N-CSR 1 d298042dncsr.htm N-CSR N-CSR
Table of Contents

 

 

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)

 

 

Carrie Schoffman

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, 2016

Date of reporting period: September 30, 2016

 

 

 


Table of Contents

Item 1. Reports to Stockholders.


Table of Contents

LOGO

Diversified Funds

ICON Bond Fund

ICON Equity Income Fund

ICON Fund

ICON Long/Short Fund

ICON Opportunities Fund

ICON Risk-Managed Balanced Fund


Table of Contents

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                     

 


Table of Contents

TABLE OF CONTENTS

 

 

About This Report (Unaudited)

     2   

Management Overview (Unaudited) and Schedules of Investments

  

ICON Bond Fund

     6   

ICON Equity Income Fund

     8   

ICON Fund

     14   

ICON Long/Short Fund

     18   

ICON Opportunities Fund

     22   

ICON Risk-Managed Balanced Fund

     26   

Financial Statements

     35   

Financial Highlights

     44   

Notes to Financial Statements

     60   

Report of Independent Registered Public Accounting Firm

     73   

Disclosure of Fund Expenses (Unaudited)

     74   

Board of Trustees and Fund Officers (Unaudited)

     76   

Additional Information (Unaudited)

     77   

Privacy Policy

     81   


Table of Contents
ICON Diversified Funds    About This Report
   September 30, 2016 (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 portfolio holdings as of September 30, 2016, the end of the reporting period. The information is not a complete analysis of every aspect of any sector, industry, security or the Funds.

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 and ICON Equity Income Fund may invest up to 35% and 25% of its assets in high-yield bonds that are below investment grade, respectively. ICON Risk-Managed Balanced Fund may invest up to 10% 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.

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 the financial statements released to the market as part of our analysis.

Investments in other mutual fund companies may entail certain risks. For example, the Fund’s performance depends on the underlying funds in which it invests, and it is subject to the risks of the underlying funds. Additionally, an investment by the Fund or underlying fund in exchange-traded funds generally presents the same primary risks as an investment in a mutual fund.

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.

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.

 

 
2    www.iconfunds.com


Table of Contents
ICON Bond Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmark?

A.

For the Fund’s fiscal year ended September 30, 2016, the ICON Bond Fund (the Fund) Class S shares outperformed its benchmark, the Barclays Capital U.S. Universal Index (ex-MBS). The Fund returned 7.54% while the Barclays Capital U.S. Universal Index (ex-MBS) returned 6.89%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

A.

Similar to last year, many investors began fiscal year 2016 anticipating upward pressure on interest rates as the Federal Reserve began a tightening cycle. However, as the year unfolded, the combination of falling commodity prices and global economic volatility created yet another year of falling interest rates and rallying bond prices. The yield on the 10-year U.S. Treasury began the fiscal year at about 2.04%, rose to 2.34% in mid-November 2015 as investors began pricing in the anticipated rate rise, fell to 1.36% in early July 2016 as prospects for increasing rates fell, and finally finished the fiscal year at 1.59%. In addition to the volatility in the U.S. Treasury market, corporate bond spreads experienced volatility of their own as default concerns for commodity related companies spiked when the price of oil and other industrial metals collapsed to current cycle lows during the first half of the fiscal year. However, those concerns were short-lived as the commodity market calmed and corporate bond spreads reversed course to finish the fiscal year slightly tighter than where they began.

Over the course of the fiscal year, the Fund maintained a lower overall duration and underexposure to U.S. Treasuries relative to the benchmark, which proved to be a headwind from a curve return standpoint. However, this curve underperformance was offset by positive returns in specific segments of the corporate bond market, closed-end fund arbitrage plays, and investments in preferred securities, resulting in outperformance relative to the benchmark over the course of the fiscal year.

 

Q.

How did the Fund’s composition affect performance?

A.

As stated above, the Fund outperformed its benchmark during the fiscal year. The outperformance stemmed from positive allocation effect, mainly from selections in the preferred share segment of the market and an overweight position in corporate credit which produced strong relative returns over the course of the fiscal year. Closed-end fund positions also produced strong returns relative to the benchmark, contributing positively to the Fund’s performance. The Fund also had positive selection effect in the corporate bond segment of the market where holdings within the Industrials, Financials, and Energy sectors of the market experienced larger spread tightening movement than the broad market.

Negative allocation effect came from the Fund’s underexposure to both U.S. Treasuries and Securitized Debt. Based on our internal assumption of risk and returns, we felt as though an overweight allocation to these segments of the market was unwarranted and would rather look to focus on bottom up security selection.

 

Q.

What is your investment outlook for the bond market?

A.

At the end of fiscal year 2016, both investment grade and high yield corporate bond spreads were trading at levels that we deemed close to fair value. With spreads at these levels we are focused on our bottom up approach to find issue specific opportunities. While we don’t anticipate a substantial upward movement in interest rates over the course of the next 12 months, the Fund is positioned in the lower portion of its duration range as we move into fiscal year 2017. We continue to shy away from interest rate forecasts and remain steadfast in our search for issue specific opportunities. While future bond market volatility might be substantial, we believe our bottom up investment methodology will help the Fund navigate the changing market.

 

 
Annual Report  |  September 30, 2016    3


Table of Contents
ICON Bond Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

      Inception Date    1 Year    5 Years    10 Years   

Since

Inception

   Gross Expense
Ratio*
   Net Expense
Ratio*

ICON Bond Fund - Class S

       5/6/04          7.54%           4.38%           4.92%           4.66%           1.06%           0.90%   

ICON Bond Fund - Class C

       10/21/02          6.59%           3.49%           4.04%           4.13%           2.34%           1.75%   

ICON Bond Fund - Class A

       9/30/10          7.25%           4.14%           N/A           3.43%           1.51%           1.15%   

ICON Bond Fund - Class A

                                  

(including maximum sales charge of 4.75%)

       9/30/10          2.12%           3.14%           N/A           2.60%           1.51%           1.15%   

Barclays Capital U.S. Universal Index

            6.11%           3.62%           5.00%           5.09%           N/A           N/A   

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

            6.89%           3.96%           5.06%           5.30%           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.

Value of a $10,000 Investment (through September 30, 2016)

 

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Bond Fund’s Class S shares on the Class’ inception date of 5/6/04 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Bond Fund’s other share classes will vary due to differences in charges and expenses. The Bond 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.

 

 
4    www.iconfunds.com


Table of Contents
ICON Bond Fund    Schedule of Investments
   September 30, 2016

 

 

     

Shares or

Principal

Amount

   Value

Corporate Bonds (59.18%)

         

Consumer Discretionary (1.16%)

         

International Game

         

Technology

         

5.35%, 10/15/23

     $     1,000,000         $ 1,010,000   
         

 

 

 

Consumer Staples (13.55%)

         

Bumble Bee Holdings, Inc.

         

9.00%, 12/15/17(a)

       650,000          653,250  

CVS Health Corp.

         

4.75%, 12/01/22

       2,500,000          2,835,678  

Innovation Ventures LLC /

         

Innovation Ventures

         

Finance Corp.

         

9.50%, 08/15/19(a)

       1,500,000          1,577,250  

Kraft Heinz Foods Co.

         

4.88%, 02/15/25(a)

       3,711,000          4,093,426  

Molson Coors Brewing Co.

         

3.00%, 07/15/26

       1,300,000          1,309,842  

WhiteWave Foods Co.

         

5.38%, 10/01/22

       1,200,000          1,363,500  
         

 

 

 

            11,832,946  
         

 

 

 

Financial (24.96%)

         

Aircastle, Ltd.

         

5.00%, 04/01/23

       1,400,000          1,463,000  

Ally Financial, Inc.

         

8.00%, 03/15/20

       2,493,000          2,848,252  

American Equity Investment

         

Life Holding Co.

         

6.63%, 07/15/21

       500,000          521,188  

Berkshire Hathaway, Inc.

         

2.75%, 03/15/23

       500,000          519,825  

E*TRADE Financial Corp.

         

5.38%, 11/15/22

       500,000          533,010  

Infinity Property & Casualty Corp.

         

5.00%, 09/19/22

       640,000          679,146  

International Lease Finance Corp.

         

5.88%, 08/15/22

       1,500,000          1,663,125  

KeyCorp Capital II

         

6.88%, 03/17/29

       1,094,000          1,241,865  

Liberty Mutual Insurance Co.

         

7.88%, 10/15/26(a)

       1,135,000          1,442,613  

MBIA, Inc.

         

6.63%, 10/01/28

       2,439,000          2,512,170  

MetLife Capital Trust IV

         

7.88%, 12/15/37(a)

       1,000,000          1,254,598  

Neuberger Berman Group

         

LLC / Neuberger Berman

         

Finance Corp.

         

5.88%, 03/15/22(a)

       765,000          798,469  

NTC Capital I, Series A

         

1.20%, 01/15/27(b)

       1,500,000          1,297,500  
     

Shares or
Principal

Amount

   Value

Financial (continued)

         

Prudential Financial, Inc.

         

8.88%, 06/15/38(b)

     $     1,000,000         $ 1,110,000    

SouthTrust Bank

         

6.13%, 01/09/28

       750,000          910,490    

State Street Capital Trust I

         

1.38%, 05/15/28(b)

       1,250,000          1,125,000    

USB Realty Corp.

         

1.83%, 01/15/17(a)(b)

       2,100,000          1,884,750    
         

 

 

 

            21,805,001    
         

 

 

 

Health Care (6.44%)

         

Amsurg Corp.

         

5.63%, 11/30/20

       300,000          308,250    

HCA Holdings, Inc.

         

5.25%, 04/15/25

       2,500,000          2,665,625    

Highmark, Inc.,

         

6.13%, 05/15/41(a)(c)

       600,000          585,286    

St. Jude Medical, Inc.

         

3.88%, 09/15/25

       1,935,000          2,063,544    
         

 

 

 

            5,622,705    
         

 

 

 

Industrials (7.00%)

         

General Electric Co., Series D

         

5.00%, 01/21/21(b)

       1,625,000          1,728,025    

Ingersoll-Rand Co.

         

6.39%, 11/15/27

       1,260,000          1,495,730    

Overseas Shipholding Group, Inc.

         

8.13%, 03/30/18(c)

       1,000,000          1,052,500    

Spirit AeroSystems, Inc.

         

5.25%, 03/15/22

       1,750,000          1,839,414    
         

 

 

 

            6,115,669    
         

 

 

 

Information Technology (3.09%)

         

Lender Processing Services,

         

Inc. / Black Knight

         

Lending Solutions, Inc.

         

5.75%, 04/15/23

       2,565,000          2,699,662    
         

 

 

 

Materials (0.60%)

         

USG Corp.

         

5.88%, 11/01/21(a)

       500,000          523,125    
         

 

 

 

Telecommunication Services (2.38%)

         

EarthLink Holdings Corp.

         

7.38%, 06/01/20

       1,000,000          1,051,250    

Lee Enterprises, Inc.

         

9.50%, 03/15/22(a)(d)

       1,000,000          1,032,500    
         

 

 

 

            2,083,750    
         

 

 

 

Total Corporate Bonds

         

(Cost $51,062,150)

            51,692,858    
         

 

 

 

 

 

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

 

Annual Report  |  September 30, 2016    5


Table of Contents
ICON Bond Fund    Schedule of Investments
   September 30, 2016

 

   

Shares or

Principal

Amount

    Value  

 

 

Convertible Corporate Bonds (2.38%)

  

Telecommunication Services (2.38%)

  

Clearwire Communications LLC / Clearwire Finance, Inc. 8.25%, 12/01/40(a)

  $ 2,000,000       $   2,077,500     
   

 

 

 

Total Convertible Corporate Bonds

(Cost $2,032,341)

  

  

    2,077,500     
   

 

 

 

U.S. Treasury Obligations (3.43%)

  

U.S. Treasury Note 1.50%, 08/15/26

    1,000,000        990,977     

U.S. Treasury Note 1.63%, 02/15/26

    2,000,000        2,004,922     
   

 

 

 

Total U.S. Treasury Obligations

(Cost $2,957,717)

  

  

    2,995,899     
   

 

 

 

Collateralized Mortgage Obligations (12.56%)

  

Citigroup Mortgage Loan Trust, Inc.,
Series 2013-J1, Class B3
3.54%, 02/25/38(a)(b)(c)

    480,268        470,699     

Green Tree, Inc.,
Series 2008-HE1, Class A
9.50%, 03/25/38(a)(b)(c)

    425,715        449,897     

MASTR Seasoned Securitization Trust, Inc.,
Series 2005-1, Class 1A1
6.52%, 09/25/32(b)

    1,060,839        1,146,938     

Mill City Mortgage Trust,
Series 2015-1, Class M3
3.20%, 10/25/32(a)(b)(c)

    800,000        781,497     

New Residential Mortgage Loan Trust,
Series 2016-1A, Class B3
5.56%, 03/25/56(a)(b)(c)

    489,658        511,588     

Sequoia Mortgage Trust, Inc.,
Series 2013-12, Class B3
4.23%, 12/25/43(a)(b)(c)

    755,957        766,794     

Towd Point Mortgage Trust, Inc.,
Series 2015-1, Class A5
3.51%, 06/25/29(a)(b)(c)

    2,500,000        2,461,658     

Towd Point Mortgage Trust, Inc.,
Series 2015-4, Class M2
3.75%, 01/25/27(a)(b)(c)

    2,000,000        1,984,399     
   

Shares or

Principal

Amount

     Value  

 

 

Collateralized Mortgage Obligations (continued)

  

Towd Point Mortgage Trust, Inc.,
Series 2015-2, Class 2M1
3.75%,
12/25/24(a)(b)(c)

  $ 1,500,000        $ 1,560,369     

Towd Point Mortgage Trust, Inc.,
Series 2015-6, Class M2
3.75%,
02/25/28(a)(b)(c)

    300,000         304,303     

Velocity Commercial Capital Loan Trust, Inc.,
Series 2014-1, Class M3
6.89%,
02/25/24(a)(b)(c)

    500,000         530,313     
    

 

 

 

Total Collateralized Mortgage Obligations

(Cost $10,903,445)

  

  

       10,968,455     
    

 

 

 

Preferred Stocks (5.39%)

  

Diversified Banks (4.11%)

  

GMAC Capital Trust I, Series 2

    141,292         3,590,229     
    

 

 

 

Diversified Operations (0.83%)

  

Pitney Bowes International Holdings, Inc., Series F(a)(c)

    700         721,219     
    

 

 

 

Office REIT’s (0.45%)

    

Gramercy Property Trust, Inc.,
Series A(c)(d)

    14,634         397,167     
    

 

 

 

Total Preferred Stocks

(Cost $4,548,684)

  

  

     4,708,615     
    

 

 

 

Closed-End Mutual Funds (9.79%)

  

BlackRock Income Trust, Inc.(d)

    99,117         642,278     

Deutsche High Income Trust

    187,002         1,722,289     

Deutsche Multi-Market Income Trust

    182,344         1,559,041     

Deutsche Strategic Income Trust

    16,735         202,828     

First Trust Mortgage Income Fund

    68,894         992,763     

Franklin Limited Duration Income Trust(d)

    88,437         1,069,203     

Morgan Stanley Income Securities, Inc.

    72,031         1,362,827     
 

 

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

 

6    www.iconfunds.com


Table of Contents
ICON Bond Fund    Schedule of Investments
   September 30, 2016

 

    Shares or
Principal
Amount
    Value  

 

 

Closed-End Mutual Funds (continued)

  

Pacholder High Yield Fund, Inc.

    140,118      $ 999,041     
   

 

 

 

Total Closed-End Mutual Funds

(Cost $8,292,846)

  

  

    8,550,270     
   

 

 

 

Collateral for Securities on Loan (1.25%)

  

State Street Navigator Prime Portfolio, 0.30%

    1,092,875        1,092,875     
   

 

 

 

Total Collateral for Securities on Loan

(Cost $1,092,875)

  

  

    1,092,875     
   

 

 

 

Short-Term Investments (6.45%)

  

Time Deposits (6.45%)

  

State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/16

    5,636,472        5,636,472     
   

 

 

 

Total Short-Term Investments

(Cost $5,636,472)

  

  

    5,636,472     
   

 

 

 

Total Investments (100.43%)

(Cost $86,526,530)

  

  

   $   87,722,944     

Liabilities Less Other Assets (-0.43%)

  

    (377,105)     
   

 

 

 

Net Assets (100.00%)

  

  $ 87,345,839     
   

 

 

 

 

(a)

Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. As of September 30, 2016, these securities had a total aggregate market value of $26,465,503, representing 30.30% of net assets.

(b)

Floating Rate Security. Rate disclosed is as of September 30, 2016.

(c)

These securities are considered to be illiquid. The aggregate value of these securities at September 30, 2016 was $12,577,689, which represent 14.40% of the Fund’s net assets.

(d)

All or a portion of the security was on loan as of September 30, 2016.

REIT - Real Estate Investment Trust

Credit Diversification (September 30, 2016)

 

A-*

     1.31%   

A3

     6.91%   

Aa2

     0.59%   

Aa3

     1.04%   

Aaa

     3.43%   

B1

     3.94%   

B2

     1.93%   

B3

     2.16%   

Ba1

     9.51%   

Ba2

     1.16%   

Ba3

     5.06%   

Baa1

     3.83%   

Baa2

     15.32%   

Baa3

     9.79%   

BBB*

     0.54%   

BBB-*

     0.60%   

Caa1

     1.20%   

NR

     9.23%   
  

 

 

 

Total:

             77.55%   
  

 

 

 

 

*

Reflects S&P Rating for securities where Moody’s rating is unavailable.

Percentages are based upon U.S. Treasury obligations, collateralized mortgage obligations, corporate and convertible corporate bond investments as a percentage of net assets. Ratings based on Moody’s Investors Service, Inc.

 

 

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

 

Annual Report  |  September 30, 2016    7


Table of Contents
ICON Equity Income Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Equity Income Fund (the Fund) Class S shares returned 13.30% for the fiscal year ending September 30, 2016, lagging its benchmark, the S&P Composite 1500 Index, which returned 15.49% during the fiscal year. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

As the fiscal year began, our valuation methodology calculated an overall average value-to-price (V/P) ratio for the equity market of 1.09, meaning we believed fair value for the equity market as a whole was approximately 9% higher than where stocks were trading. While we were anticipating positive returns, the market exceeded our expectations. Stocks with high dividend yields did particularly well over the course of the fiscal year. For example, the Utilities and Telecommunication Services sectors, both comprised largely of stocks with high dividend yields, were up 18.7% and 26.6%, respectively, for the one year period ending September 30, 2016, as measured by the S&P 1500 Utilities Index and the S&P 1500 Telecommunication Services Index. In part, the demand for high dividend yielding stocks came from the decline in interest rates as the 10-year U.S. Treasury fell from approximately 2.04% to approximately 1.60% over the course of the year. High dividend yielding stocks can be an attractive income alternative in a low interest rate environment.

 

    

Despite the Fund’s tilt toward relatively high dividend yielding stocks, it still lagged the S&P 1500 Index, primarily due to the Fund’s positions in fixed income.

 

Q.

How did the Fund’s composition affect performance?

 

A.

The Fund’s stock selection within the Information Technology sector was the largest detractor to the Fund’s performance relative to the benchmark. The Fund’s holdings in the Information Technology sector returned about 8.5% while the benchmark returns for this sector were above 22%. The Fund’s holdings in the Technology Hardware, Storage & Peripherals industry were particularly difficult for the Fund, with a net loss to the Fund versus a positive return for the benchmark. Further, the Fund’s use of protective puts resulted in a net loss for the Fund as the market rose.

 

    

The Utilities sector helped to offset some of the losses from the Information Technology sector. The Fund was overweight the Utilities sector compared to the benchmark and this overweight position coupled with stock selection within the sector contributed to the Fund’s performance. The Fund’s holdings in the Multi-Utilities industry were particularly beneficial to the Fund.

 

Q.

What is the outlook for the ICON Equity Income Fund?

 

A.

The overall average V/P ratio for the stocks we track within our system was 1.09 as of September 30, 2016. Given this V/P ratio, we believe the market can continue to rise over the next year, and the Fund currently has an equity to fixed income allocation of approximately 90% equity and 10% fixed income. Additionally, based on our valuation readings, the Fund has a notable position in the Financial sector.    We will continue to monitor the equity market to find the best combination of value and dividend for our investors.

 

 
8    www.iconfunds.com


Table of Contents
ICON Equity Income Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

     

Inception

Date

   1 Year    5 Years    10 Years   

Since

Inception

  

Gross Expense

Ratio*

  

Net Expense

Ratio*

ICON Equity Income Fund - Class S

   5/10/04        13.30%           13.04%           5.80%           6.69%           1.60%           1.55%   

ICON Equity Income Fund - Class C

   11/8/02        12.15%           11.93%           4.74%           6.91%           2.69%           2.55%   

ICON Equity Income Fund - Class A

   5/31/06        12.97%           12.76%           5.52%           5.38%           1.87%           1.80%   

ICON Equity Income Fund - Class A

                                

(including maximum sales charge of 5.75%)

   5/31/06        6.49%           11.43%           4.90%           4.78%           1.87%           1.80%   

S&P Composite 1500 Index

          15.49%           16.44%           7.44%           9.10%           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.

 

*

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.

Value of a $10,000 Investment (through September 30, 2016)

 

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Equity Income Fund’s Class S shares on the Class’ inception date of 5/10/04 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Equity Income Fund’s other share classes will vary due to differences in charges and expenses. The Equity Income 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.

 

 
Annual Report  |  September 30, 2016    9


Table of Contents
ICON Equity Income Fund    Schedule of Investments
   September 30, 2016

 

   

Shares or

Principal

Amount

    Value  

 

 

Corporate Bonds (1.60%)

  

Financial (1.20%)

  

E*TRADE Financial Corp.
5.38%, 11/15/22

  $   200,000       $ 213,204     

Ironshore Holdings U.S., Inc.
8.50%, 05/15/20(a)

    500,000        568,251     
   

 

 

 
      781,455     
   

 

 

 

Materials (0.40%)

  

Westlake Chemical Corp.
4.88%, 05/15/23(a)

    250,000        261,733     
   

 

 

 

Total Corporate Bonds

(Cost $1,043,622)

  

  

      1,043,188     
   

 

 

 

Convertible Corporate Bonds (0.40%)

  

Telecommunication Services (0.40%)

  

Clearwire Communications LLC / Clearwire Finance, Inc.
8.25%, 12/01/40(a)

    250,000        259,688     
   

 

 

 

Total Convertible Corporate Bonds

(Cost $254,981)

  

  

    259,688     
   

 

 

 

Collateralized Mortgage Obligations (1.03%)

  

Green Tree, Inc.,
Series 2008-HE1, Class A
9.50%, 03/25/38(a)(b)(c)

    170,286        179,958     

Towd Point Mortgage Trust, Inc.,
Series 2015-1, Class A5
3.51%, 06/25/29(a)(b)(c)

    500,000        492,332     
   

 

 

 

Total Collateralized Mortgage Obligations

(Cost $675,503)

  

  

    672,290     
   

 

 

 

Common Stocks (89.38%)

  

Aerospace & Defense (1.66%)

  

Boeing Co.

    8,200        1,080,268     
   

 

 

 

Apparel Retail (1.55%)

  

Buckle, Inc.(d)

    42,000        1,009,260     
   

 

 

 

Asset Management & Custody Banks (1.74%)

  

Legg Mason, Inc.

    33,800        1,131,624     
   

 

 

 

Auto Parts & Equipment (1.96%)

  

Magna International, Inc.

    29,700        1,275,615     
   

 

 

 

Automobile Manufacturers (2.63%)

  

Ford Motor Co.

    91,100        1,099,577     
   

Shares or

Principal

Amount

     Value  

 

 

Automobile Manufacturers (continued)

  

Nissan Motor Co., Ltd., Sponsored ADR

    31,400        $ 616,696     
    

 

 

 
         1,716,273     
    

 

 

 

Biotechnology (1.75%)

  

AbbVie, Inc.

    18,100         1,141,567     
    

 

 

 

Communications Equipment (1.74%)

  

Harris Corp.

    12,400         1,135,964     
    

 

 

 

Data Processing & Outsourced Services (4.45%)

  

Automatic Data Processing, Inc.

    13,100         1,155,420     

Broadridge Financial Solutions, Inc.

    9,400         637,226     

Xerox Corp.

    109,600         1,110,248     
    

 

 

 
       2,902,894     
    

 

 

 

Electric Utilities (0.82%)

  

American Electric Power Co., Inc.

    8,300         532,943     
    

 

 

 

Electronic Manufacturing Services (1.89%)

  

TE Connectivity, Ltd.

    19,100         1,229,658     
    

 

 

 

Fertilizers & Agricultural Chemicals (1.66%)

  

Agrium, Inc.(d)

    11,900         1,079,211     
    

 

 

 

Gas Utilities (0.95%)

  

National Fuel Gas Co.

    11,400         616,398     
    

 

 

 

Health Care Distributors (1.90%)

  

Cardinal Health, Inc.

    15,900         1,235,430     
    

 

 

 

Home Improvement Retail (1.90%)

  

Home Depot, Inc.

    9,600         1,235,328     
    

 

 

 

Homefurnishing Retail (1.28%)

  

Williams-Sonoma, Inc.(d)

    16,300         832,604     
    

 

 

 

Hotels, Resorts & Cruise Lines (3.50%)

  

Royal Caribbean Cruises, Ltd.

    17,000         1,274,150     

Wyndham Worldwide Corp.

    15,000         1,009,950     
    

 

 

 
       2,284,100     
    

 

 

 

Household Appliances (1.64%)

  

Whirlpool Corp.

    6,600         1,070,256     
    

 

 

 

Housewares & Specialties (1.88%)

  

Tupperware Brands Corp.

    18,700         1,222,419     
    

 

 

 

Integrated Telecommunication Services (2.84%)

  

AT&T, Inc.

    29,500         1,197,995     

BCE, Inc.

    14,200         655,756     
    

 

 

 
       1,853,751     
    

 

 

 
 

 

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

 

10    www.iconfunds.com


Table of Contents
ICON Equity Income Fund    Schedule of Investments
   September 30, 2016

 

 

   

Shares or

Principal

Amount

     Value  

 

 

Life & Health Insurance (2.06%)

    

Lincoln National Corp.

    28,600        $   1,343,628     
    

 

 

 

Mortgage REIT’s (0.98%)

  

Annaly Capital Management, Inc., REIT

    61,000         640,500     
    

 

 

 

Movies & Entertainment (3.61%)

  

Regal Entertainment Group, Class A(d)

    53,700         1,167,975     

Time Warner, Inc.

    14,900         1,186,189     
    

 

 

 
       2,354,164     
    

 

 

 

Multi-line Insurance (3.74%)

  

Hartford Financial Services Group, Inc.

    29,700         1,271,754     

Horace Mann Educators Corp.

    31,900         1,169,135     
    

 

 

 
       2,440,889     
    

 

 

 

Multi-Utilities (2.22%)

  

Dominion Resources, Inc.

    11,500         854,105     

DTE Energy Co.

    6,300         590,121     
    

 

 

 
       1,444,226     
    

 

 

 

Oil & Gas Equipment & Services (1.12%)

  

Bristow Group, Inc.(d)

    51,900         727,638     
    

 

 

 

Oil & Gas Exploration & Production (1.00%)

  

Cabot Oil & Gas Corp.

    25,200         650,160     
    

 

 

 

Oil & Gas Refining & Marketing (2.63%)

  

HollyFrontier Corp.

    32,300         791,350     

Tesoro Corp.

    11,600         922,896     
    

 

 

 
       1,714,246     
    

 

 

 

Oil & Gas Storage & Transportation (1.47%)

  

Ship Finance International, Ltd.(d)

    65,200         960,396     
    

 

 

 

Packaged Foods & Meats (1.80%)

  

B&G Foods, Inc.

    23,800         1,170,484     
    

 

 

 

Paper Packaging (1.00%)

  

International Paper Co.

    13,600         652,528     
    

 

 

 

Pharmaceuticals (5.83%)

  

Bristol-Myers Squibb Co.

    11,800         636,256     

Eli Lilly & Co.

    8,800         706,288     

Merck & Co., Inc.

    10,300         642,823     

Novo Nordisk A/S, Sponsored ADR

    16,600         690,394     

Pfizer, Inc.

    33,100         1,121,097     
    

 

 

 
       3,796,858     
    

 

 

 

Property & Casualty Insurance (5.97%)

  

AmTrust Financial Services, Inc.

    38,800         1,041,004     

Chubb, Ltd.

    7,700         967,505     

 

   

Shares or

Principal

Amount

     Value  

 

 

Property & Casualty Insurance (continued)

  

Stewart Information Services Corp.

    28,100        $ 1,249,045     

XL Group PLC

    18,900         635,607     
    

 

 

 
       3,893,161     
    

 

 

 

Railroads (1.80%)

  

Union Pacific Corp.

    12,000         1,170,360     
    

 

 

 

Regional Banks (4.24%)

  

Fifth Third Bancorp

    62,900         1,286,934     

KeyCorp

    88,200         1,073,394     

M&T Bank Corp.

    3,500         406,350     
    

 

 

 
       2,766,678     
    

 

 

 

Semiconductor Equipment (1.78%)

  

Teradyne, Inc.

    53,700         1,158,846     
    

 

 

 

Semiconductors (3.52%)

  

Intel Corp.

    34,000         1,283,500     

QUALCOMM, Inc.

    14,800         1,013,800     
    

 

 

 
       2,297,300     
    

 

 

 

Technology Hardware, Storage & Peripherals (2.46%)

  

Apple, Inc.

    14,200         1,605,310     
    

 

 

 

Thrifts & Mortgage Finance (2.88%)

  

Dime Community Bancshares, Inc.

    57,700         967,052     

New York Community Bancorp, Inc.

    64,100         912,143     
    

 

 

 
       1,879,195     
    

 

 

 

Tobacco (1.53%)

  

Reynolds American, Inc.

    21,200         999,580     
    

 

 

 

Total Common Stocks

(Cost $56,577,813)

         58,251,710     
    

 

 

 

Preferred Stocks (1.93%)

  

Consumer Finance (0.47%)

  

Discover Financial Services,
Series B(d)

    11,792         307,535     
    

 

 

 

Diversified Banks (0.42%)

  

GMAC Capital Trust I, Series 2

    10,800         274,428     
    

 

 

 

Mortgage REIT’s (0.56%)

  

Annaly Capital Management, Inc., Series E

    14,225         360,035     
    

 

 

 
 

 

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

 

Annual Report  |  September 30, 2016    11


Table of Contents
ICON Equity Income Fund    Schedule of Investments
   September 30, 2016

 

 

   

Shares or

Principal

Amount

     Value  

 

 

Office REIT’s (0.48%)

    

Gramercy Property Trust, Inc., Series A(c)

    11,573        $ 314,091     
    

 

 

 

Total Preferred Stocks

(Cost $1,214,672)

  

  

     1,256,089     
    

 

 

 

Convertible Preferred Stocks (0.40%)

  

Diversified Banks (0.40%)

    

Wells Fargo & Co., Series L

    200         261,720     
    

 

 

 

Total Convertible Preferred Stocks

(Cost $246,404)

  

  

     261,720     

Closed-End Mutual Funds (3.88%)

  

BlackRock Income Trust, Inc.

    47,970         310,846     

Blackstone / GSO Senior Floating Rate Term Fund

    6,558         110,502     

Deutsche Global High Income Fund, Inc.

    10,000         84,100     

Deutsche High Income Opportunities Fund, Inc.

    13,342         188,789     

Deutsche High Income Trust

    36,761         338,569     

Deutsche Multi-Market Income Trust

    42,005         359,143     

Deutsche Strategic Income Trust

    16,113         195,289     

Franklin Limited Duration Income Trust

    26,467         319,986     

Morgan Stanley Income Securities, Inc.

    12,866         243,425     

Pacholder High Yield Fund, Inc.

    11,866         84,605     

Wells Fargo Multi-Sector Income Fund

    22,462         291,332     
    

 

 

 

Total Closed-End Mutual Funds

(Cost $2,415,180)

  

  

       2,526,586     
    

 

 

 
Underlying Security/Expiration
Date/Exercise Price
  Contracts      Value  

 

 

Put Options Purchased (0.08%)

  

S&P 500 Index 01/20/17, 1,800

    60         54,000     
    

 

 

 

Total Put Options Purchased

(Cost $254,882)

       54,000     
    

 

 

 
   

Shares or

Principal

Amount

     Value  

 

 

Collateral for Securities on Loan (9.19%)

  

State Street Navigator Prime Portfolio, 0.30%

    5,989,261        $ 5,989,261     
    

 

 

 

Total Collateral for Securities on Loan

(Cost $5,989,261)

  

  

     5,989,261     
    

 

 

 

Short-Term Investments (0.29%)

  

Time Deposits (0.29%)

  

State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/16

    190,554         190,554     
    

 

 

 

Total Short-Term Investments

(Cost $190,554)

  

  

     190,554     
    

 

 

 

Total Investments (108.18%)

(Cost $68,862,872)

  

  

   $ 70,505,086     

Liabilities Less Other Assets (-8.18%)

  

       (5,329,915)     
    

 

 

 

Net Assets (100.00%)

  

   $ 65,175,171     
    

 

 

 

 

(a)

Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. As of September 30, 2016, these securities had a total aggregate market value of $1,761,962, representing 2.70% of net assets.

(b)

Floating Rate Security. Rate disclosed is as of September 30, 2016.

(c)

These securities are considered to be illiquid. The aggregate value of these securities at September 30, 2016 was $986,381, which represent 1.51% of the Fund’s net assets.

(d)

All or a portion of the security was on loan as of September 30, 2016.

ADR - American Depositary Receipt

REIT - Real Estate Investment Trust

 

 

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

 

12    www.iconfunds.com


Table of Contents
ICON Equity Income Fund    Schedule of Investments
   September 30, 2016

 

Sector Composition (September 30, 2016)        

Financial

     23.46%   

Consumer Discretionary

     19.95%   

Information Technology

     15.84%   

Health Care

     9.48%   

Energy

     6.22%   

Utilities

     3.99%   

Industrials

     3.46%   

Consumer Staples

     3.33%   

Telecommunication Services

     2.84%   

Materials

     2.66%   

Real Estate

     0.48%   
  

 

 

 
             91.71%   
  

 

 

 

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

Industry Composition (September 30, 2016)        

Property & Casualty Insurance

     5.97%   

Pharmaceuticals

     5.83%   

Data Processing & Outsourced Services

     4.45%   

Regional Banks

     4.24%   

Multi-line Insurance

     3.74%   

Movies & Entertainment

     3.61%   

Semiconductors

     3.52%   

Hotels, Resorts & Cruise Lines

     3.50%   

Thrifts & Mortgage Finance

     2.88%   

Integrated Telecommunication Services

     2.84%   

Oil & Gas Refining & Marketing

     2.63%   

Automobile Manufacturers

     2.63%   

Technology Hardware, Storage & Peripherals

     2.46%   

Multi-Utilities

     2.22%   

Life & Health Insurance

     2.06%   

Auto Parts & Equipment

     1.96%   

Home Improvement Retail

     1.90%   

Health Care Distributors

     1.90%   

Electronic Manufacturing Services

     1.89%   

Housewares & Specialties

     1.88%   

Railroads

     1.80%   

Packaged Foods & Meats

     1.80%   

Semiconductor Equipment

     1.78%   

Biotechnology

     1.75%   

Asset Management & Custody Banks

     1.74%   

Communications Equipment

     1.74%   

Fertilizers & Agricultural Chemicals

     1.66%   

Aerospace & Defense

     1.66%   

Household Appliances

     1.64%   

Apparel Retail

     1.55%   

Mortgage REIT’s

     1.54%   

Tobacco

     1.53%   

Oil & Gas Storage & Transportation

     1.47%   

Homefurnishing Retail

     1.28%   

Oil & Gas Equipment & Services

     1.12%   

Paper Packaging

     1.00%   

Oil & Gas Exploration & Production

     1.00%   

Other Industries (each less than 1%)

     3.54%   
  

 

 

 
             91.71%   
  

 

 

 

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

 

 

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

 

Annual Report  |  September 30, 2016    13


Table of Contents
ICON Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Fund (the Fund) Class S returned 1.81% for the fiscal year ending September 30, 2016, while its benchmark, the S&P 1500 Index, returned 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

From September 30, 2015, through the market low of February 11, 2016, the Fund underperformed, dropping more than the broad market. The market drop in December 2015 and January 2016, coming after the Federal Reserve raised its target for the Federal Funds rate and hinted at many more increases in 2016, was particularly difficult for the Fund. The Fund’s overweight position in the Financial sector relative to the benchmark hurt performance as the sector stumbled, we believe due to falling interest rates and investor concern that Federal Funds rate hikes would slow the economy. The market rebounded from its February 11, 2016 low and the Fund participated, outperforming its benchmark through September 30, 2016, but the gains were not enough to make up for the underperformance of late 2015 and early 2016.

 

Q.

How did the Fund’s composition affect performance?

 

A.

The five biggest contributors to Fund performance were Thor Industries, Center Point Energy, Martin Marietta Materials, CMS Energy Corporation and Ashland. Thor Industries is in the Consumer Discretionary sector, CMS Energy and CenterPoint Energy are in the Utilities sector and Martin Marietta Materials and Ashland are in the Materials sector.

The five largest detractors from Fund performance were Encore Capital Group, Polaris Industries, Signature Bank, McKesson Corporation and Royal Caribbean Cruises. Encore, Polaris Industries and McKesson Corporation were sold. The other two remain in the portfolio.

 

Q.

What is your investment outlook for the overall market?

 

A.

From December 1, 2014, the broad market was in a sideways range for approximately 19 months. On every advance prices ran into what we have called a “value ceiling” and went no higher. Our estimation of fair value had generally been growing since 2009, but paused and actually declined in 2015 and early 2016. However, in the spring of 2016, our estimate of fair value began growing again and prices responded with many indexes breaking out to all-time highs in August. We ended September 2016 with an overall average market value-to-price (V/P) ratio of 1.09, meaning stock prices in general would need to move higher over the next year to reach our estimate of fair value. As we wrote a year ago, “[w]e do not see any of the behaviors and signs we believe are typical of market peaks and expect the six-year-old bull market to resume.” With a current overall market V/P ratio of 1.09 as of September 30, 2016, we have the same view as we did a year ago.

 

 
14    www.iconfunds.com


Table of Contents
ICON Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

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

ICON Fund - Class S

   5/6/04        1.81%           9.95%           1.03%           3.04%           1.09%           1.09%   

ICON Fund - Class C

   11/28/00        0.65%           8.81%           0.26%           2.56%           2.27%           2.25%   

ICON Fund - Class A

   5/31/06        1.37%           9.57%           0.50%           0.04%           1.55%           1.50%   

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

   5/31/06        -4.45%           8.27%           -0.09%           -0.53%           1.55%           1.50%   

S&P Composite 1500 Index

          15.49%           16.44%           7.44%           5.61%           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.

 

*

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.

Value of a $10,000 Investment (through September 30, 2016)

 

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the ICON Fund’s Class S shares on the Class’ inception date of 5/6/04 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the ICON Fund’s other share classes will vary due to differences in charges and expenses. The ICON 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.

 

 
Annual Report  |  September 30, 2016    15


Table of Contents
ICON Fund    Schedule of Investments
   September 30, 2016

 

 

   

Shares or

Principal

Amount

     Value  

 

 

Common Stocks (100.01%)

  

Application Software (2.84%)

  

Adobe Systems, Inc.(a)

    12,000        $   1,302,480     
    

 

 

 

Asset Management & Custody Banks (2.89%)

  

Janus Capital Group, Inc.

    94,900         1,329,549     
    

 

 

 

Auto Parts & Equipment (2.23%)

  

Magna International, Inc.

    23,800         1,022,210     
    

 

 

 

Automobile Manufacturers (2.97%)

  

Thor Industries, Inc.

    16,100         1,363,670     
    

 

 

 

Biotechnology (6.28%)

  

Celgene Corp.(a)

    20,400         2,132,412     

Vertex Pharmaceuticals, Inc.(a)

    8,600         750,006     
    

 

 

 
       2,882,418     
    

 

 

 

Building Products (2.34%)

  

Masco Corp.

    31,300         1,073,903     
    

 

 

 

Construction Materials (4.33%)

  

Martin Marietta Materials, Inc.

    11,100         1,988,121     
    

 

 

 

Data Processing & Outsourced Services (1.68%)

  

Total System Services, Inc.

    16,400         773,260     
    

 

 

 

Diversified Banks (6.20%)

  

Bank of America Corp.

    182,000         2,848,300     
    

 

 

 

Electronic Components (1.49%)

  

Rogers Corp.(a)

    11,200         684,096     
    

 

 

 

Home Improvement Retail (5.30%)

  

Home Depot, Inc.

    18,900         2,432,052     
    

 

 

 

Homebuilding (3.38%)

  

PulteGroup, Inc.

    77,500         1,553,100     
    

 

 

 

Hotels, Resorts & Cruise Lines (4.90%)

  

Royal Caribbean Cruises, Ltd.

    13,200         989,340     

Wyndham Worldwide Corp.

    18,700         1,259,071     
    

 

 

 
       2,248,411     
    

 

 

 

Household Appliances (3.04%)

  

Whirlpool Corp.

    8,600         1,394,576     
    

 

 

 

Internet & Direct Marketing Retail (2.01%)

  

Amazon.com, Inc.(a)

    1,100         921,041     
    

 

 

 

Internet Software & Services (2.93%)

  

CoStar Group, Inc.(a)

    3,900         844,467     

Facebook, Inc., Class A(a)

    3,900         500,253     
    

 

 

 
       1,344,720     
    

 

 

 
   

Shares or

Principal

Amount

     Value  

 

 

Life & Health Insurance (2.23%)

  

CNO Financial Group, Inc.

    67,100        $ 1,024,617     
    

 

 

 

Movies & Entertainment (1.25%)

  

Twenty-First Century Fox, Inc., Class A

    23,800         576,436     
    

 

 

 

Multi-line Insurance (2.11%)

  

American International Group, Inc.

    16,300         967,242     
    

 

 

 

Paper Packaging (2.56%)

  

Avery Dennison Corp.

    15,100         1,174,629     
    

 

 

 

Pharmaceuticals (4.05%)

  

Jazz Pharmaceuticals PLC(a)

    15,300         1,858,644     
    

 

 

 

Real Estate Services (1.87%)

  

CBRE Group, Inc., Class A(a)

    30,700         858,986     
    

 

 

 

Regional Banks (15.18%)

  

Fifth Third Bancorp

    92,300         1,888,458     

First Commonwealth Financial Corp.

    168,300         1,698,147     

Signature Bank(a)

    18,300         2,167,635     

SVB Financial Group(a)

    11,000         1,215,940     
    

 

 

 
       6,970,180     
    

 

 

 

Semiconductors (10.87%)

  

Broadcom, Ltd.

    5,500         948,860     

NXP Semiconductors N.V.(a)

    17,600         1,795,376     

Skyworks Solutions, Inc.

    29,500         2,246,130     
    

 

 

 
       4,990,366     
    

 

 

 

Specialty Chemicals (5.08%)

  

Ashland, Inc.

    20,100         2,330,595     
    

 

 

 

Total Common Stocks

(Cost $44,291,780)

  

  

     45,913,602     
    

 

 

 

Total Investments (100.01%)

(Cost $44,291,780)

  

  

    $   45,913,602     

Liabilities Less Other Assets (-0.01%)

  

     (6,684)     
    

 

 

 

Net Assets (100.00%)

  

    $ 45,906,918     
    

 

 

 

 

(a)

Non-income producing security.

 

 

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

 

16    www.iconfunds.com


Table of Contents
ICON Fund    Schedule of Investments
   September 30, 2016

 

 

Sector Composition (September 30, 2016)

  

 

 

Financial

     28.61%   

Consumer Discretionary

     25.08%   

Information Technology

     19.81%   

Materials

     11.97%   

Health Care

     10.33%   

Industrials

     2.34%   

Real Estate

     1.87%   
  

 

 

 
             100.01%   
  

 

 

 

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

Industry Composition (September 30, 2016)

  

 

 

Regional Banks

     15.18%   

Semiconductors

     10.87%   

Biotechnology

     6.28%   

Diversified Banks

     6.20%   

Home Improvement Retail

     5.30%   

Specialty Chemicals

     5.08%   

Hotels, Resorts & Cruise Lines

     4.90%   

Construction Materials

     4.33%   

Pharmaceuticals

     4.05%   

Homebuilding

     3.38%   

Household Appliances

     3.04%   

Automobile Manufacturers

     2.97%   

Internet Software & Services

     2.93%   

Asset Management & Custody Banks

     2.89%   

Application Software

     2.84%   

Paper Packaging

     2.56%   

Building Products

     2.34%   

Auto Parts & Equipment

     2.23%   

Life & Health Insurance

     2.23%   

Multi-line Insurance

     2.11%   

Internet & Direct Marketing Retail

     2.01%   

Real Estate Services

     1.87%   

Data Processing & Outsourced Services

     1.68%   

Electronic Components

     1.49%   

Movies & Entertainment

     1.25%   
  

 

 

 
             100.01%   
  

 

 

 

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

 

 

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

 

Annual Report  |  September 30, 2016    17


Table of Contents
ICON Long/Short Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Long/Short Fund (the Fund) Class S returned 1.69% for the fiscal year ending September 30, 2016, while its benchmark, the S&P 1500 Index, returned 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

From September 30, 2015, through the market low of February 11, 2016, the Fund underperformed, dropping more than the broad market. The market drop in December 2015 and January 2016, after the Federal Reserve raised its target for the Federal Funds rate and hinted at many more increases in 2016, was particularly difficult for the Fund. The Fund’s overweight position in the Financial sector relative to the benchmark hurt performance as the sector stumbled, we believe due to falling interest rates and investor concern that Federal Funds rate hikes would slow the economy. The market rebounded from its February 11, 2016 low and the Fund participated, outperforming its benchmark through September 30, 2016, but the gains were not enough to make up for the underperformance of late 2015 and early 2016.

 

Q.

How did the Fund’s composition affect performance?

 

A.

The five biggest contributors to Fund performance were Thor Industries, CMS Energy Corporation, Rogers Corporation, CenterPoint Energy and Martin Marietta Materials. Thor Industries is in the Consumer Discretionary sector, CMS Energy and CenterPoint Energy are in the Utilities sector, Rogers Corporation is in the Information Technology sector, and Martin Marietta is in the Materials sector.

 

    

The five largest detractors from Fund performance were Encore Capital Group, Signature Bank, McKesson Corporation, Polaris Industries and Royal Caribbean Cruises. Encore Capital Group, Polaris Industries and McKesson Corporation were sold. The other two remain in the portfolio.

 

Q.

What is your investment outlook for the overall market?

 

A.

From December 1, 2014, the broad market was in a sideways range for approximately 19 months. On every advance prices ran into what we have called a “value ceiling” and went no higher. Our estimation of fair value had generally been growing since 2009, but paused and actually declined in 2015 and early 2016. However, in the spring of 2016, our estimate of fair value began growing again and prices responded with many indexes breaking out to all-time highs in August. We ended September 2016 with an overall average market value-to-price (V/P) ratio of 1.09, meaning stock prices in general would need to move higher over the next year to reach our estimate of fair value. As we wrote a year ago, “[w]e do not see any of the behaviors and signs we believe are typical of market peaks and expect the six-year-old bull market to resume.” With a current overall market V/P ratio of 1.09 as of September 30, 2016, we have the same view as we did a year ago.

 

 
18    www.iconfunds.com


Table of Contents
ICON Long/Short Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

     Inception Date    1 Year   5 Years   10 Years   Since
Inception
 

Gross

Expense
Ratio*

 

Net

Expense
Ratio*

 

ICON Long/Short Fund - Class S

   5/6/04    1.69%   10.00%   1.95%   3.59%   1.37%   1.28%

ICON Long/Short Fund - Class C

   10/17/02    0.67%     8.86%   0.94%   4.33%   2.53%   2.33%

ICON Long/Short Fund - Class A

   5/31/06    1.40%     9.68%   1.69%   1.44%   1.73%   1.58%

ICON Long/Short Fund - Class A

               

(including maximum sales charge of 5.75%)

   5/31/06    -4.42%     8.39%   1.09%   0.86%   1.73%   1.58%

S&P Composite 1500 Index

      15.49%   16.44%   7.44%   9.20%   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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Long/Short Fund’s Class S shares on the Class’ inception date of 5/6/04 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Long/Short Fund’s other share classes will vary due to differences in charges and expenses. The Long/Short 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.

 

 
Annual Report  |  September 30, 2016    19


Table of Contents
ICON Long/Short Fund    Schedule of Investments
   September 30, 2016

 

    

Shares or

Principal

Amount

     Value  

 

 

Common Stocks (100.44%)

  

  

Application Software (2.41%)

  

  

Adobe Systems, Inc.(a)

     3,700       $ 401,598       
     

 

 

 

Asset Management & Custody Banks (4.11%)

  

Janus Capital Group, Inc.

     48,800         683,688       
     

 

 

 

Auto Parts & Equipment (1.52%)

  

  

Magna International, Inc.

     5,900         253,405       
     

 

 

 

Automobile Manufacturers (3.31%)

  

  

Thor Industries, Inc.

     6,500         550,550       
     

 

 

 

Biotechnology (6.84%)

  

  

Celgene Corp.(a)

     7,300         763,069       

Vertex Pharmaceuticals, Inc.(a)

     4,300         375,003       
     

 

 

 
        1,138,072       
     

 

 

 

Building Products (3.73%)

  

  

Masco Corp.

     18,100         621,011       
     

 

 

 

Construction Materials (3.98%)

  

  

Martin Marietta Materials, Inc.

     3,700         662,707       
     

 

 

 

Data Processing & Outsourced Services (7.10%)

  

MasterCard, Inc., Class A

     8,000         814,160       

Total System Services, Inc.

     7,800         367,770       
     

 

 

 
        1,181,930       
     

 

 

 

Diversified Banks (6.65%)

  

  

Bank of America Corp.

     70,700         1,106,455       
     

 

 

 

Home Improvement Retail (2.55%)

  

  

Home Depot, Inc.

     3,300         424,644       
     

 

 

 

Homebuilding (4.25%)

  

  

PulteGroup, Inc.

     35,300         707,412       
     

 

 

 

Hotels, Resorts & Cruise Lines (6.72%)

  

  

Royal Caribbean Cruises, Ltd.

     4,600         344,770       

Wyndham Worldwide Corp.

     11,500         774,295       
     

 

 

 
        1,119,065       
     

 

 

 

Household Appliances (3.70%)

  

  

Whirlpool Corp.

     3,800         616,208       
     

 

 

 

Insurance Brokers (3.06%)

  

  

Arthur J Gallagher & Co.

     10,000         508,700       
     

 

 

 

Internet & Direct Marketing Retail (1.01%)

  

  

Amazon.com, Inc.(a)

     200         167,462       
     

 

 

 

Internet Software & Services (0.91%)

  

  

CoStar Group, Inc.(a)

     700         151,571       
     

 

 

 
    

Shares or

Principal

Amount

     Value  

 

 

Life & Health Insurance (1.39%)

  

  

CNO Financial Group, Inc.

     15,100       $ 230,577       
     

 

 

 

Multi-line Insurance (1.93%)

  

  

American International Group, Inc.

     5,400         320,436       
     

 

 

 

Pharmaceuticals (4.74%)

  

  

Jazz Pharmaceuticals PLC(a)

     6,500         789,620       
     

 

 

 

Real Estate Services (1.03%)

  

  

CBRE Group, Inc., Class A(a)

     6,100         170,678       
     

 

 

 

Regional Banks (17.57%)

  

  

Fifth Third Bancorp

     29,400         601,524       

First Commonwealth Financial Corp.

     49,800         502,482       

Signature Bank(a)

     9,200         1,089,740       

SVB Financial Group(a)

     6,600         729,564       
     

 

 

 
        2,923,310       
     

 

 

 

Semiconductors (8.72%)

  

  

NXP Semiconductors N.V.(a)

     5,200         530,452       

Skyworks Solutions, Inc.

     12,100         921,294       
     

 

 

 
        1,451,746       
     

 

 

 

Specialty Chemicals (3.21%)

  

  

Ashland, Inc.

     4,600         533,370       
     

 

 

 

Total Common Stocks

(Cost $16,198,973)

  

  

     16,714,215       
     

 

 

 

Total Investments (100.44%)

(Cost $16,198,973)

  

  

   $ 16,714,215       

Liabilities Less Other Assets (-0.44%)

  

     (73,407)       
     

 

 

 

Net Assets (100.00%)

  

   $ 16,640,808       
     

 

 

 

 

(a) 

Non-income producing security.

 

Sector Composition (September 30, 2016)

      

 

 

Financial

     34.71%   

Consumer Discretionary

     23.06%   

Information Technology

     19.14%   

Health Care

     11.58%   

Materials

     7.19%   

Industrials

     3.73%   

Real Estate

     1.03%   
  

 

 

 
             100.44%   
  

 

 

 

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

 

 

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

 

20    www.iconfunds.com


Table of Contents
ICON Long/Short Fund    Schedule of Investments
   September 30, 2016

 

Industry Composition (September 30, 2016)

      

 

 

Regional Banks

     17.57%   

Semiconductors

     8.72%   

Data Processing & Outsourced Services

     7.10%   

Biotechnology

     6.84%   

Hotels, Resorts & Cruise Lines

     6.72%   

Diversified Banks

     6.65%   

Pharmaceuticals

     4.74%   

Homebuilding

     4.25%   

Asset Management & Custody Banks

     4.11%   

Construction Materials

     3.98%   

Building Products

     3.73%   

Household Appliances

     3.70%   

Automobile Manufacturers

     3.31%   

Specialty Chemicals

     3.21%   

Insurance Brokers

     3.06%   

Home Improvement Retail

     2.55%   

Application Software

     2.41%   

Multi-line Insurance

     1.93%   

Auto Parts & Equipment

     1.52%   

Life & Health Insurance

     1.39%   

Real Estate Services

     1.03%   

Internet & Direct Marketing Retail

     1.01%   

Other Industries (each less than 1%)

     0.91%   
  

 

 

 
             100.44%   
  

 

 

 

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

 

 

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

 

Annual Report  |  September 30, 2016    21


Table of Contents
ICON Opportunities Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Opportunities Fund (the Fund) returned 10.76% for the fiscal year ending September 30, 2016, while its benchmark, the S&P Small- Cap 600 Index, returned 18.12%. Total returns for other periods as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

For both the fiscal year ended September 30, 2016, and off the market low of February 11, 2016, through September 30, 2016, the S&P Small- Cap 600 Index beat the S&P 500 Index (large cap). From September 30, 2015 through the market low of February 11, 2016 the Fund underperformed and dropped more than its benchmark, the S&P Small-Cap 600 Index. The market drop in December 2015 and January 2016, coming after the Federal Reserve raised its target for the Federal Funds rate and hinted at many more increases in 2016, was particularly difficult for the Fund. The Fund’s overweight position in the Financial sector hurt performance as the sector stumbled, we believe due to falling interest rates and investor concern that Federal Funds rate hikes would slow the economy. The market rebounded from its February 11, 2016 low through September 30, 2016, and the Fund participated in the rebound, but the gains were not enough to make up for the underperformance of late 2015 and early 2016.

 

Q.

How did the Fund’s composition affect performance?

 

A.

The five biggest contributors to Fund performance were Coherent, Inc., BioTelemetry, Inc., Thor Industries, Avery Dennison Corporation and Advanced Energy Industries. Coherent, Inc. and Advanced Energy Industries are in the Information Technology sector, BioTelemetry, Inc. is in the Health Care sector, Thor Industries is in the Consumer Discretionary sector, and Avery Dennison Corporation is in the Materials sector.

 

    

The five largest detractors from Fund performance were Sucampo Pharmaceuticals, Inc., PRA Group, Encore Capital Group, Acadia Healthcare Company and Libbey. PRA Group, Encore Capital Group and Libbey have been sold. The other two remain in the portfolio.

 

Q.

What is your investment outlook for the overall market?

 

A.

From December 1, 2014, the broad market was in a sideways range for approximately 19 months. On every advance prices ran into what we have called a “value ceiling” and went no higher. Our estimation of fair value had generally been growing since 2009, but paused and actually declined in 2015 and early 2016. However, in the spring of 2016, our estimate of fair value began growing again and prices responded with many indexes breaking out to all-time highs in August. We ended September 2016 with an overall average market value-to-price (V/P) ratio of 1.09, meaning stock prices in general would need to move higher over the next year to reach our estimate of fair value. As we wrote a year ago, “[w]e do not see any of the behaviors and signs we believe are typical of market peaks and expect the six-year-old bull market to resume.” With a current overall market V/P ratio of 1.09 as of September 30, 2016, we have the same view as we did a year ago.

 

 
22    www.iconfunds.com


Table of Contents
ICON Opportunities Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

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

 

ICON Opportunities Fund

   9/28/12    10.76%    11.18%    1.58%    1.50%

S&P Small Cap Total Return

      18.12%    14.25%      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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Opportunities Fund on the inception date of 9/28/12 to a $10,000 investment made in an unmanaged securities index on that date. The Opportunities 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.

 

 
Annual Report  |  September 30, 2016    23


Table of Contents
ICON Opportunities Fund    Schedule of Investments
   September 30, 2016

 

   

Shares or

Principal

Amount

    Value  

 

 

Common Stocks (100.07%)

  

 

Aerospace & Defense (2.72%)

  

 

Curtiss-Wright Corp.

    1,749      $ 159,351       

Hexcel Corp.

    6,255        277,097       
   

 

 

 
      436,448       
   

 

 

 

Asset Management & Custody Banks (3.21%)

  

Janus Capital Group, Inc.

    36,800        515,568       
   

 

 

 

Auto Parts & Equipment (7.58%)

  

 

Modine Manufacturing Co.(a)

    57,948        687,263       

Tower International, Inc.

    22,000        530,200       
   

 

 

 
      1,217,463       
   

 

 

 

Automobile Manufacturers (2.95%)

  

 

Thor Industries, Inc.

    5,601        474,405       
   

 

 

 

Biotechnology (3.64%)

  

 

Enzymotec, Ltd.(a)

    31,417        219,919       

Ligand Pharmaceuticals, Inc.(a)

    3,575        364,864       
   

 

 

 
      584,783       
   

 

 

 

Building Products (7.09%)

  

 

Armstrong World Industries,
Inc.(a)

    3,900        161,148       

Builders FirstSource, Inc.(a)

    41,500        477,665       

PGT, Inc.(a)

    46,900        500,423       
   

 

 

 
      1,139,236       
   

 

 

 

Communications Equipment (8.04%)

  

 

ARRIS International PLC(a)

    5,700        161,481       

CalAmp Corp.(a)

    31,800        443,610       

Finisar Corp.(a)

    23,000        685,400       
   

 

 

 
      1,290,491       
   

 

 

 

Electronic Components (1.58%)

  

 

Rogers Corp.(a)

    4,160        254,093       
   

 

 

 

Electronic Equipment & Instruments (3.03%)

  

Coherent, Inc.(a)

    4,394        485,713       
   

 

 

 

Electronic Manufacturing Services (6.15%)

  

Fabrinet(a)

    13,100        584,129       

IPG Photonics Corp.(a)

    4,900        403,515       
   

 

 

 
      987,644       
   

 

 

 

Health Care Equipment (2.88%)

  

 

LivaNova PLC(a)

    7,700        462,847       
   

 

 

 

Health Care Facilities (3.02%)

  

 

Acadia Healthcare Co., Inc.(a)

    9,800        485,590       
   

 

 

 

Heavy Electrical Equipment (1.38%)

  

 

AZZ, Inc.

    3,400        221,918       
   

 

 

 

Home Furnishings (2.07%)

  

 

La-Z-Boy, Inc.

    13,500        331,560       
   

 

 

 
   

Shares or

Principal

Amount

    Value  

 

 

Homebuilding (6.51%)

  

 

KB Home

    35,000      $ 564,200       

M/I Homes, Inc.(a)

    20,400        480,828       
   

 

 

 
      1,045,028       
   

 

 

 

Internet & Direct Marketing Retail (2.35%)

  

Nutrisystem, Inc.

    12,700        377,063       
   

 

 

 

Internet Software & Services (2.54%)

  

 

j2 Global, Inc.

    6,114        407,254       
   

 

 

 

Leisure Products (3.49%)

  

 

Brunswick Corp.

    11,500        560,970       
   

 

 

 

Life & Health Insurance (1.82%)

  

 

CNO Financial Group, Inc.

    19,100        291,657       
   

 

 

 

Multi-line Insurance (1.85%)

  

 

Horace Mann Educators Corp.

    8,100        296,865       
   

 

 

 

Paper Packaging (1.79%)

  

 

Avery Dennison Corp.

    3,700        287,823       
   

 

 

 

Pharmaceuticals (4.99%)

  

 

Impax Laboratories, Inc.(a)

    21,100        500,070       

Sucampo Pharmaceuticals, Inc., Class A(a)

    24,521        301,853       
   

 

 

 
      801,923       
   

 

 

 

Regional Banks (6.41%)

  

 

Bank of the Ozarks, Inc.

    5,600        215,040       

First Commonwealth Financial Corp.

    40,000        403,600       

Webster Financial Corp.

    10,800        410,508       
   

 

 

 
      1,029,148       
   

 

 

 

Semiconductor Equipment (6.58%)

  

 

Advanced Energy Industries,
Inc.(a)

    5,200        246,064       

Photronics, Inc.(a)

    30,700        316,517       

Teradyne, Inc.

    22,909        494,376       
   

 

 

 
      1,056,957       
   

 

 

 

Semiconductors (5.68%)

  

 

MACOM Technology Solutions Holdings, Inc.(a)

    13,100        554,654       

Microsemi Corp.(a)

    8,500        356,830       
   

 

 

 
      911,484       
   

 

 

 

Textiles (0.72%)

  

 

Culp, Inc.

    3,900        116,103       
   

 

 

 

Total Common Stocks

(Cost $15,107,975)

      16,070,034       
   

 

 

 
 

 

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

 

24    www.iconfunds.com


Table of Contents
ICON Opportunities Fund    Schedule of Investments
   September 30, 2016

 

    

Shares or

Principal

Amount

     Value  

 

 

Short-Term Investments (0.17%)

  

  

Time Deposits (0.17%)

     

State Street Euro Dollar Time Deposit (USD),
0.01%, 10/03/16

     27,464        $ 27,464       
     

 

 

 

Total Short-Term Investments

(Cost $27,464)

        27,464       
     

 

 

 

Total Investments (100.24%)

(Cost $15,135,439)

       $ 16,097,498       

Liabilities Less Other Assets (-0.24%)

  

     (38,601)       
     

 

 

 

Net Assets (100.00%)

       $  16,058,897       
     

 

 

 

 

(a)

Non-income producing security.

 

Sector Composition (September 30, 2016)

        

Information Technology

     33.60%   

Consumer Discretionary

     25.67%   

Health Care

     14.53%   

Financial

     13.29%   

Industrials

     11.19%   

Materials

     1.79%   
  

 

 

 
             100.07%   
  

 

 

 

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

Industry Composition (September 30, 2016)

  

Communications Equipment

     8.04%   

Auto Parts & Equipment

     7.58%   

Building Products

     7.09%   

Semiconductor Equipment

     6.58%   

Homebuilding

     6.51%   

Regional Banks

     6.41%   

Electronic Manufacturing Services

     6.15%   

Semiconductors

     5.68%   

Pharmaceuticals

     4.99%   

Biotechnology

     3.64%   

Leisure Products

     3.49%   

Asset Management & Custody Banks

     3.21%   

Electronic Equipment & Instruments

     3.03%   

Health Care Facilities

     3.02%   

Automobile Manufacturers

     2.95%   

Health Care Equipment

     2.88%   

Aerospace & Defense

     2.72%   

Internet Software & Services

     2.54%   

Internet & Direct Marketing Retail

     2.35%   

Home Furnishings

     2.07%   

Multi-line Insurance

     1.85%   

Life & Health Insurance

     1.82%   

Paper Packaging

     1.79%   

Electronic Components

     1.58%   

Heavy Electrical Equipment

     1.38%   

Other Industries (each less than 1%)

     0.72%   
  

 

 

 
             100.07%   
  

 

 

 

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

 

 

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

 

Annual Report  |  September 30, 2016    25


Table of Contents
ICON Risk-Managed Balanced Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The Risk-Managed Balanced Fund (the Fund) Class S shares returned 4.39% for the fiscal year ended September 30, 2016. The S&P 1500 Index returned 15.49% and the Balanced Blended Benchmark returned 11.84%. The Balanced Blended Benchmark is based on a weighting of 60% S&P 1500 Index and 40% Barclays Capital U.S. Universal Index, rebalanced monthly. Total returns for other periods and additional Class shares as of September 30, 2016, 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.

Fiscal year 2016 proved to be a challenging year for our investment process and for the ICON Risk-Managed Balanced Fund. A combination of underperforming equity securities, especially in the segments of the market that our system found to be the most attractive, and a challenging hedging environment lead to underperformance relative to the benchmarks.

 

    

According to our valuation methodology, we began fiscal year 2016 with an overall average value-to-price (V/P) ratio for the domestic market of 1.08, indicating the domestic market was priced approximately 8% below our estimate of fair value. Based on this outlook we positioned the Fund in a relatively neutral stance with an approximate 60% equities / 40% fixed income allocation. Additionally, we implemented a hedge strategy by both buying out-of-the-money S&P 500 put options and writing out-of-the-money S&P 500 call options in an attempt to reduce the effects of market volatility on the Fund. From the beginning of the fiscal year through the end of December 2015, the equity market produced a strong return of approximately 7% and the bond market fell by approximately 0.50%. While the Fund was able to mitigate losses in the bond market and participate in this upward move, equity underperformance and hedging losses due to the strong upward move in the equity market resulted in underperformance relative to the benchmark during this initial market move.

 

    

In early January 2016, our equity valuation model viewed the overall broad domestic market as approximately 5% below our estimate of fair value. While our return expectations were relatively low for the overall market, our system did see distinct valuation differences at both a sector and industry level. While the Fund was slightly underweight equities relative to the blended benchmark, overweight positions were taken in the Financials, Utilities, and Materials sectors in an attempt to take advantage of what we believed to be attractive segments of the market. Additionally, given the lower overall market value readings, the Fund bought out-of-the-money S&P 500 put options and wrote out- of-the-money S&P 500 call options in an attempt to reduce the effects of market based volatility on the Fund. Relative to the fixed income portion of the benchmark, the fixed income portion of the Fund began 2016 with an overweight position in the corporate debt segment of the market and a lower overall duration and treasury exposure. We continued to look for “event driven” opportunities in both credit risk and closed-end fund arbitrage as well.

 

    

2016 began with a rather aggressive sell-off as investors digested both macro-economic concerns and the continuation of lower overall interest rates. The combination of these two factors not only pulled down the broad market but also caused the most damage to the Financials sector. Unfortunately, due to our overweight position in this sector, our downside participation during the sell-off was substantially higher than we would have liked. Additionally, our lack of exposure to U.S. Treasuries, generally lower duration, and an aggressive widening of credit spreads resulted in fixed income underperformance as the yield on the 10-year U.S. Treasury fell by 0.61% from a yield of 2.27% on 12/31/15 to a yield of 1.66% on 02/11/16. However, our hedge profile did add value during this time as put option contracts increased in price in response to the increase in market volatility.

 

    

Around mid-February, the market began to stabilize and our equity valuation model indicated that many segments of the market had become substantially more attractive. Based on this, we increased exposure to both common stocks and equity based closed-end funds. Both of these moves proved to be beneficial as the market rebounded throughout the remainder of the time period. However, due to the aggressive V-shape rebound in the market our written call option positions ran aggressively against us and our long put option contracts fell quickly, detracting from overall fund performance.

 

    

Ultimately, over fiscal year 2016, while the Fund was able to produce positive risk adjusted returns during a volatile time period, underperformance from the Fund’s equity holdings coupled with losses from its options positions resulted in underperformance relative to the benchmark.

 

Q.

How did the Fund’s composition affect performance?

 

A.

Focusing on the equity portion of the Fund, the largest sector contributors to performance over fiscal year 2016 were the Information Technology, Industrials, and Utilities sectors. The Fund was either overweight the sectors as a whole or held equity securities that produced positive selection effect. Sectors that detracted from Fund performance include the Financials, Real Estate, and Energy sectors. Of these three, the Financials sector produced the largest negative total effect due to the combination of both overweight positions and underperforming equity selections.

 

 
26    www.iconfunds.com


Table of Contents
ICON Risk-Managed Balanced Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

    

Moving to individual stock performance within the Fund, the largest positive contributors to performance were Facebook, Masco, ITC Holdings Corp, Honeywell International, and St Jude Medical. The five largest detractors from performance were Encore Capital Group, CBRE Group, Signet Jewelers, Allergan, and Plains All-American Pipeline.

 

    

Focusing on the fixed income portion of the Fund, while we maintained a lower overall duration relative to the fixed income benchmark, the Fund was able to outperform due to strong bottom up bond selections and allocations towards both the preferred and closed-end fund segments of the market. Specific preferred positions that contributed to performance include Ally Financial, Gramercy Property Trust, and Equity Commonwealth.

 

Q.

What is your investment outlook?

 

A.

Our equity valuations concluded fiscal year 2016 with an overall average V/P ratio of 1.09, giving us confidence there is room for the market to rise in the coming year. Currently, our system indicates noticeable discrepancies in sector opportunities. Specifically, we see the Financials and Consumer Discretionary sectors as good bargains. Additionally, our valuation system has identified specific industry opportunities in both the Health Care and Information Technology sectors. The Fund began the year with a slight underweight exposure to the equity market with its allocation and the equity hedge has recently been reduced targeting an equity beta at the upper end of our historical range. In the fixed income portion of the Fund, we continue to be very selective in our individual bond holdings as credit spreads are at levels that we deem as close to historical fair value. We also continue to see opportunities in the closed-end fund market. As always, we look to value as our primary guide and will adjust our positioning as market conditions dictate.

 

 
Annual Report  |  September 30, 2016    27


Table of Contents
ICON Risk-Managed Balanced Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

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

 

ICON Risk-Managed Balanced Fund - Class S

   5/6/04      4.39%           7.28%           3.56%    3.95%    1.42%    1.28%

ICON Risk-Managed Balanced Fund - Class C

   11/21/02      3.35%           6.23%           2.53%    4.08%    2.46%    2.28%

ICON Risk-Managed Balanced Fund - Class A

   5/31/06      4.18%           7.02%           3.32%    3.26%    2.50%    2.25%

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

   5/31/06      -1.78%           5.76%           2.71%    2.67%    2.50%    2.25%

S&P Composite 1500 Index

        15.49%           16.44%           7.44%    8.78%        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.

Value of a $10,000 Investment (through September 30, 2016)

 

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Risk-Managed Balanced Fund’s Class S shares on the Class’ inception date of 5/6/04 to a $10,000 investment made in an unmanaged securities index on that date. Performance for the Risk-Managed Balanced Fund’s other share classes will vary due to differences in charges and expenses. The Risk-Managed Balanced 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    www.iconfunds.com


Table of Contents
ICON Risk-Managed Balanced Fund    Schedule of Investments
   September 30, 2016

 

 

    Shares or Principal
Amount
    Value  

 

 

Corporate Bonds (20.08%)

  

 

Consumer Discretionary (0.23%)

  

 

International Game Technology

   

5.35%, 10/15/23

  $ 100,000          $ 101,000       
   

 

 

 

Consumer Staples (3.34%)

  

 

Bumble Bee Holdings, Inc.

   

9.00%,
12/15/17(a)

    350,000            351,750       

CVS Health Corp.

   

2.75%, 12/01/22

    200,000            205,982       

CVS Health Corp.

   

4.75%, 12/01/22

    250,000            283,568       

Kraft Heinz Foods Co.

   

4.88%,
02/15/25(a)

    395,000            435,706       

Molson Coors Brewing Co.

   

3.00%, 07/15/26

    200,000            201,514       
   

 

 

 
        1,478,520       
   

 

 

 

Financial (9.75%)

   

Aircastle, Ltd.

   

5.00%, 04/01/23

    100,000            104,500       

Ally Financial, Inc.

   

8.00%, 03/15/20

    240,000            274,200       

American Equity Investment Life Holding Co.

   

6.63%, 07/15/21

    200,000            208,475       

Berkshire Hathaway, Inc.

   

2.75%, 03/15/23

    250,000            259,912       

Chubb INA Holdings, Inc.

   

8.88%, 08/15/29

    300,000            462,332       

Citigroup, Inc.,

   

6.88%, 06/01/25

    250,000            313,604       

City National Corp.

   

5.25%, 09/15/20

    378,000            426,107       

E*TRADE Financial Corp.

   

5.38%, 11/15/22

    260,000            277,165       

ILFC E-Capital Trust II

   

4.25%,
12/21/65(a)(b)

    100,000            79,750       

International Lease Finance Corp.

   

5.88%, 08/15/22

    300,000            332,625       

MetLife Capital Trust IV

   

7.88%,
12/15/37(a)

    210,000            263,466       

Neuberger Berman Group LLC / Neuberger Berman Finance Corp.

   

5.88%,
03/15/22(a)

    200,000            208,750       

NTC Capital I, Series A

   

1.20%,
01/15/27(b)

    200,000            173,000       

PNC Preferred Funding Trust II

   

2.07%,
03/31/16(a)(b)

    151,000            144,205       

Prudential Financial, Inc.

   

8.88%,
06/15/38(b)

    200,000            222,000       
    Shares or Principal
Amount
    Value  

 

 

Financial (continued)

   

SouthTrust Bank

   

6.13%, 01/09/28

  $ 250,000          $ 303,497       

State Street Capital Trust I

   

1.38%,
05/15/28(b)

    150,000            135,000       

USB Realty Corp.

   

1.83%,
01/15/17(a)(b)

    150,000            134,625       
   

 

 

 
        4,323,213       
   

 

 

 

Health Care (2.08%)

   

HCA Holdings, Inc.

   

5.25%, 04/15/25

    400,000            426,500       

Highmark, Inc.,

   

6.13%,
05/15/41(a)(c)

    125,000            121,934       

St. Jude Medical, Inc.

   

3.88%, 09/15/25

    350,000            373,251       
   

 

 

 
      921,685       
   

 

 

 

Industrials (2.93%)

   

General Electric Co., Series D

   

5.00%,
01/21/21(b)

    500,000            531,700       

Ingersoll-Rand Co.

   

6.39%, 11/15/27

    150,000            178,063       

Ingersoll-Rand Co.

   

6.44%, 11/15/27

    51,000            62,553       

Spirit AeroSystems, Inc.

   

5.25%, 03/15/22

    500,000            525,547       
   

 

 

 
      1,297,863       
   

 

 

 

Information Technology (1.05%)

  

 

Lender Processing Services, Inc. / Black Knight Lending Solutions, Inc.

   

5.75%, 04/15/23

    444,000            467,310       
   

 

 

 

Telecommunication Services (0.70%)

  

 

EarthLink Holdings Corp.

   

7.38%, 06/01/20

    100,000            105,125       

Lee Enterprises, Inc.

   

9.50%,
03/15/22(a)(d)

    200,000            206,500       
   

 

 

 
      311,625       
   

 

 

 

Total Corporate Bonds

(Cost $8,768,890)

      8,901,216       
   

 

 

 

Convertible Corporate Bonds (0.94%)

  

 

Telecommunication Services (0.94%)

  

 

Clearwire Communications LLC / Clearwire Finance, Inc.

   

8.25%,
12/01/40(a)

    400,000            415,500       
   

 

 

 

Total Convertible Corporate Bonds

(Cost $407,216)

  

  

    415,500       
   

 

 

 
 

 

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

 

Annual Report  |  September 30, 2016    29


Table of Contents
ICON Risk-Managed Balanced Fund    Schedule of Investments
   September 30, 2016

 

 

    Shares or Principal
Amount
    Value  

 

 

U.S. Treasury Obligations (6.48%)

  

 

U.S. Treasury Note

   

1.50%, 08/15/26

  $ 500,000          $ 495,488       

U.S. Treasury Note

   

1.63%, 02/15/26

    1,600,000            1,603,938       

U.S. Treasury Note

   

1.88%, 05/31/22

    750,000            774,287       
   

 

 

 

Total U.S. Treasury Obligations

(Cost $2,814,480)

  

  

      2,873,713       
   

 

 

 

Collateralized Mortgage Obligations (8.04%)

  

 

Citigroup Mortgage Loan Trust, Inc.,

   

Series 2013-J1, Class B3

   

3.54%,
02/25/38(a)(b)(c)

    192,107            188,280       

Green Tree, Inc.,

   

Series 2008-HE1, Class A

   

9.50%,
03/25/38(a)(b)(c)

    255,429            269,938       

MASTR Seasoned Securitization Trust, Inc.,

   

Series 2005-1, Class 1A1

   

6.52%,
09/25/32(b)

    321,466            347,557       

Mill City Mortgage Trust,

   

Series 2015-1, Class M3

   

3.20%,
10/25/32(a)(b)(c)

    200,000            195,374       

New Residential Mortgage Loan Trust,

   

Series 2016-1A, Class B3

   

5.56%,
03/25/56(a)(b)(c)

    337,864            352,995       

Sequoia Mortgage Trust, Inc.,

   

Series 2013-12, Class B3

   

4.23%,
12/25/43(a)(b)(c)

    212,613            215,661       

Towd Point Mortgage Trust, Inc.,

   

Series 2015-1, Class A5

   

3.51%,
06/25/29(a)(b)(c)

    300,000            295,399       

Towd Point Mortgage Trust, Inc.,

   

Series 2015-2, Class 2M1

   

3.75%,
12/25/24(a)(b)(c)

    400,000            416,098       

Towd Point Mortgage Trust, Inc.,

   

Series 2016-2, Class M2

   

3.00%,
07/25/29(a)(b)(c)

    500,000            467,734       

Towd Point Mortgage Trust, Inc.,

   

Series 2015-6, Class M2

   

3.75%,
02/25/28(a)(b)(c)

    700,000            710,040       
    Shares or Principal
Amount
    Value  

 

 

Collateralized Mortgage Obligations (continued)

  

 

Velocity Commercial Capital Loan Trust, Inc.,

   

Series 2014-1, Class M3

   

6.89%,
02/25/24(a)(b)(c)

  $ 100,000          $ 106,062       
   

 

 

 

Total Collateralized Mortgage Obligations

(Cost $3,555,406)

  

  

      3,565,138       
   

 

 

 

Common Stocks (52.02%)

  

 

Aerospace & Defense (2.22%)

  

 

B/E Aerospace, Inc.

    6,000        309,960       

Boeing Co.

    1,000        131,740       

Orbital ATK, Inc.

    4,195        319,785       

Spirit AeroSystems Holdings, Inc., Class A(e)

    5,000        222,700       
   

 

 

 
      984,185       
   

 

 

 

Air Freight & Logistics (0.11%)

  

 

Echo Global Logistics, Inc.(e)

    2,089        48,172       
   

 

 

 

Airlines (0.44%)

   

Delta Air Lines, Inc.

    5,000        196,800       
   

 

 

 

Apparel, Accessories & Luxury Goods (0.47%)

  

 

Hanesbrands, Inc.

    8,200        207,050       
   

 

 

 

Asset Management & Custody Banks (0.22%)

  

 

Invesco, Ltd.

    3,100        96,937       
   

 

 

 

Auto Parts & Equipment (0.68%)

  

 

Magna International, Inc.

    7,000        300,650       
   

 

 

 

Biotechnology (1.92%)

   

AbbVie, Inc.

    5,000        315,350       

Amgen, Inc.

    600        100,086       

Celgene Corp.(e)

    1,500        156,795       

China Biologic Products, Inc.(e)

    500        62,240       

Gilead Sciences, Inc.

    1,500        118,680       

Shire PLC, ADR

    500        96,930       
   

 

 

 
      850,081       
   

 

 

 

Broadcasting (0.27%)

   

CBS Corp., Class B

    2,200        120,428       
   

 

 

 

Building Products (0.84%)

  

 

Masco Corp.

    5,000        171,550       

PGT, Inc.(e)

    19,000        202,730       
   

 

 

 
      374,280       
   

 

 

 

Cable & Satellite (0.79%)

  

 

Comcast Corp., Class A

    5,300        351,602       
   

 

 

 
 

 

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

 

30    www.iconfunds.com


Table of Contents
ICON Risk-Managed Balanced Fund    Schedule of Investments
   September 30, 2016

 

 

    Shares or Principal
Amount
    Value  

 

 

Computer & Electronics Retail (0.19%)

  

 

GameStop Corp., Class A(d)

    3,000      $ 82,770       
   

 

 

 

Construction Machinery & Heavy Trucks (0.29%)

  

 

Allison Transmission Holdings, Inc.

    4,500        129,060       
   

 

 

 

Construction Materials (0.49%)

  

 

Martin Marietta Materials, Inc.

    600        107,466       

Summit Materials, Inc., Class A(e)

    6,000        111,300       
   

 

 

 
      218,766       
   

 

 

 

Consumer Finance (1.91%)

  

 

Ally Financial, Inc.

    19,000        369,930       

Discover Financial Services

    8,400        475,020       
   

 

 

 
      844,950       
   

 

 

 

Data Processing & Outsourced Services (3.08%)

  

 

DST Systems, Inc.

    1,500        176,880       

MasterCard, Inc., Class A

    5,500        559,735       

Visa, Inc., Class A

    6,400        529,280       

Xerox Corp.

    10,000        101,300       
   

 

 

 
        1,367,195       
   

 

 

 

Diversified Banks (1.45%)

  

 

Bank of America Corp.

    24,000        375,600       

JPMorgan Chase & Co.

    2,000        133,180       

Wells Fargo & Co.

    3,000        132,840       
   

 

 

 
      641,620       
   

 

 

 

Drug Retail (1.75%)

  

 

CVS Health Corp.

    4,200        373,758       

Walgreens Boots Alliance, Inc.

    5,000        403,100       
   

 

 

 
      776,858       
   

 

 

 

Electric Utilities (0.42%)

  

 

ALLETE, Inc.

    1,500        89,430       

OGE Energy Corp.

    3,000        94,860       
   

 

 

 
      184,290       
   

 

 

 

Electronic Equipment & Instruments (0.12%)

  

 

VeriFone Systems, Inc.(e)

    3,500        55,090       
   

 

 

 

Electronic Manufacturing Services (1.94%)

  

 

IPG Photonics Corp.(e)

    3,793        312,354       

TE Connectivity, Ltd.

    8,500        547,230       
   

 

 

 
      859,584       
   

 

 

 

Footwear (1.24%)

   

NIKE, Inc., Class B

    7,000        368,550       

Skechers U.S.A., Inc., Class A(e)

    8,000        183,200       
   

 

 

 
      551,750       
   

 

 

 

General Merchandise Stores (0.34%)

  

 

Dollar General Corp.

    1,000        69,990       

Dollar Tree, Inc.(e)

    1,000        78,930       
   

 

 

 
      148,920       
   

 

 

 
    Shares or Principal
Amount
    Value  

 

 

Health Care Distributors (1.09%)

  

 

Cardinal Health, Inc.

    1,500      $ 116,550       

McKesson Corp.

    2,200        366,850       
   

 

 

 
           483,400       
   

 

 

 

Health Care Equipment (0.53%)

  

 

Stryker Corp.

    900        104,769       

Zimmer Biomet Holdings, Inc.

    1,000        130,020       
   

 

 

 
      234,789       
   

 

 

 

Health Care Facilities (1.18%)

  

 

HCA Holdings,
Inc.(e)

    6,500        491,595       

Tenet Healthcare Corp.(e)

    1,500        33,990       
   

 

 

 
      525,585       
   

 

 

 

Health Care Services (0.30%)

  

 

MEDNAX, Inc.(e)

    2,000        132,500       
   

 

 

 

Health Care Technology (0.36%)

  

 

Allscripts Healthcare Solutions, Inc.(e)

    12,000        158,040       
   

 

 

 

Home Improvement Retail (0.50%)

  

 

Home Depot, Inc.

    500        64,340       

Lowe’s Cos., Inc.

    2,200        158,862       
   

 

 

 
      223,202       
   

 

 

 

Homefurnishing Retail (0.14%)

  

 

Aaron’s, Inc.

    2,500        63,550       
   

 

 

 

Hotels, Resorts & Cruise Lines (1.26%)

  

 

Royal Caribbean Cruises, Ltd.

    2,500        187,375       

Wyndham Worldwide Corp.

    5,500        370,315       
   

 

 

 
      557,690       
   

 

 

 

Household Appliances (0.55%)

  

 

Whirlpool Corp.

    1,500        243,240       
   

 

 

 

Housewares & Specialties (0.18%)

  

 

Newell Rubbermaid, Inc.

    1,500        78,990       
   

 

 

 

Human Resource & Employment Services (0.78%)

   

 

Kforce, Inc.

    3,000        61,470       

Korn/Ferry International

    3,000        63,000       

ManpowerGroup, Inc.

    1,000        72,260       

On Assignment, Inc.(e)

    2,000        72,580       

Robert Half International, Inc.

    2,000        75,720       
   

 

 

 
      345,030       
   

 

 

 

Industrial Conglomerates (1.13%)

  

 

Honeywell International, Inc.

    4,300        501,337       
   

 

 

 

Internet Software & Services (2.10%)

  

 

Akamai Technologies, Inc.(e)

    2,000        105,980       

Alphabet, Inc., Class C(e)

    401        311,693       

Facebook, Inc., Class A(e)

    4,000        513,080       
   

 

 

 
      930,753       
   

 

 

 
 

 

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

 

Annual Report  |  September 30, 2016    31


Table of Contents
ICON Risk-Managed Balanced Fund    Schedule of Investments
   September 30, 2016

 

    Shares or Principal
Amount
  Value  

 

 

IT Consulting & Other Services (0.21%)

 

Cognizant Technology Solutions Corp.,
Class A(e)

  2,000   $ 95,420       
   

 

 

 

Leisure Products (0.44%)

 

Brunswick Corp.

  4,000         195,120       
   

 

 

 

Life & Health Insurance (0.48%)

 

Lincoln National Corp.

  4,500     211,410       
   

 

 

 

Managed Health Care (1.50%)

 

Aetna, Inc.

  3,500     404,075       

CIGNA Corp.

  2,000     260,640       
   

 

 

 
      664,715       
   

 

 

 

Movies & Entertainment (1.12%)

 

Time Warner, Inc.

  3,500     278,635       

Twenty-First Century Fox, Inc., Class A

  9,000     217,980       
   

 

 

 
      496,615       
   

 

 

 

Multi-line Insurance (0.47%)

 

American International Group, Inc.

  3,500     207,690       
   

 

 

 

Multi-Sector Holdings (0.78%)

 

Berkshire Hathaway, Inc., Class B(e)

  2,400     346,728       
   

 

 

 

Multi-Utilities (0.79%)

 

CMS Energy Corp.

  3,200     134,432       

Sempra Energy

  2,000     214,380       
   

 

 

 
      348,812       
   

 

 

 

Oil & Gas Equipment & Services (0.67%)

 

Schlumberger, Ltd.

  3,800     298,832       
   

 

 

 

Oil & Gas Exploration & Production (0.31%)

 

Synergy Resources
Corp.(e)

  20,000     138,600       
   

 

 

 

Oil & Gas Refining & Marketing (0.58%)

 

Marathon Petroleum Corp.

  5,000     202,950       

Valero Energy Corp.

  1,000     53,000       
   

 

 

 
      255,950       
   

 

 

 

Paper Packaging (0.64%)

 

Graphic Packaging Holding Co.

  15,000     209,850       

International Paper Co.

  1,500     71,970       
   

 

 

 
      281,820       
   

 

 

 

Pharmaceuticals (3.22%)

 

Allergan PLC(e)

  2,100     483,651       

Bristol-Myers Squibb Co.

  4,500     242,640       

Eli Lilly & Co.

  3,000     240,780       

Jazz Pharmaceuticals
PLC(e)

  2,000     242,960       

Roche Holding AG, Sponsored ADR

  4,000     123,880       
    Shares or Principal
Amount
  Value  

 

 

Pharmaceuticals (continued)

 

Teva Pharmaceutical Industries, Ltd., Sponsored ADR

  2,000   $ 92,020       
   

 

 

 
      1,425,931       
   

 

 

 

Property & Casualty Insurance (0.38%)

 

XL Group PLC

  5,000     168,150       
   

 

 

 

Railroads (0.40%)

 

Union Pacific Corp.

  1,800     175,554       
   

 

 

 

Real Estate Services (1.52%)

 

CBRE Group, Inc., Class A(e)

  20,000     559,600       

Jones Lang LaSalle, Inc.

  1,000     113,790       
   

 

 

 
      673,390       
   

 

 

 

Regional Banks (1.84%)

 

Signature Bank(e)

  3,800     450,110       

SVB Financial Group(e)

  3,300     364,782       
   

 

 

 
      814,892       
   

 

 

 

Restaurants (0.82%)

 

McDonald’s Corp.

  800     92,288       

Starbucks Corp.

  5,000     270,700       
   

 

 

 
      362,988       
   

 

 

 

Semiconductors (1.50%)

 

Broadcom, Ltd.

  2,000     345,040       

Microsemi Corp.(e)

  2,500     104,950       

Skyworks Solutions, Inc.

  2,000     152,280       

Synaptics, Inc.(e)

  1,100     64,438       
   

 

 

 
      666,708       
   

 

 

 

Specialty Chemicals (0.88%)

 

Ashland, Inc.

  1,000     115,950       

Sherwin-Williams Co.

  1,000     276,660       
   

 

 

 
      392,610       
   

 

 

 

Technology Hardware, Storage & Peripherals (0.98%)

 

Apple, Inc.

  2,900     327,845       

Super Micro Computer, Inc.(e)

  4,573     106,871       
   

 

 

 
      434,716       
   

 

 

 

Trading Companies & Distributors (0.35%)

 

Air Lease Corp.

  5,401     154,361       
   

 

 

 

Trucking (0.54%)

 

Hertz Global Holdings,
Inc.(e)

  6,000     240,960       
   

 

 

 

Wireless Telecommunication Services (0.32%)

 

T-Mobile U.S., Inc.(e)

  3,000     140,160       
   

 

 

 

Total Common Stocks

(Cost $22,590,536)

    23,061,276       
   

 

 

 
 

 

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

 

32    www.iconfunds.com


Table of Contents
ICON Risk-Managed Balanced Fund    Schedule of Investments
   September 30, 2016

 

    Shares or Principal
Amount
  Value  

 

 

Preferred Stocks (1.83%)

 

Consumer Finance (0.09%)

 

Discover Financial Services, Series B

  1,500   $ 39,120       
   

 

 

 

Diversified Banks (1.00%)

 

GMAC Capital Trust I, Series 2

  17,471       443,938       
   

 

 

 

Diversified Operations (0.05%)

 

Pitney Bowes International Holdings, Inc.,
Series F(a)(c)

  20     20,606       
   

 

 

 

Office REIT’s (0.44%)

 

Gramercy Property Trust, Inc., Series A(c)

  7,179     194,838       
   

 

 

 

Reinsurance (0.25%)

 

Maiden Holdings North America, Ltd.

  4,151     111,787       
   

 

 

 

Total Preferred Stocks

(Cost $800,023)

    810,289       
   

 

 

 

Closed-End Mutual Funds (8.22%)

 

BlackRock Enhanced Government

  8,923     122,870       

BlackRock Income Trust, Inc.

  66,244     429,261       

Delaware Investments Dividend & Income Fund, Inc.(d)

  15,845     156,865       

Deutsche Global High Income Fund, Inc.

  5,840     49,114       

Deutsche High Income Trust

  53,989     497,239       

Deutsche Multi-Market Income Trust

  40,897     349,669       

Deutsche Strategic Income Trust

  6,098     73,908       

First Trust Enhanced Equity Income Fund

  8,043     107,454       

First Trust Mortgage Income Fund

  20,588     296,673       

Franklin Limited Duration Income Trust

  23,771     287,391       

JPMorgan China Region Fund, Inc.

  4,481     78,731       

Korea Equity Fund, Inc.

  14,725     125,310       

Madison Strategic Sector Premium Fund

  15,777     185,380       

Morgan Stanley Income Securities, Inc.

  17,867     338,044       
    Shares or Principal
Amount
    Value  

 

 

Closed-End Mutual Funds (continued)

  

 

Nuveen Global Equity Income Fund

    8,537      $ 101,932       

Pacholder High Yield Fund, Inc.

    16,966        120,968       

Virtus Total Return Fund

    51,212        242,745       

Wells Fargo Multi-Sector Income Fund

    6,372        82,645       
   

 

 

 

Total Closed-End Mutual Funds

(Cost $3,549,200)

  

  

    3,646,199       
   

 

 

 

Exchange Traded Funds (1.74%)

  

 

iShares Currency Hedged MSCI Eurozone ETF

    15,000        371,850       

iShares Europe ETF(d)

    10,100        397,738       
   

 

 

 

Total Exchange Traded Funds

(Cost $840,581)

  

  

    769,588       
   

 

 

 
Underlying Security/
Expiration Date/
Exercise Price
  Contracts     Value  

 

 

Put Options Purchased (0.16%)

  

 

S&P 500 Index

   

12/16/16, 1,800

    60        30,000       

S&P 500 Index

   

10/21/16, 2,050

    15        5,220       

S&P 500 Index

   

01/20/17, 1,800

    40        36,000       
   

 

 

 
      71,220       
   

 

 

 

Total Put Options Purchased

(Cost $399,527)

  

  

    71,220       
   

 

 

 
    Shares or Principal
Amount
    Value  

 

 

Collateral for Securities on Loan (0.96%)

  

 

State Street Navigator Prime Portfolio, 0.30%

    426,194        426,194       
   

 

 

 

Total Collateral for Securities on Loan
(Cost $426,194)

   

    426,194       
   

 

 

 

Short-Term Investments (0.16%)

  

 

Time Deposits (0.16%)

   

State Street Euro Dollar Time Deposit (USD),

   

0.01%, 10/03/16

    71,708        71,708       
   

 

 

 

Total Short-Term Investments

(Cost $71,708)

  

  

    71,708       
   

 

 

 
 

 

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

 

Annual Report  |  September 30, 2016    33


Table of Contents
ICON Risk-Managed Balanced Fund    Schedule of Investments
   September 30, 2016

 

     Value  

 

 

Total Investments (100.63%)

(Cost $44,223,761)

   $ 44,612,041       

Liabilities Less Other Assets (-0.63%)

     (278,288)       
  

 

 

 

Net Assets (100.00%)

   $   44,333,753       
  

 

 

 

 

(a)

Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. As of September 30, 2016, these securities had a total aggregate market value of $5,600,373, representing 12.63% of net assets.

(b)

Floating Rate Security. Rate disclosed is as of September 30, 2016.

(c)

These securities are considered to be illiquid. The aggregate value of these securities at September 30, 2016 was $3,554,959, which represent 8.02% of the Fund’s net assets.

(d)

All or a portion of the security was on loan as of September 30, 2016.

(e)

Non-income producing security.

ADR - American Depositary Receipt

REIT - Real Estate Investment Trust

 

Industry Composition (September 30, 2016)       

 

 

Pharmaceuticals

     3.22%   

Data Processing & Outsourced Services

     3.08%   

Diversified Banks

     2.45%   

Aerospace & Defense

     2.22%   

Internet Software & Services

     2.10%   

Consumer Finance

     2.00%   

Electronic Manufacturing Services

     1.94%   

Biotechnology

     1.92%   

Regional Banks

     1.84%   

Drug Retail

     1.75%   

Real Estate Services

     1.52%   

Managed Health Care

     1.50%   

Semiconductors

     1.50%   

Hotels, Resorts & Cruise Lines

     1.26%   

Footwear

     1.24%   

Health Care Facilities

     1.18%   

Industrial Conglomerates

     1.13%   

Movies & Entertainment

     1.12%   

Health Care Distributors

     1.09%   

Other Industries (each less than 1%)

     19.79%   
  

 

 

 
           53.85%   
  

 

 

 

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

Sector Composition (September 30, 2016)       

 

 

Health Care

     10.10%   

Information Technology

     9.93%   

Consumer Discretionary

     8.99%   

Financial

     8.87%   

Industrials

     7.10%   

Materials

     2.01%   

Real Estate

     1.96%   

Consumer Staples

     1.75%   

Energy

     1.56%   

Utilities

     1.21%   

Telecommunication Services

     0.32%   

Diversified

     0.05%   
  

 

 

 
           53.85%   
  

 

 

 

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

 

Credit Diversification (September 30, 2016)       

 

 

A-*

     0.78%   

A3

     4.20%   

Aa2

     0.59%   

Aa3

     0.68%   

Aaa

     6.48%   

B1

     0.94%   

B2

     1.26%   

Ba1

     1.95%   

Ba2

     0.23%   

Ba3

     1.03%   

Baa1

     2.61%   

Baa2

     3.79%   

Baa3

     4.51%   

BBB*

     0.42%   

BBB-*

     0.47%   

NR

     5.60%   
  

 

 

 

Total:

           35.54%   
  

 

 

 

 

*

Reflects S&P Rating for securities where Moody’s rating is unavailable.

Percentages are based upon U.S. Treasury obligations, collateralized mortgage obligations, corporate and convertible corporate bond investments as a percentage of net assets. Ratings based on Moody’s Investors Service, Inc.

 

 

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

 

34    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Statements of Assets and Liabilities
   September 30, 2016

 

     ICON Bond Fund      ICON Equity Income
Fund
     ICON Fund  

 

 

Assets

        

Investments, at cost

    $ 86,526,530            $ 68,862,872           $ 44,291,780       
  

 

 

 

Investments, at value(a)

     87,722,944             70,505,086             45,913,602       

Foreign currency, at value (Cost $–, $8,423 and $–, respectively)

     –             8,423             –       

Receivables:

        

Investments sold

     –             3,438,114             471,971       

Fund shares sold

     107,669             339,156             2,285       

Expense reimbursements due from Adviser

     39,000             808             2,474       

Interest

     808,511             34,472             –       

Dividends

     5,483             171,749             31,234       

Foreign tax reclaims

     –             1,782             –       

Other assets

     22,137             44,420             19,604       
  

 

 

 

Total assets

     88,705,744             74,544,010             46,441,170       
  

 

 

 

Liabilities

        

Payables:

        

Payable for collateral received on securities loaned

     1,092,875             5,989,261             –       

Loan payable, at value (Cost $–, $– and $431,277)

     –             –             431,277       

Investments purchased

     –             3,108,822             –       

Fund shares redeemed

     141,865             112,529             21,646       

Distributions due to shareholders

     20,120             50,807             –       

Advisory fees

     43,108             40,116             28,255       

Transfer agent fees

     8,647             11,724             7,985       

Fund accounting fees

     4,725             3,340             1,881       

Accrued distribution fees

     4,474             11,976             10,585       

Trustee fees and expenses

     3,677             2,661             1,977       

Administration fees

     3,716             2,744             1,950       

Accrued expenses

     36,698             34,859             28,696       
  

 

 

 

Total liabilities

     1,359,905             9,368,839             534,252       
  

 

 

 

Net Assets - all share classes

    $        87,345,839            $ 65,175,171           $ 45,906,918       
  

 

 

 

Net Assets - Class S

    $ 76,656,414            $ 37,867,930           $ 28,896,978       
  

 

 

 

Net Assets - Class C

    $ 4,589,592            $ 10,531,959           $ 11,519,992       
  

 

 

 

Net Assets - Class A

    $ 6,099,833            $ 16,775,282           $ 5,489,948       
  

 

 

 

Net Assets Consists of

        

Paid-in capital

    $ 88,517,949            $        84,209,406           $        64,945,079       

Accumulated undistributed net investment income/(loss)

     123,417             31,918             –       

Accumulated undistributed net realized gain/(loss)

     (2,491,941)             (20,708,406)             (20,659,983)       

Unrealized appreciation/(depreciation)

     1,196,414             1,642,253             1,621,822       
  

 

 

 

Net Assets

    $ 87,345,839            $ 65,175,171           $ 45,906,918       
  

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

        

Class S

     8,025,162             2,425,082             2,053,038       

Class C

     478,920             668,436             924,713       

Class A

     641,456             1,076,989             412,376       

Net asset value (offering and redemption price per share)

        

Class S

    $ 9.55            $ 15.62           $ 14.08       

Class C

    $ 9.58            $ 15.76           $ 12.46       

Class A

    $ 9.51            $ 15.58           $ 13.31       

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

    $ 9.98            $ 16.53           $ 14.13       

(a) Includes securities on loan of

    $ 1,065,671            $ 5,888,869           $ –       

 

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

 

Annual Report  |  September 30, 2016    35


Table of Contents
ICON Diversified Funds    Statements of Assets and Liabilities
   September 30, 2016

 

     ICON Long/Short
Fund
     ICON Opportunities
Fund
     ICON Risk-Managed
Balanced Fund
 

 

 

Assets

        

Investments, at cost

    $ 16,198,973          $ 15,135,439            $ 44,223,761       
  

 

 

 

Investments, at value(a)

     16,714,215           16,097,498             44,612,041       

Receivables:

        

Investments sold

     472,646           –             207,129       

Fund shares sold

     976           604             80,879       

Expense reimbursements due from Adviser

     3,605           –             10,110       

Interest

     –           –             137,087       

Dividends

     10,419           273             16,492       

Foreign tax reclaims

     –           –             –       

Other assets

     17,961           7,674             22,039       
  

 

 

 

Total assets

     17,219,822           16,106,049             45,085,777       
  

 

 

 

Liabilities

        

Payables:

        

Payable for collateral received on securities loaned

     –           –             426,194       

Loan payable, at value (Cost $498,627, $– and $–)

     498,627           –             –       

Expense recoupment due to Adviser

     –           3,706             –       

Investments purchased

     –           –             97,686       

Fund shares redeemed

     30,325           7,943             127,129       

Distributions due to shareholders

     –           –             7,753       

Advisory fees

     12,086           9,518             27,906       

Transfer agent fees

     6,821           2,357             10,265       

Fund accounting fees

     1,012           1,072             4,739       

Accrued distribution fees

     4,643           –             14,384       

Trustee fees and expenses

     756           506             1,940       

Administration fees

     737           630             1,927       

Accrued expenses

     24,007           21,420             32,101       
  

 

 

 

Total liabilities

     579,014           47,152             752,024       
  

 

 

 

Net Assets - all share classes

    $        16,640,808          $        16,058,897            $        44,333,753       
  

 

 

 

Net Assets - Class S

    $ 7,113,901          $ –            $ 20,087,384       
  

 

 

 

Net Assets - Class C

    $ 4,211,085          $ –            $ 15,151,197       
  

 

 

 

Net Assets - Class A

    $ 5,315,822          $ –            $ 9,095,172       
  

 

 

 

Net Assets Consists of

        

Paid-in capital

    $ 71,239,732          $ 15,007,079            $ 56,946,628       

Accumulated undistributed net investment income/(loss)

     (6,963)           (30,697)             68,236       

Accumulated undistributed net realized gain/(loss)

     (55,107,203)           120,456             (13,069,391)       

Unrealized appreciation/(depreciation)

     515,242           962,059             388,280       
  

 

 

 

Net Assets

    $ 16,640,808          $ 16,058,897            $ 44,333,753       
  

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

        1,089,148          

Class S

     380,324           –             1,389,269       

Class C

     252,924           –             1,141,951       

Class A

     292,676           –             644,651       

Net asset value (offering and redemption price per share)

       $ 14.74          

Class S

    $ 18.70          $ –            $ 14.46       

Class C

    $ 16.65          $ –            $ 13.27       

Class A

    $ 18.16          $ –            $ 14.11       

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

    $ 19.27          $ –            $ 14.97       

(a) Includes securities on loan of

    $ –          $ –            $ 419,967       

 

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

 

36    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Statements of Operations
   Year Ended September 30, 2016

 

 

     ICON Bond Fund      ICON Equity
Income Fund
     ICON Fund  

Investment Income

       

Interest

  $ 3,141,390       $ 116,333       $ 1,155       

Dividends

    562,160         2,294,606         744,606       

Foreign taxes withheld

            (23,016)         (1,161)       

Income from securities lending, net

    14,170         221,774         9,160       

Other income

            14         –       
 

 

 

 

Total investment income

    3,717,720         2,609,711         753,760       
 

 

 

 

 

Expenses

       

Advisory fees

    511,458         378,644         373,960       

Administration fees

    42,743         25,318         24,996       

Transfer agent fees

    86,772         81,098         82,909       

Distribution fees:

       

Class C

    39,066         76,325         124,186       

Class A

    16,084         36,994         15,833       

Registration fees

    36,254         37,350         33,244       

Audit and tax service expense

    26,515         21,082         17,326       

Fund accounting fees

    33,910         20,618         18,221       

Trustee fees and expenses

    13,976         8,422         7,974       

Insurance expense

    11,456         5,169         8,441       

Custody fees

    7,234         6,605         3,169       

Printing fees

    12,589         12,722         11,359       

Interest expense

    415         315         4,942       

Recoupment of previously reimbursed expenses

            16,522         2,969       

Other expenses

    38,700         28,546         24,394       
 

 

 

 

Total expenses before expense reimbursement

    877,172         755,730         753,923       

Expense reimbursement by Adviser due to expense limitation agreement

    (180,193)         (35,317)         (28,516)       
 

 

 

 

Net Expenses

    696,979         720,413         725,407       
 

 

 

 

Net Investment Income/(Loss)

            3,020,741         1,889,298         28,353       
 

 

 

 

 

Realized and Unrealized Gain/(Loss)

       

Net realized gain/(loss) on:

       

Investments

    240,106         (994,897)         (1,328,436)       

Foreign currency

            198         –       

Long-term capital gain distributions from other investment companies

    7,949         987         –       
 

 

 

 
    248,055         (993,712)         (1,328,436)       
 

 

 

 

Change in unrealized net appreciation/(depreciation) on:

       

Investments and foreign currency

    2,838,297         5,024,516         1,797,942       
 

 

 

 
    2,838,297         5,024,516                 1,797,942       
 

 

 

 

Net realized and unrealized gain/(loss)

    3,086,352         4,030,804         469,506       
 

 

 

 

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

   $ 6,107,093       $         5,920,102       $ 497,859       
 

 

 

 

 

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

 

Annual Report  |  September 30, 2016    37


Table of Contents
ICON Diversified Funds    Statements of Operations
   Year Ended September 30, 2016

 

 

      ICON Long/
Short Fund
     ICON Opportunities
Fund
     ICON Risk-Managed
Balanced Fund
 

Investment Income

        

Interest

    $ 9           $ 58           $ 621,620       

Dividends

             327,853         140,673         651,342       

Foreign taxes withheld

     (221)                 (2,390)       

Income from securities lending, net

     2,780                 15,046       

Other income

                     4,043       
  

 

 

 

Total investment income

     330,421         140,731                 1,289,661       
  

 

 

 

Expenses

        

Advisory fees

     183,086         83,499         380,666       

Administration fees

     10,795         5,568         25,443       

Transfer agent fees

     58,674         18,369         90,855       

Distribution fees:

        

Class C

     50,066                 151,556       

Class A

     17,453                 22,909       

Registration fees

     34,976         9,519         38,822       

Audit and tax service expense

     18,873         16,353         23,608       

Fund accounting fees

     8,409         5,344         26,291       

Trustee fees and expenses

     3,383         1,789         8,300       

Insurance expense

     4,732         1,538         4,064       

Custody fees

     3,127         2,546         11,486       

Printing fees

     6,165         6,145         11,254       

Interest expense

     6,842         664         2,630       

Recoupment of previously reimbursed expenses

     9,867         11,396         5,313       

Other expenses

     13,321         8,190         27,346       
  

 

 

 

Total expenses before expense reimbursement

     429,769         170,920         830,543       

Expense reimbursement by Adviser due to expense limitation agreement

     (80,331)         (3,029)         (44,620)       
  

 

 

 

Net Expenses

     349,438         167,891         785,923       
  

 

 

 

Net Investment Income/(Loss)

     (19,017)         (27,160)         503,738       
  

 

 

 

 

Realized and Unrealized Gain/(Loss)

        

Net realized gain/(loss) on:

        

Investments

     67,924         143,820         267,235       

Foreign currency

                     (69)       

Written options

                     (146,066)       

Long-term capital gain distributions from other investment companies

                     11,386       
  

 

 

 
     67,924         143,820         132,486       
  

 

 

 

Change in unrealized net appreciation/(depreciation) on:

        

Investments and foreign currency

     8,849         1,036,666         1,179,154       
  

 

 

 
     8,849         1,036,666         1,179,154       
  

 

 

 

Net realized and unrealized gain/(loss)

     76,773         1,180,486         1,311,640       
  

 

 

 

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

    $     57,756       $         1,153,326       $ 1,815,378       
  

 

 

 

 

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

 

38    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Statements of Changes in Net Assets
  

 

 

     ICON Bond Fund     ICON Equity Income Fund  
     Year Ended
September 30, 2016 
    Year Ended
September 30, 2015 
    Year Ended
September 30, 2016 
    Year Ended
September 30, 2015 
 

Operations

       

Net investment income/(loss)

   $ 3,020,741          $ 3,856,226          $ 1,889,298          $ 1,436,199       

Net realized gain/(loss)

    240,106            (2,721,154)            (994,699)            2,378,033       

Net realized gain/(loss) on long-term capital gain distributions from other investment companies

    7,949            –            987            –       

Change in net unrealized appreciation/(depreciation)

    2,838,297            (1,322,993)            5,024,516            (3,911,455)       
 

 

 

 

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

    6,107,093            (187,921)            5,920,102            (97,223)       
 

 

 

 

 

Dividends and Distributions to Shareholders

       

Net investment income

       

Class S

    (2,609,859)            (4,367,039) (a)        (1,164,475)            (760,578)       

Class C

    (127,022)            (198,438) (a)        (220,158)            (154,918)       

Class A

    (213,454)            (381,214) (a)        (536,706)            (425,141)       

Net realized gains

       

Class S

    –            (1,100,327)            –            –       

Class C

    –            (49,999)            –            –       

Class A

    –            (96,051)            –            –       

Return of capital

       

Class S

    –            (281,945)            –            –       

Class C

    –            (12,812)            –            –       

Class A

    –            (24,612)            –            –       
 

 

 

 

Net decrease from dividends and distributions

    (2,950,335)            (6,512,437)            (1,921,339)            (1,340,637)       
 

 

 

 

 

Fund Share Transactions

       

Shares sold

       

Class S

    23,652,490            19,939,410            22,323,535            22,636,893       

Class C

    2,037,494            2,204,299            4,965,537            2,336,246       

Class A

    3,634,359            5,041,777            5,435,514            2,127,508       

Reinvested dividends and distributions

       

Class S

    2,285,962            5,264,217            1,105,137            715,630       

Class C

    92,020            160,822            167,115            105,154       

Class A

    108,802            245,318            459,085            385,989       

Shares repurchased

       

Class S

    (25,213,749)            (33,725,086)            (10,457,028)            (7,873,137)       

Class C

    (1,852,274)            (843,849)            (2,082,558)            (796,100)       

Class A

    (5,687,994)            (1,286,486)            (3,382,907)            (2,907,210)       
 

 

 

 

Net increase/(decrease) from fund share transactions

    (942,890)            (2,999,578)            18,533,430            16,730,973       
 

 

 

 

Total net increase/(decrease) in net assets

    2,213,868            (9,699,936)            22,532,193            15,293,113       

 

Net Assets

       

Beginning of year

    85,131,971            94,831,907            42,642,978            27,349,865       
 

 

 

 

End of year

   $         87,345,839          $         85,131,971          $         65,175,171          $         42,642,978       
 

 

 

 

Accumulated undistributed net investment income/(loss)

   $ 123,417          $ (2,398)          $ 31,918          $ 73,948       
 

 

 

 

 

(a) 

The ICON Bond Fund had a distribution in excess of net investment income during the fiscal year ended September 30, 2015.

 

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

 

Annual Report  |  September 30, 2016    39


Table of Contents
ICON Diversified Funds    Statements of Changes in Net Assets
  

 

 

     ICON Bond Fund     ICON Equity Income Fund  
     Year Ended
September 30, 2016 
    Year Ended
September 30, 2015 
    Year Ended
September 30, 2016 
    Year Ended
September 30, 2015 
 

Transactions in Fund Shares

       

Shares sold

       

Class S

    2,542,262            2,079,890            1,471,811            1,503,214       

Class C

    218,630            230,646            323,130            150,250       

Class A

    394,911            531,071            358,450            137,103       

Issued to shareholders in reinvestment of distributions

       

Class S

    245,654            556,451            73,747            46,951       

Class C

    9,850            16,961            11,022            6,871       

Class A

    11,757            26,037            30,748            25,418       

Shares repurchased

       

Class S

    (2,710,665)            (3,548,159)            (706,603)            (503,502)       

Class C

    (197,764)            (89,159)            (138,110)            (51,185)       

Class A

    (619,858)            (136,282)            (224,896)            (186,068)       
 

 

 

 

Net increase/(decrease)

    (105,223)            (332,544)            1,199,299            1,129,052       
 

 

 

 

Shares outstanding, beginning of year

    9,250,761            9,583,305            2,971,208            1,842,156       
 

 

 

 

Shares outstanding, end of year

    9,145,538            9,250,761            4,170,507            2,971,208       
 

 

 

 

 

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

 

40    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Statements of Changes in Net Assets
  

 

 

     ICON Fund     ICON Long/Short Fund  
     Year Ended
September 30, 2016 
    Year Ended
September 30, 2015 
    Year Ended
September 30, 2016 
    Year Ended
September 30, 2015 
 

Operations

       

Net investment income/(loss)

   $ 28,353          $ (305,707)          $ (19,017)          $ (272,826)       

Net realized gain/(loss)

    (1,328,436)            1,666,949            67,924            1,596,940       

Change in net unrealized appreciation/(depreciation)

    1,797,942            (3,490,916)            8,849            (1,334,483)       
 

 

 

 

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

    497,859            (2,129,674)            57,756            (10,369)       
 

 

 

 

Fund Share Transactions

       

Shares sold

       

Class S

    1,519,056            2,650,530            1,759,878            13,446,762       

Class C

    455,017            570,850            196,083            1,135,887       

Class A

    356,458            673,069            635,346            2,023,326       

Shares repurchased

       

Class S

    (6,734,706)            (9,474,040)            (11,978,015)            (12,681,757)       

Class C

    (2,714,880)            (3,146,732)            (2,239,810)            (1,710,185)       

Class A

    (1,906,267)            (1,412,280)            (4,472,867)            (4,078,006)       
 

 

 

 

Net decrease from fund share transactions

    (9,025,322)            (10,138,603)            (16,099,385)            (1,863,973)       
 

 

 

 

Total net decrease in net assets

    (8,527,463)            (12,268,277)            (16,041,629)            (1,874,342)       

Net Assets

       

Beginning of year

    54,434,381            66,702,658            32,682,437            34,556,779       
 

 

 

 

End of year

   $         45,906,918          $         54,434,381          $         16,640,808          $         32,682,437       
 

 

 

 

Accumulated undistributed net investment income/(loss)

   $ –          $ (171,984)          $ (6,963)          $ (195,326)       
 

 

 

 

 

Transactions in Fund Shares

       

Shares sold

       

Class S

    108,905            174,791            98,051            668,902       

Class C

    37,939            40,080            11,912            60,489       

Class A

    27,328            44,868            36,303            100,326       

Shares repurchased

       

Class S

    (492,502)            (601,521)            (652,902)            (627,870)       

Class C

    (223,446)            (226,313)            (139,906)            (93,775)       

Class A

    (147,621)            (95,562)            (256,603)            (207,860)       
 

 

 

 

Net decrease

    (689,397)            (663,657)            (903,145)            (99,788)       
 

 

 

 

Shares outstanding, beginning of year

    4,079,524            4,743,181            1,829,069            1,928,857       
 

 

 

 

Shares outstanding, end of year

    3,390,127            4,079,524            925,924            1,829,069       
 

 

 

 

 

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

 

Annual Report  |  September 30, 2016    41


Table of Contents
ICON Diversified Funds    Statements of Changes in Net Assets
  

 

 

     ICON Opportunities Fund     ICON Risk-Managed Balanced Fund  
     Year Ended
September 30, 2016  
    Year Ended
September 30, 2015  
    Year Ended
September 30, 2016  
    Year Ended
September 30, 2015  
 

Operations

       

Net investment income/(loss)

  $ (27,160)          $ (80,515)          $ 503,738          $ 293,801        

Net realized gain/(loss)

    143,820            29,960            121,100            446,087        

Net realized gain/(loss) on long-term capital gain distributions from other investment companies

    –            –            11,386            –        

Change in net unrealized appreciation/(depreciation)

    1,036,666            587,690            1,179,154            (1,184,909)        
 

 

 

 

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

    1,153,326            537,135            1,815,378            (445,021)        
 

 

 

 

Dividends and Distributions to Shareholders

       

Net investment income

    –            (126,909)           

Class S

    –            –            (301,369)            (195,258) (a)    

Class C

    –            –            (60,049)            (45,453) (a)    

Class A

    –            –            (92,328)            (80,740) (a)    

Net realized gains

    (10,170)            (60,583) (b)       
 

 

 

 

Net decrease from dividends and distributions

    (10,170)            (187,492)            (453,746)            (321,451)        
 

 

 

 

Fund Share Transactions

       

Shares sold

    6,108,876            1,123,562           

Class S

    –            –            15,411,061            20,735,760        

Class C

    –            –            7,253,783            5,157,125        

Class A

    –            –            4,152,730            7,372,991        

Reinvested dividends and distributions

    10,162            182,711           

Class S

    –            –            259,419            158,420        

Class C

    –            –            46,376            36,577        

Class A

    –            –            79,762            63,152        

Shares repurchased

    (2,250,264)            (2,741,644)           

Class S

    –            –            (22,982,522)            (13,651,238)        

Class C

    –            –            (5,595,969)            (1,464,014)        

Class A

    –            –            (3,836,027)            (6,013,030)        
 

 

 

 

Net increase/(decrease) from fund share transactions

    3,868,774            (1,435,371)            (5,211,387)            12,395,743        
 

 

 

 

 

Total net increase/(decrease) in net assets

    5,011,930            (1,085,728)            (3,849,755)            11,629,271        

Net Assets

       

Beginning of year

    11,046,967            12,132,695            48,183,508            36,554,237        
 

 

 

 

End of year

  $ 16,058,897          $ 11,046,967          $ 44,333,753          $ 48,183,508        
 

 

 

 

 

Accumulated undistributed net investment income/(loss)

  $ (30,697)          $ (57,770)          $ 68,236          $ (3,654)        
 

 

 

 

 

(a) 

The ICON Risk-Managed Balanced Fund had a distribution in excess of net investment income during the fiscal year ended September 30, 2015.

(b) 

The ICON Opportunities Fund had a distribution in excess of net realized gain during the fiscal year ended September 30, 2015.

 

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

 

42    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Statements of Changes in Net Assets
  

 

 

      ICON Opportunities Fund      ICON Risk-Managed Balanced Fund  
      Year Ended
September 30, 2016 
     Year Ended
September 30, 2015 
     Year Ended
September 30, 2016 
     Year Ended
September 30, 2015 
 

Transactions in Fund Shares

           

Shares sold

     426,361             79,579             

Class S

     –             –             1,094,151             1,429,825       

Class C

     –             –             554,021             385,869       

Class A

     –             –             298,768             521,467       

Issued to shareholders in reinvestment of distributions

     753             13,494             

Class S

     –             –             18,182             11,119       

Class C

     –             –             3,547             2,801       

Class A

     –             –             5,727             4,524       

Shares repurchased

     (167,271)             (194,321)             

Class S

     –             –             (1,625,982)             (973,454)       

Class C

     –             –             (429,201)             (109,255)       

Class A

     –             –             (277,104)             (421,260)       
  

 

 

 

Net increase/(decrease)

     259,843             (101,248)             (357,891)             851,636       
  

 

 

 

Shares outstanding, beginning of year

     829,305             930,553             3,533,762             2,682,126       
  

 

 

 

Shares outstanding, end of year

     1,089,148             829,305             3,175,871             3,533,762       
  

 

 

 

 

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

 

Annual Report  |  September 30, 2016    43


Table of Contents
ICON Bond Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

      $ 9.20          $ 9.90          $ 9.89          $ 10.51          $ 10.11   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.34        0.41        0.43 (c)       0.24        0.38   

Net realized and unrealized
gains/(losses) on investments

    0.34        (0.44)        0.15        (0.32)        0.59   
         

Total from investment operations

    0.68        (0.03)        0.58        (0.08)        0.97   
         

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.33)        (0.51)        (0.44)        (0.24)        (0.40)   

Distributions from net realized gains

           (0.13)        (0.13)        (0.30)        (0.17)   

Return of capital

           (0.03)                        
         

Total dividends and distributions

    (0.33)        (0.67)        (0.57)        (0.54)        (0.57)   
         

 

Net asset value, end of period

      $ 9.55          $ 9.20          $ 9.90          $ 9.89          $ 10.51   
         

 

Total Return

    7.54     (0.28)     6.01     (0.84)     9.93

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

      $ 76,656          $ 73,152          $ 87,675          $ 88,313          $ 81,381   

 

Ratio of expenses to average net assets

         

Before expense limitation

    0.93     0.91     0.86     0.89     0.88

After expense limitation/
recoupment (d)

    0.75     0.75     0.75     0.75     0.75

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    3.43     4.10     4.22     2.19     3.46

After expense limitation/
recoupment

    3.61     4.26     4.33 %(c)      2.33     3.59

Portfolio turnover rate

    141     153     176     97     51 %   

 

(a)

Class S shares were formerly named Class Z shares prior to January 23, 2012.

(b)

Calculated using the average shares method.

(c)

Investment income per share of Class S reflects a large, non-recurring dividend which amounted to $0.07 per share. Excluding this non- recurring dividend, the ratio of net investment income/(loss) to average net assets would have been 3.59% for Class S.

(d)

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, when applicable.

 

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

 

44    www.iconfunds.com


Table of Contents
ICON Bond Fund    Financial Highlights
  

For a Share Outstanding Throughout the Years Presented

 

 

Class C   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,    
2012
 

Net asset value, beginning of period

      $ 9.24          $ 9.94          $ 9.93          $ 10.55          $ 10.15       

 

Income/(loss) from investment
operations:

         

Net investment income/(loss)(a)

    0.26        0.32        0.34 (b)       0.15        0.31       

Net realized and unrealized
gains/(losses) on investments

    0.34        (0.43)        0.15        (0.32)        0.57       
         

Total from investment operations

    0.60        (0.11)        0.49        (0.17)        0.88       
         

 

Less dividends and distributions:

         

Dividends from net investment
income

    (0.26)        (0.43)        (0.35)        (0.15)        (0.31)       

Distributions from net realized
gains

           (0.13)        (0.13)        (0.30)        (0.17)       

Return of capital

           (0.03)                      –       
         

Total dividends and distributions

    (0.26)        (0.59)        (0.48)        (0.45)        (0.48)       
         

 

Net asset value, end of period

      $ 9.58          $ 9.24          $ 9.94          $ 9.93          $ 10.55       
         

 

Total Return(c)

    6.59%        (1.10)%        5.10%        (1.66)%        8.98%       

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

      $ 4,590          $ 4,142          $ 2,879          $ 3,008          $ 3,772       

 

Ratio of expenses to average net
assets

         

Before expense limitation

    2.10%        2.19%        2.27%        2.06%        2.28%       

After expense limitation/
recoupment (d)

    1.60%        1.60%        1.60%        1.60%        1.60%       

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    2.28%        2.76%        2.75%        1.02%        2.35%       

After expense limitation/
recoupment

    2.78%        3.35%        3.42%( b)      1.48%        3.03%       

Portfolio turnover rate

    141%        153%        176%        97%        51%       

 

(a) 

Calculated using the average shares method.

(b) 

Investment income per share of Class C reflects a large, non-recurring dividend which amounted to $0.06 per share. Excluding this non- recurring dividend, the ratio of net investment income/(loss) to average net assets would have been 2.84% for Class C.

(c) 

The total return calculation excludes any sales charges.

(d) 

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    45


Table of Contents
ICON Bond Fund    Financial Highlights
  

For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

      $ 9.17          $ 9.86          $ 9.89          $ 10.51          $ 10.11   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.31        0.36        0.43 (c)       0.21        0.36   

Net realized and unrealized gains/(losses) on investments

    0.34        (0.41)        0.12        (0.32)        0.58   
         

Total from investment operations

    0.65        (0.05)        0.55        (0.11)        0.94   
         

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.31)        (0.48)        (0.45)        (0.21)        (0.37)   

Distributions from net realized gains

           (0.13)        (0.13)        (0.30)        (0.17)   

Return of capital

           (0.03)                        
         

Total dividends and distributions

    (0.31)        (0.64)        (0.58)        (0.51)        (0.54)   
         

 

Net asset value, end of period

      $ 9.51          $ 9.17          $ 9.86          $ 9.89          $ 10.51   
         

 

Total Return(d)

    7.25     (0.44)     5.77     (1.08)     9.66

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

      $ 6,100          $ 7,838          $ 4,278          $ 6,792          $ 7,515   

 

 

Ratio of expenses to average net assets

         

Before expense limitation

    1.38     1.36     1.44     1.34     1.31

After expense limitation/ recoupment (e)

    1.00     1.00     1.00     1.00     1.00

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    2.98     3.50     3.84     1.71     3.13

After expense limitation/ recoupment

    3.36     3.86     4.28 %(c)      2.06     3.44

Portfolio turnover rate

    141     153     176     97     51 %   

 

(a) 

Class I shares merged into Class A on January 23, 2012. The results of each class prior to the merger may have been different than what is presented.

(b) 

Calculated using the average shares method.

(c) 

Investment income per share of Class A reflects a large, non-recurring dividend which amounted to $0.08 per share. Excluding this non- recurring dividend, the ratio of net investment income/(loss) to average net assets would have been 3.55% for Class A.

(d) 

The total return calculation excludes any sales charges.

(e) 

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, when applicable.

 

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

 

46    www.iconfunds.com


Table of Contents
ICON Equity Income Fund    Financial Highlights
  

 

For a Share Outstanding Throughout the Years Presented

 

 

Class S(a)    Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

       $ 14.36          $ 14.87          $ 13.80          $ 12.18          $ 10.21   

 

Income/(loss) from investment operations:

          

Net investment income/(loss)(b)

     0.60        0.56        0.52        0.47        0.43   

Net realized and unrealized gains/(losses) on investments

     1.27        (0.56)        1.04        1.65        2.03   

Total from investment operations

     1.87        (0.00)  (c)      1.56        2.12        2.46   

 

Less dividends and distributions:

          

Dividends from net investment income

     (0.61)        (0.51)        (0.49)        (0.50)        (0.49)   

Total dividends and distributions

     (0.61)        (0.51)        (0.49)        (0.50)        (0.49)   

 

Net asset value, end of period

       $ 15.62          $ 14.36          $ 14.87          $ 13.80          $ 12.18   
   

 

Total Return

     13.30     (0.17)     11.36     17.76     24.43

 

Ratios and Supplemental Data

          

Net assets, end of period (in 000s)

       $ 37,868          $ 22,779          $ 8,022          $ 5,116          $ 7,123   

 

Ratio of expenses to average net assets

          

Before expense limitation

     1.24     1.25     1.38     1.53     1.47

After expense limitation/ recoupment (d)

     1.20     1.20     1.20     1.21     1.21

Ratio of net investment income/(loss) to average net assets

          

Before expense limitation

     3.91     3.52     3.36     3.28     3.31

After expense limitation/ recoupment

     3.95     3.57     3.54     3.60     3.57

Portfolio turnover rate

     145     174     148     163     122 %  

 

(a) 

Class S shares were formerly named Class Z shares prior to January 23, 2012.

(b) 

Calculated using the average shares method.

(c) 

Amount less than $(0.005).

(d) 

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    47


Table of Contents
ICON Equity Income Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class C    Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

       $ 14.45          $ 14.96          $ 13.88          $ 12.25          $ 10.16   

 

Income/(loss) from investment operations:

          

Net investment income/(loss)(a)

     0.45        0.40        0.36        0.35        0.29   

Net realized and unrealized gains/(losses) on investments

     1.28        (0.56)        1.06        1.65        2.06   

Total from investment operations

     1.73        (0.16)        1.42        2.00        2.35   

 

Less dividends and distributions:

          

Dividends from net investment income

     (0.42)        (0.35)        (0.34)        (0.37)        (0.26)   

Total dividends and distributions

     (0.42)        (0.35)        (0.34)        (0.37)        (0.26)   

 

Net asset value, end of period

       $ 15.76          $ 14.45          $ 14.96          $ 13.88          $ 12.25   
   

 

Total Return(b)

     12.15     (1.16)     10.26     16.58     23.31

 

Ratios and Supplemental Data

          

Net assets, end of period (in 000s)

       $ 10,532          $ 6,825          $ 5,481          $ 5,423          $ 5,146   

 

Ratio of expenses to average net assets

          

Before expense limitation

     2.34     2.34     2.45     2.42     2.62

After expense limitation/ recoupment (c)

     2.20     2.20     2.20     2.21     2.20

Ratio of net investment income/(loss) to average net assets

          

Before expense limitation

     2.80     2.40     2.21     2.49     2.09

After expense limitation/ recoupment

     2.94     2.54     2.46     2.70     2.51

Portfolio turnover rate

     145     174     148     163     122 %  

 

(a) 

Calculated using the average shares method.

(b) 

The total return calculation excludes any sales charges.

(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 the interest expense, when applicable.

 

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

 

48    www.iconfunds.com


Table of Contents
ICON Equity Income Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

      $ 14.29          $ 14.79          $ 13.73          $ 12.12          $ 10.15   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.56        0.50        0.47        0.45        0.39   

Net realized and unrealized gains/(losses) on investments

    1.26        (0.53)        1.04        1.63        2.03   

Total from investment operations

    1.82        (0.03)        1.51        2.08        2.42   

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.53)        (0.47)        (0.45)        (0.47)        (0.45)   

Total dividends and distributions

    (0.53)        (0.47)        (0.45)        (0.47)        (0.45)   

 

Net asset value, end of period

      $ 15.58          $ 14.29          $ 14.79          $ 13.73          $ 12.12   
   

 

Total Return(c)

    12.97     (0.38)     11.07     17.49     24.10

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

      $ 16,775          $ 13,039          $ 13,847          $ 12,798          $ 10,758   

 

Ratio of expenses to average net assets

         

Before expense limitation

    1.54     1.52     1.59     1.68     1.69

After expense limitation/recoupment(d)

    1.45     1.45     1.45     1.46     1.45

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    3.64     3.14     3.08     3.24     3.11

After expense limitation/recoupment

    3.73     3.21     3.22     3.45     3.35

Portfolio turnover rate

    145     174     148     163     122 %  

 

(a) 

Class I shares merged into Class A on January 23, 2012. The results of each class prior to the merger may have been different than what is presented.

(b) 

Calculated using the average shares method.

(c) 

The total return calculation excludes any sales charges.

(d) 

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    49


Table of Contents
ICON Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

      $ 13.83          $ 14.52          $ 14.00          $ 11.34          $ 8.82   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.05        (0.02)        0.00 (c)       0.07        0.07   

Net realized and unrealized gains/(losses) on investments

    0.20        (0.67)        0.52        2.66        2.45   

Total from investment operations

    0.25        (0.69)        0.52        2.73        2.52   

 

Less dividends and distributions:

         

Dividends from net investment income

                         (0.07)          

Total dividends and distributions

                         (0.07)          

 

Net asset value, end of period

      $ 14.08          $ 13.83          $ 14.52          $ 14.00          $ 11.34   
   

 

Total Return

    1.81     (4.75)     3.71     24.27     28.57

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

      $ 28,897          $ 33,695          $ 41,577          $ 6,986          $ 22,952   

 

Ratio of expenses to average net assets

         

Before expense limitation

    1.12     1.09     1.10     1.23     1.18

After expense limitation/ recoupment(d)

    1.12     1.09     1.10     1.23     1.18

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    0.39     (0.11)     0.02     0.59     0.61

After expense limitation/ recoupment

    0.39     (0.11)     0.02     0.59     0.61

Portfolio turnover rate

    31     54     65     33     24 %   

 

(a) 

Class S shares were formerly named Class Z shares prior to January 23, 2012.

(b) 

Calculated using the average shares method.

(c) 

Amount less than $0.005.

(d) 

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, when applicable.

 

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

 

50    www.iconfunds.com


Table of Contents
ICON Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class C   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

      $ 12.38          $ 13.15          $ 12.82          $ 10.42          $ 8.17   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    (0.09) (b)      (0.18)        (0.14)        (0.07)        (0.04)   

Net realized and unrealized gains/(losses) on investments

    0.17        (0.59)        0.47        2.47        2.29   

Total from investment operations

    0.08        (0.77)        0.33        2.40        2.25   

 

Net asset value, end of period

      $ 12.46          $ 12.38          $ 13.15          $ 12.82          $ 10.42   
                                         

 

Total Return(c)

    0.65     (5.86)     2.57     23.03     27.54

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

      $ 11,520          $ 13,745          $ 17,050          $ 18,848          $ 18,378   

 

Ratio of expenses to average net assets

         

Before expense limitation

    2.41     2.27     2.26     2.32     2.35

After expense limitation/ recoupment (d)

    2.26     2.25     2.25     2.26     2.28

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.90)     (1.29)     (1.09)     (0.64)     (0.48)

After expense limitation/ recoupment

    (0.75)     (1.27)     (1.08)     (0.58)     (0.41)

Portfolio turnover rate

    31     54     65     33     24 %  

 

(a) 

Calculated using the average shares method.

(b) 

The per share amount does not correspond to activity reflected in the Statement of Operations due to class specific expenses during the period.

(c) 

The total return calculation excludes any sales charges.

(d) 

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    51


Table of Contents
ICON Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

  $ 13.13      $ 13.84      $ 13.39      $ 10.85      $ 8.46   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.00 (c)       (0.08)        (0.05)        0.02        0.03   

Net realized and unrealized gains/(losses) on investments

    0.18        (0.63)        0.50        2.56        2.36   

Total from investment operations

    0.18        (0.71)        0.45        2.58        2.39   

 

Less dividends and distributions:

         

Dividends from net investment income

                         (0.04)          

Total dividends and distributions

                         (0.04)          

 

Net asset value, end of period

  $ 13.31      $ 13.13        $13.84        $13.39        $10.85   
   

 

Total Return(d)

    1.37     (5.13)     3.36     23.90     28.25

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 5,490      $ 6,994      $ 8,076      $ 10,000      $ 12,401   

 

Ratio of expenses to average net assets

         

Before expense limitation

    1.67     1.55     1.56     1.58     1.54

After expense limitation/recoupment (e)

    1.51     1.50     1.50     1.51     1.54

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.16)     (0.57)     (0.38)     0.12     0.27

After expense limitation/recoupment

    0.00 %(f)      (0.52)     (0.32)     0.19     0.27

Portfolio turnover rate

    31     54     65     33     24

 

(a) 

Class I shares merged into Class A on January 23, 2012. The results of each class prior to the merger may have been different than what is presented.

(b) 

Calculated using the average shares method.

(c) 

Amount less than $0.005.

(d) 

The total return calculation excludes any sales charges.

(e) 

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, when applicable.

(f) 

Less than 0.005% of average net assets.

 

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

 

52    www.iconfunds.com


Table of Contents
ICON Long/Short Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

      $ 18.39          $ 18.41          $ 17.48          $ 14.56          $ 11.61   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.04  (c)       (0.09)        (0.06)        0.01        0.02   

Net realized and unrealized gains/(losses) on investments

    0.27        0.07        0.99        2.91        2.93   

Total from investment operations

    0.31        (0.02)        0.93        2.92        2.95   

 

Net asset value, end of period

      $ 18.70          $ 18.39          $ 18.41          $ 17.48          $ 14.56   
                                         

 

Total Return

    1.69     (0.11)     5.32     20.05     25.41

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

      $ 7,114          $ 17,196          $ 16,465          $ 4,774          $ 3,471   

 

Ratio of expenses to average net assets

         

Before expense limitation

    1.63     1.37     1.45     1.53     2.18

After expense limitation/ recoupment (d)

    1.28     1.28     1.32     1.32     1.35

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.11)     (0.52)     (0.47)     (0.14)     (0.70)

After expense limitation/ recoupment

    0.24     (0.43)     (0.34)     0.07     0.13

Portfolio turnover rate

    20     74     65     33     54 %  

 

(a) 

Class S shares were formerly named Class Z shares prior to January 23, 2012.

(b) 

Calculated using the average shares method.

(c) 

The per share amount does not correspond to activity reflected in the Statement of Operations due to class specific expenses during the period.

(d) 

The Fund’s operating expenses, not including interest expense or dividends on short positions, are contractually limited to the amounts discussed in Note 3. The ratios in these financial highlights reflect the limitation, including the interest expense and dividends on short positions, when applicable.

 

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

 

Annual Report  |  September 30, 2016    53


Table of Contents
ICON Long/Short Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class C   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

      $ 16.54          $ 16.74          $ 16.05          $ 13.52          $ 10.89   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    (0.13)        (0.27)        (0.24)        (0.14)        (0.11)   

Net realized and unrealized gains/(losses) on investments

    0.24        0.07        0.93        2.67        2.74   

Total from investment operations

    0.11        (0.20)        0.69        2.53        2.63   

 

Net asset value, end of period

      $ 16.65          $ 16.54          $ 16.74          $ 16.05          $ 13.52   
                                         

 

Total Return(b)

    0.67     (1.19)     4.30     18.71     24.15

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

      $ 4,211          $ 6,300          $ 6,932          $ 6,108          $ 6,004   

 

Ratio of expenses to average net assets

         

Before expense limitation

    2.76     2.53     2.57     2.62     2.95

After expense limitation/ recoupment (c)

    2.33     2.33     2.38     2.37     2.41

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (1.21)     (1.68)     (1.58)     (1.21)     (1.44)

After expense limitation/ recoupment

    (0.78)     (1.48)     (1.39)     (0.96)     (0.90)

Portfolio turnover rate

    20     74     65     33     54 %  

 

(a) 

Calculated using the average shares method.

(b) 

The total return calculation excludes any sales charges.

(c) 

The Fund’s operating expenses, not including interest expense or dividends on short positions, are contractually limited to the amounts discussed in Note 3. The ratios in these financial highlights reflect the limitation, including the interest expense and dividends on short positions, when applicable.

 

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

 

54    www.iconfunds.com


Table of Contents
ICON Long/Short Fund    Financial Highlights
  

 

For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

    $ 17.91        $ 17.99        $ 17.13        $ 14.31        $ 11.44   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    (0.01)        (0.15)        (0.12)        (0.02)        (0.02)   

Net realized and unrealized gains/(losses) on investments

    0.26        0.07        0.98        2.84        2.89   

Total from investment operations

    0.25        (0.08)        0.86        2.82        2.87   

 

Net asset value, end of period

    $ 18.16        $ 17.91        $ 17.99        $ 17.13        $ 14.31   
                                         

 

Total Return(c)

    1.40     (0.44)     5.02     19.71     25.09

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

    $ 5,316        $ 9,186        $ 11,160        $ 8,813        $ 15,687   

 

Ratio of expenses to average net assets

         

Before expense limitation

    1.95     1.73     1.81     1.91     2.09

After expense limitation/ recoupment (d)

    1.58     1.58     1.63     1.61     1.65

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.40)     (0.89)     (0.82)     (0.45)     (0.58)

After expense limitation/ recoupment

    (0.03)     (0.74)     (0.64)     (0.16)     (0.14)

Portfolio turnover rate

    20     74     65     33     54

 

(a) 

Class I shares merged into Class A on January 23, 2012. The results of each class prior to the merger may have been different than what is presented.

(b) 

Calculated using the average shares method.

(c) 

The total return calculation excludes any sales charges.

(d) 

The Fund’s operating expenses, not including interest expense or dividends on short positions, are contractually limited to the amounts discussed in Note 3. The ratios in these financial highlights reflect the limitation, including the interest expense and dividends on short positions, when applicable.

 

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

 

Annual Report  |  September 30, 2016    55


Table of Contents
ICON Opportunities Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

     Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013 (a)
 

Net asset value, beginning of period

    $ 13.32        $ 13.04        $ 13.02        $ 10.00   

 

Income/(loss) from investment operations:

       

Net investment income/(loss)(b)

    (0.03)        (0.09)        (0.12)        (0.01)   

Net realized and unrealized gains/(losses) on investments

    1.46        0.58        0.41 (c)      3.03   

Total from investment operations

    1.43        0.49        0.29        3.02   

 

Less dividends and distributions:

       

Distributions from net realized gains

    (0.01)        (0.21)        (0.27)          

Total dividends and distributions

    (0.01)        (0.21)        (0.27)          

 

Net asset value, end of period

    $ 14.74        $ 13.32        $ 13.04        $ 13.02   
                                 

 

Total Return

    10.76     3.75     2.19     30.20

 

Ratios and Supplemental Data

       

Net assets, end of period (in 000s)

    $ 16,059        $ 11,047        $ 12,133        $ 442   

 

Ratio of expenses to average net assets

       

Before expense limitation

    1.53     1.58     2.44     12.47

After expense limitation/ recoupment (d)

    1.51     1.50     1.50     1.52

Ratio of net investment income/(loss) to average net assets

       

Before expense limitation

    (0.27)     (0.72)     (1.81)     (11.02)

After expense limitation/ recoupment

    (0.25)     (0.65)     (0.87)     (0.07)

Portfolio turnover rate

    95     76     46     52 %  

 

(a) 

Commenced operations on October 1, 2012.

(b) 

Calculated using the average shares method.

(c) 

The per share amount does not correspond to activity reflected in the Statement of Operations due to class specific expenses during the period.

(d) 

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, when applicable.

 

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

 

56    www.iconfunds.com


Table of Contents
ICON Risk-Managed Balanced Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

    $      14.02        $    13.98        $    13.40        $      12.32        $    10.88   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.19        0.18        0.24        0.24        0.15   

Net realized and unrealized gains/(losses) on investments

    0.42        0.01        0.56        1.04        1.44   

Total from investment operations

    0.61        0.19        0.80        1.28        1.59   

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.17)        (0.15)        (0.22)        (0.20)        (0.15)   

Total dividends and distributions

    (0.17)        (0.15)        (0.22)        (0.20)        (0.15)   

 

Net asset value, end of period

    $      14.46        $    14.02        $    13.98        $      13.40        $    12.32   
                                         

 

Total Return

    4.39     1.35     6.02     10.51     14.65

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

    $    20,087        $    26,677        $    20,071        $    43,350        $    6,692   

 

Ratio of expenses to average net assets

         

Before expense limitation

    1.27     1.34     1.22     1.43     1.80

After expense limitation/ recoupment (c)

    1.20     1.20     1.20     1.21     1.24

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    1.27     1.09     1.72     1.65     0.69

After expense limitation/ recoupment

    1.34     1.23     1.74     1.87     1.25

Portfolio turnover rate

    109     119     137     98     71 %  

 

(a) 

Class S shares were formerly named Class Z shares prior to January 23, 2012.

(b) 

Calculated using the average shares method.

(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 the interest expense, when applicable.

 

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

 

Annual Report  |  September 30, 2016    57


Table of Contents
ICON Risk-Managed Balanced Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class C    Year Ended
September 30,
2016
     Year Ended
September 30,
2015
     Year Ended
September 30,
2014
     Year Ended
September 30,
2013
     Year Ended
September 30,
2012  
 

Net asset value, beginning of period

     $ 12.89         $ 12.90         $ 12.39         $ 11.41         $ 10.09       

 

Income/(loss) from investment operations:

              

Net investment income/(loss)(a)

     0.04         0.03         0.09         0.09         0.02       

Net realized and unrealized gains/(losses) on investments

     0.39         0.01         0.54         0.98         1.34       

Total from investment operations

     0.43         0.04         0.63         1.07         1.36       

 

Less dividends and distributions:

              

Dividends from net investment income

     (0.05)         (0.05)         (0.12)         (0.09)         (0.04)       

Total dividends and distributions

     (0.05)         (0.05)         (0.12)         (0.09)         (0.04)       

 

Net asset value, end of period

     $ 13.27         $ 12.89         $ 12.90         $ 12.39         $ 11.41       
                                              

 

Total Return(b)

     3.35%         0.31%         5.06%         9.45%         13.47%       

 

Ratios and Supplemental Data

              

Net assets, end of period (in 000s)

     $ 15,151         $ 13,061         $ 9,469         $ 5,667         $ 2,243       

 

Ratio of expenses to average net assets

              

Before expense limitation

     2.29%         2.38%         2.33%         2.72%         3.25%       

After expense limitation/ recoupment(c)

     2.20%         2.20%         2.20%         2.22%         2.23%       

Ratio of net investment income/(loss) to average net assets

              

Before expense limitation

     0.24%         0.06%         0.61%         0.22%         (0.79)%       

After expense limitation/ recoupment

     0.33%         0.24%         0.74%         0.72%         0.23%       

Portfolio turnover rate

     109%         119%         137%         98%         71%       

 

(a) 

Calculated using the average shares method.

(b) 

The total return calculation excludes any sales charges.

(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 the interest expense, when applicable.

 

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

 

58    www.iconfunds.com


Table of Contents
ICON Risk-Managed Balanced Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

    $    13.68        $    13.69        $    13.12        $    12.06        $    10.66   

 

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.15        0.14        0.20        0.18        0.11   

Net realized and unrealized gains/(losses) on investments

    0.42        0.00 (c)      0.57        1.05        1.41   

Total from investment operations

    0.57        0.14        0.77        1.23        1.52   

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.14)        (0.15)        (0.20)        (0.17)        (0.12)   

Total dividends and distributions

    (0.14)        (0.15)        (0.20)        (0.17)        (0.12)   

 

Net asset value, end of period

    $    14.11        $    13.68        $    13.69        $    13.12        $    12.06   
                                         

 

Total Return(d)

    4.18     1.00     5.88     10.28     14.28

 

Ratios and Supplemental Data

         

Net assets, end of period
(in 000s)

    $    9,095        $    8,446        $    7,014        $    7,819        $    4,045   

 

Ratio of expenses to average net assets

         

Before expense limitation

    1.60     1.70     1.65     2.12     2.16

After expense limitation/ recoupment (e)

    1.45     1.45     1.45     1.47     1.48

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    0.93     0.71     1.29     0.81     0.28

After expense limitation/ recoupment

    1.08     0.96     1.49     1.46     0.96

Portfolio turnover rate

    109     119     137     98     71

 

(a) 

Class I shares merged into Class A on January 23, 2012. The results of each class prior to the merger may have been different than what is presented.

(b) 

Calculated using the average shares method.

(c) 

Amount less than $0.005.

(d) 

The total return calculation excludes any sales charges.

(e) 

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    59


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

1. ORGANIZATION

 

The ICON Bond Fund (“Bond Fund”), ICON Equity Income Fund (“Equity Income Fund”), ICON Fund (“ICON Fund”), ICON Long/Short Fund (“Long/ Short Fund”), ICON Opportunities Fund (“Opportunities Fund”) and ICON Risk-Managed Balanced Fund (“Risk-Managed Balanced Fund”) are a series of 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, with the exception of the Opportunities Fund, offers three classes of shares: Class S, Class C and Class A. The Opportunities Fund is a single-class fund. 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 eleven 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 to maximize total return. The investment objective of the Equity Income Fund is modest capital appreciation and income. The investment objective of the ICON Fund is long-term capital appreciation with a secondary objective of capital preservation. The investment objective of the Opportunities Fund is to provide capital appreciation. The investment objective of the Long/Short Fund is capital appreciation. The investment objective of the Risk-Managed Balanced Fund is modest capital appreciation and income.

The Funds, like all investments in securities, have elements of risk, including risk of loss of principal. There is no assurance that the Funds will achieve their investment objectives and may underperform funds with similar investment objectives. An investment concentrated in sectors and industries involves greater risk and volatility than a more diversified investment. Securities of small companies generally involve greater risks than investments in larger companies. Small company securities tend to be more volatile and less liquid than equity securities of larger companies. 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, Equity Income Fund and Risk-Managed Balanced Fund may invest in medium-and lower-quality debt securities. High-yield bonds, also known as “junk bonds” are speculative investments and involve a greater risk of default and price volatility than U.S. government and other high-quality bonds. Junk bonds are also less liquid (more difficult to sell) than equities and higher credit bonds. These illiquid securities are harder to sell; or value, especially in changing markets, such as periods with rising interest rates.

The Bond Fund, Equity Income Fund and Risk-Managed Balanced Fund may invest in mortgage-related securities, which are interests in pools of mortgage loans made to residential home buyers, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Pools of mortgage loans are assembled as securities for sale to investors by various governmental and government-related organizations. The Bond Fund, Equity Income Fund and Risk-Managed Balanced Fund also may invest in debt securities that are secured with collateral consisting of mortgage related securities (a Collateralized Mortgage Obligations or “CMO”), and in other types of mortgage-related securities. CMOs are debt obligations of a legal entity that are collateralized by whole mortgage loans or private mortgage bonds and divided into classes. CMOs are typically structured into multiple classes, often referred to as “tranches,” with each class bearing a different stated maturity and entitled to a different schedule for payments of principal and interest, including prepayments. CMOs may be less liquid and may exhibit greater price volatility than other types of mortgage-related or asset-backed securities. Many of the risks of investing in mortgage-related securities secured by commercial mortgage loans reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make lease payments, and the ability of a property to attract and retain tenants. These securities may be less liquid and may exhibit greater price volatility than other types of mortgage-related or other asset-backed securities. Other asset-backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. The ICON Fund and Long/Short Fund also may invest in such securities for temporary defensive purposes.

The Long/Short Fund may engage 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 Balanced Fund invests in call options; selling/writing 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 less 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.

 

 
60    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

The ICON Fund has a significant weighting in the Financial and Consumer Discretionary sectors, the Long/Short Fund has a significant weighting in the Financial sector and the Opportunities Fund has a significant weighting in the Information Technology and Consumer Discretionary sectors which may cause the Funds’ 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 remote.

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 (“GAAP”) 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. Each Fund is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.

Investment Valuation

The Funds’ securities and other assets, excluding options on securities indexes, are valued at the closing price as of 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. If the NYSE closes unexpectedly and there is active trading on other exchanges, the securities will be valued at the Valuation Time based off of those exchanges. 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 NYSE 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 is considered inaccurate or does not, in the Funds’ judgment, 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 (the “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. Exchange traded options are valued at the composite price, using the National Best Bid and Offer quotes (“NBBO”). NBBO consists of the highest bid price and lowest ask price across any of the exchanges on which an option is quoted, thus providing a view across the entire U.S. options marketplace. Debt securities with a remaining maturity of greater than 60 days are valued using 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.

Mortgage-related and asset-backed securities are typically issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche level attributes, current market data, estimated cash flows and market based yield spreads for each tranche, and incorporate deal collateral performance, as available. Mortgage-related and asset-backed securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.

Securities of investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Investments in shares of funds that are not traded on an exchange are valued at the end of day net asset value per share of such fund. Securities in the underlying funds, including restricted securities are valued in accordance with the valuation policy of such fund.

The Funds’ securities 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

 

 
Annual Report  |  September 30, 2016    61


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

(“NAV”). The valuation assigned to fair-value securities for purposes of calculating each 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.

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 may be 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, 2016:

ICON Bond Fund

 

Investments in Securities at Value*  

Level 1 - Quoted

and Unadjusted

Prices

   

Level 2 - Other

Significant

Observable Inputs

    Level 3 - Significant
Unobservable Inputs
    Total  

Corporate Bonds

  $ –          $ 51,692,858          $ –          $     51,692,858       

Convertible Corporate Bonds

    –            2,077,500            –            2,077,500       

U.S. Treasury Obligations

    –            2,995,899            –            2,995,899       

Collateralized Mortgage Obligations

    –            10,968,455            –            10,968,455       

Preferred Stocks

    4,708,615            –            –            4,708,615       

Closed-End Mutual Funds

    8,550,270            –            –            8,550,270       

Collateral for Securities on Loan

    –            1,092,875            –            1,092,875       

Short-Term Investments

    –            5,636,472            –            5,636,472       

Total

  $ 13,258,885          $ 74,464,059          $ –          $     87,722,944       
                                 
ICON Equity Income Fund        
Investments in Securities at Value*  

Level 1 - Quoted

and Unadjusted

Prices

   

Level 2 - Other

Significant
Observable Inputs

   

Level 3 - Significant
Unobservable

Inputs

    Total  

Corporate Bonds

  $ –          $ 1,043,188          $ –          $ 1,043,188       

Convertible Corporate Bonds

    –            259,688            –            259,688       

Collateralized Mortgage Obligations

    –            672,290            –            672,290       

Common Stocks

    58,251,710            –            –            58,251,710       

Preferred Stocks

    1,256,089            –            –            1,256,089       

Convertible Preferred Stocks

    261,720            –            –            261,720       

Closed-End Mutual Funds

    2,526,586            –            –            2,526,586       

Put Options Purchased

    54,000            –            –            54,000       

Collateral for Securities on Loan

    –            5,989,261            –            5,989,261       

Short-Term Investments

    –            190,554            –            190,554       

Total

  $ 62,350,105          $ 8,154,981          $ –          $ 70,505,086       
                                 
ICON Fund        
Investments in Securities at Value*  

Level 1 - Quoted

and Unadjusted

Prices

   

Level 2 - Other

Significant

Observable Inputs

   

Level 3 - Significant

Unobservable

Inputs

    Total  

Common Stocks

  $ 45,913,602          $ –          $ –          $ 45,913,602       

Total

  $ 45,913,602          $ –          $ –          $ 45,913,602       
                                 

 

 
62    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

ICON Long/Short Fund

 

Investments in Securities at Value*   Level 1 - Quoted
and Unadjusted
            Prices            
    Level 2 - Other
Significant
Observable Inputs
    Level 3 - Significant
Unobservable
            Inputs            
    Total  

Common Stocks

  $         16,714,215      $               –          $                       –      $         16,714,215       

Total

  $         16,714,215      $               –          $                       –      $ 16,714,215       
                                 

ICON Opportunities Fund

 

       
Investments in Securities at Value*   Level 1 - Quoted
and Unadjusted
Prices
    Level 2 - Other
Significant
Observable Inputs
    Level 3 -Significant
Unobservable Inputs
    Total  

Common Stocks

  $         16,070,034      $ –          $      $ 16,070,034       

Short-Term Investments

           27,464                   27,464       

Total

  $         16,070,034      $ 27,464          $      $ 16,097,498       
                                 

ICON Risk-Managed Balanced Fund

 

       
Investments in Securities at Value*   Level 1 - Quoted
and Unadjusted
Prices
    Level 2 - Other
Significant
Observable Inputs
    Level 3 -Significant
Unobservable Inputs
    Total  

Corporate Bonds

  $      $ 8,901,216          $      $ 8,901,216       

Convertible Corporate Bonds

           415,500                   415,500       

U.S. Treasury Obligations

           2,873,713                   2,873,713       

Collateralized Mortgage Obligations

           3,565,138                   3,565,138       

Common Stocks

    23,061,276        –                   23,061,276       

Preferred Stocks

    810,289        –                   810,289       

Closed-End Mutual Funds

    3,646,199        –                   3,646,199       

Exchange Traded Funds

    769,588        –                   769,588       

Put Options Purchased

    71,220        –                   71,220       

Collateral for Securities on Loan

           426,194                   426,194       

Short-Term Investments

           71,708                   71,708       

Total

  $ 28,358,572      $ 16,253,469          $      $ 44,612,041       
                                 

 

*

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

There were no Level 3 securities held in any of the Funds at September 30, 2016.

For the year ended September 30, 2016, there was no transfer activity between Level 1, Level 2 or Level 3.

The end of period timing recognition is used for transfers between levels of each Fund’s assets and liabilities.

Fund Share Valuation

Fund shares are sold and redeemed on a daily basis at net asset value. Net asset value per share is determined daily as of the close of trading on the NYSE on each day the NYSE is open for trading by dividing the total value of each Fund’s investments and other assets, less liabilities, by the number of Fund shares outstanding.

 

 
Annual Report  |  September 30, 2016    63


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

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, 2016 was limited to purchased and written options.

The Risk-Managed Balanced 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 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 Statements 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 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 purchase or 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, 2016, the Equity Income Fund engaged in purchased put option transactions and the Risk-Managed Balanced 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 Balanced Fund’s written options were collateralized by cash and/or securities held in a segregated account at the Fund’s custodian during the year. The securities pledged as collateral would be included on the Schedule of Investments if they were held at year end. Such collateral is restricted from the Fund’s use. The cash collateral held for the custodian and/or borrowings from the custodian if any, is included on the Statements of Assets and Liabilities.

 

 
64    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

The number of options contracts written and the premiums received by the Risk-Managed Balanced Fund during the year ended September 30, 2016, were as follows:

 

    ICON Risk-Managed Balanced Fund
     Number of Contracts   Premiums Received

Options outstanding, beginning of year

    $                –        

Options written during year

  (190)   (272,758)

Options closed during year

   175    268,583

Options exercised during year

    15       4,175
 

 

Options outstanding, end of year

    $                –        
 

 

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

 

ICON Equity Income Fund                       Asset Derivatives                           Liability Derivatives  
Risk Exposure   Statements of Assets and
Liabilities Location
     Fair Value      Statements of Assets and
Liabilities Location
     Fair Value  

Equity Contracts (Purchased Options)

    Investments, at value       $ 54,000         N/A         N/A   

Total

           $ 54,000                $   
                                    
ICON Risk-Managed Balanced Fund   Asset Derivatives     

 

Liability Derivatives

 
Risk Exposure   Statements of Assets and
Liabilities Location
     Fair Value      Statements of Assets and
Liabilities Location
     Fair Value  

Equity Contracts (Purchased Options)

    Investments, at value       $ 71,220         N/A         N/A   

 

 

Total

     $ 71,220          $  –   

 

 

 

ICON Equity Income Fund

 

Risk Exposure

  Statements of Operations Location   Realized
Gain/(Loss) on
Derivatives
Recognized
in Income
    Change in
Unrealized Appreciation/
(Depreciation)
on Derivatives
Recognized
in Income
 

Equity Contracts
(Purchased Options)

 

Net realized gain/(loss) on

      investments/ Change in unrealized

      net appreciation/(depreciation) on

      investments and foreign currency

          $             (281,853)      $ (200,882)       
   

Total

            $             (281,853)      $ (200,882)       
   

ICON Risk-Managed Balanced

 

Fund Risk Exposure

  Statements of Operations Location   Realized
Gain/(Loss) on
Derivatives
Recognized
in Income
   

 

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

 

Equity Contracts
(Purchased Options)

 

Net realized gain/(loss) on

      investments/ Change in unrealized

      net appreciation/(depreciation) on

      investments and foreign currency

          $             (672,809)      $ (292,850)       

Equity Contracts
(Written Options)

 

Net realized gain/(loss) on written

      options/ Change in unrealized net

      appreciation/(depreciation) on

      written options

                (146,066)        –       
                     

Total

              $             (818,875)      $ (292,850)       
                     

 

 
Annual Report  |  September 30, 2016    65


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

The average purchased and written option contracts during the year ended September 30, 2016, was as follows:

 

ICON Equity Income Fund

Derivative Type

   Unit of Measurement    Average+

 

Purchased Options

   Contracts    129++

ICON Risk-Managed Balanced Fund

Derivative Type

   Unit of Measurement    Average+

 

Purchased Options

   Contracts    159++

Written Options

   Contracts    28++

 

+ 

The average is calculated based on the actual number of days with outstanding derivatives.

++ 

During the year ended September 30, 2016, the Equity Income Fund had outstanding purchased option contracts for 192 days and the Risk-Managed Balanced Fund had outstanding purchased option contracts for the entire year and outstanding written option contracts for 257 days.

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.

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 in management’s opinion.

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 by cash and/or securities held with the Fund’s prime broker and in a segregated account at the Fund’s prime broker. 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 Statements 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 Statements 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 and for the year ended September 30, 2016, the Long/Short Fund did not engage in short selling.

Securities Lending

Under procedures adopted by the Board, the Funds may lend securities to certain approved brokers, dealers and other financial institutions to earn additional income. Cash collateral is received in exchange for securities on loan in the amount of at least 102% of the value of U.S. securities loaned or at least 105% of the value of non-U.S. securities loaned, marked to market daily. The Funds retain certain benefits of owning the securities, including receipt of dividends or interest generated by the security, but give up other rights including the right to vote proxies. The Funds retain the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by cash that generally exceeds the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Funds and any additional required collateral is delivered to each Fund on the next business day.

Generally, in the event of borrower default, the Funds have the right to use the collateral to offset any losses incurred. In the event the Funds are delayed or prevented from exercising their rights to dispose of the collateral, there may be a potential loss to the Funds. Some of these losses may be indemnified by the lending agent.

The Funds have elected to invest the cash collateral in the State Street Navigator Prime Portfolio which is disclosed on the Schedule of Investments. The Funds bear the risk of loss with respect to the investment of collateral. The net securities lending income earned by the Funds for the year ended September 30, 2016, is included in the Statements of Operations.

The value of the collateral could include collateral held for securities that were sold on or before September 30, 2016. It may also include collateral received from the pre-funding of security loans.

 

 
66    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

The following table indicates the total amount of securities loaned by type, reconciled to gross liability payable upon return of the securities loaned by the Funds as of September 30, 2016:

 

     Remaining contractual maturity of the lending agreement                
     Overnight &
Continuous
     Up to 30 days      30-90 days      Greater than
90 days
     Market Value      Collateral
Received
     Excess amount
due to
counterparty
 

 

 

Securities Lending Transactions

                    

ICON Bond Fund

                    

Corporate Securities

   $ 1,032,500       $       $       $       $ 1,032,500       $     1,055,000       $ 22,500   

Equity Securities

     33,171                                 33,171         37,875         4,704   
              

 

 

 

Total

                 1,065,671         1,092,875         27,204   

ICON Equity Income Fund

                    

Equity Securities

     5,888,869                                 5,888,869         5,989,261         100,392   

ICON Risk-Managed Balanced Fund

                    

Equity Securities

     419,967                                 419,967         426,194         6,227   

Income Taxes, Dividends, and Distributions

The Funds intend to continue 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 Balanced 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 three 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 capital gains tax 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 fixed income securities purchased are accreted or amortized to income over the life of the respective securities based on the effective yield. Paydown gains and losses on mortgage-related and other asset-backed securities are recorded as components of interest income on the Statements of Operations.

 

 
Annual Report  |  September 30, 2016    67


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

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.

Withholding Tax

Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates. The ability of issuers of debt securities held by the Funds to meet their obligations may be effected by economic and political developments in specific country or region.

Other

The Funds hold certain investments which pay dividends to their shareholders based upon available funds from operations. It is possible for these dividends to exceed the underlying investments’ taxable earnings and profits resulting in the excess portion of such dividends being designated as a return of capital. Distributions received from investments in securities that represent a return of capital or capital gains are recorded as a reduction of the cost of investments or as a realized gain, respectively.

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 additional class level expenses that are included on the Statements of Operations:

 

Fund    Printing Fees      Transfer Agent Fees*      Registration Fees    

 

 

ICON Bond Fund

        

Class S

   $ 10,684       $ 63,315           $ 16,938       

Class C

     975         9,755             9,552       

Class A

     930         9,898             9,764       

ICON Equity Income Fund

        

Class S

     8,203         39,528             14,142       

Class C

     1,459         13,907             10,317       

Class A

     3,060         22,794             12,891       

ICON Fund

        

Class S

     6,924         25,867             11,932       

Class C

     2,926         36,736             10,888       

Class A

     1,509         15,770             10,424       

ICON Long/Short Fund

        

Class S

     2,517         20,995             10,957       

Class C

     1,504         14,967             11,020       

Class A

     2,144         19,094             12,999       

ICON Risk-Managed Balanced Fund

        

Class S

     6,039         47,498             12,384       

Class C

     3,156         23,606             12,878       

Class A

     2,059         14,969             13,560       

 

*

Transfer agent out of pocket fees are a Fund level expense.

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,

 

 
68    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

0.75% of average daily net assets of the Equity Income Fund, ICON Fund, Opportunities Fund and Risk-Managed Balanced Fund, 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, acquired fund fees and expenses and extraordinary expenses) to the extent necessary to ensure that the Funds’ expenses do not exceed the following amounts:

 

Fund    Fund      Class S      Class C      Class A         

 

 

ICON Bond Fund

             0.75%         1.60%         1.00%      

ICON Equity Income Fund

             1.20%         2.20%         1.45%      

ICON Fund

             1.25%         2.25%         1.50%      

ICON Long/Short Fund

             1.25%         2.30%         1.55%      

ICON Opportunities Fund

     1.50%                              

ICON Risk-Managed Balanced Fund

             1.20%         2.20%         1.45%      

The Funds’ expense limitations, excluding the Bond Fund Class A, all classes of the ICON Fund and the Opportunities Fund, will continue in effect until at least January 31, 2021. Limitations for the Bond Fund Class A, all classes of the ICON Fund and the Opportunities Fund will continue in effect until at least January 31, 2017. 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 these payments are proposed.

As of September 30, 2016 the following amounts were available for recoupment by ICON Advisers based upon their potential expiration dates:

 

Fund    Expires
2017
     Expires
2018
     Expires
2019
 

 

 

ICON Bond Fund

   $       136,560       $       180,067       $       180,193       

ICON Equity Income Fund

     34,431         31,087         35,317       

ICON Fund

     5,855         6,855         28,516       

ICON Long/Short Fund

     46,283         50,987         80,331       

ICON Opportunities Fund

     22,580         8,824         3,029       

ICON Risk-Managed Balanced Fund

     27,233         61,973         44,620       

Accounting, Custody and Transfer Agent Fees

Effective March 1, 2016, ALPS Fund Services (“ALPS”) serves as the fund accounting agent for the Funds. Prior to March 1, 2016, State Street Bank and Trust Company (“State Street”) served as the fund accounting agent for the Funds. For its services, the Trust pays ALPS a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily net 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.

Effective April 9, 2016, ALPS became the transfer agent for the Trust. For these services, the Trust pays an annual fee plus annual base fee per Fund, per account fees and out-of-pocket expenses. Prior to April 9, 2016, Boston Financial Data Services, Inc. was the Trust’s transfer agent.

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, 2016, each Fund’s payment for administrative services to ICON Advisers is included on the Statements 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.

Effective March 1, 2016, ICON Advisers has a sub-administration agreement with ALPS under which ALPS assists ICON Advisers with the administration and business affairs of the Trust. For its services, ICON Advisers pays ALPS a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily net assets of the Trust. Prior to March 1, 2016, the sub-administration agreement was between ICON Advisers and State Street.

 

 
Annual Report  |  September 30, 2016    69


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

Distribution Fees

The Funds have adopted a non-compensatory 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, the Distribution Plan provides for reimbursement of expenses incurred by IDI related to distribution and marketing. The Bond Fund Class C shareholders pay an annual distribution and service fee of 0.85% of average daily net assets 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 A shares. There is no annual distribution and service fee for Class S shares. The total amount paid under the 12b-1 plans by the Funds is shown on the Statements of Operations.

In addition, IDI, as Distributor, receives a contingent deferred sales charge at a rate of 1.00% of the purchase price for the sale of Class C shares within one year of purchase. For Class A shares, the public offering price equals net asset value plus the applicable sales charge, which is a maximum of 5.75% (4.75% for Class A shares of the ICON Bond Fund). IDI receives a portion of this sales charge and may redistribute it as dealer discounts and brokerage commissions to non-related parties.

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 Trust paid 95% of the CCO’s salary and the remaining portion, along with other employee related expenses, is paid by ICON Advisers. For the year ended September 30, 2016, the total related amounts paid by the Funds under this arrangement are included in Other Expenses on the Statements of Operations.

The Funds may reimburse ICON Advisers for legal work performed for the Funds by its attorneys outside of the advisory and administration contracts. The Board reviews and approves such reimbursements. For the year ended September 30, 2016, the total related amounts paid by the Funds under this arrangement was $4,806 and is included in Other Expenses on the Statements of Operations.

The Funds engaged in cross trades with each other during the year ended September 30, 2016 pursuant to Rule 17a-7 under the 1940 Act. Generally, cross trading is the buying or selling of portfolio securities between funds to which the Adviser serves as the investment adviser. The Board of Trustees previously adopted procedures that apply to transactions between the Funds and its affiliates pursuant to Rule 17a-7. At its regularly scheduled meetings, the Board of Trustees reviews such transactions as of the most current calendar quarter for compliance with the requirements set forth by Rule 17a-7 and the Funds’ procedures. The procedures require that the transactions be a purchase or sale for no consideration other than cash payment against prompt delivery of a security for which market quotations are readily available, and be consistent with the investment policies of each Fund.

4. BORROWINGS

 

The Trust has entered into a uncommitted, unsecured, revolving Line of Credit agreement/arrangement with State Street to provide temporary funding for redemption requests. Effective March 21, 2016, the maximum borrowing limit was changed from $75 million to $50 million. Interest on domestic borrowings is charged at a rate quoted and determined by State Street. The Line of Credit agreement/arrangement expires on March 20, 2017.

As of September 30, 2016, the ICON Fund and the Long/Short Fund had outstanding borrowings in the amount of $431,277 and $498,627, respectively.

For the year ended September 30, 2016, the average outstanding loan by Fund was as follows:

 

Fund    Average Borrowing
(10/01/15 - 9/30/16)^
     Average Interest Rates            
(10/1/15 - 9/30/16)^         

 

ICON Bond Fund*

   $ 1,201,046         1.38%

ICON Equity Income Fund*

     429,200         1.70%

ICON Fund

     558,003         1.64%

ICON Long/Short Fund

     629,367         1.64%

ICON Opportunities Fund*

     100,612         1.67%

ICON Risk-Managed Balanced Fund*

     919,209         1.72%

 

*

There were no outstanding borrowings under this agreement/arrangement as of September 30, 2016.

^

The average is calculated based on the actual number of days with outstanding borrowings.

 

    

 

70    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

5. PURCHASES AND SALES OF INVESTMENT SECURITIES

 

For the year ended September 30, 2016, 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

   $ 111,565,515         $    114,417,196             $    2,956,094             $    4,805,127       

ICON Equity Income Fund

     90,748,139         71,956,202             –             –       

ICON Fund

     14,991,678         23,251,853             –             –       

ICON Long/Short Fund

     4,378,720         20,066,737             –             –       

ICON Opportunities Fund

     14,498,227         10,409,779             –             –       

ICON Risk-Managed Balanced Fund

     49,670,512         53,618,359             2,573,250             2,731,490       

6. FEDERAL INCOME TAX

 

The following information is presented on an income tax basis. Differences between GAAP and federal income tax purposes that are permanent in nature are reclassified within the capital accounts. Temporary differences do not require reclassification. Temporary and permanent differences do not impact the NAVs of the Funds. These differences are primarily due to differing treatments for items such as deferrals of wash sale losses, foreign currency transactions, partnership adjustments, net investment losses, and the treatment of TIPS, trust preferred securities, and paydowns.

For the year ended September 30, 2016, the following Funds had capital loss carryforwards:

 

Fund    Expiring in 2017      Expiring in 2018      

 

 

ICON Equity Income Fund

   $ –        $ 19,024,268       

ICON Fund

     –          17,897,797       

ICON Long/Short Fund

     33,675,749          19,325,857       

ICON Risk-Managed Balanced Fund

     –          12,982,796       

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, 2016, the following Funds utilized capital loss carryforwards:

 

Fund    Amount  

 

 

ICON Equity Income Fund

     $    701,417       

ICON Risk-Managed Balanced Fund

     237,622       

The capital losses with no expiration were as follows:

 

Fund    Short-Term      Long-Term  

 

 

ICON Bond Fund

     $        778,218         $    1,152,209       

ICON Fund

     1,433,750         –       

ICON Long/Short Fund

     1,444,669         –       

Under the Regulated Investment Company Modernization Act of 2010 (the “Act”) 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.

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2016, were as follows:

 

Fund    Ordinary Income      Long-Term Capital
Gains
 

 

 

ICON Bond Fund

   $ 2,950,335         $ –       

ICON Equity Income Fund

     1,921,339           –       

ICON Opportunities Fund

     –           10,170       

ICON Risk-Managed Balanced Fund

     453,746           –       

 

 
Annual Report  |  September 30, 2016    71


Table of Contents
ICON Diversified Funds    Notes to Financial Statements
   September 30, 2016

 

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2015, were as follows:

 

Fund    Ordinary Income      Long-Term Capital
Gains
     Return of Capital      

 

 

ICON Bond Fund

   $ 4,946,691           $ 1,246,377           $ 319,369       

ICON Equity Income Fund

     1,340,637             –             –       

ICON Opportunities Fund

     126,909             60,583             –       

ICON Risk-Managed Balanced Fund

     321,451             –             –       

As of September 30, 2016, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Fund   Undistributed
Ordinary
Income
    Undistributed
Capital Gains
    Late Year Loss
Deferral*
    Capital Loss
Carryforward and
Other Losses
    Unrealized
Appreciation/
(Depreciation)**
    Total
Accumulated
Earnings/
(Deficit)
 

 

 

ICON Bond Fund

  $ 158,476          $ –          $ (554,807)          $ (1,965,486)          $ 1,189,707          $ (1,172,110)       

ICON Equity Income Fund

    35,661            –            (1,876,410)            (19,028,011)            1,834,525            (19,034,235)       

ICON Fund

    –            –            (1,328,436)            (19,331,547)            1,621,822            (19,038,161)       

ICON Long/Short Fund

    –            –            (667,891)            (54,446,275)            515,242            (54,598,924)       

ICON Opportunities Fund

    –            221,529            (30,697)            –            860,986            1,051,818       

ICON Risk-Managed Balanced Fund

    69,429            –            (411,465)            (12,983,989)            713,150            (12,612,875)       

 

*

The Funds have elected to defer certain qualified late-year losses in accordance with federal income tax rules. These losses are treated as having arisen on the first day of the following fiscal year.

**

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, 2016, cost on investments for federal income tax purposes and the amount of net unrealized appreciation/(depreciation) were as follows:

 

Fund   Gross Appreciation
(excess of value over
tax cost)
    Gross Depreciation
(excess of tax cost
over value)
    Net Appreciation of
Foreign Currency
and Derivatives
    Net Unrealized
Appreciation
    Cost of Investments
for Income Tax
Purposes
 

 

 

ICON Bond Fund

  $ 1,478,937          $ (289,230)          $ –          $ 1,189,707          $ 86,533,237       

ICON Equity Income Fund

    3,305,238            (1,671,634)            200,921            1,834,525            68,670,600       

ICON Fund

    4,320,515            (2,698,693)            –            1,621,822            44,291,780       

ICON Long/Short Fund

    1,618,545            (1,103,303)            –            515,242            16,198,973       

ICON Opportunities Fund

    1,579,860            (718,874)            –            860,986            15,236,512       

ICON Risk-Managed Balanced Fund

    2,122,188            (1,737,345)            328,307            713,150            43,898,891       

7. SUBSEQUENT EVENTS

 

On October 14, 2016, the State Street Navigator Prime Portfolio, the collateral vehicle for securities lending, became the State Street Navigator Securities Lending Government Money Market Portfolio (“Government Money Market Portfolio”). The Government Money Market Portfolio will seek: (i) current income to the extent consistent with the preservation of capital and liquidity; and (ii) the maintenance of a stable $1.00 per share net asset value.

In addition to the current expense waiver through 1/31/2021, on November 14, 2016, ICON Advisers contractually agreed to limit the total expenses of the ICON Equity Income Fund for one year (excluding interest, taxes, brokerage, acquired fund fees and expenses and extraordinary expenses) to an annual rate for Class A of 1.24%, an annual rate for Class C of 1.99%, and an annual rate of 0.99% for Class S. This expense limitation may revert back to the current limits any time after January 31, 2018 upon 30 days’ written notice of termination to the Fund’s Board of Trustees. The new expense limitation will become effective with the filing of the annual registration statement in January 2017.

8. CHANGE OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee of the Board of the Funds dismissed PricewaterhouseCoopers LLP (“PwC”), as the independent registered public accounting firm of the Funds and appointed Cohen & Company, Ltd. (“Cohen”) effective July 27, 2016.

 

 
72    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Trustees of

ICON Funds

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of ICON Bond Fund, ICON Equity Income Fund, ICON Fund, ICON Long/Short Fund, ICON Opportunities Fund, and ICON Risk-Managed Balanced Fund (the “Funds”, each a series of ICON Funds) as of September 30, 2016, and the related statements of operations and changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The Funds’ financial statements and financial highlights for the years ended September 30, 2015 and prior, were audited by other auditors, whose report dated November 18, 2015 expressed an unqualified opinion on those financial statements and financial highlights.

We conducted our audit 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 and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2016, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of September 30, 2016, the results of their operations, the changes in their net assets, and their financial highlights for year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

LOGO

COHEN & COMPANY, LTD.

Cleveland, Ohio

November 23, 2016

 

 
Annual Report  |  September 30, 2016    73


Table of Contents
ICON Diversified Funds    Disclosure of Fund Expenses
   September 30, 2016 (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 (4/01/16 – 9/30/16).

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), 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

April 1, 2016

    Ending Account
Value
September 30, 2016
    Expense Ratio(a)     Expenses Paid
During period
April 1, 2016 -
September 30, 2016(b)
 

 

 

ICON Bond Fund

       

Class S

       

Actual

    $  1,000.00            $  1,049.70            0.75%            $  3.84       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,021.25            0.75%            $  3.79       

Class C

       

Actual

    $  1,000.00            $  1,044.70            1.61%            $  8.23       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,016.95            1.61%            $  8.12       

Class A

       

Actual

    $  1,000.00            $  1,048.70            1.00%            $  5.12       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,020.00            1.00%            $  5.05       

ICON Equity Income Fund

       

Class S

       

Actual

    $  1,000.00            $  1,056.70            1.20%            $  6.17       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,019.00            1.20%            $  6.06       

Class C

       

Actual

    $  1,000.00            $  1,051.50            2.20%            $  11.28       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,014.00            2.20%            $  11.08       

Class A

       

Actual

    $  1,000.00            $  1,055.50            1.45%            $  7.45       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,017.75            1.45%            $  7.31       

 

 
74    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Disclosure of Fund Expenses
   September 30, 2016 (Unaudited)

 

 

   

Beginning Account
Value

April 1, 2016

    Ending Account
Value
September 30, 2016
    Expense Ratio(a)    

Expenses Paid
During period

April 1, 2016 -
September 30, 2016(b)

 

 

 

ICON Fund

       

Class S

       

Actual

    $  1,000.00            $  1,043.00            1.09%            $  5.57       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,019.55            1.09%            $  5.50       

Class C

       

Actual

    $  1,000.00            $  1,036.60            2.27%            $  11.56       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,013.65            2.27%            $  11.43       

Class A

       

Actual

    $  1,000.00            $  1,040.70            1.52%            $  7.75       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,017.40            1.52%            $  7.67       

ICON Long/Short Fund

       

Class S

       

Actual

    $  1,000.00            $  1,040.60            1.26%            $  6.43       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,018.70            1.26%            $  6.36       

Class C

       

Actual

    $  1,000.00            $  1,035.40            2.31%            $  11.75       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,013.45            2.31%            $  11.63       

Class A

       

Actual

    $  1,000.00            $  1,039.50            1.56%            $  7.95       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,017.20            1.56%            $  7.87       

ICON Opportunities Fund

       

Actual

    $  1,000.00            $  1,129.50            1.51%            $  8.04       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,017.45            1.51%            $  7.62       

ICON Risk-Managed Balanced Fund

       

Class S

       

Actual

    $  1,000.00            $  1,023.40            1.20%            $  6.07       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,019.00            1.20%            $  6.06       

Class C

       

Actual

    $  1,000.00            $  1,019.00            2.20%            $  11.10       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,014.00            2.20%            $  11.08       

Class A

       

Actual

    $  1,000.00            $  1,022.80            1.45%            $  7.33       

Hypothetical (5% return before expenses)

    $  1,000.00            $  1,017.75            1.45%            $  7.31       

 

(a) 

The Fund’s expense ratios have been annualized based on the Fund’s most recent fiscal half-year expenses.

(b) 

Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year 183/366 (to reflect the half-year period).

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

 

 
Annual Report  |  September 30, 2016    75


Table of Contents
ICON Diversified Funds    Board of Trustees and Fund Officers
   September 30, 2016 (Unaudited)

 

The ICON Funds Board of Trustees (the “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, 65, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as Chief Executive Officer (2013 to present); and Chairman of the Investment Committee (2005 to present) and served as the Chief Investment Officer (1991 to 2004) and President (2008 to 2013 and 2014 to present) 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, 66, 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 2015), 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 (2013 to present and 2006 to 2012), Delta Dental of Pennsylvania, an insurance company (1998 to 2009 and 2010 to present), Dentegra Group, Inc, an insurance holding company (2010 to 2014) and Delta Reinsurance Corporation (2015 to present; 2011 to 2014 and 2000 to 2009).

John C. Pomeroy, Jr., 69. Mr. Pomeroy has been a Trustee of the Funds since November 2002. Mr. Pomeroy is Chief Investment Officer and Director of Investments, Pennsylvania State University (2001 to present) and was Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).

R. Michael Sentel, 68. 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, 65, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as Chief Executive Officer (2013 to present); President (1998 to 2013 and 2014 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.

Donald Salcito, 63. 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).

Carrie M. Schoffman, 43. Ms. Schoffman has been a Vice President and Principal Financial Officer/Treasurer of the Funds since June 2013. Ms. Schoffman is also Chief Compliance Officer (2013 to present and 2004 to 2008) and Anti-Money Laundering Officer (2013 to present) of the ICON Funds. She is Senior Vice President (2011 to present) and Chief Compliance Officer (2013 to present and 2004 to 2011) of ICON Advisers. Previously, she was a Staff Accountant with the Securities and Exchange Commission (2003 to 2004) and also an Experienced Manager (2001 to 2003) and a Senior Associate/Associate (1996 to 2001) at PricewaterhouseCoopers LLP.

Lesley Caviness, 50. Ms. Caviness serves as Assistant Treasurer of the Funds (2014 to present). She has worked at ICON (2007 to 2008 and 2010 to present) in fund accounting, compliance, business intelligence and performance capacities. Prior to working at ICON, Ms. Caviness was a Real Estate Broker at Seasons Real Estate Group (2008 to 2012) and Signature Real Estate (2014 to present), Finance Manager at Navigant (2000 to 2007), and Associate/Senior Associate (1996 to 2000) at PricewaterhouseCoopers LLP.

 

 
76    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Additional Information
   September 30, 2016 (Unaudited)

 

Renewal of Investment Advisory Agreement

On August 22, 2016, the Board of Trustees, including all of the Trustees that are not “interested persons” of the Trust (the “Independent Trustees”), approved continuation of the Advisory Agreements (as defined below) with the Adviser for each Fund for an additional one-year term commencing October 1, 2016.

In determining to renew the investment advisory agreements between ICON Funds (the “Trust”) and ICON Advisers, Inc. (“ICON” or the “Adviser”) the Trustees requested, were provided with and reviewed data with respect to the Adviser, its personnel, and the services provided and to be provided to each Fund by the Adviser under the Trust’s Investment Advisory Agreement dated October 9, 1996, as amended (related to the Sector Funds, the International Funds and ICON Fund) 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 Balanced, Equity Income, Opportunities and Long/Short Funds) (collectively, the “Advisory Agreements”).

The Trustees agreed that consideration of the Advisory Agreements should also include consideration of other agreements between the Adviser and the Trust that impact provisions of the Advisory Agreements, including expense limitation agreements as amended effective April 11, 2016. The Trustees were provided with and reviewed data with respect to the Adviser, its personnel, and the services provided and to be provided to each Fund by the Adviser under the Trust’s Advisory Agreements, Administrative Services Agreement and Expense Limitation Agreement and the Distribution Agreement with ICON Distributors, Inc. (“IDI”). 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; and comparative data obtained from Strategic Insight (“SI”) related to Fund performance and Fund expenses (the “SI Report”).

The Board convened a meeting with SI on August 10, 2016 to discuss the SI Report and the information contained within the SI Report. Kevin Shine, Senior Managing Director, U.S. Research & Advisory of SI, Alana Burke, Vice President, Corporate Accounts and Joe Frelix, project manager on the15(c) report, discussed the findings of the SI Report with the Independent Trustees. Management personnel participated in the SI meeting convened to discuss the data for and with the Board. At the meeting, SI discussed its methodology, peer selection and the difficulty with some sector funds, expenses and fees, and performance relative to the respective Fund’s peers. SI also discussed the Funds size and how a respective Fund’s size would affect economies of scale, in particular, operating expenses. In addition, the Trustees asked SI for a Mutual Fund Administration Analysis (the “SI Admin Analysis”). Mr. Shine walked the Trustees through the SI Admin Analysis.

Also included in the 15(c) discussion was a briefing on factors affecting the ICON investment model; expenses and expense ratios of each Fund and other ICON managed products; relative performance of each Fund; status of expense reimbursements to the Funds by the Adviser; sales and marketing initiatives; specific business factors affecting IDI; the work load on ICON as adviser and administrator to the Funds; current profitability of ICON; staffing levels and staff morale.

The Independent Trustees were represented by independent legal counsel in this process. In August 2016, after participating in the meeting with SI and management, 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 from SI. The Board received materials from independent legal counsel discussing the legal standards applicable to their consideration of the ICON-Trust agreements.

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 SI Report and the SI Admin Analysis were discussed and management personnel showed performance for each Fund and discussed the factors affecting performance. The Board inquired from SI whether there was any correlation between fund expenses and performance, and SI saw no direct correlation with the ICON Funds other than the obvious observation that higher expenses reduce performance.

During the discussion on performance, management personnel noted that 2015 was very difficult for active managers. Unlike indexes, ICON is an active manager that is willing to look different from an index.

Management elaborated further on performance. For the one year ended May 31, 2014, only three of ICON’s funds beat their respective benchmarks: Consumer Staples, Information Technology, and Long/Short. For the one year ended June 30, 2016, four of the ICON funds beat their respective benchmarks: Emerging Markets, International Equity, Information Technology, and Utilities. However, on a one year basis, eight are in

 

 
Annual Report  |  September 30, 2016    77


Table of Contents
ICON Diversified Funds    Additional Information
   September 30, 2016 (Unaudited)

 

the top third of their peer groups of which six of those eight are in the top quartile. The low point in the S & P 1500 Index was February 11, 2016. Since February 11 until July, 2016, ICON performed better than the indexes, as seven of the 12 domestic equity funds beat their respective indexes. Also during that same time period, the equity portion of the ICON Equity Income Fund beat the S&P 1500 Index. Five of the nine ICON Sector Funds beat their index for that same period.

Management noted that Advisers’ performance relative to other valuation managers as judged by the AthenaInvest system is above the medium. SI also noted that from a performance point of view, the Funds in the SI Report are compared using the Morningstar data, and there is no Morningstar category for “all cap” funds, but all ICON Funds are improving.

The Board addressed style consistency with the Adviser. Management advised that, based on the Adviser’s own analysis, and with the restructuring of the Adviser, the Adviser has continued an additional level of review on the Portfolio Managers (“PMs”) to make sure they are adhering to the ICON System; the Senior Vice President of Fund Management has been systematically tracking the Funds’ performance; he evaluates each of the ICON Funds to help ensure all PMs are investing consistently and in accordance with the ICON System by evaluating the Funds from an attribution perspective in monthly meetings.

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 concluded:

 

  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;

 

  B.

That the breadth and the quality of investment advisory and other services being provided to each Fund are satisfactory, the Adviser’s performance is competitive with other fund managers in the value style group, and the Adviser has applied a disciplined approach in the style specified in the Funds’ offering document;

 

  C.

That ICON has made significant expenditures in the past year and in prior years to ensure that it has reasonably 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 methodology;

 

  D.

That the Board, after considering compliance reports and compliance initiatives undertaken during the year and conducting individual interviews with selected PMs, is satisfied with the research and portfolio management, that research and portfolio management is being constantly evaluated and improved upon; and that the PMs are evaluating trading services systematically, the Board concluded that the Adviser is providing the Funds with professional management of the nature, quality and scope required by the Funds; 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 shareholders may redeem their shares at any time without notice and the Trust’s advisory relationship with ICON may be terminated at any time and must be renewed on an annual basis.

In considering the reasonableness of the fees paid to the Adviser for managing each Fund, the Board reviewed, among other things, data concerning other funds from the SI Report, financial statements of the Adviser and an analysis of the profitability of the Adviser, and its affiliates, and their relationship with each Fund over various time periods, and the SI Admin Analysis. Such 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 and a comparison of similar data from reports filed by publicly traded firms.

The Board assessed actual (net) fees for advisory services and Fund expense ratios under the contractual relationship (the Advisory agreements, the Administration Agreement and the Expense Limitation Agreements) with the Adviser as opposed to the fees specified in the applicable Advisory Agreement and expense ratios without application of the expense limitations and the low cost of the Administration Agreement and concluded that the focus should be on actual expense ratios after application of the Expense Limitation Agreements.

The Board considered the current and anticipated asset levels of each Fund and the contractual commitments of the Adviser to waive fees and pay expenses of the Funds from time to time to limit the total expenses of the Funds. The Board also considered the Adviser’s contractual commitment regarding administration and the fact it would continue to lose money on administration. In this regard the Board discussed asset levels in each Fund covered by the Advisory Agreements. 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 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

 

 
78    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Additional Information
   September 30, 2016 (Unaudited)

 

Adviser and its affiliates from their relationship with the Funds, and services provided to 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 on the fairness of fee arrangements, the Board considered the SI Report and the SI Admin Analysis. It was noted that SI was selected at the May Board meeting to prepare its reports, an extensive analysis of the expense data of other comparable funds; and that Trustee input was solicited and provided in the process. Among other information discussed, it was noted that:

 

  A.

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

 

  B.

ICON has contractually agreed to impose expense limitations on each and every Fund at a cost to ICON;

 

  C.

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;

 

  D.

ICON has contractually committed to providing Administration services to the Funds at a cost below the average to its peer group, and within the mutual fund universe of open-end fund managers with less than $10 billion in assets under management, at less than 50% of the fee of those funds, at a loss to ICON.

The Board also considered the fees charged by the Adviser to other advisory clients as outlined in its Registration Application on Form ADV in connection with assessing data bearing on the fairness of fee arrangements. The Trustees noted that certain ICON institutional/sub-advised type accounts have lower fees than the fees paid by the Funds for a number of reasons, including but not limited to, those clients call for different commitments of time, institutional clients have low and predictable turnover of assets, in competition joint costs are apportioned among paying customers according to elasticity of demand and the Adviser has a limited level of responsibility in sub-managed accounts, or accounts with an investor agent/advisor.

The Board noted that the Funds’ redemptions were similar to industry averages which showed two things: 1) that the Funds’ Performance was not adversely impacting fund redemptions, and 2) that the fees and costs were competitive when compared to size. The Board noted that there are thousands of mutual funds competing; that investors can search and trade funds on the internet or on platforms at very little or no cost; and that if the Adviser were overcharging for its services, the Board would have expected redemptions in excess of industry norms.

The Board concluded that the Adviser is providing the Funds with professional management at a fair, reasonable and competitive price.

In connection with assessing the direct and indirect benefits to ICON from serving as the Funds’ adviser, the Board discussed services provided under the Distribution Agreement and the Administrative Services Agreement which are in addition to services under the Advisory Agreements. It was noted that IDI does not charge a fee to the Funds for its services and that ICON’s fee for administrative services ICON appears from the SI Admin Analysis to be below the average to its peer group, and within the mutual fund universe of open-end fund managers with less than $10 billion in assets under management, at less than 50% of the fee of those funds, at a loss to ICON. The Board noted that 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 the Board concluded that the arrangements are consistent with Fund brokerage practices and benefit the Funds and their shareholders.

Based on these considerations, the Board, including all of the Independent Trustees, concluded that: 1) the continuation of the Advisory Agreements was in the best interests of each Fund and its shareholders, 2) the services to be performed under the Advisory Agreements 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, and its affiliates, were consistent with fees paid by similar funds and other clients of ICON, and were 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.

 

 
Annual Report  |  September 30, 2016    79


Table of Contents
ICON Diversified Funds    Additional Information
   September 30, 2016 (Unaudited)

 

Supplemental Tax Information

Pursuant to Section 852(b)(3) of the Internal Revenue Code the following Fund designates the amount listed below as long-term capital gain dividends:

 

Opportunities Fund

   $ 10,170   

The following Funds designate the percentages listed below of the income dividends distributed in 2015 as qualified dividend income (QDI) as defined in Section 1(h)(11) of the Internal Revenue Code:

 

Bond Fund

     3.03%   

Equity Income Fund

     84.84%   

Risk-Managed Balanced Fund

     90.87%   

The following Funds designate the percentages listed below of the income dividends distributed in 2015 as qualifying for the corporate dividends received deduction (DRD) as defined in Section 854(b)(2) of the Internal Revenue Code:

 

ICON Equity Income Fund

     74.17%   

ICON Risk-Managed Balanced Fund

     81.70%   

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.

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.

 

 
80    www.iconfunds.com


Table of Contents
ICON Diversified Funds    Privacy Policy
   September 30, 2016 (Unaudited)

 

 

  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:
  

•      Social Security number and account balances

 

•      income and transaction history

 

•      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.

 

 
Annual Report  |  September 30, 2016    81


Table of Contents
ICON Diversified Funds    Privacy Policy
   September 30, 2016 (Unaudited)

 

   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

 

•      open an account or enter into an investment advisory contract

 

•      provide account information or give us your contact information

 

•      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

 

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

 

•      affiliates from using your information to market to you

 

•      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.

 

•      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.

 

•      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.

 

•      ICON doesn’t jointly market

 

 
82    www.iconfunds.com


Table of Contents

 

 

 

Page Intentionally Left Blank


Table of Contents

LOGO

For more information about the ICON Funds, contact us:

 

By Telephone

  

1-800-764-0442

By E-Mail

  

info@iconadvisers.com

By Mail

  

ICON Funds | P.O. Box 1920 | Denver, CO 80201

In Person

  

ICON Funds | 5299 DTC Boulevard, 12th Floor

  

Greenwood Village, CO 80111

On the Internet

  

www.iconfunds.com


Table of Contents

LOGO

 

LOGO

ANNUAL REPORT

September 30, 2016

 

LOGO

International Funds

ICON Emerging Markets Fund

ICON International Equity Fund


Table of Contents

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

 


Table of Contents

TABLE OF CONTENTS

 

 

About This Report (Unaudited)

     2   

Management Overview (Unaudited) and Schedules of Investments

  

ICON Emerging Markets Fund

     3   

ICON International Equity Fund

     10   

Financial Statements

     19   

Financial Highlights

     22   

Notes to Financial Statements

     28   

Report of Independent Registered Public Accounting Firm

     36   

Disclosure of Fund Expenses (Unaudited)

     37   

Board of Trustees and Fund Officers (Unaudited)

     39   

Additional Information (Unaudited)

     40   

Privacy Policy

     44   

 


Table of Contents
ICON International Funds    About This Report
   September 30, 2016 (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 portfolio holdings as of September 30, 2016, the end of the reporting period. The information is not a complete analysis of every aspect of any sector, industry, security or the Funds.

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. The ICON system relies on the integrity of the 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.

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.

 

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

 

2    www.iconfunds.com


Table of Contents
ICON Emerging Markets Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

 

Q.

How did the Fund perform relative to its benchmark?

 

A.

The ICON Emerging Markets Fund (the Fund) Class S returned 10.27% for the fiscal year ended September 30, 2016, while its benchmark, the MSCI Emerging Markets Index, returned 17.21%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

After the previous fiscal year’s losses, the emerging markets benchmark experienced a strong reversal and ended the fiscal year 2016 with gains. It appears that investor sentiment on emerging markets improved as perceptions of attractive valuations and stronger earnings and economic growth led investors to this space and away from less enticing countries in the developed world. Despite slower overall global growth, emerging market countries managed to outpace their developed market peers as emerging markets credit spreads underwent a widespread contraction, bolstering equity risk sentiment. Brazil led the way, reversing 3 years of losses as its president was impeached on corruption charges and stocks in the natural resources segment of the market recovered. Brazil was not alone as the boom in natural resources stocks helped many other countries in the Asia-Pacific region as well. Similarly, global strength in the Information Technology sector benefitted the emerging markets given their high exposure to the sector, particularly in countries in the Asia-Pacific. Global concerns, such as worry over the Chinese economy and its currency volatility as well as uncertainty regarding future U.S. interest rate policy, impacted the emerging markets. However, despite these headwinds, interest rates generally remained low and monetary policy continued to be accommodative globally which has ultimately provided a supportive backdrop for emerging markets.

 

    

At the beginning of the fiscal year, our overall average value-to-price (V/P) ratio for emerging markets stood at 0.89, indicating that, on average, emerging markets stocks were overpriced according to our system. Given this relatively low V/P ratio, the Fund took a more defensive stance including an increased allocation to cash given the over-priced conditions. The Fund’s cash holdings helped early in the fiscal year as stocks moved lower. However, as stock prices reversed and climbed higher during the fiscal year, our V/P readings were slower to improve and we continued to hold some cash, which proved to be a drag on performance. From a regional perspective, our valuation model pointed the Fund towards countries in the Asia-Pacific region and away from Latin American and European countries. Throughout the year, many countries, sectors, and individual stocks that looked relatively expensive or over-priced according to our valuation metrics outperformed those that our system indicated were better bargains. Despite the ongoing issues looming over the world economy as well as rotations within the Fund that may have seemed contrarian at times, our discipline and focus on value guided our decisions, which we believe will benefit the Fund going forward.

 

Q.

How did the Fund’s composition affect performance?

 

A.

The Fund’s primary contributors to benchmark relative performance came from the traditional economically defensive sectors of Consumer Staples, Utilities, and Telecommunication Services. Specifically, overweight positions in the Personal Products industry within the Consumer Staples sector and the Wireless Telecommunications industry within the Telecommunication Services sector contributed to positive performance relative to the benchmark. Conversely, the Materials sector was a detractor, as the Fund’s underweight position in the outperforming Steel industry and overweight position in the underperforming Paper Products industry hindered the Fund’s relative returns versus the benchmark. The Fund’s overweight positions in the Health Care and Industrials sectors also detracted from returns as these two sectors lagged the benchmark for the period. Further, as discussed above, with our valuation system showing overvalued conditions for much of the year, the Fund’s defensive cash position was detrimental to returns as the emerging markets benchmark experienced gains over the year. The Fund did not employ currency hedging during the period.

While all geographic regions saw gains over the period, there were areas of clear differentiation among certain countries throughout the year. At the country level, China, Thailand, and India were the biggest contributors to relative performance as strong stock selection within these countries proved beneficial. Despite showing the least value according to our system, Western Hemisphere equities had the highest returns, with Brazil being a notable standout. Unfortunately, our value readings for Brazil showed less upside relative to other countries and the Fund maintained an underweight position there which ultimately detracted from relative performance. While South Korea performed well as a country, the Fund’s stock selection within the country detracted from benchmark relative performance as well.

 

Q.

What is your investment outlook for emerging markets?

 

A.

At the end of fiscal year 2016, our overall average V/P ratio for emerging markets was 1.09, indicating that, on average, there is 9% upside to fair value for emerging markets equities according to our system. Despite the rally the emerging markets have experienced over the past year, we still see opportunities in this space as earnings and economic growth in the emerging market countries remain more robust than the developed world. While worries persist about the pace of global growth and the prospect of the U.S. tightening its monetary policy, global monetary policy remains accommodative and corporate earnings are forecasted to continue to grow.

According to our system, we see the best bargains in the Asia-Pacific regions, specifically in countries like Thailand, Philippines, and South Korea. The Western Hemisphere and Europe regions show the least upside according to our system as countries like Greece, Poland, Peru, and Turkey look relatively less attractive. From a sector perspective, the Financial, Utilities, and Information Technology sectors are showing the most value in our models. Guided by our disciplined, systematic and non-emotional approach to investing, we remain ready to reallocate and adapt as our investment system dictates.

 

 
Annual Report  |  September 30, 2016    3


Table of Contents
ICON Emerging Markets Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

      Inception Date      1 Year     5 Years     10 Years    

Since

Inception

    Gross Expense
Ratio*
    Net Expense
Ratio*
 

ICON Emerging Markets Fund - Class S

     2/25/97         10.27     7.42     2.88     2.96     2.44     1.55

ICON Emerging Markets Fund - Class C

     1/25/08         9.11     6.34     N/A        0.02     5.11     2.55

ICON Emerging Markets Fund - Class A

     5/31/06         9.99     7.19     2.63     2.27     4.75     1.80

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

     5/31/06         3.65     5.92     2.03     1.69     4.75     1.80

MSCI Emerging Markets Index

        17.21     3.39     4.28     5.72     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 May 5, 2014. 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.

 

*

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.

Value of a $10,000 Investment (through September 30, 2016)

 

LOGO

Past performance is not a guarantee of future results. The above graph compares a $10,000 investment made in the Emerging Markets 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 name and investment strategy changed effective May 5, 2014. The Fund’s past performance would have been different if the current strategy had been in effect. Performance for the Emerging Markets Fund’s other share classes will vary due to differences in charges and expenses. The Emerging Markets 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.

 

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

 

4    www.iconfunds.com


Table of Contents
ICON Emerging Markets Fund    Schedule of Investments
   September 30, 2016

 

    

Shares or

Principal
Amount

    Value  

Common Stocks (88.42%)

  

Advertising (0.48%)

  

Nasmedia Co., Ltd.

    6,835        $ 265,898       
   

 

 

 

Aerospace & Defense (2.40%)

  

AviChina Industry & Technology Co., Ltd., Class H

    460,000        312,015       

Korea Aerospace Industries, Ltd.

    14,800        1,031,419       
   

 

 

 
      1,343,434       
   

 

 

 

Apparel, Accessories & Luxury Goods (0.50%)

  

Youngone Corp.

    8,200        276,956       
   

 

 

 

Application Software (1.15%)

  

Com2uSCorp(a)

    2,500        228,087       

Oracle Financial Services Software, Ltd.

    8,500        412,213       
   

 

 

 
      640,300       
   

 

 

 

Auto Parts & Equipment (0.14%)

  

Mahle-Metal Leve S.A.(a)

    11,000        78,505       
   

 

 

 

Automobile Manufacturers (1.19%)

  

Chongqing Changan Automobile Co., Ltd., Class B

    160,000        261,277       

Dongfeng Motor Group Co., Ltd., Class H

    402,000        405,396       
   

 

 

 
      666,673       
   

 

 

 

Automotive Retail (0.55%)

  

Super Group, Ltd.(a)

    100,000        309,492       
   

 

 

 

Building Products (1.83%)

  

China Lesso Group Holdings, Ltd.

    552,000        377,038       

Dynasty Ceramic PCL

    1,000,000        125,812       

LG Hausys, Ltd.

    2,700        258,942       

Sintex Industries, Ltd.

    220,402        259,999       
   

 

 

 
      1,021,791       
   

 

 

 

Cable & Satellite (0.39%)

  

KT Skylife Co., Ltd.(a)

    15,000        218,900       
   

 

 

 

Casinos & Gaming (0.74%)

  

Kangwon Land, Inc.

    11,600        414,504       
   

 

 

 

Commodity Chemicals (4.14%)

  

Formosa Plastics Corp.

    213,000        530,429       

LG Chem, Ltd.

    2,200        486,580       

Lotte Chemical Corp.

    3,190        869,570       

PTT Global Chemical PCL(a)

    250,000        426,134       
   

 

 

 
      2,312,713       
   

 

 

 
   
    

Shares or

Principal
Amount

    Value  

Construction & Engineering (1.10%)

  

China Communications Construction Co., Ltd., Class H

    280,000        $ 297,150       

China State Construction International Holdings, Ltd.

    240,000        317,571       
   

 

 

 
      614,721       
   

 

 

 

Construction Materials (2.37%)

  

Anhui Conch Cement Co., Ltd., Class H

    302,000        834,689       

PPC, Ltd.

    1,240,000        486,930       
   

 

 

 
      1,321,619       
   

 

 

 

Consumer Electronics (0.57%)

  

Skyworth Digital Holdings, Ltd.

    440,000        319,451       
   

 

 

 

Consumer Finance (0.18%)

   

Credito Real SAB de CV SOFOM ER

    60,000        103,044       
   

 

 

 

Data Processing & Outsourced Services (1.61%)

  

Cielo S.A.

    89,300        897,352       
   

 

 

 

Department Stores (1.20%)

  

El Puerto de Liverpool SAB de CV, Class 1(a)

    48,000        502,533       

Grupo Sanborns SAB de CV(a)

    150,000        169,729       
   

 

 

 
      672,262       
   

 

 

 

Diversified Banks (4.95%)

  

Akbank T.A.S.

    160,000        428,629       

Bank Negara Indonesia Persero Tbk PT

    660,000        281,552       

Bank of China, Ltd., Class H

    610,000        281,701       

Bank Pan Indonesia Tbk PT(a)

    2,000,000        126,683       

China Construction Bank Corp., Class H

    720,000        540,748       

Industrial & Commercial Bank of China, Ltd., Class H

    980,000        621,977       

Shinhan Financial Group Co., Ltd.

    13,300        487,108       
   

 

 

 
      2,768,398       
   

 

 

 

Diversified Capital Markets (0.89%)

  

China Everbright, Ltd.

    240,000        494,968       
   

 

 

 

Diversified Real Estate Activities (0.61%)

  

Robinsons Land Corp.

    530,000        339,183       
   

 

 

 

Diversified Support Services (1.03%)

  

KEPCO Plant Service & Engineering Co., Ltd.

    10,900        574,035       
   

 

 

 
 

 

 
Annual Report  |  September 30, 2016    5


Table of Contents
ICON Emerging Markets Fund    Schedule of Investments
   September 30, 2016

 

     

Shares or

Principal
Amount

     Value  

Electric Utilities (0.91%)

  

Korea Electric Power Corp.

     10,400         $ 509,457       
     

 

 

 

Electronic Components (1.65%)

  

Tongda Group Holdings, Ltd.

     3,750,000         919,786       
     

 

 

 

Electronic Equipment & Instruments (3.38%)

  

Coretronic Corp.

     316,000         345,050       

Flytech Technology Co., Ltd.

     114,000         395,373       

SFA Engineering Corp.

     23,400         1,149,432       
     

 

 

 
        1,889,855       
     

 

 

 

Electronic Manufacturing Services (0.26%)

  

Inari Amertron Bhd

     180,000         144,505       
     

 

 

 

Environmental & Facilities Services (0.71%)

  

China Everbright International, Ltd.

     330,000         395,638       
     

 

 

 

Food Distributors (0.60%)

  

Hyundai Greenfood Co., Ltd.

     23,000         337,280       
     

 

 

 

Gas Utilities (1.35%)

  

GAIL India, Ltd.

     67,000         377,916       

Infraestructura Energetica Nova SAB de CV

     96,000         373,954       
     

 

 

 
        751,870       
     

 

 

 

Gold (3.91%)

  

AngloGold Ashanti, Ltd.(a)

     34,600         552,989       

Gold Fields, Ltd.

     111,000         538,066       

Sibanye Gold, Ltd.

     156,000         554,642       

Zijin Mining Group Co., Ltd., Class H

     1,680,000         538,339       
     

 

 

 
        2,184,036       
     

 

 

 

Health Care Equipment (2.62%)

  

i-SENS, Inc.(a)

     23,100         667,948       

Value Added Technologies Co., Ltd.

     23,100         793,237       
     

 

 

 
        1,461,185       
     

 

 

 

Health Care Facilities (0.93%)

  

Netcare, Ltd.

     212,000         520,391       
     

 

 

 

Health Care Supplies (0.48%)

  

Kossan Rubber Industries

     160,000         266,183       
     

 

 

 

Home Entertainment Software (1.56%)

  

NCSoft Corp.

     2,500         674,377       

Neowiz Games Corp.(a)

     18,000         197,122       
     

 

 

 
        871,499       
     

 

 

 

Home Furnishings (0.86%)

  

Hanssem Co., Ltd.

     3,000         481,538       
     

 

 

 

 

     

Shares or

Principal
Amount

     Value  

Independent Power Producers & Energy Traders (0.36%)

  

China Power International Development, Ltd.

     520,000         $ 201,474       
     

 

 

 

Industrial Conglomerates (1.80%)

  

Beijing Enterprises Holdings, Ltd.

     92,000         469,500       

LG Corp.

     9,100         537,770       
     

 

 

 
        1,007,270       
     

 

 

 

Integrated Telecommunication Services (1.51%)

  

  

Magyar Telekom Telecommunications PLC(a)

     514,000         844,175       
     

 

 

 

Internet & Direct Marketing Retail (0.72%)

  

  

GS Home Shopping, Inc.

     2,700         404,043       
     

 

 

 

Internet Software & Services (1.05%)

  

  

Tencent Holdings, Ltd.

     21,045         585,094       
     

 

 

 

IT Consulting & Other Services (1.00%)

  

  

Infosys, Ltd.

     36,000         559,881       
     

 

 

 

Life & Health Insurance (0.78%)

  

Hanwha Life Insurance Co., Ltd.(a)

     42,500         222,863       

Samsung Life Insurance Co., Ltd.

     2,200         211,278       
     

 

 

 
        434,141       
     

 

 

 

Movies & Entertainment (0.85%)

  

Loen Entertainment, Inc.(a)

     6,700         475,845       
     

 

 

 

Oil & Gas Exploration & Production (1.93%)

  

  

CNOOC, Ltd.

     740,000         933,520       

QGEP Participacoes S.A.(a)

     101,900         145,699       
     

 

 

 
        1,079,219       
     

 

 

 

Oil & Gas Refining & Marketing (1.79%)

  

  

SK Innovation Co., Ltd.(a)

     2,000         296,334       

S-Oil Corp.(a)

     9,500         705,903       
     

 

 

 
        1,002,237       
     

 

 

 

Oil & Gas Storage & Transportation (0.42%)

  

  

Kunlun Energy Co., Ltd.

     300,000         231,907       
     

 

 

 

Other Diversified Financial Services (1.30%)

  

  

Fubon Financial Holding Co., Ltd.

     490,000         728,094       
     

 

 

 

Packaged Foods & Meats (1.77%)

  

Grupo Lala SAB de CV

     95,000         181,281       

Maeil Dairy Industry Co., Ltd.

     12,600         395,167       

Orion Corp.

     550         414,504       
     

 

 

 
        990,952       
     

 

 

 

Personal Products (2.22%)

  

Cosmax, Inc.

     1,400         193,580       
 

 

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

 

6    www.iconfunds.com


Table of Contents
ICON Emerging Markets Fund    Schedule of Investments
   September 30, 2016

 

 

     

Shares or

Principal
Amount

     Value  

Personal Products (continued)

  

LG Household & Health Care, Ltd.

     1,200         $ 1,044,297       
     

 

 

 
        1,237,877       
     

 

 

 

Pharmaceuticals (3.08%)

  

Caregen Co., Ltd.

     4,600         429,473       

CSPC Pharmaceutical Group, Ltd.

     560,000         562,233       

Granules India, Ltd.

     100,000         175,211       

Sihuan Pharmaceutical Holdings Group, Ltd.

     1,193,000         262,985       

Sino Biopharmaceutical, Ltd.

     225,000         152,197       

Teva Pharmaceutical Industries, Ltd., Sponsored ADR

     3,000         138,030       
     

 

 

 
        1,720,129       
     

 

 

 

Property & Casualty Insurance (1.69%)

  

Hyundai Marine & Fire Insurance Co., Ltd.

     8,000         264,115       

KB Insurance Co., Ltd.

     14,000         347,252       

Samsung Fire & Marine Insurance Co., Ltd.

     1,300         331,112       
     

 

 

 
        942,479       
     

 

 

 

Real Estate Development (3.71%)

  

AP Thailand PCL

     3,150,000         660,999       

China Overseas Land & Investment, Ltd.

     68,000         233,783       

China Resources Land, Ltd.

     106,000         298,857       

Filinvest Land, Inc.

     7,607,000         288,303       

Sino-Ocean Group Holding, Ltd.

     700,000         324,969       

Yanlord Land Group, Ltd.

     260,000         267,433       
     

 

 

 
        2,074,344       
     

 

 

 

Real Estate Operating Companies (0.85%)

  

Central Pattana PCL

     280,000         472,741       
     

 

 

 

Regional Banks (1.66%)

  

BNK Financial Group, Inc.

     51,000         399,242       

DGB Financial Group, Inc.

     38,000         312,892       

Huishang Bank Corp., Ltd., Class H

     415,000         213,769       
     

 

 

 
        925,903       
     

 

 

 

Reinsurance (0.39%)

  

Korean Reinsurance Co.

     20,784         220,004       
     

 

 

 

Renewable Electricity (1.49%)

  

Huaneng Renewables Corp., Ltd., Class H

     2,370,000         833,248       
     

 

 

 

Security & Alarm Services (0.61%)

  

S-1 Corp.(a)

     3,700         341,832       
     

 

 

 
     

Shares or

Principal
Amount

     Value  

Semiconductor Equipment (2.26%)

  

  

Advanced Process Systems Corp.(a)

     16,827         $ 377,236       

Jusung Engineering Co., Ltd.(a)

     50,362         485,728       

Wonik Holdings Co., Ltd.(a)

     60,000         402,037       
     

 

 

 
        1,265,001       
     

 

 

 

Semiconductors (1.65%)

  

Malaysian Pacific Industries Bhd

     139,000         262,169       

Phison Electronics Corp.

     50,000         381,857       

Taiwan Semiconductor Manufacturing Co., Ltd.

     47,000         276,273       
     

 

 

 
        920,299       
     

 

 

 

Soft Drinks (0.55%)

  

Arca Continental SAB de CV

     52,000         309,483       
     

 

 

 

Steel (0.26%)

  

Feng Hsin Steel Co., Ltd.

     112,000         146,169       
     

 

 

 

Systems Software (1.09%)

  

Asseco Poland S.A.

     41,900         610,841       
     

 

 

 

Technology Hardware, Storage & Peripherals (1.74%)

  

Samsung Electronics Co., Ltd.

     666         970,204       
     

 

 

 

Thrifts & Mortgage Finance (0.70%)

  

LIC Housing Finance, Ltd.

     44,800         390,476       
     

 

 

 

Water Utilities (0.43%)

  

Beijing Enterprises Water Group, Ltd.

     352,000         239,967       
     

 

 

 

Wireless Telecommunication Services (1.52%)

  

China Mobile, Ltd.

     21,000         257,972       

Intouch Holdings PCL, Class F

     50,000         78,094       

SK Telecom Co., Ltd.

     2,500         512,602       
     

 

 

 
        848,668       
     

 

 

 
Total Common Stocks
(Cost $48,384,789)
         49,401,419       
     

 

 

 

Short-Term Investments (17.09%)

  

Money Market Funds (5.37%)

     

State Street Global Advisors Treasury Fund (0.11% 7 Day Yield)

     3,000,000         3,000,000       
     

 

 

 
 

 

 
Annual Report  |  September 30, 2016    7


Table of Contents
ICON Emerging Markets Fund    Schedule of Investments
   September 30, 2016

 

 

     

Shares or

Principal
Amount

     Value  

Time Deposits (11.72%)

     

State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/16

     6,548,311       $ 6,548,311       
     

 

 

 
Total Short-Term Investments
(Cost $ 9,548,311)
         9,548,311       
     

 

 

 
Total Investments (105.51%)
(Cost $ 57,933,100)
       $ 58,949,730       

Liabilities Less Other Assets (-5.51%)

        (3,079,373)       
     

 

 

 

Net Assets (100.00%)

        $ 55,870,357       
     

 

 

 

 

(a) 

Non-income producing security.

ADR - American Depositary Receipt

Country Composition (September 30, 2016)  

South Korea

     36.18%   

China

     13.59%   

Hong Kong

     8.61%   

South Africa

     5.29%   

Taiwan

     5.02%   

India

     3.90%   

Thailand

     3.16%   

Mexico

     2.92%   

Brazil

     2.01%   

Hungary

     1.51%   

Philippines

     1.13%   

Poland

     1.09%   

Turkey

     0.77%   

Myanmar

     0.73%   

Indonesia

     0.73%   

Bermuda

     0.57%   

Singapore

     0.48%   

Malaysia

     0.48%   

Israel

     0.25%   
  

 

 

 
     88.42%   
  

 

 

 

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

 

 

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

 

8    www.iconfunds.com


Table of Contents
ICON Emerging Markets Fund    Schedule of Investments
   September 30, 2016

 

 

Sector Composition (September 30, 2016)

 

Information Technology

     18.40%   

Financial

     13.15%   

Materials

     10.68%   

Industrials

     9.48%   

Consumer Discretionary

     8.19%   

Health Care

     7.11%   

Consumer Staples

     5.14%   

Real Estate

     4.56%   

Utilities

     4.54%   

Energy

     4.14%   

Telecommunication Services

     3.03%   
  

 

 

 
     88.42%   
  

 

 

 

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

Industry Composition (September 30, 2016)

 

Diversified Banks

     4.95%   

Commodity Chemicals

     4.14%   

Gold

     3.91%   

Real Estate Development

     3.71%   

Electronic Equipment & Instruments

     3.38%   

Pharmaceuticals

     3.08%   

Health Care Equipment

     2.62%   

Aerospace & Defense

     2.40%   

Construction Materials

     2.37%   

Semiconductor Equipment

     2.26%   

Personal Products

     2.22%   

Oil & Gas Exploration & Production

     1.93%   

Building Products

     1.83%   

Industrial Conglomerates

Oil & Gas Refining & Marketing

    
 
1.80%
1.79%
  
  

Packaged Foods & Meats

     1.77%   

Technology Hardware, Storage & Peripherals

     1.74%   

Property & Casualty Insurance

     1.69%   

Regional Banks

     1.66%   

Semiconductors

     1.65%   

Electronic Components

     1.65%   

Data Processing & Outsourced Services

     1.61%   

Home Entertainment Software

     1.56%   

Wireless Telecommunication Services

     1.52%   

Integrated Telecommunication Services

     1.51%   

Renewable Electricity

     1.49%   

Gas Utilities

     1.35%   

Other Diversified Financial Services

     1.30%   

Department Stores

     1.20%   

Automobile Manufacturers

     1.19%   

Application Software

     1.15%   

Construction & Engineering

     1.10%   

Systems Software

     1.09%   

Internet Software & Services

     1.05%   

Diversified Support Services

     1.03%   

IT Consulting & Other Services

     1.00%   

Other Industries (each less than 1%)

     16.72%   
  

 

 

 
     88.42%   
  

 

 

 

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

 

 

 
Annual Report  |  September 30, 2016    9


Table of Contents
ICON International Equity Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

  Q.

How did the Fund perform relative to its benchmark?

 

  A.

The ICON International Equity Fund (the Fund) Class S returned 5.01% for the fiscal year ended September 30, 2016, while the MSCI All Country World Index ex-United States (ACWI ex-U.S.) returned 9.80%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

  Q.

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

 

  A.

We finished fiscal year 2016 with global stock market gains as investors shrugged off worries associated with economic uncertainty and financial volatility and once again returned to buying equities after the prior year’s losses. In Asia, China’s economic growth continued to slow and the Yuan’s devaluation versus the U.S. Dollar persisted throughout the year. Japan remained in a deflationary environment with declining economic growth, causing the Bank of Japan to take further accommodative monetary policy steps to stimulate its ailing economy. Europe generally experienced continued growth, although the year was most notably highlighted by Britain’s vote to leave the European Union, commonly referred to as “Brexit.” While Brexit brought volatility in European markets, it quickly subsided as markets absorbed the worries and continued their march higher. In Latin America, Brazil stood out as a leader despite its President’s impeachment amidst a corruption scandal. While the country still remains in a deep recession, investors turned positive on the country in hopes of a future turnaround. As the period closes, we still see upside in the global markets overall with some regions showing great bargains and others appearing slightly overpriced according to our system.

At the beginning of the fiscal year, our valuation model signaled a modest 9% upside to fair value for global markets and pointed the Fund towards an overweight position in the cyclical sectors of the market such as the Information Technology and Industrials sectors. From a regional perspective, the Fund began the fiscal year with an overweight position in Europe, but pared that back throughout the year, increasing its allocation to countries in the Asia-Pacific region as their valuations improved. Emerging market equities began as an underweight, yet their exposure was increased throughout the year to an overweight position in the Fund relative to the benchmark as bargains began to emerge after prior periods of overvalued conditions. Despite the ongoing issues looming over the world economy as well as rotations within the Fund that may have seemed contrarian at times, our discipline and focus on value guided our decisions, which we believe will benefit the Fund going forward.

As a multi-cap manager, we are not restricted by market capitalization. However, following our valuation readings led to a concentration in small and mid-cap companies during the period and an underweight position in large-cap stocks relative to the benchmark. Overall, large-cap stocks outperformed their small and mid-cap peers, which detracted from the Fund’s performance relative to the benchmark.

Currency movements worldwide throughout the fiscal year also had a positive impact on the Fund’s returns. The U.S. dollar slightly weakened throughout the year versus most of the underlying currencies of the Fund’s holdings. Currency hedging was utilized for a small part of the fiscal year on the Japanese Yen which proved to be beneficial to the Fund.

 

  Q.

How did the Fund’s composition affect performance?

 

  A.

The Fund’s primary contributors to benchmark relative performance came from the Consumer Discretionary and Consumer Staples sectors. Specifically, overweight positions in the Cable & Satellite industry and underweight positions in the Automobile Manufacturers industry within the Consumer Discretionary sector and stock selection in the Personal Products and Packaged Foods & Meats industries within the Consumer Staples Sector contributed to performance relative to the benchmark. Further, an overweight in the Data Processing & Outsourced Services industry within the Information Technology sector proved beneficial.

Conversely, the Fund’s holdings in the Materials sector detracted from relative performance, as the Gold and Diversified Metals & Mining industries hindered the Fund’s relative returns versus the benchmark. The Industrials sector was another notable source of relative underperformance as the Trading Companies & Distributors and Industrial Machinery industries detracted from the Fund’s returns. Health Care stood out as the worst performing sector over the period as the Pharmaceuticals industry suffered losses and the Fund’s overweight position within this sector ultimately detracted from returns relative to the benchmark. With continued lower, and more recently negative, interest rates globally as well as tighter credit spreads, our valuation methodology is showing us better bargains than we saw at the beginning of the fiscal year.

While all geographic regions saw gains over the period, there were areas of clear differentiation among certain countries throughout the year. Despite showing the most value according to our system, European equities had the lowest returns while regions with lower valuations for much of the year, notably the Western Hemisphere and Asia-Pacific regions, outperformed. Those countries with larger concentrations to natural resources related stocks were standouts, including Brazil, Canada, Australia and Russia. The leadership in the natural resources related sectors resulted in emerging market countries outperforming their developed peers for the period. The Fund’s allocations to developed markets, most notably United Kingdom exposure amidst the Brexit volatility, contributed to underperformance relative to the benchmark for the fiscal year. As the period ended, the emerging markets still showed value across our system, although Europe and other developed markets in general showed more upside globally.

 

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

 

10    www.iconfunds.com


Table of Contents
ICON International Equity Fund    Management Overview
  

September 30, 2016 (Unaudited)

 

 

  Q.

What is your investment outlook for the international equity market?

 

  A.

Our system estimates that international equities, on average, still remain below our estimate of their intrinsic value. At the end of the period, international markets as a whole had an overall average value-to-price (V/P) ratio of 1.23, implying that, on average, our estimate of fair value for stocks is about 23% higher than where they are currently trading. Risk aversion amongst investors remains and corporate earnings have generally grown, albeit at a slowing pace, despite ongoing economic struggles and geopolitical concerns. While global economic growth has languished outside of the United States, interest rates remain low, thanks in large part to accommodative monetary policy and extraordinary central bank intervention.

According to our valuation system, Europe represents the best opportunity from a regional perspective, with Western Hemisphere showing the least upside. Dramatic improvements in sentiment and increased valuations according to our system in the emerging market countries led us to an overweight position to select areas. Based on our methodology, developed markets in Europe show attractive upside in countries such as Belgium, Italy, United Kingdom, France, and Germany. As of the end of the fiscal year 2016 we estimate that, on average, fair value for European equities is 22% higher than where prices are currently trading. Within the Western Hemisphere, Canada looks attractive to our system with Thailand, the Philippines, and South Korea currently showing the most value in the Asia- Pacific region.

From a sector perspective, we are still tilted towards the Information Technology and Health Care sectors. Within our system, Energy is the most over-valued sector, and represents an underweight position relative to the benchmark as we see little upside within this sector.

At ICON we continue to seek out industries that our system identifies as trading at a discount to fair value. 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.

 

 
Annual Report  |  September 30, 2016    11


Table of Contents
ICON International Equity Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Average Annual Total Return (as of September 30, 2016)

  

         
     Inception Date    1 Year     5 Years     10 Years     Since
Inception
   

Gross

Expense
Ratio*

   

Net

Expense
Ratio*

 

ICON International Equity Fund — Class S

   2/18/97      5.01     5.65     -0.03     4.78     1.41     1.41

ICON International Equity Fund — Class C

   2/19/04      3.80     4.49     -1.19     2.05     2.96     2.55

ICON International Equity Fund — Class A

   5/31/06      4.63     5.26     -0.43     -0.49     2.25     1.80

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

   5/31/06      -1.42     4.01     -1.02     -1.06     2.25     1.80

MSCI ACWI ex-U.S.

        9.80     6.52     2.63     5.15     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.

 

*

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.

Value of a $10,000 Investment (through September 30, 2016)

 

LOGO

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

 

 
12    www.iconfunds.com


Table of Contents
ICON International Equity Fund    Schedule of Investments
   September 30, 2016

 

 

     

Shares or

Principal
Amount

     Value  

Common Stocks (89.44%)

     

Advertising (0.78%)

     

Nasmedia Co., Ltd.

     2,960         $ 115,151       

Stroeer SE & Co. KGaA (a)

     7,400         322,144       
     

 

 

 
        437,295       
     

 

 

 

Aerospace & Defense (1.28%)

  

Korea Aerospace Industries, Ltd.

     8,600         599,338       

Ultra Electronics Holdings PLC

     4,900         112,564       
     

 

 

 
        711,902       
     

 

 

 

Airlines (0.68%)

  

Japan Airlines Co., Ltd.

     12,800         376,262       
     

 

 

 
     

Apparel, Accessories & Luxury Goods (0.30%)

  

Luxottica Group S.p.A.

     3,500         167,171       
     

 

 

 
     

Application Software (0.73%)

  

Com2uSCorp(b)

     1,600         145,976       

Oracle Financial Services Software, Ltd.

     5,400         261,876       
     

 

 

 
        407,852       
     

 

 

 

Auto Parts & Equipment (0.44%)

  

Mahle-Metal Leve S.A.(b)

     5,800         41,394       

Martinrea International, Inc.(a)

     33,000         205,000       
     

 

 

 
        246,394       
     

 

 

 

Automotive Retail (0.56%)

  

Super Group, Ltd.(b)

     100,000         309,492       
     

 

 

 

Biotechnology (3.40%)

  

Alexion Pharmaceuticals, Inc.(b)

     2,300         281,842       

Amgen, Inc.

     1,700         283,577       

Bavarian Nordic A/S(a)(b)

     7,062         267,325       

Celgene Corp.(b)

     3,500         365,855       

Shire PLC

     5,500         355,648       

Sirtex Medical, Ltd.(a)

     14,000         340,323       
     

 

 

 
        1,894,570       
     

 

 

 

Brewers (1.55%)

  

Asahi Group Holdings, Ltd.(a)

     23,700         863,326       
     

 

 

 
     

Building Products (0.78%)

  

China Lesso Group Holdings, Ltd.

     300,000         204,912       

Sintex Industries, Ltd.

     194,851         229,857       
     

 

 

 
        434,769       
     

 

 

 

Cable & Satellite (0.84%)

  

Sky PLC

     40,600         470,559       
     

 

 

 
     

Commodity Chemicals (2.62%)

  

Formosa Plastics Corp.

     113,000         281,401       

LG Chem, Ltd.

     1,200         265,407       

Lotte Chemical Corp.

     1,600         436,148       
     

Shares or

Principal
Amount

     Value  

Commodity Chemicals (continued)

  

  

PTT Global Chemical PCL(b)

     150,000         $ 255,681       

Toray Industries, Inc.(a)

     23,000         224,008       
     

 

 

 
        1,462,645       
     

 

 

 

Communications Equipment (2.15%)

  

ADVA Optical Networking SE(b)

     64,200         647,514       

Telefonaktiebolaget LM Ericsson, Class B

     76,000         548,741       
     

 

 

 
        1,196,255       
     

 

 

 

Construction & Engineering (0.91%)

  

China Communications Construction Co., Ltd., Class H

     190,000         201,637       

China State Construction International Holdings, Ltd.

     230,000         304,339       
     

 

 

 
        505,976       
     

 

 

 

Construction Materials (1.20%)

  

Anhui Conch Cement Co., Ltd., Class H

     152,000         420,108       

PPC, Ltd.

     630,000         247,392       
     

 

 

 
        667,500       
     

 

 

 

Consumer Electronics (0.31%)

  

Skyworth Digital Holdings, Ltd.

     240,000         174,246       
     

 

 

 
     

Consumer Finance (0.36%)

  

Credit Saison Co., Ltd.

     12,000         199,227       
     

 

 

 

Data Processing & Outsourced Services (2.14%)

  

Cielo S.A.

     41,600         418,027       

Paysafe Group PLC(a)(b)

     134,000         774,107       
     

 

 

 
        1,192,134       
     

 

 

 

Department Stores (0.15%)

  

Grupo Sanborns SAB de CV(b)

     75,000         84,864       
     

 

 

 

Diversified Banks (1.43%)

  

Akbank T.A.S.

     60,000         160,736       

Bank Negara Indonesia Persero Tbk PT

     400,000         170,638       

Industrial & Commercial Bank of China, Ltd., Class H

     300,000         190,401       

Shinhan Financial Group Co., Ltd.

     7,500         274,685       
     

 

 

 
        796,460       
     

 

 

 

Diversified Real Estate Activities (1.74%)

  

Mitsui Fudosan Co., Ltd.

     9,000         191,470       

Nomura Real Estate Holdings, Inc.

     24,600         415,823       

Patrizia Immobilien AG(b)

     8,800         192,753       

Robinsons Land Corp.

     270,000         172,791       
     

 

 

 
        972,837       
     

 

 

 
 

 

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

 

Annual Report  |  September 30, 2016    13


Table of Contents
ICON International Equity Fund    Schedule of Investments
   September 30, 2016

 

 

    

Shares or

Principal
Amount

    Value  

Diversified Support Services (0.80%)

  

 

KEPCO Plant Service & Engineering Co., Ltd.

    8,500        $ 447,642       
   

 

 

 

Drug Retail (0.97%)

  

Ain Holdings, Inc.

    4,000        272,329       

Sundrug Co., Ltd.

    3,200        268,606       
   

 

 

 
      540,935       
   

 

 

 

Electric Utilities (1.43%)

  

Enel S.p.A.

    120,000        534,807       

Korea Electric Power Corp.

    5,400        264,526       
   

 

 

 
      799,333       
   

 

 

 

Electronic Components (0.98%)

  

Laird PLC(b)

    25,486        104,862       

Tongda Group Holdings, Ltd.

    1,800,000        441,497       
   

 

 

 
      546,359       
   

 

 

 

Electronic Equipment & Instruments (2.93%)

  

Hitachi, Ltd.

    48,000        224,956       

Ingenico Group S.A.

    8,557        748,173       

SFA Engineering Corp.

    13,500        663,134       
   

 

 

 
      1,636,263       
   

 

 

 

Electronic Manufacturing Services (0.22%)

  

Inari Amertron Bhd

    150,000        120,421       
   

 

 

 

Environmental & Facilities Services (0.56%)

  

China Everbright

   

International, Ltd.

    260,000        311,715       
   

 

 

 

Food Distributors (0.76%)

  

Hyundai Greenfood Co., Ltd.

    29,000        425,266       
   

 

 

 

Food Retail (0.90%)

  

Alimentation Couche-Tard, Inc., Class B

    10,400        504,007       
   

 

 

 

Gas Utilities (0.78%)

  

GAIL India, Ltd.

    36,000        203,059       

Infraestructura Energetica Nova SAB de CV

    60,000        233,722       
   

 

 

 
      436,781       
   

 

 

 

Gold (5.45%)

   

AngloGold Ashanti, Ltd.(b)

    21,000        335,629       

Barrick Gold Corp.

    32,600        577,231       

Gold Fields, Ltd.

    67,500        327,202       

Randgold Resources, Ltd.

    5,900        591,323       

SEMAFO, Inc.(b)

    131,000        545,188       

Sibanye Gold, Ltd.

    95,000        337,763       

Zijin Mining Group Co., Ltd., Class H

    1,020,000        326,849       
   

 

 

 
      3,041,185       
   

 

 

 

Health Care Equipment (1.05%)

  

Getinge AB, Class B(a)

    13,000        252,018       

i-SENS, Inc.(b)

    5,300        153,252       
    

Shares or

Principal
Amount

    Value  

Health Care Equipment (continued)

  

 

Value Added Technologies Co., Ltd.

    5,300        $ 181,998       
   

 

 

 
      587,268       
   

 

 

 

Health Care Facilities (0.84%)

  

Netcare, Ltd.

    190,000        466,388       
   

 

 

 

Home Entertainment Software (2.26%)

  

Capcom Co., Ltd.

    12,900        317,378       

GungHo Online Entertainment, Inc.(a)

    93,000        228,520       

NCSoft Corp.

    1,500        404,626       

Square Enix Holdings Co., Ltd.

    9,000        310,348       
   

 

 

 
      1,260,872       
   

 

 

 

Home Furnishings (0.60%)

  

Hanssem Co., Ltd.

    2,100        337,077       
   

 

 

 

Home Improvement Retail (0.34%)

  

Hornbach Holding AG & Co. KGaA

    2,740        188,365       
   

 

 

 

Homefurnishing Retail (0.41%)

  

Nitori Holdings Co., Ltd.

    1,900        227,758       
   

 

 

 

Hotels, Resorts & Cruise Lines (0.65%)

  

TUI AG

    25,500        363,823       
   

 

 

 

Independent Power Producers & Energy Traders (0.67%)

  

Electric Power Development Co., Ltd.(a)

    15,500        372,532       
   

 

 

 

Industrial Conglomerates (1.02%)

  

Beijing Enterprises Holdings, Ltd.

    38,000        193,924       

LG Corp.

    6,300        372,302       
   

 

 

 
      566,226       
   

 

 

 

Integrated Telecommunication Services (2.30%)

  

BT Group PLC

    53,000        266,660       

Deutsche Telekom AG

    20,300        341,051       

Magyar Telekom Telecommunications
PLC(b)

    234,000        384,313       

Telenor ASA

    17,000        292,330       
   

 

 

 
      1,284,354       
   

 

 

 

Internet & Direct Marketing Retail (0.48%)

  

GS Home Shopping, Inc.

    1,800        269,362       
   

 

 

 

Internet Software & Services (0.67%)

  

COOKPAD, Inc.(a)

    39,000        374,539       
   

 

 

 

IT Consulting & Other Services (2.25%)

  

CANCOM SE

    5,000        261,238       

Fujitsu, Ltd.

    72,000        387,477       

GFT Technologies SE

    15,200        313,256       
 

 

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

 

14    www.iconfunds.com


Table of Contents
ICON International Equity Fund    Schedule of Investments
   September 30, 2016

 

 

     

Shares or

Principal
Amount

     Value  

IT Consulting & Other Services (continued)

     

Infosys, Ltd.

     19,000         $ 295,493       
     

 

 

 
        1,257,464       
     

 

 

 

Life & Health Insurance (0.55%)

  

Hanwha Life Insurance Co., Ltd.(b)

     29,000         152,072       

NN Group N.V.

     5,000         153,502       
     

 

 

 
        305,574       
     

 

 

 

Movies & Entertainment (0.45%)

  

Loen Entertainment, Inc.(b)

     3,500         248,576       
     

 

 

 

Multi-line Insurance (0.96%)

  

Allianz SE

     1,200         178,332       

AXA S.A.

     8,400         178,603       

Talanx AG

     5,900         180,039       
     

 

 

 
        536,974       
     

 

 

 

Multi-Utilities (3.72%)

  

ACEA S.p.A

     22,600         284,089       

Canadian Utilities, Ltd., Class A

     19,800         558,707       

Engie S.A.

     34,900         541,115       

Veolia Environnement S.A.

     30,000         691,248       
     

 

 

 
        2,075,159       
     

 

 

 

Oil & Gas Exploration & Production (0.42%)

  

CNOOC, Ltd.

     187,000         235,903       
     

 

 

 

Oil & Gas Refining & Marketing (0.97%)

  

SK Innovation Co., Ltd.(b)

     1,100         162,984       

S-Oil Corp.(b)

     5,100         378,958       
     

 

 

 
        541,942       
     

 

 

 

Other Diversified Financial Services (0.90%)

  

Fubon Financial Holding Co., Ltd.

     187,000         277,864       

ORIX Corp.

     15,000         221,290       
     

 

 

 
        499,154       
     

 

 

 

Packaged Foods & Meats (0.77%)

  

Maeil Dairy Industry Co., Ltd.

     7,600         238,355       

Orion Corp.

     250         188,410       
     

 

 

 
        426,765       
     

 

 

 

Paper Products (0.57%)

  

Oji Holdings Corp.

     80,000         317,083       
     

 

 

 

Personal Products (1.70%)

  

LG Household & Health Care, Ltd.

     535         465,583       

Pola Orbis Holdings, Inc.

     5,400         483,391       
     

 

 

 
        948,974       
     

 

 

 

Pharmaceuticals (8.70%)

  

Bayer AG

     4,700         472,023       

Caregen Co., Ltd.

     3,300         308,100       

Cipla, Ltd.

     33,000         287,962       

CSPC Pharmaceutical Group, Ltd.

     310,000         311,236       

Granules India, Ltd.

     60,000         105,126       
     

Shares or

Principal
Amount

     Value  

Pharmaceuticals (continued)

  

Nichi-iko Pharmaceutical Co., Ltd.(a)

     14,000         $ 268,376       

Novartis AG

     5,600         441,954       

Novo Nordisk A/S, Class B

     7,300         304,255       

Roche Holding AG

     4,000         993,994       

Sanofi

     4,300         327,449       

Sihuan Pharmaceutical Holdings Group, Ltd.

     800,000         176,352       

Teva Pharmaceutical Industries, Ltd., Sponsored ADR

     10,400         478,504       

Valeant Pharmaceuticals International, Inc.(b)

     6,500         159,484       

Vectura Group PLC(b)

     120,000         215,420       
     

 

 

 
        4,850,235       
     

 

 

 

Property & Casualty Insurance (0.32%)

  

KB Insurance Co., Ltd.

     7,200         178,587       
     

 

 

 

Railroads (0.43%)

  

VTG AG

     8,419         239,053       
     

 

 

 

Real Estate Development (1.84%)

  

AP Thailand PCL

     1,300,000         272,793       

China Overseas Land & Investment, Ltd.

     90,000         309,420       

Filinvest Land, Inc.

     3,803,000         144,133       

Sino-Ocean Group Holding, Ltd.

     350,000         162,484       

Yanlord Land Group, Ltd.

     134,000         137,831       
     

 

 

 
        1,026,661       
     

 

 

 

Real Estate Operating Companies (1.24%)

  

Aeon Mall Co., Ltd.

     27,800         439,098       

Central Pattana PCL

     150,000         253,254       
     

 

 

 
        692,352       
     

 

 

 

Regional Banks (0.45%)

  

BNK Financial Group, Inc.

     32,000         250,505       
     

 

 

 

Renewable Electricity (1.07%)

  

Huaneng Renewables Corp., Ltd., Class H

     1,700,000         597,688       
     

 

 

 

Retail REIT’s (2.11%)

  

Klepierre, REIT

     14,300         656,413       

Wereldhave N.V., REIT

     10,300         521,462       
     

 

 

 
        1,177,875       
     

 

 

 

Security & Alarm Services (0.36%)

  

S-1 Corp.(b)

     2,200         203,252       
     

 

 

 

Semiconductor Equipment (1.40%)

  

Advanced Process Systems Corp.(b)

     12,744         285,701       

Jusung Engineering Co., Ltd.(b)

     25,745         248,304       
 

 

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

 

Annual Report  |  September 30, 2016    15


Table of Contents
ICON International Equity Fund    Schedule of Investments
   September 30, 2016

 

 

     

Shares or

Principal
Amount

     Value  

Semiconductor Equipment (continued)

     

Wonik Holdings Co., Ltd.(b)

     37,000         $ 247,923       
     

 

 

 
        781,928       
     

 

 

 

Semiconductors (1.05%)

  

Malaysian Pacific Industries Bhd

     73,000         137,686       

NXP Semiconductors N.V.(b)

     4,400         448,844       
     

 

 

 
        586,530       
     

 

 

 

Soft Drinks (0.29%)

  

Arca Continental SAB de CV

     27,000         160,693       
     

 

 

 

Specialized Finance (0.36%)

  

Mitsubishi UFJ Lease & Finance Co., Ltd.

     44,000         201,913       
     

 

 

 

Systems Software (0.73%)

  

Asseco Poland S.A.

     27,800         405,284       
     

 

 

 

Technology Hardware, Storage & Peripherals (0.65%)

  

Samsung Electronics Co., Ltd.

     250         364,191       
     

 

 

 

Water Utilities (0.29%)

  

Beijing Enterprises Water Group, Ltd.

     240,000         163,614       
     

 

 

 

Wireless Telecommunication Services (3.47%)

  

Drillisch AG(a)

     13,000         631,789       

NTT DOCOMO, Inc.

     7,800         198,143       

SK Telecom Co., Ltd.

     2,000         410,081       

SoftBank Group Corp.

     10,700         693,452       
     

 

 

 
        1,933,465       
     

 

 

 
Total Common Stocks
(Cost $50,829,091)
        49,887,601       
     

 

 

 

Preferred Stocks (0.14%)

  

Building Products (0.14%)

     

Villeroy & Boch AG

     5,000         79,729       
     

 

 

 

Total Preferred Stocks (Cost $78,261)

        79,729       
     

 

 

 

Collateral for Securities on Loan (7.47%)

  

State Street Navigator Prime Portfolio, 0.30%

     4,165,210         4,165,210       
     

 

 

 
Total Collateral for Securities on Loan
(Cost $4,165,210)
         4,165,210       
     

 

 

 
     

Shares or

Principal
Amount

     Value  

Short-Term Investments (13.98%)

     

Time Deposits (13.98%)

     

State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/16

     7,794,962         $ 7,794,962       
     

 

 

 
Total Short-Term Investments
(Cost $7,794,962)
        7,794,962       
     

 

 

 

Total Investments (111.03%)

     
(Cost $62,867,524)       $ 61,927,502       

Liabilities Less Other Assets (-11.03%)

        (6,152,861)       
     

 

 

 

Net Assets (100.00%)

      $ 55,774,641       
     

 

 

 

 

(a)

All or a portion of the security was on loan as of September 30, 2016.

(b)

Non-income producing security.

ADR - American Depositary Receipt

REIT - Real Estate Investment Trust

 

 

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

 

16    www.iconfunds.com


Table of Contents
ICON International Equity Fund    Schedule of Investments
   September 30, 2016

 

 

Country Composition (September 30, 2016)        

 

South Korea

  

 

 

 

17.34%

 

  

Japan

     14.49%   

Germany

     7.91%   

France

     5.64%   

Canada

     4.56%   

China

     4.19%   

Hong Kong

     3.97%   

South Africa

     3.64%   

Switzerland

     2.57%   

India

     2.48%   

United Kingdom

     2.10%   

Ireland

     2.03%   

Netherlands

     2.01%   

Italy

     1.77%   

United States

     1.67%   

Sweden

     1.44%   

Thailand

     1.40%   

Jersey

     1.06%   

Denmark

     1.02%   

Taiwan

     1.00%   

Israel

     0.86%   

Mexico

     0.86%   

Brazil

     0.82%   

Poland

     0.73%   

Hungary

     0.69%   

Australia

     0.61%   

Philippines

     0.57%   

Norway

     0.52%   

Myanmar

     0.47%   

Bermuda

     0.31%   

Indonesia

     0.31%   

Turkey

     0.29%   

Singapore

     0.25%   
  

 

 

 
             89.58%   
  

 

 

 

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

Sector Composition (September 30, 2016)        

 

Information Technology

  

 

 

 

18.16%

 

  

Health Care

     13.99%   

Materials

     9.84%   

Utilities

     7.96%   

Industrials

     6.96%   

Consumer Staples

     6.94%   

Consumer Discretionary

     6.31%   

Real Estate

     6.27%   

Financial

     5.99%   

Telecommunication Services

     5.77%   

Energy

     1.39%   
  

 

 

 
             89.58%   
  

 

 

 

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

 

 

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

 

Annual Report  |  September 30, 2016    17


Table of Contents
ICON International Equity Fund    Schedule of Investments
   September 30, 2016

 

 

Industry Composition (September 30, 2016)

 

 

 

Pharmaceuticals

  

 

 

 

8.70%

 

  

Gold

     5.45%   

Multi-Utilities

     3.72%   

Wireless Telecommunication Services

     3.47%   

Biotechnology

     3.40%   

Electronic Equipment & Instruments

     2.93%   

Commodity Chemicals

     2.62%   

Integrated Telecommunication Services

     2.30%   

Home Entertainment Software

     2.26%   

IT Consulting & Other Services

     2.25%   

Communications Equipment

     2.15%   

Data Processing & Outsourced Services

     2.14%   

Retail REIT’s

     2.11%   

Real Estate Development

     1.84%   

Diversified Real Estate Activities

     1.74%   

Personal Products

     1.70%   

Brewers

     1.55%   

Electric Utilities

     1.43%   

Diversified Banks

     1.43%   

Semiconductor Equipment

     1.40%   

Aerospace & Defense

     1.28%   

Real Estate Operating Companies

     1.24%   

Construction Materials

     1.20%   

Renewable Electricity

     1.07%   

Semiconductors

     1.05%   

Health Care Equipment

     1.05%   

Industrial Conglomerates

     1.02%   

Other Industries (each less than 1%)

     27.08%   
  

 

 

 
             89.58%   
  

 

 

 

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

 

 

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

 

18    www.iconfunds.com


Table of Contents
ICON International Funds    Statements of Assets and Liabilities
   September 30, 2016

 

     ICON Emerging
Markets Fund
     ICON International
Equity Fund
 

 

 

Assets

     

Investments, at cost

    $ 57,933,100       $ 62,867,524       
  

 

 

 

Investments, at value(a)

     58,949,730         61,927,502       

Cash

             3,989       

Foreign currency, at value (Cost $26,512 and $3,749, respectively)

     26,563         3,885       

Receivables:

     

Investments sold

     1,244,647         635,119       

Fund shares sold

     308,392         895       

Expense reimbursements due from Adviser

     40,903         13,314       

Dividends

     30,399         59,031       

Foreign tax reclaims

             53,622       

Other assets

     10,431         13,992       
  

 

 

 

Total assets

     60,611,065         62,711,349       
  

 

 

 

Liabilities

     

Payables:

     

Payable for collateral received on securities loaned

             4,165,210       

Payable to custodian

     2,981,949         –       

Investments purchased

     1,616,787         2,610,618       

Fund shares redeemed

     18,312         39,936       

Advisory fees

     44,851         46,280       

Transfer agent fees

     17,586         6,187       

Fund accounting fees

     6,261         9,350       

Accrued distribution fees

     2,624         3,015       

Trustee fees and expenses

     2,225         2,397       

Administration fees

     2,306         2,394       

Accrued expenses

     47,807         51,321       
  

 

 

 

Total liabilities

     4,740,708         6,936,708       
  

 

 

 

Net Assets - all share classes

    $       55,870,357       $ 55,774,641       
  

 

 

 

Net Assets - Class S

    $ 45,786,335       $ 50,004,737       
  

 

 

 

Net Assets - Class C

    $ 1,011,704       $ 2,940,958       
  

 

 

 

Net Assets - Class A

    $ 9,072,318       $ 2,828,946       
  

 

 

 

Net Assets Consists of

     

Paid-in capital

    $ 60,486,102       $ 147,782,786       

Accumulated undistributed net investment income/(loss)

     (121,597)         (227,984)       

Accumulated undistributed net realized gain/(loss)

     (5,511,331)         (90,837,619)       

Unrealized appreciation/(depreciation)

     1,017,183         (942,542)       
  

 

 

 

Net Assets

    $ 55,870,357       $ 55,774,641       
  

 

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

     

Class S

     3,206,841         4,188,597       

Class C

     75,376         275,867       

Class A

     639,079         240,636       

Net asset value (offering and redemption price per share)

     

Class S

    $ 14.28       $ 11.94       

Class C

    $ 13.42       $ 10.66       

Class A

    $ 14.20       $ 11.76       

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

    $ 15.06       $ 12.48       

 

(a)  Includes securities on loan of

  

 

 $

 

 

  

  

 

$

 

3,991,129    

 

  

 

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

 

Annual Report  |  September 30, 2016    19


Table of Contents
ICON International Funds    Statements of Operations
   Year Ended September 30, 2016

 

 

     ICON Emerging
Markets Fund
    

ICON International

Equity Fund

 

 

 

Investment Income

     

Interest

    $ 3,007       $ 1,167       

Dividends

     625,999         1,287,060       

Foreign taxes withheld

     (78,829)         (115,582)       

Income from securities lending, net

             96,251       

Other income

             18,177       
  

 

 

 

Total investment income

     550,177         1,287,073       
  

 

 

 

Expenses

     

Advisory fees

     352,367         674,958       

Administration fees

     17,684         33,827       

Transfer agent fees

     87,600         72,097       

Distribution fees:

     

Class C

     8,490         30,710       

Class A

     14,933         8,310       

Registration fees

     34,626         35,870       

Audit and tax service expense

     28,040         29,795       

Fund accounting fees

     29,743         49,452       

Trustee fees and expenses

     6,101         10,751       

Insurance expense

     1,416         10,665       

Custody fees

     43,711         40,888       

Printing fees

     14,931         15,109       

Recoupment of previously reimbursed expenses

     14,744         –       

Other expenses

     36,066         48,913       
  

 

 

 

Total expenses before expense reimbursement

     690,452         1,061,345       

Expense reimbursement by Adviser due to expense limitation agreement

     (119,653)         (38,568)       
  

 

 

 

Net Expenses

     570,799         1,022,777       
  

 

 

 

Net Investment Income/(Loss)

     (20,622)         264,296       
  

 

 

 

 

Realized and Unrealized Gain/(Loss)

     

Net realized gain/(loss) on:

     

Investments

     2,213,629         (2,385,798)       

Foreign currency

     (66,421)         (251,095)       

Capital gains tax

     (79,455)         (63,731)       
  

 

 

 
     2,067,753         (2,700,624)       
  

 

 

 

 

Change in unrealized net appreciation/(depreciation) on:

     

Investments and foreign currency

     2,012,969         5,285,537       

Capital gains tax

     454         –       
  

 

 

 
     2,013,423         5,285,537       
  

 

 

 

Net realized and unrealized gain/(loss)

     4,081,176         2,584,913       
  

 

 

 

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

    $             4,060,554       $ 2,849,209       
  

 

 

 

 

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

 

20    www.iconfunds.com


Table of Contents
ICON International Funds    Statements of Changes in Net Assets
  

 

 

      ICON Emerging Markets Fund      ICON International Equity Fund  
     Year Ended      Year Ended      Year Ended      Year Ended  
      September 30, 2016      September 30, 2015      September 30, 2016      September 30, 2015  

Operations

           

Net investment income/(loss)

    $ (20,622)         $ (30,748)         $ 264,296         $ (58,796)     

Net realized gain/(loss)(a)

     2,067,753           (267,920)           (2,700,624)           (5,163,420)     

Change in net unrealized appreciation/(depreciation)

     2,013,423           (787,186)           5,285,537           3,119,772     
  

 

 

 

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

     4,060,554           (1,085,854)           2,849,209           (2,102,444)     
  

 

 

 

Dividends and Distributions to Shareholders

           

Net investment income

           

Class S

     –           –           –           (71,695)     
  

 

 

 

Net decrease from dividends and distributions

     –           –           –           (71,695)     
  

 

 

 

Fund Share Transactions

           

Shares sold

           

Class S

     35,539,610           20,067,880           3,354,948           4,506,506     

Class C

     823,176           349,016           81,425           82,616     

Class A

     12,243,987           862,982           175,210           1,145,130     

Reinvested dividends and distributions

           

Class S

     –           –           –           70,812     

Shares repurchased

           

Class S

     (9,328,014)           (11,885,964)           (23,174,814)           (15,856,511)     

Class C

     (459,358)           (468,737)           (552,431)           (1,251,157)     

Class A

     (4,458,977)           (398,743)           (1,184,134)           (1,339,594)     
  

 

 

 

Net increase/(decrease) from fund share transactions

     34,360,424           8,526,434           (21,299,796)           (12,642,198)     
  

 

 

 

 

Total net increase/(decrease) in net assets

  

 

 

 

38,420,978  

 

  

  

 

 

 

7,440,580  

 

  

  

 

 

 

(18,450,587)  

 

  

  

 

 

 

(14,816,337)  

 

  

 

Net Assets

           

Beginning of year

     17,449,379           10,008,799           74,225,228           89,041,565     
  

 

 

 

End of year

    $ 55,870,357         $ 17,449,379         $ 55,774,641         $ 74,225,228     
  

 

 

 

Accumulated undistributed net investment income/(loss)

    $ (121,597)         $ (19,769)         $ (227,984)         $ (511,973)     
  

 

 

 

Transactions in Fund Shares

           

Shares sold

           

Class S

     2,656,595           1,456,599           291,975           382,453     

Class C

     64,476           26,591           7,727           7,381     

Class A

     918,881           62,831           15,507           94,725     

Issued to shareholders in reinvestment of distributions

           

Class S

     –             –           –           6,089     

Shares repurchased

           

Class S

     (694,300)           (863,679)           (2,012,460)           (1,317,093)     

Class C

     (37,993)           (35,508)           (53,203)           (114,930)     

Class A

     (335,946)           (28,954)           (106,353)           (114,235)     
  

 

 

 

Net increase/(decrease)

     2,571,713           617,880           (1,856,807)           (1,055,610)     
  

 

 

 

Shares outstanding, beginning of year

     1,349,583           731,703           6,561,907           7,617,517     
  

 

 

 

Shares outstanding, end of year

     3,921,296           1,349,583           4,705,100           6,561,907     
  

 

 

 

 

(a)

The September 30, 2015 presentation has been changed to conform to industry standards and had no effect on the Funds’ change in net assets.

 

 

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

 

Annual Report  |  September 30, 2016    21


Table of Contents
ICON Emerging Markets Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S    Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

   $ 12.95      $ 13.72      $ 13.51      $ 12.21      $ 10.12   

Income/(loss) from investment operations:

          

Net investment income/(loss)(a)

     (0.00)  (b)      (0.03)        (0.03)        0.06        0.11   

Net realized and unrealized gains/(losses) on investments

     1.33        (0.74)        0.27        1.33        2.02   

Total from investment operations

     1.33        (0.77)        0.24        1.39        2.13   

 

Less dividends and distributions:

          

Dividends from net investment income

                   (0.03)        (0.09)        (0.04)   

Total dividends and distributions

                   (0.03)        (0.09)        (0.04)   

 

Net asset value, end of period

   $ 14.28      $ 12.95      $ 13.72      $ 13.51      $ 12.21   

 

Total Return

     10.27     (5.61 )%      1.78     11.44     21.16

 

Ratios and Supplemental Data

          

Net assets, end of period (in 000s)

   $ 45,786      $ 16,123      $ 8,942      $ 29,053      $ 37,969   

Ratio of expenses to average net assets

          

Before expense limitation

     1.85     2.44     2.11     1.64     1.50

After expense limitation/ recoupment

     1.55     1.55     1.88 %(c)      1.64     1.50

Ratio of net investment income/(loss) to average net assets

          

Before expense limitation

     (0.32 )%      (1.08 )%      (0.42 )%      0.46     0.96

After expense limitation/
recoupment

     (0.02 )%      (0.19 )%      (0.19 )%      0.46     0.96

Portfolio turnover rate

     156     76     92     60     72

 

(a) 

Calculated using the average shares method.

(b) 

Amount less than $(0.005).

(c) 

Effective May 5, 2014, Class S’s operating expenses, not including interest expense, were contractually limited to the amounts discussed in Note 3. The ratios in these financial highlights reflect the limitation, including the interest expense.

 

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

 

22    www.iconfunds.com


Table of Contents
ICON Emerging Markets Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class C    Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

Net asset value, beginning of period

   $ 12.30      $ 13.18      $ 13.06      $ 11.84      $ 9.88   

Income/(loss) from investment
operations:

          

Net investment income/(loss)(a)

     (0.15)        (0.17)        (0.11)        (0.05)        0.01   

Net realized and unrealized
gains/(losses) on investments

     1.27        (0.71)        0.23        1.28        1.95   

Total from investment operations

     1.12        (0.88)        0.12        1.23        1.96   

 

Less dividends and distributions:

          

Dividends from net investment
income

                          (0.01)          

Total dividends and distributions

                          (0.01)          

 

Net asset value, end of period

   $ 13.42      $ 12.30      $ 13.18      $ 13.06      $ 11.84   

 

Total Return(b)

     9.11     (6.68)     0.92     10.44     19.84

 

Ratios and Supplemental Data

          

Net assets, end of period (in 000s)

   $ 1,012      $ 601      $ 762      $ 832      $ 869   

 

Ratio of expenses to average net
assets

          

Before expense limitation

     4.07     5.11     4.65     3.76     3.91

After expense limitation/
recoupment (c)

     2.55     2.55     2.78     2.56     2.55

Ratio of net investment
income/(loss) to average net
assets

          

Before expense limitation

     (2.67)     (3.88)     (2.70)     (1.63)     (1.28)

After expense limitation/
recoupment

     (1.15)     (1.32)     (0.83)     (0.43)     0.08

Portfolio turnover rate

     156     76     92     60     72

 

(a) 

Calculated using the average shares method.

(b) 

The total return calculation excludes any sales charges.

(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 the interest expense, when applicable.

 

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

 

Annual Report  |  September 30, 2016    23


Table of Contents
ICON Emerging Markets Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

    Year Ended
September 30,
    Year Ended
September 30,
    Year Ended
September 30,
    Year Ended
September 30,
    Year Ended
September 30,
 
Class A   2016     2015     2014     2013     2012  

Net asset value, beginning of period

  $     12.91      $     13.71      $     13.51      $     12.17      $     10.10   

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    (0.01)        (0.07)        (0.04)        0.04        0.09   

Net realized and unrealized gains/(losses) on investments

    1.30        (0.73)        0.27        1.33        2.00   

Total from investment operations

    1.29        (0.80)        0.23        1.37        2.09   

Less dividends and distributions:

         

Dividends from net investment income

                  (0.03)        (0.03)        (0.02)   

Total dividends and distributions

                  (0.03)        (0.03)        (0.02)   

Net asset value, end of period

  $ 14.20      $ 12.91      $ 13.71      $ 13.51      $ 12.17   

Total Return(b)

    9.99     (5.84)     1.68     11.29     20.73

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 9,072      $ 725      $ 305      $ 789      $ 690   

Ratio of expenses to average net assets

         

Before expense limitation

    2.16     4.75     4.32     2.97     2.88

After expense limitation/ recoupment (c)

    1.80     1.80     1.95     1.81     1.80

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.43)     (3.44)     (2.65)     (0.82)     (0.31)

After expense limitation/recoupment

    (0.07)     (0.49)     (0.28)     0.34     0.77

Portfolio turnover rate

    156     76     92     60     72

 

(a) 

Calculated using the average shares method.

(b)

The total return calculation excludes any sales charges.

(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 the interest expense, when applicable.

 

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

 

24    www.iconfunds.com


Table of Contents
ICON International Equity Fund    Financial Highlights
  

 

For a Share Outstanding Throughout the Years Presented

 

 

Class S(a)   

Year Ended

September 30,

2016

    

Year Ended

September 30,

2015

   

Year Ended

September 30,

2014

    

Year Ended

September 30,

2013

   

Year Ended  

September 30,  

2012  

 

 

 

Net asset value, beginning of period

   $ 11.37       $ 11.75      $ 11.81       $ 11.05      $ 9.22       

Income/(loss) from investment operations:

            

Net investment income/(loss)(b)

     0.05         0.00 (c)       0.06         0.07        0.16       

Net realized and unrealized gains/(losses) on investments

     0.52         (0.37)        (0.12)         0.74        1.78       

 

 

Total from investment operations

     0.57         (0.37)        (0.06)         0.81        1.94       

 

 

Less dividends and distributions:

            

Dividends from net investment income

             (0.01)                (0.00) (d)      (0.11)       

Distributions from net realized gains

                            (0.05)        –       

 

 

Total dividends and distributions

             (0.01)                (0.05)        (0.11)       

 

 

Net asset value, end of period

   $ 11.94       $ 11.37      $ 11.75       $ 11.81      $ 11.05       

 

 

 

Total Return

     5.01%         (3.15)%        (0.51)%         7.33%        21.19%     

Ratios and Supplemental Data

            

Net assets, end of period (in 000s)

   $ 50,005       $ 67,201      $ 80,356       $ 42,105      $ 56,152       

 

Ratio of expenses to average net assets

            

Before expense limitation

     1.45%         1.41%        1.41%         1.45%        1.39%     

After expense limitation/recoupment (e)

     1.45%         1.41%        1.41%         1.45%        1.39%     

Ratio of net investment income/(loss) to average net assets

            

Before expense limitation

     0.45%         0.00% (f)       0.44%         0.65%        1.47%     

After expense limitation/recoupment

     0.45%         0.00% (f)      0.44%         0.65%        1.47%     

Portfolio turnover rate

     198%         204     193%         138%        122%     

 

(a) 

Class S shares were formerly named Class Z shares prior to January 23, 2012.

(b)

Calculated using the average shares method.

(c)

Amount less than $0.005.

(d)

Amount less than $(0.005).

(e)

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, when applicable.

(f)

Less than 0.005% of average net assets.

 

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

 

Annual Report  |  September 30, 2016    25


Table of Contents
ICON International Equity Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

Class C    Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended    
September 30,    
2012    
 

Net asset value, beginning of period

   $     10.27      $     10.72      $     10.89      $     10.26      $     8.56         

Income/(loss) from investment operations:

          

Net investment income/(loss)(a)

     (0.09)  (b)      (0.12)        (0.08)        (0.04)        (0.02)         

Net realized and unrealized gains/(losses) on investments

     0.48        (0.33)        (0.09)        0.67        1.72         

Total from investment operations

     0.39        (0.45)        (0.17)        0.63        1.70         

Net asset value, end of period

   $ 10.66      $ 10.27      $ 10.72      $ 10.89      $ 10.26         

Total Return(c)

     3.80     (4.20)     (1.56)     6.14     19.86%       

Ratios and Supplemental Data

          

Net assets, end of period (in 000s)

   $ 2,941      $ 3,299      $ 4,597      $ 5,657      $ 6,773         

Ratio of expenses to average net assets

          

Before expense limitation

     3.13     2.96     2.82     2.77     2.72%       

After expense limitation/ recoupment (d)

     2.55     2.55     2.56     2.56     2.55%       

Ratio of net investment income/(loss) to average net assets

          

Before expense limitation

     (1.40)     (1.56)     (0.99)     (0.63)     (0.41)%       

After expense limitation/ recoupment

     (0.82)     (1.15)     (0.73)     (0.42)     (0.24)%       

Portfolio turnover rate

     198     204     193     138     122%       

 

(a) 

Calculated using the average shares method.

(b)

The per share amount does not correspond to activity reflected in the Statement of Operations due to class specific expenses during the period.

(c)

The total return calculation excludes any sales charges.

(d)

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, when applicable.

 

 

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

 

26    www.iconfunds.com


Table of Contents
ICON International Equity Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)

 

 

Year Ended
September 30,
2016

 

   

Year Ended
September 30,
2015

 

   

Year Ended
September 30,
2014

 

   

Year Ended
September 30,
2013

 

   

Year Ended
September 30,
2012

 

 

 

 

Net asset value, beginning of period

  $ 11.24      $ 11.65      $ 11.75      $ 10.99      $ 9.16       

 

Income/(loss) from investment
operations:

         

Net investment income/(loss)(b)

    0.05        (0.04)        0.00(c)        0.04        0.11       

Net realized and unrealized
gains/(losses) on investments

    0.47        (0.37)        (0.10)        0.73        1.77       

 

 

Total from investment operations

    0.52        (0.41)        (0.10)        0.77        1.88       

 

 

 

Less dividends and distributions:

         

Dividends from net investment
income

                         (0.00)  (d)      (0.05)       

Distributions from net realized
gains

                         (0.01)        –       

 

 

Total dividends and distributions

                         (0.01)        (0.05)       

 

 

 

Net asset value, end of period

  $ 11.76      $ 11.24      $ 11.65      $ 11.75      $ 10.99       

 

 

 

Total Return(e)

    4.63     (3.52)     (0.85)     7.03     20.61%     

 

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 2,829      $ 3,725      $ 4,089      $ 5,043      $ 6,309       

 

Ratio of expenses to average net assets

         

Before expense limitation

    2.43     2.25     2.12     2.19     2.01%     

After expense limitation/
recoupment (f)

    1.80     1.80     1.81     1.81     1.80%     

Ratio of net investment
income/(loss) to average net assets

         

Before expense limitation

    (0.19)     (0.77)     (0.27)     (0.06)     0.85%     

After expense limitation/
recoupment

    0.44     (0.32)     0.04     0.32     1.06%     

Portfolio turnover rate

    198     204     193     138     122%     

 

(a) 

Class I shares merged into Class A on January 23, 2012. The results of each class prior to the merger may have been different than what is presented.

(b)

Calculated using the average shares method.

(c)

Amount less than $0.005.

(d)

Amount less than $(0.005).

(e)

The total return calculation excludes any sales charges.

(f)

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    27


Table of Contents
ICON International Funds    Notes to Financial Statements
   September 30, 2016

 

 1.  ORGANIZATION

 

The ICON Emerging Markets Fund (“Emerging Markets 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. Each Fund offers three classes of shares: Class S, Class C 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 fifteen 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 Emerging Markets Fund primarily invests in securities of issuers whose principal activities are in emerging markets, or are economically tied to an emerging market country. The International Equity Fund primarily invests in foreign equity securities. Foreign equity securities refer to securities of issuers, wherever organized, whose securities are listed or traded principally on a recognized stock exchange or over-the-counter market outside the United States. The investment objective of each Fund is to provide long-term capital appreciation.

The Funds, like all investments in securities, have elements of risk, including risk of loss of principal. There is no assurance that the Funds will achieve their investment objectives and may underperform funds with similar investment objectives. An investment concentrated in sectors and industries involves 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 less 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. Securities of emerging or developing market companies may be less liquid and more volatile than securities in countries with more mature markets.

The Emerging Markets Fund has a significant weighting in South Korea which may cause the Fund’s performance to be susceptible to the economic, business and/or other developments that may affect that country.

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 remote.

 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 (“GAAP”) 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. Each Fund is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.

Investment Valuation

The Funds’ securities and other assets, excluding options on securities indexes, are valued at the closing price as of 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. If the NYSE closes unexpectedly and there is active trading on other exchanges, the securities will be valued at the Valuation Time based off of those exchanges. 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 NYSE 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 is considered inaccurate or does not, in the Funds’ judgment, 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

 

 
28    www.iconfunds.com


Table of Contents
ICON International Funds    Notes to Financial Statements
   September 30, 2016

 

Funds’ securities or other assets are valued at fair value as determined in good faith by the Funds’ Board of Trustees (the “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. Exchange traded options are valued at the composite price, using the National Best Bid and Offer quotes (“NBBO”). NBBO consists of the highest bid price and lowest ask price across any of the exchanges on which an option is quoted, thus providing a view across the entire U.S. options marketplace. Debt securities with a remaining maturity of greater than 60 days are valued using 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.

Securities of investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Investments in shares of funds that are not traded on an exchange are valued at the end of day net asset value per share of such fund. Securities in the underlying funds, including restricted securities are valued in accordance with the valuation policy of such fund.

The Funds’ securities 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.

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 may be 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, 2016:

ICON Emerging Markets Fund

 

Investments in Securities at Value*

  

Level 1 - Quoted

and Unadjusted

Prices

    

Level 2 - Other

Significant

Observable Inputs

    

Level 3 - Significant

Unobservable

Inputs

    

Total

 
           
           

Common Stocks

                                   

Gas Utilities

   $ 373,954       $ 377,916       $       $ 751,870   

Oil & Gas Exploration & Production

     145,699         933,520                 1,079,219   

Packaged Foods & Meats

     181,281         809,671                 990,952   

Pharmaceuticals

     138,030         1,582,099                 1,720,129   

Semiconductors

     262,169         658,130                 920,299   

Other

     2,780,826         41,158,124                 43,938,950   

Short-Term Investments

           

Money Market Funds

     3,000,000                         3,000,000   

Time Deposits

             6,548,311                 6,548,311   

Total

   $ 6,881,959       $ 52,067,771       $       $ 58,949,730   

 

 
Annual Report  |  September 30, 2016    29


Table of Contents
ICON International Funds    Notes to Financial Statements
   September 30, 2016

 

ICON International Equity Fund

 

Investments in Securities at Value*    Level 1 - Quoted
and Unadjusted
Prices
     Level 2 - Other
Significant
Observable Inputs
     Level 3 - Significant
Unobservable
Inputs
     Total  

Common Stocks

           

Biotechnology

   $ 931,274       $ 963,296       $       $ 1,894,570       

Data Processing & Outsourced Services

     418,027         774,107                 1,192,134       

Gas Utilities

     233,722         203,059                 436,781       

Gold

     1,122,419         1,918,766                 3,041,185       

Multi-Utilities

     842,796         1,232,363                 2,075,159       

Pharmaceuticals

     853,408         3,996,827                 4,850,235       

Other

     2,012,401         34,385,136                 36,397,537       

Preferred Stocks

     79,729                         79,729       

Collateral for Securities on Loan

             4,165,210                 4,165,210       

Short-Term Investments

             7,794,962                 7,794,962       

Total

   $ 6,493,776       $ 55,433,726       $       $     61,927,502       

 

* 

Please refer to the Schedule of Investments and the Sector/Industry Classification and Country Composition tables for additional security details.

There were no Level 3 securities held in any of the Funds at September 30, 2016.

For the Emerging Markets Fund, there was no transfer activity between Level 1 and Level 2 for the year ended September 30, 2016.

For the International Equity Fund, common stocks valued at $801,016 were transferred from Level 1 to Level 2 during the year ended September 30, 2016. At September 30, 2015, these securities were valued using quoted market prices in active markets without using fair value adjustment factors; at September 30, 2016, these securities were valued using quoted market prices in active markets with fair value adjustment factors.

The end of period timing recognition is used for the transfers between levels of each Fund’s assets and liabilities.

Fund Share Valuation

Fund shares are sold and redeemed on a daily basis at net asset value. Net asset value per share is determined daily as of the close of trading on the NYSE on each day the NYSE is open for trading by dividing the total value of the Fund’s investments and other assets, less liabilities, by the number of Fund shares outstanding.

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.

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 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.

 

 
30    www.iconfunds.com


Table of Contents
ICON International Funds    Notes to Financial Statements
   September 30, 2016

 

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 Statements of Operations. At September 30, 2016 and for the year then ended, the Emerging Markets Fund and International Equity Fund had no outstanding forward foreign currency contracts.

Securities Lending

Under procedures adopted by the Board, the Funds may lend securities to certain approved brokers, dealers and other financial institutions to earn additional income. Cash collateral is received in exchange for securities on loan in the amount of at least 102% of the value of U.S. securities loaned or at least 105% of the value of non-U.S. securities loaned, marked to market daily. The Funds retain certain benefits of owning the securities, including receipt of dividends or interest generated by the security, but give up other rights including the right to vote proxies. The Funds retain the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by cash that generally exceeds the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Funds and any additional required collateral is delivered to each Fund on the next business day.

Generally, in the event of borrower default, the Funds have the right to use the collateral to offset any losses incurred. In the event the Funds are delayed or prevented from exercising their rights to dispose of the collateral, there may be a potential loss to the Funds. Some of these losses may be indemnified by the lending agent.

The Funds have elected to invest the cash collateral in the State Street Navigator Prime Portfolio which is disclosed on the Schedule of Investments. The Funds bear the risk of loss with respect to the investment of collateral. The net securities lending income earned by the Funds for the year ended September 30, 2016, is included in the Statements of Operations.

The value of the collateral could include collateral held for securities that were sold on or before September 30, 2016. It may also include collateral received from the pre-funding of security loans.

The following table indicates the total amount of securities loaned by type, reconciled to gross liability payable upon return of the securities loaned by the Fund as of September 30, 2016:

 

    Remaining contractual maturity of the lending agreement              
     Overnight &
Continuous
    Up to 30 days     30-90 days     Greater than
90 days
    Market Value     Collateral
Received
    Excess amount
due to
counterparty
 

Securities Lending Transactions

             

ICON International Equity Fund

             

Equity Securities

  $     3,991,129      $      $      $      $     3,991,129      $     4,165,210      $ 174,081   

Income Taxes, Dividends, and Distributions

The Funds intend to continue 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 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 three 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.

 

 
Annual Report  |  September 30, 2016    31


Table of Contents
ICON International Funds    Notes to Financial Statements
   September 30, 2016

 

Certain foreign countries impose a capital gains tax 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 and is included in capital gains tax in the Statements of Operations.

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 fixed income securities purchased are accreted or amortized to income over the life of the respective securities based on effective yield.

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.

Withholding Tax

Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates. The ability of issuers of debt securities held by the Funds to meet their obligations may be effected by economic and political developments in specific country or region.

Other

The Funds hold certain investments which pay dividends to their shareholders based upon available funds from operations. It is possible for these dividends to exceed the underlying investments’ taxable earnings and profits resulting in the excess portion of such dividends being designated as a return of capital. Distributions received from investments in securities that represent a return of capital or capital gains are recorded as a reduction of the cost of investments or as a realized gain, respectively.

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 additional class level expenses that are included on the Statements of Operations:

 

                                                                                            
Fund              Printing Fees          Transfer Agent Fees*              Registration Fees  

ICON Emerging Markets Fund

        

Class S

     $                    12,054           $                    64,026                 $                    15,530       

Class C

     703           2,903                 9,757       

Class A

     2,174           12,735                 9,339       

ICON International Equity Fund

        

Class S

     11,895           41,326                 14,467       

Class C

     1,366           13,286                 9,548       

Class A

     1,848           14,206                 11,855       

 

*

Transfer agent out of pocket fees are a Fund level expense.

 

 
32    www.iconfunds.com


Table of Contents
ICON International Funds    Notes to Financial Statements
   September 30, 2016

 

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, acquired fund fees and expenses 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 Emerging Markets Fund

   1.55%      2.55%      1.80%      

ICON International Equity Fund

   1.55%      2.55%      1.80%      

The Funds’ expense limitations will continue in effect until at least January 31, 2021 for Class A, Class C and International Equity Fund Class S. Effective May 5, 2014, ICON Advisers contractually agreed to limit the total expenses of the Emerging Markets Fund Class S shares to an annual rate of 1.55% in effect until at least January 31, 2017. 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 these payments are proposed.

As of September 30, 2016 the following amounts were available for recoupment by ICON Advisers based upon their potential expiration dates:

 

Fund           

Expires

2017

            

Expires

2018

            

Expires

2019

 

ICON Emerging Markets Fund

   $           49,592       $           128,006       $           119,653       

ICON International Equity Fund

        29,665            34,662            38,568       

Accounting, Custody and Transfer Agent Fees

Effective March 1, 2016, ALPS Fund Services (“ALPS”) serves as the fund accounting agent for the Funds. Prior to March 1, 2016, State Street Bank and Trust Company (“State Street”) served as the fund accounting agent for the Funds. For its services, the Trust pays ALPS a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily net 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.

Effective April 9, 2016, ALPS became the transfer agent for the Trust. For these services, the Trust pays an annual fee plus annual base fee per Fund, per account fees and out-of-pocket expenses. Prior to April 9, 2016, Boston Financial Data Services, Inc. was the Trust’s transfer agent.

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, 2016, each Fund’s payment for administrative services to ICON Advisers is included on the Statements 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.

Effective March 1, 2016, ICON Advisers has a sub-administration agreement with ALPS under which ALPS assists ICON Advisers with the administration and business affairs of the Trust. For its services, ICON Advisers pays ALPS a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily net assets of the Trust. Prior to March 1, 2016, the sub-administration agreement was between ICON Advisers and State Street.

Distribution Fees

The Funds have adopted a non-compensatory 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

 

 
Annual Report  |  September 30, 2016    33


Table of Contents
ICON International Funds    Notes to Financial Statements
   September 30, 2016

 

and for other shareholder services. Under the 12b-1 Plan, the Distribution Plan provides for reimbursement of expenses incurred by IDI related to distribution and marketing. The shareholders of the 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 A shares. There is no annual distribution and service fee for Class S shares. The total amount paid under the 12b-1 plans by the Funds is shown on the Statements of Operations.

In addition, IDI, as Distributor, receives a contingent deferred sales charge at a rate of 1.00% of the purchase price for the sale of Class C shares within one year of purchase. For Class A shares, the public offering price equals net asset value plus the applicable sales charge, which is a maximum of 5.75%. IDI receives a portion of this sales charge and may redistribute it as dealer discounts and brokerage commissions to non-related parties.

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 Trust paid 95% of the CCO’s salary and the remaining portion, along with other employee related expenses, is paid by ICON Advisers. For the year ended September 30, 2016, the total related amounts paid by the Funds under this arrangement are included in Other Expenses on the Statements of Operations.

The Funds may reimburse ICON Advisers for legal work performed for the Funds by its attorneys outside of the advisory and administration contracts. The Board of Trustees reviews and approves such reimbursements. For the year ended September 30, 2016, the total related amounts paid by the Funds under this arrangement was $1,718 and is included in Other Expenses on the Statements of Operations.

The Funds engaged in cross trades with each other during the year ended September 30, 2016 pursuant to Rule 17a-7 under the 1940 Act. Generally, cross trading is the buying or selling of portfolio securities between funds to which the Adviser serves as the investment adviser. The Board of Trustees previously adopted procedures that apply to transactions between the Funds and its affiliates pursuant to Rule 17a-7. At its regularly scheduled meetings, the Board of Trustees reviews such transactions as of the most current calendar quarter for compliance with the requirements set forth by Rule 17a-7 and the Funds’ procedures. The procedures require that the transactions be a purchase or sale for no consideration other than cash payment against prompt delivery of a security for which market quotations are readily available, and be consistent with the investment policies of each Fund.

4. BORROWINGS

 

The Trust has entered into a uncommitted, unsecured, revolving Line of Credit agreement/arrangement with State Street to provide temporary funding for redemption requests. Effective March 21, 2016, the maximum borrowing limit was changed from $75 million to $50 million. Interest on domestic borrowings is charged at a rate quoted and determined by State Street. The Line of Credit agreement/arrangement expires on March 20, 2017.

For the year ended September 30, 2016, there were no outstanding borrowings under this agreement/arrangement.

5. PURCHASES AND SALES OF INVESTMENT SECURITIES

 

For the year ended September 30, 2016, the aggregate cost of purchases and proceeds from sales of securities (excluding short-term securities) was as follows:

 

Fund    Purchases of
Securities
     Proceeds from Sales
of Securities

ICON Emerging Markets Fund

   $ 74,101,089       $   43,680,300  

ICON International Equity Fund

     111,325,450       132,122,729

6. FEDERAL INCOME TAX

 

The following information is presented on an income tax basis. Differences between GAAP and federal income tax purposes that are permanent in nature are reclassified within the capital accounts. Temporary differences do not require reclassification. Temporary and permanent differences do not impact the NAVs of the Funds. These differences are due to differing treatments for items such as passive foreign investment companies, foreign currency transactions, foreign capital gain tax treatment, and net investment losses.

 

 
34    www.iconfunds.com


Table of Contents
ICON International Funds    Notes to Financial Statements
   September 30, 2016

 

For the year ended September 30, 2016 the following Funds had capital loss carryforwards:

 

Fund        Expiring in 2017              Expiring in 2018      

ICON Emerging Markets Fund

   $ 5,511,331       $   

ICON International Equity Fund

     53,195,839         27,012,993   

For Emerging Markets Fund, the capital loss carryovers used during the year ended September 30, 2016 was $1,965,204.

For International Equity Fund, the short-term and long-term capital losses with no expiration were $5,701,835 and $1,856,542, respectively.

Under the Regulated Investment Company Modernization Act of 2010 (the “Act”) 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.

The Funds did not pay distributions to shareholders during the fiscal year ended September 30, 2016.

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2015, were as follows:

 

Fund        Ordinary Income         

    Long-Term Capital    

Gains    

 

ICON International Equity Fund

   $       71,689       $             -       

As of September 30, 2016, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Fund    Undistributed
Ordinary Income
     Late Year Loss
Deferral*
     Capital Loss
Carryforward
     Unrealized
Appreciation/
(Depreciation)**
     Total Accumulated
Earnings/(Deficit)
 

ICON Emerging Markets Fund

   $ –           $ (17,461)           $ (5,511,331)           $ 913,047           $ (4,615,745)       

ICON International Equity Fund

     –             (3,287,282)             (87,767,209)             (953,654)             (92,008,145)       

 

*

The Funds have elected to defer certain qualified late-year losses in accordance with federal income tax rules. These losses are treated as having arisen on the first day of the following fiscal year.

**

Differences between the book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to investments in passive foreign investment companies.

As of September 30, 2016, cost on investments for federal income tax purposes and the amount of net unrealized appreciation/(depreciation) were as follows:

 

Fund    Gross Appreciation
(excess of value over
tax cost)
     Gross Depreciation
(excess of tax cost
over value)
     Net Appreciation/
(Depreciation) of
Foreign Currency
     Net Unrealized
Appreciation/
(Depreciation)
     Cost of Investments
for Income Tax
Purposes
 

ICON Emerging Markets Fund

   $ 3,207,947           $ (2,295,453)           $ 553           $           913,047       $ 58,037,236       

ICON International Equity Fund

     2,875,956             (3,827,090)             (2,520)                (953,654)         62,878,636       

 7. SUBSEQUENT EVENTS

 

On October 14, 2016, the State Street Navigator Prime Portfolio, the collateral vehicle for securities lending, became the State Street Navigator Securities Lending Government Money Market Portfolio (“Government Money Market Portfolio”). The Government Money Market Portfolio will seek: (i) current income to the extent consistent with the preservation of capital and liquidity; and (ii) the maintenance of a stable $1.00 per share net asset value.

On November 14, 2016, the ICON Funds Board of Trustees approved the closing of ICON Emerging Markets Class C shares to new investors effective immediately and the merger of the ICON Emerging Markets Class C shares into the Class A shares on or around February 15, 2017.

 8. CHANGE OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee of the Board of the Funds dismissed PricewaterhouseCoopers LLP (“PwC”), as the independent registered public accounting firm of the Funds and appointed Cohen & Company, Ltd. (“Cohen”) effective July 27, 2016.

 

 
Annual Report  |  September 30, 2016    35


Table of Contents
ICON International Funds    Report of Independent Registered Public Accounting Firm
  

 

To the Shareholders and Board of Trustees of

ICON Funds

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the ICON Emerging Markets Fund and ICON International Fund (the “Funds”, each a series of ICON Funds) as of September 30, 2016, and the related statements of operations and changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The Funds’ financial statements and financial highlights for the years ended September 30, 2015 and prior, were audited by other auditors, whose report dated November 18, 2015 expressed an unqualified opinion on those financial statements and financial highlights.

We conducted our audit 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 and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2016, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of September 30, 2016, the results of their operations, the changes in their net assets, and their financial highlights for year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

LOGO

COHEN & COMPANY, LTD.

Cleveland, Ohio

November 23, 2016

 

 
36    www.iconfunds.com


Table of Contents
ICON International Funds    Disclosure of Fund Expenses
   September 30, 2016 (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 (4/01/16 – 9/30/16).

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), 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

April 1, 2016

  Ending Account    
Value    
September 30, 2016    
  Expense Ratio(a)      

Expenses Paid
During period

April 1, 2016 -
September 30, 2016(b)

ICON Emerging Markets Fund

       

Class S

       

Actual

  $  1,000.00   $  1,060.10   1.55%   $  7.98

Hypothetical (5% return before expenses)

  $  1,000.00   $  1,017.25   1.55%   $  7.82

Class C

       

Actual

  $  1,000.00   $  1,055.00   2.55%   $  13.10  

Hypothetical (5% return before expenses)

  $  1,000.00   $  1,012.25   2.55%   $  12.83  

Class A

       

Actual

  $  1,000.00   $  1,058.90   1.80%   $  9.27

Hypothetical (5% return before expenses)

  $  1,000.00   $  1,016.00   1.80%   $  9.07

ICON International Equity Fund

       

Class S

       

Actual

  $  1,000.00   $  1,032.90   1.45%   $  7.37

Hypothetical (5% return before expenses)

  $  1,000.00   $  1,017.75   1.45%   $  7.31

Class C

       

Actual

  $  1,000.00   $  1,027.00   2.55%   $  12.92  

Hypothetical (5% return before expenses)

  $  1,000.00   $  1,012.25   2.55%   $  12.83  

Class A

       

Actual

  $  1,000.00   $  1,030.70   1.80%   $  9.14

Hypothetical (5% return before expenses)

  $  1,000.00   $  1,016.00   1.80%   $  9.07

 

 
Annual Report  |  September 30, 2016    37


Table of Contents
ICON International Funds    Disclosure of Fund Expenses
   September 30, 2016 (Unaudited)

 

 

 

(a) 

The Fund’s expense ratios have been annualized based on the Fund’s most recent fiscal half-year expenses.

(b) 

Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year 183/366 (to reflect the half-year period).

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

 

 
38    www.iconfunds.com


Table of Contents
ICON International Funds    Board of Trustees and Fund Officers
   September 30, 2016 (Unaudited)

 

 

The ICON Funds Board of Trustees (the “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, 65, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as Chief Executive Officer (2013 to present); and Chairman of the Investment Committee (2005 to present) and served as the Chief Investment Officer (1991 to 2004) and President (2008 to 2013 and 2014 to present) 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, 66. 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 2015), 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 (2013 to present and 2006 to 2012), Delta Dental of Pennsylvania, an insurance company (1998 to 2009 and 2010 to present), Dentegra Group, Inc, an insurance holding company (2010 to 2014) and Delta Reinsurance Corporation (2015 to present; 2011 to 2014 and 2000 to 2009).

John C. Pomeroy, Jr., 69. Mr. Pomeroy has been a Trustee of the Funds since November 2002. Mr. Pomeroy is Chief Investment Officer and Director of Investments, Pennsylvania State University (2001 to present) and was Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).

R. Michael Sentel, 68. 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, 65, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as Chief Executive Officer (2013 to present); President (1998 to 2013 and 2014 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.

Donald Salcito, 63. 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).

Carrie M. Schoffman, 43. Ms. Schoffman has been a Vice President and Principal Financial Officer/Treasurer of the Funds since June 2013. Ms. Schoffman is also Chief Compliance Officer (2013 to present and 2004 to 2008) and Anti-Money Laundering Officer (2013 to present) of the ICON Funds. She is Senior Vice President (2011 to present) and Chief Compliance Officer (2013 to present and 2004 to 2011) of ICON Advisers. Previously, she was a Staff Accountant with the Securities and Exchange Commission (2003 to 2004) and also an Experienced Manager (2001 to 2003) and a Senior Associate/Associate (1996 to 2001) at PricewaterhouseCoopers LLP.

Lesley Caviness, 50. Ms. Caviness serves as Assistant Treasurer of the Funds (2014 to present). She has worked at ICON (2007 to 2008 and 2010 to present) in fund accounting, compliance, business intelligence and performance capacities. Prior to working at ICON, Ms. Caviness was a Real Estate Broker at Seasons Real Estate Group (2008 to 2012) and Signature Real Estate (2014 to present), Finance Manager at Navigant (2000 to 2007), and Associate/Senior Associate (1996 to 2000) at PricewaterhouseCoopers LLP.

 

 
Annual Report  |  September 30, 2016    39


Table of Contents
ICON International Funds    Additional Information
   September 30, 2016 (Unaudited)

 

Renewal of Investment Advisory Agreement

On August 22, 2016, the Board of Trustees, including all of the Trustees that are not “interested persons” of the Trust (the “Independent Trustees”), approved continuation of the Advisory Agreements (as defined below) with the Adviser for each Fund for an additional one-year term commencing October 1, 2016.

In determining to renew the investment advisory agreements between ICON Funds (the “Trust”) and ICON Advisers, Inc. (“ICON” or the “Adviser”) the Trustees requested, were provided with and reviewed data with respect to the Adviser, its personnel, and the services provided and to be provided to each Fund by the Adviser under the Trust’s Investment Advisory Agreement dated October 9, 1996, as amended (related to the Sector Funds, the International Funds and ICON Fund) 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 Balanced, Equity Income, Opportunities and Long/Short Funds) (collectively, the “Advisory Agreements”).

The Trustees agreed that consideration of the Advisory Agreements should also include consideration of other agreements between the Adviser and the Trust that impact provisions of the Advisory Agreements, including expense limitation agreements as amended effective April 11, 2016. The Trustees were provided with and reviewed data with respect to the Adviser, its personnel, and the services provided and to be provided to each Fund by the Adviser under the Trust’s Advisory Agreements, Administrative Services Agreement and Expense Limitation Agreement and the Distribution Agreement with ICON Distributors, Inc. (“IDI”). 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; and comparative data obtained from Strategic Insight (“SI”) related to Fund performance and Fund expenses (the “SI Report”).

The Board convened a meeting with SI on August 10, 2016 to discuss the SI Report and the information contained within the SI Report. Kevin Shine, Senior Managing Director, U.S. Research & Advisory of SI, Alana Burke, Vice President, Corporate Accounts and Joe Frelix, project manager on the15(c) report, discussed the findings of the SI Report with the Independent Trustees. Management personnel participated in the SI meeting convened to discuss the data for and with the Board. At the meeting, SI discussed its methodology, peer selection and the difficulty with some sector funds, expenses and fees, and performance relative to the respective Fund’s peers. SI also discussed the Funds size and how a respective Fund’s size would affect economies of scale, in particular, operating expenses. In addition, the Trustees asked SI for a Mutual Fund Administration Analysis (the “SI Admin Analysis”). Mr. Shine walked the Trustees through the SI Admin Analysis.

Also included in the 15(c) discussion was a briefing on factors affecting the ICON investment model; expenses and expense ratios of each Fund and other ICON managed products; relative performance of each Fund; status of expense reimbursements to the Funds by the Adviser; sales and marketing initiatives; specific business factors affecting IDI; the work load on ICON as adviser and administrator to the Funds; current profitability of ICON; staffing levels and staff morale.

The Independent Trustees were represented by independent legal counsel in this process. In August 2016, after participating in the meeting with SI and management, 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 from SI. The Board received materials from independent legal counsel discussing the legal standards applicable to their consideration of the ICON-Trust agreements.

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 SI Report and the SI Admin Analysis were discussed and management personnel showed performance for each Fund and discussed the factors affecting performance. The Board inquired from SI whether there was any correlation between fund expenses and performance, and SI saw no direct correlation with the ICON Funds other than the obvious observation that higher expenses reduce performance.

During the discussion on performance, management personnel noted that 2015 was very difficult for active managers. Unlike indexes, ICON is an active manager that is willing to look different from an index.

Management elaborated further on performance. For the one year ended May 31, 2014, only three of ICON’s funds beat their respective benchmarks: Consumer Staples, Information Technology, and Long/Short. For the one year ended June 30, 2016, four of the ICON funds beat their

 

 
40    www.iconfunds.com


Table of Contents
ICON International Funds    Additional Information
   September 30, 2016 (Unaudited)

 

respective benchmarks: Emerging Markets, International Equity, Information Technology, and Utilities. However, on a one year basis, eight are in the top third of their peer groups of which six of those eight are in the top quartile. The low point in the S & P 1500 Index was February 11, 2016. Since February 11 until July, 2016, ICON performed better than the indexes, as seven of the 12 domestic equity funds beat their respective indexes. Also during that same time period, the equity portion of the ICON Equity Income Fund beat the S&P 1500 Index. Five of the nine ICON Sector Funds beat their index for that same period.

Management noted that Advisers’ performance relative to other valuation managers as judged by the AthenaInvest system is above the medium. SI also noted that from a performance point of view, the Funds in the SI Report are compared using the Morningstar data, and there is no Morningstar category for “all cap” funds, but all ICON Funds are improving.

The Board addressed style consistency with the Adviser. Management advised that, based on the Adviser’s own analysis, and with the restructuring of the Adviser, the Adviser has continued an additional level of review on the Portfolio Managers (“PMs”) to make sure they are adhering to the ICON System; the Senior Vice President of Fund Management has been systematically tracking the Funds’ performance; he evaluates each of the ICON Funds to help ensure all PMs are investing consistently and in accordance with the ICON System by evaluating the Funds from an attribution perspective in monthly meetings.

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 concluded:

 

  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;

 

  B.

That the breadth and the quality of investment advisory and other services being provided to each Fund are satisfactory, the Adviser’s performance is competitive with other fund managers in the value style group, and the Adviser has applied a disciplined approach in the style specified in the Funds’ offering document;

 

  C.

That ICON has made significant expenditures in the past year and in prior years to ensure that it has reasonably 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 methodology;

 

  D.

That the Board, after considering compliance reports and compliance initiatives undertaken during the year and conducting individual interviews with selected PMs, is satisfied with the research and portfolio management, that research and portfolio management is being constantly evaluated and improved upon; and that the PMs are evaluating trading services systematically, the Board concluded that the Adviser is providing the Funds with professional management of the nature, quality and scope required by the Funds; 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 shareholders may redeem their shares at any time without notice and the Trust’s advisory relationship with ICON may be terminated at any time and must be renewed on an annual basis.

In considering the reasonableness of the fees paid to the Adviser for managing each Fund, the Board reviewed, among other things, data concerning other funds from the SI Report, financial statements of the Adviser and an analysis of the profitability of the Adviser, and its affiliates, and their relationship with each Fund over various time periods, and the SI Admin Analysis. Such 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 and a comparison of similar data from reports filed by publicly traded firms.

The Board assessed actual (net) fees for advisory services and Fund expense ratios under the contractual relationship (the Advisory agreements, the Administration Agreement and the Expense Limitation Agreements) with the Adviser as opposed to the fees specified in the applicable Advisory Agreement and expense ratios without application of the expense limitations and the low cost of the Administration Agreement and concluded that the focus should be on actual expense ratios after application of the Expense Limitation Agreements.

The Board considered the current and anticipated asset levels of each Fund and the contractual commitments of the Adviser to waive fees and pay expenses of the Funds from time to time to limit the total expenses of the Funds. The Board also considered the Adviser’s contractual commitment regarding administration and the fact it would continue to lose money on administration. In this regard the Board discussed asset levels in each Fund covered by the Advisory Agreements. 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 levels. The Board

 

 
Annual Report  |  September 30, 2016    41


Table of Contents
ICON International Funds    Additional Information
   September 30, 2016 (Unaudited)

 

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, and services provided to 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 on the fairness of fee arrangements, the Board considered the SI Report and the SI Admin Analysis. It was noted that SI was selected at the May Board meeting to prepare its reports, an extensive analysis of the expense data of other comparable funds; and that Trustee input was solicited and provided in the process. Among other information discussed, it was noted that:

 

  A.

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

 

  B.

ICON has contractually agreed to impose expense limitations on each and every Fund at a cost to ICON;

 

  C.

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;

 

  D.

ICON has contractually committed to providing Administration services to the Funds at a cost below the average to its peer group, and within the mutual fund universe of open-end fund managers with less than $10 billion in assets under management, at less than 50% of the fee of those funds, at a loss to ICON.

The Board also considered the fees charged by the Adviser to other advisory clients as outlined in its Registration Application on Form ADV in connection with assessing data bearing on the fairness of fee arrangements. The Trustees noted that certain ICON institutional/sub-advised type accounts have lower fees than the fees paid by the Funds for a number of reasons, including but not limited to, those clients call for different commitments of time, institutional clients have low and predictable turnover of assets, in competition joint costs are apportioned among paying customers according to elasticity of demand and the Adviser has a limited level of responsibility in sub-managed accounts, or accounts with an investor agent/advisor.

The Board noted that the Funds’ redemptions were similar to industry averages which showed two things: 1) that the Funds’ Performance was not adversely impacting fund redemptions, and 2) that the fees and costs were competitive when compared to size. The Board noted that there are thousands of mutual funds competing; that investors can search and trade funds on the internet or on platforms at very little or no cost; and that if the Adviser were overcharging for its services, the Board would have expected redemptions in excess of industry norms.

The Board concluded that the Adviser is providing the Funds with professional management at a fair, reasonable and competitive price.

In connection with assessing the direct and indirect benefits to ICON from serving as the Funds’ adviser, the Board discussed services provided under the Distribution Agreement and the Administrative Services Agreement which are in addition to services under the Advisory Agreements. It was noted that IDI does not charge a fee to the Funds for its services and that ICON’s fee for administrative services ICON appears from the SI Admin Analysis to be below the average to its peer group, and within the mutual fund universe of open-end fund managers with less than $10 billion in assets under management, at less than 50% of the fee of those funds, at a loss to ICON. The Board noted that 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 the Board concluded that the arrangements are consistent with Fund brokerage practices and benefit the Funds and their shareholders.

Based on these considerations, the Board, including all of the Independent Trustees, concluded that: 1) the continuation of the Advisory Agreements was in the best interests of each Fund and its shareholders, 2) the services to be performed under the Advisory Agreements 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, and its affiliates, were consistent with fees paid by similar funds and other clients of ICON, and were 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.

 

 
42    www.iconfunds.com


Table of Contents
ICON International Funds    Additional Information
   September 30, 2016 (Unaudited)

 

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.

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.

 

 
Annual Report  |  September 30, 2016    43


Table of Contents
ICON International Funds    Privacy Policy
   September 30, 2016 (Unaudited)

 

 

 

  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:

 

 
  

•      Social Security number and account balances

 

 
  

•      income and transaction history

 

 
  

•      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.

 

 

 
44    www.iconfunds.com


Table of Contents
ICON International Funds    Privacy Policy
   September 30, 2016 (Unaudited)

 

 

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

 

 
     

•      open an account or enter into an investment advisory contract

 
     

•      provide account information or give us your contact information

 
     

•      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

 

 
     

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

 
     

•      affiliates from using your information to market to you

 
     

•      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.

 

 
       

•       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.

 

 
       

•       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.

 

 
       

•      ICON doesn’t jointly market

 

   

 

 
Annual Report  |  September 30, 2016    45


Table of Contents

 

LOGO

 

For more information about the ICON Funds, contact us:

 

By Telephone

  

1-800-764-0442

By E-Mail

  

info@iconadvisers.com

By Mail

  

ICON Funds | P.O. Box 1920 | Denver, CO 80201

In Person

  

ICON Funds | 5299 DTC Boulevard, 12th Floor

  

Greenwood Village, CO 80111

On the Internet

  

www.iconfunds.com


Table of Contents

LOGO

Sector Funds

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 Natural Resources Fund

ICON Utilities Fund


Table of Contents

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

 


Table of Contents

TABLE OF CONTENTS

 

 

About This Report (Unaudited)

     2   

Management Overview (Unaudited) and Schedules of Investments

  

ICON Consumer Discretionary Fund

     3   

ICON Consumer Staples Fund

     7   

ICON Energy Fund

     11   

ICON Financial Fund

     15   

ICON Healthcare Fund

     19   

ICON Industrials Fund

     23   

ICON Information Technology Fund

     27   

ICON Natural Resources Fund

     31   

ICON Utilities Fund

     35   

Financial Statements

     39   

Financial Highlights

     55   

Notes to Financial Statements

     75   

Report of Independent Registered Public Accounting Firm

     89   

Disclosure of Fund Expenses (Unaudited)

     90   

Board of Trustees and Fund Officers (Unaudited)

     93   

Additional Information (Unaudited)

     94   

Privacy Policy

     99   


Table of Contents
ICON Sector Funds    About This Report
   September 30, 2016 (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 portfolio holdings as of September 30, 2016, the end of the reporting period. The information is not a complete analysis of every aspect of any sector, industry, security or the Funds.

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 ICON system relies on the integrity of the 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.

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.

 

 
2    www.iconfunds.com


Table of Contents
ICON Consumer Discretionary Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund Perform relative to its benchmark?

 

A.

The ICON Consumer Discretionary Fund (the Fund) Class S returned 4.49% for the fiscal year ended September 30, 2016, while the benchmark S&P 1500 Consumer Discretionary Index rose 8.49%. The broad market S&P 1500 Index returned 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016, 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.

Despite positive returns for the year, the Consumer Discretionary sector lagged the overall U.S. equity market. Investors in the Consumer Discretionary sector faced a number of headwinds including a rising U.S. dollar and its effect on earnings, growing competitive pressures from online retailers, and relatively tepid income growth for the U.S. workforce as a whole. Despite these headwinds, and aided by a resilient U.S. economy, stable consumer sentiment, and an accommodative monetary policy, investors were generally rewarded with positive performance in the sector. However, while the sector posted positive returns overall, there was notable performance dispersion at the industry level. Over the fiscal year 2016, economic growth remained positive and stable, unemployment fell, and inflation remained subdued by historical standards. We believe these factors could remain as tailwinds for the U.S. consumer and should be supportive for companies and industries in this sector of the economy.

 

Q.

How did the Fund’s Composition affect performance?

 

A.

The Apparel & Accessories & Luxury Goods industry was the greatest contributor to the Fund’s performance over the period on an industry level. The Fund was able to outperform the benchmark in this industry based on strong stock selection over the period thanks to companies such as Lululemon Athletica and Kate Spade contributing to the industry’s returns. The Homebuilding industry was another positive contributor, as holdings in LGI Homes contributed positively to the Fund’s performance.

The Internet & Direct Marketing Retail industry was the largest detractor to the Fund’s relative performance on the industry level. The Fund had no exposure to Amazon.com which posted large returns, thus the Fund’s lack of exposure contributed negatively to the performance of the Fund relative to the benchmark. Specialty Stores was another industry detractor to relative performance as Fund holdings in Signet Jewelers and Party City detracted from the Fund’s performance.

 

Q.

What is your investment outlook for the Consumer Discretionary sector?

 

A.

At the close of the fiscal year, our model indicates the Consumer Discretionary sector has a an overall average value-to-price (V/P) ratio of 1.14; or in other words, we believe the fair value for the stocks in the Consumer Discretionary sector as a whole is approximately 14% higher than where the stocks are currently trading. We currently see bargains in the automotive related industries, specifically Auto Parts & Equipment as well as the discount-related stocks within the retailing industry group. As always, we look to value as our primary guide and will adjust our positioning as market conditions dictate.

 

 
Annual Report  |  September 30, 2016    3


Table of Contents
ICON Consumer Discretionary Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

     

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    4.49%   14.40%     7.15%     5.79%   1.43%   1.43%

ICON Consumer Discretionary Fund - Class A

   9/30/10    3.86%   13.76%   N/A   13.21%   1.91%   1.91%

ICON Consumer Discretionary Fund - Class A

               

(including maximum sales charge of 5.75%)

   9/30/10    -2.14%   12.43%   N/A   12.10%   1.91%   1.91%

S&P 1500 Consumer Discretionary Index

      8.49%   19.69%   10.11%     8.63%   N/A   N/A

S&P Composite 1500 Index

      15.49%   16.44%     7.44%     6.97%   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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

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.

 

 
4    www.iconfunds.com


Table of Contents
ICON Consumer Discretionary Fund    Schedule of Investments
   September 30, 2016

 

   

Shares or

Principal
Amount

  Value  

 

 

Common Stocks (95.44%)

   

Apparel Retail (2.22%)

   

Ross Stores, Inc.

  6,100    $ 392,230       

TJX Cos., Inc.

  6,500     486,070       
   

 

 

 
      878,300       
   

 

 

 

Apparel, Accessories & Luxury Goods (3.01%)

  

Hanesbrands, Inc.

  16,400     414,100       

lululemon athletica, Inc.(a)

  12,800     780,544       
   

 

 

 
      1,194,644       
   

 

 

 

Auto Parts & Equipment (2.01%)

   

Delphi Automotive PLC

  4,100     292,412       

Modine Manufacturing Co.(a)

  33,900     402,054       

Visteon Corp.

  1,400     100,324       
   

 

 

 
      794,790       
   

 

 

 

Automotive Retail (6.46%)

   

AutoZone, Inc.(a)

  1,800     1,383,012       

O’Reilly Automotive, Inc.(a)

  4,200     1,176,462       
   

 

 

 
      2,559,474       
   

 

 

 

Broadcasting (4.29%)

   

CBS Corp., Class B

  15,500     848,470       

Discovery Communications,
Inc., Class A(a)

  16,700     449,564       

TEGNA, Inc.

  18,400     402,224       
   

 

 

 
      1,700,258       
   

 

 

 

Cable & Satellite (5.99%)

   

Comcast Corp., Class A

  35,800     2,374,972       
   

 

 

 

Computer & Electronics Retail (0.99%)

  

GameStop Corp., Class A(b)

  14,200     391,778       
   

 

 

 

Footwear (2.39%)

   

NIKE, Inc., Class B

  18,000     947,700       
   

 

 

 

General Merchandise Stores (6.87%)

  

Dollar General Corp.

  19,300     1,350,807       

Dollar Tree, Inc.(a)

  17,400     1,373,382       
   

 

 

 
      2,724,189       
   

 

 

 

Home Improvement Retail (2.60%)

  

Home Depot, Inc.

  8,000     1,029,440       
   

 

 

 

Homefurnishing Retail (3.03%)

   

Aaron’s, Inc.

  47,200     1,199,824       
   

 

 

 

Hotels, Resorts & Cruise Lines (3.91%)

  

Norwegian Cruise Line
Holdings, Ltd.(a)

  29,000     1,093,300       

Wyndham Worldwide Corp.

  6,800     457,844       
   

 

 

 
      1,551,144       
   

 

 

 

Household Appliances (2.00%)

   

Whirlpool Corp.

  4,900     794,584       
   

 

 

 
   

Shares or

Principal
Amount

  Value  

 

 

Internet & Direct Marketing Retail (2.23%)

  

Priceline Group, Inc.(a)

  600    $ 882,894       
   

 

 

 

Leisure Products (6.27%)

   

Brunswick Corp.

  26,800     1,307,304       

Smith & Wesson Holding
Corp.(a)(b)

  44,300     1,177,937       
   

 

 

 
      2,485,241       
   

 

 

 

Movies & Entertainment (18.40%)

  

Cinemark Holdings, Inc.

  43,300     1,657,524       

Time Warner, Inc.

  21,200     1,687,732       

Twenty-First Century Fox,
Inc., Class A

  82,100     1,988,462       

Walt Disney Co.

  21,100     1,959,346       
   

 

 

 
      7,293,064       
   

 

 

 

Publishing (1.03%)

   

Gannett Co., Inc.

  34,900     406,236       
   

 

 

 

Restaurants (10.78%)

   

Chipotle Mexican Grill,
Inc.(a)(b)

  500     211,750       

McDonald’s Corp.

  20,600     2,376,416       

Starbucks Corp.

  31,100     1,683,754       
   

 

 

 
      4,271,920       
   

 

 

 

Specialized Consumer Services (1.69%)

  

H&R Block, Inc.

  18,000     416,700       

Liberty Tax, Inc.

  19,745     252,342       
   

 

 

 
      669,042       
   

 

 

 

Specialty Stores (9.27%)

   

Five Below, Inc.(a)

  33,200     1,337,628       

Signet Jewelers, Ltd.

  20,800     1,550,224       

Ulta Salon Cosmetics &
Fragrance, Inc.(a)

  3,300     785,334       
   

 

 

 
      3,673,186       
   

 

 

 

Total Common Stocks

(Cost $40,126,040)

      37,822,680       
   

 

 

 

Collateral for Securities on Loan (4.50%)

  

State Street Navigator Prime
Portfolio, 0.30%

  1,782,625     1,782,625       
   

 

 

 

Total Collateral for Securities on Loan

(Cost $1,782,625)

    1,782,625       
   

 

 

 

 

 

 

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

 

Annual Report  |  September 30, 2016    5


Table of Contents
ICON Consumer Discretionary Fund    Schedule of Investments
   September 30, 2016

 

     Shares or
Principal
Amount
     Value  

 

 

Short-Term Investments (6.91%)

  

Time Deposits (6.91%)

     

State Street Euro Dollar Time
Deposit (USD),
0.01%, 10/03/16

     2,739,714        $ 2,739,714       
     

 

 

 

Total Short-Term Investments

(Cost $2,739,714)

        2,739,714       
     

 

 

 

Total Investments (106.85%)

(Cost $44,648,379)

       $ 42,345,019       

Liabilities Less Other Assets

(-6.85%)

        (2,714,258)       
     

 

 

 

Net Assets (100.00%)

       $ 39,630,761       
     

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of the security was on loan as of September 30, 2016.

 

Sector Composition (September 30, 2016)

  

 

 

 

Consumer Discretionary

     95.44%   
  

 

 

 
                 95.44%   
  

 

 

 

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

 

Industry Composition (September 30, 2016)

 

 

 

 

Movies & Entertainment

     18.40%   

Restaurants

     10.78%   

Specialty Stores

     9.27%   

General Merchandise Stores

     6.87%   

Automotive Retail

     6.46%   

Leisure Products

     6.27%   

Cable & Satellite

     5.99%   

Broadcasting

     4.29%   

Hotels, Resorts & Cruise Lines

     3.91%   

Homefurnishing Retail

     3.03%   

Apparel, Accessories & Luxury Goods

     3.01%   

Home Improvement Retail

     2.60%   

Footwear

     2.39%   

Internet & Direct Marketing Retail

     2.23%   

Apparel Retail

     2.22%   

Auto Parts & Equipment

     2.01%   

Household Appliances

     2.00%   

Specialized Consumer Services

     1.69%   

Publishing

     1.03%   

Other Industries (each less than 1%)

     0.99%   
  

 

 

 
                 95.44%   
  

 

 

 

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

 

 

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

 

6    www.iconfunds.com


Table of Contents
ICON Consumer Staples Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Consumer Staples Fund (the Fund) Class S returned 12.09% for the fiscal year ended September 30, 2016, while its sector-specific benchmark, the S&P 1500 Consumer Staples Index, returned 15.60%, and the S&P 1500 Index returned 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

While the broad market was generally higher over the past year, the Consumer Staples sector slightly outperformed the overall U.S. equity market. Faced with a historically low interest rate environment, many investors sought out market sectors with lower historical volatility and higher than average dividend yields. We believe this global search for what has been coined as “bond proxies,” brought forth huge demand and performance gains for sectors like Telecommunication Services, Utilities, and Consumer Staples. Despite spending the year trading at higher prices indicative of very little future upside, according to our models, stocks in the Consumer Staples sector maintained strong leadership throughout much of the year. We feel this leadership could come to an end if interest rates move higher in the future. Over the fiscal year ended September 30, 2016, economic growth remained positive and stable, unemployment fell, and inflation remained subdued by historical standards. All these factors could remain as tailwinds for the U.S. consumer and should be supportive for companies and industries in this sector of the economy.

 

Q.

How did the Fund’s composition affect performance?

 

A.

The Packaged Foods & Meats industry was the greatest contributor to the Fund’s performance over the period on an industry level. The Fund was able to outperform the benchmark in this industry based on strong stock selection over the period thanks to overweight positions in Tyson Foods and WhiteWave Foods, both of which performed well during the fiscal year. The Soft Drinks industry was another positive contributor as Monster Beverage posted strong gains, contributing positively to the Fund’s performance.

 

    

The Household Products industry was the Fund’s largest detractor to relative performance on the industry level. An underweight position in Procter & Gamble proved to be a detractor, contributing negatively to the performance of the Fund relative to the benchmark. The Drug Retail industry also detracted from relative performance as overweight positions in CVS Health and Walgreens Boots Alliance detracted from the Fund’s returns. Additionally, due to our valuation methodology indicating relatively low value for the sector, cash was held during the year for defensive purposes which ultimately dragged against the Fund’s returns as the sector experienced gains for the year.

 

Q.

What is your investment outlook for the Consumer Staples sector?

 

A.

At the close of the fiscal year, our model indicates the Consumer Staples sector has a an overall average value-to-price (V/P) ratio of 1.07; or in other words, we believe the fair value for the stocks in the Consumer Staples sector as a whole is approximately 7% higher than where the stocks are currently trading. We currently see bargains in the Tobacco, Soft Drinks, and Drug Retail industries. As always, we look to value as our primary guide and will adjust our positioning as market conditions dictate.

 

 
Annual Report  |  September 30, 2016    7


Table of Contents
ICON Consumer Staples Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

      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    12.09%   13.38%     7.88%     8.71%   1.87%   1.51%

ICON Consumer Staples Fund - Class A

   9/30/10    11.93%   13.06%   N/A   12.29%   2.12%   1.76%

ICON Consumer Staples Fund - Class A

               

(including maximum sales charge of 5.75%)

   9/30/10    5.50%   11.73%   N/A   11.20%   2.12%   1.76%

S&P 1500 Consumer Staples Index

      15.60%   15.51%   10.92%     8.37%   N/A   N/A

S&P Composite 1500 Index

      15.49%   16.44%     7.44%     7.46%   N/A   N/A

Past performance is not a guarantee of future results. The performance of the S&P 1500 Consumer Staples 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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

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.

 

 
8    www.iconfunds.com


Table of Contents
ICON Consumer Staples Fund    Schedule of Investments
   September 30, 2016

 

 

    

Shares or
Principal

Amount

   Value  

 

 

Common Stocks (91.77%)

     

Agricultural Products (4.45%)

  

Bunge, Ltd.

   30,200     $   1,788,746       
     

 

 

 

Brewers (1.04%)

     

Molson Coors Brewing Co.,
Class B

   3,800      417,240       
     

 

 

 

Distillers & Vintners (4.02%)

  

Constellation Brands, Inc.,
Class A

   9,700      1,614,953       
     

 

 

 

Drug Retail (9.50%)

     

CVS Health Corp.

   13,400      1,192,466       

Walgreens Boots Alliance,
Inc.

   32,600      2,628,212       
     

 

 

 
        3,820,678       
     

 

 

 

Food Retail (4.09%)

     

Kroger Co.

   55,400      1,644,272       
     

 

 

 

Household Products (8.22%)

  

Kimberly-Clark Corp.

   16,700      2,106,538       

Orchids Paper Products Co.(a)

   20,344      553,967       

Procter & Gamble Co.

   7,200      646,200       
     

 

 

 
        3,306,705       
     

 

 

 

Packaged Foods & Meats (24.31%)

  

Blue Buffalo Pet Products,
Inc.(b)

   33,400      793,584       

Cal-Maine Foods, Inc.(a)

   1,800      69,372       

Dean Foods Co.

   18,000      295,200       

Flowers Foods, Inc.(a)

   15,100      228,312       

General Mills, Inc.

   18,400      1,175,392       

Hormel Foods Corp.

   23,400      887,562       

J.M. Smucker Co.

   8,800      1,192,752       

Kellogg Co.

   15,500      1,200,785       

Mondelez International, Inc.,
Class A

   45,600      2,001,840       

Pinnacle Foods, Inc.

   6,000      301,020       

Snyder’s-Lance, Inc.

   7,000      235,060       

TreeHouse Foods, Inc.(b)

   16,000      1,395,040       
     

 

 

 
        9,775,919       
     

 

 

 

Personal Products (3.83%)

  

Estee Lauder Cos., Inc.,
Class A

   17,400      1,540,944       
     

 

 

 

Soft Drinks (17.18%)

     

Coca-Cola Co.

   66,800      2,826,976       

Dr. Pepper Snapple Group,
Inc.

   13,200      1,205,292       

Monster Beverage Corp.

   5,500      807,455       

PepsiCo, Inc.

   19,000      2,066,630       
     

 

 

 
        6,906,353       
     

 

 

 

Tobacco (15.13%)

     

Altria Group, Inc.

   44,000      2,782,120       
    

Shares or
Principal

Amount

   Value  

 

 

Tobacco (continued)

     

Philip Morris International,
Inc.

   13,400     $ 1,302,748       

Reynolds American, Inc.

   42,400      1,999,160       
     

 

 

 
        6,084,028       
     

 

 

 

Total Common Stocks

(Cost $36,948,310)

        36,899,838       
     

 

 

 

Collateral for Securities on Loan (2.01%)

  

State Street Navigator Prime
Portfolio, 0.30%

   807,060      807,060       
     

 

 

 

Total Collateral for Securities on Loan

(Cost $807,060)

     807,060       
     

 

 

 

Short-Term Investments (26.55%)

  

Money Market Funds (12.44%)

  

State Street Global Advisors
Treasury Fund (0.11% 7
Day Yield)

   5,000,000      5,000,000       
     

 

 

 

Time Deposits (14.11%)

     

State Street Euro Dollar Time
Deposit (USD),
0.01%, 10/03/16

   5,673,964      5,673,964       
     

 

 

 

Total Short-Term Investments

(Cost $10,673,964)

     10,673,964       
     

 

 

 

Total Investments (120.33%)

(Cost $48,429,334)

       $ 48,380,862       

Liabilities Less Other Assets (-20.33%)

     (8,172,765)       
     

 

 

 

Net Assets (100.00%)

       $ 40,208,097       
     

 

 

 

 

(a) 

All or a portion of the security was on loan as of September 30, 2016.

(b) 

Non-income producing security.

 

 

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

 

Annual Report  |  September 30, 2016    9


Table of Contents
ICON Consumer Staples Fund    Schedule of Investments
   September 30, 2016

 

Sector Composition (September 30, 2016)  

Consumer Staples

             91.77%   
  

 

 

 
     91.77%   
  

 

 

 

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

 

Industry Composition (September 30, 2016)  

Packaged Foods & Meats

     24.31%   

Soft Drinks

     17.18%   

Tobacco

     15.13%   

Drug Retail

     9.50%   

Household Products

     8.22%   

Agricultural Products

     4.45%   

Food Retail

     4.09%   

Distillers & Vintners

     4.02%   

Personal Products

     3.83%   

Brewers

             1.04%   
  

 

 

 
     91.77%   
  

 

 

 

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

 

 

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

 

10    www.iconfunds.com


Table of Contents
ICON Energy Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

For the fiscal year ending September 30, 2016, the ICON Energy Fund (the Fund) Class S returned 14.55%, underperforming its sector-specific benchmark, the S&P 1500 Energy Index, which returned 18.26%. The Fund also lagged the broad benchmark, the S&P 1500 Index, which returned 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

The Energy sector’s outperformance relative to the broad market came despite oil prices having a volatile year. From early October 2015 to mid-February 2016 the price per barrel of oil fell by over 47% to hit a low for the period about $26.11 per barrel. The low price of oil sparked anticipation of reduced oil production and we saw a traumatic reduction in oil rig count in the U.S. By May of 2016 the U.S. rig count fell to 316 from the 809 rigs reported at the beginning of the fiscal year. From the February 2016 low to June 2016 oil gained about 95% to reach its high for the period of $51.23 per barrel. The fiscal year ended with an announcement from the Organization of Petroleum Exporting Countries (OPEC) that it had agreed to curtail production to support oil pricing. This production curtailment reversed an 8 year trend of OPEC’s resistance to engage in production cuts to support oil pricing. Despite all the volatility, the price of oil gained over 6% for the fiscal year ended September 30, 2016. Outside of oil, natural gas, had a strong but volatile year as well with the natural gas one month forward contract gaining about 15% for the one year period ended September 30, 2016. One factor in the rise in natural gas was increased demand from Mexico for U.S. natural gas. This increase was due in part to Mexico’s passage of several aggressive energy bills in 2013 and 2014. Mexico’s energy reforms included a plan to reduce the cost of electricity production by replacing the less efficient diesel and oil electrical pants with natural gas electrical plants.

 

Q.

How did the Fund’s composition affect performance?

 

A.

The Oil & Gas Equipment & Services industry was the largest detractor to the Fund’s performance relative to the benchmark at the industry level. The Fund’s stock selection within this industry detracted from performance with the Fund’s holdings in the industry gaining around 2% compared to the over 13% gain for the benchmark. One stock within the Oil & Gas Equipment & Services industry, Oceaneering International, was the single largest detractor to the Fund’s relative performance as the stock dropped 27.54% over the course of the fiscal year. Another detractor from benchmark relative performance was the Fund’s stock selection in the Coal & Consumable Fuels industry as one stock, Alliance Resource Partners, L.P., was down approximately 37% for the year. Lastly, The Fund’s underweight position in the Integrated Oil & Gas industry detracted from performance relative to the benchmark.

The greatest contributor to the Fund’s performance on an industry level were the Fund’s holdings in the Oil & Gas Storage & Transportation industry. During the first three months of the fiscal year the Fund had an underweight position in the Oil & Gas Storage & Transportation industry relative to the benchmark. During that time, the industry declined approximately 30%. However, by the end of January 2016, the Fund was overweight this industry relative to the benchmark and from the end of December 2015 through the end of September 2016, the industry gained over 60%. Looking at the entire fiscal year ended September 30, 2016 the Fund’s holdings in the Oil & Gas Storage & Transportation industry gained over 50% compared the benchmark’s gain of approximately 13% in the industry.

 

Q.

What is your investment outlook for the Energy sector?

 

A.

At the end of the fiscal year, the overall average value-to-price (V/P) ratio for the Energy sector was 1.01 while the V/P ratio for the overall market was 1.09. With the recent run up in the Oil & Gas Storage & Transportation industry, the Fund’s position in the industry was reduced but remains slightly overweighed relative to the benchmark. Additionally the Fund also has a slight overweight Oil & Gas Refining & Marketing industry. Over the course of the upcoming fiscal year we are looking for signs of stabilization in forward looking earnings within the Energy sector and will reposition the Fund as our valuation methodology dictates.

 

 
Annual Report  |  September 30, 2016    11


Table of Contents
ICON Energy Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

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

 

 

ICON Energy Fund - Class S

     11/5/97         14.55     1.09     2.50     8.47     1.42     1.42%   

ICON Energy Fund - Class C

     9/30/10         13.31     0.01     N/A        -0.03     2.43     2.43%   

ICON Energy Fund - Class A

     9/30/10         14.19     0.79     N/A        0.74     1.66     1.66%   

ICON Energy Fund - Class A

               

(including maximum sales charge of 5.75%)

     9/30/10         7.61     -0.39     N/A        -0.25     1.66     1.66%   

S&P 1500 Energy Index

        18.26     5.35     4.45     7.47     N/A        N/A      

S&P Composite 1500 Index

        15.49     16.44     7.44     6.80     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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

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.

 

 
12    www.iconfunds.com


Table of Contents
ICON Energy Fund    Schedule of Investments
   September 30, 2016 

 

    Shares or
Principal
Amount
  Value  

 

 

Common Stocks (98.00%)

  

Integrated Oil & Gas (27.85%)

  

Chevron Corp.

  259,500   $ 26,707,740     

Eni S.p.A., Sponsored ADR(a)

  225,000     6,495,750     

Exxon Mobil Corp.

  462,500     40,367,000     

Royal Dutch Shell PLC, Sponsored ADR, Class A

  228,200     11,425,974     

Suncor Energy, Inc.

  472,200     13,117,716     
   

 

 

 
      98,114,180     
   

 

 

 

Oil & Gas Equipment & Services (20.24%)

  

Baker Hughes, Inc.

  109,000     5,501,230     

Bristow Group, Inc.(a)

  442,000     6,196,840     

Dril-Quip, Inc.(b)

  153,400     8,550,516     

Matrix Service Co.(b)

  189,000     3,545,640     

National Oilwell Varco, Inc.

  95,500     3,508,670     

Oceaneering International, Inc.

  271,300     7,463,463     

RPC, Inc.(a)(b)

  467,000     7,845,600     

Schlumberger, Ltd.

  284,550     22,377,012     

Tenaris S.A., ADR(a)

  222,600     6,321,840     
   

 

 

 
      71,310,811     
   

 

 

 

Oil & Gas Exploration & Production (32.05%)

  

Antero Resources Corp.(b)

  128,300     3,457,685     

Cabot Oil & Gas Corp.

  404,800     10,443,840     

Carrizo Oil & Gas, Inc.(b)

  149,500     6,072,690     

Chesapeake Energy Corp.(a)(b)

  1,302,850     8,168,869     

Cimarex Energy Co.

  52,500     7,054,425     

Continental Resources, Inc.(b)

  126,950     6,596,322     

Denbury Resources, Inc.(a)(b)

  1,020,450     3,296,054     

Diamondback Energy, Inc.(b)

  129,050     12,458,487     

EOG Resources, Inc.

  120,100     11,614,871     

EQT Corp.

  99,400     7,218,428     

Gulfport Energy Corp.(b)

  157,100     4,438,075     

Matador Resources Co.(b)

  220,400     5,364,536     

Newfield Exploration Co.(b)

  39,000     1,694,940     

Southwestern Energy Co.(b)

  303,000     4,193,520     

Synergy Resources Corp.(b)

  1,728,550     11,978,852     

W&T Offshore, Inc.(a)(b)

  1,480,900     2,606,384     

Whiting Petroleum Corp.(a)(b)

  713,434     6,235,413     
   

 

 

 
      112,893,391     
   

 

 

 

Oil & Gas Refining & Marketing (8.82%)

  

HollyFrontier Corp.

  229,600     5,625,200     

Marathon Petroleum Corp.

  130,950     5,315,260     

PBF Energy, Inc., Class A(a)

  152,500     3,452,600     

Phillips 66

  109,050     8,783,978     

Tesoro Corp.

  56,900     4,526,964     

Valero Energy Corp.

  63,150     3,346,950     
   

 

 

 
      31,050,952     
   

 

 

 
    Shares or
Principal
Amount
    Value  

 

 

Oil & Gas Storage & Transportation (9.04%)

  

Golar LNG, Ltd.(a)

    329,000      $ 6,974,800     

Magellan Midstream Partners L.P.

    141,500        10,009,710     

Ship Finance International, Ltd.(a)

    326,700        4,812,291     

Teekay Corp.

    200,000        1,542,000     

Teekay LNG Partners L.P.

    446,700        6,758,571     

Williams Cos., Inc.

    57,120        1,755,298     
   

 

 

 
      31,852,670     
   

 

 

 

Total Common Stocks

(Cost $342,828,109)

      345,222,004     
   

 

 

 

Collateral for Securities on Loan (12.11%)

  

 

State Street Navigator Prime Portfolio, 0.30%

    42,662,836        42,662,836     
   

 

 

 

Total Collateral for Securities on Loan

(Cost $42,662,836)

  

  

    42,662,836     
   

 

 

 

Short-Term Investments (0.65%)

  

Time Deposits (0.65%)

  

State Street Euro Dollar Time Deposit (USD), 0.01%, 10/03/16

    2,281,409        2,281,409     
   

 

 

 

Total Short-Term Investments

(Cost $2,281,409)

      2,281,409     
   

 

 

 

Total Investments (110.76%)

(Cost $387,772,354)

    $ 390,166,249     

Liabilities Less Other Assets (-10.76%)

  

    (37,897,704)     
   

 

 

 

Net Assets (100.00%)

    $ 352,268,545     
   

 

 

 

 

(a) 

All or a portion of the security was on loan as of September 30, 2016.

(b) 

Non-income producing security.

ADR - American Depositary Receipt

 

Sector Composition (September 30, 2016)        

Energy

     98.00
  

 

 

 
         98.00
  

 

 

 

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

 

 

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

 

Annual Report  |  September 30, 2016    13


Table of Contents
ICON Energy Fund    Schedule of Investments
   September 30, 2016

 

Industry Composition (September 30, 2016)        

Oil & Gas Exploration & Production

     32.05%   

Integrated Oil & Gas

     27.85%   

Oil & Gas Equipment & Services

     20.24%   

Oil & Gas Storage & Transportation

     9.04%   

Oil & Gas Refining & Marketing

     8.82%   
  

 

 

 
               98.00%   
  

 

 

 

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

 

 

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

 

14    www.iconfunds.com


Table of Contents
ICON Financial Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Financial Fund (the Fund) Class S returned -.90% for the fiscal year ending September 30, 2016, lagging both its sector-specific benchmark, the S&P 1500 Financials Index, which returned 8.43%, and its broad benchmark, the S&P 1500 Index, which returned 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016 appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

Despite the Financial sector having the highest overall average value-to-price (V/P) ratio according to our valuation model of all sectors we track, the Financial sector struggled over the course of the fiscal year ending September 30, 2016. The Financial sector is heavily influenced by interest rates and for banking stocks the difference between short-term interest rates and long-term interest rates can be particularly influential. Over the course of the fiscal year rates on the long end of the yield curve declined, with the yield on 30-year U.S. Treasury Note falling from 2.85% to 2.32%. On the short end, the yield on the 3-month U.S. Treasury Bill actually rose slightly from -.02% to .28%. This flattening of the yield curve created headwinds for banks by increasing the cost to borrow at the short end of the yield curve and reducing the income generated by loans at the long end of the yield curve.

Further struggles for the Financial sector came from the still unfolding Wells Fargo scandal. In early September 2016, Wells Fargo was fined and publicly reprimanded for creating false customer accounts. Upon the announcement of the fine, Wells Fargo stock fell over 11%. This incident appears to have reignited the negative view of the Financial sector.

 

Q.

How did the Fund’s composition affect performance?

 

A.

The biggest detractor to the Fund’s performance relative to the benchmark was the Fund’s overweight position in the Real Estate Services industry. Over the course of the fiscal year ended September 30, 2016, the industry lost over 14%. Additional losses came from stock selection in the Life & Health Insurance industry. Specifically, the Fund’s position in CNO Financial Group, which lost over 17% over the course of the fiscal year, was the largest single detractor from the Fund’s performance. Losses in the Consumer Finance industry and Asset Management & Custody Bank industry detracted from the Fund’s performance relative to the benchmark.

These losses were offset in part by the Fund’s holdings in the Mortgage REITs industry. Further losses were offset by the Fund’s holdings in the data processing industry within the Information Technology sector. Specifically Mastercard Inc., which gained more than 10% over the course of the fiscal year. However, the positive impact of holdings in these industries was not enough to overcome the underperformance discussed earlier.

It is important to note that the creation of the Real Estate sector in the Global Industry Classification Standards (GICS) in August 2016 impacted the Financial sector as several industries were moved out of the Financial sector and into the Real Estate sector.

 

Q.

What is your investment outlook for the Financials sector?

 

A.

As of September 30, 2016, ICON’s overall average V/P ratio for the Financial sector was 1.32 while ICON’s overall average V/P ratio for the entire market was 1.09. Based on our valuation methodology, 65% industries in the financial sector have valuations above 1.10. Going into the next fiscal year, the Fund has notable overweight positions in the Thrifts & Mortgage Finance industry and the Multi-line Insurance industry. We will continue to look for opportunities in the Financial sector over the year as guided by value.

 

 
Annual Report  |  September 30, 2016    15


Table of Contents
ICON Financial Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

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

ICON Financial Fund - Class S

    7/1/97        -0.90%        11.29%        -3.35%        3.31%        1.56%        1.56%   

ICON Financial Fund - Class A

    9/30/10        -1.41%        10.90%        N/A        6.01%        2.26%        1.82%   

ICON Financial Fund - Class A

             

(including maximum sales charge of 5.75%)

    9/30/10        -7.11%        9.57%        N/A        4.97%        2.26%        1.82%   

S&P 1500 Financials Index

      8.43%        17.38%        -0.78%        4.21%        N/A        N/A   

S&P Composite 1500 Index

      15.49%        16.44%        7.44%        7.07%        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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

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.

 

 
16    www.iconfunds.com


Table of Contents
ICON Financial Fund    Schedule of Investments
   September 30, 2016

 

 

    

Shares or

Principal

Amount

  Value  

 

 

Common Stocks (100.21%)

 

Asset Management & Custody Banks (5.38%)

  

Affiliated Managers Group,
Inc.(a)

   4,500    $ 651,150       

GAMCO Investors, Inc.,
Class A

   13,100     372,957       

Janus Capital Group, Inc.

   78,600     1,101,186       

Legg Mason, Inc.

   10,200     341,496       
    

 

 

 
       2,466,789       
    

 

 

 

Consumer Finance (7.11%)

 

Ally Financial, Inc.

   17,900     348,513       

American Express Co.

   14,900     954,196       

Capital One Financial Corp.

   11,100     797,313       

Discover Financial Services

   20,600     1,164,930       
    

 

 

 
       3,264,952       
    

 

 

 

Data Processing & Outsourced Services (3.62%)

  

Euronet Worldwide, Inc.(a)

   10,100     826,483       

MasterCard, Inc., Class A

   8,200     834,514       
    

 

 

 
       1,660,997       
    

 

 

 

Diversified Banks (24.49%)

  

Bank of America Corp.

   169,100     2,646,415       

Citigroup, Inc.

   38,400     1,813,632       

JPMorgan Chase & Co.

   43,300     2,883,347       

U.S. Bancorp

   38,800     1,664,132       

Wells Fargo & Co.

   50,400     2,231,712       
    

 

 

 
       11,239,238       
    

 

 

 

Financial Exchanges & Data (1.01%)

 

MarketAxess Holdings, Inc.

   2,800     463,652       
    

 

 

 

Insurance Brokers (5.69%)

  

Aon PLC

   11,400     1,282,386       

Arthur J Gallagher & Co.

   26,100     1,327,707       
    

 

 

 
       2,610,093       
    

 

 

 

Investment Banking & Brokerage (2.33%)

 

E*TRADE Financial Corp.(a)

   36,700     1,068,704       
    

 

 

 

Life & Health Insurance (7.72%)

  

CNO Financial Group, Inc.

   67,700     1,033,779       

Lincoln National Corp.

   13,800     648,324       

Sun Life Financial, Inc.(b)

   34,000     1,106,360       

Unum Group

   21,400     755,634       
    

 

 

 
       3,544,097       
    

 

 

 

Mortgage REIT’s (3.75%)

 

Annaly Capital Management,
Inc., REIT

   100,400     1,054,200       

MFA Financial, Inc., REIT

   89,400     668,712       
    

 

 

 
       1,722,912       
    

 

 

 

Multi-line Insurance (6.01%)

 

American International
Group, Inc.

   25,800     1,530,972       

Horace Mann Educators
Corp.

   33,424     1,224,989       
    

 

 

 
       2,755,961       
    

 

 

 
   

Shares or

Principal

Amount

  Value  

 

 

Multi-Sector Holdings (3.93%)

  

Berkshire Hathaway, Inc.,
Class B(a)

  12,500    $ 1,805,875       
   

 

 

 

Other Diversified Financial Services (1.23%)

  

Voya Financial, Inc.

  19,600     564,872       
   

 

 

 

Property & Casualty Insurance (5.23%)

 

AmTrust Financial Services,
Inc.

  27,500     737,825       

XL Group PLC

  49,500     1,664,685       
   

 

 

 
      2,402,510       
   

 

 

 

Real Estate Services (6.06%)

   

CBRE Group, Inc., Class A(a)

  38,300     1,071,634       

Colliers International Group,
Inc.

  14,900     626,843       

Jones Lang LaSalle, Inc.

  9,500     1,081,005       
   

 

 

 
      2,779,482       
   

 

 

 

Regional Banks (12.12%)

   

BancorpSouth, Inc.

  20,500     475,600       

Fifth Third Bancorp

  70,600     1,444,476       

First Commonwealth
Financial Corp.

  150,300     1,516,527       

First Midwest Bancorp, Inc.

  42,300     818,928       

Signature Bank(a)

  7,500     888,375       

SVB Financial Group(a)

  3,800     420,052       
   

 

 

 
      5,563,958       
   

 

 

 

Thrifts & Mortgage Finance (4.53%)

 

BofI Holding, Inc.(a)(b)

  19,200     430,080       

Dime Community
Bancshares, Inc.

  36,043     604,081       

New York Community
Bancorp, Inc.

  42,600     606,198       

Radian Group, Inc.

  32,300     437,665       
   

 

 

 
      2,078,024       
   

 

 

 

Total Common Stocks

(Cost $47,278,764)

      45,992,116       
   

 

 

 

Collateral for Securities on Loan (1.10%)

 

State Street Navigator Prime
Portfolio, 0.30%

  502,800     502,800       
   

 

 

 

Total Collateral for Securities on Loan

(Cost $502,800)

    502,800       
   

 

 

 

Total Investments (101.31%)

(Cost $47,781,564)

     $   46,494,916       

Liabilities Less Other Assets (-1.31%)

    (599,542)       
   

 

 

 

Net Assets (100.00%)

     $   45,895,374       
   

 

 

 
 

 

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

 

Annual Report  |  September 30, 2016    17


Table of Contents
ICON Financial Fund    Schedule of Investments
   September 30, 2016

 

(a) 

Non-income producing security.

(b) 

All or a portion of the security was on loan as of September 30, 2016.

REIT - Real Estate Investment Trust

 

Sector Composition (September 30, 2016)        

Financial

     90.53%   

Real Estate

     6.06%   

Information Technology

     3.62%   
  

 

 

 
             100.21%   
  

 

 

 

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

 

Industry Composition (September 30, 2016)        

Diversified Banks

     24.49%   

Regional Banks

     12.12%   

Life & Health Insurance

     7.72%   

Consumer Finance

     7.11%   

Real Estate Services

     6.06%   

Multi-line Insurance

     6.01%   

Insurance Brokers

     5.69%   

Asset Management & Custody Banks

     5.38%   

Property & Casualty Insurance

     5.23%   

Thrifts & Mortgage Finance

     4.53%   

Multi-Sector Holdings

     3.93%   

Mortgage REIT’s

     3.75%   

Data Processing & Outsourced Services

     3.62%   

Investment Banking & Brokerage

     2.33%   

Other Diversified Financial Services

     1.23%   

Financial Exchanges & Data

     1.01%   
  

 

 

 
             100.21%   
  

 

 

 

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

 

 

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

 

18    www.iconfunds.com


Table of Contents
ICON Healthcare Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Healthcare Fund Class S returned 9.44% for the fiscal year ended September 30, 2016, under-performing its sector-specific benchmark, the S&P 1500 Health Care Index, which returned 11.01%, and under-performing its broad benchmark, the S&P 1500 Index, which returned 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016 appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

While the broad market ended the past fiscal year on strong gains, the period wasn’t without its turbulence. January saw a selloff after the Federal Reserve hiked interest rates in the prior month. Equities rallied into the summer, but experienced another shock as Britain voted to leave the European Union. Brexit, as this came to be called, caused a sharp selloff in global stock markets, yet those losses were quickly erased as the rally steadily marched higher. While worries about global monetary policy and uncertainty surrounding the upcoming U.S. presidential election persist, the Health Care sector dealt with a number of its own unique challenges. Drug pricing concerns carried over from the past year and scrutiny surrounding this broad issue intensified as some companies had to defend their practices to Congress. Drug pricing has also made its way into political speeches for the upcoming election. The focus on this topic seems to be weighing on sentiment for pharmaceutical and biotechnology stocks. In addition, general health care utilization activity, after effects of the Affordable Care Act legislation, and merger and acquisition activity shaped the landscape for Health Care stocks over the year. The Health Care sector showed modest upside to our estimation of fair value for most of the year, with a slight increase as the period ended.

 

Q.

What were the Fund’s greatest contributors/detractors?

 

A.

Biotechnology was the greatest industry contributor to the Fund’s outperformance relative to the benchmark during the fiscal year as the Fund outperformed based on individual stock selection within the industry. Companies like Eagle Pharmaceuticals, Alexion Pharmaceuticals, and AbbVie were notable contributors. Additionally, the Health Care Services industry was a positive contributor to the Fund’s relative performance as the Fund was able to outperform based on individual stock selection within the industry. The Fund’s holdings in companies like BioTelemetry, MEDNAX, and Laboratory Corporation of America Holdings contributed to this industry’s returns.

The Pharmaceutical industry was the Fund’s largest detractor to relative performance on an industry level. Specifically, stock selection within the industry had a negative effect on performance as an overweight position in Valeant Pharmaceuticals International, and underweight position in Johnson & Johnson detracted from relative returns. Additionally, the Health Care Distributors industry was a detractor from relative performance as the Fund was overweight this negatively performing industry for the year.

 

Q.

What is your investment outlook for the Health Care sector?

 

A.

After positive returns for most of the past fiscal year, the Health Care sector has an overall average value-to-price (V/P) ratio of 1.07 according to our methodology; or in other words, we believe the overall average fair value for the Health Care sector is approximately 7% higher than where it is currently trading. We currently see broad value across most industries, most notably in the Pharmaceuticals and Managed Health Care industries. As always, we look to value as our primary guide and will adjust our positioning as market conditions dictate.

 

 
Annual Report  |  September 30, 2016    19


Table of Contents
ICON Healthcare Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

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

 

ICON Healthcare Fund - Class S

   2/24/97    9.44%   19.87%   8.54%   10.46%   1.36%   1.36%

ICON Healthcare Fund - Class A

   9/30/10    9.03%   19.42%   N/A   17.15%   1.62%   1.62%

ICON Healthcare Fund - Class A

               

(including maximum sales charge of 5.75%)

   9/30/10    2.76%   18.01%   N/A   16.00%   1.62%   1.62%

S&P 1500 Health Care Index

      11.01%   20.33%   10.57%     9.38%   N/A   N/A

S&P Composite 1500 Index

      15.49%   16.44%   7.44%     7.49%   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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

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.

 

 
20    www.iconfunds.com


Table of Contents
ICON Healthcare Fund    Schedule of Investments
   September 30, 2016

 

    

Shares or

Principal

Amount

   Value  

 

 

Common Stocks (97.25%)

  

Biotechnology (28.20%)

  

AbbVie, Inc.

   42,300     $ 2,667,861       

Alexion Pharmaceuticals,
Inc.(a)

   19,600      2,401,784       

AMAG Pharmaceuticals,
Inc.(a)(b)

   39,100      958,341       

Amgen, Inc.

   21,800      3,636,458       

Celgene Corp.(a)

   55,300      5,780,509       

Emergent BioSolutions,
Inc.(a)

   30,000      945,900       

Gilead Sciences, Inc.

   36,300      2,872,056       

Ligand Pharmaceuticals,
Inc.(a)

   4,000      408,240       

Regeneron Pharmaceuticals,
Inc.(a)

   2,200      884,444       

Shire PLC, ADR

   8,200      1,589,652       

Vertex Pharmaceuticals,
Inc.(a)

   8,400      732,564       
     

 

 

 
        22,877,809       
     

 

 

 

Health Care Equipment (23.48%)

  

Abbott Laboratories

   22,600      955,754       

Becton, Dickinson and Co.

   7,500      1,347,975       

Boston Scientific Corp.(a)

   104,000      2,475,200       

CR Bard, Inc.

   2,000      448,560       

Hologic, Inc.(a)

   32,400      1,258,092       

Integer Holdings Corp.(a)

   14,000      303,660       

LivaNova PLC(a)

   8,000      480,880       

Medtronic PLC

   42,800      3,697,920       

STERIS PLC

   22,400      1,637,440       

Stryker Corp.

   25,100      2,921,891       

Teleflex, Inc.

   12,300      2,067,015       

Zimmer Biomet Holdings,
Inc.

   11,200      1,456,224       
     

 

 

 
        19,050,611       
     

 

 

 

Health Care Facilities (2.92%)

  

Acadia Healthcare Co.,
Inc.(a)

   6,700      331,985       

Community Health Systems,
Inc.(a)

   28,000      323,120       

HCA Holdings, Inc.(a)

   8,000      605,040       

Tenet Healthcare Corp.(a)

   49,000      1,110,340       
     

 

 

 
        2,370,485       
     

 

 

 

Health Care Services (4.62%)

  

BioTelemetry, Inc.(a)

   143,492      2,664,647       

DaVita, Inc.(a)

   16,400      1,083,548       
     

 

 

 
        3,748,195       
     

 

 

 

Health Care Supplies (1.52%)

  

Cooper Cos., Inc.

   6,900      1,236,894       
     

 

 

 

Life Sciences Tools & Services (3.60%)

  

Albany Molecular Research,
Inc.(a)(b)

   52,000      858,520       

Charles River Laboratories
International, Inc.(a)

   24,800      2,066,832       
     

 

 

 
        2,925,352       
     

 

 

 
    

Shares or

Principal
Amount

     Value  

 

 

Managed Health Care (2.03%)

  

Anthem, Inc.

     4,900        $ 614,019       

CIGNA Corp.

     4,700         612,504       

UnitedHealth Group, Inc.

     3,000         420,000       
     

 

 

 
        1,646,523       
     

 

 

 

Pharmaceuticals (30.88%)

  

Allergan PLC(a)

     20,500         4,721,355       

Bayer AG, Sponsored ADR

     8,000         804,000       

Bristol-Myers Squibb Co.

     55,500         2,992,560       

Corcept Therapeutics, Inc.(a)

     92,300         599,950       

Eli Lilly & Co.

     26,000         2,086,760       

Endo International PLC(a)

     18,000         362,700       

Horizon Pharma PLC(a)

     35,000         634,550       

Innoviva, Inc.(a)(b)

     32,500         357,175       

Jazz Pharmaceuticals PLC(a)

     16,700         2,028,716       

Mylan N.V.(a)

     35,000         1,334,200       

Novo Nordisk A/S, Sponsored ADR

     11,500         478,285       

Pacira Pharmaceuticals,
Inc.(a)

     23,000         787,060       

Perrigo Co. PLC

     6,300         581,679       

Pfizer, Inc.

     60,000         2,032,200       

Roche Holding AG,
Sponsored ADR

     66,200         2,050,214       

Sucampo Pharmaceuticals,
Inc., Class A(a)

     64,400         792,764       

Teva Pharmaceutical
Industries, Ltd.,
Sponsored ADR

     44,000         2,024,440       

Valeant Pharmaceuticals
International, Inc.(a)

     15,700         385,435       
     

 

 

 
        25,054,043       
     

 

 

 

Total Common Stocks

(Cost $80,639,654)

        78,909,912       
     

 

 

 

Collateral for Securities on Loan (1.91%)

  

State Street Navigator Prime
Portfolio, 0.30%

     1,546,000         1,546,000       
     

 

 

 

Total Collateral for Securities on Loan

(Cost $1,546,000)

  

  

     1,546,000       
     

 

 

 

Short-Term Investments (8.68%)

  

Time Deposits (8.68%)

  

State Street Euro Dollar Time Deposit (USD),

     

0.01%, 10/03/16

     7,042,553         7,042,553       
     

 

 

 

Total Short-Term Investments

(Cost $7,042,553)

        7,042,553       
     

 

 

 
 

 

 

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

 

Annual Report  |  September 30, 2016    21


Table of Contents
ICON Healthcare Fund    Schedule of Investments
   September 30, 2016

 

     Value  

 

 

Total Investments (107.84%)

(Cost $89,228,207)

   $  87,498,465       

Liabilities Less Other Assets (-7.84%)

     (6,359,506)       
  

 

 

 

Net Assets (100.00%)

   $ 81,138,959       
  

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of the security was on loan as of September 30, 2016.

ADR - American Depositary Receipt

 

Sector Composition (September 30, 2016)        

Health Care

             97.25%   
  

 

 

 
             97.25%   
  

 

 

 

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

 

Industry Composition (September 30, 2016)       

 

 

Pharmaceuticals

     30.88%   

Biotechnology

     28.20%   

Health Care Equipment

     23.48%   

Health Care Services

     4.62%   

Life Sciences Tools & Services

     3.60%   

Health Care Facilities

     2.92%   

Managed Health Care

     2.03%   

Health Care Supplies

     1.52%   
  

 

 

 
             97.25%   
  

 

 

 

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

 

 

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

 

22    www.iconfunds.com


Table of Contents
ICON Industrials Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Industrials Fund (the Fund) Class S shares returned 12.07% for the fiscal year ended September 30, 2016, while its sector-specific benchmark, the S&P 1500 Industrials Index, returned 19.76%, and the S&P Composite 1500 Index returned 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

Despite numerous macro-economic concerns and relatively negative investor sentiment, fiscal year 2016 produced strong gains for the cyclically sensitive Industrials sector. While the gains were relatively broad based from an industry standpoint, companies that derive a large portion of their revenues from either infrastructure buildouts or commodity extraction stood out during the fiscal year. Industries tied to infrastructure, such as the Industrial Machinery, Building Products, and Construction & Engineering industries, benefitted from a rebound in residential and commercial construction as well as the continued national focus on rebuilding our country’s roads and bridges. Further, the Heavy Electrical Equipment industry and the Construction & Farm Machinery & Heavy Trucks industry, both tied to the extraction of commodities, benefitted from a strong rebound in industrial commodities. These industries, which had been beaten down the previous year, experienced significant gains from those depressed levels and helped the Industrials sector outpace the broad market.

 

Q.

How did the Fund’s composition affect performance?

 

A.

From a valuation standpoint, according to our system, we began the period with a value-to-price (V/P) ratio of 1.09 for the Industrials sector indicating opportunity for upside returns within the sector. Despite this opportunity at the sector level, industry returns within the Industrials sector varied significantly, from approximately 52% for the best performing industry to approximately -6% for the worst performing industry, demonstrating the large role that industry rotation can play in sector investing. Additionally, industry leadership flipped aggressively with prior year losers rallying and prior year winners faltering.

Relative to the benchmark, industries that contributed the most to the Fund’s performance included the Construction & Engineering, Human Resources & Employment Services, Trading Companies & Distributors, and Research & Consulting Services industries. All these industries produced positive total effect due to overweight industry positions and holdings that outperformed the benchmark.

Relative to the benchmark, industries that detracted the most from the Fund’s performance included the Airlines, Industrial Machinery, Aerospace & Defense, Railroads and Construction & Farm Machinery & Heavy Trucks industries. Either overweight positions or underperforming holdings in these industries resulted in relative underperformance during the fiscal year.

 

Q.

What is your investment outlook for the Industrials sector?

 

A.

At the end of fiscal year 2016 the Industrials sector had a V/P ratio of approximately 1.02, an indication that our system has relatively muted return expectations for the Industrials sector over the next 9 to 12 months. Specific industries that are demonstrating value according to our system include Commercial Printing, Railroads, and Agriculture & Farm Machinery. We continue to look for industries that our system identifies as trading at a discount to fair value. Guided by our disciplined, systematic and non-emotional approach to investing, we remain watchful for new prospective investments and ready to reallocate and adapt as our investment system dictates.

 

 
Annual Report  |  September 30, 2016    23


Table of Contents
ICON Industrials Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

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

 

ICON Industrials Fund - Class S

   5/9/97    12.07%   13.24%   4.94%   5.13%   1.53%   1.50%

ICON Industrials Fund - Class A

   9/30/10    11.79%   12.71%   N/A   8.81%   2.67%   1.75%

ICON Industrials Fund - Class A

(including maximum sales charge of 5.75%)

   9/30/10      5.38%   11.39%   N/A   7.74%   2.67%   1.75%

S&P 1500 Industrials Index

      19.76%   17.80%   8.07%   7.85%   N/A   N/A

S&P Composite 1500 Index

      15.49%   16.44%   7.44%   7.46%   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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

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.

 

 
24    www.iconfunds.com


Table of Contents
ICON Industrials Fund    Schedule of Investments
   September 30, 2016

 

    

Shares or

Principal
Amount

     Value  

 

 

Common Stocks (92.62%)

  

Aerospace & Defense (20.19%)

  

B/E Aerospace, Inc.

     13,500       $ 697,410       

Boeing Co.

     7,000         922,180       

General Dynamics Corp.

     1,900         294,804       

Hexcel Corp.

     5,000         221,500       

Orbital ATK, Inc.

     17,390         1,325,640       

Raytheon Co.

     1,100         149,743       

Spirit AeroSystems Holdings,
Inc., Class A(a)

     14,000         623,560       

United Technologies Corp.

     7,900         802,640       
     

 

 

 
        5,037,477       
     

 

 

 

Air Freight & Logistics (2.50%)

  

Echo Global Logistics, Inc.(a)

     20,973         483,637       

FedEx Corp.

     800         139,744       
     

 

 

 
        623,381       
     

 

 

 

Airlines (3.63%)

  

Alaska Air Group, Inc.

     6,600         434,676       

Delta Air Lines, Inc.

     12,000         472,320       
     

 

 

 
        906,996       
     

 

 

 

Building Products (15.35%)

  

Apogee Enterprises, Inc.

     10,000         446,900       

Builders FirstSource, Inc.(a)

     35,000         402,850       

Fortune Brands Home &
Security, Inc.

     1,500         87,150       

Masco Corp.

     34,500         1,183,695       

PGT, Inc.(a)

     115,000         1,227,050       

Quanex Building Products
Corp.

     28,000         483,280       
     

 

 

 
        3,830,925       
     

 

 

 

Commercial Printing (2.06%)

  

Deluxe Corp.

     7,700         514,514       
     

 

 

 

Construction & Engineering (6.39%)

  

AECOM(a)

     17,500         520,275       

Comfort Systems U.S.A., Inc.

     18,500         542,235       

Dycom Industries, Inc.(a)

     6,500         531,570       
     

 

 

 
        1,594,080       
     

 

 

 

Construction Machinery & Heavy Trucks (5.17%)

  

Allison Transmission
Holdings, Inc.

     45,000         1,290,600       
     

 

 

 

Human Resource & Employment Services (13.17%)

  

Kforce, Inc.

     34,000         696,660       

Korn/Ferry International

     30,500         640,500       

ManpowerGroup, Inc.

     9,000         650,340       

On Assignment, Inc.(a)

     17,000         616,930       

Robert Half International, Inc.

     18,000         681,480       
     

 

 

 
        3,285,910       
     

 

 

 

Industrial Conglomerates (6.40%)

  

Carlisle Cos., Inc.

     5,000         512,850       

Honeywell International, Inc.

     9,300         1,084,287       
     

 

 

 
        1,597,137       
     

 

 

 
    

Shares or

Principal
Amount

   Value  

 

 

Industrial Machinery (5.37%)

  

Crane Co.

   5,700    $ 359,157       

Middleby Corp.(a)

   4,000      494,480       

Snap-on, Inc.

   3,200      486,272       
     

 

 

 
        1,339,909       
     

 

 

 

Railroads (1.84%)

  

Union Pacific Corp.

   4,700      458,391       
     

 

 

 

Research & Consulting Services (2.40%)

  

Hill International, Inc.(a)

   130,061      599,581       
     

 

 

 

Trading Companies & Distributors (5.15%)

  

Air Lease Corp.

   45,000      1,286,100       
     

 

 

 

Trucking (3.00%)

  

Hertz Global Holdings, Inc.(a)

   14,400      578,304       

JB Hunt Transport Services, Inc.

   2,100      170,394       
     

 

 

 
        748,698       
     

 

 

 

Total Common Stocks

(Cost $21,773,155)

        23,113,699       
     

 

 

 

Short-Term Investments (10.38%)

  

Time Deposits (10.38%)

  

State Street Euro Dollar Time Deposit (USD),
0.01%, 10/03/16

   2,590,162      2,590,162       
     

 

 

 

Total Short-Term Investments

(Cost $2,590,162)

        2,590,162       
     

 

 

 

Total Investments (103.00%)

(Cost $24,363,317)

      $   25,703,861       

Liabilities Less Other Assets

(-3.00%)

        (748,994)       
     

 

 

 

Net Assets (100.00%)

      $   24,954,867       
     

 

 

 

 

(a) 

Non-income producing security.

 

 

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

 

Annual Report  |  September 30, 2016    25


Table of Contents
ICON Industrials Fund    Schedule of Investments
   September 30, 2016

 

Sector Composition (September 30, 2016)       

 

 

Industrials

     92.62%   
  

 

 

 
             92.62%   
  

 

 

 

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

 

Industry Composition (September 30, 2016)       

 

 

Aerospace & Defense

     20.19%   

Building Products

     15.35%   

Human Resource & Employment Services

     13.17%   

Industrial Conglomerates

     6.40%   

Construction & Engineering

     6.39%   

Industrial Machinery

     5.37%   

Construction Machinery & Heavy Trucks

     5.17%   

Trading Companies & Distributors

     5.15%   

Airlines

     3.63%   

Trucking

     3.00%   

Air Freight & Logistics

     2.50%   

Research & Consulting Services

     2.40%   

Commercial Printing

     2.06%   

Railroads

     1.84%   
  

 

 

 
             92.62%   
  

 

 

 

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

 

 

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

 

26    www.iconfunds.com


Table of Contents
ICON Information Technology Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Information Technology Fund (the Fund) Class S shares returned 20.13% for the fiscal year ended September 30, 2016, while its sector-specific benchmark, the S&P 1500 Information Technology Index, returned 22.83%, and the S&P 1500 Index gained 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

The Information Technology sector continues to shift as cloud based applications continue to gain market share. Bloomberg reported anticipated enterprise application growth for cloud based products to grow by 15.6% from 2014 to 2019, while on-site enterprise applications growth is projected to be only 3.9% for that same time period. Cloud exposure is spread across many industries within the Information Technology sector as different types of companies try to cash in on this growth engine. Examples range from Microsoft in the System Software industry, Cisco Systems in the Communication Equipment industry, and HP Inc. in the Technology Hardware, Storage & Peripherals industry just to name a few. Returns for all three of these companies outpaced the S&P 1500 Information Technology Index over the fiscal year. Many companies used merger and acquisition activity to get exposure to cloud based products as well as data analytics. In the fiscal year ending September 30, 2014 there were 27 acquisitions while there were 42 acquisitions in the fiscal year ending September 30, 2016.

 

Q.

How did the Fund’s composition affect performance?

 

A.

Stock selection in the Data Processing & Outsourced Services industry and the Semiconductors industry detracted from performance relative to the benchmark. During the course of the fiscal year ended September 30, 2016, the Fund’s positions in the Data Processing & Outsourced Services industry returned less than 1% while the benchmark holdings in the industry gained over 17%. Everi Holdings was the largest single detractor from the Data Processing & Outsourced Services industry, losing over 24% the day after reporting its first quarter earnings.

These losses were offset in part by the Fund’s overweight position in the Semiconductor Equipment industry. During the course of the fiscal year, the Fund had an average position of around 6.5% in the Semiconductor Equipment industry while the benchmark’s average position was close to 1.5%. The Fund’s position in this industry returned about 65% for the fiscal year.

 

Q.

What is your investment outlook for the Information Technology sector?

 

A.

At the end of fiscal year 2016, the Information Technology sector had a value-to-price (V/P) ratio of 1.09 according to ICON’s valuation methodology, an indication that our system still sees upside potential for the sector. Specific industries that are demonstrating value according to our system include both the Semiconductor Equipment industry and the Data Processing & Outsourced Services industry, and, as a result, the Fund is overweight in those two industries relative to the benchmark. We will continue to look for opportunities in the Information Technology sector over the year as guided by value.

 

 
Annual Report  |  September 30, 2016    27


Table of Contents
ICON Information Technology Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

     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    20.13%   16.92%   7.55%   8.77%   1.44%   1.44%

ICON Information Technology Fund - Class A

   9/30/10    19.80%   16.44%   N/A   13.87%   1.90%   1.75%

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

   9/30/10    12.93%   15.07%   N/A   12.75%   1.90%   1.75%

S&P 1500 Information Technology Index

      22.83%   17.99%   10.36%     7.87%   N/A   N/A

NASDAQ Composite Index

      14.97%   17.07%     8.93%     7.17%   N/A   N/A

S&P Composite 1500 Index

      15.49%   16.44%     7.44%     7.46%   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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

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.

 

 
28    www.iconfunds.com


Table of Contents
ICON Information Technology Fund    Schedule of Investments
   September 30, 2016

 

 

     Shares or
Principal
Amount
   Value  

 

 

Common Stocks (99.14%)

  

Application Software (5.08%)

  

CDK Global, Inc.

   22,100     $ 1,267,656       

Mentor Graphics Corp.

   51,100      1,351,084       
     

 

 

 
        2,618,740       
     

 

 

 

Communications Equipment (4.02%)

  

Cisco Systems, Inc.

   32,100      1,018,212       

Digi International, Inc.(a)

   16,100      183,540       

Harris Corp.

   9,500      870,295       
     

 

 

 
        2,072,047       
     

 

 

 

Data Processing & Outsourced Services (14.97%)

  

Automatic Data Processing, Inc.

   9,900      873,180       

Broadridge Financial Solutions, Inc.

   7,300      494,867       

DST Systems, Inc.

   4,400      518,848       

Euronet Worldwide, Inc.(a)

   7,400      605,542       

MasterCard, Inc., Class A

   14,700      1,496,019       

MAXIMUS, Inc.

   22,500      1,272,600       

Total System Services, Inc.

   12,000      565,800       

Visa, Inc., Class A

   14,180      1,172,686       

Xerox Corp.

   71,200      721,256       
     

 

 

 
        7,720,798       
     

 

 

 

Electronic Components (1.87%)

  

Rogers Corp.(a)

   15,800      965,064       
     

 

 

 

Electronic Equipment & Instruments (3.53%)

  

Fitbit, Inc., Class A(a)(b)

   54,400      807,296       

Keysight Technologies, Inc.(a)

   16,600      526,054       

OSI Systems, Inc.(a)

   7,500      490,350       
     

 

 

 
        1,823,700       
     

 

 

 

Electronic Manufacturing Services (4.28%)

  

Fabrinet(a)

   12,400      552,916       

IPG Photonics Corp.(a)

   8,835      727,562       

TE Connectivity, Ltd.

   14,400      927,072       
     

 

 

 
        2,207,550       
     

 

 

 

Home Entertainment Software (4.55%)

  

Activision Blizzard, Inc.

   29,100      1,289,130       

Electronic Arts, Inc.(a)

   12,400      1,058,960       
     

 

 

 
        2,348,090       
     

 

 

 

Internet Software & Services (19.44%)

  

Alphabet, Inc., Class A(a)

   3,200      2,572,992       

Alphabet, Inc., Class C(a)

   3,439      2,673,101       

eBay, Inc.(a)

   18,600      611,940       

Facebook, Inc., Class A(a)

   29,000      3,719,830       

j2 Global, Inc.

   6,800      452,948       
     

 

 

 
        10,030,811       
     

 

 

 

IT Consulting & Other Services (1.22%)

  

Cognizant Technology
Solutions Corp.,
Class A(a)

   13,200      629,772       
     

 

 

 
     Shares or
Principal
Amount
     Value  

 

 

Semiconductor Equipment (7.00%)

  

Advanced Energy Industries, Inc.(a)

     22,197        $ 1,050,362       

Applied Materials, Inc.

     16,900         509,535       

Photronics, Inc.(a)

     89,200         919,652       

Teradyne, Inc.

     52,400         1,130,792       
     

 

 

 
        3,610,341       
     

 

 

 

Semiconductors (10.53%)

  

  

Broadcom, Ltd.

     5,300         914,356       

Intel Corp.

     51,400         1,940,350       

Monolithic Power Systems, Inc.

     8,400         676,200       

QUALCOMM, Inc.

     11,600         794,600       

Skyworks Solutions, Inc.

     14,500         1,104,030       
     

 

 

 
        5,429,536       
     

 

 

 

Systems Software (5.61%)

  

  

Microsoft Corp.

     29,500         1,699,200       

Oracle Corp.

     30,400         1,194,112       
     

 

 

 
        2,893,312       
     

 

 

 

Technology Distributors (1.08%)

  

  

PC Connection, Inc.

     21,100         557,462       
     

 

 

 

Technology Hardware, Storage & Peripherals (15.96%)

  

Apple, Inc.

     62,000         7,009,100       

Electronics For Imaging,
Inc.(a)

     25,000         1,223,000       
     

 

 

 
        8,232,100       
     

 

 

 

Total Common Stocks

(Cost $41,205,367)

        51,139,323       
     

 

 

 

Collateral for Securities on Loan (1.59%)

  

State Street Navigator Prime Portfolio, 0.30%

     823,500         823,500       
     

 

 

 

Total Collateral for Securities on Loan

(Cost $823,500)

  

  

     823,500       
     

 

 

 

Short-Term Investments (0.61%)

  

  

Time Deposits (0.61%)

  

  

State Street Euro Dollar Time Deposit (USD),
0.01%, 10/03/16

     314,271         314,271       
     

 

 

 

Total Short-Term Investments

(Cost $314,271)

        314,271       
     

 

 

 

Total Investments (101.34%)

(Cost $42,343,138)

       $ 52,277,094       

Liabilities Less Other Assets (-1.34%)

  

     (693,252)       
     

 

 

 

Net Assets (100.00%)

       $ 51,583,842       
     

 

 

 
 

 

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

 

Annual Report  |  September 30, 2016    29


Table of Contents
ICON Information Technology Fund    Schedule of Investments
   September 30, 2016

 

(a) 

Non-income producing security.

(b) 

All or a portion of the security was on loan as of September 30, 2016.

 

Sector Composition (September 30, 2016)  

 

 

Information Technology

     99.14%   
  

 

 

 
             99.14%   
  

 

 

 

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

 

Industry Composition (September 30, 2016)  

 

 

Internet Software & Services

     19.44%   

Technology Hardware, Storage & Peripherals

     15.96%   

Data Processing & Outsourced Services

     14.97%   

Semiconductors

     10.53%   

Semiconductor Equipment

     7.00%   

Systems Software

     5.61%   

Application Software

     5.08%   

Home Entertainment Software

     4.55%   

Electronic Manufacturing Services

     4.28%   

Communications Equipment

     4.02%   

Electronic Equipment & Instruments

     3.53%   

Electronic Components

     1.87%   

IT Consulting & Other Services

     1.22%   

Technology Distributors

     1.08%   
  

 

 

 
             99.14%   
  

 

 

 

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

 

 

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

 

30    www.iconfunds.com


Table of Contents
ICON Natural Resources Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Natural Resources Fund returned 17.24% for the fiscal year ended September 30, 2016, while the S&P Composite 1500 Index rose by 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016 appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

While fiscal year 2016 produced strong returns from start to finish, it was a tale of two different markets largely driven by macro-economic shocks and general commodity movements. The year began with a strong rally that reversed rather quickly as commodities resumed their downward spiral, falling by approximately 20% before finding a bottom in the middle of February 2016. This aggressive sell-off hit industrial metals and oil the hardest, resulting in negative returns in industries tied to these commodities such as the Copper, Aluminum, Diversified Metals & Mining, Oil & Gas Drilling, and Oil & Gas Exploration & Transportation industries. Our valuation methodology pointed us away from this segment of the market resulting in the Fund having lower downside capture numbers relative to the benchmark to start off the fiscal year.

The second half of fiscal year 2016 proved to be the exact opposite of the first half as commodities, and the equities tied to those commodities, rebounded aggressively. The largest returns stemmed from the Energy sector as companies that were on the brink of default when oil was trading below $30 a barrel experience strong relief rallies as oil rebounded finishing the fiscal year at approximately $48 a barrel. While we increased exposure to the Energy sector over the course of the fiscal year, the Fund was underweight during this rebound resulting in underperformance relative to the benchmark over the course of the second half of the year.

One specific segment within Natural Resource, gold miners, produced consistently strong returns over the course of the fiscal year in spite of variable market movements. Similar to the rest of the commodity space, gold miners have been in decline for several years and experienced a significant rebound rally during fiscal year 2016 with some companies within the segment producing triple digit returns. Our valuation methodology continued to view this space as generally overvalued and we avoided taking a position, which lead to underperformance relative to the benchmark.

 

Q.

How did the Fund’s composition affect performance?

 

A.

Individual industry returns for the industries in Natural Resources segment of the market varied wildly over the course of fiscal year 2016. The best performing industry was up over 46% while the worst was down over 48%. This divergence highlights why we believe industry rotation is so important within a volatile market segment such as Natural Resources. Additionally, variation in industry returns shows how industry allocation can drive the majority of returns over the course of the year.

Positive industry contributors to the Fund’s performance during fiscal year 2016 included Diversified Chemicals, Construction Materials, Specialty Chemicals, Paper Packaging, and Integrated Oil & Gas. Negative industry detractors from the Fund’s performance during fiscal year 2016 included Precious Metals & Minerals, Oil & Gas Refining & Marketing, Paper Products, Coal & Consumable Fuels, and Aluminum.

 

Q.

What is your investment outlook for the Materials sector?

 

A.

At the close of the fiscal year, the Natural Resource segment of the market was trading relatively close to fair value based on our valuation methodology, indicating that we see muted upside return expectations for fiscal year 2017. While the volatility over the past 12 months has presented certain opportunities due to depressed prices, we continue to remain cautious on commodity related names as demand from emerging market economies continues to wane and forward looking growth rates remain relatively depressed. However, we do see opportunity in industries that are tied to domestic economic growth and decreased cyclical exposure.

 

 
Annual Report  |  September 30, 2016    31


Table of Contents
ICON Natural Resources Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

    

Inception

Date

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

Net Expense

Ratio*

 

ICON Natural Resources Fund - Class S

   5/5/97    17.24%     9.82%   5.50%   4.36%   1.42%   1.42%

ICON Natural Resources Fund - Class C

   9/30/10    16.11%     8.62%   N/A   5.10%   2.94%   2.50%

ICON Natural Resources Fund - Class A

   9/30/10    17.05%     9.48%   N/A   5.89%   1.76%   1.75%

ICON Natural Resources Fund - Class A

               

   (including maximum sales charge of 5.75%)

   9/30/10    10.29%     8.19%   N/A   4.86%   1.76%   1.75%

S&P 1500 Materials Index

      24.87%   13.43%   7.41%   6.73%   N/A   N/A

S&P Composite 1500 Index

      15.49%   16.44%   7.44%   7.43%   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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

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 name changed effective January 22, 2016 and the investment strategy changed effective August 18, 2016. The Fund’s past performance would have been different if the current strategy had been in effect. 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.

 

 
32    www.iconfunds.com


Table of Contents
ICON Natural Resources Fund    Schedule of Investments
   September 30, 2016

 

 

    Shares or
Principal
Amount
  Value  

 

 

Common Stocks (82.04%)

  

Building Products (7.79%)

  

Apogee Enterprises, Inc.

  16,000    $ 715,040       

Fortune Brands Home & Security,
Inc.

  9,500     551,950       

Masco Corp.

  60,000     2,058,600       

PGT, Inc.(a)

  211,300     2,254,571       
   

 

 

 
      5,580,161       
   

 

 

 

Coal & Consumable Fuels (2.81%)

  

Cameco Corp.(b)

  235,000     2,011,600       
   

 

 

 

Commodity Chemicals (4.47%)

   

Cabot Corp.

  7,000     366,870       

LyondellBasell Industries N.V.,
Class A

  20,000     1,613,200       

Methanex Corp.

  9,939     354,624       

Olin Corp.

  42,339     868,796       
   

 

 

 
      3,203,490       
   

 

 

 

Construction & Engineering (1.92%)

  

Comfort Systems U.S.A., Inc.

  46,940     1,375,812       
   

 

 

 

Construction Materials (8.34%)

   

Buzzi Unicem S.p.A.

  60,000     1,230,288       

Eagle Materials, Inc.

  13,000     1,004,900       

Headwaters, Inc.(a)

  75,000     1,269,000       

Martin Marietta Materials, Inc.

  5,500     985,105       

Summit Materials, Inc., Class A(a)

  80,000     1,484,000       
   

 

 

 
      5,973,293       
   

 

 

 

Copper (0.53%)

  

Freeport-McMoRan, Inc.

  35,000     380,100       
   

 

 

 

Diversified Chemicals (14.42%)

   

Dow Chemical Co.

  68,745     3,563,053       

Eastman Chemical Co.

  40,000     2,707,200       

Huntsman Corp.

  250,000     4,067,500       
   

 

 

 
      10,337,753       
   

 

 

 

Fertilizers & Agricultural Chemicals (4.65%)

  

Agrium, Inc.(b)

  5,500     498,795       

CF Industries Holdings, Inc.

  90,000     2,191,500       

Monsanto Co.

  6,300     643,860       
   

 

 

 
      3,334,155       
   

 

 

 

Integrated Oil & Gas (4.19%)

  

BP PLC

  215,000     1,253,180       

Royal Dutch Shell PLC, Sponsored
ADR, Class A

  35,000     1,752,450       
   

 

 

 
      3,005,630       
   

 

 

 

Oil & Gas Equipment & Services (2.41%)

  

Schlumberger, Ltd.

  22,000     1,730,080       
   

 

 

 

Oil & Gas Exploration & Production (4.82%)

  

Diamondback Energy, Inc.(a)

  16,000     1,544,640       
    Shares or
Principal
Amount
  Value  

 

 

Oil & Gas Exploration & Production (continued)

  

Synergy Resources Corp.(a)

  275,000    $ 1,905,750       
   

 

 

 
      3,450,390       
   

 

 

 

Oil & Gas Refining & Marketing (4.47%)

  

PBF Energy, Inc., Class A(b)

  31,214     706,685       

Phillips 66

  8,000     644,400       

Tesoro Corp.

  10,000     795,600       

Valero Energy Corp.

  20,000     1,060,000       
   

 

 

 
      3,206,685       
   

 

 

 

Oil & Gas Storage & Transportation (1.47%)

  

Enbridge, Inc.

  24,000     1,054,796       
   

 

 

 

Paper Packaging (8.53%)

   

Avery Dennison Corp.

  2,200     171,138       

Graphic Packaging Holding Co.

  290,000     4,057,100       

International Paper Co.

  30,000     1,439,400       

Smurfit Kappa Group PLC

  20,000     447,053       
   

 

 

 
      6,114,691       
   

 

 

 

Research & Consulting Services (3.36%)

 

Hill International, Inc.(a)

  522,440     2,408,448       
   

 

 

 

Specialty Chemicals (7.31%)

  

Ashland, Inc.

  6,000     695,700       

Celanese Corp., Class A

  17,000     1,131,520       

PolyOne Corp.

  60,000     2,028,600       

Sherwin-Williams Co.

  5,000     1,383,300       
   

 

 

 
      5,239,120       
   

 

 

 

Steel (0.55%)

   

Nucor Corp.

  8,000     395,600       
   

 

 

 

Total Common Stocks

(Cost $59,303,835)

      58,801,804       
   

 

 

 

Exchange Traded Funds (10.31%)

  

iShares North American Natural
Resources ETF(b)

  112,000     3,859,520       

Energy Select Sector SPDR Fund(b)

  50,000     3,530,500       
   

 

 

 

Total Exchange Traded Funds

(Cost $6,681,608)

      7,390,020       
   

 

 

 

Collateral for Securities on Loan (9.08%)

  

State Street Navigator Prime
Portfolio, 0.30%

  6,505,465     6,505,465       
   

 

 

 

Total Collateral for Securities on Loan

(Cost $6,505,465)

      6,505,465       
   

 

 

 
 

 

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

 

Annual Report  |  September 30, 2016    33


Table of Contents
ICON Natural Resources Fund    Schedule of Investments
   September 30, 2016

 

 

    Shares or
Principal
Amount
    Value  

 

 

Short-Term Investments (8.74%)

  

Time Deposits (8.74%)

   

State Street Euro Dollar Time
Deposit (USD),
0.01%, 10/03/16

    6,265,943       $ 6,265,943        
   

 

 

 

Total Short-Term Investments

(Cost $6,265,943)

      6,265,943        
   

 

 

 

Total Investments (110.17%)

(Cost $78,756,851)

     $ 78,963,232        

Liabilities Less Other Assets (-10.17%)

  

    (7,290,850)       
   

 

 

 

Net Assets (100.00%)

     $   71,672,382        
   

 

 

 

 

(a)

Non-income producing security.

(b)

All or a portion of the security was on loan as of September 30, 2016.

ADR - American Depositary Receipt

 

Sector Composition (September 30, 2016)  

Materials

             48.80%   

Energy

     20.17%   

Industrials

     13.07%   
  

 

 

 
             82.04%   
  

 

 

 

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

 

Industry Composition (September 30, 2016)  

Diversified Chemicals

     14.42%   

Paper Packaging

     8.53%   

Construction Materials

     8.34%   

Building Products

     7.79%   

Specialty Chemicals

     7.31%   

Oil & Gas Exploration & Production

     4.82%   

Fertilizers & Agricultural Chemicals

     4.65%   

Commodity Chemicals

     4.47%   

Oil & Gas Refining & Marketing

     4.47%   

Integrated Oil & Gas

     4.19%   

Research & Consulting Services

     3.36%   

Coal & Consumable Fuels

     2.81%   

Oil & Gas Equipment & Services

     2.41%   

Construction & Engineering

     1.92%   

Oil & Gas Storage & Transportation

     1.47%   

Other Industries (each less than 1%)

     1.08%   
  

 

 

 
             82.04%   
  

 

 

 

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

 

 

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

 

34    www.iconfunds.com


Table of Contents
ICON Utilities Fund    Management Overview
   September 30, 2016 (Unaudited)

 

 

 

Q.

How did the Fund perform relative to its benchmarks?

 

A.

The ICON Utilities Fund (the Fund) Class S returned 21.74% for the fiscal year ended September 30, 2016, beating its sector-specific benchmark, the S&P 1500 Utilities Index, which returned 18.71%. The broad benchmark, the S&P 1500 Index, returned 15.49%. Total returns for other periods and additional Class shares as of September 30, 2016, appear in the subsequent pages of this Fund’s Management Overview.

 

Q.

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

 

A.

According to our valuation methodology, at the end of the prior fiscal year, the Utilities sector had a value-to-price (V/P) ratio of 1.12 while the average V/P ratio for the overall equity market stood at 1.09. As the yield on the 10-year U.S. Treasury Note generally fell throughout the year, from 2.04% on September 30, 2015 to 1.60% on September 30, 2016, investors sought higher income elsewhere, increasing demand for dividend yielding stocks in the Utilities sector. On average, as of the end of the fiscal year 2016, the dividend yield for stocks we track in the Utilities sector was 3.33%, making them an attractive alternative to treasuries from a yield stand-point.

 

    

The Fund did have exposure to stocks outside of the Utilities sector, including companies in the Oil & Gas storage & Transportation industry. Many of the companies in this industry supply natural gas for electricity generation and redistribution for companies within the Utilities sector. Over the course of the year, the Fund’s weighted average holdings in the Oil & Gas Storage & Transportation industry was around 5.6% and these positions returned about 47%. The Fund’s holdings in the Telecommunication Services sector had positive performance as well. In general, the stocks the Fund held outside of the Utilities sector have similar dividend characteristic to the stocks within the Utilities sector.

 

Q.

How did the Fund’s composition affect performance?

 

A.

Over the course of the fiscal year, stock selection played a large role in the Fund’s performance relative to the benchmark. This is true specifically for the stocks held in the Fund from the Multi-Utilities industry. The stocks held in the Fund from the Multi-Utilities industry returned approximately 24% over the fiscal year while the benchmark’s holdings in the industry gained about 17%. Additionally the Fund was overweight compared to the benchmark in this industry, adding to the Fund’s relative out performance in the industry. The largest industry detractor from the Fund’s performance relative to the benchmark came from an overweight position in the Gas Utilities industry as the Fund’s stock selection within the industry led to the Fund underperforming in this industry compared to the benchmark.

 

Q.

What is your investment outlook for the Utilities sector?

 

A.

As of September 30, 2016, according to our valuation methodology, the Utilities sector had a V/P ratio of 1.13. Given these V/P readings we generally have a positive outlook for the sector and remain optimistic for the year ahead. However, because the Utilities sector is seen by some investors as an alternative to fixed income in a low interest rate environment, an increase in interest rates might make the Utilities sector less attractive, creating a short term headwind for the sector. As always, we look to value as our primary guide and will adjust our positioning as market conditions dictate.

 

 
Annual Report  |  September 30, 2016    35


Table of Contents
ICON Utilities Fund    Management Overview
   September 30, 2016 (Unaudited)

 

Average Annual Total Return (as of September 30, 2016)

 

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

 

ICON Utilities Fund - Class S

   7/9/97    21.74%    11.99%    7.55%   8.47%   1.70%   1.50%

ICON Utilities Fund - Class A

   9/30/10    21.29%    11.69%    N/A   11.17%   1.89%   1.75%

ICON Utilities Fund - Class A

        (including maximum sales charge of 5.75%)

   9/30/10    14.36%    10.38%    N/A   10.06%   1.89%   1.75%

S&P 1500 Utilities Index

      18.71%    12.61%    8.39%   8.36%   N/A   N/A

S&P Composite 1500 Index

      15.49%    16.44%    7.44%   6.97%   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.

Value of a $10,000 Investment (through September 30, 2016)

 

 

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.

 

 
36    www.iconfunds.com


Table of Contents
ICON Utilities Fund    Schedule of Investments
   September 30, 2016

 

   

Shares or
Principal

Amount

  Value  

 

 

Common Stocks (97.41%)

   

Communications Equipment (1.86%)

 

Harris Corp.

  12,100    $ 1,108,481     
   

 

 

 

Electric Utilities (36.43%)

   

Alliant Energy Corp.

  42,900     1,643,499     

American Electric Power Co.,
Inc.

  56,100     3,602,181     

Duke Energy Corp.

  23,200     1,856,928     

Edison International

  50,200     3,626,950     

Eversource Energy

  52,900     2,866,122     

Great Plains Energy, Inc.

  48,500     1,323,565     

Hawaiian Electric Industries,
Inc.

  29,500     880,575     

NextEra Energy, Inc.

  13,900     1,700,248     

OGE Energy Corp.

  63,500     2,007,870     

Pinnacle West Capital Corp.

  29,600     2,249,304     
   

 

 

 
      21,757,242     
   

 

 

 

Electronic Manufacturing Services (1.38%)

  

TE Connectivity, Ltd.

  12,800     824,064     
   

 

 

 

Gas Utilities (5.84%)

   

National Fuel Gas Co.

  40,900     2,211,463     

South Jersey Industries, Inc.

  22,100     653,055     

Spire, Inc.

  9,800     624,652     
   

 

 

 
      3,489,170     
   

 

 

 

Independent Power Producers & Energy Traders (3.17%)

  

AES Corp.

  55,000     706,750     

Calpine Corp.(a)

  94,100     1,189,424     
   

 

 

 
      1,896,174     
   

 

 

 

Integrated Telecommunication Services (5.15%)

  

AT&T, Inc.

  47,000     1,908,670     

BCE, Inc.

  25,300     1,168,354     
   

 

 

 
      3,077,024     
   

 

 

 

Multi-Utilities (34.78%)

   

Ameren Corp.

  64,400     3,167,192     

Avista Corp.

  23,800     994,602     

Black Hills Corp.

  14,400     881,568     

CenterPoint Energy, Inc.

  74,700     1,735,281     

CMS Energy Corp.

  40,576     1,704,597     

Dominion Resources, Inc.

  38,200     2,837,114     

DTE Energy Co.

  34,400     3,222,248     

NiSource, Inc.

  39,900     961,989     

Public Service Enterprise
Group, Inc.

  18,100     757,847     

SCANA Corp.

  15,700     1,136,209     

Sempra Energy

  31,500     3,376,485     
   

 

 

 
      20,775,132     
   

 

 

 

Oil & Gas Exploration & Production (1.33%)

   

Cabot Oil & Gas Corp.

  30,800     794,640     
   

 

 

 
   

Oil & Gas Storage & Transportation (4.95%)

   

Magellan Midstream

        Partners L.P.

  19,100     1,351,134     
   

Shares or
Principal

Amount

    Value  

 

 

Oil & Gas Storage & Transportation (continued)

  

Ship Finance International,
Ltd.(b)

    76,100       $ 1,120,953     

Teekay Corp.

    63,000        485,730     
   

 

 

 
      2,957,817     
   

 

 

 

Semiconductors (1.06%)

   

Monolithic Power Systems,
Inc.

    7,900        635,950     
   

 

 

 

Water Utilities (1.46%)

   

Aqua America, Inc.

    28,600        871,728     
   

 

 

 

Total Common Stocks

(Cost $57,229,931)

      58,187,422     
   

 

 

 

Underlying Security/Expiration

Date/Exercise Price

  Contracts     Value  

 

 

Put Options Purchased (0.53%)

  

Utilities Select Sector SPDR Fund
12/16/16, 50

    900        208,800     

Utilities Select Sector SPDR Fund
10/21/16, 51

    500        107,500     
   

 

 

 
      316,300     
   

 

 

 

Total Put Options Purchased

(Cost $235,691)

      316,300     
   

 

 

 
    Shares or
Principal
Amount
    Value  

 

 

Collateral for Securities on Loan (1.91%)

  

State Street Navigator Prime Portfolio, 0.30%

    1,141,500        1,141,500     
   

 

 

 

Total Collateral for Securities on Loan

(Cost $1,141,500)

  

  

    1,141,500     
   

 

 

 

Short-Term Investments (1.92%)

   

Time Deposits (1.92%)

   

State Street Euro Dollar Time

        Deposit (USD),

        0.01%, 10/03/16

    1,144,742        1,144,742     
   

 

 

 

Total Short-Term Investments

(Cost $1,144,742)

  

  

    1,144,742     
   

 

 

 

Total Investments (101.77%)

(Cost $59,751,864)

     $ 60,789,964     

Liabilities Less Other Assets (-1.77%)

      (1,058,431)     
   

 

 

 

Net Assets (100.00%)

     $ 59,731,533     
   

 

 

 
 

 

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

 

Annual Report  |  September 30, 2016    37


Table of Contents
ICON Utilities Fund    Schedule of Investments
   September 30, 2016

 

(a)

Non-income producing security.

(b)

All or a portion of the security was on loan as of September 30, 2016.

 

Sector Composition (September 30, 2016)        

Utilities

     81.68%   

Energy

     6.28%   

Telecommunication Services

     5.15%   

Information Technology

     4.30%   
  

 

 

 
             97.41%   
  

 

 

 

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

 

Industry Composition (September 30, 2016)        

Electric Utilities

     36.43%   

Multi-Utilities

     34.78%   

Gas Utilities

     5.84%   

Integrated Telecommunication Services

     5.15%   

Oil & Gas Storage & Transportation

     4.95%   

Independent Power Producers & Energy Traders

     3.17%   

Communications Equipment

     1.86%   

Water Utilities

     1.46%   

Electronic Manufacturing Services

     1.38%   

Oil & Gas Exploration & Production

     1.33%   

Semiconductors

     1.06%   
  

 

 

 
             97.41%   
  

 

 

 

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

 

 

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

 

38    www.iconfunds.com


Table of Contents
ICON Sector Funds    Statements of Assets and Liabilities
   September 30, 2016

 

 

      ICON Consumer
Discretionary Fund
   ICON Consumer
Staples Fund
   ICON Energy Fund    

Assets

        

Investments, at cost

     $ 44,648,379       $ 48,429,334       $ 387,772,354       
  

 

 

 

Investments, at value(a)

     42,345,019         48,380,862         390,166,249       

Receivables:

        

Investments sold

     1,205,395                 12,424,552       

Fund shares sold

     2,684         120,483         317,563       

Expense reimbursements due from Adviser

     1,330         6,957         –       

Dividends

     27,528         88,546         385,284       

Foreign tax reclaims

                     14,319       

Other assets

     7,062         11,158         106,937       
  

 

 

 

Total assets

     43,589,018         48,608,006         403,414,904       
  

 

 

 

Liabilities

        

Payables:

        

Payable for collateral received on securities loaned

     1,782,625         807,060         42,662,836       

Payable to custodian

             4,997,860         –       

Investments purchased

     2,068,016         2,453,345         7,438,901       

Fund shares redeemed

     34,123         66,859         478,397       

Advisory fees

     32,850         33,224         281,961       

Transfer agent fees

     7,923         10,690         137,132       

Fund accounting fees

     1,956         1,990         10,948       

Accrued distribution fees

     495         1,731         10,883       

Trustee fees and expenses

     1,744         1,696         14,657       

Administration fees

     1,706         1,716         14,507       

Accrued expenses

     26,819         23,738         96,137       
  

 

 

 

Total liabilities

     3,958,257         8,399,909         51,146,359       
  

 

 

 

Net Assets - all share classes

     $ 39,630,761       $ 40,208,097       $ 352,268,545       
  

 

 

 

Net Assets - Class S

     $ 37,263,151       $ 31,798,893       $ 327,497,266       
  

 

 

 

Net Assets - Class C

     $       $       $ 10,123,542       
  

 

 

 

Net Assets - Class A

     $ 2,367,610       $ 8,409,204       $ 14,647,737       
  

 

 

 

Net Assets Consists of

        

Paid-in capital

     $ 39,678,667       $ 37,182,312       $ 508,102,164       

Accumulated undistributed net investment income/(loss)

             33,122         (33,682)       

Accumulated undistributed net realized gain/(loss)

     2,255,454         3,041,135         (158,193,832)       

Unrealized appreciation/(depreciation)

     (2,303,360)         (48,472)         2,393,895       
  

 

 

 

Net Assets

     $ 39,630,761       $ 40,208,097       $ 352,268,545       
  

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

        

Class S

     2,750,033         3,982,674         25,872,744       

Class C

                     833,969       

Class A

     181,315         1,056,629         1,162,441       

Net asset value (offering and redemption price per share)

        

Class S

     $ 13.55       $ 7.98       $ 12.66       

Class C

     $       $       $ 12.14       

Class A

     $ 13.06       $ 7.96       $ 12.60       

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

     $ 13.85       $ 8.44       $ 13.37       

(a) Includes securities on loan of

     $ 1,781,465       $ 779,737       $ 41,762,067       

 

 

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

 

Annual Report  |  September 30, 2016    39


Table of Contents
ICON Sector Funds    Statements of Assets and Liabilities
   September 30, 2016

 

 

      ICON Financial Fund   

ICON Healthcare

Fund

  

ICON Industrials

Fund

Assets

        

Investments, at cost

     $ 47,781,564       $ 89,228,207       $ 24,363,317   
  

 

 

 

Investments, at value(a)

     46,494,916         87,498,465         25,703,861   

Foreign currency, at value (Cost $8,921, $– and $–, respectively)

     8,921                   

Receivables:

        

Investments sold

             38,660           

Fund shares sold

     31,580         16,288         26   

Expense reimbursements due from Adviser

     3,105                 3,959   

Dividends

     70,810         29,818         5,619   

Foreign tax reclaims

             3,827           

Other assets

     9,491         11,941         7,294   
  

 

 

 

Total assets

     46,618,823         87,598,999         25,720,759   
  

 

 

 

Liabilities

        

Payables:

        

Payable for collateral received on securities loaned

     502,800         1,546,000           

Loan payable, at value (Cost $100,081, $– and $–)

     100,081                   

Expense recoupment due to Adviser

             4,155           

Investments purchased

             4,763,837         688,466   

Fund shares redeemed

     41,586         10,762         26,984   

Advisory fees

     38,216         66,526         19,417   

Transfer agent fees

     7,229         22,628         5,720   

Fund accounting fees

     2,154         3,175         1,433   

Accrued distribution fees

     538         1,058         234   

Trustee fees and expenses

     1,927         3,450         709   

Administration fees

     1,964         3,451         991   

Accrued expenses

     26,954         34,998         21,938   
  

 

 

 

Total liabilities

     723,449         6,460,040         765,892   
  

 

 

 

Net Assets - all share classes

     $ 45,895,374       $ 81,138,959       $ 24,954,867   
  

 

 

 

Net Assets - Class S

     $ 43,353,774       $ 76,217,584       $ 23,956,789   
  

 

 

 

Net Assets - Class A

     $ 2,541,600       $ 4,921,375       $ 998,078   
  

 

 

 

Net Assets Consists of

        

Paid-in capital

     $ 138,026,167       $ 81,764,791       $ 41,850,875   

Accumulated undistributed net investment income/(loss)

     487,449         (63,244)         (22,535)   

Accumulated undistributed net realized gain/(loss)

     (91,331,594)         1,167,154         (18,214,017)   

Unrealized appreciation/(depreciation)

     (1,286,648)         (1,729,742)         1,340,544   
  

 

 

 

Net Assets

     $ 45,895,374       $ 81,138,959       $ 24,954,867   
  

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

        

Class S

     5,654,114         4,947,704         1,953,540   

Class A

     329,586         331,596         82,224   

Net asset value (offering and redemption price per share)

        

Class S

     $ 7.67       $ 15.40       $ 12.26   

Class A

     $ 7.71       $ 14.84       $ 12.14   

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

     $ 8.18       $ 15.75       $ 12.88   

(a) Includes securities on loan of

     $ 495,160       $ 1,522,070       $   

 

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

 

40    www.iconfunds.com


Table of Contents
ICON Sector Funds    Statements of Assets and Liabilities
   September 30, 2016

 

 

      ICON Information
Technology Fund
   ICON Natural
Resources Fund
   ICON Utilities Fund  

Assets

        

Investments, at cost

     $ 42,343,138       $ 78,756,851       $ 59,751,864   
  

 

 

 

Investments, at value(a)

     52,277,094         78,963,232         60,789,964   

Receivables:

        

Investments sold

     425,578         1,628,149         1,433,785   

Fund shares sold

     39,360         109,235         419,599   

Expense reimbursements due from Adviser

     224         68,539         4,876   

Dividends

     16,054         114,731         193,892   

Foreign tax reclaims

             833           

Other assets

     8,529         14,648         25,417   
  

 

 

 

Total assets

     52,766,839         80,899,367         62,867,533   
  

 

 

 

Liabilities

        

Payables:

        

Payable for collateral received on securities loaned

     823,500         6,505,465         1,141,500   

Investments purchased

     245,087         2,354,077         1,721,830   

Fund shares redeemed

     24,019         233,675         117,639   

Distributions due to shareholders

                     49,985   

Advisory fees

     41,634         58,706         48,562   

Transfer agent fees

     14,421         29,848         16,289   

Fund accounting fees

     2,251         3,043         2,483   

Accrued distribution fees

     527         2,133         3,169   

Trustee fees and expenses

     1,994         3,058         2,827   

Administration fees

     2,124         3,026         2,598   

Accrued expenses

     27,440         33,954         29,118   
  

 

 

 

Total liabilities

     1,182,997         9,226,985         3,136,000   
  

 

 

 

Net Assets - all share classes

     $ 51,583,842       $ 71,672,382       $ 59,731,533   
  

 

 

 

Net Assets - Class S

     $ 48,952,961       $ 65,787,313       $ 43,863,813   
  

 

 

 

Net Assets - Class C

     $       $ 1,434,502       $   
  

 

 

 

Net Assets - Class A

     $ 2,630,881       $ 4,450,567       $ 15,867,720   
  

 

 

 

Net Assets Consists of

        

Paid-in capital

     $ 32,776,198       $ 76,480,544       $ 54,513,606   

Accumulated undistributed net investment income/(loss)

             400,690         22,990   

Accumulated undistributed net realized gain/(loss)

     8,873,688         (5,415,227)         4,156,752   

Unrealized appreciation/(depreciation)

     9,933,956         206,375         1,038,185   
  

 

 

 

Net Assets

     $ 51,583,842       $ 71,672,382       $ 59,731,533   
  

 

 

 

Shares outstanding (unlimited shares authorized, no par value)

        

Class S

     2,726,177         5,129,815         4,623,967   

Class C

             116,014           

Class A

     149,939         349,577         1,697,039   

Net asset value (offering and redemption price per share)

        

Class S

     $ 17.96       $ 12.82       $ 9.49   

Class C

     $       $ 12.36       $   

Class A

     $ 17.55       $ 12.73       $ 9.35   

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

     $ 18.62       $ 13.51       $ 9.92   

(a) Includes securities on loan of

     $ 801,360       $ 6,414,211       $ 1,120,953   

 

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

 

Annual Report  |  September 30, 2016    41


Table of Contents
ICON Sector Funds    Statements of Operations
   Year Ended September 30, 2016

 

 

      ICON Consumer
Discretionary Fund
   ICON Consumer
Staples Fund
   ICON Energy Fund

Investment Income

        

Interest

     $ 654       $ 3,252       $ 1,023   

Dividends

     521,596         384,685         11,474,238   

Foreign taxes withheld

     (2,925)                 (207,358)   

Income from securities lending, net

     26,483         9,916         684,231   
  

 

 

 

Total investment income

     545,808         397,853         11,952,134   
  

 

 

 

Expenses

        

Advisory fees

     452,667         227,890         3,428,145   

Administration fees

     22,696         11,394         171,802   

Transfer agent fees

     66,031         59,171         806,805   

Distribution fees:

        

Class C

                     95,696   

Class A

     7,600         18,194         34,812   

Registration fees

     28,409         25,863         54,814   

Audit and tax service expense

     18,161         16,991         34,532   

Fund accounting fees

     17,177         9,605         118,076   

Trustee fees and expenses

     7,263         4,008         55,485   

Insurance expense

     7,349         2,130         61,030   

Custody fees

     4,477         3,295         12,430   

Printing fees

     12,699         7,027         74,541   

Interest expense

     94         1,329         1,157   

Recoupment of previously reimbursed expenses

             15,155           

Other expenses

     21,196         12,021         133,033   
  

 

 

 

Total expenses before expense reimbursement

     665,819         414,073         5,082,358   

Expense reimbursement by Adviser due to expense limitation agreement

     (4,288)         (51,650)           
  

 

 

 

Net Expenses

     661,531         362,423         5,082,358   
  

 

 

 

Net Investment Income/(Loss)

     (115,723)         35,430         6,869,776   
  

 

 

 

Realized and Unrealized Gain/(Loss)

        

Net realized gain/(loss) on:

        

Investments

     2,371,232         3,041,135         (57,721,087)   

Foreign currency

                     605   
  

 

 

 

     2,371,232         3,041,135         (57,720,482)   
  

 

 

 

Change in unrealized net appreciation/(depreciation) on:

        

Investments and foreign currency

     (204,909)         (1,151,918)         100,616,370   
  

 

 

 

     (204,909)         (1,151,918)         100,616,370   
  

 

 

 

Net realized and unrealized gain/(loss)

     2,166,323         1,889,217         42,895,888   
  

 

 

 

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

     $ 2,050,600       $ 1,924,647       $ 49,765,664   
  

 

 

 

 

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

 

42    www.iconfunds.com


Table of Contents
ICON Sector Funds    Statements of Operations
   Year Ended September 30, 2016

 

      ICON Financial Fund    ICON Healthcare
Fund
   ICON Industrials
Fund

Investment Income

        

Interest

     $ 66       $ 554       $ 153   

Dividends

     1,165,780         982,095         216,090   

Foreign taxes withheld

     (6,229)         (2,918)           

Income from securities lending, net

     35,443         29,526         1,655   

Other income

             11,826           
  

 

 

 

Total investment income

     1,195,060         1,021,083         217,898   
  

 

 

 

Expenses

        

Advisory fees

     498,102         867,577         159,835   

Administration fees

     25,147         43,503         8,011   

Transfer agent fees

     67,791         161,988         37,466   

Distribution fees:

        

Class A

     6,029         21,015         1,912   

Registration fees

     26,489         42,769         21,962   

Audit and tax service expense

     18,190         19,915         16,918   

Fund accounting fees

     18,984         30,153         6,969   

Trustee fees and expenses

     7,974         13,827         2,456   

Insurance expense

     5,121         19,380         4,389   

Custody fees

     3,844         4,834         3,018   

Printing fees

     13,698         18,052         10,327   

Interest expense

     715         2,484           

Recoupment of previously reimbursed expenses

                     5,222   

Other expenses

     24,340         34,821         8,312   
  

 

 

 

Total expenses before expense reimbursement

     716,424         1,280,318         286,797   

Expense reimbursement by Adviser due to expense limitation agreement

     (8,903)         (3,006)         (44,625)   
  

 

 

 

Net Expenses

     707,521         1,277,312         242,172   
  

 

 

 

Net Investment Income/(Loss)

     487,539         (256,229)         (24,274)   
  

 

 

 

Realized and Unrealized Gain/(Loss)

        

Net realized gain/(loss) on:

        

Investments

     (4,872,050)         1,360,141         1,229,396   

Foreign currency

     (90)                   

Long-term capital gain distributions from other investment companies

     3,543                   
  

 

 

 

     (4,868,597)         1,360,141         1,229,396   
  

 

 

 

Change in unrealized net appreciation/(depreciation) on:

        

Investments and foreign currency

     2,869,562         6,368,752         210,733   
  

 

 

 

     2,869,562         6,368,752         210,733   
  

 

 

 

Net realized and unrealized gain/(loss)

     (1,999,035)         7,728,893         1,440,129   
  

 

 

 

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

     $ (1,511,496)       $ 7,472,664       $ 1,415,855   
  

 

 

 

 

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

 

Annual Report  |  September 30, 2016    43


Table of Contents
ICON Sector Funds    Statements of Operations
   Year Ended September 30, 2016

 

 

      ICON Information
Technology Fund
   ICON Natural
Resources Fund(a)
   ICON Utilities Fund

Investment Income

        

Interest

     $ 130       $ 656       $ 124   

Dividends

     467,451         1,583,165         2,141,065   

Foreign taxes withheld

             (29,895)         (17,926)   

Income from securities lending, net

     9,569         29,109         44,515   

Other income

     1,175         6           
  

 

 

 

Total investment income

     478,325         1,583,041         2,167,778   
  

 

 

 

Expenses

        

Advisory fees

     465,306         691,011         452,604   

Administration fees

     23,312         34,640         22,783   

Transfer agent fees

     94,908         162,930         87,574   

Distribution fees:

        

Class C

             10,865           

Class A

     5,138         10,226         26,359   

Registration fees

     25,146         32,898         24,905   

Audit and tax service expense

     18,053         22,065         17,680   

Fund accounting fees

     17,452         25,461         17,525   

Trustee fees and expenses

     7,494         11,176         8,007   

Insurance expense

     6,916         11,286         2,478   

Custody fees

     4,163         5,957         4,155   

Printing fees

     14,991         69,412         15,660   

Interest expense

     748         539         1,807   

Recoupment of previously reimbursed expenses

     1,032         346         36,164   

Other expenses

     21,820         43,515         22,199   
  

 

 

 

Total expenses before expense reimbursement

     706,479         1,132,327         739,900   

Expense reimbursement by Adviser due to expense limitation agreement

     (8,637)         (73,898)         (31,947)   
  

 

 

 

Net Expenses

     697,842         1,058,429         707,953   
  

 

 

 

Net Investment Income/(Loss)

     (219,517)         524,612         1,459,825   
  

 

 

 

Realized and Unrealized Gain/(Loss)

        

Net realized gain/(loss) on:

        

Investments

     9,737,627         (4,578,566)         4,282,912   

Foreign currency

             (11,991)         649   
  

 

 

 

     9,737,627         (4,590,557)         4,283,561   
  

 

 

 

Change in unrealized net appreciation/(depreciation) on:

        

Investments and foreign currency

     (1,066,435)         15,224,010         1,873,338   
  

 

 

 

     (1,066,435)         15,224,010         1,873,338   
  

 

 

 

Net realized and unrealized gain/(loss)

     8,671,192         10,633,453         6,156,899   
  

 

 

 

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

     $ 8,451,675       $ 11,158,065       $ 7,616,724   
  

 

 

 

 

(a) 

Prior to January 22, 2016, the ICON Natural Resources Fund was known as the ICON Materials Fund.

 

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

 

44    www.iconfunds.com


Table of Contents

 

Page Intentionally Left Blank

 

 


Table of Contents
ICON Sector Funds    Statements of Changes in Net Assets
  

 

     ICON Consumer Discretionary Fund    ICON Consumer Staples Fund

 

 
     Year Ended
September 30, 2016
   Year Ended
September 30, 2015
   Year Ended
September 30, 2016
   Year Ended
September 30, 2015

 

 

Operations

           

Net investment income/(loss)

    $ (115,723)       $ (279,889)       $ 35,430       $ 37,316        

Net realized gain/(loss)

     2,371,232         5,384,667         3,041,135         2,707,892        

Change in net unrealized appreciation/(depreciation)

     (204,909)         (1,319,349)         (1,151,918)         (738,309)        
  

 

 

 

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

     2,050,600         3,785,429         1,924,647         2,006,899        
  

 

 

 

Dividends and Distributions to Shareholders

           

Net investment income

           

Class S

                     (2,775)         (182,080)        

Class C(a)

                             (27,681)        

Class A(a)

                     (282)         (55,273)        

Net realized gains

           

Class S

     (4,142,603)         (7,437,716)         (1,689,533)         (2,549,485)        

Class C(a)

             (61,165)                 (526,066)        

Class A(a)

     (324,745)         (598,384)         (1,018,358)         (758,214)        
  

 

 

 

Net decrease from dividends and distributions

     (4,467,348)         (8,097,265)         (2,710,948)         (4,098,799)        
  

 

 

 

Fund Share Transactions

           

Shares sold

           

Class S

     3,598,562         21,689,352         31,781,091         9,344,934        

Class C(a)

             409,813                 1,255,133        

Class A(a)

     978,272         3,370,795         9,210,875         2,230,956        

Reinvested dividends and distributions

           

Class S

     4,104,730         7,360,142         1,604,272         2,554,153        

Class C(a)

             52,431                 201,008        

Class A(a)

     289,861         539,623         808,132         688,039        

Shares repurchased

           

Class S

     (13,145,470)         (35,671,860)         (9,693,926)         (27,906,883)        

Class C(a)

             (952,038)                 (2,486,008)        

Class A(a)

     (1,690,501)         (3,081,029)         (4,969,477)         (1,473,943)        
  

 

 

 

Net increase/(decrease) from fund share transactions

     (5,864,546)         (6,282,771)         28,740,967         (15,592,611)        
  

 

 

 

Total net increase/(decrease) in net assets

     (8,281,294)         (10,594,607)         27,954,666         (17,684,511)        

Net Assets

           

Beginning of year

     47,912,055         58,506,662         12,253,431         29,937,942        
  

 

 

 

End of year

    $ 39,630,761       $ 47,912,055       $ 40,208,097       $ 12,253,431        
  

 

 

 

Accumulated undistributed net investment income/(loss)

    $       $       $ 33,122       $ 749        
  

 

 

 

 

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

 

46    www.iconfunds.com


Table of Contents
ICON Sector Funds    Statements of Changes in Net Assets
  

 

    ICON Consumer Discretionary Fund   ICON Consumer Staples Fund

 

    Year Ended
September 30, 2016
  Year Ended
  September 30, 2015  
  Year Ended
  September 30, 2016  
  Year Ended  
September 30, 2015  

 

Transactions in Fund Shares

       

Shares sold

       

Class S

  251,318   1,413,797   3,991,017   914,672  

Class C(a)

    29,106     124,315  

Class A(a)

  70,735   218,030   1,184,079   234,942  

Issued to shareholders in reinvestment of distributions

       

Class S

  307,240   502,056   212,768   275,267  

Class C(a)

    3,777     22,384  

Class A(a)

  22,418   37,710   107,322   74,225  

Shares repurchased

       

Class S

  (955,082)   (2,336,434)   (1,161,279)   (2,476,966)  

Class C(a)

    (69,108)     (276,761)  

Class A(a)

  (128,008)   (203,013)   (626,714)   (153,867)  
 

 

Net increase/(decrease)

  (431,379)   (404,079)   3,707,193   (1,261,789)  
 

 

Shares outstanding, beginning of year

  3,362,727   3,766,806   1,332,110   2,593,899  
 

 

Shares outstanding, end of year

  2,931,348   3,362,727   5,039,303   1,332,110  
 

 

 

(a) 

Class C shares merged into Class A shares on September 25, 2015. The information presented includes the activity for Class C prior to the merger as well as Class C shares redeemed and Class A shares issued in connection with the merger.

 

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

 

Annual Report  |  September 30, 2016    47


Table of Contents
ICON Sector Funds    Statements of Changes in Net Assets
  

 

 

     ICON Energy Fund    ICON Financial Fund

 

 
     Year Ended
September 30, 2016
   Year Ended
September 30, 2015
   Year Ended
September 30, 2016
   Year Ended
September 30, 2015
 

 

 

Operations

           

Net investment income/(loss)

   $ 6,869,776       $ 3,185,299       $ 487,539       $ 228,338   

Net realized gain/(loss)

     (57,720,482)         (91,275,818)         (4,872,140)         2,241,254   

Net realized gain/(loss) on long-term capital gain distributions from other investment companies

                     3,543           

Change in net unrealized appreciation/(depreciation)

     100,616,370         (125,848,879)         2,869,562         (4,690,498)   
  

 

 

 

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

     49,765,664         (213,939,398)         (1,511,496)         (2,220,906)   
  

 

 

 

Dividends and Distributions to Shareholders

           

Net investment income

           

Class S

     (3,080,658)         (2,185,262)                 (297,167)  (a) 

Class C(b)

     (46,988)                         (1,205)  (a)  

Class A(b)

     (87,124)         (46,508)                 (2,530)  (a)  

Net realized gains

           

Class S

             (91,546,420)                   

Class C(b)

             (2,566,539)                   

Class A(b)

             (4,344,666)                   
  

 

 

 

Net decrease from dividends and distributions

     (3,214,770)         (100,689,395)                 (300,902)   
  

 

 

 

Fund Share Transactions

           

Shares sold

           

Class S

     109,808,067         155,430,206         11,122,679         33,196,366   

Class C(b)

     1,926,758         6,608,035                 710,046   

Class A(b)

     4,574,292         9,095,784         1,691,237         2,012,530   

Reinvested dividends and distributions

           

Class S

     2,963,225         89,035,364                 294,149   

Class C(b)

     40,797         2,100,297                 1,038   

Class A(b)

     66,909         3,519,414                 1,970   

Shares repurchased

           

Class S

     (149,229,594)         (246,946,411)         (15,374,878)         (14,305,860)   

Class C(b)

     (2,980,604)         (7,362,690)                 (716,985)   

Class A(b)

     (6,498,389)         (11,211,290)         (1,112,225)         (489,118)   
  

 

 

 

Net increase/(decrease) from fund share transactions

     (39,328,539)         268,709         (3,673,187)         20,704,136   
  

 

 

 

Total net increase/(decrease) in net assets

     7,222,355         (314,360,084)         (5,184,683)         18,182,328   

Net Assets

           

Beginning of year

     345,046,190         659,406,274         51,080,057         32,897,729   
  

 

 

 

End of year

    $ 352,268,545       $ 345,046,190       $ 45,895,374       $ 51,080,057   
  

 

 

 

Accumulated undistributed net investment income/(loss)

    $ (33,682)       $ 1,363,789       $ 487,449       $   
  

 

 

 

 

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

 

48    www.iconfunds.com


Table of Contents
ICON Sector Funds    Statements of Changes in Net Assets
  

 

 

    ICON Energy Fund   ICON Financial Fund

 

 
     Year Ended
September 30, 2016
  Year Ended
September 30, 2015
  Year Ended
September 30, 2016
  Year Ended
September 30, 2015

Transactions in Fund Shares

       

Shares sold

       

Class S

    9,937,173        11,026,018        1,386,325        3,898,005     

Class C(b)

    173,976        467,829               83,078     

Class A(b)

    405,435        602,723        225,786        244,185     

Issued to shareholders in reinvestment of distributions

       

Class S

    278,237        6,310,086               37,808     

Class C(b)

    3,961        153,195               135     

Class A(b)

    6,295        250,314               251     

Shares repurchased

       

Class S

    (13,027,347)        (16,249,675)        (2,072,996)        (1,717,118)     

Class C(b)

    (270,035)        (484,637)               (92,318)     

Class A(b)

    (561,929)        (743,141)        (148,818)        (60,426)     
 

 

 

 

Net increase/(decrease)

    (3,054,234)        1,332,712        (609,703)        2,393,600     
 

 

 

 

Shares outstanding, beginning of year

    30,923,388        29,590,676        6,593,403        4,199,803     
 

 

 

 

Shares outstanding, end of year

    27,869,154        30,923,388        5,983,700        6,593,403     
 

 

 

 

 

(a) 

The ICON Financial Fund had a distribution in excess of net investment income during the fiscal year ended September 30, 2015.

(b) 

Class C shares of the ICON Financial Fund merged into Class A shares on September 25, 2015. The information presented includes the activity for Class C prior to the merger as well as Class C shares redeemed and Class A shares issued in connection with the merger.

 

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

 

Annual Report  |  September 30, 2016    49


Table of Contents
ICON Sector Funds    Statements of Changes in Net Assets
  

 

     ICON Healthcare Fund    ICON Industrials Fund

 

 
     Year Ended
September 30, 2016
   Year Ended
September 30, 2015
   Year Ended
September 30, 2016
   Year Ended
September 30, 2015
 

 

 

Operations

           

Net investment income/(loss)

    $ (256,229)       $ (757,081)       $ (24,274)       $ 27,024       

Net realized gain/(loss)

     1,360,141         24,437,743         1,229,396         6,859,443       

Change in net unrealized appreciation/(depreciation)

     6,368,752         (16,999,189)         210,733         (7,128,021)       
  

 

 

 

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

     7,472,664         6,681,473         1,415,855         (241,554)       
  

 

 

 

Dividends and Distributions to Shareholders

           

Net investment income

           

Class S

                             (26,242)       

Net realized gains

           

Class S

     (18,074,605)         (29,325,742)                 –       

Class C(a)

             (255,243)                 –       

Class A(a)

     (2,959,679)         (3,330,588)                 –       
  

 

 

 

Net decrease from dividends and distributions

     (21,034,284)         (32,911,573)                 (26,242)       
  

 

 

 

Fund Share Transactions

           

Shares sold

           

Class S

     8,840,606         82,146,215         13,580,388         7,116,799       

Class C(a)

             2,116,107                 136,307       

Class A(a)

     1,044,829         12,844,606         865,729         520,264       

Reinvested dividends and distributions

           

Class S

     17,161,570         27,557,080                 25,951       

Class C(a)

             226,826                 –       

Class A(a)

     2,747,924         3,195,114                 –       

Shares repurchased

           

Class S

     (33,976,571)         (140,472,115)         (5,225,967)         (28,551,022)       

Class C(a)

             (2,684,340)                 (389,916)       

Class A(a)

     (11,543,997)         (8,127,702)         (528,190)         (199,180)       
  

 

 

 

Net increase/(decrease) from fund share transactions

     (15,725,639)         (23,198,209)         8,691,960         (21,340,797)       
  

 

 

 

Total net increase/(decrease) in net assets

     (29,287,259)         (49,428,309)         10,107,815         (21,608,593)       

Net Assets

           

Beginning of year

     110,426,218         159,854,527         14,847,052         36,455,645       
  

 

 

 

End of year

    $ 81,138,959       $ 110,426,218       $ 24,954,867       $ 14,847,052       
  

 

 

 

Accumulated undistributed net investment income/(loss)

    $ (63,244)       $       $ (22,535)       $ (2,188)       
  

 

 

 

 

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

 

50    www.iconfunds.com


Table of Contents
ICON Sector Funds    Statements of Changes in Net Assets
  

 

     ICON Healthcare Fund    ICON Industrials Fund

 

 
     Year Ended
September 30, 2016
   Year Ended
September 30, 2015
   Year Ended
September 30, 2016
   Year Ended
September 30, 2015    
 

 

 

Transactions in Fund Shares

           

Shares sold

           

Class S

     571,957         3,948,413         1,102,557         581,655       

Class C(a)

             110,698                 11,363       

Class A(a)

     67,963         646,369         72,878         45,927       

Issued to shareholders in reinvestment of distributions

           

Class S

     1,165,868         1,445,049                 2,223       

Class C(a)

             12,714                 –       

Class A(a)

     193,108         171,688                 –       

Shares repurchased

           

Class S

     (2,124,163)         (6,673,617)         (451,383)         (2,357,106)       

Class C(a)

             (156,937)                 (35,500)       

Class A(a)

     (811,470)         (430,358)         (45,537)         (16,775)       
  

 

 

 

Net increase/(decrease)

     (936,737)         (925,981)         678,515         (1,768,213)       
  

 

 

 

Shares outstanding, beginning of year

     6,216,037         7,142,018         1,357,249         3,125,462        
  

 

 

 

Shares outstanding, end of year

     5,279,300         6,216,037         2,035,764         1,357,249        
  

 

 

 

 

(a) 

Class C shares merged into Class A shares on September 25, 2015. The information presented includes the activity for Class C prior to the merger as well as Class C shares redeemed and Class A shares issued in connection with the merger.

 

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

 

Annual Report  |  September 30, 2016    51


Table of Contents
ICON Sector Funds    Statements of Changes in Net Assets
  

 

    ICON Information Technology Fund     ICON Natural Resources Fund  

 

 
    Year Ended
September 30, 2016
    Year Ended
September 30, 2015
    Year Ended
September 30, 2016(a)
    Year Ended
September 30, 2015
 

 

 

Operations

       

Net investment income/(loss)

   $ (219,517)        $ (353,717)        $ 524,612        $ 213,173       

Net realized gain/(loss)

    9,737,627          6,605,486          (4,590,557)          13,500,660       

Change in net unrealized appreciation/(depreciation)

    (1,066,435)          (1,368,701)          15,224,010          (32,304,609)       
 

 

 

 

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

    8,451,675          4,883,068          11,158,065          (18,590,776)       
 

 

 

 

Dividends and Distributions to Shareholders

       

Net investment income

       

Class S

    –          –          (322,749)          (208,262)       

Class A(b)

    –          –          (2,353)          –       

Net realized gains

       

Class S

    –          –          (4,489,113)          –       

Class C(b)

    –          –          (52,186)          –       

Class A(b)

    –          –          (201,365)          –       
 

 

 

 

Net decrease from dividends and distributions

    –          –          (5,067,766)          (208,262)       
 

 

 

 

Fund Share Transactions

       

Shares sold

       

Class S

    18,296,541          21,010,894          16,580,790          21,981,237       

Class C(b)

    –          499,734          828,203          609,433       

Class A(b)

    1,908,013          4,813,274          4,545,786          1,846,097       

Reinvested dividends and distributions

       

Class S

    –          –          4,690,853          200,552       

Class C(b)

    –          –          43,566          –       

Class A(b)

    –          –          183,313          –       

Shares repurchased

       

Class S

    (22,597,870)          (30,795,176)          (21,368,193)          (37,934,905)       

Class C(b)

    –          (929,352)          (401,215)          (216,420)       

Class A(b)

    (2,987,018)          (2,189,088)          (3,837,341)          (5,884,751)       
 

 

 

 

Net increase/(decrease) from fund share transactions

    (5,380,334)          (7,589,714)          1,265,762          (19,398,757)       
 

 

 

 

Total net increase/(decrease) in net assets

    3,071,341          (2,706,646)          7,356,061          (38,197,795)       

Net Assets

       

Beginning of year

    48,512,501          51,219,147          64,316,321          102,514,116       
 

 

 

 

End of year

   $ 51,583,842        $ 48,512,501        $ 71,672,382        $ 64,316,321       
 

 

 

 

Accumulated undistributed net investment income/(loss)

   $ –        $ (286,389)        $ 400,690        $ 213,172       
 

 

 

 

 

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

 

52    www.iconfunds.com


Table of Contents
ICON Sector Funds    Statements of Changes in Net Assets
  

 

    ICON Information Technology Fund   ICON Natural Resources Fund

 

 
    Year Ended
September 30, 2016
  Year Ended
September 30, 2015
  Year Ended
September 30, 2016(a)
  Year Ended
September 30, 2015
 

 

 

Transactions in Fund Shares

       

Shares sold

       

Class S

    1,105,056          1,431,875          1,391,294          1,483,591       

Class C(b)

    –          34,317          72,656          41,945       

Class A(b)

    119,658          324,948          384,690          125,254       

Issued to shareholders in reinvestment of distributions

       

Class S

    –          –          422,219          13,699       

Class C(b)

    –          –          4,038          –       

Class A(b)

    –          –          16,604          –       

Shares repurchased

       

Class S

    (1,410,912)          (2,116,872)          (1,776,770)          (2,608,199)       

Class C(b)

    –          (65,286)          (33,139)          (15,147)       

Class A(b)

    (186,123)          (142,668)          (313,793)          (413,339)       
 

 

 

 

Net increase/(decrease)

    (372,321)          (533,686)          167,799          (1,372,196)       
 

 

 

 

Shares outstanding, beginning of year

    3,248,437          3,782,123          5,427,607          6,799,803       
 

 

 

 

Shares outstanding, end of year

    2,876,116          3,248,437          5,595,406          5,427,607       
 

 

 

 

 

(a) 

Prior to January 22, 2016, the ICON Natural Resources Fund was known as the ICON Materials Fund.

(b) 

Class C shares of the ICON Information Technology Fund merged into Class A shares on September 25, 2015. The information presented includes the activity for Class C prior to the merger as well as Class C shares redeemed and Class A shares issued in connection with the merger.

 

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

 

Annual Report  |  September 30, 2016    53


Table of Contents
ICON Sector Funds    Statements of Changes in Net Assets
  

 

 

     ICON Utilities Fund

 

 
     Year Ended
September 30, 2016
   Year Ended
September 30, 2015
 

 

 

Operations

     

Net investment income/(loss)

    $ 1,459,825       $ 646,343       

Net realized gain/(loss)

     4,283,561         940,502       

Change in net unrealized appreciation/(depreciation)

     1,873,338         (758,094)       
  

 

 

 

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

     7,616,724         828,751       
  

 

 

 

Dividends and Distributions to Shareholders

     

Net investment income

     

Class S

     (1,106,247)         (485,422)       

Class C(a)

             (44,880)       

Class A(a)

     (318,477)         (92,640)       
  

 

 

 

Net decrease from dividends and distributions

     (1,424,724)         (622,942)       
  

 

 

 

Fund Share Transactions

     

Shares sold

     

Class S

     50,937,665         12,850,414       

Class C(a)

             1,076,770       

Class A(a)

     12,140,072         4,507,405       

Reinvested dividends and distributions

     

Class S

     1,060,746         455,862       

Class C(a)

             7,444       

Class A(a)

     221,423         80,869       

Shares repurchased

     

Class S

     (31,789,944)         (12,269,919)       

Class C(a)

             (3,353,179)       

Class A(a)

     (3,816,717)         (1,458,476)       
  

 

 

 

Net increase from fund share transactions

     28,753,245         1,897,190       
  

 

 

 

Total net increase in net assets

     34,945,245         2,102,999       

Net Assets

     

Beginning of year

     24,786,288         22,683,289       
  

 

 

 

End of year

    $ 59,731,533       $ 24,786,288       
  

 

 

 

Accumulated undistributed net investment income/(loss)

    $ 22,990       $ 25,158       
  

 

 

 

Transactions in Fund Shares

     

Shares sold

     

Class S

     5,504,446         1,524,522       

Class C(a)

             132,246       

Class A(a)

     1,380,355         563,149       

Issued to shareholders in reinvestment of distributions

     

Class S

     114,167         55,665       

Class C(a)

             929       

Class A(a)

     23,829         9,994       

Shares repurchased

     

Class S

     (3,372,689)         (1,469,244)       

Class C(a)

             (421,473)       

Class A(a)

     (424,156)         (178,414)       
  

 

 

 

Net increase

     3,225,952         217,374       
  

 

 

 

Shares outstanding, beginning of year

     3,095,054         2,877,680       
  

 

 

 

Shares outstanding, end of year

     6,321,006         3,095,054       
  

 

 

 

 

(a) 

Class C shares merged into Class A shares on September 25, 2015. The information presented includes the activity for Class C prior to the merger as well as Class C shares redeemed and Class A shares issued in connection with the merger.

 

 

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

 

54    www.iconfunds.com


Table of Contents
ICON Consumer Discretionary Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S   Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
  Year Ended
September 30,
2012
 

 

 

Net asset value, beginning of period

  $ 14.27      $ 15.55      $ 14.50      $ 11.82      $ 8.79        

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    (0.03)        (0.07)        (0.07)        (0.03)        0.03        

Net realized and unrealized gains/(losses) on investments

    0.65        1.03        1.12        2.73        3.00        

 

 

Total from investment operations

    0.62        0.96        1.05        2.70        3.03        

 

 

Less dividends and distributions:

         

Dividends from net investment income

                         (0.02)        –        

Distributions from net realized gains

    (1.34)        (2.24)                      –        

 

 

Total dividends and distributions

    (1.34)        (2.24)               (0.02)        –        

 

 

Net asset value, end of period

  $ 13.55      $ 14.27      $ 15.55      $ 14.50      $ 11.82        

 

 

Total Return

    4.49     5.80     7.24     22.91     34.47%     

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 37,263      $ 44,913      $ 55,476      $ 39,883      $ 58,314        

Ratio of expenses to average net assets

         

Before expense limitation

    1.42     1.43     1.46     1.38     1.40%     

After expense limitation/
recoupment(b)

    1.42     1.43     1.46     1.38     1.40%     

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.22)     (0.44)     (0.47)     (0.21)     0.26%     

After expense limitation/
recoupment

    (0.22)     (0.44)     (0.47)     (0.21)     0.26%     

Portfolio turnover rate

    158     201     202     87     91%     

 

(a) 

Calculated using the average shares method.

(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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    55


Table of Contents
ICON Consumer Discretionary Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
  Year Ended
September 30,
2012
 

 

 

Net asset value, beginning of period

  $ 13.88      $ 15.24      $ 14.25      $ 11.65      $ 8.75        

Income/(loss) from investment operations:

         

Net investment income/(loss) (b)

    (0.10)        (0.14)        (0.12)        (0.09)        (0.02)        

Net realized and unrealized gains/(losses) on investments

    0.62        1.02        1.11        2.69        2.92        

 

 

Total from investment operations

    0.52        0.88        0.99        2.60        2.90        

 

 

Less dividends and distributions:

         

Distributions from net realized gains

    (1.34)        (2.24)                      –        

 

 

Total dividends and distributions

    (1.34)        (2.24)                      –        

 

 

Net asset value, end of period

  $ 13.06      $ 13.88      $ 15.24      $ 14.25      $ 11.65        

 

 

Total Return(c)

    3.86     5.34     6.95     22.42     33.03%     

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 2,368      $ 2,999      $ 2,492      $ 4,699      $ 1,542        

Ratio of expenses to average net assets

         

Before expense limitation

    2.13     1.91     1.76     1.78     1.78%     

After expense limitation/
recoupment (d)

    1.99     1.91     1.76     1.78     1.78%     

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.92)     (0.97)     (0.80)     (0.66)     (0.20)%     

After expense limitation/recoupment

    (0.78)     (0.97)     (0.80)     (0.66)     (0.20)%     

Portfolio turnover rate

    158     201     202     87     91%     

 

(a) 

Class C shares were merged into Class A on September 25, 2015. The amounts presented represent the results of the Class A shares for the periods prior to the merger and the results of the combined share class for the period subsequent to the merger.

(b) 

Calculated using the average shares method.

(c) 

The total return calculation excludes any sales charges.

(d) 

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, when applicable.

 

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

 

56    www.iconfunds.com


Table of Contents
ICON Consumer Staples Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended    
September 30,    
2012    
 

Net asset value, beginning of period

    $ 9.20        $ 11.55        $ 11.18        $ 10.20        $ 8.61       

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    0.02        0.04        0.11        0.21        0.14       

Net realized and unrealized gains/(losses) on investments

    0.96        0.98        1.31        0.98        1.69       

 

 

Total from investment operations

    0.98        1.02        1.42        1.19        1.83       

 

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.00) (b)      (0.22)        (0.03)        (0.21)        (0.24)       

Distributions from net realized gains

    (2.20)        (3.15)        (1.02)               –       

 

 

Total dividends and distributions

    (2.20)        (3.37)        (1.05)        (0.21)        (0.24)       

 

 

Net asset value, end of period

    $ 7.98        $ 9.20        $ 11.55        $ 11.18        $ 10.20       

 

 

Total Return

    12.09     8.66     13.32     11.75     21.50%       

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

    $ 31,799        $ 8,651        $ 25,731        $ 33,813        $ 37,567       

Ratio of expenses to average net assets

         

Before expense limitation

    1.74     1.87     1.45     1.51     1.55%       

After expense limitation/
recoupment (c)

    1.51     1.51     1.45     1.51     1.51%       

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    0.00% (d)      (0.01)     0.94     1.92     1.40%       

After expense limitation/recoupment

    0.23     0.35     0.94     1.92     1.44%       

Portfolio turnover rate

    125     16     52     91     82%       

 

(a) 

Calculated using the average shares method.

(b) 

Amount less than $(0.005).

(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 the interest expense, when applicable.

(d) 

Less than 0.005% of average net assets.

 

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

 

Annual Report  |  September 30, 2016    57


Table of Contents
ICON Consumer Staples Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended    
September 30,    
2012    
 

 

 

Net asset value, beginning of period

    $ 9.19        $ 11.58        $ 11.23        $ 10.24        $ 8.68       

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    (0.00)( c)(d)      0.02        0.07        0.14        0.11       

Net realized and unrealized gains/(losses) on investments

    0.97        0.97        1.32        1.03        1.68       

 

 

Total from investment operations

    0.97        0.99        1.39        1.17        1.79       

 

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.00) (d)      (0.23)        (0.02)        (0.18)        (0.23)       

Distributions from net realized gains

    (2.20)        (3.15)        (1.02)               –       

 

 

Total dividends and distributions

    (2.20)        (3.38)        (1.04)        (0.18)        (0.23)       

 

 

Net asset value, end of period

    $ 7.96        $ 9.19        $ 11.58        $ 11.23        $ 10.24       

 

 

Total Return(e)

    11.93     8.32     12.99     11.52     20.94%       

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

    $ 8,409        $ 3,602        $ 2,740        $ 2,744        $ 1,499       

Ratio of expenses to average net assets

         

Before expense limitation

    1.97     2.12     2.04     1.84     2.05%       

After expense limitation/ recoupment (f)

    1.76     1.76     1.75     1.75     1.77%       

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.23)     (0.15)     0.35     1.20     0.82%       

After expense limitation/ recoupment

    (0.02)     0.21     0.64     1.29     1.10%       

Portfolio turnover rate

    125     16     52     91     82%       

 

(a) 

Class C shares were merged into Class A on September 25, 2015. The amounts presented represent the results of the Class A shares for the periods prior to the merger and the results of the combined share class for the period subsequent to the merger.

(b) 

Calculated using the average shares method.

(c) 

The per share amount does not correspond to activity reflected in the Statement of Operations due to class specific expenses during the period.

(d) 

Amount less than $(0.005).

(e) 

The total return calculation excludes any sales charges.

(f) 

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, when applicable.

 

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

 

58    www.iconfunds.com


Table of Contents
ICON Energy Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended    
September 30,    
2012    
 

 

 

Net asset value, beginning of period

    $ 11.17        $ 22.30        $ 22.59        $ 19.18        $ 16.64       

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    0.24        0.11        0.11        0.18        0.16        

Net realized and unrealized
gains/(losses) on investments

    1.36        (7.42)        0.33        3.51        2.93       

 

 

Total from investment operations

    1.60        (7.31)        0.44        3.69        3.09       

 

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.11)        (0.09)        (0.06)        (0.28)        (0.15)       

Distributions from net realized gains

           (3.73)        (0.67)               (0.40)       

 

 

Total dividends and distributions

    (0.11)        (3.82)        (0.73)        (0.28)        (0.55)       

 

 

Net asset value, end of period

    $ 12.66        $ 11.17        $ 22.30        $ 22.59        $ 19.18       

 

 

Total Return

    14.55     (36.37)     1.92     19.55     18.87%       

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

    $ 327,497        $ 320,486        $ 615,541        $ 659,581        $ 567,054       

Ratio of expenses to average net assets

         

Before expense limitation

    1.44     1.42     1.28     1.29     1.23%       

After expense limitation/ recoupment (b)

    1.44     1.42     1.28     1.29     1.23%       

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    2.04     0.74     0.46     0.85     0.87%       

After expense limitation/
recoupment

    2.04     0.74     0.46     0.85     0.87%       

Portfolio turnover rate

    99     154     97     88     74%       

 

(a) 

Calculated using the average shares method.

(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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    59


Table of Contents
ICON Energy Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class C   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended    
September 30,    
2012    
 

 

 

Net asset value, beginning of period

    $ 10.77        $ 21.74        $ 22.21        $ 18.87        $ 16.47       

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    0.11        (0.04)        (0.15)        (0.05)        (0.04)       

Net realized and unrealized gains/(losses) on investments

    1.31        (7.20)        0.35        3.48        2.88       

 

 

Total from investment operations

    1.42        (7.24)        0.20        3.43        2.84       

 

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.05)                      (0.09)        (0.04)       

Distributions from net realized gains

           (3.73)        (0.67)               (0.40)       

 

 

Total dividends and distributions

    (0.05)        (3.73)        (0.67)        (0.09)        (0.44)       

 

 

Net asset value, end of period

    $ 12.14        $ 10.77        $ 21.74        $ 22.21        $ 18.87       

 

 

Total Return(b)

    13.31     (36.99)     0.83     18.30     17.50%       

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

    $ 10,124        $ 9,972        $ 17,170        $ 14,691        $ 8,257       

Ratio of expenses to average net assets

         

Before expense limitation

    2.49     2.43     2.38     2.35     2.36%       

After expense limitation/ recoupment (c)

    2.49     2.43     2.38     2.35     2.36%       

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    0.99     (0.26)     (0.65)     (0.25)     (0.20)%       

After expense limitation/ recoupment

    0.99     (0.26)     (0.65)     (0.25)     (0.20)%       

Portfolio turnover rate

    99     154     97     88     74%       

 

(a) 

Calculated using the average shares method.

(b) 

The total return calculation excludes any sales charges.

(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 the interest expense, when applicable.

 

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

 

60    www.iconfunds.com


Table of Contents
ICON Energy Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended    
September 30,    
2012    
 

 

 

Net asset value, beginning of period

    $ 11.11        $ 22.20        $ 22.50        $ 19.12        $ 16.59       

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    0.21        0.07        0.04        0.11        0.11       

Net realized and unrealized gains/(losses) on investments

    1.35        (7.39)        0.35        3.51        2.91       

 

 

Total from investment operations

    1.56        (7.32)        0.39        3.62        3.02       

 

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.07)        (0.04)        (0.02)        (0.24)        (0.09)       

Distributions from net realized gains

           (3.73)        (0.67)               (0.40)       

 

 

Total dividends and distributions

    (0.07)        (3.77)        (0.69)        (0.24)        (0.49)       

 

 

Net asset value, end of period

    $ 12.60        $ 11.11        $ 22.20        $ 22.50        $ 19.12       

 

 

Total Return(b)

    14.19     (36.55)     1.67     19.21     18.47%       

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

    $ 14,648        $ 14,588        $ 26,695        $ 26,170        $ 15,836       

Ratio of expenses to average net assets

         

Before expense limitation

    1.73     1.66     1.55     1.61     1.55%       

After expense limitation/ recoupment (c)

    1.73     1.66     1.55     1.61     1.55%       

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    1.77     0.50     0.19     0.51     0.61%       

After expense limitation/ recoupment

    1.77     0.50     0.19     0.51     0.61%       

Portfolio turnover rate

    99     154     97     88     74%       

 

(a) 

Calculated using the average shares method.

(b) 

The total return calculation excludes any sales charges.

(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 the interest expense, when applicable.

 

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

 

Annual Report  |  September 30, 2016    61


Table of Contents
ICON Financial Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended    
September 30,    
2012    
 

 

 

Net asset value, beginning of period

    $ 7.74        $ 7.83        $ 7.47        $ 6.04        $ 4.69       

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    0.08        0.04        0.00 (b)       0.04        0.04       

Net realized and unrealized gains/(losses) on investments

    (0.15)        (0.08)        0.54        1.44        1.34       

 

 

Total from investment operations

    (0.07)        (0.04)        0.54        1.48        1.38       

 

 

Less dividends and distributions:

         

Dividends from net investment income

           (0.05)        (0.18)        (0.05)        (0.03)       

 

 

Total dividends and distributions

           (0.05)        (0.18)        (0.05)        (0.03)       

Net asset value, end of period

    $ 7.67        $ 7.74        $ 7.83        $ 7.47        $ 6.04       

 

 

Total Return

    (0.90)     (0.55)     7.27     24.68     29.54%       

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

    $ 43,354        $ 49,106        $ 32,286        $ 11,853        $ 27,696       

Ratio of expenses to average net assets

         

Before expense limitation

    1.40     1.49     1.64     1.47     1.39%       

After expense limitation/ recoupment (c)

    1.40     1.49     1.50     1.47     1.39%       

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    1.00     0.52     (0.20)     0.65     0.70%       

After expense limitation/ recoupment

    1.00     0.52     (0.06)     0.65     0.70%       

Portfolio turnover rate

    49     51     79     95     95%       

 

(a) 

Calculated using the average shares method.

(b) 

Amount less than $0.005.

(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 the interest expense, when applicable.

 

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

 

62    www.iconfunds.com


Table of Contents
ICON Financial Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   

Year Ended
September 30, 

2016

   

Year Ended
September 30, 

2015

   

Year Ended
September 30, 

2014

   

Year Ended
September 30, 

2013

   

Year Ended    
September 30,     

2012    

 

 

 

Net asset value, beginning of period

   $ 7.82      $ 7.89      $ 7.37      $ 5.99      $ 4.68       

Income/(loss) from investment
operations:

          

Net investment income/(loss)(b)

     0.05        0.02        (0.02)        0.06        0.01       

Net realized and unrealized
gains/(losses) on investments

     (0.16)        (0.07)        0.54        1.38        1.33       

 

 

Total from investment operations

     (0.11)        (0.05)        0.52        1.44        1.34       

 

 

Less dividends and distributions:

          

Dividends from net investment
income

            (0.02)               (0.06)        (0.03)       

 

 

Total dividends and distributions

            (0.02)               (0.06)        (0.03)       

 

 

Net asset value, end of period

   $ 7.71      $ 7.82      $ 7.89      $ 7.37      $ 5.99       

 

 

Total Return(c)

     (1.41)     (0.69)     7.20     24.20     28.83%       

Ratios and Supplemental Data

          

Net assets, end of period (in 000s)

   $ 2,542      $ 1,974      $ 541      $ 936      $ 9,278       

Ratio of expenses to average net
assets

          

Before expense limitation

     2.12     2.19     2.35     1.88     1.80%       

After expense limitation/ recoupment (d)

     1.75     1.75     1.75     1.76     1.77%       

Ratio of net investment
income/(loss) to average net
assets

          

Before expense limitation

     0.26     (0.15)     (0.86)     0.82     0.09%       

After expense limitation/
recoupment

     0.63     0.29     (0.26)     0.94     0.12%       

Portfolio turnover rate

     49     51     79     95     95%       

 

(a) 

Class C shares were merged into Class A on September 25, 2015. The amounts presented represent the results of the Class A shares for the periods prior to the merger and the results of the combined share class for the period subsequent to the merger.

(b) 

Calculated using the average shares method.

(c) 

The total return calculation excludes any sales charges.

(d) 

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    63


Table of Contents
ICON Healthcare Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended    
September 30,    
2012    
 

 

 

Net asset value, beginning of period

    $ 17.83        $ 22.42        $ 22.17        $ 17.56        $ 13.56       

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    (0.04)        (0.09)        (0.11)        0.03        0.17       

Net realized and unrealized
gains/(losses) on investments

    1.54        1.02        6.18        4.75        3.97       

 

 

Total from investment operations

    1.50        0.93        6.07        4.78        4.14       

 

 

Less dividends and distributions:

         

Dividends from net investment income

                  (0.03)        (0.17)        (0.14)       

Distributions from net realized gains

    (3.93)        (5.52)        (5.79)               –       

 

 

Total dividends and distributions

    (3.93)        (5.52)        (5.82)        (0.17)        (0.14)        

 

 

Net asset value, end of period

    $ 15.40        $ 17.83        $ 22.42        $ 22.17        $ 17.56       

 

 

Total Return

    9.44     2.55     32.27     27.48     30.76%     

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

    $ 76,218        $ 95,109        $ 148,261        $ 92,171        $ 100,938       

Ratio of expenses to average net assets

         

Before expense limitation

    1.44     1.36     1.36     1.39     1.34%     

After expense limitation/ recoupment (b)

    1.44     1.36     1.36     1.39     1.34%     

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.26)     (0.45)     (0.53)     0.13     1.08%     

After expense limitation/ recoupment

    (0.26)     (0.45)     (0.53)     0.13     1.08%     

Portfolio turnover rate

    107     141     188     112     48%     

 

(a) 

Calculated using the average shares method.

(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, when applicable.

 

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

 

64    www.iconfunds.com


Table of Contents
ICON Healthcare Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

 

 

Net asset value, beginning of period

  $     17.37      $ 22.01      $ 21.92      $     17.42      $     13.53       

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    (0.09)        (0.14)        (0.14)        (0.03)        0.11       

Net realized and unrealized
gains/(losses) on investments

    1.49        1.02        6.03        4.69        3.94       

 

 

Total from investment operations

    1.40        0.88        5.89        4.66        4.05       

 

 

Less dividends and distributions:

         

Dividends from net investment income

                  (0.01)        (0.16)        (0.16)       

Distributions from net realized gains

    (3.93)        (5.52)        (5.79)               –       

 

 

Total dividends and distributions

    (3.93)        (5.52)        (5.80)        (0.16)        (0.16)       

 

 

Net asset value, end of period

  $ 14.84      $ 17.37      $ 22.01      $ 21.92      $ 17.42       

 

 

Total Return(c)

    9.03     2.33     31.72     26.95     30.19%     

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 4,921      $ 15,317      $ 10,878      $ 3,748      $ 390       

Ratio of expenses to average net assets

         

Before expense limitation

    1.79     1.62     1.62     1.69     2.89%     

After expense limitation/recoupment (d)

    1.75     1.62     1.62     1.69     1.76%     

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.63)     (0.69)     (0.66)     (0.15)     (0.46)%     

After expense limitation/recoupment

    (0.59)     (0.69)     (0.66)     (0.15)     0.67%     

Portfolio turnover rate

    107     141     188     112     48%     

 

(a)

Class C shares were merged into Class A on September 25, 2015. The amounts presented represent the results of the Class A shares for the periods prior to the merger and the results of the combined share class for the period subsequent to the merger.

(b)

Calculated using the average shares method.

(c)

The total return calculation excludes any sales charges.

(d)

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    65


Table of Contents
ICON Industrials Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

 

 

Net asset value, beginning of period

  $ 10.94      $ 11.67      $ 10.56      $ 8.26      $ 6.80       

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    (0.02)        0.01        0.01        0.06        0.07       

Net realized and unrealized
gains/(losses) on investments

    1.34        (0.73)        1.16        2.35        1.48       

 

 

Total from investment operations

    1.32        (0.72)        1.17        2.41        1.55       

 

 

Less dividends and distributions:

         

Dividends from net investment income

           (0.01)        (0.06)        (0.11)        (0.09)       

 

 

Total dividends and distributions

           (0.01)        (0.06)        (0.11)        (0.09)       

 

 

Net asset value, end of period

  $ 12.26      $ 10.94      $ 11.67      $ 10.56      $ 8.26       

 

 

Total Return

    12.07     (6.15)     11.14     29.52     22.99%     

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 23,957      $ 14,251      $ 35,883      $ 34,409      $ 39,621       

Ratio of expenses to average net assets

         

Before expense limitation

    1.73     1.53     1.41     1.46     1.40%     

After expense limitation/recoupment(b)

    1.50     1.50     1.41     1.46     1.40%     

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.37)     0.07     0.07     0.60     0.91%     

After expense limitation/recoupment

    (0.14)     0.10     0.07     0.60     0.91%     

Portfolio turnover rate

    87     23     30     46     34%     

 

(a)  Calculated using the average shares method.
(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, when applicable.

 

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

 

66    www.iconfunds.com


Table of Contents
ICON Industrials Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
       

 

 

Net asset value, beginning of period

  $ 10.86      $ 11.58      $ 10.45      $ 8.10      $ 6.76     

Income/(loss) from investment
operations:

           

Net investment income/(loss)(b)

    (0.04)        (0.02)        (0.03)        0.00 (c)      0.08     

Net realized and unrealized
gains/(losses) on investments

    1.32        (0.70)        1.16        2.36        1.35     

 

 

Total from investment operations

    1.28        (0.72)        1.13        2.36        1.43     

 

 

Less dividends and distributions:

           

Dividends from net investment
income

                         (0.01)        (0.09)     

 

 

Total dividends and distributions

                         (0.01)        (0.09)     

 

 

Net asset value, end of period

  $ 12.14      $ 10.86      $ 11.58      $ 10.45      $ 8.10     

 

 

Total Return(d)

    11.79     (6.22)     10.81     29.20     21.21  

Ratios and Supplemental Data

           

Net assets, end of period (in 000s)

  $ 998      $ 596      $ 298      $ 4,322      $ 163     

Ratio of expenses to average net assets

           

Before expense limitation

    2.96     2.67     2.02     2.09     2.50  

After expense limitation/
recoupment(e)

    1.75     1.75     1.75     1.75     1.75  

Ratio of net investment
income/(loss) to average net assets

           

Before expense limitation

    (1.59)     (1.11)     (0.56)     (0.32)     0.18  

After expense limitation/
recoupment

    (0.38)     (0.19)     (0.29)     0.02     0.93  

Portfolio turnover rate

    87     23     30     46     34  

 

(a)  Class C shares were merged into Class A on September 25, 2015. The amounts presented represent the results of the Class A shares for the periods prior to the merger and the results of the combined share class for the period subsequent to the merger.
(b)  Calculated using the average shares method.
(c)  Amount less than $0.005.
(d)  The total return calculation excludes any sales charges.
(e)  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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    67


Table of Contents
ICON Information Technology Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
       

 

 

Net asset value, beginning of period

  $ 14.95      $ 13.55      $ 11.44      $ 10.72      $ 8.22     

Income/(loss) from investment
operations:

           

Net investment income/(loss)(a)

    (0.07)        (0.09)        (0.07)        (0.02)        (0.02)     

Net realized and unrealized
gains/(losses) on investments

    3.08        1.49        2.18        0.74        2.52     

 

 

Total from investment operations

    3.01        1.40        2.11        0.72        2.50     

 

 

Net asset value, end of period

  $ 17.96      $ 14.95      $ 13.55      $ 11.44      $ 10.72     

 

 

Total Return

    20.13     10.33     18.44     6.72     30.41  

Ratios and Supplemental Data

           

Net assets, end of period (in 000s)

  $ 48,953      $ 45,343      $ 50,363      $ 73,851      $ 83,330     

Ratio of expenses to average net assets

           

Before expense limitation

    1.49     1.44     1.40     1.38     1.34  

After expense limitation/ recoupment (b)

    1.49     1.44     1.40     1.38     1.34  

Ratio of net investment
income/(loss) to average net assets

           

Before expense limitation

    (0.46)     (0.62)     (0.56)     (0.22)     (0.20)  

After expense limitation/ recoupment

    (0.46)     (0.62)     (0.56)     (0.22)     (0.20)  

Portfolio turnover rate

    94     43     48     52     35  

 

(a) 

Calculated using the average shares method.

(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, when applicable.

 

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

 

68    www.iconfunds.com


Table of Contents
ICON Information Technology Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
       

 

 

Net asset value, beginning of period

  $ 14.65      $ 13.32      $ 11.30      $ 10.65      $ 8.20     

Income/(loss) from investment
operations:

           

 Net investment income/(loss)(b)

    (0.11)        (0.14)        (0.11)        (0.05)        (0.06)     

  Net realized and unrealized
gains/(losses) on investments

    3.01        1.47        2.13        0.70        2.51     

 

 

  Total from investment operations

    2.90        1.33        2.02        0.65        2.45     

 

 

Net asset value, end of period

  $ 17.55      $ 14.65      $ 13.32      $ 11.30      $ 10.65     

 

 

Total Return(c)

    19.80     9.99     17.88     6.10     29.88  

Ratios and Supplemental Data

           

Net assets, end of period (in 000s)

  $ 2,631      $ 3,170      $ 455      $ 2,330      $ 1,400     

Ratio of expenses to average net assets

           

Before expense limitation

    2.17     1.90     1.94     2.23     2.87  

After expense limitation/
recoupment (d)

    1.75     1.75     1.75     1.75     1.75  

Ratio of net investment
income/(loss) to average net assets

           

Before expense limitation

    (1.12)     (1.07)     (1.10)     (0.94)     (1.71)  

After expense limitation/
recoupment

    (0.70)     (0.92)     (0.91)     (0.45)     (0.59)  

Portfolio turnover rate

    94     43     48     52     35  

 

(a) 

Class C shares were merged into Class A on September 25, 2015. The amounts presented represent the results of the Class A shares for the periods prior to the merger and the results of the combined share class for the period subsequent to the merger.

(b) 

Calculated using the average shares method.

(c) 

The total return calculation excludes any sales charges.

(d) 

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    69


Table of Contents
ICON Natural Resources Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S   Year Ended
September 30,
2016 (a)
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
       

 

 

Net asset value, beginning of period

  $ 11.86      $ 15.09      $ 13.43      $ 11.12      $ 9.00     

Income/(loss) from investment
operations:

           

Net investment income/(loss)(b)

    0.10        0.04        0.04        0.09        0.11     

Net realized and unrealized
gains/(losses) on investments

    1.80        (3.23)        1.68        2.40        2.11     

 

 

Total from investment operations

    1.90        (3.19)        1.72        2.49        2.22     

 

 

Less dividends and distributions:

           

Dividends from net investment
income

    (0.06)        (0.04)        (0.06)        (0.18)        (0.10)     

Distributions from net realized
gains

    (0.88)                                 

 

 

Total dividends and distributions

    (0.94)        (0.04)        (0.06)        (0.18)        (0.10)     

 

 

Net asset value, end of period

  $ 12.82      $ 11.86      $ 15.09      $ 13.43      $ 11.12     

 

 

Total Return

    17.24     (21.22)     12.85     22.73     24.85  

Ratios and Supplemental Data

           

Net assets, end of period
(in 000s)

  $ 65,787      $ 60,404      $ 93,610      $ 65,782      $ 41,627     

Ratio of expenses to average net assets

           

Before expense limitation

    1.59     1.42     1.36     1.45     1.39  

After expense limitation/
recoupment (c)

    1.50     1.42     1.36     1.45     1.39  

Ratio of net investment
income/(loss) to average net assets

           

Before expense limitation

    0.70     0.27     0.26     0.72     1.00  

After expense limitation/
recoupment

    0.79     0.27     0.26     0.72     1.00  

Portfolio turnover rate

    81     48     33     56     41  

 

(a) 

Prior to January 22, 2016, the ICON Natural Resources Fund was known as the ICON Materials Fund.

(b) 

Calculated using the average shares method.

(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 the interest expense, when applicable.

 

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

 

70    www.iconfunds.com


Table of Contents
ICON Natural Resources Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class C   Year Ended
September 30,
2016 (a)
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

 

 

Net asset value, beginning of period

  $ 11.51         $ 14.77         $ 13.24         $ 10.94         $ 8.92        

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    (0.03) (c )      (0.11)           (0.12)           (0.04)           0.00 (d )    

Net realized and unrealized

    1.76              

gains/(losses) on investments

      (3.15)           1.65           2.38           2.08        

 

 

Total from investment operations

    1.73           (3.26)           1.53           2.34           2.08        

 

 

Less dividends and distributions:

         

Dividends from net investment income

    –           –           –           (0.04)           (0.06)        

Distributions from net realized gains

    (0.88)           –           –           –           –        

 

 

Total dividends and distributions

    (0.88)           –           –           (0.04)           (0.06)        

 

 

Net asset value, end of period

  $ 12.36         $ 11.51         $ 14.77         $ 13.24         $ 10.94        

 

 

Total Return(e)

    16.11%        (22.07)%        11.56%        21.43%        23.36%     

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 1,435         $ 834         $ 675         $ 218         $ 195        

Ratio of expenses to average net assets

         

Before expense limitation

    3.01%        2.94%        4.17%        4.12%        4.29%     

After expense limitation/

         

recoupment (f)

    2.51%        2.50%        2.50%        2.50%        2.51%     

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    (0.73)%        (1.22)%        (2.51)%        (1.95)%        (1.82)%      

After expense limitation/ recoupment

    (0.23)%        (0.78)%        (0.84)%        (0.33)%        (0.04)%      

Portfolio turnover rate

    81%        48%        33%        56%        41%      

 

(a)

Prior to January 22, 2016, the ICON Natural Resources Fund was known as the ICON Materials Fund.

(b)

Calculated using the average shares method.

(c)

The per share amount does not correspond to activity reflected in the Statement of Operations due to class specific expenses during the period.

(d)

Amount less than $0.005.

(e)

The total return calculation excludes any sales charges.

(f)

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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    71


Table of Contents
ICON Natural Resources Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A   Year Ended
September 30,
2016 (a)
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

 

 

Net asset value, beginning of period

  $ 11.75      $ 14.96      $ 13.36      $ 11.07      $ 8.97       

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.06        (0.01)        (0.01)        0.05        0.08       

Net realized and unrealized gains/(losses) on investments

    1.81        (3.20)        1.67        2.38        2.10       

 

 

Total from investment operations

    1.87        (3.21)        1.66        2.43        2.18       

 

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.01)               (0.06)        (0.14)        (0.08)      

Distributions from net realized gains

    (0.88)                             –      

 

 

Total dividends and distributions

    (0.89)               (0.06)        (0.14)        (0.08)      

 

 

Net asset value, end of period

  $ 12.73      $ 11.75      $ 14.96      $ 13.36      $ 11.07       

 

 

Total Return(c)

    17.05     (21.46)     12.47     22.24     24.44%    

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 4,451      $ 3,078      $ 8,229      $ 1,883      $ 539       

Ratio of expenses to average net assets

         

Before expense limitation

    2.02     1.76     1.72     2.02     2.12%    

After expense limitation/ recoupment (d)

    1.75     1.75     1.72     1.75     1.76%    

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    0.24     (0.06)     (0.07)     0.17     0.34%    

After expense limitation/ recoupment

    0.51     (0.05)     (0.07)     0.44     0.70%    

Portfolio turnover rate

    81     48     33     56     41%    

 

(a) 

Prior to January 22, 2016, the ICON Natural Resources Fund was known as the ICON Materials Fund.

(b) 

Calculated using the average shares method.

(c) 

The total return calculation excludes any sales charges.

(d) 

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, when applicable.

 

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

 

72    www.iconfunds.com


Table of Contents
ICON Utilities Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class S   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

 

 

Net asset value, beginning of period

  $ 8.03      $ 7.90      $ 7.22      $ 6.81      $ 6.29       

Income/(loss) from investment operations:

         

Net investment income/(loss)(a)

    0.30        0.28        0.22        0.20        0.20       

Net realized and unrealized gains/(losses) on investments

    1.43        0.11        0.69        0.43        0.55       

 

 

Total from investment operations

    1.73        0.39        0.91        0.63        0.75       

 

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.27)        (0.26)        (0.23)        (0.22)        (0.23)       

 

 

Total dividends and distributions

    (0.27)        (0.26)        (0.23)        (0.22)        (0.23)       

 

 

Net asset value, end of period

  $ 9.49      $ 8.03      $ 7.90      $ 7.22      $ 6.81       

 

 

Total Return

    21.74     4.93     12.69     9.25     12.01%       

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 43,864      $ 19,107      $ 17,920      $ 29,117      $ 23,524       

Ratio of expenses to average net assets

         

Before expense limitation

    1.59     1.70     1.52     1.62     1.53%       

After expense limitation/ recoupment (b)

    1.50     1.50     1.50     1.51     1.51%       

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    3.15     3.12     2.84     2.71     3.00%       

After expense limitation/ recoupment

    3.24     3.32     2.86     2.81     3.02%       

Portfolio turnover rate

    168     243     107     121     51%       

 

(a) 

Calculated using the average shares method.

(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, when applicable.

 

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

 

Annual Report  |  September 30, 2016    73


Table of Contents
ICON Utilities Fund    Financial Highlights
   For a Share Outstanding Throughout the Years Presented

 

 

Class A(a)   Year Ended
September 30,
2016
    Year Ended
September 30,
2015
    Year Ended
September 30,
2014
    Year Ended
September 30,
2013
    Year Ended
September 30,
2012
 

 

 

Net asset value, beginning of period

  $ 7.92      $ 7.81      $ 7.14      $ 6.73      $ 6.24       

Income/(loss) from investment operations:

         

Net investment income/(loss)(b)

    0.28        0.26        0.21        0.18        0.20       

Net realized and unrealized gains/(losses) on investments

    1.40        0.11        0.68        0.42        0.53       

 

 

Total from investment operations

    1.68        0.37        0.89        0.60        0.73       

 

 

Less dividends and distributions:

         

Dividends from net investment income

    (0.25)        (0.26)        (0.22)        (0.19)        (0.24)       

 

 

Total dividends and distributions

    (0.25)        (0.26)        (0.22)        (0.19)        (0.24)       

 

 

Net asset value, end of period

  $ 9.35      $ 7.92      $ 7.81      $ 7.14      $ 6.73       

 

 

Total Return(c)

    21.29     4.63     12.44     8.96     11.81%    

Ratios and Supplemental Data

         

Net assets, end of period (in 000s)

  $ 15,868      $ 5,679      $ 2,517      $ 2,402      $ 7,113       

Ratio of expenses to average net assets

         

Before expense limitation

    1.79     1.89     1.81     1.74     1.70%    

After expense limitation/ recoupment (d)

    1.75     1.75     1.75     1.74     1.70%    

Ratio of net investment income/(loss) to average net assets

         

Before expense limitation

    3.10     3.04     2.69     2.55     3.03%    

After expense limitation/ recoupment

    3.14     3.18     2.75     2.55     3.03%    

Portfolio turnover rate

    168     243     107     121     51%    

 

(a) 

Class C shares were merged into Class A on September 25, 2015. The amounts presented represent the results of the Class A shares for the (b) periods prior to the merger and the results of the combined share class for the period subsequent to the merger.

(b) 

Calculated using the average shares method.

(c) 

The total return calculation excludes any sales charges.

(d) 

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, when applicable.

 

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

 

74    www.iconfunds.com


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

1. ORGANIZATION

 

The ICON Consumer Discretionary Fund (“Consumer Discretionary Fund”), ICON Consumer Staples Fund (“Consumer Staples Fund”), ICON Energy Fund (“Energy Fund”), ICON Financial Fund (“Financial Fund”), ICON Healthcare Fund (“Healthcare Fund”), ICON Industrials Fund (“Industrials Fund”), ICON Information Technology Fund (“Information Technology Fund”), ICON Natural Resources Fund (formerly ICON Materials Fund) (“Natural Resources Fund”) and ICON Utilities Fund (“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 non-diversified investment management company. Each Fund offers two classes of shares: Class A and Class S. The Energy Fund and the Natural Resources Fund also offer a Class C share. On September 25, 2015, the Class C shares of the Consumer Discretionary Fund, Consumer Staples Fund, Financial Fund, Healthcare Fund, Industrials Fund, Information Technology Fund, and Utilities Fund were merged into the respective Class A shares of the Fund. The Class C shares of each of the Funds noted above were closed. The merger activity is shown in the Statements of Changes in Net Assets. 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, like all investments in securities, have elements of risk, including risk of loss of principal. There is no assurance that the Funds will achieve their investment objectives and may underperform funds with similar investment objectives. An investment concentrated in sectors and industries involves 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 mid-cap investing, including limited product lines, less liquidity and small market share.

The Energy Fund has a significant weighting in the Oil & Gas Exploration & Production industry and the Integrated Oil & Gas industry, the Healthcare Fund has a significant weighting in the Pharmaceuticals industry and the Biotechnology industry and the Utilities Fund has a significant weighting in the Electric Utilities industry and the Multi-Utilities industry which may cause the Funds’ performance to be susceptible to the economic, business and/or other developments that may affect those industries.

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 remote.

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 (“GAAP”) 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. Each Fund is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.

Investment Valuation

The Funds’ securities and other assets, excluding options on securities indexes, are valued at the closing price as of 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. If the NYSE closes unexpectedly and there is active trading on other exchanges, the securities will be valued at the Valuation Time based off of those exchanges. 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 NYSE is open for trading.

 

 
Annual Report  |  September 30, 2016    75


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

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 is considered inaccurate or does not, in the Funds’ judgment, 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 (the “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. Exchange traded options are valued at the composite price, using the National Best Bid and Offer quotes (“NBBO”). NBBO consists of the highest bid price and lowest ask price across any of the exchanges on which an option is quoted, thus providing a view across the entire U.S. options marketplace. Debt securities with a remaining maturity of greater than 60 days are valued using 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.

Securities of investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Investments in shares of funds that are not traded on an exchange are valued at the end of day net asset value per share of such fund. Securities in the underlying funds, including restricted securities are valued in accordance with the valuation policy of such fund.

The Funds’ securities 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.

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 may be 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, 2016:

ICON Consumer Discretionary Fund

 

Investments in Securities at Value*    Level 1 - Quoted
and Unadjusted
Prices
     Level 2 - Other
Significant
Observable Inputs
     Level 3 - Significant
Unobservable
Inputs
     Total  

 

 

Common Stocks

   $ 37,822,680       $       $       $     37,822,680       

Collateral for Securities on Loan

             1,782,625                 1,782,625       

Short-Term Investments

             2,739,714                 2,739,714       

 

 

Total

   $ 37,822,680       $ 4,522,339       $       $ 42,345,019       

 

 

 

 
76    www.iconfunds.com


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

ICON Consumer Staples Fund

 

Investments in Securities at Value*   

Level 1 - Quoted

and Unadjusted
Prices

   Level 2 - Other
Significant
Observable Inputs
  

Level 3 - Significant
Unobservable

Inputs

   Total  

 

 

Common Stocks

   $         36,899,838         $         $         $ 36,899,838       

Collateral for Securities on Loan

               807,060                     807,060       

Short-Term Investments

                 

Money Market Funds

     5,000,000                               5,000,000       

Time Deposits

               5,673,964                     5,673,964       

 

 

Total

   $ 41,899,838         $             6,481,024         $                         –         $         48,380,862       

 

 

 

ICON Energy Fund

                 
Investments in Securities at Value*   

Level 1 - Quoted
and Unadjusted

Prices

   Level 2 - Other
Significant
Observable Inputs
   Level 3 - Significant
Unobservable
Inputs
   Total  

 

 

Common Stocks

   $ 345,222,004         $         $         $ 345,222,004       

Collateral for Securities on Loan

               42,662,836                     42,662,836       

Short-Term Investments

               2,281,409                     2,281,409       

 

 

Total

   $ 345,222,004         $ 44,944,245         $         $ 390,166,249       

 

 

 

ICON Financial Fund

                 
Investments in Securities at Value*    Level 1 - Quoted
and Unadjusted
Prices
   Level 2 - Other
Significant
Observable Inputs
   Level 3 - Significant
Unobservable
Inputs
   Total  

 

 

Common Stocks

   $ 45,992,116         $         $         $ 45,992,116       

Collateral for Securities on Loan

               502,800                     502,800       

 

 

Total

   $ 45,992,116         $ 502,800         $         $ 46,494,916       

 

 

 

ICON Healthcare Fund

                 
Investments in Securities at Value*    Level 1 - Quoted
and Unadjusted
Prices
  

Level 2 - Other

Significant
Observable Inputs

   Level 3 - Significant
Unobservable
Inputs
   Total  

 

 

Common Stocks

   $ 78,909,912         $         $         $ 78,909,912       

Collateral for Securities on Loan

               1,546,000                     1,546,000       

Short-Term Investments

               7,042,553                     7,042,553       

 

 

Total

   $ 78,909,912         $ 8,588,553         $         $ 87,498,465       

 

 

 

ICON Industrials Fund

                 
Investments in Securities at Value*    Level 1 - Quoted
and Unadjusted
Prices
   Level 2 - Other
Significant
Observable Inputs
   Level 3 - Significant
Unobservable
Inputs
   Total  

 

 

Common Stocks

   $ 23,113,699         $         $         $ 23,113,699       

Short-Term Investments

               2,590,162                     2,590,162       

 

 

Total

   $ 23,113,699         $ 2,590,162         $         $ 25,703,861       

 

 

 

ICON Information Technology Fund

                 
Investments in Securities at Value*    Level 1 - Quoted
and Unadjusted
Prices
   Level 2 - Other
Significant
Observable Inputs
   Level 3 - Significant
Unobservable
Inputs
   Total  

 

 

Common Stocks

   $ 51,139,323         $         $         $ 51,139,323       

Collateral for Securities on Loan

               823,500                     823,500       

Short-Term Investments

               314,271                     314,271       

 

 

Total

   $ 51,139,323         $ 1,137,771         $         $ 52,277,094       

 

 

 

 
Annual Report  |  September 30, 2016    77


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

 

ICON Natural Resources Fund

                 
Investments in Securities at Value*    Level 1 - Quoted
and Unadjusted
Prices
   Level 2 - Other
Significant
Observable Inputs
   Level 3 - Significant
Unobservable
Inputs
   Total  

 

 

Common Stocks

                 

Construction Materials

   $             4,743,005         $             1,230,288         $         $ 5,973,293       

Integrated Oil & Gas

     1,752,450           1,253,180                     3,005,630       

Paper Packaging

     5,667,638           447,053                     6,114,691       

Other

     43,708,190                               43,708,190       

Exchange Traded Funds

     7,390,020                               7,390,020       

Collateral for Securities on Loan

               6,505,465                     6,505,465       

Short-Term Investments

               6,265,943                     6,265,943       

 

 

Total

   $ 63,261,303         $ 15,701,929         $                       –         $     78,963,232       

 

 

 

ICON Utilities Fund

                 
Investments in Securities at Value*    Level 1 - Quoted
and Unadjusted
Prices
   Level 2 - Other
Significant
Observable Inputs
   Level 3 - Significant
Unobservable
Inputs
   Total  

 

 

Common Stocks

   $         58,187,422         $         $         $ 58,187,422       

Put Options Purchased

     316,300                               316,300       

Collateral for Securities on Loan

               1,141,500                     1,141,500       

Short-Term Investments

               1,144,742                     1,144,742       

 

 

Total

   $ 58,503,722         $             2,286,242         $                       –         $ 60,789,964       

 

 

 

*

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

No Level 3 securities were held in any of the Funds at September 30, 2016.

For the year ended September 30, 2016, there was no transfer activity between Level 1, Level 2 or Level 3.

The end of period timing recognition is used for the transfers between levels of each Fund’s assets and liabilities.

Fund Share Valuation

Fund shares are sold and redeemed on a daily basis at net asset value. Net asset value per share is determined daily as of the close of trading on the NYSE on each day the NYSE is open for trading by dividing the total value of the Fund’s investments and other assets, less liabilities, by the number of Fund shares outstanding.

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.

 

 
78    www.iconfunds.com


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

Options Transactions

The Funds’ use of derivatives for the year ended September 30, 2016 was limited to purchased options.

The Funds 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 or to provide market exposure while trying to reduce transaction costs.

Option contracts involve market risk and 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 Statements 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 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 purchase or 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, 2016, the Utilities Fund engaged in purchased put option transactions. All open option contracts are included on each Fund’s Schedule of Investments.

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

 

ICON Utilities Fund    Asset Derivatives      Liability Derivatives      
  

 

 
Risk Exposure   

    Statements of Assets and    

Liabilities Location

   Fair Value      Statements of Assets and
Liabilities Location
     Fair Value  

 

 

Equity Contracts (Purchased Options)

  

Investments, at value

   $     316,300         N/A         N/A       

 

 

Total

      $     316,300          $         –       

 

 

 

ICON Energy Fund

 

Risk Exposure

   Statements of Operations Location    Realized
Gain/(Loss) on
Derivatives
Recognized
in Income
   

Change in    
Unrealized Appreciation/    
(Depreciation)    

on Derivatives    
Recognized    

in Income    

 

 

 

Equity Contracts
(Purchased Options)

  

Net realized gain/(loss) on investments/change in unrealized net appreciation/(depreciation) on investments and foreign currency

   $                 (425,394       $                 –       

 

 

Total

      $ (425,394       $ –       

 

 

 

 
Annual Report  |  September 30, 2016    79


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

 

ICON Consumer Staples Fund

 

Risk Exposure

   Statements of Operations Location   

Realized

Gain/(Loss) on
Derivatives

Recognized

in Income

    

Change in    

Unrealized Appreciation/    

(Depreciation)    

on Derivatives    

Recognized    

in Income    

 

 

 

Equity Contracts
(Purchased Options)

  

Net realized gain/(loss) on investments/ Change in unrealized net appreciation/(depreciation) on investments and foreign currency

     $                       (79,107)         $                                     –       

 

 

Total

        $                       (79,107)         $                                     –       

 

 

ICON Financial Fund

 

Risk Exposure

   Statements of Operations Location   

Realized

Gain/(Loss) on

Derivatives

Recognized

in Income

    

Change in    

Unrealized Appreciation/    

(Depreciation)    

on Derivatives

Recognized    

in Income    

 

 

 

Equity Contracts
(Purchased Options)

  

Net realized gain/(loss) on investments/ change in unrealized net appreciation/(depreciation) on investments and foreign currency

     $                    (239,271)         $                                     –       

 

 

Total

        $                    (239,271)         $                                     –       

 

 

ICON Natural Resources Fund

 

Risk Exposure

   Statements of Operations Location   

Realized

Gain/(Loss) on
Derivatives

Recognized

in Income

    

Change in    

Unrealized Appreciation/    

(Depreciation)    

on Derivatives    

Recognized    

in Income    

 

 

 

Equity Contracts
(Purchased Options)

  

Net realized gain/(loss) on investments/ change in unrealized net appreciation/(depreciation) on investments and foreign currency

     $                    (183,964)         $                                     –       

 

 

Total

        $                    (183,964)         $                                     –       

 

 

ICON Utilities Fund

 

Risk Exposure

   Statements of Operations Location   

Realized

Gain/(Loss) on

Derivatives

Recognized

in Income

    

Change in    

Unrealized Appreciation/    

(Depreciation)    

on Derivatives    

Recognized    

in Income    

 

 

 

Equity Contracts
(Purchased Options)

  

Net realized gain/(loss) on investments/ change in unrealized net appreciation/(depreciation) on investments and foreign currency

     $                       74,007         $                            80,609       

 

 

Total

        $                       74,007         $                            80,609       

 

 

 

 
80    www.iconfunds.com


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

The average purchased option contracts during the year ended September 30, 2016, was as follows:

 

ICON Consumer Staples Fund

     
Derivative Type       Unit of Measurement             Average Contracts+             Days Held      

Purchased Options

    Contracts        1,263        76   

ICON Energy Fund

     
Derivative Type   Unit of Measurement     Average Contracts+     Days Held  

Purchased Options

    Contracts        5,675        220   

ICON Financial Fund

     
Derivative Type   Unit of Measurement     Average Contracts+     Days Held  

Purchased Options

    Contracts        1,283        123   

ICON Natural Resources Fund

     
Derivative Type   Unit of Measurement     Average Contracts+     Days Held  

Purchased Options

    Contracts        3,950        80   

ICON Utilities Fund

     
Derivative Type   Unit of Measurement     Average Contracts+     Days Held  

Purchased Options

    Contracts        1,578        64   

 

+

The average is calculated based on the actual number of days with outstanding derivatives.

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 certain approved brokers, dealers and other financial institutions to earn additional income. Cash collateral is received in exchange for securities on loan in the amount of at least 102% of the value of U.S. securities loaned or at least 105% of the value of non-U.S. securities loaned, marked to market daily. The Funds retain certain benefits of owning the securities, including receipt of dividends or interest generated by the security, but give up other rights including the right to vote proxies. The Funds retain the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by cash that generally exceeds the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Funds and any additional required collateral is delivered to each Fund on the next business day.

Generally, in the event of borrower default, the Funds have the right to use the collateral to offset any losses incurred. In the event the Funds are delayed or prevented from exercising their rights to dispose of the collateral, there may be a potential loss to the Funds. Some of these losses may be indemnified by the lending agent.

The Funds have elected to invest the cash collateral in the State Street Navigator Prime Portfolio which is disclosed on the Schedule of Investments. The Funds bear the risk of loss with respect to the investment of collateral. The net securities lending income earned by the Funds for the year ended September 30, 2016, is included in the Statements of Operations.

The value of the collateral could include collateral held for securities that were sold on or before September 30, 2016. It may also include collateral received from the pre-funding of security loans.

The following table indicates the total amount of securities loaned by type, reconciled to gross liability payable upon return of the securities loaned by the Funds as of September 30, 2016:

 

     Remaining contractual maturity of the lending agreement              
      Overnight &
Continuous
    Up to 30 days     30-90 days     Greater than
90 days
    Market Value     Collateral
Received
   

Excess amount

due to
counterparty

 

Securities Lending Transactions ICON Consumer Discretionary Fund

              

Equity Securities

   $       1,781,465      $               –      $               –      $               –      $       1,781,465      $       1,782,625      $       1,160   

 

 
Annual Report  |  September 30, 2016    81


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

 

    Remaining contractual maturity of the lending agreement              
     Overnight &
Continuous
    Up to 30 days     30-90 days     Greater than
90 days
    Market Value    

Collateral

Received

    Excess amount
due to
counterparty
 

Securities Lending Transactions

             

ICON Consumer Staples Fund

             

Equity Securities

    779,737                             779,737        807,060        27,323   

ICON Energy Fund

             

Equity Securities

    41,762,067                             41,762,067        42,662,836        900,769   

ICON Financial Fund

             

Equity Securities

    495,160                             495,160        502,800        7,640   

ICON Healthcare Fund

             

Equity Securities

    1,522,070                             1,522,070        1,546,000        23,930   

ICON Information Technology Fund

             

Equity Securities

    801,360                             801,360        823,500        22,140   

ICON Natural Resources Fund

             

Equity Securities

    6,414,211                             6,414,211        6,505,465        91,254   

ICON Utilities Fund

             

Equity Securities

    1,120,953                             1,120,953        1,141,500        20,547   

Income Taxes, Dividends, and Distributions

The Funds intend to continue 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 three 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 capital gains tax 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 fixed income securities purchased are accreted or amortized to income over the life of the respective securities based on the effective yield.

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.

 

 
82    www.iconfunds.com


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

Withholding Tax

Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates. The ability of issuers of debt securities held by the Funds to meet their obligations may be effected by economic and political developments in specific country or region.

Other

The Funds hold certain investments which pay dividends to their shareholders based upon available funds from operations. It is possible for these dividends to exceed the underlying investments’ taxable earnings and profits resulting in the excess portion of such dividends being designated as a return of capital. Distributions received from investments in securities that represent a return of capital or capital gains are recorded as a reduction of the cost of investments or as a realized gain, respectively.

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 additional class level expenses that are included on the Statements of Operations:

 

Fund    Printing Fees      Transfer Agent Fees*      Registration Fees  

ICON Consumer Discretionary Fund

        

Class S

   $ 11,374       $ 54,272       $ 18,632   

Class A

     1,325         8,803         9,777   

ICON Consumer Staples Fund

        

Class S

     4,163         40,238         15,016   

Class A

     2,864         15,550         10,847   

ICON Energy Fund

        

Class S

     68,704         704,338         41,600   

Class C

     2,495         20,081         6,275   

Class A

     3,342         30,526         6,939   

ICON Financial Fund

        

Class S

     12,496         57,558         18,870   

Class A

     1,202         7,018         7,619   

ICON Healthcare Fund

        

Class S

     15,621         133,583         33,418   

Class A

     2,431         16,285         9,351   

ICON Industrials Fund

        

Class S

     9,541         30,559         16,622   

Class A

     786         4,237         5,340   

ICON Information Technology Fund

        

Class S

     13,986         82,524         18,919   

Class A

     1,005         6,112         6,227   

ICON Natural Resources Fund

        

Class S

     63,927         143,867         19,832   

Class C

     1,334         2,602         4,406   

Class A

     4,151         8,836         8,660   

ICON Utilities Fund

        

Class S

     13,585         63,983         16,142   

Class A

     2,075         15,512         8,763   

 

*

Transfer agent out of pocket fees are a Fund level expense.

 

 
Annual Report  |  September 30, 2016    83


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

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.

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

 

Fund                Class S                    Class C                      Class A            

ICON Consumer Discretionary Fund

   1.74%            1.99%

ICON Consumer Staples Fund

   1.50%            1.75%

ICON Energy Fund

   1.50%      2.50%       1.75%

ICON Financial Fund

   1.50%            1.75%

ICON Healthcare Fund

   1.50%            1.75%

ICON Industrials Fund

   1.50%            1.75%

ICON Information Technology Fund

   1.50%            1.75%

ICON Natural Resources Fund

   1.50%      2.50%       1.75%

ICON Utilities Fund

   1.50%            1.75%

The Funds’ expense limitations will continue in effect until at least January 31, 2017. 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 these payments are proposed.

As of September 30, 2016 the following amounts were available for recoupment by ICON Advisers based upon their potential expiration dates:

 

Fund            Expires        
2017
             Expires        
2018
             Expires        
2019
 

ICON Consumer Discretionary Fund

   $       $       $ 4,288   

ICON Consumer Staples Fund

     7,639         37,969         51,650   

ICON Financial Fund

     5,985         3,685         8,903   

ICON Healthcare Fund

                     3,006   

ICON Industrials Fund

     1,798         7,666         44,625   

ICON Information Technology Fund

     1,744         1,632         8,637   

ICON Natural Resources Fund

     8,051         3,552         73,898   

ICON Utilities Fund

     498         30,739         31,947   

Accounting, Custody and Transfer Agent Fees

Effective March 1, 2016, ALPS Fund Services (“ALPS”) serves as the fund accounting agent for the Funds. Prior to March 1, 2016, State Street Bank and Trust Company (“State Street”) served as the fund accounting agent for the Funds. For its services, the Trust pays ALPS a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily net 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.

Effective April 9, 2016, ALPS became the transfer agent for the Trust. For these services, the Trust pays an annual fee plus annual base fee per Fund, per account fees and out-of-pocket expenses. Prior to April 9, 2016, Boston Financial Data Services, Inc. was the Trust’s transfer agent.

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

 

 
84    www.iconfunds.com


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

net assets over $5 billion. For the year ended September 30, 2016, each Fund’s payment for administrative services to ICON Advisers is included on the Statements 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.

Effective March 1, 2016, ICON Advisers has a sub-administration agreement with ALPS under which ALPS assists ICON Advisers with the administration and business affairs of the Trust. For its services, ICON Advisers pays ALPS a fee that is calculated daily and paid monthly at an annual rate based on the aggregate average daily net assets of the Trust. Prior to March 1, 2016, the sub-administration agreement was between ICON Advisers and State Street.

Distribution Fees

The Funds have adopted a non-compensatory 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, the Distribution Plan provides for reimbursement of expenses incurred by IDI related to distribution and marketing. The shareholders of the 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 A shares. There is no annual distribution and service fee for Class S shares. The total amount paid under the 12b-1 plans by the Funds is shown on the Statements of Operations.

In addition, IDI, as Distributor, receives a contingent deferred sales charge at a rate of 1.00% of the purchase price for the sale of Class C shares within one year of purchase. For Class A shares, the public offering price equals net asset value plus the applicable sales charge, which is a maximum of 5.75%. IDI receives a portion of this sales charge and may redistribute it as dealer discounts and brokerage commissions to non-related parties.

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 Trust paid 95% of the CCO’s salary and the remaining portion, along with other employee related expenses, is paid by ICON Advisers. For the year ended September 30, 2016, the total related amounts paid by the Funds under this arrangement are included in Other Expenses on the Statements of Operations.

The Funds may reimburse ICON Advisers for legal work performed for the Funds by its attorneys outside of the advisory and administration contracts. The Board reviews and approves such reimbursements. For the year ended September 30, 2016, the total related amounts paid by the Funds under this arrangement was $26,077 and is included in Other Expenses on the Statements of Operations.

The Funds engaged in cross trades with each other during the year ended September 30, 2016 pursuant to Rule 17a-7 under the 1940 Act. Generally, cross trading is the buying or selling of portfolio securities between funds to which the Adviser serves as the investment adviser. The Board of Trustees previously adopted procedures that apply to transactions between the Funds and its affiliates pursuant to Rule 17a-7. At its regularly scheduled meetings, the Board of Trustees reviews such transactions as of the most current calendar quarter for compliance with the requirements set forth by Rule 17a-7 and the Funds’ procedures. The procedures require that the transactions be a purchase or sale for no consideration other than cash payment against prompt delivery of a security for which market quotations are readily available, and be consistent with the investment policies of each Fund.

4. BORROWINGS

 

The Trust has entered into a uncommitted, unsecured, revolving Line of Credit agreement/arrangement with State Street to provide temporary funding for redemption requests. Effective March 21, 2016, the maximum borrowing limit was changed from $75 million to $50 million. Interest on domestic borrowings is charged at a rate quoted and determined by State Street. The Line of Credit agreement/arrangement expires on March 20, 2017.

As of September 30, 2016, the Financial Fund had an outstanding borrowing in the amount of $100,081.

 

 
Annual Report  |  September 30, 2016    85


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

For the year ended September 30, 2016, the average outstanding loan by Fund was as follows:

 

Fund    Average Borrowing
(10/01/15 - 9/30/16)^
             Average Interest Rates        
        (10/01/15 -  9/30/16)^        

 

ICON Consumer Discretionary Fund*

   $ 130,031       1.63%

ICON Consumer Staples Fund*

     638,591       1.69%

ICON Energy Fund*

     2,280,791       1.73%

ICON Financial Fund

     259,635       1.60%

ICON Healthcare Fund*

     1,519,099       1.58%

ICON Information Technology Fund*

     611,476       1.62%

ICON Natural Resources Fund*

     420,607       1.57%

ICON Utilities Fund*

     1,248,569       1.64%

 

*

There were no outstanding borrowings under this agreement/arrangement as of September 30, 2016.

^

The average is calculated based on the actual number of days with outstanding borrowings.

5. PURCHASES AND SALES OF INVESTMENT SECURITIES

 

For the year ended September 30, 2016, 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

     $ 62,541,904        $ 71,659,741  

ICON Consumer Staples Fund

       46,530,223          22,943,541  

ICON Energy Fund

       330,143,210          357,575,012  

ICON Financial Fund

       23,957,754          26,277,257  

ICON Healthcare Fund

       88,081,913          126,352,008  

ICON Industrials Fund

       20,122,707          12,923,460  

ICON Information Technology Fund

       43,113,426          46,143,872  

ICON Natural Resources Fund

       51,400,004          60,211,144  

ICON Utilities Fund

       101,921,794          74,131,559  

6. FEDERAL INCOME TAX

 

The following information is presented on an income tax basis. Differences between GAAP and federal income tax purposes that are permanent in nature are reclassified within the capital accounts. Temporary differences do not require reclassification. Temporary and permanent differences do not impact the NAVs of the Funds. These differences are due to differing treatments for items such as deferrals of wash sale losses, foreign currency transactions, partnership adjustments, and net investment losses.

For the year ended September 30, 2016, the following Funds had capital loss carryforwards:

 

Fund      Expiring in 2017        Expiring in 2018      

 

 

ICON Financial Fund

   $ 42,575,056       $ 43,715,782       

ICON Industrials Fund

             18,214,017       

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, 2016, the following Funds utilized capital loss carryforwards:

 

Fund            Amount          

 

 

ICON Financial Fund

   $ 185,723       

ICON Industrials Fund

     1,229,396       

ICON Information Technology Fund

     357,889       

ICON Utilities Fund

     87,574       

For Energy Fund, the short-term and long-term capital losses with no expiration were $80,771,602 and $27,925,037, respectively.

 

 
86    www.iconfunds.com


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

Under the Regulated Investment Company Modernization Act of 2010 (the “Act”) 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.

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2016, were as follows:

 

Fund        Ordinary Income          Long-Term Capital    
Gains
 

 

 

ICON Consumer Discretionary Fund

   $ 1,967,808         $ 2,499,540       

ICON Consumer Staples Fund

     528,316           2,182,632       

ICON Energy Fund

     3,214,770           –       

ICON Healthcare Fund

     16,435,757           4,598,527       

ICON Natural Resources Fund

     325,103           4,742,663       

ICON Utilities Fund

     1,424,724           –       

The tax characteristics of distributions paid to shareholders during the fiscal year ended September 30, 2015, were as follows:

 

Fund        Ordinary Income          Long-Term Capital    
Gains
 

 

 

ICON Consumer Discretionary Fund

   $ 3,159,255         $ 4,938,010       

ICON Consumer Staples Fund

     1,055,012           3,043,787       

ICON Energy Fund

     5,883,708           94,805,687       

ICON Financial Fund

     300,902           –       

ICON Healthcare Fund

     17,398,269           15,513,304       

ICON Industrials Fund

     26,242           –       

ICON Natural Resources Fund

     208,262           –       

ICON Utilities Fund

     622,942           –       

As of September 30, 2016, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Fund    Undistributed
 Ordinary Income 
    

Undistributed

  Capital Gains  

     Late Year Loss
        Deferral*        
     Capital Loss
Carryforward
 and Other Losses 
   

Unrealized
Appreciation/

 (Depreciation)** 

     Total Accumulated
  Earnings/(Deficit)  
 

 

 

ICON Consumer Discretionary Fund

   $ 584,789       $ 1,670,665       $       $      $ (2,303,360)       $ (47,906)       

ICON Consumer Staples Fund

     1,732,630         1,341,627                        (48,472)         3,025,785       

ICON Energy Fund

     784,757                 (42,235,817)         (110,650,408) ***      (3,732,151)         (155,833,619)       

ICON Financial Fund

     487,449                 (4,992,037)         (86,290,838)        (1,335,367)         (92,130,793)       

ICON Healthcare Fund

             1,215,858         (63,244)                (1,778,446)         (625,832)       

ICON Industrials Fund

                     (22,535)         (18,214,017)        1,340,544         (16,896,008)       

ICON Information Technology Fund

     474,618         8,402,419                        9,930,607         18,807,644       

ICON Natural Resources Fund

     400,690                 (5,415,227)                206,375         (4,808,162)       

ICON Utilities Fund

     3,119,151         1,047,759                        1,051,017         5,217,927       

 

*

The Funds have elected to defer certain qualified late-year losses in accordance with federal income tax rules. These losses are treated as having arisen on the first day of the following fiscal year.

**

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

***

Includes $1,953,769 of deferred passive losses for partnership investments.

 

 
Annual Report  |  September 30, 2016    87


Table of Contents
ICON Sector Funds    Notes to Financial Statements
   September 30, 2016

 

As of September 30, 2016, cost on investments for federal income tax purposes and the amount of net unrealized appreciation/(depreciation) were as follows:

 

Fund    Gross Appreciation
(excess of value over
tax cost)
     Gross Depreciation
(excess of tax cost
over value)
    Net Appreciation/
(Depreciation) of
Foreign Currency
    

Net Unrealized
Appreciation/

(Depreciation)

     Cost of Investments
for Income Tax
Purposes
 

 

 

ICON Consumer Discretionary Fund

   $ 1,072,882       $ (3,376,242   $       $ (2,303,360)       $ 44,648,379   

ICON Consumer Staples Fund

     1,269,743         (1,318,215             (48,472)         48,429,334   

ICON Energy Fund

     32,926,021         (36,658,172             (3,732,151)         393,898,400   

ICON Financial Fund

     2,012,727         (3,348,094             (1,335,367)         47,830,283   

ICON Healthcare Fund

     2,154,853         (3,933,299             (1,778,446)         89,276,911   

ICON Industrials Fund

     1,878,155         (537,611             1,340,544         24,363,317   

ICON Information Technology Fund

     10,461,507         (530,900             9,930,607         42,346,487   

ICON Natural Resources Fund

     4,683,104         (4,476,723     (6)         206,375         78,756,851   

ICON Utilities Fund

     2,345,263         (1,294,331     85         1,051,017         59,739,032   

7. SUBSEQUENT EVENTS

 

On October 14, 2016, the State Street Navigator Prime Portfolio, the collateral vehicle for securities lending, became the State Street Navigator Securities Lending Government Money Market Portfolio (“Government Money Market Portfolio”). The Government Money Market Portfolio will seek: (i) current income to the extent consistent with the preservation of capital and liquidity; and (ii) the maintenance of a stable $1.00 per share net asset value.

8. CHANGE OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee of the Board of the Funds dismissed PricewaterhouseCoopers LLP (“PwC”), as the independent registered public accounting firm of the Funds and appointed Cohen & Company, Ltd. (“Cohen”) effective July 27, 2016.

 

 
88    www.iconfunds.com


Table of Contents
ICON Sector Funds   

Report of Independent Registered

Public Accounting Firm

 

To the Shareholders and Board of Trustees of ICON Funds

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, 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 Natural Resources Fund, and ICON Utilities Fund (the “Funds”, each a series of ICON Funds) as of September 30, 2016, and the related statements of operations and changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The Funds’ financial statements and financial highlights for the years ended September 30, 2015 and prior, were audited by other auditors, whose report dated November 18, 2015 expressed an unqualified opinion on those financial statements and financial highlights.

We conducted our audit 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 and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2016, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of September 30, 2016, the results of their operations, the changes in their net assets, and their financial highlights for year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

 

      LOGO

COHEN & COMPANY, LTD.

Cleveland, Ohio

November 23, 2016

 

 
Annual Report  |  September 30, 2016    89


Table of Contents
ICON Sector Funds    Disclosure of Fund Expenses
   September 30, 2016 (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 (4/01/16 – 9/30/16).

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), 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

April 1, 2016

     Ending Account
Value
September 30, 2016
    

Expense

Ratio(a)

   

Expenses Paid
During period

April 1, 2016 -
September 30, 2016(b)

 

 

 

ICON Consumer Discretionary Fund

          

Class S

          

Actual

     $  1,000.00         $     970.60         1.38%        $  6.80   

Hypothetical (5% return before expenses)

     $  1,000.00         $  1,018.10         1.38%        $  6.96   

Class A

          

Actual

     $  1,000.00         $     968.10         1.99%        $  9.79   

Hypothetical (5% return before expenses)

     $  1,000.00         $  1,015.05         1.99%        $  10.02   

ICON Consumer Staples Fund

          

Class S

          

Actual

     $  1,000.00         $  1,020.50         1.51%        $  7.63   

Hypothetical (5% return before expenses)

     $  1,000.00         $  1,017.45         1.51%        $  7.62   

Class A

          

Actual

     $  1,000.00         $  1,020.50         1.76%        $  8.89   

Hypothetical (5% return before expenses)

     $  1,000.00         $  1,016.20         1.76%        $  8.87   

 

 
90    www.iconfunds.com


Table of Contents
ICON Sector Funds    Disclosure of Fund Expenses
   September 30, 2016 (Unaudited)

 

 

    

Beginning Account
Value

April 1, 2016

   Ending Account
Value
September 30, 2016
   Expense Ratio(a)   

Expenses Paid

During period

April 1, 2016 -
September 30, 2016(b)

 

ICON Energy Fund

           

Class S

           

Actual

   $  1,000.00    $  1,123.30    1.39%    $  7.38

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,018.05    1.39%    $  7.01

Class C

           

Actual

   $  1,000.00    $  1,116.80    2.47%    $  13.07  

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,012.65    2.47%    $  12.43  

Class A

           

Actual

   $  1,000.00    $  1,121.00    1.71%    $  9.07

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,016.45    1.71%    $  8.62

ICON Financial Fund

           

Class S

           

Actual

   $  1,000.00    $  1,046.40    1.39%    $  7.11

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,018.05    1.39%    $  7.01

Class A

           

Actual

   $  1,000.00    $  1,043.30    1.76%    $  8.99

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,016.20    1.76%    $  8.87

ICON Healthcare Fund

           

Class S

           

Actual

   $  1,000.00    $  1,111.90    1.37%    $  7.23

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,018.15    1.37%    $  6.91

Class A

           

Actual

   $  1,000.00    $  1,109.90    1.75%    $  9.23

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,016.25    1.75%    $  8.82

ICON Industrials Fund

           

Class S

           

Actual

   $  1,000.00    $  1,068.90    1.50%    $  7.76

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,017.50    1.50%    $  7.57

Class A

           

Actual

   $  1,000.00    $  1,067.70    1.76%    $  9.10

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,016.20    1.76%    $  8.87

ICON Information Technology Fund

           

Class S

           

Actual

   $  1,000.00    $  1,087.20    1.47%    $  7.67

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,017.65    1.47%    $  7.41

Class A

           

Actual

   $  1,000.00    $  1,085.30    1.75%    $  9.12

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,016.25    1.75%    $  8.82

ICON Natural Resources Fund

           

Class S

           

Actual

   $  1,000.00    $  1,077.30    1.51%    $  7.84

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,017.45    1.51%    $  7.62

Class C

           

Actual

   $  1,000.00    $  1,072.00    2.51%    $  13.00  

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,012.45    2.51%    $  12.63  

Class A

           

Actual

   $  1,000.00    $  1,077.00    1.75%    $  9.09

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,016.25    1.75%    $  8.82

 

 
Annual Report  |  September 30, 2016    91


Table of Contents
ICON Sector Funds    Disclosure of Fund Expenses
   September 30, 2016 (Unaudited)

 

    

Beginning Account
Value

April 1, 2016

   Ending Account
Value
September 30, 2016
   Expense Ratio(a)   

Expenses Paid

During period

April 1, 2016 -
September 30, 2016(b)

 

ICON Utilities Fund

           

Class S

           

Actual

   $  1,000.00    $  1,032.90    1.50%    $  7.62

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,017.50    1.50%    $  7.57

Class A

           

Actual

   $  1,000.00    $  1,031.40    1.75%    $  8.89

Hypothetical (5% return before expenses)

   $  1,000.00    $  1,016.25    1.75%    $  8.82

 

(a) 

The Fund’s expense ratios have been annualized based on the Fund’s most recent fiscal half-year expenses.

(b) 

Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year 183/366 (to reflect the half-year period).

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

 

 
92    www.iconfunds.com


Table of Contents
ICON Sector Funds    Board of Trustees and Fund Officers
   September 30, 2016 (Unaudited)

 

The ICON Funds Board of Trustees (the “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, 65, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as Chief Executive Officer (2013 to present); and Chairman of the Investment Committee (2005 to present) and served as the Chief Investment Officer (1991 to 2004) and President (2008 to 2013 and 2014 to present) 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, 66. 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 2015), 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 (2013 to present and 2006 to 2012), Delta Dental of Pennsylvania, an insurance company (1998 to 2009 and 2010 to present), Dentegra Group, Inc, an insurance holding company (2010 to 2014) and Delta Reinsurance Corporation (2015 to present; 2011 to 2014 and 2000 to 2009).

John C. Pomeroy, Jr., 69. Mr. Pomeroy has been a Trustee of the Funds since November 2002. Mr. Pomeroy is Chief Investment Officer and Director of Investments, Pennsylvania State University (2001 to present) and was Portfolio Manager and Product Manager, Trinity Investment Management Corporation (1989 to 2001).

R. Michael Sentel, 68. 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, 65, Chairman of the Board. Dr. Callahan has been a Trustee of the Funds since their inception. Dr. Callahan also serves as Chief Executive Officer (2013 to present); President (1998 to 2013 and 2014 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.

Donald Salcito, 63. 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).

Carrie M. Schoffman, 43. Ms. Schoffman has been a Vice President and Principal Financial Officer/Treasurer of the Funds since June 2013. Ms. Schoffman is also Chief Compliance Officer (2013 to present and 2004 to 2008) and Anti-Money Laundering Officer (2013 to present) of the ICON Funds. She is Senior Vice President (2011 to present) and Chief Compliance Officer (2013 to present and 2004 to 2011) of ICON Advisers. Previously, she was a Staff Accountant with the Securities and Exchange Commission (2003 to 2004) and also an Experienced Manager (2001 to 2003) and a Senior Associate/Associate (1996 to 2001) at PricewaterhouseCoopers LLP.

Lesley Caviness, 50. Ms. Caviness serves as Assistant Treasurer of the Funds (2014 to present). She has worked at ICON (2007 to 2008 and 2010 to present) in fund accounting, compliance, business intelligence and performance capacities. Prior to working at ICON, Ms. Caviness was a Real Estate Broker at Seasons Real Estate Group (2008 to 2012) and Signature Real Estate (2014 to present), Finance Manager at Navigant (2000 to 2007), and Associate/Senior Associate (1996 to 2000) at PricewaterhouseCoopers LLP.

 

 
Annual Report  |  September 30, 2016    93


Table of Contents
ICON Sector Funds    Additional Information
   September 30, 2016 (Unaudited)

 

Renewal of Investment Advisory Agreement

On August 22, 2016, the Board of Trustees, including all of the Trustees that are not “interested persons” of the Trust (the “Independent Trustees”), approved continuation of the Advisory Agreements (as defined below) with the Adviser for each Fund for an additional one-year term commencing October 1, 2016.

In determining to renew the investment advisory agreements between ICON Funds (the “Trust”) and ICON Advisers, Inc. (“ICON” or the “Adviser”) the Trustees requested, were provided with and reviewed data with respect to the Adviser, its personnel, and the services provided and to be provided to each Fund by the Adviser under the Trust’s Investment Advisory Agreement dated October 9, 1996, as amended (related to the Sector Funds, the International Funds and ICON Fund) 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 Balanced, Equity Income, Opportunities and Long/Short Funds) (collectively, the “Advisory Agreements”).

The Trustees agreed that consideration of the Advisory Agreements should also include consideration of other agreements between the Adviser and the Trust that impact provisions of the Advisory Agreements, including expense limitation agreements as amended effective April 11, 2016. The Trustees were provided with and reviewed data with respect to the Adviser, its personnel, and the services provided and to be provided to each Fund by the Adviser under the Trust’s Advisory Agreements, Administrative Services Agreement and Expense Limitation Agreement and the Distribution Agreement with ICON Distributors, Inc. (“IDI”). 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; and comparative data obtained from Strategic Insight (“SI”) related to Fund performance and Fund expenses (the “SI Report”).

The Board convened a meeting with SI on August 10, 2016 to discuss the SI Report and the information contained within the SI Report. Kevin Shine, Senior Managing Director, U.S. Research & Advisory of SI, Alana Burke, Vice President, Corporate Accounts and Joe Frelix, project manager on the15(c) report, discussed the findings of the SI Report with the Independent Trustees. Management personnel participated in the SI meeting convened to discuss the data for and with the Board. At the meeting, SI discussed its methodology, peer selection and the difficulty with some sector funds, expenses and fees, and performance relative to the respective Fund’s peers. SI also discussed the Funds size and how a respective Fund’s size would affect economies of scale, in particular, operating expenses. In addition, the Trustees asked SI for a Mutual Fund Administration Analysis (the “SI Admin Analysis”). Mr. Shine walked the Trustees through the SI Admin Analysis.

Also included in the 15(c) discussion was a briefing on factors affecting the ICON investment model; expenses and expense ratios of each Fund and other ICON managed products; relative performance of each Fund; status of expense reimbursements to the Funds by the Adviser; sales and marketing initiatives; specific business factors affecting IDI; the work load on ICON as adviser and administrator to the Funds; current profitability of ICON; staffing levels and staff morale.

The Independent Trustees were represented by independent legal counsel in this process. In August 2016, after participating in the meeting with SI and management, 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 from SI. The Board received materials from independent legal counsel discussing the legal standards applicable to their consideration of the ICON-Trust agreements.

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 SI Report and the SI Admin Analysis were discussed and management personnel showed performance for each Fund and discussed the factors affecting performance. The Board inquired from SI whether there was any correlation between fund expenses and performance, and SI saw no direct correlation with the ICON Funds other than the obvious observation that higher expenses reduce performance.

During the discussion on performance, management personnel noted that 2015 was very difficult for active managers. Unlike indexes, ICON is an active manager that is willing to look different from an index.

Management elaborated further on performance. For the one year ended May 31, 2014, only three of ICON’s funds beat their respective benchmarks: Consumer Staples, Information Technology, and Long/Short. For the one year ended June 30, 2016, four of the ICON funds beat their respective benchmarks: Emerging Markets, International Equity, Information Technology, and Utilities. However, on a one year basis, eight are in

 

 
94    www.iconfunds.com


Table of Contents
ICON Sector Funds    Additional Information
   September 30, 2016 (Unaudited)

 

the top third of their peer groups of which six of those eight are in the top quartile. The low point in the S & P 1500 Index was February 11, 2016. Since February 11 until July, 2016, ICON performed better than the indexes, as seven of the 12 domestic equity funds beat their respective indexes. Also during that same time period, the equity portion of the ICON Equity Income Fund beat the S&P 1500 Index. Five of the nine ICON Sector Funds beat their index for that same period.

Management noted that Advisers’ performance relative to other valuation managers as judged by the AthenaInvest system is above the medium. SI also noted that from a performance point of view, the Funds in the SI Report are compared using the Morningstar data, and there is no Morningstar category for “all cap” funds, but all ICON Funds are improving.

The Board addressed style consistency with the Adviser. Management advised that, based on the Adviser’s own analysis, and with the restructuring of the Adviser, the Adviser has continued an additional level of review on the Portfolio Managers (“PMs”) to make sure they are adhering to the ICON System; the Senior Vice President of Fund Management has been systematically tracking the Funds’ performance; he evaluates each of the ICON Funds to help ensure all PMs are investing consistently and in accordance with the ICON System by evaluating the Funds from an attribution perspective in monthly meetings.

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 concluded:

 

  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;

 

  B.

That the breadth and the quality of investment advisory and other services being provided to each Fund are satisfactory, the Adviser’s performance is competitive with other fund managers in the value style group, and the Adviser has applied a disciplined approach in the style specified in the Funds’ offering document;

 

  C.

That ICON has made significant expenditures in the past year and in prior years to ensure that it has reasonably 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 methodology;

 

  D.

That the Board, after considering compliance reports and compliance initiatives undertaken during the year and conducting individual interviews with selected PMs, is satisfied with the research and portfolio management, that research and portfolio management is being constantly evaluated and improved upon; and that the PMs are evaluating trading services systematically, the Board concluded that the Adviser is providing the Funds with professional management of the nature, quality and scope required by the Funds; 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 shareholders may redeem their shares at any time without notice and the Trust’s advisory relationship with ICON may be terminated at any time and must be renewed on an annual basis.

In considering the reasonableness of the fees paid to the Adviser for managing each Fund, the Board reviewed, among other things, data concerning other funds from the SI Report, financial statements of the Adviser and an analysis of the profitability of the Adviser, and its affiliates, and their relationship with each Fund over various time periods, and the SI Admin Analysis. Such 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 and a comparison of similar data from reports filed by publicly traded firms.

The Board assessed actual (net) fees for advisory services and Fund expense ratios under the contractual relationship (the Advisory agreements, the Administration Agreement and the Expense Limitation Agreements) with the Adviser as opposed to the fees specified in the applicable Advisory Agreement and expense ratios without application of the expense limitations and the low cost of the Administration Agreement and concluded that the focus should be on actual expense ratios after application of the Expense Limitation Agreements.

The Board considered the current and anticipated asset levels of each Fund and the contractual commitments of the Adviser to waive fees and pay expenses of the Funds from time to time to limit the total expenses of the Funds. The Board also considered the Adviser’s contractual commitment regarding administration and the fact it would continue to lose money on administration. In this regard the Board discussed asset levels in each Fund covered by the Advisory Agreements. 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 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

 

 
Annual Report  |  September 30, 2016    95


Table of Contents
ICON Sector Funds    Additional Information
   September 30, 2016 (Unaudited)

 

Adviser and its affiliates from their relationship with the Funds, and services provided to 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 on the fairness of fee arrangements, the Board considered the SI Report and the SI Admin Analysis. It was noted that SI was selected at the May Board meeting to prepare its reports, an extensive analysis of the expense data of other comparable funds; and that Trustee input was solicited and provided in the process. Among other information discussed, it was noted that:

 

  A.

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

 

  B.

ICON has contractually agreed to impose expense limitations on each and every Fund at a cost to ICON;

 

  C.

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;

 

  D.

ICON has contractually committed to providing Administration services to the Funds at a cost below the average to its peer group, and within the mutual fund universe of open-end fund managers with less than $10 billion in assets under management, at less than 50% of the fee of those funds, at a loss to ICON.

The Board also considered the fees charged by the Adviser to other advisory clients as outlined in its Registration Application on Form ADV in connection with assessing data bearing on the fairness of fee arrangements. The Trustees noted that certain ICON institutional/sub-advised type accounts have lower fees than the fees paid by the Funds for a number of reasons, including but not limited to, those clients call for different commitments of time, institutional clients have low and predictable turnover of assets, in competition joint costs are apportioned among paying customers according to elasticity of demand and the Adviser has a limited level of responsibility in sub-managed accounts, or accounts with an investor agent/advisor.

The Board noted that the Funds’ redemptions were similar to industry averages which showed two things: 1) that the Funds’ Performance was not adversely impacting fund redemptions, and 2) that the fees and costs were competitive when compared to size. The Board noted that there are thousands of mutual funds competing; that investors can search and trade funds on the internet or on platforms at very little or no cost; and that if the Adviser were overcharging for its services, the Board would have expected redemptions in excess of industry norms.

The Board concluded that the Adviser is providing the Funds with professional management at a fair, reasonable and competitive price.

In connection with assessing the direct and indirect benefits to ICON from serving as the Funds’ adviser, the Board discussed services provided under the Distribution Agreement and the Administrative Services Agreement which are in addition to services under the Advisory Agreements. It was noted that IDI does not charge a fee to the Funds for its services and that ICON’s fee for administrative services ICON appears from the SI Admin Analysis to be below the average to its peer group, and within the mutual fund universe of open-end fund managers with less than $10 billion in assets under management, at less than 50% of the fee of those funds, at a loss to ICON. The Board noted that 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 the Board concluded that the arrangements are consistent with Fund brokerage practices and benefit the Funds and their shareholders.

Based on these considerations, the Board, including all of the Independent Trustees, concluded that: 1) the continuation of the Advisory Agreements was in the best interests of each Fund and its shareholders, 2) the services to be performed under the Advisory Agreements 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, and its affiliates, were consistent with fees paid by similar funds and other clients of ICON, and were 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.

 

 
96    www.iconfunds.com


Table of Contents
ICON Sector Funds    Additional Information
   September 30, 2016 (Unaudited)

 

Supplemental Tax Information

Pursuant to Section 852(b)(3) of the Internal Revenue Code the following Funds designate the amounts listed below as long-term capital gain dividends:

 

ICON Consumer Discretionary Fund

   $ 2,499,540   

ICON Consumer Staples Fund

   $ 2,182,632   

ICON Healthcare Fund

   $ 4,598,525   

ICON Natural Resources Fund

   $ 4,742,663   

The following Funds designate the percentages listed below of the income dividends distributed in 2015 as qualified dividend income (QDI) as defined in Section 1(h)(11) of the Internal Revenue Code:

 

ICON Consumer Discretionary Fund

     17.63

ICON Consumer Staples Fund

     53.02

ICON Energy Fund

     100.00

ICON Financial Fund

     100.00

ICON Healthcare Fund

     5.73

ICON Industrials Fund

     100.00

ICON Natural Resources Fund

     100.00

ICON Utilities Fund

     100.00

The following Funds designate the percentages listed below of the income dividends distributed in 2015 as qualifying for the corporate dividends received deduction (DRD) as defined in Section 854(b)(2)of the Internal Revenue Code:

 

ICON Consumer Discretionary Fund

     14.46

ICON Consumer Staples Fund

     51.31

ICON Energy Fund

     100.00

ICON Financial Fund

     100.00

ICON Healthcare Fund

     5.48

ICON Industrials Fund

     100.00

ICON Natural Resources Fund

     100.00

ICON Utilities Fund

     100.00

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.

 

 
Annual Report  |  September 30, 2016    97


Table of Contents
ICON Sector Funds    Additional Information
   September 30, 2016 (Unaudited)

 

Shareholder Meeting

On August 11, 2016, the ICON Natural Resources Fund held a Special Meeting of Shareholders for the purpose of voting on a proposal to approve and understand that the Fund’s Investment Restrictions and designation as a sector fund which “concentrates its investments in the industries or groups of industries within the sector(s)” allows the Fund to concentrate within the Natural Resources space in sectors in an amount determined by the Adviser in the Adviser’s sole discretion. The proposal was approved with the following votes:

 

Affirmative

     2,689,700.028   

Against

     268,515.240   

Abstain

     59,774.353   

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.

 

 
98    www.iconfunds.com


Table of Contents
ICON Sector Funds    Privacy Policy
   September 30, 2016 (Unaudited)

 

 

 

   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:

  
  

 

•      Social Security number and account balances

  

•      income and transaction history

  

•      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.

 

 
Annual Report  |  September 30, 2016    99


Table of Contents
ICON Sector Funds    Privacy Policy
   September 30, 2016 (Unaudited)

 

 

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

    

 

•      open an account or enter into an investment advisory contract

    

•      provide account information or give us your contact information

    

•      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

    

 

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

    

•      affiliates from using your information to market to you

    

•      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.

    

 

•      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.

    

 

•      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.

    

 

•      ICON doesn’t jointly market

 

 

 
100    www.iconfunds.com


Table of Contents

LOGO

For more information about the ICON Funds, contact us:

 

By Telephone

  

                     1-800-764-0442

 

By E-Mail

  

 

                     info@iconadvisers.com

 

By Mail

  

 

                     ICON Funds | P.O. Box 1920 | Denver, CO 80201

 

In Person

  

 

                     ICON Funds | 5299 DTC Boulevard, 12th Floor

  

                     Greenwood Village, CO 80111

 

On the Internet

  

 

                     www.iconfunds.com


Table of Contents

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.


Table of Contents

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, 2016 and September 30, 2015, the aggregate Audit Fees billed (or to be billed) by Cohen & Company, LTD. (“Cohen”) and PricewaterhouseCoopers LLP (“PwC”), respectively, 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.

 

2016      2015  
  $216,000       $ 365,365   

 

  (b) Audit-Related Fees

In each of the fiscal years ended September 30, 2016 and September 30, 2015, the aggregate Audit-Related Fees billed (or to be billed) by Cohen and PwC, respectively, 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.

 

2016      2015  
$ 0       $ 0   

 

  (c) Tax Fees

In each of the fiscal years ended September 30, 2016 and September 30, 2015 the aggregate Tax Fees billed (or to be billed) by Cohen and PwC, respectively, for professional services rendered for tax return preparation, tax compliance, tax advice and tax planning are shown in the table below. All of the below fees were paid by the Registrant.

 

2016      2015  
  $81,000       $ 134,800   

 

  (d) All Other Fees

In each of the fiscal years ended September 30, 2015 and September 30, 2014 the aggregate Other Fees billed (or to be billed) by Cohen and PwC, respectively, for all other non-audit services rendered are shown in the table below. All of the below fees were paid by the Registrant.

 

2016      2015  
$ 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, 2016, 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 Cohen was 12%.


Table of Contents

(g) See Item 4(d) above.

(h) There were no non-audit fees provided by Cohen or PwC respectively, in the fiscal year ending September 30, 2016 or September 30, 2015 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.

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

Not applicable.

Item 11. Controls and Procedures.

(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b) There were no changes in the registrant’s internal control over financial reporting 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.


Table of Contents

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 6, 2016

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 6, 2016

 

By (Signature and Title)*   

/s/ Carrie M. Schoffman

   Carrie M. Schoffman, Vice President, Chief Compliance Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

 

Date   

December 6, 2016

 

* Print the name and title of each signing officer under his or her signature.