N-CSR 1 d262274dncsr.htm FORM N-CSR FORM N-CSR
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-07883

ICON Funds

(Exact name of registrant as specified in charter)

5299 DTC Blvd. Suite 1200 Greenwood Village, CO 80111

(Address of principal executive offices) (Zip code)

Erik L. Jonson 5299 DTC Blvd. Suite 1200 Greenwood Village, CO 80111

(Name and address of agent for service)

Registrant’s telephone number, including area code: 303-790-1600

Date of fiscal year end: September 30, 2011

Date of reporting period: September 30, 2011

 

 

 


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TABLE OF CONTENTS

 

Item 1. Reports to Stockholders

     2   

Item 2. Code of Ethics

     3   

Item 3. Audit Committee Financial Expert

     3   

Item 4. Principal Accountant Fees and Services

     3   

Item 5. Audit Committee of Listed Registrants

     4   

Item 6. Investments

     4   

Item  7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

     4   

Item 8. Portfolio Managers of Closed-End Management Investment Companies

     4   

Item  9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

     4   

Item 10. Submission of Matters to a Vote of Security Holders

     5   

Item 11. Controls and Procedures

     5   

Item 12. Exhibits

     5   

SIGNATURES

     6   

EX-99.CODE ETH

  

EX-99.CERT

  

EX-99.906CERT

  


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Item 1.  Reports to Stockholders.

 


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LOGO

2011 ANNUAL REPORT

ICON DIVERSIFIED FUNDS

INVESTMENT UPDATE

ICON Bond Fund

ICON Core Equity Fund

ICON Equity Income Fund

ICON Long/Short Fund

ICON Risk-Managed Equity Fund

LOGO

1-800-764-0442 | www.iconfunds.com

 

AR-DIV-11 K21585


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LOGO

You can now sign up for electronic delivery of ICON Fund shareholder reports, including prospectuses, annual reports, semiannual reports and proxy statements.

When these materials are available, you will receive an email from ICON with instructions on how to view the documents. Statements, transaction confirmations and other documents that are not available online will continue to be sent to you by U.S. mail.

Visit ICON’s website at www.iconfunds.com to learn more and sign up.

You may change or cancel your participation in eDelivery by visiting www.iconfunds.com, or you can request a hard copy of any of the materials free of charge by calling ICON Funds at 1-800-764-0442.

 

1-800-764-0442    •    www.iconfunds.com


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TABLE OF CONTENTS

 

About This Report (Unaudited)

     2   

Message from ICON Funds (Unaudited)

     6   

Management Overview (Unaudited) and Schedules of Investments

  

ICON Bond Fund

     8   

ICON Core Equity Fund

     17   

ICON Equity Income Fund

     22   

ICON Long/Short Fund

     30   

ICON Risk-Managed Equity Fund

     38   

Financial Statements

     46   

Financial Highlights

     54   

Notes to Financial Statements

     64   

Report of Independent Registered Public Accounting Firm

     84   

Six Month Hypothetical Expense Example (Unaudited)

     85   

Board of Trustees and Fund Officers (Unaudited)

     88   

Other Information (Unaudited)

     91   

Important Notice to Shareholders (Unaudited)

     98   


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ABOUT THIS REPORT (UNAUDITED)

Historical Returns

All total returns mentioned in this Report account for the change in a Fund’s per-share price and the reinvestment of any dividends, capital gain distributions and adjustments for financial statement purposes. 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 may have reimbursed certain fees or expenses of some of the Funds. If not for these reimbursements, performance would have been lower. Fund results shown, unless otherwise indicated, are at net asset value. If a sales charge (maximum 5.75%) had been deducted, results 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.iconfunds.com for performance results current to the most recent month-end.

Portfolio Data

This Report reflects ICON’s views, opinions and portfolio holdings as of September 30, 2011, 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, industry or sector. Each Fund’s holdings as of September 30, 2011 are included in each Fund’s Schedule of Investments.

According to ICON, value investing is an analytical approach to investing that employs various factors, including projecting earnings growth estimates, in an effort to determine whether securities are over- or underpriced relative to ICON’s estimates of their intrinsic value. Value investing involves risks and uncertainties and does not guarantee better performance or lower costs than other investment methodologies. ICON’s value-to-price ratio (“V/P”) is a ratio of intrinsic value, as calculated using ICON’s proprietary valuation methodology, of a broad range of domestic and international securities within ICON’s system as compared to the current market price of those securities. The ICON system relies on the integrity of financial statements released to the market as part of our analysis.

 

2   ABOUT THIS REPORT


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This Report contains statements regarding industry or sector themes, new market themes, investment outlook, relative strength, value-to-price ratios, and investment team expectations, beliefs, goals and the like that are based on current expectations, recent individual stock performance relative to current market prices, estimates of company values and other information supplied to the market by the companies we follow. Words such as “expects,” “suggests,” “anticipates,” “targets,” “goals,” “value,” “intrinsic value,” “indicates,” “believes,” “considers,” “estimates,” variations of such words and similar expressions are intended to identify forward looking statements, which are not statements of historical fact. Forward looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. These risks and uncertainties are based on a number of important factors, including, among others: stock price fluctuations; the integrity and accuracy of historical and projected financial and other information supplied by companies to the public or assumptions based on such information supplied; interest rates; bond yields; future earnings growth rates; the risks noted in this Report and other factors beyond the control of our investment team but used by the investment team to influence their assumptions. Therefore, actual outcome may differ materially from what is expressed in such forward looking statements.

There are risks associated with mutual fund investing, including the loss of principal. The likelihood of loss may be greater if you invest for a shorter period of time. There is no assurance that the investment process will consistently lead to successful results.

There are risks associated with selling short, including the risk that the ICON Long/Short Fund may have to cover its short position at a higher price than the short price, resulting in a loss. The ICON Long/Short 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 in the underlying securities, and are not suitable for all investors.

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 ICON 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.

An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment.

 

ABOUT THIS REPORT     3   


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Investments in foreign securities may entail unique risks, including political, market, and currency risks. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, do not exist in foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers. The ICON system relies on the integrity of financial statements released to the market as part of our analysis.

The prospectus and statement of additional information contain this and other information about the Funds and are available by visiting www.iconfunds.com or calling 1-800-764-0442. Please read the prospectus and statement of additional information carefully.

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 Funds’ portfolios may significantly differ in holdings and composition from the index. Individuals cannot invest directly in an index.

 

 

The unmanaged Standard & Poor’s (“S&P”) Composite 1500 Index (“S&P 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 unmanaged Barclays Capital 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.

 

 

The unmanaged Barclays Capital U.S. Universal Index (ex-MBS) represents the Barclays Capital U.S. Universal Index without including the CMBS Index and the CMBS High-Yield Index.

Index returns and statistical data included in this Report are provided by FactSet Research Systems.

 

4   ABOUT THIS REPORT


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Financial Intermediary

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may influence the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.

 

 

ABOUT THIS REPORT     5   


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MESSAGE FROM ICON FUNDS

Dear Shareholder,

As valuation investors, we look for quality companies priced below our estimate of intrinsic value. We will buy stocks we believe are “on sale” when investors get distracted by a particular news story or headline and worry about its potential impact on the economy in general and the markets in particular. When this happens, stocks are temporarily priced based on worst-case scenario projections, not on their fundamentals. As concerns subside, prices often move up toward the stock’s intrinsic value and may even exceed ICON’s estimate of value when excessive worry is replaced with excessive optimism. Implementing our valuation strategy does not require an information edge; it simply requires discipline. Our system needs discipline to filter out news headlines, concentrate on value, and, frequently, buy when most are selling and sell when most are buying. ICON’s discipline requires also the willingness to take strong industry and sector tilts. We see industries and sectors becoming overpriced and underpriced through cycles as investors change their views of the economy and migrate around the universe of stocks.

In spite of a volatile 12 months, we believe the stock market is in a multi-year recovery from the financial crisis and recession of 2008-2009. Stocks were generally priced far below our estimate of their fair value when the market hit its recent low in March 2009, but their ascent toward fair value has been choppy and severely interrupted at least twice; first in the summer of 2010 and then again during the summer of 2011. Both times, sharp drops in stock prices were precipitated by concerns over the European sovereign debt crisis. Investors were especially wary of the situation in Greece, but also, to a lesser extent, investors worried about the economies of Ireland, Spain and Italy. We thought these concerns were excessive in 2010 and we continue to believe the concern is unwarranted. We expect fears to subside and, when that happens, we believe stocks will resume their recovery path.

The interruptions experienced during the summers of 2010 and 2011 have been frustrating for value investors like ICON, as we see a very different world than many other investors. Where others see a negative macroeconomic outlook, we see positive earnings and solid company fundamentals. When 2011 second quarter earnings were announced, companies in the S&P 500 Index reported earnings that were, on average, 16.24% higher than a year earlier. In fact, 75% of those companies reported earnings that exceeded analysts’ estimates by 4.67% on average. This growth in earnings is more robust than the earnings we saw coming out of any of the previous four recessions (that is, 1974, 1982, 1992 and 2001 recessions). Strong earnings and a low interest rate environment contribute to what we

 

6   MESSAGE FROM ICON FUNDS


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believe are attractive valuations, but skittish investors, concerned with debt problems in Europe, continue to shy away from equities.

We have seen investors turn their backs on solid fundamentals many times before. Historically, however, investors have come to gradually embrace these fundamentals and stock prices generally rise again to meet intrinsic value. In 1990, 1998 and 2010, for example, the market experienced a decline similar in magnitude and duration to that seen during the summer of 2011. Each market bottom led to anxiety over a worsening recession, but, months later, these fears proved unfounded. Stock prices rebounded and resumed their prior upward path. As we head into a new fiscal year, we are anticipating a similar rebound. Having two major market interruptions in two consecutive summers is unusual, unsettling and has admittedly made it difficult for investors to stay the course to recovery. The volatile environment also presented problems for money managers like ICON who struggled with abrupt and extreme industry and sector theme reversals.

As fiscal year 2011 comes to an end, we still believe cyclical, economically sensitive industries are the long term leaders for this multi-year recovery. Unfortunately, these same industries can be subject to dramatic market swings when investors, worried about the economy, panic and jump out of the market. We believe the old Wall Street adage still applies: “Stocks climb a wall of worry.” The climb back from the recession and financial crisis of 2008 and 2009 has been and will continue to be riddled with worry.

As always, we remain focused on value and company fundamentals as we try to filter out the conjecture and emotions that typically contribute to market volatility. Experienced sailors will tell someone who is seasick: “Don’t look at the waves; look at the horizon.” Lately, it seems, most investors have been focused on the waves. At ICON, we like to focus on a horizon that includes quality companies, with growing earnings, priced far below our estimate of their fair value. We will continue to stay this course.

Yours truly,

LOGO

Craig T Callahan, DBA

Chairman of the Board of Trustees and President of the Adviser

 

MESSAGE FROM ICON FUNDS     7   


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MANAGEMENT OVERVIEW

ICON BOND FUND

  

Class I

Class C

Class Z

Class A

 

IOBIX

IOBCX

IOBZX

IOBAX

 

Q. How did the Fund perform relative to its benchmark?

 

A.

For the Fund’s fiscal year ended September 30, 2011, the ICON Bond Fund underperformed its benchmark, the Barclays Capital US Universal ex MBS Index. For the fiscal year the Fund returned -0.19% for the Class I shares, -0.68% for the Class C shares (and -1.53% with maximum sales charge), -0.02% for the Class A shares (and -4.77% with maximum sales charge) and 0.15% for the Class Z shares, while the Barclays Capital US Universal ex MBS Index returned 4.47% and the Barclays Capital US Universal Index returned 4.77%.1 Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

1 

The Fund changed its benchmark to the Barclays Capital US Universal ex MBS Index on January 24, 2011 because the Fund has not significantly invested in asset-backed securities in the past and has no present intent to do so in the immediate future.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. While the majority of headline news has been focused on volatility in the equity market, the fixed income market experienced similar movement, creating a challenging environment for the ICON Bond Fund. The fiscal year can be broken down into two distinct time periods based on the differences in performance between corporate bonds and the “risk free” safe haven of Treasury securities. Utilizing ICON’s valuation system, which is quantitatively based on comparing historical relationships across the credit curve to current relationships, the Fund began the fiscal year with an overweight position in corporate bonds and underweight position in Treasury securities as historical risk-return relationships pointed to a continuation of corporate credit spread tightening amidst an environment of rising interest rates. Because of the Fund’s overweight position in corporate bonds, the Fund did well during the first half of the fiscal year as investors sold off Treasury securities, increasing the yield on the 10-Year Treasury from 2.51% on 09/30/10 to 3.47% on 03/31/11. At the same time corporate credit spreads, as measured by comparing Moody’s Baa Index Yields to the US 10-year Constant Maturity Treasury yield, tightened from 307 bps. to 258 bps. During the first half of the fiscal year, corporate bonds with lower credit quality also fared well with the Barclays Capital US High Yield Corporate Index posting gains in excess of 7%.

 

8   MANAGEMENT OVERVIEW


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The second half of the fiscal year saw investors shift their focus away from improving corporate fundamentals and towards European sovereign debt concerns and slowing domestic economic growth. Initially, safe haven buying of Treasury securities was relatively muted as 10-year yields fell by 47 bps. to 3% from 03/31/11 to 06/30/11. However, increasing fears surrounding European debt combined with additional monetary stimulus from the Federal Reserve, in the form of “Operation Twist,” caused Treasury yields to collapse, finishing the fiscal year at 1.92%. Inversely, corporate bond spreads, again measured by comparing Moody’s Baa Index Yields to the US 10-year Constant Maturity Treasury yield, widened significantly from 258 bps on 03/31/11 to finish the year at 330 bps on 09/30/11. This reversal resulted in the Fund underperforming as our valuation methodology indicated that corporate bonds were undervalued while Treasuries were overvalued throughout the entire fiscal year.

 

Q. How did the Fund’s composition affect performance?

 

A. As stated above, the Fund’s overweight position in corporate bonds during the fiscal year affected performance negatively. Further, although the Fund’s significant underweight position in perceived “risk free” Treasuries benefitted the Fund’s performance relative to the benchmark during the first half of the fiscal year, the strong reversal during the second half of the year resulted in negative overall allocation effect. The Fund’s corporate bond allocation also resulted in underperformance relative to the benchmark as our methodology pointed us towards both the Financial sector and the high yield segment of the market. Both of these areas underperformed during the fiscal year. Finally, while the Fund’s exposure to floating rate notes aided relative performance in the face of rising yields at the outset of the fiscal year, this overweight exposure negatively impacted relative performance in the second half of the year as the Federal Reserve’s announcement that it intended to maintain low interest rates into 2013 made variable rate investments unattractive.

 

Q. What is your investment outlook for the bond market?

 

A.

ICON’s valuation system continues to see significant value in intermediate to long term corporate bonds. On the Treasury side, continued purchases by the Federal Reserve should provide enough support to aid further economic expansion. However, this action has lowered interest rates to a level that makes investment in these securities unattractive from a valuation perspective. On the corporate side, credit spreads widened over the fiscal year due to a barrage of economic concerns. However, default rates continue to decline across all

 

MANAGEMENT OVERVIEW     9   


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  credit qualities. This environment of declining default rates coupled with widening credit spreads creates very attractive valuation disconnects which have historically resulted in positive returns for patient investors. We believe once economic concerns subside, corporate bond spreads will resume the tightening trend that began in 2009.

ICON Bond Fund

Credit Diversification

September 30, 2011

 

A1

    1.7%   

A2

    4.7%   

A3

    12.6%   

Aa2

    2.6%   

Aa3

    2.5%   

B1

    6.0%   

B2

    1.2%   

B3

    1.6%   

Ba1

    4.6%   

Ba2

    4.4%   

Baa1

    9.1%   

Baa2

    14.1%   

Baa3

    22.8%   
 

 

 

 
    87.9%   
 

 

 

 

Percentages are based upon corporate and foreign corporate bond investments as a percentage of net assets.

Ratings based on Moody’s Investors Service, Inc.

 

 

 

10   MANAGEMENT OVERVIEW


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ICON Bond Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
    1 Year     5 Years     Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Bond Fund - Class I

    9/30/02        -0.19%        5.21%        4.80%        1.13%        1.00%   

Barclays Capital U.S. Universal Index

            4.77%        6.40%        5.66%        N/A        N/A   

Barclays Capital U.S. Universal Index (ex-MBS)

            4.47%        6.17%        5.72%        N/A        N/A   

ICON Bond Fund - Class C

    10/21/02        -0.68%        4.59%        4.48%        2.46%        1.60%   

Barclays Capital U.S. Universal Index

            4.77%        6.40%        5.92%        N/A        N/A   

Barclays Capital U.S. Universal Index (ex-MBS)

            4.47%        6.17%        6.06%        N/A        N/A   

ICON Bond Fund - Class Z

    5/6/04        0.15%        5.46%        4.84%        1.39%        0.75%   

Barclays Capital U.S. Universal Index

            4.77%        6.40%        5.91%        N/A        N/A   

Barclays Capital U.S. Universal Index (ex-MBS)

            4.47%        6.17%        5.78%        N/A        N/A   

ICON Bond Fund - Class A

    9/30/10        -0.02%        N/A        -0.02%        1.13%        1.00%   

ICON Bond Fund - Class A (including maximum sales charge of 4.75%)

    9/30/10        -4.77%        N/A        -4.76%        1.13%        1.00%   

Barclays Capital U.S. Universal Index

            4.77%        N/A        4.77%        N/A        N/A   

Barclays Capital U.S. Universal Index (ex-MBS)

            4.47%        N/A        4.47%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

MANAGEMENT OVERVIEW     11   


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ICON Bond Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

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.

 

12   MANAGEMENT OVERVIEW


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ICON BOND FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Interest
Rate
    Maturity
Date
    Value  
       
  Corporate Bonds (80.2%)   
$ 220,000      ACE INA Holdings, Inc.     8.88     08/15/29      $ 308,157   
  800,000      AES Corp.     7.75     10/15/15        812,000   
  1,000,000      Alcoa, Inc.     6.75     07/15/18        1,071,104   
  950,000      Alcoa, Inc.     5.72     02/23/19        953,448   
  1,000,000      Alcoa, Inc.     6.75     01/15/28        1,034,944   
  1,000,000      Allied Waste North America, Inc.     6.88     06/01/17        1,068,750   
  2,000,000      Ally Financial, Inc.     6.75     12/01/14        1,938,732   
  1,000,000      Ameren Energy Generating Co.(a)     7.00     04/15/18        1,012,500   
  1,440,000      American Express Bank FSB(b)     0.53     06/12/17        1,323,238   
  1,000,000      American Express Co.     7.00     03/19/18        1,183,027   
  400,000      American International Group, Inc.     5.38     10/18/11        399,500   
  900,000      American International Group, Inc.     4.25     05/15/13        897,831   
  900,000      American International Group, Inc.     8.25     08/15/18        997,602   
  800,000      Avnet, Inc.     6.00     09/01/15        864,858   
  250,000      Bank of America Corp.     5.42     03/15/17        217,191   
  900,000      Bank of America Corp.     5.63     07/01/20        828,956   
  1,000,000      Bank of America Corp.     6.80     03/15/28        975,829   
  950,000      Bank of America NA(b)     0.65     06/15/17        698,668   
  1,000,000      BB&T Corp.     5.25     11/01/19        1,089,943   
  850,000      Best Buy Co., Inc.     5.50     03/15/21        772,330   
  401,000      Bill Barrett Corp.     9.88     07/15/16        437,090   
  950,000      Citigroup, Inc.     6.00     08/15/17        1,008,173   
  1,000,000      Citigroup, Inc.     6.13     05/15/18        1,072,604   
  500,000      Comcast Cable Holdings LLC     9.80     02/01/12        513,491   
  1,000,000      Commercial Metals Co.     7.35     08/15/18        1,017,166   
  1,000,000      Computer Sciences Corp.     6.50     03/15/18        1,080,137   
  900,000      Cooper Tire & Rubber Co.     7.63     03/15/27        792,000   
  114,000      Cox Communications, Inc.     7.63     06/15/25        149,041   
  450,000      Dean Foods Co.     6.90     10/15/17        420,750   
  950,000      Delphi Financial Group, Inc.     7.88     01/31/20        1,090,151   
  500,000      Denbury Resources, Inc.     9.75     03/01/16        540,000   
  450,000      Exelon Generation Co. LLC     5.35     01/15/14        481,640   
  750,000      Exelon Generation Co. LLC     6.20     10/01/17        845,688   
  900,000      Exelon Generation Co. LLC     4.00     10/01/20        894,757   
  23,000      FirstEnergy Corp., Series B     6.45     11/15/11        23,125   

 

SCHEDULE OF INVESTMENTS     13   


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Shares or Principal Amount   Interest
Rate
    Maturity
Date
    Value  
       
$ 1,000,000      Ford Motor Credit Co. LLC     5.63     09/15/15      $ 1,005,915   
  600,000      Freeport-McMoRan Copper & Gold, Inc.     8.38     04/01/17        643,500   
  1,000,000      Frontier Communications Corp.     8.13     10/01/18        980,000   
  900,000      Gap, Inc.     5.95     04/12/21        846,528   
  500,000      General Electric Capital Corp.     4.75     09/15/14        535,444   
  1,000,000      General Electric Capital Corp.(a)(b)     0.48     05/11/16        922,515   
  397,000      Genworth Financial, Inc.     5.65     06/15/12        401,410   
  1,000,000      Goldman Sachs Group, Inc.(b)     0.81     03/22/16        857,593   
  1,000,000      Goldman Sachs Group, Inc.     5.95     01/15/27        974,468   
  900,000      Goodyear Tire & Rubber Co.(a)     8.25     08/15/20        915,750   
  1,000,000      Hartford Financial Services Group, Inc.     6.30     03/15/18        1,033,682   
  1,000,000      HCP, Inc.     5.65     12/15/13        1,050,297   
  1,500,000      HCP, Inc.     6.30     09/15/16        1,604,880   
  500,000      HCP, Inc.     6.70     01/30/18        540,245   
  1,000,000      Horace Mann Educators Corp.     6.85     04/15/16        1,086,839   
  500,000      HSBC Finance Corp.     4.75     07/15/13        516,915   
  474,700      JC Penney Corp., Inc.     7.95     04/01/17        505,556   
  450,000      John Hancock Life Insurance Co.(c)(d)     7.38     02/15/24        528,110   
  1,000,000      JPMorgan Chase Bank NA(b)     0.67     06/13/16        917,509   
  1,000,000      Lincoln National Corp.     7.00     03/15/18        1,145,875   
  1,000,000      Lincoln National Corp.     8.75     07/01/19        1,185,269   
  1,400,000      Lorillard Tobacco Co.(a)     6.88     05/01/20        1,552,499   
  1,000,000      Masco Corp.     6.13     10/03/16        975,183   
  350,000      Merrill Lynch & Co., Inc.     5.45     02/05/13        346,859   
  1,500,000      Morgan Stanley(a)     4.75     04/01/14        1,425,478   
  900,000      Morgan Stanley(b)     0.73     10/15/15        760,029   
  950,000      Morgan Stanley     3.50     10/15/20        866,875   
  1,000,000      National City Bank(b)     0.70     06/07/17        915,629   
  1,000,000      National City Corp.     6.88     05/15/19        1,148,928   
  500,000      Newfield Exploration Co.     7.13     05/15/18        517,500   
  122,000      NLV Financial Corp.(c)(d)     6.50     03/15/35        109,236   
  1,000,000      NRG Energy, Inc.     7.38     01/15/17        1,031,250   
  600,000      Pitney Bowes, Inc.     4.75     05/15/18        601,389   
  750,000      PPL Energy Supply LLC     6.50     05/01/18        877,314   
  180,000      Provident Cos., Inc.     7.00     07/15/18        202,908   
  1,000,000      Reynolds American, Inc.     7.25     06/01/12        1,039,499   
  900,000      Reynolds American, Inc.     7.25     06/01/13        981,886   
  1,000,000      Rowan Cos., Inc.     7.88     08/01/19        1,180,730   
  500,000      RR Donnelley & Sons Co.     4.95     04/01/14        472,500   
  1,350,000      RR Donnelley & Sons Co.     6.13     01/15/17        1,171,125   
  900,000      RR Donnelley & Sons Co.(a)     6.63     04/15/29        722,250   

 

14   SCHEDULE OF INVESTMENTS


Table of Contents
Shares or Principal Amount   Interest
Rate
    Maturity
Date
    Value  
       
$ 500,000      Ryder System, Inc.     5.85     03/01/14      $ 546,577   
  1,350,000      Southern Copper Corp.     5.38     04/16/20        1,377,000   
  500,000      State Street Bank & Trust Co.(b)     0.54     12/08/15        479,969   
  1,000,000      Suntrust Banks, Inc.(b)     0.55     04/01/15        926,260   
  500,000      Tennessee Gas Pipeline Co.     7.00     10/15/28        585,269   
  500,000      Tesoro Corp.(a)     6.63     11/01/15        503,125   
  1,000,000      Torchmark Corp.     6.38     06/15/16        1,092,700   
  1,800,000      Toys R Us, Inc.     7.38     10/15/18        1,530,000   
  1,000,000      UIL Holdings Corp.     4.63     10/01/20        1,033,207   
  1,000,000      United States Steel Corp.(a)     6.05     06/01/17        910,000   
  850,000      Valmont Industries, Inc.     6.63     04/20/20        988,162   
  500,000      Wachovia Corp.     5.25     08/01/14        524,558   
  900,000      Wells Fargo Bank NA(b)     0.50     05/16/16        797,677   
  1,000,000      Whirlpool Corp.     7.75     07/15/16        1,205,879   
  1,000,000      Willis North America, Inc.     6.20     03/28/17        1,091,987   
       

 

 

 
 
 
Total Corporate Bonds
(Cost $75,795,150)
 
  
    77,504,158   
  U.S. Treasury Obligations (5.7%)   
  2,000,000      U.S. Treasury Note     2.38     07/31/17        2,136,250   
  1,000,000      U.S. Treasury Note     1.88     08/31/17        1,038,750   
  2,000,000      U.S. Treasury Note     3.63     02/15/20        2,308,750   
       

 

 

 
 
 
Total U.S. Treasury Obligations
(Cost $5,031,283)
 
  
    5,483,750   
  Foreign Corporate Bonds (7.7%)   
  900,000      AngloGold Holdings PLC     5.38     04/15/20        881,749   
  900,000      ArcelorMittal(a)     5.50     03/01/21        806,445   
  900,000      Aspen Insurance Holdings, Ltd.(a)     6.00     12/15/20        920,447   
  1,000,000      Gold Fields Orogen Holding BVI, Ltd.(d)     4.88     10/07/20        920,672   
  900,000      Petrobras International Finance Co.     5.38     01/27/21        909,900   
  1,900,000      UBS AG     5.88     12/20/17        1,955,161   
  900,000      Vale Overseas, Ltd.     8.25     01/17/34        1,096,200   
       

 

 

 
 
 
Total Foreign Corporate Bonds
(Cost $7,748,949)
 
  
    7,490,574   
  Foreign Government Bond (0.6%)   
  500,000      Republic of South Africa, YD     6.50     06/02/14        553,750   
       

 

 

 
 
 
Total Foreign Government Bonds
(Cost $508,558)
 
  
    553,750   
  Collateral for Securities on Loan (6.8%)   
  6,560,230      State Street Navigator Prime Portfolio         6,560,230   
       

 

 

 
 
 
Total Collateral for Securities on Loan
(Cost $6,560,230)
 
  
    6,560,230   

 

SCHEDULE OF INVESTMENTS     15   


Table of Contents
Shares or Principal Amount   Interest
Rate
  Maturity
Date
  Value  
       
  Short-Term Investment (4.5%)   
$ 4,326,005      State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/11       $ 4,326,005   
       

 

 

 
 
 
Total Short-Term Investments
(Cost $4,326,005)
    4,326,005   
 
 
Total Investments 105.5%
(Cost $99,970,175)
    101,918,467   
  Liabilities Less Other Assets (5.5)%     (5,350,682
       

 

 

 
  Net Assets 100.0%   $ 96,567,785   
       

 

 

 

The accompanying notes are an integral part of the financial statements.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

(b) Floating Rate Security. Rate disclosed is as of September 30, 2011.

 

(c) These securities are considered to be illiquid. The aggregate value of these securities at September 30, 2011 was $637,346, which represent 0.7% of the Fund’s Net Assets.

 

(d) 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

 

16   SCHEDULE OF INVESTMENTS


Table of Contents

MANAGEMENT OVERVIEW

ICON CORE EQUITY FUND

  

Class I

Class C

Class Z

Class A

 

ICNIX

ICNCX

ICNZX

ICNAX

 

Q. How did the Fund perform relative to its benchmark?

 

A. The ICON Core Equity Fund lost -1.33% for the Class I shares, -2.27% for the Class C shares (-3.27% with maximum sales charge), -2.43% for the Class Z shares, and -2.42% for the Class A shares (-8.04% with maximum sales charge) for the fiscal year ended September 30, 2011. The Fund’s benchmark, the S&P Composite 1500 Index, gained 0.92% over the fiscal year. Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors influenced the Fund’s relative performance during the period?

 

A. During fiscal year 2011, the stock market exhibited two extreme behaviors. Stock prices surged higher for the first seven months of the fiscal year. Between May and September 2011, however, prices dropped over European sovereign debt concerns and the potential fallout on the economy in general and European banks in particular. While the Fund rose 24.83% through April 2011, outperforming its benchmark, those gains were offset by the Fund’s declining 20.95% versus benchmark losses of 17.02% between May and September. As we did not see overpriced valuation readings typical of market peaks in April, we remained largely invested and had too much exposure during the ensuing five-month retreat.

 

Q. How did the Fund’s composition affect performance?

 

A. The Fund is heavily weighted in economically sensitive, cyclical stocks - the very stocks investors worried about recessions or economic slowdowns tend to avoid. We continued to hold on to many of these stocks even through the market downturn in the last half of the fiscal year because they had attractive valuation readings under the ICON system.

In that regard, the Fund was adversely affected by its holdings in the industrial conglomerates, industrial machinery, coal & consumable fuels, electronic components and steel industries. Nonetheless, we continue to hold positions in these last five industries at fiscal year end, believing them to be good values, and anticipating that these laggards will emerge as leaders in the next market upturn.

The top five industries that contributed positively to Fund performance are retail apparel, diversified metals & mining, computer hardware, consumer finance, and life & health insurance.

 

MANAGEMENT OVERVIEW     17   


Table of Contents
Q. What is your investment outlook for the overall market?

 

A. As the fiscal year closes, we estimate the overall market has a value-to-price ratio of 1.48, giving us confidence about the prospect for future opportunities. We believe the fears that drove the market lower will prove to be unwarranted and that the market will resume its recovery off the March 2009 low. As one fiscal year closes and another begins, we will continue to rely upon our disciplined methodology to guide us through these challenging times.

ICON Core Equity Fund

Sector Composition

September 30, 2011

 

Industrials

    25.8%   

Consumer Discretionary

    25.2%   

Information Technology

    13.6%   

Energy

    12.2%   

Materials

    8.5%   

Financial

    7.4%   

Health Care

    7.3%   
 

 

 

 
    100.0%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Core Equity Fund

Industry Composition

September 30, 2011

 

Integrated Oil & Gas

    7.4%   

IT Consulting & Other Services

    7.2%   

Cable & Satellite

    7.1%   

Apparel Retail

    6.8%   

Industrial Conglomerates

    6.0%   

Footwear

    5.5%   

Electrical Components & Equipment

    5.2%   

Industrial Machinery

    5.0%   

Computer Hardware

    4.5%   

Steel

    4.4%   

Industrial Gases

    4.1%   

Movies & Entertainment

    3.8%   

Railroads

    3.5%   

Construction & Farm Machinery & Heavy Trucks

    3.5%   

Biotechnology

    2.9%   

Consumer Finance

    2.9%   

Health Care Equipment

    2.3%   

Specialized Finance

    2.1%   

Health Care Services

    2.1%   

General Merchandise Stores

    2.1%   

Oil & Gas Drilling

    2.0%   

Electronic Components

    1.8%   

Other Diversified Financial Services

    1.8%   

Trading Companies & Distributors

    1.7%   

Coal & Consumable Fuels

    1.4%   

Oil & Gas Refining & Marketing

    1.4%   

Other Industries (each less
than 1%)

    1.5%   
 

 

 

 
    100.0%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

18   MANAGEMENT OVERVIEW


Table of Contents

ICON Core Equity Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
    1 Year     5 Years     10 Years     Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Core Equity Fund - Class I

    10/12/00        -1.33%        -6.82%        1.23%        1.16%        1.35%        1.35%   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        1.01%        N/A        N/A   

ICON Core Equity Fund - Class C

    11/28/00        -2.27%        -7.62%        0.40%        -0.20%        2.25%        2.25%   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        0.96%        N/A        N/A   

ICON Core Equity Fund - Class Z

    5/6/04        -2.43%        -7.17%        N/A        -1.37%        1.90%        1.90%   

S&P Composite 1500 Index

            0.92%        -0.86%        N/A        2.62%        N/A        N/A   

ICON Core Equity Fund - Class A

    5/31/06        -2.42%        -7.82%        N/A        -8.14%        2.68%        2.68%   

ICON Core Equity Fund - Class A (including maximum sales charge of 5.75%)

    5/31/06        -8.04%        -8.90%        N/A        -9.15%        2.68%        2.68%   

S&P Composite 1500 Index

            0.92%        -0.86%        N/A        0.10%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Since Inception performance results for Class C shares include returns for certain time periods that were restarted as of June 8, 2004. Class Z shares are available only to institutional investors.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

MANAGEMENT OVERVIEW     19   


Table of Contents

ICON Core Equity Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class I shares on the Class’ inception date of 10/12/00 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund’s other share classes will vary due to differences in charges and expenses. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

 

20   MANAGEMENT OVERVIEW


Table of Contents

ICON CORE EQUITY FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (100.0%)   
  22,100      Accenture PLC, Class A   $ 1,164,228   
  53,800      Alpha Natural Resources, Inc.     951,722   
  7,900      Apple, Inc.     3,011,322   
  75,100      Bio-Reference Labs, Inc.†(a)     1,382,591   
  29,000      CACI International, Inc., Class A     1,448,260   
  15,800      Cash America International, Inc.     808,328   
  31,000      Caterpillar, Inc.     2,289,040   
  31,400      Celgene Corp.     1,944,288   
  27,100      Chevron Corp.     2,507,292   
  13,500      Cliffs Natural Resources, Inc.     690,795   
  5,700      CME Group, Inc.     1,404,480   
  114,700      Comcast Corp., Class A     2,397,230   
  31,800      Cooper Industries PLC     1,466,616   
  98,400      Corning, Inc.     1,216,224   
  61,800      CSX Corp.     1,153,806   
  18,200      Dollar Tree, Inc.     1,367,002   
  18,400      Dover Corp.     857,440   
  21,600      Eaton Corp.     766,800   
  48,100      Emerson Electric Co.     1,987,011   
  33,200      Exxon Mobil Corp.     2,411,316   
  38,700      Ezcorp, Inc., Class A     1,104,498   
  11,800      General Dynamics Corp.     671,302   
  126,400      General Electric Co.     1,926,336   
  31,000      Illinois Tool Works, Inc.     1,289,600   
  12,500      International Business Machines Corp.     2,187,875   
  39,000      JPMorgan Chase & Co.     1,174,680   
Shares or Principal Amount   Value  
   
  35,500      Nike, Inc., Class B   $ 3,035,605   
  44,100      Noble Corp.     1,294,335   
  26,400      Nucor Corp.     835,296   
  6,300      Parker Hannifin Corp.     397,719   
  29,200      Praxair, Inc.     2,729,616   
  52,500      ResMed, Inc.†(a)     1,511,475   
  22,600      Ross Stores, Inc.     1,778,394   
  22,900      Siemens AG, ADR     2,056,191   
  137,900      Steel Dynamics, Inc.     1,367,968   
  37,300      Time Warner Cable, Inc.     2,337,591   
  48,600      TJX Cos., Inc.     2,695,842   
  14,500      Union Pacific Corp.     1,184,215   
  50,900      Valero Energy Corp.     905,002   
  30,200      Viacom, Inc., Class B     1,169,948   
  44,100      Walt Disney Co.     1,330,056   
  17,100      Wells Fargo & Co.     412,452   
  18,500      Wolverine World Wide, Inc.     615,125   
  7,700      WW Grainger, Inc.     1,151,458   
   

 

 

 
 
 
Total Common Stocks
(Cost $67,135,739)
    66,388,370   
 
 
Collateral for Securities on
Loan (2.8%)
 
  1,841,798      State Street Navigator Prime Portfolio     1,841,798   
   

 

 

 
 
 
 
Total Collateral for Securities
on Loan
(Cost $1,841,798)
    1,841,798   
 
 
Total Investments 102.8%
(Cost $68,977,537)
    68,230,168   
 
 
Liabilities Less Other Assets
(2.8)%
    (1,875,937
   

 

 

 
  Net Assets 100.0%   $ 66,354,231   
   

 

 

 
 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

ADR American Depository Receipt

 

SCHEDULE OF INVESTMENTS     21   


Table of Contents

MANAGEMENT OVERVIEW

ICON EQUITY INCOME FUND

  

Class I

Class C

Class Z

Class A

 

IOEIX

IOECX

IOEZX

IEQAX

 

Q. How did the Fund perform relative to its benchmark?

 

A. The ICON Equity Income Fund, Class I, returned -2.73% for the fiscal year ending September 30, 2011, underperforming the Fund’s benchmark, the S&P Composite 1500 Index, which returned 0.92% during the same period. Class A shares of the Fund returned -2.66% (and -8.22% with maximum sales charge) during the same period. Class C shares of the Fund returned -3.47% (and –4.47% with maximum sales charge) for the fiscal year, while Class Z shares returned -2.40%. Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. In the first half of the fiscal year, the S&P 1500 rose over 18% while the ICON Equity Income Fund returned approximately 14%. The Fund’s cash and non-equity holdings, as well as weak performance from the Fund’s dividend paying stocks in general, help account for the Fund’s underperforming the benchmark by 4% during this period. For the 12-months ended September 30, 2011, the Fund’s composition, on average, included an allocation of approximately 15% cash, preferred stock, convertible bonds, and other fixed income instruments. In a six-month period marked by an 18% return in the benchmark, the Fund’s cash and fixed income holdings proved detrimental to performance. The Fund’s dividend-paying stocks likewise dragged on performance. Within the S&P 1500, stocks that pay a dividend yield of less than 2% gained over 20% during the first half of the fiscal year while stocks that pay more than 2% returned about 15% for the same time period. Over the course of the fiscal year, 78% of the stocks in the ICON Equity Income Fund, on average, had a dividend of 2% or more.

In the last half of the fiscal year, however, the market reversed course, and both the market and the Fund experienced significant losses that offset earlier gains. Although the Fund’s equity positions lagged the benchmark, this time the Fund’s non-equity exposure benefitted Fund performance during the market downturn.

 

Q. How did the Fund’s composition affect performance?

 

A.

The fund was overweight Energy and Industrials stocks with a dividend yield of 2% or more. These higher yielding stocks returned considerably

 

22   MANAGEMENT OVERVIEW


Table of Contents
  less during the fiscal year than stocks that paid a dividend yield of less than 2%. Moreover, the Fund’s Energy and Industrials holdings had losses of 20% or more compared to an overall 6.5% loss for similar yielding stocks in the S&P 1500.

The Fund’s overweight position in the Industrials sector was the biggest detractor from performance, with the Fund’s railroads holdings in particular contributing significantly to those losses. Over the course of the fiscal year, Industrials made up on average around 13.8% of the Fund compared to 11.5% of the benchmark. On the other hand, the Fund’s overweight Utilities holdings were up approximately 19.5% over the fiscal year, outperforming the 11.9% return by the Utilities stocks held by the S&P 1500. Still, the Fund’s Utilities returns could not overcome losses by the Fund’s Industrials and other cyclical holdings.

 

Q. What is your investment outlook for the market?

 

A. As the fiscal year ends, we estimate the overall domestic market has a V/P of approximately 1.48 under the ICON system, suggesting many opportunities exist for investors. We believe also that investors will seek out high dividend securities as they look to generate income in the coming year. Guided by our valuation and relative strength metrics, we will continue to try to take advantage of changing market conditions so as to benefit the Fund.

ICON Equity Income Fund

Sector Composition

September 30, 2011

 

Industrials

    17.8%   

Financial

    15.3%   

Information Technology

    14.7%   

Consumer Discretionary

    11.6%   

Energy

    10.9%   

Materials

    7.4%   

Health Care

    6.7%   

Telecommunication & Utilities

    4.7%   

Consumer Staples

    2.7%   
 

 

 

 
    91.8%   
 

 

 

 

Percentages are based upon common, preferred and convertible preferred stocks as a percentage of net assets.

 

MANAGEMENT OVERVIEW     23   


Table of Contents

ICON Equity Income Fund

Industry Composition

September 30, 2011

 

Integrated Oil & Gas

    7.9%   

Industrial Conglomerates

    3.9%   

Pharmaceuticals

    3.7%   

IT Consulting & Other Services

    3.0%   

Apparel Retail

    2.9%   

Railroads

    2.9%   

Systems Software

    2.8%   

Industrial Machinery

    2.6%   

Office Services & Supplies

    2.4%   

Semiconductors

    2.3%   

Regional Banks

    2.3%   

Diversified Chemicals

    2.3%   

Aerospace & Defense

    2.1%   

Diversified Banks

    2.0%   

Oil & Gas Drilling

    1.8%   

Specialty Chemicals

    1.8%   

Restaurants

    1.8%   

Asset Management & Custody Banks

    1.8%   

Mortgage REIT’s

    1.7%   

Data Processing & Outsourced Services

    1.7%   

Other Diversified Financial Services

    1.7%   

Life & Health Insurance

    1.6%   

Construction & Farm Machinery & Heavy Trucks

    1.6%   

Industrial Gases

    1.5%   

Health Care Equipment

    1.3%   

Computer Hardware

    1.3%   

Home Improvement Retail

    1.3%   

Coal & Consumable Fuels

    1.2%   

Specialized Consumer Services

    1.2%   

Specialized Finance

    1.1%   

General Merchandise Stores

    1.1%   

Semiconductor Equipment

    1.1%   

Internet Software & Services

    1.1%   

Cable & Satellite

    1.1%   

Movies & Entertainment

    1.0%   

Consumer Finance

    1.0%   

Thrifts & Mortgage Finance

    1.0%   

Multi-Utilities

    1.0%   

Commercial Printing

    1.0%   

Steel

    1.0%   

Property & Casualty Insurance

    1.0%   

Other Industries (each less
than 1%)

    12.9%   
 

 

 

 
    91.8%   
 

 

 

 

Percentages are based upon common, preferred and convertible preferred stocks as a percentage of net assets.

 

 

24   MANAGEMENT OVERVIEW


Table of Contents

ICON Equity Income Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
    1 Year     5 Years     Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Equity Income Fund - Class I

    9/30/02        -2.73%        -1.12%        5.75%        1.55%        1.47%   

S&P Composite 1500 Index

            0.92%        -0.86%        6.16%        N/A        N/A   

ICON Equity Income Fund - Class C

    11/8/02        -3.47%        -1.98%        4.18%        2.99%        2.22%   

S&P Composite 1500 Index

            0.92%        -0.86%        5.18%        N/A        N/A   

ICON Equity Income Fund - Class Z

    5/10/04        -2.40%        -0.97%        2.60%        7.68%        1.22%   

S&P Composite 1500 Index

            0.92%        -0.86%        2.99%        N/A        N/A   

ICON Equity Income Fund - Class A

    5/31/06        -2.66%        -1.25%        -1.09%        4.61%        1.47%   

ICON Equity Income Fund - Class A (including maximum sales charge of 5.75%)

    5/31/06        -8.22%        -2.41%        -2.18%        4.61%        1.47%   

S&P Composite 1500 Index

            0.92%        -0.86%        0.10%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

MANAGEMENT OVERVIEW     25   


Table of Contents

ICON Equity Income Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

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.

 

26   MANAGEMENT OVERVIEW


Table of Contents

ICON EQUITY INCOME FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (88.0%)   
  8,500      3M Co.   $ 610,215   
  15,500      A Schulman, Inc.     263,345   
  6,500      Air Products & Chemicals, Inc.     496,405   
  5,900      Alliance Resource Partners L.P.     386,804   
  31,700      American Eagle Outfitters, Inc.     371,524   
  8,500      American States Water Co.     288,405   
  19,500      Annaly Capital Management, Inc., REIT     324,285   
  42,800      Apollo Investment Corp.     321,856   
  6,400      Automatic Data Processing, Inc.     301,760   
  5,200      Avery Dennison Corp.     130,416   
  7,000      Bank of Montreal(a)     390,950   
  7,800      Baxter International, Inc.     437,892   
  19,300      BB&T Corp.     411,669   
  11,400      Best Buy Co., Inc.     265,620   
  1,700      BlackRock, Inc.     251,617   
  8,000      Buckle, Inc.(a)     307,680   
  6,900      Caterpillar, Inc.     509,496   
  11,100      CEC Entertainment, Inc.     316,017   
  7,400      Chevron Corp.     684,648   
  1,500      CME Group, Inc.     369,600   
  9,700      Computer Sciences Corp.     260,445   
  13,000      ConocoPhillips     823,160   
  17,700      CSX Corp.     330,459   
  3,900      Cullen/Frost Bankers, Inc.     178,854   
  15,400      Diebold, Inc.     423,654   
  14,100      Dow Chemical Co.     316,686   
  10,700      E.I. du Pont de Nemours & Co.     427,679   
  8,000      Eaton Corp.     284,000   
Shares or Principal Amount   Value  
   
  7,100      Eli Lilly & Co.   $ 262,487   
  9,300      ENI SpA, ADR(a)     326,709   
  7,900      Ensco PLC, ADR     319,397   
  10,300      Exxon Mobil Corp.     748,089   
  36,800      First Niagara Financial Group, Inc.     336,720   
  43,900      General Electric Co.     669,036   
  9,100      Guess?, Inc.     259,259   
  28,600      H&R Block, Inc.     380,666   
  6,900      Harris Corp.     235,773   
  13,500      Harsco Corp.     261,765   
  12,800      Home Depot, Inc.     420,736   
  7,400      Illinois Tool Works, Inc.     307,840   
  21,800      Intel Corp.     464,994   
  5,600      International Business Machines Corp.     980,168   
  4,300      Johnson & Johnson     273,953   
  18,500      JPMorgan Chase & Co.     557,220   
  3,600      Kimberly-Clark Corp.     255,636   
  9,300      KLA-Tencor Corp.     356,004   
  13,400      Leggett & Platt, Inc.     265,186   
  10,800      Linear Technology Corp.     298,620   
  3,600      Lockheed Martin Corp.     261,504   
  21,300      Manulife Financial Corp.     241,329   
  11,900      Merck & Co., Inc.     389,249   
  8,400      Mercury General Corp.     322,140   
  36,600      Microsoft Corp.     910,974   
  7,000      Norfolk Southern Corp.     427,140   
  4,400      Northrop Grumman Corp.     229,504   
  10,200      Nucor Corp.     322,728   
  7,100      Omnicom Group, Inc.     261,564   
  55,300      PDL BioPharma, Inc.     306,915   
  5,000      PepsiCo, Inc.     309,500   
  15,900      Pfizer, Inc.     281,112   
  34,200      Pitney Bowes, Inc.(a)     642,960   
  11,800      Pool Corp.     308,924   
 

 

SCHEDULE OF INVESTMENTS     27   


Table of Contents
Shares or Principal Amount   Value  
   
  22,000      Redwood Trust, Inc., REIT(a)   $ 245,740   
  23,300      RR Donnelley & Sons Co.     328,996   
  5,800      Ryder System, Inc.     217,558   
  8,300      SCANA Corp.     335,735   
  20,600      Seagate Technology PLC     211,768   
  10,400      Southern Copper Corp.     259,896   
  12,100      Sun Life Financial, Inc.     287,859   
  46,000      SUPERVALU, Inc.(a)     306,360   
  7,500      Target Corp.     367,800   
  19,800      Texas Roadhouse, Inc.     261,756   
  5,600      Transocean, Ltd.     267,344   
  9,300      UGI Corp.     244,311   
  2,200      Union Pacific Corp.     179,674   
  67,200      United Online, Inc.     351,456   
Shares or Principal Amount   Value  
   
  3,900      United Parcel Service, Inc., Class B   $ 246,285   
  2,800      United Technologies Corp.     197,008   
  15,700      Valley National Bancorp     166,263   
  10,200      Valspar Corp.     318,342   
  11,000      Wells Fargo & Co.     265,320   
   

 

 

 
 

 

Total Common Stocks

(Cost $31,605,601)

    28,740,413   
  Preferred Stocks (3.1%)  
  13,400      Capital One Capital II(a)     338,350   
  13,400      Comcast Corp.     343,308   
  13,400      Viacom, Inc.     341,834   
   

 

 

 
 

 

Total Preferred Stocks

(Cost $1,034,833)

    1,023,492   
 
Shares or Principal Amount   Interest
Rate
    Maturity
Date
    Value  
  Corporate Bonds (6.2%)      
$ 240,000      Archer-Daniels-Midland Co.     6.63     05/01/29      $ 314,287   
  600,000      Bank of America Corp.     5.42     03/15/17        521,258   
  350,000      Commercial Metals Co.     7.35     08/15/18        356,008   
  300,000      Delphi Financial Group, Inc.     7.88     01/31/20        344,258   
  500,000      Goldman Sachs Group, Inc.     5.38     03/15/20        496,538   
       

 

 

 
 
 
Total Corporate Bonds
(Cost $2,081,063)
        2,032,349   
  Convertible Corporate Bonds (0.8%)      
  350,000      Central European Distribution Corp.     3.00     03/15/13        239,750   
       

 

 

 
 

 

Total Convertible Corporate Bonds

(Cost $323,507)

        239,750   
  Convertible Preferred Stock (0.7%)      
  6,100      Omnicare Capital Trust II, Series B     4.00     06/15/33        231,800   
       

 

 

 
 

 

Total Convertible Preferred Stocks

(Cost $265,165)

        231,800   

 

  28      SCHEDULE OF INVESTMENTS


Table of Contents

Underlying Security/

Expiration Date/
Exercise Price

  Contracts*     Value  
Call Options Purchased (0.1%)   

Archer-Daniels-Midland Co., January 2013, $35.00

    69      $ 7,141   

Bank Of America Corp., January 2012, $17.50

    343        343   

Bank Of America Corp., January 2012, $9.00

    667        15,341   

Commercial Metals Co., March 2012, $14.00

    250        6,250   

Computer Sciences Corp., January 2012, $60.00

    58        290   

Delphi Financial Group, Inc., January 2012, $30.00

    100        2,500   

Goldman Sachs Group, Inc., January 2012, $185.00

    27        135   

Hewlett Packard Co., January 2012, $50.00

    50        125   

Valero Energy Corp., January 2012, $30.00

    117        1,287   
   

 

 

 

Total Call Options Purchased

(Cost $228,380)

  

  

    33,412   

Shares or Principal Amount

  Value  
  Collateral for Securities on Loan (6.6%)   
  2,154,862      State Street Navigator Prime Portfolio   $ 2,154,862   
   

 

 

 
 
 

 

Total Collateral for Securities
on Loan

(Cost $2,154,862)

    2,154,862   
 
 
Total Investments 105.5%
(Cost $37,693,411)
    34,456,078   
 
 
Liabilities Less Other Assets
(5.5)%
    (1,794,482
   

 

 

 
  Net Assets 100.0%   $ 32,661,596   
   

 

 

 
 

 

The accompanying notes are an integral part of the financial statements.

 

* All Options have 100 shares per contract.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

ADR American Depository Receipt

 

REIT Real Estate Investment Trust

 

SCHEDULE OF INVESTMENTS     29   


Table of Contents

MANAGEMENT OVERVIEW

ICON LONG/SHORT FUND

  

Class I

Class C

Class Z

Class A

 

IOLIX

IOLCX

IOLZX

ISTAX

 

Q. How did the Fund perform relative to its benchmark?

 

A. For the 12-months ended September 30, 2011, the ICON Long/Short Fund returned -2.78% for Class I shares, -3.54% for Class C shares (-4.54% with maximum sales charge), -2.44% for Class Z shares, and -2.80% for Class A shares (-8.41% with maximum sales charge), underperforming the 0.92% return for the Fund’s stated benchmark, the S&P 1500 Composite Index. The Fund underperformed the 0.27% return for the Bank of America/Merrill Lynch US Dollar 3 month Constant Maturity benchmark which is often traditionally used with long/short funds. Total returns and other performance statistics for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors influenced the Fund’s relative performance during the period?

 

A. Between September 30, 2010 and September 30, 2011, the stock market exhibited two very different behaviors. The market rallied from the beginning of the fiscal year, surging higher through the end of April 2011. From May through the end of September, however, the S&P 1500 fell 16.22%, as investors grew concerned over Europe’s sovereign debt crisis and its impact on Europe’s banks in particular and the economy in general. The Fund did not keep pace with its benchmark as the market rallied through April, but, by design, the Fund declined less than the market during the May-September retreat.

The ICON system did not uncover many overvalued companies during the fiscal year, making it difficult to find stocks we believed were overpriced to sell short. In fact, on September 22, 2011, we calculated an overall market V/P of 1.59 – one of the highest V/Ps we’ve ever recorded. Negative investor sentiment and high valuations make for attractive bargains under the ICON system, and we saw few places to profit from short selling in this environment.

 

Q. How did the Fund’s composition affect performance?

 

A. The Fund had a heavy, long position tilt in economically sensitive, cyclical stocks during the fiscal year. In spite of our high valuation readings, investors avoided these shares as they became wary of an economic slowdown or recession. The Fund’s exposure to cyclical industries and sectors, combined with what we believed to be a dearth of short opportunities, negatively impacted performance.

 

30   MANAGEMENT OVERVIEW


Table of Contents

The industries that benefitted Fund performance during the fiscal year included IT consulting, life & health Insurance, diversified metals & mining, apparel retail and homefurnishing retail. By contrast, the Fund’s holdings in railroads, industrial machinery, steel, electronic components and coal & consumable fuels adversely affected Fund performance. Nonetheless, at fiscal year-end the Fund continued to hold positions in these five industries, as we believe these laggards may well become this fiscal year’s leaders.

 

Q. What is your investment outlook for the overall market?

 

A. As the fiscal year ends, we estimate the overall market has a V/P of 1.48, giving us confidence about the prospect for future opportunities. We believe the fears that drove the market lower will prove to be unwarranted and that the market will resume its recovery off the March 2009 low. As one fiscal year closes and another begins, we will continue to rely upon our disciplined methodology to guide us through these challenging times.

ICON Long/Short Fund

Sector Composition

September 30, 2011

 

Industrials

    24.6%   

Information Technology

    21.0%   

Consumer Discretionary

    18.8%   

Financial

    11.1%   

Energy

    9.6%   

Health Care

    7.8%   

Materials

    7.2%   
 

 

 

 
    100.1%   
 

 

 

 

Percentages are based upon long positions as a percentage of net assets.

ICON Long/Short Fund

Industry Composition

September 30, 2011

 

IT Consulting & Other Services

    12.7%   

Integrated Oil & Gas

    8.7%   

Industrial Machinery

    7.6%   

Apparel Retail

    7.0%   

Cable & Satellite

    5.7%   

Computer Hardware

    4.6%   

Industrial Conglomerates

    4.3%   

Consumer Finance

    4.2%   

Railroads

    3.5%   

Construction & Farm Machinery & Heavy Trucks

    3.4%   

Health Care Equipment

    3.2%   

Industrial Gases

    3.0%   

Footwear

    3.0%   

Biotechnology

    2.9%   
 

 

MANAGEMENT OVERVIEW     31   


Table of Contents

ICON Long/Short Fund

Industry Composition (continued)

September 30, 2011

 

Electrical Components & Equipment

    2.8%   

Diversified Banks

    2.1%   

Specialty Chemicals

    2.1%   

Specialized Finance

    2.1%   

Steel

    2.0%   

Electronic Components

    2.0%   

Aerospace & Defense

    2.0%   

Other Diversified Financial Services

    1.8%   

Health Care Services

    1.8%   

Data Processing & Outsourced Services

    1.7%   

General Merchandise Stores

    1.6%   

Home Improvement Retail

    1.5%   

Trading Companies & Distributors

    1.0%   

Other Industries (each less
than 1%)

    1.8%   
 

 

 

 
    100.1%   
 

 

 

 

Percentages are based upon long positions as a percentage of net assets.

 

 

32   MANAGEMENT OVERVIEW


Table of Contents

ICON Long/Short Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
    1 Year     5 Years     Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Long/Short Fund - Class I

    9/30/02        -2.78%        -5.65%        3.34%        2.90%        2.45%   

S&P Composite 1500 Index

            0.92%        -0.86%        6.16%        N/A        N/A   

ICON Long/Short Fund - Class C

    10/17/02        -3.54%        -6.40%        1.88%        3.60%        3.19%   

S&P Composite 1500 Index

            0.92%        -0.86%        5.35%        N/A        N/A   

ICON Long/Short Fund - Class Z

    5/6/04        -2.44%        -5.51%        -0.52%        5.80%        2.15%   

S&P Composite 1500 Index

            0.92%        -0.86%        2.62%        N/A        N/A   

ICON Long/Short Fund - Class A

    5/31/06        -2.80%        -5.72%        -5.71%        3.65%        2.45%   

ICON Long/Short Fund - Class A (including maximum sales charge of 5.75%)

    5/31/06        -8.41%        -6.83%        -6.75%        3.65%        2.45%   

S&P Composite 1500 Index

            0.92%        -0.86%        0.10%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

MANAGEMENT OVERVIEW     33   


Table of Contents

ICON Long/Short Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

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.

 

34   MANAGEMENT OVERVIEW


Table of Contents

ICON LONG/SHORT FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (100.1%)   
  9,500      Accenture PLC, Class Ax   $ 500,460   
  7,300      Alpha Natural Resources, Inc.†x     129,137   
  1,700      Apple, Inc.†x     648,006   
  4,400      Automatic Data Processing, Inc.x     207,460   
  13,700      Bio-Reference Labs, Inc.†(a)     252,217   
  6,400      CACI International, Inc., Class A     319,616   
  4,700      Capital One Financial Corp.x     186,261   
  5,500      Caterpillar, Inc.x     406,120   
  6,600      Celgene Corp.x     408,672   
  3,200      Chevron Corp.x     296,064   
  2,700      Cliffs Natural Resources, Inc.     138,159   
  1,200      CME Group, Inc.     295,680   
  5,800      Cognizant Technology Solutions Corp., Class A     363,660   
  21,500      Comcast Corp., Class Ax     449,350   
  1,300      Computer Sciences Corp.     34,905   
  3,500      Cooper Industries PLC     161,420   
  22,900      Corning, Inc.     283,044   
  1,300      Covidien PLCx     57,330   
  18,600      CSX Corp.x     347,262   
  10,500      Danaher Corp.x     440,370   
  1,300      Deere & Co.     83,941   
  3,100      Dollar Tree, Inc.     232,841   
  8,600      Dover Corp.     400,760   
  6,100      Ecolab, Inc.     298,229   
  5,600      Emerson Electric Co.     231,336   
Shares or Principal Amount   Value  
   
  10,000      Exxon Mobil Corp.x   $ 726,300   
  14,300      Ezcorp, Inc., Class A     408,122   
  2,500      General Dynamics Corp.     142,225   
  40,400      General Electric Co.x     615,696   
  4,800      Guess?, Inc.     136,752   
  4,600      HCC Insurance Holdings, Inc.     124,430   
  3,600      Home Depot, Inc.     118,332   
  5,700      Illinois Tool Works, Inc.     237,120   
  3,600      International Business Machines Corp.x     630,108   
  8,500      JPMorgan Chase & Co.     256,020   
  5,100      Lowe’s Cos., Inc.     98,634   
  10,200      Marathon Oil Corp.x     220,116   
  1,000      Medtronic, Inc.x     33,240   
  5,000      Nike, Inc., Class B     427,550   
  2,400      Norfolk Southern Corp.     146,448   
  2,600      Northrop Grumman Corp.     135,616   
  4,600      Praxair, Inc.     430,008   
  4,500      Reliance Steel & Aluminum Co.     153,045   
  11,400      ResMed, Inc.     328,206   
  4,000      Ross Stores, Inc.     314,760   
  700      Stryker Corp.     32,991   
  5,700      Time Warner Cable, Inc.x     357,219   
  9,700      TJX Cos., Inc.     538,059   
  12,600      Wells Fargo & Co.     303,912   
  1,000      WW Grainger, Inc.     149,540   
   

 

 

 
 

 

Total Common Stocks

(Cost $14,659,396)

    14,236,749   
 

 

SCHEDULE OF INVESTMENTS   35


Table of Contents
Shares or Principal Amount   Value  
  Collateral for Securities on Loan (0.0%)   
  5,194      State Street Navigator Prime Portfolio   $ 5,194   
   

 

 

 
 

 

 

Total Collateral for Securities

on Loan

(Cost $5,194)

    5,194   
Shares or Principal Amount   Value  
Total Investments 100.1% (Cost $14,664,590)   $ 14,241,943   
Liabilities Less Other Assets (0.1)%     (17,812
   

 

 

 
Net Assets 100.0%   $ 14,224,131   
   

 

 

 
 

 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

x All or a portion of the security is pledged as collateral for securities sold short.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

36   SCHEDULE OF INVESTMENTS


Table of Contents

ICON LONG/SHORT FUND

SCHEDULE OF SECURITIES SOLD SHORT

SEPTEMBER 30, 2011

 

Shares     Short Security   Value  
  1,500      Blue Nile, Inc.   $ 52,920   
  1,000      Salesforce.com, Inc.     114,280   
  2,000      SL Green Realty Corp., REIT     116,300   
  3,900      SPDR S&P 500 ETF Trust     441,363   
  3,300      Texas Industries, Inc.     104,742   
   

 

 

 
 
 
Total Securities Sold Short
(Proceeds $871,963)
  $ 829,605   
   

 

 

 

 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

REIT Real Estate Investment Trust

 

SCHEDULE OF INVESTMENTS     37   


Table of Contents

MANAGEMENT OVERVIEW

RISK MANAGED EQUITY FUND

  

Class I

Class C

Class Z

Class A

 

IOCIX

IOCCX

IOCZX

IOCAX

 

Q. How did the Fund Perform relative to its benchmark?

 

A. The ICON Risk Managed Equity Fund, Class I, slightly underperformed its benchmark for the fiscal year ended September 30, 2011, gaining 0.31% versus the 0.92% increase in the S&P 1500 Composite Index. The Fund’s Class A shares returned 0.32% (and -5.41% with maximum sales charge) during the same period, the Fund’s Class Z shares returned 0.51% and the Fund’s Class C shares returned -0.45% for the fiscal year (-1.45% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors influenced the Fund’s relative performance during the period?

 

A. The fiscal year was marked by concern over macro economic factors. A stubbornly high unemployment rate in the U.S., ongoing malaise in the domestic housing market, worries over a potential sharp decline in consumer spending and Europe’s sovereign debt crisis weighed heavily on investors. Global efforts to redress debts that amounted to trillions of dollars did little to assuage investor skittishness.

The resulting “risk on, risk off” trading led to wild swings in the equity indices. Good economic news generally had investors rushing in to buy stocks while bad economic data sent investors rushing out of the global equity markets. This choppy investment environment can prove challenging for ICON’s value-driven investment methodology.

The global debt crisis contributed to a volatile year characterized by a dramatic rally and a subsequent equally dramatic decline. Between October 1, 2010 and April 30, 2011, the S&P 1500 rose 21.63%. Subsequent concerns over Europe’s sovereign debt crisis and increasing recessionary fears in the U.S. proved too much for the market to bear, however, and the S&P 1500 benchmark fell 17.02% between April 30, 2011 and September 30, 2011.

While both the Fund and its benchmark eked out a nominal return at the end of the 12-month period, the Fund, with a beta 0.53, navigated the volatility in somewhat less dramatic fashion. The Fund’s low beta was the result of a disciplined implementation of option puts and calls. Specifically, the Fund wrote S&P 500 Index call options and used some of the proceeds to buy S&P 500 Index out-of-the-money put options.

 

38   MANAGEMENT OVERVIEW


Table of Contents

Although this hedge, by design, may have reduced the Fund’s upside potential, it also helped offset losses throughout the fiscal year – particularly during the freefall that took place between roughly May 1, 2011 and August 8, 2011. During that timeframe the Fund’s options hedge eliminated just over 600 basis points of the dramatic sell-off relative to its benchmark.

Q. How did the Fund’s composition affect performance?

 

A. The Fund’s overweight position in the IT consulting & services industry benefitted Fund performance. The industry rose almost 25% during the fiscal year and made up an average of around 5% of the Fund versus 1.9% of the benchmark. Fund performance benefitted also from an underweight position in the other diversified financial services industry. Although the industry made up an average of 3% of the benchmark, it represented only 1% of the Fund. This underweighting proved advantageous, as the industry declined more than 30% over the 12-month period.

In contrast, the Fund’s industrial conglomerates holdings adversely affected performance. The Fund was overweight this industry (5.2% versus 2.4% of the benchmark), which declined 4.2% during the fiscal year. An underweight position in the systems software industry likewise detracted from relative performance as the industry rose 4.3% during the fiscal period - significantly more than the 0.92% rise in the benchmark.

Q. What is your investment outlook for the overall Market?

 

A. As of September 30, 2011, the overall domestic market has a V/P ratio of 1.48 under the ICON system, suggesting significant upside potential. We believe anxious investors have helped depress stock prices to levels below the stocks’ intrinsic worth. If investor fears abate, as we anticipate they will, investors will likely turn their attention to corporate profits that have been steadily growing. This new focus should be a strong catalyst for higher stock prices. We believe negative investor sentiment will give way to an improved economy in the next 12 months and we hope to take advantage of any market rally.

 

MANAGEMENT OVERVIEW     39   


Table of Contents

ICON Risk-Managed Equity Fund

Sector Composition

September 30, 2011

 

Information Technology

    19.0%   

Industrials

    13.1%   

Consumer Discretionary

    12.8%   

Health Care

    12.3%   

Financial

    11.4%   

Consumer Staples

    10.6%   

Energy

    10.4%   

Telecommunication & Utilities

    5.4%   

Materials

    5.3%   
 

 

 

 
    100.3%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Risk-Managed Equity Fund

Industry Composition

September 30, 2011

 

Integrated Oil & Gas

    10.0%   

IT Consulting & Other Services

    7.1%   

Health Care Equipment

    4.9%   

Computer Hardware

    4.7%   

Apparel Retail

    4.1%   

Household Products

    3.9%   

Railroads

    3.8%   

Pharmaceuticals

    2.7%   

Industrial Conglomerates

    2.7%   

Life & Health Insurance

    2.6%   

Semiconductors

    2.5%   

Cable & Satellite

    2.4%   

Construction & Farm Machinery & Heavy Trucks

    2.3%   

Industrial Gases

    2.3%   

Tobacco

    2.2%   

Regional Banks

    2.1%   

Industrial Machinery

    2.0%   

Health Care Distributors

    1.9%   

Soft Drinks

    1.9%   

Data Processing & Outsourced Services

    1.8%   

General Merchandise Stores

    1.8%   

Systems Software

    1.7%   

Diversified Banks

    1.6%   

Health Care Services

    1.6%   

Electric Utilities

    1.5%   

Automotive Retail

    1.4%   

Aerospace & Defense

    1.4%   

Packaged Foods & Meats

    1.3%   

Hypermarkets & Super Centers

    1.3%   

Multi-Utilities

    1.3%   

Movies & Entertainment

    1.2%   

Diversified Chemicals

    1.2%   

Biotechnology

    1.2%   

Asset Management & Custody Banks

    1.2%   

Consumer Finance

    1.1%   

Specialized Finance

    1.1%   

Gas Utilities

    1.0%   

Integrated Telecommunication Services

    1.0%   

Other Diversified Financial Services

    1.0%   

Paper Packaging

    1.0%   

Other Industries (each less
than 1%)

    6.5%   
 

 

 

 
    100.3%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

40   MANAGEMENT OVERVIEW


Table of Contents

ICON Risk-Managed Equity Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
    1 Year     5 Years     Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Risk-Managed Equity Fund - Class I

    9/30/02        0.31%        -0.23%        4.48%        1.82%        1.56%   

S&P Composite 1500 Index

            0.92%        -0.86%        6.16%        N/A        N/A   

ICON Risk-Managed Equity Fund - Class C

    11/21/02        -0.45%        -1.05%        2.89%        3.36%        2.30%   

S&P Composite 1500 Index

            0.92%        -0.86%        4.68%        N/A        N/A   

ICON Risk-Managed Equity Fund - Class Z

    5/6/04        0.51%        -0.03%        1.75%        10.41%        1.31%   

S&P Composite 1500 Index

            0.92%        -0.86%        2.62%        N/A        N/A   

ICON Risk-Managed Equity Fund - Class A

    5/31/06        0.32%        -0.25%        -0.14%        2.62%        1.59%   

ICON Risk-Managed Equity Fund - Class A (including maximum sales charge of 5.75%)

    5/31/06        -5.41%        -1.42%        -1.24%        2.62%        1.59%   

S&P Composite 1500 Index

            0.92%        -0.86%        0.10%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

MANAGEMENT OVERVIEW     41   


Table of Contents

ICON Risk-Managed Equity Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

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.

 

42   MANAGEMENT OVERVIEW


Table of Contents

ICON RISK-MANAGED EQUITY FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (100.3%)   
  4,400      3M Co.x   $ 315,876   
  5,800      Accenture PLC, Class Ax     305,544   
  2,900      AGL Resources, Inc.x     118,146   
  2,900      Air Products & Chemicals, Inc.     221,473   
  9,400      Altria Group, Inc.x     252,014   
  1,700      American Financial Group, Inc.x     52,819   
  4,000      American Water Works Co., Inc.     120,720   
  1,800      Ameriprise Financial, Inc.x     70,848   
  5,100      Amerisource-Bergen Corp.x     190,077   
  4,400      Amgen, Inc.     241,780   
  2,500      Apple, Inc.†,x     952,950   
  2,800      Arrow Electronics, Inc.†,x     77,784   
  2,000      Assurant, Inc.     71,600   
  3,600      AT&T, Inc.     102,672   
  5,000      Automatic Data Processing, Inc.x     235,750   
  900      AutoZone, Inc.†,x     287,271   
  8,700      Bank of New York Mellon Corp.     161,733   
  9,500      BB&T Corp.     202,635   
  2,300      Becton, Dickinson & Co.     168,636   
  8,400      Bristol-Myers Squibb Co.x     263,592   
  3,200      Campbell Soup Co.     103,584   
  4,600      Cardinal Health, Inc.x     192,648   
  3,000      Cash America International, Inc.     153,480   
  4,300      Caterpillar, Inc.x     317,512   
  5,800      Chevron Corp.x     536,616   
  700      China Petroleum & Chemical Corp., ADR     67,060   
Shares or Principal Amount   Value  
   
  400      CME Group, Inc.   $ 98,560   
  2,900      Cognizant Technology Solutions Corp., Class A     181,830   
  2,100      Colgate-Palmolive Co.     186,228   
  8,000      ConocoPhillipsx     506,560   
  2,100      Cooper Industries PLC     96,852   
  3,800      CR Bard, Inc.x     332,652   
  20,400      CSX Corp.x     380,868   
  900      Cummins, Inc.     73,494   
  3,700      Danaher Corp.     155,178   
  1,000      Deere & Co.x     64,570   
  3,200      DIRECTV, Class A†,x     135,200   
  5,300      Dover Corp.     246,980   
  2,800      Dr. Pepper Snapple Group, Inc.     108,584   
  6,100      E.I. du Pont de Nemours & Co.     243,817   
  7,600      Eli Lilly & Co.x     280,972   
  2,200      Express Scripts, Inc.,x     81,554   
  7,100      Exxon Mobil Corp.x     515,673   
  2,700      Ezcorp, Inc., Class A†,x     77,058   
  1,300      FedEx Corp.     87,984   
  14,500      General Electric Co.x     220,980   
  2,900      Genuine Parts Co.     147,320   
  300      Google, Inc., Class A     154,314   
  6,000      Guess?, Inc.     170,940   
  8,900      Intel Corp.x     189,837   
  500      IntercontinentalExchange, Inc.     59,130   
  5,400      International Business Machines Corp.x     945,162   
  2,150      Jos. A. Bank Clothiers, Inc.†,x     100,254   
  6,800      JPMorgan Chase & Co.     204,816   
  3,000      Kellogg Co.     159,570   
  3,600      Kimberly-Clark Corp.     255,636   
  1,500      Laboratory Corp. of America Holdings     118,575   
 

 

SCHEDULE OF INVESTMENTS     43   


Table of Contents
Shares or Principal Amount   Value  
   
  5,300      Lincare Holdings, Inc.   $ 119,250   
  7,200      Lowe’s Cos., Inc.     139,248   
  3,200      M&T Bank Corp.     223,680   
  6,800      Medtronic, Inc.x     226,032   
  13,600      Microsoft Corp.x     338,504   
  2,500      Murphy Oil Corp.     110,400   
  2,600      NASDAQ OMX Group, Inc.†,x     60,164   
  1,300      Nike, Inc., Class B     111,163   
  3,900      Occidental Petroleum Corp.x     278,850   
  5,000      Paychex, Inc.     131,850   
  4,300      PepsiCo, Inc.x     266,170   
  3,200      Philip Morris International, Inc.     199,616   
  4,400      PPL Corp.     125,576   
  2,500      Praxair, Inc.     233,700   
  5,600      Procter & Gamble Co.x     353,808   
  5,800      Prudential Financial, Inc.x     271,788   
  4,000      Rock-Tenn Co., Class Ax     194,720   
  1,200      Ross Stores, Inc.     94,428   
  2,200      Sempra Energy     113,300   
  8,100      Skyworks Solutions, Inc.     145,314   
Shares or Principal Amount   Value  
   
  4,100      Southern Co.   $ 173,717   
  7,300      Target Corp.x     357,992   
  6,200      Texas Instruments, Inc.     165,230   
  5,400      Time Warner Cable, Inc.x     338,418   
  8,200      TJX Cos., Inc.x     454,854   
  7,200      Torchmark Corp.x     250,992   
  4,600      U.S. Bancorp     108,284   
  3,500      UGI Corp.     91,945   
  4,800      Union Pacific Corp.x     392,016   
  4,000      United Technologies Corp.x     281,440   
  4,900      Valero Energy Corp.     87,122   
  5,400      Valspar Corp.     168,534   
  4,900      Varian Medical Systems, Inc.†,x     255,584   
  2,800      Verizon Communications, Inc.     103,040   
  4,900      Wal-Mart Stores, Inc.     254,310   
  8,100      Walt Disney Co.     244,296   
  9,300      Wells Fargo & Co.     224,316   
  5,700      Xcel Energy, Inc.     140,733   
   

 

 

 
 
 
Total Common Stocks
(Cost $19,303,535)
    20,196,352   
 
Underlying Security/
Expiration Date/
Exercise Price
  Contracts*   Value  
Put Option Purchased (1.1%)   
S+P 500 Index, November 2011, $1,090.00   45     216,225   
     

 

 

 
Total Put Options Purchased
(Cost $179,251)
    216,225   
Shares or Principal Amount   Value  
  Short-Term Investment (1.5%)  
$ 305,123      State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/11     305,123   
   

 

 

 
 
 
Total Short-Term Investments
(Cost $305,123)
    305,123   
 
 
Total Investments 102.9%
(Cost $19,787,909)
    20,717,700   
 
 
Liabilities Less Other Assets
(2.9)%
    (579,939
   

 

 

 
  Net Assets 100.0%   $ 20,137,761   
   

 

 

 
 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

x All or a portion of the security is pledged as collateral for call options written.

 

* All options have 100 shares per contract.

 

ADR American Depository Receipt

 

44   SCHEDULE OF INVESTMENTS


Table of Contents

ICON RISK-MANAGED EQUITY FUND

SCHEDULE OF WRITTEN CALL OPTIONS

SEPTEMBER 30, 2011

 

Underlying Security/

Expiration Date/

Exercise Price

  Contracts*     Value  

S+P 500 Index, November 2011, $1,200.00

    75      $ 186,750   
   

 

 

 
Total Options Written (Premiums received $250,738)       $186,750   
   

 

 

 
 

 

The accompanying notes are an integral part of the financial statements.

 

* All options have 100 shares per contract.

 

SCHEDULE OF INVESTMENTS     45   


Table of Contents

STATEMENTS OF ASSETS AND LIABILITIES

SEPTEMBER 30, 2011

 

     ICON
Bond Fund
    ICON
Core Equity
Fund
    ICON Equity
Income
Fund
    ICON
Long/Short
Fund
    ICON Risk-
Managed
Equity Fund
 

Assets

         

Investments, at cost

  $ 99,970,175      $ 68,977,537      $ 37,693,411      $ 14,664,590      $ 19,787,909   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Investments, at value

    101,918,467        68,230,168        34,456,078        14,241,943        20,717,700   

Deposits for short sales

                  -        867,087          

Receivables:

         

Fund shares sold

    146,280        33,020        55,471        8,336        53,496   

Investments sold

           120,290        1,041,162        52,627        1,125,604   

Interest

    1,347,152               16,956                 

Dividends

           91,821        128,957        15,502        30,002   

Expense reimbursements by Adviser

    31,590               14,842        8,919        9,773   

Foreign tax reclaims

           476        12,299                 

Other assets

    31,617        27,376        18,891        14,953        14,893   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

    103,475,106        68,503,151        35,744,656        15,209,367        21,951,468   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

         

Options written, at value (premiums received $250,738)

               

 

  

           186,750   

Securities sold short, at value (proceeds of $871,963)

                         829,605          

Payables:

         

Due to custodian bank

           87,898        5,518        61,381        7,679   

Due to prime broker

                                381,638   

Expense recoupments due to adviser

    404               844        1,501        1,314   

Investments purchased

                  745,218               1,136,732   

Payable for collateral received on securities loaned

    6,560,230        1,841,798        2,154,862        5,194          

Fund shares redeemed

    214,252        90,896        75,520        27,800        37,818   

Dividends from short positions

                         2,637          

Distributions due to shareholders

    10,886               29,564               2,881   

Advisory fees

    48,751        43,809        21,262        10,592        12,556   

Accrued distribution fees

    22,057        26,308        9,561        6,729        5,453   

Fund accounting fees

    1,674        1,188        573        257        340   

Transfer agent fees

    8,486        10,414        6,340        5,351        4,725   

Administration fees

    3,909        2,802        1,290        241        669   

Trustee fees

    927        639        327        132        163   

Accrued expenses

    35,745        43,168        32,181        33,816        34,989   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities

    6,907,321        2,148,920        3,083,060        985,236        1,813,707   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Assets - all share classes

  $ 96,567,785      $ 66,354,231      $ 32,661,596      $ 14,224,131      $ 20,137,761   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Assets - Class I

  $ 91,558,138      $ 47,091,659      $ 25,774,771      $ 7,422,783      $ 15,996,634   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Assets - Class C

  $ 3,878,927      $ 17,884,471      $ 3,873,558      $ 5,545,931      $ 2,099,332   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Assets - Class Z

  $ 881,250      $ 132,765      $ 141,917      $ 42,195      $ 59,526   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Assets - Class A

  $ 249,470      $ 1,245,336      $ 2,871,350      $ 1,213,222      $ 1,982,269   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

46   FINANCIAL STATEMENTS


Table of Contents

 

     ICON
Bond Fund
    ICON
Core Equity
Fund
    ICON Equity
Income

Fund
    ICON
Long/Short
Fund
    ICON Risk-
Managed
Equity Fund
 

Net Assets Consist of

         

Paid-in capital

  $ 93,262,692      $ 110,488,686      $ 64,552,538      $ 77,256,824      $ 39,449,871   

Accumulated undistributed net investment income/(loss)

    (329,386     161,462        (42,834  

 

-

  

    -   

Accumulated undistributed net realized gain/(loss) from investments, written options, securities sold short and foreign currency transactions

    1,686,187        (43,548,548     (28,610,560  

 

(62,652,404

    (20,305,889

Unrealized appreciation/(depreciation) on investments, written options, securities sold short and foreign currency transactions

    1,948,292        (747,369     (3,237,548  

 

(380,289

    993,779   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Assets

  $ 96,567,785      $ 66,354,231      $ 32,661,596      $ 14,224,131      $ 20,137,761   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

         

Class I

    9,044,012        5,266,439        2,509,863        644,401        1,496,041   

Class C

    382,322        2,188,186        381,093        509,318        208,064   

Class Z

    87,192        15,044        13,902        3,635        5,470   

Class A

    24,681        147,161        282,921        106,031        185,969   

Net asset value (offering and redemption price per share)

         

Class I

  $ 10.12      $ 8.94      $ 10.27      $ 11.52      $ 10.69   

Class C

  $ 10.15      $ 8.17      $ 10.16      $ 10.89      $ 10.09   

Class Z

  $ 10.11      $ 8.82      $ 10.21      $ 11.61      $ 10.88   

Class A

  $ 10.11      $ 8.46      $ 10.15      $ 11.44      $ 10.66   

Class A maximum offering price (100%/(100%-maximum sales charge)) of net asset value adjusted to the nearest cent per share

  $ 10.61      $ 8.98      $ 10.77     

$

12.14

  

  $ 11.31   

†  Includes securities on loan of

  $ 6,216,808      $ 1,788,475      $ 2,031,367      $ 5,100      $   

The accompanying notes are an integral part of the financial statements.

 

FINANCIAL STATEMENTS     47   


Table of Contents

STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED SEPTEMBER 30, 2011

 

     ICON
Bond
Fund
    ICON Core
Equity Fund
    ICON
Equity
Income Fund
    ICON
Long/Short
Fund
    ICON
Risk-Managed
Equity Fund
 

Investment Income

         

Interest

  $ 6,959,739      $ 103      $ 277,602      $ 2,665      $ 38   

Dividends

           1,620,001        2,228,348        324,896        543,333   

Income from securities lending, net

    51,983        32,102        40,123        8,631        8,485   

Foreign taxes withheld

           (5,866     (48,165)        (2,109     (1,618
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Investment Income

    7,011,722        1,646,340        2,497,908        334,083        550,238   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

         

Advisory fees

    801,143        691,698        352,723        161,286        180,450   

Distribution fees:

         

Class I

    321,055        167,126        99,382        24,525        45,172   

Class C

    34,536        236,860        42,512        76,991        25,788   

Class A

    135        3,666        7,240        3,506        8,374   

Fund accounting fees

    14,766        11,024        6,326        1,743        2,427   

Transfer agent fees

    91,127        123,774        64,609        52,392        50,752   

Administration fees

    66,074        45,663        23,274        9,395        11,913   

Prime broker expense

                         14,383          

Custody fees

    5,725        3,290        7,309        1,155        1,970   

Registration fees:

         

Class I

    22,385        19,621        16,536        12,545        14,030   

Class C

    9,738        12,624        9,872        11,211        9,408   

Class A

    2        12,598        12,705        12,850        13,317   

Insurance expense

    23,473        14,227        6,013        4,312        5,029   

Trustee fees and expenses

    13,019        9,196        4,414        1,789        2,204   

Audit and Tax Service expense

    37,231        34,743        36,448        40,834        40,909   

Interest expense

    3,244        3,880        1,254        3,085        8,474   

Recoupment of previously reimbursed expenses

    404               9,657        1,501        1,314   

Other expenses

    83,887        94,885        52,948        29,070        50,011   

Dividends on Short positions

                         56,694          
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses before expense reimbursement

    1,527,944        1,484,875        753,222        519,267        471,542   

Expense reimbursement by Adviser due to expense limitation agreement

    (167,544         

 

(38,479)

  

    (93,442     (95,012
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Expenses

    1,360,400        1,484,875        714,743        425,825        376,530   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Investment Income/(Loss)

    5,651,322        161,465        1,783,165        (91,742     173,708   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

48   FINANCIAL STATEMENTS


Table of Contents
     ICON
Bond
Fund
    ICON Core
Equity Fund
    ICON
Equity
Income Fund
    ICON
Long/Short
Fund
    ICON
Risk-Managed
Equity Fund
 

Net Realized and Unrealized Gain/(Loss) on Investments, written options, securities sold short and foreign currency transactions

         

Net realized gain/(loss) from investment transactions

  $ 3,288,516      $ 10,265,342      $ 5,489,334      $ 2,239,395      $ 2,436,117   

Net realized gain/(loss) from foreign currency transactions

               

 

668

  

    28          

Net realized gain/(loss) from written option transactions

                                (327,694

Net realized gain/(loss) from securities sold short

                         (708,407       

Change in unrealized net appreciation/(depreciation) on investments and foreign currency transactions

    (8,196,071     (5,953,813  

 

(7,090,202

    (1,379,785     (1,810,906

Change in unrealized net appreciation/(depreciation) on written options

               

 

  

           71,420   

Change in unrealized net appreciation/(depreciation) on securities sold short

               

 

  

    1,399          
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments, written options, securities sold short and foreign currency transactions

    (4,907,555     4,311,529     

 

(1,600,200

    152,630        368,937   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Increase/(Decrease) in Net Assets Resulting From Operations

  $ 743,767      $ 4,472,994     

$

182,965

  

  $ 60,888      $ 542,645   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of the financial statements.

 

FINANCIAL STATEMENTS     49   


Table of Contents

STATEMENTS OF CHANGES IN NET ASSETS

 

     ICON Bond Fund     ICON Core Equity Fund  
     Year Ended
September 30,
2011
    Year Ended
September 30,
2010
    Year Ended
September 30,
2011
    Year Ended
September 30,
2010
 

Operations

       

Net investment income/(loss)

  $ 5,651,322      $ 7,192,155      $ 161,465      $ 168,491   

Net realized gain/(loss) on investment transactions, foreign currency transactions, written options, and securities sold short

    3,288,516        3,917,555        10,265,342        14,090,952   

Change in net unrealized appreciation/(depreciation) on investments, foreign currency translations, written options and securities sold short

    (8,196,071     4,715,381        (5,953,813     (13,188,272
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase/(decrease) in net assets resulting from operations

    743,767        15,825,091        4,472,994        1,071,171   
 

 

 

   

 

 

   

 

 

   

 

 

 

Dividends and Distributions to Shareholders

       

Net investment income

       

Class I

    (5,454,987     (7,018,728     (168,477     (1,206,894

Class C

    (148,880     (171,690            (306,237

Class Z

    (44,454     (47,033            (12,403

Class A

    (2,400                   (17,821

Net realized gains

       

Class I

    (2,996,875     (558,064              

Class C

    (86,038     (15,108              

Class Z

    (21,226     (3,365              

Class A

    (723                     
 

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease from dividends and distributions

    (8,755,583     (7,813,988     (168,477     (1,543,355
 

 

 

   

 

 

   

 

 

   

 

 

 

Fund Share Transactions

       

Shares sold

       

Class I

    32,580,297        32,845,451        12,906,410        32,073,401   

Class C

    750,410        1,213,265        1,201,294        1,562,483   

Class Z

    19,196        20,785        39,438        72,404   

Class A

    267,330        10        572,831        259,338   

Reinvested dividends and distributions

       

Class I

    8,265,981        7,377,916        164,558        1,185,449   

Class C

    213,732        177,601               292,854   

Class Z

    1,620        1,117               6,842   

Class A

    2,562                      15,412   

Shares repurchased

       

Class I

    (87,891,304     (67,826,327     (43,843,823     (21,796,993

Class C

    (1,362,160     (1,511,408     (8,294,982     (10,352,418

Class Z

    (126,205     (111,600     (345,913     (561,889

Class A

    (12,669            (660,978     (880,468
 

 

 

   

 

 

   

 

 

   

 

 

 

Net Increase/(decrease) from fund share transactions

    (47,291,210     (27,813,190     (38,261,165     1,876,415   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total net increase/(decrease) in net assets

    (55,303,026     (19,802,087     (33,956,648     1,404,231   

Net Assets

       

Beginning of year

    151,870,811        171,672,898        100,310,879        98,906,648   
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 96,567,785      $ 151,870,811      $ 66,354,231      $ 100,310,879   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

50   FINANCIAL STATEMENTS


Table of Contents
ICON Equity Income Fund     ICON Long/Short Fund     ICON Risk-Managed Equity Fund  

Year Ended

September 30,

2011

    Year Ended
September 30,
2010
    Year Ended
September 30,
2011
    Year Ended
September 30,
2010
    Year Ended
September 30,
2011
    Year Ended
September 30,
2010
 
         
$ 1,783,165      $ 1,767,561      $ (91,742   $ (89,691   $ 173,708      $ 156,568   

 

5,490,002

  

    8,290,828        1,531,016        2,734,750        2,108,423        5,402,433   

 

(7,090,202

    (5,642,176     (1,378,386     (2,082,344     (1,739,486     (4,101,512

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

182,965

  

    4,416,213        60,888        562,715        542,645        1,457,489   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  (1,549,373     (1,394,021            (226,189     (171,775     (113,070
  (125,340     (94,130            (108,323     (3,673       
  (6,010     (2,847            (2,537     (807     (331
  (124,650     (20,940            (33,034     (27,376     (16,623
         
                                       
                                       
                                       
                                       

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1,805,373

    (1,511,938            (370,083     (203,631     (130,024

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  12,707,420        6,439,261        2,207,397        7,069,126        4,921,371        3,611,409   
  1,345,156        820,363        172,641        563,229        495,568        901,343   
  80,077        20,499        5,994        48,904        9,665        18,551   
  2,446,198        1,691,037        378,445        517,157        454,303        3,131,899   
         
  1,486,514        1,365,429               207,415        162,601        110,939   
  101,343        87,134               99,955        3,600          
  5,779        2,847               2,472        807        331   
  88,433        15,489               28,090        24,439        15,056   
         
  (25,184,721     (14,371,467     (6,096,500     (11,219,022     (7,970,159     (23,642,476
  (843,467     (901,740     (4,226,492     (6,341,689     (1,039,898     (1,591,293
  (16,701     (6,334     (99,121     (47,144     (12,896     (31,188
  (840,365     (431,805     (1,018,297     (1,102,767     (2,709,760     (639,913

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(8,624,334

    (5,269,287     (8,675,933     (10,174,274     (5,660,359     (18,115,342

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(10,246,742

    (2,365,012     (8,615,045     (9,981,642     (5,321,345     (16,787,877
         
  42,908,338        45,273,350        22,839,176        32,820,818        25,459,106        42,246,983   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 32,661,596      $ 42,908,338      $ 14,224,131      $ 22,839,176      $ 20,137,761      $ 25,459,106   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

FINANCIAL STATEMENTS     51   


Table of Contents

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

 

     ICON Bond
Fund
    ICON
Core Equity Fund
 
     Year Ended
September 30,
2011
    Year Ended
September 30,
2010
    Year Ended
September 30,
2011
    Year Ended
September 30,
2010
 

Transactions in Fund Shares

       

Shares sold

       

Class I

    3,096,208        3,125,554        1,260,372        3,491,672   

Class C

    71,019        114,827        125,482        183,620   

Class Z

    1,835        1,975        3,786        7,898   

Class A

    25,660        0.925        56,844        29,488   

Reinvested dividends and distributions

       

Class I

    795,208        700,903        16,133        128,576   

Class C

    20,535        16,834               34,209   

Class Z

    156        106               740   

Class A

    249                      1,726   

Shares repurchased

       

Class I

    (8,382,077     (6,448,096     (4,156,795     (2,411,026

Class C

    (128,801     (143,069     (877,121     (1,230,820

Class Z

    (12,029     (10,776     (33,715     (61,378

Class A

    (1,229            (66,713     (99,609
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase/(decrease)

    (4,513,266     (2,641,741     (3,671,727     75,096   
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares outstanding, beginning of year

    14,051,473        16,693,214        11,288,557        11,213,461   
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares outstanding, end of year

    9,538,207        14,051,473        7,616,830        11,288,557   
 

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated undistributed net investment income/(loss)

  $ (329,386   $ (329,987   $ 161,462      $ 168,474   
 

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of the financial statements.

 

52   FINANCIAL STATEMENTS


Table of Contents

ICON

Equity Income Fund

    ICON
Long/Short Fund
    ICON
Risk-Managed Equity Fund
 

Year Ended
September 30,
2011

  Year Ended
September 30,
2010
    Year Ended
September 30,
2011
    Year Ended
September 30,
2010
    Year Ended
September 30,
2011
    Year Ended
September 30,
2010
 
         
         
1,070,619     600,784        168,947        586,428        431,144        335,464   
116,234     77,154        14,038        49,342        47,099        89,178   
6,846     1,894        480        4,041        834        1,688   
209,444     156,113        31,066        43,946        40,810        288,848   

 

    

         
128,303     129,419               17,015        14,135        10,089   
8,989     8,411               8,558        330          
508     269               202        69        30   
7,833     1,454               2,320        2,138        1,379   
         
(2,120,602)     (1,345,972     (478,602     (946,546     (693,438     (2,195,558
(73,121)     (86,142     (350,539     (560,432     (96,498     (155,945
(1,444)     (582     (7,938     (4,033     (1,092     (2,874
(73,851)     (41,307     (82,587     (93,559     (232,103     (59,543

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(720,242)     (498,505     (705,135     (892,718     (486,572     (1,687,244

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

    

3,908,021

    4,406,526        1,968,520        2,861,238        2,382,116        4,069,360   

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
3,187,779     3,908,021        1,263,385        1,968,520        1,895,544        2,382,116   

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

    

$          (42,834)

  $ 28,158      $ -      $ (6   $ -      $ 29,973   

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

FINANCIAL STATEMENTS     53   


Table of Contents

FINANCIAL HIGHLIGHTS

 

 

          Income/(loss) from investment operations     Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON Bond Fund

           

Class I

           

Year Ended September 30, 2011

  $ 10.81      $ 0.45      $ (0.47   $ (0.02   $ (0.45   $ (0.22

Year Ended September 30, 2010

    10.28        0.46        0.56        1.02        (0.45     (0.04

Year Ended September 30, 2009

    9.44        0.40        0.84        1.24        (0.40     -   

Year Ended September 30, 2008

    10.02        0.42        (0.55     (0.13     (0.45     -   

Year Ended September 30, 2007

    10.00        0.44        0.03        0.47        (0.45     -   

Class C

           

Year Ended September 30, 2011

    10.83        0.39        (0.46     (0.07     (0.39     (0.22

Year Ended September 30, 2010

    10.30        0.39        0.57        0.96        (0.39     (0.04

Year Ended September 30, 2009

    9.46        0.34        0.84        1.18        (0.34     -   

Year Ended September 30, 2008

    10.05        0.35        (0.55     (0.20     (0.39     -   

Year Ended September 30, 2007

    10.02        0.38        0.04        0.42        (0.39     -   

Class Z

           

Year Ended September 30, 2011

    10.79        0.47        (0.46     0.01        (0.47     (0.22

Year Ended September 30, 2010

    10.26        0.48        0.57        1.05        (0.48     (0.04

Year Ended September 30, 2009

    9.42        0.45        0.81        1.26        (0.42     -   

Year Ended September 30, 2008

    10.02        0.44        (0.57     (0.13     (0.47     -   

Year Ended September 30, 2007

    10.00        0.46        0.03        0.49        (0.47     -   

Class A

           

Year Ended September 30, 2011

    10.81        0.46        (0.46     0.00        (0.48     (0.22

 

54   FINANCIAL HIGHLIGHTS


Table of Contents
distributions                       Ratio of expenses
to average net assets
    Ratio of net investment
income/(loss)

to average net assets
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of
period (in
thousands)
    Before
expense
limitation

and  transfer
agent
earnings
credit
    After
expense
limitation

and  transfer
agent
earnings
credit(b)
    Before
expense
limitation

and  transfer
agent
earnings
credit
    After
expense
limitation

and transfer
agent
earnings
credit
    Portfolio
turnover
rate(a)
 
               
               
$ (0.67   $ 10.12        (0.19 )%    $ 91,558        1.11     1.00 %      4.14     4.25     32.13
  (0.49     10.81        10.20     146,277        1.13     1.00 %      4.21     4.34     63.47
  (0.40     10.28        13.50     166,145        1.09     1.00 %      4.08     4.17     73.71
  (0.45     9.44        (1.48 )%      100,985        1.08     1.00 %      4.06     4.14     73.47
  (0.45     10.02        4.80     123,102        1.09     1.00 %      4.34     4.42     34.40
               
  (0.61     10.15        (0.68 )%      3,879        2.16     1.60 %      3.11     3.67     32.13
  (0.43     10.83        9.52     4,544        2.46     1.60 %      2.88     3.74     63.47
  (0.34     10.30        12.80     4,441        2.40     1.60 %      2.75     3.55     73.71
  (0.39     9.46        (2.16 )%      2,725        2.42     1.60 %      2.71     3.53     73.47
  (0.39     10.05        4.27     1,491        3.15     1.60 %      2.28     3.82     34.40
               
  (0.69     10.11        0.15     881        1.18     0.75 %      4.08     4.51     32.13
  (0.52     10.79        10.45     1,049        1.39     0.75 %      3.95     4.59     63.47
  (0.42     10.26        13.79     1,087        1.91     0.75 %      3.34     4.50     73.71
  (0.47     9.42        (1.43 )%      8        186.00     0.75 %      (180.79 )%      4.46     73.47
  (0.47     10.02        5.02     11        31.60     0.75 %      (26.18 )%      4.67     34.40
               
  (0.70     10.11        (0.02 )%      249        5.83     1.01 %      (0.38 )%      4.44     32.13

 

FINANCIAL HIGHLIGHTS     55   


Table of Contents

FINANCIAL HIGHLIGHTS (CONTINUED)

 

 

 

          Income/(loss) from investment operations     Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON Core Equity Fund

           

Class I

           

Year Ended September 30, 2011

  $ 9.08      $ 0.04      $ (0.16   $ (0.12   $ (0.02   $ -   

Year Ended September 30, 2010

    9.08        0.04        0.12        0.16        (0.16     -   

Year Ended September 30, 2009

    11.24        0.10        (2.26     (2.16     -        -   

Year Ended September 30, 2008

    16.59        0.09        (4.07     (3.98     -        (1.37

Year Ended September 30, 2007

    15.22        0.02        2.46        2.48        -        (1.11

Class C

           

Year Ended September 30, 2011

    8.36        (0.05     (0.14     (0.19     -        -   

Year Ended September 30, 2010

    8.37        (0.04     0.11        0.07        (0.08     -   

Year Ended September 30, 2009

    10.46        0.03        (2.12     (2.09     -        -   

Year Ended September 30, 2008

    15.66        (0.01     (3.82     (3.83     -        (1.37

Year Ended September 30, 2007

    14.52        (0.10     2.35        2.25        -        (1.11

Class Z

           

Year Ended September 30, 2011

    9.04        (0.07     (0.15     (0.22     -        -   

Year Ended September 30, 2010

    9.07        (0.01     0.11        0.10        (0.13     -   

Year Ended September 30, 2009

    11.24        0.10        (2.27     (2.17     -        -   

Year Ended September 30, 2008

    16.62        0.09        (4.10     (4.01     -        (1.37

Year Ended September 30, 2007

    15.23        0.03        2.47        2.50        -        (1.11

Class A

           

Year Ended September 30, 2011

    8.67        (0.07     (0.14     (0.21     -        -   

Year Ended September 30, 2010

    8.73        (0.08     0.10        0.02        (0.08     -   

Year Ended September 30, 2009

    10.92        0.01        (2.20     (2.19     -        -   

Year Ended September 30, 2008

    16.32        (0.01     (4.02     (4.03     -        (1.37

Year Ended September 30, 2007

    15.09        (0.06     2.40        2.34        -        (1.11

 

56   FINANCIAL HIGHLIGHTS


Table of Contents
distributions                       Ratio of expenses
to average net assets
    Ratio of net investment
income/(loss)

to average net assets
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of
period (in
thousands)
    Before
expense
limitation

and  transfer
agent
earnings
credit
    After
expense
limitation

and  transfer
agent
earnings
credit
    Before
expense
limitation

and  transfer
agent
earnings
credit
    After
expense
limitation

and  transfer
agent
earnings
credit
    Portfolio
turnover
rate(a)
 
               
               
$ (0.02   $ 8.94        (1.33 )%    $ 47,092        1.35     1.35     0.44     0.44     57.93
  (0.16     9.08        1.70     73,969        1.35     1.35     0.45     0.45     123.12
  -        9.08        (19.22 )%      62,963        1.37     1.37     1.23     1.23     208.48
  (1.37     11.24        (25.99 )%      76,606        1.27     1.27     0.67     0.67     173.81
  (1.11     16.59        17.05     88,246        1.24     1.23     0.12     0.13     116.81
               
  -        8.17        (2.27 )%      17,884        2.27     2.27     (0.50 )%      (0.50 )%      57.93
  (0.08     8.36        0.84     24,573        2.25     2.25     (0.45 )%      (0.45 )%      123.12
  -        8.37        (19.98 )%      33,089        2.25     2.25     0.44     0.44     208.48
  (1.37     10.46        (26.61 )%      55,364        2.05     2.05     (0.09 )%      (0.09 )%      173.81
  (1.11     15.66        16.25     92,350        2.02     2.02     (0.68 )%      (0.67 )%      116.81
               
  -        8.82        (2.43 )%      133        2.52     2.52     (0.72 )%      (0.72 )%      57.93
  (0.13     9.04        1.10     406        1.90     1.90     (0.06 )%      (0.06 )%      123.12
  -        9.07        (19.31 )%      887        1.45     1.45     1.27     1.27     208.48
  (1.37     11.24        (26.11 )%      1,222        1.34     1.34     0.65     0.65     173.81
  (1.11     16.62        17.18     1,320        1.18     1.18     0.17     0.17     116.81
               
  -        8.46        (2.42 )%      1,245        2.52     2.52     (0.75 )%      (0.75 )%      57.93
  (0.08     8.67        0.22     1,362        2.68     2.68     (0.88 )%      (0.88 )%      123.12
  -        8.73        (20.05 )%      1,969        2.43     2.43     0.11     0.11     208.48
  (1.37     10.92        (26.76 )%      1,878        2.09     2.09     (0.08 )%      (0.08 )%      173.81
  (1.11     16.32        16.25     1,390        1.66     1.65     (0.42 )%      (0.41 )%      116.81

 

FINANCIAL HIGHLIGHTS     57   


Table of Contents

FINANCIAL HIGHLIGHTS (CONTINUED)

 

 

              
Income/(loss) from  investment operations
    Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON Equity Income Fund

           

Class I

           

Year Ended September 30, 2011

  $ 11.00      $ 0.45      $ (0.71   $ (0.26   $ (0.47   $ -   

Year Ended September 30, 2010

    10.28        0.45        0.66        1.11        (0.39     -   

Year Ended September 30, 2009

    11.87        0.40        (1.59     (1.19     (0.40     -   

Year Ended September 30, 2008

    16.48        0.34        (3.00     (2.66     (0.31     (1.64

Year Ended September 30, 2007

    14.94        0.29        2.26        2.55        (0.34     (0.67

Class C

           

Year Ended September 30, 2011

    10.85        0.37        (0.72     (0.35     (0.34     -   

Year Ended September 30, 2010

    10.16        0.36        0.64        1.00        (0.31     -   

Year Ended September 30, 2009

    11.73        0.32        (1.56     (1.24     (0.33     -   

Year Ended September 30, 2008

    16.33        0.21        (2.97     (2.76     (0.20     (1.64

Year Ended September 30, 2007

    14.85        0.14        2.23        2.37        (0.22     (0.67

Class Z

           

Year Ended September 30, 2011

    10.96        0.50        (0.71     (0.21     (0.54     -   

Year Ended September 30, 2010

    10.26        0.47        0.64        1.11        (0.41     -   

Year Ended September 30, 2009

    11.84        0.41        (1.57     (1.16     (0.42     -   

Year Ended September 30, 2008

    16.46        0.38        (3.04     (2.66     (0.32     (1.64

Year Ended September 30, 2007

    14.94        0.30        2.26        2.56        (0.37     (0.67

Class A

           

Year Ended September 30, 2011

    10.90        0.47        (0.71     (0.24     (0.51     -   

Year Ended September 30, 2010

    10.21        0.46        0.63        1.09        (0.40     -   

Year Ended September 30, 2009

    11.80        0.38        (1.57     (1.19     (0.40     -   

Year Ended September 30, 2008

    16.40        0.31        (2.99     (2.68     (0.28     (1.64

Year Ended September 30, 2007

    14.92        0.27        2.22        2.49        (0.34     (0.67

 

  58      FINANCIAL HIGHLIGHTS


Table of Contents
distributions                       Ratio of expenses
to average net assets
    Ratio of net investment
income/(loss)

to average net assets
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of

period (in
thousands)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit(b)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Portfolio
turnover
rate(a)
 

$

(0.47

  $ 10.27        (2.73 )%    $ 25,775        1.47     1.45     3.82     3.84     142.75
  (0.39     11.00        10.93     37,731        1.53     1.45     4.12     4.20     123.33
  (0.40     10.28        (9.48 )%      41,623        1.40     1.40     4.58     4.58     148.56
  (1.95     11.87        (17.76 )%      98,501        1.23 %(d)      1.23     2.48     2.48     132.93
  (1.01     16.48        17.67     124,668        1.23 %(e)      1.22     1.86     1.86     121.30
               
  (0.34     10.16        (3.47 )%      3,874        2.53     2.20     2.85     3.18     142.75
  (0.31     10.85        9.99     3,569        2.97     2.20     2.68     3.46     123.33
  (0.33     10.16        (10.12 )%      3,348        2.69     2.21     3.21     3.69     148.56
  (1.84     11.73        (18.60 )%      4,461        2.34 %(d)      2.20     1.40     1.54     132.93
  (0.89     16.33        16.45     5,331        2.33 %(e)      2.21     0.75     0.87     121.30
               
  (0.54     10.21        (2.40 )%      142        3.99     1.20     1.45     4.24     142.75
  (0.41     10.96        11.04     88        7.66     1.20     (2.01 )%      4.45     123.33
  (0.42     10.26        (9.20 )%      66        8.73     1.21     (2.83 )%      4.69     148.56
  (1.96     11.84        (17.81 )%      81        11.18 %(d)      1.20     (7.14 )%      2.84     132.93
  (1.04     16.46        17.74     40        11.08 %(e)      1.21     (7.96 )%      1.92     121.30
               
  (0.51     10.15        (2.66 )%      2,871        1.91     1.45     3.55     4.01     142.75
  (0.40     10.90        10.84     1,521        4.59     1.45     1.19     4.32     123.33
  (0.40     10.21        (9.53 )%      237        5.68     1.46     0.26     4.48     148.56
  (1.92     11.80        (17.98 )%      281        5.40 %(d)      1.44     (1.67 )%      2.29     132.93
  (1.01     16.40        17.29     322        3.77 %(e)      1.45     (0.60 )%      1.73     121.30

 

FINANCIAL HIGHLIGHTS     59   


Table of Contents

FINANCIAL HIGHLIGHTS (CONTINUED)

 

 

          Income/(loss) from investment operations     Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON Long/Short Fund(c)

           

Class I

           

Year Ended September 30, 2011

  $ 11.85      $ (0.02   $ (0.31   $ (0.33   $ -      $ -   

Year Ended September 30, 2010

    11.73        -        0.28        0.28        (0.16     -   

Year Ended September 30, 2009

    13.76        0.16        (1.91     (1.75     (0.28     -   

Year Ended September 30, 2008

    19.26        0.13        (4.86     (4.73     (0.03     (0.74

Year Ended September 30, 2007

    17.19        0.07        2.47        2.54        (0.04     (0.43

Class C

           

Year Ended September 30, 2011

    11.29        (0.11     (0.29     (0.40     -        -   

Year Ended September 30, 2010

    11.19        (0.08     0.27        0.19        (0.09     -   

Year Ended September 30, 2009

    13.13        0.06        (1.81     (1.75     (0.19     -   

Year Ended September 30, 2008

    18.54        -        (4.67     (4.67     -        (0.74

Year Ended September 30, 2007

    16.67        (0.08     2.38        2.30        -        (0.43

Class Z

           

Year Ended September 30, 2011

    11.90        0.02        (0.31     (0.29     -        -   

Year Ended September 30, 2010

    11.80        0.03        0.29        0.32        (0.22     -   

Year Ended September 30, 2009

    13.81        0.17        (1.89     (1.72     (0.29     -   

Year Ended September 30, 2008

    19.30        0.18        (4.93     (4.75     -        (0.74

Year Ended September 30, 2007

    17.29        0.10        2.41        2.51        (0.07     (0.43

Class A

           

Year Ended September 30, 2011

    11.77        (0.02     (0.31     (0.33     -        -   

Year Ended September 30, 2010

    11.67        -        0.28        0.28        (0.18     -   

Year Ended September 30, 2009

    13.69        0.14        (1.88     (1.74     (0.28     -   

Year Ended September 30, 2008

    19.20        0.10        (4.85     (4.75     (0.02     (0.74

Year Ended September 30, 2007

    17.18        0.05        2.46        2.51        (0.06     (0.43

 

60   FINANCIAL HIGHLIGHTS


Table of Contents
distributions                       Ratio of expenses
to average net assets
    Ratio of net investment
income/(loss)

to average net assets
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of
period (in
thousands)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit(b)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Portfolio
turnover
rate(a)
 

$

-

  

  $ 11.52        (2.78 )%    $ 7,423        2.32     1.94     (0.56 )%      (0.18 )%      67.28
  (0.16     11.85        2.32     11,306        2.90     2.45     (0.44 )%      0.01     136.50
  (0.28     11.73        (12.40 )%      15,209        2.03     1.97     1.44     1.50     131.79
  (0.77     13.76        (25.43 )%      93,243        1.47     1.47     0.78     0.78     174.59
  (0.47     19.26        15.05     238,943        1.46     1.46     0.39     0.39     105.00

 

-

  

    10.89        (3.54 )%      5,546        3.14     2.70     (1.38 )%      (0.94 )%      67.28
  (0.09     11.29        1.65     9,547        3.60     3.19     (1.14 )%      (0.73 )%      136.50
  (0.19     11.19        (13.10 )%      15,093        2.95     2.81     0.44     0.58     131.79
  (0.74     13.13        (26.09 )%      27,148        2.31     2.31     (0.01 )%      (0.01 )%      174.59
  (0.43     18.54        14.05     43,986        2.33     2.32     (0.48 )%      (0.47 )%      105.00

 

-

  

    11.61        (2.44 )%      42        7.76     1.65     (5.96 )%      0.15     67.28
  (0.22     11.90        2.63     132        5.80     2.15     (3.39 )%      0.25     136.50
  (0.29     11.80        (12.10 )%      128        4.40     1.73     (1.12 )%      1.55     131.79
  (0.74     13.81        (25.45 )%      540        2.37     1.44     0.16     1.09     174.59
  (0.50     19.30        14.81     447        1.25     1.25     0.55     0.55     105.00

 

-

  

    11.44        (2.80 )%      1,213        3.23     1.91     (1.46 )%      (0.14 )%      67.28
  (0.18     11.77        2.34     1,855        3.65     2.45     (1.21 )%      (0.01 )%      136.50
  (0.28     11.67        (12.39 )%      2,390        2.64     2.06     0.76     1.34     131.79
  (0.76     13.69        (25.61 )%      4,859        1.72     1.72     0.63     0.63     174.59
  (0.49     19.20        14.94     6,481        1.68     1.67     0.27     0.26     105.00

 

FINANCIAL HIGHLIGHTS     61   


Table of Contents

FINANCIAL HIGHLIGHTS (CONTINUED)

 

 

          Income/(loss) from investment operations     Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON Risk-Managed Equity Fund

           

Class I

           

Year Ended September 30, 2011

  $ 10.76      $ 0.09      $ (0.05   $ 0.04      $ (0.11   $ -   

Year Ended September 30, 2010

    10.43        0.06        0.31        0.37        (0.04     -   

Year Ended September 30, 2009

    11.28        0.15        (0.85     (0.70     (0.15     -   

Year Ended September 30, 2008

    13.18        0.12        (1.39     (1.27     (0.10     (0.53

Year Ended September 30, 2007

    13.80        (0.02     1.64        1.62        (0.01     (2.23

Class C

           

Year Ended September 30, 2011

    10.15        0.01        (0.05     (0.04     (0.02     -   

Year Ended September 30, 2010

    9.88        (0.02     0.29        0.27        -        -   

Year Ended September 30, 2009

    10.72        0.05        (0.79     (0.74     (0.10     -   

Year Ended September 30, 2008

    12.61        0.01        (1.32     (1.31     (0.05     (0.53

Year Ended September 30, 2007

    13.39        (0.11     1.56        1.45        -        (2.23

Class Z

           

Year Ended September 30, 2011

    10.96        0.12        (0.05     0.07        (0.15     -   

Year Ended September 30, 2010

    10.61        0.08        0.33        0.41        (0.06     -   

Year Ended September 30, 2009

    11.46        0.22        (0.91     (0.69     (0.16     -   

Year Ended September 30, 2008

    13.37        0.15        (1.43     (1.28     (0.10     (0.53

Year Ended September 30, 2007

    13.94        0.01        1.65        1.66        -        (2.23

Class A

           

Year Ended September 30, 2011

    10.72        0.09        (0.05     0.04        (0.10     -   

Year Ended September 30, 2010

    10.39        0.05        0.33        0.38        (0.05     -   

Year Ended September 30, 2009

    11.25        0.09        (0.80     (0.71     (0.15     -   

Year Ended September 30, 2008

    13.15        0.10        (1.38     (1.28     (0.09     (0.53

Year Ended September 30, 2007

    13.80        (0.03     1.65        1.62        (0.04     (2.23

 

(x) Calculated using the average shares method.  
* The total return calculation is for the period indicated and excludes any sales charges.  
(a) Portfolio turnover is calculated at the Fund level.  
(b) The Fund’s operating expenses, not including interest expense, are contractually limited to the amounts discussed in Note 3. The ratios in these financial highlights reflect the limitation, including the interest expense.  
(c) The Fund’s operating expenses, not including dividends on short positions, are contractually limited to 1.55% for Class I, 2.30% for Class C, 1.25% for Class Z and 1.55% for Class A. The ratios in these financial highlights reflect the limitation, including the dividends on short positions.  
(d) The ratio of expenses to average net assets before expense limitation and transfer agent earnings credit including expenses that were paid on behalf of the Fund by a third party related to a tax matter were 1.43%, 2.54%, 11.38% and 5.60% for Class I, C, Z and A, respectively.  
(e) The ratio of expenses to average net assets before expense limitation and transfer agent earnings credit including a potential Internal Revenue Code section 860 deficiency dividend expense were 1.81%, 2.91%, 11.66% and 4.35% for Class I, C, Z and A, respectively.  

The accompanying notes are an integral part of the financial statements.

 

62   FINANCIAL HIGHLIGHTS


Table of Contents
distributions                       Ratio of expenses
to average net assets
    Ratio of net investment
income/(loss)

to average net assets
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of
period (in
thousands)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit(b)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Portfolio
turnover
rate(a)
 

$

(0.11

  $ 10.69        0.31   $ 15,997        1.78     1.49     0.51     0.80     67.61
  (0.04     10.76        3.56     18,768        1.82     1.56     0.26     0.52     114.34
  (0.15     10.43        (5.98 )%      37,475        1.44     1.44     1.62     1.62     194.31
  (0.63     11.28        (10.04 )%      82,599        1.30     1.30     0.93     0.93     184.47
  (2.24     13.18        12.51     77,195        1.50     1.50     (0.11 )%      (0.11 )%      150.42
               
  (0.02     10.09        (0.45 )%      2,099        2.95     2.23     (0.66 )%      0.06     67.61
  -        10.15        2.73     2,609        3.36     2.30     (1.27 )%      (0.21 )%      114.34
  (0.10     9.88        (6.69 )%      3,199        2.72     2.24     0.06     0.54     194.31
  (0.58     10.72        (10.85 )%      4,207        2.52     2.21     (0.24 )%      0.07     184.47
  (2.23     12.61        11.53     2,291        2.76     2.25     (1.34 )%      (0.83 )%      150.42
               
  (0.15     10.88        0.51     60        7.22     1.23     (4.94 )%      1.05     67.61
  (0.06     10.96        3.90     62        10.41     1.31     (8.34 )%      0.75     114.34
  (0.16     10.61        (5.79 )%      72        3.55     1.24     (0.10 )%      2.21     194.31
  (0.63     11.46        (9.99 )%      422        4.39     1.21     (1.98 )%      1.20     184.47
  (2.23     13.37        12.67     37        17.99     1.25     (16.64 )%      0.10     150.42
               
  (0.10     10.66        0.32     1,982        2.08     1.48     0.20     0.80     67.61
  (0.05     10.72        3.69     4,020        2.62     1.59     (0.57 )%      0.46     114.34
  (0.15     10.39        (6.05 )%      1,501        2.87     1.49     (0.43 )%      0.95     194.31
  (0.62     11.25        (10.18 )%      863        3.75     1.46     (1.44 )%      0.85     184.47
  (2.27     13.15        12.51     294        7.12     1.49     (5.85 )%      (0.22 )%      150.42

 

FINANCIAL HIGHLIGHTS     63   


Table of Contents

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

 

1.  Organization

The ICON Bond Fund (“Bond Fund”), ICON Core Equity Fund (“Core Equity Fund”), ICON Equity Income Fund (“Equity Income Fund”), ICON Long/Short Fund (“Long/Short Fund”) and ICON Risk-Managed Equity Fund (“Risk-Managed 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. Each Fund has four classes of shares: Class I, Class C, Class Z and Class A. All classes have equal rights as to earnings, assets and voting privileges except that each Class may bear different distribution fees, registration costs, legal costs, mailing and printing costs and shareholder servicing costs and each Class has exclusive voting rights with respect to its distribution plan. There are currently twelve 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 Equity Income Fund is modest capital appreciation and income. The investment objective of the Long/Short Fund is capital appreciation. The investment objective of the Risk-Managed Equity Fund is modest capital appreciation and to maximize realized gains.

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 Long/Short Fund engages in short selling; 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 Long/Short Fund’s loss on a short sale is potentially unlimited as a loss occurs when the value of a security sold short increases. The Risk-Managed

 

64   NOTES TO FINANCIAL STATEMENTS


Table of Contents

Equity 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. 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. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, may not exist in some foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers. There are also risks associated with small- and mid-cap investing, including limited product lines, less liquidity and small market share.

The Core Equity Fund has a significant weighting in the Industrials sector and the Consumer Discretionary sector which may cause the Fund’s performance to be susceptible to the economic, business and/or other developments that may affect those sectors.

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 involving future claims that may be made against each Fund is unknown. However, based on experience, the Funds expect the risk of loss to be minimal.

2.  Significant Accounting Policies

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 may differ from these estimates.

 

NOTES TO FINANCIAL STATEMENTS     65   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

Investment Valuation

The Funds’ securities and other assets, excluding options on securities indexes, 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 Standard Time) each day the NYSE is open, except that securities traded primarily on the NASDAQ Stock Market (“NASDAQ”) are normally valued by the Funds at the NASDAQ Official Closing Price provided by NASDAQ each business day. Options on securities indexes are valued at the close of the Chicago Board Options Exchange (normally 4:15 p.m. Eastern Standard Time) on each day the New York Stock Exchange is open for trading.

The Funds use pricing services to obtain the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service’s valuation quote 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, a 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 market with the most volume. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than 60 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 based upon a matrix valuation system which considers such factors as security prices, yields, maturities and ratings. Short-term debt securities with remaining maturities of 60 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 NYSE are used to convert foreign security values into U.S. dollars.

The Funds’ securities that traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Board determines that use of another valuation methodology is appropriate. The purposes of daily fair valuation are to avoid stale prices and to take into account, among other things, any significant events occurring after the close of foreign markets. The pricing service uses statistical analyses and quantitative models to adjust local

 

66   NOTES TO FINANCIAL STATEMENTS


Table of Contents

market prices using factors such as subsequent movements and changes in the prices of indexes, securities and exchange rates in other markets to determine fair value as of the time a Fund calculates its net asset value (“NAV”). The valuation assigned to fair-value securities for purposes of calculating a Fund’s NAV may differ from the security’s most recent closing market price and from the prices used by other mutual funds to calculate their NAVs.

Investments in other open-end investment companies are valued at net asset value.

Various inputs are used to determine the value of the Funds’ investments. These inputs are summarized in the three broad levels listed below:

Level 1 — quoted prices in active markets for identical securities.

Level 2 — significant observable inputs other than Level 1 quoted prices (including, but not limited to, quoted prices for similar securities, interest rates, prepayment speeds, and credit risk).

Level 3 — significant unobservable inputs.

Observable inputs are those based on market data obtained from sources independent of the Funds, and unobservable inputs reflect the Funds’ own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example, non-U.S. equity securities actively traded in foreign markets generally are reflected in Level 2 despite the availability of closing prices, because the Funds evaluate and determine whether those closing prices reflect fair value at the close of the NYSE or require adjustment, as described above. The following table summarizes the Funds’ investments, based on the inputs used to determine their values on September 30, 2011:

 

    Level 1     Level 2     Total  
     

ICON Bond Fund*

     

Assets

     

Corporate Bonds

  $ -      $ 77,504,158      $ 77,504,158   

U.S. Treasury Obligations

    -        5,483,750        5,483,750   

Foreign Corporate Bonds

    -        7,490,574        7,490,574   

Foreign Government Bond

    -        553,750        553,750   

Collateral for Securities on Loan

    -        6,560,230        6,560,230   

Short-Term Investments

    -        4,326,005        4,326,005   
 

 

 

   

 

 

   

 

 

 

Total

  $ -      $ 101,918,467      $ 101,918,467   
 

 

 

   

 

 

   

 

 

 

 

NOTES TO FINANCIAL STATEMENTS     67   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

    Level 1     Level 2     Total  
     

ICON Core Equity Fund*

     

Assets

     

Common Stocks

  $ 66,388,370      $ -      $ 66,388,370   

Collateral for Securities on Loan

    -        1,841,798        1,841,798   
 

 

 

   

 

 

   

 

 

 

Total

  $ 66,388,370      $ 1,841,798      $ 68,230,168   
 

 

 

   

 

 

   

 

 

 

ICON Equity Income Fund*

     

Assets

     

Common Stocks

  $ 28,740,413      $ -      $ 28,740,413   

Preferred Stocks

    1,023,492        -        1,023,492   

Corporate Bonds

    -        2,032,349        2,032,349   

Convertible Corporate Bonds

    -        239,750        239,750   

Convertible Preferred Stock

    231,800        -        231,800   

Call Options Purchased

    33,412        -        33,412   

Collateral for Securities on Loan

    -        2,154,862        2,154,862   
 

 

 

   

 

 

   

 

 

 

Total

  $ 30,029,117      $ 4,426,961      $ 34,456,078   
 

 

 

   

 

 

   

 

 

 

ICON Long/Short Fund*

     

Assets

     

Common Stocks

  $ 14,236,749      $ -      $ 14,236,749   

Collateral for Securities on Loan

    -        5,194        5,194   
 

 

 

   

 

 

   

 

 

 

Total

  $ 14,236,749      $ 5,194      $ 14,241,943   
 

 

 

   

 

 

   

 

 

 

Liabilities

     

Securities Sold Short

     

Common Stock

  $ (388,242   $ -      $ (388,242

Exchange Traded Funds

    (441,363     -        (441,363
 

 

 

   

 

 

   

 

 

 

Total

  $ (829,605   $ -      $ (829,605
 

 

 

   

 

 

   

 

 

 

ICON Risk-Managed Equity Fund*

     

Assets

     

Common Stocks

  $ 20,196,352      $ -      $ 20,196,352   

Put Option Purchased

    216,225        -        216,225   

Short-Term Investments

    -        305,123        305,123   
 

 

 

   

 

 

   

 

 

 

Total

  $ 20,412,577      $ 305,123      $ 20,717,700   
 

 

 

   

 

 

   

 

 

 

Liabilities

     

Written Call Options

  $ (186,750   $ -      $ (186,750
 

 

 

   

 

 

   

 

 

 

Total

  $ (186,750   $ -      $ (186,750
 

 

 

   

 

 

   

 

 

 

 

* Please refer to the Schedule of Investments and the Sector/Industry Classification and Credit Diversification tables for additional security details.

 

68   NOTES TO FINANCIAL STATEMENTS


Table of Contents

There were no Level 3 securities held in any of the Funds at September 30, 2011.

For the year ended September 30, 2011, there was no significant security transfer activity between Level 1 and Level 2.

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 daily into U.S. dollars at the prevailing rates of exchange. 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.

Options Transactions

The Funds’ use of derivatives for the year ended September 30, 2011 was limited to purchased and written options.

The Risk-Managed Equity Fund’s primary investment strategy involves the use of options. Each of the other Funds may also purchase and/or write (sell) call and put options on any security in which it may invest. The Funds utilize options to hedge against changes in market conditions or to provide market exposure while trying to reduce transaction costs.

Option contracts involve market risk and can be highly volatile. Should prices of securities or securities indexes move in an unexpected manner, the Funds may not achieve the desired benefits and may realize losses and thus be in a worse position than if such strategies had not been utilized.

When a Fund writes a put or call option, an amount equal to the premium received is included on the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the

 

NOTES TO FINANCIAL STATEMENTS     69   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

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 on an individual security 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 call option on a securities index is exercised, a gain or loss is realized as determined by the premium originally received, the exercise price and the market value of the index. If a written put option on an individual security is exercised, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, a Fund bears the market risk of an unfavorable change in the price of the individual security or securities index underlying the written option. Additionally, written call options may involve the risk of limited gains, lack of liquidity for the option and lack of liquidity for the security or securities index.

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 on 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 option on an individual security, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option on an individual security, 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. If the Fund exercises a put or a call option on a security index, a gain or loss is realized as determined by the premium originally paid, the exercise price and the market value of the index. Written and purchased options are non-income producing securities.

As of September 30, 2011, the Equity Income Fund engaged in purchased call option transactions and the Risk-Managed Equity Fund engaged in written call and purchased put options transactions. All open option contracts are included on each Fund’s Schedule of Investments.

The Risk-Managed Equity Fund’s written options are collateralized by cash and/or securities held in a segregated account at the Fund’s custodian. The securities pledged as collateral are included on the Schedule of Investments. Such collateral is restricted from the Fund’s use. The cash collateral held for the prime broker and/or borrowings from the prime broker are included on the Statement of Assets and Liabilities.

 

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The number of options contracts written and the premiums received by the Risk-Managed Equity Fund during the year ended September 30, 2011, were as follows:

 

    Risk-Managed Equity Fund  
     Number of
Contracts
    Premiums
Received
 

Options outstanding, beginning of period

    130      $ 247,668   

Options written during period

    2,470        6,221,851   

Options closed during period

    (2,525     (6,218,781
 

 

 

   

 

 

 

Options outstanding, end of period

    75      $ 250,738   
 

 

 

   

 

 

 

The following is a summary of how these derivatives are treated in the financial statements and their impact on the Funds:

Fair Values of Derivative Instruments as of September 30, 2011

 

   

Asset Derivatives

   

Liability Derivatives

 
Derivatives not accounted for as
hedging instruments
  Statement of
Assets and
Liabilities
Location
 

Fair

Value

    Statement of
Assets and
Liabilities
Location
 

Fair

Value

 

Purchased option contracts

       

Equity risk

       

ICON Equity Income Fund

 

Investments,

at value

  $ 33,412     

Investments,

at value

  $ -   

ICON Risk-Managed Equity Fund

      216,225          -   

Written option contracts

       

Equity risk

       

ICON Risk-Managed Equity Fund

  Options written, at value   $ -      Options written, at value   $ 186,750   

Amount of Realized Gain or (Loss) on Derivatives Recognized in Operations

 

Derivatives not accounted for

as hedging instruments

 

Location of Gain/(Loss)

on Derivatives
Recognized in Operations

  Amount  

Purchased option contracts

   

Equity risk

   

ICON Equity Income Fund

  Net realized gain/(loss) from   $ (324,613

ICON Risk-Managed Equity Fund

  investment transactions     (432,358

Written option contracts

   

Equity risk

   

ICON Risk-Managed Equity Fund

  Net realized gain/(loss) from written option transactions   $ (327,694

 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

Change in Unrealized Appreciation/(Depreciation) on Derivatives Recognized in Operations

 

Derivatives not accounted for

as hedging instruments

 

Location of Gain/(Loss)

on Derivatives
Recognized in Operations

  Amount  

Purchased option contracts

   

Equity risk

   

ICON Equity Income Fund

  Change in unrealized net   $ 173,495   

ICON Risk-Managed Equity Fund

  appreciation/(depreciation) on investments     105,919   

Written option contracts

   

Equity risk

   

ICON Risk-Managed Equity Fund

  Change in unrealized net appreciation/(depreciation) on written options   $ 71,420   

For the year ended September 30, 2011, the Funds’ quarterly holdings of options contracts were as follows:

 

    ICON Equity
Income Fund
    ICON Risk-
Managed
Equity Fund
    ICON Risk-
Managed
Equity Fund
 
Quarter Ended   Number of Options Purchased
Contracts Outstanding
    Number of
Options Written
Contracts
Outstanding
 

December 31, 2010

    871        200        180   

March 31, 2011

    820        50        150   

June 30, 2011

    819        35        120   

September 30, 2011

    1,681        45        75   

The Funds value derivatives at fair value, as described below, and recognize changes in fair value currently in the results of operations. Accordingly, the Funds do not follow hedge accounting, even for derivatives employed as economic hedges.

Short Sales

The Long/Short Fund may engage in short sales (selling securities it does not own) as part of its normal investment activities. The Long/Short Fund enters into short positions in equity securities identified as being overvalued.

Short sales involve market risk. If a security sold short increases in price, the Long/Short Fund may have to cover its short position at a higher price than the short sale price, resulting in a loss. These short sales are collateralized

 

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by cash and/or securities held with the Fund’s prime broker and in a 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 restricted from use. The cash collateral that is restricted from use is included on the Statement of Assets and Liabilities as “Deposits for short sales.” The securities pledged as collateral that are restricted from use are included on the Schedule of Investments. Dividends received on short sales are treated as an expense on the Statement of Operations. Liabilities for securities sold short are closed out by purchasing the applicable securities for delivery to the Fund’s prime broker. As of September 30, 2011, the Long/Short Fund engaged in short selling. The short positions are included in the Schedule of Securities Sold Short on the Schedule of Investments.

Securities Lending

Under procedures adopted by the Board, the Funds may lend securities to non-affiliated qualified parties. The Funds seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security. The Funds do not have the right to vote on securities while they are on loan; however, the Funds may attempt to call back the loan and vote the proxy.

All loans will be continuously secured by collateral which consists of cash. The cash collateral is invested in the State Street Navigator Prime Portfolio and is disclosed on the Schedule of Investments. The lending fees received and the Funds’ portion of the interest income earned on cash collateral are included on the Statement of Operations, if applicable.

As of September 30, 2011, the following Funds had securities with the following values on loan:

 

Fund   Value of
Loaned Securities
    Value of
Collateral
 

ICON Bond Fund

  $ 6,216,808      $ 6,560,230   

ICON Core Equity Fund

    1,788,475        1,841,798   

ICON Equity Income Fund

    2,031,367        2,154,862   

ICON Long/Short Fund

    5,100        5,194   

ICON Risk-Managed Equity Fund

    -        -   

The value of the collateral above could include collateral held for securities that were sold on or before September 30, 2011. It may also include collateral received from the pre-funding of loans.

 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

Income Taxes

The Funds intend to qualify as regulated investment companies under Subchapter M of the Internal Revenue Code and, accordingly, the Funds will generally not be subject to federal and state income taxes, or federal excise taxes to the extent that they intend to make sufficient distributions of net investment income and net realized capital gains.

Dividends paid by the Funds from net investment income and distributions of net realized short-term gains are, for federal income tax purposes, taxable as ordinary income to shareholders.

Dividends and distributions to shareholders are recorded by the Funds on the ex-dividend/distribution date. The Bond Fund distributes net investment income, if any, to shareholders monthly. The Equity Income Fund and the Risk-Managed Equity Fund intend to distribute net investment income, if any, to shareholders quarterly. The other Funds distribute income, if any, annually. The Funds distribute net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryforwards. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes. 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.

Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax periods and has concluded that no provision for federal income tax is required in the Funds’ financial statements.

The Funds file U.S. tax returns. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the past four years, no examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

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 value of the securities received. Interest income is accrued as earned. Certain dividends from foreign securities are recorded as soon as the Funds are informed of the

 

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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 the trade date. However, for financial reporting purposes, security transactions are accounted for on the trade date. Gains and losses on securities sold are determined on the basis of identified cost.

Allocation of 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.

Below are the class level expenses that are included on the Statement of Operations:

 

Fund   Legal
Expense
    Printing
And Postage
Expense
    Transfer
Agent
Expense
 

ICON Bond Fund

     

Class I

  $ 16,173      $ 20,089      $ 73,565   

Class C

    512        599        11,475   

Class Z

    124        152        3,500   

Class A

    7        5        2,587   

ICON Core Equity Fund

     

Class I

    8,655        36,708        59,873   

Class C

    3,149        13,416        54,305   

Class Z

    27        113        3,454   

Class A

    200        870        6,142   

ICON Equity Income Fund

     

Class I

    4,953        17,733        45,239   

Class C

    530        1,880        10,858   

Class Z

    16        56        3,302   

Class A

    361        1,276        5,210   

 

NOTES TO FINANCIAL STATEMENTS     75   


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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

Fund   Legal
Expense
    Printing
And Postage
Expense
    Transfer
Agent
Expense
 

ICON Long/Short Fund

     

Class I

  $ 1,554      $ 3,285      $ 22,723   

Class C

    1,219        3,050        20,859   

Class Z

    10        30        3,325   

Class A

    222        486        5,485   

ICON Risk-Managed Equity Fund

     

Class I

    2,832        17,251        33,230   

Class C

    404        2,430        8,392   

Class Z

    10        59        3,226   

Class A

    525        3,089        5,904   

3.  Fees and Other Transactions with Affiliates

Investment Advisory Fees

ICON Advisers, Inc. (“ICON Advisers”) serves as investment adviser to the Funds and is responsible for managing the Funds’ portfolios of securities. ICON Advisers receives a monthly management fee that is computed daily at an annual rate of 0.60% of average daily net assets of the Bond Fund, 0.75% of average daily net assets of the Core Equity, Equity Income and Risk-Managed Equity Funds, and 0.85% of average daily net assets of the Long/Short Fund.

ICON Advisers has contractually agreed to limit the Funds’ expenses (exclusive of brokerage, interest, taxes, dividends on short sales and extraordinary expenses) to the extent necessary to ensure that the Funds’ expenses do not exceed the following amounts:

 

Fund   Class I     Class C     Class Z     Class A  

ICON Bond Fund

    1.00%        1.60%        0.75%        1.00%   

ICON Equity Income Fund

    1.45%        2.20%        1.20%        1.45%   

ICON Long/Short Fund

    1.55%        2.30%        1.25%        1.55%   

ICON Risk-Managed Equity Fund

    1.45%        2.20%        1.20%        1.45%   

The Funds’ expense limitations, excluding the Bond Fund Class A, will continue in effect until at least January 31, 2021. The Bond Fund Class A will continue in effect until at least January 31, 2013. To the extent ICON Advisers 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

 

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operating expenses exceed the expense limits in effect at the time the expenses were reimbursed or at the time these payments are proposed.

As of September 30, 2011 the following amounts were still available for recoupment by ICON Advisers based upon their potential expiration dates:

 

Fund   2012     2013     2014  

ICON Bond Fund

  $ 143,964      $ 245,979      $ 167,544   

ICON Equity Income Fund

    35,498        73,119        38,479   

ICON Long/Short Fund

    60,531        150,441        93,442   

ICON Risk-Managed Equity Fund

    33,743        138,234        95,012   

Accounting, Custody and Transfer Agent Fees

State Street Bank and Trust Company (“State Street”) serves as the fund accounting agent for the funds. For its services, the Trust pays State Street a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily assets of the Trust.

State Street is the custodian of the Trust’s investments. For its services, the Trust pays State Street asset-based fees that vary according to the number of positions and transactions, plus out-of-pocket expenses.

Boston Financial Data Services, Inc. (“BFDS”) is the Trust’s transfer agent. For these services, the Trust pays a per account fee, plus certain other transaction cusip charges. BFDS may pay each Fund transfer agent earnings credits. Transfer agent earnings credits are credits received for interest which results from overnight balances used by BFDS for clearing shareholder transactions.

Administrative Services

The Trust has entered into an administrative services agreement with ICON Advisers pursuant to which ICON Advisers oversees the administration of the Trust’s business and affairs. This agreement provides for an annual fee of 0.05% on the Trust’s 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. For the year ended September 30, 2011, each Funds’ payment for administrative services to ICON Advisers is included on the Statement of Operations. The administrative services agreement provides that ICON Advisers 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

 

NOTES TO FINANCIAL STATEMENTS     77   


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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

the administrative services agreement relates, except for a loss resulting from willful misfeasance, bad faith or negligence by ICON Advisers in the performance of its duties.

ICON Advisers has a sub-administration agreement with State Street to which State Street assists ICON Advisers with the administration and business affairs of the Trust. For its services, ICON Advisers pays State Street a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily assets of the Trust.

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 and for other shareholder services. Under the 12b-1 Plan, Bond Fund Class C shareholders pay an annual distribution and service fee of 0.85% of average daily net assets and Class I and Class A shareholders pay an annual distribution and service fee of 0.25% of average daily net assets. The shareholders of the other Funds pay an annual distribution and service fee of 1.00% of average daily net assets for Class C shares and an annual distribution and service fee of 0.25% of average daily net assets for Class I shares and Class A shares. The total amount paid under the 12b-1 plans by the Funds is shown on the Statement of Operations.

Other Related Parties

Certain Officers and Directors of ICON Advisers 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 86% by the Trust and 14% by ICON Advisers. For the year ended September 30, 2011, the total related amounts paid by the Funds under this arrangement are included in Other Expenses on the Statements of Operations.

Some of the distribution amounts received by IDI, discussed in the Distribution Fees section above, have been used to offset various shareholder servicing costs incurred by ICON Advisers. For the year ended September 30, 2011, this amount was $7,992.

 

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4.  Borrowings

The Trust has entered into Lines of Credit agreements with State Street to provide temporary funding for redemption requests. The maximum borrowing is limited to $150 million. Interest on domestic borrowings is charged at the higher of the Federal Funds Rate effective on that day and the Overnight LIBOR Rate effective on that day plus 1.25%. The Funds may have borrowings with the prime broker as a result of brokerage requirements. Interest on domestic borrowing with the prime broker is charged at the Fed Funds rate plus 0.50%. The average interest rate charged for ICON Bond Fund, ICON Core Equity Fund and ICON Equity Income Fund for the year ended September 30, 2011 was 1.44%. The average interest rate charged for ICON Long/Short Fund for the year ended September 30, 2011 was 2.02%. The average interest rate charged for ICON Risk-Managed Equity Fund for the year ended September 30, 2011 was 2.08%.

 

Fund  

Average Borrowing

(10/1/10-9/30/11)

 

ICON Bond Fund

  $ 226,534   

ICON Core Equity Fund*

    265,663   

ICON Equity Income Fund*

    88,878   

ICON Long/Short Fund*

    369,075   

ICON Risk-Managed Equity Fund*

    1,184,941   

 

* Fund had outstanding borrowings under these agreements as of September 30, 2011.

5.  Purchases and Sales of Investment Securities

For the year ended September 30, 2011, the aggregate cost of purchases and proceeds from sales of investment securities (excluding securities sold short, short-term securities and written options contracts) was as follows:

 

Fund  

Purchases of

Securities

   

Proceeds

from Sales of
Securities

    Purchases of
Long-Term U.S.
Government
Obligations
   

Proceeds

from Sales of

Long-Term U.S.

Government

Obligations

 

ICON Bond Fund

  $ 35,808,316      $ 76,458,099      $ 5,555,955      $ 14,349,341   

ICON Core Equity Fund

    52,733,314        90,956,093        -        -   

ICON Equity Income Fund

    63,932,443        71,155,482        1,003,930        1,869,806   

ICON Long/Short Fund

    12,270,147        22,897,943        -        -   

ICON Risk-Managed Equity Fund

    16,862,018        22,832,093        -        -   

 

NOTES TO FINANCIAL STATEMENTS     79   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

6.  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 sale losses, foreign currency transactions, net investment losses, and capital loss carryforwards.

The tax components of capital shown in the following tables include losses the Funds may be able to offset against gains recognized in future years. The accumulated losses noted represent net capital loss carryforwards as of September 30, 2011 and post-October losses that may be available to offset future realized capital gains and thereby reduce future taxable income distributions.

For the year ended September 30, 2011 the following Funds had capital loss carryforwards:

 

Fund   Amounts     Expires  
   

ICON Core Equity Fund

  $ 23,715,124        2017   
    19,833,424        2018   

ICON Equity Income Fund

    9,397,439        2017   
    19,089,764        2018   

ICON Long/Short Fund

    43,306,180        2017   
    19,325,857        2018   

ICON Risk-Managed Equity Fund

    5,993,077        2017   
    14,212,596        2018   

Future capital loss carryforward utilization in any given year may be limited if there are substantial shareholder redemptions or contributions. During the year ended September 30, 2011 the Funds utilized capital loss carryforwards:

 

Fund   Amount  

ICON Core Equity Fund

  $ 10,265,321   

ICON Equity Income Fund

    5,627,077   

ICON Long/Short Fund

    853,303   

ICON Risk-Managed Equity Fund

    2,242,574   

 

80   NOTES TO FINANCIAL STATEMENTS


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The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2011, were as follows:

 

    Distributions Paid from     Total
Distributions
Paid
 
Fund  

Ordinary

Income

   

Net Long-Term

Gains

   
     

ICON Bond Fund

  $ 7,853,451      $ 1,064,414      $ 8,917,865   

ICON Core Equity Fund

    168,477        -        168,477   

ICON Equity Income Fund

    1,710,940        -        1,710,940   

ICON Long/Short Fund

    -        -        -   

ICON Risk-Managed Equity Fund

    203,631        -        203,631   

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2010, were as follows:

 

    Distributions Paid from     Total
Distributions
Paid
 
Fund  

Ordinary

Income

   

Net Long-Term

Gains

   

ICON Bond Fund

  $ 7,731,554      $ 158,909      $ 7,890,463   

ICON Core Equity Fund

    1,543,355        -        1,543,355   

ICON Equity Income Fund

    1,655,386        -        1,655,386   

ICON Long/Short Fund

    370,083        -        370,083   

ICON Risk-Managed Equity Fund

    130,024        -        130,024   

 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

As of September 30, 2011, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Fund  

Undistributed

Ordinary

Income

    Undistributed
Net Long-
Term-Gains
   

Accumulated

Earnings

   

Distributions

Payable*

   

Accumulated

Capital and

Other Losses

   

Unrealized

Appreciation/

(Depreciation)**

    Total
Accumulated
Earnings/
(Deficit)
 
             

ICON Bond Fund

  $ 29,622      $ 1,686,187      $ 1,715,809      $ (359,008   $ -      $ 1,948,292      $ 3,305,093   

ICON Core Equity Fund

    161,462        -        161,462        -        (43,548,548     (747,369     (44,134,455

ICON Equity Income Fund

    314,548        -        314,548        (357,382     (28,487,200     (3,360,908     (31,890,942

ICON Long/Short Fund

    -        -        -        -        (62,632,037     (400,656     (63,032,693

ICON Risk-Managed Equity Fund

    -        -        -        -        (20,205,673     893,563        (19,312,110

 

* Differences between the financial statement distribution payable and the tax basis distribution payable are a result of accrual based accounting and cash basis accounting used for federal tax reporting purposes.

 

** Differences between the book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to tax deferral of losses on wash sales.

As of September 30, 2011, cost on investments for federal income tax purposes and the amount of net unrealized appreciation/(depreciation) were as follows:

 

Fund   Cost    

Unrealized

Appreciation

   

Unrealized

(Depreciation)

   

Net
Appreciation/

(Depreciation)

 

ICON Bond Fund

  $ 99,970,175      $ 4,063,592      $ (2,115,300   $ 1,948,292   

ICON Core Equity Fund

    68,977,537        7,225,049        (7,972,418     (747,369

ICON Equity Income Fund

    37,816,771        1,050,301        (4,410,994     (3,360,693

ICON Long/Short Fund

    14,684,957        1,189,185        (1,632,199     (443,014

ICON Risk-Managed
Equity Fund

    19,787,165        2,264,378        (1,269,855     994,523   

The Regulated Investment Company Modernization Act of 2010 (the “Act”) was signed into law on December 22, 2010. The Act makes changes to a number of tax rules impacting the Funds. Under the Act, future capital

 

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losses generated by a fund may be carried over indefinitely, but these losses must be used prior to the utilization of any pre-enactment capital losses. Since pre-enactment capital losses may only be carried forward for eight years, there may be a greater likelihood that all or a portion of each fund’s pre-enactment capital losses will expire unused. In general, the provisions of the Act will be effective for each Fund’s fiscal year ending 2012.

7.  Subsequent Events

The Board of Trustees has decided to merge Class I shares into Class A shares of all Diversified Funds effective January 23, 2012. Please visit www.iconfunds.com for additional information regarding these share class mergers.

Class Z shares of each Fund will be renamed Class S shares effective January 23, 2012. The Class S shares will be offered to platform sales and to investment representatives through fee-based products or accounts, as well as institutional investors. ICON reserves the right to change or waive the investment criteria for the Class S shares.

Effective January 23, 2012, the Core Equity Fund will change its name to the ICON Fund and enter into an expense limitation agreement with ICON Advisers contractually limiting expenses (exclusive of brokerage, interest, taxes, dividends on short sales and extraordinary expenses) to 1.25%, 1.50% and 2.25% of average net assets for Class S, Class A and Class C, respectively.

Subsequent to year end, the ICON Funds suspended participation in the securities lending program.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To the Board of Trustees and Shareholders of the ICON Funds:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of ICON Bond Fund, ICON Core Equity Fund, ICON Equity Income Fund, ICON Long/Short Fund, and ICON Risk-Managed Equity Fund (five of the portfolios constituting ICON Funds, hereafter referred to as the “Funds”) at September 30, 2011, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

LOGO

Denver, Colorado

November 18, 2011

 

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SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE

SEPTEMBER 30, 2011 (UNAUDITED)

Example

As a shareholder of a Fund you may pay two types of fees: transaction fees and fund-related fees. Certain funds charge transaction fees, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange 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 six-month period and held for the six-month period (4/1/11 – 9/30/11).

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, 12b-1 fees, fund accounting, custody and transfer agent fees. However, the Example does not include client specific fees, such as the $15 fee charged to IRA accounts, or the $15 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),

 

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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.

 

    

Beginning
Account
Value

4/1/11

    Ending
Account
Value
9/30/11
    Expenses Paid
During Period
4/1/11-9/30/11*
    Annualized
Expense Ratio
4/1/11 - 9/30/11
 

Actual Expenses

       

ICON Bond Fund

       

Class I

  $ 1,000.00      $ 994.80      $ 5.02        1.00%   

Class C

    1,000.00        992.90        8.02        1.60%   

Class Z

    1,000.00        997.00        3.78        0.75%   

Class A

    1,000.00        995.80        5.04        1.00%   

ICON Core Equity Fund

       

Class I

    1,000.00        812.70        6.42        1.41%   

Class C

    1,000.00        808.90        10.46        2.31%   

Class Z

    1,000.00        812.90        6.90        1.52%   

Class A

    1,000.00        808.00        11.55        2.55%   

ICON Equity Income Fund

       

Class I

    1,000.00        853.70        6.74        1.45%   

Class C

    1,000.00        850.20        10.20        2.20%   

Class Z

    1,000.00        855.20        5.58        1.20%   

Class A

    1,000.00        854.10        6.74        1.45%   

ICON Long/Short Fund

       

Class I

    1,000.00        861.00        7.89        1.69%   

Class C

    1,000.00        857.50        11.36        2.44%   

Class Z

    1,000.00        862.60        6.50        1.39%   

Class A

    1,000.00        860.80        7.91        1.69%   

ICON Risk-Managed Equity Fund

  

     

Class I

    1,000.00        910.40        7.11        1.48%   

Class C

    1,000.00        907.00        10.68        2.23%   

Class Z

    1,000.00        911.20        5.92        1.24%   

Class A

    1,000.00        910.10        7.11        1.48%   

Hypothetical (assuming a 5% return before expenses)

  

ICON Bond Fund

       

Class I

    1,000.00        1,020.03        5.09     

Class C

    1,000.00        1,017.02        8.11     

Class Z

    1,000.00        1,021.28        3.82     

Class A

    1,000.00        1,020.02        5.10     

ICON Core Equity Fund

       

Class I

    1,000.00        1,017.98        7.15     

Class C

    1,000.00        1,013.50        11.64     

Class Z

    1,000.00        1,017.45        7.68     

Class A

    1,000.00        1,012.29        12.86     

 

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     Beginning
Account
Value
4/1/11
    Ending
Account
Value
9/30/11
    Expenses Paid
During Period
4/1/11-9/30/11*
    Annualized
Expense Ratio
4/1/11 - 9/30/11

ICON Equity Income Fund

       

Class I

  $ 1,000.00      $ 1,017.80      $ 7.33     

Class C

    1,000.00        1,014.04        11.11     

Class Z

    1,000.00        1,019.05        6.07     

Class A

    1,000.00        1,017.80        7.33     

ICON Long/Short Fund

       

Class I

    1,000.00        1,016.59        8.55     

Class C

    1,000.00        1,012.84        12.31     

Class Z

    1,000.00        1,018.09        7.04     

Class A

    1,000.00        1,016.57        8.57     

ICON Risk-Managed Equity Fund

  

     

Class I

    1,000.00        1,017.62        7.51     

Class C

    1,000.00        1,013.86        11.28     

Class Z

    1,000.00        1,018.87        6.26     

Class A

    1,000.00        1,017.63        7.51     

 

* Expenses are equal to the Fund’s six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 183/365 to reflect the one-half year period.

Total returns exclude applicable sales charges. If sales charges were included (maximum 5.75%), returns would be lower.

 

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BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED)

The ICON Funds Board of Trustees (“Board”) consists of four Trustees who oversee the 17 ICON Funds (the “Funds”). The Board is responsible for general oversight of the Funds’ business and for assuring that the Funds are managed in the best interest of the Funds’ shareholders. The Trustees, and their ages, and principal occupations are set forth below. The address of the Trustees is 5299 DTC Blvd., Suite 1200, Greenwood Village, CO 80111. Trustees have no official term of office and generally serve until they resign or are not re-elected.

Interested Trustee

Craig T. Callahan, 60, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as President (1998 to present) and Chairman of the Investment Committee (2005 to present) and served as the Chief Investment Officer (1991 to 2004) of ICON Advisers. Dr. Callahan is also Executive Vice President (2005 to present); Director (1991 to present); and was previously President (1998 to 2005) and Chief Compliance Officer (2005) of IDI. Dr. Callahan also serves as the President (1998 to present) and Chairman of the Board of Directors (1994 to present) of ICON Management & Research Corporation (“IM&R”), the parent company of ICON Advisers and IDI.

Independent Trustees

Glen F. Bergert, 61. Mr. Bergert has been a Trustee of the Funds since 1999. Mr. Bergert is President of Venture Capital Management LLC (1997 to present), General Partner of SOGNO Partners LP, a venture capital company (2001 to present), General Partner of Bergert Properties, LLP, a real estate holding company (1997 to present), General Partner of Pyramid Real Estate Partnership, a real estate development company (1998 to present), General Partner of Chamois Partners, LP, a venture capital company (2004 to present) and was previously a General Partner with KPMG Peat Marwick, LLP (1979 to 1997). Mr. Bergert is also a Director of Delta Dental of California, an insurance company (2006 to present), Delta Dental of Pennsylvania, an insurance company (1998 to 2009 and 2010 to present), Dentegra Group, Inc, an insurance holding company (2010 to present) and Delta Reinsurance Corporation (2000 to 2009 and 2011 to present). Mr. Bergert was a Director of Herre Bros, Inc., a contracting company (1998 to 2011).

John C. Pomeroy, Jr., 64. Mr. Pomeroy has been a Trustee of the Funds since November 2002. Mr. Pomeroy is Chief Investment Officer and Director

 

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of Investments, Pennsylvania State University (2001 to present) and was Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).

R. Michael Sentel, 63. Mr. Sentel has been a Trustee of the Funds since their inception. Mr. Sentel is a Senior Attorney with the U.S. Department of Education (1996 to present). Mr. Sentel also provides legal representation as a sole practitioner with an emphasis on corporate and transactional law. He served as general counsel to numerous public companies and served on the board of directors of one of these clients. Mr. Sentel began his legal career with the U.S. Securities and Exchange Commission’s Division of Enforcement and served as a Branch Chief (1980 to 1981). Later he served as the Section Chief for the Professional Liability Section of the Federal Deposit Insurance Corp. with responsibility for the Rocky Mountain Region (1991 to 1994).

The Officers of the Funds are:

Craig T. Callahan, 60, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as President (1998 to present) and Chairman of the Investment Committee (2005 to present) and served as the Chief Investment Officer (1991 to 2004) of ICON Advisers. Dr. Callahan is also Executive Vice President (2005 to present); Director (1991 to present); and was previously President (1998 to 2005) and Chief Compliance Officer (2005) of IDI. Dr. Callahan also serves as the President (1998 to present) and Chairman of the Board of Directors (1994 to present) of IM&R, the parent company of ICON Advisers and IDI.

Erik L. Jonson, 62. Mr. Jonson has been a Vice President and Principal Financial Officer/Treasurer of the Funds since their inception in 1996. Mr. Jonson is also Chief Financial Officer (1996 to present) and Executive Vice President (2004 to present) and was previously Vice President (1998 to 2004) and Secretary (2005 and 1998 to 2002) of ICON Advisers; Chief Financial Officer, Secretary and Director (1998 to present) of IM&R; and Executive Vice President and Treasurer/Financial Principal (1996 to present) of IDI.

Jessica Seidlitz, 33. Ms. Seidlitz serves as the Assistant Treasurer of the Funds (2007 to present). She also serves as the Mutual Fund Controller of ICON Advisers (2005 to present). Previously, she was a Senior Associate/Associate at PricewaterhouseCoopers LLP (2001 to 2004).

Donald Salcito, 58. Mr. Salcito serves as Vice President and Secretary of the Funds (November 15, 2006 to present). Mr. Salcito is also Executive Vice President and General Counsel (September 2005 to present) of ICON Advisers; Director of IM&R (2005 to present); Executive Vice President, Secretary, General Counsel of IDI (2005 to present). Previously, he was a Partner in various national law firms, practicing in the securities law area. (1980 to 2005).

 

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Brian Harding, 32. Mr. Harding serves as Chief Compliance Officer and Anti-Money Laundering Officer of the Funds (2008 to present). Mr. Harding also serves as Chief Compliance Officer of ICON Advisers (2011 to present). Previously, he was a Manager (2007 to 2008) and a Senior Associate/Associate (2001 to 2007) at PricewaterhouseCoopers LLP.

 

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OTHER INFORMATION

Renewal of Investment Advisory Agreements

On August 15, 2011, the Board of Trustees, including a majority of the Trustees that are not “interested persons” of the Trust (the “Independent Trustees”), approved continuation of the Advisory Agreements with the Adviser for each Fund for an additional one-year term commencing October 1, 2011.

In determining to renew the investment advisory agreements between ICON Funds (the “Trust”) and ICON Advisers, Inc. (“ICON” or the “Adviser”) the Board requested, was provided with and reviewed data with respect to ICON, its personnel, and the services provided and to be provided to each Fund by ICON under the Trust’s Investment Advisory Agreement dated October 9, 1996, as amended (related to the Sector, International and Core Equity Funds) and under the Trust’s Investment Advisory Agreement dated July 9, 2002 and effective October 1, 2002, as amended (related to the U.S. Diversified Funds — Bond, Risk-Managed Equity, Equity Income and Long/Short Funds) (collectively, the “Advisory Agreements”). The data included information concerning advisory, distribution and administrative services provided to the Funds by ICON and its related companies; information concerning other businesses of those companies; comparative data related to exchange traded funds versus the Sector Funds; and comparative data obtained from Lipper Analytical Services related to Fund performance and Fund expenses (the “Lipper report”). The data also included an analysis of the Funds’ ratings on the AthenaInvest system (the “AthenaInvest data”) and a presentation on ICON’s investment model. AthenaInvest is an affiliate of the Adviser. The Board of Trustees met on August 4 and 19, 2011 to discuss the data. Management personnel discussed the data for and with those present. Included in the discussion was a briefing on the sales and marketing initiatives, the different classes of shares being offered by the Trust and efficiencies in connection with administering services to the Funds/various classes of shares.

The Independent Trustees were represented by independent legal counsel throughout the process. Prior to acting on the matter, the Independent Trustees met separately as a group in private sessions with their independent legal counsel to review and discuss the foregoing information. Based on these discussions, independent legal counsel and/or the Lead Independent Trustee also contacted management to request additional information and to discuss responses to questions raised during the process. In addition, the Independent Trustees received materials from their independent legal counsel discussing the legal standards applicable to their consideration of the agreement.

 

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In considering the nature, extent and quality of the services provided by the Adviser, the Board reviewed information relating to ICON’s operations and personnel. Among other things, the Adviser provided biographical information on its professional staff and descriptions of its organizational and management structure. In the course of their deliberations the Board evaluated, among other things, information relating to the investment philosophy, strategies and techniques used in managing each Fund, the qualifications and experience of ICON’s investment personnel, ICON’s compliance programs, ICON’s brokerage practices, including the extent to which the Adviser obtains research through “soft dollar” arrangements with the Funds’ brokerage, compliance reports on the foregoing, and the financial and non-financial resources available to provide services required under the Advisory Agreement.

During the discussion, the Lipper report and the AthenaInvest data were discussed and management personnel showed performance for each fund and discussed the factors affecting performance. Management noted that ICON modified the valuation methodology at the end of 2008 to better account for systemic risk. ICON implemented the modified valuation methodology in February 2009. During the discussion, management personnel noted that the markets continue to experience volatility and that when the markets are volatile, relative strength readings are also more volatile and less reliable It was also noted that volatility has affected ICON’s performance; that this had been the case for much of the last two years for the Funds; that poor quality stocks with low relative strength led the market whereas higher quality stocks with higher relative strength have not performed as well; that the market volatility and the relative strength component to our methodology have produced mixed results; and that many other value managers have had challenges in this market. The Adviser discussed its continuing assessment of its “investment model” – including steps taken to test the relative strength components of the system and methodology. Overall, the Board of Trustees concluded that the Adviser continues to believe the adjustments to the system have been functioning as intended; and that, notwithstanding that belief, the Adviser is constantly evaluating the system and will modify it as needed.

In connection with reviewing data bearing upon the nature, quality, and extent of services furnished by ICON to each Fund, the Board assessed data concerning ICON’s staffing, systems and facilities. The Board also assessed ICON’s non-Trust business to see if there are any initiatives that would dilute service to the Trust. The Board noted:

A.  That the breadth and the quality of investment advisory and other services being provided to each Fund is satisfactory, as evidenced in part by efforts to address and improve the performance record of each Fund when compared with the performance records of a peer group of comparable funds and markets in general;

 

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B.  That the breadth and the quality of investment advisory and other services being provided to each Fund is satisfactory, as evidenced in part by the AthenaInvest data (ratings based on an assessment of fund strategy) reflects that all Funds are rated 3 or higher and that, unlike many other fund groups, ICON Funds has no fund rated 1 or 2 (where 1 is the lowest and 5 is the highest).

C.  That ICON has made significant expenditures in the past year and in prior years to ensure that it has the sophisticated systems and the highly trained personnel necessary for it to be able to continue to provide quality service to the Funds’ shareholders, including the dedication of substantial resources to ICON’s investment and trading departments;

D.  That the Board, after considering compliance reports and compliance initiatives undertaken during the year and conducting individual interviews with selected portfolio managers, is satisfied with the research, portfolio management, and trading services, among others, being provided by ICON to the Funds, and is charging fair, reasonable, and competitive fees; and

E.  The risks assumed by ICON in providing investment advisory services to each Fund including the capital commitments which have been made in the past and which continue to be made by ICON to ensure the continuation of the highest quality of service to the Trust is made with the recognition that the Trust’s advisory relationship with ICON be terminated at any time and must be renewed on an annual basis.

In considering the reasonableness of the fee payable to the Adviser for managing each Fund, the Board reviewed, among other things, data concerning other funds from the Lipper report, financial statements of the Adviser and an analysis of the profitability to the Adviser and its affiliates of their relationship with each Fund over various time periods, which analysis identified all revenues and other benefits received by the Adviser and its affiliates from managing each Fund, the costs associated with providing such services and the resulting profitability to the Adviser and its affiliates.

The Board considered the current and anticipated asset levels of each Fund and the willingness of the Adviser to waive fees and pay expenses of the Funds from time to time to limit the total expenses of the Funds. In this regard the Board discussed significantly reduced asset levels in each fund covered by the Advisory Agreements due to the tumultuous markets during the past three and a half years, to relative poor Fund performance, and to industry wide net-redemptions in reaction to the tumultuous markets. ICON’s ability to provide the services called for under the Advisory Agreements was assessed in light of current and projected asset levels. Fund expenses and expense ratios were also assessed in light of current and projected asset

 

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levels. The Board concluded that the Adviser has the resources necessary to provide the services called for under the Advisory Agreements; that profitability to the Adviser and its affiliates from their relationship with the Funds is not excessive; and that the Adviser is not realizing material benefits from economies of scale that would warrant adjustments to the fees for any Fund at this time. The Board of Trustees concluded that, in light of the nature, extent and quality of the services provided by the Adviser and the levels of profitability associated with providing these services, the fees charged by the Adviser under the Advisory Agreements to each Fund are reasonable.

In connection with assessing data bearing the fairness of fee arrangements, the Board used data from Lipper report concerning funds of similar size and funds of larger size, as well as data concerning ICON’s other clients and noted that:

A.  the advisory fee structures of the Funds were considered in comparison with advisory fees and expense ratios of other similarly managed funds as set forth in the comparative data;

B.  expense ratios for 10 of the 17 Funds are above average, 4 are equal to the median, 2 are below both the average and the median, and 1 is equal to the average.;

C.  in 16 of the 17 Funds, the assets under management are significantly below either the average or the median and that when the fund size approaches industry average our expenses also approach or are less than industry average.;

D.  ICON has contractually agreed to impose expense limitations on certain Funds at a cost to ICON;

E.  the advisory and other fees payable by the Funds to ICON are essentially fees which would be similar to those which would have resulted solely from “arm’s-length” bargaining, and may well be lower than fees arrived at solely from such arm’s-length negotiation;

F.  the fees paid to ICON for managing other institutional accounts (such as pension plans) are not lower than the fees paid by similarly-managed funds; indeed, some institutional accounts have been encouraged to, and have in fact used, the Funds Z share class, but to the extent some fees of those accounts are lower, the reasons why such accounts are less costly for ICON to manage; and

G.  ICON has contractually committed to break points in its fees so that economies of scale could be realized as a Fund grows in assets, for the benefit of Fund shareholders.

 

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In connection with the direct and indirect benefits to ICON from serving as the Funds’ adviser, the Board discussed and noted that:

A.  ICON benefits from serving directly or through affiliates as the principal underwriter and administrative agent for the Funds; that services provided by ICON and its affiliates to the Funds are satisfactory, and that fees derived from providing the services are competitive and reasonable; and

B.  ICON receives research assistance (primarily in the form of data) from the use of soft dollars generated from Fund portfolio transactions; that such research assists ICON in providing quality advisory services; that Trust and Adviser compliance personnel continuously evaluate and report on the soft-dollar arrangements and related costs; and that the Board concluded that the arrangements are consistent with Fund brokerage practices and benefit the Funds and their shareholders.

Based on these considerations, among others, the Board, including a majority of the Independent Trustees, concluded that: 1) the continuation of the Advisory Agreement was in the best interests of each Fund and its shareholders, 2) the services to be performed under the Advisory Agreement were required for the operation of the Funds, 3) the advisory services were satisfactory to the Funds in the past, and 4) the fees for the advisory services and other benefits from the relationship with the Trust received by ICON were consistent with fees paid by similar funds, other clients of ICON, reasonable in light of the comparative data, and within the range of what would have been negotiated at arm’s length in light of all the circumstances.

Supplemental Tax Information

For corporate shareholders, the following percentage of the total ordinary income dividends paid during the fiscal year ended September 30, 2011, qualifies for the corporate dividends received deduction for the following Funds:

 

Fund  

Dividends

Received
Deduction

 

ICON Core Equity Fund

    88

ICON Equity Income Fund

    48

ICON Risk-Managed Equity Fund

    100

 

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For the fiscal year ended September 30, 2011, the following funds paid qualified dividend income:

 

Fund   Amount  

ICON Core Equity Fund

    76%   

ICON Equity Income Fund

    54%   

ICON Risk-Managed Equity Fund

    100%   

The Funds designate the following amounts, or the maximum amount needed, as long-term capital gain distributions qualifying for the maximum 15% income tax rate for individuals:

 

Fund   Amount  

ICON Bond Fund

    1,674,209   

Portfolio Holdings

Information related to the 10 largest portfolio holdings of each Fund is made available at www.iconfunds.com within approximately 10 business days after month-end. Additionally, a complete list of each Fund’s holdings is made available approximately 30 days after 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 Securities and Exchange Commission (the “Commission”) 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 summarized description of the policies and procedures the ICON Funds use to vote proxies is available free of charge at www.iconfunds.com or by calling 1-800-764-0442.

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 free of charge at www.iconfunds.com or on the Commission’s website at www.sec.gov.

Cost Basis Information

Effective January 1, 2012, federal law requires mutual fund companies to maintain and report a shareholder’s cost basis by tax lot, gain/loss information and holding period of covered shares to the Internal Revenue Service on Form 1099. Covered shares are mutual fund shares acquired on or after January 1, 2012. A fund is not required to maintain and report information for shares not deemed as covered.

 

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The new law requires each fund to elect a default tax identification methodology in order to perform the required reporting. As a result, the Trust has chosen Average Cost as its default tax identification methodology. This is the method each Fund will use. However, at the time of purchase or upon the sale of covered shares, shareholders may choose a different tax identification method. Furthermore, if you purchase shares through a financial intermediary, please contact the intermediary to find out what default tax identification method they will use. We recommend that you consult your tax adviser to determine which tax identification methodology best suits your individual tax situation.

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.iconfunds.com or by calling 1-800-764-0442. Please read the prospectus carefully before investing.

ICON Distributors, Inc., Distributor.

 

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IMPORTANT NOTICE TO ALL SHAREHOLDERS OF THE ICON FUNDS:

The Trustees of the ICON Funds (the “Trust”) have amended the ICON Funds Master Trust Agreement dated September 19, 1996 as previously amended (the “MTA”), to expressly state that the Trustees have absolute power to reclassify shares of a Fund, or close a class of shares by merging or consolidating one class with another class of shares within a Fund, without seeking shareholder approval. The amendments state that this Trustee power is subject to the same limitation applicable to any Trustee amendment by providing that “the reclassification, merger or consolidation does not adversely affect the rights of the shareholders.” The amendments are focused on the classes of shares within a Fund, not the Fund itself. A copy of the Amended and Restated Master Trust Agreement (the “Amended and Restated MTA”), marked to show changes can be viewed at: www.iconfunds.com.

As provided in the MTA, the Trustees have authorized the offering of shares of seventeen Funds (sometimes referred to as series or Sub-Trusts). The Trustees have also authorized the offering of classes of shares of the Funds with an expense allocation plan. The expense allocation plan provides that the expenses of the respective share classes are: costs and charges that correspond to the differing distribution and service expenses of the sales and marketing channels used by investors to invest in the Funds; filing and/or registration fees charged by most states for offering or selling each class; and other class specific costs.

During the past year and a half, ICON management and the Trustees have discussed methods to reduce existing share class expenses and to increase Trust assets. ICON management proposed streamlining the existing class structure, which proposal called for a change in the number and type of share classes offered by certain of the ICON Funds. For example, certain ICON Diversified Funds have two similar classes: Class I & A. ICON management proposed merging Class I into Class A. Class A shares are strategically flexible because they can be marketed in both a load structure on a commission platform and a load-waived structure on no-load or NTF platforms. A similar issue exists with Class Z and S shares, where the primary difference between the two classes is Class S shares can be sold on platforms. ICON Management proposed a structure where, in general, each ICON Fund would have three share classes: Class A, C and S. Management proposed merging Class I with Class A, Class S with Class Z and renaming Class Z to Class S with all the attending rights of Class S. For information

 

98   IMPORTANT NOTICE TO ALL SHAREHOLDERS


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concerning share class structure, see Explanation of Share Classes at: www.iconfunds.com. The list of currently authorized classes of shares is also set forth in Section 4.1 of the Amended and Restated MTA.

The Trustees and their representatives questioned and debated whether the Trustees had the power to reclassify shares of a Fund, or close a class of shares by merging or consolidating one class with another class of shares within a Fund, without shareholder approval. The MTA gave shareholders limited voting rights. Shareholders can vote on an amendment to the MTA only if Section 7.3 of the MTA requires it; and, Section 7.3 has not required shareholder approval to reclassify shares of a Fund, or close a class of shares by merging or consolidating one class with another class of shares within a Fund.

On the other hand, the Trustees have the implied power and authority to merge or consolidate classes, but no expressed power. Section 3.2 of the MTA gives the Trustees all the powers necessary to conduct the business of the Trust. The Trustees have had specific authority to establish classes of shares or divide the shares of any Sub-Trust. The Trustees decided to exercise their specific power and amend the MTA to state explicitly that that they can merge or consolidate share classes without shareholder approval. Section 7.3 of the MTA specifically provides the Trustees with the power to amend the MTA, without shareholder approval, whether or not related to the rights of shareholders, as long as the amendment does not adversely affect the rights of any shareholder and is not in contravention of applicable law.

Based on the above, the Trustees believe it was unnecessary to seek shareholder approval to amend the MTA to clarify the Trustees’ powers. Never the less, ICON management requested outside cost estimates for seeking shareholder approval. Costs estimates ranged between $450,000 and $550,000. The Trustees rejected spending shareholder assets to seek approval.

Critically, no shareholder would be adversely affected under the proposed amendment. The dollar value of a shareholder’s interest in the eliminated class will be the same as the dollar value of that shareholder’s interest in the substitute class. It is, for all intents and purposes, only a reclassification of shares. If a shareholder does not like the new share class for any reason, a shareholder can simply redeem his/her shares.

Please read the Amended and Restated MTA carefully. If you have any questions, please call us at 1-800-764-0442, or email the ICON Funds at: info@iconadvisers.com.

 

IMPORTANT NOTICE TO ALL SHAREHOLDERS     99   


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ICON FUNDS PRIVACY INFORMATION

 

FACTS   WHAT DOES ICON DO
WITH YOUR PERSONAL INFORMATION?
 
Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
 
What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

n  Social Security number and account balances

 

n  income and transaction history

 

n  checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 
How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons ICON chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does ICON share?   Can you limit this sharing?

For our everyday business purposes —

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

  Yes   No

For our marketing purposes —

to offer our products and services to you

  No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business

purposes —

information about your transactions and experiences

  No   We don’t share

For our affiliates’ everyday business

purposes —

information about your creditworthiness

  No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 1-800-764-0442 for the ICON Funds and 1-800-828-4881 for ICON Advisers, Inc. and ICON Distributors, Inc.

 

100   ICON FUNDS PRIVACY INFORMATION


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Page  2    

 

Who we are     
Who is providing this notice?    ICON Funds, ICON Advisers, Inc., and ICON Distributors, Inc. (collectively “ICON”)
What we do     
How does ICON protect my personal information?   

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

 

Contracts with our service providers require them to restrict access to your non-public personal information, and to maintain physical, electronic and procedural safeguards against unintended disclosure.

How does ICON collect my personal information?   

We collect your personal information, for example, when you

 

n  open an account or enter into an investment advisory contract

 

n  provide account information or give us your contact information

 

n  make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.

Why can’t I limit all sharing?   

Federal law gives you the right to limit only

 

n  sharing for affiliates’ everyday business purposes — information about your creditworthiness

 

n  affiliates from using your information to market to you

 

n  sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

Definitions     
Affiliates   

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

n  Our affiliates include financial companies such as ICON Funds, ICON Advisers, Inc., and ICON Distributors, Inc.

Nonaffiliates   

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

n  Nonaffiliates we share with can include financial companies such as custodians, transfer agents, registered representatives, financial advisers and nonfinancial companies such as fulfillment, proxy voting, and class action service providers

Joint marketing   

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

n  ICON doesn’t jointly market

 

ICON FUNDS PRIVACY INFORMATION     101   


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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, 12th Floor Greenwood Village, CO 80111

On the Internet    www.iconfunds.com
By E-Mail    info@iconadvisers.com

 

LOGO


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LOGO

2011 ANNUAL REPORT

ICON INTERNATIONAL FUNDS

INVESTMENT UPDATE

ICON Asia-Pacific Region Fund

ICON Europe Fund

ICON International Equity Fund

 

LOGO

1-800-764-0442 | www.iconfunds.com

 

AR-INTL-11 K21583


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LOGO

You can now sign up for electronic delivery of ICON Fund shareholder reports, including prospectuses, annual reports, semiannual reports and proxy statements.

When these materials are available, you will receive an email from ICON with instructions on how to view the documents. Statements, transaction confirmations and other documents that are not available online will continue to be sent to you by U.S. mail.

Visit ICON’s website at www.iconfunds.com to learn more and sign up.

You may change or cancel your participation in eDelivery by visiting www.iconfunds.com, or you can request a hard copy of any of the materials free of charge by calling ICON Funds at 1-800-764-0442.

 

1-800-764-0442    •    www.iconfunds.com


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TABLE OF CONTENTS

 

About This Report (Unaudited)

     2   

Message from ICON Funds (Unaudited)

     6   

Management Overview (Unaudited) and Schedules of Investments

  

ICON Asia-Pacific Region Fund

     8   

ICON Europe Fund

     17   

ICON International Equity Fund

     25   

Financial Statements

     36   

Financial Highlights

     44   

Notes to Financial Statements

     48   

Report of Independent Registered Public Accounting Firm

     65   

Six Month Hypothetical Expense Example (Unaudited)

     66   

Board of Trustees and Fund Officers (Unaudited)

     68   

Other Information (Unaudited)

     71   

Important Notice to Shareholders (Unaudited)

     78   


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ABOUT THIS REPORT (UNAUDITED)

Historical Returns

All total returns mentioned in this Report account for the change in a Fund’s per-share price and the reinvestment of any dividends, capital gain distributions and adjustments for financial statement purposes. 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 may have reimbursed certain fees or expenses of some of the Funds. If not for these reimbursements, performance would have been lower. Fund results shown, unless otherwise indicated, are at net asset value. If a sales charge (maximum 5.75%) had been deducted, results 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.iconfunds.com for performance results current to the most recent month-end.

Portfolio Data

This Report reflects ICON’s views, opinions and portfolio holdings as of September 30, 2011, 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, industry or sector. Each Fund’s holdings as of September 30, 2011 are included in each Fund’s Schedule of Investments.

According to ICON, value investing is an analytical approach to investing that employs various factors, including projecting earnings growth estimates, in an effort to determine whether securities are over- or underpriced relative to ICON’s estimates of their intrinsic value. Value investing involves risks and uncertainties and does not guarantee better performance or lower costs than other investment methodologies. ICON’s value-to-price ratio (“V/P”) is a ratio of intrinsic value, as calculated using ICON’s proprietary valuation

 

2   ABOUT THIS REPORT


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methodology, of a broad range of domestic and international securities within ICON’s system as compared to the current market price of those securities. The ICON system relies on the integrity of financial statements released to the market as part of our analysis.

This Report contains statements regarding industry or sector themes, new market themes, investment outlook, relative strength, value-to-price ratios, and investment team expectations, beliefs, goals and the like that are based on current expectations, recent individual stock performance relative to current market prices, estimates of company values and other information supplied to the market by the companies we follow. Words such as “expects,” “suggests,” “anticipates,” “targets,” “goals,” “value,” “intrinsic value,” “indicates,” “believes,” “considers,” “estimates,” variations of such words and similar expressions are intended to identify forward looking statements, which are not statements of historical fact. Forward looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. These risks and uncertainties are based on a number of important factors, including, among others: stock price fluctuations; the integrity and accuracy of historical and projected financial and other information supplied by companies to the public or assumptions based on such information supplied; interest rates; bond yields; future earnings growth rates; the risks noted in this report and other factors beyond the control of our investment team but used by the investment team to influence their assumptions. Therefore, actual outcome may differ materially from what is expressed in such forward looking statements.

There are risks associated with mutual fund investing, including the loss of principal. The likelihood of loss may be greater if you invest for a shorter period of time. There is no assurance that the investment process will consistently lead to successful results.

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.

Investments in foreign securities may entail unique risks, including political, market, and currency risks. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, do not exist in foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers.

 

ABOUT THIS REPORT     3   


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The prospectus and statement of additional information contain this and other information about the Funds and are available by visiting www.iconfunds.com or calling 1-800-764-0442. Please read the prospectus and statement of additional information carefully.

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 All Country Pacific Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed and emerging markets in the Pacific Region (Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand).

 

 

The unmanaged MSCI All Country Asia-Pacific Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed and emerging markets in the Pacific region (Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand).

 

 

The unmanaged MSCI Europe Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets in Europe (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom).

 

 

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.

Index returns and statistical data included in this Report are provided by FactSet Research Systems.

 

4   ABOUT THIS REPORT


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Financial Intermediary

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may influence the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.

 

ABOUT THIS REPORT     5   


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MESSAGE FROM ICON FUNDS

Dear Shareholder,

As valuation investors, we look for quality companies priced below our estimate of intrinsic value. We will buy stocks we believe are “on sale” when investors get distracted by a particular news story or headline and worry about its potential impact on the economy in general and the markets in particular. When this happens, stocks are temporarily priced based on worst-case scenario projections, not on their fundamentals. As concerns subside, prices often move up toward the stock’s intrinsic value and may even exceed ICON’s estimate of value when excessive worry is replaced with excessive optimism. Implementing our valuation strategy does not require an information edge; it simply requires discipline. Our system needs discipline to filter out news headlines, concentrate on value, and, frequently, buy when most are selling and sell when most are buying. ICON’s discipline requires also the willingness to take strong industry and sector tilts. We see industries and sectors becoming overpriced and underpriced through cycles as investors change their views of the economy and migrate around the universe of stocks.

In spite of a volatile 12 months, we believe the stock market is in a multi-year recovery from the financial crisis and recession of 2008-2009. Stocks were generally priced far below our estimate of their fair value when the market hit its recent low in March 2009, but their ascent toward fair value has been choppy and severely interrupted at least twice: first in the summer of 2010 and then again during the summer of 2011. Both times, sharp drops in stock prices were precipitated by concerns over the European sovereign debt crisis. Investors were especially wary of the situation in Greece, but also, to a lesser extent, investors worried about the economies of Ireland, Spain and Italy. We thought these concerns were excessive in 2010 and we continue to believe the concern is unwarranted. We expect fears to subside and, when that happens, we believe stocks will resume their recovery path.

The interruptions experienced during the summers of 2010 and 2011 have been frustrating for value investors like ICON, as we see a very different world than many other investors. Where others see a negative macroeconomic outlook, we see positive earnings and solid company fundamentals. When 2011 second quarter earnings were announced, companies in the S&P 500 Index reported earnings that were, on average, 16.24% higher than a year earlier. In fact, 75% of those companies reported earnings that exceeded analysts’ estimates by 4.67% on average. This growth in earnings is more robust than the earnings we saw coming out of any of the previous four recessions (that is, 1974, 1982, 1992 and 2001 recessions).

 

6   MESSAGE FROM ICON FUNDS


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Strong earnings and a low interest rate environment contribute to what we believe are attractive valuations, but skittish investors, concerned with debt problems in Europe, continue to shy away from equities.

We have seen investors turn their backs on solid fundamentals many times before. Historically, however, investors have come to gradually embrace these fundamentals and stock prices generally rise again to meet intrinsic value. In 1990, 1998 and 2010, for example, the market experienced a decline similar in magnitude and duration to that seen during the summer of 2011. Each market bottom led to anxiety over a worsening recession, but, months later, these fears proved unfounded. Stock prices rebounded and resumed their prior upward path. As we head into a new fiscal year, we are anticipating a similar rebound. Having two major market interruptions in two consecutive summers is unusual, unsettling and has admittedly made it difficult for investors to stay the course to recovery. The volatile environment also presented problems for money managers like ICON who struggled with abrupt and extreme industry and sector theme reversals.

As fiscal year 2011 comes to an end, we still believe cyclical, economically sensitive industries are the long term leaders for this multi-year recovery. Unfortunately, these same industries can be subject to dramatic market swings when investors, worried about the economy, panic and jump out of the market. We believe the old Wall Street adage still applies: “Stocks climb a wall of worry.” The climb back from the recession and financial crisis of 2008 and 2009 has been and will continue to be riddled with worry.

As always, we remain focused on value and company fundamentals as we try to filter out the conjecture and emotions that typically contribute to market volatility. Experienced sailors will tell someone who is seasick: “Don’t look at the waves; look at the horizon.” Lately, it seems, most investors have been focused on the waves. At ICON, we like to focus on a horizon that includes quality companies, with growing earnings, priced far below our estimate of their fair value. We will continue to stay this course.

Yours truly,

LOGO

Craig T. Callahan, DBA

Chairman of the Board of Trustees and President of the Adviser

 

MESSAGE FROM ICON FUNDS     7   


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MANAGEMENT OVERVIEW

ICON ASIA-PACIFIC REGION FUND

  

Class S

Class C

Class A

 

ICARX

ICPCX

IPCAX

 

Q. How did the Fund perform relative to its benchmark?

 

A.

The ICON Asia-Pacific Region Fund returned -18.06% for Class S shares for the fiscal year ended September 30, 2011, underperforming its benchmark, the MSCI All Country Asia-Pacific Index, which returned -7.90% and the MSCI All Country Pacific Index which returned -6.93%.1 Class A shares of the Fund returned -18.22% (and -22.90% with maximum sales charge) during the same period while Class C shares returned -18.82% (and -19.82% with maximum sales charge). Total returns for other periods as of September 30, 2011, appear in the subsequent pages of this Fund’s Management Overview.

 

1 The Fund changed its benchmark to the MSCI All Country Asia-Pacific Index on January 24, 2011 because the Fund invests in India, which is included in the new benchmark.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. During the fiscal year 2011, investors experienced two investment environments across global markets. First, investors saw a recovery-based rally that dominated the majority of the period. This rally was followed by a sudden and significant fear-based flight to perceived safety. The Asia-Pacific region was no exception.

The majority of fiscal year 2011, roughly through the end of July 2011, was marked by a continuation of the recovery-based rally that began in early September 2010. The Asia-Pacific region’s performance during this time was dominated by cyclical sectors and emerging markets, areas where the Fund was overweight.

However, going into August 2011, fears over future global growth prospects and the European sovereign debt crisis reemerged and dominated the final two months of the period. As in previous fear-based market moves since 2008, volatility spiked as investors worried about global demand and a return to the frozen credit environment that followed the collapse of Lehman Brothers. As a result, the cyclical, economically-sensitive sectors and emerging market countries that had led through July 2011 were hit hardest as investors fled to perceived safety.

 

Q. How did the Fund’s composition affect performance?

 

A.

In general, the Fund’s overweighting in cyclical, economically sensitive sectors and emerging market countries - both market segments expected

 

8   MANAGEMENT OVERVIEW


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  to benefit the most as the global economy recovers - contributed most to the Fund’s underperformance.

In terms of sector-level moves during the fiscal year 2011, the Fund reduced exposure to the Information Technology, Utilities, and Health Care sectors while increasing weightings in the Materials, Energy, and Financial sectors. The primary drivers of negative performance relative to the benchmark were overweight positions in the Materials and Consumer Discretionary sectors along with an underweight position in the Consumer Staples sector.

At the country-level, the most notable increases during the fiscal year were to South Korea, Singapore, Australia, Thailand, and Indonesia. Positions in Japan, China, Taiwan, Hong Kong, and India were reduced during the period. The primary drivers of negative performance relative to the benchmark came from the Fund’s overweight positions in China and India and underweight positions in Japan. Further, because of investors’ sudden and significant shift out of emerging markets, the Fund’s emerging market currency exposure contributed to the Fund’s underperformance.

As a multi-cap manager, we are not limited by restrictions on market capitalization. Similar to fiscal year 2010, our valuation metrics during the period led us away from mid- and small-cap companies and towards large-cap companies. Despite this shift, the Fund remains significantly underweight in large-cap stocks, the dominant market cap allocation of the benchmark, and significantly overweight in mid- and small-cap stocks relative to the benchmark.

 

Q. What is your investment outlook for the Asia-Pacific equity market?

 

A. As investor fears have spiked recently, equity markets have declined virtually in unison. Whether investors are looking at developed markets vs. emerging markets, country vs. country or region vs. region, there has been virtually no safe place to hide since late July 2011. We view the decline since the end of July 2011 as a prime example of investor overreaction, a situation that can open up value opportunities.

When the dust starts to settle from gut-wrenching periods like this, we believe investors may regain their focus and start looking for bargains. In the past, we have seen investors drawn to the growth potential of emerging Asia-Pacific countries along with their relatively low levels of debt. In our experience, these markets have tended to recover at a faster clip relative to their developed counterparts following periods of high volatility and market setbacks.

 

MANAGEMENT OVERVIEW     9   


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With a V/P of 1.35 for the Asia-Pacific region as a whole, we see opportunity in the region. As investors regain their focus, we expect the cyclical, economically-sensitive sectors that have been hurt the most recently to regain the leadership position they held for most of the fiscal year 2011. Specifically, we see value in the Materials, Industrials, Energy, and Consumer Discretionary sectors. Also, our system sees significant value in the emerging market countries of the Asia-Pacific region relative to their developed counterparts. In particular, we see great value in Korea, China, Thailand and Indonesia - the Fund maintains an overweight position in each of these countries and in emerging markets as a whole. We believe it is nearly impossible to accurately time bottoms and, further, that rallies do not offer invitations. Given this philosophy, and the valuations we see in the market at fiscal year-end, we remain heavily invested, ready to reallocate and adapt as market conditions dictate.

 

ICON Asia-Pacific Region Fund

Country Composition

September 30, 2011

 

South Korea

    22.0%   

Japan

    19.2%   

Australia

    12.2%   

China

    11.2%   

Singapore

    8.1%   

India

    7.2%   

Thailand

    5.9%   

Hong Kong

    5.3%   

Indonesia

    3.8%   

Malaysia

    2.6%   
 

 

 

 
    97.5%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Asia-Pacific Region Fund

Sector Composition

September 30, 2011

 

Financial

    25.9%   

Materials

    19.2%   

Industrials

    16.9%   

Consumer Discretionary

    12.9%   

Energy

    9.3%   

Information Technology

    6.0%   

Consumer Staples

    3.6%   

Telecommunication & Utilities

    2.9%   

Health Care

    0.8%   
 

 

 

 
    97.5%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

10   MANAGEMENT OVERVIEW


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ICON Asia-Pacific Region Fund

Industry Composition

September 30, 2011

 

Diversified Banks

    16.7%   

Automobile Manufacturers

    6.9%   

Trading Companies & Distributors

    5.2%   

Diversified Metals & Mining

    5.2%   

Property & Casualty Insurance

    3.9%   

Integrated Oil & Gas

    3.8%   

Industrial Conglomerates

    3.5%   

Commodity Chemicals

    3.4%   

Real Estate Development

    3.2%   

Auto Parts & Equipment

    3.2%   

Construction Materials

    2.8%   

Diversified Chemicals

    2.6%   

Steel

    2.6%   

Electronic Equipment & Instruments

    2.1%   

Industrial Machinery

    2.0%   

Internet Software & Services

    1.9%   

Oil & Gas Refining & Marketing

    1.9%   

Construction & Engineering

    1.9%   

Wireless Telecommunication Services

    1.7%   

Tires & Rubber

    1.6%   

Food Distributors

    1.5%   

Oil & Gas Equipment & Services

    1.3%   

Specialty Chemicals

    1.3%   

IT Consulting & Other Services

    1.2%   

Electrical Components & Equipment

    1.2%   

Oil & Gas Exploration & Production

    1.1%   

Coal & Consumable Fuels

    1.1%   

Agricultural Products

    1.1%   

Other Industries (each less than 1%)

    11.6%   
 

 

 

 
    97.5%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

MANAGEMENT OVERVIEW     11   


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ICON Asia-Pacific Region Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
    1 Year     5 Years     10 Years     Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Asia-Pacific Region Fund - Class S

    2/25/97        -18.06%        -1.47%        6.15%        1.47%        1.63%        1.63%   

MSCI All Country Pacific Index

            -6.93%        -0.16%        7.49%        1.88%        N/A        N/A   

MSCI All Country Asia-Pacific Index

            -7.90%        -0.01%        7.74%        2.06%        N/A        N/A   

ICON Asia-Pacific Region Fund - Class C

    1/25/08        -18.82%        N/A        N/A        -7.97%        9.04%        2.57%   

MSCI All Country Pacific Index

            -6.93%        N/A        N/A        -3.78%        N/A        N/A   

MSCI All Country Asia-Pacific Index

            -7.90%        N/A        N/A        -4.04%        N/A        N/A   

ICON Asia-Pacific Region Fund - Class A

    5/31/06        -18.22%        -1.74%        N/A        -2.13%        5.17%        1.82%   

ICON Asia-Pacific Region Fund - Class A (including maximum sales charge of 5.75%)

    5/31/06        -22.90%        -2.89%        N/A        -3.21%        5.17%        1.82%   

MSCI All Country Pacific Index

            -6.93%        -0.16%        N/A        0.01%        N/A        N/A   

MSCI All Country Asia-Pacific Index

            -7.90%        -0.01%        N/A        0.24%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. The Adviser has agreed to limit certain Fund expenses on Class C and Class A shares; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

12   MANAGEMENT OVERVIEW


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ICON Asia-Pacific Region Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ inception date of 2/25/97 to a $10,000 investment made in an unmanaged securities index on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends, capital gain distributions and tax return of capital, but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

 

MANAGEMENT OVERVIEW     13   


Table of Contents

ICON ASIA-PACIFIC REGION FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (97.5%)   
  648,000      Agricultural Bank of China, Ltd., Class H   $ 211,583   
  20,200      Aisin Seiki Co., Ltd.(a)     672,568   
  364,000      Alliance Financial Group Bhd.     373,077   
  62,100      Australia & New Zealand Banking Group, Ltd.     1,152,650   
  397,000      Axiata Group Bhd.     567,811   
  5,600      Baidu, Inc., ADR**     598,696   
  620,000      Bank Danamon Indonesia Tbk PT     321,314   
  1,144,000      Bank of Ayudhya PCL     730,042   
  1,083,500      Bank of China, Ltd., Class H     335,041   
  29,300      Bank of India     187,076   
  362,000      Bank Rakyat Indonesia Persero Tbk PT     237,026   
  833,000      BBMG Corp.     614,378   
  42,700      BHP Billiton, Ltd.     1,413,815   
  40,700      BS Financial Group, Inc.     443,759   
  18,000      Caltex Australia, Ltd.     185,518   
  650,000      Chaoda Modern Agriculture Holdings, Ltd.***     91,815   
  32,000      Cheung Kong Holdings, Ltd.     347,913   
  1,434,870      China Construction Bank Corp., Class H     867,861   
  221,000      China Lilang Ltd.     215,755   
  466,000      China National Materials Co., Ltd., Class H     168,720   
  761,000      China Petroleum & Chemical Corp., Class H     731,861   
Shares or Principal Amount   Value  
   
  496,000      China Resources Cement Holdings, Ltd.   $ 325,315   
  120,000      China Shineway Pharmaceutical Group, Ltd.     146,818   
  526,909      China Vanke Co., Ltd.     452,713   
  177,000      China Yurun Food Group, Ltd.     188,776   
  117,800      Dah Sing Financial Group, Ltd.     325,586   
  78,000      DBS Group Holdings, Ltd.     699,430   
  10,600      Doosan Corp.     1,196,350   
  8,800      Doosan Heavy Industries and Construction Co., Ltd.     410,648   
  45,200      Doosan Infracore Co., Ltd.     680,302   
  2,105,000      Ezion Holdings, Ltd.     760,163   
  333,000      Gamuda Bhd.     297,701   
  45,000      Glenmark Pharmaceuticals, Ltd.     295,745   
  134,000      Goodpack, Ltd.     154,657   
  356,000      Guangzhou Automobile Group Co., Ltd., Class H     342,370   
  25,700      Hana Financial Group, Inc.     747,266   
  11,850      Hankook Tire Co., Ltd.     398,840   
  14,200      Hanwha Corp.     396,817   
  45,200      HCL Technologies, Ltd.     373,452   
  238,000      Hitachi, Ltd.(a)     1,181,447   
  24,200      Honda Motor Co., Ltd.(a)     708,936   
  138,500      Housing Development & Infrastructure, Ltd.     274,460   
 

 

14   SCHEDULE OF INVESTMENTS


Table of Contents
Shares or Principal Amount   Value  
   
  14,800      Hyosung Corp.   $ 681,652   
  2,790      Hyundai Mobis     790,230   
  7,500      Hyundai Motor Co.     1,311,133   
  1,698,000      Indika Energy Tbk PT     428,993   
  425,000      Indocement Tunggal Prakarsa Tbk PT     669,229   
  288,000      Insurance Australia Group, Ltd.     833,709   
  132,000      ITOCHU Corp.(a)     1,261,369   
  14,000      JSR Corp.(a)     240,880   
  65,000      Kasikornbank PCL     242,394   
  99,000      Kingboard Chemical Holdings, Ltd.     266,669   
  13,500      Kintetsu World Express, Inc.     386,113   
  7,400      Korea Gas Corp.     192,229   
  41,000      Korea Life Insurance Co., Ltd.     191,950   
  22,500      Kuraray Co., Ltd.     306,857   
  1,131,000      KWG Property Holding, Ltd.     417,882   
  11,000      LG Display Co., Ltd.     179,403   
  7,730      LS Corp.     476,451   
  85,407      Meritz Fire & Marine Insurance Co., Ltd.     757,502   
  137,000      Minebea Co., Ltd.(a)     459,925   
  80,000      Mitsubishi Gas Chemical Co., Inc.     491,120   
  117,000      Mitsubishi Materials Corp.     284,899   
  66,400      Mitsui & Co., Ltd.(a)     961,822   
  222,000      MobileOne, Ltd.     414,490   
  52,400      National Australia Bank, Ltd.     1,113,046   
  10,800      Newcrest Mining, Ltd.     355,980   
  39,000      NHK Spring Co., Ltd.     344,597   
  2,700      NHN Corp.     514,395   
  12,300      Nitto Denko Corp.(a)     484,086   
  771,000      Noble Group, Ltd.(a)     769,200   
Shares or Principal Amount   Value  
   
  2,375      OCI Co., Ltd.   $ 405,502   
  486,000      Olam International Ltd.     828,172   
  301,000      OneSteel, Ltd.     352,753   
  11,000      Orica, Ltd.     246,864   
  4,800      Otsuka Corp.     330,867   
  119,000      Oversea-Chinese Banking Corp., Ltd.     733,420   
  590,000      PetroChina Co., Ltd., Class H     713,186   
  32,000      Ping An Insurance Group Co.     178,112   
  2,405      POSCO     741,135   
  734,000      Pruksa Real Estate PCL     334,881   
  97,000      PTT Chemical PCL     306,425   
  146,000      PTT Exploration & Production PCL     651,562   
  85,400      PTT PCL     709,579   
  22,000      Reliance Industries, Ltd.     359,699   
  10,600      Rio Tinto, Ltd.     620,879   
  140,000      Sakari Resources, Ltd.(a)     208,807   
  68,000      Seek, Ltd.(a)     344,964   
  54,500      Sesa Goa, Ltd.     220,907   
  1,350,000      Shenzhen Expressway Co., Ltd., Class H     483,463   
  17,400      Shinhan Financial Group Co., Ltd.     606,679   
  33,000      Shriram Transport Finance Co., Ltd.     408,326   
  100,000      Sime Darby Bhd.     262,714   
  132,000      Singapore Technologies Engineering, Ltd.     280,988   
  1,295,000      Sino Thai Engineering & Construction PCL     380,511   
  4,700      SK Holdings Co., Ltd.     520,486   
  4,790      SK Innovation Co., Ltd.     560,436   
  293,000      Sterlite Industries India, Ltd.     670,614   
 

 

SCHEDULE OF INVESTMENTS     15   


Table of Contents
Shares or Principal Amount   Value  
   
  155,000      Sumitomo Chemical Co., Ltd.(a)   $ 598,073   
  40,000      Sumitomo Rubber Industries, Ltd.     511,457   
  142,500      Tata Motors, Ltd.     447,997   
  20,500      Tata Steel, Ltd.     172,643   
  741,000      Techtronic Industries Co.     497,243   
  587,000      Telekomunikasi Indonesia Tbk PT     500,638   
  24,300      Tokio Marine Holdings, Inc.     615,834   
  32,600      Toyota Motor Corp.     1,117,501   
  58,400      Union Bank of India     288,452   
  143,000      United Phosphorus, Ltd.     397,868   
  134,000      Wilmar International, Ltd.(a)     533,222   
  16,000      Woolworths, Ltd.     382,345   
  46,400      Woori Finance Holdings Co., Ltd.     393,443   
  110,000      Zhuzhou CSR Times Electric Co., Ltd.     180,293   
   

 

 

 
 

 

Total Common Stocks

(Cost $67,505,105)

    55,753,216   
Shares or Principal Amount   Value  
  Collateral for Securities on Loan (11.9%)   
  6,792,269      State Street Navigator Prime Portfolio   $ 6,792,269   
   

 

 

 
 
 

 

Total Collateral for
Securities on Loan

(Cost $6,792,269)

    6,792,269   
  Short-Term Investment (1.7%)   
$ 1,009,895      State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/11     1,009,895   
   

 

 

 
 

 

Total Short-Term Investments

(Cost $1,009,895)

    1,009,895   
 

 

Total Investments 111.1%*

(Cost $75,307,269)

    63,555,380   
 
 
Liabilities Less Other Assets
(11.1)%
    (6,357,653
   

 

 

 
  Net Assets 100.0%   $ 57,197,727   
   

 

 

 
 

 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

* The value of foreign securities fair valued (Note 2) as of September 30, 2011 was 96.27% of net assets.

 

** This security is considered a Level 1 security. Please see Note 2 for further details.

 

*** This security is considered a Level 3 security. Please see Note 2 for further details.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

ADR American Depository Receipt

 

16   SCHEDULE OF INVESTMENTS


Table of Contents

MANAGEMENT OVERVIEW

ICON EUROPE FUND

  

Class S

Class C

Class A

 

ICSEX

ICUCX

IERAX

 

Q. How did the Fund perform relative to its benchmark?

 

A. The ICON Europe Fund returned -19.90% for Class S shares for the fiscal year ended September 30, 2011, underperforming its benchmark, the MSCI Europe Index, which returned -11.26%. Class A shares of the Fund returned -20.04% (and -24.63% with maximum sales charge) during the same period while Class C shares returned -20.73% (and -21.73% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. Europe spent much of the year dealing with the sovereign debt issues of many Eurozone member countries. Fraught with high debt to GDP levels, large budget deficits, and slow economic growth, countries like Greece, Portugal, Italy, and Spain are at the center of the crisis and are dependent on additional bailouts from stronger neighbor countries such as Germany and France. As the sovereign debt crisis developed, concerns over a regional and global contagion began, increasing investors’ overall risk aversion. While Europe participated in the global recovery over the past year, the pace of its economic expansion was rather tepid and lackluster. As the fiscal year 2011 came to an end, growth slowed and central banks came together in an effort to solve the debt crisis amidst the backdrop of slowing global demand.

As the fiscal year 2011 began, the European region was priced at 27% below our calculation of intrinsic value. The region’s equity markets continued the upward advances which began in May 2010, and ultimately peaked at the end of April 2011. Just as Ireland’s bailout issues seemed to be resolved towards the end of 2010, Portugal joined Greece in the fray as government bond rating downgrades preceded Portugal’s formal request for a bailout. Late spring through early summer of 2011 brought a generally choppy, sideways market as signs started to emerge that global growth would be moderate. Further adding to concerns about global growth, inflation was advancing at a faster than desired pace, causing the European Central Bank to raise its main refinancing rate in both April and July 2011.

August and September 2011 brought massive global equity selloffs as risk aversion and volatility spiked. Rumors swirled and the overall health of

 

MANAGEMENT OVERVIEW     17   


Table of Contents

the single currency European bloc was brought into question as warnings of the sovereign debt crisis spread beyond the periphery of the Eurozone. Spanish and Italian bond yields rose sharply, while those of Germany decreased amidst a global flight to perceived safety. With global markets reeling, Germany approved measures which would expand the European Financial Stability Facility, yet markets remained skeptical of the plan’s overall effectiveness in bringing the crisis to a close. Amidst this volatility, company earnings remained generally healthy. Further, while corporate credit spreads have risen, it has not led to a dramatic deterioration of our intrinsic value calculations for the region’s underlying equities. As such, we ended this period with stocks trading at a 31% discount to our estimate of intrinsic value, representing the best bargains of all regions across the globe.

Both the Euro and the Pound rallied at the beginning of the fiscal year 2011, but during the last two months of the period the U.S. dollar strengthened relative to most of the major European currencies as investors fled to perceived safe havens amidst the region’s economic and fiscal difficulties.

 

Q. How did the Fund’s composition affect performance?

 

A. The Fund’s positions in economically sensitive sectors such as Industrials and Materials contributed positively through April 2011, yet detracted more dramatically as the selloff continued into the end of the fiscal year 2011. Defensive based sectors experienced more muted losses. The Fund’s underweight position in the Financial sector (specifically banks) contributed positively to performance relative to the benchmark as the Financial sector saw the deepest losses. The Fund’s exposure to the Telecommunication & Utilities sector also contributed to portfolio returns over the fiscal year 2011.

As fears of global contagion spread through the summer of 2011, the Fund’s overweight position in the Industrials sector proved to be the biggest contributor to the Fund’s underperformance relative to the benchmark as economically sensitive industries such as industrial machinery and construction & engineering suffered losses. The Fund’s underweight position in the defensive Consumer Staples sector also contributed to underperformance relative to the benchmark as industries such as tobacco and packaged foods & meats posted positive net benchmark returns over the fiscal year 2011. Additionally, underweight exposure to the pharmaceutical industry proved to be detrimental to the Fund as Health Care stocks posted gains over the period.

 

18   MANAGEMENT OVERVIEW


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Regarding country composition, an overweight position in Norway, and underweight positions in embattled countries of Italy, Greece, and Spain contributed positively to performance relative to the benchmark. The Fund’s underweight position in the United Kingdom and overweight position in France detracted from relative performance.

 

Q. What is your investment outlook for the European equity market?

 

A. Our analysis suggests there is still value in the European region in spite of the palpable fear that has gripped the global markets. We estimate that, on average, fair value for European equities is 45% higher than where prices are currently trading. According to our calculations, Europe has the best values when compared to all other regions we track globally. We believe the economically sensitive sectors will eventually emerge again as future leaders as their stock prices have been overly punished given the underlying company fundamentals. Sectors such as Materials and Industrials are showing some of the best bargains and we remain tilted towards these sectors. Defensive sectors such as Consumer Staples and Telecommunication & Utilities are showing relative strength under our system but lack value relative to the broad market.

We believe it is nearly impossible to accurately time market bottoms and that rallies do not issue invitations. Guided by our disciplined, systematic and non-emotional approach to investing, we see opportunities amidst the turbulence and volatility. We continue to seek out industries that our system identifies as trading at a discount to fair value and showing relative strength in the markets. Our valuations at the end of the fiscal year dictate that we remain nearly fully invested, but as market conditions dictate we will adjust accordingly.

 

MANAGEMENT OVERVIEW     19   


Table of Contents

ICON Europe Fund

Country Composition

September 30, 2011

 

Germany

    33.2%   

France

    17.9%   

Switzerland

    11.4%   

United Kingdom

    10.5%   

Norway

    6.7%   

Netherlands

    4.3%   

Finland

    2.6%   

Russia

    2.5%   

Austria

    1.7%   

Sweden

    1.6%   

Denmark

    1.6%   

Luxembourg

    1.4%   

Bermuda

    1.1%   

Mauritius

    0.8%   
 

 

 

 
    97.3%   
 

 

 

 

Percentages are based upon common and preferred stocks as a percentage of net assets.

ICON Europe Fund

Sector Composition

September 30, 2011

 

Industrials

    24.8%   

Materials

    19.6%   

Energy

    19.4%   

Financial

    10.4%   

Consumer Discretionary

    6.8%   

Consumer Staples

    5.7%   

Information Technology

    4.5%   

Telecommunication & Utilities

    3.1%   

Health Care

    3.0%   
 

 

 

 
    97.3%   
 

 

 

 

Percentages are based upon common and preferred stocks as a percentage of net assets.

 

 

ICON Europe Fund

Industry Composition

September 30, 2011

 

Integrated Oil & Gas

    15.6%   

Industrial Machinery

    7.7%   

Industrial Conglomerates

    5.7%   

Diversified Metals & Mining

    4.7%   

Application Software

    4.5%   

Multi-line Insurance

    4.5%   

Packaged Foods & Meats

    3.8%   

Life & Health Insurance

    3.8%   

Specialty Chemicals

    3.2%   

Integrated Telecommunication Services

    3.1%   

Pharmaceuticals

    3.0%   

Fertilizers & Agricultural Chemicals

    2.9%   

Industrial Gases

    2.4%   

Tires & Rubber

    2.3%   

Diversified Chemicals

    2.3%   

Construction & Engineering

    2.1%   

Trading Companies & Distributors

    2.1%   

Oil & Gas Drilling

    1.9%   

Air Freight & Logistics

    1.9%   

Hypermarkets & Super Centers

    1.8%   

Automobile Manufacturers

    1.7%   

Building Products

    1.6%   

Steel

    1.3%   

Trucking

    1.2%   

Catalog Retail

    1.2%   

Oil & Gas Refining & Marketing

    1.1%   

Diversified Banks

    1.1%   

Heavy Electrical Equipment

    1.0%   

Construction & Farm Machinery & Heavy Trucks

    1.0%   

Other Industries (each less than 1%)

    6.8%   
 

 

 

 
    97.3%   
 

 

 

 

Percentages are based upon common and preferred stocks as a percentage of net assets.

 

 

20   MANAGEMENT OVERVIEW


Table of Contents

ICON Europe Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
    1 Year     5 Years     10 Years     Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Europe Fund - Class S

    2/20/97        -19.90%        -7.72%        5.10%        4.01%        1.58%        1.58%   

MSCI Europe Index

            -11.26%        -3.55%        5.34%        4.58%        N/A        N/A   

ICON Europe Fund - Class C

    1/25/08        -20.73%        N/A        N/A        -13.71%        40.14%        2.55%   

MSCI Europe Index

            -11.26%        N/A        N/A        -8.02%        N/A        N/A   

ICON Europe Fund - Class A

    5/31/06        -20.04%        -8.01%        N/A        -7.15%        17.22%        1.80%   

ICON Europe Fund - Class A (including maximum sales charge of 5.75%)

    5/31/06        -24.63%        -9.10%        N/A        -8.18%        17.22%        1.80%   

MSCI Europe Index

            -11.26%        -3.55%        N/A        -2.26%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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. The Adviser has agreed to limit certain expenses on Class C and Class A shares; without these limitations, returns would have been lower. The limitation provisions may be terminated in the future.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

MANAGEMENT OVERVIEW     21   


Table of Contents

ICON Europe Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ inception date of 2/20/97 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.

 

22   MANAGEMENT OVERVIEW


Table of Contents

ICON EUROPE FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (96.9%)   
  16,200      ABB, Ltd.   $ 277,115   
  2,100      Adidas AG     127,797   
  3,900      Air Liquide S.A.     455,426   
  18,900      Alliance Oil Co. Ltd.     200,149   
  6,600      Allianz SE     618,613   
  24,000      ArcelorMittal     383,443   
  2,500      Arkema S.A.     144,772   
  10,700      Assa Abloy AB, Class B     220,147   
  50,200      AXA S.A.     653,096   
  5,150      BASF SE     313,972   
  3,900      Bauer AG     89,094   
  3,130      Bayer AG     172,725   
  2,500      Bayerische Motoren Werke AG     165,153   
  27,900      BHP Billiton PLC     745,318   
  5,478      BNP Paribas     215,957   
  123,300      BP PLC     739,267   
  3,860      Brenntag AG     334,853   
  10,100      Carrefour S.A.     229,997   
  5,800      Cie de St-Gobain     221,278   
  10,834      Cie Generale des Etablissements Michelin, Class B     647,959   
  26,800      CNP Assurances     394,603   
  1,700      Continental AG     98,124   
  41,400      Deutsche Post AG     530,036   
  19,100      DSV A/S     343,654   
  12,300      Duerr AG     396,345   
  5,800      ElringKlinger AG(a)     135,598   
  56,300      Essar Energy PLC     218,118   
  41,800      GEA Group AG     975,725   
  21,600      ING Groep NV     152,363   
  12,600      K+S AG     659,598   
  20,200      Kloeckner & Co. SE     248,692   
  5,400      Konecranes Oyj     108,526   
  6,900      Lanxess AG     330,992   
Shares or Principal Amount   Value  
   
  154,000      Legal & General Group PLC   $ 230,002   
  1,600      Linde AG     214,101   
  10,000      LUKOIL OAO, ADR(a)**     501,900   
  3,500      MAN SE     271,307   
  1,800      Mayr Melnhof Karton AG     162,102   
  6,700      Metro AG     284,406   
  1,150      Muenchener Rueckversicherungs Gesellschaft AG     142,826   
  12,480      Neste Oil Oyj     108,309   
  19,700      Nestle S.A.     1,084,538   
  11,900      Novartis AG     664,754   
  270,100      Old Mutual PLC     438,279   
  10,900      OMV AG     324,454   
  15,200      Pandora A/S(a)     101,343   
  6,200      Renault S.A.     205,365   
  47,000      Rexam PLC     226,010   
  7,800      Rheinmetall AG     365,866   
  6,600      Rio Tinto PLC     292,698   
  34,000      Royal Dutch Shell PLC, Class B     1,057,901   
  19,600      SAP AG     997,292   
  3,600      Schneider Electric S.A.     192,656   
  10,800      Seadrill, Ltd.(a)     298,256   
  13,700      Siemens AG     1,232,594   
  385      Sika AG     681,661   
  3,664      Societe Generale     95,915   
  40,300      Statoil ASA     864,752   
  20,000      Svenska Cellulosa AB, Class B     243,520   
  27,700      Takkt AG     333,235   
  57,400      Telenor ASA     885,293   
  20,800      Temenos Group AG     280,905   
  20,900      Total S.A.     922,095   
  4,900      Transocean, Ltd.     236,251   
  12,018      Vallourec S.A.     688,232   
 

 

SCHEDULE OF INVESTMENTS     23   


Table of Contents
Shares or Principal Amount   Value  
   
  17,600      Vedanta Resources PLC   $ 299,173   
  2,600      Wacker Chemie AG(a)     230,828   
  4,000      Yara International ASA     152,602   
  33,600      YIT Oyj     504,682   
   

 

 

 
 
 
Total Common Stocks
(Cost $34,938,530)
    27,364,608   
  Preferred Stock (0.4%)  
  2,400      Porsche Automobil Holding SE     114,315   
   

 

 

 
 
 
Total Preferred Stocks
(Cost $164,631)
    114,315   
Shares or Principal Amount   Value  
   
 
 
Collateral for Securities on
Loan (2.9%)
 
  826,916      State Street Navigator Prime Portfolio   $ 826,916   
   

 

 

 
 
 
 
Total Collateral for Securities
on Loan
(Cost $826,916)
    826,916   
 
 
Total Investments 100.2%*
(Cost $35,930,077)
    28,305,839   
 
 
Liabilities Less Other Assets
(0.2)%
    (46,680
   

 

 

 
  Net Assets 100.0%   $ 28,259,159   
   

 

 

 
 

 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

* The value of foreign securities fair valued (Note 2) as of September 30, 2011 was 95.46% of net assets.

 

** This security is considered a Level 1 security. See Note 2 for further details.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

ADR American Depository Receipt

 

24   SCHEDULE OF INVESTMENTS


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MANAGEMENT OVERVIEW

ICON INTERNATIONAL EQUITY FUND

  

Class S

Class I

Class C

Class Z

Class A

 

ICESX

IIQIX

IIQCX

ICNEX

IIQAX

 

Q. How did the Fund perform relative to its benchmark?

 

A. For the fiscal year ended September 30, 2011, the ICON International Equity Fund returned -23.62% for Class I shares, -23.32% for Class S shares and -23.38% for Class Z shares, underperforming the -10.42% return of the MSCI All Country World Index (ACWI) ex-U.S., the Fund’s benchmark. Class A shares of the Fund returned -23.65% (and -28.01% with maximum sales charge) during the same period while Class C shares of the Fund returned -24.25% (and -25.25% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. The fiscal year 2011 can be split into two distinct periods starting with the continuation of the recovery based rally from the prior year and ending with heavy selling pressure amidst a volatile and risk averse backdrop. Europe found itself facing benign growth and renewed fears about a sovereign debt crisis involving deteriorated fiscal situations in countries such as Greece, Portugal, and Italy. Meanwhile, the Asia-Pacific region experienced moderate growth as central bankers enacted policies to combat the fear of rising inflation. As the year unfolded and global contagion fears increased, those emerging economies in the Asia-Pacific region that experienced growth during the first half of the fiscal year 2011 generally suffered the largest losses as indiscriminate selling and heightened risk aversion led to lower returns. Despite their geographical distance from the troubled Eurozone countries, China, India, and Brazil were all hit hard during this latest episode of volatility. In general, the period was highlighted by a risk-on, risk-off environment with negative investor sentiment ultimately prevailing by the end of the fiscal year 2011.

The most significant reallocation in the Fund during the period was a decrease in the Financial sector, specifically in European banks. The rotation out of the Financial sector was allocated mostly to industries within the Materials and Energy sectors in emerging market countries in the Asia-Pacific region and the Western Hemisphere. By the end of the period, fears about the health of the global economy hurt the performance of the cyclical sectors while defensive sectors fared better.

 

MANAGEMENT OVERVIEW     25   


Table of Contents

As a multi-cap manager, we are not limited by restrictions on market capitalization. However, our valuation metrics resulted in a concentration in large-cap companies during the period. Despite this concentration in large-cap stocks, the Fund remained underweight in large-cap stocks relative to the benchmark. This underweight position in large-cap stocks, combined with an overweight position in mid-cap stocks relative to the benchmark, detracted from performance as large-cap stocks outperformed the overall benchmark during the period.

Currency movements worldwide throughout the fiscal year 2011 had a slightly negative effect on returns. The U.S. dollar experienced a choppy, yet generally downward movement as riskier assets appreciated, leading to increased demand for foreign currencies. As fear increased, primarily in July and August 2011, this trend reversed. This reversal ultimately hurt the Fund as portfolio currencies in the Asia-Pacific region and Western Hemisphere suffered losses versus the U.S. dollar amidst the global flight to safety.

 

Q. How did the Fund’s composition affect performance?

 

A. The Fund’s underweight position in the Financial sector proved to be the most beneficial contributor to performance relative to the benchmark as banks and capital market stocks, primarily in Europe, suffered steep losses amidst the sovereign debt crisis concerns. Additionally, an overweight position relative to the benchmark in the gold industry contributed positively as the underlying spot price of the base metal increased throughout the fiscal year 2011.

Conversely, the Materials sector was a detractor, suffering losses during the fiscal year 2011. Further, the Fund’s underweight position in the defensive Consumer Staples sector relative to its benchmark also hindered returns as stocks within this sector outperformed the benchmark amidst the overall downturn.

Emerging markets underperformed over the entire period after strong participation in the prior year’s recovery-based rally. As such, the Fund’s positions in countries like China, India, and Brazil detracted from performance. Meanwhile, South Korea, Norway, Belgium, and Indonesia contributed positively to performance relative to the benchmark. As the fiscal year 2011 ended, heightened risk aversion permeated through the global markets and the Fund’s positions in cyclically oriented sectors and higher growth emerging countries brought the majority of the year’s Fund losses during August and September 2011.

 

26   MANAGEMENT OVERVIEW


Table of Contents
Q. What is your investment outlook for the international equity market?

 

A. Amidst the volatility seen over the past year, we still see opportunity in the worldwide equity markets. These markets have experienced periods of both turmoil and jubilation over the past three years and the representative companies have adjusted to ever-changing economic conditions. Interest rates remain low, monetary policy is loose and accommodative, and corporate earnings and balance sheets have improved despite the negative headlines. We believe these are all positive signs for stocks going forward. However, these positive signs come at a time of heightened risk aversion and general fear as investor sentiment has declined for all but the safest of assets. We see bargains in the international equity market and as of the end of the fiscal year 2011 we estimate that, on average, fair value for international equities is 39% higher than where prices are currently trading. Europe, where equities are trading with a 45% upside to our estimate of fair value, is showing the best bargains globally.

We believe that the market is in the midst of correction within the broader recovery-based market theme that began in 2009. Despite the recent selloff, we remain tilted towards the Industrials, Materials, and Energy sectors as they are showing some of the best bargains around the equity markets according to our system. We feel that the areas that have held up the best from a relative strength standpoint, aren’t offering enough upside relative to the aforementioned cyclicals and that our preferred positioning focuses more on what we feel will lead the market out of this turbulence.

In the Asia-Pacific region, countries like South Korea, China and Singapore remain the most attractive within the region according to our valuation metrics. Within the Western Hemisphere, Canada and Brazil look attractive to our system with Germany currently showing the most value in the European region.

At ICON we continue to seek out industries that our system identifies as trading at a discount to fair value and showing relative strength in the markets. Guided by our disciplined, systematic and non-emotional approach to investing, we see numerous opportunities amidst the recent turbulence and volatility. We believe it is nearly impossible to accurately time market bottoms and we believe rallies do not offer invitations. Therefore, given our current valuations, we remain almost fully invested. As market conditions dictate, we will adjust accordingly.

 

MANAGEMENT OVERVIEW     27   


Table of Contents

ICON International Equity Fund

Country Composition

September 30, 2011

 

South Korea

    14.7%   

Germany

    13.4%   

France

    8.6%   

Canada

    8.4%   

China

    8.0%   

Brazil

    7.1%   

India

    4.4%   

Switzerland

    3.6%   

Australia

    3.2%   

Norway

    3.1%   

Japan

    3.0%   

Singapore

    2.8%   

Hong Kong

    2.7%   

United Kingdom

    2.3%   

Netherlands

    1.9%   

Finland

    1.6%   

Thailand

    1.5%   

Mexico

    1.3%   

Russia

    1.2%   

Israel

    1.2%   

Indonesia

    0.9%   

Taiwan

    0.8%   

Bermuda

    0.7%   

South Africa

    0.6%   

Mauritius

    0.5%   

Denmark

    0.1%   
 

 

 

 
    97.6%   
 

 

 

 

Percentages are based upon common and preferred stocks as a percentage of net assets.

ICON International Equity Fund

Sector Composition

September 30, 2011

Materials

    22.6%   

Industrials

    20.4%   

Energy

    18.8%   

Financial

    14.7%   

Consumer Discretionary

    8.3%   

Consumer Staples

    5.1%   

Information Technology

    4.1%   

Telecommunication & Utilities

    2.1%   

Health Care

    1.5%   
 

 

 

 
    97.6%   
 

 

 

 

Percentages are based upon common and preferred stocks as a percentage of net assets.

 

 

28   MANAGEMENT OVERVIEW


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ICON International Equity Fund

Industry Composition

September 30, 2011

 

Integrated Oil & Gas

    11.1%   

Diversified Banks

    10.1%   

Industrial Machinery

    6.5%   

Industrial Conglomerates

    5.4%   

Steel

    5.1%   

Trading Companies & Distributors

    5.0%   

Automobile Manufacturers

    4.6%   

Fertilizers & Agricultural Chemicals

    4.6%   

Commodity Chemicals

    3.5%   

Diversified Metals & Mining

    3.2%   

Oil & Gas Equipment & Services

    2.7%   

Life & Health Insurance

    2.6%   

Application Software

    2.6%   

Oil & Gas Exploration & Production

    2.3%   

Packaged Foods & Meats

    2.3%   

Multi-line Insurance

    1.9%   

Precious Metals & Minerals

    1.6%   

Oil & Gas Refining & Marketing

    1.5%   

Building Products

    1.5%   

Pharmaceuticals

    1.5%   

Auto Parts & Equipment

    1.5%   

Integrated Telecommunication Services

    1.4%   

Hypermarkets & Super Centers

    1.4%   

Construction Materials

    1.2%   

Specialty Chemicals

    1.2%   

Internet Software & Services

    1.1%   

Other Industries (each less than 1%)

    10.2%   
 

 

 

 
    97.6%   
 

 

 

 

Percentages are based upon common and preferred stocks as a percentage of net assets.

 

 

 

MANAGEMENT OVERVIEW     29   


Table of Contents

ICON International Equity Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
    1 Year     5 Years     10 Years     Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON International Equity Fund - Class S

    1/25/08        -23.32%        N/A        N/A        -11.88%        1.42%        1.42%   

MSCI ACWI ex-U.S.

            -10.42%        N/A        N/A        -5.80%        N/A        N/A   

ICON International Equity Fund - Class I

    2/6/04        -23.62%        -5.75%        N/A        1.92%        1.84%        1.80%   

MSCI ACWI ex-U.S.

            -10.42%        -1.12%        N/A        5.37%        N/A        N/A   

ICON International Equity Fund - Class C

    2/19/04        -24.25%        -6.55%        N/A        0.48%        2.69%        2.55%   

MSCI ACWI ex-U.S.

            -10.42%        -1.12%        N/A        4.99%        N/A        N/A   

ICON International Equity Fund - Class Z

    2/18/97        -23.38%        -5.40%        6.33%        4.48%        1.43%        1.36%   

MSCI ACWI ex-U.S.

            -10.42%        -1.12%        7.27%        4.21%        N/A        N/A   

ICON International Equity Fund - Class A

    5/31/06        -23.65%        -5.81%        N/A        -5.58%        2.16%        1.80%   

ICON International Equity Fund - Class A (including maximum sales charge of 5.75%)

    5/31/06        -28.01%        -6.92%        N/A        -6.63%        2.16%        1.80%   

MSCI ACWI ex-U.S.

            -10.42%        -1.12%        N/A        -0.35%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

30   MANAGEMENT OVERVIEW


Table of Contents

ICON International Equity Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class Z shares on the Class’ inception date of 2/18/97 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Fund’s other share classes will vary due to differences in charges and expenses. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends, capital gain distributions and tax return of capital, but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

 

MANAGEMENT OVERVIEW     31   


Table of Contents

ICON INTERNATIONAL EQUITY FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (91.5%)  
  727,000      Agricultural Bank of China, Ltd., Class H   $ 237,378   
  6,000      Air Liquide S.A.     700,655   
  93,100      Alliance Oil Co. Ltd.     985,919   
  7,400      Allianz SE     693,596   
  480,000      America Movil S.A.B. de C.V., Series L**     529,893   
  12,300      Arkema S.A.     712,280   
  65,000      AXA S.A.     845,642   
  7,900      Baidu, Inc., ADR**     844,589   
  645,000      Bank Danamon Indonesia Tbk PT     334,270   
  1,853,500      Bank of China, Ltd., Class H     573,142   
  16,000      Bank of Nova Scotia**     804,962   
  5,700      BASF SE     347,503   
  1,025,500      BBMG Corp.     756,357   
  33,700      BHP Billiton, Ltd.     1,115,822   
  158,400      Billabong International, Ltd.(a)     499,851   
  123,410      BP PLC     739,927   
  10,300      Brenntag AG     893,520   
  6,200      Carrefour S.A.     141,186   
  56,000      Catcher Technology Co., Ltd.     320,623   
  1,702,000      Chaoda Modern Agriculture Holdings, Ltd.***     240,414   
  1,055,020      China Construction Bank Corp., Class H     638,114   
  1,121,000      China Green Holdings, Ltd.     210,439   
  455,000      China International Marine Containers Group Co., Ltd., Class B     459,319   
Shares or Principal Amount   Value  
   
  406,000      China Minsheng Banking Corp., Ltd., Class H   $ 246,960   
  1,168,000      China National Materials Co., Ltd., Class H     422,885   
  1,736,000      China Petroleum & Chemical Corp., Class H     1,669,527   
  240,000      China Resources Cement Holdings, Ltd.     157,410   
  192,000      China Shineway Pharmaceutical Group, Ltd.     234,909   
  240,000      China Yurun Food Group, Ltd.     255,967   
  39,700      Cia Siderurgica Nacional S.A.**     311,646   
  19,400      Cie de St-Gobain     740,135   
  10,400      Cie Generale des Etablissements Michelin, Class B     622,002   
  44,800      CNP Assurances     659,634   
  8,600      Continental AG     496,392   
  41,300      Deutsche Post AG     528,756   
  11,300      Doosan Corp.     1,275,354   
  11,000      Duerr AG     354,455   
  96,000      Duratex S.A.**     439,601   
  112,000      Essar Energy PLC     433,912   
  4,136,000      Ezion Holdings, Ltd.     1,493,602   
  5,600      Fugro, NV     282,416   
  72,600      GEA Group AG     1,694,681   
  28,000      Hana Financial Group, Inc.     814,142   
  42,000      Hiwin Technologies Corp.     284,797   
  23,900      Hyosung Corp.     1,100,776   
  2,300      Hyundai Mobis     651,444   
  13,000      Hyundai Motor Co.     2,272,630   
 

 

32   SCHEDULE OF INVESTMENTS


Table of Contents
Shares or Principal Amount   Value  
   
  1,380,000      Indika Energy Tbk PT   $ 348,652   
  29,100      Industrial Bank of Korea     337,835   
  26,000      JSW Steel, Ltd.     312,185   
  22,700      K+S AG     1,188,324   
  11,000      KB Financial Group, Inc.     363,463   
  2,500      KCC Corp.     467,061   
  29,000      Kloeckner & Co. SE     357,033   
  33,500      Konecranes Oyj     673,265   
  149,000      Korea Life Insurance Co., Ltd.     697,574   
  9,700      Metro AG     411,752   
  117,000      Mitsui & Co., Ltd.(a)     1,694,776   
  28,700      Nestle S.A.     1,580,012   
  1,003,181      Noble Group, Ltd.(a)     1,000,839   
  113,000      Northam Platinum, Ltd.     458,193   
  2,200      OCI Co., Ltd.     375,623   
  92,000      Oil & Natural Gas Corp., Ltd.     498,921   
  400,000      Olam International Ltd.     681,623   
  451,000      Old Mutual PLC     731,817   
  460,000      OneSteel, Ltd.     539,091   
  29,500      Pan American Silver Corp.(a)**     794,718   
  17,400      Pandora A/S(a)     116,011   
  57,400      PetroBakken Energy, Ltd., Class A(a)**     369,740   
  5,240      POSCO     1,614,780   
  41,500      Potash Corp. of Saskatchewan, Inc.**     1,801,937   
  344,000      PTT Aromatics & Refining PCL     269,772   
  292,000      PTT Chemical PCL     922,433   
  6,300      Rio Tinto, Ltd.     369,013   
  39,500      Royal Dutch Shell PLC, Class B     1,229,032   
  33,400      SAP AG     1,699,466   
  19,300      Seadrill, Ltd.(a)     532,994   
  21,000      Siemens AG     1,889,378   
Shares or Principal Amount   Value  
   
  515      Sika AG   $ 911,832   
  9,900      SK Holdings Co., Ltd.     1,096,344   
  4,400      SK Innovation Co., Ltd.     514,806   
  61,300      Statoil ASA     1,315,368   
  293,000      Sterlite Industries India, Ltd.     670,614   
  137,000      Sumitomo Heavy Industries, Ltd.     700,597   
  29,500      Suncor Energy, Inc.(a)**     753,335   
  430,000      Tata Motors, Ltd.     1,351,852   
  800,000      Techtronic Industries Co.     536,834   
  71,000      Telenor ASA     1,095,048   
  28,300      Temenos Group AG,(a)     382,192   
  25,000      Teva Pharmaceutical Industries, Ltd., ADR**     930,500   
  24,800      Toronto-Dominion Bank**     1,765,275   
  31,155      Total S.A.     1,374,540   
  24,400      Trican Well Service, Ltd.**     346,010   
  218,000      United Phosphorus, Ltd.     606,540   
  17,070      Vallourec S.A.(a)     977,543   
  21,400      Vedanta Resources PLC     363,768   
  230,000      Wal-Mart de Mexico S.A.B. de C.V., Series V**     527,384   
  38,300      YIT Oyj(a)     575,277   
   

 

 

 
 
 
Total Common Stocks
(Cost $98,003,272)
    72,192,406   
  Preferred Stocks (6.1%)  
  62,340     Banco Bradesco S.A.**     918,730   
  184,000      Investimentos Itau S.A.**     932,599   
  168,000      Petroleo Brasileiro S.A.**     1,706,582   
  61,000      Vale S.A., Class A**     1,272,719   
   

 

 

 
 
 
Total Preferred Stocks
(Cost $6,046,638)
    4,830,630   
 

 

SCHEDULE OF INVESTMENTS     33   


Table of Contents
Shares or Principal Amount   Value  
   
 
 
Collateral for Securities on
Loan (6.5%)
 
  5,156,672      State Street Navigator Prime Portfolio   $ 5,156,672   
   

 

 

 
 
 
 
Total Collateral for Securities
on Loan
(Cost $5,156,672)
    5,156,672   
Shares or Principal Amount   Value  
   
  Short-Term Investment (0.5%)   
$ 416,675      State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/11   $ 416,675   
   

 

 

 
 
 
Total Short-Term Investments
(Cost $416,675)
    416,675   
 
 
Total Investments 104.6%*
(Cost $109,623,257)
    82,596,383   
 
 
Liabilities Less Other Assets
(4.6)%
    (3,669,659
   

 

 

 
  Net Assets 100.0%   $ 78,926,724   
   

 

 

 
 

 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

* The value of foreign securities fair valued (Note 2) as of September 30, 2011 was 78.21% of net assets.

 

** This security is considered a Level 1 security. See Note 2 for further details.

 

*** This security is considered a Level 3 security. Please see Note 2 for further details.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

ADR American Depository Receipt

 

34   SCHEDULE OF INVESTMENTS


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STATEMENTS OF ASSETS AND LIABILITIES

SEPTEMBER 30, 2011

 

     ICON
Asia-Pacific
Region
Fund
    ICON
Europe
Fund
    ICON
International
Equity Fund
 

Assets

     

Investments, at cost

  $ 75,307,269      $ 35,930,077      $ 109,623,257   
 

 

 

   

 

 

   

 

 

 

Investments, at value

    63,555,380        28,305,839        82,596,383   

Foreign currency, at value(a)

    429,319               234,012   

Receivables:

     

Fund shares sold

    51,315        11,020        21,730   

Investments sold

           810,959        1,299,498   

Dividends

    210,877        7,431        104,868   

Expense reimbursements by Adviser

    22,193        18,787        8,974   

Foreign tax reclaims

    397        106,449        98,490   

Other assets

    11,671        11,031        81,599   
 

 

 

   

 

 

   

 

 

 

Total Assets

    64,281,152        29,271,516        84,445,554   
 

 

 

   

 

 

   

 

 

 

Liabilities

     

Payables:

     

Due to custodian bank

           78,996          

Expense recoupment due to adviser

                  2,457   

Payable for collateral received on securities loaned

    6,792,269        826,916        5,156,672   

Fund shares redeemed

    159,769        35,982        200,218   

Advisory fees

    53,372        25,552        74,552   

Accrued distribution fees

    897        77        14,112   

Fund accounting fees

    1,093        525        837   

Transfer agent fees

    7,843        4,905        11,487   

Administration fees

    2,629        1,037        3,742   

Trustee fees

    491        302        712   

Capital gains tax

    12,612                 

Accrued expenses

    52,450        38,065        54,041   
 

 

 

   

 

 

   

 

 

 

Total Liabilities

    7,083,425        1,012,357        5,518,830   
 

 

 

   

 

 

   

 

 

 

Net Assets - all share classes

  $ 57,197,727      $ 28,259,159      $ 78,926,724   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class S

  $ 55,637,142      $ 28,095,258      $ 36,493,913   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class I

  $      $      $ 24,916,776   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class C

  $ 792,272      $ 58,877      $ 8,050,050   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class Z

  $      $      $ 6,826,384   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class A

  $ 768,313      $ 105,024      $ 2,639,601   
 

 

 

   

 

 

   

 

 

 

 

36   FINANCIAL STATEMENTS


Table of Contents
     ICON
Asia-Pacific
Region
Fund
    ICON
Europe
Fund
    ICON
International
Equity Fund
 

Net Assets Consist of

     

Paid-in capital

  $ 79,479,805      $ 86,125,694      $ 186,185,943   

Accumulated undistributed net investment income/(loss)

    217,349        459,347        560,902   

Accumulated undistributed net realized gain/(loss) from investments and foreign currency transactions

    (10,719,331     (50,705,371     (80,794,382

Unrealized appreciation/(depreciation) on investments and foreign currency transactions

    (11,780,096     (7,620,511     (27,025,739
 

 

 

   

 

 

   

 

 

 

Net Assets

  $ 57,197,727      $ 28,259,159      $ 78,926,724   
 

 

 

   

 

 

   

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

     

Class S

    5,495,259        2,734,569        3,906,231   

Class I

                  2,742,006   

Class C

    80,178        5,845        940,143   

Class Z

                  740,274   

Class A

    76,036        10,221        288,199   

Net asset value (offering and redemption price per share)

     

Class S

  $ 10.12      $ 10.27      $ 9.34   

Class I

  $      $      $ 9.09   

Class C

  $ 9.88      $ 10.07      $ 8.56   

Class Z

  $      $      $ 9.22   

Class A

  $ 10.10      $ 10.28      $ 9.16   

Class A maximum offering price (100%/(100%-maximum sales charge)) of net asset value adjusted to the nearest cent per share

  $ 10.72      $ 10.91      $ 9.72   

†  Includes securities on loan of

  $ 6,291,167      $ 737,761      $ 4,790,217   

(a)  Foreign currency, at cost

  $ 450,505      $      $ 234,564   

The accompanying notes are an integral part of the financial statements.

 

FINANCIAL STATEMENTS     37   


Table of Contents

STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED SEPTEMBER 30, 2011

 

     ICON
Asia-Pacific
Region

Fund
    ICON
Europe
Fund
    ICON
International
Equity Fund
 

Investment Income

     

Interest

  $ 104      $ 120      $ 234   

Dividends

    1,637,690        1,356,131        2,952,587   

Income from securities lending, net

    11,092        78,046        109,511   

Foreign taxes withheld

    (107,956     (158,231     (302,909
 

 

 

   

 

 

   

 

 

 

Total Investment Income

    1,540,930        1,276,066        2,759,423   
 

 

 

   

 

 

   

 

 

 

Expenses

     

Advisory fees

    717,471        433,847        1,072,619   

Distribution fees:

     

Class I

    -        -        86,172   

Class C

    8,354        791        127,551   

Class A

    3,131        402        12,621   

Fund accounting fees

    9,502        5,066        12,516   

Transfer agent fees

    89,639        55,668        123,437   

Administration fees

    35,525        21,477        53,082   

Custody fees

    79,345        18,769        99,696   

Registration fees:

     

Class S

    30,123        22,147        16,021   

Class I

    -        -        18,316   

Class C

    11,700        11,177        13,549   

Class A

    12,658        12,310        13,390   

Class Q*

    -        -        502   

Insurance expense

    11,283        7,312        16,752   

Trustee fees and expenses

    6,597        4,242        9,814   

Audit and tax service expense

    64,678        41,216        62,656   

Recoupment of previously reimbursed expenses

    -        -        10,350   

Interest expense

    3,432        1,088        990   

Other expenses

    100,524        63,526        102,133   
 

 

 

   

 

 

   

 

 

 

Total expenses before expense reimbursement

    1,183,962        699,038        1,852,167   

Expense reimbursement by Adviser due to expense limitation agreement

    (31,078     (29,163     (25,510
 

 

 

   

 

 

   

 

 

 

Net Expenses

    1,152,884        669,875        1,826,657   
 

 

 

   

 

 

   

 

 

 

Net Investment Income/(Loss)

    388,046        606,191        932,766   
 

 

 

   

 

 

   

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments, Foreign Currency and Capital Gains Tax

     

Net realized gain/(loss) from investment transactions

    9,874,630        4,703,346        11,896,021   

Net realized gain/(loss) from foreign currency transactions

    287,624        (367,632     58,537   

Net realized capital gains tax

    (28,063     -        (33,954

Change in unrealized net appreciation/(depreciation) on investments and foreign currency transactions

    (23,378,425     (11,104,476     (37,453,624
 

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain/(loss) on investments, foreign currency and capital gains tax

    (13,244,234     (6,768,762     (25,533,020
 

 

 

   

 

 

   

 

 

 

Net Increase/(Decrease) in Net Assets Resulting From Operations

  $ (12,856,188   $ (6,162,571   $ (24,600,254
 

 

 

   

 

 

   

 

 

 

 

* Class Q shares of the International Equity Fund closed on April 12, 2011.

The accompanying notes are an integral part of the financial statements.

 

38   FINANCIAL STATEMENTS


Table of Contents

 

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Table of Contents

STATEMENTS OF CHANGES IN NET ASSETS

 

     ICON Asia-Pacific Region Fund  
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 

Operations

   

Net investment income/(loss)

  $ 388,046      $ 99,732   

Net realized gain/(loss) on investment transactions

    9,874,630        16,265,852   

Net realized gain/(loss) from foreign currency transactions

    287,624        (418,749

Net realized capital gains tax

    (28,063     (111,185

Change in net unrealized appreciation/(depreciation) on investments and foreign currency transactions

    (23,378,425     (3,881,126
 

 

 

   

 

 

 

Net increase/(decrease) in net assets resulting from operations

    (12,856,188     11,954,524   
 

 

 

   

 

 

 

Dividends to Shareholders

   

Net investment income

   

Class S

    -        (2,047,982

Class I

    -        (299

Class C

    -        (3,704

Class Z

    -        (115

Class A

    -        (8,693

Class Q*

    -        -   
 

 

 

   

 

 

 

Net decrease from dividends

    -        (2,060,793
 

 

 

   

 

 

 

Fund Share Transactions

   

Shares sold

   

Class S

    24,830,854        36,256,247   

Class I

    -        98,494   

Class C

    858,994        231,787   

Class Z

    -        1,200   

Class A

    832,245        1,406,633   

Class Q*

    -        -   

Reinvested dividends and distributions

   

Class S

    -        1,969,593   

Class I

    -        299   

Class C

    -        3,127   

Class Z

    -        115   

Class A

    -        7,199   

Class Q*

    -        -   

Shares repurchased

   

Class S

    (27,570,610     (85,400,255

Class I

    -        (116,205

Class C

    (286,152     (112,028

Class Z

    -        (7,660

Class A

    (1,054,975     (938,570

Class Q*

    -        -   
 

 

 

   

 

 

 

Net Increase/(decrease) from fund share transactions

    (2,389,644     (46,600,024
 

 

 

   

 

 

 

Total net increase/(decrease) in net assets

    (15,245,832     (36,706,293

Net Assets

   

Beginning of year

    72,443,559        109,149,852   
 

 

 

   

 

 

 

End of year

  $ 57,197,727      $ 72,443,559   
 

 

 

   

 

 

 

 

40   FINANCIAL STATEMENTS


Table of Contents
ICON Europe Fund      ICON International Equity Fund  

Year ended
September 30,
2011

    Year ended
September 30,
2010
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 
      
$ 606,191      $ 766,263       $ 932,766      $ 928,060   
  4,703,346        6,397,943         11,896,021        21,040,500   

 

(367,632

    87,772         58,537        (479,441
  -        -         (33,954     (80,639

 

(11,104,476

    (4,393,093      (37,453,624     (11,081,438

 

 

   

 

 

    

 

 

   

 

 

 

 

(6,162,571

    2,858,885         (24,600,254     10,327,042   

 

 

   

 

 

    

 

 

   

 

 

 
      
      
  (453,210     (491,915      (209,215     (630,736
  -        (20      (118,029     (558,189
  (410     (67      -        (143,688
  -        (40      (82,032     (482,631
  (1,567     (889      (20,141     (79,858
  -        -         (52,806     (157,568

 

 

   

 

 

    

 

 

   

 

 

 
  (455,187     (492,931      (482,223     (2,052,670

 

 

   

 

 

    

 

 

   

 

 

 
      
      
  7,568,313        6,692,968         28,322,716        6,126,691   
  -        -         13,088,283        11,426,534   
  5,475        60,123         918,923        1,409,676   
  -        -         2,581,160        6,771,576   
  10,420        19,813         1,383,795        1,948,858   
  -        -         23,892        417,260   
      
  440,889        484,255         204,055        628,823   
  -        20         101,764        491,814   
  410        67         -        127,039   
  -        40         79,707        439,510   
  1,511        692         17,213        70,683   
  -        -         52,676        157,214   
      
  (21,885,777     (17,663,442      (11,610,081     (12,511,313
  -        (3,632      (17,474,596     (14,836,993
  (2,563     (14,990      (4,428,987     (4,462,878
  -        (3,677      (6,802,428     (24,426,405
  (30,619     (38,218      (3,354,216     (2,257,800
  -        -         (9,287,654     (1,324,612

 

 

   

 

 

    

 

 

   

 

 

 
  (13,891,941     (10,465,981      (6,183,778     (29,804,323

 

 

   

 

 

    

 

 

   

 

 

 
  (20,509,699     (8,100,027      (31,266,255     (21,529,951
      
  48,768,858        56,868,885         110,192,979        131,722,930   

 

 

   

 

 

    

 

 

   

 

 

 
$ 28,259,159      $ 48,768,858       $ 78,926,724      $ 110,192,979   

 

 

   

 

 

    

 

 

   

 

 

 

 

FINANCIAL STATEMENTS     41   


Table of Contents

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

 

 

     ICON Asia-Pacific Region Fund  
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 

Transactions in Fund Shares

   

Shares sold

   

Class S

    1,912,320        3,291,708   

Class I

    -        8,567   

Class C

    66,475        21,226   

Class Z

    -        110   

Class A

    64,370        127,018   

Class Q*

    -        -   

Reinvested dividends and distributions

   

Class S

    -        182,201   

Class I

    -        28   

Class C

    -        292   

Class Z

    -        10   

Class A

    -        666   

Class Q*

    -        -   

Shares repurchased

   

Class S

    (2,154,565     (7,912,830

Class I

    -        (10,129

Class C

    (22,566     (9,887

Class Z

    -        (650

Class A

    (81,339     (85,752

Class Q*

    -        -   
 

 

 

   

 

 

 

Net increase/(decrease)

    (215,305     (4,387,422

Shares outstanding, beginning of year

    5,866,778        10,254,200   
 

 

 

   

 

 

 

Shares outstanding, end of year

    5,651,473        5,866,778   
 

 

 

   

 

 

 

Accumulated undistributed net investment income/(loss)

  $ 217,349      $ (430,258
 

 

 

   

 

 

 

 

* Class Q shares of the International Equity Fund closed on April 12, 2011.

The accompanying notes are an integral part of the financial statements.

 

42   FINANCIAL STATEMENTS


Table of Contents
ICON Europe Fund      ICON International Equity Fund  

Year ended
September 30,
2011

    Year ended
September 30,
2010
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 
      
      
  540,432        548,122         2,179,451        531,628   
  -        -         1,070,213        1,039,598   
  402        5,033         77,449        133,245   
  -        -         206,375        591,916   
  765        1,639         109,312        172,608   
  -        -         1,884        37,359   
      
  32,418        38,927         16,118        55,015   
  -        2         8,240        44,069   
  31        6         -        11,962   
  -        3         6,377        38,963   
  111        55         1,382        6,283   
  -        -         4,218        13,950   
      
  (1,585,829     (1,453,831      (933,083     (1,115,347
  -        (289      (1,434,870     (1,344,907
  (183     (1,276      (375,566     (423,072
  -        (292      (529,937     (2,217,806
  (2,203     (3,065      (267,603     (204,963
  -        -         (718,870     (120,384

 

 

   

 

 

    

 

 

   

 

 

 
  (1,014,056     (864,966      (578,910     (2,749,883
  3,764,691        4,629,657         9,195,763        11,945,646   

 

 

   

 

 

    

 

 

   

 

 

 
  2,750,635        3,764,691         8,616,853        9,195,763   

 

 

   

 

 

    

 

 

   

 

 

 

$

459,347

  

  $ 675,975       $ 560,902      $ 85,776   

 

 

   

 

 

    

 

 

   

 

 

 

 

FINANCIAL STATEMENTS     43   


Table of Contents

FINANCIAL HIGHLIGHTS

 

 

 

          Income/(loss) from investment operations     Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON Asia-Pacific Region Fund

           

Class S

           

Year ended September 30, 2011

  $ 12.35      $ 0.07      $ (2.30   $ (2.23   $ -      $ -   

Year ended September 30, 2010

    10.64        0.01        1.89        1.90        (0.19     -   

Year ended September 30, 2009

    9.47        0.08        1.20        1.28        (0.11     -   

Year ended September 30, 2008

    18.82        0.10        (6.99     (6.89     (0.12     (2.34

Year ended September 30, 2007

    13.19        0.15        5.51        5.66        (0.03     -   

Class C

           

Year ended September 30, 2011

    12.17        (0.02     (2.27     (2.29     -        -   

Year ended September 30, 2010

    10.54        (0.05     1.82        1.77        (0.14     -   

Year ended September 30, 2009

    9.41        0.02        1.18        1.20        (0.07     -   

January 25, 2008 (inception) to September 30, 2008

    13.73        0.05        (4.37     (4.32     -        -   

Class A

           

Year ended September 30, 2011

    12.35        0.04        (2.29     (2.25     -        -   

Year ended September 30, 2010

    10.63        0.02        1.86        1.88        (0.16     -   

Year ended September 30, 2009

    9.38        0.05        1.25        1.30        (0.05     -   

Year ended September 30, 2008

    18.72        0.03        (6.93     (6.90     (0.10     (2.34

Year ended September 30, 2007

    13.18        0.27        5.30        5.57        (0.03     -   

ICON Europe Fund

           

Class S

           

Year ended September 30, 2011

    12.95        0.19        (2.73     (2.54     (0.14     -   

Year ended September 30, 2010

    12.28        0.18        0.60        0.78        (0.11     -   

Year ended September 30, 2009

    13.23        0.15        (0.79     (0.64     (0.31     -   

Year ended September 30, 2008

    24.04        0.36        (8.21     (7.85     (0.21     (2.75

Year ended September 30, 2007

    18.82        0.21        5.33        5.54        (0.05     (0.27

Class C

           

Year ended September 30, 2011

    12.77        0.07        (2.70     (2.63     (0.07     -   

Year ended September 30, 2010

    12.15        0.09        0.56        0.65        (0.03     -   

Year ended September 30, 2009

    13.12        0.07        (0.80     (0.73     (0.24     -   

January 25, 2008 (inception) to September 30, 2008

    17.91        0.07        (4.86     (4.79     -        -   

Class A

           

Year ended September 30, 2011

    12.98        0.18        (2.75     (2.57     (0.13     -   

Year ended September 30, 2010

    12.30        0.15        0.60        0.75        (0.07     -   

Year ended September 30, 2009

    13.14        0.12        (0.75     (0.63     (0.21     -   

Year ended September 30, 2008

    23.91        0.26        (8.17     (7.91     (0.11     (2.75

Year ended September 30, 2007

    18.79        0.15        5.28        5.43        (0.04     (0.27

 

44   FINANCIAL HIGHLIGHTS


Table of Contents
distributions                       Ratio of expenses
to average net assets(a)
    Ratio of net investment
income/(loss)
to average net assets(a)
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of
period (in
thousands)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Portfolio
turnover
rate(b)
 
               
               
$ -      $ 10.12        (18.06 )%    $ 55,637        1.59     1.59     0.55     0.55     71.03
  (0.19     12.35        18.02     70,854        1.63     1.63     0.13     0.13     100.41
  (0.11     10.64        14.18     108,325        1.54     1.54     1.00     1.00     171.05
  (2.46     9.47        (41.26 )%      69,519        1.42     1.42     0.70     0.70     168.42
  (0.03     18.82        43.03     205,332        1.38     1.38     0.96     0.97     130.84
               
  -        9.88        (18.82 )%      792        4.40     2.55 %(c)      (2.02 )%      (0.17 )%      71.03
  (0.14     12.17        17.02     441        9.04     2.57 %(c)      (6.91 )%      (0.44 )%      100.41
  (0.07     10.54        13.10     260        19.80     2.55 %(c)      (17.06 )%      0.19     171.05

 

-

  

    9.41        (31.46 )%      33        23.58     2.64 %(c)      (20.28 )%      0.66     168.42
               
  -        10.10        (18.22 )%      768        3.05     1.81 %(c)      (0.97 )%      0.27     71.03
  (0.16     12.35        17.91     1,149        5.17     1.82 %(c)      (3.13 )%      0.22     100.41
  (0.05     10.63        14.11     543        5.89     1.82 %(c)      (3.41 )%      0.66     171.05
  (2.44     9.38        (41.53 )%      412        2.94     1.88 %(c)      (0.82 )%      0.24     168.42
  (0.03     18.72        42.38     973        3.26     1.85 %(c)      0.24     1.65     130.84
               
               
  (0.14     10.27        (19.90 )%      28,095        1.54     1.54     1.40     1.40     51.94
  (0.11     12.95        6.40     48,547        1.58     1.58     1.48     1.48     105.08
  (0.31     12.28        (4.13 )%      56,681        1.57     1.57     1.52     1.52     129.97
  (2.96     13.23        (36.83 )%      84,320        1.35     1.35     1.89     1.89     181.83
  (0.32     24.04        29.69     139,069        1.35     1.35     0.97     0.97     133.36
               
  (0.07     10.07        (20.73 )%      59        19.88     2.52 %(c)      (16.84 )%      0.52     51.94
  (0.03     12.77        5.37     71        40.14     2.55 %(c)      (36.86 )%      0.73     105.08
  (0.24     12.15        (5.04 )%      22        75.12     2.57 %(c)      (71.83 )%      0.72     129.97

 

-

  

    13.12        (26.74 )%      16        51.24     2.58 %(c)      (48.03 )%      0.63     181.83
               
  (0.13     10.28        (20.04 )%      105        11.29     1.80 %(c)      (8.20 )%      1.29     51.94
  (0.07     12.98        6.16     150        17.22     1.80 %(c)      (14.22 )%      1.21     105.08
  (0.21     12.30        (4.32 )%      159        11.15     1.82 %(c)      (8.08 )%      1.25     129.97
  (2.86     13.14        (37.17 )%      370        4.36     1.83 %(c)      (1.18 )%      1.35     181.83
  (0.31     23.91        29.14     666        2.43     1.84 %(c)      0.09     0.69     133.36

 

FINANCIAL HIGHLIGHTS     45   


Table of Contents

FINANCIAL HIGHLIGHTS (CONTINUED)

 

 

 

          Income/(loss) from investment operations     Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON International Equity Fund

           

Class S

           

Year ended September 30, 2011

  $ 12.26      $ 0.16      $ (3.00   $ (2.84   $ (0.08   $ -   

Year ended September 30, 2010

    11.27        0.12        1.08        1.20        (0.21     -   

Year ended September 30, 2009

    10.84        0.13        0.30        0.43        -        -   

January 25, 2008 (inception) to September 30, 2008

    15.25        0.20        (4.61     (4.41     -        -   

Class I

           

Year ended September 30, 2011

    11.94        0.09        (2.90     (2.81     (0.04     -   

Year ended September 30, 2010

    10.97        0.07        1.06        1.13        (0.16     -   

Year ended September 30, 2009

    10.71        0.05        0.37        0.42        (0.16     -   

Year ended September 30, 2008

    20.09        0.22        (7.48     (7.26     (0.13     (1.99

Year ended September 30, 2007

    14.94        0.18        5.63        5.81        - (d)      (0.66

Class C

           

Year ended September 30, 2011

    11.30        - (d)      (2.74     (2.74     -        -   

Year ended September 30, 2010

    10.40        (0.01     1.01        1.00        (0.10     -   

Year ended September 30, 2009

    10.10        - (d)      0.36        0.36        (0.06     -   

Year ended September 30, 2008

    19.09        0.07        (7.07     (7.00     - (d)      (1.99

Year ended September 30, 2007

    14.36        - (d)      5.39        5.39        -        (0.66

Class Z

           

Year ended September 30, 2011

    12.11        0.14        (2.95     (2.81     (0.08     -   

Year ended September 30, 2010

    11.13        0.13        1.06        1.19        (0.21     -   

Year ended September 30, 2009

    10.87        0.11        0.35        0.46        (0.20     -   

Year ended September 30, 2008

    20.34        0.22        (7.53     (7.31     (0.17     (1.99

Year ended September 30, 2007

    15.07        0.20        5.73        5.93        -        (0.66

Class A

           

Year ended September 30, 2011

    12.04        0.10        (2.94     (2.84     (0.04     -   

Year ended September 30, 2010

    11.07        0.08        1.06        1.14        (0.17     -   

Year ended September 30, 2009

    10.78        0.06        0.37        0.43        (0.14     -   

Year ended September 30, 2008

    20.24        0.18        (7.52     (7.34     (0.13     (1.99

Year ended September 30, 2007

    15.06        0.17        5.67        5.84        -        (0.66

 

(x) Calculated using the average shares method.  
* The total return calculation is for the period indicated and excludes any sales charges.  
(a) Annualized for periods less than a year.  
(b) Portfolio turnover is calculated at the Fund level and is not annualized for periods less than a year.  
(c) The Fund’s operating expenses, not including interest expense, are contractually limited to the amounts discussed in Note 3. The ratios in these financial highlights reflect the limitation, including interest expense.  
(d) Amount less than $0.005.  
(e) The ratio of expenses to average net assets after the contractual expense limitation and voluntary expense waiver and transfer agent earnings credit is 1.29%, 1.73%, 2.52%, 1.25% and 1.76% for Class S, Class I, Class C, Class Z and Class A, respectively.  
(f) The ratio of net investment income/(loss) to average net assets after the contractual expense limitation and voluntary expense waiver and transfer agent earnings credit is 1.47%, 0.62%, (0.01%), 1.25% and 0.74% for Class S, Class I, Class C, Class Z and Class A, respectively.  

The accompanying notes are an integral part of the financial statements.

 

46   FINANCIAL HIGHLIGHTS


Table of Contents
distributions                       Ratio of expenses
to average net assets(a)
    Ratio of net investment
income/(loss)

to average net assets(a)
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of
period (in
thousands)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit(C)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Portfolio
turnover
rate(b)
 
               
               
$ (0.08   $ 9.34        (23.32 )%    $ 36,494        1.44     1.44 %      1.28     1.28     91.46
  (0.21     12.26        10.78     32,424        1.42     1.42 %      1.08     1.08     111.29
  -        11.27        3.97     35,748        1.34     1.34 %(e)      1.42     1.42 %(f)      182.73

 

-

  

    10.84        (28.92 )%      1,515        1.62     1.62 %      2.08     2.08     188.73
               
  (0.04     9.09        (23.62 )%      24,917        1.81     1.80 %      0.73     0.74     91.46
  (0.16     11.94        10.44     36,993        1.84     1.80 %      0.63     0.66     111.29
  (0.16     10.97        4.60     36,860        1.76     1.76 %(e)      0.59     0.59 %(f)      182.73
  (2.12     10.71        (39.85 )%      110,029        1.55     1.55 %      1.39     1.39     188.73
  (0.66     20.09        40.11     170,383        1.54     1.54 %      1.02     1.03     132.30
               
  -        8.56        (24.25 )%      8,050        2.64     2.55 %      (0.11 )%      (0.02 )%      91.46
  (0.10     11.30        9.65     13,990        2.69     2.55 %      (0.21 )%      (0.07 )%      111.29
  (0.06     10.40        3.79     15,774        2.64     2.55 %(e)      (0.13 )%      (0.04 )%(f)      182.73
  (1.99     10.10        (40.38 )%      22,194        2.44     2.44 %      0.47     0.47     188.73
  (0.66     19.09        38.74     29,274        2.57     2.56 %      (0.04 )%      (0.03 )%      132.30
               
  (0.08     9.22        (23.38 )%      6,826        1.45     1.45 %      1.12     1.12     91.46
  (0.21     12.11        10.87     12,806        1.43     1.36 %      1.06     1.12     111.29
  (0.20     11.13        5.16     29,437        1.43     1.25 %(e)      1.07     1.25 %(f)      182.73
  (2.16     10.87        (39.66 )%      13,580        1.27     1.27 %      1.31     1.31     188.73
  (0.66     20.34        40.56     37,619        1.26     1.26 %      1.16     1.16     132.30
               
  (0.04     9.16        (23.65 )%      2,640        2.03     1.80 %      0.56     0.79     91.46
  (0.17     12.04        10.38     5,358        2.16     1.80 %      0.33     0.68     111.29
  (0.14     11.07        4.65     5,214        2.08     1.80 %(e)      0.42     0.70 %(f)      182.73
  (2.12     10.78        (39.95 )%      7,001        1.73     1.73 %      1.17     1.17     188.73
  (0.66     20.24        39.97     6,744        1.70     1.69 %      0.98     0.99     132.30

 

FINANCIAL HIGHLIGHTS     47   


Table of Contents

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

 

1.  Organization

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 Asia-Pacific Region Fund and the Europe Fund each have three classes of shares: Class S, Class C and Class A. The International Equity Fund has five classes of shares: Class S, Class I, Class C, Class Z and Class A. All classes have equal rights as to earnings, assets and voting privileges except that each Class may bear different distribution fees, registration costs, legal costs, mailing and printing costs and shareholder servicing costs and each Class has exclusive voting rights with respect to its distribution plan. There are currently fourteen 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 the Europe Fund primarily invest in companies whose principal business activities fall within specific regions. The investment objective of each Fund is to provide long-term capital appreciation.

The Funds may have elements of risk, including the risk of loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment 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. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, may not exist in some foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers. There are also risks associated with small- and

 

48   NOTES TO FINANCIAL STATEMENTS


Table of Contents

mid-cap investing, including limited product lines, less liquidity, and small market share.

The Asia-Pacific Region Fund has a significant weighting in the Financial sector and the Europe Fund has a significant weighting in Germany which may cause each Fund’s performance to be susceptible to the economic, business and/or other developments that may affect that country and/or sector.

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 involving future claims that may be made against each Fund is unknown. However, based on experience, the Funds expect the risk of loss to be minimal.

2.  Significant Accounting Policies

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 may differ from these estimates.

Investment Valuation

The Funds’ securities and other assets, excluding options on securities indexes, 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 Standard Time) each day the NYSE is open, except that securities traded primarily on the NASDAQ Stock Market (“NASDAQ”) are normally valued by the Funds at the NASDAQ Official Closing Price provided by NASDAQ each business day. Options on securities indexes are valued at the close of the Chicago Board Options Exchange (normally 4:15 p.m. Eastern Standard Time) on each day the New York Stock Exchange is open for trading.

The Funds use pricing services to obtain the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service’s valuation quote is considered inaccurate or does not reflect

 

NOTES TO FINANCIAL STATEMENTS     49   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

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, a 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 market with the most volume. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than 60 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 based upon a matrix valuation system which considers such factors as security prices, yields, maturities and ratings. Short-term debt securities with remaining maturities of 60 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 NYSE are used to convert foreign security values into U.S. dollars.

The Funds’ securities that traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Board determines that use of another valuation methodology is appropriate. The purposes of daily fair valuation are to avoid stale prices and to take into account, among other things, any significant events occurring after the close of foreign markets. The pricing service uses statistical analyses and quantitative models to adjust local market prices using factors such as subsequent movements and changes in the prices of indexes, securities and exchange rates in other markets to determine fair value as of the time a Fund calculates its net asset value (“NAV”). The valuation assigned to fair-value securities for purposes of calculating a Fund’s NAV may differ from the security’s most recent closing market price and from the prices used by other mutual funds to calculate their NAVs.

Investments in other open-end investment companies are valued at net asset value.

Various inputs are used to determine the value of the Funds’ investments. These inputs are summarized in the three broad levels listed below:

Level 1 — quoted prices in active markets for identical securities.

 

50   NOTES TO FINANCIAL STATEMENTS


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Level 2 — significant observable inputs other than Level 1 quoted prices (including, but not limited to, quoted prices for similar securities, interest rates, prepayment speeds, and credit risk).

Level 3 — significant unobservable inputs.

Observable inputs are those based on market data obtained from sources independent of the Funds, and unobservable inputs reflect the Funds’ own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example, non-U.S. equity securities actively traded in foreign markets generally are reflected in Level 2 despite the availability of closing prices, because the Funds evaluate and determine whether those closing prices reflect fair value at the close of the NYSE or require adjustment, as described above. The following table summarizes the Funds’ investments, based on the inputs used to determine their values on September 30, 2011:

 

    Level 1     Level 2     Level 3     Total  

ICON Asia-Pacific Region Fund*

       

Assets

       

Common Stocks

       

South Korea

  $ -      $ 12,596,608      $ -      $ 12,596,608   

Japan

    -        10,958,351        -        10,958,351   

Australia

    -        7,002,523        -        7,002,523   

China

    598,696        5,830,930        -        6,429,626   

Singapore

    -        4,613,349        -        4,613,349   

India

    -        4,097,239        -        4,097,239   

Thailand

    -        3,355,394        -        3,355,394   

Hong Kong

    -        2,949,808        91,815        3,041,623   

Other Countries

    -        3,658,503        -        3,658,503   

Collateral for Securities on Loan

    -        6,792,269        -        6,792,269   

Short-Term Investments

    -        1,009,895        -        1,009,895   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 598,696      $ 62,864,869      $ 91,815      $ 63,555,380   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

NOTES TO FINANCIAL STATEMENTS     51   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

    Level 1     Level 2     Level 3     Total  

ICON Europe Fund*

       

Assets

       

Common Stocks

       

Germany

  $ -      $ 9,269,772      $ -      $ 9,269,772   

France

    -        5,067,351        -        5,067,351   

Switzerland

    -        3,225,224        -        3,225,224   

United Kingdom

    -        2,970,747        -        2,970,747   

Norway

    -        1,902,647        -        1,902,647   

Other Countries

    501,900        4,426,967        -        4,928,867   

Preferred Stock

       

Germany

    -        114,315        -        114,315   

Collateral for Securities on Loan

    -        826,916        -        826,916   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 501,900      $ 27,803,939      $ -      $ 28,305,839   
 

 

 

   

 

 

   

 

 

   

 

 

 

ICON International Equity Fund*

       

Assets

       

Common Stocks

       

South Korea

  $ -      $ 11,581,832      $ -      $ 11,581,832   

Germany

    -        10,554,856        -        10,554,856   

France

    -        6,773,617        -        6,773,617   

Canada

    6,635,977        -        -        6,635,977   

China

    844,589        5,494,558        -        6,339,147   

Brazil

    751,247        -        -        751,247   

Other Countries

    1,987,777        27,327,539        240,414        29,555,730   

Preferred Stocks

       

Brazil

    4,830,630        -        -        4,830,630   

Collateral for Securities on Loan

    -        5,156,672        -        5,156,672   

Short-Term Investments

    -        416,675        -        416,675   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 15,050,220      $ 67,305,749      $ 240,414      $ 82,596,383   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

* Please refer to the Schedule of Investments and the Sector/Industry Classification and Country Composition tables for additional security details.

For the year ended September 30, 2011, there was no significant transfer activity between Level 1 and Level 2.

 

52   NOTES TO FINANCIAL STATEMENTS


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A roll forward of fair value measurements using significant unobservable inputs (Level 3) for the year ended September, 2011 for the Asia-Pacific Region Fund and the International Equity Fund, was as follows:

 

     Common Stocks
Hong Kong
 

ICON Asia-Pacific Region Fund

 

Beginning balance 9/30/10

  $ -   

Net purchases (sales)

    -   

Accrued discounts (premiums)

    -   

Total realized gains (losses)

    -   

Total change in unrealized appreciation (depreciation)

    -   

Transfers in to Level 3*

    91,815   

Transfers out of Level 3

    -   
 

 

 

 

Ending balance 9/30/11

  $ 91,815   
 

 

 

 

Net change in unrealized appreciation (depreciation) on investments held at 9/30/11

  $ (449,104
 

 

 

 
     Common Stocks
Hong Kong
 

ICON International Equity Fund

 

Beginning balance 9/30/10

  $ -   

Net purchases (sales)

    -   

Accrued discounts (premiums)

    -   

Total realized gains (losses)

    -   

Total change in unrealized appreciation (depreciation)

    -   

Transfers in to Level 3*

    240,414   

Transfers out of Level 3

    -   
 

 

 

 

Ending balance 9/30/11

  $ 240,414   
 

 

 

 

Net change in unrealized appreciation (depreciation) on investments held at 9/30/11

  $ (1,133,353
 

 

 

 

 

* Transferred out of Level 2 into Level 3 because sufficient observable inputs were not available.

Net realized gain/(loss) and net change in unrealized appreciation/depreciation is reflected on the Statement of Operations.

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 daily into U.S. dollars at the prevailing rates

 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

of exchange. Income and expenses are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the transactions. Purchases and sales of securities are translated into U.S. dollars at the contractual currency exchange rates established at the time of each trade.

The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Net unrealized appreciation or depreciation on investments and foreign currency translations arise from changes in the value of assets and liabilities, resulting from changes in the exchange rates and changes in market prices of securities held.

Forward Foreign Currency Contracts

The Funds may enter into short-term forward foreign currency contracts. A forward foreign currency contract is an agreement between contracting parties to exchange an amount of currency at some future time at an agreed upon rate. The Funds may use forward foreign currency contracts to manage foreign currency exposure with respect to transactional hedging, positional hedging, cross hedging and proxy hedging.

These contracts involve market risk and do not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of those securities decline. The Funds could be exposed to risk if the value of the currency changes unfavorably. Additionally, the Funds could be exposed to counterparty risk if the counterparties are unable to meet the terms of the contracts.

These contracts are marked-to-market daily. 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 on the Statement of Operations. At September 30, 2011, the Asia-Pacific Region Fund, Europe Fund and International Equity Fund had no outstanding forward foreign currency contracts.

 

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The following is a summary of how these derivatives are treated in the financial statements and their impact on the Funds:

Amount of Realized Gain or (Loss) on Derivatives Recognized in Operations

 

Derivatives not accounted for as hedging
instruments
  Location of Gain/(Loss)
on Derivatives
Recognized in Operations
  Amount  

Foreign exchange contracts

   

Foreign exchange risk

   

ICON Asia-Pacific Region Fund

  Net realized gain/(loss) from   $ 232,585   

ICON Europe Fund

  foreign currency transactions     (296,220

ICON International Equity Fund

      267,566   

Change in Unrealized Appreciation/(Depreciation) on Derivatives Recognized in Operations

 

Derivatives not accounted for as hedging
instruments
  Location of Gain/(Loss)
on Derivatives
Recognized in Operations
  Amount  

Foreign exchange contracts

   

Foreign exchange risk

   

ICON Asia-Pacific Region Fund

  Change in unrealized net   $ (224,856

ICON Europe Fund

  appreciation/(depreciation) on     220,789   

ICON International Equity Fund

  foreign currency transactions     (312,473

The number of contracts open during the year ended September 30, 2011 for the Asia-Pacific Region Fund, Europe Fund, and International Equity Fund were 1, 2, and 4, respectively.

The Funds value derivatives at fair value, as described above, and recognize changes in fair value currently in the results of operations. Accordingly, the Funds do not follow hedge accounting even for derivatives employed as economic hedges.

Securities Lending

Under procedures adopted by the Board, the Funds may lend securities to non-affiliated qualified parties. The Funds seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security. The Funds do not have the right to vote on securities while they are on loan; however, the Funds may attempt to call back the loan and vote the proxy.

 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

All loans will be continuously secured by collateral which consists of cash. The cash collateral is invested in the State Street Navigator Prime Portfolio and is disclosed on the Schedule of Investments. The lending fees received and the Funds’ portion of the interest income earned on cash collateral are included on the Statement of Operations, if applicable.

As of September 30, 2011, the following Funds had securities with the following values on loan:

 

Fund   Value of
Loaned Securities
    Value of
Collateral
 

ICON Asia-Pacific Region Fund

  $ 6,291,167      $ 6,792,269   

ICON Europe Fund

    737,761        826,916   

ICON International Equity Fund

    4,790,217        5,156,672   

The value of the collateral above could include collateral held for securities that were sold on or before September 30, 2011. It may also include collateral received from the pre-funding of loans.

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 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 income and net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryforward. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes. 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.

 

56   NOTES TO FINANCIAL STATEMENTS


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Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years and has concluded that no provision for federal income tax is required in the Funds’ financial statements.

The Funds file U.S. tax returns. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the past four years, no examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Certain foreign countries impose a tax on capital gains which is accrued by the Funds based on the unrealized appreciation, if any, on affected securities. Any accrual would reduce a Fund’s NAV. The tax is paid when the gain is realized.

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 value of the securities received. Interest income is accrued as earned. Certain dividends from foreign securities are 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 the trade date. However, for financial reporting purposes, security transactions are accounted for on the trade date. Gains and losses on securities sold are determined on the basis of identified cost.

Allocation of 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

 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

losses and expenses other than class-specific expenses are allocated daily to each class of shares based upon the proportion of net assets.

Below are the class level expenses that are included on the Statement of Operations:

 

Fund   Legal
Expense
    Printing
And Postage
Expense
    Transfer
Agent
Expense
 

ICON Asia-Pacific Region Fund

     

Class S

  $ 8,272      $ 50,655      $ 80,386   

Class C

    99        624        4,780   

Class A

    149        899        4,473   

ICON Europe Fund

     

Class S

    5,426        25,899        49,570   

Class C

    10        48        2,882   

Class A

    20        101        3,216   

ICON International Equity Fund

     

Class S

    4,873        15,298        20,130   

Class I

    4,089        12,869        49,827   

Class C

    1,486        4,794        26,198   

Class Z

    1,400        4,503        14,607   

Class A

    579        1,895        9,354   

Class Q*

    333        1,013        3,321   

 

* Class Q shares of the International Equity Fund were closed on April 12, 2011.

3.  Fees and Other Transactions with Affiliates

Investment Advisory Fees

ICON Advisers, Inc. (“ICON Advisers”) serves as investment adviser to the Funds and is responsible for managing the Funds’ portfolios of securities. ICON Advisers receives a monthly management fee that is computed daily at an annual rate of 1.00% of each Fund’s average daily net assets.

ICON Advisers has contractually agreed to limit the Funds’ operating expenses (exclusive of brokerage, interest, taxes, and extraordinary expenses) to the extent necessary to ensure that the Funds’ expenses do not exceed the following amounts:

 

Fund   Class S     Class I     Class C     Class Z     Class A  

ICON Asia-Pacific Region Fund

    -        N/A        2.55%        N/A        1.80%   

ICON Europe Fund

    -        N/A        2.55%        N/A        1.80%   

ICON International Equity Fund

    1.55%        1.80%        2.55%        1.55%        1.80%   

 

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Effective February 18, 2011, the expense limitation for Class S shares of ICON International Equity Fund decreased from 1.80% to 1.55%.

The Funds’ expense limitations will continue in effect until at least January 31, 2021. To the extent ICON Advisers reimburses or absorbs fees and expenses, it may seek payment of such amounts for up to three years after the expenses were reimbursed or absorbed. A Fund will make no such payment, however, if the total Fund operating expenses exceed the expense limits in effect at the time the expenses were reimbursed or at the time these payments are proposed.

As of September 30, 2011 the following amounts were still available for recoupment by ICON Advisers based upon their potential expiration dates:

 

Fund   2012     2013     2014  

ICON Asia-Pacific Region Fund

  $ 27,778      $ 47,207      $ 31,078   

ICON Europe Fund

    26,513        42,776        29,163   

ICON International Equity Fund

    61,349        53,159        25,510   

Accounting, Custody and Transfer Agent Fees

State Street Bank and Trust Company, (“State Street”) serves as the fund accounting agent for the funds. For its services, the Trust pays State Street a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily assets of the Trust.

State Street is the custodian of the Trust’s investments. For its services, the Trust pays State Street asset-based fees that vary according to the number of positions and transactions, plus out-of-pocket expenses.

Boston Financial Data Services, Inc. (“BFDS”) is the Trust’s transfer agent. For these services, the Trust pays a per account fee, plus certain other transaction cusip charges and out-of-pocket expenses. BFDS may pay each Fund transfer agent earnings credits. Transfer agent earnings credits are credits received for interest which results from overnight balances used by BFDS for clearing shareholder transactions.

Administrative Services

The Trust has entered into an administrative services agreement with ICON Advisers pursuant to which ICON Advisers oversees the administration of the Trust’s business and affairs. This agreement provides for an annual fee of 0.05% on the Trust’s 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

 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

of average daily net assets and 0.030% on average daily net assets over $5 billion. For the year ended September 30, 2011, each Funds’ payment for administrative services to ICON Advisers is included on the Statement of Operations. The administrative services agreement provides that ICON Advisers 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 Advisers in the performance of its duties.

ICON Advisers has a sub-administration agreement with State Street to which State Street assists ICON Advisers with the administration and business affairs of the Trust. For its services, ICON Advisers pays State Street a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily assets of the Trust.

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, Class I and Class A shareholders pay an annual distribution and service fee of 0.25% of average daily net assets. The Class C shareholders pay an annual distribution and service fee of 1.00% of average daily net assets. The total amount paid under the 12b-1 plans by the Funds is shown on the Statement of Operations.

Other Related Parties

Certain Officers and Directors of ICON Advisers 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 86% by the Trust and 14% by ICON Advisers. For the year ended September 30, 2011, the total related amounts paid by the Funds under this arrangement are included in Other Expenses on the Statements of Operations.

Some of the distribution amounts received by IDI, discussed in the Distribution Fees section above, have been used to offset various shareholder servicing costs incurred by ICON Advisers. For the year ended September 30, 2011, this amount was $7,992.

 

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4.  Borrowings

The Trust has entered into Lines of Credit agreements with State Street to provide temporary funding for redemption requests. The maximum borrowing is limited to $150 million. Interest on domestic borrowings is charged at the higher of the Federal Funds Rate effective on that day and the Overnight LIBOR Rate effective on that day plus 1.25%. The average interest rate charged for the year ended September 30, 2011 was 1.44%.

 

Fund   Average Borrowing
(10/1/10-9/30/11)
 

ICON Asia-Pacific Region Fund

  $ 235,233   

ICON Europe Fund*

    77,220   

ICON International Equity Fund

    68,525   

 

* Fund had outstanding borrowings under these agreements as of September 30, 2011.

5.  Purchases and Sales of Investment Securities

For the year ended September 30, 2011, the aggregate cost of purchases and proceeds from sales of investment securities (excluding short-term securities) was as follows:

 

Fund   Purchases of
Securities
    Proceeds
from Sales of
Securities
 

ICON Asia-Pacific Region Fund

  $ 49,418,483      $ 52,266,151   

ICON Europe Fund

    21,696,800        35,314,841   

ICON International Equity Fund

    95,080,491        100,507,298   

6.  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 sale losses, foreign currency transactions, net investment losses, and capital loss carryforwards.

The tax components of capital shown in the following tables include losses the Funds may be able to offset against gains recognized in future years. The accumulated losses noted represent net capital loss carryforwards as of September 30, 2011 and post-October losses that may be available to offset future realized capital gains and thereby reduce future taxable income distributions.

 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

For the year ended September 30, 2011 the following Funds had capital loss carryforwards:

 

Fund   Amounts     Expires  

ICON Asia-Pacific Region Fund

  $ 10,719,331        2017   

ICON Europe Fund

    24,032,405        2017   
    26,614,409        2018   

ICON International Equity Fund

    53,195,839        2017   
    27,012,993        2018   

Future capital loss carryforward utilization in any given year may be limited if there are substantial shareholder redemptions or contributions. During the year ended September 30, 2011, the Funds utilized capital loss carryforwards:

 

Fund   Amount  

ICON Asia-Pacific Region Fund

  $ 9,873,592   

ICON Europe Fund

    4,703,346   

ICON International Equity Fund

    11,896,021   

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2011, were as follows:

 

Fund   Distributions
Paid from
Ordinary Income
    Total
Distributions
Paid
 

ICON Asia-Pacific Region Fund

  $ -      $ -   

ICON Europe Fund

    455,187        455,187   

ICON International Equity Fund

    482,223        482,223   

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2010, were as follows:

 

Fund   Distributions
Paid from
Ordinary Income
    Total
Distributions
Paid
 

ICON Asia-Pacific Region Fund

  $ 2,060,793      $ 2,060,793   

ICON Europe Fund

    492,931        492,931   

ICON International Equity Fund

    2,052,670        2,052,670   

 

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As of September 30, 2011, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Fund   Undistributed
Ordinary
Income
    Accumulated
Capital and
Other Losses
    Unrealized
Appreciation/
(Depreciation)*
    Total
Accumulated
Earnings/
(Deficit)
 

ICON Asia-Pacific Region Fund

  $ 217,349      $ (10,719,331   $ (11,780,096   $ (22,282,078

ICON Europe Fund

    460,661        (50,646,814     (7,680,382     (57,866,535

ICON International Equity Fund

    560,902        (80,208,832     (27,611,289     (107,259,219

 

* Differences between the book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to tax deferral of losses on wash sales.

As of September 30, 2011, cost on investments for federal income tax purposes and the amount of net unrealized appreciation/(depreciation) were as follows:

 

Fund   Cost    

Unrealized

Appreciation

   

Unrealized

(Depreciation)

   

Net
Appreciation/

(Depreciation)

 

ICON Asia-Pacific Region Fund

  $ 75,307,269      $ 2,781,079      $ (14,532,968   $ (11,751,889

ICON Europe Fund

    35,988,634        919,277        (8,602,072     (7,682,795

ICON International Equity Fund

    110,208,806        2,771,355        (30,383,778     (27,612,423

The Regulated Investment Company Modernization Act of 2010 (the “Act”) was signed into law on December 22, 2010. The Act makes changes to a number of tax rules impacting the Funds. Under the Act, future capital losses generated by a fund may be carried over indefinitely, but these losses must be used prior to the utilization of any pre-enactment capital losses. Since pre-enactment capital losses may only be carried forward for eight years, there may be a greater likelihood that all or a portion of each fund’s pre-enactment capital losses will expire unused. In general, the provisions of the Act will be effective for each Fund’s fiscal year ending 2012.

7.  Subsequent Events

The Board of Trustees has decided to merge Class I shares into Class A shares of the ICON International Equity Fund effective January 23, 2012.

The Board of Trustees has also decided to merge the Class S shares into the Class Z shares of the International Equity Fund and to rename the resultant share class Class S effective January 23, 2012. Immediately upon completion of this share class merger, the expense limitation agreement will be amended so that expenses (exclusive of brokerage, interest, taxes, dividends

 

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

on short sales and extraordinary expenses) will be contractually limited to 1.55% of average net assets. As with the other ICON Funds Class S shares, the resultant Class S for the International Equity Fund will be offered to platform sales and investment representatives through fee-based products or accounts, as well as institutional investors. ICON reserves the right to change or waive the investment criteria for the Class S shares. Please visit www.iconfunds.com for additional important information regarding these share class mergers.

Subsequent to year end, the ICON Funds suspended participation in the securities lending program.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To the Board of Trustees and Shareholders of the ICON Funds:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of ICON Asia-Pacific Region Fund, ICON Europe Fund, and ICON International Equity Fund (three of the portfolios constituting ICON Funds, hereafter referred to as the “Funds”) at September 30, 2011, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

LOGO

Denver, Colorado

November 18, 2011

 

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SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE

SEPTEMBER 30, 2011 (UNAUDITED)

Example

As a shareholder of a Fund you may pay two types of fees: transaction fees and fund-related fees. Certain funds charge transaction fees, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange 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 six-month period and held for the six-month period (4/1/11 – 9/30/11).

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, 12b-1 fees, fund accounting, custody and transfer agent fees. However, the Example does not include client specific fees, such as the $15 fee charged to IRA accounts, or the $15 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),

 

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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.

 

    

Beginning
Account
Value

4/1/11

    Ending
Account
Value
9/30/11
    Expenses Paid
During Period
4/1/11 - 9/30/11*
    Annualized
Expense Ratio
4/1/11 - 9/30/11
 

Actual Expenses

       

ICON Asia-Pacific Region Fund

       

Class S

  $ 1,000.00      $ 759.20      $ 7.31        1.66%   

Class C

    1,000.00        755.90        11.24        2.55%   

Class A

    1,000.00        758.80        7.96        1.80%   

ICON Europe Fund

       

Class S

    1,000.00        707.30        6.77        1.58%   

Class C

    1,000.00        703.70        10.91        2.55%   

Class A

    1,000.00        707.00        7.73        1.81%   

ICON International Equity Fund

       

Class S

    1,000.00        698.60        6.45        1.52%   

Class I

    1,000.00        698.20        7.67        1.80%   

Class C

    1,000.00        694.80        10.84        2.55%   

Class Z

    1,000.00        699.00        6.31        1.48%   

Class A

    1,000.00        697.60        7.66        1.80%   

Hypothetical (assuming a 5% return before expenses)

       

ICON Asia-Pacific Region Fund

       

Class S

    1,000.00        1,016.76        8.38     

Class C

    1,000.00        1,012.26        12.88     

Class A

    1,000.00        1,016.02        9.12     

ICON Europe Fund

       

Class S

    1,000.00        1,017.13        8.00     

Class C

    1,000.00        1,012.26        12.89     

Class A

    1,000.00        1,016.01        9.13     

ICON International Equity Fund

       

Class S

    1,000.00        1,017.47        7.67     

Class I

    1,000.00        1,016.04        9.10     

Class C

    1,000.00        1,012.28        12.87     

Class Z

    1,000.00        1,017.64        7.50     

Class A

    1,000.00        1,016.04        9.10     

 

* Expenses are equal to the Fund’s six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 183/365 to reflect the one-half year period.

Total returns exclude applicable sales charges. If sales charges were included (maximum 5.75%), returns would be lower.

 

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BOARD OF TRUSTEES AND FUND OFFICERS (UNAUDITED)

The ICON Funds Board of Trustees (“Board”) consists of four Trustees who oversee the 17 ICON Funds (the “Funds”). The Board is responsible for general oversight of the Funds’ business and for assuring that the Funds are managed in the best interest of the Funds’ shareholders. The Trustees, and their ages, and principal occupations are set forth below. The address of the Trustees is 5299 DTC Blvd., Suite 1200, Greenwood Village, CO 80111. Trustees have no official term of office and generally serve until they resign or are not re-elected.

Interested Trustee

Craig T. Callahan, 60, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as President (1998 to present) and Chairman of the Investment Committee (2005 to present) and served as the Chief Investment Officer (1991 to 2004) of ICON Advisers. Dr. Callahan is also Executive Vice President (2005 to present); Director (1991 to present); and was previously President (1998 to 2005) and Chief Compliance Officer (2005) of IDI. Dr. Callahan also serves as the President (1998 to present) and Chairman of the Board of Directors (1994 to present) of ICON Management & Research Corporation (“IM&R”), the parent company of ICON Advisers and IDI.

Independent Trustees

Glen F. Bergert, 61. Mr. Bergert has been a Trustee of the Funds since 1999. Mr. Bergert is President of Venture Capital Management LLC (1997 to present), General Partner of SOGNO Partners LP, a venture capital company (2001 to present), General Partner of Bergert Properties, LLP, a real estate holding company (1997 to present), General Partner of Pyramid Real Estate Partnership, a real estate development company (1998 to present), General Partner of Chamois Partners, LP, a venture capital company (2004 to present) and was previously a General Partner with KPMG Peat Marwick, LLP (1979 to 1997). Mr. Bergert is also a Director of Delta Dental of California, an insurance company (2006 to present), Delta Dental of Pennsylvania, an insurance company (1998 to 2009 and 2010 to present), Dentegra Group, Inc, an insurance holding company (2010 to present) and Delta Reinsurance Corporation (2000 to 2009 and 2011 to present). Mr. Bergert was a Director of Herre Bros, Inc., a contracting company (1998 to 2011).

John C. Pomeroy, Jr., 64. Mr. Pomeroy has been a Trustee of the Funds since November 2002. Mr. Pomeroy is Chief Investment Officer and Director

 

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of Investments, Pennsylvania State University (2001 to present) and was Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).

R. Michael Sentel, 63. Mr. Sentel has been a Trustee of the Funds since their inception. Mr. Sentel is a Senior Attorney with the U.S. Department of Education (1996 to present). Mr. Sentel also provides legal representation as a sole practitioner with an emphasis on corporate and transactional law. He served as general counsel to numerous public companies and served on the board of directors of one of these clients. Mr. Sentel began his legal career with the U.S. Securities and Exchange Commission’s Division of Enforcement and served as a Branch Chief (1980 to 1981). Later he served as the Section Chief for the Professional Liability Section of the Federal Deposit Insurance Corp. with responsibility for the Rocky Mountain Region (1991 to 1994).

The Officers of the Funds are:

Craig T. Callahan, 60, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as President (1998 to present) and Chairman of the Investment Committee (2005 to present) and served as the Chief Investment Officer (1991 to 2004) of ICON Advisers. Dr. Callahan is also Executive Vice President (2005 to present); Director (1991 to present); and was previously President (1998 to 2005) and Chief Compliance Officer (2005) of IDI. Dr. Callahan also serves as the President (1998 to present) and Chairman of the Board of Directors (1994 to present) of IM&R, the parent company of ICON Advisers and IDI.

Erik L. Jonson, 62. Mr. Jonson has been a Vice President and Principal Financial Officer/Treasurer of the Funds since their inception in 1996. Mr. Jonson is also Chief Financial Officer (1996 to present) and Executive Vice President (2004 to present) and was previously Vice President (1998 to 2004) and Secretary (2005 and 1998 to 2002) of ICON Advisers; Chief Financial Officer, Secretary and Director (1998 to present) of IM&R; and Executive Vice President and Treasurer/Financial Principal (1996 to present) of IDI.

Jessica Seidlitz, 33. Ms. Seidlitz serves as the Assistant Treasurer of the Funds (2007 to present). She also serves as the Mutual Fund Controller of ICON Advisers (2005 to present). Previously, she was a Senior Associate/Associate at PricewaterhouseCoopers LLP (2001 to 2004).

Donald Salcito, 58. Mr. Salcito serves as Vice President and Secretary of the Funds (November 15, 2006 to present). Mr. Salcito is also Executive Vice President and General Counsel (September 2005 to present) of ICON Advisers; Director of IM&R (2005 to present); Executive Vice President, Secretary, General Counsel of IDI (2005 to present). Previously, he was a

 

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Partner in various national law firms, practicing in the securities law area. (1980 to 2005).

Brian Harding, 32. Mr. Harding serves as Chief Compliance Officer and Anti-Money Laundering Officer of the Funds (2008 to present). Mr. Harding also serves as Chief Compliance Officer of ICON Advisers (2011 to present). Previously, he was a Manager (2007 to 2008) and a Senior Associate/Associate (2001 to 2007) at PricewaterhouseCoopers LLP.

 

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OTHER INFORMATION (UNAUDITED)

Renewal of Investment Advisory Agreement

On August 15, 2011, the Board of Trustees, including a majority of the Trustees that are not “interested persons” of the Trust (the “Independent Trustees”), approved continuation of the Advisory Agreements with the Adviser for each Fund for an additional one-year term commencing October 1, 2011.

In determining to renew the investment advisory agreements between ICON Funds (the “Trust”) and ICON Advisers, Inc. (“ICON” or the “Adviser”) the Board requested, was provided with and reviewed data with respect to ICON, its personnel, and the services provided and to be provided to each Fund by ICON under the Trust’s Investment Advisory Agreement dated October 9, 1996, as amended (related to the Sector, International and Core Equity Funds) and under the Trust’s Investment Advisory Agreement dated July 9, 2002 and effective October 1, 2002, as amended (related to the U.S. Diversified Funds - Bond, Risk-Managed Equity, Equity Income and Long/Short Funds) (collectively, the “Advisory Agreements”). The data included information concerning advisory, distribution and administrative services provided to the Funds by ICON and its related companies; information concerning other businesses of those companies; comparative data related to exchange traded funds versus the Sector Funds; and comparative data obtained from Lipper Analytical Services related to Fund performance and Fund expenses (the “Lipper report”). The data also included an analysis of the Funds’ ratings on the AthenaInvest system (the “AthenaInvest data”) and a presentation on ICON’s investment model. AthenaInvest is an affiliate of the Adviser. The Board of Trustees met on August 4 and 19, 2011 to discuss the data. Management personnel discussed the data for and with those present. Included in the discussion was a briefing on the sales and marketing initiatives, the different classes of shares being offered by the Trust and efficiencies in connection with administering services to the Funds/various classes of shares.

The Independent Trustees were represented by independent legal counsel throughout the process. Prior to acting on the matter, the Independent Trustees met separately as a group in private sessions with their independent legal counsel to review and discuss the foregoing information. Based on these discussions, independent legal counsel and/or the Lead Independent Trustee also contacted management to request additional information and to discuss responses to questions raised during the process. In addition, the Independent Trustees received materials from their independent legal counsel discussing the legal standards applicable to their consideration of the agreement.

 

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In considering the nature, extent and quality of the services provided by the Adviser, the Board reviewed information relating to ICON’s operations and personnel. Among other things, the Adviser provided biographical information on its professional staff and descriptions of its organizational and management structure. In the course of their deliberations the Board evaluated, among other things, information relating to the investment philosophy, strategies and techniques used in managing each Fund, the qualifications and experience of ICON’s investment personnel, ICON’s compliance programs, ICON’s brokerage practices, including the extent to which the Adviser obtains research through “soft dollar” arrangements with the Funds’ brokerage, compliance reports on the foregoing, and the financial and non-financial resources available to provide services required under the Advisory Agreement.

During the discussion, the Lipper report and the AthenaInvest data were discussed and management personnel showed performance for each fund and discussed the factors affecting performance. Management noted that ICON modified the valuation methodology at the end of 2008 to better account for systemic risk. ICON implemented the modified valuation methodology in February 2009. During the discussion, management personnel noted that the markets continue to experience volatility and that when the markets are volatile, relative strength readings are also more volatile and less reliable It was also noted that volatility has affected ICON’s performance; that this had been the case for much of the last two years for the Funds; that poor quality stocks with low relative strength led the market whereas higher quality stocks with higher relative strength have not performed as well; that the market volatility and the relative strength component to our methodology have produced mixed results; and that many other value managers have had challenges in this market. The Adviser discussed its continuing assessment of its “investment model” - including steps taken to test the relative strength components of the system and methodology. Overall, the Board of Trustees concluded that the Adviser continues to believe the adjustments to the system have been functioning as intended; and that, notwithstanding that belief, the Adviser is constantly evaluating the system and will modify it as needed.

In connection with reviewing data bearing upon the nature, quality, and extent of services furnished by ICON to each Fund, the Board assessed data concerning ICON’s staffing, systems and facilities. The Board also assessed ICON’s non-Trust business to see if there are any initiatives that would dilute service to the Trust. The Board noted:

A.  That the breadth and the quality of investment advisory and other services being provided to each Fund is satisfactory, as evidenced in part by efforts to address and improve the performance record of each

 

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Fund when compared with the performance records of a peer group of comparable funds and markets in general;

B.  That the breadth and the quality of investment advisory and other services being provided to each Fund is satisfactory, as evidenced in part by the AthenaInvest data (ratings based on an assessment of fund strategy) reflects that all Funds are rated 3 or higher and that, unlike many other fund groups, ICON Funds has no fund rated 1 or 2 (where 1 is the lowest and 5 is the highest).

C.  That ICON has made significant expenditures in the past year and in prior years to ensure that it has the sophisticated systems and the highly trained personnel necessary for it to be able to continue to provide quality service to the Funds’ shareholders, including the dedication of substantial resources to ICON’s investment and trading departments;

D.  That the Board, after considering compliance reports and compliance initiatives undertaken during the year and conducting individual interviews with selected portfolio managers, is satisfied with the research, portfolio management, and trading services, among others, being provided by ICON to the Funds, and is charging fair, reasonable, and competitive fees; and

E.  The risks assumed by ICON in providing investment advisory services to each Fund including the capital commitments which have been made in the past and which continue to be made by ICON to ensure the continuation of the highest quality of service to the Trust is made with the recognition that the Trust’s advisory relationship with ICON be terminated at any time and must be renewed on an annual basis.

In considering the reasonableness of the fee payable to the Adviser for managing each Fund, the Board reviewed, among other things, data concerning other funds from the Lipper report, financial statements of the Adviser and an analysis of the profitability to the Adviser and its affiliates of their relationship with each Fund over various time periods, which analysis identified all revenues and other benefits received by the Adviser and its affiliates from managing each Fund, the costs associated with providing such services and the resulting profitability to the Adviser and its affiliates.

The Board considered the current and anticipated asset levels of each Fund and the willingness of the Adviser to waive fees and pay expenses of the Funds from time to time to limit the total expenses of the Funds. In this regard the Board discussed significantly reduced asset levels in each fund covered by the Advisory Agreements due to the tumultuous markets during the past three and a half years, to relative poor Fund performance, and to industry wide net-redemptions in reaction to the tumultuous markets. ICON’s

 

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ability to provide the services called for under the Advisory Agreements was assessed in light of current and projected asset levels. Fund expenses and expense ratios were also assessed in light of current and projected asset levels. The Board concluded that the Adviser has the resources necessary to provide the services called for under the Advisory Agreements; that profitability to the Adviser and its affiliates from their relationship with the Funds is not excessive; and that the Adviser is not realizing material benefits from economies of scale that would warrant adjustments to the fees for any Fund at this time. The Board of Trustees concluded that, in light of the nature, extent and quality of the services provided by the Adviser and the levels of profitability associated with providing these services, the fees charged by the Adviser under the Advisory Agreements to each Fund are reasonable.

In connection with assessing data bearing the fairness of fee arrangements, the Board used data from Lipper report concerning funds of similar size and funds of larger size, as well as data concerning ICON’s other clients and noted that:

A.  the advisory fee structures of the Funds were considered in comparison with advisory fees and expense ratios of other similarly managed funds as set forth in the comparative data;

B.  expense ratios for 10 of the 17 Funds are above average, 4 are equal to the median, 2 are below both the average and the median, and 1 is equal to the average.;

C.  in 16 of the 17 Funds, the assets under management are significantly below either the average or the median and that when the fund size approaches industry average our expenses also approach or are less than industry average.;

D.  ICON has contractually agreed to impose expense limitations on certain Funds at a cost to ICON;

E.  the advisory and other fees payable by the Funds to ICON are essentially fees which would be similar to those which would have resulted solely from “arm’s-length” bargaining, and may well be lower than fees arrived at solely from such arm’s-length negotiation;

F.  the fees paid to ICON for managing other institutional accounts (such as pension plans) are not lower than the fees paid by similarly-managed funds; indeed, some institutional accounts have been encouraged to, and have in fact used, the Funds Z share class, but to the extent some fees of those accounts are lower, the reasons why such accounts are less costly for ICON to manage; and

 

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G.  ICON has contractually committed to break points in its fees so that economies of scale could be realized as a Fund grows in assets, for the benefit of Fund shareholders.

In connection with the direct and indirect benefits to ICON from serving as the Funds’ adviser, the Board discussed and noted that:

A.  ICON benefits from serving directly or through affiliates as the principal underwriter and administrative agent for the Funds; that services provided by ICON and its affiliates to the Funds are satisfactory, and that fees derived from providing the services are competitive and reasonable; and

B.  ICON receives research assistance (primarily in the form of data) from the use of soft dollars generated from Fund portfolio transactions; that such research assists ICON in providing quality advisory services; that Trust and Adviser compliance personnel continuously evaluate and report on the soft-dollar arrangements and related costs; and that the Board concluded that the arrangements are consistent with Fund brokerage practices and benefit the Funds and their shareholders.

Based on these considerations, among others, the Board, including a majority of the Independent Trustees, concluded that: 1) the continuation of the Advisory Agreement was in the best interests of each Fund and its shareholders, 2) the services to be performed under the Advisory Agreement were required for the operation of the Funds, 3) the advisory services were satisfactory to the Funds in the past, and 4) the fees for the advisory services and other benefits from the relationship with the Trust received by ICON were consistent with fees paid by similar funds, other clients of ICON, reasonable in light of the comparative data, and within the range of what would have been negotiated at arm’s length in light of all the circumstances.

Supplemental Tax Information

For corporate shareholders, none of the total ordinary income dividends paid during the fiscal year ended September 30, 2011, qualified for the corporate dividends received deduction.

For the fiscal year ended September 30, 2011, the following funds paid qualified dividend income:

 

Fund   Amount  

ICON Asia-Pacific Region Fund

    -   

ICON Europe Fund

    100

ICON International Fund

    100

 

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The Funds had no long-term capital gain distributions qualifying for the maximum 15% income tax rate for individuals.

Portfolio Holdings

Information related to the 10 largest portfolio holdings of each Fund is made available at www.iconfunds.com within approximately 10 business days after month-end. Additionally, a complete list of each Fund’s holdings is made available approximately 30 days after 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 Securities and Exchange Commission (the “Commission”) 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 summarized description of the policies and procedures the ICON Funds use to vote proxies is available free of charge at www.iconfunds.com or by calling 1-800-764-0442.

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 free of charge at www.iconfunds.com or on the Commission’s website at www.sec.gov.

Cost Basis Information

Effective January 1, 2012, federal law requires mutual fund companies to maintain and report a shareholder’s cost basis by tax lot, gain/loss information and holding period of covered shares to the Internal Revenue Service on Form 1099. Covered shares are mutual fund shares acquired on or after January 1, 2012. A fund is not required to maintain and report information for shares not deemed as covered.

The new law requires each fund to elect a default tax identification methodology in order to perform the required reporting. As a result, the Trust has chosen Average Cost as its default tax identification methodology. This is the method each Fund will use. However, at the time of purchase or upon the sale of covered shares, shareholders may choose a different tax identification method. Furthermore, if you purchase shares through a financial intermediary, please contact the intermediary to find out what default tax identification method they will use. We recommend that you consult your tax adviser to determine which tax identification methodology best suits your individual tax situation.

 

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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.iconfunds.com or by calling 1-800-764-0442. Please read the prospectus carefully before investing.

ICON Distributors, Inc., Distributor.

 

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IMPORTANT NOTICE TO ALL SHAREHOLDERS OF THE ICON FUNDS:

The Trustees of the ICON Funds (the “Trust”) have amended the ICON Funds Master Trust Agreement dated September 19, 1996 as previously amended (the “MTA”), to expressly state that the Trustees have absolute power to reclassify shares of a Fund, or close a class of shares by merging or consolidating one class with another class of shares within a Fund, without seeking shareholder approval. The amendments state that this Trustee power is subject to the same limitation applicable to any Trustee amendment by providing that “the reclassification, merger or consolidation does not adversely affect the rights of the shareholders.” The amendments are focused on the classes of shares within a Fund, not the Fund itself. A copy of the Amended and Restated Master Trust Agreement (the “Amended and Restated MTA”), marked to show changes can be viewed at: www.iconfunds.com.

As provided in the MTA, the Trustees have authorized the offering of shares of seventeen Funds (sometimes referred to as series or Sub-Trusts). The Trustees have also authorized the offering of classes of shares of the Funds with an expense allocation plan. The expense allocation plan provides that the expenses of the respective share classes are: costs and charges that correspond to the differing distribution and service expenses of the sales and marketing channels used by investors to invest in the Funds; filing and/or registration fees charged by most states for offering or selling each class; and other class specific costs.

During the past year and a half, ICON management and the Trustees have discussed methods to reduce existing share class expenses and to increase Trust assets. ICON management proposed streamlining the existing class structure, which proposal called for a change in the number and type of share classes offered by certain of the ICON Funds. For example, certain ICON Diversified Funds have two similar classes: Class I & A. ICON management proposed merging Class I into Class A. Class A shares are strategically flexible because they can be marketed in both a load structure on a commission platform and a load-waived structure on no-load or NTF platforms. A similar issue exists with Class Z and S shares, where the primary difference between the two classes is Class S shares can be sold on platforms. ICON Management proposed a structure where, in general, each ICON Fund would have three share classes: Class A, C and S. Management proposed merging Class I with Class A, Class S with Class Z and renaming Class Z to Class S with all the attending rights of Class S. For information

 

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concerning share class structure, see Explanation of Share Classes at: www.iconfunds.com. The list of currently authorized classes of shares is also set forth in Section 4.1 of the Amended and Restated MTA.

The Trustees and their representatives questioned and debated whether the Trustees had the power to reclassify shares of a Fund, or close a class of shares by merging or consolidating one class with another class of shares within a Fund, without shareholder approval. The MTA gave shareholders limited voting rights. Shareholders can vote on an amendment to the MTA only if Section 7.3 of the MTA requires it; and, Section 7.3 has not required shareholder approval to reclassify shares of a Fund, or close a class of shares by merging or consolidating one class with another class of shares within a Fund.

On the other hand, the Trustees have the implied power and authority to merge or consolidate classes, but no expressed power. Section 3.2 of the MTA gives the Trustees all the powers necessary to conduct the business of the Trust. The Trustees have had specific authority to establish classes of shares or divide the shares of any Sub-Trust. The Trustees decided to exercise their specific power and amend the MTA to state explicitly that that they can merge or consolidate share classes without shareholder approval. Section 7.3 of the MTA specifically provides the Trustees with the power to amend the MTA, without shareholder approval, whether or not related to the rights of shareholders, as long as the amendment does not adversely affect the rights of any shareholder and is not in contravention of applicable law.

Based on the above, the Trustees believe it was unnecessary to seek shareholder approval to amend the MTA to clarify the Trustees’ powers. Never the less, ICON management requested outside cost estimates for seeking shareholder approval. Costs estimates ranged between $450,000 and $550,000. The Trustees rejected spending shareholder assets to seek approval.

Critically, no shareholder would be adversely affected under the proposed amendment. The dollar value of a shareholder’s interest in the eliminated class will be the same as the dollar value of that shareholder’s interest in the substitute class. It is, for all intents and purposes, only a reclassification of shares. If a shareholder does not like the new share class for any reason, a shareholder can simply redeem his/her shares.

Please read the Amended and Restated MTA carefully. If you have any questions, please call us at 1-800-764-0442, or email the ICON Funds at: info@iconadvisers.com.

 

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ICON FUNDS PRIVACY INFORMATION

 

FACTS  

WHAT DOES ICON DO

WITH YOUR PERSONAL INFORMATION?

 
Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
 
What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

n  Social Security number and account balances

 

n  income and transaction history

 

n  checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 
How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons ICON chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does ICON share?   Can you limit this sharing?

For our everyday business purposes —

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

  Yes   No

For our marketing purposes —

to offer our products and services to you

  No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes —

information about your transactions and experiences

  No   We don’t share

For our affiliates’ everyday business purposes —

information about your creditworthiness

  No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 1-800-764-0442 for the ICON Funds and 1-800-828-4881 for ICON Advisers, Inc. and ICON Distributors, Inc.

 

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Page 2    

 

Who we are    
Who is providing this notice?   ICON Funds, ICON Advisers, Inc., and ICON Distributors, Inc. (collectively “ICON”)
What we do    
How does ICON protect my personal information?  

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

 

Contracts with our service providers require them to restrict access to your non-public personal information, and to maintain physical, electronic and procedural safeguards against unintended disclosure.

How does ICON collect my personal information?  

We collect your personal information, for example, when you

 

n  open an account or enter into an investment advisory contract

 

n  provide account information or give us your contact information

 

n  make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

n  sharing for affiliates’ everyday business purposes — information about your creditworthiness

 

n  affiliates from using your information to market to you

 

n  sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

Definitions    
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

n  Our affiliates include financial companies such as ICON Funds, ICON Advisers, Inc., and ICON Distributors, Inc.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

n  Nonaffiliates we share with can include financial companies such as custodians, transfer agents, registered representatives, financial advisers and nonfinancial companies such as fulfillment, proxy voting, and class action service providers

Joint marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

n  ICON doesn’t jointly market

 

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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, 12th Floor
Greenwood Village, CO 80111
On the Internet    www.iconfunds.com
By E-Mail    info@iconadvisers.com

 

LOGO


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LOGO

2011 ANNUAL REPORT

ICON SECTOR FUNDS

INVESTMENT UPDATE

ICON Consumer Discretionary Fund

ICON Consumer Staples Fund

ICON Energy Fund

ICON Financial Fund

ICON Healthcare Fund

ICON Industrials Fund

ICON Information Technology Fund

ICON Materials Fund

ICON Telecommunication & Utilities Fund

 

LOGO

1-800-764-0442 | www.iconfunds.com

 

AR-SECT-11 K21580


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LOGO

You can now sign up for electronic delivery of ICON Fund shareholder reports, including prospectuses, annual reports, semiannual reports and proxy statements.

When these materials are available, you will receive an email from ICON with instructions on how to view the documents. Statements, transaction confirmations and other documents that are not available online will continue to be sent to you by U.S. mail.

Visit ICON’s website at www.iconfunds.com to learn more and sign up.

You may change or cancel your participation in eDelivery by visiting www.iconfunds.com, or you can request a hard copy of any of the materials free of charge by calling ICON Funds at 1-800-764-0442.

 

 

1-800-764-0442    •     www.iconfunds.com


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TABLE OF CONTENTS

 

About This Report (Unaudited)

     2   

Message from ICON Funds (Unaudited)

     5   

Management Overview (Unaudited) and Schedules of Investments

  

ICON Consumer Discretionary Fund

     7   

ICON Consumer Staples Fund

     13   

ICON Energy Fund

     18   

ICON Financial Fund

     24   

ICON Healthcare Fund

     31   

ICON Industrials Fund

     38   

ICON Information Technology Fund

     43   

ICON Materials Fund

     50   

ICON Telecommunication & Utilities Fund

     56   

Financial Statements

     62   

Financial Highlights

     80   

Notes to Financial Statements

     86   

Report of Independent Registered Public Accounting Firm

     104   

Six Month Hypothetical Expense Example (Unaudited)

     105   

Board of Trustees and Fund Officers (Unaudited)

     109   

Other Information (Unaudited)

     112   

Important Notice to Shareholders (Unaudited)

     119   


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ABOUT THIS REPORT (UNAUDITED)

Historical Returns

All total returns mentioned in this Report account for the change in a Fund’s per-share price and the reinvestment of any dividends, capital gain distributions and adjustments for financial statement purposes. 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 may have reimbursed certain fees or expenses of some of the Funds. If not for these reimbursements, performance would have been lower. Fund results shown, unless otherwise indicated, are at net asset value. If a sales charge (maximum 5.75%) had been deducted, results 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.iconfunds.com for performance results current to the most recent month-end.

Portfolio Data

This Report reflects ICON’s views, opinions and portfolio holdings as of September 30, 2011, 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, industry or sector. Each Fund’s holdings as of September 30, 2011 are included in each Fund’s Schedule of Investments.

According to ICON, value investing is an analytical approach to investing that employs various factors, including projecting earnings growth estimates, in an effort to determine whether securities are over- or underpriced relative to ICON’s estimates of their intrinsic value. Value investing involves risks and uncertainties and does not guarantee better performance or lower costs than other investment methodologies. ICON’s value-to-price ratio (“V/P”) is a ratio of intrinsic value, as calculated using ICON’s proprietary valuation

 

2   ABOUT THIS REPORT


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methodology, of a broad range of domestic and international securities within ICON’s system as compared to the current market price of those securities. The ICON system relies on the integrity of financial statements released to the market as part of our analysis.

This Report contains statements regarding industry or sector themes, new market themes, investment outlook, relative strength, value-to-price ratios, and investment team expectations, beliefs, goals and the like that are based on current expectations, recent individual stock performance relative to current market prices, estimates of company values and other information supplied to the market by the companies we follow. Words such as “expects,” “suggests,” “anticipates,” “targets,” “goals,” “value,” “intrinsic value,” “indicates,” “believes,” “considers,” “estimates,” variations of such words and similar expressions are intended to identify forward looking statements, which are not statements of historical fact. Forward looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. These risks and uncertainties are based on a number of important factors, including, among others: stock price fluctuations; the integrity and accuracy of historical and projected financial and other information supplied by companies to the public or assumptions based on such information supplied; interest rates; bond yields; future earnings growth rates; the risks noted in this Report and other factors beyond the control of our investment team but used by the investment team to influence their assumptions. Therefore, actual outcome may differ materially from what is expressed in such forward looking statements.

There are risks associated with mutual fund investing, including the loss of principal. The likelihood of loss may be greater if you invest for a shorter period of time. 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. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, do not exist in foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers.

The prospectus and statement of additional information contain this and other information about the Funds and are available by visiting

 

ABOUT THIS REPORT     3   


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www.iconfunds.com or calling 1-800-764-0442. Please read the prospectus and statement of additional information carefully.

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”) Composite 1500 Index (“S&P 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.

 

 

Total returns for the S&P 1500 Consumer Discretionary Index and the S&P 1500 Industrials Index include the reinvestment of dividends and capital gain distributions beginning on January 1, 2002. Index returns with reinvested dividends and distributions are unavailable prior to that date.

Index returns and statistical data included in this Report are provided by FactSet Research Systems.

Financial Intermediary

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may influence the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.

 

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MESSAGE FROM ICON FUNDS

Dear Shareholders,

As valuation investors, we look for quality companies priced below our estimate of intrinsic value. We will buy stocks we believe are “on sale” when investors get distracted by a particular news story or headline and worry about its potential impact on the economy in general and the markets in particular. When this happens, stocks are temporarily priced based on worst-case scenario projections, not on their fundamentals. As concerns subside, prices often move up toward the stock’s intrinsic value and may even exceed ICON’s estimate of value when excessive worry is replaced with excessive optimism. Implementing our valuation strategy does not require an information edge; it simply requires discipline. Our system needs discipline to filter out news headlines, concentrate on value, and, frequently, buy when most are selling and sell when most are buying. ICON’s discipline requires also the willingness to take strong industry and sector tilts. We see industries and sectors becoming overpriced and underpriced through cycles as investors change their views of the economy and migrate around the universe of stocks.

In spite of a volatile 12 months, we believe the stock market is in a multi-year recovery from the financial crisis and recession of 2008-2009. Stocks were generally priced far below our estimate of their fair value when the market hit its recent low in March 2009, but their ascent toward fair value has been choppy and severely interrupted at least twice; first in the summer of 2010 and then again during the summer of 2011. Both times, sharp drops in stock prices were precipitated by concerns over the European sovereign debt crisis. Investors were especially wary of the situation in Greece, but also, to a lesser extent, investors worried about the economies of Ireland, Spain and Italy. We thought these concerns were excessive in 2010 and we continue to believe the concern is unwarranted. We expect fears to subside and, when that happens, we believe stocks will resume their recovery path.

The interruptions experienced during the summers of 2010 and 2011 have been frustrating for value investors like ICON, as we see a very different world than many other investors. Where others see a negative macroeconomic outlook, we see positive earnings and solid company fundamentals. When 2011 second quarter earnings were announced, companies in the S&P 500 Index reported earnings that were, on average, 16.24% higher than a year earlier. In fact, 75% of those companies reported earnings that exceeded analysts’ estimates by 4.67% on average. This growth in earnings is more robust than the earnings we saw coming out of any of the previous four recessions (that is, 1974, 1982, 1992 and 2001 recessions).

 

MESSAGE FROM ICON FUNDS     5   


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Strong earnings and a low interest rate environment contribute to what we believe are attractive valuations, but skittish investors, concerned with debt problems in Europe, continue to shy away from equities.

We have seen investors turn their backs on solid fundamentals many times before. Historically, however, investors have come to gradually embrace these fundamentals and stock prices generally rise again to meet intrinsic value. In 1990, 1998 and 2010, for example, the market experienced a decline similar in magnitude and duration to that seen during the summer of 2011. Each market bottom led to anxiety over a worsening recession, but, months later, these fears proved unfounded. Stock prices rebounded and resumed their prior upward path. As we head into a new fiscal year, we are anticipating a similar rebound. Having two major market interruptions in two consecutive summers is unusual, unsettling and has admittedly made it difficult for investors to stay the course to recovery. The volatile environment also presented problems for money managers like ICON who struggled with abrupt and extreme industry and sector theme reversals.

As fiscal year 2011 comes to an end, we still believe cyclical, economically sensitive industries are the long term leaders for this multi-year recovery. Unfortunately, these same industries can be subject to dramatic market swings when investors, worried about the economy, panic and jump out of the market. We believe the old Wall Street adage still applies: “Stocks climb a wall of worry.” The climb back from the recession and financial crisis of 2008 and 2009 has been and will continue to be riddled with worry.

As always, we remain focused on value and company fundamentals as we try to filter out the conjecture and emotions that typically contribute to market volatility. Experienced sailors will tell someone who is seasick: “Don’t look at the waves; look at the horizon.” Lately, it seems, most investors have been focused on the waves. At ICON, we like to focus on a horizon that includes quality companies, with growing earnings, priced far below our estimate of their fair value. We will continue to stay this course.

Yours truly,

LOGO

Craig T. Callahan, DBA

Chairman of the Board of Trustees and President of the Adviser

 

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MANAGEMENT OVERVIEW

ICON CONSUMER DISCRETIONARY FUND

  

Class S

Class C

Class A

  

ICCCX

ICCEX

ICCAX

 

Q. How did the Fund Perform relative to its benchmark?

 

A. The ICON Consumer Discretionary Fund outperformed both its sector-specific benchmark and its broad-based benchmark for the fiscal year ended September 30, 2011. The Fund’s Class S shares rose 10.98%, while the S&P 1500 Consumer Discretionary Index rose 5.40 % and the broad S&P Composite 1500 Index returned 0.92% during the fiscal year. The Fund’s Class A shares returned 10.48% (and 4.17% with maximum sales charge) during the same period and the Fund’s Class C shares returned 10.10% for the fiscal year (9.10% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors influenced the Fund’s relative performance during the period?

 

A. The Consumer Discretionary sector showed gains in spite of a difficult economic environment. The global debt crisis not only weighed on equity markets worldwide, but also led to considerable market volatility. Between October 1, 2010 and April 30, 2011, the S&P 1500 rose 21.63%. In the wake of recessionary concerns, stubbornly high unemployment and potential sovereign debt defaults in Portugal, Spain, Italy and Greece, the S&P 1500 Index plummeted 11.23% in just two weeks between July 25, 2011 and August 5, 2011. Volatility and negative investor sentiment notwithstanding, the S&P 1500 eked out a small gain of 0.92%. As noted above, Consumer Discretionary stocks fared even better, rising 5.40%.

Perhaps surprisingly, and in spite of investors’ evident skittishness, consumer confidence held steady during the fiscal year. The Consumer Board Confidence Index, which measures and attempts to quantify consumer confidence in the economy, ended the 12-month period at 45.4 - just slightly below its reading at the beginning of the period of 48.6. The Index remained well above its all time low of 25.3, reached on February 28, 2009, just before the U.S. equity markets hit a multi-year low following the collapse of the global financial system. According to recent estimates, consumer spending comprises approximately 70% of U.S. gross domestic product. The stability of the Consumer Board Confidence Index may help explain why stocks in this sector managed to rise moderately over the period.

 

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Q. How did the Fund’s composition affect performance?

 

A. The Fund’s overweight position in the apparel retail industry benefitted Fund performance. The Fund had an average apparel retail weight of approximately 18% versus 5.8% in its sector-specific benchmark. This overweighting accounted for 1.6% of the Fund’s outperformance. The Fund’s overweight position in footwear (approximately 11.3% versus 2.9% in its sector-specific benchmark) likewise accounted for approximately 1.5% of the Fund’s outperformance. The Fund’s underweighting in certain industry laggards also proved beneficial. Homebuilding, for example, was down 26% during the fiscal year. While the industry made up 1.3% of the benchmark, the Fund held no positions in this industry.

The Fund’s underweight positions in both the internet retail and apparel accessories & luxury goods industries negatively impacted Fund performance. The Fund’s underweight internet retail position detracted 1.2% from benchmark relative performance. The Fund’s underweight position in the apparel accessories & luxury goods industry detracted .50%. The restaurant industry proved to be the single worst detractor to Fund performance, accounting for a 2% drag relative to the Fund’s benchmark.

 

Q. What is your investment outlook for the Consumer Discretionary sector?

 

A. As we head into the new fiscal year, the Consumer Discretionary sector looks even more attractive under the ICON system than it did 12 months ago. As of September 30, 2011, the sector has a V/P of 1.43, suggesting significant upside potential. We see opportunities throughout the Consumer Discretionary sector and remain overweight the cable & satellite, footwear, apparel retail and apparel accessories & luxury goods industries. We believe negative investor sentiment will give way to an improved economy in the next 12 months and we hope to take advantage of any market rally.

 

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ICON Consumer Discretionary Fund

Industry Composition

September 30, 2011

 

Apparel Retail

    22.9%   

Cable & Satellite

    17.7%   

General Merchandise Stores

    14.2%   

Footwear

    10.9%   

Automotive Retail

    6.5%   

Home Improvement Retail

    6.4%   

Movies & Entertainment

    4.5%   

Distributors

    4.1%   

Restaurants

    2.1%   

Broadcasting

    1.9%   

Specialty Stores

    1.6%   

Apparel, Accessories & Luxury Goods

    1.5%   

Other Industries (each less than 1%)

    1.4%   
 

 

 

 
    95.7%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Consumer Discretionary Fund

Sector Composition

September 30, 2011

 

Consumer Discretionary

    95.7%   
 

 

 

 
    95.7%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

MANAGEMENT OVERVIEW     9   


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ICON Consumer Discretionary Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
   

1

Year

   

5

Years

   

10

Years

    Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Consumer Discretionary
Fund - Class S

    7/9/97        10.98%        0.35%        5.08%        2.92%        2.02%        1.74%   

S&P 1500 Consumer Discretionary Index

            5.40%        1.29%        4.79%        4.99%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        3.84%        N/A        N/A   

ICON Consumer Discretionary
Fund - Class C

    9/30/10        10.10%        N/A        N/A        10.07%        3.02%        2.74%   

S&P 1500 Consumer Discretionary Index

            5.40%        N/A        N/A        5.40%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

ICON Consumer Discretionary
Fund - Class A

    9/30/10        10.48%          N/A          N/A        10.45%        2.27%        1.99%   

ICON Consumer Discretionary
Fund - Class A (including maximum sales charge
of 5.75%)

    9/30/10        4.17%          N/A          N/A        4.16%        2.27%        1.99%   

S&P 1500 Consumer Discretionary Index

            5.40%          N/A          N/A        5.40%        N/A        N/A   

S&P Composite 1500 Index

            0.92%          N/A          N/A        0.92%        N/A        N/A   

Past performance is not a guarantee of future results. The performance of the S&P 1500 Consumer Discretionary Index includes the reinvestment of the dividends and capital gain distributions beginning on January 1, 2002. Additional information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

10   MANAGEMENT OVERVIEW


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ICON Consumer Discretionary Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ inception date of 7/9/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

 

MANAGEMENT OVERVIEW     11   


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ICON CONSUMER DISCRETIONARY FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (95.7%)   
  9,600      Aaron’s, Inc.   $ 242,400   
  13,800      Advance Auto Parts, Inc.     801,780   
  14,900      Ascena Retail Group, Inc.     403,343   
  4,400      AutoZone, Inc.     1,404,436   
  46,000      Big Lots, Inc.     1,602,180   
  21,200      Buckle, Inc.(a)     815,352   
  161,200      Comcast Corp., Class A     3,369,080   
  10,700      Darden Restaurants, Inc.     457,425   
  5,100      Deckers Outdoor Corp.     475,626   
  32,600      DIRECTV, Class A     1,377,350   
  17,500      Discovery Communications, Inc., Class A     658,350   
  29,500      Gap, Inc.     479,080   
  18,300      Genuine Parts Co.     929,640   
  19,200      Gildan Activewear, Inc.(a)     496,128   
  15,400      Guess?, Inc.     438,746   
  18,000      H&R Block, Inc.     239,580   
  21,600      Home Depot, Inc.     709,992   
  19,149      JOS A. Bank Clothiers, Inc.     892,918   
  76,400      Lowe’s Cos., Inc.     1,477,576   
  2,900      McDonald’s Corp.     254,678   
  21,620      Nike, Inc., Class B     1,848,726   
  18,100      Pool Corp.     473,858   
Shares or Principal Amount   Value  
   
  10,800      Ross Stores, Inc.   $ 849,852   
  41,300      Staples, Inc.     549,290   
  66,600      Target Corp.     3,266,064   
  20,800      Time Warner Cable, Inc.     1,303,536   
  63,500      TJX Cos., Inc.     3,522,345   
  19,100      Urban Outfitters, Inc.(a)     426,312   
  50,900      Walt Disney Co.     1,535,144   
  42,300      Wolverine World Wide, Inc.     1,406,475   
   

 

 

 
 
 
Total Common Stocks
(Cost $33,873,896)
    32,707,262   
 
 
Collateral for Securities on
Loan (3.9%)
 
  1,322,350      State Street Navigator Prime Portfolio     1,322,350   
   

 

 

 
 
 
 
Total Collateral for
Securities on Loan
(Cost $1,322,350)
    1,322,350   
  Short-Term Investment (3.9%)   
$ 1,320,613      State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/11     1,320,613   
   

 

 

 
 
 
Total Short-Term Investments
(Cost $1,320,613)
    1,320,613   
 
 
Total Investments 103.5%
(Cost $36,516,859)
    35,350,225   
 
 
Liabilities Less
Other Assets (3.5)%
    (1,183,985
   

 

 

 
  Net Assets 100.0%   $ 34,166,240   
   

 

 

 
 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

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MANAGEMENT OVERVIEW

ICON CONSUMER STAPLES FUND

  

Class S

Class C

Class A

  

ICLEX

ICLCX

ICRAX

 

Q. How did the Fund Perform relative to its benchmark?

 

A. The ICON Consumer Staples Fund underperformed its sector-specific benchmark for the period. The Fund’s Class S shares rose 7.64%, while the benchmark S&P 1500 Consumer Staples Index rose 10.65%. However the Fund outperformed its broad-based benchmark, the S&P Composite 1500 Index, which returned 0.92% over the course of the fiscal year. The Fund’s Class A shares returned 8.52% (and 2.31% with maximum sales charge) during the same period and the Fund’s Class C shares returned 6.65% for the fiscal year (5.65% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors influenced the Fund’s relative performance during the period?

 

A. The fiscal year was marked by concern over macro economic factors. A stubbornly high unemployment rate in the U.S., ongoing malaise in the domestic housing market, worries over a potential sharp decline in consumer spending and Europe’s sovereign debt crisis weighed heavily on investors.

The resulting “risk on, risk off” trading led to wide swings in the equity indices. Good economic news generally had investors rushing in to buy stocks while bad economic data sent investors rushing out of the global equity markets. This choppy investment environment can prove challenging for ICON’s value-driven investment methodology.

If one theme emerged during this volatile year, we would describe it as a flight to safety. The uncertainty surrounding worldwide economic conditions led investors to steady, stable, supposedly “recession proof” or “defensive” industries, many of which make up the Consumer Staples sector. These include the household products, soft drinks and food distributors industries, all of which were held by the Fund.

The Consumer Staples sector was the second best performing of the 10 sectors tracked by S&P, just behind Utilities.

 

MANAGEMENT OVERVIEW     13   


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Q. How did the Fund’s composition affect performance?

 

A. The Fund’s overweight positions in the movies & entertainment and distillers & vintners industries contributed about 2.0% to positive relative performance.

In contrast, the Fund’s drug retail and agricultural products industries holdings detracted from the Fund’s relative performance. The Fund’s overweight positions in these two industries, both of which had negative returns, accounted for an approximately 1.9% decline in the Fund’s relative performance.

 

Q. What is your investment outlook for the Consumer Staples sector?

 

A. As we enter the new fiscal year, the Consumer Staples sector is trading at a deep discount to our estimate of the sector’s fair value. We believe this sector could rally in the coming months and, therefore, we remain largely invested. We are not aggressively over or underweight any particular industry since our system indicates virtually all industries in this sector are undervalued. We will continue to use our systematic approach to investing in an effort to uncover sector bargains.

 

ICON Consumer Staples Fund

Industry Composition

September 30, 2011

 

Household Products

    22.1%   

Soft Drinks

    20.7%   

Packaged Foods & Meats

    17.1%   

Tobacco

    16.6%   

Hypermarkets & Super Centers

    10.1%   

Drug Retail

    3.1%   

Food Distributors

    2.9%   

General Merchandise Stores

    2.3%   

Food Retail

    1.7%   

Distillers & Vintners

    1.2%   

Agricultural Products

    1.1%   

Personal Products

    0.8%   
 

 

 

 
    99.7%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Consumer Staples Fund

Sector Composition

September 30, 2011

 

Consumer Staples

    97.4%   

Consumer Discretionary

    2.3%   
 

 

 

 
    99.7%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

14   MANAGEMENT OVERVIEW


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ICON Consumer Staples Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
   

1

Year

    5
Years
    10
Years
    Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Consumer Staples
Fund - Class S

    5/9/97        7.64%        2.65%        6.32%        7.13%        1.54%        1.50%   

S&P 1500 Consumer Discretionary Index

            5.40%        1.29%        4.79%        5.51%        N/A        N/A   

S&P 1500 Consumer Staples Index

            10.65%        6.51%        6.66%        6.00%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        4.51%        N/A        N/A   

ICON Consumer Staples
Fund - Class C

    9/30/10        6.65%        N/A        N/A        6.63%        2.54%        2.50%   

S&P 1500 Consumer Discretionary Index

            5.40%        N/A        N/A        5.40%        N/A        N/A   

S&P 1500 Consumer Staples Index

            10.65%        N/A        N/A        10.65%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

ICON Consumer Staples
Fund - Class A

    9/30/10        8.52%        N/A        N/A        8.49%        1.79%        1.75%   

ICON Consumer Staples Fund - Class A (including maximum sales charge of 5.75%)

    9/30/10        2.31%        N/A        N/A        2.31%        1.79%        1.75%   

S&P 1500 Consumer Discretionary Index

            5.40%        N/A        N/A        5.40%        N/A        N/A   

S&P 1500 Consumer Staples Index

            10.65%        N/A        N/A        10.65%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

Past performance is not a guarantee of future results. The performance of the S&P 1500 Consumer Discretionary Index includes the reinvestment of the dividends and capital gain distributions beginning on January 1, 2002. Additional information about these performance results and the comparative indexes can be found in the About This Report section. The Adviser has agreed to limit certain Fund expenses; without

 

MANAGEMENT OVERVIEW     15   


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these limitations, returns would have been lower. The limitation provisions may be terminated in the future.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

ICON Consumer Staples Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ 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.

 

16   MANAGEMENT OVERVIEW


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ICON CONSUMER STAPLES FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (99.7%)   
  39,900      Altria Group, Inc.   $ 1,069,719   
  9,100      Andersons, Inc.     306,306   
  5,700      Archer-Daniels-Midland Co.     141,417   
  8,400      Avon Products, Inc.     164,640   
  9,700      Campbell Soup Co.     313,989   
  22,800      Coca-Cola Co.     1,540,368   
  17,900      Coca-Cola Enterprises, Inc.     445,352   
  11,500      Colgate-Palmolive Co.     1,019,820   
  13,700      Constellation Brands, Inc., Class A     246,600   
  2,400      Corn Products International, Inc.     94,176   
  8,400      CVS Caremark Corp.     282,072   
  10,100      Dr. Pepper Snapple Group, Inc.     391,678   
  18,500      General Mills, Inc.     711,695   
  7,200      HJ Heinz Co.     363,456   
  16,800      Hormel Foods Corp.     453,936   
  6,000      J.M. Smucker Co.     437,340   
  15,200      Kellogg Co.     808,488   
  17,900      Kimberly-Clark Corp.(a)     1,271,079   
  10,500      Kraft Foods, Inc., Class A     352,590   
  15,500      Kroger Co.     340,380   
  4,800      Lorillard, Inc.     531,360   
Shares or Principal Amount   Value  
   
  2,200      McCormick & Co., Inc.   $ 101,552   
  30,800      PepsiCo, Inc.     1,906,520   
  29,300      Philip Morris International, Inc.     1,827,734   
  36,100      Procter & Gamble Co.     2,280,798   
  11,700      Sysco Corp.     303,030   
  9,600      Target Corp.     470,784   
  40,300      Wal-Mart Stores, Inc.     2,091,570   
  10,900      Walgreen Co.     358,501   
   

 

 

 
 

 

Total Common Stocks

(Cost $20,584,837)

    20,626,950   
 
 
Collateral for Securities on
Loan (0.2%)
 
  42,195      State Street Navigator Prime Portfolio     42,195   
   

 

 

 
 
 

 

Total Collateral for Securities
on Loan

(Cost $42,195)

    42,195   
  Short-Term Investment (7.7%)   
$ 1,592,203      State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/11     1,592,203   
   

 

 

 
 

 

Total Short-Term Investments

(Cost $1,592,203)

    1,592,203   
 
 
Total Investments 107.6%
(Cost $22,219,235)
    22,261,348   
 
 
Liabilities Less Other Assets
(7.6)%
    (1,568,571
   

 

 

 
  Net Assets 100.0%   $ 20,692,777   
   

 

 

 
 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

SCHEDULE OF INVESTMENTS     17   


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MANAGEMENT OVERVIEW

ICON ENERGY FUND

  

Class S

Class C

Class A

  

ICENX

ICEEX

ICEAX

 

Q. How did the Fund perform relative to its benchmarks?

 

A. For the fiscal year ended September 30, 2011, the ICON Energy Fund returned 0.8%, lagging its sector-specific benchmark, the S&P 1500 Energy Index, which gained 7.13%, and its broad benchmark, the S&P Composite 1500 Index, which rose 0.92%. The Fund’s Class A shares returned 0.49% (and -5.29% with maximum sales charge) during the same period and the Fund’s Class C shares returned -0.23% for the fiscal year (-1.23% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. While Fund returns were in-line with the broad benchmark, the Fund experienced significant volatility over the course of the fiscal year. The price of oil, measured by West Texas Intermediate Crude, was partially responsible for this volatility. Unrest in the Middle East, notably discord in Egypt, Syria and Libya, led to concerns over distribution. Meanwhile, the sovereign debt crisis in Europe resulted in the paring back of global economic growth estimates. Crude prices saw dramatic swings during the last 12-months, ranging between a high of $113.93 per barrel on April 29, 2011 and a low of $79.20 per barrel on September 30, 2011 - very close to where crude prices sat when the fiscal year began.

The Fund’s use of options negatively impacted performance. In December 2010, concerned about a possible selloff in the sector, the Fund purchased put options in the hope of paring potential losses. The options’ value eroded, however, as the Fund’s holdings rose an additional 18% between December 15, 2010 and April 29, 2011. On the other hand, the options contributed positively to performance as the market declined after April 29, 2011. Net, however, this positive contribution was not enough to offset the losses sustained prior to that date and, overall, the Fund’s use of derivatives was responsible for nearly a 1% drag on performance.

While the price of oil declined over the fiscal year, the crack spread (that is, the difference between the price of crude oil and the petroleum products extracted from the crude) rose sharply. The Gulf Coast 3:2:1 benchmark, which measures the crack spread, gained over 275% between October 1, 2010 and September 30, 2011. The rise in the crack spread

 

18   MANAGEMENT OVERVIEW


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saw a corresponding rise in the profit margins of many companies in the oil & gas refining & marketing industry.

 

Q. How did the Fund’s composition affect performance?

 

A. The Fund’s oil & gas refining & marketing holdings contributed positively to relative performance. Over the course of the fiscal year the Fund held a nearly 6% position in this industry, significantly overweight the roughly 2% position reflected in the sector-specific benchmark. The Fund’s oil & gas refining & marketing holdings were up around 32% over the last 12-months. Unfortunately, these gains were not sufficient to offset the relative underperformance created by the Fund’s integrated oil & gas industry holdings. Moreover, the Fund’s underweight position in Exxon Mobil negatively impacted performance. Exxon Mobil had a total return of 20% over the 12-month period, but while Exxon Mobil made up approximately 25% of the S&P 1500 Energy Sector Index, it had an average weight of only 20% in the Fund during that time. The Fund’s underweight exposure to the oil & gas storage & transportation industry likewise detracted from performance. The industry returned an average of about 24% during the fiscal year, but made up only 1% of the Fund versus 3.28% of the benchmark.

 

Q. What is your investment outlook for the Energy sector?

 

A. As of fiscal year-end, we estimate the Energy sector has an overall V/P of 1.57, with several industries within the sector showing even greater value. Accordingly, and as of this writing, we are optimistic that we will continue to find investing opportunities within the Energy sector in the coming year.

 

ICON Energy Fund

Industry Composition

September 30, 2011

 

Integrated Oil & Gas

    55.8%   

Oil & Gas Equipment & Services

    17.6%   

Oil & Gas Refining & Marketing

    12.1%   

Oil & Gas Exploration & Production

    5.7%   

Oil & Gas Drilling

    5.4%   

Coal & Consumable Fuels

    2.2%   
 

 

 

 
    98.8%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Energy Fund

Sector Composition

September 30, 2011

 

Energy

    98.8%   
 

 

 

 
    98.8%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

MANAGEMENT OVERVIEW     19   


Table of Contents

ICON Energy Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
   

1

Year

   

5

Years

   

10

Years

    Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Energy

Fund - Class S

    11/5/97        0.80%        3.93%        13.44%        11.26%        1.24%        1.24%   

S&P 1500 Energy Index

            7.13%        3.56%        10.82%        8.25%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        3.53%        N/A        N/A   

ICON Energy
Fund - Class C

    9/30/10        -0.23%        N/A        N/A        -0.23%        2.24%        2.24%   

S&P 1500 Energy Index

            7.13%        N/A        N/A        7.13%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

ICON Energy
Fund - Class A

    9/30/10        0.49%        N/A        N/A        0.49%        1.49%        1.49%   

ICON Energy
Fund - Class A (including maximum sales charge of 5.75%)

    9/30/10        -5.29%        N/A        N/A        -5.28%        1.49%        1.49%   

S&P 1500 Energy Index

            7.13%        N/A        N/A        7.13%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

20   MANAGEMENT OVERVIEW


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ICON Energy Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ inception date of 11/5/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

 

MANAGEMENT OVERVIEW     21   


Table of Contents

ICON ENERGY FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (98.8%)   
  84,900      Alliance Resource Partners L.P.   $ 5,566,044   
  133,900      Apache Corp.     10,744,136   
  318,500      Baker Hughes, Inc.     14,701,960   
  118,100      Cameron International Corp.     4,905,874   
  896,200      Chevron Corp.     82,916,424   
  638,100      ConocoPhillips     40,404,492   
  101,800      Consol Energy, Inc.     3,454,074   
  18,000      Core Laboratories NV     1,616,940   
  192,000      Devon Energy Corp.     10,644,480   
  92,800      Diamond Offshore Drilling, Inc.(a)     5,079,872   
  139,100      Dril-Quip, Inc.     7,498,881   
  152,100      Ensco PLC, ADR     6,149,403   
  1,738,500      Exxon Mobil Corp.     126,267,255   
  584,900      Halliburton Co.     17,851,148   
  172,100      Helmerich & Payne, Inc.     6,987,260   
  238,300      Hess Corp.     12,501,218   
  345,400      Marathon Oil Corp.     7,453,732   
  182,500      Marathon Petroleum Corp.     4,938,450   
  238,600      Murphy Oil Corp.     10,536,576   
  349,400      National Oilwell Varco, Inc.     17,896,268   
  133,400      Newfield Exploration Co.     5,294,646   
  288,500      Noble Corp.     8,467,475   
  290,400      Occidental Petroleum Corp.     20,763,600   
  103,900      Peabody Energy Corp.     3,520,132   
  59,300      PetroChina Co., Ltd.     7,145,057   
Shares or Principal Amount   Value  
   
  441,400      Schlumberger, Ltd.   $ 26,364,822   
  175,800      Southwestern Energy Co.     5,859,414   
  331,400      Suncor Energy, Inc.     8,430,816   
  173,500      Sunoco, Inc.     5,380,235   
  740,000      Tesoro Corp.     14,407,800   
  104,500      Tidewater, Inc.     4,394,225   
  78,700      Transocean, Ltd.     3,757,138   
  1,381,900      Valero Energy Corp.     24,570,182   
  397,200      Weatherford International, Ltd.     4,849,812   
  318,000      Western Refining, Inc.(a)     3,962,280   
  467,800      World Fuel Services Corp.(a)     15,273,670   
   

 

 

 
 
 
Total Common Stocks
(Cost $617,804,499)
    560,555,791   
 
 
Collateral for Securities on
Loan (3.0%)
 
  16,866,358      State Street Navigator Prime Portfolio     16,866,358   
   

 

 

 
 
 
 
Total Collateral for
Securities on Loan
(Cost $16,866,358)
    16,866,358   
  Short-Term Investment (0.3%)   
$ 1,692,020      State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/11     1,692,020   
   

 

 

 
 
 
 
Total Short-Term
Investments
(Cost $1,692,020)
    1,692,020   
 
 
Total Investments 102.1%
(Cost $636,362,877)
    579,114,169   
 
 
Liabilities Less
Other Assets (2.1)%
    (11,998,317
   

 

 

 
  Net Assets 100.0%   $ 567,115,852   
   

 

 

 
 

 

22   SCHEDULE OF INVESTMENTS


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The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

ADR American Depository Receipt

 

SCHEDULE OF INVESTMENTS     23   


Table of Contents

MANAGEMENT OVERVIEW

ICON FINANCIAL FUND

  

Class S

Class C

Class A

  

ICFSX

ICOCX

ICFAX

 

Q. How did the Fund perform relative to its benchmarks?

 

A. The ICON Financial Fund Class S lost 15.18% for the fiscal year ending September 30, 2011, about in-line with the Fund’s sector-specific benchmark, the S&P 1500 Financials Index, which declined 15.24%. Class A shares of the Fund returned -15.36% (and -20.25% with maximum sales charge) during the same period while the Fund’s Class C shares returned -16.08% (-17.08% with maximum sales charge). The broad-based S&P Composite 1500 Index gained 0.92% during the fiscal year. Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. The Financials sector lagged the broader equity market for a third year in a row as the sector struggled to regain momentum. We believe a dismal global economic outlook (and, in particular, sovereign debt concerns among the Eurozone nations referred to in the press under the “PIIGS” acronym (Portugal, Italy, Ireland, Greece and Spain)) combined with the uncertainties surrounding litigation for key players within the sector have proven unsettling for most Financials investors. Bank of America (“BOA”), for example, paid nearly $3 billion to settle claims with Fannie Mae and Freddie Mac early in the fiscal year. Fannie Mae recently announced, however, that it may exercise its right to have BOA buy back faulty loans – a move that could cost BOA billions of dollars. Over the course of the fiscal year, BOA’s stock has declined by 53%. JP Morgan Chase & Co. also struggled with shareholder lawsuits, declining 19.8% between September 30, 2010 and September 30, 2011.

Investors are troubled by the potential fallout of the sovereign debt crisis and pending litigation. The resulting selloff helps explain the sector’s weak performance relative to the broader market.

 

Q. How did the Fund’s composition affect performance?

 

A.

During the first half of the fiscal year, as of March 31, 2011, the ICON Financial Fund returned 12.7% versus 15.0% for its benchmark, the S&P 1500 Financials Index. The Fund’s overweight exposure to insurance industries detracted from performance, as the slow housing market had an adverse affect on insurance companies that derive income from title and mortgage insurance. For example, the Fund held positions in both

 

24   MANAGEMENT OVERVIEW


Table of Contents
  Fidelity National Financial and Allstate Insurance, both of which detracted from performance. Fidelity National missed its 3rd quarter earnings estimates by more than 27% due in part to reduced demand for title insurance. These disappointing results caused Fidelity National to reduce its dividend as well. Allstate likewise missed 3rd quarter estimates as the number of homeowner insurance policies it issued fell. Our significant positions in both Allstate and Fidelity National at the time of their earnings announcements proved to be a drag on performance during the first half of the fiscal year.

The Fund’s consumer finance and credit card processing company holdings (specifically, Visa and MasterCard) contributed to the Fund’s positive performance in the second half of the fiscal year. On average during the fiscal year, the Fund held a 10% position in consumer finance companies, compared with a 4.5% weighting in the sector-specific S&P 1500 Financials Index benchmark. On June 29, 2011, Visa and MasterCard rallied 11% and 15% respectively, buoyed by the Federal government’s higher than expected cap on debit card fees. Companies in the specialized finance industry also contributed positively to the Fund’s performance on news in April 2011 that the NASDAQ and Intercontinental Exchange would be making a joint bid to purchase NYSE Euronext. The Fund’s approximate 18.7% return in specialized finance holdings outperformed the sector-specific index’s return of 1.12% for this industry The Fund was also overweight this industry, holding a 6.7% position on average between March 31, 2011 and September 30, 2011 versus the benchmark’s 2.6% position. An underweight in REIT industry holdings also hindered the Fund’s performance.

 

Q. What is your investment outlook for the Financials sector?

 

A. As of September 30, 2011, we calculate an overall V/P of 1.48 for the domestic market, suggesting to us that many opportunities remain available to investors. We calculate a V/P of 1.59 for the Financials sector as of September 30, 2011, indicating even greater potential under the ICON system for investors interested in Financials. We are optimistic that the economy will continue to improve, and as that occurs, we hope to be positioned to take advantage of any rally.

 

MANAGEMENT OVERVIEW     25   


Table of Contents

ICON Financial Fund

Industry Composition

September 30, 2011

 

Other Diversified Financial Services

    14.2%   

Specialized Finance

    11.9%   

Diversified Banks

    11.8%   

Asset Management & Custody Banks

    10.8%   

Property & Casualty Insurance

    9.6%   

Regional Banks

    8.0%   

Life & Health Insurance

    7.7%   

Investment Banking & Brokerage

    6.1%   

Consumer Finance

    5.5%   

Multi-line Insurance

    3.3%   

Thrifts & Mortgage Finance

    2.9%   

Reinsurance

    2.8%   

Mortgage REIT’s

    1.6%   

Specialized REIT’s

    1.1%   

Data Processing & Outsourced Services

    1.0%   

Diversified Capital Markets

    0.9%   
 

 

 

 
    99.2%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Financial Fund

Sector Composition

September 30, 2011

 

Financial

    98.2%   

Information Technology

    1.0%   
 

 

 

 
    99.2%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

26   MANAGEMENT OVERVIEW


Table of Contents

ICON Financial Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
   

1

Year

   

5

Years

   

10

Years

    Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Financial Fund - Class S

    7/1/97        -15.18%        -16.07%        -3.51%        0.65%        1.43%        1.43%   

S&P 1500 Financials Index

            -15.24%        -16.14%        -3.91%        -0.05%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        3.96%        N/A        N/A   

ICON Financial Fund - Class C

    9/30/10        -16.08%        N/A        N/A        -16.04%        2.43%        2.43%   

S&P 1500 Financials Index

            -15.24%        N/A        N/A        -15.24%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

ICON Financial Fund - Class A

    9/30/10        -15.36%        N/A        N/A        -15.32%        1.68%        1.68%   

ICON Financial Fund - Class A (including maximum sales charge of 5.75%)

    9/30/10        -20.25%        N/A        N/A        -20.20%        1.68%        1.68%   

S&P 1500 Financials Index

            -15.24%        N/A        N/A        -15.24%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

MANAGEMENT OVERVIEW     27   


Table of Contents

ICON Financial Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ inception date of 7/1/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

 

28   MANAGEMENT OVERVIEW


Table of Contents

ICON FINANCIAL FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (99.2%)   
  11,100      ACE, Ltd.   $ 672,660   
  8,600      Aflac, Inc.     300,570   
  11,900      Allied World Assurance Co. Holdings, Ltd.     639,149   
  7,200      American Express Co.     323,280   
  5,900      American Financial Group, Inc.     183,313   
  11,200      Ameriprise Financial, Inc.     440,832   
  9,600      Annaly Capital Management, Inc., REIT     159,648   
  23,800      Anworth Mortgage Asset Corp., REIT     161,840   
  8,400      Assurant, Inc.     300,720   
  209,000      Bank of America Corp.     1,279,080   
  24,500      Bank of New York Mellon Corp.     455,455   
  40,700      BB&T Corp.     868,131   
  2,700      BlackRock, Inc.     399,627   
  8,700      Capital One Financial Corp.     344,781   
  7,200      Cash America International, Inc.     368,352   
  57,100      Charles Schwab Corp.     643,517   
  7,500      Chubb Corp.     449,925   
  60,590      Citigroup, Inc.     1,552,316   
  4,100      CME Group, Inc.     1,010,240   
  6,600      Cullen/Frost Bankers, Inc.     302,676   
  19,100      Delphi Financial Group, Inc., Class A     411,032   
  8,200      Deutsche Bank AG     283,802   
  4,500      Everest Re Group, Ltd.     357,210   
  12,000      Ezcorp, Inc., Class A     342,480   
  14,100      Federated Investors, Inc., Class B     247,173   
Shares or Principal Amount   Value  
   
  44,800      First Niagara Financial Group, Inc.   $ 409,920   
  6,600      Franklin Resources, Inc.     631,224   
  7,500      Goldman Sachs Group, Inc.     709,125   
  20,300      Hancock Holding Co.     543,634   
  14,300      Hartford Financial Services Group, Inc.     230,802   
  12,800      HCC Insurance Holdings, Inc.     346,240   
  16,200      Hospitality Properties Trust, REIT     343,926   
  6,600      IntercontinentalExchange, Inc.     780,516   
  9,300      Invesco, Ltd.     144,243   
  59,200      JPMorgan Chase & Co.     1,783,104   
  5,400      M&T Bank Corp.     377,460   
  28,200      Manulife Financial Corp.     319,506   
  26,500      MetLife, Inc.     742,265   
  11,800      Moody’s Corp.     359,310   
  27,000      Morgan Stanley     364,500   
  48,400      NASDAQ OMX Group, Inc.     1,119,976   
  46,000      People’s United Financial, Inc.     524,400   
  10,500      PNC Financial Services Group, Inc.     505,995   
  9,500      Portfolio Recovery Associates, Inc.     591,090   
  18,000      Progressive Corp.     319,680   
  9,600      Prudential Financial, Inc.     449,856   
  17,600      Redwood Trust, Inc., REIT     196,592   
  12,400      Reinsurance Group of America, Inc.     569,780   
  19,700      State Street Corp.     633,552   
  11,400      Sun Life Financial, Inc.     271,206   
  8,200      T Rowe Price Group, Inc.     391,714   
 

 

SCHEDULE OF INVESTMENTS     29   


Table of Contents
Shares or Principal Amount   Value  
   
  18,100      TD Ameritrade Holding Corp.   $ 266,160   
  15,500      Tower Group, Inc.     354,330   
  14,000      Travelers Cos., Inc.     682,220   
  38,000      U.S. Bancorp     894,520   
  3,900      Visa, Inc., Class A     334,308   
  6,500      Waddell & Reed Financial, Inc., Class A     162,565   
Shares or Principal Amount   Value  
  122,100      Wells Fargo & Co.   $ 2,945,052   
  7,400      World Acceptance Corp.     414,030   
   

 

 

 
 
 
Total Common Stocks
(Cost $38,302,481)
    32,210,610   
 
 
Total Investments 99.2%
(Cost $38,302,481)
    32,210,610   
 
 
Other Assets Less Liabilities
0.8%
    254,232   
   

 

 

 
  Net Assets 100.0%   $ 32,464,842   
   

 

 

 
 

 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

REIT Real Estate Investment Trust

 

30   SCHEDULE OF INVESTMENTS


Table of Contents

MANAGEMENT OVERVIEW

ICON HEALTHCARE FUND

  

Class S

Class C

Class A

  

ICHCX

ICHEX

ICHAX

 

Q. How did the Fund perform relative to its benchmarks?

 

A. For the fiscal year ended September 30, 2011, the Fund’s sector-specific benchmark, the S&P 1500 Health Care Index, returned 6.45%, and its broad benchmark, the S&P Composite 1500 Index, returned 0.92%. The ICON Healthcare Fund Class S outperformed both benchmarks, gaining 6.66% during the same period. Class A shares of the Fund returned 6.42% (and 0.30% with maximum sales charge) during the same period while the Fund’s Class C shares returned 5.64% for the fiscal year (4.64% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. The Healthcare sector fared relatively well in 2011. After lagging the broad market for the first half of the fiscal year, the sector resisted the market declines of the last fiscal quarter caused by sovereign debt worries in Greece, the Moody’s downgrade of the U.S. debt rating, and a deadlocked Congress. The Consumer Staples, Utilities, and Healthcare sectors were more resistant to the sharp declines that took a greater toll on Materials, Financials and other sectors. However, the Congressional debates over the debt ceiling reintroduced worry and speculation about future cuts to Medicare and Medicaid and caused some Healthcare industries to take a hit.

While there were no immediate cuts, health care analysts predicted the 12-member “super committee” charged with slashing federal spending by $1.5 trillion could make significant changes to the programs, including cuts to Medigap insurance, which would limit supplemental insurance plans for the elderly. The industries hit the hardest over this news were health care facilities, life sciences tools & services, and managed health care. Hospitals and doctor groups warned that cuts to Medicare and Medicaid would decrease revenues and crowd underfunded emergency rooms. Medical research funding could also face large cuts, which would take a heavy toll on life sciences and biotech companies receiving federal aid. Rampant speculation over potential funding troubles led to certain industries faring worse than others in the last few months of the fiscal year.

 

MANAGEMENT OVERVIEW     31   


Table of Contents
Q. How did the Fund’s composition affect performance?

 

A. The Fund’s concentrations in the pharmaceutical and managed health care industries contributed positively to the returns relative to the benchmark. Several small-cap pharmaceutical companies held in the Fund saw substantial gains after better than expected earnings releases and acquisition deals. The Fund’s performance also benefitted from a strong underweight in the health care facilities industry. Several companies in the industry saw sharp two day losses between 25% and 40% after the announcement of the Congressional budget reductions. In many cases, quarterly earnings forecasts were lowered to reflect these expected income shortfalls.

The Fund’s health care services industry holdings detracted from performance because of regulation changes. Gentiva Health Services, for example, declined over 65% between July 29, 2011 and August 10, 2011 amid speculation that it would suffer a mandated reduction in government reimbursements. Other detractors to performance came from biotechnology firms failing to get approval for new drugs in development. Heavy weights in companies such as United Therapeutics and Salix Pharmaceuticals detracted from the Fund’s performance when the companies announced that drugs in development had failed to pass trial testing.

 

Q. What is your investment outlook for the Healthcare sector?

 

A. Under ICON’s valuation methodology, the Healthcare sector ranks among the most undervalued of the sectors we track. As of fiscal year end, our calculations indicate the Healthcare sector continues to have significant potential upside, trading at a 49% discount to our measurement of the sector’s intrinsic value. We are optimistic that the economy will continue to expand and that the market will continue to move higher. The Fund ends its fiscal year overweight in the biotechnology and health care distributors industries, with significant positions in both large and small-cap pharmaceuticals.

 

32   MANAGEMENT OVERVIEW


Table of Contents

ICON Healthcare Fund

Industry Composition

September 30, 2011

 

Pharmaceuticals

    43.1%   

Biotechnology

    14.8%   

Health Care Equipment

    13.2%   

Health Care Distributors

    10.1%   

Managed Health Care

    6.9%   

Health Care Services

    5.7%   

Life Sciences Tools & Services

    3.1%   

Industrial Conglomerates

    1.8%   

Life & Health Insurance

    0.9%   
 

 

 

 
    99.6%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Healthcare Fund

Sector Composition

September 30, 2011

 

Health Care

    96.9%   

Industrials

    1.8%   

Financial

    0.9%   
 

 

 

 
    99.6%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

MANAGEMENT OVERVIEW     33   


Table of Contents

ICON Healthcare Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
    1
Year
    5
Years
    10
Years
    Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Healthcare Fund - Class S

    2/24/97        6.66%        -1.71%        4.33%        7.41%        1.36%        1.36%   

S&P 1500 Health Care Index

            6.45%        1.60%        2.10%        5.86%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        4.59%        N/A        N/A   

ICON Healthcare Fund - Class C

    9/30/10        5.64%        N/A        N/A        5.62%        2.36%        2.36%   

S&P 1500 Health Care Index

            6.45%        N/A        N/A        6.45%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

ICON Healthcare
Fund - Class A

    9/30/10        6.42%        N/A        N/A        6.40%        1.61%        1.61%   

ICON Healthcare Fund - Class A (including maximum sales charge of 5.75%)

    9/30/10        0.30%        N/A        N/A        0.30%        1.61%        1.61%   

S&P 1500 Health Care Index

            6.45%        N/A        N/A        6.45%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

 

34   MANAGEMENT OVERVIEW


Table of Contents

ICON Healthcare Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ inception date of 2/24/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

 

MANAGEMENT OVERVIEW     35   


Table of Contents

ICON HEALTHCARE FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (99.6%)   
  10,200      3M Co.   $ 732,258   
  83,000      Abbott Laboratories     4,244,620   
  21,400      Aetna, Inc.     777,890   
  18,600      Allergan, Inc.     1,532,268   
  46,200      Amerisource-Bergen Corp.     1,721,874   
  57,600      Amgen, Inc.     3,165,120   
  21,400      AstraZeneca PLC, ADR     949,304   
  30,100      Baxter International, Inc.     1,689,814   
  10,100      Becton, Dickinson & Co.     740,532   
  38,500      Bio-Reference Labs, Inc.†(a)     708,785   
  73,500      Bristol-Myers Squibb Co.     2,306,430   
  42,700      Cardinal Health, Inc.     1,788,276   
  45,800      Celgene Corp.     2,835,936   
  13,500      CIGNA Corp.     566,190   
  20,900      Covance, Inc.     949,905   
  14,400      Covidien PLC     635,040   
  64,600      Eli Lilly & Co.     2,388,262   
  30,600      Express Scripts, Inc.     1,134,342   
  31,000      Forest Laboratories, Inc.     954,490   
  67,200      Gilead Sciences, Inc.     2,607,360   
  22,100      GlaxoSmithKline PLC, ADR     912,509   
  20,100      Henry Schein, Inc.     1,246,401   
  92,300      Johnson & Johnson     5,880,433   
  13,600      Laboratory Corp. of America Holdings     1,075,080   
  33,900      Lincare Holdings, Inc.     762,750   
  21,700      McKesson Corp.     1,577,590   
  10,000      Mednax, Inc.     626,400   
  69,600      Medtronic, Inc.     2,313,504   
Shares or Principal Amount   Value  
   
  158,100      Merck & Co., Inc.   $ 5,171,451   
  19,600      Mylan, Inc.     333,200   
  43,900      Patterson Cos., Inc.     1,256,857   
  277,400      PDL BioPharma, Inc.     1,539,570   
  358,800      Pfizer, Inc.     6,343,584   
  41,800      Protective Life Corp.     653,334   
  51,700      ResMed, Inc.     1,488,443   
  49,100      Salix Pharmaceuticals, Ltd.     1,453,360   
  7,100      Siemens AG, ADR     637,509   
  20,100      St Jude Medical, Inc.     727,419   
  15,900      Stryker Corp.     749,367   
  86,300      SurModics, Inc.†(a)     785,330   
  13,500      Thermo Fisher Scientific, Inc.     683,640   
  27,200      United Therapeutics Corp.     1,019,728   
  52,000      UnitedHealth Group, Inc.     2,398,240   
  15,000      Varian Medical Systems, Inc.     782,400   
  8,900      Waters Corp.     671,861   
  22,400      WellPoint, Inc.     1,462,272   
   

 

 

 
 
 
Total Common Stocks
(Cost $79,899,878)
    74,980,928   
 
 
Collateral for Securities on
Loan (1.5%)
 
  
  1,139,111      State Street Navigator Prime Portfolio     1,139,111   
   

 

 

 
 
 
 
Total Collateral for Securities
on Loan
(Cost $1,139,111)
    1,139,111   
 
 
Total Investments 101.1%
(Cost $81,038,989)
    76,120,039   
 
 
Liabilities Less Other Assets
(1.1)%
    (856,946
   

 

 

 
  Net Assets 100.0%   $ 75,263,093   
   

 

 

 
 

 

36   SCHEDULE OF INVESTMENTS


Table of Contents

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

ADR American Depository Receipt

 

SCHEDULE OF INVESTMENTS     37   


Table of Contents

MANAGEMENT OVERVIEW

ICON INDUSTRIALS FUND

  

Class S

Class C
Class A

  

ICTRX

ICICX

ICIAX

 

Q. How did the Fund perform relative to its benchmarks?

 

A. The ICON Industrials Fund, Class S shares, fell 8.21% for the fiscal year ended September 30, 2011, while its sector-specific benchmark, the S&P 1500 Industrials Index, fell 4.50% and the S&P Composite 1500 Index gained 0.92%. Class A shares of the Fund returned -8.75% (and -14.04% with maximum sales charge) during the same period while Class C shares returned -9.29% (-10.29% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. Continuing a now familiar pattern of volatility and uncertainty, fiscal year 2011 proved to be a challenging environment for the manufacturing based and cyclically focused Industrials sector. The year began with a strong rally as investors responded positively to domestic growth and solid company fundamentals. Domestic manufacturing (as measured by the ISM Manufacturing Purchasing Managers Index) reached a high of 61.4 in February 2011 as the economy continued to recover. This growth directly benefitted the Industrials sector as the S&P 1500 Industrials Index returned approximately 23% during the first half of the fiscal year. Halfway through the fiscal year, however, investors evidently became anxious over European sovereign debt issues and slowing domestic economic growth. Additionally, growth in the manufacturing sector of the domestic economy slowed, raising concerns about the strength of the recovery. Economic uncertainty and sovereign debt worries sparked an aggressive sell-off and the S&P 1500 Industrials Index fell into negative territory by the end of the fiscal year.

 

Q. How did the Fund’s composition affect performance?

 

A. Industry returns in the S&P 1500 Industrials Index show the volatile nature of this past fiscal year, as the best performing industry, marine, outperformed the worst performing industry, airlines, by over 51%.

The top industry contributors to the Fund’s performance during fiscal year 2011 were aerospace & defense, trading companies & distributors, electrical components & equipment, airlines (which the Fund held early in the fiscal year when the industry was still strong), and construction & engineering. Overweight positions in strong performing industries contributed positively to overall performance.

 

38   MANAGEMENT OVERVIEW


Table of Contents

Top industry detractors from performance during fiscal year 2011 were industrial machinery, construction & farm machinery & heavy trucks, railroads, commercial printing, and air freight & logistics. All of these industries are heavily tied to economic growth and were sold off aggressively during the second half of the year.

 

Q. What is your investment outlook for the Industrials sector?

 

A. At the close of the fiscal year, the Industrials sector had a V/P of 1.47 under the ICON system, giving us confidence about the sector’s potential. We believe investors have priced in a great deal of negative economic news. Company specific fundamentals remain solid, however, as many firms responded to the last recession by building up strong balance sheets and cash stockpiles. We like the way many of these companies are positioned, as we contend the manufacturing and cyclically oriented firms within the Industrials sector have a better ability than many other companies to withstand near term economic uncertainty and invest in future growth opportunities. We will continue to follow our systematic approach to investing in our search for opportunities within the Industrials sector.

 

ICON Industrials Fund

Industry Composition

September 30, 2011

 

Railroads

    19.5%   

Industrial Conglomerates

    16.7%   

Industrial Machinery

    14.8%   

Construction & Farm Machinery & Heavy Trucks

    14.0%   

Aerospace & Defense

    13.6%   

Air Freight & Logistics

    8.9%   

Commercial Printing

    4.2%   

Electrical Components & Equipment

    3.1%   

Office Services & Supplies

    2.1%   

Human Resource & Employment Services

    1.5%   

Other Industries (each less than 1%)

    1.4%   
 

 

 

 
    99.8%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Industrials Fund

Sector Composition

September 30, 2011

 

Industrials

    99.8%   
 

 

 

 
    99.8%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

MANAGEMENT OVERVIEW     39   


Table of Contents

ICON Industrials Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
   

1

Year

   

5

Years

   

10

Years

   

Since

Inception

   

Gross

Expense

Ratio*

   

Net

Expense

Ratio*

 

ICON Industrials
Fund - Class S

    5/9/97        -8.21%        -2.75%        3.34%        2.45%        1.40%        1.40%   

S&P 1500 Industrials Index

            -4.50%        -0.85%        3.90%        4.59%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        4.51%        N/A        N/A   

ICON Industrials
Fund - Class C

    9/30/10        -9.29%        N/A        N/A        -9.27%        2.40%        2.40%   

S&P 1500 Industrials Index

            -4.50%        N/A        N/A        -4.50%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

ICON Industrials
Fund - Class A

    9/30/10        -8.75%        N/A        N/A        -8.73%        1.65%        1.65%   

ICON Industrials
Fund - Class A (including maximum sales charge
of 5.75%)

    9/30/10        -14.04%        N/A        N/A        -14.01%        1.65%        1.65%   

S&P 1500 Industrials Index

            -4.50%        N/A        N/A        -4.50%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

40   MANAGEMENT OVERVIEW


Table of Contents

ICON Industrials Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ inception date of 5/9/97 to a $10,000 investment made in unmanaged securities indexes on that date. The Fund’s performance in this chart and the performance table assumes the reinvestment of dividends and capital gain distributions but does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.

 

MANAGEMENT OVERVIEW     41   


Table of Contents

ICON INDUSTRIALS FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (99.8%)   
  25,000      3M Co.   $ 1,794,750   
  10,000      Avery Dennison Corp.     250,800   
  30,000      Boeing Co.     1,815,300   
  10,000      Canadian National Railway Co.     665,800   
  20,000      Canadian Pacific Railway, Ltd.(a)     961,800   
  52,000      Caterpillar, Inc.     3,839,680   
  20,000      Cooper Industries PLC     922,400   
  105,000      CSX Corp.     1,960,350   
  10,000      Cummins, Inc.     816,600   
  45,000      Danaher Corp.     1,887,300   
  25,000      Deere & Co.     1,614,250   
  25,000      Dover Corp.     1,165,000   
  20,000      Eaton Corp.     710,000   
  10,000      Emerson Electric Co.     413,100   
  20,000      FedEx Corp.     1,353,600   
  15,000      General Dynamics Corp.     853,350   
  350,000      General Electric Co.     5,334,000   
  5,000      Hubbell, Inc., Class B     247,700   
  40,000      Illinois Tool Works, Inc.     1,664,000   
  20,000      Ingersoll-Rand PLC     561,800   
  25,000      Kforce, Inc.(a)     245,250   
  8,000      Lockheed Martin Corp.     581,120   
  15,000      Manpower, Inc.     504,300   
  10,000      Navistar International Corp.     321,200   
  50,000      Norfolk Southern Corp.     3,051,000   
Shares or Principal Amount   Value  
   
  15,000      PACCAR, Inc.   $ 507,300   
  12,000      Parker Hannifin Corp.     757,560   
  15,000      Pitney Bowes, Inc.(a)     282,000   
  15,000      Raytheon Co.     613,050   
  5,000      Rockwell Collins, Inc.     263,800   
  150,000      RR Donnelley & Sons Co.     2,118,000   
  10,000      Ryder System, Inc.     375,100   
  15,000      Siemens AG, ADR     1,346,850   
  10,000      SPX Corp.     453,100   
  40,000      Union Pacific Corp.     3,266,800   
  50,000      United Parcel Service, Inc., Class B     3,157,500   
  20,000      United Stationers, Inc.     545,000   
  40,000      United Technologies Corp.     2,814,400   
  4,000      Valmont Industries, Inc.     311,760   
  2,500      WW Grainger, Inc.     373,850   
   

 

 

 
 
 
Total Common Stocks
(Cost $52,756,916)
    50,720,520   
 
 
Collateral for Securities on
Loan (3.1%)
 
  1,563,306      State Street Navigator Prime Portfolio     1,563,306   
   

 

 

 
 
 
 
Total Collateral for
Securities on Loan
(Cost $1,563,306)
    1,563,306   
 
 
Total Investments 102.9%
(Cost $54,320,222)
    52,283,826   
 
 
Liabilities Less
Other Assets (2.9)%
    (1,493,712
   

 

 

 
  Net Assets 100.0%   $ 50,790,114   
   

 

 

 
 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

ADR American Depository Receipt

 

42   SCHEDULE OF INVESTMENTS


Table of Contents

MANAGEMENT OVERVIEW

ICON INFORMATION TECHNOLOGY FUND

  

Class S

Class C

Class A

  

ICTEX

ICTFX

ICTTX

 

Q. How did the Fund perform relative to its benchmark?

 

A. The ICON Information Technology Fund, Class S, underperformed its benchmark for the fiscal year ended September 30, 2011 by 0.81%. The Fund Class S shares returned 2.11%, while its sector-specific benchmark, the S&P 1500 Information Technology Composite Index, rose 2.92%. The Fund outperformed the broad index, the S&P Composite 1500, which gained 0.92% for the fiscal year. Class A shares of the Fund returned 1.86% (and -3.98% with maximum sales charge) during the same period, while the Fund’s Class C shares returned 0.99% for the fiscal year (-0.01% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors influenced the Fund’s relative performance during the period?

 

A. In 2011, technology companies experienced some major shifts from years past. Apple surpassed Exxon Mobil to become the largest company in the world based on market cap, and then experienced an historic shift as its co-founder, Steve Jobs, stepped down as CEO. Hewlett Packard, the world’s largest PC manufacturer, shook up the sector when it announced it would discontinue the manufacturing of many of its computer hardware products. Consumer payment networks, such as Visa and MasterCard, received a huge boost in revenues after government regulation capped debit card transaction fees. In a sector where over 60% of market cap is made up of its ten largest companies, these events made quite an impact on investment returns.

Company earnings also provided a significant boost to the sector. Technology companies saw an average increase in earnings of 43% over the previous year. While some Information Technology companies’ earnings announcements fell short of expectations, these announcements were greatly outnumbered by positive reports from companies that met or exceeded analysts’ estimates.

 

Q. How did the Fund’s composition affect performance?

 

A.

The Fund’s greatest detractor in performance came from an overweight position in the semiconductor equipment and electronic manufacturing services industries. The solar power industry failed to meet high

 

MANAGEMENT OVERVIEW     43   


Table of Contents
  expectations for rapid growth, and many solar panel manufacturers such as MEMC Electronic Materials and First Solar Inc. saw their shares plummet as demand dried up. The ICON Information Technology Fund had a strong position in these solar energy related companies, which negatively impacted Fund performance. The Fund also suffered losses from positions in the data processing & outsourced services industry, primarily from an overweight position in Lender Processing Services Inc. which announced large downward revisions in its earnings forecasts in June of 2011.

Fortunately, the Fund’s positions in the sector’s large-cap companies helped minimize losses. Apple, IBM, Accenture PLC, MasterCard, and Visa all had successful years and brought significant gains to the portfolio. These large-cap names continue to make up a significant portion of the Fund’s composition.

 

Q. What is your investment outlook for the Information Technology Sector?

 

A. Going into the new fiscal year, ICON’s methodology leads us to believe the Information Technology sector, as well as the market as a whole, has considerable value. Technology stocks are trading, on average, at around 47% below our calculation of fair value. We view the sharp declines in the last quarter of 2011 to be an overreaction to worries over Europe’s sovereign debt crisis and domestic congressional deadlock. While the ride over the last 12-months has certainly been unpleasant at times, we believe these declines provide investors a good opportunity to purchase stocks at a discount.

At the close of the fiscal year, the ICON Information Technology Fund is overweight in IT consulting & other services and technology distributors. The Fund also sees value in the sector’s major large-cap names and continues to hold close-to-benchmark positions in these stocks.

 

44   MANAGEMENT OVERVIEW


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ICON Information Technology Fund

Industry Composition

September 30, 2011

 

IT Consulting & Other Services

    24.7%   

Computer Hardware

    15.2%   

Systems Software

    9.7%   

Data Processing & Outsourced Services

    9.1%   

Internet Software & Services

    8.9%   

Semiconductors

    8.2%   

Communications Equipment

    8.1%   

Technology Distributors

    6.9%   

Electronic Manufacturing Services

    5.8%   

Semiconductor Equipment

    3.3%   
 

 

 

 
    99.9%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Information Technology Fund

Sector Composition

September 30, 2011

 

Information Technology

    99.9%   
 

 

 

 
    99.9%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

MANAGEMENT OVERVIEW     45   


Table of Contents

ICON Information Technology Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
   

1

Year

    5
Years
    10
Years
    Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Information Technology Fund - Class S

    2/19/97        2.11%        -1.07%        0.58%        6.11%        1.37%        1.37%   

S&P 1500 Information Technology Index

            2.92%        3.22%        4.53%        4.62%        N/A        N/A   

NASDAQ Composite Index

            1.97%        1.35%        4.89%        3.98%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        4.55%        N/A        N/A   

ICON Information Technology
Fund - Class C

    9/30/10        0.99%        N/A        N/A        0.99%        2.37%        2.37%   

S&P 1500 Information Technology Index

            2.92%        N/A        N/A        2.92%        N/A        N/A   

NASDAQ Composite Index

            1.97%        N/A        N/A        1.97%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

ICON Information Technology
Fund - Class A

    9/30/10        1.86%        N/A        N/A        1.86%        1.62%        1.62%   

ICON Information Technology Fund - Class A (including maximum sales charge of 5.75%)

    9/30/10        -3.98%        N/A        N/A        -3.97%        1.62%        1.62%   

S&P 1500 Information Technology Index

            2.92%        N/A        N/A        2.92%        N/A        N/A   

NASDAQ Composite Index

            1.97%        N/A        N/A        1.97%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

46   MANAGEMENT OVERVIEW


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ICON Information Technology Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ 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.

 

MANAGEMENT OVERVIEW     47   


Table of Contents

ICON INFORMATION TECHNOLOGY FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (99.9%)   
  30,000      Accenture PLC, Class A   $ 1,580,400   
  61,000      Amdocs, Ltd.     1,654,320   
  5,600      Anixter International, Inc.     265,664   
  23,100      Apple, Inc.     8,805,258   
  25,200      Arrow Electronics, Inc.     700,056   
  41,400      Automatic Data Processing, Inc.     1,952,010   
  22,800      Avnet, Inc.     594,624   
  4,700      Baidu, Inc., ADR     502,477   
  17,900      CACI International, Inc., Class A     893,926   
  130,100      Cisco Systems, Inc.     2,015,249   
  20,300      Cognizant Technology Solutions Corp., Class A     1,272,810   
  52,700      Convergys Corp.     494,326   
  25,800      CSG Systems International, Inc.     326,112   
  23,100      eBay, Inc.     681,219   
  4,300      First Solar, Inc.(a)     271,803   
  205,700      Flextronics International, Ltd.     1,158,091   
  7,200      Google, Inc., Class A     3,703,536   
  20,700      Hewlett-Packard Co.     464,715   
  17,600      Infosys Technologies, Ltd., ADR(a)     898,832   
  85,900      Ingram Micro, Inc., Class A     1,385,567   
  163,500      Intel Corp.     3,487,455   
  47,500      International Business Machines Corp.     8,313,925   
  15,100      KLA-Tencor Corp.     578,028   
  24,400      Lender Processing Services, Inc.     334,036   
Shares or Principal Amount   Value  
   
  13,000      Linear Technology Corp.   $ 359,450   
  3,900      Mastercard, Inc., Class A     1,236,924   
  136,500      MEMC Electronic Materials, Inc.     715,260   
  53,300      Methode Electronics, Inc.     396,019   
  142,800      Microsoft Corp.     3,554,292   
  15,600      Multi-Fineline Electronix, Inc.     311,064   
  81,500      Oracle Corp.     2,342,310   
  71,000      Perficient, Inc.     519,720   
  28,200      Plexus Corp.     637,884   
  60,800      QUALCOMM, Inc.     2,956,704   
  42,300      SAIC, Inc.     499,563   
  25,600      SYNNEX Corp.     670,720   
  36,800      TE Connectivity, Ltd.     1,035,552   
  13,800      Tech Data Corp.     596,574   
  46,800      Teradyne, Inc.     515,268   
  19,900      Tessera Technologies, Inc.     237,606   
  33,500      Texas Instruments, Inc.     892,775   
  14,100      Visa, Inc., Class A     1,208,652   
   

 

 

 
 
 
Total Common Stocks
(Cost $58,819,117)
    61,020,776   
 
 
Collateral for Securities on
Loan (2.0%)
 
  1,204,705      State Street Navigator Prime Portfolio     1,204,705   
   

 

 

 
 
 
 
Total Collateral for
Securities on Loan
(Cost $1,204,705)
    1,204,705   
 
 
Total Investments 101.9%
(Cost $60,023,822)
    62,225,481   
 
 
Liabilities Less
Other Assets (1.9)%
    (1,141,718
   

 

 

 
  Net Assets 100.0%   $ 61,083,763   
   

 

 

 
 

 

48   SCHEDULE OF INVESTMENTS


Table of Contents

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

(a) All or a portion of the security was on loan as of September 30, 2011.

 

ADR American Depository Receipt

 

SCHEDULE OF INVESTMENTS     49   


Table of Contents

MANAGEMENT OVERVIEW

ICON MATERIALS FUND

  

Class S

Class C

Class A

  

ICBMX

ICBCX

ICBAX

 

Q. How did the Fund perform relative to its benchmarks?

 

A. The ICON Materials Fund, Class S shares, fell 10.07% for the fiscal year ended September 30, 2011, while its sector-specific benchmark, the S&P 1500 Materials Index, fell 6.87%. Class A shares of the Fund returned -10.37% (and -15.50% with maximum sales charge) during the same period while the Fund’s Class C shares returned -10.87% (-11.87% with maximum sales charge). The broad-based S&P Composite 1500 Index gained 0.92% during the fiscal year. Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors were behind the Fund’s relative performance?

 

A. Continuing an all too familiar pattern of volatility and uncertainty, fiscal year 2011 proved to be a challenging environment for the cyclically focused Materials sector. The year began with a strong rally as investors responded favorably to continued domestic economic growth and solid company fundamentals. Halfway through the fiscal year, however, European sovereign debt concerns and fears over slowing domestic economic growth sparked an aggressive sell-off. The sell-off caused the S&P 1500 Materials Index to fall into negative territory by the end of the fiscal year.

No industry better reflected investor sentiment and relative performance of the ICON Materials Fund during the fiscal year than the gold industry. During the first half of the year, as the equity market rallied, gold mining stocks sold off aggressively as positive investor sentiment reduced demand for this segment of the market. While the ICON Materials Fund participated in the overall equity rally, we lagged the S&P 1500 Materials Index due to an overweight in these gold mining equities. As economic fears increased during the second half of the fiscal year, investors flocked towards gold and gold mining equities, hoping to find a safe haven during uncertain times. We pared back our gold mining industry positions during the first half of the year, believing the industry lacked strength. When many of these same companies rallied during the second half of the fiscal year, our underweight position in gold and gold mining equities hurt relative overall performance.

 

50   MANAGEMENT OVERVIEW


Table of Contents
Q. How did the Fund’s composition affect performance?

 

A. Industry returns in the S&P 1500 Materials Index reflect the volatility of this past fiscal year, as the best performing industry, fertilizers & agricultural chemicals, outperformed the worst industry, commodity chemicals, by over 50%. This divergence contributed positively to the performance of the ICON Materials Fund as we were overweight fertilizers & agricultural chemicals during the year.

The top industry contributors to performance during fiscal year 2011 were specialty chemicals, fertilizers & agricultural chemicals, and railroads. While the railroad industry is considered part of the Industrials sector, the industry’s strong ties to commodity products and its relative outperformance made railroads an attractive addition to the Materials Fund.

Top industry detractors from performance included diversified chemicals, steel, gold, diversified metals & mining, and aluminum.

 

Q. What is your investment outlook for the Materials sector?

 

A. At the close of the fiscal year, the Materials sector had a V/P of 1.51 under the ICON system, giving us confidence about the sector’s potential as we begin a new year. We believe investors have already priced in a great deal of negative economic news. Company specific fundamentals remain solid, however, as many firms responded to the last recession by building up strong balance sheets and cash stockpiles. We like the way many of these firms are positioned, as we contend the cyclically oriented companies within the Materials sector have a better ability than many other companies to both withstand near term economic uncertainty and invest for future growth. We will continue to follow our systematic approach to investing and look for opportunities within the Materials sector where stocks are trading below our calculation of intrinsic value.

 

MANAGEMENT OVERVIEW     51   


Table of Contents

ICON Materials Fund

Industry Composition

September 30, 2011

 

Diversified Chemicals

    25.8%   

Industrial Gases

    15.2%   

Fertilizers & Agricultural Chemicals

    12.6%   

Steel

    11.0%   

Specialty Chemicals

    9.3%   

Diversified Metals & Mining

    7.4%   

Paper Packaging

    6.2%   

Railroads

    3.4%   

Aluminum

    3.2%   

Commodity Chemicals

    2.8%   

Agricultural Products

    1.0%   

Paper Products

    1.0%   
 

 

 

 
    98.9%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Materials Fund

Sector Composition

September 30, 2011

 

Materials

    94.5%   

Industrials

    3.4%   

Consumer Staples

    1.0%   
 

 

 

 
    98.9%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

52   MANAGEMENT OVERVIEW


Table of Contents

ICON Materials Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
   

1

Year

    5
Years
    10
Years
    Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Materials
Fund - Class S

    5/5/97        -10.07%        1.35%        9.08%        2.53%        1.38%        1.38%   

S&P 1500 Materials Index

            -6.87%        1.72%        7.31%        4.50%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        4.46%        N/A        N/A   

ICON Materials Fund - Class C

    9/30/10        -10.87%        N/A        N/A        -10.84%        2.38%        2.38%   

S&P 1500 Materials Index

            -6.87%        N/A        N/A        -6.87%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

ICON Materials
Fund - Class A

    9/30/10        -10.37%        N/A        N/A        -10.35%        1.63%        1.63%   

ICON Materials
Fund - Class A (including maximum sales charge of 5.75%)

    9/30/10        -15.50%        N/A        N/A        -15.46%        1.63%        1.63%   

S&P 1500 Materials Index

            -6.87%        N/A        N/A        -6.87%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

MANAGEMENT OVERVIEW     53   


Table of Contents

ICON Materials Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ 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.

 

54   MANAGEMENT OVERVIEW


Table of Contents

ICON MATERIALS FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (98.9%)   
  50,000      A Schulman, Inc.   $ 849,500   
  25,000      Agrium, Inc.     1,666,500   
  45,000      Air Products & Chemicals, Inc.     3,436,650   
  150,000      Alcoa, Inc.     1,435,500   
  45,000      ArcelorMittal     715,950   
  25,000      Archer-Daniels-Midland Co.     620,250   
  20,000      Ashland, Inc.     882,800   
  20,000      Cabot Corp.     495,600   
  25,000      Calgon Carbon Corp.     364,250   
  50,000      Century Aluminum Co.     447,000   
  10,000      CF Industries Holdings, Inc.     1,233,900   
  23,000      Cliffs Natural Resources, Inc.     1,176,910   
  220,000      Dow Chemical Co.     4,941,200   
  175,000      E.I. du Pont de Nemours & Co.     6,994,750   
  35,000      Ecolab, Inc.     1,711,150   
  10,000      FMC Corp.     691,600   
  145,000      Freeport-McMoRan Copper & Gold, Inc.     4,415,250   
  25,000      International Paper Co.     581,250   
  50,000      Koppers Holdings, Inc.     1,280,500   
Shares or Principal Amount   Value  
   
  40,000      Monsanto Co.   $ 2,401,600   
  15,000      Mosaic Co.     734,550   
  20,000      Norfolk Southern Corp.     1,220,400   
  55,000      Nucor Corp.     1,740,200   
  10,000      POSCO, ADR     760,100   
  35,000      Potash Corp. of Saskatchewan, Inc.     1,512,700   
  20,000      PPG Industries, Inc.     1,413,200   
  60,000      Praxair, Inc.     5,608,800   
  25,000      Reliance Steel & Aluminum Co.     850,250   
  45,000      Rock-Tenn Co., Class A     2,190,600   
  35,000      RPM International, Inc.     654,500   
  40,000      Sealed Air Corp.     668,000   
  30,000      Sonoco Products Co.     846,900   
  100,000      Steel Dynamics, Inc.     992,000   
  10,000      Union Pacific Corp.     816,700   
  15,000      Vale S.A., ADR     342,000   
  75,000      Valspar Corp.     2,340,750   
   

 

 

 
 

 

Total Common Stocks

(Cost $63,242,194)

    59,033,760   
 

 

Total Investments 98.9%

(Cost $63,242,194)

    59,033,760   
 
 
Other Assets Less Liabilities
1.1%
    640,621   
   

 

 

 
  Net Assets 100.0%   $ 59,674,381   
   

 

 

 
 

The accompanying notes are an integral part of the financial statements.

 

Non-income producing security.

 

ADR American Depository Receipt

 

SCHEDULE OF INVESTMENTS     55   


Table of Contents

MANAGEMENT OVERVIEW

ICON TELECOMMUNICATION &
UTILITIES FUND

  

Class S

Class C

Class A

  

ICTUX

ICTZX

ICTVX

 

Q. How did the Fund Perform relative to its benchmark?

 

A. The Fund’s Class S shares gained 9.16% for the fiscal year ended September 30, 2011. The Fund outperformed its broad based benchmark, the S&P Composite 1500 Index, which returned just 0.92% for the same time period. The Fund underperformed one of its sector specific benchmarks, the S&P 1500 Utilities Index, which returned 12.03%, but outperformed another sector specific benchmark, the S&P 1500 Telecommunications Services Index, which returned 5.20%. Class A shares of the Fund returned 8.56% (and 2.24% with maximum sales charge) during the same period while Class C shares returned 7.77% for the fiscal year (6.77% with maximum sales charge). Total returns for other periods as of September 30, 2011 appear in the subsequent pages of this Fund’s Management Overview.

 

Q. What primary factors influenced the Fund’s relative performance during the period?

 

A. The fiscal year was marked by concern over macro economic factors. A stubbornly high unemployment rate in the U.S., ongoing malaise in the domestic housing market, worries over a potential sharp decline in consumer spending and Europe’s sovereign debt crisis weighed heavily on investors. The resulting “risk on, risk off” trading created wide swings in the equity indices. Good economic news generally had investors rushing in to buy stocks while bad economic data sent investors rushing out of the global equity markets. This choppy investment environment can be difficult for the ICON value-driven investment methodology. While the Fund was able to outperform its Telecommunications benchmark, the sudden swings in the market made it difficult for our system to identify sustainable industry themes.

If one overarching theme emerged during this volatile year, we would describe it as a flight to safety. Uncertainty over worldwide economic conditions led investors to steady, stable, supposedly “recession proof” companies, many of which make up the Telecommunications and Utilities sectors. The Fund held positions in many equities characterized by low betas and high dividend yields relative to the broader market as measured by the S&P 1500 Composite Index.

 

56   MANAGEMENT OVERVIEW


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Q. How did the Fund’s composition affect performance?

 

A. The Fund’s underweight position in the integrated telecommunication services industry negatively impacted performance. In contrast, the Fund’s exposure to the electric utilities industry provided the largest boost to performance relative to its benchmarks. Still, this charge from electric utilities was not enough to overcome the Fund’s underweight position in integrated telecommunication services, which helps explain the Fund’s underperforming its Telecommunications benchmark. In particular, performance was adversely affected by underweight positions in both AT&T and Verizon.

 

Q. What is your investment outlook for the Utilities sector?

 

A. As we enter the new fiscal year, the Utilities sector is trading at a deep discount to our estimate of the sector’s fair value. Our model suggests all five industries within the sector are bargains and we believe the sector may present many opportunities for investors in the coming months. In addition to the sector’s attractive valuations, we also see several undervalued companies paying relatively high dividends. Accordingly, as the fiscal year ended we increased our Fund holdings in Utilities stocks that had high dividend yields and were undervalued under the ICON system.

 

ICON Telecommunication & Utilities Fund

Industry Composition

September 30, 2011

 

Electric Utilities

    49.5%   

Multi-Utilities

    37.0%   

Gas Utilities

    7.2%   

Water Utilities

    0.9%   
 

 

 

 
    94.6%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

ICON Telecommunication & Utilities Fund

Sector Composition

September 30, 2011

 

Telecommunication & Utilities

    94.6%   
 

 

 

 
    94.6%   
 

 

 

 

Percentages are based upon common stocks as a percentage of net assets.

 

 

MANAGEMENT OVERVIEW     57   


Table of Contents

ICON Telecommunication & Utilities Fund

Average Annual Total Return

as of September 30, 2011

 

     Inception
Date
   

1

Year

    5
Years
    10
Years
    Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

ICON Telecommunication & Utilities
Fund - Class S

    7/9/97        9.16%        3.29%        5.86%        7.25%        1.67%        1.50%   

S&P 1500 Telecommunications Services Index

            5.20%        1.26%        -0.44%        2.03%        N/A        N/A   

S&P 1500 Utilities Index

            12.03%        4.34%        5.96%        6.91%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        -0.86%        3.34%        3.84%        N/A        N/A   

ICON Telecommunication & Utilities
Fund - Class C

    9/30/10        7.77%        N/A        N/A        7.74%        2.67%        2.50%   

S&P 1500 Telecommunications Services Index

            5.20%        N/A        N/A        5.20%        N/A        N/A   

S&P 1500 Utilities Index

            12.03%        N/A        N/A        12.03%        N/A        N/A   

S&P Composite 1500 Index

            0.92%        N/A        N/A        0.92%        N/A        N/A   

ICON Telecommunication & Utilities
Fund - Class A

    9/30/10        8.56%        N/A        N/A        8.53%        1.92%        1.75%   

ICON Telecommunication & Utilities
Fund - Class A (including maximum sales charge of 5.75%)

    9/30/10        2.24%        N/A        N/A        2.23%        1.92%        1.75%   

S&P 1500 Telecommunications Services Index

            5.20%        N/A        N/A        5.20%        N/A        N/A   

 

58   MANAGEMENT OVERVIEW


Table of Contents

ICON Telecommunication & Utilities Fund

Average Annual Total Return (continued)

as of September 30, 2011

 

     Inception
Date
 

1

Year

    5
Years
    10
Years
    Since
Inception
    Gross
Expense
Ratio*
    Net
Expense
Ratio*
 

S&P 1500 Utilities Index

        12.03%        N/A        N/A        12.03%        N/A        N/A   

S&P Composite 1500 Index

        0.92%        N/A        N/A        0.92%        N/A        N/A   

Past performance is not a guarantee of future results. Information about these performance results and the comparative indexes can be found in the About This Report section. 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.

 

* Please see the most recent prospectus for details.

Class C total returns exclude applicable sales charges. If sales charges were included returns would be lower.

 

MANAGEMENT OVERVIEW     59   


Table of Contents

ICON Telecommunication & Utilities Fund

Value of a $10,000 Investment

through September 30, 2011

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Fund’s Class S shares on the Class’ 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.

 

60   MANAGEMENT OVERVIEW


Table of Contents

ICON TELECOMMUNICATION & UTILITIES FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011

 

Shares or Principal Amount   Value  
   
  Common Stocks (94.6%)   
  9,200      AGL Resources, Inc.   $ 374,808   
  7,300      Allete, Inc.     267,399   
  26,800      American Electric Power Co., Inc.     1,018,936   
  6,800      American Water Works Co., Inc.     205,224   
  8,100      Atmos Energy Corp.     262,845   
  11,500      DTE Energy Co.     563,730   
  55,300      Duke Energy Corp.     1,105,447   
  19,900      Edison International     761,175   
  14,300      Entergy Corp.     947,947   
  20,000      Exelon Corp.     852,200   
  19,500      Integrys Energy Group, Inc.     948,090   
  7,900      Laclede Group, Inc.     306,125   
  15,200      MDU Resources Group, Inc.     291,688   
  20,700      NextEra Energy, Inc.     1,118,214   
  10,900      Pepco Holdings, Inc.     206,228   
  23,200      PG&E Corp.     981,592   
  5,400      Piedmont Natural Gas Co., Inc.     156,006   
  44,500      PPL Corp.     1,270,030   
  19,700      Progress Energy, Inc.     1,018,884   
Shares or Principal Amount   Value  
   
  32,000      Public Service Enterprise Group, Inc.   $ 1,067,840   
  30,400      SCANA Corp.     1,229,680   
  19,100      Sempra Energy     983,650   
  52,100      Southern Co.     2,207,477   
  9,500      UGI Corp.     249,565   
  37,800      Vectren Corp.     1,023,624   
  5,300      WGL Holdings, Inc.     207,071   
  39,600      Xcel Energy, Inc.     977,724   
   

 

 

 
 
 
Total Common Stocks
(Cost $19,966,374)
    20,603,199   
  Short-Term Investment (2.3%)   
$ 500,770      State Street Euro Dollar Time
Deposit (USD),
0.01%, 10/03/11
    500,770   
   

 

 

 
 
 
 
Total Short-Term
Investments
(Cost $500,770)
    500,770   
 
 
Total Investments 96.9%
(Cost $20,467,144)
    21,103,969   
 
 
Other Assets Less Liabilities
3.1%
    681,307   
   

 

 

 
  Net Assets 100.0%   $ 21,785,276   
   

 

 

 
 

 

SCHEDULE OF INVESTMENTS     61   


Table of Contents

STATEMENTS OF ASSETS AND LIABILITIES

SEPTEMBER 30, 2011

 

     ICON
Consumer
Discretionary
Fund
    ICON
Consumer
Staples
Fund
    ICON
Energy
Fund
 

Assets

     

Investments, at cost

  $ 36,516,859      $ 22,219,235      $ 636,362,877   
 

 

 

   

 

 

   

 

 

 

Investments, at value

    35,350,225        22,261,348        579,114,169   

Receivables:

     

Fund shares sold

    2,980        1,652        748,342   

Investments sold

    747,561        646,981        14,058,382   

Dividends

    19,561        56,653        261,477   

Expense reimbursements by Adviser

    921        7,739          

Foreign tax reclaims

           3,207        29,517   

Other assets

    6,629        5,184        111,580   
 

 

 

   

 

 

   

 

 

 

Total Assets

    36,127,877        22,982,764        594,323,467   
 

 

 

   

 

 

   

 

 

 

Liabilities

     

Payables:

     

Investments purchased

    516,869        2,180,155        9,088,850   

Payable for collateral received on securities loaned

    1,322,350        42,195        16,866,358   

Fund shares redeemed

    67,685        27,555        543,072   

Advisory fees

    28,094        16,350        515,229   

Accrued distribution fees

    29        54        5,455   

Fund accounting fees

    562        335        10,338   

Transfer agent fees

    5,502        3,915        49,135   

Administration fees

    1,405        817        26,035   

Trustee fees

    195        175        4,642   

Accrued expenses

    18,946        18,436        98,501   
 

 

 

   

 

 

   

 

 

 

Total Liabilities

    1,961,637        2,289,987        27,207,615   
 

 

 

   

 

 

   

 

 

 

Net Assets - all share classes

  $ 34,166,240      $ 20,692,777      $ 567,115,852   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class S

  $ 34,123,253      $ 20,614,140      $ 556,392,865   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class C

  $ 31,801      $ 54,916      $ 4,718,303   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class A

  $ 11,186      $ 23,721      $ 6,004,684   
 

 

 

   

 

 

   

 

 

 

 

62   FINANCIAL STATEMENTS


Table of Contents
     ICON
Consumer
Discretionary
Fund
    ICON
Consumer
Staples
Fund
    ICON
Energy
Fund
 

Net Assets Consist of

     

Paid-in capital

  $ 55,155,417      $ 24,040,825      $ 631,686,223   

Accumulated undistributed net investment income/(loss)

    -        279,768        5,562,115   

Accumulated undistributed net realized gain/(loss) from investments and foreign currency transactions

    (19,822,543     (3,669,929     (12,883,778

Unrealized appreciation/(depreciation) on investments and foreign currency transactions

    (1,166,634     42,113        (57,248,708
 

 

 

   

 

 

   

 

 

 

Net Assets

  $ 34,166,240      $ 20,692,777      $ 567,115,852   
 

 

 

   

 

 

   

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

     

Class S

    3,883,903        2,393,053        33,431,450   

Class C

    3,646        6,437        286,524   

Class A

    1,278        2,733        361,916   

Net asset value (offering and redemption price per share)

     

Class S

  $ 8.79      $ 8.61      $ 16.64   

Class C

  $ 8.72      $ 8.53      $ 16.47   

Class A

  $ 8.75      $ 8.68      $ 16.59   

Class A maximum offering price (100%/(100%-maximum sales charge)) of net asset value adjusted to the nearest cent per share

  $ 9.28      $ 9.21      $ 17.60   

†  Includes securities on loan of

  $ 1,246,832      $ 41,186      $ 16,037,468   

The accompanying notes are an integral part of the financial statements.

 

FINANCIAL STATEMENTS     63   


Table of Contents

STATEMENTS OF ASSETS AND LIABILITIES

SEPTEMBER 30, 2011

 

     ICON
Financial
Fund
    ICON
Healthcare
Fund
    ICON
Industrials
Fund
 

Assets

     

Investments, at cost

  $ 38,302,481      $ 81,038,989      $ 54,320,222   
 

 

 

   

 

 

   

 

 

 

Investments, at value

    32,210,610        76,120,039        52,283,826   

Receivables:

     

Fund shares sold

    5,113        44,512        7,973   

Investments sold

    401,705        335,860        765,713   

Dividends

    37,860        104,499        121,548   

Expense reimbursements by Adviser

    992        1,829        1,339   

Foreign tax reclaims

    11,544        1,563          

Other assets

    7,484        13,315        12,113   
 

 

 

   

 

 

   

 

 

 

Total Assets

    32,675,308        76,621,617        53,192,512   
 

 

 

   

 

 

   

 

 

 

Liabilities

     

Payables:

     

Due to custodian bank

    111,219        10,417        664,811   

Payable for collateral received on securities loaned

           1,139,111        1,563,306   

Fund shares redeemed

    40,353        101,692        96,215   

Advisory fees

    28,483        63,804        45,087   

Accrued distribution fees

    13        45        40   

Fund accounting fees

    588        1,297        911   

Transfer agent fees

    6,398        11,874        6,835   

Administration fees

    1,424        3,190        2,254   

Trustee fees

    348        522        460   

Accrued expenses

    21,640        26,572        22,479   
 

 

 

   

 

 

   

 

 

 

Total Liabilities

    210,466        1,358,524        2,402,398   
 

 

 

   

 

 

   

 

 

 

Net Assets - all share classes

  $ 32,464,842      $ 75,263,093      $ 50,790,114   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class S

  $ 32,432,314      $ 75,115,545      $ 50,652,939   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class C

  $ 8,808      $ 21,913      $ 14,708   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class A

  $ 23,720      $ 125,635      $ 122,467   
 

 

 

   

 

 

   

 

 

 

 

64   FINANCIAL STATEMENTS


Table of Contents
     ICON
Financial
Fund
    ICON
Healthcare
Fund
    ICON
Industrials
Fund
 

Net Assets Consist of

     

Paid-in capital

  $ 141,245,100      $ 84,424,286      $ 91,954,582   

Accumulated undistributed net investment income/(loss)

    210,720        663,354        535,609   

Accumulated undistributed net realized gain/(loss) from investments and foreign currency transactions

    (102,898,904     (4,905,597     (39,663,402

Unrealized appreciation/(depreciation) on investments and foreign currency transactions

    (6,092,074     (4,918,950     (2,036,675
 

 

 

   

 

 

   

 

 

 

Net Assets

  $ 32,464,842      $ 75,263,093      $ 50,790,114   
 

 

 

   

 

 

   

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

     

Class S

    6,913,061        5,539,845        7,454,007   

Class C

    1,899        1,632        2,188   

Class A

    5,070        9,287        18,117   

Net asset value (offering and redemption price per share)

     

Class S

  $ 4.69      $ 13.56      $ 6.80   

Class C

  $ 4.64      $ 13.43      $ 6.72   

Class A

  $ 4.68      $ 13.53      $ 6.76   

Class A maximum offering price (100%/(100%-maximum sales charge)) of net asset value adjusted to the nearest cent per share

  $ 4.97      $ 14.36      $ 7.17   

†  Includes securities on loan of

  $      $ 1,107,726      $ 1,471,117   

The accompanying notes are an integral part of the financial statements.

 

FINANCIAL STATEMENTS     65   


Table of Contents

STATEMENTS OF ASSETS AND LIABILITIES

SEPTEMBER 30, 2011

 

     ICON
Information
Technology
Fund
    ICON
Materials
Fund
    ICON
Telecommunication
& Utilities Fund
 

Assets

     

Investments, at cost

  $ 60,023,822      $ 63,242,194      $ 20,467,144   
 

 

 

   

 

 

   

 

 

 

Investments, at value

    62,225,481        59,033,760        21,103,969   

Cash

           89          

Receivables:

     

Fund shares sold

    9,304        57,400        926,948   

Investments sold

    281,642        756,158          

Dividends

    17,388        142,412        75,183   

Expense reimbursements by Adviser

    1,048        2,708        10,832   

Foreign tax reclaims

                  18,307   

Other assets

    14,145        14,952        4,649   
 

 

 

   

 

 

   

 

 

 

Total Assets

    62,549,008        60,007,479        22,139,888   
 

 

 

   

 

 

   

 

 

 

Liabilities

     

Payables:

     

Due to custodian bank

    97,844        155,146          

Investments purchased

                  269,432   

Payable for collateral received on securities loaned

    1,204,705                 

Fund shares redeemed

    73,585        80,045        30,180   

Distributions due to shareholders

                  13,286   

Advisory fees

    52,297        56,239        16,410   

Accrued distribution fees

    1        229        6   

Fund accounting fees

    1,060        1,137        340   

Transfer agent fees

    7,657        9,290        4,559   

Administration fees

    2,615        2,812        821   

Trustee fees

    541        619        168   

Accrued expenses

    24,940        27,581        19,410   
 

 

 

   

 

 

   

 

 

 

Total Liabilities

    1,465,245        333,098        354,612   
 

 

 

   

 

 

   

 

 

 

Net Assets - all share classes

  $ 61,083,763      $ 59,674,381      $ 21,785,276   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class S

  $ 61,081,142      $ 59,067,736      $ 21,312,561   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class C

  $ 1,303      $ 120,053      $ 23,932   
 

 

 

   

 

 

   

 

 

 

Net Assets - Class A

  $ 1,318      $ 486,592      $ 448,783   
 

 

 

   

 

 

   

 

 

 

 

66   FINANCIAL STATEMENTS


Table of Contents
     ICON
Information
Technology
Fund
    ICON
Materials
Fund
    ICON
Telecommunication
& Utilities Fund
 

Net Assets Consist of

     

Paid-in capital

  $ 88,594,363      $ 83,715,680      $ 30,898,870   

Accumulated undistributed net investment income/(loss)

    -        651,006        148,439   

Accumulated undistributed net realized gain/(loss) from investments and foreign currency transactions

    (29,712,259     (20,483,871     (9,898,858

Unrealized appreciation/(depreciation) on investments and foreign currency transactions

    2,201,659        (4,208,434     636,825   
 

 

 

   

 

 

   

 

 

 

Net Assets

  $ 61,083,763      $ 59,674,381      $ 21,785,276   
 

 

 

   

 

 

   

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

     

Class S

    7,429,749        6,560,121        3,389,492   

Class C

    160        13,464        3,856   

Class A

    161        54,228        71,891   

Net asset value (offering and redemption price per share)

     

Class S

  $ 8.22      $ 9.00      $ 6.29   

Class C

  $ 8.13      $ 8.92      $ 6.21   

Class A

  $ 8.20      $ 8.97      $ 6.24   

Class A maximum offering price (100%/(100%-maximum sales charge)) of net asset value adjusted to the nearest cent per share

  $ 8.70      $ 9.52      $ 6.62   

†  Includes securities on loan of

  $ 1,157,101      $      $   

The accompanying notes are an integral part of the financial statements.

 

FINANCIAL STATEMENTS     67   


Table of Contents

STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED SEPTEMBER 30, 2011

 

     ICON
Consumer
Discretionary
Fund
    ICON
Consumer
Staples
Fund
    ICON
Energy
Fund
 

Investment Income

     

Interest

  $ 91      $ 56      $ 1,513   

Dividends

    365,551        648,933        13,424,461   

Income from securities lending, net

    16,748        11,940        131,354   

Foreign taxes withheld

    -        (2,405     (136,771
 

 

 

   

 

 

   

 

 

 

Total Investment Income

    382,390        658,524        13,420,557   
 

 

 

   

 

 

   

 

 

 

Expenses

     

Advisory fees

    291,593        252,803        6,706,331   

Distribution fees:

     

Class C

    141        291        24,599   

Class A

    19        54        10,625   

Fund accounting fees

    4,706        2,641        95,908   

Transfer agent fees

    52,627        41,166        459,782   

Administration fees

    14,426        12,514        336,328   

Custody fees

    634        2,636        23,747   

Registration fees:

     

Class S

    22,231        21,694        81,210   

Class C

    -        -        2,324   

Class A

    1        -        3,558   

Insurance expense

    2,086        4,503        80,700   

Trustee fees and expenses

    2,200        2,601        57,642   

Audit and tax service expense

    24,931        25,226        33,040   

Interest expense

    1,202        1,261        2,850   

Other expenses

    34,492        32,536        305,149   
 

 

 

   

 

 

   

 

 

 

Total expenses before expense reimbursement

    451,289        399,926        8,223,793   

Expense reimbursement by Adviser due to expense limitation agreement

    (2,712     (21,170     -   
 

 

 

   

 

 

   

 

 

 

Net Expenses

    448,577        378,756        8,223,793   
 

 

 

   

 

 

   

 

 

 

Net Investment Income/(Loss)

    (66,187     279,768        5,196,764   
 

 

 

   

 

 

   

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currency Transactions

     

Net realized gain/(loss) from investment transactions

    3,958,013        6,056,213        56,908,887   

Net realized gain/(loss) from foreign currency transactions

    -        -        (1,756

Change in unrealized net appreciation/ (depreciation) on investments and foreign currency translations

    (2,613,003     (3,689,577     (79,499,501
 

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain/(loss) on investments and foreign currency transactions

    1,345,010        2,366,636        (22,592,370
 

 

 

   

 

 

   

 

 

 

Net Increase/(Decrease) in Net Assets Resulting From Operations

  $ 1,278,823      $ 2,646,404      $ (17,395,606
 

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of the financial statements.

 

68   FINANCIAL STATEMENTS


Table of Contents

ICON

Financial

Fund

    ICON
Healthcare
Fund
    ICON
Industrials
Fund
    ICON
Information
Technology
Fund
    ICON
Materials
Fund
    ICON
Telecommunication
& Utilities Fund
 
         
$ 39      $ 94      $ 164      $ 111      $ 197      $ 13   
  933,792        1,698,058        1,420,598        699,342        1,826,920        1,334,638   
  348        40,435        29,230        43,973        29,836        -   
  (14,312     (16,996     (9,112     -        (10,940     (26,715

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  919,867        1,721,591        1,440,880        743,426        1,846,013        1,307,936   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
  498,520        776,497        666,581        783,790        893,928        244,118   
         
  39        63        114        12        940        12   
  56        74        233        2        1,158        2   
  5,681        6,943        8,593        9,438        11,576        2,886   
  59,592        108,678        75,017        89,735        95,844        43,084   
  24,679        38,448        32,998        38,799        44,247        12,089   
  4,822        3,626        3,459        3,642        3,959        3,484   
         
  24,038        27,420        26,920        27,346        26,158        22,070   
  -        442        -        -        1        -   
  1        364        442        -        1,098        -   
  8,705        17,612        9,044        13,868        12,476        3,539   
  5,042        6,133        6,413        7,244        8,517        2,615   
  25,638        26,735        25,671        26,262        26,029        25,127   
  1,821        1,381        3,745        2,287        3,031        2,447   
  44,038        47,228        49,110        54,014        69,819        33,425   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
  702,672        1,061,644        908,340        1,056,439        1,198,781        394,898   
         
  (2,512     (3,414     (2,849     (2,606     (3,934     (25,886

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  700,160        1,058,230        905,491        1,053,833        1,194,847        369,012   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  219,707        663,361        535,389        (310,407     651,166        938,924   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
         
         
  4,264,982        16,832,522        4,947,342        10,930,880        14,037,245        3,030,171   
         
  (29     -        225        -        2        253   
         
         
  (8,169,704     (14,799,677     (9,247,082     (7,722,736     (18,663,236     (1,633,228

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  (3,904,751     2,032,845        (4,299,515     3,208,144        (4,625,989     1,397,196   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
$ (3,685,044   $ 2,696,206      $ (3,764,126   $ 2,897,737      $ (3,974,823   $ 2,336,120   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

FINANCIAL STATEMENTS     69   


Table of Contents

STATEMENTS OF CHANGES IN NET ASSETS

 

     ICON Consumer Discretionary Fund  
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 

Operations

   

Net investment income/(loss)

  $ (66,187   $ (93,189

Net realized gain/(loss) on investment transactions and foreign currency transactions

    3,958,013        2,071,670   

Change in net unrealized appreciation/(depreciation) on investments and foreign currency transactions

    (2,613,003     (738,123
 

 

 

   

 

 

 

Net increase/(decrease) in net assets resulting from operations

    1,278,823        1,240,358   
 

 

 

   

 

 

 

Dividends and Distributions to Shareholders

   

Net investment income

   

Class S

    -        (376,917

Class C

    -        -   

Class A

    -        -   
 

 

 

   

 

 

 

Net decrease from dividends and distributions

    -        (376,917
 

 

 

   

 

 

 

Fund Share Transactions

   

Shares sold

   

Class S

    35,997,921        25,144,641   

Class C

    34,449        10   

Class A

    13,977        10   

Reinvested dividends and distributions

   

Class S

    -        370,245   

Class C

    -        -   

Class A

    -        -   

Shares repurchased

   

Class S

    (20,906,184     (22,833,765

Class C

    -        -   

Class A

    (2,421     -   
 

 

 

   

 

 

 

Net Increase/(decrease) from fund share transactions

    15,137,742        2,681,141   
 

 

 

   

 

 

 

Total net increase/(decrease) in net assets

    16,416,565        3,544,582   

Net Assets

   

Beginning of year

    17,749,675        14,205,093   
 

 

 

   

 

 

 

End of year

  $ 34,166,240      $ 17,749,675   
 

 

 

   

 

 

 

 

* Amount less than $0.50.

 

70   FINANCIAL STATEMENTS


Table of Contents
ICON Consumer Staples Fund     ICON Energy Fund     ICON Financial Fund  

Year ended
September 30,
2011

    Year ended
September 30,
2010
    Year ended
September 30,
2011
    Year ended
September 30,
2010
    Year ended
September 30,
2011
    Year ended
September 30,
2010
 
         
$ 279,768      $ 315,209      $ 5,196,764      $ 7,066,956      $ 219,707      $ 224,427   
         
  6,056,213        1,411,171        56,907,131        70,562,544        4,264,953        14,551,608   
         
  (3,689,577     1,507,065        (79,499,501     (83,867,728     (8,169,704     (20,022,696

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
  2,646,404        3,233,445        (17,395,606     (6,238,228     (3,685,044     (5,246,661

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  (315,201     (383,505     (6,512,391     (7,077,474     (214,079     (1,136,088
  -     -        (2,299     -        -     -   
  -     -        (2,050     -        -     -   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (315,201     (383,505     (6,516,740     (7,077,474     (214,079     (1,136,088

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  4,430,851        12,417,351        292,023,538        178,922,949        5,449,823        23,666,480   
  64,933        10        6,473,169        10        11,500        10   
  58,829        10        13,691,961        10        43,528        10   
         
  307,247        379,975        6,151,455        6,772,496        205,345        1,109,429   
  -        -        2,134        -        -        -   
  -        -        1,303        -        -        -   
         
  (17,099,046     (11,080,889     (231,307,972     (222,753,588     (28,086,279     (41,710,196
  (8,325     -        (481,687     -        -        -   
  (33,053     -        (5,707,105     -        (10,223     -   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (12,278,564     1,716,457        80,846,796        (37,058,123     (22,386,306     (16,934,267

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (9,947,361     4,566,397        56,934,450        (50,373,825     (26,285,429     (23,317,016
         
  30,640,138        26,073,741        510,181,402        560,555,227        58,750,271        82,067,287   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 20,692,777      $ 30,640,138      $ 567,115,852      $ 510,181,402      $ 32,464,842      $ 58,750,271   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

FINANCIAL STATEMENTS     71   


Table of Contents

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

 

     ICON Consumer Discretionary Fund  
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 

Transactions in Fund Shares

   

Shares sold

   

Class S

    3,902,028        3,179,590   

Class C

    3,645        1   

Class A

    1,549        1   

Reinvested dividends and distributions

   

Class S

    -        52,892   

Class C

    -        -   

Class A

    -        -   

Shares repurchased

   

Class S

    (2,259,195     (3,071,715

Class C

    -        -   

Class A

    (272     -   
 

 

 

   

 

 

 

Net increase/(decrease)

    1,647,755        160,769   

Shares outstanding, beginning of year

    2,241,072        2,080,303   
 

 

 

   

 

 

 

Shares outstanding, end of year

    3,888,827        2,241,072   
 

 

 

   

 

 

 

Accumulated undistributed net investment income/(loss)

  $ -      $ -   
 

 

 

   

 

 

 

The accompanying notes are an integral part of the financial statements.

 

72   FINANCIAL STATEMENTS


Table of Contents
ICON Consumer Staples Fund     ICON Energy Fund     ICON Financial Fund  

Year ended
September 30,
2011

    Year ended
September 30,
2010
    Year ended
September 30,
2011
    Year ended
September 30,
2010
    Year ended
September 30,
2011
    Year ended
September 30,
2010
 
         
         
  502,481        1,605,672        13,946,024        10,555,692        964,735        3,866,691   
  7,402        1        310,026        1        1,897        2   
  6,526        1        634,607        1        7,154        2   
         
  35,644        49,931        315,298        395,124        34,396        197,759   
  -        -        109        -        -        -   
  -        -        66        -        -        -   
         
  (1,937,424     (1,426,850     (11,397,070     (13,514,630     (4,672,640     (7,233,233
  (966     -        (23,612     -        -        -   
  (3,794     -        (272,758     -        (2,086     -   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (1,390,131     228,755        3,512,690        (2,563,812     (3,666,544     (3,168,779
  3,792,354        3,563,599        30,567,200        33,131,012        10,586,574        13,755,353   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  2,402,223        3,792,354        34,079,890        30,567,200        6,920,030        10,586,574   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
$ 279,768      $ 315,201      $ 5,562,115      $ 7,390,361      $ 210,720      $ 214,041   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

FINANCIAL STATEMENTS     73   


Table of Contents

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

 

         
ICON Healthcare Fund
 
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 

Operations

   

Net investment income/(loss)

  $ 663,361      $ 368,451   

Net realized gain/(loss) on investment transactions and foreign currency transactions

    16,832,522        11,603,009   

Change in net unrealized appreciation/(depreciation) on investments and foreign currency transactions

    (14,799,677     (5,724,798
 

 

 

   

 

 

 

Net increase/(decrease) in net assets resulting from operations

    2,696,206        6,246,662   
 

 

 

   

 

 

 

Dividends and Distributions to Shareholders

   

Net investment income

   

Class S

    (368,446     (1,948,725

Class C

    -     -   

Class A

    -     -   
 

 

 

   

 

 

 

Net decrease from dividends and distributions

    (368,446     (1,948,725
 

 

 

   

 

 

 

Fund Share Transactions

   

Shares sold

   

Class S

    34,364,122        60,674,398   

Class C

    24,350        10   

Class A

    139,248        10   

Reinvested dividends and distributions

   

Class S

    339,364        1,861,774   

Class C

    -        -   

Class A

    -        -   

Shares repurchased

   

Class S

    (34,486,108     (104,885,201

Class C

    -        -   

Class A

    -        -   
 

 

 

   

 

 

 

Net Increase/(decrease) from fund share transactions

    380,976        (42,349,009
 

 

 

   

 

 

 

Total net increase/(decrease) in net assets

    2,708,736        (38,051,072

Net Assets

   

Beginning of year

    72,554,357        110,605,429   
 

 

 

   

 

 

 

End of year

  $ 75,263,093      $ 72,554,357   
 

 

 

   

 

 

 

 

* Amount less than $0.50.

 

74   FINANCIAL STATEMENTS


Table of Contents
ICON Industrials Fund     ICON Information
Technology Fund
    ICON Materials Fund  

Year ended
September 30,
2011

    Year ended
September 30,
2010
    Year ended
September 30,
2011
    Year ended
September 30,
2010
    Year ended
September 30,
2011
    Year ended
September 30,
2010
 
         
$ 535,389      $ 481,375      $ (310,407   $ (558,858   $ 651,166      $ 478,057   
 
 
    
4,947,567
 
  
    5,748,298        10,930,880        15,864,394        14,037,247        9,069,867   
 
 
    
(9,247,082
 
    5,287,288        (7,722,736     (11,556,229     (18,663,236     1,094,273   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
 
 
    
(3,764,126
 
    11,516,961        2,897,737        3,749,307        (3,974,823     10,642,197   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  (478,530     (1,217,973     -        (631,045     (477,527     (1,039,736
  -     -        -        -        -     -   
  (24     -        -        -        (659     -   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (478,554     (1,217,973     -        (631,045     (478,186     (1,039,736

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         
         
  25,861,382        20,401,204        21,159,024        11,238,244        23,865,539        34,039,868   
  28,866        10        2,731        10        191,926        10   
  583,511        10        1,500        10        1,071,934        10   
         
  466,250        1,207,851        -        623,163        429,088        961,442   
  -        -        -        -        -        -   
  24        -        -        -        518        -   
         
  (43,113,233     (30,836,480     (40,245,229     (56,960,109     (48,822,526     (51,775,985
  (8,746     -        (1,175     -        (35,925     -   
  (392,087     -        -        -        (428,748     -   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (16,574,033     (9,227,405     (19,083,149     (45,098,682     (23,728,194     (16,774,655

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (20,816,713     1,071,583        (16,185,412     (41,980,420     (28,181,203     (7,172,194
         
  71,606,827        70,535,244        77,269,175        119,249,595        87,855,584        95,027,778   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 50,790,114      $ 71,606,827      $ 61,083,763      $ 77,269,175      $ 59,674,381      $ 87,855,584   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

FINANCIAL STATEMENTS     75   


Table of Contents

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

 

         
ICON Healthcare Fund
 
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 

Transactions in Fund Shares

   

Shares sold

   

Class S

    2,280,950        4,673,714   

Class C

    1,631        1   

Class A

    9,286        1   

Reinvested dividends and distributions

   

Class S

    25,045        141,580   

Class C

    -        -   

Class A

    -        -   

Shares repurchased

   

Class S

    (2,443,847     (8,133,721

Class C

    -        -   

Class A

    -        -   
 

 

 

   

 

 

 

Net increase/(decrease)

    (126,935     (3,318,425

Shares outstanding, beginning of year

    5,677,699        8,996,124   
 

 

 

   

 

 

 

Shares outstanding, end of year

    5,550,764        5,677,699   
 

 

 

   

 

 

 

Accumulated undistributed net investment income/(loss)

  $ 663,354      $ 368,439   
 

 

 

   

 

 

 

The accompanying notes are an integral part of the financial statements.

 

76   FINANCIAL STATEMENTS


Table of Contents
ICON Industrials Fund     ICON Information
Technology Fund
    ICON Materials Fund  

Year ended
September 30,
2011

    Year ended
September 30,
2010
    Year ended
September 30,
2011
    Year ended
September 30,
2010
    Year ended
September 30,
2011
    Year ended
September 30,
2010
 
         
         
  3,033,834        2,856,226        2,272,423        1,388,002        2,072,102        3,610,598   
  3,349        1        289        1        16,427        1   
  67,174        1        160        1        92,217        1   
         
  56,790        180,008        -        76,839        37,972        103,381   
  -        -        -        -        -        -   
  3        -        -        -        46        -   
         
  (5,217,067     (4,504,290     (4,436,744     (7,172,818     (4,284,985     (5,619,157
  (1,162     -        (130     -        (2,964     -   
  (49,061     -        -        -        (38,036     -   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (2,106,140     (1,468,054     (2,164,002     (5,707,975     (2,107,221     (1,905,176
  9,580,452        11,048,506        9,594,072        15,302,047        8,735,034        10,640,210   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  7,474,312        9,580,452        7,430,070        9,594,072        6,627,813        8,735,034   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    
$
 
535,609
 
  
  $ 478,549      $ -      $ -      $ 651,006      $ 478,024   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

FINANCIAL STATEMENTS     77   


Table of Contents

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

 

     ICON Telecommunication &
Utilities Fund
 
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 

Operations

   

Net investment income/(loss)

  $ 938,924      $ 867,140   

Net realized gain/(loss) on investment transactions and foreign currency transactions

    3,030,424        (482,505

Change in net unrealized appreciation/(depreciation) on investments and foreign currency transactions

    (1,633,228     2,392,792   
 

 

 

   

 

 

 

Net increase/(decrease) in net assets resulting from operations

    2,336,120        2,777,427   
 

 

 

   

 

 

 

Dividends and Distributions to Shareholders

   

Net investment income

   

Class S

    (1,565,042     (595,082

Class C

    (445     -   

Class A

    (4,387     -   
 

 

 

   

 

 

 

Net decrease from dividends and distributions

    (1,569,874     (595,082
 

 

 

   

 

 

 

Fund Share Transactions

   

Shares sold

   

Class S

    8,448,631        18,118,349   

Class C

    24,131        10   

Class A

    450,760        10   

Reinvested dividends and distributions

   

Class S

    1,508,702        581,406   

Class C

    320        -   

Class A

    4,387        -   

Shares repurchased

   

Class S

    (21,453,429     (11,393,241

Class C

    -        -   

Class A

    -        -   
 

 

 

   

 

 

 

Net Increase/(decrease) from fund share transactions

    (11,016,498     7,306,534   
 

 

 

   

 

 

 

Total net increase/(decrease) in net assets

    (10,250,252     9,488,879   

Net Assets

   

Beginning of year

    32,035,528        22,546,649   
 

 

 

   

 

 

 

End of year

  $ 21,785,276      $ 32,035,528   
 

 

 

   

 

 

 

 

78   FINANCIAL STATEMENTS


Table of Contents
     ICON Telecommunication &
Utilities Fund
 
     Year ended
September 30,
2011
    Year ended
September 30,
2010
 

Transactions in Fund Shares

   

Shares sold

   

Class S

    1,349,348        3,124,533   

Class C

    3,803        2   

Class A

    71,186        2   

Reinvested dividends and distributions

   

Class S

    244,079        98,710   

Class C

    51        -   

Class A

    703        -   

Shares repurchased

   

Class S

    (3,416,187     (1,991,136

Class C

    -        -   

Class A

    -        -   
 

 

 

   

 

 

 

Net increase/(decrease)

    (1,747,017     1,232,111   

Shares outstanding, beginning of year

    5,212,256        3,980,145   
 

 

 

   

 

 

 

Shares outstanding, end of year

    3,465,239        5,212,256   
 

 

 

   

 

 

 

Accumulated undistributed net investment income/(loss)

  $ 148,439      $ 779,136   
 

 

 

   

 

 

 

The accompanying notes are an integral part of the financial statements.

 

FINANCIAL STATEMENTS     79   


Table of Contents

FINANCIAL HIGHLIGHTS

 

 

          Income/(loss) from investment operations     Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON Consumer Discretionary Fund

           

Class S

           

Year ended September 30, 2011

  $ 7.92      $ (0.02   $ 0.89      $ 0.87      $ -      $ -   

Year ended September 30, 2010

    6.83        (0.05     1.42        1.37        (0.28     -   

Year ended September 30, 2009

    7.19        0.01        (0.37     (0.36     -        -   

Year ended September 30, 2008

    12.79        - (c)      (2.61     (2.61     -        (2.99

Year ended September 30, 2007

    12.11        (0.04     0.72        0.68        -        -   

Class C

           

Year ended September 30, 2011

    7.92        (0.12     0.92        0.80        -        -   

Class A

           

Year ended September 30, 2011

    7.92        (0.06     0.89        0.83        -        -   

ICON Consumer Staples Fund

           

Class S

           

Year ended September 30, 2011

    8.08        0.10        0.52        0.62        (0.09     -   

Year ended September 30, 2010

    7.32        0.08        0.76        0.84        (0.08     -   

Year ended September 30, 2009

    7.37        0.04        (0.09     (0.05     -        - (c) 

Year ended September 30, 2008

    10.62        0.03        (1.60     (1.57     (0.13     (1.55

Year ended September 30, 2007

    9.21        0.10        1.33        1.43        (0.02     - (c) 

Class C

           

Year ended September 30, 2011

    8.08        0.04        0.50        0.54        (0.09     -   

Class A

           

Year ended September 30, 2011

    8.08        0.11        0.58        0.69        (0.09     -   

ICON Energy Fund

           

Class S

           

Year ended September 30, 2011

    16.69        0.16        -        0.16        (0.21     -   

Year ended September 30, 2010

    16.92        0.21        (0.23     (0.02     (0.21     -   

Year ended September 30, 2009

    27.06        0.21        (2.41     (2.20     (0.12     (7.82

Year ended September 30, 2008

    41.46        0.20        (4.82     (4.62     (0.11     (9.67

Year ended September 30, 2007

    31.88        0.08        12.86        12.94        -        (3.36

Class C

           

Year ended September 30, 2011

    16.69        (0.10     0.09        (0.01     (0.21     -   

Class A

           

Year ended September 30, 2011

    16.69        0.08        0.03        0.11        (0.21     -   

ICON Financial Fund

           

Class S

           

Year ended September 30, 2011

    5.55        0.03        (0.87     (0.84     (0.02     -   

Year ended September 30, 2010

    5.97        0.02        (0.32     (0.30     (0.12     -   

Year ended September 30, 2009

    8.55        0.09        (2.43     (2.34     (0.24     -   

Year ended September 30, 2008

    14.30        0.21        (4.29     (4.08     (0.14     (1.53

Year ended September 30, 2007

    14.47        0.13        0.45        0.58        (0.15     (0.60

Class C

           

Year ended September 30, 2011

    5.55        (0.02     (0.87     (0.89     (0.02     -   

Class A

           

Year ended September 30, 2011

    5.55        0.01        (0.86     (0.85     (0.02     -   

 

80   FINANCIAL HIGHLIGHTS


Table of Contents
distributions                       Ratio of expenses
to average net assets
    Ratio of net investment
income/(loss)

to average net assets
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of
period (in
thousands)
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and  transfer
agent
earnings
credit
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and  transfer
agent
earnings
credit
    Portfolio
turnover
rate(a)
 
               
               
$ -      $ 8.79        10.98   $ 34,123        1.54     1.54 %(b)      (0.23 )%      (0.23 )%      107.57
  (0.28     7.92        20.61     17,750        2.02     2.02     (0.62 )%      (0.62 )%      194.84
  -        6.83        (5.01 )%      14,205        1.63     1.63     0.14     0.14     200.23
  (2.99     7.19        (24.21 )%      72,242        1.38     1.38     (0.04 )%      (0.04 )%      218.32
  -        12.79        5.62     94,477        1.30     1.30     (0.31 )%      (0.31 )%      144.89
               
  -        8.72        10.10     32        13.14     2.75 %(b)      (11.73 )%      (1.34 )%      107.57
               
  -        8.75        10.48     11        18.49     1.98 %(b)      (17.17 )%      (0.66 )%      107.57
               
               
  (0.09     8.61        7.64     20,614        1.57     1.50 %(b)      1.03     1.10     109.56
  (0.08     8.08        11.56     30,640        1.54     1.54     0.98     0.98     86.31
  - (c)      7.32        (0.64 )%      26,074        1.58     1.58     0.72     0.72     134.29
  (1.68     7.37        (17.40 )%      42,139        1.46     1.46     0.31     0.31     132.40
  (0.02     10.62        15.61     31,571        1.41     1.41     1.02     1.02     150.72
               
  (0.09     8.53        6.65     55        7.00     2.50 %(b)      (4.09 )%      0.41     109.56
               
  (0.09     8.68        8.52     24        7.60     1.75 %(b)      (4.60 )%      1.25     109.56
               
               
  (0.21     16.64        0.80     556,393        1.20     1.20 %(b)      0.77     0.77     88.31
  (0.21     16.69        (0.17 )%      510,181        1.24     1.24     1.26     1.26     169.86
  (7.94     16.92        (1.73 )%      560,555        1.24     1.24     1.39     1.39     186.47
  (9.78     27.06        (14.62 )%      492,637        1.16     1.16     0.59     0.59     119.87
  (3.36     41.46        43.64     816,075        1.17 %(d)      1.17 %(d)      0.24 %(d)      0.24 %(d)      54.75
               
  (0.21     16.47        (0.23 )%      4,718        2.47     2.47 %(b)      (0.47 )%      (0.47 )%      88.31
               
  (0.21     16.59        0.49     6,005        1.70     1.70 %(b)      0.38     0.38     88.31
               
               
  (0.02     4.69        (15.18 )%      32,432        1.40     1.40 %(b)      0.44     0.44     100.23
  (0.12     5.55        (5.11 )%      58,750        1.43     1.43     0.36     0.36     143.36
  (0.24     5.97        (26.80 )%      82,067        1.42     1.42     1.70     1.70     194.00
  (1.67     8.55        (31.93 )%      128,175        1.22     1.22     1.94     1.94     220.83
  (0.75     14.30        3.84     200,089        1.21     1.21     0.86     0.86     93.04
               
  (0.02     4.64        (16.08 )%      9        35.28     2.50 %(b)      (33.22 )%      (0.44 )%      100.23
               
  (0.02     4.68        (15.36 )%      24        7.37     1.75 %(b)      (5.50 )%      0.12     100.23

 

FINANCIAL HIGHLIGHTS     81   


Table of Contents

FINANCIAL HIGHLIGHTS (CONTINUED)

 

 

          Income/(loss) from investment operations     Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON Healthcare Fund

           

Class S

           

Year ended September 30, 2011

  $ 12.78      $ 0.12      $ 0.73      $ 0.85      $ (0.07   $ -   

Year ended September 30, 2010

    12.29        0.04        0.63        0.67        (0.18     -   

Year ended September 30, 2009

    13.49        0.08        (1.28     (1.20     -        -   

Year ended September 30, 2008

    17.68        (0.02     (2.65     (2.67     -        (1.52

Year ended September 30, 2007

    17.95        - (c)      1.19        1.19        -        (1.46

Class C

           

Year ended September 30, 2011

    12.78        (0.01     0.73        0.72        (0.07     -   

Class A

           

Year ended September 30, 2011

    12.78        0.12        0.70        0.82        (0.07     -   

ICON Industrials Fund

           

Class S

           

Year ended September 30, 2011

    7.47        0.07        (0.67     (0.60     (0.07     -   

Year ended September 30, 2010

    6.38        0.05        1.17        1.22        (0.13     -   

Year ended September 30, 2009

    8.16        0.08        (1.82     (1.74     (0.04     -   

Year ended September 30, 2008

    10.77        0.05        (2.32     (2.27     (0.01     (0.33

Year ended September 30, 2007

    13.22        0.02        2.63        2.65        - (c)      (5.10

Class C

           

Year ended September 30, 2011

    7.47        (0.02     (0.66     (0.68     (0.07     -   

Class A

           

Year ended September 30, 2011

    7.47        0.05        (0.69     (0.64     (0.07     -   

ICON Information Technology Fund

           

Class S

           

Year ended September 30, 2011

    8.05        (0.04     0.21        0.17        -        -   

Year ended September 30, 2010

    7.79        (0.05     0.35        0.30        (0.04     -   

Year ended September 30, 2009

    7.86        (0.01     (0.06     (0.07     -        -   

Year ended September 30, 2008

    11.02        (0.04     (3.12     (3.16     -        -   

Year ended September 30, 2007

    8.72        (0.05     2.35        2.30        -        -   

Class C

           

Year ended September 30, 2011

    8.05        (0.13     0.21        0.08        -        -   

Class A

           

Year ended September 30, 2011

    8.05        (0.05     0.20        0.15        -        -   

ICON Materials Fund

           

Class S

           

Year ended September 30, 2011

    10.06        0.08        (1.08     (1.00     (0.06     -   

Year ended September 30, 2010

    8.93        0.05        1.18        1.23        (0.10     -   

Year ended September 30, 2009

    9.81        0.11        (0.91     (0.80     (0.08     -   

Year ended September 30, 2008

    15.39        0.08        (3.23     (3.15     (0.06     (2.37

Year ended September 30, 2007

    11.67        0.08        5.10        5.18        (0.15     (1.31

Class C

           

Year ended September 30, 2011

    10.06        (0.03     (1.05     (1.08     (0.06     -   

Class A

           

Year ended September 30, 2011

    10.06        0.05        (1.08     (1.03     (0.06     -   

 

82   FINANCIAL HIGHLIGHTS


Table of Contents
distributions                       Ratio of expenses
to average net assets
    Ratio of net investment
income/(loss)

to average net assets
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of
period (in
thousands)
    Before
expense
limitation

and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Portfolio
turnover
rate(a)
 
               
               
$ (0.07   $ 13.56        6.66   $ 75,116        1.36     1.36 %(b)      0.85     0.85     83.63
  (0.18     12.78        5.39     72,554        1.36     1.36     0.31     0.31     102.42
  -        12.29        (8.90 )%      110,605        1.37     1.37     0.74     0.74     105.75
  (1.52     13.49        (16.43 )%      160,083        1.25     1.25     (0.12 )%      (0.12 )%      61.44
  (1.46     17.68        7.17     473,287        1.20 %(d)      1.20 %(d)      0.01 %(d)      0.01 %(d)      24.56
               
  (0.07     13.43        5.64     22        31.38     2.50 %(b)      (28.98 )%      (0.10 )%      83.63
               
  (0.07     13.53        6.42     126        7.15     1.75 %(b)      (4.58 )%      0.82     83.63
               
               
  (0.07     6.80        (8.21 )%      50,653        1.36     1.36 %(b)      0.80     0.80     55.87
  (0.13     7.47        19.40     71,607        1.40     1.40     0.73     0.73     54.34
  (0.04     6.38        (21.25 )%      70,535        1.37     1.37     1.39     1.39     96.24
  (0.34     8.16        (21.72 )%      125,286        1.25     1.25     0.55     0.55     143.40
  (5.10     10.77        28.73     155,739        1.27 %(d)      1.27 %(d)      0.16 %(d)      0.16 %(d)      125.44
               
  (0.07     6.72        (9.29 )%      15        13.56     2.50 %(b)      (11.29 )%      (0.23 )%      55.87
               
  (0.07     6.76        (8.75 )%      122        3.46     1.75 %(b)      (1.12 )%      0.59     55.87
               
               
  -        8.22        2.11     61,081        1.34     1.34 %(b)      (0.40 )%      (0.40 )%      44.84
  (0.04     8.05        3.91     77,269        1.37     1.37     (0.58 )%      (0.58 )%      68.32
  -        7.79        (0.89 )%      119,250        1.38     1.38     (0.09 )%      (0.09 )%      89.87
  -        7.86        (28.68 )%      178,450        1.24     1.24     (0.41 )%      (0.41 )%      171.22
  -        11.02        26.38     266,965        1.23     1.23     (0.49 )%      (0.49 )%      78.66
               
  -        8.13        0.99     1        115.00     2.51 %(b)      (113.96 )%      (1.47 )%      44.84
               
  -        8.20        1.86     1        215.56     1.75 %(b)      (214.36 )%      (0.55 )%      44.84
               
               
  (0.06     9.00        (10.07 )%      59,068        1.33     1.33 %(b)      0.73     0.73     62.97
  (0.10     10.06        13.92     87,856        1.38     1.38     0.54     0.54     70.80
  (0.08     8.93        (7.87 )%      95,028        1.40     1.40     1.50     1.50     134.88
  (2.43     9.81        (23.79 )%      118,522        1.26     1.26     0.60     0.60     111.26
  (1.46     15.39        48.63     131,321        1.33     1.33     0.59     0.59     109.10
               
  (0.06     8.92        (10.87 )%      120        4.11     2.50 %(b)      (1.91 )%      (0.30 )%      62.97
               
  (0.06     8.97        (10.37 )%      487        2.26     1.74 %(b)      (0.07 )%      0.45     62.97

 

FINANCIAL HIGHLIGHTS     83   


Table of Contents

FINANCIAL HIGHLIGHTS (CONTINUED)

 

 

          Income/(loss) from investment operations     Less dividends and  
     Net asset
value,
beginning
of period
    Net
investment
income/
(loss)(x)
    Net realized
and unrealized
gains/(losses)
on investments
    Total from
investment
operations
    Dividends
from net
investment
income
    Distributions
from net
realized
gains
 

ICON Telecommunication & Utilities Fund

           

Class S

           

Year ended September 30, 2011

  $ 6.15      $ 0.24      $ 0.31      $ 0.55      $ (0.41   $ -   

Year ended September 30, 2010

    5.66        0.19        0.44        0.63        (0.14     -   

Year ended September 30, 2009

    6.34        0.14        (0.44     (0.30     (0.38     -   

Year ended September 30, 2008

    9.20        0.14        (2.03     (1.89     (0.06     (0.91

Year ended September 30, 2007

    7.66        0.10        2.18        2.28        (0.11     (0.63

Class C

           

Year ended September 30, 2011

    6.15        0.25        0.22        0.47        (0.41     -   

Class A

           

Year ended September 30, 2011

    6.15        0.34        0.17        0.51        (0.42     -   

 

(x) Calculated using the average shares method.  
* The total return calculation is for the period indicated and excludes any sales charges.  
(a) Portfolio turnover is calculated at the Fund level.  
(b) Effective January 1, 2011, the Fund’s operating expenses, not including interest expense, are contractually limited to the amounts discussed in Note 3. The ratios in these financial highlights reflect the limitation, including interest expense.  
(c) Amount less than $0.005.  
(d) Ratios include transfer agent earnings credits received. These earnings credits reduced the net expense ratio and increased the net income ratio by 0.01%.  

The accompanying notes are an integral part of the financial statements.

 

84   FINANCIAL HIGHLIGHTS


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distributions                       Ratio of expenses
to average net assets
    Ratio of net investment
income/(loss)

to average net assets
       
Total
dividends
and
distributions
    Net asset
value, end
of period
    Total
return*
    Net assets,
end of
period (in
thousands)
    Before
expense
limitation

and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Before
expense
limitation
and transfer
agent
earnings
credit
    After
expense
limitation
and transfer
agent
earnings
credit
    Portfolio
turnover
rate(a)
 
               
               
$ (0.41   $ 6.29        9.16   $ 21,313        1.61     1.51 %(b)      3.75     3.85     114.73
  (0.14     6.15        11.16     32,036        1.67     1.67     3.28     3.28     84.45
  (0.38     5.66        (4.39 )%      22,547        1.70     1.70     2.70     2.70     90.27
  (0.97     6.34        (23.01 )%      30,335        1.35     1.35     1.74     1.74     102.65
  (0.74     9.20        31.60     109,509        1.33     1.33     1.20     1.20     154.99
               
  (0.41     6.21        7.77     24        122.08     2.50 %(b)      (115.58 )%      4.00     114.73
               
  (0.42     6.24        8.56     449        185.34     1.75 %(b)      (178.27 )%      5.32     114.73

 

FINANCIAL HIGHLIGHTS     85   


Table of Contents

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

 

1.   Organization

The ICON Consumer Discretionary Fund, ICON Consumer Staples Fund (formerly, ICON Leisure and Consumer Staples Fund), ICON Energy Fund, ICON Financial Fund, ICON Healthcare Fund, ICON Industrials Fund, ICON Information Technology Fund, ICON Materials Fund, and ICON 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. As of September 30, 2011, each Fund has three classes of shares: Class S, Class C and Class A. Class A and Class C shares commenced operations on September 30, 2010. All classes have equal rights as to earnings, assets, and voting privileges except that each Class may bear different distribution fees, registration costs, legal costs, mailing and printing costs and shareholder servicing costs and each Class has exclusive voting rights with respect to its distribution plan. There are currently eight 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 invest primarily in securities of companies whose principal business activities fall within specific sectors and industries. The investment objective of each Fund is to provide long-term capital appreciation.

The Funds may have elements of risk, including the risk of loss of principal. There is no assurance that the investment process will consistently lead to successful results. An investment in a non-diversified sector fund may involve greater risk and volatility than a more 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. Financial statements of foreign companies are governed by different accounting, auditing, and financial standards than U.S. companies and may be less transparent and uniform than in the United States. Many corporate governance standards, which help ensure the integrity of public information in the United States, may not exist in some foreign countries. In general, there may be less governmental supervision of foreign stock exchanges and securities brokers and issuers. There are also risks associated with small-and mid-cap investing, including limited product lines, less liquidity and small market share.

 

86   NOTES TO FINANCIAL STATEMENTS


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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 involving future claims that may be made against each Fund is unknown. However, based on experience, the Funds expect the risk of loss to be minimal.

2.  Significant Accounting Policies

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 may differ from these estimates.

Investment Valuation

The Funds’ securities and other assets, excluding options on securities indexes, 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 Standard Time) each day the NYSE is open, except that securities traded primarily on the NASDAQ Stock Market (“NASDAQ”) are normally valued by the Funds at the NASDAQ Official Closing Price provided by NASDAQ each business day. Options on securities indexes are valued at the close of the Chicago Board Options Exchange (normally 4:15 p.m. Eastern Standard Time) on each day the New York Stock Exchange is open for trading.

The Funds use pricing services to obtain the market value of securities in their portfolios; if a pricing service is not able to provide a price, or the pricing service’s valuation quote 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, a security is valued at the current closing bid price (or yield equivalent thereof) or based on quotes obtained from dealers

 

NOTES TO FINANCIAL STATEMENTS     87   


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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

making a market for the security. Options are valued at their closing mid-price on the market with the most volume. Mid-price is the average of the closing bid and closing ask prices. Debt securities with a remaining maturity of greater than 60 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 based upon a matrix valuation system which considers such factors as security prices, yields, maturities and ratings. Short-term debt securities with remaining maturities of 60 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 NYSE are used to convert foreign security values into U.S. dollars.

The Funds’ securities that traded in countries outside of the Western Hemisphere are fair valued daily by utilizing the quotations of an independent pricing service, unless the Board determines that use of another valuation methodology is appropriate. The purposes of daily fair valuation are to avoid stale prices and to take into account, among other things, any significant events occurring after the close of foreign markets. The pricing service uses statistical analyses and quantitative models to adjust local market prices using factors such as subsequent movements and changes in the prices of indexes, securities and exchange rates in other markets to determine fair value as of the time a Fund calculates its net asset value (“NAV”). The valuation assigned to fair-value securities for purposes of calculating a Fund’s NAV may differ from the security’s most recent closing market price and from the prices used by other mutual funds to calculate their NAVs.

Investments in other open-end investment companies are valued at net asset value.

Various inputs are used to determine the value of the Funds’ investments. These inputs are summarized in the three broad levels listed below:

Level 1 — quoted prices in active markets for identical securities.

Level 2 — significant observable inputs other than Level 1 quoted prices (including, but not limited to, quoted prices for similar securities, interest rates, prepayment speeds, and credit risk).

Level 3 — significant unobservable inputs.

Observable inputs are those based on market data obtained from sources independent of the Funds, and unobservable inputs reflect the Funds’ own assumptions based on the best information available. The input levels are

 

88   NOTES TO FINANCIAL STATEMENTS


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not necessarily an indication of the risk or liquidity associated with investments at that level. For example, non-U.S. equity securities actively traded in foreign markets generally are reflected in Level 2 despite the availability of closing prices, because the Funds evaluate and determine whether those closing prices reflect fair value at the close of the NYSE or require adjustment, as described above. The following table summarizes the Funds’ investments, based on the inputs used to determine their values on September 30, 2011:

 

    Level 1     Level 2     Total  

ICON Consumer Discretionary Fund*

     

Assets

     

Common Stocks

  $ 32,707,262      $ -      $ 32,707,262   

Collateral for Securities on Loan

    -        1,322,350        1,322,350   

Short-Term Investments

    -        1,320,613        1,320,613   
 

 

 

   

 

 

   

 

 

 

Total

  $ 32,707,262      $ 2,642,963      $ 35,350,225   
 

 

 

   

 

 

   

 

 

 

ICON Consumer Staples Fund*

     

Assets

     

Common Stocks

  $ 20,626,950      $ -      $ 20,626,950   

Collateral for Securities on Loan

    -        42,195        42,195   

Short-Term Investments

    -        1,592,203        1,592,203   
 

 

 

   

 

 

   

 

 

 

Total

  $ 20,626,950      $ 1,634,398      $ 22,261,348   
 

 

 

   

 

 

   

 

 

 

ICON Energy Fund*

     

Assets

     

Common Stocks

  $ 560,555,791      $ -      $ 560,555,791   

Collateral for Securities on Loan

    -        16,866,358        16,866,358   

Short-Term Investments

    -        1,692,020        1,692,020   
 

 

 

   

 

 

   

 

 

 

Total

  $ 560,555,791      $ 18,558,378      $ 579,114,169   
 

 

 

   

 

 

   

 

 

 

ICON Financial Fund*

     

Assets

     

Common Stocks

  $ 32,210,610      $ -      $ 32,210,610   
 

 

 

   

 

 

   

 

 

 

Total

  $ 32,210,610      $ -      $ 32,210,610   
 

 

 

   

 

 

   

 

 

 

ICON Healthcare Fund*

     

Assets

     

Common Stocks

  $ 74,980,928      $ -      $ 74,980,928   

Collateral for Securities on Loan

    -        1,139,111        1,139,111   
 

 

 

   

 

 

   

 

 

 

Total

  $ 74,980,928      $ 1,139,111      $ 76,120,039   
 

 

 

   

 

 

   

 

 

 

 

NOTES TO FINANCIAL STATEMENTS     89   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

    Level 1     Level 2     Total  

ICON Industrials Fund*

     

Assets

     

Common Stocks

  $ 50,720,520      $ -      $ 50,720,520   

Collateral for Securities on Loan

    -        1,563,306        1,563,306   
 

 

 

   

 

 

   

 

 

 

Total

  $ 50,720,520      $ 1,563,306      $ 52,283,826   
 

 

 

   

 

 

   

 

 

 

ICON Information Technology Fund*

     

Assets

     

Common Stocks

  $ 61,020,776      $ -      $ 61,020,776   

Collateral for Securities on Loan

    -        1,204,705        1,204,705   
 

 

 

   

 

 

   

 

 

 

Total

  $ 61,020,776      $ 1,204,705      $ 62,225,481   
 

 

 

   

 

 

   

 

 

 

ICON Materials Fund*

     

Assets

     

Common Stocks

  $ 59,033,760      $ -      $ 59,033,760   
 

 

 

   

 

 

   

 

 

 

Total

  $ 59,033,760      $ -      $ 59,033,760   
 

 

 

   

 

 

   

 

 

 

ICON Telecommunication & Utilities Fund*

  

   

Assets

     

Common Stocks

  $ 20,603,199      $ -      $ 20,603,199   

Short-Term Investments

    -        500,770        500,770   
 

 

 

   

 

 

   

 

 

 

Total

  $ 20,603,199      $ 500,770      $ 21,103,969   
 

 

 

   

 

 

   

 

 

 

 

* Please refer to the Schedule of Investments and the Sector/Industry Classification tables for additional security details.

There were no Level 3 securities held in any of the Funds at September 30, 2011.

For the year ended September 30, 2011, there was no significant security transfer activity between Level 1 and Level 2.

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 daily into U.S. dollars at the prevailing rates of exchange. 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

 

90   NOTES TO FINANCIAL STATEMENTS


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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.

Options Transactions

The Funds’ use of derivatives for the year ended September 30, 2011 was limited to purchased put options.

Each Fund may purchase and/or write (sell) call and put options on any security in which it may invest. The Funds utilize options to hedge against changes in market conditions and to provide market exposure while trying to reduce transaction costs.

Option contracts involve market risk, liquidity risk and can be highly volatile. Should prices of securities or securities indexes move in an unexpected manner, the Funds may not achieve the desired benefits and may realize losses and thus be in a worse position than if such strategies had not been utilized.

When a Fund writes a put or call option, an amount equal to the premium received is included on 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 on an individual security 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 call option on a securities index is exercised, a gain or loss is realized as determined by the premium originally received, the exercise price and the market value of the index. If a written put option on an individual security is exercised, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, a Fund bears the market risk of an unfavorable change in the price of the individual security or securities index underlying the written option. Additionally, written call options may involve the risk of limited gains.

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 on the Fund’s Statement of Assets and Liabilities as an investment, and is

 

NOTES TO FINANCIAL STATEMENTS     91   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

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 option on an individual security, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option on an individual security, 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. If the Fund exercises a put or a call option on a security index, a gain or loss is realized as determined by the premium originally paid, the exercise price and the market value of the index. Written and purchased options are non-income producing securities.

The following is a summary of how these derivatives are treated in the financial statements and their impact on the Funds:

Amount of Realized Gain or (Loss) on Derivatives Recognized in Operations

 

Derivatives not accounted for as hedging
instruments
  Location of Gain/(loss)
on Derivatives
Recognized in Operations
  Amount  

Purchased option contracts

   

Equity risk
ICON Energy Fund

 

    
Net realized gain/(loss) from

investment transactions

  $ (3,487,118

Change in Unrealized Appreciation/Depreciation on Derivatives Recognized in Operations

 

Derivatives not accounted for as hedging
instruments
  Location of Gain/(loss)
on Derivatives
Recognized in Operations
  Amount  

Purchased option contracts

   

Equity risk
ICON Energy Fund

 

Change in unrealized net appreciation/(depreciation) on investments

  $ 4,644   

 

92   NOTES TO FINANCIAL STATEMENTS


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For the year ended September 30, 2011, the Fund’s quarterly holdings of options contracts were as follows:

 

    ICON Energy Fund  
Quarter Ended   Number of Options
Purchased Contracts
Outstanding
 

December 31, 2010

    14,630   

March 31, 2011

    10,000   

June 30, 2011

    -   

September 30, 2011

    -   

The Funds value derivatives at fair value, as described above, and recognize changes in fair value currently in the results of operations. Accordingly, the Funds do not follow hedge accounting, even for derivatives employed as economic hedges.

Securities Lending

Under procedures adopted by the Board, the Funds may lend securities to non-affiliated qualified parties. The Funds seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security. The Funds do not have the right to vote on securities while they are on loan; however, the Funds may attempt to call back the loan and vote the proxy.

All loans will be continuously secured by collateral which consists of cash. The cash collateral is invested in the State Street Navigator Prime Portfolio and is disclosed on the Schedule of Investments. The lending fees received and the Funds’ portion of the interest income earned on cash collateral are included on the Statement of Operations, if applicable.

As of September 30, 2011, the following Funds had securities with the following values on loan:

 

Fund   Value of
Loaned Securities
    Value of
Collateral
 

ICON Consumer Discretionary Fund

  $ 1,246,832      $ 1,322,350   

ICON Consumer Staples Fund

    41,186        42,195   

ICON Energy Fund

    16,037,468        16,866,358   

ICON Healthcare Fund

    1,107,726        1,139,111   

ICON Industrials Fund

    1,471,117        1,563,306   

ICON Information Technology Fund

    1,157,101        1,204,705   

 

NOTES TO FINANCIAL STATEMENTS     93   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

The value of the collateral above could include collateral held for securities that were sold on or before September 30, 2011. It may also include collateral received from the pre-funding of loans.

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 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 income and net realized capital gains, if any, to shareholders at least annually, if not offset by capital loss carryforward. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes. 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.

Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax periods and has concluded that no provision for federal income tax is required in the Funds’ financial statements.

The Funds file U.S. tax returns. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the past four years, no examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

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 value of the securities received. Interest income is accrued as earned. Certain dividends

 

94   NOTES TO FINANCIAL STATEMENTS


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from foreign securities are 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 the trade date. However, for financial reporting purposes, security transactions are accounted for on the trade date. Gains and losses on securities sold are determined on the basis of identified cost.

Allocation of 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.

Below are the class level expenses that are included on the Statement of Operations:

 

Fund   Legal
Expense
    Printing
And Postage
Expense
    Transfer
Agent
Expense
 

ICON Consumer Discretionary Fund

     

Class S

  $ 2,967      $ 18,567      $ 49,820   

Class C

    1        8        1,537   

Class A

    1        7        1,270   

ICON Consumer Staples Fund

     

Class S

    3,351        12,534        38,535   

Class C

    4        23        1,349   

Class A

    3        19        1,282   

ICON Energy Fund

     

Class S

    85,327        105,101        443,272   

Class C

    312        365        6,234   

Class A

    539        637        10,276   

 

NOTES TO FINANCIAL STATEMENTS     95   


Table of Contents

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

Fund   Legal
Expense
    Printing
And Postage
Expense
    Transfer
Agent
Expense
 

ICON Financial Fund

     

Class S

  $ 6,637      $ 15,872      $ 57,016   

Class C

    1        2        1,280   

Class A

    3        9        1,296   

ICON Healthcare Fund

     

Class S

    7,706        19,248        105,948   

Class C

    1        -        1,394   

Class A

    3        -        1,336   

ICON Industrials Fund

     

Class S

    8,276        16,746        72,309   

Class C

    1        4        1,296   

Class A

    12        29        1,412   

ICON Information Technology Fund

     

Class S

    9,600        20,458        87,124   

Class C

    -        -        1,360   

Class A

    -        -        1,251   

ICON Materials Fund

     

Class S

    12,263        31,151        91,405   

Class C

    13        37        1,793   

Class A

    64        181        2,646   

ICON Telecommunication & Utilities Fund

     

Class S

    3,325        13,595        40,449   

Class C

    -        1        1,353   

Class A

    -        1        1,282   

3.  Fees and Other Transactions with Affiliates

Investment Advisory Fees

ICON Advisers, Inc. (“ICON Advisers”) serves as investment adviser to the Funds and is responsible for managing the Funds’ portfolios of securities. ICON Advisers receives a monthly management fee that is computed daily at an annual rate of 1.00% on 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.

Effective January 1, 2011, ICON Advisers has contractually agreed to limit its Fund’s expenses (exclusive of brokerage, interest, taxes, dividends on short

 

96   NOTES TO FINANCIAL STATEMENTS


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sales and extraordinary expenses) to the extent necessary to ensure that the Funds’ expenses do not exceed the following amounts:

 

Fund   Class S     Class C     Class A  

ICON Consumer Discretionary Fund

    1.74%        2.74%        1.99%   

ICON Consumer Staples Fund

    1.50%        2.50%        1.75%   

ICON Energy Fund

    1.50%        2.50%        1.75%   

ICON Financial Fund

    1.50%        2.50%        1.75%   

ICON Healthcare Fund

    1.50%        2.50%        1.75%   

ICON Industrials Fund

    1.50%        2.50%        1.75%   

ICON Information Technology Fund

    1.50%        2.50%        1.75%   

ICON Materials Fund

    1.50%        2.50%        1.75%   

ICON Telecommunication & Utilities Fund

    1.50%        2.50%        1.75%   

The Funds’ expense limitations will continue in effect until at least January 31, 2013. To the extent ICON Advisers reimburses or absorbs fees and expenses, it may seek payment of such amounts for up to three years after the expenses were reimbursed or absorbed. A Fund will make no such payment, however, if the total Fund operating expenses exceed the expense limits in effect at the time the expenses were reimbursed or at the time these payments are proposed.

As of September 30, 2011 the following amounts were still available for recoupment by ICON Advisers based upon their potential expiration dates:

 

Fund   2014  

ICON Consumer Discretionary Fund

  $ 2,712   

ICON Consumer Staples Fund

    21,170   

ICON Financial Fund

    2,512   

ICON Healthcare Fund

    3,414   

ICON Industrials Fund

    2,849   

ICON Information Technology Fund

    2,606   

ICON Materials Fund

    3,934   

ICON Telecommunication & Utilities Fund

    25,886   

Accounting, Custody and Transfer Agent Fees

State Street Bank and Trust Company (“State Street”) serves as the fund accounting agent for the funds. For its services, the Trust pays State Street a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily assets of the Trust.

 

NOTES TO FINANCIAL STATEMENTS     97   


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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

State Street is the custodian of the Trust’s investments. For its services, the Trust pays State Street asset-based fees that vary according to the number of positions and transactions, plus out-of-pocket expenses.

Boston Financial Data Services, Inc. (“BFDS”) is the Trust’s transfer agent. For these services, the Trust pays a per account fee, plus certain other transaction cusip charges and out-of-pocket expenses. BFDS may pay each Fund transfer agent earnings credits. Transfer agent earnings credits are credits received for interest which results from overnight balances used by BFDS for clearing shareholder transactions.

Administrative Services

The Trust has entered into an administrative services agreement with ICON Advisers pursuant to which ICON Advisers oversees the administration of the Trust’s business and affairs. This agreement provides for an annual fee of 0.05% on the Trust’s 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. For the year ended September 30, 2011, each Funds’ payment for administrative services to ICON Advisers is included on the Statement of Operations. The administrative services agreement provides that ICON Advisers 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 Advisers in the performance of its duties.

ICON Advisers has a sub-administration agreement with State Street to which State Street assists ICON Advisers with the administration and business affairs of the Trust. For its services, ICON Advisers pays State Street a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily assets of the Trust.

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, Class A shareholders pay an annual distribution and service fee of 0.25% of average daily net assets. The Class C shareholders pay an annual

 

98   NOTES TO FINANCIAL STATEMENTS


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distribution and service fee of 1.00% of average daily net assets. The total amount paid under the 12b-1 plans, if any, by the Funds is shown on the Statement of Operations.

Other Related Parties

Certain Officers and Directors of ICON Advisers 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 86% by the Trust and 14% by ICON Advisers. For the year ended September 30, 2011, the total related amounts paid by each Fund are included in Other Expenses on the Statement of Operations.

Some of the distribution amounts received by IDI, discussed in the Distribution Fees section above, have been used to offset various shareholder servicing costs incurred by ICON Advisers. For the year ended September 30, 2011, this amount was $7,992.

4.  Borrowings

The Trust has entered into Lines of Credit agreements with State Street to provide temporary funding for redemption requests. The maximum borrowing is limited to $150 million. Interest on domestic borrowings is charged at the higher of the Federal Funds Rate effective on that day and the Overnight LIBOR Rate effective on that day plus 1.25%. The average interest rate charged for the year ended September 30, 2011 was 1.44%.

 

Fund  

Average Borrowing

(10/1/10-9/30/11)

 

ICON Consumer Discretionary Fund

  $ 85,077   

ICON Consumer Staples Fund

    85,042   

ICON Energy Fund

    202,114   

ICON Financial Fund*

    128,374   

ICON Healthcare Fund*

    90,718   

ICON Industrials Fund*

    255,117   

ICON Information Technology Fund*

    162,375   

ICON Materials Fund*

    213,567   

ICON Telecommunication & Utilities Fund

    166,745   

 

* Fund had outstanding borrowings under these agreements as of September 30, 2011.

 

NOTES TO FINANCIAL STATEMENTS     99   


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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

5.  Purchases and Sales of Investment Securities

For the year ended September 30, 2011, the aggregate cost of purchases and proceeds from sales of investment securities (excluding short-term securities) was as follows:

 

Fund   Purchases of
Securities
    Proceeds
from Sales of
Securities
 

ICON Consumer Discretionary Fund

  $ 44,674,050      $ 31,057,364   

ICON Consumer Staples Fund

    26,983,194        39,136,853   

ICON Energy Fund

    656,949,667        585,023,178   

ICON Financial Fund

    48,922,698        70,954,301   

ICON Healthcare Fund

    65,078,100        64,212,426   

ICON Industrials Fund

    36,232,458        52,056,869   

ICON Information Technology Fund

    34,471,368        52,418,715   

ICON Materials Fund

    54,579,645        78,210,619   

ICON Telecommunication & Utilities Fund

    27,809,126        40,297,317   

6.  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 sale losses, foreign currency transactions, net investment losses, and capital loss carryforwards.

The tax components of capital shown in the following tables include losses the Funds may be able to offset against gains recognized in future years. The accumulated losses noted represent net capital loss carryforwards as of September 30, 2011 and post-October losses that may be available to offset future realized capital gains and thereby reduce future taxable income distributions.

For the year ended September 30, 2011 the following Funds had capital loss carryforwards:

 

Fund   Amounts     Expires  

ICON Consumer Discretionary Fund

  $ 11,308,112        2017   
    8,355,189        2018   

ICON Consumer Staples Fund

    1,764,198        2017   
    1,888,341        2018   

ICON Energy Fund

    240,766        2018   

 

100   NOTES TO FINANCIAL STATEMENTS


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Fund   Amounts     Expires  

ICON Financial Fund

  $ 58,696,031        2017   
    43,715,782        2018   

ICON Healthcare Fund

    4,557,995        2018   

ICON Industrials Fund

    11,618,296        2017   
    28,045,106        2018   

ICON Information Technology Fund

    21,080        2016   
    22,796,772        2017   
    6,573,259        2018   

ICON Materials Fund

    12,782,639        2017   
    7,349,690        2018   

ICON Telecommunication & Utilities Fund

    6,027,677        2017   
    3,844,832        2018   

Future capital loss carryover utilization in any given year may be limited if there are substantial shareholder redemptions or contributions. During the year ended September 30, 2011 the Funds utilized capital loss carryforwards:

 

Fund   Amount  

ICON Consumer Discretionary Fund

  $ 3,855,294   

ICON Consumer Staples Fund

    5,999,632   

ICON Energy Fund

    66,984,362   

ICON Financial Fund

    4,644,695   

ICON Healthcare Fund

    16,982,763   

ICON Industrials Fund

    4,771,025   

ICON Information Technology Fund

    10,930,880   

ICON Materials Fund

    13,969,617   

ICON Telecommunication & Utilities Fund

    2,166,913   

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2011, were as follows:

 

Fund   Distributions
Paid from
Ordinary Income
    Total
Distributions
Paid
 

ICON Consumer Staples Fund

  $ 315,201      $ 315,201   

ICON Energy Fund

    6,516,740        6,516,740   

ICON Financial Fund

    214,079        214,079   

ICON Healthcare Fund

    368,446        368,446   

ICON Industrials Fund

    478,554        478,554   

ICON Materials Fund

    478,186        478,186   

ICON Telecommunication & Utilities Fund

    1,194,876        1,194,876   

 

NOTES TO FINANCIAL STATEMENTS     101   


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NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2010, were as follows:

 

Fund   Distributions
Paid from
Ordinary Income
    Total
Distributions
Paid
 

ICON Consumer Discretionary Fund

  $ 376,917      $ 376,917   

ICON Consumer Staples Fund

    383,505        383,505   

ICON Energy Fund

    7,077,474        7,077,474   

ICON Financial Fund

    1,136,088        1,136,088   

ICON Healthcare Fund

    1,948,725        1,948,725   

ICON Industrials Fund

    1,217,973        1,217,973   

ICON Information Technology Fund

    631,045        631,045   

ICON Materials Fund

    1,039,736        1,039,736   

ICON Telecommunication & Utilities Fund

    595,082        595,082   

As of September 30, 2011, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Fund   Undistributed
Ordinary
Income
    Distributions
Payable*
    Accumulated
Capital and
Other Losses
    Unrealized
Appreciation/
(Depreciation)**
    Total
Accumulated
Earnings/
(Deficit)
 

ICON Consumer Discretionary Fund

  $ -      $ -      $ (19,663,301   $ (1,325,877   $ (20,989,178

ICON Consumer Staples Fund

    279,768        -        (3,652,539     24,723        (3,348,048

ICON Energy Fund

    4,365,200        -        (240,766     (68,694,805     (64,570,371

ICON Financial Fund

    210,720        -        (102,411,813     (6,579,165     (108,780,258

ICON Healthcare Fund

    663,354        -        (4,557,995     (5,266,551     (9,161,192

ICON Industrials Fund

    535,609        -        (39,663,402     (2,036,675     (41,164,468

ICON Information Technology Fund

    -        -        (29,391,111     1,880,511        (27,510,600

ICON Materials Fund

    651,006        -        (20,132,329     (4,559,976     (24,041,299

ICON Telecommunication & Utilities Fund

    523,437        (374,998     (9,872,509     610,476        (9,113,594

 

* Differences between the financial statement distribution payable and the tax basis distribution payable are a result of accrual based accounting and cash based accounting used for federal tax reporting purposes.

 

** Differences between the book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to tax deferral of losses on wash sales.

 

102   NOTES TO FINANCIAL STATEMENTS


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As of September 30, 2011, cost on investments for federal income tax purposes and the amount of net unrealized appreciation/(depreciation) were as follows:

 

Fund   Cost    

Unrealized

Appreciation

   

Unrealized

(Depreciation)

   

Net
Appreciation/

(Depreciation)

 

ICON Consumer Discretionary Fund

  $ 36,676,102      $ 1,683,943      $ (3,009,820   $ (1,325,877

ICON Consumer Staples Fund

    22,236,625        654,172        (629,449     24,723   

ICON Energy Fund

    647,808,975        21,841,739        (90,536,545     (68,694,806

ICON Financial Fund

    38,789,572        466,202        (7,045,164     (6,578,962

ICON Healthcare Fund

    81,386,590        2,281,923        (7,548,474     (5,266,551

ICON Industrials Fund

    54,320,222        3,017,401        (5,053,797     (2,036,396

ICON Information Technology Fund

    60,344,970        9,620,888        (7,740,377     1,880,511   

ICON Materials Fund

    63,593,736        3,908,425        (8,468,401     (4,559,976

ICON Telecommunication & Utilities Fund

    20,493,493        799,171        (188,695     610,476   

The Regulated Investment Company Modernization Act of 2010 (the “Act”) was signed into law on December 22, 2010. The Act makes changes to a number of tax rules impacting the Funds. Under the Act, future capital losses generated by a fund may be carried over indefinitely, but these losses must be used prior to the utilization of any pre-enactment capital losses. Since pre-enactment capital losses may only be carried forward for eight years, there may be a greater likelihood that all or a portion of each fund’s pre-enactment capital losses will expire unused. In general, the provisions of the Act will be effective for each Fund’s fiscal year ending 2012.

7.  Subsequent Events

Effective January 23, 2012, the Telecommunication & Utilities Fund will change its name to the ICON Utilities Fund and invest primarily in utilities.

Subsequent to year end, the ICON Funds suspended participation in the securities lending program.

 

NOTES TO FINANCIAL STATEMENTS     103   


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REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To the Board of Trustees and Shareholders of the ICON Funds:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of ICON Consumer Discretionary Fund, ICON Consumer Staples Fund, ICON Energy Fund, ICON Financial Fund, ICON Healthcare Fund, ICON Industrials Fund, ICON Information Technology Fund, ICON Materials Fund, and ICON Telecommunications & Utilities Fund (nine of the portfolios constituting ICON Funds, hereafter referred to as the “Funds”) at September 30, 2011, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

LOGO

Denver, Colorado

November 18, 2011

 

104   REPORT OF ACCOUNTING FIRM


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SIX MONTH HYPOTHETICAL EXPENSE EXAMPLE

SEPTEMBER 30, 2011 (UNAUDITED)

Example

As a shareholder of a Fund you may pay two types of fees: transaction fees and fund-related fees. Certain funds charge transaction fees, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange 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 six-month period and held for the six-month period (4/1/11 – 9/30/11).

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, 12b-1 fees, fund accounting, custody and transfer agent fees. However, the Example does not include client specific fees, such as the $15 fee charged to IRA accounts, or the $15 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),

 

EXPENSE EXAMPLE     105   


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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.

 

     Beginning
Account
Value
4/1/11
    Ending
Account
Value
9/30/11
    Expenses Paid
During Period
4/1/11 - 9/30/11*
    Annualized
Expense Ratio
4/1/11 - 9/30/11
 

Actual Expenses

       

ICON Consumer Discretionary Fund

       

Class S

  $ 1,000.00      $ 953.40      $ 6.97        1.42%   

Class C

    1,000.00        946.80        13.75        2.75%   

Class A

    1,000.00        949.00        10.22        1.99%   

ICON Consumer Staples Fund

       

Class S

    1,000.00        972.90        7.47        1.51%   

Class C

    1,000.00        968.20        12.29        2.49%   

Class A

    1,000.00        981.90        8.69        1.75%   

ICON Energy Fund

       

Class S

    1,000.00        734.70        5.25        1.21%   

Class C

    1,000.00        730.10        10.89        2.51%   

Class A

    1,000.00        732.80        7.55        1.74%   

ICON Financial Fund

       

Class S

    1,000.00        752.80        6.27        1.43%   

Class C

    1,000.00        748.40        10.96        2.50%   

Class A

    1,000.00        752.40        7.83        1.75%   

ICON Healthcare Fund

       

Class S

    1,000.00        935.80        6.07        1.25%   

Class C

    1,000.00        930.70        12.11        2.50%   

Class A

    1,000.00        933.70        8.50        1.75%   

ICON Industrials Fund

       

Class S

    1,000.00        761.50        6.05        1.37%   

Class C

    1,000.00        756.80        11.01        2.50%   

Class A

    1,000.00        758.70        7.74        1.76%   

ICON Information Technology Fund

       

Class S

    1,000.00        878.20        6.29        1.34%   

Class C

    1,000.00        872.30        11.73        2.50%   

Class A

    1,000.00        877.00        8.23        1.75%   

ICON Materials Fund

       

Class S

    1,000.00        738.90        5.86        1.34%   

Class C

    1,000.00        735.40        10.95        2.51%   

Class A

    1,000.00        737.70        7.75        1.76%   

 

106   EXPENSE EXAMPLE


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     Beginning
Account
Value
4/1/11
    Ending
Account
Value
9/30/11
    Expenses Paid
During Period
4/1/11 - 9/30/11*
    Annualized
Expense Ratio
4/1/11 - 9/30/11
 

ICON Telecommunication & Utilities Fund

       

Class S

  $ 1,000.00      $ 1,035.40      $ 7.71        1.51%   

Class C

    1,000.00        1,024.30        12.71        2.50%   

Class A

    1,000.00        1,028.60        8.90        1.75%   

Hypothetical (assuming a 5% return before expenses)

       

ICON Consumer Discretionary Fund

       

Class S

    1,000.00        1,017.94        7.20     

Class C

    1,000.00        1,010.95        14.20     

Class A

    1,000.00        1,014.58        10.57     

ICON Consumer Staples Fund

  

     

Class S

    1,000.00        1,017.50        7.64     

Class C

    1,000.00        1,012.58        12.57     

Class A

    1,000.00        1,016.30        8.84     

ICON Energy Fund

       

Class S

    1,000.00        1,019.02        6.11     

Class C

    1,000.00        1,012.48        12.67     

Class A

    1,000.00        1,016.36        8.78     

ICON Financial Fund

       

Class S

    1,000.00        1,017.91        7.22     

Class C

    1,000.00        1,012.53        12.62     

Class A

    1,000.00        1,016.13        9.01     

ICON Healthcare Fund

       

Class S

    1,000.00        1,018.79        6.33     

Class C

    1,000.00        1,012.52        12.62     

Class A

    1,000.00        1,016.28        8.86     

ICON Industrials Fund

       

Class S

    1,000.00        1,018.20        6.93     

Class C

    1,000.00        1,012.53        12.62     

Class A

    1,000.00        1,016.27        8.87     

ICON Information Technology Fund

       

Class S

    1,000.00        1,018.37        6.76     

Class C

    1,000.00        1,012.54        12.61     

Class A

    1,000.00        1,016.29        8.85     

 

EXPENSE EXAMPLE     107   


Table of Contents
     Beginning
Account
Value
4/1/11
    Ending
Account
Value
9/30/11
    Expenses Paid
During Period
4/1/11 - 9/30/11*
    Annualized
Expense Ratio
4/1/11 - 9/30/11

ICON Materials Fund

       

Class S

  $ 1,000.00      $ 1,018.33      $ 6.80     

Class C

    1,000.00        1,012.44        12.70     

Class A

    1,000.00        1,016.15        8.99     

ICON Telecommunication & Utilities Fund

       

Class S

    1,000.00        1,017.49        7.64     

Class C

    1,000.00        1,012.51        12.64     

Class A

    1,000.00        1,016.29        8.85     

 

* Expenses are equal to the Fund’s six month expense ratio annualized, multiplied by the average account value over the period, multiplied by 183/365 to reflect the one-half year period.

Total returns exclude applicable sales charges. If sales charges were included (maximum 5.75%), returns would be lower.

 

108   EXPENSE EXAMPLE


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BOARD OF TRUSTEES AND FUND OFFICERS

(UNAUDITED)

The ICON Funds Board of Trustees (“Board”) consists of four Trustees who oversee the 17 ICON Funds (the “Funds”). The Board is responsible for general oversight of the Funds’ business and for assuring that the Funds are managed in the best interest of the Funds’ shareholders. The Trustees, and their ages, and principal occupations are set forth below. The address of the Trustees is 5299 DTC Blvd., Suite 1200, Greenwood Village, CO 80111. Trustees have no official term of office and generally serve until they resign or are not re-elected.

Interested Trustee

Craig T. Callahan, 60, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as President (1998 to present) and Chairman of the Investment Committee (2005 to present) and served as the Chief Investment Officer (1991 to 2004) of ICON Advisers. Dr. Callahan is also Executive Vice President (2005 to present); Director (1991 to present); and was previously President (1998 to 2005) and Chief Compliance Officer (2005) of IDI. Dr. Callahan also serves as the President (1998 to present) and Chairman of the Board of Directors (1994 to present) of ICON Management & Research Corporation (“IM&R”), the parent company of ICON Advisers and IDI.

Independent Trustees

Glen F. Bergert, 61. Mr. Bergert has been a Trustee of the Funds since 1999. Mr. Bergert is President of Venture Capital Management LLC (1997 to present), General Partner of SOGNO Partners LP, a venture capital company (2001 to present), General Partner of Bergert Properties, LLP, a real estate holding company (1997 to present), General Partner of Pyramid Real Estate Partnership, a real estate development company (1998 to present), General Partner of Chamois Partners, LP, a venture capital company (2004 to present) and was previously a General Partner with KPMG Peat Marwick, LLP (1979 to 1997). Mr. Bergert is also a Director of Delta Dental of California, an insurance company (2006 to present), Delta Dental of Pennsylvania, an insurance company (1998 to 2009 and 2010 to present), Dentegra Group, Inc, an insurance holding company (2010 to present) and Delta Reinsurance Corporation (2000 to 2009 and 2011 to present). Mr. Bergert was a Director of Herre Bros, Inc., a contracting company (1998 to 2011).

John C. Pomeroy, Jr., 64. Mr. Pomeroy has been a Trustee of the Funds since November 2002. Mr. Pomeroy is Chief Investment Officer and Director

 

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of Investments, Pennsylvania State University (2001 to present) and was Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).

R. Michael Sentel, 63. Mr. Sentel has been a Trustee of the Funds since their inception. Mr. Sentel is a Senior Attorney with the U.S. Department of Education (1996 to present). Mr. Sentel also provides legal representation as a sole practitioner with an emphasis on corporate and transactional law. He served as general counsel to numerous public companies and served on the board of directors of one of these clients. Mr. Sentel began his legal career with the U.S. Securities and Exchange Commission’s Division of Enforcement and served as a Branch Chief (1980 to 1981). Later he served as the Section Chief for the Professional Liability Section of the Federal Deposit Insurance Corp. with responsibility for the Rocky Mountain Region (1991 to 1994).

The Officers of the Funds are:

Craig T. Callahan, 60, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as President (1998 to present) and Chairman of the Investment Committee (2005 to present) and served as the Chief Investment Officer (1991 to 2004) of ICON Advisers. Dr. Callahan is also Executive Vice President (2005 to present); Director (1991 to present); and was previously President (1998 to 2005) and Chief Compliance Officer (2005) of IDI. Dr. Callahan also serves as the President (1998 to present) and Chairman of the Board of Directors (1994 to present) of IM&R, the parent company of ICON Advisers and IDI.

Erik L. Jonson, 62. Mr. Jonson has been a Vice President and Principal Financial Officer/Treasurer of the Funds since their inception in 1996. Mr. Jonson is also Chief Financial Officer (1996 to present) and Executive Vice President (2004 to present) and was previously Vice President (1998 to 2004) and Secretary (2005 and 1998 to 2002) of ICON Advisers; Chief Financial Officer, Secretary and Director (1998 to present) of IM&R; and Executive Vice President and Treasurer/Financial Principal (1996 to present) of IDI.

Jessica Seidlitz, 33. Ms. Seidlitz serves as the Assistant Treasurer of the Funds (2007 to present). She also serves as the Mutual Fund Controller of ICON Advisers (2005 to present). Previously, she was a Senior Associate/Associate at PricewaterhouseCoopers LLP (2001 to 2004).

Donald Salcito, 58. Mr. Salcito serves as Vice President and Secretary of the Funds (November 15, 2006 to present). Mr. Salcito is also Executive Vice President and General Counsel (September 2005 to present) of ICON Advisers; Director of IM&R (2005 to present); Executive Vice President,

 

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Secretary, General Counsel of IDI (2005 to present). Previously, he was a Partner in various national law firms, practicing in the securities law area. (1980 to 2005).

Brian Harding, 32. Mr. Harding serves as Chief Compliance Officer and Anti-Money Laundering Officer of the Funds (2008 to present). Mr. Harding also serves as Chief Compliance Officer of ICON Advisers (2011 to present). Previously, he was a Manager (2007 to 2008) and a Senior Associate/Associate (2001 to 2007) at PricewaterhouseCoopers LLP.

 

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OTHER INFORMATION (UNAUDITED)

Renewal of Investment Advisory Agreement

On August 15, 2011, the Board of Trustees, including a majority of the Trustees that are not “interested persons” of the Trust (the “Independent Trustees”), approved continuation of the Advisory Agreements with the Adviser for each Fund for an additional one-year term commencing October 1, 2011.

In determining to renew the investment advisory agreements between ICON Funds (the “Trust”) and ICON Advisers, Inc. (“ICON” or the “Adviser”) the Board requested, was provided with and reviewed data with respect to ICON, its personnel, and the services provided and to be provided to each Fund by ICON under the Trust’s Investment Advisory Agreement dated October 9, 1996, as amended (related to the Sector, International and Core Equity Funds) and under the Trust’s Investment Advisory Agreement dated July 9, 2002 and effective October 1, 2002, as amended (related to the U.S. Diversified Funds - Bond, Risk-Managed Equity, Equity Income and Long/Short Funds) (collectively, the “Advisory Agreements”). The data included information concerning advisory, distribution and administrative services provided to the Funds by ICON and its related companies; information concerning other businesses of those companies; comparative data related to exchange traded funds versus the Sector Funds; and comparative data obtained from Lipper Analytical Services related to Fund performance and Fund expenses (the “Lipper report”). The data also included an analysis of the Funds’ ratings on the AthenaInvest system (the “AthenaInvest data”) and a presentation on ICON’s investment model. AthenaInvest is an affiliate of the Adviser. The Board of Trustees met on August 4 and 19, 2011 to discuss the data. Management personnel discussed the data for and with those present. Included in the discussion was a briefing on the sales and marketing initiatives, the different classes of shares being offered by the Trust and efficiencies in connection with administering services to the Funds/various classes of shares.

The Independent Trustees were represented by independent legal counsel throughout the process. Prior to acting on the matter, the Independent Trustees met separately as a group in private sessions with their independent legal counsel to review and discuss the foregoing information. Based on these discussions, independent legal counsel and/or the Lead Independent Trustee also contacted management to request additional information and to discuss responses to questions raised during the process. In addition, the Independent Trustees received materials from their independent legal counsel discussing the legal standards applicable to their consideration of the agreement.

 

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In considering the nature, extent and quality of the services provided by the Adviser, the Board reviewed information relating to ICON’s operations and personnel. Among other things, the Adviser provided biographical information on its professional staff and descriptions of its organizational and management structure. In the course of their deliberations the Board evaluated, among other things, information relating to the investment philosophy, strategies and techniques used in managing each Fund, the qualifications and experience of ICON’s investment personnel, ICON’s compliance programs, ICON’s brokerage practices, including the extent to which the Adviser obtains research through “soft dollar” arrangements with the Funds’ brokerage, compliance reports on the foregoing, and the financial and non-financial resources available to provide services required under the Advisory Agreement.

During the discussion, the Lipper report and the AthenaInvest data were discussed and management personnel showed performance for each fund and discussed the factors affecting performance. Management noted that ICON modified the valuation methodology at the end of 2008 to better account for systemic risk. ICON implemented the modified valuation methodology in February 2009. During the discussion, management personnel noted that the markets continue to experience volatility and that when the markets are volatile, relative strength readings are also more volatile and less reliable It was also noted that volatility has affected ICON’s performance; that this had been the case for much of the last two years for the Funds; that poor quality stocks with low relative strength led the market whereas higher quality stocks with higher relative strength have not performed as well; that the market volatility and the relative strength component to our methodology have produced mixed results; and that many other value managers have had challenges in this market. The Adviser discussed its continuing assessment of its “investment model” – including steps taken to test the relative strength components of the system and methodology. Overall, the Board of Trustees concluded that the Adviser continues to believe the adjustments to the system have been functioning as intended; and that, notwithstanding that belief, the Adviser is constantly evaluating the system and will modify it as needed.

In connection with reviewing data bearing upon the nature, quality, and extent of services furnished by ICON to each Fund, the Board assessed data concerning ICON’s staffing, systems and facilities. The Board also assessed ICON’s non-Trust business to see if there are any initiatives that would dilute service to the Trust. The Board noted:

A.  That the breadth and the quality of investment advisory and other services being provided to each Fund is satisfactory, as evidenced in part by efforts to address and improve the performance record of each

 

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Fund when compared with the performance records of a peer group of comparable funds and markets in general;

B.  That the breadth and the quality of investment advisory and other services being provided to each Fund is satisfactory, as evidenced in part by the AthenaInvest data (ratings based on an assessment of fund strategy) reflects that all Funds are rated 3 or higher and that, unlike many other fund groups, ICON Funds has no fund rated 1 or 2 (where 1 is the lowest and 5 is the highest).

C.  That ICON has made significant expenditures in the past year and in prior years to ensure that it has the sophisticated systems and the highly trained personnel necessary for it to be able to continue to provide quality service to the Funds’ shareholders, including the dedication of substantial resources to ICON’s investment and trading departments;

D.  That the Board, after considering compliance reports and compliance initiatives undertaken during the year and conducting individual interviews with selected portfolio managers, is satisfied with the research, portfolio management, and trading services, among others, being provided by ICON to the Funds, and is charging fair, reasonable, and competitive fees; and

E.  The risks assumed by ICON in providing investment advisory services to each Fund including the capital commitments which have been made in the past and which continue to be made by ICON to ensure the continuation of the highest quality of service to the Trust is made with the recognition that the Trust’s advisory relationship with ICON be terminated at any time and must be renewed on an annual basis.

In considering the reasonableness of the fee payable to the Adviser for managing each Fund, the Board reviewed, among other things, data concerning other funds from the Lipper report, financial statements of the Adviser and an analysis of the profitability to the Adviser and its affiliates of their relationship with each Fund over various time periods, which analysis identified all revenues and other benefits received by the Adviser and its affiliates from managing each Fund, the costs associated with providing such services and the resulting profitability to the Adviser and its affiliates.

The Board considered the current and anticipated asset levels of each Fund and the willingness of the Adviser to waive fees and pay expenses of the Funds from time to time to limit the total expenses of the Funds. In this regard the Board discussed significantly reduced asset levels in each fund covered by the Advisory Agreements due to the tumultuous markets during the past three and a half years, to relative poor Fund performance, and to industry wide net-redemptions in reaction to the tumultuous markets. ICON’s

 

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ability to provide the services called for under the Advisory Agreements was assessed in light of current and projected asset levels. Fund expenses and expense ratios were also assessed in light of current and projected asset levels. The Board concluded that the Adviser has the resources necessary to provide the services called for under the Advisory Agreements; that profitability to the Adviser and its affiliates from their relationship with the Funds is not excessive; and that the Adviser is not realizing material benefits from economies of scale that would warrant adjustments to the fees for any Fund at this time. The Board of Trustees concluded that, in light of the nature, extent and quality of the services provided by the Adviser and the levels of profitability associated with providing these services, the fees charged by the Adviser under the Advisory Agreements to each Fund are reasonable.

In connection with assessing data bearing the fairness of fee arrangements, the Board used data from Lipper report concerning funds of similar size and funds of larger size, as well as data concerning ICON’s other clients and noted that:

A.  the advisory fee structures of the Funds were considered in comparison with advisory fees and expense ratios of other similarly managed funds as set forth in the comparative data;

B.  expense ratios for 10 of the 17 Funds are above average, 4 are equal to the median, 2 are below both the average and the median, and 1 is equal to the average.;

C.  in 16 of the 17 Funds, the assets under management are significantly below either the average or the median and that when the fund size approaches industry average our expenses also approach or are less than industry average.;

D.  ICON has contractually agreed to impose expense limitations on certain Funds at a cost to ICON;

E.  the advisory and other fees payable by the Funds to ICON are essentially fees which would be similar to those which would have resulted solely from “arm’s-length” bargaining, and may well be lower than fees arrived at solely from such arm’s-length negotiation;

F.  the fees paid to ICON for managing other institutional accounts (such as pension plans) are not lower than the fees paid by similarly-managed funds; indeed, some institutional accounts have been encouraged to, and have in fact used, the Funds Z share class, but to the extent some fees of those accounts are lower, the reasons why such accounts are less costly for ICON to manage; and

 

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G.  ICON has contractually committed to break points in its fees so that economies of scale could be realized as a Fund grows in assets, for the benefit of Fund shareholders.

In connection with the direct and indirect benefits to ICON from serving as the Funds’ adviser, the Board discussed and noted that:

A.  ICON benefits from serving directly or through affiliates as the principal underwriter and administrative agent for the Funds; that services provided by ICON and its affiliates to the Funds are satisfactory, and that fees derived from providing the services are competitive and reasonable; and

B.  ICON receives research assistance (primarily in the form of data) from the use of soft dollars generated from Fund portfolio transactions; that such research assists ICON in providing quality advisory services; that Trust and Adviser compliance personnel continuously evaluate and report on the soft-dollar arrangements and related costs; and that the Board concluded that the arrangements are consistent with Fund brokerage practices and benefit the Funds and their shareholders.

Based on these considerations, among others, the Board, including a majority of the Independent Trustees, concluded that: 1) the continuation of the Advisory Agreement was in the best interests of each Fund and its shareholders, 2) the services to be performed under the Advisory Agreement were required for the operation of the Funds, 3) the advisory services were satisfactory to the Funds in the past, and 4) the fees for the advisory services and other benefits from the relationship with the Trust received by ICON were consistent with fees paid by similar funds, other clients of ICON, reasonable in light of the comparative data, and within the range of what would have been negotiated at arm’s length in light of all the circumstances.

 

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Supplemental Tax Information

For corporate shareholders, the following percentage of the total ordinary income dividends paid during the fiscal year ended September 30, 2011, qualifies for the corporate dividends received deduction for the following Funds:

 

Fund   Dividends
Received
Deduction
 

ICON Consumer Staples Fund

    100%   

ICON Energy Fund

    100%   

ICON Financial Fund

    100%   

ICON Healthcare Fund

    100%   

ICON Industrials Fund

    100%   

ICON Materials Fund

    88%   

ICON Telecommunication & Utilities Fund

    100%   

For the fiscal year ended September 30, 2011, the following funds paid qualified dividend income:

 

Fund   Amount  

ICON Consumer Staples Fund

    100%   

ICON Energy Fund

    100%   

ICON Financial Fund

    100%   

ICON Healthcare Fund

    100%   

ICON Industrials Fund

    100%   

ICON Materials Fund

    89%   

ICON Telecommunication & Utilities Fund

    100%   

The Funds had no long-term capital gain distributions qualifying for the maximum 15% income tax rate for individuals.

Portfolio Holdings

Information related to the 10 largest portfolio holdings of each Fund is made available at www.iconfunds.com within approximately 10 business days after month-end. Additionally, a complete list of each Fund’s holdings is made available approximately 30 days after 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 Securities and Exchange Commission (the “Commission”) 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.

 

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Proxy Voting

A summarized description of the policies and procedures the ICON Funds use to vote proxies is available free of charge at www.iconfunds.com or by calling 1-800-764-0442.

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 free of charge at www.iconfunds.com or on the Commission’s website at www.sec.gov.

Cost Basis Information

Effective January 1, 2012, federal law requires mutual fund companies to maintain and report a shareholder’s cost basis by tax lot, gain/loss information and holding period of covered shares to the Internal Revenue Service on Form 1099. Covered shares are mutual fund shares acquired on or after January 1, 2012. A fund is not required to maintain and report information for shares not deemed as covered.

The new law requires each fund to elect a default tax identification methodology in order to perform the required reporting. As a result, the Trust has chosen Average Cost as its default tax identification methodology. This is the method each Fund will use. However, at the time of purchase or upon the sale of covered shares, shareholders may choose a different tax identification method. Furthermore, if you purchase shares through a financial intermediary, please contact the intermediary to find out what default tax identification method they will use. We recommend that you consult your tax adviser to determine which tax identification methodology best suits your individual tax situation.

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.iconfunds.com or by calling 1-800-764-0442. Please read the prospectus carefully before investing.

ICON Distributors, Inc., Distributor.

 

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IMPORTANT NOTICE TO ALL SHAREHOLDERS OF THE ICON FUNDS:

The Trustees of the ICON Funds (the “Trust”) have amended the ICON Funds Master Trust Agreement dated September 19, 1996 as previously amended (the “MTA”), to expressly state that the Trustees have absolute power to reclassify shares of a Fund, or close a class of shares by merging or consolidating one class with another class of shares within a Fund, without seeking shareholder approval. The amendments state that this Trustee power is subject to the same limitation applicable to any Trustee amendment by providing that “the reclassification, merger or consolidation does not adversely affect the rights of the shareholders.” The amendments are focused on the classes of shares within a Fund, not the Fund itself. A copy of the Amended and Restated Master Trust Agreement (the “Amended and Restated MTA”), marked to show changes can be viewed at: www.iconfunds.com.

As provided in the MTA, the Trustees have authorized the offering of shares of seventeen Funds (sometimes referred to as series or Sub-Trusts). The Trustees have also authorized the offering of classes of shares of the Funds with an expense allocation plan. The expense allocation plan provides that the expenses of the respective share classes are: costs and charges that correspond to the differing distribution and service expenses of the sales and marketing channels used by investors to invest in the Funds; filing and/or registration fees charged by most states for offering or selling each class; and other class specific costs.

During the past year and a half, ICON management and the Trustees have discussed methods to reduce existing share class expenses and to increase Trust assets. ICON management proposed streamlining the existing class structure, which proposal called for a change in the number and type of share classes offered by certain of the ICON Funds. For example, certain ICON Diversified Funds have two similar classes: Class I & A. ICON management proposed merging Class I into Class A. Class A shares are strategically flexible because they can be marketed in both a load structure on a commission platform and a load-waived structure on no-load or NTF platforms. A similar issue exists with Class Z and S shares, where the primary difference between the two classes is Class S shares can be sold on platforms. ICON Management proposed a structure where, in general, each ICON Fund would have three share classes: Class A, C and S. Management proposed merging Class I with Class A, Class S with Class Z and renaming Class Z to Class S with all the attending rights of Class S. For information concerning share class structure, see Explanation of Share Classes at:

 

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www.iconfunds.com. The list of currently authorized classes of shares is also set forth in Section 4.1 of the Amended and Restated MTA.

The Trustees and their representatives questioned and debated whether the Trustees had the power to reclassify shares of a Fund, or close a class of shares by merging or consolidating one class with another class of shares within a Fund, without shareholder approval. The MTA gave shareholders limited voting rights. Shareholders can vote on an amendment to the MTA only if Section 7.3 of the MTA requires it; and, Section 7.3 has not required shareholder approval to reclassify shares of a Fund, or close a class of shares by merging or consolidating one class with another class of shares within a Fund.

On the other hand, the Trustees have the implied power and authority to merge or consolidate classes, but no expressed power. Section 3.2 of the MTA gives the Trustees all the powers necessary to conduct the business of the Trust. The Trustees have had specific authority to establish classes of shares or divide the shares of any Sub-Trust. The Trustees decided to exercise their specific power and amend the MTA to state explicitly that that they can merge or consolidate share classes without shareholder approval. Section 7.3 of the MTA specifically provides the Trustees with the power to amend the MTA, without shareholder approval, whether or not related to the rights of shareholders, as long as the amendment does not adversely affect the rights of any shareholder and is not in contravention of applicable law.

Based on the above, the Trustees believe it was unnecessary to seek shareholder approval to amend the MTA to clarify the Trustees’ powers. Never the less, ICON management requested outside cost estimates for seeking shareholder approval. Costs estimates ranged between $450,000 and $550,000. The Trustees rejected spending shareholder assets to seek approval.

Critically, no shareholder would be adversely affected under the proposed amendment. The dollar value of a shareholder’s interest in the eliminated class will be the same as the dollar value of that shareholder’s interest in the substitute class. It is, for all intents and purposes, only a reclassification of shares. If a shareholder does not like the new share class for any reason, a shareholder can simply redeem his/her shares.

Please read the Amended and Restated MTA carefully. If you have any questions, please call us at 1-800-764-0442, or email the ICON Funds at: info@iconadvisers.com.

 

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ICON FUNDS PRIVACY INFORMATION

 

FACTS  

WHAT DOES ICON DO

WITH YOUR PERSONAL INFORMATION?

 
Why?   Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
 
What?  

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

n  Social Security number and account balances

 

n  income and transaction history

 

n  checking account information and wire transfer instructions

 

When you are no longer our customer, we continue to share your information as described in this notice.

 
How?   All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons ICON chooses to share; and whether you can limit this sharing.

 

Reasons we can share your personal information   Does ICON share?   Can you limit this sharing?

For our everyday business purposes —

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

  Yes   No

For our marketing purposes —

to offer our products and services to you

  No   We don’t share
For joint marketing with other financial companies   No   We don’t share

For our affiliates’ everyday business purposes —

information about your transactions and experiences

  No   We don’t share

For our affiliates’ everyday business purposes —

information about your creditworthiness

  No   We don’t share
For nonaffiliates to market to you   No   We don’t share

 

Questions?   Call 1-800-764-0442 for the ICON Funds and 1-800-828-4881 for ICON Advisers, Inc. and ICON Distributors, Inc.

 

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Page 2    

 

Who we are    
Who is providing this notice?   ICON Funds, ICON Advisers, Inc., and ICON Distributors, Inc. (collectively “ICON”)
What we do    
How does ICON protect my personal information?  

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

 

Contracts with our service providers require them to restrict access to your non-public personal information, and to maintain physical, electronic and procedural safeguards against unintended disclosure.

How does ICON collect my personal information?  

We collect your personal information, for example, when you

 

n  open an account or enter into an investment advisory contract

 

n  provide account information or give us your contact information

 

n  make a wire transfer

 

We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

n  sharing for affiliates’ everyday business purposes — information about your creditworthiness

 

n  affiliates from using your information to market to you

 

n  sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

Definitions    
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

n  Our affiliates include financial companies such as ICON Funds, ICON Advisers, Inc., and ICON Distributors, Inc.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

n  Nonaffiliates we share with can include financial companies such as custodians, transfer agents, registered representatives, financial advisers and nonfinancial companies such as fulfillment, proxy voting, and class action service providers

Joint marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

n  ICON doesn’t jointly market

 

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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, 12th Floor
Greenwood Village, CO 80111
On the Internet    www.iconfunds.com
By E-Mail    info@iconadvisers.com

 

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Item 2.  Code of Ethics.

(a)  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. This code of ethics is included as an Exhibit.

(b)  Not used.

(c)  There were no amendments, during the period covered by this report, to 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, and that relates to any element of the code of ethics description.

(d)  The registrant has not granted any waivers, 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 of the items set forth in paragraph (b) of this item’s instructions.

(e)  Not applicable.

(f)  See the attached Exhibit.

Item 3.  Audit Committee Financial Expert.

3(a)(1)  The Registrant’s Board of Trustees has determined that the registrant has at least one audit committee financial expert serving on its audit committee.

3(a)(2)  The audit committee financial experts are Glen F. Bergert and R. Michael Sentel, who are “independent” for purposes of this Item 3 of Form N-CSR.

3(a)(3)  Not applicable.

Item 4.  Principal Accountant Fees and Services.

(a)  Audit Fees

In each of the fiscal years ended September 30, 2011 and September 30, 2010, the aggregate Audit Fees billed (or to be billed) by PricewaterhouseCoopers LLP (“PwC”) for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements as well as reimbursable expenses are listed below. All of the below fees were paid by the Registrant.

         2011   2010
         $352,200   $338,650

(b)  Audit-Related Fees

In each of the fiscal years ended September 30, 2011 and September 30, 2010, the aggregate Audit-Related Fees billed (or to be billed) by PwC for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund’s financial statements, but not reported as Audit Fees, are shown in the table below.

         2011   2010
         $8,220*   $24,100**

 

* This fee was related to procedures performed during a reprocessing event.
** This fee was related to procedures performed when the Registrant changed service providers.


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(c)  Tax Fees

In each of the fiscal years ended September 30, 2011 and September 30, 2010 the aggregate Tax Fees billed (or to be billed) by PwC for professional services rendered for tax return preparation, tax compliance, tax advice and tax planning are shown in the table below. In the fiscal year ending September 30, 2010, PwC also rendered professional services for service provider conversion procedures. All of the below fees were paid by the Registrant.

         2011   2010
         $118,425   $127,370

(d)  All Other Fees

In each of the fiscal years ended September 30, 2011 and September 30, 2010 the aggregate Other Fees billed (or to be billed) by PwC for all other non-audit services rendered are shown in the table below. All of the below fees were paid by the Registrant.

         2011   2010
         $0   $0

(e)(1)  The audit committee of the Registrant’s Board of Trustees is required to pre-approve all services to be provided by the independent accountants to the Registrant or the Registrant’s investment adviser and to any entity controlling, controlled by or under common control with the investment adviser that provides on-going services to the Registrant to determine whether the services performed by the independent accountants impair their independence from the Registrant. The audit committee has delegated authority to the Chairman of the audit committee, subject to review and ratification by the full audit committee.

(e)(2)  100% of the fees were approved by the Registrant’s audit committee pursuant to paragraph (c)(7)(i)(C) if Rule 2-01 of Regulation S-X.

(f)  For the fiscal year ended September 30, 2011, the percentage of hours spent on the audit of the Registrant’s financial statements that were attributed to work performed by persons who are not full-time, permanent employees of PwC was 0%.

(g)  See Item 4(d) above.

(h)  There were no non-audit fees provided by PwC in the fiscal year ending September 30, 2011 or September 30, 2010 to the investment adviser or to any entity controlling, controlled by, or under common control with the investment adviser that provides on-going services to the Registrant.

Item 5.  Audit Committee of Listed Registrants.

Not applicable.

Item 6.  Investments.

 

(a) The schedule of investments in securities of unaffiliated issuers is included in Item 1.

 

(b) Not applicable.

Item 7.  Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8.  Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9.  Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.


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Item10.  Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 11.  Controls and Procedures.

(a)  The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b)  There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12.  Exhibits.

(a)(1)  The code of ethics is attached.

(a)(2)  Certifications pursuant to Rule 30a-2(a) are attached.

(a)(3)  Not applicable.

 

(b) Certifications pursuant to Rule 30a-2(b) are furnished herewith.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)   ICON Funds
By (Signature and Title)*   /s/ Craig T. Callahan
 

Craig T. Callahan, President and Chief Executive Officer (Principal Executive Officer)

Date  

December 2, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*   /s/ Craig T. Callahan
 

Craig T. Callahan, President and Chief Executive Officer (Principal Executive Officer)

Date  

December 2, 2011

By (Signature and Title)*   /s/ Erik L. Jonson
 

Erik L. Jonson, Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

Date  

December 2, 2011

 

* Print the name and title of each signing officer under his or her signature.