Resource Center – Tax Center – FAQs

Q. Why do the ICON Funds pay distributions to shareholders?

A. As a regulated investment company under the Internal Revenue Code, ICON Funds must make distributions of net investment income and net realized capital gains to shareholders of record.

Dividends and distributions to shareholders are recorded by the funds on the ex-dividend/distribution date. The ex-dividend date is the day on which declared distributions (dividends or capital gains) are deducted from a fund’s assets before it calculates its daily net asset value. On the ex-dividend date, a fund’s NAV per share drops by the amount of the per-share distribution plus market activity that day. The funds distribute any net realized capital gains to shareholders at least annually, if not offset by capital loss carryovers.

Q. Why does my fund’s net asset value (NAV) drop when distributions are paid?

A. The NAV, or price, of a fund that’s paying a distribution drops on the “ex-date” to reflect the fund’s adjusted NAV after the distribution has been paid. Market activity is also reflected in that day’s NAV.

Q. What is a capital gain?

A. A gain on an asset that is sold one year or less after it was purchased is a short-term capital gain. A gain on an asset held more than one year is a long-term capital gain. Shareholders can receive capital gains either as a distribution from the net gains on the sale of fund securities or from redemption of fund shares.

Q. What causes capital gain distributions to be generated by an ICON Fund?

A. Capital gains can arise from ICON’s strict sell discipline and are the by-product of an investment discipline that results in holding industries we believe are underpriced for an extended period of time.

When industries begin trading above our estimate of fair value, our methodology directs us to sell those overpriced industries, book any profits, and use the proceeds to rotate into underpriced industries. In our view, the potential for missing attractive buying opportunities far outweighs the cost of carrying unrealized long-term gains.

Q. Can ICON manage funds to avoid capital gains?

A. ICON’s investment decisions are not dictated by the potential effects of taxes. We do not invest in industries simply to avoid capital gains taxes. Our process is driven, first and foremost, by valuation, not tax efficiency. Please consult your accountant or tax professional if you have any questions or concerns regarding capital gains and other tax consequences.

Capital gains are a residual of the ICON investment process. Capital loss carryforwards that were generated in prior years are used to offset gains, but most carryforwards have been fully utilized.

Q. What is the tax effect of distributions if I own ICON in an IRA?

A. Retirement (tax-deferred) account shareholders do not realize any tax consequence as a result of annual fund distributions. IRAs are non-taxable accounts. Please consult your accountant or tax professional with any other questions or concerns regarding the tax effect of IRA distributions.

Q. Why am I receiving a Form 1099-DIV?

A. Every shareholder who receives more than $10 of taxable distributions from an ICON Fund receives a Form 1099-DIV, even if the distributions were reinvested. Taxable distributions are required to be reported on an individual’s federal income tax return.

Q. If I’ve been invested in an ICON Fund for less than one year, will I still receive the full distribution?

A. Yes. Fund distributions are not pro-rated based on duration of investment and are paid to shareholders of record on a certain date.

Q. Do I have to pay taxes on distributions that are reinvested?

A. Yes. Even if you have elected to reinvest distributions, they will be paid to your account and will be taxable.

This information does not constitute tax advice. For tax-related questions, please consult your accountant or tax professional.

The data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the data quoted. Please call 1-800-828-4881 or get performance results current to the most recent month-end. Returns assume the reinvestment of dividends and capital gain distributions and reflect applicable fees and expenses.