N-CSRS 1 d36664nvcsrs.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: September 30 Date of reporting period: March 31, 2006 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. March 31, 2006 (unaudited) 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 (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 44 ICON Long/Short Fund 54 SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE 65 FINANCIAL STATEMENTS 69 FINANCIAL HIGHLIGHTS 76 NOTES TO FINANCIAL STATEMENTS 80 OTHER INFORMATION 91
[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. The Adviser reimbursed certain fees of the Bond Fund, Covered Call Fund, Equity Income Fund and Long/Short Fund. If not for these reimbursements, performance would have been lower. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results represent past performance, and current performance may be higher or lower. Please call 1-800-764-0442 or visit www.iconadvisers.com for performance results current to the most recent month-end. PORTFOLIO DATA This report reflects ICON's views, opinions, and portfolio holdings as of March 31, 2006, the end of the reporting period. The information is not a complete analysis of every aspect of any sector, industry, security or the Funds. Opinions and forecasts regarding industries, companies and/or themes, and portfolio composition and holdings, are subject to change at any time based on market and other conditions, and should not be construed as a recommendation of any specific security. Each Fund's holdings as of March 31, 2006 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. ICON'S INVESTMENT APPROACH The Funds employ 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 of investment style, and searches for potential industry leadership wherever and whenever it may emerge. The Funds do not utilize static valuation metrics such as price-to-earnings (P/E). As we believe these measures do not adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that considers the effects of historical and projected earnings, projected growth, risk and interest rates (opportunity cost). By combined our determination of value with relative strength (RS), we aim to compute leading industry themes that are poised, in our view, to outperform the sector benchmark. For all corporate earnings and other financial information we rely on the integrity of the publicaly available financial information provided to the United States Securities and Exchange Commission. COMPARATIVE INDEXES The comparative indexes discussed in this report are meant to provide a basis for judging the Funds' performance against a specific securities index. Each index shown accounts for both change in security price and reinvestment of dividends and distributions, but does not reflect the costs of managing a mutual fund. The Funds' portfolios may significantly differ in holdings and composition from the index. Individuals cannot invest directly in an index. - The unmanaged Standard & Poor's SuperComposite 1500 (S&P 1500) Index is a broad-based capitalization-weighted index comprising 1,500 stocks of large-cap, mid-cap, and small-cap U.S. companies. - The Lehman Brothers (LB) U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, the non-ERISA portion of the Commercial Mortgage-Backed Securities (CMBS) Index and the CMBS High- Yield Index. All securities in this market-value weighted index have at least one year remaining to maturity and meet certain minimum issue size criteria. Index returns and statistical data included in this report are provided by Bloomberg, FactSet Research Systems, and Lehman Brothers. About This Report 3 Message from ICON Funds -------------------------------------------------------------------------------- Conflicting forces convinced many investors that the equity markets were in the throes of a sideways trading range. -------------------------------------------------------------------------------- Dear ICON Shareholder: 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 in tactical pursuit of industries we believe are poised to outperform the broader market. We are quantitative, unemotional and objective, and find strength in numbers. Whether you invest in our U.S. Diversified Funds, such as the ICON Core Equity Fund, our Sector Funds, such as the ICON Energy Fund, or our International Funds, such as the ICON Asia-Pacific Region Fund, each is powered by ICON's unique systematic discipline. A CLASSIC STOCK MARKET BATTLE "Strength in numbers" is an apt phrase to describe the fiscal six-month period, as conflicting forces convinced many investors that the equity markets were in the throes of a sideways trading range. The fact is stocks rallied nicely amid a mid-October dip and lackluster year-end finish. Despite posting solid gains against a backdrop of widespread guessing and reacting, the move up was stealth-like, so quiet that the word "rally" was conspicuous by its absence. Much of the guessing was focused on the likelihood of continued monetary tightening and future policy direction under new Federal Reserve Chairman Ben Bernanke. At the same time, investors reacted strongly to movements in energy prices, even though we had not seen appreciable increases in inflation or long-term interest rates. What we did see was a classic stock market battle that periodically pits prosperity and healthy corporate earnings against higher interest rates. Over the past few years, many market observers feared that events such as terrorism, war, hurricanes and rising oil prices would stall the economy. However, as investors realized that economic prosperity and higher earnings defied these even-related concerns, stocks prices have trended higher. RACING TO CATCH UP WITH VALUE While stock prices have continued to move higher, we believe recent uptrends in long-term interest rates have acted as a drag on the stock market, inhibiting the normal growth of equity valuations. Although the rise in AAA bond yields has been modest compared to the dramatic increases in the federal funds rate, intrinsic value has declined according to our system. Although further monetary tightening remains a distinct possibility, our system is designed in such a way that we do not have to "guess the Fed" or predict the 4 Message from ICON Funds We find strength in numbers, reflecting the fact that we are quantitative, unemotional and objective. (CRAIG T. CALLAHAN PHOTO) Craig T. Callahan President future. We simply have to recognize underpricing and overpricing when either condition occurs. While interest rate factors have cut into equity valuations, we believe these effects have been offset by rising earnings. Should conditions change, and value no longer supports higher equity prices, stocks could be viewed as overpriced and call for a more cautious stance on our part. -------------------------------------------------------------------------------- We believe recent uptrends in long-term interest rates have acted as a drag on the stock market, inhibiting the normal growth of equity valuations. -------------------------------------------------------------------------------- To date, this has not come to pass, and we continue to view stock prices, in general, to be below our estimate of intrinsic value. As long as this is the case, we will continue to ride out the volatility, enabling investors to participate in what are typically unpredictable market advances, where price races to catch up with value. Meanwhile, we believe that higher short-term interest rates and "Fed guessing" have dampened the attractiveness of bonds. Our system currently views long-term government bonds as overpriced and long-term corporate bonds as fairly valued, with yields inching higher, relative strength has weakened accordingly. Thus, we continue to reduce duration by selling longer maturities and purchasing shorter maturities, which has helped us avoid the negative effects of a seesaw rise in yields. The environment remains challenging, and we are flexibly positioned should conditions change. BULLISH POSTURE PROVED CORRECT It is our contention that investors have been continually fooled on the upside by the prosperity of cyclical companies. We have seen these industry and sector themes remain in place for the past three years, and this most recent reporting period was no exception. Industries in economically sensitive areas such as Energy, Materials, Industrials, and Information Technology led the way, while industries in the more defensive-oriented Utilities, Healthcare and Consumer Staples sectors lagged their cyclical peers. Given the consistently strong relative performance of the ICON Sector Funds, this comes as no surprise to us. Based on valuation, our bullish, fully invested posture proved to be absolutely correct, and we are pleased to have shared this success with you. Message from ICON Funds 5 Message from ICON Funds (continued) -------------------------------------------------------------------------------- Based on valuation, our bullish, fully invested posture proved to be absolutely correct. -------------------------------------------------------------------------------- Still, it is important to remember that value is never stagnant. Value moves as earnings grow, and so far robust earnings growth has won the battle versus rising interest rates. Whether this continues to be the case is not something we choose to predict. We remain highly confident, however, in the ability of our system to identify theme changes when and if they occur. In closing, we are most grateful for the privilege of guiding you through these challenging markets. For current market updates, as well as up-to-date Fund performance and account information, we invite you to visit our website at www.iconadvisers.com. Yours truly, /s/ Craig T. Callahan Craig T. Callahan, DBA Chairman of the Board of Trustees and President of the Adviser Consider the investment objectives, risks, charges, expenses, and share classes of each ICON Fund carefully before investing. The prospectus contains this and other information about the Funds and is available by visiting www.iconadvisers.com or calling 1-800-764-0442. Please read the prospectus carefully before investing. An investment in a non-diversified sector fund or region fund may involve greater risk and volatility than a more diversified fund. Investments in foreign securities may entail unique risks, including political, market, and currency risks. The ICON system relies on the integrity of financial statements released to the market as part of our analysis. 6 Message from ICON Funds Management Overview ICON Bond Fund -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION March 31, 2006 Corporate Bonds 67.2% Investment Grade 48.4% Non-Investment Grade 18.8% U.S. Governments and Agencies 27.6% Foreign Government Bonds 2.4% Short-Term Investments 2.9% Percentages are based upon net assets. PORTFOLIO HIGHLIGHTS March 31, 2006 Number of Bonds(1) 124 Weighted average maturity(1) 3.3 Years Weighted average duration(1) 2.2 Years 30-Day SEC Yield (after expense limitation) - Class I 4.64% 30-Day SEC Yield (before expense limitation) - Class I 4.53% 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-month period ended March 31, 2006, the ICON Bond Fund returned 0.02% for Class I shares, -0.28% for Class C shares and 0.16% for Class Z shares, underperforming the 0.29% 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, 2006 appear on page 11. Q. WHICH MARKET FACTORS INFLUENCED THE FUND'S RELATIVE PERFORMANCE? A. The Federal Reserve remained concerned with inflation, surprising many "one and done" speculators by raising the target federal funds rate four times over the course of the period. In his first meeting as Fed chairman, Ben Bernanke maintained existing Fed policy, while leaving the door open for further policy firming. Meanwhile, speculation over when the Fed would cease monetary tightening led to a seesaw rise in long-term rates. Although the yield curve remained relatively flat, it experienced its share of volatility, inverting several times throughout the period. Against this backdrop, the past six months were difficult for bonds, as reflected in the Fund's overall performance. Our bond model indicated little reason to own longer-dated maturities, which are more sensitive to rising interest rates. Thus, the Fund systematically reduced duration by eliminating longer maturities and increasing shorter-dated issues, lowering the portfolio's weighted average duration from 5.7 years to 2.7 years by period-end. This reduction helped the Fund avoid some, but not all, of the negative effects associated with rising long-term rates. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Given a generally challenging environment for bonds, characterized by rising long-term rates and a relatively flat yield curve, longer-duration bonds underperformed shorter-term issues. While the Fund does not invest based on projected interest rate movements, net duration was steadily reduced during the period, as our value-driven analysis favored opportunities at the short end of the yield curve. As a result, the Fund's weighting in issues with maturities of less than one year more than doubled during the period, rising to 52% from 25%. The Fund's overall reduction in duration helped it avoid much of the pain associated with rising long-term rates, as evidenced by the -2.02% six-month total return recorded by the 10-year U.S. Treasury. Management Overview 7 Management Overview (continued) ICON Bond Fund Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE BOND MARKET? A. At period-end, we had witnessed a slightly steeper yield curve along with a rise in long-term rates. However, we do not currently view long-term bonds as attractive. Our analysis continues to show government bonds with maturities beyond the 10-year U.S. Treasury as unattractive based on value and relative strength. While rising long-term yields have increased value in this area slightly, relative strength has weakened accordingly. That said, we continue to reduce the Fund's duration by selling remaining longer-dated issues and adding to our portfolio of short-term liquid maturities. We believe this tilt is well positioned for the current market environment, offering considerable flexibility should new leadership emerge. 8 Management Overview [TODD BURCHETT PHOTO] Todd Burchett Portfolio Manager PERFORMANCE HIGHLIGHTS March 31, 2006 - Given a generally challenging environment for bonds, with rising long-term rates and a relatively flat yield curve, longer-duration bonds underperformed shorter-term issues. - The Fund's net duration was steadily reduced during the period, as our value-driven analysis favored shorter-maturity opportunities. Management Overview 9 Management Overview (continued) ICON Bond Fund TOP 10 BOND HOLDINGS March 31, 2006 DaimlerChrysler NA Holding, 6.40%, 5/15/06 3.3% U.S. Treasury, 2.00%, 5/15/2006 3.0% U.S. Treasury, 2.63%, 11/15/2006 2.9% U.S. Treasury, 3.99%, 4/13/2006 2.4% Household Financial Corp., 5.75%, 1/30/07 2.3% Keycorp, 2.75%, 2/27/07 2.0% U.S. Treasury, 3.50%, 11/15/06 1.8% Federal Home Loan Mortgage Corp. (FHLMC), 5.05%, 2/28/13 1.7% Federal Home Loan Mortgage Corp. (FHLMC), 5.16%, 2/27/15 1.7% Federal National Mortgage Association (FNMA), 5.00%, 3/9/15 1.7%
Percentages are based upon net assets. CREDIT QUALITY DIVERSIFICATION March 31, 2006 Aaa 29.2% Aa1 1.6% Aa2 0.2% Aa3 5.4% A1 7.7% A2 7.1% A3 12.7% Baa1 2.9% Baa2 4.1% Baa3 7.6% Ba1 4.7% Ba2 4.1% Ba3 4.0% B1 1.6% B2 2.7% B3 1.6%
Percentages based on total investments less short-term investments. Ratings based on Moody's. 10 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
INCEPTION SINCE DATE 6 MONTH* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON Bond Fund - Class I 9/30/02 0.02% 1.11% N/A 4.15% --------------------------------------------------------------------------------------------- Lehman Brothers U.S. Universal Index 0.29% 2.95% N/A 4.33% --------------------------------------------------------------------------------------------- ICON Bond Fund - Class C 10/21/02 -0.28% 0.48% N/A 4.28% --------------------------------------------------------------------------------------------- Lehman Brothers U.S. Universal Index 0.29% 2.95% N/A 4.98% --------------------------------------------------------------------------------------------- ICON Bond Fund - Class Z 5/6/04 0.16% 1.24% N/A 3.04% --------------------------------------------------------------------------------------------- Lehman Brothers U.S. Universal Index 0.29% 2.95% N/A 4.20% ---------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2006 [BAR CHART]
LEHMAN BROTHERS U.S. UNIVERSAL ICON BOND FUND - CLASS I INDEX ------------------------ ------------------------------ 9/30/02 10000.00 10000.00 10053.00 10200.00 3/31/03 10245.00 10385.00 10854.00 10706.00 10820.00 10714.00 11070.00 10795.00 3/31/04 11422.00 11083.00 10984.00 10812.00 11406.00 11186.00 11527.00 11330.00 3/31/05 11404.00 11266.00 11744.00 11615.00 11528.00 11565.00 11510.00 11639.00 3/31/06 11531.00 11599.00
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund's Class I shares on the Class' inception date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund's other share classes will vary due to differences in charges and expenses. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Management Overview 11 Schedule of Investments ICON Bond Fund March 31, 2006 (unaudited)
PRINCIPAL AMOUNT VALUE --------------------------------------------- CORPORATE BONDS 67.2% $ 200,000 Ace Capital Trust II, 9.70%, 04-01-30 $ 266,319 220,000 Ace INA Holdings, Inc., 8.88%, 08-15-29 277,920 400,000 AFC Capital Trust I, 8.21%, 02-03-27 414,377 1,000,000 AIG International Lease Finance Corp., 5.75%, 02-15-07 1,003,156 868,000 AK Steel Corp., 7.88%, 02-15-09 872,340 275,000 Allied Waste North America, 5.75%, 02-15-11 261,938 150,000 Allstate Life Global Fund, 3.50%, 07-30-07 146,306 112,000 Avnet, Inc., 8.00%, 11-15-06 113,260 240,000 Axa SA, 8.60%, 12-15-30 306,766 297,000 Calenergy Co., Inc., 7.63%, 10-15-07 306,159 150,000 Caliber System, 7.80%, 08-01-06 150,983 1,000,000 CBS Corp., 5.63%, 05-01-07 999,407 1,127,000 Chartered Semiconductor, 5.75%, 08-03-10 1,111,411 304,000 Chase Manhattan Corp., 7.25%, 06-01-07 310,149 1,020,000 Cigna Corp., 8.25%, 01-01-07 1,039,423 450,000 Cincinnati Financial Corp., 6.90%, 05-15-28 481,242 410,000 CNA Financial Corp., 6.60%, 12-15-08 420,713 250,000 CNA Financial Corp., 7.25%, 11-15-23 262,177 400,000 Comcast Cable Communications, 8.88%, 05-01-17 475,116 360,000 Corestates Capital WB, 6.75%, 11-15-06 362,336
PRINCIPAL AMOUNT VALUE --------------------------------------------- $ 700,000 Countrywide Home Loan, 5.50%, 02-01-07 $ 700,590 1,000,000 Countrywide Home Loan, 4.13%, 09-15-09 955,825 114,000 Cox Communications, Inc., 7.63%, 06-15-25 121,569 100,000 D.R. Horton, Inc., 8.00%, 02-01-09 105,411 2,750,000 DaimlerChrysler NA Holding, 6.40%, 05-15-06 2,753,870 250,000 DaimlerChrysler NA Holding, 7.38%, 09-15-06 252,156 470,000 DaimlerChrysler NA Holding, 4.13%, 03-07-07 464,885 750,000 DaimlerChrysler NA Holding, 4.75%, 01-15-08 739,801 500,000 DaimlerChrysler NA Holding, 8.00%, 06-15-10 537,872 500,000 DaimlerChrysler NA Holding, 8.50%, 01-18-31 584,941 260,000 Dillards, Inc., 9.50%, 09-01-09 278,850 1,155,000 Eastman Kodak Co., 6.38%, 06-15-06 1,155,493 750,000 Embratel, 11.00%, 12-15-08 834,375 589,000 Fairfax Financial Holdings, 7.75%, 04-26-12 518,320 500,000 Farmers Insurance Capital Notes*, 7.20%, 07-15-48 496,686 6,000 First American Financial, 7.55%, 04-01-28 6,445 940,000 First Chicago NBD Corp., 7.00%, 10-16-06 947,344 760,000 First Data Corp., 4.70%, 11-01-06 757,763 1,200,000 Ford Motor Credit Co., 6.50%, 01-25-07 1,195,406
12 Schedule of Investments
PRINCIPAL AMOUNT VALUE --------------------------------------------- $ 940,000 General Electric Capital Corp., 2.80%, 01-15-07 $ 923,417 441,000 General Mills, Inc., 2.63%, 10-24-06 433,794 100,000 General Motors Acceptance Corp., 4.00%, 05-15-06 99,248 950,000 General Motors Acceptance Corp., 4.50%, 07-15-06 941,847 1,000,000 General Motors Acceptance Corp., 6.13%, 09-15-06 995,388 1,000,000 General Motors Acceptance Corp., 6.13%, 02-01-07 984,563 650,000 GTE Southwest, Inc., 6.23%, 01-01-07 653,107 600,000 Halliburton Co., 6.00%, 08-01-06 600,950 1,028,000 Hilton Hotels Corp., 7.95%, 04-15-07 1,050,298 1,950,000 Household Financial Corp., 5.75%, 01-30-07 1,958,165 138,000 Household Financial Corp., 7.65%, 05-15-07 140,915 670,000 Household Financial Corp., 5.88%, 02-01-09 679,320 750,000 IBM Corp., 2.38%, 11-01-06 738,427 250,000 IBM Corp., 3.80%, 02-01-08 243,678 725,000 International Lease Finance Corp., 2.95%, 05-23-06 723,079 1,109,000 International Lease Finance Corp., 5.63%, 06-01-07 1,109,558 450,000 John Hancock*, 7.38%, 02-15-24 513,340 500,000 Johnson Controls, Inc., 5.00%, 11-15-06 498,264 50,000 JP Morgan Chase & Co., 6.70%, 11-01-07 50,958 455,000 JP Morgan Chase & Co., 6.75%, 08-15-08 468,814
PRINCIPAL AMOUNT VALUE --------------------------------------------- $ 921,000 Keycorp, 3.05%, 11-22-06 $ 907,261 1,750,000 Keycorp, 2.75%, 02-27-07 1,703,208 1,055,000 Liberty Mutual Group*, 6.50%, 03-15-35 996,088 430,000 Liberty Mutual Insurance*, 8.20%, 05-04-07 437,649 250,000 Loews Corp., 6.75%, 12-15-06 251,582 260,000 Marsh & Mclennan Cos., Inc., 5.38%, 03-15-07 259,285 500,000 McDonnell Douglas Corp., 6.88%, 11-01-06 503,956 550,000 Mediacom Broadband LLC, 11.00%, 07-15-13 585,750 288,000 Merck & Co., Inc., 2.50%, 03-30-07 280,198 500,000 Morgan Stanley, 3.88%, 01-15-09 481,079 1,000,000 National City Bank, 2.38%, 08-15-06 989,433 400,000 New Jersey Bell Telephone, 7.85%, 11-15-29 425,388 122,000 NLV Financial Corp.*, 6.50%, 03-15-35 111,538 929,000 Owens Illinois, Inc., 8.10%, 05-15-07 945,258 500,000 Pemex Project Funding Trust, 8.50%, 02-15-08 524,000 270,000 Phillip Morris Co., Inc., 7.20%, 02-01-07 272,718 815,000 Popular NA, Inc., 6.13%, 10-15-06 818,183 300,000 Private Export Funding, Series B, 6.49%, 07-15-07 304,652 200,000 Pulte Homes, Inc., 4.88%, 07-15-09 194,677 350,000 Royal Caribbean Cruises, 6.75%, 03-15-08 356,169
Schedule of Investments 13 Schedule of Investments (continued) ICON Bond Fund March 31, 2006(unaudited)
PRINCIPAL AMOUNT VALUE --------------------------------------------- $ 100,000 Sears Roebuck Acceptance Corp., 6.70%, 11-15-06 $ 99,734 100,000 Sears Roebuck Acceptance Corp., 7.00%, 06-15-07 99,805 382,000 Sears Roebuck Acceptance Corp. 6.25%, 05-01-09 384,642 213,000 Semco Energy, Inc., 6.40%, 11-25-08 205,529 40,000 Suntrust Bank, 2.50%, 11-01-06 39,362 500,000 Target Corp., 3.38%, 03-01-08 483,003 350,000 Telefonica de Argentina - YD, 9.13%, 11-07-10 364,875 500,000 Tennessee Gas Pipeline, 7.00%, 10-15-28 494,294 727,000 Textron Financial Corp., 2.75%, 06-01-06 724,498 450,000 Time Warner Cos., Inc., 7.48%, 01-15-08 464,494 630,000 Travelers Property & Casualty, 6.75%, 11-15-06 632,887 288,000 TRW, Inc., 6.32%, 05-27-08 289,292 500,000 Tyco International, Ltd. - YD, 6.13%, 11-01-08 506,778 155,000 Union Carbide Corp., 6.70%, 04-01-09 157,226 250,000 Union Carbide Corp., 7.50%, 06-01-25 267,382 550,000 Union Tank Car Co., 7.13%, 02-01-07 558,672 410,000 Verizon, Inc., 8.30%, 08-01-31 456,852 1,312,000 Wells Fargo Co., 5.90%, 05-21-06 1,313,324 500,000 Wisconsin Power & Light Co., 7.00%, 06-15-07 507,773 ----------- TOTAL CORPORATE BONDS (COST $56,903,150) 56,194,724
PRINCIPAL AMOUNT VALUE --------------------------------------------- U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY BONDS 27.6% $ 270,000 Fannie Mae, 3.10%, 07-28-08 $ 258,560 1,500,000 Fannie Mae, 5.00%, 03-09-15 1,442,708 500,000 Fannie Mae, 5.00%, 04-17-15 480,448 1,000,000 Fannie Mae, 5.00%, 07-09-18 935,028 700,000 Federal Farm Credit Bank, 4.00%, 12-05-06 694,753 255,000 Federal Farm Credit Bank, 5.90%, 08-04-08 259,704 1,000,000 Federal Home Loan Bank, 4.00%, 02-12-10 958,399 405,000 Federal Home Loan Bank, 4.80%, 03-19-13 389,832 750,000 Federal Home Loan Bank, 5.50%, 02-14-20 714,479 500,000 Federal Home Loan Bank, 5.50%, 03-03-20 476,415 1,500,000 Federal Home Loan Mortgage Corp., 5.05%, 02-28-13 1,462,187 370,000 Federal Home Loan Mortgage Corp., 5.00%, 10-29-13 358,693 457,000 Federal Home Loan Mortgage Corp., 5.00%, 09-15-14 441,517 1,500,000 Federal Home Loan Mortgage Corp., 5.16%, 02-27-15 1,457,833 400,000 Federal Home Loan Mortgage Corp., 5.00%, 12-15-15 383,821 550,000 Federal Home Loan Mortgage Corp., 5.00%, 09-09-16 524,937 975,000 Federal Home Loan Mortgage Corp., 5.25%, 07-27-17 936,598
14 Schedule of Investments
PRINCIPAL AMOUNT VALUE --------------------------------------------- $2,000,000 U.S. Treasury Bill, 3.99%, 04-13-06 $ 1,997,007 500,000 U.S. Treasury Note, 2.25%, 04-30-06 499,148 2,500,000 U.S. Treasury Note, 2.00%, 05-15-06 2,491,931 1,000,000 U.S. Treasury Note, 2.38%, 08-15-06 991,289 1,000,000 U.S. Treasury Note, 6.50%, 10-15-06 1,008,320 2,440,000 U.S. Treasury Note, 2.63%, 11-15-06 2,406,640 1,500,000 U.S. Treasury Note, 3.50%, 11-15-06 1,487,343 ----------- TOTAL U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY BONDS (COST $23,436,353) 23,057,590 FOREIGN GOVERNMENT BOND 2.4% 1,000,000 Federal Republic Of Brazil - YD, 9.38%, 04-07-08 1,068,500 750,000 Federal Republic Of Brazil - YD, 14.50%, 10-15-09 960,000 ----------- TOTAL FOREIGN GOVERNMENT BOND (COST $2,062,500) 2,028,500
PRINCIPAL AMOUNT VALUE --------------------------------------------- SHORT-TERM INVESTMENTS 2.9% $2,424,607 Brown Brothers Harriman Time Deposit, 4.07%, 04-03-06# $ 2,424,607 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $2,424,607) 2,424,607 TOTAL INVESTMENTS (COST $84,826,610) 100.1% 83,705,421 LIABILITIES LESS OTHER ASSETS (0.1)% (72,151) ----------- TOTAL NET ASSETS 100.0% $83,633,270 ===========
The accompanying notes are an integral part of the financial statements. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. * Security was acquired pursuant to Rule 144A of the Securities Act of 1933 and may be deemed to be restricted for resale. YD Yankee Dollar Bond Schedule of Investments 15 Management Overview ICON Core Equity Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 98.5% Top 10 Equity Holdings 13.6% Number of Stocks 124 Short-Term Investments 1.4% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Grant Prideco, Inc. 1.5% MSC Industrial Direct Co., Inc. - Class A 1.5% America Movil S.A. De C.V. - ADR 1.5% Aleris International, Inc. 1.4% Celgene Corp. 1.4% BHP Billiton, Ltd. - ADR 1.3% Mylan Laboratories, Inc. 1.3% CSX Corp. 1.3% Coldwater Creek, Inc. 1.2% PSS World Medical, Inc. 1.2% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. For the six-month period ended March 31, 2006, the ICON Core Equity Fund returned 12.44% for Class I shares, 12.02% for Class C shares and 12.46% for Class Z shares, outperforming the 7.08% return of the S&P 1500 Index, the Fund's benchmark, over the same period. Total returns for other periods as of March 31, 2006 appear on page 22. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund performed strongly during the period as a valuation-driven tilt toward cyclical industries, primarily in the Industrials and Materials sectors, fueled outsized relative returns. While each of the nine economic sectors we track posted positive results for the period, the top performers were Industrials and Materials, areas where the Fund was actively overweighted. Overall, the Fund maintained exposure to all economic sectors, as valuations were attractive across a wide spectrum of industries. However, the portfolio was decidedly underweight the Leisure & Consumer Staples sector as most of its constituent industries lacked compelling combinations of value and relative strength. With the sector lagging the broad S&P 1500 Index, the Fund's underexposure helped drive its relative outperformance. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Underscoring the cyclical nature of the period's rally, primary contributors to performance included Industrials sector components trading companies & distributors, construction & farm machinery & heavy trucks, and railroads. Steel was a major contributor from the Materials sector, while leading Financials sector industry investment banking & brokerage boosted relative returns. Conversely, industries such as managed healthcare, food retail, food distributors, oil & gas drilling, and oil & gas exploration & production detracted from Fund performance. Notably, two of these industries were within the Leisure & Consumer Staples sector, which was deemed out of favor as investors leaned toward cyclical issues. Minimally negative returns posted by the two Energy-related industries appeared motivated by investor uncertainty amid extreme volatility. 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 (TODD BURCHETT PHOTO) Todd Burchett Portfolio Manager Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET? A. While stocks ended the period trading at a relatively smaller discount to fair value than when it began, our analysis continues to show some upside potential in a large number of industries. Moreover, company fundamentals appear attractive despite ever-present macroeconomic concerns. Moving ahead, we expect to increase exposure to the Consumer Discretionary sector. The sector appears to have been out of favor on fears that rising energy prices would crimp consumer spending. Nevertheless, fundamentals remain strong and we have yet to see a sustained slowdown in discretionary buying. Meanwhile, we anticipate continued strength in Materials and Industrials, although these sectors are now trading close to fair value. As such, we will carefully monitor our positions and could very well pare back exposure if valuations become increasingly less attractive. Management Overview 17 Management Overview (continued) ICON Core Equity Fund PERFORMANCE HIGHLIGHTS March 31, 2006 - The Fund performed strongly during the period as a valuation-driven tilt toward cyclical industries, primarily in the Industrials and Materials sectors, fueled relative performance. - Primary industry contributors included trading companies & distributors, construction & farm machinery & heavy trucks, railroads, steel and investment banking & brokerage. - Meaningful industry detractors included managed healthcare, food retail, food distributors, oil & gas drilling, and oil & gas exploration & production. 18 Management Overview SECTOR COMPOSITION March 31, 2006 Industrials 19.2% Financial 16.5% Information Technology 14.0% Consumer Discretionary 13.6% Healthcare 12.1% Materials 9.7% Energy 9.1% Telecommunication and Utilities 2.4% Leisure and Consumer Staples 1.9%
Percentages are based upon net assets. Management Overview 19 Management Overview (continued) ICON Core Equity Fund INDUSTRY COMPOSITION March 31, 2006 Pharmaceuticals 4.9% Health Care Distributors 4.5% Oil & Gas Equipment & Services 4.1% Apparel Retail 4.0% Oil & Gas Drilling 3.9% Trading Companies & Distributors 3.1% Semiconductors 3.0% Trucking 2.9% Computer Storage & Peripherals 2.7% Aluminum 2.5% Asset Management & Custody Banks 2.5% Railroads 2.5% Investment Banking & Brokerage 2.3% Thrifts & Mortgage Insurance 2.3% Air Freight & Logistics 2.1% Airlines 2.0% Construction & Farm Machinery & Heavy Trucks 2.0% Home Furnishings 2.0% Communications Equipment 1.9% Construction Materials 1.9% Steel 1.8% Building Products 1.7% Catalog Retail 1.7% Consumer Finance 1.6% Wireless Telecommunication Services 1.5% Auto Parts & Equipment 1.4% Biotechnology 1.4% Data Processing & Outsourced Services 1.4% Fertilizers & Agricultural Chemicals 1.4% Specialized Finance 1.4% Diversified Metals & Mining 1.3% Internet Software Services 1.3%
20 Management Overview INDUSTRY COMPOSITION (CONTINUED) March 31, 2006 Multi-Line Insurance 1.3% Computer Hardware 1.2% IT Consulting & Other Services 1.2% Oil & Gas Exploration & Production 1.1% Other Diversified Financial Services 1.1% Automotive Retail 1.0% Consumer Electronics 1.0% General Merchandise Stores 1.0% Human Resource & Employment Services 1.0% Automobile Manufacturers 0.9% Diversified Banks 0.9% Electronic Equipment Manufacturers 0.9% Life & Health Insurance 0.9% Marine 0.8% Metal & Glass Containers 0.8% Mortgage REITS 0.8% Regional Banks 0.8% Life Sciences Tools & Services 0.7% Leisure Products 0.7% Property & Casualty Insurance 0.7% Aerospace & Defense 0.6% Household Products 0.6% Restaurants 0.6% Electric Utilities 0.5% Footwear 0.5% Health Care Services 0.5% Technology Distributors 0.5% Integrated Telecommunication Services 0.4% Electrical Components & Equipment 0.3% Diversified Commercial & Professional Services 0.2%
Management Overview 21 Management Overview (continued) ICON Core Equity Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
INCEPTION SINCE DATE 6 MONTH* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON Core Equity Fund - Class I 10/12/00 12.44% 22.92% 10.00% 10.68% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 2.30% --------------------------------------------------------------------------------------------- ICON Core Equity Fund - Class C 11/28/00 12.02% 21.98% 9.16% 8.86% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 2.11% --------------------------------------------------------------------------------------------- ICON Core Equity Fund - Class Z 5/6/04 12.46% 22.51% N/A 19.75% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 11.37% ---------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. The Since Inception performance results for Class C shares include returns for certain time periods that were restated as of June 8, 2004. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2006 [LINE CHART]
ICON CORE EQUITY FUND - CLASS I S&P 1500 INDEX ------------------------------- -------------- 10/12/00 10000.00 10000.00 11850.00 10031.00 3/31/01 10810.00 8861.00 12680.00 9444.00 10040.00 8037.00 12456.00 8963.00 3/31/02 13234.00 9049.00 12048.00 7887.00 9717.00 6525.00 9461.00 7054.00 3/31/03 8715.00 6818.00 10515.00 7890.00 11374.00 8135.00 12571.00 9140.00 3/31/04 13001.00 9336.00 13072.00 9498.00 13072.00 9320.00 14556.00 10218.00 3/31/05 14167.00 10015.00 14659.00 10187.00 15487.00 10574.00 15959.00 10798.00 3/31/06 17415.00 11322.00
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund's Class I shares on the Class' inception date of 10/12/00 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund's other share classes will vary due to differences in charges and expenses. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. 22 Management Overview Schedule of Investments ICON Core Equity Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- COMMON STOCKS (98.5%) 28,800 Accredited Home Lenders Holding Co.(a) $ 1,473,984 64,600 Agrium, Inc. - ADR 1,631,796 76,000 Alcoa, Inc. 2,322,560 63,800 Aleris International, Inc.(a) 3,066,866 89,900 America Movil S.A. De C.V. - ADR 3,079,974 34,700 American Financial Group, Inc. 1,443,867 36,100 Ameriprise Financial, Inc. 1,626,666 53,000 AmerisourceBergen Corp. 2,558,310 55,000 AMR Corp.(a) 1,487,750 22,600 Apple Computer, Inc.(a) 1,417,472 24,600 Arkansas Best Corp. 962,352 35,700 Arrow Electronics, Inc.(a) 1,152,039 29,100 AT&T, Inc. 786,864 62,200 AU Optronics Corp. - ADR 927,402 10,300 AutoZone, Inc.(a) 1,026,807 25,700 Avid Technology, Inc.(a) 1,116,922 36,700 Barr Pharmaceuticals, Inc.(a) 2,311,366 70,950 BHP Billiton, Ltd. - ADR 2,827,358 52,100 Boston Private Financial Holdings, Inc. 1,760,459 19,700 Caremark Rx, Inc.(a) 968,846 55,500 Cash America International, Inc. 1,666,110 65,200 Celgene Corp.(a) 2,883,144 24,330 Cemex S.A. De C.V. - ADR 1,588,262 25,500 Central Garden & Pet Co.(a) 1,355,070 52,300 Christopher & Banks Corp. 1,213,883 30,800 CIT Group, Inc. 1,648,416
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 93,450 Coldwater Creek, Inc.(a) $ 2,597,910 32,400 Companhia Vale do Rio Doce - ADR 1,572,372 22,800 Computer Sciences Corp.(a) 1,266,540 57,600 Corning, Inc.(a) 1,550,016 44,700 CSX Corp. 2,673,059 21,000 Cummins, Inc. 2,207,100 19,200 Curtiss-Wright Corp. 1,271,040 20,000 Diamond Offshore Drilling, Inc. 1,790,000 42,000 Drew Industries, Inc.(a) 1,493,100 40,500 Eagle Materials, Inc. 2,582,280 28,700 Eli Lilly & Co. 1,587,110 36,100 ElkCorp 1,218,375 49,600 Ethan Allen Interiors, Inc. 2,084,192 44,300 Euronet Worldwide, Inc(a) 1,675,869 78,700 Family Dollar Stores, Inc. 2,093,420 53,400 Fastenal Co. 2,527,956 14,500 FedEx Corp. 1,637,630 89,800 First Cash Financial Services, Inc.(a) 1,795,102 55,200 Forest Laboratories, Inc.(a) 2,463,576 10,200 Franklin Electric Co., Inc. 557,430 83,400 Furniture Brands International, Inc. 2,044,134 31,300 GFI Group, Inc.(a) 1,624,783 20,600 Golden West Financial Corp. 1,398,740 4,200 Google, Inc. - Class A(a) 1,638,000 74,400 Grant Prideco, Inc.(a) 3,187,296 35,000 Griffon Corp.(a) 869,400 38,200 HCC Insurance Holdings, Inc. 1,329,360 22,300 Healthcare Services Group, Inc. 476,328
Schedule of Investments 23 Schedule of Investments (continued) ICON Core Equity Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 32,400 Helmerich & Payne, Inc. $ 2,262,168 44,500 Henry Schein, Inc.(a) 2,129,770 59,100 Honda Motor Co., Ltd. - ADR 1,829,736 48,900 Hutchinson Technology, Inc.(a) 1,475,313 40,700 Investors Financial Services Corp. 1,907,609 46,500 J.B. Hunt Transport Services, Inc. 1,001,610 24,600 j2 Global Communications, Inc.(a) 1,156,200 19,200 Johnson Controls, Inc. 1,457,856 37,125 Jos. A. Bank Clothiers, Inc.(a) 1,780,144 35,700 Joy Global, Inc. 2,133,789 57,800 JPMorgan Chase & Co. 2,406,792 24,100 Kirby Corp.(a) 1,641,451 22,050 Knight Transportation, Inc. 435,488 40,900 Komag, Inc.(a) 1,946,840 48,100 Korea Electric Power Corp. - ADR 1,038,960 20,400 Marten Transport, Ltd.(a) 369,036 17,800 Marvell Technology Group, Ltd. - ADR(a) 962,980 95,900 Matsushita Electric Industrial Co., Ltd. - ADR 2,123,226 44,100 McKesson HBOC, Inc. 2,298,933 46,300 Mellon Financial Corp. 1,648,280 91,000 Mesa Air Group, Inc.(a) 1,041,040 45,500 Metrologic Instruments, Inc.(a) 1,052,415 41,800 Monster Worldwide, Inc.(a) 2,084,148 58,100 MSC Industrial Direct Co., Inc. - Class A 3,138,562
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 112,100 Myers Industries, Inc. $ 1,792,479 118,300 Mylan Laboratories, Inc. 2,768,220 36,900 National-OilWell Varco, Inc.(a) 2,366,028 34,700 New Century Financial Corp. 1,596,894 36,200 NICE Systems, Ltd. - ADR(a) 1,844,752 35,700 Nokia Corp. - ADR 739,704 46,700 Norfolk Southern Corp. 2,525,069 31,100 O'Reilly Automotive, Inc.(a) 1,137,016 76,800 Old Dominion Freight Line, Inc.(a) 2,069,760 54,900 optionsXpress Holdings, Inc. 1,596,492 52,000 Pacer International, Inc. 1,699,360 61,300 Pacific Sunwear of California, Inc.(a) 1,358,408 59,100 Pfizer, Inc. 1,472,772 45,600 Philadelphia Consolidated Holding Corp.(a) 1,556,784 28,900 Portfolio Recovery Associates, Inc.(a) 1,353,387 23,900 Prudential Financial, Inc. 1,811,859 134,400 PSS World Medical, Inc.(a) 2,592,576 38,700 Rare Hospitality International, Inc.(a) 1,347,921 48,600 Ross Stores, Inc. 1,418,634 48,400 Rowan Cos., Inc. 2,127,664 22,900 Ryder System, Inc. 1,025,462 57,500 Satyam Computer Services, Ltd. - ADR 2,516,200 33,800 SCP Pool Corp. 1,585,558 90,600 Seagate Technology 2,385,498 186,800 Siliconware Precision Industries Co. - ADR 1,204,860
24 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 33,000 Simpson Manufacturing Co., Inc. $ 1,428,900 27,400 SiRF Technology Holdings, Inc.(a) 970,234 61,000 SkyWest, Inc. 1,785,470 40,900 Steel Dynamics, Inc. 2,320,257 30,400 Steven Madden, Ltd. 1,079,200 50,000 Superior Energy Services, Inc.(a) 1,339,500 133,100 Taiwan Semiconductor Manufacturing Co., Ltd. - ADR 1,338,986 55,100 Texas Instruments, Inc. 1,789,097 92,200 The Finish Line, Inc. 1,516,690 59,400 The Gymboree Corp.(a) 1,546,776 27,400 The Scotts Miracle-Gro Co. 1,253,824 38,200 The Sportsman's Guide, Inc.(a) 1,011,918 41,500 Thermo Electron Corp.(a) 1,539,235 110,000 TradeStation Group, Inc.(a) 1,520,200
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 35,800 Ultra Petroleum Corp.(a) $ 2,230,698 37,200 Unit Corp.(a) 2,073,900 31,500 UTI Worldwide, Inc. - ADR 995,400 32,200 Wachovia Corp. 1,804,810 44,600 Washington Mutual, Inc. 1,900,852 15,100 Watsco, Inc. 1,072,855 40,000 Weatherford International, Ltd.(a) 1,830,000 ------------ TOTAL COMMON STOCKS (COST $174,208,064) 209,081,168 SHORT-TERM INVESTMENTS (1.4%) 2,931,086 Brown Brothers Harriman Time Deposit, 4.07%, 04-03-06# 2,931,086 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $2,931,086) 2,931,086 TOTAL INVESTMENTS (COST $177,139,150) 99.9% 212,012,254 OTHER ASSETS LESS LIABILITIES 0.1% 157,531 ------------ TOTAL NET ASSETS 100.0% $212,169,785 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt Schedule of Investments 25 Management Overview ICON Covered Call Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 104.5% Top 10 Equity Holdings 15.3% Number of Stocks 118 Options Purchased Put Options 1.1% Number of Securities on Which Options Have Been Purchased 1 Short-Term Investments 2.8% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Burlington Northern Santa Fe Corp. 1.8% Wesco International, Inc. 1.7% Companhia Vale do Rio Doce - ADR 1.7% Watsco, Inc. 1.6% JPMorgan Chase & Co. 1.5% Superior Energy Services, Inc. 1.4% Ceradyne, Inc. 1.4% The Goldman Sachs Group, Inc. 1.4% Eagle Materials, Inc. 1.4% Ryder System, 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, 2006, the ICON Covered Call Fund returned 2.99% for Class I shares, 2.69% for Class C shares and 3.13% for Class Z shares, underperforming the 7.08% return of the S&P 1500 Index, the Fund's benchmark, over the same period. Total returns for other periods as of March 31, 2006 appear on page 31. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund was unable to keep pace with its benchmark. With stocks advancing in broad fashion throughout the period, calls written against the Fund's underlying securities limited upside potential. Conversely, these same calls provided protection from a downside turn, reducing the portfolio's volatility relative to the benchmark. Option premiums declined slightly during the period, hovering near 15-year lows as measured by the CBOE Market Volatility Index (VIX), a broad gauge of expected market volatility. Since lower expectations often result in lower option premiums, income levels, which were already at a near-term bottom, further restricted the Fund's return potential. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. From a broad sector perspective, the Industrials and Materials areas were key contributors to performance, evidenced by leading cyclical themes in the trading companies & distributors, steel, and railroads industries. Overall, these value-driven industry tilts proved to be the primary reason for the Fund's positive performance over the period, yet calls written against the underlying securities in these industries limited gains. In contrast, the Energy and Information Technology sectors detracted from Fund performance, with the semiconductors, oil & gas drilling, and food distributors groups lagging significantly. Calls written against long securities in these industries reduced losses experienced by the Fund. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET? A. While stocks ended the period trading at relatively smaller discounts to fair value than where they began, our analysis continues to detect upside potential. Moreover, company fundamentals appear attractive despite continued macroeconomic concerns. Looking ahead, we expect to increase exposure to the Consumer Discretionary sector, as this is the most undervalued area of the nine we track. The group appears to have lost favor on fears that rising energy prices would crimp consumer spending, however, fundamentals remain strong and we have yet to see a sustained slowdown in discretionary buying. At the same 26 Management Overview [ROBERT STRAUS, CMT PHOTO] Robert Straus, CMT Portfolio Manager time, we anticipate continued strength in Materials and Industrials, although these sectors are now trading close to fair value. As such, we will monitor these positions carefully and could very well pare back exposure if valuations become increasingly less attractive. At the same time, we cannot predict if and when historically low option premiums will revert to more normalized levels. For that reason, we will monitor premium levels and look to write longer-dated options should conditions improve. PERFORMANCE HIGHLIGHTS - The Fund's investment strategy hindered relative results, as calls written against the underlying securities limited upside potential in an upward market. - Option premiums hovered near 15-year lows as measured by the CBOE Market Volatility Index, leading to restricted income levels and limited return potential. - Industries that contributed to Fund performance included trading companies & distributors, steel and railroads, while semiconductors, oil & gas drilling and food distributors detracted from results. Management Overview 27 Management Overview (continued) ICON Covered Call Fund SECTOR COMPOSITION March 31, 2006 Industrials 22.5% Financial 17.4% Consumer Discretionary 14.3% Information Technology 14.3% Healthcare 11.7% Materials 10.5% Energy 8.0% Telecommunication and Utilities 3.8% Leisure and Consumer Staples 2.0%
Percentages are based upon net assets. 28 Management Overview INDUSTRY COMPOSITION March 31, 2006 Trading Companies & Distributors 4.5% Railroads 4.3% Steel 4.1% Trucking 3.7% Apparel Retail 3.6% Oil & Gas Equipment & Services 3.5% Computer Storage & Peripherals 3.0% Oil & Gas Drilling 3.0% Pharmaceuticals 2.9% Health Care Distributors 2.8% Diversified Metals & Mining 2.7% Investment Banking & Brokerage 2.5% Home Furnishings 2.4% Managed Health Care 2.4% Construction Materials 2.3% Internet Software Services 2.3% Air Freight & Logistics 2.2% Multi-Line Insurance 2.2% Semiconductors 2.2% Wireless Telecommunication Services 2.1% Construction & Farm Machinery & Heavy Trucks 2.0% Computer Hardware 1.8% Data Processing & Outsourced Services 1.8% Consumer Finance 1.7% Airlines 1.6% Mortgage REITS 1.6% Regional Banks 1.6% Other Diversified Financial Services 1.5% Property & Casualty Insurance 1.5% Aerospace & Defense 1.4% Building Products 1.4%
Management Overview 29 Management Overview (continued) ICON Covered Call Fund INDUSTRY COMPOSITION (CONTINUED) March 31, 2006 Life & Health Insurance 1.4% Asset Management & Custody Banks 1.3% Marine 1.3% Auto Parts & Equipment 1.2% Automotive Retail 1.2% Diversified Banks 1.2% Health Care Services 1.2% IT Consulting & Other Services 1.2% Oil & Gas Exploration & Production 1.2% Automobile Manufacturers 1.1% Consumer Electronics 1.1% Communications Equipment 1.0% Electric Utilities 1.0% Technology Distributors 1.0% Thrifts & Mortgage Insurance 1.0% Aluminum 0.9% Education Services 0.9% General Merchandise Stores 0.9% Leisure Products 0.8% Life Sciences Tools & Services 0.8% Biotechnology 0.7% Catalog Retail 0.7% Integrated Telecommunication Services 0.7% Restaurants 0.7% Health Care Equipment 0.5% Home Improvement Retail 0.5% Household Products 0.5% Specialty Chemicals 0.5% Specialty Stores 0.5% Health Care Facilities 0.4% Coal & Consumable Fuels 0.3% Apparel Accessories & Luxury Goods 0.2%
30 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
INCEPTION SINCE DATE 6 MONTH* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON Covered Call Fund - Class I 9/30/02 2.99% 6.92% N/A 13.17% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 17.06% --------------------------------------------------------------------------------------------- ICON Covered Call Fund - Class C 11/21/02 2.69% 6.22% N/A 10.50% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 14.01% --------------------------------------------------------------------------------------------- ICON Covered Call Fund - Class Z 5/6/04 3.13% 7.21% N/A 8.34% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 11.37% ---------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2006 [LINE GRAPH]
ICON COVERED CALL FUND - CLASS I S&P 1500 INDEX -------------------------------- -------------- 9/30/02 10000.00 10000.00 10490.00 10811.00 3/31/03 10050.00 10450.00 11770.00 12093.00 12400.00 12469.00 13541.00 14009.00 3/31/04 13799.00 14308.00 13944.00 14557.00 13706.00 14285.00 14568.00 15661.00 3/31/05 14416.00 15349.00 14470.00 15613.00 14966.00 16206.00 14946.00 16550.00 3/31/06 15414.00 17353.00
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund's Class I shares on the Class' inception date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund's other share classes will vary due to differences in charges and expenses. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Management Overview 31 Schedule of Investments ICON Covered Call Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- COMMON STOCKS 104.5% 6,200 A.G. Edwards, Inc.(x) $ 309,132 9,700 Abercrombie & Fitch Co.(x) 565,510 5,200 Accredited Home Lenders Holding Co.(a)(x) 266,136 15,600 Aetna, Inc.(x) 766,584 10,300 Affiliated Computer Services, Inc. - Class A(a)(x) 614,498 15,700 AK Steel Holding Corp.(a)(x) 235,500 12,200 Alaska Air Group, Inc.(a)(x) 432,490 17,600 Alcoa, Inc.(x) 537,856 10,700 Alpharma, Inc. - Class A(x) 286,974 23,700 America Movil S.A. De C.V. - ADR(x) 811,962 12,800 American Express Co.(x) 672,640 15,200 AmerisourceBergen Corp.(x) 733,704 7,600 Apple Computer, Inc.(a)(x) 476,672 3,000 AutoZone, Inc.(a)(x) 299,070 7,700 Barr Pharmaceuticals, Inc.(a)(x) 484,946 20,500 BHP Billiton, Ltd. - ADR(x) 816,925 13,200 Burlington Northern Santa Fe Corp.(x) 1,099,955 4,400 Capital One Financial Corp.(x) 354,288 3,300 Caremark Rx, Inc.(a)(x) 162,294 9,600 Celgene Corp.(a)(x) 424,512 8,800 Cemex S.A. De C.V. - ADR(x) 574,464 17,000 Ceradyne, Inc.(a)(x) 848,300 21,800 Christopher & Banks Corp.(x) 505,978 4,100 Chubb Corp.(x) 391,304 5,100 CIGNA Corp.(x) 666,162 12,300 Cognizant Technology Solutions Corp.(a)(x) 731,727 15,600 Coldwater Creek, Inc.(a)(x) 433,680
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 21,400 Companhia Vale do Rio Doce - ADR(x) $ 1,038,542 8,400 Computer Sciences Corp.(a)(x) 466,620 16,500 Cost Plus, Inc.(a)(x) 282,150 12,000 CSX Corp.(x) 717,600 7,500 Cullen/Frost Bankers, Inc.(x) 403,125 6,700 Cummins, Inc.(x) 704,170 11,000 Darden Restaurants, Inc.(x) 451,330 19,000 Dollar Tree Stores, Inc.(a)(x) 525,730 13,200 Eagle Materials, Inc.(x) 841,632 4,100 East-West Bancorp, Inc.(x) 158,055 13,300 ElkCorp(x) 448,875 5,200 Ethan Allen Interiors, Inc.(x) 218,504 17,000 Fastenal Co.(x) 804,780 6,700 FedEx Corp.(x) 756,698 9,100 Forest Laboratories, Inc.(a)(x) 406,133 7,600 Fossil, Inc.(a)(x) 141,208 2,800 Freeport-McMoran Copper & Gold, Inc. - Class B(x) 167,356 30,600 Furniture Brands International, Inc.(x) 750,006 1,700 Google, Inc. - Class A(a)(x) 663,000 6,600 Grant Prideco, Inc.(a)(x) 282,744 6,100 Harman International Industries, Inc.(x) 677,893 5,100 Helmerich & Payne, Inc.(x) 356,082 13,200 Henry Schein, Inc.(a)(x) 631,752 19,600 Hutchinson Technology, Inc.(a)(x) 591,332 30,400 Ingram Micro, Inc.(a)(x) 608,000 7,500 International Business Machines Corp.(x) 618,525 33,500 J.B. Hunt Transport Services, Inc.(x) 721,590
32 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 16,000 j2 Global Communications, Inc.()(a)(x) $ 752,000 9,900 Johnson Controls, Inc.(x) 751,707 21,500 JPMorgan Chase & Co.(x) 895,260 11,800 Kirby Corp.()(a)(x) 803,698 32,550 Knight Transportation, Inc.(x) 642,863 8,800 Komag, Inc.()(a)(x) 418,880 26,800 Korea Electric Power Corp. - ADR(x) 578,880 10,000 Laureate Education, Inc.()(a)(x) 533,800 6,000 Loews Corp.(x) 607,200 7,100 McKesson HBOC, Inc.(x) 370,123 9,200 MedcoHealth Solutions, Inc.()(a)(x) 526,424 19,800 Mesa Air Group, Inc.()(a)(x) 226,512 8,700 MetLife, Inc.(x) 420,819 5,900 Mohawk Industries, Inc.()(a)(x) 476,248 15,300 Molecular Devices Corp.(a)(x) 507,348 5,900 Morgan Stanley(x) 370,638 8,100 Nabors Industries, Ltd.(a)(x) 579,798 8,300 National-OilWell Varco, Inc.(a)(x) 532,196 7,800 New Century Financial Corp.(x) 358,956 12,200 NICE Systems, Ltd. - ADR(a)(x) 621,712 14,800 Norfolk Southern Corp.(x) 800,236 18,400 NovaStar Financial, Inc.(x) 615,296 11,700 O'Reilly Automotive, Inc.(a)(x) 427,752 14,100 OM Group, Inc.(a)(x) 324,300 9,100 Par Pharmaceutical Cos., Inc.(a)(x) 256,438 3,600 Peabody Energy Corp.(x) 181,476 5,600 PNC Financial Services Group, Inc.(x) 376,936
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 8,400 Polaris Industries, Inc.(x) $ 458,304 14,800 PortalPlayer, Inc.(a)(x) 329,004 5,500 Prudential Financial, Inc.(x) 416,955 7,800 Psychiatric Solutions, Inc.(a)(x) 258,414 3,200 Rio Tinto PLC - ADR(x) 662,400 26,700 Ross Stores, Inc.(x) 779,373 18,600 Ryder System, Inc.(x) 832,908 30,800 Seagate Technology(x) 810,964 10,500 Selective Insurance Group, Inc.(x) 556,500 57,600 Siliconware Precision Industries Co. - ADR(x) 371,520 10,400 SkyWest, Inc.(x) 304,408 7,600 SonoSite, Inc.(a)(x) 308,864 13,900 Spectrum Brands, Inc.(a)(x) 301,908 13,500 Steel Dynamics, Inc.(x) 765,855 17,100 Steel Technologies, Inc.(x) 415,530 32,800 Superior Energy Services, Inc.(a)(x) 878,712 39,000 Taiwan Semiconductor Manufacturing Co., Ltd. - ADR(x) 392,340 18,300 Telefonos de Mexico S.A. de C.V. - ADR(x) 411,384 7,800 Teva Pharmaceutical Industries, Ltd. - ADR(x) 321,204 10,000 Texas Instruments, Inc.(x) 324,700 21,900 The Bank of New York Co., Inc.(x) 789,276 23,500 The Finish Line, Inc.(x) 386,575 5,400 The Goldman Sachs Group, Inc.(x) 847,584 8,700 The Hartford Financial Services Group, Inc.(x) 700,785 5,700 The Sherwin- Williams Co.(x) 281,808 9,700 The Toro Co.(x) 463,175
Schedule of Investments 33 Schedule of Investments (continued) ICON Covered Call Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 6,400 Toyota Motor Corp. - ADR(x) $ 696,960 11,800 Ultra Petroleum Corp.(a)(x) 735,258 14,900 Unit Corp.(a)(x) 830,675 8,600 United Parcel Service, Inc. - Class B(x) 682,668 6,300 Universal Forest Products, Inc.(x) 399,987 10,700 Vimpel Communications - ADR(a)(x) 460,207 10,000 W-H Energy Services, Inc.(a)(x) 444,900 13,100 Wachovia Corp.(x) 734,255 8,900 Washington Mutual, Inc.(x) 379,318 13,700 Watsco, Inc.(x) 973,385 15,500 Wesco International, Inc.(a)(x) 1,054,155 ----------- TOTAL COMMON STOCKS (COST $52,999,583) 63,656,409
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- SHORT-TERM INVESTMENTS 2.8% 1,713,942 Brown Brothers Harriman Time Deposit, 4.07%, 04-03-06# $ 1,713,942 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $1,713,942) 1,713,942 PUT OPTIONS PURCHASED 1.1% 2,300 Midcap SPDR Trust Series 1, Expiration September 2006, Exercise Price $112.00 661,250 ----------- TOTAL PUT OPTIONS PURCHASED (COST $823,400) 661,250 TOTAL INVESTMENTS 108.4% (COST $55,536,925) 66,031,601 LIABILITIES LESS OTHER ASSETS (8.4)% (5,114,190) ----------- TOTAL NET ASSETS 100.0% $60,917,411 ===========
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt x Portion or all of this security is pledged as collateral for call options written. 34 Schedule of Investments Schedule of Written Options ICON Covered Call Fund March 31, 2006
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ A.G. Edwards, Inc. Expiration May 2006 Exercise Price $45.00 43 $ 22,360 Expiration August 2006 Exercise Price $45.00 19 11,590 Abercrombie & Fitch & Co. Expiration August 2006 Exercise Price $60.00 65 30,550 Exercise Price $70.00 16 2,560 Expiration November 2006 Exercise Price $60.00 16 10,080 Accredited Home Lenders Holding Co. Expiration June 2006 Exercise Price $50.00 36 17,640 Expiration September 2006 Exercise Price $55.00 16 7,360 Aetna, Inc. Expiration July 2006 Exercise Price $52.50 156 27,300 Affiliated Computer Services, Inc. - Class A Expiration April 2006 Exercise Price $60.00 31 4,263 Expiration July 2006 Exercise Price $65.00 51 7,268 Expiration October 2006 Exercise Price $60.00 21 10,080 AK Steel Holding Corp. Expiration September 2006 Exercise Price $12.50 157 52,595 Alaska Air Group, Inc. Expiration April 2006 Exercise Price $30.00 37 20,720 Exercise Price $35.00 24 3,360 Expiration October 2006 Exercise Price $35.00 61 24,705
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Alcoa, Inc. Expiration July 2006 Exercise Price $30.00 132 $ 28,380 Expiration October 2006 Exercise Price $30.00 44 12,540 Alpharma, Inc. - Class A Expiration September 2006 Exercise Price $30.00 107 18,993 America Movil S.A. De C.V. - ADR Expiration May 2006 Exercise Price $35.00 119 18,445 Expiration August 2006 Exercise Price $35.00 118 32,745 American Express Co. Expiration April 2006 Exercise Price $52.50 32 2,480 Expiration July 2006 Exercise Price $55.00 38 4,180 Exercise Price $57.50 32 1,440 Expiration October 2006 Exercise Price $55.00 26 5,330 AmerisourceBergen Corp. Expiration May 2006 Exercise Price $42.50 23 14,260 Expiration August 2006 Exercise Price $45.00 56 29,120 Exercise Price $47.50 73 25,550 Apple Computer, Inc. Expiration July 2006 Exercise Price $60.00 19 14,250 Exercise Price $65.00 46 23,000 Exercise Price $70.00 11 3,520
Schedule of Written Options 35 Schedule of Written Options (continued) ICON Covered Call Fund March 31, 2006
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ AutoZone, Inc. Expiration June 2006 Exercise Price $95.00 12 $ 9,060 Exercise Price $100.00 9 3,870 Expiration September 2006 Exercise Price $110.00 9 2,475 Barr Pharmaceuticals, Inc. Expiration May 2006 Exercise Price $65.00 24 4,260 Expiration August 2006 Exercise Price $60.00 11 6,985 Exercise Price $70.00 42 7,665 BHP Billiton, Ltd. - ADR Expiration May 2006 Exercise Price $35.00 61 32,330 Expiration August 2006 Exercise Price $35.00 62 39,370 Expiration November 2006 Exercise Price $40.00 82 32,390 Burlington Northern Santa Fe Corp. Expiration July 2006 Exercise Price $80.00 46 32,200 Expiration October 2006 Exercise Price $75.00 40 49,200 Exercise Price $85.00 46 28,290 Capital One Financial Corp. Expiration September 2006 Exercise Price $80.00 24 14,160 Exercise Price $85.00 11 3,740 Exercise Price $95.00 9 765 Caremark Rx, Inc. Expiration June 2006 Exercise Price $50.00 33 6,188
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Celgene Corp. Expiration July 2006 Exercise Price $32.50 96 $ 124,320 Cemex S.A. De C.V. - ADR Expiration July 2006 Exercise Price $60.00 17 12,240 Exercise Price $65.00 26 10,660 Expiration October 2006 Exercise Price $60.00 28 24,360 Exercise Price $70.00 17 6,290 Ceradyne, Inc. Expiration June 2006 Exercise Price $50.00 102 48,450 Expiration September 2006 Exercise Price $65.00 68 16,150 Christopher & Banks Corp. Expiration June 2006 Exercise Price $20.00 54 20,520 Exercise Price $22.50 109 23,435 Expiration September 2006 Exercise Price $25.00 55 10,588 Chubb Corp. Expiration April 2006 Exercise Price $95.00 41 7,175 CIGNA Corp. Expiration July 2006 Exercise Price $125.00 36 39,960 Exercise Price $130.00 15 11,925 Cognizant Technology Solutions Corp. Expiration July 2006 Exercise Price $55.00 41 29,315 Exercise Price $60.00 82 33,210
36 Schedule of Written Options
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Coldwater Creek, Inc. Expiration July 2006 Exercise Price $22.38 58(+) $ 47,850 Expiration October 2006 Exercise Price $30.00 69(+) 19,665 Companhia Vale do Rio Doce - ADR Expiration June 2006 Exercise Price $40.00 43 37,625 Expiration September 2006 Exercise Price $45.00 85 55,250 Exercise Price $50.00 86 34,400 Computer Sciences Corp. Expiration June 2006 Exercise Price $55.00 84 26,880 Cost Plus, Inc. Expiration May 2006 Exercise Price $20.00 49 1,225 Expiration November 2006 Exercise Price $17.50 116 26,970 CSX Corp. Expiration August 2006 Exercise Price $55.00 36 24,660 Exercise Price $60.00 60 21,900 Expiration November 2006 Exercise Price $65.00 24 6,300 Cullen/Frost Bankers, Inc. Expiration April 2006 Exercise Price $55.00 75 2,438 Cummins, Inc. Expiration June 2006 Exercise Price $100.00 21 18,270 Exercise Price $115.00 19 3,658 Expiration September 2006 Exercise Price $110.00 27 17,010
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Darden Restaurants, Inc. Expiration April 2006 Exercise Price $40.00 110 $ 15,950 Dollar Tree Stores, Inc. Expiration August 2006 Exercise Price $27.50 109 22,073 Exercise Price $30.00 81 7,493 Eagle Materials, Inc. Expiration April 2006 Exercise Price $56.63 20 15,100 Expiration July 2006 Exercise Price $53.38 66 82,170 Expiration October 2006 Exercise Price $65.00 46 34,270 East-West Bancorp, Inc. Expiration July 2006 Exercise Price $35.00 12 5,340 Expiration October 2006 Exercise Price $40.00 29 6,670 ElkCorp Expiration October 2006 Exercise Price $35.00 133 40,565 Ethan Allen Interiors, Inc. Expiration May 2006 Exercise Price $40.00 36 10,710 Expiration November 2006 Exercise Price $45.00 16 4,040 Fastenal Co. Expiration May 2006 Exercise Price $42.50 76 42,560 Expiration August 2006 Exercise Price $45.00 60 31,500 Expiration November 2006 Exercise Price $50.00 34 12,070 FedEx Corp. Expiration April 2006 Exercise Price $105.00 47 39,480 Expiration July 2006 Exercise Price $115.00 20 10,200
Schedule of Written Options 37 Schedule of Written Options (continued) ICON Covered Call Fund March 31, 2006
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Forest Laboratories, Inc. Expiration May 2006 Exercise Price $45.00 45 $ 9,675 Expiration August 2006 Exercise Price $45.00 27 10,800 Exercise Price $50.00 19 3,278 Fossil, Inc. Expiration September 2006 Exercise Price $17.50 38 10,640 Exercise Price $20.00 38 6,270 Freeport-McMoran Copper & Gold, Inc. - Class B Expiration August 2006 Exercise Price $50.00 28 33,460 Furniture Brands International, Inc. Expiration July 2006 Exercise Price $22.50 123 36,285 Exercise Price $25.00 183 26,993 Google, Inc. - Class A Expiration April 2006 Exercise Price $370.00 3 8,250 Expiration June 2006 Exercise Price $370.00 9 33,435 Expiration September 2006 Exercise Price $360.00 5 27,900 Grant Prideco, Inc. Expiration July 2006 Exercise Price $40.00 66 36,960 Harman International Industries, Inc. Expiration July 2006 Exercise Price $100.00 31 48,205 Exercise Price $110.00 15 13,350 Exercise Price $115.00 15 9,525
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Helmerich & Payne, Inc. Expiration June 2006 Exercise Price $65.00 10 $ 7,400 Expiration September 2006 Exercise Price $60.00 12 15,720 Exercise Price $65.00 20 19,600 Exercise Price $70.00 9 6,390 Henry Schein, Inc. Expiration April 2006 Exercise Price $45.00 26 8,060 Expiration July 2006 Exercise Price $50.00 106 15,105 Hutchinson Technology, Inc. Expiration May 2006 Exercise Price $30.00 98 17,150 Expiration August 2006 Exercise Price $25.00 69 43,815 Expiration January 2007 Exercise Price $35.00 29 6,018 Ingram Micro, Inc. Expiration September 2006 Exercise Price $20.00 304 46,360 International Business Machines Corp. Expiration April 2006 Exercise Price $85.00 30 1,875 Expiration July 2006 Exercise Price $80.00 45 22,275 J.B. Hunt Transportation Services, Inc. Expiration May 2006 Exercise Price $22.50 135 8,775 Expiration August 2006 Exercise Price $25.00 200 13,000
38 Schedule of Written Options
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ j2 Global Communications, Inc. Expiration June 2006 Exercise Price $40.00 54 $ 44,550 Exercise Price $45.00 64 29,120 Exercise Price $50.00 16 3,160 Expiration September 2006 Exercise Price $45.00 26 15,860 Johnson Controls, Inc. Expiration April 2006 Exercise Price $70.00 39 24,765 Expiration July 2006 Exercise Price $75.00 30 13,200 Expiration October 2006 Exercise Price $80.00 30 10,350 JPMorgan Chase & Co. Expiration June 2006 Exercise Price $40.00 76 17,860 Expiration September 2006 Exercise Price $42.50 139 21,545 Kirby Corp. Expiration June 2006 Exercise Price $60.00 11 10,395 Exercise Price $65.00 35 19,950 Expiration September 2006 Exercise Price $60.00 24 26,400 Exercise Price $65.00 24 18,000 Exercise Price $70.00 24 12,000 Knight Transportation, Inc. Expiration September 2006 Exercise Price $20.00 163 30,563 Exercise Price $22.50 162 14,985
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Komag, Inc. Expiration June 2006 Exercise Price $45.00 42 $ 25,410 Exercise Price $50.00 14 5,040 Expiration September 2006 Exercise Price $45.00 32 26,720 Korea Electric Power Corp. - ADR Expiration April 2006 Exercise Price $22.50 78 1,365 Expiration September 2006 Exercise Price $20.00 95 27,313 Exercise Price $22.50 95 14,013 Laureate Education, Inc. Expiration May 2006 Exercise Price $55.00 30 4,125 Expiration August 2006 Exercise Price $50.00 40 22,800 Exercise Price $55.00 30 8,775 Loews Corp. Expiration June 2006 Exercise Price $90.00 30 37,500 Expiration September 2006 Exercise Price $100.00 30 20,850 McKesson Corp. Expiration August 2006 Exercise Price $55.00 71 14,200 MedcoHealth Solutions, Inc. Expiration April 2006 Exercise Price $55.00 37 10,823 Expiration July 2006 Exercise Price $60.00 37 9,250 Expiration October 2006 Exercise Price $65.00 18 4,095 Mesa Air Group, Inc. Expiration September 2006 Exercise Price $12.50 198 19,800
Schedule of Written Options 39 Schedule of Written Options (continued) ICON Covered Call Fund March 31, 2006
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ MetLife, Inc. Expiration June 2006 Exercise Price $50.00 61 $ 7,015 Expiration September 2006 Exercise Price $55.00 26 1,755 Mohawk Industries, Inc. Expiration May 2006 Exercise Price $90.00 44 880 Expiration August 2006 Exercise Price $80.00 15 8,400 Molecular Devices Corp. Expiration July 2006 Exercise Price $30.00 92 41,400 Exercise Price $35.00 61 10,218 Morgan Stanley Expiration July 2006 Exercise Price $60.00 42 18,900 Expiration October 2006 Exercise Price $65.00 17 4,973 Nabors Industries, Ltd. Expiration June 2006 Exercise Price $65.00 81 72,090 National-OilWell Varco, Inc. Expiration May 2006 Exercise Price $60.00 27 16,740 Expiration August 2006 Exercise Price $65.00 56 33,880 New Century Financial Corp. Expiration August 2006 Exercise Price $45.00 78 36,660 NICE Systems, Ltd. - ADR Expiration August 2006 Exercise Price $50.00 51 24,225 Exercise Price $55.00 71 18,638
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Norfolk Southern Corp. Expiration June 2006 Exercise Price $50.00 59 $ 31,270 Expiration September 2006 Exercise Price $55.00 59 21,830 Expiration January 2007 Exercise Price $60.00 30 9,900 Novastar Financial, Inc. Expiration June 2006 Exercise Price $30.00 133 51,205 Expiration September 2006 Exercise Price $25.00 51 43,095 O'Reilly Automotive, Inc. Expiration August 2006 Exercise Price $35.00 76 26,980 Exercise Price $40.00 41 5,125 OM Group, Inc. Expiration June 2006 Exercise Price $20.00 113 41,810 Expiration September 2006 Exercise Price $25.00 28 5,530 Par Pharmaceutical Cos., Inc. Expiration May 2006 Exercise Price $30.00 32 4,400 Expiration August 2006 Exercise Price $25.00 46 23,000 Exercise Price $35.00 13 1,333 Peabody Energy Corp. Expiration June 2006 Exercise Price $45.00 18 12,870 Exercise Price $50.00 18 7,200 PNC Financial Services Group, Inc. Expiration May 2006 Exercise Price $70.00 45 3,600 Expiration August 2006 Exercise Price $70.00 11 2,173
40 Schedule of Written Options
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Polaris Industries, Inc. Expiration June 2006 Exercise Price $50.00 29 $ 16,530 Expiration September 2006 Exercise Price $55.00 55 22,825 PortalPlayer, Inc. Expiration May 2006 Exercise Price $22.50 21 3,780 Exercise Price $25.00 53 4,903 Expiration August 2006 Exercise Price $30.00 22 1,925 Expiration November 2006 Exercise Price $22.50 15 5,850 Exercise Price $25.00 37 10,823 Prudential Financial, Inc. Expiration June 2006 Exercise Price $75.00 28 9,520 Exercise Price $80.00 16 1,760 Expiration September 2006 Exercise Price $80.00 11 3,025 Psychiatric Solutions, Inc. Expiration June 2006 Exercise Price $30.00 30 13,050 Expiration September 2006 Exercise Price $30.00 28 14,840 Exercise Price $35.00 20 5,350 Rio Tinto PLC - ADR Expiration July 2006 Exercise Price $195.00 10 21,250 Exercise Price $200.00 7 12,635 Expiration October 2006 Exercise Price $180.00 15 52,800 Ross Stores, Inc. Expiration May 2006 Exercise Price $30.00 267 22,028
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Ryder System, Inc. Expiration May 2006 Exercise Price $42.50 93 $ 31,155 Expiration August 2006 Exercise Price $45.00 45 14,400 Exercise Price $47.50 48 9,960 Seagate Technology Expiration June 2006 Exercise Price $25.00 108 26,730 Expiration September 2006 Exercise Price $25.00 123 41,820 Exercise Price $30.00 77 10,203 Selective Insurance Group, Inc. Expiration June 2006 Exercise Price $55.00 38 6,365 Expiration September 2006 Exercise Price $55.00 46 12,650 Exercise Price $60.00 21 2,363 Siliconware Precision Industries, Inc. - ADR Expiration September 2006 Exercise Price $7.50 576 33,120 SkyWest, Inc. Expiration April 2006 Exercise Price $30.00 26 1,560 Expiration July 2006 Exercise Price $25.00 26 13,650 Exercise Price $30.00 52 11,310 SonoSite, Inc. Expiration June 2006 Exercise Price $35.00 30 19,650 Exercise Price $40.00 46 13,340 Spectrum Brands, Inc. Expiration September 2006 Exercise Price $22.50 139 29,885
Schedule of Written Options 41 Schedule of Written Options (continued) ICON Covered Call Fund March 31, 2006
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Steel Dynamics, Inc. Expiration August 2006 Exercise Price $50.00 135 $ 139,725 Steel Technologies, Inc. Expiration July 2006 Exercise Price $25.00 136 28,560 Exercise Price $30.00 35 2,363 Superior Energy Services, Inc. Expiration June 2006 Exercise Price $22.50 98 46,550 Exercise Price $25.00 164 47,970 Expiration September 2006 Exercise Price $25.00 66 25,410 Taiwan Semiconductor Manufacturing Co., Ltd. - ADR Expiration April 2006 Exercise Price $10.00 390 11,700 Telefonos de Mexico S.A. de C.V. - ADR Expiration May 2006 Exercise Price $22.50 135 12,150 Expiration August 2006 Exercise Price $25.00 48 2,400 Teva Pharmaceutical Industries, Ltd. - ADR Expiration June 2006 Exercise Price $42.50 43 6,020 Expiration September 2006 Exercise Price $45.00 35 5,425 Texas Instruments, Inc. Expiration April 2006 Exercise Price $30.00 50 13,750 Expiration July 2006 Exercise Price $30.00 25 9,500 Exercise Price $35.00 25 2,875
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ The Bank of New York Co., Inc. Expiration April 2006 Exercise Price $35.00 37 $ 5,735 Expiration July 2006 Exercise Price $35.00 138 31,395 Expiration October 2006 Exercise Price $37.50 44 6,820 The Finish Line, Inc. Expiration May 2006 Exercise Price $17.50 70 2,275 Expiration August 2006 Exercise Price $20.00 36 990 Expiration November 2006 Exercise Price $17.50 129 16,448 The Goldman Sachs Group, Inc. Expiration July 2006 Exercise Price $150.00 35 42,700 Exercise Price $155.00 19 16,910 The Hartford Financial Services Group, Inc. Expiration June 2006 Exercise Price $80.00 43 14,405 Expiration September 2006 Exercise Price $85.00 44 12,320 The Sherwin-Williams Co. Expiration September 2006 Exercise Price $50.00 11 3,905 Expiration January 2007 Exercise Price $55.00 46 12,650 The Toro Co. Expiration June 2006 Exercise Price $45.00 68 26,520 Expiration September 2006 Exercise Price $50.00 29 7,105
42 Schedule of Written Options
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ Toyota Motor Corp. - ADR Expiration July 2006 Exercise Price $105.00 13 $ 10,595 Exercise Price $110.00 38 19,380 Exercise Price $115.00 13 3,835 Ultra Petroleum Corp. Expiration June 2006 Exercise Price $55.00 34 32,980 Exercise Price $60.00 30 19,350 Expiration September 2006 Exercise Price $50.00 54 84,510 Unit Corp. Expiration June 2006 Exercise Price $55.00 97 40,255 Expiration September 2006 Exercise Price $55.00 52 32,240 United Parcel Service, Inc. - Class B Expiration April 2006 Exercise Price $75.00 43 20,210 Expiration October 2006 Exercise Price $80.00 43 16,770 Universal Forest Products, Inc. Expiration April 2006 Exercise Price $60.00 38 15,960 Expiration July 2006 Exercise Price $65.00 25 9,875 Vimpel Communications - ADR Expiration April 2006 Exercise Price $45.00 43 1,613 Expiration October 2006 Exercise Price $45.00 64 16,000
UNDERLYING SECURITY/ EXPIRATION DATE/ EXERCISE PRICE CONTRACTS* VALUE ------------------------------------------------ W-H Energy Services, Inc. Expiration April 2006 Exercise Price $40.00 34 $ 15,980 Expiration July 2006 Exercise Price $35.00 33 35,475 Exercise Price $40.00 33 23,430 Wachovia Corp. Expiration April 2006 Exercise Price $55.00 85 14,663 Expiration July 2006 Exercise Price $55.00 26 7,345 Exercise Price $57.50 20 2,900 Washington Mutual, Inc. Expiration July 2006 Exercise Price $45.00 89 7,120 Watsco, Inc. Expiration August 2006 Exercise Price $70.00 89 59,630 Exercise Price $75.00 48 20,400 Wesco International, Inc. Expiration July 2006 Exercise Price $55.00 30 44,700 Exercise Price $60.00 47 51,935 Exercise Price $65.00 62 47,120 Expiration October 2006 Exercise Price $65.00 16 15,360 ---------- Total Option Written (Premiums received $4,641,617) 15,198 $5,326,195 ==========
The accompanying notes are an integral part of this Schedule of Investments. * All written options have 100 shares per contract unless otherwise noted. (+) Contracts have 150 shares per contract. Schedule of Written Options 43 Management Overview ICON Equity Income Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities Common Stocks 90.7% Convertible Preferred Stocks 0.8% Top 10 Equity Holdings 12.7% Number of Stocks 101 Options Purchased Call Options 0.4% Number of Securities on Which Options Have Been Purchased 7 Bonds & Short-Term Investments Convertible Corporate Bonds 0.4% Corporate Bonds 3.6% U.S. Government and Agencies 3.4% Short-Term Investments 0.4% Number of Bonds 13 Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 JPMorgan Chase & Co. 1.5% Altria Group, Inc. 1.3% Eagle Materials, Inc. 1.3% Pacer International, Inc. 1.3% DaimlerChrysler AG - ADR 1.3% New Century Financial Corp. 1.2% Lennox International, Inc. 1.2% Philippine Long Distance Telephone Co. - ADR 1.2% StarTek, Inc. 1.2% Diamond Offshore Drilling, Inc. 1.2% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. For the six-month period ended March 31, 2006, the ICON Equity Income Fund returned 7.49% for Class I shares, 6.97% for Class C shares and 7.43% for Class Z shares, generally in line with the 7.08% return posted by the S&P 1500 Index, the Fund's benchmark, over the same period. Total returns for other periods as of March 31, 2006 appear on page 49. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund kept pace with its equity-centered benchmark despite deriving a portion of its returns from dividends, coupon payments and synthetic fixed income investments, an area of the market that experienced difficulty during the period. While the Fund maintained equity exposure to all economic sectors throughout the period, it captured significant upside through a value-driven tilt toward the top-performing Materials and Industrials groups. However, exposure to Leisure & Consumer Staples along with a significant weighting in the Telecommunication & Utilities sector detracted from results. Fixed income holdings also hampered performance as rising interest rates produced turbulence within the asset class. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Top sector contributors included the Financials, Materials and Consumer Discretionary areas, while the Leisure & Consumer Staples and Telecommunication & Utilities groups hindered Fund results. Notably, because of the dividend-paying nature of many of the companies within the Telecommunication & Utilities sector, the Fund generally maintains higher exposure to this group than other diversified ICON funds. From an industry perspective, the Fund's focus on economically sensitive areas such as diversified metals & mining, trading companies & distributors and construction & farm machinery & heavy trucks enhanced returns. Conversely, exposure to the more defensively oriented multi-utilities, managed health care and water utilities industries served to curb returns while the Fund's fixed income holdings detracted from performance as interest rates rose. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC MARKETS? A. Though stocks ended the period trading at relatively smaller discounts to fair value, our analysis continues to show upside potential in many industries. Moreover, company fundamentals appear attractive despite ever-present macroeconomic concerns. 44 Management Overview [DEREK ROLLINGSON PHOTO] Derek Rollingson Portfolio Manager Looking ahead, we expect to increase exposure to the Consumer Discretionary sector, currently the most undervalued of the nine we track. The group appears to have lost favor on fears that rising energy prices would crimp consumer spending. Nevertheless, fundamentals remain strong and there has yet to be a sustained slowdown in discretionary buying. Meanwhile, we anticipate continued strength in Materials and Industrials, although these sectors are now trading close to fair value. As such, we will carefully monitor our positions and could pare back exposure if valuations warrant. As for the Fund's fixed income exposure, based on current valuation and relative strength metrics, we expect to remain focused on shorter-duration securities, as they are less sensitive to interest rate movements and continue to be more attractive than longer-term issues. PERFORMANCE HIGHLIGHTS March 31, 2006 - The Fund's equity exposure captured upside through a value-driven tilt toward Materials and Industrials sectors, while exposure to Leisure & Consumer Staples and Telecommunication & Utilities hindered results. - Fixed income holdings hampered performance as rising interest rates produced turbulence within the asset class. - Principal industry contributors included diversified metals & mining, trading companies & distributors, and construction & farm machinery & heavy trucks, while multi-utilities, managed health care, and water utilities detracted from returns. Management Overview 45 Management Overview (continued) ICON Equity Income Fund SECTOR COMPOSITION March 31, 2006 Financial 18.1% Industrials 16.5% Consumer Discretionary 13.4% Materials 11.1% Information Technology 10.0% Healthcare 6.9% Telecommunication and Utilities 5.4% Energy 5.0% Leisure and Consumer Staples 4.3%
Percentages are based upon common stock positions and net assets. 46 Management Overview INDUSTRY COMPOSITION March 31, 2006 Integrated Telecommunication Services 3.8% Home Furnishings 3.5% Other Diversified Financial Services 3.4% Investment Banking & Brokerage 3.1% Construction & Farm Machinery & Heavy Trucks 2.9% Pharmaceuticals 2.7% Semiconductors 2.5% Construction Materials 2.4% Thrifts & Mortgage Insurance 2.4% Oil & Gas Drilling 2.3% Air Freight & Logistics 2.2% Mortgage REITS 2.2% Aluminum 2.1% Building Products 2.1% Steel 2.1% Tobacco 2.1% Diversified Metals & Mining 2.0% Trading Companies & Distributors 2.0% Data Processing & Outsourced Services 1.9% Apparel Retail 1.8% Asset Management & Custody Banks 1.7% Health Care Equipment 1.7% Integrated Oil & Gas 1.5% Trucking 1.5% Life & Health Insurance 1.4% Automobile Manufacturers 1.3% Health Care Technology 1.2% Apparel Accessories & Luxury Goods 1.1% Computer Hardware 1.1% Electronic Equipment Manufacturers 1.1% Oil & Gas Equipment & Services 1.1% Computer Storage & Peripherals 1.0% Diversified Banks 1.0% Industrial Machinery 1.0% Specialized Consumer Services 1.0% Specialty Chemicals 1.0% Aerospace & Defense 0.9% Diversified Commercial & Professional Services 0.9%
Management Overview 47 Management Overview (continued) ICON Equity Income Fund INDUSTRY COMPOSITION (CONTINUED) March 31, 2006 Electrical Components & Equipment 0.9% Electronic Manufacturing Services 0.9% General Merchandise Stores 0.9% Leisure Products 0.9% Railroads 0.9% Retail REITS 0.9% Auto Parts & Equipment 0.8% Commodity Chemicals 0.8% Electric Utilities 0.8% Fertilizers & Agricultural Chemicals 0.8% Health Care Distributors 0.8% Household Appliances 0.8% Multi-Line Insurance 0.8% Regional Banks 0.8% Specialty Stores 0.8% Tire & Rubber 0.8% Automotive Retail 0.7% Commercial Printing 0.7% Communications Equipment 0.7% Household Products 0.7% Multi-Utilities 0.7% Airlines 0.6% IT Consulting & Other Services 0.6% Publishing 0.6% Health Care Facilities 0.5% Property & Casualty Insurance 0.5%
Percentages are based upon common stock positions and net assets. 48 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
INCEPTION SINCE DATE 6 MONTH* 1 YEAR 5 YEARS INCEPTION ---------------------------------------------------------------------------------------------- ICON Equity Income Fund - Class I 9/30/02 7.49% 14.12% N/A 18.45% ---------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 17.06% ---------------------------------------------------------------------------------------------- ICON Equity Income Fund - Class C 11/8/02 6.97% 13.04% N/A 15.96% ---------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 14.30% ---------------------------------------------------------------------------------------------- ICON Equity Income Fund - Class Z 5/10/04 7.43% 14.09% N/A 15.41% ---------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 13.00% ----------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2006 [LINE GRAPH]
ICON EQUITY INCOME FUND - CLASS I S&P 1500 INDEX ------------------------------- -------------- 9/30/02 10000.00 10000.00 10819.00 10811.00 3/31/03 10091.00 10450.00 12073.00 12093.00 12482.00 12469.00 14475.00 14009.00 3/31/04 14940.00 14308.00 15016.00 14557.00 14928.00 14285.00 16146.00 15661.00 3/31/05 15847.00 15349.00 16192.00 15613.00 16822.00 16206.00 16849.00 16550.00 3/31/06 18083.00 17353.00
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund's Class I shares on the Class' inception date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund's other share classes will vary due to differences in charges and expenses. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Management Overview 49 Schedule of Investments ICON Equity Income Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- COMMON STOCKS 90.7% 29,400 A.G. Edwards, Inc. $ 1,465,884 16,400 Abercrombie & Fitch Co. 956,120 54,100 Alcoa, Inc. 1,653,296 26,800 Altria Group, Inc. 1,899,048 12,300 Aluminum Corp. of China, Ltd. - ADR 1,288,056 28,000 American Financial Group, Inc. 1,165,080 62,700 Angelica Corp. 1,286,604 30,300 Arkansas Best Corp. 1,185,336 51,200 AT&T, Inc. 1,384,448 25,600 Barnes & Noble, Inc. 1,184,000 18,000 Becton, Dickinson & Co. 1,108,440 34,800 BellSouth Corp. 1,205,820 31,400 BHP Billiton, Ltd. - ADR 1,251,290 46,600 Biovail Corp. 1,134,710 29,600 Canadian National Railway Co. - ADR 1,340,288 20,900 Caterpillar, Inc. 1,500,829 24,834 Cemex S.A. De C.V. - ADR 1,621,164 28,100 Citigroup, Inc. 1,327,163 17,100 Colgate- Palmolive Co. 976,410 25,900 Companhia Energetica de Minas Gerais - ADR 1,177,673 29,300 Companhia Vale do Rio Doce - ADR 1,421,929 33,200 Computer Programs & Systems, Inc. 1,660,000 76,300 Cooper Tire & Rubber Co. 1,094,142 12,600 Cummins, Inc. 1,324,260 31,300 DaimlerChrysler AG - ADR 1,796,933 16,300 Deere & Co. 1,288,515
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 18,700 Diamond Offshore Drilling, Inc. $ 1,673,650 106,000 Doral Financial Corp. - ADR 1,224,300 22,100 Dow Jones & Company, Inc. 868,530 29,100 Eagle Materials, Inc. 1,855,416 20,300 Eaton Corp. 1,481,291 15,200 Emerson Electric Co. 1,271,176 31,900 Ethan Allen Interiors, Inc. 1,340,438 47,000 Family Dollar Stores, Inc. 1,250,200 23,000 Fannie Mae 1,182,200 59,400 Furniture Brands International, Inc. 1,455,894 45,100 Hewlett-Packard Co. 1,483,790 23,000 Hillenbrand Industries, Inc. 1,264,770 30,900 Honeywell International, Inc. 1,321,593 10,300 Infosys Technologies, Ltd. - ADR 801,958 40,709 ING Group N.V. - ADR 1,603,934 44,600 Jackson Hewitt Tax Services, Inc. 1,408,468 50,900 JPMorgan Chase & Co. 2,119,476 49,300 Kellwood Co. 1,547,527 30,400 Kimco Realty Corp. 1,235,456 57,300 La-Z-Boy, Inc. 974,100 20,000 Lan Airlines S.A. - ADR 783,800 49,700 Leggett & Platt, Inc. 1,211,189 58,000 Lennox International, Inc. 1,731,880 63,800 Limited Brands, Inc. 1,560,548 18,500 Lincoln National Corp. 1,009,915 15,600 Manor Care, Inc. 691,860
50 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 17,105 Marathon Oil Corp. $ 1,302,888 37,300 Masco Corp. 1,211,877 21,500 McKesson HBOC, Inc. 1,120,795 34,600 Mellon Financial Corp. 1,231,760 39,200 Merck & Co., Inc. 1,381,016 112,700 Methode Electronics, Inc. 1,227,303 33,700 Microchip Technology, Inc. 1,223,310 21,400 Morgan Stanley 1,344,348 28,400 MSC Industrial Direct Co., Inc. - Class A 1,534,168 38,100 New Century Financial Corp. 1,753,362 44,300 NovaStar Financial, Inc. 1,481,392 32,875 Old Republic International Corp. 717,333 56,500 Pacer International, Inc. 1,846,420 8,300 Petrochina Co., Ltd. - ADR 871,085 51,300 Pfizer, Inc. 1,278,396 46,031 Philippine Long Distance Telephone Co. - ADR 1,729,384 17,700 PNC Financial Services Group, Inc. 1,191,387 23,100 Polaris Industries, Inc. 1,260,336 46,500 Precision Drilling Corp. - ADR 1,503,810 20,000 Protective Life Corp. 994,800 61,800 Quaker Chemical Corp. 1,344,150 23,100 Ryder System, Inc. 1,034,418 44,000 Sabre Holdings Corp. - Class A 1,035,320
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 53,000 Seagate Technology $ 1,395,490 21,199 Sempra Energy 984,906 145,800 Siliconware Precision Industries Co. - ADR 940,410 18,000 Southern Copper Corp. 1,520,640 46,700 Spartech Corp. 1,120,800 76,200 SpectraLink Corp. 956,310 125,800 Standard Motor Products, Inc. 1,117,104 59,200 Standard Register Co. 917,600 73,100 StarTek, Inc. 1,722,236 27,300 Steel Dynamics, Inc. 1,548,729 132,200 Taiwan Semiconductor Manufacturing Co., Ltd. - ADR 1,329,932 63,600 Technitrol, Inc. 1,525,128 47,600 Telecomunicacoes de Sao Paulo S.A. - ADR 1,175,720 10,900 The Bear Stearns Cos., Inc. 1,511,830 23,600 The Scotts Miracle-Gro Co. 1,079,936 28,200 Tidewater, Inc. 1,557,486 23,500 United Auto Group, Inc. 1,010,500 16,700 United Parcel Service, Inc. - Class B 1,325,646 29,400 Universal Corp. 1,081,038 16,300 W.W. Grainger, Inc. 1,228,205 25,100 Wachovia Corp. 1,406,855 48,700 Waddell & Reed Financial, Inc. - Class A 1,124,970 26,500 Washington Mutual, Inc. 1,129,430 12,400 Whirlpool Corp. 1,134,228 ------------ TOTAL COMMON STOCKS (COST $110,477,522) 128,514,984
Schedule of Investments 51 Schedule of Investments (continued) ICON Equity Income Fund March 31, 2006
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- CONVERTIBLE PREFERRED STOCKS 0.8% 4,000 Northrop Grumman Corp. 7.00%, 04-04-21 $ 539,000 9,000 Omnicare, Inc. 4.00%, 06-15-33 646,875 ------------ TOTAL CONVERTIBLE PREFERRED STOCKS (COST $1,090,944) 1,185,875 CORPORATE BONDS 3.6% 500,000 Aetna, Inc. 6.97%, 08-15-36 564,142 1,000,000 DaimlerChrysler AG 6.50%, 11-15-13 1,017,067 1,288,000 Household Finance Corp. 4.75%, 07-15-13 1,211,850 800,000 Lowe's Companies, Inc. 8.25%, 06-01-10 884,814 750,000 Mediacom Broadband LLC 11.00%, 07-15-13 798,750 575,000 United Rentals NA, Inc. 7.75%, 11-15-13 575,000 ------------ TOTAL CORPORATE BONDS (COST $5,226,269) 5,051,623 CONVERTIBLE CORPORATE BONDS 0.4% 600,000 International Rectifier Corp. 4.25% 07-15-07 584,250 ------------ TOTAL CONVERTIBLE CORPORATE BONDS (COST $583,500) 584,250 U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY BONDS 3.4% 1,323,000 Freddie Mac 5.16%, 02-27-15 1,285,809 258,000 Freddie Mac 5.00%, 09-29-17 243,980 750,000 U.S. Treasury Note 2.00%, 05-15-06 747,579 750,000 U.S. Treasury Note 3.13%, 01-31-07 739,424
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 1,000,000 U.S. Treasury Note 6.25%, 02-15-07 $ 1,011,250 750,000 U.S. Treasury Note 4.00%, 08-31-07 741,240 ------------ TOTAL U.S. GOVERNMENT AND U.S. GOVERNMENT AGENCY BONDS (COST $4,811,571) 4,769,282 CALL OPTIONS PURCHASED 0.4% 125 Ceradyne, Inc. Expiration January 2007, Exercise Price $60.00 70,625 166 Cooper Cameron Corp. Expiration January 2008, Exercise Price $40.00 186,750 221 Hunt Transport Services, Inc. Expiration January 2007, Exercise Price $30.00 11,050 600 Infocrossing, Inc. Expiration September 2006, Exercise Price $12.50 88,500 123 Lowe's Companies, Inc. Expiration January 2007, Exercise Price $65.00 76,260 125 Trimble Navigation, Ltd. Expiration August 2006, Exercise Price $40.00 88,750 667 Unisys Corp. Expiration January 2007, Exercise Price $7.50 50,025 ------------ TOTAL CALL OPTIONS PURCHASED (COST $478,410) 571,960
52 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- SHORT-TERM INVESTMENTS 0.4% 569,623 Brown Brothers Harriman Time Deposit, 4.07%, 04-03-06# $ 569,623 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $569,623) 569,623 TOTAL INVESTMENTS 99.3% (COST $123,237,839) 141,247,597 OTHER ASSETS LESS LIABILITIES 0.7% 413,131 ------------ TOTAL NET ASSETS 100.0% $141,660,728 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt Schedule of Investments 53 Management Overview ICON Long/Short Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 98.3% Top 10 Long Equity Holdings 12.2% Number of Long Stocks 139 Number of Short Positions 3 Short-Term Investments 3.4% Percentages are based upon net assets. TOP 10 LONG EQUITY HOLDINGS March 31, 2006 Union Pacific Corp. 1.3% Morgan Stanley 1.3% Companhia De Saneamento Basico do Estado de Sao Paulo - ADR 1.3% Dollar Tree Stores, Inc.(a) 1.2% AK Steel Holding Corp.(a) 1.2% Family Dollar Stores, Inc. 1.2% Burlington Northern Santa Fe Corp. 1.2% Norfolk Southern Corp. 1.2% Eagle Materials, Inc. 1.2% Polaris Industries, Inc. 1.1% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. For the six-month period ended March 31, 2006, the ICON Long/Short Fund returned 12.95% for Class I shares, 12.54% for Class C shares and 13.08% for Class Z shares, outpacing the 7.08% return of the S&P 1500 Index, the Fund's benchmark, over the same period. Total returns for other periods as of March 31, 2006 appear on page 59. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The primary driver of the Fund's relative outperformance was a valuation- based tilt toward industries in the economically sensitive Industrials and Materials sectors, both of which were heavily overweighted relative to the benchmark. Also lifting results was effective stock selection within the underweight Financials group. By contrast, the Fund held minimal short exposure, as the long side proved far more attractive according to our analysis. However, these short positions detracted slightly from overall performance, as industries judged by our system to be overpriced continued to demonstrate considerable relative strength. Although the ICON methodology guides the Fund to emphasize specific industries and securities, it may result in investments concentrated within a given capitalization range. Such was the case for the period, as stock selection among large-cap issues aided relative performance despite the Fund's significant underweight in this range. The portfolio's heavy overweight in mid-cap stocks also lifted performance, while small-cap exposure was not as favorable on a relative basis, yet still contributed positively to results. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. On the long side, the Fund's focus on economically sensitive industries such as steel and construction & farm machinery & heavy trucks enhanced results, while stock selection within the computer storage & peripherals space added to gains. Exposure to trading companies & distributors and investment banking & brokerage also proved favorable. Conversely, long-side industries that detracted from performance included health care facilities, multi-utilities and semiconductors. Likewise, the Fund's relatively limited short exposure proved a slight drag on results, with unprofitable companies in the oil & gas exploration & production and oil & gas refining & marketing areas accounting for the negative effect. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE DOMESTIC EQUITY MARKET? A. Given continued global expansion, economically sensitive industries were still among the best performing areas at period-end. However, these groups have enjoyed an extended advance and have closed relatively substantial 54 Management Overview [J.C. Waller III PHOTO] J.C. Waller, III Portfolio Manager valuation gaps. As such, shorting opportunities may become more prevalent if interest rates continue to erode value and overpriced industries show signs of weakening relative strength. On the long side, certain industries within the out-of-favor Consumer Discretionary sector are showing nascent signs of strength, which could prove opportune going forward. Moreover, particular Energy-related areas are displaying robust earnings growth relative to rising interest rates, thus providing additional opportunities. PERFORMANCE HIGHLIGHTS March 31, 2006 - The primary driver of the Fund's relative outperformance was a valuation- based tilt toward industries in the economically sensitive Industrials and Materials sectors. - The Fund benefited from heavily weighted long-side exposure to the steel and construction & farm machinery & heavy trucks industries. - Long side industries detracting from performance included health care facilities, multi-utilities and semiconductors, while minimal short positions in oil & gas exploration & production and oil & gas refining & marketing areas proved a slight drag on results. Management Overview 55 Management Overview (continued) ICON Long/Short Fund SECTOR COMPOSITION March 31, 2006 Industrials 16.5% Financial 15.9% Materials 15.3% Energy 12.1% Consumer Discretionary 11.9% Information Technology 10.1% Healthcare 8.0% Leisure and Consumer Staples 4.8% Telecommunication and Utilities 3.7%
Percentages are based upon common stock positions and net assets. 56 Management Overview INDUSTRY COMPOSITION March 31, 2006 Oil & Gas Drilling 4.9% Oil & Gas Equipment & Services 4.7% Railroads 4.7% Steel 4.7% Diversified Metals & Mining 3.8% Investment Banking & Brokerage 3.8% Regional Banks 3.6% Pharmaceuticals 3.5% Aluminum 3.2% General Merchandise Stores 3.0% Airlines 2.6% Building Products 2.6% Oil & Gas Exploration & Production 2.6% Home Furnishings 2.5% Apparel Accessories & Luxury Goods 2.4% Construction Materials 2.4% Computer Storage & Peripherals 2.3% Leisure Products 2.3% Health Care Distributors 2.2% Communications Equipment 2.1% Consumer Finance 2.0% Trucking 1.9% Wireless Telecommunication Services 1.9% Apparel Retail 1.8% Multi-Line Insurance 1.8%
Management Overview 57 Management Overview (continued) ICON Long/Short Fund Water Utilities 1.8% Internet Software Services 1.7% Semiconductors 1.7% Trading Companies & Distributors 1.7% Life & Health Insurance 1.5% Soft Drinks 1.5% Data Processing & Outsourced Services 1.4% Air Freight & Logistics 1.2% Asset Management & Custody Banks 1.1% Health Care Services 1.1% Other Diversified Financial Services 1.1% Specialty Chemicals 1.1% Diversified Banks 1.0% Photographic Products 1.0% Human Resource & Employment Services 0.9% Specialty Stores 0.9% Managed Health Care 0.8% Automotive Retail 0.7% IT Consulting & Other Services 0.7% Household Appliances 0.6% Aerospace & Defense 0.4% Biotechnology 0.4% Construction & Farm Machinery & Heavy Trucks 0.4% Computer Hardware 0.3%
58 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
INCEPTION SINCE DATE 6 MONTH* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------- ICON Long/Short Fund - Class I 9/30/02 12.95% 19.92% N/A 19.94% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 17.06% --------------------------------------------------------------------------------------------- ICON Long/Short Fund - Class C 10/17/02 12.54% 19.01% N/A 17.31% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 15.70% --------------------------------------------------------------------------------------------- ICON Long/Short Fund - Class Z 5/6/04 13.08% 20.28% N/A 16.66% --------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% N/A 11.37% ---------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. The Adviser has agreed to limit certain Fund expenses; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future. Class Z shares are available only to institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2006 [LINE GRAPH]
ICON LONG/SHORT FUND - CLASS I S&P 1500 INDEX ------------------------------ -------------- 9/30/02 10000.00 10000.00 9760.00 10811.00 3/31/03 8880.00 10450.00 11039.00 12093.00 12000.00 12469.00 13453.00 14009.00 3/31/04 14435.00 14308.00 14455.00 14557.00 14091.00 14285.00 15899.00 15661.00 3/31/05 15752.00 15349.00 15700.00 15613.00 16726.00 16206.00 16903.00 16550.00 3/31/06 18891.00 17353.00
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund's Class I shares on the Class' inception date of 9/30/02 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund's other share classes will vary due to differences in charges and expenses. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Management Overview 59 Schedule of Investments ICON Long/Short Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- COMMON STOCKS 98.3% 50,000 99 Cents Only Stores(a) $ 678,000 16,000 A.C. Moore Arts & Crafts, Inc.(a) 294,400 19,000 A.G. Edwards, Inc. 947,340 18,000 Aeropostale, Inc.(a) 542,880 96,500 AK Steel Holding Corp.(a) 1,447,500 20,000 Alaska Air Group, Inc.(a) 709,000 41,000 Alcoa, Inc. 1,252,960 28,000 Aleris International, Inc.(a) 1,345,960 11,000 Aluminum Corp. of China, Ltd. - ADR 1,151,920 36,000 America Movil S.A. De C.V. - ADR 1,233,360 40,000 America's Car- Mart, Inc.(a) 860,000 5,000 American International Group, Inc. 330,450 37,000 AmeriCredit Corp.(a) 1,137,010 22,000 AmerisourceBergen Corp. 1,061,940 9,000 AmerUs Group Co. 542,160 18,000 AMR Corp.(a) 486,900 22,000 AstraZeneca PLC - ADR 1,105,060 11,500 Atwood Oceanics, Inc.(a) 1,161,615 15,000 Barr Pharmaceuticals, Inc.(a) 944,700 18,000 Barrett Business Services, Inc.(a) 486,000 10,000 Berry Petroleum Co. 684,500 34,000 BHP Billiton, Ltd. - ADR 1,354,900 12,000 Borders Group, Inc. 302,880 17,100 Burlington Northern Santa Fe Corp. 1,424,943
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 20,000 C.H. Robinson Worldwide, Inc. $ 981,800 28,000 Canadian National Railway Co. - ADR 1,267,840 10,000 Caremark Rx, Inc.(a) 491,800 39,000 Cash America International, Inc. 1,170,780 11,200 Celgene Corp.(a) 495,264 10,005 Cemex S.A. De C.V. - ADR 653,126 9,000 Ceradyne, Inc.(a) 449,100 23,500 Christopher & Banks Corp. 545,435 7,200 CIGNA Corp. 940,464 30,000 Coca-Cola Enterprises Inc. 610,200 22,000 Colonial Bancgroup, Inc. 550,000 6,000 Columbia Sportswear Co.(a) 319,980 70,000 Companhia De Saneamento Basico do Estado de Sao Paulo - ADR 1,540,700 21,600 Companhia Vale do Rio Doce - ADR 1,048,248 18,000 Continental Airlines, Inc. - Class B(a) 484,200 42,000 Convergys Corp.(a) 764,820 40,500 Corning, Inc.(a) 1,089,855 42,500 Cost Plus, Inc.(a) 726,750 175,000 Cray, Inc.(a) 316,750 21,000 Credit Suisse Group - ADR 1,173,060 27,000 CSG Systems International, Inc.(a) 628,020 7,000 Cullen/Frost Bankers, Inc. 376,250 14,500 Diamond Offshore Drilling, Inc. 1,297,750 53,000 Dollar Tree Stores, Inc.(a) 1,466,510 8,000 Dril-Quip, Inc.(a) 566,800
60 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 21,600 Eagle Materials, Inc. $ 1,377,216 22,000 East-West Bancorp, Inc. 848,100 40,000 Eastman Kodak Co. 1,137,600 20,000 EFJ, Inc.(a) 215,800 54,000 Family Dollar Stores, Inc. 1,436,400 21,000 Fastenal Co. 994,140 7,300 Fiserv, Inc.(a) 310,615 20,000 Forest Laboratories, Inc.(a) 892,600 24,500 Fossil, Inc.(a) 455,210 11,000 Freeport- McMoran Copper & Gold, Inc. - Class B 657,470 24,500 Grant Prideco, Inc.(a) 1,049,580 75,000 Haverty Furniture Cos., Inc. 1,076,250 29,550 HCC Insurance Holdings, Inc. 1,028,340 15,000 Helen of Troy, Ltd.(a) 318,000 15,000 Helix Energy Solutions Group, Inc.(a) 568,500 17,700 Helmerich & Payne, Inc. 1,235,814 15,500 Henry Schein, Inc.(a) 741,830 13,000 Hutchinson Technology, Inc.(a) 392,210 14,000 Investors Financial Services Corp. 656,180 18,200 j2 Global Communications, Inc.(a) 855,400 8,000 Joy Global, Inc. 478,160 32,000 JPMorgan Chase & Co. 1,332,480 100,000 K2, Inc.(a) 1,255,000 35,000 KCS Energy, Inc.(a) 910,000 45,000 Kforce, Inc.(a) 573,750
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 22,000 Knight Transportation, Inc. $ 434,500 25,000 Komag, Inc.(a) 1,190,000 15,000 Lan Airlines S.A. - ADR 587,850 7,300 Lehman Brothers Holding, Inc. 1,055,069 30,000 Liz Claiborne, Inc. 1,229,400 7,000 Martin Marietta Materials, Inc. 749,210 35,000 Masco Corp. 1,137,150 16,700 McKesson HBOC, Inc. 870,571 15,300 MedcoHealth Solutions, Inc.(a) 875,466 25,000 Morgan Stanley 1,570,501 19,000 MSC Industrial Direct Co., Inc. - Class A 1,026,380 40,000 Mylan Laboratories, Inc. 936,000 14,500 National- OilWell Varco, Inc.(a) 929,740 46,800 Netease.com, Inc. - ADR(a) 1,148,472 25,000 Newpark Resources, Inc.(a) 205,000 17,000 NICE Systems, Ltd. - ADR(a) 866,320 26,000 Norfolk Southern Corp. 1,405,820 27,000 Old Dominion Freight Line, Inc.(a) 727,650 55,000 OM Group, Inc.(a) 1,265,000 10,000 Oregon Steel Mills, Inc.(a) 511,700 13,000 Pacer International, Inc. 424,840 10,000 Par Pharmaceutical Cos., Inc.(a) 281,800 20,000 Pepsi Bottling Group, Inc. 607,800 25,000 PepsiAmericas, Inc. 611,250 12,500 PETCO Animal Supplies, Inc.(a) 294,625
Schedule of Investments 61 Schedule of Investments (continued) ICON Long/Short Fund March 31, 2006
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 10,000 PetsMart, Inc. $ 281,400 25,000 Polaris Industries, Inc. 1,364,000 14,500 Polo Ralph Lauren Corp. 878,845 19,000 Posco - ADR 1,212,200 7,500 Protective Life Corp. 373,050 4,500 Prudential Financial, Inc. 341,145 25,000 Radyne Corp.(a) 399,250 7,000 Reliance Steel & Aluminum Co. 657,440 45,000 Rent-A-Center, Inc.(a) 1,151,550 5,700 Rio Tinto PLC - ADR 1,179,900 17,500 Ross Stores, Inc. 510,825 28,000 Rowan Cos., Inc. 1,230,880 23,500 Ryder System, Inc. 1,052,330 20,000 Satyam Computer Services, Ltd. - ADR 875,200 47,000 Seagate Technology 1,237,510 158,000 Siliconware Precision Industries Co. - ADR 1,019,100 20,000 Simpson Manufacturing Co., Inc. 866,000 29,200 SkyWest, Inc. 854,684 15,000 Southern Copper Corp. 1,267,200 40,000 Southwest Water Co. 637,600 8,600 StanCorp Financial Group, Inc. 465,346 33,800 Steel Technologies, Inc. 821,340 100,000 Taiwan Semiconductor Manufacturing Co., Ltd. - ADR 1,006,000 31,800 Texas Regional Bancshares, Inc. 937,782 16,500 The Bank of New York Co., Inc. 594,660
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 26,500 The Finish Line, Inc. $ 435,925 6,100 The Goldman Sachs Group, Inc. 957,456 8,300 The Hartford Financial Services Group, Inc. 668,565 10,000 The Pepsi Bottling Group, Inc. 303,900 7,500 The Stanley Works 379,950 30,000 Tim Participacoes S.A. - ADR 1,110,900 18,000 Ultra Petroleum Corp.(a) 1,121,580 30,000 Umpqua Holdings Corp. 855,000 17,000 Union Pacific Corp. 1,586,950 17,000 Unit Corp.(a) 947,750 16,600 Universal Forest Products, Inc. 1,053,934 7,500 W&T Offshore, Inc. 302,325 20,500 W-H Energy Services, Inc.(a) 912,045 26,000 Weatherford International, Ltd.(a) 1,189,500 15,000 Wintrust Financial Corp. 872,550 ------------ TOTAL COMMON STOCKS (COST $99,429,612) 116,790,306 SHORT-TERM INVESTMENTS 3.4% 4,084,440 Brown Brothers Harriman Time Deposit, 4.07%, 04-03-06# 4,084,440 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $4,084,440) 4,084,440 TOTAL INVESTMENTS 101.7% (COST $103,514,052) 120,874,746 LIABILITIES LESS OTHER ASSETS (1.7)% (2,048,792) ------------ TOTAL NET ASSETS 100.0% $118,825,954 ============
62 Schedule of Investments The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt All shares held may be pledged as collateral for investment securities sold short. Schedule of Investments 63 Schedule of Investments ICON Long/Short Fund March 31, 2006 (unaudited)
SHARES SHORT SECURITIES VALUE -------------------------------------------- 17,500 Contango Oil & Gas Co.(a) $226,625 27,000 KFx, Inc.(a) 491,400 25,000 Syntroleum Corp.(a) 206,750 -------- TOTAL SHORT SECURITIES (PROCEEDS $691,961) $924,775 ========
The accompanying notes are an integral part of this Schedule of Investments. (a) Non-income producing security. 64 Schedule of Investments Six Month Hypothetical Expense Example March 31, 2006 (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 (10/1/05 - 3/31/06). ACTUAL EXPENSES The first set of lines in the table for each Fund provide information about actual account values and actual expenses. The Example includes, but is not limited to, management fees, 12b-1 fees, fund accounting, custody and transfer agent fees. However, the Example does not include client specific fees, such as the $10.00 fee charged to IRA accounts, or the $15.00 fee charged for wire redemptions. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for each Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second set of lines in the table for each Fund provide information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees that may be charged by other funds. Therefore, this information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. Expense Example 65 Six Month Hypothetical Expense Example (continued) March 31, 2006 (unaudited)
BEGINNING ENDING EXPENSES PAID ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO 10/1/05 3/31/06 10/1/05-3/31/06* 10/1/05-3/31/06 ------------------------------------------------------------------------------------------------ ICON BOND FUND ------------------------------------------------------------------------------------------------ CLASS I ------------------------------------------------------------------------------------------------ Actual Expenses $1,000.00 $1,000.20 $ 4.99 1.00% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,020.01 5.04 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------ Actual period 1,000.00 997.20 7.97 1.60% return ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,017.02 8.05 ------------------------------------------------------------------------------------------------ CLASS Z ------------------------------------------------------------------------------------------------ Actual period 1,000.00 1,001.60 3.74 0.75% return ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,021.26 3.78 ------------------------------------------------------------------------------------------------ ICON CORE EQUITY FUND ------------------------------------------------------------------------------------------------ CLASS I ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,124.40 6.46 1.22% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,018.92 6.14 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,120.20 10.68 2.02% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,014.93 10.15 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ CLASS Z ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,124.60 5.88 1.11% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,019.47 5.59 Example (5% return before expenses) ------------------------------------------------------------------------------------------------
66 Expense Example
BEGINNING ENDING EXPENSES PAID ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO 10/1/05 3/31/06 10/1/05-3/31/06* 10/1/05-3/31/06 ------------------------------------------------------------------------------------------------ ICON COVERED CALL FUND ------------------------------------------------------------------------------------------------ CLASS I ------------------------------------------------------------------------------------------------ Actual Expenses $1,000.00 $1,029.90 $ 7.34 1.45% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,017.77 7.29 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,026.90 11.12 2.20% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,014.03 11.05 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ CLASS Z ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,031.30 6.08 1.20% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,019.02 6.04 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ ICON EQUITY INCOME FUND ------------------------------------------------------------------------------------------------ CLASS I ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,074.90 6.36 1.23% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,018.87 6.19 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,069.70 11.35 2.20% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,014.03 11.05 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ CLASS Z ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,074.30 6.21 1.20% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,019.02 6.04 Example (5% return before expenses) ------------------------------------------------------------------------------------------------
Expense Example 67 Six Month Hypothetical Expense Example (continued) March 31, 2006 (unaudited)
BEGINNING ENDING EXPENSES PAID ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO 10/1/05 3/31/06 10/1/05-3/31/06* 10/1/05-3/31/06 ------------------------------------------------------------------------------------------------ ICON LONG/SHORT FUND ------------------------------------------------------------------------------------------------ CLASS I ------------------------------------------------------------------------------------------------ Actual Expenses $1,000.00 $1,129.50 $ 8.23 1.55% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,017.27 7.80 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,125.40 12.19 2.30% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,013.53 11.55 Example (5% return before expenses) ------------------------------------------------------------------------------------------------ CLASS Z ------------------------------------------------------------------------------------------------ Actual Expenses 1,000.00 1,130.80 6.64 1.25% ------------------------------------------------------------------------------------------------ Hypothetical 1,000.00 1,018.77 6.29 Example (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. 68 Expense Example Statements of Assets and Liabilities March 31, 2006 (unaudited)
ICON ICON ICON ICON ICON CORE COVERED EQUITY LONG/SHORT BOND FUND EQUITY FUND CALL FUND INCOME FUND FUND ----------- ------------ ----------- ------------ ------------ ASSETS Investments, at cost $84,826,610 $177,139,150 $55,536,925 $123,237,839 $103,514,052 ----------- ------------ ----------- ------------ ------------ Investments, at value 83,705,421 212,012,254 66,031,601 141,247,597 120,874,746 Cash - - 27,397 4,810 170,105 Deposits for short sales - - - - 1,315,205 Receivables: Fund shares sold 320,011 502,947 257,554 287,701 1,181,645 Investments sold 5,373,451 Interest 1,187,016 331 194 129,587 - Dividends - 128,169 51,041 221,191 83,581 Expense reimbursements by Advisor 26,821 - 25,012 2,681 - Other assets 20,601 20,748 14,644 18,836 16,577 ----------- ------------ ----------- ------------ ------------ Total Assets 85,259,870 212,664,449 66,407,443 141,912,403 129,015,310 ----------- ------------ ----------- ------------ ------------ LIABILITIES Options written, at value (premiums received of $4,641,617) - - 5,326,195 - - Common stocks sold short, at value (proceeds of $691,961) - - - - 924,775 Payables: Due to custodian bank 496,924 - - - - Investments bought 513,317 - - - 9,058,483 Fund shares redeemed 517,377 215,671 57,844 60,995 21,547 Distributions due to shareholders 5,939 - - 28,511 - Advisory fees & fee waiver recoupment 42,646 130,660 38,289 88,470 123,316 Accrued distribution fees 17,848 99,946 14,176 30,970 31,452 Fund accounting fees 1,742 4,253 1,288 2,884 2,203 Transfer agent fees 2,742 10,614 2,901 2,506 685 Administration fees 3,365 8,238 2,416 5,580 4,291 Trustee fees 3,760 9,231 2,702 6,245 4,847 Accrued expenses 20,940 16,051 44,221 25,514 17,757 ----------- ------------ ----------- ------------ ------------ Total Liabilities 1,626,600 494,664 5,490,032 251,675 10,189,356 ----------- ------------ ----------- ------------ ------------ NET ASSETS - ALL SHARE CLASSES $83,633,270 $212,169,785 $60,917,411 $141,660,728 $118,825,954 =========== ============ =========== ============ ============ NET ASSETS - CLASS I $82,736,143 $114,453,932 $57,451,147 $137,397,299 $ 97,546,516 =========== ============ =========== ============ ============ NET ASSETS - CLASS C $ 894,694 $ 96,349,784 $ 3,380,850 $ 4,240,650 $ 17,968,593 =========== ============ =========== ============ ============ NET ASSETS - CLASS Z $ 2,433 $ 1,366,069 $ 85,414 $ 22,779 $ 3,310,845 =========== ============ =========== ============ ============ NET ASSETS CONSIST OF Paid-in capital $85,809,849 $164,898,584 $51,933,904 $117,717,841 $ 97,554,282 Accumulated undistributed net investment income/(loss) 38,065 (631,690) (133,206) 41 (300,280) Accumulated undistributed net realized gain/(loss) from investments (1,093,455) 13,029,787 (693,385) 5,933,088 4,444,072 Unrealized appreciation/(depreciation) on investments, written options and securities sold short (1,121,189) 34,873,104 9,810,098 18,009,758 17,127,880 ----------- ------------ ----------- ------------ ------------ NET ASSETS $83,633,270 $212,169,785 $60,917,411 $141,660,728 $118,825,954 =========== ============ =========== ============ ============ Shares outstanding (unlimited shares authorized, no par value) Class I 8,311,948 6,978,761 4,053,599 8,796,995 5,402,078 Class C 89,697 6,132,099 245,058 273,123 1,021,394 Class Z 245 83,383 5,996 1,458 182,453 Net asset value (offering and redemption price per share) Class I $ 9.95 $ 16.40 $ 14.17 $ 15.62 $ 18.06 Class C $ 9.97 $ 15.71 $ 13.80 $ 15.53 $ 17.59 Class Z $ 9.93 $ 16.38 $ 14.25 $ 15.62 $ 18.15
The accompanying notes are an integral part of the financial statements. Financial Statements 69 Statements of Operations For the period ended March 31, 2006 (unaudited)
ICON ICON ICON ICON ICON CORE COVERED EQUITY LONG/SHORT BOND FUND EQUITY FUND CALL FUND INCOME FUND FUND ----------- ----------- ----------- ----------- ----------- INVESTMENT INCOME Interest $ 2,155,962 $ 46,077 $ 11,355 $ 303,146 $ 44,007 Dividends - 808,197 295,389 1,542,389 346,490 Foreign taxes withheld - (1,729) - - (1,291) ----------- ----------- ----------- ---------- ----------- Total Investment Income 2,155,962 852,545 306,744 1,845,535 389,206 ----------- ----------- ----------- ---------- ----------- EXPENSES Advisory fees 249,901 703,142 216,822 491,123 346,430 Distribution fees: Class I 102,986 126,742 67,828 158,682 82,405 Class C 3,852 424,384 17,637 19,986 76,289 Fund accounting fees 13,356 24,594 11,556 17,931 11,522 Transfer agent fees 24,027 70,365 19,755 36,653 18,982 Administration fees 19,579 44,049 13,587 30,773 19,126 Registration fees: Class I 5,804 4,667 3,735 4,523 3,959 Class C 3,560 3,550 2,806 2,842 3,408 Custody fees 9,716 16,010 55,090 15,075 11,551 Insurance expense 2,520 4,766 1,862 4,763 2,003 Trustee fees and expenses 4,227 7,666 3,075 5,569 3,617 Interest expense 4,675 584 7,704 702 1,005 Other expenses 31,170 53,716 24,952 40,745 28,660 ----------- ----------- ----------- ---------- ----------- Total expenses before expense (reimbursement)/recoupment 475,373 1,484,235 446,409 829,367 608,957 ----------- ----------- ----------- ---------- ----------- Expense (reimbursement)/recoupment by Advisor due to expense limitation agreement (51,437) - (6,459) (3,084) 80,529 ----------- ----------- ----------- ---------- ----------- Net Expenses 423,936 1,484,235 439,950 826,283 689,486 ----------- ----------- ----------- ---------- ----------- NET INVESTMENT INCOME (LOSS) 1,732,026 (631,690) (133,206) 1,019,252 (300,280) ----------- ----------- ----------- ---------- ----------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from: Investment transactions (1,013,139) 13,087,844 4,111,422 6,275,287 5,693,050 Written options - - (2,909,582) - - Securities sold short - - - 37,114 ----------- ----------- ----------- ---------- ----------- Total net realized gain/(loss) (1,013,139) 13,087,844 1,201,840 6,275,287 5,730,164 ----------- ----------- ----------- ---------- ----------- Change in net unrealized appreciation/(depreciation) on investments, written options and securities sold short (646,017) 9,717,730 654,471 2,164,323 5,425,643 ----------- ----------- ----------- ---------- ----------- Net realized and unrealized gain/(loss) on investments (1,659,156) 22,805,574 1,856,311 8,439,610 11,155,807 ----------- ----------- ----------- ---------- ----------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 72,870 $22,173,884 $ 1,723,105 $9,458,862 $10,855,527 =========== =========== =========== ========== ===========
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, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ -------------- ------------------ OPERATIONS Net investment income/(loss) $ 1,732,026 $ 2,741,954 $ (631,690) $ (959,954) Net realized gain/(loss) from investment transactions, written options and securities sold short (1,013,139) (11,900) 13,087,844 14,916,012 Change in net unrealized appreciation/(depreciation) on investments, written options and securities sold short (646,017) (2,183,484) 9,717,730 8,567,211 ------------ ------------ ------------ ------------ Net increase/(decrease) in net assets resulting from operations 72,870 546,570 22,173,884 22,523,269 ------------ ------------ ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income Class I (1,673,998) (2,853,077) - - Class C (15,431) (31,705) - - Class Z (97) (101) - - Net realized gains Class I (67,629) (338,815) (3,632,925) - Class C (720) (4,379) (3,157,999) - Class Z (5) (6) (44,621) - ------------ ------------ ------------ ------------ Net decrease from dividends and distributions (1,757,880) (3,228,083) (6,835,545) - ------------ ------------ ------------ ------------ FUND SHARE TRANSACTIONS Shares sold Class I 32,241,305 68,872,908 28,918,826 58,022,225 Class C 140,887 1,493,441 15,573,617 24,404,517 Class Z 2,281 4,736 89,529 1,088,280 Reinvested dividends and distributions Class I 1,706,591 3,161,012 3,340,799 - Class C 14,764 34,828 3,039,446 - Class Z 103 106 44,621 - Shares repurchased Class I (31,961,459) (48,473,705) (19,985,892) (23,305,845) Class C (229,234) (876,763) (7,241,763) (10,044,802) Class Z (5,070) (181) (37,877) (7,314) ------------ ------------ ------------ ------------ Net increase/(decrease) from fund share transactions 1,910,168 24,216,382 23,741,306 50,157,061 ------------ ------------ ------------ ------------ Total net increase/(decrease) in net assets 225,158 21,534,869 39,079,645 72,680,330 NET ASSETS Beginning of period 83,408,112 61,873,243 173,090,140 100,409,810 ------------ ------------ ------------ ------------ End of period $ 83,633,270 $ 83,408,112 $212,169,785 $173,090,140 ============ ============ ============ ============
72 Financial Statements
ICON COVERED CALL FUND ICON EQUITY INCOME FUND ICON LONG/SHORT FUND ------------------------------------ ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED PERIOD ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ -------------- ------------------ -------------- ------------------ $ (133,206) $ (269,738) $ 1,019,252 $ 2,384,761 $ (300,280) $ (365,486) 1,201,840 (929,262) 6,275,287 8,338,413 5,730,164 (1,286,092) 654,471 5,856,219 2,164,323 5,084,010 5,425,643 10,046,242 ----------- ------------ ------------ ------------ ------------ ------------ 1,723,105 4,657,219 9,458,862 15,807,184 10,855,527 8,394,664 ----------- ------------ ------------ ------------ ------------ ------------ - - (1,477,196) (2,332,579) - - - - (27,349) (30,549) - - - - (268) (410) - - (466,120) (2,014,072) (8,604,004) (690,470) - (1,266,628) (32,162) (97,417) (280,066) (13,763) - (183,354) (31) (118) (1,603) (103) - 1,524 ----------- ------------ ------------ ------------ ------------ ------------ (498,313) (2,111,607) (10,390,486) (3,067,874) - (1,451,506) ----------- ------------ ------------ ------------ ------------ ------------ 9,933,127 22,320,205 19,139,711 40,993,500 44,917,996 48,606,994 190,997 2,209,902 519,589 2,071,831 3,739,473 10,192,112 81,394 727 2,349 9,609 3,129,470 101,583 459,746 1,901,482 9,350,759 2,824,292 - 1,158,739 27,565 88,746 263,358 36,636 - 163,651 31 118 1,870 513 - 1,524 (8,457,866) (15,241,634) (19,867,994) (44,139,761) (9,408,440) (26,815,665) (544,458) (751,331) (377,695) (418,636) (1,592,234) (1,348,857) - (790) (4,199) (3,317) (38,954) (7,915) ----------- ------------ ------------ ------------ ------------ ------------ 1,690,536 10,527,425 9,027,748 1,374,667 40,747,311 32,052,166 ----------- ------------ ------------ ------------ ------------ ------------ 2,915,328 13,073,037 8,096,124 14,113,977 51,602,838 38,995,324 58,002,083 44,929,046 133,564,604 119,450,627 67,223,116 28,227,792 ----------- ------------ ------------ ------------ ------------ ------------ $60,917,411 $ 58,002,083 $141,660,728 $133,564,604 $118,825,954 $ 67,223,116 =========== ============ ============ ============ ============ ============
Financial Statements 73 Statements of Changes in Net Assets (continued)
ICON BOND FUND ICON CORE EQUITY FUND ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ -------------- ------------------ TRANSACTIONS IN FUND SHARES Shares sold Class I 3,211,731 6,619,646 1,871,635 4,143,039 Class C 13,991 142,887 1,046,679 1,818,535 Class Z 227 455 5,743 74,785 Reinvested dividends and distributions Class I 170,422 304,338 223,461 - Class C 1,470 3,347 211,758 - Class Z 10 10 2,991 - Shares repurchased Class I (3,182,381) (4,658,204) (1,311,316) (1,647,530) Class C (22,817) (84,344) (484,447) (740,648) Class Z (504) (17) (2,427) (514) ----------- ----------- ------------ ------------ Net increase/(decrease) 192,149 2,328,118 1,564,077 3,647,667 ----------- ----------- ------------ ------------ Shares outstanding beginning of period 8,209,741 5,881,623 11,630,166 7,982,499 ----------- ----------- ------------ ------------ Shares outstanding end of period 8,401,890 8,209,741 13,194,243 11,630,166 =========== =========== ============ ============ PURCHASE AND SALES OF INVESTMENT SECURITIES (excluding short-term securities and written options) Purchase of securities (including short sale transactions) $24,952,889 $30,243,959 $127,902,970 $230,365,019 Proceeds from sales of securities (including short sale transactions) 22,941,263 18,795,990 111,816,633 183,339,859 Purchases of long-term U.S. government securities - 27,647,371 - - Proceeds from sales of long-term U.S. government securities 8,030,763 28,497,651 - - ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ 38,065 $ (4,435) $ (631,690) $ - =========== =========== ============ ============
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, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ -------------- ------------------ -------------- ------------------ 720,302 1,669,418 1,252,927 2,741,457 2,639,257 3,261,050 14,361 168,643 34,331 139,266 229,807 700,414 5,749 54 153 633 176,011 6,835 33,630 141,902 632,139 183,923 - 77,095 2,068 6,733 17,970 2,394 - 11,065 2 9 126 34 - 101 (616,123) (1,138,447) (1,299,809) (2,917,378) (562,066) (1,771,701) (40,607) (56,539) (24,960) (27,971) (99,068) (91,534) - (57) (274) (219) (2,279) (524) ----------- ----------- ----------- ------------ ----------- ----------- 119,382 791,716 612,603 122,139 2,381,662 2,192,801 ----------- ----------- ----------- ------------ ----------- ----------- 4,185,271 3,393,555 8,458,973 8,336,834 4,224,263 2,031,462 ----------- ----------- ----------- ------------ ----------- ----------- 4,304,653 4,185,271 9,071,576 8,458,973 6,605,925 4,224,263 =========== =========== =========== ============ =========== =========== $40,590,090 $92,623,516 $93,140,830 $187,781,662 $72,223,828 $83,387,797 43,168,584 86,038,491 93,512,885 188,205,266 34,358,136 57,223,650 - - 2,513,008 1,564,975 - - - - 2,575,196 - - - $ (133,206) $ (269,738) $ 41 $ 485,602 $ (300,280) $ - =========== =========== =========== ============ =========== ===========
Financial Statements 75 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 BOND FUND CLASS I+ Period Ended March 31, 2006 (unaudited) $10.16 0.21 (0.21) (0.00) Year Ended September 30, 2005 $10.52 0.40 (0.29) 0.11 Year Ended September 30, 2004 $10.41 0.45 0.10 0.55 September 30, 2002 (inception) to September 30, 2003 $10.00 0.42 0.38 0.80 CLASS C Period Ended March 31, 2006 (unaudited) $10.18 0.18 (0.21) (0.03) Year Ended September 30, 2005 $10.54 0.33 (0.28) 0.05 Year Ended September 30, 2004 $10.42 0.38 0.12 0.50 October 21, 2002 (inception) to September 30, 2003 $ 9.79 0.37 0.60 0.97 CLASS Z Period Ended March 31, 2006 (unaudited) $10.15 0.22 (0.21) 0.01 Year Ended September 30, 2005 $10.51 0.42 (0.28) 0.14 May 6, 2004 (inception) to September 30, 2004 $10.26 0.46 (0.02) 0.44 ICON CORE EQUITY FUND CLASS I Period Ended March 31, 2006 (unaudited) $15.14 (0.02) 1.85 1.83 Year Ended September 30, 2005 $12.78 (0.05) 2.41 2.36 Year Ended September 30, 2004 $11.12 (0.07) 1.73 1.66 Year Ended September 30, 2003 $ 9.50 (0.04) 1.66 1.62 Year Ended September 30, 2002 $10.04 (0.07) (0.20) (0.27) October 12, 2000 (inception) to September 30, 2001 $10.00 (0.05) 0.09 0.04 CLASS C Period Ended March 31, 2006 (unaudited) $14.58 (0.08) 1.78 1.70 Year Ended September 30, 2005 $12.41 (0.15) 2.32 2.17 Year Ended September 30, 2004 $10.88 (0.16) 1.69 1.53 Year Ended September 30, 2003 $ 9.36 (0.11) 1.63 1.52 Year Ended September 30, 2002 $ 9.98 (0.15) (0.20) (0.35) November 28, 2000 (inception) to September 30, 2001 $10.62 (0.10) (0.54) (0.64) CLASS Z Period Ended March 31, 2006 (unaudited) $15.12 (0.02) 1.85 1.83 Year Ended September 30, 2005 $12.79 (0.14) 2.47 2.33 May 6, 2004 (inception) to September 30, 2004 $12.07 (0.03) 0.75 0.72 ICON COVERED CALL FUND CLASS I+ Period Ended March 31, 2006 (unaudited) $13.88 (0.03) 0.44 0.41 Year Ended September 30, 2005 $13.25 (0.06) 1.26 1.20 Year Ended September 30, 2004 $12.40 (0.07) 1.36 1.29 September 30, 2002 (inception) to September 30, 2003 $10.00 (0.07) 2.47 2.40 CLASS C Period Ended March 31, 2006 (unaudited) $13.56 (0.08) 0.44 0.36 Year Ended September 30, 2005 $13.06 (0.16) 1.23 1.07 Year Ended September 30, 2004 $12.32 (0.16) 1.34 1.18 November 21, 2002 (inception) to September 30, 2003 $10.75 (0.17) 1.74 1.57 CLASS Z Period Ended March 31, 2006 (unaudited) $13.94 - 0.43 0.43 Year Ended September 30, 2005 $13.29 (0.03) 1.24 1.22 May 6, 2004 (inception) to September 30, 2004 $12.86 (0.01) 0.44 0.43 LESS DIVIDENDS AND DISTRIBUTIONS ------------------------------------------------------ DIVIDENDS DISTRIBUTIONS TOTAL NET ASSET FROM NET FROM NET DIVIDENDS VALUE, INVESTMENT REALIZED AND END OF INCOME GAINS DISTRIBUTIONS PERIOD ---------- ------------- ------------- --------- ICON BOND FUND CLASS I+ Period Ended March 31, 2006 (unaudited) (0.20) (0.01) (0.21) $ 9.95 Year Ended September 30, 2005 (0.41) (0.06) (0.47) $10.16 Year Ended September 30, 2004 (0.44) - (0.44) $10.52 September 30, 2002 (inception) to September 30, 2003 (0.39) - (0.39) $10.41 CLASS C Period Ended March 31, 2006 (unaudited) (0.17) (0.01) (0.18) $ 9.97 Year Ended September 30, 2005 (0.35) (0.06) (0.41) $10.18 Year Ended September 30, 2004 (0.38) - (0.38) $10.54 October 21, 2002 (inception) to September 30, 2003 (0.34) - (0.34) $10.42 CLASS Z Period Ended March 31, 2006 (unaudited) (0.22) (0.01) (0.23) $ 9.93 Year Ended September 30, 2005 (0.44) (0.06) (0.50) $10.15 May 6, 2004 (inception) to September 30, 2004 (0.19) - (0.19) $10.51 ICON CORE EQUITY FUND CLASS I Period Ended March 31, 2006 (unaudited) - (0.57) (0.57) $16.40 Year Ended September 30, 2005 - - - $15.14 Year Ended September 30, 2004 - - - $12.78 Year Ended September 30, 2003 - - - $11.12 Year Ended September 30, 2002 - (0.27) (0.27) $ 9.50 October 12, 2000 (inception) to September 30, 2001 - - - $10.04 CLASS C Period Ended March 31, 2006 (unaudited) - (0.57) (0.57) $15.71 Year Ended September 30, 2005 - - - $14.58 Year Ended September 30, 2004 - - - $12.41 Year Ended September 30, 2003 - - - $10.88 Year Ended September 30, 2002 - (0.27) (0.27) $ 9.36 November 28, 2000 (inception) to September 30, 2001 - - - $ 9.98 CLASS Z Period Ended March 31, 2006 (unaudited) - (0.57) (0.57) $16.38 Year Ended September 30, 2005 - - - $15.12 May 6, 2004 (inception) to September 30, 2004 - - - $12.79 ICON COVERED CALL FUND CLASS I+ Period Ended March 31, 2006 (unaudited) - (0.12) (0.12) $14.17 Year Ended September 30, 2005 - (0.57) (0.57) $13.88 Year Ended September 30, 2004 - (0.44) (0.44) $13.25 September 30, 2002 (inception) to September 30, 2003 - - - $12.40 CLASS C Period Ended March 31, 2006 (unaudited) - (0.12) (0.12) $13.80 Year Ended September 30, 2005 - (0.57) (0.57) $13.56 Year Ended September 30, 2004 - (0.44) (0.44) $13.06 November 21, 2002 (inception) to September 30, 2003 - - - $12.32 CLASS Z Period Ended March 31, 2006 (unaudited) - (0.12) (0.12) $14.25 Year Ended September 30, 2005 - (0.57) (0.57) $13.94 May 6, 2004 (inception) to September 30, 2004 - - - $13.29
76 Financial Highlights
RATIO OF EXPENSES TO RATIO OF NET INVESTMENT INCOME AVERAGE NET ASSETS(A) TO AVERAGE NET ASSETS(A) ------------------------- ------------------------------- AVERAGE NET BEFORE AFTER BEFORE AFTER NET ASSETS, ASSETS FOR EXPENSE EXPENSE EXPENSE EXPENSE PORTFOLIO TOTAL END OF PERIOD THE PERIOD LIMITATION/ LIMITATION/ LIMITATION/ LIMITATION/ TURNOVER RETURN* (IN THOUSANDS) (IN THOUSANDS) RECOUPMENT RECOUPMENT RECOUPMENT RECOUPMENT RATE(B) ------- -------------- -------------- ----------- ----------- -------------- -------------- --------- 0.02% $ 82,736 82,620 1.10% 1.00% 4.06% 4.16% 40.00% 1.05% $ 82,415 71,253 1.18% 1.10% 3.72% 3.80% 76.28% 5.41% $ 61,502 46,295 1.29% 1.30% 4.28% 4.27% 37.98% 8.19% $ 39,338 33,787 1.45% 1.30% 4.01% 4.16% 41.65% (0.28)% $ 895 908 3.20% 1.60% 1.97% 3.57% 40.00% 0.47% $ 988 926 3.42% 1.69% 1.46% 3.19% 76.28% 4.83% $ 371 317 6.84% 1.90% 3.63% 8.57% 37.98% 9.98% $ 260 199 2.05% 1.90% 3.48% 3.63% 41.65% 0.16% $ 2 5 50.81% 0.75% (45.64)% 4.42% 40.00% 1.30% $ 5 2 74.28% 0.84% (69.41)% 4.03% 76.28% 4.33% $ 1 1 0.86% 0.86% 4.60% 4.60% 37.98% 12.44% $114,454 101,786 1.22% N/A (0.31)% N/A 60.10% 18.47% $ 93,780 69,660 1.27% N/A (0.33)% N/A 136.82% 14.93% $ 47,273 43,044 1.33% N/A (0.59)% N/A 116.26% 17.05% $ 37,603 34,007 1.39% N/A (0.37)% N/A 188.07% (3.23)% $ 42,232 37,577 1.36% N/A (0.58)% N/A 107.82% 0.40% $ 23,261 23,802 1.60% N/A (0.36)% N/A 124.61% 12.02% $ 96,350 85,210 2.02% N/A (1.11)% N/A 60.10% 17.49% $ 78,145 66,561 2.04% N/A (1.10)% N/A 136.82% 14.06% $ 53,101 45,114 2.08% N/A (1.34)% N/A 116.26% 16.24% $ 35,428 30,459 2.14% N/A (1.12)% N/A 188.07% (4.07)% $ 27,744 19,849 2.11% N/A (1.33)% N/A 107.82% (6.03)% $ 6,324 2,920 2.23% N/A (1.24)% N/A 124.61% 12.46% $ 1,366 1,239 1.11% N/A (0.20)% N/A 60.10% 18.22% $ 1,165 229 1.76% N/A (0.94)% N/A 136.82% 5.97% $ 36 32 1.12% N/A (0.28)% N/A 116.26% 2.99% $ 57,451 54,428 1.45% 1.45% (0.41)% (0.41)% 64.95% 9.21% $ 54,347 49,938 1.54% 1.45% (0.57)% (0.48)% 159.35% 10.53% $ 42,962 30,305 1.60% 1.45% (0.67)% (0.52)% 167.57% 24.00% $ 20,981 14,544 2.07% 1.45% (1.27)% (0.65)% 184.24% 2.69% $ 3,381 3,536 2.55% 2.20% (1.52)% (1.17)% 64.95% 8.31% $ 3,652 2,914 2.80% 2.20% (1.80)% (1.20)% 159.35% 9.69% $ 1,964 838 3.89% 2.20% (2.93)% (1.23)% 167.57% 14.60% $ 148 50 2.83% 2.20% (2.13)% (1.50)% 184.24% 3.13% $ 85 30 7.94% 1.20% (6.71)% 0.03% 64.95% 9.42% $ 3 3 53.94% 1.20% (52.97)% (0.23)% 159.35% 3.34% $ 3 2 1.12% 1.12% (0.11)% (0.11)% 167.57%
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 --------- ---------- -------------- ---------- ICON EQUITY INCOME FUND CLASS I+ Period Ended March 31, 2006 (unaudited) $15.79 0.12 0.97 1.09 Year Ended September 30, 2005 $14.33 0.27 1.54 1.81 Year Ended September 30, 2004 $12.22 0.31 2.09 2.40 September 30, 2002 (inception) to September 30, 2003 $10.00 0.25 2.20 2.45 CLASS C Period Ended March 31, 2006 (unaudited) $15.71 0.05 0.96 1.01 Year Ended September 30, 2005 $14.27 0.13 1.54 1.67 Year Ended September 30, 2004 $12.21 0.20 2.06 2.26 November 8, 2002 (inception) to September 30, 2003 $10.63 0.16 1.59 1.75 CLASS Z Period Ended March 31, 2006 (unaudited) $15.79 0.12 0.98 1.10 Year Ended September 30, 2005 $14.33 0.28 1.55 1.83 May 10, 2004 (inception) to September 30, 2004 $13.43 0.39 0.70 1.09 ICON LONG/SHORT FUND(D) CLASS I+ Period Ended March 31, 2006 (unaudited) $15.99 (0.05) 2.12 2.07 Year Ended September 30, 2005 $13.92 (0.08) 2.65 2.57 Year Ended September 30, 2004 $12.00 (0.08) 2.16 2.08 September 30, 2002 (inception) to September 30, 2003 $10.00 (0.07) 2.07 2.00 CLASS C Period Ended March 31, 2006 (unaudited) $15.63 (0.11) 2.07 1.96 Year Ended September 30, 2005 $13.73 (0.19) 2.59 2.40 Year Ended September 30, 2004 $11.92 (0.18) 2.15 1.97 October 17, 2002 (inception) to September 30, 2003 $10.61 (0.15) 1.46 1.31 CLASS Z Period Ended March 31, 2006 (unaudited) $16.05 (0.03) 2.13 2.10 Year Ended September 30, 2005 $13.94 (0.05) 2.66 2.61 May 6, 2004 (inception) to September 30, 2004 $13.99 (0.04) (0.01) (0.05) LESS DIVIDENDS AND DISTRIBUTIONS ------------------------------------------------------ DIVIDENDS DISTRIBUTIONS TOTAL NET ASSET FROM NET FROM NET DIVIDENDS VALUE, INVESTMENT REALIZED AND END OF INCOME GAINS DISTRIBUTIONS PERIOD ---------- ------------- ------------- --------- ICON EQUITY INCOME FUND CLASS I+ Period Ended March 31, 2006 (unaudited) (0.17) (1.09) (1.26) $15.62 Year Ended September 30, 2005 (0.27) (0.08) (0.35) $15.79 Year Ended September 30, 2004 (0.29) - (0.29) $14.33 September 30, 2002 (inception) to September 30, 2003 (0.23) - (0.23) $12.22 CLASS C Period Ended March 31, 2006 (unaudited) (0.10) (1.09) (1.19) $15.53 Year Ended September 30, 2005 (0.15) (0.08) (0.23) $15.71 Year Ended September 30, 2004 (0.20) - (0.20) $14.27 November 8, 2002 (inception) to September 30, 2003 (0.17) - (0.17) $12.21 CLASS Z Period Ended March 31, 2006 (unaudited) (0.18) (1.09) (1.27) $15.62 Year Ended September 30, 2005 (0.29) (0.08) (0.37) $15.79 May 10, 2004 (inception) to September 30, 2004 (0.19) - (0.19) $14.33 ICON LONG/SHORT FUND(D) CLASS I+ Period Ended March 31, 2006 (unaudited) - - - $18.06 Year Ended September 30, 2005 - (0.50) (0.50) $15.99 Year Ended September 30, 2004 - (0.16) (0.16) $13.92 September 30, 2002 (inception) to September 30, 2003 - - - $12.00 CLASS C Period Ended March 31, 2006 (unaudited) - - - $17.59 Year Ended September 30, 2005 - (0.50) (0.50) $15.63 Year Ended September 30, 2004 - (0.16) (0.16) $13.73 October 17, 2002 (inception) to September 30, 2003 - - - $11.92 CLASS Z Period Ended March 31, 2006 (unaudited) - - - $18.15 Year Ended September 30, 2005 - (0.50) (0.50) $16.05 May 6, 2004 (inception) to September 30, 2004 - - - $13.94
(x) Calculated using the average share method. * The total return calculation is for the period indicated. (a) Annualized for periods less than a year. (b) Portfolio turnover is calculated at the Fund level. (c) The limitation on expenses for Class Z shares occurred when the Advisor reimbursed the Fund for excise and income taxes incurred during the period (Note 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 Fund has changed its originally stated inception date of October 1, 2002 to September 30, 2002. The accompanying notes are an integral part of the financial statements. 78 Financial Highlights
RATIO OF EXPENSES TO RATIO OF NET INVESTMENT INCOME AVERAGE NET ASSETS(A) TO AVERAGE NET ASSETS(A) ------------------------- ------------------------------- AVERAGE NET BEFORE AFTER BEFORE AFTER NET ASSETS, ASSETS FOR EXPENSE EXPENSE EXPENSE EXPENSE PORTFOLIO TOTAL END OF PERIOD THE PERIOD LIMITATION/ LIMITATION/ LIMITATION/ LIMITATION/ TURNOVER RETURN* (IN THOUSANDS) (IN THOUSANDS) RECOUPMENT RECOUPMENT RECOUPMENT RECOUPMENT RATE(B) ------- -------------- -------------- ----------- ----------- -------------- -------------- --------- 7.49% $137,397 127,337 1.23% 1.23% 1.59% 1.59% 73.48% 12.71% $129,681 131,412 1.27% 1.27% 1.79% 1.79% 143.82% 19.69% $117,552 88,318 1.35% 1.37% 2.25% 2.23% 51.84% 24.72% $ 42,474 25,288 1.72% 1.45% 2.23% 2.30% 35.17% 6.97% $ 4,241 4,010 2.31% 2.20% 0.51% 0.62% 73.48% 11.71% $ 3,861 3,026 2.53% 2.20% 0.53% 0.86% 143.82% 18.56% $ 1,885 1,053 3.47% 2.20% 0.12% 1.40% 51.84% 16.63% $ 581 348 2.48% 2.20% 1.10% 1.38% 35.17% 7.43% $ 23 23 8.56% 1.20% (5.75)% 1.61% 73.48% 12.89% $ 23 20 9.37% 1.20% (6.31)% 1.86% 143.82% 8.12% $ 14 12 1.11% 0.97%(c) 2.62% 2.76% 51.84% 12.95% $ 97,547 66,347 1.32% 1.55% (0.37)% (0.60)% 41.86% 18.69% $ 53,158 47,211 1.58% 1.58% (0.53)% (0.53)% 112.06% 17.42% $ 24,480 14,374 2.15% 1.74% (1.03)% (0.62)% 148.32% 20.00% $ 9,726 6,997 3.09% 1.55% (2.20)% (0.66)% 162.25% 12.54% $ 17,969 15,322 2.20% 2.30% (1.27)% (1.37)% 41.86% 17.68% $ 13,925 8,860 2.37% 2.32% (1.35)% (1.31)% 112.06% 16.61% $ 3,716 1,417 3.70% 2.49% (2.57)% (1.35)% 148.32% 12.35% $ 269 186 3.84% 2.30% (2.99)% (1.45)% 162.25% 13.08% $ 3,311 332 1.70% 1.30% (0.82)% (0.42)% 41.86% 18.96% $ 140 89 3.07% 1.33% (2.07)% (0.33)% 112.06% (0.36)% $ 32 29 1.98% 1.76% (0.50)% (0.28)% 148.32%
Financial Highlights 79 Notes to Financial Statements (unaudited) March 31, 2006 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The ICON Bond Fund ("Bond Fund"), ICON Core Equity Fund ("Core Equity Fund") ICON Covered Call Fund ("Covered Call Fund"), ICON Equity Income Fund ("Equity Income Fund"), and ICON Long/Short Fund ("Long/Short Fund") are series funds (individually a "Fund" and collectively, the "Funds"). The Funds are part of the ICON Funds (the "Trust"), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end investment management company. The ICON Core Equity Fund commenced operations on October 12, 2000; the other Funds commenced operations on September 30, 2002. Each Fund offers three classes of shares, Class I, Class C and Class Z. All classes have equal rights as to earnings, assets and voting privileges except that each Class may bear different distribution fees, registration costs and shareholder servicing costs and each Class has exclusive voting rights with respect to its distribution plan. There are currently 12 other active funds within the Trust. Those funds are covered by separate prospectuses and shareholder reports. Each Fund is authorized to issue an unlimited number of no par shares. The investment objective of the Bond Fund is maximum total return. The investment objective of the Core Equity Fund is long-term capital appreciation with a secondary objective of capital preservation. The investment objective of the Covered Call Fund is modest capital appreciation and to maximize realized gains from writing covered call options. The investment objective of the Equity Income Fund is modest capital appreciation and income. The investment objective of the Long/Short Fund is capital appreciation. The Funds may have elements of risk, including the risk of loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment. Investing in fixed income securities such as bonds involves interest rate risk. When interest rates rise, the value of fixed income securities generally decreases. Additionally, the Bond Fund may invest in medium- and lower-quality debt securities. High-yield bonds involve a greater risk of default and price volatility than U.S. government and other high-quality bonds. The Covered Call Fund invests in call options; call options involve certain risks, such as limited gains and lack of liquidity of the underlying securities, and are not suitable for all investors. The Long/Short Fund invests short in securities; there are risks associated with selling short, including the risk that the Long/Short Fund may have to cover its short position at a higher price than the short sale, resulting in a loss. The Fund's loss on a short sale is potentially unlimited as a loss occurs when the value of a security sold short increases. There are also risks associated with small and mid-cap investing, including limited product lines, less liquidity and small market share. Investments in foreign securities and currency transactions may involve certain considerations and risks not typically 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 closing price at the close of regular trading on the New York Stock Exchange (the "NYSE") (normally 4 p.m. Eastern time) each day the NYSE is open, except that securities traded primarily on the NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at the NASDAQ Official Closing Price provided by NASDAQ each business day. The Funds use pricing services to report the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service quote of valuation is inaccurate or does not reflect the market value of the security, prices may be obtained through market quotations from independent broker/dealers. If market quotations from these sources are not readily available, the Funds' securities or other assets are valued at fair value as determined in good faith by the Funds' Board of Trustees ("Board") or pursuant to procedures approved by the Board. The valuation assigned to fair-valued securities for purposes of calculating a Fund's net asset value ("NAV") may differ from the security's most recent closing market price and from the prices used by other mutual funds to calculate their NAVs. Lacking any sales that day, the security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes obtained from dealers making a market for the security. Options are valued at their closing mid-price on the principal market where the option is traded. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than sixty days are valued in accordance with the evaluated bid price supplied by the pricing service. The evaluated bid price supplied by the pricing Notes to Financial Statements 81 Notes to Financial Statements (continued) service is a matrix system which considers such factors as security prices, yields, maturities and ratings. Short-term securities with remaining maturities of sixty days or less are generally valued at amortized cost or original cost plus accrued interest, which approximates market value. Currency rates as of the close of the New York Stock Exchange are used to convert foreign security values into U.S. dollars. Foreign securities traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Funds' adviser determines that use of another valuation methodology is appropriate. The pricing service uses statistical analyses and quantitative models to adjust local market prices using factors such as subsequent movement and changes in the prices of indexes, securities and exchange rates in other markets in determining fair value as of the time a Fund calculates its net asset value. REPURCHASE AGREEMENTS Repurchase agreements, if held by the Funds, are fully collateralized by U.S. Government securities and such collateral is in the possession of the Funds' custodian. The collateral is evaluated daily to ensure its market value exceeds the current market value of the repurchase agreements including accrued interest. In the event of default on the obligation to purchase, the Funds have the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. No repurchase agreements were purchased or sold by the Funds during the period ended March 31, 2006. 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. 82 Notes to Financial Statements FORWARD FOREIGN CURRENCY CONTRACTS The Funds may enter into short-term forward foreign currency contracts in connection with planned purchases or sales of securities as a hedge against fluctuations in foreign exchange rates pending the settlement of transactions in foreign securities. A forward foreign currency contract is an agreement between contracting parties to exchange an amount of currency at some future time with an agreed upon rate. These contracts are marked-to-market daily and the related appreciation or depreciation of the contract is presented in the Statements of Assets and Liabilities. Net realized gains and losses on foreign currency transactions represent disposition of foreign currencies, and the difference between the amount recorded at the time of the transaction and the U.S. dollar amount actually received. Any realized gain or loss incurred by the Funds due to foreign currency translation is included in the Statements of Operations. The Funds did not enter into any forward foreign currency contracts during the period ended March 31, 2006. FUTURES CONTRACTS The Funds may invest in financial futures contracts for the purpose of hedging their existing securities or securities it intends to purchase against fluctuations in fair value caused by changes in prevailing markets. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as "variation margin," are made or received by the Fund each day, depending on the daily fluctuations in the fair value of the underlying security. The Fund recognizes a gain or loss equal to the daily variation margin. Should market conditions move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts and the underlying hedged assets. The Funds held no financial futures contracts during the period ended March 31, 2006. OPTIONS TRANSACTIONS The Covered Call Fund writes (sells) call options as part of its normal investment activities. Each Fund may write (sell) put and call options only if it owns an offsetting position in the underlying security. When a Fund writes a put or call option, an amount equal to the premium received is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. Such liability is subject to off balance sheet risks to the extent of any future increases in market value of the written options. If an Notes to Financial Statements 83 Notes to Financial Statements (continued) option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security and the proceeds from the sale are increased by the premium originally received. If a written put option is assigned, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, a Fund has no control over whether the underlying securities are subsequently sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the security underlying the written option. Each Fund may also purchase put and call options. When a Fund purchases a put or call option, an amount equal to the premium paid is included in the Fund's Statement of Assets and Liabilities as an investment, and is subsequently marked-to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If the Fund exercises a call, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option, a gain or loss is realized from the sale of the underlying security, and the proceeds from such a sale are decreased by the premium originally paid. Written and purchased options are non-income producing securities. SHORT SALES The Long/Short Fund may engage in short sales (selling securities it does not own) as part of its normal investment activities. These short sales are collateralized by cash equivalents or securities held with the Fund's prime broker and segregated account at the Fund's custodian. The collateral required is determined daily by reference to the market value of the short positions. Such collateral for the Fund is held by one broker. Dividend expense on short sales is treated as an expense on the Statement of Operations. Liabilities for securities sold short are reported at market value in the Statement of Assets and Liabilities. Such liabilities are subject to off-balance sheet risk to the extent of any future increases in market value of the securities sold short. The ultimate liability for securities sold short could exceed the liabilities recorded in the Statement of Assets and Liabilities. Liabilities for securities sold short are closed out by purchasing the applicable securities for delivery to the Fund's prime broker. INCOME TAXES The Funds intend to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code and, accordingly, the Funds will generally not be subject to federal and state income taxes, or federal excise taxes to the extent that they intend to make sufficient distributions of net investment income and net realized capital gains. 84 Notes to Financial Statements Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders. Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. As of March 1, 2006, the Bond Fund distributes net investment income, if any, to shareholders daily. Prior to that date, the Bond Fund distributed net investment income, if any, to shareholders monthly. The Core Equity Fund, Covered Call Fund and Long/Short Fund distribute income, if any, annually. The Equity Income Fund distributes net investment income, if any, to shareholders quarterly. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryovers. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Discounts and premiums on securities purchased are amortized over the life of the respective securities. INVESTMENT TRANSACTIONS Security transactions are accounted for no later than one business day after trade date. However, for financial reporting purposes security transactions are accounted for on trade date. Gains and losses on securities sold are determined on the basis of identified cost. ALLOCATION OF INCOME AND EXPENSES Each class of a Fund's shares bears expenses incurred specifically on its behalf and, in addition, each class bears a portion of general expenses, based upon relative net assets of each class. Expenses which cannot be directly attributed to a specific fund in the Trust are apportioned between all funds in the Trust based upon relative net assets. In calculating the net asset value per share of each class, investment income, realized and unrealized gains and losses and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets. 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 Funds' expense limitation will continue in effect until at least January 31, 2016. To the extent ICON reimburses or absorbs fees and expenses, it may seek payment of such amounts for up to three years after the expenses were reimbursed or absorbed. A Fund will make no such payment, however, if the total Fund operating expenses exceed the expense limits in effect at the time the expenses were reimbursed or at the time these payments are proposed. As of March 31, 2006 the following amounts are still available for recoupment by ICON based upon their potential expiration dates:
2007 2008 2009 ----------------------------------------------------------------------------------- ICON Bond Fund $ 9,844 $76,145 $51,437 ICON Covered Call Fund 58,657 67,070 6,459 ICON Equity Income Fund - 11,894 3,084 ICON Long/Short Fund 77,195 - -
86 Notes to Financial Statements TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES BISYS Fund Services Ohio, Inc. ("BISYS") is the Fund Accounting Agent for the Funds. For its services, the Trust pays BISYS 0.03% on the first $1.75 billion of net assets, 0.0175% on net assets over $1.75 billion and up to $5 billion, and 0.01% on net assets in excess of $5 billion. Brown Brothers Harriman ("BBH") is the 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. Boston Financial Data Services, Inc. is 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. As of January 31, 2006, this agreement provides for an annual fee of 0.05% on the Funds' first $1.5 billion of average daily net assets, 0.045% on the next $1.5 billion of average daily net assets, 0.040% on the next $2 billion of average daily net assets and 0.030% on average daily net assets over $5 billion. Prior to that date, this agreement provided 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. ICON has entered into a sub-administration agreement with BISYS pursuant to which BISYS assists ICON with the administration and business affairs of the Trust. For its services, ICON pays BISYS at an annual rate of 0.025% on the first $1.75 billion of Trust assets and 0.015% on assets above $1.75 billion. DISTRIBUTION FEES The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act ("12b-1 Plan") under which the Funds are authorized to compensate the Funds' distributor, ICON Distributors, Inc. ("IDI") (an affiliate of the adviser) for the sale and distribution of shares. Under the 12b-1 Plan, Bond Fund Class C shareholders pay an annual 12b-1 and service fee of 0.85% of average Notes to Financial Statements 87 Notes to Financial Statements (continued) daily net assets and Class I shareholders pay an annual 12b-1 fee of 0.25% of average daily net assets. The shareholders of the other Funds pay an annual 12b-1 and service fee of 1.00% of average daily net assets for Class C shares and an annual 12b-1 and service fee of 0.25% of average daily net assets for Class I shares. The total amount paid under the 12b-1 plans by the Funds is shown in the Statement of Operations. RELATED PARTIES Certain Officers and Directors of ICON are also Officers and Trustees of the Funds; however, such Officers and Trustees (with the exception of the Chief Compliance Officer, "CCO") receive no compensation from the Funds. The CCO's salary is paid 90% by the Funds and 10% by the Adviser. For the period ended March 31, 2006, the total related amounts paid by the Trust under this arrangement are included in Other Expenses on the Statements of Operations. Some of the 12b-1 amounts received by IDI, discussed in the Distribution Fees, have been used to offset various shareholder servicing costs incurred by the Advisor. For the period ended March 31, 2006 this amount was $73,221. 3. LINE OF CREDIT The Funds entered into Lines of Credit agreements with BBH; the maximum borrowing is limited to 25% of eligible securities held by the portfolio subject to a maximum borrowing limit by the Trust of $115 million. Interest is charged at LIBOR plus 2.00% which was 6.83% at March 31, 2006.
AVERAGE BORROWING (10/1/05-3/31/06) ---------------------------------------------------------------------------- ICON Bond Fund** $647,137 ICON Core Equity Fund 229,706 ICON Covered Call Fund** 423,803 ICON Equity Income Fund 332,622 ICON Long/Short Fund 214,426
** Fund had outstanding borrowings as of March 31, 2006. 88 Notes to Financial Statements 4. OPTIONS CONTRACTS WRITTEN The number of option contracts written and the premiums received by the ICON Covered Call Fund during the period ended March 31, 2006, were as follows:
NUMBER OF PREMIUMS CONTRACTS RECEIVED ------------------------------------------------------------------------------------- Options outstanding, beginning of period 13,261 $ 2,471,399 Options written during period 39,371 12,178,943 Options expired during period (315) (62,599) Options closed during period (37,119) (9,946,126) Options exercised during period - - ------- ----------- Options outstanding, end of period 15,198 $ 4,641,617 ======= ===========
5. FEDERAL INCOME TAX Income and capital gain distributions are determined in accordance with income tax regulations that may differ from accounting principles that are generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferrals of wash losses, foreign currency transactions, net investment losses, and capital loss carryforwards. Accumulated capital losses noted below represent net capital loss carryforwards as of September 30, 2005 that may be available to offset future realized capital gains and thereby reduce future taxable income distributions.
FUND AMOUNTS EXPIRES ---------------------------------------------------------------------------- ICON Covered Call Fund $621,989 2013 ICON Long/Short Fund 387,875 2013
During the year ended September 30, 2005, the following capital loss carryforwards were used: ICON Core Equity Fund $8,138,524
Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Funds' next taxable year. For the year ended September 30, 2005, the fund deferred to October 1, 2005 post October capital losses:
CAPITAL FUND LOSSES ----------------------------------------------------------------------- ICON Bond Fund $ 31,259 ICON Covered Call Fund 18,744 ICON Long/Short Fund 898,217
Notes to Financial Statements 89 Notes to Financial Statements (continued) The aggregate gross unrealized appreciation and depreciation of securities held by the Funds and the total cost of securities for federal tax purposes as of March 31, 2006 were as follows:
UNREALIZED UNREALIZED NET APPRECIATION COST APPRECIATION (DEPRECIATION) (DEPRECIATION) ----------------------------------------------------------------------------------------- ICON Bond Fund $ 84,826,610 $ 91,795 $(1,212,984) $(1,121,189) ICON Core Equity Fund 177,139,150 37,498,517 (2,625,413) 34,873,104 ICON Covered Call Fund 56,289,189 10,595,046 (2,293,701) 8,301,345 ICON Equity Income Fund 122,641,739 20,136,505 (1,530,647) 18,605,858 ICON Long/Short Fund 103,514,052 18,155,481 (1,027,601) 17,127,880
6. SEGREGATED ACCOUNT AND SHORT SALE COLLATERAL As of March 31, 2006 the ICON Long/Short Fund had securities or cash deposits with the counterparty to the short sales in the amount of $1,315,205 as collateral for the short sales. 7. SUBSEQUENT EVENT Effective June 1, 2006, class C shares will impose a 1% contingent deferred sales charge ("CDSC") on shares redeemed within one-year of purchase. Shares purchased prior to June 1, 2006 will not be subject to the CDSC. 90 Notes to Financial Statements Other Information (unaudited) 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. Other Information 91 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 I-149-DIV March 31, 2006 (unaudited) Investment Update ICON INTERNATIONAL FUNDS ICON ASIA-PACIFIC REGION FUND ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND Semiannual Report (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 25 SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE 34 FINANCIAL STATEMENTS 36 FINANCIAL HIGHLIGHTS 42 NOTES TO FINANCIAL STATEMENTS 44 OTHER INFORMATION 53
[RECYCLE LOGO] About This Report HISTORICAL RETURNS All total returns mentioned in this report account for the change in a Fund's per-share price and the reinvestment of any dividends, capital gain distributions, and tax return of capital. If your account is set up to receive Fund distributions in cash rather than to reinvest them, your actual return may differ from these figures. The Funds' performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The Adviser reimbursed certain fees for the International Equity Fund. If not for these reimbursements, performance would have been lower. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results represent past performance, and current performance may be higher or lower. Please call 1-800-764-0442 or visit www.iconadvisers.com for performance results current to the most recent month-end. PORTFOLIO DATA This report reflects ICON's views, opinions and portfolio holdings as of March 31, 2006, the end of the reporting period. The information is not a complete analysis of every aspect of any sector, industry, security or the Funds. Opinions and forecasts regarding industries, companies and/or themes, and portfolio composition and holdings, are subject to change at any time based on market and other conditions, and should not be construed as a recommendation of any specific security. Each Fund's holdings as of March 31, 2006 are included in each Fund's Schedule of Investments. Certain companies' stock performance during the period is mentioned throughout the Management Overviews. While ICON's quantitative investment methodology primarily considers company-specific factors beyond financial data, various company factors may impact a stock's performance, and therefore, Fund performance. There are risks associated with mutual fund investing, including the loss of principal. There is no assurance that the investment process will consistently lead to successful results. Investments in foreign securities may entail unique risks, including political, market and currency risks. An investment in a region fund may involve greater risk and volatility than a diversified fund. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment. There are also risks associated with small- and mid-cap investing, including limited product lines, less liquidity and small market share. ICON'S INVESTMENT APPROACH The Funds employ 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 2 About This Report investment style, and searches for potential industry leadership wherever and whenever it may emerge. The Funds do not utilize static valuation metrics such as price-to-earnings (P/E) as we believe these measures do not adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that considers the effects of historical and projected earnings, projected growth, risk and interest rates (opportunity cost). By combined our determination of value with relative strength (RS), we aim to compute leading industry themes that are poised, in our view, to outperform the sector benchmark. For all corporate earnings and other financial information we rely on the integrity of the publicaly available financial information provided to the United States Securities and Exchange Commission. COMPARATIVE INDEXES The comparative indexes discussed in this report are meant to provide a basis for judging a Fund's performance against specific securities indexes. Each index shown accounts for both change in the security price and reinvestment of dividends and distributions (except as noted), but does not reflect the costs of managing a mutual fund. The total return figures for the Morgan Stanley Capital International (MSCI) indexes assume change in security prices and the deduction of local taxes. The Funds' portfolios may significantly differ in holdings and composition from the indexes. Individuals cannot invest directly in an index. - The unmanaged MSCI Europe Index comprises approximately 600 stocks traded in developed markets from 15 European countries. The capitalization-weighted index attempts to capture at least 60% of investable capitalization in those markets subject to constraints governed by industry representation, maximum liquidity, maximum float, and minimum cross-ownership. - The unmanaged MSCI All Country Pacific Index comprises stocks traded in the developed and emerging markets of the Pacific Basin (Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand). The capitalization-weighted index attempts to capture at least 60% of investable capitalization in those markets subject to constraints governed by industry representation, maximum liquidity, maximum float, and minimum cross-ownership. - The MSCI All Country World Index ex-United States (ACWI ex-U.S.) is a leading unmanaged benchmark of international stock performance. The capitalization-weighted index is representative of the performance of securities of companies located in developed and emerging markets outside of the United States. - The unmanaged Bloomberg European 500 Index measures the weighted average performance in U.S. dollars of the 500 most highly capitalized European companies. Index returns and statistical data included in this report are provided by Bloomberg and FactSet Research Systems. About This Report 3 Message from ICON Funds -------------------------------------------------------------------------------- Conflicting forces convinced many investors that the global equity markets were in the throes of a sideways trading range. -------------------------------------------------------------------------------- Dear ICON Shareholder: Thank you for your continued investment in the ICON International Funds and welcome to those of you receiving this report for the first time. We are pleased to report that for the one-year period ending December 31, 2005, both the ICON Asia-Pacific Region Fund and the ICON International Equity Fund received a 2005 Lipper Performance Achievement Certificate as the best-performing fund in their respective categories. ICON employs a value-based, bottom-up investment system in tactical pursuit of industries we believe are poised to outperform the broader market. We are quantitative, unemotional and objective, and find strength in numbers. Whether you invest in our International Funds, such as the ICON Asia-Pacific Region Fund, our Sector Funds, such as the ICON Energy Fund, or our U.S. Diversified Funds, such as the ICON Core Equity Fund, each is powered by ICON's unique systematic discipline. A CLASSIC STOCK MARKET BATTLE "Strength in numbers" is an apt phrase to describe the fiscal six-month period, as conflicting forces convinced many investors that global equity markets were in the throes of a sideways trading range. The fact is, international stocks rallied significantly amid a mid-October dip and brief but volatile pullback in Asian markets later in the period. With many foreign issues trading at deeper discounts than their U.S. counterparts, and in some instances involving equal or less risk, investors once again realized the benefits of diversification through overseas investing. Despite posting strong gains against a backdrop of widespread guessing and reacting, the move up was stealth-like, so quiet that the word "rally" was conspicuous by its absence. Much of the guessing was focused on the likelihood of continued monetary tightening, though most of Asia, Japan being the primary example, was raising rates from near-zero levels, setting this area apart from the rest of the world. Europe also lifted rates from historically low levels, with nascent tightening yet to significantly impact value in the region. At the same time, investors reacted to movements in energy prices, even though we had not seen appreciable increases in inflation or long-term interest rates. What we did see was a classic stock market battle that periodically pits prosperity and healthy corporate earnings against higher interest rates. Over the past few years, many market observers feared that events such as terrorism, war, hurricanes and rising oil prices would stall the global economy. However, as investors realized that economic prosperity and higher earnings defied these event-related concerns, stocks prices have trended higher. 4 Message from ICON Funds We find strength in numbers, reflecting the fact that we are quantitative, unemotional and objective. (CRAIG T. CALLAHAN PHOTO) Craig T. Callahan President RACING TO CATCH UP WITH VALUE -------------------------------------------------------------------------------- We believe recent uptrends in long-term interest rates have acted as a drag on global markets, inhibiting the normal growth of equity valuations. -------------------------------------------------------------------------------- While stock prices have continued to move higher, we believe recent uptrends in long-term interest rates have acted as a drag on global markets, inhibiting the growth of equity valuations to a certain extent. Although the rise in local bond yields has been modest compared to increases in short-term lending rates, intrinsic value has declined according to our system. Although further monetary tightening remains a distinct possibility, our system is designed in such a way that we do not have to predict the future. We simply have to recognize underpricing and overpricing when either condition occurs. While interest rate factors have cut into equity valuations, we believe these effects have been offset by rising earnings. Should conditions change, and value no longer supports higher equity prices, stocks could be viewed as overpriced and call for a more cautious stance on our part. To date, this has not come to pass, and we continue to view stock prices, in general, to be below our estimate of intrinsic value. As long as this is the case, we will continue to ride out the volatility, enabling investors to participate in what are typically unpredictable market advances, where price races to catch up with value. BULLISH POSTURE PROVED CORRECT It is our contention that investors have been continually fooled on the upside by the prosperity of cyclical companies. We have seen these industry and sector themes remain in place for the past three years, and this most recent reporting period was no exception. Industries in economically sensitive areas such as Materials and Industrials led the way, while industries in the more defensive- oriented Utilities and Healthcare sectors lagged their cyclical peers. Given the consistently strong relative performance of the ICON International Funds, this comes as no surprise to us. Based on valuation, our bullish, fully Message from ICON Funds 5 Message from ICON Funds (continued) invested posture proved to be absolutely correct, and we are pleased to have shared this success with you. -------------------------------------------------------------------------------- Based on valuation, our bullish, fully invested posture proved to be absolutely correct. -------------------------------------------------------------------------------- Still, it is important to remember that value is never stagnant. Value moves as earnings grow, and so far robust earnings growth has won the battle versus rising interest rates. Whether this continues to be the case is not something we choose to predict. We remain highly confident, however, in the ability of our system to identify theme changes when and if they occur. In closing, we are most grateful for the privilege of guiding you through these challenging markets. For current market updates, as well as up-to-date Fund performance and account information, we invite you to visit our website at www.iconadvisers.com. Yours truly, /s/ Craig T. Callahan Craig T. Callahan, DBA Chairman of the Board of Trustees and President of the Adviser Consider the investment objectives, risks, charges, expenses, and share classes of each ICON Fund carefully before investing. The prospectus contains this and other information about the Funds and is available by visiting www.iconadvisers.com or calling 1-800-764-0442. Please read the prospectus carefully before investing. An investment in a non-diversified sector fund or region fund may involve greater risk and volatility than a more diversified fund. Investments in foreign securities may entail unique risks, including political, market, and currency risks. The ICON system relies on the integrity of financial statements released to the market as part of our analysis. 6 Message from ICON Funds Management Overview ICON Asia-Pacific Region Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 99.4% Top 10 Equity Holdings 18.9% Number of Stocks 106 Short-Term Investments 0.9% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Zinifex, Ltd. 2.5% High Tech Computer Corp. 2.0% Komatsu, Ltd. 1.9% Toyota Motor Corp. 1.9% Hopson Development Holdings, Ltd. 1.9% The Japan Steel Works, Ltd. 1.8% Mitzuho Financial Group, Inc. 1.8% Lasertec Corp. 1.7% Park24 Co., Ltd. 1.7% Hengan International Group Co., Ltd. 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 20.03% for the six-month period ended March 31, 2006, outpacing its benchmark, the MSCI All Country Pacific Index, which returned 16.32% over the same period. Total returns for other periods as of March 31, 2006 appear on page 12. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. With shares generally trading at deeper discounts and thus closing a wider valuation gap, Asian markets on the whole outperformed those in the U.S. during the period, continuing an overall show of strength in the international arena that has been in place for some time now. While the Fund does not utilize market capitalization as a valuation measure, the portfolio's tilt toward mid- and small-cap stocks relative to the predominantly large-cap benchmark served to enhance performance, as stock selection within these smaller capitalization ranges experienced more sizeable returns versus many large-cap securities. Additionally, the Fund's focus on leading industry themes in the Materials and Industrials sectors boosted relative performance, while currency fluctuations produced a negligible effect on overall results. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Fueling performance was the continued strong showing in cyclical sectors such Materials and Industrials. In particular, the globally-strong Materials area contributed most significantly to the Fund's relative outperformance of its benchmark, with an active overweight in groups such as diversified metals & mining, steel and gold leading the way. As far as Industrials, this sector showed a strong combination of industry value and strength, and the Fund's tilt toward industrial machinery proved highly favorable. In contrast, Information Technology was the Fund's poorest-performing sector during the period on a relative basis. Weakness in internet software services, due in part to the previously mentioned accounting scandal at Livedoor Co. Ltd. (which the Fund held), along with volatility in the semiconductor space, combined to dampen relative returns. Meanwhile, the Fund's active underweight in Telecommunication & Utilities, specifically the avoidance of wireless telecommunication services and integrated telecommunication services, was particularly beneficial to performance. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE ASIA-PACIFIC REGION? A. Even though valuations have tightened in recent years, our analysis continues to rank the Asia-Pacific region as the most undervalued on a global basis given its healthy upside potential. Following January's fear-based Management Overview 7 Management Overview (continued) ICON Asia-Pacific Region Fund [SCOTT SNYDER PHOTO] Scott Snyder Portfolio Manager correction, the region appears to be back on track, with its fundamentals intact. While country selection is not a primary consideration of our investment process, as a secondary factor Japan remains the most attractive, while China and Hong Kong are also compelling. In light of historically low interest rates, nascent monetary tightening has yet to impact value in the region. Although this situation bears close watching, we continue to focus on industries showing attractive discounts and market leadership. Financials, Materials and Industrials have emerged, as domestic demand echoes regional expectations for recovery. Moreover, Materials and Industrials are mirroring infrastructure spending and resource demand already occurring in the region. Although demonstrating value, Telecommunication & Utilities, Consumer Staples and Healthcare are not yet signaling leadership, indicating an extension of the current cyclical theme. PERFORMANCE HIGHLIGHTS - The Fund's valuation-based tilt toward mid- and small-cap stocks served to enhance relative performance. - A focus on leading cyclical industry themes boosted relative performance, while currency fluctuations had a negligible effect. - Fueling performance was the continued strong showing in Materials and Industrials, while Information Technology was the Fund's poorest-performing sector on a relative basis. 8 Management Overview COUNTRY COMPOSITION March 31, 2006 Japan 57.3% China 10.5% Hong Kong 8.2% South Korea 7.6% Taiwan 5.2% Australia 5.1% Indonesia 3.1% Singapore 2.0% New Zealand 0.4%
Percentages are based upon net assets. SECTOR COMPOSITION March 31, 2006 Materials 20.8% Industrials 19.5% Financial 19.2% Information Technology 16.2% Consumer Discretionary 11.3% Leisure and Consumer Staples 5.6% Energy 4.1% Healthcare 1.4% Telecommunication and Utilities 1.3%
Percentages are based upon net assets. Management Overview 9 Management Overview (continued) ICON Asia-Pacific Region Fund INDUSTRY COMPOSITION March 31, 2006 Diversified Banks 7.0% Diversified Metals & Mining 6.1% Real Estate Management & Development 5.2% Industrial Machinery 4.9% Steel 4.1% Semiconductor Equipment 3.8% Auto Parts & Equipment 3.6% Computer Hardware 3.5% Investment Banking & Brokerage 3.5% Trading Companies & Distributors 2.9% Semiconductors 2.7% Consumer Electronics 2.4% Gold 2.4% Specialty Chemicals 2.3% Commodity Chemicals 2.1% Diversified Chemicals 2.1% Heavy Electrical Equipment 2.1% Oil & Gas Exploration & Production 2.1% Automobile Manufacturers 1.9% Construction & Farm Machinery & Heavy Trucks 1.9% Electronic Equipment Manufacturers 1.8% Office Electronics 1.8% Diversified Commercial & Professional Services 1.7% Life & Health Insurance 1.7% Personal Products 1.7%
10 Management Overview INDUSTRY COMPOSITION (CONTINUED) March 31, 2006 Railroads 1.6% Commercial Printing 1.4% Electrical Components & Equipment 1.4% Leisure Products 1.4% Apparel Accessories & Luxury Goods 1.3% Communications Equipment 1.3% Electronic Manufacturing Services 1.3% Gas Utilities 1.3% Construction & Engineering 1.2% Aluminum 1.1% Education Services 1.1% Integrated Oil & Gas 1.1% Consumer Finance 0.9% Oil & Gas Equipment & Services 0.9% Photographic Products 0.9% Property & Casualty Insurance 0.9% Health Care Distributors 0.7% Soft Drinks 0.7% Construction Materials 0.6% Apparel Retail 0.5% Health Care Equipment 0.5% Home Furnishing Retail 0.5% Tobacco 0.5% Agriculture Products 0.4% Air Freight & Logistics 0.4% Health Care Supplies 0.2% Percentages are based upon net assets.
Management Overview 11 Management Overview (continued) ICON Asia-Pacific Region Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTH* 1 YEAR 5 YEARS 2/25/97 ------------------------------------------------------------------------------------------- ICON Asia-Pacific Region Fund 20.03% 46.77% 8.63% 3.46% ------------------------------------------------------------------------------------------- MSCI All Country Pacific Index 16.32% 33.06% 11.50% 3.75% -------------------------------------------------------------------------------------------
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, 2006 (LINE GRAPH)
ICON ASIA - PACIFIC REGION FUND MSCI ALL COUNTRY PACIFIC INDEX ------------------------------- ------------------------------ 2/25/97 9550 9496 3/31/97 11320 11163 9940 9656 8270 7530 8310 7839 3/31/98 7360 7011 6089 6079 7759 7789 8569 8616 3/31/99 9809 9715 10870 10541 13170 12277 11620 12234 3/31/00 10870 11455 10251 10133 9611 8764 9011 8111 3/31/01 8711 8183 6811 6673 6766 6946 6625 7264 3/31/02 6424 7446 5701 6499 6053 6356 5801 5976 3/31/03 6584 6819 7648 8066 8695 8921 9067 10020 3/31/04 8323 9510 8222 9291 9044 10578 9287 10505 3/31/05 9519 10439 11356 12017 13509 13059 3/31/06 13631 13978
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. 12 Management Overview Schedule of Investments ICON Asia-Pacific Region Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- COMMON STOCKS (99.4%) 13,300 Advantest Corp. $ 1,580,318 46,000 Aisin Seiki Co., Ltd. 1,789,856 1,622,000 Aluminum Corp. of China, Ltd. 1,704,582 1,650,000 Angang New Steel Company, Ltd. 1,548,820 26,000 Canon, Inc. 1,716,151 117 Central Japan Railway Co. 1,154,217 56,300 Cheil Industries, Inc. 2,059,051 2,978,000 China Construction Bank(a) 1,386,997 859,000 China Life Insurance Co., Ltd.(a) 1,089,103 2,908,000 China Resources Land, Ltd. 2,169,732 33,000 Chiyoda Corp. 769,366 1,600,000 CNOOC, Ltd. 1,246,218 174,000 Daido Steel Co., Ltd. 1,770,684 39,000 Daifuku Co., Ltd. 641,240 159,000 Daihen Corp. 821,885 44,000 Daishin Securities Co.(a) 914,502 102,000 Daiwa Securities Group, Inc. 1,368,939 45,000 Denso Corp. 1,779,075 1,206,000 Dongfang Electrical Machinery Co., Ltd. 2,452,817 167 East Japan Railway Co. 1,237,098 33,100 Elpida Memory, Inc.(a) 1,182,696 1,076,000 Foxconn International Holdings, Ltd.(a) 2,014,560 186,000 Fujikura, Ltd. 2,103,394 135,000 Fujitsu, Ltd. 1,134,621 1,090,000 Global Bio-chem Technology Group Co., Ltd. 571,601 1,610,000 Hengan International Group Co., Ltd. 2,549,192
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 114,000 High Tech Computer Corp. $ 3,109,224 17,000 Hitachi Chemical Co., Ltd. 488,329 125,291 Hon Hai Precision Industry Co., Ltd. 773,845 1,334,000 Hopson Development Holdings, Ltd. 2,874,775 32,400 Hoya Corp. 1,304,889 63,000 Hyundai Securities Co., Ltd.(a) 865,093 38,000 Hyundai Steel Co. 1,131,654 93,400 Industrial Bank of Korea 1,726,071 70 Inpex Corp. 593,365 34,100 Iriso Electronics Co., Ltd. 1,368,337 263,000 Ishikawajima- Harima Heavy Industries Co., Ltd. 834,190 30,300 Ito En, Ltd. 1,061,500 123,000 Itochu Corp. 1,058,543 225 Japan Tobacco, Inc. 791,931 303,000 Johnson Health Tech. Co., Ltd. 1,516,428 36,700 JSR Corp. 1,091,074 675 K.K. DaVinci Advisors(a) 919,361 323,000 Kagara Zinc, Ltd.(a) 812,332 314,000 Kawasaki Heavy Industries, Ltd. 1,102,740 292,000 Kobe Steel, Ltd. 1,110,597 68,000 Kokusai Securities Company, Ltd. 1,091,846 155,000 Komatsu, Ltd. 2,956,751 12,700 Kookmin Bank 1,088,883 708,000 KS Energy Services, Ltd. 1,349,867 84,250 Largan Precision Co., Ltd. 1,362,257 74,600 Lasertec Corp. 2,609,002 65,800 LG International Corp. 1,618,131 632,000 Li Ning Co., Ltd. 605,584 206,600 Mainfreight, Ltd. 597,634
Schedule of Investments 13 Schedule of Investments (continued) ICON Asia-Pacific Region Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 101,000 Matsushita Electric Industrial Co., Ltd. $ 2,231,995 29,900 Mitsubishi Corp. 681,859 383,000 Mitsubishi Materials Corp. 2,051,243 241,000 Mitsubishi Rayon Co., Ltd. 1,972,854 112 Mitsubishi UFJ Financial Group, Inc. 1,703,547 75,000 Mitsui & Co., Ltd. 1,083,402 340 Mizuho Financial Group, Inc. 2,781,452 13,900 Nagaileben Co., Ltd. 366,891 80,588 NGK Spark Plug Co., Ltd. 1,878,129 94,000 Nissan Chemical Industries, Ltd. 1,594,664 57,000 Nissha Printing Co., Ltd. 2,144,439 15,200 Nitori Co., Ltd. 790,056 8,000 Nitto Denko Corp. 678,603 48,000 Nomura Holdings, Inc. 1,063,521 4,500 Orix Corp. 1,397,894 814,000 Oxiana, Ltd.(a) 1,563,254 76,000 Park24 Co., Ltd. 2,600,523 1,592,000 PetroChina Co., Ltd. 1,669,182 3,804,000 PICC Property and Casualty Co., Ltd. 1,382,103 590,000 Ping An Insurance (Group) Company of China, Ltd. 1,519,212 485,000 Ports Design, Ltd. 711,625 3,776,000 PT Aneka Tambang 1,812,661 1,876,000 PT Perusahaan Gas Negara 2,070,442 332,000 PT Semen Gresik 932,513 1,188,000 Raffles Education Corp., Ltd. 1,692,353 53,000 Ricoh Co. Ltd. 1,034,239 14,300 Rio Tinto, Ltd. 806,536
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 33,500 Samsung Engineering Co., Ltd. $ 1,126,775 73,000 Sanken Electric Co., Ltd. 1,244,597 2,326,000 Shanghai Forte Land Co., Ltd. 1,210,633 55,300 Shinko Electric Industries Co., Ltd. 1,670,236 389,000 Showa Denko K.K 1,728,385 30,900 Sony Corp. 1,423,758 107,000 Sumitomo Heavy Industries, Ltd. 1,026,353 176,000 Sumitomo Metal Industries, Ltd. 755,900 191 Sumitomo Mitsui Financial Group, Inc. 2,108,670 19,000 Sysmex Corp. 831,448 55,000 Teikoku Oil Co., Ltd. 663,958 412,000 The Japan Steel Works, Ltd. 2,806,920 75,000 Toho Pharmaceutical Co., Ltd. 1,106,552 82,000 Tokuyama Corp. 1,390,285 24,100 Tokyo Electron, Ltd. 1,657,399 63,000 Tokyu Land Corp. 563,628 148,000 Toray Industries, Inc. 1,209,493 205,000 Toshiba Corp. 1,191,524 53,200 Toyota Motor Corp. 2,897,189 57,800 TSM Tech Co., Ltd. 1,062,636 870,000 Unimicron Technology Corp. 1,264,196 24,495 Woodside Petroleum, Ltd. 796,364 2,654,000 Zijin Mining Group Co., Ltd. - Class H 2,087,982 565,803 Zinifex, Ltd. 3,870,975 ------------ TOTAL COMMON STOCKS (COST $131,255,961) 152,481,996
14 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- SHORT-TERM INVESTMENTS (0.9%) $1,319,114 Brown Brothers Harriman Time Deposit, 4.07%, 04/03/06# $ 1,319,114 993 Brown Brothers Harriman Time Deposit - Australian Dollar, 4.45%, 04/03/06# 993 508 Brown Brothers Harriman Time Deposit - Hong Kong Dollar, 2.90%, 04/03/06# 508
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- $ 77 Brown Brothers Harriman Time Deposit - New Zealand Dollar, 6.25%, 04/03/06# $ 77 226 Brown Brothers Harriman Time Deposit - Singapore Dollar, 2.37%, 04/03/06# 226 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $1,320,918) 1,320,918 ------------ TOTAL INVESTMENTS (COST $132,576,879) 100.3% 153,802,914 LIABILITIES LESS OTHER ASSETS (0.3)% (381,462) ------------ TOTAL NET ASSETS 100.0% $153,421,452 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. v All common stocks were fair valued (Note 1) as of March 31, 2006 unless noted with a v. Total value of common stocks fair valued was $152,481,996. Schedule of Investments 15 Management Overview ICON Europe Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 94.6% Top 10 Equity Holdings 18.2% Number of Stocks 120 Short-Term Investments 12.3% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Vedanta Resources PLC 2.4% USG People N.V. 2.3% Vallourec S.A. 2.3% Brunel International N.V. 2.0% Kensington Group PLC 1.7% Osterrichische Elekrizitaitswirts AG - Class A 1.6% Salzgitter AG 1.6% Option N.V. 1.5% Buzzi Unicem S.p.A. 1.4% Credit Suisse Group 1.4% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Europe Fund appreciated 21.15% for the six-month period ended March 31, 2006, outpacing returns of 16.59% for the Bloomberg European 500 Index and 13.04% for the MSCI Europe Index, the Fund's benchmarks, over the same period. Total returns for other periods as of March 31, 2006 appear on page 21. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. Continuing an international show of strength that has been in place for several years, European bourses outperformed the broad U.S. market for the period. Furthermore, the region outpaced all others during the latter half, with European shares having traded at deeper discounts relative to the U.S. and thus closing a wider valuation gap. While the Fund does not utilize market capitalization as a valuation measure, our methodology led us to actively tilt the portfolio toward mid- to large-capitalization stocks, although this positioning was still relatively underweight versus the predominantly large-cap dominated benchmark. The Fund's relative performance benefited significantly from an overweighting in small- and mid-cap issues, along with effective stock and industry selection in the large-cap space. At the same time, currency exchange fluctuations had a negligible effect on overall returns. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Relative to the benchmark, Fund performance was driven by continued strength in the actively overweighted Industrials sector, benefiting greatly from the human resource & employment services area - despite high regional unemployment - and the industrial machinery group. At the same time, the globally thematic Materials sector lifted returns, as active overweights in the diversified metals & mining and steel groups augmented performance. From an industry perspective, the Fund's underweighting in the benchmark- dominated integrated oil & gas group minimized the pullback seen in Energy, while the portfolio's overweighting in specialized finance, specifically exchange-related issues, was rewarded. Moreover, an underweight in the positively performing diversified banks industry hurt relative performance, as this area comprised the largest benchmark weighting. Other laggards included IT consulting & other services and health care equipment. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE EUROPEAN MARKET? A. European stocks have now virtually closed a longstanding valuation gap that has existed with their U.S. counterparts. While we still view the broad 16 Management Overview [SCOTT SNYDER PHOTO] Scott Snyder Portfolio Manager region as undervalued, valuations are as tight as we have witnessed in nearly two years. Meanwhile, monetary tightening has not significantly impacted value in the region, although that could change as we move forward. In light of this, our focus remains on industries demonstrating attractive discounts and market leadership. With the cyclical theme still in place, we see no compelling reason to change the Fund's tilt toward Materials and Industrials. While Financials remain strong, certain areas have become expensive, and will be monitored closely. As the period concluded, we were finding the deepest discounts in Energy and recently lagging areas such as Telecommunication & Utilities and Consumer Staples. Although it is not yet necessarily their time to lead, we will keep a close eye on these groups should a theme change begin to emerge. PERFORMANCE HIGHLIGHTS - The Fund's relative performance benefited from an overweight in small- and mid-cap issues, and effective stock and industry selection in the large-cap space. - Fund performance was driven by continued strength in the actively overweighted Industrials sector and globally thematic Materials group. Management Overview 17 Management Overview (continued) ICON Europe Fund COUNTRY COMPOSITION March 31, 2006 United Kingdom 20.0% Germany 16.8% Netherlands 11.4% France 10.9% Switzerland 8.7% Greece 5.3% Belgium 4.6% Italy 4.5% Austria 3.4% Denmark 1.9% Finland 1.8% Poland 1.5% Sweden 1.4% Norway 1.1% Spain 0.8% Portugal 0.5%
Percentages are based upon net assets. SECTOR COMPOSITION March 31, 2006 Financial 26.9% Industrials 20.8% Materials 14.5% Leisure and Consumer Staples 7.8% Consumer Discretionary 7.4% Telecommunication and Utilities 6.9% Energy 3.9% Information Technology 3.7% Healthcare 2.7%
Percentages are based upon net assets. 18 Management Overview INDUSTRY COMPOSITION March 31, 2006 Diversified Banks 10.0% Diversified Metals & Mining 4.4% Human Resource & Employment Services 4.3% Industrial Machinery 4.3% Diversified Capital Markets 3.8% Steel 3.7% Thrifts & Mortgage Insurance 3.7% Construction Materials 3.5% Electric Utilities 3.4% Multi-Line Insurance 3.3% Construction & Engineering 2.9% Home Building 2.5% Department Stores 1.9% Aerospace & Defense 1.8% Communications Equipment 1.8% Multi-Utilities 1.8% Asset Management & Custody Banks 1.7% Electrical Components & Equipment 1.7% Oil & Gas Equipment & Services 1.7% Water Utilities 1.7% Specialty Chemicals 1.6% Broadcast & Cable TV 1.5% Diversified Commercial & Professional Services 1.5% Heavy Electrical Equipment 1.3% Other Diversified Financial Services 1.3% Diversified REITS 1.3% Tobacco 1.3% Real Estate Management & Development 1.1%
Management Overview 19 Management Overview (continued) ICON Europe Fund INDUSTRY COMPOSITION (CONTINUED) March 31, 2006 Integrated Oil & Gas 1.2% Air Freight & Logistics 1.1% Brewers 1.0% Casinos & Gaming 1.0% Environmental & Facilities Services 1.0% Footwear 1.0% Health Care Equipment 1.0% Internet Software Services 1.0% Agriculture Products 0.9% Pharmaceuticals 0.9% Trucking 0.9% Auto Parts & Equipment 0.8% Health Care Facilities 0.8% Paper Packaging 0.8% Specialized Finance 0.8% Household Products 0.7% Leisure Products 0.7% Oil & Gas Refining & Marketing 0.7% Diversified Chemicals 0.6% IT Consulting & Other Services 0.6% Hotels, Resorts & Cruise Lines 0.5% Apparel Accessories & Luxury Goods 0.4% Automobile Manufacturers 0.3% Tire & Rubber 0.3% Airlines 0.2% Apparel Retail 0.2% Application Software 0.2% Oil & Gas Exploration & Production 0.2% Percentages are based upon net assets.
20 Management Overview AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTH* 1 YEAR 5 YEARS 2/20/97 ------------------------------------------------------------------------------------------- ICON Europe Fund 21.15% 36.66% 14.85% 10.72% ------------------------------------------------------------------------------------------- MSCI Europe Index 13.04% 21.22% 9.90% 9.44% ------------------------------------------------------------------------------------------- Bloomberg European 500 Index 16.59% 33.57% 4.89% 9.30% -------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. The Fund's name and investment strategy changed effective January 29, 2004. The Fund's past performance would have been different if the current strategy had been in effect. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2006 [LINE GRAPH]
BLOOMBERG EUROPEAN 500 ICON EUROPE FUND MSCI EUROPE INDEX INDEX ---------------- ----------------- ---------------------- 2/20/97 9800 10308 10154 3/31/97 10700 11239 11402 11899 12178 12471 12381 12197 12596 15104 14684 15466 3/31/98 15603 15450 16093 12625 13233 12886 15068 15722 15212 14245 15401 15808 3/31/99 13197 15364 16760 13435 15555 16514 14365 18272 20766 13848 18298 21916 3/31/00 14459 17732 21215 13462 16447 20888 14180 16784 19775 12653 14181 17706 3/31/01 11551 13937 18795 10794 12255 15220 11141 13488 17198 11980 13479 17566 3/31/02 12459 12905 14899 9850 9963 11517 10396 11049 12062 9623 10038 10728 3/31/03 11899 12286 12509 13097 12772 12835 15173 15374 14220 15812 15519 14770 3/31/04 16092 15898 15228 16011 16095 15131 18487 18662 16040 18500 18759 16828 3/31/05 18287 18665 17829 20869 20117 19278 20913 20518 20030 3/31/06 25282 22740 22476
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. The above graph compares a $10,000 investment made in the Fund on its inception date of 2/20/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund's performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Management Overview 21 Schedule of Investments ICON Europe Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- COMMON STOCKS (93.6%) 67,900 ABB, Ltd.(a) $ 855,765 18,700 ABN ARMO Holding N.V. 558,708 16,250 Alpha Bank A.E. 600,511 11,000 Arcadis N.V. 470,724 23,300 Aviva PLC 322,876 48,900 BAE Systems PLC 356,461 4,100 Baloise Holding AG 291,970 22,900 Banco Popolare di Verona e Novara Scrl 605,674 8,650 Bank Zachodni WBK S.A. 394,607 52,000 Barclays PLC 607,200 34,000 Barratt Developments PLC 622,944 10,000 Bayer AG 400,682 23,600 Bellway PLC 504,875 44,100 BG Group PLC 550,729 25,500 BHP Billiton PLC 467,525 11,500 Bilfinger Berger AG 753,125 6,160 BNP Paribas S.A. 570,016 2,180 Boehler - Uddeholm AG 448,682 19,500 British American Tobacco PLC 471,697 40,700 Brunel International N.V. 1,371,834 40,400 Buzzi Unicem S.p.A 962,512 79,400 Capitalia S.p.A. 658,099 12,700 Commerzbank AG 504,441 505 Compagnie Francois d'Entreprises 525,520 2,000 Continental AG 220,396 17,100 Credit Suisse Group 956,895 53,250 Curanum AG 542,277 3,100 Dem Allianz AG 516,984 19,177 Det Norske Oljeselskap ASA 140,403 6,240 Deutsche Bank AG 711,358 2,170 Deutsche Boerse AG 312,065 10,650 Deutsche Post AG 266,402 5,100 Deutsche Postbank AG 370,221
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 4,405 DSV A/S $ 585,796 4,000 E.ON AG 439,548 20,600 easyJet PLC(a) 125,321 93,500 Energias de Portugal, S.A. 366,988 6,380 Eurofins Scientific(a) 361,695 3,200 Euronext N.V. 263,684 5,200 EVS Broadcast Equipment S.A. 254,038 14,700 Fondiaria - Sai S.p.A. 586,156 2,250 Fresenius AG 404,185 12,600 Fugro N.V. 484,725 13,700 Gerry Weber International AG 284,730 23,000 GlaxoSmithKline PLC 601,220 2,370 Groupe Steria SCA 145,099 24,100 HBOS PLC 401,818 9,500 Heineken N.V. 359,842 29,600 Homeserve PLC 744,000 12,505 Hypo Real Estate Holding AG 858,736 7,500 InBev N.V. 351,325 22,300 ING Groep N.V. 878,137 18,200 Intralot S.A. 475,605 12,200 JC Aktiebolag 155,451 29,200 Jumbo S.A. 484,962 4,550 KBC Groep N.V. 487,432 57,300 Kensington Group PLCv 1,182,552 2,800 Koninklijke BAM Groep N.V. 283,132 7,350 Lafarge S.A. 832,207 4,500 Linedata Services 138,256 8,100 Maisons France Confort 555,447 15,200 Man Group PLC 649,516 89,570 Marks & Spencer Group PLC 864,503 2,860 Mayr-Melnhof Karton AG 510,503 11,800 Mecalux S.A.(a) 373,444 18,200 Motor Oil (Hellas) Corinth Refineries S.A. 491,838 11,715 National Bank Of Greece S.A. 550,801 14,650 Next PLC 418,643 22,800 Northern Rock PLC 467,971
22 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 10,700 Nutreco Holding N.V. $ 621,459 2,490 Oesterrichische Elekrizitaitswirts AG - Class A 1,108,396 4,130 OMV AG 276,154 9,400 OPAP S.A. 359,329 9,960 Option N.V.(a) 1,002,510 18,063 Pennon Group PLC 419,327 5,100 Phonak Holding AG 290,450 20,000 Pinguely - Haulotte 606,009 5,800 Prokom Software SA 262,094 1,730 Puma AG(a) 653,992 18,900 Ramirent Oyj 625,131 14,150 Reckitt Benckiser PLC 496,594 6,100 Red Electrica de Espana 196,524 1,370 Rieter Holding AG 545,216 9,200 Rio Tinto PLC 471,813 74,500 Rolls Royce Group PLC 591,727 3,211,860 Rolls-Royce Group PLC - B Sharesv* 5,580 7,990 RWE AG 694,398 11,300 Saipem S.p.A. 260,977 15,020 Salzgitter AG 1,104,309 3,910 SBM Offshore N.V. 391,451 5,100 Schneider Electric S.A. 549,103 590 Sika AG(a) 605,568 1,810 Sjaelso Gruppen A/S 722,661 3,365 Societe Generale 504,159 905 Solarworld AG 237,303 33,600 Sportingbet PLCv 218,887 7,700 SSAB Svenskt Stal AB 369,174 12,700 Suez S.A. 499,045 625 Sulzer AG 425,699
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 30,100 Swedish Match AB $ 411,320 20,600 ThyssenKrupp AG 594,345 12,810 Titan Cement Co. 611,983 14,300 TNT N.V. 494,155 24,000 Tomra Systems ASA 191,561 13,050 TVN S.A.(a) 355,429 8,460 UBS AG 929,991 3,420 Umicore, S.A. 473,132 4,730 Unibail 852,466 10,900 United Internet AG 701,255 21,490 USG People N.V. 1,553,418 22,495 Vacon Oyj(a) 627,335 1,600 Vallourec S.A. 1,540,917 66,900 Vedanta Resources PLC 1,633,326 10,300 Veidekke ASA 411,075 3,000 Volkswagen AG 224,638 13,600 Vontobel Holding AG 524,744 14,450 Xstrata PLC 467,792 3,700 Zodiac S.A. 239,447 2,200 Zurich Financial Services AG(a) 515,169 ----------- TOTAL COMMON STOCKS (COST $54,476,920) 63,802,021 PREFERRED STOCKS (1.0%) 25,600 ProsiebenSat.1 Media AGv 666,297 ----------- TOTAL PREFERRED STOCKS (COST $624,873) 666,297 SHORT-TERM INVESTMENTS (12.3%) $8,390,021 Brown Brothers Harriman Time Deposit, 4.07%, 04/03/06# $ 8,390,021 133 Brown Brothers Harriman Time Deposit - British Pound, 3.52%, 04/03/06# 133
Schedule of Investments 23 Schedule of Investments (continued) ICON Europe Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- $ 83 Brown Brothers Harriman Time Deposit - Danish Krone, 1.45%, 04/03/06# $ 83 100 Brown Brothers Harriman Time Deposit - Norwegian Kroner, 1.15%, 04/03/06# 100 79 Brown Brothers Harriman Time Deposit - Swedish Krona, 1.15%, 04/03/06# 79 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $8,390,416) 8,390,416 ----------- TOTAL INVESTMENTS 106.9% (COST $63,492,209) 72,858,734 LIABILITIES LESS OTHER ASSETS (6.9)% (4,725,525) ----------- TOTAL NET ASSETS 100.0% $68,133,209 ===========
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. v All common stocks were fair valued (Note 1) as of March 31, 2006 unless noted with a v. Total value of common stocks fair valued was $62,395,002. * Shares are currently restricted from trading. 24 Schedule of Investments Management Overview ICON International Equity Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 96.8% Top 10 Equity Holdings 16.6% Number of Stocks 125 Short-Term Investments 5.3% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Vallaourec S.A. 2.2% USG People N.V. 2.2% Vedanta Resources PLC 2.0% High Tech Computer Corp. 1.5% The Japan Steel Works, Ltd. 1.5% Oesterrichische Elekrizitaitswirts AG - Class A 1.5% Option N.V. 1.5% Tim Participacoes S.A. 1.4% Dongfang Electrical Machinery Co., Ltd. 1.4% Hopson Development Holdings, Ltd. 1.4% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. For the six-month period ended March 31, 2006, the ICON International Equity Fund returned 21.10% for Class I shares, 20.67% for Class C shares and 21.37% for Class Z shares, outpacing the 14.57% 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, 2006 appear on page 30. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. Broad market participation across Asia, Europe and the Western Hemisphere benefited overall performance, as foreign stocks continued to trade at deeper discounts and close wider valuation gaps than their U.S. counterparts. The Asia-Pacific region led the way during the fourth quarter of 2005, while Europe assumed global leadership in the first quarter of 2006, contributing significantly to overall outperformance versus the broad U.S. market. While the Fund does not utilize market capitalization as a valuation measure, our methodology led us to tilt the portfolio actively toward small-and mid-cap stocks relative to the predominantly large-cap benchmark. This overweighting and stock selection of small- and mid-caps, combined with an underweight in the large-cap arena, proved beneficial to relative performance. At the same time, the Fund's focus on leading industry themes within the Materials and Industrials sectors also lifted results, while currency movements exerted minimal impact on absolute performance. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Compared to the benchmark, Fund performance was boosted most substantially by continued strength in the actively overweighted Industrials sector. Strong showings from both Asian and European names in industrial machinery and European holdings in human resource & employment services proved highly beneficial, as did the Fund's overweighting in Materials sector component diversified metals & mining. Also lifting results was the Fund's overexposure in Latin American wireless telecommunication services. Meanwhile, Healthcare was the lone detracting sector, as health care facilities and health care equipment both faltered. While country selection is not a primary consideration of our investment process, industry weightings impact regional weightings, and those played a role in overall performance. Proving favorable was an active tilt toward Asia, primarily Japan and South Korea, versus the Fund's underexposure to the Western Hemisphere and Europe, with underweights in the U.K. and Italy. Management Overview 25 Management Overview (continued) ICON Asia-Pacific Region Fund [SCOTT SNYDER PHOTO] Scott Snyder Portfolio Manager Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INTERNATIONAL EQUITY MARKET? A. According to our analysis, international equities on average still trade at deeper discounts versus their domestic peers, with the widest valuation gap being in the Asia-Pacific region. Meanwhile, the worldwide cyclical theme continues to show strength, with Materials, Industrials and Financials indicating leadership. On the other hand, defensive areas are showing value but lack relative strength. Additionally, we are seeing a divergence in Information Technology, as this area shows the most value in Asia, yet the least in Europe. As previously noted, country selection is not primary to our investment approach, though as a secondary consideration Japan, China and Hong Kong remain the most attractive Asian countries. Europe is showing more parity regarding value and leadership, though Germany, the Netherlands and Greece appear compelling. In the Western Hemisphere region, Brazil also remains attractive. That being said, we remain committed to seeking out those industries indicating value and relative strength wherever they may emerge. PERFORMANCE HIGHLIGHTS - Broad market participation across Asia, Europe and the Western Hemisphere benefited overall performance. - The Fund's overweighting and stock selection of small- and mid-cap stocks, combined with an underweight in the large-cap arena, proved beneficial to relative performance, as did a focus on leading industry themes. - Performance was boosted by continued strength in the actively overweighted Industrials sector along with overweights in the diversified metals & mining and wireless telecommunication industries. Healthcare was the lone detracting sector. 26 Management Overview COUNTRY COMPOSITION March 31, 2006 Japan 25.6% United Kingdom 10.0% Netherlands 7.6% Germany 7.5% France 6.0% China 4.9% Brazil 3.6% Taiwan 3.5% Switzerland 3.4% Greece 3.3% Belgium 3.2% Hong Kong 3.0% Austria 2.9% Italy 2.7% Australia 2.1% Canada 2.1% South Korea 1.9% Finland 1.2% Mexico 1.2% Denmark 0.8% Norway 0.3%
Percentages are based upon net assets. Management Overview 27 Management Overview (continued) ICON International Equity Fund SECTOR COMPOSITION March 31, 2006 Financial 23.1% Industrials 20.4% Materials 17.5% Information Technology 8.3% Consumer Discretionary 7.8% Telecommunication and Utilities 7.2% Leisure and Consumer Staples 5.9% Energy 5.6% Healthcare 1.0%
Percentages are based upon net assets. INDUSTRY COMPOSITION March 31, 2006 Diversified Banks 8.6% Diversified Metals & Mining 5.5% Industrial Machinery 4.9% Steel 4.0% Electric Utilities 3.2% Diversified Capital Markets 2.9% Integrated Oil & Gas 2.6% Wireless Telecommunication Services 2.6% Real Estate Management & Development 2.5% Heavy Electrical Equipment 2.3% Computer Hardware 2.2% Electrical Components & Equipment 2.2% Human Resource & Employment Services 2.2% Auto Parts & Equipment 2.1% Communications Equipment 2.0% Multi-Line Insurance 1.9% Specialty Chemicals 1.9% Construction Materials 1.8% Oil & Gas Exploration & Production 1.7% Railroads 1.7% Construction & Engineering 1.6% Air Freight & Logistics 1.5% Diversified Chemicals 1.5% Leisure Products 1.4% Investment Banking & Brokerage 1.3%
28 Management Overview INDUSTRY COMPOSITION (CONTINUED) March 31, 2006 Thrifts & Mortgage Insurance 1.3% Construction & Farm Machinery & Heavy Trucks 1.2% Oil & Gas Equipment & Services 1.2% Diversified Commercial & Professional Services 1.1% Gold 1.1% Personal Products 1.1% Commodity Chemicals 1.0% Life & Health Insurance 1.0% Pharmaceuticals 1.0% Semiconductor Equipment 1.0% Consumer Finance 0.9% Internet Software Services 0.9% Multi-Utilities 0.9% Tobacco 0.9% Agriculture Products 0.8% Consumer Electronics 0.8% Office Electronics 0.8% Specialized Finance 0.8% Trucking 0.8% Aluminum 0.7% Apparel Accessories & Luxury Goods 0.7% Asset Management & Custody Banks 0.7% Automobile Manufacturers 0.7% Electronic Manufacturing Services 0.7% Footwear 0.7% Home Building 0.7% Photographic Products 0.7% Real Estate Investment Trusts 0.7% Apparel Retail 0.6% Broadcast & Cable TV 0.6% Department Stores 0.6% General Merchandise Stores 0.6% Aerospace & Defense 0.5% Other Diversified Financial Services 0.5% Semiconductors 0.5% Water Utilities 0.5% Environmental & Facilities Services 0.4% Household Products 0.4% Tire & Rubber 0.4% Electronic Equipment Manufacturers 0.2%
Percentages are based upon net assets. Management Overview 29 Management Overview (continued) ICON International Equity Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
INCEPTION SINCE DATE 6 MONTH* 1 YEAR 5 YEARS INCEPTION --------------------------------------------------------------------------------------------------- ICON International Equity Fund - Class I 2/6/04 21.10% 41.47% N/A 22.82% --------------------------------------------------------------------------------------------------- MSCI ACWI ex-U.S 14.57% 28.11% N/A 21.37% --------------------------------------------------------------------------------------------------- ICON International Equity Fund - Class C 2/19/04 20.67% 40.39% N/A 19.66% --------------------------------------------------------------------------------------------------- MSCI ACWI ex-U.S 14.57% 28.11% N/A 20.07% --------------------------------------------------------------------------------------------------- ICON International Equity Fund - Class Z 2/18/97 21.37% 42.12% 15.40% 10.60% --------------------------------------------------------------------------------------------------- MSCI ACWI ex-U.S 14.57% 28.11% 11.77% 7.77% ---------------------------------------------------------------------------------------------------
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Information about these performance results and the comparative indexes can be found on pages 2 and 3. The Fund's name and investment strategy changed effective January 29, 2004. The Fund's past performance would have been different if the current strategy had been in effect. Class Z shares are available only to grandfathered and institutional investors. * Not annualized. VALUE OF A $10,000 INVESTMENT through March 31, 2006 [LINE GRAPH]
ICON INTERNATIONAL EQUITY FUND CLASS Z MSCI ACWI EX-U.S. ------------------------------ ----------------- 2/18/97 10230 10028 3/31/97 10570 11330 11060 11225 11281 10258 12900 11659 3/31/98 13562 11486 11841 9750 13001 11741 12171 12019 3/31/99 12728 12580 13354 13008 15698 15370 15585 15490 3/31/00 15159 14858 14747 13647 14340 13052 12239 11337 3/31/01 12224 11322 10280 9650 11145 10508 11145 10680 3/31/02 10901 10397 8538 8390 9077 8966 8382 8312 3/31/03 10684 9961 12175 10826 14897 12678 15742 13291 3/31/04 15232 13199 15436 13332 17589 15387 17621 15438 3/31/05 17447 15436 20619 17262 23113 18020 3/31/06 25025 19777
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, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- COMMON STOCKS (96.2%) 60,800 ABB, Ltd.(a) $ 766,282 18,480 ABN ARMO Holding N.V. 552,135 21,900 Alpha Bank A.E 809,305 528,000 Aluminum Corp. of China, Ltd. 554,882 584,000 America Movil S.A. de C.V.v 1,000,529 8,500 Arcadis N.V. 363,741 59,200 BAE Systems PLC 431,543 27,900 Banco Popolare di Verona e Novara Scrl 737,917 31,400 Barratt Developments PLC 575,308 54,100 BG Group PLC 675,611 19,700 BHP Billiton PLC 361,186 5,722 BNP Paribas S.A. 529,485 2,590 Boehler - Uddeholm AG 533,067 14,940 British American Tobacco PLC 361,392 14,800 Canadian National Railway Co.v 670,791 9,900 Canon, Inc. 653,457 93,100 Capitalia S.p.A. 771,650 16,600 Cheil Industries, Inc. 607,109 15,500 Commerzbank AG 615,656 700 Compagnie Francois d'Entreprises 728,443 8,400,000 Companhia Energetica de Minas Geraisv 383,107 2,806 Continental AG 309,215 12,600 Credit Suisse Group 705,081 75,000 Daido Steel Co., Ltd. 763,226 30,000 Daiwa Securities Group, Inc. 402,629 20,100 Denso Corp. 794,654 35,132 Det Norske Oljeselskap ASA 257,217 5,500 Deutsche Bank AG 626,999
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 2,430 Deutsche Boerse AG $ 349,455 16,750 Deutsche Post AG 418,989 550,000 Dongfang Electrical Machinery Co., Ltd. 1,118,614 5,480 DSM N.V. 249,799 4,640 DSV A/S 617,046 5,000 E.ON AG 549,436 100 East Japan Railway Co. 740,777 7,860 Eurofins Scientific(a) 445,599 4,150 Euronext N.V. 341,965 7,970 EVS Broadcast Equipment S.A. 389,361 17,600 First Quantum Minerals, Ltd.v 723,535 17,400 Fondiaria - Sai S.p.A. 693,817 12,700 Fugro N.V. 488,572 81,000 Fujikura, Ltd. 915,996 32,000 GlaxoSmithKline PLC 836,480 25,300 HBOS PLC 421,826 586,000 Hengan International Group Co., Ltd. 927,843 46,200 High Tech Computer Corp. 1,260,053 519,000 Hopson Development Holdings, Ltd. 1,118,447 19,400 Industrial Bank of Korea 358,520 10,200 ING Groep N.V. 401,659 34 Inpex Corp. 288,206 115 Japan Tobacco, Inc. 404,764 18,000 JFE Holdings, Inc. 728,068 86,400 Johnson Health Tech. Co., Ltd. 432,407 24,400 Jumbo S.A. 405,242 290 K.K. DaVinci Advisors(a) 394,985 179,000 Kawasaki Heavy Industries, Ltd. 628,632 52,800 Kensington Group PLCv 1,089,681 187,000 Kobe Steel, Ltd. 711,238 52,000 Komatsu, Ltd. 991,943
Schedule of Investments 31 Schedule of Investments (continued) ICON International Equity Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 6,500 Lafarge S.A. $ 735,966 35,450 Largan Precision Co., Ltd. 573,199 23,800 Lasertec Corp. 832,364 10,700,000 Lojas Americanas S.A.v 457,483 12,500 Man Group PLC 534,143 28,000 Matsushita Electric Industrial Co., Ltd. 618,771 109,000 Mitsubishi Materials Corp. 583,774 97,000 Mitsubishi Rayon Co., Ltd. 794,053 23 Mitsubishi UFJ Financial Group, Inc. 349,836 56 Mizuho Financial Group, Inc. 458,122 15,300 National Bank of Greece S.A. 719,356 16,050 Next PLC 458,649 38,021 NGK Spark Plug Co., Ltd. 886,092 43,000 Nissan Chemical Industries, Ltd. 729,474 5,100 Nitto Denko Corp. 432,609 27,700 Nomura Holdings, Inc. 613,740 10,900 Nutreco Holding N.V. 633,076 2,715 Oesterrichische Elekrizitaitswirts AG - Class A 1,208,553 9,200 OMV AG 615,160 11,730 Option N.V.(a) 1,180,669 2,300 Orix Corp. 714,479 11,000 Park24 Co., Ltd. 376,391 18,427 Pennon Group PLC 427,777 10,500 Petroleo Brasileiro, S.A. - ADRv 910,035 310,000 Ping An Insurance (Group) Company of China, Ltd. 798,230 314,000 Ports Design, Ltd. 460,722 1,600 Puma AG(a) 604,848 9,700 Reckitt Benckiser PLC 340,421 6,050 Rio Tinto, Ltd. 341,227
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 5,050 RWE AG $ 438,887 23,800 Sampo Oyj 500,617 17,700 Samsung Engineering Co., Ltd. 595,341 4,900 SBM Offshore N.V. 490,566 4,000 Schneider Electric S.A. 430,669 8,200 Sega Sammy Holdings, Inc. 332,906 1,124,000 Shanghai Forte Land Co., Ltd. 585,018 14,000 Shinko Electric Industries Co., Ltd. 422,845 117,000 Showa Denko K.K 519,848 1,430 Solarworld AG 374,965 8,700 Suez S.A. 341,866 34,000 Sumitomo Heavy Industries, Ltd. 326,131 48 Sumitomo Mitsui Financial Group, Inc. 529,927 6,100 Talisman Energy, Inc.v 324,017 180,000 The Japan Steel Works, Ltd. 1,226,325 20,500 ThyssenKrupp AG 591,460 312,060,000 Tim Participacoes S.A.v 1,154,175 14,950 Titan Cement Co. 714,219 24,240 TNT N.V. 837,644 34,000 Tokuyama Corp. 576,460 78,000 Toshiba Corp. 453,360 10,600 Toyota Motor Corp. 577,259 8,640 UBS AG 949,778 2,400 Umicore, S.A. 332,023 3,200 Unibail 576,721 381,000 Unimicron Technology Corp. 553,631 11,500 United Internet AG 739,856 24,750 USG People N.V. 1,789,069 10 V Technology Co,. Ltd. 137,506 17,430 Vacon Oyj(a) 486,085 1,892 Vallourec S.A. 1,822,135 65,500 Vedanta Resources PLC 1,599,146
32 Schedule of Investments
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 13,700 Woodside Petroleum, Ltd. $ 445,405 1,122,000 Zijin Mining Group Co., Ltd. - Class H 882,711 130,800 Zinifex, Ltd. 894,875 1,500 Zurich Financial Services AG(a) 351,251 ----------- TOTAL COMMON STOCKS (COST $64,872,043) 78,278,488 PREFERRED STOCKS (0.6%) 18,700 ProsiebenSat.1 Media AGv 486,709 ----------- TOTAL PREFERRED STOCKS (COST $468,119) 486,709 SHORT-TERM INVESTMENTS (5.3%) $ 4,275,521 Brown Brothers Harriman Time Deposit, 4.07%, 04/03/06# $ 4,275,521 338 Brown Brothers Harriman Time Deposit - Australian Dollar, 4.45%, 04/03/06# 338 180 Brown Brothers Harriman Time Deposit - Canadian Dollar, 2.70%, 04/03/06# 180 86 Brown Brothers Harriman Time Deposit - Danish Krone, 1.45%, 04/03/06# 86
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- $ 48,153 Brown Brothers Harriman Time Deposit - Euro, 1.68%, 04/03/06# $ 48,153 197 Brown Brothers Harriman Time Deposit - Hong Kong Dollar, 2.90%, 04/03/06# 197 35 Brown Brothers Harriman Time Deposit - Norwegian Kroner, 1.15%, 04/03/06# 35 86 Brown Brothers Harriman Time Deposit - Singapore Dollar, 2.37%, 04/03/06# 86 65 Brown Brothers Harriman Time Deposit - Swedish Krona, 1.15%, 04/03/06# 65 ----------- TOTAL SHORT-TERM INVESTMENT (COST $4,324,661) 4,324,661 ----------- TOTAL INVESTMENTS 102.1% (COST $69,664,823) 83,089,858 LIABILITIES LESS OTHER ASSETS (2.1)% (1,735,060) ----------- TOTAL NET ASSETS 100.0% $81,354,798 ===========
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt v All common stocks were fair valued (Note 1) as of March 31, 2006 unless noted with a v. Total value of common stocks fair valued was $71,565,135. Schedule of Investments 33 Six Month Hypothetical Expense Example March 31, 2006 (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 (10/1/05 - 3/31/06). ACTUAL EXPENSES The first line in the table for each Fund provides information about actual account values and actual expenses. The Example includes, but is not limited to, management fees, fund accounting, custody and transfer agent fees. However, the Example does not include client specific fees, such as the $10.00 fee charged to IRA accounts, or the $15.00 fee charged for wire redemptions. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for each Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line in the table for each Fund provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees that may be charged by other funds. Therefore, this information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. 34 Expense Example
BEGINNING ENDING EXPENSES PAID ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO 10/1/05 3/31/06 10/1/05-3/31/06* 10/1/05-3/31/06 ------------------------------------------------------------------------------------------------- ICON ASIA-PACIFIC REGION FUND ------------------------------------------------------------------------------------------------- Actual Expenses $1,000.00 $1,200.30 $ 7.63 1.39% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,018.07 6.99 (5% return before expenses) ------------------------------------------------------------------------------------------------- ICON EUROPE FUND ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,211.50 8.66 1.57% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,017.17 7.90 (5% return before expenses) ------------------------------------------------------------------------------------------------- ICON INTERNATIONAL EQUITY FUND ------------------------------------------------------------------------------------------------- CLASS I ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,211.00 9.54 1.73% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,016.37 8.70 (5% return before expenses) ------------------------------------------------------------------------------------------------- CLASS C ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,206.70 14.03 2.55% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,012.28 12.79 (5% return before expenses) ------------------------------------------------------------------------------------------------- CLASS Z ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,213.70 7.78 1.41% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,017.97 7.09 (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 35 Statements of Assets and Liabilities March 31, 2006 (unaudited)
ICON ICON ASIA-PACIFIC ICON INTERNATIONAL REGION FUND EUROPE FUND EQUITY FUND ------------ ----------- ------------- ASSETS Investments, at cost $132,576,879 $63,492,209 $69,664,823 ------------ ----------- ----------- Investments, at value 153,802,914 72,858,734 83,089,858 Cash 17,609 - - Receivables: Fund shares sold 694,209 1,427,634 803,693 Investments sold 2,640,605 214,387 1,703,936 Interest 304 1,308 894 Dividends 438,066 53,796 189,253 Foreign security reclaims - 22,206 11,706 Other assets 64,643 20,669 35,518 ------------ ----------- ----------- Total Assets 157,658,350 74,598,734 85,834,858 ------------ ----------- ----------- LIABILITIES Payables: Due to custodian bank - 577,786 14,870 Investments bought 3,708,173 5,796,211 4,366,887 Fund shares redeemed 367,643 30,983 11,133 Advisory fees 126,502 46,635 62,331 Accrued distribution fees - - 13,965 Fund accounting fees 3,061 1,116 1,506 Transfer agent fees 12,319 301 2,344 Administration fees 5,984 2,188 2,936 Trustee fees 6,691 2,496 3,315 Accrued expenses 6,525 7,809 773 ------------ ----------- ----------- Total Liabilities 4,236,898 6,465,525 4,480,060 ------------ ----------- ----------- NET ASSETS - ALL SHARE CLASSES $153,421,452 $68,133,209 $81,354,798 ============ =========== =========== NET ASSETS - CLASS I $ - $ - $49,861,853 ============ =========== =========== NET ASSETS - CLASS C $ - $ - $ 7,578,350 ============ =========== =========== NET ASSETS - CLASS Z $ - $ - $23,914,595 ============ =========== =========== NET ASSETS CONSIST OF Paid-in capital $142,873,814 $57,441,326 $64,523,993 Accumulated undistributed net investment income/(loss) (282,766) (134,014) (195,516) Accumulated undistributed net realized gain/(loss) from investments (10,171,586) 1,643,080 3,813,479 Accumulated net realized gain/(loss) from foreign currency translations (238,621) (199,390) (219,939) Unrealized appreciation/(depreciation): on investments and other assets and liabilities denominated in foreign currency 21,240,611 9,382,207 13,432,781 ------------ ----------- ----------- NET ASSETS $153,421,452 $68,133,209 $81,354,798 ============ =========== =========== Shares outstanding (unlimited shares authorized, no par value) 11,375,442 3,797,102 - Class I - - 3,338,169 Class C - - 525,358 Class Z - - 1,589,305 Net asset value (offering and redemption price per share) $ 13.49 $ 17.94 $ - Class I $ - $ - $ 14.94 Class C $ - $ - $ 14.43 Class Z $ - $ - $ 15.05
The accompanying notes are an integral part of the financial statements. 36 Financial Statements Statements of Operations For the period ended March 31, 2006 (unaudited)
ICON ICON ASIA-PACIFIC ICON INTERNATIONAL REGION FUND EUROPE FUND EQUITY FUND ------------ ----------- ------------- INVESTMENT INCOME Interest $ 65,718 $ 30,222 $ 25,095 Dividends 601,749 130,337 338,089 Foreign taxes withheld (62,110) - (20,101) ----------- ---------- ----------- Total Investment Income 605,357 160,559 343,083 ----------- ---------- ----------- EXPENSES Advisory fees 549,438 163,112 270,930 Distribution fees: Class I - - 36,550 Class C - - 19,005 Fund accounting fees 25,242 13,330 17,439 Transfer agent fees 39,200 7,847 19,875 Custody fees 76,539 38,491 41,956 Administration fees 25,768 7,639 12,711 Registration fees 14,086 9,393 13,180 Insurance expense 443 580 710 Trustee fees and expenses 4,595 2,082 2,652 Interest expense 48,731 225 7,536 Other expenses 34,199 16,033 19,896 ----------- ---------- ----------- Total expenses before expense (reimbursement)/recoupment 818,241 258,732 462,440 ----------- ---------- ----------- Expense (reimbursement)/recoupment by Adviser due to expense limitation agreement - - (3,163) ----------- ---------- ----------- Net Expenses 818,241 258,732 459,277 ----------- ---------- ----------- NET INVESTMENT INCOME (LOSS) (212,884) (98,173) (116,194) ----------- ---------- ----------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized gain/(loss) from investment transactions (2,382,287) 1,608,202 3,933,503 Net realized gain/(loss) from foreign currency translations (205,954) (101,688) (151,464) Change in unrealized net appreciation/(depreciation) on investments 14,813,393 6,034,579 7,789,480 ----------- ---------- ----------- Net realized and unrealized gain/(loss) on investments 12,225,152 7,541,093 11,571,519 ----------- ---------- ----------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $12,012,268 $7,442,920 $11,455,325 =========== ========== ===========
The accompanying notes are an integral part of the financial statements. Financial Statements 37 Statements of Changes in Net Assets
ICON ASIA-PACIFIC REGION FUND ------------------------------------ PERIOD ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ OPERATIONS Net investment income/(loss) $ (212,884) $ 45,287 Net realized gain/(loss) from investment transactions (2,382,287) 1,927,462 Net realized gain/(loss) from foreign currency translations (205,954) (32,667) Change in net unrealized appreciation/(depreciation) on investments and foreign currency translations 14,813,393 4,738,359 ------------ ------------ Net increase/(decrease) in net assets resulting from operations 12,012,268 6,678,441 ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income (85,846) (26,459) Class I - - Class C - - Class Z - - Net realized gains - - Class I - - Class C - - Class Z - - ------------ ------------ Net decrease from dividends and distributions (85,846) (26,459) ------------ ------------ FUND SHARE TRANSACTIONS Shares sold 169,421,747 39,085,269 Class I - - Class C - - Class Z - - Reinvested dividends and distributions 80,516 26,163 Class I - - Class C - - Class Z - - Shares repurchased (76,728,135) (14,089,724) Class I - - Class C - - Class Z - - ------------ ------------ Net increase/(decrease) from fund share transactions 92,774,128 25,021,708 ------------ ------------ Total net increase/(decrease) in net assets 104,700,550 31,673,690 NET ASSETS Beginning of period 48,720,902 17,047,212 ------------ ------------ End of period $153,421,452 $ 48,720,902 ============ ============
The accompanying notes are an integral part of the financial statements. 38 Financial Statements
ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ -------------- ------------------ $ (98,173) $ 85,751 $ (116,194) $ 80,075 1,608,202 2,088,483 3,933,503 2,007,770 (101,688) (97,702) (151,464) (68,475) 1,925,390 7,789,480 4,346,469 6,034,579 ----------- ----------- ----------- ----------- 7,442,920 4,001,922 11,455,325 6,365,839 ----------- ----------- ----------- ----------- - - - - - - (24,881) - - - - - - - (50,351) - (1,340,887) - - - - - (1,143,374) (422,167) - - (134,889) (37,935) - - (934,778) (1,003,360) ----------- ----------- ----------- ----------- (1,340,887) - (2,288,273) (1,463,462) ----------- ----------- ----------- ----------- 43,163,763 19,527,704 - - 33,171,377 10,807,776 - - 5,456,429 1,464,926 - - 7,527,414 5,520,800 1,336,067 - - - 1,133,191 407,049 - - 130,198 36,352 - - 983,433 994,866 (5,711,405) (8,112,955) - - (4,817,168) (1,176,471) - - (231,696) (248,111) - - (3,630,121) (2,942,011) ----------- ----------- ----------- ----------- 38,788,425 11,414,749 39,723,057 14,865,176 ----------- ----------- ----------- ----------- 44,890,458 15,416,671 48,890,109 19,767,553 23,242,751 7,826,080 32,464,689 12,697,136 ----------- ----------- ----------- ----------- $68,133,209 $23,242,751 $81,354,798 $32,464,689 =========== =========== =========== ===========
Financial Statements 39
ICON ASIA-PACIFIC REGION FUND ------------------------------------ PERIOD ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ TRANSACTIONS IN FUND SHARES Shares sold 13,127,267 3,865,936 Class I - - Class C - - Class Z - - Reinvested dividends and distributions 6,233 2,994 Class I - - Class C - - Class Z - - Shares repurchased (6,088,574) (1,624,763) Class I - - Class C - - Class Z - - ------------ ----------- Net increase/(decrease) 7,044,926 2,244,167 ------------ ----------- Shares outstanding beginning of period 4,330,516 2,086,349 ------------ ----------- Shares outstanding end of period 11,375,442 4,330,516 ============ =========== PURCHASE AND SALES OF INVESTMENT SECURITIES (excluding short-term securities) Purchase of securities $188,792,508 $53,438,824 Proceeds from sales of securities 95,257,324 30,360,825 ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ (282,766) $ 15,964 ============ ===========
The accompanying notes are an integral part of the financial statements. 40 Financial Statements
ICON EUROPE FUND ICON INTERNATIONAL EQUITY FUND ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ -------------- ------------------ 2,587,457 1,406,104 - - 2,404,990 953,897 - - 402,591 131,856 - - 589,076 481,231 91,261 - - - 84,124 37,655 - - 9,984 3,420 - - 72,522 91,777 (364,223) (574,107) - - (341,654) (104,200) - - (16,728) (23,141) - - (261,996) (260,880) ----------- ----------- ----------- ----------- 2,314,495 831,997 2,942,909 1,311,615 ----------- ----------- ----------- ----------- 1,482,607 650,610 2,509,923 1,198,308 ----------- ----------- ----------- ----------- 3,797,102 1,482,607 5,452,832 2,509,923 =========== =========== =========== =========== $53,897,542 $33,678,756 $79,503,806 $41,768,432 19,515,929 24,639,660 44,389,603 28,810,442 $ (134,014) $ (35,841) $ (195,516) $ (4,090) =========== =========== =========== ===========
Financial Statements 41 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 ASIA-PACIFIC REGION FUND Period Ended March 31, 2006 (unaudited) $11.25 (0.02) 2.27 2.25 Year Ended September 30, 2005 $ 8.17 0.03 3.08 3.11 Year Ended September 30, 2004 $ 7.62 0.02 0.55 0.57 Year Ended September 30, 2003 $ 5.68 0.04 1.90 1.94 Year Ended September 30, 2002 $ 6.81 (0.19) (0.91) (1.10) Year Ended September 30, 2001 $10.25 0.07 (3.51) (3.44) ICON EUROPE FUND Period Ended March 31, 2006 (unaudited) $15.68 (0.05) 3.17 3.12 Year Ended September 30, 2005 $12.03 0.07 3.58 3.65 Year Ended September 30, 2004 $ 9.84 (0.04) 2.23 2.19 Year Ended September 30, 2003 $ 7.40 (0.02) 2.46 2.44 Year Ended September 30, 2002 $ 8.13 (0.04) (0.67) (0.71) Year Ended September 30, 2001 $10.14 0.05 (2.06) (2.01) ICON INTERNATIONAL EQUITY FUND CLASS I Period Ended March 31, 2006 (unaudited) $12.91 (0.03) 2.69 2.66 Year Ended September 30, 2005 $10.59 0.04 3.25 3.29 February 6, 2004 (inception) to September 30, 2004 $10.96 0.04 (0.41) (0.37) CLASS C Period Ended March 31, 2006 (unaudited) $12.53 (0.07) 2.59 2.52 Year Ended September 30, 2005 $10.55 (0.14) 3.09 2.95 February 19, 2004 (inception) to September 30, 2004 $11.29 (0.02) (0.72) (0.74) CLASS Z Period Ended March 31, 2006 (unaudited) $13.00 (0.02) 2.72 2.70 Year Ended September 30, 2005 $10.60 0.06 3.31 3.37 Year Ended September 30, 2004 $ 8.41 0.01 2.24 2.25 Year Ended September 30, 2003 $ 5.96 0.06 2.45 2.51 Year Ended September 30, 2002 $ 7.24 0.04 (1.25) (1.21) Year Ended September 30, 2001 $11.79 0.09 (3.31) (3.22) 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, 2006 (unaudited) (0.01) - - (0.01) Year Ended September 30, 2005 (0.03) - - (0.03) Year Ended September 30, 2004 (0.02) - - (0.02) Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - - (0.03) (0.03) Year Ended September 30, 2001 - - - - ICON EUROPE FUND Period Ended March 31, 2006 (unaudited) - (0.86) - (0.86) Year Ended September 30, 2005 - - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 (0.02) - - (0.02) Year Ended September 30, 2001 - - - - ICON INTERNATIONAL EQUITY FUND CLASS I Period Ended March 31, 2006 (unaudited) (0.01) (0.62) - (0.63) Year Ended September 30, 2005 - (0.97) - (0.97) February 6, 2004 (inception) to September 30, 2004 - - - - CLASS C Period Ended March 31, 2006 (unaudited) - (0.62) - (0.62) Year Ended September 30, 2005 - (0.97) - (0.97) February 19, 2004 (inception) to September 30, 2004 - - - - CLASS Z Period Ended March 31, 2006 (unaudited) (0.03) (0.62) - (0.65) Year Ended September 30, 2005 - (0.97) - (0.97) Year Ended September 30, 2004 (0.06) - - (0.06) Year Ended September 30, 2003 - (0.06) - (0.06) Year Ended September 30, 2002 (0.04) - (0.03) (0.07) Year Ended September 30, 2001 - (1.33) - (1.33)
(x) Calculated using the average share method. * The total return calculation is for the period indicated. (a) Annualized for periods less than a year. (b) Portfolio turnover is calculated at the Fund level. The accompanying notes are an integral part of the financial statements. 42 Financial Highlights
RATIO OF EXPENSES TO AVERAGE NET ASSETS(A) ------------------------- NET ASSET AVERAGE NET BEFORE AFTER VALUE, NET ASSETS, ASSETS EXPENSE EXPENSE END OF TOTAL END OF PERIOD FOR THE PERIOD LIMITATION/ LIMITATION/ PERIOD RETURN* (IN THOUSANDS) (IN THOUSANDS) RECOUPMENT RECOUPMENT --------- -------- -------------- -------------- ----------- ----------- $13.49 20.03% $153,422 $110,766 1.39% N/A $11.25 38.12% $ 48,721 $ 15,225 1.93% N/A $ 8.17 7.51% $ 17,047 $ 14,976 1.91% N/A $ 7.62 34.15% $ 6,084 $ 6,683 1.98% N/A $ 5.68 (16.29)% $ 6,927 $ 12,142 1.66% N/A $ 6.81 (33.56)% $ 19,684 $ 18,749 1.70% N/A $17.94 21.15% $ 68,133 $ 32,952 1.57% N/A $15.68 30.34% $ 23,243 $ 16,665 1.85% N/A $12.03 22.26% $ 7,826 $ 7,230 2.24% N/A $ 9.84 32.97% $ 9,262 $ 6,774 1.87% N/A $ 7.40 (8.76)% $ 4,619 $ 5,706 2.14% N/A $ 8.13 (19.82)% $ 7,397 $ 7,935 1.96% N/A $14.94 21.10% $ 49,862 $ 29,508 1.70% 1.73% $12.91 32.90% $ 15,376 $ 7,921 2.02% 1.97% $10.59 (3.38)% $ 3,211 $ 1,960 2.32% N/A $14.43 20.67% $ 7,578 $ 3,844 2.91% 2.55% $12.53 29.56% $ 1,622 $ 643 4.52% 3.51% $10.55 (6.55)% $ 183 $ 162 3.06% N/A $15.05 21.37% $ 23,915 $ 21,250 1.41% 1.41% $13.00 33.57% $ 15,466 $ 12,184 1.68% 1.68% $10.60 26.79% $ 9,303 $ 10,063 1.98% N/A $ 8.41 42.60% $ 10,587 $ 8,571 2.00% N/A $ 5.96 (16.94)% $ 8,222 $ 13,347 1.72% N/A $ 7.24 (30.29)% $ 14,196 $ 18,204 1.65% N/A RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS(A) -------------------------------------------- BEFORE AFTER EXPENSE EXPENSE LIMITATION/ LIMITATION/ PORTFOLIO RECOUPMENT RECOUPMENT TURNOVER RATE(B) ----------- ----------- ---------------- (0.39)% N/A 87.57% 0.30% N/A 185.84% 0.20% N/A 58.62% 0.68% N/A 81.44% (0.23)% N/A 14.43% 0.75% N/A 55.58% (0.60)% N/A 57.65% 0.51% N/A 153.55% (0.38)% N/A 78.57% (0.29)% N/A 101.37% (0.42)% N/A 12.26% 0.55% N/A 84.49% (0.39)% (0.42)% 81.94% 0.27% 0.32% 139.23% 0.44% N/A 117.74% (1.47)% (1.11)% 81.94% (2.23)% (1.22)% 139.23% (0.16)% N/A 117.74% (0.33)% (0.33)% 81.94% 0.51% 0.51% 139.23% 0.03% N/A 117.74% 0.88% N/A 98.91% 0.48% N/A 91.99% 0.97% N/A 41.67%
Financial Highlights 43 Notes to Financial Statements (unaudited) March 31, 2006 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The ICON Asia-Pacific Region Fund ("Asia-Pacific Region Fund"), ICON Europe Fund ("Europe Fund") and ICON International Equity Fund ("International Equity Fund") are series funds (individually a "Fund" and collectively, the "Funds"). The Funds are part of the ICON Funds (the "Trust"), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end investment management company. The International Equity Fund offers three classes of shares Class I, Class C and Class Z. All classes have equal rights as to earnings, assets and voting privileges except that each Class may bear different distribution fees, registration costs and shareholder servicing costs and each Class has exclusive voting rights with respect to its distribution plan. There are 14 other active funds within the Trust. Those funds are covered by separate prospectuses and shareholder reports. Each Fund is authorized to issue an unlimited number of no par shares. The Funds primarily invest in foreign securities; the Asia-Pacific Region Fund and Europe Fund primarily invest in companies whose principal business activities fall within specific regions. The investment objective of each Fund is long-term capital appreciation. The Funds may have elements of risk, including the loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment. Investments in foreign securities and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar-denominated transactions as a result of, among other factors, the possibility of lower government supervision and regulation of foreign securities markets and the possibility of political or economic instability. There are also risks associated with small- and mid-cap investing, including limited product lines, less liquidity, and small market share. In addition, in the normal course of business the Funds may enter into various agreements that provide for general indemnifications. Each Fund's maximum exposure under these arrangements is unknown as any potential exposure involves future claims that may be made against each Fund. However, based on experience, the Funds expect the risk of loss to be remote. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from these estimates. 44 Notes to Financial Statements INVESTMENT VALUATION The Funds' securities and other assets are valued at the closing price at the close of the regular trading session of the New York Stock Exchange (the "NYSE") (normally 4 p.m. Eastern time) each day the NYSE is open, except that (a) securities traded primarily on the NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at the NASDAQ Official Closing Price provided by NASDAQ each business day; and (b) any foreign investments in the Funds traded in countries outside of the Western Hemisphere are fair valued daily based on procedures established by the Funds' Board of Trustees ("Board") to avoid stale prices and to take into account, among other things, any significant events occurring after the close of a foreign market in those regions. The Funds use pricing services to report the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service quote of valuation is inaccurate or does not reflect the market value of the security, prices may be obtained through market quotations from independent broker/ dealers. If market quotations from these sources are not readily available, the Funds' securities or other assets are valued at fair value as determined in good faith by the Funds' Board or pursuant to procedures approved by the Board. The valuation assigned to fair-valued securities for purposes of calculating a Fund's net asset value ("NAV") may differ from the security's most recent closing market price and from the prices used by other mutual funds to calculate their NAVs. Lacking any sales that day, the security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes from dealers making a market for the security. Options are valued at their closing mid-price on the principal market where the option is traded. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than sixty days are valued in accordance with the evaluated bid price supplied by the pricing service. The evaluated bid price supplied by the pricing service is a matrix system which considers such factors as security prices, yields, maturities and ratings. Short-term securities with remaining maturities of sixty days or less are generally valued at amortized cost or original cost plus accrued interest, which approximates market value. Currency rates as of the close of the New York Stock Exchange are used to convert foreign security values into U.S. dollars. Foreign securities traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Funds' adviser determines that use of another valuation methodology is appropriate. The pricing service uses statistical analyses and quantitative models to adjust local market prices using factors such as subsequent movement and changes in the prices of indexes, securities and exchange rates in other markets in determining fair value as of the time a Fund calculates its net asset value. Notes to Financial Statements 45 Notes to Financial Statements (unaudited) (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, 2006. 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 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 actually received. Any realized gain or loss incurred by the Funds due to foreign currency translation is included in the Statements of Operations. The 46 Notes to Financial Statements Funds did not enter into any foreign currency contracts during the period ended March 31, 2006. FUTURES CONTRACTS The Funds may invest in financial futures contracts for the purpose of hedging their existing securities or securities it intends to purchase against fluctuations in fair value caused by changes in prevailing markets. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as "variation margin," are made or received by the Fund each day, depending on the daily fluctuations in the fair value of the underlying security. The Fund recognizes a gain or loss equal to the daily variation margin. Should market conditions move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts and the underlying hedged assets. The Funds held no financial futures contracts during the period ended March 31, 2006. OPTIONS TRANSACTIONS Each Fund may write put and call options only if it owns an offsetting position in the underlying security. When a Fund writes a put or call option, an amount equal to the premium received is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. If an option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security and the proceeds from the sale are increased by the premium originally received. If a written put option is exercised, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, a Fund has no control over whether the underlying securities are subsequently sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the security underlying the written option. Each Fund may also purchase put and call options. When a Fund purchases a call or put option, an amount equal to the premium paid is included in the Fund's Statement of Assets and Liabilities as an investment, and is subsequently marked-to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If the Fund exercises a call, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option, a gain or loss is realized from the sale of the underlying security, and the proceeds from such a sale are decreased by the premium Notes to Financial Statements 47 Notes to Financial Statements (unaudited) (continued) 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, 2006. INCOME TAXES The Funds intend to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code and, accordingly, the Funds will generally not be subject to federal and state income taxes, or federal excise taxes to the extent that they intend to make sufficient distributions of net investment income and net realized capital gains. Dividends received by shareholders of the Funds which are derived from foreign source income and foreign taxes paid by the Funds are to be treated, to the extent allowable under the Code, as if received and paid by the shareholders of the Funds. Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders. Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryovers. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Certain dividends from foreign securities will be recorded as soon as the Funds are informed of the dividend if such information is obtained subsequent to the ex-dividend date. INVESTMENT TRANSACTIONS Security transactions are accounted for no later than one business day after trade date. However, for financial reporting purposes security transactions are accounted for on trade date. Gains and losses on securities sold are determined on the basis of identified cost. ALLOCATION OF INCOME AND EXPENSES Expenses which cannot be directly attributed to a specific fund in the Trust are apportioned between all funds based upon relative net assets. Each class of the International Equity Fund's bears expenses incurred specifically on its behalf 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 48 Notes to Financial Statements in the various classes of the International Equity Fund, investment income, realized and unrealized gains and losses and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets. 2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEES ICON Advisers, Inc. ("ICON") serves as the investment adviser to the Funds and is responsible for managing the Funds' portfolios of securities. ICON receives a monthly management fee that is computed daily at an annual rate of 1.00% of each Fund's average daily net assets. Effective May 1, 2005, ICON has contractually agreed to reimburse operating expenses (exclusive of brokerage, interest, taxes, and extraordinary expenses) of the International Equity Fund to the extent necessary to ensure that the Fund's operating expenses do not exceed 2.55% for Class C, 1.80% for Class I and 1.55% for Class Z. The International Equity Fund expense limitation will continue in effect until at least January 29, 2016. To the extent ICON reimburses or absorbs fees and expenses, it may seek payment of such amounts for up to three years after the expenses were reimbursed or absorbed. The International Equity Fund will make no such payment, however, if the total Fund operating expenses exceed the expense limits in effect at the time the expenses were reimbursed or at the time these payments are proposed. For the period ended March 31, 2006, ICON's net reimbursement for the International Equity Fund was $3,163. This expense reimbursement is subject to recoupment by ICON based on a rolling three-year period. This reimbursement is due to expire in 2009. TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES BISYS Fund Services Ohio, Inc. ("BISYS") is the Fund Accounting Agent for the Funds. For its services, the Trust pays BISYS 0.03% on the first $1.75 billion of net assets, 0.0175% on net assets over $1.75 billion and up to $5 billion, and 0.01% on net assets in excess of $5 billion. Brown Brothers Harriman ("BBH") is the 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. Boston Financial Data Services, Inc. is the Trust's transfer agent. For these services, the Trust pays an account fee of $13.25 per open account, $7.00 per Notes to Financial Statements 49 Notes to Financial Statements (unaudited) (continued) 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. As of January 31, 2006, this agreement provides for an annual fee of 0.05% on the Funds' first $1.5 billion of average daily net assets, 0.045% on the next $1.5 billion of average daily net assets, 0.040% on the next $2 billion of average daily net assets and 0.030% on average daily net assets over $5 billion. Prior to that date, This agreement provided 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. ICON has 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") (an affiliate of the adviser) for the sale and distribution of shares. Under the 12b-1 Plan, Class I shareholders of the International Equity Fund pay an annual 12b-1 and service fee of 0.25% of average daily net assets. The Class C shareholders of the International Equity Fund pay an annual 12b-1 and service fee of 1.00% of average daily net assets. RELATED PARTIES Certain Officers and Directors of ICON are also Officers and Trustees of the Funds; however, such Officers and Trustees (with the exception of the Chief Compliance Officer, "CCO") receive no compensation from the Funds. The CCO's salary is paid 90% by the Funds and 10% by the Adviser. For the period ended March 31, 2006, the total related amounts paid by the Trust under this agreement are included in Other Expenses on the Statement of Operations. 50 Notes to Financial Statements 3. LINE OF CREDIT The Funds entered into Lines of Credit agreements with BBH; the maximum borrowing is limited to 25% of eligible securities held by the portfolio subject to a maximum borrowing limit by the Trust of $115 million. Interest is charged at LIBOR plus 2.00% which was 6.83% at March 31, 2006.
AVERAGE BORROWING (10/1/05 -- 3/31/06) ---------------------------------------------------------------------------------- ICON Asia-Pacific Region Fund** $2,224,794 ICON Europe Fund 202,937 ICON International Equity Fund 599,075
** Fund had outstanding borrowings as of March 31, 2006. 4. FEDERAL INCOME TAX Income and capital gain distributions are determined in accordance with income tax regulations that may differ from accounting principles that are generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferrals of wash losses, foreign currency transactions, net investment losses, and capital loss carryforwards. The tax components of capital shown in the following tables represent losses or deductions the Funds may be able to offset against income and gains recognized in future years and post October loss deferrals. The accumulated losses noted in the following tables represent net capital loss carryforwards as of September 30, 2005 that may be available to offset future realized capital gains and thereby reduce future taxable income distributions.
AMOUNT EXPIRATION DATE ------------------------------------------------------------------------------------- ICON Asia-Pacific Region Fund $2,249,864 September 30, 2007 3,254,268 September 30, 2009 1,330,946 September 30, 2010 952,529 September 30, 2011
During the year ended September 30, 2005 the ICON Asia-Pacific Region Fund and the ICON Europe Fund utilized capital loss carryforwards of $1,844,287 and $832,262, respectively. Notes to Financial Statements 51 Notes to Financial Statements (unaudited) (continued) The aggregate gross unrealized appreciation and depreciation of securities held by the Funds and the total cost of securities for federal tax purposes as of March 31, 2006 were as follows:
UNREALIZED UNREALIZED NET APPRECIATION FUND COST APPRECIATION (DEPRECIATION) (DEPRECIATION) ----------------------------------------------------------------------------------------- ICON Asia-Pacific Region Fund $132,766,926 $22,461,667 $(1,425,679) $21,035,988 ICON Europe Fund 63,520,446 9,735,519 (397,231) 9,338,288 ICON International Equity Fund 69,768,652 13,699,518 (378,312) 13,321,206
5. SUBSEQUENT EVENT Effective June 1, 2006, the existing shares of the ICON Asia-Pacific Region Fund and ICON Europe Fund are re-designated as ICON Asia-Pacific Region - Class S and ICON Europe Fund - Class S, respectively, Effective June 1, 2006, the Class C shares of ICON International Equity Fund will impose a 1% contingent deferred sales charge ("CDSC") on shares redeemed within one-year of purchase. Shares purchased prior to June 1, 2006 will not be subject to the CDSC. 52 Notes to Financial Statements Other Information (unaudited) 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 Other Information 53 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 I-148-FOR March 31, 2006 (unaudited) 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 (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 13 ICON Financial Fund 19 ICON Healthcare Fund 25 ICON Industrials Fund 31 ICON Information Technology Fund 37 ICON Leisure and Consumer Staples Fund 43 ICON Materials Fund 49 ICON Telecommunication & Utilities Fund 55 SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE 61 FINANCIAL STATEMENTS 64 FINANCIAL HIGHLIGHTS 72 NOTES TO FINANCIAL STATEMENTS 76 OTHER INFORMATION 84
[RECYCLE LOGO] About This Report HISTORICAL RETURNS All total returns mentioned in this report account for the change in a Fund's per-share price and the reinvestment of any dividends, capital gain distributions, and tax return of capital. If your account is set up to receive Fund distributions in cash rather than to reinvest them, your actual return may differ from these figures. The Funds' performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results represent past performance, and current performance may be higher or lower. Please call 1-800-764-0442 or visit www.iconadvisers.com for performance results current to the most recent month-end. PORTFOLIO DATA This report reflects ICON's views, opinions, and portfolio holdings as of March 31, 2006, the end of the reporting period. The information is not a complete analysis of every aspect of any sector, industry, security, or the Funds. Opinions and forecasts regarding industries, companies and/or themes, and portfolio composition and holdings, are subject to change at any time based on market and other conditions, and should not be construed as a recommendation of any specific security. Each Fund's holdings as of March 31, 2006 are included in each Fund's Schedule of Investments. Certain companies' stock performance during the period is mentioned throughout the Management Overviews. While ICON's quantitative investment methodology primarily considers financial data, various company factors may impact a stock's performance, and therefore, Fund performance. There are risks associated with mutual fund investing, including the loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment. Investments in foreign securities may entail unique risks, including political, market and currency risks. There are also risks associated with small- and mid- cap investing, including limited product lines, less liquidity and small market share. 2 About This Report ICON'S INVESTMENT APPROACH The Funds employ 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. The Funds do not utilize static valuation metrics such as price-to-earnings (P/E). As we believe these measures do not adequately represent intrinsic value, which can vary over time. Instead, we calculate proprietary value-to-price (V/P) ratios that considers the effects of historical and projected earnings, projected growth, risk and interest rates (opportunity cost). By combined our determination of value with relative strength (RS), we aim to compute leading industry themes that are poised, in our view, to outperform the sector benchmark. For all corporate earnings and other financial information we rely on the integrity of the publicaly available financial information provided to the United States Securities and Exchange Commission. COMPARATIVE INDEXES The comparative indexes discussed in this report are meant to provide a basis for judging the Funds' performance against specific securities indexes. Each index shown accounts for both change in security price and reinvestment of dividends and distributions (except as noted), but does not reflect the costs of managing a mutual fund. The Funds' portfolios may significantly differ in holdings and composition from the indexes. Individuals cannot invest directly in an index. - The unmanaged Standard & Poor's (S&P) Super Composite 1500 Index is a broad-based capitalization-weighted index comprising 1,500 stocks of large- cap, mid-cap, and small-cap U.S. companies. - The capitalization-weighted S&P 1500 Sector and Industry Indexes are based on specific classifications determined by S&P. - The unmanaged NASDAQ Composite ("NASDAQ") Index is a broad-based capitalization-weighted index of all NASDAQ National Market and Small-Cap stocks. - The unmanaged Merrill Lynch 1-Year U.S. Treasury Bill Index consists of a single issue with the longest maturity. The issue is replaced on a monthly basis to maintain the characteristics of the index. Index returns and statistical data included in this report are provided by Bloomberg and FactSet Research Systems. About This Report 3 Message from ICON Funds -------------------------------------------------------------------------------- Conflicting forces convinced many investors that the equity markets were in the throes of a sideways trading range. -------------------------------------------------------------------------------- Dear ICON Shareholder: Thank you for your continued investment in the ICON Sector Funds and welcome to those of you receiving this report for the first time. ICON employs a value-based, bottom-up investment system in tactical pursuit of industries we believe are poised to outperform the broader market. We are quantitative, unemotional and objective, and find strength in numbers. Whether you invest in our Sector Funds, such as the ICON Energy Fund, our U.S. Diversified Funds, such as the ICON Core Equity Fund, or our International Funds, such as the ICON Asia-Pacific Region Fund, each is powered by ICON's unique systematic discipline. A CLASSIC STOCK MARKET BATTLE "Strength in numbers" is an apt phrase to describe the fiscal six-month period, as conflicting forces convinced many investors that the equity markets were in the throes of a sideways trading range. The fact is stocks rallied nicely amid a mid-October dip and lackluster year-end finish. Despite posting solid gains against a backdrop of widespread guessing and reacting, the move up was stealth-like, so quiet that the word "rally" was conspicuous by its absence. Much of the guessing was focused on the likelihood of continued monetary tightening and future policy direction under new Federal Reserve Chairman Ben Bernanke. At the same time, investors reacted strongly to movements in energy prices, even though we had not seen appreciable increases in inflation or long-term interest rates. What we did see was a classic stock market battle that periodically pits prosperity and healthy corporate earnings against higher interest rates. Over the past few years, many market observers feared that events such as terrorism, war, hurricanes and rising oil prices would stall the economy. However, as investors realized that economic prosperity and higher earnings defied these even-related concerns, stocks prices have trended higher. 4 Message from ICON Funds We find strength in numbers, reflecting the fact that we are quantitative, unemotional and objective. (CRAIG T. CALLAHAN PHOTO) Craig T. Callahan President RACING TO CATCH UP WITH VALUE -------------------------------------------------------------------------------- We believe recent uptrends in long-term interest rates have acted as a drag on the stock market, inhibiting the normal growth of equity valuations. -------------------------------------------------------------------------------- While stock prices have continued to move higher, we believe recent uptrends in long-term interest rates have acted as a drag on the stock market, inhibiting the normal growth of equity valuations. Although the rise in AAA bond yields has been modest compared to the dramatic increases in the federal funds rate, intrinsic value has declined according to our system. Although further monetary tightening remains a distinct possibility, our system is designed in such a way that we do not have to "guess the Fed" or predict the future. We simply have to recognize underpricing and overpricing when either condition occurs. While interest rate factors have cut into equity valuations, we believe these effects have been offset by rising earnings. Should conditions change, and value no longer supports higher equity prices, stocks could be viewed as overpriced and call for a more cautious stance on our part. To date, this has not come to pass, and we continue to view stock prices, in general, to be below our estimate of intrinsic value. As long as this is the case, we will continue to ride out the volatility, enabling investors to participate in what are typically unpredictable market advances, where price races to catch up with value. BULLISH POSTURE PROVED CORRECT It is our contention that investors have been continually fooled on the upside by the prosperity of cyclical companies. We have seen these industry and sector themes remain in place for the past three years, and this most recent reporting period was no exception. Industries in economically sensitive areas such as Energy, Materials, Industrials, and Information Technology led the way, while industries in the more defensive-oriented Utilities, Healthcare and Consumer Staples sectors lagged their cyclical peers. Given the consistently strong relative performance of the ICON Sector Funds, this comes as no surprise to us. Based on valuation, our bullish, fully invested posture proved to be absolutely correct, and we are pleased to have shared this success with you. Message from ICON Funds 5 Message from ICON Funds (continued) Still, it is important to remember that value is never stagnant. Value moves as earnings grow, and so far robust earnings growth has won the battle versus rising interest rates. Whether this continues to be the case is not something we choose to predict.We remain highly confident, however, in the ability of our system to identify theme changes when and if they occur. -------------------------------------------------------------------------------- Based on valuation, our bullish, fully invested posture proved to be absolutely correct. -------------------------------------------------------------------------------- In closing, we are most grateful for the privilege of guiding you through these challenging markets. For current market updates, as well as up-to-date Fund performance and account information, we invite you to visit our website at www.iconadvisers.com. Yours truly, /s/ Craig T. Callahan Craig T. Callahan, DBA Chairman of the Board of Trustees and President of the Adviser Consider the investment objectives, risks, charges, expenses, and share classes of each ICON Fund carefully before investing. The prospectus contains this and other information about the Funds and is available by visiting www.iconadvisers.com or calling 1-800-764-0442. Please read the prospectus carefully before investing. An investment in a non-diversified sector fund or region fund may involve greater risk and volatility than a more diversified fund. Investments in foreign securities may entail unique risks, including political, market, and currency risks. The ICON system relies on the integrity of financial statements released to the market as part of our analysis. 6 Message from ICON Funds Management Overview ICON Consumer Discretionary Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 100.4% Top 10 Equity Holdings 22.5% Number of Stocks 84 Short-Term Investments 0.3% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Jos. A. Bank Clothiers, Inc. 2.6% Lowe's Cos., Inc. 2.5% Furniture Brands International, Inc. 2.5% Drew Industries, Inc. 2.3% Honda Motor Co., Ltd. - ADR 2.2% Ethan Allen Interiors, Inc. 2.2% Brown Shoe Co., Inc. 2.1% Matsushita Electric Industrial Co., Ltd. - ADR 2.1% Christopher & Banks Corp. 2.0% The Home Depot, Inc. 2.0% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Consumer Discretionary Fund appreciated 9.62% for the six-month period ended March 31, 2006, outpacing the 5.29% return of its sector-specific benchmark, the S&P 1500 Consumer Discretionary Index, as well as the 7.08% return for its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2006 are listed on page 10. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. Consumer Discretionary issues posted reasonable gains over the six-month period. However, other leading sectors, including the economically sensitive Materials, Industrials and Financials groups, dominated the market. We believe the portfolio's industry tilts toward such leading areas as auto parts & equipment, automotive retail and apparel retail enabled the Fund to outperform the broad S&P 1500 Index. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Among significant industry contributors were the overweight auto parts & equipment and apparel retail groups, as well as automotive retail, catalog retail, and automotive manufacturers. On average, the combined groups comprised nearly half of the Fund's net assets. By contrast, the Fund's exposure to homebuilding, apparel accessories & luxury goods, and household appliances combined to detract from Fund returns. The homebuilding area, a previous market leader, lagged most, as the sharp rise in interest rates during the first quarter appeared to trigger a sell-off in the group. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE CONSUMER DISCRETIONARY SECTOR? A. Heading into the new fiscal year, the Consumer Discretionary sector remains, under our model, undervalued. Despite concerns over increasing commodity prices and rising interest rates, consumer confidence and spending have both held steady. Moreover, underlying fundamentals within consumer-related issues continue to be strong. At the same time, global economic conditions remain favorable as inflation and interest rates have stayed manageable. Barring a sustained, sharp rise in these variables and other variables, we believe the discounted Consumer Discretionary sector is poised to assume market leadership over the next six to twelve months. Management Overview 7 Management Overview (continued) ICON Consumer Discretionary Fund [ROBERT STRAUS, CMT PHOTO] Robert Straus, CMT Portfolio Manager PERFORMANCE HIGHLIGHTS March 31, 2006 - The principal driver of the Fund's relative outperformance was its value- driven, active investment style. - Among significant industry contributors were the overweight auto parts & equipment and apparel retail groups, automotive retail, catalog retail, and automotive manufacturers. - The Fund's exposure to homebuilding, apparel accessories & luxury goods, and household appliances detracted from returns. 8 Management Overview INDUSTRY COMPOSITION as of March 31, 2006 Apparel Retail 18.6% Home Furnishings 9.2% Automotive Retail 8.6% Auto Parts & Equipment 8.4% Footwear 8.2% General Merchandise Stores 6.4% Automobile Manufacturers 5.1% Home Furnishing Retail 5.1% Home Improvement Retail 4.8% Consumer Electronics 4.0% Department Stores 3.7% Apparel Accessories & Luxury Goods 3.1% Specialized Consumer Services 2.9% Specialty Stores 2.4% Education Services 2.3% Catalog Retail 1.9% Home Building 1.6% Motorcycle Manufacturers 1.0% Computer & Electronics Retail 0.9% Household Appliances 0.9% Technology Distributors 0.7% Construction Materials 0.6%
Percentages are based upon net assets. Management Overview 9 Management Overview (continued) ICON Consumer Discretionary Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTH* 1 YEAR 5 YEARS 7/9/97 ------------------------------------------------------------------------------------------- ICON Consumer Discretionary Fund 9.62% 7.48% 9.38% 4.97% ------------------------------------------------------------------------------------------- S&P 1500 Consumer Discretionary Index 5.29% 3.36% 4.84% 6.73% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 6.49% -------------------------------------------------------------------------------------------
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, 2006 [LINE GRAPH]
ICON CONSUMER S&P 1500 CONSUMER DISCRETIONARY FUND DISCRETIONARY INDEX S&P 1500 INDEX ------------------ ------------------- -------------- 7/9/97 10000.00 10000.00 10000.00 10970.00 10892.00 10597.00 9810.00 11268.00 10852.00 3/31/98 11141.00 13276.00 12321.00 10851.00 14327.00 12620.00 7870.00 11778.00 11262.00 10360.00 15109.00 13709.00 3/31/99 10033.00 16371.00 14207.00 11067.00 17232.00 15312.00 9900.00 15612.00 14339.00 10852.00 18199.00 16485.00 3/31/00 10504.00 17620.00 16994.00 9797.00 16082.00 16554.00 9449.00 15341.00 16548.00 9603.00 14752.00 15338.00 3/31/01 9757.00 13937.00 13550.00 11364.00 15401.00 14440.00 9173.00 12045.00 12290.00 12121.00 14467.00 13705.00 3/31/02 13380.00 14959.00 13837.00 13605.00 13358.00 12059.00 10360.00 11065.00 9976.00 9807.00 11319.00 10786.00 3/31/03 9080.00 11069.00 10425.00 11414.00 13277.00 12064.00 12069.00 13661.00 12439.00 13769.00 15642.00 13976.00 3/31/04 14178.00 16036.00 14275.00 14095.00 15910.00 14523.00 13000.00 15725.00 14251.00 14535.00 17895.00 15624.00 3/31/05 14208.00 17079.00 15313.00 14751.00 17108.00 15576.00 13932.00 16766.00 16168.00 14123.00 17039.00 16511.00 3/31/06 15272.00 17653.00 17312.00
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. 10 Management Overview Schedule of Investments ICON Consumer Discretionary Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- COMMON STOCKS (100.4%) 145,300 99 Cents Only Stores(a) $ 1,970,268 45,500 A.C. Moore Arts & Crafts, Inc.(a) 837,200 42,200 Aaron Rents, Inc. 1,146,574 26,600 Abercrombie & Fitch Co. 1,550,780 30,600 Advance Auto Parts, Inc. 1,274,184 49,100 Aeropostale, Inc.(a) 1,480,856 108,400 Aftermarket Technology Corp.(a) 2,450,924 35,600 America's Car-Mart, Inc.(a) 765,400 39,300 American Eagle Outfitters, Inc. 1,173,498 44,300 Ann Taylor Stores Corp.(a) 1,629,797 209,900 Ashworth, Inc.(a) 2,084,307 55,000 AutoNation, Inc.(a) 1,185,250 27,400 AutoZone, Inc.(a) 2,731,506 31,200 Borders Group, Inc. 787,488 28,800 BorgWarner, Inc. 1,729,152 63,000 Brown Shoe Co., Inc. 3,306,240 102,600 Cache, Inc.(a) 1,881,684 52,400 Cavco Industries, Inc.(a) 2,546,116 136,300 Christopher & Banks Corp. 3,163,523 62,850 Coldwater Creek, Inc.(a) 1,747,230 70,300 Cost Plus, Inc.(a) 1,202,130 42,300 Craftmade International, Inc. 782,127 11,800 Dick's Sporting Goods, Inc.(a) 468,106 110,700 Dollar Tree Stores, Inc.(a) 3,063,069 101,500 Drew Industries, Inc.(a) 3,608,325 14,700 Eagle Materials, Inc. 937,272 79,800 Ethan Allen Interiors, Inc. 3,353,196 104,500 Family Dollar Stores, Inc. 2,779,700 29,200 Federated Department Stores, Inc. 2,131,600 37,000 Fossil, Inc.(a) 687,460 159,500 Furniture Brands International, Inc. 3,909,345
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 29,700 GameStop Corp. - Class A(a) $ 1,400,058 14,000 Gildan Activewear, Inc. - Class A(a) 665,280 60,100 Group 1 Automotive, Inc. 2,857,154 24,200 Guess?, Inc.(a) 946,462 29,000 Harley-Davidson, Inc. 1,504,520 26,800 Harman International Industries, Inc. 2,978,284 181,200 Haverty Furniture Cos., Inc. 2,600,220 27,000 Helen of Troy, Ltd.(a) 572,400 110,800 Honda Motor Co., Ltd. - ADR 3,430,368 46,800 Insight Enterprises, Inc.(a) 1,030,068 20,100 ITT Educational Services, Inc.(a) 1,287,405 38,500 J.C. Penney Co., Inc. 2,325,785 92,000 Jackson Hewitt Tax Services, Inc. 2,905,360 38,000 Johnson Controls, Inc. 2,885,340 83,500 Jos. A. Bank Clothiers, Inc.(a) 4,003,825 26,000 Kellwood Co. 816,140 23,700 Keystone Automotive Industries, Inc.(a) 1,000,377 22,400 Kohl's Corp.(a) 1,187,424 111,600 La-Z-Boy, Inc. 1,897,200 24,000 Laureate Education, Inc.(a) 1,281,120 78,900 Leggett & Platt, Inc. 1,922,793 19,900 Liz Claiborne, Inc. 815,502 61,000 Lowe's Cos., Inc. 3,930,840 146,700 Matsushita Electric Industrial Co., Ltd. - ADR 3,247,938 40,400 Matthews International Corp. - Class A 1,545,704 36,000 Mohawk Industries, Inc.(a) 2,905,920 22,200 Nike, Inc. - Class B 1,889,220 80,100 O'Reilly Automotive, Inc.(a) 2,928,456 46,000 Pacific Sunwear of California, Inc.(a) 1,019,360
Schedule of Investments 11 Schedule of Investments (continued) ICON Consumer Discretionary Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 19,700 PETCO Animal Supplies, Inc.(a) $ 464,329 84,000 Rent-A-Center, Inc.(a) 2,149,560 71,700 Ross Stores, Inc. 2,092,923 44,650 Staples, Inc. 1,139,468 84,900 Steven Madden, Ltd. 3,013,950 4,900 Strayer Education, Inc. 501,074 178,700 Stride Rite Corp. 2,587,576 35,900 Target Corp. 1,867,159 67,600 Tenneco, Inc.(a) 1,466,244 65,100 The Cato Corp. 1,553,286 116,800 The Finish Line, Inc. 1,921,360 91,700 The Gymboree Corp.(a) 2,387,868 72,900 The Home Depot, Inc. 3,083,670 10,700 The Sherwin- Williams Co. 529,008 46,000 The Sportsman's Guide, Inc.(a) 1,218,540 51,500 The Timberland Co. - Class A(a) 1,762,845 38,800 Thor Industries, Inc. 2,070,368
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 106,700 TJX Cos., Inc. $ 2,648,294 31,500 Too, Inc.(a) 1,082,025 10,600 Toyota Motor Corp. - ADR 1,154,340 20,100 Universal Technical Institute, Inc.(a) 605,010 35,700 United Auto Group, Inc. 1,535,100 19,300 Williams-Sonoma, Inc.(a) 818,320 44,600 Winnebago Industries, Inc. 1,353,164 ------------ TOTAL COMMON STOCKS (COST $137,891,672) 155,150,311 SHORT-TERM INVESTMENTS (0.3%) $489,522 Brown Brothers Harriman Time Deposit, 4.07%, 04/03/06# 489,522 ------------ TOTAL SHORT-TERM INVESTMENT (COST $489,522) 489,522 ------------ TOTAL INVESTMENTS 100.7% (COST $138,381,194) 155,639,833 ------------ LIABILITIES LESS OTHER ASSETS (0.7%) (1,162,504) ------------ TOTAL NET ASSETS 100.0% $154,477,329 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt 12 Schedule of Investments Management Overview ICON Energy Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 99.9% Top 10 Equity Holdings 31.5% Number of Stocks 68 Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Petroleo Brasileiro S.A. - ADR 4.9% Grant Prideco, Inc. 3.5% Ultra Petroleum Corp. 3.5% Helix Energy Solutions Group, Inc. 3.1% National-OilWell Varco, Inc. 2.9% Petro-Canada - ADR 2.9% Diamond Offshore Drilling, Inc. 2.7% Nabors Industries, Ltd. 2.7% Transocean, Inc. 2.7% Weatherford International, Ltd. 2.6% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Energy Fund appreciated 8.80% for the six-month period ended March 31, 2006, outpacing the 1.43% return for its sector-specific benchmark, the S&P 1500 Energy Index, in addition to the 7.08% return of its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2006 are listed on page 16. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund's significant tilt toward the oil & gas equipment & services and oil & gas drilling industries proved to be the primary driver of outsized gains, while underexposure to the integrated oil & gas area and a lack of exposure to benchmark bellwether Exxon Mobil also aided returns. From a market capitalization perspective, the Fund's stock selection within the underexposed large-cap group boosted results, as did an overweighting in mid-cap issues. Meanwhile, the Fund's limited exposure to the lagging small-cap space helped to mitigate the drag on relative outperformance. Although our process guides us to emphasize specific industries and securities, it may result in concentration within a given capitalization range. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Heavily overweighted positions in the oil & gas equipment & services and oil & gas drilling industries combined with a significant underweight in integrated oil & gas proved highly beneficial to Fund performance during the period. Although the large-cap dominated integrated oil & gas industry represents approximately 60% of the sector benchmark, we found it to be less attractive from a valuation and relative strength standpoint. In contrast, the Fund's exposure to oil & gas exploration & production along with a relatively minimal weighting in oil & gas storage & transportation slowed results. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE ENERGY SECTOR? A. Looking ahead, we anticipate a continued upward trend, as energy stock prices in general appear healthy relative to their intrinsic worth. However, because of the strong stock price increase most issues have experienced over the past three years, we expect volatility as investors take profits. Based on the fundamentals that comprise our valuation model, we believe the oil & gas drilling and coal & consumable fuels areas offer the best bargains, and if current conditions persist, we expect to be heavily weighted in both. Conversely, we currently view oil & gas refining & marketing as the lone expensive industry, and thus continue to maintain an active underweighting. Management Overview 13 Management Overview (continued) ICON Energy Fund [J.C. WALLER III, PORTFOLIO MANAGER PHOTO] J.C. Waller, III Portfolio Manager PERFORMANCE HIGHLIGHTS March 31, 2006 - A systematic approach to industry selection enabled the Fund to outperform the S&P 1500 Energy Index. - Overweight positions in oil & gas equipment & services and oil & gas drilling combined with a significant underweight in integrated oil & gas drove gains. - Although the integrated oil & gas industry represents approximately 60% of the sector benchmark, we found it unattractive from a valuation standpoint. 14 Management Overview INDUSTRY COMPOSITION March 31, 2006 Oil & Gas Equipment & Services 29.7% Oil & Gas Drilling 24.7% Integrated Oil & Gas 21.8% Oil & Gas Exploration & Production 17.0% Coal & Consumable Fuels 3.8% Oil & Gas Storage & Transportation 1.6% Construction Materials 1.3%
Percentages are based upon net assets. Management Overview 15 Management Overview (continued) ICON Energy Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTH* 1 YEAR 5 YEARS 11/5/97 ------------------------------------------------------------------------------------------- ICON Energy Fund 8.80% 41.11% 22.07% 18.18% ------------------------------------------------------------------------------------------- S&P 1500 Energy Index 1.43% 23.90% 15.63% 11.28% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 6.08% -------------------------------------------------------------------------------------------
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, 2006 [LINE GRAPH]
ICON ENERGY FUND S&P 1500 ENERGY INDEX S&P 1500 INDEX ---------------- --------------------- -------------- 11/5/97 10000.00 10000.00 10000.00 9100.00 9432.00 10291.00 03/31/98 9330.00 9872.00 11683.00 8630.00 9603.00 11967.00 6350.00 8920.00 10680.00 5723.00 8937.00 13000.00 03/31/99 6726.00 9455.00 13472.00 8164.00 10671.00 14520.00 8083.00 10579.00 13597.00 8600.00 10702.00 15632.00 3/31/00 11092.00 11203.00 16115.00 11872.00 11539.00 15698.00 13361.00 12516.00 15692.00 15363.00 12651.00 14545.00 3/31/01 15010.00 11875.00 12849.00 14202.00 12096.00 13693.00 12488.00 10566.00 11654.00 14856.00 11245.00 12997.00 3/31/02 16385.00 12350.00 13121.00 14823.00 11769.00 11435.00 13117.00 9493.00 9460.00 14004.00 10190.00 10228.00 3/31/03 13539.00 10230.00 9886.00 14857.00 10988.00 11440.00 15178.00 11038.00 11796.00 18580.00 12737.00 13253.00 3/31/04 20154.00 13460.00 13536.00 21649.00 14547.00 13772.00 24165.00 16142.00 13514.00 25672.00 16862.00 14816.00 3/31/05 28840.00 19815.00 14521.00 29882.00 20283.00 14771.00 37406.00 24205.00 15332.00 36433.00 22554.00 15657.00 3/31/06 40700.00 24551.00 16416.00
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. 16 Management Overview Schedule of Investments ICON Energy Fund March 31, 2006 (unaudited)
SHARES VALUE -------------------------------------------- COMMON STOCKS (99.9%) 75,000 Alpha Natural Resources, Inc.(a) $ 1,735,500 84,700 Anadarko Petroleum Corp. 8,555,547 100,000 Apache Corp. 6,551,000 215,000 Atwood Oceanics, Inc.(a) 21,717,150 175,000 Berry Petroleum Co. 11,978,750 100,000 BG Group PLC - ADR 6,271,000 70,000 BP PLC - ADR 4,825,800 425,000 Chesapeake Energy Corp. 13,349,250 225,000 Chevron Corp. 13,043,250 300,000 China Petroleum and Chemical Corp. - ADR 17,508,000 200,014 Cimarex Energy Co. 8,652,606 85,000 CNOOC, Ltd. - ADR 6,645,300 200,000 Comstock Resources, Inc.(a) 5,938,000 140,000 ConocoPhillips 8,841,000 125,000 CONSOL Energy, Inc. 9,270,000 350,000 Cooper Cameron Corp.(a) 15,428,000 300,000 Diamond Offshore Drilling, Inc. 26,850,000 150,000 Dril-Quip, Inc.(a) 10,627,500 75,000 Edge Petroleum Corp.(a) 1,873,500 350,000 El Paso Corp. 4,217,500 225,000 Energy Partners, Ltd.(a) 5,305,500 250,000 ENSCO International, Inc. 12,862,500 225,000 FMC Technologies, Inc.(a) 11,524,500 300,000 Foundation Coal Holdings, Inc. 12,342,000 75,000 GlobalSantaFe Corp. 4,556,250 800,000 Grant Prideco, Inc.(a) 34,271,999 325,000 Headwaters, Inc.(a) 12,931,750 800,000 Helix Energy Solutions Group, Inc.(a) 30,320,000 300,000 Helmerich & Payne, Inc. 20,946,000 125,000 Hornbeck Offshore Services, Inc.(a) 4,508,750
SHARES VALUE -------------------------------------------- 50,000 Hydril Co.(a) $ 3,897,500 575,000 KCS Energy, Inc.(a) 14,950,000 375,000 Lone Star Technologies, Inc.(a) 20,778,750 175,000 Lufkin Industries, Inc. 9,702,000 100,000 Lukoil - ADR 8,290,000 287,050 Marathon Oil Corp. 21,864,599 100,000 Maverick Tube Corp.(a) 5,299,000 375,000 Nabors Industries, Ltd.(a) 26,842,500 450,000 National-OilWell Varco, Inc.(a) 28,854,000 500,000 Newpark Resources, Inc.(a) 4,100,000 180,000 Noble Corp. 14,598,000 475,000 Oil States International, Inc.(a) 17,503,750 850,000 Parker Drilling Co.(a) 7,879,500 700,000 Patterson-UTI Energy, Inc. 22,372,000 280,000 Peabody Energy Corp. 14,114,800 125,000 Penn Virginia Corp. 8,875,000 600,000 Petro-Canada - ADR 28,554,000 220,000 Petrochina Co., Ltd. - ADR 23,089,000 550,000 Petroleo Brasileiro S.A. - ADR 47,668,499 150,000 Precision Drilling Corp. - ADR 4,851,000 450,000 Pride International, Inc.(a) 14,031,000 550,000 Range Resources Corp. 15,020,500 100,000 Repsol YPF S.A. - ADR 2,850,000 350,000 Rowan Cos., Inc. 15,386,000 260,000 Royal Dutch Shell - Class A - ADR 16,187,600 250,000 Stolt Offshore S.A. - ADR(a) 3,872,500 200,000 Suncor Energy, Inc. - ADR 15,404,000 800,000 Superior Energy Services, Inc.(a) 21,432,000 300,000 TETRA Technologies, Inc.(a) 14,112,000 534,300 The Williams Companies, Inc. 11,428,677 300,000 Tidewater, Inc. 16,569,000
Schedule of Investments 17 Schedule of Investments (continued) ICON Energy Fund March 31, 2006 (unaudited)
SHARES VALUE -------------------------------------------- 325,000 Transocean, Inc.(a) $ 26,097,500 550,000 Ultra Petroleum Corp.(a) 34,270,500 425,000 Unit Corp.(a) 23,693,750 175,000 W&T Offshore, Inc. 7,054,250 300,000 W-H Energy Services, Inc.(a) 13,347,000
SHARES VALUE -------------------------------------------- 549,298 Weatherford International, Ltd.(a) $ 25,130,384 400,033 XTO Energy, Inc. 17,429,438 ------------ TOTAL INVESTMENT 99.9% (COST $650,847,148) 980,847,899 OTHER ASSETS LESS LIABILITIES 0.1% 1,194,771 ------------ TOTAL NET ASSETS 100.0% $982,042,670 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. ADR American Depositary Receipt 18 Schedule of Investments Management Overview ICON Financial Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 100.4% Top 10 Equity Holdings 27.1% Number of Stocks 58 Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Cash America International, Inc. 3.3% Credit Suisse Group - ADR 3.0% JPMorgan Chase & Co. 3.0% First Cash Financial Services, Inc. 2.9% China Life Insurance Co., Ltd. - ADR 2.6% ING Group N.V. - ADR 2.6% HCC Insurance Holdings, Inc. 2.5% Washington Mutual, Inc. 2.5% Mellon Financial Corp. 2.4% Ameriprise Financial, Inc. 2.3% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Financial Fund gained 11.86% for the six-month period ended March 31, 2006, slightly underperforming the 11.98% return of its sector-specific benchmark, the S&P 1500 Financials Index, while outperforming the 7.08% return for its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2005 appear on page 22. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund reflected overall improvement in the Financials sector, as banks, asset managers and investment banking & brokerage led the broader market. However, the portfolio slightly underperformed its narrow benchmark due to an underweight in the strong performing thrifts & mortgage finance industry relative to the benchmark. The Fund had no representation in this industry to begin the period, though based on our analysis of valuation and leadership, we subsequently established a significant weighting. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Industries that contributed most meaningfully to Fund performance included the heavily overweighted investment banking & brokerage group and the consumer finance area. Conversely, the Fund's underweighting and unfavorable stock selection within the thrifts & mortgage finance group detracted significantly from results. Reinsurance holdings also worked against overall returns and were subsequently reduced on declining relative strength. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE FINANCIALS SECTOR? A. While the Financials sector showed a fair amount of value toward the end of the period, the extent of this value had diminished somewhat with the rise in AAA bond yields. Accordingly, we expect to increase our selectivity. Our analysis continues to identify opportunistic value within the insurance and banking industries, including thrifts & mortgage finance, regional banks, property & casualty insurance, and life & health insurance. On the other hand, as valuations have climbed in the investment banking & brokerage, specialized finance, real estate management & development, and real estate investment trust areas, ownership positions will be carefully monitored for signs of changing leadership as they approach or exceed fair value. Management Overview 19 Management Overview (continued) ICON Financial Fund (DEREK ROLLINGSON PHOTO) Derek Rollingson Portfolio Manager PERFORMANCE HIGHLIGHTS March 31, 2006 - The Fund reflected overall improvement in the Financials sector, as banks, asset managers and investment banking & brokerage areas led the broader market. - A value-driven tilt toward investment banking & brokerage and consumer finance proved advantageous to performance. - Underweighting and unfavorable stock selection within thrifts & mortgage finance detracted from results. 20 Management Overview TOP 10 INDUSTRIES March 31, 2006 Investment Banking & Brokerage 20.1% Thrifts & Mortgage Insurance 11.6% Consumer Finance 11.4% Asset Management & Custody Banks 9.1% Other Diversified Financial Services 7.8% Multi-Line Insurance 7.7% Life & Health Insurance 5.8% Specialized Finance 5.7% Diversified Banks 5.2% Property & Casualty Insurance 3.4% Regional Banks 3.2% Diversified Capital Markets 3.0% Real Estate Investment Trusts 3.0% Retail REITS 2.0% Real Estate Management & Development 1.4%
Percentages are based upon net assets. Management Overview 21 Management Overview (continued) ICON Financial Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTH* 1 YEAR 5 YEARS 7/1/97 ------------------------------------------------------------------------------------------- ICON Financial Fund 11.86% 17.27% 10.32% 11.29% ------------------------------------------------------------------------------------------- S&P 1500 Financials Index 11.98% 18.15% 7.67% 9.62% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 6.70% -------------------------------------------------------------------------------------------
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, 2006 [LINE GRAPH]
ICON FINANCIAL FUND S&P 1500 FINANCIALS INDEX S&P 1500 INDEX ------------------- ------------------------- -------------- 7/1/97 10000.00 10000.00 10000.00 10510.00 11141.00 10796.00 10526.00 12020.00 11056.00 3/31/98 12003.00 13426.00 12552.00 12294.00 13821.00 12857.00 9411.00 10941.00 11474.00 11267.00 13265.00 13967.00 3/31/99 11878.00 14190.00 14474.00 12442.00 14931.00 15600.00 10357.00 12642.00 14608.00 11074.00 13668.00 16795.00 3/31/00 11342.00 13923.00 17314.00 11366.00 13526.00 16865.00 14307.00 16727.00 16858.00 16613.00 17081.00 15626.00 3/31/01 15598.00 15435.00 13804.00 17694.00 16730.00 14711.00 15675.00 14787.00 12521.00 17047.00 15904.00 13963.00 3/31/02 17625.00 16526.00 14097.00 16375.00 15375.00 12285.00 13812.00 12812.00 10164.00 14014.00 13719.00 10988.00 3/31/03 13011.00 13027.00 10621.00 16193.00 15404.00 12291.00 16899.00 16097.00 12673.00 19659.00 18038.00 14238.00 3/31/04 21045.00 18958.00 14543.00 20714.00 18507.00 14796.00 21046.00 18637.00 14519.00 23264.00 20187.00 15917.00 3/31/05 21736.00 18903.00 15601.00 22127.00 19777.00 15869.00 22788.00 19945.00 16472.00 23834.00 21511.00 16821.00 3/31/06 25491.00 22334.00 17637.00
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. 22 Management Overview Schedule of Investments ICON Financial Fund March 31, 2006 (unaudited)
SHARES VALUE -------------------------------------------- COMMON STOCKS (100.4%) 59,700 A.G. Edwards, Inc. $ 2,976,642 103,500 Accredited Home Lenders Holding Co.(a) 5,297,130 50,500 ACE, Ltd. 2,626,505 74,700 American International Group, Inc. 4,936,923 168,700 AmeriCredit Corp.(a) 5,184,151 124,100 Ameriprise Financial, Inc. 5,591,946 87,900 Boston Private Financial Holdings, Inc. 2,970,141 55,300 Capital One Financial Corp. 4,452,756 264,300 Cash America International, Inc. 7,934,286 123,900 China Life Insurance Co., Ltd. - ADR(a) 6,325,095 91,500 CIT Group, Inc. 4,897,080 109,700 Citigroup, Inc. 5,182,228 130,400 Credit Suisse Group - ADR 7,284,144 39,200 Downey Financial Corp. 2,638,160 163,000 Eaton Vance Corp. 4,462,940 88,300 Fannie Mae 4,538,620 163,500 Financial Federal Corp. 4,790,550 351,300 First Cash Financial Services, Inc.(a) 7,022,487 96,800 GFI Group, Inc.(a) 5,024,888 62,300 Golden West Financial Corp. 4,230,170 174,650 HCC Insurance Holdings, Inc. 6,077,820 155,800 ING Group N.V. - ADR 6,138,520 55,800 Investment Technology Group, Inc.(a) 2,778,840 69,700 Investors Financial Services Corp. 3,266,839 42,500 Jones Lang LaSalle, Inc. 3,252,950 171,900 JPMorgan Chase & Co. 7,157,916 120,600 Kimco Realty Corp. 4,901,184 38,100 Kookmin Bank - ADR 3,258,312
SHARES VALUE -------------------------------------------- 170,700 Labranche and Co., Inc.(a) $ 2,698,767 32,800 Lehman Brothers Holding, Inc. 4,740,584 52,500 Lincoln National Corp. 2,865,975 48,800 Loews Corp. 4,938,560 162,300 Mellon Financial Corp. 5,777,880 70,100 Merrill Lynch & Co., Inc. 5,521,076 38,400 MGIC Investment Corp. 2,558,592 79,300 Morgan Stanley 4,981,626 75,400 New Century Financial Corp. 3,469,908 114,400 NovaStar Financial, Inc. 3,825,536 152,494 optionsXpress Holdings, Inc. 4,434,526 83,700 Philadelphia Consolidated Holding Corp.(a) 2,857,518 53,400 PMI Group, Inc. 2,452,128 87,000 Portfolio Recovery Associates, Inc.(a) 4,074,210 36,400 Prudential Financial, Inc. 2,759,484 101,700 Raymond James Financial, Inc. 3,006,252 46,000 RLI Corp. 2,635,800 50,900 SLM Corp. 2,643,746 43,200 State Street Corp. 2,610,576 33,900 SunTrust Banks, Inc. 2,466,564 24,500 The Bear Stearns Cos., Inc. 3,398,150 27,700 The Goldman Sachs Group, Inc. 4,347,792 29,800 The Hartford Financial Services Group, Inc. 2,400,390 325,000 TradeStation Group, Inc.(a) 4,491,500 85,500 Umpqua Holdings Corp. 2,436,750 105,100 UnumProvident Corp. 2,152,448 75,900 US Bancorp 2,314,950 91,800 Wachovia Corp. 5,145,390
Schedule of Investments 23 Schedule of Investments (continued) ICON Financial Fund March 31, 2006
SHARES VALUE -------------------------------------------- 138,400 Washington Mutual, Inc. $ 5,898,608 27,300 Wells Fargo & Co. 1,743,651 ------------ TOTAL INVESTMENT 100.4% (COST $206,702,212) 240,848,160 ------------ LIABILITIES LESS OTHER ASSETS (0.4)% (856,894) ------------ TOTAL NET ASSETS 100.0% $239,991,266 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. ADR American Depositary Receipt 24 Schedule of Investments Management Overview ICON Healthcare Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 93.7% Top 10 Equity Holdings 24.2% Number of Stocks 88 Short-Term Investments 6.0% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Celgene Corp. 3.4% AmerisourceBergen Corp. 3.1% McKesson HBOC, Inc. 2.7% Barr Pharmaceuticals, Inc. 2.7% Mylan Laboratories, Inc. 2.4% Henry Schein, Inc. 2.3% Cardinal Health, Inc. 2.2% Eli Lilly & Co. 1.8% Pfizer, Inc. 1.8% DaVita, Inc. 1.8% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Healthcare Fund appreciated 5.63% for the six-month period ended March 31, 2006, outperforming the 3.22% return for its sector-specific benchmark, the S&P 1500 Healthcare Index, while underperforming the 7.08% return for its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2006 appear on page 28. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. A valuation-driven tilt toward healthcare distributors and healthcare services coupled with favorable stock selection in the biotechnology space accounted for the Fund's outperformance. Also assisting gains was the decision to reduce exposure to the managed health care group as relative strength began to wane. While the Fund remained relatively underweight in the healthcare equipment industry, several names within the group detracted from performance. From a market capitalization perspective, the Fund revealed a very different makeup than the S&P 1500 Healthcare Index, which is weighted overwhelmingly toward large-cap stocks. The Fund was significantly underweight in this segment. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Among the Fund's leading industry contributors during the period were healthcare distributors and healthcare services, both of which displayed a strong combination of value and relative strength. Additionally, stock selection within the equally weighted biotechnology space also served to boost relative performance. By contrast, the Fund's positions in the healthcare equipment industry proved detrimental as several holdings in this group witnessed declines. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE HEALTHCARE SECTOR? A. While our analysis continues to show widespread value within the Healthcare sector, no one industry stands out as a dominant leader. Our investment approach seeks to capture market leadership along with attractive valuation. At this time we will wait for signs of relative strength before capitalizing on available valve opportunities. Management Overview 25 Management Overview (continued) ICON Healthcare Fund [J.C. WALLER III PHOTO] J.C. Waller, III Portfolio Manager PERFORMANCE HIGHLIGHTS March 31, 2006 - A valuation-driven tilt toward healthcare distributors and healthcare services coupled with favorable stock selection in the biotechnology space aided performance. - The decision to reduce managed health care exposure on waning relative strength aided results. - While relatively underweight in healthcare equipment, several of the Fund's names within the group detracted from performance. 26 Management Overview INDUSTRY COMPOSITION March 31, 2006 Pharmaceuticals 24.2% Health Care Services 13.8% Health Care Distributors 12.4% Biotechnology 10.9% Managed Health Care 7.5% Life Sciences Tools & Services 6.5% Health Care Equipment 6.4% Health Care Facilities 4.9% Health Care Supplies 3.0% Health Care Technology 2.8% Specialized Consumer Services 0.7% Drug Retail 0.6%
Percentages are based upon net assets. Management Overview 27 Management Overview (continued) ICON Healthcare Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 2/24/97 ------------------------------------------------------------------------------------------- ICON Healthcare Fund 5.63% 15.27% 11.44% 13.72% ------------------------------------------------------------------------------------------- S&P 1500 Healthcare Index 3.22% 9.67% 2.44% 8.36% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 7.62% -------------------------------------------------------------------------------------------
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, 2006 [LINE GRAPH]
S&P 1500 HEALTH CARE ICON HEALTHCARE FUND INDEX S&P 1500 INDEX -------------------- -------------------- -------------- 2/24/97 10000.00 10000.00 10000.00 9460.00 8940.00 9368.00 11080.00 11104.00 10981.00 11780.00 11169.00 11933.00 11644.00 11995.00 12221.00 3/31/98 13319.00 14014.00 13874.00 13813.00 14945.00 14211.00 12224.00 14703.00 12682.00 13427.00 16953.00 15438.00 3/31/99 13500.00 17464.00 15999.00 13863.00 16807.00 17243.00 11571.00 15192.00 16147.00 13938.00 15787.00 18564.00 3/31/00 15234.00 16050.00 19137.00 17042.00 19693.00 18642.00 17976.00 19880.00 18634.00 19936.00 21802.00 17272.00 3/31/01 18731.00 18405.00 15258.00 20498.00 18659.00 16261.00 18585.00 18850.00 13839.00 19303.00 19285.00 15434.00 3/31/02 19845.00 19189.00 15582.00 19524.00 16124.00 13580.00 17540.00 14975.00 11234.00 17523.00 15629.00 12146.00 3/31/03 17337.00 15824.00 11740.00 20236.00 17535.00 13585.00 20812.00 16927.00 14008.00 22981.00 18382.00 15738.00 3/31/04 23895.00 18439.00 16075.00 24777.00 18954.00 16354.00 23201.00 17940.00 16048.00 27102.00 18998.00 17594.00 3/31/05 27934.00 18932.00 17244.00 29598.00 19748.00 17540.00 30483.00 20115.00 18207.00 30871.00 20421.00 18593.00 3/31/06 32198.00 20762.00 19495.00
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. 28 Management Overview Schedule of Investments ICON Healthcare Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- COMMON STOCKS (93.7%) 225,000 Adams Respiratory Therapeutics, Inc.(a) $ 8,948,250 250,000 Aetna, Inc. 12,285,000 25,000 Alliance Imaging, Inc.(a) 161,000 200,000 Alpharma, Inc. - Class A 5,364,000 500,000 AmerisourceBergen Corp. 24,135,000 225,000 AMN Healthcare Services, Inc.(a) 4,212,000 160,000 Arrow International, Inc. 5,227,200 225,000 AstraZeneca PLC - ADR 11,301,750 325,000 Barr Pharmaceuticals, Inc.(a) 20,468,500 125,000 Biogen Idec Inc.(a) 5,887,500 275,000 Biovail Corp. 6,696,250 225,000 Bradley Pharmaceuticals, Inc.(a) 3,345,750 150,000 Cambrex Corp. 2,931,000 225,000 Cardinal Health, Inc. 16,767,000 215,000 Caremark Rx, Inc.(a) 10,573,700 600,000 Celgene Corp.(a) 26,532,000 200,000 Cephalon, Inc.(a) 12,050,000 200,000 Cerner Corp.(a) 9,490,000 50,000 CIGNA Corp. 6,531,000 250,000 Community Health Systems, Inc.(a) 9,037,500 150,000 Connetics Corp.(a) 2,539,500 175,000 Coventry Health Care, Inc.(a) 9,446,500 172,100 Cross Country Healthcare, Inc.(a) 3,331,856 150,000 CVS Corp. 4,480,500 300,000 Cytyc Corp.(a) 8,454,000 225,000 DaVita, Inc.(a) 13,547,250 35,000 Dentsply International, Inc. 2,035,250 300,000 Digene Corp.(a) 11,730,000
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 100,000 Dr. Reddy's Laboratories, Ltd. - ADR $ 3,140,000 81,500 Edwards Lifesciences Corp.(a) 3,545,250 250,000 Eli Lilly & Co. 13,825,000 300,000 Emdeon Corp.(a) 3,240,000 300,000 Encore Medical Corp.(a) 1,536,000 100,000 Express Scripts, Inc.(a) 8,790,000 250,000 First Horizon Pharmaceutical Corp.(a) 6,302,500 175,000 Fisher Scientific International Inc.(a) 11,908,750 225,000 Forest Laboratories, Inc.(a) 10,041,750 150,000 Gilead Sciences, Inc.(a) 9,333,000 150,000 Health Net, Inc.(a) 7,623,000 225,000 HealthExtras, Inc.(a) 7,942,500 208,500 Healthways, Inc.(a) 10,620,990 375,000 Henry Schein, Inc.(a) 17,947,500 172,500 Hi-Tech Pharmacal Co., Inc.(a) 4,864,500 150,000 Humana, Inc.(a) 7,897,500 70,100 Icon PLC - ADR(a) 3,427,189 200,000 Immucor, Inc.(a) 5,738,000 75,000 Invitrogen Corp(a) 5,259,750 125,000 Johnson & Johnson, Inc. 7,402,500 325,000 K-V Pharmaceutical Co.(a) 7,839,000 500,000 King Pharmaceuticals, Inc.(a) 8,625,000 200,000 Laboratory Corp. of America Holdings(a) 11,696,000 200,000 LifeCell Corp.(a) 4,510,000 175,000 Lincare Holdings, Inc.(a) 6,818,000 280,000 Manor Care, Inc. 12,418,000
Schedule of Investments 29 Schedule of Investments (continued) ICON Healthcare Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 200,000 Martek Biosciences Corp.(a) $ 6,566,000 144,500 Matthews International Corp. - Class A 5,528,570 400,000 McKesson HBOC, Inc. 20,852,000 200,000 MedcoHealth Solutions, Inc.(a) 11,444,000 200,000 Molecular Devices Corp.(a) 6,632,000 775,000 Mylan Laboratories, Inc. 18,135,000 75,000 Omnicare, Inc. 4,124,250 200,000 Owens & Minor, Inc. 6,554,000 50,000 Palomar Medical Technologies, Inc.(a) 1,672,500 250,000 Par Pharmaceutical Cos., Inc.(a) 7,045,000 100,000 Parexel International Corp.(a) 2,644,000 350,000 Per-Se Technologies, Inc.(a) 9,331,000 550,000 Pfizer, Inc. 13,706,000 325,600 Pharmaceutical Product Development, Inc. 11,269,016 150,000 Possis Medical, Inc.(a) 1,524,000 475,000 PSS World Medical, Inc.(a) 9,162,750 252,000 Psychiatric Solutions, Inc.(a) 8,348,760 125,000 Quest Diagnostics, Inc. 6,412,500 180,000 ResMed, Inc.(a) 7,916,400 200,000 Respironics, Inc.(a) 7,782,000 200,000 Salix Pharmaceuticals, Ltd.(a) 3,302,000
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 60,000 Schick Technologies, Inc.(a) $ 2,994,000 150,000 SonoSite, Inc.(a) 6,096,000 175,000 Stryker Corp. 7,759,500 225,000 Teva Pharmaceutical Industries, Ltd. - ADR 9,265,500 175,000 Thermo Electron Corp.(a) 6,490,750 212,800 United Surgical Partners International, Inc.(a) 7,535,248 175,000 United Therapeutics Corp.(a) 11,599,000 75,024 UnitedHealth Group, Inc. 4,190,841 200,000 Ventiv Health, Inc.(a) 6,644,000 200,000 Watson Pharmaceuticals, Inc.(a) 5,748,000 140,072 Wellpoint, Inc.(a) 10,845,775 150,000 West Pharmaceutical Services, Inc. 5,208,000 180,000 Wyeth 8,733,600 ------------ TOTAL COMMON STOCKS (COST $572,075,719) 722,862,895 SHORT-TERM INVESTMENTS (6.0%) $46,417,777 Brown Brothers Harriman Time Deposit, 4.07%, 04/03/06# 46,417,777 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $46,417,777) 46,417,777 ------------ TOTAL INVESTMENTS 99.7% (COST $618,493,496) 769,280,672 ------------ OTHER ASSETS LESS LIABILITIES 0.3% 2,031,304 ------------ TOTAL NET ASSETS 100.0% $771,311,976 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt 30 Schedule of Investments Management Overview ICON Industrials Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 99.2% Top 10 Equity Holdings 20.0% Number of Stocks 91 Short-Term Investments 0.5% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Wesco International, Inc. 2.5% Burlington Northern Santa Fe Corp. 2.1% Norfolk Southern Corp. 2.1% Oshkosh Truck Corp. 2.0% American Science and Engineering, Inc. 2.0% FedEx Corp. 1.9% Ceradyne, Inc. 1.9% MSC Industrial Direct Co., Inc. - Class A 1.9% Canadian National Railway Co. - ADR 1.8% Fastenal Co. 1.8% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Industrials Fund advanced 20.34% for the six-month period ended March 31, 2006, outperforming both the 14.01% return for its sector-specific benchmark, the S&P 1500 Industrials Index, and the 7.08% return of its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2006 appear on page 34. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. ICON's valuation-driven investment approach coupled with continued strong economic fundamentals favoring cyclical stocks enabled the Fund to post substantial upside gains. This atmosphere was conducive to the Industrials sector, which tends to perform best during times of economic expansion. Overall, the Fund's tilt toward economically sensitive groups such as railroads, construction & farm machinery & heavy trucks, industrial machinery, and trading companies & distributors drove its outsized gains, while significantly underweight exposure to industrial conglomerates insulated the Fund from these lagging benchmark bellwethers. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. With strong economic growth and increased demand bolstering fundamentals in transportation-related industries, the broader construction group, industrial machinery and trading companies & distributors, the Fund's overweighting in these areas relative to the sector benchmark proved highly beneficial. A standout among these groups was the construction & farm machinery & heavy trucks space, where the Fund maintained an approximate 11% average weighting and witnessed a gain of approximately 39% for the period. Moreover, the Fund benefited from its lack of exposure to the industrial conglomerates area, a group that returned approximately 4.5% for the period, less than a third of the return delivered by the S&P 1500 Industrials Index. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INDUSTRIALS SECTOR? A. Due to strong overall performance and the recent rise in long-term bond yields, we have seen general dissipation in the value of the Industrials sector. Despite this, we continue to find what we believe are attractive valuations in some of the broader industries, namely transportation-related groups, industrial machinery, aerospace & defense, and building products. Going forward, while some industries are growing expensive and thus dragging down the overall value of the Industrials sector, we believe there are still attractive opportunities in broader industries. Management Overview 31 Management Overview (continued) ICON Industrials Fund [TODD BURCHETT PHOTO] Todd Burchett Portfolio Manager PERFORMANCE HIGHLIGHTS March 31, 2006 - The Fund benefited from a lack of exposure to bellwether industrial conglomerates. - The construction & farm machinery & heavy trucks industry and trading companies & distributors group contributing most significantly to results, while minimal exposure to industrial conglomerates slowed performance. 32 Management Overview INDUSTRY COMPOSITION March 31, 2006 Industrial Machinery 18.3% Aerospace & Defense 11.9% Railroads 11.5% Construction & Farm Machinery & Heavy Trucks 10.4% Trading Companies & Distributors 9.0% Air Freight & Logistics 7.9% Trucking 6.4% Building Products 4.6% Airlines 4.0% Human Resource & Employment Services 3.6% Electrical Components & Equipment 3.4% Diversified Commercial & Professional Services 2.4% Trucking 1.8% Construction & Engineering 1.5% Marine 1.3% Environmental & Facilities Services 0.6% Office Services & Supplies 0.6%
Percentages are based upon net assets. Management Overview 33 Management Overview (continued) ICON Industrials Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTHS* 1 YEAR 5 YEARS 5/9/97 ------------------------------------------------------------------------------------------- ICON Industrials Fund 20.34% 28.86% 11.25% 6.99% ------------------------------------------------------------------------------------------- S&P 1500 Industrials Index 14.01% 14.71% 7.08% 7.60% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 7.56% -------------------------------------------------------------------------------------------
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, 2006 [LINE GRAPH]
ICON INDUSTRIALS FUND S&P 1500 INDUSTRIALS INDEX S&P 1500 INDEX --------------------- -------------------------- -------------- 5/9/97 10000.00 10000.00 10000.00 10790.00 10956.00 10767.00 12400.00 11623.00 11700.00 11605.00 11509.00 11982.00 3/31/98 12995.00 12970.00 13604.00 11819.00 12459.00 13934.00 9662.00 10543.00 12435.00 12226.00 12465.00 15137.00 3/31/99 11503.00 12572.00 15687.00 13080.00 14186.00 16907.00 11295.00 13339.00 15832.00 11402.00 14537.00 18202.00 3/31/00 11068.00 14412.00 18764.00 10568.00 14190.00 18278.00 10805.00 15263.00 18271.00 11888.00 15228.00 16935.00 3/31/01 10706.00 13632.00 14961.00 12055.00 15157.00 15943.00 10205.00 12296.00 13569.00 12079.00 14343.00 15133.00 3/31/02 13164.00 14377.00 15278.00 12114.00 12531.00 13315.00 9500.00 10293.00 11015.00 9536.00 10852.00 11909.00 3/31/03 8462.00 10266.00 11511.00 9680.00 11879.00 13320.00 10504.00 12492.00 13735.00 12032.00 14340.00 15431.00 3/31/04 12127.00 14277.00 15761.00 12807.00 15482.00 16035.00 12556.00 15376.00 15735.00 14466.00 17028.00 17251.00 3/31/05 14155.00 16729.00 16908.00 14023.00 16279.00 17198.00 15158.00 16832.00 17852.00 15640.00 17672.00 18230.00 3/31/06 18241.00 19190.00 19115.00
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. 34 Management Overview Schedule of Investments ICON Industrials Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- COMMON STOCKS (99.2%) 123,000 A.S.V., Inc.(a) $ 3,963,060 20,000 Actuant Corp. - Class A 1,224,400 67,000 Alaska Air Group, Inc.(a) 2,375,150 89,000 Albany International Corp. - Class A 3,390,010 23,900 Alliant Techsystems, Inc.(a) 1,844,363 55,500 American Science and Engineering, Inc.(a) 5,183,700 68,300 AMR Corp.(a) 1,847,515 84,500 Apogee Enterprises, Inc. 1,426,360 51,700 Arkansas Best Corp. 2,022,504 90,000 Barnes Group, Inc. 3,645,000 60,000 Barrett Business Services, Inc.(a) 1,620,000 55,000 Builders FirstSource, Inc.(a) 1,249,050 65,000 Burlington Northern Santa Fe Corp. 5,416,449 35,300 C.H. Robinson Worldwide, Inc. 1,732,877 105,000 Canadian National Railway Co. - ADR 4,754,400 57,000 Canadian Pacific Railway, Ltd. - ADR 2,848,290 58,000 Caterpillar, Inc. 4,164,980 63,900 Celadon Group, Inc.(a) 1,398,771 100,000 Ceradyne, Inc.(a) 4,990,000 68,000 CSX Corp. 4,066,400 37,000 Cummins, Inc. 3,888,700 25,000 Curtiss-Wright Corp. 1,655,000 65,000 Danaher Corp. 4,130,750 25,000 Dynamex, Inc.(a) 483,000 45,000 Eaton Corp. 3,283,650 53,000 ElkCorp 1,788,750 27,000 EMCOR Group, Inc.(a) 1,340,820
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 86,700 Empresa Brasileira de Aeronautica S.A. - ADR $ 3,194,895 100,000 Fastenal Co. 4,734,000 45,000 FedEx Corp. 5,082,300 54,400 Flanders Corp.(a) 635,392 51,300 Franklin Electric Co., Inc. 2,803,545 125,000 FTI Consulting, Inc.(a) 3,566,250 55,000 Gardner Denver, Inc.(a) 3,586,000 44,400 General Cable Corp.(a) 1,346,652 45,800 General Dynamics Corp. 2,930,284 150,000 Genesee & Wyoming, Inc.(a) 4,602,000 40,800 Granite Construction, Inc. 1,986,144 27,100 Harsco Corp. 2,239,002 61,700 Healthcare Services Group, Inc. 1,317,912 40,000 IDEX Corp. 2,086,800 60,000 Ingersoll Rand Co. Ltd. - Class A 2,507,400 7,000 Jacobs Engineering Group, Inc.(a) 607,180 69,400 Joy Global, Inc. 4,148,038 46,700 Kaydon Corp. 1,884,812 110,000 Kforce, Inc.(a) 1,402,500 51,000 Kirby Corp.(a) 3,473,610 218,550 Knight Transportation, Inc. 4,316,363 78,000 Labor Ready, Inc.(a) 1,868,100 130,500 Lennox International, Inc. 3,896,730 86,000 Lincoln Electric Holdings, Inc. 4,643,140 15,000 Lockheed Martin Corp. 1,126,950 58,000 Manpower, Inc. 3,316,440 90,000 Marten Transport, Ltd.(a) 1,628,100 60,000 Masco Corp. 1,949,400 155,100 Mesa Air Group, Inc.(a) 1,774,344
Schedule of Investments 35 Schedule of Investments (continued) ICON Industrials Fund March 31, 2006
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 26,500 Monster Worldwide, Inc.(a) $ 1,321,290 50,000 Moog, Inc. - Class A(a) 1,774,500 90,000 MSC Industrial Direct Co., Inc. - Class A 4,861,800 100,000 Norfolk Southern Corp. 5,407,000 45,000 Northrop Grumman Corp. 3,073,050 165,000 Old Dominion Freight Line, Inc.(a) 4,446,750 200,000 Orbital Sciences Corp.(a) 3,164,000 84,000 Oshkosh Truck Corp. 5,228,160 21,000 PACCAR, Inc. 1,480,080 134,700 Pacer International, Inc. 4,401,996 50,000 Parker Hannifin Corp. 4,030,500 50,000 Regal-Beloit Corp. 2,113,500 55,950 Rollins, Inc. 1,132,428 53,000 Roper Industries, Inc. 2,577,390 105,400 Ryder System, Inc. 4,719,812 60,000 SCS Transportation, Inc.(a) 1,746,600 150,000 SkyWest, Inc. 4,390,500 7,900 Stericycle, Inc.(a) 534,198 16,400 Terex Corp.(a) 1,299,536 47,000 The Boeing Co. 3,662,710 48,000 The Middleby Corp.(a) 4,018,560 62,000 The Toro Co. 2,960,500 40,000 Timken Co. 1,290,800
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 30,000 Union Pacific Corp. $ 2,800,500 25,000 United Industrial Corp. 1,523,250 57,700 United Parcel Service, Inc. - Class B 4,580,226 30,000 United Stationers, Inc.(a) 1,593,000 40,000 United Technologies Corp. 2,318,800 30,000 Universal Forest Products, Inc. 1,904,700 42,100 USA Truck, Inc.(a) 1,036,502 126,000 UTI Worldwide, Inc. - ADR 3,981,600 50,000 W.W. Grainger, Inc. 3,767,500 51,200 Watsco, Inc. 3,637,760 94,800 Wesco International, Inc.(a) 6,447,348 28,700 West Corp.(a) 1,281,742 ------------ TOTAL COMMON STOCKS (COST $194,203,052) 258,896,820 SHORT-TERM INVESTMENTS (0.5%) $1,375,561 Brown Brothers Harriman Time Deposit, 4.07%, 04/03/06 # 1,375,561 ------------ TOTAL SHORT-TERM INVESTMENT (COST $1,375,561) 1,375,561 TOTAL INVESTMENTS 99.7% (COST $195,578,613) 260,272,381 ------------ OTHER ASSETS LESS LIABILITIES 0.3% 869,022 ------------ TOTAL NET ASSETS 100.0% $261,141,403 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt 36 Schedule of Investments Management Overview ICON Information Technology Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 100.2% Top 10 Equity Holdings 23.9% Number of Stocks 81 Short-Term Investments 0.0% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 International Business Machines Corp. 3.1% Seagate Technology 2.6% Komag, Inc. 2.6% Google, Inc. - Class A 2.5% Hutchinson Technology, Inc. 2.4% Hewlett-Packard Co. 2.3% Apple Computer, Inc. 2.3% Taiwan Semiconductor Manufacturing Co., Ltd. - ADR 2.1% Nokia Corp. - ADR 2.0% Satyam Computer Services, Ltd. - ADR 2.0% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Information Technology Fund appreciated 6.55% for the six-month period ended March 31, 2006, trailing its narrow benchmarks, the S&P 1500 Information Technology Index and the NADSAQ Composite Index, which returned 6.76% and 9.28%, respectively, while also lagging its broad benchmark, the S&P 1500 Index, which returned 7.08%. Total returns for other periods as of March 31, 2006 appear on page 40. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund underperformed both its broad and narrow benchmarks during a period best characterized by its lack of clear and sustained industry leadership - a difficult setting given the Fund's thematic investment approach. Moreover, at the beginning of the period, our system did not detect any significant industry valuation discrepancies. Overall, industry allocations yielded a positive impact on relative performance versus the sector-specific benchmark. However, a handful of large-cap names, specifically Cisco Systems, Qualcomm and Corning, significantly outperformed the benchmark. According to our system, these larger names were not as undervalued as some of their small- and mid-cap counterparts. Consequently, their lower weights worked against Fund performance. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Among industries that made measurable contributions to Fund results were IT consulting & other services, electronic equipment manufacturers, computer hardware, and computer storage & peripherals. In contrast, significant detractors included systems software, application software, and semiconductors. Because our quantitative analysis did not detect a strong combination of value and relative strength, the Fund did not take aggressively high weightings in any of the 15 industries we track. However, the Fund's largest average position during this period was in the positively performing communications equipment area, which, due in part to our underweight exposure to benchmark-heavy Cisco, underperformed on a relative basis. Conversely, the Fund's active underweight in the negatively performing semiconductor space served to benefit relative returns. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE INFORMATION TECHNOLOGY SECTOR? A. Trading at a slight discount to our estimate of fair value, the Information Technology sector was among the market's best performers at period-end. Valuations, in our view, are thinning as prices have closed the gap on Management Overview 37 Management Overview (continued) ICON Information Technology Fund [ROBERT STRAUS, CMT PHOTO] Robert Straus, CMT Portfolio Manager intrinsic value. Nevertheless, our analysis indicates residual upside potential in the sector, although greater selectivity will need to be exercised going forward. Given strong interest in the overall market uptrend, we believe the sector will participate in a continuation of the current broad-based rally over the next six to twelve months. PERFORMANCE HIGHLIGHTS March 31, 2006 - A handful of large-cap names significantly outperformed the sector benchmark, although the Fund's relative underweight in these issues worked against performance. - Because our quantitative analysis did not detect a strong combination of value and relative strength, the Fund did not take aggressively high industry weightings. - IT consulting & other services, electronic equipment manufacturers, computer hardware and computer storage & peripherals aided results, while systems software, application software and semiconductors detracted from returns. 38 Management Overview INDUSTRY COMPOSITION March 31, 2006 Communications Equipment 12.7% Computer Hardware 11.3% Computer Storage & Peripherals 10.9% Data Processing & Outsourced Services 10.9% Semiconductors 10.4% Electronic Equipment Manufacturers 8.7% Application Software 7.0% Technology Distributors 6.5% Internet Software Services 6.3% IT Consulting & Other Services 5.8% Semiconductor Equipment 5.6% Office Electronics 2.2% Electronic Manufacturing Services 1.9%
Percentages are based upon net assets. Management Overview 39 Management Overview (continued) ICON Information Technology Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTH* 1 YEAR 5 YEARS 2/19/97 ------------------------------------------------------------------------------------------- ICON Information Technology Fund 6.55% 14.30% -1.07% 11.37% ------------------------------------------------------------------------------------------- S&P 1500 Information Technology Index 6.76% 15.22% 0.66% 5.73% ------------------------------------------------------------------------------------------- NASDAQ Composite index 9.28% 18.02% 5.48% 6.55% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 7.56% -------------------------------------------------------------------------------------------
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, 2006 [LINE GRAPH]
ICON INFORMATION S&P 1500 INFORMATION NASDAQ COMPOSITE TECHNOLOGY FUND TECHNOLOGY INDEX INDEX S&P 1500 INDEX ---------------- -------------------- ---------------- -------------- 2/19/97 10000.00 10000.00 10000.00 10000.00 9210.00 9036.00 8949.00 9334.00 10850.00 10958.00 10580.00 10941.00 12961.00 12853.00 12379.00 11890.00 10432.00 11312.00 11546.00 12176.00 3/31/98 11524.00 13581.00 13511.00 13824.00 11088.00 14584.00 13960.00 14160.00 9569.00 14126.00 12492.00 12636.00 13975.00 19383.00 16188.00 15382.00 3/31/99 15490.00 21379.00 18185.00 15941.00 19901.00 24062.00 19862.00 17181.00 21008.00 25075.00 20319.00 16088.00 29493.00 34155.00 30129.00 18496.00 3/31/00 36190.00 38844.00 33868.00 19068.00 33516.00 35387.00 29387.00 18574.00 33456.00 30971.00 27224.00 18567.00 33646.00 21169.00 18322.00 17209.00 3/31/01 28149.00 16075.00 13657.00 15203.00 32236.00 18117.00 16051.00 16202.00 22449.00 12273.00 11140.00 13789.00 29269.00 16476.00 14507.00 15378.00 3/31/02 29699.00 15416.00 13738.00 15525.00 23079.00 11450.00 10903.00 13530.00 17208.00 8437.00 8742.00 11194.00 17151.00 10296.00 9972.00 12101.00 3/31/03 15568.00 10196.00 10030.00 11697.00 20892.00 12127.00 12147.00 13536.00 23798.00 13474.00 13388.00 13957.00 25210.00 15226.00 15035.00 15681.00 3/31/04 25411.00 14887.00 14982.00 16016.00 24059.00 15249.00 15402.00 16295.00 22736.00 13698.00 14287.00 15990.00 26190.00 15568.00 16411.00 17530.00 3/31/05 23340.00 14420.00 15106.00 17181.00 23831.00 14661.00 15570.00 17477.00 25039.00 15563.00 16314.00 18141.00 25154.00 15815.00 16760.00 18525.00 3/31/06 26678.00 16615.00 17829.00 19424.00
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. 40 Management Overview Schedule of Investments ICON Information Technology Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- COMMON STOCKS (100.2%) 103,200 Affiliated Computer Services, Inc. - Class A(a) $ 6,156,912 90,000 Amphenol Corp. - Class A 4,696,200 34,300 Analog Devices, Inc. 1,313,347 80,800 Anixter International, Inc. 3,860,624 117,700 Apple Computer, Inc.(a) 7,382,144 171,900 Arris Group, Inc.(a) 2,365,344 133,900 Arrow Electronics, Inc.(a) 4,320,953 98,000 ATI Technologies, Inc. - ADR(a) 1,683,640 261,900 AU Optronics Corp. - ADR 3,904,929 46,800 Avid Technology, Inc.(a) 2,033,928 86,900 Avnet, Inc.(a) 2,205,522 63,300 Benchmark Electronics, Inc.(a) 2,427,555 93,700 Cabot Microelectronics Corp.(a) 3,476,270 248,500 Cadence Design Systems, Inc.(a) 4,594,765 66,300 CANON, Inc. - ADR 4,379,115 211,500 Checkpoint Systems, Inc.(a) 5,685,120 82,800 Cognizant Technology Solutions Corp.(a) 4,925,772 99,200 Computer Sciences Corp.(a) 5,510,560 170,400 Convergys Corp.(a) 3,102,984 233,800 Corning, Inc.(a) 6,291,558 93,700 CSG Systems International, Inc.(a) 2,179,462 115,200 Diebold, Inc. 4,734,720 364,600 EFJ, Inc.(a) 3,934,034 216,100 EMC Corp.(a) 2,945,443 246,700 EPIQ Systems, Inc.(a) 4,687,300 62,600 Euronet Worldwide, Inc.(a) 2,368,158 39,500 Fair Issac Corp. 1,564,990 93,600 Fidelity National Information Services, Inc 3,795,480 100,100 First Data Corp. 4,686,682
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 121,200 Fiserv, Inc.(a) $ 5,157,060 135,800 Global Imaging Systems, Inc.(a) 5,157,684 20,900 Google, Inc. - Class A(a) 8,151,000 227,400 Hewlett-Packard Co. 7,481,460 257,900 Hutchinson Technology, Inc.(a) 7,780,843 47,900 Infosys Technologies, Ltd. - ADR 3,729,494 276,300 Ingram Micro, Inc.(a) 5,526,000 121,100 International Business Machines Corp. 9,987,117 156,400 Intevac Inc.(a) 4,501,192 100,500 j2 Global Communications, Inc.(a) 4,723,500 51,800 Jabil Circuit, Inc.(a) 2,220,148 172,300 Komag, Inc.(a) 8,201,480 126,200 LG.Philips LCD Co., Ltd. - ADR(a) 2,864,740 29,300 Marvell Technology Group, Ltd. - ADR(a) 1,585,130 34,200 Maximus, Inc. 1,230,516 89,600 MEMC Electronic Materials, Inc.(a) 3,308,032 70,700 Mentor Graphics Corp.(a) 781,235 89,800 Mettler-Toledo International, Inc.(a) 5,418,532 117,600 Microchip Technology, Inc. 4,268,880 61,500 Nam Tai Electronics, Inc. 1,408,965 75,500 National Semiconductor Corp. 2,101,920 105,900 NDS Group PLC - ADR(a) 5,509,977 70,300 Neoware Systems, Inc.(a) 2,082,286 121,900 NICE Systems, Ltd. - ADR(a) 6,212,024 315,900 Nokia Corp. - ADR 6,545,448 190,700 Open Text Corp.(a) 3,133,201 152,400 PDF Solutions, Inc.(a) 2,883,408 92,700 Plantronics, Inc. 3,284,361 94,200 PortalPlayer, Inc.(a) 2,094,066
Schedule of Investments 41 Schedule of Investments (continued) ICON Information Technology Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 92,700 Qualcomm, Inc. $ 4,691,547 250,100 Radyne Corp.(a) 3,994,097 48,800 Rimage Corp.(a) 1,101,904 60,200 SanDisk Corp.(a) 3,462,704 149,400 Satyam Computer Services, Ltd. - ADR 6,537,744 315,700 Seagate Technology 8,312,381 964,000 Siliconware Precision Industries Co. - ADR 6,217,800 46,400 SiRF Technology Holdings, Inc.(a) 1,643,024 24,100 SPSS, Inc.(a) 763,006 88,000 Stratasys, Inc.(a) 2,594,240 663,800 Taiwan Semiconductor Manufacturing Co., Ltd. - ADR 6,677,828 64,350 TALX Corp. 1,832,688 161,400 Technitrol, Inc. 3,870,372 120,800 Tessera Technology, Inc.(a) 3,875,264 179,200 Texas Instruments, Inc. 5,818,624 91,800 Transaction Systems Architects, Inc.(a) 2,865,078 51,900 Verint Systems, Inc.(a) 1,835,703
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 124,700 ViaSat, Inc.(a) $ 3,572,655 86,000 Vishay Intertechnology, Inc.(a) 1,224,640 125,500 WebEx Communications, Inc.(a) 4,225,585 146,500 Western Digital Corp.(a) 2,846,495 153,200 Wipro, Ltd. - ADR 2,278,084 177,400 Xerox Corp.(a) 2,696,480 ------------ TOTAL COMMON STOCKS (COST $271,844,335) 321,481,153 SHORT-TERM INVESTMENTS (0.0%) $170,171 Brown Brothers Harriman Time Deposit, 4.07%, 04/03/06# 170,171 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $170,171) 170,171 ------------ TOTAL INVESTMENTS (COST $272,014,506) 100.2% 321,651,324 ------------ LIABILITIES LESS OTHER ASSETS (0.2)% (767,166) ------------ TOTAL NET ASSETS 100.0% $320,884,158 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt 42 Schedule of Investments Management Overview ICON Leisure and Consumer Staples Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 101.0% Top 10 Equity Holdings 27.3% Number of Stocks 64 Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Century Casinos, Inc. 3.2% Ruby Tuesday, Inc. 2.9% Life Time Fitness, Inc. 2.9% Darden Restaurants, Inc. 2.8% Panera Bread Co. - Class A 2.8% Eastman Kodak Co. 2.8% Penn National Gaming, Inc. 2.7% Marriott International, Inc. - Class A 2.5% Corn Products International, Inc. 2.4% SCP Pool Corp. 2.3% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Leisure and Consumer Staples Fund returned 3.04% for the six-month period ended March 31, 2006, trailing the 5.29% return for the S&P 1500 Consumer Discretionary Index, while outpacing the 2.18% return of the S&P 1500 Consumer Staples Index. Although neither sector-specific benchmark is an ideal comparison individually, we believe together they provide a suitable reference for the Fund's overall performance. Additionally, the Fund fell short of its broad benchmark, the S&P 1500 Index, which returned 7.08% over the same period. Total returns for other periods as of March 31, 2006 appear on page 46. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. The Fund's valuation-driven tilt toward Leisure-related issues versus those in the defensive Consumer Staples area enabled it to outperform the S&P 1500 Consumer Staples Index for the period. However, with approximately one-third of the portfolio positioned in generally lagging Consumer Staples industries, performance trailed the S&P 1500 Consumer Discretionary Index. The poor showing in Consumer Staples was magnified by particularly sharp declines experienced in the packaged foods & meats and food distributors industries - the latter of which was ultimately removed from the portfolio on weakening relative strength. Generally speaking, disappointing performance in both sector-specific benchmarks made it difficult for the Fund to keep pace with the broad S&P 1500 Index. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Contributing significantly to results was the Fund's heavily overweight position in the restaurant industry, an area that comprised nearly a quarter of the portfolio by period-end. The restaurant industry added 3.48% to overall performance. Also displaying attractive value and leadership were casinos & gaming, which had no representation at the beginning of the period, and leisure products. Weightings in both groups were respectively boosted to approximately 7% and 13.8%, respectively, of net assets by period-end. In contrast, Fund results suffered from exposure to the packaged foods and meats and food distributors industry, a previous leader that was systematically sold on declining relative strength, and food retail, which experienced overpricing among certain stocks. Positioning in the group was ultimately pared back from approximately 13.3% to 3% of net assets by period-end. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE LEISURE AND CONSUMER STAPLES SECTOR? A. Looking ahead, sector valuations appear generally in line with the overall market. Our system is identifying incremental value in areas with less Management Overview 43 Management Overview (continued) ICON Leisure and Consumer Staples Fund [DEREK ROLLINGSON PHOTO] Derek Rollingson Portfolio Manager relative strength such as personal products, publishing and broadcast & cable TV. We intend to watch these areas for signs of relative strength. Given attractive V/P metrics and recent leadership in the leisure products industry, we believe this area is well positioned for future growth. In contrast, we will carefully monitor our holdings within casinos & gaming, as this group has become expensive by our estimation. PERFORMANCE HIGHLIGHTS March 31, 2006 - The Fund's valuation-driven tilt toward Leisure-related cyclical issues enabled it to outperform the S&P 1500 Consumer Staples Index. - Primary industry contributors to Fund performance included restaurants, casinos & gaming and leisure products. - Results suffered from exposure to the previously leading food distributors group as well as food retail and packaged foods and meats. 44 Management Overview INDUSTRY COMPOSITION March 31, 2006 Restaurants 24.7% Leisure Products 13.7% Casinos & Gaming 7.1% Hotels, Resorts & Cruise Lines 6.9% Publishing 6.3% Agriculture Products 4.6% Hypermarkets & Super Centers 4.2% Apparel Retail 3.4% Food Retail 3.0% Leisure Facilities 2.9% Photographic Products 2.8% Soft Drinks 2.4% Household Products 2.3% Movies & Entertainment 2.1% Packaged Foods & Meats 2.1% Automobile Manufacturers 1.8% Catalog Retail 1.8% Computer & Electronics Retail 1.8% Distillers & Vintners 1.8% Airlines 1.7% Footwear 1.7% Tobacco 1.0% Personal Products 0.9%
Percentages are based upon net assets. Management Overview 45 Management Overview (continued) ICON Leisure and Consumer Staples Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTH* 1 YEAR 5 YEARS 5/9/97 ------------------------------------------------------------------------------------------- ICON Leisure and Consumer Staples Fund 3.04% -4.98% 10.11% 10.52% ------------------------------------------------------------------------------------------- S&P 1500 Consumer Discretionary Index 5.29% 3.36% 4.84% 7.51% ------------------------------------------------------------------------------------------- S&P 1500 Consumer Staples Index 2.18% 4.91% 4.40% 5.39% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 7.56% -------------------------------------------------------------------------------------------
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, 2006 [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 10000.00 10000.00 10000.00 10000.00 10440.00 10706.00 10532.00 10769.00 11350.00 11749.00 10622.00 11703.00 11555.00 12154.00 11706.00 11985.00 3/31/98 12688.00 14320.00 12925.00 13606.00 12347.00 15454.00 13400.00 13937.00 11826.00 12705.00 11479.00 12437.00 13616.00 16298.00 14093.00 15140.00 3/31/99 14416.00 17659.00 13631.00 15689.00 15440.00 18587.00 13776.00 16910.00 13571.00 16840.00 12269.00 15835.00 13002.00 19631.00 13169.00 18205.00 3/31/00 12647.00 19006.00 12188.00 18768.00 13559.00 17347.00 12880.00 18282.00 14286.00 16547.00 12860.00 18274.00 14871.00 15912.00 13891.00 16938.00 3/31/01 15042.00 15034.00 12860.00 14963.00 17058.00 16612.00 13581.00 15946.00 14609.00 12992.00 12273.00 13572.00 18594.00 15605.00 12863.00 15136.00 3/31/02 21074.00 16136.00 14032.00 15281.00 20035.00 14409.00 13625.00 13317.00 17369.00 11935.00 12199.00 11017.00 16795.00 12210.00 12350.00 11911.00 3/31/03 16129.00 11940.00 11560.00 11513.00 18595.00 14322.00 12639.00 13323.00 19262.00 14736.00 12824.00 13737.00 21387.00 16872.00 13864.00 15434.00 3/31/04 22999.00 17298.00 14683.00 15764.00 23512.00 17161.00 14784.00 16038.00 22504.00 16962.00 13930.00 15738.00 25211.00 19303.00 15074.00 17254.00 3/31/05 25627.00 18422.00 15205.00 16911.00 24876.00 18454.00 15159.00 17202.00 23632.00 18085.00 15611.00 17855.00 22656.00 18379.00 15666.00 18234.00 3/31/06 24351.00 19041.00 15951.00 19118.00
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. 46 Management Overview Schedule of Investments ICON Leisure and Consumer Staples Fund March 31, 2006 (unaudited)
SHARES VALUE -------------------------------------------- COMMON STOCKS (101.0%) 17,400 ADVO, Inc. $ 556,800 15,300 Aeropostale, Inc.(a) 461,448 5,400 Altria Group, Inc. 382,644 24,700 AMR Corp.(a) 668,135 10,000 BJ's Wholesale Club, Inc.(a) 315,100 6,900 Brown Shoe Co., Inc. 362,112 14,300 Brunswick Corp. 555,698 8,700 Buffalo Wild Wings, Inc.(a) 361,746 17,200 Casey's General Stores, Inc. 393,364 9,800 Central Garden & Pet Co.(a) 520,772 120,900 Century Casinos, Inc.(a) 1,286,376 17,800 Christopher & Banks Corp. 413,138 25,250 Coldwater Creek, Inc.(a) 701,950 11,700 Companhia Brasileira de Distribuicao Grupo Pao de Acucar - ADR 493,155 28,100 Constellation Brands, Inc.(a) 703,905 32,600 Corn Products International, Inc. 963,982 9,000 Costco Wholesale Corp. 487,440 6,200 Ctrip.com International, Ltd. - ADR 512,740 27,300 Darden Restaurants, Inc. 1,120,119 27,500 Delta & Pine Land Co. 829,400 9,900 Dow Jones & Co., Inc. 389,070 38,800 Eastman Kodak Co. 1,103,472 4,800 Fomento Economico Mexicano, S.A. de C.V. - ADR 439,968 15,200 GameStop Corp. - Class A(a) 716,528 25,500 Gruma S.A. - ADR 295,800 4,100 Hansen Natural Corp.(a) 516,805 5,500 Harrah's Entertainment, Inc. 428,780 33,300 Hilton Hotels Corp. 847,818 13,200 IHOP Corp. 632,808
SHARES VALUE -------------------------------------------- 16,400 J & J Snack Foods Corp. $ 550,876 20,300 Jack In the Box, Inc.(a) 883,050 25,900 JAKKS Pacific, Inc.(a) 692,566 40,900 K2, Inc.(a) 513,295 24,200 Life Time Fitness, Inc.(a) 1,133,770 25,100 MarineMax, Inc.(a) 841,352 14,400 Marriott International, Inc. - Class A 987,840 22,400 Mattel, Inc. 406,112 22,800 McDonald's Corp. 783,408 5,500 McGraw-Hill Cos., Inc. 316,910 9,000 Meredith Corp. 502,110 16,400 Morningstar, Inc.(a) 734,228 26,100 O'Charley's, Inc.(a) 481,806 12,500 OSI Restaurant Partners, Inc. 550,000 14,700 Panera Bread Co. - Class A(a) 1,105,146 11,600 Papa John's International, Inc.(a) 380,596 11,700 Parlux Fragrances, Inc.(a) 377,325 25,900 Penn National Gaming, Inc.(a) 1,092,462 11,700 Polaris Industries, Inc. 638,352 13,200 Rare Hospitality International, Inc.(a) 459,756 11,400 RC2 Corp.(a) 453,834 9,200 Royal Caribbean Cruises, Ltd. 386,584 36,400 Ruby Tuesday, Inc. 1,167,712 39,600 Ryan's Restaurant Group, Inc.(a) 574,200 19,300 SCP Pool Corp. 905,363 18,700 Spectrum Brands, Inc.(a) 406,164 20,100 Starbucks Corp.(a) 756,564 14,700 Steinway Musical Instruments, Inc.(a) 473,634 15,000 The Cheesecake Factory, Inc.(a) 561,750 18,300 The Gymboree Corp.(a) 476,532 8,900 The Timberland Co. - Class A(a) 304,647 30,300 The Walt Disney Co. 845,067 13,500 Thor Industries, Inc. 720,360
Schedule of Investments 47 Schedule of Investments (continued) ICON Leisure and Consumer Staples Fund March 31, 2006 (unaudited)
SHARES VALUE -------------------------------------------- 8,500 Wal-Mart Stores, Inc. $ 401,540 18,000 Weis Markets, Inc. 802,260 ----------- TOTAL INVESTMENTS 101.0% (COST $35,180,853) 40,128,244 LIABILITIES LESS OTHER ASSETS (1.0)% (391,039) ----------- TOTAL NET ASSETS 100.0% $39,737,205 ===========
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. ADR American Depositary Receipt 48 Schedule of Investments Management Overview ICON Materials Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 97.9% Top 10 Equity Holdings 34.5% Number of Stocks 52 Short-Term Investments 2.5% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Alcoa, Inc. 5.2% Eagle Materials, Inc. 3.9% Steel Dynamics, Inc. 3.9% Southern Copper Corp. 3.5% Rio Tinto PLC - ADR 3.2% Myers Industries, Inc. 3.1% CRH PLC - ADR 3.0% Aleris International, Inc. 3.0% BHP Billiton, Ltd. - ADR 2.9% Martin Marietta Materials, Inc. 2.8% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Materials Fund gained 20.60% for the six-month period ended March 31, 2006, outpacing the 19.01% return for its sector-specific benchmark, the S&P 1500 Materials Index, as well as the 7.08% return of its broad benchmark, the S&P 1500 Index. Total returns for other periods as of March 31, 2006 appear on page 52. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. A methodical approach to industry selection combined with strong global demand for raw materials enabled the Fund to deliver significant upside gains. Based on our analysis of valuation and relative strength, the portfolio was able to outpace the S&P 1500 Materials Index through a significant tilt toward leading areas such as diversified metals & mining, steel and aluminum. A substantial position in foreign companies via American Depository Receipts (ADRs) - especially within in the metals and mining industries - also contributed positively to benchmark-beating results. Moreover, the Fund was able to sidestep losses incurred by the benchmark within the commodity chemicals group. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Overweight positions in the diversified metals & mining, steel and aluminum industries versus the sector benchmark proved beneficial to Fund performance. The Fund increased its weighting in these sectors with significant exposure to ADRs. Conversely, while the benchmark suffered significant losses in the commodity chemicals group, the Fund was able to avoid much of the damage based on valuation analysis of major names that proved relatively unattractive. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE MATERIALS SECTOR? A. At period-end, the Materials sector continued to demonstrate significant relative strength. However, the spread between market price and fair value had diminished considerably, indicating that stocks were beginning to show signs of price maturity. Given this decline in V/P metrics, we anticipate exercising greater selectivity going forward. Nevertheless, our analysis continues to detect sustainable strength and value in the aluminum, gold and metal & glass containers industries, leading us to maintain or possibly increase current weightings in these groups. We also see extensive value in commodity chemicals, but little in the way of relative strength. In contrast, steel and construction materials appear overpriced after Management Overview 49 Management Overview (continued) ICON Materials Fund [DEREK ROLLINGSON PHOTO] Derek Rollingson Portfolio Manager a nice run. Thus, we will continue to monitor these areas carefully for signs of changing leadership. PERFORMANCE HIGHLIGHTS March 31, 2006 - A methodical approach to industry selection combined with strong global demand for raw materials enabled the Fund to deliver significant upside gains. - A value-based tilt toward diversified metals & mining, steel and aluminum proved beneficial to performance, as did significant exposure to ADRs. - While the benchmark suffered significant losses in the commodity chemicals group, ICON's valuation analysis enable the Fund to avoid much of the damage. 50 Management Overview INDUSTRY COMPOSITION March 31, 2006 Steel 15.8% Aluminum 12.8% Construction Materials 11.4% Specialty Chemicals 11.0% Diversified Metals & Mining 9.5% Metal & Glass Containers 9.3% Diversified Chemicals 5.7% Commodity Chemicals 5.6% Railroads 4.8% Paper Packaging 4.1% Construction & Farm Machinery & Heavy Trucks 3.0% Gold 1.8% Fertilizers & Agricultural Chemicals 1.3% Coal & Consumable Fuels 1.2% Industrial Gases 0.6%
Percentages are based upon net assets. Management Overview 51 Management Overview (continued) ICON Materials Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTH* 1 YEAR 5 YEARS 5/5/97 ------------------------------------------------------------------------------------------- ICON Materials Fund 20.60% 32.83% 19.12% 4.29% ------------------------------------------------------------------------------------------- S&P 1500 Materials Index 19.01% 11.97% 13.06% 7.19% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 7.48% -------------------------------------------------------------------------------------------
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, 2006 [LINE GRAPH]
ICON MATERIALS FUND S&P 1500 MATERIALS INDEX S&P 1500 INDEX ------------------- ------------------------ -------------- 5/5/97 10000.00 10000.00 10000.00 9730.00 10749.00 10707.00 10900.00 11391.00 11635.00 7606.00 10466.00 11916.00 3/31/98 8632.00 11582.00 13528.00 7586.00 11142.00 13857.00 6819.00 9413.00 12366.00 6800.00 9795.00 15053.00 3/31/99 6571.00 9728.00 15599.00 8060.00 11660.00 16813.00 7612.00 10685.00 15743.00 8372.00 11807.00 18100.00 3/31/00 7352.00 10523.00 18660.00 7092.00 9136.00 18176.00 6758.00 8547.00 18169.00 6400.00 10572.00 16841.00 3/31/01 6063.00 10046.00 14877.00 6643.00 11050.00 15855.00 6011.00 9755.00 13494.00 7062.00 11031.00 15048.00 3/31/02 8036.00 12210.00 15193.00 7814.00 11922.00 13241.00 6013.00 9201.00 10954.00 6184.00 10214.00 11842.00 3/31/03 5675.00 9429.00 11447.00 6322.00 10707.00 13246.00 6576.00 11335.00 13658.00 8449.00 13972.00 15345.00 3/31/04 8555.00 13824.00 15673.00 9098.00 14315.00 15946.00 9642.00 14914.00 15648.00 10914.00 16307.00 17155.00 3/31/05 10946.00 16578.00 16813.00 10593.00 15154.00 17103.00 12055.00 15598.00 17752.00 12472.00 17045.00 18129.00 3/31/06 14539.00 18563.00 19008.00
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. 52 Management Overview Schedule of Investments ICON Materials Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- COMMON STOCKS 97.9% 265,700 AK Steel Holding Corp.(a) $ 3,985,500 51,500 Albemarle Corp. 2,335,525 87,700 Alcan, Inc. - ADR 4,010,521 280,800 Alcoa, Inc. 8,581,247 104,400 Aleris International, Inc.(a) 5,018,508 36,100 Aluminum Corp. of China, Ltd. - ADR 3,780,392 26,900 Anglogold Ashanti, Ltd. - ADR 1,455,828 49,100 AptarGroup, Inc. 2,712,775 53,500 Ashland, Inc. 3,802,780 87,300 Ball Corp. 3,826,359 87,000 Bemis Co., Inc. 2,747,460 121,070 BHP Billiton, Ltd. - ADR 4,824,640 21,100 Burlington Northern Santa Fe Corp. 1,758,263 47,400 Cabot Corp. 1,611,126 26,900 Carpenter Technology Corp. 2,542,588 15,700 Caterpillar, Inc. 1,127,417 45,976 Cemex S.A. De C.V. - ADR 3,001,313 94,100 Companhia Vale do Rio Doce - ADR 4,566,673 142,500 CRH PLC - ADR 5,058,750 27,100 CSX Corp. 1,620,580 21,200 Cummins, Inc. 2,228,120 53,000 Cytec Industries, Inc. 3,180,530 102,600 Eagle Materials, Inc. 6,541,776 140,700 Ferro Corp. 2,814,000 58,950 Genesee & Wyoming, Inc.(a) 1,808,586 111,000 Georgia Gulf Corp. 2,884,890
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- 152,900 Gibraltar Industries, Inc. $ 4,504,434 69,500 Gold Fields, Ltd. - ADR 1,527,610 136,800 Hercules, Inc.(a) 1,887,840 26,850 Joy Global, Inc. 1,604,825 43,000 Lubrizol Corp. 1,842,550 25,300 MacDermid, Inc. 813,395 42,900 Martin Marietta Materials, Inc. 4,591,587 141,300 Methanex Corp. 2,900,889 323,000 Myers Industries, Inc. 5,164,770 48,900 Norfolk Southern Corp. 2,644,023 176,400 OM Group, Inc.(a) 4,057,200 153,600 Pactiv Corp.(a) 3,769,344 40,000 Peabody Energy Corp. 2,016,400 31,100 Posco - ADR 1,984,180 34,100 PPG Industries, Inc. 2,160,235 18,600 Praxair, Inc. 1,025,790 13,000 Quaker Chemical Corp. 282,750 25,400 Rio Tinto PLC - ADR 5,257,800 84,300 Ryerson, Inc. 2,255,868 48,100 Sealed Air Corp. 2,783,547 32,800 Sonoco Products Co. 1,110,936 69,600 Southern Copper Corp. 5,879,808 152,000 Spartech Corp. 3,648,000 113,100 Steel Dynamics, Inc. 6,416,163 48,100 The Scotts Miracle-Gro Co. 2,201,056 105,700 The Valspar Corp. 2,945,859 ------------ TOTAL COMMON STOCKS (COST $130,865,839) 163,103,006
Schedule of Investments 53 Schedule of Investments (continued) ICON Materials Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE -------------------------------------------- SHORT-TERM INVESTMENTS 2.5% $ 4,144,998 Brown Brothers Harriman Time Deposit, 4.07%, 04/03/06# $ 4,144,998 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $4,144,998) 4,144,998 ------------ TOTAL INVESTMENTS 100.4% (COST $135,010,837) 167,248,004 ------------ LIABILITIES LESS OTHER ASSETS (0.4)% (692,990) ------------ TOTAL NET ASSETS 100.0% $166,555,014 ============
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt 54 Schedule of Investments Management Overview ICON Telecommunication & Utilities Fund -------------------------------------------------------------------------------- PORTFOLIO PROFILE March 31, 2006 Equities 99.4% Top 10 Equity Holdings 40.9% Number of Stocks 66 Short-Term Investments 3.6% Percentages are based upon net assets. TOP 10 EQUITY HOLDINGS March 31, 2006 Verizon Communications, Inc. 5.3% BellSouth Corp. 4.8% AT&T, Inc. 4.8% PT Telekomunikasi Indonesia - ADR 4.6% America Movil S.A. De C.V. - ADR 4.5% Telefonos De Mexico S.A. De C.V. - ADR 3.7% Telecomunicacoes de Sao Paulo S.A. - ADR 3.6% Korea Electric Power Corp. - ADR 3.3% Telekom Austria AG - ADR 3.3% KT Corp. - ADR 3.0% Percentages are based upon net assets. -------------------------------------------------------------------------------- Q. HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARKS? A. The ICON Telecommunication & Utilities Fund appreciated 3.06% for the six-month period ended March 31, 2006, underperforming the 14.07% return for S&P 1500 Telecommunication Services Index, while outperforming the -6.12% return for the S&P 1500 Utilities Index. Although neither sector-specific benchmark is an ideal comparison individually, we believe together they provide a suitable reference for the Fund's overall performance. Additionally, the Fund underperformed its broad benchmark, the S&P 1500 Index, which returned 7.08% over the same period. Total returns for other periods as of March 31, 2006 appear on page 58. Q. WHAT PRIMARY FACTORS WERE BEHIND THE FUND'S RELATIVE PERFORMANCE? A. Generally speaking, the Fund's valuation-based tilt toward Telecommunication Services issues versus those in the Utilities area accounted for its positive performance. For the period, the average exposure to the Telecommunication Services sector was approximately 42%, not including additional weighting in telecom- and wireless-related companies technically falling outside the confines of the S&P 1500 Telecommunication Services Index. The average exposure to Utilities was approximately 43%, with an additional .93% in utility-related companies outside the S&P 1500 Utilities Index. These weightings represented a significant reversal in the Fund's makeup compared to the prior fiscal year, a period in which average exposure to Utilities was more than approximately two-thirds of the portfolio. This shift was the result of ICON's value-driven, active investment style, and proved beneficial to overall performance. Q. HOW DID THE PORTFOLIO'S COMPOSITION AFFECT FUND PERFORMANCE? A. Given the outperformance of Telecommunication Services industries versus Utilities industries during the period, the Fund's tilt toward wireless telecommunication services, integrated telecommunication services and telecom-related companies proved advantageous. This overweighting was based primarily on favorable valuation and relative strength measures, but was also impacted by the number of available liquid companies within each industry. Leading industry gains were recorded by the Fund's wireless telecommunication services holdings, which returned approximately 16.3% versus a 6.5% return for the S&P 1500 Wireless Telecommunication Services Index. This outperformance was due mainly to the Fund's exposure to emerging market wireless companies, whose value and relative strength were more compelling than their U.S. counterparts. Management Overview 55 Management Overview (continued) ICON Telecommunication & Utilities Fund [TODD BURCHETT PHOTO] Todd Burchett Portfolio Manager Turning to Utilities, although the Fund maintained limited exposure to gas utilities and independent power producers & energy traders, both proved to be meaningful detractors on the basis of significant industrywide declines. Multi-utilities, an area where the Fund had substantially greater exposure, also hindered results. Q. WHAT IS YOUR INVESTMENT OUTLOOK FOR THE TELECOMMUNICATION & UTILITIES SECTOR? A. Looking ahead, we expect to decrease the Fund's exposure to Utilities while increasing its weighting in the Telecommunication Services sector. While finding value and relative strength in some of the well-known, domestic telecommunication stocks, their relative attractiveness pales in comparison to the American Depository Receipts (ADRs) of international peers, particularly in the integrated telecommunications services area. Thus, the Fund expects to have a high relative weighting in U.S. securities. As for Utilities, our system is showing two bright spots: the water utilities and independent power producers & energy traders groups. The same domestic-international dichotomy exists in this space, and given compelling growth prospects, attractive valuations and diversification opportunities, we continue to expect high relative overseas exposure here as well. PERFORMANCE HIGHLIGHTS - The Fund's valuation-based tilt toward the Telecommunication Services sector, a significant change from the prior fiscal year, proved beneficial to overall performance. - Continued mergers and acquisition activity and robust sales growth in emerging markets provided a positive backdrop for Telecommunication Services industries. - The wireless telecommunication services and integrated telecommunication services industries contributed to Fund performance, while gas utilities and independent power producers & energy traders detracted from performance. 56 Management Overview INDUSTRY COMPOSITION March 31, 2006 Integrated Telecommunication Services 39.6% Electric Utilities 15.8% Wireless Telecommunication Services 15.0% Communications Equipment 6.2% Water Utilities 5.9% Independent Power Producers & Energy Traders 3.8% Multi-Utilities 2.1% Electronic Equipment Manufacturers 1.8% Electrical Components & Equipment 1.7% Electronic Manufacturing Services 1.7% Internet Software Services 1.3% Oil & Gas Equipment & Services 1.1% Consumer Electronics 1.0% Alternative Carriers 0.9% Coal & Consumable Fuels 0.6% Technology Distributors 0.5% Integrated Oil & Gas 0.4%
Percentages are based upon net assets. Management Overview 57 Management Overview (continued) ICON Telecommunication & Utilities Fund AVERAGE ANNUAL TOTAL RETURN as of March 31, 2006
SINCE INCEPTION 6 MONTH* 1 YEAR 5 YEARS 7/9/97 ------------------------------------------------------------------------------------------- ICON Telecommunication & Utilities Fund 3.06% 19.35% 6.66% 9.50% ------------------------------------------------------------------------------------------- S&P 1500 Telecommunications Services Index 14.07% 16.76% -4.14% 1.45% ------------------------------------------------------------------------------------------- S&P 1500 Utilities Index -6.12% 9.83% 0.75% 7.54% ------------------------------------------------------------------------------------------- S&P 1500 Index 7.08% 13.05% 5.02% 6.49% -------------------------------------------------------------------------------------------
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, 2006 [LINE GRAPH]
ICON S&P 1500 TELECOMMUNICATION & TELECOMMUNICATIONS S&P 1500 UTILITIES UTILITIES FUND SERVICES INDEX INDEX S&P 1500 INDEX ------------------- ------------------ ------------------ -------------- 7/9/97 10000.00 10000.00 10000.00 10000.00 10630.00 10622.00 10417.00 10597.00 12253.00 12707.00 12118.00 10852.00 3/31/98 13800.00 14982.00 12775.00 12321.00 13528.00 14391.00 12766.00 12620.00 14231.00 15105.00 13226.00 11262.00 15927.00 19374.00 13625.00 13709.00 3/31/99 15110.00 20000.00 12192.00 14207.00 16924.00 22672.00 13518.00 15312.00 16401.00 21048.00 12967.00 14339.00 17026.00 23189.00 12330.00 16485.00 3/31/00 15958.00 22888.00 13585.00 16994.00 16306.00 19688.00 14281.00 16554.00 18858.00 17603.00 18732.00 16548.00 19039.00 14272.00 19530.00 15338.00 3/31/01 15995.00 14014.00 18172.00 13550.00 16564.00 13868.00 17309.00 14440.00 15327.00 13802.00 14540.00 12290.00 15596.00 12458.00 14271.00 13705.00 3/31/02 15322.00 10537.00 14813.00 13837.00 14173.00 8052.00 12587.00 12059.00 11948.00 5960.00 10056.00 9976.00 12737.00 8181.00 10542.00 10786.00 3/31/03 11625.00 7010.00 10216.00 10425.00 14077.00 8534.00 12283.00 12064.00 14380.00 7750.00 12292.00 12439.00 15985.00 8776.00 13319.00 13976.00 3/31/04 17289.00 9219.00 13956.00 14275.00 16215.00 9133.00 13832.00 14523.00 16906.00 9723.00 14699.00 14251.00 18497.00 10515.00 16403.00 15624.00 3/31/05 18497.00 9715.00 17175.00 15313.00 20075.00 10055.00 18792.00 15576.00 21420.00 9944.00 20094.00 16168.00 20542.00 9913.00 18900.00 16511.00 3/31/06 22076.00 11343.00 18864.00 17312.00
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. 58 Management Overview Schedule of Investments ICON Telecommunication & Utilities Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- COMMON STOCKS (99.4%) 86,200 America Movil S.A. De C.V. - ADR $ 2,953,211 17,900 American States Water Co. 668,744 14,700 Amphenol Corp. - Class A 767,046 7,600 Anixter International, Inc. 363,128 118,300 AT&T, Inc. 3,198,832 92,600 BellSouth Corp. 3,208,590 19,700 Benchmark Electronics, Inc.(a) 755,495 3,400 BP PLC - ADR 234,396 32,900 CalAmp Corp.(a) 386,246 30,000 California Water Service Group 1,351,500 25,000 China Mobile, Ltd. - ADR 663,500 74,300 China Unicom, Ltd. - ADR 613,718 50,000 Companhia De Saneamento Basico do Estado De Sao Paulo - ADR 1,100,500 35,600 Companhia Energetica de Minas Gerais - ADR 1,618,732 44,400 Companhia Paranaense De Energia - ADR 436,008 15,000 Compania Anonima Nacional Telefonos de Venezuela - ADR 317,700 18,000 Consolidated Water Co., Ltd. 440,820 10,600 Constellation Energy Group 579,926 36,300 CPFL Energia S.A. - ADR 1,524,600 35,500 Duquesne Light Holdings, Inc. 585,750 12,900 E.ON AG - ADR 472,140 36,600 EFJ, Inc.(a) 394,914 12,800 Exelon Corp. 677,120 16,200 FPL Group, Inc. 650,268 83,000 General Communication, Inc. - Class A(a) 1,003,470 10,600 Hubbell, Inc. - Class B 543,356
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 27,500 IDACORP, Inc. $ 894,300 31,300 II-VI, Inc.(a) 566,217 10,000 International Power PLC - ADR 492,500 18,500 j2 Global Communications, Inc.(a) 869,500 100,800 Korea Electric Power Corp. - ADR 2,177,280 92,100 KT Corp. - ADR 1,961,730 13,600 Lufkin Industries, Inc. 753,984 29,800 Matsushita Electric Industrial Co., Ltd. - ADR 659,772 14,800 NICE Systems, Ltd. - ADR(a) 754,208 12,000 NII Holdings, Inc.(a) 707,640 30,000 Nokia Corp. - ADR 621,600 21,300 Otter Tail Corp. 611,097 8,200 Peabody Energy Corp. 413,362 27,200 Pepco Holdings, Inc. 619,888 23,200 Philippine Long Distance Telephone Co. - ADR 871,624 25,000 Portugal Telecom, SGPS, S.A. - ADR 305,500 73,100 Premiere Global Services, Inc.(a) 588,455 100,000 PT Telekomunikasi Indonesia - ADR 3,031,000 14,400 Qualcomm, Inc. 728,784 32,900 Radyne Corp.(a) 525,413 21,000 RELM Wireless Corp.(a) 204,540 4,000 Rostelecom - ADR 77,000 8,000 RWE AG - ADR 698,400 14,000 Sempra Energy 650,440 25,000 SK Telecom Co., Ltd. - ADR 589,750 19,800 Southern Co. 648,846 20,040 Southwest Water Co. 319,438 72,500 SpectraLink Corp. 909,875 37,600 Tele Norte Leste Participacoes S.A. - ADR 627,168
Schedule of Investments 59 Schedule of Investments (continued) ICON Telecommunication & Utilities Fund March 31, 2006 (unaudited)
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- 97,200 Telecomunicacoes de Sao Paulo S.A. - ADR $ 2,400,840 109,700 Telefonos De Mexico S.A. De C.V. - ADR 2,466,056 45,900 Telekom Austria AG - ADR 2,159,595 10,000 Telemig Celular Participacoes S.A. - ADR 476,600 10,000 Telephone and Data Systems, Inc. 394,400 10,000 Telkom South Africa, Ltd. - ADR 1,050,100 46,300 Tim Participacoes S.A. - ADR 1,714,489 9,300 Trimble Navigation, Ltd.(a) 418,965 22,100 TXU Corp. 989,196 102,900 Verizon Communications, Inc. 3,504,774 41,300 Vimpel Communications - ADR(a) 1,776,313 ----------- TOTAL COMMON STOCKS (COST $56,251,621) 65,740,349
SHARES OR PRINCIPAL AMOUNT VALUE --------------------------------------------- SHORT-TERM INVESTMENTS (3.6%) $2,366,370 Brown Brothers Harriman Time Deposit, 4.07%, 04/03/06# $ 2,366,370 ----------- TOTAL SHORT-TERM INVESTMENTS (COST 2,366,370) 2,366,370 ----------- TOTAL INVESTMENTS 103.0% (COST $58,617,991) 68,106,719 ----------- LIABILITIES LESS OTHER ASSETS (3.0)% (1,943,796) ----------- TOTAL NET ASSETS 100.0% $66,162,923 ===========
The accompanying notes are an integral part of the financial statements. (a) Non-income producing security. # BBH Time Deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of March 31, 2006. ADR American Depositary Receipt 60 Schedule of Investments Six Month Hypothetical Expense Example March 31, 2006 (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 (10/1/05 - 3/31/06). ACTUAL EXPENSES The first line in the table for each Fund provides information about actual account values and actual expenses. The Example includes, but is not limited to, management fees, fund accounting, custody and transfer agent fees. However, the Example does not include client specific fees, such as the $10.00 fee charged to IRA accounts, or the $15.00 fee charged for wire redemptions. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for each Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line in the table for each Fund provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees that may be charged by other funds. Therefore, this information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. Expense Example 61 Six Month Hypothetical Expense Example (continued) March 31, 2006 (unaudited)
BEGINNING ENDING EXPENSES PAID ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO 10/1/05 3/31/06 10/1/05-3/31/06* 10/1/05-3/31/06 ------------------------------------------------------------------------------------------------- ICON CONSUMER DISCRETIONARY FUND ------------------------------------------------------------------------------------------------- Actual Expenses $1,000.00 $1,096.20 $6.53 1.25% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,018.77 6.29 (5% return before expenses) ------------------------------------------------------------------------------------------------- ICON ENERGY FUND ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,088.00 5.99 1.15% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,019.27 5.79 (5% return before expenses) ------------------------------------------------------------------------------------------------- ICON FINANCIAL FUND ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,118.60 6.34 1.20% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,019.02 6.04 (5% return before expenses) ------------------------------------------------------------------------------------------------- ICON HEALTHCARE FUND ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,056.30 6.00 1.17% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,019.17 5.89 (5% return before expenses) ------------------------------------------------------------------------------------------------- ICON INDUSTRIALS FUND ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,203.40 6.54 1.19% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,019.07 5.99 (5% return before expenses) ------------------------------------------------------------------------------------------------- ICON INFORMATION TECHNOLOGY FUND ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,065.50 6.23 1.21% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,018.97 6.09 (5% return before expenses) ------------------------------------------------------------------------------------------------- ICON LEISURE AND CONSUMER STAPLES FUND ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,030.40 8.50 1.68% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,016.62 8.45 (5% return before expenses) -------------------------------------------------------------------------------------------------
62 Expense Example
BEGINNING ENDING EXPENSES PAID ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD EXPENSE RATIO 10/1/05 3/31/06 10/1/05-3/31/06* 10/1/05-3/31/06 ------------------------------------------------------------------------------------------------- ICON MATERIALS FUND ------------------------------------------------------------------------------------------------- Actual Expenses $1,000.00 $1,206.00 $6.93 1.26% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,018.72 6.34 (5% return before expenses) ------------------------------------------------------------------------------------------------- ICON TELECOMMUNICATION & UTILITIES FUND ------------------------------------------------------------------------------------------------- Actual Expenses 1,000.00 1,030.60 6.73 1.33% ------------------------------------------------------------------------------------------------- Hypothetical Example 1,000.00 1,018.37 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 63 Statements of Assets and Liabilities March 31, 2006 (unaudited)
ICON CONSUMER ICON ICON ICON DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND ------------------ ------------ -------------- --------------- ASSETS Investments, at cost $138,381,194 $650,847,148 $206,702,212 $618,493,496 ------------ ------------ ------------ ------------ Investments, at value 155,639,833 980,847,899 240,848,160 769,280,672 Cash - - - - Receivables: Fund shares sold 99,808 3,056,890 190,053 1,801,645 Investments sold - 14,609,420 619,641 1,555,082 Interest 55 - - 5,248 Dividends 117,331 206,293 262,108 90,201 Other assets 30,828 83,071 32,015 63,836 ------------ ------------ ------------ ------------ Total Assets 155,887,855 998,803,573 241,951,977 772,796,684 ------------ ------------ ------------ ------------ LIABILITIES Payables: Due to custodian bank - 10,216,623 1,413,876 - Fund shares redeemed 134,901 1,437,027 262,771 708,927 Investments bought 1,094,730 4,152,151 - - Advisory fees 129,414 786,753 202,684 635,434 Fund accounting fees 3,147 19,874 4,992 15,812 Transfer agent fees 4,184 4,902 10,476 4,247 Administration fees 6,111 38,423 9,612 30,588 Trustee fees 6,852 42,890 10,723 34,259 Accrued expenses 31,187 62,260 45,577 55,441 ------------ ------------ ------------ ------------ Total Liabilities 1,410,526 16,760,903 1,960,711 1,484,708 ------------ ------------ ------------ ------------ NET ASSETS $154,477,329 $982,042,670 $239,991,266 $771,311,976 ============ ============ ============ ============ NET ASSETS CONSIST OF Paid-in Capital $134,273,898 $604,600,473 $193,323,148 $600,779,406 Accumulated undistributed net investment income/(loss) (355,609) (1,923,475) 457,573 (2,122,079) Accumulated undistributed net realized gain/(loss) from investments 3,300,401 49,364,921 12,064,597 21,867,473 Unrealized appreciation/(depreciation) on investments 17,258,639 330,000,751 34,145,948 150,787,176 ------------ ------------ ------------ ------------ NET ASSETS $154,477,329 $982,042,670 $239,991,266 $771,311,976 ============ ============ ============ ============ Shares outstanding (unlimited shares authorized, no par value) 12,354,100 27,515,296 17,131,024 41,305,690 Net Asset Value (offering price and redemption price per share) $ 12.50 $ 35.69 $ 14.01 $ 18.67
The accompanying notes are an integral part of the financial statements. 64 Financial Statements
ICON ICON LEISURE AND ICON ICON INFORMATION CONSUMER ICON TELECOMMUNICATION INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND ---------------- --------------- ------------ -------------- ----------------- $195,578,613 $272,014,506 $35,180,853 $135,010,837 $58,617,991 ------------ ------------ ----------- ------------ ----------- 260,272,381 321,651,324 40,128,244 167,248,004 68,106,719 16,575 - - 15,543 - 390,804 315,962 154,621 1,933,447 87,727 2,210,261 - 1,160,021 - 403,087 - 19 - 469 268 97,436 141,805 15,259 289,253 246,437 34,877 45,538 29,372 31,009 25,845 ------------ ------------ ----------- ------------ ----------- 263,022,334 322,154,648 41,487,517 169,517,725 68,870,083 ------------ ------------ ----------- ------------ ----------- - 642,433 161,931 - - 297,483 270,682 44,060 83,473 89,129 1,302,139 - 1,469,277 2,718,625 2,526,842 217,696 269,711 33,032 131,722 54,418 5,303 6,563 813 3,201 1,354 2,518 12,144 9,571 5,947 7,356 10,277 12,748 1,566 6,220 2,584 11,532 14,271 1,749 6,991 2,882 33,983 41,938 28,313 6,532 22,595 ------------ ------------ ----------- ------------ ----------- 1,880,931 1,270,490 1,750,312 2,962,711 2,707,160 ------------ ------------ ----------- ------------ ----------- $261,141,403 $320,884,158 $39,737,205 $166,555,014 $66,162,923 ============ ============ =========== ============ =========== $176,999,062 $322,806,740 $35,005,293 $121,249,800 $49,120,508 (434,708) (832,009) (191,126) 545,860 371,217 19,883,281 (50,727,391) (24,353) 12,522,187 7,182,470 64,693,768 49,636,818 4,947,391 32,237,167 9,488,728 ------------ ------------ ----------- ------------ ----------- $261,141,403 $320,884,158 $39,737,205 $166,555,014 $66,162,923 ============ ============ =========== ============ =========== 17,647,731 34,609,396 4,193,570 13,160,672 9,019,189 $ 14.80 $ 9.27 $ 9.48 $ 12.66 $ 7.34
Financial Statements 65 Statements of Operations For the period ended March 31, 2006 (unaudited)
ICON CONSUMER ICON ICON ICON DISCRETIONARY FUND ENERGY FUND FINANCIAL FUND HEALTHCARE FUND ------------------ ----------- -------------- --------------- INVESTMENT INCOME Interest $ 41,853 $ 203,803 $ 37,982 $ 577,450 Dividends 425,649 3,397,208 1,939,740 1,509,440 Foreign taxes withheld - - - (6,712) ---------- ----------- ----------- ----------- Total Investment Income 467,502 3,601,011 1,977,722 2,080,178 ---------- ----------- ----------- ----------- EXPENSES Advisory fees 623,967 4,635,017 1,235,376 3,574,539 Fund accounting fees 16,316 113,405 31,049 87,552 Transfer agent fees 46,516 183,907 71,282 171,369 Custody fees 15,298 33,871 17,891 29,574 Administration fees 29,297 220,181 58,082 168,964 Registration fees 12,255 26,587 14,026 23,297 Insurance expense 5,905 20,844 6,565 15,978 Trustee fees and expenses 5,259 30,154 9,003 23,375 Interest expense 41,467 121,115 35,423 - Other expenses 26,831 139,406 41,453 107,609 ---------- ----------- ----------- ----------- Total expenses 823,111 5,524,487 1,520,150 4,202,257 ---------- ----------- ----------- ----------- NET INVESTMENT INCOME (LOSS) (355,609) (1,923,476) 457,572 (2,122,079) ---------- ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from investment transactions 4,086,840 57,323,056 15,034,753 21,890,056 Net realized gain/(loss) from foreign currency translations - - - - Change in unrealized appreciation/(depreciation) on investments 5,067,807 10,441,284 11,326,477 20,961,118 ---------- ----------- ----------- ----------- Net realized and unrealized gain/(loss) on investments 9,154,647 67,764,340 26,361,230 42,851,174 ---------- ----------- ----------- ----------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $8,799,038 $65,840,864 $26,818,802 $40,729,095 ========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements. 66 Financial Statements
ICON ICON LEISURE AND ICON ICON INFORMATION CONSUMER ICON TELECOMMUNICATION INDUSTRIALS FUND TECHNOLOGY FUND STAPLES FUND MATERIALS FUND & UTILITIES FUND ---------------- --------------- ------------ -------------- ----------------- $ 38,936 $ 57,115 $ 2,934 $ 28,468 $ 10,484 879,096 819,174 159,432 1,370,247 1,084,759 (2,968) (15,300) - (2,331) (1,695) ----------- ----------- ---------- ----------- ------------ 915,064 860,989 162,366 1,396,384 1,093,548 ----------- ----------- ---------- ----------- ------------ 1,138,028 1,379,638 204,051 669,207 400,766 28,838 34,521 6,688 17,005 10,874 47,912 88,790 64,507 72,638 49,451 14,958 17,106 17,366 10,016 14,924 53,463 64,798 9,595 31,431 18,864 15,842 17,972 16,560 14,957 13,522 6,845 9,574 3,632 3,570 3,571 8,350 10,695 3,144 4,579 2,972 12,055 18,220 10,783 5,198 31,477 39,509 51,684 17,166 21,924 14,876 ----------- ----------- ---------- ----------- ------------ 1,365,800 1,692,998 353,492 850,525 561,297 ----------- ----------- ---------- ----------- ------------ (450,736) (832,009) (191,126) 545,859 532,251 ----------- ----------- ---------- ----------- ------------ 22,436,346 3,858,384 153,220 13,308,807 10,807,945 - - 2,784 (22,334) - 20,993,586 17,163,143 854,872 15,186,718 (12,000,623) ----------- ----------- ---------- ----------- ------------ 43,429,932 21,021,527 1,010,876 28,473,191 (1,192,678) ----------- ----------- ---------- ----------- ------------ $42,979,196 $20,189,518 $ 819,750 $29,019,050 $ (660,427) =========== =========== ========== =========== ============
Financial Statements 67 Statements of Changes in Net Assets
ICON CONSUMER DISCRETIONARY FUND ICON ENERGY FUND ----------------------------------- ----------------------------------- PERIOD ENDED PERIOD ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ -------------- ------------------ OPERATIONS Net investment income/(loss) $ (355,609) $ (947,312) $ (1,923,476) $ 2,256,526 Net realized gain/(loss) from investment transactions 4,086,840 21,149,069 57,323,056 22,940,745 Net realized gain/(loss) from foreign currency translations - - - - Change in unrealized appreciation/ depreciation on investments 5,067,807 (9,621,489) 10,441,284 259,958,925 ------------ ------------ -------------- -------------- Net increase/(decrease) in net assets resulting from operations 8,799,038 10,580,268 65,840,864 285,156,196 ------------ ------------ -------------- -------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income - - (2,256,525) - Net realized gains (15,842,362) - (23,251,426) - ------------ ------------ -------------- -------------- Net decrease from dividends and distributions (15,842,362) - (25,507,951) - ------------ ------------ -------------- -------------- FUND SHARE TRANSACTIONS Shares sold 63,406,438 50,107,439 230,173,507 711,655,180 Reinvested dividends and distributions 15,740,469 - 24,368,155 - Shares repurchased (87,048,016) (43,187,689) (321,789,746) (275,467,439) ------------ ------------ -------------- -------------- Net increase/(decrease) from fund share transactions (7,901,109) 6,919,750 (67,248,084) 436,187,741 ------------ ------------ -------------- -------------- Total net increase/(decrease) in net assets (14,944,433) 17,500,018 (26,915,171) 721,343,937 NET ASSETS Beginning of period 169,421,762 151,921,744 1,008,957,841 287,613,904 ------------ ------------ -------------- -------------- End of period $154,477,329 $169,421,762 $ 982,042,670 $1,008,957,841 ============ ============ ============== ============== TRANSACTIONS IN FUND SHARES Shares sold 5,348,643 3,605,400 6,791,988 27,585,644 Reinvested dividends and distributions 1,362,806 - 760,300 - Shares repurchased (6,803,217) (3,120,303) (9,924,453) (10,886,604) ------------ ------------ -------------- -------------- Net increase/(decrease) (91,768) 485,097 (2,372,165) 16,699,040 Shares outstanding beginning of period 12,445,868 11,960,771 29,887,461 13,188,421 ------------ ------------ -------------- -------------- Shares outstanding end of period 12,354,100 12,445,868 27,515,296 29,887,461 ============ ============ ============== ============== PURCHASE AND SALES OF INVESTMENT SECURITIES (excluding short-term securities) Purchase of securities $111,226,313 $270,228,278 $ 147,231,017 $ 565,978,887 Proceeds from sales of securities 135,277,169 263,033,052 195,868,836 155,874,919 ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ (355,609) $ - $ (1,923,475) $ 2,256,526 ============ ============ ============== ==============
The accompanying notes are an integral part of the financial statements. 68 Financial Statements
ICON FINANCIAL FUND ICON HEALTHCARE FUND ICON INDUSTRIALS FUND ------------------------------------ ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED PERIOD ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ -------------- ------------------ -------------- ------------------ $ 457,572 $ 1,894,706 $ (2,122,079) $ (3,785,078) $ (450,736) $ (664,614) 15,034,753 15,015,457 21,890,056 10,569,614 22,436,346 28,540,115 - - - - - - 11,326,477 (4,980,248) 20,961,118 96,973,294 20,993,586 6,079,683 ------------ ------------- ------------- ------------- ------------ ------------- 26,818,802 11,929,915 40,729,095 103,757,830 42,979,196 33,955,184 ------------ ------------- ------------- ------------- ------------ ------------- (1,744,311) (400,204) - - - - (16,113,682) (14,368,848) (10,591,515) (877,529) (6,835,273) - ------------ ------------- ------------- ------------- ------------ ------------- (17,857,993) (14,769,052) (10,591,515) (877,529) (6,835,273) - ------------ ------------- ------------- ------------- ------------ ------------- 75,480,347 160,151,652 221,130,838 513,075,619 45,942,671 116,314,931 17,760,399 14,495,645 9,893,314 842,844 6,801,064 - (73,093,565) (149,318,334) (172,609,095) (219,709,399) (44,381,863) (143,327,765) ------------ ------------- ------------- ------------- ------------ ------------- 20,147,181 25,328,963 58,415,057 294,209,064 8,361,872 (27,012,834) ------------ ------------- ------------- ------------- ------------ ------------- 29,107,990 22,489,826 88,552,637 397,089,365 44,505,795 6,942,350 210,883,276 188,393,450 682,759,339 285,669,974 216,635,608 209,693,258 ------------ ------------- ------------- ------------- ------------ ------------- $239,991,266 $ 210,883,276 $ 771,311,976 $ 682,759,339 $261,141,403 $ 216,635,608 ============ ============= ============= ============= ============ ============= 5,456,427 12,078,196 12,206,875 30,887,090 3,340,071 9,680,063 1,353,679 1,066,641 557,019 53,243 543,216 - (5,386,988) (11,535,456) (9,520,348) (13,735,740) (3,300,086) (12,555,300) ------------ ------------- ------------- ------------- ------------ ------------- 1,423,118 1,609,381 3,243,546 17,204,593 583,201 (2,875,237) 15,707,906 14,098,525 38,062,144 20,857,551 17,064,530 19,939,767 ------------ ------------- ------------- ------------- ------------ ------------- 17,131,024 15,707,906 41,305,690 38,062,144 17,647,731 17,064,530 ============ ============= ============= ============= ============ ============= $208,407,405 $ 334,005,678 $ 238,376,990 $ 493,069,662 $ 90,153,885 $ 131,854,781 204,524,293 321,445,227 220,931,049 216,184,507 87,531,681 161,003,971 $ 457,573 $ 1,744,312 $ (2,122,079) $ - $ (434,708) $ 16,028 ============ ============= ============= ============= ============ =============
Financial Statements 69 Statements of Changes in Net Assets (continued)
ICON INFORMATION TECHNOLOGY FUND ------------------------------------ PERIOD ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ OPERATIONS: Net investment income/(loss) $ (832,009) $ (2,393,338) Net realized gain/(loss) from investment transactions 3,858,384 9,986,052 Net realized gain/(loss) from foreign currency translations - - Change in net unrealized appreciation/depreciation on investments 17,163,143 12,306,795 ------------ ------------- Net increase/(decrease) in net assets resulting from operations 20,189,518 19,899,509 ------------ ------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income - - Net realized gains - - ------------ ------------- Net decrease from dividends and distributions - - ------------ ------------- FUND SHARE TRANSACTIONS Shares sold 126,646,222 183,518,365 Reinvested dividends and distributions - - Shares repurchased (46,025,012) (227,596,847) ------------ ------------- Net increase/(decrease) from fund share transactions 80,621,210 (44,078,482) ------------ ------------- Total net increase/(decrease) in net assets 100,810,728 (24,178,973) NET ASSETS: Beginning of period 220,073,430 244,252,403 ------------ ------------- End of period $320,884,158 $ 220,073,430 ============ ============= TRANSACTIONS IN FUND SHARES Shares sold 14,481,708 22,003,840 Reinvested dividends and distributions - - Shares repurchased (5,178,912) (27,607,984) ------------ ------------- Net increase/(decrease) 9,302,796 (5,604,144) Shares outstanding beginning of period 25,306,600 30,910,744 ------------ ------------- Shares outstanding end of period 34,609,396 25,306,600 ============ ============= PURCHASE AND SALES OF INVESTMENT SECURITIES (excluding short-term securities) Purchase of securities $209,792,026 $ 395,041,638 Proceeds from sales of securities 128,532,278 442,915,109 ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME/(LOSS) $ (832,009) $ - ============ =============
The accompanying notes are an integral part of the financial statements. 70 Financial Statements
ICON LEISURE AND ICON TELECOMMUNICATION & CONSUMER STAPLES FUND ICON MATERIALS FUND UTILITIES FUND ------------------------------------ ------------------------------------ ------------------------------------ PERIOD ENDED PERIOD ENDED PERIOD ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED MARCH 31, 2006 YEAR ENDED (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 (UNAUDITED) SEPTEMBER 30, 2005 -------------- ------------------ -------------- ------------------ -------------- ------------------ $ (191,126) $ (451,588) $ 545,859 $ 333,419 $ 532,251 $ 1,905,415 153,220 12,701,511 13,308,807 28,105,684 10,807,945 10,867,997 2,784 - (22,334) - - - 854,872 (9,663,969) 15,186,718 (7,049,729) (12,000,623) 12,025,488 ------------ ------------- ------------ ------------- ------------ ------------ 819,750 2,585,954 29,019,050 21,389,374 (660,427) 24,798,900 ------------ ------------- ------------ ------------- ------------ ------------ - - (236,508) (163,349) (1,880,275) (767,065) (9,573,812) (13,572,229) (9,051,351) - (9,640,653) - ------------ ------------- ------------ ------------- ------------ ------------ (9,573,812) (13,572,229) (9,287,859) (163,349) (11,520,928) (767,065) ------------ ------------- ------------ ------------- ------------ ------------ 5,083,773 156,682,191 67,095,394 89,687,347 11,934,452 93,654,010 8,013,754 13,378,405 8,769,250 160,788 11,345,862 762,535 (12,016,513) (194,686,497) (28,610,175) (151,343,125) (65,586,581) (59,123,198) ------------ ------------- ------------ ------------- ------------ ------------ 1,081,014 (24,625,901) 47,254,469 (61,494,990) (42,306,267) 35,293,347 ------------ ------------- ------------ ------------- ------------ ------------ (7,673,048) (35,612,176) 66,985,660 (40,268,965) (54,487,622) 59,325,182 47,410,253 83,022,429 99,569,354 139,838,319 120,650,545 61,325,363 ------------ ------------- ------------ ------------- ------------ ------------ $ 39,737,205 $ 47,410,253 $166,555,014 $ 99,569,354 $ 66,162,923 $120,650,545 ============ ============= ============ ============= ============ ============ 512,216 12,172,021 6,011,891 8,775,257 1,598,255 12,890,779 900,421 1,067,710 825,717 15,794 1,644,205 106,947 (1,182,358) (14,999,963) (2,488,542) (15,426,293) (8,798,101) (7,698,688) ------------ ------------- ------------ ------------- ------------ ------------ 230,279 (1,760,232) 4,349,066 (6,635,242) (5,555,641) 5,299,038 3,963,291 5,723,523 8,811,606 15,446,848 14,574,830 9,275,792 ------------ ------------- ------------ ------------- ------------ ------------ 4,193,570 3,963,291 13,160,672 8,811,606 9,019,189 14,574,830 ============ ============= ============ ============= ============ ============ $ 52,165,701 $ 261,063,086 $138,667,026 $ 132,449,934 $ 58,618,566 $149,329,103 60,739,700 299,173,481 103,752,539 191,074,580 112,171,214 113,156,179 $ (191,126) $ - $ 545,860 $ 236,509 $ 371,217 $ 1,719,241 ============ ============= ============ ============= ============ ============
Financial Statements 71 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, 2006 (unaudited) $13.61 (0.04) 1.16 1.12 Year Ended September 30, 2005 $12.70 (0.08) 0.99 0.91 Year Ended September 30, 2004 $11.79 (0.05) 0.96 0.91 Year Ended September 30, 2003 $10.12 (0.08) 1.75 1.67 Year Ended September 30, 2002 $ 8.96 (0.06) 1.22 1.16 Year Ended September 30, 2001 $ 9.23 (0.01) (0.26) (0.27) ICON ENERGY FUND Period Ended March 31, 2006 (unaudited) $33.76 (0.07) 2.93 2.86 Year Ended September 30, 2005 $21.81 0.10 11.85 11.95 Year Ended September 30, 2004 $13.70 (0.04) 8.15 8.11 Year Ended September 30, 2003 $11.84 (0.04) 1.90 1.86 Year Ended September 30, 2002 $11.29 (0.08) 0.65 0.57 Year Ended September 30, 2001 $13.19 0.07 (0.76) (0.69) ICON FINANCIAL FUND Period Ended March 31, 2006 (unaudited) $13.43 0.03 1.50 1.53 Year Ended September 30, 2005 $13.36 0.13 0.99 1.12 Year Ended September 30, 2004 $10.78 0.04 2.60 2.64 Year Ended September 30, 2003 $ 8.84 0.05 1.92 1.97 Year Ended September 30, 2002 $12.04 (0.01) (1.08) (1.09) Year Ended September 30, 2001 $12.26 0.06 1.13 1.19 ICON HEALTHCARE FUND Period Ended March 31, 2006 (unaudited) $17.94 (0.05) 1.05 1.00 Year Ended September 30, 2005 $13.70 (0.14) 4.42 4.28 Year Ended September 30, 2004 $12.28 (0.14) 1.56 1.42 Year Ended September 30, 2003 $10.35 (0.09) 2.02 1.93 Year Ended September 30, 2002 $11.57 (0.12) (0.49) (0.61) Year Ended September 30, 2001 $11.93 (0.10) 0.51 0.41 ICON INDUSTRIALS FUND Period Ended March 31, 2006 (unaudited) $12.70 (0.03) 2.54 2.51 Year Ended September 30, 2005 $10.52 (0.04) 2.22 2.18 Year Ended September 30, 2004 $ 8.80 (0.05) 1.77 1.72 Year Ended September 30, 2003 $ 7.96 (0.05) 0.89 0.84 Year Ended September 30, 2002 $ 8.55 (0.02) (0.57) (0.59) Year Ended September 30, 2001 $ 9.07 (0.02) (0.48) (0.50) 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, 2006 (unaudited) - (2.23) - (2.23) Year Ended September 30, 2005 - - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - - - - Year Ended September 30, 2001 - - - - ICON ENERGY FUND Period Ended March 31, 2006 (unaudited) (0.08) (0.85) - (0.93) Year Ended September 30, 2005 - - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 (0.02) - - (0.02) Year Ended September 30, 2001 (0.09) (1.12) - (1.21) ICON FINANCIAL FUND Period Ended March 31, 2006 (unaudited) (0.09) (0.86) - (0.95) Year Ended September 30, 2005 (0.03) (1.02) - (1.05) Year Ended September 30, 2004 (0.06) - - (0.06) Year Ended September 30, 2003 (0.03) - - (0.03) Year Ended September 30, 2002 - (2.11) - (2.11) Year Ended September 30, 2001 (1.41) - - (1.41) ICON HEALTHCARE FUND Period Ended March 31, 2006 (unaudited) - (0.27) - (0.27) Year Ended September 30, 2005 - (0.04) - (0.04) Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - (0.56) (0.05) (0.61) Year Ended September 30, 2001 - (0.77) - (0.77) ICON INDUSTRIALS FUND Period Ended March 31, 2006 (unaudited) - (0.41) - (0.41) Year Ended September 30, 2005 - - - - Year Ended September 30, 2004 - - - - Year Ended September 30, 2003 - - - - Year Ended September 30, 2002 - - - - Year Ended September 30, 2001 (0.02) - - (0.02)
(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. 72 Financial Highlights
RATIO OF RATIO OF NET NET ASSET AVERAGE NET EXPENSES INVESTMENT VALUE, NET ASSETS, ASSETS FOR TO AVERAGE INCOME/(LOSS) PORTFOLIO END OF TOTAL END OF PERIOD THE PERIOD NET ASSETS TO AVERAGE TURNOVER PERIOD RETURN* (IN THOUSANDS) (IN THOUSANDS) (A) NET ASSETS (A) RATE --------- ------- -------------- -------------- ---------- -------------- --------- $12.50 9.62% $ 154,477 125,054 1.25% (0.57)% 86.76% $13.61 7.17% $ 169,422 167,635 1.25% (0.57)% 157.94% $12.70 7.72% $ 151,922 178,011 1.31% (0.38)% 120.63% $11.79 16.50% $ 150,065 118,834 1.40% (0.79)% 174.51% $10.12 12.95% $ 121,640 184,174 1.29% (0.49)% 128.06% $ 8.96 (2.93)% $ 107,075 78,281 1.37% (0.10)% 88.20% $35.69 8.80% $ 982,043 939,429 1.15% (0.41)% 15.57% $33.76 54.79% $1,008,998 602,922 1.21% 0.37% 27.51% $21.81 59.20% $ 287,614 127,920 1.35% (0.20)% 13.42% $13.70 15.71% $ 55,629 74,883 1.40% (0.29)% 42.53% $11.84 5.03% $ 104,220 71,434 1.35% (0.61)% 26.30% $11.29 (6.53)% $ 36,945 49,195 1.39% 0.54% 134.77% $14.01 11.86% $ 239,991 247,914 1.20% 0.37% 83.81% $13.43 8.29% $ 210,883 188,864 1.26% 1.00% 170.75% $13.36 24.53% $ 188,393 162,121 1.32% 0.34% 114.50% $10.78 22.35% $ 139,261 131,042 1.34% 0.54% 142.77% $ 8.84 (11.88)% $ 110,116 60,904 1.36% (0.06)% 69.58% $12.04 9.57% $ 54,318 59,425 1.41% 0.51% 174.41% $18.67 5.63% $ 771,312 721,550 1.17% (0.59)% 32.16% $17.94 31.39% $ 682,750 463,813 1.22% (0.82)% 47.88% $13.70 11.56% $ 285,670 244,742 1.29% (1.04)% 52.72% $12.28 18.65% $ 141,259 120,068 1.34% (0.84)% 85.52% $10.35 (5.63)% $ 93,031 44,042 1.39% (1.05)% 104.90% $11.57 3.39% $ 33,646 35,981 1.45% (0.98)% 145.08% $14.80 20.34% $ 261,141 228,475 1.19% (0.40)% 38.26% $12.70 20.72% $ 216,636 196,295 1.24% (0.34)% 67.25% $10.52 19.55% $ 209,693 179,657 1.29% (0.47)% 45.77% $ 8.80 10.55% $ 132,554 70,382 1.43% (0.64)% 90.49% $ 7.96 (6.90)% $ 63,919 107,335 1.30% (0.24)% 99.22% $ 8.55 (5.55)% $ 76,325 55,928 1.38% (0.16)% 72.65%
Financial Highlights 73 Financial Highlights (continued)
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS ---------------------------------------- ------------------------------------------ NET ASSET NET NET REALIZED DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT AND UNREALIZED TOTAL FROM FROM NET FROM NET TOTAL BEGINNING INCOME/ GAINS/(LOSSES) INVESTMENT INVESTMENT REALIZED DIVIDENDS AND OF PERIOD (LOSS)(X) ON INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS --------- ---------- -------------- ---------- ---------- ------------- ------------- ICON INFORMATION TECHNOLOGY FUND Period Ended March 31, 2006 (unaudited) $ 8.70 (0.03) 0.60 0.57 - - - Year Ended September 30, 2005 $ 7.90 (0.08) 0.88 0.80 - - - Year Ended September 30, 2004 $ 8.27 (0.08) (0.29) (0.37) - - - Year Ended September 30, 2003 $ 5.98 (0.08) 2.37 2.29 - - - Year Ended September 30, 2002 $ 7.80 (0.10) (1.72) (1.82) - - - Year Ended September 30, 2001 $22.13 (0.10) (4.03) (4.13) - (10.20) (10.20) ICON LEISURE AND CONSUMER STAPLES FUND Period Ended March 31, 2006 (unaudited) $11.96 (0.05) 0.24 0.19 - (2.67) (2.67) Year Ended September 30, 2005 $14.51 (0.06) 0.94 0.88 - (3.43) (3.43) Year Ended September 30, 2004 $12.42 (0.04) 2.13 2.09 - - - Year Ended September 30, 2003 $11.20 (0.06) 1.28 1.22 - - - Year Ended September 30, 2002 $ 9.42 (0.07) 1.85 1.78 - - Year Ended September 30, 2001 $ 9.24 (0.05) 0.26 0.21 (0.01) (0.02) (0.03) ICON MATERIALS FUND Period Ended March 31, 2006 (unaudited) $11.30 0.05 2.12 2.17 (0.02) (0.79) (0.81) Year Ended September 30, 2005 $ 9.05 0.03 2.23 2.26 (0.01) - (0.01) Year Ended September 30, 2004 $ 6.20 0.01 2.87 2.88 (0.03) - (0.03) Year Ended September 30, 2003 $ 5.68 0.03 0.50 0.53 (0.01) - (0.01) Year Ended September 30, 2002 $ 5.70 0.02 (0.01) 0.01 (0.03) - (0.03) Year Ended September 30, 2001 $ 6.49 0.02 (0.74) (0.72) (0.07) - (0.07) ICON TELECOMMUNICATION & UTILITIES FUND Period Ended March 31, 2006 (unaudited) $ 8.28 0.05 0.13 0.18 (0.18) (0.94) (1.12) Year Ended September 30, 2005 $ 6.61 0.14 1.61 1.75 (0.08) - (0.08) Year Ended September 30, 2004 $ 5.69 0.07 0.92 0.99 (0.07) - (0.07) Year Ended September 30, 2003 $ 4.78 0.10 0.87 0.97 (0.06) - (0.06) Year Ended September 30, 2002 $ 6.19 0.10 (1.45) (1.35) (0.06) - (0.06) Year Ended September 30, 2001 $ 8.13 0.09 (1.52) (1.43) (0.11) (0.40) (0.51)
(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. 74 Financial Highlights
RATIO OF NET NET ASSET AVERAGE NET RATIO OF INVESTMENT VALUE, NET ASSETS, ASSETS FOR THE EXPENSES INCOME/(LOSS) PORTFOLIO END OF TOTAL END OF PERIOD PERIOD TO AVERAGE TO AVERAGE TURNOVER PERIOD RETURN* (IN THOUSANDS) (IN THOUSANDS) NET ASSETS (A) NET ASSETS (A) RATE --------- ------- -------------- --------------- -------------- -------------- --------- $ 9.27 6.55% $320,884 277,239 1.21% (0.60)% 46.74% $ 8.70 10.13% $220,073 264,222 1.29% (0.91)% 152.16% $ 7.90 (4.47)% $244,252 282,062 1.31% (0.91)% 189.67% $ 8.27 38.29% $307,972 190,287 1.35% (1.16)% 155.39% $ 5.98 (23.33)% $ 75,623 189,972 1.31% (1.09)% 190.09% $ 7.80 (32.90)% $118,851 99,875 1.37% (0.90)% 70.32% $ 9.48 3.04% $ 39,737 40,879 1.68% (0.94)% 126.26% $11.96 5.01% $ 47,410 99,988 1.30% (0.45)% 271.72% $14.51 16.83% $ 83,022 104,515 1.33% (0.31)% 148.43% $12.42 10.89% $ 82,347 80,928 1.38% (0.51)% 139.54% $11.20 18.90% $ 88,341 86,202 1.34% (0.55)% 90.43% $ 9.42 2.26% $ 41,162 41,086 1.40% (0.50)% 148.23% $12.66 20.60% $166,555 134,573 1.26% 0.81% 76.61% $11.30 25.04% $ 99,569 101,971 1.31% 0.33% 128.01% $ 9.05 46.61% $139,838 68,497 1.37% 0.13% 59.48% $ 6.20 9.36% $ 30,376 40,156 1.47% 0.59% 130.01% $ 5.68 0.06% $ 59,020 45,917 1.36% 0.23% 74.55% $ 5.70 (11.07)% $ 29,200 24,544 1.47% 0.40% 91.28% $ 7.34 3.06% $ 66,163 80,074 1.33% 1.33% 70.85% $ 8.28 26.70% $120,651 101,129 1.26% 1.88% 112.91% $ 6.61 17.57% $ 61,325 54,232 1.37% 1.07% 108.81% $ 5.69 20.36% $ 42,509 53,219 1.41% 2.05% 158.24% $ 4.78 (22.05)% $ 66,366 20,196 1.50% 1.78% 137.81% $ 6.19 (18.74)% $ 16,537 13,554 1.54% 1.22% 46.10%
Financial Highlights 75 Notes to Financial Statements (unaudited) March 31, 2006 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The ICON Consumer Discretionary Fund ("Consumer Discretionary Fund"), ICON Energy Fund ("Energy Fund"), ICON Financial Fund ("Financial Fund"), ICON Healthcare Fund ("Healthcare Fund"), ICON Industrials Fund ("Industrials Fund"), ICON Information Technology Fund ("Information Technology Fund"), ICON Leisure and Consumer Staples Fund ("Leisure and Consumer Staples Fund"), ICON Materials Fund ("Materials Fund"), and ICON Telecommunication & Utilities Fund ("Telecommunication & Utilities Fund") are series funds (individually a "Fund" and collectively, the "Funds"). The Funds are part of the ICON Funds (the "Trust"), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment management company. There are eight other active funds within the Trust. Those funds are covered by separate prospectuses and shareholder reports. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries and sectors. Each Fund is authorized to issue an unlimited number of no par shares. The investment objective of each of Fund is to provide long-term capital appreciation. The Funds may have elements of risk, including the loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment in a non-diversified sector fund may involve greater risk and volatility than a diversified fund. Investments in foreign securities and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar-denominated transactions as a result of, among other factors, the possibility of lower government supervision and regulation of foreign securities markets and the possibility of political or economic instability. There are also risks associated with small- and mid-cap investing, including limited product lines, less liquidity and small market share. In addition, in the normal course of business the Funds may enter into various agreements that provide for general indemnifications. Each Fund's maximum exposure under these arrangements is unknown as any potential exposure involves future claims that may be made against each Fund. However, based on experience, the Funds expect the risk of loss to be remote. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from these estimates. 76 Notes to Financial Statements INVESTMENT VALUATION The Funds' securities and other assets are valued at the closing price at the close of the regular trading session of the New York Stock Exchange (the "NYSE") (normally 4 p.m. Eastern time) each day the NYSE is open, except that securities traded primarily on the NASDAQ Stock Market ("NASDAQ") are normally valued by a Fund at the NASDAQ Official Closing Price provided by NASDAQ each business day. The Funds use pricing services to report the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service quote of valuation is considered inaccurate or does not reflect the market value of the security, prices may be obtained through market quotations from independent broker/dealers. If market quotations from these sources are not readily available, the Funds' securities or other assets are valued at fair value as determined in good faith by the Funds' Board of Trustees ("Board") or pursuant to procedures approved by the Board. Lacking any sales that day, the security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes from dealers making a market for the security. Options are valued at their closing mid-price on the principal market where the option is traded. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than sixty days are valued in accordance with the evaluated bid price supplied by the pricing service. The evaluated bid price supplied by the pricing service is a matrix system which considers such factors as security prices, yields, maturities and ratings. Short-term securities with remaining maturities of sixty days or less are generally valued at amortized cost or original cost plus accrued interest, which approximates market value. Currency rates as of the close of the New York Stock Exchange are used to convert foreign security values into U.S. dollars. Foreign securities traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Funds' adviser determines that use of another valuation methodology is appropriate. The pricing service uses statistical analyses and quantitative models to adjust local market prices using factors such as subsequent movement and changes in the prices of indexes, securities and exchange rates in other markets in determining fair value as of the time a Fund calculates its net asset value. The valuation assigned to fair-valued securities for purposes of calculating a Fund's net asset value ("NAV") may differ from the security's most recent closing market price and from the prices used by other mutual funds to calculate their NAVs. 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' Notes to Financial Statements 77 Notes to Financial Statements (unaudited) (continued) 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, 2006. 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, 2006. 78 Notes to Financial Statements FUTURES CONTRACTS The Funds may invest in financial futures contracts for the purpose of hedging their existing securities or securities it intends to purchase against fluctuations in fair value caused by changes in prevailing markets. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as "variation margin," are made or received by the Fund each day, depending on the daily fluctuations in the fair value of the underlying security. The Fund recognizes a gain or loss equal to the daily variation margin. Should market conditions move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts and the underlying hedged assets. The Funds held no financial futures contracts during the period ended March 31, 2006. OPTIONS TRANSACTIONS Each Fund may write put and call options only if it owns an offsetting position in the underlying security. When a Fund writes a put or call option, an amount equal to the premium received is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. If an option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security and the proceeds from the sale are increased by the premium originally received. If a written put option is exercised, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, a Fund has no control over whether the underlying securities are subsequently sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the security underlying the written option. Each Fund may also purchase put and call options. When a Fund purchases a call or put option, an amount equal to the premium paid is included in the Fund's Statement of Assets and Liabilities as an investment, and is subsequently marked-to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If the Fund exercises a call, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option, a gain or loss is realized from the sale of the underlying security, and the proceeds from such a sale are decreased by the premium originally paid. Written and purchased options are non-income producing securities. The Funds did not enter into any option transactions during the period ended March 31, 2006. Notes to Financial Statements 79 Notes to Financial Statements (unaudited) (continued) INCOME TAXES The Funds intend to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code and, accordingly, the Funds will generally not be subject to federal and state income taxes, or federal excise taxes to the extent that they intend to make sufficient distributions of net investment income and net realized capital gains. Dividends received by shareholders of the Funds which are derived from foreign source income and foreign taxes paid by the Funds are to be treated, to the extent allowable under the Code, as if received and paid by the shareholders of the Funds. Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders. Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryovers. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Certain dividends from foreign securities will be recorded as soon as the Funds are informed of the dividend if such information is obtained subsequent to the ex-dividend date. Discounts and premiums on securities purchased are amortized over the life of the respective securities. INVESTMENT TRANSACTIONS Security transactions are accounted for no later than one business day after trade date. However, for financial reporting purposes security transactions are accounted for on trade date. Gains and losses on securities sold are determined on the basis of identified cost. EXPENSES Expenses which cannot be directly attributed to a specific fund in the Trust are apportioned between all funds in the Trust based upon relative net assets. 80 Notes to Financial Statements 2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEES ICON Advisers, Inc. ("ICON") serves as the investment adviser to the Funds and is responsible for managing the Funds' portfolios of securities. Effective January 31, 2006, the Funds are obligated to pay ICON management fees computed daily at an annual rate of 1.00% of the first $500 million of average daily net assets, 0.95% on the next $250 million, 0.925% on the next $750 million, 0.90% on the next $3.5 billion, and 0.875% on average daily net assets over $5 billion. Prior to that date, ICON received a monthly management fee that was computed daily at an annual rate of 1.00% of the Funds' average daily net assets. TRANSFER AGENT, CUSTODY AND ACCOUNTING FEES BISYS Fund Services Ohio, Inc. ("BISYS") is the Fund Accounting Agent for the Funds. For its services, the Trust pays BISYS 0.03% on the first $1.75 billion of average net assets, 0.0175% on the average net assets over $1.75 billion and up to $5 billion, and 0.01% on average net assets in excess of $5 billion. Brown Brothers Harriman ("BBH") is the 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. Boston Financial Data Services, Inc. is 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. As of January 31, 2006, this agreement provides for an annual fee of 0.05% on the Funds' first $1.5 billion of average daily net assets, 0.045% on the next $1.5 billion of average daily net assets, 0.040% on the next $2 billion of average daily net assets and 0.030% on average daily net assets over $5 billion. Prior to that date, this agreement provided 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 Notes to Financial Statements 81 Notes to Financial Statements (unaudited) (continued) resulting from willful misfeasance, bad faith or negligence by ICON in the performance of its duties. ICON has entered into a sub-administration agreement with BISYS pursuant to which BISYS assists ICON with the administration and business affairs of the Trust. For its services, ICON pays BISYS at an annual rate of 0.025% on the first $1.75 billion of Trust assets and 0.015% on assets above $1.75 billion. RELATED PARTIES Certain Officers and Directors of ICON are also Officers and Trustees of the Funds; however, such Officers and Trustees (with the exception of the Chief Compliance Officer, "CCO") receive no compensation from the Funds. The CCO's salary is paid 90% by the Funds and 10% by the Adviser. For the period ended March 31, 2006, the total related amounts paid by the Trust under this arrangement are included in Other Expenses on the Statements of Operations. 3. LINE OF CREDIT The Funds entered into Lines of Credit agreements with BBH; the maximum borrowing is limited to 25% of eligible securities held by the portfolio subject to a maximum borrowing limit by the Trust of $115 million. Interest is charged at LIBOR plus 2.00% which was 6.83% at March 31, 2006.
AVERAGE BORROWING (10/1/05 - 3/31/06) ---------------------------------------------------------------------------------- ICON Consumer Discretionary Fund** $1,827,583 ICON Energy Fund** 8,619,033 ICON Financial Fund** 2,248,947 ICON Healthcare Fund 15 ICON Industrials Fund** 1,371,632 ICON Information Technology Fund** 1,271,747 ICON Leisure and Consumer Staples Fund** 503,993 ICON Materials Fund** 619,774 ICON Telecommunication & Utilities Fund** 1,928,028
** Fund had outstanding borrowings as of March 31, 2006. 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 82 Notes to Financial Statements recognized in future years and post October loss deferrals. The accumulated losses noted in the following tables represent net capital loss carryforwards as of September 30, 2005 that may be available to offset future realized capital gains and thereby reduce future taxable income distributions. The ICON Information Technology Fund has a capital loss carryforward of $54,485,753, which expires in 2011. During the year ended September 30, 2005, the following capital loss carryforwards were used: ICON Consumer Discretionary Fund $ 6,093,146 ICON Energy Fund 7,535,248 ICON Industrials Fund 24,281,548 ICON Information Technology Fund 9,949,705 ICON Materials Fund 19,740,720 ICON Telecommunication & Utilities Fund 4,843,948
The aggregate gross unrealized appreciation and depreciation of securities held by the Funds and the total cost of securities for federal tax purposes as of March 31, 2006 were as follows:
UNREALIZED UNREALIZED NET APPRECIATION FUND COST APPRECIATION (DEPRECIATION) (DEPRECIATION) ----------------------------------------------------------------------------------------- ICON Consumer Discretionary Fund $138,980,627 $ 18,225,711 $ (1,566,505) $ 16,659,206 ICON Energy Fund 650,853,910 335,902,416 (5,908,427) 329,993,989 ICON Financial Fund 206,778,303 36,186,333 (2,116,476) 34,069,857 ICON Healthcare Fund 618,516,079 161,399,392 (10,634,799) 150,764,593 ICON Industrials Fund 195,562,584 65,165,985 (456,188) 64,709,797 ICON Information Technology Fund 272,219,833 53,001,383 (3,569,892) 49,431,491 ICON Leisure and Consumer Staples Fund 35,470,314 5,032,086 (374,156) 4,657,930 ICON Materials Fund 135,191,723 33,523,597 (1,467,316) 32,056,281 ICON Telecommunication & Utilities Fund 58,635,904 10,081,506 (610,691) 9,470,815
Notes to Financial Statements 83 Other Information (unaudited) 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 84 Other Information [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 I-147-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 12(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. NOT APPLICABLE - ONLY FOR ANNUAL REPORTS. 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. (c) 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 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 May 31, 2006 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 May 31, 2006 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 May 31, 2006