion. PerkinElmer Inc., a supplier of
scientific instruments, also gained, having benefited from consolidation and
cost reductions. Elsewhere, heavy equipment maker Caterpillar Inc. capitalized
on an improved pricing environment and projected upturn in heavy-duty truck
sales.
Among the Fund's performance detractors, local phone giant SBC Communications
Inc. retreated due to an increasingly difficult competitive environment for the
once-dominant Baby Bell. Specialty printer Deluxe Corp. also fell, as demand and
pricing came under pressure.
WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC MARKET?
Despite impressive gains since the mid-March bottom, current valuations continue
to support further upside potential in the broader market. The Fund is
positioned to capitalize on a sustained cyclical recovery. With our valuation
and relative strength readings pointing to earnings-per-share expansion, in
addition to the more favorable tax environment, we believe the outlook for
dividend-yielding stocks remains positive.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 94.1%
Common Stocks 83.1%
Preferred Stocks 4.9%
Convertible Preferred Stocks 6.1%
Top 10 Equity Holdings 14.9%
Number of Stocks 101
Bonds & Cash Equivalents 6.0%
Convertible Corporate Bonds 4.3%
Cash Equivalents 1.7%
Number of Bonds 5
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
Ford Motor Company 1.9%
General Motors Corporation 1.5%
Goodrich Corporation,
8.300%, 9-30-25 -- Preferred 1.5%
Nash Finch Company 1.5%
PerkinElmer, Inc. 1.5%
StarTek, Inc. 1.4%
Toy "R" Us, Inc.,
6.250%, 8-16-05 -- Preferred 1.4%
Stewart & Stevenson
Services, Inc. 1.4%
J.P. Morgan Chase & Co. 1.4%
Goodrich Corporation 1.4%
Percentages are based upon net assets.
15
Management Overview (continued)
ICON EQUITY INCOME FUND
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Industrials 18.3%
Financial 14.0%
Consumer Discretionary 13.8%
Information Technology 11.4%
Leisure and Consumer Staples 8.0%
Materials 5.8%
Telecommunication & Utilities 5.2%
Health Care 4.3%
Energy 2.3%
</Table>
Percentages are based upon common stock positions and net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
INCEPTION ONE FIVE SINCE
DATE YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class I 10/1/02 24.72% N/A 24.72%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 24.69% N/A 24.69%
- ------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class C 11/8/02 N/A N/A 16.63%
- ------------------------------------------------------------------------------------------
S&P 1500 Index N/A N/A 13.05%
- ------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative index can be found on pages 2 and 3. The
Adviser has agreed to limit a portion of the Fund's expenses if they exceed the
designated cap. The Fund's total return would have been lower if this expense
limitation had not been in place.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON EQUITY INCOME FUND - CLASS I S&P 1500 INDEX
--------------------------------- --------------
10/1/02 10000 10000
12/31/02 10819 10811
3/31/03 10091 10450
6/30/03 12073 12093
9/30/03 12482 12469
</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 10/1/02 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 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. The Fund also offers Class C
shares. These figures do not reflect the charges applicable to Class C shares of
the Fund. Applying these charges would result in lower returns for investors.
16
Schedule of Investments
ICON EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 83.1%
CONSUMER DISCRETIONARY 13.8%
ADVERTISING 0.9%
29,000 The Interpublic Group of
Companies, Inc.(a) $ 409,480
APPAREL ACCESSORIES & LUXURY GOODS 1.1%
7,900 Kellwood Company 264,255
5,600 V.F. Corporation 217,896
- -----------------------------------------------------
482,151
APPAREL RETAIL 1.7%
15,900 The Cato Corporation 320,703
26,500 Limited Brands 399,620
- -----------------------------------------------------
720,323
AUTOMOBILE MANUFACTURERS 3.5%
76,700 Ford Motor Company 826,059
16,300 General Motors Corporation 667,159
- -----------------------------------------------------
1,493,218
DEPARTMENT STORES 1.1%
10,500 Sears, Roebuck and Co. 459,165
DISTRIBUTORS 0.4%
4,800 Genuine Parts Company 153,504
FOOTWEAR 0.5%
7,000 Brown Shoe Company, Inc. 221,900
HOUSEHOLD APPLIANCES 2.5%
13,000 Maytag Corporation 324,610
10,800 Snap-on Incorporated 298,620
6,700 Whirlpool Corporation 454,059
- -----------------------------------------------------
1,077,289
SPECIALTY STORES 0.9%
25,800 The Pep Boys-Manny, Moe &
Jack 394,740
TIRES & RUBBER 1.2%
7,100 Bandag, Incorporated 239,483
18,700 Cooper Tire & Rubber Company
(f) 296,769
- -----------------------------------------------------
536,252
- -----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 5,948,022
ENERGY 2.3%
INTEGRATED OIL & GAS 0.7%
5,300 ConocoPhillips 290,175
OIL & GAS REFINING & MARKETING &
TRANSPORTATION 1.6%
10,600 Ashland Inc. 348,210
8,900 Sunoco, Inc. 357,958
- -----------------------------------------------------
706,168
- -----------------------------------------------------
TOTAL ENERGY 996,343
FINANCIAL 14.0%
ASSET MANAGEMENT & CUSTODY BANKS 0.8%
12,600 The Bank of New York Company,
Inc. 366,786
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
DIVERSIFIED BANKS 1.0%
14,000 FleetBoston Financial
Corporation $ 422,100
DIVERSIFIED CAPITAL MARKETS 1.4%
17,100 J.P. Morgan Chase & Co. 587,043
INSURANCE BROKERS 1.0%
20,500 Aon Corporation 427,425
INVESTMENT BANKING & BROKERAGE 2.5%
14,800 A.G. Edwards, Inc. 568,468
10,400 Morgan Stanley 524,784
- -----------------------------------------------------
1,093,252
LIFE & HEALTH INSURANCE 2.1%
12,000 Lincoln National Corporation 424,560
31,100 Presidential Life Corporation 470,543
- -----------------------------------------------------
895,103
OTHER DIVERSIFIED FINANCIAL
SERVICES 2.1%
11,500 Citigroup Inc. 523,365
20,900 ING Groep N.V. -- ADR 386,650
- -----------------------------------------------------
910,015
PROPERTY & CASUALTY INSURANCE 0.8%
10,300 Old Republic International
Corporation 340,827
REAL ESTATE INVESTMENT TRUSTS 1.7%
4,400 General Growth Properties,
Inc. 315,480
7,300 Novastar Financial, Inc. 419,531
- -----------------------------------------------------
735,011
THRIFTS & MORTGAGE FINANCE 0.6%
7,650 GreenPoint Financial Corp. 228,429
- -----------------------------------------------------
TOTAL FINANCIAL 6,005,991
HEALTHCARE 4.3%
HEALTH CARE DISTRIBUTORS 1.1%
20,500 Owens & Minor, Inc. 494,050
HEALTH CARE FACILITIES 1.2%
17,400 Manor Care, Inc. 522,000
PHARMACEUTICALS 2.0%
11,200 Bristol-Myers Squibb Company 287,392
32,200 ICN Pharmaceuticals, Inc. 552,552
- -----------------------------------------------------
839,944
- -----------------------------------------------------
TOTAL HEALTHCARE 1,855,994
INDUSTRIALS 18.3%
AEROSPACE & DEFENSE 1.4%
24,200 Goodrich Corporation 586,608
AIR FREIGHT & LOGISTICS 0.9%
13,700 Ryder System, Inc. 401,684
BUILDING PRODUCTS 2.4%
19,400 Masco Corporation 474,912
16,000 York International
Corporation 553,440
- -----------------------------------------------------
1,028,352
</Table>
17
Schedule of Investments (continued)
ICON EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS 1.9%
7,300 Caterpillar Inc. $ 502,532
20,400 Federal Signal Corporation 303,960
- -----------------------------------------------------
806,492
DIVERSIFIED COMMERCIAL SERVICES 0.8%
8,700 Deluxe Corporation 349,218
ELECTRICAL COMPONENTS & EQUIPMENT 3.3%
8,300 Cooper Industries, Ltd. 398,649
7,000 Emerson Electric Co. 368,550
8,700 Hubbell Incorporated 317,463
7,900 Roper Industries, Inc. 344,045
- -----------------------------------------------------
1,428,707
EMPLOYMENT SERVICES 1.3%
38,900 Gevity HR, Inc. 571,052
INDUSTRIAL CONGLOMERATES 1.0%
14,600 General Electric Company 435,226
INDUSTRIAL MACHINERY 3.6%
8,400 Briggs & Stratton Corporation 493,584
11,100 Harsco Corporation 427,017
40,700 Stewart & Stevenson Services,
Inc. 611,314
- -----------------------------------------------------
1,531,915
MARINE 0.9%
14,000 Alexander & Baldwin, Inc. 393,820
TRADING COMPANIES & DISTRIBUTORS 0.8%
16,800 Applied Industrial
Technologies, Inc. 333,816
- -----------------------------------------------------
TOTAL INDUSTRIALS 7,866,890
INFORMATION TECHNOLOGY 11.4%
APPLICATION SOFTWARE 2.2%
11,300 FactSet Research Systems Inc. 501,155
27,100 Jack Henry & Associates, Inc. 471,269
- -----------------------------------------------------
972,424
COMPUTER HARDWARE 1.3%
27,900 Hewlett-Packard Company 540,144
DATA PROCESSING & OUTSOURCED SERVICES 2.7%
26,400 Electronic Data Systems
Corporation 533,280
19,300 StarTek, Inc. 617,600
- -----------------------------------------------------
1,150,880
ELECTRONIC EQUIPMENT MANUFACTURERS 1.5%
41,900 PerkinElmer, Inc. 641,489
SEMICONDUCTOR EQUIPMENT 2.5%
17,500 Applied Materials, Inc.(a) 317,275
5,000 Cabot Microelectronics
Corporation(a) 278,150
28,300 Helix Technology Corporation 463,271
- -----------------------------------------------------
1,058,696
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
SEMICONDUCTORS 1.3%
19,700 Intel Corporation $ 542,144
- -----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 4,905,777
LEISURE AND CONSUMER STAPLES 8.0%
CASINOS & GAMING 1.0%
10,900 Mandalay Resort Group 431,749
FOOD DISTRIBUTORS 1.5%
42,200 Nash Finch Company 654,100
FOOD RETAIL 1.0%
17,100 SUPERVALU INC. 408,006
HOTELS, RESORTS & CRUISE LINES 2.4%
19,300 Royal Caribbean Cruises
Ltd.(f) 542,523
14,200 Starwood Hotels & Resorts
Worldwide, Inc. 494,160
- -----------------------------------------------------
1,036,683
LEISURE PRODUCTS 1.1%
33,700 Callaway Golf Company 480,899
PUBLISHING 1.0%
9,500 Dow Jones & Company, Inc. 449,825
- -----------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 3,461,262
MATERIALS 5.8%
ALUMINUM 0.7%
11,500 Alcoa Inc. 300,840
COMMODITY CHEMICALS 0.9%
13,700 Lyondell Chemical Company 175,086
21,200 Methanex Corporation(f) 198,432
- -----------------------------------------------------
373,518
FERTILIZERS & AGRICULTURAL
CHEMICALS 0.6%
10,200 Monsanto Company 244,188
PAPER PRODUCTS 3.0%
19,200 Aracruz Celulose S.A. -- ADR 524,160
19,700 Georgia-Pacific Corp. 477,528
11,900 MeadWestvaco Corporation 303,450
- -----------------------------------------------------
1,305,138
SPECIALTY CHEMICALS 0.6%
21,600 RPM International, Inc. 282,096
- -----------------------------------------------------
TOTAL MATERIALS 2,505,780
TELECOMMUNICATION & UTILITIES 5.2%
ELECTRIC UTILITIES 1.9%
13,100 Alliant Energy Corporation 288,200
9,500 Great Plains Energy
Incorporated 288,040
9,100 IDACORP, Inc. 232,050
- -----------------------------------------------------
808,290
GAS UTILITIES 0.9%
6,900 Atmos Energy Corporation 165,186
5,700 Peoples Energy Corporation 235,866
- -----------------------------------------------------
401,052
</Table>
18
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
INTEGRATED TELECOMMUNICATION SERVICES 1.9%
8,500 ALLTEL Corporation $ 415,565
6,300 SBC Communications Inc. 140,175
16,600 Sprint Corporation 250,660
- -----------------------------------------------------
806,400
MULTI-UTILITIES & UNREGULATED POWER 0.5%
10,300 Energy East Corporation 231,029
- -----------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 2,246,771
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $31,981,856) 35,792,830
PREFERRED STOCKS 4.9%
12,200 Ambac Financial Group, Inc.,
7.000%, 10-17-51 324,642
6,600 Bank One Capital Corporation,
8.000%, 1-30-31 182,160
25,700 Goodrich Corporation, 8.300%,
9-30-25 656,378
16,000 MBNA Corporation, 7.500%,
Series A 405,600
71,800 Sprint Corporation 547,834
- -----------------------------------------------------
TOTAL PREFERRED STOCKS
(COST $2,170,584) 2,116,614
CONVERTIBLE PREFERRED STOCKS 6.1%
16,200 Ameren Corporation, 9.750%,
5-15-05 451,170
16,300 CenturyTel, Inc., 6.875%,
5-15-05 451,510
4,200 Chesapeake Energy
Corporation, 6.750%, 12-31-49 317,730
5,700 Emmis Communications
Corporation, 6.250%,
12-31-49, Series A 250,800
4,300 KeySpan Corporation, 8.750%,
5-16-05 224,890
10,500 Sempra Energy, 8.500%,
5-17-05 289,800
15,700 Toy "R" Us, Inc., 6.250%,
8-16-05 617,010
- -----------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $2,401,463) 2,602,910
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
CONVERTIBLE CORPORATE BONDS 4.3%
$100,000 Amerisource Health
Corporation, 5.000%, 12-1-07 $ 117,875
500,000 Echostar Communications
Corporation, 4.875%, 1-01-07 509,375
600,000 International Rectifier
Corporation, 4.250%, 7-15-07 571,500
230,000 Providian Financial
Corporation, 3.250%, 8-15-05 215,050
425,000 The Walt Disney Company,
2.125%, 4-15-23 434,031
- -----------------------------------------------------
TOTAL CONVERTIBLE CORPORATE BONDS
(COST $1,883,929) 1,847,831
SHORT-TERM INVESTMENT 1.7%
709,220 American Family Demand Note,
0.741%(#) 709,220
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $709,220) 709,220
- -----------------------------------------------------
TOTAL INVESTMENTS 100.1%
(COST $39,147,052) 43,069,405
- -----------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.1%) (13,848)
- -----------------------------------------------------
NET ASSETS 100.0% $43,055,557
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
(#) Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
(f) Foreign security
Dates shown on each security are due dates of the obligation.
19
Management Overview
ICON LONG/SHORT FUND
A discussion with J.C. Waller III, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Long/Short Fund, Class I appreciated 20.00% for the fiscal year ended
September 30, 2003, compared to a 24.69% return for its benchmark, the S&P 1500
Index. The Fund's Class C shares also appreciated, having risen 12.35% since
their October 17, 2002 inception, while the Index returned 18.86% over the same
period.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST YEAR?
The market experienced two distinct themes during the reporting period. The
first, a speculative eight-week surge off the market low of early October 2002,
featured lower-quality companies that were inconsistent with the Fund's
investment methodology. Accordingly, the Fund was not positioned to capture what
appeared to be unsustainable gains. A pullback between December 2002 and
early-March 2003 confirmed these assumptions as industry leadership proved both
intermittent and fear-based.
Amid the market bottom of mid-March, geopolitical concerns inexplicably
transformed into cautious optimism. In the absence of a triggering event, a
second theme emerged as a broad market rally ensued. This time, however, the
extended advance was driven by higher-quality companies and emphasized
economically sensitive sectors such as Information Technology, Consumer
Discretionary, and Financials. Against this backdrop, value was widespread
within the market, reaching record highs by our calculations during the fall
2002 and spring 2003 periods. While the Fund emphasized economically sensitive
sectors that were demonstrating both value and relative strength, shifts in
market themes were sudden and swift. Consequently, a broad positioning was
maintained in an attempt to capture leadership wherever it emerged. For these
reasons, the Fund found few opportunities to short positions during the period.
Because our shorting strategy emphasizes industries that possess neither value
nor relative strength, current market conditions did not favor extensive short
allocations. Although the Fund held on average approximately 4% of invested
assets in short positions, by period-end the actual short weighting had declined
to less than 1%. The Fund is not market neutral; the proportion of long and
short positions in the Fund depends on the availability of underpriced and
overpriced industries and our evaluation of market conditions.
WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
Although positioned for an anticipated broad rally at its October 2002
inception, the Fund was adjusted slightly following the October 9 market low to
boost its exposure to economically sensitive sectors. January 2003 saw a more
significant shift as Energy and Healthcare were substantially reduced while
Information Technology and Consumer Discretionary were more heavily weighted.
By March 2003, leadership had further concentrated as relative strength
emerged across an increasing number of cyclical industries, including asset
management & custody banks, consumer finance, investment banking & brokerage,
Internet software & services, hotels, resorts & cruise lines, and specialty
stores. These rotations proved advantageous for the Fund as cyclical stocks
rallied on post-war optimism and a brighter economic outlook.
With the resurgence in cyclical stocks following the mid-March market
bottom, several industries within the Financials and Information Technology
sectors became richly valued and were reduced. Proceeds were then redirected to
the Industrials sector, which featured discounted valuations and newfound
strength. In contrast, Energy lagged in its move back toward fair value and was
removed from the Fund. Healthcare also encountered difficulties, yet maintained
a moderate weighting centered on the increasingly attractive managed healthcare
industry.
Stocks that made measurable contributions to Fund performance over the
period included Internet messaging services provider J2 Global Communications
Inc. A strong balance sheet and expanding profit margins bolstered this
undervalued company. Meanwhile, United Online Inc, a low-cost Internet service
provider, demonstrated similar characteristics, while recently turning
profitable.
Among the Fund's performance laggards, Web security firm Internet Security
Systems Inc. tumbled after missing Wall Street revenue estimates. Weakness in
corporate technology spending pressured networking systems manufacturer Black
Box Corp. and the stocks were subsequently removed from the Fund.
WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC MARKET?
Valuation readings indicate an ongoing and sizable gap between stock prices and
fair value. Assuming this gap continues to close, leadership may likely come
from the underpriced Consumer Discretionary and Industrials sectors.
As for the Fund's short positions, our system has identified few
short-selling candidates; the exception being several richly valued industries
within the Financials and Information Technology sectors. However, should
current market conditions persist, opportunities could become more plentiful.
[SIDENOTE]
PORTFOLIO PROFILE
September 30, 2003
Equities 92.7%
Top 10 Equity Holdings 17.2%
Number of Stocks 80
Cash Equivalents 7.4%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
September 30, 2003
j2 Global Communications, Inc. 2.0%
International Rectifier Corporation 1.9%
J.P. Morgan Chase & Co. 1.9%
Swift Transportation Co., Inc. 1.7%
Thor Industries, Inc. 1.7%
Silicon Laboratories Inc. 1.6%
Capital One Financial Corporation 1.6%
Harman International Industries, Incorporated 1.6%
Humana Inc. 1.6%
Williams-Sonoma, Inc. 1.6%
Percentages are based upon net assets.
20
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
Consumer Discretionary 22.1%
Industrials 16.9%
Financial 14.1%
Information Technology 13.6%
Health Care 10.2%
Leisure and Consumer Staples 9.0%
Materials 5.8%
Telecommunication & Utilities 1.0%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
INCEPTION ONE FIVE SINCE
DATE YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON Long/Short Fund - Class I 10/1/02 20.00% N/A 20.00%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 24.69% N/A 24.69%
- ------------------------------------------------------------------------------------------
ICON Long/Short Fund-Class C 10/17/02 N/A N/A 12.35%
- ------------------------------------------------------------------------------------------
S&P 1500 Index N/A N/A 18.86%
- ------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative index can be found on pages 2 and 3. The
Adviser has agreed to limit a portion of the Fund's expenses if they exceed the
designated cap. The Fund's total return would have been lower if this expense
limitation had not been in place.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through September 30, 2003
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON LONG/SHORT FUND - CLASS I S&P 1500 INDEX
------------------------------ --------------
10/1/02 10000 10000
12/31/02 9760 10811
3/31/03 8880 10450
6/30/03 11039 12093
9/30/03 12000 12469
</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 10/1/02 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 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. The Fund also offers Class C
shares. These figures do not reflect the charges applicable to Class C shares of
the Fund. Applying these charges would lower returns.
21
Schedule of Investments
ICON LONG/SHORT FUND
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
COMMON STOCKS 92.7%
CONSUMER DISCRETIONARY 22.1%
APPAREL RETAIL 2.4%
4,900 Christopher & Banks
Corporation $ 116,914
6,000 Pacific Sunwear of
California, Inc.(a) 123,960
- -----------------------------------------------------
240,874
AUTOMOBILE MANUFACTURERS 3.7%
5,100 Monaco Coach Corporation(a) 84,405
3,100 Thor Industries, Inc. 167,462
2,700 Winnebago Industries, Inc. 120,366
- -----------------------------------------------------
372,233
COMPUTER & ELECTRONICS RETAIL 1.4%
3,000 Best Buy Co., Inc.(a) 142,560
CONSUMER ELECTRONICS 1.6%
1,600 Harman International
Industries, Incorporated 157,360
DEPARTMENT STORES 0.9%
2,200 The Neiman Marcus Group,
Inc.(a) 91,740
GENERAL MERCHANDISE STORES 3.3%
3,100 99 Cents Only Stores(a) 100,254
3,600 Dollar Tree Stores, Inc.(a) 120,780
2,700 Family Dollar Stores, Inc. 107,703
- -----------------------------------------------------
328,737
INTERNET RETAIL 1.2%
2,200 eBay Inc.(a) 117,700
SPECIALTY STORES 7.6%
3,300 Barnes & Noble, Inc.(a) 83,853
3,200 Michaels Stores, Inc. 130,432
5,700 PETsMART, Inc. 129,732
4,500 The Sports Authority, Inc.(a) 141,570
3,400 Tractor Supply Company(a) 111,554
5,800 Williams-Sonoma, Inc.(a) 156,484
- -----------------------------------------------------
753,625
- -----------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 2,204,829
FINANCIAL 14.1%
ASSET MANAGEMENT & CUSTODY BANKS 1.2%
1,300 The Bank of New York Company,
Inc. 37,843
2,700 Mellon Financial Corporation 81,378
- -----------------------------------------------------
119,221
CONSUMER FINANCE 5.0%
2,800 Capital One Financial
Corporation 159,712
4,800 First Cash Financial
Services, Inc.(a) 96,144
5,600 MBNA Corporation 127,680
10,200 Providian Financial
Corporation(a) 120,258
- -----------------------------------------------------
503,794
DIVERSIFIED BANKS 0.8%
2,500 FleetBoston Financial
Corporation 75,375
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
DIVERSIFIED CAPITAL MARKETS 1.9%
5,600 J.P. Morgan Chase & Co. $ 192,248
INVESTMENT BANKING & BROKERAGE 2.1%
2,800 A.G. Edwards, Inc. 107,548
2,100 Morgan Stanley 105,966
- -----------------------------------------------------
213,514
LIFE & HEALTH INSURANCE 0.9%
7,500 UICI(a) 94,050
OTHER DIVERSIFIED FINANCIAL
SERVICES 1.3%
2,800 Citigroup Inc. 127,428
THRIFTS & MORTGAGE FINANCE 0.9%
2,800 New York Community Bancorp,
Inc. 88,228
- -----------------------------------------------------
TOTAL FINANCIAL 1,413,858
HEALTH CARE 10.2%
HEALTH CARE FACILITIES 4.3%
6,600 Health Management Associates,
Inc. 143,946
10,400 Province Healthcare
Company(a) 134,680
5,500 United Surgical Partners
International, Inc.(a) 155,650
- -----------------------------------------------------
434,276
MANAGED HEALTH CARE 5.9%
1,200 Anthem, Inc.(a) 85,596
2,400 Coventry Health Care, Inc.(a) 126,576
3,300 Health Net Inc.(a) 104,511
8,700 Humana Inc.(a) 157,035
2,200 PacifiCare Health Systems,
Inc.(a) 107,360
- -----------------------------------------------------
581,078
- -----------------------------------------------------
TOTAL HEALTH CARE 1,015,354
INDUSTRIALS 16.9%
AIRLINES 3.5%
8,200 ExpressJet Holdings, Inc.(a) 113,160
2,200 JetBlue Airways
Corporation(a) 133,936
6,200 SkyWest, Inc. 107,384
- -----------------------------------------------------
354,480
CONSTRUCTION & ENGINEERING 3.4%
2,800 Fluor Corporation 104,524
5,900 Insituform Technologies,
Inc.(a) 104,784
6,800 URS Corporation(a) 131,920
- -----------------------------------------------------
341,228
DIVERSIFIED COMMERCIAL SERVICES 4.2%
3,000 Career Education
Corporation(a) 135,900
2,400 Corinthian Colleges, Inc.(a) 137,184
2,200 University of Phoenix
Online(a) 146,674
- -----------------------------------------------------
419,758
EMPLOYMENT SERVICES 3.4%
6,500 Gevity HR, Inc. 95,420
13,100 Labor Ready, Inc.(a) 131,655
15,900 Spherion Corporation(a) 110,664
- -----------------------------------------------------
337,739
</Table>
22
SCHEDULE OF INVESTMENTS
September 30, 2003
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------------
TRUCKING 2.4%
7,500 Swift Transportation Co.,
Inc.(a) $ 170,175
3,100 Werner Enterprises, Inc. 71,021
- -----------------------------------------------------
241,196
- -----------------------------------------------------
TOTAL INDUSTRIALS 1,694,401
INFORMATION TECHNOLOGY 13.6%
APPLICATION SOFTWARE 1.8%
4,100 Magma Design Automation,
Inc.(a) 80,442
5,800 Mentor Graphics
Corporation(a) 101,674
- -----------------------------------------------------
182,116
COMMUNICATIONS EQUIPMENT 1.6%
2,900 InterDigital Communications
Corporation(a) 43,500
3,700 UTStarcom, Inc.(a) 117,660
- -----------------------------------------------------
161,160
INTERNET SOFTWARE & SERVICES 5.7%
6,500 FindWhat.com(a) 112,385
5,200 j2 Global Communications,
Inc.(a) 196,716
3,600 Sohu.com Inc.(a) 112,140
4,300 United Online, Inc.(a) 149,597
- -----------------------------------------------------
570,838
SEMICONDUCTORS 4.5%
5,200 International Rectifier
Corporation(a) 194,688
5,400 NVIDIA Corporation(a) 85,919
3,600 Silicon Laboratories Inc.(a) 161,784
- -----------------------------------------------------
442,391
- -----------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 1,356,505
LEISURE AND CONSUMER STAPLES 9.0%
FOOD RETAIL 1.1%
4,400 SUPERVALU INC 104,984
HOTELS, RESORTS & CRUISE LINES 4.4%
2,700 Carnival Corporation(f) 88,803
2,900 Marriott International, Inc. 124,787
3,600 Royal Caribbean Cruises
Ltd.(f) 101,196
3,700 Starwood Hotels & Resorts
Worldwide, Inc. 128,760
- -----------------------------------------------------
443,546
MOVIES & ENTERTAINMENT 1.9%
2,800 Fox Entertainment Group,
Inc.(a) 78,372
5,500 The Walt Disney Company 110,935
- -----------------------------------------------------
189,307
RESTAURANTS 1.6%
2,200 CEC Entertainment Inc.(a) 86,240
5,300 The Steak n Shake Company(a) 78,970
- -----------------------------------------------------
165,210
- -----------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 903,047
MATERIALS 5.8%
ALUMINUM 0.8%
3,100 Alcoa Inc. 81,096
</Table>
<Table>
- -----------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
METAL & GLASS CONTAINERS 1.1%
16,300 Crown Holdings, Inc.(a) $ 110,025
PAPER PACKAGING 0.7%
1,600 Sealed Air Corporation(a) 75,568
STEEL 3.2%
13,900 Allegheny Technologies, Inc. 91,045
5,300 Carpenter Technology
Corporation 113,632
8,400 NN, Inc. 108,024
- -----------------------------------------------------
312,701
- -----------------------------------------------------
TOTAL MATERIALS 579,390
TELECOMMUNICATION & UTILITIES 1.0%
WIRELESS TELECOMMUNICATION SERVICES 1.0%
1,600 AO VimpelCom(a) -- ADR 97,376
- -----------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 97,376
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $7,712,111) 9,264,760
SHORT-TERM INVESTMENTS 7.4%
U.S. GOVERNMENT OBLIGATIONS 3.6%
$251,000 FHLB Discount Note, 0.895%,
12-30-03 250,379
112,000 U.S. Treasury Bill, 0.796%,
12-11-03(b) 111,805
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $362,274) 362,184
VARIABLE RATE DEMAND NOTE 3.8%
375,391 American Family Demand Note,
0.741%(#) 375,391
- -----------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE
(COST $375,391) 375,391
- -----------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $737,665) 737,575
- -----------------------------------------------------
TOTAL INVESTMENTS 100.1%
(COST $8,449,776) 10,002,335
- -----------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.1%) (7,678)
- -----------------------------------------------------
NET ASSETS 100.0% $ 9,994,657
- -----------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
(b) Security is pledged with broker as collateral for investment securities
sold short
# Variable rate demand notes 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, 2003.
ADR -- American Depositary Receipt
f Foreign security
23
Schedule of Investments (continued)
ICON LONG/SHORT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF SHORT SECURITIES
September 30, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHORT SECURITIES SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------------------------------------------------------
Colgate-Palmolive Company 1,400 $78,246
- --------------------------------------------------------------------------------------------------
TOTAL SHORT SECURITIES (PROCEEDS OF $72,802) 1,400 $78,246
</Table>
The accompanying notes are an integral part of the financial statements.
24
Statements of Assets and Liabilities
<Table>
<Caption>
-------------- -------------- --------------
SEPTEMBER 30, 2003 ICON ICON ICON
COVERED CALL EQUITY INCOME LONG/SHORT
FUND FUND FUND
------------ -------------- --------------
ASSETS
Investments, at cost $18,774,883 $39,147,052 $ 8,449,776
-------------- -------------- --------------
Investments, at value 21,301,740 43,069,405 10,002,335
Cash - - 116
Receivables:
Fund shares sold 53,026 251,576 71,542
Investments sold 29,301 - -
Interest 67 19,343 80
Dividends 5,315 55,601 3,809
Deposits for short sales - - 48,536
Expense reimbursements by Adviser 19,171 16,533 16,695
Other assets 1,396 2,472 659
-------------- -------------- --------------
Total Assets 21,410,016 43,414,930 10,143,772
-------------- -------------- --------------
LIABILITIES
Options written, at value (premiums received of $241,662,
$0 and $0, respectively) 170,747 - -
Common stocks sold short, at value (proceeds of $0, $0 and
$72,802, respectively) - - 78,246
Payables:
Due to custodian bank - 2,222 -
Fund shares redeemed 30,106 53,287 16,832
Advisory fees 13,313 26,867 6,972
Accrued distribution fees 4,524 9,318 2,212
Fund accounting, custodial and transfer agent fees 8,915 10,541 7,627
Administration fees 888 1,790 411
Distributions due to shareholders - 183,619 -
Accrued expenses 52,576 71,729 36,815
-------------- -------------- --------------
Total Liabilities 281,069 359,373 149,115
-------------- -------------- --------------
NET ASSETS - ALL SHARE CLASSES $21,128,947 $43,055,557 $ 9,994,657
============== ============== ==============
NET ASSETS - CLASS I $20,980,984 $42,474,380 $ 9,725,838
============== ============== ==============
NET ASSETS - CLASS C $ 147,963 $ 581,177 $ 268,819
============== ============== ==============
Shares outstanding (unlimited shares authorized, no par
value)
Class I 1,692,216 3,474,395 810,315
Class C 12,014 47,601 22,544
Net asset value (offering price and redemption price per
share)
Class I $ 12.40 $ 12.22 $ 12.00
Class C $ 12.32 $ 12.21 $ 11.92
</Table>
The accompanying notes are an integral part of the financial statements.
25
Statements of Operations
<Table>
<Caption>
-------------- -------------- --------------
FOR THE YEAR ENDED SEPTEMBER 30, 2003 ICON ICON ICON
COVERED CALL EQUITY INCOME LONG/SHORT
FUND FUND FUND
-------------- -------------- --------------
INVESTMENT INCOME
Interest $ 8,802 $ 66,994 $ 5,754
Dividends 107,670 859,107 58,708
-------------- -------------- --------------
Total Investment Income 116,472 926,101 64,462
-------------- -------------- --------------
EXPENSES
Advisory fees 108,512 190,412 60,488
Distribution fees:
Class I 36,487 63,516 17,511
Class C 434 3,178 1,796
Fund accounting, custodial and transfer agent fees 51,706 51,434 47,120
Administration fees 6,635 11,636 3,248
Audit fees 17,273 30,267 8,460
Registration fees 26,960 27,820 26,336
Legal fees 1,470 2,528 19,165
Insurance expense 126 223 60
Trustee fees and expenses 874 1,466 433
Shareholder reports 12,883 20,451 6,618
Interest expense 368 42 2,291
Other expenses 36,785 36,942 27,599
-------------- -------------- --------------
Total expenses before expense reimbursement and dividends
on short positions 300,513 439,915 221,125
Expense reimbursement by Adviser (90,063) (69,536) (109,309)
Dividends on short positions - - 1,154
-------------- -------------- --------------
Net Expenses 210,450 370,379 112,970
-------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) (93,978) 555,722 (48,508)
-------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) from:
Investment transactions 1,447,182 444,788 (149,305)
Written options (933,240) 46,224 -
Securities sold short - - (23,584)
-------------- -------------- --------------
Total net realized gain/(loss) 513,942 491,012 (172,889)
-------------- -------------- --------------
Change in net unrealized appreciation/(depreciation) on
securities, written options and securities sold short 2,597,772 3,922,353 1,547,115
-------------- -------------- --------------
Net realized and unrealized gain on investments 3,111,714 4,413,365 1,374,226
-------------- -------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,017,736 $4,969,087 $1,325,718
============== ============== ==============
</Table>
The accompanying notes are an integral part of the financial statements.
26
Statements of Changes in Net Assets
<Table>
<Caption>
------------------ ------------------ ------------------
ICON ICON ICON
COVERED CALL FUND EQUITY INCOME FUND LONG/SHORT FUND
------------------ ------------------ ------------------
For the year For the year For the year
October 1, 2002* October 1, 2002* October 1, 2002*
(inception) to (inception) to (inception) to
September 30, 2003 September 30, 2003 September 30, 2003
------------------ ------------------ ------------------
OPERATIONS
Net investment income/(loss) $ (93,978) $ 555,722 $ (48,508)
Net realized gain/(loss) from investment transactions,
written options and securities sold short 513,942 491,012 (172,889)
Change in unrealized appreciation/(depreciation) on
securities, written options and securities sold short 2,597,772 3,922,353 1,547,115
------------------ ------------------ ------------------
Net increase in net assets resulting from operations 3,017,736 4,969,087 1,325,718
------------------ ------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - (555,767) -
------------------ ------------------ ------------------
Net decrease from dividends and distributions - (555,767) -
------------------ ------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold
Class I 21,535,397 44,637,115 10,958,821
Class C 177,231 637,549 436,593
Reinvested dividends and distributions
Class I - 528,515 -
Class C - 4,458 -
Shares repurchased
Class I (3,564,680) (7,026,892) (2,533,670)
Class C (36,737) (138,508) (192,805)
------------------ ------------------ ------------------
Net increase from fund share transactions 18,111,211 38,642,237 8,668,939
------------------ ------------------ ------------------
Total net increase in net assets 21,128,947 43,055,557 9,994,657
NET ASSETS
Beginning of period - - -
------------------ ------------------ ------------------
End of period $21,128,947 $43,055,557 $ 9,994,657
------------------ ------------------ ------------------
NET ASSETS CONSIST OF
Paid-in capital $18,111,211 $38,642,237 $ 8,620,431
Accumulated undistributed net investment income (loss) - 14,605 -
Accumulated undistributed net realized gain/(loss) from
investments 419,964 476,362 (172,889)
Unrealized appreciation on securities, written options and
securities sold short 2,597,772 3,922,353 1,547,115
------------------ ------------------ ------------------
Net Assets $21,128,947 $43,055,557 $ 9,994,657
================== ================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold
Class I 2,020,657 4,069,794 1,055,319
Class C 15,317 60,013 42,776
Reinvested dividends and distributions
Class I - 47,549 -
Class C - 405 -
Shares repurchased
Class I (328,441) (642,948) (245,004)
Class C (3,303) (12,817) (20,232)
------------------ ------------------ ------------------
Net increase 1,704,230 3,521,996 832,859
------------------ ------------------ ------------------
Shares outstanding beginning of period - - -
------------------ ------------------ ------------------
Shares outstanding end of period 1,704,230 3,521,996 832,859
================== ================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding short-term securities and written options)
Purchase of securities (including short sale transactions) $45,565,265 $47,049,615 $19,387,249
Proceeds from sales of securities (including short sale
transactions) 28,417,692 9,058,288 11,575,765
</Table>
* The offering of Class I shares of the Funds commenced on October 1, 2002 and
Class C shares on November 21, 2002, November 8, 2002 and October 17, 2002,
respectively.
The accompanying notes are an integral part of the financial statements.
27
Financial Highlights
<Table>
<Caption>
--------------------------------------- ---------------------------------------
ICON COVERED CALL FUND ICON EQUITY INCOME FUND
--------------------------------------- ---------------------------------------
Class I Class C Class I Class C
For the year For the period For the year For the period
October 1, 2002 November 21, 2002 October 1, 2002 November 8, 2002
(inception) to (inception) to (inception) to (inception) to
September 30, 2003 September 30, 2003 September 30, 2003 September 30, 2003
------------------ ------------------ ------------------ ------------------
Net asset value, beginning
of period $ 10.00 $ 10.75 $ 10.00 $10.63
------------------ ------------------ ------------------ ------------------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income/(loss)(x) (0.07) (0.17) 0.25 0.16
Net realized and
unrealized gains on
investments 2.47 1.74 2.20 1.59
------------------ ------------------ ------------------ ------------------
Total from investment
operations 2.40 1.57 2.45 1.75
------------------ ------------------ ------------------ ------------------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income 0.00 0.00 (0.23) (0.17)
------------------ ------------------ ------------------ ------------------
Total distributions 0.00 0.00 (0.23) (0.17)
------------------ ------------------ ------------------ ------------------
Net asset value, end of
period $ 12.40 $ 12.32 $ 12.22 $12.21
================== ================== ================== ==================
Total return 24.00% 14.60%(b) 24.72% 16.63%(b)
Net assets, end of period
(in thousands) $20,981 $ 148 $42,474 $ 581
Average net assets for the
period (in thousands) $14,544 $ 50 $25,288 $ 348
Ratio of expenses to average
net assets*
Before expense waiver 2.07% 2.83% 1.72% 2.48%
After expense waiver 1.45% 2.20% 1.45% 2.20%
Ratio of net investment
income/(loss) to average
net assets*
Before expense waiver (1.27)% (2.13)% 1.93% 1.10%
After expense waiver (0.65)% (1.50)% 2.20% 1.38%
Portfolio turnover rate 184.24%(a) 184.24%(a) 35.17%(a) 35.17%(a)
<Caption>
---------------------------------------
ICON LONG/SHORT FUND
---------------------------------------
Class I Class C
For the year For the period
October 1, 2002 October 17, 2002
(inception) to (inception) to
September 30, 2003 September 30, 2003
------------------ ------------------
Net asset value, beginning
of period $ 10.00 $ 10.61
------------------ ------------------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income/(loss)(x) (0.07) (0.15)
Net realized and
unrealized gains on
investments 2.07 1.46
------------------ ------------------
Total from investment
operations 2.00 1.31
------------------ ------------------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income 0.00 0.00
------------------ ------------------
Total distributions 0.00 0.00
------------------ ------------------
Net asset value, end of
period $ 12.00 $ 11.92
================== ==================
Total return 20.00% 12.35%(b)
Net assets, end of period
(in thousands) $ 9,726 $ 269
Average net assets for the
period (in thousands) $ 6,997 $ 186
Ratio of expenses to average
net assets*
Before expense waiver 3.09% 3.84%
After expense waiver 1.55% 2.30%
Ratio of net investment
income/(loss) to average
net assets*
Before expense waiver (2.20)% (2.99)%
After expense waiver (0.66)% (1.45)%
Portfolio turnover rate 162.25%(a) 162.25%(a)
</Table>
* Annualized for periods less than a year
(a) Portfolio turnover is calculated at the Fund level and therefore represents
the year October 1, 2002 (Fund inception) to September 30, 2003.
(b) The total return calculation is for the period indicated.
(x) Calculated using the average share method
28
Notes to Financial Statements
SEPTEMBER 30, 2003
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The 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, which is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end investment management company. The Funds commenced
operations on October 1, 2002 and offer two classes of shares. There are
currently 15 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 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. Additionally, call options involve certain risks and are not suitable
for all investors. There are risks associated with selling short, including the
risk that the Fund may have to cover its short position at a higher price than
the short sale, resulting in a loss. High-yield bonds involve a greater risk of
default and price volatility than U.S. Government and other high-quality bonds.
High-yield/high-risk bonds can experience sudden and sharp price swings which
will affect net asset value. There are also risks associated with small and
mid-cap investing, including limited product lines, less liquidity and small
market share.
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 could differ from these estimates.
Investment Valuation.
The Funds' securities and other assets are valued at the close of the regular
trading session of the New York Stock Exchange (the "Exchange") (normally 4 p.m.
Eastern time) each day the Exchange is open. A security listed or traded
primarily on a securities exchange or in the over-the-counter market is valued
at its last sale price on the exchange or market where it is principally traded.
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 or by a pricing service approved by the Trust's
Board of Trustees. Options are valued at their closing mid-price on the
principal market where the option is traded. Mid-price is the average of the sum
of the closing bid and closing ask prices. The market value of individual
securities held by the Funds is determined by using pricing services that
provide market prices to other mutual funds or, as needed, by obtaining market
quotations from independent broker/dealers. Securities and assets for which
quotations are not readily available are valued at fair value determined in good
faith pursuant to consistently applied procedures established by the Trust's
Board. Short-term securities with remaining maturities of 60 days or less are
generally valued at amortized cost or original cost plus accrued interest, both
of which approximate market value. London closing quotes for exchange rates are
used to convert foreign security values into U.S. dollars.
29
Notes to Financial Statements (continued)
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 repurchases agreements were purchased or sold by the Fund during the
year ended September 30, 2003.
Options Transactions.
Each Fund may write put and call options only if it, among other things, (i)
owns an offsetting position in the underlying security or (ii) maintains cash or
other liquid assets in an amount equal to or greater than its obligation under
the option.
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, 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. 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.
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 gain.
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 Equity Income Fund distributes net
investment income, if any, to shareholders quarterly. The Funds distribute net
realized capital gains, if any, to shareholders at least annually, if not offset
by capital loss carryovers. Income distributions and capital gain distributions
are determined in accordance with income tax regulations, which may differ from
generally accepted accounting principles generally accepted in the United States
of America.
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.
30
Investment Transactions.
Security transactions are accounted for as of trade date. Gains and losses on
securities sold are determined on the basis of identified cost.
Expenses.
Each class of a Fund's shares bears expenses incurred specifically on its
behalf and, in addition, each class bears a portion of general expenses, based
upon relative net assets of each class. Expenses which cannot be directly
attributed to a specific fund in the Trust are apportioned between all funds in
the Trust based upon relative net assets.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fees.
Meridian Investment Management Corporation ("Meridian") serves as the investment
adviser to the Funds and is responsible for managing the Funds' portfolios of
securities. Meridian receives a monthly management fee that is computed daily at
an annual rate of 0.75% of average daily net assets on the Covered Call and
Equity Income Funds and 0.85% on the Long/Short Fund. For the year ended
September 30, 2003, Meridian contractually agreed to limit its investment
advisory fee and/or reimburse 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 2.20% for Class C and
1.45% for Class I for the ICON Covered Call Fund and the ICON Equity Income Fund
and 2.30% for Class C and 1.55% for Class I for the ICON Long/Short Fund. To the
extent Meridian 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. For the year or period
ended September 30, 2003, Meridian reimbursed/ absorbed $89,744 on the Class I
shares and $319 on the Class C shares for the ICON Covered Call Fund, $68,745 on
the Class I shares and $791 on the Class C shares for the ICON Equity Income
Fund, and $106,558 on the Class I shares and $2,751 on the Class C shares for
the ICON Long/Short Fund, respectively. These expenses are subject to recovery
by Meridian based on a rolling three-year period.
31
Notes to Financial Statements (continued)
Transfer Agent, Custody and Accounting Fees.
U.S. Bank N.A. ("U.S. Bank") and U.S. Bancorp Fund Services, LLC ("U.S.
Bancorp") provide domestic custodial services, transfer agent services and fund
accounting for the Funds. For these services the Trust pays a fee for transfer
agent and custody services at an annual rate of 0.065% on the first $500 million
of average daily net assets, 0.06% on the next $ 1 billion of average daily net
assets, and 0.05% on the average daily net assets in excess of $1.5 billion. The
Funds pay a minimum fee for fund accounting of $39,000 (on each Fund) on the
first $100 million of average net assets, 0.025% on the next $200 million of
average daily net assets and 0.0125% on the daily average net assets in excess
of $300 million. The Trust also pays for various out-of-pocket costs incurred by
U.S. Bancorp that are estimated to be 0.02% of average daily net assets.
Administrative Services.
The Trust has entered into an administrative services agreement with Meridian.
This agreement provided for an annual fee of 0.05% on the Trust's first $500
million of average daily net assets and 0.04% on average daily net assets in
excess of $500 million for the period October 1, 2002 to August 31, 2003 and
0.05% on average daily net assets up to $1.5 billion and 0.045% on the average
daily net assets in excess of $1.5 billion for the period beginning on September
1, 2003.
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, Meridian Clearing Corp. ("MCC") (an affiliate of the adviser) for
the sale and distribution of shares. Under the 12b-1 Plan, Class C shareholders
pay an annual 12b-1 and service fee of 1.00% of average daily net assets and
Class I shareholders pay an annual 12b-1 fee of 0.25% of average daily net
assets. For the year or period ended September 30, 2003 the total amounts paid
or payable to MCC pursuant to the 12b-1 Plan were $36,487 on the Class I shares
and $434 on the Class C shares of the Covered Call Fund, $63,516 on the Class I
shares and $3,178 on the Class C shares of the Equity Income Fund and $17,511 on
the Class I shares and $1,796 on the Class C shares of the Long/ Short Fund.
Related parties.
Certain officers and directors of Meridian and MCC are also officers and
trustees of the Funds; however, such officers and trustees receive no
compensation from the Funds.
3. OPTIONS CONTRACTS WRITTEN
The number of option contracts written and the premiums received by the ICON
Covered Call Fund during the period ended September 30, 2003, were as follows:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
Options outstanding,
beginning of period - -
Options written during
period 27,231 $ 2,573,355
Options expired during
period (9,835) (776,869)
Options closed during
period (11,305) (1,241,354)
Options exercised during
period (2,757) (313,470)
------- -----------
Options outstanding, end
of period 3,334 $ 241,662
======= ===========
</Table>
32
The number of option contracts written and the premiums received by the
ICON Equity Income Fund during the period ended September 30, 2003, were as
follows:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
Options outstanding,
beginning of period - -
Options written during
period 300 $ 46,224
Options expired during
period (300) (46,224)
Options closed during
period - -
Options exercised during
period - -
---- --------
Options outstanding, end of
period - $ -
==== ========
</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
carryovers.
The aggregate composition by Fund of unrealized capital appreciation and
depreciation of investment securities for federal income tax purposes as of
September 30, 2003 are as follows:
<Table>
<Caption>
ICON ICON ICON
COVERED CALL EQUITY INCOME LONG/SHORT
FUND FUND FUND
Federal Tax Cost $18,971,709 $38,161,196 $8,449,776
Unrealized
Appreciation $ 3,213,269 $ 4,918,410 $1,737,072
Unrealized
Depreciation $ (812,323) $(1,010,201) $ (189,957)
Net Appreciation $ 2,400,946 $ 3,908,209 $1,547,115
</Table>
Accumulated capital losses in the Long/Short Fund represent net capital
loss carryovers as of September 30, 2003 that may be available to offset future
realized capital gains and thereby reduce future taxable income distributions.
This carryover in the amount of $445 will expire on September 30, 2011.
The Long/Short Fund also incurred "post October" losses during the period
from November 1, 2002 through September 30, 2003. These losses of $172,444 will
be deferred for tax purposes and recognized in the year ending September 30,
2004.
The distributions from ordinary income for the Equity Income Fund for the
year ended September 30, 2003 were $555,767.
33
Report of Independent Auditors
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE ICON 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 Covered Call Fund, ICON Equity
Income Fund, and ICON Long/Short Fund (three of the portfolios constituting ICON
Funds, hereafter referred to as the "Funds") at September 30, 2003, and the
results of each of their operations, the changes in each of their net assets and
the financial highlights for the year from October 1, 2002 (commencement of
operations) through September 30, 2003, 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 Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with auditing standards generally
accepted in the United States of America, which 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 audit, which included confirmation of securities at September
30, 2003 by correspondence with the custodian and brokers, and the application
of alternative auditing procedures where securities purchased had not been
received, provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 12, 2003
34
Board of Trustees and Fund Officers
(unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 18 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, addresses and
principal occupations are set forth below. Trustees have no official term of
office and generally serve until they resign or are not re-elected.
INTERESTED TRUSTEE
CRAIG T. CALLAHAN, 52, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception in 1996. Dr. Callahan also serves as President
(1998 to present) and Chief Investment Officer (1991 to present) of Meridian
Investment Management Corporation ("Meridian"), 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 Meridian Clearing
Corporation ("MCC"), the Funds' Distributor. Dr. Callahan also serves as the
Chief Investment Officer and Director (1994 to present), and was previously
Secretary/Treasurer (1994 to 1998) of Meridian Management & Research Corporation
("MM&R"), the parent company of Meridian and MCC.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 53. 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); 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); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 56. 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).
35
Board of Trustees and Fund Officers (continued)
GREGORY KELLAM SCOTT, 54. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott is Senior Vice President -- Law, General Counsel and
Secretary, GenCorp, Inc., a multinational technology-based manufacturing company
(2002 to present). Mr. Scott was previously 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).
R. MICHAEL SENTEL, 55. 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 FDIC with responsibility for the Rocky Mountain Region
(1991-1994).
JONATHAN F. ZESCHIN, 50. 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 2002). 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 is also a Director of the Wasatch Funds
(2002 to present); and a Director of the Young Americans Education Foundation
and Young Americans Bank (1998 to present).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 52. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as Meridian's President (1998 to
present) and Chief Investment Officer (1991 to present). Dr. Callahan is also
President (1998 to present), Director (1991 to present) and was previously Vice
President (1991 to 1998) of MCC. Dr. Callahan is also the Chief Investment
Officer and Director (1994 to present), and was previously Secretary/ Treasurer
(1994 to 1998) of MM&R.
ERIK L. JONSON, 54. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception in 1996. Mr. Jonson is also Chief
Financial Officer (1996 to present) and Vice President (1998 to present) of
Meridian; Chief Financial Officer, Secretary and Director (1996 to present) of
MM&R; and Vice President and Treasurer (March 2002 to present) and was
previously Secretary/Treasurer, (1998 to 2002) of MCC.
ANDRA C. OZOLS, 42. Ms. Ozols has been a Vice President and Secretary of the
Funds since March 2002. She previously served in that capacity in 1998. Ms.
Ozols is also Vice President, General Counsel and Secretary (March 2002 to
present and January 1998 to October 1998) of Meridian; Vice President and
Secretary (March 2002 to present) of MCC and Director (June 2003 to present) of
MM&R. Ms. Ozols was previously Vice President (1999 to 2002) and Assistant
General Counsel (October 1998 to February 2002) of Founders Asset Management
LLC; and was previously a Branch Chief (1993 to 1995) and Enforcement Attorney
(1990 to 1995 and 1996 to 1998) with the U.S. Securities and Exchange
Commission.
The Trustees and Officers of the Funds may be contacted at 5299 DTC
Boulevard, Suite 1200, Greenwood Village, Colorado 80111.
Additional information about the Funds' Trustees and Officers is available
in the Funds' Statement of Additional Information, which can be obtained free of
charge by calling 1-800-764-0442.
36
Other Information
(unaudited)
QUALIFYING DIVIDEND INCOME
Of the amount distributed in the fiscal year ended September 30, 2003 for the
Equity Income Fund, 67.76% represents qualified dividend income.
PROXY VOTING BY THE FUNDS
A description of the policies and procedures that the Funds use to determine how
to vote proxies related to portfolio securities can be obtained free of charge
by calling 1-800-764-0442, or by visiting www.iconfunds.com, or www.sec.gov.
Information regarding how the Funds voted proxies relating to portfolio
securities will be available free of charge no later than August 31, 2004 by
calling 1-800-764-0442 or by visiting www.iconfunds.com or www.sec.gov.
37
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[ICON FUNDS LOGOS]
FOR MORE INFORMATION ABOUT THE ICON FUNDS, CONTACT US:
BY TELEPHONE 1-800-764-0442
BY MAIL ICON Funds
P.O. Box 701
Milwaukee, WI 53201-0701
IN PERSON ICON Funds
5299 DTC Boulevard, Suite 1200
Greenwood Village, CO 80111
BY E-MAIL ICON@mimcorp.com
ON THE INTERNET www.iconfunds.com
This report is for the general information of the Funds' shareholders. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus. Please call 1-800-764-0442 or
visit www.iconfunds.com for a current prospectus, which contains more complete
information, including charges, expenses, share classes, and risks. Please read
the prospectus carefully before you invest or send money. Meridian Clearing
Corp., Distributor.
I-120-SPEC
- --------------------------------------------------------------------------------
Item 2. Code of Ethics.
(a) Code of Ethics. ICON Funds ("Registrant") has adopted a code of ethics
("Code"), as defined in Item 2 of Form N-CSR, that applies to its Principal
Executive Officer and Principal Financial Officer. A copy of the Code is
filed as an exhibit to this Form N-CSR.
(b) Amendments. During the period covered by the report, no amendments were
made to the provisions of the Code.
(c) Waivers. During the period covered by the report, the Registrant has not
granted any express or implicit waivers from the provisions of the Code.
(d) Not applicable.
(e)(1) A copy of the Code is filed as Exhibit EX-99.CODE ETH to this Form N-CSR.
Copies of the Code will also be made available free of charge upon request,
by writing ICON Funds at P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or
by calling 1-800-764-0442.
Item 3. Audit Committee Financial Expert.
ICON Funds Board of Trustees has determined that each member of ICON Funds'
Audit Committee is an "audit committee financial expert," as defined in Item 3
to Form N-CSR. The members of the Audit Committee include Glen F. Bergert,
Chairman; R. Michael Sentel and Jonathan F. Zeschin, who are all "independent"
under the standards set forth in Item 3 to Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Not Applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Items 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures.
(a) The Registrant's Principal Executive Officer and Principal Financial
Officer have concluded that the Registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940) provide reasonable assurances that material information relating to
the Registrant is made known to them by the appropriate persons, based on
their evaluation of these controls and procedures as of a date within 90
days of the filing date of this report
(b) There was no change in the Registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act)
that occurred during the Registrant's most recently ended second fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
Item 10. Exhibits.
(a)(1) Code of Ethics for Principal Executive Officer and Principal Financial
Officer pursuant to Item 2 of Form N-CSR is filed and attached hereto as
EX-99.CODE ETH.
(a)(2) Separate certifications for the Registrant's Principal Executive Officer
and Principal Financial Officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company
Act of 1940, as amended, are attached as EX99.CERT. (b) A certification of
the Registrant's Principal Executive Officer and Principal Financial
Officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, is attached as EX99.906CERT.
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.
ICON Funds
By: /s/ Craig T. Callahan
--------------------------------------
Craig T. Callahan
President and Chief Executive Officer
(Principal Executive Officer)
Date: December 1, 2003
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: /s/ Craig T. Callahan
---------------------------------------
Craig T. Callahan
President and Chief Executive Officer
(Principal Executive Officer)
Date: December 1, 2003
By: /s/ Erik L. Jonson
----------------------------------------
Erik L. Jonson
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
Date: December 1, 2003