N-CSRS 1 d26034nvcsrs.txt FORM N-CSRS 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: 9/30/05 -------------------------- Date of reporting period: 3/31/05 ------------------------- 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. Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1). > March 31, 2005 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 Semiannual Report (unaudited) (ICON FUNDS LOGO) Table of Contents ABOUT THIS REPORT 2 MESSAGE FROM ICON FUNDS 4 MANAGEMENT OVERVIEWS AND SCHEDULES OF INVESTMENTS ICON Bond Fund 7 ICON Core Equity Fund 16 ICON Covered Call Fund 26 ICON Equity Income Fund 43 ICON Long/Short Fund 55 HYPOTHETICAL EXPENSE EXAMPLE 66 FINANCIAL STATEMENTS 69 FINANCIAL HIGHLIGHTS 76 NOTES TO FINANCIAL STATEMENTS 80
[RECYCLE LOGO] About This Report HISTORICAL RETURNS All total returns mentioned in this report account for the change in a Fund's per-share price, the reinvestment of any dividends and capital gain distributions, and adjustments for financial statement purposes. If your account is set up to receive Fund distributions in cash rather than reinvest them, your actual return may differ from these figures. The Funds' performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results represent past performance, and current performance may be higher or lower. Please call 1-800-764-0442 or visit www.iconadvisers.com for performance results current to the most recent month-end. PORTFOLIO DATA This report reflects ICON's views, opinions, and portfolio holdings as of March 31, 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 percentage holdings as of March 31, 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, and Lehman Brothers. About This Report 3 Message from ICON Funds -------------------------------------------------------------------------------- The fact that stocks have been in the midst of a two-year bull market may come as a surprise to many investors. -------------------------------------------------------------------------------- Thank you for your continued investment in the ICON U.S. Diversified Funds and welcome to those of you receiving this report for the first time. As you may know, ICON employs a value-based, bottom-up investment system of industry rotation to try to capture leading market themes that evolve over time. While intrinsic value is dynamic and always changing, stock prices have continued in their move toward fair value, even as a number of distractions have made for a volatile setting. DEALING WITH DISTRACTIONS At times like these, I often think of Douglas Adams, author of The Hitchhiker's Guide to the Galaxy, who wrote, "Nothing travels faster than the speed of light with the possible exception of bad news, which follows its own special laws." Over the course of the past six months, investors have been inundated by a litany of bad news, ranging from Iraq, terrorism and oil prices to interest rates and budget deficits. Although the markets seemed to rise above these distractions during the first half of the reporting period, investors have since found it difficult to sort through these events despite the presence of solid economic and investment fundamentals -- and no clear signs of inflation. Investors' behavior is highly reminiscent of patterns established last year, which featured fear-driven sell-offs and highly correlated industry dynamics. During market setbacks, economically sensitive and cyclical industries have declined the most while industries considered recession-proof have been the most resilient. In contrast, when the market has advanced, cyclical industries have led the way while recession-proof industries have lagged. PARTICIPATING IN THE ADVANCE Given myriad doubts about the economy and earnings, and the volatility typically associated with a cyclical rally, the fact that stocks have been in the midst of a bull market may come as a surprise to many investors. But that is in fact the case. Having hit significant multi-year lows on March 11, 2003 just prior to the Iraq war, and near-term lows on August 12, 2004, stocks have actually recorded a two-year advance. Research into market history and investor behavior indicates to us that many investors assign the horrible and distasteful aspects of war as negatives for economic growth and company valuations. However, we have found no concrete evidence, past or present, to support such a relationship. For this reason, we believe that successful investors need to stay focused on the divergence between price and value, while also drawing a distinction between geopolitical concerns and the realities of investment fundamentals. 4 Message from ICON Funds We apply our value-based, bottom-up industry rotation across the entire market in order to identify leading industry themes wherever they may emerge. [CRAIG T. CALLAHAN PHOTO] Craig T. Callahan President Our research has shown these fundamentals to be generally healthy and encouraging. By invoking the valuation-driven discipline that enables us to patiently ride through market turbulence, we have participated in the advance. -------------------------------------------------------------------------------- Despite short-lived theme reversals and temporary setbacks, our valuation model suggests stocks are still priced below intrinsic value. -------------------------------------------------------------------------------- A MORE DIVERSE INDUSTRY COMPOSITION No matter what the market environment, our approach remains consistent. At the end of the period, we measured the broad market as significantly below our estimate of fair value. This discount makes sense to us as investors seemingly braced for a slowdown in economic growth and corporate earnings, although we believe the market has overreacted to these short-term concerns. Nevertheless, what has become gradually apparent amid the market turmoil is that our recent focus on highly cyclical industries is no longer warranted. While economically sensitive sectors such as Energy, Materials and Industrials were clear market leaders during the first half of our reporting period, value and relative strength readings have since pointed us toward a more diverse composition of industries, including those widely considered to be defensive or recession-proof. Accordingly, we were able to capture second-half upside within the Healthcare, Consumer Staples and Utilities sectors, where combinations of value and relative strength became increasingly more attractive. Healthcare, in particular, offered considerable breadth, with all eight industries in the sector trading at double-digit discounts to their intrinsic value and six posting above-average relative strength. Utilities were also quite compelling. Despite their so-called defensive tendencies, we view them as prospective market leaders. Bonds, on the other hand, came under pressure during the period, encountering extreme volatility in the face of monetary tightening and inflation fears. Although our valuation measures suggest that investors have overstated the impact of higher short-term interest rates, there is no evidence either in the Consumer Price Index or the yield curve to suggest that inflation is currently a threat. Rather than debate inflation, we continue to rely on our valuation readings, which favor long-term corporate bonds, and lower-grade, higher- yielding securities. Message from ICON Funds 5 Message from ICON Funds (continued) SEARCHING FOR VALUE Having sustained market leadership for the past three years, it comes as no surprise that cyclical industries were decidedly volatile. Because of their sensitivity to economic fluctuations, these industries typically exhibit a higher standard deviation or variability, which serves as a measure of risk. Capturing their leadership has been a challenge and has certainly made for some unpleasant periods. However, our system dictates that we not be swayed by emotion. We simply calculate value and allow it to direct us to industries that are showing value above price and relative strength. ICON does not subscribe to the traditional style grid that classifies stocks by size -- small-cap, mid-cap or large-cap -- and by style, either value or growth. Instead, we apply our value-based, bottom-up industry rotation across the entire market in order to identify leading industry themes wherever they may emerge. In doing so, we are an all-cap manager and thus avoid arbitrary barriers or restrictions in our pursuit of value. THE PRIVILEGE OF GUIDING YOU In January, we had the good fortune to announce the promotions of three investment team members. We'd like to again take a moment to share the news. Portfolio Managers Robert Straus, Derek Rollingson and J.C. Waller, III have been promoted to Vice Presidents and have been named Chief Investment Officer, Director of Research and Director of Institutional Portfolio Management, respectively. These promotions recognize the outstanding and valuable contributions each has made to your investment. 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 The Consumer Price Index is the primary indicator of U.S. inflation and is used to make cost-of-living adjustments to billions of dollars in benefit payments. 6 Message from ICON Funds Management Overview ICON Bond Fund -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION March 31, 2005 Corporate Bonds 44.3% Investment Grade 33.0% Non-Investment Grade 11.3% U.S. Governments and Agencies 35.2% Short-Term Investments 19.5% Percentages are based upon net assets. PORTFOLIO HIGHLIGHTS March 31, 2005 Number of Bonds(1) 84 Weighted average maturity(1) 10.2 Years Weighted average duration(1) 6.2 Years 30-Day SEC Yield (after expense limitation) - Class I 4.26% 30-Day SEC Yield (before expense limitation) - Class I 3.94% 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 six months ended March 31, 2005, the ICON Bond Fund returned, -0.03% for Class I shares, -0.29% for Class C shares, and 0.22% for Class Z shares, underperforming the 0.71% return of the Lehman Brothers U.S. Universal Index, the Fund's benchmark, over the same period. Total returns for other periods as of March 31, 2005 appear on page 11. Q. WHICH MARKET FACTORS INFLUENCED THE FUND'S RELATIVE PERFORMANCE? A. The Fund captured modest upside during the fourth quarter of 2004, as the bond market exhibited resilience in the face of rising interest rates. Despite monetary tightening, which saw the federal funds rate increase from 1.75% to 2.75% during the period, the measured pace kept benchmark 10-year treasury yields within a benign trading range. At the same time, corporate credit spreads remained relatively tight amid signs of tame inflation and sustainable economic growth. However, conditions weakened considerably during the first quarter of 2005, when surging oil prices raised fears of higher inflation and slowing economic growth. While 10-year Treasury yields drifted as low as 3.99% in early February, this stoking of concerns sent yields dramatically higher, peaking at 4.64% by mid-March. As bond prices fell sharply lower in conjunction with rising rates, the Fund slipped into negative territory, eroding earlier gains. Relative performance also suffered after an earnings warning issued by Fund holding General Motors produced a widespread sell-off in automotive-related debt. The subsequent downgrading of GM credits further pressured the Fund, which saw declines in its automotive-related holdings. Q. HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT APPROACH? A. The Fund employs a quantitative methodology, identifying bonds believed to be underpriced relative to value regardless of their location on the conventional style grid. In doing so, the Fund may go anywhere in its pursuit of potential market themes, without limitations on maturity, duration (interest-rate sensitivity) or credit quality. For that reason, the Fund does not partake in the counterproductive exercise of forecasting interest rate movements. Instead, 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 (income plus capital appreciation) by focusing on securities poised to lead the broader market. Management Overview 7 Management Overview (continued) ICON Bond Fund Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. With longer rates still well within the levels established by their prolonged secular decline, favorable valuation readings led to the Fund's continued overweighting of longer-duration bonds. However, this strategy worked against overall six-month performance as longer-duration bonds, given their increased sensitivity to changing interest rates, underperformed shorter-duration bonds when benchmark yields trended higher. Although the Fund does not invest based on projected interest rate movements, net duration was steadily reduced during the period, but not at the expense of valuation and relative strength. A pullback in high-yield bonds also detracted from Fund performance. With risk premiums declining following a strong two-year run, the sector appears to have run its course. Consequently, the Fund continued to trim its high- yield exposure on declining relative strength, as extremely tight spreads over Treasuries left little room for further contraction or capital appreciation. Nevertheless, longer-duration names such as Farmers Exchange Capital, Federal National Mortgage Association, First American Corp., and Time Warner Company Inc. all contributed to Fund performance due to solid underlying fundamentals. Meanwhile, DaimlerChrysler and General Motors Acceptance Corp. lost value when GM's lowered guidance and ensuing downgrade roiled the bond market. Phillips Petroleum and U.S. Treasury positions also detracted, as oil-related concerns and rising interest rates fueled inflation fears. Nevertheless, these bonds had not reached our sell criteria at period-end, and the Fund continued to own them. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE BOND MARKET? A. Irrespective of efforts to shorten net duration, the Fund's valuation and relative strength readings continue to favor longer-duration bonds. Furthermore, with economic growth seemingly in line with sustainable Federal Reserve targets, there appears to be no reason why rates must rise appreciably above current levels. However, rather than attempt to predict the unpredictable, the Fund will continue to rely on a disciplined, valuation- based methodology in seeking out suitable opportunities to invest for maximum total return. 8 Management Overview [DEREK ROLLINGSON PHOTO] Derek Rollingson Portfolio Manager PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund initially captured modest upside but later slipped into negative territory as inflation concerns pressured bond prices. - Relative performance suffered after an earnings warning issued by General Motors produced a widespread sell-off in automotive-related debt. DaimlerChrysler and General Motors Acceptance Corp., owned by the Fund, lost value. - The Fund's continued overweighting of longer-duration bonds worked against six-month performance when benchmark yields trended higher. - Farmers Exchange Capital, Federal National Mortgage Association, First American Corp., and Time Warner Company Inc. all contributed to Fund performance. Management Overview 9 Management Overview (continued) ICON Bond Fund TOP 10 BOND HOLDINGS March 31, 2005 U.S. Treasury, 8.75%, 5-15-17 2.9% Federal Home Loan Bank (FHLB), 5.375%, 8-15-18 2.7% U.S. Treasury, 6.875%, 8-15-25 2.6% U.S. Treasury, 7.50%, 11-15-16 2.6% U.S. Treasury, 1.625%, 4-30-05 2.5% Federal National Mortgage Association (FNMA), 7.125%, 1-15-30 2.2% U.S. Treasury, 6.25%, 8-15-23 2.0% Federal National Mortgage Association (FNMA), 6.25%, 5-15-29 2.0% U.S. Treasury, 5.75%, 8-15-10 1.9% Federal Home Loan Mortgage Corp. (FHLMC), 5.125%, 7-15-12 1.7%
Percentages are based upon net assets. 10 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
INCEPTION SINCE DATE 6 MONTHS* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON Bond Fund - Class I 10/1/02 -0.03% -0.17% N/A 5.39% --------------------------------------------------------------------------------------------- Lehman Brothers U.S. Universal Index 0.71% 1.66% N/A 4.89% --------------------------------------------------------------------------------------------- ICON Bond Fund - Class C 10/21/02 -0.29% -0.68% N/A 5.88% --------------------------------------------------------------------------------------------- Lehman Brothers U.S. Universal Index 0.71% 1.66% N/A 5.82% --------------------------------------------------------------------------------------------- ICON Bond Fund - Class Z 5/6/04 0.22% N/A N/A 4.56%* --------------------------------------------------------------------------------------------- Lehman Brothers U.S. Universal Index 0.71% N/A N/A 5.02%* ---------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative index can be found on pages 2 and 3. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005
LEHMAN BROTHERS U.S. UNIVERSAL ICON BOND FUND - CLASS I INDEX ------------------------ ------------------------------ 10/1/02 10000 10000 3/31/03 10245 10385 3/31/04 11422 11083 3/31/05 11404 11266
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund's Class I shares on the Class' inception date of 10/1/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund's other share classes will vary due to differences in charges and expenses. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Management Overview 11 Schedule of Investments ICON Bond Fund March 31, 2005 (unaudited)
PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- BONDS 79.5% CORPORATE BONDS 44.3% AAA RATING 1.3% 250,000 General Electric Capital Corp., 2.85%, 01/30/06 $ 248,210 354,000 General Electric Capital Corp., 7.38%, 01/19/10 393,842 300,000 Private Export Funding, Series B, 6.49%, 07/15/07 314,223 ------------ 956,275 AA3 RATING 1.4% 500,000 Bell Telephone Co. of Pennsylvania, 6.00%, 12/01/28 480,680 500,000 Merrill Lynch & Co., 5.30%, 09/30/15 496,624 ------------ 977,304 A3 RATING 6.6% 500,000 Boeing Co., 8.75%, 08/15/21 675,764 500,000 Boeing Corp., 6.88%, 11/01/06 519,442 700,000 Countrywide Home Loan, 5.50%, 02/01/07 713,497 1,000,000 DaimlerChrysler NA Holdings, 6.50%, 11/15/13 1,039,974 400,000 GTE Corp., 6.94%, 04/15/28 432,623 500,000 Phillips Petroleum, 8.75%, 05/25/10 591,689 400,000 PNC Funding Corp., 5.25%, 11/15/15 396,769 352,000 Textron Financial Corp., 2.75%, 06/01/06 344,572 ------------ 4,714,330 A2 RATING 8.0% 500,000 Ameritech Capital Funding, 6.55%, 01/15/28 531,915 400,000 Archer-Daniels- Midland Co., 8.38%, 04/15/17 502,229
PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 900,000 Bellsouth Corp., 6.00%, 11/15/34 $ 895,486 450,000 Cincinnati Financial Corp., 6.90%, 05/15/28 500,169 450,000 John Hancock, 7.38%, 02/15/24* 528,522 675,000 Lowe's Cos., Inc., 6.88%, 02/15/28 791,815 382,000 SBC Communications, Inc., 6.25%, 03/15/11 405,354 500,000 Target Corp., 3.38%, 03/01/08 486,892 550,000 Union Tank Car Co., 7.13%, 02/01/07 577,609 500,000 Wisconsin Power & Light Co., 7.00%, 06/15/07 526,621 ------------ 5,746,612 A1 RATING 4.6% 760,000 First Data Corp., 4.70%, 11/01/06 766,610 600,000 First Tennessee Bank, 2.76%, 11/18/05 599,850 670,000 Household Finance Co., 5.88%, 02/01/09 697,176 750,000 IBM Corp., 2.38%, 11/01/06 733,881 455,000 JP Morgan Chase & Co., 6.75%, 08/15/08 486,423 ------------ 3,283,940 BAA3 RATING 6.7% 185,000 Cardinal Health Inc., 4.45%, 06/30/05 185,184 1,020,000 Cigna Corp, 8.25%, 01/01/07 1,084,968 400,000 Comcast Cable Communications, 8.88%, 05/01/17 505,051 500,000 Farmers Insurance Capital Notes, 7.20%, 07/15/48 524,850
12 Schedule of Investments
PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 400,000 Hilton Hotels Corp., 7.50%, 12/15/17 $ 458,507 500,000 Motorola, Inc., 6.50%, 11/15/28 520,584 440,000 News America Holdings, Inc., 7.75%, 02/01/24 511,412 500,000 Sprint Capital Corp., 7.13%, 01/30/06 511,850 500,000 Tyco International Ltd., 6.13%, 11/01/08 524,691 ------------ 4,827,097 BAA2 RATING 2.0% 350,000 Capital One Financial Corp., 6.88%, 02/01/06 358,328 6,000 First American Financial, 7.55%, 04/01/28 6,731 600,000 Halliburton Co., 6.00%, 08/01/06 612,115 400,000 Phillip Morris Cos., 7.65%, 07/01/08 433,814 ------------ 1,410,988 BAA1 RATING 2.4% 600,000 General Motors Acceptance Corp., 6.13%, 08/28/07 585,069 600,000 PSEG Power Corp., 6.95%, 06/01/12 664,056 399,000 Time Warner, Inc., 7.57%, 02/01/24 461,810 ------------ 1,710,935 BA3 RATING 2.1% 415,000 Fairfax Financial Holdings f, 7.75%, 04/26/12 400,475 350,000 Georgia-Pacific Corp., 7.38%, 12/01/25 365,750 240,000 Georgia-Pacific Corp., 8.88%, 05/15/31 289,200 426,000 Qwest Corp., 6.13%, 11/15/05 430,260 ------------ 1,485,685
PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- BA2 RATING 1.5% 400,000 Afc Capital Trust I, 8.21%, 02/03/27 $ 424,898 580,000 Avnet, Inc., 8.00%, 11/15/06 609,000 ------------ 1,033,898 BA1 RATING 0.5% 350,000 Royal Caribbean Cruises f, 6.75%, 03/15/08 f 363,563 ------------ B3 RATING 3.9% 990,000 Curative Health Services, 10.75%, 05/01/11 814,274 500,000 Marsh Supermarkets, Inc., 8.88%, 08/01/07 497,500 500,000 Nortel Networks, Ltd., 6.13%, 02/15/06 501,250 829,000 Owens Illinois Inc, 8.10%, 05/15/07 858,015 200,000 Primus Telecomm Group, 8.00%, 01/15/14 144,000 ------------ 2,815,039 B2 RATING 2.3% 250,000 Mediacom Broadband Llc, 11.00%, 07/15/13 267,500 400,000 Providian Financial Corp., 3.25%, 08/15/05 399,500 500,000 Tembec Industries, Inc., 8.63%, 06/30/09 482,500 500,000 United Rentals NA, Inc., 7.00%, 02/15/14 457,500 ------------ 1,607,000 B1 RATING 1.0% 670,000 CSC Holdings, Inc., 7.25%, 07/15/08 686,750 ------------ TOTAL CORPORATE BONDS 31,619,416
Schedule of Investments 13 Schedule of Investments (continued) ICON Bond Fund March 31, 2005 (unaudited)
PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY BONDS 35.2% AAA RATING 35.2% 700,000 Federal Farm Credit Bank, 4.00%, 12/05/06 $ 700,623 200,000 Federal Farm Credit Bank, 5.90%, 07/21/08 209,792 255,000 Federal Farm Credit Bank, 5.90%, 08/04/08 267,570 750,000 Federal Home Loan Bank, 3.35%, 03/03/06 747,660 1,000,000 Federal Home Loan Bank, 3.50%, 03/21/06 997,755 1,000,000 Federal Home Loan Bank, 4.00%, 02/12/10 979,978 450,000 Federal Home Loan Bank, 5.88%, 02/15/11 476,790 1,850,000 Federal Home Loan Bank, 5.38%, 08/15/18 1,911,246 750,000 Federal Home Loan Bank, 5.50%, 02/14/20 738,138 1,150,000 Federal Home Loan Mortgage Corp., 5.13%, 07/15/12 1,178,036 370,000 Federal Home Loan Mortgage Corp., 5.00%, 10/29/13 365,514 270,000 Federal National Mortgage Association, 3.10%, 07/28/08 257,267 1,250,000 Federal National Mortgage Association, 6.25%, 05/15/29 1,432,914 1,250,000 Federal National Mortgage Association, 7.13%, 01/15/30 1,585,040
PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 800,000 Tennessee Valley Authority, 5.63%, 01/18/11 $ 840,104 1,250,000 U.S. Treasury, 5.75%, 08/15/10 1,341,406 1,000,000 U.S. Treasury, 3.88%, 02/15/13 965,273 1,500,000 U.S. Treasury, 7.50%, 11/15/16 1,880,625 1,500,000 U.S. Treasury, 8.75%, 05/15/17 2,061,153 1,250,000 U.S. Treasury, 6.25%, 08/15/23 1,455,420 1,500,000 U.S. Treasury, 6.88%, 08/15/25 1,882,442 1,000,000 U.S. Treasury, 5.25%, 11/15/28 1,051,680 1,750,000 U.S. Treasury, 1.63%, 04/30/05 1,748,359 ------------ 25,074,785 ------------ TOTAL U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY BONDS 25,074,785 ------------ TOTAL BONDS (COST $56,403,978) 56,694,201 SHORT-TERM INVESTMENTS 19.5% VARIABLE RATE DEMAND NOTE 0.3% $ 190,888 American Family Demand Note, 2.4663%# 190,888 ------------ U.S. GOVERNMENT AGENCIES 15.0% 10,700,000 Federal Home Loan Bank, 2.25%, 04/01/05 10,700,000 ------------ COMMERCIAL PAPER 4.2% 500,000 Ford Motor Credit Co., 3.19%, 07/22/05(fv) 495,033 500,000 Hertz Corp., 2.75%, 04/25/05 499,084 500,000 Hertz Corp., 3.04%, 04/28/05 498,860 500,000 Natexis US Financial Co., 2.97%, 06/29/05(fv) 496,335
14 Schedule of Investments
PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 500,000 Zions Bancorp., 2.98%, 06/02/05(fv) $ 497,434 500,000 Zions Bancorp., 2.94%, 06/23/05(fv) 496,617 ------------ 2,983,363 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $13,874,251) 13,874,251 ------------ TOTAL INVESTMENTS (COST $70,278,229) 99.0% 70,568,452 OTHER ASSETS LESS LIABILITIES 1.0% 701,027 ------------ NET ASSETS 100.0% $ 71,269,479 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005. f Foreign security * Security was acquired pursuant to Rule 144A of the Securities Act of 1933 and may be deemed to be restricted for resale. fv Security was fair valued at March 31, 2005. Dates shown on securities are the due dates of the obligation. Schedule of Investments 15 Management Overview ICON Core Equity Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 98.4% Top 10 Equity Holdings 14.5% Number of Stocks 108 Short-Term Investments 1.0% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 CIGNA Corp. 1.7% Yellow Roadway Corp. 1.6% Texas Instruments, Inc. 1.5% Labor Ready, Inc. 1.5% America Movil S.A. de C.V. 1.4% Burlington Northern Santa Fe Corp. 1.4% Reebok International Ltd. 1.4% Quiksilver, Inc. 1.4% Norfolk Southern Corp. 1.3% Aetna, Inc. 1.3% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. For the six months ended March 31, 2005, the ICON Core Equity Fund returned 8.37% for Class I shares, 7.90% for Class C shares, and 8.52% for Class Z shares, outperforming the 7.45% return of the S&P 1500 Index, the Fund's benchmark, over the same period. Total returns for other periods as of March 31, 2005 appear on page 20. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. Despite a turbulent investment environment lacking clear, sustained industry leadership, the Fund's strong tilt toward the most economically sensitive sectors such as Industrials and Information Technology enabled it to outperform its benchmark during a broad year-end rally and across the entire six-month period. As the cyclical theme weakened during the first quarter of 2005, the Fund was repositioned to more defensive-oriented industries, which assumed market leadership. Toward the end of the period, this positioning was favorable, but relative to its index, the Fund lost ground. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. The period was marked by extreme swings in the broad market. Concerns over rising oil prices dominated the environment for much of the period, even as the broad equity market rallied in conjunction with the year-end cyclical theme. During the year-end rally, investors appeared to set aside their fears of higher inflation and slowing economic growth, and instead focused on strong corporate earnings and sound underlying fundamentals. By mid-December, however, the tone of the market had changed dramatically, as crude oil futures began to rise sharply followed in early February 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 by a sudden jump in 10-year Treasury yields. This convergence of events rekindled inflation concerns while raising fears that a more aggressive stance toward monetary tightening might restrict economic growth. As the cyclically led rally subsided amid these distractions, investors braced for disappointing quarterly earnings, sending stocks into a late-period decline. Against this backdrop, investors sought refuge in more defensive areas of the market, yet remained prone to fear-based selling. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. The cyclical bent of the Fund's leading industry contributors highlights the strength of this positioning. The railroads, communications equipment, trucking, commodity chemicals, IT consulting & services, and managed health care industries contributed positively to overall Fund performance. Specific stocks that enhanced Fund performance included IT services provider Cognizant Technology Solutions Corp. and telecom equipment maker Comtech Telecommunications Corp., both of which benefited from better-than-expected quarterly earnings. Elsewhere, container manufacturer Owens-Illinois profited from higher-than-forecast operating income and widening margins resulting from efforts to focus on core glass operations. In contrast, principal industry detractors included insurance brokers, building products, steel, specialty chemicals, and health care equipment. At the same time, the Fund's lack of exposure to the integrated oil & gas industry generated the largest negative impact on a relative basis. Measurable individual detractors included insurance brokerage AON Corp., which slid when it agreed to a settlement stemming from the New York State Attorney General's investigation into insurance industry practices. Managed health care group Coventry Health Care Inc. retreated when it announced the proposed acquisition of First Health Group. Both of these stocks were sold when their relative strength declined. Meanwhile, building products manufacturer Griffon Corp. also hurt Fund performance, having posted lower operating results on continued increases in raw material costs, but it had not reached our sell criteria by period-end. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET? A. The late-period sell-off appears to be fear-driven and our methodology indicates that stocks are currently trading at a discount to estimated fair value. Ultimately, we anticipate that investor concerns will give way to strong prevailing fundamentals. However, given recent ambiguity in market leadership, we have broadened the Fund's exposure to include a more diverse range of industries. Management Overview 17 Management Overview (continued) ICON Core Equity Fund PERFORMANCE HIGHLIGHTS - The Fund's strong tilt toward economically sensitive sectors for the first three months of the period enabled it to outperform its benchmark over the six-month period. - The Fund's defensive positioning during the final three months of the period helped maintain most gains. - Railroads, communications equipment, trucking, commodity chemicals, IT consulting & services and managed health care were among the Fund's leading industry contributors, while insurance brokers, building products, steel, specialty chemicals, and health care equipment were principal industry detractors. - Specific stocks that enhanced Fund performance included Cognizant Technology Solutions Corp., Comtech Telecommunications Corp. and Owens-Illinois. - Measurable individual detractors included AON Corp., Griffon Corp. and Coventry Health Care Inc. 18 Management Overview TOP SECTORS March 31, 2005 Industrials 17.5% Financial 15.6% Healthcare 14.9% Consumer Discretionary 14.8% Information Technology 13.1% Materials 7.1% Telecommunications & Utilities 6.1% Leisure & Consumer Staples 4.7% Energy 4.6%
Percentages are based upon net assets. Management Overview 19 Management Overview (continued) ICON Core Equity Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
INCEPTION SINCE DATE 6 MONTHS* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON Core Equity Fund - Class I 10/12/00 8.37% 8.97% N/A 8.11% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% N/A 0.03% --------------------------------------------------------------------------------------------- ICON Core Equity Fund - Class C 11/28/00 7.90% 8.07% N/A 6.04% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% N/A -0.26% --------------------------------------------------------------------------------------------- ICON Core Equity Fund - Class Z 5/6/04 8.52% N/A N/A 15.00%* --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% N/A N/A 8.55%* ---------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative index can be found on pages 2 and 3. The Since Inception performance results for Class C shares include returns for certain time periods that were restated as of June 8, 2004. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE CHART]
ICON CORE EQUITY FUND - CLASS I S&P 1500 INDEX ------------------------------- -------------- 10/12/00 10000 10000 3/31/01 10810 8861 3/31/02 13234 9049 3/31/03 8715 6818 3/31/04 13001 9336 3/31/05 14167 10015
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. 20 Management Overview Schedule of Investments ICON Core Equity Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 98.4% UNITED STATES OF AMERICA 90.2% CONSUMER DISCRETIONARY 14.8% APPAREL ACCESSORIES & LUXURY GOODS 2.3% 31,800 Polo Ralph Lauren Corp. $ 1,233,840 62,800 Quiksilver, Inc.(a) 1,823,084 ------------ 3,056,924 APPAREL RETAIL 5.2% 38,900 Hot Topic, Inc.(a) 849,965 54,900 Jos. A. Bank Clothiers, Inc.(a) 1,608,570 60,200 Pacific Sunwear Of California, Inc.(a) 1,684,396 55,400 Ross Stores, Inc. 1,614,356 22,400 Urban Outfitters, Inc.(a) 1,074,528 ------------ 6,831,815 FOOTWEAR 2.6% 49,600 Brown Shoe Co., Inc. 1,699,792 42,100 Reebok International Ltd. 1,865,030 ------------ 3,564,822 HOME IMPROVEMENT RETAIL 1.3% 31,700 The Home Depot, Inc. 1,212,208 11,800 The Sherwin- Williams Co. 519,082 ------------ 1,731,290 HOMEBUILDING 1.2% 21,300 Toll Brothers, Inc.(a) 1,679,505 ------------ MOTORCYCLE MANUFACTURERS 0.4% 9,900 Harley-Davidson, Inc. 571,824 ------------ SPECIALTY STORES 1.8% 46,800 Michaels Stores, Inc. 1,698,840 25,800 Zale Corp.(a) 766,776 ------------ 2,465,616 ------------ TOTAL CONSUMER DISCRETIONARY 19,901,796
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- ENERGY 3.5% OIL & GAS EXPLORATION & PRODUCTION 2.3% 56,600 Energy Partners Ltd.(a) $ 1,469,902 30,600 Ultra Petroleum Corp.(a) 1,554,480 ------------ 3,024,382 OIL & GAS REFINING & MARKETING & TRANSPORTATION 1.2% 33,400 General Maritime Corp.(a) 1,617,896 ------------ TOTAL ENERGY 4,642,278 FINANCIAL 14.8% ASSET MANAGEMENT & CUSTODY BANKS 2.4% 23,100 American Capital Strategies Ltd. 725,571 28,000 Bank of New York Co., Inc. 813,400 19,000 Investors Financial Services Corp. 929,290 21,400 SEI Investments Co. 773,824 ------------ 3,242,085 CONSUMER FINANCE 3.2% 36,500 Americredit Corp.(a) 855,560 15,900 Capital One Financial Corp. 1,188,843 44,500 First Cash Financial Services, Inc.(a) 942,065 74,000 Providian Financial Corp.(a) 1,269,840 ------------ 4,256,308 INVESTMENT BANKING & BROKERAGE 2.3% 40,500 Investment Technology Group, Inc.(a) 708,750 13,000 Lehman Brothers Holding, Inc. 1,224,080 12,200 The Bear Stearns Cos., Inc. 1,218,780 ------------ 3,151,610 LIFE & HEALTH INSURANCE 1.7% 23,600 AmerUs Group Co. 1,115,100 19,900 Prudential Financial, Inc. 1,142,260 ------------ 2,257,360
Schedule of Investments 21 Schedule of Investments (continued) ICON Core Equity Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- MULTI-LINE INSURANCE 2.8% 37,600 Allmerica Financial Corp.(a) $ 1,351,720 34,600 HCC Insurance Holdings, Inc. 1,251,136 17,900 The Hartford Financial Services Group, Inc. 1,227,224 ------------ 3,830,080 OTHER DIVERSIFIED FINANCIAL SERVICES 0.8% 24,900 Citigroup, Inc. 1,119,006 ------------ PROPERTY & CASUALTY INSURANCE 1.6% 24,100 Selective Insurance Group, Inc. 1,114,143 26,000 Stewart Information Services Corp. 975,520 ------------ 2,089,663 ------------ TOTAL FINANCIAL 19,946,112 HEALTHCARE 14.9% HEALTH CARE EQUIPMENT 1.7% 39,000 CONMED Corp.(a) 1,174,680 22,900 Diagnostic Products Corp. 1,106,070 ------------ 2,280,750 HEALTH CARE FACILITIES 2.2% 41,700 Community Health Systems, Inc.(a) 1,455,747 30,200 Triad Hospitals, Inc.(a) 1,513,020 ------------ 2,968,767 HEALTH CARE SERVICES 4.6% 39,000 Caremark Rx, Inc.(a) 1,551,420 31,500 Laboratory Corp. of America Holdings(a) 1,518,300 15,100 Quest Diagnostics, Inc. 1,587,463 39,450 Renal Care Group, Inc.(a) 1,496,733 ------------ 6,153,916
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- HEALTH CARE SUPPLIES 1.1% 19,800 The Cooper Cos., Inc. $ 1,443,420 ------------ MANAGED HEALTH CARE 5.3% 22,800 Aetna, Inc. 1,708,860 25,500 CIGNA Corp. 2,277,150 17,300 UnitedHealth Group, Inc. 1,650,074 29,000 WellChoice, Inc.(a) 1,545,990 ------------ 7,182,074 ------------ TOTAL HEALTHCARE 20,028,927 INDUSTRIALS 17.5% AEROSPACE & DEFENSE 2.4% 15,400 L-3 Communications Holdings, Inc. 1,093,708 17,800 Lockheed Martin Corp. 1,086,868 18,200 Northrop Grumman Corp. 982,436 ------------ 3,163,012 AIRLINES 0.8% 61,000 SkyWest, Inc. 1,133,990 ------------ BUILDING PRODUCTS 2.9% 32,100 ElkCorp 1,234,566 67,900 Griffon Corp.(a) 1,453,739 35,100 Masco Corp. 1,216,917 ------------ 3,905,222 COMMERCIAL PRINTING 0.5% 20,100 John H. Harland Co. 690,636 ------------ EMPLOYMENT SERVICES 1.5% 105,900 Labor Ready, Inc.(a) 1,975,035 ------------ INDUSTRIAL MACHINERY 2.7% 51,400 Flowserve Corp.(a) 1,329,718 39,900 The Manitowoc Co, Inc. 1,611,561 23,100 Watts Water Technologies, Inc.- Class A 753,291 ------------ 3,694,570
22 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- RAILROADS 2.7% 34,700 Burlington Northern Santa Fe Corp. $ 1,871,371 47,000 Norfolk Southern Corp. 1,741,350 ------------ 3,612,721 TRUCKING 4.0% 44,400 Arkansas Best Corp. 1,677,432 62,250 Knight Transportation, Inc. 1,535,708 36,700 Yellow Roadway Corp.(a) 2,148,417 ------------ 5,361,557 ------------ TOTAL INDUSTRIALS 23,536,743 INFORMATION TECHNOLOGY 9.7% COMPUTER STORAGE & PERIPHERALS 0.8% 85,100 EMC Corp.(a) 1,048,432 ------------ 1,048,432 ELECTRONIC EQUIPMENT MANUFACTURERS 1.9% 34,900 Amphenol Corp.- Class A 1,292,696 25,900 Mettler-Toledo International, Inc.(a) 1,230,250 ------------ 2,522,946 INTERNET SOFTWARE & SERVICES 2.2% 51,200 Digital Insight Corp.(a) 839,680 34,000 Digital River, Inc.(a) 1,059,440 32,900 j2 Global Communications, Inc.(a) 1,128,799 ------------ 3,027,919 IT CONSULTING & OTHER SERVICES 1.4% 23,100 Anteon International Corp.(a) 899,283 21,600 Cognizant Technology Solutions Corp.(a) 997,920 ------------ 1,897,203 SEMICONDUCTOR EQUIPMENT 0.6% 17,700 KLA-Tencor Corp.(a) 814,377 ------------
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- SEMICONDUCTORS 1.5% 78,500 Texas Instruments, Inc. $ 2,000,965 ------------ TECHNOLOGY DISTRIBUTORS 1.3% 35,700 Arrow Electronics, Inc.(a) 904,995 49,200 Avnet, Inc.(a) 906,264 ------------ 1,811,259 ------------ TOTAL INFORMATION TECHNOLOGY 13,123,101 LEISURE & CONSUMER STAPLES 4.7% FOOD DISTRIBUTORS 1.1% 40,400 Nash Finch Co. 1,534,796 ------------ HOTELS, RESORTS & CRUISE LINES 0.7% 22,000 Royal Caribbean Cruises Ltd. 983,180 ------------ MOVIES & ENTERTAINMENT 0.5% 21,100 The Walt Disney Co. 606,203 ------------ RESTAURANTS 2.4% 24,900 CEC Entertainment, Inc.(a) 911,340 34,000 McDonald's Corp. 1,058,760 36,600 Sonic Corp.(a) 1,222,440 ------------ 3,192,540 ------------ TOTAL LEISURE & CONSUMER STAPLES 6,316,719 MATERIALS 5.6% COMMODITY CHEMICALS 1.0% 96,800 Wellman, Inc. 1,399,728 ------------ CONSTRUCTION MATERIALS 1.4% 13,500 Eagle Materials, Inc. 1,092,690 14,600 Texas Industries, Inc. 784,750 ------------ 1,877,440 DIVERSIFIED CHEMICALS 0.7% 14,900 Eastman Chemical Co. 879,100 ------------ METAL & GLASS CONTAINERS 0.9% 49,600 Owens-Illinois, Inc.(a) 1,246,944 ------------ SPECIALTY CHEMICALS 0.8% 59,300 RPM International, Inc. 1,084,004 ------------
Schedule of Investments 23 Schedule of Investments (continued) ICON Core Equity Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- STEEL 0.8% 32,100 Steel Dynamics, Inc. $ 1,105,845 ------------ TOTAL MATERIALS 7,593,061 TELECOMMUNICATIONS & UTILITIES 4.7% ELECTRIC UTILITIES 1.6% 24,200 FPL Group, Inc. 971,630 24,900 PNM Resources, Inc. 664,332 40,100 TECO Energy, Inc. 628,768 ------------ 2,264,730 GAS UTILITIES 0.5% 21,900 Oneok, Inc. 674,958 ------------ INTEGRATED TELECOMMUNICATION SERVICES 0.4% 24,200 Sprint Corp. (FON Group) 550,550 ------------ MULTI-UTILITIES & UNREGULATED POWER 1.0% 23,900 Public Service Enterprise Group, Inc. 1,299,921 ------------ WATER UTILITIES 1.2% 61,400 American States Water Co. 1,553,420 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 6,343,579 ------------ TOTAL UNITED STATES OF AMERICA 121,432,316 AMERICAN DEPOSITARY RECEIPT 4.7% NETHERLANDS 0.8% FINANCIAL 0.8% OTHER DIVERSIFIED FINANCIAL SERVICES 0.8% 35,500 Ing Groep N.V. 1,073,165 ------------ TOTAL FINANCIAL 1,073,165 ------------ TOTAL NETHERLANDS 1,073,165 FINLAND 0.8% INFORMATION TECHNOLOGY 0.8% COMMUNICATIONS EQUIPMENT 0.8% 70,800 Nokia Oyj - ADR 1,092,444 ------------ TOTAL INFORMATION TECHNOLOGY 1,092,444 ------------ TOTAL FINLAND 1,092,444
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- MEXICO 2.1% TELECOMMUNICATION & UTILITIES 1.4% WIRELESS TELECOMMUNICATION SERVICES 1.4% 37,400 America Movil S.A. De C.V. $ 1,929,840 ------------ TOTAL TELECOMMUNICATION & UTILITIES 1,929,840 MATERIALS 0.7% CONSTRUCTION MATERIALS 0.7% 24,330 Cemex S.A. De C.V. 881,963 ------------ TOTAL MATERIALS 881,963 ------------ TOTAL MEXICO 2,811,803 SWITZERLAND 1.0% INFORMATION TECHNOLOGY 1.0% COMPUTER STORAGE & PERIPHERALS 1.0% 21,700 Logitech International S.A.(a) 1,321,096 ------------ TOTAL INFORMATION TECHNOLOGY 1,321,096 ------------ TOTAL SWITZERLAND 1,321,096 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 6,298,508 CANADA 1.4% INFORMATION TECHNOLOGY 0.6% SEMICONDUCTORS 0.6% 47,800 ATI Technologies, Inc.(a) 825,028 ------------ TOTAL INFORMATION TECHNOLOGY 825,028 MATERIALS 0.8% COMMODITY CHEMICALS 0.8% 51,700 Methanex Corp. 1,004,531 ------------ TOTAL MATERIALS 1,004,531 ------------ TOTAL CANADA 1,829,559 BAHAMAS 1.1% ENERGY 1.1% OIL & GAS REFINING & MARKETING & TRANSPORTATION 1.1% 34,200 Teekay Shipping Corp. 1,537,290 ------------ TOTAL ENERGY 1,537,290 ------------ TOTAL BAHAMAS 1,537,290
24 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- BERMUDA 1.0% INFORMATION TECHNOLOGY 1.0% SEMICONDUCTORS 1.0% 36,500 Marvell Technology Group, Ltd.(a) $ 1,399,410 ------------ TOTAL INFORMATION TECHNOLOGY 1,399,410 ------------ TOTAL BERMUDA 1,399,410 ------------ TOTAL COMMON STOCKS (COST $113,007,818) 132,497,083 SHORT-TERM INVESTMENTS 1.0% VARIABLE RATE DEMAND NOTES 1.0% $1,291,604 American Family Demand Note, 2.4840%# 1,291,604 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $1,291,604) 1,291,604 ------------ TOTAL INVESTMENTS 99.4% (COST $114,299,422) 133,788,687 OTHER ASSETS LESS LIABILITIES 0.6% 757,804 ------------ NET ASSETS 100.0% $134,546,491 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005 ADR American Depositary Receipt Schedule of Investments 25 Management Overview ICON Covered Call Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 101.3% Top 10 Equity Holdings 15.0% Number of Stocks 120 Short-Term Investments 0.4% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 Burlington Northern Santa Fe Corp. 1.8% CIGNA Corp. 1.8% HCA, Inc. 1.5% Coventry Health Care, Inc. 1.5% American Healthways, Inc. 1.4% Altria Group, Inc. 1.4% Diagnostic Products Corp. 1.4% The Hartford Financial Services Group, Inc. 1.4% Steel Dynamics, Inc. 1.4% Owens-Illinois, Inc. 1.4% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. For the six months ended March 31, 2005, the ICON Covered Call Fund returned 5.19% for Class I shares, 4.72% for Class C shares, and 5.26% for Class Z shares, underperforming the 7.45% return of its benchmark, the S&P 1500 Index, over the same period. Total returns for other periods as of March 31, 2005 appear on page 30. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. Conflicting market dynamics helped 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 during the fourth quarter of 2004, the Fund was unable to keep pace as calls written against the underlying securities restricted upside potential. However, as stocks experienced sharp, volatile swings during the first quarter of 2005, implied or expected volatility as measured by the CBOE Market Volatility Index (VIX) averaged just 13.23, well below its 15-year historical average of nearly 20. Since lower volatility expectations typically result in lower option premiums, income levels, which were already at near-term lows, declined further, thereby limiting the Fund's downside cushion. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. The period was marked by extreme swings in the broad market, conditions that are generally difficult for a covered call writing strategy. This environment emerged in the wake of surging oil prices, which climbed from $40.71 a barrel in early December to $55.40 a barrel by period-end. When a corresponding rise in 10-year Treasury yields stoked pronounced fears of 26 Management Overview [ROBERT STRAUS, CMT PHOTO] Robert Straus, CMT Portfolio Manager higher inflation and slowing economic growth, investors sold shares, driving prices sharply lower off their early-March highs. 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 is in keeping with our valuation-driven methodology, with premiums at historical lows, it served to hamper Fund performance. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. From a broad sector perspective, Industrials and Healthcare were the top contributors to positive performance, evidenced by leading market themes in the managed health care, trucking, railroads, and homebuilding industries. On average, managed health care led all industry contributors and was the second most heavily weighted industry in the Fund, while trucking was the second leading contributor and most heavily weighted industry based on value and relative strength. Conversely, Information Technology proved to be the principal relative detractor at the sector level, while industry laggards included steel, computer hardware, health care equipment, and application software. Of the four, steel had the largest negative impact on Fund performance, having peaked in early March, but then declining sharply through period-end on concerns surrounding a possible economic softening. Ultimately, the steel position was pared back due to declining relative strength. As for top-performing companies, container manufacturer Owens-Illinois benefited from better-than-expected operating income and widening margins. Toll Brothers also advanced, as the upscale homebuilder experienced strong growth in conjunction with robust new home sales. Elsewhere, railroad operator Burlington Northern Santa Fe Corp. was successful in instituting fuel surcharges while experiencing double-digit volume growth. In contrast, individual performance detractors included Stratasys Inc., a maker a rapid prototyping devices, which struggled with higher compliance and commission costs. Life and health insurer UICI tumbled on the announcement that the company has settled class action cases challenging its relationship with member associations. Both of these stocks were liquidated due to declining relative strength. Meanwhile, Steel Dynamics Inc. also lost ground when the mini-mill steelmaker lowered earnings guidance Management Overview 27 Management Overview (continued) ICON Covered Call Fund due to softening demand and rising input costs, but the Fund continued to hold it at period-end because it did not meet our sell criteria. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET? A. Given the fear-driven nature of the early-March sell-off, our methodology indicates that U.S. stocks are trading at a sizable discount to proprietary fair value estimates. We believe that investor angst over unpredictable macroeconomic events will give way to recognition of strong prevailing fundamentals, and stocks are poised to move toward fair value. Accordingly, we continue to write out-of-the-money calls, sacrificing some premium yield and downside cushion in return for increased upside potential. Moreover, we continue to write shorter-dated options in order to maintain flexibility should premium levels improve, making longer-dated options more attractive. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund's investment strategy hurt relative performance, as calls written against the underlying securities restricted upside potential in a rising market. - Lower implied volatility sent option premiums to 15-year lows, limiting the Fund's premium yield and downside cushion. - Late-period declines turned steel into the largest industry detractor, while managed health care led all industry contributors. - Top-performing holdings included Owens-Illinois, Toll Brothers and Burlington Northern Santa Fe Corp. - Among the stocks that detracted from Fund performance were Stratasys Inc., Steel Dynamics Inc. and UICI. The CBOE Market Volatility Index is a measure of expected volatility calculated as 100 times the square root of the expected 30-day variance of the S&P 500 Index rate of return. 28 Management Overview TOP SECTORS March 31, 2005 Industrials 18.0% Healthcare 15.7% Consumer Discretionary 15.6% Financial 11.9% Information Technology 10.7% Leisure & Consumer Staples 8.0% Materials 7.6% Telecommunications & Utilities 7.1% Energy 6.7%
Percentages are based upon net assets. Management Overview 29 Management Overview (continued) ICON Covered Call Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
INCEPTION SINCE DATE 6 MONTHS* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON Covered Call Fund - Class I 10/1/02 5.19% 4.48% N/A 15.79% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% N/A 18.73% --------------------------------------------------------------------------------------------- ICON Covered Call Fund - Class C 11/21/02 4.72% 3.69% N/A 12.38% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% N/A 14.42% --------------------------------------------------------------------------------------------- ICON Covered Call Fund - Class Z 5/6/04 5.26% N/A N/A 8.62%* --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% N/A N/A 8.55%* ---------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative index can be found on pages 2 and 3. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON COVERED CALL FUND - CLASS I S&P 1500 INDEX -------------------------------- -------------- 10/1/02 10000 10000 3/31/03 10050 10450 3/31/04 13799 14308 3/31/05 14416 15349
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund's Class I shares on the Class' inception date of 10/1/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund's other share classes will vary due to differences in charges and expenses. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. 30 Management Overview Schedule of Investments ICON Covered Call Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 101.3% UNITED STATES OF AMERICA 97.7% CONSUMER DISCRETIONARY 15.6% APPAREL ACCESSORIES & LUXURY GOODS 3.0% 9,400 Polo Ralph Lauren Corp.(x) $ 364,720 21,300 Quiksilver, Inc.(a)(x) 618,339 10,500 V.F. Corp.(x) 620,970 ------------ 1,604,029 APPAREL RETAIL 4.8% 7,800 Abercrombie & Fitch Co.(x) 446,472 30,100 Hot Topic, Inc.(a)(x) 657,685 14,500 Pacific Sunwear of California, Inc.(a)(x) 405,710 23,500 Ross Stores, Inc.(x) 684,790 12,800 The Finish Line, Inc.(x) 296,320 ------------ 2,490,977 COMPUTER & ELECTRONICS RETAIL 0.4% 4,400 Best Buy Co., Inc.(x) 237,644 ------------ FOOTWEAR 1.4% 2,200 NIKE, Inc. - Class B(x) 183,282 7,600 Timberland Co. - Class A(a)(x) 539,068 ------------ 722,350 HOME IMPROVEMENT RETAIL 3.1% 8,500 Lowe's Cos., Inc.(x) 485,265 17,600 The Home Depot, Inc.(x) 673,024 10,300 The Sherwin-Williams Co.(x) 453,097 ------------ 1,611,386 HOMEBUILDING 1.0% 6,900 Toll Brothers, Inc.(a)(x) 544,065 ------------ MOTORCYCLE MANUFACTURERS 0.7% 6,500 Harley-Davidson, Inc.(x) 375,440 ------------ SPECIALTY STORES 1.2% 12,800 Michael's Stores, Inc.(x) 464,640 3,600 O'Reilly Automotive, Inc.(a)(x) 178,308 ------------ 642,948 ------------ TOTAL CONSUMER DISCRETIONARY 8,228,839
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- ENERGY 5.2% OIL & GAS EXPLORATION & PRODUCTION 1.8% 3,500 Newfield Exploration Co.(a)(x) $ 259,910 14,000 Ultra Petroleum Corp.(a)(x) 711,200 ------------ 971,110 OIL & GAS REFINING & MARKETING & TRANSPORTATION 3.4% 4,900 Ashland, Inc.(x) 330,603 6,800 General Maritime Corp.(a)(x) 329,392 25,300 OMI Corp.(x) 484,495 9,800 Overseas Shipholding Group, Inc.(x) 616,518 ------------ 1,761,008 ------------ TOTAL ENERGY 2,732,118 FINANCIAL 11.9% CONSUMER FINANCE 2.3% 8,500 Capital One Financial Corp.(x) 635,545 23,800 Providian Financial Corp.(a)(x) 408,408 3,100 SLM Corp.(x) 154,504 ------------ 1,198,457 INVESTMENT BANKING & BROKERAGE 2.6% 15,700 A.G. Edwards, Inc.(x) 703,360 3,200 Lehman Brothers Holding, Inc.(x) 301,312 3,500 The Goldman Sachs Group, Inc.(x) 384,965 ------------ 1,389,637 LIFE & HEALTH INSURANCE 0.6% 5,500 Prudential Financial, Inc.(x) 315,700 ------------ MULTI-LINE INSURANCE 2.6% 8,800 Loews Corp.(x) 647,152 10,800 The Hartford Financial Services Group, Inc.(x) 740,448 ------------ 1,387,600 PROPERTY & CASUALTY INSURANCE 2.8% 9,200 ACE Ltd.(x) 379,684 9,100 The Allstate Corp.(x) 491,946 13,400 Selective Insurance Group, Inc.(x) 619,482 ------------ 1,491,112
Schedule of Investments 31 Schedule of Investments (continued) ICON Covered Call Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- REINSURANCE 1.0% 6,200 Everest Re Group Ltd.(x) $ 527,682 ------------ TOTAL FINANCIAL 6,310,188 HEALTHCARE 15.7% HEALTH CARE DISTRIBUTORS 0.4% 4,400 Patterson Cos., Inc.(a)(x) 219,780 ------------ HEALTH CARE EQUIPMENT 1.4% 15,500 Diagnostic Products Corp.(x) 748,650 ------------ HEALTH CARE FACILITIES 4.6% 13,500 Community Health Systems, Inc.(a)(x) 471,285 15,000 HCA, Inc.(x) 803,550 10,400 Lifepoint Hospitals, Inc.(a)(x) 455,936 5,100 United Surgical Partners International, Inc.(a)(x) 233,427 9,400 Universal Health Services, Inc.(x) 492,560 ------------ 2,456,758 HEALTH CARE SERVICES 3.5% 23,000 American Healthways, Inc.(a)(x) 759,460 13,200 Laboratory Corp. of America Holdings(a)(x) 636,240 4,300 Quest Diagnostics, Inc.(x) 452,059 ------------ 1,847,759 MANAGED HEALTH CARE 5.8% 7,800 Aetna, Inc.(x) 584,610 11,500 AMERIGROUP Corp.(a)(x) 420,440 10,400 CIGNA Corp.(x) 928,720 11,750 Coventry Health Care, Inc.(a)(x) 800,645 9,500 Health Net Inc.(a)(x) 310,745 ------------ 3,045,160 ------------ TOTAL HEALTHCARE 8,318,107 INDUSTRIALS 18.0% AEROSPACE & DEFENSE 0.5% 4,000 Alliant Techsystems, Inc.(a)(x) 285,800 ------------
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- AIRLINES 1.2% 12,600 Alaska Air Group, Inc.(a)(x) $ 370,944 15,400 SkyWest, Inc.(x) 286,286 ------------ 657,230 BUILDING PRODUCTS 1.7% 15,800 Lennox International, Inc.(x) 346,336 14,000 NCI Building Systems, Inc.(a)(x) 540,400 ------------ 886,736 CONSTRUCTION & ENGINEERING 1.4% 10,800 Granite Construction, Inc.(x) 283,716 9,200 Jacobs Engineering Group, Inc.(a)(x) 477,664 ------------ 761,380 CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 2.0% 7,500 Oshkosh Truck Corp.(x) 614,925 5,000 The Toro Co.(x) 442,500 ------------ 1,057,425 EMPLOYMENT SERVICES 0.6% 17,600 Labor Ready, Inc.(a)(x) 328,240 ------------ ENVIRONMENTAL SERVICES 0.8% 12,000 Waste Connections, Inc.(a)(x) 417,000 ------------ INDUSTRIAL MACHINERY 0.7% 4,600 Ingersoll Rand Co. Ltd. - Class A(x) 366,390 ------------ RAILROADS 3.5% 18,000 Burlington Northern Santa Fe Corp.(x) 970,740 12,000 CSX Corp.(x) 499,800 10,300 Norfolk Southern Corp.(x) 381,615 ------------ 1,852,155 TRADING COMPANIES & DISTRIBUTORS 1.1% 9,700 W.W. Grainger, Inc.(x) 604,019 ------------
32 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- TRUCKING 4.5% 9,000 Arkansas Best Corp.(x) $ 340,020 14,000 CNF, Inc.(x) 655,060 11,700 J.B. Hunt Transport Services, Inc.(x) 512,109 20,650 Knight Transportation, Inc.(x) 509,436 8,800 Swift Transportation Co., Inc.(a)(x) 194,832 2,600 Yellow Roadway Corp.(a)(x) 152,204 ------------ 2,363,661 ------------ TOTAL INDUSTRIALS 9,580,036 INFORMATION TECHNOLOGY 10.0% APPLICATION SOFTWARE 0.2% 4,900 SS&C Technologies, Inc.(x) 111,720 ------------ COMPUTER STORAGE & PERIPHERALS 1.5% 29,000 Overland Storage, Inc.(a)(x) 425,720 12,300 SanDisk Corp.(a)(x) 341,940 ------------ 767,660 COMPUTER HARDWARE 1.5% 6,600 Avid Technology, Inc.(a)(x) 357,192 11,700 Dell, Inc.(a)(x) 449,514 ------------ 806,706 ELECTRONIC EQUIPMENT MANUFACTURERS 0.6% 8,300 Amphenol Corp. - Class A(x) 307,432 ------------ HOME ENTERTAINMENT SOFTWARE 0.5% 7,400 Take-Two Interactive Software, Inc.(a)(x) 289,340 ------------ INTERNET SOFTWARE & SERVICES 2.0% 33,700 Digital Insight Corp.(a)(x) 552,680 15,400 j2 Global Communications, Inc.(a)(x) 528,374 ------------ 1,081,054 IT CONSULTING & OTHER SERVICES 0.9% 6,200 Anteon International Corp.(a)(x) 241,366 4,900 Cognizant Technology Solutions Corp.(a)(x) 226,380 ------------ 467,746 SEMICONDUCTOR EQUIPMENT 0.8% 8,800 KLA-Tencor Corp.(a)(x) 404,888 ------------
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- SEMICONDUCTORS 2.0% 8,000 International Rectifier Corp.(a)(x) $ 364,000 11,100 OmniVision Technologies, Inc.(a)(x) 168,165 20,500 Texas Instruments, Inc.(x) 522,545 ------------ 1,054,710 ------------ TOTAL INFORMATION TECHNOLOGY 5,291,256 LEISURE & CONSUMER STAPLES 8.0% AGRICULTURE PRODUCTS 0.9% 19,200 Corn Products International, Inc.(x) 499,008 ------------ DISTILLERS & VINTNERS 1.0% 10,400 Constellation Brands, Inc.(a)(x) 549,848 ------------ FOOD DISTRIBUTORS 0.9% 13,000 Nash Finch Co.(x) 493,870 ------------ PHOTOGRAPHIC PRODUCTS 0.4% 6,200 Eastman Kodak Co.(x) 201,810 ------------ RESTAURANTS 2.7% 12,900 CBRL Group, Inc.(x) 532,770 6,700 Rare Hospitality International, Inc.(a)(x) 206,896 18,300 Sonic Corp.(a)(x) 611,220 ------------ 1,350,886 TOBACCO 2.1% 11,600 Altria Group, Inc.(x) 758,524 1,100 Reynolds American, Inc.(x) 88,649 5,600 UST, Inc.(x) 289,520 ------------ 1,136,693 ------------ TOTAL LEISURE & CONSUMER STAPLES 4,232,115 MATERIALS 7.6% ALUMINUM 0.6% 12,900 Aleris International, Inc.(a)(x) 321,855 ------------ CONSTRUCTION MATERIALS 2.4% 8,000 Eagle Materials, Inc.(x) 647,520 15,200 Headwaters, Inc.(a)(x) 498,864 2,500 Lafarge North America, Inc.(x) 146,125 ------------ 1,292,509 DIVERSIFIED CHEMICALS 0.8% 5,800 PPG Industries, Inc.(x) 414,816 ------------
Schedule of Investments 33 Schedule of Investments (continued) ICON Covered Call Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- FERTILIZERS & AGRICULTURAL CHEMICALS 0.0% 200 Scotts Miracle-Gro Company(a) $ 14,046 ------------ METAL & GLASS CONTAINERS 1.4% 28,600 Owens-Illinois, Inc.(a)(x) 719,004 ------------ STEEL 2.4% 9,000 Nucor Corp.(x) 518,040 21,400 Steel Dynamics, Inc.(x) 737,230 ------------ 1,255,270 ------------ TOTAL MATERIALS 4,017,500 TELECOMMUNICATIONS & UTILITIES 5.7% ELECTRIC UTILITIES 1.5% 8,100 DTE Energy Co.(x) 368,388 7,600 PPL Corp.(x) 410,324 ------------ 778,712 GAS UTILITIES 0.9% 7,700 Questar Corp.(x) 456,225 ------------ MULTI-UTILITIES & UNREGULATED POWER 2.3% 12,600 Public Service Enterprise Group, Inc.(x) 685,314 14,000 Sempra Energy(x) 557,760 ------------ 1,243,074 WIRELESS TELECOMMUNICATION SERVICES 1.0% 4,900 NII Holdings, Inc. - Class B(a)(x) 281,750 4,000 SpectraSite, Inc.(a)(x) 231,880 ------------ 513,630 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 2,991,641 ------------ TOTAL UNITED STATES OF AMERICA 51,701,800 AMERICAN DEPOSITARY RECEIPT 1.4% MEXICO 1.4% TELECOMMUNICATIONS & UTILITIES 1.4% WIRELESS TELECOMMUNICATION SERVICES 1.4% 13,900 America Movil S.A. de C.V.(x) 717,240 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 717,240 ------------ TOTAL MEXICO 717,240 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 717,240
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- BAHAMAS 0.7% ENERGY 0.7% OIL & GAS REFINING & MARKETING & TRANSPORTATION 0.7% 8,300 Teekay Shipping Corp.(x) $ 373,085 ------------ TOTAL ENERGY 373,085 ------------ TOTAL BAHAMAS 373,085 BERMUDA 0.5% ENERGY 0.5% OIL & GAS REFINING & MARKETING & TRANSPORTATION 0.5% 5,700 Nordic American Tanker Shipping Ltd.(x) 270,465 ------------ TOTAL ENERGY 270,465 ------------ TOTAL BERMUDA 270,465 BRITISH VIRGIN ISLANDS 0.7% INFORMATION TECHNOLOGY 0.7% ELECTRONIC EQUIPMENT MANUFACTURERS 0.7% 14,000 Nam Tai Electronics, Inc.(x) 372,400 ------------ TOTAL INFORMATION TECHNOLOGY 372,400 ------------ TOTAL BRITISH VIRGIN ISLANDS 372,400 CANADA 0.3% ENERGY 0.3% INTEGRATED OIL & GAS 0.3% 3,500 Suncor Energy, Inc.(x) 140,735 ------------ TOTAL ENERGY 140,735 ------------ TOTAL CANADA 140,735 ------------ TOTAL COMMON STOCKS (COST $47,229,469) 53,575,725
34 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- SHORT-TERM INVESTMENTS 0.4% VARIABLE RATE DEMAND NOTES 0.4% 234,055 American Family Demand Note, 2.4663%(#) $ 234,055 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $234,055) 234,055 ------------ TOTAL INVESTMENTS 101.7% (COST $47,463,524) 53,809,780 LIABILITIES LESS OTHER ASSETS (1.7)% (906,169) ------------ NET ASSETS 100.0% $ 52,903,611 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005. x Portion or all of this security is pledged as collateral for call options written. Schedule of Investments 35 Schedule of Written Options ICON Covered Call Fund March 31, 2005 (unaudited)
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- A.G. Edwards, Inc. Expiration April 2005 Exercise Price $45.00 157 $ 10,205 Abercrombie & Fitch Co. Expiration April 2005 Exercise Price $55.00 51 15,173 ACE Ltd. Expiration May 2005 Exercise Price $45.00 92 3,220 Aetna, Inc. Expiration April 2005 Exercise Price $75.00 55 9,488 Expiration April 2005 Exercise Price $77.50 12 810 Expiration May 2005 Exercise Price $75.00 11 3,630 Alaska Air Group, Inc. Expiration April 2005 Exercise Price $30.00 126 9,135 Aleris International, Inc. Expiration May 2005 Exercise Price $30.00 129 4,838 Alliant Techsystems, Inc. Expiration May 2005 Exercise Price $75.00 40 3,300 The Allstate Corp. Expiration May 2005 Exercise Price $55.00 86 7,955 Altria Group, Inc. Expiration April 2005 Exercise Price $65.00 81 9,518 America Movil S.A. de C.V. Expiration April 2005 Exercise Price $55.00 118 1,475 Expiration May 2005 Exercise Price $55.00 21 1,785
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- American Healthways, Inc. Expiration April 2005 Exercise Price $35.00 207 $ 3,623 Expiration May 2005 Exercise Price $35.00 23 1,898 AMERIGROUP Corp. Expiration May 2005 Exercise Price $35.00 58 15,660 Amphenol Corp. Expiration May 2005 Exercise Price $40.00 45 2,363 Anteon International Corp. Expiration April 2005 Exercise Price $40.00 56 2,240 Arkansas Best Corp. Expiration April 2005 Exercise Price $40.00 76 4,180 Expiration April 2005 Exercise Price $45.00 14 315 Ashland, Inc. Expiration April 2005 Exercise Price $70.00 49 3,920 Avid Technology, Inc. Expiration April 2005 Exercise Price $55.00 50 6,250 Expiration May 2005 Exercise Price $55.00 10 2,700 Best Buy Co., Inc. Expiration April 2005 Exercise Price $55.00 44 5,170 Burlington Northern Santa Fe Corp. Expiration April 2005 Exercise Price $50.00 117 47,970 Capital One Financial Corp. Expiration April 2005 Exercise Price $75.00 85 9,563
36 Schedule of Written Options
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- CBRL Group, Inc. Expiration April 2005 Exercise Price $45.00 129 $ 1,613 CIGNA Corp. Expiration April 2005 Exercise Price $90.00 104 15,860 CNF, Inc. Expiration April 2005 Exercise Price $47.50 28 1,890 Expiration April 2005 Exercise Price $50.00 112 1,400 Cognizant Technology Solutions Corp. Expiration April 2005 Exercise Price $45.00 34 7,395 Community Health Systems, Inc. Expiration May 2005 Exercise Price $35.00 135 17,550 Constellation Brands, Inc. Expiration April 2005 Exercise Price $50.00 36 11,070 Expiration April 2005 Exercise Price $55.00 52 1,430 Expiration May 2005 Exercise Price $55.00 16 1,520 Corn Products International, Inc. Expiration April 2005 Exercise Price $27.50 192 1,920 Coventry Health Care, Inc. Expiration April 2005 Exercise Price $65.00 64 22,720 Expiration April 2005 Exercise Price $70.00 53 3,048 CSX Corp. Expiration May 2005 Exercise Price $45.00 120 3,300
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- Dell, Inc. Expiration April 2005 Exercise Price $40.00 117 $ 1,463 Diagnostic Products Corp. Expiration April 2005 Exercise Price $50.00 108 5,130 Expiration May 2005 Exercise Price $50.00 47 6,698 Digital Insight Corp. Expiration April 2005 Exercise Price $17.50 303 3,788 Expiration May 2005 Exercise Price $17.50 34 1,530 DTE Energy Co. Expiration April 2005 Exercise Price $45.00 49 4,410 Eagle Materials, Inc. Expiration April 2005 Exercise Price $85.00 68 6,970 Expiration May 2005 Exercise Price $85.00 12 3,000 Eastman Kodak Co. Expiration April 2005 Exercise Price $32.50 62 4,495 Everest Re Group Ltd. Expiration April 2005 Exercise Price $90.00 40 500 Expiration May 2005 Exercise Price $90.00 22 1,595 General Maritime Corp. Expiration April 2005 Exercise Price $50.00 68 4,930 The Goldman Sachs Group, Inc. Expiration May 2005 Exercise Price $115.00 35 4,200
Schedule of Written Options 37 Schedule of Written Options (continued) ICON Covered Call Fund March 31, 2005 (unaudited)
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- Granite Construction, Inc. Expiration April 2005 Exercise Price $25.00 41 $ 5,843 Harley-Davidson, Inc. Expiration April 2005 Exercise Price $60.00 49 2,573 Expiration April 2005 Exercise Price $65.00 16 80 The Hartford Financial Services Group, Inc. Expiration April 2005 Exercise Price $70.00 65 3,738 Expiration May 2005 Exercise Price $70.00 27 4,320 HCA, Inc. Expiration April 2005 Exercise Price $47.50 127 78,740 Expiration May 2005 Exercise Price $55.00 23 2,760 Headwaters, Inc. Expiration May 2005 Exercise Price $35.00 152 15,200 Health Net, Inc. Expiration May 2005 Exercise Price $35.00 95 6,413 The Home Depot, Inc. Expiration April 2005 Exercise Price $40.00 176 1,760 Hot Topic, Inc. Expiration May 2005 Exercise Price $22.50 301 32,358 Ingersoll-Rand Co. Ltd. - Class A Expiration May 2005 Exercise Price $90.00 46 1,725 International Rectifier Corp. Expiration April 2005 Exercise Price $45.00 56 8,400
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- j2 Global Communications, Inc. Expiration April 2005 Exercise Price $35.00 46 $ 4,600 Expiration April 2005 Exercise Price $40.00 108 810 Jacobs Engineering Group, Inc. Expiration April 2005 Exercise Price $55.00 60 750 Expiration May 2005 Exercise Price $55.00 32 2,480 J.B. Hunt Transport Services, Inc. Expiration April 2005 Exercise Price $45.00 35 2,363 Expiration May 2005 Exercise Price $50.00 82 3,485 KLA-Tencor Corp. Expiration April 2005 Exercise Price $47.50 71 3,905 Knight Transportation, Inc. Expiration April 2005 Exercise Price $25.00 75 3,563 Expiration May 2005 Exercise Price $25.00 72 6,660 Labor Ready, Inc. Expiration May 2005 Exercise Price $20.00 150 9,375 Laboratory Corp. of America Holdings Expiration April 2005 Exercise Price $45.00 40 13,200 Expiration April 2005 Exercise Price $50.00 59 738 Expiration May 2005 Exercise Price $47.50 33 6,518 Lafarge North America, Inc. Expiration April 2005 Exercise Price $60.00 16 760
38 Schedule of Written Options
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- Lehman Brothers Holdings, Inc. Expiration April 2005 Exercise Price $95.00 32 $ 4,000 Lennox International, Inc. Expiration April 2005 Exercise Price $22.50 111 2,498 Expiration May 2005 Exercise Price $22.50 47 2,703 Lifepoint Hospitals, Inc. Expiration May 2005 Exercise Price $40.00 68 31,280 Expiration May 2005 Exercise Price $45.00 36 5,220 Loews Corp. Expiration April 2005 Exercise Price $75.00 77 3,273 Expiration May 2005 Exercise Price $75.00 11 1,430 Lowe's Cos., Inc. Expiration May 2005 Exercise Price $60.00 85 4,675 Michael's Stores, Inc. Expiration May 2005 Exercise Price $35.00 77 16,940 Nam Tai Electronics, Inc. Expiration May 2005 Exercise Price $30.00 140 7,000 Nash Finch Co. Expiration April 2005 Exercise Price $35.00 65 20,150 Expiration April 2005 Exercise Price $40.00 39 1,268 Expiration May 2005 Exercise Price $40.00 26 2,990
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- NCI Building Systems, Inc. Expiration April 2005 Exercise Price $40.00 112 $ 6,440 Expiration May 2005 Exercise Price $40.00 28 3,710 Newfield Exploration Co. Expiration April 2005 Exercise Price $75.00 26 3,965 Expiration May 2005 Exercise Price $75.00 9 2,813 NII Holdings, Inc. Expiration April 2005 Exercise Price $60.00 39 1,950 Expiration May 2005 Exercise Price $60.00 10 1,475 NIKE, Inc. Expiration April 2005 Exercise Price $85.00 15 1,013 Expiration May 2005 Exercise Price $85.00 4 690 Nordic American Tanker Shipping Ltd. Expiration April 2005 Exercise Price $50.00 57 3,420 Norfolk Southern Corp. Expiration May 2005 Exercise Price $40.00 103 2,060 Nucor Corp. Expiration April 2005 Exercise Price $65.00 77 1,925 Expiration May 2005 Exercise Price $65.00 13 1,788 OMI Corp. Expiration April 2005 Exercise Price $20.00 215 5,913 Expiration May 2005 Exercise Price $20.00 38 3,420
Schedule of Written Options 39 Schedule of Written Options (continued) ICON Covered Call Fund March 31, 2005 (unaudited)
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- Omnivision Technologies Expiration April 2005 Exercise Price $17.50 111 $ 833 O'Reilly Automotive, Inc. Expiration May 2005 Exercise Price $50.00 27 4,118 Oshkosh Truck Corp. Expiration April 2005 Exercise Price $80.00 41 12,300 Overland Storage, Inc. Expiration April 2005 Exercise Price $15.00 232 8,120 Overseas Shipholding Group, Inc. Expiration April 2005 Exercise Price $65.00 78 7,605 Expiration May 2005 Exercise Price $65.00 20 5,000 Owens-Illinois, Inc. Expiration May 2005 Exercise Price $25.00 186 25,575 Pacific Sunwear of California Expiration April 2005 Exercise Price $30.00 145 2,538 Patterson Cos., Inc. Expiration April 2005 Exercise Price $50.00 40 3,800 Polo Ralph Lauren Corp. Expiration April 2005 Exercise Price $40.00 47 1,645 Expiration May 2005 Exercise Price $40.00 47 4,230 PPG Industries, Inc. Expiration May 2005 Exercise Price $75.00 58 3,045
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- PPL Corp. Expiration April 2005 Exercise Price $55.00 61 $ 1,220 Expiration May 2005 Exercise Price $55.00 15 1,200 Providian Financial Corp. Expiration May 2005 Exercise Price $17.50 119 7,140 Prudential Financial, Inc. Expiration April 2005 Exercise Price $60.00 47 588 Expiration May 2005 Exercise Price $60.00 8 660 Public Service Enterprise Group, Inc. Expiration April 2005 Exercise Price $55.00 100 3,750 Expiration May 2005 Exercise Price $55.00 26 2,600 Quest Diagnostics, Inc. Expiration April 2005 Exercise Price $100.00 15 8,025 Expiration May 2005 Exercise Price $105.00 19 6,175 Questar Corp. Expiration April 2005 Exercise Price $55.00 77 33,880 Quiksilver, Inc. Expiration April 2005 Exercise Price $30.00 149 6,333 Expiration April 2005 Exercise Price $35.00 64 800 Rare Hospitality International, Inc. Expiration April 2005 Exercise Price $30.00 57 6,413
40 Schedule of Written Options
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- Reynolds American, Inc. Expiration May 2005 Exercise Price $80.00 8 $ 2,520 Ross Stores, Inc. Expiration May 2005 Exercise Price $30.00 235 21,738 SanDisk Corp. Expiration April 2005 Exercise Price $27.50 37 4,348 Expiration April 2005 Exercise Price $30.00 62 1,860 Expiration May 2005 Exercise Price $30.00 24 3,240 Selective Insurance Group, Inc. Expiration April 2005 Exercise Price $45.00 60 9,450 Expiration April 2005 Exercise Price $50.00 23 288 Sempra Energy Expiration April 2005 Exercise Price $40.00 21 1,103 Expiration May 2005 Exercise Price $40.00 70 8,225 SkyWest, Inc. Expiration May 2005 Exercise Price $20.00 154 4,620 SLM Corp. Expiration April 2005 Exercise Price $50.00 31 3,023 Sonic Corp. Expiration April 2005 Exercise Price $35.00 146 2,920 Expiration May 2005 Exercise Price $35.00 37 2,960 SpectraSite, Inc. Expiration April 2005 Exercise Price $60.00 24 1,380 Expiration May 2005 Exercise Price $60.00 16 2,760
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- SS&C Technologies, Inc. Expiration May 2005 Exercise Price $25.00 40 $ 2,500 Steel Dynamics, Inc. Expiration April 2005 Exercise Price $40.00 214 5,350 Suncor Energy, Inc. Expiration April 2005 Exercise Price $40.00 35 4,550 Swift Transportation Co., Inc. Expiration April 2005 Exercise Price $22.50 24 1,200 Expiration May 2005 Exercise Price $25.00 64 2,240 Take-Two Interactive Software, Inc. Expiration April 2005 Exercise Price $40.00 14 1,085 Expiration April 2005 Exercise Price $42.50 52 780 Expiration May 2005 Exercise Price $42.50 8 700 Teekay Shipping Corp. Expiration April 2005 Exercise Price $50.00 83 1,245 Texas Instruments, Inc. Expiration May 2005 Exercise Price $27.50 205 9,738 The Finish Line Expiration May 2005 Exercise Price $22.50 102 14,790 The Sherwin-Williams Co. Expiration May 2005 Exercise Price $45.00 67 5,863 Timberland Co. Expiration April 2005 Exercise Price $75.00 76 1,710
Schedule of Written Options 41 Schedule of Written Options (continued) ICON Covered Call Fund March 31, 2005 (unaudited)
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- Toll Brothers, Inc. Expiration April 2005 Exercise Price $85.00 69 $ 2,243 The Toro Co. Expiration May 2005 Exercise Price $95.00 50 5,875 Ultra Petroleum Corp. Expiration April 2005 Exercise Price $55.00 28 1,260 Expiration May 2005 Exercise Price $55.00 1,008 20,720 United Surgical Partners International, Inc. Expiration April 2005 Exercise Price $45.00 31 4,728 Expiration May 2005 Exercise Price $47.50 20 2,850 Universal Health Services, Inc. Expiration April 2005 Exercise Price $50.00 61 16,318 Expiration May 2005 Exercise Price $55.00 33 3,053
UNDERLYING SECURITY/ CONTRACTS EXPIRATION DATE/ (100 SHARES MARKET EXERCISE PRICE PER CONTRACT) VALUE ------------------------------------------------- UST, Inc. Expiration April 2005 Exercise Price $55.00 31 $ 465 Expiration May 2005 Exercise Price $55.00 25 938 V.F. Corp. Expiration April 2005 Exercise Price $60.00 105 6,038 W.W. Grainger, Inc. Expiration April 2005 Exercise Price $60.00 39 10,043 Waste Connections, Inc. Expiration May 2005 Exercise Price $35.00 78 6,825 Yellow Roadway Corp. Expiration April 2005 Exercise Price $60.00 26 2,145 Total Options Written 12,791 1,056,190 (Premiums received $1,030,299)
The accompanying notes are an integral part of the financial statements. 42 Schedule of Written Options Management Overview ICON Equity Income Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities Common Stocks 76.9% Preferred Stocks 2.9% Convertible Preferred Stocks 5.1% Top 10 Equity Holdings 14.0% Number of Stocks 107 Options Purchased Call Options 0.3% Number of Securities on Which Options Have Been Purchased 4 Bonds & Short-Term Investments Convertible Corporate Bonds 2.0% Corporate Bonds 8.1% Short-Term Investments 0.6% Number of Bonds 21 Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 Canadian Pacific Railway Ltd. 1.7% The Allstate Corporation 1.6% Burlington Northern Santa Fe Corp. 1.6% CIGNA Corp. 1.6% Apogee Enterprises, Inc. 1.3% Caterpillar, Inc. 1.3% Altria Group, Inc. 1.3% Smith & Nephew plc 1.2% UST, Inc. 1.2% DaimlerChrysler AG, 6.5%, 11/15/2013 1.2% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. For the six months ended March 31, 2005, the ICON Equity Income Fund returned 6.17% for Class I shares, 5.71% for Class C shares, and 6.30% for Class Z shares, underperforming the 7.45% return of its benchmark, the S&P 1500 Index, over the same period. Total returns for other periods as of March 31, 2005 appear on page 47. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. After capturing solid upside alongside a broad year-end rally, the Fund surrendered a portion of its gains during the first quarter of 2005, as weakness in the fixed-income markets led to relative underperformance. Behind this weakness were external factors ranging from inflation fears to slowing economic growth, both of which were related to the rising cost of oil. Higher interest rates, however, also posed a significant challenge. With 10- year Treasury Note yields drifting as low as 3.99% before peaking at 4.64% in mid-March, bond prices declined as interest rates rose. Additionally, automotive-related debt lost value when an earnings warning issued by General Motors (which the Fund did not own) produced a widespread sell-off. Because the Fund held a sizable position in corporate debt during the period, including several automotive-related holdings, falling bond prices worked against relative performance. Consequently, the corporate debt position was reduced. 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 intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Management Overview 43 Management Overview (continued) ICON Equity Income Fund Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. Conflicting markets characterized the investment environment during the six- month period. Initially, stocks rose in a broad advance as investors warmed to easing energy prices, positive job growth and decisive election-year results. Moreover, steady increases in gross domestic product and the measured pace of monetary tightening suggested that the economy was on solid footing. However, conditions worsened during the first quarter when sudden surges in oil prices and interest rates fueled fears that higher inflation would lead to a softening economy. Although pricing power and inflation remained in check, investors nonetheless retreated as cyclical industries lost ground, while defensive groups maintained traction amid subsequent downturns. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Despite the pullback in cyclical industries, economically sensitive sectors such as Industrials and Materials comprised large sector weights relative the benchmark and proved to be the leading contributors to Fund performance. Within the Industrials sector, the railroads industry was an industry standout, whereas construction materials and commodity chemicals were top gainers in the Materials sector. Although the largest sector weight when the period began, positions in the Financial area were steadily reduced due to their lack of relative strength. Industry weakness within the consumer finance group, which experienced a severe reversal of leadership during the period, resulted in the sector finishing the period as a net detractor. Steel also saw its leadership position evaporate when the industry suffered a fear-based sell-off as the period came to a close, and finished up as a net detractor to performance. As for the Fund's leading individual contributors, railroad operator Burlington Northern Santa Fe Corp. was successful in instituting fuel surcharges while also achieving double-digit volume growth. Meanwhile, polyester fiber and PET resin producer Wellman Inc. benefited from pricing improvements and subsequent margin recovery. Smokeless tobacco marketer UST Inc. also gapped higher as the company continued to benefit from favorable industry trends. Conversely, consumer finance company Cash America International Inc. slid when Federal regulators unveiled new guidelines governing the secured non- recourse loan business. Multi-line insurer American International Group Inc. also struggled when it was named in the New York State Attorney General's investigation into insurance industry practices. Likewise, insurance brokerage AON Corp. fell when it agreed to settle a lawsuit stemming from the New 44 Management Overview [DEREK ROLLINGSON PHOTO] Derek Rollingson Portfolio Manager York State investigation. All three were ultimately liquidated due to declining relative strength. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC MARKETS? A. While ICON does not utilize market capitalization as a research metric, compelling valuation and relative strength readings in selected industries have led us to increase the Fund's exposure to large-cap names. Generally, large-cap companies, particularly those featuring more defensive tendencies, distribute attractive dividend income, and their attractive valuations made them suited for inclusion in the Fund. It is likely that the Fund will continue to decrease its weighting in convertible instruments, whose value is tied to yields, while increasing its pure equity exposure. With economic growth seemingly in line with Federal Reserve targets, we see no reason why yields must rise appreciably above current levels, but do anticipate that the broader equity market will resume its upward advance over time. PERFORMANCE HIGHLIGHTS March 31, 2005 - After capturing solid upside in a broad year-end rally, the Fund surrendered a portion of its gains as its fixed-income allocation led to relative underperformance. - The Fund's fixed-income holdings lost value during the period when bond prices declined as interest rates rose. - Despite a pullback in cyclical industries, Industrials and Materials comprised large sector weights relative to the benchmark and were the leading contributors to Fund performance. - Burlington Northern Santa Fe Corp., Wellman Inc. and UST Inc. were among the Fund's leading individual contributors. - Stocks that detracted from Fund performance included Cash America International Inc., American International Group Inc. and AON Corp. Management Overview 45 Management Overview (continued) ICON Equity Income Fund SECTOR COMPOSITION March 31, 2005 Financial 13.9% Industrials 13.7% Healthcare 13.5% Leisure & Consumer Staples 11.4% Information Technology 10.3% Telecommunications & Utilities 9.8% Materials 9.1% Consumer Discretionary 8.9% Energy 4.7%
Percentages are based upon common stock positions and net assets. 46 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
INCEPTION SINCE DATE 6 MONTHS* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON Equity Income Fund - Class I 10/1/02 6.17% 6.07% N/A 20.26% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% N/A 18.73% --------------------------------------------------------------------------------------------- ICON Equity Income Fund - Class C 11/8/02 5.71% 5.21% N/A 17.20% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% N/A 14.82% --------------------------------------------------------------------------------------------- ICON Equity Income Fund - Class Z 5/10/04 6.30% N/A N/A 14.93%* --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% N/A N/A 11.44%* ---------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative index can be found on pages 2 and 3. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON EQUITY INCOME FUND - CLASS I S&P 1500 INDEX ------------------------------- -------------- 10/1/02 10000 10000 3/31/03 10091 10450 3/31/04 14940 14308 3/31/05 15847 15349
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund's Class I shares on the Class' inception date of 10/1/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund's other share classes will vary due to differences in charges and expenses. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Management Overview 47 Schedule of Investments ICON Equity Income Fund March 31, 2005 (unaudited)
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 76.9% UNITED STATES OF AMERICA 65.8% CONSUMER DISCRETIONARY 5.3% APPAREL ACCESSORIES & LUXURY GOODS 1.0% 22,600 V.F. Corp. $ 1,336,564 APPAREL RETAIL 0.9% 50,400 Limited Brands, Inc. 1,224,720 FOOTWEAR 1.0% 41,000 Brown Shoe Co., Inc. 1,405,070 HOME IMPROVEMENT RETAIL 0.9% 28,100 The Sherwin- Williams Co. 1,236,119 HOMEBUILDING 1.5% 19,700 Hovnanian Enterprises, Inc. - Class A(a) 1,004,700 18,300 Ryland Group, Inc. 1,134,966 ------------ 2,139,666 ------------ TOTAL CONSUMER DISCRETIONARY 7,342,139 ENERGY 2.0% INTEGRATED OIL & GAS 0.7% 9,400 ConocoPhillips 1,013,696 OIL & GAS EQUIPMENT & SERVICES 0.7% 26,500 Tidewater, Inc. 1,029,790 OIL & GAS REFINING & MARKETING & TRANSPORTATION 0.6% 10,600 Ashland, Inc. 715,182 ------------ TOTAL ENERGY 2,758,668 FINANCIAL 8.7% ASSET MANAGEMENT & CUSTODY BANKS 0.7% 30,000 American Capital Strategies Ltd. 942,300 CONSUMER FINANCE 0.9% 69,200 Providian Financial Corp.(a) 1,187,472 DIVERSIFIED BANKS 0.9% 29,694 Bank of America Corp. 1,309,505 INVESTMENT BANKING & BROKERAGE 1.0% 29,400 A.G. Edwards, Inc. 1,317,120 LIFE & HEALTH INSURANCE 0.4% 12,000 Lincoln National Corp. 541,680
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- MULTI-LINE INSURANCE 1.8% 30,300 American Financial Group, Inc. $ 933,240 21,000 Loews Corp. 1,544,340 ------------ 2,477,580 PROPERTY & CASUALTY INSURANCE 2.4% 33,500 First American Corp. 1,103,490 40,700 The Allstate Corp. 2,200,242 ------------ 3,303,732 REAL ESTATE INVESTMENT TRUSTS 0.6% 25,600 General Growth Properties, Inc. 872,960 ------------ TOTAL FINANCIAL 11,952,349 HEALTHCARE 9.5% HEALTH CARE DISTRIBUTORS 0.9% 43,500 Owens & Minor, Inc. 1,181,025 HEALTH CARE EQUIPMENT 1.5% 20,500 Diagnostic Products Corp. 990,150 52,900 PerkinElmer, Inc. 1,091,327 ------------ 2,081,477 HEALTH CARE FACILITIES 1.0% 26,700 HCA, Inc. 1,430,319 HEALTH CARE SERVICES 1.8% 30,100 Caremark Rx, Inc.(a) 1,197,378 45,700 Computer Programs & Systems, Inc. 1,283,256 ------------ 2,480,634 MANAGED HEALTH CARE 2.4% 24,000 CIGNA Corp. 2,143,200 22,500 WellChoice, Inc.(a) 1,199,475 ------------ 3,342,675 PHARMACEUTICALS 1.9% 24,000 Abbott Laboratories 1,118,880 11,200 Bristol-Myers Squibb Co. 285,152 18,200 Johnson & Johnson, Inc. 1,222,312 ------------ 2,626,344 ------------ TOTAL HEALTHCARE 13,142,474 INDUSTRIALS 11.6% AEROSPACE & DEFENSE 0.9% 32,000 Raytheon Co. 1,238,400
48 Schedule of Investments
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- BUILDING PRODUCTS 3.3% 128,700 Apogee Enterprises, Inc. $ 1,837,836 58,000 Lennox International, Inc. 1,271,360 45,200 Masco Corp. 1,567,084 ------------ 4,676,280 COMMERCIAL PRINTING 0.9% 38,000 R.R. Donnelley & Sons Co. 1,201,560 CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 1.3% 19,300 Caterpillar, Inc. 1,764,792 ELECTRICAL COMPONENTS & EQUIPMENT 0.8% 15,400 Cooper Industries, Ltd. 1,101,408 INDUSTRIAL CONGLOMERATES 1.0% 18,300 Textron, Inc. 1,365,546 INDUSTRIAL MACHINERY 0.9% 21,300 Harsco Corp. 1,269,693 MARINE 0.4% 14,000 Alexander & Baldwin, Inc. 576,800 RAILROADS 1.6% 40,500 Burlington Northern Santa Fe Corp. 2,184,165 TRADING COMPANIES & DISTRIBUTORS 0.5% 25,200 Applied Industrial Technology, Inc. 685,440 ------------ TOTAL INDUSTRIALS 16,064,084 INFORMATION TECHNOLOGY 6.4% APPLICATION SOFTWARE 0.4% 27,100 Jack Henry & Associates, Inc. 487,529 COMMUNICATIONS EQUIPMENT 1.1% 107,500 SpectraLink Corp. 1,517,900 COMPUTER HARDWARE 1.9% 23,100 Diebold, Inc. 1,267,035 65,000 Hewlett-Packard Co. 1,426,100 ------------ 2,693,135 COMPUTER STORAGE & PERIPHERALS 0.8% 74,900 Overland Storage, Inc.(a) 1,099,532
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- INTERNET SOFTWARE & SERVICES 1.6% 59,100 Digital Insight Corp.(a) $ 969,240 36,600 j2 Global Communications, Inc.(a) 1,255,746 ------------ 2,224,986 SEMICONDUCTORS 0.6% 32,300 Texas Instruments, Inc. 823,327 ------------ TOTAL INFORMATION TECHNOLOGY 8,846,409 LEISURE & CONSUMER STAPLES 7.8% FOOD DISTRIBUTORS 0.7% 24,500 Nash Finch Co. 930,755 LEISURE PRODUCTS 0.6% 68,600 Callaway Golf Co. 878,080 PACKAGED FOODS & MEATS 0.7% 19,900 General Mills, Inc. 978,085 PHOTOGRAPHIC PRODUCTS 0.8% 33,200 Eastman Kodak Co. 1,080,660 RESTAURANTS 2.5% 31,900 CBRL Group, Inc. 1,317,470 32,100 McDonald's Corp. 999,594 26,000 Outback Steakhouse, Inc. 1,190,540 ------------ 3,507,604 TOBACCO 2.5% 26,800 Altria Group, Inc. 1,752,452 32,300 UST, Inc. 1,669,910 ------------ 3,422,362 ------------ TOTAL LEISURE & CONSUMER STAPLES 10,797,546 MATERIALS 6.4% CONSTRUCTION MATERIALS 1.7% 16,800 Eagle Materials, Inc. 1,359,792 18,200 Vulcan Materials Company 1,034,306 ------------ 2,394,098 DIVERSIFIED CHEMICALS 2.4% 27,800 Dow Chemical Co. 1,385,830 18,000 Eastman Chemical Co. 1,062,000 13,500 PPG Industries, Inc. 965,520 ------------ 3,413,350
Schedule of Investments 49 Schedule of Investments (continued) ICON Equity Income Fund March 31, 2005 (unaudited)
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- SPECIALTY CHEMICALS 0.8% 56,700 RPM International, Inc. $ 1,036,476 STEEL 1.5% 27,200 Steel Dynamics, Inc. 937,040 45,600 Steel Technologies, Inc. 1,093,944 ------------ 2,030,984 ------------ TOTAL MATERIALS 8,874,908 TELECOMMUNICATIONS & UTILITIES 8.1% ELECTRIC UTILITIES 2.9% 31,600 Alliant Energy Corp 846,248 109,300 CenterPoint Energy, Inc. 1,314,879 83,000 TECO Energy, Inc. 1,301,440 6,465 TXU Corp. 514,808 ------------ 3,977,375 GAS UTILITIES 1.3% 24,200 Atmos Energy Corp. 653,400 48,600 NiSource, Inc. 1,107,594 ------------ 1,760,994 INTEGRATED TELECOMMUNICATION SERVICES 0.9% 53,232 Sprint Corp. (FON Group) 1,211,028 MULTI-UTILITIES & UNREGULATED POWER 1.2% 39,200 Duke Energy Corp. 1,097,992 23,600 Energy East Corp. 618,792 ------------ 1,716,784 WATER UTILITIES 1.8% 45,000 American States Water Co. 1,138,500 40,000 California Water Service Group 1,334,800 ------------ 2,473,300 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 11,139,481 ------------ TOTAL UNITED STATES OF AMERICA 90,918,058 AMERICAN DEPOSITARY RECEIPT 6.8% BRAZIL 1.4% MATERIALS 0.7% PAPER PRODUCTS 0.7% 28,700 Aracruz Celulose S.A. 1,027,460 ------------ TOTAL MATERIALS 1,027,460
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- TELECOMMUNICATIONS & UTILITIES 0.7% WIRELESS TELECOMMUNICATION SERVICES 0.7% 34,000 Telemig Celular Participacoes S. A $ 984,300 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 984,300 ------------ TOTAL BRAZIL 2,011,760 FINLAND 0.9% INFORMATION TECHNOLOGY 0.9% COMMUNICATIONS EQUIPMENT 0.9% 82,600 Nokia Oyj 1,274,518 ------------ TOTAL INFORMATION TECHNOLOGY 1,274,518 ------------ TOTAL FINLAND 1,274,518 MEXICO 0.9% MATERIALS 0.9% CONSTRUCTION MATERIALS 0.9% 32,234 Cemex S.A. de C.V. 1,168,483 ------------ TOTAL MATERIALS 1,168,483 ------------ TOTAL MEXICO 1,168,483 NETHERLANDS 0.9% FINANCIAL 0.9% OTHER DIVERSIFIED FINANCIAL SERVICES 0.9% 40,709 ING Groep N.V. 1,230,633 ------------ TOTAL FINANCIAL 1,230,633 ------------ TOTAL NETHERLANDS 1,230,633 SWITZERLAND 0.8% INFORMATION TECHNOLOGY 0.8% COMPUTER STORAGE & PERIPHERALS 0.8% 17,300 Logitech International S.A.(a) 1,053,224 ------------ TOTAL INFORMATION TECHNOLOGY 1,053,224 ------------ TOTAL SWITZERLAND 1,053,224 UNITED KINGDOM 1.9% ENERGY 0.7% INTEGRATED OIL & GAS 0.7% 16,700 Shell Transport & Trading Co. plc 907,812 ------------ TOTAL ENERGY 907,812
50 Schedule of Investments
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- HEALTHCARE 1.2% HEALTH CARE EQUIPMENT 1.2% 36,000 Smith & Nephew plc $ 1,692,720 ------------ TOTAL HEALTH CARE 1,692,720 ------------ TOTAL UNITED KINGDOM 2,600,532 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 9,339,150 BERMUDA 0.8% ENERGY 0.8% OIL & GAS REFINING & MARKETING & TRANSPORTATION 0.8% 24,300 Nordic American Tanker Shipping Ltd. 1,153,035 ------------ TOTAL ENERGY 1,153,035 ------------ TOTAL BERMUDA 1,153,035 CANADA 2.8% INDUSTRIALS 1.7% RAILROADS 1.7% 64,000 Canadian Pacific Railway Ltd. 2,302,080 ------------ TOTAL INDUSTRIALS 2,302,080 MATERIALS 1.1% COMMODITY CHEMICALS 1.1% 78,400 Methanex Corp. 1,523,312 ------------ TOTAL MATERIALS 1,523,312 ------------ TOTAL CANADA 3,825,392 UNITED KINGDOM 0.7% ENERGY 0.7% OIL & GAS REFINING & MARKETING & TRANSPORTATION 0.7% 50,400 Top Tankers, Inc. 934,920 ------------ TOTAL ENERGY 934,920 ------------ TOTAL UNITED KINGDOM 934,920 ------------ TOTAL COMMON STOCKS (COST $93,074,867) 106,170,555 PREFERRED STOCKS 2.9% CONSUMER DISCRETIONARY 0.3% HOUSEHOLD APPLIANCES 0.3% 15,000 Maytag Corp., 7.875%, 8-1-31 375,750 ------------ TOTAL CONSUMER DISCRETIONARY 375,750
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- FINANCIAL 1.1% BUSINESS SERVICES 0.6% 800,000 AFC Capital Trust I, 8.207%, 2/3/27 $ 849,796 CONSUMER FINANCE 0.3% 16,000 MBNA Corp., 7.500%, Series A 405,760 PROPERTY & CASUALTY INSURANCE 0.2% 12,200 AMBAC Financial Group, Inc., 7.000%, 10-17-51 312,198 ------------ TOTAL FINANCIAL 1,567,754 HEALTHCARE 0.3% MANAGED HEALTH CARE 0.3% 18,200 Aetna, Inc., 8.500%, 8-31-41 475,020 ------------ TOTAL HEALTHCARE 475,020 INFORMATION TECHNOLOGY 0.5% OFFICE ELECTRONICS 0.5% 18,100 Xerox Capital LLC, 6.540%, 2-28-06, Series A(a) 648,352 ------------ TOTAL INFORMATION TECHNOLOGY 648,352 LEISURE & CONSUMER STAPLES 0.7% MOVIES & ENTERTAINMENT 0.7% 38,000 The Walt Disney Co., 7.000%, 11-1-31 980,400 ------------ TOTAL LEISURE & CONSUMER STAPLES 980,400 ------------ TOTAL PREFERRED STOCKS (COST $4,076,257) 4,047,276 CONVERTIBLE PREFERRED STOCKS 5.1% UNITED STATES OF AMERICA 4.8% CONSUMER DISCRETIONARY 1.0% SPECIALTY STORES 1.0% 23,200 Toys "R" Us, Inc., 6.250%, 8-16-05 1,427,960 ------------ TOTAL CONSUMER DISCRETIONARY 1,427,960 ENERGY 0.4% ELECTRIC INTEGRATED 0.4% 14,400 TXU Corp., 8.750%, 11-16-05, Series C 531,072 ------------ TOTAL ENERGY 531,072
Schedule of Investments 51 Schedule of Investments (continued) ICON Equity Income Fund March 31, 2005 (unaudited)
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- HEALTHCARE 0.3% HEALTH CARE DISTRIBUTORS 0.3% 9,000 Omnicare, Inc., 4.000%, 6-15-33 $ 464,130 ------------ TOTAL HEALTHCARE 464,130 INDUSTRIALS 0.4% AEROSPACE & DEFENSE 0.4% 4,000 Northrop Grumman Corp., 7.000%, 4-4-21 520,000 ------------ TOTAL INDUSTRIALS 520,000 INFORMATION TECHNOLOGY 0.8% TECHNOLOGY DISTRIBUTORS 0.8% 17,000 Pioneer Standard Fin. Trust, 6.750%, 3-31-28 1,081,625 ------------ TOTAL INFORMATION TECHNOLOGY 1,081,625 LEISURE & CONSUMER STAPLES 1.2% DISTILLERS & VINTNERS 1.2% 39,000 Constellation Brands, Inc., 5.750%, 9-1-06 1,575,990 ------------ TOTAL LEISURE & CONSUMER STAPLES 1,575,990 TELECOMMUNICATIONS & UTILITIES 0.7% ELECTRIC UTILITIES 0.2% 16,200 Ameren Corp., 9.750%, 5-15-05 434,484 GAS UTILITIES 0.2% 4,300 KeySpan Corp., 8.750%, 5-16-05 217,537 MULTI-UTILITIES & UNREGULATED POWER 0.3% 10,500 Sempra Energy, 8.500%, 5-17-05 347,130 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 999,151 ------------ TOTAL UNITED STATES OF AMERICA 6,599,928
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- AMERICAN DEPOSITARY RECEIPT 0.3% TELECOMMUNICATIONS & UTILITIES 0.3% INTEGRATED TELECOMMUNICATION SERVICES 0.3% 8,600 Philippine Long Distance Telephone Co., 3.500%, 12-31-49, Series III $ 421,400 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 421,400 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 421,400 ------------ TOTAL CONVERTIBLE PREFERRED STOCKS (COST $5,614,448) 7,021,328 CALL OPTIONS PURCHASED (100 SHARES PER CONTRACT) 0.3% CONSUMER DISCRETIONARY 0.0% HOME IMPROVEMENT RETAIL 0.0% 123 Lowe's Companies, Inc. Expiration January 2007, Exercise price $65.00 60,270 FINANCIAL 0.1% INVESTMENT BANKING & BROKERAGE 0.1% 125 Morgan Stanley Expiration January 2007, Exercise Price $60.00 88,750 LIFE & HEALTH INSURANCE 0.0% 125 Prudential Financial, Inc. Expiration January 2006, Exercise price $60.00 46,875 ------------ TOTAL CONSUMER DISCRETIONARY 135,625 HEALTHCARE 0.2% MANAGED HEALTH CARE 0.2% 84 Aetna, Inc. Expiration January 2006, Exercise Price $60.00 157,080 ------------ TOTAL HEALTHCARE 157,080 ------------ TOTAL CALL OPTIONS PURCHASED (COST $222,095) 352,975
52 Schedule of Investments
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- CONVERTIBLE CORPORATE BONDS 2.0% HEALTHCARE 1.0% PHARMACEUTICALS 1.0% 1,500,000 King Pharmaceuticals, Inc., 2.7500%, 11/15/21 $ 1,423,125 ------------ TOTAL HEALTHCARE 1,423,125 INFORMATION TECHNOLOGY 0.9% COMPUTER STORAGE & PERIPHERALS 0.1% 177,000 Adaptec, Inc., 3.000%, 3/5/07 177,000 DATA PROCESSING & OUTSOURCED SERVICES 0.3% 458,000 The BISYS Group, Inc., 4.000%, 3/15/06 452,848 SEMICONDUCTORS 0.5% 600,000 International Rectifier Corp., 4.250%, 7/15/07 597,750 ------------ TOTAL INFORMATION TECHNOLOGY 1,227,598 LEISURE & CONSUMER STAPLES 0.1% PHOTOGRAPHIC PRODUCTS 0.1% 110,000 Eastman Kodak Co., 3.375%, 10/15/33 133,650 ------------ TOTAL LEISURE & CONSUMER STAPLES 133,650 ------------ TOTAL CONVERTIBLE CORPORATE BONDS (COST $2,807,363) 2,784,373 CORPORATE BONDS 8.1% CONSUMER DISCRETIONARY 2.3% AUTOMOBILE MANUFACTURERS 1.2% 1,600,000 DaimlerChrysler AG, 6.500%, 11/15/13 1,663,960 HOME IMPROVEMENT RETAIL 0.7% 800,000 Lowe's Companies, Inc., 8.250%, 6/1/10 929,465 RENTAL & LEASING 0.4% 575,000 United Rentals NA, Inc., 7.750%, 11/15/13 557,750 ------------ TOTAL CONSUMER DISCRETIONARY 3,151,175
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- ENERGY 0.1% GAS DISTRIBUTION 0.1% 111,000 SEMCO Energy, Inc., 8.000%, 6/30/16 $ 114,186 ------------ TOTAL ENERGY 114,186 FINANCIAL 2.8% CONSUMER FINANCE 0.9% 1,230,000 Providian Financial Corp., 3.250%, 8/15/05 1,228,462 CONSUMER LOANS 0.9% 1,288,000 Household Finance Corp., 4.750%, 7/15/13 1,253,946 INVESTMENT BANKING & BROKERAGE 0.5% 750,000 Morgan Stanley, 4.750%, 4/1/14 714,089 LIFE & HEALTH INSURANCE 0.5% 750,000 Prudential Financial, Inc., 5.750%, 7/15/33 753,060 ------------ TOTAL FINANCIAL 3,949,557 HEALTHCARE 1.3% HEALTH CARE SERVICES 0.9% 1,447,000 Curative Health Services, Inc., 10.750%, 5/1/11 1,190,158 MANAGED HEALTH CARE 0.4% 500,000 Aetna, Inc., 6.970%, 8/15/36 573,136 ------------ TOTAL HEALTHCARE 1,763,294 LEISURE & CONSUMER STAPLES 1.6% BROADCASTING & CABLE TV 0.6% 750,000 Mediacom Broadband LLC, 11.000%, 07/15/13* 802,500 HOTELS, RESORTS & CRUISE LINES 0.7% 1,000,000 Royal Caribbean Cruises, 7.2500%, 3/15/18 1,060,000 LEISURE FACILITIES 0.1% 113,000 Bally Total Fitness Holding Corp., 10.500%, 7/15/11 111,305
Schedule of Investments 53 Schedule of Investments (continued) ICON Equity Income Fund March 31, 2005 (unaudited)
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- RESTAURANTS 0.2% 225,000 McDonald's Corp., 5.000%, 9/30/16 $ 212,935 ------------ TOTAL LEISURE & CONSUMER STAPLES 2,186,740 ------------ TOTAL CORPORATE BONDS (COST $11,334,464) 11,164,952 U.S. GOVERNMENT & U.S. GOVERNMENT AGENCY BONDS 1.3% AAA RATINGS 1.3% 750,000 U.S. Treasury, 8.75%, 5/15/17 1,030,577 750,000 U.S. Treasury, 5.25%, 11/15/28 788,760 ------------ TOTAL AAA RATINGS 1,819,337 ------------ TOTAL U.S. GOVERNMENT & U.S. GOVERNMENT AGENCY BONDS (COST $1,847,344) 1,819,337
SHARES, CONTRACTS OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- SHORT-TERM INVESTMENTS 0.6% VARIABLE RATE DEMAND NOTES 0.6% 889,098 American Family Demand Note, 2.4663%# $ 889,098 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $889,098) 889,098 ------------ TOTAL INVESTMENTS 97.2% (COST $119,865,936) 134,249,894 OTHER ASSETS LESS LIABILITIES 2.8% 3,881,414 ------------ NET ASSETS 100.0% $138,131,308 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 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 due dates of the obligations. 54 Schedule of Investments Management Overview ICON Long/Short Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 99.6% Top 10 Long Equity Holdings 11.8% Number of Long Stocks 118 Number of Short Positions 18 Short-Term Investments 0.0% Percentages are based upon net assets. TOP 10 LONG EQUITY HOLDINGS March 31, 2005 Altria Group, Inc. 1.3% The Finish Line, Inc. 1.3% Canadian Pacific Railway Ltd. 1.2% Pacific Sunwear of California, Inc. 1.2% ElkCorp 1.2% Aetna, Inc. 1.2% HCA, Inc. 1.1% UnitedHealth Group, Inc. 1.1% Sonic Corp. 1.1% Triad Hospitals, Inc. 1.1% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. For the six months ended March 31, 2005, the ICON Long/Short Fund returned 11.79% for Class I shares, 11.28% for Class C shares, and 11.84% for Class Z shares, outpacing the 7.45% return of the S&P 1500 Index, the Fund's benchmark, over the same period. Total returns for other periods as of March 31, 2005 appear on page 59. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund's valuation-driven investment approach captured meaningful upside in conjunction with a broad year-end rally favoring economically sensitive industries. This cyclical tilt proved conducive to Fund performance, as heavily weighted sectors such as Industrials and Materials typically perform best during times of economic expansion. With the economy seemingly in the middle stages of a sustainable recovery, bargains were plentiful, helping to bolster returns as stocks closed the gap between market and intrinsic value. Later in the period, concerns over possible economic softening, rising commodity costs, perceived inflationary pressures, and weak corporate profits severely dampened investor sentiment. While cyclical industries bore the brunt of this reversal, exposure to more defensive sectors such as Healthcare and Leisure and Consumer Staples enabled the Fund to withstand subsequent setbacks. Despite the volatile nature of conflicting markets, our value discipline proved effective in keeping the Fund well ahead of its relative benchmark during the period. 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. 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. 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 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 earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with improving relative strength on the long side, and declining relative strength on the short side, we aim to capture leading industry themes poised to outperform the broader market. Management Overview 55 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 PAST SIX MONTHS? A. Stocks trended higher during the first half of the reporting period as easing energy prices, positive job growth and decisive election-year results bolstered investor confidence. Moreover, steady increases in gross domestic product and the measured pace of monetary tightening suggested that the economy remained on solid footing. Nevertheless, we believe there was no one triggering event, and that upside gains were simply a natural move toward fair value. However, with expectations running high for 2005, stocks got off to a shaky start, as surging commodity prices rekindled inflation fears, sending interest rates markedly higher. As these and other distractions permeated the market, investors succumbed to mounting selling pressure, erasing a portion of the previous quarter's gains. While shorting opportunities were limited during the late-year advance, subsequent declines in relative strength provided an opening. As such, the Fund's short exposure was increased to approximately 15% of total assets by period-end. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. On the long side, market leadership was captured among both cyclical and defensive industries exhibiting a strong combination of value and relative strength. Among the leading industry contributors were homebuilding, railroads and managed health care, all of which were overweighted relative to the benchmark. Exposure to the Leisure and Consumer Staples sector also served to boost returns, with food distributors and restaurants driving industry performance. The Fund had short positions in application software, systems software, semiconductor equipment, casinos & gaming, and specialized finance. These positions were initiated during the second half of the reporting period as signs of overvaluation and declining relative strength became more evident. Conversely, the insurance brokers group proved to be a principal detractor amid fallout from the New York State Attorney General's investigation into insurance industry practices. Computer hardware followed suit despite better-than-expected showings from several industry bellwethers. On the company level, meaningful contributors to Fund performance included container manufacturer Owens Illinois, which benefited from 56 Management Overview [J.C. Waller III PHOTO] J.C. Waller, III Portfolio Manager higher-than-forecast operating income and widening margins, the result of efforts to focus on core glass operations. Toll Brothers also appreciated, as the upscale builder capitalized on a robust market for new home sales. Meanwhile, railroad operator Burlington Northern Santa Fe Corp. was successful in instituting fuel surcharges while achieving double-digit growth. In contrast, individual detractors included networking equipment supplier UTStarcom Inc., which experienced delays in its financial reporting and internal controls assessment. Insurance brokerage AON Corp. also encountered negative sentiment when it agreed to settle a lawsuit stemming from the New York State investigation. Elsewhere, rising fuel costs, which cut into profitability, hurt Northwest Airlines, the nation's fourth largest carrier. All three stocks were liquidated when they met our sell discipline. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET? A. Given the increasing ambiguity in market leadership, the Fund has taken steps to broaden its industry exposure to include defensive-oriented areas such as Consumer Staples and Utilities. Although this move is tactical in nature, it remains guided by our valuation and relative strength metrics, and positions the Fund to capitalize on developing market themes once industry leadership comes into focus. Against this backdrop, overvaluation and declining relative strength in certain industries could lead to additional shorting opportunities. PERFORMANCE HIGHLIGHTS March 31, 2005 - Despite conflicting markets, the Fund's value discipline proved effective in driving relative outperformance. - Long positions in cyclical and defensive industries such as homebuilding, railroads and managed health care contributed to Fund performance, while insurance brokers and computer hardware were principal industry detractors. - The Fund held short positions in application software, systems software, semiconductor equipment, casinos & gaming, and specialized finance during the period. - Meaningful company contributors to Fund performance included Owens-Illinois, Toll Brothers and Burlington Northern Santa Fe Corp. - Among the Fund's weakest individual performers were UTStarcom Inc., AON Corp. and Northwest Airlines. Management Overview 57 Management Overview (continued) ICON Long/Short Fund SECTOR COMPOSITION March 31, 2005 Industrials 15.5% Healthcare 14.6% Financial 13.4% Consumer Discretionary 12.5% Leisure & Consumer Staples 11.3% Information Technology 10.8% Telecommunications & Utilities 8.3% Materials 7.3% Energy 5.9%
Percentages are based upon long positions and net assets. 58 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
INCEPTION SINCE DATE 6 MONTHS* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON Long/Short Fund - Class I 10/1/02 11.79% 9.12% N/A 19.97% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% N/A 18.73% --------------------------------------------------------------------------------------------- ICON Long/Short Fund - Class C 10/17/02 11.28% 8.29% N/A 16.62% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% N/A 16.79% --------------------------------------------------------------------------------------------- ICON Long/Short Fund - Class Z 5/6/04 11.84% N/A N/A 11.44%* --------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% N/A N/A 8.55%* ---------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative index can be found on pages 2 and 3. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON LONG/SHORT FUND - CLASS I S&P 1500 INDEX ------------------------------ -------------- 10/1/02 10000 10000 3/31/03 8880 10450 3/31/04 14435 14308 3/31/05 15752 15349
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund's Class I shares on the Class' inception date of 10/1/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund's other share classes will vary due to differences in charges and expenses. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Management Overview 59 Schedule of Investments ICON Long/Short Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 99.6% UNITED STATES OF AMERICA 87.1% CONSUMER DISCRETIONARY 12.5% APPAREL RETAIL 4.7% 27,100 Pacific Sunwear of California, Inc.(a) $ 758,258 22,500 Ross Stores, Inc. 655,650 33,200 The Finish Line, Inc. 768,580 14,000 Urban Outfitters, Inc.(a) 671,580 ------------ 2,854,068 DISTRIBUTORS 0.7% 10,100 Building Materials Holding Corp. 449,248 ------------ FOOTWEAR 3.2% 18,000 Brown Shoe Co., Inc. 616,860 15,000 Reebok International Ltd. 664,500 9,500 Timberland Co. - Class A(a) 673,835 ------------ 1,955,195 HOME IMPROVEMENT RETAIL 1.1% 6,600 Lowe's Cos., Inc. 376,794 6,700 The Home Depot, Inc. 256,208 ------------ 633,002 HOMEBUILDING 1.9% 12,300 Hovnanian Enterprises, Inc. - Class A(a) 627,300 9,000 Ryland Group, Inc. 558,180 ------------ 1,185,480 TIRES & RUBBER 0.9% 43,200 The Goodyear Tire & Rubber Co.(a) 576,720 ------------ TOTAL CONSUMER DISCRETIONARY 7,653,713 ENERGY 2.8% OIL & GAS EXPLORATION & PRODUCTION 1.7% 14,000 Petroleum Development Corp.(a) 527,660 10,500 Ultra Petroleum Corp.(a) 533,400 ------------ 1,061,060 OIL & GAS REFINING & MARKETING & TRANSPORTATION 1.1% 33,500 OMI Corp. 641,525 ------------ TOTAL ENERGY 1,702,585
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- FINANCIAL 13.4% CONSUMER FINANCE 3.4% 21,200 Cash America International, Inc. $ 464,916 21,400 First Cash Financial Services, Inc.(a) 453,038 36,900 Providian Financial Corp.(a) 633,204 21,400 World Acceptance Corp.(a) 546,128 ------------ 2,097,286 DIVERSIFIED BANKS 1.4% 9,700 Wachovia Corp. 493,827 6,100 Wells Fargo & Co. 364,780 ------------ 858,607 INVESTMENT BANKING & BROKERAGE 4.3% 15,300 A.G. Edwards, Inc. 685,440 7,300 Lehman Brothers Holding, Inc. 687,368 10,000 Morgan Stanley 572,500 6,100 The Goldman Sachs Group, Inc. 670,939 ------------ 2,616,247 LIFE & HEALTH INSURANCE 1.1% 7,500 Protective Life Corp. 294,750 4,300 StanCorp Financial Group, Inc. 364,554 ------------ 659,304 MULTI-LINE INSURANCE 1.8% 15,400 HCC Insurance Holdings, Inc. 556,864 8,300 The Hartford Financial Services Group, Inc. 569,048 ------------ 1,125,912 PROPERTY & CASUALTY INSURANCE 1.4% 4,100 Philadelphia Consolidated Holding Corp.(a) 317,873 11,400 Selective Insurance Group, Inc. 527,022 ------------ 844,895 ------------ TOTAL FINANCIAL 8,202,251
60 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- HEALTHCARE 14.6% HEALTH CARE FACILITIES 5.5% 18,000 Community Health Systems, Inc.(a) $ 628,380 13,000 HCA, Inc. 696,410 13,800 Triad Hospitals, Inc.(a) 691,380 14,000 United Surgical Partners International, Inc.(a) 640,780 12,000 Universal Health Services, Inc. - Class B 628,800 ------------ 3,285,750 HEALTH CARE SERVICES 3.9% 36,200 Dendrite International, Inc.(a) 508,248 12,600 Laboratory Corp. of America Holdings(a) 607,320 5,900 Quest Diagnostics, Inc. 620,267 17,150 Renal Care Group, Inc.(a) 650,671 ------------ 2,386,506 MANAGED HEALTH CARE 5.2% 9,600 Aetna, Inc. 719,520 16,800 Centene Corp.(a) 503,832 7,200 CIGNA Corp. 642,960 7,300 UnitedHealth Group, Inc. 696,274 11,800 WellChoice, Inc.(a) 629,058 ------------ 3,191,644 ------------ TOTAL HEALTHCARE 8,863,900 INDUSTRIALS 13.7% AIRLINES 2.5% 45,400 Continental Airlines, Inc. - Class B(a) 546,616 42,600 Frontier Airlines, Inc.(a) 446,448 29,200 SkyWest, Inc. 542,828 ------------ 1,535,892 BUILDING PRODUCTS 3.9% 19,400 ElkCorp 746,124 22,000 Griffon Corp.(a) 471,020 16,400 Simpson Manufacturing Co., Inc. 506,760 16,600 Universal Forest Products, Inc. 644,910 ------------ 2,368,814
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMERCIAL PRINTING 0.4% 6,700 John H. Harland Co. $ 230,212 ------------ CONSTRUCTION & ENGINEERING 1.5% 17,700 Granite Construction, Inc. 464,979 15,500 URS Corp.(a) 445,625 ------------ 910,604 EMPLOYMENT SERVICES 0.3% 10,200 Labor Ready, Inc.(a) 190,230 ------------ INDUSTRIAL MACHINERY 1.0% 7,800 The Manitowoc Co, Inc. 315,042 9,800 Watts Water Technologies, Inc. - Class A 319,578 ------------ 634,620 RAILROADS 1.8% 10,600 Burlington Northern Santa Fe Corp. 571,658 13,900 Norfolk Southern Corp. 514,995 ------------ 1,086,653 TRUCKING 2.3% 10,900 Arkansas Best Corp. 411,802 20,000 Knight Transportation, Inc. 493,400 9,000 Yellow Roadway Corp.(a) 526,860 ------------ 1,432,062 ------------ TOTAL INDUSTRIAL 8,389,087 INFORMATION TECHNOLOGY 7.4% COMMUNICATIONS EQUIPMENT 1.5% 27,600 NETGEAR, Inc.(a) 416,484 36,700 SpectraLink Corp. 518,204 ------------ 934,688 COMPUTER HARDWARE 1.5% 10,500 Diebold, Inc. 575,925 90,600 Sun Microsystems, Inc.(a) 366,024 ------------ 941,949 COMPUTER STORAGE & PERIPHERALS 1.8% 25,000 Komag, Inc.(a) 558,750 38,400 Overland Storage, Inc.(a) 563,712 ------------ 1,122,462
Schedule of Investments 61 Schedule of Investments (continued) ICON Long/Short Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- INTERNET SOFTWARE & SERVICES 1.9% 18,200 j2 Global Communications, Inc.(a) $ 624,442 23,700 Sohu.com, Inc.(a) 416,646 ------------ 1,041,088 SEMICONDUCTORS 0.7% 9,400 International Rectifier Corp.(a) 427,700 ------------ TOTAL INFORMATION TECHNOLOGY 4,467,887 LEISURE & CONSUMER STAPLES 11.3% FOOD DISTRIBUTORS 2.3% 15,500 Central European Distribution Corp(a) 515,995 20,000 Performance Food Group Co.(a) 553,600 34,300 Spartan Stores, Inc.(a) 364,952 ------------ 1,434,547 MOVIES & ENTERTAINMENT 0.9% 19,800 The Walt Disney Co. 568,854 ------------ PACKAGED FOODS & MEATS 1.8% 5,500 General Mills, Inc. 270,325 7,500 Ralcorp Holdings, Inc. 355,125 14,500 Smithfield Foods, Inc.(a) 457,475 ------------ 1,082,925 PHOTOGRAPHIC PRODUCTS 0.6% 10,500 Eastman Kodak Co. 341,775 ------------ RESTAURANTS 3.1% 12,000 Panera Bread Co. - Class A(a) 678,360 20,700 Sonic Corp.(a) 691,380 15,050 The Cheesecake Factory, Inc. 533,523 ------------ 1,903,263 TOBACCO 2.6% 12,400 Altria Group, Inc. 810,836 6,600 Reynolds American, Inc. 531,894 5,200 Universal Corp. 238,004 ------------ 1,580,734 ------------ TOTAL LEISURE & CONSUMER STAPLES 6,912,098
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- MATERIALS 5.7% CONSTRUCTION MATERIALS 3.4% 7,200 Eagle Materials, Inc. $ 582,768 7,600 Florida Rock Industries, Inc. 447,032 7,300 Headwaters, Inc.(a) 239,586 7,000 Lafarge North America, Inc. 409,150 7,000 Martin Marietta Materials, Inc. 391,440 ------------ 2,069,976 DIVERSIFIED CHEMICALS 1.1% 2,800 Eastman Chemical Co. 165,200 18,900 Hercules, Inc.(a) 273,861 13,200 Penford Corp. 214,500 ------------ 653,561 FERTILIZERS & AGRICULTURAL CHEMICALS 0.3% 2,800 The Scotts Miracle- Gro Co.(a) 196,644 ------------ METAL & GLASS CONTAINERS 0.9% 23,000 Owens-Illinois, Inc.(a) 578,220 ------------ TOTAL MATERIALS 3,498,401 TELECOMMUNICATIONS & UTILITIES 5.7% ELECTRIC UTILITIES 4.2% 10,000 DTE Energy Co. 454,800 31,500 El Paso Electric Co. 598,500 12,600 PG&E Corp. 429,660 45,600 Sierra Pacific Resources(a) 490,200 39,400 TECO Energy, Inc. 617,792 ------------ 2,590,952 GAS UTILITIES 1.0% 19,000 ONEOK, Inc. 585,580 ------------ MULTI-UTILITIES & UNREGULATED POWER 0.5% 6,400 Constellation Energy Group, Inc. 330,880 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 3,507,412 ------------ TOTAL UNITED STATES OF AMERICA 53,197,334
62 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- AMERICAN DEPOSITARY RECEIPT 6.3% BRAZIL 0.6% MATERIALS 0.6% STEEL 0.6% 16,000 Companhia Siderurgica Nacional S.A., ADR $ 385,600 ------------ TOTAL MATERIALS 385,600 ------------ TOTAL BRAZIL 385,600 DENMARK 1.1% ENERGY 1.1% OIL & GAS REFINING & MARKETING & TRANSPORTATION 1.1% 12,000 Dampskibsselskabet Torm - ADR 641,880 ------------ TOTAL ENERGY 641,880 ------------ TOTAL DENMARK 641,880 ISRAEL 0.7% TELECOMMUNICATIONS & UTILITIES 0.7% WIRELESS TELECOMMUNICATION SERVICES 0.7% 50,000 Partner Communications Co. Ltd.(a) 455,500 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 455,500 ------------ TOTAL ISRAEL 455,500 MEXICO 2.0% MATERIALS 1.0% CONSTRUCTION MATERIALS 1.0% 16,405 Cemex S.A. de C.V. 594,681 ------------ TOTAL MATERIALS 594,681 TELECOMMUNICATIONS & UTILITIES 1.0% WIRELESS TELECOMMUNICATION SERVICES 1.0% 12,000 America Movil S.A. de C.V. 619,200 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 619,200 ------------ TOTAL MEXICO 1,213,881 RUSSIA 0.9% TELECOMMUNICATIONS & UTILITIES 0.9% WIRELESS TELECOMMUNICATION SERVICES 0.9% 15,400 Mobile Telesystems 541,926 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 541,926 ------------ TOTAL RUSSIA 541,926
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- SWITZERLAND 1.0% INFORMATION TECHNOLOGY 1.0% COMPUTER STORAGE & PERIPHERALS 1.0% 9,900 Logitech International S.A.(a) $ 602,712 ------------ TOTAL INFORMATION TECHNOLOGY 602,712 ------------ TOTAL SWITZERLAND 602,712 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 3,841,499 CANADA 1.8% INDUSTRIALS 1.8% RAILROADS 1.8% 5,000 Canadian National Railway Co. 316,550 21,100 Canadian Pacific Railway Ltd. 758,967 ------------ TOTAL INDUSTRIALS 1,075,517 ------------ TOTAL CANADA 1,075,517 HONG KONG 0.7% INFORMATION TECHNOLOGY 0.7% INTERNET SOFTWARE & SERVICES 0.7% 14,200 SINA Corp.(a) 441,052 ------------ TOTAL INFORMATION TECHNOLOGY 441,052 ------------ TOTAL HONG KONG 441,052 UNITED KINGDOM 1.0% ENERGY 1.0% OIL & GAS REFINING & MARKETING & TRANSPORTATION 1.0% 32,800 Top Tankers, Inc. 608,440 ------------ TOTAL ENERGY 608,440 ------------ TOTAL UNITED KINGDOM 608,440 BAHAMAS 1.0% ENERGY 1.0% OIL & GAS REFINING & MARKETING & TRANSPORTATION 1.0% 13,200 Teekay Shipping Corp. 593,340 ------------ TOTAL ENERGY 593,340 ------------ TOTAL BAHAMAS 593,340 BERMUDA 0.8% INFORMATION TECHNOLOGY 0.8% SEMICONDUCTORS 0.8% 13,200 Marvell Technology Group, Ltd.(a) 506,088 ------------ TOTAL INFORMATION TECHNOLOGY 506,088 ------------ TOTAL BERMUDA 506,088
Schedule of Investments 63 Schedule of Investments (continued) ICON Long/Short Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- CAYMAN ISLANDS 0.9% INFORMATION TECHNOLOGY 0.9% INTERNET SOFTWARE & SERVICES 0.9% 11,700 Netease.com, Inc.(a) $ 564,057 ------------ TOTAL INFORMATION TECHNOLOGY 564,057 ------------ TOTAL CAYMAN ISLANDS 564,057 ------------ TOTAL COMMON STOCKS (COST $54,884,696) 60,827,327
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- SHORT-TERM INVESTMENTS 0.0% VARIABLE RATE DEMAND NOTES 0.0% 488 American Family Demand Note, 2.4663%# $ 488 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $488) 488 ------------ TOTAL INVESTMENTS 99.6% (COST $54,885,184) 60,827,815 OTHER ASSETS LESS LIABILITIES 0.4% 239,276 ------------ NET ASSETS 100.0% $ 61,067,091 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005. Dates shown on securities are due dates of the obligations. 64 Schedule of Investments Schedule of Short Securities ICON Long/Short Fund March 31, 2005 (unaudited)
MARKET SHARES SHORT SECURITIES VALUE --------------------------------------------- 8,400 Arch Coal, Inc. $ 361,284 30,000 Aspect Communications Corp.(a) 312,300 26,100 Aztar Corp.(a) 745,416 32,500 BMC Software, Inc.(a) 487,500 1,500 Chicago Mercantile Exchange 291,045 22,000 Computer Associates International, Inc. 596,200 17,000 Cymer, Inc.(a) 455,090 35,000 eSPEED, Inc.(a) 322,000 15,000 FileNET Corp.(a) 341,700 10,800 Massey Energy Co. 432,432 25,800 McAfee, Inc.(a) 582,048 120,000 Novell, Inc.(a) 715,200 24,000 Novellus Systems, Inc.(a) 641,520 45,300 Pinnacle Entertainment, Inc.(a) 756,510 35,000 Siebel Systems, Inc.(a) 319,550 43,000 Ultratech, Inc.(a) 627,800 20,000 VERITAS Software Corp.(a) 464,400 24,800 WMS Industries, Inc.(a) 698,368 ---------- TOTAL SHORT SECURITIES (PROCEEDS OF $8,897,151) $9,150,363 ==========
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. Schedule of Short Securities 65 Six Month Hypothetical Expense Example March 31, 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 (10/1/04 - 3/31/05). 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 $15.00 fee charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The Example also does not include portfolio trading commissions and related trading expenses, and interest expenses or dividends on short positions taken by the Fund. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line 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. 66 Expense Example
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD 10/1/04 3/31/05 10/1/04-3/31/05* ----------------------------------------------------------------------------------------------- ICON BOND FUND ----------------------------------------------------------------------------------------------- CLASS C Actual Expenses $1,000 $ 997 $ 8.91 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,016 $ 9.00 ----------------------------------------------------------------------------------------------- CLASS I Actual period return $1,000 $1,000 $ 5.93 ----------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,019 $ 5.99 ----------------------------------------------------------------------------------------------- CLASS Z Actual period return $1,000 $1,002 $ 4.19 ----------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,021 $ 4.23 ----------------------------------------------------------------------------------------------- ICON CORE EQUITY FUND ----------------------------------------------------------------------------------------------- CLASS C Actual Expenses $1,000 $1,079 $10.47 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,015 $10.15 ----------------------------------------------------------------------------------------------- CLASS I Actual Expenses $1,000 $1,084 $ 6.65 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,019 $ 6.44 ----------------------------------------------------------------------------------------------- CLASS Z Actual Expenses $1,000 $1,085 $ 5.15 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,020 $ 4.99 ----------------------------------------------------------------------------------------------- ICON COVERED CALL FUND ----------------------------------------------------------------------------------------------- CLASS C Actual Expenses $1,000 $1,047 $11.23 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,014 $11.05 ----------------------------------------------------------------------------------------------- CLASS I Actual Expenses $1,000 $1,052 $ 7.42 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,018 $ 7.29 ----------------------------------------------------------------------------------------------- CLASS Z Actual Expenses $1,000 $1,053 $ 5.94 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,019 $ 5.84 ----------------------------------------------------------------------------------------------- ICON EQUITY INCOME FUND ----------------------------------------------------------------------------------------------- CLASS C Actual Expenses $1,000 $1,057 $11.28 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,014 $11.05 ----------------------------------------------------------------------------------------------- CLASS I Actual Expenses $1,000 $1,062 $ 6.63 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,019 $ 6.49 ----------------------------------------------------------------------------------------------- CLASS Z Actual Expenses $1,000 $1,063 $ 5.30 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,020 $ 5.19 -----------------------------------------------------------------------------------------------
Expense Example 67 Six Month Hypothetical Expense Example (continued) March 31, 2005 (unaudited)
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD 10/1/04 3/31/05 10/1/04-3/31/05* ----------------------------------------------------------------------------------------------- ICON LONG/SHORT FUND ----------------------------------------------------------------------------------------------- CLASS C Actual Expenses $1,000 $1,113 $12.12 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,014 $11.55 ----------------------------------------------------------------------------------------------- CLASS I Actual Expenses $1,000 $1,118 $ 8.18 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,017 $ 7.80 ----------------------------------------------------------------------------------------------- CLASS Z Actual Expenses $1,000 $1,118 $ 6.87 ----------------------------------------------------------------------------------------------- Hypothetical Example (5% return before expenses) $1,000 $1,019 $ 6.54 -----------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 182/365 to reflect the one-half year period. 68 Expense Example Statements of Assets and Liabilities March 31, 2005 (unaudited)
ICON ICON ICON ICON ICON CORE COVERED EQUITY LONG/SHORT BOND FUND EQUITY FUND CALL FUND INCOME FUND FUND ----------- ------------ ----------- ------------ ----------- ASSETS Investments, at cost $70,278,229 $114,299,422 $47,463,524 $119,865,936 $54,885,184 ----------- ------------ ----------- ------------ ----------- Investments, at value 70,568,452 133,788,687 53,809,780 134,249,894 60,827,815 Cash 700,483 5,494 33,871 5,331 - Deposits for short sales - - - - 9,073,172 Receivables: Fund shares sold 212,212 491,189 164,858 189,825 152,553 Investments sold - 951,703 - 5,194,538 579,515 Interest 822,667 4,948 44 289,209 868 Dividends - 57,643 47,176 182,081 53,844 Expense reimbursements by Advisor 29,697 - 42,530 13,645 7,206 Other assets 2,544 4,236 1,858 5,401 1,027 ----------- ------------ ----------- ------------ ----------- Total Assets 72,336,055 135,303,900 54,100,117 140,129,924 70,696,000 ----------- ------------ ----------- ------------ ----------- LIABILITIES Options written, at value (premiums received of $0, $0, $1,030,299, $0 and $0, respectively) - - 1,056,190 - - Common stocks sold short, at value (proceeds of $0, $0, $0, $0 and $8,897,151, respectively) - - - - 9,150,363 Payables: Due to custodian bank - - - - 352,361 Investments bought 700,483 543,201 - 1,393,246 - Fund shares redeemed 3,040 4,424 31,846 67,306 1,789 Distributions due to shareholders 244,482 - - 335,133 - Advisory fees & fee waiver recoupment 35,700 84,720 34,728 89,877 44,213 Accrued distribution fees 15,098 70,283 13,000 30,778 17,166 Fund accounting, custodial and transfer agent fees 20,703 23,122 16,037 24,715 16,648 Administration fees 2,975 5,648 2,315 5,992 2,601 Accrued expenses 44,095 26,011 42,390 51,569 43,768 ----------- ------------ ----------- ------------ ----------- Total Liabilities 1,066,576 757,409 1,196,506 1,998,616 9,628,909 ----------- ------------ ----------- ------------ ----------- NET ASSETS - ALL SHARE CLASSES $71,269,479 $134,546,491 $52,903,611 $138,131,308 $61,067,091 =========== ============ =========== ============ =========== NET ASSETS - CLASS I $70,414,847 $ 67,432,909 $49,892,578 $134,991,317 $52,248,068 =========== ============ =========== ============ =========== NET ASSETS - CLASS C $ 852,887 $ 67,029,350 $ 3,007,803 $ 3,118,128 $ 8,726,609 =========== ============ =========== ============ =========== NET ASSETS - CLASS Z $ 1,745 $ 84,232 $ 3,230 $ 21,863 $ 92,414 =========== ============ =========== ============ =========== NET ASSETS CONSIST OF Paid-in capital $70,947,851 $117,708,500 $47,573,783 $119,834,653 $55,282,459 Accumulated undistributed net investment income/(loss) 8,425 (472,567) (147,577) 709,220 (162,371) Accumulated undistributed net realized gain/(loss) from investments 22,980 (2,178,707) (842,960) 3,203,477 257,584 Unrealized appreciation/(depreciation) on securities, written options and securities sold short 290,223 19,489,265 6,320,365 14,383,958 5,689,419 ----------- ------------ ----------- ------------ ----------- NET ASSETS $71,269,479 $134,546,491 $52,903,611 $138,131,308 $61,067,091 =========== ============ =========== ============ =========== Shares outstanding (unlimited shares authorized, no par value) Class I 6,876,591 4,869,850 3,733,034 8,994,261 3,469,768 Class C 83,155 5,004,637 229,367 208,730 590,291 Class Z 171 6,067 241 1,457 6,123 Net asset value (offering and redemption price per share) Class I $ 10.24 $ 13.85 $ 13.37 $ 15.01 $ 15.06 Class C $ 10.26 $ 13.39 $ 13.11 $ 14.94 $ 14.78 Class Z $ 10.24(a) $ 13.88 $ 13.40 $ 15.01 $ 15.09
(a) Net assets divided by shares outstanding may not recalculate due to the rounding of net assets and/or shares outstanding. The accompanying notes are an integral part of the financial statements. Financial Statements 69 Statements of Operations For the period ended March 31, 2005 (unaudited)
ICON ICON ICON ICON ICON CORE COVERED EQUITY LONG/SHORT BOND FUND EQUITY FUND CALL FUND INCOME FUND FUND ----------- ----------- ----------- ----------- ---------- INVESTMENT INCOME Interest $ 1,644,364 $ 30,977 $ 1,837 $ 486,914 $ 23,242 Dividends - 477,309 228,481 1,579,284 196,756 Foreign taxes withheld - (1,154) (139) (12,818) (498) ----------- ----------- ----------- ----------- ---------- Total Investment Income 1,644,364 507,132 230,179 2,053,380 219,500 ----------- ----------- ----------- ----------- ---------- EXPENSES Advisory fees 195,069 442,203 190,653 502,554 195,269 Distribution fees: Class I 80,346 70,888 60,494 164,266 49,935 Class C 3,165 305,729 12,213 12,916 29,687 Fund accounting, custodial and transfer agent fees 56,977 62,451 45,502 70,094 44,724 Administration fees 15,725 28,552 12,299 32,418 11,180 Audit fees 4,203 7,309 3,116 8,537 2,562 Registration fees: Class I 9,777 9,137 8,611 12,128 8,972 Class C 8,236 8,563 8,136 8,248 8,488 Legal fees 683 1,197 527 1,407 406 Insurance expense 1,747 2,741 1,226 3,385 757 Trustee fees and expenses 3,711 6,538 2,843 7,647 2,172 Shareholder reports 11,733 20,747 9,084 24,079 7,533 Interest Expense 57 - 10,640 144 421 Dividends on short positions - - - - 3,380 Other expenses 28,838 13,644 54,942 42,138 23,369 ----------- ----------- ----------- ----------- ---------- Total expenses before expense (reimbursement)/recoupment 420,267 979,699 420,286 889,961 388,855 ----------- ----------- ----------- ----------- ---------- Expense (reimbursement)/recoupment by Advisor due to expense limitation agreement (29,697) - (42,530) (13,645) (7,206) ----------- ----------- ----------- ----------- ---------- Net Expenses 390,570 979,699 377,756 876,316 381,649 ----------- ----------- ----------- ----------- ---------- NET INVESTMENT INCOME (LOSS) 1,253,794 (472,567) (147,577) 1,177,064 (162,149) ----------- ----------- ----------- ----------- ---------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from: Investment transactions 6,320 5,959,817 1,935,632 3,067,845 401,107 Written options - - (2,308,345) - - Securities sold short - - - - (143,482) ----------- ----------- ----------- ----------- ---------- Total net realized gain/(loss) 6,320 5,959,817 (372,713) 3,067,845 257,625 ----------- ----------- ----------- ----------- ---------- Change in net unrealized appreciation/(depreciation) on securities, written options and securities sold short (1,418,089) 2,901,102 3,020,957 3,622,533 4,033,424 ----------- ----------- ----------- ----------- ---------- Net realized and unrealized gain/(loss) on investments (1,411,769) 8,860,919 2,648,244 6,690,378 4,291,049 ----------- ----------- ----------- ----------- ---------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (157,975) $8,388,352 $ 2,500,667 $7,867,442 $4,128,900 =========== =========== =========== =========== ==========
The accompanying notes are an integral part of the financial statements. 70 Financial Statements THIS PAGE INTENTIONALLY LEFT BLANK Statements of Changes in Net Assets
ICON BOND FUND ICON CORE EQUITY FUND ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ -------------- ------------------ OPERATIONS Net investment income/(loss) $ 1,253,794 $ 1,994,678 $ (472,567) $ (861,159) Net realized gain/(loss) from investments transactions, written options and securities sold short 6,320 772,882 5,959,817 5,419,845 Change in net unrealized appreciation/(depreciation) on securities, written options and securities sold short (1,418,089) (160,120) 2,901,102 6,605,972 -------------- ------------------ -------------- ------------------ Net increase/(decrease) in net assets resulting from operations (157,975) 2,607,440 8,388,352 11,164,658 -------------- ------------------ -------------- ------------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income Class I (1,383,631) (1,972,705) - - Class C (14,833) (11,095) - - Class Z (28) (10) - - Net realized gains Class I (338,815) - - - Class C (4,379) - - - Class Z (6) - - - -------------- ------------------ -------------- ------------------ Net decrease from dividends and distributions (1,741,692) (1,983,810) - - -------------- ------------------ -------------- ------------------ FUND SHARE TRANSACTIONS Shares sold Class I 33,422,193 33,416,648 20,587,176 16,988,164 Class C 714,238 342,757 13,432,647 18,403,784 Class Z 1,210 645 47,558 35,784 Reinvested dividends and distributions Class I 1,475,479 1,971,854 - - Class C 16,655 10,191 - - Class Z 27 10 - - Shares repurchased Class I (24,108,781) (13,848,513) (4,440,191) (13,079,331) Class C (224,998) (241,960) (3,876,031) (6,132,345) Class Z (120) - (2,830) (1,884) -------------- ------------------ -------------- ------------------ Net increase/(decrease) from fund share transactions 11,295,903 21,651,632 25,748,329 16,214,172 -------------- ------------------ -------------- ------------------ Total net increase/(decrease) in net assets 9,396,236 22,275,262 34,136,681 27,378,830 NET ASSETS Beginning of period 61,873,243 39,597,981 100,409,810 73,030,980 -------------- ------------------ -------------- ------------------ End of period $ 71,269,479 $ 61,873,243 $134,546,491 $100,409,810 ============== ================== ============== ==================
72 Financial Statements
ICON COVERED CALL FUND ICON EQUITY INCOME FUND ICON LONG/SHORT FUND ------------------------------------ ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED PERIOD ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ -------------- ------------------ -------------- ------------------ $ (147,577) $ (169,445) $ 1,177,064 $ 1,986,249 $ (162,149) $ (108,267) (372,713) 2,216,139 3,067,845 1,009,178 257,625 1,862,548 3,020,957 701,636 3,622,533 6,839,072 4,033,424 108,880 -------------- ------------------ -------------- ------------------ -------------- ------------------ 2,500,667 2,748,330 7,867,442 9,834,499 4,128,900 1,863,161 -------------- ------------------ -------------- ------------------ -------------- ------------------ - - (1,145,392) (1,955,243) - - - - (12,764) (18,936) (222) - - - (202) (169) - - (2,014,072) (813,994) (690,470) - (1,266,628) (122,911) (97,417) (11,304) (13,763) - (183,132) (7,238) (118) - (103) - (1,524) - -------------- ------------------ -------------- ------------------ -------------- ------------------ (2,111,607) (825,298) (1,862,694) (1,974,348) (1,451,506) (130,149) -------------- ------------------ -------------- ------------------ -------------- ------------------ 11,982,321 28,282,997 24,437,117 84,251,666 31,375,755 21,568,653 1,275,119 1,905,597 1,230,905 1,466,895 4,691,414 3,489,408 671 3,139 6,658 13,644 55,269 32,109 1,901,482 802,492 1,410,925 1,849,956 1,158,739 121,354 88,746 10,975 20,035 17,806 163,651 7,238 118 - 235 169 1,524 - (7,328,866) (9,000,921) (14,307,753) (18,768,921) (7,084,535) (8,589,480) (333,296) (127,212) (122,189) (296,277) (199,517) (129,159) (790) - - (19) (395) - -------------- ------------------ -------------- ------------------ -------------- ------------------ 7,585,505 21,877,067 12,675,933 68,534,919 30,161,905 16,500,123 -------------- ------------------ -------------- ------------------ -------------- ------------------ 7,974,565 23,800,099 18,680,681 76,395,070 32,839,299 18,233,135 44,929,046 21,128,947 119,450,627 43,055,557 28,227,792 9,994,657 -------------- ------------------ -------------- ------------------ -------------- ------------------ $52,903,611 $44,929,046 $138,131,308 $119,450,627 $61,067,091 $28,227,792 ============== ================== ============== ================== ============== ==================
Financial Statements 73 Statements of Changes in Net Assets (continued)
ICON BOND FUND ICON CORE EQUITY FUND ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ -------------- ------------------ TRANSACTIONS IN FUND SHARES Shares sold Class I 3,190,547 3,199,688 1,493,982 1,380,045 Class C 67,743 32,748 1,015,224 1,535,906 Class Z 115 63 3,467 2,959 Reinvested dividends and distributions Class I 140,980 188,665 - - Class C 1,589 979 - - Class Z 3 1 - - Shares repurchased Class I (2,301,332) (1,319,789) (323,604) (1,060,722) Class C (21,340) (23,478) (290,809) (511,842) Class Z (11) - (205) (154) -------------- ------------------ -------------- ------------------ Net increase/(decrease) 1,078,294 2,078,877 1,898,055 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 6,959,917 5,881,623 9,880,554 7,982,499 ============== ================== ============== ================== PURCHASE AND SALES OF INVESTMENT SECURITIES (excluding short-term securities and written options) Purchase of securities (including short sale transactions) $ 9,511,989 $ 14,692,029 $ 75,252,919 $117,495,384 Proceeds from sales of securities (including short sale transactions) 11,425,721 14,436,998 51,298,016 101,917,674 Purchases of long-term U.S. government securities 12,119,067 22,260,709 - - Proceeds from sales of long-term U.S. government securities 14,226,978 1,889,387 - - ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ 8,425 $ 153,123 $ (472,567) $ - ============== ================== ============== ==================
The accompanying notes are an integral part of the financial statements. 74 Financial Statements
ICON COVERED CALL FUND ICON EQUITY INCOME FUND ICON LONG/SHORT FUND ------------------------------------ ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED PERIOD ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ -------------- ------------------ -------------- ------------------ 894,739 2,169,073 1,650,754 5,938,018 2,108,811 1,570,724 96,921 147,349 83,549 104,841 322,166 257,198 50 239 437 995 3,739 2,309 141,902 63,040 92,036 128,188 77,095 9,511 6,733 877 1,313 1,248 11,065 574 9 - 15 12 101 - (546,524) (681,412) (952,265) (1,336,866) (474,581) (632,107) (24,686) (9,841) (8,225) (21,597) (13,650) (9,606) (57) - - (1) (26) - -------------- ------------------ -------------- ------------------ -------------- ------------------ 569,087 1,689,325 867,614 4,814,838 2,034,720 1,198,603 -------------- ------------------ -------------- ------------------ -------------- ------------------ 3,393,555 1,704,230 8,336,834 3,521,996 2,031,462 832,859 -------------- ------------------ -------------- ------------------ -------------- ------------------ 3,962,642 3,393,555 9,204,448 8,336,834 4,066,182 2,031,462 ============== ================== ============== ================== ============== ================== $39,073,508 $74,412,247 $ 81,352,956 $111,360,137 $42,583,445 $38,171,546 35,551,590 53,342,570 72,435,871 44,139,424 13,764,630 22,620,730 - - - - - - - - - - - - $ (147,577) $ 249,818 $ 709,220 $ 690,514 $ (162,371) $ - ============== ================== ============== ================== ============== ==================
Financial Statements 75 Financial Highlights
INCOME FROM INVESTMENT OPERATIONS ------------------------------------------- NET ASSET NET NET REALIZED TOTAL VALUE, INVESTMENT AND UNREALIZED FROM BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT OF PERIOD (LOSS)(x) ON INVESTMENTS OPERATIONS --------- ---------- ----------------- ---------- ICON BOND FUND CLASS I Period Ended March 31, 2005 (unaudited) $10.52 $ 0.20 $(0.20) $ 0.00 Year Ended September 30, 2004 10.41 0.45 0.10 0.55 October 1, 2002 (inception) to September 30, 2003 10.00 0.42 0.38 0.80 CLASS C Period Ended March 31, 2005 (unaudited) 10.54 0.17 (0.20) (0.03) 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 Period Ended March 31, 2005 (unaudited) 10.51 0.22 (0.19) 0.03 May 6, 2004 (inception) to September 30, 2004 10.26 0.46 (0.02) 0.44 ICON CORE EQUITY FUND CLASS I Period Ended March 31, 2005 (unaudited) 12.78 (0.03) 1.10 1.07 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 Period Ended March 31, 2005 (unaudited) 12.41 (0.08) 1.06 0.98 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 Period Ended March 31, 2005 (unaudited) 12.79 (0.01) 1.10 1.09 May 6, 2004 (inception) to September 30, 2004 12.07 (0.03) 0.75 0.72 ICON COVERED CALL FUND CLASS I Period Ended March 31, 2005 (unaudited) 13.25 (0.04) 0.73 0.69 Year Ended September 30, 2004 12.40 (0.07) 1.36 1.29 October 1, 2002 (inception) to September 30, 2003 10.00 (0.07) 2.47 2.40 LESS DIVIDENDS AND DISTRIBUTIONS ------------------------------------------------------- DIVIDENDS FROM DISTRIBUTIONS TOTAL NET FROM NET RETURN DIVIDENDS INVESTMENT REALIZED OF AND INCOME GAINS CAPITAL DISTRIBUTIONS ---------- ------------- ---------- ------------- ICON BOND FUND CLASS I Period Ended March 31, 2005 (unaudited) $(0.22) $(0.06) - $(0.28) Year Ended September 30, 2004 (0.44) - - (0.44) October 1, 2002 (inception) to September 30, 2003 (0.39) - - (0.39) CLASS C Period Ended March 31, 2005 (unaudited) (0.19) (0.06) - (0.25) Year Ended September 30, 2004 (0.38) - - (0.38) October 21, 2002 (inception) to September 30, 2003 (0.34) - - (0.34) CLASS Z Period Ended March 31, 2005 (unaudited) (0.24) (0.06) - (0.30) May 6, 2004 (inception) to September 30, 2004 (0.19) - - (0.19) ICON CORE EQUITY FUND CLASS I Period Ended March 31, 2005 (unaudited) - - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - (0.27) - (0.27) October 12, 2000 (inception) to September 30, 2001 - - - - CLASS C Period Ended March 31, 2005 (unaudited) - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - (0.27) - (0.27) November 28, 2000 (inception) to September 30, 2001 - - - - CLASS Z Period Ended March 31, 2005 (unaudited) - - - - May 6, 2004 (inception) to September 30, 2004 - - - - ICON COVERED CALL FUND CLASS I Period Ended March 31, 2005 (unaudited) - (0.57) - (0.57) Year Ended September 30, 2004 - (0.44) - (0.44) October 1, 2002 (inception) to September 30, 2003 - - - -
76 Financial Highlights
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 FOR EXPENSE EXPENSE EXPENSE EXPENSE PORTFOLIO END OF TOTAL END OF PERIOD THE PERIOD LIMITATION/ LIMITATION/ LIMITATION/ LIMITATION/ TURNOVER PERIOD RETURN* (IN THOUSANDS) (IN THOUSANDS) RECOUPMENT RECOUPMENT RECOUPMENT RECOUPMENT RATE(b) --------- --------- -------------- -------------- ----------- ----------- ----------- ----------- --------- $10.24 (0.03)% $70,415 $64,549 1.26% 1.19% 3.79% 3.86% 36.85% 10.52 5.41% 61,502 46,295 1.29% 1.30% 4.28% 4.27% 37.98% 10.41 8.19% 39,338 33,787 1.45% 1.30% 4.01% 4.16% 41.65% 10.26 (0.29)% 853 749 4.05% 1.79% 1.01% 3.27% 36.85% 10.54 4.83% 371 317 6.84% 1.90% 3.63% 8.57% 37.98% 10.42 9.98% 260 199 2.05% 1.90% 3.48% 3.63% 41.65% 10.24 0.22% 2 1 0.94% 0.84% 4.10% 4.20% 36.85% 10.51 4.33% 1 1 0.86% 0.86% 4.60% 4.60% 37.98% 13.85 8.37% 67,433 57,047 1.28% N/A (0.41)% N/A 44.06% 12.78 14.93% 47,273 43,044 1.33% N/A (0.59)% N/A 116.26% 11.12 17.05% 37,603 34,007 1.39% N/A (0.37)% N/A 188.07% 9.50 (3.23)% 42,232 37,577 1.36% N/A (0.58)% N/A 107.82% 10.04 0.40% 23,261 23,802 1.60% N/A (0.36)% N/A 124.61% 13.39 7.90% 67,029 61,436 2.02% N/A (1.16)% N/A 44.06% 12.41 14.06% 53,101 45,114 2.08% N/A (1.34)% N/A 116.26% 10.88 16.24% 35,428 30,459 2.14% N/A (1.12)% N/A 188.07% 9.36 (4.07)% 27,744 19,849 2.11% N/A (1.33)% N/A 107.82% 9.98 (6.03)%+ 6,324 2,920 2.23% N/A (1.24)% N/A 124.61% 13.88 8.52% 84 65 0.99% N/A (0.14)% N/A 44.06% 12.79 5.97% 36 32 1.12% N/A (0.28)% N/A 116.26% 13.37 5.19% 49,893 48,596 1.59% 1.45% (0.68)% (0.54)% 68.20% 13.25 10.53% 42,962 30,305 1.60% 1.45% (0.67)% (0.52)% 167.57% 12.40 24.00% 20,981 14,544 2.07% 1.45% (1.27)% (0.65)% 184.24%
Financial Highlights 77 Financial Highlights (continued)
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 --------- ---------- -------------- ---------- CLASS C Period Ended March 31, 2005 (unaudited) $13.06 $(0.08) $ 0.70 $ 0.62 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 Period Ended March 31, 2005 (unaudited) 13.29 (0.02) 0.70 0.68 May 6, 2004 (inception) to September 30, 2004 12.86 (0.01) 0.44 0.43 ICON EQUITY INCOME FUND CLASS I Period Ended March 31, 2005 (unaudited) 14.33 0.13 0.83 0.96 Year Ended September 30, 2004 12.22 0.31 2.09 2.40 October 1, 2002 (inception) to September 30, 2003 10.00 0.25 2.20 2.45 CLASS C Period Ended March 31, 2005 (unaudited) 14.27 0.06 0.81 0.87 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 Period Ended March 31, 2005 (unaudited) 14.33 0.15 0.85 1.00 May 10, 2004 (inception) to September 30, 2004 13.43 0.39 0.70 1.09 ICON LONG/SHORT FUND(D) CLASS I Period Ended March 31, 2005 (unaudited) 13.92 (0.05) 1.69 1.64 Year Ended September 30, 2004 12.00 (0.08) 2.16 2.08 October 1, 2002 (inception) to September 30, 2003 10.00 (0.07) 2.07 2.00 CLASS C Period Ended March 31, 2005 (unaudited) 13.73 (0.10) 1.65 1.55 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 Period Ended March 31, 2005 (unaudited) 13.94 (0.03) 1.68 1.65 May 6, 2004 (inception) to September 30, 2004 13.99 (0.04) (0.01) (0.05) LESS DIVIDENDS AND DISTRIBUTIONS ------------------------------------------------------- DIVIDENDS DISTRIBUTIONS FROM NET FROM NET TOTAL INVESTMENT REALIZED RETURN DIVIDENDS AND INCOME GAINS OF CAPITAL DISTRIBUTIONS ---------- ------------- ---------- ------------- CLASS C Period Ended March 31, 2005 (unaudited) - $(0.57) - $(0.57) Year Ended September 30, 2004 - (0.44) - (0.44) November 21, 2002 (inception) to September 30, 2003 - - - - CLASS Z Period Ended March 31, 2005 (unaudited) - (0.57) - (0.57) May 6, 2004 (inception) to September 30, 2004 - - - - ICON EQUITY INCOME FUND CLASS I Period Ended March 31, 2005 (unaudited) $(0.20) (0.08) - (0.28) Year Ended September 30, 2004 (0.29) - - (0.29) October 1, 2002 (inception) to September 30, 2003 (0.23) - - (0.23) CLASS C Period Ended March 31, 2005 (unaudited) (0.12) (0.08) - (0.20) Year Ended September 30, 2004 (0.20) - - (0.20) November 8, 2002 (inception) to September 30, 2003 (0.17) - - (0.17) CLASS Z Period Ended March 31, 2005 (unaudited) (0.24) (0.08) - (0.32) May 10, 2004 (inception) to September 30, 2004 (0.19) - - (0.19) ICON LONG/SHORT FUND(D) CLASS I Period Ended March 31, 2005 (unaudited) - (0.50) - (0.50) Year Ended September 30, 2004 - (0.16) - (0.16) October 1, 2002 (inception) to September 30, 2003 - - - - CLASS C Period Ended March 31, 2005 (unaudited) - (0.50) - (0.50) Year Ended September 30, 2004 - (0.16) - (0.16) October 17, 2002 (inception) to September 30, 2003 - - - - CLASS Z Period Ended March 31, 2005 (unaudited) - (0.50) - (0.50) May 6, 2004 (inception) to September 30, 2004 - - - -
(x) Calculated using the average share method. * The total return calculation is for the period indicated. (a) Annualized for periods less than a year. (b) Portfolio turnover is calculated at the Fund level. The rate shown is for the longest period indicated of the three share classes. (c) The limitation on expenses for Class Z shares occurred when the Advisor reimbursed the Fund for excise and income taxes incurred during the period (Note 5). These expenses were extraordinary expenses not subject to the contractual expense limitation discussed in Note 2. (d) The Fund's operating expenses, not including dividends on short positions, are contractually limited to 2.30% for Class C, 1.55% for Class I, and 1.30% for Class Z. The ratios in these financial highlights reflect the limitation, including the dividends on short positions. + The total return for the Class C shares for the period November 28, 2000 (inception) to September 30, 2001 has been restated due to a mathematical error. The previous total return was (0.20%) (See Note 7). The accompanying notes are an integral part of the financial statements. 78 Financial Highlights
RATIO OF NET INVESTMENT RATIO OF EXPENSES TO INCOME TO AVERAGE AVERAGE AVERAGE NET ASSETS(a) NET ASSETS(a) NET NET ASSETS, NET ------------------------- ------------------------- ASSET END OF ASSETS FOR BEFORE AFTER BEFORE AFTER VALUE, PERIOD THE PERIOD EXPENSE EXPENSE EXPENSE EXPENSE PORTFOLIO END OF TOTAL (IN (IN LIMITATION/ LIMITATION/ LIMITATION/ LIMITATION/ TURNOVER PERIOD RETURN* THOUSANDS) THOUSANDS) RECOUPMENT RECOUPMENT RECOUPMENT RECOUPMENT RATE(b) --------- --------- -------------- -------------- ----------- ----------- ----------- ----------- --------- $13.11 4.72% $ 3,008 $ 2,457 2.98% 2.20% (2.05)% (1.27)% 68.20% 13.06 9.69% 1,964 838 3.89% 2.20% (2.93)% (1.23)% 167.57% 12.32 14.60% 148 50 2.83% 2.20% (2.13)% (1.50)% 184.24% 13.40 5.26% 3 3 1.24% 1.16% (0.33)% (0.25)% 68.20% 13.29 3.34% 3 2 1.12% 1.12% (0.11)% (0.11)% 167.57% 15.01 6.17% 134,991 131,977 1.30% 1.29% 1.76% 1.77% 55.43% 14.33 19.69% 117,552 88,318 1.35% 1.37% 2.25% 2.23% 51.84% 12.22 24.72% 42,474 25,288 1.72% 1.45% 2.23% 2.30% 35.17% 14.94 5.71% 3,118 2,602 2.68% 2.20% 0.39% 0.87% 55.43% 14.27 18.56% 1,885 1,053 3.47% 2.20% 0.12% 1.40% 51.84% 12.21 16.63% 581 348 2.48% 2.20% 1.10% 1.38% 35.17% 15.01 6.30% 22 19 1.04% 1.03% 2.00% 2.01% 55.43% 14.33 8.12% 14 12 1.11% 0.97%(c) 2.62% 2.76% 51.84% 15.06 11.79% 52,248 40,293 1.57% 1.57% (0.59)% (0.59)% 32.38% 13.92 17.42% 24,480 14,374 2.15% 1.74% (1.03)% (0.62)% 148.32% 12.00 20.00% 9,726 6,997 3.09% 1.55% (2.20)% (0.66)% 162.25% 14.78 11.28% 8,727 5,994 2.55% 2.31% (1.57)% (1.33)% 32.38% 13.73 16.61% 3,716 1,417 3.70% 2.49% (2.57)% (1.35)% 148.32% 11.92 12.35% 269 186 3.84% 2.30% (2.99)% (1.45)% 162.25% 15.09 11.84% 92 61 1.27% 1.31% (0.30)% (0.34)% 32.38% 13.94 (0.36)% 32 29 1.98% 1.76% (0.50)% (0.28)% 148.32%
Financial Highlights 79 Notes to Financial Statements March 31, 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 October 1, 2002. Each Fund offers three classes of shares, Class I, Class C and Class Z. All classes have equal rights as to earnings, assets and voting privileges except that each Class may bear different distribution fees, registration costs and each Class has exclusive voting rights with respect to its distribution plan. There are currently 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 80 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 close of regular trading on the New York Stock Exchange (the "NYSE") (normally 4 p.m. Eastern time) each day the NYSE is open, except that securities traded primarily on the NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at the NASDAQ Official Closing Price provided by NASDAQ each business day. The Funds use pricing services to determine the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service quote of valuation is inaccurate or does not reflect the market value of the security, prices may be obtained through market quotations from independent broker/dealers. If market quotations from these sources are not readily available, the Funds' securities or other assets are valued at fair value as determined in good faith by the Funds' Board of Trustees ("Board") or pursuant to procedures approved by the Board. The valuation assigned to fair-valued securities for purposes of calculating a Fund's 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. 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 81 Notes to Financial Statements (continued) in other markets in determining fair value as of the time a Fund calculates its net asset value. A security listed or traded primarily on a securities exchange or in the over-the-counter market is generally valued at its last sale price on the exchange or market where it is principally traded, except that securities primarily traded on NASDAQ are normally valued at the NASDAQ Official Closing Price. Lacking any sales that day, the security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes obtained from dealers making a market for the security. Options are valued at their closing mid-price on the principal market where the option is traded. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than sixty days are valued in accordance with the evaluated bid price supplied by the pricing service. Short-term securities with remaining maturities of sixty days or less are generally valued at amortized cost or original cost plus accrued interest, which approximates market value. 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. 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 period ended March 31, 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 82 Notes to Financial Statements 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 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 period ended March 31, 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 as of March 31, 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. Notes to Financial Statements 83 Notes to Financial Statements (continued) When a Fund writes a put or call option, an amount equal to the premium received is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. Such liability is subject to off balance sheet risks to the extent of any future increases in market value of the written options. If an option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security and the proceeds from the sale are increased by the premium originally received. If a written put option is assigned, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, a Fund has no control over whether the underlying securities are subsequently sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the security underlying the written option. Each Fund may also purchase put and call options. When a Fund purchases a put or call option, an amount equal to the premium paid is included in the Fund's Statement of Assets and Liabilities as an investment, and is subsequently marked-to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If the Fund exercises a call, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option, a gain or loss is realized from the sale of the underlying security, and the proceeds from such a sale are decreased by the premium originally paid. Written and purchased options are non-income producing securities. SHORT SALES The Long/Short Fund may engage in short sales (selling securities it does not own) as part of its normal investment activities. These short sales are collateralized by cash equivalents or securities with the Fund's prime broker and segregated account at the Fund's custodian. The collateral required is determined daily by reference to the market value of the short positions. Such collateral for the Fund is held by one broker. Dividend expense on short sales is treated as an expense on the Statement of Operations. Liabilities for securities sold short are reported at market value in the financial statements. Such liabilities are subject to off-balance sheet risk to the extent of any future increases in market value of the securities sold short. The ultimate liability for securities sold short could exceed the liabilities recorded in the Statement of Assets and Liabilities. Liabilities for securities sold short are closed out by purchasing the applicable securities for delivery to the Fund's prime broker. 84 Notes to Financial Statements INCOME TAXES The Funds intend to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code and, accordingly, the Funds will generally not be subject to federal and state income taxes, or federal excise taxes to the extent that they intend to make sufficient distributions of net investment income and net realized capital gain. Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders. Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. The Bond Fund distributes net investment income, if any, to shareholders monthly. The Equity Income Fund distributes net investment income, if any, to shareholders quarterly. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryovers. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles generally accepted in the United States of America. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. 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. Notes to Financial Statements 85 Notes to Financial Statements (continued) 2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEES ICON Advisers, Inc. ("ICON") serves as investment adviser to the Funds and is responsible for managing the Funds' portfolios of securities. ICON receives a monthly management fee that is computed daily at an annual rate of 0.60% of average daily nets assets of the Bond Fund, 0.75% of average daily net assets of the Core Equity, Covered Call and Equity Income Funds, and 0.85% of average daily net assets of the Long/Short Fund. ICON has contractually agreed to limit its investment advisory fee and/or reimburse certain of the Funds' operating expenses (exclusive of brokerage, interest, taxes, and extraordinary expenses) to the extent necessary to ensure that the Funds' operating expenses do not exceed 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, 2006. To the extent ICON reimburses or absorbs fees and expenses, it may seek payment of such amounts for up to three years after the expenses were reimbursed or absorbed. A Fund will make no such payment, however, if the total Fund operating expenses exceed the expense limits in effect at the time the expenses were reimbursed or at the time these payments are proposed. For the period ended March 31, 2005, ICON's net reimbursement/(recoupment) during the period ended March 31, 2005 was $8,395 on Class C and $21,302 on Class I shares of the Bond Fund; $9,487 on Class C and $33,043 on Class I shares of the Covered Call Fund; $7,478 on Class C and $6,167 on Class I shares of the Equity Income Fund; and $7,229 on Class C and $(23) on Class I shares of the Long/Short Fund, respectively. These expense reimbursements are subject to recovery by ICON based on a rolling three-year period. TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES U.S. Bank N.A. ("U.S. Bank") and U.S. Bancorp Fund Services, LLC ("U.S. Bancorp") provided domestic custodial services, transfer agent services and fund accounting for the Funds during the period. 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 86 Notes to Financial Statements $1 billion of average daily net assets, and 0.04% on the average daily net assets in excess of $1.5 billion. The Funds paid a minimum fee for fund accounting of $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 and Administration Services 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. During the period, 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- Notes to Financial Statements 87 Notes to Financial Statements (continued) 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. For the period ended March 31, 2005 the total amounts paid or payable to IDI pursuant to the 12b-1 Plan were $3,165 on Class C shares and $80,346 on Class I shares of the Bond Fund, $305,729 on Class C shares and $70,888 on Class I shares of the Core Equity Fund, $12,213 on Class C shares and $60,494 on Class I shares of the Covered Call Fund, $12,916 on Class C shares and $164,266 on Class I shares of the Equity Income Fund, and $29,687 on Class C shares and $49,935 on Class I shares of the Long/Short Fund. 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) receive no compensation from the Funds. There are certain employees of ICON, such as the Chief Compliance Officer and staff who administer the compliance program, for which the Funds reimburse ICON for certain amounts related to compensation and certain other expenses incurred. For the period ended March 31, 2005, the total related amounts paid by the Trust 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 allows the Funds to borrow funds, subject to certain conditions for temporary purposes. Interest on these borrowings was calculated at prime, which was 5.5% at March 31, 2005. A commitment fee of $500 per line of credit has been 88 Notes to Financial Statements paid by each Fund. The maximum borrowing was limited to 25% of eligible securities held by the portfolio subject to the following maximums: ICON Bond Fund $ 9,000,000 ICON Core Equity Fund $15,000,000 ICON Covered Call Fund $ 7,000,000 ICON Equity Income Fund $25,000,000 ICON Long/Short Fund $ 3,000,000
The Long/Short Fund had $352,361 outstanding on its line of credit as of March 31, 2005. Effective April 18, 2005, the Fund 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 $135 million. 4. OPTIONS CONTRACTS WRITTEN The number of option contracts written and the premiums received by the ICON Covered Call Fund during the period ended March 31, 2005, were as follows:
NUMBER OF PREMIUMS CONTRACTS RECEIVED ------------------------------------------------------------------------------------- Options outstanding, beginning of period 11,776 $ 1,035,052 Options written during period 6,997 6,242,196 Options expired during period (1,474) (1,361,600) Options closed during period (4,095) (4,460,399) Options assigned during period (413) (424,950) Options outstanding, end of period 12,791 1,030,299
5. FEDERAL INCOME TAX Income and capital gain distributions are determined in accordance with income tax regulations that may differ from accounting principles that are generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferrals of wash losses, foreign currency transactions, net investment losses, and capital loss carryovers. Notes to Financial Statements 89 Notes to Financial Statements (continued) The tax character of distributions paid during the periods indicated were as follows:
ORDINARY LONG-TERM RETURN OF TOTAL INCOME CAPITAL GAIN CAPITAL DISTRIBUTIONS ------------------------------------------------------------------------------------------ YEAR ENDED SEPTEMBER 30, 2004 ICON Bond Fund $1,983,810 $ - $- $1,963,810 ICON Core Equity Fund - - - - ICON Covered Call Fund 825,244 54 - 825,298 ICON Equity Income Fund 1,974,348 - - 1,974,348 ICON Long/Short Fund 102,417 27,732 - 130,149 YEAR ENDED SEPTEMBER 30, 2003 ICON Bond Fund 1,394,730 - - 1,394,730 ICON Core Equity Fund - - - - ICON Covered Call Fund - - - - ICON Equity Income Fund 555,767 - - 555,767 ICON Long/Short Fund - - - -
Accumulated capital losses noted below represent net capital loss carryovers as of September 30, 2004 that may be available to offset future realized capital gains and thereby reduce future taxable income distributions. These carryovers expire on September 30, 2010 and 2011. During the year ended September 30, 2004, the following capital loss carryforwards were used: ICON Bond Fund $ 716 ICON Core Equity Fund 3,759,872 ICON Covered Call Fund - ICON Equity Income Fund - ICON Long/Short Fund 445
The tax components of capital shown in the table below represent: (1) losses or deductions the portfolio may be able to offset against income and gains recognized in future years, and (2) post October loss deferrals.
ACCUMULATED UNDISTRIBUTED UNDISTRIBUTED POST OCTOBER CAPITAL LOSSES ORDINARY INCOME LONG-TERM GAIN DEFERRALS ---------------------------------------------------------------------------------------- ICON Bond Fund $ - $ 153,122 $359,860 $ - ICON Core Equity Fund 8,138,524 - - - ICON Covered Call Fund - 1,404,286 707,268 - ICON Equity Income Fund - 690,544 898,315 - ICON Long/Short Fund - 605,334 845,915 -
90 Notes to Financial Statements As of March 31, 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:
UNREALIZED UNREALIZED NET APPRECIATION COST APPRECIATION (DEPRECIATION) (DEPRECIATION) ----------------------------------------------------------------------------------------- ICON Bond Fund $ 70,278,229 $ 927,479 $ (637,256) $ 290,223 ICON Core Equity Fund 114,299,422 21,270,379 (1,781,114) 19,489,265 ICON Covered Call Fund 47,463,524 7,191,148 (870,783) 6,320,365 ICON Equity Income Fund 119,865,936 16,247,879 (1,863,921) 14,383,958 ICON Long/Short Fund 54,885,184 7,239,884 (1,550,465) 5,689,419
6. SEGREGATED ACCOUNT AND SHORT SALE COLLATERAL As of March 31, 2005 the ICON Long/Short Fund had securities or cash deposits with the counterparty to the short sales in the amount of $9,073,172 as collateral for the short sales. 7. TOTAL RETURN RESTATEMENT The ICON Core Equity Fund, Class C has restated its total return for the period ended September 30, 2001 from (0.20%) to (6.03%). The resulting decrease in total return of 5.83% was due to a mathematical error. Notes to Financial Statements 91 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. 92 [ICON FUNDS LOGO] 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
[ICON FUNDS LOGO] 1-800-764-0442 www.iconadvisers.com ICRPANNUDIV I-142-DIV > March 31, 2005 Investment Update ICON FOREIGN FUNDS ICON ASIA-PACIFIC REGION FUND ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND Semiannual Report (unaudited) (ICON FUNDS LOGO) Table of Contents ABOUT THIS REPORT 2 MESSAGE FROM ICON FUNDS 4 MANAGEMENT OVERVIEWS AND SCHEDULES OF INVESTMENTS ICON Asia-Pacific Region Fund 7 ICON Europe Fund 16 ICON International Equity Fund 26 HYPOTHETICAL EXPENSE EXAMPLE 37 FINANCIAL STATEMENTS 39 FINANCIAL HIGHLIGHTS 46 NOTES TO FINANCIAL STATEMENTS 48
About This Report HISTORICAL RETURNS All total returns mentioned in this report account for the change in a Fund's per-share price and the reinvestment of any dividends, capital gain distributions, and tax return of capital. If your account is set up to receive Fund distributions in cash rather than to reinvest them, your actual return may differ from these figures. The Funds' performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results represent past performance, and current performance may be higher or lower. Please call 1-800-764-0442 or visit www.iconadvisers.com for performance results current to the most recent month-end. PORTFOLIO DATA This report reflects ICON's views, opinions and portfolio holdings as of March 31, 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 percentage holdings as of March 31, 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, these factors may impact a stock's performance, and therefore, Fund performance. There are risks associated with mutual fund investing, including the risk of loss of principal. There is no assurance that the investment process will consistently lead to successful results. Investments in foreign securities may entail unique risks, including political, market and currency risks. An investment in a region fund may involve greater risk and volatility than a diversified fund. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment. There are also risks associated with small- and mid-cap investing, including limited product lines, less liquidity and small market share. 2 About This Report COMPARATIVE INDEXES The comparative indexes discussed in this report are meant to provide a basis for judging a Fund's performance against specific securities indexes. Each index shown accounts for both change in security price and reinvestment of dividends and distributions (except as noted), but does not reflect the costs of managing a mutual fund. The total return figures for the Morgan Stanley Capital International (MSCI) indexes assume change in security prices and the deduction of local taxes. The Funds' portfolios may significantly differ in holdings and composition from the indexes. Individuals cannot invest directly in an index. - The unmanaged MSCI Europe Index comprises approximately 600 stocks traded in developed markets from 15 European countries. The capitalization-weighted index attempts to capture at least 60% of investable capitalization in those markets subject to constraints governed by industry representation, maximum liquidity, maximum float, and minimum cross-ownership. - The unmanaged MSCI All Country Pacific Index comprises stocks traded in the developed and emerging markets of the Pacific Basin (Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand). The capitalization-weighted index attempts to capture at least 60% of investable capitalization in those markets subject to constraints governed by industry representation, maximum liquidity, maximum float, and minimum cross-ownership. - The MSCI All Country World Index ex-United States (ACWI ex-U.S.) is a leading unmanaged benchmark of international stock performance. The capitalization-weighted index is representative of the performance of securities of companies located in developed and emerging markets outside of the United States. - The unmanaged Bloomberg European 500 Index measures the weighted average performance in U.S. dollars of the 500 most highly capitalized European companies. Index returns and statistical data included in this report are provided by Bloomberg and FactSet. About This Report 3 Message from ICON Funds -------------------------------------------------------------------------------- The fact that most countries have been in the midst of a two-year bull market may come as a surprise to many investors. -------------------------------------------------------------------------------- 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 a value-based, bottom-up investment system of industry rotation to try to capture leading market themes that evolve over time. While intrinsic value is dynamic and always changing, stock prices have continued in their move toward fair value, even as a number of distractions have made for a volatile setting. DEALING WITH DISTRACTIONS At times like these, I often think of Douglas Adams, author of The Hitchhiker's Guide to the Galaxy, who wrote, "Nothing travels faster than the speed of light with the possible exception of bad news, which follows its own special laws." Over the course of the past six months, investors worldwide have been inundated by a litany of bad news, ranging from Iraq, terrorism and oil prices to interest rates and budget deficits. Although foreign markets seemed to rise above these distractions during the first half of the reporting period, investors have since found it difficult to sort through these events despite the presence of generally solid economic and investment fundamentals -- and no clear signs of inflation. Investors' behavior is highly reminiscent of patterns established last year, which featured fear-driven sell-offs and highly correlated industry dynamics in international markets. During market setbacks, economically sensitive and cyclical industries have declined the most while industries considered recession-proof have been the most resilient. In contrast, when the markets have advanced, cyclical industries have led the way while recession-proof industries have lagged. PARTICIPATING IN THE ADVANCE Given myriad doubts about international economies and earnings, and the volatility typically associated with a cyclical rally, the fact that most countries have been in the midst of a bull market may come as a surprise to many investors. International stocks have actually recorded a two-year advance. Research into market history and investor behavior indicates to us that many investors assign the horrible and distasteful aspects of war as negatives for economic growth and company valuations. However, we have found no concrete evidence, past or present, to support such a relationship. For this reason, we believe that successful investors need to stay focused on the divergence between price and value, while also drawing a distinction between geopolitical concerns and the realities of investment fundamentals. 4 Message from ICON Funds We apply our value-based, bottom-up industry rotation across the entire market in order to identify leading industry themes wherever they may emerge. [CRAIG T. CALLAHAN PHOTO] Craig T. Callahan President Our research has shown these fundamentals to be generally healthy and encouraging. By invoking the valuation-driven discipline that enables us to patiently ride through market turbulence, we have participated in the advance. A MORE DIVERSE INDUSTRY COMPOSITION No matter what the market environment, our approach remains consistent. At the end of the period, we measured the broad international market as significantly below our estimate of fair value. This discount makes sense to us as investors seemingly braced for a slowdown in economic growth and corporate earnings, although we believe the market has overreacted to these short-term concerns. Nevertheless, what has become gradually apparent amid the market turmoil is that our recent focus on highly cyclical industries is no longer warranted. While economically sensitive sectors such as Energy, Materials and Industrials were clear market leaders during the first half of our reporting period, value and relative strength readings have since pointed us toward a more diverse composition of industries, including those widely considered to be defensive or recession-proof. Accordingly, we were able to capture second-half upside within the Healthcare, Consumer Staples and Utilities sectors, where combinations of value and relative strength became increasingly more attractive. Healthcare, in particular, offered considerable breadth, with all eight industries in the sector trading at double-digit discounts to their intrinsic value and six posting above-average relative strength. Utilities were also quite compelling. Despite their so-called defensive tendencies, we view them as prospective market leaders. International equity markets have apparently decoupled from domestic equity markets, with Europe and Japan moving in more of a steady upward path compared to the trading range seen in the U.S. However, due to the strengthening U.S. dollar, positive international returns appear to be benefiting from stock appreciation rather than currency strength, as opposed to events in 2004. Message from ICON Funds 5 Message from ICON Funds (continued) SEARCHING FOR VALUE Having sustained market leadership for the past three years, it comes as no surprise that cyclical industries were decidedly volatile. Because of their sensitivity to economic fluctuations, these industries typically exhibit a higher standard deviation or variability, which often serves as a measure of risk. Capturing their leadership has been a challenge and has certainly made for some unpleasant periods. However, our system dictates that we not be swayed by emotion. We simply allow our system to direct us to the best values in the international markets. ICON does not subscribe to the traditional style grid that classifies stocks by size -- small-cap, mid-cap or large-cap -- and by style, either value or growth. Instead, we apply our value-based, bottom-up industry rotation across the entire market in order to identify leading industry themes wherever they may emerge. In doing so, we are an all-cap manager and thus avoid arbitrary barriers or restrictions in our pursuit of value. THE PRIVILEGE OF GUIDING YOU In January, we had the good fortune to announce the promotions of three investment team members. We'd like to again take a moment to share the news. Portfolio Managers Robert Straus, Derek Rollingson and J.C. Waller, III have been promoted to Vice Presidents and have been named Chief Investment Officer, Director of Research and Director of Institutional Portfolio Management, respectively. Additionally, Scott Snyder has been named Assistant Portfolio Manager for the ICON Foreign Funds. These promotions recognize the outstanding and valuable contributions each has made to your investment. 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 6 Message from ICON Funds Management Overview ICON Asia-Pacific Region Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 100.7% Top 10 Equity Holdings 18.3% Number of Stocks 94 Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 Shimano, Inc. 2.0% Cosco Pacific Ltd. 2.0% Sumitomo Metal Industries Ltd. 2.0% LG Engineering and Construction Corp. 1.9% LG Corp. 1.8% Esprit Holdings Ltd. 1.8% Marubeni Corp. 1.7% Singamas Container Holdings Ltd. 1.7% TechTronic Industries Co., Ltd. 1.7% Terumo Corp. 1.7% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Asia-Pacific Region Fund appreciated 12.95% for the six-month period ended March 31, 2005, keeping pace with its benchmark, the MSCI All Country Pacific Index, which returned 13.06% over the same period. Total returns for other periods as of March 31, 2005 appear on page 11. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. In what could be described as a tale of two quarters, the Fund trailed its benchmark during the first half of the reporting period, but made up considerable ground during the second half to finish the period virtually in line with the index. While our focus on leading industry themes enhanced relative performance throughout the fiscal half-year, the Fund also profited from the weak U.S. dollar, which translated into currency gains for companies domiciled in non-dollar-denominated countries. On average, Asian markets outperformed U.S. markets during the period, as Asian shares continued to trade at deeper discounts and therefore closed a wider valuation gap. However, while performance in the U.S. market was attributed to small- and medium-capitalization stocks, the Fund maintained more of a large-cap bias during the period. Although this tilt was still underweight the Fund's predominantly large-cap benchmark, the Fund's relative overweight in small- and mid-cap stocks benefited relative performance. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. Conflicting markets characterized the six-month period, as a year-end cyclical theme gave way to volatility. Nevertheless, there are few signs that Management Overview 7 Management Overview (continued) ICON Asia-Pacific Region Fund the Tsunami disaster in December 2004 will have lasting long-term effects on the region's economic development. For that reason, Asian markets are expected to remain key contributors to global economic growth, supported by healthy domestic demand, strengthening interregional trade and increased economic integration. At the country level, after appearing to emerge from its protracted malaise, Japan once again slipped into a mild recession. Prospects for future growth appear uncertain, especially within the context of Asia's developing economies, where income growth has boosted consumer confidence and spending. Meanwhile, structural reforms are expected to moderate China's robust expansion to more sustainable levels. Given signs that domestic demand and investment growth are slowing, a soft landing should prove positive for this burgeoning economic powerhouse. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. While cyclical industries drove much of the Fund's upside momentum, the Industrials sector in particular contributed most to the Fund's performance versus the benchmark. The Fund maintained an active overweighting with broad participation throughout the sector, a move that paid off handsomely. Industry standouts included construction & farm machinery & heavy trucks and marine, which were linked to regional strength in shipbuilding. Positions in the Consumer Discretionary sector were also significant contributors, highlighted by vigorous gains in the distributors industry. Primary detractors surfaced within the Telecommunication & Utilities sector, specifically the electric utilities and integrated telecommunication services industries, while Leisure and Consumer Staples saw weakness in defensive industries such as packaged foods & meats. Stocks that contributed to Fund performance included shipbuilder Hanjin Heavy Industries & Construction, which capitalized on surging demand for cargo vessels and containers. Industrial products manufacturer Sumitomo Metal Industries boosted earnings by way of rising steel prices, while automotive distributor Jardine Cycle & Carriage Ltd. benefited from record-low finance rates that helped boost car and motorcycle sales. Among the Fund's principal company detractors, cargo shipper Kawasaki Kisen Kaisha declined when a convertible bond issue raised dilution fears related to the company's stock price. Also retreating was Jiangxi Copper Co. Ltd. as market woes came to bear on this leading Chinese copper producer. Meanwhile, lowered earnings guidance and an unfavorable currency exchange rate hurt industrial conglomerate Hyosung Corp. All three companies were sold from the Fund as their relative strength declined. 8 Management Overview [J.C. WALLER, III PHOTO] J.C. Waller, III Portfolio Manager [SCOTT SNYDER PHOTO] Scott Snyder Assistant Portfolio Manager Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE ASIA-PACIFIC REGION? A. Although the overall Asia-Pacific region remains economically robust, our focus remains on demonstrated industry valuation and relative strength to drive our investment decisions. While economically sensitive and defensive sectors alike have shown contradictory strength indicators, the Industrials sector continues to exhibit clear leadership, with Healthcare now emerging as a potential theme. Nevertheless, lagging sectors such as Information Technology and Financials are contributing to volatile markets, convincing us to be evermore vigilant in sticking to our discipline. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund trailed its benchmark early in the period, but made up considerable ground later on to finish virtually in line with the index. - Our focus on leading industry themes enhanced relative performance during the period, as did the Fund's relative overweight position in small- and mid-cap stocks. - Cyclical industries such as construction & farm machinery & heavy trucks, marine and distributors were significant contributors to Fund performance, while defensive-oriented electric utilities, integrated telecommunication services and packaged foods & meats detracted from performance. - Stocks that contributed to Fund performance included Hanjin Heavy Industries & Construction, Sumitomo Metal Industries and Jardine Cycle & Carriage Ltd. - Among the Fund's principal company detractors were Kawasaki Kisen Kaisha, Jiangxi Copper Co. Ltd. and Hyosung Corp. Management Overview 9 Management Overview (continued) TOP COUNTRIES March 31, 2005 Japan 38.7% South Korea 23.7% Hong Kong 17.5% Singapore 8.1% Australia 6.4% Indonesia 3.0% China 2.7% Malaysia 0.6%
Percentages are based upon net assets. TOP SECTORS March 31, 2005 Industrials 29.5% Materials 16.0% Financial 13.4% Leisure & Consumer Staples 11.6% Consumer Discretionary 10.6% Healthcare 7.6% Energy 6.3% Information Technology 4.2% Telecommunications & Utilities 1.5%
Percentages are based upon net assets. 10 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 2/25/97 ------------------------------------------------------------------------------------------- ICON Asia-Pacific Region Fund 12.95% 2.42% -4.39% -0.91% ------------------------------------------------------------------------------------------- MSCI All Country Pacific Index 13.06% 4.84% -3.00% 0.61% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative index can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON ASIA-PACIFIC REGION FUND MSCI ALL COUNTRY PACIFIC INDEX ----------------------------- ------------------------------ 2/25/1997 10000 10000 3/31/1998 8310 7839 3/31/1999 8569 8616 3/31/2000 11620 12234 3/31/2001 9011 8111 3/31/2002 6625 7264 3/31/2003 5801 5976 3/31/2004 9067 10020 3/31/2005 9287 10505
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund on its inception date of 2/25/97 to a $10,000 investment made in an unmanaged securities index on that date. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends, capital gain distributions and tax return of capital but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Management Overview 11 Schedule of Investments ICON Asia-Pacific Region Fund March 31, 2005 (unaudited)
SHARES MARKET VALUE --------------------------------------------- COMMON STOCKS 100.7% AUSTRALIA 6.4% CONSUMER DISCRETIONARY 1.1% APPAREL ACCESSORIES AND LUXURY GOODS 1.1% 11,000 Billabong International Ltd. $ 113,028 ------------ TOTAL CONSUMER DISCRETIONARY 113,028 ENERGY 0.6% OIL & GAS EXPLORATION & PRODUCTION 0.6% 9,200 Santos Ltd. 64,126 ------------ TOTAL ENERGY 64,126 FINANCIAL 0.9% DIVERSIFIED BANKS 0.9% 3,700 Commonwealth Bank of Australia 99,971 ------------ TOTAL FINANCIAL 99,971 HEALTHCARE 1.3% BIOTECHNOLOGY 1.3% 5,300 CSL Ltd. 139,951 ------------ TOTAL HEALTHCARE 139,951 MATERIALS 2.5% DIVERSIFIED METALS & MINING 2.5% 5,800 BHP Billiton Ltd. 80,946 16,000 Iluka Resources Ltd. 70,228 51,700 Zinifex Ltd.(a)v 118,570 ------------ TOTAL MATERIALS 269,744 ------------ TOTAL AUSTRALIA 686,820 CHINA 2.7% ENERGY 1.4% INTEGRATED OIL & GAS 1.4% 158,000 China Petroleum & Chemical Corp. 64,088 148,000 PetroChina Co., Ltd. 92,857 ------------ TOTAL ENERGY 156,945 INDUSTRIALS 0.7% MARINE 0.7% 86,000 China Shipping Development Co., Ltd. 75,238 ------------ TOTAL INDUSTRIALS 75,238 MATERIALS 0.6% COMMODITY CHEMICALS 0.6% 150,000 SINOPEC Shanghai Petrochemical Co., Ltd. 60,911 ------------ TOTAL MATERIALS 60,911 ------------ TOTAL CHINA 293,094
SHARES MARKET VALUE --------------------------------------------- HONG KONG 17.5% CONSUMER DISCRETIONARY 5.2% APPAREL RETAIL 1.9% 28,000 Esprit Holdings Ltd. $ 190,898 ------------ DISTRIBUTORS 1.6% 96,000 Li & Fung Ltd. 174,521 ------------ HOUSEHOLD APPLIANCES 1.7% 82,000 Techtronic Industries Co., Ltd. 181,165 ------------ TOTAL CONSUMER DISCRETIONARY 546,584 FINANCIAL 2.6% REAL ESTATE MANAGEMENT & DEVELOPMENT 1.9% 104,000 Sino Land Co., Ltd. 93,790 14,000 Swire Pacific Ltd. 110,637 ------------ 204,427 SPECIALIZED FINANCE 0.7% 30,000 Hong Kong Exchanges & Clearing Ltd. 77,362 ------------ TOTAL FINANCIAL 281,789 INDUSTRIALS 4.8% INDUSTRIAL CONGLOMERATES 0.5% 18,000 CITIC Pacific Ltd. 52,667 ------------ MARINE 1.5% 33,000 Orient Overseas International Ltd. 158,930 ------------ MARINE PORTS & SERVICES 2.8% 46,000 China Merchants Holdings International Co., Ltd. 90,070 100,000 Cosco Pacific Ltd. 216,835 ------------ 306,905 ------------ TOTAL INDUSTRIALS 518,502 INFORMATION TECHNOLOGY 1.2% SEMICONDUCTOR EQUIPMENT 1.2% 31,000 ASM Pacific Technology Ltd. 133,140 ------------ TOTAL INFORMATION TECHNOLOGY 133,140 LEISURE & CONSUMER STAPLES 1.3% HOTELS & RESORTS & CRUISE LINES 1.3% 246,000 China Travel International Investment Hong Kong Ltd. 75,526 68,000 Hong Kong and Shanghai Hotels Ltd. 62,670 ------------ TOTAL LEISURE & CONSUMER STAPLES 138,196
12 Schedule of Investments
SHARES MARKET VALUE --------------------------------------------- MATERIALS 1.7% METAL & GLASS CONTAINERS 1.7% 208,000 Singamas Container Holdings Ltd.(a)v $ 181,350 ------------ TOTAL MATERIALS 181,350 TELECOMMUNICATIONS & UTILITIES 0.7% ELECTRIC UTILITIES 0.7% 27,000 Cheung Kong Infrastructure Holdings Ltd. 77,422 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 77,422 ------------ TOTAL HONG KONG 1,876,983 INDONESIA 3.0% FINANCIAL 1.3% DIVERSIFIED BANKS 1.3% 296,000 PT Bank Danamon Indonesia 148,418 ------------ TOTAL FINANCIAL 148,418 INDUSTRIALS 0.8% CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 0.8% 280,000 PT United Tractors 84,822 ------------ TOTAL INDUSTRIALS 84,822 MATERIALS 0.9% DIVERSIFIED METALS & MINING 0.9% 390,000 PT Aneka Tambang 92,697 ------------ TOTAL MATERIALS 92,697 ------------ TOTAL INDONESIA 325,937 JAPAN 38.7% CONSUMER DISCRETIONARY 1.1% COMPUTER & ELECTRONICS RETAIL 1.1% 2,200 Yamada Denki Co., Ltd. 115,118 ------------ TOTAL CONSUMER DISCRETIONARY 115,118 ENERGY 3.3% OIL & GAS EXPLORATION & PRODUCTION 1.4% 20,000 Teikoku Oil Co., Ltd. 145,880 ------------ OIL & GAS REFINING & MARKETING & TRANSPORTATION 1.9% 33,000 Cosmo Oil Co., Ltd. 106,806 18,000 Nippon Mining Holdings, Inc. 98,866 ------------ 205,672 ------------ TOTAL ENERGY 351,552
SHARES MARKET VALUE --------------------------------------------- FINANCIAL 4.5% CONSUMER FINANCE 2.5% 1,300 Aeon Credit Service Co., Ltd. $ 87,616 2,500 Credit Saison Co., Ltd. 89,631 700 Orix Corp. 89,209 ------------ 266,456 DIVERSIFIED BANKS 0.8% 12 Sumitomo Mitsui Financial Group, Inc. 81,010 ------------ REGIONAL BANKS 1.2% 8,000 Suruga Bank Ltd. 70,990 10,000 The Bank of Fukuoka Ltd. 62,646 ------------ 133,636 ------------ TOTAL FINANCIAL 481,102 HEALTHCARE 4.6% HEALTH CARE DISTRIBUTORS 2.0% 1,400 Alfresa Holdings Corp. 57,861 12,000 Mediceo Holdings Co., Ltd. 159,277 ------------ 217,138 HEALTH CARE EQUIPMENT 2.6% 4,000 Olympus Corp. 93,100 5,900 Terumo Corp. 177,332 ------------ 270,432 ------------ TOTAL HEALTHCARE 487,570 INDUSTRIALS 8.8% CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 1.2% 17,000 Komatsu Ltd. 127,403 ------------ ELECTRICAL COMPONENTS & EQUIPMENT 0.8% 28,000 Fuji Electric Holdings Co., Ltd. 88,021 ------------ INDUSTRIAL MACHINERY 2.9% 15,000 Daifuku Co., Ltd. 110,764 56,000 Japan Steel Works Ltd. 119,761 22,000 Sumitomo Heavy Industries Ltd. 86,327 ------------ 316,852 MARINE 1.0% 17,000 Nippon Yusen K.K 102,206 ------------
Schedule of Investments 13 Schedule of Investments (continued) ICON Asia-Pacific Region Fund March 31, 2005 (unaudited)
SHARES MARKET VALUE --------------------------------------------- TRADING COMPANIES & DISTRIBUTORS 2.9% 58,000 Marubeni Corp. $ 185,600 13,000 Mitsui & Co., Ltd. 119,594 ------------ 305,194 ------------ TOTAL INDUSTRIALS 939,676 INFORMATION TECHNOLOGY 3.0% ELECTRONIC EQUIPMENT MANUFACTURERS 1.9% 800 Nidec Corp. 99,385 25,000 Oki Electric Industry Co., Ltd. 105,057 ------------ 204,442 SEMICONDUCTOR EQUIPMENT 1.1% 1,600 Advantest Corp. 122,114 ------------ TOTAL INFORMATION TECHNOLOGY 326,556 LEISURE & CONSUMER STAPLES 7.4% BREWERS 1.5% 7,400 Asahi Breweries Ltd. 95,787 14,000 Sapporo Holdings Ltd. 65,423 ------------ 161,210 LEISURE PRODUCTS 2.8% 1,700 Sankyo Co., Ltd. 82,144 6,500 Shimano, Inc. 218,163 ------------ 300,307 PACKAGED FOODS & MEATS 0.8% 24,000 Nippon Suisan Kaisha Ltd. 81,136 ------------ PHOTOGRAPHIC PRODUCTS 1.1% 10,000 Nikon Corp. 114,553 ------------ TOBACCO 1.2% 12 Japan Tobacco, Inc. 133,067 ------------ TOTAL LEISURE & CONSUMER STAPLES 790,273 MATERIALS 6.0% CONSTRUCTION MATERIALS 1.1% 42,000 Taiheiyo Cement Corp. 117,621 ------------ DIVERSIFIED CHEMICALS 1.2% 61,000 Ube Industries Ltd. 125,481 ------------ STEEL 3.7% 58,000 Kobe Steel Ltd. 101,973 34,000 Nippon Steel Corp. 85,694 117,000 Sumitomo Metal Industries Ltd. 210,039 ------------ 397,706 ------------ TOTAL MATERIALS 640,808 ------------ TOTAL JAPAN 4,132,655
SHARES MARKET VALUE --------------------------------------------- MALAYSIA 0.6% FINANCIAL 0.6% REAL ESTATE MANAGEMENT & DEVELOPMENT 0.6% 65,000 Sp Setia Bhd $ 68,463 ------------ TOTAL FINANCIAL 68,463 ------------ TOTAL MALAYSIA 68,463 SINGAPORE 8.1% CONSUMER DISCRETIONARY 1.6% DISTRIBUTORS 1.6% 24,000 Jardine Cycle & Carriage Ltd. 170,003 ------------ TOTAL CONSUMER DISCRETIONARY 170,003 ENERGY 1.0% OIL & GAS EQUIPMENT & SERVICES 1.0% 110,000 KS Tech Ltd. 105,919 ------------ TOTAL ENERGY 105,919 FINANCIAL 1.1% REAL ESTATE MANAGEMENT & DEVELOPMENT 1.1% 82,000 Keppel Land Ltd. 114,122 ------------ TOTAL FINANCIAL 114,122 HEALTHCARE 0.8% HEALTH CARE FACILITIES 0.8% 92,000 Parkway Holdings Ltd. 90,785 ------------ TOTAL HEALTHCARE 90,785 INDUSTRIALS 3.6% CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 1.5% 144,000 Sembcorp Marine Ltd.(a) 168,264 ------------ INDUSTRIAL CONGLOMERATES 1.1% 18,000 Keppel Corp., Ltd. 118,713 ------------ TRUCKING 1.0% 74,000 SBS Transit Ltd.(a)v 103,076 ------------ TOTAL INDUSTRIALS 390,053 ------------ TOTAL SINGAPORE 870,882 SOUTH KOREA 23.7% CONSUMER DISCRETIONARY 1.6% DISTRIBUTORS 1.6% 5,700 Hyundai Department Store H&S Co., Ltd. 167,923 ------------ TOTAL CONSUMER DISCRETIONARY 167,923 FINANCIAL 2.4% DIVERSIFIED BANKS 1.5% 6,300 Shinhan Financial Group Co., Ltd. 168,264 ------------
14 Schedule of Investments
SHARES MARKET VALUE --------------------------------------------- REAL ESTATE MANAGEMENT & DEVELOPMENT 0.9% 9,800 LG Investment & Securities Co., Ltd.(a) $ 91,746 ------------ TOTAL FINANCIAL 260,010 HEALTHCARE 0.9% PHARMACEUTICALS 0.9% 1,049 Yuhan Corp.v 92,870 ------------ TOTAL HEALTHCARE 92,870 INDUSTRIALS 10.8% CONSTRUCTION & ENGINEERING 4.7% 2,900 Daelim Industrial Co., Ltd. 153,379 20,500 Daewoo Engineering & Construction Co., Ltd. 139,049 7,200 LG Engineering And Construction Corp. 198,193 ------------ 490,621 CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 1.8% 4,500 Daewoo Shipbuilding & Marine Engineering Co., Ltd. 84,414 9,500 Hanjin Heavy Industries & Construction Co., Ltd. 110,046 ------------ 194,460 ELECTRICAL COMPONENTS & EQUIPMENT 1.2% 5,400 LS Cable Ltd 131,000 ------------ INDUSTRIAL CONGLOMERATES 1.8% 8,300 LG Corp. 197,896 ------------ MARINE 1.3% 4,657 Hanjin Shipping Co., Ltd. 134,730 ------------ TOTAL INDUSTRIALS 1,148,707
SHARES MARKET VALUE --------------------------------------------- LEISURE & CONSUMER STAPLES 2.9% PACKAGED FOODS & MEATS 2.0% 300 Nong Shim Co., Ltd. $ 85,495 3,000 Samyang Corp. 125,777 ------------ 211,272 TOBACCO 0.9% 3,000 KT&G Corp.v 97,364 ------------ TOTAL LEISURE & CONSUMER STAPLES 308,636 MATERIALS 4.3% COMMODITY CHEMICALS 1.4% 11,700 Hanwha Chemical Corp. 153,666 ------------ DIVERSIFIED CHEMICALS 0.6% 3,000 Samsung Fine Chemicals Co., Ltd. 60,974 ------------ DIVERSIFIED METALS & MINING 1.4% 4,400 Korea Zinc Co., Ltd. 146,416 ------------ STEEL 0.9% 500 POSCO 98,892 ------------ TOTAL MATERIALS 459,948 ------------ TELECOMMUNICATIONS & UTILITIES 0.8% INTEGRATED TELECOMMUNICATION SERVICES 0.8% 2,300 KT Corp. 89,337 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 89,337 ------------ TOTAL SOUTH KOREA 2,527,431 ------------ TOTAL INVESTMENTS 100.7% (COST $9,866,214) 10,782,265 LIABILITIES LESS OTHER ASSETS (0.7)% (73,610) ------------ NET ASSETS 100.0% $10,708,655 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. v All securities were fair valued (Note 1) as of March 31, 2005 unless noted with a v. Total value of securities fair valued was $10,188,855. Schedule of Investments 15 Management Overview ICON Europe Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 99.1% Top 10 Equity Holdings 15.7% Number of Stocks 102 Short-Term Investments 0.7% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 DSV A/S 1.9% Kingspan Group plc 1.8% Boehler-Uddeholm AG 1.8% HeidelbergCement AG 1.6% Meda AB 1.5% DIS Deutsche Industries Svc. 1.5% Umicore 1.4% Kobenhavns Lufthavne A/S 1.4% Titan Cement Co. 1.4% OMV AG 1.4% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Europe Fund appreciated 15.55% for the six-month period ended March 31, 2005. Relative to its benchmarks, this performance outpaced the 11.22% return of the Bloomberg European 500 Index, while trailing the 16.55% return for the MSCI Europe Index over the same period. Total returns for other periods as of March 31, 2005 appear on page 20. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund's focus on leading industry themes benefited relative performance during the period, as did weakness in the U.S. dollar. With the dollar's decline peaking in late 2004, the Fund profited from direct exposure to gains in the euro, which helped boost returns in the underlying equities. Having recorded strong fourth-quarter advances, European shares outperformed the broad U.S. market before flattening in conjunction with the dollar's first-quarter rebound. Despite the dollar's rebound, U.S. markets lost ground, as European shares continued to trade at deeper discounts and therefore closed a wider valuation gap. Although ICON does not utilize market capitalization as a valuation measure, the Fund's large-cap bias during the period was still underweight the Fund's predominantly large-cap benchmarks, which served to benefit relative performance. 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 of 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. 16 Management Overview [ROBERT STRAUS, CMT PHOTO] Robert Straus, CMT Portfolio Manager [SCOTT SNYDER PHOTO] Scott Snyder Assistant Portfolio Manager Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. An early-period cyclical theme surrendered to volatile first-quarter markets as surging oil prices fueled inflation fears and growth concerns in the United States. European markets once again found themselves in the throes of an economic slowdown, characterized by continued high unemployment in Germany and France, as well as lower exports due to the strong euro. Also contributing to the downturn in business conditions was a decrease in personal consumption, reflecting stagnant consumer confidence within the region. Although discouraging, steady gains in foreign investment and capital spending helped to offset the effects of this untimely deceleration. Nevertheless, globalization and economic integration continued to be viewed as key to a broad economic recovery, evidenced by the ongoing expansion of the European Union. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Cyclical groups in the Industrials and Materials sectors continued to register strong returns while serving as leading contributors to the Fund. From our standpoint, the Fund was well positioned to capture this theme, having maintained an active overweight in both sectors based on valuation and relative strength. Within Industrials, the trucking and industrial machinery industries proved to be the Fund's top performers, while payoffs in Materials were realized from exposure to the steel and diversified metals & mining industries. Meanwhile, tepid consumer spending weighed heavily on the Consumer Discretionary sector, highlighted by markedly poor performance among homebuilding companies. Telecommunication & Utilities was another sector that produced poor relative performance, triggered by the Fund's underweight exposure and subsequent weakness in integrated telecommunications services and electric utilities. Among the Fund's meaningful stock contributors, trucking and logistics company DSV A/S benefited from consolidation trends that enabled it to triple its 2004 profit. Specialty steel producer Boehler-Uddeholm AG took advantage of acquisitions and favorable supply-demand dynamics to boost earnings. Elsewhere, telecommunication services firm Anscom Holding AG returned to profitability by virtue of a 25% cut in operating expenses. In contrast, specialty shipper Star Reefers, Inc. came under pressure as operating expenses were negatively impacted by the weak U.S. dollar and higher interest rates in China, an area where it operates. Tire manufacturer Michelin also suffered when high-profile institutional investors cut their stake in the company. The Fund continued to hold both stocks at period-end, as they had not reached our sell criteria. Management Overview 17 Management Overview (continued) ICON Europe Fund Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE EUROPEAN MARKET? A. Despite signs of economic softening, we continue to detect compelling opportunities within the European market. Stocks in the Industrials sector remain attractive, particularly among the electrical components & equipment and construction & engineering groups, while shifts in industry leadership have brought Healthcare to the forefront. Meanwhile, the Materials sector appears to be waning alongside persistent weakness in Information Technology and Financials. That said, in the absence of a clear theme going forward, we remain committed to our discipline, looking for value and relative strength wherever they may emerge. PERFORMANCE HIGHLIGHTS March 31, 2005 - Our focus on leading industry themes enhanced relative performance during the period, as did the Fund's position in large-cap stocks. - The Fund profited from direct exposure to currency gains, which helped boost returns in the underlying equities. - Active overweights in the top-performing Industrials and Materials sectors enabled the Fund to capture cyclical upside, while poor showings in the Consumer Discretionary and Telecommunication & Utilities sectors worked against Fund performance. - Meaningful stock contributors included DSV A/S, Boehler-Uddeholm AG and Ascom Holding AG. - Stocks that detracted from Fund performance included Star Reefers Inc. Co. and Michelin. 18 Management Overview TOP COUNTRIES March 31, 2005 Germany 13.4% Austria 10.1% Switzerland 10.0% Belgium 8.1% Netherlands 8.1% United Kingdom 7.8% France 7.2% Italy 6.4% Greece 6.2% Sweden 4.7%
Percentages are based upon net assets. TOP SECTORS March 31, 2005 Industrials 26.5% Financial 17.5% Materials 14.1% Leisure & Consumer Staples 9.6% Healthcare 8.4% Energy 7.0% Telecommunications & Utilities 6.0% Consumer Discretionary 5.6% Information Technology 4.4%
Percentages are based upon net assets. Management Overview 19 Management Overview (continued) ICON Europe Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 2/20/97 ------------------------------------------------------------------------------------------- ICON Europe Fund 15.55% 17.00% 5.96% 7.88% ------------------------------------------------------------------------------------------- MSCI Europe Index 16.55% 20.88% 0.50% 8.07% ------------------------------------------------------------------------------------------- Bloomberg European 500 Index 11.22% 13.93% -5.15% 6.63% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
BLOOMBERG EUROPEAN ICON EUROPE FUND MSCI EUROPE INDEX 500 INDEX ---------------- ----------------- ------------------ 2/20/1997 10000 10000 10000 3/31/1998 15104 14684 15466 3/31/1999 14245 15401 15808 3/31/2000 13848 18298 21916 3/31/2001 12653 14181 17706 3/31/2002 11980 13480 17566 3/31/2003 9623 10038 10728 3/31/2004 15812 15519 14770 3/31/2005 18500 18759 16828
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. 20 Management Overview Schedule of Investments ICON Europe Fund March 31, 2005 (unaudited)
SHARES MARKET VALUE --------------------------------------------- COMMON & PREFERRED STOCKS 99.1% AUSTRIA 10.1% CONSUMER DISCRETIONARY 1.1% TIRES & RUBBER 1.1% 6,300 Semperit AG Holding $ 200,897 ------------ TOTAL CONSUMER DISCRETIONARY 200,897 ENERGY 1.4% INTEGRATED OIL & GAS 1.4% 760 OMV AG 241,580 ------------ TOTAL ENERGY 241,580 INDUSTRIALS 2.9% BUILDING PRODUCTS 0.7% 2,700 Wienerberger AG 122,911 ENVIRONMENTAL SERVICES 0.9% 4,530 BWT AGv 153,219 INDUSTRIAL MACHINERY 1.3% 2,700 Andritz AG(a) 241,338 ------------ TOTAL INDUSTRIALS 517,468 MATERIALS 3.1% STEEL 3.1% 2,300 Boehler - Uddeholm AGv 313,674 3,100 voestalpine AG 239,295 ------------ 552,969 ------------ TOTAL MATERIALS 552,969 TELECOMMUNICATIONS & UTILITIES 1.6% ELECTRIC UTILITIES 0.8% 600 Verbund AG 136,087 ------------ INTEGRATED TELECOMMUNICATION SERVICES 0.8% 7,600 Telekom Austria AG 148,865 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 284,952 ------------ TOTAL AUSTRIA 1,797,866 BELGIUM 8.1% FINANCIAL 2.2% DIVERSIFIED BANKS 1.2% 2,700 KBC Group N.V. 227,673 ------------ OTHER DIVERSIFIED FINANCIAL SERVICES 1.0% 5,900 Fortis 168,243 ------------ TOTAL FINANCIAL 395,916 INDUSTRIALS 0.8% ELECTRICAL COMPONENTS & EQUIPMENT 0.8% 1,600 Bekaert NV 134,432 ------------ TOTAL INDUSTRIALS 134,432
SHARES MARKET VALUE --------------------------------------------- INFORMATION TECHNOLOGY 1.0% COMMUNICATIONS EQUIPMENT 1.0% 1,400 EVS Broadcast Equipment S.A.v $ 179,422 ------------ TOTAL INFORMATION TECHNOLOGY 179,422 LEISURE & CONSUMER STAPLES 0.8% FOOD RETAIL 0.8% 900 Colruyt SA 139,889 ------------ TOTAL LEISURE & CONSUMER STAPLES 139,889 MATERIALS 2.7% COMMODITY CHEMICALS 1.3% 1,900 Solvay S.A. 226,384 ------------ DIVERSIFIED METALS & MINING 1.4% 2,500 Umicore 253,881 ------------ TOTAL MATERIALS 480,265 TELECOMMUNICATIONS & UTILITIES 0.6% WIRELESS TELECOMMUNICATION SERVICES 0.6% 1,135 Mobistar, S.A.(a)v 99,620 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 99,620 ------------ TOTAL BELGIUM 1,429,544 DENMARK 4.1% ENERGY 0.8% OIL & GAS REFINING & MARKETING & TRANSPORTATION 0.8% 2,500 Dampskibsselskabet Torm A/S(a) 133,071 ------------ TOTAL ENERGY 133,071 INDUSTRIALS 3.3% AIRPORT SERVICES 1.4% 1,060 Kobenhavns Lufthavne A/S(a) 252,535 ------------ TRUCKING 1.9% 4,500 DSV A/S 343,128 ------------ TOTAL INDUSTRIALS 595,663 ------------ TOTAL DENMARK 728,734 FRANCE 7.2% CONSUMER DISCRETIONARY 0.8% TIRES & RUBBER 0.8% 2,100 Michelin (CGDE) - B 138,034 ------------ TOTAL CONSUMER DISCRETIONARY 138,034 FINANCIAL 1.9% DIVERSIFIED BANKS 1.1% 1,820 Societe Generale 189,281 ------------
Schedule of Investments 21 Schedule of Investments (continued) ICON Europe Fund March 31, 2005 (unaudited)
SHARES MARKET VALUE --------------------------------------------- LIFE & HEALTH INSURANCE 0.8% 2,000 CNP Assurances $ 141,569 ------------ TOTAL FINANCIAL 330,850 INDUSTRIALS 1.9% BUILDING PRODUCTS 1.0% 2,780 Compagnie de Saint- Gobain 169,491 ------------ CONSTRUCTION & ENGINEERING 0.9% 1,100 Vinci SA 158,595 ------------ TOTAL INDUSTRIALS 328,086 LEISURE & CONSUMER STAPLES 1.8% LEISURE PRODUCTS 0.9% 2,000 Trigano S.A. 177,779 ------------ MOVIES & ENTERTAINMENT 0.9% 5,197 Vivendi Universal(a) 159,126 ------------ TOTAL LEISURE & CONSUMER STAPLES 336,905 TELECOMMUNICATIONS & UTILITIES 0.8% MULTI-UTILITIES & UNREGULATED POWER 0.8% 5,200 SUEZ 140,055 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 140,055 ------------ TOTAL FRANCE 1,273,930 GERMANY 13.4% CONSUMER DISCRETIONARY 2.0% APPAREL ACCESSORIES & LUXURY GOODS 0.8% 4,600 Hugo Boss AG 142,150 ------------ TIRES & RUBBER 1.2% 2,800 Continental AG 216,668 ------------ TOTAL CONSUMER DISCRETIONARY 358,818 FINANCIAL 0.5% MULTI-LINE INSURANCE 0.5% 715 Dem Allianz Ag 90,752 ------------ TOTAL FINANCIAL 90,752 HEALTHCARE 1.1% PHARMACEUTICALS 1.1% 2,900 Schering AG 193,240 ------------ TOTAL HEALTHCARE 193,240 INDUSTRIALS 3.6% CONSTRUCTION & ENGINEERING 0.5% 3,000 Hochtief AG 95,816 ------------ CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 0.7% 2,500 Vossloh AGv 126,863 ------------
SHARES MARKET VALUE --------------------------------------------- ELECTRICAL COMPONENTS & EQUIPMENT 0.9% 1,900 Leoni AG(a)v $ 156,923 ------------ EMPLOYMENT SERVICES 1.5% 6,200 DIS Deutscher Industries Servicesv 257,345 ------------ TOTAL INDUSTRIALS 636,947 INFORMATION TECHNOLOGY 1.1% INTERNET SOFTWARE & SERVICES 1.1% 5,900 United Internet AG 188,234 ------------ TOTAL INFORMATION TECHNOLOGY 188,234 LEISURE & CONSUMER STAPLES 0.9% HOUSEHOLD PRODUCTS 0.9% 1,700 Henkel KGaA 154,016 ------------ TOTAL LEISURE & CONSUMER STAPLES 154,016 MATERIALS 3.2% CONSTRUCTION MATERIALS 1.6% 4,500 HeidelbergCement AGv 283,179 ------------ DIVERSIFIED CHEMICALS 1.6% 3,100 BASF AG 219,287 2,500 Bayer AG 82,723 ------------ 302,010 ------------ TOTAL MATERIALS 585,189 TELECOMMUNICATIONS & UTILITIES 1.0% MULTI-UTILITIES & UNREGULATED POWER 1.0% 2,800 RWE AG 169,389 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 169,389 ------------ TOTAL GERMANY 2,376,585 GREECE 6.2% ENERGY 0.5% OIL & GAS REFINING & MARKETING & TRANSPORTATION 0.5% 9,210 Hellenic Petroleum S.A. 92,162 ------------ TOTAL ENERGY 92,162 FINANCIAL 2.2% DIVERSIFIED BANKS 2.2% 4,900 Alpha Bank(a) 165,415 6,900 National Bank Of Greece SA 233,323 ------------ 398,738 ------------ TOTAL FINANCIAL 398,738
22 Schedule of Investments
SHARES MARKET VALUE --------------------------------------------- INFORMATION TECHNOLOGY 0.6% COMMUNICATIONS EQUIPMENT 0.6% 20,500 Intracom SA $ 102,472 ------------ TOTAL INFORMATION TECHNOLOGY 102,472 LEISURE & CONSUMER STAPLES 0.8% LEISURE PRODUCTS 0.8% 15,000 Jumbo S.A. 143,469 ------------ TOTAL LEISURE & CONSUMER STAPLES 143,469 MATERIALS 1.4% CONSTRUCTION MATERIALS 1.4% 7,400 Titan Cement Co.(a)v 245,387 ------------ TOTAL MATERIALS 245,387 TELECOMMUNICATIONS & UTILITIES 0.7% ELECTRIC UTILITIES 0.7% 4,000 Public Power Corp. 115,301 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 115,301 ------------ TOTAL GREECE 1,097,529 IRELAND 3.2% INDUSTRIALS 2.5% BUILDING PRODUCTS 1.8% 26,600 Kingspan Group plcv 314,503 ------------ INDUSTRIAL CONGLOMERATES 0.7% 5,300 DCC plcv 123,267 ------------ TOTAL INDUSTRIALS 437,770 TELECOMMUNICATIONS & UTILITIES 0.7% INTEGRATED TELECOMMUNICATION SERVICES 0.7% 45,000 Eircom Group plc(a)v 118,428 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 118,428 ------------ TOTAL IRELAND 556,198 ITALY 6.4% ENERGY 1.8% INTEGRATED OIL & GAS 1.1% 6,900 Eni S.p.A 179,340 ------------ OIL & GAS REFINING & MARKETING & TRANSPORTATION 0.7% 9,500 Erg S.p.A 130,139 ------------ TOTAL ENERGY 309,479 FINANCIAL 2.7% DIVERSIFIED BANKS 1.9% 11,339 Sanpolo IMI S.p.A 177,672 29,560 Banco Intesa S.p.A 150,205 ------------ 327,877
SHARES MARKET VALUE --------------------------------------------- MULTI-LINE INSURANCE 0.8% 6,300 Riunione Adiatica di Sicurta S.p.A. $ 148,350 ------------ TOTAL FINANCIAL 476,227 LEISURE & CONSUMER STAPLES 0.9% BROADCASTING & CABLE TV 0.9% 10,847 Mediaset S.p.A 155,994 ------------ TOTAL LEISURE & CONSUMER STAPLES 155,994 MATERIALS 1.0% CONSTRUCTION MATERIALS 1.0% 11,720 Buzzi Unicem S.p.A 181,549 ------------ TOTAL MATERIALS 181,549 ------------ TOTAL ITALY 1,123,249 LUXEMBOURG 0.7% MATERIALS 0.7% STEEL 0.7% 5,180 Arcelor NPV 118,291 ------------ TOTAL MATERIALS 118,291 ------------ TOTAL LUXEMBOURG 118,291 NETHERLANDS 8.1% ENERGY 1.7% INTEGRATED OIL & GAS 0.8% 2,300 Royal Dutch Petroleum Co. 137,856 ------------ OIL & GAS EQUIPMENT & SERVICES 0.9% 2,600 IHC Caland NV 165,237 ------------ TOTAL ENERGY 303,093 FINANCIAL 1.0% OTHER DIVERSIFIED FINANCIAL SERVICES 1.0% 5,600 ING Groep NV 169,203 ------------ TOTAL FINANCIAL 169,203 HEALTHCARE 1.2% HEALTH CARE DISTRIBUTORS 1.2% 3,400 OPG Groep NV 216,416 ------------ TOTAL HEALTHCARE 216,416 INDUSTRIALS 4.2% EMPLOYMENT SERVICES 1.2% 4,900 Randstad Holding NV 218,232 ------------ INDUSTRIAL CONGLOMERATES 1.2% 4,200 Aalberts Industries N.V.(a) 216,870 ------------
Schedule of Investments 23 Schedule of Investments (continued) ICON Europe Fund March 31, 2005 (unaudited)
SHARES MARKET VALUE --------------------------------------------- TRADING COMPANIES & DISTRIBUTORS 1.8% 1,800 Eriks Group N.V.(a) $ 125,947 5,500 Univar NV 181,922 ------------ 307,869 ------------ TOTAL INDUSTRIALS 742,971 ------------ TOTAL NETHERLANDS 1,431,683 NORWAY 3.6% ENERGY 0.8% OIL & GAS EQUIPMENT & SERVICES 0.8% 4,800 TPS - Nopec Geophysical Co. ASA(a)v 140,456 ------------ TOTAL ENERGY 140,456 FINANCIAL 0.9% MULTI-LINE INSURANCE 0.9% 16,400 Storebrand ASA 148,602 ------------ TOTAL FINANCIAL 148,602 INDUSTRIALS 1.3% MARINE 1.3% 5,400 Star Reefers, Inc.(a) 130,224 4,400 Wilhelm Wilhelmsen ASA(a) 112,915 ------------ TOTAL INDUSTRIALS 243,139 TELECOMMUNICATIONS & UTILITIES 0.6% INTEGRATED TELECOMMUNICATION SERVICES 0.6% 12,000 Telenor ASA 107,994 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 107,994 ------------ TOTAL NORWAY 640,191 PORTUGAL 1.1% LEISURE & CONSUMER STAPLES 1.1% FOOD RETAIL 1.1% 12,715 Jeronimo Martins(a)v 193,687 ------------ TOTAL LEISURE & CONSUMER STAPLES 193,687 ------------ TOTAL PORTUGAL 193,687 SPAIN 4.4% CONSUMER DISCRETIONARY 0.8% APPAREL RETAIL 0.8% 4,600 Inditex S.A. 137,531 ------------ TOTAL CONSUMER DISCRETIONARY 137,531 FINANCIAL 0.9% MULTI-LINE INSURANCE 0.9% 10,000 Corporacion Mapfre, S.A. 154,182 ------------ TOTAL FINANCIAL 154,182
SHARES MARKET VALUE --------------------------------------------- INDUSTRIALS 1.6% CONSTRUCTION & ENGINEERING 1.6% 6,700 ACS, Actividades de Construccion y Servicios, S.A. $ 165,865 2,200 Fomento de Construcciones y Contratas S.A. 112,458 ------------ 278,323 ------------ TOTAL INDUSTRIALS 278,323 LEISURE & CONSUMER STAPLES 1.1% TOBACCO 1.1% 4,900 Altadis, S.A. 200,359 ------------ TOTAL LEISURE & CONSUMER STAPLES 200,359 ------------ TOTAL SPAIN 770,395 SWEDEN 4.7% FINANCIAL 0.8% DIVERSIFIED BANKS 0.8% 13,800 Nordea Bank AB 139,435 ------------ TOTAL FINANCIAL 139,435 HEALTHCARE 3.9% HEALTH CARE DISTRIBUTORS 1.4% 5,600 Meda AB(a)v 257,434 ------------ HEALTH CARE EQUIPMENT 1.3% 15,300 Getinge AB - B Shares 228,440 ------------ HEALTH CARE FACILITIES 1.2% 14,100 Capio AB(a) 213,464 ------------ TOTAL HEALTHCARE 699,338 ------------ TOTAL SWEDEN 838,773 SWITZERLAND 10.0% FINANCIAL 2.8% DIVERSIFIED CAPITAL MARKETS 1.9% 4,170 Credit Suisse Group 178,333 1,904 UBS AG 160,810 ------------ 339,143 REINSURANCE 0.9% 2,100 Swiss Reinsurance Co. 150,408 ------------ TOTAL FINANCIAL 489,551 HEALTHCARE 1.2% HEALTH CARE EQUIPMENT 1.2% 1,000 Nobel Biocare Holding AG 210,518 ------------ TOTAL HEALTHCARE 210,518
24 Schedule of Investments
SHARES MARKET VALUE --------------------------------------------- INDUSTRIALS 3.5% DIVERSIFIED COMMERCIAL SERVICES 1.1% 2,900 Amazys Holding AG(a)v $ 196,577 ------------ INDUSTRIAL MACHINERY 2.4% 535 Schindler Holding AG Reg 203,303 525 Sulzer AG 226,364 ------------ 429,667 ------------ TOTAL INDUSTRIALS 626,244 INFORMATION TECHNOLOGY 1.7% COMMUNICATIONS EQUIPMENT 0.7% 7,738 Ascom Holding AG(a) 130,808 ------------ COMPUTER STORAGE & PERIPHERALS 1.0% 2,900 Logitech International S.A.(a) 176,183 ------------ TOTAL INFORMATION TECHNOLOGY 306,991 MATERIALS 0.8% FERTILIZERS & AGRICULTURAL CHEMICALS 0.8% 1,300 Syngenta AG 136,041 ------------ TOTAL MATERIALS 136,041 ------------ TOTAL SWITZERLAND 1,769,345 UNITED KINGDOM 7.8% CONSUMER DISCRETIONARY 0.9% HOMEBUILDING 0.9% 9,400 Bellway plcv 156,361 ------------ TOTAL CONSUMER DISCRETIONARY 156,361 FINANCIAL 1.6% CONSUMER FINANCE 1.6% 20,200 Cattles plc 129,028 11,500 Provident Financial plcv 153,872 ------------ 282,900 ------------ TOTAL FINANCIAL 282,900 HEALTHCARE 1.0% HEALTH CARE DISTRIBUTORS 1.0% 11,900 Alliance UniChem plc 174,011 ------------ TOTAL HEALTHCARE 174,011
SHARES MARKET VALUE --------------------------------------------- INDUSTRIALS 0.9% TRUCKING 0.9% 15,700 Bps Arriva plcv $ 155,765 ------------ TOTAL INDUSTRIALS 155,765 LEISURE & CONSUMER STAPLES 2.2% FOOD RETAIL 0.5% 14,500 Tesco plc 86,703 ------------ RESTAURANTS 0.9% 12,300 Enterprise Inns plc 179,182 ------------ TOBACCO 0.8% 5,200 Imperial Tobacco Group plc 136,435 ------------ TOTAL LEISURE & CONSUMER STAPLES 402,320 MATERIALS 1.2% DIVERSIFIED METALS & MINING 1.2% 15,300 BHP Billiton plc 205,527 ------------ TOTAL MATERIALS 205,527 ------------ TOTAL UNITED KINGDOM 1,376,884 ------------ TOTAL COMMON & PREFERRED STOCKS (COST $15,494,972) 17,522,884 SHORT-TERM INVESTMENTS 0.7% 118,395 Chase Icon South European Sweep, 0.920%, # 118,395 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $118,395) 118,395 ------------ TOTAL INVESTMENTS 99.8% (COST $15,613,367) 17,641,279 OTHER ASSETS LESS LIABILITIES 0.2% 42,726 ------------ NET ASSETS 100.0% $ 17,684,005 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005. v All securities were fair valued (Note 1) as of March 31, 2005 unless noted with a v. Total value of securities fair valued was $14,015,297. Schedule of Investments 25 Management Overview ICON International Equity Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 100.4% Top 10 Equity Holdings 15.0% Number of Stocks 114 Short-Term Investments 3.3% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 DSV A/S 1.9% Shimano Inc. 1.8% Boehler-Uddeholm AG 1.7% Umicore 1.6% Sembcorp Marine, Ltd. 1.5% Meda AB 1.4% BHP Billiton plc 1.3% Kobenhavns Lufthavne A/S 1.3% Canadian Tire Corp., Class A 1.3% Union Fenosa, S.A. 1.2% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. For the six months ended March 31, 2005, the ICON International Equity Fund returned 13.77% for Class I shares, 11.36% for Class C shares, and 14.15% for Class Z shares, underperforming the 15.79% 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 March 31, 2005 appear on page 30. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. While the Fund's focus on leading industry themes yielded meaningful contributions to relative performance, underlying returns were enhanced by way of direct exposure to currency gains in the euro, pound and yen. With the U.S. dollar's decline peaking in late 2004, a broad late-period rally ran its course just as the dollar embarked on a first-quarter rebound. Nevertheless, Asian shares continued to eke out modest gains whereas European markets traded flat. Foreign shares, which continued to trade at deeper discounts, closed a wider valuation gap and outperformed. Market capitalization also played a role, as the Fund's relative underweighting in large-cap stocks placed greater emphasis on small- and mid-cap names. Although ICON does not utilize market capitalization as a valuation measure, ICON's investment methodology led to the Fund's overweight position in mid-caps which added to relative performance. Conversely, the overweight in small-caps detracted from relative performance. 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. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. 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 Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. European markets outperformed Asian markets during the period, yet vast differences underscored the challenges and opportunities facing each region. With few clear signs that the tsunami disaster will have lasting effects, Asian markets are expected to play a key role in the ongoing global expansion. Although Japan remains a question mark, China's receptivity to structural reforms should lead to more sustainable growth rates, while income growth in South Asia's developing economies bodes well for consumer spending. In contrast, European markets once again found themselves in the throes of an economic slowdown, characterized by continued high unemployment in Germany and France, as well as lower net exports due to the strong euro. Nevertheless, a decrease in personal consumption, reflecting stagnant consumer confidence, belies steady gains in foreign investment and capital spending, not to mention a benign inflation picture. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. From a sector perspective, Industrials was the principal contributor to returns and the Fund's largest overall weighting. The Fund enjoyed broad participation throughout the group. Active overweights in trucking and building products outpaced their industry counterparts and contributed to Fund performance. Meanwhile, active underweighting in the Information Technology sector provided the most outperformance versus the benchmark, where selective exposure to communications equipment and computer storage & peripherals proved positive. In contrast, the Telecommunication & Utilities sector surrendered significant upside, triggered by underweight exposure and subsequent underperformance in integrated telecommunication services and wireless telecommunication services. Among the Fund's principal company contributors, specialty steel producer Boehler-Uddeholm AG took advantage of acquisitions and favorable pricing dynamics to boost earnings. Trucking and logistics company DSV A/S benefited from consolidation trends that enabled it to triple its 2004 profit. Elsewhere, higher crude oil prices and wider refining margins bolstered exploration and production firm OMV AG, which reported a 51% rise in fourth-quarter profits. As for the Fund's primary detractors, railroad operator Global Railway Industries fell as adverse foreign exchange trends cut into reported revenues. Cargo shipper Kawasaki Kisen Kaisha also declined when a convertible bond issue raised dilution fears related to the company's stock. Moreover, wireless services provider Vimpel Communications tumbled on news that the company could face back tax claims of $300 million, although the final Management Overview 27 Management Overview (continued) ICON International Equity Fund liability was reduced to $17.6 million. All three stocks were liquidated from the Fund when they reached our sell criteria. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INTERNATIONAL MARKET? A. Despite robust fundamentals in Asia and signs of softening in Europe, we continue to focus on industry valuation and relative strength to drive our investment decisions. As cyclical and defensive sectors alike exhibit contradictory strength indicators, we are currently still seeing clear leadership within the Industrials sector, with Healthcare now emerging as a potential theme. Given increasingly volatile markets and significant risks in sectors such as Information Technology and Financials, we remain evermore vigilant in sticking to our discipline and following themes outside the United States. PERFORMANCE HIGHLIGHTS March 31, 2005 - While the Fund's focus on leading industry themes yielded meaningful contributions to relative performance, underlying returns were enhanced by currency gains. - Our methodology led us to overweight mid-cap stocks, which added to relative performance, and small-cap stocks, which detracted from relative performance. - The Industrials sector was the principal contributor to absolute return and the Fund's largest overall weighting, while Telecommunication & Utilities surrendered upside on underweight exposure and subsequent underperformance. - Among the Fund's principal company contributors to performance were Boehler-Uddeholm AG, DSV A/S, and OMV AG. - Primary individual detractors included Global Railway Industries, Kawasaki Kisen Kaisha and Vimpel Communications. 28 Management Overview TOP COUNTRIES March 31, 2005 Canada 10.0% United Kingdom 8.1% Hong Kong 7.7% Japan 8.2% Germany 7.9% Austria 7.2% Netherlands 6.9% Spain 6.8% Switzerland 6.5% Belgium 5.7%
Percentages are based upon net assets. TOP SECTORS March 31, 2005 Industrials 26.6% Financial 17.0% Materials 12.7% Consumer Discretionary 9.1% Leisure & Consumer Staples 8.8% Health Care 8.1% Energy 7.4% Telecommunications & Utilities 6.2% Information Technology 4.5%
Percentages are based upon net assets. Management Overview 29 Management Overview (continued) ICON International Equity Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
INCEPTION SINCE DATE 6 MONTHS* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON International Equity Fund-Class Z 2/18/97 14.15% 11.93% 2.49% 7.23% --------------------------------------------------------------------------------------------- MSCI ACWI ex-U.S. 15.79% 16.16% -0.07% 5.50% --------------------------------------------------------------------------------------------- ICON International Equity Fund-Class I 2/6/04 13.77% 11.45% N/A 8.60% --------------------------------------------------------------------------------------------- MSCI ACWI ex-U.S. 15.79% 16.16% N/A 15.77% --------------------------------------------------------------------------------------------- ICON International Equity Fund-Class C 2/19/04 11.36% 8.88% N/A 3.65% --------------------------------------------------------------------------------------------- MSCI ACWI ex-U.S. 15.79% 16.16% N/A 13.26% ---------------------------------------------------------------------------------------------
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. Class Z shares are available only to grandfathered and institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON INTERNATIONAL EQUITY FUND CLASS Z MSCI ACWI EX-U.S. ------------------------- ----------------- 2/18/1997 10000 10000 3/31/1998 12900 11659 3/31/1999 12171 12019 3/31/2000 15585 15490 3/31/2001 12239 11337 3/31/2002 11145 10680 3/31/2003 8382 8312 3/31/2004 15742 13291 3/31/2005 17621 15438
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. 30 Management Overview Schedule of Investments ICON International Equity Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCK 100.4% AMERICAN DEPOSITARY RECEIPTS 1.5% BRAZIL 0.6% ENERGY 0.6% INTEGRATED OIL & GAS 0.6% 3,000 Petroleo Brasileiro, S.A.v $ 132,540 ------------ TOTAL ENERGY 132,540 ------------ TOTAL BRAZIL 132,540 MEXICO 0.9% MATERIALS 0.9% CONSTRUCTION MATERIALS 0.9% 4,803 Cemex, S.A. De C.V.*v 174,109 ------------ TOTAL MATERIALS 174,109 ------------ TOTAL MEXICO 174,109 ------------ TOTAL AMERICAN DEPOSITORY RECEIPTS 306,649 AUSTRALIA 1.9% HEALTH CARE 1.0% BIOTECHNOLOGY 1.0% 7,600 CSL, Ltd. 200,685 ------------ TOTAL HEALTH CARE 200,685 MATERIALS 0.9% DIVERSIFIED METALS & MINING 0.9% 78,400 Zinifex, Ltd.(a)v 179,805 ------------ TOTAL MATERIALS 179,805 ------------ TOTAL AUSTRALIA 380,490 AUSTRIA 7.2% ENERGY 1.1% INTEGRATED OIL & GAS 1.1% 731 OMV Ag 232,362 ------------ TOTAL ENERGY 232,362 FINANCIAL 0.9% DIVERSIFIED BANKS 0.9% 3,500 Erste Bank Der Oesterreichischen Sparkassen Ag 183,098 ------------ TOTAL FINANCIAL 183,098 INDUSTRIALS 2.0% BUILDING PRODUCTS 1.0% 4,500 Wienerberger Ag 204,851 ------------ INDUSTRIAL MACHINERY 1.0% 2,200 Andritz Ag(a) 196,645 ------------ TOTAL INDUSTRIALS 401,496
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- MATERIALS 2.3% STEEL 2.3% 2,490 Boehler - Uddeholm Agv $ 339,586 1,600 Voestalpine Ag 123,507 ------------ TOTAL MATERIALS 463,093 TELECOMMUNICATIONS & UTILITIES 0.9% INTEGRATED TELECOMMUNICATION SERVICES 0.9% 9,600 Telekom Austria Ag 188,040 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 188,040 ------------ TOTAL AUSTRIA 1,468,089 BELGIUM 5.7% FINANCIAL 2.2% DIVERSIFIED BANKS 1.1% 2,765 KBC Group N.V. 233,154 ------------ OTHER DIVERSIFIED FINANCIAL SERVICES 1.1% 7,900 Fortis 225,275 ------------ TOTAL FINANCIAL 458,429 MATERIALS 2.6% COMMODITY CHEMICALS 0.9% 1,600 Solvay, S.A. 190,640 ------------ DIVERSIFIED METALS & MINING 1.7% 3,200 Umicore S.A. 324,966 ------------ TOTAL MATERIALS 515,606 TELECOMMUNICATIONS & UTILITIES 0.9% WIRELESS TELECOMMUNICATION SERVICES 0.9% 2,200 Mobistar, S.A.(a)v 193,095 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 193,095 ------------ TOTAL BELGIUM 1,167,130 CANADA 10.0% CONSUMER DISCRETIONARY 3.6% APPAREL RETAIL 0.5% 4,900 Reitmans Ltd., Class Av 111,345 ------------ DISTRIBUTORS 0.9% 7,400 Uni-Select, Inc.v 179,222 ------------ GENERAL MERCHANDISE STORES 1.2% 5,500 Canadian Tire Corp., Class Av 259,276 ------------ HOME IMPROVEMENT RETAIL 1.0% 10,800 Rona, Inc.(a)v 211,056 ------------ TOTAL CONSUMER DISCRETIONARY 760,899
Schedule of Investments 31 Schedule of Investments (continued) ICON International Equity Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- ENERGY 2.4% OIL & GAS DRILLING 0.7% 6,900 Ensign Resource Service Group, Inc.v $ 153,656 ------------ OIL & GAS EQUIPMENT & SERVICES 1.7% 1,900 CHC Helicopter Corp., Class Av 87,134 15,800 Savanna Energy Services Corp.(a)v 248,320 ------------ 335,454 ------------ TOTAL ENERGY 489,110 FINANCIAL 0.5% OTHER DIVERSIFIED FINANCIAL SERVICES 0.5% 2,900 Brascan Corp.v 109,511 ------------ TOTAL FINANCIAL 109,511 LEISURE & CONSUMER STAPLES 2.6% FOOD DISTRIBUTORS 0.7% 8,100 Van Houtte, Inc.v 149,725 ------------ FOOD RETAIL 1.1% 3,400 Loblaw Cos., Ltd.v 204,107 ------------ TOBACCO 0.8% 8,600 Rothmans, Inc.v 170,479 ------------ TOTAL LEISURE & CONSUMER STAPLES 524,311 TELECOMMUNICATIONS & UTILITIES 0.9% MULTI-UTILITIES & UNREGULATED POWER 0.9% 3,500 Atco Ltd., Class Iv 185,816 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 185,816 ------------ TOTAL CANADA 2,069,647 CHINA 1.1% INDUSTRIALS 1.1% MARINE 1.1% 266,000 China Shipping Development Co., Ltd. 232,714 ------------ TOTAL INDUSTRIALS 232,714 ------------ TOTAL CHINA 232,714 DENMARK 4.8% FINANCIAL 0.7% DIVERSIFIED BANKS 0.7% 5,085 Danske Bank A/S 147,481 ------------ TOTAL FINANCIAL 147,481
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- INDUSTRIALS 4.1% AIRPORT SERVICES 1.3% 1,100 Kobenhavns Lufthavne A/S(a) $ 262,065 ------------ INDUSTRIAL MACHINERY 0.9% 5,500 NKT Holding A/Sv 190,534 ------------ TRUCKING 1.9% 5,100 DSV A/S 388,878 ------------ TOTAL INDUSTRIALS 841,477 ------------ TOTAL DENMARK 988,958 FINLAND 2.5% FINANCIAL 0.6% MULTI-LINE INSURANCE 0.6% 9,000 Sampo Oyj 130,795 ------------ TOTAL FINANCIAL 130,795 INDUSTRIALS 1.9% BUILDING PRODUCTS 0.4% 4,150 Uponor Oyj 87,226 ------------ ELECTRICAL COMPONENTS & EQUIPMENT 0.6% 7,400 Vacon Oyj 130,829 ------------ INDUSTRIAL MACHINERY 0.9% 2,100 Kone Oyj(a)v 163,452 ------------ TOTAL INDUSTRIALS 381,507 ------------ TOTAL FINLAND 512,302 FRANCE 1.7% CONSUMER DISCRETIONARY 0.8% TIRES & RUBBER 0.8% 2,700 Michelin (Cgde) - B 177,472 ------------ TOTAL CONSUMER DISCRETIONARY 177,472 INDUSTRIALS 0.9% BUILDING PRODUCTS 0.9% 2,900 Compagnie De Saint- Gobain 176,808 ------------ TOTAL INDUSTRIALS 176,808 ------------ TOTAL FRANCE 354,280 GERMANY 7.9% CONSUMER DISCRETIONARY 2.5% APPAREL ACCESSORIES & LUXURY GOODS 0.8% 5,576 Hugo Boss Ag 172,311 ------------ SPECIALTY STORES 0.7% 3,747 Douglas Holding Ag 136,777 ------------ TIRES & RUBBER 1.0% 2,806 Continental Ag 217,133 ------------ TOTAL CONSUMER DISCRETIONARY 526,221
32 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- FINANCIAL 0.8% REINSURANCE 0.8% 4,000 Hannover Rueckversicherungs Ag $ 158,232 ------------ TOTAL FINANCIAL 158,232 HEALTH CARE 0.7% PHARMACEUTICALS 0.7% 2,100 Schering Ag 139,932 ------------ TOTAL HEALTH CARE 139,932 INDUSTRIALS 1.9% ELECTRICAL COMPONENTS & EQUIPMENT 0.7% 1,700 Leoni Ag(a)v 140,405 ------------ EMPLOYMENT SERVICES 1.2% 6,000 DIS Deutscher Industries Service Agv 249,043 ------------ TOTAL INDUSTRIALS 389,448 INFORMATION TECHNOLOGY 1.1% INTERNET SOFTWARE & SERVICES 1.1% 6,800 United Internet Ag 216,882 ------------ TOTAL INFORMATION TECHNOLOGY 216,882 MATERIALS 0.9% CONSTRUCTION MATERIALS 0.9% 3,200 HeidelbergCement AGv 201,371 ------------ TOTAL MATERIALS 201,371 ------------ TOTAL GERMANY 1,632,086 HONG KONG 7.7% CONSUMER DISCRETIONARY 0.9% APPAREL RETAIL 0.9% 28,000 Esprit Holdings Ltd. 190,898 ------------ TOTAL CONSUMER DISCRETIONARY 190,898 FINANCIAL 1.6% REAL ESTATE MANAGEMENT & DEVELOPMENT 1.6% 182,000 Sino Land Co., Ltd. 164,133 21,000 Swire Pacific Ltd., Class A 165,955 ------------ TOTAL FINANCIAL 330,088 INDUSTRIALS 1.8% MARINE 0.9% 34,000 Orient Overseas International, Ltd. 163,746 ------------ MARINE PORTS & SERVICES 0.9% 88,000 Cosco Pacific, Ltd. 190,815 ------------ TOTAL INDUSTRIALS 354,561
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- INFORMATION TECHNOLOGY 1.0% SEMICONDUCTOR EQUIPMENT 1.0% 46,000 ASM Pacific Technology, Ltd. $ 197,563 ------------ TOTAL INFORMATION TECHNOLOGY 197,563 LEISURE & CONSUMER STAPLES 0.6% HOTELS RESORTS & CRUISE LINES 0.6% 422,000 China Travel International Investment Hong Kong Ltd. 129,560 ------------ TOTAL LEISURE & CONSUMER STAPLES 129,560 MATERIALS 1.0% METAL & GLASS CONTAINERS 1.0% 240,000 Singamas Container Holdings, Ltd.(a)v 209,250 ------------ TOTAL MATERIALS 209,250 TELECOMMUNICATIONS & UTILITIES 0.8% ELECTRIC UTILITIES 0.8% 56,000 Cheung Kong Infrastructure Holdings, Ltd. 160,578 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 160,578 ------------ TOTAL HONG KONG 1,572,498 IRELAND 1.4% FINANCIAL 0.6% DIVERSIFIED BANKS 0.6% 5,100 Anglo Irish Bank Corp., Plc 127,533 ------------ TOTAL FINANCIAL 127,533 INDUSTRIALS 0.8% INDUSTRIAL CONGLOMERATES 0.8% 6,500 DCC Plcv 151,176 ------------ TOTAL INDUSTRIALS 151,176 ------------ TOTAL IRELAND 278,709 ITALY 0.7% FINANCIAL 0.7% MULTI-LINE INSURANCE 0.7% 6,100 Riunione Adiatica Di Sicurta S.P.A. 143,640 ------------ TOTAL FINANCIAL 143,640 ------------ TOTAL ITALY 143,640
Schedule of Investments 33 Schedule of Investments (continued) ICON International Equity Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- JAPAN 8.2% FINANCIAL 0.6% CONSUMER FINANCE 0.6% 1,000 Orix Corp. $ 127,441 ------------ TOTAL FINANCIAL 127,441 HEALTH CARE 2.1% HEALTH CARE DISTRIBUTORS 1.1% 18,000 Mediceo Holdings Co., Ltd. 238,916 ------------ HEALTH CARE EQUIPMENT 1.0% 6,900 Terumo Corp. 207,383 ------------ TOTAL HEALTH CARE 446,299 INDUSTRIALS 2.5% ELECTRICAL COMPONENTS & EQUIPMENT 0.7% 44,000 Fuji Electric Holdings Co., Ltd. 138,319 ------------ INDUSTRIAL MACHINERY 0.4% 22,000 Sumitomo Heavy Industries Ltd. 86,327 ------------ TRADING COMPANIES & DISTRIBUTORS 1.4% 13,000 Mitsui & Co., Ltd. 119,594 19,000 Sumitomo Corporation 162,450 ------------ 282,044 ------------ TOTAL INDUSTRIALS 506,690 INFORMATION TECHNOLOGY 0.6% ELECTRONIC EQUIPMENT MANUFACTURERS 0.6% 1,000 Nidec Corp. 124,232 ------------ TOTAL INFORMATION TECHNOLOGY 124,232 LEISURE & CONSUMER STAPLES 2.4% LEISURE PRODUCTS 1.8% 11,100 Shimano Inc. 372,554 ------------ PHOTOGRAPHIC PRODUCTS 0.6% 10,000 Nikon Corp. 114,553 ------------ TOTAL LEISURE & CONSUMER STAPLES 487,107 ------------ TOTAL JAPAN 1,691,769 MEXICO 1.8% LEISURE & CONSUMER STAPLES 0.9% SOFT DRINKS 0.9% 33,000 Fomento Economico Mexicano, S.A. De C.V.v 176,835 ------------ TOTAL LEISURE & CONSUMER STAPLES 176,835
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- MATERIALS 0.2% STEEL 0.2% 10,197 Hylsamex, S.A. De C.V.(a)v $ 33,877 ------------ TOTAL MATERIALS 33,877 TELECOMMUNICATIONS & UTILITIES 0.7% WIRELESS TELECOMMUNICATION SERVICES 0.7% 61,000 America Movil S.A. De C.V.v 157,212 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 157,212 ------------ TOTAL MEXICO 367,924 NETHERLANDS 6.9% ENERGY 1.7% INTEGRATED OIL & GAS 0.8% 2,900 Royal Dutch Petroleum Co. 173,819 ------------ OIL & GAS EQUIPMENT & SERVICES 0.9% 2,800 IHC Caland N.V. 177,947 ------------ TOTAL ENERGY 351,766 FINANCIAL 0.7% OTHER DIVERSIFIED FINANCIAL SERVICES 0.7% 5,000 ING Groep N.V. 151,074 ------------ TOTAL FINANCIAL 151,074 HEALTHCARE 0.9% HEALTH CARE DISTRIBUTORS 0.9% 2,800 OPG Groep NV 177,986 ------------ TOTAL HEALTHCARE 177,986 INDUSTRIALS 1.9% INDUSTRIAL CONGLOMERATES 0.9% 3,800 Aalberts Industries N.V.(a) 196,216 ------------ TRADING COMPANIES & DISTRIBUTORS 1.0% 5,900 Univar N.V. 195,152 ------------ TOTAL INDUSTRIALS 391,368 MATERIALS 1.7% DIVERSIFIED CHEMICALS 0.7% 3,355 Akzo Nobel N.V. 153,478 ------------ SPECIALTY CHEMICALS 1.0% 2,740 DSM N.V. 193,033 ------------ TOTAL MATERIALS 346,511 ------------ TOTAL NETHERLANDS 1,418,705
34 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- NORWAY 1.3% FINANCIAL 0.7% MULTI-LINE INSURANCE 0.7% 15,800 StoreBrand ASA $ 143,166 ------------ TOTAL FINANCIAL 143,166 INDUSTRIALS 0.6% MARINE 0.6% 5,100 Wilhelm Wilhelmsen Asa(a) 130,879 ------------ TOTAL INDUSTRIALS 130,879 ------------ TOTAL NORWAY 274,045 SINGAPORE 2.4% ENERGY 0.9% OIL & GAS EQUIPMENT & SERVICES 0.9% 184,800 KS Technology, Ltd. 177,945 ------------ TOTAL ENERGY 177,945 INDUSTRIALS 1.5% CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 1.5% 264,000 Sembcorp Marine, Ltd.(a) 308,485 ------------ TOTAL INDUSTRIALS 308,485 ------------ TOTAL SINGAPORE 486,430 SPAIN 6.8% ENERGY 0.7% INTEGRATED OIL & GAS 0.7% 5,230 Repsol YPF, S.A. 138,561 ------------ TOTAL ENERGY 138,561 FINANCIAL 1.3% DIVERSIFIED BANKS 0.7% 11,000 Banco Santander Central Hispano, S.A. 133,868 ------------ MULTI-LINE INSURANCE 0.6% 9,000 Corporacion Mapfre, S.A. 138,764 ------------ TOTAL FINANCIAL 272,632 INDUSTRIALS 1.9% CONSTRUCTION & ENGINEERING 1.9% 6,800 ACS, Actividades De Construccion Y Servicios, S.A. 168,340 3,800 Grupo Ferrovial, S.A. 215,220 ------------ TOTAL INDUSTRIALS 383,560
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- LEISURE & CONSUMER STAPLES 0.9% TOBACCO 0.9% 4,600 Altadis, S.A. $ 188,093 ------------ TOTAL LEISURE & CONSUMER STAPLES 188,093 TELECOMMUNICATIONS & UTILITIES 2.0% ELECTRIC UTILITIES 1.3% 8,500 Union Fenosa, S.A. 252,545 ------------ WATER UTILITIES 0.7% 7,000 Sociedad General De Aguas De Barcelona, S.A. 151,424 ------------ TOTAL TELECOMMUNICATIONS & UTILITIES 403,969 ------------ TOTAL SPAIN 1,386,815 SWEDEN 4.3% FINANCIAL 1.1% DIVERSIFIED BANKS 1.1% 22,900 Nordea Bank Ab 231,381 ------------ TOTAL FINANCIAL 231,381 HEALTH CARE 2.4% HEALTH CARE DISTRIBUTORS 1.5% 6,300 Meda Ab(a)v 289,613 ------------ HEALTH CARE FACILITIES 0.9% 12,700 Capio Ab(a) 192,269 ------------ TOTAL HEALTH CARE 481,882 INDUSTRIALS 0.8% CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 0.8% 3,907 Volvo Ab 173,241 ------------ TOTAL INDUSTRIALS 173,241 ------------ TOTAL SWEDEN 886,504 SWITZERLAND 6.5% FINANCIAL 1.8% DIVERSIFIED CAPITAL MARKETS 1.8% 4,300 Credit Suisse Group 183,893 2,100 UBS Ag 177,364 ------------ TOTAL FINANCIAL 361,257 HEALTH CARE 1.0% HEALTH CARE EQUIPMENT 1.0% 1,000 Nobel Biocare Holding Ag 211,009 ------------ TOTAL HEALTH CARE 211,009
Schedule of Investments 35 Schedule of Investments (continued) ICON International Equity Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- INDUSTRIALS 1.0% DIVERSIFIED COMMERCIAL SERVICES 1.0% 2,900 Amazys Holding Ag(a)v $ 196,577 ------------ TOTAL INDUSTRIALS 196,577 INFORMATION TECHNOLOGY 1.8% COMMUNICATIONS EQUIPMENT 0.9% 12,000 Ascom Holding Ag(a) 202,856 ------------ COMPUTER STORAGE & PERIPHERALS 0.9% 3,100 Logitech International S.A.(a) 188,333 ------------ TOTAL INFORMATION TECHNOLOGY 391,189 MATERIALS 0.9% FERTILIZERS & AGRICULTURAL CHEMICALS 0.9% 1,700 Syngenta Ag 177,899 ------------ TOTAL MATERIALS 177,899 ------------ TOTAL SWITZERLAND 1,337,931 UNITED KINGDOM 8.1% CONSUMER DISCRETIONARY 1.3% HOMEBUILDING 1.3% 11,400 Bellway Plcv 189,629 5,000 The Berkeley Group Holdings Plc(a)v 76,563 ------------ TOTAL CONSUMER DISCRETIONARY 266,192 FINANCIAL 2.2% CONSUMER FINANCE 1.5% 17,400 Cattles Plc 111,143 14,200 Provident Financial Plcv 189,998 ------------ 301,141 LIFE & HEALTH INSURANCE 0.7% 71,980 Legal & General Group Plc 153,992 ------------ TOTAL FINANCIAL 455,133
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- INDUSTRIALS 1.9% BUILDING PRODUCTS 1.0% 20,328 BPB Plcv $ 190,718 ------------ INDUSTRIAL CONGLOMERATES 0.9% 11,800 Smiths Group Plc 189,743 ------------ TOTAL INDUSTRIALS 380,461 LEISURE & CONSUMER STAPLES 1.4% FOOD RETAIL 0.5% 17,000 Tesco Plc 101,652 ------------ RESTAURANTS 0.9% 14,200 Punch Taverns Plc 184,611 ------------ TOTAL LEISURE & CONSUMER STAPLES 286,263 MATERIALS 1.3% DIVERSIFIED METALS & MINING 1.3% 20,500 BHP Billiton Plc 275,379 ------------ TOTAL MATERIALS 275,379 ------------ TOTAL UNITED KINGDOM 1,663,428 ------------ TOTAL COMMON STOCKS (COST $18,246,324) 20,620,743 SHORT-TERM INVESTMENTS 3.3% 675,279 Chase Icon North European Sweep 675,279 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $675,279) 675,279 ------------ TOTAL INVESTMENTS 103.7% (COST $18,921,603) 21,296,022 LIABILITIES LESS OTHER ASSETS (3.7)% (755,065) ------------ NET ASSETS 100.0% $ 20,540,957 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. v All securities were fair valued (Note 1) as of March 31, 2005 unless noted with a v. Total value of securities fair valued was $15,400,987. 36 Schedule of Investments Six Month Hypothetical Expense Example March 31, 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 (10/1/04 - 3/31/05). 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 $15.00 fee charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The Example also does not include portfolio trading commissions and related trading expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line 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) March 31, 2005 (unaudited)
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD 10/1/04 3/31/05 10/1/04-3/31/05* ---------------------------------------------------------------------------------------------- ICON ASIA-PACIFIC REGION FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,130 $12.48 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,013 $11.80 (5% return before expenses) ---------------------------------------------------------------------------------------------- ICON EUROPE FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,156 $10.80 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,015 $10.10 (5% return before expenses) ---------------------------------------------------------------------------------------------- ICON INTERNATIONAL EQUITY FUND ---------------------------------------------------------------------------------------------- CLASS C ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,114 $33.20 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $ 994 $31.31 (5% return before expenses) ---------------------------------------------------------------------------------------------- CLASS I ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,138 $12.42 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,013 $11.70 (5% return before expenses) ---------------------------------------------------------------------------------------------- CLASS Z ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,142 $ 9.98 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,016 $ 9.40 (5% return before expenses) ----------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 182/365 to reflect the one-half year period. 38 Expense Example Statements of Assets and Liabilities March 31, 2005 (unaudited)
ICON ICON ASIA-PACIFIC ICON INTERNATIONAL REGION FUND EUROPE FUND EQUITY FUND ------------ ----------- ------------- ASSETS Investments, at cost $ 9,866,214 $15,613,367 $18,921,603 ------------ ----------- ------------- Investments, at value 10,782,265 17,641,279 21,296,022 Cash - 3,341 - Receivables: Fund shares sold 85,653 25,178 12,726 Investments sold 89,167 344,921 328,859 Interest 222 295 179 Dividends 79,883 30,095 39,776 Other assets 783 361 576 ------------ ----------- ------------- Total Assets 11,037,973 18,045,470 21,678,138 ------------ ----------- ------------- LIABILITIES Payables: Due to custodian bank 233,932 - 425,134 Investments bought 45,104 311,469 657,969 Advisory fees 8,773 14,881 16,970 Accrued distribution fees - - 1,723 Fund accounting, custodial and transfer agent fees 22,889 15,063 17,568 Administration fees 449 744 848 Accrued expenses 18,171 19,308 16,969 ------------ ----------- ------------- Total Liabilities 329,318 361,465 1,137,181 ------------ ----------- ------------- NET ASSETS - ALL SHARE CLASSES $10,708,655 $17,684,005 $20,540,957 ============ =========== ============= NET ASSETS - CLASS I $ - $ - $ 7,874,115 ============ =========== ============= NET ASSETS - CLASS C $ - $ - $ 461,078 ============ =========== ============= NET ASSETS - CLASS Z $ - $ - $12,205,764 ============ =========== ============= NET ASSETS CONSIST OF Paid-in capital $17,513,529 $15,435,512 $17,201,075 Accumulated undistributed net investment income/(loss) (6,994) (60,583) (63,585) Accumulated undistributed net realized gain/(loss) from investments (7,713,931) 281,164 1,029,048 Accumulated net realized gain/(loss) from foreign currency translations Unrealized appreciation/(depreciation): on securities and other assets and liabilities denominated in foreign currency 916,051 2,027,912 2,374,419 ------------ ----------- ------------- NET ASSETS $10,708,655 $17,684,005 $20,540,957 ============ =========== ============= Shares outstanding (unlimited shares authorized, no par value) 1,164,048 1,272,209 - Class I - - 711,762 Class C - - 42,799 Class Z - - 1,099,049 Net asset value (offering and redemption price per share) $ 9.20 $ 13.90 $ - Class I $ - $ - $ 11.06 Class C $ - $ - $ 10.77 Class Z $ - $ - $ 11.11
The accompanying notes are an integral part of the financial statements. Financial Statements 39 Statements of Operations For the year ended March 31, 2005 (unaudited)
ICON ICON ASIA-PACIFIC ICON INTERNATIONAL REGION FUND EUROPE FUND EQUITY FUND ------------ ----------- ------------- INVESTMENT INCOME Interest $ 331 $ 931 $ 609 Dividends 141,614 86,463 131,694 Foreign taxes withheld (18,474) (7,018) (16,086) ------------ ----------- ------------- Total Investment Income 123,471 80,376 116,217 ------------ ----------- ------------- EXPENSES Advisory fees 55,581 69,684 86,530 Distribution fees: Class I - - 6,527 Class C - - 1,435 Fund accounting, custodial and transfer agent fees 39,721 35,227 38,147 Administration fees 2,666 3,385 4,193 Audit fees 679 696 906 Registration fees 8,932 9,570 9,974 Legal fees 142 126 170 Insurance expense 509 229 372 Trustee fees and expenses 779 687 812 Shareholder reports 8,449 8,793 8,032 Interest expense 857 82 651 Other expenses 12,150 11,723 22,053 ------------ ----------- ------------- Total Expenses 130,465 140,202 179,802 ------------ ----------- ------------- NET INVESTMENT INCOME (LOSS) (6,994) (59,826) (63,585) ------------ ----------- ------------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized gain/(loss) from investment transactions 2,036,079 1,115,189 1,029,051 Net realized gain/(loss) from foreign currency translations - - 14 Change in unrealized net appreciation/(depreciation) on securities (772,808) 605,674 1,077,587 ------------ ----------- ------------- Net realized and unrealized gain/(loss) on investments 1,263,271 1,720,863 2,106,652 ------------ ----------- ------------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,256,277 $1,661,037 $2,043,067 ============ =========== =============
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
ICON ASIA-PACIFIC REGION FUND ------------------------------------ PERIOD ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ OPERATIONS Net investment income/(loss) $ (6,994) $ 30,021 Net realized gain/(loss) from investment transactions 2,036,079 176,502 Net realized gain/(loss) from foreign currency translations - (3,454) Change in net unrealized appreciation/(depreciation) on securities and foreign currency translations (772,808) 115,601 -------------- ------------------ Net increase/(decrease) in net assets resulting from operations 1,256,277 318,670 -------------- ------------------ 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 4,771,474 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 (12,366,012) (10,319,543) Class I - - Class C - - Class Z - - -------------- ------------------ Net increase/(decrease) from fund share transactions (7,568,375) 10,683,496 -------------- ------------------ Total net increase/(decrease) in net assets (6,338,557) 10,963,002 NET ASSETS Beginning of period 17,047,212 6,084,210 -------------- ------------------ End of period $ 10,708,655 $ 17,047,212 ============== ==================
42 Financial Statements
ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ -------------- ------------------ $ (59,826) $ (27,710) $ (63,585) $ 8,851 1,115,189 1,242,857 1,029,051 3,949,314 - (765) 14 (2,877) 605,674 365,375 1,077,587 (1,455,011) -------------- ------------------ -------------- ------------------ 1,661,037 1,579,757 2,043,067 2,500,277 -------------- ------------------ -------------- ------------------ - - - - - - - - - - - - - - - (57,934)* - - - - - - (422,167) - - - (37,935) - - - (1,003,360) - -------------- ------------------ -------------- ------------------ - - (1,463,462) (57,934) -------------- ------------------ -------------- ------------------ 10,495,179 5,686,345 - - - - 4,639,809 3,425,609 - - 479,297 267,290 - - 3,294,142 3,833,056 - - - - - - 407,049 - - - 36,352 - - - 994,866 57,394 (2,298,291) (8,702,471) - - - - (500,470) (265,090) - - (224,645) (75,175) - - (1,862,184) (7,575,790) -------------- ------------------ -------------- ------------------ 8,196,888 (3,016,126) 7,264,216 (332,706) -------------- ------------------ -------------- ------------------ 9,857,925 (1,436,369) 7,843,821 2,109,637 7,826,080 9,262,449 12,697,136 10,587,499 -------------- ------------------ -------------- ------------------ $17,684,005 $ 7,826,080 $20,540,957 $12,697,136 ============== ================== ============== ==================
Financial Statements 43 Statements of Changes in Net Assets (continued)
ICON ASIA-PACIFIC REGION FUND ------------------------------------ PERIOD ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ TRANSACTIONS IN FUND SHARES Shares sold 521,320 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 (1,446,615) (1,241,267) Class I - - Class C - - Class Z - - -------------- ------------------ Net increase/(decrease) (922,301) 1,288,418 -------------- ------------------ Shares outstanding beginning of period 2,086,349 797,931 -------------- ------------------ Shares outstanding end of period 1,164,048 2,086,349 ============== ================== PURCHASE AND SALES OF INVESTMENT SECURITIES (excluding short-term securities) Purchase of securities $12,413,104 $18,808,223 Proceeds from sales of securities 19,671,638 8,416,715 ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ (6,994) $ 26,459 ============== ==================
* The tax character of distributions to shareholders from net investment income for the period ending September 30, 2004 is ordinary income. The accompanying notes are an integral part of the financial statements. 44 Financial Statements
ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ -------------- ------------------ 788,692 505,470 - - - - 415,741 328,830 - - 43,063 24,806 - - 295,377 375,261 - - - - - - 37,655 - - - 3,420 - - - 91,777 5,845 (167,093) (796,013) - - - - (44,991) (25,473) - - (21,060) (7,430) - - (165,680) (762,885) -------------- ------------------ -------------- ------------------ 621,599 (290,543) 655,302 (61,046) -------------- ------------------ -------------- ------------------ 650,610 941,153 1,198,308 1,259,354 -------------- ------------------ -------------- ------------------ 1,272,209 650,610 1,853,610 1,198,308 ============== ================== ============== ================== $15,570,543 $5,496,870 $18,089,237 $12,810,296 7,482,924 8,124,419 12,187,552 13,098,694 $ (60,583) $ (757) $ (63,585) $ - ============== ================== ============== ==================
Financial Statements 45 Financial Highlights
INCOME FROM INVESTMENT OPERATIONS ---------------------------------------- NET ASSET NET NET REALIZED VALUE, INVESTMENT AND UNREALIZED TOTAL FROM BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT OF PERIOD (LOSS) ON INVESTMENTS OPERATIONS --------- ---------- -------------- ---------- ICON ASIA-PACIFIC REGION FUND Period Ended March 31, 2005 (unaudited) $ 8.17 $(0.01)(x) $ 1.07 $ 1.06 Year Ended September 30, 2004 7.62 0.02(x) 0.55 0.57 Year Ended September 30, 2003 5.68 0.04(x) 1.90 1.94 Year Ended September 30, 2002 6.81 (0.19)(x) (0.91) (1.10) Year Ended September 30, 2001 10.25 0.07(x) (3.51) (3.44) Year Ended September 30, 2000 10.87 0.03(x) (0.65) (0.62) ICON EUROPE FUND Period Ended March 31, 2005 (unaudited) 12.03 (0.06)(x) 1.93 1.87 Year Ended September 30, 2004 9.84 (0.04) 2.23 2.19 Year Ended September 30, 2003 7.40 (0.02)(x) 2.46 2.44 Year Ended September 30, 2002 8.13 (0.04)(x) (0.67) (0.71) Year Ended September 30, 2001 10.14 0.05(x) (2.06) (2.01) Year Ended September 30, 2000 10.12 0.02(x) - 0.02 ICON INTERNATIONAL EQUITY CLASS I Period Ended March 31, 2005(b) (unaudited) 10.59 (0.05)(x) 1.49 1.44 February 6, 2004 (inception) to September 30, 2004 10.96 0.04(x) (0.41) (0.37) CLASS C Period Ended March 31, 2005(b) (unaudited) 10.55 (0.27)(x) 1.46 1.19 February 19, 2004 (inception) to September 30, 2004 11.29 (0.02)(x) (0.72) (0.74) CLASS Z Period Ended March 31, 2005(b) (unaudited) 10.60 (0.03)(x) 1.51 1.48 Year Ended September 30, 2004 8.41 0.01(x) 2.24 2.25 Year Ended September 30, 2003 5.96 0.06(x) 2.45 2.51 Year Ended September 30, 2002 7.24 0.04(x) (1.25) (1.21) Year Ended September 30, 2001 11.79 0.09(x) (3.31) (3.22) Year Ended September 30, 2000 11.74 0.04(x) 1.21 1.25 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 Period Ended March 31, 2005 (unaudited) $(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 - - - - Year Ended September 30, 2000 - - - - ICON EUROPE FUND Period Ended March 31, 2005 (unaudited) - - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 (0.02) - - (0.02) Year Ended September 30, 2001 - - - - Year Ended September 30, 2000 - - - - ICON INTERNATIONAL EQUITY CLASS I Period Ended March 31, 2005(b) (unaudited) - $(0.97) - (0.97) February 6, 2004 (inception) to September 30, 2004 - - - - CLASS C Period Ended March 31, 2005(b) (unaudited) - (0.97) - (0.97) February 19, 2004 (inception) to September 30, 2004 - - - - CLASS Z Period Ended March 31, 2005(b) (unaudited) - (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) Year Ended September 30, 2000 - (1.20) - (1.20)
(x) Calculated using the average share method. * The total return calculation is for the period indicated. (a) Annualized for periods less than a year. (b) Portfolio turnover is calculated at the Fund level. The rate shown is for the longest period indicated of the three share classes. The accompanying notes are an integral part of the financial statements. 46 Financial Highlights
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(A) NET ASSETS(A) RATE --------- ------- -------------- -------------- ------------- ------------- --------- $ 9.20 12.95% $10,709 $11,111 2.35% (0.13)% 104.76% 8.17 7.51% 17,047 14,976 1.91% 0.20% 58.62% 7.62 34.15% 6,084 6,683 1.98% 0.68% 81.44% 5.68 (16.29)% 6,927 12,142 1.66% (0.23)% 14.43% 6.81 (33.56)% 19,684 18,749 1.70% 0.75% 55.58% 10.25 (5.70)% 25,710 32,629 1.53% 0.24% 101.88% 13.90 15.55% 17,684 14,030 2.01% (0.86)% 55.63% 12.03 22.26% 7,826 7,230 2.24% (0.38)% 78.57% 9.84 32.97% 9,262 6,774 1.87% (0.29)% 101.37% 7.40 (8.76)% 4,619 5,706 2.14% (0.42)% 12.26% 8.13 (19.82)% 7,397 7,935 1.96% 0.55% 84.49% 10.14 0.20% 6,560 7,109 1.80% 0.18% 62.17% 11.06 11.36% 7,874 5,261 2.33% (0.92)% 71.24% 10.59 (3.38)% 3,211 1,960 2.32% 0.44% 117.74% 10.77 13.77% 461 290 6.30% (4.95)% 71.24% 10.55 (6.55)% 183 162 3.06% (0.16)% 117.74% 11.11 14.15% 12,206 11,844 1.87% (0.56)% 71.24% 10.60 26.79% 9,303 10,063 1.98% 0.03% 117.74% 8.41 42.60% 10,587 8,571 2.00% 0.88% 98.91% 5.96 (16.94)% 8,222 13,347 1.72% 0.48% 91.99% 7.24 (30.29)% 14,196 18,204 1.65% 0.97% 41.67% 11.79 10.43% 33,315 29,412 1.52% 0.30% 34.24%
Financial Highlights 47 Notes to Financial Statements March 31, 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 and registration 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 risk of loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment. Investments in foreign securities and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar- denominated transactions as a result of, among other factors, the possibility of lower government supervision and regulation of foreign securities markets and the possibility of political or economic instability. There are also risks associated with small- and mid-cap investing, including limited product lines, less liquidity, and small market share. 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 close of the regular trading session of the New York Stock Exchange (the "NYSE") (normally 4 p.m. Eastern time) each day the NYSE is open, except that (a) securities traded primarily on the NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at the NASDAQ Official Closing Price provided by NASDAQ each business day; and (b) any foreign investments in the Funds traded in countries outside of the Western Hemisphere are fair valued daily based on procedures established by the Funds' Board of Trustees ("Board") to avoid stale prices and to take into account, among other things, any significant events occurring after the close of a foreign market in those regions. The Funds use pricing services to determine the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service quote of valuation is inaccurate or does not reflect the market value of the security, prices may be obtained through market quotations from independent broker/dealers. If market quotations from these sources are not readily available, the Funds' securities or other assets are valued at fair value as determined in good faith by the Funds' Board or pursuant to procedures approved by the Board. The valuation assigned to fair-valued securities for purposes of calculating a Fund's 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. Foreign securities traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Funds' adviser determines that use of another valuation methodology is appropriate. The pricing service uses statistical analyses and quantitative models to adjust local market prices using factors such as subsequent movement and changes in the prices of indexes, securities and exchange rates in other markets in determining fair value as of the time a Fund calculates its net asset value. A security listed or traded primarily on a securities exchange or in the over-the-counter market is generally valued at the last sale price on the exchange or market where the security is principally traded, except that securities primarily traded on NASDAQ are normally valued at the NASDAQ Official Closing Price. Lacking any sales that day, the security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes from dealers making a market for the security. Options are valued at their closing mid-price on the principal market where the option is traded. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than sixty days are valued in accordance with the evaluated bid price supplied by the pricing service. Short-term securities with remaining maturities of sixty days or less are generally valued at amortized cost or original cost plus accrued interest, which approximates market value. Prior to February 22, 2005, London closing exchange rates were used to convert foreign security values into Notes to Financial Statements 49 Notes to Financial Statements (continued) 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. 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 period ended March 31, 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 period ended March 31, 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 as of March 31, 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 period ended March 31, 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 gain. Dividends received by shareholders of the Funds which are derived from foreign source income and foreign taxes paid by the Funds are to be treated, to the extent allowable under the Code, as if received and paid by the shareholders of the Funds. Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders. Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryovers. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles generally accepted in the United States of America. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Certain dividends from foreign securities will be recorded as soon as the Funds are informed of the dividend if such information is obtained subsequent to the ex-dividend date. INVESTMENT TRANSACTIONS Security transactions are accounted for 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 52 Notes to Financial Statements International Equity Fund's 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. 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, 2007. 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. 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 during the period. 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. The Funds 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. Bancorp that are estimated to be 0.02% of average daily net assets. U.S. Bancorp had entered into an agreement with JP Morgan Chase Co. ("Chase") on behalf of the Funds to provide international custodial services. Notes to Financial Statements 53 Notes to Financial Statements (continued) 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 and Administration Services 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. During the period, 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. 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") 54 Notes to Financial Statements (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 pay an annual 12b-1 and service fee of 1.00% of average daily net assets. For the period ended March 31, 2005 the total amounts paid or payable to IDI pursuant to the 12b-1 Plan were $1,435 on Class C shares and $6,527 on Class I shares of the International Equity Fund. 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) receive no compensation from the Funds. There are certain employees of ICON, such as the Chief Compliance Officer and staff who administer the compliance program, for which the Funds reimburse ICON for certain amounts related to compensation and certain other expenses incurred. For the period ended March 31, 2005, the total related amounts paid by the Trust are included in Other Expenses on the Statement of Operations. 3. LINE OF CREDIT Effective April 18, 2005, the Fund 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 $135 million. 4. FEDERAL INCOME TAX Income and capital gain distributions are determined in accordance with income tax regulations that may differ from accounting principles that are generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferrals of wash losses, foreign currency transactions, net investment losses, and capital loss carryovers. The tax components of capital shown in the following tables represent losses or deductions the Funds may be able to offset against income and gains recognized in future years and post October loss deferrals. The accumulated losses noted in the following tables represent net capital loss carryovers as of September 30, 2004 that may be available to offset future realized capital gains Notes to Financial Statements 55 Notes to Financial Statements (continued) and thereby reduce future taxable income distributions. These carryovers expire between September 30, 2007 and September 30, 2011.
ACCUMULATED UNDISTRIBUTED UNDISTRIBUTED CAPITAL CAPITAL LOSSES ORDINARY INCOME LONG-TERM GAIN LOSSES ----------------------------------------------------------------------------------------- ICON Asia-Pacific Region Fund $9,631,893 $26,459 0 0 ICON Europe Fund 832,262 0 0 0 ICON International Equity Fund 0 $66,857 $1,396,592 0
During the year ended September 30, 2004 the ICON Asia-Pacific Region Fund utilized capital loss carryforwards of $137,275, the ICON Europe Fund utilized capital loss carryforwards of $1,244,634 and the ICON International Equity Fund utilized capital loss carryforwards of $2,433,905. As of March 31, 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:
UNREALIZED UNREALIZED NET APPRECIATION COST APPRECIATION (DEPRECIATION) (DEPRECIATION) ----------------------------------------------------------------------------------------- ICON Asia-Pacific Region Fund $ 9,866,214 $1,160,823 $(244,772) $ 916,051 ICON Europe Fund 15,613,367 2,287,552 (259,640) 2,027,912 ICON International Equity Fund 18,921,603 2,653,466 (279,047) 2,374,419
56 Notes to Financial Statements 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 57 THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK [ICON FUNDS LOGO] For more information about the ICON Funds, contact us: 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
[ICON FUNDS LOGO] 1-800-764-0442 www.iconadvisers.com ICRPANNUINTL I-144-FOR > March 31, 2005 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 Semiannual Report (unaudited) (ICON FUNDS LOGO) Table of Contents ABOUT THIS REPORT 2 MESSAGE FROM ICON FUNDS 4 MANAGEMENT OVERVIEW AND SCHEDULE OF INVESTMENTS ICON Consumer Discretionary Fund 7 ICON Energy Fund 14 ICON Financial Fund 22 ICON Healthcare Fund 29 ICON Industrials Fund 36 ICON Information Technology Fund 44 ICON Leisure and Consumer Staples Fund 51 ICON Materials Fund 58 ICON Telecommunication & Utilities Fund 65 HYPOTHETICAL EXPENSE EXAMPLE 72 FINANCIAL STATEMENTS 74 FINANCIAL HIGHLIGHTS 82 NOTES TO FINANCIAL STATEMENTS 86
About This Report HISTORICAL RETURNS All total returns mentioned in this report account for the change in a Fund's per-share price and the reinvestment of any dividends, capital gain distributions, and tax return of capital. If your account is set up to receive Fund distributions in cash rather than to reinvest them, your actual return may differ from these figures. The Funds' performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results represent past performance, and current performance may be higher or lower. Please call 1-800-764-0442 or visit www.iconadvisers.com for performance results current to the most recent month-end. PORTFOLIO DATA This report reflects ICON's views, opinions, and portfolio holdings as of March 31, 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 percentage holdings as of March 31, 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, these factors may impact a stock's performance, and therefore, Fund performance. There are risks associated with mutual fund investing, including the risk of loss of principal. There is no assurance that the investment process will consistently lead to successful results. 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. About This Report 3 Message from ICON Funds -------------------------------------------------------------------------------- The fact that stocks have been in the midst of a two-year bull market may come as a surprise to many investors. -------------------------------------------------------------------------------- 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 a value-based, bottom-up investment system of industry rotation to try to capture leading market themes that evolve over time. While you may have been introduced to us through your investment in the ICON Sector Funds, we would like to point out that we apply the same discipline across the entire ICON fund family. We invite you to consider the ICON U.S. Diversified Funds, such as the ICON Core Equity Fund and the ICON Long/Short Fund, as well as the ICON Foreign Funds, based on your investment objectives, risk tolerance, and time horizon. DEALING WITH DISTRACTIONS At times like these, I often think of Douglas Adams, author of The Hitchhiker's Guide to the Galaxy, who wrote, "Nothing travels faster than the speed of light with the possible exception of bad news, which follows its own special laws." Over the course of the past six months, investors have been inundated by a litany of bad news, ranging from Iraq, terrorism and oil prices to interest rates and budget deficits. Although the markets seemed to rise above these distractions during the first half of the reporting period, investors have since found it difficult to sort through these events despite the presence of solid economic and investment fundamentals -- and no clear signs of inflation. Investors' behavior is highly reminiscent of patterns established last year, which featured fear-driven sell-offs and highly correlated industry dynamics. During market setbacks, economically sensitive and cyclical industries have declined the most while industries considered recession-proof have been the most resilient. In contrast, when the market has advanced, cyclical industries have led the way while recession-proof industries have lagged. PARTICIPATING IN THE ADVANCE Given myriad doubts about the economy and earnings, and the volatility typically associated with a cyclical rally, the fact that stocks have been in the midst of a bull market may come as a surprise to many investors. But that is in fact the case. Having hit significant multi-year lows on March 11, 2003 just --------------- 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. 4 Message from ICON Funds We apply our value-based, bottom-up industry rotation across the entire market in order to identify leading industry themes wherever they may emerge. [CRAIG T. CALLAHAN PHOTO] Craig T. Callahan President prior to the Iraq war, and near-term lows on August 12, 2004, stocks have actually recorded a two-year advance. Research into market history and investor behavior indicates to us that many investors assign the horrible and distasteful aspects of war as negatives for economic growth and company valuations. However, we have found no concrete evidence, past or present, to support such a relationship. For this reason, we believe that successful investors need to stay focused on the divergence between price and value, while also drawing a distinction between geopolitical concerns and the realities of investment fundamentals. Our research has shown these fundamentals to be generally healthy and encouraging. By invoking the valuation-driven discipline that enables us to patiently ride through market turbulence, we have participated in the advance. A MORE DIVERSE INDUSTRY COMPOSITION No matter what the market environment, our approach remains consistent. At the end of the period, we measured the broad market as significantly below our estimate of fair value. This discount makes sense to us as investors seemingly braced for a slowdown in economic growth and corporate earnings, although we believe the market has overreacted to these short-term concerns. Nevertheless, what has become gradually apparent amid the market turmoil is that our recent focus on highly cyclical industries is no longer warranted. While economically sensitive sectors such as Energy, Materials and Industrials were clear market leaders during the first half of our reporting period, value and relative strength readings have since pointed us toward a more diverse composition of industries, including those widely considered to be defensive or recession-proof. Accordingly, we were able to capture second-half upside within the Healthcare, Consumer Staples and Utilities sectors, where combinations of value and relative strength became increasingly more attractive. Healthcare, in particular, offered considerable breadth, with all eight industries in the sector trading at double-digit discounts to their intrinsic value and six posting above-average relative strength. Utilities were also quite compelling. Despite their so-called defensive tendencies, we view them as prospective market leaders. Message from ICON Funds 5 Message from ICON Funds (continued) SEARCHING FOR VALUE Having sustained market leadership for the past three years, it comes as no surprise that cyclical industries were decidedly volatile. Because of their sensitivity to economic fluctuations, these industries typically exhibit a higher standard deviation or variability, which serves as a measure of risk. Capturing their leadership has been a challenge and has certainly made for some unpleasant periods. However, our system dictates that we not be swayed by emotion. We simply calculate value and allow it to direct us to industries that are showing value above price and relative strength. ICON does not subscribe to the traditional style grid that classifies stocks by size -- small-cap, mid-cap or large-cap -- and by style, either value or growth. Instead, we apply our value-based, bottom-up industry rotation across the entire market in order to identify leading industry themes wherever they may emerge. In doing so, we are an all-cap manager and thus avoid arbitrary barriers or restrictions in our pursuit of value. THE PRIVILEGE OF GUIDING YOU In January, we had the good fortune to announce the promotions of three investment team members. We'd like to again take a moment to share the news. Portfolio Managers Robert Straus, Derek Rollingson and J.C. Waller, III have been promoted to Vice Presidents and have been named Chief Investment Officer, Director of Research and Director of Institutional Portfolio Management, respectively. These promotions recognize the outstanding and valuable contributions each has made to your investment. 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 6 Message from ICON Funds Management Overview ICON Consumer Discretionary Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 99.7% Top 10 Equity Holdings 28.7% Number of Stocks 58 Short-Term Investments 0.1% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 The Finish Line, Inc. 3.4% Pacific Sunwear of California, Inc. 3.4% Federated Department Stores, Inc. 3.0% Lowe's Cos., Inc. 2.9% Reebok International Ltd. 2.8% V.F. Corp. 2.8% Ross Stores, Inc. 2.6% Hovnanian Enterprises, Inc. - Class A 2.6% Quiksilver, Inc. 2.6% Brown Shoe Co., Inc. 2.6% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Consumer Discretionary Fund gained 9.29% for the six-month period ended March 31, 2005, outpacing the 8.61% return of its sector-specific benchmark, the S&P 1500 Consumer Discretionary Index, as well as the 7.45% return for its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2005 appear on page 11. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. Value-driven identification of industry themes led the Fund to be positioned favorably during the reporting period. However, much of the overall advance was recorded between October 25 and December 31, 2004, in conjunction with strong gains in cyclically oriented consumer issues. During that time, the S&P 1500 Consumer Discretionary Index grew by 13.90% while the Fund virtually kept pace, rising 13.69%. Both returns surpassed a same-period increase in the S&P 1500 Index of 11.38%. Subsequently, the Fund's valuation-based discipline also held up well during the first quarter of 2005, when consumer cyclical stocks suffered considerable setbacks. For this period, the S&P Consumer Discretionary Index declined 4.56% while the Fund and the S&P 1500 Index fell by 2.25% and 1.99%, respectively. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. Surging investor confidence characterized the early months of the reporting period as oil prices eased and election-year uncertainties subsided. However, crude oil futures soon reversed course, rising sharply from $40.71 Management Overview 7 Management Overview (continued) ICON Consumer Discretionary Fund a barrel in early December to $55.40 a barrel by period-end, in part due to prolonged weakness in the U.S. dollar. Although higher energy costs were slow to pass through to consumers, inflation fears weighed heavily on market sentiment, as benchmark 10-year Treasury yields soared from 3.99% in early February to 4.64% in late March. This steep, sudden rise in both oil prices and interest rates took its toll on consumer cyclical issues, as gains amassed during the fourth quarter of 2004 were pared amid worries that inflationary pressures would crimp consumer spending. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Leading industry contributors during the period included apparel retail, homebuilding and footwear, which accounted for almost two-thirds of the Fund's return. Valuation and relative strength had previously led us to overweight apparel retail, the Fund's top contributor and largest overall average industry weight. Homebuilding, as well, continued to benefit from historically low mortgage rates and a continued strong economy despite ongoing monetary tightening by the Federal Reserve. Principal company contributors to Fund performance included specialty retailer Abercrombie & Fitch Co., which continued to boost sales on the basis of its brand rather than promotional incentives. Homebuilder Toll Brothers also advanced, as the company experienced strong growth in the face of robust new home sales. Meanwhile, Federated Department Stores rose on news that its proposed merger with May Department Stores would drive significant competitive synergies. In contrast, core detracting industry positions included computer & electronics retail, airlines, consumer electronics, and automobile manufacturers. Although computer & electronics retail comprised the largest weighting of these four laggards, its total average weighting accounted for less than 5% of net assets during the period. The industry suffered on the heels of Radio Shack's lowered earnings guidance in mid-February. Among the Fund's primary individual detractors was video game retailer GameStop Corp., which missed earnings forecasts when inventory shortages hurt holiday sales. Other laggards included homebuilder Pulte Homes, which faced weather-related slowdowns in its primary Florida and California markets, and women's apparel retailer Cache Inc, which reported flat same-store sales. GameStop and Pulte Homes were liquidated when they met our sell criteria. 8 Management Overview [ROBERT STRAUS, CMT PHOTO] Robert Straus, CMT Portfolio Manager Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE CONSUMER DISCRETIONARY SECTOR? A. Growing concerns over rising oil prices and interest rates appeared to be catalysts for a sell-off in consumer cyclical issues early in 2005. Not surprisingly, as the reporting period came to a close, the Consumer Discretionary sector was trading at more than a 20% discount to our estimate of fair value. We believe these concerns are short-term overreactions, and have created opportunities to fortify existing positions. In particular, we have focused on the apparel retail industry as it currently represents the sector's most attractive combination of value and relative strength. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund's value driven approach at the industry level was the primary contributor to relative outperformance during the period. - Valuation and relative strength led us to overweight apparel retail, the Fund's top contributor and largest overall average industry weight. - In contrast, core industry detractors included computer & electronics retail, airlines, consumer electronics, and automobile manufacturers. - Stocks that boosted Fund performance included Abercrombie & Fitch Co., Toll Brothers and Federated Department Stores. - Among the Fund's poorest-performing holdings were GameStop Corp., Pulte Homes and Cache Inc. Management Overview 9 Management Overview (continued) ICON Consumer Discretionary Fund TOP 10 INDUSTRIES as of March 31, 2005 Apparel Retail 22.0% Footwear 11.4% Specialty Stores 9.4% Apparel Accessories & Luxury Goods 8.6% Restaurants 8.4% Home Building 8.0% General Merchandise Stores 7.3% Home Improvement Retail 6.3% Department Stores 4.8% Advertising 3.1%
Percentages are based upon net assets. 10 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 7/9/97 ------------------------------------------------------------------------------------------- ICON Consumer Discretionary Fund 9.29% 0.22% 6.23% 4.65% ------------------------------------------------------------------------------------------- S&P 1500 Consumer Discretionary Index 8.61% 6.50% -0.62% 7.17% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% -2.06% 5.67% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The performance of the S&P 1500 Consumer Discretionary Index includes the reinvestment of dividends and capital gain distributions beginning on January 1, 2002. Additional information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON CONSUMER S&P 1500 CONSUMER DISRETIONARY FUND DISCRETIONARY INDEX S&P 1500 INDEX ----------------- ------------------- -------------- 7/9/97 10000 10000 10000 3/31/98 11141 13276 12321 3/31/99 10033 16371 14207 3/31/00 10504 17620 16994 3/31/01 9757 13937 13550 3/31/02 13380 14959 13837 3/31/03 9080 11069 10425 3/31/04 14178 16036 14275 3/31/05 14208 17079 15313
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 March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- COMMON STOCKS 99.7% UNITED STATES OF AMERICA 99.7% CONSUMER DISCRETIONARY 88.2% ADVERTISING 3.1% 121,300 Harte-Hanks, Inc. $ 3,343,028 139,600 Interpublic Group of Cos., Inc.(a) 1,714,288 ------------ 5,057,316 APPAREL ACCESSORIES & LUXURY GOODS 8.6% 158,300 Ashworth, Inc.(a) 1,803,037 82,700 Perry Ellis International, Inc.(a) 1,855,788 42,900 Polo Ralph Lauren Corp. 1,664,520 146,200 Quiksilver, Inc.(a) 4,244,186 77,900 V.F. Corp. 4,607,006 ------------ 14,174,537 APPAREL RETAIL 22.0% 64,200 Abercrombie & Fitch Co. 3,674,808 86,000 AnnTaylor Stores Corp.(a) 2,200,740 183,600 Cache, Inc.(a) 2,487,780 57,100 Foot Locker, Inc. 1,673,030 130,100 Hot Topic, Inc.(a) 2,842,685 98,000 Jos. A. Bank Clothiers, Inc.(a) 2,871,400 200,000 Pacific Sunwear of California, Inc.(a) 5,596,000 146,400 Ross Stores, Inc. 4,266,096 242,000 The Finish Line, Inc. 5,602,300 102,700 Too, Inc.(a) 2,533,609 49,300 Urban Outfitters, Inc.(a) 2,364,921 ------------ 36,113,369 COMPUTER & ELECTRONICS RETAIL 2.0% 31,900 Best Buy Co., Inc. 1,722,919 34,300 Electronics Boutique Holdings Corp.(a) 1,473,871 ------------ 3,196,790 DEPARTMENT STORES 4.8% 78,300 Federated Department Stores, Inc. 4,983,012 56,100 Kohl's Corp.(a) 2,896,443 ------------ 7,879,455
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- DISTRIBUTORS 0.9% 31,800 Building Materials Holding Corp. $ 1,414,464 ------------ FOOTWEAR 11.4% 123,300 Brown Shoe Co., Inc. 4,225,491 68,700 K-Swiss, Inc. 2,269,161 42,800 NIKE, Inc. - Class B 3,565,668 105,200 Reebok International Ltd. 4,660,360 56,900 Timberland Co. - Class A(a) 4,035,917 ------------ 18,756,597 GENERAL MERCHANDISE STORES 7.3% 92,600 Dollar General Corp. 2,028,866 97,800 Dollar Tree Stores, Inc. 2,809,794 81,500 Family Dollar Stores, Inc. 2,474,340 63,100 Shopko Stores, Inc.(a) 1,402,082 64,300 Target Corp. 3,216,286 ------------ 11,931,368 HOME FURNISHINGS 2.0% 38,100 Mohawk Industries Co.(a) 3,211,830 ------------ HOME IMPROVEMENT RETAIL 6.3% 82,800 Lowe's Cos., Inc. 4,727,052 63,900 The Home Depot, Inc. 2,443,536 71,900 The Sherwin- Williams Co. 3,162,881 ------------ 10,333,469 HOME BUILDING 8.0% 137,866 D.R. Horton, Inc. 4,031,202 83,300 Hovnanian Enterprises, Inc. - Class A(a) 4,248,300 47,000 M/I Homes, Inc. 2,299,710 41,800 Ryland Group, Inc. 2,592,436 ------------ 13,171,648 HOUSEWARES & SPECIALTIES 1.2% 37,000 Tupperware Corp. 753,320 36,500 The Yankee Candle Co. Inc.(a) 1,157,050 ------------ 1,910,370
12 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- Rx SPECIALTY STORES 9.4% 67,200 Borders Group, Inc. $ 1,788,864 44,300 Dick's Sporting Goods, Inc.(a) 1,627,139 65,200 Michaels Stores, Inc. 2,366,760 85,100 O'Reilly Automotive, Inc.(a) 4,215,003 115,800 Pier 1 Imports, Inc. 2,111,034 59,300 Staples, Inc. 1,863,799 68,500 West Marine, Inc.(a) 1,456,310 ------------ 15,428,909 TIRE & RUBBER 1.2% 144,500 The Goodyear Tire & Rubber Co.(a) 1,929,075 ------------ TOTAL CONSUMER DISCRETIONARY 144,509,197 INDUSTRIALS 1.5% AIRLINES 1.5% 134,800 SkyWest, Inc. 2,505,932 ------------ TOTAL INDUSTRIALS 2,505,932 LEISURE & CONSUMER STAPLES 8.4% RESTAURANTS 8.4% 43,100 Brinker International, Inc.(a) 1,561,082 78,500 CBRL Group, Inc. 3,242,050 53,200 Jack In the Box, Inc.(a) 1,973,720 110,800 Sonic Corp.(a) 3,700,720 91,500 The Cheesecake Factory, Inc. 3,243,675 ------------ TOTAL LEISURE & CONSUMER STAPLES 13,721,247
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- MATERIALS 1.6% CONSTRUCTION MATERIALS 1.6% 32,711 Eagle Materials, Inc. $ 2,647,628 ------------ TOTAL MATERIALS 2,647,628 ------------ TOTAL UNITED STATES OF AMERICA 163,384,004 ------------ TOTAL COMMON STOCKS (COST $145,429,767) 163,384,004 SHORT-TERM INVESTMENTS 0.1% VARIABLE RATE DEMAND NOTES 0.1% $199,715 American Family Demand Note, 2.4663%# 199,715 ------------ TOTAL VARIABLE RATE DEMAND NOTES 199,715 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $199,715) 199,715 ------------ TOTAL INVESTMENTS 99.8% (COST $145,629,482) 163,583,719 OTHER ASSETS LESS LIABILITIES 0.2% 300,925 ------------ NET ASSETS 100.0% $163,884,644 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005. Schedule of Investments 13 Management Overview ICON Energy Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 88.0% Top 10 Equity Holdings 24.2% Number of Stocks 67 Short-Term Investments 11.9% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 Petroleo Brasileiro S.A. 3.6% Petro-Canada 2.6% Suncor Energy, Inc. 2.6% Cal Dive International, Inc. 2.5% Shell Transport & Trading Co. plc 2.4% Petroleum Development Corp. 2.3% Ultra Petroleum Corp. 2.1% Tsakos Energy Navigation Ltd. 2.1% Superior Energy Services, Inc. 2.1% National-OilWell, Inc. 1.9% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Energy Fund appreciated 19.35% for the six-month period ended March 31, 2005, trailing the 22.75% return for its sector-specific benchmark, the S&P 1500 Energy Index, while outperforming the 7.45% return of its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2005 appear on page 18. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund benefited during the period from a positive correlation between crude oil prices and energy stock prices. As continued strong demand growth in the face of limited supply capacity pushed crude oil prices higher, energy company earnings strengthened, providing the necessary support for stock prices to trend upward. Nevertheless, the sector experienced considerable volatility as crude oil prices fluctuated. This is reflected in the Fund's six-month performance in which it outpaced the S&P 1500 Energy Index during the first half of the reporting period but was unable to keep pace with the large-cap dominated index during the second half. Leading integrated oil & gas companies Exxon Mobil, Occidental Petroleum and ConocoPhillips led the benchmark higher during this advance. However, our valuation-related lack of exposure to Exxon Mobil and Occidental Petroleum, and underweight exposure to ConocoPhillips, worked against the Fund. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. Equity markets registered substantial early gains, as investors welcomed lower energy prices, improving job creation, and decisive election-year 14 Management Overview [J.C. WALLER III, PORTFOLIO MANAGER PHOTO] J.C. Waller, III Portfolio Manager results. While this year-end rally suggested growing confidence in a sustainable economic recovery, macroeconomic news was decidedly mixed. Concern over the persistently weak U.S. dollar belied a widening trade deficit, even as higher short-term interest rates and inflation appeared to be manageable risks. However, these risks ultimately turned more worrisome when supply-demand issues pushed the price of crude oil futures from $40.71 a barrel in early December to $55.40 a barrel by period-end. As benchmark 10-year Treasury yields jumped from 3.99% in early February to 4.64% in late March, inflation fears intensified, weighing heavily on market sentiment. Energy stocks proved immune to this pressure, as the rise in crude oil prices bolstered valuations. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Given no convincing evidence to the contrary, valuation and relative strength readings led us to maintain relatively stable industry weightings during the period. The Fund remained overweighted in leading industry performers oil & gas refining & marketing & transportation, oil & gas exploration & production, and oil & gas equipment & services. Generally, the Fund was either slightly underweighted or equal weighted in oil & gas drilling, yet significantly underweighted in integrated oil & gas. While much of the sector hovered at fair value, we found the large-cap dominated integrated oil & gas industry, which comprises nearly 61% of the index, to be unattractive from a valuation standpoint. Among the Fund's top-performing stocks, offshore services company Cal Dive International enjoyed robust revenue gains, reflecting increases in production volumes and commodity prices. Also profiting from higher energy prices was Brazil's national oil company Petrobras, which reported earnings growth in both its upstream and downstream operations. Elsewhere, General Maritime, a provider of oil transportation services, profited from stronger spot charter rates. In contrast, oil and gas developers Harvest Natural Resources and Petroleum Development Corp. saw their market value decline. Harvest experienced drilling delays and production setbacks, while Petroleum Development reported accounting difficulties. Meanwhile, feedstock supplier TETRA Technologies, Inc. encountered integration issues amid several major acquisitions. None of these three stocks had met our sell criteria, so the Fund continued to own them at period-end. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE ENERGY SECTOR? A. Although the Energy sector as a whole continues to linger at fair value, we believe certain industries, particularly oil & gas refining & marketing & Management Overview 15 Management Overview (continued) ICON Energy Fund transportation, remain undervalued. While the other industry groups are featuring fewer bargains, selected companies are still trading at discounts to their estimated intrinsic value, and those are currently being targeted. As long as valuations do not become overextended, we remain cautiously optimistic. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund benefited during the period from a positive correlation between crude oil prices and energy stock prices. - Our methodology led us to overweight leading industry performer oil & gas refining & marketing & transportation. - We found the large-cap dominated integrated oil & gas industry, which comprises nearly 61% of the index, to be unattractive from a valuation standpoint. - Cal Dive International, Petrobras, and General Maritime were among the Fund's top-performing stocks. - Stocks that saw their market value decline during the period included Harvest Natural Resources, Petroleum Development Corp. and TETRA Technologies Inc. 16 Management Overview TOP INDUSTRIES March 31, 2005 Oil & Gas Exploration & Production 22.4% Integrated Oil & Gas 21.0% Oil & Gas Equipment & Services 17.8% Oil & Gas Refining, Marketing & Transportation 17.3% Oil & Gas Drilling 5.8% Construction Materials 1.6% Construction & Engineering 1.3% Industrial Machinery 0.8%
Percentages are based upon net assets. Management Overview 17 Management Overview (continued) ICON Energy Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 11/5/97 ------------------------------------------------------------------------------------------- ICON Energy Fund 19.35% 43.10% 21.06% 15.38% ------------------------------------------------------------------------------------------- S&P 1500 Energy Index 22.75% 47.21% 12.08% 9.68% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% -2.06% 5.17% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON ENERGY FUND S&P 1500 ENERGY INDEX S&P 1500 INDEX ---------------- --------------------- -------------- 11/5/97 10000 10000 10000 3/31/98 9330 9872 11683 3/31/99 6726 9455 13472 3/31/00 11092 11203 16115 3/31/01 15010 11875 12849 3/31/02 16385 12350 13121 3/31/03 13539 10230 9886 3/31/04 20154 13460 13536 3/31/05 28840 19815 14521
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. 18 Management Overview Schedule of Investments ICON Energy Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- COMMON STOCKS 88.0% UNITED STATES OF AMERICA 57.0% ENERGY 53.9% INTEGRATED OIL & GAS 2.4% 80,000 ConocoPhillips $ 8,627,200 155,000 Marathon Oil Corp. 7,272,600 ------------ 15,899,800 OIL & GAS DRILLING 2.9% 19,100 Helmerich & Payne, Inc. 758,079 15,600 Noble Corp. 876,876 400,000 Patterson-UTI Energy, Inc. 10,008,000 175,000 Unit Corp.(a) 7,904,750 ------------ 19,547,705 OIL & GAS EQUIPMENT & SERVICES 17.8% 375,000 Cal Dive International, Inc.(a) 16,987,500 200,000 FMC Technologies, Inc.(a) 6,636,000 375,000 Grand Prideco, Inc.(a) 9,060,000 125,000 Gulf Island Fabrication, Inc. 2,932,500 164,700 Hydril Co.(a) 9,620,127 275,000 Maverick Tube Corp.(a) 8,940,250 271,800 National- OilWell Varco, Inc.(a) 12,693,060 88,700 Oceaneering International, Inc.(a) 3,326,250 134,400 Offshore Logistics, Inc.(a) 4,478,208 425,000 Oil States International, Inc.(a) 8,733,750 800,000 Superior Energy Services, Inc.(a) 13,760,000 200,000 TETRA Technologies, Inc.(a) 5,688,000 250,000 Tidewater, Inc. 9,715,000 300,000 W-H Energy Services, Inc.(a) 7,179,000 ------------ 119,749,645
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- OIL & GAS EXPLORATION & PRODUCTION 22.4% 24,200 Anadarko Petroleum Corp. $ 1,841,620 50,000 Berry Petroleum Co. 2,572,500 450,000 Chesapeake Energy Corp. 9,873,000 117,514 Cimarex Energy Co.(a) 4,583,046 80,000 Comstock Resources, Inc.(a) 2,299,200 320,000 Denbury Resources, Inc.(a) 11,273,600 270,000 Encore Acquisition Co.(a) 11,151,000 475,000 Energy Partners Ltd.(a) 12,335,750 406,800 Harvest Natural Resources, Inc.(a) 4,836,852 525,000 KCS Energy, Inc.(a) 8,064,000 132,000 Newfield Exploration Co.(a) 9,802,320 21,200 Noble Energy, Inc. 1,442,024 150,036 Patina Oil & Gas Corp. 6,001,440 130,800 Penn Virginia Corp. 6,003,720 414,000 Petroleum Development Corp.(a) 15,603,660 403,900 Range Resources Corp. 9,435,104 325,000 Remington Oil & Gas Corp.(a) 10,244,000 283,100 Ultra Petroleum Corp.(a) 14,381,480 265,433 XTO Energy, Inc. 8,716,820 ------------ 150,461,136 OIL & GAS REFINING & MARKETING & TRANSPORTATION 8.4% 125,000 Ashland, Inc. 8,433,750 275,000 Frontier Oil Corp. 9,971,500 250,000 General Maritime Corp.(a) 12,110,000 475,000 OMI Corp. 9,096,250
Schedule of Investments 19 Schedule of Investments (continued) ICON Energy Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- 100,000 Overseas Shipholding Group, Inc. $ 6,291,000 534,300 The Williams Companies, Inc. 10,050,183 ------------ 55,952,683 ------------ TOTAL ENERGY 361,610,969 INDUSTRIALS 1.5% CONSTRUCTION & ENGINEERING 0.7% 153,000 URS Corp.(a) 4,398,750 INDUSTRIAL MACHINERY 0.8% 223,900 Flowserve Corp.(a) 5,792,293 ------------ TOTAL INDUSTRIALS 10,191,043 MATERIALS 1.6% CONSTRUCTION MATERIALS 1.6% 320,000 Headwaters, Inc.(a) 10,502,400 ------------ TOTAL MATERIALS 10,502,400 ------------ TOTAL UNITED STATES OF AMERICA 382,304,412 AMERICAN DEPOSITARY RECEIPT 11.4% BRAZIL 3.6% ENERGY 3.6% INTEGRATED OIL & GAS 3.6% 540,000 Petroleo Brasileiro S.A. - ADR 23,857,200 ------------ TOTAL ENERGY 23,857,200 ------------ TOTAL BRAZIL 23,857,200 DENMARK 1.0% ENERGY 1.0% OIL & GAS REFINING & MARKETING & TRANSPORTATION 1.0% 125,000 Dampskibsselskabet Torm - ADR 6,686,250 ------------ TOTAL ENERGY 6,686,250 ------------ TOTAL DENMARK 6,686,250 CHINA 2.4% ENERGY 2.4% INTEGRATED OIL & GAS 2.4% 240,000 China Petroleum and Chemical Corp. - ADR 9,784,800 100,000 Petrochina Co., Ltd. - ADR 6,322,000 ------------ TOTAL ENERGY 16,106,800 ------------ TOTAL CHINA 16,106,800
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- ITALY 0.7% ENERGY 0.7% INTEGRATED OIL & GAS 0.7% 36,000 ENI S.p.A. - ADR $ 4,685,760 ------------ TOTAL ENERGY 4,685,760 ------------ TOTAL ITALY 4,685,760 NETHERLANDS 2.4% ENERGY 1.8% INTEGRATED OIL & GAS 1.8% 200,000 Royal Dutch Petroleum - ADR 12,008,000 ------------ TOTAL ENERGY 12,008,000 INDUSTRIALS 0.7% CONSTRUCTION & ENGINEERING 0.6% 100,000 Chicago Bridge and Iron Co. N.V. - ADR 4,403,000 ------------ TOTAL INDUSTRIALS 4,403,000 ------------ TOTAL NETHERLANDS 16,411,000 SPAIN 1.3% ENERGY 1.3% INTEGRATED OIL & GAS 1.3% 330,000 Repsol YPF S.A. - ADR 8,761,500 TOTAL ENERGY 8,761,500 ------------ TOTAL SPAIN 8,761,500 ------------ TOTAL AMERICAN DEPOSITORY RECEIPT 76,508,510 BAHAMAS 1.7% ENERGY 1.7% OIL & GAS REFINING & MARKETING & TRANSPORTATION 1.7% 250,000 Teekay Shipping Corp. 11,237,500 ------------ TOTAL ENERGY 11,237,500 ------------ TOTAL BAHAMAS 11,237,500 BERMUDA 4.8% ENERGY 4.8% OIL & GAS DRILLING 1.8% 200,000 Nabors Industries Ltd.(a) 11,828,000 ------------
20 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- OIL & GAS REFINING & MARKETING & TRANSPORTATION 3.0% 318,008 Ship Finance International Ltd. $ 6,455,562 320,000 Tsakos Energy Navigation Ltd. 14,089,600 ------------ TOTAL ENERGY 20,545,162 ------------ TOTAL BERMUDA 32,373,162 CANADA 7.5% ENERGY 7.5% INTEGRATED OIL & GAS 6.4% 300,000 Petro-Canada 17,358,000 215,000 Petrokazakhstan, Inc. 8,636,550 425,000 Suncor Energy, Inc. 17,089,250 ------------ 43,083,800 OIL & GAS DRILLING 1.1% 94,900 Precision Drilling Corp.(a) 7,085,234 ------------ TOTAL ENERGY 50,169,034 ------------ TOTAL CANADA 50,169,034 UNITED KINGDOM 5.6% ENERGY 5.6% INTEGRATED OIL & GAS 2.4% 300,000 Shell Transport & Trading Co. PLC 16,308,000 ------------
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- OIL & GAS REFINING & MARKETING & TRANSPORTATION 3.2% 180,000 Frontline Ltd. $ 8,820,000 650,000 Top Tankers, Inc. 12,057,500 ------------ 20,877,500 ------------ TOTAL ENERGY 37,185,500 ------------ TOTAL UNITED KINGDOM 37,185,500 ------------ TOTAL COMMON STOCKS (COST $459,397,668) 589,778,118 SHORT-TERM INVESTMENTS 11.9% U.S. GOVERNMENT NOTE 10.2% $68,000,000 FHLB Discount Note, 2.2810%, 04/01/05 68,000,000 ------------ VARIABLE RATE DEMAND NOTE 1.7% 11,305,221 American Family Demand Note, 2.4663%# 11,305,221 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $79,305,221) 79,305,221 ------------ TOTAL INVESTMENTS 99.9% (COST $538,702,889) 669,083,339 OTHER ASSETS LESS LIABILITIES 0.1% 698,922 ------------ NET ASSETS 100.0% $669,782,261 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005 ADR American Depositary Receipt Dates shown on securities are the due dates of the obligation. Schedule of Investments 21 Management Overview ICON Financial Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 96.4% Top 10 Equity Holdings 27.8% Number of Stocks 48 Short-Term Investments 1.6% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 The Hartford Financial Services Group, Inc. 3.0% Loews Corp. 2.9% A.G. Edwards, Inc. 2.9% American Financial Corp. 2.8% Prudential Financial, Inc. 2.8% HCC Insurance Holdings, Inc. 2.8% Morgan Stanley 2.7% Philadelphia Consolidated Holding Corp. 2.7% The Goldman Sachs Group, Inc. 2.6% ING Groep N.V. 2.6% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Financial Fund gained 3.29% for the six-month period ended March 31, 2005, outperforming the 1.43% return for its sector-specific benchmark, the S&P 1500 Financials Index, but trailing the 7.45% return for its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2005 appear on page 26. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund reflected overall weakness in the Financials sector during the period, as investors became increasingly concerned that rising interest rates and the inflationary effects of higher oil prices would pressure the shares of financial services companies. Fallout from the New York attorney general's investigation into the insurance industry and credit quality trends in the consumer finance industry also contributed to widespread headline risk. Nevertheless, the Fund outpaced its narrow benchmark in large part due to a valuation-driven tilt toward the top-performing investment banking & brokerage industry, which on average was the Fund's largest industry weighting during the period. Valuations remained attractive, with the group trading at a discount to the broader market, while relative strength has compared favorably. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. Although the Fund participated in a broad year-end rally favoring economically sensitive industries, much of those gains were erased during the first quarter of 2005. As strong corporate earnings and sound underlying 22 Management Overview [DEREK ROLLINGSON PHOTO] Derek Rollingson Portfolio Manager fundamentals gave way to perceptions of slowing growth and rising prices, stocks abruptly retreated before settling into a volatile trading range. While defensive groups fared better amid this sideways market, cyclical industries gave back considerable ground. Investment performance, a key "product" of the Financials sector, further exacerbated an already difficult environment, as mutual fund flows proved weak and considerable assets remained on the sidelines. For that reason, companies with diverse revenue streams, capital markets exposure and less reliance on spread revenue appeared to best weather the storm, even as investor sentiment reflected pervasive negativity. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. The Fund's largest industry exposure, investment banking & brokerage, turned in the strongest performance during the period, capitalizing on an overweight position relative to the benchmark. Comprising 9.9% of net assets at the start of the period, by period-end the industry accounted for 19.6% of net assets, due to its attractive V/P and RS characteristics. Also contributing to Fund performance was life & health insurance, which continues to benefit from demographic trends supporting an aging population. Meanwhile, regional banks remained among the weakest industries in the sector and consequently worked against Fund performance. Having begun the fiscal year at 12.0% of net assets, by period-end all exposure had been removed. Conversely, multi-line insurance was increased to 11.6% from 7.4%, as V/P and RS improved despite concerns surrounding from the New York State insurance probe. Among the Fund's leading stock contributors, brokerage firm A.G. Edwards Inc. profited from a pickup in market activity coupled with effective cost controls. By focusing on fast-growing segments of the insurance business, particularly the Japanese market, Prudential Financial Inc. repeatedly posted better-than-expected earnings. Elsewhere, global investment banking giant Goldman Sachs Group Inc. saw transaction volume increase after two quarterly declines. In contrast, specialty finance company First Cash Financial Inc. slid when Federal regulators announced new guidelines governing the payday lending business. Multi-line insurer American International Group Inc. also struggled when it was named in the New York State insurance investigation, as did residential mortgage lender Countrywide Financial Corp. upon revealing accounting irregularities. Although the Fund continues to hold First Cash Financial, Countrywide and AIG were liquidated due to declining relative strength. Management Overview 23 Management Overview (continued) ICON Financial Fund Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE FINANCIALS SECTOR? A. While sector valuations currently demonstrate considerable upside potential, we remain on the lookout for market leadership that has been slow to develop. In light of these still challenging conditions, we continue to apply our discipline, investing with a keen eye toward valuation and relative strength. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund reflected overall weakness in the Financials sector though outperformed its narrow benchmark. - Our valuation methodology led us to overweight investment banking & brokerage, the Fund's largest industry exposure and top performer. - Regional banking was among the sector's weakest industries during the period and consequently worked against Fund performance. - A.G. Edwards Inc., Prudential Financial Inc. and Goldman Sachs Group Inc. all made meaningful individual contributions to Fund performance - Principal company detractors included First Cash Financial Inc., American International Group Inc. and Countrywide Financial Corp. 24 Management Overview TOP 10 INDUSTRIES March 31, 2005 Investment Banking & Brokerage 19.6% Consumer Finance 12.8% Property & Casualty Insurance 12.5% Life & Health Insurance 11.7% Multi-Line Insurance 11.6% Asset Management & Custody Banks 10.9% Other Diversified Financial Services 6.2% Diversified Banks 4.9% Reinsurance 4.2% Thrifts & Mortgage Finance 1.2%
Percentages are based upon net assets. Management Overview 25 Management Overview (continued) ICON Financial Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 7/1/97 ------------------------------------------------------------------------------------------- ICON Financial Fund 3.29% 3.29% 13.89% 10.54% ------------------------------------------------------------------------------------------- S&P 1500 Financials Index 1.43% -0.29% 6.31% 8.57% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% -2.06% 5.91% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON FINANCIAL FUND S&P 1500 FINANCIALS INDEX S&P 1500 INDEX ------------------- ------------------------- -------------- 7/1/97 10000 10000 10000 3/31/98 12003 13426 12552 3/31/99 11878 14190 14474 3/31/00 11342 13923 17314 3/31/01 15598 15435 13804 3/31/02 17625 16526 14097 3/31/03 13011 13027 10621 3/31/04 21045 18958 14543 3/31/05 21736 18903 15601
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund on its inception date of 7/1/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. 26 Management Overview Schedule of Investments ICON Financial Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 96.4% UNITED STATES OF AMERICA 93.8% FINANCIAL 93.8% ASSET MANAGEMENT & CUSTODY BANKS 10.9% 75,300 Affiliated Managers Group, Inc.(a) $ 4,670,859 105,000 American Capital Strategies, Ltd. 3,298,050 166,400 Eaton Vance Corp. 3,900,416 96,400 Investors Financial Services Corp. 4,714,924 53,300 Legg Mason, Inc. 4,164,862 43,100 SEI Investments Co. 1,558,496 ------------ 22,307,607 CONSUMER FINANCE 12.8% 161,700 AmeriCredit Corp.(a) 3,790,248 49,000 Capital One Financial Corp. 3,663,730 79,000 First Cash Financial Services, Inc.(a) 1,672,430 191,000 Metris Companies, Inc.(a) 2,213,690 296,100 Providian Financial Corp.(a) 5,081,076 102,800 SLM Corp. 5,123,552 175,700 World Acceptance Corp.(a) 4,483,864 ------------ 26,028,590 DIVERSIFIED BANKS 4.9% 92,600 Bank of America Corp. 4,083,660 80,600 Wachovia Corp. 4,103,346 31,200 Wells Fargo & Co. 1,865,760 ------------ 10,052,766 INVESTMENT BANKING & BROKERAGE 19.6% 132,500 A.G. Edwards, Inc. 5,936,001 135,400 E*TRADE Financial Corp. 1,624,800 260,700 Investment Technology Group, Inc.(a) 4,562,250 491,200 Labranche and Co., Inc.(a) 4,568,160
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 47,100 Lehman Brothers Holding, Inc. $ 4,434,936 96,700 Morgan Stanley 5,536,075 123,000 Raymond James Financial, Inc. 3,726,900 43,700 The Bear Stearns Cos., Inc. 4,365,630 48,700 The Goldman Sachs Group, Inc. 5,356,513 ------------ 40,111,265 LIFE & HEALTH INSURANCE 11.7% 110,500 AmerUs Group Co. 5,221,125 54,450 Delphi Financial Group, Inc. 2,341,350 60,900 Lincoln National Corp. 2,749,026 78,800 MetLife, Inc. 3,081,080 100,100 Prudential Financial, Inc. 5,745,740 55,300 StanCorp Financial Group, Inc. 4,688,334 ------------ 23,826,655 MULTI-LINE INSURANCE 11.6% 160,700 Allmerica Financial Corp.(a) 5,777,165 156,100 HCC Insurance Holdings, Inc. 5,644,576 81,800 Loews Corp. 6,015,572 90,400 The Hartford Financial Services Group, Inc. 6,197,824 ------------ 23,635,137 OTHER DIVERSIFIED FINANCIAL SERVICES 3.6% 84,200 Citigroup, Inc. 3,783,948 93,600 Principal Financial Group, Inc. 3,602,664 ------------ 7,386,612 PROPERTY & CASUALTY INSURANCE 12.5% 89,610 Fidelity National Financial, Inc. 2,951,753 79,800 LandAmerica Financial Group, Inc. 3,992,394 71,400 Philadelphia Consolidated Holding Corp.(a) 5,535,642 111,600 Selective Insurance Group, Inc. 5,159,268
Schedule of Investments 27 Schedule of Investments (continued) ICON Financial Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 79,000 The Allstate Corp. $ 4,270,740 73,400 W.R. Berkley Corp. 3,640,640 ------------ 25,550,437 REINSURANCE 4.2% 47,400 Everest Re Group Ltd. 4,034,214 67,500 Transatlantic Holdings, Inc. 4,469,850 ------------ 8,504,064 SPECIALIZED FINANCE 0.8% 276,900 Instinet Group, Inc.(a) 1,628,172 ------------ THRIFTS & MORTGAGE INSURANCE 1.2% 72,900 IndyMac Bancorp, Inc. 2,478,600 ------------ TOTAL FINANCIAL 191,509,905 ------------ TOTAL UNITED STATES OF AMERICA 191,509,905 AMERICAN DEPOSITARY RECEIPT 2.6% NETHERLANDS 2.6% FINANCIAL 2.6% OTHER DIVERSIFIED FINANCIAL SERVICES 2.6% 174,658 ING Groep NV - ADR 5,279,911 ------------ TOTAL FINANCIAL 5,279,911 ------------ TOTAL NETHERLANDS 5,279,911 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 5,279,911 ------------ TOTAL COMMON STOCKS (COST $174,446,865) 196,789,816
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- SHORT-TERM INVESTMENTS 1.6% U.S. GOVERNMENT AGENCIES 1.4% $2,900,000 FHLB Discount Note, 2.2810%, 4/1/05 $ 2,900,000 ------------ VARIABLE DEMAND RATE NOTES 0.2% 362,176 American Family Demand Note, 2.4663%# 362,176 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $3,262,176) 3,262,176 ------------ TOTAL INVESTMENTS 98.0% (COST $177,709,041) 200,051,992 OTHER ASSETS LESS LIABILITIES 2.0% 4,040,149 ------------ NET ASSETS 100.0% $204,092,141 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005 ADR American Depositary Receipt Dates shown on securities are the due dates of the obligation. 28 Schedule of Investments Management Overview ICON Healthcare Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 97.7% Top 10 Equity Holdings 25.7% Number of Stocks 64 Short-Term Investments 2.5% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 UnitedHealth Group, Inc. 3.7% Aetna, Inc. 3.0% Centene Corp. 2.7% AMERIGROUP Corp. 2.5% Wellpoint, Inc. 2.5% Humana, Inc. 2.3% CIGNA Corp. 2.3% WellChoice, Inc. 2.3% Coventry Health Care, Inc. 2.2% HCA, Inc. 2.2% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Healthcare Fund appreciated 20.40% for the six-month period ended March 31, 2005, outperforming the 5.53% return for its sector-specific benchmark, the S&P 1500 Healthcare Index, in addition to the 7.45% return for its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2005 appear on page 33. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund's focus on valuation benefited relative performance during the six- month period. Given the breadth of stocks trading at significant discounts to intrinsic value as well as the overall market, the Fund was rewarded in the fourth quarter of 2004 when investors bid shares higher in a broad cyclical rally. Although this upward sector move mirrored the cyclical rally, the defensive nature of Healthcare stocks enabled the Fund to withstand subsequent setbacks during the second half of the reporting period. Despite the presence of value and relative strength within the sector, a disparity in industry returns was noticeable. While the managed health care, health care facilities and health care services industries were among the leaders, biotechnology and pharmaceuticals proved to be laggards. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. For the first half of the reporting period, improving fundamentals and strong growth in corporate profits drove stock prices higher. Investors warmed to an easing of energy prices, positive news on the job front and the removal of election-year uncertainties, all of which suggested an increasingly sustainable and resilient U.S. economy. Management Overview 29 Management Overview (continued) ICON Healthcare Fund While this heightened expectations for the coming year, the second half of the reporting period got off to a shaky start, as surging commodity prices pushed interest rates higher and rekindled inflation fears. Meanwhile, a widening U.S. trade gap in the face of a persistently weak dollar also weighed heavily on investors. As these distractions permeated the market, stocks came under considerable downward pressure, erasing a portion of the previous quarter's gains. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Among the Fund's leading industry contributors during the period, managed health care, replete with well-managed companies and a powerfulcombination of value and relative strength, proved to be a standout.In gravitating toward this compelling market theme, the Fund took asignificantly overweight position, which boosted upside performance. The Fund's lack of exposure to pharmaceuticals, which comprise over half of the S&P 1500 Healthcare Index, also attributed positively. Because overall industry weakness did not warrant their inclusion, the Fund was able to avoid the fallout associated with the recall of several popular anti-inflammatory drugs. Conversely, several of the Fund's health care equipment holdings worked against performance. On the company level, notable contributors included Centene Corp., a provider of Medicaid and Medicaid-related programs, which benefited from a series of new contracts. Managed healthcare giant Aetna Inc. also advanced as management raised its expectations for earnings and membership growth. Meanwhile, healthcare services provider Humana Inc. capitalized on consolidation trends, acquiring CarePlus Health Plans. In contrast, principal detractors included medical device manufacturer Boston Scientific, which encountered legal difficulties involving a patent infringement suit and was sold from the Fund. Elsewhere, information services firm Dendrite International retreated on concerns that consolidation efforts would dilute earnings, while Stryker Corp. saw its shares slump when the maker of orthopedic implants faced a Justice Department probe into its sales and marketing practices. The Fund continued to own Dendrite International and Stryker Corp. as they had not met our sell criteria. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE HEALTHCARE SECTOR? A. Even as investors come to recognize the significant relative discounts within the Healthcare sector, value remains widespread. Managed health care, health care facilities and health care services all remain attractive based on valuation, and continue to be worthy of their overweight positions. Although pharmaceuticals and biotechnology are trading at deep discounts to 30 Management Overview [J.C. WALLER III PHOTO] J.C. Waller, III Portfolio Manager estimated fair value, we are still looking for more convincing signs of relative strength. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund's focus on valuation benefited relative performance as it was able to find value throughout the Healthcare sector. - Our methodology led us to significantly overweight industry standout managed health care, a compelling market theme combining value and relative strength. - Conversely, weak relative strength readings convinced us to avoid pharmaceuticals, which came under severe pressure due to safety concerns. - Centene Corp., Aetna Inc. and Humana Inc. were among the Fund's strongest-performing holdings during the period. - Stocks that detracted from performance included Boston Scientific, Dendrite International and Stryker Corp. Management Overview 31 Management Overview (continued) ICON Healthcare Fund TOP INDUSTRIES March 31, 2005 Managed Health Care 27.1% Health Care Services 24.4% Health Care Facilities 14.2% Health Care Equipment 14.0% Health Care Supplies 11.0% Health Care Distributors 3.6% Biotechnology 2.5% Office Services & Supplies 0.9%
Percentages are based upon net assets. 32 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 2/24/97 ------------------------------------------------------------------------------------------- ICON Healthcare Fund 20.40% 16.90% 12.89% 13.53% ------------------------------------------------------------------------------------------- S&P 1500 Healthcare Index 5.53% 2.67% 3.36% 8.20% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% -2.06% 6.96% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
S&P 1500 HEALTHCARE ICON HEALTHCARE FUND INDEX S&P 1500 INDEX -------------------- ------------------- -------------- 2/24/97 10000 10000 10000 3/31/98 13319 14014 13874 3/31/99 13500 17464 15999 3/31/00 15234 16050 19137 3/31/01 18731 18405 15258 3/31/02 19845 19189 15582 3/31/03 17337 15824 11740 3/31/04 23895 18439 16075 3/31/05 27934 18932 17244
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. Management Overview 33 Schedule of Investments ICON Healthcare Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 97.7% UNITED STATES OF AMERICA 97.1% HEALTH CARE 96.2% BIOTECHNOLOGY 2.5% 70,000 Martek Biosciences Corp.(a) $ 4,073,300 53,200 Serologicals Corp.(a) 1,300,208 110,000 United Therapeutics Corp.(a) 5,026,450 ------------ 10,399,958 HEALTH CARE DISTRIBUTORS 3.6% 170,000 Henry Schein, Inc.(a) 6,092,800 150,000 Owens & Minor, Inc. 4,072,500 96,000 Patterson Cos., Inc.(a) 4,795,200 ------------ 14,960,500 HEALTH CARE EQUIPMENT 14.0% 165,000 Baxter International, Inc. 5,606,700 92,700 Beckman Coulter, Inc. 6,159,915 87,300 Becton, Dickinson & Co. 5,100,066 79,200 Biosite, Inc.(a) 4,120,776 238,500 CONMED Corp.(a) 7,183,620 138,700 Diagnostic Products Corp. 6,699,210 108,000 Integra LifeSciences Holdings Corp.(a) 3,803,760 47,600 Invacare Corp. 2,124,388 144,500 Matthews International Corp. 4,733,820 57,400 ResMed, Inc.(a) 3,237,360 70,000 Respironics, Inc.(a) 4,078,900 120,000 Stryker Corp. 5,353,200 ------------ 58,201,715 HEALTH CARE FACILITIES 14.2% 185,800 AmSurg Corp.(a) 4,700,740 250,000 Community Health Systems, Inc.(a) 8,727,500 170,000 HCA, Inc. 9,106,900
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 125,000 Health Management Associates Inc. $ 3,272,500 200,000 LifePoint Hospitals, Inc.(a) 8,768,000 140,000 Manor Care, Inc. 5,090,400 138,000 Triad Hospitals, Inc.(a) 6,913,800 134,000 United Surgical Partners International, Inc.(a) 6,133,180 120,000 Universal Health Services, Inc. 6,288,000 ------------ 59,001,020 HEALTH CARE SERVICES 23.8% 208,500 American Healthways, Inc.(a) 6,884,670 173,200 Caremark Rx, Inc.(a) 6,889,896 90,500 Cerner Corp.(a) 4,752,155 172,100 Cross Country Healthcare, Inc.(a) 2,884,396 190,500 DaVita, Inc.(a) 7,972,425 351,500 Dendrite International, Inc.(a) 4,935,060 83,100 Express Scripts, Inc.(a) 7,245,489 175,000 Laboratory Corporation of America Holdings(a) 8,435,000 136,700 Lincare Holdings, Inc.(a) 6,046,241 150,000 Medco Health Solutions, Inc.(a) 7,435,500 162,800 Pharmaceutical Product Development, Inc.(a) 7,887,660 85,400 Quest Diagnostics, Inc. 8,978,102 248,300 RehabCare Group, Inc.(a) 7,128,693 200,050 Renal Care Group, Inc.(a) 7,589,897 109,500 SFBC International, Inc.(a) 3,858,780 ------------ 98,923,964
34 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- HEALTH CARE SUPPLIES 11.0% 158,200 Advanced Medical Optics, Inc.(a) $ 5,728,422 193,300 Arrow International, Inc. 6,639,855 71,600 DENTSPLY International, Inc. 3,895,756 81,500 Edwards Lifesciences Corp.(a) 3,522,430 110,000 Gen-Probe Inc.(a) 4,901,600 110,300 Surmodics, Inc.(a) 3,519,673 66,500 Sybron Dental Specialties, Inc.(a) 2,387,350 116,700 The Cooper Cos., Inc. 8,507,430 268,500 West Pharmaceutical Services, Inc. 6,417,150 ------------ 45,519,666 MANAGED HEALTH CARE 27.1% 167,200 Aetna, Inc. 12,531,640 289,600 AMERIGROUP Corp.(a) 10,587,776 378,600 Centene Corp.(a) 11,354,214 105,000 CIGNA Corp. 9,376,500 135,000 Coventry Health Care, Inc.(a) 9,198,900 294,700 Humana, Inc.(a) 9,412,718 159,900 Molina Healthcare, Inc.(a) 7,369,791 126,600 PacifiCare Health Systems, Inc.(a) 7,206,072 161,112 UnitedHealth Group, Inc. 15,366,862 175,700 WellChoice, Inc.(a) 9,366,567 83,000 Wellpoint, Inc.(a) 10,404,050 ------------ 112,175,090 ------------ TOTAL HEALTH CARE 399,181,913
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- INDUSTRIALS 0.9% OFFICE SERVICES & SUPPLIES 0.9% 99,500 Mine Safety Appliances Co. $ 3,854,630 ------------ TOTAL INDUSTRIALS 3,854,630 ------------ TOTAL UNITED STATES OF AMERICA 403,036,543 AMERICAN DEPOSITARY RECEIPT 0.6% IRELAND 0.6% HEALTH CARE 0.6% HEALTH CARE SERVICES 0.6% 70,100 Icon PLC-ADR(a) 2,630,152 ------------ TOTAL HEALTH CARE 2,630,152 ------------ TOTAL IRELAND 2,630,152 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 2,630,152 ------------ TOTAL COMMON STOCKS (COST $312,925,110) 405,666,695 SHORT-TERM INVESTMENTS 2.5% U.S. GOVERNMENT AGENCIES 2.2% $9,300,000 FHLB Discount Note, 2.2810%, 4/1/05 9,300,000 ------------ VARIABLE RATE DEMAND NOTES 0.3% 1,328,912 American Family Demand Note, 2.4663%# 1,328,912 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $10,628,912) 10,628,912 ------------ TOTAL INVESTMENTS 100.2% (COST $323,554,022) 416,295,607 OTHER ASSETS LESS LIABILITIES (0.2)% (897,288) ------------ NET ASSETS 100.0% $415,398,319 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005 ADR American Depositary Receipt Date shown on securities are the due dates of the obligation. Schedule of Investments 35 Management Overview ICON Industrials Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 98.0% Top 10 Equity Holdings 22.2% Number of Stocks 85 Short-Term Investments 1.9% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 Labor Ready, Inc. 2.8% Norfolk Southern Corp. 2.5% The Manitowoc Co, Inc. 2.4% L-3 Communications Holdings, Inc. 2.3% Terex Corporation 2.1% Goodrich Corp. 2.1% Oshkosh Truck Corp. 2.0% Simpson Manufacturing Co., Inc. 2.0% Burlington Northern Santa Fe Corp. 2.0% Lockheed Martin Corp. 2.0% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Industrials Fund advanced 12.74% for the six-month period ended March 31, 2005, outperforming both the 8.80% return for its sector-specific benchmark, the S&P 1500 Industrials Index, and the 7.45% return of its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2005 appear on page 40. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund's valuation-driven investment approach captured significant upside in conjunction with a year-end cyclical rally favoring economically sensitive industries. As is often the case, this type of environment was conducive to the Industrials sector, which tends to perform best during times of economic expansion. Against this seemingly strengthening backdrop, bargains were plentiful, and helped to bolster returns as stocks closed the gap between market price and intrinsic value. Later in the period, concerns over possible economic softening, rising commodity costs, and perceived inflationary pressures severely dampened investor sentiment. While cyclical industries bore the brunt of subsequent market pullbacks, our value discipline proved increasingly resilient, enabling the Fund to stay well ahead of its benchmarks. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. Inflation fears intensified during the period, as investors questioned whether higher energy and raw material costs would curb economic growth and, more specifically, manufacturing output. Although we continued to see limited pricing power and virtually no signs of runaway inflation, the first-quarter surge in crude oil futures and Treasury yields shaved earlier gains 36 Management Overview [J.C. WALLER, III PHOTO] J.C. Waller, III Portfolio Manager amid concerns that recent momentum in capital spending would ultimately come under pressure. This was in stark contrast to the first half of the reporting period, when expectations for a sustainable economic recovery led to robust gains in cyclical stocks. While the year-end rally reportedly gathered steam thanks to lower energy prices, improving job creation and decisive election-year results, we believe that there was no triggering event, and that the rise in stocks, particularly those we viewed as underpriced, was part of a natural move back toward fair value. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Despite higher fuel costs, transportation stocks in the railroads, trucking, and marine industries turned in strong returns due to improving manufacturing output and freight volumes. The Fund was tilted toward these leading industry themes based on valuation and relative strength, thereby profiting from direct exposure to the expanding economy. Building products and industrial machinery were also actively overweighted, as value and relative strength persisted in both industries. Furthermore, the Fund benefited from its lack of exposure to two benchmark bellwethers, General Electric and United Parcel Service, both of which underperformed the sector-specific index. Although overvaluation led to their exclusion, active avoidance of highly weighted benchmark components points to the delicate nature of comparing oneself to a market-cap weighted index. As for the Fund's top performance contributors, temporary employment agency Labor Ready Inc. turned higher gross margins and improved cost controls into better-than-expected earnings. Oshkosh Truck also advanced, as the ongoing construction boom boosted demand for cement mixers and other specialty vehicles. Meanwhile, railroad operator Burlington Northern Santa Fe Corp. was successful in instituting fuel surcharges while experiencing double-digit volume growth. In contrast, detractors included SOURCECORP, a provider of document outsourcing services, which fell after it restated financial results due to a revenue recognition error. We liquidated this stock as its relative strength declined. Insituform Technologies, a provider of pipeline rehabilitation services, also retreated when higher labor and overhead costs led to a gross margin adjustment. Elsewhere, Coinstar Inc., an operator of coin counting machines, declined after reporting flat earnings despite a doubling of revenue. The latter two companies had not met our sell criteria so the Fund continued to own them at period-end. Management Overview 37 Management Overview (continued) ICON Industrials Fund Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INDUSTRIALS SECTOR? A. Although value remains widespread across the sector, inflation fears and growth concerns have led to a difficult environment. While the economic expansion will likely continue, the pace could very well decelerate. In light of these conditions, we continue to apply our discipline, investing on the basis of valuation and relative strength. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund's valuation-driven approach captured sizable gains in conjunction with a year-end rally favoring economically sensitive industries. - Our methodology led us to overweight transportation industries such as railroads, trucking and marine, all of which turned in strong returns. - The Fund benefited from avoiding benchmark bellwethers General Electric and United Parcel Service, both of which underperformed the sector-specific index. - Labor Ready Inc., Oshkosh Truck and Burlington Northern Santa Fe Corp. were among the Fund's top performance contributors. - Stocks that detracted from performance included SOURCECORP, Insituform Technologies and Coinstar Inc. 38 Management Overview TOP 10 INDUSTRIES March 31, 2005 Aerospace & Defense 14.5% Industrial Machinery 12.7% Building Products 12.3% Railroads 12.3% Trucking 9.2% Construction & Farm Machinery & Heavy Trucks 6.3% Diversified Commercial Services 5.9% Employment Services 5.3% Electrical Components & Equipment 4.0% Construction & Engineering 3.1%
Percentages are based upon net assets. Management Overview 39 Management Overview (continued) ICON Industrials Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 5/9/97 ------------------------------------------------------------------------------------------- ICON Industrials Fund 12.74% 16.73% 5.05% 4.50% ------------------------------------------------------------------------------------------- S&P 1500 Industrials Index 8.80% 17.17% 3.03% 6.74% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% -2.06% 6.88% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON INDUSTRIALS FUND S&P 1500 INDUSTRIALS INDEX S&P 1500 INDEX --------------------- -------------------------- -------------- 5/9/97 10000 10000 10000 3/31/98 12995 12970 13604 3/31/99 11503 12572 15687 3/31/00 11068 14412 18764 3/31/01 10706 13632 14961 3/31/02 13164 14377 15278 3/31/03 8462 10266 11511 3/31/04 12127 14277 15761 3/31/05 14155 16729 16908
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. 40 Management Overview Schedule of Investments ICON Industrials Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 98.0% UNITED STATES OF AMERICA 92.1% INDUSTRIALS 90.2% AEROSPACE & DEFENSE 13.3% 17,000 Alliant Techsystems, Inc.(a) $ 1,214,650 75,300 Armor Holdings, Inc.(a) 2,792,877 37,800 Curtiss-Wright Corp. 2,154,600 93,400 EDO Corp. 2,806,670 22,900 General Dynamics Corp. 2,451,445 121,900 Goodrich Corp. 4,667,551 71,600 L-3 Communications Holdings, Inc. 5,085,032 71,700 Lockheed Martin Corp. 4,378,002 76,400 Northrop Grumman Corp. 4,124,072 ------------ 29,674,899 AIRLINES 2.6% 185,000 Continental Airlines, Inc. - Class B(a) 2,227,400 134,100 Frontier Airlines, Inc.(a) 1,405,368 114,300 SkyWest, Inc. 2,124,837 ------------ 5,757,605 BUILDING PRODUCTS 12.3% 42,600 American Standard Companies, Inc. 1,980,048 50,000 American Woodmark Corp. 1,814,000 84,500 Apogee Enterprises, Inc. 1,206,660 110,200 ElkCorp 4,238,292 143,600 Griffon Corp.(a) 3,074,476 123,400 Masco Corp. 4,278,278 109,100 NCI Building Systems, Inc.(a) 4,211,260 145,800 Simpson Manufacturing Co., Inc. 4,505,220 47,000 Trex Company, Inc.(a) 2,087,270 ------------ 27,395,504
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMERCIAL PRINTING 0.4% 27,500 John H. Harland Co. $ 944,900 ------------ CONSTRUCTION & ENGINEERING 2.1% 33,000 Granite Construction, Inc. 866,910 75,000 Insituform Technologies, Inc.(a) 1,088,250 100,000 The Shaw Group, Inc.(a) 2,180,000 18,300 URS Corp.(a) 526,125 ------------ 4,661,285 CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS 6.3% 14,000 Caterpillar, Inc. 1,280,160 38,300 Lindsay Manufacturing Co. 730,764 55,300 Oshkosh Truck Corp. 4,534,047 109,000 Terex Corp.(a) 4,719,700 30,500 The Toro Co. 2,699,250 ------------ 13,963,921 DIVERSIFIED COMMERCIAL SERVICES 5.9% 85,200 Bright Horizons Family Solutions, Inc.(a) 2,874,648 32,200 ChoicePoint, Inc.(a) 1,291,542 66,000 Coinstar, Inc.(a) 1,399,200 42,400 Equifax, Inc. 1,301,256 26,200 Portfolio Recovery Associates, Inc.(a) 891,586 205,950 Rollins, Inc. 3,830,670 48,700 West Corp.(a) 1,558,400 ------------ 13,147,302 ELECTRICAL COMPONENTS & EQUIPMENT 4.0% 43,000 Acuity Brands, Inc. 1,161,000 79,000 AMETEK, Inc. 3,179,750 34,800 Cooper Industries, Ltd. 2,488,896 21,300 Hubbell, Inc. 1,088,430 36,500 Regal-Beloit Corp. 1,050,835 ------------ 8,968,911
Schedule of Investments 41 Schedule of Investments (continued) ICON Industrials Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- EMPLOYMENT SERVICES 5.3% 89,200 Administaff, Inc. $ 1,302,320 338,200 Labor Ready, Inc.(a) 6,307,430 200,000 On Assignment, Inc.(a) 1,020,000 84,600 Resources Connection, Inc.(a) 1,770,678 139,000 Spherion Corp.(a) 1,041,110 18,500 Volt Information Sciences, Inc.(a) 446,775 ------------ 11,888,313 ENVIRONMENTAL SERVICES 1.8% 21,800 Stericycle, Inc.(a) 963,560 88,800 Waste Connections, Inc.(a) 3,085,800 ------------ 4,049,360 INDUSTRIAL CONGLOMERATES 1.5% 44,200 Textron, Inc. 3,298,204 ------------ INDUSTRIAL MACHINERY 12.7% 23,600 Actuant Corp.(a) 1,060,112 105,600 Albany International Corp. - Class A 3,260,928 56,600 Briggs & Stratton Corp. 2,060,806 20,400 Eaton Corp. 1,334,160 140,500 Flowserve Corp.(a) 3,634,735 39,000 Harsco Corp. 2,324,790 49,000 Ingersoll-Rand Co. Ltd. - Class A 3,902,850 109,500 Kaydon Corp. 3,438,300 22,300 Robbins & Myers, Inc. 490,823 134,900 The Manitowoc Co., Inc. 5,448,611 38,700 Watts Water Technologies, Inc. - Class A 1,262,007 ------------ 28,218,122 MARINE 1.0% 27,400 Alexander & Baldwin, Inc. 1,128,880 28,000 Kirby Corp.(a) 1,176,840 ------------ 2,305,720
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- OFFICE SERVICES & SUPPLIES 1.6% 30,000 Brady Corp. $ 970,500 55,500 United Stationers, Inc.(a) 2,511,375 ------------ 3,481,875 RAILROADS 8.6% 82,400 Burlington Northern Santa Fe Corp. 4,443,832 93,200 CSX Corp. 3,881,780 111,000 Genesee & Wyoming, Inc.(a) 2,876,010 151,100 Norfolk Southern Corp. 5,598,255 193,000 RailAmerica, Inc.(a) 2,408,640 ------------ 19,208,517 TRADING COMPANIES & DISTRIBUTORS 1.6% 80,000 Applied Industrial Technology, Inc. 2,176,000 21,000 W.W. Grainger, Inc. 1,307,670 ------------ 3,483,670 TRUCKING 9.2% 81,400 Arkansas Best Corp. 3,075,292 138,300 Knight Transportation, Inc. 3,411,861 111,025 Old Dominion Freight Line, Inc.(a) 3,458,429 165,000 Swift Transportation Co., Inc.(a) 3,653,100 127,650 Werner Enterprises, Inc. 2,480,240 73,600 Yellow Roadway Corp.(a) 4,308,543 ------------ 20,387,465 ------------ TOTAL INDUSTRIALS 200,835,573 MATERIALS 1.9% STEEL 1.9% 106,500 Reliance Steel & Aluminum Co. 4,261,065 ------------ TOTAL MATERIALS 4,261,065 ------------ TOTAL UNITED STATES OF AMERICA 205,096,638
42 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- AMERICAN DEPOSITARY RECEIPT 2.2% BRAZIL 1.2% INDUSTRIALS 1.2% AEROSPACE & DEFENSE 1.2% 86,700 Empresa Brasileira de Aeronautica S.A. - ADR $ 2,713,710 ------------ TOTAL INDUSTRIALS 2,713,710 ------------ TOTAL BRAZIL 2,713,710 NETHERLANDS 1.0% INDUSTRIALS 1.0% CONSTRUCTION & ENGINEERING 1.0% 50,000 Chicago Bridge and Iron Co. N.V. - ADR 2,201,500 ------------ TOTAL INDUSTRIALS 2,201,500 ------------ TOTAL NETHERLANDS 2,201,500 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 4,915,210 CANADA 3.7% INDUSTRIALS 3.7% RAILROADS 3.7% 65,100 Canadian National Railway Co. 4,121,481 112,000 Canadian Pacific Railway Ltd. 4,028,640 ------------
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- TOTAL INDUSTRIALS $ 8,150,121 ------------ TOTAL CANADA 8,150,121 ------------ TOTAL COMMON STOCKS (COST $162,294,881) 218,161,969 SHORT-TERM INVESTMENTS 1.9% U.S. GOVERNMENT AGENCIES 1.6% $3,600,000 FHLB Discount Note, 2.2810%, 4/1/05 3,600,000 ------------ VARIABLE RATE DEMAND NOTES 0.3% 701,558 American Family Demand Note, 2.4663%# 701,558 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $4,301,558) 4,301,558 ------------ TOTAL INVESTMENTS 99.9% (COST $166,596,439) 222,463,527 OTHER ASSETS LESS LIABILITIES 0.1% 227,589 ------------ TOTAL NET ASSETS 100.0% $222,691,116 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005 ADR American Depositary Receipt Dates shown on securities are the due dates of the obligation. Schedule of Investments 43 Management Overview ICON Information Technology Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 99.6% Top 10 Equity Holdings 28.8% Number of Stocks 56 Short-Term Investments 0.0% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 Texas Instruments, Inc. 4.2% Intel Corp. 3.8% Amphenol Corp. - Class A 3.0% Dell, Inc. 3.0% Nokia Corp. 2.8% Anteon International Corp. 2.5% International Rectifier Corp. 2.5% America Movil S.A. de C.V. 2.4% EMC Corp. 2.3% Mettler Toledo International, Inc. 2.3% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Information Technology Fund returned 2.66% for the six-month period ended March 31, 2005, trailing its narrow benchmarks, the S&P 1500 Information Technology Index and the NADSAQ Composite Index, which returned 5.27% and 5.74%, respectively, while also lagging its broad benchmark, the S&P 1500 Index, which returned 7.45%. Total returns for other periods as of March 31, 2005 appear on page 48. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. Based on our methodology, the Fund was relatively underweight in the semiconductor and computer hardware industries, both of which were above-average contributors to the gains in S&P 1500 Information Technology Index during the period. Although these particular industries were among the most heavily weighted industries in the Fund, we either did not own or owned a relatively smaller portion of the handful of large-cap companies in these industries that drove performance in the narrow benchmark. The decision to tilt away from these large-cap names was driven by our valuation and relative strength readings, which favored exposure to small- and mid-cap issues. While our process primarily guides us to emphasize specific industries and securities, a by-product of the process may be a heavier weighting within a given capitalization range. Unfortunately, the Fund did not benefit from this residual effect of the investment process during the six-month period, and as large-cap technology issues outperformed their small- and mid-cap counterparts, the Fund lagged its 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. 44 Management Overview [ROBERT STRAUS, CMT PHOTO] Robert Straus, CMT Portfolio Manager Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. Concerns over rising oil prices dominated the investment environment for much of the period, even as Technology issues rose sharply alongside a year-end cyclical rally. During this time, investors appeared to set aside their fears of inflationary pressures and slowing economic growth, and instead focused on strong corporate earnings and sound underlying fundamentals. By mid-December, however, the tone of the market changed dramatically, as crude oil futures surged higher followed in early February by a sudden rise in 10-year Treasury yields. This convergence of events stoked inflation concerns while raising fears that a more aggressive stance toward monetary tightening might restrict economic growth. In light of this, Technology investors abruptly reversed course, before sending the sector into a sideways trading pattern. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Typically, the Fund is broadly diversified among industries in the Information Technology sector. Because our quantitative analysis did not detect a strong combination of value and relative strength, the Fund did not take a large position in any of the 15 industries within the sector. However, the Fund's single most aggressive overweight relative to the benchmark was in the technology distributors industry, which, on a relative basis had a slight negative effect. In contrast, the Fund's single most aggressive underweight versus the benchmark was the complete avoidance of the systems software group, which, on a relative basis, contributed positively to Fund performance. Industries that made significant contributions to performance during the period included IT consulting & other services, computer storage & peripherals and semiconductors, the Fund's largest industry weighting at period-end. Specific stocks that enhanced performance included IT services provider Cognizant Technology Solutions Corp., telecom equipment manufacturer Comtech Telecommunications Corp. and Marvel Technology Group Ltd, all of which capitalized on better-than-expected earnings. Conversely, holdings from the internet software & services and application software industries detracted from overall performance. Furthermore, the Fund was underweight in semiconductor giant Intel as well as computer hardware bellwethers Dell Computer and Hewlett Packard, and did not own Apple Computer. All four contributed to the outperformance of the S&P 1500 Information Technology Index. Also at the company level, noteworthy detractors included networking equipment supplier UTStarcom Inc., which fell on news that it had Management Overview 45 Management Overview (continued) ICON Information Technology Fund encountered financial reporting issues. Meanwhile, shipping delays and softening demand plagued Ditech Communications Corp., a provider of voice quality enhancement products, while Stratasys Inc., a maker of rapid prototyping devices, struggled with higher compliance and commission costs. All three companies were removed from the Fund when their relative strength declined. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INFORMATION TECHNOLOGY SECTOR? A. While the Technology sector remains underpriced relative to our estimate of fair value, we are not seeing sufficient relative strength at the industry level to justify a broad upward move. Thus, until we detect significant improvement in this important comparative metric, we believe investors should exercise near-term caution regarding the outlook for the sector. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund benefited early in the period as Technology shares rose sharply, yet gave up significant ground when inflation fears and growth concerns distracted investors. - Because our quantitative analysis did not detect a strong combination of value and relative strength, the Fund did not take large industry positions. - IT consulting & services, computer storage & peripherals and semiconductors contributed to performance while Internet software & services and application software detracted. - Noteworthy company detractors during the period included UTStarcom Inc., Ditech Communications Corp. and Stratasys Inc. - Specific stocks that enhanced performance included Cognizant Technology Solutions Corp., Comtech Telecommunications Corp. and Marvel Technology Group Ltd. 46 Management Overview TOP 10 INDUSTRIES as of March 31, 2005 Semiconductors 13.8% Electronic Equipment Manufacturers 11.3% Computer Storage & Peripherals 10.5% Computer Hardware 10.3% Internet Software & Services 9.1% Technology Distributors 8.6% IT Consulting & Other Services 6.5% Application Software 5.8% Aerospace & Defense 3.9% Electronic Manufacturing Services 3.7%
Percentages are based upon net assets. Management Overview 47 Management Overview (continued) ICON Information Technology Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 2/19/97 ------------------------------------------------------------------------------------------- ICON Information Technology Fund 2.66% -8.15% -8.40% 11.02% ------------------------------------------------------------------------------------------- S&P 1500 Information Technology Index 5.27% -3.13% -17.98% 4.62% ------------------------------------------------------------------------------------------- NASDAQ Composite Index 5.74% 0.83% -14.91% 5.22% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% -2.06% 6.90% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON INFORMATION S&P 1500 INFORMATION NASDAQ COMPOSITE TECHNOLOGY FUND TECHNOLOGY INDEX INDEX S&P 1500 INDEX ---------------- -------------------- ---------------- -------------- 2/19/97 10000 10000 10000 10000 3/31/98 11524 13581 13511 13824 3/31/99 15490 21379 18185 15941 3/31/00 36190 38844 33868 19068 3/31/01 28149 16075 13657 15203 3/31/02 29699 15416 13738 15525 3/31/03 15568 10196 10030 11697 3/31/04 25411 14887 14982 16016 3/31/05 23340 14420 15106 17181
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. 48 Management Overview Schedule of Investments ICON Information Technology Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- COMMON STOCKS 99.6% UNITED STATES OF AMERICA 87.8% HEALTH CARE 2.3% HEALTH CARE SERVICES 2.3% 73,700 Computer Programs & Systems, Inc. $ 2,069,496 42,100 Quest Diagnostics, Inc. 4,425,973 ------------ TOTAL HEALTH CARE 6,495,469 INDUSTRIALS 3.9% AEROSPACE & DEFENSE 3.9% 48,200 Alliant Techsystems, Inc.(a) 3,443,890 93,500 Argon State, Inc.(a) 3,085,500 70,200 Lockheed Martin Corp. 4,286,412 ------------ TOTAL INDUSTRIALS 10,815,802 INFORMATION TECHNOLOGY 81.6% APPLICATION SOFTWARE 5.8% 124,600 Fair Issac Corp. 4,291,224 82,000 Intuit, Inc.(a) 3,589,140 242,800 SS&C Technologies, Inc. 5,535,840 81,600 Verint Systems, Inc.(a) 2,851,104 ------------ 16,267,308 COMMUNICATIONS EQUIPMENT 1.6% 309,200 SpectraLink Corp. 4,365,904 ------------ COMPUTER HARDWARE 10.3% 64,800 Avid Technology, Inc.(a) 3,506,976 219,000 Dell, Inc.(a) 8,413,980 117,300 Diebold, Inc. 6,433,905 253,400 Hewlett Packard Co. 5,559,596 54,300 International Business Machines Corp. 4,961,934 ------------ 28,876,391 COMPUTER STORAGE & PERIPHERALS 8.2% 532,900 EMC Corp.(a) 6,565,328 218,900 Komag, Inc.(a) 4,892,415 393,100 Overland Storage, Inc.(a) 5,770,708 201,900 SanDisk Corp.(a) 5,612,820 ------------ 22,841,271 DATA PROCESSING & OUTSOURCED SERVICES 2.6% 112,400 Efunds Corp.(a) 2,508,768 122,100 Fiserv, Inc.(a) 4,859,580 ------------ 7,368,348
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- ELECTRONIC EQUIPMENT MANUFACTURERS 9.3% 228,700 Amphenol Corp. - Class A $ 8,471,048 64,300 Itron, Inc.(a) 1,905,852 136,600 Mettler-Toledo International, Inc.(a) 6,488,500 124,300 National Instruments Corp. 3,362,315 276,100 Paxar Corp.(a) 5,891,974 ------------ 26,119,689 ELECTRONIC MANUFACTURING SERVICES 3.7% 196,000 Benchmark Electronics, Inc.(a) 6,238,680 139,700 Jabil Circuit, Inc.(a) 3,984,244 ------------ 10,222,924 HOME ENTERTAINMENT SOFTWARE 1.2% 86,000 Take-Two Interactive Software, Inc.(a) 3,362,600 ------------ INTERNET SOFTWARE SERVICES 9.1% 343,300 Digital Insight Corp.(a) 5,630,120 67,100 Digital River, Inc.(a) 2,090,836 31,800 Google, Inc.(a) 5,740,218 89,500 Infospace, Inc.(a) 3,654,285 140,500 j2 Global Communications, Inc.(a) 4,820,555 166,600 WebEx Communications, Inc.(a) 3,596,894 ------------ 25,532,908 IT CONSULTING & OTHER SERVICES 6.5% 182,200 Anteon International Corp.(a) 7,093,046 120,500 Cognizant Technology Solutions Corp.(a) 5,567,100 92,800 SRA International, Inc.(a) 5,591,200 ------------ 18,251,346 OFFICE ELECTRONICS 1.5% 268,900 Xerox Corp.(a) 4,073,835 ------------ SEMICONDUCTOR EQUIPMENT 1.7% 101,500 KLA-Tencor Corp.(a) 4,670,015 ------------ SEMICONDUCTORS 11.5% 453,200 Intel Corp. 10,527,836 152,400 International Rectifier Corp.(a) 6,934,200 175,200 Omnivision Technologies, Inc.(a) 2,654,280 462,800 Texas Instruments, Inc. 11,796,772 ------------ 31,913,088
Schedule of Investments 49 Schedule of Investments (continued) ICON Information Technology Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- TECHNOLOGY DISTRIBUTORS 8.6% 237,200 Agilysys, Inc. $ 4,663,352 133,900 Arrow Electronics, Inc.(a) 3,394,365 185,200 Avnet, Inc.(a) 3,411,384 160,100 Global Imaging Systems, Inc.(a) 5,677,146 213,800 Ingram Micro, Inc.(a) 3,564,046 89,100 Tech Data Corp.(a) 3,302,046 ------------ 24,012,339 ------------ TOTAL INFORMATION TECHNOLOGY 227,877,966 ------------ TOTAL UNITED STATES OF AMERICA 245,189,237 AMERICAN DEPOSITARY RECEIPT 7.5% FINLAND 2.8% INFORMATION TECHNOLOGY 2.8% COMMUNICATIONS EQUIPMENT 2.8% 504,100 Nokia Oyj 7,778,263 ------------ TOTAL INFORMATION TECHNOLOGY 7,778,263 ------------ TOTAL FINLAND 7,778,263 MEXICO 2.4% INFORMATION TECHNOLOGY 2.4% WIRELESS TELECOMMUNICATION SERVICES 2.4% 132,100 America Movil S.A. de C.V. Mexico 6,816,360 ------------ TOTAL INFORMATION TECHNOLOGY 6,816,360 ------------ TOTAL MEXICO 6,816,360 SWITZERLAND 2.3% INFORMATION TECHNOLOGY 2.3% COMPUTER STORAGE & PERIPHERALS 2.3% 104,000 Logitech International S.A. - ADR(a) 6,331,520 ------------ TOTAL INFORMATION TECHNOLOGY 6,331,520 ------------ TOTAL SWITZERLAND 6,331,520 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 20,926,143
SHARES OR PRINCIPAL AMOUNT MARKET VALUE -------------------------------------------- BERMUDA 1.3% INFORMATION TECHNOLOGY 1.3% SEMICONDUCTORS 1.3% 97,600 Marvell Technology Group, Ltd.(a) $ 3,741,984 ------------ TOTAL INFORMATION TECHNOLOGY 3,741,984 ------------ TOTAL BERMUDA 3,741,984 BRITISH VIRGIN ISLANDS 2.0% INFORMATION TECHNOLOGY 2.0% ELECTRONIC EQUIPMENT MANUFACTURERS 2.0% 207,900 Nam Tai Electronics, Inc. 5,530,140 ------------ TOTAL INFORMATION TECHNOLOGY 5,530,140 ------------ TOTAL BRITISH VIRGIN ISLANDS 5,530,140 CANADA 1.0% INFORMATION TECHNOLOGY 1.0% SEMICONDUCTORS 1.0% 165,500 ATI Technologies, Inc.(a) 2,856,530 ------------ TOTAL INFORMATION TECHNOLOGY 2,856,530 ------------ TOTAL CANADA 2,856,530 ------------ TOTAL COMMON STOCKS (COST $252,881,414) 278,244,034 SHORT-TERM INVESTMENTS 0.0% VARIABLE RATE DEMAND NOTES (0.0%) $ 507 American Family Demand Note, 2.4663%# 507 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $507) 507 ------------ TOTAL INVESTMENTS 99.6% (COST $252,881,921) 278,244,541 OTHER ASSETS LESS LIABILITIES 0.4% 1,142,923 ------------ NET ASSETS 100.0% $279,387,464 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005 ADR American Depositary Receipt 50 Schedule of Investments Management Overview ICON Leisure and Consumer Staples Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 99.6% Top 10 Equity Holdings 29.3% Number of Stocks 50 Short-Term Investments 1.0% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 Altria Group, Inc. 3.6% The Walt Disney Co. 3.2% Nash Finch Co. 3.1% Sonic Corp. 3.0% Panera Bread Co. - Class A 3.0% Shuffle Master, Inc. 2.7% CVS Corp. 2.7% Constellation Brands, Inc. 2.7% McDonald's Corp. 2.7% Ralcorp Holdings, Inc. 2.6% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Leisure and Consumer Staples Fund gained 13.88% for the six-month period ended March 31, 2005, outpacing its sector-specific benchmarks, the S&P 1500 Consumer Discretionary Index and the S&P 1500 Consumer Staples Index, which returned 8.61% and 9.15%, respectively. Although neither index is an ideal comparison individually, together they provide a suitable reference for the Fund's overall performance. Additionally, the Fund outperformed its broad benchmark, the S&P 1500 Index, which returned 7.45% over the same period. Total returns for other periods as of March 31, 2005 appear on page 55. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. Because our investment universe consists of both cyclical and defensive industries, the Fund was able to capitalize on select groups that were demonstrating leadership, regardless of their sensitivity to economic movements or the current investment landscape. Since the market failed to reveal a clear or consistent personality, the Fund's flexible mandate visibly worked in its favor. This was evident throughout the entire six-month reporting period. During the fourth quarter of 2004, cyclical industries led a year-end rally as investors focused on strong corporate earnings and solid underlying fundamentals. While the Fund participated in this advance, its defensive components enabled it to withstand subsequent setbacks during the first quarter of 2005, when record oil prices, inflation fears, and growth concerns exerted considerable downward pressure. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Management Overview 51 Management Overview (continued) ICON Leisure and Consumer Staples Fund Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. The investment environment during the period could easily be characterized as "a tale of two markets." Initially, stocks rose in a broad advance as investor confidence soared in conjunction with easing energy prices, positive job growth news and decisive election-year results. Moreover, steady increases in gross domestic product and the measured pace of monetary tightening suggested that the economy remained on solid footing. However, the second half of the reporting period took a turn for the worse when sudden surges in oil prices and interest rates fueled fears that inflationary pressures would lead to a softening economy and dampen consumer spending. Against this backdrop, cyclical industries lost significant ground, while defensive industries held their own against ensuing pullbacks. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Fund performance benefited greatly from exposure to top-performing industries, such as restaurants, distillers & vintners and food distributors. In contrast, principal industry detractors included leisure products, publishing and brewers. As for noteworthy shifts in industry weightings, improving relative strength led to increases in drug retail, from 4.3% to 7.0% of net assets, and packaged foods & meats, from 4.2% to 8.7% of net assets, while the fully valued hotels, resorts & cruise lines industry was reduced to 1.1% from 5.9% of net assets. At the company level, leading contributors included vintner Robert Mondavi Corp., whose shares rallied strongly on news of its acquisition by Constellation Brands. Meanwhile, drug retailer Longs Drug Stores posted wider gross margins as the company instituted improvements in its merchandise mix and inventory management. Drive-in restaurant operator Sonic Corp. also advanced, having repeatedly boosted results on strong sales trends. Among the Fund's primary detractors, collectibles marketer RC2 Corp. declined when it reported lower year-over-year profits while also lowering its earnings-per-share guidance. Toymaker JAAKS Pacific Inc. also retreated, as the company faced profit pressures stemming from a civil lawsuit. Elsewhere, Leapfrog Enterprises Inc. plunged when the learning products company warned that earnings would miss expectations, citing distribution problems and weak sales. Leapfrog was liquidated when its relative strength declined, but the Fund continued to own RC2 Corp. and JAAKS Pacific as they had not met our sell criteria. 52 Management Overview [DEREK ROLLINGSON PHOTO] Derek Rollingson Portfolio Manager Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE LEISURE AND CONSUMER STAPLES SECTOR? A. Despite solid performance trends during the period, sector valuations and relative strength measures remain attractive compared to the broader market. We will continue to keep a close eye on broadcast and cable TV and leisure products as potential industry leaders based on their strong V/P, and anticipate maintaining wide representation in both cyclical and defensive industries. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund held select cyclical and defensive industries that demonstrated leadership throughout the period. - Our valuation methodology led us to maintain exposure to top-performing industries such as restaurants, distillers & vintners and food distributors. - Principal industry detractors included leisure products, publishing and brewers. - Robert Mondavi Corp., Longs Drug Stores and Sonic Corp. were leading company contributors to Fund performance. - Among the Fund's primary individual detractors were RC2 Corp., Leapfrog Enterprises Inc. and JAAKS Pacific Inc. Management Overview 53 Management Overview (continued) ICON Leisure and Consumer Staples Fund TOP 10 INDUSTRIES March 31, 2005 Restaurants 19.4% Leisure Products 10.7% Movies & Entertainment 8.7% Packaged Foods & Meats 8.7% Food Distributors 8.5% Tobacco 7.1% Drug Retail 7.0% Casinos & Gaming 6.8% Household Products 4.9% Agricultural Products 4.6%
Percentages are based upon net assets. 54 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 5/9/97 ------------------------------------------------------------------------------------------- ICON Leisure and Consumer Staples Fund 13.88% 11.42% 15.17% 12.66% ------------------------------------------------------------------------------------------- S&P 1500 Consumer Discretionary Index 8.61% 6.50% -0.62% 8.05% ------------------------------------------------------------------------------------------- S&P 1500 Consumer Staples Index 9.15% 3.55% 4.52% 5.45% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% -2.06% 6.88% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The performance of the S&P 1500 Consumer Discretionary Index includes the reinvestment of dividends and capital gain distributions beginning on January 1, 2002. Additional information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON LEISURE AND CONSUMER STAPLES S&P 1500 CONSUMER S&P 1500 CONSUMER FUND DISCRETIONARY INDEX STAPLES INDEX S&P 1500 INDEX ---------------- ------------------- ----------------- -------------- 5/9/97 10000 10000 10000 10000 3/31/98 12688 14320 12925 13606 3/31/99 14416 17659 13631 15689 3/31/00 12647 19006 12188 18768 3/31/01 15042 15034 12860 14963 3/31/02 21074 16136 14032 15281 3/31/03 16129 11940 11560 11513 3/31/04 22999 17298 14683 15764 3/31/05 25627 18422 15205 16911
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 55 Schedule of Investments ICON Leisure and Consumer Staples Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 99.6% UNITED STATES OF AMERICA 98.8% CONSUMER DISCRETIONARY 2.6% COMPUTER & ELECTRONICS RETAIL 1.3% 23,800 Electronics Boutique Holdings Corp.(a) $ 1,022,686 ------------ SPECIALTY STORES 1.3% 63,600 Trans World Entertainment Corp.(a) 936,828 ------------ TOTAL CONSUMER DISCRETIONARY 1,959,514 INFORMATION TECHNOLOGY 0.9% HOME ENTERTAINMENT SOFTWARE 0.9% 23,600 THQ, Inc.(a) 664,104 ------------ TOTAL INFORMATION TECHNOLOGY 664,104 LEISURE & CONSUMER STAPLES 95.3% AGRICULTURE PRODUCTS 4.6% 73,200 Corn Products International, Inc. 1,902,468 48,700 Fresh Del Monte Produce, Inc. 1,486,324 ------------ 3,388,792 CASINOS & GAMING 6.8% 24,200 Harrah's Entertainment, Inc. 1,562,836 70,650 Shuffle Master, Inc.(a) 2,046,024 248,400 Youbet.com, Inc.(a) 1,455,624 ------------ 5,064,484 DISTILLERS & VINTNERS 2.7% 37,800 Constellation Brands, Inc.(a) 1,998,486 ------------ DRUG RETAIL 7.0% 38,600 CVS Corp. 2,031,132 54,400 Longs Drug Stores Corp. 1,861,568 335,300 Rite Aid Corp.(a) 1,327,788 ------------ 5,220,488 FOOD DISTRIBUTORS 8.5% 60,400 Nash Finch Co. 2,294,596 54,300 Performance Food Group Co.(a) 1,503,024 110,400 Spartan Stores, Inc.(a) 1,174,656
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 47,500 United Natural Foods, Inc.(a) $ 1,359,925 ------------ 6,332,201 HOTELS, RESORTS & CRUISE LINES 1.1% 12,700 Marriott International, Inc. - Class A 849,122 ------------ HOUSEHOLD PRODUCTS 4.9% 51,100 Church & Dwight Co. 1,812,517 30,800 Energizer Holdings, Inc.(a) 1,841,840 ------------ 3,654,357 HYPERMARKETS & SUPER CENTERS 2.2% 52,200 BJ's Wholesale Club, Inc.(a) 1,621,332 ------------ LEISURE FACILITIES 0.9% 19,200 Speedway Motorsports, Inc. 685,440 ------------ LEISURE PRODUCTS 10.7% 59,800 Action Performance Cos., Inc. 791,154 26,800 Arctic Cat, Inc. 725,208 26,600 Brunswick Corp. 1,246,210 107,800 Callaway Golf Co. 1,379,840 41,100 JAKKS Pacific, Inc.(a) 882,417 66,100 Mattel, Inc. 1,411,235 21,900 RC2 Corp.(a) 744,600 23,200 SCP Pool Corp. 739,152 ------------ 7,919,816 MOVIES & ENTERTAINMENT 8.7% 174,300 Image Entertainment, Inc.(a) 953,421 101,184 News Corp. - Class A 1,712,033 82,900 The Walt Disney Co. 2,381,717 82,700 Time Warner, Inc.(a) 1,451,385 ------------ 6,498,556 PACKAGED FOODS & MEATS 8.7% 51,300 American Italian Pasta Co. 1,405,620 34,900 General Mills, Inc. 1,715,335 30,600 J & J Snack Foods Corp. 1,432,998
56 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 40,300 Ralcorp Holdings, Inc. $ 1,908,205 ------------ 6,462,158 PHOTOGRAPHIC PRODUCTS 2.0% 46,800 Eastman Kodak Co. 1,523,340 ------------ RESTAURANTS 19.4% 42,200 Buffalo Wild Wings, Inc.(a) 1,596,426 42,200 CBRL Group, Inc. 1,742,860 35,500 CEC Entertainment, Inc.(a) 1,299,300 54,400 Darden Restaurants, Inc. 1,668,992 43,600 Jack In the Box, Inc.(a) 1,617,560 63,500 McDonald's Corp. 1,977,390 39,200 Panera Bread Co.(a) 2,215,976 66,800 Sonic Corp.(a) 2,231,120 ------------ 14,349,624 TOBACCO 7.1% 41,300 Altria Group, Inc. 2,700,607 20,100 Reynolds American, Inc. 1,619,859 19,400 UST, Inc. 1,002,980 ------------ 5,323,446 ------------ TOTAL LEISURE & CONSUMER STAPLES 70,891,642 ------------ TOTAL UNITED STATES OF AMERICA 73,515,260
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- CANADA 0.8% LEISURE & CONSUMER STAPLES 0.8% PUBLISHING 0.8% 18,800 Thompson Corp. $ 626,980 ------------ TOTAL LEISURE & CONSUMER STAPLES 626,980 ------------ TOTAL CANADA 626,980 ------------ TOTAL COMMON STOCKS (COST $59,146,946) 74,142,240 SHORT-TERM INVESTMENTS 1.0% VARIABLE RATE DEMAND NOTES 1.0% $756,203 American Family Demand Note, 2.4663%# 756,203 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $756,203) 756,203 ------------ TOTAL INVESTMENTS 100.6% (COST $59,903,149) 74,898,443 LIABILITIES LESS OTHER ASSETS (0.6)% (427,795) ------------ NET ASSETS 100.0% $74,470,648 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005 ADR American Depositary Receipt Schedule of Investments 57 Management Overview ICON Materials Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 98.8% Top 10 Equity Holdings 35.0% Number of Stocks 43 Short-Term Investments 1.0% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 E.I. du Pont de Nemours and Co. 4.9% Eagle Materials, Inc. 3.7% PPG Industries, Inc. 3.6% Nucor Corp. 3.5% Owens-Illinois, Inc. 3.5% Lafarge North America, Inc. 3.3% Myers Industries, Inc. 3.2% Companhia Vale do Rio Doce - ADR 3.1% Methanex Corp. 3.1% Martin Marietta Materials, Inc. 3.1% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Materials Fund gained 13.53% for the six-month period ended March 31, 2005, comparing favorably to the 11.16% return for its sector-specific benchmark, the S&P 1500 Materials Index, and the 7.45% return of its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2005 appear on page 62. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund captured solid upside during the period given a relatively conducive environment and the sector's positive correlation to expansionary cycles. All the same, notable swings emerged from time to time as perceptions of global demand varied, driven largely by concerns over the sustainability of China's rapidly accelerating economy. Through it all, our discipline prevailed, enabling the Fund to outpace its benchmarks. This discipline manifested itself in a valuation-related tilt toward mid-cap stocks, a move that proved positive for the Fund. Although our process primarily guides us to emphasize specific industries and securities, ultimately it may identify potential leadership trends 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 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 earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. Fears of inflationary pressures and slowing economic growth, two conditions not often exhibited together, dotted the investment landscape during the period. Despite sharp, sudden spikes in both commodity prices and interest 58 Management Overview [DEREK ROLLINGSON PHOTO] Derek Rollingson Portfolio Manager rates, these potent distractions, pricing power remained limited, with the exception of the steel industry, while inflation was well under control. As long as investors focused on strong corporate earnings and sound underlying fundamentals, stocks maintained an upward move. Ultimately, overriding worries took their toll on the market, as stocks settled into a volatile trading range later in the period. Economically sensitive industries bore the brunt of subsequent pullbacks, which in some cases were quite severe. Nevertheless, the Materials sector demonstrated considerable strength, having retained much of its year-end gains amid concerns that recent gains in capital spending might come under pressure. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. As a whole, the Materials sector registered strong returns during the period, with most of the 14 constituent industries reporting positive performance. Leading industries included construction materials, steel and commodity chemicals, all of which were well represented among the Fund's weightings. Steel, in fact, comprised the Fund's largest industry weighting and accounted for a large portion of the Fund's six-month total return. At the same time, metals such as aluminum and gold, in which the Fund maintained limited exposure, reached multi-year lows. The paper packaging industry also detracted from performance. However, improving value and relative strength in diversified chemicals provided a long overdue opportunity for the Fund to hold larger names such as E.I. du Pont de Nemours and Company. Among the Fund's top individual contributors, polyester fiber and PET resin producer Wellman Inc. benefited from pricing improvements and margin recovery. Container manufacturer Owens-Illinois also widened margins, the result of efforts to focus on core glass operations. Elsewhere, engineered steel producer Quanex Corporation profited from continued high demand and pricing for steel. In contrast, diversified fertilizer producer Agrium Inc. fell on concerns that declining input costs might mean lower crop nutrient prices. Meanwhile, OM Group Inc., a maker of metal-based specialty chemicals, struggled in the wake of management turmoil and accounting irregularities, while recycled packaging provider Caraustar Industries Inc. took a charge against earnings related to the closing of a production facility. The latter two stocks were removed from the Fund on declining relative strength. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE MATERIALS SECTOR? A. The Materials sector continues to perform well relative to the broader market, although the gap between market price and fair value has closed Management Overview 59 Management Overview (continued) ICON Materials Fund considerably. Given this decline in V/P, we will be watching valuations closely and anticipate that we will need to exercise greater selectivity going forward. With larger-cap valuations and relative strength showing steady improvement, we also expect that our investment system may gradually lead the Fund to stocks in that capitalization range. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund captured solid upside during the period due to the sector's positive correlation to global economic expansion. - Our valuation methodology led us to tilt toward mid-cap stocks, a move that proved net positive for the Fund. - Contributing industry groups included construction materials, steel and commodity chemicals, while paper packaging and metals detracted from performance. - Wellman Inc., Owens-Illinois and Quanex Corporation were among the Fund's top individual contributors to performance. - Stocks that detracted from performance included Agrium Inc., OM Group Inc. and Caraustar Industries Inc. 60 Management Overview TOP 10 INDUSTRIES March 31, 2005 Construction Materials 21.3% Steel 19.4% Diversified Chemicals 18.6% Metal & Glass Containers 8.7% Specialty Chemicals 8.2% Commodity Chemicals 5.1% Fertilizers & Agricultural Chemicals 4.8% Aluminum 2.8% Diversified Metals & Mining 2.7% Paper Products 2.7%
Percentages are based upon net assets. Management Overview 61 Management Overview (continued) ICON Materials Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 5/5/97 ------------------------------------------------------------------------------------------- ICON Materials Fund 13.53% 27.95% 8.29% 1.15% ------------------------------------------------------------------------------------------- S&P 1500 Materials Index 11.16% 19.92% 9.52% 6.60% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% -2.06% 6.79% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON MATERIALS FUND S&P 1500 MATERIALS INDEX S&P 1500 INDEX ------------------- ------------------------ -------------- 5/5/97 10000 10000 10000 3/31/98 8632 11582 13528 3/31/99 6571 9728 15599 3/31/00 7352 10523 18660 3/31/01 6063 10046 14877 3/31/02 8036 12210 15193 3/31/03 5675 9429 11447 3/31/04 8555 13824 15673 3/31/05 10946 16578 16813
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. 62 Management Overview Schedule of Investments ICON Materials Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 98.8% UNITED STATES OF AMERICA 83.7% INDUSTRIALS 2.2% RAILROADS 2.2% 44,900 Burlington Northern Santa Fe Corp. $ 2,421,457 ------------ TOTAL INDUSTRIALS 2,421,457 MATERIALS 81.5% ALUMINUM 2.8% 62,800 Alcoa, Inc. 1,908,492 47,300 Aleris International, Inc.(a) 1,180,135 ------------ 3,088,627 COMMODITY CHEMICALS 2.1% 154,800 Wellman, Inc. 2,238,408 ------------ CONSTRUCTION MATERIALS 16.6% 50,800 Eagle Materials, Inc. 4,111,752 51,675 Florida Rock Industries, Inc. 3,039,524 78,300 Headwaters, Inc.(a) 2,569,806 62,700 Lafarge North America, Inc. 3,664,815 60,500 Martin Marietta Materials, Inc. 3,383,160 28,200 Texas Industries, Inc. 1,515,750 ------------ 18,284,807 DIVERSIFIED CHEMICALS 18.6% 56,500 Dow Chemical Co. 2,816,525 106,000 E.I. du Pont de Nemours and Co. 5,431,440 53,300 Eastman Chemical Co. 3,144,700 102,100 Engelhard Corp. 3,066,063 144,300 Hercules, Inc.(a) 2,090,907 55,500 PPG Industries, Inc. 3,969,360 ------------ 20,518,995 DIVERSIFIED METALS & MINING 2.7% 48,600 Freeport-McMoRan Copper & Gold, Inc. 1,925,046 45,000 RTI International Metals, Inc.(a) 1,053,000 ------------ 2,978,046
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- FERTILIZERS & AGRICULTURAL CHEMICALS 2.2% 35,100 Scotts Miracle-Gro Co.(a) $ 2,465,073 ------------ INDUSTRIAL GASES 2.3% 40,200 Air Products & Chemicals, Inc. 2,544,258 ------------ METAL & GLASS CONTAINERS 8.7% 251,900 Myers Industries, Inc. 3,554,309 152,500 Owens-Illinois, Inc.(a) 3,833,850 33,200 Silgan Holdings, Inc. 2,157,336 ------------ 9,545,495 PAPER PRODUCTS 1.0% 31,600 Schweitzer- Mauduit International, Inc. 1,060,180 ------------ SPECIALTY CHEMICALS 8.2% 50,800 Cytec Industries, Inc. 2,755,900 54,000 Lubrizol Corp. 2,194,560 30,700 Rohm & Haas Co. 1,473,600 139,300 RPM International, Inc. 2,546,404 ------------ 8,970,464 STEEL 16.3% 79,300 A.M. Castle and Co.(a) 999,180 168,600 AK Steel Holding Corp.(a) 1,864,716 50,500 Gibraltar Industries, Inc. 1,107,970 79,856 NN, Inc. 983,826 67,600 Nucor Corp. 3,891,056 43,450 Quanex Corp. 2,316,754 47,400 Reliance Steel & Aluminum Co. 1,896,474 77,000 Steel Dynamics, Inc. 2,652,650 94,100 Steel Technologies, Inc. 2,257,459 ------------ 17,970,085 ------------ TOTAL MATERIALS 89,664,438 ------------ TOTAL UNITED STATES OF AMERICA 92,085,895
Schedule of Investments 63 Schedule of Investments (continued) ICON Materials Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- x AMERICAN DEPOSITARY RECEIPT 9.5% MATERIALS 9.5% BRAZIL 4.8% STEEL 3.1% 107,800 Companhia Vale do Rio Doce - ADR $ 3,407,558 ------------ PAPER PRODUCTS 1.7% 51,000 Aracruz Celulose S.A. 1,825,800 ------------ TOTAL BRAZIL 5,233,358 IRELAND 2.0% CONSTRUCTION MATERIALS 2.0% 86,500 CRH plc - ADR 2,274,085 ------------ TOTAL IRELAND 2,274,085 MEXICO 2.7% CONSTRUCTION MATERIALS 2.7% 80,276 Cemex S.A. de C.V. 2,910,005 ------------ TOTAL MEXICO 2,910,005 ------------ TOTAL MATERIALS 10,417,448 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 10,417,448
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- CANADA 5.6% MATERIALS 5.6% COMMODITY CHEMICALS 3.0% 174,600 Methanex Corp. $ 3,392,478 FERTILIZERS & AGRICULTURAL CHEMICALS 2.6% 154,500 Agrium, Inc. 2,819,625 ------------ TOTAL MATERIALS 6,212,103 ------------ TOTAL CANADA 6,212,103 ------------ TOTAL COMMON STOCKS (COST $86,594,457) 108,715,446 SHORT-TERM INVESTMENTS 1.0% VARIABLE RATE DEMAND NOTES 1.0% $1,051,220 American Family Demand Note, 2.4663%# 1,051,220 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $1,051,220) 1,051,220 ------------ TOTAL INVESTMENTS 99.8% (COST $87,645,677) 109,766,666 OTHER ASSETS LESS LIABILITIES 0.2% 262,430 ------------ NET ASSETS 100.0% $110,029,096 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005 ADR American Depositary Receipt 64 Schedule of Investments Management Overview ICON Telecommunication & Utilities Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2005 Equities 99.7% Top 10 Equity Holdings 32.2% Number of Stocks 48 Short-Term Investments 0.0% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2005 America Movil S.A. de C.V. 3.9% California Water Service Group 3.6% Constellation Energy Group 3.4% El Paso Electric Co. 3.3% PNM Resources, Inc. 3.3% DTE Energy Co. 3.0% Sempra Energy 3.0% ONEOK, Inc. 3.0% NII Holdings, Inc.-Class B 2.9% Duke Energy Corp. 2.8% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Telecommunication & Utilities Fund appreciated 9.41% for the six-month period ended March 31, 2005, outperforming the -0.09% return for S&P 1500 Telecommunication Index, while underperforming the 16.85% return for the S&P 1500 Utilities Index. Although neither of these narrow benchmarks is an ideal comparison for the Fund 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 7.45% over the same period. Total returns for other periods as of March 31, 2005 appear on page 69. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. As evidenced by the performance of the narrow benchmarks during the period, the Fund's valuation-based tilt toward Utilities issues coupled with overweight exposure to small- and medium-capitalization stocks benefited relative performance. Although commonly thought of as defensive in nature, we viewed Utilities industries as potential market leaders, given their compelling combination of value and relative strength. Over the period, the average exposure to Utilities-oriented industries was approximately two-thirds of the Fund, while the average exposure to Telecommunication issues was approximately one-third. 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 adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that consider the effects of earnings, projected growth, risk, and interest rates (opportunity cost). By combining valuation with relative strength (RS), we aim to capture leading industry themes poised to outperform the broader market. Q. WHAT INVESTMENT ENVIRONMENT DID THE FUND FACE DURING THE PAST SIX MONTHS? A. Telecommunication and Utilities issues delivered solid gains during the fourth quarter of 2004, as investors set aside fears of inflationary pressures and slowing economic growth. However, as oil-related concerns became Management Overview 65 Management Overview (continued) ICON Telecommunication & Utilities Fund more pronounced during the first quarter of 2005, Telecommunication issues retreated, while Utilities fared decidedly better. Against this volatile backdrop, the Fund captured its gains during the first half of the reporting period, but ended the second half of the period basically flat. To further illustrate, large-cap integrated telecommunication services issues, widely considered defensive holdings, came under extreme selling pressure in light of intense pricing competition and higher cost structures. At the same time, investors increasingly sought out safe havens in areas such as Utilities, whose history of dividend payouts proved highly attractive, particularly given last year's lowering of maximum tax rates on dividend income. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Leading industry contributors to Fund performance included electric utilities and multi-utilities & unregulated power. Both were top gainers in the Utilities segment, in addition to being the Fund's most heavily weighted industries based on value and relative strength. Conversely, communications equipment was the largest industry detractor, although it made up a relatively small portion of the Fund's net asset base. While the industry, in our view, continues to trade at a discount to intrinsic worth, investors avoided the group on concerns that diminished provider demand would curb its growth prospects. Meanwhile, limited exposure to integrated telecommunication services insulated the Fund from some of the losses associated with this group. Turning to meaningful company contributors, Constellation Energy Group Inc. advanced, reflecting solid market share gains in competitive power supply areas. Wireless communications provider America Movil, S.A. de C.V. also gained, having secured seven million new subscribers in the fourth quarter alone. Moreover, NII Holdings Inc., a provider of digital wireless services aimed at businesses, reported better-than-expected quarterly profits, thus raising the company's value. Among the Fund's individual detractors, wireless services provider Vimpel Communications tumbled on news that the company could face back tax claims of $300 million, although the final liability amounted to $17.6 million. Networking equipment supplier UTStarcom Inc. also declined, as the company faced issues surrounding its financial reporting and internal controls. Both stocks were sold due to declining relative strength. Elsewhere, even though Sempra Energy fell on rumors suggesting a class action suit against the company, the stock did not meet our sell discipline and the Fund held it at period-end. 66 Management Overview [ROBERT STRAUS, CMT PHOTO] Robert Straus, CMT Portfolio Manager Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE TELECOMMUNICATION & UTILITIES SECTOR? A. Despite a defensive upward move in the Utilities segment, we continue to see numerous opportunities in the sector, with electric utilities offering an ideal combination of value and relative strength. In contrast, the Telecommunication segment has been trading at a significant discount to fair value, but apart from some encouraging signs in wireless telecommunication services has yet to display broad relative strength. Thus, the Fund remains heavily tilted toward Utilities. PERFORMANCE HIGHLIGHTS March 31, 2005 - The Fund's valuation-based tilt toward Utilities, which we view as a potential market leader, benefited relative performance. - Against a volatile backdrop, the Fund captured its gains during the first half of the reporting period, ending the second half of the period flat. - Leading industry contributors to Fund performance included top-weighted and top-performing electric utilities and multi-utilities & unregulated power. - Constellation Energy Group Inc., America Movil, S.A. de C.V. and NII Holdings Inc. were among the Fund's most meaningful company contributors. - Individual detractors to Fund performance included Vimpel Communications, UTStarcom Inc. and Sempra Energy. Management Overview 67 Management Overview (continued) ICON Telecommunication & Utilities Fund TOP 10 INDUSTRIES March 31, 2005 Electric Utilities 33.0% Multi-Utilities & Unregulated Power 19.4% Wireless Telecommunication Services 15.9% Gas Utilities 9.8% Integrated Telecommunication Services 8.7% Water Utilities 6.1% Communications Equipment 3.3% Semiconductors 2.4% Internet Software & Services 1.1%
Percentages are based upon net assets. 68 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2005
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 7/9/97 ------------------------------------------------------------------------------------------- ICON Telecommunication & Utilities Fund 9.41% 6.98% 2.99% 8.29% ------------------------------------------------------------------------------------------- S&P 1500 Telecommunications Services Index -0.09% 5.38% -15.75% -0.37% ------------------------------------------------------------------------------------------- S&P 1500 Utilities Index 16.85% 23.07% 4.80% 7.25% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.45% 7.28% -2.06% 5.67% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2005 [LINE GRAPH]
ICON S&P 1500 TELECOMMUNICATION & S&P 1500 UTILITIES TELECOMMUNICATION UTILITIES FUND INDEX SERVICES INDEX S&P 1500 INDEX ---------------- ------------------ ----------------- -------------- 7/9/97 10000 10000 10000 10000 3/31/98 13800 12775 14982 12321 3/31/99 15110 12192 20000 14207 3/31/00 15958 13585 22888 16994 3/31/01 15995 18172 14014 13550 3/31/02 15322 14813 10537 13837 3/31/03 11625 10216 7010 10425 3/31/04 17289 13959 9219 14275 3/31/05 18497 17175 9715 15313
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 69 Schedule of Investments ICON Telecommunication & Utilities Fund March 31, 2005 (unaudited)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- COMMON STOCKS 99.7% UNITED STATES OF AMERICA 81.5% INFORMATION TECHNOLOGY 4.8% COMMUNICATIONS EQUIPMENT 1.3% 82,200 SpectraLink Corp. $ 1,160,664 INTERNET & SOFTWARE SERVICES 1.1% 27,400 j2 Global Communications, Inc.()(a) 940,094 SEMICONDUCTORS 2.4% 82,200 Texas Instruments, Inc. 2,095,278 ------------ TOTAL INFORMATION TECHNOLOGY 4,196,036 TELECOMMUNICATIONS & UTILITIES 76.7% ELECTRIC UTILITIES 33.0% 86,900 Allegheny Energy, Inc. 1,795,354 73,100 CenterPoint Energy, Inc. 879,393 97,800 Cleco Corp. 2,083,140 58,100 DTE Energy Co. 2,642,388 150,700 El Paso Electric Co. 2,863,300 50,400 FPL Group, Inc. 2,023,560 22,400 IDACORP, Inc. 635,488 59,200 Pepco Holdings, Inc. 1,242,608 64,500 PG&E Corp. 2,199,450 107,300 PNM Resources, Inc. 2,862,764 38,200 PPL Corp. 2,062,418 155,400 Sierra Pacific Resources(a) 1,670,550 44,600 Southern Co. 1,419,618 153,500 TECO Energy, Inc. 2,406,880 25,200 TXU Corp. 2,006,676 ------------ 28,793,587 GAS UTILITIES 9.8% 20,600 Energen Corp. 1,371,960 22,900 Equitable Resources, Inc. 1,315,376
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- 36,300 NiSource, Inc. $ 827,277 29,500 Northwest Natural Gas Co. 1,067,015 85,200 ONEOK, Inc. 2,625,864 21,800 Questar Corp. 1,291,650 ------------ 8,499,142 INTEGRATED TELECOMMUNICATION SERVICES 2.8% 25,400 Golden Telecom, Inc. 650,240 76,900 Sprint Corp. 1,749,475 ------------ 2,399,715 MULTI-UTILITIES & UNREGULATED POWER 19.4% 276,000 Aquila, Inc. 1,057,080 56,900 Constellation Energy Group, Inc. 2,941,730 23,000 Dominion Resources, Inc. of Virginia 1,711,890 87,600 Duke Energy Corp. 2,453,676 75,900 Energy East Corp. 1,990,098 43,100 Public Service Enterprise Group, Inc. 2,344,209 66,000 Sempra Energy 2,629,440 64,600 Vectren Corp. 1,720,944 ------------ 16,849,067 WATER UTILITIES 6.1% 31,600 American States Water Co. 799,480 56,900 Aqua America, Inc. 1,386,084 94,800 California Water Service Group 3,163,476 ------------ 5,349,040 WIRELESS TELECOMMUNICATION SERVICES 5.6% 44,400 NII Holdings, Inc. - Class B(a) 2,553,000 39,600 SpectraSite, Inc.(a) 2,295,612 ------------ 4,848,612 TOTAL TELECOMMUNICATION & UTILITIES 66,739,163 ------------ TOTAL UNITED STATES OF AMERICA 70,935,199
70 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- AMERICAN DEPOSITARY RECEIPT 18.2% CHINA 1.7% INTEGRATED TELECOMMUNICATIONS SERVICES 1.7% 42,700 China Telecom Corp. Ltd.(a) $ 1,487,668 ------------ TOTAL CHINA 1,487,668 FINLAND 2.0% COMMUNICATIONS EQUIPMENT 2.0% 112,000 Nokia Oyj - ADR 1,728,160 ------------ TOTAL FINLAND 1,728,160 HONG KONG 1.3% WIRELESS TELECOMMUNICATION SERVICES 1.3% 146,900 China Unicom Ltd. - ADR 1,134,068 ------------ TOTAL HONG KONG 1,134,068 ISRAEL 1.5% WIRELESS TELECOMMUNICATIONS SERVICES 1.5% 148,600 Partner Communications Co. Ltd. - ADR()(a) 1,353,746 ------------ TOTAL ISRAEL 1,353,746 MEXICO 6.6% INTEGRATED TELECOMMUNICATION SERVICES 2.7% 69,400 Telefonos de Mexico S.A de C.V 2,396,382 ------------ WIRELESS TELECOMMUNICATIONS SERVICES 3.9% 65,900 America Movil S.A. de C.V. 3,400,440 ------------ TOTAL MEXICO 5,796,822 PHILIPPINES 1.5% INTEGRATED TELECOMMUNICATION SERVICES 1.5% 51,100 Philippine Long Distance Telephone Co. 1,288,231 ------------ TOTAL PHILIPPINES 1,288,231
SHARES OR PRINCIPAL AMOUNT MARKET VALUE --------------------------------------------- RUSSIA 1.6% WIRELESS TELECOMMUNICATION SERVICES 1.6% 38,400 Mobile Telesystems - ADR $ 1,351,296 ------------ TOTAL RUSSIA 1,351,296 UNITED KINGDOM 2.0% WIRELESS TELECOMMUNICATION SERVICES 2.0% 64,400 Vodafone Group PLC - ADR 1,710,464 ------------ TOTAL UNITED KINGDOM 1,710,464 ------------ TOTAL AMERICAN DEPOSITARY RECEIPT 15,850,455 ------------ TOTAL COMMON STOCKS (COST $75,282,534) 86,785,654 SHORT-TERM INVESTMENTS 0.0% VARIABLE RATE DEMAND NOTES 0.0% $ 596 American Family Demand Note, 2.4663%# 596 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $596) 596 ------------ TOTAL INVESTMENTS 99.7% (COST $75,283,130) 86,786,250 OTHER ASSETS LESS LIABILITIES 0.3% 230,785 ------------ NET ASSETS 100.0% $87,017,035 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2005 ADR American Depositary Receipt Schedule of Investments 71 Six Month Hypothetical Expense Example March 31, 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 (10/1/04 - 3/31/05). 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 $15.00 fee charged to IRA accounts, or the $15.00 fee charged for wire redemptions. The Example also does not include portfolio trading commissions and related trading expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line 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. 72 Expense Example
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD 10/1/04 3/31/05 10/1/04-3/31/05* ---------------------------------------------------------------------------------------------- ICON CONSUMER DISCRETIONARY FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,093 $6.78 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,019 $6.54 (5% return before expenses ---------------------------------------------------------------------------------------------- ICON ENERGY FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,194 $7.05 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,019 $6.49 (5% return before expenses) ---------------------------------------------------------------------------------------------- ICON FINANCIAL FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,033 $6.54 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,019 $6.49 (5% return before expenses) ---------------------------------------------------------------------------------------------- ICON HEALTHCARE FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,204 $7.14 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,019 $6.54 (5% return before expenses) ---------------------------------------------------------------------------------------------- ICON INDUSTRIALS FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,127 $6.84 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,019 $6.49 (5% return before expenses) ---------------------------------------------------------------------------------------------- ICON INFORMATION TECHNOLOGY FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,027 $6.67 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,018 $6.64 (5% return before expenses) ---------------------------------------------------------------------------------------------- ICON LEISURE AND CONSUMER STAPLES FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,139 $7.52 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,018 $7.09 (5% return before expenses) ---------------------------------------------------------------------------------------------- ICON MATERIALS FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,135 $7.13 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,018 $6.74 (5% return before expenses) ---------------------------------------------------------------------------------------------- ICON TELECOMMUNICATION & UTILITIES FUND ---------------------------------------------------------------------------------------------- Actual Expenses $1,000 $1,094 $6.94 ---------------------------------------------------------------------------------------------- Hypothetical Example $1,000 $1,018 $6.69 (5% return before expenses) ----------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 182/365 to reflect the one-half year period. Expense Example 73 Statements of Assets and Liabilities March 31, 2005 (unaudited)
ICON CONSUMER ICON ICON ICON DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND ------------------ ------------ -------------- --------------- ASSETS Investments, at cost $145,629,482 $538,702,889 $177,709,041 $323,554,022 ------------------ ------------ -------------- --------------- Investments, at value 163,583,719 669,083,339 200,051,992 416,295,607 Cash - 4,500 - - Receivables: Fund shares sold 220,497 1,542,264 240,826 958,686 Investments sold 211,510 - 4,307,457 - Interest 628 25,504 288 2,284 Dividends 98,360 252,949 181,366 12,349 Other assets 6,353 7,845 7,875 13,197 ------------------ ------------ -------------- --------------- TOTAL ASSETS 164,121,067 670,916,401 204,789,804 417,282,123 ------------------ ------------ -------------- --------------- LIABILITIES Payables: Due to custodian bank - - - 2 Fund shares redeemed 1,260 256,077 8,828 28,566 Investments bought - - 384,405 1,306,000 Advisory fees 140,376 563,423 179,342 345,379 Fund accounting, custodial and transfer agent fees 43,846 165,521 56,108 105,937 Administration fees 7,019 28,171 8,967 17,269 Accrued expenses 43,922 120,948 60,013 80,651 ------------------ ------------ -------------- --------------- Total Liabilities 236,423 1,134,140 697,663 1,883,804 ------------------ ------------ -------------- --------------- NET ASSETS $163,884,644 $669,782,261 $204,092,141 $415,398,319 ================== ============ ============== =============== NET ASSETS CONSIST OF Paid-in Capital $133,791,936 $540,583,080 $172,892,038 $328,607,786 Accumulated undistributed net investment income/(loss) (595,475) 320,315 1,378,755 (1,672,551) Accumulated undistributed net realized gain/(loss) from investments 12,733,946 (1,501,584) 7,478,397 (4,278,501) Unrealized appreciation/(depreciation) on securities 17,954,237 130,380,450 22,342,951 92,741,585 ------------------ ------------ -------------- --------------- NET ASSETS $163,884,644 $669,782,261 $204,092,141 $415,398,319 ================== ============ ============== =============== Shares outstanding (unlimited shares authorized, no par value) 11,808,823 25,733,864 15,933,331 25,270,350 Net Asset Value (offering price and redemption price per share) $ 13.88 $ 26.03 $ 12.81 $ 16.44
The accompanying notes are an integral part of the financial statements. 74 Financial Statements
ICON ICON LEISURE AND ICON ICON INFORMATION CONSUMER ICON TELECOMMUNICATION INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND ---------------- --------------- ------------ -------------- ----------------- $166,596,439 $252,881,921 $59,903,149 $ 87,645,677 $75,283,130 ---------------- --------------- ------------ -------------- ----------------- 222,463,527 278,244,541 74,898,443 109,766,666 86,786,250 13,504 - - 11,873 - 348,747 255,193 74,113 188,927 150,733 - 3,220,328 - 350,256 336,221 844 134 1,442 2,187 1,030 173,043 95,740 75,638 159,524 108,464 9,650 12,571 5,130 4,136 2,189 ---------------- --------------- ------------ -------------- ----------------- 223,009,315 281,828,507 75,054,766 110,483,569 87,384,887 ---------------- --------------- ------------ -------------- ----------------- - 259,012 - - 237,434 3,437 1,110 471,972 288,628 1,953 - 1,768,053 - - - 192,747 242,727 62,086 95,903 74,316 58,873 79,180 20,125 29,573 23,374 9,637 12,136 3,104 4,795 3,716 53,505 78,825 26,831 35,574 27,059 ---------------- --------------- ------------ -------------- ----------------- 318,199 2,441,043 584,118 454,473 367,852 ---------------- --------------- ------------ -------------- ----------------- $222,691,116 $279,387,464 $74,470,648 $110,029,096 $87,017,035 ================ =============== ============ ============== ================= $184,354,983 $316,842,041 $55,106,661 $ 90,450,626 $77,009,427 (507,556) (1,785,104) (131,309) (50,704) 316,150 (17,023,399) (61,032,093) 4,500,002 (2,491,815) (1,811,662) 55,867,088 25,362,620 14,995,294 22,120,989 11,503,120 ---------------- --------------- ------------ -------------- ----------------- $222,691,116 $279,387,464 $74,470,648 $110,029,096 $87,017,035 ================ =============== ============ ============== ================= 18,778,166 34,466,123 5,743,250 10,723,149 12,169,500 $ 11.86 $ 8.11 $ 12.97 $ 10.26 $ 7.15
Financial Statements 75 Statements of Operations For the period ended March 31, 2005 (unaudited)
ICON CONSUMER ICON ICON ICON DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND ------------------ ----------- -------------- --------------- INVESTMENT INCOME Interest $ 8,257 $ 382,370 $ 15,310 $ 81,812 Dividends 457,207 2,930,794 2,825,093 372,210 Foreign taxes withheld - (39,391) - - ------------------ ----------- -------------- --------------- Total Investment Income 465,464 3,273,773 2,840,403 454,022 ------------------ ----------- -------------- --------------- EXPENSES Advisory fees 814,007 2,283,884 1,012,533 1,631,254 Fund accounting, custodial and transfer agent fees 112,685 345,162 140,364 231,802 Administration fees 39,326 111,007 48,936 79,019 Audit fees 9,016 22,126 11,149 17,191 Registration fees 11,820 25,270 14,871 19,023 Legal fees 1,757 4,041 2,123 3,153 Insurance expense 4,328 6,586 5,393 8,219 Trustee fees and expenses 9,707 14,840 11,706 17,921 Shareholder reports 20,055 50,873 25,007 38,786 Interest expense 5,003 - 2,978 18,079 Other expenses 33,235 89,669 36,202 62,086 ------------------ ----------- -------------- --------------- Total expenses 1,060,939 2,953,458 1,311,262 2,126,533 ------------------ ----------- -------------- --------------- NET INVESTMENT INCOME (LOSS) (595,475) 320,315 1,529,141 (1,672,511) ------------------ ----------- -------------- --------------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from investment transactions 18,827,092 6,145,870 9,350,336 (4,277,861) Change in unrealized appreciation/(depreciation) on securities (3,858,084) 70,779,908 (5,456,768) 59,888,821 ------------------ ----------- -------------- --------------- Net realized and unrealized gain/(loss) on investments 14,969,008 76,925,778 3,893,568 55,610,960 ------------------ ----------- -------------- --------------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $14,373,533 $77,246,093 $ 5,422,709 $53,938,449 ================== =========== ============== ===============
The accompanying notes are an integral part of the financial statements. 76 Financial Statements
ICON ICON LEISURE AND ICON ICON INFORMATION CONSUMER ICON TELECOMMUNICATION INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND ---------------- --------------- ------------ -------------- ----------------- $ 9,090 $ 16,534 $ 4,640 $ 14,119 $ 9,983 886,161 280,611 334,571 880,696 961,973 (15,941) - (2,072) (17,645) (1,907) ---------------- --------------- ------------ -------------- ----------------- 879,310 297,145 337,139 877,170 970,049 ---------------- --------------- ------------ -------------- ----------------- 1,075,314 1,581,993 333,094 620,834 351,534 127,452 217,208 45,708 84,497 50,571 51,946 76,385 16,064 29,892 17,034 11,846 17,382 3,808 7,067 3,703 15,025 18,898 10,522 13,803 9,673 2,289 3,398 747 1,426 706 5,557 5,548 3,577 3,515 1,751 12,406 17,595 4,712 7,493 3,835 26,351 39,614 8,170 15,545 8,324 8,489 45,423 18,065 21,023 893 50,191 58,805 23,981 25,869 19,701 ---------------- --------------- ------------ -------------- ----------------- 1,386,866 2,082,249 468,448 830,964 467,725 ---------------- --------------- ------------ -------------- ----------------- (507,556) (1,785,104) (131,309) 46,206 502,324 ---------------- --------------- ------------ -------------- ----------------- 7,258,149 3,539,735 7,808,059 17,326,804 3,041,157 18,246,589 5,195,740 1,238,806 (1,979,189) 2,039,257 ---------------- --------------- ------------ -------------- ----------------- 25,504,738 8,735,475 9,046,865 15,347,615 5,080,414 ---------------- --------------- ------------ -------------- ----------------- $24,997,182 $ 6,950,371 $8,915,556 $15,393,821 $5,582,738 ================ =============== ============ ============== =================
Financial Statements 77 Statements of Changes in Net Assets
ICON CONSUMER DISCRETIONARY FUND ICON ENERGY FUND ----------------------------------- ----------------------------------- PERIOD ENDED PERIOD ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ -------------- ------------------ OPERATIONS Net investment income/(loss) $ (595,475) $ (671,699) $ 320,315 $ (261,112) Net realized gain/(loss) from investment transactions 18,827,092 17,989,808 6,145,870 6,377,507 Change in unrealized appreciation/depreciation on securities (3,858,084) (6,390,181) 70,779,908 51,219,049 -------------- ------------------ -------------- ------------------ Net increase/(decrease) in net assets resulting from operations 14,373,533 10,927,928 77,246,093 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 23,122,385 62,754,370 423,897,540 246,044,827 Reinvested dividends and distributions - - Shares repurchased (25,533,018) (71,825,277) (118,975,276) (71,395,398) -------------- ------------------ -------------- ------------------ Net increase/(decrease) from fund share transactions (2,410,633) (9,070,907) 304,922,264 174,649,429 -------------- ------------------ -------------- ------------------ Total net increase/(decrease) in net assets 11,962,900 1,857,021 382,168,357 231,984,873 NET ASSETS Beginning of period 151,921,744 150,064,723 287,613,904 55,629,031 -------------- ------------------ -------------- ------------------ End of period $163,884,644 $151,921,744 $ 669,782,261 $287,613,904 ============== ================== ============== ================== TRANSACTIONS IN FUND SHARES Shares sold 1,699,760 4,709,437 17,632,075 13,031,426 Reinvested dividends and distributions - - - Shares repurchased (1,851,708) (5,477,472) (5,086,632) (3,903,835) -------------- ------------------ -------------- ------------------ Net increase/(decrease) (151,948) (768,035) 12,545,443 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 11,808,823 11,960,771 25,733,864 13,188,421 ============== ================== ============== ================== PURCHASE AND SALES OF INVESTMENT SECURITIES (excluding Short-term Securities) Purchase of Securities $111,558,467 $213,763,244 $ 252,909,186 $184,627,946 Proceeds from sales of securities 114,467,518 220,582,308 15,443,138 15,787,580 ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ (595,475) $ - $ 320,315 $ - ============== ================== ============== ==================
* 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. 78 Financial Statements
ICON FINANCIAL FUND ICON HEALTHCARE FUND ICON INDUSTRIALS FUND ----------------------------------- ----------------------------------- ----------------------------------- PERIOD ENDED PERIOD ENDED PERIOD ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ -------------- ------------------ -------------- ------------------ $ 1,529,141 $ 548,732 $ (1,672,511) $ (2,540,659) $ (507,556) $ (849,293) 9,350,336 17,877,672 (4,277,861) 10,762,480 7,258,149 5,713,298 (5,456,768) 13,429,005 59,888,821 6,619,577 18,246,589 22,171,644 -------------- ------------------ -------------- ------------------ -------------- ------------------ 5,422,709 31,855,409 53,938,449 14,841,398 24,997,182 27,035,649 -------------- ------------------ -------------- ------------------ -------------- ------------------ (400,204) (576,093)* (40) - - - (14,368,848) - (877,489) - - - -------------- ------------------ -------------- ------------------ -------------- ------------------ (14,769,052) (576,093) (877,529) - - - -------------- ------------------ -------------- ------------------ -------------- ------------------ 41,110,948 99,493,912 167,042,774 196,893,511 26,036,908 119,436,391 14,495,645 570,282 842,844 - - - (30,561,559) (82,211,184) (91,218,193) (67,323,826) (38,036,232) (69,333,095) -------------- ------------------ -------------- ------------------ -------------- ------------------ 25,045,034 17,853,010 76,667,425 129,569,685 (11,999,324) 50,103,296 -------------- ------------------ -------------- ------------------ -------------- ------------------ 15,698,691 49,132,326 129,728,345 144,411,083 12,997,858 77,138,945 188,393,450 139,261,124 285,669,974 141,258,891 209,693,258 132,554,313 -------------- ------------------ -------------- ------------------ -------------- ------------------ $204,092,141 $188,393,450 $415,398,319 $285,669,974 $222,691,116 $209,693,258 ============== ================== ============== ================== ============== ================== 3,054,494 7,735,769 10,629,828 14,262,864 2,245,029 11,909,801 1,066,640 47,802 53,244 - - - (2,286,328) (6,605,919) (6,270,273) (4,910,162) (3,406,630) (7,036,857) -------------- ------------------ -------------- ------------------ -------------- ------------------ 1,834,806 1,177,652 4,412,799 9,352,702 (1,161,601) 4,872,944 14,098,525 12,920,873 20,857,551 11,504,849 19,939,767 15,066,823 -------------- ------------------ -------------- ------------------ -------------- ------------------ 15,933,331 14,098,525 25,270,350 20,857,551 18,778,166 19,939,767 ============== ================== ============== ================== ============== ================== $126,904,833 $204,755,026 $120,748,585 $249,051,968 $ 20,050,008 $132,934,226 122,016,744 186,785,022 49,770,041 123,293,752 35,674,977 80,111,027 $ 1,378,755 $ 249,818 $ (1,672,551) $ - $ (507,556) $ - ============== ================== ============== ================== ============== ==================
Financial Statements 79 Statements of Changes in Net Assets (continued)
ICON INFORMATION TECHNOLOGY FUND ------------------------------------ PERIOD ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ OPERATIONS: Net investment income/(loss) $ (1,785,104) $ (2,576,634) Net realized gain/(loss) from investments transactions 3,539,735 30,876,230 Change in net unrealized appreciation/depreciation on securities 5,195,740 (41,133,606) -------------- ------------------ Net increase/(decrease) in net assets resulting from operations 6,950,371 (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 115,795,629 178,801,650 Reinvested dividends and distributions - - Shares repurchased (87,610,939) (229,687,727) -------------- ------------------ Net increase/(decrease) from fund share transactions 28,184,690 (50,886,077) -------------- ------------------ Total net increase/(decrease) in net assets 35,135,061 (63,720,087) NET ASSETS: Beginning of period 244,252,403 307,972,490 -------------- ------------------ End of period $279,387,464 $244,252,403 ============== ================== TRANSACTIONS IN FUND SHARES Shares sold 13,922,677 21,330,842 Reinvested dividends and distributions - - Shares repurchased (10,367,298) (27,658,934) -------------- ------------------ Net increase/(decrease) 3,555,379 (6,328,092) Shares outstanding beginning of period 30,910,744 37,238,836 -------------- ------------------ Shares outstanding end of period 34,466,123 30,910,744 ============== ================== PURCHASE AND SALES OF INVESTMENT SECURITIES (excluding Short-term Securities) Purchase of Securities $227,044,972 $537,991,382 Proceeds from sales of securities 202,350,289 591,381,665 ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ (1,785,104) $ - ============== ==================
* 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. 80 Financial Statements
ICON LEISURE AND ICON TELECOMMUNICATION & CONSUMER STAPLES FUND ICON MATERIALS FUND UTILITIES FUND ----------------------------------- ----------------------------------- ----------------------------------- PERIOD ENDED PERIOD ENDED PERIOD ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED MARCH 31, 2005 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 (UNAUDITED) SEPTEMBER 30, 2004 -------------- ------------------ -------------- ------------------ -------------- ------------------ $ (131,309) $ (326,799) $ 46,206 $ 87,329 $ 502,324 $ 580,886 7,808,059 11,738,085 17,326,804 1,298,590 3,041,157 3,885,662 1,238,806 2,299,602 (1,979,189) 22,065,303 2,039,257 3,437,864 -------------- ------------------ -------------- ------------------ -------------- ------------------ 8,915,556 13,710,888 15,393,821 23,451,222 5,582,738 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) -------------- ------------------ -------------- ------------------ -------------- ------------------ 20,117,337 52,673,531 37,789,181 111,162,483 27,050,299 26,477,305 13,378,405 - 160,788 198,136 762,535 557,773 (37,390,850) (65,709,303) (82,989,664) (25,150,862) (6,936,835) (15,563,524) -------------- ------------------ -------------- ------------------ -------------- ------------------ (3,895,108) (13,035,772) (45,039,695) 86,209,757 20,875,999 11,471,554 -------------- ------------------ -------------- ------------------ -------------- ------------------ (8,551,781) 675,116 (29,809,223) 109,462,068 25,691,672 18,816,169 83,022,429 82,347,313 139,838,319 30,376,251 61,325,363 42,509,194 -------------- ------------------ -------------- ------------------ -------------- ------------------ $ 74,470,648 $ 83,022,429 $110,029,096 $139,838,319 $87,017,035 $ 61,325,363 ============== ================== ============== ================== ============== ================== 1,493,456 3,663,087 3,792,318 13,704,883 3,771,704 4,192,093 1,067,710 - 15,794 26,174 106,947 94,538 (2,541,439) (4,572,081) (8,531,811) (3,179,704) (984,943) (2,487,287) -------------- ------------------ -------------- ------------------ -------------- ------------------ 19,727 (908,994) (4,723,699) 10,551,353 2,893,708 1,799,344 5,723,523 6,632,517 15,446,848 4,895,495 9,275,792 7,476,448 -------------- ------------------ -------------- ------------------ -------------- ------------------ 5,743,250 5,723,523 10,723,149 15,446,848 12,169,500 9,275,792 ============== ================== ============== ================== ============== ================== $ 38,436,590 $151,387,685 $ 54,215,396 $123,284,118 $57,991,975 $ 69,915,069 56,312,359 163,795,587 96,421,309 41,285,979 37,485,625 58,301,505 $ (131,309) $ - $ (50,704) $ 66,439 $ 316,150 $ 580,891 ============== ================== ============== ================== ============== ==================
Financial Statements 81 Financial Highlights
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 Period Ended March 31, 2005 (unaudited) $12.70 $(0.05) $ 1.23 $ 1.18 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) Year Ended September 30, 2000 9.67 (0.02) (0.42) (0.44) ICON ENERGY FUND Period Ended March 31, 2005 (unaudited) 21.81 0.02 4.20 4.22 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) Year Ended September 30, 2000 7.98 0.04 5.17 5.21 ICON FINANCIAL FUND Period Ended March 31, 2005 (unaudited) 13.36 0.10 0.40 0.50 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 Year Ended September 30, 2000 8.99 0.11 3.28 3.39 ICON HEALTHCARE FUND Period Ended March 31, 2005 (unaudited) 13.70 (0.08) 2.86 2.78 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 Year Ended September 30, 2000 7.98 (0.08) 4.34 4.26 ICON INDUSTRIALS FUND Period Ended March 31, 2005 (unaudited) 10.52 (0.03) 1.37 1.34 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) Year Ended September 30, 2000 10.31 0.03 (0.47) (0.44) 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 Period Ended March 31, 2005 (unaudited) - - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - - - - Year Ended September 30, 2001 - - - - Year Ended September 30, 2000 - - - - ICON ENERGY FUND Period Ended March 31, 2005 (unaudited) - - - - 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) Year Ended September 30, 2000 - - - - ICON FINANCIAL FUND Period Ended March 31, 2005 (unaudited) (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) Year Ended September 30, 2000 (0.12) - - (0.12) ICON HEALTHCARE FUND Period Ended March 31, 2005 (unaudited) - (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) Year Ended September 30, 2000 - (0.31) - (0.31) ICON INDUSTRIALS FUND Period Ended March 31, 2005 (unaudited) - - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - - - - Year Ended September 30, 2001 (0.02) - - (0.02) Year Ended September 30, 2000 - (0.80) - (0.80)
(x) Calculated using the average share method. * The total return calculation is for the period indicated. (a) Annualized for periods less than a year. The accompanying notes are an integral part of the financial statements. 82 Financial Highlights
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(A) NET ASSETS(A) RATE --------- ------- -------------- -------------- ------------- ------------- --------- $13.88 9.29% $163,885 $163,285 1.30% (0.73)% 68.72% 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% 9.23 (4.55)% 40,894 46,246 1.35% (0.27)% 88.44% 26.03 19.35% 669,782 460,023 1.29% 0.14% 3.60% 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% 13.19 65.29% 44,294 29,564 1.36% 0.43% 123.70% 12.81 3.29% 204,092 203,133 1.29% 1.51% 61.01% 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% 12.26 38.14% 100,404 43,690 1.33% 1.14% 28.99% 16.44 20.40% 415,398 327,734 1.30% (1.02)% 15.33% 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% 11.93 55.35% 49,066 38,688 1.38% (0.74)% 115.05% 11.86 12.74% 222,691 215,691 1.29% (0.47)% 9.31% 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% 9.07 (4.32)% 22,068 21,220 1.38% 0.34% 72.90%
Financial Highlights 83 Financial Highlights (continued) (unaudited)
INCOME FROM INVESTMENT OPERATIONS ---------------------------------------- NET ASSET NET NET REALIZED VALUE, INVESTMENT AND UNREALIZED TOTAL FROM BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT OF PERIOD (LOSS) ON INVESTMENTS OPERATIONS --------- ---------- -------------- ---------- ICON INFORMATION TECHNOLOGY FUND Period Ended March 31, 2005 (unaudited) $ 7.90 $(0.05)(x) $ 0.26 $ 0.21 Year Ended September 30, 2004 8.27 (0.08) (0.29) (0.37) Year Ended September 30, 2003 5.98 (0.08)(x) 2.37 2.29 Year Ended September 30, 2002 7.80 (0.10)(x) (1.72) (1.82) Year Ended September 30, 2001 22.13 (0.10)(x) (4.03) (4.13) Year Ended September 30, 2000 19.00 (0.05)(x) 9.62 9.57 ICON LEISURE AND CONSUMER STAPLES FUND Period Ended March 31, 2005 (unaudited) 14.51 (0.03)(x) 1.92 1.89 Year Ended September 30, 2004 12.42 (0.04)(x) 2.13 2.09 Year Ended September 30, 2003 11.20 (0.06)(x) 1.28 1.22 Year Ended September 30, 2002 9.42 (0.07)(x) 1.85 1.78 Year Ended September 30, 2001 9.24 (0.05)(x) 0.26 0.21 Year Ended September 30, 2000 12.05 0.01(x) 0.25 0.26 ICON MATERIALS FUND Period Ended March 31, 2005 (unaudited) 9.05 0.01 1.21 1.22 Year Ended September 30, 2004 6.20 0.01(x) 2.87 2.88 Year Ended September 30, 2003 5.68 0.03(x) 0.50 0.53 Year Ended September 30, 2002 5.70 0.02(x) (0.01) 0.01 Year Ended September 30, 2001 6.49 0.02(x) (0.74) (0.72) Year Ended September 30, 2000 7.31 0.03(x) (0.85) (0.82) ICON TELECOMMUNICATION & UTILITIES FUND Period Ended March 31, 2005 (unaudited) 6.61 0.05(x) 0.57 0.62 Year Ended September 30, 2004 5.69 0.07(x) 0.92 0.99 Year Ended September 30, 2003 4.78 0.10(x) 0.87 0.97 Year Ended September 30, 2002 6.19 0.10(x) (1.45) (1.35) Year Ended September 30, 2001 8.13 0.09(x) (1.52) (1.43) Year Ended September 30, 2000 10.04 0.20(x) 0.99 1.19 LESS DIVIDENDS AND DISTRIBUTIONS ------------------------------------------------------- DIVIDENDS DISTRIBUTIONS TOTAL FROM NET FROM NET DIVIDENDS INVESTMENT REALIZED RETURN AND INCOME GAINS OF CAPITAL DISTRIBUTIONS ---------- ------------- ---------- ------------- ICON INFORMATION TECHNOLOGY FUND Period Ended March 31, 2005 (unaudited) - - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - - - - Year Ended September 30, 2001 - $(10.20) - $(10.20) Year Ended September 30, 2000 - (6.44) - (6.44) ICON LEISURE AND CONSUMER STAPLES Period Ended March 31, 2005 (unaudited) - (3.43) - (3.43) Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - - - Year Ended September 30, 2001 $(0.01) (0.02) - (0.03) Year Ended September 30, 2000 - (3.07) - (3.07) ICON MATERIALS FUND Period Ended March 31, 2005 (unaudited) (0.01) - - (0.01) Year Ended September 30, 2004 (0.03) - - (0.03) Year Ended September 30, 2003 (0.01) - - (0.01) Year Ended September 30, 2002 (0.03) - - (0.03) Year Ended September 30, 2001 (0.07) - - (0.07) Year Ended September 30, 2000 - - - - ICON TELECOMMUNICATION & UTILITIES Period Ended March 31, 2005 (unaudited) (0.08) - - (0.08) Year Ended September 30, 2004 (0.07) - - (0.07) Year Ended September 30, 2003 (0.06) - - (0.06) Year Ended September 30, 2002 (0.06) - - (0.06) Year Ended September 30, 2001 (0.11) (0.40) - (0.51) Year Ended September 30, 2000 (0.16) (2.94) - (3.10)
(x) Calculated using the average share method. * The total return calculation is for the period indicated. (a) Annualized for periods less than a year. The accompanying notes are an integral part of the financial statements. 84 Financial Highlights
RATIO OF NET NET ASSET AVERAGE NET RATIO OF INVESTMENT VALUE, NET ASSETS, ASSETS FOR EXPENSES INCOME/(LOSS) PORTFOLIO END OF TOTAL END OF PERIOD THE PERIOD TO AVERAGE TO AVERAGE TURNOVER PERIOD RETURN* (IN THOUSANDS) (IN THOUSANDS) NET ASSETS(A) NET ASSETS(A) RATE --------- ------- -------------- -------------- ------------- ------------- --------- $ 8.11 2.66% $279,387 $317,373 1.32% (1.13)% 65.75% 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% 22.13 59.24% 46,689 56,279 1.35% (0.23)% 137.69% 12.97 13.88% 74,471 66,742 1.41% (0.39)% 55.52% 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% 9.24 5.27% 7,765 18,029 1.51% 0.13% 24.50% 10.26 13.53% 110,029 124,340 1.34% 0.07% 43.43% 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% 6.49 (11.22)% 18,162 23,620 1.41% 0.42% 91.76% 7.15 9.41% 87,017 70,637 1.33% 1.43% 52.71% 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% 8.13 14.99% 8,619 7,231 1.53% 2.43% 41.86%
Financial Highlights 85 Notes to Financial Statements March 31, 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"), 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 risk of loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment in a non-diversified sector fund may involve greater risk and volatility than a diversified fund. Investments in foreign securities 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. 86 Notes to Financial Statements INVESTMENT VALUATION The Funds' securities and other assets are valued at the close of the regular trading session of the New York Stock Exchange (the "NYSE") (normally 4 p.m. Eastern time) each day the NYSE is open, except that securities traded primarily on the NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at the NASDAQ Official Closing Price provided by NASDAQ each business day. The Funds use pricing services to determine the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service quote of valuation is 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. 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. A security listed or traded primarily on a securities exchange or in the over-the-counter market is generally valued at its last sale price on the exchange or market where it is principally traded, except that securities primarily traded on NASDAQ are normally valued at the NASDAQ Official Closing Price. Lacking any sales that day, the security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes from dealers making a market for the security. Options are valued at their closing mid-price on the principal market where the option is traded. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than sixty days are valued in accordance with the evaluated bid price supplied by the pricing service. Short-term securities with remaining maturities of sixty days or less are generally valued at amortized cost or original cost plus accrued interest, which approximates market value. 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. Notes to Financial Statements 87 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 period ended March 31, 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 period ended March 31, 2005. 88 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 as of March 31, 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 Notes to Financial Statements 89 Notes to Financial Statements (continued) 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 period. INCOME TAXES The Funds intend to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code and, accordingly, the Funds will generally not be subject to federal and state income taxes, or federal excise taxes to the extent that they intend to make sufficient distributions of net investment income and net realized capital gain. Dividends received by shareholders of the Funds which are derived from foreign source income and foreign taxes paid by the Funds are to be treated, to the extent allowable under the Code, as if received and paid by the shareholders of the Funds. Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders. Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryovers. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles generally accepted in the United States of America. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Certain dividends from foreign securities will be recorded as soon as the Funds are informed of the dividend if such information is obtained subsequent to the ex-dividend date. 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. 90 Notes to Financial Statements EXPENSES Expenses which cannot be directly attributed to a specific fund in the Trust are apportioned between all funds in the Trust based upon relative net assets. 2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEES ICON Advisers, Inc. ("ICON") serves as the investment adviser to the Funds and is responsible for managing the Funds' portfolios of securities. 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 during the period. 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. The Funds 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. 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 and Administration Services 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. Notes to Financial Statements 91 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. During the period, 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) receive no compensation from the Funds. There are certain employees of ICON, such as the Chief Compliance Officer and staff who administer the compliance program, for which the Funds reimburse ICON for certain amounts related to compensation and certain other expenses incurred. For the period ended March 31, 2005, the total related amounts paid by the Trust 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 purposes. Interest on these borrowings was calculated at prime, which was 5.5% at March 31, 2005. A commitment fee of $500 per line of credit has been 92 Notes to Financial Statements paid by each Fund. The maximum borrowing was limited to 25% of eligible securities held by the portfolio subject to the following maximums: ICON Consumer Discretionary Fund $30,000,000 ICON Energy Fund $30,000,000 ICON Financial Fund $35,250,000 ICON Healthcare Fund $50,000,000 ICON Industrials Fund $17,250,000 ICON Information Technology Fund $56,500,000 ICON Leisure and Consumer Staples Fund $19,250,000 ICON Materials Fund $15,000,000 ICON Telecommunication & Utilities Fund $ 8,750,000
The Information Technology Fund and the Telecommunication & Utilities Fund had $259,012 and $237,434 outstanding, respectively, as of March 31, 2005. Effective April 18, 2005, the Fund 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 $135 million. 4. FEDERAL INCOME TAX Income and capital gain distributions are determined in accordance with income tax regulations that may differ from accounting principles that are generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferrals of wash losses, foreign currency transactions, net investment losses, and capital loss carryovers. The tax components of capital shown in the following tables represent losses or deductions the Funds may be able to offset against income and gains recognized in future years and post October loss deferrals. The accumulated losses noted in the following tables represent net capital loss carryovers as of September 30, 2004 that may be available to offset future realized capital gains Notes to Financial Statements 93 Notes to Financial Statements (continued) and thereby reduce future taxable income distributions. These carryovers expire between September 30, 2007 and September 30, 2012.
ACCUMULATED UNDISTRIBUTED UNDISTRIBUTED POST OCTOBER CAPITAL LOSSES ORDINARY INCOME LONG-TERM GAIN DEFERRALS ---------------------------------------------------------------------------------------- ICON Consumer Discretionary Fund $ 6,093,146 $ - $ - $ - ICON Energy Fund 7,535,248 - - - ICON Financial Fund - 4,356,214 8,570,377 - ICON Healthcare Fund - - 877,473 - ICON Industrials Fund 24,281,548 - - - ICON Information Technology Fund 64,435,458 - - - ICON Leisure and Consumer Staples Fund - - 10,402,210 - ICON Materials Fund 19,740,720 66,439 - - ICON Telecommunication & Utilities Fund 4,843,948 580,890 - -
During the year ended September 30, 2004, the following capital loss carryforwards were used: ICON Consumer Discretionary Fund $17,445,952 ICON Energy Fund 512,039 ICON Financial Fund 3,207,869 ICON Healthcare Fund 3,187,635 ICON Industrial Fund 707,191 ICON Information Technology Fund 30,004,747 ICON Leisure and Consumer Staples Fund 1,473,912 ICON Materials Fund 692,400 ICON Telecommunication & Utilities Fund 1,418,957
94 Notes to Financial Statements As of March 31, 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:
UNREALIZED UNREALIZED NET APPRECIATION COST APPRECIATION (DEPRECIATION) (DEPRECIATION) ----------------------------------------------------------------------------------------- ICON Consumer Discretionary Fund $145,629,482 $ 20,343,000 $(2,388,763) $ 17,954,237 ICON Energy Fund 538,702,889 136,376,798 (5,996,348) 130,380,450 ICON Financial Fund 177,709,041 25,151,192 (2,808,241) 22,342,951 ICON Healthcare Fund 323,554,022 97,704,609 (4,963,024) 92,741,585 ICON Industrials Fund 166,596,439 58,321,880 (2,454,792) 55,867,088 ICON Information Technology Fund 252,881,921 29,474,445 (4,111,825) 25,362,620 ICON Leisure and Consumer Staples Fund 59,903,149 15,737,705 (742,411) 14,995,294 ICON Materials Fund 87,645,677 22,794,356 (673,367) 22,120,989 ICON Telecommunication & Utilities Fund 75,283,130 12,978,003 (1,474,883) 11,503,120
Notes to Financial Statements 95 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 96 [ICON FUNDS LOGO] 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
[ICON FUNDS LOGO] 1-800-764-0442 www.iconadvisers.com ICRPANNUSECT I-143-SEC ITEM 2. CODE OF ETHICS. Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so. NOT APPLICABLE - ONLY FOR ANNUAL REPORTS. The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 11(a)(1), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item. If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver. 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. (a) (1) Disclose that the registrant's board of directors has determined that the registrant either: (i) Has at least one audit committee financial expert serving on its audit committee; or (ii) Does not have an audit committee financial expert serving on its audit committee. (2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is "independent." In order to be considered "independent" for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) Be an "interested person" of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a- 2(a)(19)). (3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert. NOT APPLICABLE - ONLY FOR ANNUAL REPORTS. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. (b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. (c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. (d) Disclose, under the caption All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. (e) (1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. (2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. (h) Disclose whether the registrant's audit committee of the board of directors has considered whether the provision of nonaudit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. NOT APPLICABLE - ONLY FOR ANNUAL REPORTS. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. (a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant's audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state. (b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17CFR 240.10A-3(d)) regarding an exemption from the listing standards for all audit committees. NOT APPLICABLE. ITEM 6. SCHEDULE OF INVESTMENTS. File Schedule I - Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in Section 210.12-12 of Regulation S-X, unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form. NOT APPLICABLE. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company's investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company's investment adviser, or any other third party, that the company uses, or that are used on the company's behalf, to determine how to vote proxies relating to portfolio securities. NOT APPLICABLE. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. If the registrant is a closed-end management investment company that is filing an annual report on this Form N-CSR, provide the information specified in paragraphs (a) and (b) of this Item with respect to portfolio managers. NOT APPLICABLE. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. If the registrant is a closed-end management investment company, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any "affiliated purchaser," as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrant's equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781). NOT APPLICABLE. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. NOT APPLICABLE. ITEM 11. CONTROLS AND PROCEDURES. (a) Disclose the conclusions of the registrant's principal executive and principal financial officers, or persons performing similar functions, regarding the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)). 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 (i) ACCUMULATED AND COMMUNICATED TO THE INVESTMENT COMPANY'S MANAGEMENT, INCLUDING ITS CERTIFYING OFFICERS, TO ALLOW TIMELY DECISIONS REGARDING REQUIRED DISCLOSURE; AND (ii) RECORDED, PROCESSED, SUMMARIZED AND REPORTED WITHIN THE TIME PERIODS SPECIFIED IN THE SECURITIES AND EXCHANGE COMMISSION'S RULES AND FORMS. (b) Disclose any change 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 has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. THERE WERE NO CHANGES IN THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL REPORTING 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) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. NOT APPLICABLE - ONLY EFFECTIVE FOR ANNUAL REPORTS. (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2). CERTIFICATIONS PURSUANT TO RULE 30a-2(a) ARE ATTACHED HERETO. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. NOT APPLICABLE. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by rule 30a-2(b) under the Act as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant incorporates it by reference. 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 June 6, 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 June 6, 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 June 6, 2005 ------------------------------------------------ * Print the name and title of each signing officer under his or her signature.