UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-07883
ICON FUNDS
(Exact name of registrant as specified in charter)
5299 DTC Blvd., Suite 1200
Greenwood Village, CO 80111
(Address of principal executive offices)
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: 03/31/2004
Item 1 - Reports to Stockholders
March 31, 2004
Investment Update
ICON SECTOR FUNDS
Semiannual Report
[ICON FUNDS LOGO]
Table of Contents
<Table>
<Caption>
ABOUT THIS REPORT ......................................2
MESSAGE FROM ICON FUNDS ......................................4
MANAGEMENT OVERVIEW
AND SCHEDULE OF INVESTMENTS ......................................6
ICON Consumer Discretionary Fund ......................................6
ICON Energy Fund .....................................11
ICON Financial Fund .....................................16
ICON Healthcare Fund .....................................21
ICON Industrials Fund .....................................26
ICON Information Technology Fund .....................................31
ICON Leisure and Consumer Staples Fund .....................................36
ICON Materials Fund .....................................41
ICON Telecommunication & Utilities
Fund .....................................45
ICON Short-Term Fixed Income Fund .....................................49
FINANCIAL STATEMENTS .....................................52
FINANCIAL HIGHLIGHTS .....................................60
NOTES TO FINANCIAL STATEMENTS .....................................70
</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. Performance results represent
past performance, and current performance may be higher or lower. Please call
1-800-764-0442 or visit www.iconfunds.com for performance results current to the
most recent month-end.
- --------------------------------------------------------------------------------
PORTFOLIO DATA
- --------------------------------------------------------------------------------
Opinions and forecasts regarding industries, companies and/or themes, and
portfolio composition and holdings, are subject to change at any time based on
market and other conditions, and should not be construed as a recommendation of
any specific security. Each Fund's percentage holdings as of March 31, 2004 are
included in each Fund's Schedule of Investments.
Certain companies' stock performance during the period is mentioned
throughout the Management Overviews. While ICON's quantitative investment
methodology does not consider company-specific factors beyond financial data,
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. There is no assurance that the investment process will
consistently lead to successful results. An investment in a sector fund may
involve greater risk and volatility than a diversified fund, and the technology
sector has been among the most volatile sectors in the market. 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
- --------------------------------------------------------------------------------
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 Funds' portfolios may significantly differ in holdings and
composition from the indexes. Individuals cannot invest directly in an index.
- - The unmanaged Standard & Poor's (S&P) 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 Merrill Lynch 1-Year U.S. Treasury Bill Index consists of a
single issue with the longest maturity. The issue is replaced on a monthly
basis to maintain the characteristics of the index.
Index returns and statistical data included in this report are provided by
Bloomberg and FactSet.
3
Message from ICON Funds
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
[PHOTO]
- --------------------------------------------------------------------------------
Last November, I found myself in a somewhat heated TV debate in which I
contended that the then eight-month rally in stock prices still had further
upside. In taking this decidedly bullish stance, I based my position on the fact
that the stocks in the ICON domestic database were priced on average about 15%
below our estimate of fair value, and that we expected them to continue in their
upward march.
Meanwhile my opponent, a respected money manager, voiced a more pessimistic
outlook. Armed with a host of fear-based objections, including overheated
price/earnings ratios, rising interest rates and sluggish job growth, his
intuitive arguments supporting a precipitous decline undoubtedly proved
convincing to many investors. Except that he was wrong.
THE PRODUCT OF FAULTY REASONING
Through mid-March 2004, stocks did in fact continue their move toward fair
value, despite these and other concerns. Although Wall Street has been known to
climb a wall of worry, the skepticism and doubt expressed by some investors
during the advance was likely the product of faulty reasoning. Let's explore
some common investor misperceptions:
- - STOCKS ARE OVERPRICED BASED ON P/E. Price/earnings ratio is a simplistic
measure that fails to consider the impact of interest rates, a key
component in calculating the present value of any asset. Value, of course,
is not stagnant and can increase or decrease depending on the current
interest rate environment. In the current low interest rate setting, we
believe it makes sense that stock prices would be higher relative to
earnings. Our valuation model considers earnings estimates, but expands
beyond this one-dimensional statistic.
- - INTEREST RATES WILL HAVE TO RISE. There appears to be a consensus among
market observers that short-term interest rates will move higher as the
economic recovery gains traction, pressuring earnings and consequently
stock prices. The fact is short-term rates play a limited role in our
system, which emphasizes the AAA long-term bond yield in its assessment of
valuation. With long-term rates experiencing a 20-year secular decline, we
find it counterproductive to predict the impact of an increase. That being
said, we do not currently see any force capable of reversing this downward
trend.
[SIDENOTE]
Intuitive arguments supporting a decline undoubtedly proved convincing. Except
that they were wrong.
[SIDENOTE]
We remain bullish and believe stock prices are positioned
to resume their value-driven advance.
4
- - SLUGGISH JOB GROWTH WILL SLOW CONSUMER SPENDING. While unemployment is near
its historical average, investors have sold stocks on the belief that
disappointing job growth will slow consumer spending. Having examined
various measures of consumer spending going back to the 1960s, I have found
no evidence of a direct link between employment and spending. Interestingly
enough, the data would seem to suggest that spending has triggered
employment, not the other way around.
FAVORING CYCLICAL INDUSTRIES
Naturally, as evidenced by the market dip in mid-March 2004, it is quite normal
for news events to distract investors and interrupt the path back toward fair
value. Nevertheless, we remain bullish and believe stock prices are positioned
to resume their value-driven advance. Our valuation model suggests that stocks
continue to be priced at discounts relative to intrinsic value, and that market
action late in the period was merely a temporary setback.
This interruption, however, was not without its impact. Since late January
2004, market leadership has lacked a common theme, as top-performing cyclical
and economically sensitive sectors such as technology, consumer discretionary,
industrials, and materials turned increasingly volatile. At the same time,
defensive groups such as healthcare, utilities and consumer staples demonstrated
strength amid market pullbacks.
We don't expect an economic boom; we think the economic environment is
healthy. Nor do we believe the market needs a big news event to be propelled
forward. Despite these seemingly short-lived theme reversals, we think it best
to continue favoring underpriced cyclical industries, and ride through the
occasional turbulence.
A NEW NAME
Effective January 2004, Meridian Investment Management Corporation, adviser to
the ICON Funds, changed its name to ICON Advisers, Inc. More than just a name
change, we believe it represents an opportunity for our advisory firm to
introduce our story to a wider audience. The name involves many strategic
marketing and communications initiatives, including a new website for
shareholders like you and financial advisers, which we plan to launch this
summer.
In closing, we once again experienced a market that defies conventional
wisdom. ICON thanks you for the opportunity to help guide you through it.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and
Chief Investment Officer of the Adviser
[SIDENOTE]
Despite short-lived theme reversals and temporary setbacks, our valuation model
suggests stocks are still priced below intrinsic value.
5
Management Overview
ICON CONSUMER DISCRETIONARY FUND
A discussion with Robert Straus, CMT, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Consumer Discretionary Fund appreciated 17.47% for the six-month period
ended March 31, 2004, keeping pace with the 17.39% return for its
sector-specific benchmark, the S&P 1500 Consumer Discretionary Index, and
outperforming the 14.75% return of its broad benchmark, the S&P 1500 Index.
Total returns for other periods as of March 31, 2004 are listed on page 8.
Although the Fund was able to maintain its edge over both benchmarks, the second
half of the period was marred by a sharp, short-term market pullback, which
detracted from returns of economically sensitive sectors such as Consumer
Discretionary. While the Fund surrendered some gains during this downdraft, our
valuation and relative strength readings suggested that market leadership
remained concentrated in cyclical industries. As a result, the Fund used the
retreat as an opportunity to fortify selected positions.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Even though our approach views investment style as irrelevant, the Fund
benefited from a value bias during the period, as measured on a
price-to-earnings (P/E) basis. Whereas short-lived theme reversals lifted more
defensive issues during the two-month pullback, underpriced stocks encountered
less resistance than more richly valued shares.
For the record, the Fund does not utilize P/E ratio as a valuation measure,
regarding it as a static proxy. Instead, we calculate a value-to-price ratio
(V/P) for each industry and security. This is viewed as more meaningful since it
considers the effects of earnings, projected growth, risk, and interest rates
(opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Although the Fund's valuation and relative strength readings supported an upward
move during the period, pervasive fear continued to dominate the equity
landscape. Most prominent was the fear of terrorism, which heightened following
several overseas incidents. These events produced harsh sell-offs, and the
underlying uncertainty weighed heavily on the markets.
Also contributing to investors' anxiety were worries surrounding overheated
valuations, stagnant job creation, and the near-term possibility of higher
interest rates. Although we do not factor these measures into our investment
process, they affected the investment environment the Fund faced. While these
perceived concerns fueled skepticism over the sustainability of the economic
recovery, the market seemingly refused to acknowledge that a recovery was not
only taking place, but was actually gaining traction.
HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT THE FUND'S PERFORMANCE?
With respect to major industry moves during the period, the Fund sold its
holdings in the general merchandise stores and computer & electronics retail
industries, neither of which showed strong relative performance. Subsequently,
value and relative strength were detected in industries such as auto parts &
equipment, which was increased significantly, and apparel, accessories & luxury
goods. In addition, the Fund trimmed an overweight position in specialty stores,
taking the opportunity to lock in profits.
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 100.2%
Top 10 Equity Holdings 26.1%
Number of Stocks 61
Cash Equivalents 0.8%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Helen of Troy Limited 3.3%
Winnebago Industries, Inc. 2.8%
Aftermarket Technology Corp. 2.8%
Monaco Coach Corporation 2.8%
Lear Corporation 2.7%
West Marine, Inc. 2.4%
Keystone Automotive Industries, Inc. 2.4%
BorgWarner, Inc. 2.4%
Kenneth Cole Productions, Inc. 2.3%
DaimlerChrysler AG 2.2%
Percentages are based upon net assets.
6
Several individual Fund holdings contributed significantly to performance during
the period, including recreational vehicle manufacturer Monaco Coach Corp. and
motor home maker Winnebago Industries, Inc. Both benefited from favorable demand
trends and rising order backlog. Elsewhere, automotive original equipment
manufacturers (OEM) business, particularly in high-end audio and infotainment
systems, continued to drive growth for Harman International Industries, Inc.,
which added to the Fund's return during the period. When Harman's value/price
ratio fell during the period, the company met our sell criteria.
In contrast, among the Fund's poorest-performing stocks was video game retailer
Electronics Boutique Holdings Corp., which fell on lower hardware sales and was
sold from the Fund when the computer & electronics retail industry position was
replaced. Structural component manufacturer Tower Automotive, Inc. also declined
when the company announced an earnings-per-share loss related to a joint
venture. Meanwhile, men's apparel retailer Jos. A. Bank Clothiers, Inc. slid on
concerns ranging from inventory and debt levels to negative publicity.
WHAT IS THE INVESTMENT OUTLOOK FOR THE CONSUMER DISCRETIONARY SECTOR?
Our outlook for the Consumer Discretionary sector is positive, based on the
belief that the cyclical theme remains firmly in place. The sector continues to
be priced at a discount to its intrinsic worth based on our valuation
methodology, suggesting that further upside potential still exists.
Given the sector's cyclical orientation, the Fund also stands to benefit from
the economic expansion that appears to be taking hold in the U.S. This
combination of cyclically oriented, underpriced industries and an expanding
domestic economy provides the sector with both the opportunity and the catalyst
to outperform the broader market for the foreseeable future.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Our valuation methods led us to overweight small- and mid-capitalization
companies, which added to relative performance as large-cap securities
underperformed.
- - Among the Fund's strongest-performing holdings during the period were
Monaco Coach Corp. and Winnebago Industries, Inc.
- - Our methodology led us to hold a significant position in specialty stores,
and the Fund's holdings in this industry performed strongly relative to the
sector-specific Index.
- - Conversely, the worst industry performer in the Fund was computer &
electronics retail.
- - Our stockpicking in the apparel & accessories industry, an overweight
position, added to returns.
7
Management Overview (continued)
ICON CONSUMER DISCRETIONARY FUND
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Specialty Stores 17.0%
Automobile Manufacturers 13.4%
Apparel Retail 13.3%
Homebuilding 11.8%
Auto Parts & Equipment 11.3%
Apparel, Accessories & Luxury Goods 8.2%
Home Furnishings 5.3%
Household Appliances 5.3%
Department Stores 4.3%
Tobacco 3.9%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 7/9/97
- ------------------------------------------------------------------------------------------
ICON Consumer Discretionary Fund 17.47% 56.14% 7.16% 5.33%
- ------------------------------------------------------------------------------------------
S&P 1500 Consumer Discretionary Index 17.39% 44.87% -0.41% 7.27%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 0.09% 5.43%
- ------------------------------------------------------------------------------------------
</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.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON CONSUMER S&P 1500 CONSUMER
DISCRETIONARY FUND DISCRETIONARY INDEX S&P 1500 INDEX
------------------ ------------------- --------------
7/9/97 10000 10000 10000
3/31/98 11140 13276 12321
3/31/99 10832 16371 14207
3/31/00 10503 17620 16994
3/31/01 9756 13937 13550
3/31/02 13379 14959 13837
3/31/03 9080 11069 10425
3/31/04 14178 16036 14275
</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.
8
Schedule of Investments
(unaudited)
ICON CONSUMER DISCRETIONARY FUND
SCHEDULE OF INVESTMENTS
March 31, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
COMMON STOCKS 100.2%
CONSUMER DISCRETIONARY 94.6%
APPAREL, ACCESSORIES & LUXURY GOODS 8.2%
262,000 DHB Industries, Inc.(a) $ 1,930,940
116,100 Fossil, Inc.(a) 3,871,935
133,300 Kenneth Cole
Productions, Inc. 4,545,530
58,000 Polo Ralph Lauren
Corporation 1,988,240
169,600 Quiksilver, Inc.(a) 3,705,760
- ---------------------------------------------------
16,042,405
APPAREL RETAIL 13.3%
55,000 Abercrombie & Fitch Co. 1,861,200
56,300 Aeropostale, Inc.(a) 2,041,438
94,100 Cache, Inc.(a) 3,102,477
73,400 Chico's FAS, Inc.(a) 3,405,760
86,100 The Gap, Inc. 1,887,312
100,000 Hot Topic, Inc.(a) 2,645,000
103,100 Jos. A. Bank Clothiers,
Inc.(a) 3,711,600
70,300 Mothers Work, Inc.(a) 1,873,495
124,400 Ross Stores, Inc. 3,807,884
74,000 The TJX Companies, Inc. 1,817,440
- ---------------------------------------------------
26,153,606
AUTO PARTS & EQUIPMENT 11.3%
368,000 Aftermarket Technology
Corp.(a) 5,405,920
54,900 BorgWarner, Inc. 4,657,167
171,500 Keystone Automotive
Industries, Inc.(a) 4,692,240
86,000 Lear Corporation 5,328,560
407,000 Tower Automotive,
Inc.(a) 2,051,280
- ---------------------------------------------------
22,135,167
AUTOMOBILE MANUFACTURERS 13.4%
105,100 DaimlerChrysler AG(a)f) 4,386,874
251,000 Ford Motor Company 3,406,070
72,600 General Motors
Corporation 3,419,460
201,500 Monaco Coach Corporation 5,400,200
159,400 Thor Industries, Inc. 4,281,484
177,600 Winnebago Industries,
Inc. 5,535,792
- ---------------------------------------------------
26,429,880
DEPARTMENT STORES 4.3%
79,300 Federated Department
Stores, Inc. 4,286,165
76,600 The Neiman Marcus Group,
Inc. 4,131,804
- ---------------------------------------------------
8,417,969
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
HOMEBUILDING 11.8%
68,200 Centex Corporation $ 3,686,892
98,700 D.R. Horton, Inc. 3,496,941
89,600 Hovnanian Enterprises,
Inc.(a) 3,866,240
38,100 Meritage Corporation(a) 2,828,925
49,800 Pulte Homes, Inc. 2,768,880
29,300 The Ryland Group, Inc. 2,602,719
85,000 Toll Brothers, Inc.(a) 3,861,550
- ---------------------------------------------------
23,112,147
HOME FURNISHINGS 5.3%
62,500 Ethan Allen Interiors
Inc. 2,578,750
133,900 Furniture Brands
International, Inc. 4,311,580
39,500 Hooker Furniture
Corporation 917,980
31,100 Mohawk Industries,
Inc.(a) 2,561,085
- ---------------------------------------------------
10,369,395
HOME IMPROVEMENT RETAIL 0.6%
21,300 Lowe's Companies, Inc. 1,195,569
HOUSEHOLD APPLIANCES 5.3%
146,900 Craftmade International,
Inc. 3,975,114
210,300 Helen of Troy
Limited(a)f) 6,521,403
- ---------------------------------------------------
10,496,517
INTERNET RETAIL 2.6%
242,000 1-800-FLOWERS.COM,
Inc.(a) 2,315,940
39,300 eBay Inc.(a) 2,724,669
- ---------------------------------------------------
5,040,609
SPECIALTY STORES 17.0%
50,100 Advance Auto Parts,
Inc.(a) 2,037,567
127,700 Barnes & Noble, Inc.(a) 4,163,020
138,900 Big 5 Sporting Goods
Corporation(a) 3,507,225
37,700 Dick's Sporting Goods,
Inc.(a) 2,191,878
50,100 O'Reilly Automotive,
Inc.(a) 2,006,004
125,100 PETsMART, Inc. 3,410,226
86,200 The Sports Authority,
Inc.(a) 3,454,896
66,300 Staples, Inc. 1,683,357
110,200 United Auto Group, Inc. 3,015,072
149,300 West Marine, Inc.(a) 4,755,205
49,600 Zale Corporation(a) 3,052,880
- ---------------------------------------------------
33,277,330
TIRE & RUBBER 1.5%
146,000 Cooper Tire & Rubber
Company 2,941,900
- ---------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 185,612,494
INFORMATION TECHNOLOGY 1.5%
HOME ENTERTAINMENT SOFTWARE 1.5%
77,800 Take-Two Interactive
Software, Inc.(a) 2,861,484
- ---------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 2,861,484
</Table>
9
Schedule of Investments (continued)
(unaudited)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
LEISURE AND CONSUMER STAPLES 3.9%
TOBACCO 3.9%
69,000 Altria Group, Inc. $ 3,757,050
63,000 R.J. Reynolds Tobacco
Holdings, Inc. 3,811,500
- ---------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 7,568,550
MATERIALS 0.2%
CONSTRUCTION MATERIALS 0.2%
1,511 Eagle Materials Inc. 88,922
5,081 Eagle Materials Inc.,
Class B 296,731
- ---------------------------------------------------
TOTAL MATERIALS 385,653
- ---------------------------------------------------
TOTAL COMMON STOCKS
(COST $153,768,277) 196,428,181
SHORT-TERM INVESTMENTS 0.8%
U.S. GOVERNMENT AGENCIES 0.7%
$1,441,000 FHLB Discount Note,
0.7500%, 4-1-04 1,441,000
- ---------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 1,441,000
VARIABLE RATE DEMAND NOTE 0.1%
191,471 American Family Demand
Note, 0.6908%# 191,471
- ---------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 191,471
- ---------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,632,471) 1,632,471
- ---------------------------------------------------
TOTAL INVESTMENTS 101.0%
(COST $155,400,748) 198,060,652
- ---------------------------------------------------
LIABILITIES LESS OTHER ASSETS (1.0%) (1,918,818)
- ---------------------------------------------------
NET ASSETS 100.0% $196,141,834
- ---------------------------------------------------
</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 March 31, 2004.
f Foreign security
Dates shown on securities are the due dates of the obligation.
10
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 appreciated 32.77% for the six-month period ended March 31,
2004, outpacing the 21.94% return for its sector-specific benchmark, the S&P
1500 Energy Index. The Fund also surpassed its broad benchmark, the S&P 1500
Index, which returned 14.75%. Total returns for other periods as of March 31,
2004 are listed on page 13.
Our independent analysis worked in the Fund's favor during the period, as
valuation and relative strength readings led us to construct a portfolio that
differed considerably from the S&P 1500 Energy Index. Whereas the index
emphasized holdings in the integrated oil & gas industry, the Fund was more
heavily weighted in industries that led the sector's advance, such as oil & gas
refining & marketing & transportation, oil & gas exploration & production, and
oil & gas equipment & services. Stock selection also proved rewarding in that
the Fund's top performers more than offset its laggards.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Even though our approach considers investment style irrelevant, the Fund
benefited from a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. Although richly valued shares suffered amid
winter's two-month cyclical downdraft, underpriced stocks were better positioned
to withstand the pullback.
For the record, the Fund does not utilize P/E ratio as a valuation measure,
regarding it as a static proxy. Instead, we calculate a proprietary
value-to-price ratio (V/P) for each industry and security. This is viewed as
more meaningful since it considers the effects of earnings, projected growth,
risk, and interest rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Broadly speaking, rising prices, favorable supply/demand dynamics, and an
improving global economy bolstered the Energy sector during the period. However,
given its sweeping global significance, the resurfacing of geopolitical tensions
gave rise to supply concerns, which led to several pronounced market sell-offs.
Fear was undeniable in the wake of overseas terrorist events.
Closer to home, stocks recorded solid gains despite several interruptions.
Patience was at a premium as investors were quick to take profits, whether
motivated by perceptions of overheated valuations, rising interest rates, or
lackluster job growth. While most industries remained underpriced based on our
estimate of fair value, market psychology remained decidedly negative even as
economic fundamentals and corporate earnings demonstrated incremental
improvements.
HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
During the period, the Fund maintained overweight positions in leading
industries such as oil & gas refining & marketing & transportation, oil & gas
exploration & production, and oil & gas equipment & services. Much of the Fund's
exposure to integrated oil & gas was in the form of ADRs or American depository
receipts. Having begun the period at relatively deeper discounts to U.S. stocks,
these U.S. dollar-denominated shares of foreign companies generally closed a
much wider valuation gap.
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 95.0%
Top 10 Equity Holdings 36.5%
Number of Stocks 51
Cash Equivalents 8.2%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Ultra Petroleum Corp. 4.6%
Patina Oil & Gas Corporation 4.5%
Ashland Inc. 3.9%
Sunoco, Inc. 3.9%
Petroleo Brasileiro S.A. 3.8%
National-Oilwell, Inc. 3.5%
Cal Dive International, Inc. 3.2%
Headwaters Incorporated 3.1%
Repsol YPF, S.A. 3.0%
Eni S.p.A. 3.0%
Percentages are based upon net assets.
11
Management Overview (continued)
ICON ENERGY FUND
The Fund held a higher-than-normal cash position due to lagging relative
strength measures early in the period. While our goal is to keep the Fund fully
invested, we are prepared to hold cash if our valuation system is unable to
detect opportunities that meet our strict valuation criteria.
Among the Fund's individual holdings, companies that generated the greatest
contributions to returns during the period were Ultra Petroleum Corp., which
soared when analysts upgraded this emerging exploration and production company,
and Patina Oil & Gas Corp., which advanced as production gains translated into
higher revenues.
On the other hand, Fund performance was negatively impacted by equipment
manufacturer Hydril, which slumped when an anticipated upturn in drilling failed
to materialize. Oil States International, which provides specialty products and
services to oil and gas drilling and production companies, had a sharp sell-off
after announcing that projected offshore sales would be down sequentially in
2004.
WHAT IS THE INVESTMENT OUTLOOK FOR THE ENERGY SECTOR?
Although our system continues to indicate leadership in the refining & marketing
& transportation and exploration & production industries, overall we believe the
sector is fairly valued. Therefore, we do not anticipate significant shifts in
industry allocations, and in light of lowered 2005 earnings forecasts, we are
hesitant to put excess cash to work. That said, we continue to monitor the
situation closely, looking for industries that are exhibiting relative strength
and trading below our estimates of fair value.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - The Fund's holdings in small- and mid-cap stocks, determined through our
valuation model, contributed to relative performance as they outpaced
large-cap securities.
- - Among the Fund's strongest-performing holdings during the period were Ultra
Petroleum Corp. and Patina Oil & Gas Corp.
- - Our methodology led us to hold a significant position in the oil & gas
exploration & production industry, and the Fund's holdings in this area
performed strongly relative to the sector-specific Index.
- - All industry positions in the Fund performed positively in the period.
- - Oil States International, Inc. and Hydril negatively impacted performance
during the period.
- --------------------------------------------------------------------------------
TOP INDUSTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Oil & Gas Exploration & Production 25.3%
Oil & Gas Equipment & Services 23.7%
Integrated Oil & Gas 21.9%
Oil & Gas Refining & Marketing & Transportation 15.5%
Commodity Chemicals 3.1%
Construction & Engineering 2.8%
Oil & Gas Drilling 1.6%
Industrial Machinery 1.1%
</Table>
Percentages are based upon net assets.
12
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 11/5/97
- ------------------------------------------------------------------------------------------
ICON Energy Fund 32.77% 48.85% 24.54% 11.57%
- ------------------------------------------------------------------------------------------
S&P 1500 Energy Index 21.94% 31.58% 7.32% 4.75%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 0.09% 4.84%
- ------------------------------------------------------------------------------------------
</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.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON ENERGY FUND S&P 1500 ENERGY INDEX S&P 1500 INDEX
---------------- --------------------- --------------
11/5/97 10000 10000 10000
3/31/98 9330 9872 11683
3/31/99 6725 9455 13472
3/31/00 11090 11203 16115
3/31/01 15007 11875 12849
3/31/02 16381 12350 13121
3/31/03 13535 10230 9886
3/31/04 20147 13460 13536
</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.
13
Schedule of Investments
(unaudited)
ICON ENERGY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
COMMON STOCKS 95.0%
ENERGY 88.0%
INTEGRATED OIL & GAS 21.9%
30,900 China Petroleum and
Chemical Corporation --
ADR $ 1,183,470
15,800 ConocoPhillips 1,102,998
34,400 Eni S.p.A. -- ADR 3,472,680
50,000 Marathon Oil Corporation 1,683,500
35,900 Occidental Petroleum
Corporation 1,653,195
43,100 Petro-Canada (f) 1,889,935
15,100 PetroChina Company
Limited -- ADR 771,610
121,100 PetroKazakhstan Inc. (f) 3,411,387
134,000 Petroleo Brasileiro
S.A.(a) -- ADR 4,489,000
167,400 Repsol YPF, S.A. -- ADR 3,483,594
85,400 Suncor Energy, Inc. (f) 2,335,690
- ---------------------------------------------------
25,477,059
OIL & GAS DRILLING 1.6%
19,100 Helmerich & Payne, Inc. 547,215
15,600 Noble Corporation(a) (f) 599,352
25,100 Unit Corporation(a) 688,242
- ---------------------------------------------------
1,834,809
OIL & GAS EQUIPMENT & SERVICES 23.7%
142,400 Cal Dive International,
Inc.(a) 3,678,192
81,600 Core Laboratories
N.V.(a) (f) 1,729,920
63,500 FMC Technologies,
Inc.(a) 1,716,405
51,800 Hydril(a) 1,357,160
117,000 Maverick Tube
Corporation(a) 2,755,350
145,200 National-Oilwell,
Inc.(a) 4,106,256
88,700 Oceaneering
International, Inc.(a) 2,700,915
35,100 Offshore Logistics,
Inc.(a) 809,055
152,100 Oil States
International, Inc.(a) 2,044,224
34,200 SEACOR Holdings Inc.(a) 1,404,936
109,100 Superior Energy
Services, Inc.(a) 1,099,728
77,400 TETRA Technologies,
Inc.(a) 2,022,462
34,900 Tidewater Inc. 981,737
69,000 Varco International,
Inc.(a) 1,242,690
- ---------------------------------------------------
27,649,030
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
OIL & GAS EXPLORATION & PRODUCTION 25.3%
24,200 Anadarko Petroleum
Corporation $ 1,255,012
112,800 Chesapeake Energy
Corporation 1,511,520
103,714 Cimarex Energy Co.(a) 2,997,335
119,300 Comstock Resources,
Inc.(a) 2,370,491
108,000 Denbury Resources
Inc.(a) 1,820,880
50,200 Evergreen Resources,
Inc.(a) 1,724,370
48,900 Newfield Exploration
Company(a) 2,343,777
21,200 Noble Energy, Inc. 998,520
198,836 Patina Oil & Gas
Corporation 5,219,445
42,700 Prima Energy
Corporation(a) 1,475,285
56,600 Remington Oil & Gas
Corporation(a) 1,117,850
176,800 Ultra Petroleum
Corp.(a)(f) 5,305,768
50,875 XTO Energy, Inc. 1,284,085
- ---------------------------------------------------
29,424,338
OIL & GAS REFINING & MARKETING &
TRANSPORTATION 15.5%
97,400 Ashland Inc. 4,528,126
119,500 Frontier Oil Corporation 2,315,910
79,000 Overseas Shipholding
Group, Inc. 2,883,500
30,400 Sunoco, Inc. 1,896,352
65,500 Teekay Shipping
Corporation (f) 4,512,950
32,500 Valero Energy
Corporation 1,948,700
- ---------------------------------------------------
18,085,538
- ---------------------------------------------------
TOTAL ENERGY 102,470,774
INDUSTRIALS 3.9%
CONSTRUCTION & ENGINEERING 2.8%
48,000 Chicago Bridge & Iron
Company N.V. -- ADR 1,335,840
68,100 URS Corporation(a) 1,959,918
- ---------------------------------------------------
3,295,758
INDUSTRIAL MACHINERY 1.1%
60,300 Flowserve Corporation(a) 1,263,285
- ---------------------------------------------------
TOTAL INDUSTRIALS 4,559,043
MATERIALS 3.1%
COMMODITY CHEMICALS 3.1%
142,700 Headwaters
Incorporated(a) 3,655,974
- ---------------------------------------------------
TOTAL MATERIALS 3,655,974
- ---------------------------------------------------
TOTAL COMMON STOCKS
(COST $83,452,927) 110,685,791
SHORT-TERM INVESTMENTS 8.2%
U.S. GOVERNMENT AGENCIES 7.0%
$8,152,000 FHLB Discount Note,
0.7500%, 4-1-04 8,152,000
- ---------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 8,152,000
</Table>
14
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
VARIABLE RATE DEMAND NOTE 1.2%
1,351,345 American Family Demand
Note, 0.6908%# $ 1,351,345
- ---------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 1,351,345
- ---------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $9,503,345) 9,503,345
- ---------------------------------------------------
TOTAL INVESTMENTS 103.2%
(COST $92,956,272) 120,189,136
- ---------------------------------------------------
LIABILITIES LESS OTHER ASSETS (3.2%) (3,708,290)
- ---------------------------------------------------
NET ASSETS 100.0% $116,480,846
- ---------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign security
Dates shown on securities are the due dates of the obligation.
15
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 24.53% for the six-month period ended March
31, 2004, outpacing the 17.78% return of its sector-specific benchmark, the S&P
1500 Financials Index, and also surpassing the 14.75% return for its broad
benchmark, the S&P 1500 Index. Total returns for other periods as of March 31,
2004 are listed on page 18.
In focusing on underpriced industries demonstrating relative market strength,
the Fund was able to avert the pressures that came to bear on more economically
sensitive sectors. Although our overall readings indicated that a recovery-based
theme remained in place, a two-month cyclical downdraft in early 2004 and
subsequent theme reversals lifted more defensive-oriented industries.
Improving credit quality also played a key role as a recovering economy
alleviated concerns linked to perceived default rates. With short-term interest
rates still at 45-year lows, and longer-term rates slowly moderating to
historical levels, the absence of undue effects benefited the Fund.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Even though our approach views investment style as irrelevant, the Fund profited
from a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. While short-lived theme reversals boosted
defensive issues during the winter correction, underpriced shares encountered
less resistance than those viewed to be more richly valued.
The Fund does not utilize P/E ratio as a valuation measure, regarding it as a
static proxy. Instead, we calculate a proprietary value-to-price ratio (V/P) for
each industry and security. We believe this to be more meaningful since it
considers the effects of earnings, projected growth, risk, and interest rates
(opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Stocks recorded solid gains during the period even as investor sentiment
remained noticeably pessimistic. Amid steady advances in economic and company
fundamentals, markets were often driven by misperceptions of overheated
valuations, rising interest rates and lackluster job growth. Nevertheless, the
Fund's valuation and relative strength readings continued to support an upward
trend, particularly as the recovery demonstrated signs of sustainability.
What our system could not account for was the reigniting of tensions surrounding
terrorism and world unrest. While economically sensitive sectors bore the brunt
of sharp downturns in the wake of overseas terrorist events, so-called
all-weather sectors such as Financials were better positioned to withstand these
event-driven sell-offs.
HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
The Fund's relative outperformance can be attributed to its sizable exposure to
consumer finance, its largest industry weighting, as well as to contributions
from the real estate investment trust and life & health insurance industries.
Consumer finance, in particular, benefited as lower-than-anticipated default
rates eased credit concerns.
The investment banking & brokerage industry was significantly reduced when it
exceeded fair value following a run-up earlier in the period. At
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 100.2%
Top 10 Equity Holdings 29.1%
Number of Stocks 49
Cash Equivalents 0.0%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
J.P. Morgan Chase & Co. 3.9%
American International Group, Inc. 3.3%
Investors Financial Services Corp. 3.0%
Loews Corporation 2.8%
First Cash Financial Services, Inc. 2.8%
AmeriCredit Corp. 2.8%
Novastar Financial, Inc. 2.7%
IndyMac Bancorp, Inc. 2.6%
Bank One Corporation 2.6%
Allmerica Financial Corporation 2.6%
Percentages are based upon net assets.
16
the same time, declining relative strength limited the Fund's exposure to
regional banks, while lack of leadership led us to trim asset management &
custody banks by half.
Among the Fund's leading individual performance contributors, auto finance
company AmeriCredit Corp. posted better-than-expected earnings as credit quality
improvements allowed the company to shave its loan loss reserves. Subprime
mortgage lender NovaStar Financial Inc., which operates as a real estate
investment trust, also reported strong earnings-per-share gains in addition to
announcing a 2-for-1 stock split. Pawnshop operator First Cash Financial
Services Inc. also added significantly to Fund returns as it capitalized on its
retail orientation to boost earnings.
Fund performance was negatively impacted by title insurance provider Stewart
Information Services Corp., whose stock price retreated as higher mortgage rates
curbed refinancing activity. A decline in loan originations also hurt mortgage
banker Washington Mutual, Inc., which warned of contracting margins. Transaction
services provider Investment Technology Group Inc. fell on reports of lower
trading volumes. All were ultimately sold as their relative strength declined.
WHAT IS THE INVESTMENT OUTLOOK FOR THE FINANCIALS SECTOR?
Looking ahead, our system indicates notable value and prospective leadership
across the entire insurance group, including multi-line insurance, life & health
insurance and property & casualty insurance. Based on our readings, we have
increased each of these weightings, with multi-line insurance, which had little
representation at the beginning of the period, rising to 12.8% of the Fund at
period-end.
At the same time, we continue to detect weakness in regional banks and
diversified banks, prompting us to limit the Fund's exposure to these
industries. Nevertheless, regional banks may be close to turning a corner and
for that reason, we will continue to watch the industry closely.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - The Fund favored small- and mid-cap stocks, which contributed to relative
performance as they outperformed large-cap securities.
- - Among the Fund's strongest-performing holdings during the period were
AmeriCredit Corp. and NovaStar Financial, Inc.
- - Our methodology led us to hold an overweight position in the consumer
finance industry, and the Fund's holdings in this industry performed
strongly relative to the sector-specific Index.
- - Though slightly underweight vs. the Index, real estate investment trusts
contributed significantly to returns.
- - The industry holdings indicated by our valuation readings all performed
positively for the period.
17
Management Overview (continued)
ICON FINANCIAL FUND
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Consumer Finance 17.2%
Multi-Line Insurance 12.8%
Thrift & Mortgage Finance 11.6%
Property & Casualty Insurance 8.7%
Diversified Banks 7.3%
Life & Health Insurance 6.8%
Regional Banks 6.3%
Insurance Brokers 6.1%
Reinsurance 5.2%
Asset Management & Custody Banks 4.7%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 7/1/97
- ------------------------------------------------------------------------------------------
ICON Financial Fund 24.53% 61.74% 12.12% 11.66%
- ------------------------------------------------------------------------------------------
S&P 1500 Financials Index 17.78% 45.54% 5.96% 9.94%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 0.09% 5.71%
- ------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON FINANCIAL FUND S&P 1500 FINANCIALS INDEX S&P 1500 INDEX
------------------- ------------------------- --------------
7/1/97 10000 10000 10000
3/31/98 12002 13426 12552
3/31/99 11877 14190 14474
3/31/00 11343 13923 17314
3/31/01 15598 15435 13804
3/31/02 17626 16526 14097
3/31/03 13012 13027 10621
3/31/04 21045 18958 14543
</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.
18
Schedule of Investments
(unaudited)
ICON FINANCIAL FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------
COMMON STOCKS 100.2%
FINANCIAL 100.2%
ASSET MANAGEMENT & CUSTODY BANKS 4.7%
98,700 The Bank of New York
Company, Inc. $ 3,109,050
129,600 Investors Financial
Services Corp. 5,355,072
- --------------------------------------------------
8,464,122
CONSUMER FINANCE 17.2%
296,000 AmeriCredit Corp.(a) 5,040,880
40,300 Capital One Financial
Corporation 3,039,829
172,300 Cash America
International, Inc. 3,971,515
85,100 CompuCredit
Corporation(a) 1,799,014
151,000 First Cash Financial
Services, Inc.(a) 5,078,130
158,000 MBNA Corporation 4,365,540
383,300 Metris Companies Inc.(a) 3,081,732
225,200 Providian Financial
Corporation(a) 2,950,120
92,600 World Acceptance
Corporation(a) 1,806,626
- --------------------------------------------------
31,133,386
DIVERSIFIED BANKS 7.3%
87,500 Bank One Corporation 4,770,500
77,200 Comerica Incorporated 4,193,504
91,200 Wachovia Corporation 4,286,400
- --------------------------------------------------
13,250,404
DIVERSIFIED CAPITAL MARKETS 3.9%
169,500 J.P. Morgan Chase & Co. 7,110,525
INSURANCE BROKERS 6.1%
144,800 Aon Corporation 4,041,368
81,400 Arthur J. Gallagher & Co. 2,651,198
115,000 Hilb, Rogal and Hamilton
Company 4,381,500
- --------------------------------------------------
11,074,066
INVESTMENT BANKING & BROKERAGE 1.7%
30,100 The Goldman Sachs Group,
Inc. 3,140,935
LIFE & HEALTH INSURANCE 6.8%
98,400 AmerUs Group Co. 3,970,440
97,950 Delphi Financial Group,
Inc. 4,115,859
91,400 Lincoln National
Corporation 4,325,048
- --------------------------------------------------
12,411,347
</Table>
<Table>
- --------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
MULTI-LINE INSURANCE 12.8%
134,400 Allmerica Financial
Corporation(a) $ 4,643,520
135,000 American Financial Group,
Inc. 4,027,050
82,700 American International
Group, Inc. 5,900,645
54,700 Hartford Financial
Services Group, Inc. 3,484,390
86,000 Loews Corporation 5,079,160
- --------------------------------------------------
23,134,765
OTHER DIVERSIFIED FINANCIAL SERVICES 3.6%
52,100 Citigroup Inc. 2,693,570
170,500 ING Groep N.V. -- ADR 3,759,525
- --------------------------------------------------
6,453,095
PROPERTY & CASUALTY INSURANCE 8.7%
79,500 ACE Limited(f) 3,391,470
38,500 The Allstate Corporation 1,750,210
115,510 Fidelity National
Financial, Inc. 4,574,196
53,900 MBIA Inc. 3,379,530
63,500 SAFECO Corporation 2,741,295
- --------------------------------------------------
15,836,701
REAL ESTATE INVESTMENT TRUSTS 2.7%
74,400 Novastar Financial, Inc. 4,906,680
REGIONAL BANKS 6.3%
190,500 The Colonial BancGroup,
Inc. 3,524,250
67,700 FirstMerit Corporation 1,763,585
61,800 Irwin Financial
Corporation 1,667,364
111,200 UCBH Holdings, Inc. 4,452,448
- --------------------------------------------------
11,407,647
REINSURANCE 5.2%
39,800 Everest Re Group, Ltd.(f) 3,400,512
73,200 Scottish Re Group
Limited(f) 1,770,708
48,600 Transatlantic Holdings,
Inc. 4,238,406
- --------------------------------------------------
9,409,626
SPECIALIZED FINANCE 1.6%
76,300 CIT Group Inc. 2,903,215
THRIFTS & MORTGAGE FINANCE 11.6%
71,000 Astoria Financial
Corporation 2,700,130
45,700 Countrywide Financial
Corporation 4,382,630
35,700 Freddie Mac 2,108,442
132,200 IndyMac Bancorp, Inc. 4,797,538
94,700 New Century Financial
Corporation 4,598,632
66,600 The PMI Group, Inc. 2,488,176
- --------------------------------------------------
21,075,548
- --------------------------------------------------
TOTAL FINANCIAL 181,712,062
- --------------------------------------------------
TOTAL COMMON STOCKS
(COST $151,780,814) 181,712,062
</Table>
19
Schedule of Investments (continued)
(unaudited)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------
SHORT-TERM INVESTMENT 0.0%
VARIABLE RATE DEMAND NOTE
$ 8,263 American Family Demand
Note, 0.6908%# $ 8,263
- --------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $8,263) 8,263
- --------------------------------------------------
TOTAL INVESTMENTS 100.2%
(COST $151,789,077) 181,720,325
- --------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.2%) (356,398)
- --------------------------------------------------
NET ASSETS 100.0% $181,363,927
- --------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign security
20
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 14.82% for the six-month period ended March
31, 2004, beating the 8.94% return of its sector-specific benchmark, the S&P
1500 Healthcare Index, and keeping pace with its broad benchmark, the S&P 1500
Index, which gained 14.75%. Total returns for other periods as of March 31, 2004
are listed on page 23.
The Fund's flexibility and our focus on underpriced industries demonstrating
market strength worked in the Fund's favor during the period. Although our
overall valuation and relative strength readings during the period led us to
believe that a recovery-based theme remained in place, a two-month cyclical
pullback in early 2004 and subsequent theme reversals lifted more
defensive-minded areas. By charting a less volatile path than its cyclical
counterparts, the Fund benefited.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Even though our approach does not consider investment style, the Fund's balance
between growth and value mirrored the broader market during the period, as
measured on a price-to-earnings (P/E) basis. Nevertheless, the Fund detected a
higher level of pricing discrepancy than was evident by means of traditional
metrics. It is important to note that the Fund does not utilize P/E ratio as a
valuation measure, regarding it as a static proxy. Instead, we calculate a
proprietary value-to-price ratio (V/P) for each industry and security. We view
this as more meaningful since it considers the effects of earnings, projected
growth, risk, and interest rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Solid gains during the period did little to counter a market psychology that had
turned decidedly pessimistic. Fundamentals aside, profit taking was fast and
furious, often driven by dubious perceptions of overheated valuations, rising
interest rates, and lackluster job growth. However, even as investors chose to
overlook compelling signs to the contrary, the fact remained that the economy,
in our view, had not only stabilized, but was now beginning to accelerate.
Adding to the uncertainty, though, was the underpinning of terrorism, which
re-emerged in the wake of overseas terrorist events. While economically
sensitive industries bore the brunt of the cyclical downturn, so-called
all-weather sectors such as Healthcare relied upon defensive tendencies as
insulation against event-driven sell-offs.
HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
The Fund's significant outperformance relative to its sector-specific benchmark
can be attributed to overweight positions in managed health care and health care
services, in addition to judicious exposure to selected biotechnology stocks.
Gains in managed health care reflected improved execution and mounting
consolidation, while health care services benefited from revenue growth and
favorable demographic trends.
Avoidance of large-cap pharmaceuticals, a core component of the Fund's
sector-specific index, also worked to the Fund's advantage given
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 97.8%
Top 10 Equity Holdings 22.3%
Number of Stocks 72
Cash Equivalents 5.6%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Aetna Inc. 2.5%
DaVita, Inc. 2.4%
Community Health Systems, Inc. 2.3%
LifePoint Hospitals, Inc. 2.2%
Renal Care Group, Inc. 2.2%
Province Healthcare Company 2.2%
United Surgical Partners International, Inc. 2.2%
Sierra Health Services, Inc. 2.2%
UnitedHealth Group Incorporated 2.1%
NDCHealth Corporation 2.0%
Percentages are based upon net assets.
21
Management Overview (continued)
ICON HEALTHCARE FUND
concerns surrounding patent expirations, generic competition and Medicare
reimbursement.
Meanwhile, health care facilities came under intense pressure as hospital
operators faced a growing number of challenges ranging from case management
demands to unpaid bills. In light of weakening relative strength, the group was
slightly trimmed with the proceeds going toward managed health care and health
care distributors.
The top contributors to Fund performance during the period included managed
health care providers Sierra Health Services, which provides workers
compensation insurance, and Aetna Inc. and PacifiCare Health Systems, Inc., both
of which reported strong enrollment and earning-per-share trends.
Returns suffered most from companies including hospital operator Dynacq
Healthcare Inc., which faced regulatory scrutiny over its accounting practices
and was subsequently sold when its relative strength weakened. Drug delivery
holding Biovail Corp. fared no better, facing a regulator inquiry of its own
while posting disappointing financial results. Its downdraft led us to sell the
Fund's shares. Lincare Holdings Inc, a leading provider of respiratory therapy
services, also declined, as expectations of lower Medicare reimbursement rates
pressured the stock. These stocks, except for Lincare Holdings, were sold as
relative strength weakened. We continued to own Lincare as it remains
attractively valued and appears to have overcome its recent weakness.
WHAT IS THE INVESTMENT OUTLOOK FOR THE HEALTHCARE SECTOR?
We anticipate that the Healthcare sector will continue in its move toward fair
value, driven by current leaders managed health care and health care services,
as well as emerging leaders health care distributors and health care equipment.
Although current valuation and relative strength measures bode well for these
industries, we are less optimistic about large-cap pharmaceuticals and large-cap
biotechnology, both of which appear either fairly valued or overpriced, while
lagging the broader market.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Valuation directed us to smaller capitalization companies, which aided
relative performance as they outperformed large-cap securities.
- - Among the Fund's strongest-performing holdings during the period were
Sierra Health Services Inc. and PacifiCare Health Systems, Inc.
- - Our methodology led us to hold a significant position in the
best-performing managed health care industry, and this overweighting
contributed to returns.
- - The Fund benefited from not owning large-cap pharmaceutical companies,
which lagged.
- --------------------------------------------------------------------------------
TOP INDUSTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Health Care Services 23.8%
Managed Health Care 18.2%
Health Care Facilities 13.1%
Pharmaceuticals 11.8%
Health Care Equipment 10.3%
Biotechnology 8.2%
Health Care Distributors 6.3%
Health Care Supplies 6.1%
</Table>
Percentages are based upon net assets.
22
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 2/24/97
- ------------------------------------------------------------------------------------------
ICON Healthcare Fund 14.82% 37.83% 12.10% 13.06%
- ------------------------------------------------------------------------------------------
S&P 1500 Healthcare Index 8.94% 16.52% 1.09% 9.01%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 0.09% 6.92%
- ------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
S&P 1500 HEALTHCARE
ICON HEALTHCARE FUND INDEX S&P 1500 INDEX
-------------------- ------------------- --------------
2/24/97 10000 10000 10000
3/31/97 9460 8940 9368
3/31/98 13319 14014 13874
3/31/99 13500 17464 15999
3/31/00 15234 16050 19137
3/31/01 18730 18405 15258
3/31/02 19844 19189 15582
3/31/03 17336 15824 11740
3/31/04 23894 18439 16075
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund on its inception date of 2/24/97 to a
$10,000 investment made in unmanaged securities indexes on that date. The Fund's
performance in this chart and the performance table assumes the reinvestment of
dividends and capital gain distributions but does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or on the redemption of
Fund shares.
23
Schedule of Investments
(unaudited)
ICON HEALTHCARE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
COMMON STOCKS 97.8%
HEALTH CARE 97.8%
BIOTECHNOLOGY 8.2%
118,600 Affymetrix, Inc.(a) $ 4,002,750
85,200 Cephalon, Inc.(a) 4,882,812
56,000 Genencor
International Inc.(a) 745,360
34,000 IDEXX Laboratories,
Inc.(a) 1,933,580
151,200 QLT Inc.(a)f) 3,861,648
172,500 Serologicals
Corporation(a) 3,519,000
107,100 Serono SA -- ADR 1,648,269
- -------------------------------------------------
20,593,419
HEALTH CARE DISTRIBUTORS 6.3%
36,200 Cardinal Health, Inc. 2,494,180
64,400 Henry Schein, Inc.(a) 4,599,448
106,300 Omnicare, Inc. 4,712,279
184,500 Priority Healthcare
Corporation(a) 3,928,005
- -------------------------------------------------
15,733,912
HEALTH CARE EQUIPMENT 10.3%
48,600 Becton, Dickinson and
Company 2,356,128
79,200 Biosite
Incorporated(a) 2,532,024
88,800 CONMED Corporation(a) 2,623,152
54,400 Hillenbrand
Industries, Inc. 3,693,216
47,600 Invacare Corporation 2,148,664
69,700 Mentor Corporation 2,097,970
81,300 ResMed Inc.(a) 3,673,947
81,100 Respironics, Inc.(a) 4,381,022
27,600 Stryker Corporation 2,443,428
- -------------------------------------------------
25,949,551
HEALTH CARE FACILITIES 13.1%
113,700 AmSurg Corp.(a) 2,582,127
206,500 Community Health
Systems Inc.(a) 5,746,895
174,900 LifePoint Hospitals,
Inc.(a) 5,656,266
92,700 Manor Care, Inc. 3,271,383
347,300 Province Healthcare
Company(a) 5,522,070
77,600 Triad Hospitals,
Inc.(a) 2,391,632
161,100 United Surgical
Partners
International,
Inc.(a) 5,467,734
53,100 Universal Health
Services, Inc. 2,446,317
- -------------------------------------------------
33,084,424
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
HEALTH CARE SERVICES 23.8%
171,600 American Healthways,
Inc.(a) $ 4,190,472
54,500 Cerner Corporation(a) 2,462,855
120,500 Cross Country
Healthcare, Inc.(a) 2,006,325
127,000 DaVita, Inc.(a) 6,064,250
124,500 Dendrite
International,
Inc.(a) 1,992,000
58,500 eResearch Technology,
Inc.(a) 1,640,925
67,900 Express Scripts,
Inc.(a) 5,064,661
81,000 ICON plc(a) -- ADR 2,861,730
130,200 Laboratory
Corporation of
America Holdings(a) 5,110,350
97,700 Lincare Holdings
Inc.(a) 3,069,734
189,300 NDCHealth Corporation 5,139,495
65,100 Pediatrix Medical
Group, Inc.(a) 4,101,300
118,000 Pharmaceutical
Product Development,
Inc.(a) 3,515,220
59,100 Quest Diagnostics
Incorporated 4,895,253
121,100 Renal Care Group,
Inc.(a) 5,541,536
73,000 SFBC International,
Inc.(a) 2,172,480
- -------------------------------------------------
59,828,586
HEALTH CARE SUPPLIES 6.1%
88,600 Arrow International,
Inc. 2,648,254
89,100 The Cooper Companies,
Inc. 4,811,400
74,100 ICU Medical, Inc.(a) 2,250,417
155,400 Immucor, Inc.(a) 2,815,848
31,000 Ocular Sciences,
Inc.(a) 903,650
26,900 Osteotech, Inc.(a) 173,505
66,500 Sybron Dental
Specialties, Inc.(a) 1,812,125
- -------------------------------------------------
15,415,199
</Table>
24
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
MANAGED HEALTH CARE 18.2%
70,100 Aetna Inc. $ 6,289,372
41,200 Anthem, Inc.(a) 3,734,368
77,000 Centene
Corporation(a) 2,355,430
63,900 CIGNA Corporation 3,771,378
108,700 Coventry Health Care,
Inc.(a) 4,601,271
58,100 Humana Inc.(a) 1,105,062
104,000 Oxford Health Plans,
Inc. 5,080,400
126,600 PacifiCare Health
Systems, Inc.(a) 5,007,030
149,600 Sierra Health
Services, Inc.(a) 5,445,440
80,900 UnitedHealth Group
Incorporated 5,213,196
27,400 WellPoint Health
Networks Inc.(a)() 3,115,928
- -------------------------------------------------
45,718,875
PHARMACEUTICALS 11.8%
32,400 Abbott Laboratories 1,331,640
63,600 American
Pharmaceutical
Partners, Inc.(a) 2,985,384
96,825 Barr Pharmaceuticals,
Inc.(a) 4,444,267
90,500 Bristol-Myers Squibb
Company 2,192,815
63,600 Forest Laboratories,
Inc.(a) 4,555,032
21,200 Galen Holdings PLC --
ADR 1,300,620
153,075 Mylan Laboratories
Inc. 3,479,395
157,600 Shire Pharmaceuticals
Group PLC(a) -- ADR 4,638,168
39,700 Taro Pharmaceutical
Industries Ltd.(a)f) 2,302,203
39,000 Teva Pharmaceutical
Industries
Ltd. -- ADR 2,472,990
- -------------------------------------------------
29,702,514
- -------------------------------------------------
TOTAL HEALTH CARE 246,026,480
- -------------------------------------------------
TOTAL COMMON STOCKS
(COST $200,580,100) 246,026,480
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
SHORT-TERM INVESTMENTS 5.6%
U.S. GOVERNMENT AGENCIES 4.8%
$12,017,000 FHLB Discount Note,
0.7500%, 4-1-04 $ 12,017,000
- -------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 12,017,000
- -------------------------------------------------
VARIABLE RATE DEMAND NOTE 0.8%
2,017,623 American Family
Demand Note, 0.6908%# 2,017,623
- -------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 2,017,623
- -------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $14,034,623) 14,034,623
- -------------------------------------------------
TOTAL INVESTMENTS 103.4%
(COST $214,614,723) 260,061,103
- -------------------------------------------------
LIABILITIES LESS OTHER (8,464,592)
ASSETS (3.4%)
- -------------------------------------------------
NET ASSETS 100.0% $251,596,511
- -------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign security
Dates shown on securities are the due dates of the obligation.
25
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 gained 15.45% for the six-month period ended March 31,
2004, outperforming its sector-specific benchmark, the S&P 1500 Industrials
Index, and its broad benchmark, the S&P 1500 Index, which returned 14.29% and
14.75%, respectively. Total returns for longer periods are listed on page 28.
While capturing solid gains early in the period, the Fund later relinquished a
portion of that advance amid a two-month cyclical downturn. The effects of this
winter pullback were most pronounced among economically sensitive sectors, as
temporary theme reversals lifted more defensive-oriented industries. Despite the
apparent tug of war, our valuation and relative strength readings suggested
longer-term leadership favored cyclical groups, such as the Industrials sector,
which have possessed considerable leverage to a reviving economy.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Even though our approach views investment style as irrelevant, the Fund came
under pressure due to its growth bias during the reporting period, as measured
on a traditional price-to-earnings (P/E) basis. Whereas our valuation readings
viewed much of the sector as underpriced, traditional measures such as P/E
pegged it as fairly valued, and thus vulnerable to a sell-off. The Fund does not
utilize P/E ratio as a valuation measure, regarding it as a static proxy.
Instead, we calculate a proprietary value-to-price ratio (V/P) for each industry
and security. This is viewed as more meaningful since it considers the effects
of earnings, projected growth, risk, and interest rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Despite solid gains during the period, market psychology remained decidedly
negative. Driven by macroeconomic factors such as perceptions of overheated
valuations, rising interest rates, and lackluster job growth, investors appeared
impatient and eager to take profits. While these and other concerns fueled
skepticism regarding the strength and sustainability of the recovery, economic
fundamentals and corporate earnings continued to demonstrate incremental
improvements.
Further exacerbating market uncertainty was the underlying fear of terrorism,
which resurfaced in the wake of international terrorist events. Rising energy
costs, a byproduct of these tensions, were seen as a detriment to manufacturing
and transportation-related industries, while erratic government spending
continued to plague aerospace & defense. At the same time, employment services
and building products persevered, even as employment and consumer confidence
data remained mixed.
HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
The Fund's outperformance relative to its benchmarks can be attributed to an
overweighting in employment services, which proved resilient in its march toward
fair value. In contrast, airlines were scaled back considerably as rising fuel
prices and pricing pressures contributed to weakness. Diversified commercial
services was also trimmed when several education stocks experienced
accreditation issues, while data processing services, which was reclassified by
S&P as part of the Technology sector, was sold on declining relative strength.
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 99.1%
Top 10 Equity Holdings 24.6%
Number of Stocks 74
Cash Equivalents 0.7%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Armor Holdings, Inc. 3.3%
Labor Ready, Inc. 2.7%
URS Corporation 2.5%
Apollo Group, Inc. 2.5%
Terex Corporation 2.4%
The Manitowoc Company, Inc. 2.4%
Granite Construction Incorporated 2.3%
Reliance Steel & Aluminum Co. 2.2%
York International Corporation 2.2%
Gevity HR, Inc. 2.1%
Percentages are based upon net assets.
26
Furthermore, lack of exposure to industrial conglomerates Tyco International
Ltd. and General Electric Company worked against Fund performance. Tyco, which
comprised 4.26% of the S&P 1500 Industrials Index, returned 40.36% during the
period, while GE, which accounted for nearly 24% of the sector-specific index,
returned 3.68%. Neither stock was judged suitable for investment according to
our valuation and relative strength measures.
Measurable contributions to performance were made by Armor Holdings, Inc., a
leading maker of specialized security products, which announced two new
contracts totaling $40 million. Employment services firm Gevity HR, Inc. also
advanced, having reported organizational changes that boosted client growth, as
did Resources Connection Inc., which posted a 47% jump in quarterly revenue.
Metals processor Reliance Steel & Aluminum rallied strongly, citing higher metal
prices and rising demand.
Fund performance suffered from airline stocks including Ryanair Holdings PLC,
JetBlue Airways Corp., and Mesa Air Group, Inc., after they struggled over
higher fuel costs and intense pricing competition. All companies were sold when
the Fund's exposure to airlines was pared. Infrastructure service provider
MasTec, Inc. tumbled when the company delayed filing of its Form 10-K (annual
operations report) with the Securities and Exchange Commission. Relative
strength suffered during the resulting sell-off, and we liquidated the stock.
WHAT IS THE INVESTMENT OUTLOOK FOR THE INDUSTRIALS SECTOR?
Although defensive names rebounded during the cyclical pullback of early 2004,
we believe this to be a temporary theme reversal. On the basis of valuation and
relative strength, we anticipate that economically sensitive sectors such as
Industrials will regain their status as market leaders, particularly as the
recovery proves sustainable.
While the Fund's top-performing employment services industry now appears to be
fairly valued, we still see potential upside in building products, diversified
commercial services and defense-related issues. However, as other emerging
leadership appears unclear at this time, we will continue to monitor the
situation closely.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Valuation led us to invest in smaller capitalization companies, which
contributed positively to relative performance as large-cap securities
underperformed.
- - Among the Fund's strongest-performing holdings during the period were Armor
Holdings Inc. and Gevity HR, Inc.
- - Our methodology led us to hold a significant position in the employment
services industry, and the Fund's holdings in this area performed strongly
relative to the sector-specific Index.
- - The Fund's overweighting in airlines, a lagging industry, hindered returns.
27
Management Overview (continued)
ICON INDUSTRIALS FUND
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Industrial Machinery 15.1%
Building Products 14.3%
Aerospace & Defense 12.4%
Construction & Engineering 10.2%
Diversified Commercial Services 10.2%
Employment Services 10.2%
Railroads 7.0%
Construction, Farm Machinery & Heavy Trucks 5.3%
Trucking 4.7%
Electrical Components & Equipment 4.1%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 5/9/97
- ------------------------------------------------------------------------------------------
ICON Industrials Fund 15.45% 43.30% 1.06% 2.84%
- ------------------------------------------------------------------------------------------
S&P 1500 Industrials Index 14.29% 39.07% 2.58% 5.30%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 0.09% 6.82%
- ------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON INDUSTRIALS FUND S&P 1500 INDUSTRIALS INDEX S&P 1500 INDEX
--------------------- -------------------------- --------------
5/9/97 10000 10000 10000
3/31/98 12996 12970 13604
3/31/99 11503 12572 15687
3/31/00 11069 14412 18764
3/31/01 10708 13632 14961
3/31/02 13167 14377 15278
3/31/03 8464 10266 11511
3/31/04 12129 14277 15761
</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.
28
Schedule of Investments
(unaudited)
ICON INDUSTRIALS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
COMMON STOCKS 99.1%
INDUSTRIALS 99.1%
AEROSPACE & DEFENSE 12.4%
169,900 Armor Holdings, Inc.(a) $ 5,623,690
52,800 Curtiss-Wright Corporation 2,474,736
50,400 Engineered Support
Systems, Inc. 2,459,016
261,300 GenCorp. Inc. 2,829,879
22,900 General Dynamics
Corporation 2,045,657
107,200 Goodrich Corporation 3,009,104
43,000 L-3 Communications
Holdings, Inc. 2,557,640
- ---------------------------------------------------
20,999,722
AIRLINES 0.7%
64,300 SkyWest, Inc. 1,237,132
BUILDING PRODUCTS 14.3%
14,200 American Standard
Companies Inc.(a) 1,615,250
25,000 American Woodmark
Corporation 1,661,500
110,200 ElkCorp. 2,985,318
143,600 Griffon Corporation(a) 3,101,760
103,000 Masco Corporation 3,135,320
89,000 NCI Building Systems,
Inc.(a) 2,087,940
64,600 Simpson Manufacturing Co.,
Inc. 3,162,170
92,000 Universal Forest Products,
Inc. 2,839,120
93,500 York International
Corporation 3,675,485
- ---------------------------------------------------
24,263,863
CONSTRUCTION & ENGINEERING 10.2%
61,000 Chicago Bridge & Iron
Company N.V. - ADR 1,697,630
88,400 Dycom Industries, Inc.(a) 2,344,368
51,000 Fluor Corporation 1,973,190
161,500 Granite Construction
Incorporated 3,838,855
93,900 Insituform Technologies,
Inc.(a) 1,467,657
154,400 The Shaw Group Inc.(a) 1,673,696
149,700 URS Corporation(a) 4,308,366
- ---------------------------------------------------
17,303,762
CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS 5.3%
14,000 Caterpillar Inc. 1,106,980
38,300 Lindsay Manufacturing Co. 922,264
51,800 Oshkosh Truck Corporation 2,885,260
109,000 Terex Corporation(a) 4,029,730
- ---------------------------------------------------
8,944,234
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
DIVERSIFIED COMMERCIAL SERVICES 10.2%
31,200 Apollo Group, Inc.(a) $ 2,686,632
42,600 Bright Horizons Family
Solutions, Inc.(a) 2,009,016
32,200 ChoicePoint Inc.(a) 1,224,566
42,400 Equifax Inc. 1,094,768
26,200 Portfolio Recovery
Associates, Inc.(a) 705,828
137,300 Rollins, Inc. 3,538,221
63,100 SOURCECORP,
Incorporated(a) 1,672,150
49,400 University of Phoenix
Online 4,298,788
- ---------------------------------------------------
17,229,969
ELECTRICAL COMPONENTS & EQUIPMENT 4.1%
79,000 AMETEK, Inc. 2,025,560
50,200 A.O. Smith Corporation 1,453,290
34,800 Cooper Industries, Ltd.(f) 1,989,864
21,300 Hubbell Incorporated 854,769
27,700 Regal-Beloit Corporation 553,446
- ---------------------------------------------------
6,876,929
EMPLOYMENT SERVICES 10.2%
111,800 Administaff, Inc.(a) 1,948,674
124,500 Gevity HR, Inc. 3,635,400
338,200 Labor Ready, Inc.(a) 4,572,464
278,900 On Assignment, Inc.(a) 1,559,051
43,500 Resources Connection,
Inc.(a) 1,919,177
271,700 Spherion Corporation(a) 2,779,491
33,500 Volt Information Sciences,
Inc.(a) 818,740
- ---------------------------------------------------
17,232,997
INDUSTRIAL CONGLOMERATES 1.3%
41,000 Textron Inc. 2,179,150
INDUSTRIAL MACHINERY 15.1%
28,300 Briggs & Stratton
Corporation 1,909,401
20,400 Eaton Corporation 1,146,276
140,500 Flowserve Corporation(a) 2,943,475
95,063 Graco Inc. 2,767,269
31,400 Harsco Corporation 1,428,700
49,000 Ingersoll-Rand Company(f) 3,314,850
109,500 Kaydon Corporation 3,014,535
134,900 The Manitowoc Company,
Inc. 3,990,342
106,500 Reliance Steel & Aluminum
Co. 3,743,475
91,600 Stewart & Stevenson
Services, Inc. 1,339,192
- ---------------------------------------------------
25,597,515
MARINE 1.1%
27,400 Alexander & Baldwin, Inc. 906,392
28,000 Kirby Corporation(a) 946,120
- ---------------------------------------------------
1,852,512
</Table>
29
Schedule of Investments (continued)
(unaudited)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
OFFICE SERVICES & SUPPLIES 2.5%
48,700 Brady Corporation $ 1,854,496
55,500 United Stationers Inc.(a) 2,336,550
- ---------------------------------------------------
4,191,046
RAILROADS 7.0%
68,600 CP Railway Limited(f) 1,658,748
93,200 CSX Corporation 2,823,028
111,000 Genesee & Wyoming Inc.(a) 2,741,700
141,000 Norfolk Southern
Corporation 3,114,690
131,800 RailAmerica, Inc.(a) 1,588,190
- ---------------------------------------------------
11,926,356
TRUCKING 4.7%
58,700 Knight Transportation,
Inc.(a) 1,407,626
29,600 Landstar System, Inc.(a) 1,211,824
22,050 Old Dominion Freight Line,
Inc.(a) 743,085
72,700 Swift Transportation Co.,
Inc.(a) 1,248,259
55,400 USF Corporation 1,895,788
77,250 Werner Enterprises, Inc. 1,463,887
- ---------------------------------------------------
7,970,469
- ---------------------------------------------------
TOTAL INDUSTRIALS 167,805,656
- ---------------------------------------------------
TOTAL COMMON STOCKS
(COST $134,883,839) 167,805,656
SHORT-TERM INVESTMENTS 0.7%
U.S. GOVERNMENT AGENCIES 0.5%
$846,000 FHLB Discount Note,
0.7500%, 4-1-04 846,000
- ---------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 846,000
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
VARIABLE RATE DEMAND NOTE 0.2%
291,599 American Family Demand
Note, 0.6908%# $ 291,599
- ---------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,137,599) 1,137,599
- ---------------------------------------------------
TOTAL INVESTMENTS 99.8%
(COST $136,021,438) 168,943,255
- ---------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.2% 335,348
- ---------------------------------------------------
NET ASSETS 100.0% $169,278,603
- ---------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign security
Dates shown on securities are the due dates of the obligation.
30
Management Overview
ICON INFORMATION TECHNOLOGY FUND
A discussion with Robert Straus, CMT, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Information Technology Fund gained 6.77% for the six-month period ended
March 31, 2004, trailing its narrow benchmarks, the S&P 1500 Information
Technology Index and the NASDAQ Composite Index, which returned 10.49% and
11.91%, respectively, while also lagging its broad benchmark, the S&P 1500
Index, which returned 14.75%. Total returns for other periods as of March 31,
2004 are listed on page 33.
Several factors converged during the period, leading to the Fund's
underperformance. Based on our valuation and relative strength readings, the
Fund held sizable weightings in semiconductor-related and Internet software &
services stocks going into the fourth quarter of 2003. Although these industries
had served the Fund well, concerns that expectations had exceeded fundamentals
led to a round of profit-taking. A sharp, short-term market pullback then
followed in the first quarter of 2004, with cyclical sectors such as Information
Technology feeling the brunt of the pullback.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges. Nevertheless, the Fund suffered from a growth
bias during the period, as measured on a traditional price-to-earnings (P/E)
basis. Whereas our methodology and valuation readings viewed much of the sector
as slightly underpriced, traditional measures such as P/E pegged the sector as
richly valued, leaving it vulnerable to a sell-off.
For the record, the Fund does not utilize P/E ratio as a valuation measure,
regarding it as a static proxy. Instead, we calculate a proprietary
value-to-price ratio (V/P) for each industry and security. This is viewed as
more meaningful since it considers the effects of earnings, projected growth,
risk, and interest rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
An underlying backdrop of fear permeated the equity markets during the period,
eroding earlier advances that made sense to our system. In particular,
geopolitical tensions resurfaced, characterized by severe downturns in the wake
of overseas terrorist activity.
Although we do not consider macroeconomic factors in our investment process,
conflicting economic data further exacerbated market uncertainty, as investors
grappled with reports of stagnant job creation and expectations of higher
interest rates. All the same, Wall Street climbed this "wall of worry,"
conceding that an economic recovery was perhaps taking shape, yet as the same
time questioning its very sustainability.
HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT THE FUND'S PERFORMANCE?
Our valuation metrics did not support the fourth-quarter freefall in technology
stocks; however, semiconductors and Internet software & services weakened
considerably amid profit-taking and fear-based selling. A corresponding decline
in relative strength compelled us to significantly pare back both industries. In
their place, we added to technology distributors, which offered an attractive
combination of value and relative strength.
Another industry that our system identified as attractive was wireless
telecommunications, a truly global industry that had been out of favor
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 100.2%
Top 10 Equity Holdings 27.8%
Number of Stocks 57
Cash Equivalents 0.0%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Ingram Micro Inc. 3.9%
OmniVision Technologies, Inc. 3.1%
Global Imaging Systems, Inc. 3.0%
Silicon Laboratories 3.0%
Activision, Inc. 2.6%
Cognizant Technology Solutions Corporation 2.5%
Tech Data Corporation 2.5%
Mobile Telesystems 2.4%
AO VimpelCom 2.4%
Sonic Solutions 2.4%
Percentages are based upon net assets.
31
Management Overview (continued)
ICON INFORMATION TECHNOLOGY FUND
for several years. Despite its classification in the Telecommunication Services
sector, we initiated a position on the basis of its close relationship to the
Information Technology sector.
Turning to individual securities, measurable detractors to Fund performance
included j2 Global Communications, Inc, a provider of value-added messaging and
communications services, which saw an unexpected drop in third-quarter 2003
revenues. Meanwhile, Internet access provider United Online Inc. slid when the
company encountered competitive pricing pressures. When our system indicated
that its strength relative to other companies in that industry was sliding, we
sold the stock.
In contrast, software company SS&C Technologies, Inc., a leader in financial and
investment applications, reported impressive quarterly results and contributed
to performance. However, as its value/price ratio fell later in the period, the
company reached our sell criteria. Entertainment software provider Activision,
Inc. was also a significant contributor to performance, driven by strong sales
among its core titles.
WHAT IS THE INVESTMENT OUTLOOK FOR THE INFORMATION TECHNOLOGY SECTOR?
Value has become less widespread, forcing investors to carefully choose stocks
in the cyclically oriented Information Technology sector. With that in mind, we
see opportunities in the technology distributors and wireless telecommunications
industries, which we believe stand to strengthen as the economic recovery
gathers steam. Given their recent emergence, we anticipate that they will assume
sector leadership in the months ahead. As such, the portfolio has been
positioned to capture these themes should they unfold.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Although valuation directed us to smaller capitalization companies, the
Fund's bias toward small- and mid-cap stocks produced mixed results.
- - Among the Fund's strongest-performing holdings during the period were SS&C
Technologies, Inc. and Activision, Inc.
- - Our methodology led us to hold a significant position in technology
distributors, and the Fund's holdings in this industry performed strongly
relative to the sector-specific Index.
- - Conversely, our valuation readings indicated poor strength in the computer
hardware and communications equipment industries. Though the Fund
underweighted these areas, they had a negative impact during the period.
- - Strong stock selection within the home entertainment software industry
added to Fund returns.
32
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Wireless Telecommunication Services 19.5%
Technology Distributors 17.7%
Semiconductors 13.3%
Communications Equipment 9.2%
IT Consulting & Other Services 8.1%
Electronic Equipment Manufacturers 7.1%
Internet Software & Services 6.3%
Home Entertainment Software 5.6%
Data Processing & Outsourced Services 4.7%
Application Software 4.2%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 2/19/97
- ------------------------------------------------------------------------------------------
ICON Information Technology Fund 6.77% 63.22% 10.41% 14.02%
- ------------------------------------------------------------------------------------------
S&P 1500 Information Technology Index 10.49% 46.00% -6.98% 5.76%
- ------------------------------------------------------------------------------------------
NASDAQ Composite Index 11.91% 49.38% -3.80% 5.85%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 0.09% 6.85%
- ------------------------------------------------------------------------------------------
</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.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON INFORMATION S&P 1500 INFORMATION NASDAQ COMPOSITE
TECHNOLOGY FUND TECHNOLOGY INDEX S&P 1500 INDEX INDEX
---------------- -------------------- -------------- ----------------
2/18/97 10000 10000 10000 10000
3/31/97 9210 9036 9334 8949
3/31/98 11524 13581 13824 13511
3/31/99 15489 21379 15941 18185
3/31/00 36187 38844 19068 33868
3/31/01 28145 16075 15203 13657
3/31/02 26699 15416 15525 13738
3/31/03 15569 10196 11697 10029
3/31/04 25411 14887 16016 14982
</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.
33
Schedule of Investments
(unaudited)
ICON INFORMATION TECHNOLOGY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------
COMMON STOCKS 100.2%
INFORMATION TECHNOLOGY 80.7%
APPLICATION SOFTWARE 4.2%
282,700 Magma Design Automation,
Inc.(a) $ 5,911,257
405,000 Sonic Solutions(a) 7,678,800
- --------------------------------------------------
13,590,057
COMMUNICATIONS EQUIPMENT 9.2%
423,500 Adaptec, Inc.(a) 3,709,860
510,300 Cable Design Technologies
Corporation(a) 4,837,644
121,000 Cisco Systems, Inc.(a) 2,845,920
181,200 Comverse Technology,
Inc.(a) 3,286,968
280,000 Ditech Communications
Corporation(a) 4,667,600
219,000 NICE Systems
Ltd.(a) -- ADR 5,207,820
305,500 SpectraLink Corporation 5,202,665
- --------------------------------------------------
29,758,477
DATA PROCESSING & OUTSOURCED SERVICES 4.7%
64,800 Affiliated Computer
Services, Inc.(a) 3,363,120
135,500 Computer Sciences
Corporation(a) 5,464,715
107,000 StarTek, Inc. 3,888,380
90,900 SunGard Data Systems
Inc.(a) 2,490,660
- --------------------------------------------------
15,206,875
ELECTRONIC EQUIPMENT MANUFACTURERS 7.1%
426,000 Fargo Electronics(a) 4,813,800
114,800 Mettler-Toledo
International Inc.(a) 5,097,120
194,460 Nam Tai Electronics,
Inc.(f) 4,941,229
161,700 Rofin-Sinar Technologies,
Inc.(a) 4,826,745
138,800 Vishay Intertechnology,
Inc.(a) 2,961,992
- --------------------------------------------------
22,640,886
ELECTRONIC MANUFACTURING SERVICES 2.2%
543,100 CTS Corporation 7,082,024
HOME ENTERTAINMENT SOFTWARE 5.6%
522,600 Activision, Inc.(a) 8,267,532
195,000 Take-Two Interactive
Software, Inc.(a) 7,172,100
128,800 THQ Inc.(a) 2,605,624
- --------------------------------------------------
18,045,256
</Table>
<Table>
- --------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
INTERNET SOFTWARE & SERVICES 6.3%
262,700 Digital Insight
Corporation(a) $ 5,443,144
161,000 FindWhat.com(a) 3,485,650
177,000 j2 Global Communications,
Inc.(a) 3,996,660
250,000 WebEx Communications,
Inc.(a) 7,432,500
- --------------------------------------------------
20,357,954
IT CONSULTING & OTHER SERVICES 8.1%
350,000 CIBER, Inc.(a) 3,850,000
177,900 Cognizant Technology
Solutions Corporation(a) 8,049,975
320,600 Forrester Research,
Inc.(a) 6,075,370
352,600 Lionbridge Technologies,
Inc.(a) 3,430,798
403,800 MPS Group, Inc.(a) 4,490,256
- --------------------------------------------------
25,896,399
OFFICE ELECTRONICS 2.3%
519,000 Xerox Corporation(a) 7,561,830
SEMICONDUCTORS 13.3%
367,600 Advanced Micro Devices,
Inc.(a) 5,966,148
287,100 Cypress Semiconductor
Corporation(a) 5,876,937
168,100 Marvell Technology Group
Ltd.(a)f) 7,572,905
214,500 O2Micro International
Limited(a)f) 3,695,835
369,100 OmniVision Technologies,
Inc.(a) 10,080,121
182,400 Silicon Laboratories
Inc.(a) 9,645,312
- --------------------------------------------------
42,837,258
TECHNOLOGY DISTRIBUTORS 17.7%
565,800 Agilysys, Inc. 6,733,020
166,000 Anixter International
Inc.(a) 4,689,500
197,800 Arrow Electronics,
Inc.(a) 5,035,988
283,800 Avnet, Inc.(a) 6,950,262
308,000 CellStar Corporation(a) 3,234,000
294,800 Global Imaging Systems,
Inc.(a) 9,793,256
688,800 Ingram Micro Inc.(a) 12,467,280
196,500 Tech Data Corporation(a) 8,044,710
- --------------------------------------------------
56,948,016
- --------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 259,925,032
</Table>
34
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------
TELECOMMUNICATION & UTILITIES 19.5%
WIRELESS TELECOMMUNICATION SERVICES 19.5%
175,000 America Movil S.A. de
C.V. -- ADR $ 6,763,750
74,000 AO VimpelCom(a) -- ADR 7,695,260
190,000 China Mobile (Hong Kong)
Limited -- ADR 2,791,100
59,000 Mobile Telesystems -- ADR 7,758,500
190,000 Nextel Communications,
Inc.(a) 4,698,700
425,000 Partner Communications
Company Ltd. -- ADR 3,378,750
207,000 SK Telecom Co., Ltd. --
ADR 4,409,100
350,000 STET Hellas
Telecommunications
S.A. -- ADR 7,140,000
163,500 Telemig Celular
Participacoes S.A. -- ADR 6,392,850
207,000 Turkcell Iletisim
Hizmetleri A.S.(a) -- ADR 7,400,250
117,700 United States Cellular
Corporation(a) 4,549,105
- --------------------------------------------------
62,977,365
- --------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 62,977,365
- --------------------------------------------------
TOTAL COMMON STOCKS
(COST $288,258,957) 322,902,397
</Table>
<Table>
- --------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
SHORT-TERM INVESTMENT 0.0%
VARIABLE RATE DEMAND NOTE
$ 6,110 American Family Demand
Note, 0.6908%# $ 6,110
- --------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $6,110) 6,110
- --------------------------------------------------
TOTAL INVESTMENTS 100.2%
(COST $288,265,067) 322,908,507
- --------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.2%) (734,914)
- --------------------------------------------------
NET ASSETS 100.0% $322,173,593
- --------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign security
35
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 gained 19.40% for the six-month
period ended March 31, 2004, outpacing its sector-specific benchmarks, the S&P
1500 Consumer Discretionary Index and the S&P 1500 Consumer Staples Index, which
returned 17.39% and 14.50%, respectively. Although neither index is an ideal
comparison individually, together they provide a suitable reference for the
Fund's overall performance. Additionally, the Fund outperformed its broad
benchmark, the S&P 1500 Index, which returned 14.75% over the same time period.
Total returns for other periods as of March 31, 2004 are listed on page 38.
Having begun the period tilted toward economically sensitive industries within
the Leisure sector, the Fund benefited from market leadership that emphasized a
cyclical recovery. Although the economy continued to show steady improvement
going into January, this theme was interrupted amid a sharp, two-month downdraft
that signaled a shift in strength to more defensive-oriented areas.
Against a backdrop of short-term theme reversals, the Fund's exposure to
Consumer Staples industries was more than doubled on the basis of emerging
strength relative to the broader market. This rotation, though modest, helped to
offset a cyclical decline as the period came to a close.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Nevertheless, the Fund's initial growth bias, as measured on a simplistic
price-to-earnings (P/E) basis, turned style-neutral by period-end, with
virtually equal exposure to growth and value holdings. Whereas defensive issues
managed to sidestep the cyclical downturn, underpriced shares also encountered
less resistance. We do not utilize P/E ratio as a valuation measure, regarding
it as a static proxy. Instead, we calculate a proprietary value-to-price ratio
(V/P) for each industry and security. We believe this to be more meaningful
since it considers the effects of earnings, projected growth, risk, and interest
rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Seemingly negative market trends could not conceal the fact that stocks fared
rather well during the period. Although economic fundamentals and corporate
earnings both made considerable headway, investors wrongly focused on interest
rate fears, job growth concerns and consumer spending worries. Our system saw
things differently, as valuation and relative strength readings continued to
support an upward move, particularly as the recovery gained traction.
What our system does not detect are geopolitical events such as the flaring of
tensions surrounding terrorism and world unrest. However, even as overseas
terrorist events produced broad-based market sell-offs, consumers proved
resilient, as did consumer-related industries.
HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
Concentrated weightings in Leisure industries such as hotels, resorts & cruise
lines and restaurants and strength in specialty stores contributed to the Fund's
relative outperformance. Although we continue to see leadership in these
industries, selected companies within hotels, resorts & cruise lines exceeded
fair value and were liquidated, significantly reducing the Fund's
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 99.7%
Top 10 Equity Holdings 29.3%
Number of Stocks 48
Cash Equivalents 2.1%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Brunswick Corporation 3.4%
CEC Entertainment Inc. 3.2%
Callaway Golf Company 3.1%
PepsiCo, Inc. 3.0%
The Walt Disney Company 2.9%
Ruby Tuesday, Inc. 2.8%
RC2 Corporation 2.8%
CKE Restaurants, Inc. 2.7%
Royal Caribbean Cruises Ltd. 2.7%
Harrah's Entertainment, Inc. 2.7%
Percentages are based upon net assets.
36
exposure to those industries. Meanwhile, we bolstered the Fund's Consumer
Staples exposure, initiating positions in packaged foods & meats and household
products, while adding to holdings in food distributors.
As for industry detractors, Internet software & services weakened considerably
amid fourth-quarter profit taking, while food retail and drug retail reflected
ongoing margin concerns and competitive pricing pressures.
Among the Fund's leading individual performance contributors, cruise operator
Royal Caribbean Cruises Ltd. advanced on record bookings, while raising its
full-year outlook. Recreation leader Brunswick Corp. also traded higher, having
increased its fourth-quarter earnings guidance. Music retailer Trans World
Entertainment Corp. gained after reversing a prior-year loss, while food
wholesaler Nash Finch Co. garnered investor interest in its move toward fair
value.
Certain companies turned in decidedly disappointing returns and hampered Fund
returns. Specifically, shares of LeapFrog Enterprises Inc. plummeted after a
series of forecasting missteps damaged the educational toymaker's credibility.
Meanwhile, Winn-Dixie Stores, Inc. tumbled when the supermarket operator missed
consensus earnings estimates and suspended its dividend. NASCAR collectibles
marketer Action Performance Companies, Inc. also struggled as continued weakness
in die-cast sales hurt revenues. All were ultimately sold on declining relative
strength.
WHAT IS THE INVESTMENT OUTLOOK FOR THE LEISURE AND CONSUMER STAPLES SECTOR?
Going forward, we see an ideal environment for continued economic expansion,
that being sustainable growth with low interest rates. Furthermore, we see
demonstrable leadership across many of the Fund's constituent industries,
including restaurants and food distributors.
Given the presence of continued value in the overall market based on our
methodology, we anticipate that the Leisure and Consumer Staples sector can
capitalize on that leadership and participate in any sustained growth of the
economic recovery.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Our valuation model directed us to small- and mid-capitalization companies,
and the Fund's overweighting of these stocks aided relative performance as
large-cap securities lagged.
- - Among the Fund's strongest-performing holdings during the period were Royal
Caribbean Cruises Ltd. and Brunswick Corp.
- - Our methodology led us to hold significant positions in leisure products
and hotels, resorts & cruise lines, and the Fund's holdings in these
industries performed strongly relative to the sector-specific Index.
- - Exposure to Internet software & services had a negative impact on Fund
performance.
- - Stock selection in the photographic products and leisure facilities
industries hampered returns.
37
Management Overview (continued)
ICON LEISURE AND CONSUMER STAPLES FUND
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
March 31, 2004 (unaudited)
- --------------------------------------------------------------------------------
<Table>
Restaurants 16.4%
Leisure Products 14.1%
Hotels, Resorts & Cruise Lines 7.0%
Specialty Stores 6.7%
Food Distributors 6.0%
Tobacco 5.1%
Packaged Foods & Meats 5.0%
Movies & Entertainment 4.7%
Softdrinks 4.6%
Casinos & Gaming 4.5%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 5/9/97
- ------------------------------------------------------------------------------------------
ICON Leisure and Consumer Staples Fund 19.40% 42.60% 9.79% 12.84%
- ------------------------------------------------------------------------------------------
S&P 1500 Consumer Discretionary Index 17.39% 44.87% -0.41% 8.27%
- ------------------------------------------------------------------------------------------
S&P 1500 Consumer Staples Index 14.50% 27.02% 1.50% 5.73%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 0.09% 6.83%
- ------------------------------------------------------------------------------------------
</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 January 1, 2002. Additional information
about these performance results and the comparative indexes can be found on
pages 2 and 3.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON LEISURE AND
CONSUMER STAPLES S&P 1500 CONSUMER S&P 1500 CONSUMER
FUND DISCRETIONARY INDEX STAPLES INDEX S&P 1500 INDEX
---------------- ------------------- ----------------- --------------
5/9/97 10000 10000 10000 10000
3/31/98 12687 14320 12925 13606
3/31/99 14414 17659 13631 15689
3/31/00 12646 19006 12188 18768
3/31/01 15041 15034 12860 14963
3/31/02 21073 16136 14032 15281
3/31/03 16127 11940 11559 11513
3/31/04 22996 17298 14683 15764
</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.
38
Schedule of Investments
(unaudited)
ICON LEISURE AND CONSUMER STAPLES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
COMMON STOCKS 99.7%
CONSUMER DISCRETIONARY 6.7%
SPECIALTY STORES 6.7%
103,800 Big 5 Sporting Goods
Corporation(a) $ 2,620,950
66,500 The Sports Authority,
Inc.(a) 2,665,320
212,800 Trans World
Entertainment
Corporation(a) 2,017,344
- -------------------------------------------------
7,303,614
- -------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 7,303,614
FINANCIAL 2.6%
MULTI-LINE INSURANCE 2.6%
45,300 Loews Corporation 2,675,418
- -------------------------------------------------
TOTAL FINANCIAL 2,675,418
INFORMATION TECHNOLOGY 1.7%
HOME ENTERTAINMENT SOFTWARE 1.7%
51,500 Take-Two Interactive
Software, Inc.(a) 1,894,170
- -------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 1,894,170
LEISURE AND CONSUMER STAPLES 88.7%
BROADCASTING & CABLE TV 3.4%
59,900 Cablevision Systems
New York Group(a) 1,370,512
49,100 Hearst-Argyle
Television, Inc. 1,320,299
131,400 Mediacom
Communications
Corporation(a) 1,053,828
- -------------------------------------------------
3,744,639
CASINOS & GAMING 4.5%
54,000 Harrah's
Entertainment, Inc. 2,964,060
41,200 Shuffle Master,
Inc.(a) 1,915,388
- -------------------------------------------------
4,879,448
DISTILLERS & VINTERS 1.9%
55,900 The Robert Mondavi
Corporation(a) 2,113,579
DRUG RETAIL 1.7%
51,600 CVS Corporation 1,821,480
FOOD DISTRIBUTORS 6.0%
105,900 Nash Finch Company 2,507,712
341,544 Spartan Stores,
Inc.(a) 1,536,948
51,200 United Natural Foods,
Inc.(a) 2,462,208
- -------------------------------------------------
6,506,868
FOOD RETAIL 3.8%
86,600 Alberston's, Inc. 1,918,190
73,500 SUPERVALU INC. 2,244,690
- -------------------------------------------------
4,162,880
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
HOTELS, RESORTS & CRUISE LINES 7.0%
54,800 Carnival
Corporation(f) $ 2,461,068
193,500 Prime Hospitality
Corp.(a) 2,202,030
67,300 Royal Caribbean
Cruises Ltd.(f) 2,967,930
- -------------------------------------------------
7,631,028
HOUSEHOLD PRODUCTS 3.6%
41,900 Energizer Holdings,
Inc.(a) 1,956,311
30,600 Kimberly-Clark
Corporation 1,930,860
- -------------------------------------------------
3,887,171
HYPERMARKETS & SUPER CENTERS 1.8%
79,300 BJ's Wholesale Club,
Inc.(a) 2,018,185
LEISURE PRODUCTS 14.1%
90,500 Brunswick Corporation 3,695,115
178,500 Callaway Golf Company 3,387,930
108,600 JAKKS Pacific, Inc.(a) 1,629,000
250,300 Meade Instruments
Corp.(a) 1,011,212
110,200 RC2 Corporation(a) 3,030,500
70,550 SCP Pool
Corporation(a) 2,628,693
- -------------------------------------------------
15,382,450
MOVIES & ENTERTAINMENT 4.7%
110,800 Metro-Goldwyn-Mayer
Inc.(a) 1,927,920
128,500 The Walt Disney
Company 3,211,215
- -------------------------------------------------
5,139,135
PACKAGED FOODS & MEATS 5.0%
52,900 Dean Foods Company(a) 1,766,860
29,200 J & J Snack Foods
Corp.(a) 1,319,256
131,800 Tyson Foods, Inc. 2,378,990
- -------------------------------------------------
5,465,106
PERSONAL PRODUCTS 3.5%
25,300 Avon Products, Inc. 1,919,511
52,200 NBTY, Inc.(a) 1,940,796
- -------------------------------------------------
3,860,307
PHOTOGRAPHIC PRODUCTS 1.6%
67,900 Eastman Kodak Company 1,776,943
RESTAURANTS 16.4%
55,900 CBRL Group, Inc. 2,215,876
100,200 CEC Entertainment
Inc.(a) 3,476,940
303,600 CKE Restaurants,
Inc.(a) 3,005,640
177,500 Luby's, Inc.(a) 1,056,125
90,300 McDonald's Corporation 2,579,871
94,400 Ruby Tuesday, Inc. 3,034,960
</Table>
39
Schedule of Investments (continued)
(unaudited)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
134,400 The Steak n Shake
Company(a) $ 2,587,200
- -------------------------------------------------
17,956,612
SOFTDRINKS 4.6%
74,800 Coca-Cola Enterprises
Inc. 1,807,916
60,700 PepsiCo, Inc. 3,268,695
- -------------------------------------------------
5,076,611
TOBACCO 5.1%
49,600 Altria Group, Inc. 2,700,720
46,800 R.J. Reynolds Tobacco
Holdings, Inc. 2,831,400
- -------------------------------------------------
5,532,120
- -------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 96,954,562
- -------------------------------------------------
TOTAL COMMON STOCKS
(COST $87,652,809) 108,827,764
SHORT-TERM INVESTMENTS 2.1%
U.S. GOVERNMENT AGENCIES 0.8%
$ 849,000 FHLB Discount Note,
0.7500%, 4-1-04 849,000
- -------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 849,000
- -------------------------------------------------
VARIABLE RATE DEMAND NOTE 1.3%
1,494,175 American Family Demand
Note, 0.6908%# 1,494,175
- -------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 1,494,175
- -------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,343,175) 2,343,175
- -------------------------------------------------
TOTAL INVESTMENTS 101.8%
(COST $89,995,984) 111,170,939
- -------------------------------------------------
LIABILITIES LESS OTHER (1,972,271)
ASSETS (1.8%)
- -------------------------------------------------
NET ASSETS 100.0% $109,198,668
- -------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign security
Dates shown on securities are the due dates of the obligation.
40
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 30.09% for the six-month period ended March 31,
2004, outpacing the 21.95% for its sector-specific benchmark, the S&P 1500
Materials Index, as well as the 14.75% return of its broad benchmark, the S&P
1500 Index. Total returns for longer periods are listed on the following page.
Total returns for other periods as of March 31, 2004 are listed on page 43.
Although the broad market fell victim to a two-month cyclical pullback in early
2004, the Materials sector fared better than its economically sensitive
counterparts. Rising global demand for steel and the declining U.S. dollar
offset the removal of tariffs, while the housing boom continued to support
construction materials. Specialty chemicals, also continued to demonstrate
leadership despite the mounting cost of raw materials. Economic revival, ranging
from modest improvement in the U.S. to robust expansion in China, worked to the
Fund's benefit as positive trends emerged in manufacturing and infrastructure
development. Consolidation also played an increasing role, boosting pricing
power across several industries.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Even though our approach views investment style as irrelevant, as measured on a
traditional price-to-earnings (P/E) basis, the Fund maintained a slight growth
bias during the period. Whereas issues generally considered growth-oriented
encountered significant resistance, our valuation readings would most likely
classify many of these shares as underpriced. We have never utilized P/E ratio
as a valuation measure, regarding it as a static proxy. Instead, we calculate a
proprietary value-to-price ratio (V/P) for each industry and security. We
believe this to be more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Investors grappled with a host of misperceptions during the period but still bid
shares higher. Although our overall readings indicated that a recovery-based
theme remained in place, fears of overheated valuations, rising interest rates
and stagnant job creation sent the market into a cyclical downturn, lifting more
defensive issues. Nevertheless, a trend toward sustainable GDP growth continued
to justify an upward move even as negative sentiment clouded the environment.
Our system does not account for event-driven sell-offs that surfaced in the wake
of terrorist activities and geopolitical unrest. However, even as these events
produced temporary disruptions, markets proved resilient in attempting to
establish levels of support.
HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
Strong gains were registered by the steel industry, the Fund's largest industry
weighting, followed by contributions from construction materials, specialty
chemicals and precious metals & minerals.
While significant industry rotations were limited during the period, the Fund
made two notable additions, initiating new positions in fertilizers &
agricultural chemicals and commodity chemicals. Both were added on the basis of
valuation and improving relative strength.
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 99.3%
Top 10 Equity Holdings 33.1%
Number of Stocks 44
Cash Equivalents 0.3%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Alcoa Inc. 4.4%
FMC Corporation 3.6%
IMC Global Inc. 3.4%
Headwaters Incorporated 3.4%
Millennium Chemicals Inc. 3.2%
OM Group, Inc. 3.2%
Stillwater Mining Company 3.1%
Alcan Inc. 3.1%
A.M. Castle & Co. 3.0%
Silgan Holdings Inc. 2.7%
Percentages are based upon net assets.
41
Management Overview (continued)
ICON MATERIALS FUND
Negative industry performance was driven by diversified metals & mining and
industrial machinery, although the downside in both cases was minimized due to
the Fund's limited exposure. By period-end, industrial machinery, technically
classified in the Industrials sector, had been removed from the Fund while
diversified metals & mining represented a narrow weighting.
The Fund registered top performance from OM Group, Inc., a leading producer of
metal-based specialty chemicals, and Stillwater Mining Company, the sole
domestic producer of palladium and platinum, both of which benefited from
favorable supply/demand factors and surging precious metal prices. Allegheny
Technologies Inc. gained after announcing double-digit price increases for its
specialty steel and titanium alloy products. Diversified chemical supplier FMC
Corp. also advanced, having guided earnings estimates higher on stronger-than
expected pesticide sales.
Returns during the period were hampered by aluminum producer Commonwealth
Industries, Inc., which gave back gains when it reported a drop in 2003 net
sales, reflecting lower shipments. Wellman Inc., the leading U.S. producer of
polyester fibers and plastic resins, warned of wider-than-expected losses due to
weakness in polyester resin margins. Precision ball bearing manufacturer NN,
Inc. also struggled, as dramatic increases in steel prices diluted earnings. All
three stocks were sold from the Fund after they no longer exhibited relative
strength.
WHAT IS THE INVESTMENT OUTLOOK FOR THE MATERIALS SECTOR?
Going forward, our system indicates ongoing leadership in specialty chemicals,
but also detects emerging strength in commodity chemicals and metal & glass
containers. On the other hand, we believe steel may have exceeded fair value and
have taken steps to trim the Fund's exposure. While sector-wide readings reflect
the overpriced nature of certain industries, others, as mentioned above, are
poised to assume leadership. Therefore, we foresee continued strength as this
highly cyclical group benefits from sustainable economic expansion.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Our valuation methods led us to overweight small- and mid-capitalization
companies, which added to relative performance as large-cap securities
lagged.
- - Among the Fund's strongest-performing holdings during the period were OM
Group Inc. and Stillwater Mining Co.
- - Our methodology led us to hold a significant position in steel, the
best-performing industry in the Index.
- - Conversely, our valuation readings indicated weakness in the diversified
metals & mining industry. Though the Fund's exposure was limited in this
area, it had a negative impact during the period.
- - Our stockpicking in the precious metals and minerals industry, a slightly
overweight position, added to returns.
42
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Steel 19.1%
Specialty Chemicals 12.7%
Construction Materials 12.0%
Commodity Chemicals 10.5%
Diversified Chemicals 10.3%
Aluminum 9.6%
Paper Products 7.0%
Fertilizers & Agricultural Chemicals 5.4%
Metal & Glass Containers 4.3%
Precious Metals & Minerals 3.1%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 5/5/97
- ------------------------------------------------------------------------------------------
ICON Materials Fund 30.09% 50.76% 5.42% -2.23%
- ------------------------------------------------------------------------------------------
S&P 1500 Materials Index 21.95% 46.61% 7.28% 4.80%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 0.09% 6.73%
- ------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON MATERIALS FUND S&P 1500 MATERIALS INDEX S&P 1500 INDEX
------------------- ------------------------ --------------
5/5/97 10000 10000 10000
3/31/98 8632 11582 13528
3/31/99 6571 9728 15599
3/31/00 7352 10523 18660
3/31/01 6063 10046 14877
3/31/02 8036 12210 15193
3/31/03 5675 9429 11447
3/31/04 8556 13824 15673
</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.
43
Schedule of Investments
(unaudited)
ICON MATERIALS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------
COMMON STOCKS 99.3%
INDUSTRIALS 2.4%
TRADING COMPANIES & DISTRIBUTORS 2.4%
26,000 Hughes Supply, Inc. $ 1,362,400
- --------------------------------------------------
TOTAL INDUSTRIALS 1,362,400
MATERIALS 96.9%
ALUMINUM 9.6%
39,200 Alcan Inc.(f) 1,755,768
72,600 Alcoa Inc. 2,518,494
123,200 IMCO Recycling Inc.(a) 1,160,544
- --------------------------------------------------
5,434,806
COMMODITY CHEMICALS 10.5%
74,500 Headwaters Incorporated(a) 1,908,690
95,000 Lyondell Chemical Company 1,409,800
70,300 Methanex Corporation(f) 787,360
123,000 Millennium Chemicals
Inc.(a) 1,837,620
- --------------------------------------------------
5,943,470
CONSTRUCTION MATERIALS 12.0%
32,700 Cemex S.A. de C.V. -- ADR 975,114
39,200 CRH plc -- ADR 805,168
26,275 Florida Rock Industries,
Inc. 1,107,491
32,100 Lafarge North America Inc. 1,304,865
25,100 Martin Marietta Materials,
Inc. 1,158,616
40,100 Texas Industries, Inc. 1,449,615
- --------------------------------------------------
6,800,869
DIVERSIFIED CHEMICALS 10.3%
39,400 Cabot Corporation 1,292,320
26,600 The Dow Chemical Company 1,071,448
33,100 Eastman Chemical Company 1,412,708
47,900 FMC Corporation(a) 2,051,078
- --------------------------------------------------
5,827,554
DIVERSIFIED METALS & MINING 0.9%
13,300 Freeport-McMoRan Copper &
Gold, Inc. 519,897
FERTILIZERS & AGRICULTURAL CHEMICALS 5.4%
133,600 IMC Global Inc.(a) 1,910,480
18,100 The Scotts Company(a) 1,161,115
- --------------------------------------------------
3,071,595
METAL & GLASS CONTAINERS 4.3%
77,300 Myers Industries, Inc. 950,790
32,900 Silgan Holdings Inc.(a) 1,504,517
- --------------------------------------------------
2,455,307
PAPER PACKAGING 2.0%
94,300 Caraustar Industries,
Inc.(a) 1,098,595
</Table>
<Table>
- --------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
PAPER PRODUCTS 7.0%
35,100 Aracruz Celulose S.A. --
ADR $ 1,342,575
86,500 Buckeye Technologies
Inc.(a) 896,140
27,000 Georgia-Pacific Corp. 909,630
25,000 Schweitzer-Mauduit
International, Inc. 807,500
- --------------------------------------------------
3,955,845
PRECIOUS METALS & MINERALS 3.1%
112,800 Stillwater Mining
Company(a) 1,770,960
SPECIALTY CHEMICALS 12.7%
31,200 Albemarle Corporation 904,800
48,100 Cambrex Corporation 1,293,890
164,300 Crompton Corporation 1,048,234
40,800 Ferro Corporation 1,066,920
44,400 Great Lakes Chemical
Corporation 1,058,940
60,200 OM Group, Inc.(a) 1,830,080
- --------------------------------------------------
7,202,864
STEEL 19.1%
185,400 A.M. Castle & Co.(a) 1,676,016
26,800 Carpenter Technology
Corporation 881,184
39,200 Commercial Metals Company 1,248,128
14,600 Nucor Corporation 897,608
26,900 Quanex Corporation 1,142,981
89,000 Ryerson Tull, Inc. 1,165,010
55,700 Steel Dynamics, Inc.(a) 1,380,246
71,100 Steel Technologies Inc. 1,373,652
55,800 Worthington Industries,
Inc. 1,069,686
- --------------------------------------------------
10,834,511
- --------------------------------------------------
TOTAL MATERIALS 54,916,273
- --------------------------------------------------
TOTAL COMMON STOCKS
(COST $45,436,357) 56,278,673
SHORT-TERM INVESTMENT 0.3%
VARIABLE RATE DEMAND NOTE 0.3%
$147,901 American Family Demand
Note, 0.6908%(#) 147,901
- --------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $147,901) 147,901
- --------------------------------------------------
TOTAL INVESTMENTS 99.6%
(COST $45,584,258) 56,426,574
- --------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.4% 247,083
- --------------------------------------------------
NET ASSETS 100.0% $56,673,657
- --------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign security
44
Management Overview
ICON TELECOMMUNICATION & UTILITIES FUND
A discussion with Robert Straus, CMT, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Telecommunication & Utilities Fund advanced 20.24% for the six-month
period ended March 31, 2004, outpacing its narrow benchmarks, the S&P 1500
Telecommunication Services Index and the S&P 1500 Utilities Index, which
returned 18.95% and 13.54%, respectively, and also topping its broad benchmark,
the S&P 1500 Index, which returned 14.75%. Total returns for other periods as of
March 31, 2004 are listed on page 47.
The Fund's emphasis on telecommunications-related issues, most notably within
the wireless telecommunications services industry, enhanced Fund performance
during the period. Wireless stocks, in particular, benefited from a sharp rise
in capital spending as providers boosted capacity to meet pent-up demand. Having
been out of favor for several years, the industry was also able to sidestep
fear-based profit-taking in the closely related Information Technology sector
during the fourth quarter of 2003, as well as a severe downdraft that roiled
cyclical stocks during the first quarter of 2004.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Even though our approach considers the style grid irrelevant, the Fund profited
from a value bias during the period, as measured on a simplistic
price-to-earnings (P/E) basis. Although value was widespread throughout the
sector, relative strength was limited to the wireless industry.
For the record, the Fund does not utilize P/E ratio as a valuation measure,
regarding it as a static proxy. Instead, we calculate a proprietary
value-to-price ratio (V/P) for each industry and security. This is viewed as
more meaningful since it considers the effects of earnings, projected growth,
risk, and interest rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Despite solid equity returns over the course of the period, investors appeared
easily distracted by perceived economic disappointments. While job growth fell
short of expectations, payrolls steadily increased and unemployment remained
relatively low by historical standards. Productivity gains led to higher
corporate profits and interest rate fears proved unwarranted.
Although these incremental improvements appeared to support a sustainable
economic recovery, equity markets surrendered earlier gains on valuation
concerns and a resurfacing of geopolitical tensions. While stock prices remained
underpriced based on our estimate of fair value, investors retreated in the wake
of overseas terrorist events.
HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT THE FUND'S PERFORMANCE?
Against this backdrop, the Fund maintained an underweight position in utilities,
instead emphasizing telecommunications-related issues. In doing so, however, we
trimmed Fund exposure to the integrated telecommunication services and
communications equipment industries, while nearly doubling holdings in wireless
stocks, which our system judged to be the clear leader.
Wireless stocks comprised a larger-than-usual industry weighting within the Fund
at period-
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 99.5%
Top 10 Equity Holdings 38.6%
Number of Stocks 43
Cash Equivalents 0.0%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
America Movil S.A. de C.V. 5.3%
Mobile Telesystems 5.1%
Turkcell Iletisim Hizmetleri A.S. 4.6%
Philippine Long Distance Telephone Company 3.8%
Alliant Energy Corporation 3.7%
STET Hellas Telecommunications 3.5%
AO VimpelCom 3.2%
Duke Energy Corporation 3.2%
Tele Nordeste Celular Participacoes S.A. 3.1%
Golden Telecom, Inc. 3.1%
Percentages are based upon net assets.
45
Management Overview (continued)
end, with 12 companies. By focusing on this emerging theme, which enjoyed
worldwide strength during the period, the Fund captured much of the sector's
upside, allowing it to outperform its respective benchmarks during the six-month
period.
This heavy weighting benefited Fund returns as performance was aided the most by
three overseas wireless telecommunications services companies. The American
Depositary Receipts (ADRs) of Russia-based Mobile Telesystems traded at a
significant discount to projected five-year annualized earnings. Also benefiting
from renewed investor interest were Mexico's America Movil S.A. de C.V. and
Turkey's Turkcell Iletisim Hizmetleri A.S., as the ADRs of both companies
realized strong growth in their respective countries.
Among the Fund's poorest performing stocks, messaging services provider j2
Global Communications, Inc. fell on unexpectedly weak performance in its Web and
corporate channels. As j2's relative strength weakened, we sold the stock.
Meanwhile, shares of Intrado Inc., a supplier of emergency response support
services, declined on revenue growth concerns. Although a weaker performer, we
continued to own Intrado at period-end due to .
WHAT IS THE INVESTMENT OUTLOOK FOR THE TELECOMMUNICATION & UTILITIES SECTORS?
Based on our valuation and relative strength readings, we are increasingly
optimistic about the wireless telecommunication services industry, and less so
about integrated telecommunication services, communications equipment and
utilities. Wireless companies, in our view, possess solid growth potential
driven by strong worldwide demand that has been largely untapped. As such, the
Fund could maintain or perhaps increase its global exposure to the wireless
telecom industry in the coming months.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Our methodology led us to hold a significant position in the wireless
telecommunications services industry, and the Fund's holdings in this
industry were among the strongest performers relative to Index during the
period.
- - Among the Fund's strongest-performing individual holdings during the period
were ADRs of Mobile Telesystems, America Movil S.A. de C.V., and Turkcell
Iletisim Hizmetleri A.S., all foreign wireless telecom services companies.
- - Our exposure to two communications-related stocks in the Internet software
and services industry contributed negatively to returns.
- - Although valuation directed us to smaller capitalization companies, the
Fund's bias produced mixed results.
- - Exposure to the communications equipment industry added to Fund returns.
46
- --------------------------------------------------------------------------------
TOP 10 INDUSTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Wireless Telecommunication Services 38.0%
Electric Utilities 19.1%
Integrated Telecommunication Services 12.4%
Multi-Utilities & Unregulated Power 8.6%
Construction & Engineering 6.0%
Gas Utilities 4.4%
Communications Equipment 4.0%
Oil & Gas Exploration & Production 2.1%
Building Products 1.9%
Data Processing & Outsourced Services 1.6%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 7/9/97
- -----------------------------------------------------------------------------------------
ICON Telecommunication & Utilities Fund 20.24% 48.73% 2.73% 8.48%
- -----------------------------------------------------------------------------------------
S&P 1500 Telecommunications Services Index 18.95% 31.51% -14.35% -1.20%
- -----------------------------------------------------------------------------------------
S&P 1500 Utilities Index 13.54% 36.60% 2.74% 5.08%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 0.09% 5.43%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON S&P 1500
TELECOMMUNICATION & TELECOMMUNICATIONS S&P 1500 UTILITIES
UTILITIES FUND SERVICES INDEX INDEX S&P 1500 INDEX
------------------- ------------------ ------------------ --------------
7/9/97 10000 10000 10000 10000
3/31/98 13800 14982 12775 12321
3/31/99 15112 20000 12192 14207
3/31/00 15960 22888 13585 16994
3/31/01 15995 14014 18172 13550
3/31/02 15322 10537 14813 13837
3/31/03 11625 7010 10216 10425
3/31/04 17290 9219 13956 14275
</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.
47
Schedule of Investments
(unaudited)
ICON TELECOMMUNICATION & UTILITIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
COMMON STOCKS 99.5%
ENERGY 2.1%
OIL & GAS EXPLORATION & PRODUCTION 2.1%
51,400 Southwestern Energy
Company(a) $ 1,239,768
- ---------------------------------------------------
TOTAL ENERGY 1,239,768
INDUSTRIALS 7.9%
BUILDING PRODUCTS 1.9%
11,700 Simpson Manufacturing Co.,
Inc. 572,715
14,400 York International
Corporation 566,064
- ---------------------------------------------------
1,138,779
CONSTRUCTION & ENGINEERING 6.0%
37,500 Granite Construction
Incorporated 891,375
14,700 Jacobs Engineering Group
Inc.(a) 655,620
79,200 The Shaw Group Inc.(a) 858,528
40,400 URS Corporation(a) 1,162,712
- ---------------------------------------------------
3,568,235
- ---------------------------------------------------
TOTAL INDUSTRIALS 4,707,014
INFORMATION TECHNOLOGY 5.6%
COMMUNICATIONS EQUIPMENT 4.0%
106,400 Cable Design Technologies
Corporation(a) 1,008,672
20,000 NICE Systems Ltd.(a) -- ADR 475,600
50,000 SpectraLink Corporation 851,500
- ---------------------------------------------------
2,335,772
DATA PROCESSING & OUTSOURCED SERVICES 1.6%
50,300 Intrado Inc.(a) 973,305
- ---------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 3,309,077
TELECOMMUNICATION & UTILITIES 83.9%
ALTERNATIVE CARRIERS 1.4%
92,000 PTEK Holdings, Inc.(a) 845,480
ELECTRIC UTILITIES 19.1%
84,800 Alliant Energy Corporation 2,209,888
94,700 Cleco Corporation 1,802,141
65,000 DPL Inc. 1,218,750
88,400 Duquesne Light Holdings
Inc. 1,723,800
10,400 FPL Group, Inc. 695,240
12,500 Huaneng Power
International, Inc. -- ADR 979,000
60,600 IDACORP, Inc 1,811,940
23,100 Pinnacle West Capital
Corporation 908,985
- ---------------------------------------------------
11,349,744
GAS UTILITIES 4.4%
25,200 Kinder Morgan, Inc. 1,588,104
31,000 Sempra Energy 985,800
- ---------------------------------------------------
2,573,904
INTEGRATED TELECOMMUNICATION SERVICES 12.4%
36,600 China Telecom Corporation
Limited -- ADR 1,269,654
53,600 Golden Telecom, Inc. 1,824,008
130,000 Philippine Long Distance
Telephone Company(a) -- ADR 2,223,000
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
59,500 Sprint Corporation $ 1,096,585
27,600 Telefonos de Mexico SA de
CV -- ADR 963,516
- ---------------------------------------------------
7,376,763
MULTI-UTILITIES & UNREGULATED POWER 8.6%
38,200 Constellation Energy Group,
Inc. 1,526,090
82,600 Duke Energy Corporation 1,866,760
22,800 Public Service Enterprise
Group Incorporated 1,071,144
87,000 Sierra Pacific Resources(a) 643,800
- ---------------------------------------------------
5,107,794
WIRELESS TELECOMMUNICATION SERVICES 38.0%
82,000 America Movil S.A. de
C.V. -- ADR 3,169,300
18,500 AO VimpelCom(a) -- ADR 1,923,815
152,700 China Unicom Limited -- ADR 1,375,827
23,000 Mobile Telesystems -- ADR 3,024,500
63,000 Nextel Communications,
Inc.(a) 1,557,990
42,000 NII Holdings Inc.(a) 1,471,260
115,500 Partner Communications
Company Ltd.(a) -- ADR 918,225
102,800 STET Hellas
Telecommunications S.A. --
ADR 2,097,120
67,500 Tele Nordeste Celular
Participacoes S.A. -- ADR 1,831,275
34,900 Telemig Celular
Participacoes S.A. -- ADR 1,364,590
76,500 Turkcell Iletisim
Hizmetleri A.S.(a) -- ADR 2,734,875
26,800 United States Cellular
Corporation(a) 1,035,820
- ---------------------------------------------------
22,504,597
- ---------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 49,758,282
- ---------------------------------------------------
TOTAL COMMON STOCKS
(COST $46,453,592) 59,014,141
SHORT-TERM INVESTMENT 0.0%
VARIABLE RATE DEMAND NOTE 0.0%
$ 3,301 American Family Demand
Note, 0.6908%# $ 3,301
- ---------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $3,301) 3,301
- ---------------------------------------------------
TOTAL INVESTMENTS 99.5%
(COST $46,456,893) 59,017,442
- ---------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.5% 282,319
- ---------------------------------------------------
NET ASSETS 100.0% $59,299,761
- ---------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign security
48
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 -0.03% for the six-month period
ended March 31, 2004, trailing its unmanaged benchmark, the Merrill Lynch 1-Year
Treasury Bill Index, which returned 0.70%. Total returns for other periods as of
March 31, 2004 are listed on the following page.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
The Federal Reserve Board kept the overnight lending rate unchanged during the
period, maintaining the target rate at a 45-year low of 1.00%. Meanwhile, the
short end of the yield curve remained relatively flat, with the yield on the
3-Month U.S. Treasury Bill increasing from 0.922% at the beginning of the period
to 0.944% at period-end, while the 6-month U.S. Treasury Bill yield moved lower,
starting at 1.033% and ending at 0.985%.
All told, this proved to be an unfavorable environment for cash equivalents as
Fed monetary policy focused on sustaining economic growth in an attempt to
stimulate investment.
Despite market concerns surrounding the pace of job creation, incremental
improvements in employment rolls, payroll growth and productivity gains were
realized throughout the period, leading to a shift in Federal Reserve rhetoric.
Although election-year policy shifts are generally rare, particularly in light
of tame inflation readings, many observers believed that the Fed was laying the
groundwork for raising short-term rates, possibly as early as this summer.
HOW WAS THE FUND MANAGED AND HOW DID THAT AFFECT PERFORMANCE?
Late in the period, as existing holdings matured and were subsequently
liquidated, the Fund actively pursued bank certificates of deposit in hopes of
enhancing yield. Purchases were laddered in varying maturities in order to
minimize interest rate risk, thereby maintaining flexibility in the event yields
rose. All current CD positions were held at the $100,000 level or below, well
within FDIC insurance coverage guidelines.
Even with this new strategy, the Fund's operating expenses had an increasingly
pronounced effect on overall returns with short-term yields already at
near-historical lows.
WHAT IS THE INVESTMENT OUTLOOK FOR THE SHORT-TERM FIXED INCOME MARKET?
Many analysts expect short-term rates to rise as the economic recovery proves
sustainable and investors continue to seek higher rates of return from the stock
market. However, given the current low-inflation environment, we believe it is
unlikely that any increase would be overly dramatic. Therefore, we will continue
our policy of investing in high-quality short-term securities that offer a
prudent combination of income potential and interest rate sensitivity.
49
Management Overview (continued)
ICON SHORT-TERM FIXED INCOME FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 2/7/97
- ------------------------------------------------------------------------------------------
ICON Short-Term Fixed Income Fund -0.03% -0.17% 2.06% 3.01%
- ------------------------------------------------------------------------------------------
Merrill Lynch 1-Year U.S. Treasury Bill
Index 0.70% 1.46% 4.28% 4.70%
- ------------------------------------------------------------------------------------------
</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 certain Fund expenses; without these waivers,
returns would have been lower. The waiver provisions may be terminated in the
future.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON SHORT-TERM FIXED INCOME MERRILL LYNCH 1-YEAR U.S. TREASURY
FUND BILL INDEX
---------------------------- ----------------------------------
2/7/97 10000 10000
3/31/97 10018 10043
3/31/98 10582 10673
3/31/99 11168 11256
3/31/00 11562 11741
3/31/01 12131 12641
3/31/02 12187 13211
3/31/03 12384 13683
3/31/04 12363 13883
</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 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.
50
Schedule of Investments
(unaudited)
ICON SHORT-TERM FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
SHORT-TERM INVESTMENTS 9.6%
CERTIFICATES OF DEPOSIT 9.6%
$ 99,000 American Bank Bozeman,
1.15%, 9-20-04 $ 98,793
99,000 Beal Bank SSB, 1.05%,
6-23-04 98,876
99,000 FirstBank Puerto Rico,
1.05%, 7-6-04 98,861
99,000 New York Community Bank,
1.10%, 7-26-04 98,847
99,000 Wilmington Savings Bank,
1.05%, 7-7-04 99,000
- ---------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 494,377
- ---------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS 494,377
- ---------------------------------------------------
U.S. GOVERNMENT AGENCIES 76.5%
$3,937,000 Federal Home Loan Bank
Discount Note, 0.7100%,
4-1-04 3,937,000
- ---------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 3,937,000
U.S. GOVERNMENT OBLIGATIONS 19.6%
1,000,000 U.S. Treasury Note,
2.000%, 8-31-05 1,009,922
- ---------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS 1,009,922
- ---------------------------------------------------
TOTAL INVESTMENTS 105.7%
(AMORTIZED COST
$5,436,016) 5,441,299
- ---------------------------------------------------
LIABILITIES LESS OTHER ASSETS (5.7%) (295,577)
- ---------------------------------------------------
NET ASSETS 100.0% $5,145,722
- ---------------------------------------------------
</Table>
The accompanying notes are an integral part of the financial statements.
Dates shown on securities are the due dates of the obligation.
51
Statements of Assets and Liabilities
(unaudited)
<Table>
<Caption>
------------------ -------------- --------------
MARCH 31, 2004 ICON ICON ICON
CONSUMER ENERGY FINANCIAL
DISCRETIONARY FUND FUND FUND
------------------ -------------- --------------
ASSETS
Investments, at cost $155,400,748 $ 92,956,272 $151,789,077
------------------ -------------- --------------
Investments, at value 198,060,652 120,189,136 181,720,325
Cash - 1,440 -
Receivables:
Fund shares sold 567,889 1,231,119 637,320
Investments sold 2,831,805 - -
Advisor - - -
Interest 114 809 88
Dividends 177,799 114,861 127,537
Other assets 7,482 4,062 8,761
------------------ -------------- --------------
Total Assets 201,645,741 121,541,427 182,494,031
------------------ -------------- --------------
LIABILITIES
Payables:
Due to custodian bank - - 670,000
Fund shares redeemed 102,903 68,315 230,699
Investments bought 5,124,247 4,833,353 -
Advisory fees 163,140 91,884 135,893
Fund accounting, custodial and transfer agent fees 50,960 27,619 42,763
Administration fees 8,157 4,594 6,795
Distributions due to shareholders - - -
Accrued expenses 54,500 34,816 43,954
------------------ -------------- --------------
Total Liabilities 5,503,907 5,060,581 1,130,104
------------------ -------------- --------------
NET ASSETS $196,141,834 $116,480,846 $181,363,927
================== ============== ==============
Shares outstanding (unlimited shares authorized, no par
value) 14,165,978 6,403,635 13,577,120
Net asset value (offering price and redemption price per
share) $ 13.85 $ 18.19 $ 13.36
</Table>
The accompanying notes are an integral part of the financial statements.
52
<Table>
<Caption>
-------------- -------------- --------------- ------------ -------------- ------------------- ----------------
ICON ICON ICON ICON LEISURE ICON ICON ICON
HEALTHCARE INDUSTRIALS INFORMATION AND CONSUMER MATERIALS TELECOMMUNICATION & SHORT-TERM FIXED
FUND FUND TECHNOLOGY FUND STAPLES FUND FUND UTILITIES FUND INCOME FUND
-------------- -------------- --------------- ------------ -------------- ------------------- ----------------
$214,614,723 $136,021,438 $288,265,067 $89,995,984 $45,584,258 $46,456,893 $5,436,016
-------------- -------------- --------------- ------------ -------------- ------------------- ----------------
260,061,103 168,943,255 322,908,507 111,170,939 56,426,574 59,017,442 5,441,299
- 2,100 - - 3,585 - -
1,107,379 535,932 2,371,329 339,945 325,682 275,594 27,587
- - 11,110,216 6,089,242 - 642,102 -
- - - - - - 5,215
1,208 764 13 240 142 274 1,826
62,318 137,819 44,278 93,675 54,289 46,666 -
7,265 4,337 12,169 5,069 3,008 2,825 527
-------------- -------------- --------------- ------------ -------------- ------------------- ----------------
261,239,273 169,624,207 336,446,512 117,699,110 56,813,280 59,984,903 5,476,454
-------------- -------------- --------------- ------------ -------------- ------------------- ----------------
- - 1,422,000 - - 172,000 348
215,419 82,948 734,304 79,141 50,807 13,475 114,538
9,076,996 - 11,666,016 8,263,067 - 406,585 198,000
212,125 156,131 267,634 90,396 46,129 49,351 2,974
65,818 48,758 85,336 28,135 14,492 15,314 1,386
10,606 7,807 14,565 4,520 2,306 2,468 229
- - - - - - 957
61,798 49,960 83,064 35,183 25,889 25,949 12,300
-------------- -------------- --------------- ------------ -------------- ------------------- ----------------
9,642,762 345,604 14,272,919 8,500,442 139,623 685,142 330,732
-------------- -------------- --------------- ------------ -------------- ------------------- ----------------
$251,596,511 $169,278,603 $322,173,593 $109,198,668 $56,673,657 $59,299,761 $5,145,722
============== ============== =============== ============ ============== =================== ================
17,847,314 16,663,442 36,493,966 7,365,808 7,056,672 8,768,960 566,831
$ 14.10 $ 10.16 $ 8.83 $ 14.83 $ 8.03 $ 6.76 $ 9.08
</Table>
53
Statements of Operations
(unaudited)
<Table>
<Caption>
------------------ -------------- --------------
FOR THE SIX MONTHS ENDED MARCH 31, 2004 ICON ICON ICON
CONSUMER ENERGY FINANCIAL
DISCRETIONARY FUND FUND FUND
------------------ -------------- --------------
INVESTMENT INCOME
Interest $ 6,020 $ 27,459 $ 7,400
Dividends 748,867 447,902 1,219,380
Foreign taxes withheld - (29,070) -
------------------ -------------- --------------
Total Investment Income 754,887 446,291 1,226,780
------------------ -------------- --------------
EXPENSES
Advisory fees 902,645 400,845 724,870
Fund accounting, custodial and transfer agent fees 135,049 62,198 107,552
Administration fees 44,712 19,858 35,808
Audit fees 11,423 5,058 9,149
Registration fees 24,692 19,103 19,205
Legal fees 2,806 1,039 2,379
Insurance expense 4,014 1,874 4,540
Trustee fees and expenses 7,818 3,208 6,867
Shareholder reports 17,662 8,356 14,624
Interest expense 2,938 - 17,286
Other expenses 19,236 20,464 23,013
------------------ -------------- --------------
Total expenses before Adviser reimbursement 1,172,995 542,003 965,293
Expense reimbursement by Adviser - - -
------------------ -------------- --------------
Total Expenses 1,172,995 542,003 965,293
------------------ -------------- --------------
NET INVESTMENT INCOME (LOSS) (418,108) (95,712) 261,487
------------------ -------------- --------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) from investment transactions 12,707,286 1,840,897 15,771,518
Change in unrealized net appreciation/(depreciation):
on securities 14,457,402 18,851,371 15,560,534
------------------ -------------- --------------
Net realized and unrealized gain/(loss) on investments 27,164,688 20,692,268 31,332,052
------------------ -------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $26,746,580 $20,596,556 $31,593,539
================== ============== ==============
</Table>
The accompanying notes are an integral part of the financial statements.
54
<Table>
<Caption>
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
ICON ICON ICON ICON LEISURE ICON ICON ICON
HEALTHCARE INDUSTRIALS INFORMATION AND CONSUMER MATERIALS TELECOMMUNICATION SHORT-TERM FIXED
FUND FUND TECHNOLOGY FUND STAPLES FUND FUND & UTILITIES FUND INCOME FUND
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
$ 33,797 $ 22,746 $ 7,638 $ 3,784 $ 4,052 $ 1,910 $ 43,926
307,387 712,452 703,471 538,459 280,729 426,321 -
(1,706) (3,672) - (17) (4,504) 48 -
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
339,478 731,526 711,109 542,226 280,277 428,279 43,926
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
1,040,006 888,052 1,637,824 482,345 228,345 256,471 13,848
157,654 132,291 237,941 72,030 35,259 38,317 3,236
51,615 44,039 82,218 23,898 11,319 12,703 1,056
13,157 11,256 20,741 6,103 2,888 3,245 270
25,299 23,419 32,913 17,170 14,007 16,897 8,640
2,771 2,578 5,426 1,474 604 754 62
3,641 2,390 6,864 2,610 1,592 1,205 286
8,121 7,182 15,100 4,232 1,788 2,206 248
19,848 16,634 31,261 9,837 4,775 5,667 490
- - 15,500 2,429 5,203 368 -
23,088 10,810 2,761 14,791 10,635 12,317 8,193
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
1,345,200 1,138,651 2,088,549 636,919 316,415 350,150 36,329
- - - - - - (13,630)
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
1,345,200 1,138,651 2,088,549 636,919 316,415 350,150 22,699
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
(1,005,722) (407,125) (1,377,440) (94,693) (36,138) 78,129 21,227
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
5,861,834 3,543,457 49,285,173 6,791,225 1,179,344 2,567,494 -
19,213,193 17,472,962 (26,657,046) 9,718,069 8,807,441 6,534,550 (20,251)
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
25,075,027 21,016,419 22,628,127 16,509,294 9,986,785 9,102,044 (20,251)
-------------- -------------- --------------- ------------ -------------- ----------------- ----------------
$24,069,305 $20,609,294 $ 21,250,687 $16,414,601 $9,950,647 $9,180,173 $ 976
============== ============== =============== ============ ============== ================= ================
</Table>
55
Statements of Changes in Net Assets
<Table>
<Caption>
------------------------------- -------------------------------
ICON CONSUMER ICON
DISCRETIONARY FUND ENERGY FUND
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
March 31, Year Ended March 31, Year Ended
2004 September 30, 2004 September 30,
(unaudited) 2003 (unaudited) 2003
------------ ------------- ------------ -------------
OPERATIONS
Net investment income/(loss) $ (418,108) $ (934,138) $ (95,712) $ (219,166)
Net realized gain/(loss) from investment
transactions 12,707,286 (3,833,114) 1,840,897 (5,971,578)
Net realized gain/(loss) from foreign currency
translations - - - -
Change in unrealized appreciation/(depreciation) on
securities and foreign currency translations 14,457,402 24,416,611 18,851,371 15,279,562
------------ ------------- ------------ -------------
Net increase/(decrease) in net assets resulting from
operations 26,746,580 19,649,359 20,596,556 9,088,818
------------ ------------- ------------ -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - - - -
Net realized gains - - - -
------------ ------------- ------------ -------------
Net decrease from dividends and distributions - - - -
------------ ------------- ------------ -------------
FUND SHARE TRANSACTIONS
Shares sold 37,324,181 74,163,195 60,903,552 43,780,341
Reinvested dividends and distributions - - - -
Shares repurchased (17,993,650) (65,388,174) (20,648,293) (101,459,945)
------------ ------------- ------------ -------------
Net increase/(decrease) from fund share transactions 19,330,531 8,775,021 40,255,259 (57,679,604)
------------ ------------- ------------ -------------
Total net increase/(decrease) in net assets 46,077,111 28,424,380 60,851,815 (48,590,786)
NET ASSETS
Beginning of period 150,064,723 121,640,343 55,629,031 104,219,817
------------ ------------- ------------ -------------
End of period $196,141,834 $150,064,723 $116,480,846 $ 55,629,031
------------ ------------- ------------ -------------
NET ASSETS CONSIST OF
Paid-in capital $165,275,706 $145,945,175 $101,527,758 $ 61,272,499
Accumulated undistributed net investment
income/(loss) (418,108) - (95,712) -
Accumulated undistributed net realized gain/(loss)
from investments (11,375,668) (24,082,954) (12,184,064) (14,024,961)
Unrealized appreciation/(depreciation)
on securities 42,659,904 28,202,502 27,232,864 8,381,493
------------ ------------- ------------ -------------
Net Assets $196,141,834 $150,064,723 $116,480,846 $ 55,629,031
============ ============= ============ =============
TRANSACTIONS IN FUND SHARES
Shares sold 2,778,225 7,144,559 3,584,554 3,435,224
Reinvested dividends and distributions - - - -
Shares repurchased (1,341,053) (6,440,247) (1,241,749) (8,177,227)
------------ ------------- ------------ -------------
Net increase/(decrease) 1,437,172 704,312 2,342,805 (4,742,003)
Shares outstanding beginning of period 12,728,806 12,024,494 4,060,830 8,802,833
------------ ------------- ------------ -------------
Shares outstanding end of period 14,165,978 12,728,806 6,403,635 4,060,830
============ ============= ============ =============
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $114,913,986 $215,314,229 $ 45,950,710 $ 30,459,479
Proceeds from sales of securities 92,193,978 209,236,884 4,906,557 93,961,245
</Table>
The accompanying notes are an integral part of the financial statements.
56
<Table>
<Caption>
---------------------------- ---------------------------- ----------------------------
ICON ICON ICON
FINANCIAL FUND HEALTHCARE FUND INDUSTRIALS FUND
---------------------------- ---------------------------- ----------------------------
Six Months Six Months Six Months
Ended Ended Ended
March 31, Year Ended March 31, Year Ended March 31, Year Ended
2004 September 30, 2004 September 30, 2004 September 30,
(unaudited) 2003 (unaudited) 2003 (unaudited) 2003
------------ ------------- ------------ ------------- ------------ -------------
$ 261,487 $ 702,971 $ (1,005,722) $ (1,014,408) $ (407,125) $ (450,789)
15,771,518 557,118 5,861,834 (6,819,268) 3,543,457 (6,100,761)
- - - - - -
15,560,534 26,857,798 19,213,193 24,785,530 17,472,962 15,072,214
------------ ------------- ------------ ------------- ------------ -------------
31,593,539 28,117,887 24,069,305 16,951,854 20,609,294 8,520,664
------------ ------------- ------------ ------------- ------------ -------------
(576,093) (399,824) - - - -
- - - - - -
------------ ------------- ------------ ------------- ------------ -------------
(576,093) (399,824) - - - -
------------ ------------- ------------ ------------- ------------ -------------
72,343,585 76,466,734 114,360,121 116,684,705 66,609,068 90,962,271
570,282 392,348 - - - -
(61,828,510) (75,431,900) (28,091,806) (85,408,913) (50,494,072) (30,848,064)
------------ ------------- ------------ ------------- ------------ -------------
11,085,357 1,427,182 86,268,315 31,275,792 16,114,996 60,114,207
------------ ------------- ------------ ------------- ------------ -------------
42,102,803 29,145,245 110,337,620 48,227,646 36,724,290 68,634,871
139,261,124 110,115,879 141,258,891 93,031,245 132,554,313 63,919,442
------------ ------------- ------------ ------------- ------------ -------------
$181,363,927 $139,261,124 $251,596,511 $141,258,891 $169,278,603 $132,554,313
------------ ------------- ------------ ------------- ------------ -------------
$141,080,005 $129,994,648 $211,179,650 $124,911,335 $163,215,300 $147,100,304
(24,132) 290,474 (1,005,722) - (407,125) -
10,376,806 (5,394,712) (4,023,797) (9,885,631) (26,451,389) (29,994,846)
29,931,248 14,370,714 45,446,380 26,233,187 32,921,817 15,448,855
------------ ------------- ------------ ------------- ------------ -------------
$181,363,927 $139,261,124 $251,596,511 $141,258,891 $169,278,603 $132,554,313
============ ============= ============ ============= ============ =============
5,620,700 8,155,031 8,384,434 10,595,794 6,767,924 10,993,513
47,802 42,462 - - - -
(5,012,255) (7,737,576) (2,041,969) (8,078,236) (5,171,305) (3,954,112)
------------ ------------- ------------ ------------- ------------ -------------
656,247 459,917 6,342,465 2,517,558 1,596,619 7,039,401
12,920,873 12,460,956 11,504,849 8,987,291 15,066,823 8,027,422
------------ ------------- ------------ ------------- ------------ -------------
13,577,120 12,920,873 17,847,314 11,504,849 16,663,442 15,066,823
============ ============= ============ ============= ============ =============
$115,042,476 $188,775,243 $130,626,851 $126,928,736 $ 70,880,813 $119,495,145
103,287,361 184,312,033 45,814,020 99,893,688 51,665,634 64,553,264
</Table>
57
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
------------------------------- -------------------------------
ICON INFORMATION ICON LEISURE AND
TECHNOLOGY FUND CONSUMER STAPLES FUND
------------------------------- -------------------------------
Six Months Six Months
Ended Ended
March 31, Year Ended March 31, Year Ended
2004 September 30, 2004 September 30,
(unaudited) 2003 (unaudited) 2003
------------ ------------- ------------ -------------
OPERATIONS
Net investment income/(loss) $ (1,377,440) $ (2,215,300) $ (94,693) $ (412,917)
Net realized gain/(loss) from investment
transactions 49,285,173 3,753,887 6,791,225 (1,107,203)
Net realized gain/(loss) from foreign currency
translations - - - -
Change in unrealized appreciation/(depreciation) on
securities and foreign currency translations (26,657,046) 69,595,068 9,718,069 9,588,234
------------ ------------- ------------ -------------
Net increase/(decrease) in net assets resulting from
operations 21,250,687 71,133,655 16,414,601 8,068,114
------------ ------------- ------------ -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - - - -
Net realized gains - - - -
------------ ------------- ------------ -------------
Net decrease from dividends and distribution - - - -
------------ ------------- ------------ -------------
FUND SHARE TRANSACTIONS
Shares sold 91,985,569 267,777,926 21,460,972 39,239,478
Reinvested dividends and distributions - - - -
Shares repurchased (99,035,153) (106,562,014) (11,024,218) (53,301,166)
------------ ------------- ------------ -------------
Net increase/(decrease) from fund share transactions (7,049,584) 161,215,912 10,436,754 (14,061,688)
------------ ------------- ------------ -------------
Total net increase/(decrease) in net assets 14,201,103 232,349,567 26,851,355 (5,993,574)
NET ASSETS
Beginning of period 307,972,490 75,622,923 82,347,313 88,340,887
------------ ------------- ------------ -------------
End of period $322,173,593 $ 307,972,490 $109,198,668 $ 82,347,313
------------ ------------- ------------ -------------
NET ASSETS CONSIST OF
Paid-in capital $335,070,478 $ 342,120,062 $ 82,801,094 $ 72,364,340
Accumulated undistributed net investment
income/(loss) (1,377,440) - (94,693) -
Accumulated undistributed net realized gain/(loss)
from investments (46,162,885) (95,448,058) 5,317,312 (1,473,913)
Unrealized appreciation/(depreciation)
on securities 34,643,440 61,300,486 21,174,955 11,456,886
------------ ------------- ------------ -------------
Net Assets $322,173,593 $ 307,972,490 $109,198,668 $ 82,347,313
============ ============= ============ =============
TRANSACTIONS IN FUND SHARES
Shares sold 10,290,442 39,746,545 1,524,493 3,467,652
Reinvested dividends and distributions - - - -
Shares repurchased (11,035,312) (15,146,622) (791,202) (4,724,938)
------------ ------------- ------------ -------------
Net increase/(decrease) (744,870) 24,599,923 733,291 (1,257,286)
Shares outstanding beginning of period 37,238,836 12,638,913 6,632,517 7,889,803
------------ ------------- ------------ -------------
Shares outstanding end of period 36,493,966 37,238,836 7,365,808 6,632,517
============ ============= ============ =============
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $345,888,366 $ 453,451,611 $ 67,604,745 $112,992,030
Proceeds from sales of securities 354,097,567 293,739,149 57,742,028 125,691,402
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.
58
<Table>
<Caption>
---------------------------- --------------------------- ---------------------------
ICON ICON TELECOMMUNICATION & ICON SHORT-TERM
MATERIALS FUND UTILITIES FUND FIXED INCOME FUND
---------------------------- --------------------------- ---------------------------
Six Months Six Months Six Months
Ended Ended Ended
March 31, Year Ended March 31, Year Ended March 31, Year Ended
2004 September 30, 2004 September 30, 2004 September 30,
(unaudited) 2003 (unaudited) 2003 (unaudited) 2003
------------ ------------- ----------- ------------- ----------- -------------
$ (36,138) $ 236,659 $ 78,129 $ 1,088,542 $ 21,227 $ 19,354
1,179,344 (3,456,930) 2,567,494 (2,316,365) - -
- - - - - -
8,807,441 5,930,581 6,534,550 9,090,560 (20,251) (23,336)
------------ ------------- ----------- ------------- ----------- -------------
9,950,647 2,710,310 9,180,173 7,862,737 976 (3,982)
------------ ------------- ----------- ------------- ----------- -------------
(198,911) (93,225) (559,797) (888,104) (21,227) (20,760)
- - - - - -
------------ ------------- ----------- ------------- ----------- -------------
(198,911) (93,225) (559,797) (888,104) (21,227) (20,760)
------------ ------------- ----------- ------------- ----------- -------------
28,063,439 14,151,946 15,117,340 28,972,038 4,578,339 23,499,482
198,136 92,665 557,773 886,340 20,653 20,010
(11,715,905) (45,505,812) (7,504,922) (60,690,304) (5,599,024) (24,993,710)
------------ ------------- ----------- ------------- ----------- -------------
16,545,670 (31,261,201) 8,170,191 (30,831,926) (1,000,032) (1,474,218)
------------ ------------- ----------- ------------- ----------- -------------
26,297,406 (28,644,116) 16,790,567 (23,857,293) (1,020,283) (1,498,960)
30,376,251 59,020,367 42,509,194 66,366,487 6,166,005 7,664,965
------------ ------------- ----------- ------------- ----------- -------------
$ 56,673,657 $ 30,376,251 $59,299,761 $ 42,509,194 $ 5,145,722 $ 6,166,005
------------ ------------- ----------- ------------- ----------- -------------
$ 65,826,234 $ 49,280,564 $52,832,065 $ 44,661,874 $ 5,144,376 $ 6,144,408
(57,028) 178,021 78,134 559,802 (117) (117)
(19,937,865) (21,117,209) (6,170,987) (8,738,481) (3,820) (3,820)
10,842,316 2,034,875 12,560,549 6,025,999 5,283 25,534
------------ ------------- ----------- ------------- ----------- -------------
$ 56,673,657 $ 30,376,251 $59,299,761 $ 42,509,194 $ 5,145,722 $ 6,166,005
============ ============= =========== ============= =========== =============
3,671,703 2,446,314 2,411,724 5,787,036 503,966 2,570,121
26,174 15,406 94,538 174,133 2,269 2,181
(1,536,700) (7,953,735) (1,213,750) (12,373,258) (614,999) (2,733,550)
------------ ------------- ----------- ------------- ----------- -------------
2,161,177 (5,492,015) 1,292,512 (6,412,089) (108,764) (161,248)
4,895,495 10,387,510 7,476,448 13,888,537 675,595 836,843
------------ ------------- ----------- ------------- ----------- -------------
7,056,672 4,895,495 8,768,960 7,476,448 566,831 675,595
============ ============= =========== ============= =========== =============
$ 43,236,665 $ 52,868,818 $31,045,022 $ 83,676,470 $ - $ -
27,083,366 80,253,664 23,394,101 114,328,699 - -
- - - - - 1,005,625
- - - - - -
</Table>
59
Financial Highlights
<Table>
<Caption>
----------------------------------------------------------------------------
ICON CONSUMER DISCRETIONARY FUND
----------------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
Net asset value, beginning of period $ 11.79 $ 10.12 $ 8.96 $ 9.23 $ 9.67 $ 7.87
----------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.03) (0.08) (0.06) (0.01) (0.02) -
Net realized and unrealized gains/(losses) on
investments 2.09 1.75 1.22 (0.26) (0.42) 2.04
----------- --------- --------- --------- --------- ---------
Total from investment operations 2.06 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 $ 13.85 $ 11.79 $ 10.12 $ 8.96 $ 9.23 $ 9.67
=========== ========= ========= ========= ========= =========
Total return 17.47% 16.50% 12.95% (2.93)% (4.55)% 25.78%
Net assets, end of period (in thousands) $196,142 $150,065 $121,640 $107,075 $40,894 $54,351
Average net assets for the period (in thousands) 180,036 118,834 184,174 78,281 46,246 58,294
Ratio of expenses to average net assets* 1.30% 1.40% 1.29% 1.37% 1.35% 1.35%
Ratio of net investment income/(loss) to average
net assets* (0.46)% (0.79)% (0.49)% (0.10)% (0.27)% (0.46)%
Portfolio turnover rate 51.58% 174.51% 128.06% 88.20% 88.44% 27.83%
</Table>
(x) Calculated using the average share method
* Annualized for periods less than one year
The accompanying notes are an integral part of the financial statements.
60
<Table>
<Caption>
-----------------------------------------------------------------------
ICON ENERGY FUND
-----------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
$ 13.70 $ 11.84 $ 11.29 $ 13.19 $ 7.98 $ 6.35
----------- --------- --------- --------- --------- ---------
(0.02) (0.04) (0.08) 0.07 0.04 0.01
4.51 1.90 0.65 (0.76) 5.17 1.69
----------- --------- --------- --------- --------- ---------
4.49 1.86 0.57 (0.69) 5.21 1.70
----------- --------- --------- --------- --------- ---------
- - (0.02) (0.09) - (0.07)
- - - (1.12) - -
----------- --------- --------- --------- --------- ---------
- - (0.02) (1.21) - (0.07)
----------- --------- --------- --------- --------- ---------
$ 18.19 $ 13.70 $ 11.84 $ 11.29 $ 13.19 $ 7.98
=========== ========= ========= ========= ========= =========
32.77% 15.71% 5.03% (6.53)% 65.29% 27.28%
$116,481 $55,629 $104,220 $36,945 $44,294 $19,230
79,936 74,883 71,434 49,195 29,564 13,801
1.35% 1.40% 1.35% 1.39% 1.36% 1.45%
(0.24)% (0.29)% (0.61)% 0.54% 0.43% (0.26)%
6.61% 42.53% 26.30% 134.77% 123.70% 34.41%
</Table>
61
Financial Highlights
<Table>
<Caption>
-------------------------------------------------------------------------------
ICON FINANCIAL FUND
-------------------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
Net asset value, beginning of period $ 10.78 $ 8.84 $ 12.04 $ 12.26 $ 8.99 $ 9.37
----------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) 0.02 0.05 (0.01) 0.06 0.11 0.02
Net realized and unrealized gains/(losses)
on investments 2.62 1.92 (1.08) 1.13 3.28 1.05
----------- --------- --------- --------- --------- ---------
Total from investment operations 2.64 1.97 (1.09) 1.19 3.39 1.07
----------- --------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.06) (0.03) - (1.41) (0.12) (0.06)
Distributions from net realized gains - - (2.11) - - (1.39)
----------- --------- --------- --------- --------- ---------
Total distributions (0.06) (0.03) (2.11) (1.41) (0.12) (1.45)
----------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 13.36 $ 10.78 $ 8.84 $ 12.04 $ 12.26 $ 8.99
=========== ========= ========= ========= ========= =========
Total return 24.53% 22.35% (11.88)% 9.57% 38.14% 10.05%
Net assets, end of period (in thousands) $181,364 $139,261 $110,116 $54,318 $100,404 $ 5,483
Average net assets for the period (in
thousands) 144,578 131,042 60,904 59,425 43,690 10,415
Ratio of expenses to average net assets* 1.33% 1.34% 1.36% 1.41% 1.33% 1.58%
Ratio of net investment income/(loss) to
average net assets* 0.36% 0.54% (0.06)% 0.51% 1.14% 0.09%
Portfolio turnover rate 69.60% 142.77% 69.58% 174.41% 28.99% 53.29%
</Table>
(x) Calculated using the average share method
* Annualized for periods less than one year
The accompanying notes are an integral part of the financial statements.
62
<Table>
<Caption>
-----------------------------------------------------------------------
ICON HEALTHCARE FUND
-----------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
$ 12.28 $ 10.35 $ 11.57 $ 11.93 $ 7.98 $ 11.39
----------- --------- --------- --------- --------- ---------
(0.07) (0.09) (0.12) (0.10) (0.08) -
1.89 2.02 (0.49) 0.51 4.34 (0.25)
----------- --------- --------- --------- --------- ---------
1.82 1.93 (0.61) 0.41 4.26 (0.25)
----------- --------- --------- --------- --------- ---------
- - - - - -
- - (0.56) (0.77) (0.31) (3.16)
----------- --------- --------- --------- --------- ---------
- - (0.61) (0.77) (0.31) (3.16)
----------- --------- --------- --------- --------- ---------
$ 14.10 $ 12.28 $ 10.35 $ 11.57 $ 11.93 $ 7.98
=========== ========= ========= ========= ========= =========
14.82% 18.65% (5.63)% 3.39% 55.35% (5.34)%
$251,597 $141,259 $93,031 $33,646 $49,066 $24,550
207,433 120,068 44,042 35,981 38,688 29,272
1.29% 1.34% 1.39% 1.45% 1.38% 1.40%
(0.97)% (0.84)% (1.05)% (0.98)% (0.74)% (0.83)%
23.08% 85.52% 104.90% 145.08% 115.05% 85.99%
</Table>
63
Financial Highlights
<Table>
<Caption>
----------------------------------------------------------------------------
ICON INDUSTRIALS FUND
----------------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
Net asset value, beginning of period $ 8.80 $ 7.96 $ 8.55 $ 9.07 $ 10.31 $ 9.45
----------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.02) (0.05) (0.02) (0.02) 0.03 0.01
Net realized and unrealized gains/(losses) on
investments 1.38 0.89 (0.57) (0.48) (0.47) 1.63
----------- --------- --------- --------- --------- ---------
Total from investment operations 1.36 0.84 (0.59) (0.50) (0.44) 1.64
----------- --------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - - (0.02) - (0.02)
Distributions from net realized gains - - - - (0.80) (0.76)
----------- --------- --------- --------- --------- ---------
Total distributions - - - (0.02) (0.80) (0.78)
----------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 10.16 $ 8.80 $ 7.96 $ 8.55 $ 9.07 $ 10.31
=========== ========= ========= ========= ========= =========
Total return 15.45% 10.55% (6.90)% (5.55)% (4.32)% 16.89%
Net assets, end of period (in thousands) $169,279 $132,554 $ 63,919 $76,325 $22,068 $21,004
Average net assets for the period (in thousands) 177,125 70,382 107,335 55,928 21,220 24,387
Ratio of expenses to average net assets* 1.28% 1.43% 1.30% 1.38% 1.38% 1.41%
Ratio of net investment income/(loss) to average
net assets* (0.46)% (0.64)% (0.24)% (0.16)% 0.34% 0.10%
Portfolio turnover rate 31.00% 90.49% 99.22% 72.65% 72.90% 47.97%
</Table>
(x) Calculated using the average share method
* Annualized for periods less than one year
The accompanying notes are an integral part of the financial statements.
64
<Table>
<Caption>
-----------------------------------------------------------------------
ICON INFORMATION TECHNOLOGY FUND
-----------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
$ 8.27 $ 5.98 $ 7.80 $ 22.13 $ 19.00 $ 9.20
----------- --------- --------- --------- --------- ---------
(0.04) (0.08) (0.10) (0.10) (0.05) -
0.60 2.37 (1.72) (4.03) 9.62 10.58
----------- --------- --------- --------- --------- ---------
0.56 2.29 (1.82) (4.13) 9.57 10.58
----------- --------- --------- --------- --------- ---------
- - - - - -
- - - (10.20) (6.44) (0.78)
----------- --------- --------- --------- --------- ---------
- - - (10.20) (6.44) (0.78)
----------- --------- --------- --------- --------- ---------
$ 8.83 $ 8.27 $ 5.98 $ 7.80 $ 22.13 $ 19.00
=========== ========= ========= ========= ========= =========
6.77% 38.29% (23.33)% (32.90)% 59.24% 119.53%
$322,174 $307,972 $ 75,623 $118,851 $46,689 $55,126
326,670 190,287 189,972 99,875 56,279 66,977
1.28% 1.35% 1.31% 1.37% 1.35% 1.37%
(0.84)% (1.16)% (1.09)% (0.90)% (0.23)% (1.06)%
105.52% 155.39% 190.09% 70.32% 137.69% 31.75%
</Table>
65
Financial Highlights
<Table>
<Caption>
----------------------------------------------------------------------------
ICON LEISURE AND CONSUMER STAPLES FUND
----------------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
Net asset value, beginning of period $ 12.42 $ 11.20 $ 9.42 $ 9.24 $ 12.05 $ 11.79
----------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.01) (0.06) (0.07) (0.05) 0.01 0.10
Net realized and unrealized gains/(losses) on
investments 2.42 1.28 1.85 0.26 0.25 1.61
----------- --------- --------- --------- --------- ---------
Total from investment operations 2.41 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 $ 14.83 $ 12.42 $ 11.20 $ 9.42 $ 9.24 $ 12.05
=========== ========= ========= ========= ========= =========
Total return 19.40% 10.89% 18.90% 2.26% 5.27% 14.76%
Net assets, end of period (in thousands) $109,199 $82,347 $88,341 $41,162 $ 7,765 $31,559
Average net assets for the period (in thousands) 96,205 80,928 86,202 41,086 18,029 40,054
Ratio of expenses to average net assets* 1.32% 1.38% 1.34% 1.40% 1.51% 1.38%
Ratio of net investment income/(loss) to average
net assets* (0.20)% (0.51)% (0.55)% (0.50)% 0.13% (0.12)%
Portfolio turnover rate 60.41% 139.54% 90.43% 148.23% 24.50% 49.22%
</Table>
(x) Calculated using the average share method
* Annualized for periods less than one year
The accompanying notes are an integral part of the financial statements.
66
<Table>
<Caption>
-----------------------------------------------------------------------
ICON MATERIALS FUND
-----------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
$ 6.20 $ 5.68 $ 5.70 $ 6.49 $ 7.31 $ 6.58
----------- --------- --------- --------- --------- ---------
(0.01) 0.03 0.02 0.02 0.03 0.02
1.87 0.50 (0.01) (0.74) (0.85) 0.74
----------- --------- --------- --------- --------- ---------
1.86 0.53 0.01 (0.72) (0.82) 0.76
----------- --------- --------- --------- --------- ---------
(0.03) (0.01) (0.03) (0.07) - (0.03)
- - - - - -
----------- --------- --------- --------- --------- ---------
(0.03) (0.01) (0.03) (0.07) - (0.03)
----------- --------- --------- --------- --------- ---------
$ 8.03 $ 6.20 $ 5.68 $ 5.70 $ 6.49 $ 7.31
=========== ========= ========= ========= ========= =========
30.09% 9.36% 0.06% (11.07)% (11.22)% 11.65%
$56,674 $30,376 $59,020 $29,200 $18,162 $26,373
45,544 40,156 45,917 24,544 23,620 17,145
1.39% 1.47% 1.36% 1.47% 1.41% 1.45%
(0.16)% 0.59% 0.23% 0.40% 0.42% 0.16%
60.58% 130.01% 74.55% 91.28% 91.76% 118.29%
</Table>
67
Financial Highlights
<Table>
<Caption>
----------------------------------------------------------------------------
ICON TELECOMMUNICATION & UTILITIES FUND
----------------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
Net asset value, beginning of period $ 5.69 $ 4.78 $ 6.19 $ 8.13 $10.04 $14.17
----------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) 0.01 0.10 0.10 0.09 0.20 0.83
Net realized and unrealized gains/(losses) on
investments 1.13 0.87 (1.45) (1.52) 0.99 1.18
----------- --------- --------- --------- --------- ---------
Total from investment operations 1.14 0.97 (1.35) (1.43) 1.19 2.01
----------- --------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.07) (0.06) (0.06) (0.11) (0.16) (1.02)
Distributions from net realized gains - - - (0.40) (2.94) (5.12)
----------- --------- --------- --------- --------- ---------
Total distributions (0.07) (0.06) (0.06) (0.51) (3.10) (6.14)
----------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 6.76 $ 5.69 $ 4.78 $ 6.19 $ 8.13 $10.04
=========== ========= ========= ========= ========= =========
Total return 20.24% 20.36% (22.05)% (18.74)% 14.99% 15.25%
Net assets, end of period (in thousands) $59,300 $42,509 $66,366 $16,537 $8,619 $7,129
Average net assets for the period (in thousands) 51,154 53,219 20,196 13,554 7,231 9,825
Ratio of expenses to average net assets* 1.37% 1.41% 1.50% 1.54% 1.53% 1.59%
Ratio of net investment income/(loss) to average
net assets* 0.30% 2.05% 1.78% 1.22% 2.43% 1.84%
Portfolio turnover rate 46.13% 158.24% 137.81% 46.10% 41.86% 18.85%
</Table>
(x) Calculated using the average share method
* Annualized for periods less than one year
++ 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 1.70% for the
six months ended March 31, 2004, 1.43% in 2003 and 1.41% in 2002 the ratio
of net investment income to average net assets would have been 0.36% for
the six months ended March 31, 2004, 0.26% in 2003 and 0.58% in 2002. (See
note 4)
The accompanying notes are an integral part of the financial statements.
68
<Table>
<Caption>
-----------------------------------------------------------------------
ICON SHORT-TERM FIXED INCOME FUND
-----------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
$ 9.13 $ 9.16 $ 9.14 $ 9.14 $ 9.15 $ 9.79
----------- --------- --------- --------- --------- ---------
0.05 0.02 0.05 0.26 0.39 0.43
(0.05) (0.02) (0.00) 0.02 0.02 (0.12)
----------- --------- --------- --------- --------- ---------
- - 0.05 0.28 0.41 0.31
----------- --------- --------- --------- --------- ---------
(0.05) (0.03) (0.03) (0.28) (0.39) (0.65)
- - - - (0.03) (0.30)
----------- --------- --------- --------- --------- ---------
(0.05) (0.03) (0.03) (0.28) (0.42) (0.95)
----------- --------- --------- --------- --------- ---------
$ 9.08 $ 9.13 $ 9.16 $ 9.14 $ 9.14 $ 9.15
=========== ========= ========= ========= ========= =========
(0.03)% (0.02)% 0.96% 3.15% 4.45% 3.54%
$5,146 $6,166 $7,665 $20,338 $5,386 $5,111
4,250 7,255 7,643 6,276 5,367 4,658
1.07%+ 1.42%+ 1.35%+ 1.52% 1.52% 1.06%++
1.00%+ 0.27%+ 0.52%+ 2.85% 4.16% 4.42%++
0.00% 0.00% 0.00% 0.00% 53.26% 53.22%
</Table>
69
Notes to Financial Statements
MARCH 31, 2004
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Consumer Discretionary Fund ("Consumer Discretionary Fund"), ICON
Energy Fund ("Energy Fund"), ICON Financial Fund ("Financial Fund"), ICON
Healthcare Fund ("Healthcare Fund"), ICON Industrials Fund ("Industrials Fund"),
ICON Information Technology Fund ("Information Technology Fund"), ICON Leisure
and Consumer Staples Fund ("Leisure and Consumer Staples Fund"), ICON Materials
Fund ("Materials Fund"), ICON Telecommunication & Utilities Fund ("Telecomm &
Utilities Fund"), (collectively, the "Sector 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 registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end investment management
company. There are eight other active funds within the Trust. Those funds are
covered by separate prospectuses and shareholder reports.
The Sector 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 Sector 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. There is no assurance that the investment process will consistently
lead to successful results. An investment in a non-diversified sector fund may
involve greater risk and volatility than a diversified fund. Investments in
foreign securities 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.
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 "NYSE") (normally 4 p.m.
Eastern time) each day the NYSE is open, except that securities traded primarily
on the NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at the
NASDAQ Official Closing Price provided by NASDAQ each business day. The Funds
use pricing services to determine the market value of securities in their
portfolios; if a pricing service is not able to provide a price, or the pricing
service quote of valuation is inaccurate or does not reflect the market value of
the security, prices may be obtained through market quotations from independent
broker/dealers. If market quotations from these sources are not readily
available, the Funds' securities or other assets are valued at fair value as
determined in good faith by the Funds' Board of Trustees ("Board") or pursuant
to procedures approved by the Board. Any foreign investments in the Funds traded
in countries outside of the Western Hemisphere are fair valued daily based on
procedures established by the Funds' Board to avoid stale prices and to take
into account, among other things, any significant events occurring after the
close of a foreign market in those regions. The valuation assigned to fair-
valued securities for purposes of calculating a Fund's NAV may differ from the
security's most recent closing market price and from the prices used by other
mutual funds to calculate their NAVs.
70
A security listed or traded primarily on a securities exchange or in the
over-the-counter market is generally valued at its last sale price on the
exchange or market where it is principally traded, except that securities
primarily traded on NASDAQ are normally valued at the NASDAQ Official Closing
Price. Lacking any sales that day, the security is valued at the current closing
bid price (or yield equivalent thereof) or based on quotes from dealers making a
market for the security. Options are valued at their closing mid-price on the
principal market where the option is traded. Mid-price is the average of the sum
of the closing bid and closing ask prices. Debt securities with a remaining
maturity of greater than sixty days are valued in accordance with the evaluated
bid price supplied by the pricing service. Short-term securities with remaining
maturities of sixty days or less are generally valued at amortized cost or
original cost plus accrued interest, which approximates market value. London
closing 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. No repurchase agreements were
purchased or sold by the Funds during the semiannual period ended March 31,
2004.
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 Sector 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.
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.
71
Notes to Financial Statements (continued)
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.
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.
Expenses.
Expenses which cannot be directly attributed to a specific fund in the Trust are
apportioned between all funds based upon relative net assets.
72
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fees.
ICON Advisers, Inc. ("ICON") (formerly Meridian Investment Management
Corporation) serves as the investment adviser to the Funds and is responsible
for managing the Funds' portfolios of securities. ICON receives a monthly
management fee that is computed daily at an annual rate of 1.00% of the Sector
Funds' average daily net assets and 0.65% of the Short-Term Fixed Income Fund's
average daily net assets. For the period December 1, 2003 through September 30,
2005, ICON has contractually agreed to limit its investment advisory fee and/or
reimburse the operating expenses of the Short-Term Fixed Income Fund (exclusive
of brokerage, interest, taxes, and extraordinary expenses) to the extent
necessary to ensure that the Funds' operating expenses do not exceed 0.75%. To
the extent ICON reimburses or absorbs fees and expenses, it may seek payment of
such amounts for up to three years after the expenses were reimbursed or
absorbed. The Short-Term Fixed Income 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 six-month period ended March 31, 2004, ICON reimbursed/absorbed $13,630
on shares of the Short-Term Fixed Income Fund. These expenses are subject to
recovery by ICON based on a rolling three-year period.
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 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 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. 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.
Administrative Services.
The Trust has entered into an administrative services agreement with ICON. This
agreement provides for an annual fee of 0.05% on the Funds' first $1.5 billion
of average daily net assets and 0.045% on average daily net assets in excess of
$1.5 billion.
Related Parties.
Certain officers and directors of ICON 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.
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.
73
Notes to Financial Statements (continued)
<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 (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
</Table>
The difference between book and tax net appreciation and depreciation of
investments is wash sale loss deferrals and corporate actions. The Financial
Fund and the Materials Fund had significant wash sale deferrals of $2,186,843
and $321,830, respectively. The aggregate composition by Fund of unrealized
appreciation and depreciation of investment securities for federal income tax
purposes as of September 30, 2003 is as follows:
<Table>
<Caption>
UNREALIZED UNREALIZED NET APPRECIATION
FEDERAL TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
ICON Consumer Discretionary Fund $155,400,748 $45,550,943 $ (2,891,039) $42,659,904
ICON Energy Fund 92,956,272 27,976,437 (743,573) 27,232,864
ICON Financial Fund 151,789,077 30,632,347 (701,099) 29,931,248
ICON Healthcare Fund 214,614,723 49,286,295 (3,839,915) 45,446,380
ICON Industrials Fund 136,021,438 35,537,479 (2,615,662) 32,921,817
ICON Information Technology Fund 288,265,067 45,425,871 (10,782,431) 34,643,440
ICON Leisure and Consumer Staples
Fund 89,995,984 22,782,049 (1,607,094) 21,174,955
ICON Materials Fund 45,584,258 11,787,283 (944,967) 10,842,316
ICON Telecommunication & Utilities
Fund 46,456,893 13,611,170 (1,050,621) 12,560,549
ICON Short-Term Fixed Income Fund 5,436,016 5,907 (624) 5,283
</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.
74
[ICON FUNDS LOGO]
FOR MORE INFORMATION ABOUT THE ICON FUNDS, CONTACT US:
<Table>
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, 12th Floor
Greenwood Village, CO 80111
By E-Mail info@iconadvisers.com
On the Internet www.iconfunds.com
</Table>
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. Consider the investment
objectives, risks, charges, expenses and share classes of each ICON Fund
carefully before investing. The prospectus contains this and other information
about the Funds and is available by visiting www.iconfunds.com or by calling
1-800-764-0442. Please read the prospectus carefully before investing. ICON
Distributors, Inc., Distributor
I-132-SEC
ICSECSEMI
- --------------------------------------------------------------------------------
March 31, 2004
Investment Update
ICON FOREIGN FUNDS
Semiannual Report
[ICON FUNDS LOGO]
Table of Contents
<Table>
<Caption>
ABOUT THIS REPORT ............................................2
MESSAGE FROM ICON FUNDS ............................................4
MANAGEMENT OVERVIEWS
AND SCHEDULES OF INVESTMENTS ............................................6
ICON Asia-Pacific Region Fund ............................................6
ICON Europe Fund ...........................................12
ICON International Equity
Fund ...........................................18
FINANCIAL STATEMENTS ...........................................25
FINANCIAL HIGHLIGHTS ...........................................30
NOTES TO
FINANCIAL STATEMENTS ...........................................33
</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. Performance results represent
past performance, and current performance may be higher or lower. Please call
1-800-764-0442 or visit www.iconfunds.com for performance results current to the
most recent month-end.
- --------------------------------------------------------------------------------
PORTFOLIO DATA
- --------------------------------------------------------------------------------
Opinions and forecasts regarding industries, companies and/or themes, and
portfolio composition and holdings, are subject to change at any time based on
market and other conditions, and should not be construed as a recommendation of
any specific security. Each Fund's percentage holdings as of March 31, 2004 are
included in each Fund's Schedule of Investments.
Certain companies' stock performance during the period is mentioned
throughout the Management Overviews. While ICON's quantitative investment
methodology does not consider company-specific factors beyond financial data,
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. There is no assurance that the investment process will
consistently lead to successful results. Investments in foreign securities may
entail unique risks, including political, market and currency risks. An
investment in a region fund may involve greater risk and volatility than a
diversified fund. An investment concentrated in sectors and industries may
involve greater risk and volatility than a more diversified investment. There
are also risks associated with small- and mid-cap investing, including limited
product lines, less liquidity and small market share.
2
- --------------------------------------------------------------------------------
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 an index.
- - The unmanaged Morgan Stanley Capital International (MSCI) Europe 15 Index
comprises approximately 600 stocks traded in developed markets from 15
European countries. The capitalization-weighted index attempts to capture
at least 60% of investable capitalization in those markets subject to
constraints governed by industry representation, maximum liquidity, maximum
float, and minimum cross-ownership.
- - The unmanaged MSCI All Country Pacific Free Index comprises stocks traded
in the developed and emerging markets of the Pacific Basin (Australia,
China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand,
Philippines, Singapore, Taiwan and Thailand). The capitalization-weighted
index attempts to capture at least 60% of investable capitalization in
those markets subject to constraints governed by industry representation,
maximum liquidity, maximum float, and minimum cross-ownership.
- - The MSCI All Country World Index Free ex-United States (ACWI Free ex-U.S.)
is a leading unmanaged benchmark of international stock performance. The
capitalization-weighted index is representative of the performance of
securities of companies located in developed and emerging markets outside
of the United States.
- - The unmanaged Bloomberg European 500 Index measures the weighted average
performance in U.S. dollars of the 500 most highly capitalized European
companies.
Index returns and statistical data included in this report are provided by
Bloomberg and FactSet.
3
Message from ICON Funds
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
[PHOTO]
- --------------------------------------------------------------------------------
Last November, I found myself in a somewhat heated TV debate in which I
contended that the then eight-month rally in stock prices still had further
upside. In taking this decidedly bullish stance, I based my position on the fact
that the stocks in the ICON domestic database were priced on average about 15%
below our estimate of fair value, and that we expected them to continue in their
upward march.
Meanwhile my opponent, a respected money manager, voiced a more pessimistic
outlook. Armed with a host of fear-based objections, including overheated
price/earnings ratios, rising interest rates and sluggish job growth, his
intuitive arguments supporting a precipitous decline undoubtedly proved
convincing to many investors. Except that he was wrong.
THE PRODUCT OF FAULTY REASONING
Through mid-March 2004, stocks did in fact continue their move toward fair
value, despite these and other concerns. Although Wall Street has been known to
climb a wall of worry, the skepticism and doubt expressed by some investors
during the advance was likely the product of faulty reasoning. Let's explore
some common investor misperceptions:
- - STOCKS ARE OVERPRICED BASED ON P/E. Price/earnings ratio is a simplistic
measure that fails to consider the impact of interest rates, a key
component in calculating the present value of any asset. Value, of course,
is not stagnant and can increase or decrease depending on the current
interest rate environment. In the current low interest rate setting, we
believe it makes sense that stock prices would be higher relative to
earnings. Our valuation model considers earnings estimates, but expands
beyond this one-dimensional statistic.
- - INTEREST RATES WILL HAVE TO RISE. There appears to be a consensus among
market observers that short-term interest rates will move higher as the
economic recovery gains traction, pressuring earnings and consequently
stock prices. The fact is short-term rates play a limited role in our
system, which emphasizes the AAA long-term bond yield in its assessment of
valuation. With long-term rates experiencing a 20-year secular decline, we
find it counterproductive to predict the impact of an increase. That being
said, we do not currently see any force capable of reversing this downward
trend.
- - SLOWER U.S. CONSUMER SPENDING WILL HURT THE GLOBAL ECONOMY. Consumer
spending in the U.S. continues to accelerate and is the primary driver of
sustainable economic growth. However, recent developments suggest there's
more to the global economy than just the U.S. consumer. Japan appears to be
in the midst of an internal recovery, while China's expansion remains
robust. Europe is holding steady despite headwinds created by currency
gains as structural reforms begin to stimulate improvements.
FAVORING CYCLICAL INDUSTRIES
Naturally, as evidenced by the market dip in mid-March 2004, it is quite normal
for news events to distract investors and interrupt the path back toward fair
value. Nevertheless, we remain bullish and believe stock prices are positioned
to resume their value-driven advance. Our valuation model suggests that stocks
continue to be priced at discounts relative to intrinsic value, and that market
action late in the period was merely a temporary setback.
[SIDENOTE]
Intuitive arguments supporting a decline undoubtedly proved convincing. Except
that they were wrong.
[SIDENOTE]
We remain bullish and believe stock prices are positioned to resume their
value-driven advance.
4
This interruption, however, was not without its impact. Since late January
2004, market leadership has lacked a common theme, as top-performing cyclical
and economically sensitive sectors such as technology, consumer discretionary,
industrials, and materials turned increasingly volatile. At the same time,
defensive groups such as healthcare, utilities and consumer staples demonstrated
strength amid market pullbacks.
We don't expect an economic boom; we think the economic environment is
healthy. Nor do we believe the market needs a big news event to be propelled
forward. Despite these seemingly short-lived theme reversals, we think it best
to continue favoring underpriced cyclical industries, and ride through the
occasional turbulence.
A HIGH DEGREE OF GLOBAL CORRELATION
Overseas markets were highly correlated during the period with sector and
industry moves mirroring those that demonstrated cyclical leadership within the
United States. However, having begun the period trading at relatively deeper
discounts to U.S. stocks, foreign issues on the whole outperformed the broader
domestic markets. Bolstered by a higher concentration of leading global
industries in Asia-Pacific markets and currency gains versus the U.S. dollar in
European markets, foreign markets closed a considerably wider valuation gap.
As international markets have matured and technology has advanced, we have
become more cognizant of industry and sector themes that cut across country
borders. To that end, we modified the investment strategy of our foreign funds
to allow for rotation among these leading sectors and industries, replacing
their prior focus, which emphasized country rotation. In doing so, we can
implement our valuation methodology on a broader scale.
A NEW NAME
Effective January 2004, Meridian Investment Management Corporation, adviser to
the ICON Funds, changed its name to ICON Advisers, Inc. More than just a name
change, we believe it represents an opportunity for our advisory firm to
introduce our story to a wider audience. The name involves many strategic
marketing and communications initiatives, including a new website for
shareholders like you and financial advisers, which we plan to launch this
summer.
In closing, we once again experienced a market that defies conventional
wisdom. ICON thanks you for the opportunity to help guide you through it.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and
Chief Investment Officer of the Adviser
[SIDENOTE]
Despite short-lived theme reversals and temporary setbacks, our valuation model
suggests stocks are still priced below intrinsic value.
5
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 18.56% for the fiscal half-year ended
March 31, 2004, falling short of its benchmark, the MSCI All Country Pacific
Index, which returned 24.23% over the same period. Total returns for other
periods as of March 31, 2004 are listed on page 9.
Although Asian markets reflected the same cyclically driven advance that
bolstered U.S. stocks during the period, the Fund's relative performance
suffered due to disparities in sector and industry allocation versus the
benchmark. However, with Asian shares trading at deeper relative discounts, in
part because of exceedingly low interest rates throughout the region, they
closed a much wider valuation gap and outperformed the broad U.S. market by a
considerable margin.
The Fund is managed using an all-cap strategy, meaning we invest in Asia-Pacific
securities we believe are undervalued, regardless of their location on the
traditional style grid. Our investment approach is not limited by restrictions
on market capitalization; the ICON system searches for potential industry
leadership regardless of where it emerges.
The Fund's growth orientation during the period, as measured on a
price-to-earnings (P/E) basis, hindered performance. For the record, the Fund
does not utilize P/E ratio as a valuation measure, regarding it as a static
proxy. Instead, we calculate a proprietary value-to-price ratio (V/P) for each
industry and security. We view this as more meaningful since it considers the
effects of earnings, projected growth, risk, and interest rates (opportunity
cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
While our system continued to support the recovery-based theme and its
early-period gains, geopolitical tensions and world unrest exacerbated a
latter-period correction in which cyclical industries surrendered leadership to
more defensive groups. Having viewed these sporadic reversals as temporary, the
Fund capitalized on opportunities to purchase underpriced cyclical industries on
the belief that they would retain leadership given sustainable improvements in
global economic conditions.
Asia, more so than other regions, demonstrated robust improvements, as Japan
showed clear signs of internal recovery, having made significant headway in
attempts to restore its debt-burdened banking system. South Korea emerged from a
brief recession, as strong exports and stabilizing credit fundamentals allowed
it to weather a series of domestic and external shocks. Asia's real strength,
however, continued to be exemplified by torrid growth in China, which, despite
fears of overheating, rapidly established the country as an economic powerhouse.
HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
An underweight position in the Financials sector, specifically within
diversified banks, worked against relative Fund performance during the period.
On a company-specific level, lack of exposure to banking giants Mitsubishi
Financial Group and Mizuho Financial Group, neither of which displayed the value
characteristics we seek, proved detrimental as those stocks rebounded strongly
on the improving health of Japan's banking system. Meanwhile, overweight
exposure to the Industrials and Materials sectors contributed positively,
largely on the rapid pace of infrastructure growth in China.
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004 (unaudited)
Equities 100.0%
Top 10 Equity Holdings 28.2%
Number of Stocks 61
Cash Equivalents 0.2%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004 (unaudited)
Jiangxi Copper Company Ltd. 3.7%
Sumitomo Metal Mining Co., Ltd. 3.2%
Kawasaki Kisen Kaisha, Ltd. 2.9%
Zhejiang Expressway Co., Ltd. 2.9%
Denway Motors Limited 2.7%
Hopewell Holdings Limited 2.7%
Fuji Soft ABC Incorporated 2.6%
Nippon Light Metal Company, Ltd. 2.6%
Sumitomo Heavy Industries, Ltd. 2.5%
China Merchants Holdings International Company Limited 2.4%
Percentages are based upon net assets.
6
Among the Fund's measurable individual contributors, copper producer Jiangxi
Copper Co. benefited from China's hearty appetite for commodities, even as the
company continued to trade below our fair value estimates. Denway Motors Ltd.
also advanced on the significant consumer demand and rising car sales in Hong
Kong.
Fund returns were hampered by positions in Olympus Corp., which exhibited
deteriorating relative strength and was sold when the Fund's Healthcare position
was trimmed. Alps Electric Co., Ltd. also suffered from weakening relative
strength and was sold when we pared the Fund's weighting in the Technology
sector. The proceeds from these liquidations were reallocated to Industrials and
Materials positions, which showed more value.
WHAT IS THE INVESTMENT OUTLOOK FOR THE ASIA-PACIFIC REGION?
Looking ahead, we continue to see increased global correlation among industry
themes, and will remain focused on seeking out market leadership within the
Asia-Pacific Region regardless of country origin or benchmark allocations.
Valuation and relative strength have combined to create compelling buying
opportunities in the Financials sector, particularly within diversified banks
and real estate investment trusts. Although we see ongoing leadership in the
heavily weighted Industrials and Materials sectors, we are less optimistic about
the Technology sector. In light of this, we continue to look for industries in
the region that are exhibiting relative strength and trading below our estimates
of fair value.
7
Management Overview (continued)
ICON ASIA-PACIFIC REGION FUND
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Our valuation methods led us to overweight small- and mid-capitalization
companies in the region, which produced mixed results.
- - Among the Fund's strongest-performing holdings during the period were
Jiangxi Copper Co. Corp. and Denway Motors Ltd.
- - Our methodology led us to hold a significant position in the Industrials
and Materials sectors, and the Fund's holdings in these sectors performed
strongly relative to the Index.
- - An underweight position in Japan, which comprises a large part of the
Index, hampered performance.
- - On an industry level, strong stock selection in automobile manufacturers
boosted Fund performance.
- --------------------------------------------------------------------------------
COUNTRY ALLOCATION
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Japan 36.6%
Hong Kong 34.0%
Malaysia 8.9%
South Korea 8.3%
Australia 7.6%
Singapore 4.6%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Industrials 28.9%
Materials 23.3%
Financial 15.1%
Information Technology 11.8%
Consumer Discretionary 10.3%
Leisure and Consumer Staples 5.0%
Telecommunication & Utilities 3.5%
Energy 1.5%
Health Care 0.6%
</Table>
Percentages are based upon net assets.
8
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 2/25/97
- ------------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund 18.56% 56.30% 1.13% -1.37%
- ------------------------------------------------------------------------------------------
MSCI All Country Pacific Index 24.23% 67.67% 3.07% 0.03%
- ------------------------------------------------------------------------------------------
</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.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON ASIA-PACIFIC REGION FUND MSCI ALL COUNTRY PACIFIC INDEX
----------------------------- ------------------------------
2/25/97 10000 10000
3/31/97 9550 9496
3/31/98 8310 7839
3/31/99 8570 8616
3/31/00 11620 12234
3/31/01 9010 8111
3/31/02 6624 7264
3/31/03 5801 5976
3/31/04 9067 10020
</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.
9
Schedule of Investments
(unaudited)
ICON ASIA-PACIFIC REGION FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------
COMMON STOCKS (FOREIGN) 100.0%
CONSUMER DISCRETIONARY 10.3%
AUTOMOBILE MANUFACTURERS 4.5%
386,000 Denway Motors Limited (HK) $ 445,285
1,800 Honda Motor Co., LTD. (JP) 83,088
5,400 Toyota Motor Corporation
(JP) 200,901
- --------------------------------------------------
729,274
CONSUMER ELECTRONICS 1.5%
13,700 Sharp Corporation (JP) 245,194
FOOTWEAR 1.3%
77,000 Yue Yuen Industrial
(Holdings) Limited (HK) 211,437
HOUSEHOLD APPLIANCES 3.0%
241,000 Guangdong Kelon Electrical
Holdings Company Limited
(HK)(a) 125,278
110,000 Techtronic Industries
Company Limited (HK) 357,985
- --------------------------------------------------
483,263
- --------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 1,669,168
ENERGY 1.5%
INTEGRATED OIL & GAS 1.5%
56,000 Origin Energy Limited (AU) 235,552
- --------------------------------------------------
TOTAL ENERGY 235,552
FINANCIAL 15.1%
DIVERSIFIED BANKS 9.6%
6,500 Commonwealth Bank of
Australia (AU) 165,779
6,000 Kookmin Bank (KR)(a) 243,929
8,700 National Australia Bank
Limited (AU) 206,249
13,500 Shinhan Financial Group
Co., Ltd. (KR) 249,091
25 Sumitomo Mitsui Financial
Group, Inc. (JP) 185,938
25 UFJ Holdings, Inc. (JP) 159,680
24,679 United Overseas Bank
Limited (SG) 197,076
12,000 Westpac Banking
Corporation (AU) 160,943
- --------------------------------------------------
1,568,685
MULTI-SECTOR HOLDINGS 1.5%
213,700 Swire Pacific Limited (HK) 243,754
REAL ESTATE MANAGEMENT & DEVELOPMENT 4.0%
360,000 Sino Land Company Limited
(HK) 225,482
21,000 Sumitomo Realty &
Development Co., Ltd. (JP) 274,098
16,000 Sun Hung Kai Properties
Limited (HK) 146,669
- --------------------------------------------------
646,249
- --------------------------------------------------
TOTAL FINANCIAL 2,458,688
</Table>
<Table>
- --------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
HEALTH CARE 0.6%
PHARMACEUTICALS 0.6%
295,000 China Pharmaceutical Group
Limited (HK) $ 96,765
- --------------------------------------------------
TOTAL HEALTH CARE 96,765
INDUSTRIALS 28.9%
AIRLINES 2.1%
168,800 Cathay Pacific Airways
Limited (HK) 345,442
CONSTRUCTION & ENGINEERING 1.9%
634,000 Sunway Holdings
Incorporated Berhad
(MY)(a) 314,127
CONSTRUCTION & FARM MACHINERY 2.2%
56,000 KOMATSU LTD. (JP) 355,661
HIGHWAYS & RAILTRACKS 7.9%
225,000 Hopewell Holdings Limited
(HK) 442,031
646,000 Jiangsu Expressway Company
Ltd. (HK) 378,452
636,000 Zhejiang Expressway Co.,
Ltd. (HK) 469,512
- --------------------------------------------------
1,289,995
INDUSTRIAL CONGLOMERATES 5.4%
282,000 China Merchants Holdings
International Company
Limited (HK) 396,337
51,000 Citic Pacific Limited (HK) 144,186
37,000 Keppel Corporation Limited
(SG) 161,297
77,000 Shanghai Industrial
Holdings Limited (HK) 171,919
- --------------------------------------------------
873,739
INDUSTRIAL MACHINERY 2.5%
140,000 SUMITOMO HEAVY INDUSTRIES,
LTD. (JP)(a) 399,573
MARINE 5.8%
462,000 China Shipping Development
Company Limited (HK) 316,679
22,000 Hyundai Merchant Marine
Co., Ltd. (KR)(a) 151,514
92,000 Kawasaki Kisen Kaisha,
Ltd. (JP) 477,386
- --------------------------------------------------
945,579
TRUCKING 1.1%
18,000 Seino Transportation Co.,
Ltd. (JP) 184,621
- --------------------------------------------------
TOTAL INDUSTRIALS 4,708,737
INFORMATION TECHNOLOGY 11.8%
ELECTRONIC EQUIPMENT MANUFACTURERS 4.0%
3,400 Hoya Corporation (JP) 332,214
3,000 Nidec Corporation (JP) 312,814
- --------------------------------------------------
645,028
</Table>
10
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------------
ELECTRONIC MANUFACTURING
SERVICES 1.6%
22,200 Venture Corporation
Limited (SG) $ 256,087
IT CONSULTING & OTHER SERVICES 1.8%
6,500 TIS Inc. (JP) 296,122
SEMICONDUCTOR EQUIPMENT 1.8%
3,600 Advantest Corporation (JP) 294,649
SYSTEMS SOFTWARE 2.6%
10,000 Fuji Soft ABC Incorporated
(JP) 428,761
- --------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 1,920,647
LEISURE AND CONSUMER STAPLES 5.0%
AGRICULTURAL PRODUCTS 1.4%
110,000 PPB Group Berhad (MY) 225,790
BREWERS 0.7%
13,335 Fraser & Neave Limited
(SG) 116,147
HOTELS, RESORTS & CRUISE LINES 1.5%
364,000 The Hongkong and Shanghai
Hotels, Limited (HK) 245,410
TOBACCO 1.4%
10,000 KT&G Corporation (KR) 229,950
- --------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 817,297
MATERIALS 23.3%
ALUMINUM 3.5%
38,000 Alumina Limited (AU) 155,686
153,000 Nippon Light Metal
Company, Ltd. (JP) 417,667
- --------------------------------------------------
573,353
BUILDING PRODUCTS 1.9%
232,000 Hume Industries (Malaysia)
Berhad (MY) 304,179
COMMODITY CHEMICALS 1.1%
38,000 Toray Industries, Inc.
(JP) 176,422
DIVERSIFIED CHEMICALS 1.9%
29,000 Orica Limited (AU) 317,121
DIVERSIFIED METALS & MINING 7.0%
1,118,000 Jiangxi Copper Company
Ltd. (HK) 606,275
10,000 Korea Zinc Co., Ltd. (KR) 199,888
46,000 Sumitomo Metal Mining Co.,
Ltd. (JP) 333,223
- --------------------------------------------------
1,139,386
STEEL 7.9%
265,000 Malayawata Steel Berhad
(MY) 193,868
120,000 Nippon Steel Corporation
(JP) 280,640
2,000 POSCO (KR) 282,963
393,000 Sumitomo Metal Industries,
Ltd. (JP) 525,982
- --------------------------------------------------
1,283,453
- --------------------------------------------------
TOTAL MATERIALS 3,793,914
</Table>
<Table>
- --------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
TELECOMMUNICATION & UTILITIES 3.5%
INTEGRATED TELECOMMUNICATIONS
SERVICES 0.9%
55,000 Telekom Malaysia Berhad
(MY) $ 149,217
WIRELESS TELECOMMUNICATIONS
SERVICES 2.6%
190,000 China Unicom Limited (HK) 170,419
105,000 Maxis Communications
Berhad (MY) 254,211
- --------------------------------------------------
424,630
- --------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 573,847
- --------------------------------------------------
TOTAL COMMON STOCKS (FOREIGN)
(COST $13,273,231) 16,274,615
SHORT-TERM INVESTMENT 0.2%
$ 35,080 J.P. Morgan Chase Interest
Bearing Demand Deposit
Account 35,080
- --------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $35,080) 35,080
- --------------------------------------------------
TOTAL INVESTMENTS 100.2%
(COST $13,308,311) 16,309,695
- --------------------------------------------------
LIABILITIES LESS OTHER ASSETS (0.2%) (26,511)
- --------------------------------------------------
NET ASSETS 100.0% $16,283,184
- --------------------------------------------------
</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 KR South Korea
HK Hong Kong MY Malaysia
JP Japan SG Singapore
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
ADR -- American Depository Receipt
11
Management Overview
ICON EUROPE FUND
A discussion with Robert Straus, CMT, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Europe Fund appreciated 20.73% for the six-month period ended March 31,
2004, outpacing the 15.08% return for its broader benchmark, the Bloomberg
European 500 Index but trailing the MSCI Europe 15 Index, which returned 21.51%.
Total returns for other periods as of March 31, 2004 are listed on page 15.
A cyclically driven bull market worked to the Fund's benefit during the period,
as European markets mirrored the broad advance toward fair value that has
bolstered U.S. stocks for more than a year. However, because European issues
were trading largely at deeper relative discounts to their domestic
counterparts, they closed a significantly wider valuation gap, thereby
outperforming the broad U.S. market by a considerable margin.
The Fund is managed using an all-cap strategy, meaning we invest in European
securities we believe are undervalued, regardless of their location on the
traditional style grid. Our investment approach is not limited by restrictions
on market capitalization; the ICON system searches for potential industry
leadership regardless of where it emerges.
In this somewhat cyclical, somewhat defensive environment, the Fund's balanced
stance between growth/value mirrored the broader market, as measured on a
price-to-earnings (P/E) basis. For the record, the Fund does not utilize P/E
ratio as a valuation measure, regarding it as a static proxy. Instead, we
calculate a proprietary value-to-price ratio (V/P) for each industry and
security. We view this as more meaningful since it considers the effects of
earnings, projected growth, risk, and interest rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Geopolitical tensions and world unrest continued to influence investor
sentiment, yet offered the Fund compelling opportunities to purchase underpriced
industries that were demonstrating market leadership. While our system continued
to suggest that a cyclical, recovery-based theme remained in place, the period
was underscored by sporadic strength in defensive industries. Based on our
valuation and relative strength readings, we viewed these reversals as
short-lived, and believe economically sensitive industries can retain leadership
in light of projected improvements.
During the period, however, Europe remained entrenched in a low-growth scenario
while facing stiff headwinds from an appreciating euro. Germany, Europe's
largest economy, was particularly hard hit as business confidence came under
increasing pressure and unemployment languished at historically high levels.
Nevertheless, structural reforms seem to be taking hold, as evidenced by recent
economic progress, and should ultimately prove advantageous for the region.
HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
Perhaps the most significant change in the Fund's composition during the period
was its transformation on January 29, 2004, from the ICON South Europe Region
Fund to the ICON Europe Fund. Given this expanded mandate, allowing us to invest
in equity securities anywhere in Europe, the Fund is now guided by our
time-tested strategy of industry and sector rotation. With investment themes
more closely correlated across national borders, recent studies convinced us to
adopt this strategy and replace the Fund's prior focus, which emphasized country
rotation.
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 94.8%
Top 10 Equity Holdings 27.2%
Number of Stocks 56
Cash Equivalents 13.1%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Camaieu 3.3%
Trigano 2.9%
Arcelor 2.8%
Buzzi Unicem S.p.A. 2.8%
Ascom Holding AG 2.7%
PubliGroupe S.A. 2.7%
Grupo Empresarial Ence, S.A. 2.6%
Georg Fischer AG 2.5%
Vivendi Universal SA 2.5%
SEB SA 2.4%
Percentages are based upon net assets.
12
Dominant themes that played out in Europe during the period included wireless
telecommunication services, as rising global demand re-energized this previously
out-of-favor industry. Guided by our valuation discipline, the Fund overweighted
the Materials sector, which also performed strongly, with notable contributions
from steel and construction materials. Both industries benefited from increasing
worldwide consumption, driven in large part by infrastructure development in
Mainland China. In contrast, specialty stores proved detrimental and was
eliminated on valuation concerns, while food retail detracted due to its
defensive nature.
The Fund logged measurable individual performance contributions from Swiss
telecommunication services firm Ascom Holding AG, which benefited from strong
operating results, including improved order intake and lower net losses. Also
based in Switzerland, fashion retailer Charles Voegele Holding AG realized
higher operating earnings on better sales performance and efficient inventory
reduction. The Fund also profited from direct exposure to gains in the euro, the
common currency of the European Monetary Union, which helped boost returns in
the underlying equities.
In contrast, Fund performance was hampered by its stake in Marionnaud
Parfumeries SA, Europe's largest perfume retailer, which fell as rising costs
proved a drag on profits. Deteriorating relative strength led us to sell the
company. Portuguese food distributor Jeronimo Martins SGPS SA faced a difficult
operating environment, including temporary store closures and increased
competition.
WHAT IS YOUR INVESTMENT OUTLOOK FOR THE EUROPEAN MARKET?
Our system continues to indicate increased global correlation among industry
themes, and we will remain focused on seeking out market leadership within the
Europe Region regardless of country origin or benchmark allocations.
One of the clear examples we're currently seeing is in the wireless
telecommunication services industry, where valuation and relative strength have
combined to create compelling buying opportunities. We continue to be guided by
our methodology to identify leading industries.
13
Management Overview (continued)
ICON EUROPE FUND
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Our valuation methods led us to overweight small- and mid-capitalization
European companies, which added to relative performance.
- - Among the Fund's strongest-performing holdings during the period were Ascom
Holding AG and Charles Voegele Holding AG, both based in Switzerland.
- - Our methodology led us to hold a significant position in the Consumer
Discretionary and Materials sectors, and the Fund's holdings in these
sectors performed strongly relative to Index.
- - Although they contributed positively, stockpicks in the Energy and
Financial sectors caused a slight drag on relative performance.
- - Our stockpicking in the apparel retail industry, a slightly overweight
position, added to returns.
- --------------------------------------------------------------------------------
TOP 10 COUNTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
France 24.6%
Switzerland 22.8%
Italy 9.0%
Germany 8.3%
Austria 5.6%
Belgium 4.5%
Spain 4.5%
Luxembourg 2.8%
Norway 2.6%
Poland 1.8%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Industrials 17.0%
Consumer Discretionary 15.8%
Materials 12.1%
Leisure and Consumer Staples 12.0%
Telecommunication and Utilities 11.7%
Financial 10.5%
Information Technology 9.3%
Energy 3.3%
Health Care 3.1%
</Table>
Percentages are based upon net assets.
14
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS SINCE
ENDED ONE FIVE INCEPTION
3/31/04* YEAR YEARS 2/20/97
- ------------------------------------------------------------------------------------------
ICON Europe Fund 20.73% 64.32% 2.11% 6.66%
- ------------------------------------------------------------------------------------------
MSCI Europe 15 Index 21.51% 54.61% 0.15% 6.38%
- ------------------------------------------------------------------------------------------
Bloomberg European 500 Index 15.08% 37.68% -1.35% 5.64%
- ------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
The Fund's name and investment strategy changed effective January 29, 2004. The
Fund's past performance would have been different if the current strategy had
been in effect.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
BLOOMBERG EUROPEAN 500
ICON EUROPE FUND MSCI EUROPE 15 INDEX INDEX
---------------- -------------------- ----------------------
2/20/97 10000 10000 10000
3/31/97 9800 10308 10154
3/31/98 15106 14684 15466
3/31/99 14247 15401 15808
3/31/00 13849 18298 21916
3/31/01 12654 14181 17706
3/31/02 11979 13479 17566
3/31/03 9623 10038 10728
3/31/04 15813 15519 14770
</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 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
(unaudited)
ICON EUROPE FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
COMMON STOCKS (FOREIGN) 94.8%
CONSUMER DISCRETIONARY 15.8%
ADVERTISING 2.7%
621 PubliGroupe S.A. (SZ)(a) $ 202,441
APPAREL RETAIL 5.3%
2,570 Camaieu (FR) 248,398
2,282 Charles Voegele Holding AG
(SZ)(a) 152,857
- ---------------------------------------------------
401,255
AUTO PARTS & EQUIPMENT 0.9%
10,500 Brembo S.p.A. (IT) 73,166
AUTOMOBILE MANUFACTURERS 1.4%
2,500 DaimlerChrysler AG (GR) 104,409
DEPARTMENT STORES 2.1%
1,490 Pinault-Printemps-Redoute SA
(FR) 156,012
HOUSEHOLD APPLIANCES 2.4%
1,430 SEB SA (FR) 183,289
TIRES & RUBBER 1.0%
2,000 Continental AG (GR) 79,044
- ---------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 1,199,616
ENERGY 3.3%
INTERGRATED OIL & GAS 0.7%
295 OMV AG (AT) 55,866
OIL & GAS DRILLING 1.6%
13,200 Smedvig ASA (NW) 122,159
OIL & GAS EXPLORATION & PRODUCTION 1.0%
1,150 Norsk Hydro ASA (NW) 72,506
- ---------------------------------------------------
TOTAL ENERGY 250,531
FINANCIAL 10.5%
DIVERSIFIED BANKS 5.7%
44,290 Banca Intesa S.p.A. (IT) 146,734
11,339 SanPaolo IMI S.p.A. (IT) 129,309
1,820 Societe Generale (FR) 155,720
- ---------------------------------------------------
431,763
DIVERSIFIED CAPITAL MARKETS 3.8%
4,170 Credit Suisse Group (SZ) 145,079
1,904 UBS AG (SZ) 141,764
- ---------------------------------------------------
286,843
MULTI-LINE INSURANCE 1.0%
715 Allianz AG (GR) 78,254
- ---------------------------------------------------
TOTAL FINANCIAL 796,860
HEALTH CARE 3.1%
PHARMACEUTICALS 3.1%
1,157 Roche Holding AG (SZ) 113,099
3,155 UCB SA (BE) 121,239
- ---------------------------------------------------
234,338
- ---------------------------------------------------
TOTAL HEALTH CARE 234,338
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
INDUSTRIALS 17.0%
BUILDING PRODUCTS 3.0%
2,780 Compagnie de Saint-Gobain
(FR) $ 140,642
2,700 Wienerberger AG (AT) 89,608
- ---------------------------------------------------
230,250
CONSTRUCTION & ENGINEERING 3.0%
4,000 Fomento de Construcciones y
Contratas S.A. (SP) 145,443
3,000 Hochtief AG (GR) 84,573
- ---------------------------------------------------
230,016
DIVERSIFIED CHEMICALS 0.7%
1,975 Bayer AG (GR) 48,315
ELECTRICAL COMPONENTS & EQUIPMENT 0.7%
1,000 Bekaert NV (BE) 55,212
ENVIRONMENTAL SERVICES 1.5%
4,530 BWT AG (AT) 111,048
INDUSTRIAL MACHINERY 5.5%
850 Georg Fischer AG (SZ)(a) 191,777
435 Schindler Holding AG (SZ) 138,468
355 Sulzer AG (SZ) 88,401
- ---------------------------------------------------
418,646
PAPER PRODUCTS 2.6%
7,200 Grupo Empresarial Ence, S.A.
(SP) 197,312
- ---------------------------------------------------
TOTAL INDUSTRIALS 1,290,799
INFORMATION TECHNOLOGY 9.3%
COMMUNICATIONS EQUIPMENT 2.7%
21,238 Ascom Holding AG (SZ)(a) 208,717
ELECTRONIC EQUIPMENT MANUFACTURERS 2.7%
1,105 Barco NV (BE) 92,081
4,950 Epcos AG (GR)(a) 111,927
- ---------------------------------------------------
204,008
SEMICONDUCTOR EQUIPMENT 2.2%
1,270 Unaxis Holding AG (SZ) 169,892
SYSTEM SOFTWARES 1.7%
5,005 UBI Soft Entertainment SA
(FR)(a) 126,252
- ---------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 708,869
LEISURE AND CONSUMER STAPLES 12.0%
BROADCASTING & CABLE TV 2.5%
10,847 Mediaset S.p.A. (IT) 120,238
3,455 ProSiebenSat.1 Media AG
Preferred Stock (GR) 67,940
- ---------------------------------------------------
188,178
FOOD RETAIL 1.8%
12,715 Jeronimo Martins, SGPS, S.A.
(PL)(a) 138,858
HOTELS, RESORTS & CRUISE LINES 2.3%
490 Kuoni Reisen Holding AG (SZ) 178,889
</Table>
16
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
LEISURE PRODUCTS 2.9%
4,220 Trigano (FR) $ 218,428
MOVIES & ENTERTAINMENT 2.5%
7,097 Vivendi Universal SA (FR)(a) 188,569
- ---------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 912,922
MATERIALS 12.1%
CONSTRUCTION MATERIALS 7.7%
18,220 Buzzi Unicem S.p.A. (IT) 212,865
285 Imerys SA (FR) 67,954
1,640 Lafarge SA (FR) 132,925
7,895 RHI AG (AT)(a) 171,179
- ---------------------------------------------------
584,923
FERTILIZERS & AGRICULTURAL
CHEMICALS 0.9%
4,880 Kemira Oyj (FI) 65,064
STEEL 3.5%
11,900 Arcelor (LX) 216,093
2,920 ThyssenKrupp AG (GR) 54,402
- ---------------------------------------------------
270,495
- ---------------------------------------------------
TOTAL MATERIALS 920,482
TELECOMMUNICATIONS & UTILITIES 11.7%
COMMUNICATIONS EQUIPMENT 2.0%
1,320 Sagem SA (FR) 146,946
INTEGRATED TELECOMMUNICATIONS
SERVICES 2.3%
15,500 Portugal Telecom, SGPS, S.A.
(PL) 173,485
WIRELESS TELECOMMUNICATION
SERVICES 7.4%
785 AO VimpelCom -- ADR(a) 81,632
2,995 Bouygues SA (FR) 103,211
695 Mobile Telesystems -- ADR 91,393
1,135 Mobistar SA (BE)(a) 74,482
5,700 STET Hellas
Telecommunications S.A. --
ADR 116,280
2,710 Turkcell Iletisim Hizmetleri
A.S. -- ADR(a) 96,883
- ---------------------------------------------------
563,881
- ---------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 884,312
- ---------------------------------------------------
TOTAL COMMON STOCKS (FOREIGN)
(COST $5,656,123) 7,198,729
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
SHORT-TERM INVESTMENT 13.1%
$990,507 J.P. Morgan Chase Interest
Bearing Demand Deposit
Account $ 990,507
- ---------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $990,507) 990,507
- ---------------------------------------------------
TOTAL INVESTMENTS 107.9%
(COST $6,646,630) 8,189,236
- ---------------------------------------------------
LIABILITIES LESS OTHER ASSETS (7.9%) (597,929)
- ---------------------------------------------------
NET ASSETS 100.0% $7,591,307
- ---------------------------------------------------
</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>
AT Austria IT Italy
BE Belgium LX Luxembourg
FI Finland NW Norway
FR France PL Portugal
GR Germany SP Spain
SZ Switzerland
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
ADR -- American Depository Receipt
17
Management Overview
ICON INTERNATIONAL EQUITY FUND
A discussion with the Portfolio Management Team
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON International Equity Fund, Class Z advanced 29.30% for the six-month
period ended March 31, 2004, outpacing its benchmark, the MSCI All Country World
Index ex-U.S., which returned 22.77%. The Fund's I shares returned -1.37% since
their recent February 6, 2004 inception compared to a 1.81% return for the
benchmark, while its Class C shares returned -4.43% since their February 19,
2004 inception compared to a -1.15% return for the benchmark over the same
period. Total returns for other periods as of March 31, 2004 are listed on page
21.
The increased interdependency of global economies worked to the Fund's benefit
during the period, as international markets mirrored the far-reaching move
toward fair value that has bolstered U.S. stocks for more than a year. However,
because international issues were largely trading at a deeper discount relative
to their domestic counterparts, they closed a considerably wider valuation gap,
thereby outperforming the broad U.S. market by a substantial margin.
The Fund is managed using an all-cap strategy, meaning we invest in
international securities we believe are undervalued, regardless of their
location on the traditional style grid. Our investment approach is not limited
by restrictions on market capitalization; the ICON system searches for potential
industry leadership regardless of where it emerges.
Even though our approach views investment style as irrelevant, the Fund
benefited due to its growth bias during the reporting period, as measured on a
traditional price-to-earnings (P/E) basis. For the record, the Fund does not
utilize P/E ratio as a valuation measure, regarding it as a static proxy.
Instead, we calculate a proprietary value-to-price ratio (V/P) for each industry
and security. We view this as more meaningful since it considers the effects of
earnings, projected growth, risk, and interest rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Favorable value-to-price ratios and investor overreactions to geopolitical
tensions and world unrest afforded the Fund numerous opportunities to capitalize
on underpriced industries that were demonstrating leadership relative to the
broader foreign market. While our system continued to detect a cyclical theme
leaning toward a recovering global economy, the period was marked by nascent
strength among defensive industries. We judged these reversals to be temporary
and believe economically sensitive industries can again assume leadership as the
recovery gains traction.
Europe remained entrenched in a low-growth environment while facing stiff
headwinds from the appreciating euro. Nevertheless, structural reforms seem to
be taking hold, which could ultimately prove advantageous for the region. Japan,
on the other hand, showed clear signs of internal recovery, having made
considerable headway in restoring its debt-burdened banking system. Asia's
strength, however, continued to be driven by robust growth in China, which is
rapidly establishing itself as an economic powerhouse.
HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
Perhaps the most significant change to the Fund during the period was its
transition on January 29, 2004, from the ICON North Europe Region Fund to the
diversified ICON International Equity Fund. In light of this expanded mandate,
which permits us to invest in equity securities anywhere in the world excluding
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004 (unaudited)
Equities 95.8%
Top 10 Equity Holdings 18.1%
Number of Stocks 86
Cash Equivalents 9.1%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004 (unaudited)
TUI AG 2.1%
Deutsche Bank AG 2.1%
Companhia Siderurgica Nacional S.A. 1.9%
ITV plc 1.8%
Metro AG 1.7%
Alcan Inc. 1.7%
Nokia Oyj 1.7%
QIAGEN N.V. 1.7%
Hilton Group plc 1.7%
Georg Fischer AG 1.7%
Percentages are based upon net assets.
18
the United States, the Fund is now guided by our time-tested strategy of
industry and sector rotation. With investment themes increasingly cutting across
country borders, correlation studies convinced us to adopt this strategy and
replace the Fund's prior focus, which emphasized country rotation.
Against this backdrop, much of the Fund's subsequent restructuring centered on
sector allocation rather than country weightings. For example, despite being a
leading net and relative contributor to returns, the Fund's overweight position
in Information Technology was significantly reduced during the reporting period,
as valuation concerns pressured the semiconductor equipment and semiconductors
industries. In contrast, sector exposure to relative detractor Materials was
enhanced to almost an equal weight, as steel industry fundamentals registered
vastly improving relative strength.
Holdings in the Energy sector also detracted relative to the benchmark, while
Leisure and Consumer Staples contributed due to outperformance in the
broadcasting & cable television industry.
Among the Fund's leading individual contributors to performance, semiconductor
equipment company ASML Holding NV of the Netherlands advanced on
industry-leading market share gains in its core photolithography business. U.K.
TV broadcaster Carlton Communications also climbed on anticipated cost synergies
from its approved merger with rival firm Granada Plc, but the stock became
overvalued during the period and we sold it. An improved current-year outlook
bolstered British microchip designer ARM Holdings Plc., and German electronic
component supplier Epcos AG posted a four-fold rise in operating profits.
In contrast, Fund returns were hampered by poor performance from Irish discount
airline Ryanair Holdings Plc., which tumbled when the company announced its
first-ever profit warning. Its free-fall led us to sell the company. Canadian
WestJet Airlines Ltd. also declined as government repeal of a planned corporate
tax cut forced the Canadian carrier to miss earnings expectations. Analyst
downgrades pressured the aluminum industry hurting leading producer Alcan Inc.,
while steelmaker Dofasco, Inc. of Canada fell as rising energy costs offset
record shipments.
WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INTERNATIONAL MARKET?
Although defensive names rebounded during the cyclical pullback of early 2004,
we believe this to be a temporary theme reversal. On the basis of valuation and
relative strength, we anticipate that economically sensitive sectors will regain
their status as market leaders, particularly as the recovery proves sustainable.
Given the increased correlation of industries on a global scale, we will
continue to seek out market leadership regardless of country origin.
One of the clear examples we're currently seeing is in the wireless
telecommunication services industry, where valuation and relative strength have
combined to create compelling buying opportunities in countries as varied as
Russia, Turkey and China. We continue to seek leading industries, regardless of
location, in order to capitalize on projected robust moves toward fair value.
19
Management Overview (continued)
ICON INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - On January 29, 2004, the Fund changed from the region-specific ICON North
Europe Region Fund to the diversified ICON International Equity Fund, and
its investment strategy now allows investments in equity securities
anywhere in the world excluding the United States.
- - Valuation led us to overweight small- and mid-capitalization foreign
companies, which aided relative performance.
- - All sectors owned in the Fund had positive performance during the period.
- - Among the Fund's strongest-performing holdings during the period were ASML
Holding N.V. of the Netherlands and Carlton Communications from the United
Kingdom.
- - Our methodology led us to hold a significant position in the Information
Technology sector, and the Fund's holdings in this sector contributed to
returns.
- - Our stockpicking in the broadcasting & TV industry added to returns.
- --------------------------------------------------------------------------------
TOP 10 COUNTRIES
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Germany 19.1%
Japan 13.8%
United Kingdom 7.6%
Canada 7.3%
Hong Kong 5.8%
Sweden 4.8%
Netherlands 4.4%
Austria 4.3%
Finland 4.1%
Mexico 3.2%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Industrials 19.8%
Financial 16.7%
Materials 14.7%
Consumer Discretionary 12.6%
Information Technology 10.0%
Leisure and Consumer Staples 8.3%
Telecommunication & Utilities 7.7%
Energy 4.3%
Health Care 1.7%
</Table>
Percentages are based upon net assets.
20
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS
INCEPTION ENDED ONE FIVE SINCE
DATE 3/31/04* YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON International Equity
Fund-Class Z 2/18/97 29.30% 87.81% 5.28% 6.59%
- ------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S. 22.77% 59.91% 2.03% 4.08%
- ------------------------------------------------------------------------------------------
ICON International Equity
Fund-Class I 2/6/04 N/A N/A N/A -1.37%
- ------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S. N/A N/A N/A 1.81%
- ------------------------------------------------------------------------------------------
ICON International Equity
Fund-Class C 2/19/04 N/A N/A N/A -4.43%
- ------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S. N/A N/A N/A -1.15%
- ------------------------------------------------------------------------------------------
</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
Fund's name and investment strategy changed effective January 29, 2004. The
Fund's past performance would have been different if the current strategy had
been in effect. Performance shown is for the Fund's Class Z shares, which are
available only to grandfathered and institutional investors. Performance for the
Fund's other classes will vary due to differences in charges and expenses.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON INTERNATIONAL EQUITY FUND-
CLASS Z MSCI ACWI EX-U.S.
------------------------------- -----------------
2/18/97 10000 10000
3/31/97 10230 10028
3/31/98 12900 11659
3/31/99 12171 12019
3/31/00 15585 15490
3/31/01 12239 11337
3/31/02 11146 10680
3/31/03 8354 8312
3/31/04 15744 13291
</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.
Performance for the Fund's other share classes will vary due to differences in
charges and expenses. The Fund's performance in this chart and the performance
table assumes the reinvestment of dividends, capital gain distributions and tax
return of capital but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
21
Schedule of Investments
(unaudited)
ICON INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
COMMON STOCKS (FOREIGN) 95.8%
CONSUMER DISCRETIONARY 12.6%
APPAREL ACCESSORIES & LUXURY GOODS 1.0%
5,576 Hugo Boss AG (GR) $ 123,342
AUTOMOBILE MANUFACTURERS 2.2%
3,665 DaimlerChrysler AG (GR) 153,064
3,000 Toyota Motor Corporation
(JP) 111,611
- ---------------------------------------------------
264,675
CONSUMER ELECTRONICS 0.7%
2,868 Koninklijke (Royal)
Philips Electronics N.V.
(NE) 83,068
FOOTWEAR 1.7%
900 Puma AG Rudolf Dassler
Sport (GR) 198,244
HOME IMPROVEMENT RETAIL 0.8%
4,500 RONA inc. (CN)(a) 100,118
HOMEBUILDING 0.7%
2,100 Daito Trust Construction
Co., Ltd. (JP) 82,170
HOUSEHOLD APPLIANCES 1.1%
10,000 Makita Corporation (JP) 128,548
HOUSEWARES & SPECIALTIES 0.7%
18,000 Noritake Co., Limited
(JP) 83,030
SPECIALTY STORES 1.5%
6,247 Douglas Holding AG (GR) 180,169
COMPUTER & ELECTRONIC -- RETAIL 0.8%
13,400 Elektra Comercial S.A. de
C.V. (MX)(a) 88,654
TIRES & RUBBER 1.4%
4,306 Continental AG (GR) 170,181
- ---------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 1,502,199
ENERGY 4.3%
INTEGRATED OIL & GAS 0.8%
526 OMV AG (AT) 99,612
OIL & GAS DRILLING 0.8%
10,085 Smedvig ASA (NW) 93,331
OIL & GAS EQUIPMENT & SERVICES 2.7%
8,700 Enerflex Systems Ltd.
(CN) 158,477
42,300 Peak Energy Services Ltd.
(CN)(a) 158,675
- ---------------------------------------------------
317,152
- ---------------------------------------------------
TOTAL ENERGY 510,095
FINANCIAL 16.7%
CONSUMER FINANCE 3.4%
1,000 Acom Co., Ltd. (JP) 73,209
3,800 Credit Saison Co., Ltd.
(JP) 114,264
1,000 ORIX Corporation (JP) 110,905
7,600 Provident Financial plc
(UK) 102,271
- ---------------------------------------------------
400,649
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
DIVERSIFIED BANKS 3.0%
12,293 Barclays PLC (UK) $ 108,362
4,585 Danske Bank A/S (DE) 103,847
2,465 KBC
Bankverzekeringsholding
(BE) 144,392
- ---------------------------------------------------
356,601
DIVERSIFIED CAPITAL MARKETS 2.1%
2,968 Deutsche Bank AG (GR) 248,000
LIFE & HEALTH INSURANCE 2.7%
71,980 Legal & General Group plc
(UK) 125,236
47,767 Skandia Forsakrings AB
(SW) 189,405
- ---------------------------------------------------
314,641
PROPERTY & CASUALTY INSURANCE 0.9%
10,000 Mitsui Sumitomo Insurance
Company, Limited (JP) 106,703
REAL ESTATE MANAGEMENT &
DEVELOPMENT 2.5%
460,000 China Overseas Land &
Investment Limited (HK) 104,075
55,000 Hysan Development Company
Limited (HK) 95,519
160,000 Sino Land Company Limited
(HK) 100,214
- ---------------------------------------------------
299,808
REGIONAL BANKS 1.3%
12,000 The 77 Bank, Ltd. (JP) 75,106
14,000 The Bank of Yokohama,
Ltd. (JP) 82,420
- ---------------------------------------------------
157,526
SPECIALIZED FINANCE 0.8%
7,169 OMHEX AB (SW)(a) 100,578
- ---------------------------------------------------
TOTAL FINANCIAL 1,984,506
HEALTH CARE 1.7%
BIOTECHNOLOGY 1.7%
15,417 QIAGEN N.V. (GR)(a) 202,331
- ---------------------------------------------------
TOTAL HEALTH CARE 202,331
INDUSTRIALS 19.8%
AEROSPACE & DEFENSE 1.1%
4,000 Empresa Brasileira de
Aeronautica S.A.
(Embraer) -- ADR 128,400
AIRLINES 3.3%
8,500 Austrian Airlines/
Osterreichische
Luftverkehrs AG (AT)(a) 126,183
10,942 Deutsche Lufthansa AG
(GR) 179,334
4,600 WestJet Airlines Ltd.
(CN)(a) 91,877
- ---------------------------------------------------
397,394
</Table>
22
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
BUILDING PRODUCTS 2.3%
2,900 Compagnie de Saint-Gobain
(FR) $ 146,713
4,150 Uponor Oyj (FI) 124,846
- ---------------------------------------------------
271,559
CONSTRUCTION, FARM MACHINERY & HEAVY
TRUCKS 2.2%
40,900 Global Railway Industries
Ltd. (CN)(a) 133,818
3,907 Volvo AB (SW) 128,846
- ---------------------------------------------------
262,664
INDUSTRIAL CONGLOMERATES 1.0%
30,000 Alfa, S.A. (MX)(a) 113,850
INDUSTRIAL MACHINERY 2.8%
880 Georg Fischer AG (SZ)(a) 198,545
9,000 Komori Corporation (JP) 140,505
- ---------------------------------------------------
339,050
MARINE 2.2%
172,000 China Shipping
Development Company
Limited (HK) 117,898
27,000 Kawasaki Kisen Kaisha,
Ltd. (JP) 140,102
- ---------------------------------------------------
258,000
HIGHWAYS & RAILTRACKS 1.2%
190,000 Zhejiang Expressway Co.,
Ltd. (HK) 140,263
TRADING COMPANIES & DISTRIBUTORS 1.4%
9,000 Mitsui & Co., Ltd. (JP) 81,060
9,000 Sumitomo Corporation (JP) 81,099
- ---------------------------------------------------
162,159
TRUCKING 2.3%
2,900 DSV, De Sammensluttede
Vognmaend af 13-7-1976
A/S (DE) 123,828
15,000 Seino Transportation Co.,
Ltd. (JP) 153,851
- ---------------------------------------------------
277,679
- ---------------------------------------------------
TOTAL INDUSTRIALS 2,351,018
INFORMATION TECHNOLOGY 10.0%
COMMUNICATIONS EQUIPMENT & SERVICES 3.8%
9,600 China Unicom Limited --
ADR 86,496
73,414 Nera ASA (NW)(a) 160,356
10,070 Nokia Oyj (FI) 205,096
- ---------------------------------------------------
451,948
ELECTRONIC EQUIPMENT
MANUFACTURERS 0.9%
4,650 Epcos AG (GR)(a) 105,144
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
IT CONSULTING & OTHER SERVICES 2.6%
5,259 TietoEnator Oyj (FI) $ 159,812
59,285 WM-data AB (SW)(a) 149,529
- ---------------------------------------------------
309,341
OFFICE ELECTRONICS 1.2%
8,468 Oce N.V. (NE) 143,948
SEMICONDUCTOR EQUIPMENT 1.5%
9,578 ASML Holding N.V. (NE)(a) 175,371
- ---------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 1,185,752
LEISURE AND CONSUMER STAPLES 8.3%
BROADCASTING & CABLE TV 1.9%
85,117 ITV plc (UK)(a) 208,446
10,915 ITV plc -- Convertible
Shares (UK)(a) 15,015
- ---------------------------------------------------
223,461
CASINOS & GAMING 1.7%
48,048 Hilton Group plc (UK) 200,834
HOTELS, RESORTS & CRUISE LINES 2.1%
11,124 TUI AG (GR) 254,405
HYPERMARKETS & SUPER CENTERS 1.8%
4,828 Metro AG (GR) 207,156
PUBLISHING 0.8%
5,140 Schibsted ASA (NW) 93,742
- ---------------------------------------------------
TOTAL LEISURE AND CONSUMER STAPLES 979,598
MATERIALS 14.7%
ALUMINUM 1.7%
4,600 Alcan Inc. 206,034
CONSTRUCTION MATERIALS 2.3%
4,600 Cemex S.A. de C.V. -- ADR 137,172
6,400 RHI AG (AT)(a) 138,764
- ---------------------------------------------------
275,936
DIVERSIFIED CHEMICALS 1.0%
3,355 Akzo Nobel N.V. (NE) 124,121
DIVERSIFIED METALS & MINING 1.1%
243,000 Jiangxi Copper Company
Ltd. (HK) 131,775
FOREST PRODUCTS 0.8%
8,000 Nexfor Inc. (CN) 88,933
INDUSTRIAL GASES 1.1%
2,391 Linde AG (GR) 126,999
</Table>
23
Schedule of Investments (continued)
(unaudited)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------------
METAL & GLASS CONTAINERS 1.3%
4,000 Toyo Seikan Kaisha, Ltd.
(JP) $ 79,733
63,000 Vitro, S.A. de C.V. (MX) 78,510
- ---------------------------------------------------
158,243
STEEL 5.4%
1,790 Boehler-Uddeholm AG (AT) 145,694
3,300 Companhia Siderurgica
Nacional S.A. -- ADR 225,060
5,148 Dofasco Inc. (CN) 133,180
10,197 Hylsamex, S.A. de C.V.
(MX)(a) 10,425
6,500 ThyssenKrupp AG (GR) 121,101
- ---------------------------------------------------
635,460
- ---------------------------------------------------
TOTAL MATERIALS 1,747,501
TELECOMMUNICATION & UTILITIES 7.7%
INTEGRATED TELECOMMUNICATION
SERVICES 1.3%
4,199 TDC A/S (DE) 153,551
WATER UTILITIES 1.2%
14,061 AWG plc (UK) 142,195
WIRELESS TELECOMMUNICATIONS
SERVICES 5.2%
48,220 America Movil S.A. de
C.V. (MX) 93,159
1,900 AO VimpelCom(a) -- ADR 197,581
7,400 STET Hellas
Telecommunications
S.A. -- ADR 150,960
5,100 Turkcell Iletisim
Hizmetleri A.S.(a) -- ADR 182,325
- ---------------------------------------------------
624,025
- ---------------------------------------------------
TOTAL TELECOMMUNICATION & UTILITIES 919,771
- ---------------------------------------------------
TOTAL COMMON STOCKS
(COST $9,136,101) 11,382,771
</Table>
<Table>
- ---------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
SHORT-TERM INVESTMENTS 9.1%
FOREIGN CURRENCY CONTRACTS 0.0%
$ 31 British Pounds $ 57
- ---------------------------------------------------
TOTAL FOREIGN CURRENCY CONTRACTS 57
INTEREST BEARING DEMAND DEPOSIT 9.1%
1,083,016 J.P. Morgan Chase
Interest Bearing Demand
Deposit Account 1,083,016
- ---------------------------------------------------
TOTAL INTEREST BEARING DEMAND DEPOSIT 1,083,016
- ---------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,083,060) 1,083,073
- ---------------------------------------------------
TOTAL INVESTMENTS 104.9%
(COST $10,219,161) 12,465,844
- ---------------------------------------------------
LIABILITIES LESS OTHER ASSETS (4.9%) (583,881)
- ---------------------------------------------------
NET ASSETS 100.0% $11,881,963
- ---------------------------------------------------
</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>
AT Austria JP Japan
BE Belgium MX Mexico
CN Canada NE Netherlands
DE Denmark NW Norway
FI Finland SW Sweden
FR France SZ Switzerland
GR Germany UK United Kingdom
HK Hong Kong
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
ADR -- American Depositary Receipt
24
Statements of Assets and Liabilities
(unaudited)
<Table>
<Caption>
-------------- -------------- --------------
MARCH 31, 2004 ICON ICON ICON
ASIA-PACIFIC EUROPE INTERNATIONAL
REGION FUND FUND EQUITY FUND
------------ -------------- --------------
ASSETS
Investments, at cost $13,308,311 $6,646,630 $10,219,161
-------------- -------------- --------------
Investments, at value 16,309,695 8,189,236 12,465,844
Cash 18,845 35,308 -
Receivables:
Fund shares sold 57,127 20,072 87,700
Investments sold - - 302,322
Interest 37 34 50
Dividends 37,942 12,131 47,012
Other assets 460 421 568
-------------- -------------- --------------
Total Assets 16,424,106 8,257,202 12,903,496
-------------- -------------- --------------
LIABILITIES
Payables:
Due to custodian bank - - 192,272
Fund shares redeemed 98,186 - -
Investments bought - 641,592 790,676
Advisory fees 13,456 5,881 9,561
Accrued distribution fees - - 166
Fund accounting, custodial and transfer agent fees 8,696 4,092 6,878
Administration fees 673 294 478
Accrued expenses 19,911 14,036 21,502
-------------- -------------- --------------
Total Liabilities 140,922 665,895 1,021,533
-------------- -------------- --------------
NET ASSETS -- ALL SHARE CLASSES $16,283,184 $7,591,307 $11,881,963
-------------- -------------- --------------
NET ASSETS -- CLASS I $ - $ - $ 1,234,056
-------------- -------------- --------------
NET ASSETS -- CLASS C $ - $ - $ 134,599
-------------- -------------- --------------
NET ASSETS -- CLASS Z $ - $ - $10,513,308
============== ============== ==============
Shares outstanding (unlimited shares authorized, no par
value)
Class I 1,807,377 638,924 114,202
Class C - - 12,469
Class Z - - 972,764
Net asset value (offering price and redemption price per
share)
Class I $ 9.01 $ 11.88 $ 10.81
Class C - - $ 10.79
Class Z - - $ 10.81
</Table>
The accompanying notes are an integral part of the financial statements.
25
Statements of Operations
(unaudited)
<Table>
<Caption>
-------------- -------------- --------------
FOR THE SIX MONTHS ENDED MARCH 31, 2004 ICON ICON ICON
ASIA-PACIFIC EUROPE INTERNATIONAL
REGION FUND FUND EQUITY FUND
------------ -------------- --------------
INVESTMENT INCOME
Interest $ 39 $ 125 $ 394
Dividends 114,163 16,994 86,048
Foreign taxes withheld (11,920) (3,024) (10,763)
-------------- -------------- --------------
Total Investment Income 102,282 14,095 75,679
-------------- -------------- --------------
EXPENSES
Advisory fees 72,731 33,393 52,442
Distribution fees:
Class I - - 103
Class C - - 88
Fund accounting, custodial and transfer agent fees 32,488 16,886 22,635
Administration fees 3,600 1,824 2,429
Audit fees 918 424 664
Registration fees 8,626 8,621 9,416
Legal fees 212 154 120
Insurance expense 254 224 240
Trustee fees and expenses 487 412 467
Shareholder reports 1,396 689 1,052
Interest expense 11 18 -
Other expenses 15,448 12,899 14,374
-------------- -------------- --------------
Total Expenses 136,171 75,544 104,030
-------------- -------------- --------------
NET INVESTMENT (LOSS) (33,889) (61,449) (28,351)
-------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain from investment transactions 438,815 1,059,056 3,224,538
Net realized gain/(loss) from foreign currency
translations (156) 72 417
Change in unrealized net appreciation/(depreciation):
on securities 1,428,070 485,977 (504,423)
on other assets and liabilities denominated in foreign
currency 570 (183) 642
-------------- -------------- --------------
Net realized and unrealized gain on investments 1,867,299 1,544,922 2,721,174
-------------- -------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,833,410 $1,483,473 $2,692,823
============== ============== ==============
</Table>
The accompanying notes are an integral part of the financial statements.
26
Statements of Changes in Net Assets
(unaudited)
<Table>
<Caption>
ICON ASIA-PACIFIC
REGION FUND
-------------------------------------------
Six months ended
March 31, 2004 Year ended
(unaudited) September 30, 2003
---------------- ------------------
OPERATIONS
Net investment income/(loss) $ (33,889) $ 45,529
Net realized gain from investment transactions 438,815 745,694
Net realized (loss) from foreign currency translations (156) (1,457)
Change in unrealized appreciation on securities and
foreign currency translations 1,428,640 868,520
---------------- ------------------
Net increase in net assets resulting from operations 1,833,410 1,658,286
---------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (39,164) -
Net realized gains - -
---------------- ------------------
Net decrease from dividends and distributions (39,164) -
---------------- ------------------
FUND SHARE TRANSACTIONS
Shares sold 13,850,495 6,269,616
Reinvested dividends and distributions 39,063 -
Shares repurchased (5,484,830) (8,770,250)
---------------- ------------------
Net increase/(decrease) from fund share transactions 8,404,728 (2,500,634)
---------------- ------------------
Total net increase/(decrease) in net assets 10,198,974 (842,348)
NET ASSETS
Beginning of period 6,084,210 6,926,558
---------------- ------------------
End of period $16,283,184 $ 6,084,210
---------------- ------------------
NET ASSETS CONSIST OF
Paid-in capital $22,803,029 $14,398,301
Accumulated undistributed net investment income/(loss) (33,890) 39,163
Accumulated undistributed net realized (loss) from
investments (8,768,662) (9,207,477)
Accumulated net realized (loss) from foreign currency
translations (719,191) (719,035)
Unrealized appreciation/(depreciation):
on securities 3,001,384 1,573,314
on other assets and liabilities denominated in foreign
currency 514 (56)
---------------- ------------------
NET ASSETS $16,283,184 $ 6,084,210
================ ==================
TRANSACTIONS IN FUND SHARES
Shares sold 1,649,995 879,754
Reinvested dividends and distributions 4,835 -
Shares repurchased (645,384) (1,302,144)
---------------- ------------------
Net increase/(decrease) 1,009,446 (422,390)
Shares outstanding beginning of period 797,931 1,220,321
---------------- ------------------
Shares outstanding end of period 1,807,377 797,931
================ ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $13,575,890 $ 5,375,821
Proceeds from sales of securities 5,258,853 7,711,768
</Table>
The accompanying notes are an integral part of the financial statements.
27
Statements of Changes in Net Assets (continued)
(unaudited)
<Table>
<Caption>
ICON EUROPE FUND
-------------------------------------------
Six months ended
March 31, 2004 Year ended
(unaudited) September 30, 2003
---------------- ------------------
OPERATIONS
Net investment income/(loss) $ (61,449) $ (19,824)
Net realized gain from investment transactions 1,059,056 558,317
Net realized gain from foreign currency translations 72 691
Change in unrealized appreciation on securities and
foreign currency translations 485,794 1,568,069
---------------- ------------------
Net increase in net assets resulting from operations 1,483,473 2,107,253
---------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - -
Net realized gains - -
---------------- ------------------
Net decrease from dividends and distributions - -
---------------- ------------------
FUND SHARE TRANSACTIONS
Shares sold 3,720,070 21,160,657
Reinvested dividends and distributions - -
Shares repurchased (6,874,685) (18,624,601)
---------------- ------------------
Net increase/(decrease) from fund share transactions (3,154,615) 2,536,056
---------------- ------------------
Total net increase/(decrease) in net assets (1,671,142) 4,643,309
NET ASSETS
Beginning of period 9,262,449 4,619,140
---------------- ------------------
End of period $ 7,591,307 $ 9,262,449
---------------- ------------------
NET ASSETS CONSIST OF
Paid-in capital $ 7,127,866 $10,282,481
Accumulated undistributed net investment income/(loss) (61,449) -
Accumulated undistributed net realized (loss) from
investments (663,426) (1,722,482)
Accumulated net realized (loss) from foreign currency
translations (354,341) (354,413)
Unrealized appreciation:
on securities 1,542,606 1,056,629
on other assets and liabilities denominated in foreign
currency 51 234
---------------- ------------------
NET ASSETS $ 7,591,307 $ 9,262,449
================ ==================
TRANSACTIONS IN FUND SHARES
Shares sold 336,843 2,507,561
Reinvested dividends and distributions - -
Shares repurchased (639,072) (2,190,470)
---------------- ------------------
Net increase/(decrease) (302,229) 317,091
Shares outstanding beginning of period 941,153 624,062
---------------- ------------------
Shares outstanding end of period 638,924 941,153
================ ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $ 3,735,632 $ 8,271,751
Proceeds from sales of securities 6,784,080 6,013,474
</Table>
The accompanying notes are an integral part of the financial statements.
28
<Table>
<Caption>
ICON INTERNATIONAL EQUITY FUND
-------------------------------------------
Six months ended
March 31, 2004 Year ended
(unaudited) September 30, 2003
---------------- ------------------
OPERATIONS
Net investment income/(loss) $ (28,351) $ 75,481
Net realized gain from investment transactions 3,224,538 120,749
Net realized gain from foreign currency translations 417 3,777
Change in unrealized appreciation/(depreciation) on
securities and foreign currency translations (503,781) 2,997,553
---------------- ------------------
Net increase in net assets resulting from operations 2,692,823 3,197,560
---------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class I - -
Class C - -
Class Z (57,934) (84,595)
Net realized gains
Class I - -
Class C - -
Class Z - -
---------------- ------------------
Net decrease from dividends and distributions (57,934) (84,595)
---------------- ------------------
FUND SHARE TRANSACTIONS
Shares sold
Class I 1,217,107 -
Class C 137,165 -
Class Z 2,826,658 10,203,582
Reinvested dividends and distributions
Class I - -
Class C - -
Class Z 57,395 84,466
Shares repurchased
Class I (3,400) -
Class C - -
Class Z (5,575,350) (11,035,500)
---------------- ------------------
Net (decrease) from fund share transactions (1,340,425) (747,452)
---------------- ------------------
Total net increase in net assets 1,294,464 2,365,513
NET ASSETS
Beginning of period 10,587,499 8,221,986
---------------- ------------------
End of period $11,881,963 $10,587,499
---------------- ------------------
NET ASSETS CONSIST OF
Paid-in capital $ 8,929,140 $10,269,565
Accumulated undistributed net investment income/(loss) (86,285) -
Accumulated undistributed net realized gain/(loss) from
investments 1,465,192 (1,759,346)
Accumulated net realized (loss) from foreign currency
translations (674,146) (674,563)
Unrealized appreciation:
on securities 2,246,670 2,751,093
on other assets and liabilities denominated in foreign
currency 1,392 750
---------------- ------------------
NET ASSETS $11,881,963 $10,587,499
================ ==================
TRANSACTIONS IN FUND SHARES
Shares sold
Class I 114,519 -
Class C 12,469 -
Class Z 275,634 1,344,165
Reinvested dividends and distributions
Class I - -
Class C - -
Class Z 5,845 13,781
Shares repurchased
Class I (317) -
Class C - -
Class Z (568,069) (1,478,885)
---------------- ------------------
Net (decrease) (159,919) (120,939)
Shares outstanding beginning of period 1,259,354 1,380,293
---------------- ------------------
Shares outstanding end of period 1,099,435 1,259,354
================ ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $ 6,906,260 $ 8,232,853
Proceeds from sales of securities 8,752,592 8,866,056
</Table>
The accompanying notes are an integral part of the financial statements.
29
Financial Highlights
<Table>
<Caption>
----------------------------------------------------------------------------
ICON ASIA-PACIFIC REGION FUND
----------------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
Net asset value, beginning of period $ 7.62 $ 5.68 $ 6.81 $ 10.25 $ 10.87 $ 6.09
----------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.02) 0.04 (0.19) 0.07 0.03 (0.01)
Net realized and unrealized gains/(losses) on
investments 1.43 1.90 (0.91) (3.51) (0.65) 4.79
----------- --------- --------- --------- --------- ---------
Total from investment operations 1.41 1.94 (1.10) (3.44) (0.62) 4.78
----------- --------- --------- --------- --------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.02) - - - - -
Distributions from net realized gains - - - - - -
Return of capital - - (0.03) - - -
----------- --------- --------- --------- --------- ---------
Total distributions (0.02) - (0.03) - - -
----------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 9.01 $ 7.62 $ 5.68 $ 6.81 $ 10.25 $ 10.87
=========== ========= ========= ========= ========= =========
Total return 18.56% 34.15% (16.29)% (33.56)% (5.70)% 78.49%
Net assets, end of period (in thousands) $16,283 $6,084 $ 6,927 $19,684 $25,710 $33,564
Average net assets for the period (in thousands) 14,506 6,683 12,142 18,749 32,629 29,191
Ratio of expenses to average net assets* 1.87% 1.98% 1.66% 1.70% 1.53% 1.59%
Ratio of net investment income/(loss) to average
net assets* (0.47)% 0.68% (0.23)% 0.75% 0.24% (0.57)%
Portfolio turnover rate 37.58% 81.44% 14.43% 55.58% 101.88% 62.82%
</Table>
(x) Calculated using the average share method
* Annualized for periods less than one year
The accompanying notes are an integral part of the financial statements.
30
<Table>
<Caption>
----------------------------------------------------------------------------
ICON EUROPE FUND
----------------------------------------------------------------------------
Six Months
Ended
March 31,
2004 Year Ended September 30,
(unaudited) 2003 2002 2001 2000 1999
----------- --------- --------- --------- --------- ---------
Net asset value, beginning of period $ 9.84 $ 7.40 $ 8.13 $10.14 $10.12 $11.87
----------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.10) (0.02) (0.04) 0.05 0.02 0.02
Net realized and unrealized gains/(losses) on
investments 2.14 2.46 (0.67) (2.06) - 1.06
----------- --------- --------- --------- --------- ---------
Total from investment operations 2.04 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 $11.88 $ 9.84 $ 7.40 $ 8.13 $10.14 $10.12
=========== ========= ========= ========= ========= =========
Total return 20.73% 32.97% (8.76)% (19.82)% 0.20% 6.41%
Net assets, end of period (in thousands) $7,591 $ 9,262 $4,619 $7,397 $6,560 $5,298
Average net assets for the period (in thousands) 6,660 6,774 5,706 7,935 7,109 8,107
Ratio of expenses to average net assets* 2.26% 1.87% 2.14% 1.96% 1.80% 1.81%
Ratio of net investment income/(loss) to average
net assets* (1.84)% (0.29)% (0.42)% 0.55% 0.18% (0.53)%
Portfolio turnover rate 57.64% 101.37% 12.26% 84.49% 62.17% 70.65%
</Table>
(x) Calculated using the average share method
* Annualized for periods less than one year
The accompanying notes are an integral part of the financial statements.
31
Financial Highlights (continued)
<Table>
<Caption>
---------------------------------------------------
ICON INTERNATIONAL EQUITY FUND
---------------------------------------------------
Class I Class C Class Z
For the period For the period Six Months
February 6, 2004 February 19, 2004 Ended
(inception) to (inception) to March 31,
March 31, 2004 March 31, 2004 2004
(unaudited) (unaudited) (unaudited)
----------------- ----------------- -----------
Net asset value, beginning
of period $10.96 $11.29 $ 8.41
----------------- ----------------- -----------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income/(loss)(x) (0.04) (0.08) (0.08)
Net realized and
unrealized
gains/(losses) on
investments (0.11) (0.42) 2.54
----------------- ----------------- -----------
Total from investment
operations (0.15) (0.50) 2.46
----------------- ----------------- -----------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income - - (0.06)
Distributions from net
realized gains - - -
Return of Capital - - -
----------------- ----------------- -----------
Total distributions - - (0.06)
----------------- ----------------- -----------
Net asset value, end of
period $10.81 $10.79 $ 10.81
================= ================= ===========
Total return (1.37)%(b) (4.43)%(b) 29.30%
Net assets, end of period
(in thousands) $1,234 $ 135 $10,513
Average net assets for the
period (in thousands) 82 18 10,358
Ratio of expenses to
average net assets* 2.23% 2.98% 1.98%
Ratio of net investment
income/(loss) to average
net assets* (0.79)% (1.54)% (0.54)%
Portfolio turnover rate 68.37%(a) 68.37%(a) 68.37%(a)
<Caption>
---------------------------------------------------------
ICON INTERNATIONAL EQUITY FUND
---------------------------------------------------------
Class Z
Year Ended September 30,
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning
of period $ 5.96 $ 7.24 $ 11.79 $ 11.74 $ 11.63
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income/(loss)(x) 0.06 0.04 0.09 0.04 (0.05)
Net realized and
unrealized
gains/(losses) on
investments 2.45 (1.25) (3.31) 1.21 1.51
--------- --------- --------- --------- ---------
Total from investment
operations 2.51 (1.21) (3.22) 1.25 1.46
--------- --------- --------- --------- ---------
LESS DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income - (0.04) - - (0.17)
Distributions from net
realized gains (0.06) - (1.33) (1.20) (1.18)
Return of Capital - (0.03) - - -
--------- --------- --------- --------- ---------
Total distributions (0.06) (0.07) (1.33) (1.20) (1.35)
--------- --------- --------- --------- ---------
Net asset value, end of
period $ 8.41 $ 5.96 $ 7.24 $ 11.79 $ 11.74
========= ========= ========= ========= =========
Total return 42.60% (16.94)% (30.29)% 10.43% 12.78%
Net assets, end of period
(in thousands) $10,587 $ 8,222 $14,196 $33,315 $23,971
Average net assets for the
period (in thousands) 8,571 13,347 18,204 29,412 30,993
Ratio of expenses to
average net assets* 2.00% 1.72% 1.65% 1.52% 1.59%
Ratio of net investment
income/(loss) to average
net assets* 0.88% 0.48% 0.97% 0.30% 0.25%
Portfolio turnover rate 98.91% 91.99% 41.67% 34.24% 50.36%
</Table>
(x) Calculated using the average share method
* Annualized for periods less than one year
(a)Portfolio turnover is calculated at the Fund level and therefore represents
the six months ended March 31, 2004.
(b)The total return calculation is for the period indicated.
The accompanying notes are an integral part of the financial statements.
32
Notes to Financial Statements
MARCH 31, 2004
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Asia-Pacific Region Fund ("Asia-Pacific Region Fund"), ICON Europe Fund
("Europe Fund") and ICON International Equity Fund ("International Equity Fund")
are series funds (individually a "Fund" and collectively, the "Funds"). The
Funds are part of the ICON Funds (the "Trust"), a Massachusetts business trust
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
as an open-end investment management company. The International Equity Fund
offers three classes of shares. There are fifteen other active funds within the
Trust. Those funds are covered by separate prospectuses and shareholder reports.
Each Fund is authorized to issue an unlimited number of no par shares. The
Funds primarily invest in foreign securities; the Asia-Pacific Region Fund and
Europe Fund primarily invest in companies whose principal business activities
fall within specific regions. The investment objective of each Fund is long-term
capital appreciation. The Funds may have elements of risk, including the risk of
loss of principal. There is no assurance that the investment process will
consistently lead to successful results. An investment concentrated in sectors
and industries may involve greater risk and volatility than a more diversified
investment. 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.
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 "NYSE") (normally 4 p.m.
Eastern time) each day the NYSE is open, except that (a) securities traded
primarily on the NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at
the NASDAQ Official Closing Price provided by NASDAQ each business day; and (b)
any foreign investments in the Funds traded in countries outside of the Western
Hemisphere are fair valued daily based on procedures established by the Funds'
Board of Trustees ("Board") to avoid stale prices and to take into account,
among other things, any significant events occurring after the close of a
foreign market in those regions. The Funds use pricing services to determine the
market value of securities in their portfolios; if a pricing service is not able
to provide a price, or the pricing service quote of valuation is inaccurate or
does not reflect the market value of the security, prices may be obtained
through market quotations from independent broker/dealers. If market quotations
from these sources are not readily available, the Funds' securities or other
assets are valued at fair value as determined in good faith by the Funds' Board
or pursuant to procedures approved by the Board. The valuation assigned to
fair-valued securities for purposes of calculating a Fund's NAV may differ from
the security's most recent closing market price and from the prices used by
other mutual funds to calculate their NAVs.
33
Notes to Financial Statements (continued)
Foreign securities traded in countries outside of the Western Hemisphere
are fair valued daily. Other securities listed or traded primarily on a
securities exchange or in the over-the-counter market are generally valued at
the last sale price on the exchange or market where the security is principally
traded, except that securities primarily traded on NASDAQ are normally valued at
the NASDAQ Official Closing Price. Lacking any sales that day, the security is
valued at the current closing bid price (or yield equivalent thereof) or based
on quotes from dealers making a market for the security. Options are valued at
their closing mid-price on the principal market where the option is traded.
Mid-price is the average of the sum of the closing bid and closing ask prices.
Debt securities with a remaining maturity of greater than sixty days are valued
in accordance with the evaluated bid price supplied by the pricing service.
Short-term securities with remaining maturities of sixty days or less are
generally valued at amortized cost or original cost plus accrued interest, which
approximates market value. London closing 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. No repurchase agreements were
purchased or sold by the Funds during the semiannual period ended March 31,
2004.
Foreign Currency Translation.
The accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the prevailing rates of exchange daily.
Income and expenses are translated into U.S. dollars at the prevailing exchange
rate on the respective dates of the transactions. Purchases and sales of
securities are translated into U.S. dollars at the contractual currency exchange
rates established at the time of each trade.
The Funds do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held 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.
Forward Foreign Currency Contracts.
The Funds may enter into short-term forward foreign currency contracts in
connection with planned purchases or sales of securities as a hedge against
fluctuations in foreign exchange rates pending the settlement of transactions in
foreign securities. A forward foreign currency contract is an agreement between
contracting parties to exchange an amount of currency at some future time with
an agreed upon rate.
Thesecontracts 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.
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.
34
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.
Dividends received by shareholders of the Funds which are derived from
foreign source income and foreign taxes paid by the Funds are to be treated, to
the extent allowable under the Code, as if received and paid by the shareholders
of the Funds. Dividends paid by the Funds from net investment income and
distributions of net realized short-term gains are, for federal income tax
purposes, taxable as ordinary income to shareholders.
Dividends and distributions to shareholders are recorded by the Funds on
the ex-dividend/distribution date. The Funds distribute net realized capital
gains, if any, to shareholders at least annually, if not offset by capital loss
carryovers. 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.
Expenses.
Expenses which cannot be directly attributed to a specific fund in the Trust are
apportioned between all funds based upon relative net assets. Each class of the
International Equity Fund bears expenses incurred on its behalf, and, in
addition, each class bears a portion of general expenses, based upon relative
net assets of each class.
35
Notes to Financial Statements (continued)
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fees.
ICON Advisers, Inc. ("ICON") (formerly Meridian Investment Management
Corporation) serves as the investment adviser to the Funds and is responsible
for managing the Funds' portfolios of securities. ICON receives a monthly
management fee that is computed daily at an annual rate of 1.00% of each Fund's
average daily net assets.
Transfer Agent, Custody and Accounting Fees.
U.S. Bancorp Fund Services, LLC ("U.S. Bancorp") provides transfer agent
services and fund accounting for the Funds. For these services, the Trust pays a
fee for transfer agent services at an annual rate of 0.055% on the Trust's first
$500 million of daily average net assets, 0.05% on the next $1 billion of
average daily net assets, and 0.04% on the balance of average daily net assets
in excess of $1.5 billion. 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.
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.
U.S. Bancorp has entered into an agreement with JP Morgan Chase Co.
("Chase") on behalf of the Funds to provide international custodial services.
The 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 ICON. This
agreement provides for an annual fee of 0.05% on the Funds' first $1.5 billion
of average daily net assets and 0.045% on average daily net assets in excess of
$1.5 billion.
Distribution Fees.
The International Equity Fund has adopted a Distribution Plan pursuant to Rule
12b-1 under the 1940 Act ("12b-1 Plan") under which the Funds are authorized to
compensate the Funds' distributor, ICON Distributors, Inc. ("IDI") (formerly
Meridian Clearing Corp.) (an affiliate of the adviser) for the sale and
distribution of shares. For the six months ended March 31, 2004 the total
amounts paid or payable to IDI pursuant to the 12b-1 Plan were $88 on Class C
shares and $103 on Class I shares.
Related Parties.
Certain officers and directors of ICON 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.
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 Asia-Pacific Region Fund............................... $(9,769,168) $0
ICON Europe Fund............................................ (2,076,909) 0
ICON International Equity Fund.............................. (2,433,905) 0
</Table>
36
The aggregate composition by Fund of unrealized appreciation and depreciation of
investment securities for federal income tax purposes as of March 31, 2004 are
as follows:
<Table>
<Caption>
FEDERAL UNREALIZED UNREALIZED NET APPRECIATION
TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
ICON Asia-Pacific Region Fund............. $13,308,311 $3,189,065 $(187,681) $3,001,384
ICON Europe Fund.......................... 6,646,630 1,674,712 (132,106) 1,542,606
ICON International Equity Fund............ 10,219,161 2,430,284 (183,614) 2,246,670
</Table>
37
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
ICON FUNDS LOGO
For more information about the ICON Funds, contact us:
<Table>
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, 12th Floor
Greenwood Village, CO 80111
By E-Mail info@iconadvisers.com
On the Internet www.iconfunds.com
</Table>
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. Consider the investment
objectives, risks, charges, and share classes of each ICON Fund carefully before
investing. The prospectus contains this and other information about the Funds
and is available by visiting www.iconfunds.com or by calling 1-800-764-0442.
Please read the prospectus carefully before investing. ICON Distributors, Inc.,
Distributor
I-131-FOR
ICFORSEMI
- --------------------------------------------------------------------------------
March 31, 2004
Investment Update
ICON DIVERSIFIED FUNDS
Semiannual Report
[ICON FUNDS LOGO]
Table of Contents
<Table>
<Caption>
ABOUT THIS REPORT ......................................2
MESSAGE FROM ICON FUNDS ......................................4
MANAGEMENT OVERVIEWS
AND SCHEDULES OF INVESTMENTS ......................................6
ICON Bond Fund ......................................6
ICON Core Equity Fund .....................................12
ICON Covered Call Fund .....................................18
ICON Equity Income Fund .....................................27
ICON Long/Short Fund .....................................35
FINANCIAL STATEMENTS .....................................42
FINANCIAL HIGHLIGHTS .....................................48
NOTES TO
FINANCIAL STATEMENTS .....................................55
</Table>
About This Report
- --------------------------------------------------------------------------------
HISTORICAL RETURNS
- --------------------------------------------------------------------------------
All total returns mentioned in this report account for the change in a Fund's
per-share price, the reinvestment of any dividends and capital gain
distributions, and adjustments for financial statement purposes. If your account
is set up to receive Fund distributions in cash rather than reinvest them, your
actual return may differ from these figures. The Funds' performance results do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or on the redemption of Fund shares.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Performance results represent
past performance, and current performance may be higher or lower. Please call
1-800-764-0442 or visit www.iconfunds.com for performance results current to the
most recent month-end.
- --------------------------------------------------------------------------------
PORTFOLIO DATA
- --------------------------------------------------------------------------------
Opinions and forecasts regarding industries, companies and/or themes, and
portfolio composition and holdings, are subject to change at any time based on
market and other conditions, and should not be construed as a recommendation of
any specific security. Each Fund's percentage holdings as of March 31, 2004 are
included in each Fund's Schedule of Investments.
Certain companies' stock performance during the period is mentioned
throughout the Management Overviews. While ICON's quantitative investment
methodology does not consider company-specific factors beyond financial data,
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. There is no assurance that the investment process will
consistently lead to successful results. An investment concentrated in sectors
and industries may involve greater risk and volatility than a more diversified
investment. 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 Long/Short
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.
High-yield bonds involve a greater risk of default and price volatility
than U.S. Government and other higher-quality bonds. High-yield/high-risk bonds
can experience sudden and sharp price swings which may affect net asset value.
2
- --------------------------------------------------------------------------------
COMPARATIVE INDEX
- --------------------------------------------------------------------------------
The comparative indexes discussed in this report are meant to provide a basis
for judging the Funds' performance against a specific securities index. Each
index shown accounts for both change in security price and reinvestment of
dividends and distributions, but does not reflect the costs of managing a mutual
fund. The Funds' portfolios may significantly differ in holdings and composition
from the index. Individuals cannot invest directly in an index.
- - The unmanaged Standard & Poor's 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.
- - The Lehman Brothers (LB) U.S. Universal Index represents the union of the
U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index,
the Eurodollar Index, the Emerging Markets Index, the non-ERISA portion of
the Commercial Mortgage-Backed Securities (CMBS) Index and the CMBS
High-Yield Index. All securities in this market-value weighted index have
at least one year remaining to maturity and meet certain minimum issue size
criteria.
Index returns and statistical data included in this report are provided by
Bloomberg, FactSet, and Lehman Brothers.
3
Message from ICON Funds
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
[PHOTO]
- --------------------------------------------------------------------------------
Last November, I found myself in a somewhat heated TV debate in which I
contended that the then eight-month rally in stock prices still had further
upside. In taking this decidedly bullish stance, I based my position on the fact
that the stocks in the ICON domestic database were priced on average about 15%
below our estimate of fair value, and that we expected them to continue in their
upward march.
Meanwhile my opponent, a respected money manager, voiced a more pessimistic
outlook. Armed with a host of fear-based objections, including overheated
price/earnings ratios, rising interest rates and sluggish job growth, his
intuitive arguments supporting a precipitous decline undoubtedly proved
convincing to many investors. Except that he was wrong.
THE PRODUCT OF FAULTY REASONING
Through mid-March 2004, stocks did in fact continue their move toward fair
value, despite these and other concerns. Although Wall Street has been known to
climb a wall of worry, the skepticism and doubt expressed by some investors
during the advance was likely the product of faulty reasoning. Let's explore
some common investor misperceptions:
- - STOCKS ARE OVERPRICED BASED ON P/E. Price/earnings ratio is a simplistic
measure that fails to consider the impact of interest rates, a key
component in calculating the present value of any asset. Value, of course,
is not stagnant and can increase or decrease depending on the current
interest rate environment. In the current low interest rate setting, we
believe it makes sense that stock prices would be higher relative to
earnings. Our valuation model considers earnings estimates, but expands
beyond this one-dimensional statistic.
- - INTEREST RATES WILL HAVE TO RISE. There appears to be a consensus among
market observers that short-term interest rates will move higher as the
economic recovery gains traction, pressuring earnings and consequently
stock prices. The fact is short-term rates play a limited role in our
system, which emphasizes the AAA long-term bond yield in its assessment of
valuation. With long-term rates experiencing a 20-year secular decline, we
find it counterproductive to predict the impact of an increase. That being
said, we do not currently see any force capable of reversing this downward
trend.
- - SLUGGISH JOB GROWTH WILL SLOW CONSUMER SPENDING. While unemployment is near
its historical average, investors have sold stocks on the belief that
disappointing job growth will slow consumer spending. Having examined
various measures of consumer spending going back to the 1960s, I have found
no evidence of a direct link between employment and spending. Interestingly
enough, the data would seem to suggest that spending has triggered
employment, not the other way around.
FAVORING CYCLICAL INDUSTRIES
Naturally, as evidenced by the market dip in mid-March 2004, it is quite normal
for news events to distract investors and interrupt the path back toward fair
value. Nevertheless, we remain bullish and believe stock prices are positioned
to resume their value-driven advance. Our valuation model suggests that stocks
continue to be priced at discounts relative to intrinsic value, and that market
action late in the period was merely a temporary setback.
[SIDENOTE]
Intuitive arguments supporting a decline undoubtedly proved convincing. Except
that they were wrong.
[SIDENOTE]
We remain bullish and believe stock prices are positioned to resume their
value-driven advance.
4
This interruption, however, was not without its impact. Since late January
2004, market leadership has lacked a common theme, as top-performing cyclical
and economically sensitive sectors such as technology, consumer discretionary,
industrials, and materials turned increasingly volatile. At the same time,
defensive groups such as healthcare, utilities and consumer staples demonstrated
strength amid market pullbacks.
We don't expect an economic boom; we think the economic environment is
healthy. Nor do we believe the market needs a big news event to be propelled
forward. Despite these seemingly short-lived theme reversals, we think it best
to continue favoring underpriced cyclical industries and ride through the
occasional turbulence.
A HEALTHY SKEPTICISM
Our valuation readings continued to support the powerful 20-year trend toward
lower interest rates. With yields moving in a sideways trading range, we tilted
our fixed-income holdings toward the longer end of the maturity spectrum, where
value was more prevalent relative to premium priced shorter-dated issues. The
consensus view that rates would trend higher promoted a healthy skepticism on
our part, which was rewarded when yields in fact moved lower.
We currently view interest rates at near equilibrium, with little pressure
to move considerably higher or lower. Assuming as we do that these factors
remain in place, we will continue to emphasize higher-yielding corporate bonds
over more richly valued government securities.
A NEW NAME
Effective January 2004, Meridian Investment Management Corporation, adviser to
the ICON Funds, changed its name to ICON Advisers, Inc. More than just a name
change, we believe it represents an opportunity for our advisory firm to
introduce our story to a wider audience. The name involves many strategic
marketing and communications initiatives, including a new website for
shareholders like you and financial advisers, which we plan to launch this
summer.
In closing, we once again experienced a market that defies conventional
wisdom. ICON thanks you for the opportunity to help guide you through it.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and
Chief Investment Officer of the Adviser
[SIDENOTE]
Despite short-lived theme reversals and temporary setbacks, our valuation model
suggests stocks are still priced below intrinsic value.
5
Management Overview
ICON BOND FUND
A discussion with Derek Rollingson, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
For the six-month period ended March 31, 2004, the ICON Bond Fund, Class I
appreciated 5.56%, while its Class C shares appreciated 5.15%. These gains
outpaced the Fund's benchmark, the Lehman Brothers U.S. Universal Index, which
returned 3.45% over the same period. Total returns for other periods as of March
31, 2004 are listed on the next page.
Limited interest-rate fluctuations and tighter yield spreads worked to the
Fund's advantage during the period. With minor signs of flattening at the short
and long ends of the yield curve, yields moved within a trading range,
countering the prevailing opinion that rates would have to move appreciably
above historical norms. In light of this, the Fund tilted its holdings toward
longer maturities, which, according to our readings, demonstrated better value
than premium-priced shorter-dated issues. These moves were rewarded when longer
rates in fact trended lower.
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Despite concerns surrounding the pace of job creation, incremental improvements
in employment rolls, payroll growth and productivity gains were realized
throughout the period, leading to a shift in Federal Reserve rhetoric. Although
policymakers left the overnight lending rate unchanged, maintaining the target
rate at a 45-year low of 1.00%, many observers believed that the Fed was laying
the groundwork for raising short-term rates, possibly as early as its June
meeting.
Given the current low inflation environment, it was presumed that an increase in
short-term rates would be measured. Meanwhile, longer rates, which often move
independently of short rates, remained well within levels established by their
20-year secular decline. Against this backdrop, longer-dated investment-grade
and higher-yielding corporate bonds were better positioned to retain their
value, even as the benchmark 10-year U.S. Treasury yield periodically moved
higher.
HOW WAS THE FUND MANAGED AND HOW DID THAT AFFECT PERFORMANCE?
The Fund navigated the period by going further out on the maturity spectrum
while taking steps to improve credit quality based on valuation. As directed by
our bond model, underpriced issues with maturities of greater than 10 years were
increased from 24.98% of invested assets at the start of the fiscal year to
29.78% at period-end. In doing so, weighted average duration and maturity both
increased as higher-duration bonds demonstrated better value-to-price and
relative strength characteristics relative to the broader bond market.
At the same time, with corporate issues outperforming during the period, U.S.
Government and Agency bonds were increased from 19.9% to 24.8% of net assets as
the risk premium for corporates diminished considerably. While more heavily
weighted investment-grade and high-yield corporate debt positions bolstered Fund
performance, spreads tightened to extreme levels amid heightened geopolitical
fears and rate-hike concerns, leaving little room for further contraction among
these sectors.
WHAT IS THE INVESTMENT OUTLOOK FOR THE BOND MARKET?
We will continue to rely on valuation-focused fundamentals in seeking out
suitable bond investments rather than partake in the counterproductive exercise
of forecasting interest rate movements. However, given the 20-year downward
trend in longer-term rates, we anticipate yields will simply revert to
historical norms that existed prior to the inflationary spiral of the late 1970s
and early 1980s. With yields now trading in a sideways range of between 4% and
5%, we currently see no reason why rates must rise appreciably beyond these
levels.
[SIDENOTE]
PORTFOLIO COMPOSITION
March 31, 2004
(unaudited)
Corporate Bonds: 64.7%
Investment Grade 42.4%
High Yield 22.3%
Convertible Bonds 0.9%
U.S. Government 10.0%
U.S. Agency 14.8%
Equities 1.0%
Cash Equivalents 6.1%
Percentages are based upon net assets.
[SIDENOTE]
PORTFOLIO HIGHLIGHTS
March 31, 2004
(unaudited)
Number of Bonds 80
Number of Equities 1
Weighted average maturity 11.5 years
Weighted average duration 6.8 years
30-Day Current Yield
(after expense limitation) 3.69%
30-Day Current Yield
(before expense limitation) 3.39%
Yield will fluctuate.
6
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - The Fund was rewarded by its tilt toward longer maturities, which
demonstrated better value than premium-priced shorter-dated issues.
- - Underpriced issues with maturities of greater than 10 years were increased
as higher-duration bonds demonstrated better value-to-price and relative
strength characteristics relative to the broader bond market.
- - Investment-grade and high-yield corporate debt positions bolstered Fund
performance as they remained undervalued.
- --------------------------------------------------------------------------------
TOP 10 BOND HOLDINGS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
U.S. Treasury, 5.000%, 2-15-11 2.4%
DaimlerChrysler N.A. Holdings, 6.500%, 11-15-13 2.3%
Xerox Corp. Senior Notes, 7.625%, 6-15-13 2.1%
Federal National Mortgage Association (FNMA) Notes, 5.250%, 8-01-12 2.1%
Tennessee Valley Authority, 5.625%, 1-18-11 1.9%
Federal National Mortgage Association (FNMA) Notes, 7.125%, 1-15-30 1.9%
Owens-Illinois Inc. Senior Notes, 8.100%, 5-15-07 1.8%
Tennessee Valley Authority Notes, 6.875%, 12-15-43 1.8%
Computer Associates International Inc. Senior Notes, 6.375%, 4-15-05 1.8%
U.S. Treasury, 7.500%, 11-15-16 1.7%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS
INCEPTION ENDED ONE FIVE SINCE
DATE 3/31/04* YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON Bond Fund-Class I 10/1/02 5.56% 11.48% N/A 9.29%
- ------------------------------------------------------------------------------------------
Lehman Brothers U.S.
Universal Index 3.45% 6.73% 7.11%
- ------------------------------------------------------------------------------------------
ICON Bond Fund-Class C 10/21/02 5.15% 10.82% N/A 10.61%
- ------------------------------------------------------------------------------------------
Lehman Brothers U.S.
Universal Index 3.45% 6.73% 8.66%
- ------------------------------------------------------------------------------------------
</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 waive certain Fund expenses; without these waivers,
returns would have been lower. The waiver provisions may be terminated in the
future.
* Not annualized.
7
Management Overview (continued)
ICON BOND FUND
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
LEHMAN BROTHERS U.S. UNIVERSAL
ICON BOND FUND-CLASS I INDEX
---------------------- ------------------------------
10/01/02 10000 10000
12/31/02 10053 10199
3/31/03 10245 10383
6/30/03 10853 10703
9/30/03 10819 10712
12/31/03 11069 10793
3/31/04 11421 11082
</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. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
8
Schedule of Investments
(unaudited)
ICON BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
BONDS 90.4%
CORPORATE BONDS 64.7%
$ 450,000 Allied Waste North
America Inc.
Guaranteed, 10.000%,
8-1-09 $ 482,625
316,000 Altria Group, Inc.,
7.000%, 11-4-13 348,245
700,000 AMR Corporation
Debentures, 9.000%,
8-1-12 596,750
372,000 AT&T Corporation Notes,
7.750%, 3-1-07 418,656
450,000 AT&T Wireless Services
Inc. Senior Notes,
8.750%, 3-1-31 583,651
500,000 Boeing Co. Debentures,
8.750%, 8-15-21 664,640
350,000 Capital One Financial
Corp. Senior Notes,
6.875%, 2-1-06 378,108
391,000 Cendant Corp. Senior
Notes, 7.375%, 1-15-13 458,716
450,000 Cincinnati Financial
Corp. Debentures,
6.900%, 5-15-28 516,940
525,000 CITGroup Inc. Senior
Notes, 7.750%, 4-2-12 634,103
400,000 Comcast Corp. Notes,
8.875%, 5-1-17 522,497
500,000 Comcast Corp. Notes,
6.200%, 11-15-08 553,392
800,000 Computer Associates
International Inc.
Senior Notes, 6.375%,
4-15-05 830,000
300,000 Cox Communications Inc.
Notes, 7.750%, 11-1-10 357,966
500,000 Credit Suisse FB USA
Inc. Notes, 5.500%,
8-15-13 531,687
500,000 CSC Holdings Inc.
Senior Notes, 7.250%,
7-15-08 527,500
1,000,000 Daimlerchrysler N.A.
Holdings, 6.500%,
11-15-13 1,081,555
260,000 FairFax Financial
Holdings Notes, 7.375%,
3-15-06(f) 274,300
6,000 First American Corp.
Debentures, 7.550%,
4-1-28 6,697
783,000 Ford Motor Company
Notes, 7.450%, 7-16-31 781,961
350,000 Ford Motor Credit Co.
Notes, 7.375%, 10-28-09 384,175
185,000 GTE North Inc.
Debentures, 6.940%,
4-15-28 200,837
</Table>
<Table>
- -------------------------------------------------
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
$ 350,000 The Gap Inc. Notes,
6.900%, 9-15-07 $ 388,500
300,000 The Gap Inc. Notes,
8.800%, 12-15-08 372,000
410,000 General Electric
Capital Corp. Notes,
6.750%, 3-15-32 473,618
354,000 General Electric
Capital Corp. Notes,
7.375%, 1-19-10 424,526
600,000 General Motors
Acceptance Co. Notes,
6.125%, 8-28-07 646,630
537,000 General Motors
Acceptance Co. Notes,
7.200%, 1-15-11 588,517
240,000 Georgia-Pacific Corp.
Notes, 8.875%, 5-15-31 268,800
350,000 Georgia-Pacific Corp.
Debentures, 7.375%,
12-1-25 346,500
300,000 Goldman Sachs Group
Inc. Notes, 6.600%,
1-15-12 343,818
600,000 Halliburton Company
Notes, 6.000%, 8-1-06 643,634
680,000 Hertz Corp. Senior
Notes, 7.625%, 6-1-12 748,527
300,000 Hilton Hotels Corp.
Senior Notes, 7.500%,
12-15-17 335,250
500,000 Household Finance Corp.
Senior Unsubordinated,
5.875%, 2-1-09 554,103
400,000 JC Penney Co. Inc.
Debentures, 7.950%,
4-1-17 473,000
450,000 John Hancock Notes,
7.375%, 2-15-24 531,295
455,000 J.P. Morgan Chase & Co.
Subordinated Notes,
6.750%, 8-15-08 519,120
500,000 Liberty Media Corp.
Debentures, 8.250%,
2-1-30 615,530
250,000 Marsh Supermarket Inc.
Guaranteed, 8.875%,
8/1/07 250,625
500,000 Mediacom Broadband LLC
Guaranteed, 11.000%,
7-15-13 535,000
500,000 Morgan Stanley Notes,
7.250%, 4-1-32 603,742
500,000 Motorola Inc.
Debentures, 6.500%,
11-15-28 507,543
440,000 News America Holdings
Inc. Debentures,
7.750%, 2-1-24 520,632
</Table>
9
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
$ 300,000 News America Holdings
Guaranteed, 8.150%,
10-17-36 $ 378,371
575,000 Nextel Communications
Inc. Senior Notes,
9.375%, 11-15-09 625,313
829,000 Owens-Illinois Inc.
Senior Notes, 8.100%,
5-15-07 845,580
345,000 Pep Boys Manny Moe &
Jack Notes, 7.000%,
6-1-05 357,075
300,000 Phillips Petroleum
Notes, 8.750%, 5-25-10 381,545
600,000 PSEG Power LLC
Guaranteed, 6.950%,
6-1-12 691,016
350,000 Royal Caribbean Cruises
Ltd. Senior Notes,
6.750%, 3-15-08(f) 374,500
382,000 SBC Communications Inc.
Notes, 6.250%, 3-15-11 427,784
160,000 SEMCO Energy Senior
Notes, 8.000%, 6-30-16 167,600
300,000 Starwood Hotels &
Resorts Worldwide Inc.
Guaranteed, 7.875%,
5-1-12 339,000
515,000 Tesoro Petroleum Corp.
Guaranteed, 9.000%,
7-1-08 537,531
399,000 Time Warner Inc.
Debentures, 7.570%,
2-1-24 459,481
350,000 Toys R Us Inc. Notes,
7.625%, 8-1-11 365,750
250,000 Tyco International Ltd.
Guaranteed, 6.125%,
11-1-08(f) 271,989
560,000 Verizon New Jersey Inc.
Debentures, 5.875%,
1-17-12 610,469
300,000 Wisconsin Power & Light
Co. Notes, 7.000%,
6-15-07 337,780
900,000 Xerox Corp. Senior
Notes, 7.625%, 6-15-13 958,500
- -------------------------------------------------
TOTAL CORPORATE BONDS 29,955,195
CONVERTIBLE BONDS 0.9%
400,000 Providian Financial
Corp., 3.250%, 8-15-05 393,000
- -------------------------------------------------
TOTAL CONVERTIBLE BONDS 393,000
</Table>
<Table>
- -------------------------------------------------
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
U.S. GOVERNMENT AND U.S. GOVERNMENT
AGENCY BONDS 24.8%
$ 200,000 Federal Farm Credit
Bank Notes, 5.900%,
7-21-08 $ 224,361
255,000 Federal Farm Credit
Bank Notes, 5.900%,
8-4-08 286,111
210,000 Federal Home Loan Bank
(FHLB), 5.945%, 7-28-08 236,534
450,000 Federal Home Loan Bank
(FHLB), 5.875%, 2-15-11 505,173
588,000 Federal Home Loan
Mortgage Corporation
(FHLMC) Notes, 5.125%,
7-15-12 633,286
600,000 Federal Home Loan
Mortgage Corporation
(FHLMC) Notes, 6.250%,
7-15-32 683,965
700,000 Federal National
Mortgage Association
(FNMA) Notes, 7.125%,
1-15-30 879,569
550,000 Federal National
Mortgage Association
(FNMA) Notes, 7.250%,
5-15-30 701,634
900,000 Federal National
Mortgage Association
(FNMA) Notes, 5.250%,
8-01-12 955,589
300,000 Private Export Funding
Guaranteed, 6.490%,
7-15-07 337,862
800,000 Tennessee Valley
Authority, 5.625%,
1-18-11 892,590
800,000 Tennessee Valley
Authority Notes,
6.875%, 12-15-43 836,586
669,000 U.S. Treasury, 4.875%,
2-15-12 730,282
1,000,000 U.S. Treasury, 5.000%,
2-15-11 1,103,906
500,000 U.S. Treasury, 5.750%,
8-15-10 574,062
559,000 U.S. Treasury, 6.625%,
5-15-07 636,059
600,000 U.S. Treasury, 7.500%,
11-15-16 791,015
321,000 U.S. Treasury, 8.750%,
5-15-17 465,513
- -------------------------------------------------
TOTAL U.S. GOVERNMENT AND U.S.
GOVERNMENT AGENCY BONDS 11,474,097
- -------------------------------------------------
TOTAL BONDS
(COST $39,354,897) 41,822,292
</Table>
10
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES MARKET VALUE
- -------------------------------------------------
COMMON STOCKS 1.0%
FINANCIAL 1.0%
REAL ESTATE INVESTMENT TRUSTS
7,200 Novastar Financial,
Inc. $ 474,840
- -------------------------------------------------
TOTAL FINANCIAL 474,840
- -------------------------------------------------
TOTAL COMMON STOCKS
(COST $178,262) 474,840
<Caption>
CONTRACTS (100 SHARES PER CONTRACT)
- -------------------------------------------------
CALL OPTIONS PURCHASED 0.1%
400 Xerox Corporation
Expiration January
2006, Exercise Price
$20.00 50,000
- -------------------------------------------------
TOTAL CALL OPTIONS PURCHASED
(COST $46,012) 50,000
<Caption>
PRINCIPAL AMOUNT
- -------------------------------------------------
SHORT-TERM INVESTMENTS 6.1%
U.S. GOVERNMENT AGENCIES 3.0%
$1,416,000 Federal Home Loan Bank
(FHLB) Discount Note,
0.7500%, 4-1-04 1,416,000
- -------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 1,416,000
</Table>
<Table>
- -------------------------------------------------
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
VARIABLE RATE DEMAND NOTE 3.1%
$1,425,389 American Family Demand
Note, 0.7008%# $ 1,425,389
- -------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 1,425,389
- -------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,841,389) 2,841,389
- -------------------------------------------------
TOTAL INVESTMENTS 97.6%
(COST $42,420,560) 45,188,521
- -------------------------------------------------
OTHER ASSETS LESS LIABILITIES 2.4% 1,096,370
- -------------------------------------------------
NET ASSETS 100.0% $46,284,891
- -------------------------------------------------
</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 March 31, 2004.
f Foreign security
Dates shown on securities are the due dates of the obligations.
11
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 14.30% for the six-month period ended
March 31, 2004, while its Class C shares appreciated 13.88%. In comparison, the
Fund's benchmark, the S&P 1500 Index, returned 14.75% over the same period.
Total returns for other periods as of March 31, 2004 are listed on page 14.
Despite capturing solid gains for the period, the Fund came under pressure amid
valuation-related profit-taking in the Technology sector during the fourth
quarter of 2003, followed by a two-month cyclical pullback in early 2004 that
saw renewed strength among more defensive issues. Given the Fund's economically
sensitive orientation, these short-term theme reversals worked against
performance as they bolstered areas in which the Fund was underexposed. Although
our overall valuation and relative strength readings continued to support a
recovery-based theme, the resulting tug of war limited the Fund's advance.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Having entered the period revealing a modest growth bias, as measured on a
price-to-earnings (P/E) basis, the Fund suffered when shares considered more
richly valued encountered severe resistance. Although our valuation readings
would most likely classify many of these shares as underpriced, our subsequent
shift to a value bias failed to offset earlier damage.
It should be noted that the Fund does not utilize P/E ratio as a valuation
measure, regarding it as a static proxy. Instead, we calculate a proprietary
value-to-price ratio (V/P) for each industry and security. We believe this to be
more meaningful since it considers the effects of earnings, projected growth,
risk, and interest rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Stocks moved higher during the period even as market psychology turned
increasingly negative. Amid steady improvements in economic and company
fundamentals, investors were seemingly distracted by unwarranted concerns such
as overheated valuations, rising interest rates, lackluster job growth, and
sluggish consumer spending. While impatient sellers overreacted to these and
other misperceptions, most industries remained underpriced based on our estimate
of fair value.
Further exacerbating investor uncertainty was fears surrounding heightened
terrorist activities and world unrest. Although economically sensitive sectors
bore the brunt of event-driven sell-offs, these disruptions proved temporary as
the broader market rebounded late in the period.
HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A cyclical orientation as well as our exposure or lack thereof to several key
sectors and industries worked against the Fund during the period. On the sector
level, the Fund was hindered relative to the benchmark by the Information
Technology and Energy sectors. Within the Information Technology area,
underweight positions in the computer hardware and communications equipment
industries had a negative impact on the Fund. A limited weighting in the Energy
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 99.5%
Top 10 Equity Holdings 17.5%
Number of Stocks 89
Cash Equivalents 0.5%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Labor Ready, Inc. 2.0%
AO VimpelCom 1.9%
PacifiCare Health
Systems, Inc. 1.8%
The Manitowoc
Company, Inc. 1.8%
URS Corporation 1.8%
Apollo Group, Inc. 1.8%
Granite Construction Incorporated 1.7%
STET Hellas
Telecommunications S.A. 1.6%
America Movil
S.A. de C.V. 1.6%
Cognizant Technology
Solutions Corp. 1.5%
Percentages are based upon net assets.
12
sector hurt performance as rising energy prices during the period bolstered the
group. Meanwhile, stock selection in leisure products and industrial machinery
proved detrimental, as did an overweighting in airlines.
In contrast, sectors contributing positive performance included Materials,
Consumer Discretionary and Telecommunications & Utilities. Within Materials,
steel demonstrated strength on rising global demand, while Telecommunications
leader wireless services benefited from capacity enhancements. Other industries
making notable contributions were managed health care, and employment services.
Measurable individual contributors included the U.S.-traded American Depositary
Receipts ("ADRs") of wireless services provider AO VimpelCom, which capitalized
on its leadership position in tapping the rapidly growing Russian cell phone
market. Managed health care provider PacifiCare Health Systems, Inc. also
advanced, having reported strong enrollment trends. Auto finance company
AmeriCredit Corp. posted better-than-expected earnings due to credit quality
improvements. Favorable prospects for federal markets boosted engineering
services provider URS Corp., while automotive OEM gains drove growth for audio
system supplier Harman International Industries, Inc.
In contrast, among the Fund's poorest-performing stocks were messaging services
provider j2 Global Communications, Inc., which fell on unexpectedly weak
performance in several of its markets. Elsewhere, discount carrier JetBlue
Airways Corp. faced stiff headwinds from higher fuel costs and intense pricing
competition. Specialty toolmaker SPX Corp. retreated as analysts downgraded the
stock on earnings quality concerns. Educational toymaker LeapFrog Enterprises
Inc. and collectibles marketer Action Performance Companies, Inc. also declined
amid forecasting missteps and slowing revenues. These companies were all sold as
their relative strength weakened.
WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET?
Going forward, we anticipate continued strength as the cyclical theme benefits
from sustainable economic expansion. With stocks continuing to trade below our
estimate of intrinsic value, we believe the potential for further upside still
exists. This combination of cyclical underpriced industries and an expanding
domestic economy provides the Fund with both the opportunity and the catalyst to
capture fair value moves within the broader market. While interruptions
certainly pose a near-term threat, our overall outlook remains positive.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Relative performance was hampered by holdings in the Information Technology
Sector and by minimal exposure to the Energy sector.
- - Several stocks within the Internet software & services industry caused a
negative impact to returns.
- - Positive performance was contributed by the Consumer Discretionary and
Telecommunications & Utilities sectors, as well as Materials, which was
driven by the steel industry.
- - The wireless services, managed health care, and employment services
industries all aided performance.
- - Stocks that contributed significantly to performance included AO VimpelCom,
PacifiCare Health Systems, Inc., and AmeriCredit Corp., while j2 Global
Communications, Inc., JetBlue Airways Corp. and SPX Corp. were among the
Fund's poorest individual performers.
13
Management Overview (continued)
ICON CORE EQUITY FUND
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Consumer Discretionary 19.9%
Industrials 17.4%
Information Technology 15.8%
Financial 11.8%
Materials 10.8%
Healthcare 9.2%
Leisure & Consumer Staples 6.9%
Telecommunications & Utilities 4.7%
Energy 3.0%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS
INCEPTION ENDED ONE FIVE SINCE
DATE 3/31/04* YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON Core Equity Fund-Class I 10/12/00 14.30% 49.18% N/A 7.86%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% -1.96%
- ------------------------------------------------------------------------------------------
ICON Core Equity Fund-Class C 11/27/00 13.88% 48.21% N/A 7.35%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% -2.41%
- ------------------------------------------------------------------------------------------
</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.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON CORE EQUITY FUND-CLASS I S&P 1500 INDEX
----------------------------- --------------
10/12/02 10000 10000
3/31/01 10810 8861
3/31/02 13234 9049
3/31/03 8713 6818
3/31/04 12998 9336
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund's Class I shares on the Class' inception
date of 10/12/00 to a $10,000 investment made in an unmanaged securities index
on that date. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
14
Schedule of Investments
(unaudited)
ICON CORE EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
COMMON STOCKS 99.5%
CONSUMER DISCRETIONARY 19.9%
APPAREL RETAIL 1.2%
23,100 Chico's FAS, Inc.(a) $ 1,071,840
AUTOMOBILE MANUFACTURERS 3.4%
78,900 Ford Motor Company 1,070,673
16,000 General Motors
Corporation 753,600
39,000 Winnebago Industries,
Inc. 1,215,630
- -------------------------------------------------
3,039,903
AUTOMOBILE PARTS & EQUIPMENT 4.0%
88,400 Aftermarket Technology
Corp.(a) 1,298,596
15,100 BorgWarner, Inc. 1,280,933
17,400 Lear Corporation 1,078,104
- -------------------------------------------------
3,657,633
HOUSEHOLD APPLIANCES 1.2%
36,400 Helen of Troy
Limited(a)(f) 1,128,764
DEPARTMENT STORES 1.0%
17,000 Federated Department
Stores, Inc. 918,850
FOOD DISTRIBUTORS 1.1%
40,400 Nash Finch Company 956,672
HOME FURNISHINGS 1.0%
28,600 Furniture Brands
International, Inc. 920,920
HOMEBUILDING 1.0%
20,600 Hovnanian Enterprises,
Inc.(a) 888,890
INTERNET RETAIL 0.8%
74,400 1-800-FLOWERS.COM,
Inc.(a) 712,008
RESTAURANTS 1.1%
31,200 Ruby Tuesday, Inc. 1,003,080
SPECIALTY STORES 4.1%
23,400 Michaels Stores, Inc. 1,137,708
22,400 The Sports Authority,
Inc.(a) 897,792
28,900 United Auto Group, Inc. 790,704
14,700 Zale Corporation(a) 904,785
- -------------------------------------------------
3,730,989
- -------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 18,029,549
ENERGY 3.0%
OIL & GAS EXPLORATION &
PRODUCTION 1.0%
30,600 Ultra Petroleum
Corp.(a)(f) 918,306
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 2.0%
18,500 Ashland Inc. $ 860,065
13,300 Teekay Shipping
Corporation(f) 916,370
- -------------------------------------------------
1,776,435
- -------------------------------------------------
TOTAL ENERGY 2,694,741
FINANCIAL 11.8%
ASSET MANAGEMENT & CUSTODY
BANKS 1.0%
28,000 The Bank of New York
Company, Inc. 882,000
CONSUMER FINANCE 5.9%
59,500 AmeriCredit Corp.(a) 1,013,285
15,900 Capital One Financial
Corporation 1,199,337
44,700 CompuCredit
Corporation(a) 944,958
35,200 First Cash Financial
Services, Inc.(a) 1,183,776
74,000 Providian Financial
Corporation(a) 969,400
- -------------------------------------------------
5,310,756
INSURANCE BROKERS 1.0%
24,200 Hilb, Rogal and Hamilton
Company 922,020
MULTI-LINE INSURANCE 2.2%
30,300 American Financial Group,
Inc. 903,849
18,900 Loews Corporation 1,116,234
- -------------------------------------------------
2,020,083
PROPERTY & CASUALTY INSURANCE 1.1%
15,800 MBIA Inc. 990,660
THRIFTS & MORTGAGE FINANCE 0.6%
15,600 The PMI Group, Inc. 582,816
- -------------------------------------------------
TOTAL FINANCIAL 10,708,335
HEALTHCARE 9.2%
HEALTH CARE DISTRIBUTORS 1.0%
20,500 Omnicare, Inc. 908,765
HEALTH CARE EQUIPMENT 1.5%
14,200 ResMed Inc.(a) 641,698
12,400 Respironics(a) 669,848
- -------------------------------------------------
1,311,546
HEALTH CARE FACILITIES 1.0%
58,900 Province Healthcare
Company(a) 936,510
HEALTH CARE SERVICES 1.0%
20,300 Renal Care Group, Inc.(a) 928,928
</Table>
15
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
MANAGED HEALTH CARE 4.7%
7,400 Aetna Inc. $ 663,928
7,300 Anthem, Inc.(a) 661,672
30,450 Coventry Health Care,
Inc.(a) 1,288,949
42,400 PacifiCare Health
Systems, Inc.(a) 1,676,920
- -------------------------------------------------
4,291,469
- -------------------------------------------------
TOTAL HEALTHCARE 8,377,218
INDUSTRIALS 17.4%
AEROSPACE AND DEFENSE 1.0%
15,400 L-3 Communications
Holdings, Inc. 915,992
BUILDING PRODUCTS 3.9%
32,500 Lennox International Inc. 602,875
20,800 Masco Corporation 633,152
39,900 Universal Forest
Products, Inc. 1,231,314
27,200 York International
Corporation 1,069,232
- -------------------------------------------------
3,536,573
COMMERCIAL PRINTING 0.7%
20,100 John H. Harland Company 625,512
CONSTRUCTION & ENGINEERING 3.5%
63,200 Granite Construction
Incorporated 1,502,264
56,900 URS Corporation(a) 1,637,582
- -------------------------------------------------
3,139,846
DIVERSIFIED COMMERCIAL SERVICES 3.3%
15,900 Apollo Group, Inc.(a) 1,369,149
18,300 University of Phoenix
Online(a) 1,592,466
- -------------------------------------------------
2,961,615
EMPLOYMENT SERVICES 3.2%
38,900 Gevity HR, Inc. 1,135,880
131,500 Labor Ready, Inc.(a) 1,777,880
- -------------------------------------------------
2,913,760
INDUSTRIAL MACHINERY 1.8%
56,500 The Manitowoc Company,
Inc. 1,671,270
- -------------------------------------------------
TOTAL INDUSTRIALS 15,764,568
INFORMATION TECHNOLOGY 15.8%
APPLICATION SOFTWARE 0.8%
35,200 Magma Design Automation,
Inc.(a) 736,032
COMMUNICATIONS EQUIPMENT 0.9%
83,200 Cable Design Technologies
Corporation(a) 788,736
ELECTRONIC EQUIPMENT
MANUFACTURERS 0.5%
42,800 Fargo Electronics(a) 483,640
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
INTERNET SOFTWARE & SERVICES 1.9%
32,700 Digital Insight
Corporation(a) $ 677,544
36,000 Websense, Inc.(a) 1,065,960
- -------------------------------------------------
1,743,504
IT CONSULTING & OTHER SERVICES 3.1%
30,700 Cognizant Technology
Solutions Corporation(a) 1,389,175
31,800 ManTech International
Corporation(a) 651,582
52,200 Unisys Corporation(a) 745,416
- -------------------------------------------------
2,786,173
SEMICONDUCTORS 2.0%
39,000 OmniVision Technologies,
Inc.(a) 1,065,090
14,500 Silicon Laboratories
Inc.(a) 766,760
- -------------------------------------------------
1,831,850
TECHNICAL DISTRIBUTORS 1.3%
35,400 Global Imaging Systems,
Inc.(a) 1,175,988
TECHNOLOGY DISTRIBUTORS 2.7%
43,600 Arrow Electronics,
Inc.(a) 1,110,056
33,800 Tech Data Corporation(a) 1,383,772
- -------------------------------------------------
2,493,828
WIRELESS TELECOMMUNICATION
SERVICES 2.6%
72,700 STET Hellas
Telecommunications
S.A. -- ADR 1,483,080
21,900 Telemig Celular
Participacoes S.A. -- ADR 856,290
- -------------------------------------------------
2,339,370
- -------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 14,379,121
LEISURE & CONSUMER STAPLES 6.9%
CASINOS & GAMING 0.9%
15,500 Harrah's Entertainment,
Inc. 850,795
HOTELS, RESORTS & CRUISE LINES 2.4%
72,100 Prime Hospitality
Corp.(a) 820,498
30,200 Royal Caribbean Cruises
Ltd.(f) 1,331,820
- -------------------------------------------------
2,152,318
MOVIES & ENTERTAINMENT 1.0%
36,400 The Walt Disney Company 909,636
RESTAURANTS 1.0%
24,900 CEC Entertainment Inc.(a) 864,030
TOBACCO 1.6%
10,900 Altria Group, Inc. 593,505
14,200 R.J. Reynolds Tobacco
Holdings, Inc. 859,100
- -------------------------------------------------
1,452,605
- -------------------------------------------------
TOTAL LEISURE & CONSUMER STAPLES 6,229,384
</Table>
16
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
MATERIALS 10.8%
ALUMINUM 0.9%
19,200 Alcan Inc.(f) $ 859,968
COMMODITY CHEMICALS 2.0%
38,400 Headwaters
Incorporated(a) 983,808
54,200 Millennium Chemicals
Inc.(a) 809,748
- -------------------------------------------------
1,793,556
CONSTRUCTION MATERIALS 1.1%
28,400 Texas Industries, Inc. 1,026,660
DIVERSIFIED CHEMICALS 1.4%
29,100 FMC Corporation(a) 1,246,062
FERTILIZER & AGRICULTURAL
CHEMICALS 0.8%
52,100 Agrium Inc.(f) 765,870
SPECIALTY CHEMICALS 1.1%
32,400 OM Group, Inc.(a) 984,960
STEEL 3.5%
37,100 Carpenter Technology
Corporation 1,219,848
38,100 Steel Dynamics, Inc.(a) 944,118
52,800 Steel Technologies Inc. 1,020,096
- -------------------------------------------------
3,184,062
- -------------------------------------------------
TOTAL MATERIALS 9,861,138
TELECOMMUNICATIONS & UTILITIES 4.7%
WIRELESS TELECOMMUNICATION
SERVICES 4.7%
37,400 America Movil S.A. de
C.V. -- ADR 1,445,510
16,200 AO VimpelCom(a) -- ADR 1,684,638
45,200 Nextel Communications,
Inc.(a) 1,117,796
- -------------------------------------------------
4,247,944
- -------------------------------------------------
TOTAL TELECOMMUNICATIONS & UTILITIES 4,247,944
- -------------------------------------------------
TOTAL COMMON STOCKS
(COST $74,676,424) 90,291,998
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
SHORT-TERM INVESTMENT 0.5%
$427,879 American Family Demand
Note, 0.6908%# $ 427,879
- -------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $427,879) 427,879
- -------------------------------------------------
TOTAL INVESTMENTS 100.0%
(COST $75,104,303) 90,719,877
- -------------------------------------------------
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.0%* 15,406
- -------------------------------------------------
NET ASSETS 100.0% $90,735,283
- -------------------------------------------------
</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 March 31, 2004.
f Foreign security
ADR -- American Depositary Receipt
* Less than 0.1%
17
Management Overview
ICON COVERED CALL FUND
A discussion with Robert Straus, CMT, Portfolio Manager
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Covered Call Fund, Class I rose 11.28% for the six-month period ended
March 31, 2004, while its Class C shares appreciated 10.78%. In comparison, the
Fund's benchmark, the S&P 1500 Index, returned 14.75% over the same period.
Total returns for other periods as of March 31, 2004 are listed on page 20.
The Fund's six-month underperformance is attributed to a number of reasons.
Given the Fund's economically sensitive orientation, it was vulnerable to
valuation-related profit taking in the Information Technology sector during the
fourth quarter of 2003, as well a broader, two-month cyclical downdraft in early
2004. The Fund's covered call strategy also detracted, as robust equity gains
during the period sent stock prices past their strike price, thereby limiting
upside potential. Furthermore, lower implied volatility, as measured by the
Chicago Board Options Exchange OEX Volatility Index, diminished the Fund's
income stream, as options commanded lower premiums.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Having entered the period revealing a sizable growth bias, as measured on a
price-to-earnings (P/E) basis, the Fund suffered when stocks considered more
richly valued encountered severe resistance. Although our valuation readings
would most likely classify many of these shares as underpriced, a subsequent
shift favoring value failed to offset earlier damage.
The Fund does not utilize P/E ratio as a valuation measure, regarding it as a
static proxy. Instead, we calculate a proprietary value-to-price ratio (V/P) for
each industry and security. We believe this to be more meaningful since it
considers the effects of earnings, projected growth, risk, and interest rates
(opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Although our overall readings continued to support a recovery-based theme, fear
was still pervasive and weighed heavily on the equity markets. Overheated
valuations, rising interest rates and stagnant job creation were just some of
the concerns that triggered a cyclical correction, even as economic fundamentals
and corporate earnings recorded steady improvements. Amid several short-lived
theme reversals, defensive issues strengthened despite a trend toward
sustainable GDP growth.
Further exacerbating investor uncertainties were fears surrounding heightened
terrorist activities and world unrest. Although economically sensitive sectors
bore the brunt of event-driven sell-offs, these disruptions proved temporary as
the broader market rebounded late in the period.
HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
While the Fund's flexibility had previously worked in our favor, such was not
the case during this past reporting period. Limited exposure to the Energy
sector hurt performance as rising energy prices bolstered that sector.
Meanwhile, overexposure to Internet software & services and apparel retail also
proved detrimental and was trimmed on declining relative strength.
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 102.0%
Bonds 1.2%
Top 10 Equity Holdings 16.2%
Number of Stocks 92
Number of Calls
Outstanding 80
Cash Equivalents 0.3%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
Helen of Troy Limited 1.9%
Headwaters Incorporated 1.9%
Alcoa Inc. 1.7%
Capital One Financial Corporation 1.6%
BorgWarner, Inc. 1.6%
Quicksilver, Inc. 1.5%
Ultra Petroleum Corp. 1.5%
Hilb, Rogal and Hamilton Company 1.5%
Sonic Corp. 1.5%
Oshkosh Truck Corporation 1.5%
Percentages are based upon net assets.
18
In contrast, contributing sectors included Materials, Consumer Discretionary and
Financials. Within Materials, a newly initiated position in steel demonstrated
strength on rising global demand, while specialty stores continued to lead the
Consumer group, but was trimmed on valuation concerns. Semiconductors, as well,
continued an earlier run but were later pared back, having weakened
considerably. Other industries making notable contributions were overweight
positions in consumer finance, wireless telecommunication services and
technology distributors.
Stocks that contributed measurable Fund performance included Ultra Petroleum
Corp., which soared when analysts upgraded this emerging exploration and
production company. Leading Russian wireless operator Mobile TeleSystems also
advanced as revenue growth outpaced rising expenses needed to expand its
geographic footprint. Elsewhere, pawnshop operator First Cash Financial Services
Inc. capitalized on its retail business model to boost earnings, while aluminum
giant Alcoa Inc. reported continued leverage to higher volume and pricing
increases. Finally, earnings surprises raised Oshkosh Truck Corp., which
reported better-than-expected sales in its defense unit.
Among the Fund's laggards, messaging services provider j2 Global Communications,
Inc. fell on unexpectedly weak performance in several of its key markets.
Meanwhile, women's apparel retailer Christopher & Banks Corp. posted lower
same-store sales, citing a challenging operating environment. Technology
services consultant ManTech International Corp. also dropped when the company
lowered full-year profit projections. Additionally, Internet access provider
United Online Inc. retreated amid severe pricing pressures, while specialty
toolmaker SPX Corp. pulled back as analysts downgraded the stock on earnings
quality concerns. These poor performers were sold from the Fund as their
relative strength deteriorated.
WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET?
Going forward, we continue to see attractive value in the marketplace and
believe current conditions suggest that a cyclical theme remains in place. With
respect to contracting option premiums, we have gradually let calls expire on
selected stocks in order to enhance upside potential. At the same time, we are
writing calls closer to expiration in order to take advantage of an accelerating
rate of decay and to minimize the risk of locking in low premiums for longer
time periods. Lastly, we continue to write out-of-the-money calls to capture as
much upside potential as possible without completely sacrificing premium income.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Equity gains sent stocks past the written call strike prices and limited
the Fund's upside potential.
- - The Fund suffered from an underweight position in the Energy sector.
- - Positive performance was contributed by Consumer Discretionary, Financials
and Materials.
- - Individual stocks such as Ultra Petroleum Corp., Mobile TeleSystems, and
First Cash Financial Services Inc. added significantly to returns.
- - The Fund suffered from positions in j2 Global Communications, Inc.,
Christopher & Banks Corp., and ManTech International Corp., all which were
sold from the Fund during the period.
The Chicago Board Options Exchange OEX Volatility Index reflects a market
estimate of future volatility, based on the weighted average of the implied
volatilities for a wide range of strikes.
19
Management Overview (continued)
ICON COVERED CALL FUND
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Consumer Discretionary 19.1%
Materials 16.4%
Industrials 15.7%
Information Technology 14.6%
Financial 13.0%
Health Care 8.3%
Telecommunications & Utilities 6.8%
Leisure & Consumer Staples 5.4%
Energy 2.7%
</Table>
Percentages are based upon net assets
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS
INCEPTION ENDED ONE FIVE SINCE
DATE 3/31/04* YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON Covered Call Fund-Class I 10/1/02 11.28% 37.31% N/A 24.02%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 27.06%
- ------------------------------------------------------------------------------------------
ICON Covered Call Fund-Class C 11/21/02 10.78% 36.21% N/A 19.25%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 20.00%
- ------------------------------------------------------------------------------------------
</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 waive certain Fund expenses; without these waivers,
returns would have been lower. The waiver provisions may be terminated in the
future.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON COVERED CALL FUND-CLASS I S&P 1500 INDEX
------------------------------ --------------
10/01/02 10000 10000
12/31/02 10490 10811
3/31/03 10050 10450
6/30/03 11770 12093
9/30/03 12400 12469
12/31/03 13541 14009
3/31/04 13799 14308
</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. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
20
Schedule of Investments
(unaudited)
ICON COVERED CALL FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
COMMON STOCKS 102.0%
CONSUMER DISCRETIONARY 19.1%
APPAREL ACCESSORIES & LUXURY
GOODS 2.6%
9,000 Kenneth Cole Productions,
Inc.(c) $ 306,900
20,000 Quiksilver, Inc.(a)(c) 437,000
- -------------------------------------------------
743,900
APPAREL RETAIL 0.7%
7,700 Pacific Sunwear of
California, Inc.(a) 188,958
AUTO PARTS & EQUIPMENT 2.8%
5,200 BorgWarner, Inc.(c) 441,116
5,500 Lear Corporation(c) 340,780
- -------------------------------------------------
781,896
AUTOMOBILE MANUFACTURERS 3.5%
7,500 General Motors
Corporation(c) 353,250
12,800 Thor Industries, Inc.(c) 343,808
9,000 Winnebago Industries,
Inc.(c) 280,530
- -------------------------------------------------
977,588
COMPUTER & ELECTRONICS RETAIL 0.7%
3,800 Best Buy Co., Inc.(c) 196,536
DEPARTMENT STORES 1.1%
6,000 Federated Department
Stores, Inc.(c) 324,300
GENERAL MERCHANDISE STORES 0.6%
7,400 Fred's, Inc.(c) 179,598
HOMEBUILDING 0.9%
6,000 Hovnanian Enterprises,
Inc.(a)(c) 258,900
HOUSEHOLD APPLIANCES 1.9%
17,500 Helen of Troy
Limited(a)f(c) 542,675
INTERNET RETAIL 0.7%
21,500 1-800-FLOWERS.COM,
Inc.(a)(c) 205,755
SPECIALTY STORES 3.6%
8,500 The Sports Authority,
Inc.(a)(c) 340,680
11,000 West Marine, Inc.(a)(c) 350,350
5,400 Zale Corporation(a)(c) 332,370
- -------------------------------------------------
1,023,400
- -------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 5,423,506
ENERGY 2.7%
OIL & GAS EXPLORATION &
PRODUCTION 1.5%
14,000 Ultra Petroleum
Corp.(a)f(c) 420,140
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
OIL & GAS REFINING & MARKETING &
TRANSPORTATION 1.2%
7,500 Ashland Inc. $ 348,675
- -------------------------------------------------
TOTAL ENERGY 768,815
FINANCIAL 13.0%
CONSUMER FINANCE 4.9%
19,000 AmeriCredit Corp.(a)(c) 323,570
6,000 Capital One Financial
Corporation(c) 452,580
12,500 CompuCredit
Corporation(a)(c) 264,250
10,000 First Cash Financial
Services, Inc.(a) 336,300
- -------------------------------------------------
1,376,700
INSURANCE BROKERS 1.5%
11,000 Hilb, Rogal and Hamilton
Company(c) 419,100
MULTI-LINE INSURANCE 2.2%
9,500 American Financial Group,
Inc. 283,385
5,700 Loews Corporation(c) 336,642
- -------------------------------------------------
620,027
REGIONAL BANKS 1.2%
6,000 East West Bancorp,
Inc.(c) 336,000
THRIFTS & MORTGAGE FINANCE 3.2%
9,000 IndyMac Bancorp, Inc.(c) 326,610
7,000 New Century Financial
Corporation(c) 339,920
7,338 New York Community
Bancorp, Inc.(c) 251,547
- -------------------------------------------------
918,077
- -------------------------------------------------
TOTAL FINANCIAL 3,669,904
HEALTH CARE 8.3%
HEALTH CARE DISTRIBUTORS 2.3%
7,600 Omnicare, Inc.(c) 336,908
14,000 Priority Healthcare
Corporation(a)(c) 298,060
- -------------------------------------------------
634,968
HEALTH CARE FACILITIES 2.9%
13,500 AmSurg Corp.(a)(c) 306,585
17,000 Province Healthcare
Company(a)(c) 270,300
15,000 Select Medical
Corporation(c) 250,500
- -------------------------------------------------
827,385
HEALTH CARE SERVICES 1.9%
7,000 DaVita, Inc.(a)(c) 334,250
4,500 Renal Care Group, Inc.(a) 205,920
- -------------------------------------------------
540,170
</Table>
21
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
MANAGED HEALTH CARE 1.2%
8,250 Coventry Health Care,
Inc.(a)(c) $ 349,222
- -------------------------------------------------
TOTAL HEALTH CARE 2,351,745
INDUSTRIALS 15.7%
AEROSPACE & DEFENSE 1.8%
11,000 EDO Corporation(c) 264,880
9,000 Goodrich Corporation(c) 252,630
- -------------------------------------------------
517,510
BUILDING PRODUCTS 3.4%
6,500 Simpson Manufacturing
Co., Inc. 318,175
8,000 Universal Forest
Products, Inc. 246,880
10,000 York International
Corporation(c) 393,100
- -------------------------------------------------
958,155
CONSTRUCTION & ENGINEERING 4.4%
16,300 Granite Construction
Incorporated(c) 387,451
6,800 Jacobs Engineering Group
Inc.(a)(c) 303,280
15,000 The Shaw Group Inc.(a)(c) 162,600
13,000 URS Corporation(a) 374,140
- -------------------------------------------------
1,227,471
CONSTRUCTION & FARM MACHINERY &
HEAVY TRUCKS 1.5%
7,500 Oshkosh Truck
Corporation(c) 417,750
DIVERSIFIED COMMERCIAL SERVICES 1.9%
10,000 NCO Group, Inc.(a)(c) 233,700
3,500 University of Phoenix
Online(a)(c) 304,570
- -------------------------------------------------
538,270
EMPLOYMENT SERVICES 1.9%
8,400 Gevity HR, Inc. 245,280
22,500 Labor Ready, Inc.(a)(c) 304,200
- -------------------------------------------------
549,480
INDUSTRIAL MACHINERY 0.8%
3,500 Ingersoll-Rand
Company(f(c) 236,775
- -------------------------------------------------
TOTAL INDUSTRIALS 4,445,411
INFORMATION TECHNOLOGY 14.6%
APPLICATION SOFTWARE 1.4%
5,400 Kronos Incorporated(a)(c) 175,662
11,000 Magma Design Automation,
Inc.(a)(c) 230,010
- -------------------------------------------------
405,672
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
COMMUNICATIONS EQUIPMENT 1.8%
27,000 Cable Design Technologies
Corporation(a)(c) $ 255,960
15,000 SpectraLink
Corporation(c) 255,450
- -------------------------------------------------
511,410
COMPUTER STORAGE & PERIPHERALS 0.7%
6,600 SanDisk Corporation(a)(c) 187,242
ELECTRONIC EQUIPMENT
MANUFACTURERS 1.1%
16,500 Technitrol, Inc.(a)(c) 310,200
HOME ENTERTAINMENT SOFTWARE 2.8%
25,500 Activision, Inc.(a)(c) 403,410
10,700 Take-Two Interactive
Software, Inc.(a)(c) 393,546
- -------------------------------------------------
796,956
INTERNET SOFTWARE & SERVICES 0.9%
12,000 Digital Insight
Corporation(a)(c) 248,640
IT CONSULTING & OTHER SERVICES 1.4%
9,000 Cognizant Technology
Solutions
Corporation(a)(c) 407,250
SEMICONDUCTORS 0.7%
7,100 OmniVision Technologies,
Inc.(a)(c) 193,901
TECHNOLOGY DISTRIBUTORS 3.8%
16,000 Avnet, Inc.(a)(c) 391,840
11,000 Global Imaging Systems,
Inc.(a) 365,420
17,000 Ingram Micro Inc.(a)(c) 307,700
- -------------------------------------------------
1,064,960
- -------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 4,126,231
LEISURE & CONSUMER STAPLES 5.4%
LEISURE PRODUCTS 1.0%
7,500 SCP Pool
Corporation(a)(c) 279,450
MOVIES & ENTERTAINMENT 0.8%
10,000 4Kids Entertainment,
Inc.(a)(c) 223,700
RESTAURANTS 2.5%
9,500 Ruby Tuesday, Inc.(c) 305,425
12,200 Sonic Corp.(a)(c) 418,216
- -------------------------------------------------
723,641
TOBACCO 1.1%
5,000 R.J. Reynolds Tobacco
Holdings, Inc.(c) 302,500
- -------------------------------------------------
TOTAL LEISURE & CONSUMER STAPLES 1,529,291
</Table>
22
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
MATERIALS 16.4%
FERTILIZERS & AGRICULTURAL
CHEMICALS 1.3%
10,300 Monsanto Company(c) $ 377,701
ALUMINUM 2.7%
6,000 Alcan Inc.(f(c) 268,740
14,100 Alcoa Inc.(c) 489,129
- -------------------------------------------------
757,869
COMMODITY CHEMICALS 3.7%
9,700 Georgia Gulf Corporation 292,455
21,000 Headwaters
Incorporated(a)(c) 538,020
15,500 Lyondell Chemical
Company(c) 230,020
- -------------------------------------------------
1,060,495
DIVERSIFIED CHEMICALS 1.4%
9,000 FMC Corporation(a)(c) 385,380
FERTILIZERS & AGRICULTURAL
CHEMICALS 1.5%
6,500 The Scotts Company(a)(c) 416,975
METAL & GLASS CONTAINERS 1.0%
21,000 Owens-Illinois,
Inc.(a)(c) 301,430
SPECIALTY CHEMICALS 1.7%
12,000 A. Schulman, Inc. 235,800
8,500 Albemarle Corporation(c) 246,500
- -------------------------------------------------
482,300
STEEL 3.1%
5,200 Quanex Corporation 220,948
13,000 Steel Dynamics,
Inc.(a)(c) 337,008
16,600 Steel Technologies Inc. 320,712
- -------------------------------------------------
878,668
- -------------------------------------------------
TOTAL MATERIALS 4,660,818
TELECOMMUNICATIONS & UTILITIES 6.8%
WIRELESS TELECOMMUNICATION
SERVICES 6.8%
10,000 America Movil S.A. de
C.V. -- ADR(c) 386,500
31,000 China Unicom Limited --
ADR(c) 283,815
3,000 Mobile Telesystems --
ADR(c) 394,500
10,900 Nextel Communications,
Inc.(a)(c) 269,557
15,900 STET Hellas
Telecommunications
S.A. -- ADR 324,360
6,800 Telemig Celular
Participacoes S.A. -- ADR 265,880
- -------------------------------------------------
1,924,612
- -------------------------------------------------
TOTAL TELECOMMUNICATIONS & UTILITIES 1,924,612
- -------------------------------------------------
TOTAL COMMON STOCKS
(COST $25,324,504) 28,900,333
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
CALL OPTION PURCHASED (100 SHARES
PER CONTRACT)*
Ford Motor Company
173 Expiration January 2006,
Exercise Price $20.00 $ 9,948
- -------------------------------------------------
TOTAL CALL OPTION PURCHASED
(COST $9,256) 9,948
CORPORATE BONDS 1.2%
$323,000 Ford Motor Credit Co.
7.000%, 10-1-13 340,850
- -------------------------------------------------
TOTAL BOND
(COST $345,195) 340,850
SHORT-TERM INVESTMENT 0.3%
$ 73,617 American Family Demand
Note, 0.6908%# 73,617
- -------------------------------------------------
TOTAL SHORT-TERM INVESTMENT
(COST $73,617) 73,617
- -------------------------------------------------
TOTAL INVESTMENTS 103.5%
(COST $25,752,572) 29,324,748
- -------------------------------------------------
LIABILITIES LESS OTHER ASSETS (3.5%) (994,623)
- -------------------------------------------------
NET ASSETS 100.0% $28,330,125
- -------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign
(c) Collateral for call option
* Less than 0.1%
Dates shown on securities are due dates of the obligations.
23
Schedule of Investments
(unaudited)
ICON COVERED CALL FUND
- --------------------------------------------------------------------------------
SCHEDULE OF
WRITTEN OPTIONS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
CONTRACTS
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE (100 SHARES PER CONTRACT) MARKET VALUE
- -----------------------------------------------------------------------------------------------
CALL OPTIONS
1-800-FLOWERS.COM, Inc.
Expiration April 2004, Exercise Price $10.00 215 $ 4,837
4Kids Entertainment, Inc.
Expiration May 2004, Exercise Price $25.00 100 7,000
Activision, Inc.
Expiration April 2004, Exercise Price $15.00 255 26,137
Albemarle Corporation
Expiration June 2004, Exercise Price $35.00 85 1,063
Alcan Inc.
Expiration May 2004, Exercise Price $50.00 60 2,550
Alcoa Inc.
Expiration April 2004, Exercise Price $35.00 141 10,927
America Movil S.A. de C.V.
Expiration May 2004, Exercise Price $40.00 100 10,000
AmeriCredit Corp.
Expiration May 2004, Exercise Price $20.00 190 8,550
AmSurg Corp.
Expiration May 2004, Exercise Price $23.375 135 11,813
Avnet, Inc.
Expiration April 2004, Exercise Price $25.00 160 8,800
Best Buy Co., Inc.
Expiration April 2004, Exercise Price $55.00 38 722
BorgWarner, Inc.
Expiration April 2004, Exercise Price $85.00 35 6,037
BorgWarner, Inc.
Expiration April 2004, Exercise Price $100.00 17 213
Cable Design Technologies Corporation
Expiration April 2004, Exercise Price $10.00 270 6,075
Capital One Financial Corporation
Expiration May 2004, Exercise Price $80.00 60 12,450
China Unicom Limited
Expiration April 2004, Exercise Price $12.50 315 788
Cognizant Technology Solutions Corporation
Expiration April 2004, Exercise Price $55.00 90 450
CompuCredit Corporation
Expiration April 2004, Exercise Price $22.50 125 4,687
Coventry Health Care, Inc.
Expiration May 2004, Exercise Price $45.00 82 10,455
DaVita, Inc.
Expiration April 2004, Exercise Price $40.00 70 54,250
Digital Insight Corporation
Expiration May 2004, Exercise Price $25.00 120 3,300
East West Bancorp, Inc.
Expiration April 2004, Exercise Price $55.00 60 9,150
EDO Corporation
Expiration April 2004, Exercise Price $30.00 110 2,750
Federated Department Stores, Inc.
Expiration May 2004, Exercise Price $55.00 60 11,250
FMC Corporation
Expiration April 2004, Exercise Price $35.00 90 70,650
Fred's, Inc.
Expiration April 2004, Exercise Price $25.00 74 3,330
General Motors Corporation
Expiration May 2004, Exercise Price $50.00 75 4,687
</Table>
24
- --------------------------------------------------------------------------------
SCHEDULE OF
WRITTEN OPTIONS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
CONTRACTS
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE (100 SHARES PER CONTRACT) MARKET VALUE
- -----------------------------------------------------------------------------------------------
Goodrich Corporation
Expiration May 2004, Exercise Price $35.00 90 900
Granite Construction Incorporated
Expiration June 2004, Exercise Price $25.00 90 6,525
Headwaters Incorporated
Expiration May 2004, Exercise Price $22.50 210 75,600
Helen of Troy Limited
Expiration May 2004, Exercise Price $30.00 88 20,240
Helen of Troy Limited
Expiration May 2004, Exercise Price $35.00 87 5,438
Hilb, Rogal and Hamilton Company
Expiration May 2004, Exercise Price $40.00 110 6,325
Hovnanian Enterprises, Inc.
Expiration April 2004, Exercise Price $42.50 60 10,350
IndyMac Bancorp, Inc.
Expiration April 2004, Exercise Price $35.00 90 15,750
Ingersoll-Rand Company
Expiration May 2004, Exercise Price $70.00 35 5,512
Ingram Micro Inc.
Expiration April 2004, Exercise Price $17.50 170 14,025
Jacobs Engineering Group Inc.
Expiration April 2004, Exercise Price $50.00 43 538
Kenneth Cole Productions, Inc.
Expiration April 2004, Exercise Price $35.00 90 6,525
Kronos Incorporated
Expiration April 2004, Exercise Price $35.00 54 1,755
Labor Ready, Inc.
Expiration May 2004, Exercise Price $12.50 225 32,062
Lear Corporation
Expiration May 2004, Exercise Price $65.00 55 5,913
Loews Corporation
Expiration May 2004, Exercise Price $65.00 57 1,425
Lyondell Chemical Company
Expiration May 2004, Exercise Price $17.50 155 1,163
Magma Design Automation, Inc.
Expiration April 2004, Exercise Price $25.00 110 1,375
Mobile Telesystems
Expiration May 2004, Exercise Price $125.00 30 33,600
Monsanto Company
Expiration April 2004, Exercise Price $30.00 100 66,500
NCO Group, Inc.
Expiration May 2004, Exercise Price $25.00 100 7,000
New Century Financial Corporation
Expiration May 2004, Exercise Price $60.00 70 2,100
New York Community Bancorp, Inc.
Expiration April 2004, Exercise Price $30.00 73 31,820
Nextel Communications, Inc.
Expiration May 2004, Exercise Price $30.00 109 1,907
Omnicare, Inc.
Expiration May 2004, Exercise Price $47.50 76 5,510
OmniVision Technologies, Inc.
Expiration April 2004, Exercise Price $30.00 71 4,083
Oshkosh Truck Corporation
Expiration April 2004, Exercise Price $50.00 75 44,625
</Table>
25
Schedule of Investments (continued)
(unaudited)
- --------------------------------------------------------------------------------
SCHEDULE OF
WRITTEN OPTIONS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
CONTRACTS
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE (100 SHARES PER CONTRACT) MARKET VALUE
- -----------------------------------------------------------------------------------------------
Owens-Illinois, Inc.
Expiration May 2004, Exercise Price $15.00 215 10,213
Priority Healthcare Corporation
Expiration April 2004, Exercise Price $25.00 140 1,400
Province Healthcare Company
Expiration May 2004, Exercise Price $17.50 170 6,375
Quiksilver, Inc.
Expiration May 2004, Exercise Price $22.50 200 17,500
R.J. Reynolds Tobacco Holdings, Inc.
Expiration April 2004, Exercise Price $70.00 50 375
Ruby Tuesday, Inc.
Expiration May 2004, Exercise Price $30.00 30 7,950
Ruby Tuesday, Inc.
Expiration May 2004, Exercise Price $35.00 65 2,275
SanDisk Corporation
Expiration April 2004, Exercise Price $32.50 66 1,815
The Scotts Company
Expiration June 2004, Exercise Price $65.00 65 12,675
SCP Pool Corporation
Expiration April 2004, Exercise Price $40.00 75 750
Select Medical Corporation
Expiration April 2004, Exercise Price $20.00 150 750
The Shaw Group Inc.
Expiration April 2004, Exercise Price $15.00 150 1,125
Sonic Corp.
Expiration April 2004, Exercise Price $35.00 50 2,250
Sonic Corp.
Expiration June 2004, Exercise Price $40.00 72 1,980
SpectraLink Corporation
Expiration May 2004, Exercise Price $20.00 150 9,375
The Sports Authority, Inc.
Expiration April 2004, Exercise Price $45.00 85 1,062
Steel Dynamics, Inc.
Expiration April 2004, Exercise Price $25.00 136 8,160
Take-Two Interactive Software, Inc.
Expiration April 2004, Exercise Price $37.50 107 9,095
Technitrol, Inc.
Expiration April 2004, Exercise Price $25.00 165 2,063
Thor Industries, Inc.
Expiration May 2004, Exercise Price $30.00 128 9,280
Ultra Petroleum Corp.
Expiration May 2004, Exercise Price $35.00 140 7,000
University of Phoenix Online
Expiration May 2004, Exercise Price $90.00 35 10,500
West Marine, Inc.
Expiration April 2004, Exercise Price $30.00 110 24,200
Winnebago Industries, Inc.
Expiration April 2004, Exercise Price $37.50 90 225
York International Corporation
Expiration May 2004, Exercise Price $45.00 100 1,250
Zale Corporation
Expiration May 2004, Exercise Price $60.00 54 17,280
- -----------------------------------------------------------------------------------------------
TOTAL OPTIONS WRITTEN (PREMIUMS RECEIVED $468,687) 8,453 $868,410
</Table>
26
Management Overview
ICON EQUITY INCOME FUND
A discussion with the Portfolio
Management Team
HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
The ICON Equity Income Fund, Class I advanced 19.69% for the six-month period
ended March 31, 2004. At the same time, its Class C shares appreciated 19.12%,
both of which outperformed the 14.75% return for the Fund's benchmark, the S&P
1500 Index. Total returns for other periods as of March 31, 2004 are listed on
page 29.
In light of volatile equity markets and declining value-to-price ratios during
the period, the Fund took a more conservative stance, reducing its pure equity
exposure while increasing its weighting in income-producing investments such as
preferred stocks and convertible bonds. By doing so, the Fund lowered its risk
profile yet maintained equity-like exposure to the residual intrinsic value we
continue to detect. However, in increasing its weighting in convertible bonds,
the Fund sidestepped supply issues associated with that marketplace by creating
a blended security, combining a company's corporate bond with a call option on
its stock.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Other performance considerations during the period included the Fund's value
bias, as measured on a price-to-earnings (P/E) basis. Although our valuation
readings classified much of the Fund's holdings as underpriced, returns may have
benefited when stocks generally considered more growth-oriented encountered
severe resistance amid valuation-related profit taking during the fourth quarter
of 2003 and a two-month cyclical correction in early 2004.
The Fund does not utilize P/E ratio as a valuation measure, regarding it as a
static proxy. Instead, we calculate a proprietary value-to-price ratio (V/P) for
each industry and security. We believe this to be more meaningful since it
considers the effects of earnings, projected growth, risk, and interest rates
(opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Despite their seemingly robust gains, stocks came under pressure during the
period as geopolitical tensions reignited in the wake of the overseas terrorist
events. Although economic fundamentals demonstrated incremental improvements,
conflicting data exacerbated market uncertainty as investors grappled with
misplaced concerns surrounding lackluster job growth, weaker consumer spending
and higher interest rates.
Short-term interest rates remained at 45-year lows and given the current
low-inflation environment, it seems likely that any increase would be gradual.
Furthermore, with longer rates experiencing a 20-year secular decline, we
anticipate that yields will merely revert to historical norms, ranging between
4.0% and 5.0%. That being said, we currently see no reason for interest rates to
rise appreciably above these levels.
HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
Positive contributions from all sectors with notable outperformance among
overweights in Industrials and Consumer Discretionary worked
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
EQUITIES 82.7%
COMMON STOCKS 72.2%
PREFERRED STOCKS 4.5%
CONVERTIBLE PREFERRED STOCKS 6.0%
TOP 10 EQUITY HOLDINGS 16.2%
NUMBER OF STOCKS 121
OPTIONS PURCHASED
CALL OPTIONS 0.2%
NUMBER OF CONTRACTS 4
BONDS & CASH EQUIVALENTS 18.3%
CONVERTIBLE CORPORATE BONDS 10.0%
CORPORATE BONDS 4.0%
CASH EQUIVALENTS 4.3%
NUMBER OF BONDS 18
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
March 31, 2004
(unaudited)
NOVASTAR FINANCIAL, INC. 2.0%
KIMBERLY-CLARK CORPORATION 1.8%
KNIGHTSBRIDGE TANKERS LTD. 1.7%
SMITH & NEPHEW PLC 1.7%
STEEL TECHNOLOGIES INC. 1.6%
GEVITY HR, INC. 1.5%
METHANEX CORPORATION 1.5%
FERRO CORPORATION 1.5%
TIDEWATER INC. 1.5%
MAYTAG, CORP. 1.4%
Percentages are based upon net assets.
27
Management Overview (continued)
ICON EQUITY INCOME FUND
to the Fund's advantage during the period. Selected overweight industries also
made significant contributions, including real estate investment trusts, oil &
gas refining & marketing and employment services.
Sectors detracting on a relative basis centered on the underweight Information
Technology, Health Care and Energy groups. Underweight industries such as
communications equipment, semiconductors, soft drinks, and regional banks proved
also detrimental while an overweighting in commodity chemicals held back
performance.
Measurable company contributors included subprime mortgage lender NovaStar
Financial Inc., which reported strong earnings-per-share gains in addition to
announcing a 2-for-1 stock split. Employment services firm Gevity HR, Inc. also
advanced, having implemented organizational changes that boosted client growth.
Meanwhile, wholesale food distributor Nash Finch Co. resumed its turnaround
after posting higher profits on revenue gains and cost-cutting measures.
Drugmaker Valeant Pharmaceuticals International also rebounded, having benefited
from lower quarterly losses and positive clinical data for its new Hepatitis C
treatment, while Big Three automaker Ford Motor Company gained on optimism
generated by the reviving economy.
In contrast, shares of SpectraLink plummeted after the maker of wireless
communications equipment reported missing Wall Street revenue estimates. Leading
polyester fiber producer Wellman Inc. also declined after warning of
wider-than-expected losses due to rising raw material costs. Likewise, offshore
fleet operator Tidewater Inc. encountered guidance concerns when the company's
earnings forecast fell below consensus estimates on weaker utilization trends.
Elsewhere, semiconductor equipment supplier Cabot Microelectronics Corp. and
integrated database resource FactSet Research Systems Inc. both retreated amid
widespread profit taking in the Information Technology sector. However, these
stocks did not meet the Fund's sell discipline and we continued to hold them
period-end.
WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC MARKET?
Assuming long-term interest rates trade at or near historical norms, we do not
expect fixed-income markets to be adversely affected. At the same time, we
continue to see modest upside in the equity markets based on our overall
estimate of fair value.
Although relative strength readings continue to support a cyclical theme tied to
the economic recovery, we believe a conservative approach still makes sense.
That being said, while our outlook is positive, we are mindful of the fact that
the road to fair value is never a straight line.
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - Positive contributions from all sectors, particularly Industrials and
Consumer Discretionary, aided Fund returns during the period.
- - Selected industries also made significant contributions, including real
estate investment trusts, oil & gas refining & marketing and employment
services.
- - Poorer-performing sectors included Information Technology, Health Care and
Energy.
- - Specific companies contributing positively to returns included NovaStar
Financial Inc., Gevity HR, Inc., and Nash Finch Co., while SpectraLink,
Wellman Inc., and Tidewater Inc. were poor performers.
28
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Financial 14.5%
Materials 12.1%
Industrials 11.1%
Leisure & Consumer Staples 9.4%
Consumer Discretionary 6.7%
Information Technology 6.0%
Telecommunications & Utilities 5.4%
Energy 4.0%
Healthcare 3.0%
</Table>
Percentages are based upon common stock positions and net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS
INCEPTION ENDED ONE FIVE SINCE
DATE 3/31/04* YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON Equity Income Fund-Class I 10/1/02 19.69% 48.05% N/A 30.78%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 27.06%
- ------------------------------------------------------------------------------------------
ICON Equity Income Fund-Class C 11/8/02 19.12% 46.85% N/A 26.65%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 20.56%
- ------------------------------------------------------------------------------------------
</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 waive certain Fund expenses; without these waivers,
returns would have been lower. The waiver provisions may be terminated in the
future.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON EQUITY INCOME FUND-CLASS I S&P 1500 INDEX
------------------------------- --------------
10/01/02 10000 10000
12/31/02 10819 10811
3/31/03 10091 10450
6/30/03 12073 12093
9/30/03 12482 12469
12/31/03 14475 14009
3/31/04 14940 14308
</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. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
29
Schedule of Investments
(unaudited)
ICON EQUITY INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- -------------------------------------------------
COMMON STOCKS 72.2%
CONSUMER DISCRETIONARY 6.7%
ADVERTISING 0.4%
29,000 The Interpublic Group
of Companies, Inc.(a) $ 446,020
APPAREL ACCESSORIES & LUXURY
GOODS 0.5%
7,900 Kellwood Company 310,075
5,600 V. F. Corporation 261,520
- -------------------------------------------------
571,595
APPAREL RETAIL 0.8%
15,900 The Cato Corporation 319,272
26,500 Limited Brands 530,000
- -------------------------------------------------
849,272
AUTOMOBILE MANUFACTURERS 1.3%
28,300 General Motors
Corporation 1,332,930
DEPARTMENT STORES 0.4%
10,500 Sears, Roebuck and Co. 451,080
DISTRIBUTORS 0.1%
4,800 Genuine Parts Company 157,056
FOOTWEAR 0.3%
7,000 Brown Shoe Company,
Inc. 255,010
HOUSEHOLD APPLIANCES 2.2%
48,000 Maytag Corporation 1,515,360
10,800 Snap-on Incorporated 349,272
6,700 Whirlpool Corporation 461,429
- -------------------------------------------------
2,326,061
TIRES & RUBBER 0.7%
7,100 Bandag, Incorporated 353,367
18,700 Cooper Tire & Rubber
Company(f) 376,805
- -------------------------------------------------
730,172
- -------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 7,119,196
ENERGY 4.0%
INTEGRATED OIL & GAS 0.3%
5,300 ConocoPhillips 369,993
OIL & GAS EQUIPMENT & SERVICES 1.5%
56,000 Tidewater Inc. 1,575,280
OIL & GAS REFINING & MARKETING &
TRANSPORTATION 2.2%
10,600 Ashland Inc. 492,794
87,500 Knightsbridge Tankers
Ltd.(f) 1,861,125
- -------------------------------------------------
2,353,919
- -------------------------------------------------
TOTAL ENERGY 4,299,192
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
FINANCIAL 14.5%
ASSET MANAGEMENT & CUSTODY
BANKS 0.4%
12,600 The Bank of New York
Company, Inc. $ 396,900
DIVERSIFIED BANKS 1.8%
7,100 Bank of America
Corporation 574,958
29,800 FleetBoston Financial
Corporation 1,338,020
- -------------------------------------------------
1,912,978
DIVERSIFIED CAPITAL MARKETS 1.0%
24,500 J.P. Morgan Chase &
Co. 1,027,775
INSURANCE BROKERS 2.1%
42,500 Aon Corporation 1,186,175
32,000 Arthur J. Gallagher &
Co. 1,042,240
- -------------------------------------------------
2,228,415
INVESTMENT BANKING & BROKERAGE 0.5%
10,400 Morgan Stanley 595,920
LIFE & HEALTH INSURANCE 0.5%
12,000 Lincoln National
Corporation 567,840
MULTI-LINE INSURANCE 2.5%
48,300 American Financial
Group, Inc. 1,440,789
21,000 Loews Corporation 1,240,260
- -------------------------------------------------
2,681,049
OTHER DIVERSIFIED FINANCIAL
SERVICES 1.0%
11,500 Citigroup Inc. 594,550
20,900 ING Groep N.V. -- ADR 460,845
- -------------------------------------------------
1,055,395
PROPERTY & CASUALTY INSURANCE 0.3%
15,450 Old Republic
International
Corporation 379,452
REAL ESTATE INVESTMENT TRUSTS 2.4%
13,200 General Growth
Properties, Inc. 463,980
31,600 Novastar Financial,
Inc. 2,084,020
- -------------------------------------------------
2,548,000
THRIFTS & MORTGAGE FINANCE 2.0%
10,900 Countrywide Financial
Corporation 1,045,310
31,700 New York Community
Bancorp, Inc. 1,086,676
- -------------------------------------------------
2,131,986
- -------------------------------------------------
TOTAL FINANCIAL 15,525,710
</Table>
30
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- -------------------------------------------------
HEALTHCARE 3.0%
HEALTH CARE DISTRIBUTORS 0.5%
20,500 Owens & Minor, Inc. $ 518,650
HEALTH CARE FACILITIES 0.6%
17,400 Manor Care, Inc. 614,046
HEALTH CARE SUPPLIES 1.7%
36,000 Smith & Nephew plc --
ADR 1,819,440
PHARMACEUTICALS 0.2%
11,200 Bristol-Myers Squibb
Company 271,376
- -------------------------------------------------
TOTAL HEALTHCARE 3,223,512
INDUSTRIALS 11.1%
AEROSPACE & DEFENSE 0.6%
24,200 Goodrich Corporation 679,294
AIR FREIGHT & LOGISTICS 0.5%
13,700 Ryder System, Inc. 530,601
BUILDING PRODUCTS 1.1%
19,400 Masco Corporation 590,536
16,000 York International
Corporation 628,960
- -------------------------------------------------
1,219,496
COMMERCIAL PRINTING 1.1%
38,000 R.R. Donnelley & Sons
Company 1,149,500
CONSTRUCTION & FARM MACHINERY &
HEAVY TRUCKS 0.9%
7,300 Caterpillar Inc. 577,211
20,400 Federal Signal
Corporation 404,940
- -------------------------------------------------
982,151
DIVERSIFIED COMMERCIAL
SERVICES 0.3%
8,700 Deluxe Corporation 348,870
ELECTRICAL COMPONENTS &
EQUIPMENT 1.5%
8,300 Cooper Industries,
Ltd. 474,594
7,000 Emerson Electric Co. 419,440
8,700 Hubbell Incorporated 349,131
7,900 Roper Industries, Inc. 381,175
- -------------------------------------------------
1,624,340
EMPLOYMENT SERVICES 1.6%
57,000 Gevity HR, Inc. 1,664,400
INDUSTRIAL CONGLOMERATES 1.1%
33,000 ALLETE, Inc. 1,157,970
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
INDUSTRIAL MACHINERY 1.6%
8,400 Briggs & Stratton
Corporation $ 566,748
11,100 Harsco Corporation 505,050
40,700 Stewart & Stevenson
Services, Inc. 595,034
- -------------------------------------------------
1,666,832
MARINE 0.4%
14,000 Alexander & Baldwin,
Inc. 463,120
TRADING COMPANIES &
DISTRIBUTORS 0.4%
16,800 Applied Industrial
Technologies, Inc. 381,696
- -------------------------------------------------
TOTAL INDUSTRIALS 11,868,270
INFORMATION TECHNOLOGY 6.0%
APPLICATION SOFTWARE 1.0%
11,300 FactSet Research
Systems Inc. 480,928
27,100 Jack Henry &
Associates, Inc. 521,946
- -------------------------------------------------
1,002,874
COMMUNICATIONS EQUIPMENT 1.0%
64,000 SpectraLink
Corporation 1,089,920
COMPUTER HARDWARE 0.6%
27,900 Hewlett-Packard
Company 637,236
DATA PROCESSING & OUTSOURCED
SERVICES 1.1%
26,400 Electronic Data
Systems Corporation 510,840
19,300 StarTek, Inc. 701,362
- -------------------------------------------------
1,212,202
ELECTRONIC EQUIPMENT
MANUFACTURERS 0.8%
41,900 PerkinElmer, Inc. 866,911
SEMICONDUCTOR EQUIPMENT 0.2%
5,000 Cabot Microelectronics
Corporation(a) 211,200
SEMICONDUCTORS 0.5%
19,700 Intel Corporation 535,840
TECHNOLOGY DISTRIBUTORS 0.8%
17,000 Agilysys, Inc. 826,625
- -------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 6,382,808
LEISURE & CONSUMER STAPLES 9.4%
CASINOS & GAMING 0.6%
10,900 Mandalay Resort Group 624,134
FOOD DISTRIBUTORS 1.2%
55,200 Nash Finch Company 1,307,136
</Table>
31
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- -------------------------------------------------
FOOD RETAIL 2.7%
66,000 Albertson's, Inc. $ 1,461,900
47,100 SUPERVALU INC. 1,438,434
- -------------------------------------------------
2,900,334
HOUSEHOLD PRODUCTS 1.8%
30,000 Kimberly-Clark
Corporation 1,893,000
LEISURE PRODUCTS 0.6%
33,700 Callaway Golf Company 639,626
PACKAGED FOODS & MEATS 0.8%
54,300 Lance, Inc. 889,977
PUBLISHING 0.4%
9,500 Dow Jones & Company,
Inc. 455,145
TOBACCO 1.3%
21,800 R.J. Reynolds Tobacco
Holdings, Inc. 1,318,900
- -------------------------------------------------
TOTAL LEISURE & CONSUMER STAPLES 10,028,252
MATERIALS 12.1%
ALUMINUM 0.4%
11,500 Alcoa Inc. 398,935
COMMODITY CHEMICALS 3.9%
96,700 Lyondell Chemical
Company 1,435,028
147,100 Methanex
Corporation(f) 1,647,520
130,000 Wellman, Inc. 1,085,500
- -------------------------------------------------
4,168,048
CONSTRUCTION MATERIALS 1.3%
46,000 Cemex S.A. de C.V. --
ADR 1,371,720
FERTILIZERS & AGRICULTURAL
CHEMICALS 0.3%
10,200 Monsanto Company 374,034
PAPER PRODUCTS 1.3%
19,200 Aracruz Celulose
S.A. -- ADR 734,400
19,700 Georgia-Pacific Corp. 663,693
- -------------------------------------------------
1,398,093
SPECIALTY CHEMICALS 3.3%
95,000 Crompton Corporation 606,100
61,000 Ferro Corporation 1,595,150
79,600 RPM International,
Inc. 1,316,584
- -------------------------------------------------
3,517,834
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
STEEL 1.6%
87,600 Steel Technologies
Inc. $ 1,692,432
- -------------------------------------------------
TOTAL MATERIALS 12,921,096
TELECOMMUNICATIONS & UTILITIES 5.4%
ELECTRIC UTILITIES 2.0%
31,600 Alliant Energy
Corporation 823,496
51,500 Duquesne Light
Holdings Inc. 1,004,250
9,100 IDACORP, Inc. 272,090
- -------------------------------------------------
2,099,836
GAS UTILITIES 0.4%
6,900 Atmos Energy
Corporation 176,433
5,700 Peoples Energy
Corporation 254,505
- -------------------------------------------------
430,938
INTEGRATED TELECOMMUNICATION
SERVICES 1.5%
8,500 ALLTEL Corporation 431,120
6,300 SBC Communications
Inc. 154,602
16,600 Sprint Corporation 305,938
71,800 Sprint Corporation --
Units 744,566
- -------------------------------------------------
1,636,226
MULTI-UTILITIES & UNREGULATED
POWER 1.5%
10,300 Energy East
Corporation 261,208
34,000 Telemig Celular
Participacoes S.A. --
ADR 1,329,400
- -------------------------------------------------
1,590,608
- -------------------------------------------------
TOTAL TELECOMMUNICATIONS & 5,757,608
UTILITIES
- -------------------------------------------------
TOTAL COMMON STOCKS
(COST $66,692,464) 77,125,644
</Table>
32
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- -------------------------------------------------
PREFERRED STOCKS 4.5%
18,200 Aetna Inc.,
8.500%, 8-31-41 $ 505,596
12,200 Ambac Financial Group,
Inc.,
7.000%, 10-17-51 330,620
6,600 Bank One Capital
Corporation,
8.000%, 1-30-31 182,160
27,000 Ford Motor Credit
Company,
7.600%, 3-01-32 722,250
26,000 General Motors
Acceptance
Corporation,
7.350%, 8-8-32 691,080
15,000 Maytag Corporation,
7.875%, 8-1-31 409,500
16,000 MBNA Corporation,
7.500%, Series A 424,000
38,000 The Walt Disney
Company,
7.000%, 11-1-31 1,024,100
18,100 Xerox Capital LLC,
6.540%, 2-28-06,
Series A(f) 557,633
- -------------------------------------------------
TOTAL PREFERRED STOCKS
(COST $4,807,239) 4,846,939
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
CONVERTIBLE PREFERRED STOCKS 6.0%
16,200 Ameren Corporation,
9.750%, 5-15-05 $ 452,790
16,300 CenturyTel, Inc.,
6.875%, 5-15-05 390,874
4,200 Chesapeake Energy
Corporation,
6.750%, 12-31-49 371,700
39,000 Constellation Brands,
Inc., 5.750%, 9-1-06 1,189,500
5,700 Emmis Communications
Corporation, 6.250%,
12-31-49, Series A 278,160
4,300 KeySpan Corporation,
8.750%, 5-16-05 230,050
4,000 Northrop Grumman
Corporation, 7.000%,
4-4-21 506,000
9,000 Omnicare, Inc.,
4.000%, 6-15-33 589,500
8,600 Philippine Long
Distance Telephone
Company,
3.500%, 12-31-49,
Series III -- ADR 395,600
10,500 Sempra Energy, 8.500%,
5-17-05 306,600
14,400 TXU Corp., 8.750%,
11-16-05, Series C 529,200
23,200 Toy "R" Us, Inc.,
6.250%, 8-16-05 1,110,816
- -------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $5,882,095) 6,350,790
CALL OPTIONS PURCHASED (100 SHARES
PER CONTRACT) 0.2%
400 Ford Motor Company
Expiration January
2006, Exercise Price
$20.00 23,000
75 McDonald's Corp.
Expiration September
2004, Exercise Price
$30.00 10,125
200 Royal Caribbean
Cruises Ltd.
Expiration September
2004, Exercise Price
$50.00 43,000
1,100 XEROX Corporation
Expiration January
2006, Exercise Price
$20.00 151,250
- -------------------------------------------------
TOTAL CALL OPTIONS PURCHASED
(COST $180,032) 227,375
</Table>
33
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- -------------------------------------------------
CONVERTIBLE CORPORATE BONDS 10.0%
$ 177,000 Adaptec, Inc.,
3.000%, 3-5-07 $ 177,221
100,000 Amerisource Health
Corporation,
5.000%, 12-1-07 114,875
158,000 The BISYS Group, Inc.,
4.000%, 3-15-06 158,790
790,000 China Mobile Limited,
2.250%, 10-31-05(f) 792,963
1,600,000 DaimlerChrysler AG,
6.500%, 11-15-13 1,730,488
110,000 Eastman Kodak Company,
3.375%, 10-15-33 127,187
1,288,000 Household Finance
Corporation,
4.750%, 7-15-13 1,296,412
600,000 International
Rectifier Corporation,
4.250%, 7-15-07 603,750
1,500,000 King Pharmaceuticals,
Inc., 2.750%, 11-21-06 1,447,500
135,000 Mediacom
Communications
Corporation,
5.250%, 7-1-06 131,287
1,230,000 Providian Financial
Corporation,
3.250%, 8-15-05 1,208,475
136,000 Tower Automotive,
Inc., 5.000%, 8-1-04 130,560
1,270,000 The Walt Disney
Company,
2.125%, 4-15-23 1,403,350
1,000,000 UTStarcom, Inc.,
0.875%, 3-1-08 1,403,750
- -------------------------------------------------
TOTAL CONVERTIBLE CORPORATE BONDS
(COST $10,865,827) 10,726,608
CORPORATE BONDS 4.0%
750,000 Ford Motor Credit Co.,
7.000%, 10-1-13 791,447
225,000 McDonald's Corp.,
5.000%, 9-30-16 223,509
1,000,000 Royal Caribbean
Cruises,
7.250%, 3-15-18(f) 1,045,000
2,100,000 Xerox Corporation,
7.625%, 6-15-13(a) 2,236,500
- -------------------------------------------------
TOTAL CORPORATE BOND
(COST $4,377,178) 4,296,456
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
SHORT-TERM INVESTMENTS 4.3%
U.S. GOVERNMENT OBLIGATIONS 3.0%
3,153,000 FHLB Discount Note,
1.000%, 4-01-04 $ 3,153,000
- -------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS 3,153,000
VARIABLE RATE DEMAND NOTE 1.3%
1,379,833 American Family Demand
Note, 0.6908%# 1,379,833
- -------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE 1,379,833
- -------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $4,532,833) 4,532,833
- -------------------------------------------------
TOTAL INVESTMENTS 101.2%
(COST $97,337,668) 108,106,645
- -------------------------------------------------
LIABILITIES LESS OTHER (1,296,126)
ASSETS (1.2%)
- -------------------------------------------------
NET ASSETS 100.0% $106,810,519
- -------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign
Dates shown on securities are due dates of the obligations.
34
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 advanced 20.21% for the six-month period ended
March 31, 2004, while its Class C shares appreciated 19.84%. Both returns
outpaced the Fund's benchmark, the S&P 1500 Index, which returned 14.75% over
the same period. Total returns for other periods as of March 31, 2004 are listed
on page 38.
The Fund's performance advantage during the period can be attributed to holding
concentrated long positions in leading industries favored by our valuation
methodology. Furthermore, as certain overpriced industries within the
Information Technology sector began to decline in relative strength, the Fund
initiated short positions within the technology area that ultimately contributed
to performance.
The Fund is managed using an all-cap strategy, meaning we invest in securities
we believe are undervalued, regardless of their location on the traditional
style grid. Our investment approach is not limited by restrictions on market
capitalization; the ICON system searches for potential industry leadership
regardless of where it emerges.
Other performance considerations during the period included the Fund's growth
bias, as measured on a price-to-earnings (P/E) basis. Although our valuation
readings classified many of its holdings as underpriced, the Fund may have
suffered when stocks considered more richly valued based on P/E encountered
severe resistance on two separate occasions. These occurrences include
valuation-related profit taking in the Technology sector during the fourth
quarter of 2003 and a two-month cyclical correction in early 2004 that lifted
more defensive issues.
Note that the Fund does not utilize P/E ratio as a valuation measure, regarding
it as a static proxy. Instead, we calculate a proprietary value-to-price ratio
(V/P) for each industry and security. We believe this to be more meaningful
since it considers the effects of earnings, projected growth, risk, and interest
rates (opportunity cost).
WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS?
Seemingly negative market trends prevailed despite the fact that stocks turned
in a strong showing during the period. Although economic fundamentals and
corporate earnings both made considerable headway, investors instead focused on
interest rate fears, job growth concerns and consumer spending worries. Our
system saw things differently, as valuations and relative strength readings
continued to support an upward move, particularly as the recovery gained
traction.
While stock prices remained underpriced based on our estimate of fair value,
event-driven sell-offs weighed heavily on the market. Adding to the uncertainty
was the underpinning of terrorism, which heightened following terrorist bombings
and lingering hostilities in the Middle East.
HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
The Fund's industry focus worked to its benefit during the period, as
benchmark-beating returns were generated from overweight positions in steel,
wireless telecommunication services, specialty stores, consumer finance, and
employment services. Among top-performing sectors, the Fund was increasingly
tilted toward Materials as steel strengthened on rising global demand, while
Telecommunications leader wireless services benefited from capacity
[SIDENOTE]
PORTFOLIO PROFILE
March 31, 2004
(unaudited)
Equities 89.7%
Top 10 Equity Holdings 17.9%
Number of Stocks 71
Cash Equivalents 11.3%
Percentages are based upon net assets.
[SIDENOTE]
TOP 10 EQUITY HOLDINGS
(LONG POSITIONS)
March 31, 2004
(unaudited)
First Cash Financial
Services, Inc. 2.1%
Activision, Inc. 2.0%
Turkcell Iletisim
Hizmetleri A.S. 1.8%
Steel Technologies Inc. 1.8%
Mobile Telesystems 1.8%
Steel Dynamics, Inc. 1.8%
Capital One Financial Corporation 1.7%
IMC Global Inc. 1.7%
STET Hellas
Telecommunications S.A. 1.6%
AO VimpelCom 1.6%
Percentages are based upon net assets.
35
Management Overview (continued)
ICON LONG/SHORT FUND
enhancements. However, Consumer Discretionary was steadily reduced as apparel
retail and auto parts & equipment came under pressure.
Conversely, an overweight position in Internet software & services proved
detrimental and was subsequently removed, while underexposure to communications
equipment also had a negative effect. Other detractors included limited exposure
to the Energy sector and pharmaceuticals, and an overweight position in
airlines, which was ultimately liquidated.
In accordance with the Fund's shorting discipline, which focuses on industries
that our system indicates are both overpriced and declining in relative
strength, the Fund's short weighting grew from 0.1% at the beginning of the
period to 21.9% of net assets at period-end. Short positions were initiated
during the fourth quarter of 2003 in semiconductor equipment, followed by
semiconductors and systems software in early 2004. While these positions
contributed to performance as the Information Technology sector declined on
valuation concerns, a short position in gold detracted from performance.
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.
Among the Fund's leading individual stock contributors, pawnshop operator First
Cash Financial Services Inc. capitalized on its retail-oriented business model
and strength in payday lending to boost earnings. Mid-market auto finance
company AmeriCredit Corp. also advanced, having posted better-than-expected
earnings due to credit quality improvements. Entertainment software provider
Activision Inc. continued to report impressive quarterly results as well, citing
strong sales in its core titles. Meanwhile, Allegheny Technologies Inc. rallied
after announcing double-digit price increases for its specialty steel and
titanium alloy products, whereas employment services firm Gevity HR, Inc.
reported organizational changes that boosted client growth.
Other specific companies hampered returns. Messaging services provider j2 Global
Communications, Inc. fell on unexpectedly weak performance in several of its key
markets. NASCAR marketer Action Performance Companies, Inc. also declined amid
slowing revenues in its die-cast collectibles. Elsewhere, discount carrier
JetBlue Airways Corp. faced stiff headwinds from higher fuel costs and intense
pricing competition. Also retreating was structural component manufacturer Tower
Automotive, Inc., which declined on losses related to a joint venture, and
respiratory therapy supplier Lincare Holdings Inc., as expectations of lower
Medicare reimbursement rates pressured the stock. This group of weak performers
was sold during the period as their relative strength dropped.
WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC MARKET?
On the basis of valuation and relative strength, we anticipate continued upside
for industries such as consumer finance, wireless telecommunication services and
industrial machinery. At the same time, we remain committed to managing our
short positions independent of our longer-term holdings, looking for suitable
concentration opportunities among overpriced, weakening industries poised for
pullback. As today's favored industries resume their projected march toward fair
value, these opportunities should become more plentiful.
36
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
- - The Fund's short weighting grew to 21.9% of net assets at period-end, with
positions in semiconductor equipment, followed by semiconductors and
systems software. These positions contributed to performance, but a short
position in gold detracted from performance.
- - Positions in the Materials, Financials, and Telecommunications sectors
aided returns.
- - On an industry level, steel, wireless telecommunication services, specialty
stores, consumer finance, and employment services were among the Fund's
best performers.
- - Conversely, an overweight position in Internet software & services proved
detrimental, while a lack of exposure to the Energy sector and
pharmaceuticals and an overweight position in airlines hampered
performance.
- - First Cash Financial Services Inc., AmeriCredit Corp., and Activision Inc.
made significant contributions to performance, but returns suffered from
the Fund's holdings in j2 Global Communications, Inc., Action Performance
Companies, Inc., and JetBlue Airways Corp.
37
Management Overview (continued)
ICON LONG/SHORT FUND
- --------------------------------------------------------------------------------
SECTOR COMPOSITION
March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
Materials 14.6%
Financial 13.7%
Industrials 12.0%
Telecommunications & Utilities 11.8%
Health Care 10.0%
Information Technology 9.3%
Leisure & Consumer Staples 9.1%
Consumer Discretionary 5.6%
Energy 3.6%
</Table>
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of March 31, 2004
(unaudited)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS
INCEPTION ENDED ONE FIVE SINCE
DATE 3/31/04* YEAR YEARS INCEPTION
- ------------------------------------------------------------------------------------------
ICON Long/Short Fund-Class I 10/1/02 20.21% 62.44% N/A 27.75%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 27.06%
- ------------------------------------------------------------------------------------------
ICON Long/Short Fund-Class C 10/17/02 19.84% 61.23% N/A 22.73%
- ------------------------------------------------------------------------------------------
S&P 1500 Index 14.75% 36.92% 23.84%
- ------------------------------------------------------------------------------------------
</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 waive certain Fund expenses; without these waivers,
returns would have been lower. The waiver provisions may be terminated in the
future.
* Not annualized.
- --------------------------------------------------------------------------------
VALUE OF A
$10,000 INVESTMENT
through March 31, 2004
- --------------------------------------------------------------------------------
[LINE GRAPH]
<Table>
<Caption>
ICON LONG/SHORT FUND-CLASS I S&P 1500 INDEX
---------------------------- --------------
10/01/02 10000 10000
12/31/02 9760 10811
3/31/03 8880 10450
6/30/03 11040 12093
9/30/03 12000 12469
12/31/03 13453 14009
3/31/04 14425 14308
</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. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
38
Schedule of Investments
(unaudited)
ICON LONG/SHORT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
COMMON STOCKS 89.7%
CONSUMER DISCRETIONARY 5.6%
AUTO PARTS & EQUIPMENT 2.1%
1,600 BorgWarner, Inc. $ 135,728
2,200 Lear Corporation 136,312
- -------------------------------------------------
272,040
INTERNET RETAIL 1.2%
2,200 eBay Inc.(a) 152,526
SPECIALTY STORES 2.3%
3,300 Barnes & Noble, Inc.(a) 107,580
4,500 The Sports Authority,
Inc.(a) 180,360
- -------------------------------------------------
287,940
- -------------------------------------------------
TOTAL CONSUMER DISCRETIONARY 712,506
ENERGY 3.6%
OIL & GAS EXPLORATION &
PRODUCTION 1.2%
5,100 Ultra Petroleum
Corp.(a)f) 153,051
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 2.4%
3,100 Ashland Inc. 144,119
2,200 Teekay Shipping
Corporation(f) 151,580
- -------------------------------------------------
295,699
- -------------------------------------------------
TOTAL ENERGY 448,750
FINANCIAL 13.7%
CONSUMER FINANCE 7.7%
10,500 AmeriCredit Corp.(a) 178,815
2,800 Capital One Financial
Corporation 211,204
7,800 First Cash Financial
Services, Inc.(a) 262,314
5,600 MBNA Corporation 154,728
12,700 Providian Financial
Corporation(a) 166,370
- -------------------------------------------------
973,431
INSURANCE BROKERS 2.4%
5,400 Aon Corporation 150,714
4,000 Hilb, Rogal and
Hamilton Company 152,400
- -------------------------------------------------
303,114
MULTI-LINE INSURANCE 2.6%
4,600 HCC Insurance Holdings,
Inc. 148,718
3,000 Loews Corporation 177,180
- -------------------------------------------------
325,898
THRIFTS & MORTGAGE FINANCE 1.0%
3,733 New York Community
Bancorp, Inc. 127,967
- -------------------------------------------------
TOTAL FINANCIAL 1,730,410
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
HEALTH CARE 10.0%
HEALTH CARE DISTRIBUTORS 1.4%
4,000 Omnicare, Inc. $ 177,320
HEALTH CARE FACILITIES 3.9%
4,000 LifePoint Hospitals,
Inc.(a) 129,360
11,700 Province Healthcare
Company(a) 186,030
5,500 United Surgical
Partners International,
Inc.(a) 186,670
- -------------------------------------------------
502,060
HEALTH CARE SERVICES 2.1%
5,300 Dendrite International,
Inc.(a) 84,800
3,900 Renal Care Group,
Inc.(a) 178,464
- -------------------------------------------------
263,264
MANAGED HEALTH CARE 2.6%
3,600 Coventry Health Care,
Inc.(a) 152,388
4,400 PacifiCare Health
Systems, Inc.(a) 174,020
- -------------------------------------------------
326,408
- -------------------------------------------------
TOTAL HEALTH CARE 1,269,052
INDUSTRIALS 12.0%
BUILDING PRODUCTS 3.1%
7,300 Griffon Corporation(a) 157,680
3,700 Universal Forest
Products, Inc. 114,182
3,100 York International
Corporation 121,861
- -------------------------------------------------
393,723
CONSTRUCTION & ENGINEERING 2.8%
6,600 Granite Construction
Incorporated 156,882
6,800 URS Corporation(a) 195,704
- -------------------------------------------------
352,586
DIVERSIFIED COMMERCIAL SERVICES 1.5%
2,200 University of Phoenix
Online(a) 191,444
EMPLOYMENT SERVICES 3.6%
6,500 Gevity HR, Inc. 189,800
10,200 Labor Ready, Inc.(a) 137,904
13,100 Spherion Corporation(a) 134,013
- -------------------------------------------------
461,717
INDUSTRIAL MACHINERY 1.0%
4,200 The Manitowoc Company,
Inc. 124,236
- -------------------------------------------------
TOTAL INDUSTRIALS 1,523,706
</Table>
39
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
INFORMATION TECHNOLOGY 9.3%
HOME ENTERTAINMENT SOFTWARE 4.5%
15,900 Activision, Inc.(a) $ 251,538
22,000 Midway Games Inc.(a) 160,160
7,800 THQ Inc.(a) 157,794
- -------------------------------------------------
569,492
IT CONSULTING & OTHER SERVICES 1.0%
11,700 MPS Group, Inc.(a) 130,104
TECHNOLOGY DISTRIBUTORS 3.8%
12,300 Agilysys, Inc. 146,370
5,700 Global Imaging Systems,
Inc.(a) 189,354
11,700 GTSI Corp.(a) 141,816
- -------------------------------------------------
477,540
- -------------------------------------------------
TOTAL INFORMATION TECHNOLOGY 1,177,136
LEISURE & CONSUMER STAPLES 9.1%
FOOD DISTRIBUTORS 1.7%
5,300 Nash Finch Company 125,504
19,300 Spartan Stores, Inc.(a) 86,850
- -------------------------------------------------
212,354
FOOD RETAIL 1.1%
4,400 SUPERVALU INC. 134,376
MOVIES & ENTERTAINMENT 1.1%
5,500 The Walt Disney Company 137,445
RESTAURANTS 1.7%
3,300 CEC Entertainment
Inc.(a) 114,510
5,300 The Steak n Shake
Company(a) 102,025
- -------------------------------------------------
216,535
TOBACCO 3.5%
2,700 Altria Group, Inc. 147,015
2,500 R.J. Reynolds Tobacco
Holdings, Inc. 151,250
3,000 Universal Corporation 152,460
- -------------------------------------------------
450,725
- -------------------------------------------------
TOTAL LEISURE & CONSUMER STAPLES 1,151,435
MATERIALS 14.6%
ALUMINUM 2.9%
4,000 Alcan Inc.(f) 179,160
5,600 Alcoa Inc. 194,264
- -------------------------------------------------
373,424
COMMODITY CHEMICALS 2.2%
6,500 Headwaters
Incorporated(a) 166,530
7,500 Lyondell Chemical
Company 111,300
- -------------------------------------------------
277,830
</Table>
<Table>
- -------------------------------------------------
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
DIVERSIFIED CHEMICALS 2.1%
2,800 Eastman Chemical
Company $ 119,504
3,400 FMC Corporation(a) 145,588
- -------------------------------------------------
265,092
FERTILIZERS & AGRICULTURAL
CHEMICALS 3.8%
14,600 IMC Global Inc.(a) 208,780
2,500 Monsanto Company 91,675
2,800 The Scotts Company(a) 179,620
- -------------------------------------------------
480,075
STEEL 3.6%
9,000 Steel Dynamics, Inc.(a) 223,020
12,000 Steel Technologies Inc. 231,840
- -------------------------------------------------
454,860
- -------------------------------------------------
TOTAL MATERIALS 1,851,281
TELECOMMUNICATIONS & UTILITIES 11.8%
ALTERNATIVE CARRIERS 1.0%
12,500 PTEK Holdings, Inc.(a) 114,875
WIRELESS TELECOMMUNICATION
SERVICES 10.8%
5,100 America Movil S.A. de
C.V. -- ADR 197,115
1,900 AO VimpelCom(a) -- ADR 197,581
1,700 Mobile Telesystems --
ADR 223,550
22,500 Partner Communications
Company Ltd.(a) -- ADR 178,875
9,800 STET Hellas
Telecommunications
S.A. -- ADR 199,920
3,700 Telemig Celular
Participacoes S.A. --
ADR 144,670
6,500 Turkcell Iletisim
Hizmetleri
A.S.(a)-- ADR 232,375
- -------------------------------------------------
1,374,086
- -------------------------------------------------
TOTAL TELECOMMUNICATIONS & UTILITIES 1,488,961
- -------------------------------------------------
TOTAL COMMON STOCKS
(COST $9,249,434) 11,353,237
SHORT-TERM INVESTMENTS 11.3%
US GOVERNMENT OBLIGATIONS 11.3%
$1,434,000 FHLB Discount Note,
0.750%, 4-1-04(b) 1,434,000
- -------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $1,434,000) 1,434,000
</Table>
40
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -------------------------------------------------
VARIABLE RATE DEMAND NOTE 0.0%*
3,008 American Family Demand
Note, 0.6908%# $ 3,008
- -------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTE
(COST $3,008) 3,008
- -------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,437,008) 1,437,008
- -------------------------------------------------
TOTAL INVESTMENTS 101.0%
(COST $10,686,442) 12,790,245
- -------------------------------------------------
LIABILITIES LESS OTHER ASSETS (1.0%) (150,107)
- -------------------------------------------------
NET ASSETS 100.0% $12,640,138
- -------------------------------------------------
</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 March 31, 2004.
ADR -- American Depositary Receipt
f Foreign
* Less than 0.1%
Dates shown on securities are due dates of the obligations.
- --------------------------------------------------------------------------------
SCHEDULE OF SHORT SECURITIES
March 31, 2004
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHORT SECURITIES SHARES MARKET VALUE
- ------------------------------------------------------------------------------------------------
Ascential Software Corporation(a) 9,800 $ 214,816
ATMI, Inc.(a) 7,600 200,032
Cohu, Inc. 10,900 203,285
Glamis Gold Ltd.(a)f) 10,500 189,105
Integrated Device Technology, Inc.(a) 9,000 135,000
Lam Research Corporation(a) 7,900 199,159
LSI Logic Corporation(a) 10,500 98,070
Micrel, Incorporated(a) 9,700 129,495
Novellus Systems, Inc.(a) 6,200 197,098
Photronics, Inc.(a) 9,800 173,852
Placer Dome Inc.(f) 10,000 179,700
Skyworks Solutions, Inc.(a) 11,000 128,260
TALX Corporation 10,300 226,085
Ultratech, Inc.(a) 8,100 188,811
VERITAS Software Corporation(a) 6,400 172,224
Zygo Corporation(a) 9,000 140,670
- ------------------------------------------------------------------------------------------------
TOTAL SHORT SECURITIES (PROCEEDS OF $2,906,841) 146,700 $2,775,662
</Table>
(a) Non-income producing security
f Foreign
The accompanying notes are an integral part of the financial statements.
41
Statements of Assets and Liabilities
(unaudited)
<Table>
<Caption>
-------------- -------------- -------------- -------------- --------------
MARCH 31, 2004 ICON ICON ICON ICON ICON
BOND CORE EQUITY COVERED CALL EQUITY INCOME LONG/SHORT
FUND FUND FUND FUND FUND
-------------- -------------- -------------- -------------- --------------
ASSETS
Investments, at cost $42,420,560 $75,104,303 $25,752,572 $ 97,337,668 $10,686,442
----------- ----------- ----------- ------------ -----------
Investments, at value 45,188,521 90,719,877 29,324,748 108,106,645 12,790,245
Cash 13 951 - 7,502 -
Receivables:
Fund shares sold 402,957 226,620 152,808 761,584 124,566
Investments sold 264,000 - 350,145 - -
Interest 705,461 183 12,022 187,368 12
Dividends - 39,755 14,867 104,269 6,147
Deposits for short sales - - - - 2,885,171
Expense reimbursements by Adviser 11,554 - 16,901 1,989 9,743
Other assets 2,307 4,165 879 1,557 419
----------- ----------- ----------- ------------ -----------
Total Assets 46,574,813 90,991,551 29,872,370 109,170,914 15,816,303
----------- ----------- ----------- ------------ -----------
LIABILITIES
Options written, at value (premiums
received of $0, $0, $468,687, $0 and $0,
respectively) - - 868,410 - -
Common stocks sold short, at value
(proceeds of $0, $0, $0, $0 and
$2,906,841, respectively) - - - - 2,775,662
Payables:
Due to custodian bank - - - - 348,542
Investments bought - - 581,394 1,861,149
Fund shares redeemed 13,838 98,261 8,301 11,423 -
Dividends payable - - - -
Advisory fees 22,924 56,258 17,259 65,484 9,018
Accrued distribution fees 9,707 47,384 6,159 21,707 3,264
Fund accounting, custodial and transfer
agent fees 13,881 17,595 9,446 18,817 9,776
Administration fees 1,910 3,751 1,151 4,366 530
Distributions due to shareholders 175,378 - - 309,323 -
Accrued expenses 52,284 33,019 50,125 68,126 29,373
----------- ----------- ----------- ------------ -----------
Total Liabilities 289,922 256,268 1,542,245 2,360,395 3,176,165
----------- ----------- ----------- ------------ -----------
NET ASSETS -- ALL SHARE CLASSES $46,284,891 $90,735,283 $28,330,125 $106,810,519 $12,640,138
=========== =========== =========== ============ ===========
NET ASSETS -- CLASS I $45,830,073 $44,026,800 $27,441,192 $105,662,721 $11,494,107
=========== =========== =========== ============ ===========
NET ASSETS -- CLASS C $ 454,818 $46,708,483 $ 888,933 $ 1,147,798 $ 1,146,031
=========== =========== =========== ============ ===========
Shares outstanding (unlimited shares
authorized, no par value)
Class I 4,264,266 3,463,773 2,057,209 7,283,971 806,561
Class C 42,326 3,770,871 67,393 79,389 81,246
Net asset value (offering price and
redemption price per share)
Class I $ 10.75 $ 12.71 $ 13.34 $ 14.51 $ 14.25
Class C $ 10.75 $ 12.39 $ 13.19 $ 14.46 $ 14.11
</Table>
The accompanying notes are an integral part of the financial statements.
42
Statements of Operations
(unaudited)
<Table>
<Caption>
-------------- -------------- -------------- -------------- --------------
FOR THE SIX MONTHS ENDED MARCH 31, 2004 ICON ICON ICON ICON ICON
BOND CORE EQUITY COVERED CALL EQUITY INCOME LONG/SHORT
FUND FUND FUND FUND FUND
-------------- -------------- -------------- -------------- --------------
INVESTMENT INCOME
Interest $1,171,157 $ 6,150 $ 1,568 $ 68,067 $ 3,423
Dividends (net of foreign tax of $0,
$1,928, $406, $4,674, and $194,
respectively) 35,000 256,981 99,161 1,074,746 37,592
-------------- -------------- -------------- -------------- --------------
Total Investment Income 1,206,157 263,131 100,729 1,142,813 41,015
-------------- -------------- -------------- -------------- --------------
EXPENSES
Advisory fees 125,375 317,164 96,068 257,178 48,821
Distribution fees:
Class I 51,870 53,098 31,413 84,660 13,434
Class C 1,255 210,496 2,440 4,264 3,700
Fund accounting, custodial and transfer
agent fees 35,291 45,844 30,277 42,563 25,483
Administration fees 10,719 20,943 6,343 17,032 2,846
Audit fees 11,093 5,941 6,869 18,336 3,081
Registration fees 15,176 14,128 14,352 15,504 13,697
Legal fees 876 1,771 399 808 183
Insurance expense 1,650 2,664 502 889 237
Trustee fees and expenses 1,925 3,739 1,109 2,580 507
Shareholder reports 12,613 11,704 8,203 15,984 3,835
Excise tax - - - 18,436 -
Other expenses 18,244 26,418 26,555 18,036 13,474
-------------- -------------- -------------- -------------- --------------
Total expenses before expense
(reimbursement)/recoupment 286,087 713,910 224,530 496,270 129,298
Expense (reimbursement)/recoupment by
Adviser (13,556) - (36,969) 3,886 (37,497)
-------------- -------------- -------------- -------------- --------------
Net Expenses 272,531 713,910 187,561 500,156 91,801
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) 933,626 (450,779) (86,832) 642,657 (50,786)
-------------- -------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized gain/(loss) from:
Investment transactions 436,387 5,339,460 2,093,937 2,097,625 1,363,420
Written options - - (90,216) - -
-------------- -------------- -------------- -------------- --------------
Total net realized gain 436,387 5,339,460 2,003,721 2,097,625 1,363,420
-------------- -------------- -------------- -------------- --------------
Change in net unrealized
appreciation/(depreciation) on
securities, written options and
securities sold short 899,529 5,633,383 574,681 6,846,624 687,867
-------------- -------------- -------------- -------------- --------------
Net realized and unrealized gain on
investments 1,335,916 10,972,843 2,578,402 8,944,249 2,051,287
-------------- -------------- -------------- -------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $2,269,542 $10,522,064 $2,491,570 $9,586,906 $2,000,501
============== ============== ============== ============== ==============
</Table>
The accompanying notes are an integral part of the financial statements.
43
Statements of Changes in Net Assets
<Table>
<Caption>
--------------------------------------- ---------------------------------------
ICON ICON
BOND FUND CORE EQUITY FUND
--------------------------------------- ---------------------------------------
For the Six For the Year For the Six
Months Ended October 1, 2002* Months Ended
March 31, 2004 (Inception) to March 31, 2004 Year Ended
(Unaudited) September 30, 2003 (Unaudited) September 30, 2003
----------------- ------------------- ----------------- -------------------
OPERATIONS
Net investment income/(loss) $ 933,626 $ 1,401,247 $ (450,779) $ (467,910)
Net realized gain/(loss) from investment
transactions, written options and
securities sold short 436,387 (294,006) 5,339,460 (3,558,157)
Change in unrealized
appreciation/(depreciation) on securities,
written options and securities sold short 899,529 1,868,432 5,633,383 13,315,101
----------------- ------------------- ----------------- -------------------
Net increase in net assets resulting from
operations 2,269,542 2,975,673 10,522,064 9,289,034
----------------- ------------------- ----------------- -------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (928,305) (1,394,730) - -
Net realized gains - - - -
----------------- ------------------- ----------------- -------------------
Net decrease from dividends and
distributions (928,305) (1,394,730) - -
----------------- ------------------- ----------------- -------------------
FUND SHARE TRANSACTIONS
Shares sold
Class I 13,493,754 56,519,622 8,469,796 15,777,863
Class C 235,144 372,769 9,130,439 17,459,010
Reinvested dividends and distributions
Class I 922,482 1,384,911 - -
Class C 5,547 7,462 - -
Shares repurchased
Class I (9,254,343) (20,136,882) (7,487,354) (25,007,736)
Class C (56,911) (130,844) (2,930,642) (14,463,137)
----------------- ------------------- ----------------- -------------------
Net increase/(decrease) from fund share
transactions 5,345,673 38,017,038 7,182,239 (6,234,000)
----------------- ------------------- ----------------- -------------------
Total net increase in net assets 6,686,910 39,597,981 17,704,303 3,055,034
NET ASSETS
Beginning of period 39,597,981 - 73,030,980 69,975,946
----------------- ------------------- ----------------- -------------------
End of period $46,284,891 $ 39,597,981 $90,735,283 $ 73,030,980
================= =================== ================= ===================
</Table>
The accompanying notes are an integral part of the financial statements.
44
<Table>
<Caption>
---------------------------------------- ---------------------------------------- ----------------------------------------
ICON ICON ICON
COVERED CALL FUND EQUITY INCOME FUND LONG/SHORT FUND
---------------------------------------- ---------------------------------------- ----------------------------------------
For the Six For the Year For the Six For the Year For the Six For the year
Months Ended October 1, 2002* Months Ended October 1, 2002* Months Ended October 1, 2002*
March 31, 2004 (Inception) to March 31, 2004 (Inception) to March 31, 2004 (Inception) to
(Unaudited) September 30, 2003 (Unaudited) September 30, 2003 (Unaudited) September 30, 2003
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
$ (86,832) $ (93,978) $ 642,657 $ 555,722 $ (50,786) $ (48,508)
2,003,721 513,942 2,097,625 491,012 1,363,420 (172,889)
574,681 2,597,772 6,846,624 3,922,353 687,867 1,547,115
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
2,491,570 3,017,736 9,586,906 4,969,087 2,000,501 1,325,718
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
- - (637,901) (555,767) - -
(825,299) - - - (130,149) -
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
(825,299) - (637,901) (555,767) (130,149)
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
9,930,704 21,535,397 61,818,673 44,637,115 5,112,786 10,958,821
786,004 177,231 584,328 637,549 810,501 436,593
802,497 - 607,158 528,515 121,354 -
10,975 - 5,788 4,458 7,238 -
(5,917,321) (3,564,680) (8,064,295) (7,026,892) (5,238,334) (2,533,670)
(77,952) (36,737) (145,695) (138,508) (38,416) (192,805)
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
5,534,907 18,111,211 54,805,957 38,642,237 775,129 8,668,939
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
7,201,178 21,128,947 63,754,962 43,055,557 2,645,481 9,994,657
21,128,947 - 43,055,557 - 9,994,657 -
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
$28,330,125 $21,128,947 $106,810,519 $43,055,557 $12,640,138 $ 9,994,657
================= =================== ================= =================== ================= ===================
</Table>
45
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
--------------------------------------- ---------------------------------------
ICON ICON
BOND FUND CORE EQUITY FUND
--------------------------------------- ---------------------------------------
For the Six For the Year For the Six
Months Ended October 1, 2002* Months Ended
March 31, 2004 (Inception) to March 31, 2004 Year Ended
(Unaudited) September 30, 2003 (Unaudited) September 30, 2003
----------------- ------------------- ----------------- -------------------
NET ASSETS CONSIST OF
Paid-in capital $43,362,711 $38,017,038 $83,789,397 $ 76,607,158
Accumulated undistributed net investment
income/(loss) 17,361 12,040 (450,779) -
Accumulated undistributed net realized
gain/(loss) from investments 136,858 (299,529) (8,218,909) (13,558,369)
Unrealized appreciation/(depreciation) on
securities, written options and securities
sold short 2,767,961 1,868,432 15,615,574 9,982,191
----------------- ------------------- ----------------- -------------------
NET ASSETS $46,284,891 $39,597,981 $90,735,283 $ 73,030,980
================= =================== ================= ===================
TRANSACTIONS IN FUND SHARES
Shares sold
Class I 1,276,949 5,630,081 690,395 1,599,134
Class C 22,361 36,999 758,779 1,836,853
Reinvested dividends and distributions
Class I 87,284 135,559 - -
Class C 530 726 - -
Shares repurchased
Class I (877,799) (1,987,808) (606,770) (2,665,419)
Class C (5,479) (12,811) (244,067) (1,544,876)
----------------- ------------------- ----------------- -------------------
Net increase/(decrease) 503,846 3,802,746 598,337 (774,308)
----------------- ------------------- ----------------- -------------------
Shares outstanding beginning of period 3,802,746 - 6,636,307 7,410,615
----------------- ------------------- ----------------- -------------------
Shares outstanding end of period 4,306,592 3,802,746 7,234,644 6,636,307
================= =================== ================= ===================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding short-term securities and written
options)
Purchase of securities (including short sale
transactions) $ 4,551,878 $32,843,432 $60,894,262 $121,427,409
Proceeds from sales of securities (including
short sale transactions) 2,360,465 4,586,062 53,622,419 129,023,828
Purchases of long-term U.S. government
securities 3,518,440 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. The offering
of Class C shares commenced on October 21, 2002, November 21, 2002,
November 8, 2002 and October 17, 2002, respectively.
The accompanying notes are an integral part of the financial statements.
46
<Table>
<Caption>
---------------------------------------- ---------------------------------------- ----------------------------------------
ICON ICON ICON
COVERED CALL FUND EQUITY INCOME FUND LONG/SHORT FUND
---------------------------------------- ---------------------------------------- ----------------------------------------
For the Six For the Year For the Six For the Year For the Six For the Year
Months Ended October 1, 2002* Months Ended October 1, 2002* Months Ended October 1, 2002*
March 31, 2004 (Inception) to March 31, 2004 (Inception) to March 31, 2004 (Inception) to
(Unaudited) September 30, 2003 (Unaudited) September 30, 2003 (Unaudited) September 30, 2003
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
$23,646,118 $18,111,211 $ 93,448,194 $38,642,237 $ 9,395,560 $ 8,620,431
(86,832) - 19,361 14,605 (50,786) -
1,598,386 419,964 2,573,987 476,362 1,060,382 (172,889)
3,172,453 2,597,772 10,768,977 3,922,353 2,234,982 1,547,115
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
$28,330,125 $21,128,947 $106,810,519 $43,055,557 $12,640,138 $ 9,994,657
================= =================== ================= =================== ================= ===================
748,249 2,020,657 4,343,888 4,069,794 374,789 1,055,319
60,530 15,317 42,143 60,013 61,094 42,776
63,040 - 41,981 47,549 9,511 -
882 - 410 405 574 -
(446,296) (328,441) (576,293) (642,948) (388,054) (245,004)
(6,033) (3,303) (10,765) (12,817) (2,966) (20,232)
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
420,372 1,704,230 3,841,364 3,521,996 54,948 832,859
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
1,704,230 - 3,521,996 - 832,859 -
----------------- ------------------- ----------------- ------------------- ----------------- -------------------
2,124,602 1,704,230 7,363,360 3,521,996 887,807 832,859
================= =================== ================= =================== ================= ===================
$29,300,213 $45,565,265 $ 61,492,231 $47,049,615 $ 9,737,662 $19,387,249
24,665,397 28,417,692 9,374,135 9,058,288 9,561,643 11,575,765
- - - - - -
- - - - - -
</Table>
47
Financial Highlights
<Table>
<Caption>
--------------------------------------------------------------------------------------
ICON BOND FUND
--------------------------------------------------------------------------------------
Class I Class C
For the Six For the Year For the Six For the Period
Months Ended October 1, 2002 Months Ended October 21, 2002
March 31, 2004 (Inception) to March 31, 2004 (Inception) to
(Unaudited) September 30, 2003 (Unaudited) September 30, 2003
----------------- -------------------- ----------------- --------------------
Net asset value, beginning of period $ 10.41 $ 10.00 $10.42 $ 9.79
----------------- -------------------- ----------------- --------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(x) 0.24 0.42 .21 0.37
Net realized and unrealized gains on
investments 0.33 0.38 .32 0.60
----------------- -------------------- ----------------- --------------------
Total from investment operations 0.57 0.80 .53 0.97
----------------- -------------------- ----------------- --------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.23) (0.39) (0.20) (0.34)
Distributions from net realized gains 0.00 0.00 0.00 0.00
----------------- -------------------- ----------------- --------------------
Total distributions (0.23) (0.39) (0.20) (0.34)
----------------- -------------------- ----------------- --------------------
Net asset value, end of period $ 10.75 $ 10.41 $10.75 $10.42
================= ==================== ================= ====================
Total return 5.56% 8.19% 5.15% 9.98%(b)
Net assets, end of period (in
thousands) $45,830 $39,338 $ 454 $ 260
Average net assets for the period (in
thousands) $41,385 $33,787 $ 298 $ 199
Ratio of expenses to average net
assets*
Before expense waiver 1.34% 1.45% 5.20% 2.05%
After expense waiver 1.30% 1.30% 1.90% 1.90%
Ratio of net investment income to
average net assets*
Before expense waiver 4.43% 4.01% 0.58% 3.48%
After expense waiver 4.47% 4.16% 3.87% 3.63%
Portfolio turnover rate 6.13% 41.65%(a) 6.13% 41.65%(a)
</Table>
* Annualized for periods less than a year
(a) Portfolio turnover is calculated at the Fund level and therefore represents
the period 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
48
THIS PAGE INTENTIONALLY LEFT BLANK
49
Financial Highlights (continued)
<Table>
<Caption>
--------------------------------------------------------------------------------------
ICON CORE EQUITY FUND
--------------------------------------------------------------------------------------
Class I
For the Six For the Year For the Period
Months Ended For the Year Ended October 12, 2000
March 31, 2004 Ended September 30, (Inception) to
(Unaudited) September 30, 2003 2002 September 30, 2001
----------------- -------------------- ----------------- --------------------
Net asset value, beginning of period $ 11.12 $ 9.50 $ 10.04 $ 10.00
----------------- -------------------- ----------------- --------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(x) (0.04) (0.04) (0.07) (0.05)
Net realized and unrealized
gains/(losses) on investments 1.63 1.66 (0.20) 0.09
----------------- -------------------- ----------------- --------------------
Total from investment operations 1.59 1.62 (0.27) 0.04
----------------- -------------------- ----------------- --------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income 0.00 0.00 0.00 0.00
Distributions from net realized gains 0.00 0.00 (0.27) 0.00
----------------- -------------------- ----------------- --------------------
Total distributions 0.00 0.00 (0.27) 0.00
----------------- -------------------- ----------------- --------------------
Net asset value, end of period $ 12.71 $ 11.12 $ 9.50 $ 10.04
================= ==================== ================= ====================
Total return 14.30% 17.05% (3.23)% 0.40%(b)
Net assets, end of period (in
thousands) $44,027 $37,603 $42,232 $23,261
Average net assets for the period (in
thousands) $42,365 $34,007 $37,577 $23,802
Ratio of expenses to average net assets 1.31%* 1.39% 1.36% 1.60%*
Ratio of net investment loss to average
net assets (0.69)%* (0.37)% (0.58)% (0.36)%*
Portfolio turnover rate 64.33% 188.07% 107.82% 124.61%(a)
</Table>
* Annualized for periods less than a year
(a) Portfolio turnover is calculated at the Fund level and therefore represents
the period October 12, 2000 (Fund inception) to September 30, 2003.
(b) The total return calculation is for the period indicated.
(x) Calculated using the average share method
50
<Table>
<Caption>
--------------------------------------------------------------------------------------
ICON CORE EQUITY FUND
--------------------------------------------------------------------------------------
Class C
For the Six For the Year For the Period
Months Ended For the Year Ended November 28, 2000
March 31, 2004 Ended September 30, (Inception) to
(Unaudited) September 30, 2003 2002 September 30, 2001
----------------- -------------------- ----------------- --------------------
$ 10.88 $ 9.36 $ 9.98 $ 10.62
----------------- -------------------- ----------------- --------------------
(0.08) (0.11) (0.15) (0.10)
1.59 1.63 (0.20) (0.54)
----------------- -------------------- ----------------- --------------------
1.51 1.52 (0.35) (0.64)
----------------- -------------------- ----------------- --------------------
0.00 0.00 0.00 0.00
0.00 0.00 (0.27) 0.00
----------------- -------------------- ----------------- --------------------
0.00 0.00 (0.27) 0.00
----------------- -------------------- ----------------- --------------------
$ 12.39 $ 10.88 $ 9.36 $ 9.98
================= ==================== ================= ====================
13.88% 16.24% (4.07)% (0.20)%(b)
$46,708 $35,428 $27,744 $ 6,324
$41,987 $30,459 $19,849 $ 2,920
2.07%* 2.14% 2.11% 2.23%*
(1.44)%* (1.12)% (1.33)% (1.24)%*
64.33% 188.07% 107.82% 124.61%(a)
</Table>
51
Financial Highlights (continued)
<Table>
<Caption>
---------------------------------------------------------------------------------
ICON COVERED CALL FUND
---------------------------------------------------------------------------------
Class I Class C
For the Six For the Year For the Six For the Period
Months Ended October 1, 2002 Months Ended October 1, 2002
March 31, 2004 (Inception) to March 31, 2004 (Inception) to
(Unaudited) September 30, 2003 (Unaudited) September 30, 2003
----------------- ------------------- ----------------- -------------------
Net asset value, beginning of period $ 12.40 $ 10.00 $12.32 $10.75
----------------- ------------------- ----------------- -------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.04) (0.07) (0.09) (0.17)
Net realized and unrealized gains on
investments 1.42 2.47 1.40 1.74
----------------- ------------------- ----------------- -------------------
Total from investment operations 1.38 2.40 1.31 1.57
----------------- ------------------- ----------------- -------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income 0.00 0.00 0.00 0.00
Distributions from net realized gains (0.44) 0.00 (0.44) 0.00
----------------- ------------------- ----------------- -------------------
Total distributions (0.44) 0.00 (0.44) 0.00
----------------- ------------------- ----------------- -------------------
Net asset value, end of period $ 13.34 $ 12.40 $13.19 $12.32
================= =================== ================= ===================
Total return 11.28% 24.00% 10.78% 14.60%(b)
Net assets, end of period (in thousands) $27,441 $20,981 $ 889 $ 148
Average net assets for the period (in
thousands) $25,063 $14,544 $ 499 $ 50
Ratio of expenses to average net assets*
Before expense waiver 1.70% 2.07% 4.41% 2.83%
After expense waiver 1.45% 1.45% 2.20% 2.20%
Ratio of net investment income/(loss) to
average net assets*
Before expense waiver (0.99)% (1.27)% (3.70)% (2.13)%
After expense waiver (0.74)% (0.65)% (1.49)% (1.50)%
Portfolio turnover rate 93.88%(a) 184.24%(a) 93.88%(a) 184.24%(a)
</Table>
* Annualized for periods less than a year
(a) Portfolio turnover is calculated at the Fund level and therefore represents
the period 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
The accompanying notes are an integral part of the financial statements.
52
<Table>
<Caption>
---------------------------------------------------------------------------------
ICON EQUITY INCOME FUND
---------------------------------------------------------------------------------
Class I Class C
For the Six For the Year For the Six For the Year
Months Ended October 1, 2002 Months Ended November 8, 2002
March 31, 2004 (Inception) to March 31, 2004 (Inception) to
(Unaudited) September 30, 2003 (Unaudited) September 30, 2003
----------------- ------------------- ----------------- -------------------
Net asset value, beginning of period $ 12.22 $ 10.00 $12.21 $10.63
----------------- ------------------- ----------------- -------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) 0.13 0.25 0.08 0.16
Net realized and unrealized gains on
investments 2.29 2.20 2.25 1.59
----------------- ------------------- ----------------- -------------------
Total from investment operations 2.42 2.45 2.33 1.75
----------------- ------------------- ----------------- -------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.13) (0.23) (0.08) (0.17)
Distributions from net realized gains 0.00 0.00 0.00 0.00
----------------- ------------------- ----------------- -------------------
Total distributions (0.13) (0.23) (0.08) (0.17)
----------------- ------------------- ----------------- -------------------
Net asset value, end of period $ 14.51 $ 12.22 $14.46 $12.21
================= =================== ================= ===================
Total return 19.69% 24.72% 19.12% 16.63%(b)
Net assets, end of period (in thousands) $105,663 $42,474 $1,148 $ 581
Average net assets for the period (in
thousands) $ 67,543 $25,288 $ 858 $ 348
Ratio of expenses to average net assets*
Before expense recoupment/waiver 1.44% 1.72% 2.17% 2.48%
After expense recoupment/waiver 1.45% 1.45% 2.20% 2.20%
Ratio of net investment income/(loss) to
average net assets*
Before expense recoupment/waiver 1.89% 1.93% 1.16% 1.10%
After expense recoupment/waiver 1.88% 2.20% 1.13% 1.38%
Portfolio turnover rate 14.36% 35.17%(a) 14.36% 35.17%(a)
</Table>
* Annualized for periods less than a year
(a) Portfolio turnover is calculated at the Fund level and therefore represents
the period 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
The accompanying notes are an integral part of the financial statements.
53
Financial Highlights
<Table>
<Caption>
------------------------------------------------------------------------------
ICON LONG/SHORT FUND
------------------------------------------------------------------------------
Class I Class C
For the Six For the Year For the Six For the Period
Months Ended October 1, 2002 Months Ended October 17, 2002
March 31, 2004 (Inception) to March 31, 2004 (Inception) to
(Unaudited) September 30, 2003 (Unaudited) September 30, 2003
-------------- ------------------- -------------- -------------------
Net asset value, beginning of period $ 12.00 $10.00 $11.92 $10.61
-------------- ------------------- -------------- -------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.06) (0.07) (0.11) (0.15)
Net realized and unrealized gains on
investments 2.47 2.07 2.46 1.46
-------------- ------------------- -------------- -------------------
Total from investment operations 2.41 2.00 2.35 1.31
-------------- ------------------- -------------- -------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income 0.00 0.00 0.00 0.00
Distributions from net realized gains (0.16) 0.00 (0.16) 0.00
-------------- ------------------- -------------- -------------------
Total distributions (0.16) 0.00 (0.16) 0.00
-------------- ------------------- -------------- -------------------
Net asset value, end of period $ 14.25 $12.00 $14.11 $11.92
============== =================== ============== ===================
Total return 20.21% 20.00% 19.84% 12.35%(b)
Net assets, end of period (in thousands) $11,494 $9,726 $1,146 $ 269
Average net assets for the period (in
thousands) $10,718 $6,997 $ 745 $ 186
Ratio of expenses to average net assets*
Before expense waiver 2.12% 3.09% 4.11% 3.84%
After expense waiver 1.55% 1.55% 2.30% 2.30%
Ratio of net investment income/(loss) to
average net assets*
Before expense waiver (1.41)% (2.20)% (3.40)% (2.99)%
After expense waiver (0.84)% (0.66)% (1.99)% (1.45)%
Portfolio turnover rate 84.66% 162.25%(a) 84.66% 162.25%(a)
</Table>
* Annualized for periods less than a year
(a) Portfolio turnover is calculated at the Fund level and therefore represents
the period 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
54
Notes to Financial Statements
MARCH 31, 2004
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Bond Fund ("Bond Fund"), ICON Core Equity Fund ("Core Equity Fund")
ICON Covered Call Fund ("Covered Call Fund"), ICON Equity Income Fund ("Equity
Income Fund"), and ICON Long/Short Fund ("Long/Short Fund") are series funds
(individually a "Fund" and collectively, the "Funds"). The Funds are part of the
ICON Funds (the "Trust"), a Massachusetts business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act") as an open-end
investment management company. The ICON Core Equity Fund commenced operations on
October 12, 2000; the other Funds commenced operations on October 1, 2002. Each
Fund offers three classes of shares; there were no Class Z shareholders in the
Funds as of March 31, 2004. There are currently 13 other active funds within the
Trust. Those funds are covered by separate prospectuses and shareholder reports.
Each Fund is authorized to issue an unlimited number of no par shares. The
investment objective of the Bond Fund is maximum total return. The investment
objective of the Core Equity Fund is long-term capital appreciation with a
secondary objective of capital preservation. The investment objective of the
Covered Call Fund is modest capital appreciation and to maximize realized gains
from writing covered call options. The investment objective of the Equity Income
Fund is modest capital appreciation and income. The investment objective of the
Long/Short Fund is capital appreciation.
The Funds may have elements of risk, including the risk of loss of
principal. There is no assurance that the investment process will consistently
lead to successful results. An investment concentrated in sectors and industries
may involve greater risk and volatility than a more diversified investment.
Additionally, the Bond Fund may invest in medium- and lower-quality debt
securities. These high-yield bonds involve 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. The Covered Call Fund invests in call options; call options involve
certain risks and are not suitable for all investors. The Long/Short Fund
invests short in securities; there are risks associated with selling short,
including the risk that the Long/Short Fund may have to cover its short position
at a higher price than the short sale, resulting in a loss. 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.
55
Notes to Financial Statements (continued)
Investment Valuation.
The Funds' securities and other assets are valued as of the close of regular
trading on the New York Stock Exchange (the "NYSE") (normally 4 p.m. Eastern
time) each day the NYSE is open, except that securities traded primarily on the
NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at the NASDAQ
Official Closing Price provided by NASDAQ each business day. The Funds use
pricing services to determine the market value of securities in their
portfolios; if a pricing service is not able to provide a price, or the pricing
service quote of valuation is inaccurate or does not reflect the market value of
the security, prices may be obtained through market quotations from independent
broker/dealers. If market quotations from these sources are not readily
available, the Funds' securities or other assets are valued at fair value as
determined in good faith by the Funds' Board of Trustees ("Board") or pursuant
to procedures approved by the Board. Any foreign investments in the Funds traded
in countries outside of the Western Hemisphere are fair valued daily based on
procedures established by the Funds' Board to avoid stale prices and to take
into account, among other things, any significant events occurring after the
close of a foreign market in those regions. The valuation assigned to fair-
valued securities for purposes of calculating a Fund's NAV may differ from the
security's most recent closing market price and from the prices used by other
mutual funds to calculate their NAVs.
A security listed or traded primarily on a securities exchange or in the
over-the-counter market is generally valued at its last sale price on the
exchange or market where it is principally traded, except that securities
primarily traded on NASDAQ are normally valued at the NASDAQ Official Closing
Price. Lacking any sales that day, the security is valued at the current closing
bid price (or yield equivalent thereof) or based on quotes obtained from dealers
making a market for the security. Options are valued at their closing mid-price
on the principal market where the option is traded. Mid-price is the average of
the sum of the closing bid and closing ask prices. Debt securities with a
remaining maturity of greater than sixty days are valued in accordance with the
evaluated bid price supplied by the pricing service. Short-term securities with
remaining maturities of sixty days or less are generally valued at amortized
cost or original cost plus accrued interest, which approximates market value.
London closing 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 purchase, the Funds have
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings. No repurchase agreements were purchased or sold by
the Funds during the semiannual period ended March 31, 2004.
Options Transactions.
Each Fund may write (sell) 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.
56
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 Bond Fund distributes net investment
income, if any, to shareholders monthly. 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.
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.
57
Notes to Financial Statements (continued)
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fees.
ICON Advisers, Inc. ("ICON") (formerly Meridian Investment Management
Corporation) serves as investment adviser to the Funds and is responsible for
managing the Funds' portfolios of securities. ICON receives a monthly management
fee that is computed daily at an annual rate of 0.60% of average daily nets
assets of the Bond Fund, 0.75% of average daily net assets of the Core Equity,
Covered Call and Equity Income Funds, and 0.85% of average daily net assets of
the Long/ Short Fund. For the period ended September 30, 2004, ICON has
contractually agreed to limit its investment advisory fee and/or reimburse
certain of the Funds' operating expenses (exclusive of brokerage, interest,
taxes, and extraordinary expenses) to the extent necessary to ensure that the
Funds' operating expenses do not exceed 1.90% for Class C and 1.30% for Class I
shares of the Bond Fund, 2.20% for Class C and 1.45% for Class I shares of the
Covered Call and Equity Income Funds, and 2.30% for Class C and 1.55% for Class
I shares of the Long/Short Fund. To the extent ICON reimburses or absorbs fees
and expenses, it may seek payment of such amounts for up to three years after
the expenses were reimbursed or absorbed. A Fund will make no such payment,
however, if the total Fund operating expenses exceed the expense limits in
effect at the time the expenses were reimbursed or at the time these payments
are proposed. For the six-month period ended March 31, 2004, ICON
reimbursed/absorbed $4,927 on Class C and $8,629 on Class I shares of the Bond
Fund; $5,666 on Class C and $31,303 on Class I shares of the Covered Call Fund;
$4,551 on Class C and $26,873 (prior to reimbursement by ICON for excise tax) on
Class I shares of the Equity Income Fund; and $6,834 on Class C and $30,663 on
Class I shares of the Long/Short Fund, respectively. These expenses are subject
to recovery by ICON based on a rolling three-year period.
During the period, ICON paid an excise tax liability for the Equity Income Fund
in the amount of $18,436.
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 $37,500 on the Core Equity Fund;
$48,750 on the Bond Fund, Covered Call Fund, and Long/Short Fund; and $41,250 on
the Equity Income 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 ICON. This
agreement provides for an annual fee of 0.05% on the Trust's first $1.5 billion
of average daily net assets and 0.045% on average daily net assets in excess of
$1.5 billion.
58
Distribution Fees.
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act ("12b-1 Plan") under which the Funds are authorized to compensate the Funds'
distributor, ICON Distributors, Inc. ("IDI") (formerly Meridian Clearing Corp.)
(an affiliate of the adviser) for the sale and distribution of shares. Under the
12b-1 Plan, Bond Fund Class C shareholders pay an annual 12b-1 and service fee
of 0.85% of average daily net assets and Class I shareholders pay an annual
12b-1 fee of 0.25% of average daily net assets. The shareholders of the other
Funds pay an annual 12b-1 and service fee of 1.00% of average daily net assets
for Class C shares and an annual 12b-1 and service fee of 0.25% of average daily
net assets for Class I shares. For the six-months ended March 31, 2004 the total
amounts paid or payable to IDI pursuant to the 12b-1 Plan were $1,255 on Class C
shares and $51,870 on Class I shares of the Bond Fund, $210,496 on Class C
shares and $53,098 on Class I shares of the Core Equity Fund, $2,440 on Class C
shares and $31,413 on Class I shares of the Covered Call Fund, $4,264 on Class C
shares and $84,660 on Class I shares of the Equity Income Fund, and $3,700 on
Class C shares and $13,434 on Class I shares of the Long/Short Fund.
Related parties.
Certain officers and directors of ICON and IDI are also officers and trustees of
the Trust; however, such officers and trustees receive no compensation from the
Trust.
3. OPTIONS CONTRACTS WRITTEN
The number of option contracts written and the premiums received by the ICON
Covered Call Fund during the six-month period ended March 31, 2004, were as
follows:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
Options outstanding,
beginning of
period............... 3,334 $ 241,662
Options written during
period............... 25,152 1,862,467
Options expired during
period............... (593) (71,714)
Options closed during
period............... (5,238) (1,242,589)
Options exercised
during period........ (14,240) (321,139)
------- -----------
Options outstanding,
end of period........ 8,415 $ 468,687
======= ===========
</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 for the
six-month period ended March 31, 2004 are as follows:
<Table>
<Caption>
ICON ICON ICON ICON ICON
BOND CORE EQUITY COVERED CALL EQUITY INCOME LONG/SHORT
FUND FUND FUND FUND FUND
Federal Tax Cost........ $42,420,560 $75,104,303 $25,752,572 $97,337,668 $10,686,442
Unrealized
Appreciation.......... $ 2,865,048 $16,692,543 $ 4,335,451 $13,088,778 $ 2,460,783
Unrealized
Depreciation.......... $ (97,087) $(1,076,969) $(1,162,998) $(2,319,801) $ (225,801)
Net Appreciation........ $ 2,767,961 $15,615,574 $ 3,172,453 $10,768,977 $ 2,234,982
</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.
59
Notes to Financial Statements (continued)
In 2003, the portfolios 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 Bond Fund....... $ (716) $ (296,502)
ICON Core Equity
Fund............... (11,898,396) (1,659,973)
ICON Covered Call
Fund............... -- --
ICON Equity Income
Fund............... -- --
ICON Long Short
Fund............... (445) (172,444)
</Table>
60
THIS PAGE INTENTIONALLY LEFT BLANK
[ICON FUNDS LOGO]
For more information about the ICON Funds, contact us:
<Table>
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, 12th Floor
Greenwood Village, CO 80111
By E-Mail info@iconadvisers.com
On the Internet www.iconfunds.com
</Table>
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. Consider the investment
objectives, risks, charges, expenses, and share classes of each ICON Fund
carefully before investing. The prospectus contains this and other information
about the Funds and is available by visiting www.iconfunds.com or by calling
1-800-764-0442. Please read the prospectus carefully before investing. ICON
Distributors, Inc., Distributor
I-130-D1V
ICDIVSEMI
- --------------------------------------------------------------------------------
Item 2. Code of Ethics.
Not applicable to semiannual reports.
Item 3. Audit Committee Financial Expert.
Not applicable to semiannual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable to semiannual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Not applicable - schedule is included as part of the report to
shareholders filed under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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 11. Exhibits.
(a)(1) Previously filed on December 1, 2003.
(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.
(a)(3) Not applicable.
(b) A certifications 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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ICON Funds
By: /s/ Craig T. Callahan
--------------------------------------------
Craig T. Callahan
President and Chief Executive Officer (Principal Executive Officer)
Date: June 2, 2004
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: June 2, 2004
By: /s/ Erik L. Jonson
--------------------------------------------
Erik L. Jonson
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
Date: June 2, 2004