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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07883
--------------------------------------------
ICON FUNDS
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
5299 DTC Blvd. Suite 1200 Greenwood Village, CO 80111
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Erik L. Jonson 5299 DTC Blvd. Suite 1200 Greenwood Village, CO 80111
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 303-790-1600
---------------------
Date of fiscal year end: September 30, 2005
----------------------
Date of reporting period: September 30, 2005
---------------------
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
. 2005 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 16
ICON Covered Call Fund 25
ICON Equity Income Fund 42
ICON Long/Short Fund 51
SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE (UNAUDITED) 60
FINANCIAL STATEMENTS 63
FINANCIAL HIGHLIGHTS 70
NOTES TO FINANCIAL STATEMENTS 74
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 86
BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED) 87
OTHER INFORMATION (UNAUDITED) 89
</Table>
[RECYCLE LOGO]
About This Report (unaudited)
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, 2005, the end of the reporting period. The information is not a
complete analysis of every aspect of any sector, industry, security or the
Funds.
Opinions and forecasts regarding industries, companies and/or themes, and
portfolio composition and holdings, are subject to change at any time based on
market and other conditions, and should not be construed as a recommendation of
any specific security. Each Fund's holdings as of September 30, 2005 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 Research Systems, and Lehman Brothers.
About This Report 3
Message from ICON Funds (unaudited)
- --------------------------------------------------------------------------------
Equity markets proved especially volatile during the period, retreating when
concerns intensified, then rallying when anxiety abated.
- --------------------------------------------------------------------------------
Thank you for your continued investment in the ICON U.S. Diversified Funds and
welcome to those shareholders receiving this report for the first time.
As you may know, ICON employs bottom-up industry rotation in pursuit of
industries which our system indicates are poised to outperform the broader
market. Our focus on valuation continued to serve the Funds well, as the ICON
system directed us toward underpriced industries that played a part in moving
the market higher despite inherent skepticism on the part of less informed
investors.
CLIMBING A WALL OF WORRY
Of the many sayings associated with the financial markets, one of my favorites
is "Wall Street climbs a wall of worry." Given the market's performance over the
past year, one would be hard pressed to find fault with such a claim.
Although stocks recorded solid gains over the course of the Funds' fiscal year,
the path was fraught with numerous difficulties. Investors grappled with
uncertainties stemming from rising oil prices and monetary tightening, mostly
centered on conflicting fears of economic slowdown and mounting inflation.
Equity markets proved especially volatile in this setting, retreating when
concerns intensified, then rallying when anxiety abated.
This was particularly evident during Hurricanes Katrina and Rita, as investors
reacted to day-to-day, even minute-to-minute, fluctuations in oil futures.
However, it is our view that these price swings were the result of amateur
macroeconomic conjecture that was inconsistent with professional analysts who
specialize in forecasting corporate earnings.
AVOIDING THE GUESSING GAME
When analyzing individual stocks, two of the key variables we apply to our
valuation equation include average earnings per share (EPS) and estimated long-
term earnings growth rates (LTG). In order to ensure the most realistic
projections, ICON Advisers subscribes to the highly respected Thomson Financial
I/B/E/S database service, which surveys equity analysts for their estimates of
future corporate earnings and respective growth rates.
Based on these estimates, the fallout from Katrina and Rita has resulted in
slight near-term revisions to quarterly EPS, but few modifications to the LTG
that we consider. In our equation, marginal EPS adjustments over one or two
quarters typically have a negligible impact on overall value. Given the steady
outlook for LTG, analysts view the storms' effects as temporary and not a threat
to our current valuation calculations or long-term growth forecasts.
4 Message from ICON Funds
We frequently see events that affect near-term
earnings per share but seldom trigger a change in
our analysis of the forward five-year
growth outlook.
[CRAIG T. CALLAHAN PHOTO]
Craig T. Callahan
President
We frequently see events that affect one or two quarters of EPS but seldom
trigger a change in our analysis of the forward five-year growth outlook. Less
informed investors often react, incorrectly we believe, to those events and tilt
their portfolios toward areas that are instinctively poised to benefit,
irrespective of known fundamentals. ICON does not participate in that guessing
game. Our experience tells us to stick with computing value and not react to
events that do not impact our estimate of intrinsic value. As a result, we made
no changes to Fund compositions based strictly on damage attributed to the
hurricanes.
- --------------------------------------------------------------------------------
Our experience tells us to stick with computing value and not react to events
that do not impact our estimate of intrinsic value.
- --------------------------------------------------------------------------------
Meanwhile, bonds remained subdued during the period, reflecting much of the same
event-driven volatility that plagued the stock market. Nevertheless, our
assessment of valuation continues to suggest that investors have overstated the
impact of higher short-term interest rates and perceived inflationary pressures.
Monetary tightening, in our view, presents no compelling reason for higher
long-term rates, while limited pricing power has curbed inflationary impulses,
despite rising energy prices. Although initially favoring long-term corporate
bonds, weakening relative strength and valuation concerns have tilted our
exposure to the ultra-short end of the yield curve.
A MORE UNIFORM DISTRIBUTION OF VALUE
At period-end, the average value-to-price ratio (V/P) for our domestic equity
database indicated that stocks were priced at 20% below our estimate of fair
value. In other words, we believe prices would need to advance 20% on average
over the coming year in order to reach fair value.
That being said, markets rarely move in a straight line and random news events
can in fact disrupt a move to the upside. Moreover, value is a moving target and
highly susceptible to changes in earnings, growth rates, risk, and interest
rates. Despite all these variables, valuation gaps are expected, whereas
extraneous events and their impact are generally unpredictable.
What are current valuation gaps telling us? Looking at the benchmark S&P 1500
Index, we are seeing a significant increase in the average V/P for large-cap
stocks for the first time since 1997. Although we define industry leadership by
value and relative strength and not by market capitalization, a more uniform
distribution of value suggests that an upward move from here could be very broad
and include the long-lagging large-cap segment.
Message from ICON Funds 5
Message from ICON Funds (continued)
Since the Energy-, Healthcare-, Utilities-, and Materials-related industries we
have favored during the past year have featured small- and mid-cap companies,
our value-driven avoidance of large-caps proved beneficial. However, given a
significant portion of the rally since October 2002 had a low-quality bias, our
penchant for holding high-quality companies may have detracted from overall
returns. Should large-caps ultimately come back into favor, we are tilted more
heavily toward them than we have been historically. Should high-quality
companies return to their historical risk-adjusted leadership, the Funds are
well-situated to take advantage of their strength.
OVERPRICED INDUSTRIES ARE FEW
We continue to see positive trends in corporate earnings, economic fundamentals
and company valuations, and believe the setting looks favorable for a broad move
to the upside. Our analysis shows that overpriced industries are few and far
between, even within the Energy sector, yet we believe there appears to be a
lack of leadership among Consumer-related industries, though value is
widespread.
In closing, we wish to thank you for the privilege of guiding you through these
challenging markets. For current market updates, as well as up-to-date Fund
performance and account information, we invite you to visit our website at
www.iconadvisers.com.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
Consider the investment objectives, risks, charges, expenses, and share classes
of each ICON Fund carefully before investing. The prospectus contains this and
other information about the Funds and is available by visiting
www.iconadvisers.com or calling 1-800-764-0442. Please read the prospectus
carefully before investing.
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. An
investment in a region fund may involve greater risk and volatility than a more
diversified fund. Investments in foreign securities may entail unique risks,
including political, market, and currency risks.
6 Message from ICON Funds
Management Overview
ICON Bond Fund
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
September 30, 2005
Corporate Bonds 50.2%
Investment Grade 30.1%
Non-Investment Grade 20.1%
U.S. Governments and Agencies 34.4%
Foreign Government Bonds 0.6%
Short-Term Investments 11.4%
Percentages are based upon net assets.
PORTFOLIO HIGHLIGHTS
September 30, 2005
Number of Bonds(1) 113
Weighted average
maturity(1) 8.3 Years
Weighted average
duration(1) 4.7 Years
30-Day SEC Yield
(after expense
limitation) - Class I 4.24%
30-Day SEC Yield
(before expense
limitation) - Class I 4.11%
Yield is for the Fund's Class I shares.
Yield for the Fund's other share classes will vary due to differences in charges
and expenses.
(1) Excludes cash and cash equivalents.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARK?
A. For the fiscal year ended September 30, 2005, the ICON Bond Fund returned
1.05% for Class I shares, 0.47% for Class C shares and 1.30% for Class Z
shares, underperforming the 3.38% return of the Lehman Brothers U.S.
Universal Index, the Fund's benchmark, over the same period. Total returns
for other periods as of September 30, 2005 appear on page 11.
Q. WHICH MARKET FACTORS INFLUENCED THE FUND'S RELATIVE PERFORMANCE?
A. The interest rate environment posed what Federal Reserve Chairman Alan
Greenspan referred to during the period as a "conundrum." Although the Fed
raised short-term interest rates to 3.75% from 1.75% in an attempt to ward
off inflation, many investors were taken aback when range-bound long rates
did not follow suit. As the spread between long and short rates diminished, a
relatively flat yield curve benefited the Fund's initial tilt toward
longer-duration bonds.
However, this positioning worked against Fund performance later in the period
as external factors ranging from inflationary pressures to slowing economic
growth, both of which were attributed to the rising cost of oil and ongoing
Federal Reserve policy calling for higher short-term interest rates, eroding
the value of interest rate-sensitive long-term bonds. Consequently, the
Fund's weighted average duration was steadily reduced during the second half
of the fiscal year in conjunction with relative strength metrics that by
period-end clearly favored shorter-dated issues. Although this rotation was
consistent with our readings, ultimately the move to shorter maturities
failed to stem losses associated with the Fund's prior long-term bias.
Beyond these macro-driven events, relative performance also suffered after a
mid-year earnings warning issued by Fund holding General Motors produced a
widespread sell-off in automotive-related debt. The subsequent downgrading of
GM credits to non-investment grade status further burdened the Fund, which
saw declines in its automotive-related positions.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs a quantitative methodology, identifying bonds we believe to
be underpriced relative to market price. The Fund may go anywhere in its
pursuit of potential market themes, without limitations on maturity or
duration (interest-rate sensitivity).
The Fund does not attempt to predict interest rate movements. ICON calculates
proprietary value-to-price ratios that consider the combined effects of
income stream, yield curve characteristics and risk. By combining valuation
with relative strength, the Fund aims to maximize total return
Management Overview 7
Management Overview (continued)
ICON Bond Fund
(income plus capital appreciation) by focusing on securities poised to
perform in the bond market.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. At the beginning of the period, long-term interest rates well within trading
levels established by their prolonged secular decline, thus, favorable
valuation readings initially led the Fund to overweight longer-duration
corporate bonds. However, this strategy was later changed as longer-duration
bonds, given their greater sensitivity to changing interest rates, relative
strength weakened when benchmark yields trended higher. As a result, a number
of longer-term positions were either trimmed or sold off, with the proceeds
reinvested predominantly in highly liquid overnight and 30-day corporate
paper.
A pullback in high-yield bonds also detracted from Fund performance. With
risk premiums declining following a strong two-year run, the sector appeared
to have run its course. Consequently, the Fund continued to trim its high-
yield exposure on declining relative strength, as tight credit spreads left
little room for further contraction or capital appreciation.
Nevertheless, longer-duration agency and corporate issues such as Fannie Mae
and Cincinnati Financial Corp. contributed to Fund performance, as did
holdings in long-term U.S. Treasuries. In contrast, General Motors Corp.,
Citigroup Inc., Chesapeake & Potomac Telephone Co., and New Jersey Bell
Telephone Co. all detracted from performance on weakness in their respective
industry groups. The Fund continued to hold these credits at period-end,
because it had not met our sell criteria.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE BOND MARKET?
A. While we continue to see more compelling value in longer corporate
maturities, relative strength dissipated rapidly following recent
inflationary concerns. Likewise, high-yield bonds have value, but miss the
relative strength component required in our model.
Given the current environment, however, we remain focused on investing in
shorter-term, highly liquid securities, and are poised to respond should
relative strength conditions change.
8 Management Overview
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - Initially, relatively flat yield curve initially benefited the Fund's tilt
toward longer-duration bonds, but later worked against performance as long
rates trended higher.
- - The Fund's move to shorter-dated issues failed to stem losses associated with
its prior long-term bias.
- - In select cases, relative performance suffered after a General Motors
earnings warning and subsequent GM credit downgrades produced declines in the
Fund's automotive-related holdings.
- - Longer-duration bonds issued by Fannie Mae and Cincinnati Financial Corp.
contributed positively to Fund performance, as did long-term U.S. Treasuries.
- - General Motors Corp., Citigroup Inc., Chesapeake & Potomac Telephone Co., and
New Jersey Bell Telephone Co. credits all detracted from Fund performance.
Management Overview 9
Management Overview (continued)
ICON Bond Fund
TOP 10 BOND HOLDINGS
September 30, 2005
<Table>
U.S. Treasury, 8.88%, 2/15/19 2.6%
Federal Home Loan Bank (FHLB), 5.38%, 8/15/18 2.3%
U.S. Treasury, 5.25%, 11/15/28 2.0%
Federal National Mortgage Association (FNMA), 7.13%, 1/15/30 1.9%
DaimlerChrysler NA Holding, 8.50%, 1/18/31 1.8%
Federal Home Loan Mortgage Corp. (FHLMC), 5.05%, 2/28/13 1.8%
Federal Home Loan Mortgage Corp. (FHLMC), 5.16%, 2/27/15 1.8%
Federal National Mortgage Association (FNMA), 5.00%, 3/9/15 1.8%
U.S. Treasury, 2.00%, 5/15/06 1.8%
Federal Home Loan Bank (FHLB), 3.50%, 3/21/06 1.7%
</Table>
Percentages are based upon net assets.
CREDIT QUALITY DIVERSIFICATION
September 30, 2005
<Table>
AAA 2.2%
AA 3.3%
A 38.2%
BBB 30.0%
BB 13.1%
B 12.0%
CCC 1.2%
</Table>
Percentages based on total investments less commercial paper.
Ratings based on Standard and Poors.
10 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Bond Fund - Class I 9/30/02 1.05% N/A 4.84%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 3.38% N/A 4.97%
- -------------------------------------------------------------------------------------------
ICON Bond Fund - Class C 10/21/02 0.47% N/A 5.12%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 3.38% N/A 5.75%
- -------------------------------------------------------------------------------------------
ICON Bond Fund - Class Z 5/6/04 1.30% N/A 4.02%
- -------------------------------------------------------------------------------------------
Lehman Brothers U.S. Universal Index 3.38% N/A 5.52%
- -------------------------------------------------------------------------------------------
</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.
VALUE OF A $10,000 INVESTMENT
through September 30, 2005
<Table>
<Caption>
LEHMAN BROTHERS U.S. UNIVERSAL
ICON BOND FUND - CLASS I INDEX
------------------------ ------------------------------
9/30/02 10000 10000
10053 10200
10245 10385
10854 10706
9/30/03 10820 10714
11070 10795
11422 11083
10984 10812
9/30/04 11406 11186
11527 11330
11404 11266
11744 11615
9/30/05 11528 11565
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund's Class I shares on the Class' inception
date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on
that date. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
Management Overview 11
Schedule of Investments
ICON Bond Fund
September 30, 2005
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
CORPORATE BONDS (50.2%)
$ 200,000 Ace Capital Trust
II,
9.70%, 04/01/30 $ 263,729
220,000 Ace INA Holdings,
Inc.,
8.88%, 08/15/29 289,755
400,000 Afc Capital Trust
I,
8.21%, 02/03/27 433,434
618,000 AK Steel Corp.,
7.88%, 02/15/09 599,460
275,000 Allied Waste North
America,
5.75%, 02/15/11 256,438
500,000 Ameritech Capital
Funding,
6.55%, 01/15/28 513,583
500,000 Amkor Technology,
Inc.,
9.25%, 02/15/08 468,749
400,000 Archer-Daniels-
Midland Co.,
8.38%, 04/15/17 506,276
112,000 Avnet, Inc.,
8.00%, 11/15/06 117,040
240,000 Axa SA,
8.60%, 12/15/30 315,959
410,000 Bell Atlantic
Maryland,
8.30%, 08/01/31 500,578
500,000 Bell Telephone Co.
of Pennsylvania,
6.00%, 12/01/28 486,608
500,000 Boeing Co.,
8.75%, 08/15/21 680,835
500,000 Boeing Corp.,
6.88%, 11/01/06 511,333
350,000 Capital One
Financial Corp.,
6.88%, 02/01/06 352,742
1,020,000 Cigna Corp.,
8.25%, 01/01/07 1,060,774
450,000 Cincinnati
Financial Corp.,
6.90%, 05/15/28 504,388
133,000 Citigroup, Inc.,
6.88%, 02/15/98 152,806
250,000 CNA Financial
Corp.,
7.25%, 11/15/23 264,275
400,000 Comcast Cable
Communications,
8.88%, 05/01/17 508,155
</Table>
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$ 700,000 Countrywide Home
Loan,
5.50%, 02/01/07 $ 707,613
114,000 Cox
Communications,
Inc.,
7.63%, 06/15/25 131,317
470,000 DaimlerChrysler NA
Holding,
4.13%, 03/07/07 465,085
1,250,000 DaimlerChrysler NA
Holding,
8.50%, 01/18/31 1,513,377
260,000 Dillards, Inc.,
9.50%, 09/01/09 280,800
675,000 Eastman Kodak Co.,
6.38%, 06/15/06 677,295
589,000 Fairfax Financial
Holdings,
7.75%, 04/26/12 565,440
500,000 Farmers Insurance
Capital Notes*,
7.20%, 07/15/48 515,585
500,000 Federal Express
Corp.,
7.60%, 07/01/97 596,165
6,000 First American
Financial,
7.55%, 04/01/28 6,879
760,000 First Data Corp.,
4.70%, 11/01/06 760,508
600,000 First Tennessee
Bank,
3.74%, 11/18/05 599,968
500,000 Ford Motor Credit
Co.,
7.38%, 02/01/11 478,253
283,000 Ford Motor Credit
Co.,
5.25%, 03/21/11 232,578
250,000 General Electric
Capital Corp.,
2.85%, 01/30/06 248,990
354,000 General Electric
Capital Corp.,
7.38%, 01/19/10 390,651
600,000 General Motors
Acceptance Corp.,
6.13%, 08/28/07 590,638
700,000 General Motors
Acceptance Corp.,
7.20%, 01/15/11 623,000
600,000 General Motors
Acceptance Corp.,
8.25%, 07/15/23 466,500
</Table>
12 Schedule of Investments
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$ 750,000 General Motors
Acceptance Corp.,
6.75%, 05/01/28 $ 519,375
665,000 Goldman Sachs
Group, Inc.,
5.15%, 01/15/14 665,888
900,000 GTE Corp.,
6.94%, 04/15/28 983,838
600,000 Halliburton Co.,
6.00%, 08/01/06 605,878
545,000 Hilton Hotels
Corp.,
7.50%, 12/15/17 622,040
670,000 Household Finance
Co.,
5.88%, 02/01/09 691,433
750,000 IBM Corp.,
2.38%, 11/01/06 733,961
725,000 International
Lease Finance
Corp.,
2.95%, 05/23/06 718,652
450,000 John Hancock*,
7.38%, 02/15/24 538,587
455,000 JP Morgan Chase &
Co.,
6.75%, 08/15/08 480,506
688,000 JP Morgan Chase
Capital,
5.88%, 03/15/35 673,453
1,055,000 Liberty Mutual
Group*,
6.50%, 03/15/35 978,434
220,000 Lion Connecticut
Holding,
7.25%, 08/15/23 260,080
675,000 Lowe's Cos., Inc.,
6.88%, 02/15/28 800,724
500,000 Marsh
Supermarkets,
Inc.,
8.88%, 08/01/07 488,750
550,000 Mediacom Broadband
Llc,
11.00%, 07/15/13 592,625
750,000 Morgan Stanley,
4.75%, 04/01/14 723,574
500,000 Motorola, Inc.,
6.50%, 11/15/28 549,010
400,000 New Jersey Bell
Telephone,
7.85%, 11/15/29 466,951
122,000 NLV Financial
Corp.*,
6.50%, 03/15/35 117,731
</Table>
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$ 500,000 Nortel Networks,
Ltd.,
6.13%, 02/15/06 $ 500,000
829,000 Owens Illinois,
Inc.,
8.10%, 05/15/07 849,725
400,000 Phillip Morris
Cos.,
7.65%, 07/01/08 427,354
500,000 Phillips
Petroleum,
8.75%, 05/25/10 584,611
400,000 PNC Funding Corp.,
5.25%, 11/15/15 403,766
300,000 Private Export
Funding, Series B,
6.49%, 07/15/07 309,671
750,000 Prudential
Financial, Inc.,
5.40%, 06/13/35 714,812
600,000 PSEG Power Corp.,
6.95%, 06/01/12 654,579
426,000 Qwest Corp.,
6.13%, 11/15/05 426,000
350,000 Royal Caribbean
Cruises,
6.75%, 03/15/08 360,938
382,000 SBC
Communications,
Inc.,
6.25%, 03/15/11 405,658
213,000 Semco Energy,
Inc.,
6.40%, 11/25/08 208,386
500,000 Sprint Capital
Corp.,
7.13%, 01/30/06 504,114
500,000 Target Corp.,
3.38%, 03/01/08 487,278
500,000 Tennessee Gas
Pipeline,
7.00%, 10/15/28 496,089
727,000 Textron Financial
Corp.,
2.75%, 06/01/06 719,766
500,000 Tyco
International,
Ltd.,
6.13%, 11/01/08 517,913
500,000 Tyson Foods, Inc.,
7.00%, 01/15/28 546,616
100,000 Union Carbide
Corp.,
6.79%, 06/01/25 100,000
250,000 Union Carbide
Corp.,
7.50%, 06/01/25 266,842
</Table>
Schedule of Investments 13
Schedule of Investments (continued)
ICON Bond Fund
September 30, 2005
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$ 550,000 Union Tank Car
Co.,
7.13%, 02/01/07 $ 567,559
500,000 United Rentals NA,
Inc.,
7.00%, 02/15/14 463,750
500,000 Wisconsin Power &
Light Co.,
7.00%, 06/15/07 517,361
-----------
TOTAL CORPORATE BONDS (COST
$42,318,312) 41,881,837
U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY
BONDS (34.4%)
700,000 Federal Farm
Credit Bank,
4.00%, 12/05/06 696,981
255,000 Federal Farm
Credit Bank,
5.90%, 08/04/08 264,796
750,000 Federal Home Loan
Bank,
3.35%, 03/03/06 748,007
1,400,000 Federal Home Loan
Bank,
3.50%, 03/21/06 1,395,746
1,000,000 Federal Home Loan
Bank,
4.00%, 02/12/10 978,838
450,000 Federal Home Loan
Bank,
5.88%, 02/15/11 475,694
405,000 Federal Home Loan
Bank,
4.80%, 03/19/13 399,290
1,850,000 Federal Home Loan
Bank,
5.38%, 08/15/18 1,942,962
750,000 Federal Home Loan
Bank,
5.50%, 02/14/20 740,966
500,000 Federal Home Loan
Bank,
5.50%, 03/03/20 493,566
1,150,000 Federal Home Loan
Mortgage Corp.,
5.13%, 07/15/12 1,183,301
1,500,000 Federal Home Loan
Mortgage Corp.,
5.05%, 02/28/13 1,490,447
457,000 Federal Home Loan
Mortgage Corp.,
5.00%, 09/15/14 452,084
</Table>
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$1,500,000 Federal Home Loan
Mortgage Corp.,
5.16%, 02/27/15 $ 1,489,814
400,000 Federal Home Loan
Mortgage Corp.,
5.00%, 12/15/15 393,673
550,000 Federal Home Loan
Mortgage Corp.,
5.00%, 09/09/16 538,997
975,000 Federal Home Loan
Mortgage Corp.,
5.25%, 07/27/17 962,129
370,000 Federal Home Loan
Mortgage Corp.,
5.00%, 10/29/13 366,622
1,000,000 Federal National
Mortgage
Association,
2.88%, 10/15/05 999,639
270,000 Federal National
Mortgage
Association,
3.10%, 07/28/08 257,816
1,500,000 Federal National
Mortgage
Association,
5.00%, 03/09/15 1,483,300
500,000 Federal National
Mortgage
Association,
5.00%, 04/17/15 494,087
280,000 Federal National
Mortgage
Association,
4.50%, 05/21/15 270,830
1,000,000 Federal National
Mortgage
Association,
5.00%, 07/09/18 955,446
475,000 Federal National
Mortgage
Association,
5.25%, 04/15/19 465,058
1,250,000 Federal National
Mortgage
Association,
7.13%, 01/15/30 1,623,715
800,000 Tennessee Valley
Authority,
5.63%, 01/18/11 839,407
1,000,000 U.S. Treasury,
1.63%, 10/31/05 998,511
</Table>
14 Schedule of Investments
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$1,500,000 U.S. Treasury,
2.00%, 05/15/06 $ 1,481,543
1,500,000 U.S. Treasury,
8.88%, 02/15/19 2,148,809
1,500,000 U.S. Treasury,
5.25%, 11/15/28 1,633,946
-----------
TOTAL U.S. GOVERNMENT AND U.S.
GOVERNMENT AGENCY BONDS
(COST $28,699,942) 28,666,020
COMMERCIAL PAPER (11.4%)
1,004,000 American General
Corp.,
3.81%, 11/14/05 999,331
1,000,000 Citibank Funding,
3.80%, 10/07/05 999,367
1,000,000 Citigroup, Inc.,
3.76%, 10/14/05 998,642
1,003,000 DaimlerChrysler
AG,
3.93%, 10/31/05 999,714
1,000,000 Ford Motor Co.,
4.17%, 10/06/05 999,421
1,000,000 Ford Motor Co.,
4.17%, 10/07/05 999,305
500,000 General Electric
Capital Corp.,
3.21%, 10/05/05 499,822
</Table>
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$1,000,000 General Electric
Capital Corp.,
3.72%, 10/21/05 $ 997,933
1,001,000 General Motors
Corp.,
4.20%, 10/13/05 999,599
1,006,000 HSBC Holdings Plc,
3.85%, 11/28/05 999,760
-----------
TOTAL COMMERCIAL PAPER
(COST $9,492,894) 9,492,894
FOREIGN GOVERNMENT BOND (0.6%)
500,000 Federal Republic
Of Brazil,
9.38%, 04/07/08 544,500
-----------
TOTAL FOREIGN GOVERNMENT BONDS
(COST $549,275) 544,500
-----------
TOTAL INVESTMENTS 96.6% (COST
$81,060,423) 80,585,251
OTHER ASSETS LESS LIABILITIES
3.4% 2,822,861
-----------
TOTAL NET ASSETS 100.0% $83,408,112
===========
</Table>
The accompanying notes are an integral part of the financial statements.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
* 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 obligation.
Schedule of Investments 15
Management Overview
ICON Core Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 98.3%
Top 10 Equity Holdings 15,7%
Number of Stocks 104
Short-Term Investments 2.0%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
Ultra Petroleum Corp. 2.0%
Grant Prideco, Inc. 1.7%
CIGNA Corp. 1.7%
America Movil S.A. De C.V. - ADR 1.7%
Labor Ready, Inc. 1.6%
Patterson-UTI Energy, Inc. 1.5%
Nabors Industries, Ltd. 1.5%
National-OilWell Varco, Inc. 1.4%
WellChoice, Inc. 1.3%
Express Scripts, Inc. 1.3%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. For the fiscal year ended September 30, 2005, the ICON Core Equity Fund
returned 18.47% for Class I shares, 17.49% for Class C shares and 18.22% for
Class Z shares, outperforming the 13.45% return of the S&P 1500 Index, the
Fund's benchmark, over the same period. Total returns for other periods as of
September 30, 2005 appear on page 21.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The Fund's ability to capture upside in top-performing industry groups while
minimizing the impact of prospective detractors played a key role in
generating favorable returns. Given the overhang of turbulent markets and an
absence of sustained leadership, a disciplined focus on those industries our
analysis indicated would offer the most attractive combination of value and
relative strength proved effective in helping the Fund finish the fiscal year
ahead of the broader averages.
A strong tilt toward economically sensitive industries resulted in relative
outperformance during a sharp fourth-quarter upturn. However, as the cyclical
theme weakened during the first quarter of 2005, the Fund lost ground and was
repositioned to include more defensive-oriented industries. This positioning
proved favorable during the second half of the period, as increased exposure
to the Energy sector boosted returns.
With attractive valuations across a wide spectrum of industries, the Fund
maintained exposure to all of the nine economic sectors. Each of these
contributed to the Fund's positive return, as investors appeared to recognize
the intrinsic worth indicated by our valuation model.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as we believe these measures do not adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of valuation with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the broader market.
16 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
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Despite strong underlying fundamentals at the company level, investors
grappled with a host of distractions, most notably surging oil prices and the
threat of higher inflation. At the same time, the rekindling of inflationary
pressures raised concerns that the Federal Reserve's protracted policy of
measured monetary tightening might ultimately constrict economic growth. This
convergence of conflicting fears affected on investor sentiment throughout
the period, culminating in a mid-April calendar year low for the benchmark
S&P 1500 Index.
As less disciplined investors appeared to give up on the domestic equity
market, ICON's value-to-price ratio reached its calendar year high,
indicating that stocks were priced approximately 25% below our then current
estimates of fair value. While this metric reflected the extreme pessimism
that existed at the time, interest rates hovered near 50-year lows, oil was
well below its inflation-adjusted peak, and reported earnings as well as
forward expectations remained robust. Equity prices subsequently rallied as
market fundamentals seemingly overcame the human emotion.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Leading industry contributors represented a diverse group and included
managed health care, oil & gas exploration & production, wireless
telecommunication services, health care services, human resource & employment
services, and construction materials. In contrast, industries such as
building products, leisure products, insurance brokers, specialty chemicals,
motorcycle manufacturers, and healthcare equipment were all meaningful
detractors of Fund performance.
On a relative basis, the Fund's valuation-related overweight in the managed
health care industry generated the largest positive impact on performance
versus the benchmark. Meanwhile, the Fund's lack of exposure to the
integrated oil & gas industry, which ICON's analysis deemed to be overvalued,
produced the largest negative effect.
Individual stocks that enhanced Fund performance included independent
exploration and production concern Ultra Petroleum Corp., which recorded a
company-best triple-digit increase in second-quarter earnings. Wireless
communications provider America Movil, S.A. de C.V. also advanced, having
expanded into 13 countries and acquiring 66 million subscribers in just over
five years of operations. Additionally, temporary staffing firm Labor Ready
Inc. relied on revenue gains and strategic acquisitions to grow net income
and gross margins, while managed healthcare provider CIGNA Corp. benefited
from favorable business trends in HMO stocks.
Management Overview 17
Management Overview (continued)
ICON Core Equity Fund
Conversely, building product manufacturers Griffon Corp. and ElkCorp worked
against Fund performance. Griffon posted significant earnings declines
stemming from higher raw material costs, while ElkCorp struggled with
production delays and higher operating costs. Elsewhere, motorsports
collectible and apparel marketer Action Performance Companies Inc. saw
revenue reductions in its mass merchandiser and wholesale markets.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET?
A. With widespread value and attractive company fundamentals still present in
the domestic equity market, we believe stocks have considerable upside in a
move toward our analysis of fair value. As we head into the new fiscal year,
our quantitative work indicates that industries standing to benefit from a
worldwide economic expansion remain undervalued. Accordingly, we will monitor
this broad theme closely, looking for pullback to further concentrate in
these industries.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund's ability to capture upside in top-performing industries while
minimizing the impact of detractors played a key role in generating favorable
returns.
- - Leading industry contributors represented a diverse group and included
managed health care, oil & gas exploration & production, wireless
telecommunications services, health care services, human resource &
employment services, and construction materials.
- - Industries such as building products, leisure products, insurance brokers,
specialty chemicals, motorcycle manufacturers, and health care equipment were
all meaningful detractors of Fund performance.
- - Individual stocks that enhanced Fund performance included Ultra Petroleum
Corp., America Movil, S.A. de C.V., Labor Ready Inc., and CIGNA Corp.
- - Company holdings that worked against Fund performance included Griffon Corp.,
ElkCorp and Action Performance Companies Inc.
18 Management Overview
SECTOR COMPOSITION
September 30, 2005
<Table>
Healthcare 19.8%
Industrials 16.3%
Financial 12.5%
Energy 11.8%
Information Technology 9.9%
Materials 9.5%
Consumer Discretionary 8.2%
Telecommunication and
Utilities 7.7%
Leisure and Consumer Staples 2.6%
</Table>
Percentages are based upon net assets.
Management Overview 19
Management Overview (continued)
ICON Core Equity Fund
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Managed Health Care 6.5%
Health Care Distributors 4.6%
Oil & Gas Equipment & Services 4.6%
Health Care Services 4.4%
Oil & Gas Drilling 4.2%
Steel 3.6%
Construction & Farm Machinery & Heavy
Trucks 3.5%
Biotechnology 3.3%
Life & Health Insurance 3.3%
Oil & Gas Exploration & Production 3.0%
Human Resource & Employment Services 2.7%
Construction Materials 2.4%
Investment Banking & Brokerage 2.4%
Multi-Line Insurance 2.4%
Communications Equipment 2.2%
Aerospace & Defense 2.1%
Catalog Retail 2.1%
Computer Storage & Peripherals 2.1%
Trading Companies & Distributors 2.0%
Wireless Telecommunication Services 2.0%
Diversified Metals & Mining 1.9%
Water Utilities 1.9%
Home Building 1.8%
Marine 1.8%
Railroads 1.8%
Internet Software Services 1.6%
Property & Casualty Insurance 1.6%
Semiconductors 1.6%
Apparel Retail 1.5%
Asset Management & Custody Banks 1.5%
Fertilizers & Agricultural Chemicals 1.5%
Consumer Finance 1.4%
Electric Utilities 1.4%
Multi-Utilities 1.3%
Technology Distributors 1.3%
Health Care Facilities 1.2%
Building Products 1.1%
Home Improvement Retail 1.1%
Food Distributors 1.0%
Integrated Telecommunication Services 1.0%
IT Consulting & Other Services 1.0%
Airlines 0.9%
Apparel Accessories & Luxury Goods 0.9%
Drug Retail 0.8%
Food Retail 0.8%
Computer & Electronics Retail 0.7%
Commercial Printing 0.5%
</Table>
20 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class I 10/12/00 18.47% N/A 9.20%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 1.13%
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class C 11/28/00 17.49% N/A 7.27%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 0.89%
- -------------------------------------------------------------------------------------------
ICON Core Equity Fund - Class Z 5/6/04 18.22% N/A 17.42%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 10.21%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
The Since Inception performance results for Class C shares include returns for
certain time periods that were restated as of June 8, 2004. Class Z shares are
available only to institutional investors.
VALUE OF A $10,000 INVESTMENT
through September 30, 2005
[LINE CHART]
<Table>
<Caption>
ICON CORE EQUITY FUND - CLASS I S&P 1500 INDEX
------------------------------- --------------
10/12/00 10000 10000
11850 10031
10810 8861
12680 9444
9/30/01 10040 8037
12456 8963
13234 9049
12048 7887
9/30/02 9717 6525
9461 7054
8715 6818
10515 7890
9/30/03 11374 8135
12571 9140
13001 9336
13072 9498
9/30/04 13072 9320
14556 10218
14167 10015
14659 10187
9/30/05 15487 10574
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund's Class I shares on the Class' inception
date of 10/12/00 to a $10,000 investment made in an unmanaged securities index
on that date. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
Management Overview 21
Schedule of Investments
ICON Core Equity Fund
September 30, 2005
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
COMMON STOCKS (98.3%)
28,800 A.G. Edwards,
Inc. $ 1,261,728
32,300 AFLAC, Inc. 1,463,190
64,600 Agrium, Inc. 1,419,262
112,200 America Movil
S.A. De C.V. -
ADR 2,953,104
34,400 American
Financial
Corp.(a) 1,415,216
34,700 American
Financial Group,
Inc. 1,177,371
61,400 American States
Water Co. 2,054,444
26,500 AmerisourceBergen
Corp. 2,048,450
23,400 AmerUs Group Co. 1,342,458
35,700 Arrow
Electronics,
Inc.(a) 1,119,552
49,200 Avnet, Inc.(a) 1,202,940
27,450 Best Buy Co.,
Inc. 1,194,899
30,800 California Water
Service Group 1,268,960
39,000 Caremark Rx,
Inc.(a) 1,947,270
32,600 Celgene Corp.(a) 1,770,832
24,330 Cemex S.A. De
C.V. - ADR 1,272,459
25,500 CIGNA Corp. 3,005,430
62,300 Coldwater Creek,
Inc.(a) 1,571,206
54,100 Community Health
Systems, Inc.(a) 2,099,621
32,400 Companhia Vale do
Rio Doce - ADR 1,421,064
19,900 Coventry Health
Care, Inc.(a) 1,711,798
89,200 CP Ships, Ltd. 1,902,636
44,700 CSX Corp. 2,077,656
21,000 Cummins, Inc. 1,847,790
50,200 CVS Corp. 1,456,302
34,500 D.R. Horton, Inc. 1,249,590
62,800 Digene Corp.(a) 1,789,800
13,500 Eagle Materials,
Inc. 1,638,495
60,600 El Paso Electric
Co.(a) 1,263,510
17,400 ElkCorp 622,398
</Table>
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
56,600 Energy Partners,
Ltd.(a) $ 1,767,052
36,000 Express Scripts,
Inc.(a) 2,239,200
67,400 Falconbridge,
Ltd. 1,800,928
26,700 Fastenal Co. 1,631,103
29,000 First American
Corp. 1,324,430
44,900 First Cash
Financial
Services, Inc.(a) 1,181,768
23,900 FirstEnergy Corp. 1,245,668
32,300 Freeport-McMoran
Copper & Gold,
Inc. 1,569,457
6,300 Google, Inc.(a) 1,993,698
74,400 Grant Prideco,
Inc.(a) 3,024,360
23,100 Griffon Corp.(a) 568,260
51,900 HCC Insurance
Holdings, Inc. 1,480,707
42,800 Health Net,
Inc.(a) 2,025,296
32,400 Helmerich &
Payne, Inc. 1,956,636
44,500 Henry Schein,
Inc.(a) 1,896,590
46,900 Investment
Technology Group,
Inc.(a) 1,388,240
16,100 j2 Global
Communications,
Inc.(a) 650,762
20,100 John H. Harland
Co. 892,440
29,700 Jos. A. Bank
Clothiers,
Inc.(a) 1,283,634
38,800 Joy Global, Inc. 1,957,848
24,100 Kirby Corp.(a) 1,191,263
20,900 L-3
Communications
Holdings, Inc. 1,652,563
105,900 Labor Ready,
Inc.(a) 2,716,335
20,900 Lafarge North
America, Inc. 1,413,049
13,000 Lehman Brothers
Holding, Inc. 1,514,240
32,400 Lockheed Martin
Corp. 1,977,696
43,400 Logitech
International
S.A. - ADR(a) 1,768,550
</Table>
22 Schedule of Investments
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
30,300 Lowe's Cos., Inc. $ 1,951,320
17,800 Marvell
Technology Group,
Ltd.(a) ) 820,758
44,100 McKesson HBOC,
Inc. 2,092,545
31,000 MedcoHealth
Solutions,
Inc.(a) 1,699,730
46,300 Mellon Financial
Corp. 1,480,211
27,800 MetLife, Inc. 1,385,274
64,600 Monster
Worldwide,
Inc.(a) 1,983,866
58,100 MSC Industrial
Direct Co.,
Inc. - Class A 1,927,177
35,000 Nabors
Industries,
Ltd.(a) 2,514,050
36,900 National-OilWell
Varco, Inc.(a) 2,428,020
74,500 NETGEAR, Inc.(a) 1,792,470
36,200 NICE Systems,
Ltd. - ADR (a) 1,635,516
35,700 Nokia Corp. - ADR 603,687
25,200 Norfolk Southern
Corp. 1,022,112
29,200 Omnicare, Inc. 1,641,916
72,500 Patterson-UTI
Energy, Inc. 2,615,800
55,900 Philippine Long
Distance
Telephone Co.-
ADR 1,702,155
31,800 Polo Ralph Lauren
Corp. 1,599,540
23,900 Prudential
Financial, Inc. 1,614,684
134,400 PSS World
Medical, Inc.(a) 1,792,896
23,900 Public Service
Enterprise Group,
Inc. 1,538,204
45,900 Pulte Homes, Inc. 1,970,028
39,800 Reliance Steel &
Aluminum Co. 2,106,614
70,900 Rimage Corp.(a) 1,890,903
53,900 Safeway, Inc. 1,379,840
57,500 Satyam Computer
Services, Ltd. -
ADR 1,737,650
</Table>
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
29,100 Selective
Insurance Group,
Inc. $ 1,422,990
15,600 Simpson
Manufacturing
Co., Inc. 610,584
61,000 SkyWest, Inc. 1,636,020
24,200 Sprint Corp. (FON
Group) 575,476
21,800 State Street
Corp. 1,066,456
40,900 Steel Dynamics,
Inc. 1,388,964
48,100 Steel
Technologies,
Inc. 1,247,233
50,000 Superior Energy
Services, Inc.(a) 1,154,500
40,100 TECO Energy, Inc. 722,602
55,100 Texas
Instruments, Inc. 1,867,890
39,900 The Manitowoc
Co., Inc. 2,004,975
13,700 The Scotts
Miracle-Gro Co. 1,204,641
73,900 The Sportsman's
Guide, Inc.(a) 2,017,470
61,200 Ultra Petroleum
Corp.(a) 3,481,056
49,400 United Natural
Foods, Inc.(a) 1,746,784
31,000 United
Therapeutics
Corp.(a) 2,163,800
37,700 UnitedHealth
Group, Inc. 2,118,740
44,800 Urban Outfitters,
Inc.(a) 1,317,120
20,000 Weatherford
International,
Ltd.(a) 1,373,200
30,400 WellChoice,
Inc.(a) 2,307,359
45,400 World Acceptance
Corp.(a) 1,153,614
------------
TOTAL COMMON STOCKS (COST
$145,034,270) 170,189,644
</Table>
Schedule of Investments 23
Schedule of Investments (continued)
ICON Core Equity Fund
September 30, 2005
<Table>
<Caption>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (2.0%)
$3,483,868 Brown Brothers
Harriman Time
Deposit, 3.24%,
10/01/05# $ 3,483,868
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $3,483,868) 3,483,868
------------
TOTAL INVESTMENTS 100.3% (COST
$148,518,138) 173,673,512
LIABILITIES LESS OTHER ASSETS
(0.3)% (583,372)
------------
TOTAL NET ASSETS 100.0% $173,090,140
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
24 Schedule of Investments
Management Overview
ICON Covered Call Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 105.6%
Top 10 Equity Holdings 17.1%
Number of Stocks 109
Short-Term Investments 0.4%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
Ultra Petroleum Corp. 2.2%
America Movil S.A. De C.V. - ADR 1.9%
Eagle Materials, Inc. 1.8%
Pulte Homes, Inc. 1.8%
CIGNA Corp. 1.7%
Companhia Vale do Rio Doce - ADR 1.6%
Patterson-UTI Energy, Inc. 1.6%
National-OilWell Varco, Inc. 1.5%
Universal Forest Products, Inc. 1.5%
Grant Prideco, Inc. 1.5%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. For the fiscal year ended September 30, 2005, the ICON Covered Call Fund
returned 9.21% for Class I shares, 8.31% for Class C shares and 9.42% for
Class Z shares, underperforming the 13.45% return of its benchmark, the S&P
1500 Index, over the same period. Total returns for other periods as of
September 30, 2005 appear on page 30.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Conflicting markets served to neutralize the Fund's call writing strategy
during the reporting period and consequently worked against relative
performance. When stocks advanced, as they did in broad fashion over the
course of the fiscal year, the Fund was unable to keep pace as calls written
against the underlying securities restricted upside potential.
However, as stocks experienced sharp, volatile swings, as was also the case
during the fiscal year, implied or expected volatility as measured by the
CBOE Market Volatility Index (VIX) registered well below its 15-year
historical average. Since lower expected volatility typically results in
lower option premiums, income levels, which were already at a near-term
bottom, fell to a 15-year trough, further limiting the Fund's return
potential. Even so, the Fund's downside cushion remained intact, thereby
reducing overall volatility versus the benchmark.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as we believe these measures do not adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of value with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the broader market.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Investors faced myriad distractions during the period as surging oil prices
and mounting inflation threats overshadowed strong underlying fundamentals at
the company and macroeconomic level. Moreover, the rekindling of inflationary
pressures raised concerns that the Federal Reserve would overshoot neutral
targets for monetary tightening and ultimately constrict economic growth.
Management Overview 25
Management Overview (continued)
ICON Covered Call Fund
As conflicting fears intensified throughout the fiscal year, investor
sentiment wavered, culminating in a mid-April calendar year low for the
benchmark S&P 1500 Index. While our valuation metrics reflected this
heightened pessimism, in reality, interest rates hovered near 50-year lows,
oil was well below its inflation-adjusted peak, and earnings expectations
remained robust. Equity prices subsequently rallied as emotion seemingly gave
way to fundamentals.
Given historically low levels of implied volatility and call option premiums,
the Fund continued to write shorter-dated options (one to two months) rather
than lock in the relatively low call premiums offered by longer-dated options
(three to six months). By doing so, the Fund focused on exploiting the rapid
rate of decay prior to expiration, while exercising patience for an eventual
upward regression in premium levels. Although this tactic was in keeping with
our valuation-driven methodology, with premiums at historical lows, it served
to temper Fund performance.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. From a broad sector perspective, Healthcare and Industrials contributed the
most to Fund performance, while Leisure and Consumer Staples and Consumer
Discretionary added the least. However, each of the nine sectors we track
contributed positively to overall Fund performance, as stocks continued in
their broad but often erratic rise that began in March 2003.
Of the leading industry contributors to Fund performance, managed health care
was the most heavily weighted during the period, reportedly benefiting from a
positive outlook for continued earnings-per-share growth. Oil & gas
exploration & production reflected longstanding strength in energy prices,
while construction materials, a top-performing industry for much of the
period, moved higher as a result of Hurricane Katrina.
Conversely, major industry detractors included steel, apparel retail and
computer hardware. Steel stocks languished in conjunction with moderating
demand before rebounding in the aftermath of Hurricane Katrina. Apparel
retail experienced selling pressure on concerns that higher gas prices would
curb consumer spending. Meanwhile, computer hardware faced increasing
headwinds as competitive pricing pressures accelerated.
Turning to individual stocks, primary contributors to Fund returns included
independent oil & gas developer Ultra Petroleum Corp., which recorded a
company-best triple-digit increase in quarterly earnings. Wireless
communications provider America Movil S.A. de C.V. also advanced, having
acquired 66 million subscribers in 13 countries in its first five years of
operation. Additionally, managed health care group CIGNA Corp. benefited from
favorable trends in HMO stocks, while construction products company Eagle
Materials Inc. saw increased revenues on higher demand.
26 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
In contrast, mini-mill steel producer Steel Dynamics Inc. encountered rising
input costs and pricing cuts as inventories exceeded demand. Diagnostic
Products Corp. also retreated when the maker of immunodiagnostic systems
posted lower-than-expected earnings on disappointing instrument revenue.
Elsewhere, life and health insurer UICI tumbled after announcing that it had
settled class action suits challenging its relationship with member
associations. Although the Fund continued to hold Steel Dynamics on improving
fundamentals, Diagnostic Products and UICI were sold as relative strength
declined.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET?
A. Despite lingering macroeconomic concerns, our analysis indicates that
investment fundamentals continue to look promising for the domestic equity
market. With stocks still trading at a discount to our fair value estimates,
we believe markets are poised to trend higher, particularly within those
industries that stand to benefit from increasing demands on energy, raw
materials and heavy equipment. As these groups constitute some of the
strongest and most undervalued in the market, we will continue to monitor
them closely, looking for pullbacks to further concentrate our positions.
At the same time, we cannot predict if and when the historically low option
premiums that marked the fiscal year will revert to more normal levels. For
that reason, we will keep a close eye on premium levels and will look to
write longer-dated options should conditions improve.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund's investment strategy somewhat hampered relative performance, as
calls written against the underlying securities restricted upside potential
in a rising market.
- - Lower implied volatility sent option premiums below their 15-year historical
average, limiting the Fund's premium yield and return potential.
- - Industries that contributed to performance included managed health care, oil
& gas exploration & production and construction materials, while steel,
apparel retail and computer hardware detracted from Fund performance.
- - Primary individual stocks that aided performance included Ultra Petroleum
Corp, America Movil S.A. de C.V., CIGNA Corp., and Eagle Materials Inc.
- - Stocks that detracted from Fund performance included Steel Dynamics Inc.,
Diagnostic Products Corp. and UICI.
Management Overview 27
Management Overview (continued)
ICON Covered Call Fund
SECTOR COMPOSITION
September 30, 2005
<Table>
Industrials 19.8%
Healthcare 16.0%
Energy 15.9%
Materials 13.4%
Telecommunication and Utilities 9.9%
Financial 9.7%
Information Technology 9.6%
Consumer Discretionary 8.1%
Leisure and Consumer Staples 3.2%
</Table>
Percentages are based upon net assets.
28 Management Overview
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Oil & Gas Equipment & Services 5.6%
Construction Materials 5.4%
Managed Health Care 5.0%
Steel 4.9%
Oil & Gas Drilling 4.4%
Construction & Farm Machinery & Heavy Trucks 4.3%
Oil & Gas Exploration & Production 3.8%
Biotechnology 3.7%
Railroads 3.4%
Health Care Services 3.1%
Trading Companies & Distributors 3.1%
Diversified Metals & Mining 3.0%
Multi-Line Insurance 2.8%
Multi-Utilities 2.7%
Life & Health Insurance 2.6%
Wireless Telecommunication Services 2.6%
Electric Utilities 2.4%
Building Products 2.3%
Home Building 2.3%
Construction & Engineering 1.9%
Internet Software Services 1.9%
Food Distributors 1.8%
Investment Banking & Brokerage 1.8%
Semiconductors 1.8%
Human Resource & Employment Services 1.7%
Gas Utilities 1.6%
IT Consulting & Other Services 1.6%
Aerospace & Defense 1.5%
Health Care Distributors 1.5%
Communications Equipment 1.3%
Property & Casualty Insurance 1.3%
Data Processing & Outsourced Services 1.2%
Application Software 1.1%
Catalog Retail 1.1%
Consumer Electronics 1.1%
Consumer Finance 1.1%
Apparel Accessories & Luxury Goods 1.0%
Computer & Electronics Retail 1.0%
Integrated Oil & Gas 1.0%
Coal & Consumable Fuels 0.9%
Health Care Equipment 0.9%
Home Improvement Retail 0.9%
Marine 0.9%
Apparel Retail 0.8%
Food Retail 0.8%
Health Care Supplies 0.7%
Pharmaceuticals 0.7%
Electronic Equipment Manufacturers 0.6%
Health Care Facilities 0.6%
Independent Power Producers & Energy Traders 0.6%
Tobacco 0.6%
Airlines 0.5%
Trucking 0.3%
Computer Storage & Peripherals 0.1%
</Table>
Management Overview 29
Management Overview (continued)
ICON Covered Call Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class I 9/30/02 9.21% N/A 14.39%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 17.46%
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class C 11/21/02 8.31% N/A 11.41%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 13.90%
- -------------------------------------------------------------------------------------------
ICON Covered Call Fund - Class Z 5/6/04 9.42% N/A 9.04%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 10.21%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
The Adviser has agreed to limit certain Fund expenses; without these
limitations, returns would have been lower. The limitation provisions may be
terminated in the future. Class Z shares are available only to institutional
investors.
VALUE OF A $10,000 INVESTMENT
through September 30, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON COVERED CALL FUND - CLASS I S&P 1500 INDEX
-------------------------------- --------------
9/30/02 10000 10000
10490 10811
10050 10450
11770 12093
9/30/03 12400 12469
13541 14009
13799 14308
13944 14557
9/30/04 13706 14285
14568 15661
14416 15349
14470 15613
9/30/05 14966 16206
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund's Class I shares on the Class' inception
date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on
that date. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
30 Management Overview
Schedule of Investments
ICON Covered Call Fund
September 30, 2005
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------
COMMON STOCKS (105.6%)
6,200 A.G. Edwards,
Inc.(x) $ 271,622
7,800 Aetna, Inc.(x) 671,892
12,500 AFLAC, Inc.(x) 566,250
4,500 Altria Group,
Inc.(x) 331,695
41,700 America Movil S.A.
De C.V. - ADR(x) 1,097,544
7,300 American Electric
Power Co., Inc.(x) 289,810
7,700 Apache Corp.(x) 579,194
8,500 AstraZeneca Plc -
ADR(x) 400,350
12,900 Best Buy Co.,
Inc.(x) 561,537
20,500 BHP Billiton Ltd. -
ADR(x) 700,690
13,200 Burlington Northern
Santa Fe Corp.(x) 789,360
8,300 CACI International,
Inc. - Class
A(a)(x) 502,980
8,200 Capital One
Financial Corp.(x) 652,064
8,800 Caterpillar,
Inc.(x) 517,000
14,700 Celgene Corp.(a)(x) 798,504
15,500 Cemex S.A. De
C.V. - ADR(x) 810,650
21,000 Ceradyne,
Inc.(a)(x) 770,280
8,300 CIGNA Corp.(x) 978,238
3,800 CNF Transportation,
Inc.(x) 199,500
8,300 Cognizant
Technology
Solutions
Corp.(a)(x) 386,697
24,300 Coldwater Creek,
Inc.(a)(x) 612,846
21,400 Companhia Vale do
Rio Doce - ADR(x) 938,604
6,000 Constellation
Energy Group,
Inc.(x) 369,600
8,750 Coventry Health
Care, Inc.(a)(x) 752,675
24,800 CP Ships Ltd.(x) 528,984
12,000 CSX Corp.(x) 557,760
6,700 Cummins, Inc.(x) 589,533
7,600 D.R. Horton,
Inc.(x) 275,272
17,500 Digene Corp.(a)(x) 498,750
9,100 Digital River,
Inc.(a)(x) 317,135
8,800 Eagle Materials,
Inc.(x) 1,068,056
13,300 ElkCorp(x) 475,741
6,400 Equitable
Resources, Inc.(x) 249,984
</Table>
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------
8,500 Fastenal Co.(x) $ 519,265
12,100 FirstEnergy
Corp.(x) 630,652
3,700 FPL Group, Inc.(x) 176,120
11,200 Freeport-McMoran
Copper & Gold,
Inc.(x) 544,208
24,500 Gevity HR, Inc.(x) 667,380
3,200 Goodrich Corp.(x) 141,888
1,100 Google, Inc.(a)(x) 348,106
21,300 Grant Prideco,
Inc.(a)(x) 865,845
17,500 Granite
Construction,
Inc.(x) 669,200
6,100 Harman
International
Industries, Inc.(x) 623,847
15,200 Headwaters,
Inc.(a)(x) 568,480
9,500 Health Net,
Inc.(a)(x) 449,540
4,700 Henry Schein,
Inc.(a)(x) 200,314
8,000 International
Rectifier
Corp.(a)(x) 360,640
10,800 j2 Global
Communications,
Inc.(a)(x) 436,536
6,000 Jacobs Engineering
Group, Inc.(a)(x) 404,400
4,600 Jos. A. Bank
Clothiers,
Inc.(a)(x) 198,812
15,000 Joy Global, Inc.(x) 756,900
17,600 Labor Ready,
Inc.(a)(x) 451,440
10,300 Lafarge North
America, Inc.(x) 696,383
3,200 Lehman Brothers
Holding, Inc.(x) 372,736
19,400 LifeCell
Corp.(a)(x) 419,622
8,800 Loews Corp.(x) 813,208
7,500 Lone Star
Technologies,
Inc.(a)(x) 416,925
8,200 Lowe's Cos.,
Inc.(x) 528,080
5,431 Marathon Oil
Corp.(x) 374,359
14,300 McKesson HBOC,
Inc.(x) 678,535
13,600 MedcoHealth
Solutions,
Inc.(a)(x) 745,688
12,100 MetLife, Inc.(x) 602,943
11,600 Nabors Industries,
Ltd.(a)(x) 833,228
14,000 Nam Tai
Electronics,
Inc. - ADR(x) 356,020
11,700 Nash Finch Co.(x) 493,623
13,600 National-OilWell
Varco, Inc.(a)(x) 894,880
30,200 NETGEAR, Inc.(a)(x) 726,612
</Table>
Schedule of Investments 31
Schedule of Investments (continued)
ICON Covered Call Fund
September 30, 2005
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------
7,000 Newfield
Exploration
Co.(a)(x) $ 343,700
4,900 NII Holdings,
Inc. - Class
B(a)(x) 413,805
14,800 Norfolk Southern
Corp.(x) 600,288
11,300 Omnicare, Inc.(x) 635,399
15,000 Oshkosh Truck
Corp.(x) 647,400
25,200 Patterson-UTI
Energy, Inc.(x) 909,216
6,200 Peabody Energy
Corp.(x) 522,970
17,200 Performance Food
Group Co.(a)(x) 542,832
2,500 PG&E Corp.(x) 98,125
11,600 Polo Ralph Lauren
Corp.(x) 583,480
8,300 PPL Corp. 268,339
5,500 Prudential
Financial, Inc.(x) 371,580
7,200 Psychiatric
Solutions,
Inc.(a)(x) 390,456
12,600 Public Service
Enterprise Group,
Inc.(x) 810,936
24,100 Pulte Homes,
Inc.(x) 1,034,372
7,700 Questar Corp.(x) 678,524
14,400 Reliance Steel &
Aluminum Co.(x) 762,192
18,200 Resources
Connection,
Inc.(a)(x) 539,266
11,800 Respironics,
Inc.(a)(x) 497,724
3,200 Rio Tinto
Plc - ADR(x) 525,760
18,700 Safeway, Inc.(x) 478,720
900 SanDisk Corp.(a)(x) 43,425
15,200 Selective Insurance
Group, Inc.(x) 743,280
14,000 Sempra Energy(x) 658,840
10,400 SkyWest, Inc.(x) 278,928
28,800 Sonic
Solutions(a)(x) 619,200
20,700 Steel Dynamics,
Inc.(x) 702,972
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
17,100 Steel Technologies,
Inc. $ 443,403
3,500 Suncor Energy,
Inc.(x) 211,855
32,800 Superior Energy
Services,
Inc.(a)(x) 757,352
19,900 Texas Instruments,
Inc.(x) 674,610
3,500 The Goldman Sachs
Group, Inc.(x) 425,530
10,800 The Hartford
Financial Services
Group, Inc.(x) 833,436
22,400 Ultra Petroleum
Corp.(a)(x) 1,274,112
14,900 Unit Corp.(a)(x) 823,672
9,400 United Surgical
Partners
International,
Inc.(a)(x) 367,634
11,700 United Therapeutics
Corp.(a)(x) 816,660
15,300 Universal Forest
Products, Inc.(x) 876,996
10,000 Urban Outfitters,
Inc.(a)(x) 294,000
13,300 W-H Energy
Services,
Inc.(a)(x) 431,186
13,700 Watsco, Inc.(x) 727,607
15,500 Wesco
International,
Inc.(a)(x) 524,985
-----------
TOTAL COMMON STOCKS
(COST $51,489,306) 61,261,979
SHORT-TERM INVESTMENTS (0.4%)
$225,939 Brown Brothers
Harriman Time
Deposit, 3.24%,
10/01/05(#) 225,939
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $225,939) 225,939
-----------
TOTAL INVESTMENTS 106.0%
(COST $51,715,245) 61,487,918
LIABILITIES LESS
OTHER ASSETS (6.0)% (3,485,835)
-----------
TOTAL NET ASSETS 100.0% $58,002,083
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
x Portion or all of this security is pledged as collateral for call options
written.
32 Schedule of Investments
Schedule of Written Options
ICON Covered Call Fund
September 30, 2005
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Aetna, Inc.
Expiration October
2005 Exercise
Price $85.00 39 $ 9,945
Expiration November
2005 Exercise
Price $85.00 39 15,990
AFLAC, Inc.
Expiration November
2005 Exercise
Price $45.00 125 19,063
A.G. Edwards, Inc.
Expiration November
2005 Exercise
Price $45.00 62 5,425
Altria Group, Inc.
Expiration October
2005 Exercise
Price $70.00 23 10,810
Expiration December
2005 Exercise
Price $75.00 22 6,930
America Movil S.A. de
C.V. - ADR
Expiration October
2005 Exercise
Price $25.00 279 46,035
Expiration November
2005 Exercise
Price $25.00 138 30,015
American Electric
Power, Inc.
Expiration November
2005 Exercise
Price $40.00 36 2,700
Expiration November
2005 Exercise
Price $37.50 37 9,158
Apache Corp.
Expiration January
2006 Exercise
Price $75.00 52 30,160
Expiration November
2005 Exercise
Price $80.00 25 4,688
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
AstraZeneca Plc
Expiration October
2005 Exercise
Price $45.00 11 $ 2,750
Expiration October
2005 Exercise
Price $50.00 43 753
Expiration November
2005 Exercise
Price $45.00 31 9,533
Best Buy Co., Inc.
Expiration November
2005 Exercise
Price $42.50 57 14,820
Expiration December
2005 Exercise
Price $47.50 72 8,640
BHP Billiton Ltd.
Expiration November
2005 Exercise
Price $35.00 205 23,063
Burlington Northern
Santa Fe Corp.
Expiration January
2006 Exercise
Price $60.00 66 22,110
Expiration November
2005 Exercise
Price $60.00 66 14,520
CACI International,
Inc.
Expiration October
2005 Exercise
Price $60.00 58 13,195
Expiration December
2005 Exercise
Price $65.00 25 4,750
Capital One Financial
Corp.
Expiration October
2005 Exercise
Price $80.00 50 8,375
Expiration October
2005 Exercise
Price $85.00 16 400
Expiration November
2005 Exercise
Price $80.00 16 4,120
</Table>
Schedule of Written Options 33
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2005
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Caterpillar, Inc.
Expiration October
2005 Exercise
Price $60.00 60 $ 5,700
Expiration November
2005 Exercise
Price $57.50 28 8,400
Celgene Corp.
Expiration January
2006 Exercise
Price $60.00 65 25,350
Expiration October
2005 Exercise
Price $55.00 82 21,935
Cemex SA - ADR
Expiration January
2006 Exercise
Price $55.00 16 4,160
Expiration November
2005 Exercise
Price $50.00 39 15,015
Expiration November
2005 Exercise
Price $55.00 100 14,500
Ceradyne, Inc.
Expiration December
2005 Exercise
Price $35.00 170 67,150
Expiration December
2005 Exercise
Price $40.00 40 7,100
CIGNA Corp.
Expiration October
2005 Exercise
Price $115.00 83 36,105
CNF, Inc.
Expiration October
2005 Exercise
Price $50.00 19 6,270
Expiration November
2005 Exercise
Price $47.50 19 10,735
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Cognizant Technology
Solutions Corp.
Expiration October
2005 Exercise
Price $45.00 41 $ 10,148
Expiration October
2005 Exercise
Price $50.00 17 510
Expiration November
2005 Exercise
Price $45.00 25 9,500
Coldwater Creek, Inc.
Expiration January
2006 Exercise
Price $30.00 74 9,805
Expiration October
2005 Exercise
Price $25.00 121 16,638
Expiration October
2005 Exercise
Price $30.00 48 360
Companhia Vale Do Rio
Doce - ADR
Expiration January
2006 Exercise
Price $50.00 64 12,480
Expiration November
2005 Exercise
Price $45.00 150 24,375
Constellation Energy
Group
Expiration January
2006 Exercise
Price $65.00 20 3,500
Expiration October
2005 Exercise
Price $60.00 40 9,000
Coventry Health Care,
Inc.
Expiration January
2006 Exercise
Price $90.00 26 9,230
Expiration November
2005 Exercise
Price $85.00 61 24,705
CP Ships Ltd.
Expiration October
2005 Exercise
Price $22.50 248 3,100
</Table>
34 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
CSX Corp.
Expiration October
2005 Exercise
Price $45.00 60 $ 11,250
Expiration November
2005 Exercise
Price $45.00 60 15,450
Cummins, Inc.
Expiration October
2005 Exercise
Price $85.00 30 12,300
Expiration December
2005 Exercise
Price $90.00 17 6,290
Expiration December
2005 Exercise
Price $95.00 20 3,800
D.R. Horton, Inc.
Expiration November
2005 Exercise
Price $35.00 38 10,545
Expiration November
2005 Exercise
Price $40.00 38 2,565
Digene Corp.
Expiration October
2005 Exercise
Price $30.00 146 8,030
Expiration November
2005 Exercise
Price $30.00 29 4,713
Digital River, Inc.
Expiration November
2005 Exercise
Price $35.00 46 10,235
Expiration December
2005 Exercise
Price $40.00 45 4,838
Eagle Materials, Inc.
Expiration January
2006 Exercise
Price $125.00 8 7,360
Expiration October
2005 Exercise
Price $115.00 64 45,440
Expiration October
2005 Exercise
Price $120.00 16 5,920
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
ElkCorp.
Expiration January
2006 Exercise
Price $40.00 53 $ 9,408
Expiration November
2005 Exercise
Price $35.00 80 21,600
Equitable Resources,
Inc.
Expiration October
2005 Exercise
Price $37.50 20 3,550
Expiration December
2005 Exercise
Price $40.00 12 1,260
Expiration December
2005 Exercise
Price $37.50 32 7,520
Fastenal Co.
Expiration November
2005 Exercise
Price $60.00 60 19,050
Expiration November
2005 Exercise
Price $65.00 25 2,000
Firstenergy Corp.
Expiration January
2006 Exercise
Price $55.00 60 4,800
Expiration October
2005 Exercise
Price $50.00 61 14,488
FPL Group, Inc.
Expiration October
2005 Exercise
Price $45.00 30 8,250
Freeport-McMoran,
Copper & Gold, Inc.
Expiration January
2006 Exercise
Price $50.00 73 20,258
Expiration November
2005 Exercise
Price $45.00 39 17,550
</Table>
Schedule of Written Options 35
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2005
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Gevity HR, Inc.
Expiration February
2006 Exercise
Price $30.00 56 $ 7,980
Expiration November
2005 Exercise
Price $25.00 189 52,920
Goodrich Corp.
Expiration November
2005 Exercise
Price $45.00 32 4,480
Google, Inc.
Expiration October
2005 Exercise
Price $310.00 3 4,215
Expiration October
2005 Exercise
Price $300.00 5 10,025
Expiration December
2005 Exercise
Price $320.00 3 5,190
Granite Construction,
Inc.
Expiration December
2005 Exercise
Price $35.00 75 33,750
Expiration December
2005 Exercise
Price $40.00 100 17,750
Grant Prideco, Inc.
Expiration October
2005 Exercise
Price $40.00 81 14,378
Expiration November
2005 Exercise
Price $40.00 132 37,950
Harman International
Industries
Expiration October
2005 Exercise
Price $105.00 20 4,500
Expiration October
2005 Exercise
Price $100.00 41 19,475
Headwaters, Inc.
Expiration November
2005 Exercise
Price $40.00 152 17,860
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Health Net, Inc.
Expiration January
2006 Exercise
Price $47.50 48 $ 16,920
Expiration November
2005 Exercise
Price $47.50 47 9,518
Henry Schein, Inc.
Expiration January
2006 Exercise
Price $45.00 19 2,613
Expiration October
2005 Exercise
Price $40.00 16 4,800
Expiration October
2005 Exercise
Price $45.00 12 330
International
Rectifier Corp.
Expiration November
2005 Exercise
Price $45.00 32 7,200
Expiration December
2005 Exercise
Price $45.00 24 6,900
Expiration December
2005 Exercise
Price $50.00 24 2,280
j2 Global
Communications,
Inc.
Expiration October
2005 Exercise
Price $40.00 54 7,560
Expiration December
2005 Exercise
Price $40.00 54 16,200
Jacobs Engineering
Group, Inc.
Expiration October
2005 Exercise
Price $65.00 42 13,440
Expiration November
2005 Exercise
Price $70.00 18 2,835
Jos. A Bank
Clothiers, Inc.
Expiration October
2005 Exercise
Price $40.00 46 16,560
</Table>
36 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Joy Global, Inc.
Expiration January
2006 Exercise
Price $55.00 52 $ 12,740
Expiration October
2005 Exercise
Price $50.00 98 19,600
Labor Ready, Inc.
Expiration November
2005 Exercise
Price $25.00 35 7,088
Expiration November
2005 Exercise
Price $22.50 141 50,055
Lafarge North
America, Inc.
Expiration October
2005 Exercise
Price $65.00 46 15,870
Expiration October
2005 Exercise
Price $70.00 57 3,848
Lehman Brothers
Holdings, Inc.
Expiration January
2006 Exercise
Price $120.00 7 2,730
Expiration October
2005 Exercise
Price $115.00 6 1,860
Expiration November
2005 Exercise
Price $115.00 19 8,170
Lifecell Corp.
Expiration November
2005 Exercise
Price $22.50 135 18,563
Expiration December
2005 Exercise
Price $25.00 59 7,375
Loews Corp.
Expiration October
2005 Exercise
Price $90.00 88 29,040
Lone Star
Technologies, Inc.
Expiration November
2005 Exercise
Price $60.00 75 15,188
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Lowe's Cos., Inc.
Expiration January
2006 Exercise
Price $70.00 25 $ 3,875
Expiration November
2005 Exercise
Price $65.00 57 13,538
Marathon Oil Corp.
Expiration October
2005 Exercise
Price $70.00 13 1,918
Expiration November
2005 Exercise
Price $70.00 41 11,173
McKesson Corp.
Expiration January
2006 Exercise
Price $50.00 45 6,413
Expiration November
2005 Exercise
Price $47.50 98 16,170
Medco Health
Solutions, Inc.
Expiration October
2005 Exercise
Price $55.00 136 16,660
MetLife, Inc.
Expiration October
2005 Exercise
Price $50.00 121 10,285
Nabors Industries,
Ltd.
Expiration October
2005 Exercise
Price $70.00 74 25,160
Expiration December
2005 Exercise
Price $75.00 42 14,490
Nam Tai Electronics,
Inc. - ADR
Expiration December
2005 Exercise
Price $25.00 140 25,550
</Table>
Schedule of Written Options 37
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2005
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Nash Finch Co.
Expiration October
2005 Exercise
Price $40.00 26 $ 6,760
Expiration November
2005 Exercise
Price $40.00 39 12,870
Expiration November
2005 Exercise
Price $45.00 52 4,810
National-OilWell
Varco, Inc.
Expiration October
2005 Exercise
Price $65.00 87 23,925
Expiration November
2005 Exercise
Price $70.00 49 11,638
NetGear, Inc.
Expiration October
2005 Exercise
Price $25.00 169 10,563
Expiration December
2005 Exercise
Price $25.00 133 23,940
Newfield Exploration
Co.
Expiration November
2005 Exercise
Price $50.00 23 5,118
Expiration December
2005 Exercise
Price $50.00 47 14,100
NII Holdings, Inc.
Expiration December
2005 Exercise
Price $80.00 20 16,200
Expiration December
2005 Exercise
Price $85.00 29 15,370
Norfolk Southern
Corp.
Expiration November
2005 Exercise
Price $40.00 148 27,010
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Omnicare, Inc.
Expiration October
2005 Exercise
Price $55.00 28 $ 6,650
Expiration December
2005 Exercise
Price $55.00 28 11,620
Expiration December
2005 Exercise
Price $60.00 57 10,688
Oshkosh Truck Corp.
Expiration January
2006 Exercise
Price $45.00 60 10,950
Expiration October
2005 Exercise
Price $42.50 90 11,700
Patterson-UTI Energy,
Inc.
Expiration January
2006 Exercise
Price $37.50 101 28,533
Expiration November
2005 Exercise
Price $35.00 151 43,790
Peabody Energy Corp.
Expiration November
2005 Exercise
Price $85.00 22 10,230
Expiration December
2005 Exercise
Price $90.00 40 15,400
Performance Food
Group Co.
Expiration October
2005 Exercise
Price $30.00 86 15,265
Expiration December
2005 Exercise
Price $30.00 52 13,260
PG & E Corp.
Expiration December
2005 Exercise
Price $40.00 25 2,438
</Table>
38 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Polo Ralph Lauren
Corp.
Expiration January
2006 Exercise
Price $55.00 58 $ 9,280
Expiration November
2005 Exercise
Price $50.00 58 13,775
Prudential Financial,
Inc.
Expiration November
2005 Exercise
Price $65.00 22 8,800
Expiration December
2005 Exercise
Price $65.00 17 7,310
Expiration December
2005 Exercise
Price $70.00 16 2,600
Psychiatric
Solutions, Inc.
Expiration October
2005 Exercise
Price $55.00 18 2,385
Expiration December
2005 Exercise
Price $55.00 54 17,820
Public Service
Enterprise Group,
Inc.
Expiration October
2005 Exercise
Price $65.00 84 9,240
Expiration December
2005 Exercise
Price $70.00 42 2,730
Pulte Homes, Inc.
Expiration October
2005 Exercise
Price $45.00 126 6,615
Expiration October
2005 Exercise
Price $42.50 115 18,688
Questar Corp.
Expiration November
2005 Exercise
Price $85.00 54 32,130
Expiration November
2005 Exercise
Price $90.00 23 7,590
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Reliance Steel &
Aluminium Co.
Expiration October
2005 Exercise
Price $50.00 115 $ 40,250
Expiration December
2005 Exercise
Price $50.00 29 15,080
Resources Connection,
Inc.
Expiration November
2005 Exercise
Price $30.00 182 25,025
Respironics, Inc.
Expiration January
2006 Exercise
Price $40.00 47 17,625
Expiration October
2005 Exercise
Price $40.00 71 17,573
Rio Tinto Plc - ADR
Expiration November
2005 Exercise
Price $160.00 32 28,480
Safeway, Inc.
Expiration October
2005 Exercise
Price $25.00 187 20,103
SanDisk Corp.
Expiration January
2006 Exercise
Price $42.50 4 3,300
Expiration November
2005 Exercise
Price $47.50 5 1,900
Selective Insurance
Group, Inc.
Expiration November
2005 Exercise
Price $50.00 46 5,175
Expiration December
2005 Exercise
Price $50.00 106 17,225
Sempra Energy
Expiration October
2005 Exercise
Price $45.00 140 34,650
SkyWest, Inc.
Expiration October
2005 Exercise
Price $25.00 104 21,060
</Table>
Schedule of Written Options 39
Schedule of Written Options (continued)
ICON Covered Call Fund
September 30, 2005
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Sonic Solutions
Expiration November
2005 Exercise
Price $20.00 101 $ 23,230
Expiration November
2005 Exercise
Price $22.50 187 17,298
Steel Dynamics, Inc.
Expiration January
2006 Exercise
Price $35.00 91 25,935
Expiration November
2005 Exercise
Price $30.00 49 23,520
Expiration November
2005 Exercise
Price $35.00 67 11,725
Steel Technologies,
Inc.
Expiration October
2005 Exercise
Price $25.00 86 12,255
Expiration January
2006 Exercise
Price $25.00 85 32,088
Suncor Energy, Inc.
Expiration October
2005 Exercise
Price $60.00 18 4,950
Expiration December
2005 Exercise
Price $60.00 17 8,925
Superior Energy
Services, Inc.
Expiration October
2005 Exercise
Price $22.50 58 6,815
Expiration December
2005 Exercise
Price $20.00 135 51,975
Expiration December
2005 Exercise
Price $25.00 135 13,500
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Texas Instruments,
Inc.
Expiration October
2005 Exercise
Price $35.00 60 $ 1,950
Expiration November
2005 Exercise
Price $32.50 139 31,275
The Goldman Sachs
Group, Inc.
Expiration January
2006 Exercise
Price $125.00 11 4,070
Expiration November
2005 Exercise
Price $120.00 24 10,080
The Hartford
Financial Services
Group, Inc.
Expiration November
2005 Exercise
Price $75.00 43 16,340
Expiration December
2005 Exercise
Price $75.00 65 27,950
Ultra Petroleum Corp.
Expiration November
2005 Exercise
Price $55.00 168 92,400
Expiration December
2005 Exercise
Price $50.00 21 19,950
United Surgical
Partners
International
Expiration November
2005 Exercise
Price $37.50 94 25,145
United Therapeutics
Corp.
Expiration October
2005 Exercise
Price $70.00 22 5,665
Expiration October
2005 Exercise
Price $75.00 64 5,280
Expiration November
2005 Exercise
Price $75.00 31 10,153
</Table>
40 Schedule of Written Options
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
Universal Forest
Products, Inc.
Expiration January
2006 Exercise
Price $60.00 90 $ 30,375
Expiration October
2005 Exercise
Price $60.00 25 1,938
Expiration November
2005 Exercise
Price $55.00 38 15,960
Universal Health
Services
Expiration October
2005 Exercise
Price $55.00 45 9,338
Expiration December
2005 Exercise
Price $55.00 104 48,360
Urban Outfitters,
Inc.
Expiration October
2005 Exercise
Price $27.50 60 13,650
Expiration November
2005 Exercise
Price $30.00 40 5,700
</Table>
<Table>
<Caption>
UNDERLYING SECURITY/ CONTRACTS
EXPIRATION DATE/ (100 SHARES
EXERCISE PRICE PER CONTRACT) VALUE
- -------------------------------------------------
W-H Energy Services,
Inc.
Expiration January
2006 Exercise
Price $35.00 67 $ 12,563
Expiration October
2005 Exercise
Price $30.00 66 17,800
Watsco, Inc.
Expiration October
2005 Exercise
Price $50.00 68 23,800
Expiration November
2005 Exercise
Price $50.00 69 28,635
Wesco International,
Inc.
Expiration January
2006 Exercise
Price $35.00 116 29,000
Expiration October
2005 Exercise
Price $35.00 39 2,438
------------- ----------
Total Options Written 13,261 $3,088,445
============= ==========
(Premiums received $2,471,399)
</Table>
The accompanying notes are an integral part of the financial statements.
Schedule of Written Options 41
Management Overview
ICON Equity Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities
Common Stocks 87.6%
Preferred Stocks 0.4%
Convertible Preferred Stocks 1.7%
Top 10 Equity Holdings 16.0%
Number of Stocks 102
Options Purchased
Call Options 0.5%
Number of Securities on Which Options Have Been Purchased 6
Bonds & Short-Term Investments
Convertible Corporate Bonds 0.4%
Corporate Bonds 5.5%
U.S. Government and Agencies 2.6%
Short-Term Investments 2.0%
Number of Bonds 14
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
Patterson-UTI Energy, Inc. 1.8%
Fidelity National Financial, Inc. 1.8%
Caterpillar, Inc. 1.7%
Diamond Offshore Drilling, Inc. 1.7%
Apogee Enterprises, Inc. 1.7%
Eagle Materials, Inc. 1.5%
Altria Group, Inc. 1.5%
Loews Corp. 1.5%
Alpharma, Inc. - Class A 1.4%
Hewlett-Packard Co. 1.4%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. For the fiscal year ended September 30, 2005, the ICON Equity Income Fund
returned 12.71% for Class I shares, 11.71% for Class C shares and 12.89% for
Class Z shares, underperforming the 13.45% return of its benchmark, the S&P
1500 Index, over the same period. Total returns for other periods as of
September 30, 2005 appear on page 47.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Despite capturing broad upside in the equity portion, the Fund surrendered a
portion of its gains during the period, as weakness in the steel industry and
its exposure to the fixed income markets led to relative underperformance.
Behind this weakness were external factors ranging from inflation fears to a
short-term slowdown in economic growth, both of which were related to the
rising cost of oil and ongoing Federal Reserve policy calling for higher
short-term interest rates.
The interest rate environment posed what Federal Reserve Chairman Alan
Greenspan referred to during the period as a "conundrum." Although the Fed
raised short-term interest rates to 3.75% from 1.75% in an attempt to stave
off inflation, many investors were taken aback when market-driven long rates
did not follow suit. As the spread between long- and short-term rates
diminished, a relatively flat yield curve benefited the Fund's initial tilt
toward longer-duration bonds. However, this positioning later worked against
performance as long rates trended higher, eroding earlier price gains.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying equity and debt
securities we believe are underpriced regardless of their location on the
conventional style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as these measures do not adequately represent, in our
view, intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of value with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the broader market.
42 Management Overview
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Despite a positive finish, stocks encountered considerable resistance in
their move toward our analysis of fair value. Surging oil prices and monetary
tightening presented formidable distractions, as investors allowed their
emotions to be swayed by conflicting fears of economic slowdown and mounting
inflation. Against this backdrop, equity and debt markets alternated between
broad advances and volatile sideways trading, often tracking sharp, sudden
shifts in investor sentiment. Hurricanes Katrina and Rita added to the
uncertainty, as economic forecasts envisioned near-term reductions in GDP
growth followed possible inflationary pressures due to projected rebuild
spending.
For much of the period, however, this lack of clarity obscured the fact that,
on a company and macroeconomic level, fundamentals were generally positive.
For example, interest rates continued to hover at 50-year lows, oil prices
were well below their inflation-adjusted peak of the late 1970s, and reported
earnings remained robust. As such, when investors appeared to set aside their
emotion-induced fears, as was seemingly the case following the mid-April
calendar year low, stocks rallied in recognition of the favorable setting.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. A diverse group of leading industries contributed positively to Fund
performance, including construction materials, managed health care and
railroads. Although a top-performing industry for much of the period,
construction materials moved higher in the aftermath of Hurricane Katrina.
Meanwhile, managed health care capitalized on a positive outlook for
continued earnings-per-share growth, whereas railroads benefited from ongoing
economic expansion.
In contrast, steel saw its prior leadership position evaporate on speculation
of a slowdown in the Chinese economy, and finished the period as a net
detractor of Fund performance. Strength in the Healthcare sector and relative
weakness in the Financial sector resulted in a redeployment of assets in the
these sectors. Additionally, the Fund's fixed income holdings detracted from
returns.
Although our process guides us to emphasize specific industries and
securities, it may result in investments concentrated within a given
capitalization range. Such was the case during the period, where an
overweight position in mid-cap stocks produced the strongest overall returns.
The Fund's allocation toward small-cap stocks proved detrimental, whereas
stock selection in the large-cap arena produced several of the Fund's top
performers.
Leading managed health care provider CIGNA Corp. benefited from significant
earnings growth in line with favorable business trends for HMO stocks. Heavy
Management Overview 43
Management Overview (continued)
ICON Equity Income Fund
equipment manufacturer Caterpillar Inc. also added to performance, as sales
gains among its most profitable markets and rising global demand boosted the
stock. Likewise, construction products company Eagle Materials Inc. recorded
impressive revenue expansion on higher demand.
Meanwhile, Big Three automaker General Motors Corp. detracted from Fund
performance, having struggled amid massive losses, declines in global market
share and rising raw material costs. Multi-line insurer AON Corp. also came
under pressure when it agreed to settle a lawsuit stemming from the New York
State Attorney General's investigation into insurance industry practices.
Elsewhere, mini-mill steel producer Steel Dynamics Inc. faced rising input
costs and pricing cuts as inventories exceeded demand. All three positions
were sold as relative strength declined.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC MARKETS?
A. Given widespread value within the broader equity market, we continue to favor
dividend-paying stocks over convertible and other fixed income instruments,
whose value is tied to interest rate movements. At the same time, with
economic growth seemingly in line with Federal Reserve targets, we see no
reason why yields must rise appreciably above current levels. Nevertheless,
based on current valuation and relative strength metrics, we remain focused
on shorter-duration securities, which are less sensitive to changes in
interest rates.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - Despite capturing broad upside amid challenging equity markets, the Fund
surrendered a portion of its gains as bond market weakness led to relative
underperformance.
- - A diverse group of industries, including construction materials, managed
health care and railroads, contributed positively to Fund performance, while
steel and the broad Financials sector were relative detractors.
- - CIGNA Corp., Caterpillar Inc. and Eagle Materials Inc. were among the Fund's
leading company contributors.
- - Stocks that detracted from Fund performance included General Motors Corp.,
AON Corp. and Steel Dynamics Inc.
44 Management Overview
SECTOR COMPOSITION
September 30, 2005
<Table>
Financial 16.8%
Industrials 13.5%
Telecommunication and Utilities 12.1%
Healthcare 12.0%
Consumer Discretionary 9.9%
Energy 9.0%
Materials 9.0%
Information Technology 7.6%
Leisure and Consumer Staples 5.8%
</Table>
Percentages are based upon common stock positions and net assets.
Management Overview 45
Management Overview (continued)
ICON Equity Income Fund
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Multi-Utilities 3.7%
Construction Materials 3.6%
Multi-Line Insurance 3.5%
Managed Health Care 3.4%
Oil & Gas Drilling 3.3%
Integrated Oil & Gas 3.2%
Property & Casualty Insurance 3.2%
Thrifts & Mortgage Insurance 3.1%
Health Care Services 3.0%
Water Utilities 3.0%
Building Products 2.8%
Life & Health Insurance 2.7%
Steel 2.6%
Construction & Farm Machinery & Heavy Trucks 2.5%
Integrated Telecommunication Services 2.5%
Automobile Manufacturers 2.4%
Asset Management & Custody Banks 2.2%
Household Products 2.1%
Oil & Gas Equipment & Services 2.1%
Specialized Consumer Services 2.0%
Aerospace & Defense 1.8%
Other Diversified Financial Services 1.8%
Diversified Metals & Mining 1.7%
Investment Banking & Brokerage 1.7%
Health Care Facilities 1.5%
Marine 1.5%
Tobacco 1.5%
Trading Companies & Distributors 1.5%
Computer Hardware 1.4%
Health Care Equipment 1.4%
Pharmaceuticals 1.4%
Electronic Equipment Manufacturers 1.2%
Semiconductors 1.2%
Commercial Printing 1.1%
Computer Storage & Peripherals 1.1%
Wireless Telecommunication Services 1.0%
Housewares & Specialties 0.9%
Automotive Retail 0.8%
Catalog Retail 0.8%
Computer & Electronics Retail 0.8%
Data Processing & Outsourced Services 0.8%
Fertilizers & Agricultural Chemicals 0.8%
Food Distributors 0.8%
Health Care Distributors 0.8%
Home Improvement Retail 0.8%
Leisure Products 0.8%
Railroads 0.8%
Communications Equipment 0.7%
Consumer Electronics 0.7%
Consumer Finance 0.7%
Household Appliances 0.7%
Human Resource & Employment Services 0.7%
Industrial Machinery 0.7%
Broadcast & Cable TV 0.6%
Independent Power Producers & Energy Traders 0.6%
Internet Software Services 0.6%
IT Consulting & Other Services 0.6%
Gas Utilities 0.5%
</Table>
46 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class I 9/30/02 12.71% N/A 18.93%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 17.46%
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class C 11/8/02 11.71% N/A 16.22%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 14.23%
- -------------------------------------------------------------------------------------------
ICON Equity Income Fund - Class Z 5/10/04 12.89% N/A 15.40%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 12.40%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
The Adviser has agreed to limit certain Fund expenses; without these
limitations, returns would have been lower. The limitation provisions may be
terminated in the future. Class Z shares are available only to institutional
investors.
VALUE OF A $10,000 INVESTMENT
through September 30, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON EQUITY INCOME FUND - CLASS
I S&P 1500 INDEX
------------------------------- --------------
9/30/02 10000 10000
10819 10811
10091 10450
12073 12093
9/30/03 12482 12469
14475 14009
14940 14308
15016 14557
9/30/04 14928 14285
16146 15661
15847 15349
16192 15613
9/30/05 16822 16206
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund's Class I shares on the Class' inception
date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on
that date. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
Management Overview 47
Schedule of Investments
ICON Equity Income Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ----------------------------------------------
COMMON STOCKS (87.2%)
29,400 A.G. Edwards, Inc. $ 1,288,014
31,600 Alliant Energy
Corp. 920,508
76,800 Alpharma, Inc. -
Class A 1,910,016
26,800 Altria Group, Inc. 1,975,428
8,689 Ameren Corp. 464,775
25,900 American Capital
Strategies, Ltd. 949,494
30,300 American Financial
Group, Inc. 1,028,079
45,000 American States
Water Co. 1,505,700
128,700 Apogee Enterprises,
Inc. 2,200,770
24,200 Atmos Energy Corp. 683,650
26,300 Barnes Group, Inc. 943,118
24,500 Baxter
International, Inc. 976,815
23,800 Best Buy Co., Inc. 1,036,014
31,400 BHP Billiton Ltd. -
ADR 1,073,252
36,400 BJ Services Co. 1,310,036
40,000 California Water
Service Group 1,648,000
68,600 Callaway Golf Co. 1,035,174
14,800 Canadian National
Railway Co. 1,050,652
30,100 Caremark Rx,
Inc.(a) 1,502,893
38,600 Caterpillar, Inc. 2,267,750
32,234 Cemex S.A. De
C.V. - ADR 1,685,838
109,300 CenterPoint Energy,
Inc. 1,625,291
18,700 Chevron Corp. 1,210,451
24,100 Church & Dwight Co. 890,254
15,800 CIGNA Corp. 1,862,188
32,700 Cognex Corp. 983,289
17,100 Colgate-Palmolive
Co. 902,709
33,200 Computer Programs &
Systems, Inc. 1,146,728
56,700 CP Ships Ltd. 1,209,411
12,600 Cummins, Inc. 1,108,674
31,300 DaimlerChrysler AG 1,662,656
37,000 Diamond Offshore
Drilling, Inc. 2,266,250
50,700 Diana Shipping,
Inc. 836,550
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ----------------------------------------------
28,500 Digital Insight
Corp.(a) $ 742,710
16,800 Eagle Materials,
Inc. 2,039,016
52,700 Fidelity National
Financial, Inc. 2,346,204
33,500 First American
Corp. 1,529,945
23,500 Freeport-McMoran
Copper & Gold, Inc. 1,141,865
40,400 Gevity HR, Inc. 1,100,496
33,800 Golden Telecom,
Inc. 1,067,066
21,900 Goodrich Corp. 971,046
9,400 Harman
International
Industries, Inc. 961,338
65,000 Hewlett-Packard Co. 1,898,000
232,400 Hooper Holmes, Inc. 913,332
46,700 Horace Mann
Educators Corp. 923,726
26,600 IndyMac Bancorp,
Inc. 1,052,828
10,300 Infosys
Technologies, Ltd. 765,084
40,709 ING Group N.V. -
ADR 1,212,721
44,600 Jackson Hewitt Tax
Services, Inc. 1,066,386
11,700 L-3 Communications
Holdings, Inc. 925,119
58,000 Lennox
International, Inc. 1,589,780
18,500 Lincoln National
Corp. 962,370
21,000 Loews Corp. 1,940,610
34,600 Logitech
International
S.A. - ADR(a) 1,409,950
28,100 Manor Care, Inc. 1,079,321
21,300 Manpower, Inc. 945,507
25,505 Marathon Oil Corp. 1,758,060
36,700 MBNA Corp. 904,288
53,700 MCG Capital Corp. 905,919
21,500 McKesson HBOC, Inc. 1,020,175
17,200 Medtronic, Inc. 922,264
34,600 Mellon Financial
Corp. 1,106,162
</Table>
48 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ----------------------------------------------
28,400 MSC Industrial
Direct Co., Inc. -
Class A $ 942,028
25,100 Nam Tai
Electronics,
Inc. - ADR 638,293
24,500 Nash Finch Co. 1,033,655
48,600 NiSource, Inc. 1,178,550
21,100 Nucor Corp. 1,244,689
26,300 Old Republic
International Corp. 701,421
65,400 Patterson-UTI
Energy, Inc. 2,359,632
31,300 Philippine Long
Distance Telephone
Co. - ADR 953,085
16,400 Procter & Gamble
Co. 975,144
20,000 Protective Life
Corp. 823,600
38,000 R.R. Donnelley &
Sons Co. 1,408,660
16,700 Royal Dutch Shell -
Class A - ADR 1,096,188
6,700 Royal Dutch
Petroleum Co. 420,760
8,599 Sempra Energy 404,669
75,100 Southwest Water Co. 1,088,950
76,200 SpectraLink Corp. 971,550
53,232 Sprint Corp. (FON
Group) 1,265,857
51,300 Steel Technologies,
Inc. 1,330,209
155,400 Stewart
Enterprises,
Inc. - Class A 1,030,302
83,000 TECO Energy, Inc. 1,495,660
47,600 Telecomunicacoes de
Sao Paulo S.A. -
ADR 946,288
32,300 Texas Instruments,
Inc. 1,094,970
9,000 The Bear Stearns
Cos., Inc. 987,750
11,800 The Scotts Miracle-
Gro Co. 1,037,574
37,000 The Sportsman's
Guide, Inc.(a) 1,010,100
28,200 Tidewater, Inc. 1,372,494
50,600 Tupperware Corp. 1,152,668
32,900 United Auto Group,
Inc. 1,087,016
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ----------------------------------------------
25,200 United Surgical
Partners
International,
Inc.(a) $ 985,572
49,600 UnumProvident Corp. 1,016,800
18,200 Vulcan Materials
Co. 1,350,622
16,300 W.W. Grainger, Inc. 1,025,596
22,500 WellChoice, Inc.(a) 1,707,750
12,400 Whirlpool Corp. 939,548
52,200 Worthington
Industries, Inc. 1,097,766
------------
TOTAL COMMON STOCKS (COST
$101,578,481) 116,537,131
CONVERTIBLE PREFERRED STOCKS (1.7%)
4,000 Northrop Grumman
Corp., 7.00%,
04/04/21 484,000
9,000 Omnicare, Inc.,
4.00%, 06/15/33 653,625
8,600 Philippine Long
Distance Telephone
Co., 3.50%,
12/31/49, Series
III 451,500
14,400 TXU Corp., 8.75%,
11/16/05, Series C 733,824
------------
TOTAL CONVERTIBLE PREFERRED
STOCKS (COST $1,736,376) 2,322,949
PREFERRED STOCKS (0.4%)
18,200 Aetna, Inc., 8.50%,
8/31/41 469,742
------------
TOTAL PREFERRED STOCKS (COST
$501,382) 469,742
CORPORATE BONDS (5.5%)
$ 500,000 Aetna, Inc., 6.97%,
08/15/36 588,491
800,000 AFC Capital Trust
I, 8.20%, 02/03/27 866,867
1,000,000 DaimlerChrysler AG,
6.50%, 11/15/13 1,057,286
750,000 General Motors,
6.75%, 05/01/28 519,375
1,288,000 Household Finance
Corp., 4.75%,
07/15/13 1,257,129
800,000 Lowe's Companies,
Inc., 8.25%,
06/01/10 920,084
750,000 Mediacom Broadband
LLC, 11.00%,
07/15/13 808,125
</Table>
Schedule of Investments 49
Schedule of Investments (continued)
ICON Equity Income Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ----------------------------------------------
$ 750,000 Prudential
Financial, Inc.,
5.75%, 07/15/33 $ 751,998
575,000 United Rentals NA,
Inc., 7.75%,
11/15/13 554,875
------------
TOTAL CORPORATE BONDS
(COST $7,351,294) 7,324,230
CONVERTIBLE CORPORATE BONDS (0.4%)
600,000 International
Rectifier Corp.,
4.25%, 07/15/07 579,000
------------
TOTAL CONVERTIBLE CORPORATE
BONDS
(COST $583,500) 579,000
U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY
BONDS (2.6%)
1,323,000 Freddie Mac, 5.16%,
02/27/15 1,314,015
258,000 Freddie Mac, 5.00%,
09/29/17 251,374
750,000 U.S. Treasury,
8.75%, 05/15/17 1,038,984
750,000 U.S. Treasury,
5.25%, 11/15/28 816,973
------------
TOTAL U.S. GOVERNMENT AND U.S.
GOVERNMENT AGENCY BONDS
(COST $3,396,292) 3,421,346
CALL OPTIONS PURCHASED (0.5%)
84 Aetna, Inc.
Expiration January
2006, Exercise
Price $60.00 225,960
200 Allmerica Financial
Corp. Expiration
February 2006,
Exercise price
$40.00 74,000
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ----------------------------------------------
83 Cooper Cameron
Corp. Expiration
January 2008,
Exercise price
$80.00 $ 98,355
147 Digene Corp.
Expiration March
2006, Exercise
price $45.00 2,573
123 Lowe's Companies,
Inc. Expiration
January 2007,
Exercise price
$65.00 103,320
125 Prudential
Financial, Inc.
Expiration January
2006, Exercise
price $60.00 108,125
------------
TOTAL CALL OPTIONS PURCHASED
(COST $273,971) 612,333
SHORT-TERM INVESTMENTS (2.0%)
$2,679,436 Brown Brothers
Harriman Time
Deposit, 3.24%,
10/01/05# 2,679,436
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,679,436) 2,679,436
------------
TOTAL INVESTMENTS
(COST $118,100,732) 100.3% 133,946,167
LIABILITIES LESS OTHER ASSETS
(0.3%) (381,563)
------------
TOTAL NET ASSETS (100.0%) $133,564,604
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
Dates shown on securities are due dates of the obligations.
50 Schedule of Investments
Management Overview
ICON Long/Short Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 99.1%
Top 10 Long Equity
Holdings 15.6%
Number of Long Stocks 98
Number of Short Positions 1
Short-Term Investments 0.0%
Percentages are based upon net assets.
TOP 10 LONG EQUITY HOLDINGS
September 30, 2005
Ultra Petroleum Corp. 2.0%
Canadian Pacific Railway, Ltd. 2.0%
Netease.com, Inc. 1.6%
United Surgical Partners International, Inc. 1.5%
Grant Prideco, Inc. 1.5%
KCS Energy, Inc. 1.4%
National-OilWell Varco, Inc. 1.4%
Universal Forest Products, Inc. 1.4%
America Movil S.A.
De C.V. - ADR 1.4%
Companhia Vale do Rio
Doce - ADR 1.4%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. For the fiscal year ended September 30, 2005, the ICON Long/Short Fund
returned 18.69% for Class I shares, 17.68% for Class C shares and 18.96% for
Class Z shares, outpacing the 13.45% return of the S&P 1500 Index, the Fund's
benchmark, over the same period. Total returns for other periods as of
September 30, 2005 appear on page 56.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The Fund's focus on identifying underpriced industries demonstrating market
leadership contributed positively to relative performance. Overweight
industry positions within the Healthcare and Materials sectors as well as
exposure to industries positioned to benefit from economic expansion also
served to boost fiscal-year returns. In contrast, although the Fund's short
exposure fluctuated during the period, short positions worked against overall
performance, as industries our system judged as expensive continued to
exhibit sustained relative strength.
Although our process guides us to emphasize specific industries and
securities, it may result in investments concentrated within a given
capitalization range. Such was the case during the period, in which stock
selection among large-cap stocks helped performance despite the Fund's
significant underweight in this range. A combination of industry and stock
selection within the mid-cap range also helped the Fund. Given persistently
turbulent markets during the period, ICON's disciplined methodology proved
quite effective in keeping the Fund well ahead of the broader averages.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are either underpriced or overpriced regardless of their location on
the conventional style grid. The ICON system is not limited by restrictions
on market capitalization or investment style, and searches for potential
industry leadership wherever and whenever it may emerge. In doing so, the
Fund seeks to maximize returns by playing both sides of our valuation
methodology.
For that reason, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as we believe these measures do not adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price ratios that consider the effects of historical and
projected earnings, projected growth, risk, and interest rates (opportunity
cost). By combining our determination of value with improving relative
strength on the long side, and declining relative strength on the short side,
we aim to capture leading industry themes that we believe are poised to
outperform the broader market.
Management Overview 51
Management Overview (continued)
ICON Long/Short Fund
It is important to note that the Fund is not market neutral; the proportion
of long and short positions depends on the availability of underpriced and
overpriced industries, as well as ICON's evaluation of market conditions.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. The reporting period was characterized by extreme choppiness, as rising oil
prices and perceived inflationary pressures distracted already skittish
investors. Although underlying economic and corporate fundamentals remained
generally positive throughout, the uncertainty produced severe crosscurrents,
which intensified in the wake of Hurricanes Katrina and Rita.
Against this backdrop, stocks initially rallied, as investors appeared to set
aside their oil- and inflation-induced worries. By late December, however,
energy prices resumed their powerful climb, once again stoking inflation
concerns while raising fears that the Federal Reserve would overshoot neutral
targets for monetary tightening and ultimately constrict economic growth.
As conflicting fears of economic slowdown and mounting inflation heightened
during the early months of 2005, investor sentiment wavered, culminating in a
mid-April calendar year low for the benchmark S&P 1500 Index. While our
valuation metrics reflected this growing pessimism, in reality, interest
rates hovered near 50-year lows, oil was well below its inflation-adjusted
peak, and earnings expectations remained robust. Stocks subsequently rallied
on recognition of this favorable setting, before settling into a
storm-related trading range as the period came to a close.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. The Fund captured leadership on the long side across a wide range of
industries, including overweight positions in the top-performing construction
materials and managed health care groups. Industries that typically benefit
from economic expansion, such as railroads and home building, also added to
performance, as did industries that benefited from rising petroleum prices,
such as oil & gas exploration & production.
Long-side industries that hampered Fund performance included computer
hardware, consumer finance, pharmaceuticals, and insurance brokers, all of
which possessed compelling value, yet lesser degrees of relative strength.
Likewise, the Fund's short positions generally proved a drag on performance,
as seemingly expensive industries continued to trend visibly higher. In
accordance with the Fund's shorting discipline, industry positions identified
by our methodology to be both overpriced and declining in relative strength
were initiated in coal, systems software, casinos & gaming, application
software, specialized finance, semiconductor equipment, and air freight &
logistics. By period-end, virtually all had been covered in conjunction with
a broad summertime rally.
At the company level, long stocks that contributed to performance included
independent oil & gas developer Ultra Petroleum Corp., which reported a
52 Management Overview
[J.C. Waller III PHOTO]
J.C. Waller, III
Portfolio Manager
company-best triple-digit increase in quarterly earnings. Building Materials
Holding Corp., an operator of retail centers aimed at professional
contractors, also advanced, citing robust sales gains and improving gross
margins. Elsewhere, China-based Web portal Netease.com Inc. posted robust net
profits as gaming revenues surged.
Among the Fund's weakest individual long holdings was consumer finance
company Cash America International Inc., which slid when Federal regulators
unveiled new guidelines governing secured non-recourse loans. Networking
equipment supplier UTStarcom Inc. also detracted, having fallen on unexpected
quarterly losses and pricing pressures. Meanwhile, independent energy company
Petroleum Development Corp. warned that escalating day rates and tight rig
availability could ultimately impede development plans. All three were sold
during the period on declining relative strength.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET?
A. While lingering concerns continue to make for a difficult environment, our
analysis indicates that the domestic equity market remains positioned for an
eventual upside move toward our evaluation of fair value. This is
particularly true, in our view, of industries with leverage to worldwide
economic expansion, as well as increasing global demand on energy, raw
materials and heavy equipment.
Although these groups comprise some of the strongest and most undervalued in
the market, the outlook for shorting opportunities is much less sanguine.
Therefore, we will continue to keep a close eye on valuation and relative
strength in order to capitalize on developing market themes.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - Leadership on the long side was captured by overweighting industries
including construction materials and managed health care, while poorer-
performing industries included computer hardware, consumer finance and
pharmaceuticals.
- - Short positions in coal, systems software, casinos & gaming, application
software, specialized finance, semiconductor equipment, and air freight &
logistics by and large worked against Fund performance.
- - Long stocks that contributed to Fund performance included Ultra Petroleum
Corp., Building Materials Holding Corp. and Netease.com Inc.
- - Among the Fund's weakest long holdings were Cash America International Inc.,
UTStarcom Inc. and Petroleum Development Corp.
Management Overview 53
Management Overview (continued)
ICON Long/Short Fund
SECTOR COMPOSITION
September 30, 2005
<Table>
Industrials 19.5%
Healthcare 17.1%
Energy 15.0%
Materials 13.9%
Telecommunication and Utilities 10.0%
Financial 9.1%
Information Technology 8.7%
Consumer Discretionary 4.6%
Leisure and Consumer Staples 1.2%
</Table>
Percentages are based upon long positions and net assets.
54 Management Overview
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Construction Materials 5.7%
Oil & Gas Drilling 5.4%
Oil & Gas Equipment & Services 5.2%
Steel 5.1%
Oil & Gas Exploration & Production 4.4%
Managed Health Care 3.8%
Railroads 3.8%
Health Care Distributors 3.5%
Health Care Services 3.4%
Investment Banking & Brokerage 3.4%
Multi-Utilities 2.9%
Biotechnology 2.8%
Construction & Farm Machinery & Heavy Trucks 2.7%
Diversified Metals & Mining 2.7%
Health Care Facilities 2.7%
Internet Software Services 2.7%
Computer Storage & Peripherals 2.4%
Apparel Accessories & Luxury Goods 2.3%
Multi-Line Insurance 2.3%
Wireless Telecommunication Services 2.3%
Building Products 2.2%
Aerospace & Defense 2.0%
Construction & Engineering 2.0%
Trading Companies & Distributors 1.9%
Life & Health Insurance 1.8%
Electric Utilities 1.7%
Property & Casualty Insurance 1.7%
IT Consulting & Other Services 1.6%
Communications Equipment 1.5%
Human Resource & Employment Services 1.5%
Catalog Retail 1.4%
Gas Utilities 1.4%
Airlines 1.2%
Marine 1.2%
Food Retail 1.1%
Commercial Printing 1.0%
Home Improvement Retail 1.0%
Water Utilities 1.0%
Pharmaceuticals 0.9%
Independent Power Producers & Energy Traders 0.6%
Data Processing & Outsourced Services 0.5%
Fertilizers & Agricultural Chemicals 0.4%
</Table>
Management Overview 55
Management Overview (continued)
ICON Long/Short Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund - Class I 9/30/02 18.69% N/A 18.70%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 17.46%
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund - Class C 10/17/02 17.68% N/A 15.79%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 15.87%
- -------------------------------------------------------------------------------------------
ICON Long/Short Fund - Class Z 5/6/04 18.96% N/A 12.88%
- -------------------------------------------------------------------------------------------
S&P 1500 Index 13.45% N/A 10.21%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
The Adviser has agreed to limit certain Fund expenses; without these
limitations, returns would have been lower. The limitation provisions may be
terminated in the future. Class Z shares are available only to institutional
investors.
VALUE OF A $10,000 INVESTMENT
through September 30, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON LONG/SHORT FUND - CLASS I S&P 1500 INDEX
------------------------------ --------------
9/30/02 10000 10000
9760 10811
8880 10450
11039 12093
9/30/03 12000 12469
13453 14009
14435 14308
14455 14557
9/30/04 14091 14285
15897 15661
15751 15349
15699 15613
9/30/05 16726 16206
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund's Class I shares on the Class' inception
date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on
that date. Performance for the Fund's other share classes will vary due to
differences in charges and expenses. The Fund's performance in this chart and
the performance table assumes the reinvestment of dividends and capital gain
distributions but does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or on the redemption of Fund shares.
56 Management Overview
Schedule of Investments
ICON Long/Short Fund
September 30, 2005
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
COMMON STOCKS (99.1%)
15,300 A.G. Edwards, Inc. $ 670,293
28,000 A.S.V., Inc.(a) 634,200
36,000 America Movil S.A. De
C.V. - ADR 947,520
10,500 American States Water
Co. 351,330
11,000 AmerisourceBergen
Corp. 850,300
9,000 AmerUs Group Co. 516,330
12,200 AstraZeneca Plc - ADR 574,620
18,000 Barrett Business
Services, Inc.(a) 411,300
10,000 Berry Petroleum Co. 666,900
26,000 BHP Billiton, Ltd. -
ADR 888,680
10,600 Burlington Northern
Santa Fe Corp. 633,880
8,000 CACI International,
Inc. - Class A(a) 484,800
8,000 California Water
Service Group 329,600
8,900 Canadian National
Railway Co. 631,811
30,900 Canadian Pacific
Railway, Ltd. 1,327,464
5,600 Celgene Corp.(a) 304,192
16,405 Cemex S.A. De C.V. -
ADR 857,982
23,000 CenterPoint Energy,
Inc. 342,010
20,400 Ceradyne, Inc.(a) 748,272
7,200 CIGNA Corp. 848,592
20,900 Community Health
Systems, Inc.(a) 811,129
21,600 Companhia Vale do Rio
Doce - ADR 947,376
6,400 Constellation Energy
Group, Inc. 394,240
37,000 CP Ships, Ltd. 789,210
27,000 Digene Corp.(a) 769,500
7,200 Eagle Materials, Inc. 873,864
38,000 El Paso Electric
Co.(a) 792,300
5,800 EMCOR Group, Inc.(a) 343,940
14,000 Express Scripts,
Inc.(a) 870,800
10,500 Fastenal Co. 641,445
7,300 Fiserv, Inc.(a) 334,851
11,400 Florida Rock
Industries, Inc. 730,626
21,500 Gildan Activewear,
Inc.(a) 821,945
</Table>
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
24,500 Grant Prideco, Inc.(a) $ 995,925
29,550 HCC Insurance
Holdings, Inc. 843,062
7,300 Headwaters, Inc.(a) 273,020
14,700 Helmerich & Payne,
Inc. 887,733
15,500 Henry Schein, Inc.(a) 660,610
17,500 Insight Enterprises,
Inc.(a) 325,500
37,500 J. Jill Group, Inc.(a) 593,250
18,200 j2 Global
Communications,
Inc.(a) 735,644
5,500 Jacobs Engineering
Group, Inc.(a) 370,700
15,200 John H. Harland Co. 674,880
16,000 Joy Global, Inc. 807,360
35,000 KCS Energy, Inc.(a) 963,550
30,000 Kforce, Inc.(a) 309,000
25,000 Komag, Inc.(a) 799,000
10,200 Labor Ready, Inc.(a) 261,630
7,000 Lafarge North America,
Inc. 473,270
7,300 Lehman Brothers
Holding, Inc. 850,304
10,000 Lockheed Martin Corp. 610,400
19,800 Logitech International
S.A. - ADR(a) 806,850
10,000 Lowe's Cos., Inc. 644,000
7,000 Martin Marietta
Materials, Inc. 549,220
16,700 McKesson HBOC, Inc. 792,415
15,300 MedcoHealth Solutions,
Inc.(a) 838,899
15,400 Mobile Telesystems -
ADR 626,472
19,000 MSC Industrial Direct
Co., Inc. - Class A 630,230
13,000 Nabors Industries,
Ltd.(a) 933,790
14,500 National-OilWell
Varco, Inc.(a) 954,100
11,700 Netease.com, Inc.(a) 1,053,117
15,000 NETGEAR, Inc.(a) 360,900
14,500 NICE Systems, Ltd. -
ADR(a) 655,110
10,000 Omnicare, Inc. 562,300
19,000 Oneok, Inc. 646,380
24,200 Oregon Steel Mills,
Inc.(a) 675,180
26,000 Patterson-UTI Energy,
Inc. 938,080
</Table>
Schedule of Investments 57
Schedule of Investments (continued)
ICON Long/Short Fund
September 30, 2005
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
21,300 PG&E Corp. $ 836,025
14,500 Polo Ralph Lauren
Corp. 729,350
6,000 POSCO - ADR(a) 339,360
7,500 Protective Life Corp. 308,850
13,000 Reliance Steel &
Aluminum Co. 688,090
5,700 Rio Tinto Plc - ADR 936,510
30,000 Safeway, Inc. 768,000
20,000 Satyam Computer
Services, Ltd. - ADR 604,400
11,400 Selective Insurance
Group, Inc. 557,460
45,000 Semco Energy, Inc.(a) 296,550
22,000 Sierra Pacific
Resources(a) 326,700
13,000 Simpson Manufacturing
Co., Inc. 508,820
29,200 SkyWest, Inc. 783,144
4,300 StanCorp Financial
Group, Inc. 362,060
33,800 Steel Technologies,
Inc. 876,434
45,000 TECO Energy, Inc. 810,900
6,100 The Goldman Sachs
Group, Inc. 741,638
8,300 The Hartford Financial
Services Group, Inc. 640,511
</Table>
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------
7,800 The Manitowoc Co.,
Inc. $ 391,950
2,800 The Scotts Miracle-Gro
Co. 246,204
24,000 Ultra Petroleum
Corp.(a) 1,365,119
17,000 Unit Corp.(a) 939,760
25,950 United Surgical
Partners
International, Inc.(a) 1,014,905
12,000 United Therapeutics
Corp.(a) 837,600
14,600 UnitedHealth Group,
Inc. 820,520
16,600 Universal Forest
Products, Inc. 951,512
15,500 URS Corp.(a) 626,045
20,500 W-H Energy Services,
Inc.(a) 664,610
15,100 W.R. Berkley Corp. 596,148
13,000 Weatherford
International, Ltd.(a) 892,580
11,800 WellChoice, Inc.(a) 895,620
-----------
TOTAL INVESTMENTS 99.1% (COST
$54,960,637) 66,600,558
OTHER ASSETS LESS LIABILITIES
0.9% 622,558
-----------
TOTAL NET ASSETS 100.0% $67,223,116
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
ADR American Depositary Receipt
58 Schedule of Investments
Schedule of Short Securities
ICON Long/Short Fund
September 30, 2005
<Table>
<Caption>
SHARES SHORT SECURITIES VALUE
- --------------------------------------------
50,000 eSPEED, Inc.(a) $379,000
--------
TOTAL SHORT SECURITIES (PROCEEDS
OF $441,316) $379,000
========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
Schedule of Investments 59
Six Month Hypothetical Expense Example
September 30, 2005 (unaudited)
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. 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 various ICON Funds and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/05 - 9/30/05).
ACTUAL EXPENSES
The first set of lines in the table for each Fund provide information about
actual account values and actual expenses. The Example includes, but is not
limited to, management fees, 12b-1 fees, fund accounting, custody and transfer
agent fees. However, the Example does not include client specific fees, such as
the $10.00 fee charged to IRA accounts, or the $15.00 fee charged for wire
redemptions. You may use this information, together with the amount you
invested, to estimate the expenses that you paid over the period. Simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), then multiply the result by the number in the first line for each
Fund under the heading entitled "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second set of lines in the table for each Fund provide information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
60 Expense Example
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/05 9/30/05 4/1/05-9/30/05* 4/1/05-9/30/05
- -------------------------------------------------------------------------------------------------
ICON BOND FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,010.80 $ 5.14 1.02%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.89 5.16
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual period return 1,000.00 1,007.70 8.20 1.63%
- -------------------------------------------------------------------------------------------------
Hypothetical 1,000.00 1,016.83 8.24
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual period return 1,000.00 1,010.70 4.28 0.85%
- -------------------------------------------------------------------------------------------------
Hypothetical 1,000.00 1,020.74 4.31
- -------------------------------------------------------------------------------------------------
ICON CORE EQUITY FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,093.10 6.61 1.26%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.68 6.38
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,088.90 10.73 2.05%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,014.72 10.35
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,089.30 9.85 1.88%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,015.57 9.50
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON COVERED CALL FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,038.10 7.41 1.45%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,017.73 7.33
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,034.30 11.17 2.19%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,014.02 11.06
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
</Table>
Expense Example 61
Six Month Hypothetical Expense Example (continued)
September 30, 2005 (unaudited)
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/05 9/30/05 4/1/05-9/30/05* 4/1/05-9/30/05
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,039.60 $ 6.34 1.24%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.78 6.28
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON EQUITY INCOME FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,061.60 6.51 1.26%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.68 6.38
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,056.70 11.29 2.19%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,014.02 11.06
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,062.00 6.87 1.33%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.33 6.73
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON LONG/SHORT FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,061.80 8.01 1.55%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,017.23 7.84
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,057.50 11.81 2.29%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,013.52 11.56
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,063.60 6.67 1.29%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.53 6.53
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six month expense ratio annualized,
multiplied by the average account value over the period, multiplied by 183/365
to reflect the one-half year period.
62 Expense Example
Statements of Assets and Liabilities
September 30, 2005
<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 $81,060,423 $148,518,138 $51,715,245 $118,100,732 $54,960,637
----------- ------------ ----------- ------------- -----------
Investments, at value 80,585,251 173,673,512 61,487,918 133,946,167 66,600,558
Cash - - - - -
Deposits for short sales - - - - 1,022,778
Receivables:
Fund shares sold 363,947 695,118 30,432 218,284 269,092
Investments sold 2,548,886 3,291,143 1,381,648 1,511,250 1,442,593
Interest 969,791 314 20 140,611 -
Dividends - 44,434 42,977 258,176 31,974
Expense reimbursements by Advisor 11,392 - 24,419 2,552 1,129
Other assets 16,390 20,365 12,197 18,543 14,327
----------- ------------ ----------- ------------- -----------
Total Assets 84,495,657 177,724,886 62,979,611 136,095,583 69,382,451
----------- ------------ ----------- ------------- -----------
LIABILITIES
Options written, at value (premiums received of
$0, $0, $2,471,399, $0 and $0, respectively) - - 3,088,445 - -
Common stocks sold short, at value (proceeds of
$0, $0, $0, $0 and $441,316, respectively) - - - - 379,000
Payables:
Due to custodian bank 499,888 - 692,297 - 1,648,056
Investments bought 467,180 4,353,892 1,080,349 2,211,522 -
Fund shares redeemed 7,868 29,841 7,604 105,564 7,220
Distributions due to shareholders 3,878 - - 38,362 -
Advisory fees & fee waiver recoupment 41,225 104,354 35,291 81,707 54,239
Accrued distribution fees 17,318 80,094 13,223 28,553 20,250
Fund accounting fees 1,683 3,409 1,191 2,669 1,317
Transfer agent fees 3,877 9,820 3,163 6,071 3,103
Administration fees 3,258 6,598 2,231 5,166 2,548
Trustee fees 3,138 4,303 2,778 3,805 2,889
Accrued expenses 38,232 42,435 50,956 47,560 40,713
----------- ------------ ----------- ------------- -----------
Total Liabilities 1,087,545 4,634,746 4,977,528 2,530,979 2,159,335
----------- ------------ ----------- ------------- -----------
NET ASSETS - ALL SHARE CLASSES $83,408,112 $173,090,140 $58,002,083 $133,564,604 $67,223,116
=========== ============ =========== ============= ===========
NET ASSETS - CLASS I $82,415,030 $ 93,780,302 $54,346,825 $129,680,619 $53,157,913
=========== ============ =========== ============= ===========
NET ASSETS - CLASS C $ 987,886 $ 78,144,757 $ 3,651,842 $ 3,861,049 $13,925,251
=========== ============ =========== ============= ===========
NET ASSETS - CLASS Z $ 5,196 $ 1,165,081 $ 3,416 $ 22,936 $ 139,952
=========== ============ =========== ============= ===========
NET ASSETS CONSIST OF
Paid-in capital $83,899,681 $141,157,278 $50,243,368 $108,690,093 $56,806,971
Accumulated undistributed net investment
income/(loss) (4,435) - - 485,602 -
Accumulated undistributed net realized
gain/(loss) from investments (11,962) 6,777,488 (1,396,912) 8,543,474 (1,286,092)
Unrealized appreciation/(depreciation) on
investments, written options and securities
sold short (475,172) 25,155,374 9,155,627 15,845,435 11,702,237
----------- ------------ ----------- ------------- -----------
NET ASSETS $83,408,112 $173,090,140 $58,002,083 $133,564,604 $67,223,116
=========== ============ =========== ============= ===========
Shares outstanding (unlimited shares authorized,
no par value)
Class I 8,112,176 6,194,981 3,915,790 8,211,738 3,324,887
Class C 97,053 5,358,109 269,236 245,782 890,655
Class Z 512 77,076 245 1,453 8,721
Net asset value (offering and redemption price
per share)
Class I $ 10.16 $ 15.14 $ 13.88 $ 15.79 $ 15.99
Class C $ 10.18 $ 14.58 $ 13.56 $ 15.71 $ 15.63
Class Z $ 10.15 $ 15.12 $ 13.94 $ 15.79 $ 16.05
</Table>
The accompanying notes are an integral part of the financial statements.
Financial Statements 63
Statements of Operations
For the year ended September 30, 2005
<Table>
<Caption>
ICON ICON ICON ICON
ICON CORE COVERED EQUITY LONG/SHORT
BOND FUND EQUITY FUND CALL FUND INCOME FUND FUND
----------- ----------- ----------- ----------- -----------
INVESTMENT INCOME
Interest $ 3,539,321 $ 76,460 $ 1,974 $ 931,302 $ 25,263
Dividends - 1,208,996 515,551 3,208,487 557,213
Foreign taxes withheld - (3,186) (139) (15,141) (1,400)
----------- ----------- ----------- ----------- -----------
Total Investment Income 3,539,321 1,282,270 517,386 4,124,648 581,076
----------- ----------- ----------- ----------- -----------
EXPENSES
Advisory fees 432,662 1,021,548 396,030 1,007,707 476,178
Distribution fees:
Class I 177,963 173,781 124,473 328,298 117,753
Class C 7,858 664,742 29,091 30,182 88,334
Fund accounting fees 42,276 45,702 41,516 48,330 40,065
Transfer agent fees 56,190 101,388 38,085 89,666 35,429
Administration fees 34,823 65,773 25,507 64,936 27,123
Registration fees:
Class I 14,921 14,154 13,551 17,214 14,010
Class C 13,140 13,496 13,033 13,146 13,416
Custody fees 14,270 24,417 99,501 28,560 15,611
Insurance expense 3,494 5,497 2,451 6,761 1,532
Trustee fees and expenses 8,277 14,446 6,930 16,085 6,071
Interest expense 138 34 15,556 1,360 9,151
Dividends on short positions - - - - 13,982
Other expenses 67,500 97,246 48,470 99,536 42,168
----------- ----------- ----------- ----------- -----------
Total expenses before expense
(reimbursement)/recoupment 873,512 2,242,224 854,194 1,751,781 900,823
----------- ----------- ----------- ----------- -----------
Expense (reimbursement)/recoupment by
Advisor due to expense limitation
agreement (76,145) - (67,070) (11,894) 45,739
----------- ----------- ----------- ----------- -----------
Net Expenses 797,367 2,242,224 787,124 1,739,887 946,562
----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) 2,741,954 (959,954) (269,738) 2,384,761 (365,486)
----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized gain/(loss) from:
Investment transactions (11,900) 14,916,012 3,036,502 8,340,028 257,625
Written options - - (3,965,764) - -
Securities sold short - - - - (1,543,717)
Foreign currency translations - - - (1,615) -
----------- ----------- ----------- ----------- -----------
Total net realized gain/(loss) (11,900) 14,916,012 (929,262) 8,338,413 (1,286,092)
----------- ----------- ----------- ----------- -----------
Change in net unrealized
appreciation/(depreciation) on
investments, written options and
securities sold short (2,183,484) 8,567,211 5,856,219 5,084,010 10,046,242
----------- ----------- ----------- ----------- -----------
Net realized and unrealized gain/(loss) on
investments (2,195,384) 23,483,223 4,926,957 13,422,423 8,760,150
----------- ----------- ----------- ----------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 546,570 $22,523,269 $ 4,657,219 $15,807,184 $ 8,394,664
=========== =========== =========== =========== ===========
</Table>
The accompanying notes are an integral part of the financial statements.
64 Financial Statements
THIS PAGE INTENTIONALLY LEFT BLANK
Statement of Changes in Net Assets
<Table>
<Caption>
ICON BOND FUND ICON CORE EQUITY FUND
---------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
------------------ ------------------ ------------------ ------------------
OPERATIONS
Net investment income/(loss) $ 2,741,954 $ 1,994,678 $ (959,954) $ (861,159)
Net realized gain/(loss) from
investments transactions, written
options and securities sold short (11,900) 772,882 14,916,012 5,419,845
Change in net unrealized
appreciation/(depreciation) on
investments, written options and
securities sold short (2,183,484) (160,120) 8,567,211 6,605,972
------------------ ------------------ ------------------ ------------------
Net increase/(decrease) in net
assets resulting from operations 546,570 2,607,440 22,523,269 11,164,658
------------------ ------------------ ------------------ ------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income
Class I (2,853,077) (1,972,705) - -
Class C (31,705) (11,095) - -
Class Z (101) (10) - -
Net realized gains
Class I (338,815) - - -
Class C (4,379) - - -
Class Z (6) - - -
------------------ ------------------ ------------------ ------------------
Net decrease from dividends and
distributions (3,228,083) (1,983,810) - -
------------------ ------------------ ------------------ ------------------
FUND SHARE TRANSACTIONS
Shares sold
Class I 68,872,908 33,416,648 58,022,225 16,988,164
Class C 1,493,441 342,757 24,404,517 18,403,784
Class Z 4,736 645 1,088,280 35,784
Reinvested dividends and
distributions
Class I 3,161,012 1,971,854 - -
Class C 34,828 10,191 - -
Class Z 106 10 - -
Shares repurchased
Class I (48,473,705) (13,848,513) (23,305,845) (13,079,331)
Class C (876,763) (241,960) (10,044,802) (6,132,345)
Class Z (181) - (7,314) (1,884)
------------------ ------------------ ------------------ ------------------
Net increase/(decrease) from fund
share transactions 24,216,382 21,651,632 50,157,061 16,214,172
------------------ ------------------ ------------------ ------------------
Total net increase/(decrease) in net
assets 21,534,869 22,275,262 72,680,330 27,378,830
NET ASSETS
Beginning of period 61,873,243 39,597,981 100,409,810 73,030,980
------------------ ------------------ ------------------ ------------------
End of period $ 83,408,112 $ 61,873,243 $173,090,140 $100,409,810
================== ================== ================== ==================
</Table>
66 Financial Statements
<Table>
<Caption>
ICON COVERED CALL FUND ICON EQUITY INCOME FUND ICON LONG/SHORT FUND
--------------------------------------- --------------------------------------- ---------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ (269,738) $ (169,445) $ 2,384,761 $ 1,986,249 $ (365,486) $ (108,267)
(929,262) 2,216,139 8,338,413 1,009,178 (1,286,092) 1,862,548
5,856,219 701,636 5,084,010 6,839,072 10,046,242 108,880
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
4,657,219 2,748,330 15,807,184 9,834,499 8,394,664 1,863,161
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
- - (2,332,579) (1,955,243) - -
- - (30,549) (18,936) - -
- - (410) (169) - -
(2,014,072) (813,994) (690,470) - (1,266,628) (122,911)
(97,417) (11,304) (13,763) - (183,354) (7,238)
(118) - (103) - (1,524) -
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
(2,111,607) (825,298) (3,067,874) (1,974,348) (1,451,506) (130,149)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
22,320,205 28,282,997 40,993,500 84,251,666 48,606,994 21,568,653
2,209,902 1,905,597 2,071,831 1,466,895 10,192,112 3,489,408
727 3,139 9,609 13,644 101,583 32,109
1,901,482 802,492 2,824,292 1,849,956 1,158,739 121,354
88,746 10,975 36,636 17,806 163,651 7,238
118 - 513 169 1,524 -
(15,241,634) (9,000,921) (44,139,761) (18,768,921) (26,815,665) (8,589,480)
(751,331) (127,212) (418,636) (296,277) (1,348,857) (129,159)
(790) - (3,317) (19) (7,915) -
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
10,527,425 21,877,067 1,374,667 68,534,919 32,052,166 16,500,123
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
13,073,037 23,800,099 14,113,977 76,395,070 38,995,324 18,233,135
44,929,046 21,128,947 119,450,627 43,055,557 28,227,792 9,994,657
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
$ 58,002,083 $44,929,046 $133,564,604 $119,450,627 $ 67,223,116 $28,227,792
================== ================== ================== ================== ================== ==================
</Table>
Financial Statements 67
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON BOND FUND ICON CORE EQUITY FUND
---------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
------------------ ------------------ ------------------ ------------------
TRANSACTIONS IN FUND SHARES
Shares sold
Class I 6,619,646 3,199,688 4,143,039 1,380,045
Class C 142,887 32,748 1,818,535 1,535,906
Class Z 455 63 74,785 2,959
Reinvested dividends and
distributions
Class I 304,338 188,665 - -
Class C 3,347 979 - -
Class Z 10 1 - -
Shares repurchased
Class I (4,658,204) (1,319,789) (1,647,530) (1,060,722)
Class C (84,344) (23,478) (740,648) (511,842)
Class Z (17) - (514) (154)
------------------ ------------------ ------------------ ------------------
Net increase/(decrease) 2,328,118 2,078,877 3,647,667 1,346,192
------------------ ------------------ ------------------ ------------------
Shares outstanding beginning of
period 5,881,623 3,802,746 7,982,499 6,636,307
------------------ ------------------ ------------------ ------------------
Shares outstanding end of period 8,209,741 5,881,623 11,630,166 7,982,499
================== ================== ================== ==================
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding short-term securities and written options)
Purchase of securities (including
short sale transactions) $30,243,959 $14,692,029 $230,365,019 $117,495,384
Proceeds from sales of securities
(including short sale
transactions) 18,795,990 14,436,998 183,339,859 101,917,674
Purchases of long-term U.S.
government securities 27,647,371 22,260,709 - -
Proceeds from sales of long-term
U.S. government securities 28,497,651 1,889,387 - -
ACCUMULATED UNDISTRIBUTED NET
INVESTMENT INCOME/(LOSS) $ (4,435) $ 153,123 $ - $ -
================== ================== ================== ==================
</Table>
The accompanying notes are an integral part of the financial statements.
68 Financial Statements
<Table>
<Caption>
ICON COVERED CALL FUND ICON EQUITY INCOME FUND ICON LONG/SHORT FUND
--------------------------------------- --------------------------------------- ---------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
1,669,418 2,169,073 2,741,457 5,938,018 3,261,050 1,570,724
168,643 147,349 139,266 104,841 700,414 257,198
54 239 633 995 6,835 2,309
141,902 63,040 183,923 128,188 77,095 9,511
6,733 877 2,394 1,248 11,065 574
9 - 34 12 101 -
(1,138,447) (681,412) (2,917,378) (1,336,866) (1,771,701) (632,107)
(56,539) (9,841) (27,971) (21,597) (91,534) (9,606)
(57) - (219) (1) (524) -
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
791,716 1,689,325 122,139 4,814,838 2,192,801 1,198,603
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
3,393,555 1,704,230 8,336,834 3,521,996 2,031,462 832,859
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
4,185,271 3,393,555 8,458,973 8,336,834 4,224,263 2,031,462
================== ================== ================== ================== ================== ==================
$92,623,516 $74,412,247 $187,781,662 $111,360,137 $83,387,797 $38,171,546
86,038,491 53,342,570 188,205,266 44,139,424 57,223,650 22,620,730
- - 1,564,975 - - -
- - - - - -
$ - $ - $ 485,602 $ 690,514 $ - $ -
================== ================== ================== ================== ================== ==================
</Table>
Financial Statements 69
Financial Highlights
<Table>
<Caption>
INCOME FROM INVESTMENT
OPERATIONS
----------------------------------------
NET REALIZED
NET ASSET NET AND TOTAL
VALUE, INVESTMENT AND UNREALIZED FROM
BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT
OF PERIOD (LOSS)(X) ON INVESTMENTS OPERATIONS
--------- ---------- -------------- ----------
ICON BOND FUND
CLASS I+
Year Ended September 30, 2005 $10.52 0.40 (0.29) 0.11
Year Ended September 30, 2004 $10.41 0.45 0.10 0.55
September 30, 2002 (inception)
to September 30, 2003 $10.00 0.42 0.38 0.80
CLASS C
Year Ended September 30, 2005 $10.54 0.33 (0.28) 0.05
Year Ended September 30, 2004 $10.42 0.38 0.12 0.50
October 21, 2002 (inception) to
September 30, 2003 $ 9.79 0.37 0.60 0.97
CLASS Z
Year Ended September 30, 2005 $10.51 0.42 (0.28) 0.14
May 6, 2004 (inception) to
September 30, 2004 $10.26 0.46 (0.02) 0.44
ICON CORE EQUITY FUND
CLASS I
Year Ended September 30, 2005 $12.78 (0.05) 2.41 2.36
Year Ended September 30, 2004 $11.12 (0.07) 1.73 1.66
Year Ended September 30, 2003 $ 9.50 (0.04) 1.66 1.62
Year Ended September 30, 2002 $10.04 (0.07) (0.20) (0.27)
October 12, 2000 (inception) to
September 30, 2001 $10.00 (0.05) 0.09 0.04
CLASS C
Year Ended September 30, 2005 $12.41 (0.15) 2.32 2.17
Year Ended September 30, 2004 $10.88 (0.16) 1.69 1.53
Year Ended September 30, 2003 $ 9.36 (0.11) 1.63 1.52
Year Ended September 30, 2002 $ 9.98 (0.15) (0.20) (0.35)
November 28, 2000 (inception) to
September 30, 2001 $10.62 (0.10) (0.54) (0.64)
CLASS Z
Year Ended September 30, 2005 $12.79 (0.14) 2.47 2.33
May 6, 2004 (inception) to
September 30, 2004 $12.07 (0.03) 0.75 0.72
ICON COVERED CALL FUND
CLASS I+
Year Ended September 30, 2005 $13.25 (0.06) 1.26 1.20
Year Ended September 30, 2004 $12.40 (0.07) 1.36 1.29
September 30, 2002 (inception)
to September 30, 2003 $10.00 (0.07) 2.47 2.40
CLASS C
Year Ended September 30, 2005 $13.06 (0.16) 1.23 1.07
Year Ended September 30, 2004 $12.32 (0.16) 1.34 1.18
November 21, 2002 (inception) to
September 30, 2003 $10.75 (0.17) 1.74 1.57
CLASS Z
Year Ended September 30, 2005 $13.29 (0.03) 1.25 1.22
May 6, 2004 (inception) to
September 30, 2004 $12.86 (0.01) 0.44 0.43
<Caption>
LESS DIVIDENDS AND DISTRIBUTIONS
------------------------------------------
DIVIDENDS NET
FROM DISTRIBUTIONS TOTAL ASSET
NET FROM NET DIVIDENDS VALUE,
INVESTMENT REALIZED AND END OF
INCOME GAINS DISTRIBUTIONS PERIOD
---------- ------------- ------------- ---------
ICON BOND FUND
CLASS I+
Year Ended September 30, 2005 (0.41) (0.06) (0.47) $10.16
Year Ended September 30, 2004 (0.44) - (0.44) $10.52
September 30, 2002 (inception)
to September 30, 2003 (0.39) - (0.39) $10.41
CLASS C
Year Ended September 30, 2005 (0.35) (0.06) (0.41) $10.18
Year Ended September 30, 2004 (0.38) - (0.38) $10.54
October 21, 2002 (inception) to
September 30, 2003 (0.34) - (0.34) $10.42
CLASS Z
Year Ended September 30, 2005 (0.44) (0.06) (0.50) $10.15
May 6, 2004 (inception) to
September 30, 2004 (0.19) - (0.19) $10.51
ICON CORE EQUITY FUND
CLASS I
Year Ended September 30, 2005 - - - $15.14
Year Ended September 30, 2004 - - - $12.78
Year Ended September 30, 2003 - - - $11.12
Year Ended September 30, 2002 - (0.27) (0.27) $ 9.50
October 12, 2000 (inception) to
September 30, 2001 - - - $10.04
CLASS C
Year Ended September 30, 2005 - - - $14.58
Year Ended September 30, 2004 - - - $12.41
Year Ended September 30, 2003 - - - $10.88
Year Ended September 30, 2002 - (0.27) (0.27) $ 9.36
November 28, 2000 (inception) to
September 30, 2001 - - - $ 9.98
CLASS Z
Year Ended September 30, 2005 - - - $15.12
May 6, 2004 (inception) to
September 30, 2004 - - - $12.79
ICON COVERED CALL FUND
CLASS I+
Year Ended September 30, 2005 - (0.57) (0.57) $13.88
Year Ended September 30, 2004 - (0.44) (0.44) $13.25
September 30, 2002 (inception)
to September 30, 2003 - - - $12.40
CLASS C
Year Ended September 30, 2005 - (0.57) (0.57) $13.56
Year Ended September 30, 2004 - (0.44) (0.44) $13.06
November 21, 2002 (inception) to
September 30, 2003 - - - $12.32
CLASS Z
Year Ended September 30, 2005 - (0.57) (0.57) $13.94
May 6, 2004 (inception) to
September 30, 2004 - - - $13.29
</Table>
70 Financial Highlights
<Table>
<Caption>
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO AVERAGE
AVERAGE NET ASSETS(A) NET ASSETS(A)
NET ASSETS, AVERAGE NET ---------------------- ------------------------
END OF ASSETS FOR BEFORE AFTER BEFORE AFTER PORTFOLIO
TOTAL PERIOD THE PERIOD EXPENSE EXPENSE EXPENSE EXPENSE TURNOVER
RETURN* (IN THOUSANDS) (IN THOUSANDS) LIMITATION LIMITATION LIMITATION LIMITATION RATE(B)
------- -------------- -------------- ---------- ---------- ----------- ----------- ---------
1.05% $82,415 $71,253 1.18% 1.10% 3.72% 3.80% 76.28%
5.41% $61,502 $46,295 1.29% 1.30% 4.28% 4.27% 37.98%
8.19% $39,338 $33,787 1.45% 1.30% 4.01% 4.16% 41.65%
0.47% $ 988 $ 926 3.42% 1.69% 1.46% 3.19% 76.28%
4.83% $ 371 $ 317 6.84% 1.90% 3.63% 8.57% 37.98%
9.98% $ 260 $ 199 2.05% 1.90% 3.48% 3.63% 41.65%
1.30% $ 5 $ 2 74.28% 0.84% (69.41)% 4.03% 76.28%
4.33% $ 1 $ 1 0.86% 0.86% 4.60% 4.60% 37.98%
18.47% $93,780 $69,660 1.27% N/A (0.33)% N/A 136.82%
14.93% $47,273 $43,044 1.33% N/A (0.59)% N/A 116.26%
17.05% $37,603 $34,007 1.39% N/A (0.37)% N/A 188.07%
(3.23)% $42,232 $37,577 1.36% N/A (0.58)% N/A 107.82%
0.40% $23,261 $23,802 1.60% N/A (0.36)% N/A 124.61%
17.49% $78,145 $66,561 2.04% N/A (1.10)% N/A 136.82%
14.06% $53,101 $45,114 2.08% N/A (1.34)% N/A 116.26%
16.24% $35,428 $30,459 2.14% N/A (1.12)% N/A 188.07%
(4.07)% $27,744 $19,849 2.11% N/A (1.33)% N/A 107.82%
(6.03)% $ 6,324 $ 2,920 2.23% N/A (1.24)% N/A 124.61%
18.22% $ 1,165 $ 229 1.76% N/A (0.94)% N/A 136.82%
5.97% $ 36 $ 32 1.12% N/A (0.28)% N/A 116.26%
9.21% $54,347 $49,938 1.54% 1.45% (0.57)% (0.48)% 159.35%
10.53% $42,962 $30,305 1.60% 1.45% (0.67)% (0.52)% 167.57%
24.00% $20,981 $14,544 2.07% 1.45% (1.27)% (0.65)% 184.24%
8.31% $ 3,652 $ 2,914 2.80% 2.20% (1.80)% (1.20)% 159.35%
9.69% $ 1,964 $ 838 3.89% 2.20% (2.93)% (1.23)% 167.57%
14.60% $ 148 $ 50 2.83% 2.20% (2.13)% (1.50)% 184.24%
9.42% $ 3 $ 3 53.94% 1.20% (52.97)% (0.23)% 159.35%
3.34% $ 3 $ 2 1.12% 1.12% (0.11)% (0.11)% 167.57%
</Table>
Financial Highlights 71
Financial Highlights (continued)
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
NET ASSET NET NET REALIZED
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM
BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT
OF PERIOD (LOSS)(X) ON INVESTMENTS OPERATIONS
--------- ---------- -------------- ----------
ICON EQUITY INCOME FUND
CLASS I+
Year Ended September 30, 2005 $14.33 0.27 1.54 1.81
Year Ended September 30, 2004 $12.22 0.31 2.09 2.40
September 30, 2002 (inception) to
September 30, 2003 $10.00 0.25 2.20 2.45
CLASS C
Year Ended September 30, 2005 $14.27 0.13 1.54 1.67
Year Ended September 30, 2004 $12.21 0.20 2.06 2.26
November 8, 2002 (inception) to
September 30, 2003 $10.63 0.16 1.59 1.75
CLASS Z
Year Ended September 30, 2005 $14.33 0.28 1.55 1.83
May 10, 2004 (inception) to
September 30, 2004 $13.43 0.39 0.70 1.09
ICON LONG/SHORT FUND(D)
CLASS I+
Year Ended September 30, 2005 $13.92 (0.08) 2.65 2.57
Year Ended September 30, 2004 $12.00 (0.08) 2.16 2.08
September 30, 2002 (inception) to
September 30, 2003 $10.00 (0.07) 2.07 2.00
CLASS C
Year Ended September 30, 2005 $13.73 (0.19) 2.59 2.40
Year Ended September 30, 2004 $11.92 (0.18) 2.15 1.97
October 17, 2002 (inception) to
September 30, 2003 $10.61 (0.15) 1.46 1.31
CLASS Z
Year Ended September 30, 2005 $13.94 (0.05) 2.66 2.61
May 6, 2004 (inception) to
September 30, 2004 $13.99 (0.04) (0.01) (0.05)
<Caption>
LESS DIVIDENDS AND DISTRIBUTIONS
------------------------------------------
DIVIDENDS DISTRIBUTIONS NET ASSET
FROM NET FROM NET TOTAL VALUE,
INVESTMENT REALIZED DIVIDENDS AND END OF
INCOME GAINS DISTRIBUTIONS PERIOD
---------- ------------- ------------- ---------
ICON EQUITY INCOME FUND
CLASS I+
Year Ended September 30, 2005 (0.27) (0.08) (0.35) $15.79
Year Ended September 30, 2004 (0.29) - (0.29) $14.33
September 30, 2002 (inception) to
September 30, 2003 (0.23) - (0.23) $12.22
CLASS C
Year Ended September 30, 2005 (0.15) (0.08) (0.23) $15.71
Year Ended September 30, 2004 (0.20) - (0.20) $14.27
November 8, 2002 (inception) to
September 30, 2003 (0.17) - (0.17) $12.21
CLASS Z
Year Ended September 30, 2005 (0.29) (0.08) (0.37) $15.79
May 10, 2004 (inception) to
September 30, 2004 (0.19) - (0.19) $14.33
ICON LONG/SHORT FUND(D)
CLASS I+
Year Ended September 30, 2005 - (0.50) (0.50) $15.99
Year Ended September 30, 2004 - (0.16) (0.16) $13.92
September 30, 2002 (inception) to
September 30, 2003 - - - $12.00
CLASS C
Year Ended September 30, 2005 - (0.50) (0.50) $15.63
Year Ended September 30, 2004 - (0.16) (0.16) $13.73
October 17, 2002 (inception) to
September 30, 2003 - - - $11.92
CLASS Z
Year Ended September 30, 2005 - (0.50) (0.50) $16.05
May 6, 2004 (inception) to
September 30, 2004 - - - $13.94
</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.
(c) The limitation on expenses for Class Z shares occurred when the Advisor
reimbursed the Fund for excise and income taxes incurred during the period
(Note 2). These expenses were extraordinary expenses not subject to the
contractual expense limitation discussed in Note 2.
(d) The Fund's operating expenses, not including dividends on short positions,
are contractually limited to 2.30% for Class C, 1.55% for Class I, and
1.30% for Class Z. The ratios in these financial highlights reflect the
limitation, including the dividends on short positions.
+ The Fund has changed its originally stated inception date of October 1,
2002 to September 30, 2002.
The accompanying notes are an integral part of the financial statements.
72 Financial Highlights
<Table>
<Caption>
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO AVERAGE
AVERAGE NET ASSETS(A) NET ASSETS(A)
NET ASSETS, AVERAGE NET ---------------------- -----------------------
END OF ASSETS FOR BEFORE AFTER BEFORE AFTER PORTFOLIO
TOTAL PERIOD THE PERIOD EXPENSE EXPENSE EXPENSE EXPENSE TURNOVER
RETURN* (IN THOUSANDS) (IN THOUSANDS) LIMITATION LIMITATION LIMITATION LIMITATION RATE(B)
------- -------------- -------------- ---------- ---------- ---------- ---------- ---------
12.71% $129,681 $131,412 1.27% 1.27% 1.79% 1.79% 143.82%
19.69% $117,552 $88,318 1.35% 1.37% 2.25% 2.23% 51.84%
24.72% $42,474 $25,288 1.72% 1.45% 2.23% 2.30% 35.17%
11.71% $ 3,861 $ 3,026 2.53% 2.20% 0.53% 0.86% 143.82%
18.56% $ 1,885 $ 1,053 3.47% 2.20% 0.12% 1.40% 51.84%
16.63% $ 581 $ 348 2.48% 2.20% 1.10% 1.38% 35.17%
12.89% $ 23 $ 20 9.37% 1.20% (6.31)% 1.86% 143.82%
8.12% $ 14 $ 12 1.11% 0.97%(c) 2.62% 2.76% 51.84%
18.69% $53,158 $47,211 1.58% 1.58% (0.53)% (0.53)% 112.06%
17.42% $24,480 $14,374 2.15% 1.74% (1.03)% (0.62)% 148.32%
20.00% $ 9,726 $ 6,997 3.09% 1.55% (2.20)% (0.66)% 162.25%
17.68% $13,925 $ 8,860 2.37% 2.32% (1.35)% (1.31)% 112.06%
16.61% $ 3,716 $ 1,417 3.70% 2.49% (2.57)% (1.35)% 148.32%
12.35% $ 269 $ 186 3.84% 2.30% (2.99)% (1.45)% 162.25%
18.96% $ 140 $ 89 3.07% 1.33% (2.07)% (0.33)% 112.06%
(0.36)% $ 32 $ 29 1.98% 1.76% (0.50)% (0.28)% 148.32%
</Table>
Financial Highlights 73
Notes to Financial Statements
September 30, 2005
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 September 30, 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
shareholder servicing costs and each Class has exclusive voting rights with
respect to its distribution plan. There are currently 12 other active funds
within the Trust. Those funds are covered by separate prospectuses and
shareholder reports.
Each Fund is authorized to issue an unlimited number of no par shares. The
investment objective of the Bond Fund is maximum total return. The investment
objective of the Core Equity Fund is long-term capital appreciation with a
secondary objective of capital preservation. The investment objective of the
Covered Call Fund is modest capital appreciation and to maximize realized gains
from writing covered call options. The investment objective of the Equity Income
Fund is modest capital appreciation and income. The investment objective of the
Long/Short Fund is capital appreciation.
The Funds may have elements of risk, including the risk of loss of principal.
There is no assurance that the investment process will consistently lead to
successful results. An investment concentrated in sectors and industries may
involve greater risk and volatility than a more diversified investment.
Investing in fixed income securities such as bonds involves interest rate risk.
When interest rates rise, the value of fixed income securities generally
decreases. Additionally, the Bond Fund may invest in medium- and lower-quality
debt securities. High-yield bonds involve a greater risk of default and price
volatility than U.S. government and other high-quality bonds. The Covered Call
Fund invests in call options; call options involve certain risks, such as
limited gains and lack of liquidity of the underlying securities, and are not
suitable for all investors. The Long/Short Fund invests short in securities;
there are risks associated with selling short, including the risk that the
Long/Short Fund may have to cover its short position at a higher price than the
short sale, resulting in a loss. The Fund's loss on a short sale is potentially
unlimited as a loss occurs when the value of a security sold short increases.
There are also risks associated with small and mid-cap investing, including
limited product lines, less liquidity and small market share. Investments in
foreign securities and currency transactions may involve certain considerations
and risks not typically
74 Notes to Financial Statements
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.
In addition, in the normal course of business, the Funds may enter into various
agreements that provide for general indemnifications. Each Fund's maximum
exposure under these arrangements is unknown as any potential exposure involves
future claims that may be made against each Fund. However, based on experience,
the Funds expect the risk of loss to be remote.
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 closing price at the
close of regular trading on the New York Stock Exchange (the "NYSE") (normally 4
p.m. Eastern time) each day the NYSE is open, except that securities traded
primarily on the NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at
the NASDAQ Official Closing Price provided by NASDAQ each business day. The
Funds use pricing services to report the market value of securities in their
portfolios; if a pricing service is not able to provide a price, or the pricing
service quote of valuation is inaccurate or does not reflect the market value of
the security, prices may be obtained through market quotations from independent
broker/dealers. If market quotations from these sources are not readily
available, the Funds' securities or other assets are valued at fair value as
determined in good faith by the Funds' Board of Trustees ("Board") or pursuant
to procedures approved by the Board. The valuation assigned to fair-valued
securities for purposes of calculating a Fund's net asset value ("NAV") may
differ from the security's most recent closing market price and from the prices
used by other mutual funds to calculate their NAVs.
Lacking any sales that day, the security is valued at the current closing bid
price (or yield equivalent thereof) or based on quotes obtained from dealers
making a market for the security. Options are valued at their closing mid-price
on the principal market where the option is traded. Mid-price is the average of
the closing bid and closing ask prices. Debt securities with a remaining
maturity of greater than sixty days are valued in accordance with the evaluated
bid price supplied by the pricing service. The evaluated bid price supplied by
the pricing
Notes to Financial Statements 75
Notes to Financial Statements (continued)
service is a matrix system which considers such factors as security prices,
yields, maturities and ratings. 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. Prior to February 22,
2005, London closing exchange rates were used to convert foreign security values
into U.S. dollars. After that date, currency rates as of the close of the New
York Stock Exchange were used to convert foreign security values into U.S.
dollars.
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.
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, 2005.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the prevailing rates of exchange daily.
Income and expenses are translated into U.S. dollars at the prevailing exchange
rate on the respective dates of the transactions. Purchases and sales of
securities are translated into U.S. dollars at the contractual currency exchange
rates established at the time of each trade.
The Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Net unrealized
appreciation or depreciation on investments and foreign currency translations
arise from changes in the value of assets and liabilities, resulting from
changes in the exchange rates and changes in market prices of securities held.
76 Notes to Financial Statements
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. The
Funds did not enter into any forward foreign currency contracts during the year
ended September 30, 2005.
FUTURES CONTRACTS
The Funds may invest in financial futures contracts for the purpose of hedging
their existing securities or securities it intends to purchase against
fluctuations in fair value caused by changes in prevailing markets. Upon
entering into a financial futures contract, the Fund is required to pledge to
the broker an amount of cash and/or other assets equal to a certain percentage
of the contract amount (initial margin deposit). Subsequent payments, known as
"variation margin," are made or received by the Fund each day, depending on the
daily fluctuations in the fair value of the underlying security. The Fund
recognizes a gain or loss equal to the daily variation margin. Should market
conditions move unexpectedly, the Fund may not achieve the anticipated benefits
of the financial futures contracts and may realize a loss. The use of futures
transactions involves the risk of imperfect correlation in movements in the
price of futures contracts and the underlying hedged assets. The Funds held no
financial futures contracts during the year ended September 30, 2005.
OPTIONS TRANSACTIONS
The Covered Call Fund writes (sells) call options as part of its normal
investment activities. Each Fund may write (sell) put and call options only if
it owns an offsetting position in the underlying security.
When a Fund writes a put or call option, an amount equal to the premium received
is included in the Statement of Assets and Liabilities as a liability. The
amount of the liability is subsequently marked-to-market to reflect the current
market value of the option. Such liability is subject to off balance sheet risks
to the extent of any future increases in market value of the written options. If
an
Notes to Financial Statements 77
Notes to Financial Statements (continued)
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 a closing
sale transaction, a gain or loss is realized. If the Fund exercises a call, the
cost of the security acquired is increased by the premium paid for the call. If
the Fund exercises a put option, a gain or loss is realized from the sale of the
underlying security, and the proceeds from such a sale are decreased by the
premium originally paid. Written and purchased options are non-income producing
securities.
SHORT SALES
The Long/Short Fund may engage in short sales (selling securities it does not
own) as part of its normal investment activities. These short sales are
collateralized by cash equivalents or securities held with the Fund's prime
broker and segregated account at the Fund's custodian. The collateral required
is determined daily by reference to the market value of the short positions.
Such collateral for the Fund is held by one broker. Dividend expense on short
sales is treated as an expense on the Statement of Operations. Liabilities for
securities sold short are reported at market value in the Statement of Assets
and Liabilities. Such liabilities are subject to off-balance sheet risk to the
extent of any future increases in market value of the securities sold short. The
ultimate liability for securities sold short 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 gains.
78 Notes to Financial Statements
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. Other Funds distribute income, if any,
annually. 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 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. Discounts and
premiums on securities purchased are amortized over the life of the respective
securities.
INVESTMENT TRANSACTIONS
Security transactions are accounted for no later than one business day after
trade date. However, for financial reporting purposes security transactions are
accounted for on 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.
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
Notes to Financial Statements 79
Notes to Financial Statements (continued)
average daily nets assets of the Bond Fund, 0.75% of average daily net assets of
the Core Equity, Covered Call and Equity Income Funds, and 0.85% of average
daily net assets of the Long/Short Fund. ICON has contractually agreed to limit
its investment advisory fee and/or reimburse certain of the Funds' operating
expenses (exclusive of brokerage, interest, taxes, and extraordinary expenses)
to the extent necessary to ensure that the Funds' operating expenses do not
exceed 1.60% for Class C, 1.00% for Class I and 0.75% for Class Z shares of the
Bond Fund effective January 29, 2005. Prior to that date, ICON had contractually
agreed to limit the expenses of the Bond Fund to 1.90% for Class C, 1.30% for
Class I and 1.05% for Class Z shares. ICON has also contractually agreed to
limit its investment advisory fee and/or reimburse certain operating expenses
(exclusive of brokerage, interest, taxes, and extraordinary expenses) to the
extent necessary to ensure that operating expenses do not exceed 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. The Bond Fund expense limitation will continue in
effect until at least January 31, 2016 and the expenses limitation for the other
Funds will continue until at least January 31, 2016.
To the extent ICON reimburses or absorbs fees and expenses, it may seek payment
of such amounts for up to three years after the expenses were reimbursed or
absorbed. A Fund will make no such payment, however, if the total Fund operating
expenses exceed the expense limits in effect at the time the expenses were
reimbursed or at the time these payments are proposed.
As of September 30, 2005 the following amounts are still available for
recoupment by the Advisor based upon their potential expiration dates:
<Table>
<Caption>
2006 2007 2008
- -----------------------------------------------------------------------------------
ICON Bond Fund $50,621 $ 9,844 $76,145
ICON Covered Call Fund 90,063 58,657 67,070
ICON Equity Income Fund 69,536 - 11,894
ICON Long/Short Fund 63,570 77,195 -
</Table>
TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES
U.S. Bank N.A. ("U.S. Bank") and U.S. Bancorp Fund Services, LLC ("U.S.
Bancorp") provided domestic custodial services, transfer agent services and fund
accounting for the Funds for various portions of the year ended September 30,
2005. U.S. Bank served as the custodian until April 24, 2005 and transfer agent
until April 17, 2005. For these services the Trust paid 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
80 Notes to Financial Statements
$1.5 billion. U.S. Bancorp served as the fund accountant until March 31, 2005,
for which they were paid a minimum fee for fund accounting of $45,000 on the
Core Equity Fund; $58,250 on the Bond Fund, Covered Call Fund, and Long/ Short
Fund; and $48,750 on the Equity Income Fund on the first $100 million of average
net assets. Any amount above $100 million was 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 was charged 0.0125% on any
amount over $100 million and 0.0075% on any amount over $200 million. The Trust
also paid for various out-of-pocket costs incurred by U.S. Bancorp that are
estimated to be 0.02% of average daily net assets.
Effective April 1, 2005, the Trust retained BISYS Fund Services Ohio, Inc.
("BISYS") as Fund Accounting Agent for the Funds. For its services, the Trust
pays BISYS 0.03% on the first $1.75 billion of Trust Assets, 0.0175% on assets
over $1.75 billion and up to $5 billion, and 0.01% on assets in excess of $5
billion.
Effective April 18, 2005, the Trust retained Brown Brothers Harriman ("BBH") as
custodian of the Trust's investments. For domestic custody services, the Trust
pays BBH 0.0065% on the first $50 million of average net assets and 0.0050% on
domestic assets above $50 million, plus certain transaction charges. For foreign
custody services, the Trust pays BBH 0.03% on foreign assets plus certain
transaction charges.
Effective April 25, 2005, the Trust retained Boston Financial Data Services,
Inc. as the Trust's transfer agent. For these services, the Trust pays an
account fee of $13.25 per open account, $7.00 per networked account, $1.80 per
closed account, plus certain other transaction and cusip charges.
ADMINISTRATIVE SERVICES
The Trust has entered into an administrative services agreement with ICON
pursuant to which ICON oversees the administration of the Trust's business and
affairs, including regulatory reporting and all necessary office space,
equipment, personnel and facilities. This agreement provides for an annual fee
to ICON of 0.05% on the Funds' first $1.5 billion of average daily net assets
and 0.045% on average daily net assets in excess of $1.5 billion. The
administrative services agreement provides that ICON will not be liable for any
error of judgment, mistake of law, or any loss suffered by the Trust in
connection with matters to which the administrative services agreement relates,
except for a loss resulting from willful misfeasance, bad faith or negligence by
ICON in the performance of its duties.
For the period October 1, 2004 through March 31, 2005, U.S. Bancorp provided
sub-administration services to ICON for a sub-administration fee of
Notes to Financial Statements 81
Notes to Financial Statements (continued)
0.02% on the Trust's first $1.5 billion of average daily net assets and 0.015%
on assets above $1.5 billion, subject to a minimum annual fee of $140,000.
Effective April 1, 2005, ICON entered into a sub-administration agreement with
BISYS pursuant to which BISYS assists ICON with the administration and business
affairs of the Trust. For its services, ICON pays BISYS at an annual rate of
0.025% on the first $1.75 billion of Trust assets and 0.015% on assets above
$1.75 billion.
DISTRIBUTION FEES
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act ("12b-1 Plan") under which the Funds are authorized to compensate the Funds'
distributor, ICON Distributors, Inc. ("IDI") (an affiliate of the adviser) for
the sale and distribution of shares. Under the 12b-1 Plan, 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. The total amount paid under the 12b-1 plans by the Funds is shown in the
Statement of Operations.
RELATED PARTIES
Certain Officers and Directors of ICON are also Officers and Trustees of the
Funds; however, such Officers and Trustees (with the exception of the Chief
Compliance Officer, "CCO") receive no compensation from the Funds. The CCO's
salary is paid 90% by the Funds and 10% by the Adviser. For the year ended
September 30, 2005, the total related amounts paid by the Trust under this
arrangement are included in Other Expenses on the Statements of Operations.
Some of the 12b-1 amounts received by IDI, discussed in the Distribution Fees,
has been used to offset various shareholder servicing costs incurred by the
Advisor. For the year ended September 30, 2005 this amount was $73,221.
3. LINE OF CREDIT
The Funds had entered into Lines of Credit agreements with U.S. Bank through
March 31, 2005 that allowed the Funds to borrow funds, subject to certain
conditions for temporary purposes. Interest on these borrowings was calculated
at prime. A commitment fee of $500 per line of credit has been paid by each
82 Notes to Financial Statements
Fund. The maximum borrowing was limited to 25% of eligible securities held by
the portfolio subject to the following maximums:
<Table>
<Caption>
AVERAGE AVERAGE
U.S. BANK BBH
MAXIMUM BORROWING BORROWING
- ----------------------------------------------------------------------------
ICON Bond Fund** $ 9,000,000 $196,500 $499,969
ICON Core Equity Fund 15,000,000 - 114,824
ICON Covered Call Fund** 7,000,000 605,487 489,372
ICON Equity Income Fund 25,000,000 943,000 542,771
ICON Long/Short Fund** 3,000,000 292,556 712,668
</Table>
** Fund had outstanding borrowings as of September 30, 2005.
This agreement was terminated when the custody was transferred to BBH.
Effective April 18, 2005, the Funds entered into Lines of Credit agreements with
BBH; the maximum borrowing is limited to 25% of eligible securities held by the
portfolio subject to a maximum borrowing limit by the Trust of $115 million.
Interest is charged at LIBOR plus 2.00% which was 5.86% at September 30, 2005.
4. OPTIONS CONTRACTS WRITTEN
The number of option contracts written and the premiums received by the ICON
Covered Call Fund during the year ended September 30, 2005, were as follows:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
- -------------------------------------------------------------------------------------
Options outstanding, beginning of period 11,776 $ 1,035,052
Options written during period 64,942 15,066,770
Options expired during period (11,040) (2,258,304)
Options closed during period (49,393) (10,730,372)
Options exercised during period (3,024) (641,747)
--------- ------------
Options outstanding, end of period 13,261 $ 2,471,399
========= ============
</Table>
5. FEDERAL INCOME TAX
Income and capital gain distributions are determined in accordance with income
tax regulations that may differ from accounting principles that are generally
accepted in the United States of America. These differences are due to differing
treatments for items such as net short-term gains, deferrals of wash losses,
foreign currency transactions, net investment losses, and capital loss
carryforwards.
Notes to Financial Statements 83
Notes to Financial Statements (continued)
The tax characteristics of dividends and distributions paid to shareholders
during the fiscal year ended September 30, 2005, were as follows:
<Table>
<Caption>
DISTRIBUTIONS PAID FROM
----------------------- TAX TOTAL
ORDINARY NET LONG- TOTAL TAXABLE RETURN OF DISTRIBUTIONS
FUND INCOME TERM GAINS DISTRIBUTIONS CAPITAL PAID
- ------------------------------------------------------------------------------------------------------
ICON Bond Fund $2,799,032 $343,200 $3,142,232 $ - $3,142,232
ICON Covered Call Fund 1,404,286 707,268 2,111,554 53 2,111,607
ICON Equity Income Fund 2,443,441 704,336 3,147,777 - 3,147,777
ICON Long/Short Fund 605,334 845,915 1,451,249 257 1,451,506
</Table>
Accumulated capital losses noted below represent net capital loss carryforwards
as of September 30, 2005 that may be available to offset future realized capital
gains and thereby reduce future taxable income distributions.
<Table>
<Caption>
FUND AMOUNTS EXPIRES
- -----------------------------------------------------------------------------
ICON Covered Call Fund $ 621,989 2013
ICON Long/Short Fund 387,875 2013
</Table>
During the year ended September 30, 2005, the following capital loss
carryforwards were used:
<Table>
ICON Core Equity Fund $8,138,524
</Table>
Net capital losses incurred after October 31, and within the taxable year are
deemed to arise on the first business day of the Funds' next taxable year. For
the year ended September 30, 2005, the fund deferred to October 1, 2005 post
October capital losses:
<Table>
<Caption>
CAPITAL
FUND LOSSES
- -----------------------------------------------------------------------
ICON Bond Fund $ 31,259
ICON Covered Call Fund 18,744
ICON Long/Short Fund 898,217
</Table>
As of September 30, 2005, the components of accumulated earnings (deficit) on a
tax basis was as follows:
<Table>
<Caption>
TOTAL
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED ACCUMULATED
ORDINARY NET LONG- ACCUMULATED DISTRIBUTIONS CAPITAL AND APPRECIATION EARNINGS
FUND INCOME TERM GAINS EARNINGS PAYABLE OTHER LOSSES (DEPRECIATION) (DEFICITS)
- --------------------------------------------------------------------------------------------------------------------------------
ICON Bond Fund $ 9,909 $ 8,831 $ 18,740 $ (3,878) $ (31,259) $ (475,172) $ (491,569)
ICON Core Equity Fund - 6,777,488 6,777,488 - - 25,155,374 31,932,862
ICON Covered Call
Fund - - - - (640,733) 8,399,448 7,758,715
ICON Equity Income
Fund 1,017,712 7,933,959 8,951,671 (532,110) - 16,454,950 24,874,511
ICON Long/Short Fund - - - - (1,286,092) 11,702,237 10,416,145
</Table>
84 Notes to Financial Statements
As of September 30, 2005, book cost for financial reporting purposes is
substantially the same for federal income tax purposes and differs from fair
value by net unrealized appreciation/(depreciation) of securities as follows:
<Table>
<Caption>
UNREALIZED UNREALIZED NET APPRECIATION
COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- -----------------------------------------------------------------------------------------
ICON Bond Fund $ 81,060,423 $ 531,831 ($1,007,003) ($475,172)
ICON Core Equity Fund 148,518,138 26,071,293 (915,919) 25,155,374
ICON Covered Call Fund 50,000,025 9,543,359 (1,143,911) 8,399,448
ICON Equity Income Fund 117,491,217 17,724,435 (1,269,485) 16,454,950
ICON Long/Short Fund 54,519,321 12,068,438 (366,201) 11,702,237
</Table>
6. SEGREGATED ACCOUNT AND SHORT SALE COLLATERAL
As of September 30, 2005 the ICON Long/Short Fund had securities or cash
deposits with the counterparty to the short sales in the amount of $1,022,778 as
collateral for the short sales.
Notes to Financial Statements 85
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of the ICON Diversified Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, short 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 "Funds") at September 30, 2005, the results of
each of their operations for the year then ended, the changes in each of their
net assets for each of the two years in the period then ended and the financial
highlights for each of the periods presented, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits 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, 2005 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 28, 2005
86 Report of Accounting Firm
Board of Trustees and Fund Officers
(unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 17 ICON Funds (the "Funds"). The Board is responsible for general oversight
of the Funds' business and for assuring that the Funds are managed in the best
interest of the Funds' shareholders. The Trustees, and their ages, 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, 54, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception. Dr. Callahan also serves as President (1998 to
present) and served as the Chief Investment Officer (1991 to 2004) of ICON
Advisers, Inc. ("ICON Advisers"), the Funds' Investment Adviser. Dr. Callahan is
also President (1998 to present); Director (1991 to present); and was previously
Vice President (1991 to 1998) of ICON Distributors, Inc. ("IDI"), the Funds'
Distributor, and is President of ICON Insurance Agency, Inc. (2004 to present).
Dr. Callahan also serves as the Director (1994 to present), and was previously
Secretary/Treasurer (1994 to 1998) of ICON Management & Research Corporation
("IM&R"), the parent company of ICON Advisers and IDI.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 55. Mr. Bergert has been a Trustee of the Funds since 1999. Mr.
Bergert is President of Venture Capital Management LLC (1997 to present);
General Partner of SOGNO Partners LP, a venture capital company (2001 to
present); and was previously a General Partner with KPMG Peat Marwick, LLP (1979
to 1997). Mr. Bergert is also a Director of Herre Bros, Inc., a contracting
company (1998 to present); Delta Dental of Pennsylvania, an insurance company
(1998 to present); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 56. Mr. Pomeroy has been a Trustee of the Funds since
November 2002. Mr. Pomeroy is Chief Investment Officer and Director of
Investments, Pennsylvania State University (2001 to present) and was Portfolio
Manager and Product Manager, Trinity Investment Management Corporation (1989 to
2001).
GREGORY KELLAM SCOTT, 57. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott was Senior Vice President - Law, General Counsel and
Secretary of GenCorp, Inc., a multinational technology-based manufacturing
company (2002 to 2004); Vice President and General Counsel of Kaiser-Hill
Company LLC, a nuclear clean-up and environmental remediation company (2000 to
2002) and a Colorado Supreme Court Justice (1993 to 2000). Mr. Scott is also a
member of the National Board of Directors of the
Trustees and Officers 87
Board of Trustees and Fund Officers (continued)
(unaudited)
Constituency for Africa (1997 to present) and serves as Executive Director of
Indiana Civil Rights Commission (2005-present).
R. MICHAEL SENTEL, 57. 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, 52. 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, 54. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as ICON Advisers' President (1998 to
present) and served as the Chief Investment Officer (1991 to 2004). Dr. Callahan
is also President (1998 to present), Director (1991 to present) and was
previously Vice President (1991 to 1998) of IDI, and is President of ICON
Insurance Agency, Inc. (2004 to present). Dr. Callahan is also the Director
(1994 to present), and was previously Secretary/Treasurer (1994 to 1998) of
IM&R.
ERIK L. JONSON, 56. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception and from May 20, 2005 to November 15,
2005 Acting Secretary. 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).
88 Trustees and Officers
Other Information (unaudited)
ALL FUNDS
RENEWAL OF INVESTMENT ADVISORY AGREEMENT.
In determining to renew the investment advisory agreements between ICON Funds
(the "Trust") and ICON Advisers, Inc. ("ICON" or the "Adviser") the Board
requested, was provided with and reviewed data with respect to ICON, its
personnel, and the services to be provided to each Fund by ICON under the
Trust's Investment Advisory Agreement dated October 9, 1996, as amended (related
to the Sector, Foreign and Core Equity Funds) and under the Trust's Investment
Advisory Agreement dated July 9, 2002 and effective October 1, 2002, as amended
(related to the Specialty Funds - Bond, Covered Call, Equity Income and
Long/Short Funds) (collectively, the "Advisory Agreements"). The data included
information concerning advisory, distribution and administrative services
provided to the Funds by ICON and its related companies; information concerning
other businesses of those companies; comparative data related to exchange traded
funds versus the Sector Funds; and comparative data obtained from Lipper
Analytical Services related to Fund performance and Fund expenses.
On August 8, 2005, the Board of Trustees, including all of the Trustees that are
not "interested persons" of the Trust (the "Independent Trustees"), approved
continuation of the Advisory Agreements with the Adviser for each Fund for an
additional one-year term commencing October 1, 2005.
The Independent Trustees were represented by independent legal counsel
throughout the process. Prior to acting on the matter, the Independent Trustees
met separately as a group in private sessions with their independent legal
counsel to review and discuss the foregoing information and also met with
management to discuss responses to questions raised during the process. In
addition, the Independent Trustees received materials from their independent
legal counsel discussing the legal standards applicable to their consideration
of the agreement.
In considering the nature, extent and quality of the services provided by the
Adviser, the Board reviewed information relating to the Adviser's operations and
personnel. Among other things, the Adviser provided biographical information on
its professional staff and descriptions of its organizational and management
structure. In the course of their deliberations the Board evaluated, among other
things, information relating to the investment philosophy, strategies and
techniques used in managing each Fund, the qualifications and experience of the
Adviser's investment personnel, the Adviser's compliance programs, the Adviser's
brokerage practices, including the extent to which the Adviser obtains research
through "soft dollar" arrangements with the Funds' brokerage, and the financial
and non-financial resources available to provide services required under the
Advisory Agreement.
Other Information 89
Other Information (continued) (unaudited)
In considering the reasonableness of the fee payable to the Adviser for managing
each Fund, the Board reviewed, among other things, financial statements of the
Adviser and an analysis of the profitability to the Adviser and its affiliates
of their relationship with each Fund over various time periods, which analysis
identified all revenues and other benefits received by the Adviser and its
affiliates from managing each Fund, the costs associated with providing such
services and the resulting profitability to the Adviser and its affiliates. The
Board considered the current and anticipated asset levels of each Fund and the
willingness of the Adviser to waive fees and pay expenses of the Funds from time
to time to limit the total expenses of the Funds. The Board concluded that the
profitability to the Adviser and its affiliates from their relationship with the
Funds is not excessive and that the Adviser is not realizing material benefits
from economies of scale that would warrant adjustments to the fees for any Fund
at this time. The Board of Trustees concluded that, in light of the nature,
extent and quality of the services provided by the Adviser and the levels of
profitability associated with providing these services, the fees charged by the
Adviser under the Advisory Agreements to each Fund are reasonable.
The Board of Trustees considered:
1. In connection with reviewing data bearing upon the nature, quality, and
extent of services furnished by ICON to each Fund, the Board assessed data
concerning ICON's staffing, systems and facilities. The Board also assessed
ICON's non-Trust business to see if there are any initiatives that would dilute
service to the Trust. It was noted:
A. That the breadth and the quality of investment advisory and other
services being provided to each Fund is satisfactory, as evidenced in part
by the performance record of each Fund compared with the performance
records of a peer group of comparable funds;
B. That ICON has made significant expenditures in the past year and in
prior years to ensure that it has the sophisticated systems and the highly
trained personnel necessary for it to be able to continue to provide
quality service to the Funds' shareholders, including the dedication of
substantial resources to ICON's investment and trading departments; and
C. That the Board is satisfied with the research, portfolio management, and
trading services, among others, being provided by ICON to the Funds, and is
charging fair, reasonable, and competitive fees.
2. In connection with reviewing data bearing upon the costs of services to be
provided and profits to be realized by ICON and its related companies from the
relationship with the Trust, the Board considered the Lipper comparative data,
data concerning ICON's soft-dollar arrangements, data from independent reviews
of compliance procedures, costs borne by ICON in providing advisory services to
each Fund and the profitability of ICON in light of the estimated
90 Other Information
profitability analyses which had been provided by ICON, other benefits to ICON
from serving as the Funds' adviser, and ICON's financial statements.
A. With respect to the soft-dollar arrangements the Board assessed all
facets of the arrangements - including the quality of trade execution. It
was noted that ICON receives research assistance from the use of soft
dollars generated from Fund portfolio transactions and that such research
assists ICON in providing quality investment advisory services to the Funds
and other accounts to which it provides advisory services. The Board
concluded that the arrangements are consistent with Fund brokerage
practices and benefit the Funds and their shareholders.
B. The Board noted that ICON benefits from serving directly as investment
adviser and administrative agent, and through its affiliate, as the
principal underwriter for the Funds. With respect to the distribution
services, the Board noted that proceeds of the Trust's distribution plans
pursuant to Rule 12b-1 under the 1940 Act for the International Equity and
Specialty Funds are paid to ICON's affiliate and that the distributor has
not profited from plan proceeds as all of the proceeds have been or will be
used to cover distribution and marketing expenses. In this regard, the
Trustees noted that marketing efforts have been successful as evidenced by
Fund asset levels. With respect to the administrative fee paid to ICON, the
Board reviewed the comparative data related to those services. The Board
also considered the compliance experience in these service areas and
concluded that the services provided by ICON and its affiliates to the
Funds are satisfactory and that the profits derived from providing the
services are competitive and reasonable.
C. The Board also noted the risks assumed by ICON in providing investment
advisory, distribution and administrative services (including compliance)
to each Fund, including the capital commitments which have been made in the
past and which continue to be made by ICON to ensure the continuation of
the highest quality of service to the Funds is made with the recognition
that the Funds' advisory relationship with ICON can be terminated at any
time and must be renewed on an annual basis.
3. In connection with assessing data bearing upon the fairness of fee
arrangements, the Board used data from Lipper, Inc. concerning funds of similar
size and funds of larger size, as well as data concerning ICON's other clients:
A. In this regard the Board noted that the Trust had recently changed fund
accounting, transfer agent and custodial service providers; and that the
expense numbers in the comparative data did not reflect the lower fees to
be charged by the current service providers.
Other Information 91
Other Information (continued) (unaudited)
B. The advisory fee structures of the Funds were considered in comparison
with advisory fees and expense ratios of other similarly-managed funds as
set forth in the comparative data.
It was noted that contractual advisory fees for the Sector Funds were
higher than fees for similar funds; but that the Sector Funds' expense
ratios were competitive and in most instances lower than those of
similarly-managed Funds.
It was noted that contractual advisory fees for the International Funds
were above the average fees for similar funds; and that the Funds' expense
ratios were competitive in light of their size.
It was noted that contractual advisory fees for the Specialty Funds were in
line with fees for similar funds; and that, with the exception of the Bond
Fund, the Specialty Funds' expense ratios were lower than those of
similarly-managed Funds.
It was noted that contractual advisory fee for the Core Equity Fund was
below the average fee for similar funds; and that its expense ratio was
lower than those of similarly-managed Funds.
C. In connection with assessing advisory fees and expense ratios it was
noted ICON has contractually agreed to impose expense limitations on the
International Equity and the Specialty Funds at a cost to ICON.
D. It was noted that generally the fees paid to ICON for managing other
institutional accounts (such as pension plans) are not lower than the fees
paid by similarly-managed Funds; however, to the extent such fees are
lower, it is due to the fact that such accounts are less costly for ICON to
manage.
E. It was noted that the advisory and other fees payable by the Funds to
ICON are essentially fees which would be similar to those which would have
resulted solely from "arm's-length" bargaining, and may well be lower than
fees arrived solely from such arm's-length negotiation.
92 Other Information
4. The Board considered the extent to which economies of scale could be realized
as a Fund grows in assets and whether the Fund's fees reflect these economies of
scale for the benefit of Fund shareholders. In the regard the Board noted the
Adviser's commitment to establish breakpoints in its investment advisory fees at
elevated asset levels commencing during the next fiscal year.
Based on these considerations, among others, the Board, including all of the
Independent Trustees, concluded that the continuation of the advisory agreement
was in the best interests of each Fund and its shareholders, the services to be
performed under the agreement were services required for the operation of the
Funds, ICON had provided satisfactory advisory services to the Funds in the
past, and the fees for the advisory services which ICON would perform and other
benefits from the relationship with the Trust and consistent with fees paid by
similar funds, are reasonable in light of the comparative data, and would be
within the range of what would have been negotiated at arm's length in light of
the circumstances.
SUPPLEMENTAL TAX INFORMATION
For corporate shareholders, the following percentage of the total ordinary
income dividends paid during the fiscal year ended September 30, 2005, qualify
for the corporate dividends received deduction for the following Funds:
<Table>
<Caption>
DIVIDENDS
RECEIVED
FUND DEDUCTION
- -----------------------------------------------------------------------
ICON Equity Income Fund 52.31%
</Table>
For the fiscal year ended September 30, 2005, the following Funds paid qualified
dividend income of:
<Table>
<Caption>
FUND AMOUNT
- ------------------------------------------------------------------------
ICON Covered Call Fund $ 227,916
ICON Equity Income Fund 2,443,441
ICON Long/Short Fund 125,486
</Table>
The Funds designate the following amounts as long term capital gain
distributions qualifying for the maximum 15% income tax rate for individuals:
<Table>
<Caption>
FUND AMOUNT
- ----------------------------------------------------------------------
ICON Bond Fund $343,200
ICON Covered Call Fund 707,268
ICON Equity Income Fund 704,336
ICON Long/Short Fund 845,915
</Table>
Other Information 93
PORTFOLIO HOLDINGS
A list of each ICON Fund's Top 10 holdings is available at www.iconadvisers.com
on or about 15 days following each month-end. Each ICON Fund also files a
complete schedule of portfolio holdings for the first and third quarters of its
fiscal year with the SEC on Form N-Q. The ICON Funds' Forms N-Q are available at
www.sec.gov or may be reviewed and copied at the Commission's Public Reference
Room in Washington, DC. Information about the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
PROXY VOTING
A 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 is available at
www.iconadvisers.com or on the SEC's website at www.sec.gov.
FOR MORE INFORMATION
This report is for the general information of the Funds' shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by a current prospectus. You may obtain a copy of the prospectus,
which contains information about the investment objectives, risks, charges,
expenses, and share classes of each ICON Fund, by visiting www.iconadvisers.com
or by calling 1-800-764-0442. Please read the prospectus carefully before
investing.
ICON Distributors, Inc., Distributor.
94
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
[ICON FUNDS LOGO]
<Table>
For more information about the ICON Funds, contact us:
By Telephone 1-800-764-0442
By Mail ICON Funds
P.O. Box 55452
Boston, MA 02205-8165
In Person ICON Funds
5299 DTC Boulevard, 12(th) Floor
Greenwood Village, CO 80111
On the Internet www.iconadvisers.com
By E-Mail info@iconadvisers.com
</Table>
[ICON FUNDS LOGO]
1-800-764-0442
www.iconadvisers.com
I-149-DIV
. 2005 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 26
SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE (UNAUDITED) 37
FINANCIAL STATEMENTS 39
FINANCIAL HIGHLIGHTS 46
NOTES TO FINANCIAL STATEMENTS 48
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 58
BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED) 59
OTHER INFORMATION (UNAUDITED) 61
</Table>
[RECYCLE LOGO]
About This Report (unaudited)
HISTORICAL RETURNS
All total returns mentioned in this report account for the change in a Fund's
per-share price and the reinvestment of any dividends, capital gain
distributions, and tax return of capital. If your account is set up to receive
Fund distributions in cash rather than to reinvest them, your actual return may
differ from these figures. The Funds' performance results do not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or on the
redemption of Fund shares. The Adviser reimbursed certain fees of the Fund. If
not for these reimbursements, performance would have been lower.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Performance results represent
past performance, and current performance may be higher or lower. Please call
1-800-764-0442 or visit www.iconadvisers.com for performance results current to
the most recent month-end.
PORTFOLIO DATA
This report reflects ICON's views, opinions and portfolio holdings as of
September 30, 2005, the end of the reporting period. The information is not a
complete analysis of every aspect of any sector, industry, security or the
Funds.
Opinions and forecasts regarding industries, companies and/or themes, and
portfolio composition and holdings, are subject to change at any time based on
market and other conditions, and should not be construed as a recommendation of
any specific security. Each Fund's holdings as of September 30, 2005 are
included in each Fund's Schedule of Investments.
Certain companies' stock performance during the period is mentioned throughout
the Management Overviews. While ICON's quantitative investment methodology
primarily considers company-specific factors beyond financial data, various
company factors may impact a stock's performance, and therefore, Fund
performance.
There are risks associated with mutual fund investing, including the 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 the security price and reinvestment of
dividends and distributions (except as noted), but does not reflect the costs of
managing a mutual fund. The total return figures for the Morgan Stanley Capital
International (MSCI) indexes assume change in security prices and the deduction
of local taxes. The Funds' portfolios may significantly differ in holdings and
composition from the indexes. Individuals cannot invest directly in an index.
- - The unmanaged MSCI Europe Index comprises approximately 600 stocks traded in
developed markets from 15 European countries. The capitalization-weighted
index attempts to capture at least 60% of investable capitalization in those
markets subject to constraints governed by industry representation, maximum
liquidity, maximum float, and minimum cross-ownership.
- - The unmanaged MSCI All Country Pacific Index comprises stocks traded in the
developed and emerging markets of the Pacific Basin (Australia, China, Hong
Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore,
Taiwan and Thailand). The capitalization-weighted index attempts to capture
at least 60% of investable capitalization in those markets subject to
constraints governed by industry representation, maximum liquidity, maximum
float, and minimum cross-ownership.
- - The MSCI All Country World Index ex-United States (ACWI ex-U.S.) is a leading
unmanaged benchmark of international stock performance. The
capitalization-weighted index is representative of the performance of
securities of companies located in developed and emerging markets outside of
the United States.
- - The unmanaged Bloomberg European 500 Index measures the weighted average
performance in U.S. dollars of the 500 most highly capitalized European
companies.
Index returns and statistical data included in this report are provided by
Bloomberg and FactSet Research Systems.
About This Report 3
Message from ICON Funds (unaudited)
- --------------------------------------------------------------------------------
Overpriced industries are few and far between, even within the richly valued
Energy sector.
- --------------------------------------------------------------------------------
Thank you for your continued investment in the ICON Foreign Funds and welcome to
those of you receiving this report for the first time.
As you may know, ICON employs bottom-up industry rotation in pursuit of leading
themes which our analysis shows are poised to outperform the broader market. Our
focus on valuation continued to serve the Funds well, directing us toward
underpriced industries that played a part in moving foreign markets higher
despite inherent skepticism on the part of investors.
STRONG GAINS OVERSEAS
While overseas markets recorded impressive gains that outpaced the broad U.S.
averages, the path was still fraught with numerous difficulties. Investors
grappled with uncertainties stemming from rising oil prices, political
uncertainty and currency revaluation, leading to fears of economic slowdown and
weaker corporate earnings. Equity markets proved especially volatile in this
setting, trading sideways when concerns intensified, and then rallying when
anxiety abated.
However, as U.S. investors seemingly overreacted to intraday moves in oil
futures during Hurricanes Katrina and Rita, the impact of higher oil was
noticeably more muted overseas. Despite perceived energy-related pressures that
appear intuitive to many investors, Asian economies continued to benefit from
strong domestic and global demand, structural reforms and increased capital
spending, while European companies, ever more receptive to cost-cutting and
consolidation, posted solid gains across a number of sectors.
DIVERSIONS IN GLOBAL LEADERSHIP
Although country selection is not a primary consideration of our methodology, it
remains a key secondary factor given regional economic differences and periodic
diversions in global industry leadership. Although it has been our contention
that industry leadership often crosses both country and regional borders, recent
events prove the exception to the rule.
Such was the case during the fiscal year for the Consumer Discretionary sector,
which exhibited considerable strength in Asian markets and discernible weakness
in European markets. Conversely, the Telecommunication & Utilities sector
performed well in Europe while faltering in Asia. At the same time, the
Industrials sector recorded robust performance across both regions in
conjunction with worldwide growth in infrastructure spending.
For many international investors, however, the buzz clearly centered on China.
From an economic and domestic consumption perspective, this makes perfect sense.
The progress there has been nothing short of dramatic. Nevertheless, from an
investment perspective, the environment is one of widespread value but
4 Message from ICON Funds
While overseas markets recorded impressive gains
that outpaced the broad U.S. averages, the path was
still fraught with numerous difficulties.
[CRAIG T. CALLAHAN PHOTO]
Craig T. Callahan
President
limited relative strength. While maintaining market-weight exposure, we have
found far more compelling opportunities within the surrounding region among
companies that stand to benefit from China's phenomenal growth. With the
revaluation of the yuan, a number of these include net exporters domiciled in
South Korea and Japan.
- --------------------------------------------------------------------------------
The strength of the ICON system is its ability to view each region individually
with respect to its value characteristics.
- --------------------------------------------------------------------------------
WHAT ARE VALUATION GAPS SAYING?
At period-end, our overall value-to-price ratio (V/P) for the stocks in our
foreign database was calculated to be 1.35, indicating that equities would need
to advance 35% on average over the coming year in order to reach our
determination of fair value.
That being said, markets rarely move in a straight line and random news events
can in fact disrupt a move to the upside. Moreover, value is a moving target and
highly susceptible to changes in earnings, growth rates, risk, and interest
rates. Despite these variables, valuation gaps are calculable, whereas random
events and their impact are generally unpredictable. In that regard, the
strength of the ICON system is most apparent, given its ability to view each
region individually with respect to its value characteristics.
What are current valuation gaps telling us? The Asia-Pacific region as a whole
remains the most attractive according to our analysis, offering deeper discounts
than either Europe or the United States. Despite an already strong showing, the
Industrials sector continues to feature an attractive combination of value and
relative strength across its respective industries. The Financial and Materials
sectors also appear poised to assume leadership roles, as industries with
leverage to rising domestic demand reflect regional expectations for economic
recovery. Meanwhile, Telecommunication & Utilities and Leisure and Consumer
Staples are demonstrating visible signs of weakness in light of an environment
that increasingly seems to favor economically sensitive industries.
Europe, on the other hand, while already closing a greater portion of its
valuation gap, remains undervalued according to our methodology. Nevertheless,
European markets continue to face high unemployment and more moderate growth
prospects, yet significantly lower inflationary pressures. Shifting sector
leadership appears tilted toward Materials and Information
Message from ICON Funds 5
Message from ICON Funds (continued)
Technology, although Energy and Industrials may continue to exhibit residual
strength. In contrast, the Leisure and Consumer Staples and Consumer
Discretionary sectors will likely lag, as defensive- and consumer-oriented
industries encounter lingering regional weakness.
OVERPRICED INDUSTRIES ARE FEW
We continue to see positive trends in corporate earnings, economic fundamentals
and company valuations, and believe the setting looks favorable for a broad move
to the upside. Our analysis shows that overpriced industries are few and far
between, even within the richly valued Energy sector, which enjoyed an
impressive run during the period.
In closing, we wish to thank you for the privilege of guiding you through these
challenging markets. For current market updates, as well as up-to-date Fund
performance and account information, we invite you to visit our website at
www.iconadvisers.com.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
Consider the investment objectives, risks, charges, expenses, and share classes
of each ICON Fund carefully before investing. The prospectus contains this and
other information about the Funds and is available by visiting
www.iconadvisers.com or calling 1-800-764-0442. Please read the prospectus
carefully before investing.
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. An
investment in a region fund may involve greater risk and volatility than a more
diversified fund. Investments in foreign securities may entail unique risks,
including political, market, and currency risks.
6 Message from ICON Funds
Management Overview
ICON Asia-Pacific Region Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 95.2%
Top 10 Equity Holdings 15.1%
Number of Stocks 127
Short-Term Investments 4.4%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
Hanjin Heavy Industries & Construction Co., Ltd. 1.7%
Komatsu, Ltd. 1.7%
Mitsubishi UFJ Financial Group, Inc. 1.6%
Kobe Steel, Ltd. 1.6%
Sumitomo Metal Industries, Ltd. 1.5%
Zinifex, Ltd. 1.5%
Yamada Denki Co., Ltd. 1.5%
Rio Tinto, Ltd. 1.4%
INI Steel Co. 1.4%
Sumitomo Mitsui Financial Group, Inc. 1.2%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Asia-Pacific Region Fund appreciated 38.12% for the fiscal year
ended September 30, 2005, outpacing its benchmark, the MSCI All Country
Pacific Index, which returned 29.34% over the same period. Total returns for
other periods as of September 30, 2005 appear on page 13.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. On average, Asian markets outperformed U.S. and European shares during the
period, having traded at deeper discounts and thus closing a wider valuation
gap in their comparatively steady move toward fair value. Performance also
benefited from the Fund's valuation-related tilt toward small- and
medium-capitalization stocks, which our system guided us to actively
overweight versus the predominantly large-cap benchmark. A corresponding
underweight in large-cap securities in the region further boosted returns, as
stock selections in Asian small- and mid-caps surpassed their larger
counterparts.
Against this backdrop, the Fund kept pace with its benchmark during the first
half of the reporting period, but then overtook the large-cap dominated index
in the second half to finish well ahead of regional market averages. While
our focus on leading industry themes enhanced relative performance over the
course of the fiscal year, foreign exchange fluctuations had little or no
bearing on returns as the U.S. dollar strengthened against the yen and other
Asian currencies.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying Asia-Pacific
region securities we believe are underpriced regardless of their location on
the conventional style grid. Our system is not limited by restrictions on
market capitalization, investment style or country origin, and searches for
potential industry leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as these measures do not, in our view, adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical or projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of valuation with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the sector benchmark.
Management Overview 7
Management Overview (continued)
ICON Asia-Pacific Region Fund
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. With cyclical themes driving market advances at the opening and closing
stages of the fiscal year, wholesale volatility characterized everything in
between. Temporary disruptions created by the tsunami of late December 2004
were seen as catalysts for the ensuing choppiness, even though there were few
signs that the disaster would impart lasting long-term effects on the
region's economic development. As near-term concerns receded, Asian markets
were expected to remain key contributors to global economic growth, supported
by healthy domestic and worldwide demand, structural reform, increased
capital spending, and improved economic integration.
At the country level, our analysis indicated that Japan may have turned a
corner late in the period on reports that its deflationary economy might
finally be on the upswing. Although some observers remained skeptical, given
numerous false starts and continued low consumer confidence, bank-lending
rates, domestic demand and export growth all saw steady improvement.
Meanwhile, in a move aimed at moderating overly robust export activity, China
adopted a more flexible currency policy, thereby boosting the value of the
yuan. This was viewed as favorable for shares of net exporters domiciled in
Japan and South Korea, which, unlike a number of local Chinese equities,
stand to actually benefit from China's ongoing economic expansion. Moreover,
South Korean stocks received a lift as domestic investors increased their
exposure to local shares.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Fund performance was driven by continued strong showings in cyclical sectors
such as Industrials and Consumer Discretionary. Industrials, in particular,
benefited from an active overweight, resulting in broad participation
throughout the sector. Industry standouts included construction & farm
machinery & heavy trucks and industrial machinery, which were linked to
regional strength in shipbuilding. As for Consumer Discretionary, relative
strength in distributors and apparel retail proved favorable, as Japan's
retail-and consumer-related industries strengthened at period-end.
Among the Fund's leading company contributors, shipbuilder Hanjin Heavy
Industries & Construction capitalized on rising demand for vessels equipped
to transport liquefied natural gas. Likewise, shares of industrial products
manufacturer Sumitomo Metal Industries, Ltd. rose to a five-year high on
lucrative contract wins in the oil and gas development space, while KS Energy
Services Ltd., a provider of hydraulic-based products for the shipbuilding
and oil and gas industries, benefited from increased offshore exploration and
production activities.
8 Management Overview
[J.C. WALLER, III PHOTO]
J.C. Waller, III
Portfolio Manager
[SCOTT SNYDER PHOTO]
Scott Snyder
Assistant Portfolio Manager
In contrast, Telecommunication & Utilities and Financials were the Fund's
poorest-performing sectors during the period on a relative basis. From an
industry perspective, weakness in integrated telecommunication services was
noteworthy, while an underweight in diversified banks prevented the Fund from
capturing a greater level of upside return.
Primary detractors albeit insignificant (approximately .50%) to performance
included Samyang Corp., a maker of food products and pharmaceuticals, which
dropped for no apparent reason and petrochemical producer Hanwha Chemical
Corp. also retreated, having posted lower-than-expected quarterly results on
weakness in their industrial explosives and trading divisions. Elsewhere,
container manufacturer Singamas Container Holdings Ltd. came under pressure
for no apparent reason. All three companies were removed from the Fund as
their relative strength declined.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE ASIA-PACIFIC REGION?
A. Although improving fundamentals are driving the region's robust economic
growth, our investment process remains focused on demonstrated industry
valuation and relative strength. With current calculations still supporting a
cyclical theme, we would expect to see continued leadership within the
Industrials sector and emerging leadership among Financials and Materials.
Meanwhile, lagging sectors such as Telecommunication & Utilities and Leisure
and Consumer Staples have contributed to ongoing volatility.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - Fund performance benefited from a valuation-related tilt toward small- and
mid-cap stocks, which our methodology led us to overweight versus the
large-cap dominated benchmark.
- - While our focus on leading industry themes enhanced relative performance
during the period, foreign currency fluctuations had little or no bearing.
- - Fund performance was driven by continued strong showings in cyclical sectors
such as Industrials and Consumer Discretionary, while defensive-oriented
Telecommunication & Utilities and Financials were the poorest-performing
sectors during the period on a relative basis.
- - Among the Fund's leading company contributors were Hanjin Heavy Industries &
Construction, Sumitomo Metal Industries and KS Energy Services Ltd.
- - Primary albeit insignificant (approximately .50%) company detractors included
Samyang Corp. Hanwha Chemical Corp. and Singamas Container Holdings Ltd.
Management Overview 9
Management Overview (continued)
COUNTRY COMPOSITION
September 30, 2005
<Table>
Japan 45.2%
South Korea 23.3%
Australia 7.0%
Taiwan 5.4%
Singapore 5.3%
Hong Kong 4.0%
China 1.6%
Indonesia 1.1%
Netherlands 1.0%
New Zealand 0.7%
Malaysia 0.6%
</Table>
Percentages are based upon net assets.
SECTOR COMPOSITION
September 30, 2005
<Table>
Industrials 20.2%
Financial 16.0%
Materials 15.4%
Consumer Discretionary 14.8%
Information Technology 9.0%
Energy 6.3%
Leisure and Consumer Staples 5.1%
Healthcare 4.8%
Telecommunication and Utilities 3.6%
</Table>
Percentages are based upon net assets.
10 Management Overview
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Diversified Banks 5.7%
Construction & Farm Machinery & Heavy Trucks 5.0%
Diversified Metals & Mining 4.6%
Steel 4.4%
Industrial Machinery 4.2%
Trading Companies & Distributors 3.6%
Property & Casualty Insurance 3.2%
Construction & Engineering 3.0%
Diversified Chemicals 2.9%
Apparel Retail 2.8%
Oil & Gas Exploration & Production 2.6%
Real Estate Management & Development 2.4%
Department Stores 2.2%
Electronic Equipment Manufacturers 2.2%
Oil & Gas Refining & Marketing 2.2%
Computer Hardware 2.1%
Gas Utilities 2.0%
Health Care Facilities 2.0%
Regional Banks 1.9%
Consumer Finance 1.9%
Internet Software & Services 1.9%
Construction Materials 1.9%
Automobile Manufacturers 1.7%
Semiconductors 1.5%
Computer & Electronics Retail 1.5%
Diversified Commercial & Professional Services 1.4%
Distributors 1.3%
Air Freight & Logistics 1.3%
Electric Utilities 1.2%
Catalog Retail 1.0%
</Table>
Management Overview 11
Management Overview (continued)
INDUSTRY COMPOSITION (continued)
September 30, 2005
<Table>
Photographic Products 1.0%
Apparel Accessories & Luxury Goods 1.0%
Specialty Chemicals 0.9%
Industrial Conglomerates 0.9%
Tobacco 0.9%
Personal Products 0.9%
Electronic Manufacturing Services 0.9%
Health Care Services 0.8%
Motorcycle Manufacturers 0.8%
Heavy Electrical Equipment 0.8%
Integrated Oil & Gas 0.8%
Reinsurance 0.8%
Specialty Stores 0.7%
Household Products 0.7%
Auto Parts & Equipment 0.7%
Gold 0.7%
Pharmaceuticals 0.7%
Leisure Products 0.7%
Oil & Gas Equipment & Services 0.7%
Hotels Resorts & Cruise Lines 0.6%
Homefurnishing Retail 0.5%
Health Care Supplies 0.5%
Electrical Components & Equipment 0.5%
Data Processing & Outsourced Services 0.5%
Integrated Telecommunication Services 0.4%
Biotechnology 0.4%
Commercial Printing 0.3%
Health Care Distributors 0.3%
Home Entertainment Software 0.2%
</Table>
12 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/25/97
- -----------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund 38.12% 2.07% 1.49%
- -----------------------------------------------------------------------------------------
MSCI All Country Pacific Index 29.34% 3.47% 2.16%
- -----------------------------------------------------------------------------------------
</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, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON ASIA - PACIFIC REGION MSCI ALL COUNTRY PACIFIC INDEX
-------------------------- ------------------------------
2/25/97 10000 10000
9550 9496
11320 11163
9/30/97 9940 9656
8270 7530
8310 7839
7360 7011
9/30/98 6089 6079
7759 7789
8569 8616
9809 9715
9/30/99 10870 10541
13170 12277
11620 12234
10870 11455
9/30/00 10251 10133
9611 8764
9011 8111
8711 8183
9/30/01 6811 6673
6766 6946
6625 7264
6424 7446
9/30/02 5701 6499
6053 6356
5801 5976
6584 6819
9/30/03 7648 8066
8695 8921
9067 10020
8323 9510
9/30/04 8222 9291
9044 10578
9287 10505
9519 10439
9/30/05 11356 12017
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund on its inception date of 2/25/97 to a
$10,000 investment made in an unmanaged securities index on that date. The
Fund's performance in this chart and the performance table assumes the
reinvestment of dividends, capital gain distributions and tax return of capital
but does not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or on the redemption of Fund shares.
Management Overview 13
Schedule of Investments
ICON Asia-Pacific Region Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (95.2%)
141,780 Acer, Inc. $ 283,472
12,000 Aisin Seiki Co.,
Ltd. 342,108
17,000 Amano Corp. 264,175
1,400 Amorepacific Corp. 423,700
5,800 ARRK Corp. 322,261
25,500 BHP Billiton, Ltd. 434,789
7,000 C Uyemura & Co.,
Ltd. 271,252
22,400 Cheil Industries,
Inc. 482,882
36,000 Cheung Kong
Infrastructure
Holdings, Ltd. 120,546
1,058,000 China Resources
Land, Ltd. 310,736
185,000 Commerce Asset-
Holding Berhad 275,011
102,000 Cosmo Oil Co.,
Ltd. 549,241
10,800 Credit Saison Co.,
Ltd. 476,830
6,600 CSL, Ltd. 193,328
11,000 Culture
Convenience Club
Co., Ltd. 363,269
17,000 Dacom Corp.(a) 216,371
25,600 Daegu Bank 311,792
16,000 Daewoo Engineering
& Construction
Co., Ltd. 179,368
31,500 Daifuku Co., Ltd. 428,730
101,000 Daihen Corp. 403,667
57,000 Dainippon Ink &
Chemicals, Inc. 188,113
15,000 Doosan Heavy
Industries &
Construction Co.,
Ltd. 283,450
56,000 Fuji Electric
Holdings Co., Ltd. 223,571
682,000 GES International,
Ltd. 369,698
276,000 Goodpack, Ltd. 271,237
4,900 GS Home Shopping
Inc. 511,053
9,400 Hana Tour Service
Inc. 314,243
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
38,600 Hanjin Heavy
Industries &
Construction Co.,
Ltd. $ 822,902
13,500 Hanjin
Transportation
Co., Ltd. 354,190
86,900 Healthscope, Ltd. 417,270
30,000 High Tech Computer
Corp. 368,691
87,286 Hon Hai Precision
Industry Co., Ltd. 408,659
37 Hoosiers Corp. 143,749
9,000 Horiba, Ltd. 217,159
5,400 Hoya Corp.v 182,774
1,800 Hoya Corp. 60,925
9,100 Hyundai Department
Store H&S Co.,
Ltd. 432,651
6,000 Hyundai Department
Stores Co., Ltd. 404,001
9,000 Hyundai
Development Co. 284,575
2,600 Hyundai Heavy
Industries Co.,
Ltd. 193,730
47,000 Hyundai Marine &
Fire Insurance
Co., Ltd. 467,050
4,000 Hyundai Motor Co. 313,463
9,400 Ibiden Co., Ltd. 393,776
29,300 Industrial Bank of
Korea 371,889
25,400 INI Steel Co. 658,628
40 Inpex Corp. 310,098
69,600 James Hardie
Industries NV 476,468
122,000 Japan Steel Works,
Ltd. 455,725
15 Japan Tobacco,
Inc. 236,894
21,000 JGC Corp. 385,867
90,000 Johnson Health
Tech Co., Ltd. 331,466
141,000 Kawasaki Heavy
Industries, Ltd. 358,051
76 Kenedix, Inc. 254,249
102,000 Keppel Land, Ltd. 223,720
8,700 Kia Motors Corp. 163,162
7,000 Kobayashi
Pharmaceutical
Co., Ltd. 237,389
</Table>
14 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
250,000 Kobe Steel, Ltd. $ 762,251
60,000 Komatsu, Ltd. 820,619
6,300 Kookmin Bank 373,179
9,200 Korea Electric
Power Corp. 314,651
41,400 Korean Reinsurance
Co. 382,363
243,600 KS Energy
Services, Ltd. 323,343
5,100 KT&G Corp. 220,819
30,250 Largan Precision
Co., Ltd. 272,361
8,400 LG Engineering and
Construction Corp. 333,928
6,300 LG Household &
Health Care, Ltd.v 361,673
34,000 LG Insurance Co.,
Ltd. 445,850
96,000 Li & Fung, Ltd. 222,369
229,000 Lihir Gold,
Ltd.(a) 335,105
121,000 Marubeni Corp. 565,025
16,600 Marui Co., Ltd. 281,428
31,900 MediaTek, Inc. 302,403
9,000 Mediceo Holdings
Co., Ltd. 143,928
29,900 Mitsubishi Corp. 591,755
107,000 Mitsubishi
Materials Corp. 379,544
61 Mitsubishi UFJ
Financial Group,
Inc. 798,808
46,000 Mitsui & Co., Ltd. 577,669
26,000 Mitsui Sumitomo
Insurance Co.,
Ltd. 302,784
5,000 Namco Bandai
Holdings, Inc.(a)v 83,260
4,600 Netease.com,
Inc.--ADR(a)v 414,046
3,000 NHN Corp.(a) 510,591
42,000 Nippon Mining
Holdings, Inc. 331,195
37,000 Nissan Chemical
Industries, Ltd. 466,855
3,100 Nitori Co., Ltd. 260,117
2,500 Orix Corp. 453,182
8,700 Pal Co., Ltd. 509,745
184,000 Parkway Holdings,
Ltd. 235,634
466,000 PetroChina Co.,
Ltd. 389,573
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
485,000 Ports Design, Ltd. $ 551,481
149,870 Premier Image
Technology Corp. 221,235
27,300 Primary Health
Care, Ltd. 216,520
1,288,000 PT Perusahaan Gas
Negara 523,441
15,400 Rio Tinto, Ltd. 695,011
96,700 Ryman Healthcare,
Ltd. 331,788
7,400 S1 Corp. 356,604
380 Samsung
Electronics Co.,
Ltd. 215,246
258,000 SembCorp
Industries, Ltd. 458,255
302,000 SembCorp Marine,
Ltd. 535,127
2,900 Shimamura Co.,
Ltd. 322,714
9,240 Shinhan Financial
Group Co., Ltd. 322,266
152,000 Showa Denko K.K 488,497
189,340 Siliconware
Precision
Industries Co. 193,106
55,000 Singapore
Petroleum Co.,
Ltd. 192,040
208,000 Sino Land Co.,
Ltd. 253,863
10,000 Sogo Medical Co.,
Ltd. 197,211
25,000 Sompo Japan
Insurance, Inc. 332,815
77,000 Sumitomo Heavy
Industries, Ltd. 548,859
210,000 Sumitomo Metal
Industries, Ltd. 739,003
63 Sumitomo Mitsui
Financial Group,
Inc. 596,550
30,000 Suruga Bank, Ltd. 330,583
116,000 Taiheiyo Cement
Corp. 435,223
32,000 Takashimaya Co.,
Ltd. 408,769
51,000 Teikoku Oil Co.,
Ltd. 552,143
50,000 The Joyo Bank,
Ltd. 306,052
22,000 Toho Gas Co., Ltd. 96,214
6,000 Tohoku Electric
Power Co., Inc. 133,684
7,200 Toyota Motor Corp. 332,287
</Table>
Schedule of Investments 15
Schedule of Investments (continued)
ICON Asia-Pacific Region Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
4,700 Trans Cosmos, Inc. $ 220,179
169,000 Ube Industries,
Ltd. 457,263
8,706 Unimicron
Technology Corp. 6,458
230,000 Vision Grande
Group Holdings,
Ltd.(a) 145,632
139,000 Wintek Corp. 225,163
14,700 Woodside
Petroleum, Ltd. 402,902
466,000 Xinao Gas
Holdings, Ltd. 366,386
9,300 Yamada Denki Co.,
Ltd. 708,287
19,800 Yamaha Motor Co.,
Ltd. 410,416
2,549 Yuhan Corp. 334,675
203,003 Zinifex, Ltd. 708,698
-----------
TOTAL COMMON STOCKS (COST
$39,946,416) 46,382,763
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (4.4%)
$1,924,150 Brown Brothers
Harriman Time
Deposit,
3.24%, 10/01/05# $ 1,924,150
120 Brown Brothers
Harriman Time
Deposit -
Australian Dollar,
4.55%, 10/01/05# 120
209,092 Brown Brothers
Harriman Time
Deposit - Hong
Kong Dollar,
2.25%, 10/01/05# 209,092
24 Brown Brothers
Harriman Time
Deposit -
Singapore Dollar,
1.27%, 10/01/05# 24
34 Brown Brothers
Harriman Time
Deposit - New
Zealand Dollar,
5.75%, 10/01/05# 34
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,133,420) 2,133,420
-----------
TOTAL INVESTMENTS 99.6% (COST
$42,079,836) 48,516,183
-----------
OTHER ASSETS LESS LIABILITIES
0.4% 204,719
-----------
TOTAL NET ASSETS 100.0% $48,720,902
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
v All common stocks were fair valued (Note 1) as of September 30, 2005 unless
noted with a v. Total value of common stocks fair valued was $45,341,010.
16 Schedule of Investments
Management Overview
ICON Europe Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 96.6%
Top 10 Equity Holdings 16.8%
Number of Stocks 104
Short-Term Investments 2.7%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
SolarWorld AG 2.1%
Vallourec S.A. 2.0%
DSV A/S 1.9%
Oesterrichische
Elekrizitaitswirts AG - Class A 1.8%
EVS Broadcast Equipment S.A. 1.6%
Logitech International
S.A. 1.5%
BHP Billiton PLC 1.5%
Xstrata Plc 1.5%
Fast Search & Transfer ASA 1.5%
Capio AB 1.4%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Europe Fund appreciated 30.34% for the fiscal year ended September
30, 2005, outpacing returns of 27.41% for the Bloomberg European 500 Index
and 24.99% for the MSCI Europe Index, the Fund's benchmarks, over the same
period. Total returns for other periods as of September 30, 2005 appear on
page 23.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. On average, European markets outperformed U.S. shares during the period,
having traded at deeper discounts and thus closing a wider valuation gap in
their move toward fair value. Performance also benefited from the Fund's
valuation-related tilt toward small- and medium-capitalization stocks, which
our methodology led us to actively overweight versus the large-cap dominated
benchmark. Although ICON does not utilize market capitalization as a
valuation measure, the Fund's bias contributed positively to returns.
While our primary focus on leading industry themes enhanced relative returns
over the course of the fiscal year, foreign exchange fluctuations detracted
slightly from performance as the U.S. dollar strengthened against the euro
and other European currencies. Nevertheless, the overall impact was minimal,
even though the Fund maintained direct exposure to the underlying equities.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying European
securities we believe are underpriced regardless of their location on the
conventional style grid. Our system is not limited by restrictions on market
capitalization, investment style or country origin, and searches for
potential industry leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as these measures do not, in our view, adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of valuation with relative
strength (RS), we aim to capture leading industry themes which we believe are
poised to outperform the sector benchmark.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Despite four consecutive quarters of healthy gains, European markets
experienced considerable choppiness in conjunction with conflicting economic
and corporate fundamentals. As such, while earnings expectations
Management Overview 17
Management Overview (continued)
ICON Europe Fund
were generally robust, consumer confidence and personal consumption turned
increasingly negative. Concurrently, nominal inflation pressures were no
match for continued high unemployment and slowing economic growth.
Nowhere was this more evident than in the United Kingdom, which eased
monetary policy in response to lingering weakness in household spending and
business investment. Germany, Europe's largest economy, also faced
considerable headwinds as national elections failed to muster a clear
majority, putting a damper on forward growth expectations. Nevertheless,
globalization and economic integration continued to be viewed as key to
sustaining a broad recovery, evidenced by the ongoing expansion of the
European Union.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Fund performance was driven by continued strength in the highly cyclical
Industrials sector, which benefited from active overweighting and broad
industry participation. Industry standouts included industrial machinery and
construction & engineering, both of which were linked to global gains in
infrastructure spending. At the same time, defensive-oriented sectors such as
Healthcare and Telecommunication & Utilities also contributed to relative
returns, as overweights in the health care distributors and electric
utilities industries augmented performance.
Among the Fund's leading company contributors, pharmaceutical marketer Meda
AB benefited from strategic acquisitions that added asthma and pain
medications to its growing pipeline of treatments. Meanwhile, SolarWorld AG,
a developer of solar power systems, took steps to expand its supply base in
order to meet rising global demand for solar cells. Also attributing
positively was trucking and logistics company DSV A/S, which benefited from
consolidation trends that proved accretive to quarterly results.
In contrast, Leisure and Consumer Staples and Consumer Discretionary were the
Fund's poorest-performing sectors during the period. From an industry
perspective, underweighting and underperformance in packaged foods & meats
detracted from Fund performance, as did lackluster returns in casinos &
gaming and homebuilding.
At the company level, principal detractors included specialty pharmaceutical
maker Altana AG, which tumbled after a joint development venture was
terminated in the clinical study phase. Elsewhere, online gaming operator
Sportingbet PLC experienced a sizable sell-off on fears that increased
competition would lead to slowing revenue growth. Both companies were
ultimately removed from the Fund as their relative strength declined.
18 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
[SCOTT SNYDER PHOTO]
Scott Snyder
Assistant Portfolio Manager
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE EUROPEAN MARKET?
A. Although fundamental concerns continue to loom over the European market, our
analysis indicates that value remains widespread amid shifts in sector
leadership. While the Energy and Industrials sectors may demonstrate residual
strength, emerging themes have been detected in Materials (diversified metals
& mining) and Information Technology (communications equipment and internet
software & services). Conversely, Consumer-related sectors reflect ongoing
weakness in consumer confidence and personal consumption. That being the
case, we remain committed to our discipline, seeking out value and relative
strength among industries poised to outperform the sector benchmark.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - Our focus on leading industry themes enhanced relative performance during the
period, as did the Fund's valuation-related weight in small-and mid-cap
stocks.
- - Foreign exchange fluctuations detracted slightly from performance as the U.S.
dollar strengthened against the euro and other European currencies.
- - Active overweighting in the Industrials and Health Care sectors drove Fund
performance, while underweighting and underperformance in Leisure and
Consumer Staples and Consumer Discretionary hurt overall returns.
- - Leading company contributors during the period included Meda AB, SolarWorld
AG and DSV A/S.
- - Companies that detracted from Fund performance included Altana AG and
Sportingbet PLC.
Management Overview 19
Management Overview (continued)
ICON Europe Fund
COUNTRY COMPOSITION
September 30, 2005
<Table>
Germany 16.3%
France 11.2%
United Kingdom 10.8%
Switzerland 7.3%
Netherlands 7.9%
Sweden 5.8%
Austria 5.4%
Norway 5.3%
Denmark 4.9%
Finland 4.7%
Belgium 4.7%
Spain 3.6%
Greece 2.9%
Poland 2.2%
Italy 1.5%
Russia 1.1%
Ireland 1.0%
</Table>
Percentages are based upon net assets.
SECTOR COMPOSITION
September 30, 2005
<Table>
Industrials 21.5%
Healthcare 13.5%
Information Technology 13.3%
Energy 12.5%
Materials 10.6%
Financial 7.7%
Consumer Discretionary 7.0%
Telecommunication and Utilities 6.9%
Leisure and Consumer Staples 3.6%
</Table>
Percentages are based upon net assets.
20 Management Overview
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Integrated Oil & Gas 5.8%
Industrial Machinery 5.6%
Diversified Metals & Mining 5.2%
Electric Utilities 4.7%
Health Care Equipment 4.5%
Communications Equipment 3.7%
Construction & Engineering 3.6%
Health Care Facilities 3.4%
Diversified Banks 2.6%
Pharmaceuticals 2.6%
Internet Software & Services 2.5%
Steel 2.5%
Oil & Gas Equipment & Services 2.4%
Oil & Gas Exploration & Production 2.4%
Tires & Rubber 2.3%
It Consulting & Other Services 2.1%
Automobile Manufacturers 1.9%
Trucking 1.9%
Health Care Distributors 1.9%
Electronic Equipment Manufacturers 1.9%
Multi-Line Insurance 1.7%
Aerospace & Defense 1.7%
Electrical Components & Equipment 1.7%
Systems Software 1.5%
Diversified Commercial & Professional Services 1.5%
Computer Storage & Peripherals 1.5%
Packaged Foods & Meats 1.5%
</Table>
Management Overview 21
Management Overview (continued)
ICON Europe Fund
INDUSTRY COMPOSITION (continued)
September 30, 2005
<Table>
Oil & Gas Refining & Marketing 1.3%
Specialty Stores 1.2%
Health Care Supplies 1.2%
Heavy Electrical Equipment 1.1%
Human Resource & Employment Services 1.1%
Specialty Chemicals 1.0%
Trading Companies & Distributors 1.0%
Building Products 1.0%
Specialized Finance 1.0%
Apparel Retail 1.0%
Multi-Utilities 1.0%
Marine 1.0%
Leisure Products 0.9%
Fertilizers & Agricultural Chemicals 0.9%
Real Estate Management & Development 0.9%
Asset Management & Custody Banks 0.8%
Brewers 0.7%
Real Estate Investment Trusts 0.7%
Water Utilities 0.7%
Oil & Gas Drilling 0.6%
Construction Materials 0.6%
Apparel Accessories & Luxury Goods 0.5%
Airport Services 0.5%
Wireless Telecommunication Services 0.5%
Tobacco 0.4%
Diversified Chemicals 0.4%
</Table>
22 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/20/97
- -----------------------------------------------------------------------------------------
ICON Europe Fund 30.34% 9.16% 8.92%
- -----------------------------------------------------------------------------------------
MSCI Europe Index 24.99% 4.11% 8.46%
- -----------------------------------------------------------------------------------------
Bloomberg European 500 Index 27.41% -1.59% 7.92%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2005
[LINE GRAPH]
<Table>
<Caption>
BLOOMBERG EUROPEAN 500
ICON EUROPE FUND MSCI EUROPE INDEX INDEX
---------------- ----------------- ----------------------
2/20/97 10000 10000 10000
9800 10308 10154
10700 11239 11402
9/30/97 11899 12178 12471
12381 12197 12596
15104 14684 15466
15603 15450 16093
9/30/98 12625 13233 12886
15068 15722 15212
14245 15401 15808
13197 15364 16760
9/30/99 13435 15555 16514
14365 18272 20766
13848 18298 21916
14459 17732 21215
9/30/00 13462 16447 20888
14180 16784 19775
12653 14181 17706
11551 13937 18795
9/30/01 10794 12255 15220
11141 13488 17198
11980 13479 17566
12459 12905 14899
9/30/02 9850 9963 11517
10396 11049 12062
9623 10038 10728
11899 12286 12509
9/30/03 13097 12772 12835
15173 15374 14220
15812 15519 14770
16092 15898 15228
9/30/04 16011 16095 15131
18487 18662 16040
18500 18759 16828
18287 18665 17829
9/30/05 20869 20117 19278
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund on its inception date of 2/20/97 to a
$10,000 investment made in unmanaged securities indexes on that date. The Fund's
performance in this chart and the performance table assumes the reinvestment of
dividends and capital gain distributions but does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or on the redemption of
Fund shares.
Management Overview 23
Schedule of Investments
ICON Europe Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (96.6%)
6,700 Actividades de
Construccion y
Servicios, S.A. $ 195,487
2,300 Altadis, S.A. 103,101
1,200 Andritz AG 119,790
4,100 AstraZeneca Plc 191,529
6,000 Axalto Holding
NV(a) 220,315
32,400 BAE Systems Plc 196,574
1,200 Bank Austria
Creditanstalt 134,564
4,000 Bank Pekao SA 221,306
4,000 Bank Zachodni WBK
SA 152,008
2,500 Bayer AG 91,977
2,200 Bayerische Motoren
Werke AG 103,310
7,900 Beter Bed Holding
N.V. 283,571
20,300 BG Group Plc 192,491
21,800 BHP Billiton PLC 352,240
1,680 Boehler - Uddeholm
AG 282,750
2,400 Bouygues SA 111,512
8,720 Buzzi Unicem S.p.A 137,260
17,000 Cadbury Schweppes
Plc 171,658
16,900 Capio AB(a) 333,906
1,500 Celesio AG 131,208
2,800 Charles Voegele
Holding AG 228,580
2,200 Coloplast A/S Class
B 134,171
2,800 Continental AG 230,447
13,200 Corporacion Mapfre,
S.A. 226,869
18,000 Curanum AG 121,862
1,290 Dem Allianz AG 174,249
42,000 Det Norske
Oljeselskap ASA 263,715
2,400 Deutsche Boerse AG 229,125
4,700 DIS Deutscher
Industries Service
AG 247,385
20,600 DOF ASA 101,278
4,150 DSV A/S 441,524
4,600 Elekta AB - B
Shares 210,610
6,900 Eni S.p.A 204,652
4,350 Eurofins
Scientific(a) 183,775
10,400 EVS Broadcast
Equipment S.A. 374,233
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
91,700 Fast Search &
Transfer ASA(a) $ 346,981
4,200 Folli - Follie SA 125,829
2,200 Fomento de
Construcciones y
Contratas S.A. 131,284
1,900 Fresenius AG-PFDv 263,143
8,300 Fugro N.V.(a) 250,494
5,370 Groupe Steria SCA 293,241
34,700 HiQ International
AB 203,100
3,000 Hochtief AG 133,523
8,000 Homeserve Plc 155,939
4,250 InBev N.V. 168,352
47,700 Intracom S.A. 330,955
18,600 Jumbo S.A. 212,439
2,900 K+S AG 203,886
17,900 Kingspan Group Plcv 230,163
460 Kobenhavns
Lufthavne A/S 115,258
6,300 Leoni AG 200,756
8,800 Logitech
International
S.A.(a) 355,864
4,400 Lukoil - ADRv 253,440
23,300 Lundin Petroleum
AB(a) 294,175
6,600 Man Group Plc 192,848
8,050 Neste Oil Oyj(a) 297,117
600 Nestle S.A. 176,271
1,000 Nobel Biocare
Holding AG 235,810
12,600 Nokian Renkaat
Oyj(a) 298,608
1,215 Oesterrichische
Elekrizitaitswirts
AG - Class A 426,743
2,400 Omega Pharma SAv 135,495
4,900 OMV AG 290,934
4,000 OPG Groep N.V. 303,506
2,900 Option N.V.(a) 158,990
5,625 Orpea(a) 331,549
7,500 Pinguely-Haulotte 149,581
23,600 PlasmaSelect AG(a) 209,498
130 Porsche AG 99,886
7,300 Ramirent Oyj 173,810
6,400 Red Electrica de
Espana 182,963
14,000 Renishaw Plc 211,453
4,200 Rio Tinto Plc(a) 172,097
1,500 Roche Holding AG(a) 208,452
</Table>
24 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
4,600 Royal Dutch Shell
Plcv $ 151,850
1,700 RWE AG 112,451
2,600 SBM Offshore N.V. 217,111
810 Sjaelso Gruppen A/S 202,631
6,000 Smedvig ASA 147,009
820 Societe Generale 93,675
13,100 Softbank SA 132,740
3,300 SolarWorld AG 492,991
9,500 SSAB Svenskt Stal
AB 287,965
5,400 Stada Arzneimittel
AG 193,300
3,300 Stork N.V. 163,641
4,000 Suez Lyonnaise Des
Eaux S.A. 115,557
525 Sulzer AG 266,606
26,600 Temenos Group AG(a) 225,631
875 Total SA 238,161
2,230 Umicore, S.A. 243,674
1,100 Unibail 159,493
7,200 United Internet AG 234,208
5,500 Univar N.V. 238,255
9,500 Vacon Oyj 194,101
975 Vallourec S.A. 474,829
30,800 Vedanta Resources
Plc 325,902
5,000 Veidekke ASA 136,672
10,400 Vestas Wind Systems
AS(a) 251,638
2,800 Vinci S.A.(a) 241,197
4,020 Volkswagen AG 247,982
4,000 Wartsila OYJ - B
Shares 127,447
5,600 WaveLight Laser
Technologie AG 124,899
6,500 Wilhelm Wilhelmsen
ASA 227,859
13,400 Xstrata Plc 347,760
3,400 Zodiac S.A. 200,834
-----------
TOTAL COMMON STOCKS (COST
$19,099,915) 22,441,534
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (2.7%)
$200,511 Brown Brothers
Harriman Time
Deposit - Danish
Krone,
1.28%, 10/01/05# $ 200,511
416,735 Brown Brothers
Harriman Time
Deposit - Euro,
1.29%, 10/01/05# 416,735
63 Brown Brothers
Harriman Time
Deposit - British
Pound,
3.59%, 10/01/05# 63
40 Brown Brothers
Harriman Time
Deposit - Norwegian
Kroner,
1.13%, 10/01/05# 40
20,748 Brown Brothers
Harriman Time
Deposit - Swedish
Krona,
0.65%, 10/01/05# 20,748
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $638,097) 638,097
-----------
TOTAL INVESTMENTS 99.3% (COST
$19,738,012) 23,079,631
-----------
OTHER ASSETS LESS LIABILITIES
0.7% 163,120
-----------
TOTAL NET ASSETS 100.0% $23,242,751
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
v All common stocks were fair valued (Note 1) as of September 30, 2005 unless
noted with a v. Total value of common stocks fair valued was $21,407,443.
ADR American Depositary Receipt.
Schedule of Investments 25
Management Overview
ICON International Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 98.9%
Top 10 Equity Holdings 14.3%
Number of Stocks 125
Short-Term Investments 2.6%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
SolarWorld AG 1.7%
Kobe Steel, Ltd. 1.5%
Vallourec S.A. 1.5%
Mitsubishi UFJ Financial Group, Inc. 1.5%
DSV A/S 1.4%
SembCorp Marine, Ltd. 1.4%
Hyundai Heavy Industries
Co., Ltd. 1.4%
Rio Tinto, Ltd. 1.3%
PAL Co., Ltd. 1.3%
Hanjin Heavy Industries & Construction Co., Ltd. 1.3%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. For the fiscal year ended September 30, 2005, the ICON International Equity
Fund returned 32.90% for Class I shares, 29.56% for Class C shares and 33.57%
for Class Z shares, outpacing the 29.48% return of the MSCI All Country World
Index ex-U.S., the Fund's benchmark, over the same period. Total returns for
other periods as of September 30, 2005 appear on page 33.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Broad regional participation across Asia-Pacific and European markets
benefited overall Fund performance, as foreign shares continued to trade at
deeper discounts and close wider valuation gaps than U.S. stocks. However,
foreign exchange fluctuations detracted slightly from real returns, as the
U.S. dollar strengthened against the euro, the yen and other foreign
currencies. Nevertheless, the full impact was minimal, even though the Fund
maintained direct currency exposure in the underlying equities.
Despite these factors, the Fund's focus on leading industry themes was the
primary driver of enhanced relative performance during the period.
Secondarily, a valuation-related tilt toward medium-capitalization stocks,
which our methodology led us to actively overweight versus the large-cap
dominated benchmark, further boosted relative returns. Although ICON does not
utilize market capitalization as a valuation measure, the Fund's residual
bias proved favorable, as selections in international mid-caps generally
outperformed their larger counterparts.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying international
securities we believe are underpriced regardless of their location on the
conventional style grid or in the world. Our system is not limited by
restrictions on market capitalization, investment style or country origin,
and searches for potential industry leadership wherever and whenever it may
emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as these measures do not in our view adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of value with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the sector benchmark.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Even as cyclical themes propelled healthy advances at the opening and closing
stages of the fiscal year, foreign markets experienced considerable
choppiness in conjunction with external events and conflicting
26 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
[SCOTT SNYDER PHOTO]
Scott Snyder
Assistant Portfolio Manager
fundamentals. Despite temporary tsunami-related disruptions, Asian markets by
and large saw continued robust expansion. Japan, in fact, may have finally
turned a corner, as late-period reports pointed to a reversal in its
prolonged deflationary malaise. Meanwhile, China's revaluation of the yuan
was viewed as a favorable first step in its embrace of structural reforms.
Europe, however, was more a study in contrasts. While earnings expectations
were generally upbeat, consumer confidence and personal consumption turned
decidedly negative. Nominal inflation pressures were of little consequence
given continued high unemployment and lingering weakness. Even as the United
Kingdom eased monetary policy, the uncertain outcome of Germany's national
elections put a damper on forward growth projections. Nevertheless,
globalization and economic integration, as evidenced by an expanding European
Union, continued to be viewed as key to sustaining a broad recovery.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Fund performance was driven by continued strength in the highly cyclical
Industrials sector, which benefited from active overweighting and broad
industry participation. Industry standouts included industrial machinery and
construction & farm machinery & heavy trucks, both of which were linked to
energy-related expansion in Asia-Pacific shipbuilding and global gains in
infrastructure spending. At the same time, defensive-oriented sectors such as
Healthcare also contributed positively, reflecting market leadership in the
health care distributors group.
Alongside these sector and industry leaders, top-performing company
contributors included pharmaceutical marketer Meda AB, which benefited from
strategic acquisitions that added asthma and pain medications to its growing
product lineup. Likewise, trucking and logistics company DSV A/S capitalized
on consolidation trends that proved accretive to quarterly results, while
specialty steel producer Boehler-Uddeholm AG tapped acquired growth to meet
rising demand for high-alloy products.
Regional weightings also played a role in overall performance, as the Fund
benefited from a European tilt during most of the fiscal year, before
shifting more toward Asia-Pacific. Although country selection is not a
primary consideration of our investment methodology, it is a secondary factor
given regional economic differences and periodic diversions in global
industry leadership.
In contrast, the Energy sector detracted from relative performance, despite
contributing positively on an absolute basis. Having underweighted the sector
due to valuation and relative strength concerns, each of the constituent
industries, in particular oil & gas exploration & production, continued to
move higher, ultimately to the detriment of Fund performance in terms of
opportunity cost.
Management Overview 27
Management Overview (continued)
ICON International Equity Fund
At the company level, principal detractors included specialty pharmaceutical
maker Altana AG, which tumbled after a joint development venture was
terminated in the clinical study phase. Sports equipment marketer Shimano
Inc. also retreated as the company cut net income forecasts, citing
competition from lower-priced Chinese imports. Elsewhere, container
manufacturer Singamas Container Holdings Ltd. came under pressure due to
relocation and production delays. All three were ultimately removed from the
Fund as their relative strength declined.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INTERNATIONAL EQUITY MARKET?
A. On the whole, international equities continue trade at substantial discounts
to domestic stocks, according to our analysis, yet industry leadership
appears to be in a period of transition and, in certain cases, global
diversion. While industry selection primarily drives our investment
methodology, we are well aware of regional moves and consider them carefully
in our decision-making process.
To illustrate the point, according to current valuation calculations, Asia is
demonstrating strength in Consumer Discretionary, weakness in Information
Technology, while Europe is exhibiting strength in Information Technology,
weakness in Consumer Discretionary. That being the case, we remain committed
to our discipline, seeking out value and relative strength wherever it may
emerge.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - Broad regional participation across Asia-Pacific and European markets
benefited overall Fund performance.
- - Leading industry themes were the primary drivers of relative Fund
performance, while a valuation-related tilt toward medium-capitalization
stocks boosted returns versus the large-cap dominated benchmark.
- - Continued strength in the highly cyclical Industrial sector and the
defensive-oriented Health Care sector contributed positively to relative
performance, while an underweight in the Energy sector proved detrimental.
- - Top-performing companies that contributed to performance included Meda AB,
DSV A/S and Boehler-Uddeholm AG.
- - Principal detractors to performance included Altana AG, Shimano Inc. and
Singamas Container Holdings Ltd.
28 Management Overview
COUNTRY COMPOSITION
September 30, 2005
<Table>
Japan 26.8%
South Korea 11.3%
Germany 6.5%
Netherlands 4.6%
United Kingdom 4.3%
Switzerland 4.2%
Spain 4.1%
Taiwan 3.8%
Australia 3.7%
Singapore 3.5%
Norway 3.3%
France 3.1%
Finland 2.7%
Denmark 2.6%
Austria 2.5%
Sweden 1.9%
Hong Kong 1.8%
Belgium 1.7%
Mexico 1.7%
Canada 1.5%
Brazil 1.1%
Russia 0.8%
Cayman Islands 0.5%
Indonesia 0.5%
Ireland 0.4%
</Table>
Percentages are based upon net assets.
Management Overview 29
Management Overview (continued)
ICON International Equity Fund
SECTOR COMPOSITION
September 30, 2005
<Table>
Industrials 23.3%
Materials 13.3%
Financial 11.4%
Energy 10.8%
Consumer Discretionary 10.6%
Information Technology 9.8%
Healthcare 9.1%
Telecommunication and Utilities 7.2%
Leisure and Consumer Staples 3.4%
</Table>
Percentages are based upon net assets.
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Industrial Machinery 4.7%
Diversified Banks 4.2%
Steel 4.1%
Construction & Farm Machinery & Heavy Trucks 4.0%
Diversified Metals & Mining 4.0%
Electric Utilities 3.9%
Integrated Oil & Gas 3.7%
Diversified Chemicals 2.8%
Oil & Gas Equipment & Services 2.8%
Apparel Retail 2.6%
Construction & Engineering 2.6%
Internet Software & Services 2.6%
Health Care Facilities 2.6%
Trading Companies & Distributors 2.5%
Health Care Equipment 2.5%
Department Stores 2.4%
Pharmaceuticals 2.1%
Property & Casualty Insurance 2.1%
Oil & Gas Exploration & Production 2.0%
Oil & Gas Refining & Marketing 1.8%
Multi-Line Insurance 1.6%
</Table>
30 Management Overview
INDUSTRY COMPOSITION (continued)
September 30, 2005
<Table>
Specialty Chemicals 1.5%
Computer Hardware 1.5%
Trucking 1.4%
Electrical Components & Equipment 1.4%
Health Care Distributors 1.3%
Computer & Electronics Retail 1.2%
Real Estate Management & Development 1.2%
Gas Utilities 1.2%
Automobile Manufacturers 1.2%
Regional Banks 1.2%
Consumer Finance 1.1%
Construction Materials 1.0%
Leisure Products 1.0%
Human Resource & Employment Services 1.0%
Semiconductors 1.0%
Household Products 0.9%
Apparel Accessories & Luxury Goods 0.9%
Computer Storage & Peripherals 0.9%
Diversified Commercial & Professional Services 0.9%
Communications Equipment 0.9%
Aerospace & Defense 0.9%
</Table>
Management Overview 31
Management Overview (continued)
ICON International Equity Fund
INDUSTRY COMPOSITION (continued)
September 30, 2005
<Table>
It Consulting & Other Services 0.8%
Electronic Equipment Manufacturers 0.8%
Industrial Conglomerates 0.8%
Distributors 0.8%
Multi-Utilities 0.8%
Wireless Telecommunication Services 0.7%
Air Freight & Logistics 0.7%
Electronic Manufacturing Services 0.7%
Packaged Foods & Meats 0.7%
Tires & Rubber 0.7%
Marine 0.7%
Specialty Stores 0.7%
Home Entertainment Software 0.6%
Oil & Gas Drilling 0.6%
Water Utilities 0.5%
Homefurnishing Retail 0.5%
Biotechnology 0.5%
Airport Services 0.5%
Commercial Printing 0.5%
Photographic Products 0.4%
Tobacco 0.4%
Building Products 0.3%
</Table>
32 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
INCEPTION SINCE
DATE 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------
ICON International Equity Fund - Class
I 2/6/04 32.90% N/A 16.37%
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S 29.48% N/A 18.49%
- -------------------------------------------------------------------------------------------
ICON International Equity Fund - Class
C 2/19/04 29.56% N/A 12.58%
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S 29.48% N/A 16.78%
- -------------------------------------------------------------------------------------------
ICON International Equity Fund - Class
Z 2/18/97 33.57% 6.93% 8.76%
- -------------------------------------------------------------------------------------------
MSCI ACWI ex-U.S 29.48% 4.81% 6.54%
- -------------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
Class Z shares are available only to grandfathered and institutional investors.
VALUE OF A $10,000 INVESTMENT
through September 30, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON INTERNATIONAL EQUITY FUND
CLASS Z MSCI ACWI EX-U.S.
------------------------------ -----------------
2/18/97 10000 10000
10230 10028
10570 11330
9/30/97 11060 11225
11281 10258
12900 11659
13562 11486
9/30/98 11841 9750
13001 11741
12171 12019
12728 12580
9/30/99 13354 13008
15698 15370
15585 15490
15159 14858
9/30/00 14747 13647
14340 13052
12239 11337
12224 11322
9/30/01 10280 9650
11145 10508
11145 10680
10901 10397
9/30/02 8538 8390
9077 8966
8382 8312
10684 9961
9/30/03 12175 10826
14897 12678
15742 13291
15232 13199
9/30/04 15436 13332
17589 15387
17621 15438
17447 15436
9/30/05 20619 17262
</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 33
Schedule of Investments
ICON International Equity Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (98.9%)
5,600 Actividades de
Construccion y
Servicios, S.A. $ 163,392
3,000 Altadis, S.A. 134,480
183,000 America Movil S.A.
de C.V.v 241,289
1,600 Andritz AG 159,720
10,200 Anglo Irish Bank
Corp., Plc 139,399
5,000 ARRK Corp. 277,811
4,700 AstraZeneca Plc 219,557
7,000 Atco Ltd., Class
Iv 254,173
45,600 BAE Systems Plc 276,660
11,000 Banco Santander
Central Hispano,
S.A. 144,708
27,300 BG Group Plc 258,867
19,700 BHP Billiton PLC 318,308
1,590 Boehler - Uddeholm
AG 267,603
14,500 Capio AB(a) 286,487
6,203 Cemex, S.A. de
C.V.--ADRv 324,417
3,400 Charles Voegele
Holding AG 277,561
13,300 Cheil Industries,
Inc. 286,711
56,000 Cheung Kong
Infrastructure
Holdings, Ltd. 187,516
2,806 Continental AG 230,941
14,800 Corporacion
Mapfre, S.A. 254,368
68,881 Cosmo Oil Co.,
Ltd. 370,903
6,500 Culture
Convenience Club
Co., Ltd. 214,659
13,000 Daegu Bank 158,332
18,000 Daifuku Co., Ltd. 244,989
33,700 Det Norske
Oljeselskap ASA 211,600
6,000 DIS Deutscher
Industries Service
AG 315,811
12,800 Doosan Heavy
Industries &
Construction Co.,
Ltd. 241,877
5,480 DSM NV 215,434
4,400 DSV A/S 468,121
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
6,900 Elekta AB - B
Shares $ 315,914
6,600 Enagas 118,709
7,700 EVS Broadcast
Equipment S.A. 277,076
107,200 Fast Search &
Transfer ASA(a) 405,631
7,600 Fugro N.V.(a) 229,368
38,000 Fuji Electric
Holdings Co., Ltd. 151,709
439,000 GES International,
Ltd. 237,973
5,000 Groupe Steria SCA 273,036
2,500 Grupo Ferrovial,
S.A. 208,265
19,300 Hanjin Heavy
Industries &
Construction Co.,
Ltd. 411,451
9,000 Hanjin
Transportation Co. 236,127
59,300 Healthscope Ltd. 284,743
19,200 High Tech Computer
Corp. 235,962
50,219 Hon Hai Precision
Industry Co., Ltd. 235,119
45 Hoosiers Corp. 174,829
11,000 Horiba 265,417
5,500 Hyundai Department
Store H&S Co.,
Ltd. 261,492
6,000 Hyundai Heavy
Industries Co.,
Ltd. 447,069
39,400 Hyundai Marine &
Fire Insurance
Co., Ltd. 391,527
14,000 Inchon Iron &
Steel Co. 363,024
20,000 Industrial Bank of
Korea 253,849
24 Inpex Corp. 186,058
13,000 JGC Corp. 238,871
86,400 Johnson Health
Tech. Co., Ltd 318,207
7,800 Kia Motors Corp. 146,283
161,000 Kobe Steel, Ltd. 490,888
640 Kobenhavns
Lufthavne A/S 160,360
2,100 Kone Oyj(a)v 142,582
4,000 Korea Electric
Power Corp. 136,805
</Table>
34 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
146,560 KS Technology,
Ltd. $ 194,537
15,450 Largan Precision
Co., Ltd. 139,107
4,500 Leoni AG 143,397
5,000 LG Household &
Health Carev 287,042
6,900 Logitech
International
S.A.(a) 279,029
4,300 Lukoil - ADRv 247,680
60,000 Marubeni Corp. 280,178
15,200 MARUI Co., Ltd. 257,693
33,000 MediaTek, Inc. 312,831
11,000 Mediceo Holdings
Co., Ltd. 175,912
36 Mitsubishi UFJ
Financial Group,
Inc. 471,428
23,000 Mitsui & Co., Ltd. 288,834
11,000 Namco Bandai
Holdings, Inc.(a)v 183,172
800 Nestle S.A. 235,028
1,250 NHN Corp. 212,646
64,000 Nippon Steel Corp. 240,917
28,000 Nippon Mining
Holdings Corp. 220,797
24,000 Nissan Chemical
Industries, Ltd. 302,825
2,000 Nitori Co., Ltd. 167,818
5,500 NKT Holding A/S 233,868
1,200 Nobel Biocare
Holding AG 282,972
1,115 Oesterrichische
Elekrizitaitswirts
AG - Class A 391,620
3,200 OPG Groep N.V. 242,805
1,900 Orix Corp. 344,418
4,500 Orpea(a) 265,240
7,100 PAL Co., Ltd. 415,999
5,000 Petroleo
Brasileiro,
S.A.--ADRv 357,449
25,000 PlasmaSelect AG(a) 221,926
140,000 Ports Design, Ltd. 159,190
360,000 PT Perusahaan Gas
Negara 146,304
12,400 Qiagen N.V.(a) 161,488
5,230 Repsol YPF, S.A. 168,937
9,250 Rio Tinto, Ltd. 417,457
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
1,800 Roche Holding
AG(a) $ 250,143
4,800 Royal Dutch Shell
Plcv 158,452
16,600 Sampo Oyj 263,446
2,800 SBM Offshore N.V. 233,812
148,000 SembCorp
Industries, Ltd. 262,875
264,000 SembCorp Marine,
Ltd. 467,793
98,000 Showa Denko K.K 314,952
182,000 Sino Land Co.,
Ltd. 222,130
7,300 Smedvig ASA 178,861
7,000 Sociedad General
de Aguas de
Barcelona, S.A. 170,062
3,690 SolarWorld AG 551,255
22,000 Sompo Japan
Insurance, Inc. 292,877
6,300 Stada Arzneimittel
AG 225,517
5,560 Stockmann Oyj
Abp - B Shares 225,329
42,000 Sumitomo Heavy
Industries, Ltd. 299,378
40 Sumitomo Mitsui
Financial Group,
Inc. 378,761
20,000 Suruga Bank Ltd. 220,389
23,000 Takashimaya Co. 293,803
28,000 Toho Gas Co., Ltd. 122,454
6,600 Trican Well
Service, Ltd.(a)v 240,274
105,000 Ube Industries,
Ltd. 284,099
2,400 Umicore, S.A. 262,250
6,800 United Internet AG 221,196
5,900 Univar N.V. 255,583
4,150 Uponor Oyj 95,958
7,400 Vacon Oyj 151,194
975 Vallourec S.A. 474,830
28,800 Vedanta Resources
Plc 304,741
238,000 Vision Grande
Group Holdings,
Ltd. 150,698
3,800 Volkswagen AG 234,411
6,300 Wilhelm Wilhelmsen
ASA 220,848
</Table>
Schedule of Investments 35
Schedule of Investments (continued)
ICON International Equity Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
8,800 Woodside
Petroleum, Ltd. $ 241,193
5,300 YAMADA DENKI Co.,
Ltd. 403,647
70,000 Zinifex, Ltd.(a) 244,375
-----------
TOTAL COMMON STOCKS (COST
$26,459,430) 32,112,168
SHORT-TERM INVESTMENTS (2.6%)
$ 196 Brown Brothers
Harriman Time
Deposit - Australian
Dollar,
4.55%, 10/01/05# 196
84 Brown Brothers
Harriman Time
Deposit - Canadian
Dollar,
1.85%, 10/01/05# 84
18 Brown Brothers
Harriman Time
Deposit - Danish
Krone,
1.28%, 10/01/05# 18
691,297 Brown Brothers
Harriman Time
Deposit - Euro,
1.29%, 10/01/05# 691,297
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
$ 164,269 Brown Brothers
Harriman Time
Deposit - Hong
Kong Dollar,
2.25%, 10/01/05# $ 164,269
5 Brown Brothers
Harriman Time
Deposit -
Norwegian Kroner,
1.13%, 10/01/05# 5
31 Brown Brothers
Harriman Time
Deposit - Swedish
Krona,
0.65%, 10/01/05# 31
4 Brown Brothers
Harriman Time
Deposit - Singapore
Dollar,
1.27%, 10/01/05# 4
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $855,904) 855,904
-----------
TOTAL INVESTMENTS 101.5% (COST
$27,315,334) 32,968,072
-----------
LIABILITIES LESS OTHER ASSETS
(1.5)% (503,383)
-----------
TOTAL NET ASSETS 100.0% $32,464,689
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
v All common stocks were fair valued (Note 1) as of September 30, 2005
unless noted with a v. Total value of common stocks fair valued was
$29,675,638.
ADR American Depositary Receipt
36 Schedule of Investments
Six Month Hypothetical Expense Example
September 30, 2005 (unaudited)
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. 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 various ICON Funds and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/05 - 9/30/05).
ACTUAL EXPENSES
The first line in the table for each Fund provides information about actual
account values and actual expenses. The Example includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example does not include client specific fees, such as the $10.00 fee charged to
IRA accounts, or the $15.00 fee charged for wire redemptions. You may use this
information, together with the amount you invested, to estimate the expenses
that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line for each Fund under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
Expense Example 37
Six Month Hypothetical Expense Example (continued)
September 30, 2005 (unaudited)
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/05 9/30/05 4/1/05-9/30/05* 4/1/05-9/30/05
- -------------------------------------------------------------------------------------------------
ICON ASIA-PACIFIC REGION
FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,222.80 $ 9.42 1.69%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,016.53 8.54
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON EUROPE FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,128.10 9.28 1.74%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,016.28 8.79
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON INTERNATIONAL EQUITY
FUND
- -------------------------------------------------------------------------------------------------
CLASS I
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,168.20 9.78 1.80%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,015.98 9.10
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,163.40 14.64 2.70%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,011.46 13.61
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
CLASS Z
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,170.10 8.21 1.51%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,017.43 7.64
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six month expense ratio annualized,
multiplied by the average account value over the period, multiplied by 183/365
to reflect the one-half year period.
38 Expense Example
Statements of Assets and Liabilities
September 30, 2005
<Table>
<Caption>
ICON ICON
ASIA-PACIFIC ICON INTERNATIONAL
REGION FUND EUROPE FUND EQUITY FUND
------------ ----------- -------------
ASSETS
Investments, at cost $42,079,836 $19,738,012 $27,315,334
----------- ----------- -----------
Investments, at value 48,516,183 23,079,631 32,968,072
Cash 17,905 - 249,124
Receivables:
Fund shares sold 1,987,414 330,349 72,396
Investments sold 927,713 645,920 761,233
Interest 365 226 246
Dividends 65,131 12,104 27,666
Foreign security reclaims - 19,545 7,011
Other assets 15,136 15,224 17,086
----------- ----------- -----------
Total Assets 51,529,847 24,102,999 34,102,834
----------- ----------- -----------
LIABILITIES
Payables:
Due to custodian bank - 580,716 -
Investments bought 2,725,743 221,162 1,580,138
Fund shares redeemed 9,046 - -
Advisory fees 31,569 19,247 19,660
Accrued distribution fees - - 3,906
Fund accounting fees 773 472 624
Transfer agent fees 1,505 1,026 1,908
Administration fees 1,497 913 1,208
Trustee fees 2,509 2,320 2,421
Accrued expenses 36,303 34,392 28,280
----------- ----------- -----------
Total Liabilities 2,808,945 860,248 1,638,145
----------- ----------- -----------
NET ASSETS - ALL SHARE CLASSES $48,720,902 $23,242,751 $32,464,689
=========== =========== ===========
NET ASSETS - CLASS I $ - $ - $15,375,785
=========== =========== ===========
NET ASSETS - CLASS C $ - $ - $ 1,622,434
=========== =========== ===========
NET ASSETS - CLASS Z $ - $ - $15,466,470
=========== =========== ===========
NET ASSETS CONSIST OF
Paid-in capital $50,099,686 $18,652,901 $24,800,936
Accumulated undistributed net investment income/(loss) 15,964 (35,841) (4,090)
Accumulated undistributed net realized gain/(loss) from
investments (7,066,810) 1,730,943 2,770,457
Accumulated net realized gain/(loss) from foreign currency
translations (755,156) (452,880) (745,915)
Unrealized appreciation/(depreciation):
on investments and other assets and liabilities
denominated in foreign currency 6,427,218 3,347,628 5,643,301
----------- ----------- -----------
NET ASSETS $48,720,902 $23,242,751 $32,464,689
=========== =========== ===========
Shares outstanding (unlimited shares authorized, no par
value) 4,330,516 1,482,607 2,509,923
----------- ----------- -----------
Class I - - 1,190,709
Class C - - 129,511
Class Z - - 1,189,703
Net asset value (offering and redemption price per share) $ 11.25 $ 15.68 $ -
Class I $ - $ - $ 12.91
Class C $ - $ - $ 12.53
Class Z $ - $ - $ 13.00
</Table>
The accompanying notes are an integral part of the financial statements.
Financial Statements 39
Statements of Operations
For the year ended September 30, 2005
<Table>
<Caption>
ICON ICON
ASIA-PACIFIC ICON INTERNATIONAL
REGION FUND EUROPE FUND EQUITY FUND
------------ ----------- -------------
INVESTMENT INCOME
Interest $ 8,804 $ 7,652 $ -
Dividends 374,261 457,355 540,665
Foreign taxes withheld (43,855) (71,257) (77,090)
---------- ---------- ----------
Total Investment Income 339,210 393,750 463,575
---------- ---------- ----------
EXPENSES
Advisory fees 151,409 166,252 206,961
Distribution fees:
Class I - - 19,731
Class C - - 6,396
Fund accounting fees 21,942 24,145 25,493
Transfer agent fees 12,901 10,643 18,125
Custody fees 49,620 49,771 51,795
Administration fees 7,258 8,041 9,992
Audit fees 16,184 16,161 16,744
Registration fees 17,470 18,168 20,207
Insurance expense 1,010 465 750
Trustee fees and expenses 3,103 2,878 3,358
Interest expense 2,700 2,343 3,476
Other expenses 10,326 9,132 11,028
---------- ---------- ----------
Total expenses before expense (reimbursement)/recoupment 293,923 307,999 394,056
---------- ---------- ----------
Expense (reimbursement)/recoupment by Adviser due to
expense limitation agreement - - (10,556)
---------- ---------- ----------
Net Expenses 293,923 307,999 383,500
---------- ---------- ----------
NET INVESTMENT INCOME (LOSS) 45,287 85,751 80,075
---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain/(loss) from investment transactions 1,927,462 2,088,483 2,007,770
Net realized gain/(loss) from foreign currency
translations (32,667) (97,702) (68,475)
Change in unrealized net appreciation/(depreciation) on
investments 4,738,359 1,925,390 4,346,469
---------- ---------- ----------
Net realized and unrealized gain/(loss) on investments 6,633,154 3,916,171 6,285,764
---------- ---------- ----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $6,678,441 $4,001,922 $6,365,839
========== ========== ==========
</Table>
The accompanying notes are an integral part of the financial statements.
40 Financial Statements
THIS PAGE INTENTIONALLY LEFT BLANK
Statements of Changes in Net Assets
<Table>
<Caption>
ICON ASIA-PACIFIC REGION FUND
----------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
------------------ ------------------
OPERATIONS
Net investment income/(loss) $ 45,287 $ 30,021
Net realized gain/(loss) from investment transactions 1,927,462 176,502
Net realized gain/(loss) from foreign currency
translations (32,667) (3,454)
Change in net unrealized appreciation/(depreciation) on
investments and foreign currency translations 4,738,359 115,601
------------ ------------
Net increase/(decrease) in net assets resulting from
operations 6,678,441 318,670
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (26,459) (39,164)*
Class I - -
Class C - -
Class Z - -
Net realized gains - -
Class I - -
Class C - -
Class Z - -
------------ ------------
Net decrease from dividends and distributions (26,459) (39,164)
------------ ------------
FUND SHARE TRANSACTIONS
Shares sold 39,085,269 20,963,976
Class I - -
Class C - -
Class Z - -
Reinvested dividends and distributions 26,163 39,063
Class I - -
Class C - -
Class Z - -
Shares repurchased (14,089,724) (10,319,543)
Class I - -
Class C - -
Class Z - -
------------ ------------
Net increase/(decrease) from fund share transactions 25,021,708 10,683,496
------------ ------------
Total net increase/(decrease) in net assets 31,673,690 10,963,002
NET ASSETS
Beginning of period 17,047,212 6,084,210
------------ ------------
End of period $ 48,720,902 $ 17,047,212
============ ============
</Table>
* The tax character of distributions to shareholders from net investment income
for the period ending September 30, 2004 is ordinary income.
42 Financial Statements
<Table>
<Caption>
ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND
---------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
------------------ ------------------ ------------------ ------------------
$ 85,751 $ (27,710) $ 80,075 $ 8,851
2,088,483 1,242,857 2,007,770 3,949,314
(97,702) (765) (68,475) (2,877)
1,925,390 365,375 4,346,469 (1,455,011)
----------- ----------- ----------- -----------
4,001,922 1,579,757 6,365,839 2,500,277
----------- ----------- ----------- -----------
- - - -
- - - -
- - - -
- - - (57,934)*
- - - -
- - (422,167) -
- - (37,935) -
- - (1,003,360) -
----------- ----------- ----------- -----------
- - (1,463,462) (57,934)
----------- ----------- ----------- -----------
19,527,704 5,686,345 - -
- - 10,807,776 3,425,609
- - 1,464,926 267,290
- - 5,520,800 3,833,056
- - - -
- - 407,049 -
- - 36,352 -
- - 994,866 57,394
(8,112,955) (8,702,471) - -
- - (1,176,471) (265,090)
- - (248,111) (75,175)
- - (2,942,011) (7,575,790)
----------- ----------- ----------- -----------
11,414,749 (3,016,126) 14,865,176 (332,706)
----------- ----------- ----------- -----------
15,416,671 (1,436,369) 19,767,553 2,109,637
7,826,080 9,262,449 12,697,136 10,587,499
----------- ----------- ----------- -----------
$23,242,751 $ 7,826,080 $32,464,689 $12,697,136
=========== =========== =========== ===========
</Table>
Financial Statements 43
<Table>
<Caption>
ICON ASIA-PACIFIC REGION FUND
----------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
------------------ ------------------
TRANSACTIONS IN FUND SHARES
Shares sold 3,865,936 2,524,850
Class I - -
Class C - -
Class Z - -
Reinvested dividends and distributions 2,994 4,835
Class I - -
Class C - -
Class Z - -
Shares repurchased (1,624,763) (1,241,267)
Class I - -
Class C - -
Class Z - -
----------- -----------
Net increase/(decrease) 2,244,167 1,288,418
----------- -----------
Shares outstanding beginning of period 2,086,349 797,931
----------- -----------
Shares outstanding end of period 4,330,516 2,086,349
=========== ===========
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding short-term securities)
Purchase of securities $53,438,824 $18,808,223
Proceeds from sales of securities 30,360,825 8,416,715
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ 15,964 $ 26,459
=========== ===========
</Table>
The accompanying notes are an integral part of the financial statements.
44 Financial Statements
<Table>
<Caption>
ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND
---------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004 SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
------------------ ------------------ ------------------ ------------------
1,406,104 505,470 - -
- - 953,897 328,830
- - 131,856 24,806
- - 481,231 375,261
- - - -
- - 37,655 -
- - 3,420 -
- - 91,777 5,845
(574,107) (796,013) - -
- - (104,200) (25,473)
- - (23,141) (7,430)
- - (260,880) (762,885)
----------- ---------- ----------- -----------
831,997 (290,543) 1,311,615 (61,046)
----------- ---------- ----------- -----------
650,610 941,153 1,198,308 1,259,354
----------- ---------- ----------- -----------
1,482,607 650,610 2,509,923 1,198,308
=========== ========== =========== ===========
$33,678,756 $5,496,870 $41,768,432 $12,810,296
24,639,660 8,124,419 28,810,442 13,098,694
$ (35,841) $ (757) $ (4,090) $ -
=========== ========== =========== ===========
</Table>
Financial Statements 45
Financial Highlights
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
NET ASSET NET NET REALIZED
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM
BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT
OF PERIOD (LOSS) (X) ON INVESTMENTS OPERATIONS
--------- ---------- -------------- ----------
ICON ASIA-PACIFIC REGION FUND
Year Ended September 30, 2005 $ 8.17 0.03 3.08 3.11
Year Ended September 30, 2004 $ 7.62 0.02 0.55 0.57
Year Ended September 30, 2003 $ 5.68 0.04 1.90 1.94
Year Ended September 30, 2002 $ 6.81 (0.19) (0.91) (1.10)
Year Ended September 30, 2001 $10.25 0.07 (3.51) (3.44)
ICON EUROPE FUND
Year Ended September 30, 2005 $12.03 0.07 3.58 3.65
Year Ended September 30, 2004 $ 9.84 (0.04) 2.23 2.19
Year Ended September 30, 2003 $ 7.40 (0.02) 2.46 2.44
Year Ended September 30, 2002 $ 8.13 (0.04) (0.67) (0.71)
Year Ended September 30, 2001 $10.14 0.05 (2.06) (2.01)
ICON INTERNATIONAL EQUITY FUND
CLASS I
Year Ended September 30, 2005 $10.59 0.04 3.25 3.29
February 6, 2004 (inception)
to September 30, 2004 $10.96 0.04 (0.41) (0.37)
CLASS C
Year Ended September 30, 2005 $10.55 (0.14) 3.09 2.95
February 19, 2004 (inception)
to September 30, 2004 $11.29 (0.02) (0.72) (0.74)
CLASS Z
Year Ended September 30, 2005 $10.60 0.06 3.31 3.37
Year Ended September 30, 2004 $ 8.41 0.01 2.24 2.25
Year Ended September 30, 2003 $ 5.96 0.06 2.45 2.51
Year Ended September 30, 2002 $ 7.24 0.04 (1.25) (1.21)
Year Ended September 30, 2001 $11.79 0.09 (3.31) (3.22)
<Caption>
LESS DIVIDENDS AND DISTRIBUTIONS
-------------------------------------------------------
DIVIDENDS DISTRIBUTIONS TOTAL
FROM NET FROM NET DIVIDENDS
INVESTMENT REALIZED RETURN AND
INCOME GAINS OF CAPITAL DISTRIBUTIONS
---------- ------------- ---------- -------------
ICON ASIA-PACIFIC REGION FUND
Year Ended September 30, 2005 (0.03) - - (0.03)
Year Ended September 30, 2004 (0.02) - - (0.02)
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 - - (0.03) (0.03)
Year Ended September 30, 2001 - - - -
ICON EUROPE FUND
Year Ended September 30, 2005 - - - -
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 (0.02) - - (0.02)
Year Ended September 30, 2001 - - - -
ICON INTERNATIONAL EQUITY FUND
CLASS I
Year Ended September 30, 2005 - (0.97) - (0.97)
February 6, 2004 (inception)
to September 30, 2004 - - - -
CLASS C
Year Ended September 30, 2005 - (0.97) - (0.97)
February 19, 2004 (inception)
to September 30, 2004 - - - -
CLASS Z
Year Ended September 30, 2005 - (0.97) - (0.97)
Year Ended September 30, 2004 (0.06) - - (0.06)
Year Ended September 30, 2003 - (0.06) - (0.06)
Year Ended September 30, 2002 (0.04) - (0.03) (0.07)
Year Ended September 30, 2001 - (1.33) - (1.33)
</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 accompanying notes are an integral part of the financial statements.
46 Financial Highlights
<Table>
<Caption>
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO AVERAGE
AVERAGE NET ASSETS(A) NET ASSETS(A)
------------------------- -------------------------
NET ASSET AVERAGE NET BEFORE AFTER BEFORE AFTER
VALUE, NET ASSETS, ASSETS EXPENSE EXPENSE EXPENSE EXPENSE
END OF TOTAL END OF PERIOD FOR THE PERIOD LIMITATION/ LIMITATION/ LIMITATION/ LIMITATION/
PERIOD RETURN * (IN THOUSANDS) (IN THOUSANDS) RECOUPMENT RECOUPMENT RECOUPMENT RECOUPMENT
--------- -------- -------------- -------------- ----------- ----------- ----------- -----------
$11.25 38.12% $48,721 $15,225 1.93% N/A 0.30% N/A
$ 8.17 7.51% $17,047 $14,976 1.91% N/A 0.20% N/A
$ 7.62 34.15% $ 6,084 $ 6,683 1.98% N/A 0.68% N/A
$ 5.68 (16.29)% $ 6,927 $12,142 1.66% N/A (0.23)% N/A
$ 6.81 (33.56)% $19,684 $18,749 1.70% N/A 0.75% N/A
$15.68 30.34% $23,243 $16,665 1.85% N/A 0.51% N/A
$12.03 22.26% $ 7,826 $ 7,230 2.24% N/A (0.38)% N/A
$ 9.84 32.97% $ 9,262 $ 6,774 1.87% N/A (0.29)% N/A
$ 7.40 (8.76)% $ 4,619 $ 5,706 2.14% N/A (0.42)% N/A
$ 8.13 (19.82)% $ 7,397 $ 7,935 1.96% N/A 0.55% N/A
$12.91 32.90% $15,376 $ 7,921 2.02% 1.97% 0.27% 0.32%
$10.59 (3.38)% $ 3,211 $ 1,960 2.32% N/A 0.44% N/A
$12.53 29.56% $ 1,622 $ 643 4.52% 3.51% (2.23)% (1.22)%
$10.55 (6.55)% $ 183 $ 162 3.06% N/A (0.16)% N/A
$13.00 33.57% $15,466 $12,184 1.68% 1.68% 0.51% 0.51%
$10.60 26.79% $ 9,303 $10,063 1.98% N/A 0.03% N/A
$ 8.41 42.60% $10,587 $ 8,571 2.00% N/A 0.88% N/A
$ 5.96 (16.94)% $ 8,222 $13,347 1.72% N/A 0.48% N/A
$ 7.24 (30.29)% $14,196 $18,204 1.65% N/A 0.97% N/A
<Caption>
PORTFOLIO
TURNOVER RATE (B)
-----------------
185.84%
58.62%
81.44%
14.43%
55.58%
153.55%
78.57%
101.37%
12.26%
84.49%
139.23%
117.74%
139.23%
117.74%
139.23%
117.74%
98.91%
91.99%
41.67%
</Table>
Financial Highlights 47
Notes to Financial Statements
September 30, 2005
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Asia-Pacific Region Fund ("Asia-Pacific Region Fund"), ICON Europe Fund
("Europe Fund") and ICON International Equity Fund ("International Equity Fund")
are series funds (individually a "Fund" and collectively, the "Funds"). The
Funds are part of the ICON Funds (the "Trust"), a Massachusetts business trust
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
as an open-end investment management company. The International Equity Fund
offers three classes of shares Class I, Class C and Class Z. All classes have
equal rights as to earnings, assets and voting privileges except that each Class
may bear different distribution fees, registration costs and shareholder
servicing costs and each Class has exclusive voting rights with respect to its
distribution plan. There are 14 other active funds within the Trust. Those funds
are covered by separate prospectuses and shareholder reports.
Each Fund is authorized to issue an unlimited number of no par shares. The Funds
primarily invest in foreign securities; the Asia-Pacific Region Fund and Europe
Fund primarily invest in companies whose principal business activities fall
within specific regions. The investment objective of each Fund is long-term
capital appreciation.
The Funds may have elements of risk, including the loss of principal. There is
no assurance that the investment process will consistently lead to successful
results. An investment concentrated in sectors and industries may involve
greater risk and volatility than a more diversified investment. Investments in
foreign securities and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar-denominated
transactions as a result of, among other factors, the possibility of lower
government supervision and regulation of foreign securities markets and the
possibility of political or economic instability. There are also risks
associated with small- and mid-cap investing, including limited product lines,
less liquidity, and small market share.
In addition, in the normal course of business the Funds may enter into various
agreements that provide for general indemnifications. Each Fund's maximum
exposure under these arrangements is unknown as any potential exposure involves
future claims that may be made against each Fund. However, based on experience,
the Funds expect the risk of loss to be remote.
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.
48 Notes to Financial Statements
INVESTMENT VALUATION
The Funds' securities and other assets are valued at the closing price at the
close of the regular trading session of the New York Stock Exchange (the "NYSE")
(normally 4 p.m. Eastern time) each day the NYSE is open, except that (a)
securities traded primarily on the NASDAQ Stock Market ("NASDAQ") are normally
valued by 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 report the market value of securities in their portfolios; if a pricing
service is not able to provide a price, or the pricing service quote of
valuation is inaccurate or does not reflect the market value of the security,
prices may be obtained through market quotations from independent broker/
dealers. If market quotations from these sources are not readily available, the
Funds' securities or other assets are valued at fair value as determined in good
faith by the Funds' Board or pursuant to procedures approved by the Board. The
valuation assigned to fair-valued securities for purposes of calculating a
Fund's net asset value ("NAV") may differ from the security's most recent
closing market price and from the prices used by other mutual funds to calculate
their NAVs.
Lacking any sales that day, the security is valued at the current closing bid
price (or yield equivalent thereof) or based on quotes from dealers making a
market for the security. Options are valued at their closing mid-price on the
principal market where the option is traded. Mid-price is the average of the
closing bid and closing ask prices. Debt securities with a remaining maturity of
greater than sixty days are valued in accordance with the evaluated bid price
supplied by the pricing service. The evaluated bid price supplied by the pricing
service is a matrix system which considers such factors as security prices,
yields, maturities and ratings. Short-term securities with remaining maturities
of sixty days or less are generally valued at amortized cost or original cost
plus accrued interest, which approximates market value. Prior to February 22,
2005, London closing exchange rates were used to convert foreign security values
into U.S. dollars. After that date, currency rates as of the close of the New
York Stock Exchange were used to convert foreign security values into U.S.
dollars.
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
Notes to Financial Statements 49
Notes to Financial Statements (continued)
in other markets in determining fair value as of the time a Fund calculates its
net asset value.
REPURCHASE AGREEMENTS
Repurchase agreements, if held by the Funds, are fully collateralized by U.S.
Government securities and such collateral is in the possession of the Funds'
custodian. The collateral is evaluated daily to ensure its market value exceeds
the current market value of the repurchase agreements including accrued
interest. In the event of default on the obligation to repurchase, the Funds
have the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. In the event of default or bankruptcy by the
other party to the agreement, realization and/or retention of the collateral or
proceeds may be subject to legal proceedings. No repurchase agreements were
purchased or sold by the Funds during the year ended September 30, 2005.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the prevailing rates of exchange daily.
Income and expenses are translated into U.S. dollars at the prevailing exchange
rate on the respective dates of the transactions. Purchases and sales of
securities are translated into U.S. dollars at the contractual currency exchange
rates established at the time of each trade.
The Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Net unrealized
appreciation or depreciation on investments and foreign currency translations
arise from changes in the value of assets and liabilities, resulting from
changes in the exchange rates and changes in market prices of securities held.
FORWARD FOREIGN CURRENCY CONTRACTS
The Funds may enter into short-term forward foreign currency contracts in
connection with planned purchases or sales of securities as a hedge against
fluctuations in foreign exchange rates pending the settlement of transactions in
foreign securities. A forward foreign currency contract is an agreement between
contracting parties to exchange an amount of currency at some future time 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
50 Notes to Financial Statements
actually received. Any realized gain or loss incurred by the Funds due to
foreign currency translation is included in the Statements of Operations. The
Funds did not enter into any foreign currency contracts during the year ended
September 30, 2005.
FUTURES CONTRACTS
The Funds may invest in financial futures contracts for the purpose of hedging
their existing securities or securities it intends to purchase against
fluctuations in fair value caused by changes in prevailing markets. Upon
entering into a financial futures contract, the Fund is required to pledge to
the broker an amount of cash and/or other assets equal to a certain percentage
of the contract amount (initial margin deposit). Subsequent payments, known as
"variation margin," are made or received by the Fund each day, depending on the
daily fluctuations in the fair value of the underlying security. The Fund
recognizes a gain or loss equal to the daily variation margin. Should market
conditions move unexpectedly, the Fund may not achieve the anticipated benefits
of the financial futures contracts and may realize a loss. The use of futures
transactions involves the risk of imperfect correlation in movements in the
price of futures contracts and the underlying hedged assets. The Funds held no
financial futures contracts during the year ended September 30, 2005.
OPTIONS TRANSACTIONS
Each Fund may write put and call options only if it owns an offsetting position
in the underlying security. When a Fund writes a put or call option, an amount
equal to the premium received is included in the Statement of Assets and
Liabilities as a liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. 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
Notes to Financial Statements 51
Notes to Financial Statements (continued)
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. The Funds did not enter into any option transactions during the year
ended September 30, 2005.
INCOME TAXES
The Funds intend to qualify as regulated investment companies under Subchapter M
of the Internal Revenue Code and, accordingly, the Funds will generally not be
subject to federal and state income taxes, or federal excise taxes to the extent
that they intend to make sufficient distributions of net investment income and
net realized capital gains.
Dividends received by shareholders of the Funds which are derived from foreign
source income and foreign taxes paid by the Funds are to be treated, to the
extent allowable under the Code, as if received and paid by the shareholders of
the Funds. Dividends paid by the Funds from net investment income and
distributions of net realized short-term gains are, for federal income tax
purposes, taxable as ordinary income to shareholders.
Dividends and distributions to shareholders are recorded by the Funds on the
ex-dividend/distribution date. The Funds distribute net realized capital gains,
if any, to shareholders at least annually, if not offset by capital loss
carryovers. Income distributions and capital gain distributions are determined
in accordance with income tax regulations, which may differ from accounting
principles generally accepted in the United States of America.
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 no later than one business day after
trade date. However, for financial reporting purposes security transactions are
accounted for on trade date. Gains and losses on securities sold are determined
on the basis of identified cost.
ALLOCATION OF INCOME AND EXPENSES
Expenses which cannot be directly attributed to a specific fund in the Trust are
apportioned between all funds based upon relative net assets. Each class of the
International Equity Fund's bears expenses incurred specifically on its behalf
52 Notes to Financial Statements
and, in addition, each class bears a portion of general expenses, based upon
relative net assets of each class. 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.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES
ICON Advisers, Inc. ("ICON") serves as the investment adviser to the Funds and
is responsible for managing the Funds' portfolios of securities. ICON receives a
monthly management fee that is computed daily at an annual rate of 1.00% of each
Fund's average daily net assets.
Effective May 1, 2005, ICON has contractually agreed to reimburse operating
expenses (exclusive of brokerage, interest, taxes, and extraordinary expenses)
of the International Equity Fund to the extent necessary to ensure that the
Fund's operating expenses do not exceed 2.55% for Class C, 1.80% for Class I and
1.55% for Class Z. The International Equity Fund expense limitation will
continue in effect until at least January 29, 2016. To the extent ICON
reimburses or absorbs fees and expenses, it may seek payment of such amounts for
up to three years after the expenses were reimbursed or absorbed. The
International Equity 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, 2005, ICON's net reimbursement for the
International Equity Fund was $10,556. This expense reimbursement is subject to
recoupment by ICON based on a rolling three-year period.
TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES
U.S. Bank, N.A. ("U.S. Bank") and U.S. Bancorp Fund Services, LLC ("U.S.
Bancorp") provided domestic custodial services, transfer agent services and fund
accounting for the Funds for various portions of the year ended September 30,
2005. U.S. Bank served as the custodian until April 17, 2005 and the transfer
agent until April 24, 2005. For these services, the Trust paid 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. U.S. Bancorp served as the fund accountant until March 31,
2005, for which they were paid 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
Notes to Financial Statements 53
Notes to Financial Statements (continued)
the balance of average daily net assets in excess of $1 billion for these
services. The Funds also paid for various out-of-pocket costs incurred by U.S.
Bank and U.S. Bancorp.
U.S. Bancorp had entered into an agreement with JP Morgan Chase Co. ("Chase") on
behalf of the Funds to provide international custodial services. The Funds paid
an annual rate of 0.125% of average daily net assets plus a per trade
transaction cost for these custodial services.
Effective April 1, 2005, the Trust retained BISYS Fund Services Ohio, Inc.
("BISYS") as Fund Accounting Agent for the Funds. For its services, the Trust
pays BISYS 0.03% on the first $1.75 billion of Trust Assets, 0.0175% on assets
over $1.75 billion and up to $5 billion, and 0.01% on assets in excess of $5
billion.
Effective April 18, 2005, the Trust retained Brown Brothers Harriman ("BBH") as
custodian of the Trust's investments. For domestic custody services, the Trust
pays BBH 0.0065% on the first $50 million of average net assets and 0.0050% on
domestic assets above $50 million, plus certain transaction charges. For foreign
custody services, the Trust pays BBH 0.03% on foreign assets plus certain
transaction charges.
Effective April 25, 2005, the Trust retained Boston Financial Data Services,
Inc. as the Trust's transfer agent. For these services, the Trust pays an
account fee of $13.25 per open account, $7.00 per networked account, $1.80 per
closed account, plus certain other transaction and cusip charges.
ADMINISTRATIVE SERVICES
The Trust has entered into an administrative services agreement with ICON
pursuant to which ICON oversees the administration of the Trust's business and
affairs, including regulatory reporting and all necessary office space,
equipment, personnel and facilities. This agreement provides for an annual fee
to ICON of 0.05% on the Funds' first $1.5 billion of average daily net assets
and 0.045% on average daily net assets in excess of $1.5 billion. The
administrative services agreement provides that ICON will not be liable for any
error of judgment, mistake of law, or any loss suffered by the Trust in
connection with matters to which the administrative services agreement relates,
except for a loss resulting from willful misfeasance, bad faith or negligence by
ICON in the performance of its duties.
For the period October 1, 2004 through March 31, 2005, U.S. Bancorp provided
sub-administration services to ICON for a sub-administration fee of 0.02% on the
Trust's first $1.5 billion of average daily net assets and 0.015% on assets
above $1.5 billion, subject to a minimum annual fee of $140,000. Effective April
1, 2005, ICON entered into a sub-administration agreement with BISYS pursuant to
which BISYS assists ICON with the administration and business affairs of the
54 Notes to Financial Statements
Trust. For its services, ICON pays BISYS at an annual rate of 0.025% on the
first $1.75 billion of Trust assets and 0.015% on assets above $1.75 billion.
DISTRIBUTION FEES
The 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") (an affiliate
of the adviser) for the sale and distribution of shares. Under the 12b-1 Plan,
Class I shareholders of the International Equity Fund pay an annual 12b-1 and
service fee of 0.25% of average daily net assets. The Class C shareholders of
the International Equity Fund pay an annual 12b-1 and service fee of 1.00% of
average daily net assets.
RELATED PARTIES
Certain Officers and Directors of ICON are also Officers and Trustees of the
Funds; however, such Officers and Trustees (with the exception of the Chief
Compliance Officer, "CCO") receive no compensation from the Funds. The CCO's
salary is paid 90% by the Funds and 10% by the Adviser. For the year ended
September 30, 2005, the total related amounts paid by the Trust under this
agreement are included in Other Expenses on the Statement of Operations.
3. LINE OF CREDIT
Effective April 18, 2005, the Funds entered into Lines of Credit agreements with
BBH; the maximum borrowing is limited to 25% of eligible securities held by the
portfolio subject to a maximum borrowing limit by the Trust of $115 million.
Interest is charged at LIBOR plus 2.00% which was 5.86% at September 30, 2005.
<Table>
<Caption>
AVERAGE BORROWING
- -------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund $198,875
ICON Europe Fund** 291,875
ICON International Equity Fund** 210,493
</Table>
** Fund had outstanding borrowings as of September 30, 2005.
4. FEDERAL INCOME TAX
Income and capital gain distributions are determined in accordance with income
tax regulations that may differ from accounting principles that are generally
accepted in the United States of America. These differences are due to differing
treatments for items such as net short-term gains, deferrals of wash losses,
foreign currency transactions, net investment losses, and capital loss
carryforwards.
Notes to Financial Statements 55
Notes to Financial Statements (continued)
The tax components of capital shown in the following tables represent losses or
deductions the Funds may be able to offset against income and gains recognized
in future years and post October loss deferrals. The accumulated losses noted in
the following tables represent net capital loss carryforwards as of September
30, 2005 that may be available to offset future realized capital gains and
thereby reduce future taxable income distributions.
<Table>
<Caption>
AMOUNT EXPIRATION DATE
- -------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund $2,249,864 September 30, 2007
3,254,268 September 30, 2009
1,330,946 September 30, 2010
952,529 September 30, 2011
</Table>
During the year ended September 30, 2005 the ICON Asia-Pacific Region Fund and
the ICON Europe Fund utilized capital loss carryforwards of $1,844,287 and
$832,262, respectively.
The tax characteristics of dividends paid to shareholders during the fiscal year
ended September 30, 2005, were as follows:
<Table>
<Caption>
TOTAL
ORDINARY NET LONG- TOTAL TAXABLE DISTRIBUTIONS
FUND INCOME TERM GAINS DISTRIBUTIONS PAID
- ------------------------------------------------------------------------------------------
ICON Asia-Pacific Region Fund $26,459 $ - $ 26,459 $ 26,459
ICON International Equity Fund 66,857 1,396,605 1,463,462 1,463,462
</Table>
As of September 30, 2005, the components of accumulated earnings (deficit) on a
tax basis was as follows:
<Table>
<Caption>
TOTAL
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED ACCUMULATED
ORDINARY NET LONG- ACCUMULATED CAPITAL AND APPRECIATION EARNINGS
FUND INCOME TERM GAINS EARNINGS OTHER LOSSES (DEPRECIATION) (DEFICITS)
- ----------------------------------------------------------------------------------------------------------------
ICON Asia-Pacific
Region Fund $ 85,846 $ - $ 85,846 $(7,787,607) $6,322,977 $(1,378,784)
ICON Europe Fund - 1,280,887 1,280,887 (35,841) 3,344,804 4,589,850
ICON International
Equity Fund 796,102 1,303,681 2,099,783 - 5,563,970 7,663,753
</Table>
56 Notes to Financial Statements
The aggregate gross unrealized appreciation and depreciation of securities held
by the Funds and the total cost of securities for federal tax purposes as of
September 30, 2005, are noted below. Unrealized appreciation (depreciation) in
the table below exclude appreciation (depreciation) on foreign currency
transactions.
<Table>
<Caption>
UNREALIZED UNREALIZED NET APPRECIATION
FUND COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- -----------------------------------------------------------------------------------------
ICON Asia-Pacific Region
Fund $42,184,077 $6,537,393 $(205,287) $6,332,106
ICON Europe Fund 19,740,836 3,474,286 (135,491) 3,338,795
ICON International Equity
Fund 27,394,665 5,688,439 (115,032) 5,573,407
</Table>
Notes to Financial Statements 57
Report of Independent Registered Public Accounting Firm
To the Board of Trustees 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 and ICON International Equity Fund (three of the portfolios
constituting ICON Funds, hereafter referred to as the "Funds") at September 30,
2005, the results of each of their operations for the year then ended, the
changes in each of their net assets for each of the two years in the period then
ended and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Funds' management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audits 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, 2005 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 22, 2005
58 Report of Accounting Firm
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 17 ICON Funds (the "Funds"). The Board is responsible for general oversight
of the Funds' business and for assuring that the Funds are managed in the best
interest of the Funds' shareholders. The Trustees, and their ages, 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, 54, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception. Dr. Callahan also serves as President (1998 to
present) and served as the Chief Investment Officer (1991 to 2004) of ICON
Advisers, Inc. ("ICON Advisers"), the Funds' Investment Adviser. Dr. Callahan is
also President (1998 to present); Director (1991 to present); and was previously
Vice President (1991 to 1998) of ICON Distributors, Inc. ("IDI"), the Funds'
Distributor, and is President of ICON Insurance Agency, Inc. (2004 to present).
Dr. Callahan also serves as the Director (1994 to present), and was previously
Secretary/Treasurer (1994 to 1998) of ICON Management & Research Corporation
("IM&R"), the parent company of ICON Advisers and IDI.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 55. Mr. Bergert has been a Trustee of the Funds since 1999. Mr.
Bergert is President of Venture Capital Management LLC (1997 to present);
General Partner of SOGNO Partners LP, a venture capital company (2001 to
present); and was previously a General Partner with KPMG Peat Marwick, LLP (1979
to 1997). Mr. Bergert is also a Director of Herre Bros, Inc., a contracting
company (1998 to present); Delta Dental of Pennsylvania, an insurance company
(1998 to present); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 56. Mr. Pomeroy has been a Trustee of the Funds since
November 2002. Mr. Pomeroy is Chief Investment Officer and Director of
Investments, Pennsylvania State University (2001 to present) and was Portfolio
Manager and Product Manager of Trinity Investment Management Corporation (1989
to 2001).
GREGORY KELLAM SCOTT, 57. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott was Senior Vice President -- Law, General Counsel and
Secretary of GenCorp, Inc., a multinational technology-based manufacturing
company (2002 to 2004); Vice President and General Counsel of Kaiser-Hill
Company LLC, a nuclear clean-up and environmental remediation company (2000 to
2002) and a Colorado Supreme Court Justice (1993 to 2000). Mr. Scott is also a
member of the National Board of Directors of the Constituency for Africa (1997
to present) and serves as Executive Director of Indiana Civil Rights Commission
(2005-present).
Trustees and Officers 59
Board of Trustees and Fund Officers (continued)
(unaudited)
R. MICHAEL SENTEL, 57. 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, 52. 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, 54. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as ICON Advisers' President (1998 to
present) and served as the Chief Investment Officer (1991 to 2004). Dr. Callahan
is also President (1998 to present), Director (1991 to present) and was
previously Vice President (1991 to 1998) of IDI, and is President of ICON
Insurance Agency, Inc. (2004 to present). Dr. Callahan is also the Director
(1994 to present), and was previously Secretary/Treasurer (1994 to 1998) of
IM&R.
ERIK L. JONSON, 56. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception and from May 20, 2005 to November 15,
2005 acting Secretary. 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).
60 Trustees and Officers
Other Information (unaudited)
ALL FUNDS
RENEWAL OF INVESTMENT ADVISORY AGREEMENT.
In determining to renew the investment advisory agreements between ICON Funds
(the "Trust") and ICON Advisers, Inc. ("ICON" or the "Adviser") the Board
requested, was provided with and reviewed data with respect to ICON, its
personnel, and the services to be provided to each Fund by ICON under the
Trust's Investment Advisory Agreement dated October 9, 1996, as amended (related
to the Sector, Foreign and Core Equity Funds) and under the Trust's Investment
Advisory Agreement dated July 9, 2002 and effective October 1, 2002, as amended
(related to the Specialty Funds -- Bond, Covered Call, Equity Income and
Long/Short Funds) (collectively, the "Advisory Agreements"). The data included
information concerning advisory, distribution and administrative services
provided to the Funds by ICON and its related companies; information concerning
other businesses of those companies; comparative data related to exchange traded
funds versus the Sector Funds; and comparative data obtained from Lipper
Analytical Services related to Fund performance and Fund expenses.
On August 8, 2005, the Board of Trustees, including all of the Trustees that are
not "interested persons" of the Trust (the "Independent Trustees"), approved
continuation of the Advisory Agreements with the Adviser for each Fund for an
additional one-year term commencing October 1, 2005.
The Independent Trustees were represented by independent legal counsel
throughout the process. Prior to acting on the matter, the Independent Trustees
met separately as a group in private sessions with their independent legal
counsel to review and discuss the foregoing information and also met with
management to discuss responses to questions raised during the process. In
addition, the Independent Trustees received materials from their independent
legal counsel discussing the legal standards applicable to their consideration
of the agreement.
In considering the nature, extent and quality of the services provided by the
Adviser, the Board reviewed information relating to the Adviser's operations and
personnel. Among other things, the Adviser provided biographical information on
its professional staff and descriptions of its organizational and management
structure. In the course of their deliberations the Board evaluated, among other
things, information relating to the investment philosophy, strategies and
techniques used in managing each Fund, the qualifications and experience of the
Adviser's investment personnel, the Adviser's compliance programs, the Adviser's
brokerage practices, including the extent to which the Adviser obtains research
through "soft dollar" arrangements with the Funds' brokerage, and the financial
and non-financial resources available to provide services required under the
Advisory Agreement.
Other Information 61
Other Information (continued) (unaudited)
In considering the reasonableness of the fee payable to the Adviser for managing
each Fund, the Board reviewed, among other things, financial statements of the
Adviser and an analysis of the profitability to the Adviser and its affiliates
of their relationship with each Fund over various time periods, which analysis
identified all revenues and other benefits received by the Adviser and its
affiliates from managing each Fund, the costs associated with providing such
services and the resulting profitability to the Adviser and its affiliates. The
Board considered the current and anticipated asset levels of each Fund and the
willingness of the Adviser to waive fees and pay expenses of the Funds from time
to time to limit the total expenses of the Funds. The Board concluded that the
profitability to the Adviser and its affiliates from their relationship with the
Funds is not excessive and that the Adviser is not realizing material benefits
from economies of scale that would warrant adjustments to the fees for any Fund
at this time. The Board of Trustees concluded that, in light of the nature,
extent and quality of the services provided by the Adviser and the levels of
profitability associated with providing these services, the fees charged by the
Adviser under the Advisory Agreements to each Fund are reasonable.
The Board of Trustees' considered:
1. In connection with reviewing data bearing upon the nature, quality, and
extent of services furnished by ICON to each Fund, the Board assessed data
concerning ICON's staffing, systems and facilities. The Board also assessed
ICON's non-Trust business to see if there are any initiatives that would dilute
service to the Trust. It was noted:
A. That the breadth and the quality of investment advisory and other
services being provided to each Fund is satisfactory, as evidenced in part
by the performance record of each Fund compared with the performance
records of a peer group of comparable funds;
B. That ICON has made significant expenditures in the past year and in
prior years to ensure that it has the sophisticated systems and the highly
trained personnel necessary for it to be able to continue to provide
quality service to the Funds' shareholders, including the dedication of
substantial resources to ICON's investment and trading departments; and
C. That the Board is satisfied with the research, portfolio management, and
trading services, among others, being provided by ICON to the Funds, and is
charging fair, reasonable, and competitive fees.
2. In connection with reviewing data bearing upon the costs of services to be
provided and profits to be realized by ICON and its related companies from the
relationship with the Trust, the Board considered the Lipper comparative data,
data concerning ICON's soft-dollar arrangements, data from independent reviews
of compliance procedures, costs borne by ICON in providing advisory services to
each Fund and the profitability of ICON in light of the estimated
62 Other Information
profitability analyses which had been provided by ICON, other benefits to ICON
from serving as the Funds' adviser, and ICON's financial statements.
A. With respect to the soft-dollar arrangements the Board assessed all
facets of the arrangements -- including the quality of trade execution. It
was noted that ICON receives research assistance from the use of soft
dollars generated from Fund portfolio transactions and that such research
assists ICON in providing quality investment advisory services to the Funds
and other accounts to which it provides advisory services. The Board
concluded that the arrangements are consistent with Fund brokerage
practices and benefit the Funds and their shareholders.
B. The Board noted that ICON benefits from serving directly as investment
adviser and administrative agent, and through its affiliate, as the
principal underwriter for the Funds. With respect to the distribution
services, the Board noted that proceeds of the Trust's distribution plans
pursuant to Rule 12b-1 under the 1940 Act for the International Equity and
Specialty Funds are paid to ICON's affiliate and that the distributor has
not profited from plan proceeds as all of the proceeds have been or will be
used to cover distribution and marketing expenses. In this regard, the
Trustees noted that marketing efforts have been successful as evidenced by
Fund asset levels. With respect to the administrative fee paid to ICON, the
Board reviewed the comparative data related to those services. The Board
also considered the compliance experience in these service areas and
concluded that the services provided by ICON and its affiliates to the
Funds are satisfactory and that the profits derived from providing the
services are competitive and reasonable.
C. The Board also noted the risks assumed by ICON in providing investment
advisory, distribution and administrative services (including compliance)
to each Fund, including the capital commitments which have been made in the
past and which continue to be made by ICON to ensure the continuation of
the highest quality of service to the Funds is made with the recognition
that the Funds' advisory relationship with ICON can be terminated at any
time and must be renewed on an annual basis.
3. In connection with assessing data bearing upon the fairness of fee
arrangements, the Board used data from Lipper, Inc. concerning funds of similar
size and funds of larger size, as well as data concerning ICON's other clients:
A. In this regard the Board noted that the Trust had recently changed fund
accounting, transfer agent and custodial service providers; and that the
expense numbers in the comparative data did not reflect the lower fees to
be charged by the current service providers.
Other Information 63
Other Information (continued) (unaudited)
B. The advisory fee structures of the Funds were considered in comparison
with advisory fees and expense ratios of other similarly-managed funds as
set forth in the comparative data.
It was noted that contractual advisory fees for the Sector Funds were
higher than fees for similar funds; but that the Sector Funds' expense
ratios were competitive and in most instances lower than those of
similarly-managed Funds.
It was noted that contractual advisory fees for the International Funds
were above the average fees for similar funds; and that the Funds' expense
ratios were competitive in light of their size.
It was noted that contractual advisory fees for the Specialty Funds were in
line with fees for similar funds; and that, with the exception of the Bond
Fund, the Specialty Funds' expense ratios were lower than those of
similarly-managed Funds.
It was noted that contractual advisory fee for the Core Equity Fund was
below the average fee for similar funds; and that its expense ratio was
lower than those of similarly-managed Funds.
C. In connection with assessing advisory fees and expense ratios it was
noted ICON has contractually agreed to impose expense limitations on the
International Equity and the Specialty Funds at a cost to ICON.
D. It was noted that generally the fees paid to ICON for managing other
institutional accounts (such as pension plans) are not lower than the fees
paid by similarly-managed Funds; however, to the extent such fees are
lower, it is due to the fact that such accounts are less costly for ICON to
manage. ,
E. It was noted that the advisory and other fees payable by the Funds to
ICON are essentially fees which would be similar to those which would have
resulted solely from "arm's-length" bargaining, and may well be lower than
fees arrived solely from such arm's-length negotiation.
4. The Board considered the extent to which economies of scale could be realized
as a Fund grows in assets and whether the Fund's fees reflect these economies of
scale for the benefit of Fund shareholders. In the regard the Board noted the
Adviser's commitment to establish breakpoints in its investment advisory fees at
elevated asset levels commencing during the next fiscal year.
Based on these considerations, among others, the Board, including all of the
Independent Trustees, concluded that the continuation of the advisory agreement
was in the best interests of each Fund and its shareholders, the services to be
performed under the agreement were services required for the operation of the
Funds, ICON had provided satisfactory advisory services to the Funds in the
past, and the fees for the advisory services which ICON would
64 Other Information
perform and other benefits from the relationship with the Trust and consistent
with fees paid by similar funds, are reasonable in light of the comparative
data, and would be within the range of what would have been negotiated at arm's
length in light of the circumstances.
SUPPLEMENTAL TAX INFORMATION
For the fiscal year ended September 30, 2005, the following Funds paid qualified
dividend income of:
<Table>
<Caption>
FUND AMOUNT
- ---------------------------------------------------------------------
ICON Asia-Pacific Region Fund $26,459
ICON International Equity Fund 66,857
</Table>
The Funds designate the following amounts as long term capital gain
distributions qualifying for the maximum 15% income tax rate for individuals:
<Table>
<Caption>
FUND AMOUNT
- ------------------------------------------------------------------------
ICON International Equity Fund $1,396,605
</Table>
Other Information 65
PORTFOLIO HOLDINGS
A list of each ICON Fund's Top 10 holdings is available at www.iconadvisers.com
on or about 15 days following each month end. Each ICON Fund also files a
complete schedule of portfolio holdings for the first and third quarters of its
fiscal year with the SEC on Form N-Q. The ICON Funds' Forms N-Q are available at
www.sec.gov or may be reviewed and copied at the Commission's Public Reference
Room in Washington, DC. Information about the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
PROXY VOTING
A 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 is available at
www.iconadvisers.com or on the SEC's website at www.sec.gov.
FOR MORE INFORMATION
This report is for the general information of the Funds' shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by a current prospectus. You may obtain a copy of the prospectus,
which contains information about the investment objectives, risks, charges,
expenses, and share classes of each ICON Fund, by visiting www.iconadvisers.com
or by calling 1-800-764-0442. Please read the prospectus carefully before
investing.
ICON Distributors, Inc., Distributor
66
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THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
[ICON FUNDS LOGO]
<Table>
For more information about the ICON Funds, contact us:
By Telephone 1-800-764-0442
By Mail ICON Funds
P.O. Box 55452
Boston, MA 02205-8165
In Person ICON Funds
5299 DTC Boulevard, 12(th) Floor
Greenwood Village, CO 80111
On the Internet www.iconadvisers.com
By E-Mail info@iconadvisers.com
</Table>
[ICON FUNDS LOGO]
1-800-764-0442
www.iconadvisers.com
I-148-FOR
. 2005 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 FUNDS LOGO]
Table of Contents
<Table>
ABOUT THIS REPORT (UNAUDITED) 2
MESSAGE FROM ICON FUNDS (UNAUDITED) 4
MANAGEMENT OVERVIEW (UNAUDITED) AND SCHEDULE OF INVESTMENTS
ICON Consumer Discretionary Fund 7
ICON Energy Fund 13
ICON Financial Fund 20
ICON Healthcare Fund 26
ICON Industrials Fund 33
ICON Information Technology Fund 40
ICON Leisure and Consumer Staples Fund 47
ICON Materials Fund 53
ICON Telecommunication & Utilities Fund 59
SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE (UNAUDITED) 67
FINANCIAL STATEMENTS 70
FINANCIAL HIGHLIGHTS 78
NOTES TO FINANCIAL STATEMENTS 82
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 92
BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED) 93
OTHER INFORMATION (UNAUDITED) 95
</Table>
[RECYCLE LOGO]
About This Report (unaudited)
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, 2005, the end of the reporting period. The information is not a
complete analysis of every aspect of any sector, industry, security, or the
Funds.
Opinions and forecasts regarding industries, companies and/or themes, and
portfolio composition and holdings, are subject to change at any time based on
market and other conditions, and should not be construed as a recommendation of
any specific security. Each Fund's holdings as of September 30, 2005 are
included in each Fund's Schedule of Investments.
Certain companies' stock performance during the period is mentioned throughout
the Management Overviews. While ICON's quantitative investment methodology
primarily considers financial data, various company factors may impact a stock's
performance, and therefore, Fund performance.
There are risks associated with mutual fund investing, including the loss of
principal. There is no assurance that the investment process will consistently
lead to successful results. An investment concentrated in sectors and industries
may involve greater risk and volatility than a more diversified investment.
Investments in foreign securities 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 Research Systems.
About This Report 3
Message from ICON Funds (unaudited)
- --------------------------------------------------------------------------------
Equity markets proved especially volatile during the period, retreating when
concerns intensified, then rallying when anxiety abated.
- --------------------------------------------------------------------------------
Thank you for your continued investment in the ICON Sector Funds and welcome to
those of you receiving this report for the first time.
As you may know, ICON employs bottom-up industry rotation in pursuit of
industries which our system indicates are poised to outperform the broader
market. While we are recognized for our Sector Funds, we invite you to also
consider the ICON U.S. Diversified Funds and the ICON Foreign Funds, depending
on your investment objectives, risk tolerance and time horizon. No matter which
ICON Fund you choose, such as the ICON Core Equity Fund, ICON Long/Short Fund or
ICON Asia-Pacific Region Fund, each is powered by ICON's disciplined,
value-based system.
CLIMBING A WALL OF WORRY
Of the many sayings associated with the financial markets, one of my favorites
is "Wall Street climbs a wall of worry." Given the market's performance over the
past year, one would be hard pressed to find fault with such a claim.
Although stocks recorded solid gains over the course of the Funds' fiscal year,
the path was fraught with numerous difficulties. Investors grappled with
uncertainties stemming from rising oil prices and monetary tightening, mostly
centered on conflicting fears of economic slowdown and mounting inflation.
Equity markets proved especially volatile in this setting, retreating when
concerns intensified, then rallying when anxiety abated.
This was particularly evident during Hurricanes Katrina and Rita, as investors
reacted to day-to-day, even minute-to-minute, fluctuations in oil futures.
However, it is our view that these price swings were the result of amateur
macroeconomic conjecture that was inconsistent with professional analysts who
specialize in forecasting corporate earnings.
AVOIDING THE GUESSING GAME
When analyzing individual stocks, two of the key variables we apply to our
valuation equation include estimated average earnings per share (EPS) and
estimated long-term earnings growth rates (LTG). In order to ensure the most
realistic projections, ICON Advisers subscribes to the highly respected Thomson
Financial I/B/E/S database service, which surveys equity analysts for their
estimates of future corporate earnings and respective growth rates.
Based on these estimates, the fallout from Katrina and Rita has resulted in
slight near-term revisions to quarterly EPS, but few modifications to the LTG
that we consider. In our equation, marginal EPS adjustments over one or two
quarters typically have a negligible impact on overall value. Given the steady
outlook for LTG, analysts view the storms' effects as temporary and not a threat
to our current valuation calculations or long-term growth forecasts.
4 Message from ICON Funds
We frequently see events that affect near-term
earnings per share but seldom trigger a change in
our analysis of the forward five-year growth outlook.
[CRAIG T. CALLAHAN PHOTO]
Craig T. Callahan
President
- --------------------------------------------------------------------------------
Our experience tells us to stick with computing value and not react to events
that do not impact our estimate of intrinsic value.
- --------------------------------------------------------------------------------
We frequently see events that affect one or two quarters of EPS but seldom
trigger a change in our analysis of the forward five-year growth outlook.
Investors often react, incorrectly we believe, to those events and tilt their
portfolios toward areas that are instinctively poised to benefit, irrespective
of known fundamentals. ICON does not participate in that guessing game. Our
experience tells us to stick with computing value and not react to events that
do not impact our estimate of intrinsic value. As a result, we made no changes
to Fund compositions based strictly on damage attributed to the hurricanes.
A MORE UNIFORM DISTRIBUTION OF VALUE
At period-end, the average value-to-price ratio (V/P) for our domestic equity
database indicated that stocks were priced at 20% below our estimate of fair
value. In other words, we believe prices would need to advance 20% on average in
order to reach fair value.
That being said, markets rarely move in a straight line and random news events
can in fact disrupt a move to the upside. Moreover, value is a moving target and
highly susceptible to changes in earnings, growth rates, risk, and interest
rates. Despite all these variables, valuation gaps are expected, whereas
external events and their impact are generally unpredictable.
What are current valuation gaps telling us? Looking at the benchmark S&P 1500
Index, we are seeing a significant increase in the average V/P for large-cap
stocks for the first time since 1997. Although we define industry leadership by
value and relative strength and not by market capitalization, a more uniform
distribution of value suggests that an upward move from here could be very broad
and include the long-lagging large-cap segment.
Since the Energy-, Healthcare-, Utilities-, and Materials-related industries we
have favored during the past year have featured small- and mid-cap companies,
our value-driven avoidance of large-caps proved beneficial. However, given a
significant portion of the rally since October 2002 had a low-quality bias, our
penchant for holding high-quality companies may have detracted from overall
returns. Should large-caps ultimately come back into favor, we are tilted more
heavily toward them than we have been historically. Should high-quality
Message from ICON Funds 5
Message from ICON Funds (continued) (unaudited)
companies return to their historical risk-adjusted leadership, the Funds are
well-situated to take advantage of their strength.
OVERPRICED INDUSTRIES ARE FEW
We continue to see positive trends in corporate earnings, economic fundamentals
and company valuations, and believe the setting looks favorable for a broad move
to the upside. Our analysis shows that overpriced industries are few and far
between, even within the Energy sector, yet we believe there appears to be a
lack of leadership among Consumer-related industries, though value is
widespread.
In closing, we wish to thank you for the privilege of guiding you through these
challenging markets. For current market updates, as well as up-to-date Fund
performance and account information, we invite you to visit our website at
www.iconadvisers.com.
Yours truly,
/s/ Craig T. Callahan
Craig T. Callahan, DBA
Chairman of the Board of Trustees and President of the Adviser
Consider the investment objectives, risks, charges, expenses, and share classes
of each ICON Fund carefully before investing. The prospectus contains this and
other information about the Funds and is available by visiting
www.iconadvisers.com or calling 1-800-764-0442. Please read the prospectus
carefully before investing.
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. An
investment in a region fund may involve greater risk and volatility than a more
diversified fund. Investments in foreign securities may entail unique risks,
including political, market, and currency risks.
6 Message from ICON Funds
Management Overview
ICON Consumer Discretionary Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 100.4%
Top 10 Equity Holdings 29.3%
Number of Stocks 58
Short-Term Investments 0.0%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
Lowe's Cos., Inc. 4.3%
The Home Depot, Inc. 3.3%
Harman International Industries, Inc. 3.3%
Target Corp. 2.9%
Best Buy Co., Inc. 2.9%
O'Reilly Automotive, Inc. 2.8%
V.F. Corp. 2.7%
Jos. A. Bank Clothiers, Inc. 2.5%
Eagle Materials, Inc. 2.3%
eBay, 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 appreciated 7.17% for the fiscal year
ended September 30, 2005, outpacing the 6.62% return of its sector-specific
benchmark, the S&P 1500 Consumer Discretionary Index, yet trailing the 13.45%
return for its broad benchmark, the S&P 1500 Index. Total returns for other
periods as of September 30, 2005 appear on page 11.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. A value-driven, active investment style at the industry level enabled the
Fund to be favorably positioned throughout the fiscal year. While this
contributed to positive relative performance versus the sector-specific
benchmark, much of the Fund's advance was recorded during the fourth quarter
of 2004, a generally conducive period for cyclically oriented consumer
industries.
As this theme weakened in calendar year 2005 on concerns that rising oil
prices and higher short-term interest rates would curb consumer spending, the
Fund lost ground but continued to post reasonable gains. Nevertheless,
Consumer Discretionary issues failed to keep pace with upside moves in the
broader market, which generally favored more defensive-oriented sectors.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as we believe these measures do not adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of valuation with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the sector benchmark.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Rising oil prices and ongoing monetary tightening dominated the investment
environment during the fiscal year, creating a volatile setting for Consumer
Discretionary issues. Over the course of the reporting period, crude oil
futures climbed in excess of $16 a barrel to more than $66 a barrel by
period-end, a 33% increase. At the same time, the Federal Reserve, in an
Management Overview 7
Management Overview (continued)
ICON Consumer Discretionary Fund
attempt to stave off any hint of future inflation, continued to raise
short-term interest rates to 3.75% at year-end from 1.75% in October 2004.
Against this backdrop, the S&P 1500 Consumer Discretionary Index rallied
sharply from mid-October 2004 through the end of the calendar year, as
investors appeared to temporarily set aside their oil- and inflation-related
concerns. However, as these distractions resurfaced at the start of 2005, the
index fell sharply on worries that higher energy prices would inhibit
consumer spending. Although the broader market rebounded following a
mid-April low, spending fears continued to weigh heavily on Consumer
Discretionary issues, limiting gains for both the Fund and its
sector-specific benchmark.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Among the industries that contributed to Fund performance were homebuilding,
footwear and apparel retail, which on average comprised almost one-third of
net assets, while accounting for nearly all of the Fund's fiscal-year total
return. As the largest overall industry weight, on average, apparel retail
held up well for most of the year before indiscriminate selling caused it to
retreat late in the period. Homebuilding, on the other hand, remained strong
throughout, as builders continued to benefit from historically low mortgage
rates and generally favorable economic conditions.
Such was the case for residential homebuilder Toll Brothers Inc., which
generated record revenue and share earnings in line with demographic-driven
demand for new homes. Building Materials Holding Corp., an operator of retail
centers aimed at professional contractors, also turned in a strong showing,
citing robust sales gains and improving gross margins. Elsewhere, specialty
retailer Abercrombie & Fitch Co. reported impressive financial results thanks
to strong brand loyalty and double-digit comparable-store sales.
In contrast, principal industry detractors included homefurnishing retail,
automobile manufacturers and specialty stores. Although specialty stores on
average was the most heavily weighted of the three, homefurnishing retail and
automobile manufacturers inflicted appreciably more damage as relative
strength faltered during the period.
As for individual detractors, specialty retailer Hot Topic Inc. came under
pressure when management slashed its earnings guidance due to a projected
drop-off in same-store sales. Recreational vehicle manufacturer Winnebago
Industries Inc. also trended lower as weakening demand diminished the
company's top and bottom lines. Meanwhile, higher operating costs and
weather-related revenue shortfalls eroded profits for homefurnishing retailer
Cost Plus Inc. All three were ultimately sold on declining relative strength.
8 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE CONSUMER DISCRETIONARY SECTOR?
A. Heading into the new fiscal year, the Consumer Discretionary sector is,
according to our analysis, the most undervalued of the nine sectors we track.
Our quantitative analysis indicates that the intrinsic value of companies
within the sector remains well above where their stocks are currently
trading. While we cannot predict such a move, or its timing if one were to
occur, we believe that ongoing concerns regarding energy prices and interest
rates will ultimately give way to fundamental value. If this should come to
pass, Consumer Discretionary issues could easily transform into next year's
market leaders.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund's value-driven, active investment style at the industry level
contributed to positive relative performance versus the sector-specific
benchmark.
- - Among the industries that contributed to performance were homebuilding,
footwear and apparel retail, which together accounted for most of the Fund's
fiscal-year total return.
- - Principal industry detractors included homefurnishing retail, automobile
manufacturers and specialty stores, with the latter two inflicting
appreciably more damage as relative strength declined.
- - Stocks that boosted Fund performance included Abercrombie & Fitch Co., Toll
Brothers Inc. and Building Materials Holding Corp.
- - Holdings that detracted from fiscal-year Fund performance included Hot Topic
Inc., Winnebago Industries Inc and Cost Plus Inc.
Management Overview 9
Management Overview (continued)
ICON Consumer Discretionary Fund
INDUSTRY COMPOSITION
as of September 30, 2005
<Table>
Apparel Retail 10.5%
Home Building 10.0%
Home Improvement Retail 9.5%
Automotive Retail 7.9%
Apparel Accessories & Luxury Goods 7.6%
Catalog Retail 6.8%
Auto Parts & Equipment 6.1%
Automobile Manufacturers 5.6%
Construction Materials 4.2%
Department Stores 3.5%
Consumer Electronics 3.2%
Specialized Consumer Services 3.0%
Computer & Electronics Retail 2.9%
General Merchandise Stores 2.9%
Housewares & Specialties 2.9%
Specialty Stores 2.6%
Footwear 2.5%
Internet Retail 2.3%
Home Furnishing Retail 1.9%
Education Services 1.3%
Tobacco 1.2%
Distributors 0.8%
Advertising 0.6%
Packaged Foods & Meats 0.6%
</Table>
Percentages are based upon net assets.
10 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 7/9/97
- -----------------------------------------------------------------------------------------
ICON Consumer Discretionary Fund 7.17% 8.08% 4.11%
- -----------------------------------------------------------------------------------------
S&P 1500 Consumer Discretionary Index 6.62% 1.79% 6.48%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 13.45% -0.46% 6.01%
- -----------------------------------------------------------------------------------------
</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, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON CONSUMER S&P 1500 CONSUMER
DISCRETIONARY FUND DISCRETIONARY INDEX S&P 1500 INDEX
------------------ ------------------- --------------
7/9/97 10000 10000 10000
10970 10892 10597
9810 11268 10852
11141 13276 12321
10851 14327 12620
9/30/98 7870 11778 11262
10360 15109 13709
10032 16371 14207
11067 17232 15312
9/30/99 9899 15612 14339
10851 18199 16485
10503 17620 16994
9796 16082 16554
9/30/00 9448 15341 16548
9602 14752 15338
9756 13937 13550
11363 15401 14440
9/30/01 9172 12045 12290
12120 14467 13705
13379 14959 13837
13604 13358 12059
9/30/02 10360 11065 9976
9806 11319 10786
9080 11069 10425
11413 13277 12064
9/30/03 12068 13661 12439
13768 15642 13976
14176 16036 14275
14094 15910 14523
9/30/04 12999 15725 14251
14534 17895 15624
14207 17079 15313
14750 17108 15576
9/30/05 13932 16766 16168
</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
Schedule of Investments
ICON Consumer Discretionary Fund
September 30, 2005
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------
COMMON STOCKS (100.4%)
55,300 Aaron Rents, Inc. $ 1,169,595
72,000 Advance Auto Parts,
Inc.(a) 2,784,960
136,100 Aftermarket
Technology Corp.(a) 2,502,879
26,900 Altria Group, Inc. 1,982,799
121,900 Ann Taylor Stores
Corp.(a) 3,236,445
43,100 AutoZone, Inc.(a) 3,588,075
113,150 Best Buy Co., Inc. 4,925,419
64,900 BorgWarner, Inc. 3,664,254
71,900 Brown Shoe Co.,
Inc. 2,372,700
15,100 Building Materials
Holding Corp. 1,407,169
106,900 Cache, Inc.(a) 1,628,087
70,600 Cavco Industries,
Inc.(a) 2,561,368
15,600 Centex Corp. 1,007,448
137,400 Coldwater Creek,
Inc.(a) 3,465,228
106,666 D.R. Horton, Inc. 3,863,443
64,500 DaimlerChrysler AG 3,426,240
32,700 Eagle Materials,
Inc. 3,968,799
94,500 eBay, Inc.(a) 3,893,400
66,600 Education
Management Corp.(a) 2,147,184
51,000 Federated
Department Stores,
Inc. 3,410,370
31,100 Fortune Brands,
Inc. 2,529,363
158,200 Gentex Corp. 2,752,680
75,100 Gildan Activewear,
Inc. - Class A(a) 2,871,073
54,100 Harman
International
Industries, Inc. 5,532,807
68,900 Insight
Enterprises,
Inc.(a) 1,281,540
16,800 J & J Snack Foods
Corp. 971,040
202,700 J. Jill Group,
Inc.(a) 3,206,714
116,300 Jackson Hewitt Tax
Services, Inc. 2,780,733
98,000 Jos. A. Bank
Clothiers, Inc.(a) 4,235,560
46,200 Keystone Automotive
Industries, Inc.(a) 1,331,022
52,100 Kohl's Corp.(a) 2,614,378
</Table>
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------
45,800 Lafarge North
America, Inc. $ 3,096,538
113,800 Lowe's Cos., Inc. 7,328,720
53,600 M/I Homes, Inc. 2,908,336
59,200 Matthews
International
Corp. - Class A 2,237,168
22,600 Nike, Inc. - Class
B 1,845,968
170,200 O'Reilly
Automotive, Inc.(a) 4,796,236
63,800 Oxford Industries,
Inc. 2,878,656
78,100 Pacific Sunwear of
California, Inc.(a) 1,674,464
89,200 Pulte Homes, Inc. 3,828,464
177,200 Quiksilver, Inc.(a) 2,560,540
41,800 Ryland Group, Inc. 2,859,956
117,550 Staples, Inc. 2,506,166
58,500 Talbots, Inc. 1,750,320
95,300 Target Corp. 4,948,929
89,500 The Cato Corp. 1,783,735
145,500 The Home Depot,
Inc. 5,549,370
71,900 The Sherwin-
Williams Co. 3,168,633
67,400 The Sports
Authority, Inc.(a) 1,984,256
134,600 The Sportsman's
Guide, Inc.(a) 3,674,580
89,100 Thor Industries,
Inc. 3,029,400
33,800 Toyota Motor
Corp. - ADR 3,122,106
105,500 Tupperware Corp. 2,403,290
65,800 United Auto Group,
Inc. 2,174,032
110,600 Urban Outfitters,
Inc.(a) 3,251,640
77,900 V.F. Corp. 4,515,863
24,700 Valassis
Communications,
Inc.(a) 962,806
54,600 Williams-Sonoma,
Inc.(a) 2,093,910
------------
TOTAL INVESTMENTS 100.4%
(COST $157,856,022) 170,046,854
LIABILITIES LESS OTHER ASSETS
(0.4)% (625,092)
------------
TOTAL NET ASSETS 100.0% $169,421,762
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
ADR American Depositary Receipt
12 Schedule of Investments
Management Overview
ICON Energy Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 96.0%
Top 10 Equity Holdings 28.9%
Number of Stocks 69
Short-Term Investments 2.7%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
Petroleo Brasileiro S.A. - ADR 4.3%
Ultra Petroleum Corp. 3.6%
Grant Prideco, Inc. 3.1%
National-OilWell Varco, Inc. 2.9%
Patterson-UTI Energy, Inc. 2.8%
Nabors Industries, Ltd. 2.7%
Cal Dive International, Inc. 2.5%
Petro-Canada 2.5%
Unit Corp 2.3%
Suncor Energy, Inc. 2.2%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Energy Fund appreciated 54.79% for the fiscal year ended September
30, 2005, outpacing the 49.95% return for its sector-specific benchmark, the
S&P 1500 Energy Index and the 13.45% return of its broad benchmark, the S&P
1500 Index. Total returns for other periods as of September 30, 2005 appear
on page 17.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Although a positive correlation between crude oil prices and energy stock
prices benefited the Fund during the period, industry selection played a more
crucial role in outperforming the S&P 1500 Energy Index. Initially, our
valuation-related lack of exposure to bellwether integrated oil & gas
companies worked against Fund performance, as Exxon Mobil, Occidental
Petroleum and ConocoPhillips led the large-cap dominated index higher. The
Fund also failed early in the period to benefit from leading industry group
oil & gas refining & marketing, as our valuation model deemed it too rich to
warrant meaningful exposure during the second half of the reporting period.
However, as leadership shifted to the more heavily weighted oil & gas
exploration & production, oil & gas equipment & services and oil & gas
drilling industries late in the period, the Fund gained momentum and
surpassed its benchmark. Much of this upward move reflected strength in
medium-capitalization stocks, in which the Fund maintained an overweight
position relative to its narrow benchmark. While not a primary consideration
of the Fund's investment process, this valuation-driven focus on mid-caps
proved advantageous to fiscal-year returns.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as we believe these measures do not adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of value with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the sector benchmark.
Management Overview 13
Management Overview (continued)
ICON Energy Fund
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. As continued strong demand in the face of limited supply pushed crude oil
prices higher, Energy sector earnings strengthened, providing the necessary
support for stock prices to trend higher. Rising demand among developing
countries such as China and India further strained the delicate balance, as
did temporary drilling, refining and shipping disruptions caused by
Hurricanes Katrina and Rita. While headline risks and the ensuing fears of
economic slowdown and mounting inflation pressured the broader market, energy
stocks and energy-related mutual funds such as the ICON Energy Fund enjoyed
significant inflows.
Looking at the big picture, oil & gas refining & marketing finished the
period as the leading industry group of the 139 industries tracked by
Standard & Poor's, while oil- and gas-related industries dominated the list.
Despite the phenomenal, yet volatile runup, the sector as a whole appeared to
hover at or near our estimates of fair value. Nevertheless, certain
industries and stocks remained underpriced according to our calculations,
even as seemingly misguided talk of a bubble obscured underlying growth in
reported earnings.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Overweight positions in oil & gas exploration & production and oil & gas
equipment & services combined with a significant underweight in integrated
oil & gas proved highly favorable for Fund performance during the period.
While much of the sector lingered at our estimate of fair value, we found the
large-cap dominated integrated oil & gas industry, which comprises
approximately 60% of the sector-specific benchmark, to be less attractive
from a valuation and relative strength standpoint.
Conversely, while still contributing positively, certain names within the
heavily overweighted oil & gas storage & transportation industry worked
against Fund performance. Although the group was a leading contributor in
calendar year 2004, it weakened considerably during the reporting period and
was subsequently reduced. In trimming this exposure, proceeds were redirected
toward the oil & gas drilling industry, where earnings-per-share growth led
to more attractive valuations.
Turning to the Fund's best-performing stocks, Brazil's national oil company
Petroleo Brasileiro reported robust earnings growth in both its upstream and
downstream operations, reflecting the impact of rising crude oil and gasoline
prices. Also benefiting from higher commodity prices was offshore services
company Cal Dive International, which saw considerable growth in output
levels as well as drilling demand. Meanwhile, independent exploration and
production firm Ultra Petroleum Corp. recorded a triple-digit increase in
second-quarter earnings, the strongest quarter in the company's history.
14 Management Overview
[J.C. WALLER III, PORTFOLIO MANAGER PHOTO]
J.C. Waller, III
Portfolio Manager
In contrast, oil and gas developers Petroleum Development Corp. and Harvest
Natural Resources Inc. saw their market value decline. Petroleum Development
warned of escalating day rates and tight rig availability, which could
ultimately impede development plans, while Harvest Natural Resources
experienced drilling delays and production setbacks. Canadian energy company
Petrokazakhstan, Inc. also retreated following news of a dispute in its joint
venture with Kazakhstan-based Lukoil. All three stocks were ultimately sold
due to our estimate of declining relative strength.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE ENERGY SECTOR?
A. Going forward, we anticipate a continued upward trend in energy stock prices,
but not without occasional pullbacks along the way. Although our current
estimates indicate that this long-running sector theme is fairly valued,
select industries and stocks, most notably in the oil & gas drilling and oil
& gas equipment & services groups, remain, in our opinion, undervalued. Given
our analysis of earnings, we have systematically increased the Fund's
exposure to these industries, while reducing exposure to more expensive areas
such as oil & gas refining and marketing.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund benefited during the period from a positive correlation between
crude oil prices and energy stock prices.
- - Overweight positions in oil & gas exploration & production and oil & gas
equipment & services combined with a significant underweight in integrated
oil & gas proved favorable for Fund performance.
- - We found the large-cap dominated integrated oil & gas industry, which
comprises approximately 60% of the sector-specific benchmark, to be less
attractive from our valuation standpoint and relative strength.
- - Petroleo Brasileiro, Ultra Petroleum Corp. and Cal Dive International Inc.
were among the Fund's top-performing stocks.
- - Stocks that saw their market value decline during the period included
Petroleum Development Corp., Harvest Natural Resources and Petrokazakhstan,
Inc.
Management Overview 15
Management Overview (continued)
ICON Energy Fund
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Oil & Gas Equipment & Services 25.8%
Oil & Gas Exploration & Production 23.2%
Integrated Oil & Gas 22.9%
Oil & Gas Drilling 18.2%
Oil & Gas Storage & Transportation 3.5%
Construction Materials 1.2%
Construction & Engineering 0.6%
Industrial Machinery 0.4%
Oil & Gas Refining & Marketing 0.2%
</Table>
Percentages are based upon net assets.
16 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 11/5/97
- -----------------------------------------------------------------------------------------
ICON Energy Fund 54.79% 22.86% 18.17%
- -----------------------------------------------------------------------------------------
S&P 1500 Energy Index 49.95% 14.10% 11.84%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 13.45% -0.46% 5.56%
- -----------------------------------------------------------------------------------------
</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, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON ENERGY FUND S&P 1500 ENERGY INDEX S&P 1500 INDEX
---------------- --------------------- --------------
11/5/97 10000 10000 10000
9100 9432 10291
9330 9872 11683
8630 9603 11967
9/30/98 6350 8920 10680
5723 8937 13000
6726 9455 13472
8164 10671 14520
9/30/99 8083 10579 13597
8600 10702 15632
11092 11203 16115
11872 11539 15698
9/30/00 13361 12516 15692
15363 12651 14545
15010 11875 12849
14202 12096 13693
9/30/01 12488 10566 11654
14856 11245 12997
16385 12350 13121
14823 11769 11435
9/30/02 13117 9493 9460
14004 10190 10228
13539 10230 9886
14857 10988 11440
9/30/03 15178 11038 11796
18580 12737 13253
20154 13460 13536
21649 14547 13772
9/30/04 24165 16142 13514
25672 16862 14816
28840 19815 14521
29882 20283 14771
9/30/05 37406 24205 15332
</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 17
Schedule of Investments
ICON Energy Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (96.0%)
84,700 Anadarko
Petroleum
Corp. $ 8,110,025
125,000 Apache Corp. 9,402,500
215,000 Atwood
Oceanics,
Inc.(a) 18,105,150
175,000 Berry
Petroleum Co. 11,670,750
400,000 Cal Dive
International,
Inc.(a) 25,364,000
450,000 Chesapeake
Energy Corp. 17,212,500
225,000 Chevron Corp. 14,564,250
300,000 China
Petroleum and
Chemical
Corp. - ADR 13,578,000
215,014 Cimarex Energy
Co.(a) 9,746,584
200,000 Comstock
Resources,
Inc.(a) 6,562,000
160,000 ConocoPhillips 11,185,600
200,000 Cooper Cameron
Corp.(a) 14,786,000
100,000 Core
Laboratories
N.V.(a) 3,226,000
125,000 Dampskibsselskabet
Torm - ADR 7,167,500
275,000 Denbury
Resources,
Inc.(a) 13,871,000
300,000 Diamond
Offshore
Drilling, Inc. 18,375,000
405,000 Encore
Acquisition
Co.(a) 15,734,249
375,000 Energy
Partners,
Ltd.(a) 11,707,500
36,000 ENI S.p.A. -
ADR 5,331,600
100,000 Flowserve
Corp.(a) 3,635,000
225,000 FMC
Technologies,
Inc.(a) 9,474,750
50,000 Frontier Oil
Corp. 2,217,500
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
775,000 Grant Prideco,
Inc.(a) $ 31,503,750
100,000 Gulf Island
Fabrication,
Inc. 2,875,000
325,000 Headwaters,
Inc.(a) 12,155,000
300,000 Helmerich &
Payne, Inc. 18,117,000
164,700 Hydril Co.(a) 11,305,008
575,000 KCS Energy,
Inc.(a) 15,829,750
375,000 Lone Star
Technologies,
Inc.(a) 20,846,250
225,000 Lukoil - ADR 12,960,000
287,050 Marathon Oil
Corp. 19,786,357
175,000 Maverick Tube
Corp.(a) 5,250,000
375,000 Nabors
Industries,
Ltd.(a) 26,936,250
450,000 National-
OilWell Varco,
Inc.(a) 29,610,000
300,000 Newfield
Exploration
Co.(a) 14,730,000
500,000 Newpark
Resources,
Inc.(a) 4,210,000
180,000 Noble Corp. 12,322,800
42,400 Noble Energy,
Inc. 1,988,560
196,000 Oceaneering
International,
Inc.(a) 10,468,360
160,000 Offshore
Logistics(a) 5,920,000
475,000 Oil States
International,
Inc.(a) 17,247,250
775,000 Patterson-UTI
Energy, Inc. 27,962,000
130,800 Penn Virginia
Corp. 7,548,468
600,000 Petro-Canada 25,038,000
200,000 Petrochina
Co., Ltd. -
ADR 16,674,000
600,000 Petroleo
Brasileiro
S.A. - ADR 42,894,000
</Table>
18 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
189,800 Precision
Drilling
Corp.(a) $ 9,338,160
300,000 Pride
International,
Inc.(a) 8,553,000
370,600 Range
Resources
Corp. 14,308,866
325,000 Remington Oil
& Gas Corp.(a) 13,487,500
330,000 Repsol YPF
S.A. - ADR 10,662,300
260,000 Royal Dutch
Shell - Class
A - ADR 17,066,400
280,149 Royal Dutch
Shell - Class
B - ADR 19,293,862
125,000 Spinnaker
Exploration
Co.(a) 8,086,250
360,000 Suncor Energy,
Inc. 21,790,800
800,000 Superior
Energy
Services,
Inc.(a) 18,472,000
50,000 Teekay
Shipping Corp. 2,152,500
300,000 TETRA
Technologies,
Inc.(a) 9,366,000
534,300 The Williams
Companies,
Inc. 13,384,215
300,000 Tidewater,
Inc. 14,601,000
500,000 Top Tankers,
Inc. 7,510,000
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
325,000 Transocean,
Inc.(a) $ 19,925,750
150,000 Tsakos Energy
Navigation ,
Ltd. 5,403,000
635,000 Ultra
Petroleum
Corp.(a) 36,118,800
425,000 Unit Corp.(a) 23,494,000
153,000 URS Corp.(a) 6,179,670
300,000 W-H Energy
Services,
Inc.(a) 9,726,000
235,000 Weatherford
International,
Ltd.(a) 16,135,100
400,033 XTO Energy,
Inc. 18,129,496
--------------
TOTAL COMMON STOCKS (COST
$648,830,463) 968,389,930
SHORT-TERM INVESTMENTS (2.7%)
$26,997,349 Brown Brothers
Harriman Time
Deposit,
3.24%,
10/01/05# 26,997,349
--------------
TOTAL SHORT-TERM INVESTMENTS
(COST $26,997,349) 26,997,349
--------------
TOTAL INVESTMENTS (COST
$675,827,812) 98.7% 995,387,279
OTHER ASSETS LESS LIABILITIES
1.3% 13,570,562
--------------
TOTAL NET ASSETS 100.0% $1,008,957,841
==============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
Schedule of Investments 19
Management Overview
ICON Financial Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 99.9%
Top 10 Equity Holdings 26.9%
Number of Stocks 48
Short-Term Investments 0.3%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
Investment Technology
Group, Inc. 3.5%
First American Corp. 2.9%
Loews Corp. 2.9%
Allmerica Financial Corp. 2.6%
AmerUs Group Co. 2.5%
UnumProvident Corp. 2.5%
Prudential Financial, Inc. 2.5%
American International
Group, Inc. 2.5%
LandAmerica Financial
Group, Inc. 2.5%
Mellon Financial Corp. 2.5%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Financial Fund gained 8.29% for the fiscal year ended September 30,
2005, outpacing the 7.02% return of its sector-specific benchmark, the S&P
1500 Financials Index, while trailing the 13.45% return for its broad
benchmark, the S&P 1500 Index. Total returns for other periods as of
September 30, 2005 appear on page 24.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The Financials sector fared poorly vs. the broad market during the period,
and the Fund's underperformance relative to the S&P 1500 reflected yearlong
weakness in the Financials sector. A valuation-driven tilt toward
insurance-related industries provided a modest lift relative to the sector-
specific benchmark. Also beneficial was the Fund's overweight position in
medium-capitalization stocks, which proved to be the top-performing market
capitalization segment within the S&P 1500 Financials Index. While this tilt
toward mid-cap stocks, a by-product of our methodology, proved advantageous
during the period, individual stock selection within large-capitalization
stocks actually resulted in the best overall performance.
Although our process guides us to emphasize specific industries and
securities, it may result in investments concentrated within a given
capitalization range. Such was the case for the Financials sector, where
large- and mid-cap stocks produced the strongest relative returns. In
contrast, the Fund's allocation to small-cap stocks relative to the benchmark
proved detrimental, as it was the worst-performing area in the index.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as these measures do not, in our view, adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of value with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the sector benchmark.
20 Management Overview
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Despite a positive finish, stocks encountered considerable resistance in
their move toward our estimates of fair value. Surging oil prices and
monetary tightening presented formidable distractions, as investors let their
emotions be swayed by conflicting fears of economic slowdown and mounting
inflation.
Against this backdrop, market movements alternated between broad advances and
volatile sideways trading, often tracking sharp, sudden shifts in investor
sentiment. Hurricanes Katrina and Rita added to this uncertainty, as economic
forecasts called for near-term reductions in real GDP growth followed by
possible inflationary pressures due to projected rebuilding spending.
In the Financials sector, the combined effects of rising interest rates and a
flattening yield curve weighed heavily on the profit outlook for banks, while
thrifts & mortgage finance struggled with slowing mortgage and refinancing
originations. Fallout from the New York State Attorney General's probe into
the insurance industry contributed to widespread headline risk, although
insurance groups rebounded nicely as economic concerns triggered rotations
into more recession-proof industries. Meanwhile, the investment banking &
brokerage industry maintained a positive course due to increases in capital
markets activity and commodity trading.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Industries that contributed to Fund returns included the life & health
insurance, property & casualty insurance and multi-line insurance groups, all
of which reportedly benefited from higher premium income and lower claim
payouts. Investment banking & brokerage also turned in a solid showing as
companies pursued growth through mergers and acquisitions.
In contrast, regional banks, diversified banks and thrifts & mortgage finance
were among the weakest industries in the Financials sector and consequently
worked against Fund performance. By period-end, all three were either removed
or significantly reduced on declining relative strength.
Among the Fund's top individual performers, Investment Technology Group Inc.,
a provider of automated equity trading services, benefited from improved
trading volumes and solid earnings growth. Investment manager Legg Mason Inc.
also advanced, having significantly boosted assets under management with the
acquisition of Citigroup's worldwide asset management business. Likewise,
acquisitions enabled diversified financial services giant Prudential
Financial Inc. to expand its global presence, particularly in rapidly
expanding Asian insurance markets.
Management Overview 21
Management Overview (continued)
ICON Financial Fund
Conversely, companies that detracted from Fund performance included global
custody and mutual fund administrator Investors Financial Service Corp.,
which fell after warning that it would miss earnings growth targets due to
narrower-than-expected investment spreads. Residential mortgage lender
Countrywide Financial Corp. also came under pressure when the company
revealed that it had uncovered accounting irregularities. Meanwhile, equity
specialist firm LaBranche & Co., Inc. fell short of earnings expectations,
citing unfavorable market conditions. All three were subsequently removed on
declining relative strength, although LaBranche was later repurchased when
its valuation became more attractive.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE FINANCIALS SECTOR?
A. Given expectations for sustainable economic growth and relatively low
interest rates, we continue to detect notable upside potential in the
Financials sector. Despite their show of strength, insurance industries still
carry attractive valuations and will likely maintain leadership positions. At
the same time, banking industries are demonstrating significant value and
will be monitored closely for future signs of emerging leadership. In what
are still challenging conditions for the Financial sector, we remain
committed to our discipline, with a keen eye toward valuation and relative
strength.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund reflected yearlong weakness in the Financials sector, yet provided a
modest lift relative to its sector-specific benchmark.
- - Leading industry contributors included overweights in the life & health
insurance, property & casualty insurance and multi-line insurance groups.
- - Regional banks, diversified banks and thrifts & mortgage finance were among
the sector's weakest industries and consequently worked against Fund
performance.
- - Investment Technology Group Inc., Legg Mason Inc. and Prudential Financial
Inc. were among the Fund's top individual performers.
- - Stocks that detracted from returns included Investors Financial Services
Corp., Countrywide Financial Corp. and LaBranche & Co., Inc.
22 Management Overview
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Life & Health Insurance 17.9%
Investment Banking & Brokerage 16.4%
Consumer Finance 14.9%
Multi-Line Insurance 13.4%
Property & Casualty Insurance 13.0%
Asset Management & Custody Banks 12.0%
Regional Banks 3.9%
Specialized Finance 3.6%
Insurance Brokers 2.1%
Reinsurance 1.4%
Other Diversified Financial
Services 1.3%
</Table>
Percentages are based upon net assets.
Management Overview 23
Management Overview (continued)
ICON Financial Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 7/1/97
- -----------------------------------------------------------------------------------------
ICON Financial Fund 8.29% 9.76% 10.50%
- -----------------------------------------------------------------------------------------
S&P 1500 Financials Index 7.02% 3.58% 8.73%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 13.45% -0.46% 6.24%
- -----------------------------------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these
performance results and the comparative indexes can be found on pages 2 and 3.
VALUE OF A $10,000 INVESTMENT
through September 30, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON FINANCIAL FUND S&P 1500 FINANCIALS INDEX S&P 1500 INDEX
------------------- ------------------------- --------------
7/1/97 10000 10000 10000
10510 11141 10796
10526 12020 11056
12003 13426 12552
12294 13821 12857
9/30/98 9411 10941 11474
11267 13265 13967
11878 14190 14474
12442 14931 15600
9/30/99 10357 12642 14608
11074 13668 16795
11342 13923 17314
11366 13526 16865
9/30/00 14307 16727 16858
16613 17081 15626
15598 15435 13804
17694 16730 14711
9/30/01 15675 14787 12521
17047 15904 13963
17625 16526 14097
16375 15375 12285
9/30/02 13812 12812 10164
14014 13719 10988
13011 13027 10621
16193 15404 12291
9/30/03 16899 16097 12673
19659 18038 14238
21045 18958 14543
20714 18507 14796
9/30/04 21046 18637 14519
23264 20187 15917
21738 18903 15601
22129 19777 15869
9/30/05 22788 19945 16472
</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.
24 Management Overview
Schedule of Investments
ICON Financial Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (99.9%)
98,500 A.G. Edwards, Inc. $ 4,315,285
91,000 AFLAC, Inc. 4,122,300
134,100 Allmerica Financial
Corp.(a) 5,516,874
194,200 Amegy
Bancorporation,
Inc. 4,394,746
113,200 American Capital
Strategies, Ltd. 4,149,912
64,000 American Express
Co. 3,676,160
85,900 American
International
Group, Inc. 5,322,364
86,000 AmeriCredit
Corp.(a) 2,052,820
93,600 AmerUs Group Co. 5,369,832
140,600 Aon Corp. 4,510,448
51,500 Capital One
Financial Corp. 4,095,280
195,800 Cash America
International, Inc. 4,062,850
126,700 China Life
Insurance Co.,
Ltd. - ADR(a) 3,909,962
80,100 CIT Group, Inc. 3,618,918
89,900 CompuCredit
Corp.(a) 3,993,358
96,000 Delphi Financial
Group, Inc. 4,492,800
165,100 Eaton Vance Corp. 4,097,782
29,500 Everest Re Group,
Ltd. 2,888,050
99,200 Financial Federal
Corp. 3,948,160
136,200 First American
Corp. 6,220,254
193,500 First Cash
Financial Services,
Inc.(a) 5,092,920
111,200 First Republic Bank 3,917,576
174,650 HCC Insurance
Holdings, Inc. 4,982,765
131,800 Horace Mann
Educators Corp. 2,607,004
247,000 Investment
Technology Group,
Inc.(a) 7,311,200
581,200 Labranche and Co.,
Inc.(a) 5,050,628
82,100 LandAmerica
Financial Group,
Inc. 5,307,765
37,700 Lehman Brothers
Holding, Inc. 4,391,296
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
91,400 Lincoln National
Corp. $ 4,754,628
65,800 Loews Corp. 6,080,578
177,700 MBNA Corp. 4,378,528
261,600 MCG Capital Corp. 4,413,192
162,300 Mellon Financial
Corp. 5,188,731
70,100 Merrill Lynch &
Co., Inc. 4,300,635
86,100 MetLife, Inc. 4,290,363
93,400 Northern Trust
Corp. 4,721,370
58,000 Principal Financial
Group, Inc. 2,747,460
79,100 Prudential
Financial, Inc. 5,343,996
134,200 Raymond James
Financial, Inc. 4,310,504
79,700 Selective Insurance
Group, Inc. 3,897,330
74,600 SLM Corp. 4,001,544
88,600 St. Paul Travelers
Cos., Inc. 3,975,482
57,700 State Street Corp. 2,822,684
85,500 Stewart Information
Services Corp. 4,377,600
43,800 The Bear Stearns
Cos., Inc. 4,807,050
49,700 The Hartford
Financial Services
Group, Inc. 3,835,349
261,300 UnumProvident Corp. 5,356,650
90,700 W.R. Berkley Corp. 3,580,836
------------
TOTAL COMMON STOCKS (COST
$187,784,348) 210,603,819
SHORT-TERM INVESTMENTS (0.3%)
$599,055 Brown Brothers
Harriman Time
Deposit,
3.24%, 10/01/05# 599,055
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $599,055) 599,055
------------
TOTAL INVESTMENTS (COST
$188,383,403) 100.2% 211,202,874
LIABILITIES LESS OTHER ASSETS
(0.2)% (319,598)
------------
TOTAL NET ASSETS 100.0% $210,883,276
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
Schedule of Investments 25
Management Overview
ICON Healthcare Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 97.2%
Top 10 Equity Holdings 23.0%
Number of Stocks 85
Short-Term Investments 3.3%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
McKesson HBOC, Inc. 2.8%
AmerisourceBergen Corp. 2.7%
Express Scripts, Inc. 2.6%
Celgene Corp. 2.4%
Henry Schein, Inc. 2.2%
United Surgical Partners International, Inc. 2.1%
Omnicare, Inc. 2.1%
UnitedHealth Group, Inc. 2.1%
Coventry Health Care, Inc. 2.0%
Wellpoint, Inc. 2.0%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Healthcare Fund appreciated 31.39% for the fiscal year ended
September 30, 2005, outperforming the 12.13% return for its sector-specific
benchmark, the S&P 1500 Healthcare Index, as well as the 13.45% return for
its broad benchmark, the S&P 1500 Index. Total returns for other periods as
of September 30, 2005 appear on page 30.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Active overweight positions in the top-performing managed healthcare and
healthcare services industries combined with a value-driven tilt toward
medium-capitalization stocks relative to the sector benchmark accounted for
the Fund's outperformance. While the emphasis on mid-cap securities was a
residual of the Fund's investment process rather than a primary
consideration, the larger relative weighting proved advantageous to
fiscal-year returns.
At the same time, limited exposure to large-cap pharmaceuticals, the sector
laggard, resulted in positive performance. Given the apparent disparity of
industry returns, it appears that investors did not fully recognize the
widespread value that permeated the Healthcare sector during the reporting
period.
This was evidenced early in the period when election-year uncertainties
weighed heavily on the sector in general and the highly politicized managed
health care industry in particular. The phenomenon was short lived, however,
and as the political rhetoric subsided, the industry recouped its losses and
assumed its leadership status.
Another interesting development involved the healthcare facilities industry,
which surged amid a broad winter market decline, only to sell off during a
summer rally. Conversely, healthcare distributors and healthcare services
marched steadily higher throughout the period, while pharmaceuticals hinted
at a new-year rebound that ultimately failed to materialize. Still, the Fund
took the opportunity to selectively invest in pharmaceutical stocks, where
bargains have been plentiful.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as we believe these measures do not adequately
26 Management Overview
[J.C. WALLER III PHOTO]
J.C. Waller, III
Portfolio Manager
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of value with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the sector benchmark.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. The reporting period was characterized by extreme choppiness, as rising oil
prices and ongoing monetary tightening distracted investors. Although
underlying economic and company fundamentals remained generally positive, the
uncertainty produced severe crosscurrents, which intensified with Hurricanes
Katrina and Rita. As market sentiment fluctuated between fears of economic
slowdown and mounting inflation, stocks settled into a volatile sideways
trading range. When these concerns subsided, stocks resumed their upward
advance.
Within the Healthcare sector, lingering difficulties, such as pricing
pressures and increased generic competition, appeared to hamper the branded
pharmaceuticals industry, which comprises nearly 50% of the S&P 1500
Healthcare Index. Hospital issues also retreated as storm-related closures in
the Gulf region raised concerns over the group's earnings outlook. Meanwhile,
the managed healthcare industry continued to demonstrate sustainable strength
based on its attractive combination of steady operating margins and low
relative valuations.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. The Fund benefited from an active overweight in the managed healthcare group,
which accounted for nine of the top 10 contributing companies in the Fund
during the period. The HMO segment features a number of well-managed
businesses in addition to what we see as a powerful combination of value and
relative strength. Healthcare services, another active overweight position,
also contributed positively to overall performance, as rising revenues,
growing demand and favorable demographic trends appear to be driving a move
toward fair value.
Among the Fund's leading individual contributors to performance were managed
care companies WellPoint Inc., Aetna Inc. and Humana Inc. Acquisition-related
growth enhanced WellPoint's profits and subscriber base, while Aetna and
Humana relied on specialty product lines and new product offerings to boost
enrollment and earnings.
In contrast, pharmaceuticals hampered Fund returns, although the Fund's
limited exposure helped relative to the benchmark. Given the presence of
Management Overview 27
Management Overview (continued)
ICON Healthcare Fund
significant value, we have maintained the Fund's pharmaceutical position
despite a current absence of sustainable relative strength.
Individual companies that detracted from Fund performance included Martek
Biosciences Corp., a producer of microalgae-based nutritional products, whose
shares tumbled due to a demand-related inventory buildup among its larger
customers. Medical device maker Boston Scientific Corp. also retreated,
having reported declining sales and pricing pressures. Meanwhile, long-term
care provider Kindred Healthcare Inc. faced revenue shortfalls resulting from
lower admissions and Medicare payment reductions. All three stocks were
ultimately sold due to our estimate of declining relative strength.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE HEALTHCARE SECTOR?
A. We believe the Healthcare sector continues to offer broad upside potential.
Our estimates indicated widespread value, while forward earnings growth
projections generally appear strong and steady. Based on our analysis of
value and relative strength, our system indicates the healthcare services and
healthcare distributors industries may be poised to continue leadership
roles, but we see little evidence to support a similar move in biotechnology.
However, after a significant period of time, we have begun to accumulate
positions in pharmaceutical stocks through exposure to the generic drug
segment.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - Given the apparent disparity of industry returns, it appears that investors
did not fully recognize the widespread value that permeated the Healthcare
sector.
- - Active overweight positions in industry standouts managed healthcare and
healthcare services contributed positively to overall performance.
- - Pharmaceuticals detracted from returns despite the Fund's limited exposure.
- - Managed care companies WellPoint Inc., Aetna Inc. and Humana Inc. were among
the Fund's strongest-performing holdings during the period.
- - Stocks that detracted from performance during the period included Martek
Biosciences Corp., Boston Scientific Corp. and Kindred Healthcare Inc.
28 Management Overview
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Health Care Services
23.6%
Pharmaceuticals
14.3%
Managed Health Care
14.1%
Biotechnology
11.0%
Health Care Equipment
10.4%
Health Care Distributors
9.4%
Health Care Facilities
8.0%
Health Care Supplies
5.1%
Specialized Consumer Services
0.8%
Office Services & Supplies
0.5%
</Table>
Percentages are based upon net assets.
Management Overview 29
Management Overview (continued)
ICON Healthcare Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/24/97
- -----------------------------------------------------------------------------------------
ICON Healthcare Fund 31.39% 11.14% 13.84%
- -----------------------------------------------------------------------------------------
S&P 1500 Healthcare Index 12.13% 0.24% 8.47%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 13.45% -0.46% 7.22%
- -----------------------------------------------------------------------------------------
</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, 2005
[LINE GRAPH]
<Table>
<Caption>
S&P 1500 HEALTH CARE
ICON HEALTHCARE FUND INDEX S&P 1500 INDEX
-------------------- -------------------- --------------
2/24/97 10000 10000 10000
9460 8940 9368
11080 11104 10981
11780 11169 11933
11644 11995 12221
13319 14014 13874
13813 14945 14211
9/30/98 12224 14703 12682
13427 16953 15438
13500 17464 15999
13863 16807 17243
9/30/99 11571 15192 16147
13938 15787 18564
15234 16050 19137
17042 19693 18642
9/30/00 17976 19880 18634
19936 21802 17272
18731 18405 15258
20498 18659 16261
9/30/01 18585 18850 13839
19303 19285 15434
19845 19189 15582
19524 16124 13580
9/30/02 17540 14975 11234
17523 15629 12146
17337 15824 11740
20236 17535 13585
9/30/03 20812 16927 14008
22981 18382 15738
23895 18439 16075
24777 18954 16354
9/30/04 23201 17940 16048
27102 18998 17594
27934 18932 17244
29598 19748 17540
9/30/05 30483 20115 18207
</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.
30 Management Overview
Schedule of Investments
ICON Healthcare Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
COMMON STOCKS (97.2%)
158,200 Advanced
Medical Optics,
Inc.(a) $ 6,003,690
125,000 Aetna, Inc. 10,767,500
170,000 Affymetrix,
Inc.(a) 7,859,100
220,000 Alpharma,
Inc. - Class A 5,471,400
50,000 American Dental
Partners,
Inc.(a) 1,696,000
208,500 American
Healthways,
Inc.(a) 8,840,400
240,000 AmerisourceBergen
Corp. 18,552,000
100,000 Amgen, Inc.(a) 7,967,000
215,000 AmSurg Corp.(a) 5,882,400
193,300 Arrow
International,
Inc. 5,451,060
200,000 AstraZeneca
Plc - ADR 9,420,000
210,000 Baxter
International,
Inc. 8,372,700
79,200 Biosite,
Inc.(a) 4,899,312
200,000 Bradley
Pharmaceuticals,
Inc.(a) 2,184,000
240,000 Caremark Rx,
Inc.(a) 11,983,200
300,000 Celgene
Corp.(a) 16,296,000
125,000 Cerner Corp.(a) 10,866,250
190,000 Chiron Corp.(a) 8,287,800
91,000 CIGNA Corp. 10,725,260
335,000 Community
Health Systems,
Inc.(a) 13,001,350
200,000 CONMED Corp.(a) 5,576,000
160,000 Coventry Health
Care, Inc.(a) 13,763,200
172,100 Cross Country
Healthcare,
Inc.(a) 3,194,176
190,500 DaVita, Inc.(a) 8,776,335
300,000 Dendrite
International,
Inc.(a) 6,027,000
71,600 Dentsply
International,
Inc. 3,867,832
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
138,700 Diagnostic
Products Corp. $ 7,313,651
375,000 Digene Corp.(a) 10,687,500
81,500 Edwards
Lifesciences
Corp.(a) 3,619,415
156,000 Eli Lilly & Co. 8,349,120
280,000 Express
Scripts,
Inc.(a) 17,416,000
225,000 First Horizon
Pharmaceutical
Corp.(a) 4,470,750
150,000 Gilead
Sciences,
Inc.(a) 7,314,000
258,000 Health Net,
Inc.(a) 12,208,560
200,000 HealthExtras,
Inc.(a) 4,276,000
350,000 Henry Schein,
Inc.(a) 14,917,000
115,000 Hi-Tech
Pharmacal Co.,
Inc.(a) 3,459,200
8,400 Horizon Health
Corp.(a) 228,228
243,200 Humana, Inc.(a) 11,644,416
70,100 Icon PLC-
ADR(a) 3,505,000
300,000 IVAX Corp.(a) 7,908,000
125,000 Johnson &
Johnson, Inc. 7,910,000
292,600 K-V
Pharmaceutical
Co.(a) 5,199,502
200,000 Laboratory
Corp. of
America
Holdings(a) 9,742,000
200,000 LifeCell
Corp.(a) 4,326,000
250,000 Lifepoint
Hospitals,
Inc.(a) 10,932,500
175,000 Lincare
Holdings,
Inc.(a) 7,183,750
280,000 Manor Care,
Inc. 10,754,800
144,500 Matthews
International
Corp. - Class A 5,460,655
400,000 McKesson HBOC,
Inc. 18,980,000
200,000 MedcoHealth
Solutions,
Inc.(a) 10,966,000
185,000 MGI Pharma,
Inc.(a) 4,312,350
81,000 Mine Safety
Appliances Co. 3,134,700
</Table>
Schedule of Investments 31
Schedule of Investments (continued)
ICON Healthcare Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
450,000 Mylan
Laboratories,
Inc. $ 8,667,000
250,000 Omnicare, Inc. 14,057,500
200,000 Owens & Minor,
Inc. 5,870,000
100,000 Parexel
International
Corp.(a) 2,009,000
150,000 Per-Se
Technologies,
Inc.(a) 3,099,000
296,000 Pfizer, Inc. 7,391,120
162,800 Pharmaceutical
Product
Development,
Inc.(a) 9,362,628
100,000 Possis Medical,
Inc.(a) 1,096,000
450,000 PSS World
Medical,
Inc.(a) 6,003,000
126,000 Psychiatric
Solutions,
Inc.(a) 6,832,980
125,000 Quest
Diagnostics,
Inc. 6,317,500
100,000 RehabCare
Group, Inc.(a) 2,052,000
90,000 ResMed, Inc.(a) 7,168,500
285,000 Respironics,
Inc.(a) 12,021,300
250,000 Salix
Pharmaceuticals,
Ltd.(a) 5,312,500
80,000 Sanofi-Aventis
S.A. - ADR 3,324,000
128,200 Serologicals
Corp.(a) 2,892,192
185,000 SFBC
International,
Inc.(a) 8,212,150
150,000 Stryker Corp. 7,414,500
110,300 Surmodics,
Inc.(a) 4,267,507
66,500 Sybron Dental
Specialties,
Inc.(a) 2,765,070
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
200,000 Teva
Pharmaceutical
Industries,
Ltd. ADR $ 6,684,000
135,000 The Cooper
Cos., Inc. 10,342,350
100,000 Thermo Electron
Corp.(a) 3,090,000
360,000 United Surgical
Partners
International,
Inc.(a) 14,079,600
195,000 United
Therapeutics
Corp.(a) 13,611,000
250,024 UnitedHealth
Group, Inc. 14,051,349
175,000 Ventiv Health,
Inc.(a) 4,586,750
119,000 WellChoice,
Inc.(a) 9,032,100
180,000 Wellpoint,
Inc.(a) 13,647,600
268,500 West
Pharmaceutical
Services, Inc. 7,966,395
180,000 Wyeth 8,328,600
------------
TOTAL COMMON STOCKS (COST
$533,679,195) 663,505,253
SHORT-TERM INVESTMENTS (3.3%)
$22,216,644 Brown Brothers
Harriman Time
Deposit, 3.24%,
10/01/05# 22,216,644
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $22,216,644) 22,216,644
------------
TOTAL INVESTMENTS 100.5% (COST
$555,895,839) 685,721,897
LIABILITIES LESS OTHER ASSETS
(0.05)% (2,962,558)
------------
TOTAL NET ASSETS 100.0% $682,759,339
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
32 Schedule of Investments
Management Overview
ICON Industrials Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 98.6%
Top 10 Equity Holdings 20.7%
Number of Stocks 80
Short-Term Investments 1.4%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
The Manitowoc Co., Inc. 2.6%
Goodrich Corp. 2.5%
Labor Ready, Inc. 2.4%
L-3 Communications Holdings, Inc. 2.3%
Lockheed Martin Corp. 2.0%
Northrop Grumman Corp. 1.9%
SkyWest, Inc. 1.9%
Joy Global, Inc. 1.7%
Ceradyne, Inc. 1.7%
American Science and Engineering, Inc. 1.7%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Industrials Fund advanced 20.72% for the fiscal year ended September
30, 2005, outperforming both the 9.47% return for its sector-specific
benchmark, the S&P 1500 Industrials Index, and the 13.45% return of its broad
benchmark, the S&P 1500 Index. Total returns for other periods as of
September 30, 2005 appear on page 37.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. While ongoing economic expansion proved conducive for the Industrials sector,
much of the Fund's relative performance can be attributed to industry
selection within medium-capitalization companies and stock selection within
the larger-capitalization space. However, most of the upward move reflected
strength among mid-caps, in which the Fund maintained an overweight position
relative to its sector-specific benchmark. Combined with an active
underweight in large-caps, these valuation-related tilts proved advantageous
to fiscal-year returns.
For that reason, the Fund benefited from a lack of exposure to benchmark
bellwethers General Electric and United Parcel Service, both of which
underperformed the S&P 1500 Industrials Index. Although our analysis showed
these securities were overvalued, which led to their exclusion, active
underweighting or avoidance of heavily weighted benchmark components can
amplify the attribution effect in either direction. This points to the highly
delicate nature of comparisons to a market-cap weighted index, as our process
focuses on specific industries and securities rather than a given
capitalization range.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as we believe these measures do not, in our view,
adequately represent intrinsic value, which can vary over time. Instead, we
calculate proprietary value-to-price (V/P) ratios that consider the effects
of historical and projected earnings, projected growth, risk, and interest
rates (opportunity cost). By combining our determination of value with
relative strength (RS), we aim to capture leading industry themes that we
believe are poised to outperform the sector benchmark.
Management Overview 33
Management Overview (continued)
ICON Industrials Fund
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Positive overall trends in economic fundamentals and corporate earnings faced
potent headwinds in the form of surging oil prices, inflation fears, monetary
tightening and slowing growth. When investor anxiety abated, as was the case
during the fourth quarter of 2004 and the second quarter of 2005, stocks
embarked upon a broad advance. However, as market sentiment turned decidedly
negative, most notably in the wake of Hurricanes Katrina and Rita, stocks
entered into a volatile trading range, which served to moderate prior gains.
Within the Industrials sector, this juxtaposition of concerns, namely the
economic slowdown and inflationary pressures, at times proved a formidable
obstacle for cyclically oriented industries. However, these fears were
largely unwarranted, and as clear industry leadership emerged following a
mid-April bottom, the sector moved steadily higher.
Railroads, for example, actually benefited from higher commodity prices as
rising demand for coal products boosted shipping volumes, while construction
& engineering demonstrated considerable strength even before the lift
provided by the anticipated rebuild of storm-ravaged areas. Through it all,
our value discipline proved highly resilient, enabling the Fund to stay well
ahead of its respective benchmarks.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Although a number of industries possessed both value and relative strength
during the period, those making meaningful contributions to Fund performance
included railroads, construction & engineering and human resource &
employment services. Selected stock picks within the less-robust industrial
machinery group also bolstered returns, while trucking weakened after a
strong first half and was subsequently reduced. Further detracting from
overall returns was the building products industry, as several key names
failed to capitalize on favorable metrics.
Individual companies that made a positive impact on performance during the
period included temporary staffing firm Labor Ready Inc., which relied on
revenue gains and strategic acquisitions to grow net income and gross
margins. Personnel administration manager Administaff Inc. also advanced,
having reported strong quarterly results on increased sales and improved
client retention. Meanwhile, diversified manufacturer The Manitowoc Company
Inc. received a major boost in sales and earnings from its expanding global
crane business.
In contrast, Trex Company Inc., a manufacturer of composite decking products,
tumbled when the company unexpectedly warned of revenue and
earnings-per-share shortfalls. Coinstar Inc., an operator of self-service
coin
34 Management Overview
[J.C. WALLER, III PHOTO]
J.C. Waller, III
Portfolio Manager
conversion machines, also declined after reporting flat earnings despite a
doubling of revenue. Elsewhere, Simpson Manufacturing Company Inc., a maker
of construction connectors and fastening systems, reported declining gross
margins due to increased material and marketing costs.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INDUSTRIALS SECTOR?
A. Despite inflationary concerns and higher input costs, in our view, value and
relative strength remain widespread across the sector. Against this backdrop,
certain industries such as construction & engineering, railroads and human
resource & employment services have been notably resilient and should remain
leaders, particularly as part of a so-called late cycle rally.
We have also increased our exposure to the trading companies & distributors
industry, which has shown promise in outperforming the broader market during
market advances. Going forward, however, much will depend on the strength of
the economic expansion, which while it should continue, may likely do so at a
slower pace.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund's relative performance can be attributed to industry selection in
the medium-capitalization range and stock selection in the larger-
capitalization space.
- - The Fund benefited from a lack of exposure to benchmark bellwethers General
Electric and United Parcel Service, both of which underperformed the
sector-specific benchmark.
- - Industries making meaningful contributions to Fund performance included
railroads, construction & engineering and human resource & employment
services, while trucking and building products detracted from overall
returns.
- - Labor Ready Inc., Administaff Inc. and The Manitowoc Company Inc. were among
the Fund's leading investments.
- - Stocks that detracted from performance included Trex Company Inc., Coinstar
Inc. and Simpson Manufacturing Company Inc.
Management Overview 35
Management Overview (continued)
ICON Industrials Fund
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Aerospace & Defense 22.7%
Industrial Machinery 12.1%
Construction & Farm Machinery & Heavy
Trucks 11.2%
Railroads 9.4%
Trading Companies & Distributors 7.1%
Human Resource & Employment Services 6.5%
Construction & Engineering 4.9%
Building Products 4.6%
Electrical Components & Equipment 3.3%
Marine 3.2%
Commercial Printing 3.0%
Airlines 2.8%
Diversified Commercial & Professional
Services 2.8%
Environmental & Facilities Services 2.2%
Industrial Conglomerates 1.1%
Education Services 1.0%
Office Services & Supplies 0.7%
</Table>
Percentages are based upon net assets.
36 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 5/9/97
- -----------------------------------------------------------------------------------------
ICON Industrials Fund 20.72% 7.01% 5.08%
- -----------------------------------------------------------------------------------------
S&P 1500 Industrials Index 9.47% 1.98% 6.40%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 13.45% -0.46% 7.15%
- -----------------------------------------------------------------------------------------
</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, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON INDUSTRIALS FUND S&P 1500 INDUSTRIALS INDEX S&P 1500 INDEX
--------------------- -------------------------- --------------
5/9/97 10000 10000 10000
10790 10956 10767
12400 11623 11700
11605 11509 11982
12995 12970 13604
11819 12459 13934
9/30/98 9662 10543 12435
12226 12465 15137
11503 12572 15687
13080 14186 16907
9/30/99 11295 13339 15832
11402 14537 18202
11068 14412 18764
10568 14190 18278
9/30/00 10805 15263 18271
11888 15228 16935
10706 13632 14961
12055 15157 15943
9/30/01 10205 12296 13569
12079 14343 15133
13164 14377 15278
12114 12531 13315
9/30/02 9500 10293 11015
9536 10852 11909
8462 10266 11511
9680 11879 13320
9/30/03 10504 12492 13735
12032 14340 15431
12127 14277 15761
12807 15482 16035
9/30/04 12556 15376 15735
14466 17028 17251
14155 16729 16908
14023 16279 17198
9/30/05 15158 16832 17852
</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 37
Schedule of Investments
ICON Industrials Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (98.6%)
123,000 A.S.V., Inc.(a) $ 2,785,950
32,000 Administaff, Inc. 1,271,680
67,000 Alaska Air Group,
Inc.(a) 1,947,020
89,000 Albany
International
Corp. - Class A 3,281,430
27,400 Alexander &
Baldwin, Inc. 1,458,776
33,000 Alliant
Techsystems,
Inc.(a) 2,463,450
55,500 American Science
and Engineering,
Inc.(a) 3,640,245
37,800 American Standard
Companies, Inc. 1,759,590
84,500 Apogee
Enterprises, Inc. 1,444,950
91,000 Applied
Industrial
Technology, Inc. 3,265,080
63,000 Armor Holdings,
Inc.(a) 2,709,630
90,000 Barnes Group,
Inc. 3,227,400
60,000 Barrett Business
Services, Inc.(a) 1,371,000
54,000 Bright Horizons
Family Solutions,
Inc.(a) 2,073,600
54,500 Burlington
Northern Santa Fe
Corp. 3,259,100
46,000 Canadian National
Railway Co.-ADR 3,265,540
72,000 Canadian Pacific
Railway, Ltd. 3,093,120
58,000 Caterpillar, Inc. 3,407,500
100,000 Ceradyne, Inc.(a) 3,668,000
125,000 CP Ships Ltd. 2,666,250
67,000 CSX Corp. 3,114,160
37,000 Cummins, Inc. 3,255,630
50,000 Curtiss-Wright
Corp. 3,085,500
14,000 Eaton Corp. 889,700
28,000 ElkCorp 1,001,560
59,000 EMCOR Group,
Inc.(a) 3,498,700
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
86,700 Empresa
Brasileira de
Aeronautica
S.A. - ADR $ 3,346,620
74,000 Esterline
Technologies
Corp.(a) 2,803,860
50,000 Fastenal Co. 3,054,500
100,000 Flowserve
Corp.(a) 3,635,000
125,000 FTI Consulting,
Inc.(a) 3,157,500
95,000 General Cable
Corp.(a) 1,596,000
22,900 General Dynamics
Corp. 2,737,695
90,000 Genesee & Wyoming
, Inc.(a) 2,853,000
121,900 Goodrich Corp. 5,405,046
94,000 Granite
Construction,
Inc. 3,594,560
42,000 Griffon Corp.(a) 1,033,200
27,100 Harsco Corp. 1,776,947
39,600 Ingersoll Rand
Co. Ltd. - Class
A 1,513,908
20,000 Jacobs
Engineering
Group, Inc.(a) 1,348,000
76,000 John H. Harland
Co. 3,374,400
75,000 Joy Global, Inc. 3,784,500
46,700 Kaydon Corp. 1,326,747
110,000 Kforce, Inc.(a) 1,133,000
56,000 Kirby Corp.(a) 2,768,080
64,000 L-3
Communications
Holdings, Inc. 5,060,480
200,000 Labor Ready,
Inc.(a) 5,130,000
130,500 Lennox
International,
Inc. 3,577,005
86,000 Lincoln Electric
Holdings, Inc. 3,388,400
71,700 Lockheed Martin
Corp. 4,376,568
100,000 LSI Industries,
Inc. 1,900,000
58,000 Manpower, Inc. 2,574,620
87,000 Monster
Worldwide,
Inc.(a) 2,671,770
50,000 Moog, Inc. -
Class A(a) 1,476,000
90,000 MSC Industrial
Direct Co.,
Inc. - Class A 2,985,300
</Table>
38 Schedule of Investments
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
82,000 Norfolk Southern
Corp. $ 3,325,920
76,400 Northrop Grumman
Corp. 4,152,340
265,000 Orbital Sciences
Corp.(a) 3,312,500
84,000 Oshkosh Truck
Corp. 3,625,440
26,200 Portfolio
Recovery
Associates,
Inc.(a) 1,131,316
84,000 R.R. Donnelley &
Sons Co. 3,113,880
132,000 RailAmerica,
Inc.(a) 1,570,800
50,000 Regal-Beloit
Corp. 1,622,000
99,950 Rollins, Inc. 1,951,024
53,000 Roper Industries,
Inc. 2,082,370
150,000 SkyWest, Inc. 4,023,000
21,800 Stericycle,
Inc.(a) 1,245,870
35,000 Teleflex, Inc. 2,467,500
35,600 Terex Corp.(a) 1,759,708
47,000 The Boeing Co. 3,193,650
111,000 The Manitowoc
Co., Inc. 5,577,750
48,000 The Middleby
Corp.(a) 3,480,000
30,000 United
Stationers,
Inc.(a) 1,435,800
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
30,000 United
Technologies
Corp. $ 1,555,200
19,000 Universal Forest
Products, Inc. 1,089,080
56,000 URS Corp.(a) 2,261,840
50,000 W.W. Grainger,
Inc. 3,146,000
42,000 Waste
Connections,
Inc.(a) 1,473,360
90,000 Wesco
International,
Inc.(a) 3,048,300
48,700 West Corp.(a) 1,820,893
------------
TOTAL COMMON STOCKS (COST
$170,052,626) 213,752,808
SHORT-TERM INVESTMENTS (1.4%)
$2,953,152 Brown Brothers
Harriman Time
Deposit,
3.24%, 10/1/05# 2,953,152
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,953,152) 2,953,152
------------
TOTAL INVESTMENTS (COST
$173,005,778) 100.0% 216,705,960
LIABILITIES LESS OTHER ASSETS
0.0% (70,352)
------------
TOTAL NET ASSETS 100.0% $216,635,608
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
Schedule of Investments 39
Management Overview
ICON Information Technology Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 99.6%
Top 10 Equity Holdings 30.4%
Number of Stocks 63
Short-Term Investments 0.5%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
Texas Instruments, Inc. 4.8%
Google, Inc. - Class A 4.1%
Fiserv, Inc. 3.1%
Hewlett-Packard Co. 3.0%
Anteon
International Corp. 2.7%
Satyam Computer
Services, Ltd. 2.6%
Logitech
International S.A. 2.6%
NICE Systems, Ltd. - ADR 2.5%
NETGEAR, Inc. 2.5%
Apple Computer, Inc. 2.5%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Information Technology Fund appreciated 10.13% for the fiscal year
ended September 30, 2005, trailing its narrow benchmarks, the S&P 1500
Information Technology Index and the NASDAQ Composite Index, which returned
13.61% and 14.19%, respectively, while also lagging its broad benchmark, the
S&P 1500 Index, which returned 13.45%. Total returns for other periods as of
September 30, 2005 appear on page 44.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. The Fund's systematic investment approach worked against performance as the
ICON system led to lower-than-average relative exposure to the robust
semiconductors group and industry bellwether Intel Corp. Although the
semiconductors group comprised on average the largest industry weight within
the Fund, the decision to underweight was made because suitable opportunity
was also detected among other Technology-related industries. As for Intel,
the stock was seemingly not trading at a steep enough discount to warrant a
more aggressive market-weight position.
A similar scenario unfolded in the computer hardware industry, which also
turned in a strong overall showing. While this group was among the Fund's
most heavily weighted industries during the period, it was underexposed
relative to the market-weighted index average. Within the industry, the
Fund's scaled-down position in sector standout Apple Computer Inc. was not
sufficient to keep pace with the narrow benchmark.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as these measures do not, in our view, adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the historical and
projected effects of historical and estimated earnings, projected growth,
risk, and interest rates (opportunity cost). By combining our determination
of value with relative strength (RS), we aim to capture leading industry
themes that we believe are poised to outperform the sector benchmark.
40 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. With rising oil prices, ongoing monetary tightening, and conflicting fears of
mounting inflation and economic slowdown dominating the investment landscape,
Information Technology issues endured severe volatility. As crude oil futures
climbed in excess of $16 a barrel over the course of the fiscal year, the
Federal Reserve maintained its policy of keeping inflation at bay, raising
short-term interest rates to 3.75% at period-end from 1.75% in October 2004.
While higher raw material costs and limited pricing power pressured profit
margins, so too did the rising interest rate environment, which many believed
would decrease the value of projected future earnings.
Against this backdrop, Technology shares initially rallied, as investors
appeared to set aside oil- and inflation- related fears, and instead focused
on strong underlying fundamentals at the corporate and macroeconomic level.
By mid-December, however, oil prices resumed their powerful surge, stoking
inflation concerns while raising fears that a more aggressive stance toward
monetary tightening might constrict economic growth.
As these worries heightened, investors abandoned the highly cyclical sector,
sending shares sharply lower on fear-based selling. This continued until
April, when once again, fear seemingly gave way to fundamentals, lifting
Technology stocks into solidly positive territory for the period.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Among the industries that made measurable contributions to Fund performance
during the period were semiconductors, IT consulting & other services, and
internet software & services. Conversely, principal industry detractors
included systems software, computer & electronics retail, and office
electronics.
Because our quantitative model did not detect strong industry leadership
within the Information Technology sector, the Fund avoided taking an
aggressively high weighting in any of the 15 industries we track. Instead,
the Fund maintained varying levels of exposure to each of the constituent
groups, relying on our proprietary metrics to determine what in our view was
the most appropriate allocation based on current valuation and relative
strength readings.
Turning to individual stocks, leading contributors to Fund performance
included leading online Web search engine Google Inc., which reported record
revenues on increased advertising spending. Global chipmaker Texas
Instruments Inc. also gapped higher, having benefited from healthy growth in
semiconductor demand and widening gross margins. Meanwhile, Cognizant
Technology Solutions Corp., a provider of custom IT services, capitalized on
Management Overview 41
Management Overview (continued)
ICON Information Technology Fund
positive outsourcing trends and expansion of its customer base through internal
efforts and acquisitions.
In contrast, companies that detracted from performance included Overland Storage
Inc., which tumbled when the data protection provider reported quarterly and
key account losses. Elsewhere, bar-code tag and labeling systems manufacturer
Paxar Corp. posted flat quarterly revenues, reflecting softness in European
markets. Also working against Fund performance was e-business infrastructure
supplier InfoSpace Inc., which announced lower-than-expected second- and
third-quarter profits. All three were ultimately sold on declining relative
strength.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INFORMATION TECHNOLOGY SECTOR?
A. Having been among the market leaders during the second half of the fiscal
year, the Information Technology sector remains, according to our analysis,
underpriced relative to our fair value estimates and still possesses
reasonable upside potential. While oil price and interest rate uncertainties
continue to loom large, we believe these concerns do not reflect strong
underlying fundamentals at the macroeconomic and individual company level.
Should investor concerns give way to fundamental value, the sector will
likely continue to rally.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund's systematic investment approach contributed to relative
underperformance as the semiconductors and computer hardware industries were
underexposed relative to the market-weighted benchmark.
- - Because our quantitative model did not detect strong market leadership, the
Fund did not take aggressively high industry weightings.
- - Semiconductors, IT consulting & other services and internet software &
services contributed to Fund performance, while systems software, computer &
electronics retail, and office electronics detracted.
- - Leading individual contributors during the period included Google Inc., Texas
Instruments Inc. and Cognizant Technology Solutions Corp.
- - Principal company detractors included Overland Storage Inc., Paxar Corp. and
InfoSpace Inc.
42 Management Overview
INDUSTRY COMPOSITION
as of September 30, 2005
<Table>
Communications Equipment 16.5%
IT Consulting & Other Services 15.8%
Semiconductors 12.5%
Application Software 8.8%
Internet Software Services 7.5%
Computer Storage & Peripherals 7.3%
Data Processing & Outsourced Services 6.5%
Computer Hardware 6.5%
Electronic Equipment Manufacturers 5.9%
Technology Distributors 4.4%
Systems Software 2.5%
Health Care Distributors 1.7%
Health Care Equipment 1.4%
Electronic Manufacturing Services 1.1%
Home Entertainment Software 0.7%
Health Care Supplies 0.5%
</Table>
Percentages are based upon net assets.
Management Overview 43
Management Overview (continued)
ICON Information Technology Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 2/19/97
- -----------------------------------------------------------------------------------------
ICON Information Technology Fund 10.13% -5.63% 11.25%
- -----------------------------------------------------------------------------------------
S&P 1500 Information Technology Index 13.61% -12.86% 5.27%
- -----------------------------------------------------------------------------------------
NASDAQ Composite Index 14.19% -9.73% 5.85%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 13.45% -0.46% 7.16%
- -----------------------------------------------------------------------------------------
</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, 2005
[LINE GRAPH]
<Table>
<Caption>
S&P 1500
ICON INFORMATION INFORMATION NASDAQ COMPOSITE
TECHNOLOGY FUND TECHNOLOGY INDEX INDEX S&P 1500 INDEX
---------------- ---------------- ---------------- --------------
2/19/97 10000 10000 10000 10000
9210 9036 8949 9334
10850 10958 10580 10941
12961 12853 12379 11890
10432 11312 11546 12176
11524 13581 13511 13824
11088 14584 13960 14160
9/30/98 9569 14126 12492 12636
13975 19383 16188 15382
15490 21379 18185 15941
19901 24062 19862 17181
9/30/99 21008 25075 20319 16088
29493 34155 30129 18496
36190 38844 33868 19068
33516 35387 29387 18574
9/30/00 33456 30971 27224 18567
33646 21169 18322 17209
28149 16075 13657 15203
32236 18117 16051 16202
9/30/01 22449 12273 11140 13789
29269 16476 14507 15378
29699 15416 13738 15525
23079 11450 10903 13530
9/30/02 17208 8437 8742 11194
17151 10296 9972 12101
15568 10196 10030 11697
20892 12127 12147 13536
9/30/03 23798 13474 13388 13957
25210 15226 15035 15681
25411 14887 14982 16016
24059 15249 15402 16295
9/30/04 22736 13698 14287 15990
26190 15568 16411 17530
23340 14420 15106 17181
23831 14661 15570 17477
9/30/05 25039 15563 16314 18141
</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.
44 Management Overview
Schedule of Investments
ICON Information Technology Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (99.6%)
78,600 Activision,
Inc.(a) $ 1,607,370
94,400 Amphenol Corp. -
Class A 3,808,096
54,800 Analog Devices,
Inc. 2,035,272
139,600 Anteon
International
Corp.(a) 5,969,296
100,600 Apple Computer,
Inc.(a) 5,393,166
144,600 Arris Group,
Inc.(a) 1,714,956
133,900 Arrow
Electronics,
Inc.(a) 4,199,104
132,100 Avnet, Inc.(a) 3,229,845
116,900 Avocent Corp.(a) 3,698,716
36,000 Baxter
International,
Inc. 1,435,320
80,100 CACI
International,
Inc. - Class A(a) 4,854,060
144,800 Checkpoint
Systems, Inc.(a) 3,434,656
121,400 Cisco Systems,
Inc.(a) 2,176,702
97,900 Cognizant
Technology
Solutions
Corp.(a) 4,561,161
69,000 Cree, Inc.(a) 1,726,380
71,100 Digital River,
Inc.(a) 2,477,835
216,100 EMC Corp.(a) 2,796,334
193,400 EPIQ Systems,
Inc.(a) 4,219,988
116,100 Fair Issac Corp. 5,201,280
80,800 First Data Corp. 3,232,000
149,000 Fiserv, Inc.(a) 6,834,630
157,300 Gevity HR, Inc. 4,284,852
28,200 Google, Inc. -
Class A(a) 8,924,172
87,300 Henry Schein,
Inc.(a) 3,720,726
227,400 Hewlett-Packard
Co. 6,640,080
33,200 Infosys
Technologies,
Ltd. - ADR 2,466,096
122,300 Ingram Micro,
Inc.(a) 2,267,442
178,200 Intel Corp. 4,392,630
61,200 International
Rectifier
Corp.(a) 2,758,896
24,600 Intuit, Inc.(a) 1,102,326
34,300 Itron, Inc.(a) 1,566,138
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
54,000 j2 Global
Communications,
Inc.(a) $ 2,182,680
75,700 Jabil Circuit,
Inc.(a) 2,340,644
113,600 Komag, Inc.(a) 3,630,656
139,000 Logitech
International
S.A. - ADR(a) 5,664,250
114,200 ManTech
International
Corp.(a) 3,016,022
29,300 Marvell
Technology Group,
Ltd. - ADR(a) 1,351,023
99,400 Maximus, Inc. 3,553,550
22,500 Mettler-Toledo
International,
Inc.(a) 1,147,050
156,300 Microchip
Technology, Inc. 4,707,756
127,300 Microsoft Corp. 3,275,429
18,500 Millipore
Corp.(a) 1,163,465
117,400 Nam Tai
Electronics, Inc. 2,985,482
134,700 Neoware Systems,
Inc.(a) 2,254,878
19,900 Netease.com,
Inc. - ADR(a) 1,791,199
228,100 NETGEAR, Inc.(a) 5,488,086
121,900 NICE Systems,
Ltd. - ADR(a) 5,507,442
315,900 Nokia Corp. - ADR 5,341,869
174,400 Oracle Corp.(a) 2,160,816
92,700 Qualcomm, Inc. 4,148,325
34,700 Research in
Motion, Ltd. -
ADR(a) 2,373,480
38,200 Respironics,
Inc.(a) 1,611,276
69,800 Rimage Corp.(a) 1,861,566
44,400 SanDisk Corp.(a) 2,142,300
189,900 Satyam Computer
Services, Ltd. -
ADR 5,738,778
75,300 Scientific-Atlanta,
Inc. 2,824,503
230,500 Sonic
Solutions(a) 4,955,750
84,100 SRA
International,
Inc. - Class A(a) 2,983,868
310,700 Texas
Instruments, Inc. 10,532,730
93,700 Verint Systems,
Inc.(a) 3,836,078
</Table>
Schedule of Investments 45
Schedule of Investments (continued)
ICON Information Technology Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
124,700 ViaSat, Inc.(a) $ 3,198,555
46,800 WebEx
Communications,
Inc.(a) 1,147,068
153,200 Wipro, Ltd. - ADR 1,587,152
------------
TOTAL COMMON STOCKS (COST
$186,759,576) 219,233,251
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
SHORT-TERM INVESTMENTS (0.5%)
$1,058,662 Brown Brothers
Harriman Time
Deposit, 3.24%,
10/01/05# $ 1,058,662
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,058,662) 1,058,662
------------
TOTAL INVESTMENTS
(COST $187,818,238) 100.1% 220,291,913
LIABILITIES LESS OTHER ASSETS
(0.1)% (218,483)
------------
TOTAL NET ASSETS 100.0% $220,073,430
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
46 Schedule of Investments
Management Overview
ICON Leisure and Consumer Staples Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 101.0%
Top 10 Equity Holdings 37.8%
Number of Stocks 39
Short-Term Investments 0.0%
Percentages are based upon net assets
TOP 10 EQUITY HOLDINGS
September 30, 2005
Papa John's International, Inc. 4.3%
Safeway, Inc. 4.2%
Performance Food Group Co. 4.1%
Kroger Co. 4.1%
J & J Snack Foods Corp. 4.0%
Life Time Fitness, Inc. 3.7%
United Natural Foods,
Inc. 3.6%
Nash Finch Co. 3.3%
Casey's General Stores, Inc. 3.3%
Dow Jones & Company, Inc. 3.2%
Percentages are based upon net assets
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Leisure and Consumer Staples Fund advanced 5.01% for the fiscal year
ended September 30, 2005, trailing its sector-specific benchmarks, the S&P
1500 Consumer Discretionary Index and the S&P 1500 Consumer Staples Index,
which returned 6.62% and 12.07%, respectively. Although neither index is an
ideal comparison individually, together they provide a suitable reference for
the Fund's overall performance. Additionally, the Fund fell short of its
broad benchmark, the S&P 1500 Index, which returned 13.45% over the same
period. Total returns for other periods as of September 30, 2005 appear on
page 51.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Several factors contributed to the Fund's lag in relative performance. First,
while the Fund maintained a sizable position in Altria Group Inc. during the
period, this exposure was significantly underweighted relative to the S&P
1500 Consumer Staples Index, which maintained an average weighted exposure of
more than 10% of the index. Although a weighting of this magnitude in our
view would have exposed Fund shareholders to undue risk, Altria accounted for
approximately 43% of the S&P 1500 Consumer Staples Index's total 12-month
return. Thus, the Fund's small position worked against relative performance.
Secondly, the Fund's position in the poorly performing leisure products
industry hampered performance.
Finally, although our process guides us to emphasize specific industries and
securities, it may result in investments concentrated within a given
capitalization range. Such was the case during the fiscal year, in which the
Fund's valuation-related bias toward small- and mid-cap stocks proved
detrimental as large-caps within the Leisure and Consumer Staples sector
outperformed.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as these measures do not, in our view, adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected
Management Overview 47
Management Overview (continued)
ICON Leisure and Consumer Staples Fund
earnings, projected growth, risk, and interest rates (opportunity cost). By
combining our determination of value with relative strength (RS), we aim to
capture leading industry themes that we believe are poised to outperform the
sector benchmarks.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Not unlike the broader market, both the Leisure and Consumer Staples segments
came under pressure during the period as perceived fears overshadowed
quantifiable improvements in economic and company fundamentals. Much of these
concerns centered on consumer spending, which remained resilient despite
speculation to the contrary. Nevertheless, Leisure-related industries
underperformed as investors surmised that rising interest rates and higher
energy prices would spur material declines in discretionary spending and
corporate profits.
Likewise, Consumer Staples industries were believed to be at risk as
competitive pricing pressures made it difficult for companies to pass higher
raw material costs through to consumers. These concerns heightened in the
wake of Hurricanes Katrina and Rita, although storm-related price hikes by
and large proved temporary. All told, the defensive characteristics
associated with the segment enabled it to weather the volatility that often
plagued more cyclically oriented industries.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. Fund performance suffered from exposure to the beleaguered leisure products
and soft drinks industries, while stock selection in the personal products
group detracted from overall gains. In contrast, primary industry
contributors included food distributors, food retail and drug retail.
Noteworthy shifts in industry weightings during the period included increases
in food distributors, to approximately 14% of net assets at period-end, and
food retail, from no representation to approximately 13% of net assets at
period-end. While improving relative strength led to these industry
rotations, the restaurants group was ultimately lowered to 8.6% from 14.7% of
net assets as its relative strength declined.
Although weak industry level performance prompted us to be more selective in
our stock picking, several of the Fund's holdings were significant
detractors. These included LeapFrog Enterprises Inc., which tumbled when the
maker of learning products cited distribution issues and weak sales as
reasons for its earnings shortfall. Restaurant operator O'Charley's Inc. also
stumbled, as higher food and beverage costs coupled with lower sales rocked
the casual dining chain. Elsewhere, 4 Kids Entertainment Inc. slid when the
youth-oriented media group reported declines in licensing and
48 Management Overview
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
advertising revenue. These stocks were sold during the period as their
declining relative strength met our sell criteria.
Conversely, leading individual contributors included drug retailer Longs Drug
Stores Corp., which saw gross margins widen after instituting improvements in
its merchandise mix and inventory management. Competing drug retailer CVS
Corp. also advanced, as acquisitions boosted its presence in the highly
profitable Florida and Texas markets. Meanwhile, regional grocery operator
Sparten Stores Inc. posted solid gains on higher margins in both its retail
and distribution segments.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE LEISURE AND CONSUMER STAPLES SECTOR?
A. Widespread value continues to dot the Leisure and Consumer Staples sector,
although relative strength has been conspicuously weak. For that reason, we
will be keeping tabs on the broadcasting & cable TV, leisure products,
publishing, and restaurant industries for indications of emerging leadership.
At the same time, with food retail and food distributors currently nearing
our estimate of fair value, we will be on the lookout for signs that
valuations have become stretched.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund's valuation-related bias toward small- and mid-cap stocks proved
detrimental.
- - Fund performance suffered from industry exposure to leisure products and soft
drinks, in addition to stock selection in personal products. In addition, an
underweight position in strong-performing Altria, Inc. hampered relative
performance.
- - Primary industry contributors included food distributors, food retail and
drug retail.
- - Several of the Fund's holdings led to its underperformance, including
LeapFrog Enterprises Inc., O'Charley's Inc. and 4 Kids Entertainment Inc.
- - Leading individual contributors to returns included Longs Drug Store Corp.,
CVS Corp. and Sparten Stores Inc.
Management Overview 49
Management Overview (continued)
ICON Leisure and Consumer Staples Fund
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Food Distributors
14.4%
Food Retail
13.3%
Packaged Foods & Meats
9.4%
Publishing
9.2%
Restaurants
8.7%
Broadcast & Cable TV
6.7%
Leisure Facilities
6.5%
Personal Products
5.0%
Catalog Retail
4.3%
Computer & Electronics Retail
4.0%
Drug Retail
3.1%
Household Products
2.9%
Leisure Products
2.8%
Movies & Entertainment
2.6%
Home Entertainment Software
2.4%
Automobile Manufacturers
2.3%
Consumer Electronics
2.1%
Home Improvement Retail
1.3%
</Table>
Percentages are based upon net assets.
50 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 5/9/97
- -----------------------------------------------------------------------------------------
ICON Leisure and Consumer Staples Fund 5.01% 10.59% 10.79%
- -----------------------------------------------------------------------------------------
S&P 1500 Consumer Discretionary Index 6.62% 1.79% 7.31%
- -----------------------------------------------------------------------------------------
S&P 1500 Consumer Staples Index 12.07% 3.95% 5.45%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 13.45% -0.46% 7.15%
- -----------------------------------------------------------------------------------------
</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, 2005
[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
10440 10706 10532 10769
11350 11749 10622 11703
11555 12154 11706 11985
12688 14320 12925 13606
12347 15454 13400 13937
9/30/98 11826 12705 11479 12437
13616 16298 14093 15140
14416 17659 13631 15689
15440 18587 13776 16910
9/30/99 13571 16840 12269 15835
13002 19631 13169 18205
12647 19006 12188 18768
13559 17347 12880 18282
9/30/00 14286 16547 12860 18274
14871 15912 13891 16938
15042 15034 12860 14963
17058 16612 13581 15946
9/30/01 14609 12992 12273 13572
18594 15605 12863 15136
21074 16136 14032 15281
20035 14409 13625 13317
9/30/02 17369 11935 12199 11017
16795 12210 12350 11911
16129 11940 11560 11513
18595 14322 12639 13323
9/30/03 19262 14736 12824 13737
21387 16872 13864 15434
22999 17298 14683 15764
23512 17161 14784 16038
9/30/04 22504 16962 13930 15738
25211 19303 15074 17254
25627 18422 15205 16911
24876 18454 15159 17202
9/30/05 23632 18085 15611 17855
</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 51
Schedule of Investments
ICON Leisure and Consumer Staples Fund
September 30, 2005
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------
COMMON STOCKS (101.0%)
28,500 Activision, Inc.(a) $ 582,825
17,650 Best Buy Co., Inc. 768,305
42,800 Bob Evans Farms,
Inc. 971,988
31,700 Cablevision Systems
Corp. - Class A(a) 972,239
66,500 Casey's General
Stores, Inc. 1,542,800
35,000 Central European
Distribution Corp(a) 1,490,650
36,900 Church & Dwight Co. 1,363,086
21,500 Coldwater Creek,
Inc.(a) 542,230
51,700 CVS Corp. 1,499,817
39,600 Dow Jones & Company,
Inc. 1,512,324
48,300 Emmis Communications
Corp. - Class A(a) 1,066,947
40,400 GameStop Corp. -
Class B(a) 1,146,956
9,900 Harman International
Industries, Inc. 1,012,473
290,800 Image Entertainment,
Inc.(a) 1,218,452
53,200 Interstate Bakeries
Corp.(a) 497,420
33,200 J & J Snack Foods
Corp. 1,918,960
34,600 J. Jill Group,
Inc.(a) 547,372
95,200 Kroger Co.(a) 1,960,168
31,700 Lancaster Colony
Corp. 1,363,100
52,600 Life Time Fitness,
Inc.(a) 1,743,164
9,700 Lowe's Cos., Inc. 624,680
</Table>
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------
32,900 McDonald's Corp. $ 1,101,821
29,200 McGraw-Hill Cos.,
Inc. 1,402,768
153,300 Mediacom
Communications
Corp.(a) 1,131,354
37,000 Nash Finch Co. 1,561,030
40,900 Papa John's
International,
Inc.(a) 2,049,908
41,500 Parlux Fragrances,
Inc.(a) 1,209,310
62,200 Performance Food
Group Co.(a) 1,963,032
126,000 Poore Brothers,
Inc.(a) 686,700
78,400 Safeway, Inc. 2,007,040
38,300 SCP Pool Corp. 1,337,819
37,800 Speedway
Motorsports, Inc. 1,373,274
35,000 The Sportsman's
Guide, Inc.(a) 955,500
38,500 Thomson Corp. -- ADR 1,444,135
31,800 Thor Industries,
Inc. 1,081,200
25,650 THQ, Inc.(a) 546,858
48,300 United Natural
Foods, Inc.(a) 1,707,888
25,000 USANA Health
Sciences, Inc.(a) 1,192,500
20,000 Weis Markets, Inc. 800,200
-----------
TOTAL INVESTMENTS 101.0%
(COST $43,805,774) 47,898,293
LIABILITIES LESS OTHER ASSETS
(1.0)% (488,040)
-----------
TOTAL NET ASSETS 100.0% $47,410,253
===========
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
ADR American Depositary Receipt
52 Schedule of Investments
Management Overview
ICON Materials Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 100.1%
Top 10 Equity Holdings 38.0%
Number of Stocks 40
Short-Term Investments 0.7%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
Eagle Materials, Inc. 4.2%
Companhia Vale do Rio Doce 4.1%
Freeport-McMoran Copper & Gold, Inc. - Class B 3.9%
Rio Tinto Plc 3.8%
Cemex S.A. De C.V. - ADR 3.8%
BHP Billiton Ltd. - ADR 3.7%
Martin Marietta Materials, Inc. 3.7%
The Scotts Miracle-Gro Co. 3.6%
Agrium, Inc. - ADR 3.6%
Reliance Steel & Aluminum Co. 3.6%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Materials Fund gained 25.04% for the fiscal year ended September,
2005, outpacing the 4.58% return for its sector-specific benchmark, the S&P
1500 Materials Index, as well as the 13.45% return of its broad benchmark,
the S&P 1500 Index. Total returns for other periods as of September 30, 2005
appear on page 57.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Although certain Materials-related industries struggled during the period,
the Fund continued to capture solid upside in the heavily weighted
construction materials and steel industries, both of which were fueled by
ongoing gains in global economic growth. However, as rising raw material
costs pressured corporate profit margins, the Fund's exposure to such
industries as specialty chemicals, commodity chemicals and aluminum was
substantially reduced. While these moves helped to offset some of the losses,
the negative effects were not completely neutralized.
Fund performance was aided by minimal exposure during the period to the three
largest constituents in the S&P 1500 Materials Index, E.I. du Pont de Nemours
and Co., Dow Chemical Co. and Alcoa Inc., which all suffered considerable
losses. The Fund did not own any of these stocks at period-end.
In a difficult sector, ICON's discipline prevailed, enabling the Fund to
outpace its benchmarks. Moreover, our discipline manifested itself in a
valuation-related tilt toward mid-cap stocks, a residual development that
reaped positive rewards. Although our process guides us to emphasize specific
industries and securities, it may result in investments concentrated within a
given capitalization range. Such was the case for the Materials sector, where
stocks with a market capitalization of between $1 billion and $4 billion
produced the strongest overall returns.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E) as we believe these measures do not adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of value with relative
strength (RS), we aim to
Management Overview 53
Management Overview (continued)
ICON Materials Fund
capture leading industry themes that we believe are poised to outperform the
sector benchmark.
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. Equity markets faced considerable volatility throughout the fiscal year as
conflicting fears of higher inflation and economic slowdown distracted
investors. Surging oil prices and ongoing monetary tightening exacerbated
these concerns, sending stocks into a volatile sideways trading range.
However, this lack of focus obscured the fact that corporate earnings and
economic fundamentals were generally positive. When investors were confident
enough to look beyond the uncertainties, stocks typically charted an upward
move.
Within the Materials sector, the environment was relatively conducive in
certain industries given the group's positive correlation to expansionary
cycles. Despite surging input costs, pricing power remained subdued, although
inflation concerns arose in the aftermath of Hurricanes Katrina and Rita.
Nevertheless, our analysis indicates that construction materials and steel
continue to trade at sizable discounts to our estimates of their intrinsic
value. Steel stocks declined earlier this year on moderating demand, but have
since trended upward with renewed vigor. Gold stocks also revealed strength
late in the period, trading at multi-year highs in conjunction with rising
gold futures.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. With much of the sector coming under pressure during the second half of the
fiscal year, the Fund's valuation-related tilt toward our evaluation of the
top-performing construction materials and steel industries proved highly
advantageous. Late-period strength in gold stocks also contributed to Fund
performance, reflecting double-digit, year-over-year gains in the spot price
for gold. At the same time, given the global nature of the Materials sector,
the Fund increased its holdings in American Depository Receipts. Trading at
relatively deeper discounts than U.S. stocks, these dollar-denominated shares
of foreign companies generally closed a much wider valuation gap.
Among the Fund's top contributors to performance, construction material
producers Florida Rock Industries Inc. and Eagle Materials Inc. benefited
from supply and demand factors and their anticipated impact on pricing and
revenues. Meanwhile, precision engineered steel producer Quanex Corp.
profited from robust earnings across the company's core high-growth markets.
In contrast, the Fund's performance was hampered by its investments in the
diversified chemicals and specialty chemicals industries, as concerns over
rising raw material costs and tighter profit margins pressured these
54 Management Overview
[DEREK ROLLINGSON PHOTO]
Derek Rollingson
Portfolio Manager
petroleum-dependent segments. Our analysis of declining relative strength and
lack of upside participation ultimately led to reduced exposure.
Several individual companies had a particularly negative effect on fiscal
year performance, including recycled packaging provider Caraustar Industries
Inc., which saw its profits erode due to higher freight and fuel expenses.
Likewise, precision bearing manufacturer NN Inc. lowered earnings forecasts
as raw material and resin prices skyrocketed, while resin supplier Myers
Industries, Inc. proved unsuccessful in implementing price increases and
internal cost controls. All three stocks were sold due to our estimate of
declining relative strength.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE MATERIALS SECTOR?
A. In light of the pullback across several constituent industries, our analysis
indicates the Materials sector continues to feature widespread value,
particularly within the top-performing construction materials and steel
groups. While these industries are expected to maintain their leadership
position, certain groups, most notably gold, now appear expensive based on
our valuation model. Consequently, we will monitor our gold positions closely
for signs of overpricing or declining relative strength, while keeping a
watchful eye on the underpriced chemical industries for signs of
revitalization.
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund continued to capture solid upside in industries that were fueled by
ongoing gains in global economic growth.
- - The Fund's valuation-related tilt toward mid-cap stocks, a consequence of our
investment process, reaped positive rewards.
- - Certain industry groups, including construction materials and steel, aided
performance while diversified chemicals and specialty chemicals detracted
from performance.
- - Florida Rock Industries Inc., Eagle Materials Inc. and Quanex Corporation
were among the Fund's top individual contributors to performance.
- - Stocks that detracted from performance included Caraustar Industries Inc.,
NN, Inc. and Myers Industries, Inc.
Management Overview 55
Management Overview (continued)
ICON Materials Fund
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Steel
24.2%
Construction Materials
23.2%
Diversified Metals & Mining
16.8%
Fertilizers & Agricultural Chemicals
8.1%
Gold
6.2%
Construction & Farm Machinery & Heavy
Trucks 4.8%
Industrial Gases
4.5%
Railroads
3.8%
Specialty Chemicals
2.8%
Precious Metals & Minerals
2.7%
Aluminum
1.5%
Paper Products
1.5%
</Table>
Percentages are based upon net assets.
56 Management Overview
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 5/5/97
- -----------------------------------------------------------------------------------------
ICON Materials Fund 25.04% 12.27% 2.25%
- -----------------------------------------------------------------------------------------
S&P 1500 Materials Index 4.58% 12.78% 5.43%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 13.45% -0.46% 7.07%
- -----------------------------------------------------------------------------------------
</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, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON MATERIALS FUND S&P 1500 MATERIALS INDEX S&P 1500 INDEX
------------------- ------------------------ --------------
5/5/97 10000 10000 10000
9730 10749 10707
10900 11391 11635
7606 10466 11916
8632 11582 13528
7586 11142 13857
9/30/98 6819 9413 12366
6800 9795 15053
6571 9728 15599
8060 11660 16813
9/30/99 7612 10685 15743
8372 11807 18100
7352 10523 18660
7092 9136 18176
9/30/00 6758 8547 18169
6400 10572 16841
6063 10046 14877
6643 11050 15855
9/30/01 6011 9755 13494
7062 11031 15048
8036 12210 15193
7814 11922 13241
9/30/02 6013 9201 10954
6184 10214 11842
5675 9429 11447
6322 10707 13246
9/30/03 6576 11335 13658
8449 13972 15345
8555 13824 15673
9098 14315 15946
9/30/04 9642 14914 15648
10914 16307 17155
10946 16578 16813
10593 15154 17103
9/30/05 12055 15598 17752
</Table>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares
a $10,000 investment made in the Fund on its inception date of 5/5/97 to a
$10,000 investment made in unmanaged securities indexes on that date. The Fund's
performance in this chart and the performance table assumes the reinvestment of
dividends and capital gain distributions but does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or on the redemption of
Fund shares.
Management Overview 57
Schedule of Investments
ICON Materials Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
COMMON STOCKS (100.1%)
161,200 Agrium, Inc. - ADR $ 3,541,564
79,900 Airgas, Inc. 2,367,437
55,000 Aleris
International,
Inc.(a) 1,509,750
84,600 Anglo American
Plc - ADR 2,554,920
37,200 Aracruz Celulose
S.A. - ADR 1,509,576
119,800 Barrick Gold
Corp. - ADR 3,480,190
109,200 BHP Billiton
Ltd. - ADR 3,732,456
21,100 Burlington
Northern Santa Fe
Corp. 1,261,780
23,800 Caterpillar, Inc. 1,398,250
72,676 Cemex S.A. De
C.V. - ADR 3,800,955
94,100 Companhia Vale do
Rio Doce - ADR 4,127,226
85,500 Compania de Minas
Buenaventura
S.A.u. - ADR 2,654,775
68,200 CRH Plc - ADR 1,853,199
27,100 CSX Corp. 1,259,608
21,200 Cummins, Inc. 1,865,388
34,200 Eagle Materials,
Inc. 4,150,853
102,500 Falconbridge, Ltd. 2,738,800
42,862 Florida Rock
Industries, Inc. 2,747,026
79,400 Freeport-McMoran
Copper & Gold,
Inc. - Class B 3,858,046
39,300 Genesee & Wyoming
, Inc.(a) 1,245,810
40,000 Gibraltar
Industries, Inc. 914,800
89,800 Headwaters,
Inc.(a) 3,358,520
50,900 Lafarge North
America, Inc. 3,441,349
63,600 Lubrizol Corp. 2,755,788
47,300 Martin Marietta
Materials, Inc. 3,711,158
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- --------------------------------------------
29,400 Nucor Corp. $ 1,734,306
111,400 Oregon Steel
Mills, Inc.(a) 3,108,060
115,600 Placer Dome,
Inc. - ADR 1,982,540
45,000 Praxair, Inc. 2,156,850
52,150 Quanex Corp. 3,453,373
66,900 Reliance Steel &
Aluminum Co. 3,541,017
163,600 Richmont Mines,
Inc.(a) 734,564
23,200 Rio Tinto
Plc - ADR 3,811,760
81,900 Ryerson Tull, Inc. 1,744,470
7,600 Sociedad Quimica y
Minera de Chile
SA - ADR 959,424
62,700 Steel Dynamics,
Inc. 2,129,292
92,700 Steel
Technologies, Inc. 2,403,711
29,400 The Manitowoc Co.,
Inc. 1,477,350
41,100 The Scotts
Miracle-Gro Co. 3,613,923
47,700 Worthington
Industries, Inc. 1,003,131
------------
TOTAL COMMON STOCKS (COST
$82,642,546) 99,692,995
SHORT-TERM INVESTMENTS (0.7%)
$718,844 Brown Brothers
Harriman Time
Deposit, 3.24%,
10/01/05# 718,844
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $718,844) 718,844
------------
TOTAL INVESTMENTS 100.8% (COST
$83,361,390) 100,411,839
LIABILITIES LESS OTHER ASSETS
(0.8)% (842,485)
------------
TOTAL NET ASSETS 100.0% $ 99,569,354
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
58 Schedule of Investments
Management Overview
ICON Telecommunication & Utilities Fund
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
September 30, 2005
Equities 99.7%
Top 10 Equity Holdings 33.4%
Number of Stocks 56
Short-Term Investments 0.9%
Percentages are based upon net assets.
TOP 10 EQUITY HOLDINGS
September 30, 2005
California Water Service Group 4.1%
America Movil S.A. De C.V. - ADR 3.6%
American States Water Co. 3.6%
CenterPoint Energy, Inc. 3.3%
BellSouth Corp. 3.3%
El Paso Electric Co. 3.3%
Equitable Resources, Inc. 3.1%
Pepco Holdings, Inc. 3.1%
Southern Co. 3.0%
TECO Energy, Inc. 3.0%
Percentages are based upon net assets.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS?
A. The ICON Telecommunication & Utilities Fund appreciated 26.70% for the fiscal
year ended September 30, 2005, outperforming the 2.27% return for S&P 1500
Telecommunication Services Index while underperforming the 36.70% return for
the S&P 1500 Utilities Index. Although neither sector-specific benchmark 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 13.45% over the same
period. Total returns for other periods as of September 30, 2005 appear on
page 64.
Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE?
A. Consistent with the returns of the sector-specific benchmarks during the
period, the Fund's valuation-related tilt toward Utilities issues accounted
for its positive overall performance. Over the course of the fiscal year, the
average exposure to Utilities-oriented industries was more than two-thirds of
the Fund, while the average exposure to Telecommunication issues was less
than one-third.
Although commonly considered defensive in nature, Utilities industries
assumed roles as market leaders based on a powerful combination of value and
relative strength. ICON's investment discipline guided the Fund to maintain
an overweight position in medium-capitalization stocks relative to the narrow
benchmarks. While the emphasis on mid-cap securities was a residual of the
Fund's investment process rather than a primary consideration, the larger
relative weighting proved advantageous to fiscal-year returns.
Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH?
A. The Fund employs an all-cap investment strategy, identifying securities we
believe are underpriced regardless of their location on the conventional
style grid. Our system is not limited by restrictions on market
capitalization or investment style, and searches for potential industry
leadership wherever and whenever it may emerge.
Furthermore, the Fund does not utilize static valuation metrics such as
price-to-earnings (P/E), as we believe these measures do not adequately
represent intrinsic value, which can vary over time. Instead, we calculate
proprietary value-to-price (V/P) ratios that consider the effects of
historical and projected earnings, projected growth, risk, and interest rates
(opportunity cost). By combining our determination of value with relative
strength (RS), we aim to capture leading industry themes that we believe are
poised to outperform the sector benchmarks.
Management Overview 59
Management Overview (continued)
ICON Telecommunication & Utilities Fund
Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE FISCAL YEAR?
A. With rising oil prices, inflation fears, monetary tightening, and economic
concerns pressuring the broader market, investors increasingly sought out
safe havens in defensive-oriented sectors such as Utilities. Further
bolstering the sector's appeal was its history of dividend payouts, which
proved highly attractive given last year's lowering of maximum tax rates on
dividend income. All told, the overall economic environment provided a
positive setting, as long-term bond yields, which compete with dividend
yields paid by utility stocks, remained relatively low.
Deregulation of utility markets and strong global demand for power were also
key growth factors. Each contributed to improved utility earnings,
particularly among those power companies whose excess capacity could be
resold into regions experiencing higher demand and cost dynamics.
At the same time, conditions within the Telecommunication space were not
nearly as favorable. Large-cap integrated telecommunication issues continued
to come under heavy selling pressure, as intense pricing competition and
rising costs chilled investor sentiment toward this primary constituent
industry. Nevertheless, major telecom players in developed world markets
benefited from increased sales and consolidation activity, while those in
emerging markets gained from rapid infrastructure and wireless growth.
Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE?
A. A highly weighted tilt toward the Utilities sector worked in the Fund's
favor, as evidenced by fiscal-year returns of 36.70% for the S&P 1500
Utilities Index and 2.27% for the S&P 1500 Telecommunications Services Index.
Leading industry contributors by performance attribution included the entire
field of Utilities industries, namely independent power producers & energy
traders, gas utilities, water utilities, electric utilities, and
multi-utilities. Our analysis of valuation and relative strength played a key
role in their respective weightings, as did liquidity considerations.
Among the Fund's primary contributors to performance, wireless communications
provider America Movil, S.A. de C.V. has experienced phenomenal growth,
expanding into 13 countries and acquiring more than 66 million subscribers in
just over five years of operations. NII Holdings Inc., a provider of digital
wireless services aimed at businesses, also gained, having reported record
subscribers, revenues and income. Independent power producer Constellation
Energy Group Inc. reflected solid market share gains in the competitive power
supply arena, while diversified electric utility Allegheny Energy Inc.
advanced on significantly improved outlooks for current year and forward
earnings.
60 Management Overview
[ROBERT STRAUS, CMT PHOTO]
Robert Straus, CMT
Portfolio Manager
Conversely, communications equipment was the largest industry detractor to
fiscal-year performance, although it comprised a relatively small portion of
the Fund thereby limiting its impact. While the industry continues to trade
at a discount to our estimate of fair value, investors avoided the group on
concerns that a lack of service provider demand would curb its growth
prospects. Likewise, the Fund maintained relatively narrow exposure to the
integrated telecommunication services industry, which helped offset some of
the losses associated with the group.
Individual companies that detracted from Fund returns included networking
equipment supplier UTStarcom Inc., which fell sharply after announcing an
unexpected fourth-quarter loss on declining revenue and was removed from the
Fund. Meanwhile, wireless services provider Vimpel Communications tumbled on
news that the company faced substantial back tax claims. Elsewhere, shares of
Boston Communication Group Inc. plummeted when the provider of subscriber
management solutions received an unfavorable ruling in a patent infringement
suit, and the company was ultimately sold due to our estimates of declining
relative strength.
Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE TELECOMMUNICATION & UTILITIES SECTOR?
A. Although utility stocks recorded above-average returns throughout the fiscal
year, they also experienced above-average losses during a late-period broad
market sell-off. Moreover, rising long-term bond yields have begun to regain
some luster versus utility dividend yields. Nevertheless, we continue to
detect significant value across the Utilities sector, particularly in
conjunction with the recent sell-off. The same holds true for the
Telecommunication sector, especially the integrated telecommunication
services industry, which is demonstrating nascent leadership based on our
estimates of value and relative strength.
Management Overview 61
Management Overview (continued)
ICON Telecommunication & Utilities Fund
PERFORMANCE HIGHLIGHTS
September 30, 2005
- - The Fund's valuation-related tilt toward the Utilities sector, which assumed
the role of market leader, benefited overall performance.
- - Defensive-oriented investor preferences, dividend payouts, deregulation, and
strong global demand provided a positive setting for Utilities industries.
- - Leading industry contributors to Fund performance included the entire
Utilities group, while communications equipment detracted from relative
returns.
- - America Movil, S.A. de C.V., NII Holdings Inc., Constellation Energy Group
Inc., and Allegheny Energy Inc. were among the Fund's leading individual
contributors to Fund returns.
- - Companies that detracted from Fund performance during the period included
UTStarcom Inc., Vimpel Communications and Boston Communication Group Inc.
62 Management Overview
INDUSTRY COMPOSITION
September 30, 2005
<Table>
Multi-Utilities 26.1%
Electric Utilities 25.8%
Integrated Telecommunication Services 13.2%
Wireless Telecommunication Services 9.9%
Gas Utilities 8.7%
Water Utilities 8.3%
Communications Equipment 4.4%
Independent Power Producers & Energy
Traders 3.3%
</Table>
Percentages are based upon net assets.
Management Overview 63
Management Overview (continued)
ICON Telecommunication & Utilities Fund
AVERAGE ANNUAL TOTAL RETURN
as of September 30, 2005
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 5 YEARS 7/9/97
- -----------------------------------------------------------------------------------------
ICON Telecommunication & Utilities Fund 26.70% 2.58% 9.70%
- -----------------------------------------------------------------------------------------
S&P 1500 Telecommunications Services Index 2.27% -10.79% -0.07%
- -----------------------------------------------------------------------------------------
S&P 1500 Utilities Index 36.70% 1.41% 8.85%
- -----------------------------------------------------------------------------------------
S&P 1500 Index 13.45% -0.46% 6.01%
- -----------------------------------------------------------------------------------------
</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, 2005
[LINE GRAPH]
<Table>
<Caption>
ICON S&P 1500
TELECOMMUNICATION & TELECOMMUNICATIONS S&P 1500 UTILITIES
UTILITIES FUND SERVICES INDEX INDEX S&P 1500 INDEX
------------------- ------------------ ------------------ --------------
7/9/97 10000 10000 10000 10000
10630 10622 10417 10597
12253 12707 12118 10852
13800 14982 12775 12321
13528 14391 12766 12620
9/30/98 14231 15105 13226 11262
15927 19374 13625 13709
15110 20000 12192 14207
16924 22672 13518 15312
9/30/99 16401 21048 12967 14339
17026 23189 12330 16485
15958 22888 13585 16994
16306 19688 14281 16554
9/30/00 18858 17603 18732 16548
19039 14272 19530 15338
15995 14014 18172 13550
16564 13868 17309 14440
9/30/01 15327 13802 14540 12290
15596 12458 14271 13705
15322 10537 14813 13837
14173 8052 12587 12059
9/30/02 11948 5960 10056 9976
12737 8181 10542 10786
11625 7010 10216 10425
14077 8534 12283 12064
9/30/03 14380 7750 12292 12439
15985 8776 13319 13976
17289 9219 13956 14275
16215 9133 13832 14523
9/30/04 16906 9723 14699 14251
18497 10515 16403 15624
18497 9715 17175 15313
20075 10055 18792 15576
9/30/05 21420 9944 20094 16168
</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.
64 Management Overview
Schedule of Investments
ICON Telecommunication & Utilities Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
COMMON STOCKS (99.7%)
31,700 Allegheny Energy,
Inc.(a) $ 973,824
164,900 America Movil
S.A. De C.V. -
ADR 4,340,168
72,100 American Electric
Power Co., Inc. 2,862,370
129,700 American States
Water Co. 4,339,762
30,900 Avista Corp. 599,460
152,300 BellSouth Corp. 4,005,490
121,400 California Water
Service Group 5,001,680
270,600 CenterPoint
Energy, Inc. 4,023,822
42,700 China Telecom
Corp., Ltd. - ADR 1,609,363
74,300 China Unicom,
Ltd. - ADR 615,204
92,400 Cleco Corp. 2,178,792
72,200 Consolidated
Edison Company of
New York, Inc. 3,505,310
42,300 Constellation
Energy Group,
Inc. 2,605,680
19,100 Dominion
Resources, Inc.
of Virginia 1,645,274
44,600 DTE Energy Co. 2,045,356
188,300 El Paso Electric
Co.(a) 3,926,055
22,700 Endesa, S.A. -
ADR 607,679
39,500 Energen Corp. 1,708,770
53,600 Enersis
S.A. - ADR 613,184
94,800 Equitable
Resources, Inc. 3,702,888
67,400 FirstEnergy Corp. 3,512,888
25,700 FPL Group, Inc. 1,223,320
61,600 Golden Telecom,
Inc. - ADR 1,944,712
40,500 IDACORP, Inc. 1,220,265
34,900 Korea Electric
Power Corp. - ADR 618,079
54,700 KT Corp. - ADR 1,230,750
29,700 Mobile
Telesystems - ADR 1,208,196
66,300 National Fuel Gas
Co. 2,267,460
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
72,700 NETGEAR, Inc.(a) $ 1,749,162
34,100 NICE Systems,
Ltd. - ADR(a) 1,540,638
95,100 NiSource, Inc. 2,306,175
73,200 Nokia Corp. -
ADR 1,237,812
63,400 Oneok, Inc. 2,156,868
28,900 Otter Tail Corp. 894,166
158,600 Pepco Holdings,
Inc. 3,690,622
87,200 PG&E Corp. 3,422,600
63,900 Philippine Long
Distance
Telephone Co.-
ADR 1,945,755
36,000 Pinnacle West
Capital Corp. 1,586,880
83,200 PNM Resources,
Inc. 2,385,344
108,700 PPL Corp. 3,514,271
33,800 Public Service
Enterprise Group,
Inc. 2,175,368
25,300 Puget Energy,
Inc. 594,044
104,200 Semco Energy,
Inc.(a) 686,678
58,500 Sempra Energy 2,753,010
25,000 SK Telecom Co.,
Ltd. - ADR 546,000
102,100 Southern Co. 3,651,096
49,800 Southwest Water
Co. 722,100
61,900 SpectraLink Corp. 789,225
133,000 Sprint Nextel
Corp. 3,162,740
202,100 TECO Energy, Inc. 3,641,842
89,000 Telecomunicacoes
de Sao Paulo
S.A. - ADR 1,769,320
159,500 Telefonos de
Mexico S.A. De
C.V. - ADR 3,392,565
38,000 Turkcell Iletisim
Hizmetleri - ADR 518,700
12,100 TXU Corp. 1,365,848
83,000 Vectren Corp. 2,353,050
35,500 Vimpel
Communications -
ADR(a) 1,577,620
------------
TOTAL COMMON STOCKS
(COST $98,775,949) 120,265,300
</Table>
Schedule of Investments 65
Schedule of Investments (continued)
ICON Telecommunication & Utilities Fund
September 30, 2005
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
- ---------------------------------------------
x
SHORT-TERM INVESTMENTS (0.9%)
$1,080,301 Brown Brothers
Harriman Time
Deposit,
3.24%, 10/01/05 # $ 1,080,301
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,080,301) 1,080,301
------------
TOTAL INVESTMENTS 100.6%
(COST $99,856,250) 121,345,601
LIABILITIES LESS OTHER ASSETS
(0.6)% (695,056)
------------
TOTAL NET ASSETS 100.0% $120,650,545
============
</Table>
The accompanying notes are an integral part of the financial statements.
(a) Non-income producing security.
# BBH Time Deposits are considered short-term obligations and are payable on
demand. Interest rates change periodically on specified dates. The rates
listed are as of September 30, 2005.
ADR American Depositary Receipt
66 Schedule of Investments
Six Month Hypothetical Expense Example
September 30, 2005 (unaudited)
EXAMPLE
As a shareholder of a Fund you may pay two types of fees: transaction fees and
fund-related fees. Certain funds charge transactions fees, including sales
charges (loads) on purchase payments, reinvested dividends, or other
distributions; redemption fees; and exchange fees. 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 various ICON Funds and to compare these costs with the
ongoing costs of investing in other mutual funds. This Example is based on an
investment of $1,000 invested at the beginning of the period and held for the
six-month period (4/1/05 - 9/30/05).
ACTUAL EXPENSES
The first line in the table for each Fund provides information about actual
account values and actual expenses. The Example includes, but is not limited to,
management fees, fund accounting, custody and transfer agent fees. However, the
Example does not include client specific fees, such as the $10.00 fee charged to
IRA accounts, or the $15.00 fee charged for wire redemptions. You may use this
information, together with the amount you invested, to estimate the expenses
that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line for each Fund under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table for each Fund provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads), redemption fees, or exchange
fees that may be charged by other funds. Therefore, this information is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds.
Expense Example 67
Six Month Hypothetical Expense Example (continued)
September 30, 2005 (unaudited)
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/05 9/30/05 4/1/05-9/30/05* 4/1/05-9/30/05
- -------------------------------------------------------------------------------------------------
ICON CONSUMER
DISCRETIONARY FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $ 980.50 $5.91 1.19%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.03 6.02
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON ENERGY FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,297.00 $6.68 1.16%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.18 5.87
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON FINANCIAL FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,048.40 $6.32 1.23%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.83 6.22
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON HEALTHCARE FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,091.20 $6.13 1.17%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.13 5.92
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON INDUSTRIALS FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,070.80 $6.13 1.18%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,019.08 5.97
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON INFORMATION
TECHNOLOGY FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,072.80 $6.44 1.24%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.78 6.28
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON LEISURE AND CONSUMER
STAPLES FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 922.10 $5.97 1.24%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.78 6.28
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
</Table>
68 Expense Example
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO
4/1/05 9/30/05 4/1/05-9/30/05* 4/1/05-9/30/05
- -------------------------------------------------------------------------------------------------
ICON MATERIALS FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses $1,000.00 $1,101.40 $6.64 1.26%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.68 6.38
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
ICON TELECOMMUNICATION &
UTILITIES FUND
- -------------------------------------------------------------------------------------------------
Actual Expenses 1,000.00 1,158.00 $6.60 1.22%
- -------------------------------------------------------------------------------------------------
Hypothetical Example 1,000.00 1,018.88 6.17
(5% return before
expenses)
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</Table>
* Expenses are equal to the Fund's six month expense ratio annualized,
multiplied by the average account value over the period, multiplied by 183/365
to reflect the one-half year period.
Expense Example 69
Statements of Assets and Liabilities
September 30, 2005
<Table>
<Caption>
ICON
CONSUMER ICON ICON ICON
DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND
------------------ -------------- -------------- ---------------
ASSETS
Investments, at cost $157,856,022 $ 675,827,812 $188,383,403 $555,895,839
------------ -------------- ------------ ------------
Investments, at value 170,046,854 995,387,279 211,202,874 685,721,897
Cash - - - 865
Receivables:
Fund shares sold 104,854 19,482,215 106,524 3,879,342
Investments sold 7,442,331 - 10,555,722 -
Interest - 2,430 54 2,114
Dividends 123,927 1,008,486 363,923 53,071
Other assets 26,953 72,396 27,918 58,551
------------ -------------- ------------ ------------
Total Assets 177,744,919 1,015,952,806 222,257,015 689,715,840
------------ -------------- ------------ ------------
LIABILITIES
Payables:
Due to custodian bank 2,521,888 - 528 -
Fund shares redeemed 121,967 861,431 136,208 1,426,189
Investments bought 5,472,993 5,174,634 10,997,586 4,826,787
Advisory fees 142,144 764,687 172,690 547,728
Fund accounting fees 3,483 18,736 4,231 13,420
Transfer agent fees 7,622 26,731 9,717 23,947
Administration fees 6,740 36,258 8,189 25,971
Trustee fees 4,363 14,574 4,865 11,062
Accrued expenses 41,957 97,914 39,725 81,397
------------ -------------- ------------ ------------
Total Liabilities 8,323,157 6,994,965 11,373,739 6,956,501
------------ -------------- ------------ ------------
NET ASSETS $169,421,762 $1,008,957,841 $210,883,276 $682,759,339
============ ============== ============ ============
NET ASSETS CONSIST OF
Paid-in Capital $142,175,007 $ 671,848,557 $173,175,967 $542,364,349
Accumulated undistributed net investment
income/(loss) - 2,256,526 1,744,312 -
Accumulated undistributed net realized
gain/(loss) from investments 15,055,923 15,293,291 13,143,526 10,568,932
Unrealized appreciation/(depreciation) on
investments 12,190,832 319,559,467 22,819,471 129,826,058
------------ -------------- ------------ ------------
NET ASSETS $169,421,762 $1,008,957,841 $210,883,276 $682,759,339
============ ============== ============ ============
Shares outstanding (unlimited shares
authorized, no par value) 12,445,868 29,887,461 15,707,906 38,062,144
Net Asset Value (offering price and
redemption price per share) $ 13.61 $ 33.76 $ 13.43 $ 17.94
</Table>
The accompanying notes are an integral part of the financial statements.
70 Financial Statements
<Table>
<Caption>
ICON
ICON LEISURE AND ICON
ICON INFORMATION CONSUMER ICON TELECOMMUNICATION
INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND
---------------- --------------- ------------ -------------- -----------------
$173,005,778 $187,818,238 $43,805,774 $ 83,361,390 $ 99,856,250
------------ ------------ ----------- ------------ ------------
216,705,960 220,291,913 47,898,293 100,411,839 121,345,601
2,769 - - - -
115,212 271,594 19,339 108,905 131,130
- 10,001,177 1,360,785 369,148 -
266 95 - 65 97
114,741 77,001 12,636 49,066 225,175
36,537 40,397 29,086 28,126 24,746
------------ ------------ ----------- ------------ ------------
216,975,485 230,682,177 49,320,139 100,967,149 121,726,749
------------ ------------ ----------- ------------ ------------
- 1,082 104,135 - -
98,622 221,085 186,893 53,583 71,662
- 10,132,355 1,538,505 1,225,564 847,240
174,605 180,347 40,164 75,603 96,392
4,278 4,419 984 1,852 2,362
7,116 12,273 9,481 8,557 7,509
8,279 8,552 1,905 3,584 4,571
4,890 4,992 2,667 3,250 3,593
42,087 43,642 25,152 25,802 42,875
------------ ------------ ----------- ------------ ------------
339,877 10,608,747 1,909,886 1,397,795 1,076,204
------------ ------------ ----------- ------------ ------------
$216,635,608 $220,073,430 $47,410,253 $ 99,569,354 $120,650,545
============ ============ =========== ============ ============
$168,637,190 $242,185,530 $33,924,279 $ 73,995,331 $ 91,426,775
16,028 - - 236,509 1,719,241
4,282,208 (54,585,775) 9,393,455 8,287,065 6,015,178
43,700,182 32,473,675 4,092,519 17,050,449 21,489,351
------------ ------------ ----------- ------------ ------------
$216,635,608 $220,073,430 $47,410,253 $ 99,569,354 $120,650,545
============ ============ =========== ============ ============
17,064,530 25,306,600 3,963,291 8,811,606 14,574,830
$ 12.70 $ 8.70 $ 11.96 $ 11.30 $ 8.28
</Table>
Financial Statements 71
Statements of Operations
For the year ended September 30, 2005
<Table>
<Caption>
ICON
CONSUMER ICON ICON ICON
DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND
------------------ ------------ -------------- ---------------
INVESTMENT INCOME
Interest $ 8,151 $ 1,019,847 $ 48,337 $ 345,909
Dividends 1,135,197 8,552,720 4,234,107 1,520,589
Foreign taxes withheld - (37,833) - (7,019)
----------- ------------ ----------- ------------
Total Investment Income 1,143,348 9,534,734 4,282,444 1,859,479
----------- ------------ ----------- ------------
EXPENSES
Advisory fees 1,676,070 6,010,428 1,886,008 4,631,466
Fund accounting fees 88,416 292,571 104,328 212,610
Transfer agent fees 103,922 308,048 130,166 250,077
Administration fees 80,902 290,502 90,964 223,505
Registration fees 20,593 35,165 23,744 28,644
Insurance expense 8,642 13,411 10,749 16,515
Trustee fees and expenses 17,400 45,216 21,570 40,095
Interest expense 14,721 - 48,707 18,079
Other expenses 79,994 282,867 71,502 223,566
----------- ------------ ----------- ------------
Total expenses 2,090,660 7,278,208 2,387,738 5,644,557
----------- ------------ ----------- ------------
NET INVESTMENT INCOME (LOSS) (947,312) 2,256,526 1,894,706 (3,785,078)
----------- ------------ ----------- ------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized gain/(loss) from investment
transactions 21,149,069 22,940,745 15,015,457 10,569,614
Change in unrealized
appreciation/(depreciation) on
investments (9,621,489) 259,958,925 (4,980,248) 96,973,294
----------- ------------ ----------- ------------
Net realized and unrealized gain/(loss) on
investments 11,527,580 282,899,670 10,035,209 107,542,908
----------- ------------ ----------- ------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $10,580,268 $285,156,196 $11,929,915 $103,757,830
=========== ============ =========== ============
</Table>
The accompanying notes are an integral part of the financial statements.
72 Financial Statements
<Table>
<Caption>
ICON
ICON LEISURE AND ICON
ICON INFORMATION CONSUMER ICON TELECOMMUNICATION
INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND
---------------- --------------- ------------ -------------- -----------------
$ 36,949 $ 34,007 $ 4,406 $ 20,975 $ 12,503
1,754,074 968,628 844,465 1,665,484 3,166,445
(20,546) - (2,636) (17,645) (1,907)
----------- ----------- ---------- ----------- -----------
1,770,477 1,002,635 846,235 1,668,814 3,177,041
----------- ----------- ---------- ----------- -----------
1,961,273 2,640,693 1,004,088 1,020,441 1,011,015
97,842 153,118 45,208 59,889 47,415
113,109 202,692 81,010 85,040 68,507
94,739 127,452 48,566 49,249 48,808
23,897 28,002 19,724 22,640 18,582
11,081 11,122 7,113 6,989 3,579
20,477 29,312 10,158 10,347 10,008
27,210 100,248 70,665 37,033 22,295
85,463 103,334 11,291 43,767 41,417
----------- ----------- ---------- ----------- -----------
2,435,091 3,395,973 1,297,823 1,335,395 1,271,626
----------- ----------- ---------- ----------- -----------
(664,614) (2,393,338) (451,588) 333,419 1,905,415
----------- ----------- ---------- ----------- -----------
28,540,115 9,986,052 12,701,511 28,105,684 10,867,997
6,079,683 12,306,795 (9,663,969) (7,049,729) 12,025,488
----------- ----------- ---------- ----------- -----------
34,619,798 22,292,847 3,037,542 21,055,955 22,893,485
----------- ----------- ---------- ----------- -----------
$33,955,184 $19,899,509 $2,585,954 $21,389,374 $24,798,900
=========== =========== ========== =========== ===========
</Table>
Financial Statements 73
Statements of Changes in Net Assets
<Table>
<Caption>
ICON CONSUMER
DISCRETIONARY FUND ICON ENERGY FUND
-------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004
------------- ------------- -------------- -------------
OPERATIONS
Net investment income/(loss) $ (947,312) $ (671,699) $ 2,256,526 $ (261,112)
Net realized gain/(loss) from investment
transactions 21,149,069 17,989,808 22,940,745 6,377,507
Change in unrealized appreciation/depreciation
on investments (9,621,489) (6,390,181) 259,958,925 51,219,049
------------ ------------ -------------- ------------
Net increase/(decrease) in net assets
resulting from operations 10,580,268 10,927,928 285,156,196 57,335,444
------------ ------------ -------------- ------------
Dividends and Distributions to Shareholders
Net investment income - - - -
Net realized gains - - - -
------------ ------------ -------------- ------------
Net decrease from dividends and distributions - - - -
------------ ------------ -------------- ------------
FUND SHARE TRANSACTIONS
Shares sold 50,107,439 62,754,370 711,655,180 246,044,827
Reinvested dividends and distributions - - - -
Shares repurchased (43,187,689) (71,825,277) (275,467,439) (71,395,398)
------------ ------------ -------------- ------------
Net increase/(decrease) from fund share
transactions 6,919,750 (9,070,907) 436,187,741 174,649,429
------------ ------------ -------------- ------------
Total net increase/(decrease) in net assets 17,500,018 1,857,021 721,343,937 231,984,873
NET ASSETS
Beginning of period 151,921,744 150,064,723 287,613,904 55,629,031
------------ ------------ -------------- ------------
End of period $169,421,762 $151,921,744 $1,008,957,841 $287,613,904
============ ============ ============== ============
TRANSACTIONS IN FUND SHARES
Shares sold 3,605,400 4,709,437 27,585,644 13,031,426
Reinvested dividends and distributions - - - -
Shares repurchased (3,120,303) (5,477,472) (10,886,604) (3,903,835)
------------ ------------ -------------- ------------
Net increase/(decrease) 485,097 (768,035) 16,699,040 9,127,591
Shares outstanding beginning of period 11,960,771 12,728,806 13,188,421 4,060,830
------------ ------------ -------------- ------------
Shares outstanding end of period 12,445,868 11,960,771 29,887,461 13,188,421
============ ============ ============== ============
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-term Securities)
Purchase of Securities $270,228,278 $213,763,244 $ 565,978,887 $184,627,946
Proceeds from sales of securities 263,033,052 220,582,308 155,874,919 15,787,580
Accumulated undistributed net investment
income/(loss) $ - $ - $ 2,256,526 $ -
============ ============ ============== ============
</Table>
* The tax character of distributions to shareholders from net investment income
for the year ended September 30, 2004 is ordinary income.
The accompanying notes are an integral part of the financial statements.
74 Financial Statements
<Table>
<Caption>
ICON FINANCIAL FUND ICON HEALTHCARE FUND ICON INDUSTRIALS FUND
----------------------------- ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004 2005 2004
------------- ------------- ------------- ------------- ------------- -------------
$ 1,894,706 $ 548,732 $ (3,785,078) $ (2,540,659) $ (664,614) $ (849,293)
15,015,457 17,877,672 10,569,614 10,762,480 28,540,115 5,713,298
(4,980,248) 13,429,005 96,973,294 6,619,577 6,079,683 22,171,644
------------ ------------ ------------ ------------ ------------ -------------
11,929,915 31,855,409 103,757,830 14,841,398 33,955,184 27,035,649
------------ ------------ ------------ ------------ ------------ -------------
(400,204) (576,093)* - - - -
(14,368,848) - (877,529) - - -
------------ ------------ ------------ ------------ ------------ -------------
(14,769,052) (576,093) (877,529) - - -
------------ ------------ ------------ ------------ ------------ -------------
160,151,652 99,493,912 513,075,619 196,893,511 116,314,931 119,436,391
14,495,645 570,282 842,844 - - -
(149,318,334) (82,211,184) (219,709,399) (67,323,826) (143,327,765) (69,333,095)
------------ ------------ ------------ ------------ ------------ -------------
25,328,963 17,853,010 294,209,064 129,569,685 (27,012,834) 50,103,296
------------ ------------ ------------ ------------ ------------ -------------
22,489,826 49,132,326 397,089,365 144,411,083 6,942,350 77,138,945
188,393,450 139,261,124 285,669,974 141,258,891 209,693,258 132,554,313
------------ ------------ ------------ ------------ ------------ -------------
$210,883,276 $188,393,450 $682,759,339 $285,669,974 $216,635,608 $ 209,693,258
============ ============ ============ ============ ============ =============
12,078,196 7,735,769 30,887,090 14,262,864 9,680,063 11,909,801
1,066,641 47,802 53,243 - - -
(11,535,456) (6,605,919) (13,735,740) (4,910,162) (12,555,300) (7,036,857)
------------ ------------ ------------ ------------ ------------ -------------
1,609,381 1,177,652 17,204,593 9,352,702 (2,875,237) 4,872,944
14,098,525 12,920,873 20,857,551 11,504,849 19,939,767 15,066,823
------------ ------------ ------------ ------------ ------------ -------------
15,707,906 14,098,525 38,062,144 20,857,551 17,064,530 19,939,767
============ ============ ============ ============ ============ =============
$334,005,678 $204,755,026 $493,069,662 $249,051,968 $131,854,781 $ 132,934,226
321,445,227 186,785,022 216,184,507 123,293,752 161,003,971 80,111,027
$ 1,744,312 $ 249,818 $ - $ - $ 16,028 $ -
============ ============ ============ ============ ============ =============
</Table>
Financial Statements 75
Statements of Changes in Net Assets (continued)
<Table>
<Caption>
ICON INFORMATION
TECHNOLOGY FUND
------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004
------------- -------------
OPERATIONS:
Net investment income/(loss) $ (2,393,338) $ (2,576,634)
Net realized gain/(loss) from investments transactions 9,986,052 30,876,230
Change in net unrealized appreciation/depreciation on
investments 12,306,795 (41,133,606)
------------ -------------
Net increase/(decrease) in net assets resulting from
operations 19,899,509 (12,834,010)
------------ -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - -
Net realized gains - -
------------ -------------
Net decrease from dividends and distributions - -
------------ -------------
FUND SHARE TRANSACTIONS
Shares sold 183,518,365 178,801,650
Reinvested dividends and distributions - -
Shares repurchased (227,596,847) (229,687,727)
------------ -------------
Net increase/(decrease) from fund share transactions (44,078,482) (50,886,077)
------------ -------------
Total net increase/(decrease) in net assets (24,178,973) (63,720,087)
NET ASSETS:
Beginning of period 244,252,403 307,972,490
------------ -------------
End of period $220,073,430 $ 244,252,403
============ =============
TRANSACTIONS IN FUND SHARES
Shares sold 22,003,840 21,330,842
Reinvested dividends and distributions - -
Shares repurchased (27,607,984) (27,658,934)
------------ -------------
Net increase/(decrease) (5,604,144) (6,328,092)
Shares outstanding beginning of period 30,910,744 37,238,836
------------ -------------
Shares outstanding end of period 25,306,600 30,910,744
============ =============
PURCHASE AND SALES OF INVESTMENT SECURITIES
(excluding Short-term Securities)
Purchase of Securities $395,041,638 $ 537,991,382
Proceeds from sales of securities 442,915,109 591,381,665
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ - $ -
============ =============
</Table>
* The tax character of distributions to shareholders from net investment income
for the year ended September 30, 2004 is ordinary income.
The accompanying notes are an integral part of the financial statements.
76 Financial Statements
<Table>
<Caption>
ICON LEISURE AND ICON TELECOMMUNICATION &
CONSUMER STAPLES FUND ICON MATERIALS FUND UTILITIES FUND
------------------------------ ------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004 2005 2004
------------- ------------- ------------- ------------- ------------- -------------
$ (451,588) $ (326,799) $ 333,419 $ 87,329 $ 1,905,415 $ 580,886
12,701,511 11,738,085 28,105,684 1,298,590 10,867,997 3,885,662
(9,663,969) 2,299,602 (7,049,729) 22,065,303 12,025,488 3,437,864
------------ ------------ ------------ ------------ ------------ ------------
2,585,954 13,710,888 21,389,374 23,451,222 24,798,900 7,904,412
------------ ------------ ------------ ------------ ------------ ------------
- - (163,349) (198,911)* (767,065) (559,797)*
(13,572,229) - - - - -
------------ ------------ ------------ ------------ ------------ ------------
(13,572,229) - (163,349) (198,911) (767,065) (559,797)
------------ ------------ ------------ ------------ ------------ ------------
156,682,191 52,673,531 89,687,347 111,162,483 93,654,010 26,477,305
13,378,405 - 160,788 198,136 762,535 557,773
(194,686,497) (65,709,303) (151,343,125) (25,150,862) (59,123,198) (15,563,524)
------------ ------------ ------------ ------------ ------------ ------------
(24,625,901) (13,035,772) (61,494,990) 86,209,757 35,293,347 11,471,554
------------ ------------ ------------ ------------ ------------ ------------
(35,612,176) 675,116 (40,268,965) 109,462,068 59,325,182 18,816,169
83,022,429 82,347,313 139,838,319 30,376,251 61,325,363 42,509,194
------------ ------------ ------------ ------------ ------------ ------------
$ 47,410,253 $ 83,022,429 $ 99,569,354 $139,838,319 $120,650,545 $ 61,325,363
============ ============ ============ ============ ============ ============
12,172,021 3,663,087 8,775,257 13,704,883 12,890,779 4,192,093
1,067,710 - 15,794 26,174 106,947 94,538
(14,999,963) (4,572,081) (15,426,293) (3,179,704) (7,698,688) (2,487,287)
------------ ------------ ------------ ------------ ------------ ------------
(1,760,232) (908,994) (6,635,242) 10,551,353 5,299,038 1,799,344
5,723,523 6,632,517 15,446,848 4,895,495 9,275,792 7,476,448
------------ ------------ ------------ ------------ ------------ ------------
3,963,291 5,723,523 8,811,606 15,446,848 14,574,830 9,275,792
============ ============ ============ ============ ============ ============
$261,063,086 $151,387,685 $132,449,934 $123,284,118 $149,329,103 $ 69,915,069
299,173,481 163,795,587 191,074,580 41,285,979 113,156,179 58,301,505
$ - $ - $ 236,509 $ 66,439 $ 1,719,241 $ 580,891
============ ============ ============ ============ ============ ============
</Table>
Financial Statements 77
Financial Highlights
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
NET ASSET NET NET REALIZED
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM
BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT
OF PERIOD (LOSS)(X) ON INVESTMENTS OPERATIONS
--------- ---------- -------------- ----------
ICON CONSUMER DISCRETIONARY FUND
Year Ended September 30, 2005 $12.70 $(0.08) $ 0.99 $ 0.91
Year Ended September 30, 2004 11.79 (0.05) 0.96 0.91
Year Ended September 30, 2003 10.12 (0.08) 1.75 1.67
Year Ended September 30, 2002 8.96 (0.06) 1.22 1.16
Year Ended September 30, 2001 9.23 (0.01) (0.26) (0.27)
ICON ENERGY FUND
Year Ended September 30, 2005 21.81 0.10 11.85 11.95
Year Ended September 30, 2004 13.70 (0.04) 8.15 8.11
Year Ended September 30, 2003 11.84 (0.04) 1.90 1.86
Year Ended September 30, 2002 11.29 (0.08) 0.65 0.57
Year Ended September 30, 2001 13.19 0.07 (0.76) (0.69)
ICON FINANCIAL FUND
Year Ended September 30, 2005 13.36 0.13 0.99 1.12
Year Ended September 30, 2004 10.78 0.04 2.60 2.64
Year Ended September 30, 2003 8.84 0.05 1.92 1.97
Year Ended September 30, 2002 12.04 (0.01) (1.08) (1.09)
Year Ended September 30, 2001 12.26 0.06 1.13 1.19
ICON HEALTHCARE FUND
Year Ended September 30, 2005 13.70 (0.14) 4.42 4.28
Year Ended September 30, 2004 12.28 (0.14) 1.56 1.42
Year Ended September 30, 2003 10.35 (0.09) 2.02 1.93
Year Ended September 30, 2002 11.57 (0.12) (0.49) (0.61)
Year Ended September 30, 2001 11.93 (0.10) 0.51 0.41
ICON INDUSTRIALS FUND
Year Ended September 30, 2005 10.52 (0.04) 2.22 2.18
Year Ended September 30, 2004 8.80 (0.05) 1.77 1.72
Year Ended September 30, 2003 7.96 (0.05) 0.89 0.84
Year Ended September 30, 2002 8.55 (0.02) (0.57) (0.59)
Year Ended September 30, 2001 9.07 (0.02) (0.48) (0.50)
<Caption>
LESS DIVIDENDS AND DISTRIBUTIONS
-------------------------------------------------------
DIVIDENDS DISTRIBUTIONS TOTAL
FROM NET FROM NET DIVIDENDS
INVESTMENT REALIZED RETURN AND
INCOME GAINS OF CAPITAL DISTRIBUTIONS
---------- ------------- ---------- -------------
ICON CONSUMER DISCRETIONARY FUND
Year Ended September 30, 2005 $ - $ - $ - $ -
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 - - - -
Year Ended September 30, 2001 - - - -
ICON ENERGY FUND
Year Ended September 30, 2005 - - - -
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 (0.02) - - (0.02)
Year Ended September 30, 2001 (0.09) (1.12) - (1.21)
ICON FINANCIAL FUND
Year Ended September 30, 2005 (0.03) (1.02) - (1.05)
Year Ended September 30, 2004 (0.06) - - (0.06)
Year Ended September 30, 2003 (0.03) - - (0.03)
Year Ended September 30, 2002 - (2.11) - (2.11)
Year Ended September 30, 2001 (1.41) - - (1.41)
ICON HEALTHCARE FUND
Year Ended September 30, 2005 - (0.04) - (0.04)
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 - (0.56) (0.05) (0.61)
Year Ended September 30, 2001 - (0.77) - (0.77)
ICON INDUSTRIALS FUND
Year Ended September 30, 2005 - - - -
Year Ended September 30, 2004 - - - -
Year Ended September 30, 2003 - - - -
Year Ended September 30, 2002 - - - -
Year Ended September 30, 2001 (0.02) - - (0.02)
</Table>
(x) Calculated using the average share method.
The accompanying notes are an integral part of the financial statements.
78 Financial Highlights
<Table>
<Caption>
RATIO OF NET
NET ASSET AVERAGE RATIO OF INVESTMENT
VALUE, NET ASSETS, NET ASSETS EXPENSES INCOME/(LOSS) PORTFOLIO
END OF TOTAL END OF PERIOD FOR THE PERIOD TO AVERAGE TO AVERAGE TURNOVER
PERIOD RETURN (IN THOUSANDS) (IN THOUSANDS) NET ASSETS NET ASSETS RATE
--------- ------ -------------- -------------- ---------- ------------- ---------
$13.61 7.17% $ 169,422 $167,635 1.25% (0.57)% 157.94%
12.70 7.72% 151,922 178,011 1.31% (0.38)% 120.63%
11.79 16.50% 150,065 118,834 1.40% (0.79)% 174.51%
10.12 12.95% 121,640 184,174 1.29% (0.49)% 128.06%
8.96 (2.93)% 107,075 78,281 1.37% (0.10)% 88.20%
33.76 54.79% 1,008,958 602,922 1.21% 0.37% 27.51%
21.81 59.20% 287,614 127,920 1.35% (0.20)% 13.42%
13.70 15.71% 55,629 74,883 1.40% (0.29)% 42.53%
11.84 5.03% 104,220 71,434 1.35% (0.61)% 26.30%
11.29 (6.53)% 36,945 49,195 1.39% 0.54% 134.77%
13.43 8.29% 210,883 188,864 1.26% 1.00% 170.75%
13.36 24.53% 188,393 162,121 1.32% 0.34% 114.50%
10.78 22.35% 139,261 131,042 1.34% 0.54% 142.77%
8.84 (11.88)% 110,116 60,904 1.36% (0.06)% 69.58%
12.04 9.57% 54,318 59,425 1.41% 0.51% 174.41%
17.94 31.39% 682,759 463,813 1.22% (0.82)% 47.88%
13.70 11.56% 285,670 244,742 1.29% (1.04)% 52.72%
12.28 18.65% 141,259 120,068 1.34% (0.84)% 85.52%
10.35 (5.63)% 93,031 44,042 1.39% (1.05)% 104.90%
11.57 3.39% 33,646 35,981 1.45% (0.98)% 145.08%
12.70 20.72% 216,636 196,295 1.24% (0.34)% 67.25%
10.52 19.55% 209,693 179,657 1.29% (0.47)% 45.77%
8.80 10.55% 132,554 70,382 1.43% (0.64)% 90.49%
7.96 (6.90)% 63,919 107,335 1.30% (0.24)% 99.22%
8.55 (5.55)% 76,325 55,928 1.38% (0.16)% 72.65%
</Table>
Financial Highlights 79
Financial Highlights (continued)
<Table>
<Caption>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
---------------------------------------- ------------------------------------------
NET ASSET NET NET REALIZED DIVIDENDS DISTRIBUTIONS TOTAL
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM FROM NET FROM NET DIVIDENDS
BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT INVESTMENT REALIZED AND
OF PERIOD (LOSS)(X) ON INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
--------- ---------- -------------- ---------- ---------- ------------- -------------
ICON INFORMATION TECHNOLOGY FUND
Year Ended September 30,
2005 $ 7.90 $(0.08) $ 0.88 $ 0.80 $ - $ - $ -
Year Ended September 30,
2004 8.27 (0.08) (0.29) (0.37) - - -
Year Ended September 30,
2003 5.98 (0.08) 2.37 2.29 - - -
Year Ended September 30,
2002 7.80 (0.10) (1.72) (1.82) - - -
Year Ended September 30,
2001 22.13 (0.10) (4.03) (4.13) - (10.20) (10.20)
ICON LEISURE AND CONSUMER STAPLES FUND
Year Ended September 30,
2005 14.51 (0.06) 0.94 0.88 - (3.43) (3.43)
Year Ended September 30,
2004 12.42 (0.04) 2.13 2.09 - - -
Year Ended September 30,
2003 11.20 (0.06) 1.28 1.22 - - -
Year Ended September 30,
2002 9.42 (0.07) 1.85 1.78 - -
Year Ended September 30,
2001 9.24 (0.05) 0.26 0.21 (0.01) (0.02) (0.03)
ICON MATERIALS FUND
Year Ended September 30,
2005 9.05 0.03 2.23 2.26 (0.01) - (0.01)
Year Ended September 30,
2004 6.20 0.01 2.87 2.88 (0.03) - (0.03)
Year Ended September 30,
2003 5.68 0.03 0.50 0.53 (0.01) - (0.01)
Year Ended September 30,
2002 5.70 0.02 (0.01) 0.01 (0.03) - (0.03)
Year Ended September 30,
2001 6.49 0.02 (0.74) (0.72) (0.07) - (0.07)
ICON TELECOMMUNICATION & UTILITIES FUND
Year Ended September 30,
2005 6.61 0.14 1.61 1.75 (0.08) - (0.08)
Year Ended September 30,
2004 5.69 0.07 0.92 0.99 (0.07) - (0.07)
Year Ended September 30,
2003 4.78 0.10 0.87 0.97 (0.06) - (0.06)
Year Ended September 30,
2002 6.19 0.10 (1.45) (1.35) (0.06) - (0.06)
Year Ended September 30,
2001 8.13 0.09 (1.52) (1.43) (0.11) (0.40) (0.51)
</Table>
(x) Calculated using the average share method.
The accompanying notes are an integral part of the financial statements.
80 Financial Highlights
<Table>
<Caption>
RATIO OF NET
NET ASSET AVERAGE NET RATIO OF INVESTMENT
VALUE, NET ASSETS, ASSETS EXPENSES INCOME/(LOSS) PORTFOLIO
END OF TOTAL END OF PERIOD FOR THE PERIOD TO AVERAGE TO AVERAGE TURNOVER
PERIOD RETURN (IN THOUSANDS) (IN THOUSANDS) NET ASSETS NET ASSETS RATE
--------- ------ -------------- -------------- ---------- ------------- ---------
$ 8.70 10.13% $220,073 $264,222 1.29% (0.91)% 152.16%
7.90 (4.47)% 244,252 282,062 1.31% (0.91)% 189.67%
8.27 38.29% 307,972 190,287 1.35% (1.16)% 155.39%
5.98 (23.33)% 75,623 189,972 1.31% (1.09)% 190.09%
7.80 (32.90)% 118,851 99,875 1.37% (0.90)% 70.32%
11.96 5.01% 47,410 99,988 1.30% (0.45)% 271.72%
14.51 16.83% 83,022 104,515 1.33% (0.31)% 148.43%
12.42 10.89% 82,347 80,928 1.38% (0.51)% 139.54%
11.20 18.90% 88,341 86,202 1.34% (0.55)% 90.43%
9.42 2.26% 41,162 41,086 1.40% (0.50)% 148.23%
11.30 25.04% 99,569 101,971 1.31% 0.33% 128.01%
9.05 46.61% 139,838 68,497 1.37% 0.13% 59.48%
6.20 9.36% 30,376 40,156 1.47% 0.59% 130.01%
5.68 0.06% 59,020 45,917 1.36% 0.23% 74.55%
5.70 (11.07)% 29,200 24,544 1.47% 0.40% 91.28%
8.28 26.70% 120,651 101,129 1.26% 1.88% 112.91%
6.61 17.57% 61,325 54,232 1.37% 1.07% 108.81%
5.69 20.36% 42,509 53,219 1.41% 2.05% 158.24%
4.78 (22.05)% 66,366 20,196 1.50% 1.78% 137.81%
6.19 (18.74)% 16,537 13,554 1.54% 1.22% 46.10%
</Table>
Financial Highlights 81
Notes to Financial Statements
September 30, 2005
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The ICON Consumer Discretionary Fund ("Consumer Discretionary Fund"), ICON
Energy Fund ("Energy Fund"), ICON Financial Fund ("Financial Fund"), ICON
Healthcare Fund ("Healthcare Fund"), ICON Industrials Fund ("Industrials Fund"),
ICON Information Technology Fund ("Information Technology Fund"), ICON Leisure
and Consumer Staples Fund ("Leisure and Consumer Staples Fund"), ICON Materials
Fund ("Materials Fund"), and ICON Telecommunication & Utilities Fund
("Telecommunication & Utilities Fund") are series funds (individually a "Fund"
and collectively, the "Funds"). The Funds are part of the ICON Funds (the
"Trust"), a Massachusetts business trust registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end investment management
company. There are eight other active funds within the Trust. Those funds are
covered by separate prospectuses and shareholder reports.
The Funds invest primarily in securities of companies whose principal business
activities fall within specific industries and sectors. Each Fund is authorized
to issue an unlimited number of no par shares. The investment objective of each
of Fund is to provide long-term capital appreciation.
The Funds may have elements of risk, including the loss of principal. There is
no assurance that the investment process will consistently lead to successful
results. An investment in a non-diversified sector fund may involve greater risk
and volatility than a diversified fund. Investments in foreign securities and
currency transactions may involve certain considerations and risks not typically
associated with those of U.S. dollar-denominated transactions as a result of,
among other factors, the possibility of lower government supervision and
regulation of foreign securities markets and the possibility of political or
economic instability. There are also risks associated with small- and mid-cap
investing, including limited product lines, less liquidity and small market
share.
In addition, in the normal course of business the Funds may enter into various
agreements that provide for general indemnifications. Each Fund's maximum
exposure under these arrangements is unknown as any potential exposure involves
future claims that may be made against each Fund. However, based on experience,
the Funds expect the risk of loss to be remote.
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.
82 Notes to Financial Statements
INVESTMENT VALUATION
The Funds' securities and other assets are valued at the closing price at the
close of the regular trading session of the New York Stock Exchange (the "NYSE")
(normally 4 p.m. Eastern time) each day the NYSE is open, except that securities
traded primarily on the NASDAQ Stock Market ("NASDAQ") are normally valued by a
Fund at the NASDAQ Official Closing Price provided by NASDAQ each business day.
The Funds use pricing services to report the market value of securities in their
portfolios; if a pricing service is not able to provide a price, or the pricing
service quote of valuation is considered inaccurate or does not reflect the
market value of the security, prices may be obtained through market quotations
from independent broker/dealers. If market quotations from these sources are not
readily available, the Funds' securities or other assets are valued at fair
value as determined in good faith by the Funds' Board of Trustees ("Board") or
pursuant to procedures approved by the Board.
Lacking any sales that day, the security is valued at the current closing bid
price (or yield equivalent thereof) or based on quotes from dealers making a
market for the security. Options are valued at their closing mid-price on the
principal market where the option is traded. Mid-price is the average of the
closing bid and closing ask prices. Debt securities with a remaining maturity of
greater than sixty days are valued in accordance with the evaluated bid price
supplied by the pricing service. The evaluated bid price supplied by the pricing
service is a matrix system which considers such factors as security prices,
yields, maturities and ratings. Short-term securities with remaining maturities
of sixty days or less are generally valued at amortized cost or original cost
plus accrued interest, which approximates market value. Prior to February 22,
2005, London closing exchange rates were used to convert foreign security values
into U.S. dollars. After that date, currency rates as of the close of the New
York Stock Exchange were used to convert foreign security values into U.S.
dollars.
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 net asset value ("NAV") may differ from the security's most
recent closing market price and from the prices used by other mutual funds to
calculate their NAVs.
Notes to Financial Statements 83
Notes to Financial Statements (continued)
REPURCHASE AGREEMENTS
Repurchase agreements, if held by the Funds, are fully collateralized by U.S.
Government securities and such collateral is in the possession of the Funds'
custodian. The collateral is evaluated daily to ensure its market value exceeds
the current market value of the repurchase agreements including accrued
interest. In the event of default on the obligation to repurchase, the Funds
have the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. In the event of default or bankruptcy by the
other party to the agreement, realization and/or retention of the collateral or
proceeds may be subject to legal proceedings. No repurchase agreements were
purchased or sold by the Funds during the year ended September 30, 2005.
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 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. 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, resulting from changes in the exchange rates and changes in
market prices of securities held. The Funds did not enter into any forward
foreign currency contracts during the year ended September 30, 2005.
84 Notes to Financial Statements
FUTURES CONTRACTS
The Funds may invest in financial futures contracts for the purpose of hedging
their existing securities or securities it intends to purchase against
fluctuations in fair value caused by changes in prevailing markets. Upon
entering into a financial futures contract, the Fund is required to pledge to
the broker an amount of cash and/or other assets equal to a certain percentage
of the contract amount (initial margin deposit). Subsequent payments, known as
"variation margin," are made or received by the Fund each day, depending on the
daily fluctuations in the fair value of the underlying security. The Fund
recognizes a gain or loss equal to the daily variation margin. Should market
conditions move unexpectedly, the Fund may not achieve the anticipated benefits
of the financial futures contracts and may realize a loss. The use of futures
transactions involves the risk of imperfect correlation in movements in the
price of futures contracts and the underlying hedged assets. The Funds held no
financial futures contracts during the year ended September 30, 2005.
OPTIONS TRANSACTIONS
Each Fund may write put and call options only if it owns an offsetting position
in the underlying security. When a Fund writes a put or call option, an amount
equal to the premium received is included in the Statement of Assets and
Liabilities as a liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. 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. The Funds did not enter into any option transactions during the year
ended September 30, 2005.
Notes to Financial Statements 85
Notes to Financial Statements (continued)
INCOME TAXES
The Funds intend to qualify as regulated investment companies under Subchapter M
of the Internal Revenue Code and, accordingly, the Funds will generally not be
subject to federal and state income taxes, or federal excise taxes to the extent
that they intend to make sufficient distributions of net investment income and
net realized capital gains.
Dividends received by shareholders of the Funds which are derived from foreign
source income and foreign taxes paid by the Funds are to be treated, to the
extent allowable under the Code, as if received and paid by the shareholders of
the Funds. Dividends paid by the Funds from net investment income and
distributions of net realized short-term gains are, for federal income tax
purposes, taxable as ordinary income to shareholders.
Dividends and distributions to shareholders are recorded by the Funds on the
ex-dividend/distribution date. The Funds distribute net realized capital gains,
if any, to shareholders at least annually, if not offset by capital loss
carryovers. Income distributions and capital gain distributions are determined
in accordance with income tax regulations, which may differ from 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.
Discounts and premiums on securities purchased are amortized over the life of
the respective securities.
INVESTMENT TRANSACTIONS
Security transactions are accounted for no later than one business day after
trade date. However, for financial reporting purposes security transactions are
accounted for on 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 in the Trust based upon relative net assets.
86 Notes to Financial Statements
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES
ICON Advisers, Inc. ("ICON") serves as the investment adviser to the Funds and
is responsible for managing the Funds' portfolios of securities. ICON receives a
monthly management fee that is computed daily at an annual rate of 1.00% of the
Funds' average daily net assets.
TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES
U.S. Bank N.A. ("U.S. Bank") and U.S. Bancorp Fund Services, LLC ("U.S.
Bancorp") provided domestic custodial services, transfer agent services and fund
accounting for the Funds for various portions of the year ended September 30,
2005. U.S. Bank served as the custodian until April 17, 2005 and the transfer
agent until April 24, 2005. For these services, the Trust paid 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. U.S. Bancorp served as the fund accountant until
March 31, 2005, for which they were paid 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 paid for various out-of-pocket costs incurred by U.S. Bank and
U.S. Bancorp.
Effective April 1, 2005, the Trust retained BISYS Fund Services Ohio, Inc.
("BISYS") as Fund Accounting Agent for the Funds. For its services, the Trust
pays BISYS 0.03% on the first $1.75 billion of Trust Assets, 0.0175% on the
average daily net assets over $1.75 billion and up to $5 billion, and 0.01% on
assets in excess of $5 billion.
Effective April 18, 2005, the Trust retained Brown Brothers Harriman ("BBH") as
custodian of the Trust's investments. For domestic custody services, the Trust
pays BBH 0.0065% on the first $50 million of average net assets and 0.0050% on
domestic assets above $50 million, plus certain transaction charges. For foreign
custody services, the Trust pays BBH 0.03% on foreign assets plus certain
transaction charges.
Effective April 25, 2005, the Trust retained Boston Financial Data Services,
Inc. as the Trust's transfer agent. For these services, the Trust pays an
account fee of $13.25 per open account, $7.00 per networked account, $1.80 per
closed account, plus certain other transaction and cusip charges.
Notes to Financial Statements 87
Notes to Financial Statements (continued)
ADMINISTRATIVE SERVICES
The Trust has entered into an administrative services agreement with ICON
pursuant to which ICON oversees the administration of the Trust's business and
affairs, including regulatory reporting and all necessary office space,
equipment, personnel and facilities. This agreement provides for an annual fee
to ICON of 0.05% on the Funds' first $1.5 billion of average daily net assets
and 0.045% on average daily net assets in excess of $1.5 billion. The
administrative services agreement provides that ICON will not be liable for any
error of judgment, mistake of law, or any loss suffered by the Trust in
connection with matters to which the administrative services agreement relates,
except for a loss resulting from willful misfeasance, bad faith or negligence by
ICON in the performance of its duties.
For the period October 1, 2004 thru March 31, 2005, U.S. Bancorp provided
sub-administration services to ICON for a sub-administration fee of 0.02% on the
Trust's first $1.5 billion of average daily net assets and 0.015% on assets
above $1.5 billion, subject to a minimum annual fee of $140,000.
Effective April 1, 2005, ICON entered into a sub-administration agreement with
BISYS pursuant to which BISYS assists ICON with the administration and business
affairs of the Trust. For its services, ICON pays BISYS at an annual rate of
0.025% on the first $1.75 billion of Trust assets and 0.015% on assets above
$1.75 billion.
RELATED PARTIES
Certain Officers and Directors of ICON are also Officers and Trustees of the
Funds; however, such Officers and Trustees (with the exception of the Chief
Compliance Officer, "CCO") receive no compensation from the Funds. The CCO's
salary is paid 90% by the Funds and 10% by the Adviser. For the year ended
September 30, 2005, the total related amounts paid by the Trust under this
arrangement are included in Other Expenses on the Statements of Operations.
3. LINE OF CREDIT
The Funds had entered into Lines of Credit agreements with U.S. Bank that
allowed the Funds to borrow funds, subject to certain conditions, for temporary
88 Notes to Financial Statements
purposes. The maximum borrowing was limited to 25% of eligible securities held
by the portfolio subject to the following maximums:
<Table>
<Caption>
AVERAGE U.S. AVERAGE BBH
MAXIMUM BANK BORROWING BORROWING
- -------------------------------------------------------------------------------------
ICON Consumer Discretionary Fund** $30,000,000 $1,677,700 $ 728,674
ICON Energy Fund 30,000,000 - -
ICON Financial Fund 35,250,000 592,929 8,056,338
ICON Healthcare Fund 50,000,000 5,806,565 -
ICON Industrials Fund 17,250,000 829,227 11,532,886
ICON Information Technology Fund 56,500,000 2,446,992 5,507,829
ICON Leisure and Consumer Staples
Fund** 19,250,000 1,159,667 5,024,527
ICON Materials Fund 15,000,000 2,989,104 1,348,882
ICON Telecommunication & Utilities Fund 8,750,000 209,762 3,421,081
</Table>
**Fund had outstanding borrowings as of September 30, 2005.
This agreement was terminated when the custody was transferred to BBH.
Effective April 18, 2005, the Funds entered into Lines of Credit agreements with
BBH; the maximum borrowing is limited to 25% of eligible securities held by the
portfolio subject to a maximum borrowing limit by the Trust of $115 million.
Interest is charged at LIBOR plus 2.00% which was 5.86% at September 30, 2005.
4. FEDERAL INCOME TAX
Income and capital gain distributions are determined in accordance with income
tax regulations that may differ from accounting principles that are generally
accepted in the United States of America. These differences are due to differing
treatments for items such as net short-term gains, deferrals of wash losses,
foreign currency transactions, net investment losses, and capital loss
carryovers.
The tax components of capital shown in the following tables represent losses or
deductions the Funds may be able to offset against income and gains recognized
in future years and post October loss deferrals. The accumulated losses noted in
the following tables represent net capital loss carryforwards as of September
30, 2005 that may be available to offset future realized capital gains and
thereby reduce future taxable income distributions. The ICON Information
Technology Fund has a capital loss carryforward of $54,485,753, which expires in
2011.
Notes to Financial Statements 89
Notes to Financial Statements (continued)
The tax characteristics of dividends and distributions paid to shareholders
during the fiscal year ended September 30, 2005, were as follows:
<Table>
<Caption>
TOTAL
ORDINARY NET LONG- TOTAL TAXABLE DISTRIBUTIONS
FUND INCOME TERM GAINS DISTRIBUTIONS PAID
- ----------------------------------------------------------------------------------------------------------------
ICON Financial Fund $4,850,731 $ 9,918,321 $14,769,052 $14,769,052
ICON Healthcare Fund - 877,529 877,529 877,529
ICON Leisure and Consumer Staples Fund 698,297 12,873,932 13,572,229 13,572,229
ICON Materials Fund 163,349 - 163,349 163,349
ICON Telecommunication & Utilities Fund 767,065 - 767,065 767,065
</Table>
During the year ended September 30, 2005, the following capital loss
carryforwards were used:
<Table>
ICON Consumer Discretionary Fund $ 6,093,146
ICON Energy Fund 7,535,248
ICON Industrials Fund 24,281,548
ICON Information Technology Fund 9,949,705
ICON Materials Fund 19,740,720
ICON Telecommunication & Utilities Fund 4,843,948
</Table>
As of September 30, 2005, the components of accumulated earnings (deficit) on a
tax basis was as follows:
<Table>
<Caption>
TOTAL
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED ACCUMULATED
ORDINARY NET LONG- ACCUMULATED CAPITAL AND APPRECIATION EARNINGS
FUND INCOME TERM GAINS EARNINGS OTHER LOSSES (DEPRECIATION) (DEFICITS)
- ----------------------------------------------------------------------------------------------------------------------
ICON Consumer
Discretionary Fund $ - $15,075,599 $15,075,599 $ - $ 12,171,156 $ 27,246,755
ICON Energy Fund 2,256,526 15,317,738 17,574,264 - 319,535,020 337,109,284
ICON Financial Fund 1,744,312 13,206,728 14,951,040 - 22,756,269 37,707,309
ICON Healthcare Fund - 10,591,515 10,591,515 - 129,803,475 140,394,990
ICON Industrials Fund - 4,282,208 4,282,208 - 43,716,211 47,998,419
ICON Information
Technology Fund - - - (54,485,753) 32,373,653 (22,112,100)
ICON Leisure and Consumer
Staples Fund 34,856 9,538,955 9,573,811 - 3,912,163 13,485,974
ICON Materials Fund 236,509 8,471,489 8,707,998 - 16,866,025 25,574,023
ICON Telecommunication &
Utilities Fund 1,719,240 6,033,092 7,752,332 - 21,471,438 29,223,770
</Table>
90 Notes to Financial Statements
As of September 30, 2005, book cost for financial reporting purposes is
substantially the same for federal income tax purposes and differs from market
value by net unrealized appreciation/(depreciation) of securities as follows:
<Table>
<Caption>
UNREALIZED UNREALIZED NET APPRECIATION
FUND COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- -----------------------------------------------------------------------------------------
ICON Consumer
Discretionary Fund $157,875,698 $15,296,598 ($3,125,442) $12,171,156
ICON Energy Fund 675,852,259 320,310,350 (775,330) 319,535,020
ICON Financial Fund 188,446,605 24,168,907 (1,412,638) 22,756,269
ICON Healthcare Fund 555,918,422 138,674,998 (8,871,523) 129,803,475
ICON Industrials Fund 172,989,749 45,027,631 (1,311,420) 43,716,211
ICON Information
Technology Fund 187,918,260 34,932,479 (2,558,826) 32,373,653
ICON Leisure and
Consumer Staples Fund 43,986,130 5,097,937 (1,185,774) 3,912,163
ICON Materials Fund 83,545,814 17,044,670 (178,645) 16,866,025
ICON Telecommunication &
Utilities Fund 99,874,163 21,816,656 (345,218) 21,471,438
</Table>
Notes to Financial Statements 91
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of the ICON Sector Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of ICON Consumer Discretionary Fund,
ICON Energy Fund, ICON Financial Fund, ICON Healthcare Fund, ICON Industrials
Fund, ICON Information Technology Fund, ICON Leisure and Consumer Staples Fund,
ICON Materials Fund, and ICON Telecommunication & Utilities Fund (nine of the
portfolios constituting ICON Funds, hereafter referred to as the "Funds") at
September 30, 2005, 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 audits 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, 2005 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 22, 2005
92 Report of Accounting Firm
Board of Trustees and Fund Officers (unaudited)
The ICON Funds Board of Trustees ("Board") consists of six Trustees who oversee
the 17 ICON Funds (the "Funds"). The Board is responsible for general oversight
of the Funds' business and for ensuring 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, 54, Chairman of the Board. Dr. Callahan has been a Trustee of
the Funds since their inception. Dr. Callahan also serves as President (1998 to
present) and served as the Chief Investment Officer (1991 to 2004) of ICON
Advisers, Inc. ("ICON Advisers"), the Funds' Investment Adviser. Dr. Callahan is
also President (1998 to present); Director (1991 to present); and was previously
Vice President (1991 to 1998) of ICON Distributors, Inc. ("IDI"), the Funds'
Distributor, and is President of ICON Insurance Agency, Inc. (2004 to present).
Dr. Callahan also serves as the Director (1994 to present), and was previously
Secretary/Treasurer (1994 to 1998) of ICON Management & Research Corporation
("IM&R"), the parent company of ICON Advisers and IDI.
INDEPENDENT TRUSTEES
GLEN F. BERGERT, 55. Mr. Bergert has been a Trustee of the Funds since 1999. Mr.
Bergert is President of Venture Capital Management LLC (1997 to present);
General Partner of SOGNO Partners LP, a venture capital company (2001 to
present); and was previously a General Partner with KPMG Peat Marwick, LLP (1979
to 1997). Mr. Bergert is also a Director of Herre Bros, Inc., a contracting
company (1998 to present); Delta Dental of Pennsylvania, an insurance company
(1998 to present); DDP Inc., an insurance company (1998 to present); and Delta
Reinsurance Corporation (2000 to present).
JOHN C. POMEROY, JR., 56. Mr. Pomeroy has been a Trustee of the Funds since
November 2002. Mr. Pomeroy is Chief Investment Officer and Director of
Investments, Pennsylvania State University (2001 to present) and was Portfolio
Manager and Product Manager of Trinity Investment Management Corporation (1989
to 2001).
GREGORY KELLAM SCOTT, 57. Mr. Scott has been a Trustee of the Funds since
November 2002. Mr. Scott was Senior Vice President -- Law, General Counsel and
Secretary of GenCorp, Inc., a multinational technology-based manufacturing
company (2002 to 2004); Vice President and General Counsel of Kaiser-Hill
Company LLC, a nuclear clean-up and environmental remediation company (2000 to
2002) and a Colorado Supreme Court Justice (1993 to 2000). Mr. Scott is also a
member of the National Board of Directors of the Constituency for Africa (1997
to present) and serves as Executive Director of Indiana Civil Rights Commission
(2005-present).
Trustees and Officers 93
Board of Trustees and Fund Officers (continued)
(unaudited)
R. MICHAEL SENTEL, 57. 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, 52. 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, 54. Dr. Callahan has been President of the Funds since their
inception in 1996. Dr. Callahan also serves as ICON Advisers' President (1998 to
present) and served as the Chief Investment Officer (1991 to 2004). Dr. Callahan
is also President (1998 to present), Director (1991 to present) and was
previously Vice President (1991 to 1998) of IDI, and is President of ICON
Insurance Agency, Inc. (2004 to present). Dr. Callahan is also the Director
(1994 to present), and was previously Secretary/Treasurer (1994 to 1998) of
IM&R.
ERIK L. JONSON, 56. Mr. Jonson has been a Vice President and Chief Financial
Officer of the Funds since their inception and from May 20, 2005 to November 15,
2005 acting Secretary. 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).
94 Trustees and Officers
Other Information (unaudited)
ALL FUNDS
RENEWAL OF INVESTMENT ADVISORY AGREEMENT.
In determining to renew the investment advisory agreements between ICON Funds
(the "Trust") and ICON Advisers, Inc. ("ICON" or the "Adviser") the Board
requested, was provided with and reviewed data with respect to ICON, its
personnel, and the services to be provided to each Fund by ICON under the
Trust's Investment Advisory Agreement dated October 9, 1996, as amended (related
to the Sector, Foreign and Core Equity Funds) and under the Trust's Investment
Advisory Agreement dated July 9, 2002 and effective October 1, 2002, as amended
(related to the Specialty Funds -- Bond, Covered Call, Equity Income and
Long/Short Funds) (collectively, the "Advisory Agreements"). The data included
information concerning advisory, distribution and administrative services
provided to the Funds by ICON and its related companies; information concerning
other businesses of those companies; comparative data related to exchange traded
funds versus the Sector Funds; and comparative data obtained from Lipper
Analytical Services related to Fund performance and Fund expenses.
On August 8, 2005, the Board of Trustees, including all of the Trustees that are
not "interested persons" of the Trust (the "Independent Trustees"), approved
continuation of the Advisory Agreements with the Adviser for each Fund for an
additional one-year term commencing October 1, 2005.
The Independent Trustees were represented by independent legal counsel
throughout the process. Prior to acting on the matter, the Independent Trustees
met separately as a group in private sessions with their independent legal
counsel to review and discuss the foregoing information and also met with
management to discuss responses to questions raised during the process. In
addition, the Independent Trustees received materials from their independent
legal counsel discussing the legal standards applicable to their consideration
of the agreement.
In considering the nature, extent and quality of the services provided by the
Adviser, the Board reviewed information relating to the Adviser's operations and
personnel. Among other things, the Adviser provided biographical information on
its professional staff and descriptions of its organizational and management
structure. In the course of their deliberations the Board evaluated, among other
things, information relating to the investment philosophy, strategies and
techniques used in managing each Fund, the qualifications and experience of the
Adviser's investment personnel, the Adviser's compliance programs, the Adviser's
brokerage practices, including the extent to which the Adviser obtains research
through "soft dollar" arrangements with the Funds' brokerage, and the financial
and non-financial resources available to provide services required under the
Advisory Agreement.
Other Information 95
Other Information (continued) (unaudited)
In considering the reasonableness of the fee payable to the Adviser for managing
each Fund, the Board reviewed, among other things, financial statements of the
Adviser and an analysis of the profitability to the Adviser and its affiliates
of their relationship with each Fund over various time periods, which analysis
identified all revenues and other benefits received by the Adviser and its
affiliates from managing each Fund, the costs associated with providing such
services and the resulting profitability to the Adviser and its affiliates. The
Board considered the current and anticipated asset levels of each Fund and the
willingness of the Adviser to waive fees and pay expenses of the Funds from time
to time to limit the total expenses of the Funds. The Board concluded that the
profitability to the Adviser and its affiliates from their relationship with the
Funds is not excessive and that the Adviser is not realizing material benefits
from economies of scale that would warrant adjustments to the fees for any Fund
at this time. The Board of Trustees concluded that, in light of the nature,
extent and quality of the services provided by the Adviser and the levels of
profitability associated with providing these services, the fees charged by the
Adviser under the Advisory Agreements to each Fund are reasonable.
The Board of Trustees' considered:
1. In connection with reviewing data bearing upon the nature, quality, and
extent of services furnished by ICON to each Fund, the Board assessed data
concerning ICON's staffing, systems and facilities. The Board also assessed
ICON's non-Trust business to see if there are any initiatives that would dilute
service to the Trust. It was noted:
A. That the breadth and the quality of investment advisory and other
services being provided to each Fund is satisfactory, as evidenced in part
by the performance record of each Fund compared with the performance
records of a peer group of comparable funds;
B. That ICON has made significant expenditures in the past year and in
prior years to ensure that it has the sophisticated systems and the highly
trained personnel necessary for it to be able to continue to provide
quality service to the Funds' shareholders, including the dedication of
substantial resources to ICON's investment and trading departments; and
C. That the Board is satisfied with the research, portfolio management, and
trading services, among others, being provided by ICON to the Funds, and is
charging fair, reasonable, and competitive fees.
2. In connection with reviewing data bearing upon the costs of services to be
provided and profits to be realized by ICON and its related companies from the
relationship with the Trust, the Board considered the Lipper comparative data,
data concerning ICON's soft-dollar arrangements, data from independent reviews
of compliance procedures, costs borne by ICON in providing advisory services to
each Fund and the profitability of ICON in light of the estimated
96 Other Information
profitability analyses which had been provided by ICON, other benefits to ICON
from serving as the Funds' adviser, and ICON's financial statements.
A. With respect to the soft-dollar arrangements the Board assessed all
facets of the arrangements -- including the quality of trade execution. It
was noted that ICON receives research assistance from the use of soft
dollars generated from Fund portfolio transactions and that such research
assists ICON in providing quality investment advisory services to the Funds
and other accounts to which it provides advisory services. The Board
concluded that the arrangements are consistent with Fund brokerage
practices and benefit the Funds and their shareholders.
B. The Board noted that ICON benefits from serving directly as investment
adviser and administrative agent, and through its affiliate, as the
principal underwriter for the Funds. With respect to the distribution
services, the Board noted that proceeds of the Trust's distribution plans
pursuant to Rule 12b-1 under the 1940 Act for the International Equity and
Specialty Funds are paid to ICON's affiliate and that the distributor has
not profited from plan proceeds as all of the proceeds have been or will be
used to cover distribution and marketing expenses. In this regard, the
Trustees noted that marketing efforts have been successful as evidenced by
Fund asset levels. With respect to the administrative fee paid to ICON, the
Board reviewed the comparative data related to those services. The Board
also considered the compliance experience in these service areas and
concluded that the services provided by ICON and its affiliates to the
Funds are satisfactory and that the profits derived from providing the
services are competitive and reasonable.
C. The Board also noted the risks assumed by ICON in providing investment
advisory, distribution and administrative services (including compliance)
to each Fund, including the capital commitments which have been made in the
past and which continue to be made by ICON to ensure the continuation of
the highest quality of service to the Funds is made with the recognition
that the Funds' advisory relationship with ICON can be terminated at any
time and must be renewed on an annual basis.
3. In connection with assessing data bearing upon the fairness of fee
arrangements, the Board used data from Lipper, Inc. concerning funds of similar
size and funds of larger size, as well as data concerning ICON's other clients:
A. In this regard the Board noted that the Trust had recently changed fund
accounting, transfer agent and custodial service providers; and that the
expense numbers in the comparative data did not reflect the lower fees to
be charged by the current service providers.
Other Information 97
Other Information (continued) (unaudited)
B. The advisory fee structures of the Funds were considered in comparison
with advisory fees and expense ratios of other similarly-managed funds as
set forth in the comparative data.
It was noted that contractual advisory fees for the Sector Funds were
higher than fees for similar funds; but that the Sector Funds' expense
ratios were competitive and in most instances lower than those of
similarly-managed Funds.
It was noted that contractual advisory fees for the International Funds
were above the average fees for similar funds; and that the Funds' expense
ratios were competitive in light of their size.
It was noted that contractual advisory fees for the Specialty Funds were in
line with fees for similar funds; and that, with the exception of the Bond
Fund, the Specialty Funds' expense ratios were lower than those of
similarly-managed Funds.
It was noted that contractual advisory fee for the Core Equity Fund was
below the average fee for similar funds; and that its expense ratio was
lower than those of similarly-managed Funds.
C. In connection with assessing advisory fees and expense ratios it was
noted ICON has contractually agreed to impose expense limitations on the
International Equity and the Specialty Funds at a cost to ICON.
D. It was noted that generally the fees paid to ICON for managing other
institutional accounts (such as pension plans) are not lower than the fees
paid by similarly-managed Funds; however, to the extent such fees are
lower, it is due to the fact that such accounts are less costly for ICON to
manage.
E. It was noted that the advisory and other fees payable by the Funds to
ICON are essentially fees which would be similar to those which would have
resulted solely from "arm's-length" bargaining, and may well be lower than
fees arrived solely from such arm's-length negotiation.
4. The Board considered the extent to which economies of scale could be realized
as a Fund grows in assets and whether the Fund's fees reflect these economies of
scale for the benefit of Fund shareholders. In the regard the Board noted the
Adviser's commitment to establish breakpoints in its investment advisory fees at
elevated asset levels commencing during the next fiscal year.
Based on these considerations, among others, the Board, including all of the
Independent Trustees, concluded that the continuation of the advisory agreement
was in the best interests of each Fund and its shareholders, the services to be
performed under the agreement were services required for the operation of the
Funds, ICON had provided satisfactory advisory services to the Funds in the
past, and the fees for the advisory services which ICON would
98 Other Information
perform and other benefits from the relationship with the Trust and consistent
with fees paid by similar funds, are reasonable in light of the comparative
data, and would be within the range of what would have been negotiated at arm's
length in light of the circumstances.
SUPPLEMENTAL TAX INFORMATION
For corporate shareholders, the following percentage of the total ordinary
income dividends paid during the fiscal year ended September 30, 2005, qualify
for the corporate dividends received deduction for the following Funds:
<Table>
<Caption>
DIVIDENDS
RECEIVED
FUND DEDUCTION
- -----------------------------------------------------------------------
ICON Financial Fund 10.19%
ICON Leisure and Consumer Staples Fund 100.00
ICON Materials Fund 59.33
ICON Telecommunication & Utilities Fund 24.27
</Table>
For the fiscal year ended September 30, 2005, the following Funds paid qualified
dividend income of:
<Table>
<Caption>
FUND AMOUNT
- ------------------------------------------------------------------------
ICON Financial Fund $2,805,053
ICON Leisure and Consumer Staples Fund 698,297
ICON Materials Fund 163,349
ICON Telecommunication & Utilities Fund 767,065
</Table>
The Funds designate the following amounts as long term capital gain
distributions qualifying for the maximum 15% income tax rate for individuals:
<Table>
<Caption>
FUND AMOUNT
- -------------------------------------------------------------------------
ICON Financial Fund $ 9,918,321
ICON Healthcare Fund 877,529
ICON Leisure and Consumer Staples Fund 12,873,932
</Table>
Other Information 99
PORTFOLIO HOLDINGS
A list of each ICON Fund's Top 10 holdings is available at www.iconadvisers.com
on or about 15 days following each month end. Each ICON Fund also files a
complete schedule of portfolio holdings for the first and third quarters of its
fiscal year with the SEC on Form N-Q. The ICON Funds' Forms N-Q are available at
www.sec.gov or may be reviewed and copied at the Commission's Public Reference
Room in Washington, DC. Information about the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
PROXY VOTING
A 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 is available at
www.iconadvisers.com or on the SEC's website at www.sec.gov.
FOR MORE INFORMATION
This report is for the general information of the Funds' shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by a current prospectus. You may obtain a copy of the prospectus,
which contains information about the investment objectives, risks, charges,
expenses, and share classes of each ICON Fund, by visiting www.iconadvisers.com
or by calling 1-800-764-0442. Please read the prospectus carefully before
investing.
ICON Distributors, Inc., Distributor
100
THIS PAGE INTENTIONALLY LEFT BLANK
[ICON FUNDS LOGO]
<Table>
For more information about the ICON Funds, contact us:
By Telephone 1-800-764-0442
By Mail ICON Funds
P.O. Box 55452
Boston, MA 02205-8165
In Person ICON Funds
5299 DTC Boulevard, 12(th) Floor
Greenwood Village, CO 80111
On the Internet www.iconadvisers.com
By E-Mail info@iconadvisers.com
</Table>
[ICON FUNDS LOGO]
1-800-764-0442
www.iconadvisers.com
I-147-SEC
ITEM 2. CODE OF ETHICS.
During the period covered by the report, with respect to the registrant's
code of ethics that applies to its principal executive officer, principal
financial officer, principal accounting officer or controller, or persons
performing similar functions; there have been no amendments to, nor any
waivers granted from, a provision that relates to any element of the code
of ethics definition enumerated in paragraph (b) of this Item 2.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
3(a)(1) The registrant's board of directors has determined that the registrant
has at least one audit committee financial expert serving on its audit
committee.
3(a)(2) The audit committee financial expert is Jonathan F. Zeschin, who is
"independent" for purposes of this Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Fiscal year ended 9/30/05
Registrant (g) Covered Entities 1
---------- ----------------
(a) Audit Fees 2 $298,250 N/A
(b) Non-Audit Fees
(c) Tax Fees 3 $64,300 $34,650
All Other Fees 4 - $28,400
(d) Total Non-Audit Fees $64,300 $63,050
Fiscal year ended 9/30/04
Registrant (g) Covered Entities 1
---------- ----------------
(a) Audit Fees 2 $261,500 N/A
(b) Non-Audit Fees
(c) Tax Fees 3 $ 91,300 $30,870
All Other Fees 4 $ 6,300 $85,700 5
(d) Total Non-Audit Fees $ 97,600 $116,570
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.
4. "All Other Fees" paid by the Registrant in fiscal year 2004 reflect
agreed-upon procedures related to trade allocation review. For fiscal
year 2005, the fees were related to multi-class issues.
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.
(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.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a)The registrant's principal executive officer and principal financial officer
have concluded, based on their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing date of this
report, that these disclosure controls and procedures are adequately designed
and are operating effectively to ensure that information required to be
disclosed by the registrant on Form N-CSR is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.
(b)There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that
occurred during the second fiscal quarter of the period covered by this report
that have materially affected or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) THE CODE OF ETHICS THAT IS THE SUBJECT OF THE DISCLOSURE REQUIRED BY
ITEM 2 IS FURNISHED HEREWITH.
(a)(2) CERTIFICATIONS PURSUANT TO RULE 30A-2 ARE FURNISHED HEREWITH.
(a)(3) Not Applicable.
(b) CERTIFICATIONS PURSUANT TO RULE 30A-2(b) ARE FURNISHED HEREWITH.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) ICON FUNDS
--------------------------------------------------------------
By (Signature and Title)* /s/ Craig T. Callahan
-------------------------------------------------
Craig T. Callahan, President and Chief Executive
Officer (Principal Executive Officer)
Date December 8, 2005
----------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Craig T. Callahan
-------------------------------------------------------
Craig T. Callahan, President and Chief Executive
Officer (Principal Executive Officer)
Date December 8, 2005
----------------------------------------
By (Signature and Title)* /s/ Erik L. Jonson
-------------------------------------------------------
Erik L. Jonson, Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer and Principal
Accounting Officer)
Date December 8, 2005
----------------------------------------