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: 09/30/2004
Item 1 - Reports to Stockholders
> 2004 Annual Report
Investment Update
ICON U.S. DIVERSIFIED FUNDS
ICON BOND FUND
ICON CORE EQUITY FUND
ICON COVERED CALL FUND
ICON EQUITY INCOME FUND
ICON LONG/SHORT FUND
[ICON FUNDS LOGO]
Table of Contents
<Table>
ABOUT THIS REPORT (UNAUDITED) 2
MESSAGE FROM ICON FUNDS (UNAUDITED) 4
MANAGEMENT OVERVIEWS (UNAUDITED) AND SCHEDULES OF
INVESTMENTS
ICON Bond Fund 7
ICON Core Equity Fund 18
ICON Covered Call Fund 29
ICON Equity Income Fund 48
ICON Long/Short Fund 62
FINANCIAL STATEMENTS 75
FINANCIAL HIGHLIGHTS 82
NOTES TO FINANCIAL STATEMENTS 92
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 102
BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED) 103
OTHER INFORMATION (UNAUDITED) 106
</Table>
[RECYCLE LOGO]
About This Report
HISTORICAL RETURNS
All total returns mentioned in this report account for the change in a Fund's
per-share price, 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.iconadvisers.com for performance results current to
the most recent month-end.
PORTFOLIO DATA
This report reflects ICON's views, opinions, and portfolio holdings as of
September 30, 2004, the end of the reporting period. The information is not a
complete analysis of every aspect of any sector, industry, security or the
Funds.
Opinions and forecasts regarding industries, companies and/or themes, and
portfolio composition and holdings, are subject to change at any time based on
market and other conditions, and should not be construed as a recommendation of
any specific security. Each Fund's percentage holdings as of September 30, 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, those factors 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. The Fund's loss on a short sale is potentially
unlimited as a loss occurs when the value of a security sold short increases.
Call options involve certain risks, such as limited gains and lack of liquidity
of
2 About This Report
the underlying securities, and are not suitable for all investors. Investments
in foreign securities may entail unique risks, including political, market, and
currency risks.
Investing in fixed income securities such as bonds involves interest rate risk.
When interest rates rise, the value of fixed income securities generally
decreases. The Bond Fund may invest up to 25% of its assets in high-yield bonds
that are below investment grade. High-yield bonds involve a greater risk of
default and price volatility than U.S. Government and other higher-quality
bonds.
COMPARATIVE INDEXES
The comparative indexes discussed in this report are meant to provide a basis
for judging the Funds' performance against a specific securities index. Each
index shown accounts for both change in security price and reinvestment of
dividends and distributions, but does not reflect the costs of managing a mutual
fund. The Funds' portfolios may significantly differ in holdings and composition
from the index. Individuals cannot invest directly in an index.
- - The unmanaged Standard & Poor's 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.
About This Report 3
Dear ICON Shareholder:
- --------------------------------------------------------------------------------
While the themeless market has not necessarily made for a negative environment,
it has made for a difficult one.
- --------------------------------------------------------------------------------
ICON's disciplined investment methodology focuses on the identification of
changing industry themes that our system indicates are favorably positioned to
outperform the broader market. During the early months of the Funds' fiscal
year, economically sensitive sectors drove nearly all of the 14.58% annual gain
in the benchmark S&P 1500 Index.
Later in the fiscal year, despite a number of peaks and valleys, the market has
traded in a sideways manner, offering few signs of a clear direction. Within
this trading range, economically sensitive sectors such as Materials, Consumer
Discretionary, Information Technology, and Industrials have led during market
advances, yet in complete and extreme theme reversals, they suffered the most
amid subsequent pullbacks, as defensive-oriented sectors such as Healthcare,
Utilities and Consumer Staples demonstrated passing strength. With such notable
exceptions as the steel and oil & gas refining, marketing & transportation
industries, the behavior of the market over the past 12 months has been
themeless.
EXTRANEOUS EVENTS HAVE DISTRACTED INVESTORS
While the themeless market has not necessarily made for a negative environment,
it has made for a difficult one. Considering the backdrop of mostly favorable
underlying fundamentals, from inflation to interest rates to corporate earnings,
the pause has proven increasingly frustrating for a number of investors, pushing
many to the sidelines.
Although we view this lull as an interruption to the rally that was underway
last year, it appears to us that investors have become distracted by extraneous
events, such as rising oil prices, higher interest rates, terrorism, and the
presidential election. Despite our longstanding belief that stock prices are
driven by fundamentals and value, it is not unusual for these and other
distractions to create a temporary disconnect for investors.
We would never presume to cast doubt on any investor for experiencing these
concerns. On an emotional level, they are very real and fueled on a daily basis
by the media. However, due to their unpredictability, these fears play no role
in ICON's valuation system. Moreover, we currently see little or no evidence to
support the overstated influence they are currently exerting.
FAVORABLE UNDERLYING FUNDAMENTALS
Starting with the overall economy, scores of investors seem to view the current
setting of moderate economic growth as inadequate, desiring a return to the
higher growth, yet unsustainable environment of the late 1990s. Nevertheless,
the Federal Reserve continues to pursue this rational scenario, balancing
sustainable moderate growth with low inflation. Even though these efforts have
been largely successful, there continues to be considerable reluctance on the
4 Message from ICON Funds
We continue to monitor industry leadership
rather than engage in the futile exercise of
timing market bottoms.
[CRAIG T. CALLAHAN PHOTO]
Craig T. Callahan
Chairman and
Chief Investment Officer
part of many investors to embrace these new, and we believe more favorable,
conditions.
With respect to rising oil prices, we have detected an unusually strong negative
correlation this year relative to stock prices, meaning that when the price of
oil has increased, stocks, as measured by the S&P 500 Index, have declined.
While this makes intuitive sense, historically we have found just the opposite:
a fairly low if not slightly positive correlation between oil prices and stock
prices. Whereas this recent negative correlation has been extreme, we expect it
will be brief.
At the same time, higher oil prices did not lead to higher inflation, as many
had anticipated. One need only look at the Consumer Price Index, which
experienced moves of -0.1% in July and +0.1% in August. Long-term interest
rates, as measured by the 10-year Treasury Note yield, also declined during the
summer months, puzzling skeptics who expected that rates would trend higher.
However, as fixed-income investors extended maturities in conjunction with the
Federal Reserve's short-term rate hikes, longer-term yields fell amid signals
that the tightening would keep inflation in check.
As for the presidential election, that's a guessing game we routinely avoid, as
it is inconsistent with our valuation-driven system. New legislation typically
encounters many levels of compromise, and it would be years before its impact on
corporate earnings could be determined. Pharmaceutical stocks, for example, have
been cited as an area that could face legislative and regulatory hurdles based
on election results. However, we believe those companies' prospects are more
dependent on the aging population and the demand for new treatments than they
are on election outcomes.
POSITIONED TO PARTICIPATE
Guided by the ICON system, we base our sector rotations not on external events
but on valuation and relative strength. As a result of these readings, we more
heavily weighted the Materials and Industrials sectors during the period, and
late in the period, increased the Funds' exposure to Information Technology.
With stock prices in the sector generally declining and corporate earnings on
the rise, our value/price ratios are once again attractive. It now
5 Message from ICON Funds
appears to us that this leadership trend could continue and we believe we are
positioned to participate should a sustainable rally emerge.
The same holds true for our bond holdings, where between June and August we
gradually tilted the Bond Fund's exposure toward longer-term government and
agency securities. In light of widespread expectations that interest rates would
rise, we sense that the subsequent rally caught most investors by surprise. Even
after this recent rally, longer-term bonds remained priced below our estimate of
intrinsic value, suggesting the potential for further upside.
RALLIES SELDOM OFFER INVITATIONS
At the end of the period, our analysis indicated that the U.S. domestic market
was undervalued by approximately 22%. For that reason, we are riding through
this period with the expectation that after the breakout from the current
scenario, stocks will resume their path toward fair value. Last year reminded us
that rallies seldom offer invitations, and often materialize without a
significant triggering event. Still, we continue to monitor industry leadership
and theme identification closely, rather than engage in the futile exercise of
attempting to time market bottoms.
In closing, I wish to again thank you for the opportunity to help guide you
through these challenging markets. For ongoing market updates, as well as up-
to-date Fund, performance, and account information, we invite you to visit our
new website at www.iconadvisers.com.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and Chief Investment Officer of the Adviser
The unmanaged Standard & Poor's 500 Index is a market value-weighted index of
large-cap common stocks considered representative of the broad market. The
Consumer Price Index is the primary indicator of U.S. inflation and is used to
make cost-of-living adjustments to billions of dollars in benefit payments.
6 Message from ICON Funds
Management Overview
ICON Bond Fund
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
September 30, 2004
Corporate Bonds 47.6%
Investment Grade 37.4%
High Yield 10.2%
Convertible Bonds 0.6%
U.S. Governments 29.2%
U.S. Agencies 15.5%
Equities 0.0%
Short-Term Investments 3.9%
Percentages are based upon net assets.
PORTFOLIO HIGHLIGHTS
September 30, 2004
Number of Bonds 85
Number of Equities 0
Weighted average maturity 11.87 years
Weighted average duration 7.44 years
30-Day SEC Yield
(after expense
limitation) -
Class I 3.19%
30-Day SEC Yield
(before expense
limitation) -
Class I 3.25%
Yield is for the Fund's Class I shares. Yield for the Fund's other share classes
will vary due to differences in charges and expenses.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Bond Fund, Class I appreciated 5.41% for the fiscal year ended
September 30, 2004, while its Class C shares appreciated 4.83%. This
compares to a 4.41% return for the Fund's benchmark, the Lehman Brothers
U.S. Universal Index. The Fund's Class Z shares returned 4.33% since their
May 6, 2004 inception compared to a 4.28% return for the benchmark over the
same period. Total returns for longer periods appear on page 11.
Despite widespread expectations that bond yields would trend higher in
anticipation of and in conjunction with monetary tightening by the Federal
Reserve, the long end of Treasury curve remained virtually unchanged during
the period. Given rate pressures in premium-priced shorter-dated issues, the
Fund's value-driven tilt toward longer maturities -- initially in
higher-yielding corporate bonds, then in government and agency securities
later in the period -- worked in its favor.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Rising oil prices, geopolitical tensions, and election-year rhetoric
triggered a climate of fear and uncertainty during the period, even as
underlying economic fundamentals remained perceptibly positive. This near
utopia of moderate real GDP, nominal inflation and declining unemployment,
coupled with three late-period hikes in the federal funds rate, convinced
many investors that long yields would have to move appreciably higher than
their recent historical lows.
However, extraneous events raised doubts about the sustainability of the
yearlong economic recovery, resulting in a moderate flattening of the yield
curve. Although the benchmark 10-Year Treasury Note yield peaked in
mid-June, rates then proceeded to trend markedly lower before settling into
a narrow trading range. With rates well within levels established by their
20-year secular decline, bond prices rallied as investors extended
maturities on hopes that the Fed's actions would keep forward inflation in
check.
Q. HOW WAS THE FUND MANAGED AND HOW DID THAT AFFECT PERFORMANCE?
A. In light of prevailing conditions, the Fund acted on valuation readings
favoring longer-duration bonds, increasing its weighted average duration
from 6.07 years at the beginning of the period to 7.44 years at period-end.
While heavily weighted high-yield corporate debt positions bolstered Fund
performance during the fiscal half-year, spreads tightened to extreme levels
amid heightened anxiety, leaving little room for further contraction within
this sector.
Management Overview 7
Management Overview (continued)
ICON Bond Fund
As such, weakening valuation and relative strength metrics in the months
leading up to a late-period rally prompted us reduce the Fund's weighting in
high-yield corporate bonds by more than half. At the same time, we steadily
tilted Fund exposure toward longer-term government and agency securities,
from 20% of net assets at the fiscal half-year to 43% at period-end, as the
risk premium for corporates diminished considerably.
Accordingly, long-term government bonds proved to be the largest overall
contributor to Fund performance during the fiscal year, while analyst
downgrades pressured the bonds of supermarket operator Winn-Dixie Stores
Inc., and mortgage guarantor Federal National Mortgage Association (FNMA)
Notes, both of which were subsequently sold.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE BOND MARKET?
A. Based on rigorous analysis of valuation and relative strength, our system
continues to favor longer-duration bonds. With economic growth seemingly in
line with sustainable Federal Reserve targets, we see no reason why rates
must rise appreciably above current range-bound levels. However, given the
20-year secular decline in yields, the exercise of forecasting interest rate
movements is at best counterproductive. Instead, we continue to rely on
valuation-focused fundamentals in seeking out suitable opportunities for
investment.
8 Management Overview
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - The Fund was rewarded by its tilt toward longer maturity bonds, which
demonstrated better value than premium-priced shorter-dated issues.
- - High-yield corporate debt bolstered Fund performance early in the period but
was significantly reduced when tighter spreads left little room for further
contraction.
- - Our methodology led us to steadily increase exposure to government and
agency issues, ultimately the largest contributors to Fund performance
during the period.
Management Overview 9
Management Overview (continued)
ICON Bond Fund
TOP 10 BOND HOLDINGS
September 30, 2004
<Table>
U.S. Treasury, 7.500%, 11-15-24 3.2%
Federal Home Loan Bank (FHLB), 5.375%, 8-15-18 3.2%
U.S. Treasury, 7.500%, 11-15-16 3.1%
U.S. Treasury, 6.875%, 8-15-25 3.0%
U.S. Treasury, 8.750%, 5-15-17 2.9%
U.S. Treasury, 3.875%, 2-15-13 2.8%
U.S. Treasury, 5.000%, 2-15-11 2.6%
U.S. Treasury, 4.875%, 2-15-12 2.6%
U.S. Treasury, 5.250%, 2-15-29 2.5%
U.S. Treasury, 5.250%, 11-15-28 2.5%
</Table>
Percentages are based upon net assets.
10 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Bond Fund-Class I 10/1/02 5.41% N/A 6.80%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 4.41% 5.77%
- -------------------------------------------------------------------------------------------
ICON Bond Fund-Class C 10/21/02 4.83% N/A 7.60%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 4.41% 6.98%
- -------------------------------------------------------------------------------------------
ICON Bond Fund-Class Z 5/6/04 N/A N/A 4.33%*
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 4.28%*
- -------------------------------------------------------------------------------------------
</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 limitations,
returns would have been lower. The limitation provisions may be terminated in
the future. Class Z shares are available only to institutional investors.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[BAR CHART]
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.
Management Overview 11
Management Overview (continued)
ICON Bond Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Bond Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. This Example is based on an investment
of $1,000 invested at the beginning of the period and held for the six-month
period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first set of lines in the table below provide information about actual
account values and actual expenses, (with actual net expenses being limited to
1.90%, 1.30% and 1.05% based on a contractual commitment). The Example below
includes, but is not limited to, management fees, 12b-1 fees, fund accounting,
custody and transfer agent fees. However, the Example below does not include
client specific fees, such as the $15.00 fee charged to IRA accounts, or the
$15.00 fee charged for wire redemptions. The Example also does not include
portfolio trading commissions and related trading expenses, or dividends on
short positions taken by the Fund. You may use this information, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second set of lines in the table below provide information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
12 Management Overview
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04* 9/30/04 4/1/04-9/30/04**
- ---------------------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 996.10 $9.48
- ---------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,015.50 $9.57
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
CLASS I
- ---------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 998.60 $6.50
- ---------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1.018.50 $6.56
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
CLASS Z
- ---------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,043.30 $3.57
- ---------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,016.50 $3.52
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
</Table>
* Class Z shares commenced operations May 6, 2004.
** Expenses are equal to the Fund's six-month expense ratios after limitation,
if any, of 1.90% (Class C), 1.30% (Class I) and 0.87% (Class Z), annualized,
multiplied by the average account value over the period, multiplied by
183/366, 183/366 and 147/366 respectively to reflect the one-half year
period or date of inception.
Management Overview 13
Schedule of Investments
ICON Bond Fund
September 30, 2004
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
BONDS 93.5%
CORPORATE BONDS 47.6%
AAA RATING 1.2%
354,000 General Electric
Capital Corp.
Notes,
7.375%, 1-19-10 $ 407,958
300,000 Private Export
Funding
Guaranteed,
6.490%, 7-15-07 324,931
------------
732,889
AA3 RATING 3.1%
500,000 Bell Atlantic
Pennsylvania
Debentures,
6.000%, 12-1-28 490,518
300,000 Goldman Sachs
Group Inc. Notes,
6.600%, 1-15-12 335,030
500,000 Merrill Lynch &
Co. Notes,
5.300%, 9-30-15 508,328
560,000 Verizon New
Jersey Inc.
Debentures,
5.875%, 1-17-12 595,916
------------
1,929,792
A3 RATING 6.8%
500,000 Boeing Co.
Debentures,
8.750%, 8-15-21 663,768
1,000,000 DaimlerChrysler
N.A. Holdings
Guaranteed,
6.500%, 11-15-13 1,085,010
450,000 Dow Chemical
Debentures,
7.375%, 11-1-29 522,533
350,000 Ford Motor Credit
Co. Notes,
7.375%, 10-28-09 383,367
185,000 Verizon
Communications
Debentures,
6.940%, 4-15-28 199,159
250,000 McDonnell Douglas
Corp. Debentures,
9.750%, 4-1-12 330,030
</Table>
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
500,000 Phillips
Petroleum Notes,
8.750%, 5-25-10 $ 615,215
400,000 PNC Funding Corp.
Guaranteed,
5.250%, 11-15-15 406,036
------------
4,205,118
A2 RATING 8.1%
750,000 BB&T Corporation
Subordinated
Notes,
4.750%, 10-1-12 752,430
736,000 Becton Dickinson
Notes,
4.550%, 4-15-13 729,835
450,000 Cincinnati
Financial Corp.
Debentures,
6.900%, 5-15-28 505,983
525,000 CITGroup Inc.
Senior Notes,
7.750%, 4-2-12 621,314
550,000 Coca-Cola
Enterprises
Debentures,
8.500%, 2-1-12 689,351
600,000 General Motors
Acceptance Corp.
Notes,
6.125%, 8-28-07 632,134
450,000 John Hancock
Notes,
7.375%, 2-15-24 522,462
500,000 Wisconsin Power &
Light Co. Notes,
7.000%, 6-15-07 543,261
------------
4,996,770
A1 RATING 2.7%
670,000 Household Finance
Corp. Senior
Unsubordinated,
5.875%, 2-1-09 722,245
455,000 J.P. Morgan Chase
& Co.
Subordinated
Notes,
6.750%, 8-15-08 504,056
382,000 SBC
Communications
Inc. Notes,
6.250%, 3-15-11 419,048
------------
1,645,349
</Table>
14 Schedule of Investments
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
BAA3 RATING 6.2%
500,000 Comcast Cable
Communications
Notes,
6.200%, 11-15-08 $ 540,310
400,000 Comcast Cable
Communications
Notes,
8.875%, 5-1-17 510,812
500,000 Farmers Exchange
Capital Notes,
7.200%, 7-15-48,
(Acquired 4-27-
04;
Cost $497,500)* 505,997
300,000 Hilton Hotels
Corp. Senior
Notes,
7.500%, 12-15-17 343,500
500,000 Motorola Inc.
Debentures,
6.500%, 11-15-28 519,175
440,000 News America
Holdings
Debentures,
7.750%, 2-1-24 513,763
300,000 News America
Holdings
Guaranteed,
8.150%, 10-17-36 373,059
500,000 Tyco
International
Group SA
Guaranteed,
6.125%,
11-1-08(f) 542,282
------------
3,848,898
BAA2 RATING 4.6%
316,000 Altria Group,
Inc. Notes,
7.000%, 11-4-13 329,703
400,000 Phillip Morris
Inc. Notes,
7.650%, 7-1-08 435,116
350,000 Capital One
Financial Corp.
Senior Notes,
6.875%, 2-1-06 368,012
300,000 Cox
Communications
Inc. Notes,
7.750%, 11-1-10 334,338
6,000 First American
Corp. Debentures,
7.550%, 4-1-28 6,607
</Table>
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
600,000 Halliburton
Company Notes,
6.000%, 8-1-06 $ 626,723
680,000 Hertz Corp.
Senior Notes,
7.625%, 6-1-12 746,488
------------
2,846,987
BAA1 RATING 4.7%
391,000 Cendant Corp.
Senior Notes,
7.375%, 1-15-13 452,415
783,000 Ford Motor
Company Notes,
7.450%, 7-16-31 767,755
537,000 General Motors
Notes,
7.200%, 1-15-11 568,719
600,000 PSEG Power LLC
Guaranteed,
6.950%, 6-1-12 672,033
399,000 Time Warner
Company Inc.
Debentures,
7.570%, 2-1-24 450,725
------------
2,911,647
BA3 RATING 3.1%
194,000 FairFax Financial
Holdings Notes,
7.375%,
4-26-12(f) 175,570
350,000 Georgia-Pacific
Corp. Debentures,
7.375%, 12-1-25 372,750
240,000 Georgia-Pacific
Corp. Notes,
8.875%, 5-15-31 291,000
575,000 Nextel
Communications
Inc. Senior
Notes,
9.375%, 11-15-09 608,781
426,000 Qwest Corporation
Notes,
6.125%, 11-15-05 435,053
------------
1,883,154
BA2 RATING 2.2%
350,000 Royal Caribbean
Cruises Ltd.
Senior Notes,
6.750%,
3-15-08(f) 372,313
900,000 Xerox Corporation
Senior Notes,
7.625%, 6-15-13 972,000
------------
1,344,313
</Table>
Schedule of Investments 15
Schedule of Investments (continued)
ICON Bond Fund
September 30, 2004
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
B3 RATING 1.4%
352,000 Allied Waste
North America
Inc. Guaranteed,
10.000%, 8-1-09 $ 370,480
500,000 Marsh Supermarket
Inc. Guaranteed,
8.875%, 8-1-07 505,000
------------
875,480
B2 RATING 1.3%
500,000 Bally Total
Fitness Holdings
Senior Notes,
10.500%, 7-15-11 475,000
345,000 Pep Boys Manny
Moe & Jack Notes,
7.000%, 6-1-05 350,175
------------
825,175
B1 RATING 0.8%
500,000 CSC Holdings Inc.
Senior Notes,
7.250%, 7-15-08 520,000
CAA1 RATING 1.4%
829,000 Owens-Illinois
Inc. Senior
Notes,
8.100%, 5-15-07 870,450
------------
TOTAL CORPORATE BONDS 29,436,022
CERTIFICATES OF DEPOSIT 0.6%
98,000 Amcore Bank,
1.500%, 2-14-05 97,755
98,000 Catawaba Valley,
1.500%, 2-14-05 97,755
99,000 Independent
Bankers Bank
Deposit Notes,
1.300%, 11-15-04 98,917
99,000 Westernbank
Puerto Rico
Deposit Notes,
1.300%, 11-12-04 98,924
------------
TOTAL CERTIFICATES OF DEPOSIT 393,351
------------
CONVERTIBLE BONDS 0.6%
B2 RATING 0.6%
400,000 Providian
Financial Corp.,
3.250%, 8-15-05 394,000
------------
TOTAL CONVERTIBLE BONDS 394,000
</Table>
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
U.S. GOVERNMENT AND U.S. GOVERNMENT
AGENCY BONDS 44.7%
AAA RATING 43.2%
200,000 Federal Farm
Credit Bank
Notes,
5.900%, 7-21-08 $ 217,162
255,000 Federal Farm
Credit Bank
Notes,
5.900%, 8-4-08 276,968
210,000 Federal Home Loan
Bank (FHLB),
5.945%, 7-28-08 228,869
450,000 Federal Home Loan
Bank (FHLB),
5.875%, 2-15-11 491,332
1,000,000 Federal Home Loan
Bank (FHLB),
4.500%, 9-16-13 998,862
1,850,000 Federal Home Loan
Bank (FHLB),
5.375%, 8-15-18 1,966,883
900,000 Federal Home Loan
Mortgage
Corporation
(FHLMC) Notes,
5.125%, 7-15-12 945,352
1,250,000 Federal National
Mortgage
Association
(FNMA) Notes,
6.250%, 5-15-29 1,395,510
1,000,000 Federal National
Mortgage
Association
(FNMA) Notes,
7.125%, 1-15-30 1,231,975
800,000 Tennessee Valley
Authority,
5.625%, 1-18-11 867,410
1,000,000 U.S. Treasury,
3.875%, 5-15-09 1,024,297
1,250,000 U.S. Treasury,
5.750%, 8-15-10 1,393,506
1,500,000 U.S. Treasury,
5.000%, 2-15-11 1,612,675
1,500,000 U.S. Treasury,
4.875%, 2-15-12 1,598,554
1,750,000 U.S. Treasury,
3.875%, 2-15-13 1,739,062
1,500,000 U.S. Treasury,
7.500%, 11-15-16 1,927,675
1,250,000 U.S. Treasury,
8.750%, 5-15-17 1,763,622
</Table>
16 Schedule of Investments
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
1,500,000 U.S. Treasury,
7.500%, 11-15-24 $ 2,000,917
1,500,000 U.S. Treasury,
6.875%, 8-15-25 1,883,028
1,500,000 U.S. Treasury,
5.250%, 11-15-28 1,560,117
1,500,000 U.S. Treasury,
5.250%, 2-15-29 1,561,582
------------
26,685,358
AA2 RATING 1.5%
900,000 Federal National
Mortgage
Association
(FNMA)
Subordinated
Notes,
5.250%, 8-01-12 935,333
------------
TOTAL U.S. GOVERNMENT AND U.S.
GOVERNMENT AGENCY BONDS 27,620,691
------------
TOTAL BONDS
(COST $56,105,740) 57,844,064
CONTRACTS (100 SHARES PER CONTRACT)
- ---------------------------------------------
CALL OPTIONS PURCHASED 0.0%
400 Xerox Corporation
Expiration
January 2006,
Exercise Price
$20.00 16,000
------------
TOTAL CALL OPTIONS PURCHASED
(COST $46,012) 16,000
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS 3.9%
U.S. GOVERNMENT AGENCIES 3.5%
$2,154,000 Federal Home Loan
Bank (FHLB)
Discount Note,
1.369%, 10-1-04 2,154,000
------------
TOTAL U.S. GOVERNMENT AGENCIES 2,154,000
VARIABLE RATE DEMAND NOTE 0.4%
275,097 American Family
Demand Note,
1.453%# 275,097
------------
TOTAL VARIABLE RATE DEMAND NOTE 275,097
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,429,097) 2,429,097
------------
TOTAL INVESTMENTS 97.4%
(COST $58,580,849) 60,289,161
------------
OTHER ASSETS LESS LIABILITIES
2.6% 1,584,082
------------
NET ASSETS 100.0% $ 61,873,243
============
</Table>
The accompanying notes are an integral part of the financial statements.
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
f Foreign security
* Security was acquired pursuant to Rule 144A of the Securities Act of 1933
and may be deemed to be restricted for resale.
Dates shown on securities are the due dates of the obligations.
Schedule of Investments 17
Management Overview
ICON Core Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 99.3%
Top 10 Equity Holdings 16.3%
Number of Stocks 92
Short-Term Investments 1.5%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
The Manitowoc Company, Inc. 2.0%
CIGNA Corporation 1.8%
Yellow Roadway Corporation 1.7%
Arkansas Best Corporation 1.6%
Coventry Health Care, Inc. 1.6%
Quicksilver, Inc. 1.6%
Cognizant Technology Solutions Corporation 1.5%
Best Buy Co., Inc. 1.5%
Ultra Petroleum Corp. 1.5%
Labor Ready, Inc. 1.5%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Core Equity Fund, Class I gained 14.93% for the fiscal year ended
September 30, 2004, while its Class C shares appreciated 14.06%. This
compares to a 14.58% return for the Fund's benchmark, the S&P 1500 Index.
The Fund's Class Z shares returned 5.97% since their May 6, 2004 inception
compared to a 1.02% return for the benchmark over the same period. Total
returns for other periods as of September 30, 2004 are listed on page 22.
Despite these gains, the Fund weathered extreme volatility during the
period, dominated by sharp and sudden theme reversals. Having maintained a
tilt toward economically sensitive sectors during the period, the Fund
outperformed the market during cyclical upturns, but lagged when dramatic
pullbacks favored more defensive-oriented sectors. Although our valuation
and relative strength metrics continued to support a recovery-driven theme,
the lack of consistent cyclical leadership detracted from overall
performance.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
While the ICON system does not consider investment style, the Fund
maintained a neutral bias during the period as measured on a traditional
price-to-earnings (P/E) basis. Based on S&P/Barra data, value stocks
outperformed their growth counterparts during the period, suggesting that
portfolio composition worked against Fund performance. Our research suggests
otherwise, indicating that industry and sector weightings derived from
intrinsic valuation analysis proved more relevant than traditional valuation
measures.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. A "Jekyll & Hyde" market dominated the investment environment during the
period, as rising oil prices, military activity, terrorist threats, economic
sustainability, and election-year uncertainty all weighed heavily on
investor sentiment. Following a strong cyclical rally in the fourth quarter
of 2003, stocks recoiled as calendar year 2004 unfolded, then reversed
course and
18 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
[J.C. WALLER, III PHOTO]
J.C. Waller, III
Portfolio Manager
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
peaked in early March. However, as investor concerns intensified, these
swings grew more pronounced.
Upturns were typically led by economically sensitive sectors, while
downturns saw renewed strength among more defensive issues. In all, three
sizable upswings were countered by three slightly sharper downturns,
resulting in a volatile and slightly negative trading range. Although
prevailing economic conditions showed incremental improvements during the
first three quarters of 2004, each rally was extinguished amid a climate of
fear and uncertainty.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Overweight positions in the Materials and Consumer Discretionary sectors
contributed significantly to Fund performance during the fiscal year. Major
industry contributors included steel and consumer finance, both of which
maintained strong value-to-price and relative strength readings throughout
the period. Steel prices skyrocketed on rising global demand, while the low
interest rate environment benefited interest-rate sensitive groups such as
consumer finance.
In contrast, the Information Technology sector was the largest overall
detractor, although its negative impact was modest in absolute terms.
Nevertheless, the volatile nature of the sector made it particularly
vulnerable to severe downturns. Meanwhile, the Fund's Energy holdings
contributed positively to absolute performance yet resulted in an
opportunity cost due to limited exposure in this fully valued sector. Other
industries diminishing performance included leisure products, health care
distributors, apparel retail, and airlines.
Measurable individual stock contributors included leading middle-market auto
finance company AmeriCredit Corp., whose recent record of better-
than-expected quarterly results boosted the stock. Specialty steelmaker
Carpenter Technology Corp. also advanced, buoyed by rising steel prices and
strong global demand. Elsewhere, IT services provider Cognizant Technology
Solutions Corp. benefited from adding 40 new strategic clients in a
three-month period.
Among the Fund's laggards, discount carrier JetBlue Airways Corp. struggled
amid competitive pressures and higher fuel costs, which offset revenue
growth, and was removed from the Fund. Meanwhile, drug distributor Cardinal
Health Inc. retreated on regulatory probes into its accounting practices and
was subsequently sold. Messaging services provider j2 Global Communications,
Inc. also pulled back when its earnings guidance fell short of consensus
expectations, but it did not reach our sell criteria during the period.
Management Overview 19
Management Overview (continued)
ICON Core Equity Fund
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET?
A. A late-period cyclical rally revealed broad participation as investors once
again turned their attention to the sound economic underpinnings that
seemingly prevail. With stocks currently trading at a 22% discount to our
estimate of intrinsic worth, clear value exists in the marketplace. Assuming
a dissipation of investor concerns, we contend that this rally is
sustainable.
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - Having maintained a tilt toward economically sensitive sectors, the lack of
consistent cyclical leadership limited overall Fund performance.
- - Positive performance was driven by overweight positions in the Materials and
Consumer Discretionary sectors, as well as contributions from the steel and
consumer finance industries.
- - Relative performance was hampered by holdings in the Information Technology
sector and by limited exposure to the Energy sector.
- - Stocks that contributed significantly to performance included AmeriCredit
Corp., Carpenter Technology Corp. and Cognizant Technology Solutions Corp.
- - Among the Fund's poorest individual performers were JetBlue Airways Corp.,
Cardinal Health Inc. and j2 Global Communications, Inc.
The unmanaged S&P/Barra Growth and Value indexes are constructed by dividing
stocks in indexes according to book-to-price ratio. The Value index contains
firms with higher book-to-price ratios; conversely, the Growth index has firms
with lower book-to-price ratios. Both indexes are capitalization-weighted.
20 Management Overview
TOP SECTORS
September 30, 2004
<Table>
Industrials 20.2%
Financial 15.5%
Materials 14.3%
Consumer Discretionary 12.4%
Information Technology 11.2%
Healthcare 9.7%
Leisure & Consumer Staples 7.9%
Telecommunications & Utilities 4.5%
Energy 3.6%
</Table>
Percentages are based upon net assets.
Management Overview 21
Management Overview (continued)
ICON Core Equity Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund-Class I 10/12/00 14.93% N/A 6.98%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -1.76%
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund-Class C 11/28/00 14.06% N/A 4.76%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -2.14%
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund-Class Z 5/6/04 N/A N/A 5.97%*
- -------------------------------------------------------------------------------------------
S&P 1500 Index 1.02%*
- -------------------------------------------------------------------------------------------
</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
Since Inception performance results for Class C shares include returns for
certain time periods that were restated as of June 8, 2004. Class Z shares are
available only to institutional investors.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[BAR CHART]
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.
22 Management Overview
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Core Equity Fund and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first set of lines in the table below provides information about actual
account values and actual expenses. The Example below includes, but is not
limited to, management fees, 12b-1 fees, fund accounting, custody and transfer
agent fees. However, the Example below does not include client specific fees,
such as the $15.00 fee charged to IRA accounts, or the $15.00 fee charged for
wire redemptions. The Example also does not include portfolio trading
commissions and related trading expenses, and interest expense or dividends on
short positions taken by the Fund. You may use this information, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second set of lines in the table below provide information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
Management Overview 23
Management Overview (continued)
ICON Core Equity Fund
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04* 9/30/04 4/1/04-9/30/04**
- ----------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,001.60 $10.51
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,014.50 $10.58
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
CLASS I
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,005.50 $ 6.77
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.25 $ 6.81
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
CLASS Z
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,059.70 $ 4.67
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,015.54 $ 4.57
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Class Z shares commenced operations May 6, 2004.
** Expenses are equal to the Fund's six-month expense ratios of 2.10% (Class
C), 1.35% (Class I), and 1.13% (Class Z), annualized, multiplied by the
average account value over the period, multiplied by 183/366, 183/366 and
147/366 respectively to reflect the one-half year period or date of
inception.
24 Management Overview
22
Schedule of Investments
ICON Core Equity Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
COMMON STOCKS 99.3%
UNITED STATES OF AMERICA 95.1%
CONSUMER DISCRETIONARY 12.4%
APPAREL ACCESSORIES & LUXURY GOODS 2.7%
31,800 Polo Ralph Lauren
Corporation $ 1,156,566
62,800 Quiksilver,
Inc.(a) 1,596,376
------------
2,752,942
AUTOMOBILE MANUFACTURERS 0.8%
22,200 Winnebago
Industries, Inc. 769,008
COMPUTER & ELECTRONICS RETAIL 1.5%
27,700 Best Buy Co.,
Inc. 1,502,448
CONSUMER ELECTRONICS 1.1%
9,800 Harman
International
Industries 1,055,950
HOME IMPROVEMENT RETAIL 1.2%
31,700 The Home Depot,
Inc. 1,242,640
HOUSEWARES & SPECIALTIES 0.8%
27,400 Blyth, Inc. 846,660
MOTORCYCLE MANUFACTURERS 1.1%
19,000 Harley-Davidson,
Inc. 1,129,360
SPECIALTY STORES 2.1%
23,400 Michaels Stores,
Inc. 1,385,514
25,800 Zale
Corporation(a) 724,980
------------
2,110,494
TIRES & RUBBER 1.1%
53,000 Cooper Tire &
Rubber Company 1,069,010
------------
TOTAL CONSUMER DISCRETIONARY 12,478,512
ENERGY 2.5%
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 1.0%
18,500 Ashland Inc. 1,037,480
OIL & GAS EXPLORATION & PRODUCTION 1.5%
30,600 Ultra Petroleum
Corp.(a) 1,500,930
------------
TOTAL ENERGY 2,538,410
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
FINANCIAL 15.5%
ASSET MANAGEMENT & CUSTODY BANKS 3.1%
23,100 American Capital
Strategies, Ltd. $ 723,954
28,000 The Bank of New
York Company,
Inc. 816,760
19,000 Investors
Financial
Services Corp. 857,470
21,400 SEI Investments
Company 720,752
------------
3,118,936
CONSUMER FINANCE 3.1%
36,500 AmeriCredit
Corp.(a) 762,120
15,900 Capital One
Financial
Corporation 1,175,010
74,000 Providian
Financial
Corporation(a) 1,149,960
------------
3,087,090
INSURANCE BROKERS 1.8%
32,500 Aon Corporation 934,050
24,200 Hilb Rogal and
Hobbs Company 876,524
------------
1,810,574
INVESTMENT BANKING & BROKERAGE 1.2%
12,200 The Bear Stearns
Companies Inc. 1,173,274
LIFE & HEALTH INSURANCE 2.2%
23,600 AmerUS Group Co. 967,600
36,900 UICI 1,208,106
------------
2,175,706
MULTI-LINE INSURANCE 0.9%
30,300 American
Financial Group,
Inc. 905,667
OTHER DIVERSIFIED FINANCIAL SERVICES 0.7%
19,300 JPMorgan Chase &
Co. 766,789
PROPERTY & CASUALTY INSURANCE 0.9%
24,100 Selective
Insurance Group,
Inc. 896,520
</Table>
Schedule of Investments 25
Schedule of Investments (continued)
ICON Core Equity Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
REGIONAL BANKS 0.9%
23,200 BB&T Corporation $ 920,808
THRIFTS & MORTGAGE FINANCE 0.7%
15,600 The PMI Group,
Inc. 633,048
------------
TOTAL FINANCIAL 15,488,412
HEALTHCARE 9.7%
HEALTH CARE EQUIPMENT 2.1%
21,700 ResMed Inc.(a) 1,033,137
20,400 Respironics,
Inc.(a) 1,090,176
------------
2,123,313
HEALTH CARE SERVICES 1.0%
30,450 Renal Care Group,
Inc.(a) 981,403
HEALTH CARE SUPPLIES 1.3%
19,800 The Cooper
Companies, Inc. 1,357,290
MANAGED HEALTH CARE 5.3%
7,400 Aetna Inc. 739,482
13,200 Anthem, Inc.(a) 1,151,700
25,500 CIGNA Corporation 1,775,565
30,450 Coventry Health
Care, Inc.(a) 1,625,117
------------
5,291,864
------------
TOTAL HEALTHCARE 9,753,870
INDUSTRIALS 20.2%
AEROSPACE & DEFENSE 4.5%
20,500 Curtiss-Wright
Corporation 1,173,215
15,400 L-3
Communications
Holdings, Inc. 1,031,800
20,800 Lockheed Martin
Corporation 1,160,224
21,200 Northrop Grumman
Corporation 1,130,596
------------
4,495,835
BUILDING PRODUCTS 1.7%
24,800 Griffon
Corporation(a) 523,280
35,100 Masco Corporation 1,212,003
------------
1,735,283
COMMERCIAL PRINTING 0.6%
20,100 John H. Harland
Company 630,135
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
EMPLOYMENT SERVICES 1.5%
105,900 Labor Ready,
Inc.(a) $ 1,484,718
INDUSTRIAL MACHINERY 4.5%
51,400 Flowserve
Corporation(a) 1,242,852
56,500 The Manitowoc
Company, Inc. 2,003,490
16,300 Reliance Steel &
Aluminum Co. 647,110
23,100 Watts Water
Technologies,
Inc. 620,235
------------
4,513,687
RAILROADS 2.7%
34,700 Burlington
Northern Santa Fe
Corporation 1,329,357
47,000 Norfolk Southern
Corporation 1,397,780
------------
2,727,137
TRUCKING 4.7%
44,400 Arkansas Best
Corporation 1,625,928
62,250 Knight
Transportation,
Inc.(a) 1,333,395
36,700 Yellow Roadway
Corporation(a) 1,720,863
------------
4,680,186
------------
TOTAL INDUSTRIALS 20,266,981
INFORMATION TECHNOLOGY 11.2%
COMMUNICATIONS EQUIPMENT 1.3%
48,900 Comtech
Telecommunications
Corp.(a) 1,325,190
COMPUTER STORAGE & PERIPHERALS 1.0%
51,600 Synaptics
Incorporated(a) 1,040,256
DATA PROCESSING & OUTSOURCED SERVICES 1.4%
30,700 Computer Sciences
Corporation(a) 1,445,970
ELECTRONIC EQUIPMENT MANUFACTURERS 1.0%
20,500 Mettler-Toledo
International
Inc.(a) 968,010
</Table>
26 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
INTERNET SOFTWARE & SERVICES 1.6%
17,800 Digital River,
Inc.(a) $ 530,084
32,900 j2 Global
Communications,
Inc.(a) 1,039,311
------------
1,569,395
IT CONSULTING & OTHER SERVICES 1.5%
49,700 Cognizant
Technology
Solutions
Corporation(a) 1,516,347
SEMICONDUCTORS 1.1%
34,600 Cree, Inc.(a) 1,056,338
TECHNOLOGY DISTRIBUTORS 2.3%
33,800 Tech Data
Corporation(a) 1,302,990
61,700 Ingram Micro
Inc.(a) 993,370
------------
2,296,360
------------
TOTAL INFORMATION TECHNOLOGY 11,217,866
LEISURE & CONSUMER STAPLES 7.9%
FOOD DISTRIBUTORS 1.2%
40,400 Nash Finch
Company 1,270,580
FOOD RETAIL 0.9%
36,600 Albertson's, Inc. 875,838
HOTELS, RESORTS & CRUISE LINES 1.0%
22,000 Royal Caribbean
Cruises Ltd. 959,200
MOVIES & ENTERTAINMENT 0.8%
36,400 The Walt Disney
Company(a) 820,820
PACKAGED FOODS & MEATS 0.7%
20,500 Ralcorp Holdings,
Inc.(a) 740,050
RESTAURANTS 1.8%
24,900 CEC
Entertainment,
Inc.(a) 915,075
31,200 Ruby Tuesday,
Inc. 869,544
------------
1,784,619
TOBACCO 1.5%
10,900 Altria Group,
Inc. 512,736
14,200 Reynolds
American, Inc. 966,168
------------
1,478,904
------------
TOTAL LEISURE & CONSUMER
STAPLES 7,930,011
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
MATERIALS 13.6%
COMMODITY CHEMICALS 2.3%
38,400 Headwaters
Incorporated(a) $ 1,185,024
54,200 Millennium
Chemicals Inc.(a) 1,149,582
------------
2,334,606
CONSTRUCTION MATERIALS 1.5%
28,400 Texas Industries,
Inc. 1,460,896
DIVERSIFIED CHEMICALS 2.1%
14,900 Eastman Chemical
Company 708,495
29,100 FMC
Corporation(a) 1,413,387
------------
2,121,882
FERTILIZERS & AGRICULTURAL CHEMICALS 1.2%
70,400 The Mosaic Co.(a) 1,224,256
METAL & GLASS CONTAINERS 1.8%
70,180 Myers Industries,
Inc. 768,471
63,600 Owens-Illinois,
Inc.(a) 1,017,600
------------
1,786,071
SPECIALTY CHEMICALS 1.2%
32,400 OM Group, Inc.(a) 1,184,544
STEEL 3.5%
21,800 Carpenter
Technology
Corporation 1,040,732
38,100 Steel Dynamics,
Inc. 1,471,422
39,900 Steel
Technologies Inc. 1,022,118
------------
3,534,272
------------
TOTAL MATERIALS 13,646,527
TELECOMMUNICATIONS & UTILITIES 2.1%
MULTI-UTILITIES & UNREGULATED POWER 1.0%
27,700 Sempra Energy 1,002,463
WIRELESS TELECOMMUNICATION SERVICES 1.1%
45,200 Nextel
Communications,
Inc.(a) 1,077,568
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 2,080,031
------------
TOTAL UNITED STATES OF AMERICA 95,400,620
</Table>
Schedule of Investments 27
Schedule of Investments (continued)
ICON Core Equity Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
AMERICAN DEPOSITARY RECEIPTS 3.1%
MEXICO 2.1%
MATERIALS 0.7%
CONSTRUCTION MATERIALS 0.7%
24,330 Cemex S.A. de
C.V. $ 684,646
------------
TOTAL MATERIALS 684,646
WIRELESS TELECOMMUNICATION SERVICES 1.47%
37,400 America Movil
S.A. de C.V. 1,459,722
------------
TOTAL MEXICO 2,144,368
RUSSIA 1.4%
TELECOMMUNICATIONS & UTILITIES 1.0%
9,100 AO VimpelCom(a) 990,080
------------
990,080
------------
TOTAL RUSSIA 990,080
------------
TOTAL AMERICAN DEPOSITARY
RECEIPTS 3,134,448
BAHAMAS 1.1%
ENERGY 1.1%
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 1.1%
26,600 Teekay Shipping
Corporation 1,146,194
------------
TOTAL ENERGY 1,146,194
------------
TOTAL BAHAMAS 1,146,194
------------
TOTAL COMMON STOCKS
(COST $83,093,099) 99,681,262
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENT 1.5%
U.S. GOVERNMENT OBLIGATIONS 1.4%
$1,458,000 FHLB Discount
Note,
1.369%, 10-01-04 $ 1,458,000
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS 1,458,000
VARIABLE RATE DEMAND NOTE 0.1%
47,104 American Family
Demand Note,
1.453%# 47,104
------------
TOTAL VARIABLE RATE DEMAND NOTE
47,104
------------
TOTAL SHORT-TERM INVESTMENT
(COST $1,505,104) 1,505,104
------------
TOTAL INVESTMENTS 100.8%
(COST $84,598,203) 101,186,366
------------
LIABILITIES LESS OTHER ASSETS
(0.8%) (776,556)
------------
NET ASSETS 100.0% $100,409,810
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
28 Schedule of Investments
Management Overview
ICON Covered Call Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 102.1%
Top 10 Equity Holdings 17.1%
Number of Stocks 102
Number of Written Option Contracts 165
Short-Term Investments 0.4%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
Yellow Roadway Corporation 2.7%
Steel Dynamics, Inc. 2.0%
Owens-Illinois, Inc. 1.7%
Knight Transportation, Inc. 1.6%
Headwaters Incorporated 1.6%
CIGNA Corporation 1.6%
The Home Depot, Inc. 1.5%
Burlington Northern
Santa Fe Corporation 1.5%
Ultra Petroleum Corp. 1.5%
UICI 1.4%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Covered Call Fund, Class I rose 10.53% for the fiscal year ended
September 30, 2004, while its Class C shares appreciated 9.69%. This
compares to a 14.58% return for the Fund's benchmark, the S&P 1500 Index.
The Fund's Class Z shares returned 3.34% since their May 6, 2004 inception
compared to a 1.02% return for the benchmark over the same period. Total
returns for other periods as of September 30, 2004 are listed on page 33.
Although the Fund produced a positive return, sharp theme reversals and an
absence of consistent sector leadership worked against the Fund's cyclical
tilt, resulting in relative underperformance for the fiscal-year period.
Also detracting from returns was the Fund's call writing strategy, which
limited upside potential in a rising market.
Implied volatility (as measured by the CBOE Market Volatility Index), is the
primary driver behind option premiums increasing or decreasing. When implied
volatility fell during the period, it tempered the Fund's downside
protection, as option premiums dropped to five-year lows.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
Although ICON's system does not consider investment style, the Fund
benefited from a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. This is corroborated by independent data,
which details the outperformance of S&P/Barra Value Indexes over their
S&P/Barra Growth counterparts for the one-year period ended September 30,
2004.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. The market took on a "Jekyll & Hyde" quality during the period, as an
extended first-half rally dissipated amid extreme fear and uncertainty.
Within this volatile trading range, rising oil prices, geopolitical
tensions, economic setbacks, and election-year rhetoric all weighed heavily
on investor sentiment. However, as these concerns intensified, the swings
grew more pronounced, quickly extinguishing any move toward a sustained
cyclical rally.
Management Overview 29
Management Overview (continued)
ICON Covered Call Fund
Nevertheless, upturns were typically led by economically sensitive sectors,
while downturns saw renewed strength among more defensive issues. In all, a
slight negative bias held back second-half returns, even as our valuation
and relative strength analysis continued to support a recovery-driven theme
against a backdrop of favorable underlying fundamentals.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. As implied volatility and call option premiums steadily declined during the
year, many option writers gravitated toward longer-dated calls, which locked
in historically low premiums for extended periods. Instead, we wrote
shorter- dated options that decay more rapidly prior to expiration, while
waiting for premiums to regress upward toward normally higher levels. With
option premiums at historical lows, this tactic served to hamper Fund
performance.
With respect to sectors and industries, our valuation-related underweighting
in the Energy sector resulted in an opportunity cost, as the Fund
surrendered a sizable portion of that group's robust gains relative to the
benchmark. At the industry level, apparel retail, health care distributors,
Internet software & services, and real estate investment trusts detracted
from Fund performance, and were subsequently trimmed on declining relative
strength.
In contrast, leading contributors included overweight positions in the
cyclically oriented Materials, Industrials and Consumer Discretionary
sectors. The semiconductors industry was a noteworthy performer, although
later pared on weakness, while apparel & accessories, construction & farm
machinery, diversified chemicals, homebuilding, aluminum, and employment
services also made measurable contributions.
Among the Fund's primary individual detractors, drug distributor Cardinal
Health Inc. saw its accounting practices come under regulatory scrutiny and
was subsequently sold. Mortgage finance group New Century Financial Corp.
also retreated as uncertainty surrounding its conversion into a real estate
investment trust pressured the stock. Elsewhere, specialty toolmaker SPX
Corp. faced higher input costs and acquisition integration issues.
Stocks that bolstered Fund performance included mini-mill steelmaker the
International Steel Group, which capitalized on pricing power enhancements
and rising global demand. Life and health insurer UICI also advanced, having
reported strong quarterly results and better-than-expected loss ratios.
Meanwhile, Ultra Petroleum Corp. moved higher as higher energy prices
enabled this emerging exploration and production firm to double earnings and
cash flow.
30 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET?
A. A late-period cyclical rally revealed broad participation as investors once
again turned their attention to the sound economic underpinnings that
seemingly prevail. With stocks currently trading at a 22% discount to our
estimate of intrinsic worth, our system indicates that clear value exists in
the marketplace.
Assuming a dissipation of investor concerns, we maintain that this rally is
sustainable and could very well endure over the next six to 12 months. With
premiums still hovering at five-year lows, we will continue to write
shorter- dated calls with the belief that premium yields will soon rebound.
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - While the Fund had positive performance during the fiscal year, its call
writing strategy limited upside potential, as lower implied volatility
diminished option premiums, which fell to five-year lows.
- - An underweighted Energy sector, along with industry exposure to apparel
retail, health care distributors and Internet software & services, hampered
relative performance.
- - Among the Fund's poorest performing stocks were Cardinal Health Inc., New
Century Financial Corp. and SPX Corp.
- - Positive performance was driven by overweight positions in the Materials,
Industrials and Consumer Discretionary sectors, as well as contributions
from the apparel & accessories, construction & farm machinery, diversified
chemicals industries.
- - Stocks that boosted Fund performance included International Steel Group,
UICI and Ultra Petroleum Corp.
The unmanaged S&P/Barra Growth and Value indexes are constructed by dividing
stocks in indexes according to book-to-price ratio. The Value index contains
firms with higher book-to-price ratios; conversely, the Growth index has firms
with lower book-to-price ratios. Both indexes are capitalization-weighted.
The Chicago Board Options Exchange (CBOE) SPX Volatility Index reflects a market
estimate of future volatility, based on the weighted average of the implied
volatilities for a wide range of strikes.
Management Overview 31
Management Overview (continued)
ICON Covered Call Fund
SECTOR COMPOSITION
September 30, 2004
<Table>
Industrials
20.9%
Financial
16.7%
Materials
14.2%
Consumer Discretionary
13.6%
Information Technology
10.3%
Health Care
9.2%
Leisure & Consumer Staples
8.4%
Energy
5.9%
Telecommunications & Utilities
2.8%
</Table>
Percentages are based upon net assets.
32 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund-Class I 10/1/02 10.53% N/A 17.10%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 14.58% 19.55%
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund-Class C 11/21/02 9.69% N/A 13.11%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 14.58% 14.14%
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund-Class Z 5/6/04 N/A N/A 3.34%*
- -------------------------------------------------------------------------------------------
S&P 1500 Index 1.02%*
- -------------------------------------------------------------------------------------------
</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 limitations,
returns would have been lower. The limitation provisions may be terminated in
the future. Class Z shares are available only to institutional investors.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON COVERED CALL FUND-CLASS I S&P 1500 INDEX
------------------------------ --------------
10/1/02 $10000 $10000
3/31/03 $10050 $10450
9/30/03 $12400 $12469
3/31/04 $13799 $14308
9/30/04 $13706 $14285
</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.
Management Overview 33
31
Management Overview (continued)
ICON Covered Call Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Covered Call Fund and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first set of lines in the table below provide information about actual
account values and actual expenses, (with actual net expenses being limited to
2.20%, 1.45% and 1.20% based on a contractual commitment). The Example below
includes, but is not limited to, management fees, 12b-1 fees, fund accounting,
custody and transfer agent fees. However, the Example below does not include
client specific fees, such as the $15.00 fee charged to IRA accounts, or the
$15.00 fee charged for wire redemptions. The Example also does not include
portfolio trading commissions and related trading expenses, and interest expense
or dividends on short positions taken by the Fund. You may use this information,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second set of lines in the table below provide information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
34 Management Overview
32
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04* 9/30/04 4/1/04-9/30/04**
- ---------------------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 990.10 $10.95
- ---------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,014.00 $11.08
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
CLASS I
- ---------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 993.30 $ 7.23
- ---------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,017.75 $ 7.31
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
CLASS Z
- ---------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,033.40 $ 4.57
- ---------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,015.58 $ 4.53
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
</Table>
* Class Z shares commenced operations May 6, 2004.
** Expenses are equal to the Fund's six-month expense ratios after limitation,
if any, of 2.20% (Class C), 1.45% (Class I), and 1.12% (Class Z),
annualized, multiplied by the average account value over the period,
multiplied by 183/366, 183/366 and 147/366 respectively to reflect the
one-half year period or date of inception.
Management Overview 35
Schedule of Investments
ICON Covered Call Fund
September 30, 2004
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
COMMON STOCKS 102.1%
UNITED STATES OF AMERICA 99.7%
CONSUMER DISCRETIONARY 13.6%
APPAREL ACCESSORIES & LUXURY GOODS 3.7%
16,500 Polo Ralph Lauren
Corporation(x) $ 600,105
21,300 Quiksilver, Inc.(a)
(x) 541,446
10,500 V.F. Corporation(x) 519,225
------------
1,660,776
COMPUTER & ELECTRONICS RETAIL 1.0%
8,400 Best Buy Co.,
Inc.(x) 455,616
CONSUMER ELECTRONICS 1.1%
4,500 Harman
International
Industries,
Incorporated(x) 484,875
HOME IMPROVEMENT RETAIL 2.5%
17,600 The Home Depot,
Inc.(x) 689,920
10,300 The Sherwin-
Williams Company(x) 452,788
------------
1,142,708
HOMEBUILDING 1.0%
9,700 Toll Brothers,
Inc.(a)(x) 449,401
HOUSEWARES & SPECIALTIES 1.0%
7,900 The Yankee Candle
Company, Inc.(a)(x) 228,784
12,700 Tupperware
Corporation(x) 215,646
------------
444,430
MOTORCYCLE MANUFACTURERS 1.2%
8,700 Harley-Davidson,
Inc.(x) 517,128
SPECIALTY STORES 1.3%
7,500 Michaels Stores,
Inc.(x) 444,075
3,600 O'Reilly
Automotive,
Inc.(a)(x) 137,844
------------
581,919
TIRES & RUBBER 0.8%
18,500 Cooper Tire &
Rubber Company(x) 373,145
------------
TOTAL CONSUMER DISCRETIONARY 6,109,998
ENERGY 4.1%
OIL & GAS EQUIPMENT & SERVICES 0.7%
9,100 Offshore Logistics,
Inc.(a)(x) 313,222
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
OIL & GAS EXPLORATION & PRODUCTION 2.5%
7,000 Newfield
Exploration
Co.(a)(x) $ 428,680
14,000 Ultra Petroleum
Corp.(a)(x) 686,700
------------
1,115,380
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 0.9%
7,500 Ashland Inc.(x) 420,600
------------
TOTAL ENERGY 1,849,202
FINANCIAL 16.7%
CONSUMER FINANCE 1.0%
6,000 Capital One
Financial
Corporation(x) 443,400
DIVERSIFIED BANKS 1.7%
5,800 Bank of America
Corporation(x) 251,314
8,500 Comerica
Incorporated(x) 504,475
------------
755,789
INSURANCE BROKERS 0.9%
11,000 Hilb Rogal and
Hobbs Company(x) 398,420
INVESTMENT BANKING & BROKERAGE 1.8%
11,200 A.G. Edwards,
Inc.(x) 387,744
4,300 Goldman Sachs
Group, Inc.(x) 400,932
------------
788,676
LIFE & HEALTH INSURANCE 3.4%
8,800 Delphi Financial
Group, Inc.(x) 353,496
10,000 Torchmark
Corporation(x) 531,800
19,800 UICI(x) 648,252
------------
1,533,548
MULTI-LINE INSURANCE 2.2%
6,700 Hartford Financial
Services Group,
Inc.(x) 414,931
9,700 Loews
Corporation(x) 567,450
------------
982,381
REAL ESTATE INVESTMENT TRUST 1.1%
8,200 New Century
Financial
Corporation(x) 493,804
</Table>
36 Schedule of Investments
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
REGIONAL BANKS 2.7%
10,800 BB&T Corporation(x) $ 428,652
12,000 East West Bancorp,
Inc.(x) 403,080
15,000 Hibernia
Corporation(x) 396,150
------------
1,227,882
THRIFTS & MORTGAGE FINANCE 1.9%
9,000 IndyMac Bancorp,
Inc.(x) 325,800
13,500 Doral Financial
Corp.(x) 559,845
------------
885,645
TOTAL FINANCIAL 7,509,545
HEALTH CARE 9.2%
BIOTECHNOLOGY 1.1%
8,900 Amgen Inc.(a)(x) 504,452
HEALTH CARE DISTRIBUTORS 0.9%
19,000 Priority Healthcare
Corporation(a)(x) 382,850
HEALTH CARE EQUIPMENT 1.0%
8,700 Respironics,
Inc.(a)(x) 464,928
HEALTH CARE SERVICES 0.5%
9,000 RehabCare Group,
Inc.(a)(x) 207,270
HEALTH CARE SUPPLIES 1.4%
20,800 PolyMedica
Corporation(x) 640,640
MANAGED HEALTH CARE 4.3%
10,400 AMERIGROUP
Corporation(a)(x) 585,000
10,400 CIGNA
Corporation(x) 724,152
11,750 Coventry Health
Care, Inc.(a)(x) 627,097
------------
1,936,249
------------
TOTAL HEALTH CARE 4,136,389
INDUSTRIALS 20.9%
AEROSPACE & DEFENSE 2.2%
10,000 Alliant Techsystems
Inc.(a)(x) 605,000
7,000 Northrop Grumman
Corporation(x) 373,310
------------
978,310
AIR FREIGHT & LOGISTICS 1.3%
14,000 CNF Inc.(x) 573,860
BUILDING PRODUCTS 0.7%
9,600 Masco
Corporation(x) 331,488
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS
1.7%
7,500 Oshkosh Truck
Corporation(x) $ 427,950
5,000 The Toro Company(x) 341,500
------------
769,450
DIVERSIFIED COMMERCIAL SERVICES 0.9%
14,500 NCO Group,
Inc.(a)(x) 390,775
EMPLOYMENT SERVICES 1.0%
32,300 Labor Ready,
Inc.(a)(x) 452,846
ENVIRONMENTAL SERVICES 1.9%
5,500 Stericycle,
Inc.(a)(x) 252,450
19,200 Waste Connections,
Inc.(a)(x) 608,256
------------
860,706
INDUSTRIAL MACHINERY 2.8%
20,800 Flowserve
Corporation(a)(x) 502,944
12,700 Reliance Steel &
Aluminum Co.(x) 504,190
3,500 Ingersoll Rand
Company -- Class
A(x) 237,895
------------
1,245,029
RAILROADS 1.5%
18,000 Burlington Northern
Santa Fe
Corporation(x) 689,580
TRADING COMPANIES & DISTRIBUTORS 1.3%
9,700 W.W. Grainger,
Inc.(x) 559,205
TRUCKING 5.6%
9,000 Arkansas Best
Corporation(x) 329,580
34,150 Knight
Transportation,
Inc.(a)(x) 731,493
26,000 Yellow Roadway
Corporation(a)(x) 1,219,140
6,700 J.B. Hunt Transport
Services, Inc.(x) 248,831
------------
2,529,051
------------
TOTAL INDUSTRIALS 9,380,300
INFORMATION TECHNOLOGY 10.3%
APPLICATION SOFTWARE 1.0%
10,000 Intuit Inc.(a)(x) 454,000
</Table>
Schedule of Investments 37
Schedule of Investments (continued)
ICON Covered Call Fund
September 30, 2004
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
COMMUNICATIONS EQUIPMENT 0.9%
15,200 Comtech
Telecommunications
Corp.(a)(x) $ 411,920
COMPUTER STORAGE & PERIPHERALS 0.8%
12,300 SanDisk
Corporation(a)(x) 358,176
DATA PROCESSING & OUTSOURCED SERVICES 1.1%
11,000 Computer Sciences
Corporation(a)(x) 518,100
ELECTRONIC EQUIPMENT MANUFACTURERS 1.0%
9,200 Mettler-Toledo
International
Inc.(a)(x) 434,424
HOME ENTERTAINMENT SOFTWARE 0.8%
10,700 Take-Two
Interactive
Software,
Inc.(a)(x) 351,495
INTERNET SOFTWARE & SERVICES 1.3%
11,900 Digital River,
Inc.(a)(x) 354,382
7,600 j2 Global
Communications,
Inc.(a)(x) 240,084
------------
594,466
IT CONSULTING & OTHER SERVICES 1.2%
18,000 Cognizant
Technology
Solutions
Corporation(a)(x) 549,180
SEMICONDUCTOR EQUIPMENT 0.7%
8,800 Cabot
Microelectronics
Corporation(a)(x) 319,000
SEMICONDUCTORS 0.7%
14,700 Texas Instruments
Incorporated(x) 312,816
TECHNOLOGY DISTRIBUTORS 0.8%
11,000 Global Imaging
Systems, Inc.(a)(x) 341,880
------------
TOTAL INFORMATION TECHNOLOGY 4,645,457
LEISURE & CONSUMER STAPLES 8.4%
AGRICULTURAL PRODUCTS 1.0%
9,600 Corn Products
International,
Inc.(x) 442,560
BREWERS 0.8%
5,500 Adolph Coors
Company(x) 373,560
DISTILLERS & VINTNERS 0.8%
10,400 Constellation
Brands, Inc.(a)(x) 395,824
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
PACKAGED FOODS & MEATS 1.4%
17,000 Sara Lee
Corporation(x) $ 388,620
8,400 Smithfield Foods,
Inc.(a)(x) 210,000
------------
598,620
PHOTOGRAPHIC PRODUCTS 1.1%
15,500 Eastman Kodak
Company(x) 499,410
RESTAURANTS 1.0%
18,300 Sonic Corp.(a)(x) 469,029
TOBACCO 2.3%
5,800 Reynolds American
Inc.(x) 394,632
15,200 UST Inc.(x) 611,952
------------
1,006,584
------------
TOTAL LEISURE & CONSUMER
STAPLES 3,785,587
MATERIALS 14.2%
ALUMINUM 1.0%
14,100 Alcoa Inc.(x) 473,619
COMMODITY CHEMICALS 2.6%
9,700 Georgia Gulf
Corporation(x) 432,523
23,500 Headwaters
Incorporated(a)(x) 725,210
------------
1,157,733
CONSTRUCTION MATERIALS 2.4%
8,000 Eagle Materials
Inc.(x) 570,400
10,600 Lafarge North
America Inc.(x) 497,034
------------
1,067,434
DIVERSIFIED CHEMICALS 1.0%
9,000 FMC
Corporation(a)(x) 437,130
FERTILIZERS & AGRICULTURAL CHEMICALS 0.9%
6,500 The Scotts
Company(a)(x) 416,975
METAL & GLASS CONTAINERS 2.5%
48,500 Owens-Illinois,
Inc.(a)(x) 776,000
15,500 Pactiv
Corporation(a)(x) 360,375
------------
1,136,375
SPECIALTY CHEMICALS 1.0%
8,300 A. Schulman,
Inc.(x) 182,932
7,000 Albemarle
Corporation(x) 245,630
------------
428,562
</Table>
38 Schedule of Investments
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
STEEL 2.8%
23,300 Steel Dynamics,
Inc.(x) $ 899,846
15,900 Worthington
Industries, Inc.(x) 339,465
------------
1,239,311
------------
TOTAL MATERIALS 6,357,139
TELECOMMUNICATIONS & UTILITIES 2.2%
INTEGRATED TELECOMMUNICATION SERVICES 1.7%
11,000 Golden Telecom,
Inc.(x) 313,830
17,400 SBC Communications
Inc.(x) 451,530
------------
765,360
WIRELESS TELECOMMUNICATION SERVICES 0.5%
10,900 Nextel
Communications,
Inc.(a)(x) 259,856
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 1,025,216
------------
TOTAL UNITED STATES OF AMERICA 44,798,833
------------
AMERICAN DEPOSITARY RECEIPT 0.6%
MEXICO 0.6%
TELECOMMUNICATIONS & UTILITIES 0.6%
WIRELESS TELECOMMUNICATION SERVICES 0.6%
7,000 America Movil S.A.
de C.V.(x) 273,210
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 273,210
------------
TOTAL MEXICO 273,210
------------
TOTAL AMERICAN DEPOSITARY
RECEIPT 273,210
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
CANADA 0.7%
ENERGY 0.7%
INTEGRATED OIL & GAS 0.7%
10,000 Suncor Energy,
Inc.(x) $ 320,100
------------
TOTAL ENERGY 320,100
------------
TOTAL CANADA 320,100
BAHAMAS 1.1%
ENERGY 1.1%
OIL & GAS REFINING & MARKETING &
TRANSPORTATION 1.1%
11,000 Teekay Shipping
Corporation(x) 473,991
------------
TOTAL ENERGY 473,991
------------
TOTAL BAHAMAS 473,991
------------
TOTAL COMMON STOCKS
(COST $42,225,740) 45,866,134
SHORT-TERM INVESTMENT 0.4%
$174,557 American Family
Demand Note,
1.4525%# $ 174,557
------------
TOTAL SHORT-TERM INVESTMENT
(COST $174,557) 174,557
------------
TOTAL INVESTMENTS 102.5%
(COST $42,400,297) 46,040,691
------------
LIABILITIES LESS OTHER ASSETS
(2.5%) (1,111,645)
------------
NET ASSETS 100.0% $44,929,046
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
(x) Portion or all of this security is pledged as collateral for call options
written.
Schedule of Investments 39
36
Schedule of Written Options
ICON Covered Call Fund
September 30, 2004
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
CALL OPTIONS
A. Schulman, Inc.
Expiration November
2004, Exercise
Price $20.00 50 $ 10,625
Expiration November
2004, Exercise
Price $22.50 25 1,438
A.G. Edwards, Inc.
Expiration October
2004, Exercise
Price $35.00 67 3,350
Expiration November
2004, Exercise
Price $35.00 45 5,400
Adolph Coors Company
Expiration November
2004, Exercise
Price $65.00 29 11,020
Expiration November
2004, Exercise
Price $70.00 26 2,795
Albemarle Corporation
Expiration October
2004, Exercise
Price $35.00 70 4,725
Alcoa Inc.
Expiration November
2004, Exercise
Price $32.50 126 24,255
Expiration November
2004, Exercise
Price $35.00 15 975
Alliant Techsystems
Inc.
Expiration November
2004, Exercise
Price $60.00 100 20,250
America Movil S.A. de
C.V.
Expiration November
2004, Exercise
Price $40.00 58 6,380
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
AMERIGROUP
Corporation
Expiration October
2004, Exercise
Price $55.00 104 $ 22,360
Amgen Inc.
Expiration October
2004, Exercise
Price $60.00 89 1,780
Arkansas Best
Corporation
Expiration October
2004, Exercise
Price $35.00 72 14,220
Ashland Inc.
Expiration October
2004, Exercise
Price $55.00 75 11,437
Bank of America
Corporation
Expiration October
2004, Exercise
Price $45.00 48 480
Expiration November
2004, Exercise
Price $45.00 10 350
BB&T Corporation
Expiration October
2004, Exercise
Price $40.00 54 1,485
Expiration November
2004, Exercise
Price $40.00 27 1,755
Best Buy Co., Inc.
Expiration October
2004, Exercise
Price $55.00 84 6,300
Burlington Northern
Santa Fe
Corporation
Expiration November
2004, Exercise
Price $35.00 60 21,600
Expiration November
2004, Exercise
Price $40.00 120 5,400
</Table>
40 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Cabot
Microelectronics
Corporation(a)
Expiration October
2004, Exercise
Price $35.00 44 $ 8,800
Expiration October
2004, Exercise
Price $40.00 44 1,100
Capital One Financial
Corporation
Expiration October
2004, Exercise
Price $75.00 60 6,000
CIGNA Corporation
Expiration October
2004, Exercise
Price $70.00 16 2,000
Expiration November
2004, Exercise
Price $75.00 88 7,040
CNF Inc.
Expiration October
2004, Exercise
Price $42.50 70 2,625
Expiration November
2004, Exercise
Price $40.00 70 15,400
Cognizant Technology
Solutions
Corporation
Expiration October
2004, Exercise
Price $30.00 150 16,125
Expiration November
2004, Exercise
Price $30.00 30 6,300
Comerica Incorporated
Expiration October
2004, Exercise
Price $60.00 48 2,520
Expiration November
2004, Exercise
Price $60.00 37 4,625
Computer Sciences
Corporation
Expiration October
2004, Exercise
Price $50.00 110 1,100
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Comtech
Telecommunications
Corp.
Expiration October
2004, Exercise
Price $25.00 62 $ 14,570
Expiration November
2004, Exercise
Price $30.00 90 7,650
Constellation Brands,
Inc.
Expiration October
2004, Exercise
Price $37.50 104 10,660
Cooper Tire & Rubber
Company
Expiration October
2004, Exercise
Price $20.00 96 4,560
Expiration November
2004, Exercise
Price $22.50 89 1,113
Corn Products
International, Inc.
Expiration November
2004, Exercise
Price $50.00 96 4,080
Coventry Health Care,
Inc.
Expiration October
2004, Exercise
Price $55.00 117 4,972
Delphi Financial
Group, Inc.
Expiration October
2004, Exercise
Price $40.00 75 5,812
Digital River, Inc.
Expiration October
2004, Exercise
Price $30.00 97 8,730
Expiration November
2004, Exercise
Price $30.00 22 4,895
Doral Financial Corp.
Expiration October
2004, Exercise
Price $40.00 86 15,695
Expiration October
2004, Exercise
Price $45.00 49 613
</Table>
Schedule of Written Options 41
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2004
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Eagle Materials Inc.
Expiration October
2004, Exercise
Price $70.00 10 $ 1,975
Expiration November
2004, Exercise
Price $75.00 70 7,875
East West Bancorp,
Inc.
Expiration October
2004, Exercise
Price $32.50 60 8,550
Expiration October
2004, Exercise
Price $35.00 60 1,050
Eastman Kodak Company
Expiration November
2004, Exercise
Price $35.00 155 6,587
Flowserve Corporation
Expiration November
2004, Exercise
Price $25.00 208 13,520
FMC Corporation
Expiration November
2004, Exercise
Price $50.00 90 11,475
Georgia Gulf
Corporation
Expiration November
2004, Exercise
Price $45.00 97 16,732
Global Imaging
Systems, Inc.
Expiration October
2004, Exercise
Price $30.00 110 14,575
Golden Telecom, Inc.
Expiration November
2004, Exercise
Price $30.00 88 7,700
Goldman Sachs Group,
Inc.
Expiration October
2004, Exercise
Price $95.00 36 2,340
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Harley-Davidson, Inc.
Expiration October
2004, Exercise
Price $60.00 87 $ 9,570
Harman International
Industries,
Incorporated
Expiration November
2004, Exercise
Price $110.00 45 18,000
Hartford Financial
Services Group,
Inc.
Expiration October
2004, Exercise
Price $60.00 50 11,375
Expiration November
2004, Exercise
Price $65.00 17 978
Headwaters
Incorporated
Expiration October
2004, Exercise
Price $30.00 185 24,050
Expiration November
2004, Exercise
Price $30.00 26 5,655
Hibernia Corporation
Expiration October
2004, Exercise
Price $25.00 58 8,555
Hilb Rogal and Hobbs
Company
Expiration October
2004, Exercise
Price $35.00 88 12,100
Expiration January
2005, Exercise
Price $40.00 12 510
IndyMac Bancorp, Inc.
Expiration November
2004, Exercise
Price $35.00 68 13,260
Ingersoll-Rand
Company - Class A
Expiration October
2004, Exercise
Price $65.00 5 1,675
Expiration October
2004, Exercise
Price $70.00 30 1,425
</Table>
42 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Intuit Inc.
Expiration October
2004, Exercise
Price $45.00 65 $ 6,500
Expiration November
2004, Exercise
Price $47.50 35 3,325
J.B. Hunt Transport
Services, Inc.
Expiration November
2004, Exercise
Price $35.00 33 10,395
Expiration November
2004, Exercise
Price $40.00 34 2,465
j2 Global
Communications,
Inc.
Expiration October
2004, Exercise
Price $30.00 53 10,732
Expiration November
2004, Exercise
Price $35.00 23 2,070
Knight
Transportation,
Inc.
Expiration October
2004, Exercise
Price $22.50 149 2,608
Expiration November
2004, Exercise
Price $22.50 192 11,040
Labor Ready, Inc.
Expiration November
2004, Exercise
Price $12.50 223 39,582
Expiration November
2004, Exercise
Price $15.00 100 3,750
Lafarge North America
Inc.
Expiration November
2004, Exercise
Price $45.00 80 19,600
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Loews Corporation
Expiration October
2004, Exercise
Price $55.00 39 $ 14,040
Expiration October
2004, Exercise
Price $60.00 44 1,320
Expiration November
2004, Exercise
Price $60.00 14 1,330
Masco Corporation
Expiration October
2004, Exercise
Price $35.00 39 780
Expiration November
2004, Exercise
Price $35.00 57 3,848
Mettler-Toledo
International Inc.
Expiration November
2004, Exercise
Price $45.00 15 4,500
Expiration November
2004, Exercise
Price $50.00 77 2,888
Michaels Stores, Inc.
Expiration October
2004, Exercise
Price $60.00 75 6,750
NCO Group, Inc.
Expiration November
2004, Exercise
Price $25.00 87 20,010
Expiration December
2004, Exercise
Price $30.00 58 2,465
New Century Financial
Corporation
Expiration November
2004, Exercise
Price $60.00 33 15,015
Expiration November
2004, Exercise
Price $65.00 49 12,005
</Table>
Schedule of Written Options 43
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2004
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Newfield Exploration
Co.
Expiration October
2004, Exercise
Price $60.00 11 $ 2,063
Expiration November
2004, Exercise
Price $65.00 59 3,982
Nextel
Communications,
Inc.(a)
Expiration October
2004, Exercise
Price $22.50 97 15,035
Expiration November
2004, Exercise
Price $25.00 12 900
Northrop Grumman
Corporation
Expiration October
2004, Exercise
Price $50.00 39 13,260
Expiration November
2004, Exercise
Price $55.00 19 1,473
Offshore Logistics,
Inc.
Expiration November
2004, Exercise
Price $35.00 91 11,147
O'Reilly Automotive,
Inc.
Expiration October
2004, Exercise
Price $40.00 22 495
Expiration November
2004, Exercise
Price $40.00 14 1,085
Oshkosh Truck
Corporation
Expiration November
2004, Exercise
Price $60.00 75 7,687
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Owens-Illinois, Inc.
Expiration October
2004, Exercise
Price $15.00 312 $ 35,880
Expiration November
2004, Exercise
Price $15.00 77 11,165
Expiration November
2004, Exercise
Price $17.50 96 2,880
Pactiv Corporation
Expiration October
2004, Exercise
Price $22.50 29 2,610
Expiration October
2004, Exercise
Price $25.00 126 1,575
Polo Ralph Lauren
Corporation
Expiration November
2004, Exercise
Price $40.00 165 4,950
PolyMedica
Corporation
Expiration October
2004, Exercise
Price $30.00 164 18,450
Priority Healthcare
Corporation
Expiration October
2004, Exercise
Price $20.00 180 11,250
Expiration October
2004, Exercise
Price $25.00 10 125
Quiksilver, Inc.
Expiration October
2004, Exercise
Price $25.00 170 16,575
RehabCare Group, Inc.
Expiration October
2004, Exercise
Price $22.50 63 6,142
Expiration November
2004, Exercise
Price $25.00 27 1,283
</Table>
44 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Reliance Steel &
Aluminum Co.
Expiration October
2004, Exercise
Price $40.00 116 $ 10,730
Expiration December
2004, Exercise
Price $45.00 11 1,073
Respironics, Inc.
Expiration October
2004, Exercise
Price $55.00 87 4,132
Reynolds American
Inc.
Expiration October
2004, Exercise
Price $65.00 29 10,295
Expiration November
2004, Exercise
Price $70.00 29 5,365
SanDisk Corporation
Expiration October
2004, Exercise
Price $30.00 123 11,685
Sara Lee Corporation
Expiration October
2004, Exercise
Price $22.50 126 6,615
Expiration November
2004, Exercise
Price $22.50 27 2,093
SBC Communications
Inc.
Expiration October
2004, Exercise
Price $27.50 29 145
Expiration November
2004, Exercise
Price $27.50 116 1,450
Smithfield Foods,
Inc.
Expiration October
2004, Exercise
Price $25.00 18 1,035
Expiration November
2004, Exercise
Price $25.00 58 5,945
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Sonic Corp.
Expiration October
2004, Exercise
Price $25.00 116 $ 10,150
Expiration November
2004, Exercise
Price $25.00 37 4,902
Steel Dynamics, Inc.
Expiration October
2004, Exercise
Price $40.00 47 3,408
Expiration November
2004, Exercise
Price $40.00 152 25,460
Stericycle, Inc.
Expiration October
2004, Exercise
Price $45.00 28 4,060
Expiration October
2004, Exercise
Price $50.00 17 170
Expiration November
2004, Exercise
Price $50.00 10 400
Suncor Energy, Inc.
Expiration November
2004, Exercise
Price $30.00 55 14,850
Expiration November
2004, Exercise
Price $35.00 45 2,250
Take-Two Interactive
Software, Inc.
Expiration October
2004, Exercise
Price $35.00 7 158
Expiration November
2004, Exercise
Price $37.50 100 3,250
Teekay Shipping
Corporation
Expiration October
2004, Exercise
Price $40.00 44 14,740
Expiration November
2004, Exercise
Price $45.00 66 7,590
</Table>
Schedule of Written Options 45
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2004
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Texas Instruments
Incorporated
Expiration October
2004, Exercise
Price $22.50 30 $ 750
Expiration November
2004, Exercise
Price $25.00 117 2,925
The Home Depot, Inc.
Expiration October
2004, Exercise
Price $37.50 153 27,922
The Scotts Company
Expiration October
2004, Exercise
Price $65.00 55 3,713
The Sherwin-Williams
Company
Expiration October
2004, Exercise
Price $40.00 89 35,600
Expiration November
2004, Exercise
Price $45.00 14 1,085
The Toro Company
Expiration October
2004, Exercise
Price $70.00 40 2,500
Expiration November
2004, Exercise
Price $70.00 10 1,875
The Yankee Candle
Company, Inc.
Expiration November
2004, Exercise
Price $30.00 79 5,332
Toll Brothers, Inc.
Expiration October
2004, Exercise
Price $50.00 97 970
Torchmark Corporation
Expiration October
2004, Exercise
Price $50.00 85 27,200
Expiration November
2004, Exercise
Price $55.00 15 750
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Tupperware
Corporation
Expiration October
2004, Exercise
Price $17.50 100 $ 1,250
Expiration November
2004, Exercise
Price $17.50 27 1,148
UICI
Expiration October
2004, Exercise
Price $30.00 198 58,410
Ultra Petroleum Corp.
Expiration November
2004, Exercise
Price $50.00 140 40,600
UST Inc.
Expiration October
2004, Exercise
Price $40.00 126 8,505
V.F. Corporation
Expiration October
2004, Exercise
Price $50.00 105 4,988
W.W. Grainger, Inc.
Expiration October
2004, Exercise
Price $55.00 15 3,975
Expiration November
2004, Exercise
Price $55.00 68 22,440
Expiration November
2004, Exercise
Price $60.00 14 840
Waste Connections,
Inc.
Expiration October
2004, Exercise
Price $30.00 96 16,320
Worthington
Industries, Inc.
Expiration October
2004, Exercise
Price $20.00 88 12,540
Expiration November
2004, Exercise
Price $22.50 71 3,727
</Table>
46 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES MARKET
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Yellow Roadway
Corporation
Expiration October
2004, Exercise
Price $45.00 106 $ 23,320
Expiration November
2004, Exercise
Price $50.00 154 13,475
----------
Total Options Written
(Premiums received
$1,035,052) 11,776 $1,376,038
</Table>
The accompanying notes are an integral part of the financial statements.
Schedule of Written Options 47
Management Overview
ICON Equity Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 85.9%
Common Stocks 76.1%
Preferred Stocks 4.0%
Convertible Preferred
Stocks 5.8%
Top 10 Equity Holdings 16.2%
Number of Stocks 108
Options Purchased
Call Options 0.2%
Number of Securities on
Which Options Have Been
Purchased 6
Bonds & Short-Term Investments 13.3%
Convertible Corporate
Bonds 3.9%
Corporate Bonds 8.6%
Short-Term Investments 0.8%
Number of Bonds 18
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
The Allstate Corporation 1.9%
Steel Technologies Inc. 1.9%
Methanex Corporation 1.9%
Bank of America Corporation 1.7%
Kimberly-Clark Corporation 1.6%
Textron Inc. 1.5%
Tidewater Inc. 1.5%
PolyMedica Corporation 1.4%
CIGNA Corporation 1.4%
Smith & Nephew plc 1.4%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Equity Income Fund, Class I gained 19.69% for the fiscal year ended
September 30, 2004, while its Class C shares appreciated 18.56%. Both
returns outpaced the 14.58% advance for the Fund's benchmark, the S&P 1500
Index. Meanwhile, the Fund's Class Z shares increased 8.12% since their May
10, 2004 inception compared to a 3.71% return for the benchmark over the
same period. Total returns for other periods as of September 30, 2004 are
listed on page 52.
Having maintained an equity tilt toward economically sensitive sectors
during the period, the Fund outperformed the market during cyclical upturns,
but lagged when dramatic pullbacks favored more defensive-oriented sectors.
Although our valuation and relative strength metrics continued to support a
recovery-driven theme, the lack of consistent cyclical leadership detracted
from overall performance. Meanwhile, the Fund's focus on longer-maturity
bonds worked in its favor as benchmark Treasury yields remained virtually
unchanged, despite persistent fears that rates would move appreciably
higher.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
While our system does not consider investment style, the Fund benefited from
a value bias during the period, as measured on a traditional price-to-
earnings (P/E) basis. This was corroborated by the outperformance of
S&P/Barra Value Indexes over their growth counterparts for the one-year
period ended September 30, 2004.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Widespread expectations that long-term interest rates would trend higher
failed to materialize when fixed-income investors extended maturities in
conjunction with three Federal Reserve rate hikes. Consequently, longer
rates fell amid indications that Fed tightening at the short end would keep
inflation in check. Given these favorable conditions, our system continued
to support a recovery-based theme, featuring an eventual upside move in
economically sensitive industries.
48 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
[J.C. WALLER, III PHOTO]
J.C. Waller, III
Portfolio Manager
However, an extended first-half rally dissipated against a cloud of
uncertainty, as rising oil prices, geopolitical tensions and election-year
rhetoric fueled investor concerns. Although underlying fundamentals improved
incrementally, fear-driven theme rotations sent the market into a volatile
trading range, quickly extinguishing any move toward a sustained cyclical
rally.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. The Fund's bond exposure enabled it to dampen some of the extreme volatility
during the period. Given rate pressures in premium-priced shorter-dated
issues, the Fund's value-driven tilt toward longer maturities worked to its
advantage. Whereas high-yield corporate debt bolstered first-half
performance, declining risk premiums favored a shift to government and
agency securities -- ultimately the largest contributors to Fund performance
for the period.
Meanwhile, we more heavily weighted the Financials sector, which boosted
overall dividend yield and relative performance. Also contributing to
performance were overweight positions in the Materials sector and the steel
industry, which produced market-leading returns while continuing to exhibit
further upside potential, based on valuation and relative strength.
Among the Fund's leading company contributors, commercial services giant
Cendant Corp. benefited from margin improvements and strong sales in its
core travel and real estate businesses. Elsewhere, crude oil transporter
Knightsbridge Tankers Ltd. profited from the runup in oil prices, while
yielding a substantial dividend payout.
In contrast, stocks that detracted from Fund performance over the 12 months
included commodity fiber producer Wellman Inc., which struggled with weak
demand and rising input costs. Also retreating on weaker-than-expected
orders was SpectraLink Corp., a maker of workplace wireless communication
systems.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC MARKET?
A. We believe the backdrop of economic strength and stable interest rates
coupled with widespread value and the sustainability of the late-period
advance creates a positive setting for the market at large. With economic
growth seemingly in line with sustainable Federal Reserve targets, we see no
reason why long rates must rise appreciably above current range-bound
levels, given their 20-year secular decline. For that reason, we will
continue to rely on valuation-related fundamentals in seeking out suitable
dividend- paying equities and fixed-income opportunities.
Management Overview 49
Management Overview (continued)
ICON Equity Income Fund
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - The Fund's bond exposure and value-driven tilt toward longer maturities
contributed to performance, while a lack of consistent sector leadership
proved to be a detractor to returns.
- - While high-yield corporate debt bolstered first-half performance, a
valuation-based shift to government and agency securities enhanced overall
returns.
- - A heavily weighted Financials sector boosted dividend yield and relative
performance, while overweight positions in Materials and steel contributed
market-leading returns.
- - Stocks that aided returns included Cendant Corp. and Knightsbridge Tankers
Ltd., while Wellman Inc. and SpectraLink Corp. were among the poorest
performers.
The unmanaged S&P/Barra Growth and Value indexes are constructed by dividing
stocks in indexes according to book-to-price ratio. The Value index contains
firms with higher book-to-price ratios; conversely, the Growth index has firms
with lower book-to-price ratios. Both indexes are capitalization-weighted.
50 Management Overview
SECTOR COMPOSITION
September 30, 2004
<Table>
Financial
20.6%
Industrials
16.0%
Materials
12.4%
Consumer Discretionary
10.5%
Leisure & Consumer Staples
10.1%
Health Care
9.3%
Telecommunications & Utilities
8.8%
Information Technology
6.6%
Energy
4.3%
</Table>
Percentages are based upon common stock positions and net assets.
Management Overview 51
Management Overview (continued)
ICON Equity Income Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund-Class I 10/1/02 19.69% N/A 22.21%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 14.58% 19.55%
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund-Class C 11/8/02 18.56% N/A 18.67%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 14.58% 14.64%
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund-Class Z 5/10/04 N/A N/A 8.12%*
- -------------------------------------------------------------------------------------------
S&P 1500 Index 3.71%*
- -------------------------------------------------------------------------------------------
</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 limitations,
returns would have been lower. The limitation provisions may be terminated in
the future. Class Z shares are available only to institutional investors.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON EQUITY INCOME FUND-CLASS I S&P 1500 INDEX
------------------------------- --------------
10/1/02 $10000 $10000
3/31/03 $10091 $10450
9/30/03 $12482 $12469
3/31/04 $14940 $14308
9/30/04 $14927 $14285
</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.
52 Management Overview
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Equity Income Fund and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first set of lines in the table below provide information about actual
account values and actual expenses, (with actual net expenses being limited to
2.20%, 1.45% and 1.20% based on a contractual commitment). The Example below
includes, but is not limited to, management fees, 12b-1 fees, fund accounting,
custody and transfer agent fees. However, the Example below does not include
client specific fees, such as the $15.00 fee charged to IRA accounts, or the
$15.00 fee charged for wire redemptions. The Example also does not include
portfolio trading commissions and related trading expenses, and interest expense
or dividends on short positions taken by the Fund. You may use this information,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second set of lines in the table below provide information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
Management Overview 53
50
Management Overview (continued)
ICON Equity Income Fund
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04* 9/30/04 4/1/04-9/30/04**
- ---------------------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------
Actual Expense $1,000.00 $ 995.30 $10.97
- ---------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,014.00 $11.08
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
CLASS I
- ---------------------------------------------------------------------------------------------
Actual Expense $1,000.00 $ 999.10 $ 6.65
- ---------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,018.35 $ 6.71
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
CLASS Z
- ---------------------------------------------------------------------------------------------
Actual Expense $1,000.00 $1,081.20 $ 4.05
- ---------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,015.75 $ 3.93
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
</Table>
* Class Z shares commenced operations May 10, 2004.
** Expenses are equal to the Fund's six-month expense ratios after limitation
if any, of 2.20% (Class C), 1.33% (Class I), and 0.97% (Class Z),
annualized, multiplied by the average account value over the period,
multiplied by 183/366, 183/366 and 143/366 respectively to reflect the
one-half year period or date of inception.
54 Management Overview
Schedule of Investments
ICON Equity Income Fund
September 30, 2004
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
COMMON STOCKS 76.1%
UNITED STATES OF AMERICA 67.1%
CONSUMER DISCRETIONARY 7.0%
APPAREL ACCESSORIES & LUXURY GOODS 2.4%
7,900 Kellwood Company $ 287,955
71,000 Oshkosh B'Gosh,
Inc. 1,434,200
22,600 V. F. Corporation 1,117,570
------------
2,839,725
APPAREL RETAIL 0.8%
15,900 The Cato
Corporation 353,775
26,500 Limited Brands 590,685
------------
944,460
AUTOMOBILE MANUFACTURERS 1.0%
28,300 General Motors
Corporation 1,202,184
HOME IMPROVEMENT RETAIL 1.0%
28,100 The Sherwin-
Williams Company 1,235,276
HOUSEHOLD APPLIANCES 0.3%
10,800 Snap-on
Incorporated 297,648
TIRES & RUBBER 1.5%
18,900 Bandag,
Incorporated 827,820
50,300 Cooper Tire &
Rubber Company 1,014,551
------------
1,842,371
------------
TOTAL CONSUMER DISCRETIONARY 8,361,664
ENERGY 2.4%
INTEGRATED OIL & GAS 0.4%
5,300 ConocoPhillips 439,105
OIL & GAS EQUIPMENT & SERVICES 1.5%
56,000 Tidewater Inc. 1,822,800
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 0.5%
10,600 Ashland Inc. 594,448
------------
TOTAL ENERGY 2,856,353
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
FINANCIAL 14.2%
ASSET MANAGEMENT & CUSTODY BANKS 2.7%
30,000 American Capital
Strategies, Ltd. $ 940,200
29,800 The Bank of New
York Company, Inc. 869,266
83,000 MCG Capital
Corporation 1,440,880
------------
3,250,346
DIVERSIFIED BANKS 1.7%
47,294 Bank of America
Corporation 2,049,249
INSURANCE BROKERS 1.9%
42,500 Aon Corporation 1,221,450
32,000 Arthur J.
Gallagher & Co. 1,060,160
------------
2,281,610
LIFE & HEALTH INSURANCE 0.5%
12,000 Lincoln National
Corporation 564,000
MULTI-LINE INSURANCE 2.3%
48,300 American Financial
Group, Inc. 1,443,687
21,000 Loews Corporation 1,228,500
------------
2,672,187
OTHER DIVERSIFIED FINANCIAL SERVICES 0.8%
24,500 JPMorgan Chase &
Co. 973,385
PROPERTY & CASUALTY INSURANCE 1.9%
48,000 The Allstate
Corporation 2,303,520
REAL ESTATE INVESTMENT TRUSTS 0.3%
13,200 General Growth
Properties, Inc. 409,200
REGIONAL BANKS 1.0%
29,000 BB&T Corporation 1,151,010
THRIFTS & MORTGAGE FINANCE 1.1%
32,700 Countrywide
Financial
Corporation 1,288,053
------------
TOTAL FINANCIAL 16,942,560
HEALTH CARE 5.4%
HEALTH CARE DISTRIBUTORS 0.9%
43,500 Owens & Minor,
Inc. 1,104,900
HEALTH CARE EQUIPMENT 0.6%
41,900 PerkinElmer, Inc. 721,518
</Table>
Schedule of Investments 55
Schedule of Investments (continued)
ICON Equity Income Fund
September 30, 2004
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
HEALTH CARE SUPPLIES 1.4%
55,800 PolyMedica
Corporation $ 1,718,640
MANAGED HEALTH CARE 1.4%
24,000 CIGNA Corporation 1,671,120
PHARMACEUTICALS 1.1%
24,000 Abbott
Laboratories 1,016,640
11,200 Bristol-Myers
Squibb Company 265,104
------------
1,281,744
------------
TOTAL HEALTH CARE 6,497,922
INDUSTRIALS 15.6%
AEROSPACE & DEFENSE 3.4%
42,600 Goodrich
Corporation 1,335,936
26,300 Lockheed Martin
Corporation 1,467,014
32,000 Raytheon Company 1,215,360
------------
4,018,310
AIR FREIGHT & LOGISTICS 0.5%
13,700 Ryder System, Inc. 644,448
BUILDING PRODUCTS 2.7%
128,700 Apogee
Enterprises, Inc. 1,664,091
45,200 Masco Corporation 1,560,756
------------
3,224,847
COMMERCIAL PRINTING 1.0%
38,000 R.R. Donnelley &
Sons Company 1,190,160
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS
0.8%
7,300 Caterpillar Inc. 587,285
20,400 Federal Signal
Corporation 379,032
------------
966,317
ELECTRICAL COMPONENTS & EQUIPMENT 0.8%
7,900 Roper Industries,
Inc. 453,934
8,300 Cooper Industries,
Ltd. 489,700
------------
943,634
INDUSTRIAL CONGLOMERATES 1.5%
28,500 Textron Inc. 1,831,695
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
INDUSTRIAL MACHINERY 1.6%
8,400 Briggs & Stratton
Corporation $ 682,080
11,100 Harsco Corporation 498,390
40,700 Stewart &
Stevenson
Services, Inc. 719,169
------------
1,899,639
MARINE 0.4%
14,000 Alexander &
Baldwin, Inc. 475,160
OFFICE SERVICES & SUPPLIES 1.1%
27,000 Brady Corporation 1,316,790
RAILROADS 1.3%
40,500 Burlington
Northern Santa Fe
Corporation 1,551,555
TRADING COMPANIES & DISTRIBUTORS 0.5%
16,800 Applied Industrial
Technologies, Inc. 600,432
------------
TOTAL INDUSTRIALS 18,662,987
INFORMATION TECHNOLOGY 1.4%
APPLICATION SOFTWARE 0.9%
11,300 FactSet Research
Systems Inc. 544,660
27,100 Jack Henry &
Associates, Inc. 508,667
------------
1,053,327
DATA PROCESSING & OUTSOURCED SERVICES 0.5%
19,300 StarTek, Inc. 605,248
------------
TOTAL INFORMATION TECHNOLOGY 1,658,575
LEISURE & CONSUMER STAPLES 6.8%
FOOD RETAIL 1.0%
49,000 Albertson's, Inc. 1,172,570
HOUSEHOLD PRODUCTS 1.6%
30,000 Kimberly-Clark
Corporation 1,937,700
PACKAGED FOODS & MEATS 0.7%
54,300 Lance, Inc. 876,945
PHOTOGRAPHIC PRODUCTS 0.9%
33,200 Eastman Kodak
Company 1,069,704
</Table>
56 Schedule of Investments
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
TOBACCO 2.6%
21,800 Reynolds American
Inc. $ 1,483,272
40,000 UST Inc. 1,610,400
------------
3,093,672
------------
TOTAL LEISURE & CONSUMER
STAPLES 8,150,591
MATERIALS 8.2%
ALUMINUM 0.3%
11,500 Alcoa Inc. 386,285
CONSTRUCTION MATERIALS 2.3%
16,800 Eagle Materials
Inc. 1,197,840
30,000 Vulcan Materials
Company 1,528,500
------------
2,726,340
DIVERSIFIED CHEMICALS 1.4%
18,000 Eastman Chemical
Company 855,900
13,500 PPG Industries,
Inc. 827,280
------------
1,683,180
PAPER PRODUCTS 0.9%
91,000 Glatfelter 1,127,490
SPECIALTY CHEMICALS 1.4%
23,200 The Lubrizol
Corporation 802,720
33,700 Quaker Chemical
Corporation 813,855
------------
1,616,575
STEEL 1.9%
87,600 Steel Technologies
Inc. 2,244,050
------------
TOTAL MATERIALS 9,783,920
TELECOMMUNICATIONS & UTILITIES 6.1%
ELECTRIC UTILITIES 1.7%
31,600 Alliant Energy
Corporation 786,208
51,500 Duquesne Light
Holdings Inc. 924,940
9,100 IDACORP, Inc 264,446
------------
1,975,594
GAS UTILITIES 0.3%
6,900 Atmos Energy
Corporation 173,811
5,700 Peoples Energy
Corporation 237,576
------------
411,387
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
INTEGRATED TELECOMMUNICATION SERVICES 0.9%
53,232 Sprint Corporation $ 1,071,560
MULTI-UTILITIES & UNREGULATED POWER 1.3%
39,200 Duke Energy
Corporation 897,288
23,600 Energy East
Corporation 594,248
------------
1,491,536
WATER UTILITIES 1.9%
45,000 American States
Water Company 1,120,500
40,000 California Water
Service Group 1,174,800
------------
2,295,300
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 7,245,377
------------
TOTAL UNITED STATES OF AMERICA 80,159,949
AMERICAN DEPOSITARY RECEIPTS 4.6%
BRAZIL 1.6%
MATERIALS 0.8%
PAPER PRODUCTS 0.8%
28,700 Aracruz Celulose
S.A. 950,544
------------
TOTAL MATERIALS 950,544
TELECOMMUNICATIONS & UTILITIES 0.8%
WIRELESS TELECOMMUNICATIONS SERVICES 0.8%
34,000 Telemig Celular
Participacoes 968,320
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 968,320
------------
TOTAL BRAZIL 1,918,864
MEXICO 1.1%
CONSTRUCTION MATERIALS 1.1%
48,034 Cemex S.A. de C.V. 1,351,677
------------
TOTAL MEXICO 1,351,677
NETHERLANDS 0.5%
FINANCIAL 0.5%
OTHER DIVERSIFIED FINANCIAL SERVICES 0.5%
21,409 ING Groep N.V. 541,220
------------
TOTAL FINANCIAL 541,220
------------
TOTAL NETHERLANDS 541,220
</Table>
Schedule of Investments 57
Schedule of Investments (continued)
ICON Equity Income Fund
September 30, 2004
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
UNITED KINGDOM 1.4%
HEALTH CARE SUPPLIES 1.4%
HEALTH CARE 1.4%
36,000 Smith & Nephew plc $ 1,668,600
------------
TOTAL HEALTH CARE 1,668,600
------------
TOTAL UNITED KINGDOM 1,668,600
------------
TOTAL AMERICAN DEPOSITARY
RECEIPTS 5,480,361
BERMUDA 1.3%
ENERGY 1.3%
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 1.3%
50,900 Knightsbridge
Tankers Ltd. 1,577,900
------------
TOTAL ENERGY 1,577,900
------------
TOTAL BERMUDA 1,577,900
BRITISH VIRGIN ISLANDS 1.2%
INFORMATION TECHNOLOGY 1.2%
ELECTRONIC EQUIPMENT MANUFACTURERS 1.2%
70,000 Nam Tai
Electronics, Inc. 1,494,500
------------
TOTAL INFORMATION TECHNOLOGY 1,494,500
------------
TOTAL BRITISH VIRGIN ISLANDS 1,494,500
CANADA 1.9%
MATERIALS 1.9%
COMMODITY CHEMICALS 1.9%
147,100 Methanex
Corporation 2,216,797
------------
TOTAL MATERIALS 2,216,797
------------
TOTAL CANADA 2,216,797
------------
TOTAL COMMON STOCKS (COST
$80,792,236) 90,929,507
PREFERRED STOCKS 4.0%
UNITED STATES OF AMERICA 3.5%
CONSUMER DISCRETIONARY 0.3%
HOUSEHOLD APPLIANCES 0.3%
15,000 Maytag
Corporation,
7.875%, 8-1-31 397,350
------------
TOTAL CONSUMER DISCRETIONARY 397,350
FINANCIAL 1.9%
CONSUMER FINANCE 0.3%
16,000 MBNA Corporation,
7.500%, Series A 410,400
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
CONSUMER LOANS 1.1%
26,000 General Motors
Acceptance
Corporation,
7.350%, 8-8-32 $ 669,240
27,000 Ford Motor Credit
Company,
7.600%, 3-01-32 702,270
------------
1,371,510
PROPERTY & CASUALTY INSURANCE 0.3%
12,200 Ambac Financial
Group, Inc.,
7.000%, 10-17-51 319,640
REGIONAL BANKS 0.2%
6,600 Bank One Capital
Corporation,
8.000%, 1-30-31 175,890
------------
TOTAL FINANCIAL 2,277,440
HEALTH CARE 0.4%
MANAGED HEALTH CARE 0.4%
18,200 Aetna Inc.,
8.500%, 8-31-41 489,762
------------
TOTAL HEALTH CARE 489,762
LEISURE & CONSUMER STAPLES 0.9%
MOVIES & ENTERTAINMENT 0.9%
38,000 The Walt Disney
Company,
7.000%, 11-1-31 1,007,380
------------
TOTAL LEISURE & CONSUMER
STAPLES 1,007,380
------------
TOTAL UNITED STATES OF AMERICA 4,171,932
CANADA 0.5%
INFORMATION TECHNOLOGY 0.5%
OFFICE ELECTRONICS 0.5%
18,100 Xerox Capital LLC,
6.540%, 2-28-06,
Series A 600,687
------------
TOTAL INFORMATION TECHNOLOGY 600,687
------------
TOTAL CANADA 600,687
------------
TOTAL PREFERRED STOCKS (COST
$4,807,239) 4,772,619
CONVERTIBLE PREFERRED STOCKS 5.8%
UNITED STATES OF AMERICA 5.4%
CONSUMER DISCRETIONARY 0.9%
SPECIALTY STORES 0.9%
23,200 Toy "R" Us, Inc.,
6.250%, 8-16-05 1,114,992
------------
TOTAL CONSUMER DISCRETIONARY 1,114,992
</Table>
58 Schedule of Investments
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
ENERGY 0.6%
ELECTRIC INTEGRATED 0.6%
14,400 TXU Corp.,
8.750%, 11-16-05,
Series C $ 750,240
------------
TOTAL ENERGY 750,240
HEALTH CARE 0.4%
HEALTH CARE DISTRIBUTORS 0.4%
9,000 Omnicare, Inc.,
4.000%, 6-15-33 427,500
------------
TOTAL HEALTH CARE 427,500
INDUSTRIALS 0.4%
AEROSPACE & DEFENSE 0.4%
4,000 Northrop Grumman
Corporation,
7.000%, 4-4-21 524,000
------------
TOTAL INDUSTRIALS 524,000
LEISURE & CONSUMER STAPLES 1.1%
DISTILLERS & VINTNERS 1.1%
39,000 Constellation
Brands, Inc.,
5.750%, 9-1-06 1,277,250
------------
TOTAL LEISURE & CONSUMER
STAPLES 1,277,250
INFORMATION TECHNOLOGY 0.8%
TECHNOLOGY DISTRIBUTORS 0.8%
17,000 Pioneer Standard
Fin. Trust,
6.75%, 3-31-28 947,750
------------
TOTAL INFORMATION TECHNOLOGY 947,750
MATERIALS 0.4%
PAPER PACKAGING 0.4%
4,200 Chesapeake Energy
Corporation,
6.750%, 12-31-49 428,778
------------
TOTAL MATERIALS 428,778
TELECOMMUNICATIONS & UTILITIES 0.8%
ELECTRIC UTILITIES 0.3%
16,200 Ameren
Corporation,
9.750%, 5-15-05 444,852
GAS UTILITIES 0.2%
4,300 KeySpan
Corporation,
8.750%, 5-16-05 227,900
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER 0.3%
10,500 Sempra Energy,
8.500%, 5-17-05 $ 325,080
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 997,832
------------
TOTAL UNITED STATES OF AMERICA 6,468,342
AMERICAN DEPOSITARY RECEIPT 0.4%
TELECOMMUNICATIONS & UTILITIES 0.4%
INTEGRATED TELECOMMUNICATION SERVICES 0.4%
8,600 Philippine Long
Distance Telephone
Company,
3.500%, 12-31-49,
Series III 427,850
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 427,850
------------
TOTAL AMERICAN DEPOSITARY
RECEIPT 427,850
------------
TOTAL CONVERTIBLE PREFERRED
STOCKS (COST $6,120,026) 6,896,192
CALL OPTIONS PURCHASED (100 SHARES PER
CONTRACT) 0.2%
UNITED STATES OF AMERICA 0.2%
CONSUMER DISCRETIONARY 0.1%
AUTOMOBILE MANUFACTURERS 0.0%
400 Ford Motor Company
Expiration January
2006, Exercise
Price $20.00 11,000
HOME IMPROVEMENT RETAIL 0.1%
123 Lowe's Companies,
Inc.
Expiration January
2007, Exercise
Price $65.00 62,730
------------
TOTAL CONSUMER DISCRETIONARY 73,730
FINANCIAL 0.1%
INVESTMENT BANKING & BROKERAGE 0.1%
125 Morgan Stanley
Expiration January
2007, Exercise
Price $60.00 49,375
</Table>
Schedule of Investments 59
Schedule of Investments (continued)
ICON Equity Income Fund
September 30, 2004
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
LIFE & HEALTH INSURANCE 0.0%
150 Prudential
Financial, Inc.
Expiration January
2005, Exercise
Price $50.00 $ 15,375
------------
TOTAL FINANCIAL 64,750
HEALTH CARE 0.0%
MANAGED HEALTH CARE 0.0%
50 Aetna, Inc.
Expiration October
2004, Exercise
Price $100.00 7,875
------------
TOTAL HEALTH CARE 7,875
INFORMATION TECHNOLOGY 0.0%
OFFICE ELECTRONICS 0.0%
1,100 XEROX Corporation
Expiration January
2006, Exercise
Price $20.00 52,250
------------
TOTAL INFORMATION TECHNOLOGY 52,250
------------
TOTAL UNITED STATES OF AMERICA 198,605
------------
TOTAL CALL OPTIONS PURCHASED
(COST $318,757) 198,605
CONVERTIBLE CORPORATE BONDS 3.9%
UNITED STATES OF AMERICA 3.9%
FINANCIAL 1.0%
CONSUMER FINANCE 1.0%
1,230,000 Providian
Financial
Corporation,
3.250%, 8-15-05 1,211,550
------------
TOTAL FINANCIAL 1,211,550
HEALTH CARE 1.2%
PHARMACEUTICALS 1.2%
1,500,000 King
Pharmaceuticals,
Inc.,
2.750%, 11-15-21 1,447,500
------------
TOTAL HEALTH CARE 1,447,500
INFORMATION TECHNOLOGY 0.8%
COMPUTER STORAGE & PERIPHERALS 0.2%
177,000 Adaptec, Inc.,
3.000%, 3-5-07 177,000
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
DATA PROCESSING & OUTSOURCED SERVICES 0.1%
158,000 The BISYS Group,
Inc.,
4.000%, 3-15-06,
(Acquired 1-30-04;
Cost $161,162)* $ 154,840
SEMICONDUCTORS 0.5%
600,000 International
Rectifier
Corporation,
4.250%, 7-15-07 591,000
------------
TOTAL INFORMATION TECHNOLOGY 922,840
LEISURE & CONSUMER STAPLES 0.2%
BROADCASTING & CABLE TV 0.1%
135,000 Mediacom
Communications
Corporation,
5.250%, 7-1-06 131,288
PHOTOGRAPHIC PRODUCTS 0.1%
110,000 Eastman Kodak
Company,
3.375%, 10-15-33,
(Acquired 1-30-04;
Cost $134,369)* 138,600
------------
TOTAL LEISURE & CONSUMER
STAPLES 269,888
TELECOMMUNICATIONS & UTILITIES 0.7
WIRELESS TELECOMMUNICATION SERVICES 0.7%
790,000 China Mobile
Limited,
2.250%, 11-3-05 785,062
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 785,062
------------
TOTAL UNITED STATES OF AMERICA 4,636,840
------------
TOTAL CONVERTIBLE CORPORATE
BONDS (COST $4,659,509) 4,636,840
CORPORATE BONDS 8.6%
UNITED STATES OF AMERICA 8.6%
CONSUMER DISCRETIONARY 2.2%
AUTOMOBILE MANUFACTURERS 1.4%
1,600,000 DaimlerChrysler
AG, 6.50%, 11-15-
13 1,736,016
HOME IMPROVEMENT RETAIL 0.8%
800,000 Lowe's Companies,
Inc.,
8.250%, 6-1-10 964,802
------------
TOTAL CONSUMER DISCRETIONARY 2,700,818
</Table>
60 Schedule of Investments
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
FINANCIAL 2.9%
CONSUMER LOANS 1.7%
750,000 Ford Motor Credit
Co.,
7.000%, 10-1-13 $ 792,966
1,288,000 Household Finance
Corporation,
4.750%, 7-15-13 1,275,232
------------
2,068,198
INVESTMENT BANKING & BROKERAGE 0.6%
750,000 Morgan Stanley,
4.750%, 4-1-14 726,057
------------
LIFE & HEALTH INSURANCE 0.6%
750,000 Prudential
Financial, Inc.
5.750%, 7-15-33 734,432
------------
TOTAL FINANCIAL 3,528,687
HEALTH CARE 0.5%
MANAGED HEALTH CARE 0.5%
500,000 Lion Connecticut
Holding,
6.970%, 8-15-36 565,295
------------
TOTAL HEALTH CARE 565,295
INFORMATION TECHNOLOGY 1.9%
OFFICE ELECTRONICS 1.9%
2,100,000 Xerox Corporation,
7.625%, 6-15-13(a) 2,268,000
------------
TOTAL INFORMATION TECHNOLOGY 2,268,000
</Table>
<Table>
<Caption>
SHARES, CONTRACTS OR PRINCIPAL
AMOUNT MARKET VALUE
- ---------------------------------------------
LEISURE & CONSUMER STAPLES 1.1%
HOTELS, RESORTS & CRUISE LINES 0.9%
1,000,000 Royal Caribbean
Cruises,
7.250%, 3-15-18 $ 1,055,000
RESTAURANTS 0.2%
225,000 McDonald's Corp.,
5.000%, 9-30-16 218,027
------------
TOTAL LEISURE & CONSUMER
STAPLES 1,273,027
------------
TOTAL UNITED STATES OF AMERICA 10,335,827
------------
TOTAL CORPORATE BONDS (COST
$10,310,398) 10,335,827
SHORT-TERM INVESTMENTS 0.8%
VARIABLE RATE DEMAND NOTE 0.8%
1,009,023 American Family
Demand Note,
1.4525%# $ 1,009,023
------------
TOTAL VARIABLE RATE DEMAND NOTE
1,009,023
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,009,023) 1,009,023
------------
TOTAL INVESTMENTS 99.4% (COST
$108,017,188) 118,778,613
------------
OTHER ASSETS LESS LIABILITIES
0.6% 672,014
------------
NET ASSETS 100.0% $119,450,627
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
* Security was acquired pursuant to Rule 144A of the Securities Act of 1933
and may be deemed to be restricted for resale.
Dates shown on securities are due dates of the obligations.
Schedule of Investments 61
Management Overview
ICON Long/Short Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 97.8%
Top 10 Long Equity Holdings 14.5%
Number of Stocks 108
Number of Short Positions 4
Short-Term Investments 4.0%
Percentages are based upon net assets.
TOP 10 LONG EQUITY HOLDINGS
September 30, 2004
The Mosaic Co. 1.7%
Knight Transportation, Inc. 1.5%
Yellow Roadway Corporation 1.5%
Norfolk Southern Corporation 1.5%
Teekay Shipping Corporation 1.5%
Curtiss-Wright Corporation 1.4%
Burlington Northern Santa Fe Corporation 1.4%
Arkansas Best
Corporation 1.4%
The Goodyear Tire &
Rubber Company 1.3%
Northrop Grumman Corporation 1.3%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Long/Short Fund, Class I gained 17.42% for the fiscal year ended
September 30, 2004, while its Class C shares appreciated 16.61%. Both
returns outpaced the Fund's benchmark, the S&P 1500 Index, which returned
14.58%. The Fund's Class Z shares returned -0.36% since their May 6, 2004
inception compared to a 1.02% return for the benchmark over the same period.
Total returns for other periods as of September 30, 2004 are listed on page
66.
Despite these gains, the lack of consistent sector leadership detracted from
overall Fund performance, as sharp and sudden theme reversals dominated the
investment landscape. Nevertheless, our valuation and relative strength
metrics continued to support a recovery-based theme, resulting in an
economically sensitive portfolio tilt. Consequently, the Fund outperformed
the market during cyclical upturns, but lagged when dramatic pullbacks
favored more defensive-oriented sectors.
Although the Fund was most heavily weighted toward the strongly performing
mid-cap segment during the period, the Fund is managed using an all-cap
strategy, meaning it invests in securities we believe are undervalued,
regardless of their location on the conventional style grid. This investment
approach is not limited by restrictions on market capitalization; the ICON
system searches for potential industry leadership no matter where it
emerges.
While the ICON system does not consider investment style, the Fund benefited
from a value bias during the period as measured on a traditional
price-to-earnings (P/E) basis. Based on S&P/Barra Index data, value stocks
outperformed their growth counterparts during the fiscal year, suggesting
that portfolio composition worked in the Fund's favor. At the same time, the
Fund's underweight exposure to certain growth stocks relative to the
benchmark detracted slightly from relative performance.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. A range-bound market characterized the investment environment, as rising oil
prices, the war on terror, economic setbacks, and election-year anxiety all
weighed heavily on investor sentiment. Frequent rotations between cyclical
and defensive-oriented sectors indicated an absence of leadership,
62 Management Overview
[J.C. WALLER, III PHOTO]
J.C. Waller, III
Portfolio Manager
with markets turning increasingly volatile amid a climate of fear and
uncertainty.
Our system saw things differently, however, as valuation and relative
strength metrics suggested that prevailing economic improvements would
support an eventual move to the upside. While subsequent upturns were in
fact led by economically sensitive sectors, downturns saw renewed strength
among more defensive issues. In this "tug-of-war" setting, cyclical rallies
were easily extinguished, but poised to gain traction should economic fears
give way to fundamental realities.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Our industry focus worked to the Fund's advantage, as overweight long
positions in steel and consumer finance delivered benchmark-beating returns
while still maintaining strong value-to-price and relative strength
readings. Enhanced exposure to the Materials sector also played an important
role, with the metals group capitalizing on rising global demand and higher
prices. Moreover, interest rate sensitive stocks continued to benefit from
an ongoing secular decline, even as the Federal Reserve initiated a
much-anticipated tightening cycle.
Conversely, overweight positions in Internet software & services and
airlines detracted from performance. Internet software & services fell
victim to fear- based selling that diminished its relative strength while
airlines struggled with competitive pressures and rising fuel costs, even
though the industry represented compelling value.
In accordance with the Fund's shorting discipline, which focuses on
industries that our system indicates are both overpriced and declining in
relative strength, short positions were initiated in the semiconductors,
semiconductor equipment and systems software industries. While these
positions contributed to performance as the Information Technology sector
declined on valuation concerns, they were later covered as value became more
evident.
Looking at the Fund's leading individual long stock contributors, Steel
Dynamics, Inc. advanced as pricing power and rising global demand boosted
the mini-mill steelmaker's quarterly results. Middle-market auto finance
company AmeriCredit Corp. also rallied, having posted better-than-expected
income growth in its core business. Elsewhere, ongoing gains in its
automotive OEM business combined with cost reductions drove expanded
earnings for audio system supplier Harman International Industries, Inc.
Meanwhile, long stocks that detracted from performance included drug
distributor Cardinal Health Inc., which retreated on accounting probes and
was subsequently sold. Corinthian Colleges Inc., a provider of for-profit
Management Overview 63
Management Overview (continued)
ICON Long/Short Fund
post-secondary education services, also faced regulatory issues and was
removed from the portfolio. Facing slowing revenues and the resignation of
its CFO, collectibles marketer Action Performance Companies, Inc. was
liquidated on declining relative strength.
The Fund is not market neutral; the proportion of long and short positions
depends on the availability of underpriced and overpriced industries, and
our evaluation of market conditions.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET?
A. Value remains relatively broad, while the measured economic expansion
appears sustainable. Assuming an eventual breakout to the upside, we will
continue to rely on our methodology as the most sensible way to capture
anticipated cyclical leadership. In light of this, we currently see few
short candidates, though the potential exists should stock prices exceed our
estimate of fair value.
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - Although the Fund benefited from its ability to own long and short
positions, overall Fund performance was hampered by sharp and sudden theme
reversals and the lack of consistent sector leadership.
- - Positive performance was driven by overweight long positions in steel and
consumer finance, while overweight positions in Internet software & services
and airlines detracted from performance.
- - Short positions in the semiconductors, semiconductor equipment and systems
software industries contributed to performance but were later covered as
value became more evident.
- - Stocks that contributed significantly to performance included Steel
Dynamics, Inc., AmeriCredit Corp. and Harman International Industries, Inc.
- - Among the Fund's weakest individual performers were Cardinal Health Inc.,
Corinthian Colleges Inc. and Action Performance Companies, Inc.
The unmanaged S&P/Barra Growth and Value indexes are constructed by dividing
stocks in indexes according to book-to-price ratio. The Value index contains
firms with higher book-to-price ratios; conversely, the Growth index has firms
with lower book-to-price ratios. Both indexes are capitalization-weighted.
64 Management Overview
SECTOR COMPOSITION
September 30, 2004
<Table>
Industrials
18.5%
Materials
15.7%
Consumer Discretionary
11.8%
Information Technology
11.0%
Financial
10.5%
Leisure & Consumer Staples
8.6%
Health Care
7.5%
Telecommunications & Utilities
7.1%
Energy
7.1%
</Table>
Percentages are based upon long positions and net assets.
Management Overview 65
Management Overview (continued)
ICON Long/Short Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund-Class I 10/1/02 17.42% N/A 18.73%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 14.58% 19.55%
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund-Class C 10/17/02 16.61% N/A 14.83%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 14.58% 17.13%
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund-Class Z 5/6/04 N/A N/A -0.36%*
- -------------------------------------------------------------------------------------------
S&P 1500 Index 1.02%*
- -------------------------------------------------------------------------------------------
</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 limitations,
returns would have been lower. The limitation provisions may be terminated in
the future. Class Z shares are available only to institutional investors.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[BAR CHART]
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.
66 Management Overview
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Long/Short Fund and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first set of lines in the table below provide information about actual
account values and actual expenses, (with actual net expenses being limited to
2.30%, 1.55% and 1.30% based on a contractual commitment). The Example below
includes, but is not limited to, management fees, 12b-1 fees, fund accounting,
custody and transfer agent fees. However, the Example below does not include
client specific fees, such as the $15.00 fee charged to IRA accounts, or the
$15.00 fee charged for wire redemptions. The Example also does not include
portfolio trading commissions and related trading expenses, dividends on short
positions taken by the Fund. You may use this information, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second set of lines in the table below provide information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
Management Overview 67
Management Overview (continued)
ICON Long/Short Fund
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04* 9/30/04 4/1/04-9/30/04**
- ---------------------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 973.10 $11.35
- ---------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,013.50 $11.58
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
CLASS I
- ---------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 976.20 $ 7.66
- ---------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,017.25 $ 7.81
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
CLASS Z
- ---------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 996.40 $ 5.21
- ---------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,014.86 $ 5.27
(5% return before expenses)
- ---------------------------------------------------------------------------------------------
</Table>
* Class Z shares commenced operations May 6, 2004.
** Expenses are equal to the Fund's six-month expense ratios after limitation,
if any, of 2.30% (Class C), 1.55% (Class I) and 1.30% (Class Z), annualized,
multiplied by the average account value over the period, multiplied by
183/366, 183/366 and 147/366 respectively to reflect the one-half year or
date of inception.
68 Management Overview
Schedule of Investments
ICON Long/Short Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
COMMON STOCKS 97.8%
UNITED STATES OF AMERICA 89.2%
CONSUMER DISCRETIONARY 11.3%
APPAREL RETAIL 1.3%
12,200 The Dress Barn,
Inc.(a) $ 212,890
11,500 The Gymboree
Corporation(a) 165,600
------------
378,490
AUTOMOBILE MANUFACTURERS 1.2%
13,300 Ford Motor
Company 186,865
3,500 General Motors
Corporation 148,680
------------
335,545
CATALOG RETAIL 1.0%
16,400 Insight
Enterprises,
Inc.(a) 276,176
COMPUTER & ELECTRONICS RETAIL 1.2%
6,200 Best Buy Co.,
Inc. 336,288
HOMEBUILDING 1.1%
8,100 Hovnanian
Enterprises,
Inc.(a) 324,810
HOME IMPROVEMENT RETAIL 1.9%
10,100 Building
Materials Holding
Corporation 277,952
6,700 The Home Depot,
Inc. 262,640
------------
540,592
HOUSEWARES & SPECIALTIES 1.1%
5,800 Newell Rubbermaid
Inc. 116,232
11,000 Tupperware
Corporation 186,780
------------
303,012
TIRES & RUBBER 2.5%
16,200 Cooper Tire &
Rubber Company 326,754
35,300 The Goodyear Tire
& Rubber
Company(a) 379,122
------------
705,876
------------
TOTAL CONSUMER DISCRETIONARY 3,200,789
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
ENERGY 5.6%
OIL & GAS EQUIPMENT & SERVICES 2.2%
8,500 Maverick Tube
Corporation(a) $ 261,885
11,300 National-Oilwell,
Inc.(a) 371,318
------------
633,203
OIL & GAS EXPLORATION & PRODUCTION 2.8%
7,400 Patina Oil & Gas
Corporation 218,818
6,300 Petroleum
Development
Corporation(a) 276,066
5,900 Ultra Petroleum
Corp.(a) 289,395
------------
784,279
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 0.6%
3,100 Ashland Inc. 173,848
------------
TOTAL ENERGY 1,591,330
FINANCIAL 9.8%
CONSUMER FINANCE 2.7%
11,500 Cash America
International,
Inc. 281,290
12,700 Providian
Financial
Corporation(a) 197,358
12,000 World Acceptance
Corporation(a) 279,000
------------
757,648
INSURANCE BROKERS 1.1%
5,400 Aon Corporation 155,196
4,000 Hilb Rogal and
Hobbs Company 144,880
------------
300,076
LIFE & HEALTH INSURANCE 2.1%
7,500 Protective Life
Corporation 294,825
4,300 StanCorp
Financial Group,
Inc. 306,160
------------
600,985
MULTI-LINE INSURANCE 1.2%
5,300 HCC Insurance
Holdings, Inc. 159,795
3,000 Loews Corporation 175,500
------------
335,295
</Table>
Schedule of Investments 69
Schedule of Investments (continued)
ICON Long/Short Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
PROPERTY & CASUALTY INSURANCE 1.6%
4,100 Philadelphia
Consolidated
Holding Corp.(a) $ 225,992
6,100 Selective
Insurance Group,
Inc. 226,920
------------
452,912
THRIFTS & MORTGAGE FINANCE 1.1%
7,600 Doral Financial
Corp. 315,172
------------
TOTAL FINANCIAL 2,762,088
HEALTH CARE 7.5%
HEALTH CARE SERVICES 2.6%
13,300 Dendrite
International,
Inc.(a) 214,396
3,100 Quest Diagnostics
Incorporated 273,482
7,650 Renal Care Group,
Inc.(a) 246,559
------------
734,437
MANAGED HEALTH CARE 4.9%
2,900 Anthem, Inc.(a) 253,025
7,200 Centene
Corporation(a) 306,576
3,900 CIGNA Corporation 271,557
5,200 Coventry Health
Care, Inc.(a) 277,524
3,800 UnitedHealth
Group
Incorporated 280,212
------------
1,388,894
------------
TOTAL HEALTH CARE 2,123,331
INDUSTRIALS 18.5%
AEROSPACE & DEFENSE 5.0%
7,100 Curtiss-Wright
Corporation 406,333
10,000 EDO Corporation 277,500
6,000 Lockheed Martin
Corporation 334,680
7,100 Northrop Grumman
Corporation 378,643
------------
1,397,156
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
AIRLINES 2.1%
24,100 Frontier
Airlines, Inc.(a) $ 185,088
23,200 Northwest
Airlines
Corporation(a) 190,472
15,100 SkyWest, Inc. 227,255
------------
602,815
BUILDING PRODUCTS 0.6%
7,300 Griffon
Corporation(a) 154,030
COMMERCIAL PRINTING 0.7%
6,700 John H. Harland
Company 210,045
EMPLOYMENT SERVICES 0.9%
10,200 Labor Ready,
Inc.(a) 143,004
13,100 Spherion
Corporation(a) 102,442
------------
245,446
INDUSTRIAL MACHINERY 1.9%
7,800 The Manitowoc
Company, Inc. 276,588
9,800 Watts Water
Technologies,
Inc. 263,130
------------
539,718
RAILROADS 2.9%
10,600 Burlington
Northern Santa Fe
Corporation 406,086
13,900 Norfolk Southern
Corporation 413,386
------------
819,472
TRUCKING 4.4%
10,900 Arkansas Best
Corporation 399,158
20,000 Knight
Transportation,
Inc.(a) 428,400
9,000 Yellow Roadway
Corporation(a) 422,010
------------
1,249,568
------------
TOTAL INDUSTRIALS 5,218,250
INFORMATION TECHNOLOGY 9.1%
COMMUNICATIONS EQUIPMENT 1.8%
21,200 NETGEAR, Inc.(a) 259,064
27,000 SpectraLink
Corporation 256,500
------------
515,564
</Table>
70 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
COMPUTER STORAGE & PERIPHERALS 2.1%
22,800 Overland Storage,
Inc.(a) $ 318,972
13,700 Synaptics
Incorporated(a) 276,192
------------
595,164
HOME ENTERTAINMENT SOFTWARE 1.3%
15,900 Activision,
Inc.(a) 220,533
7,800 THQ Inc.(a) 151,788
------------
372,321
INTERNET SOFTWARE & SERVICES 2.1%
9,900 Digital River,
Inc.(a) 294,822
9,500 j2 Global
Communications,
Inc.(a) 300,105
------------
594,927
SEMICONDUCTORS 1.0%
9,300 Cree, Inc.(a) 283,929
TECHNOLOGY DISTRIBUTORS 0.8%
12,300 Agilysys, Inc. 212,667
------------
TOTAL INFORMATION TECHNOLOGY 2,574,572
LEISURE & CONSUMER STAPLES 8.6%
FOOD DISTRIBUTORS 1.6%
8,800 Central European
Distribution
Corporation(a) 196,592
5,300 Nash Finch
Company 166,685
19,300 Spartan Stores,
Inc.(a) 77,393
------------
440,670
PACKAGED FOODS & MEATS 3.6%
5,500 General Mills,
Inc. 246,950
6,900 H.J. Heinz
Company 248,538
7,500 Ralcorp Holdings,
Inc.(a) 270,750
11,200 Sara Lee
Corporation 256,032
------------
1,022,270
PHOTOGRAPHIC PRODUCTS 1.2%
10,500 Eastman Kodak
Company 338,310
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
TOBACCO 2.2%
3,700 Altria Group,
Inc. $ 174,048
3,300 Reynolds
American, Inc. 224,532
5,200 Universal
Corporation 232,128
------------
630,708
------------
TOTAL LEISURE & CONSUMER
STAPLES 2,431,958
MATERIALS 15.0%
COMMODITY CHEMICALS 1.4%
7,300 Headwaters
Incorporated(a) 225,278
7,500 Lyondell Chemical
Company 168,450
------------
393,728
CONSTRUCTION MATERIALS 2.6%
5,000 Eagle Materials
Inc. 356,500
7,600 Florida Rock
Industries, Inc. 372,324
------------
728,824
DIVERSIFIED CHEMICALS 2.8%
2,800 Eastman Chemical
Company 133,140
3,400 FMC
Corporation(a) 165,138
18,900 Hercules
Incorporated(a) 269,325
13,200 Penford
Corporation 229,812
------------
797,415
FERTILIZERS & AGRICULTURAL CHEMICALS 2.3%
27,200 The Mosaic Co.(a) 473,008
2,800 The Scotts
Company(a) 179,620
------------
652,628
METAL & GLASS CONTAINERS 2.6%
23,000 Owens-Illinois,
Inc.(a) 368,000
15,900 Pactiv
Corporation(a) 369,675
------------
737,675
</Table>
Schedule of Investments 71
Schedule of Investments (continued)
ICON Long/Short Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
STEEL 3.3%
14,700 Allegheny
Technologies,
Inc. $ 268,275
9,000 Steel Dynamics,
Inc. 347,580
12,000 Steel
Technologies Inc. 307,404
------------
923,259
------------
TOTAL MATERIALS 4,233,529
TELECOMMUNICATIONS & UTILITIES 3.8%
MULTI-UTILITIES & UNREGULATED POWER 3.8%
6,400 Constellation
Energy Group 254,976
11,100 ONEOK, Inc. 288,822
7,000 Sempra Energy 253,330
29,800 Sierra Pacific
Resources(a) 266,710
------------
1,063,838
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 1,063,838
------------
TOTAL UNITED STATES OF AMERICA 25,199,685
AMERICAN DEPOSITARY RECEIPTS 4.0%
BRAZIL 0.4%
TELECOMMUNICATIONS & UTILITIES 0.4%
WIRELESS TELECOMMUNICATION SERVICES 0.4%
3,700 Telemig Celular
Participacoes
S.A. 105,376
------------
TOTAL BRAZIL 105,376
ISRAEL 0.6%
WIRELESS TELECOMMUNICATION SERVICES 0.6%
22,500 Partner
Communications
Company, Ltd (a) 154,125
------------
TOTAL ISRAEL 154,125
MEXICO 1.40%
MATERIALS 0.7%
CONSTRUCTION MATERIALS 0.7%
7,205 Cemex S.A. de
C.V. 202,749
------------
TOTAL MATERIALS 202,749
------------
TELECOMMUNICATIONS & UTILITIES 0.7%
WIRELESS TELECOMMUNICATION SERVICES 0.7%
5,100 America Movil
S.A. de C.V. 199,053
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 199,053
------------
TOTAL MEXICO 401,802
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
RUSSIA 1.6%
TELECOMMUNICATIONS & UTILITIES 1.6%
WIRELESS TELECOMMUNICATION SERVICES 1.6%
1,900 AO VimpelCom(a) $ 206,720
1,700 Mobile
Telesystems 246,483
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 453,203
------------
TOTAL RUSSIA 453,203
TOTAL AMERICAN DEPOSITARY
RECEIPTS 1,114,506
BERMUDA 1.7%
FINANCIAL 0.7%
REINSURANCE 0.7%
4,000 RenaissanceRe
Holdings Ltd. 206,320
------------
TOTAL FINANCIAL 206,320
INFORMATION TECHNOLOGY 1.0%
SEMICONDUCTORS 1.0%
10,600 Marvell
Technology Group
Ltd.(a) 276,978
------------
TOTAL INFORMATION TECHNOLOGY 276,978
------------
TOTAL BERMUDA 483,298
CHINA 0.9%
INFORMATION TECHNOLOGY 0.9%
SEMICONDUCTORS 0.9%
23,100 O2Micro
International
Limited(a) 248,094
------------
TOTAL INFORMATION TECHNOLOGY 248,094
------------
TOTAL CHINA 248,094
GERMANY 0.5%
CONSUMER DISCRETIONARY 0.5%
AUTOMOBILE MANUFACTURERS 0.5%
3,700 DaimlerChrysler
AG 153,254
------------
TOTAL CONSUMER DISCRETIONARY 153,254
------------
TOTAL GERMANY 153,254
</Table>
72 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
BAHAMAS 1.5%
ENERGY 1.5%
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 1.5%
9,500 Teekay Shipping
Corporation $ 409,355
------------
TOTAL ENERGY 409,355
------------
TOTAL BAHAMAS 409,355
------------
TOTAL COMMON STOCKS
(COST $25,664,773) 27,608,192
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
SHORT-TERM INVESTMENT 4.0%
VARIABLE RATE DEMAND NOTE 4.0%
$1,130,824 American Family
Demand Note,
1.453%# $ 1,130,824
------------
TOTAL SHORT-TERM INVESTMENT
(COST $1,130,824) 1,130,824
TOTAL INVESTMENTS 101.8%
(COST $26,795,597) 28,739,016
------------
LIABILITIES LESS OTHER ASSETS
(1.8%) (511,224)
------------
NET ASSETS 100.0% $ 28,227,792
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
Dates shown on securities are due dates of the obligations.
Schedule of Investments 73
Schedule of Short Securities
ICON Long/Short Fund
September 30, 2004
<Table>
<Caption>
SHORT SECURITIES SHARES MARKET VALUE
- -----------------------------------------------
Arch Coal, Inc.(a) 8,400 $ 298,116
Massey Energy Company(a) 10,800 312,444
Pride International,
Inc.(a) 16,000 316,640
Rowan Companies, Inc.(a) 12,100 319,440
------ ------------
TOTAL SHORT SECURITIES
(PROCEEDS OF $959,216) 47,300 $ 1,246,640
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
74 Schedule of Short Securities
Statements of Assets and Liabilities
September 30, 2004
<Table>
<Caption>
ICON ICON ICON ICON
ICON CORE COVERED EQUITY LONG/SHORT
BOND FUND EQUITY FUND CALL FUND INCOME FUND FUND
----------- ------------ ----------- ------------ -----------
ASSETS
Investments, at cost $58,580,849 $ 84,598,203 $42,400,297 $108,017,188 $26,795,597
----------- ------------ ----------- ------------ -----------
Investments, at value 60,289,161 101,186,366 46,040,691 118,778,613 28,739,016
Cash - 3,716 141,741 15,443 -
Cash-segregated account - - - - 350,460
Deposits for short sales - - - - 1,465,488
Receivables:
Fund shares sold 1,039,416 725,515 202,859 612,754 178,144
Investments sold - 684,973 99,791 - 733,654
Interest 897,956 23 394 221,613 1,594
Dividends - 55,233 38,053 174,546 34,152
Expense reimbursements by Adviser - - 11,008 32,545 10,014
Other assets 3,193 5,011 2,241 6,186 1,383
----------- ------------ ----------- ------------ -----------
Total Assets 62,229,726 102,660,837 46,536,778 119,841,700 31,513,905
----------- ------------ ----------- ------------ -----------
LIABILITIES
Options written, at value (premiums
received of $0, $0, $1,035,052, $0 and
$0, respectively) - - 1,376,038 - -
Common stocks sold short, at value
(proceeds of $0, $0, $0, $0 and $959,216,
respectively) - - - - 1,246,640
Payables:
Due to custodian bank - - - 63,099 -
Investments bought - 2,040,415 118,906 - 1,962,862
Fund shares redeemed 238,117 14,045 13,144 37,884 4,137
Distributions due to shareholders 602 - - 37,526 -
Advisory fees & fee waiver recoupment 33,418 59,507 26,669 105,705 18,618
Accrued distribution fees 12,431 51,628 9,668 24,224 7,157
Fund accounting, custodial and transfer
agent fees 14,740 18,163 12,961 19,708 11,239
Income and excise tax payable - - - 32,545 -
Administration fees 2,368 3,874 1,739 4,594 998
Accrued expenses 54,807 63,395 48,607 65,788 34,462
----------- ------------ ----------- ------------ -----------
Total Liabilities 356,483 2,251,027 1,607,732 391,073 3,286,113
----------- ------------ ----------- ------------ -----------
NET ASSETS - ALL SHARE CLASSES $61,873,243 $100,409,810 $44,929,046 $119,450,627 $28,227,792
=========== ============ =========== ============ ===========
NET ASSETS - CLASS I $61,501,903 $ 47,272,841 $42,962,368 $117,551,593 $24,479,671
=========== ============ =========== ============ ===========
NET ASSETS - CLASS C $ 370,669 $ 53,101,085 $ 1,963,502 $ 1,884,636 $ 3,715,942
=========== ============ =========== ============ ===========
NET ASSETS - CLASS Z $ 671 $ 35,884 $ 3,176 $ 14,398 $ 32,179
=========== ============ =========== ============ ===========
NET ASSETS CONSIST OF
Paid-in capital $59,651,948 $ 91,960,171 $39,988,278 $107,158,720 $25,120,554
Accumulated undistributed net investment
income/ (loss) 153,123 - - 690,514 -
Accumulated undistributed net realized
gain/(loss) from investments 359,860 (8,138,524) 1,641,360 839,968 1,451,243
Unrealized appreciation/(depreciation) on
securities, written options and
securities sold short 1,708,312 16,588,163 3,299,408 10,761,425 1,655,995
----------- ------------ ----------- ------------ -----------
NET ASSETS $61,873,243 $100,409,810 $44,929,046 $119,450,627 $28,227,792
=========== ============ =========== ============ ===========
Shares outstanding (unlimited shares
authorized, no par value)
Class I 5,846,396 3,699,472 3,242,917 8,203,736 1,758,443
Class C 35,163 4,280,222 150,399 132,093 270,710
Class Z 64 2,805 239 1,005 2,309
Net asset value (offering price and
redemption price per share)
Class I $ 10.52 $ 12.78 $ 13.25 $ 14.33 $ 13.92
Class C $ 10.54 $ 12.41 $ 13.06 $ 14.27 $ 13.73
Class Z $ 10.51 $ 12.79 $ 13.29 $ 14.33 $ 13.94
</Table>
The accompanying notes are an integral part of the financial statements.
Financial Statements 75
Statements of Operations
For the year ended September 30, 2004
<Table>
<Caption>
ICON ICON ICON ICON
ICON CORE COVERED EQUITY LONG/SHORT
BOND FUND EQUITY FUND CALL FUND INCOME FUND FUND
---------- ----------- ---------- ----------- ----------
INVESTMENT INCOME
Interest $2,604,226 $ 10,940 $ 15,738 $ 374,729 $ 20,525
Dividends (net of foreign tax of $0,
$3,007, $1,846, $11,627, and $904,
respectively) - 644,594 273,976 2,850,418 156,919
---------- ----------- ---------- ----------- ----------
Total Investment Income 2,604,226 655,534 289,714 3,225,147 177,444
---------- ----------- ---------- ----------- ----------
EXPENSES
Advisory fees 280,439 663,062 234,218 672,154 134,488
Distribution fees:
Class I 116,059 107,900 75,978 221,402 36,038
Class C 2,686 452,357 8,370 10,548 14,190
Fund accounting, custodial and transfer
agent fees 104,787 116,740 105,180 114,511 74,548
Administration fees 23,336 43,067 15,378 44,019 7,722
Audit fees 14,962 28,396 9,918 29,344 4,979
Registration fees
Class I 19,181 16,481 19,372 21,998 15,158
Class C 15,637 17,285 13,413 14,534 13,283
Legal fees 1,899 3,696 1,221 3,226 588
Insurance expense 4,301 6,934 1,716 3,240 840
Trustee fees and expenses 4,010 7,402 2,580 6,724 1,343
Shareholder reports 20,056 27,192 13,002 30,441 6,568
Income and excise tax - - - 50,981 -
Interest expense 104 6,978 4,829 - 13,294
Dividends on short positions - - - - 29,468
Other expenses 11,935 19,203 12,641 10,950 10,399
---------- ----------- ---------- ----------- ----------
Total expenses before expense
(reimbursement)/recoupment 619,392 1,516,693 517,816 1,234,072 362,906
---------- ----------- ---------- ----------- ----------
Expense (reimbursement)/recoupment by
Adviser due to expense limitation
agreement (9,844) - (58,657) 55,807 (77,195)
Expense reimbursement by Adviser for
income and excise tax paid - - - (50,981) -
---------- ----------- ---------- ----------- ----------
Net Expenses 609,548 1,516,693 459,159 1,238,898 285,711
---------- ----------- ---------- ----------- ----------
NET INVESTMENT INCOME (LOSS) 1,994,678 (861,159) (169,445) 1,986,249 (108,267)
---------- ----------- ---------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized gain/(loss) from:
Investment transactions 772,882 5,419,845 2,561,170 1,009,178 1,506,399
Written options - - (345,031) - -
Securities sold short - - - - 356,149
---------- ----------- ---------- ----------- ----------
Total net realized gain 772,882 5,419,845 2,216,139 1,009,178 1,862,548
---------- ----------- ---------- ----------- ----------
Change in net unrealized
appreciation/(depreciation) on
securities, written options and
securities sold short (160,120) 6,605,972 701,636 6,839,072 108,880
---------- ----------- ---------- ----------- ----------
Net realized and unrealized gain on
investments 612,762 12,025,817 2,917,775 7,848,250 1,971,428
---------- ----------- ---------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $2,607,440 $11,164,658 $2,748,330 $9,834,499 $1,863,161
========== =========== ========== =========== ==========
</Table>
The accompanying notes are an integral part of the financial statements.
76 Financial Statements
THIS PAGE INTENTIONALLY LEFT BLANK
Statements of Changes in Net Assets
<Table>
<Caption>
ICON BOND FUND ICON CORE EQUITY FUND
--------------------------------------- ---------------------------------------
FOR THE YEAR
OCTOBER 1, 2002*
YEAR ENDED (INCEPTION) TO YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------ ------------------ ------------------
OPERATIONS
Net investment income/(loss) $ 1,994,678 $ 1,401,247 $ (861,159) $ (467,910)
Net realized gain/(loss) from
investment transactions, written
options and securities sold short 772,882 (294,006) 5,419,845 (3,558,157)
Change in unrealized appreciation/
(depreciation) on securities,
written options and securities
sold short (160,120) 1,868,432 6,605,972 13,315,101
------------------ ------------------ ------------------ ------------------
Net increase in net assets resulting
from operations 2,607,440 2,975,673 11,164,658 9,289,034
------------------ ------------------ ------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income
Class I (1,972,705) (1,387,266) - -
Class C (11,095) (7,464) - -
Class Z (10) - - -
Net realized gains
Class I - - - -
Class C - - - -
Class Z - - - -
------------------ ------------------ ------------------ ------------------
Net decrease from dividends and
distributions (1,983,810) (1,394,730) - -
------------------ ------------------ ------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold
Class I 33,416,648 56,519,622 16,988,164 15,777,863
Class C 342,757 372,769 18,403,784 17,459,010
Class Z 645 35,784
Reinvested dividends and
distributions
Class I 1,971,854 1,384,911 - -
Class C 10,191 7,462 - -
Class Z 10 - - -
Shares repurchased
Class I (13,848,513) (20,136,882) (13,079,331) (25,007,736)
Class C (241,960) (130,844) (6,132,345) (14,463,137)
Class Z - - (1,884) -
------------------ ------------------ ------------------ ------------------
Net increase/(decrease) from fund
share transactions 21,651,632 38,017,038 16,214,172 (6,234,000)
------------------ ------------------ ------------------ ------------------
Total net increase in net assets 22,275,262 39,597,981 27,378,830 3,055,034
NET ASSETS
Beginning of period 39,597,981 - 73,030,980 69,975,946
------------------ ------------------ ------------------ ------------------
End of period $ 61,873,243 $ 39,597,981 $100,409,810 $ 73,030,980
================== ================== ================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
78 Financial Statements
<Table>
<Caption>
ICON COVERED CALL FUND ICON EQUITY INCOME FUND ICON LONG/SHORT FUND
--------------------------------------- --------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR
OCTOBER 1, 2002* OCTOBER 1, 2002* OCTOBER 1, 2002*
YEAR ENDED (INCEPTION) TO YEAR ENDED (INCEPTION) TO YEAR ENDED (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ (169,445) $ (93,978) $ 1,986,249 $ 555,722 $ (108,267) $ (48,508)
2,216,139 513,942 1,009,178 491,012 1,862,548 (172,889)
701,636 2,597,772 6,839,072 3,922,353 108,880 1,547,115
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
2,748,330 3,017,736 9,834,499 4,969,087 1,863,161 1,325,718
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
- - (1,955,243) (551,309) - -
- - (18,936) (4,458) - -
- - (169) - - -
(813,994) - - - (122,911) -
(11,304) - - - (7,238) -
- - - - - -
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(825,298) - (1,974,348) (555,767) (130,149) -
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
28,282,997 21,535,397 84,251,666 44,637,115 21,568,653 10,958,821
1,905,597 177,231 1,466,895 637,549 3,489,408 436,593
3,139 13,644 32,109
802,492 - 1,849,956 528,515 121,354 -
10,975 - 17,806 4,458 7,238 -
- - 169 - - -
(9,000,921) (3,564,680) (18,768,921) (7,026,892) (8,589,480) (2,533,670)
(127,212) (36,737) (296,277) (138,508) (129,159) (192,805)
- - (19) - - -
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
21,877,067 18,111,211 68,534,919 38,642,237 16,500,123 8,668,939
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
23,800,099 21,128,947 76,395,070 43,055,557 18,233,135 9,994,657
21,128,947 - 43,055,557 - 9,994,657 -
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$44,929,046 $21,128,947 $119,450,627 $43,055,557 $28,227,792 $ 9,994,657
================== ================== ================== ================== ================== ==================
</Table>
Financial Statements 79
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON BOND FUND ICON CORE EQUITY FUND
--------------------------------------- ---------------------------------------
FOR THE YEAR
OCTOBER 1, 2002*
YEAR ENDED (INCEPTION) TO YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------ ------------------ ------------------
TRANSACTIONS IN FUND SHARES
Shares sold
Class I 3,199,688 5,630,081 1,380,045 1,599,134
Class C 32,748 36,999 1,535,906 1,836,853
Class Z 63 - 2,959 -
Reinvested dividends and
distributions
Class I 188,665 135,559 - -
Class C 979 726 - -
Class Z 1 - - -
Shares repurchased
Class I (1,319,789) (1,987,808) (1,060,722) (2,665,419)
Class C (23,478) (12,811) (511,842) (1,544,876)
Class Z - (154)
------------------ ------------------ ------------------ ------------------
Net increase/(decrease) 2,078,877 3,802,746 1,346,192 (774,308)
------------------ ------------------ ------------------ ------------------
Shares outstanding beginning of
period 3,802,746 - 6,636,307 7,410,615
------------------ ------------------ ------------------ ------------------
Shares outstanding end of period 5,881,623 3,802,746 7,982,499 6,636,307
================== ================== ================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding short-term securities and written options)
Purchase of securities (including
short sale transactions) $14,692,029 $32,843,432 $117,495,384 $121,427,409
Proceeds from sales of securities
(including short sale
transactions) 14,436,998 4,586,062 101,917,674 129,023,828
Purchases of long-term U.S.
government securities 22,260,709 14,995,428 - -
Proceeds from sales of long-term
U.S. government securities 1,889,387 8,399,209 - -
ACCUMULATED UNDISTRIBUTED NET
INVESTMENT INCOME $ 153,123 $ 12,040 $ - $ -
================== ================== ================== ==================
</Table>
* The offering of Class I shares commenced on October 1, 2002. The offering of
Class C shares commenced on October 21, 2002 (ICON Bond Fund), November 21,
2002 (ICON Covered Call Fund), November 8, 2002 (ICON Equity Income Fund),
and October 17, 2002 (ICON Long/Short Fund). The offering of Class Z shares
commenced on May 6, 2004 for all Funds except Equity Income, which commenced
on May 10, 2004.
The accompanying notes are an integral part of the financial statements.
80 Financial Statements
<Table>
<Caption>
ICON COVERED CALL FUND ICON EQUITY INCOME FUND ICON LONG/SHORT FUND
--------------------------------------- --------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR
OCTOBER 1, 2002* OCTOBER 1, 2002* OCTOBER 1, 2002*
YEAR ENDED (INCEPTION) TO YEAR ENDED (INCEPTION) TO YEAR ENDED (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
2,169,073 2,020,657 5,938,018 4,069,794 1,570,724 1,055,319
147,349 15,317 104,841 60,013 257,198 42,776
239 - 995 - 2,309 -
63,040 - 128,188 47,549 9,511 -
877 - 1,248 405 574 -
- - 12 - - -
(681,412) (328,441) (1,336,866) (642,948) (632,107) (245,004)
(9,841) (3,303) (21,597) (12,817) (9,606) (20,232)
- (1) -
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
1,689,325 1,704,230 4,814,838 3,521,996 1,198,603 832,859
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
1,704,230 - 3,521,996 - 832,859 -
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
3,393,555 1,704,230 8,336,834 3,521,996 2,031,462 832,859
================== ================== ================== ================== ================== ==================
$74,412,247 $45,565,265 $111,360,137 $47,049,615 $38,171,546 $19,387,249
53,342,570 28,417,692 44,139,424 9,058,288 22,620,730 11,575,765
- - - - - -
- - - - - -
$ - $ - $ 690,514 $ 14,605 $ - $ -
================== ================== ================== ================== ================== ==================
</Table>
Financial Statements 81
Financial Highlights
<Table>
<Caption>
ICON BOND FUND
------------------------------------------
CLASS I
FOR THE YEAR
CLASS I OCTOBER 1, 2002
FOR THE YEAR ENDED (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
Net asset value, beginning of period $ 10.41 $ 10.00
------------------ ------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(x) 0.45 0.42
Net realized and unrealized gains/(losses) on investments 0.10 0.38
------------------ ------------------
Total from investment operations 0.55 0.80
------------------ ------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.44) (0.39)
Distributions from net realized gains 0.00 0.00
------------------ ------------------
Total distributions (0.44) (0.39)
------------------ ------------------
Net asset value, end of period $ 10.52 $ 10.41
================== ==================
Total return* 5.41% 8.19%
Net assets, end of period (in thousands) $61,502 $39,338
Average net assets for the period (in thousands) $46,295 $33,787
Ratio of expenses to average net assets(a)
Before expense limitation/recoupment 1.29% 1.45%
After expense limitation/recoupment 1.30% 1.30%
Ratio of net investment income to average net assets(a)
Before expense limitation/recoupment 4.28% 4.01%
After expense limitation/recoupment 4.27% 4.16%
Portfolio turnover rate(b) 37.98% 41.65%
</Table>
(x) Calculated using the average share method.
* The total return calculation is for the period indicated.
(a) Annualized for periods less than a year.
(b) Portfolio turnover is calculated at the Fund level. The rate shown is for
the longest period indicated of the three share classes.
The accompanying notes are an integral part of the financial statements.
82 Financial Highlights
<Table>
<Caption>
ICON BOND FUND
- ----------------------------------------------------------------------------
CLASS C CLASS Z
FOR THE PERIOD FOR THE PERIOD
CLASS C OCTOBER 21, 2002 MAY 6, 2004
FOR THE YEAR ENDED (INCEPTION) TO (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004
------------------ ------------------ ------------------
$10.42 $ 9.79 $10.26
------------------ ------------------ ------------------
0.38 0.37 0.46
0.12 0.60 (0.02)
------------------ ------------------ ------------------
0.50 0.97 0.44
------------------ ------------------ ------------------
(0.38) (0.34) (0.19)
0.00 0.00 0.00
------------------ ------------------ ------------------
(0.38) (0.34) (0.19)
------------------ ------------------ ------------------
$10.54 $10.42 $10.51
================== ================== ==================
4.83% 9.98% 4.33%
$ 371 $ 260 $ 1
$ 317 $ 199 $ 1
6.84% 2.05% 0.86%
1.90% 1.90% 0.86%
3.63% 3.48% 4.60%
8.57% 3.63% 4.60%
37.98% 41.65% 37.98%
</Table>
Financial Highlights 83
Financial Highlights (continued)
<Table>
<Caption>
ICON CORE EQUITY FUND
---------------------------------------------------------------------------------
CLASS I
FOR THE PERIOD
CLASS I CLASS I CLASS I OCTOBER 12, 2000
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 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) (0.07) (0.04) (0.07) (0.05)
Net realized and unrealized
gains/(losses) on investments 1.73 1.66 (0.20) 0.09
------------------ ------------------ ------------------ ------------------
Total from investment operations 1.66 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 $ 12.78 $ 11.12 $ 9.50 $ 10.04
================== ================== ================== ==================
Total return* 14.93% 17.05% (3.23)% 0.40%
Net assets, end of period (in thousands) $47,273 $37,603 $42,232 $23,261
Average net assets for the period (in
thousands) $43,044 $34,007 $37,577 $23,802
Ratio of expenses to average net
assets(a) 1.33% 1.39% 1.36% 1.60%
Ratio of net investment loss to average
net assets(a) (0.59)% (0.37)% (0.58)% (0.36)%
Portfolio turnover rate(b) 116.26% 188.07% 107.82% 124.61%
</Table>
(x) Calculated using the average share method.
* The total return calculation is for the period indicated.
(a) Annualized for periods less than a year.
(b) Portfolio turnover is calculated at the Fund level. The rate shown is for
the longest period indicated of the three share classes.
+ The total return for the Class C shares for the period November 28, 2000
(inception) to September 30, 2001 has been restated due to a mathematical
error. The previous total return was (0.20%) (See Note 7).
The accompanying notes are an integral part of the financial statements.
84 Financial Highlights
<Table>
<Caption>
ICON CORE EQUITY FUND
-----------------------------------------------------------------------------------------------------------
CLASS C CLASS Z
FOR THE PERIOD FOR THE PERIOD
CLASS C CLASS C CLASS C NOVEMBER 28, 2000 MAY 6, 2004
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED (INCEPTION) TO (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2002 SEPTEMBER 30, 2001 SEPTEMBER 30, 2004
------------------- ------------------- ------------------- ------------------- -------------------
$ 10.88 $ 9.36 $ 9.98 $10.62 $12.07
------------------- ------------------- ------------------- ------------------- -------------------
(0.16) (0.11) (0.15) (0.10) (0.03)
1.69 1.63 (0.20) (0.54) 0.75
------------------- ------------------- ------------------- ------------------- -------------------
1.53 1.52 (0.35) (0.64) 0.72
------------------- ------------------- ------------------- ------------------- -------------------
0.00 0.00 0.00 0.00 0.00
0.00 0.00 (0.27) 0.00 0.00
------------------- ------------------- ------------------- ------------------- -------------------
0.00 0.00 (0.27) 0.00 0.00
------------------- ------------------- ------------------- ------------------- -------------------
$ 12.41 $ 10.88 $ 9.36 $ 9.98 $12.79
=================== =================== =================== =================== ===================
14.06% 16.24% (4.07)% (6.03)%+ 5.97%
$53,101 $35,428 $27,744 $6,324 $ 36
$45,114 $30,459 $19,849 $2,920 $ 32
2.08% 2.14% 2.11% 2.23% 1.12%
(1.34)% (1.12)% (1.33)% (1.24)% (0.28)%
116.26% 188.07% 107.82% 124.61% 116.26%
</Table>
Financial Highlights 85
Financial Highlights (continued)
<Table>
<Caption>
ICON COVERED CALL FUND
------------------------------------------
CLASS I
FOR THE YEAR
CLASS I OCTOBER 1, 2002
FOR THE YEAR ENDED (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
Net asset value, beginning of period $ 12.40 $ 10.00
------------------ ------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment (loss)(x) (0.07) (0.07)
Net realized and unrealized gains on investments 1.36 2.47
------------------ ------------------
Total from investment operations 1.29 2.40
------------------ ------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income 0.00 0.00
Distributions from net realized gains (0.44) 0.00
------------------ ------------------
Total distributions (0.44) 0.00
------------------ ------------------
Net asset value, end of period $ 13.25 $ 12.40
================== ==================
Total return* 10.53% 24.00%
Net assets, end of period (in thousands) $42,962 $20,981
Average net assets for the period (in thousands) $30,305 $14,544
Ratio of expenses to average net assets(a)
Before expense limitation 1.60% 2.07%
After expense limitation 1.45% 1.45%
Ratio of net investment income/(loss) to average net
assets(a)
Before expense limitation (0.67)% (1.27)%
After expense limitation (0.52)% (0.65)%
Portfolio turnover rate(b) 167.57% 184.24%
</Table>
(x) Calculated using the average share method.
* The total return calculation is for the period indicated.
(a) Annualized for periods less than a year.
(b) Portfolio turnover is calculated at the Fund level. The rate shown is for
the longest period indicated of the three share classes.
The accompanying notes are an integral part of the financial statements.
86 Financial Highlights
<Table>
<Caption>
ICON COVERED CALL FUND
- ----------------------------------------------------------------------------
CLASS C CLASS Z
FOR THE PERIOD FOR THE PERIOD
CLASS C NOVEMBER 21, 2002 MAY 6, 2004
FOR THE YEAR ENDED (INCEPTION) TO (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004
------------------ ------------------ ------------------
$12.32 $10.75 $12.86
------------------ ------------------ ------------------
(0.16) (0.17) (0.01)
1.34 1.74 0.44
------------------ ------------------ ------------------
1.18 1.57 0.43
------------------ ------------------ ------------------
0.00 0.00 0.00
(0.44) 0.00 0.00
------------------ ------------------ ------------------
(0.44) 0.00 0.00
------------------ ------------------ ------------------
$13.06 $12.32 $13.29
================== ================== ==================
9.69% 14.60% 3.34%
$1,964 $ 148 $ 3
$ 838 $ 50 $ 2
3.89% 2.83% 1.12%
2.20% 2.20% 1.12%
(2.93)% (2.13)% (0.11)%
(1.23)% (1.50)% (0.11)%
167.57% 184.24% 167.57%
</Table>
Financial Highlights 87
Financial Highlights (continued)
<Table>
<Caption>
ICON EQUITY INCOME FUND
-------------------------------------------
CLASS I
FOR THE YEAR
CLASS I OCTOBER 1, 2002
FOR THE YEAR ENDED (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
Net asset value, beginning of period $ 12.22 $ 10.00
------------------ ------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(x) 0.31 0.25
Net realized and unrealized gains on investments 2.09 2.20
------------------ ------------------
Total from investment operations 2.40 2.45
------------------ ------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.29) (0.23)
Distributions from net realized gains 0.00 0.00
------------------ ------------------
Total distributions (0.29) (0.23)
------------------ ------------------
Net asset value, end of period $ 14.33 $ 12.22
================== ==================
Total return* 19.69% 24.72%
Net assets, end of period (in thousands) $117,552 $42,474
Average net assets for the period (in thousands) $ 88,318 $25,288
Ratio of expenses to average net assets(a)
Before expense limitation/recoupment 1.35% 1.72%
After expense limitation/recoupment 1.37% 1.45%
Ratio of net investment income/(loss) to average net
assets(a)
Before expense limitation/recoupment 2.25% 2.23%
After expense limitation/recoupment 2.23% 2.30%
Portfolio turnover rate(b) 51.84% 35.17%
</Table>
(x) Calculated using the average share method.
* The total return calculation is for the period indicated.
(a) Annualized for periods less than a year.
(b) Portfolio turnover is calculated at the Fund level. The rate shown is for
the longest period indicated of the three share classes.
(c) The limitation on expenses for Class Z shares occurred when the Adviser
reimbursed the Fund for excise and income taxes incurred during the period
(Note 5). These expenses were extraordinary expenses not subject to the
contractual expense limitation discussed in Note 2.
The accompanying notes are an integral part of the financial statements.
88 Financial Highlights
<Table>
<Caption>
ICON EQUITY INCOME FUND
------------------------------------------------------------------------
CLASS C CLASS Z
FOR THE PERIOD FOR THE PERIOD
CLASS C NOVEMBER 8, 2002 MAY 10, 2004
FOR THE YEAR ENDED (INCEPTION) TO (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004
------------------ ------------------ ------------------
$12.21 $10.63 $13.43
------------------ ------------------ ------------------
0.20 0.16 0.39
2.06 1.59 0.70
------------------ ------------------ ------------------
2.26 1.75 1.09
------------------ ------------------ ------------------
(0.20) (0.17) (0.19)
0.00 0.00 0.00
------------------ ------------------ ------------------
(0.20) (0.17) (0.19)
------------------ ------------------ ------------------
$14.27 $12.21 $14.33
================== ================== ==================
18.56% 16.63% 8.12%
$1,885 $ 581 $ 14
$1,053 $ 348 $ 12
3.47% 2.48% 1.11%
2.20% 2.20% 0.97%(c)
0.12% 1.10% 2.62%
1.40% 1.38% 2.76%
51.84% 35.17% 51.84%
</Table>
Financial Highlights 89
Financial Highlights (continued)
<Table>
<Caption>
ICON LONG/SHORT FUND
------------------------------------------
CLASS I
FOR THE YEAR
CLASS I OCTOBER 1, 2002
FOR THE YEAR ENDED (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
Net asset value, beginning of period $ 12.00 $10.00
------------------ ------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment (loss)(x) (0.08) (0.07)
Net realized and unrealized gains/(losses) on investments 2.16 2.07
------------------ ------------------
Total from investment operations 2.08 2.00
------------------ ------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income 0.00 0.00
Distributions from net realized gains (0.16) 0.00
------------------ ------------------
Total distributions (0.16) 0.00
------------------ ------------------
Net asset value, end of period $ 13.92 $12.00
================== ==================
Total return* 17.42% 20.00%
Net assets, end of period (in thousands) $24,480 $9,726
Average net assets for the period (in thousands) $14,374 $6,997
Ratio of expenses to average net assets(a)
Before expense limitation 2.15% 3.09%
After expense limitation(c) 1.74% 1.55%
Ratio of net investment income/(loss) to average net
assets(a)
Before expense limitation (1.03)% (2.20)%
After expense limitation (0.62)% (0.66)%
Portfolio turnover rate(b) 148.32% 162.25%
</Table>
(x) Calculated using the average share method.
* The total return calculation is for the period indicated.
(a) Annualized for periods less than a year.
(b) Portfolio turnover is calculated at the Fund level. The rate shown is for
the longest period indicated of the three share classes.
(c) The Fund's operating expenses, not including dividends on short positions,
are contractually limited to 2.30% for Class C, 1.55% for Class I, and 1.30%
for Class Z. The ratios in these financial highlights reflect the limitation
including the dividends on short positions.
The accompanying notes are an integral part of the financial statements.
90 Financial Highlights
<Table>
<Caption>
ICON LONG/SHORT FUND
- ----------------------------------------------------------------------------
CLASS C CLASS Z
FOR THE PERIOD FOR THE PERIOD
CLASS C OCTOBER 17, 2002 MAY 6, 2004
FOR THE YEAR ENDED (INCEPTION) TO (INCEPTION) TO
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003 SEPTEMBER 30, 2004
------------------ ------------------ ------------------
$11.92 $10.61 $13.99
------------------ ------------------ ------------------
(0.18) (0.15) (0.04)
2.15 1.46 (0.01)
------------------ ------------------ ------------------
1.97 1.31 (0.05)
------------------ ------------------ ------------------
0.00 0.00 0.00
(0.16) 0.00 0.00
------------------ ------------------ ------------------
(0.16) 0.00 0.00
------------------ ------------------ ------------------
$13.73 $11.92 $13.94
================== ================== ==================
16.61% 12.35% (0.36)%
$3,716 $ 269 $ 32
$1,417 $ 186 $ 29
3.70% 3.84% 1.98%
2.49% 2.30% 1.76%
(2.57)% (2.99)% (0.50)%
(1.35)% (1.45)% (0.28)%
148.32% 162.25% 148.32%
</Table>
Financial Highlights 91
Notes to Financial Statements
September 30, 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, Class I, Class C and Class Z. All classes
have equal rights as to earnings, assets and voting privileges except that each
Class may bear different distribution fees, registration costs and each Class
has exclusive voting rights with respect to its distribution plan. 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, such as limited gains and lack of liquidity of the underlying
securities, and are not suitable for all investors. The Long/Short Fund invests
short in securities; there are risks associated with selling short, including
the risk that the Long/Short Fund may have to cover its short position at a
higher price than the short sale, resulting in a loss. The Fund's loss on a
short sales is potentially unlimited as a loss occurs when the value of a
security sold short increases. There are also risks associated with small and
mid-cap investing, including limited product lines, less liquidity and small
market share.
92 Notes to Financial Statements
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of income and expenses during the
reporting period. Actual results could differ from these estimates.
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. 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.
Foreign securities traded in countries outside of the Western Hemisphere are
fair valued daily by utilizing the quotations of an independent pricing service,
unless the Funds' adviser determines that use of another valuation methodology
is appropriate. The pricing service uses statistical analyses and quantitative
models to adjust local market prices using factors such as subsequent movement
and changes in the prices of indexes, securities and exchange rates in other
markets in determining fair value as of the time a Fund calculates its net asset
value. 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
Notes to Financial Statements 93
Notes to Financial Statements (continued)
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 year ended September 30, 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.
When a Fund writes a put or call option, an amount equal to the premium received
is included in the Statement of Assets and Liabilities as a liability. The
amount of the liability is subsequently marked-to-market to reflect the current
market value of the option. Such liability is subject to off balance sheet risks
to the extent of any future increases in market value of the written options. If
an option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized. If a written call
option is exercised, a gain or loss is realized for the sale of the underlying
security and the proceeds from the sale are increased by the premium originally
received. If a written put option is assigned, 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
94 Notes to Financial Statements
a closing sale transaction, a gain or loss is realized. If the Fund exercises a
call, the cost of the security acquired is increased by the premium paid for the
call. If the Fund exercises a put option, a gain or loss is realized from the
sale of the underlying security, and the proceeds from such a sale are decreased
by the premium originally paid. Written and purchased options are non-income
producing securities.
SHORT SALES.
The Long/Short Fund may engage in short sales (selling securities it does not
own) as part of its normal investment activities. These short sales are
collateralized by cash equivalents or securities with the Fund's prime broker
and segregated account at the Fund's custodian. The collateral required is
determined daily by reference to the market value of the short positions. Such
collateral for the Fund is held by one broker. Dividend expense on short sales
is treated as an expense on the Statement of Operations. Liabilities for
securities sold short are reported at market value in the financial statements.
Such liabilities are subject to off-balance sheet risk to the extent of any
future increases in market value of the securities sold short. The ultimate
liability for securities sold short could exceed the liabilities recorded in the
Statement of Assets and Liabilities. Liabilities for securities sold short are
closed out by purchasing the applicable securities for delivery to the Fund's
prime broker.
INCOME TAXES.
The Funds intend to qualify as regulated investment companies under Subchapter M
of the Internal Revenue Code and, accordingly, the Funds will generally not be
subject to federal and state income taxes, or federal excise taxes to the extent
that they intend to make sufficient distributions of net investment income and
net realized capital 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.
Notes to Financial Statements 95
Notes to Financial Statements (continued)
INVESTMENT INCOME.
Dividend income is recorded on the ex-dividend date. Non-cash dividends included
in dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Discounts and
premiums on securities purchased are amortized over the life of the respective
securities.
INVESTMENT TRANSACTIONS.
Security transactions are accounted for as of trade date. Gains and losses on
securities sold are determined on the basis of identified cost.
ALLOCATION OF INCOME AND EXPENSES.
Each class of a Fund's shares bears expenses incurred specifically on its behalf
and, in addition, each class bears a portion of general expenses, based upon
relative net assets of each class. Expenses which cannot be directly attributed
to a specific fund in the Trust are apportioned between all funds in the Trust
based upon relative net assets. In calculating the net asset value per share of
each class, investment income, realized and unrealized gains and losses and
expenses other than class specific expenses are allocated daily to each class of
shares based upon the proportion of net assets of each class at the beginning of
each day.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES.
ICON Advisers, Inc. ("ICON") serves as investment adviser to the Funds and is
responsible for managing the Funds' portfolios of securities. ICON receives a
monthly management fee that is computed daily at an annual rate of 0.60% of
average daily nets assets of the Bond Fund, 0.75% of average daily net assets of
the Core Equity, Covered Call and Equity Income Funds, and 0.85% of average
daily net assets of the Long/Short Fund. 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, 1.30% for
Class I and 1.05% for Class Z shares of the Bond Fund, 2.20% for Class C, 1.45%
for Class I and 1.20% for Class Z shares of the Covered Call and Equity Income
Funds, and 2.30% for Class C, 1.55% for Class I and 1.30% for Class Z 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
96 Notes to Financial Statements
expenses exceed the expense limits in effect at the time the expenses were
reimbursed or at the time these payments are proposed. For the year ended
September 30, 2004, ICON's net reimbursement/(recoupment) $15,700 on Class C and
$(5,856) on Class I shares of the Bond Fund; $14,239 on Class C and $44,418 on
Class I shares of the Covered Call Fund; $12,851 on Class C and $(68,658) (prior
to reimbursement by ICON for excise and income tax) on Class I shares of the
Equity Income Fund; and $17,311 on Class C and $59,859 on Class I shares and $25
on Class Z shares of the Long/Short Fund, respectively. These expense
reimbursements are subject to recovery by ICON based on a rolling three-year
period.
During the period, ICON paid an excise and income tax liability for the Equity
Income Fund in the amount of $50,981.
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 0.055% on the first $500 million
of average daily net assets, 0.05% on the next $1 billion of average daily net
assets, and 0.04% on the average daily net assets in excess of $1.5 billion. The
Funds paid 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 through
July 2004. As of August 1 these minimums increased to $45,000 on Core Equity
Fund, $58,250 on Bond Fund, Covered Call Fund and Long/Short Fund and $48,750 on
the Equity Income Fund due to the addition of the Z shares. Any amount above
$100 million is charged 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 for
the Bond Fund, Covered Call Fund, Equity Income Fund and the Long/Short Fund.
The Core Equity Fund is charged 0.0125% on any amount over $100 million and
0.0075% on any amount over $200 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.
Notes to Financial Statements 97
Notes to Financial Statements (continued)
DISTRIBUTION FEES.
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act ("12b-1 Plan") under which the Funds are authorized to compensate the Funds'
distributor, ICON Distributors, Inc. ("IDI") (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 year ended September 30, 2004 the total
amounts paid or payable to IDI pursuant to the 12b-1 Plan were $2,686 on Class C
shares and $116,059 on Class I shares of the Bond Fund, $452,537 on Class C
shares and $107,900 on Class I shares of the Core Equity Fund, $8,370 on Class C
shares and $75,978 on Class I shares of the Covered Call Fund, $10,548 on Class
C shares and $221,402 on Class I shares of the Equity Income Fund, and $14,190
on Class C shares and $36,038 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. LINE OF CREDIT
The Funds have entered into Lines of Credit agreements with U.S. Bank that
allows the Funds to borrow funds, subject to certain conditions for temporary or
emergency purposes. Interest is calculated at prime, 4.75% at September 30,
2004. The maximum borrowing is limited to 25% of eligible securities held by the
portfolio subject to the following maximums:
<Table>
ICON Bond Fund $ 9,000,000
ICON Core Equity Fund $15,000,000
ICON Covered Call Fund $ 7,000,000
ICON Equity Income Fund $25,000,000
ICON Long/Short Fund $ 3,000,000
</Table>
There was no amount outstanding on the line of credit for any of the Funds as of
September 30, 2004.
A commitment fee of $500 per line of credit has been paid by each Fund.
98 Notes to Financial Statements
4. OPTIONS CONTRACTS WRITTEN
The number of option contracts written and the premiums received by the ICON
Covered Call Fund during the year period ended September 30, 2004, were as
follows:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- ----------------------------------------------------------------------------------------
Options outstanding, beginning of period 3,334 $ 241,662
Options written during period 72,803 5,337,013
Options expired during period (30,458) (1,822,445)
Options closed during period (28,855) (2,325,840)
Options assigned during period (5,048) (395,338)
------------------- -------------------
Options outstanding, end of period 11,776 $ 1,035,052
=================== ===================
</Table>
5. FEDERAL INCOME TAX
Income and capital gain distributions are determined in accordance with income
tax regulations that may differ from accounting principles that are generally
accepted in the United States of America. These differences are due to differing
treatments for items such as net short-term gains, deferrals of wash losses,
foreign currency transactions, net investment losses, and capital loss
carryovers.
The tax character of distributions paid during the periods indicated were as
follows:
<Table>
<Caption>
ORDINARY LONG-TERM RETURN OF TOTAL
INCOME CAPITAL GAIN CAPITAL DISTRIBUTIONS
- --------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2004
ICON Bond Fund $1,983,810 $ -- $ -- $1,963,810
ICON Core Equity Fund -- -- -- --
ICON Covered Call Fund 825,244 54 -- 825,298
ICON Equity Income Fund 1,974,348 -- -- 1,974,348
ICON Long/Short Fund 102,417 27,732 -- 130,149
YEAR ENDED SEPTEMBER 30, 2003
ICON Bond Fund 1,394,730 -- -- 1,394,730
ICON Core Equity Fund -- -- -- --
ICON Covered Call Fund -- -- -- --
ICON Equity Income Fund 555,767 -- -- 555,767
ICON Long/Short Fund -- -- -- --
</Table>
Notes to Financial Statements 99
Notes to Financial Statements (continued)
The aggregate composition by Fund of unrealized capital appreciation and
depreciation of investment securities for federal income tax purposes as of
September 30, 2004 are as follows:
<Table>
<Caption>
FEDERAL TAX UNREALIZED UNREALIZED NET
COST APPRECIATION (DEPRECIATION) APPRECIATION
- ---------------------------------------------------------------------------------------------
ICON Bond Fund $ 58,580,849 $ 1,917,539 $ (209,227) $ 1,708,312
ICON Core Equity Fund 84,598,203 17,489,902 (901,739) 16,588,163
ICON Covered Call Fund 41,835,498 3,889,259 (1,060,104) 2,829,155
ICON Equity Income Fund 108,075,826 12,810,978 (2,108,191) 10,702,787
ICON Long/Short Fund 25,836,381 2,730,295 (1,074,300) 1,655,995
</Table>
Accumulated capital losses noted below represent net capital loss carryovers as
of September 30, 2004 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.
During the year ended September 30, 2004, the following capital loss
carryforwards were used:
<Table>
ICON Bond Fund $ 716
ICON Core Equity Fund 3,759,872
ICON Covered Call Fund --
ICON Equity Income Fund --
ICON Long/Short Fund 445
</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.
<Table>
<Caption>
UNDISTRIBUTED UNDISTRIBUTED
ACCUMULATED ORDINARY LONG-TERM POST OCTOBER
CAPITAL LOSSES INCOME GAIN DEFERRALS
- ---------------------------------------------------------------------------------------------
ICON Bond Fund $ -- $ 153,122 $359,860 $ --
ICON Core Equity Fund 8,138,524 -- -- --
ICON Covered Call Fund -- 1,404,286 707,268 --
ICON Equity Income Fund -- 690,544 898,315 --
ICON Long/Short Fund -- 605,334 845,915 --
</Table>
The ICON Equity Income Fund generated taxable income during the year ended
September 30, 2003, which was not distributed to the Fund's shareholders within
the time prescribed by the Internal Revenue Code. This excess income is taxable
at the corporate rate of 35% and is also subject to excise tax. The Fund's
Adviser has agreed to voluntarily reimburse the Fund for the aggregate amount of
the corporate and excise tax on this income in excess of the distributions to
shareholders.
100 Notes to Financial Statements
6. SEGREGATED ACCOUNT AND SHORT SALE COLLATERAL
As of September 30, 2004 the ICON Long/Short Fund had securities or cash
deposits with the counterparty to the Short Sales in the amount of $1,465,488 as
collateral for the short sales. Additionally, the Fund had cash segregated at
the custodian in the amount of $350,460 as collateral for the short sales.
7. TOTAL RETURN RESTATEMENT
The ICON Core Equity Fund, Class C has restated its total return for the period
ended September 30, 2001 from (0.20%) to (6.03%). The resulting decrease in
total return of 5.83% was due to a mathematical error.
8. INDEMNIFICATIONS
In the normal course of business, the Funds enter into contracts that contain a
variety of representations which provide general indemnifications. Each Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against each Fund that have not yet occurred.
However, based on experience, the Funds expect the risk of loss to be remote.
Notes to Financial Statements 101
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of the ICON Diversified Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, short sales and written options and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
ICON Bond Fund, ICON Core Equity Fund, ICON Covered Call Fund, ICON Equity
Income Fund, and ICON Long/Short Fund (five of the portfolios constituting ICON
Funds, hereafter referred to as the "Funds") at September 30, 2004, the results
of each of their operations for the year then ended, the changes in each of
their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 2004 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
As discussed in Note 7 to the financial statements, the ICON Core Equity Fund,
Class C has restated its total return for the period ended September 30, 2001.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 19, 2004
102 Report of Accounting Firm
Board of Trustees and Fund Officers
(unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 18 ICON Funds (the "Funds"). The Board is responsible for general oversight
of the Funds' business and for assuring that the Funds are managed in the best
interest of the Funds' shareholders. The Trustees, and their ages, addresses and
principal occupations are set forth below. Trustees have no official term of
office and generally serve until they resign or are not re-elected.
INTERESTED TRUSTEE
CRAIG T. CALLAHAN, 53, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception. Dr. Callahan also serves as President (1998 to
present) and Chief Investment Officer (1991 to present) of ICON Advisers, Inc.
("ICON Advisers"), the Funds' Investment Adviser. Dr. Callahan is also President
(1998 to present); Director (1991 to present); and was previously Vice President
(1991 to 1998) of ICON Distributors, Inc. ("IDI"), the Funds' Distributor, and
is President of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan also
serves as the Chief Investment Officer and Director (1994 to present), and was
previously Secretary/Treasurer (1994 to 1998) of ICON Management & Research
Corporation ("IM&R"), the parent company of ICON Advisers and IDI.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 54. Mr. Bergert has been a Trustee of the Funds since 1999. Mr.
Bergert is President of Venture Capital Management LLC (1997 to present);
General Partner of SOGNO Partners LP, a venture capital company (2001 to
present); and was previously a General Partner with KPMG Peat Marwick, LLP (1979
to 1997). Mr. Bergert is also a Director of Herre Bros, Inc., a contracting
company (1998 to present); Delta Dental of Pennsylvania, an insurance company
(1998 to present); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 57. Mr. Pomeroy has been a Trustee of the Funds since
November 2002. Mr. Pomeroy is Chief Investment Officer and Director of
Investments, Pennsylvania State University (2001 to present) and was Portfolio
Manager and Product Manager, Trinity Investment Management Corporation (1989 to
2001).
GREGORY KELLAM SCOTT, 56. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott was Senior Vice President -- Law, General Counsel and
Secretary, GenCorp, Inc., a multinational technology-based manufacturing company
(2002 to 2004); Vice President and General Counsel of Kaiser-Hill Company LLC, a
nuclear clean-up and environmental remediation company (2000 to 2002) and a
Colorado Supreme Court Justice (1993 to 2000). Mr. Scott
Trustees and Officers 103
Board of Trustees and Fund Officers (continued)
(unaudited)
is also a member of the National Board of Directors of the Constituency for
Africa (1997 to present).
R. MICHAEL SENTEL, 56. Mr. Sentel has been a Trustee of the Funds since their
inception. Mr. Sentel is a Senior Attorney with the U.S. Department of Education
(1996 to present). Mr. Sentel also provides legal representation as a sole
practitioner with an emphasis on corporate and transactional law. He served as
general counsel to numerous public companies and served on the board of
directors of one of these clients. Mr. Sentel began his legal career with the
U.S. Securities and Exchange Commission's Division of Enforcement and became a
branch chief. Later he served as the section chief for the Professional
Liability Section of the Federal Deposit Insurance Corp. with responsibility for
the Rocky Mountain Region (1991 to 1994).
JONATHAN F. ZESCHIN, 51. Mr. Zeschin has been a Trustee of the Funds since
November 2002. Mr. Zeschin is President and Founder of ESSENTIAL Advisers, Inc.,
a wealth management and investment advisory firm (2000 to present) and was
Managing Partner of JZ Partners LLC, a business consulting firm for investment
management companies (1998 to 2002). Mr. Zeschin was previously President of
Founders Asset Management LLC, an investment management company (1995 to 1998)
and Executive Vice President, INVESCO Funds Group, an investment advisory
company (1992 to 1995). Mr. Zeschin was previously a Director of the Young
Americans Education Foundation and Young Americans Bank (1998 to 2004); and was
previously a Director of the Wasatch Funds (2002 to 2004).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 53. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as ICON Advisers' President (1998 to
present) and Chief Investment Officer (1991 to present). Dr. Callahan is also
President (1998 to present), Director (1991 to present) and was previously Vice
President (1991 to 1998) of IDI, and is President of ICON Insurance Agency, Inc.
(2004 to present). Dr. Callahan is also the Chief Investment Officer and
Director (1994 to present), and was previously Secretary/Treasurer (1994 to
1998) of IM&R.
ERIK L. JONSON, 55. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception. Mr. Jonson is also Chief Financial
Officer (1996 to present) and Executive Vice President (2004 to present) and was
previously Vice President (1998 to 2004) of ICON Advisers; Chief Financial
Officer, Secretary and Director (1996 to present) of IM&R; and Executive Vice
President (2004 to present) and Treasurer (2002 to present) and was previously
Secretary/Treasurer, (1998 to 2002) and Vice President, (2002 to 2004) of IDI;
and Executive Vice President and Treasurer of ICON Insurance Agency, Inc. (2004
to present).
104 Trustees and Officers
ANDRA C. OZOLS, 43. Ms. Ozols has been a Vice President and Secretary of the
Funds since March 2002. She previously served in that capacity in 1998. Ms.
Ozols is also Executive Vice President (2004 to present), General Counsel and
Secretary (2002 to present) and was previously Vice President (2002 to 2004) of
ICON Advisers; Executive Vice President (2004 to present) and Secretary (2002 to
present) and was previously Vice President (2002 to 2004) of IDI; Director (June
2003 to present) of IM&R; and Executive Vice President and Secretary of ICON
Insurance Agency, Inc. (2004 to present). Ms. Ozols was previously Vice
President (1999 to 2002) and Assistant General Counsel (October 1998 to February
2002) of Founders Asset Management LLC; and was previously a Branch Chief (1993
to 1995) and Enforcement Attorney (1990 to 1995 and 1996 to 1998) with the U.S.
Securities and Exchange Commission.
The Trustees and Officers of the Funds may be contacted at 5299 DTC Boulevard,
Suite 1200, Greenwood Village, Colorado 80111.
Additional information about the Funds' Trustees and Officers is available in
the Funds' Statement of Additional Information, which can be obtained free of
charge by calling 1-800-764-0442 or by visiting www.iconadvisers.com.
Trustees and Officers 105
Other Information (unaudited)
QUALIFYING DIVIDEND INCOME
For the year ended September 30, 2004, the following distributions represented
qualified dividend income:
ICON Covered Call Fund 16.90%
ICON Equity Income Fund 91.76%
ICON Long/Short Fund 20.73%
106 Other Information
PORTFOLIO HOLDINGS
A list of each ICON Fund's Top 10 holdings is available at www.iconadvisers.com
on or about 15 days following each month-end. Beginning March 1, 2005, each ICON
Fund will file a complete schedule of portfolio holdings for the first and third
quarters of its fiscal year with the SEC on Form N-Q. The ICON Funds' Forms N-Q
will be available at www.sec.gov or may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC. Information about the
Public Reference Room may be obtained by calling 1-800-SEC-0330.
PROXY VOTING
A description of the policies and procedures the ICON Funds use to vote proxies
is available at www.iconadvisers.com; without charge upon request by calling
1-800-764-0442; or on the SEC's website at www.sec.gov.
Information about how the ICON Funds voted proxies related to each Fund's
portfolio securities during the 12-month period ended June 30, 2004 is available
at www.iconadvisers.com or on the SEC's website at www.sec.gov.
This report is for the general information of the Funds' shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by a current prospectus. You may obtain a copy of the prospectus,
which contains information about the investment objectives, risks, charges,
expenses, and share classes of each ICON Fund, by visiting www.iconadvisers.com
or by calling 1-800-764-0442. Please read the prospectus carefully before
investing. ICON Distributors, Inc., Distributor.
107
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, 12(th) Floor
Greenwood Village, CO 80111
On the Internet www.iconadvisers.com
By E-Mail info@iconadvisers.com
</Table>
[ICON FUNDS LOGO]
1-800-764-0442
www.iconadvisers.com
ICRPANNUDIV I-142-DIV
. 2004 Annual Report
Investment Update
ICON FOREIGN FUNDS
ICON ASIA-PACIFIC REGION FUND
ICON EUROPE FUND
ICON INTERNATIONAL EQUITY FUND
[ICON FUNDS LOGO]
Table of Contents
<Table>
ABOUT THIS REPORT (UNAUDITED) 2
MESSAGE FROM ICON FUNDS (UNAUDITED) 4
MANAGEMENT OVERVIEWS (UNAUDITED) AND SCHEDULES OF
INVESTMENTS
ICON Asia-Pacific Region Fund 7
ICON Europe Fund 17
ICON International Equity Fund 27
FINANCIAL STATEMENTS 39
FINANCIAL HIGHLIGHTS 45
NOTES TO FINANCIAL STATEMENTS 48
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 55
BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED) 56
OTHER INFORMATION (UNAUDITED) 59
</Table>
LOGO
About This Report
HISTORICAL RETURNS
All total returns mentioned in this report account for the change in a Fund's
per-share price and the reinvestment of any dividends, capital gain
distributions, and tax return of capital. If your account is set up to receive
Fund distributions in cash rather than to reinvest them, your actual return may
differ from these figures. The Funds' performance results do not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or on the
redemption of Fund shares.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Performance results represent
past performance, and current performance may be higher or lower. Please call
1-800-764-0442 or visit www.iconadvisers.com for performance results current to
the most recent month-end.
PORTFOLIO DATA
This report reflects ICON's views, opinions and portfolio holdings as of
September 30, 2004, the end of the reporting period. The information is not a
complete analysis of every aspect of any sector, industry, security or the
Funds.
Opinions and forecasts regarding industries, companies and/or themes, and
portfolio composition and holdings, are subject to change at any time based on
market and other conditions, and should not be construed as a recommendation of
any specific security. Each Fund's percentage holdings as of September 30, 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, these factors 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 About This Report
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 Morgan Stanley Capital
International (MSCI) indexes assume change in security prices and the deduction
of local taxes. The Funds' portfolios may significantly differ in holdings and
composition from the indexes. Individuals cannot invest directly in an index.
- - The unmanaged MSCI Europe 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 Index comprises stocks traded in the
developed and emerging markets of the Pacific Basin (Australia, China, Hong
Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines,
Singapore, Taiwan and Thailand). The capitalization-weighted index attempts
to capture at least 60% of investable capitalization in those markets
subject to constraints governed by industry representation, maximum
liquidity, maximum float, and minimum cross-ownership.
- - The MSCI All Country World Index ex-United States (ACWI ex-U.S.) is a
leading unmanaged benchmark of international stock performance. The
capitalization-weighted index is representative of the performance of
securities of companies located in developed and emerging markets outside of
the United States.
- - The unmanaged Bloomberg European 500 Index measures the weighted average
performance in U.S. dollars of the 500 most highly capitalized European
companies.
Index returns and statistical data included in this report are provided by
Bloomberg and FactSet.
About This Report 3
Dear ICON Shareholder:
- --------------------------------------------------------------------------------
While the themeless markets have not necessarily made for a negative
environment, it has made for a difficult one.
- --------------------------------------------------------------------------------
ICON's disciplined investment methodology focuses on the identification of
changing industry themes that our system indicates are favorably positioned to
outperform the broader market. During the early months of the Funds' fiscal
year, economically sensitive sectors drove nearly all of the 23.15% annual gain
in the broad benchmark MSCI All Country World Index ex-U.S.
Later in the fiscal year, despite a number of peaks and valleys, overseas
markets traded in a sideways manner, offering few signs of a clear direction.
Within this trading range, economically sensitive sectors such as Materials,
Consumer Discretionary, Information Technology, and Industrials have led during
market advances, yet in complete and extreme theme reversals, they suffered the
most amid subsequent pullbacks, as defensive-oriented sectors such as
Healthcare, Utilities and Consumer Staples demonstrated passing strength. With
such notable exceptions as the steel and oil & gas refining, marketing &
transportation industries, the behavior of most overseas markets during the past
12 months has been themeless.
EXTRANEOUS EVENTS HAVE DISTRACTED INVESTORS
While the themeless markets have not necessarily made for a negative
environment, it has made for a difficult one. Considering the backdrop of mostly
favorable underlying fundamentals, from inflation to interest rates to corporate
earnings, the pause has proven increasingly frustrating for a number of
investors, pushing many to the sidelines.
Although we view this lull as an interruption to the rally that was underway
last year, it appears to us that investors have become distracted by extraneous
events, such as rising oil prices, higher interest rates, terrorism, and the
U.S. presidential election. Despite our longstanding belief that stock prices
are driven by fundamentals and value, it is not unusual for these and other
distractions to create a temporary disconnect for investors.
We would never presume to cast doubt on any investor for experiencing these
concerns. On an emotional level, they are very real and fueled on a daily basis
by the media. However, due to their unpredictability, these fears play no role
in ICON's valuation system. Moreover, we currently see little or no evidence to
support the overstated influence they are currently exerting.
FAVORABLE UNDERLYING FUNDAMENTALS
With respect to rising oil prices, we have detected an unusually strong negative
correlation this year relative to stock prices, meaning that when the price of
oil has increased, stocks, as measured by the Standard & Poor's 500 Index, have
declined. While this makes intuitive sense, historically we have found just the
opposite: a fairly low if not slightly positive correlation between oil prices
and
4 Message from ICON Funds
We continue to monitor industry
leadership rather than engage in the futile
exercise of timing market bottoms.
[CRAIG T. CALLAHAN PHOTO]
Craig T. Callahan
Chairman and Chief
Investment Officer
stock prices. Whereas this recent negative correlation has been extreme, we
expect it will be brief.
At the same time, higher oil prices did not lead to higher inflation, as many
had anticipated. One need only look at the Consumer Price Index, which
experienced moves of -0.1% in July and +0.1% in August. Long-term interest
rates, as measured by the 10-year Treasury Note yield, also declined during the
summer months, puzzling skeptics who expected that rates would trend higher.
However, as fixed-income investors extended maturities in conjunction with the
Federal Reserve's short-term rate hikes, longer-term yields fell amid signals
that the tightening would keep inflation in check.
As for the U.S. presidential election, that's a guessing game we routinely
avoid, as it is inconsistent with our valuation-driven system. New legislation
typically encounters many levels of compromise, and it would be years before its
impact on corporate earnings could be determined. Pharmaceutical stocks, for
example, have been cited as an area that could face legislative and regulatory
hurdles based on election results. However, we believe these companies'
prospects are more dependent on the aging population and the demand for new
treatments than they are on election outcomes.
POSITIONED TO PARTICIPATE
That being said, overseas markets continued to exhibit a high degree of
correlation, having reacted in a similar fashion to many of the same extraneous
events that impacted U.S. stocks. Our valuation readings have guided us to
follow the same strategy we employ domestically, focusing on value and investing
in industries we expect to lead. Although some country-by-country differences
must be considered, industry rotations are typically based on market themes
rather than country fundamentals.
As a result of valuation and relative strength readings during the period, we
more heavily weighted the Materials and Industrials sectors, and toward
period-end, increased the Funds' exposure to Information Technology. With stock
prices in the sector generally declining and corporate earnings on the rise, our
value/price ratios are once again attractive. It now appears to us that this
Message from ICON Funds 5
leadership trend could continue and we believe we are positioned to participate
should a sustainable rally emerge.
RALLIES SELDOM OFFER INVITATIONS
At the end of the period, our analysis indicated that European and Asian markets
were undervalued by 20% and 31%, respectively. For that reason, we remain
invested, riding through this period with the expectation that after the
breakout from the current scenario, stocks will resume their path toward fair
value. Last year reminded us that rallies seldom offer invitations, and often
materialize without a significant triggering event. Still, we continue to
monitor industry leadership and theme identification closely, rather than engage
in the futile exercise of attempting to time market bottoms.
In closing, I wish to again thank you for the opportunity to help guide you
through these challenging markets. For ongoing market updates, as well as up-
to-date Fund, performance, and account information, we invite you to visit our
new website at www.iconadvisers.com.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and Chief Investment Officer of the Adviser
6 Message from ICON Funds
Management Overview
ICON Asia-Pacific Region Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 98.5%
Top 10 Equity Holdings 24.3%
Number of Stocks 75
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
Kawasaki Kisen Kaisha, Ltd. 2.8%
Hopewell Holdings Limited 2.8%
Sumitomo Metal Industries, Ltd. 2.7%
Techtronic Industries Company Limited 2.5%
China Merchants Holdings International Company Limited 2.5%
Zhejiang Expressway Co., Ltd. 2.4%
Sumitomo Heavy Industries, Ltd. 2.4%
Komatsu Ltd. 2.1%
Hoya Corporation 2.1%
Jiangxi Copper Company Ltd. 2.0%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Asia-Pacific Region Fund advanced 7.51% for the fiscal year ended
September 30, 2004, trailing its benchmark, the MSCI All Country Pacific
Index, which returned 15.19% over the same period. Total returns for other
periods as of September 30, 2004 are listed on page 11.
Although Asian markets reflected the extreme volatility that permeated U.S.
markets, Asian shares traded at deeper discounts throughout the period and
therefore closed a wider valuation gap. However, their slight return
advantage over U.S. shares did not translate to the Fund's relative
performance, which suffered due to disparities in sector and industry
allocations versus its benchmark.
The Fund is managed using an all-cap strategy, meaning it invests in Asia-
Pacific securities we believe are undervalued, regardless of their location
on the conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
While the ICON system does not consider investment style, the Fund had a
neutral value/growth stance relative to its broad benchmark during the
period, as measured on a traditional price-to-earnings (P/E) basis. This
positioning had a minimal effect on overall performance.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. A sideways or themeless market characterized the investment environment for
much of the fiscal year, as leadership shifted sharply and suddenly between
cyclical and defensive-oriented sectors. Market advances typically favored
economically sensitive sectors, while event-driven downturns favored more
defensive issues. Whether triggered by rising oil prices, geopolitical
tensions or economic setbacks, global markets settled into a trading range
that capped early-period gains.
Nevertheless, our system continued to support a recovery-based theme, as
evidenced by encouraging developments across the entire Asia-Pacific Region.
The emergence of a cyclical growth trend has fostered widespread
improvements, ranging from robust expansion in China to internal recovery in
Japan, while declining interest rates and credit quality enhancements have
bolstered domestic investment.
Management Overview 7
Management Overview (continued)
ICON Asia-Pacific Region Fund
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. An active underweight in the Financials sector, specifically lack of
exposure to diversified banking giants Mitsubishi Tokyo Financial Group and
Mizuho Financial Group, worked against Fund performance. The same held true
for the Healthcare sector, where our avoidance of drugmakers Takeda
Pharmaceutical Co., Ltd. and Sankyo Co., Ltd., based on their high prices,
detracted on an opportunity cost level.
Conversely, an overweight in the Industrials sector lifted relative
performance, driven by gains in the marine and industrial machinery groups.
While their combination of deep discounts and relative strength contributed
positively to fiscal-year returns, our active underweight in
Telecommunication & Utilities also proved advantageous given the sector's
lagging performance.
Among the Fund's leading individual stock detractors, Kookmin Bank, a
provider of commercial banking services, came under pressure when its chief
executive officer was convicted of improperly cutting the company's 2003
corporate tax bill. Telecommunication services provider China Unicom Ltd.
also declined after reporting profits that fell short of analysts'
expectations. Elsewhere, construction & engineering contractor Sunway
Holdings Inc. proceeded to acquire its outstanding shares in order to
privatize the company. These three holdings were sold as their long-term
earnings forecasts caused concern and as we identified other sector and
industry opportunities.
In contrast, measurable contributors to Fund performance included Jiangxi
Copper Co. Ltd., as supply-demand factors sent copper prices to a 15-year
high. Cargo shippers Kawasaki Kisen Kaisha Ltd. and China Shipping
Development also advanced as China's economic expansion enabled both to
boost freight rates. Meanwhile, Denway Motors Ltd., owners of Guangzhou
Honda, benefited from mounting consumer demand and rising sales.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE ASIA-PACIFIC REGION?
A. 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.
While regional forecasts call for sustained economic growth and improving
corporate fundamentals, we continue to be guided by our methodology. With
valuation and relative strength readings already supporting ongoing
leadership in the heavily weighted Industrials and Materials sectors, new
opportunities within the Energy sector are emerging as well.
8 Management Overview
[J.C. WALLER, III PHOTO]
J.C. Waller, III
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - Disparities in sector and industry allocations vs. its benchmark detracted
from the Fund's relative performance. - Stocks that hurt performance during
the period included Kookmin Bank, China Unicom Ltd. and Sunway Holdings Inc.
- - Active underweights in the Financials and Healthcare sectors worked against
relative performance, as diversified banks and pharmaceuticals boosted
benchmark returns.
- - An overweight in the Industrials sector lifted relative performance, driven
by gains in the marine and industrial machinery groups.
- - Among the Fund's strongest-performing holdings during the period were
Jiangxi Copper Co. Ltd., Kawasaki Kisen Ltd., China Shipping Development,
and Denway Motors Ltd.
Management Overview 9
Management Overview (continued)
ICON Asia-Pacific Region Fund
TOP COUNTRIES
September 30, 2004
<Table>
Japan
51.0%
Hong Kong
18.1%
China
7.9%
Singapore
5.5%
Australia
5.4%
Malaysia
4.3%
South Korea
3.9%
Indonesia
1.3%
New Zealand
1.1%
</Table>
Percentages are based upon net assets.
TOP SECTORS
September 30, 2004
<Table>
Industrials
25.2%
Financial
17.1%
Materials
14.2%
Consumer Discretionary
12.7%
Leisure & Consumer Staples
10.6%
Information Technology
8.3%
Telecommunication & Utilities
5.4%
Energy
2.5%
Health Care
2.4%
</Table>
Percentages are based upon net assets.
10 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/25/97
- -----------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund 7.51% -5.43% -2.55%
- -----------------------------------------------------------------------------------------
MSCI All Country Pacific Index 15.19% -2.49% -0.96%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative index can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[BAR CHART]
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.
Management Overview 11
Management Overview (continued)
ICON Asia-Pacific Region Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Asia-Pacific Region Fund and to compare these costs
with the ongoing costs of investing in other mutual funds. This Example is based
on an investment of $1,000 invested at the beginning of the period and held for
the six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04* 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 906.80 $9.20
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,015.35 $9.72
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.93%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
12 Management Overview
Schedule of Investments
ICON Asia-Pacific Region Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
COMMON STOCKS 98.5%
AUSTRALIA 5.4%
ENERGY 1.4%
INTEGRATED OIL & GAS 1.4%
56,000 Origin Energy
Limited $ 247,180
-----------
TOTAL ENERGY 247,180
FINANCIAL 2.8%
DIVERSIFIED BANKS 2.8%
6,500 Commonwealth Bank
of Australia 142,559
8,949 National Australia
Bank Limited 174,994
12,000 Westpac Banking
Corporation 153,910
-----------
471,463
-----------
TOTAL FINANCIAL 471,463
MATERIALS 1.2%
DIVERSIFIED CHEMICALS 1.2%
16,000 Orica Limited 201,395
-----------
TOTAL MATERIALS 201,395
-----------
TOTAL AUSTRALIA 920,038
CHINA 7.9%
INDUSTRIALS 5.9%
HIGHWAY & RAILTRACKS 4.1%
646,000 Jiangsu Expressway
Company Ltd. 278,564
636,000 Zhejiang Expressway
Co., Ltd. 414,673
-----------
693,237
MARINE 1.8%
354,000 China Shipping
Development Company
Limited 301,553
-----------
TOTAL INDUSTRIALS 994,790
MATERIALS 2.0%
DIVERSIFIED METALS & MINING 2.0%
595,000 Jiangxi Copper
Company Ltd. 348,386
-----------
TOTAL MATERIALS 348,386
-----------
TOTAL CHINA 1,343,176
HONG KONG 18.1%
CONSUMER DISCRETIONARY 3.5%
HOUSEHOLD APPLIANCES 2.5%
220,000 Techtronic
Industries Company
Limited 432,931
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
TEXTILES 1.0%
202,000 Texwinca Holdings
Limited $ 170,779
-----------
TOTAL CONSUMER DISCRETIONARY 603,710
FINANCIAL 3.4%
MULTI-SECTOR HOLDINGS 1.5%
213,700 Swire Pacific
Limited 257,648
REAL ESTATE MANAGEMENT & DEVELOPMENT 0.9%
16,000 Sun Hung Kai
Properties Limited 150,796
SPECIALIZED FINANCE 1.0%
78,000 Hong Kong Exchanges
& Clearing Limited 177,504
-----------
TOTAL FINANCIAL 585,948
INDUSTRIALS 8.6%
AIRLINES 1.7%
168,800 Cathay Pacific
Airways Limited 289,396
HIGHWAYS & RAILTRACKS 2.8%
225,000 Hopewell Holdings
Limited 468,982
INDUSTRIAL CONGLOMERATES 4.1%
282,000 China Merchants
Holdings
International
Company Limited 423,612
51,000 Citic Pacific
Limited 131,214
77,000 Shanghai Industrial
Holdings Limited 140,007
-----------
694,833
-----------
TOTAL INDUSTRIALS 1,453,211
LEISURE & CONSUMER STAPLES 1.6%
HOTELS, RESORTS & CRUISE LINES 1.6%
364,000 The Hongkong and
Shanghai Hotels,
Limited 266,088
-----------
TOTAL LEISURE & CONSUMER
STAPLES 266,088
TELECOMMUNICATIONS & UTILITIES 1.0%
ELECTRIC UTILITIES 1.0%
30,000 CLP Holdings
Limited 171,553
-----------
TOTAL TELECOMMUNICATIONS &
UTILITIES 171,553
-----------
TOTAL HONG KONG 3,080,510
</Table>
Schedule of Investments 13
Schedule of Investments (continued)
ICON Asia-Pacific Region Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
INDONESIA 1.3%
FINANCIAL 1.3%
DIVERSIFIED BANKS 1.3%
550,000 PT Bank Danamon
Indonesia $ 224,191
-----------
TOTAL FINANCIAL 224,191
-----------
TOTAL INDONESIA 224,191
JAPAN 51.0%
CONSUMER DISCRETIONARY 7.8%
APPAREL RETAIL 0.8%
6,000 AOYAMA TRADING Co.,
Ltd. 136,293
AUTO PARTS & EQUIPMENT 2.0%
7,100 DENSO CORPORATION 167,825
17,000 NGK SPARK PLUG Co.,
Ltd. 176,991
-----------
344,816
AUTOMOBILE MANUFACTURERS 1.7%
1,800 HONDA MOTOR CO.,
LTD. 87,302
5,400 Toyota Motor
Corporation 205,672
-----------
292,974
CONSUMER ELECTRONICS 1.1%
13,700 Sharp Corporation 188,479
MOTORCYCLE MANUFACTURERS 1.1%
12,000 Yamaha Motor Co.,
Ltd. 181,393
TIRES & RUBBER 1.1%
10,000 BRIDGESTONE
CORPORATION 185,744
-----------
TOTAL CONSUMER DISCRETIONARY 1,329,699
ENERGY 1.1%
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 1.1%
61,000 COSMO OIL COMPANY,
LIMITED 177,223
-----------
TOTAL ENERGY 177,223
FINANCIAL 8.4%
CONSUMER FINANCE 3.0%
3,000 AEON CREDIT SERVICE
CO., LTD. 170,522
2,000 ORIX Corporation 204,558
2,000 Promise Co., Ltd. 130,923
-----------
506,003
DIVERSIFIED BANKS 0.8%
25 Sumitomo Mitsui
Financial Group,
Inc. 142,881
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT 1.0%
16,000 Sumitomo Realty &
Development Co.,
Ltd. $ 170,362
REGIONAL BANKS 3.6%
31,000 THE BANK OF
FUKUOKA, LTD. 148,124
28,000 The Bank of
Yokohama, Ltd. 150,443
41,000 The Joyo Bank, Ltd. 165,180
20,000 THE SHIZUOKA BANK,
LTD. 150,582
-----------
614,329
-----------
TOTAL FINANCIAL 1,433,575
HEALTH CARE 2.4%
PHARMACEUTICALS 2.4%
7,600 Eisai Co., Ltd. 207,064
9,100 FUJISAWA
PHARMACEUTICAL
COMPANY LIMITED 205,334
-----------
412,398
-----------
TOTAL HEALTH CARE 412,398
INDUSTRIALS 8.3%
CONSTRUCTION & FARM MACHINERY 2.1%
56,000 KOMATSU LTD. 360,558
INDUSTRIAL MACHINERY 2.4%
140,000 SUMITOMO HEAVY
INDUSTRIES, LTD.(a) 413,920
MARINE 2.8%
70,000 Kawasaki Kisen
Kaisha, Ltd. 479,004
TRUCKING 1.0%
18,000 Seino
Transportation Co.,
Ltd. 161,297
-----------
TOTAL INDUSTRIALS 1,414,779
INFORMATION TECHNOLOGY 7.0%
ELECTRONIC EQUIPMENT MANUFACTURERS 3.9%
3,400 HOYA CORPORATION 356,368
3,000 NIDEC CORPORATION 302,661
-----------
659,029
IT CONSULTING & OTHER SERVICES 1.3%
6,500 TIS Inc. 219,728
SYSTEMS SOFTWARE 1.8%
10,000 FUJI SOFT ABC
INCORPORATED 314,077
-----------
TOTAL INFORMATION TECHNOLOGY 1,192,834
</Table>
14 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
LEISURE & CONSUMER STAPLES 5.7%
DRUG RETAIL 0.7%
5,000 Matsumotokiyoshi
Co., Ltd. $ 126,646
FOOD RETAIL 2.0%
6,000 FamilyMart Co.,
Ltd. 160,771
5,000 LAWSON, INC. 173,452
-----------
334,223
HYPERMARKETS AND SUPER CENTERS 0.8%
4,000 ITO-YOKADO CO.,
LTD. 137,156
PACKAGED FOODS & MEATS 2.2%
32,000 Meiji Dairies
Corporation 184,251
63,000 NIPPON SUISAN
KAISHA, Ltd. 187,103
-----------
371,354
-----------
TOTAL LEISURE & CONSUMER
STAPLES 969,379
MATERIALS 9.3%
ALUMINUM 2.0%
153,000 Nippon Light Metal
Company, Ltd. 341,682
COMMODITY CHEMICALS 1.0%
38,000 TORAY INDUSTRIES,
INC. 176,056
DIVERSIFIED METALS & MINING 1.9%
46,000 Sumitomo Metal
Mining Co., Ltd. 319,202
STEEL 4.4%
120,000 NIPPON STEEL
CORPORATION 285,588
393,000 Sumitomo Metal
Industries, Ltd. 466,922
-----------
752,510
-----------
TOTAL MATERIALS 1,589,450
TELECOMMUNICATIONS & UTILITIES 1.0%
ELECTRIC UTILITIES 1.0%
9,100 Kyushu Electric
Power Company,
Incorporated~ 170,499
-----------
TOTAL TELECOMMUNICATIONS &
UTILITIES 170,499
-----------
TOTAL JAPAN 8,689,836
MALAYSIA 4.3%
INDUSTRIALS 0.9%
BUILDING PRODUCTS 0.9%
122,000 Hume Industries
(Malaysia) Berhad~ 148,968
-----------
TOTAL INDUSTRIALS 148,968
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
LEISURE & CONSUMER STAPLES 1.1%
AGRICULTURAL PRODUCTS 1.1%
110,000 PPB Group Berhad~ $ 189,605
-----------
TOTAL LEISURE & CONSUMER
STAPLES 189,605
TELECOMMUNICATIONS & UTILITIES 2.3%
INTEGRATED TELECOMMUNICATION 0.9%
55,000 Telekom Malaysia
Berhad 162,123
WIRELESS TELECOMMUNICATION SERVICES 1.4%
105,000 Maxis
Communications
Berhad 234,931
-----------
TOTAL TELECOMMUNICATIONS &
UTILITIES 397,054
-----------
TOTAL MALAYSIA 735,627
NEW ZEALAND 1.1%
TELECOMMUNICATIONS & UTILITIES 1.1%
GAS UTILITIES 1.1%
86,400 NGC Holdings
Limited 182,219
-----------
TOTAL TELECOMMUNICATIONS &
UTILITIES 182,219
-----------
TOTAL NEW ZEALAND 182,219
SINGAPORE 5.5%
CONSUMER DISCRETIONARY 1.4%
DISTRIBUTORS 1.4%
48,000 Jardine Cycle &
Carriage Limited 235,168
-----------
TOTAL CONSUMER DISCRETIONARY 235,168
FINANCIAL 1.2%
DIVERSIFIED BANKS 1.2%
24,679 United Overseas
Bank Limited 200,853
-----------
TOTAL FINANCIAL 200,853
INDUSTRIALS 1.0%
INDUSTRIAL CONGLOMERATES 1.0%
37,000 Keppel Corporation
Limited 173,641
-----------
TOTAL INDUSTRIALS 173,641
INFORMATION TECHNOLOGY 1.3%
ELECTRONIC MANUFACTURING SERVICES 1.3%
22,200 Venture Corporation
Limited 217,666
-----------
TOTAL INFORMATION TECHNOLOGY 217,666
</Table>
Schedule of Investments 15
Schedule of Investments (continued)
ICON Asia-Pacific Region Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
LEISURE & CONSUMER STAPLES 0.6%
BREWERS 0.6%
13,335 Fraser & Neave
Limited $ 109,994
-----------
TOTAL LEISURE & CONSUMER
STAPLES 109,994
-----------
TOTAL SINGAPORE 937,322
SOUTH KOREA 3.9%
INDUSTRIALS 0.6%
MARINE 0.6%
12,000 Hyundai Merchant
Marine Co., Ltd.(a) 99,891
-----------
TOTAL INDUSTRIALS 99,891
LEISURE & CONSUMER STAPLES 1.6%
TOBACCO 1.6%
10,000 KT&G Corporation~ 264,438
-----------
TOTAL LEISURE & CONSUMER
STAPLES 264,438
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
MATERIALS 1.7%
STEEL 1.7%
2,000 POSCO $ 298,159
-----------
TOTAL MATERIALS 298,159
-----------
TOTAL SOUTH KOREA 662,488
-----------
TOTAL COMMON STOCKS
(COST $15,086,573) 16,775,407
OTHER ASSETS IN EXCESS OF
LIABILITIES 1.5% 271,805
-----------
NET ASSETS 100.0% $17,047,212
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
~ All securities were fair valued (Note 1) as of September 30, 2004 unless
noted with a ~. Total value of securities fair valued was $16,001,897.
16 Schedule of Investments
Management Overview
ICON Europe Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 98.7%
Top 10 Equity Holdings 26.2%
Number of Stocks 67
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
Ascom Holding AG 3.7%
Buzzi Unicem S.p.A. 3.1%
Camaieu 2.9%
Georg Fischer AG 2.7%
Grupo Empresarial Ence, S.A. 2.5%
Vivendi Universal SA 2.3%
Kuoni Reisen Holding AG 2.3%
PubliGroupe S.A. 2.3%
RHI AG 2.2%
Smedvig ASA 2.2%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Europe Fund appreciated 22.26% for the fiscal year ended September
30, 2004, outpacing the 17.89% return for the Bloomberg European 500 Index,
but trailing the 26.02% return for the MSCI Europe 15 Index. Total returns
for other periods as of September 30, 2004 are listed on page 21.
European markets remained highly correlated to the U.S. market during the
period, reflecting the early-period cyclical rally and subsequent volatility
that characterized the broad U.S. market. However, because European issues
were generally priced at deeper relative discounts, they closed a
significantly wider valuation gap and outperformed domestic equities by a
considerable margin.
The Fund is managed using an all-cap strategy, meaning it invests in
European securities we believe are undervalued, regardless of their location
on the conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
Despite an absence of leadership, the Fund benefited from an overall growth
bias, 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
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
a. While a cyclical theme pointed to a recovering global economy, Europe
remained entrenched in a low-growth scenario amid lingering high
unemployment and diminished consumer confidence. Rising commodity prices
added to the uncertainty, although currency gains, particularly in the
widely adopted euro, offset their impact. Meanwhile, incremental
improvements in export growth and corporate investment were also seen as
encouraging and proved to be settling influences.
However, in the wake of heightened geopolitical tensions, market leadership
turned sporadic, with frequent rotations between economically sensitive and
defensive industries. Even so, our system viewed these abrupt theme
reversals as temporary, and as a result, we continued to position the Fund
with a sustainable, recovery-driven rally in mind.
Management Overview 17
Management Overview (continued)
ICON Europe Fund
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Clearly, the most significant shift in the Fund's composition during the
period was its transition in late January 2004 from the ICON South Europe
Region Fund to the ICON Europe Fund.
As part of the portfolio's expanded mandate, the Fund now invests in equity
securities anywhere in Europe. This strategy had emerged as the increasing
correlation of investment themes across national borders convinced us that
the Fund could benefit from a broader scope, compared to its prior focus,
which emphasized country rotation.
The Materials sector was one of the Fund's more dominant themes during the
period, having benefited from an overweight position that emphasized the
top-performing steel and construction materials industries. Wireless
telecommunication services in the Telecommunication & Utilities sector also
continued to demonstrate leadership while narrowing a sizable valuation gap,
as did communications equipment, among the Fund's leading industry
contributors relative to the benchmark.
Limited exposure to the Energy sector, specifically integrated oil & gas,
proved detrimental to relative performance. Valuation and relative strength
readings did not support this sector's dramatic move, which exceeded fair
value when oil prices started to spike.
Among the Fund's foremost company contributors, telecommunication services
firm Anscom Holding AG profited from strong operating results, including
improved order intake and lower net losses. Steelmaker Arcelor NPV also
advanced as rising global demand pushed steel prices to robust levels.
Elsewhere, media giant Vivendi Universal soared on the announcement of its
pending merger with NBC.
Conversely, Europe's largest perfume retailer Marionnaud Parfumeries SA
detracted from Fund performance, as rising costs weakened earnings.
Deteriorating relative strength led us to liquidate the position at a loss.
Meanwhile, defense contractor Societe d'Applications Generales d'Electricite
et de Macanique and electronic component supplier Epcos AG both retreated as
earnings setbacks pressured their stocks.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE EUROPEAN MARKET?
a. Forecasts call for modest economic growth within the European market,
reflecting a broad-based global expansion driven by a cyclical recovery. Low
real interest rates could lead to improved business and consumer spending,
which in turn could fuel an upturn in employment rolls.
Whether or not this comes to pass, we continue to be guided by our
methodology, which has identified valuation and relative strength across a
18 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
number of sectors and industries. The Materials sector, specifically steel
and diversified metals & mining, remains attractive, while Financials and
its constituent diversified financial services industry offer compelling
buying opportunities.
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - European issues were generally priced at deeper relative discounts than U.S.
equities, leading to considerable outperformance as prices moved toward fair
value.
- - Dominant themes included an overweighted Materials sector, specifically
steel and construction materials, as well as wireless telecommunication
services and communications equipment in the Telecommunication & Utilities
sector.
- - Among the Fund's strongest-performing holdings during the period were Ascom
Holding AG, Arcelor NPV and Vivendi Universal.
- - Conversely, an underweighted Energy sector proved detrimental to relative
performance.
- - Stocks that hurt performance during the period included Marionnaud
Parfumeries, Societe d'Applications Generales d'Electricite et de Macanique
and Epcos AG.
Management Overview 19
Management Overview (continued)
ICON Europe Fund
TOP COUNTRIES
September 30, 2004
<Table>
Switzerland
20.1%
France
15.8%
Austria
11.3%
Italy
8.1%
Spain
7.3%
Germany
7.0%
Belgium
5.2%
United Kingdom
4.1%
Portugal
4.0%
Norway
3.3%
</Table>
Percentages are based upon net assets.
TOP SECTORS
September 30, 2004
<Table>
Industrials
21.7%
Materials
16.4%
Consumer Discretionary
11.0%
Leisure & Consumer Staples
10.7%
Financial
9.9%
Telecommunications & Utilities
9.4%
Energy
8.0%
Information Technology
6.5%
Health Care
5.1%
</Table>
Percentages are based upon net assets.
20 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/20/97
- -----------------------------------------------------------------------------------------
ICON Europe Fund 22.26% 3.57% 6.38%
- -----------------------------------------------------------------------------------------
MSCI Europe 15 Index 26.02% 0.68% 6.46%
- -----------------------------------------------------------------------------------------
Bloomberg European 500 Index 17.89% -1.73% 5.59%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
The 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.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[BAR CHART]
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.
Management Overview 21
Management Overview (continued)
ICON Europe Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Europe Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. This Example is based on an investment
of $1,000 invested at the beginning of the period and held for the six-month
period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04* 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,012.60 $11.02
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,014.05 $11.03
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 2.19%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
22 Management Overview
Schedule of Investments
ICON Europe Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
COMMON AND PREFERRED STOCKS 98.7%
ADR -- AMERICAN DEPOSITARY RECEIPTS 4.7%
RUSSIA 2.3%
TELECOMMUNICATIONS & UTILITIES 2.3%
WIRELESS TELECOMMUNICATION SERVICES 2.3%
785 AO VimpelCom(a)~ $ 85,408
695 Mobile Telesystems~ 100,768
----------
TOTAL
RUSSIA 186,176
GREECE 1.2%
TELECOMMUNICATION & UTILITIES 1.2%
WIRELESS TELECOMMUNICATION SERVICES 1.2%
5,700 STET Hellas
Telecommunications
S.A.~ 93,993
----------
TOTAL
GREECE 93,993
TURKEY 1.2%
TELECOMMUNICATION & UTILITIES 1.2%
WIRELESS TELECOMMUNICATION SERVICES 1.2%
7,992 Turkcell Illetisim
Hizmetteri -- Turkey
A.S. Coj~ 89,590
----------
TOTAL
TURKEY 89,590
----------
TOTAL TELECOMMUNICATIONS &
UTILITIES 369,759
----------
TOTAL ADR -- AMERICAN DEPOSITARY
RECEIPTS 369,759
AUSTRIA 11.3%
ENERGY 1.5%
INTEGRATED OIL & GAS 1.5%
500 OMV AG 115,466
----------
TOTAL ENERGY 115,466
INDUSTRIALS 5.3%
AIRLINES 1.0%
6,135 Austrian Airlines/
Osterreichische
Luftverkehrs AG(a) 77,683
BUILDING PRODUCTS 1.3%
2,700 Wienerberger AG 101,475
ENVIRONMENTAL SERVICES 1.4%
4,530 BWT AG 112,489
INDUSTRIAL MACHINERY 1.6%
2,100 VA Technologie AG(a) 124,123
----------
TOTAL INDUSTRIALS 415,770
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
MATERIALS 4.5%
CONSTRUCTION MATERIALS 2.2%
7,895 RHI AG(a) $ 174,927
STEEL 2.3%
1,000 Boehler-Uddeholm AG 92,477
1,500 voestalpine AG 85,160
----------
177,637
----------
TOTAL MATERIALS 352,564
----------
TOTAL AUSTRIA 883,800
BELGIUM 5.2%
HEALTH CARE 2.2%
PHARMACEUTICALS 2.2%
3,155 UCB SA 168,419
----------
TOTAL HEALTH CARE 168,419
INDUSTRIALS 0.8%
ELECTRICAL COMPONENTS & EQUIPMENT 0.8%
1,000 Bekaert NV 62,546
----------
TOTAL INDUSTRIALS 62,546
INFORMATION TECHNOLOGY 1.2%
ELECTRONIC EQUIPMENT MANUFACTURERS 1.2%
1,105 Barco NV 95,228
----------
TOTAL INFORMATION TECHNOLOGY 95,228
TELECOMMUNICATION & UTILITIES 1.0%
WIRELESS TELECOMMUNICATION SERVICES 1.0%
1,135 Mobistar SA(a) 81,246
----------
TOTAL TELECOMMUNICATIONS &
UTILITIES 81,246
----------
TOTAL BELGIUM 407,439
CANADA 1.0%
ENERGY 1.0%
OIL & GAS EQUIPMENT & SERVICES 1.0%
4,700 Enerflex Systems
Ltd.~ 75,056
----------
TOTAL ENERGY 75,056
----------
TOTAL CANADA 75,056
DENMARK 1.0%
INDUSTRIALS 1.0%
TRUCKING 1.0%
1,500 DSV A/S 79,276
----------
TOTAL INDUSTRIALS 79,276
----------
TOTAL DENMARK 79,276
</Table>
Schedule of Investments 23
Schedule of Investments (continued)
ICON Europe Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
FINLAND 1.6%
HEALTH CARE 0.7%
PHARMACEUTICALS 0.7%
4,000 Orion Oyj~ $ 54,751
----------
TOTAL HEALTH CARE 54,751
MATERIALS 0.9%
FERTILIZERS & AGRICULTURAL CHEMICALS 0.9%
4,880 Kemira Oyj 67,996
----------
TOTAL MATERIALS 67,996
----------
TOTAL FINLAND 122,747
FRANCE 15.8%
CONSUMER DISCRETIONARY 3.0%
APPAREL RETAIL 3.0%
2,570 Camaieu 230,646
----------
TOTAL CONSUMER DISCRETIONARY 230,646
FINANCIAL 2.1%
DIVERSIFIED BANKS 2.1%
1,820 Societe Generale 161,531
----------
TOTAL FINANCIAL 161,531
HEALTH CARE 0.7%
PHARMACEUTICALS 0.7%
800 Sanofi-Aventis 58,200
----------
TOTAL HEALTH CARE 58,200
INDUSTRIALS 1.8%
BUILDING PRODUCTS 1.8%
2,780 Compagnie de Saint-
Gobain 143,004
----------
TOTAL INDUSTRIALS 143,004
INFORMATION TECHNOLOGY 1.6%
COMMUNICATIONS EQUIPMENT 1.6%
1,320 Sagem SA 126,693
----------
TOTAL INFORMATION TECHNOLOGY
1.6% 126,693
LEISURE & CONSUMER STAPLES 2.3%
MOVIES & ENTERTAINMENT 2.3%
7,097 Vivendi Universal
SA(a) 182,371
----------
TOTAL LEISURE & CONSUMER STAPLES 182,371
MATERIALS 2.8%
CONSTRUCTION MATERIALS 2.8%
1,140 Imerys SA 76,098
1,640 Lafarge SA 143,290
----------
219,388
----------
TOTAL MATERIALS 219,388
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
TELECOMMUNICATION & UTILITIES 1.5%
WIRELESS TELECOMMUNICATION SERVICES 1.5%
2,995 Bouygues SA $ 112,650
----------
TOTAL TELECOMMUNICATION &
UTILITIES 112,650
----------
TOTAL FRANCE 1,234,483
GERMANY 7.0%
CONSUMER DISCRETIONARY 2.7%
AUTOMOBILE MANUFACTURERS 1.3%
2,500 DaimlerChrysler AG 103,349
TIRES & RUBBER 1.4%
2,000 Continental AG 108,702
----------
TOTAL CONSUMER DISCRETIONARY 212,051
FINANCIAL 0.9%
MULTI-LINE INSURANCE 0.9%
715 Allianz AG 71,943
----------
TOTAL FINANCIAL 71,943
INDUSTRIALS 1.0%
CONSTRUCTION & ENGINEERING 1.0%
3,000 Hochtief AG 73,997
----------
TOTAL INDUSTRIALS 73,997
LEISURE & CONSUMER STAPLES 0.8%
BROADCASTING & CABLE TV 0.8%
3,455 ProSiebenSat.1 Media
AG Preferred Stock 63,151
----------
TOTAL LEISURE & CONSUMER STAPLES 63,151
MATERIALS 1.6%
DIVERSIFIED CHEMICALS 0.9%
2,500 Bayer AG 68,425
STEEL 0.7%
2,920 ThyssenKrupp AG 56,756
----------
TOTAL MATERIALS 125,181
----------
TOTAL GERMANY 546,323
GREECE 0.7%
ENERGY 0.7%
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 0.7%
6,210 Hellenic Petroleum
S.A. 51,510
----------
TOTAL ENERGY 51,510
----------
TOTAL GREECE 51,510
ITALY 8.1%
CONSUMER DISCRETIONARY 0.9%
AUTO PARTS & EQUIPMENT 0.9%
10,500 Brembo S.p.A. 69,870
----------
TOTAL CONSUMER DISCRETIONARY 69,870
</Table>
24 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
FINANCIAL 2.5%
DIVERSIFIED BANKS 2.5%
18,160 Banca Intesa S.p.A. $ 69,219
11,339 SanPaolo IMI S.p.A. 128,069
----------
197,288
----------
TOTAL FINANCIAL 197,288
LEISURE & CONSUMER STAPLES 1.6%
BROADCASTING & CABLE TV 1.6%
10,847 Mediaset S.p.A. 123,377
----------
TOTAL LEISURE & CONSUMER STAPLES 123,377
MATERIALS 3.1%
CONSTRUCTION MATERIALS 3.1%
18,220 Buzzi Unicem S.p.A. 241,223
----------
TOTAL MATERIALS 241,223
----------
TOTAL ITALY 631,758
LUXEMBOURG 1.0%
MATERIALS 1.0%
STEEL 1.0%
4,480 Arcelor 83,077
----------
TOTAL MATERIALS 83,077
----------
TOTAL LUXEMBOURG 83,077
NETHERLANDS 1.5%
ENERGY 1.5%
INTEGRATED OIL & GAS 1.5%
2,300 Royal Dutch
Petroleum Company 118,635
----------
TOTAL ENERGY 118,635
----------
TOTAL NETHERLANDS 118,635
NORWAY 3.3%
ENERGY 3.3%
OIL & GAS DRILLING 2.2%
13,200 Smedvig ASA 172,852
OIL & GAS EXPLORATION & PRODUCTION 1.1%
1,150 Norsk Hydro ASA 83,909
----------
TOTAL ENERGY 256,761
----------
TOTAL NORWAY 256,761
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
PORTUGAL 4.0%
LEISURE & CONSUMER STAPLES 1.8%
FOOD RETAIL 1.8%
12,715 Jeronimo Martins,
SGPS, S.A.(a) $ 143,403
----------
TOTAL LEISURE & CONSUMER STAPLES 143,403
TELECOMMUNICATION & UTILITIES 2.2%
INTEGRATED TELECOMMUNICATION 2.2%
15,500 Portugal Telecom,
SGPS, S.A. 171,008
----------
TOTAL TELECOMMUNICATIONS &
UTILITIES 171,008
----------
TOTAL PORTUGAL 314,411
SPAIN 7.3%
INDUSTRIALS 2.9%
CONSTRUCTION & ENGINEERING 1.9%
4,000 Fomento de
Construcciones y
Contratas S.A. 148,730
HIGHWAYS & RAILTRACKS 1.0%
4,300 Abertis
Infraestructuras
S.A. 80,468
----------
TOTAL INDUSTRIALS 229,198
LEISURE & CONSUMER STAPLES 1.9%
RESTAURANTS 1.9%
75,000 TelePizza, S.A. 144,767
----------
TOTAL LEISURE & CONSUMER STAPLES 144,767
MATERIALS 2.5%
PAPER PRODUCTS 2.5%
7,200 Grupo Empresarial
Ence, S.A. 199,005
----------
TOTAL MATERIALS 199,005
----------
TOTAL SPAIN 572,970
SWEDEN 1.0%
FINANCIAL 1.0%
DIVERSIFIED BANKS 1.0%
10,100 Nordea Bank AB 82,744
----------
TOTAL FINANCIAL 82,744
----------
TOTAL SWEDEN 82,744
</Table>
Schedule of Investments 25
Schedule of Investments (continued)
ICON Europe Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
SWITZERLAND 20.1%
CONSUMER DISCRETIONARY 2.3%
ADVERTISING 2.3%
621 PubliGroupe S.A. $ 180,935
----------
TOTAL CONSUMER DISCRETIONARY 180,935
FINANCIAL 3.4%
DIVERSIFIED CAPITAL MARKETS 3.4%
4,170 Credit Suisse Group 133,195
1,904 UBS AG 134,173
----------
267,368
----------
TOTAL FINANCIAL 267,368
HEALTH CARE 1.5%
PHARMACEUTICALS 1.5%
1,157 Roche Holding AG 119,844
----------
TOTAL HEALTH CARE 119,844
INDUSTRIALS 6.9%
BUILDING PRODUCTS 1.1%
110 Geberit AG 85,631
INDUSTRIAL MACHINERY 5.8%
850 Georg Fischer AG(a) 212,141
435 Schindler Holding AG 135,309
355 Sulzer AG 106,586
----------
454,036
----------
TOTAL INDUSTRIALS 539,667
INFORMATION TECHNOLOGY 3.7%
COMMUNICATIONS EQUIPMENT 3.7%
21,238 Ascom Holding AG(a) 285,688
----------
TOTAL INFORMATION TECHNOLOGY 285,688
LEISURE & CONSUMER STAPLES 2.3%
HOTELS, RESORTS & CRUISE LINES 2.3%
490 Kuoni Reisen Holding
AG 181,703
----------
TOTAL LEISURE & CONSUMER STAPLES 181,703
----------
TOTAL SWITZERLAND 1,575,205
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
UNITED KINGDOM 4.1%
CONSUMER DISCRETIONARY 2.1%
HOMEBUILDING 2.1%
5,400 Barratt Developments
plc $ 55,273
7,500 George Wimpey plc 54,709
11,300 Taylor Woodrow plc 53,819
----------
163,801
----------
TOTAL CONSUMER DISCRETIONARY 163,801
INDUSTRIALS 2.0%
AEROSPACE & DEFENSE 2.0%
34,010 Rolls-Royce Group
plc 156,107
----------
TOTAL INDUSTRIALS 156,107
----------
TOTAL UNITED KINGDOM 319,908
----------
TOTAL COMMON STOCKS (COST
$6,304,121) 7,725,862
OTHER ASSETS LESS LIABILITIES
1.5% 100,218
----------
NET ASSETS 100.0% $7,826,080
==========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
~ All securities were fair valued (Note 1) as of September 30, 2004 unless
noted with a ~. Total value of securities fair valued was $7,226,296.
26 Schedule of Investments
Management Overview
ICON International Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 100.2%
Top 10 Equity Holdings 16.0%
Number of Stocks 97
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
Puma AG Rudolf Dassler Sport 1.9%
Smedvig ASA 1.8%
Georg Fischer AG 1.7%
OMV AG 1.7%
DSV A/S 1.6%
Skandia Forsakrings AB 1.5%
Global Railway Industries Ltd. 1.5%
Kawasaki Kisen Kaisha, Ltd. 1.5%
Grupo Elektra S.A. de C.V. 1.4%
AWG plc 1.4%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON International Fund, Class Z advanced 26.79% for the fiscal year
ended September 30, 2004, outpacing its benchmark, the MSCI All Country
World Index ex-U.S., which returned 23.15%. The Fund's Class I shares
returned -3.38% since their February 6, 2004 inception compared to a 2.13%
return for the benchmark, while its Class C shares returned -6.55% since
their February 19, 2004 inception compared to a -0.84% return for the
benchmark over the same period. Total returns for other periods as of
September 30, 2004 are listed on page 31.
A simultaneous global recovery benefited the Fund during the period, as
overseas markets demonstrated highly correlated, yet often volatile moves
toward fair value. Although benchmark disparities and lagging returns worked
against the Fund's Asia-Pacific holdings, our overall focus on
valuation-driven sector rotation proved advantageous, given the deeper
relative discounts at which foreign stocks were trading versus their U.S.
counterparts.
The Fund is managed using an all-cap strategy, meaning it invests in
international securities we believe are undervalued, regardless of their
location on the conventional style grid. This investment approach is not
limited by restrictions on market capitalization; the ICON system searches
for overseas industry leadership no matter where it emerges.
Despite our focus on valuation, the Fund benefited from a presumed growth
bias during the period, as measured on a traditional price-to-earnings (P/E)
basis. This tilt likely reflects the Fund's sizable exposure to economically
sensitive industries, which, according to our system, may sustain an
eventual broad move to the upside.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Consistent with a nascent global recovery, our system continued to detect a
cyclical theme in which economically sensitive industries would assume
market dominance. However, the period was in fact marked by frequent theme
reversals, triggered by event-driven downturns that favored defensive
issues. We viewed these abrupt range-bound moves as temporary interruptions,
and instead saw incremental improvements as a sign that expansion-related
leadership could solidify.
Management Overview 27
Management Overview (continued)
ICON International Equity Fund
At the regional level, Europe remained entrenched in a low-growth scenario
amid lingering high unemployment and diminished consumer confidence.
Nevertheless, currency gains helped offset the effects of rising commodity
prices, but did not hinder export growth or corporate investment. Japan
stayed on its newly forged path of internal recovery as monetary reforms
proliferated and deflation concerns subsided. Asia's high-growth stature,
however, continued to be defined by the rapid emergence of China as an
economic powerhouse.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Clearly, the most significant shift in the Fund's composition during the
period was its conversion in late January 2004 from the ICON North Europe
Region Fund to the ICON International Equity Fund.
As part of its expanded mandate, the Fund may now invest in equity
securities anywhere in the world excluding the United States. This strategy
had emerged as the increasing correlation of investment themes across
national borders convinced us that the Fund could benefit from a broader
scope, compared to its prior focus, which emphasized country rotation.
Against this backdrop, much of the Fund's restructuring centered on sector
allocation rather than country weightings. For example, the Fund's active
overweight in Information Technology, specifically semiconductors and
semiconductor equipment, coupled with valuation-related rotations yielded
strong relative returns. The Fund's underweight in Leisure and Consumer
Staples aided relative performance, as did capitalizing on value and
relative strength in selected Leisure industries broadcasting & cable TV and
casinos & gaming.
Meanwhile, below-average exposure in Financials and constituent industry
diversified banks, particularly the absence of benchmark bellwether HSBC
Holdings Plc, hurt relative returns. Within the Materials sector, the Fund's
steel component performed well, although an underweight position in
diversified metals & mining offset those gains.
As for individual holdings that made measurable contributions, semiconductor
equipment company ASML Holding NV advanced on industry-leading market share
gains in its core photolithography business, while microchip designer ARM
Holdings Plc benefited from an improved current-year outlook. Elsewhere,
broadcast media company Carlton Communications projected significant cost
synergies from its pending merger with rival firm Granada Plc, but was
ultimately liquidated due to valuation concerns.
In contrast, Fund performance came under pressure when China Overseas Land &
Investment Ltd. experienced a slowdown in international real estate markets.
Integrated steel producer Companhia Siderurgica Nacional faced
28 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
[J.C. WALLER, III PHOTO]
J.C. Waller, III
Portfolio Manager
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
earnings shortfalls and regional liquidity concerns, even as the global
steel industry logged impressive gains. Moreover, discount air carrier
Ryanair Holdings Plc tumbled when the company reported its first-ever profit
warning and was subsequently sold from the Fund.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE INTERNATIONAL MARKET?
A. Given the increasing correlation of global industry themes, we believe it is
critical to focus on market leadership regardless of country origin or
benchmark allocations. Although we anticipate a broad-based, recovery-driven
expansion, our quantitative methodology indicates ongoing strength in
Materials and Industrials, with compelling opportunities emerging in Energy
and Financials.
PERFORMANCE HIGHLIGHTS
September 30, 2004
Valuation-driven sector rotations proved highly advantageous, given the deep
relative discounts at which foreign stocks were trading.
- - Active overweighting and industry rotations in Information Technology,
specifically semiconductors and semiconductor equipment, produced strong
relative returns.
- - Among the Fund's strongest-performing holdings during the period were ASML
Holding NV, ARM Holdings Plc and Carlton Communications.
- - Below-average exposure in Financials and diversified banks hurt relative
returns during the period, while underweight positions in the diversified
metals & mining industry offset gains in steel.
- - Stocks that hurt performance during the period included China Overseas Land
& Investment Ltd., Companhia Siderurgica Nacional and Ryanair Holdings Plc.
Management Overview 29
Management Overview (continued)
ICON International Equity Fund
TOP COUNTRIES
September 30, 2004
<Table>
Japan
26.0%
Germany
10.3%
Canada
8.8%
Austria
8.6%
United Kingdom
6.7%
Spain
4.9%
Mexico
4.3%
Switzerland
3.6%
Sweden
3.6%
Norway
3.1%
</Table>
Percentages are based upon net assets.
TOP SECTORS
September 30, 2004
<Table>
Industrials
21.5%
Financial
16.9%
Consumer Discretionary
16.6%
Materials
14.3%
Energy
10.2%
Health Care
6.3%
Telecommunication & Utilities
6.2%
Leisure & Consumer Staples
6.0%
Information Technology
2.2%
</Table>
Percentages are based upon net assets.
30 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON International Equity Fund-Class Z 2/18/97 26.79% 2.94% 5.87%
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S. 23.15% 0.49% 3.85%
- -------------------------------------------------------------------------------------------
ICON International Equity Fund-Class I 2/6/04 N/A N/A -3.38%*
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S. 2.13%*
- -------------------------------------------------------------------------------------------
ICON International Equity Fund-Class C 2/19/04 N/A N/A -6.55%*
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S. -0.84%*
- -------------------------------------------------------------------------------------------
</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
Fund's name and investment strategy changed effective January 29, 2004. The
Fund's past performance would have been different if the current strategy had
been in effect. Class Z shares are available only to grandfathered and
institutional investors.
* Not annualized.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON INTERNATIONAL EQUITY FUND-
CLASS Z MSCI ACWI EX-U.S.
------------------------------- -----------------
2/18/97 10000.00 10000.00
9/30/97 11060.00 11225.40
9/30/98 11841.00 9749.68
9/30/99 13354.00 13007.80
9/30/00 14747.00 13647.00
9/30/01 10280.00 9649.94
9/30/02 8538.00 8390.48
9/30/03 12176.00 10826.00
9/30/04 15438.00 13332.30
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund's Class Z shares on the Class' inception
date of 2/18/97 to a $10,000 investment made in an unmanaged securities index on
that date. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends, capital gain
distributions and tax return of capital but does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or on the redemption of
Fund shares.
Management Overview 31
Management Overview (continued)
ICON International Equity Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXPENSE EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON International Equity Fund and to compare these costs
with the ongoing costs of investing in other mutual funds. This Example is based
on an investment of $1,000 invested at the beginning of the period and held for
the six-month period (4/1/04 - 9/30/04).
32 Management Overview
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04* 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 977.80 $ 14.88
- ----------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,009.95 $ 15.12
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
CLASS I
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 979.60 $ 11.33
- ----------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,013.55 $ 11.53
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
CLASS Z
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 980.60 $ 9.85
- ----------------------------------------------------------------------------------------------
Hypothetical $1,000.00 $1,015.05 $ 10.02
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratios of 3.01% (Class
C), 2.29% (Class I) and 1.99% (Class Z) annualized, multiplied by the
average account value over the period, multiplied by 183/366 to reflect the
one-half year period.
Management Overview 33
Schedule of Investments
ICON International Equity Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS 100.2%
ADR -- AMERICAN DEPOSITORY RECEIPTS 3.0%
MEXICO 1.1%
MATERIALS 1.1%
CONSTRUCTION MATERIALS 1.1%
4,803 Cemex S.A. de C.V.~ $ 135,156
-----------
TOTAL MATERIALS 135,156
-----------
TOTAL MEXICO 135,156
RUSSIA 1.9%
TELECOMMUNICATION & UTILITIES 1.9%
WIRELESS TELECOMMUNICATION SERVICES 1.9%
1,200 AO VimpelCom(a)~ 130,560
800 Mobile Telesystems~ 115,992
-----------
246,552
-----------
TOTAL TELECOMMUNICATION &
UTILITIES 246,552
-----------
TOTAL RUSSIA 246,552
-----------
TOTAL ADR -- AMERICAN DEPOSITORY
RECEIPTS 381,708
AUSTRALIA 1.8%
HEALTH CARE 1.0%
BIOTECHNOLOGY 1.0%
6,000 CSL Limited 123,918
-----------
TOTAL HEALTH CARE 123,918
LEISURE & CONSUMER STAPLES 0.8%
AGRICULTURAL PRODUCTS 0.8%
74,550 Futuris Corporation
Limited 102,873
-----------
TOTAL LEISURE & CONSUMER STAPLES 102,873
-----------
TOTAL AUSTRALIA 226,791
AUSTRIA 8.6%
ENERGY 1.7%
INTEGRATED OIL & GAS 1.7%
931 OMV AG 214,997
-----------
TOTAL ENERGY 214,997
INDUSTRIALS 4.5%
AIRLINES 0.9%
8,500 Austrian Airlines/
Osterreichische
Luftverkehrs AG(a) 107,629
AIRPORT SERVICES 1.0%
2,000 Flughafen Wien AG 121,937
BUILDING PRODUCTS 1.3%
4,500 Wienerberger AG 169,125
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
INDUSTRIAL MACHINERY 1.3%
2,800 VA Technologie
AG(a) $ 165,498
-----------
TOTAL INDUSTRIALS 564,189
MATERIALS 2.4%
CONSTRUCTION MATERIALS 1.1%
6,400 RHI AG(a) 141,803
STEEL 1.3%
1,790 Boehler-Uddeholm AG 165,534
-----------
TOTAL MATERIALS 307,337
-----------
TOTAL AUSTRIA 1,086,523
BELGIUM 1.3%
FINANCIAL 1.3%
DIVERSIFIED BANKS 1.3%
2,465 KBC
Bankverzekeringsholding 160,806
-----------
TOTAL FINANCIAL 160,806
-----------
TOTAL BELGIUM 160,806
CANADA 8.8%
CONSUMER DISCRETIONARY 2.3%
GENERAL MERCHANDISE STORES 1.3%
4,200 Canadian Tire
Corporation,
Limited~ 164,841
HOME IMPROVEMENT RETAIL 1.0%
4,500 RONA Inc.(a)~ 119,972
-----------
TOTAL CONSUMER DISCRETIONARY 284,813
ENERGY 1.1%
OIL & GAS EQUIPMENT & SERVICES 1.1%
8,700 Enerflex Systems
Ltd.~ 138,933
-----------
TOTAL ENERGY 138,933
INDUSTRIALS 2.0%
AIRLINES 0.5%
6,900 WestJet Airlines
Ltd.(a)~ 71,696
CONSTRUCTION & FARM MACHINERY 1.5%
40,900 Global Railway
Industries Ltd.(a)~ 186,151
-----------
TOTAL INDUSTRIALS 257,847
MATERIALS 3.4%
ALUMINUM 1.0%
2,761 Alcan Inc.~ 131,976
</Table>
34 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
FOREST PRODUCTS 0.8%
10,200 Norbord Inc.~ $ 99,054
PAPER PRODUCTS 0.2%
2,040 Fraser Papers
Inc.(a)~ 25,807
STEEL 1.4%
5,148 Dofasco Inc.~ 173,288
-----------
TOTAL MATERIALS 430,125
-----------
TOTAL CANADA 1,111,718
CHINA 2.1%
INDUSTRIALS 2.1%
HIGHWAYS & RAILTRACKS 1.0%
190,000 Zhejiong Expressway
Co., Ltd. 123,880
MARINE 1.1%
172,000 China Shipping
Development Company
Limited 146,517
-----------
TOTAL INDUSTRIALS 270,397
-----------
TOTAL CHINA 270,397
DENMARK 2.6%
FINANCIAL 1.0%
DIVERSIFIED BANKS 1.0%
4,585 Danske Bank A/S 120,743
-----------
TOTAL FINANCIAL 120,743
INDUSTRIALS 1.6%
TRUCKING 1.6%
3,900 DSV A/S 206,117
-----------
TOTAL INDUSTRIALS 206,117
-----------
TOTAL DENMARK 326,860
FINLAND 3.1%
HEALTH CARE 1.0%
PHARMACEUTICALS 1.0%
9,200 Orion Oyj~ 125,927
-----------
TOTAL HEALTH CARE 125,927
INDUSTRIALS 1.1%
BUILDING PRODUCTS 1.1%
4,150 Uponor Oyj 147,018
-----------
TOTAL INDUSTRIALS 147,018
LEISURE & CONSUMER STAPLES 1.0%
AGRICULTURAL PRODUCTS 1.0%
50,000 Raisio Group Plc~ 122,958
-----------
TOTAL LEISURE & CONSUMER STAPLES 122,958
-----------
TOTAL FINLAND 395,903
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
FRANCE 2.1%
ENERGY 1.0%
INTEGRATED OIL & GAS 1.0%
600 Total SA $ 122,542
-----------
TOTAL ENERGY 122,542
INDUSTRIALS 1.1%
BUILDING PRODUCTS 1.1%
2,900 Compagnie de
Saint-Gobain 149,177
-----------
TOTAL INDUSTRIALS 149,177
-----------
TOTAL FRANCE 271,719
GERMANY 10.3%
CONSUMER DISCRETIONARY 5.1%
APPAREL & ACCESSORIES 1.1%
5,576 Hugo Boss AG 148,747
FOOTWEAR 1.9%
900 Puma AG Rudolf
Dassler Sport 240,613
SPECIALTY STORES 0.9%
3,747 Douglas Holding AG 111,827
TIRES & RUBBER 1.2%
2,806 Continental AG 152,509
-----------
TOTAL CONSUMER DISCRETIONARY 653,696
HEALTH CARE 2.3%
HEALTH CARE DISTRIBUTORS 1.2%
2,300 Celesio AG 156,645
PHARMACEUTICALS 1.1%
2,100 Schering AG 132,025
-----------
TOTAL HEALTH CARE 288,670
LEISURE & CONSUMER STAPLES 0.8%
HYPERMARKETS & SUPER CENTERS 0.8%
2,382 Metro AG 106,017
-----------
TOTAL LEISURE & CONSUMER STAPLES 106,017
MATERIALS 2.1%
INDUSTRIAL GASES 1.1%
2,391 Linde AG 137,834
STEEL 1.0%
6,500 ThyssenKrupp AG 126,340
-----------
TOTAL MATERIALS 264,174
-----------
TOTAL GERMANY 1,312,557
</Table>
Schedule of Investments 35
Schedule of Investments (continued)
ICON International Equity Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
HONG KONG 1.3%
LEISURE & CONSUMER STAPLES 1.3%
HOTELS, RESORTS & CRUISE LINES 1.3%
152,000 Shangri-La Asia
Limited $ 163,709
-----------
TOTAL LEISURE & CONSUMER STAPLES 163,709
-----------
TOTAL HONG KONG 163,709
JAPAN 26.0%
CONSUMER DISCRETIONARY 5.3%
AUTOMOBILE MANUFACTURERS 1.2%
4,000 Toyota Motor
Corporation 152,350
DEPARTMENT STORES 0.7%
12,000 The Daimaru, Inc. 92,256
HOMEBUILDINGS 0.9%
2,700 DAITO TRUST
CONSTRUCTION
CO., LTD. 109,369
HOUSEHOLD APPLIANCES 1.1%
10,000 Makita Corporation 141,280
HOUSEWARES & SPECIALTIES 0.6%
18,000 NORITAKE CO.,
LIMITED 70,213
MOTORCYCLE MANUFACTURERS 0.8%
7,000 Yamaha Motor Co.,
Ltd. 105,813
-----------
TOTAL CONSUMER DISCRETIONARY 671,281
ENERGY 2.5%
OIL & GAS EXPLORATION & PRODUCTION 1.2%
28,000 TEIKOKU OIL CO.,
LTD. 155,333
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 1.3%
26,000 NIPPON OIL
CORPORATION 164,055
-----------
TOTAL ENERGY 319,388
FINANCIAL 9.3%
CONSUMER FINANCE 3.5%
2,000 ACOM CO., LTD 124,088
3,800 Credit Saison Co.,
Ltd. 117,202
1,000 ORIX Corporation 102,279
1,500 Promise Co., Ltd. 98,192
-----------
441,761
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
PROPERTY & CASUALTY INSURANCE 0.7%
10,000 Mitsui Sumitomo
Insurance Company,
Limited $ 82,649
REGIONAL BANKS 5.1%
24,000 The 77 Bank, Ltd. 134,855
27,000 THE BANK OF
FUKUOKA, LTD. 129,011
27,000 The Bank of
Yokohama, Ltd. 145,070
29,000 The Joyo Bank, Ltd. 116,834
17,000 THE SHIZUOKA BANK,
LTD. 127,995
-----------
653,765
-----------
TOTAL FINANCIAL 1,178,175
HEALTH CARE 2.0%
HEALTH CARE DISTRIBUTORS 1.0%
5,000 SUZUKEN CO., LTD. 129,606
PHARMACEUTICALS 1.0%
4,500 Eisai Co., Ltd. 122,604
-----------
TOTAL HEALTH CARE 252,210
INDUSTRIALS 5.4%
INDUSTRIAL MACHINERY 0.9%
9,000 KOMORI CORPORATION 114,564
MARINE 1.4%
27,000 Kawasaki Kisen
Kaisha, Ltd. 184,759
TRADING COMPANIES & DISTRIBUTORS 2.0%
13,000 MITSUI & CO., LTD. 108,984
19,000 SUMITOMO
CORPORATION 141,546
-----------
250,530
TRUCKING 1.1%
15,000 Seino
Transportation Co.,
Ltd. 134,415
-----------
TOTAL INDUSTRIALS 684,268
MATERIALS 1.5%
METAL & GLASS CONTAINERS 0.7%
6,000 TOYO SEIKAN KAISHA,
LTD. 92,664
</Table>
36 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SPECIALTY CHEMICALS 0.8%
13,000 NIPPON SHOKUBAI
CO., LTD. $ 97,076
-----------
TOTAL MATERIALS 189,740
-----------
TOTAL JAPAN 3,295,062
MEXICO 4.3%
CONSUMER DISCRETIONARY 1.4%
COMPUTER & ELECTRONICS RETAIL 1.4%
26,100 Grupo Elektra S.A.
de C.V.~ 175,061
-----------
TOTAL CONSUMER DISCRETIONARY 175,061
INDUSTRIALS 0.9%
INDUSTRIAL CONGLOMERATES 0.9%
30,000 Alfa, S.A.~ 113,291
-----------
TOTAL INDUSTRIALS 113,291
LEISURE & CONSUMER STAPLES 1.1%
SOFT DRINKS 1.1%
33,000 Fomento Economico
Mexicano, S.A. de
C.V.~ 145,573
-----------
TOTAL LEISURE & CONSUMER STAPLES 145,573
MATERIALS 0.2%
STEEL 0.2%
10,197 Hylsamex, S.A. de
C.V.(a) ~ 20,864
-----------
TOTAL MATERIALS 20,864
TELECOMMUNICATION & UTILITIES 0.7%
WIRELESS TELECOMMUNICATION SERVICES 0.7%
48,220 America Movil S.A.
de C.V.~ 94,008
-----------
TOTAL TELECOMMUNICATION &
UTILITIES 94,008
-----------
TOTAL MEXICO 548,797
NETHERLANDS 3.0%
ENERGY 1.2%
INTEGRATED OIL & GAS 1.2%
2,900 Royal Dutch
Petroleum Company 149,583
-----------
TOTAL ENERGY 149,583
MATERIALS 1.8%
DIVERSIFIED CHEMICALS 0.9%
3,355 Akzo Nobel N.V. 118,703
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SPECIALTY CHEMICALS 0.9%
2,140 DSM NV $ 111,834
-----------
TOTAL MATERIALS 230,537
-----------
TOTAL NETHERLANDS 380,120
NORWAY 3.1%
ENERGY 1.8%
OIL & GAS DRILLING 1.8%
17,485 Smedvig ASA 228,964
-----------
TOTAL ENERGY 228,964
INFORMATION TECHNOLOGY 1.3%
COMMUNICATIONS EQUIPMENT 1.3%
73,414 Nera ASA 163,087
-----------
TOTAL INFORMATION TECHNOLOGY 163,087
-----------
TOTAL NORWAY 392,051
SPAIN 4.9%
ENERGY 0.9%
INTEGRATED OIL & GAS 0.9%
5,230 Repsol YPF, S.A. 114,831
-----------
TOTAL ENERGY 114,831
LEISURE & CONSUMER STAPLES 1.0%
RESTAURANTS 1.0%
65,925 TelePizza, S.A. 127,250
-----------
TOTAL LEISURE & CONSUMER STAPLES 127,250
MATERIALS 0.8%
STEEL 0.8%
7,200 Acerinox, S.A. 99,786
-----------
TOTAL MATERIALS 99,786
TELECOMMUNICATION & UTILITIES 2.2%
ELECTRIC UTILITIES 1.2%
6,700 Union Fenosa, S.A. 152,607
WATER UTILITIES 1.0%
7,000 Sociedad General de
Aquas de Barcelona,
S.A. 123,373
-----------
TOTAL TELECOMMUNICATION &
UTILITIES 275,980
-----------
TOTAL SPAIN 617,847
SWEDEN 3.6%
FINANCIAL 2.5%
DIVERSIFIED BANKS 1.0%
16,000 Nordea Bank AB 131,079
</Table>
Schedule of Investments 37
Schedule of Investments (continued)
ICON International Equity Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
LIFE & HEALTH INSURANCE 1.5%
47,767 Skandia Forsakrings
AB $ 189,687
-----------
TOTAL FINANCIAL 320,766
INDUSTRIALS 1.1%
CONSTRUCTION & FARM MACHINERY 1.1%
3,907 Volvo AB 138,195
-----------
TOTAL INDUSTRIALS 138,195
-----------
TOTAL SWEDEN 458,961
SWITZERLAND 3.6%
INDUSTRIALS 1.7%
INDUSTRIAL MACHINERY 1.7%
880 Georg Fischer AG(a) 219,628
-----------
TOTAL INDUSTRIALS 219,628
INFORMATION TECHNOLOGY 0.9%
COMPUTER STORAGE & PERIPHERALS 0.9%
2,500 Logitech
International
S.A.(a) 121,145
-----------
TOTAL INFORMATION TECHNOLOGY 121,145
MATERIALS 1.0%
SPECIALTY CHEMICALS 1.0%
200 Givaudan SA 121,855
-----------
TOTAL MATERIALS 121,855
-----------
TOTAL SWITZERLAND 462,628
UNITED KINGDOM 6.7%
CONSUMER DISCRETIONARY 2.5%
DEPARTMENT STORES 0.8%
17,000 Marks & Spencer
Group plc 105,610
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
HOMEBUILDING 1.7%
13,000 George Wimpey plc $ 94,829
5,000 The Berkeley Group
plc 114,475
-----------
209,304
-----------
TOTAL CONSUMER DISCRETIONARY 314,914
FINANCIAL 2.8%
DIVERSIFIED BANKS 1.8%
11,000 Abbey National plc 111,369
12,293 Barclays PLC 117,707
-----------
229,076
LIFE & HEALTH INSURANCE 1.0%
71,980 Legal & General
Group plc 129,496
-----------
TOTAL FINANCIAL 358,572
TELECOMMUNICATION & UTILITIES 1.4%
WATER UTILITIES 1.4%
14,061 AWG plc 174,653
4,668,252 AWG plc --
Redemption Shares 7,941
-----------
182,594
-----------
TOTAL TELECOMMUNICATION &
UTILITIES 182,594
-----------
TOTAL UNITED KINGDOM 856,080
-----------
TOTAL COMMON STOCKS
(COST $11,423,804) 12,720,237
LIABILITIES LESS OTHER ASSETS
(0.2%) (23,101)
-----------
NET ASSETS 100.0% $12,697,136
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
~ All securities were fair valued (Note 1) as of September 30, 2004 unless
notes with a ~. Total value of securities fair valued was $10,429,129.
38 Schedule of Investments
Statements of Assets and Liabilities
September 30, 2004
<Table>
<Caption>
ICON ICON
ASIA-PACIFIC ICON INTERNATIONAL
REGION FUND EUROPE FUND EQUITY FUND
------------ ----------- -------------
ASSETS
Investments, at cost $15,086,573 $6,304,121 $11,423,804
------------ ----------- -------------
Investments, at value 16,775,407 7,725,862 12,720,237
Cash 225,182 98,447 -
Receivables:
Fund shares sold 63,076 28,437 58,018
Interest 257 10 106
Dividends 56,320 14,324 36,824
Other assets 930 419 681
------------ ----------- -------------
Total Assets 17,121,172 7,867,499 12,815,866
------------ ----------- -------------
LIABILITIES
Payables:
Due to custodian bank - - 34,304
Fund shares redeemed 13,778 3,721 37,110
Advisory fees 14,207 6,394 10,427
Accrued distribution fees - - 753
Fund accounting, custodial and transfer agent fees 17,578 9,147 15,398
Administration fees 661 303 493
Accrued expenses 27,736 21,854 20,245
------------ ----------- -------------
Total Liabilities 73,960 41,419 118,730
------------ ----------- -------------
NET ASSETS - ALL SHARE CLASSES $17,047,212 $7,826,080 $12,697,136
============ =========== =============
NET ASSETS - CLASS I $ - $ - $ 3,211,198
============ =========== =============
NET ASSETS - CLASS C $ - $ - $ 183,266
============ =========== =============
NET ASSETS - CLASS Z $ - $ - $ 9,302,672
============ =========== =============
NET ASSETS CONSIST OF
Paid-in capital $25,081,904 $7,238,624 $ 9,936,859
Accumulated undistributed net investment income/(loss) 26,459 (757) -
Accumulated undistributed net realized (loss) from
investments (9,027,521) (478,847) 2,140,885
Accumulated net realized (loss) from foreign currency
translations (722,489) (355,178) (677,440)
Unrealized appreciation:
on securities and other assets and liabilities
denominated in foreign currency 1,688,859 1,422,238 1,296,832
------------ ----------- -------------
NET ASSETS $17,047,212 $7,826,080 $12,697,136
============ =========== =============
Total Shares outstanding (unlimited shares authorized, no
par value) 2,086,349 650,610 1,198,308
------------ ----------- -------------
Class I - - 303,357
Class C - - 17,376
Class Z - - 877,575
Net asset value (offering price and redemption price per
share) $ 8.17 $ 12.03 -
Class I - - $ 10.59
Class C - - $ 10.55
Class Z - - $ 10.60
</Table>
The accompanying notes are an integral part of the financial statements.
Financial Statements 39
Statements of Operations
For the year ended September 30, 2004
<Table>
<Caption>
ICON ICON
ASIA-PACIFIC ICON INTERNATIONAL
REGION FUND EUROPE FUND EQUITY FUND
------------ ----------- -------------
INVESTMENT INCOME
Interest $ 888 $ 435 $ 1,240
Dividends 342,164 155,579 270,932
Foreign taxes withheld (27,626) (21,663) (31,459)
------------ ----------- -------------
Total Investment Income 315,426 134,351 240,713
------------ ----------- -------------
EXPENSES
Advisory fees 150,167 72,495 114,455
Distribution fees:
Class I - - 3,141
Class C - - 988
Fund accounting, custodial and transfer agent fees 76,901 44,971 66,730
Administration fees 7,358 3,561 5,617
Audit fees 1,759 847 1,739
Registration fees 23,522 21,030 14,823
Legal fees 634 342 424
Insurance expense 851 710 786
Trustee fees and expenses 1,107 706 946
Shareholder reports 7,401 4,353 6,033
Interest expense - 6 190
Other expenses 15,705 13,040 15,990
------------ ----------- -------------
Total Expenses 285,405 162,061 231,862
------------ ----------- -------------
NET INVESTMENT INCOME (LOSS) 30,021 (27,710) 8,851
------------ ----------- -------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain from investment transactions 176,502 1,242,857 3,949,314
Net realized (loss) from foreign currency translations (3,454) (765) (2,877)
Change in unrealized net appreciation/(depreciation):
on securities 115,520 365,112 (1,454,672)
on other assets and liabilities denominated in foreign
currency 81 263 (339)
------------ ----------- -------------
Net realized and unrealized gain on investments 288,649 1,607,467 2,491,426
------------ ----------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $318,670 $1,579,757 $ 2,500,277
============ =========== =============
</Table>
The accompanying notes are an integral part of the financial statements.
40 Financial Statements
Statements of Changes in Net Assets
<Table>
<Caption>
ICON ASIA-PACIFIC REGION FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income $ 30,021 $ 45,529
Net realized gain from investment transactions 176,502 745,694
Net realized gain/(loss) from foreign currency
translations (3,454) (1,457)
Change in unrealized appreciation on securities and
foreign currency translations 115,601 868,520
------------------ ------------------
Net increase in net assets resulting from operations 318,670 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 20,963,976 6,269,616
Reinvested dividends and distributions 39,063 -
Shares repurchased (10,319,543) (8,770,250)
------------------ ------------------
Net increase/(decrease) from fund share transactions 10,683,496 (2,500,634)
------------------ ------------------
Total net increase/(decrease) in net assets 10,963,002 (842,348)
NET ASSETS
Beginning of period 6,084,210 6,926,558
------------------ ------------------
End of period $ 17,047,212 $ 6,084,210
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 2,524,850 879,754
Reinvested dividends and distributions 4,835 -
Shares repurchased (1,241,267) (1,302,144)
------------------ ------------------
Net increase/(decrease) 1,288,418 (422,390)
Shares outstanding beginning of period 797,931 1,220,321
------------------ ------------------
Shares outstanding end of period 2,086,349 797,931
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $ 18,808,223 $ 5,375,821
Proceeds from sales of securities 8,416,715 7,711,768
Purchases of long-term U.S. government securities - -
Proceeds from sales of long-term U.S. government
securities - -
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 26,459 $ 39,163
================== ==================
</Table>
* The tax character of distributions to shareholders from net investment
income for the period ending September 30, 2004 is ordinary income.
The accompanying notes are an integral part of the financial statements.
Financial Statements 41
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON EUROPE FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment (loss) $ (27,710) $ (19,824)
Net realized gain from investment transactions 1,242,857 558,317
Net realized gain/(loss) from foreign currency
translations (765) 691
Change in unrealized appreciation on securities and
foreign currency translations 365,375 1,568,069
------------------ ------------------
Net increase in net assets resulting from operations 1,579,757 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 5,686,345 21,160,657
Reinvested dividends and distributions - -
Shares repurchased (8,702,471) (18,624,601)
------------------ ------------------
Net increase/(decrease) from fund share transactions (3,016,126) 2,536,056
------------------ ------------------
Total net increase/(decrease) in net assets (1,436,369) 4,643,309
NET ASSETS
Beginning of period 9,262,449 4,619,140
------------------ ------------------
End of period $ 7,826,080 $ 9,262,449
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 505,470 2,507,561
Reinvested dividends and distributions - -
Shares repurchased (796,013) (2,190,470)
------------------ ------------------
Net increase/(decrease) (290,543) 317,091
Shares outstanding beginning of period 941,153 624,062
------------------ ------------------
Shares outstanding end of period 650,610 941,153
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $ 5,496,870 $ 8,271,751
Proceeds from sales of securities 8,124,419 6,013,474
Purchases of long-term U.S. government securities - -
Proceeds from sales of long-term U.S. government
securities - -
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ (757) $ -
================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
42 Financial Statements
<Table>
<Caption>
ICON INTERNATIONAL EQUITY FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income $ 8,851 $ 75,481
Net realized gain from investment transactions 3,949,314 120,749
Net realized gain/(loss) from foreign currency
translations (2,877) 3,777
Change in unrealized appreciation/(depreciation) on
securities and foreign currency translations (1,455,011) 2,997,553
------------------ ------------------
Net increase in net assets resulting from operations 2,500,277 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 3,425,609 -
Class C 267,290 -
Class Z 3,833,056 10,203,582
Reinvested dividends and distributions
Class I - -
Class C - -
Class Z 57,394 84,466
Shares repurchased
Class I (265,090) -
Class C (75,175) -
Class Z (7,575,790) (11,035,500)
------------------ ------------------
Net (decrease) from fund share transactions (332,706) (747,452)
------------------ ------------------
Total net increase in net assets 2,109,637 2,365,513
NET ASSETS
Beginning of period 10,587,499 8,221,986
------------------ ------------------
End of period $12,697,136 $ 10,587,499
================== ==================
</Table>
* The tax character of distributions to shareholders from net investment
income for the periods ending September 30, 2004 and September 30, 2003 is
ordinary income.
The accompanying notes are an integral part of the financial statements.
Financial Statements 43
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON INTERNATIONAL EQUITY FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
TRANSACTIONS IN FUND SHARES
Shares sold
Class I 328,830 -
Class C 24,806 -
Class Z 375,261 1,344,165
Reinvested dividends and distributions
Class I - -
Class C - -
Class Z 5,845 13,781
Shares repurchased
Class I (25,473) -
Class C (7,430) -
Class Z (762,885) (1,478,885)
------------------ ------------------
Net (decrease) (61,046) (120,939)
Shares outstanding beginning of period 1,259,354 1,380,293
------------------ ------------------
Shares outstanding end of period 1,198,308 1,259,354
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $12,810,296 $ 8,232,853
Proceeds from sales of securities 13,098,694 8,866,056
Purchases of long-term U.S. government securities - -
Proceeds from sales of long-term U.S. government
securities - -
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ - $ -
================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
44 Financial Statements
Financial Highlights
<Table>
<Caption>
ICON ASIA-PACIFIC REGION FUND
----------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2004
2004 2003 2002 2001 2000
------- ------ ------- ------- -------
Net asset value, beginning of period $ 7.62 $ 5.68 $ 6.81 $ 10.25 $ 10.87
------- ------ ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) 0.02 0.04 (0.19) 0.07 0.03
Net realized and unrealized gains/(losses) on investments 0.55 1.90 (0.91) (3.51) (0.65)
------- ------ ------- ------- -------
Total from investment operations 0.57 1.94 (1.10) (3.44) (0.62)
------- ------ ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.02) - - - -
Distributions from net realized gains - - - - -
Return of Capital - - (0.03) - -
------- ------ ------- ------- -------
Total distributions - - (0.03) - -
------- ------ ------- ------- -------
Net asset value, end of period $ 8.17 $ 7.62 $ 5.68 $ 6.81 $ 10.25
======= ====== ======= ======= =======
Total return 7.51% 34.15% (16.29)% (33.56)% (5.70)%
Net assets, end of period (in thousands) $17,047 $6,084 $ 6,927 $19,684 $25,710
Average net assets for the period (in thousands) 14,976 6,683 12,142 18,749 32,629
Ratio of expenses to average net assets 1.91% 1.98% 1.66% 1.70% 1.53%
Ratio of net investment income/(loss) to average net assets 0.20% 0.68% (0.23)% 0.75% 0.24%
Portfolio turnover rate 58.62% 81.44% 14.43% 55.58% 101.88%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
Financial Highlights 45
Financial Highlights (continued)
<Table>
<Caption>
ICON EUROPE FUND
------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
------ ------ ------ ------ ------
Net asset value, beginning of period $ 9.84 $ 7.40 $ 8.13 $10.14 $10.12
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.04) (0.02)(x) (0.04)(x) 0.05(x) 0.02(x)
Net realized and unrealized gains/(losses) on investments 2.23 2.46 (0.67) (2.06) -
------ ------ ------ ------ ------
Total from investment operations 2.19 2.44 (0.71) (2.01) 0.02
------ ------ ------ ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - (0.02) - -
Distributions from net realized gains - - - - -
------ ------ ------ ------ ------
Total distributions - - (0.02) - -
------ ------ ------ ------ ------
Net asset value, end of period $12.03 $ 9.84 $ 7.40 $ 8.13 $10.14
====== ====== ====== ====== ======
Total return 22.26% 32.97% (8.76)% (19.82)% 0.20%
Net assets, end of period (in thousands) $7,826 $9,262 $4,619 $7,397 $6,560
Average net assets for the period (in thousands) 7,230 6,774 5,706 7,935 7,109
Ratio of expenses to average net assets 2.24% 1.87% 2.14% 1.96% 1.80%
Ratio of net investment income/(loss) to average net assets (0.38)% (0.29)% (0.42)% 0.55% 0.18%
Portfolio turnover rate 78.57% 101.37% 12.26% 84.49% 62.17%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
46 Financial Highlights
<Table>
<Caption>
ICON INTERNATIONAL EQUITY FUND
---------------------------------------------------------------------------------------
CLASS I CLASS C
FOR THE PERIOD FOR THE PERIOD
FEBRUARY 6, FEBRUARY 19,
2004 2004
(INCEPTION) TO (INCEPTION) TO CLASS Z
SEPTEMBER 30, SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, 2004
2004 2004 2004 2003 2002 2001 2000
-------------- -------------- ------- ------- ------- ------- -------
Net asset value, beginning of
period $10.96 $11.29 $ 8.41 $ 5.96 $ 7.24 $ 11.79 $ 11.74
-------------- -------------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income/(loss)(x) 0.04 (0.02) 0.01 0.06 0.04 0.09 0.04
Net realized and unrealized
gains/(losses) on
investments (0.41) (0.72) 2.24 2.45 (1.25) (3.31) 1.21
-------------- -------------- ------- ------- ------- ------- -------
Total from investment operations (0.37) (0.74) 2.25 2.51 (1.21) (3.22) 1.25
-------------- -------------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income - - (0.06) - (0.04) - -
Distributions from net
realized gains - - - (0.06) - (1.33) (1.20)
Return of capital - - - - (0.03) - -
-------------- -------------- ------- ------- ------- ------- -------
Total distributions - - (0.06) (0.06) (0.07) (1.33) (1.20)
-------------- -------------- ------- ------- ------- ------- -------
Net asset value, end of period $10.59 $10.55 $ 10.60 $ 8.41 $ 5.96 $ 7.24 $ 11.79
============== ============== ======= ======= ======= ======= =======
Total return* (3.38)% (6.55)% 26.79% 42.60% (16.94)% (30.29)% 10.43%
Net assets, end of period (in
thousands) $3,211 $ 183 $ 9,303 $10,587 $ 8,222 $14,196 $33,315
Average net assets for the
period (in thousands) 1,960 162 10,063 8,571 13,347 18,204 29,412
Ratio of expenses to average net
assets(a) 2.32% 3.06% 1.98% 2.00% 1.72% 1.65% 1.52%
Ratio of net investment
income/(loss) to average net
assets(a) 0.44% (0.16)% 0.03% 0.88% 0.48% 0.97% 0.30%
Portfolio turnover rate 117.74%(b) 117.74%(b) 117.74%(b) 98.91% 91.99% 41.67% 34.24%
</Table>
(x) Calculated using the average share method.
* The total return calculation is for the period indicated.
(a) Annualized for periods less than one year.
(b) Portfolio turnover is calculated at the Fund level and therefore represents
the year ended September 30, 2004.
The accompanying notes are an integral part of the financial statements.
Financial Highlights 47
Notes to Financial Statements
September 30, 2004
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Asia-Pacific Region Fund ("Asia-Pacific Region Fund"), ICON Europe Fund
("Europe Fund") (formerly ICON South Europe Fund) and ICON International Equity
Fund ("International Equity Fund") (formerly ICON North Europe 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 Class I, Class C and Class Z. All classes have equal rights as
to earnings, assets and voting privileges except that each Class may bear
different distribution fees and registration costs and each Class has exclusive
voting rights with respect to its distribution plan. There are 15 other active
funds within the Trust. Those funds are covered by separate prospectuses and
shareholder reports.
Each Fund is authorized to issue an unlimited number of no par shares. The 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 and currency transactions may
involve certain considerations and risks not typically associated with those of
U.S. dollar-denominated transactions as a result of, among other factors, the
possibility of lower government supervision and regulation of foreign securities
markets and the possibility of political or economic instability. 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
48 Notes to Financial Statements
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.
Foreign securities traded in countries outside of the Western Hemisphere are
fair valued daily by utilizing the quotations of an independent pricing service,
unless the Funds' adviser determines that use of another valuation methodology
is appropriate. The pricing service uses statistical analyses and quantitative
models to adjust local market prices using factors such as subsequent movement
and changes in the prices of indexes, securities and exchange rates in other
markets in determining fair value as of the time a Fund calculates its net asset
value. 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
Notes to Financial Statements 49
Notes to Financial Statements (continued)
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 annual period ended September 30,
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.
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.
No forward foreign currency contracts were entered into during the year ended
September 30, 2004.
50 Notes to Financial Statements
OPTIONS TRANSACTIONS.
Each Fund may write put and call options only if it, among other things, (i)
owns an offsetting position in the underlying security or (ii) maintains cash or
other liquid assets in an amount equal to or greater than its obligation under
the option.
When a Fund writes a put or call option, an amount equal to the premium received
is included in the Statement of Assets and Liabilities as a liability. The
amount of the liability is subsequently marked-to-market to reflect the current
market value of the option. If an option expires on its stipulated expiration
date or if the Fund enters into a closing purchase transaction, a gain or loss
is realized. If a written call option is exercised, a gain or loss is realized
for the sale of the underlying security and the proceeds from the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the security acquired is decreased by the premium
originally received. As a writer of an option, a Fund has no control over
whether the underlying securities are subsequently sold (call) or purchased
(put) and, as a result, bears the market risk of an unfavorable change in the
price of the security underlying the written option.
Each Fund may also purchase put and call options. When a Fund purchases a 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.
No option transactions were entered into during the year ended September 30,
2004.
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
Notes to Financial Statements 51
Notes to Financial Statements (continued)
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. In calculating the
net asset value of the shares in the various classes of the International Equity
Fund, investment income, realized and unrealized gains and losses and expenses
other than class specific expenses are allocated daily to each class of shares
based upon the proportion of net assets of each class at the beginning of each
day.
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.
52 Notes to Financial Statements
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. The Class I shareholders pay an annual 12b-1 and service
fee of 0.25% of average daily net assets. The Class C shareholders pay an annual
12b-1 and service fee of 1.00% of average daily net assets. For the year ended
September 30, 2004 the total amounts paid or payable to IDI pursuant to the
12b-1 Plan were $988 on Class C shares and $3,141 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.
Notes to Financial Statements 53
Notes to Financial Statements (continued)
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,
2004 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.
<Table>
<Caption>
UNDISTRIBUTED
ACCUMULATED UNDISTRIBUTED LONG-TERM CAPITAL
CAPITAL LOSSES ORDINARY INCOME GAIN LOSSES
- ---------------------------------------------------------------------------------------------
ICON Asia-Pacific Region
Fund $9,631,893 $26,459 0 0
ICON Europe Fund 832,262 0 0 0
ICON International Equity
Fund 0 $66,857 $1,396,592 0
</Table>
During the year ended September 30, 2004 the ICON Asia-Pacific Region Fund
utilized capital loss carryforwards of $137,275, the ICON Europe Fund utilized
capital loss carryforwards of $1,244,634 and the ICON International Equity Fund
utilized capital loss carryforwards of $2,433,905.
The aggregate composition by Fund of unrealized appreciation and depreciation of
investment securities for federal income tax purposes as of September 30, 2004
are as follows:
<Table>
<Caption>
FEDERAL UNREALIZED UNREALIZED
TAX COST APPRECIATION (DEPRECIATION) NET APPRECIATION
- ---------------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund $15,204,702 $2,296,655 $(725,950) $1,570,705
ICON Europe Fund 6,304,121 1,597,892 (176,151) 1,421,741
ICON International Equity
Fund 11,423,804 1,704,043 (407,610) 1,296,433
</Table>
4. INDEMNIFICATIONS
In the normal course of business, the Funds enter into contracts that contain a
variety of representations which provide general indemnifications. Each Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against each Fund that have not yet occurred.
However, based on experience, the Funds expect the risk of loss to be remote.
54 Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of the ICON Foreign Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of ICON Asia-Pacific Region Fund, ICON
Europe Fund (formerly known as "ICON South Europe Region Fund") and ICON
International Equity Fund (formerly known as "ICON North Europe Region Fund")
(three of the portfolios constituting ICON Funds, hereafter referred to as the
"Funds") at September 30, 2004, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 2004 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 17, 2004
Report of Accounting Firm 55
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 18 ICON Funds (the "Funds"). The Board is responsible for general oversight
of the Funds' business and for assuring that the Funds are managed in the best
interest of the Funds' shareholders. The Trustees, and their ages, addresses and
principal occupations are set forth below. Trustees have no official term of
office and generally serve until they resign or are not re-elected.
INTERESTED TRUSTEE
CRAIG T. CALLAHAN, 53, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception. Dr. Callahan also serves as President (1998 to
present) and Chief Investment Officer (1991 to present) of ICON Advisers, Inc.
("ICON Advisers"), the Funds' Investment Adviser. Dr. Callahan is also President
(1998 to present); Director (1991 to present); and was previously Vice President
(1991 to 1998) of ICON Distributors, Inc. ("IDI"), the Funds' Distributor, and
is President of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan also
serves as the Chief Investment Officer and Director (1994 to present), and was
previously Secretary/Treasurer (1994 to 1998) of ICON Management & Research
Corporation ("IM&R"), the parent company of ICON Advisers and IDI.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 54. Mr. Bergert has been a Trustee of the Funds since 1999. Mr.
Bergert is President of Venture Capital Management LLC (1997 to present);
General Partner of SOGNO Partners LP, a venture capital company (2001 to
present); and was previously a General Partner with KPMG Peat Marwick, LLP (1979
to 1997). Mr. Bergert is also a Director of Herre Bros, Inc., a contracting
company (1998 to present); Delta Dental of Pennsylvania, an insurance company
(1998 to present); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 57. Mr. Pomeroy has been a Trustee of the Funds since
November 2002. Mr. Pomeroy is Chief Investment Officer and Director of
Investments, Pennsylvania State University (2001 to present) and was Portfolio
Manager and Product Manager, Trinity Investment Management Corporation (1989 to
2001).
GREGORY KELLAM SCOTT, 56. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott was previously Senior Vice President -- Law, General
Counsel and Secretary, GenCorp, Inc., a multinational technology-based
manufacturing company (2002 to 2004); Vice President and General Counsel of
Kaiser-Hill Company LLC, a nuclear clean-up and environmental remediation
company (2000 to 2002) and a Colorado Supreme Court Justice (1993 to 2000). Mr.
Scott is also a member of the National Board of Directors of the Constituency
for Africa (1997 to present).
56 Trustees and Officers
R. MICHAEL SENTEL, 56. Mr. Sentel has been a Trustee of the Funds since their
inception. Mr. Sentel is a Senior Attorney with the U.S. Department of Education
(1996 to present). Mr. Sentel also provides legal representation as a sole
practitioner with an emphasis on corporate and transactional law. He served as
general counsel to numerous public companies and served on the board of
directors of one of these clients. Mr. Sentel began his legal career with the
U.S. Securities and Exchange Commission's Division of Enforcement and became a
branch chief. Later he served as the section chief for the Professional
Liability Section of the Federal Deposit Insurance Corp. with responsibility for
the Rocky Mountain Region (1991 to 1994).
JONATHAN F. ZESCHIN, 51. Mr. Zeschin has been a Trustee of the Funds since
November 2002. Mr. Zeschin is President and Founder of ESSENTIAL Advisers, Inc.,
a wealth management and investment advisory firm (2000 to present) and was
Managing Partner of JZ Partners LLC, a business consulting firm for investment
management companies (1998 to 2002). Mr. Zeschin was previously President of
Founders Asset Management LLC, an investment management company (1995 to 1998)
and Executive Vice President, INVESCO Funds Group, an investment advisory
company (1992 to 1995). Mr. Zeschin was previously a Director of the Young
Americans Education Foundation and Young Americans Bank (1998 to 2004); and was
previously a Director of the Wasatch Funds (2002 to 2004).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 53. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as ICON Advisers' President (1998 to
present) and Chief Investment Officer (1991 to present). Dr. Callahan is also
President (1998 to present), Director (1991 to present) and was previously Vice
President (1991 to 1998) of IDI and is President of ICON Insurance Agency, Inc.
(2004 to present). Dr. Callahan is also the Chief Investment Officer and
Director (1994 to present), and was previously Secretary/Treasurer (1994 to
1998) of IM&R.
ERIK L. JONSON, 55. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception. Mr. Jonson is also Chief Financial
Officer (1996 to present) and Executive Vice President (2004 to present) and was
previously Vice President (1998 to 2004) of ICON Advisers; Chief Financial
Officer, Secretary and Director (1996 to present) of IM&R; Executive Vice
President (2004 to present) and Treasurer (2002 to present) and was previously
Secretary/Treasurer, (1998 to 2002) and Vice President, (2002 to 2004) of IDI;
and Executive Vice President and Treasurer of ICON Insurance Agency, Inc. (2004
to present).
ANDRA C. OZOLS, 43. Ms. Ozols has been a Vice President and Secretary of the
Funds since March 2002. She previously served in that capacity in 1998.
Trustees and Officers 57
Board of Trustees and Fund Officers (continued)
(unaudited)
Ms. Ozols is also Executive Vice President (2004 to present), General Counsel
and Secretary (2002 to present) and was previously Vice President (2002 to 2004)
of ICON Advisers; Executive Vice President (2004 to present) and Secretary (2002
to present) and was previously Vice President (2002 to 2004) of IDI; Director
(June 2003 to present) of IM&R; and Executive Vice President and Secretary of
ICON Insurance Agency, Inc. (2004 to present). Ms. Ozols was previously Vice
President (1999 to 2002) and Assistant General Counsel (October 1998 to February
2002) of Founders Asset Management LLC; and was previously a Branch Chief (1993
to 1995) and Enforcement Attorney (1990 to 1995 and 1996 to 1998) with the U.S.
Securities and Exchange Commission.
The Trustees and Officers of the Funds may be contacted at 5299 DTC Boulevard,
Suite 1200, Greenwood Village, Colorado 80111.
Additional information about the Funds' Trustees and Officers is available in
the Funds' Statement of Additional Information, which can be obtained free of
charge by calling 1-800-764-0442 or by visiting www.iconadvisers.com.
58 Trustees and Officers
Other Information (unaudited)
QUALIFYING DIVIDEND INCOME
Of the amount distributed in the fiscal year ended September 30, 2004 for the
ICON Asia-Pacific Region Fund, 0.28% represents qualified dividend income. Of
the amount distributed in the fiscal year ended September 30, 2004 for the ICON
International Equity Fund, 100% represents qualified dividend income.
Other Information 59
PORTFOLIO HOLDINGS
A list of each ICON Fund's Top 10 holdings is available at www.iconadvisers.com
on or about 15 days following each month-end. Beginning March 1, 2005, each ICON
Fund will file a complete schedule of portfolio holdings for the first and third
quarters of its fiscal year with the SEC on Form N-Q. The ICON Funds' Forms N-Q
will be available at www.sec.gov or may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC. Information about the
Public Reference Room may be obtained by calling 1-800-SEC-0330.
PROXY VOTING
A description of the policies and procedures the ICON Funds use to vote proxies
is available at www.iconadvisers.com; without charge upon request by calling
1-800-764-0442; or on the SEC's website at www.sec.gov.
Information about how the ICON Funds voted proxies related to each Fund's
portfolio securities during the 12-month period ended June 30, 2004 is available
at www.iconadvisers.com or on the SEC's website at www.sec.gov.
This report is for the general information of the Funds' shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by a current prospectus. You may obtain a copy of the prospectus,
which contains information about the investment objectives, risks, charges,
expenses, and share classes of each ICON Fund, by visiting www.iconadvisers.com
or by calling 1-800-764-0442. Please read the prospectus carefully before
investing. ICON Distributors, Inc., Distributor.
60
[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, 12(th) Floor
Greenwood Village, CO 80111
On the Internet www.iconadvisers.com
By E-Mail info@iconadvisers.com
</Table>
[ICON FUNDS LOGO]
1-800-764-0442
www.iconadvisers.com
ICRPANNUINTL I-141-FOR
2004 Annual Report
Investment Update
ICON SECTOR FUNDS
ICON CONSUMER DISCRETIONARY FUND
ICON ENERGY FUND
ICON FINANCIAL FUND
ICON HEALTHCARE FUND
ICON INDUSTRIALS FUND
ICON INFORMATION TECHNOLOGY FUND
ICON LEISURE AND CONSUMER STAPLES FUND
ICON MATERIALS FUND
ICON TELECOMMUNICATION & UTILITIES FUND
ICON SHORT-TERM FIXED INCOME FUND
[ICON FUNDS LOGO]
Table of Contents
<Table>
ABOUT THIS REPORT (UNAUDITED) 2
MESSAGE FROM ICON FUNDS (UNAUDITED) 4
MANAGEMENT OVERVIEWS (UNAUDITED) AND SCHEDULES OF
INVESTMENTS
ICON Consumer Discretionary Fund 7
ICON Energy Fund 15
ICON Financial Fund 24
ICON Healthcare Fund 32
ICON Industrials Fund 41
ICON Information Technology Fund 50
ICON Leisure and Consumer Staples Fund 59
ICON Materials Fund 67
ICON Telecommunication & Utilities Fund 75
ICON Short-Term Fixed Income Fund 83
FINANCIAL STATEMENTS 88
FINANCIAL HIGHLIGHTS 102
NOTES TO FINANCIAL STATEMENTS 112
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 120
BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED) 121
OTHER INFORMATION (UNAUDITED) 124
</Table>
[RECYCLE LOGO]
About This Report
HISTORICAL RETURNS
All total returns mentioned in this report account for the change in a Fund's
per-share price and the reinvestment of any dividends, capital gain
distributions, and tax return of capital. If your account is set up to receive
Fund distributions in cash rather than to reinvest them, your actual return may
differ from these figures. The Funds' performance results do not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or on the
redemption of Fund shares.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Performance results represent
past performance, and current performance may be higher or lower. Please call
1-800-764-0442 or visit www.iconadvisers.com for performance results current to
the most recent month-end.
PORTFOLIO DATA
This report reflects ICON's views, opinions, and portfolio holdings as of
September 30, 2004, the end of the reporting period. The information is not a
complete analysis of every aspect of any sector, industry, security, or the
Funds.
Opinions and forecasts regarding industries, companies and/or themes, and
portfolio composition and holdings, are subject to change at any time based on
market and other conditions, and should not be construed as a recommendation of
any specific security. Each Fund's percentage holdings as of September 30, 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 About This Report
COMPARATIVE INDEXES
The comparative indexes discussed in this report are meant to provide a basis
for judging the Funds' performance against specific securities indexes. Each
index shown accounts for both change in security price and reinvestment of
dividends and distributions (except as noted), but does not reflect the costs of
managing a mutual fund. The Funds' portfolios may significantly differ in
holdings and composition from the indexes. Individuals cannot invest directly in
an index.
- - The unmanaged Standard & Poor's (S&P) Super Composite 1500 Index is a
broad-based capitalization-weighted index comprising 1,500 stocks of large-
cap, mid-cap, and small-cap U.S. companies.
- - The capitalization-weighted S&P 1500 Sector and Industry Indexes are based
on specific classifications determined by S&P.
- - The unmanaged NASDAQ Composite ("NASDAQ") Index is a broad-based
capitalization-weighted index of all NASDAQ National Market and Small-Cap
stocks.
- - 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.
About This Report 3
Dear ICON Shareholder:
- --------------------------------------------------------------------------------
We are riding through this period with the expectation that after the breakout
from the current scenario, stocks will resume their path toward fair value.
- --------------------------------------------------------------------------------
I'd like to welcome the many shareholders who have joined the ICON sector funds
since our last report. As you may know, ICON believes the stock market
experiences themes, in which certain industries and sectors lead the market for
periods of time. At ICON, we perform value-based, bottom-up industry rotation to
identify undervalued industries within each sector. We apply this system to all
the ICON sector funds as well as the ICON diversified equity funds, including
the ICON Core Equity, Covered Call, Equity Income, International Equity and
Long/Short Funds.
ICON's disciplined investment methodology focuses on the identification of
changing industry themes that our system indicates are favorably positioned to
outperform the broader market. During the early months of the Funds' fiscal
year, economically sensitive sectors drove nearly all of the 14.58% annual gain
in the broad benchmark S&P 1500 Index through September 30, 2004.
Later in the fiscal year, despite a number of peaks and valleys, the market
traded in a sideways manner, offering few signs of a clear direction. Within
this trading range, economically sensitive consumer and industrial industries
have led during market advances, yet in complete and extreme theme reversals
they suffered the most amid subsequent declines. With such notable exceptions as
the steel and oil & gas refining & marketing & transportation industries, the
behavior of the U.S. stock market over the past 12 months has been themeless.
EXTRANEOUS EVENTS HAVE DISTRACTED INVESTORS
While the themeless market has not necessarily made for a negative environment,
it has made for a difficult one. Considering the backdrop of mostly favorable
underlying fundamentals, from inflation to interest rates to corporate earnings,
the pause has proven increasingly frustrating for a number of investors, pushing
many to the sidelines.
Although we view this lull as an interruption to the rally that was underway
last year, it appears to us that investors have become distracted by extraneous
events, such as rising oil prices, higher interest rates, terrorism, and the
presidential election. Despite our longstanding belief that stock prices are
driven by fundamentals and value, it is not unusual for these and other
distractions to create a temporary disconnect for investors.
We would never presume to cast doubt on any investor for experiencing these
concerns. On an emotional level, they are very real and fueled on a daily basis
by the media. However, due to their unpredictability, these fears play no role
in ICON's valuation system. Moreover, we currently see little or no evidence to
support the overstated influence they are currently exerting.
4 Message from ICON Funds
We continue to monitor industry leadership
rather that engage in the futile exercise of timing
market bottoms.
[CRAIG T. CALLAHAN PHOTO]
Craig T. Callahan
Chairman and Chief
Investment Officer
FAVORABLE UNDERLYING FUNDAMENTALS
Starting with the overall economy, scores of investors seem to view the current
setting of moderate economic growth as inadequate, desiring a return to the
higher growth, yet unsustainable environment of the late 1990s. Nevertheless,
the Federal Reserve continues to pursue this rational scenario, balancing
sustainable moderate growth with low inflation. Even though these efforts have
been largely successful, there continues to be considerable reluctance on the
part of many investors to embrace these new, and we believe more favorable,
conditions.
With respect to rising oil prices, we have detected an unusually strong negative
correlation this year relative to stock prices, meaning that when the price of
oil has increased, stocks, as measured by the S&P 500 Index, have declined.
While this makes intuitive sense, historically we have found just the opposite:
a fairly low if not slightly positive correlation between oil prices and stock
prices. Whereas this recent negative correlation has been extreme, we expect it
will be brief.
At the same time, higher oil prices did not lead to higher inflation, as many
had anticipated. One need only look at the Consumer Price Index, which
experienced moves of -0.1% in July and +0.1% in August. Long-term interest
rates, as measured by the 10-year Treasury Note yield, also declined during the
summer months, puzzling skeptics who expected that rates would trend higher.
However, as fixed-income investors extended maturities in conjunction with the
Federal Reserve's short-term rate hikes, longer-term yields fell amid signals
that the tightening would keep inflation in check.
As for the presidential election, that's a guessing game we routinely avoid, as
it is inconsistent with our valuation-driven system. New legislation typically
encounters many levels of compromise, and it would be years before its impact on
corporate earnings could be determined. Pharmaceutical stocks, for example, have
been cited as an area that could face legislative and regulatory hurdles based
on election results. However, we believe these companies' prospects are more
dependent on the aging population and the demand for new treatments than they
are on election outcomes.
Message from ICON Funds 5
RALLIES SELDOM OFFER INVITATIONS
At the end of the period, our analysis indicated that the general U.S. domestic
market was undervalued by approximately 22%. For that reason, we are riding
through this period with the expectation that after the breakout from the
current scenario, stocks will resume their path toward fair value. Last year
reminded us that rallies seldom offer invitations, and often materialize without
a significant triggering event. Still, we continue to monitor industry
leadership and theme identification closely, rather than engage in the futile
exercise of attempting to time market bottoms.
In closing, I wish to again thank you for the opportunity to help guide you
through these challenging markets. For ongoing market updates, as well as
up-to-date Fund, performance, and account information, we invite you to visit
our new website at www.iconadvisers.com.
Yours truly,
/s/ Craig T. Callahan, DBA
Craig T. Callahan, DBA
Chairman of the Board of Trustees and Chief Investment Officer of the Adviser
The unmanaged S&P 500 Index is a market value-weighted index of large-cap common
stocks considered representative of the broad market. The Consumer Price Index
is the primary indicator of U.S. inflation and is used to make cost-of-living
adjustments to billions of dollars in benefit payments.
6 Message from ICON Funds
Management Overview
ICON Consumer Discretionary Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 99.6%
Top 10 Equity Holdings 28.4%
Number of Stocks 56
Short-Term Investments 0.8%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
Quiksilver, Inc. 3.5%
Winnebago Industries, Inc. 3.4%
Eagle Materials Inc. 3.2%
eBay Inc. 3.0%
Polo Ralph Lauren Corporation 2.9%
Best Buy Co., Inc. 2.7%
The Home Depot, Inc. 2.7%
Fossil, Inc. 2.4%
PETsMART, Inc. 2.3%
Lowe's Companies, Inc. 2.3%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Consumer Discretionary Fund gained 7.72% for the fiscal year ended
September 30, 2004, trailing the 15.11% return of its sector-specific
benchmark, the S&P 1500 Consumer Discretionary Index, as well as the 14.58%
return for its broad benchmark, the S&P 1500 Index. Total returns for other
periods as of September 30, 2004 are listed on page 11.
The highly cyclical nature of the sector proved advantageous during an
early-period rally, yet ultimately worked against the Fund when a fear-
driven, summertime sell-off diluted returns. The Fund's tilt toward
underpriced small-and mid-cap stocks also detracted from relative
performance, as large-caps were the primary positive contributor to our
market-cap weighted sector-specific benchmark. While the Fund held positions
in many of these large-cap names, its exposure to each was below the
benchmark weight.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
Although ICON's system does not consider investment style, the Fund
benefited from a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. More than two-thirds of the Fund's holdings
possessed below-average P/E valuations, accounting for the majority of the
Fund's positive performance. This is corroborated by independent data
detailing the outperformance of S&P/Barra Value Indexes over their S&P/Barra
Growth counterparts for the one-year period ended September 30, 2004.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. A "Jekyll & Hyde" market dominated the investment environment during the
period, as an extended first-half rally dissipated amid extreme fear and
uncertainty. Within this volatile trading range, rising oil prices,
geopolitical tensions, economic setbacks, and election-year rhetoric all
weighed heavily on investor sentiment. However, as these concerns
intensified, the swings grew more pronounced, quickly extinguishing any move
toward a sustained cyclical rally.
Management Overview 7
Management Overview (continued)
ICON Consumer Discretionary Fund
In this setting, upturns were typically led by cyclical sectors, while
defensive issues prevailed during the downturns, resulting in a slight
negative bias that held back second-half returns. Nonetheless, our valuation
and relative strength readings continued to support a recovery-based theme,
driven by sustainable economic growth, low interest rates and nominal
inflation.
Q. HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
A. Primary industry detractors during the period included auto parts &
equipment and apparel retail. Higher steel prices and cost of goods sold
hurt the auto parts group, while rising gas prices impaired apparel
retailers' distribution of goods. Although home improvement retail
contributed to positive absolute returns, it was underweight compared to our
sector-specific benchmark and detracted from relative performance.
In contrast, leading industry contributors included specialty stores, the
Fund's largest overall weighting, as well as homebuilding, which continued
to benefit from a resilient housing market and historically low interest
rates. Other top performers during the period included apparel, accessories
& luxury goods, auto manufacturers, and consumer electronics.
It should be pointed out that the S&P 1500 Consumer Discretionary Index
comprises certain industries that are not represented in the Fund's
investment universe. These industries are instead considered for investment
within the ICON Leisure and Consumer Staples Fund since they better reflect
that fund's more defensive nature. Although a number of these industries
outperformed the broader market during the period, they were not represented
in the Fund.
On the company level, principal detractors included structural component
maker Tower Automotive, Inc., which came under pressure as bloated car
inventories and lackluster demand limited production schedules. Apparel
retailer Talbots Inc. also faltered when weakening consumer spending led to
an inventory buildup. Likewise, video game retailer Electronics Boutique
Holdings Corp. suffered as holiday sales expectations led to overheated
valuations. All three stocks were sold during the period as their relative
strength declined.
Among the Fund's leading contributors, recreational vehicle manufacturer
Winnebago Industries Inc. saw significant increases in demand and order
backlog. Fossil Inc., a marketer of moderately priced watches, also advanced
as overseas expansion boosted earnings. Elsewhere, ongoing gains in its
automotive OEM business, particularly in multimedia systems, drove expanded
earnings for audio system supplier Harman International Industries, Inc.
8 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE CONSUMER DISCRETIONARY SECTOR?
A. A late-period cyclical rally revealed broad participation as investors once
again acknowledged the sound economic underpinnings that seemingly prevail.
With stocks currently trading at a 22% discount to our estimate of intrinsic
worth, our system indicates that clear value exists in both the sector and
the market.
Assuming a dissipation of investor concerns, we maintain that this rally is
sustainable and could very well endure over the next six to 12 months. In
such a scenario, we would anticipate that cyclical sectors such as Consumer
Discretionary could outperform the broader market.
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - The Fund's tilt toward underpriced small- and mid-cap stocks detracted from
relative returns as high-performance large-caps dominated the
sector-specific benchmark.
- - Industry laggards included auto parts & equipment, apparel retail and home
improvement retail, which contributed positive returns, yet still detracted
from relative performance.
- - Among the Fund's poorest-performing stocks were Tower Automotive, Inc.,
Talbots Inc. and Electronics Boutique Holdings Corp.
- - Specialty stores, the Fund's largest industry weighting, drove positive
performance, as did homebuilding, consumer electronics, and apparel,
accessories & luxury goods.
- - Stocks that boosted Fund performance included Winnebago Industries Inc.,
Fossil Inc. and Harman International Industries, Inc.
The unmanaged S&P/Barra Growth and Value indexes are constructed by dividing
stocks in indexes according to book-to-price ratio. The Value index contains
firms with higher book-to-price ratios; conversely, the Growth index has firms
with lower book-to-price ratios. Both indexes are capitalization-weighted.
Management Overview 9
Management Overview (continued)
ICON Consumer Discretionary Fund
TOP 10 INDUSTRIES
as of September 30, 2004
<Table>
Specialty Stores
14.3%
Apparel, Accessories & Luxury
Goods 13.1%
Home Improvement Retail
9.0%
Homebuilding
8.8%
Apparel Retail
8.5%
Automobile Manufacturers
7.1%
General Merchandise Stores
5.2%
Tire & Rubber
4.8%
Computer & Electronics Retail
4.6%
Department Stores
3.8%
</Table>
Percentages are based upon net assets.
10 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 7/9/97
- ---------------------------------------------------------------------------------------
ICON Consumer Discretionary Fund 7.72% 5.60% 3.70%
- ---------------------------------------------------------------------------------------
S&P 1500 Consumer Discretionary Index 15.11% 0.14% 6.46%
- ---------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -0.12% 5.02%
- ---------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The performance of the
S&P 1500 Consumer Discretionary Index includes the reinvestment of dividends and
capital gain distributions beginning on January 1, 2002. Additional information
about these performance results and the comparative indexes can be found on
pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON CONSUMER S&P 1500 CONSUMER
DISCRETIONARY FUND DISCRETIONARY INDEX S&P 1500 INDEX
------------------ ------------------- --------------
7/9/97 10000.00 10000.00 10000.00
9/30/97 10970.00 10892.00 10597.00
9/30/98 7870.00 11778.30 11262.20
9/30/99 9899.00 15612.20 14338.50
9/30/00 9449.00 15340.70 16547.70
9/30/01 9172.00 12045.00 12289.70
9/30/02 10360.00 11064.80 9976.42
9/30/03 12069.00 16661.20 12439.30
9/30/04 13001.00 15725.00 14251.50
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund on its inception date of 7/9/97 to a
$10,000 investment made in unmanaged securities indexes on that date. The Fund's
performance in this chart and the performance table assumes the reinvestment of
dividends and capital gain distributions but does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or on the redemption of
Fund shares.
Management Overview 11
Management Overview (continued)
ICON Consumer Discretionary Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Consumer Discretionary Fund and to compare these costs
with the ongoing costs of investing in other mutual funds. This Example is based
on an investment of $1,000 invested at the beginning of the period and held for
the six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 917.00 $6.33
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.40 $6.66
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.32%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
12 Management Overview
Schedule of Investments
ICON Consumer Discretionary Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
COMMON STOCKS 99.6%
UNITED STATES OF AMERICA 98.2%
CONSUMER DISCRETIONARY 92.9%
APPAREL, ACCESSORIES & LUXURY GOODS 13.1%
87,500 DHB Industries,
Inc.(a) $ 1,242,500
120,050 Fossil, Inc.(a) 3,714,347
76,400 Kenneth Cole
Productions, Inc. 2,149,896
121,400 Polo Ralph Lauren
Corporation 4,415,318
208,600 Quiksilver,
Inc.(a) 5,302,612
62,600 V. F. Corporation 3,095,570
------------
19,920,243
APPAREL RETAIL 8.5%
89,600 Abercrombie &
Fitch Co. 2,822,400
99,750 Aeropostale,
Inc.(a) 2,613,450
73,400 Chico's FAS,
Inc.(a) 2,510,280
98,000 Jos. A. Bank
Clothiers,
Inc.(a) 2,712,640
107,600 Pacific Sunwear
of California,
Inc.(a) 2,264,980
------------
12,923,750
AUTOMOBILE MANUFACTURERS 5.7%
50,800 Monaco Coach
Corporation 1,099,820
87,200 Thor Industries,
Inc. 2,308,184
150,100 Winnebago
Industries, Inc. 5,199,464
------------
8,607,468
CATALOG RETAIL 1.3%
112,600 Insight
Enterprises,
Inc.(a) 1,896,184
COMPUTER & ELECTRONICS RETAIL 4.6%
76,000 Best Buy Co.,
Inc. 4,122,240
153,400 GameStop
Corporation(a) 2,839,434
------------
6,961,674
CONSUMER ELECTRONICS 1.7%
23,600 Harman
International
Industries,
Incorporated 2,542,900
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
DEPARTMENT STORES 3.8%
62,800 Federated
Department
Stores, Inc. $ 2,853,004
61,900 Kohl's
Corporation(a) 2,982,961
------------
5,835,965
FOOTWEAR 2.5%
26,000 NIKE, Inc. 2,048,800
31,400 The Timberland
Company(a) 1,783,520
------------
3,832,320
GENERAL MERCHANDISE STORES 5.2%
212,500 Big Lots, Inc.(a) 2,598,875
97,800 Dollar Tree
Stores, Inc.(a) 2,635,710
57,500 Target
Corporation 2,601,875
------------
7,836,460
HOMEBUILDING 8.8%
70,000 D.R. Horton, Inc. 2,317,700
58,600 Hovnanian
Enterprises,
Inc.(a) 2,349,860
31,100 Meritage Homes
Corporation(a) 2,444,460
49,800 Pulte Homes, Inc. 3,056,226
69,400 Toll Brothers,
Inc.(a) 3,215,302
------------
13,383,548
HOME FURNISHINGS 2.0%
38,100 Mohawk
Industries,
Inc.(a) 3,024,759
HOME IMPROVEMENT RETAIL 9.0%
107,500 Building
Materials Holding
Corporation 2,958,400
103,400 The Home Depot,
Inc. 4,053,280
65,000 Lowe's Companies,
Inc. 3,532,750
71,900 The Sherwin-
Williams Company 3,160,724
------------
13,705,154
HOUSEHOLD APPLIANCES 1.0%
42,100 Craftmade
International,
Inc. 831,054
24,300 Helen of Troy
Limited(a) 661,446
------------
1,492,500
</Table>
Schedule of Investments 13
Schedule of Investments (continued)
ICON Consumer Discretionary Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
HOUSEWARES & SPECIALTIES 1.7%
30,400 Blyth, Inc. $ 939,360
37,000 Tupperware
Corporation 628,260
36,500 The Yankee Candle
Company, Inc.(a) 1,057,040
------------
2,624,660
INTERNET RETAIL 3.0%
49,400 eBay Inc.(a) 4,541,836
MOTORCYCLE MANUFACTURERS 1.9%
49,200 Harley-Davidson,
Inc. 2,924,448
SPECIALTY STORES 14.3%
95,400 Barnes & Noble,
Inc.(a) 3,529,800
56,300 Cost Plus,
Inc.(a) 1,991,894
75,400 Dick's Sporting
Goods, Inc.(a) 2,685,748
32,600 Michaels Stores,
Inc. 1,930,246
85,100 O'Reilly
Automotive,
Inc.(a) 3,258,479
125,100 PETsMART, Inc. 3,551,589
66,300 Staples, Inc. 1,977,066
99,200 Zale
Corporation(a) 2,787,520
------------
21,712,342
TIRE & RUBBER 4.8%
68,200 Bandag,
Incorporated 2,987,160
76,100 Cooper Tire &
Rubber Company 1,534,937
263,800 The Goodyear Tire
& Rubber
Company(a) 2,833,212
------------
7,355,309
------------
TOTAL CONSUMER DISCRETIONARY 141,121,520
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
INFORMATION TECHNOLOGY 2.1%
HOME ENTERTAINMENT SOFTWARE 2.1%
97,600 Take-Two
Interactive
Software, Inc.(a) $ 3,206,160
------------
TOTAL INFORMATION TECHNOLOGY 3,206,160
MATERIALS 3.2%
CONSTRUCTION MATERIALS 3.2%
67,511 Eagle Materials
Inc. 4,813,534
------------
TOTAL MATERIALS 4,813,534
------------
TOTAL UNITED STATES OF AMERICA 149,141,214
GERMANY 1.4%
CONSUMER DISCRETIONARY 1.4%
AUTOMOBILE MANUFACTURERS 1.4%
52,700 DaimlerChrysler
AG 2,182,834
------------
TOTAL CONSUMER DISCRETIONARY 2,182,834
------------
TOTAL GERMANY 2,182,834
------------
TOTAL COMMON STOCKS
(COST $129,511,727) 151,324,048
SHORT-TERM INVESTMENTS 0.8%
VARIABLE RATE DEMAND NOTE 0.8%
$1,181,308 American Family
Demand Note,
1.4525%# 1,181,308
------------
TOTAL VARIABLE RATE DEMAND NOTE
1,181,308
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,181,308) 1,181,308
------------
TOTAL INVESTMENTS 100.4%
(COST $130,693,035) 152,505,356
------------
LIABILITIES LESS OTHER ASSETS
(0.4%) (583,612)
------------
NET ASSETS 100.0% $151,921,744
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
14 Schedule of Investments
Management Overview
ICON Energy Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 95.7%
Top 10 Equity Holdings 31.6%
Number of Stocks 62
Short-Term Investments 7.2%
Percentages are based upon net assets
TOP 10 EQUITY HOLDINGS
September 30, 2004
Ultra Petroleum Corp. 4.8%
Cal Dive International, Inc. 3.7%
Teekay Shipping Corporation 3.4%
Petroleo Brasileiro S.A. 3.2%
National-Oilwell, Inc. 3.1%
Patina Oil & Gas Corporation 3.0%
Headwaters Incorporated 2.8%
Maverick Tube Corporation 2.6%
Suncor Energy, Inc. 2.5%
Hydril 2.5%
Percentages are based upon net assets
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Energy Fund gained 59.20% for the fiscal year ended September 30,
2004, comparing favorably to the 46.24% return for its sector-specific
benchmark, the S&P 1500 Energy Index, as well as the 14.58% return for its
broad benchmark, the S&P 1500 Index. Total returns for other periods as of
September 30, 2004 are listed on page 19.
Independent analysis worked to the Fund's advantage during the period, as
valuation and relative strength readings led us to overweight certain
industries relative to the S&P 1500 Energy Index. While the overall group
spent much of the calendar year trading close to our fair value estimates,
the Fund was underweight in industries whose relative strength lagged in
comparison.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
Although the ICON system does not consider investment style, the Fund
benefited from a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. While this bias was similar to that of the
Fund's sector-specific benchmark, the Fund's higher P/E stocks also
contributed positively to performance as part of a broad sector advance.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
ratio as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Energy stock prices reflected the sharp spike in crude oil prices, which
climbed by approximately 70% as measured by the Bloomberg West Texas
Intermediate Cushing Spot Index for the 12-month period ending September 30,
2004. The broad scope of this advance was further evidenced by the
historically high correlation between the price of oil and returns for the
S&P 500 Energy Index in calendar year 2004.
From a macro perspective, a number of reasons have been cited for the
phenomenal rise in oil prices. Supply concerns and output uncertainty appear
to have been driving forces, as friction between the Russian government and
top oil producer Yukos (not a Fund holding), tensions in Nigeria, Iraqi
insurgency, and hurricane-related production delays in the Gulf of Mexico
all fueled fears.
Management Overview 15
Management Overview (continued)
ICON Energy Fund
Through it all, industry leadership remained consistent, with the oil & gas
refining & marketing & transportation, oil & gas equipment & services and
oil & gas exploration & production industries turning in the strongest
showings. In fact, out of the 132 industries that comprise the broad-based
S&P 1500 Index, oil & gas refining & marketing & transportation and oil &
gas exploration & production were among the period's top 10 leaders.
Q. HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
A. Based on valuation and relative strength, the Fund profited from overweight
positions in leading industries such as oil & gas refining, marketing &
transportation, oil & gas equipment & services and oil & gas exploration &
production. Although the integrated oil & gas industry and the oil & gas
drilling industry produced solid returns, the Fund's low exposure compared
to the benchmark reaped rewards as other industries outperformed.
Smaller capitalization stocks were among the Fund's top performers during
the period. For example, Ultra Petroleum Corp. moved higher when analysts
upgraded this emerging exploration and production firm. Also advancing were
Patina Oil & Gas Corp. and Teekay Shipping Corp. Patina saw ongoing
production growth and higher realized prices boost quarterly results, while
Teekay continued to benefit from higher shipping rates.
Many energy stocks performed strongly during the period, but several
holdings did detract slightly from returns, including oil services giant
Schlumberger Ltd., as investors registered disappointment that its
first-quarter earnings report was in line with expectations. We sold the
stock as its relative strength weakened. Elsewhere, marine support services
provider GulfMark Offshore, Inc. fell when it reported net quarterly losses
stemming from difficulties in its North Sea operations. The company's
valuation and relative strength continued to be strong, along with other
stocks in this group, and we continued to own it at period-end.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE ENERGY SECTOR?
A. Although our analysis currently views the sector as fairly valued, certain
industries and stocks remain attractive. The best bargains appear to be in
oil & gas refining & marketing & transportation and as a result we have
increased the Fund's exposure in these areas. At the same time, oil & gas
drilling appears a bit expensive and will be watched closely. Given the rise
in stock prices during the fiscal year, we are cautiously optimistic going
forward, assuming valuations do not overheat.
16 Management Overview
[J.C. WALLER III, PORTFOLIO MANAGER PHOTO]
J.C. Waller, III
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - Smaller capitalization stocks were among the Fund's top performers during
the period. - Ultra Petroleum Corp., Patina Oil & Gas Corp. and Teekay
Shipping Corp. all made significant contributions to overall Fund
performance.
- - Overweight positions in the oil & gas refining, marketing & transportation,
oil & gas equipment & services and oil & gas exploration & production
industries performed favorably relative to the Fund's sector-specific
benchmark.
- - Stocks that detracted from performance during the period included
Schlumberger Ltd. and GulfMark Offshore, Inc.
The Bloomberg West Texas Intermediate Cushing Crude Oil Spot Price Index is an
index which represents the price of crude oil per barrel in U.S. dollars.
Management Overview 17
Management Overview (continued)
ICON Energy Fund
TOP INDUSTRIES
September 30, 2004
<Table>
Oil & Gas Exploration & Production
25.8%
Oil & Gas Equipment & Services
24.1%
Oil & Gas Refining, Marketing &
Transportation 18.1%
Integrated Oil & Gas
16.3%
Oil & Gas Drilling
5.1%
Commodity Chemicals
2.8%
Construction & Engineering
1.8%
Industrial Machinery
1.7%
</Table>
Percentages are based upon net assets.
18 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 11/5/97
- -----------------------------------------------------------------------------------------
ICON Energy Fund 59.20% 24.48% 13.63%
- -----------------------------------------------------------------------------------------
S&P 1500 Energy Index 46.24% 8.82% 7.19%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -0.12% 4.46%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON ENERGY FUND S&P 1500 ENERGY INDEX S&P 1500 INDEX
---------------- --------------------- --------------
11/5/97 10000.0 10000.0 10000.0
9/30/98 6350.0 8920.19 10679.6
9/30/99 8082.0 10578.6 13596.8
9/30/00 13359.0 12515.6 15691.6
9/30/01 12486.0 10566.0 11654.0
9/30/02 13114.0 9493.07 9460.34
9/30/03 15174.0 11038.2 11795.8
9/30/04 24157.0 16142.4 13514.2
</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.
Management Overview 19
Management Overview (continued)
ICON Energy Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Energy Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. This Example is based on an investment
of $1,000 invested at the beginning of the period and held for the six-month
period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,199.00 $7.37
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.30 $6.76
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.34% annualized,
multiplied by the average account value over the period, multiplied by 183/366
to reflect the one-half year period.
20 Management Overview
Schedule of Investments
ICON Energy Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
COMMON STOCKS 95.7%
UNITED STATES OF AMERICA 69.9%
ENERGY 64.5%
INTEGRATED OIL & GAS 1.2%
15,800 ConocoPhillips $ 1,309,030
50,000 Marathon Oil
Corporation 2,064,000
------------
3,373,030
OIL & GAS DRILLING 3.2%
19,100 Helmerich &
Payne, Inc. 547,979
15,600 Noble
Corporation(a) 701,220
136,600 Patterson-UTI
Energy, Inc. 2,604,962
153,000 Unit
Corporation(a) 5,367,240
------------
9,221,401
OIL & GAS EQUIPMENT & SERVICES 24.1%
301,000 Cal Dive
International,
Inc.(a) 10,721,620
114,500 FMC
Technologies,
Inc.(a) 3,824,300
35,000 GulfMark
Offshore,
Inc.(a) 571,550
164,700 Hydril(a) 7,073,865
239,400 Maverick Tube
Corporation(a) 7,375,914
271,800 National-
Oilwell,
Inc.(a) 8,931,348
88,700 Oceaneering
International,
Inc.(a) 3,267,708
65,100 Offshore
Logistics,
Inc.(a) 2,240,742
317,800 Oil States
International,
Inc.(a) 5,942,860
34,200 SEACOR Holdings
Inc.(a) 1,598,850
466,700 Superior Energy
Services,
Inc.(a) 6,029,764
147,300 TETRA
Technologies,
Inc.(a) 4,573,665
118,000 Tidewater Inc. 3,840,900
164,000 W-H Energy
Services,
Inc.(a) 3,403,000
------------
69,396,086
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
OIL & GAS EXPLORATION & PRODUCTION 25.8%
24,200 Anadarko
Petroleum
Corporation $ 1,605,912
50,000 Berry Petroleum
Company 1,836,500
200,000 Chesapeake
Energy
Corporation 3,166,000
117,514 Cimarex Energy
Co.(a) 4,105,939
129,300 Comstock
Resources,
Inc.(a) 2,704,956
116,600 Denbury
Resources
Inc.(a) 2,961,640
133,000 Encore
Acquisition
Company(a) 4,588,500
202,300 Harvest Natural
Resources,
Inc.(a) 3,358,180
105,800 Newfield
Exploration
Company(a) 6,479,192
21,200 Noble Energy,
Inc. 1,234,688
294,936 Patina Oil &
Gas Corporation 8,721,258
94,100 Penn Virginia
Corporation 3,725,419
75,000 Petroleum
Development
Corporation(a) 3,286,500
175,500 Range Resources
Corporation 3,069,495
147,600 Remington Oil &
Gas
Corporation(a) 3,874,500
283,100 Ultra Petroleum
Corp.(a) 13,886,055
169,075 XTO Energy,
Inc. 5,491,556
------------
74,096,290
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 10.2%
97,400 Ashland Inc. 5,462,192
119,500 Frontier Oil
Corporation 2,821,395
122,500 General
Maritime
Corporation(a) 4,266,675
267,000 OMI Corporation 4,277,340
79,000 Overseas
Shipholding
Group, Inc. 3,921,560
</Table>
Schedule of Investments 21
Schedule of Investments (continued)
ICON Energy Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
30,400 Sunoco, Inc. $ 2,248,992
534,300 The Williams
Companies, Inc. 6,465,030
------------
29,463,184
------------
TOTAL ENERGY 185,549,991
INDUSTRIALS 2.6%
CONSTRUCTION & ENGINEERING 0.9%
95,400 URS
Corporation(a) 2,545,272
INDUSTRIAL MACHINERY 1.7%
205,200 Flowserve
Corporation(a) 4,961,736
------------
TOTAL INDUSTRIALS 7,507,008
MATERIALS 2.8%
COMMODITY CHEMICALS 2.8%
263,400 Headwaters
Incorporated(a) 8,128,524
------------
TOTAL MATERIALS 8,128,524
------------
TOTAL UNITED STATES OF AMERICA 201,185,523
AMERICAN DEPOSITARY RECEIPT 8.2%
BRAZIL 3.2%
ENERGY 3.2%
INTEGRATED OIL & GAS 3.2%
261,800 Petroleo
Brasileiro
S.A. -- ADR 9,228,450
------------
TOTAL ENERGY 9,228,450
------------
TOTAL BRAZIL 9,228,450
CHINA 1.3%
ENERGY 1.3%
INTEGRATED OIL & GAS 1.3%
69,300 China Petroleum
and Chemical
Corporation --
ADR 2,844,765
15,100 PetroChina
Company
Limited -- ADR 811,776
------------
TOTAL ENERGY 3,656,541
------------
TOTAL CHINA 3,656,541
ITALY 1.4%
ENERGY 1.4%
INTEGRATED OIL & GAS 1.4%
36,000 Eni S.p.A. --
ADR 4,042,800
------------
TOTAL ENERGY 4,042,800
------------
TOTAL ITALY 4,042,800
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
NETHERLANDS 0.9%
ENERGY 0.9%
CONSTRUCTION & ENGINEERING 0.9%
83,800 Chicago Bridge
& Iron Company
N.V. -- ADR $ 2,513,162
------------
TOTAL ENERGY 2,513,162
------------
TOTAL NETHERLANDS 2,513,162
SPAIN 1.4%
ENERGY 1.4%
INTEGRATED OIL & GAS 1.4%
187,300 Repsol YPF,
S.A. -- ADR 4,105,616
------------
TOTAL ENERGY 4,105,616
------------
TOTAL SPAIN 4,105,616
------------
TOTAL AMERICAN DEPOSITARY
RECEIPTS 23,546,569
BAHAMAS 3.4%
ENERGY 3.4%
OIL & GAS REFINING & MARKETING &
TRANSPORTATION 3.4%
225,100 Teekay Shipping
Corporation 9,699,559
------------
TOTAL ENERGY 9,699,559
------------
TOTAL BAHAMAS 9,699,559
BERMUDA 2.3%
ENERGY 2.3%
OIL & GAS REFINING & MARKETING &
TRANSPORTATION 2.3%
186,100 Tsakos Energy
Navigation Ltd. 6,541,415
------------
TOTAL ENERGY 6,541,415
------------
TOTAL BERMUDA 6,541,415
</Table>
22 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
UNITED KINGDOM 3.5%
ENERGY 3.5%
INTEGRATED OIL & GAS 1.3%
85,700 Shell Transport
& Trading
Company plc $ 3,814,507
------------
OIL & GAS REFINING, MARKETING &
TRANSPORTATION 2.2%
60,000 Frontline
Limited 2,831,400
225,000 Top Tankers,
Inc.(a) 3,597,750
------------
6,429,150
------------
TOTAL ENERGY 10,243,657
------------
TOTAL UNITED KINGDOM 10,243,657
CANADA 8.4%
ENERGY 8.4%
INTEGRATED OIL & GAS 6.5%
119,700 Petro-Canada 6,218,415
156,200 PetroKazakhstan
Inc. 5,352,974
223,100 Suncor Energy,
Inc. 7,141,431
------------
18,712,820
------------
OIL & GAS DRILLING 1.9%
94,900 Precision
Drilling
Corporation(a) 5,456,750
------------
TOTAL ENERGY 24,169,570
------------
TOTAL CANADA 24,169,570
------------
TOTAL COMMON STOCKS
(COST $215,785,751) 275,386,293
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
SHORT-TERM INVESTMENTS 7.2%
U.S. GOVERNMENT AGENCIES 7.1%
$20,483,000 FHLB Discount
Note,
1.3690%,
10-1-04 $ 20,483,000
------------
TOTAL U.S. GOVERNMENT AGENCIES 20,483,000
VARIABLE RATE DEMAND NOTE 0.1%
102,054 American Family
Demand Note,
1.4525%# 102,054
------------
TOTAL VARIABLE RATE DEMAND
NOTE 102,054
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $20,585,054) 20,585,054
------------
TOTAL INVESTMENTS 102.9%
(COST $236,370,805) 295,971,347
------------
LIABILITIES LESS OTHER ASSETS
(2.9%) (8,357,443)
------------
NET ASSETS 100.0% $287,613,904
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004. ADR American Depositary
Receipt
Dates shown on securities are the due dates of the obligation.
Schedule of Investments 23
Management Overview
ICON Financial Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 99.7%
Top 10 Equity Holdings 27.8%
Number of Stocks 51
Short-Term Investments 0.2%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
JPMorgan Chase & Co. 3.5%
Investors Financial Services Corp. 3.1%
New Century Financial Corporation 3.0%
Bank of America Corporation 3.0%
Countrywide Financial Corporation 2.9%
UICI 2.7%
IndyMac Bancorp, Inc. 2.5%
Providian Financial Corporation 2.4%
Comerica Incorporated 2.4%
ING Groep N.V. 2.3%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Financial Fund gained 24.53% for the fiscal year ended September
30, 2004, outpacing the 15.78% return for its sector-specific benchmark, the
S&P 1500 Financials Index, as well as the 14.58% return for its broad
benchmark, the S&P 1500 Index, over the same period. Total returns for other
periods as of September 30, 2004 are listed on page 28.
A favorable economic setting of moderate real GDP, nominal inflation and low
interest rates did little to placate investors during the period, as
extraneous events raised doubts about the sustainability of the yearlong
recovery. With markets turning increasingly volatile amid a climate of fear
and uncertainty, early-period gains came under severe pressure as sharp
theme reversals took their toll. Nevertheless, the Fund outperformed its
benchmark for the 12-month period.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
Although ICON's system does not consider investment style, the Fund
benefited from a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. This is corroborated by independent data,
which details the outperformance of S&P/Barra Value Indexes over their
S&P/Barra Growth counterparts for the one-year period ended September 30,
2004.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Widespread expectations that long-term interest rates would trend higher
failed to materialize when fixed-income investors extended maturities in
conjunction with Federal Reserve rate hikes. Consequently, longer rates fell
amid indications that the tightening would keep inflation in check. Given
these favorable conditions, our system continued to support a recovery-based
theme, driven by an eventual upside move in economically sensitive
industries.
Although underlying fundamentals remained positive, frequent fear-based
rotations produced an absence of industry leadership. As rising oil prices,
the war on terror, economic setbacks, and election-year rhetoric fueled
24 Management Overview
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
investor concerns, the market settled into a volatile trading range, quickly
extinguishing any move toward a sustained cyclical or defensive rally.
Q. HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
A. While the Financial sector was generally in line with the broader market
during the period, the Fund's returns surpassed those benchmarks, benefiting
from a concentrated weighting in the sector-leading consumer finance
industry as well as strong contributions from the life & health insurance
and real estate investment trusts industries.
As the Fund's leading net contributor, consumer finance maintained a sizable
weighting throughout the period, yet was dramatically reduced when selected
companies exceeded fair value. Conversely, the Fund's exposure to regional
banks increased appreciably on improving valuation and relative strength
readings. However, the reinsurance industry was removed on relative strength
concerns, having detracted from Fund performance due to hurricane-related
losses.
Among the Fund's top performers, middle-market auto finance company
AmeriCredit Corp. turned in a strong showing, having posted better-than-
expected income growth on higher loan volume. Meanwhile, life and health
insurer UICI reported significant earnings upside, citing more favorable
loss ratios in its Self Employed Agency division. High dividend payouts from
subprime mortgage lender NovaStar Financial Inc. also contributed, although
the real estate investment trust was later removed on valuation concerns.
In contrast, measurable detractors included reinsurer Transatlantic
Holdings, Inc., which fell due to moderating casualty rates and
hurricane-related losses and was sold. Elsewhere, global investment banking
giant Goldman Sachs Group Inc. succumbed to investor uncertainty surrounding
Fed monetary policy and geopolitical events. The Fund sold Goldman Sachs but
repurchased it shortly before period-end when it again met our valuation
criteria. Title Insurance provider Stewart Information Services Corp. also
retreated as rising costs and policy losses contributed to lower margins,
and we liquidated the position.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE FINANCIALS SECTOR?
A. A positive backdrop of strong economic growth and stable interest rates,
coupled with widespread value, positions the sector to capitalize on an
eventual upside move. Valuations are particularly attractive among asset
management & custody banks and investment banking & brokerage, and the
anticipated emergence of relative strength should spur a broad march toward
fair value.
Management Overview 25
Management Overview (continued)
ICON Financial Fund
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - Our valuation model led us to small- and medium-capitalization companies,
which aided relative performance as large-cap securities lagged.
- - AmeriCredit Corp., UICI and NovaStar Financial Inc. were among the Fund's
strongest-performing holdings during the period.
- - A concentrated weighting in the sector-leading consumer finance industry and
strong contributions from life & health insurance boosted Fund performance.
- - Conversely, the reinsurance industry had a negative impact on returns and
was subsequently removed on relative strength concerns.
- - Stocks that detracted from performance during the period included
Transatlantic Holdings, Inc., Goldman Sachs Group Inc. and Stewart
Information Services Corp.
The unmanaged S&P/Barra Growth and Value indexes are constructed by dividing
stocks in indexes according to book-to-price ratios. The Value index contains
firms with higher book-to-price ratios; conversely, the Growth index has firms
with lower book-to-price ratios. Both indexes are capitalization-weighted.
26 Management Overview
TOP 10 INDUSTRIES
September 30, 2004
<Table>
Regional Banks
12.0%
Life & Health Insurance
11.8%
Consumer Finance
11.2%
Investment Banking & Brokerage
9.9%
Diversified Banks
8.7%
Property & Casualty Insurance
8.7%
Thrifts & Mortgage Finance
8.5%
Multi-Line Insurance
7.4%
Other Diversified Financial
Services 7.2%
Asset Management & Custody Banks
7.1%
</Table>
Percentages are based upon net assets.
Management Overview 27
Management Overview (continued)
ICON Financial Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 7/1/97
- -----------------------------------------------------------------------------------------
ICON Financial Fund 24.53% 15.24% 10.81%
- -----------------------------------------------------------------------------------------
S&P 1500 Financials Index 15.78% 8.07% 8.97%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -0.12% 5.28%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON FINANCIAL FUND S&P 1500 FINANCIALS INDEX S&P 1500 INDEX
------------------- ------------------------- --------------
7/1/97 10000.0 10000.0 10000.0
9/30/97 10510.0 11141.0 10796.0
9/30/98 9411.0 10940.8 11473.7
9/30/99 10357.0 12642.3 14607.8
9/30/00 14307.0 16726.7 16858.4
9/30/01 15676.0 14787.3 12520.5
9/30/02 13813.0 12812.3 10163.8
9/30/03 16900.0 16097.1 12672.9
9/30/04 21045.0 18636.7 14519.1
</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.
28 Management Overview
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Financial Fund and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,000.00 $6.50
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.50 $6.56
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.30%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
Management Overview 29
Schedule of Investments
ICON Financial Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
COMMON STOCKS 99.7%
UNITED STATES OF AMERICA 97.4%
FINANCIAL 97.4%
ASSET MANAGEMENT & CUSTODY BANKS 7.1%
75,000 American Capital
Strategies, Ltd. $ 2,350,500
61,200 The Bank of New
York Company, Inc. 1,785,204
129,600 Investors
Financial Services
Corp. 5,848,848
98,300 SEI Investments
Company 3,310,744
------------
13,295,296
CONSUMER FINANCE 11.2%
169,000 AmeriCredit
Corp.(a) 3,528,720
40,300 Capital One
Financial
Corporation 2,978,170
172,300 Cash America
International,
Inc. 4,214,458
286,700 Metris Companies
Inc.(a) 2,803,926
296,100 Providian
Financial
Corporation(a) 4,601,394
130,900 World Acceptance
Corporation(a) 3,043,425
------------
21,170,093
DIVERSIFIED BANKS 8.7%
129,200 Bank of America
Corporation 5,598,236
77,200 Comerica
Incorporated 4,581,820
91,200 Wachovia
Corporation 4,281,840
31,200 Wells Fargo &
Company 1,860,456
------------
16,322,352
INSURANCE BROKERS 4.2%
70,700 Aon Corporation 2,031,918
72,500 Arthur J.
Gallagher & Co. 2,401,925
94,800 Hilb Rogal and
Hobbs Company 3,433,656
------------
7,867,499
INVESTMENT BANKING & BROKERAGE 9.9%
105,400 A.G. Edwards, Inc. 3,648,948
43,700 The Bear Stearns
Companies Inc. 4,202,629
40,200 The Goldman Sachs
Group, Inc. 3,748,248
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
197,000 Investment
Technology Group,
Inc.(a) $ 3,014,100
81,000 Morgan Stanley 3,993,300
------------
18,607,225
LIFE & HEALTH INSURANCE 11.8%
91,600 AmerUs Group Co. 3,755,600
91,050 Delphi Financial
Group, Inc. 3,657,479
60,900 Lincoln National
Corporation 2,862,300
88,600 Prudential
Financial, Inc. 4,167,744
38,500 StanCorp Financial
Group, Inc. 2,741,200
157,400 UICI 5,153,276
------------
22,337,599
MULTI-LINE INSURANCE 7.4%
122,900 American Financial
Group, Inc. 3,673,481
63,200 American
International
Group, Inc. 4,296,968
67,700 The Hartford
Financial Services
Group, Inc. 4,192,661
32,000 Loews Corporation 1,872,000
------------
14,035,110
OTHER DIVERSIFIED FINANCIAL SERVICES 4.9%
59,100 Citigroup Inc. 2,607,492
165,900 JPMorgan Chase &
Co. 6,591,207
------------
9,198,699
PROPERTY & CASUALTY INSURANCE 8.7%
79,000 The Allstate
Corporation 3,791,210
89,610 Fidelity National
Financial, Inc. 3,414,141
82,200 SAFECO Corporation 3,752,430
52,700 Selective
Insurance Group,
Inc. 1,960,440
80,500 W. R. Berkley
Corporation 3,393,880
------------
16,312,101
REAL ESTATE INVESTMENT TRUST 3.0%
94,700 New Century
Financial
Corporation 5,702,834
</Table>
30 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
REGIONAL BANKS 12.0%
116,900 Associated
Banc-Corp $ 3,748,983
92,400 BB&T Corporation 3,667,356
190,500 The Colonial
BancGroup, Inc. 3,895,725
141,800 Hibernia
Corporation 3,744,938
84,100 UCBH Holdings,
Inc. 3,285,787
90,100 First BanCorp 4,351,830
------------
22,694,619
THRIFTS & MORTGAGE FINANCE 8.5%
137,100 Countrywide
Financial
Corporation 5,400,369
132,200 IndyMac Bancorp,
Inc. 4,785,640
98,400 The PMI Group,
Inc. 3,993,072
45,100 Doral Financial
Corp. 1,870,297
------------
16,049,378
------------
TOTAL FINANCIAL 183,592,805
------------
TOTAL UNITED STATES OF AMERICA 183,592,805
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- --------------------------------------------
AMERICAN DEPOSITARY RECEIPT 2.3%
NETHERLANDS 2.3%
FINANCIAL 2.3%
OTHER DIVERSIFIED FINANCIAL SERVICES 2.3%
174,658 ING Groep N.V. --
ADR $ 4,415,354
------------
TOTAL FINANCIAL 4,415,354
------------
TOTAL NETHERLANDS 4,415,354
------------
TOTAL AMERICAN DEPOSITARY
RECEIPT 4,415,354
------------
TOTAL COMMON STOCKS
(COST $160,208,440) 188,008,159
SHORT-TERM INVESTMENT 0.2%
VARIABLE RATE DEMAND NOTE 0.2%
$365,418 American Family
Demand Note,
1.4525%# $ 365,418
------------
TOTAL SHORT-TERM INVESTMENT
(COST $365,418) 365,418
------------
TOTAL INVESTMENTS 99.9%
(COST $160,573,858) 188,373,577
------------
OTHER ASSETS LESS LIABILITIES
0.1% 19,873
------------
NET ASSETS 100.0% $188,393,450
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
ADR American Depositary Receipt
Schedule of Investments 31
Management Overview
ICON Healthcare Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 97.7%
Top 10 Equity Holdings 28.8%
Number of Stocks 63
Short-Term Investments 1.4%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
UnitedHealth Group Incorporated 4.2%
Aetna Inc. 2.9%
Coventry Health Care, Inc. 2.9%
AMERIGROUP Corporation 2.9%
Centene Corporation 2.8%
The Cooper Companies, Inc. 2.8%
Laboratory Corporation of America Holdings 2.7%
Quest Diagnostics Incorporated 2.6%
CIGNA Corporation 2.6%
Anthem, Inc. 2.4%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Healthcare Fund gained 11.56% for the fiscal year ended September
30, 2004, outpacing the 5.99% return for its sector-specific benchmark, the
S&P 1500 Healthcare Index, but trailing the 14.58% return for its broad
benchmark, the S&P 1500 Index. Total returns for other periods as of
September 30, 2004 are listed on page 36.
Avoidance of large-cap pharmaceuticals, a core component of the S&P 1500
Healthcare Index, bolstered Fund performance during the period. Although
this avoidance was based on declining relative strength, the segment was
pressured by investor concerns surrounding patent expirations, generic
competition, reimportation, and Medicare reimbursement. The Fund further
diverged from its sector-specific benchmark by emphasizing mid-cap stocks,
which outpaced large-cap stocks.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
While the ICON system does not consider investment style, the Fund benefited
from a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. This bias deviated from the Fund's sector-
specific benchmark, resulting in positive attribution for the Fund.
Conversely, the Fund's holdings in higher P/E securities, often referred to
as growth stocks, worked against performance relative to the benchmark.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard P/E as a static proxy. Instead, we calculate a proprietary
value-to-price ratio (V/P) for each industry and security. We view this
ratio as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. A sideways or themeless market characterized the investment environment
during the fiscal year, as defensive-oriented sectors such as Healthcare
exhibited intermittent strength. Market advances typically favored
economically sensitive sectors, although their leadership sporadically
encountered severe resistance, often triggered by extraneous events such as
rising oil prices, terrorism, and election-year uncertainties.
As a result, the widespread value detected by our system went largely
unrealized within certain industries in the Healthcare sector. Budget
deficits and their potential impact on government healthcare spending were
believed to weigh heavily on investors. Also noteworthy was the disparity in
industry
32 Management Overview
[J.C. WALLER III PHOTO]
J.C. Waller III
Portfolio Manager
returns, with managed health care and health care supplies leading at the
expense of health care facilities, health care distributors and
pharmaceuticals.
Q. HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
A. Our methodology led us to aggressively overweight managed health care, the
best-performing industry group within the sector, while liquidating
pharmaceuticals, which indicated overall weakness. Both moves contributed
positively to performance, as managed health care possessed strong value
throughout, while the absence of pharmaceuticals by fiscal year-end
insulated the Fund from the fallout associated with Merck's recall of a
popular arthritis treatment. The Fund did not own Merck during the period.
Among the Fund's top contributors to performance during the period were
managed healthcare organizations Sierra Health Services and Aetna Inc.
Sierra benefited from steady revenue and earnings growth, while keeping a
lid on operating expenses. Aetna continued to boost enrollment levels in
addition to paring administrative costs and unprofitable accounts.
Elsewhere, contact lens maker The Cooper Companies, Inc. reported consistent
earnings-per-share gains, while projecting further revenue growth from its
pending acquisition of rival Ocular Sciences, Inc. (which the Fund did not
own at period-end).
In contrast, information services provider NDC Health Corp. struggled as its
core pharmaceutical customer base faced a difficult operating environment.
Drug distributor Cardinal Health Inc. also retreated, having seen its
accounting practices come under regulatory scrutiny. Meanwhile,
biopharmaceutical maker Cephalon Inc. grappled with competitive overhang as
well as probes into its marketing practices. All were ultimately sold on
declining relative strength.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE HEALTHCARE SECTOR?
A. Value remains widespread in the Healthcare sector, even among industry
standout managed health care. Given the breadth of stocks trading at
substantial discounts to intrinsic value as well as the overall market, we
anticipate that investor recognition will eventually spur a broad upward
move in the sector toward fair value. With that in mind, we stick to our
system in an attempt to identify industry leadership through the analysis of
valuation and relative strength.
Management Overview 33
Management Overview (continued)
ICON Healthcare Fund
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - Medium capitalization stocks comprised the Fund's largest weighting and were
among its top performers during the period.
- - Sierra Health Services, Aetna Inc. and The Cooper Companies, Inc. all made
significant contributions to overall Fund performance.
- - Our methodology led us to aggressively overweight managed health care, the
best-performing industry in the Index.
- - Conversely, our relative strength readings convinced us to avoid
pharmaceuticals, indicating overall weakness. This segment lagged the sector
during the period.
- - Stocks that detracted from performance during the period included NDC Health
Corp., Cardinal Health Inc. and Cephalon Inc.
34 Management Overview
TOP INDUSTRIES
September 30, 2004
<Table>
Managed Health Care
27.9%
Health Care Services
25.3%
Health Care Equipment
21.5%
Health Care Facilities
10.6%
Health Care Supplies
6.1%
Health Care Distributors
3.7%
Biotechnology
2.6%
</Table>
Percentages are based upon net assets.
Management Overview 35
Management Overview (continued)
ICON Healthcare Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/24/97
- -----------------------------------------------------------------------------------------
ICON Healthcare Fund 11.56% 14.94% 11.72%
- -----------------------------------------------------------------------------------------
S&P 1500 Healthcare Index 5.99% 3.38% 8.00%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -0.12% 6.42%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
S&P 1500 HEALTHCARE
ICON HEALTHCARE FUND INDEX S&P 1500 INDEX
-------------------- ------------------- --------------
2/24/97 10000 10000 10000
9/30/97 11780 11169 11933
9/30/98 12224 14703 12682
9/30/99 11571 15192 16147
9/30/00 17976 19880 18634
9/30/01 18585 18850 13839
9/30/02 17539 14975 11234
9/30/03 20810 16927 14008
9/30/04 23199 17940 16048
</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.
36 Management Overview
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Healthcare Fund and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 970.90 $6.36
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.55 $6.51
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.29%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
Management Overview 37
Schedule of Investments
ICON Healthcare Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
COMMON STOCKS 97.7%
UNITED STATES OF AMERICA 96.1%
HEALTH CARE 96.1%
BIOTECHNOLOGY 2.0%
56,000 Genencor
International
Inc.(a) $ 898,800
50,000 Gen-Probe
Incorporated(a) 1,993,500
122,800 Serologicals
Corporation(a) 2,864,924
------------
5,757,224
HEALTH CARE DISTRIBUTORS 3.7%
106,500 McKesson
Corporation 2,731,725
64,400 Henry Schein,
Inc.(a) 4,012,764
184,500 Priority
Healthcare
Corporation(a) 3,717,675
------------
10,462,164
HEALTH CARE EQUIPMENT 21.5%
135,900 Baxter
International
Inc. 4,370,544
104,900 Beckman Coulter,
Inc. 5,886,988
87,300 Becton, Dickinson
and Company 4,513,410
79,200 Biosite
Incorporated(a) 3,877,632
114,600 Boston Scientific
Corporation(a) 4,553,058
113,400 CONMED
Corporation(a) 2,982,420
71,600 DENTSPLY
International
Inc. 3,718,904
54,400 Hillenbrand
Industries, Inc. 2,748,832
3,240 Hospira, Inc.(a) 99,144
108,000 Integra
LifeSciences
Holdings(a) 3,467,880
47,600 Invacare
Corporation 2,189,600
144,500 Matthews
International
Corporation 4,895,660
99,500 Mine Safety
Appliances
Company 4,051,640
112,900 ResMed Inc.(a) 5,375,169
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
114,900 Respironics,
Inc.(a) $ 6,140,256
55,200 Stryker
Corporation 2,654,016
------------
61,525,153
HEALTH CARE FACILITIES 10.6%
172,700 AmSurg Corp.(a) 3,657,786
206,500 Community Health
Systems Inc.(a) 5,509,420
174,900 LifePoint
Hospitals,
Inc.(a) 5,248,749
92,700 Manor Care, Inc. 2,777,292
136,200 Triad Hospitals,
Inc.(a) 4,690,728
161,100 United Surgical
Partners
International,
Inc.(a) 5,533,785
64,600 Universal Health
Services, Inc. 2,810,100
------------
30,227,860
HEALTH CARE SERVICES 24.3%
208,500 American
Healthways,
Inc.(a) $ 6,069,435
90,500 Cerner
Corporation(a) 3,915,030
172,100 Cross Country
Healthcare,
Inc.(a) 2,667,550
190,500 DaVita, Inc.(a) 5,934,075
169,700 Dendrite
International,
Inc.(a) 2,735,564
91,900 Express Scripts,
Inc.(a) 6,004,746
175,000 Laboratory
Corporation of
America
Holdings(a) 7,651,000
97,700 Lincare Holdings
Inc.(a) 2,902,667
65,100 Pediatrix Medical
Group, Inc.(a) 3,570,735
162,800 Pharmaceutical
Product
Development,
Inc.(a) 5,860,800
85,400 Quest Diagnostics
Incorporated 7,533,988
248,300 RehabCare Group,
Inc.(a) 5,718,349
</Table>
38 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
181,650 Renal Care Group,
Inc.(a) $ 5,854,579
109,500 SFBC
International,
Inc.(a) 2,880,945
------------
69,299,463
HEALTH CARE SUPPLIES 6.1%
88,600 Arrow
International,
Inc. 2,649,140
116,700 The Cooper
Companies, Inc. 7,999,785
81,500 Edwards
Lifesciences
Corporation(a) 2,730,250
74,100 ICU Medical,
Inc.(a) 1,929,564
26,900 Osteotech,
Inc.(a) 105,986
66,500 Sybron Dental
Specialties,
Inc.(a) 1,974,385
------------
17,389,110
MANAGED HEALTH CARE 27.9%
83,600 Aetna Inc. 8,354,148
144,800 AMERIGROUP
Corporation(a) 8,145,000
77,900 Anthem, Inc.(a) 6,796,775
189,300 Centene
Corporation(a) 8,060,394
105,000 CIGNA Corporation 7,311,150
153,700 Coventry Health
Care, Inc.(a) 8,202,969
294,700 Humana Inc.(a) 5,888,106
80,000 Molina Healthcare
Inc.(a) 2,840,000
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
126,600 PacifiCare Health
Systems, Inc.(a) $ 4,646,220
23,200 Sierra Health
Services, Inc.(a) 1,111,976
161,112 UnitedHealth
Group
Incorporated 11,880,399
175,700 WellChoice
Inc.(a) 6,558,881
------------
79,796,018
------------
TOTAL HEALTH CARE 274,456,992
------------
TOTAL UNITED STATES OF AMERICA 274,456,992
------------
AMERICAN DEPOSITARY RECEIPTS 1.6%
IRELAND 1.0%
HEALTH CARE 1.0%
HEALTH CARE SERVICES 1.0%
90,500 ICON plc(a)(b) --
ADR 2,978,355
------------
TOTAL HEALTH CARE 2,978,355
------------
TOTAL IRELAND 2,978,355
SWITZERLAND 0.6%
HEALTH CARE 0.6%
BIOTECHNOLOGY 0.6%
107,100 Serono SA -- ADR 1,641,843
------------
TOTAL HEALTH CARE 1,641,843
------------
TOTAL SWITZERLAND 1,641,843
------------
TOTAL AMERICAN DEPOSITARY
RECEIPTS 4,620,198
------------
TOTAL COMMON STOCKS
(COST $246,224,426) 279,077,190
</Table>
Schedule of Investments 39
Schedule of Investments (continued)
ICON Healthcare Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS 1.4%
U.S. GOVERNMENT AGENCIES 0.8%
$2,226,000 FHLB Discount
Note,
1.3690%, 10-1-04 $ 2,226,000
------------
TOTAL U.S. GOVERNMENT AGENCIES 2,226,000
VARIABLE RATE DEMAND NOTE 0.6%
1,686,892 American Family
Demand Note,
1.4525%# 1,686,892
------------
TOTAL VARIABLE RATE DEMAND NOTE 1,686,892
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $3,912,892) 3,912,892
------------
TOTAL INVESTMENTS 99.1%
(COST $250,137,318) 282,990,082
------------
OTHER ASSETS LESS LIABILITIES
0.9% 2,679,892
------------
NET ASSETS 100.0% $285,669,974
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
(b) Not affiliated with ICON Funds or its adviser.
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
ADR American Depositary Receipt
Dates shown on securities are the due dates of the obligation.
40 Schedule of Investments
Management Overview
ICON Industrials Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 99.3%
Top 10 Equity Holdings 21.9%
Number of Stocks 84
Short-Term Investments 3.2%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
Armor Holdings, Inc. 2.5%
L-3 Communications Holdings, Inc. 2.3%
The Manitowoc Company, Inc. 2.3%
Labor Ready, Inc. 2.3%
Terex Corporation 2.3%
Simpson Manufacturing Co., Inc. 2.2%
Norfolk Southern Corporation 2.1%
Masco Corporation 2.0%
Reliance Steel & Aluminum Co. 2.0%
Northrop Grumman Corporation 1.9%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Industrials Fund advanced 19.55% for the fiscal year ended
September 30, 2004, trailing the 23.09% return for its sector-specific
benchmark, the S&P 1500 Industrials Index, yet outpacing the 14.58% return
for its broad benchmark, the S&P 1500 Index. Total returns for other periods
as of September 30, 2004 are listed on page 45.
While valuation led us to emphasize small- and mid-cap stocks during the
period, this bias detracted from relative performance as a number of sector
heavyweights turned in stronger-than-expected results. Given the large-cap
orientation and strong performance of the narrow benchmark, the Fund's lack
of exposure to bellwethers such as United Parcel Service, Tyco
International, United Technologies, General Electric Co., and Boeing proved
detrimental.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
Although the ICON system does not consider investment style, the Fund
maintained a style-neutral bias during the period, balancing value and
growth as measured on a traditional price-to-earnings (P/E) basis. Based on
this standard valuation metric, performance attribution was virtually equal,
with contributions to returns ascribed to both sides of the style grid.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to-price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Despite measured growth throughout the period in real GDP, manufacturing and
industrial production, extraneous events such as rising oil prices, interest
rate movements, terrorist activity, and election-year uncertainty distracted
investors on a recurring basis. This created a "tug-of-war" between
economically sensitive and more defensive-oriented sectors, resulting in a
sideways or range-bound market for much of the fiscal year.
Nevertheless, the overall environment appeared to be conducive for the Fund,
as the Industrials sector tends to perform best during times of economic
expansion. While business fundamentals were reported to have settled into a
solid upward trend, the slower pace was unsettling to some investors.
However, stronger levels of capital spending were viewed as
Management Overview 41
Management Overview (continued)
ICON Industrials Fund
encouraging, leading to speculation that much of the sector would post
better operating results in the months ahead.
Q. HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
A. Based on valuation and relative strength, the Fund gravitated toward
aerospace & defense, trucking and railroads during the period, all of which
contributed to fiscal-year performance. Despite erratic government spending,
defense contractors continued to benefit from ongoing military action in the
Middle East. Meanwhile, despite higher fuel costs, trucking and railroads
were among the best performers, as favorable business trends supported
stronger shipping demand.
In contrast, the diversified commercial services industry was plagued by
regulatory concerns, as for-profit education providers experienced
accounting and accreditation irregularities and were subsequently removed
from the portfolio. Airlines experienced difficulties as rising fuel prices
and pricing pressures contributed to weakness. Moreover, construction &
engineering was trimmed in order to free up capital for other industries
demonstrating sustainable market leadership, such as building products and
industrial machinery.
Leading individual stock contributors included Armor Holdings, Inc., a maker
of specialized security systems, which was awarded seven new contracts by
the U.S. Army. Metals processor Reliance Steel & Aluminum Co. also rallied,
citing higher aluminum prices and rising demand. Elsewhere, diversified
industrial manufacturer The Manitowoc Company, Inc. profited from its
growing participation in homeland security.
Holdings that detracted from performance included for-profit, post-secondary
education companies Corinthian Colleges Inc. and Career Education Corp.,
both of which encountered legal issues and were subsequently sold.
Elsewhere, discount carrier JetBlue Airways Corp. struggled amid competitive
pressures and higher fuel costs, which offset revenue growth. All three
stocks were sold during the period as their relative strength declined.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE INDUSTRIALS SECTOR?
A. We believe that the economic expansion will continue to gain traction,
though at a moderate pace, which should bode well for the sector as a whole.
Assuming an eventual breakout to the upside from the current range-bound
market, we continue to rely on valuation and relative strength as the most
sensible way to capture economically sensitive leadership. Judging from
recent readings, our system indicates that building products, trucking and
railroads are positioned to lead this anticipated advance.
42 Management Overview
[J.C. WALLER, III PHOTO]
J.C. Waller, III
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - The Industrials sector outperformed the broad market during the period
although the Fund underperformed its sector-specific benchmark.
- - Valuation directed us toward small- and mid-cap stocks, which detracted from
relative performance given the large-cap orientation of the Fund's
sector-specific benchmark.
- - Among the Fund's strongest-performing holdings during the period were Armor
Holdings Inc., Reliance Steel & Aluminum Co. and The Manitowoc Co.
- - Our methodology led us to hold sizable positions in the aerospace & defense,
trucking and railroads industries, all of which contributed to fiscal-year
performance.
- - Conversely, the diversified commercial services industry was plagued by
regulatory concerns and was subsequently removed from the portfolio.
- - Stocks that detracted from performance during the period included Corinthian
Colleges Inc., Career Education Corp. and JetBlue Airways Corp.
Management Overview 43
Management Overview (continued)
ICON Industrials Fund
TOP 10 INDUSTRIES
September 30, 2004
<Table>
Aerospace & Defense
18.1%
Industrial Machinery
14.5%
Building Products
13.4%
Railroads
10.3%
Trucking
9.3%
Construction, Farm Machinery &
Heavy Trucks 5.8%
Employment Services
5.7%
Construction & Engineering
5.0%
Diversified Commercial Services
4.9%
Electrical Components & Equipment
3.5%
</Table>
Percentages are based upon net assets.
44 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 5/9/97
- -----------------------------------------------------------------------------------------
ICON Industrials Fund 19.55% 2.14% 3.13%
- -----------------------------------------------------------------------------------------
S&P 1500 Industrials Index 23.09% 2.88% 5.99%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -0.12% 6.32%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON INDUSTRIALS FUND S&P 1500 INDUSTRIALS INDEX S&P 1500 INDEX
--------------------- -------------------------- --------------
5/9/97 10000 10000 10000
9/30/97 12400 11623 11701
9/30/98 9663 10543 12435
9/30/99 11295 13339 15832
9/30/00 10807 15263 18271
9/30/01 10207 12296 13569
9/30/02 9502 10293 11015
9/30/03 10505 12492 13735
9/30/04 12558 15376 15735
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund on its inception date of 5/9/97 to a
$10,000 investment made in unmanaged securities indexes on that date. The Fund's
performance in this chart and the performance table assumes the reinvestment of
dividends and capital gain distributions but does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or on the redemption of
Fund shares.
Management Overview 45
Management Overview (continued)
ICON Industrials Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Industrials Fund and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,035.40 $ 6.62
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.50 $ 6.56
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.30%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
46 Management Overview
Schedule of Investments
ICON Industrials Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
COMMON STOCKS 99.3%
UNITED STATES OF AMERICA 94.5%
INDUSTRIALS 94.5%
AEROSPACE & DEFENSE 17.0%
35,000 Alliant
Techsystem,
Inc.(a) $ 2,117,500
125,700 Armor Holdings,
Inc.(a) 5,230,377
52,800 Curtiss-Wright
Corporation 3,021,744
93,400 EDO Corporation 2,591,850
261,300 GenCorp Inc. 3,540,615
22,900 General Dynamics
Corporation 2,338,090
121,900 Goodrich
Corporation 3,822,784
71,600 L-3
Communications
Holdings, Inc. 4,797,200
71,700 Lockheed Martin
Corporation 3,999,426
76,400 Northrop Grumman
Corporation 4,074,412
------------
35,533,998
AIRLINES 1.4%
172,900 Frontier
Airlines, Inc.(a) 1,327,872
108,300 SkyWest, Inc. 1,629,915
------------
2,957,787
BUILDING PRODUCTS 13.4%
42,600 American Standard
Companies Inc.(a) 1,657,566
50,000 American Woodmark
Corporation 1,851,250
84,500 Apogee
Enterprises, Inc. 1,092,585
110,200 ElkCorp 3,059,152
143,600 Griffon
Corporation(a) 3,029,960
123,400 Masco Corporation 4,261,002
109,100 NCI Building
Systems, Inc.(a) 3,480,290
72,900 Simpson
Manufacturing
Co., Inc. 4,607,280
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
47,000 Trex Company,
Inc.(a) $ 2,081,160
93,500 York
International
Corporation 2,953,665
------------
28,073,910
COMMERCIAL PRINTING 0.4%
27,500 John H. Harland
Company 862,125
CONSTRUCTION & ENGINEERING 4.1%
88,400 Dycom Industries,
Inc.(a) 2,509,676
51,000 Fluor Corporation 2,270,520
109,000 Insituform
Technologies,
Inc.(a) 2,035,030
154,400 The Shaw Group
Inc.(a) 1,852,800
------------
8,668,026
CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS
5.8%
14,000 Caterpillar Inc. 1,126,300
38,300 Lindsay
Manufacturing Co. 1,027,589
55,300 Oshkosh Truck
Corporation 3,155,418
109,000 Terex
Corporation(a) 4,730,600
30,500 The Toro Company 2,083,150
------------
12,123,057
DIVERSIFIED COMMERCIAL SERVICES 4.9%
42,600 Bright Horizons
Family Solutions,
Inc.(a) 2,312,754
32,200 ChoicePoint
Inc.(a) 1,373,330
42,400 Equifax Inc. 1,117,664
26,200 Portfolio
Recovery
Associates,
Inc.(a) 770,018
137,300 Rollins, Inc. 3,335,017
63,100 SOURCECORP,
Incorporated(a) 1,397,034
------------
10,305,817
ELECTRICAL COMPONENTS & EQUIPMENT 3.5%
79,000 AMETEK, Inc. 2,395,280
50,200 A.O. Smith
Corporation 1,222,370
21,300 Hubbell
Incorporated 954,879
</Table>
Schedule of Investments 47
Schedule of Investments (continued)
ICON Industrials Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
27,700 Regal-Beloit
Corporation $ 670,063
34,800 Cooper
Industries,
Ltd. -- Class A 2,053,200
------------
7,295,792
EMPLOYMENT SERVICES 5.7%
111,800 Administaff,
Inc.(a) 1,308,060
338,200 Labor Ready,
Inc.(a) 4,741,564
278,900 On Assignment,
Inc.(a) 1,238,316
42,300 Resources
Connection,
Inc.(a) 1,598,094
271,700 Spherion
Corporation(a) 2,124,694
33,500 Volt Information
Sciences, Inc.(a) 963,795
------------
11,974,523
ENVIRONMENTAL SERVICES 2.4%
49,400 Stericycle,
Inc.(a) 2,267,460
88,800 Waste
Connections,
Inc.(a) 2,813,184
------------
5,080,644
INDUSTRIAL CONGLOMERATES 1.3%
44,200 Textron Inc. 2,840,734
INDUSTRIAL MACHINERY 14.5%
61,600 Albany
International
Corp. -- Class A 1,836,296
28,300 Briggs & Stratton
Corporation 2,297,960
20,400 Eaton Corporation 1,293,564
140,500 Flowserve
Corporation(a) 3,397,290
63,162 Graco Inc. 2,115,927
31,400 Harsco
Corporation 1,409,860
109,500 Kaydon
Corporation 3,150,315
134,900 The Manitowoc
Company, Inc. 4,783,554
106,500 Reliance Steel &
Aluminum Co. 4,228,050
91,600 Stewart &
Stevenson
Services, Inc. 1,618,572
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
38,700 Watts Water
Technologies,
Inc. -- Class A $ 1,039,095
49,000 Ingersoll Rand
Company -- Class
A 3,330,530
------------
30,501,013
MARINE 1.0%
27,400 Alexander &
Baldwin, Inc. 929,956
28,000 Kirby
Corporation(a) 1,124,200
------------
2,054,156
OFFICE SERVICES & SUPPLIES 2.3%
48,700 Brady Corporation 2,375,099
55,500 United Stationers
Inc.(a) 2,408,700
------------
4,783,799
RAILROADS 7.5%
82,400 Burlington
Northern Santa Fe
Corporation 3,156,744
93,200 CSX Corporation 3,094,240
111,000 Genesee & Wyoming
Inc.(a) 2,810,520
151,100 Norfolk Southern
Corporation 4,493,714
193,000 RailAmerica,
Inc.(a) 2,132,650
------------
15,687,868
TRUCKING 9.3%
81,400 Arkansas Best
Corporation 2,980,868
138,300 Knight
Transportation,
Inc.(a) 2,962,386
91,325 Old Dominion
Freight Line,
Inc.(a) 2,631,073
142,300 Swift
Transportation
Co., Inc.(a) 2,393,486
75,400 USF Corporation 2,706,106
</Table>
48 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
127,650 Werner
Enterprises, Inc. $ 2,464,922
73,600 Yellow Roadway
Corporation(a) 3,451,104
------------
19,589,945
------------
TOTAL INDUSTRIALS 198,333,194
------------
TOTAL UNITED STATES OF AMERICA 198,333,194
AMERICAN DEPOSITARY RECEIPTS 2.0%
BRAZIL 1.1%
INDUSTRIALS 1.1%
AEROSPACE & DEFENSE 1.1%
86,700 Empresa
Brasileira de
Aeronautica
S.A.(a) -- ADR 2,288,880
------------
TOTAL INDUSTRIALS 2,288,880
------------
TOTAL BRAZIL 2,288,880
NETHERLANDS 0.9%
INDUSTRIALS 0.9%
CONSTRUCTION & ENGINEERING 0.9%
61,000 Chicago Bridge &
Iron Company
N.V. -- ADR 1,829,390
------------
TOTAL INDUSTRIALS 1,829,390
------------
TOTAL NETHERLANDS 1,829,390
------------
TOTAL AMERICAN DEPOSITARY
RECEIPTS 4,118,270
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
CANADA 2.8%
INDUSTRIALS 2.8%
RAILROADS 2.8%
65,100 Canadian National
Railway Company $ 3,157,350
103,700 CP Railway
Limited 2,673,386
------------
TOTAL INDUSTRIALS 5,830,736
------------
TOTAL CANADA 5,830,736
------------
TOTAL COMMON STOCKS
(COST $170,661,701) 208,282,200
SHORT-TERM INVESTMENTS 3.2%
U.S. GOVERNMENT AGENCIES 3.1%
$6,572,000 FHLB Discount
Note,
1.3690%, 10-1-04 6,572,000
------------
TOTAL U.S. GOVERNMENT AGENCIES 6,572,000
VARIABLE RATE DEMAND NOTE 0.1%
$ 116,039 American Family
Demand Note,
1.4525%# 116,039
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $6,688,039) 6,688,039
------------
TOTAL INVESTMENTS 102.5%
(COST $177,349,740) 214,970,239
------------
LIABILITIES LESS OTHER ASSETS
(2.5%) (5,276,981)
------------
NET ASSETS 100.0% $209,693,258
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
ADR American Depositary Receipt
Dates shown on securities are the due dates of the obligation.
Schedule of Investments 49
Management Overview
ICON Information Technology Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 100.3%
Top 10 Equity Holdings 26.6%
Number of Stocks 60
Short-Term Investments 0.6%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
Cree, Inc. 3.3%
j2 Global Communications, Inc. 3.2%
Stratasys, Inc. 2.7%
Synaptics Incorporated 2.6%
Comtech Telecommunications Corp. 2.6%
Cognizant Technology Solutions Corporation 2.6%
Paxar Corporation 2.6%
Mettler-Toledo International, Inc. 2.4%
Xerox Corporation 2.3%
EMC Corporation 2.3%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Information Technology Fund returned -4.47% for the fiscal year
ended September 30, 2004, trailing its narrow benchmarks, the S&P 1500
Information Technology Index and the NASDAQ Composite Index, which returned
1.66% and 6.71%, respectively, while also lagging its broad benchmark, the
S&P 1500 Index, which returned 14.58%. Total returns for other periods as of
September 30, 2004 are listed on page 54.
Market capitalization was the primary factor contributing to the Fund's
underperformance during the period. In a value-driven tilt away from the
largest issues in the S&P 1500 Information Technology Index, the Fund held
sizable weightings in small- and mid-cap stocks. Although these smaller
holdings possessed valuation characteristics that were stronger than their
larger counterparts, they were severely punished in a broad and steep
decline that began in early 2004.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
While the ICON system does not consider investment style, the Fund suffered
from a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. This bias deviated from the Fund's sector-
specific benchmark, which typically emphasizes large-cap growth-oriented
companies. As technology investors flocked to these larger-cap issues amid
economic and geopolitical uncertainty, smaller shares perceived as more
volatile were indiscriminately sold.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
ratio as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Lingering concerns ranging from oil-related inflationary pressures to anemic
capital spending weighed heavily on the highly volatile Information
Technology sector. An early-period follow-through rally was all but erased
as tech shares traded sharply lower against the broader backdrop of an
extended sideways market. With the sustainability of the economic recovery
still in question, larger-cap tech stocks fared somewhat better than small-
and mid- caps, although few were left unscathed as the summer doldrums set
in.
50 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
However, following a mid-August sector low, tech shares rebounded strongly
through the end of the period, as economic and inflation fears gave way to
fundamental realities. Improving corporate profits and declining long-term
interest rates swayed investors to finally recognize the value in smaller
technology issues that our system had detected all along.
Q. HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
A. Although our valuation metrics did not support the freefall in technology
shares, two of the Fund's largest industry detractors, communications
equipment and Internet software & services, fell victim to fear-driven
selling. Communications equipment failed to demonstrate sustainable relative
strength and was gradually reduced in order to broaden industry exposure and
mitigate risk. Internet software & services, which had previously been a
strong performer, was pared back as indiscriminate profit taking weakened it
considerably.
In their place, assets were redeployed into technology distributors and
software-related industries (application software and home entertainment
software), which proved to be among the Fund's strongest performers during
the period. Valuation and relative strength readings justified significantly
overweight positions relative to the sector-specific benchmark, and both
weathered turbulent market conditions in a seemingly steady manner.
Turning to individual stocks, noteworthy detractors included Open Text
Corp., a developer of enterprise content management software, as summertime
corporate spending cutbacks translated into disappointing quarterly results.
Meanwhile, OSI Systems Inc., a maker of optoelectronic monitoring systems,
struggled as softer sales, acquisition charges and litigation expenses hurt
earnings per share. Sonic Solutions also retreated after the application
software company reported first-quarter profits that matched Wall Street
estimates.
Among the Fund's leading contributors, IT services provider Cognizant
Technology Solutions Corp. benefited from adding 40 new strategic clients in
a three-month period. Financial software developer SS&C Technologies, Inc.
reported better-than-expected quarterly revenue and earnings, but realized
fair value and was subsequently sold. Elsewhere, semiconductor maker Marvell
Technology Group Ltd. boosted revenue across a wide range of products, while
increasing market share and operating margins.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE INFORMATION TECHNOLOGY SECTOR?
A. The Information Technology sector emerged as a late-period market leader in
a sharp and sudden rally that bounced off of mid-August lows. Moreover, at
fiscal year-end, the average technology issue continued to trade at a 19%
discount to our estimate of intrinsic value. This combination of
strengthening
Management Overview 51
Management Overview (continued)
ICON Information Technology Fund
stock prices and current valuation levels suggest to us that the sector is
positioned to outperform the broader market over the next six to 12 months.
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - Although valuation directed us to smaller capitalization companies, the
Fund's bias toward small- and mid-cap stocks produced disappointing results.
- - Stocks that detracted from performance during the period included Open Text
Corp., OSI Systems Inc. and Sonic Solutions.
- - Our methodology led us to pare back communications equipment and Internet
software & services, both of which fell victim to fear-driven selling.
- - Conversely, valuation and relative strength readings justified overweight
positions in technology distributors and software-related industries, among
the Fund's top performers for the period.
- - Among the Fund's best-performing holdings during the period were Cognizant
Technology Solutions Corp., SS&C Technologies, Inc. and Marvell Technology
Group Ltd.
52 Management Overview
TOP 10 INDUSTRIES
as of September 30, 2004
<Table>
Semiconductors
12.7%
Communications Equipment
11.0%
Technology Distributors
10.5%
IT Consulting & Other Services
8.8%
Electronic Equipment Manufacturers
8.6%
Data Processing & Outsourced Services
8.3%
Computer Storage & Peripherals
8.1%
Application Software
6.6%
Internet Software & Services
6.1%
Computer Hardware
5.7%
</Table>
Percentages are based upon net assets.
Management Overview 53
Management Overview (continued)
ICON Information Technology Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/19/97
- -----------------------------------------------------------------------------------------
ICON Information Technology Fund -4.47% 1.59% 11.39%
- -----------------------------------------------------------------------------------------
S&P 1500 Information Technology Index 1.66% -11.39% 4.22%
- -----------------------------------------------------------------------------------------
NASDAQ Composite Index 6.71% -6.80% 4.80%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -0.12% 6.36%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON INFORMATION S&P 1500 INFORMATION NASDAQ COMPOSITE
TECHNOLOGY FUND TECHNOLOGY INDEX INDEX S&P 1500 INDEX
---------------- -------------------- ---------------- --------------
2/19/97 10000 10000 10000 10000
9/30/97 12960 12853 12379 11890
9/30/98 9569 14126 12492 12636
9/30/99 21006 25075 20319 16088
9/30/00 33451 30971 27224 18567
9/30/01 22447 12273 11140 13789
9/30/02 17209 8437 8742 11194
9/30/03 23799 13474 13388 13957
9/30/04 22735 13698 14287 15990
</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.
54 Management Overview
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Information Technology Fund and to compare these costs
with the ongoing costs of investing in other mutual funds. This Example is based
on an investment of $1,000 invested at the beginning of the period and held for
the six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 894.70 $ 6.44
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.20 $ 6.86
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.36%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
Management Overview 55
Schedule of Investments
ICON Information Technology Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
COMMON STOCKS 100.3%
UNITED STATES OF AMERICA 94.2%
CONSUMER DISCRETIONARY 1.8%
COMPUTER & ELECTRONICS RETAIL 1.8%
81,100 Best Buy Co.,
Inc. $ 4,398,864
------------
TOTAL CONSUMER DISCRETIONARY 4,398,864
------------
INFORMATION TECHNOLOGY 92.4%
APPLICATION SOFTWARE 6.6%
129,700 Altiris, Inc.(a) 4,105,005
96,100 Intuit, Inc.(a) 4,362,940
173,600 Sonic
Solutions(a) 2,833,152
128,000 Verint Systems,
Inc.(a) 4,715,520
------------
16,016,617
COMMUNICATIONS EQUIPMENT 9.8%
134,100 ADTRAN, Inc. 3,041,388
194,000 Belden CDT, Inc. 4,229,200
236,900 Comtech
Telecommunications
Corp.(a) 6,419,990
204,100 Ditech
Communications
Corporation(a) 4,569,799
134,800 SafeNet, Inc.(a) 3,556,024
237,900 Tellabs, Inc.(a) 2,186,301
------------
24,002,702
COMPUTER HARDWARE 5.7%
113,500 Dell, Inc.(a) 4,040,600
71,200 Diebold,
Incorporated 3,325,040
205,300 Stratasys,
Inc.(a) 6,478,242
------------
13,843,882
COMPUTER STORAGE & PERIPHERALS 8.1%
50,900 Avid Technology,
Inc.(a) 2,385,683
487,400 EMC
Corporation(a) 5,624,596
186,800 SanDisk
Corporation(a) 5,439,616
319,100 Synaptics
Incorporated(a) 6,433,056
------------
19,882,951
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
DATA PROCESSING & OUTSOURCED SERVICES 8.3%
96,700 Affiliated
Computer
Services, Inc.(a) $ 5,383,289
114,100 Computer Sciences
Corporation(a) 5,374,110
83,500 First Data
Corporation 3,632,250
83,300 Fiserv, Inc.(a) 2,903,838
94,100 StarTek, Inc. 2,950,976
------------
20,244,463
ELECTRONIC EQUIPMENT MANUFACTURERS 8.6%
144,300 Amphenol
Corporation(a) 4,943,718
119,000 Itron, Inc.(a) 2,076,550
121,600 Mettler-Toledo
International,
Inc.(a) 5,741,952
276,100 Paxar
Corporation(a) 6,261,948
71,200 ARGON ST, Inc.(a) 1,993,600
------------
21,017,768
ELECTRONIC MANUFACTURING SERVICES 1.6%
134,100 Benchmark
Electronics,
Inc.(a) 3,996,180
HOME ENTERTAINMENT SOFTWARE 3.7%
178,800 Activision,
Inc.(a) 2,479,956
117,500 Take-Two
Interactive
Software, Inc.(a) 3,859,875
134,900 THQ, Inc.(a) 2,625,154
------------
8,964,985
INTERNET SOFTWARE & SERVICES 6.1%
60,000 Ask Jeeves,
Inc.(a) 1,962,600
170,900 Digital River,
Inc.(a) 5,089,402
248,800 j2 Global
Communications,
Inc.(a) 7,859,592
------------
14,911,594
IT CONSULTING & OTHER SERVICES 8.8%
92,100 Anteon
International
Corporation(a) 3,375,465
100,700 CACI
International,
Inc.(a) 5,314,946
</Table>
56 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
210,000 Cognizant
Technology
Solutions
Corporation(a) $ 6,407,100
175,600 Forrester
Research, Inc.(a) 2,676,144
70,000 SRA
International,
Inc.(a) 3,609,200
------------
21,382,855
OFFICE ELECTRONICS 2.3%
403,000 Xerox
Corporation(a) 5,674,240
SEMICONDUCTOR EQUIPMENT 3.7%
111,000 Cabot
Microelectronics
Corporation(a) 4,023,750
60,000 KLA-Tencor
Corp.(a) 2,488,800
58,600 Lam Research
Corp.(a) 1,282,168
40,900 Varian
Semiconductor
Equipment
Associates
Inc.(a) 1,263,810
------------
9,058,528
SEMICONDUCTORS 8.6%
260,000 Cree, Inc.(a) 7,937,800
74,900 International
Rectifier
Corporation(a) 2,569,070
47,400 Maxim Integrated
Products, Inc. 2,004,546
163,600 Microchip
Technology
Incorporated 4,391,024
187,400 Texas Instruments
Incorporated 3,987,872
------------
20,890,312
TECHNOLOGY DISTRIBUTORS 10.5%
237,200 Agilysys, Inc. 4,101,188
143,800 Anixter
International,
Inc.(a) 5,045,942
176,700 Global Imaging
Systems, Inc.(a) 5,491,836
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
347,100 Ingram Micro,
Inc.(a) $ 5,588,310
143,300 Tech Data
Corporation(a) 5,524,215
------------
25,751,491
------------
TOTAL INFORMATION TECHNOLOGY 225,638,568
------------
TOTAL UNITED STATES OF AMERICA 230,037,432
------------
AMERICAN DEPOSITARY RECEIPTS 2.0%
FINLAND 1.2%
INFORMATION TECHNOLOGY 1.2%
COMMUNICATIONS EQUIPMENT 1.2%
206,500 Nokia Oyj 2,833,180
------------
TOTAL INFORMATION TECHNOLOGY 2,833,180
------------
TOTAL FINLAND 2,833,180
MEXICO 0.8%
TELECOMMUNICATION & UTILITIES 0.8%
WIRELESS TELECOMMUNICATION SERVICES 0.8%
53,700 America Movil
S.A. de C.V.
Mexico 2,095,911
------------
TOTAL TELECOMMUNICATION &
UTILITIES 2,095,911
------------
TOTAL MEXICO 2,095,911
TOTAL AMERICAN DEPOSITARY
RECEIPTS 4,929,091
BERMUDA 2.2%
INFORMATION TECHNOLOGY 2.2%
SEMICONDUCTORS 2.2%
206,600 Marvell
Technology Group
Ltd.(a) 5,398,458
------------
TOTAL INFORMATION TECHNOLOGY 5,398,458
------------
TOTAL BERMUDA 5,398,458
------------
CANADA 1.2%
INFORMATION TECHNOLOGY 1.2%
SEMICONDUCTORS 1.2%
184,700 ATI Technologies,
Inc.(a) 2,831,451
------------
TOTAL INFORMATION TECHNOLOGY 2,831,451
------------
TOTAL CANADA 2,831,451
------------
</Table>
Schedule of Investments 57
Schedule of Investments (continued)
ICON Information Technology Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
CHINA 0.7%
INFORMATION TECHNOLOGY 0.7%
SEMICONDUCTORS 0.7%
150,600 O2Micro
International
Limited(a) $ 1,617,444
------------
TOTAL INFORMATION TECHNOLOGY 1,617,444
------------
TOTAL CHINA 1,617,444
------------
TOTAL COMMON STOCKS
(COST $224,646,996) 244,813,876
SHORT-TERM INVESTMENTS 0.6%
U.S. GOVERNMENT AGENCIES 0.6%
$1,474,000 FHLB Discount
Note, 1.3690%,
10-1-04 1,474,000
------------
TOTAL U.S. GOVERNMENT AGENCIES 1,474,000
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
VARIABLE RATE DEMAND NOTE 0.0%
57,254 American Family
Demand Note,
1.4525%# $ 57,254
------------
VARIABLE RATE DEMAND NOTE
TOTAL SHORT-TERM INVESTMENT
(COST $1,531,254) 1,531,254
------------
TOTAL INVESTMENTS 100.9%
(COST $226,178,250) 246,345,130
------------
LIABILITIES LESS OTHER ASSETS
(0.9%) (2,092,727)
------------
NET ASSETS 100.0% $244,252,403
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
Dates shown on securities are the due dates of the obligation.
58 Schedule of Investments
Management Overview
ICON Leisure and Consumer Staples Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 99.9%
Top 10 Equity Holdings 29.1%
Number of Stocks 45
Short-Term Investments 1.4%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
Eastman Kodak Company 3.5%
Brunswick Corporation 3.3%
JAKKS Pacific, Inc. 3.0%
McDonald's Corporation 2.9%
BJ's Wholesale Club, Inc. 2.9%
Nash Finch Company 2.8%
Sonic Corp. 2.7%
CEC Entertainment, Inc. 2.7%
Speedway Motorsports, Inc. 2.7%
Reader's Digest Association, Inc. 2.6%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Leisure and Consumer Staples Fund appreciated 16.83% for the fiscal
year ended September 30, 2004, outpacing its sector-specific benchmarks, the
S&P 1500 Consumer Discretionary Index and the S&P 1500 Consumer Staples
Index, which returned 15.11% and 8.63%, 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 14.58%
over the same period. Total returns for other periods as of September 30,
2004 are listed on page 63.
Despite a favorable environment that featured moderate economic growth and
nominal inflation, markets turned increasingly volatile as investors focused
on extraneous events. While the ensuing sideways market capped broad
early-period gains, abrupt theme reversals supported the more cyclical
Leisure industries, often at the expense of the more defensive Consumer
Staples group.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
Although our system does not consider investment style, the Fund benefited
from a value bias during the period, as measured on a traditional price-to-
earnings (P/E) basis. This is corroborated by the outperformance of
S&P/Barra Value Indexes over their S&P/Barra Growth counterparts for the
one-year period ended September 30, 2004.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to- price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. A range-bound market characterized the investment environment for much of
the fiscal year, as rising oil prices, the war on terror, economic
sustainability, and election-year uncertainty weighed heavily on investor
sentiment. Frequent rotations between cyclical and defensive-oriented
industries indicated an absence of leadership, which only grew more
pronounced as concerns intensified.
Management Overview 59
Management Overview (continued)
ICON Leisure and Consumer Staples Fund
Nevertheless, our system continued to support a recovery-driven theme based
on valuation and relative strength readings that anticipated an eventual
upside move. Although underlying conditions remained favorable, attempts at
a cyclical rally were easily extinguished, yet poised to gain traction
should economic fears give way to fundamental realities.
Q. HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
A. The Fund captured relative outperformance during the period from
concentrated weightings in restaurants and leisure products, both leading
cyclical industries. Hotels, resorts & cruise lines also recorded strong
contributions, yet was significantly reduced when selected companies in this
heavily weighted industry exceeded fair value. Restaurants, on the other
hand, retained sizable exposure as valuation and relative strength readings
suggested ongoing leadership.
Conversely, soft drinks, distillers & vintners, and brewers proved to be net
detractors, as defensive-oriented industries in the Consumer Staples sector
exhibited declining relative strength. Within the Leisure industries, movies
& entertainment was roundly pared when it failed to sustain what appeared to
be nascent market leadership.
Among the Fund's leading individual stock contributors, recreation marketer
Brunswick Corp. saw strong improvements and market share gains across its
three core product lines. Food wholesaler Nash Finch Co. also advanced as
improved operating efficiencies and declining competitive pressures helped
boost profits. Meanwhile, fast food operator CKE Restaurants Inc. benefited
from modest growth in customer traffic coupled with higher check averages.
In contrast, stocks that hurt Fund returns included supermarket operator
Winn-Dixie Stores, Inc., which grappled with the deepening competitive
threat from supercenters and warehouse club stores. NASCAR collectibles
marketer Action Performance Companies, Inc. also struggled, having faced
slowing revenues and management turnover. Elsewhere, educational toymaker
LeapFrog Enterprises Inc., which the Fund owned, sold, and repurchased at
the end of the period, tumbled as higher production costs eroded revenue
gains. Yet, LeapFrog's value has held and it has performed well since the
August 11, 2004 market low. Winn-Dixie and Action Performance Companies were
ultimately sold on declining relative strength.
60 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Derek Rollingson
Portfolio Manager
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE LEISURE AND CONSUMER STAPLES SECTOR?
A. Widespread value, both in the sector and the broader market, supports our
belief that sustainable economic growth and continued low interest rates
could drive an eventual move to the upside. Although we will need to be
selective given leadership concerns in Consumer Staples, we see demonstrable
relative strength in Leisure industries such as restaurants and leisure
products. Based on our methodology, we anticipate that the sector can
capitalize on that leadership and participate in a broad move toward fair
value.
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - The ICON valuation model led us to small- and medium-capitalization
companies in the sector, which aided relative performance.
- - Brunswick Corp., Nash Finch Co. and CKE Restaurants Inc. were among the
Fund's strongest-performing holdings during the period.
- - Our methodology led us to hold concentrated weightings in restaurants,
leisure products, and hotels, all of which contributed strongly to Fund
performance.
- - Conversely, soft drinks, distillers & vintners, and brewers proved to be net
detractors, as defensive-oriented industries experienced declining relative
strength.
- - Stocks that detracted from performance during the period included Winn-Dixie
Stores, Inc., Action Performance Companies, Inc. and LeapFrog Enterprises
Inc.
The unmanaged S&P/Barra Growth and Value indexes are constructed by dividing
stocks in indexes according to book-to-price ratio. The Value index contains
firms with higher book-to-price ratios; conversely, the Growth index has firms
with lower book-to-price ratios. Both indexes are capitalization-weighted.
Management Overview 61
Management Overview (continued)
ICON Leisure and Consumer Staples Fund
TOP 10 INDUSTRIES
September 30, 2004
<Table>
Restaurants
14.7%
Leisure Products
13.4%
Food Distributors
7.0%
Hotels, Resorts & Cruise Lines
5.9%
Computer & Electronics Retail
5.4%
Publishing
4.9%
Agricultural Products
4.8%
Distillers & Vinters
4.7%
Leisure Facilities
4.6%
Drug Retail
4.3%
</Table>
Percentages are based upon net assets.
62 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 5/9/97
- -----------------------------------------------------------------------------------------
ICON Leisure and Consumer Staples Fund 16.83% 10.64% 11.59%
- -----------------------------------------------------------------------------------------
S&P 1500 Consumer Discretionary Index 15.11% 0.14% 7.41%
- -----------------------------------------------------------------------------------------
S&P 1500 Consumer Staples Index 8.63% 2.57% 4.58%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -0.12% 6.33%
- -----------------------------------------------------------------------------------------
</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.
VALUE OF A $10,000 INVESTMENT
through September 30, 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
9/30/97 11350 11749 10622 11703
9/30/98 11825 12705 11479 12437
9/30/99 13570 16840 12269 15835
9/30/00 14285 16547 12860 18274
9/30/01 14607 12992 12273 13572
9/30/02 17367 11935 12199 11017
9/30/03 19259 14736 12824 13737
9/30/04 22500 16962 13930 15738
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund on its inception date of 5/9/97 to a
$10,000 investment made in unmanaged securities indexes on that date. The Fund's
performance in this chart and the performance table assumes the reinvestment of
dividends and capital gain distributions but does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or on the redemption of
Fund shares.
Management Overview 63
Management Overview (continued)
ICON Leisure and Consumer Staples Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Leisure and Consumer Staples Fund and to compare these
costs with the ongoing costs of investing in other mutual funds. This Example is
based on an investment of $1,000 invested at the beginning of the period and
held for the six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 978.40 $6.63
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.30 $6.76
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.34% annualized,
multiplied by the average account value over the period, multiplied by 183/366
to reflect the one-half year period.
64 Management Overview
Schedule of Investments
ICON Leisure and Consumer Staples Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
COMMON STOCKS 99.9%
UNITED STATES OF AMERICA 97.6%
CONSUMER DISCRETIONARY 9.4%
COMPUTER & ELECTRONICS RETAIL 5.4%
27,000 Best Buy Co.,
Inc. $ 1,464,480
44,600 Electronics
Boutique Holdings
Corp.(a) 1,520,860
81,100 GameStop
Corporation(a) 1,501,161
------------
4,486,501
MOTORCYCLE MANUFACTURERS 2.1%
29,000 Harley-Davidson,
Inc. 1,723,760
SPECIALTY STORES 1.9%
165,600 Trans World
Entertainment
Corporation(a) 1,617,912
------------
TOTAL CONSUMER DISCRETIONARY 7,828,173
INFORMATION TECHNOLOGY 2.2%
HOME ENTERTAINMENT SOFTWARE 2.2%
56,000 Take-Two
Interactive
Software, Inc.(a) 1,839,600
------------
TOTAL INFORMATION TECHNOLOGY 1,839,600
LEISURE AND CONSUMER STAPLES 86.0%
AGRICULTURAL PRODUCTS 4.8%
43,200 Corn Products
International,
Inc. 1,991,520
80,800 Fresh Del Monte
Produce, Inc. 2,012,728
------------
4,004,248
BREWERS 2.0%
24,700 Adolph Coors
Company 1,677,624
CASINOS & GAMING 4.2%
27,300 Harrah's
Entertainment,
Inc. 1,446,354
53,400 Shuffle Master,
Inc.(a) 2,000,364
------------
3,446,718
DISTILLERS & VINTERS 4.7%
48,400 Constellation
Brands, Inc. --
Class A(a) 1,842,104
52,200 The Robert
Mondavi
Corporation --
Class A(a) 2,044,674
------------
3,886,778
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
DRUG RETAIL 4.3%
38,600 CVS Corporation $ 1,626,218
81,800 Longs Drug Stores
Corporation 1,979,560
------------
3,605,778
FOOD DISTRIBUTORS 7.0%
62,600 Central European
Distribution
Corporation(a) 1,398,484
74,000 Nash Finch
Company 2,327,300
77,400 United Natural
Foods, Inc.(a) 2,058,840
------------
5,784,624
HOTELS, RESORTS & CRUISE LINES 5.9%
20,600 Marriott
International,
Inc. 1,070,376
47,800 Royal Caribbean
Cruises, Ltd. 2,084,080
36,700 Carnival
Corporation 1,735,543
------------
4,889,999
HOUSEHOLD PRODUCTS 3.3%
41,900 Energizer
Holdings, Inc.(a) 1,931,590
12,800 Kimberly-Clark
Corporation 826,752
------------
2,758,342
HYPERMARKETS & SUPER CENTERS 2.8%
86,500 BJ's Wholesale
Club, Inc.(a) 2,364,910
LEISURE FACILITIES 4.6%
32,600 International
Speedway
Corporation 1,626,740
65,900 Speedway
Motorsports, Inc. 2,196,447
------------
3,823,187
LEISURE PRODUCTS 13.4%
73,800 Arctic Cat, Inc. 1,915,110
58,900 Brunswick
Corporation 2,695,264
109,400 JAKKS Pacific,
Inc.(a) 2,516,200
42,100 LeapFrog
Enterprises,
Inc.(a) 852,525
57,600 RC2
Corporation(a) 1,895,040
46,825 SCP Pool
Corporation 1,252,101
------------
11,126,240
</Table>
Schedule of Investments 65
Schedule of Investments (continued)
ICON Leisure and Consumer Staples Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
MOVIES & ENTERTAINMENT 2.0%
72,900 The Walt Disney
Company(a) $ 1,643,895
PACKAGED FOODS & MEATS 4.2%
47,300 J & J Snack Foods
Corp.(a) 2,028,224
40,300 Ralcorp Holdings,
Inc.(a) 1,454,830
------------
3,483,054
PHOTOGRAPHIC PRODUCTS 3.5%
89,100 Eastman Kodak
Company 2,870,802
PUBLISHING 2.6%
150,100 Reader's Digest
Association, Inc. 2,189,959
RESTAURANTS 14.7%
60,600 CEC
Entertainment,
Inc.(a) 2,227,050
55,100 Jack in the Box,
Inc.(a) 1,748,323
314,800 Luby's, Inc.(a) 2,077,680
86,000 McDonald's
Corporation 2,410,580
34,600 Red Robin Gourmet
Burgers, Inc.(a) 1,510,982
87,500 Sonic Corp.(a) 2,242,625
------------
12,217,240
TOBACCO 2.0%
24,400 Reynolds
American, Inc. 1,660,176
------------
TOTAL LEISURE AND CONSUMER
STAPLES 71,433,574
------------
TOTAL UNITED STATES OF AMERICA 81,101,347
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
CANADA 2.3%
LEISURE AND CONSUMER STAPLES 2.3%
PUBLISHING 2.3%
53,900 The Thomson
Corporation $ 1,869,791
------------
TOTAL LEISURE AND CONSUMER
STAPLES 1,869,791
------------
TOTAL CANADA 1,869,791
------------
TOTAL COMMON STOCKS
(COST $69,214,650) 82,971,138
SHORT-TERM INVESTMENTS 1.4%
U.S. GOVERNMENT AGENCIES 1.3%
$1,095,000 FHLB Discount
Note,
1.369%, 10-1-04 1,095,000
------------
TOTAL U.S. GOVERNMENT AGENCIES 1,095,000
VARIABLE RATE DEMAND NOTE 0.1%
$ 67,945 American Family
Demand Note,
1.4525%# 67,945
------------
TOTAL VARIABLE RATE DEMAND NOTE
67,945
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,162,945) 1,162,945
------------
TOTAL INVESTMENTS 101.3%
(COST $70,377,595) 84,134,083
------------
LIABILITIES LESS OTHER ASSETS
(1.3%) (1,111,654)
------------
NET ASSETS 100.0% $ 83,022,429
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
Dates shown on securities are the due dates of the obligation.
66 Schedule of Investments
Management Overview
ICON Materials Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 97.0%
Top 10 Equity Holdings 24.2%
Number of Stocks 62
Short-Term Investments 5.1%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
The Mosaic Co. 2.7%
Millennium Chemicals, Inc. 2.6%
PPG Industries, Inc. 2.6%
Steel Dynamics, Inc. 2.5%
Methanex Corporation 2.4%
Steel Technologies, Inc. 2.3%
Eagle Materials, Inc. 2.3%
Alcan, Inc. 2.3%
E.I. du Pont de Nemours
and Company 2.3%
Caraustar Industries, Inc. 2.2%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Materials Fund appreciated 46.61% for the fiscal year ended
September 30, 2004, outpacing the 31.57% return for its sector-specific
benchmark, the S&P 1500 Materials Index, as well as the 14.58% return for
its broad benchmark, the S&P 1500 Index. Total returns for other periods as
of September 30, 2004 are listed on page 71.
Although the broad market encountered volatility during the period, the
Materials sector fared considerably better than its cyclical counterparts.
Against a backdrop of improving economic fundamentals and rising global
demand, the sector as a whole benefited from a recovery-driven advance
toward fair value. Additionally, the Fund's overweight position in small-
and mid-cap stocks contributed positively to performance as smaller
capitalization stocks outperformed their large-cap counterparts.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
Although the ICON system does not consider investment style, the Fund
benefited from a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. This is borne out by returns for the
S&P/Barra Value Indexes for the one-year period ended September 30, 2004, in
which the S&P 500/Barra Value, S&P MidCap 400/Barra Value and S&P SmallCap
600/Barra Value Indexes outperformed their S&P/Barra Growth counterparts.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard P/E as a static proxy. Instead, we calculate a proprietary
value-to-price ratio (V/P) for each industry and security. We view this
ratio as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. While the broader market moved in a sideways direction for much of the
fiscal year, the Materials sector recorded positive performance across all
of its constituent industries. A stronger U.S. economy drove a portion of
these gains, as demand for steel, specialty chemicals and raw materials
accelerated, enabling producers to exercise pricing power after several
dormant years.
However, much of the domestic advance was aided by China's robust expansion,
which has led to strong global demand for commodities and continued to
support positive trends in global manufacturing and infrastructure
development, despite signs that its government would take preemptive steps
to moderate growth. This, along with other extraneous
Management Overview 67
Management Overview (continued)
ICON Materials Fund
events, such as rising oil prices, terrorism and election-year
uncertainties, distracted the markets from time to time.
Q. HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
A. Our prior-year rotation into the steel industry made significant
contributions to Fund performance during the period. As the Fund's largest
industry weighting at period-end, steel delivered sector-leading returns,
while continuing to exhibit further upside potential based on valuation and
relative strength.
In contrast, the Fund maintained limited exposure to gold, the sector
laggard, on the grounds that it was overpriced compared to more compelling
values. Commodity chemicals and fertilizers & agricultural chemicals, two
new positions initiated at mid-period, were identified by our system as
being underpriced and showing improving relative strength. Over the course
of their second-half progress, both industries added to returns.
Among the Fund's top contributors to performance, OM Group, Inc., a producer
of metal-based specialty chemicals, reported sizeable year-over-year sales
gains on strong demand for its line of cobalt products. Mini-mill steel
producer Steel Dynamics, Inc. also advanced as strong global demand and
rising prices offset the higher cost of raw materials. Meanwhile,
platinum-group metals producer Stillwater Mining Company substantially
boosted revenue in a palladium transaction with Russian mining company
Norilsk (which the Fund does not own), yet it was subsequently sold due to
low value/price measurements.
Specific stocks that detracted from performance included commodity fiber
producer Wellman Inc., which struggled with weak demand and rising input
costs. Elsewhere, diversified chemicals company Solutia Inc. was sold at a
loss on declining relative strength. The company subsequently filed for
bankruptcy due to liabilities inherited from its former parent.
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE MATERIALS SECTOR?
A. While our analysis currently indicates considerable upside potential within
the overall market, the Materials sector is further along in its march
toward fair value. That being said, we anticipate continued leadership in
steel and to a lesser extent commodity chemicals. At the same time, given
lower V/P levels, we are inclined to keep a more watchful eye on the sector,
and anticipate that going forward we may exercise greater selectivity at the
security level.
68 Management Overview
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - Smaller capitalization stocks were among the Fund's top performers during
the period. - OM Group Inc., Steel Dynamics Inc. and Stillwater Mining
Company all made significant contributions to overall Fund performance.
- - Our methodology led us to hold a sizable position in steel, the best-
performing industry in the Index.
- - Conversely, our valuation readings resulted in limited exposure to gold,
which our system viewed as overpriced. This industry lagged the sector for
the period.
- - Stocks that detracted from performance during the period included Wellman
Inc. and Solutia Inc.
The unmanaged S&P/Barra Growth and Value indexes are constructed by dividing
stocks in indexes according to book-to-price ratio. The Value index contains
firms with higher book-to-price ratios; conversely, the Growth index has firms
with lower book-to-price ratios. Both indexes are capitalization-weighted.
Management Overview 69
Management Overview (continued)
ICON Materials Fund
TOP 10 INDUSTRIES
September 30, 2004
<Table>
Steel
17.6%
Specialty Chemicals
12.5%
Diversified Chemicals
11.0%
Construction Materials
10.6%
Commodity Chemicals
9.1%
Fertilizers & Agricultural
Chemicals 6.7%
Paper Products
6.3%
Metal & Glass Containers
6.3%
Aluminum
5.7%
Paper Packaging
3.8%
</Table>
Percentages are based upon net assets.
70 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 5/5/97
- ---------------------------------------------------------------------------------------
ICON Materials Fund 46.61% 4.84% -0.49%
- ---------------------------------------------------------------------------------------
S&P 1500 Materials Index 31.57% 6.90% 5.55%
- ---------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -0.12% 6.23%
- ---------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON MATERIALS FUND S&P 1500 MATERIALS INDEX S&P 1500 INDEX
------------------- ------------------------ --------------
5/5/97 10000 10000 10000
9/30/97 10900 11391 11635
9/30/98 6818 9413 12366
9/30/99 7613 10685 15743
9/30/00 6759 8547 18169
9/30/01 6010 9755 13494
9/30/02 6014 9201 10954
9/30/03 6577 11335 13658
9/30/04 9642 14914 15648
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund on its inception date of 5/5/97 to a
$10,000 investment made in unmanaged securities indexes on that date. The Fund's
performance in this chart and the performance table assumes the reinvestment of
dividends and capital gain distributions but does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or on the redemption of
Fund shares.
Management Overview 71
Management Overview (continued)
ICON Materials Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Materials Fund and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,127.00 $7.23
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.20 $6.86
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.36%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
72 Management Overview
Schedule of Investments
ICON Materials Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------
COMMON STOCKS 97.0%
UNITED STATES OF AMERICA 85.4%
INDUSTRIALS 1.4%
TRADING COMPANIES & DISTRIBUTORS 1.4%
64,600 Hughes Supply, Inc. $ 1,942,522
------------
TOTAL INDUSTRIALS 1,942,522
MATERIALS 84.0%
ALUMINUM 3.4%
81,600 Alcoa, Inc. 2,740,944
89,300 Commonwealth
Industries, Inc.(a) 834,062
102,600 IMCO Recycling,
Inc.(a) 1,169,640
------------
4,744,646
COMMODITY CHEMICALS 6.7%
32,500 Georgia Gulf
Corporation 1,449,175
98,800 Headwaters
Incorporated(a) 3,048,968
52,400 Lyondell Chemical
Company 1,176,904
173,500 Millennium
Chemicals, Inc.(a) 3,679,935
------------
9,354,982
CONSTRUCTION MATERIALS 8.2%
45,600 Eagle Materials,
Inc. 3,251,280
52,475 Florida Rock
Industries, Inc. 2,570,750
50,700 Lafarge North
America Inc. 2,377,323
25,100 Martin Marietta
Materials, Inc. 1,136,277
40,100 Texas Industries,
Inc. 2,062,744
------------
11,398,374
DIVERSIFIED CHEMICALS 11.0%
48,100 Cabot Corporation 1,855,217
74,500 E.I. du Pont de
Nemours and Company 3,188,600
53,300 Eastman Chemical
Company 2,534,415
65,700 Engelhard
Corporation 1,862,595
47,900 FMC Corporation(a) 2,326,503
58,900 PPG Industries,
Inc. 3,609,392
------------
15,376,722
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------
DIVERSIFIED METALS & MINING 3.0%
59,000 Freeport-McMoRan
Copper & Gold, Inc. $ 2,389,500
91,900 RTI International
Metals, Inc.(a) 1,780,103
------------
4,169,603
FERTILIZERS & AGRICULTURAL CHEMICALS 4.4%
217,500 The Mosaic Co.(a) 3,782,325
36,000 The Scotts
Company(a) 2,309,400
------------
6,091,725
INDUSTRIAL GASSES 1.9%
33,800 Air Products and
Chemicals, Inc. $ 1,838,044
19,400 Praxair, Inc. 829,156
------------
2,667,200
METAL & GLASS CONTAINERS 6.3%
142,300 Crown Holdings,
Inc.(a) 1,467,113
117,310 Myers Industries,
Inc. 1,284,544
145,200 Owens-Illinois,
Inc.(a) 2,323,200
57,700 Pactiv Corp.(a) 1,341,525
51,300 Silgan Holdings,
Inc. 2,375,190
------------
8,791,572
PAPER PACKAGING 3.8%
184,900 Caraustar
Industries, Inc.(a) 3,100,773
85,300 Sonoco Products
Company 2,255,332
------------
5,356,105
PAPER PRODUCTS 5.2%
213,200 Buckeye
Technologies,
Inc.(a) 2,377,180
27,000 Georgia-Pacific
Corp. 970,650
193,500 Glatfelter 2,397,465
48,500 Schweitzer-Mauduit
International, Inc. 1,571,400
------------
7,316,695
SPECIALTY CHEMICALS 12.5%
77,600 Albemarle
Corporation 2,722,984
33,600 Cambrex Corporation 737,520
55,300 Cytec Industries,
Inc. 2,706,935
71,600 Great Lakes
Chemical
Corporation 1,832,960
65,900 Lubrizol Corp. 2,280,140
</Table>
Schedule of Investments 73
Schedule of Investments (continued)
ICON Materials Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------
84,100 OM Group, Inc.(a) $ 3,074,696
40,200 Rohm and Haas
Company 1,727,394
139,300 RPM International,
Inc. 2,458,645
------------
17,541,274
STEEL 17.6%
296,800 AK Steel Holding
Corporation(a) 2,421,888
227,500 A.M. Castle &
Co.(a) 2,309,125
22,900 Carpenter
Technology
Corporation 1,093,246
31,300 Commercial Metals
Company 1,243,236
28,000 Nucor Corporation 2,558,360
57,600 Quanex Corporation 2,953,728
145,000 Ryerson Tull, Inc. 2,489,650
90,900 Steel Dynamics,
Inc. 3,510,558
127,400 Steel Technologies,
Inc. 3,263,606
132,100 Worthington
Industries, Inc. 2,820,335
------------
24,663,732
------------
TOTAL MATERIALS 117,472,630
------------
TOTAL UNITED STATES 119,415,152
AMERICAN DEPOSITARY RECEIPTS 3.5%
IRELAND 1.2%
CONSTRUCTION MATERIALS 1.2%
72,500 CRH plc 1,714,625
------------
TOTAL IRELAND 1,714,625
------------
MEXICO 1.2%
CONSTRUCTION MATERIALS 1.2%
58,476 Cemex S.A. de C.V. 1,645,515
------------
TOTAL MEXICO 1,645,515
------------
BRAZIL 1.1%
PAPER PRODUCTS 1.1%
45,900 Aracruz Celulose
S.A. 1,520,208
------------
TOTAL BRAZIL 1,520,208
------------
TOTAL MATERIALS 4,880,348
------------
TOTAL AMERICAN DEPOSITARY
RECEIPTS 4,880,348
------------
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- -----------------------------------------------
CANADA 8.1%
MATERIALS 8.1%
ALUMINUM 2.3%
67,700 Alcan, Inc. $ 3,236,060
COMMODITY CHEMICALS 2.4%
225,700 Methanex
Corporation 3,401,299
FERTILIZERS & AGRICULTURAL CHEMICALS 2.3%
172,600 Agrium, Inc. 3,065,376
GOLD 1.1%
68,400 Placer Dome, Inc. 1,359,792
54,200 Richmont Mines,
Inc.(a) 215,716
------------
1,575,508
------------
TOTAL MATERIALS 11,278,243
------------
TOTAL CANADA 11,278,243
------------
TOTAL COMMON STOCKS
(COST $111,473,565) 135,573,743
SHORT-TERM INVESTMENTS 5.1%
U.S. GOVERNMENT AGENCIES 5.0%
$6,975,000 FHLB Discount Note,
1.3690%, 10-1-04 6,975,000
------------
TOTAL U.S. GOVERNMENT AGENCIES 6,975,000
VARIABLE RATE DEMAND NOTE 0.1%
166,453 American Family
Demand Note,
1.4525%# 166,453
------------
TOTAL VARIABLE RATE DEMAND NOTE 166,453
------------
TOTAL SHORT-TERM INVESTMENT
(COST $7,141,453) 7,141,453
------------
TOTAL INVESTMENTS 102.1%
(COST $118,615,018) 142,715,196
------------
LIABILITIES LESS OTHER ASSETS
(2.1%) (2,876,877)
------------
NET ASSETS 100.0% $139,838,319
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
Dates shown on securities are due dates of the obligations.
74 Schedule of Investments
Management Overview
ICON Telecommunication & Utilities Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2004
Equities 99.8%
Top 10 Equity Holdings 33.8%
Number of Stocks 44
Short-Term Investments 0.2%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2004
Sempra Energy 3.9%
DTE Energy Company 3.8%
Constellation Energy Group, Inc. 3.7%
PNM Resources Inc. 3.5%
FirstEnergy Corp. 3.4%
Pinnacle West Capital Corporation 3.3%
Duke Energy Corporation 3.3%
Energy East Corporation 3.1%
PG&E Corporation 2.9%
FPL Group, Inc. 2.9%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Telecommunication & Utilities Fund advanced 17.57% for the fiscal
year ended September 30, 2004, trailing its narrow benchmarks, the S&P 1500
Telecommunication Services Index and the S&P 1500 Utilities Index, which
returned 25.45% and 19.58%, respectively, while outpacing its broad
benchmark, the S&P 1500 Index, which returned 14.58% over the same period.
Total returns for other periods as of September 30, 2004 are listed on page
79.
A valuation-driven tilt toward small- and mid-cap stocks accounted for much
of the Fund's underperformance relative to the narrow benchmarks. Although
our system consistently detected superior value in these smaller issues, the
perceived safety of large-cap stocks bolstered defensive sectors such as
Telecommunication & Utilities. As a result, the Fund, like the sector,
outpaced the broader market, but failed to keep up with the large-cap-led
narrow benchmarks.
The Fund is managed using an all-cap strategy, meaning it invests in
securities we believe are undervalued, regardless of their location on the
conventional style grid. This investment approach is not limited by
restrictions on market capitalization; the ICON system searches for
potential industry leadership no matter where it emerges.
While our system does not consider investment style, the Fund benefited from
a value bias during the period, as measured on a traditional
price-to-earnings (P/E) basis. This was corroborated by independent data,
which detailed the outperformance of S&P/Barra Value Indexes over their
growth counterparts for the one-year period ended September 30, 2004.
For the record, the Fund does not utilize P/E ratio as a valuation measure.
We regard it as a static proxy. Instead, we calculate a proprietary
value-to-price ratio (V/P) for each industry and security. We view this
measure as more meaningful since it considers the effects of earnings,
projected growth, risk, and interest rates (opportunity cost).
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. A "Jekyll & Hyde" market dominated the investment environment during the
period, as an extended first-half rally dissipated amid extreme fear and
uncertainty. Within the volatile trading range that followed, rising oil
prices, geopolitical tensions, economic setbacks, and election-year rhetoric
all weighed heavily on investor sentiment. However, as these concerns
intensified, the swings grew more pronounced, quickly extinguishing any
moves toward a sustained cyclical rally.
Management Overview 75
Management Overview (continued)
ICON Telecommunication & Utilities Fund
In this setting, upturns were typically led by economically sensitive
sectors, while defensive issues prevailed during market downturns. In all, a
slight negative bias held back second-half returns, even as our valuation
and relative strength readings continued to support a recovery-based theme
driven by sustainable economic growth, low interest rates and nominal
inflation.
Q. HOW DID INDIVIDUAL INDUSTRIES AND COMPANIES AFFECT FUND PERFORMANCE?
A. Significant underweighting in integrated telecommunication services and
electric utilities worked against relative Fund performance during the
period. While we maintained broad company exposure to these industries
relative to the narrow benchmarks, our value-based preference for smaller
issues prevented us from fully participating in the gains recorded by the
large-cap-oriented, sector-specific indexes.
For example, three of the 15 constituent companies in the S&P 1500
Telecommunication Services Index comprised nearly two-thirds of the
benchmark on a market-cap weighted basis. At the same time, 10 of the 83
companies comprising the S&P 1500 Utilities Index accounted for almost 44%
of the benchmark on a market-cap weighted basis.
That being said, our overweight position in wireless telecommunication
services contributed positively to Fund performance on both an absolute and
relative basis. Having stood out for much of the period due to strong
valuation and relative strength metrics, we virtually doubled the Fund's
weighting during the fiscal year as the industry enjoyed widespread global
leadership.
The wireless theme enjoyed worldwide strength during the period and Fund
performance was aided by three overseas wireless telecommunications services
operators. The American Depositary Receipts (ADRs) of Russia-based Mobile
TeleSystems and Mexico's America Movil S.A. de C.V. both were measurable
company contributors to Fund returns as they benefited from strong
subscriber growth in their respective regions. Meanwhile, Philippine Long
Distance Telephone Co., that country's leading telecommunication services
provider, advanced on strong operating results.
Among the Fund's poorest-performing stocks, Intrado Inc. fell as licensing
revenue delays and cost writedowns led to lower-than-expected earnings for
the provider of emergency response support services. Elsewhere, messaging
services supplier j2 Global Communications, Inc. struggled as subscriber
revenue experienced a double-digit decline. Wireless services provider
Telemig Celular Participacoes S.A., another ADR in the Fund, also retreated
as its CEO's pending retirement led to uncertainty regarding the company's
future prospects.
76 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
Q. WHAT IS THE INVESTMENT OUTLOOK FOR THE TELECOMMUNICATION & UTILITIES SECTOR?
A. Although our methodology continues to support a sustainable recovery-driven
rally, the defensive nature of the sector does not lend itself to cyclical
leadership. Nevertheless, we still see clear value in both the market and
the sector, and as a result, are convinced that strong upside potential
remains, assuming sound ongoing fundamentals and the tempering of investor
concerns.
PERFORMANCE HIGHLIGHTS
September 30, 2004
- - A valuation-driven tilt toward small- and mid-cap stocks accounted for the
Fund's relative underperformance as large-caps bolstered defensive sectors.
- - Stocks that detracted from performance during the period included Intrado
Inc., j2 Global Communications, Inc. and Telemig Celular Participacoes.
- - Our methodology led us to underweight integrated telecommunication services
and electric utilities, which worked against Fund performance during the
period.
- - Conversely, valuation and relative strength readings led us to overweight
wireless telecommunication services, which enjoyed widespread global
leadership.
- - Among the Fund's best-performing holdings during the period were the ADRs of
Mobile TeleSystems, America Movil S.A. de C.V. and Philippine Long Distance
Telephone Co.
The unmanaged S&P/Barra Growth and Value indexes are constructed by dividing
stocks in indexes according to book-to-price ratio. The Value index contains
firms with higher book-to-price ratios; conversely, the Growth index has firms
with lower book-to-price ratios. Both indexes are capitalization-weighted.
Management Overview 77
Management Overview (continued)
ICON Telecommunication & Utilities Fund
TOP 10 INDUSTRIES
September 30, 2004
<Table>
Electric Utilities
32.0%
Multi-Utilities & Unregulated Power
26.0%
Integrated Telecommunication Services
11.1%
Wireless Telecommunication Services
10.0%
Gas Utilities
9.9%
Communications Equipment
3.2%
Water Utilities
3.0%
Environmental Services
2.0%
Oil & Gas Refining & Marketing &
Transportation 1.4%
Building Products
1.2%
</Table>
Percentages are based upon net assets.
78 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 7/9/97
- ---------------------------------------------------------------------------------------
ICON Telecommunication & Utilities Fund 17.57% 0.61% 7.54%
- ---------------------------------------------------------------------------------------
S&P 1500 Telecommunications Services Index 25.45% -14.31% -0.39%
- ---------------------------------------------------------------------------------------
S&P 1500 Utilities Index 19.58% 2.54% 5.47%
- ---------------------------------------------------------------------------------------
S&P 1500 Index 14.58% -0.12% 5.02%
- ---------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2004
[LINE GRAPH]
<Table>
<Caption>
ICON S&P 1500
TELECOMMUNICATION & S&P 1500 UTILITIES TELECOMMUNICATIONS
UTILITIES FUND INDEX SERVICES INDEX S&P 1500 INDEX
------------------- ------------------ ------------------ --------------
7/9/97 10000 10000 10000 10000
9/30/97 10630 10417 12707 10597
9/30/98 14232 13226 15105 11262
9/30/99 16402 12967 21048 14339
9/30/00 18860 18732 17603 16548
9/30/01 15327 14540 13802 12290
9/30/02 11948 10056 5960 9976
9/30/03 14380 12292 7750 12439
9/30/04 16906 14699 9723 14251
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund on its inception date of 7/9/97 to a
$10,000 investment made in unmanaged securities indexes on that date. The Fund's
performance in this chart and the performance table assumes the reinvestment of
dividends and capital gain distributions but does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or on the redemption of
Fund shares.
Management Overview 79
Management Overview (continued)
ICON Telecommunication & Utilities Fund
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Telecommunication & Utilities Fund and to compare these
costs with the ongoing costs of investing in other mutual funds. This Example is
based on an investment of $1,000 invested at the beginning of the period and
held for the six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 977.80 $6.77
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,018.15 $6.91
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 1.37%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
80 Management Overview
Schedule of Investments
ICON Telecommunication & Utilities Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
COMMON STOCKS 99.8%
UNITED STATES OF AMERICA 89.6%
ENERGY 1.4%
OIL & GAS REFINING & MARKETING &
TRANSPORTATION 1.4%
13,600 Kinder Morgan, Inc. $ 854,352
------------
TOTAL ENERGY 854,352
INDUSTRIALS 3.2%
BUILDING PRODUCTS 1.2%
11,700 Simpson
Manufacturing Co.,
Inc. 739,440
ENVIRONMENTAL SERVICES 2.0%
38,250 Waste Connections,
Inc.(a) 1,211,760
------------
TOTAL INDUSTRIALS 1,951,200
INFORMATION TECHNOLOGY 3.2%
COMMUNICATIONS EQUIPMENT 3.2%
27,400 Belden CDT Inc. 597,320
34,400 Comtech
Telecommunications
Corp.(a) 932,240
46,100 Tellabs, Inc.(a) 423,659
------------
1,953,219
------------
TOTAL INFORMATION TECHNOLOGY 1,953,219
TELECOMMUNICATIONS & UTILITIES 81.8%
ELECTRIC UTILITIES 32.0%
103,300 Allegheny Energy,
Inc.(a) 1,648,668
94,700 Cleco Corporation 1,632,628
79,600 DPL Inc. 1,638,168
55,500 DTE Energy Company 2,341,545
50,100 FirstEnergy Corp. 2,058,108
25,800 FPL Group, Inc. 1,762,656
60,600 IDACORP, Inc. 1,761,036
60,500 PG&E Corporation(a) 1,839,200
49,300 Pinnacle West
Capital Corporation 2,045,950
96,200 PNM Resources Inc. 2,165,462
15,700 PPL Corporation 740,726
------------
19,634,147
GAS UTILITIES 9.9%
45,000 Atmos Energy
Corporation 1,133,550
80,100 NiSource Inc. 1,682,901
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
48,500 Northwest Natural
Gas Company $ 1,538,905
72,200 Southwestern Energy
Company(a) 1,729,190
------------
6,084,546
INTEGRATED TELECOMMUNICATION SERVICES 7.5%
25,900 Golden Telecom,
Inc. 738,927
50,200 SBC Communications
Inc. 1,302,690
73,500 Sprint Corporation 1,479,555
27,500 Verizon
Communications Inc. 1,082,950
------------
4,604,122
MULTI-UTILITIES & UNREGULATED POWER 26.0%
56,900 Constellation
Energy Group, Inc. 2,266,896
87,600 Duke Energy
Corporation 2,005,164
18,700 Energen Corporation 963,985
75,900 Energy East
Corporation 1,911,162
15,500 Equitable
Resources, Inc. 841,805
58,300 ONEOK, Inc. 1,516,966
32,700 Public Service
Enterprise Group
Incorporated 1,393,020
37,700 Questar Corporation 1,727,414
66,600 Sempra Energy 2,410,254
99,400 Sierra Pacific
Resources(a) 889,630
------------
15,926,296
WATER UTILITIES 3.0%
24,100 American States
Water Company 600,090
56,900 Aqua America Inc. 1,258,059
------------
1,858,149
WIRELESS TELECOMMUNICATION SERVICES 3.4%
47,400 Nextel
Communications,
Inc. -- Class A(a) 1,130,016
22,500 NII Holdings
Inc.(a) 927,225
------------
2,057,241
------------
TOTAL TELECOMMUNICATIONS &
UTILITIES 50,164,501
------------
TOTAL UNITED STATES OF AMERICA 54,923,272
</Table>
Schedule of Investments 81
Schedule of Investments (continued)
ICON Telecommunication & Utilities Fund
September 30, 2004
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
AMERICAN DEPOSITARY RECEIPTS 10.2%
PHILIPPINES 2.1%
INTEGRATED TELECOMMUNICATION SERVICES 2.1%
52,900 Philippine Long
Distance Telephone
Company(a) $ 1,319,608
------------
TOTAL PHILIPPINES 1,319,608
MEXICO 4.2%
INTEGRATED TELECOMMUNICATION SERVICES 1.4%
27,600 Telefonos de Mexico
SA de CV 890,652
WIRELESS TELECOMMUNICATION SERVICES 2.8%
43,500 America Movil S.A.
de C.V. 1,697,805
------------
TOTAL MEXICO 2,588,457
RUSSIA 3.9%
WIRELESS TELECOMMUNICATION SERVICE 3.9%
10,300 AO VimpelCom 1,120,640
8,600 Mobile Telesystems 1,246,914
------------
TOTAL WIRELESS
TELECOMMUNICATION SERVICE 2,367,554
------------
TOTAL RUSSIA 2,367,554
------------
TOTAL AMERICAN DEPOSITARY
RECEIPTS 6,275,619
------------
TOTAL COMMON STOCKS
(COST $51,735,028) 61,198,891
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENT 0.2%
VARIABLE RATE DEMAND NOTE 0.2%
$122,511 American Family
Demand Note,
1.4525%# $ 122,511
------------
TOTAL SHORT-TERM INVESTMENT
(COST $122,511) 122,511
------------
TOTAL INVESTMENTS 100.0%
(COST $51,857,539) 61,321,402
------------
OTHER ASSETS LESS LIABILITIES
0.0% 3,961
------------
NET ASSETS 100.0% $ 61,325,363
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security
# Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of September 30, 2004.
82 Schedule of Investments
Management Overview
ICON Short-Term Fixed Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Short-Term Fixed Income Fund returned -0.05% for the fiscal year
ended September 30, 2004, trailing its unmanaged benchmark, the Merrill
Lynch 1-Year Treasury Bill Index, which returned 0.89%. Total returns for
other periods as of September 30, 2004 are listed on page 84.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Having laid the groundwork for higher short-term interest rates, the Federal
Reserve Board embarked upon a rare election-year policy shift, raising the
target overnight lending rate to 1.75% from a 45-year low of 1.00%. The
short end of the yield curve responded in kind, with the 3-Month U.S.
Treasury Bill yield increasing from 0.943% at the beginning of the period to
1.705% at period-end. Despite these gains, the environment for cash
equivalents remained largely unfavorable, as yields failed to keep pace with
reported nominal inflation.
Q. HOW WAS THE FUND MANAGED AND HOW DID THAT AFFECT PERFORMANCE?
A. As existing short-term holdings matured and were subsequently liquidated
during the period, 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. Although this strategy offered
considerable flexibility in a rising rate environment, it failed to improve
performance as the Fund's operating expenses continued to detract from
overall returns.
Q. WHY DID THE FUND CEASE OPERATIONS ON OCTOBER 27, 2004?
A. Given its small asset base, high operating expenses, declining investment
performance, and limited growth prospects, the Fund's Board of Trustees
unanimously concluded that the Fund's continued operation would not be
feasible and that a complete liquidation and termination would be in the
best interests of the Fund's shareholders. Receipt of a Liquidating
Distribution is a taxable event and it is urged that Fund shareholders
consult their tax adviser regarding the tax consequences.
Management Overview 83
Management Overview (continued)
ICON Short-Term Fixed Income Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2004
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/7/97
- ---------------------------------------------------------------------------------------
ICON Short-Term Fixed Income Fund -0.05% 1.68% 2.81%
- ---------------------------------------------------------------------------------------
Merrill Lynch 1-Year U.S. Treasury Bill Index 0.89% 3.85% 4.41%
- ---------------------------------------------------------------------------------------
</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. The
Adviser has agreed to limit certain Fund expenses; without these limitations,
returns would have been lower. Following its liquidation on October 27, 2004,
the Fund ceased operations.
VALUE OF A $10,000 INVESTMENT
through September 30, 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
9/30/97 10307 10386
9/30/98 10984 11046
9/30/99 11372 11516
9/30/00 11878 12130
9/30/01 12252 13050
9/30/02 12369 13540
9/30/03 12367 13786
9/30/04 12361 13909
</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.
84 Management Overview
FUND EXPENSE EXAMPLE (UNAUDITED)
September 30, 2004
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. The ICON Funds do not charge
these types of fees. Funds also incur various ongoing expenses, including
management fees, distribution and/or service fees, and other fund expenses,
which are indirectly paid by shareholders.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the ICON Short-Term Fixed Income Fund and to compare these costs
with the ongoing costs of investing in other mutual funds. This Example is based
on an investment of $1,000 invested at the beginning of the period and held for
the six-month period (4/1/04 - 9/30/04).
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. The Example below includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example below does not include client specific fees, such as the $15.00 fee
charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The
Example also does not include portfolio trading commissions and related trading
expenses. You may use this information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange fees that may be
charged by other funds. Therefore, this information is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD
4/1/04 9/30/04 4/1/04-9/30/04*
- ----------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 999.80 $3.75
- ----------------------------------------------------------------------------------------------
Hypothetical Example $1,000.00 $1,021.25 $3.79
(5% return before expenses)
- ----------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six-month expense ratio of 0.75%
annualized, multiplied by the average account value over the period,
multiplied by 183/366 to reflect the one-half year period.
Management Overview 85
Schedule of Investments
ICON Short-Term Fixed Income Fund
September 30, 2004
<Table>
<Caption>
PRINCIPAL AMOUNT MARKET VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS 100.3%
CERTIFICATES OF DEPOSIT 4.2%
$ 99,000 Fremont Invt,
1.20%, 10-14-04 $ 98,980
99,000 Lehman Brothers,
1.2%, 10-14-04 98,980
------------
TOTAL CERTIFICATES OF DEPOSIT 197,960
------------
U.S. GOVERNMENT AGENCIES 96.1%
4,488,000 Federal Home Loan
Bank Discount
Note, 1.369%,
10-01-04 4,488,000
------------
TOTAL U.S. GOVERNMENT AGENCIES 4,488,000
------------
TOTAL SHORT-TERM INVESTMENTS 4,685,960
------------
TOTAL INVESTMENTS 100.3%
(AMORTIZED COST $4,686,000) 4,685,960
------------
LIABILITIES LESS OTHER ASSETS
(0.3%) (15,390)
------------
NET ASSETS 100.0% $ 4,670,570
============
</Table>
The accompanying notes are an integral part of the financial statements.
Dates shown on securities are the due dates of the obligation.
86 Schedule of Investments
THIS PAGE INTENTIONALLY LEFT BLANK
Statements of Assets and Liabilities
September 30, 2004
<Table>
<Caption>
ICON
CONSUMER ICON ICON ICON
DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND
------------------ ------------ -------------- ---------------
ASSETS
Investments, at cost $130,693,035 $236,370,805 $160,573,858 $250,137,318
------------------ ------------ -------------- ---------------
Investments, at value 152,505,356 295,971,347 188,373,577 282,990,082
Cash 1 2,514 9,842 -
Receivables:
Fund shares sold 251,199 6,153,037 291,640 655,708
Investments sold 4,553,324 - - 4,807,039
Interest 362 88 458 2,269
Dividends 105,172 314,646 139,481 16,501
Other assets 7,910 12,036 9,856 15,020
------------------ ------------ -------------- ---------------
Total Assets 157,423,324 302,453,668 188,824,854 288,486,619
------------------ ------------ -------------- ---------------
LIABILITIES
Payables:
Fund shares redeemed 84,466 175,365 152,191 405,903
Investments bought 5,167,942 14,310,782 - 1,988,328
Advisory fees 124,580 203,439 153,685 234,064
Expense limitation recoupment - - - -
Fund accounting, custodial and transfer
agent fees 36,370 61,717 43,823 67,445
Administration fees 5,891 11,025 7,309 11,080
Distributions due to shareholders - - - -
Accrued expenses 82,331 77,436 74,396 109,825
------------------ ------------ -------------- ---------------
Total Liabilities 5,501,580 14,839,764 431,404 2,816,645
------------------ ------------ -------------- ---------------
NET ASSETS $151,921,744 $287,613,904 $188,393,450 $285,669,974
================== ============ ============== ===============
NET ASSETS CONSIST OF
Paid-in capital $136,202,569 $235,660,816 $147,847,004 $251,940,361
Accumulated undistributed net investment
income/(loss) - - 249,818 -
Accumulated undistributed net realized
gain/(loss) from investments (6,093,146) (7,647,454) 12,496,909 876,849
Unrealized appreciation/(depreciation) on
securities 21,812,321 59,600,542 27,799,719 32,852,764
------------------ ------------ -------------- ---------------
NET ASSETS $151,921,744 $287,613,904 $188,393,450 $285,669,974
================== ============ ============== ===============
Shares outstanding (unlimited shares
authorized, no par value) 11,960,771 13,188,421 14,098,525 20,857,551
Net asset value (offering price and
redemption price per share) $ 12.70 $ 21.81 $ 13.36 $ 13.70
</Table>
The accompanying notes are an integral part of the financial statements.
88 Financial Statements
<Table>
<Caption>
ICON
ICON LEISURE AND ICON ICON
ICON INFORMATION CONSUMER ICON TELECOMMUNICATION SHORT-TERM FIXED
INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND INCOME FUND
---------------- --------------- ------------ -------------- ----------------- ----------------
$177,349,740 $226,178,250 $70,377,595 $118,615,018 $51,857,539 $4,686,000
---------------- --------------- ------------ -------------- ----------------- ----------------
214,970,239 246,345,130 84,134,083 142,715,196 61,321,402 4,685,960
7,645 2,845 - 15,664 1,992 734
357,538 294,699 159,016 4,087,500 208,722 -
- 8,912,630 6,831,268 2,720,093 2,858,417 -
53 226 358 53 181 1,106
154,902 99,944 106,265 143,418 139,634 -
10,156 10,138 6,536 6,423 3,199 -
---------------- --------------- ------------ -------------- ----------------- ----------------
215,500,533 255,665,612 91,237,526 149,688,347 64,533,547 4,687,800
---------------- --------------- ------------ -------------- ----------------- ----------------
100,671 259,070 40,925 63,338 32,020 1,199
5,405,444 10,805,148 7,992,598 9,599,643 3,068,951 -
164,703 177,814 86,028 102,227 49,669 2,643
- - - - - 2,398
46,650 55,203 25,802 29,673 15,069 1,668
8,131 9,479 3,219 5,277 2,374 181
- - - - - -
81,676 106,495 66,525 49,870 40,101 9,141
---------------- --------------- ------------ -------------- ----------------- ----------------
5,807,275 11,413,209 8,215,097 9,850,028 3,208,184 17,230
---------------- --------------- ------------ -------------- ----------------- ----------------
$209,693,258 $244,252,403 $83,022,429 $139,838,319 $61,325,363 $4,670,570
================ =============== ============ ============== ================= ================
$196,354,307 $288,657,351 $59,001,769 $135,490,321 $56,133,428 $4,677,555
- - - 66,439 580,891 (117)
(24,281,548) (64,571,828) 10,264,172 (19,818,619) (4,852,819) (6,828)
37,620,499 20,166,880 13,756,488 24,100,178 9,463,863 (40)
---------------- --------------- ------------ -------------- ----------------- ----------------
$209,693,258 $244,252,403 $83,022,429 $139,838,319 $61,325,363 $4,670,570
================ =============== ============ ============== ================= ================
19,939,767 30,910,744 5,723,523 15,446,848 9,275,792 515,363
$ 10.52 $ 7.90 $ 14.51 $ 9.05 $ 6.61 $ 9.06
</Table>
Financial Statements 89
Statements of Operations
For the year ended September 30, 2004
<Table>
<Caption>
ICON
CONSUMER ICON ICON ICON
DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND
------------------ ----------- -------------- ---------------
INVESTMENT INCOME
Interest $ 9,866 $ 179,443 $ 13,347 $ 81,427
Dividends 1,695,111 1,413,695 2,696,528 545,727
Foreign taxes withheld (40,254) (132,168) (25,102) (5,954)
------------------ ----------- -------------- ---------------
Total Investment Income 1,664,723 1,460,970 2,684,773 621,200
------------------ ----------- -------------- ---------------
EXPENSES
Advisory fees 1,784,984 1,282,770 1,625,653 2,454,126
Fund accounting, custodial and transfer agent fees 271,627 230,554 248,652 384,838
Administration fees 87,620 64,263 79,745 120,549
Audit fees 20,868 15,072 19,002 28,772
Registration fees 31,389 34,452 30,992 35,207
Legal fees 7,622 4,340 6,599 9,465
Insurance expense 12,814 6,743 14,576 12,337
Trustee fees and expenses 14,126 11,291 13,497 18,857
Shareholder reports 43,307 32,729 41,433 55,263
Interest expense 33,713 84 19,078 -
Other expenses 28,352 39,784 36,814 42,445
------------------ ----------- -------------- ---------------
Total expenses before expense reimbursement 2,336,422 1,722,082 2,136,041 3,161,859
Expense (reimbursement)/recoupment by Adviser due
to expense limitation agreement - - - -
------------------ ----------- -------------- ---------------
Net Expenses 2,336,422 1,722,082 2,136,041 3,161,859
------------------ ----------- -------------- ---------------
NET INVESTMENT INCOME (LOSS) (671,699) (261,112) 548,732 (2,540,659)
------------------ ----------- -------------- ---------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized gain/(loss) from investment
transactions 17,989,808 6,377,507 17,877,672 10,762,480
Change in unrealized net
appreciation/(depreciation)
on securities (6,390,181) 51,219,049 13,429,005 6,619,577
------------------ ----------- -------------- ---------------
Net realized and unrealized gain/(loss) on
investments 11,599,627 57,596,556 31,306,677 17,382,057
------------------ ----------- -------------- ---------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $10,927,928 $57,335,444 $31,855,409 $14,841,398
================== =========== ============== ===============
</Table>
The accompanying notes are an integral part of the financial statements.
90 Financial Statements
<Table>
<Caption>
ICON
ICON LEISURE AND ICON ICON
ICON INFORMATION CONSUMER ICON TELECOMMUNICATION SHORT-TERM FIXED
INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND INCOME FUND
---------------- --------------- ------------ -------------- ----------------- ----------------
$ 41,877 $ 25,472 $ 12,335 $ 16,787 $ 6,812 $ 72,010
1,443,352 1,121,006 1,053,321 1,016,944 1,326,008 -
(12,614) (21,185) (2,040) (7,518) (9,173) -
---------------- --------------- ------------ -------------- ----------------- ----------------
1,472,615 1,125,293 1,063,616 1,026,213 1,323,647 72,010
---------------- --------------- ------------ -------------- ----------------- ----------------
1,801,490 2,828,350 1,048,013 686,842 543,803 29,781
277,755 406,636 167,289 120,353 91,166 8,058
88,789 139,882 50,611 34,110 26,711 2,228
21,102 33,023 12,253 8,067 6,364 532
38,278 50,365 27,233 30,402 27,182 14,575
7,582 13,104 4,321 2,431 2,239 165
8,126 21,605 8,458 5,382 3,924 861
15,169 24,604 8,209 5,952 4,486 428
37,567 64,125 27,557 17,273 17,727 1,510
6,797 101,399 14,443 6,786 2,186 -
19,253 18,834 22,028 21,286 16,973 9,491
---------------- --------------- ------------ -------------- ----------------- ----------------
2,321,908 3,701,927 1,390,415 938,884 742,761 67,629
- - - - - (26,776)
---------------- --------------- ------------ -------------- ----------------- ----------------
2,321,908 3,701,927 1,390,415 938,884 742,761 40,853
---------------- --------------- ------------ -------------- ----------------- ----------------
(849,293) (2,576,634) (326,799) 87,329 580,886 31,157
---------------- --------------- ------------ -------------- ----------------- ----------------
5,713,298 30,876,230 11,738,085 1,298,590 3,885,662 (3,008)
22,171,644 (41,133,606) 2,299,602 22,065,303 3,437,864 (25,574)
---------------- --------------- ------------ -------------- ----------------- ----------------
27,884,942 (10,257,376) 14,037,687 23,363,893 7,323,526 (28,582)
---------------- --------------- ------------ -------------- ----------------- ----------------
$27,035,649 $(12,834,010) $13,710,888 $23,451,222 $7,904,412 $ 2,575
================ =============== ============ ============== ================= ================
</Table>
Financial Statements 91
Statements of Changes in Net Assets
<Table>
<Caption>
ICON CONSUMER DISCRETIONARY FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ (671,699) $ (934,138)
Net realized gain/(loss) from investment transactions 17,989,808 (3,833,114)
Change in unrealized appreciation/(depreciation) on
securities (6,390,181) 24,416,611
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations 10,927,928 19,649,359
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - -
Net realized gains - -
------------------ ------------------
Net decrease from dividends and distributions - -
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold 62,754,370 74,163,195
Reinvested dividends and distributions - -
Shares repurchased (71,825,277) (65,388,174)
------------------ ------------------
Net increase/(decrease) from fund share transactions (9,070,907) 8,775,021
------------------ ------------------
Total net increase/(decrease) in net assets 1,857,021 28,424,380
NET ASSETS
Beginning of period 150,064,723 121,640,343
------------------ ------------------
End of period $151,921,744 $150,064,723
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 4,709,437 7,144,559
Reinvested dividends and distributions - -
Shares repurchased (5,477,472) (6,440,247)
------------------ ------------------
Net increase/(decrease) (768,035) 704,312
Shares outstanding beginning of period 12,728,806 12,024,494
------------------ ------------------
Shares outstanding end of period 11,960,771 12,728,806
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $213,763,244 $215,314,229
Proceeds from sales of securities 220,582,308 209,236,884
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ - $ -
================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
92 Financial Statements
<Table>
<Caption>
ICON ENERGY FUND
----------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ (261,112) $ (219,166)
Net realized gain/(loss) from investment transactions 6,377,507 (5,971,578)
Change in unrealized appreciation/(depreciation) on
securities 51,219,049 15,279,562
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations 57,335,444 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 246,044,827 43,780,341
Reinvested dividends and distributions - -
Shares repurchased (71,395,398) (101,459,945)
------------------ ------------------
Net increase/(decrease) from fund share transactions 174,649,429 (57,679,604)
------------------ ------------------
Total net increase/(decrease) in net assets 231,984,873 (48,590,786)
NET ASSETS
Beginning of period 55,629,031 104,219,817
------------------ ------------------
End of period $287,613,904 $ 55,629,031
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 13,031,426 3,435,224
Reinvested dividends and distributions - -
Shares repurchased (3,903,835) (8,177,227)
------------------ ------------------
Net increase/(decrease) 9,127,591 (4,742,003)
Shares outstanding beginning of period 4,060,830 8,802,833
------------------ ------------------
Shares outstanding end of period 13,188,421 4,060,830
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $184,627,946 $ 30,459,479
Proceeds from sales of securities 15,787,580 93,961,245
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ - $ -
================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
Financial Statements 93
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON FINANCIAL FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ 548,732 $ 702,971
Net realized gain/(loss) from investment transactions 17,877,672 557,118
Change in unrealized appreciation/(depreciation) on
securities 13,429,005 26,857,798
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations 31,855,409 28,117,887
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (576,093)* (399,824)*
Net realized gains - -
------------------ ------------------
Net decrease from dividends and distributions (576,093) (399,824)
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold 99,493,912 76,466,734
Reinvested dividends and distributions 570,282 392,348
Shares repurchased (82,211,184) (75,431,900)
------------------ ------------------
Net increase/(decrease) from fund share transactions 17,853,010 1,427,182
------------------ ------------------
Total net increase/(decrease) in net assets 49,132,326 29,145,245
NET ASSETS
Beginning of period 139,261,124 110,115,879
------------------ ------------------
End of period $188,393,450 $139,261,124
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 7,735,769 8,155,031
Reinvested dividends and distributions 47,802 42,462
Shares repurchased (6,605,919) (7,737,576)
------------------ ------------------
Net increase/(decrease) 1,177,652 459,917
Shares outstanding beginning of period 12,920,873 12,460,956
------------------ ------------------
Shares outstanding end of period 14,098,525 12,920,873
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $204,755,026 $188,775,243
Proceeds from sales of securities 186,785,022 184,312,033
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ 249,818 $ 290,474
================== ==================
</Table>
* The tax character of distributions to shareholders from net investment
income for the periods ending September 30, 2004 and September 30, 2003 is
ordinary income.
The accompanying notes are an integral part of the financial statements.
94 Financial Statements
<Table>
<Caption>
ICON HEALTHCARE FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ (2,540,659) $ (1,014,408)
Net realized gain/(loss) from investment transactions 10,762,480 (6,819,268)
Change in unrealized appreciation/(depreciation) on
securities 6,619,577 24,785,530
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations 14,841,398 16,951,854
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - -
Net realized gains - -
------------------ ------------------
Net decrease from dividends and distributions - -
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold 196,893,511 116,684,705
Reinvested dividends and distributions - -
Shares repurchased (67,323,826) (85,408,913)
------------------ ------------------
Net increase/(decrease) from fund share transactions 129,569,685 31,275,792
------------------ ------------------
Total net increase/(decrease) in net assets 144,411,083 48,227,646
NET ASSETS
Beginning of period 141,258,891 93,031,245
------------------ ------------------
End of period $285,669,974 $141,258,891
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 14,262,864 10,595,794
Reinvested dividends and distributions - -
Shares repurchased (4,910,162) (8,078,236)
------------------ ------------------
Net increase/(decrease) 9,352,702 2,517,558
Shares outstanding beginning of period 11,504,849 8,987,291
------------------ ------------------
Shares outstanding end of period 20,857,551 11,504,849
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $249,051,968 $126,928,736
Proceeds from sales of securities 123,293,752 99,893,688
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ - $ -
================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
Financial Statements 95
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON INDUSTRIALS FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ (849,293) $ (450,789)
Net realized gain/(loss) from investment transactions 5,713,298 (6,100,761)
Change in unrealized appreciation/(depreciation) on
securities 22,171,644 15,072,214
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations 27,035,649 8,520,664
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - -
Net realized gains - -
------------------ ------------------
Net decrease from dividends and distributions - -
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold 119,436,391 90,962,271
Reinvested dividends and distributions - -
Shares repurchased (69,333,095) (30,848,064)
------------------ ------------------
Net increase/(decrease) from fund share transactions 50,103,296 60,114,207
------------------ ------------------
Total net increase/(decrease) in net assets 77,138,945 68,634,871
NET ASSETS
Beginning of period 132,554,313 63,919,442
------------------ ------------------
End of period $209,693,258 $132,554,313
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 11,909,801 10,993,513
Reinvested dividends and distributions - -
Shares repurchased (7,036,857) (3,954,112)
------------------ ------------------
Net increase/(decrease) 4,872,944 7,039,401
Shares outstanding beginning of period 15,066,823 8,027,422
------------------ ------------------
Shares outstanding end of period 19,939,767 15,066,823
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $132,934,226 $119,495,145
Proceeds from sales of securities 80,111,027 64,553,264
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ - $ -
================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
96 Financial Statements
<Table>
<Caption>
ICON INFORMATION TECHNOLOGY FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ (2,576,634) $ (2,215,300)
Net realized gain/(loss) from investment transactions 30,876,230 3,753,887
Change in unrealized appreciation/(depreciation) on
securities (41,133,606) 69,595,068
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations (12,834,010) 71,133,655
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - -
Net realized gains - -
------------------ ------------------
Net decrease from dividends and distributions - -
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold 178,801,650 267,777,926
Reinvested dividends and distributions - -
Shares repurchased (229,687,727) (106,562,014)
------------------ ------------------
Net increase/(decrease) from fund share transactions (50,886,077) 161,215,912
------------------ ------------------
Total net increase/(decrease) in net assets (63,720,087) 232,349,567
NET ASSETS
Beginning of period 307,972,490 75,622,923
------------------ ------------------
End of period $ 244,252,403 $ 307,972,490
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 21,330,842 39,746,545
Reinvested dividends and distributions - -
Shares repurchased (27,658,934) (15,146,622)
------------------ ------------------
Net increase/(decrease) (6,328,092) 24,599,923
Shares outstanding beginning of period 37,238,836 12,638,913
------------------ ------------------
Shares outstanding end of period 30,910,744 37,238,836
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $ 537,991,382 $ 453,451,611
Proceeds from sales of securities 591,381,665 293,739,149
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ - $ -
================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
Financial Statements 97
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON LEISURE AND CONSUMER STAPLES FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ (326,799) $ (412,917)
Net realized gain/(loss) from investment transactions 11,738,085 (1,107,203)
Change in unrealized appreciation/(depreciation) on
securities 2,299,602 9,588,234
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations 13,710,888 8,068,114
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - -
Net realized gains - -
------------------ ------------------
Net decrease from dividends and distributions - -
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold 52,673,531 39,239,478
Reinvested dividends and distributions - -
Shares repurchased (65,709,303) (53,301,166)
------------------ ------------------
Net increase/(decrease) from fund share transactions (13,035,772) (14,061,688)
------------------ ------------------
Total net increase/(decrease) in net assets 675,116 (5,993,574)
NET ASSETS
Beginning of period 82,347,313 88,340,887
------------------ ------------------
End of period $ 83,022,429 $ 82,347,313
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 3,663,087 3,467,652
Reinvested dividends and distributions - -
Shares repurchased (4,572,081) (4,724,938)
------------------ ------------------
Net increase/(decrease) (908,994) (1,257,286)
Shares outstanding beginning of period 6,632,517 7,889,803
------------------ ------------------
Shares outstanding end of period 5,723,523 6,632,517
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $151,387,685 $112,992,030
Proceeds from sales of securities 163,795,587 125,691,402
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ - $ -
================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
98 Financial Statements
<Table>
<Caption>
ICON MATERIALS FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ 87,329 $ 236,659
Net realized gain/(loss) from investment transactions 1,298,590 (3,456,930)
Change in unrealized appreciation/(depreciation) on
securities 22,065,303 5,930,581
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations 23,451,222 2,710,310
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (198,911)* (93,225)*
Net realized gains - -
------------------ ------------------
Net decrease from dividends and distributions (198,911) (93,225)
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold 111,162,483 14,151,946
Reinvested dividends and distributions 198,136 92,665
Shares repurchased (25,150,862) (45,505,812)
------------------ ------------------
Net increase/(decrease) from fund share transactions 86,209,757 (31,261,201)
------------------ ------------------
Total net increase/(decrease) in net assets 109,462,068 (28,644,116)
NET ASSETS
Beginning of period 30,376,251 59,020,367
------------------ ------------------
End of period $139,838,319 $ 30,376,251
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 13,704,883 2,446,314
Reinvested dividends and distributions 26,174 15,406
Shares repurchased (3,179,704) (7,953,735)
------------------ ------------------
Net increase/(decrease) 10,551,353 (5,492,015)
Shares outstanding beginning of period 4,895,495 10,387,510
------------------ ------------------
Shares outstanding end of period 15,446,848 4,895,495
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $123,284,118 $ 52,868,818
Proceeds from sales of securities 41,285,979 80,253,664
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ 66,439 $ 178,021
================== ==================
</Table>
* The tax character of distributions to shareholders from net investment
income for periods ending September 30, 2004 and September 30, 2003 is
ordinary income.
The accompanying notes are an integral part of the financial statements.
Financial Statements 99
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON TELECOMMUNICATION &
UTILITIES FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ 580,886 $ 1,088,542
Net realized gain/(loss) from investment transactions 3,885,662 (2,316,365)
Change in unrealized appreciation/(depreciation) on
securities 3,437,864 9,090,560
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations 7,904,412 7,862,737
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (559,797)* (888,104)*
Net realized gains - -
------------------ ------------------
Net decrease from dividends and distributions (559,797) (888,104)
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold 26,477,305 28,972,038
Reinvested dividends and distributions 557,773 886,340
Shares repurchased (15,563,524) (60,690,304)
------------------ ------------------
Net increase/(decrease) from fund share transactions 11,471,554 (30,831,926)
------------------ ------------------
Total net increase/(decrease) in net assets 18,816,169 (23,857,293)
NET ASSETS
Beginning of period 42,509,194 66,366,487
------------------ ------------------
End of period $ 61,325,363 $ 42,509,194
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 4,192,093 5,787,036
Reinvested dividends and distributions 94,538 174,133
Shares repurchased (2,487,287) (12,373,258)
------------------ ------------------
Net increase/(decrease) 1,799,344 (6,412,089)
Shares outstanding beginning of period 7,476,448 13,888,537
------------------ ------------------
Shares outstanding end of period 9,275,792 7,476,448
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $ 69,915,069 $ 83,676,470
Proceeds from sales of securities 58,301,505 114,328,699
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ 580,891 $ 559,802
================== ==================
</Table>
* The tax character of distributions to shareholders from net investment
income for periods ending September 30, 2004 and September 30, 2003 is
ordinary income.
The accompanying notes are an integral part of the financial statements.
100 Financial Statements
<Table>
<Caption>
ICON SHORT-TERM FIXED INCOME FUND
------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ 31,157 $ 19,354
Net realized gain/(loss) from investment transactions (3,008) -
Net realized gain/(loss) from foreign currency
translations - -
Change in unrealized appreciation/(depreciation) on
securities (25,574) (23,336)
------------------ ------------------
Net increase/(decrease) in net assets resulting from
operations 2,575 (3,982)
------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (31,157)* (20,760)*
Net realized gains - -
------------------ ------------------
Net decrease from dividends and distributions (31,157) (20,760)
------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold 8,455,732 23,499,482
Reinvested dividends and distributions 30,300 20,010
Shares repurchased (9,952,885) (24,993,710)
------------------ ------------------
Net increase/(decrease) from fund share transactions (1,466,853) (1,474,218)
------------------ ------------------
Total net increase/(decrease) in net assets (1,495,435) (1,498,960)
NET ASSETS
Beginning of period 6,166,005 7,664,965
------------------ ------------------
End of period $ 4,670,570 $ 6,166,005
================== ==================
TRANSACTIONS IN FUND SHARES
Shares sold 931,859 2,570,121
Reinvested dividends and distributions 3,334 2,181
Shares repurchased (1,095,425) (2,733,550)
------------------ ------------------
Net increase/(decrease) (160,232) (161,248)
Shares outstanding beginning of period 675,595 836,843
------------------ ------------------
Shares outstanding end of period 515,363 675,595
================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-Term Securities)
Purchase of securities $ - $ -
Proceeds from sales of securities - -
Purchases of long-term U.S. government securities - 1,005,625
Proceeds from sales of long-term U.S. government
securities - -
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ (117) $ (117)
================== ==================
</Table>
* The tax character of distributions to shareholders from net investment
income for periods ending September 30, 2004 and September 30, 2003 is
ordinary income.
The accompanying notes are an integral part of the financial statements.
Financial Statements 101
Financial Highlights
<Table>
<Caption>
ICON CONSUMER DISCRETIONARY FUND
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
-------- -------- -------- -------- -------
Net asset value, beginning of period $ 11.79 $ 10.12 $ 8.96 $ 9.23 $ 9.67
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.05) (0.08) (0.06) (0.01) (0.02)
Net realized and unrealized gains/(losses) on
investments 0.96 1.75 1.22 (0.26) (0.42)
-------- -------- -------- -------- -------
Total from investment operations 0.91 1.67 1.16 (0.27) (0.44)
-------- -------- -------- -------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - - - -
Distributions from net realized gains - - - - -
-------- -------- -------- -------- -------
Total dividends and distributions - - - - -
-------- -------- -------- -------- -------
Net asset value, end of period $ 12.70 $ 11.79 $ 10.12 $ 8.96 $ 9.23
======== ======== ======== ======== =======
Total return 7.72% 16.50% 12.95% (2.93)% (4.55)%
Net assets, end of period (in thousands) $151,922 $150,065 $121,640 $107,075 $40,894
Average net assets for the period (in thousands) 178,011 118,834 184,174 78,281 46,246
Ratio of expenses to average net assets 1.31% 1.40% 1.29% 1.37% 1.35%
Ratio of net investment income/(loss) to average net
assets (0.38)% (0.79)% (0.49)% (0.10)% (0.27)%
Portfolio turnover rate 120.63% 174.51% 128.06% 88.20% 88.44%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
102 Financial Highlights
<Table>
<Caption>
ICON ENERGY FUND
-------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
-------- ------- -------- ------- -------
Net asset value, beginning of period $ 13.70 $ 11.84 $ 11.29 $ 13.19 $ 7.98
-------- ------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.04) (0.04) (0.08) 0.07 0.04
Net realized and unrealized gains/(losses) on
investments 8.15 1.90 0.65 (0.76) 5.17
-------- ------- -------- ------- -------
Total from investment operations 8.11 1.86 0.57 (0.69) 5.21
-------- ------- -------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - (0.02) (0.09) -
Distributions from net realized gains - - - (1.12) -
-------- ------- -------- ------- -------
Total dividends and distributions - - (0.02) (1.21) -
-------- ------- -------- ------- -------
Net asset value, end of period $ 21.81 $ 13.70 $ 11.84 $ 11.29 $ 13.19
======== ======= ======== ======= =======
Total return 59.20% 15.71% 5.03% (6.53)% 65.29%
Net assets, end of period (in thousands) $287,614 $55,629 $104,220 $36,945 $44,294
Average net assets for the period (in thousands) 127,920 74,883 71,434 49,195 29,564
Ratio of expenses to average net assets 1.35% 1.40% 1.35% 1.39% 1.36%
Ratio of net investment income/(loss) to average net
assets (0.20)% (0.29)% (0.61)% 0.54% 0.43%
Portfolio turnover rate 13.42% 42.53% 26.30% 134.77% 123.70%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
Financial Highlights 103
Financial Highlights (continued)
<Table>
<Caption>
ICON FINANCIAL FUND
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
-------- -------- -------- ------- --------
Net asset value, beginning of period $ 10.78 $ 8.84 $ 12.04 $ 12.26 $ 8.99
-------- -------- -------- ------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) 0.04 0.05 (0.01) 0.06 0.11
Net realized and unrealized gains/(losses) on
investments 2.60 1.92 (1.08) 1.13 3.28
-------- -------- -------- ------- --------
Total from investment operations 2.64 1.97 (1.09) 1.19 3.39
-------- -------- -------- ------- --------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.06) (0.03) - (1.41) (0.12)
Distributions from net realized gains - - (2.11) - -
-------- -------- -------- ------- --------
Total dividends and distributions (0.06) (0.03) (2.11) (1.41) (0.12)
-------- -------- -------- ------- --------
Net asset value, end of period $ 13.36 $ 10.78 $ 8.84 $ 12.04 $ 12.26
======== ======== ======== ======= ========
Total return 24.53% 22.35% (11.88)% 9.57% 38.14%
Net assets, end of period (in thousands) $188,393 $139,261 $110,116 $54,318 $100,404
Average net assets for the period (in thousands) 162,121 131,042 60,904 59,425 43,690
Ratio of expenses to average net assets 1.32% 1.34% 1.36% 1.41% 1.33%
Ratio of net investment income/(loss) to average net
assets 0.34% 0.54% (0.06)% 0.51% 1.14%
Portfolio turnover rate 114.50% 142.77% 69.58% 174.41% 28.99%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
104 Financial Highlights
<Table>
<Caption>
ICON HEALTHCARE FUND
-------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
-------- -------- ------- ------- -------
Net asset value, beginning of period $ 12.28 $ 10.35 $ 11.57 $ 11.93 $ 7.98
-------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.14) (0.09) (0.12) (0.10) (0.08)
Net realized and unrealized gains/(losses) on
investments 1.56 2.02 (0.49) 0.51 4.34
-------- -------- ------- ------- -------
Total from investment operations 1.42 1.93 (0.61) 0.41 4.26
-------- -------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - - - -
Distributions from net realized gains - - (0.56) (0.77) (0.31)
Return of Capital - - (0.05) - -
-------- -------- ------- ------- -------
Total dividends and distributions - - (0.61) (0.77) (0.31)
-------- -------- ------- ------- -------
Net asset value, end of period $ 13.70 $ 12.28 $ 10.35 $ 11.57 $ 11.93
======== ======== ======= ======= =======
Total return 11.56% 18.65% (5.63)% 3.39% 55.35%
Net assets, end of period (in thousands) $285,670 $141,259 $93,031 $33,646 $49,066
Average net assets for the period (in thousands) 244,742 120,068 44,042 35,981 38,688
Ratio of expenses to average net assets 1.29% 1.34% 1.39% 1.45% 1.38%
Ratio of net investment income/(loss) to average net
assets (1.04)% (0.84)% (1.05)% (0.98)% (0.74)%
Portfolio turnover rate 52.72% 85.52% 104.90% 145.08% 115.05%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
Financial Highlights 105
Financial Highlights (continued)
<Table>
<Caption>
ICON INDUSTRIALS FUND
--------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
-------- -------- -------- ------- -------
Net asset value, beginning of period $ 8.80 $ 7.96 $ 8.55 $ 9.07 $ 10.31
-------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.05) (0.05) (0.02) (0.02) 0.03
Net realized and unrealized gains/(losses) on
investments 1.77 0.89 (0.57) (0.48) (0.47)
-------- -------- -------- ------- -------
Total from investment operations 1.72 0.84 (0.59) (0.50) (0.44)
-------- -------- -------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - - (0.02) -
Distributions from net realized gains - - - - (0.80)
-------- -------- -------- ------- -------
Total dividends and distributions - - - (0.02) (0.80)
-------- -------- -------- ------- -------
Net asset value, end of period $ 10.52 $ 8.80 $ 7.96 $ 8.55 $ 9.07
======== ======== ======== ======= =======
Total return 19.55% 10.55% (6.90)% (5.55)% (4.32)%
Net assets, end of period (in thousands) $209,693 $132,554 $ 63,919 $76,325 $22,068
Average net assets for the period (in thousands) 179,657 70,382 107,335 55,928 21,220
Ratio of expenses to average net assets 1.29% 1.43% 1.30% 1.38% 1.38%
Ratio of net investment income/(loss) to average net
assets (0.47)% (0.64)% (0.24)% (0.16)% 0.34%
Portfolio turnover rate 45.77% 90.49% 99.22% 72.65% 72.90%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
106 Financial Highlights
<Table>
<Caption>
ICON INFORMATION TECHNOLOGY FUND
---------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
-------- -------- -------- -------- -------
Net asset value, beginning of period $ 8.27 $ 5.98 $ 7.80 $ 22.13 $ 19.00
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.08) (0.08)(x) (0.10)(x) (0.10)(x) (0.05)(x)
Net realized and unrealized gains/(losses) on
investments (0.29) 2.37 (1.72) (4.03) 9.62
-------- -------- -------- -------- -------
Total from investment operations (0.37) 2.29 (1.82) (4.13) 9.57
-------- -------- -------- -------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - - - -
Distributions from net realized gains - - - (10.20) (6.44)
-------- -------- -------- -------- -------
Total dividends and distributions - - - (10.20) (6.44)
-------- -------- -------- -------- -------
Net asset value, end of period $ 7.90 $ 8.27 $ 5.98 $ 7.80 $ 22.13
======== ======== ======== ======== =======
Total return (4.47)% 38.29% (23.33)% (32.90)% 59.24%
Net assets, end of period (in thousands) $244,252 $307,972 $ 75,623 $118,851 $46,689
Average net assets for the period (in thousands) 282,062 190,287 189,972 99,875 56,279
Ratio of expenses to average net assets 1.31% 1.35% 1.31% 1.37% 1.35%
Ratio of net investment income/(loss) to average net
assets (0.91)% (1.16)% (1.09)% (0.90)% (0.23)%
Portfolio turnover rate 189.67% 155.39% 190.09% 70.32% 137.69%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
Financial Highlights 107
Financial Highlights (continued)
<Table>
<Caption>
ICON LEISURE AND CONSUMER STAPLES FUND
------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
-------- ------- ------- ------- -------
Net asset value, beginning of period $ 12.42 $ 11.20 $ 9.42 $ 9.24 $ 12.05
-------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) (0.04) (0.06) (0.07) (0.05) 0.01
Net realized and unrealized gains/(losses) on
investments 2.13 1.28 1.85 0.26 0.25
-------- ------- ------- ------- -------
Total from investment operations 2.09 1.22 1.78 0.21 0.26
-------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income - - - (0.01) -
Distributions from net realized gains - - - (0.02) (3.07)
-------- ------- ------- ------- -------
Total dividends and distributions - - - (0.03) (3.07)
-------- ------- ------- ------- -------
Net asset value, end of period $ 14.51 $ 12.42 $ 11.20 $ 9.42 $ 9.24
======== ======= ======= ======= =======
Total return 16.83% 10.89% 18.90% 2.26% 5.27%
Net assets, end of period (in thousands) $ 83,022 $82,347 $88,341 $41,162 $ 7,765
Average net assets for the period (in thousands) 104,515 80,928 86,202 41,086 18,029
Ratio of expenses to average net assets 1.33% 1.38% 1.34% 1.40% 1.51%
Ratio of net investment income/(loss) to average net
assets (0.31)% (0.51)% (0.55)% (0.50)% 0.13%
Portfolio turnover rate 148.43% 139.54% 90.43% 148.23% 24.50%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
108 Financial Highlights
<Table>
<Caption>
ICON MATERIALS FUND
------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
-------- ------- ------- ------- -------
Net asset value, beginning of period $ 6.20 $ 5.68 $ 5.70 $ 6.49 $ 7.31
-------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) 0.01 0.03 0.02 0.02 0.03
Net realized and unrealized gains/(losses) on
investments 2.87 0.50 (0.01) (0.74) (0.85)
-------- ------- ------- ------- -------
Total from investment operations 2.88 0.53 0.01 (0.72) (0.82)
-------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.03) (0.01) (0.03) (0.07) -
Distributions from net realized gains - - - - -
-------- ------- ------- ------- -------
Total dividends and distributions (0.03) (0.01) (0.03) (0.07) -
-------- ------- ------- ------- -------
Net asset value, end of period $ 9.05 $ 6.20 $ 5.68 $ 5.70 $ 6.49
======== ======= ======= ======= =======
Total return 46.61% 9.36% 0.06% (11.07)% (11.22)%
Net assets, end of period (in thousands) $139,838 $30,376 $59,020 $29,200 $18,162
Average net assets for the period (in thousands) 68,497 40,156 45,917 24,544 23,620
Ratio of expenses to average net assets 1.37% 1.47% 1.36% 1.47% 1.41%
Ratio of net investment income/(loss) to average net
assets 0.13% 0.59% 0.23% 0.40% 0.42%
Portfolio turnover rate 59.48% 130.01% 74.55% 91.28% 91.76%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
Financial Highlights 109
Financial Highlights (continued)
<Table>
<Caption>
ICON TELECOMMUNICATION & UTILITIES FUND
----------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
------- ------- ------- ------- ------
Net asset value, beginning of period $ 5.69 4.78 $ 6.19 $ 8.13 $10.04
------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) 0.07 0.10 0.10 0.09 0.20
Net realized and unrealized gains/(losses) on investments 0.92 0.87 (1.45) (1.52) 0.99
------- ------- ------- ------- ------
Total from investment operations 0.99 0.97 (1.35) (1.43) 1.19
------- ------- ------- ------- ------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.07) (0.06) (0.06) (0.11) (0.16)
Distributions from net realized gains - - - (0.40) (2.94)
------- ------- ------- ------- ------
Total dividends and distributions (0.07) (0.06) (0.06) (0.51) (3.10)
------- ------- ------- ------- ------
Net asset value, end of period $ 6.61 5.69 $ 4.78 $ 6.19 $ 8.13
======= ======= ======= ======= ======
Total return 17.57% 20.36% (22.05)% (18.74)% 14.99%
Net assets, end of period (in thousands) $61,325 $42,509 $66,366 $16,537 $8,619
Average net assets for the period (in thousands) 54,232 53,219 20,196 13,554 7,231
Ratio of expenses to average net assets 1.37% 1.41% 1.50% 1.54% 1.53%
Ratio of net investment income/(loss) to average net assets 1.07% 2.05% 1.78% 1.22% 2.43%
Portfolio turnover rate 108.81% 158.24% 137.81% 46.10% 41.86%
</Table>
(x) Calculated using the average share method
The accompanying notes are an integral part of the financial statements.
110 Financial Highlights
<Table>
<Caption>
ICON SHORT-TERM FIXED INCOME FUND
-------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
2004 2003 2002 2001 2000
------ ------ ------ ------- ------
Net asset value, beginning of period $ 9.13 $ 9.16 $ 9.14 $ 9.14 $ 9.15
------ ------ ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(x) 0.05 0.02 0.05 0.26 0.39
Net realized and unrealized gains/(losses) on investments (0.05) (0.02) (0.00) 0.02 0.02
------ ------ ------ ------- ------
Total from investment operations - - 0.05 0.28 0.41
------ ------ ------ ------- ------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (0.07) (0.03) (0.03) (0.28) (0.39)
Distributions from net realized gains - - - - (0.03)
Total dividends and distributions (0.07) (0.03) (0.03) (0.28) (0.42)
------ ------ ------ ------- ------
Net asset value, end of period $ 9.06 $ 9.13 $ 9.16 $ 9.14 $ 9.14
====== ====== ====== ======= ======
Total return (0.05)% (0.02)% 0.96% 3.15% 4.45%
Net assets, end of period (in thousands) $4,671 $6,166 $7,665 $20,338 $5,386
Average net assets for the period (in thousands) 4,539 7,255 7,643 6,276 5,367
Ratio of expenses to average net assets 0.90%+ 1.42%+ 1.35%+ 1.52% 1.52%
Ratio of net investment income/(loss) to average net assets 0.69%+ 0.27%+ 0.52%+ 2.85% 4.16%
Portfolio turnover rate 0.00% 0.00% 0.00% 0.00% 53.26%
</Table>
(x) Calculated using the average share method
+ Includes expense waiver (Note 2). If this waiver had not been made, the
ratio of expenses to average net assets would have been 1.49% for the year
ended September 30, 2004, 1.43% in 2003 and 1.41% in 2002 the ratio of net
investment income to average net assets would have been 0.10% for the year
ended September 30, 2004, 0.26% in 2003 and 0.58% in 2002.
The accompanying notes are an integral part of the financial statements.
Financial Highlights 111
Notes to Financial Statements
September 30, 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
("Telecommunication & 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 and sectors. 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
112 Notes to Financial Statements
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.
Foreign securities traded in countries outside of the Western Hemisphere are
fair valued daily by utilizing the quotations of an independent pricing service,
unless the Funds' adviser determines that use of another valuation methodology
is appropriate. The pricing service uses statistical analyses and quantitative
models to adjust local market prices using factors such as subsequent movement
and changes in the prices of indexes, securities and exchange rates in other
markets in determining fair value as of the time a Fund calculates its net asset
value. The valuation assigned to fair-valued securities for purposes of
calculating a Fund's NAV may differ from the security's most recent closing
market price and from the prices used by other mutual funds to calculate their
NAVs.
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
Notes to Financial Statements 113
Notes to Financial Statements (continued)
obligation. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings. No repurchase agreements were purchased or sold by
the Funds during the year ended September 30, 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.
No forward foreign currency contracts were entered into during the year.
OPTIONS TRANSACTIONS.
Each Fund (other than the Short-Term Fixed Income Fund) may write put and call
options only if it, among other things, (i) owns an offsetting position in the
underlying security or (ii) maintains cash or other liquid assets in an amount
equal to or greater than its obligation under the option.
When a Fund writes a put or call option, an amount equal to the premium received
is included in the Statement of Assets and Liabilities as a liability. The
amount of the liability is subsequently marked-to-market to reflect the current
114 Notes to Financial Statements
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.
No option transactions were entered into during the year.
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.
Notes to Financial Statements 115
Notes to Financial Statements (continued)
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.
Discounts and premiums on securities purchased are amortized over the life of
the respective securities.
INVESTMENT TRANSACTIONS.
Security transactions are accounted for as of trade date. Gains and losses
realized 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 in the Trust based upon relative net assets.
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 Fund's operating expenses do not exceed 0.75%.
Prior to December 1, 2003, ICON may have voluntarily waived a portion of its
advisory fee. 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 year ended September 30, 2004, ICON reimbursed $29,174 and
recouped $2,398 on shares of the Short-Term Fixed Income Fund. These expenses
are subject to recovery by ICON based on a rolling three-year period. However,
with the Short-Term Fixed Income Fund having ceased operations, ICON will not
recoup any additional expenses.
116 Notes to Financial Statements
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 0.055% 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.
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. LINE OF CREDIT
The Funds have entered into Lines of Credit agreements with U.S. Bank that
allows the Funds to borrow funds, subject to certain conditions, for temporary
or emergency purposes. Interest is calculated at prime, which was 4.75% at
September 30, 2004. The maximum borrowing is limited to 25% of eligible
securities held by the portfolio subject to the following maximums.
<Table>
ICON Consumer Discretionary Fund $ 30,000,000
ICON Energy Fund $ 30,000,000
ICON Financial Fund $ 35,250,000
ICON Healthcare Fund $ 50,000,000
ICON Industrials Fund $ 17,250,000
ICON Information Technology Fund $ 56,500,000
ICON Leisure and Consumer Staples Fund $ 19,250,000
ICON Materials Fund $ 15,000,000
ICON Telecommunication & Utilities Fund $ 8,750,000
ICON Short-Term Fixed Income Fund $ 1,750,000
</Table>
There was no amount outstanding on the line of credit for any of the Funds as of
September 30, 2004.
A commitment fee of $500 per line of credit has been paid by each Fund.
Notes to Financial Statements 117
Notes to Financial Statements (continued)
4. FEDERAL INCOME TAX
Income and capital gain distributions are determined in accordance with income
tax regulations that may differ from accounting principles that are generally
accepted in the United States of America. These differences are due to differing
treatments for items such as net short-term gains, deferrals of wash losses,
foreign currency transactions, net investment losses, and capital loss
carryovers.
The tax components of capital shown in the following tables represent losses or
deductions the Funds may be able to offset against income and gains recognized
in future years and post October loss deferrals. The accumulated losses noted in
the following tables represent net capital loss carryovers as of September 30,
2004 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, 2012.
In 2004, the Short-Term Fixed Income Fund incurred "post October" losses during
the period from November 1, 2003 through September 30, 2004. These losses will
be deferred for tax purposes and recognized in the year ending September 30,
2005.
<Table>
<Caption>
ACCUMULATED UNDISTRIBUTED UNDISTRIBUTED POST OCTOBER
CAPITAL LOSSES ORDINARY INCOME LONG-TERM GAIN DEFERRALS
- ----------------------------------------------------------------------------------------
ICON Consumer
Discretionary $ 6,093,146 $ - $ - $ -
ICON Energy Fund 7,535,248 - - -
ICON Financial Fund - 4,356,214 8,570,377 -
ICON Healthcare Fund - - 877,473 -
ICON Industrials Fund 24,281,548 - - -
ICON Information
Technology Fund 64,435,458 - - -
ICON Leisure and
Consumer Staples
Fund - - 10,402,210 -
ICON Materials Fund 19,740,720 66,439 - -
ICON Telecommunication
& Utilities Fund 4,843,948 580,890 - -
ICON Short-Term Fixed
Income Fund 3,820 - - 3,008
</Table>
During the year ended September 30, 2004, the following capital loss
carryforwards were used:
<Table>
ICON Consumer Discretionary Fund $17,445,952
ICON Energy Fund 512,039
ICON Financial Fund 3,207,869
ICON Healthcare Fund 3,187,635
ICON Industrial Fund 707,191
ICON Information Technology Fund 30,004,747
ICON Leisure and Consumer Staples Fund 1,473,912
ICON Materials Fund 692,400
ICON Telecommunication & Utilities Fund 1,418,957
</Table>
118 Notes to Financial Statements
The difference between book and tax net appreciation and depreciation of
investments is wash sale loss deferrals and corporate actions. The aggregate
composition by Fund of unrealized appreciation and depreciation of investment
securities for federal income tax purposes as of September 30, 2004 is as
follows:
<Table>
<Caption>
UNREALIZED UNREALIZED NET APPRECIATION
FEDERAL TAX COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- --------------------------------------------------------------------------------------------
ICON Consumer
Discretionary Fund $130,693,035 $24,967,600 $ (3,155,279) $ 21,812,321
ICON Energy Fund 236,483,011 59,717,914 (229,578) 59,488,336
ICON Financial Fund 160,753,722 28,966,569 (1,346,714) 27,619,855
ICON Healthcare Fund 250,137,318 43,277,504 (10,425,366) 32,852,138
ICON Industrials Fund 177,349,740 41,313,464 (3,692,965) 37,620,499
ICON Information
Technology Fund 226,314,619 25,620,346 (5,589,835) 20,030,511
ICON Leisure and
Consumer Staples Fund 70,515,632 14,395,253 (776,802) 13,618,451
ICON Materials Fund 118,692,917 25,270,744 (1,248,465) 24,022,279
ICON Telecommunication
& Utilities Fund 51,866,409 9,559,790 (104,797) 9,454,993
ICON Short-Term Fixed
Income Fund 4,686,000 - (40) (40)
</Table>
For the year ended September 30, 2004 the ICON Healthcare Fund and the ICON
Information Technology Fund reclassed $2,540,659 and $2,576,634 respectively
from accumulated undistributed net investment loss into paid-in capital.
5. SUBSEQUENT EVENT
On October 27, 2004 the ICON Short-Term Fixed Income Fund redeemed all remaining
shares and ceased operations.
6. INDEMNIFICATIONS
In the normal course of business, the Funds enter into contracts that contain a
variety of representations which provide general indemnifications. Each Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against each Fund that have not yet occurred.
However, based on experience, the Funds expect the risk of loss to be remote.
Notes to Financial Statements 119
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of the ICON Sector Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of ICON Consumer Discretionary Fund,
ICON Energy Fund, ICON Financial Fund, ICON Healthcare Fund, ICON Industrials
Fund, ICON Information Technology Fund, ICON Leisure and Consumer Staples Fund,
ICON Materials Fund, ICON Telecommunication & Utilities Fund, and ICON
Short-Term Fixed Income Fund (ten of the portfolios constituting ICON Funds,
hereafter referred to as the "Funds") at September 30, 2004, the results of each
of their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 2004 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 15, 2004
120 Report of Accounting Firm
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 18 ICON Funds (the "Funds"). The Board is responsible for general oversight
of the Funds' business and for assuring that the Funds are managed in the best
interest of the Funds' shareholders. The Trustees, and their ages, addresses and
principal occupations are set forth below. Trustees have no official term of
office and generally serve until they resign or are not re-elected.
INTERESTED TRUSTEE
CRAIG T. CALLAHAN, 53, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception. Dr. Callahan also serves as President (1998 to
present) and Chief Investment Officer (1991 to present) of ICON Advisers, Inc.
("ICON Advisers"), the Funds' Investment Adviser. Dr. Callahan is also President
(1998 to present); Director (1991 to present); and was previously Vice President
(1991 to 1998) of ICON Distributors, Inc. ("IDI"), the Funds' Distributor, and
is President of ICON Insurance Agency, Inc. (2004 to present). Dr. Callahan also
serves as the Chief Investment Officer and Director (1994 to present), and was
previously Secretary/Treasurer (1994 to 1998) of ICON Management & Research
Corporation ("IM&R"), the parent company of ICON Advisers and IDI.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 54. Mr. Bergert has been a Trustee of the Funds since 1999. Mr.
Bergert is President of Venture Capital Management LLC (1997 to present);
General Partner of SOGNO Partners LP, a venture capital company (2001 to
present); and was previously a General Partner with KPMG Peat Marwick, LLP (1979
to 1997). Mr. Bergert is also a Director of Herre Bros, Inc., a contracting
company (1998 to present); Delta Dental of Pennsylvania, an insurance company
(1998 to present); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 57. Mr. Pomeroy has been a Trustee of the Funds since
November 2002. Mr. Pomeroy is Chief Investment Officer and Director of
Investments, Pennsylvania State University (2001 to present) and was Portfolio
Manager and Product Manager, Trinity Investment Management Corporation (1989 to
2001).
GREGORY KELLAM SCOTT, 56. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott was previously Senior Vice President -- Law, General
Counsel and Secretary, GenCorp, Inc., a multinational technology-based
manufacturing company (2002 to 2004); Vice President and General Counsel of
Kaiser-Hill Company LLC, a nuclear clean-up and environmental remediation
company (2000 to 2002) and a Colorado Supreme Court Justice (1993 to 2000). Mr.
Scott is also a member of the National Board of Directors of the Constituency
for Africa (1997 to present).
Trustees and Officers 121
Board of Trustees and Fund Officers (continued)
(unaudited)
R. MICHAEL SENTEL, 56. Mr. Sentel has been a Trustee of the Funds since their
inception. Mr. Sentel is a Senior Attorney with the U.S. Department of Education
(1996 to present). Mr. Sentel also provides legal representation as a sole
practitioner with an emphasis on corporate and transactional law. He served as
general counsel to numerous public companies and served on the board of
directors of one of these clients. Mr. Sentel began his legal career with the
U.S. Securities and Exchange Commission's Division of Enforcement and became a
branch chief. Later he served as the section chief for the Professional
Liability Section of the Federal Deposit Insurance Corp. with responsibility for
the Rocky Mountain Region (1991 to 1994).
JONATHAN F. ZESCHIN, 51. Mr. Zeschin has been a Trustee of the Funds since
November 2002. Mr. Zeschin is President and Founder of ESSENTIAL Advisers, Inc.,
a wealth management and investment advisory firm (2000 to present) and was
Managing Partner of JZ Partners LLC, a business consulting firm for investment
management companies (1998 to 2002). Mr. Zeschin was previously President of
Founders Asset Management LLC, an investment management company (1995 to 1998)
and Executive Vice President, INVESCO Funds Group, an investment advisory
company (1992 to 1995). Mr. Zeschin was previously a Director of the Young
Americans Education Foundation and Young Americans Bank (1998 to 2004); and was
previously a Director of the Wasatch Funds (2002 to 2004).
THE OFFICERS OF THE FUNDS ARE:
CRAIG T. CALLAHAN, 53. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as ICON Advisers' President (1998 to
present) and Chief Investment Officer (1991 to present). Dr. Callahan is also
President (1998 to present), Director (1991 to present) and was previously Vice
President (1991 to 1998) of IDI and President of ICON Insurance Agency Inc.
(2004 to present). Dr. Callahan is also the Chief Investment Officer and
Director (1994 to present), and was previously Secretary/Treasurer (1994 to
1998) of IM&R.
ERIK L. JONSON, 55. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception. Mr. Jonson is also Chief Financial
Officer (1996 to present) and Executive Vice President (2004 to present) and was
previously Vice President (1998 to 2004) of ICON Advisers; Chief Financial
Officer, Secretary and Director (1996 to present) of IM&R; Executive Vice
President (2004 to present) and Treasurer (2002 to present) and was previously
Secretary/Treasurer, (1998 to 2002) and Vice President, (2002 to 2004) of IDI;
and Executive Vice President and Treasurer of ICON Insurance Agency, Inc. (2004
to present).
122 Trustees and Officers
ANDRA C. OZOLS, 43. Ms. Ozols has been a Vice President and Secretary of the
Funds since March 2002. She previously served in that capacity in 1998. Ms.
Ozols is also Executive Vice President (2004 to present), General Counsel and
Secretary (2002 to present) and was previously Vice President (2002 to 2004) of
ICON Advisers; Executive Vice President (2004 to present) and Secretary (2002 to
present) and was previously Vice President (2002 to 2004) of IDI; Director (June
2003 to present) of IM&R; and Executive Vice President and Secretary of ICON
Insurance Agency, Inc. (2004 to present). Ms. Ozols was previously Vice
President (1999 to 2002) and Assistant General Counsel (October 1998 to February
2002) of Founders Asset Management LLC; and was previously a Branch Chief (1993
to 1995) and Enforcement Attorney (1990 to 1995 and 1996 to 1998) with the U.S.
Securities and Exchange Commission.
The Trustees and Officers of the Funds may be contacted at 5299 DTC Boulevard,
Suite 1200, Greenwood Village, Colorado 80111.
Additional information about the Funds' Trustees and Officers is available in
the Funds' Statement of Additional Information, which can be obtained free of
charge by calling 1-800-764-0442 or by visiting www.iconadvisers.com.
Trustees and Officers 123
Other Information (unaudited)
QUALIFIED DIVIDEND INCOME
For the fiscal year ended September 30, 2004 the following Funds distributed
qualified dividend income in the percentages shown:
ICON Financial Fund 76.72%
ICON Materials Fund 10.50%
ICON Telecommunication & Utilities Fund 100.00%
124 Other Information
PORTFOLIO HOLDINGS
A list of each ICON Fund's Top 10 holdings is available at www.iconadvisers.com
on or about 15 days following each month-end. Beginning March 1, 2005, each ICON
Fund will file a complete schedule of portfolio holdings for the first and third
quarters of its fiscal year with the SEC on Form N-Q. The ICON Funds' Forms N-Q
will be available at www.sec.gov or may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC. Information about the
Public Reference Room may be obtained by calling 1-800-SEC-0330.
PROXY VOTING
A description of the policies and procedures the ICON Funds use to vote proxies
is available at www.iconadvisers.com; without charge upon request by calling
1-800-764-0442; or on the SEC's website at www.sec.gov.
Information about how the ICON Funds voted proxies related to each Fund's
portfolio securities during the 12-month period ended June 30, 2004 is available
at www.iconadvisers.com or on the SEC's website at www.sec.gov.
This report is for the general information of the Funds' shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by a current prospectus. You may obtain a copy of the prospectus,
which contains information about the investment objectives, risks, charges,
expenses, and share classes of each ICON Fund, by visiting www.iconadvisers.com
or by calling 1-800-764-0442. Please read the prospectus carefully before
investing. ICON Distributors, Inc., Distributor.
125
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, 12(th) Floor
Greenwood Village, CO 80111
On the Internet www.iconadvisers.com
By E-Mail info@iconadvisers.com
</Table>
[ICON FUNDS LOGO]
1-800-764-0442
www.iconadvisers.com
ICRPANNUSECT I-140-SEC
Item 2. Code of Ethics.
(a) ICON Funds ("Registrant") has adopted a code of ethics ("Code"),
as defined in Item 2 of Form N-CSR, that applies to its Principal
Executive Officer and Principal Financial Officer, regardless of
whether these individuals are employed by the Registrant or a
third party. The Registrant has not made any amendments to its
Code during the covered period. A copy of the Code is available
free of charge upon request by writing ICON Funds at P.O. Box
701, Milwaukee, WI 53201-0701 or calling 1-800-764-0442.
(b) No information need be disclosed pursuant to this paragraph.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) (1) The Fund's Code of Ethics was previously filed with Form
N-CSR dated December 1, 2003.
(2) Not applicable.
(3) See item 2(a) above.
Item 3. Audit Committee Financial Expert.
ICON Funds Board of Trustees has determined that each member of ICON
Funds' Audit Committee is an "audit committee financial expert," as
defined in Item 3 to Form N-CSR. The members of the Audit Committee
include Glen F. Bergert, Chairman; R. Michael Sentel and Jonathan F.
Zeschin, who are all "independent" under the standards set forth in
Item 3 to Form N-CSR. Under applicable securities laws, a person who
is determined to be an audit committee financial expert will not be
deemed an "expert" for any puropse, including without limitation for
the purposes of Section 11 of the Securities Act of 1933, as a result
of being designated or identified as an audit committee financial
expert. The designation or identification of a person as an audit
committee finanical expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties,
obligations, and liabilities imposed on such person as a member of the
Audit Committee and Board of Trustees in the absence of such
designation or identification.
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g)
The Registrant has engaged its principal accountants,
PricewaterhouseCoopers, LLP, ("independent accountants") to perform
audit services and tax services during the past two fiscal years. The
following table details the aggregate fees billed (or to be billed)
for each of the last two fiscal years:
Fiscal year ended 9/30/04 Registrant Covered Entities 1
---------- ----------------
Audit Fees 2 $261,500 N/A
Non-Audit Fees
Tax Fees 3 $ 91,300 $ 30,870
All Other Fees $ 6,300 4 $ 85,700 5
Total Non-Audit Fees $ 97,600 $116,570
Fiscal year ended 9/30/03 Registrant Covered Entities1
---------- ----------------
Audit Fees 2 $247,000 N/A
Non-Audit Fees
Tax Fees 3 $ 86,940 $ 30,500
All Other Fees $ 8,000 6 $ 53,200 7
Total Non-Audit Fees $ 94,940 $ 83,700
1 Covered Entities include ICON Advisers, Inc. ("ICON Advisers"),
investment adviser and administrator to the Registrant, as well
as ICON Advisers' affiliated entities.
2 "Audit Fees" represents fees for performing an audit of the
Registrant's annual financial statements or services that are
normally provided by the independent accountants in connection
with statutory and regulatory filings.
3 "Tax Fees" represent fees for tax return preparation, excise
distribution calculations, quarterly tax compliance reviews, and
tax planning and tax advice services provided in connection with
the preparation and review of the Registrant's tax returns. ICON
Advisers pays the fee for the quarterly tax compliance reviews
under its Administration Agreement with the Registrant.
4 "All Other Fees" paid by the Registrant in fiscal year 2004
reflect agreed-upon procedures related to trade allocation
review.
5 "All Other Fees" paid by Covered Entities in fiscal year 2004
reflect fees for agreed-upon procedures related to trade
allocation review and fees related to verification of ICON
Advisers' performance results pursuant to the Association for
Investment Management and Research Performance Presentation
Standards.
6 "All Other Fees" paid by the Registrant in fiscal year 2003
represent consulting on tax and audit issues related to new funds
and review and issuance of a proxy consent.
7 "All Other Fees" paid by Covered Entities in fiscal year 2003
represent consulting on tax and audit issues related to new funds
and tax issues related to qualification as a registered
investment company.
(e) (1) The Audit Committee of the Registrant's Board of Trustees
("Board") is required to review and pre-approve all services to
be provided by the independent accountants to the Registrant and
Covered Entities to determine whether the services performed by
the independent accountants impair their independence from the
Registrant. The Audit Committee has delegated preapproval
authority to the Chairman of the Audit Committee, subject to
review and ratification by the full Audit Committee.
(e) (2) All of the principal accountants' hours spent on auditing the
Registrant's financial statements were attributed to work
performed by full-time permanent employees of the independent
accountants. 100% of the non-audit services provided by the
independent accountants to either the Registrant or the Covered
Entities were pre-approved by the Audit Committee.
(f) Not applicable.
(h) The Audit Committee of the Registrant's Board has considered whether the
provision of services other than audit services performed by the
independent accountants to the Registrant and Covered Entities is
compatible with maintaining the independent accountants' independence in
performing audit services.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
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 to open-end investment companies.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
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) are sufficient to ensure that the
information required to be disclosed by the Registrant in this
Form N-CSR was recorded, processed, summarized and reported
within the required timeframes, 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 were no significant changes or corrective actions with
regard to significant deficiencies or material weaknesses 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 controls
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 to open-end investment companies.
(b) A certification of the Registrant's Principal Executive Officer
and Principal Financial Officer, as required by 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, is attached as EX99.906CERT.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ICON Funds
By: /s/ Craig T. Callahan
--------------------------------------
Craig T. Callahan
President and Chief Executive Officer
(Principal Executive Officer)
Date: December 3, 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: December 3, 2004
By: /s/ Erik L. Jonson
----------------------------------------
Erik L. Jonson
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
Date: December 3, 2004