REGISTRATION NO. ..................
REGISTRATION NO. ..................
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.......
Post-Effective Amendment No......
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. .....
ICON Funds
(Exact Name Of Registrant As Specified In Charter)
1793 KINGSWOOD DRIVE, SUITE 200, SOUTHLAKE, TEXAS 76092
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: (817) 431-2197
Kenneth Trumpfheller
1793 Kingswood Drive, Suite 200, Southlake, Texas 76092
(Name and Address of Agent for Service)
With copy to:
Charles W. Lutter, Jr., Attorney
103 Canyon Oaks, San Antonio, TX 78232-1305
APPROXIMATE DATE OF PROPOSED OFFERING: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
hereby declares that an indefinite number or amount of shares are being
registered under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL
THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
EXHIBIT INDEX ON PAGE .......
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ICON FUNDS
CROSS REFERENCE SHEET
FORM N-1A
ICON FUNDS
CROSS REFERENCE SHEET
FORM N-1A
ITEM SECTION IN PROSPECTUS
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1............................... Cover Page
2............................... Summary of Fund Expenses
3............................... None
4............................... The Trust, Investment Objective and Strategies,
Investment Policies and Techniques and Risk
Considerations
5............................... Management of the Fund
5A.............................. None
6............................... Cover Page, Dividends and Distributions, Taxes,
The Trust
7............................... How to Invest in the Fund, Share Price
Calculation
8............................... How to Redeem Shares
9............................... None
ITEM SECTION IN STATEMENT OF ADDITIONAL INFORMATION
- ---- ----------------------------------------------
10.............................. Cover Page
11.............................. Table of Contents
12.............................. Description of the Trust
13.............................. Investment Restrictions, Additional Information
About Fund Investments and Risk Considerations
14.............................. Trustees and Officers
15.............................. Administratrive Services, The Investment
Adviser
16.............................. The Investment Adviser, Custodian, Transfer
Agent, Independent Accountants and Counsel,
Administrative Services
17.............................. Portfolio Transactions
18.............................. Description of the Trust
19.............................. Determination of Share Price
20.............................. Tax Status
21.............................. Distributor
22.............................. Calculation of Performance Data
23.............................. None
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PART A
PROSPECTUS
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ICON FUNDS
PROSPECTUS
January ........ , 1997
U.S. EQUITY FUNDS FOREIGN EQUITY FUNDS
ICON Basic Materials Fund ICON North Asia Region Fund
ICON Capital Goods Fund ICON South Asia Region Fund
ICON Consumer Cyclicals Fund ICON North Europe Region Fund
ICON Consumer Staples Fund ICON South Europe Region Fund
ICON Energy Fund ICON Western Hemisphere Fund
ICON Financial Services Fund
ICON Healthcare Fund
ICON Leisure Fund FIXED INCOME FUND
ICON Technology Fund ICON Short-Term Fixed IncomeFund
ICON Telecommunication & Utilities Fund
ICON Transportation Fund
C/O MERIDIAN INVESTMENT MANAGEMENT CORPORATION
12835 EAST ARAPAHOE ROAD TOWER II
ENGLEWOOD, COLORADO 80112
FOR INFORMATION, SHAREHOLDER SERVICES AND REQUESTS:
1-800-..........
This prospectus presents information that a prospective investor should know
about the various series of the ICON Funds (the "Trust"). Each Fund is a
portfolio of the Trust, a non-diversified, open-end management investment
company ("Fund" or collectively the "Funds"). The funds are designed for use by
institutional money managers who have discretionary authority to direct
investments on behalf of the beneficial owners of fund shares. The short-term
fixed income fund objective is to attain high current income consistent with
preservation of capital. The other funds are designed to provide long-term
capital appreciation with respect to the sectors selected by the money managers;
and, a fund may not contain significant assets at times when money managers
place client funds in other sectors. Investors should look to the performance of
their investment advisers, not to the performance of the funds.
Shares of the funds are offered on a "no-load" basis which means there are no
sales charges or commissions. The funds are distributed by Meridian Clearing
Corp.
A Statement of Additional Information dated ............. has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
This Statement is available free from Icon Funds upon written request at the
address set forth above or by calling 1-800- .................
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR, HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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ICON Funds Prospectus
Page 1
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY............................................................3
SUMMARY OF FUND EXPENSES......................................................6
INVESTMENT OBJECTIVE AND STRATEGIES...........................................7
U.S. Equity Funds........................................................7
ICON Basic Materials Fund............................................7
ICON Capital Goods Fund..............................................8
ICON Consumer Cyclicals Fund.........................................8
ICON Consumer Staples Fund...........................................8
ICON Energy Fund.................................................... 8
ICON Financial Services Fund........................................ 9
ICON Healthcare Fund................................................ 9
ICON Leisure Fund...................................................10
ICON Technology Fund................................................10
ICON Telecommunication & Utilities Fund.............................10
ICON Transportation Fund............................................10
Foreign Equity Funds....................................................11
ICON North Asia Region Fund.........................................11
ICON South Asia Region Fund.........................................12
ICON North Europe Region Fund.......................................12
ICON South Europe Region Fund.......................................12
ICON Western Hemisphere Fund........................................12
Fixed Income Fund.......................................................12
ICON Short-Term Fixed Income Fund...................................12
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS...................12
TYPES OF INVESTMENT RISK.....................................................16
FOREIGN INVESTMENT RISKS.....................................................17
SPECIAL CONSIDERATIONS.......................................................18
HOW TO INVEST IN THE FUND....................................................18
HOW TO REDEEM SHARES.........................................................19
HOW TO MAKE EXCHANGES........................................................21
SHARE PRICE CALCULATION......................................................21
DIVIDENDS AND DISTRIBUTIONS..................................................21
TAXES........................................................................22
THE TRUST....................................................................23
MANAGEMENT OF THE FUNDS......................................................24
PERFORMANCE INFORMATION......................................................26
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ICON Funds Prospectus
Page 2
PROSPECTUS SUMMARY
The information summarized below is qualified in its entirety by the more
detailed information set forth below in this Prospectus.
The Trust................... ICON Funds (the "Trust") is an open-end management
investment company. It is registered as an
investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"). The
Trust consists of and, on a continuous basis,
issues redeemable shares of numerous separate,
non-diversified portfolios each of which has its
own investment objectives and policies, commonly
referred to as mutual funds. The portfolios are
designed to serve a wide range of investor needs.
The Funds................... The following Funds are offered through this
Prospectus:
U.S. EQUITY FUNDS
ICON Basic Materials Fund
ICON Capital Goods Fund
ICON Consumer Cyclicals Fund
ICON Consumer Staples Fund
ICON Energy Fund
ICON Financial Services Fund
ICON Healthcare Fund
ICON Leisure Fund
ICON Technology Fund
ICON Telecommunication & Utilities Fund
ICON Transportation Fund
FOREIGN EQUITY FUNDS
ICON North Asia Region Fund
ICON South Asia Region Fund
ICON North Europe Region Fund
ICON South Europe Region Fund
ICON Western Hemisphere Fund
FIXED INCOME FUND
ICON Short-Term Fixed Income Fund
U.S. Equity Funds-- ........ The investment objective of the U.S. Equity Funds
Investment Objective is to provide long-term capital appreciation.
Each Fund seeks to achieve its objective
by investing primarily in equity securities,
including common stock and securities convertible
into common stock of U.S. issuers.
Foreign Equity Funds-- ...... The investment objective of the Foreign Equity
InvestmentObjective Funds is to provide long- term capital
appreciation. Each Fund seeks to achieve its
objective by investing primarily in equity
securities including common stocks and securities
convertible into common stocks of foreign issuers.
Fixed Income Fund-- ........ The investment objective of the Fixed Income Fund
Investment bjective is to provide as high a level of total return
through current income and capital appreciation as
is consistent with the preservation of capital.
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ICON Funds Prospectus
Page 3
The Investment Advisor....... Meridian Investment Management Corporation, 12835
East Arapahoe Road, Tower II, Englewood, Colorado,
("Meridian" or the "Advisor") has been selected to
serve as the investment advisor to carry out the
investment and reinvestment of the Fund's assets.
The Administrator........... The Fund has retained AmeriPrime Financial
Services, Incorporated, 1793 Kingswood Drive,
Suite 200, Southlake, Texas, ("AmeriPrime" or the
"Administrator") as the administrator to manage
the Fund's business affairs.
Purpose of the Trust......... Meridian is a sponsor of the Funds offered by this
prospectus. The Funds were created so that
investment advisory clients of Meridian and other
similarly situated investment advisers would have
available to them no load sector funds focusing on
selected industries or countries; so that the
investment advisers may move money freely from
sector to sector on behalf of their clients
without the limitations imposed by many fund
groups where large movements of money in and out
of a fund could disrupt portfolio management and
performance; and to provide Meridian investment
advisory clients portfolio management services
with lower aggregate costs.
Who May Purchase Fund Shares..The Funds were established to provide broadly
based investment opportunities in various domestic
sectors and in the main security markets of the
world for investment portfolios managed by
professional fiduciaries such as trustees,
investment advisers and other persons and
institutions acting in a fiduciary capacity. The
Funds are designed to enable fiduciaries to comply
with the rule that investments made by fiduciaries
should be selected with the care, skill and
caution that would be exercised by a prudent
person based on their clients investment
objectives.
Special Consideration....... Shares of the Fund are not available to the
public, only through these professional
advisers/fiduciaries. In this regard, investors
should be aware that a Fund may not contain
significant assets at times when money managers
place their client funds in other sectors.
The Distributor.............. Meridian Clearing Corporation 12835 East Arapahoe
Road, Tower II, Englewood, Colorado, ("MCC" or
the "Distributor") has agreed to act as
Distributor as an accommodation for the Trust in
connection with acting as agent in the various
states and with clearing promotional materials
with appropriate regulatory authorities.
How to Purchase Fund Shares.. There is no sales charge on the purchase of Fund
shares. Shares may be purchased by contacting the
Trust's Transfer Agent at 1-800-.......... Shares
of any Fund may be purchased at the net asset
value per share next determined after receipt and
acceptance of the purchase order. The minimum
initial investment in each Fund is $50,000 and the
subsequent minimum investment amount is $100.
Subject to the minimum investment amount, shares
may also be purchased by exchange.
Redemptions.................. Shares may be redeemed directly from a Fund at the
net asset value per share next determined after
receipt of the redemption request in good order.
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ICON Funds Prospectus
Page 4
Exchange Privilege.......... Shares of the Funds may be exchanged for shares of
certain other funds managed by the Advisor at the
net asset value next determined after receipt of
the exchange request.
Shareholder Communication.... Each shareholder will receive annual and
semi-annual reports containing financial
statements, and a statement confirming each share
transaction. Financial statements included in
annual reports are audited by the Trust's
independent certified public accountants. Where
possible, shareholder confirmations and account
statements will consolidate all ICON Funds
holdings of the shareholder.
Special Risk Considerations.. International investments pose additional risks
including currency exchange rate fluctuation,
currency revaluation and political risks.
Transfer Agent and Custodian..Firstar Trust Company, Incorporated is located at
615 East Michigan. Street, Milwaukee, Wisconsin
53202.
THE PROSPECTUSES OF THE FUNDS ARE COMBINED IN THIS PROSPECTUS. EACH FUND OFFERS
ONLY ITS OWN SHARES, YET IT IS POSSIBLE THAT A FUND MIGHT BECOME LIABLE FOR A
MISSTATEMENT IN THE PROSPECTUS OF ANOTHER FUND. THE TRUSTEES OF THE TRUST HAVE
CONSIDERED THIS IN APPROVING THE USE OF A COMBINED PROSPECTUS.
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ICON Funds Prospectus
Page 5
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding the direct
and indirect expenses that an investor may incur as a shareholder in a Fund.
The expense information is based on estimated amounts for the current fiscal
year. The expenses are expressed as a percentage of average net assets. The
example should not be considered a representation of future Fund performance or
expenses, both of which may vary from the example.
Shareholders should be aware that each Fund is a no-load fund and, accordingly,
a shareholder does not pay any sales charge or commission upon purchase or
redemption of shares of the Fund.
ICON ICON ICON
U.S. EQUITY FOREIGN EQUITY FIXED INCOME
SHAREHOLDER TRANSACTION EXPENSES FUNDS FUNDS FUND
- --------------------------------- ----------- -------------- ------------
Sales Load Imposed on Purchases None None None
Deferred Sales Load None None None
Redemption Fees None None None
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE
NET ASSETS)
- --------------------------------
Management Fees 1.00% 1.00% 0.65%
Other Expenses 0.45% 0.65% 0.45%
Total Fund Operating Expenses 1.45% 1.65% 1.10%
The tables above are provided to assist an investor in understanding the direct
and indirect expenses that an investor may incur as a shareholder in the Fund.
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and redemption at the end of each time period:
FUND 1 YEAR 3 YEARS
- ---------------------------- ------------------------ ---------------------
ICON U.S. Equity Funds $ 15 $ 47
ICON Foreign Equity Funds $ 17 $ 54
ICON Fixed Income Fund $ 12 $ 36
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ICON Funds Prospectus
Page 6
INVESTMENT OBJECTIVE AND STRATEGIES
U.S. EQUITY FUNDS
The investment objective of each U.S. Equity Fund is to provide long-term
capital appreciation. Each Fund seeks to achieve its objective by investing
primarily in equity securities, including common stock and securities
convertible into common stock of U.S. issuers.
Each U.S. Equity Fund focuses on a particular investment area. Under normal
circumstances, at least 65% of the total assets of each Fund will be invested in
securities of companies principally engaged in its particular named industry
sector. For the purposes of these policies, a company is considered to be
"principally engaged" in business activities in a specific sector iF at least
50% of its assets, gross income or net sales are derived from activities in such
sector, or at least 50% of its assets are dedicated to the production of
revenues from such sector. In circumstances where, based on available financial
information, a question exists as to whether or not a company meets one of these
standards, the Fund may invest in the securities of such a company only if
Meridian determines, after review of information describing the company and its
business activities, that the company's primary business is within the sector.
The remainder of the Fund's assets may be invested in debt securities of
companies in the sector and/or equity and debt securities of companies outside
of the sector if, in the opinion of Meridian, such securities stand to benefit
from developments in the sector.
Each U.S. Equity Fund is comprised of industry-specific "baskets" of securities
which are subsets of such sector, examples of which are provided below under
each fund's description. Each industry basket will encompass a sample of stocks
from Meridian's approved list for such industry. In selecting and weighting
companies for inclusion in each basket, Meridian ordinarily looks for several of
the following characteristics: high growth; healthy balance sheet; pricing
flexibility; strong management; liquidity; and generally operating
characteristics which will enable the companies to compete successfully in their
respective markets. Based on its proprietary research and investment methods,
Meridian may, from time to time, add, delete, or replace a company within a
basket.
Investment selection and weighting of baskets within each fund are based on
industry attractiveness. In attempting to determine industry attractiveness,
Meridian uses its proprietary valuation model to analyze its universe of
individual stocks based on the following factors: historical and estimated
future earnings; long-term earnings growth projections; risk; current and future
interest rate conditions; and current price. Meridian then groups stocks into
their representative industry classifications in order to determine those
industries Meridian deems to be attractive relative to other industries.
The U.S. Equity Funds are non-diversified, and each may invest up to 25% of its
total assets in the securities of one issuer. However, no fund may invest more
than 5% of its total assets in securities of any company that derives more than
15% of its revenues from brokerage or investment management activities. As a
result, investments in the equity funds may involve greater risks than
investments in other types of mutual funds.
ICON BASIC MATERIALS FUND - Industry baskets include, but are not limited to:
Construction; Containers; Gold; Mining; Metal/Aluminum; Paper & Forest Products;
and Steel. Based on Meridian's proprietary research and methodology and under
normal market conditions, Meridian will actively invest and weight the fund's
assets in those industry baskets within the Basic Materials Fund that are deemed
to be attractive relative to other industries in the sector.
Many companies in the basic materials sector are significantly affected by the
level and volatility of commodity prices, the exchange value of the dollar,
import controls, and worldwide competition. At times, worldwide production of
these materials has exceeded demand as a result of over-building or economic
downturns, leading to poor investment returns or losses. Other risks may include
liability for environmental damage, depletion of resources, and mandated
expenditures for safety and pollution control. In addition, the environment
services industry can be impacted by legislation, government regulations, and
enforcement policies. As regulations are developed and enforced, companies may
be required to alter or cease production of a product or service.
The price of precious metals is affected by broad economic and political
conditions. For example, the price of gold and other precious metal mining
securities can face substantial short-term volatility caused by international
monetary and political
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ICON Funds Prospectus
Page 7
developments such as currency devaluations or revaluations, economic and social
conditions within a country, or trade restrictions between countries. Since much
of the world's gold reserves are located in South Africa, the social and
economic conditions there can affect gold and gold-related companies located
elsewhere. The price of precious metals is closely tied to broad economic and
political conditions
ICON CAPITAL GOODS FUND - Industry baskets include, but are not limited to:
Chemicals; Building Materials; Conglomerates; Electrical Equipment; Engineering
& Construction; Heavy Duty Truck & Parts; Machine Tools; Machinery
(Diversified); Manufacturing; and Pollution Control/Environment. Based on
Meridian's proprietary research and methodology and under normal market
conditions, Meridian will actively invest and weight the fund's assets in those
industry baskets within the Capital Goods Fund that are deemed to be attractive
relative to other industries in the sector.
Companies in the chemical processing field are subject to intense competition,
product obsolescence, and significant government regulation. As regulations are
developed and enforced, such companies may be required to alter or cease
production of a product, to pay fines, or to pay for cleaning up a disposal
site. In addition, chemical companies face unique risks associated with handling
hazardous products.
The success of equipment manufacturing and distribution companies is closely
tied to overall capital spending levels, which is influenced by an individual
company's profitability, and broader issues such as interest rates and foreign
competition. The industry may also be affected by economic cycles, technical
progress, labor relations, and government regulations.
ICON CONSUMER CYCLICALS FUND - Industry baskets include, but are not limited to:
Hardware & Tools; Home- building/Manufactured Housing; Household Furnishings &
Appliances; Photograph/Imaging; Retail-General/Department Stores;
Retail-Specialty; retail-Specialty Apparel; Shoes; Textile-Apparel
Manufacturers; and Toys. Based on Meridian's proprietary research and
methodology and under normal market conditions, Meridian will actively invest
and weight the fund's assets in those industry baskets within the Consumer
Cyclicals Fund that are deemed to be attractive relative to other industries in
the sector.
The success of consumer product manufacturers and retailers is closely tied to
the performance of the overall economy, interest rates, competition, and
consumer confidence. Success depends heavily on disposable household income and
consumer spending. Changes in demographics and consumer tastes can affect the
demand for, and success of, consumer products in the marketplace.
ICON CONSUMER STAPLES FUND - Industry baskets include, but are not limited to:
Beverages; Cosmetics; Distributors- Consumer Products; Foods;
Household/Housewares; Retail-Drug; Retail-Food Chains; and Tobacco. Based on
Meridian's proprietary research and methodology and under normal market
conditions, Meridian will actively invest and weight the fund's assets in those
industry baskets within the Consumer Staples Fund that are deemed to be
attractive relative to other industries in the sector.
The success of retailing companies iS closely tied to consumer spending, which
is affected by general economic conditions and consumer confidence levels. The
retailing industry is highly competitive, and a company's success is often tied
to its ability to anticipate changing consumer tastes. In addition, the
agriculture/food industry is impacted by supply and demand, which may be
affected by demographic and product trends, and by food fads, marketing
campaigns, and environmental factors. In the U.S., the agricultural products
industry is subject to regulation by numerous government agencies.
ICON ENERGY FUND - Industry baskets include, but are not limited to:
Oil-Domestic and International Integrated; Oil- Equipment & Drilling;
Oil-Exploration & Production; and Natural Gas. Based on Meridian's proprietary
research and methodology and under normal market conditions, Meridian will
actively invest and weight the fund's assets in those industry baskets within
the Energy Fund that are deemed to be attractive relative to other industries in
the sector.
Securities of companies in the energy field are subject to changes in value and
dividend yield which depend largely on the price and supply of both conventional
and alternative energy sources. Swift price and supply fluctuations may be
caused by events relating to international politics, energy conservation, the
success of energy source exploration projects, and tax and other regulatory
policies of domestic and foreign governments.
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ICON Funds Prospectus
Page 8
ICON FINANCIAL SERVICES FUND - Industry baskets include, but are not limited to:
Banks; Financial Services; Insurance Property Casualty;
Insurance-Life/Multi-line; Investment Banks/Brokerage Firms; Personal Loans;
Real Estate Investment Trusts; and Savings & Loan Companies. Based on Meridian's
proprietary research and methodology and under normal market conditions,
Meridian will actively invest and weight the fund's assets in those industry
baskets within the Financial Services Fund that are deemed to be attractive
relative to other industries in the sector.
Financial services companies are subject to extensive governmental regulation
which may limit both the amounts and types of services offered, loans and other
financial commitments permitted, and the interest rates and fees they can
charge. Profitability is largely dependent on the availability and cost of
capital funds, and can fluctuate significantly when interest rates change.
Credit losses resulting from financial difficulties of borrowers can negatively
impact the industry. Company profits are affected by interest rate levels,
general economic conditions, and price and marketing competition. Inmsurance
companies are subject to severe price competition and may be impacted by events
or trends such as natural catastrophes, mortality rates, or recessions.
Similarly, as the services offered by banks expand, banks are becoming more
exposed to well-established competitors. This exposure has also increased due to
the erosion of historical distinctions between regional banks and other
financial institutions. With respect to brokerage firms, changes in regulations,
brokerage commission structure, stock and bond market activity, and the
competitive environment, combined with the operating leverage inherent in
companies in these industries, can produce erratic returns over time. (Under the
1940 Act and SEC regulations, the Fund may not invest more than 5% of its total
assets in the equity securities of any company that derives more than 15% of its
revenues from brokerage or investment management activities.) Legislation is
currently being considered which would reduce the separation between commercial
and investment banking businesses. If enacted, this could significantly impact
the industry and the Fund.
Companies in the real estate industry are subject to a variety of factors such
as government spending on housing subsidies, public works, and transportation
facilities, as well as changes in interest rates, consumer confidence and
spending, taxation, demographic patterns, the level of new and existing home
sales, and other economic activity.
ICON HEALTHCARE FUND - Industry baskets include, but are not limited to:
Biotechnology; Healthcare Delivery; Healthcare Drugs (Pharmaceuticals); and
Medical Equipment & Devices. Based on Meridian's proprietary research and
methodology and under normal market conditions, Meridian will actively invest
and weight the fund's assets in those industry baskets within the Healthcare
Fund that are deemed to be attractive relative to other industries in the
sector.
The demand for health care services should increase as the population ages.
However, studies have shown the ability of health care providers to curtail
unnecessary hospital stays and reduce costs. These changes could alter the
health care industry, focusing it more on home care, and placing less emphasis
on inpatient revenues as a source of profit. The health care industry is subject
to government regulation and approval of products and services, which could have
a significant effect on price and availability. Moreover, federal and state
governments provide a substantial percentage of revenues to health are service
providers. These sources are subject to extensive governmental regulation, and
appropriations are a continued source of debate. The types of products or
services produced or provided by a particular company may quickly become
obsolete. Similarly, biotechnology companies are affected by patent
considerations, intense competition, rapid technological change and
obsolescence, and regulatory requirements. In addition, many of these companies
may not offer products yet and may have persistent losses or erratic review
patterns.
ICON LEISURE FUND - Industry baskets include, but are not limited to:
Broadcasting/Cable; Hotel-Motel; Leisure Time/Recreation/Gaming;
Publishing-Newspapers; Publishing/Printing; and Restaurants. Based on Meridian's
proprietary research and methodology and under normal market conditions,
Meridian will actively invest and weight the fund's assets in those industry
baskets within the Leisure Fund that are deemed to be attractive relative to
other industries in the sector. Some of the companies in these industries are
undergoing significant change because of federal deregulation of cable and
broadcasting. As a result, competitive pressures are intense and the stocks are
subject to increase price volatility.
Securities of the companies in the leisure industry may be considered
speculative and generally exhibit greater volatility than the overall market.
Many companies have unpredictable earnings due, in part, to changing consumer
tastes and intense competition. The industry has reacted strongly to
technological developments and to the threat of government regulations. As a
result, competitive pressures are intense and the stocks are subject to
increased price volatility.
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ICON Funds Prospectus
Page 9
ICON TECHNOLOGY FUND - Industry baskets include, but are not limited to:
Communication-Equipment/Manufacturing; Computer Software & Services; Computer
Systems; Electronics-Defense/Instrumentation; Electronics-Semiconductors; and
Office Equipment & Supplies. Based on Meridian's proprietary research and
methodology and under normal market conditions, Meridian will actively invest
and weight the fund's assets in those industry baskets within the Technology
Fund that are deemed to be attractive relative to other industries in the
sector.
Competitive pressures and changing domestic and international demand may have a
significant effect on the financial condition of companies in the computer
industry. Companies in the industry spend heavily on research and development
and are sensitive to the risk of product obsolescence. Competitive pressures may
have a significant effect on the financial condition of companies in the
technology industry. For example, if technology continues to advance at an
accelerated rate, and the number of companies and product offerings continues to
expand, these companies could become increasingly sensitive to short product
cycles and aggressive pricing. Products or services provided by these industries
may be in the development stage and can face risks such as failure to obtain
financing or regulatory approval, intense competition, product incompatibility,
consumer preference, and rapid obsolescence.
ICON TELECOMMUNICATION & UTILITIES FUND - Industry baskets include, but are not
limited to: Cellular; Electric, Gas and Water Utilities; and Telecommunications.
Based on Meridian's proprietary research and methodology and under normal market
conditions, Meridian will actively invest and weight the fund's assets in those
industry baskets within the Telecommunication & Utilities Fund that are deemed
to be attractive relative to other industries in the sector.
Energy service firms are affected by supply and demand both for their specific
product or service, and for energy products in general. The price of oil and
gas, exploration and production spending, governmental regulation, world events
and economic conditions will likewise affect the performance of these companies.
Public utility stocks have traditionally produced above-average dividend income,
but the fund's investments are based on growth potential. The gas and electric
public utilities industries may be subject to broad risks resulting from
governmental regulation, financing difficulties, supply and demand of services
or fuel, and special risks associated with energy and atmosphere conservation.
The Fund may not own more than 5% of the outstanding voting securities of more
than one public utility company as defined by the Public Utility Holding Company
Act of 1935.
Companies in the telecommunications field may range from traditional local and
long-distance telephone service or equipment providers, to companies involved in
new technologies such as cellular telephone or paging services. Telephone
operating companies are subject to both federal and state regulations governing
rates of return and services that may be offered. Many companies in the industry
fiercely compete for market share. Although telephone companies usually pay an
above average dividend, the fund's investment decisions are primarily based on
growth potential and not on income.
ICON TRANSPORTATION FUND - Industry baskets include, but are not limited to:
Aerospace/Defense; Automobiles; Airlines; Railroads; and Truckers. Based on
Meridian's proprietary research and methodology and under normal market
conditions, Meridian will actively invest and weight the fund's assets in those
industry baskets within the Transportation Fund that are deemed to be attractive
relative to other industries in the sector.
Profitability in these industries is substantially influenced by competition
within the industry, domestic and foreign economies and government regulation,
and the price of fuel. The airline industry is still feeling the effects of
deregulation. In addition, the automotive industry is highly cyclical and
companies in the industry may suffer periodic operating losses. While most of
the major participants in these sectors are large, financially strong companies,
some are smaller with a non-diversified product line or customer base.
FOREIGN EQUITY FUNDS
The investment objective of each Foreign Equity Fund is to provide long-term
capital appreciation. Each Fund seeks to achieve its objective by investing
primarily in equity securities including common stocks and securities
convertible into common stocks of foreign issuers.
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Each Foreign Equity Fund focuses on a particular geographic region of the world.
Under normal circumstances, at least 65% of the total assets of each Fund will
be invested in securities of companies principally engaged in the business
activities in its particular named geographic. For the purposes of these
policies, a company is considered to be "principally engaged" in business
activities in a specific region if, in the opinion of Meridian, it has one or
more of the following characteristics: (i) its principal securities trading
market is in that foreign region; (ii) the company derives at least 50% of its
annual revenue from either goods produced, sales made, or services performed in
that foreign region; or (iii) the company is organized under the laws of, or has
its principal offices in, a foreign country in that foreign region. In
circumstances where, based on available financial information, a question exists
whether a company meets one of these standards, the fund may invest in the
securities of such a company only if Meridian determines, after review of
information describing the company and its business activities, that the
company's primary business is within the region. The remainder of the Fund's
assets may be invested in debt securities of companies in the region and/or
equity and debt securities of companies outside of the region if, in the opinion
of Meridian, such securities stand to benefit from developments in the region.
Each Foreign Equity Fund is comprised of country-specific "baskets" of
securities which are subsets of such region, examples of which are provided in
each fund's description. Each of these country baskets will encompass a sample
of stocks from Meridian's approved list for its respective country. In selecting
and weighting companies for inclusion in each basket, Meridian ordinarily looks
for several of the following characteristics: high growth; healthy balance
sheet; pricing flexibility; strong management; liquidity; and acceptable
operating characteristics which will enable the countries to compete
successfully in their respective markets. Based on its proprietary research and
investment methods, Meridian may, from time to time, add, delete, or replace a
company within a basket.
Investment selection and weighting of baskets within each fund are based on
country attractiveness. In attempting to determine country attractiveness,
Meridian uses its proprietary valuation model to analyze its universe of
individual stocks based on the following factors: historical and estimated
future earnings; long-term earnings growth projections; risk; current and future
interest rate conditions; and current price. Meridian then groups stocks into
their representative country classifications in order to determine those
countries Meridian deems to be attractive relative to other countries.
The Foreign Equity Funds are non-diversified, and each fund may invest up to 25%
of its total assets in the securities of one issuer. As a result, investments in
the equity funds may involve greater risks than investments in other types of
mutual funds.
ICON NORTH ASIA REGION FUND - May include, but is not limited to, baskets of
securities from the following foreign countries: Japan; Korea; China; Hong Kong;
and Taiwan. Based on Meridian's proprietary research and methodology and under
normal market conditions, Meridian will actively invest and weight the fund's
assets in those country baskets within the North Asia Region Fund that are
deemed to be attractive relative to other countries in the region.
ICON SOUTH ASIA REGION FUND - May include, but is not limited to, baskets of
securities from the following foreign countries: Australia; Indonesia; Malaysia;
New Zealand; and Singapore. Based on Meridian's proprietary research and
methodology and under normal market conditions, Meridian will actively invest
and weight the fund's assets in those country baskets within the South Asia
Region Fund that are deemed to be attractive relative to other countries in the
region.
ICON NORTH EUROPE REGION FUND - May include, but is not limited to, baskets of
securities from the following foreign countries: Belgium; Denmark; Finland;
Germany; Ireland; Netherlands; Norway; Sweden; and United Kingdom. Based on
Meridian's proprietary research and methodology and under normal market
conditions, Meridian will actively invest and weight the fund's assets in those
country baskets within the North Europe Region Fund that are deemed to be
attractive relative to other countries in the region.
ICON SOUTH EUROPE REGION FUND - May include, but is not limited to, baskets of
securities from the following foreign countries: Austria; France; Greece; Italy;
Portugal; Spain; and Switzerland. Based on Meridian's proprietary research and
methodology and under normal market conditions, Meridian will actively invest
and weight the fund's assets in those country baskets within the South Europe
Region Fund that are deemed to be attractive relative to other countries in the
region.
ICON WESTERN HEMISPHERE FUND - May include, but is not limited to, baskets of
securities from the following foreign countries: Argentina; Brazil; Canada;
Chile; and Mexico. Based on Meridian's proprietary research and methodology and
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ICON Funds Prospectus
Page 11
under normal market conditions, Meridian will actively invest and weight the
fund's assets in those country baskets within the Western Hemisphere Fund that
are deemed to be attractive relative to other countries in the region.
FIXED INCOME FUND
ICON SHORT-TERM FIXED INCOME FUND - The objective of the Short-Term Fixed Income
Fund is to attain high current income consistent with preservation of principal.
The Fund invests in short-term maturity fixed income securities, including
securities issued by the U.S. Government, U.S. Government Agencies, and debt
obligations of firms approved by the Advisor.
The primary goals are safety and liquidity. In meeting these goals, risk can be
measured both by perceived or actual changes in creditworthiness, adequate
diversification, and exposure to changes in interest rates. Exposure to credit
risk is limited by Fund diversification. However, the Fund may emphasize certain
sectors of the market that are judged to represent good relative value.
Consistent with the goals of safety and liquidity, the Advisor limits the
interest rate sensitivity of the Fund. The average term to maturity of the
investments is two years or less with no single investment having a maturity of
more than two years. Given these maturity restrictions the weighted Fund
duration (a measure of Fund sensitivity to changes in interest rates) is
generally one year or less.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions, and
other factors, and because of their narrow industry focus, each fund's
performance is closely tied to and affected by its industry or foreign region.
In addition, you should be aware that the Funds have no operating history. This
section contains general information about various types of securities and
investment techniques that the Fund may purchase or employ.
EQUITY SECURITIES. Each Fund may invest in equity securities, including common
stocks, preferred stocks and securities convertible into common stocks, such as
rights, warrants and convertible debt securities. Equity securities may be
issued by either established, well capitalized companies or newly-formed,
small-cap companies, and may trade on regional or national stock exchanges or in
the over-the counter market.
DEBT SECURITIES. Each Fund may temporarily invest in short-term debt securities.
Each Fund will limit its investment in fixed income securities to corporate debt
securities and U.S. government securities. Debt securities are generally
considered to be interest rate sensitive, which means that their value will
generally decrease when interest rates rise and increase when interest rates
fall. Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer term securities and are less
affected by changes in interest rates.
CORPORATE DEBT SECURITIES: Corporate debt securities are long and short-term
debt obligations issued by companies (such as publicly issued and privately
placed bonds, notes and commercial paper). The Fund will only invest in
corporate debt securities rated A or higher by Standard & Poor's Corporation or
Moody's Investors Services, Inc.
U.S. GOVERNMENT OBLIGATIONS: U.S. government obligations may be backed by the
credit of the government as a whole or only by the issuing agency. U.S. Treasury
bonds, notes, and bills and some agency securities, such as those issued by the
Federal Housing Administration and the Government National Mortgage Association
(GNMA), are backed by the full faith and credit of the U.S. government as to
payment of principal and interest and are the highest quality government
securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
FOREIGN SECURITIES: Each Fund may invest in foreign securities. Foreign
investments can involve significant risks in addition to the risks inherent in
U.S. investments. The value of securities denominated in or indexed to foreign
currencies, and of
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ICON Funds Prospectus
Page 12
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign
securities markets generally have less trading volume and less liquidity than
U.S. markets, and prices on some foreign markets can be highly volatile. Many
foreign countries lack uniform accounting and disclosure standards comparable to
those applicable to U.S. companies, and it may be more difficult to obtain
reliable information regarding an issuer's financial condition and operations.
In addition, the costs of foreign investing, including withholding taxes,
brokerage commissions, and custodial costs, generally are higher than for U.S.
investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may invoke increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It also may be difficult to enforce legal rights
in foreign countries.
Investing abroad also involves different political and economic risks. Foreign
investments may be affected by actions of foreign governments adverse to the
interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic or social instability, military action or unrest, or adverse diplomatic
developments. There is no assurance that an Advisor will be able to anticipate
or counter these potential events and their impacts on the Fund's share price.
The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of securities.
The Fund may invest in foreign securities that impose restrictions on transfer
within the U.S. or to U.S. persons. Although securities subject to transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
FORWARD FOREIGN CURRENCY CONTRACTS: Each Fund may enter into contracts to
purchase or sell foreign currencies at a future date ("forward contract") as a
hedge against fluctuations in foreign exchange rates pending the settlement of
transactions in foreign securities or during the time the Fund holds foreign
securities. A forward contract is an agreement between contracting parties to
exchange an amount of currency at some future time at an agreed upon rate. A
Fund will not enter into a forward contract for a term of more than one year or
for purposes of speculation. Investors should be aware that hedging against a
decline in the value of a currency in the foregoing manner does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Furthermore, such hedging transactions
preclude the opportunity for gain if the value of the hedging currency should
rise. Forward contracts may, from time to time, be considered illiquid, in which
case they would be subject to a Fund's limitation on investing in illiquid
securities.
INDEX FUTURES CONTRACTS AND RELATED OPTIONS: In order to remain fully invested,
and to reduce transaction costs, each Fund may purchase and sell index futures
contracts or purchase and sell options thereon as a hedge against changes in
market conditions. An index futures contract is an agreement pursuant to which
two parties agree to take or make delivery of an amount of cash equal to a
specified dollar or other currency amount times the difference between the index
value at the close of the last trading day of the contract and the price at
which the futures contract is originally struck. No physical delivery of the
underlying securities are made.
PUT AND CALL OPTIONS: Each Fund may purchase and sell futures contracts and
options (i) to hedge against changes in market conditions; and (ii) to provide
market exposure while attempting to reduce transaction costs.
SELLING (OR WRITING) COVERED CALL OPTIONS. Each Fund may sell (or write) covered
call options on portfolio securities to hedge against adverse movements in the
prices of these securities. A call option gives the buyer of the option, upon
payment of a premium, the right to call upon the writer to deliver a security on
or before a fixed date at a predetermined price, referred to as the strike
price. If the price of the hedged security should fall or remain below the
strike price, the Fund will not be called upon to deliver the security, and the
Fund will retain the premium received for the option as additional income,
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ICON Funds Prospectus
Page 13
offsetting all or part of any decline in the value of the security. The hedge
provided by writing covered call options is limited to a price decline in the
security of no more than the option premium received by the Fund for writing the
option. If the security owned by the Fund appreciates above the option's strike
price, the Fund will generally be called upon to deliver the security, which
will prevent the Fund from receiving the benefit of any price appreciation above
the strike price.
BUYING CALL OPTIONS. Each Fund may purchase call options on securities which
each Fund intends to purchase to take advantage of anticipated positive
movements in the prices of these securities. Each Fund will realize a gain from
the exercise of a call option if, during the option period, the price of the
underlying security to be purchased increases by more than the amount of the
premium paid. A Fund will realize a loss equal to all or a portion of the
premium paid for the option if the price of the underlying security decreases or
does not increase by more than the premium.
BUYING PUT OPTIONS. Each Fund may purchase put options on portfolio securities
to hedge against adverse movements in the prices of these securities. A put
option gives the buyer of the option, upon payment of a premium, the right to
sell a security to the writer of the option on or before a fixed date at a
predetermined price. A Fund will realize a gain from the exercise of a put
option if, during the option period, the price of the security declines by an
amount in excess of the premium paid. A Fund will realize a loss equal to all or
a portion of the premium paid for the option if the price of the security
increases or does not decrease by more than the premium.
CLOSING TRANSACTIONS. Each Fund may dispose of an option written by the Fund by
entering into a "closing purchase transaction" for an identical option and may
dispose of an option purchased by the Fund by entering into a "closing sale
transaction" for an identical option. In each case, the closing transaction will
have the effect of terminating the rights of the option holder and the
obligations of the option purchaser and will result in a gain or loss to the
Fund based upon the relative amount of the premiums paid or received for the
original option and the closing transaction. A Fund may sell (or write) put
options solely for the purpose of entering into closing sale transactions.
INDEX FUTURES CONTRACTS AND RELATED OPTIONS. Each Fund may purchase and sell
call options and purchase put options on stock indices in order to manage cash
flow, reduce equity exposure, or to remain fully invested in equity securities.
Options on securities indices are similar to options on a security except that,
upon the exercise of an option on a securities index, settlement is made in cash
rather than in specific securities. An index futures contract is an agreement
pursuant to which two parties agree to take or make delivery of an amount of
cash equal to a specified dollar or other currency amount times the difference
between the index value at the close of the last trading day of the contract and
the price at which the futures contract is originally struck. No physical
delivery of the underlying securities are made.
LIMITATIONS. Each Fund will purchase and sell only options that are listed on a
securities exchange or quoted on NASDAQ. A Fund will not purchase any option if,
immediately thereafter, the aggregate market value of all outstanding options
purchased and written by the Fund would exceed 5% of the Fund's total assets. A
Fund will not effect a futures or option transaction, if immediately thereafter,
the aggregate value of the Fund's securities subject to outstanding call options
would exceed 100% of the value of the Fund's total assets.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS: Each Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
for the securities is not fixed at the date of purchase, but is set after the
securities are issued (often a month or more later). Each Fund also may purchase
or sell securities on a delayed delivery basis. The payment obligation and
interest rate that will be received on the delayed delivery securities are fixed
at the time the buyer enters into the commitment. A Fund will only make
commitments to purchase when-issued or delayed delivery securities with the
intention of actually acquiring such securities, but the Fund may sell these
securities before the settlement date if is deemed advisable. During the period
between purchase and settlement, no payment is made by the Fund and no interest
accrues to the Fund. At the time of settlement, the market value of the security
may be more or less than the purchase price, and Fund bears the risk of such
market value fluctuations. Each Fund maintains, in a segregate account, cash,
U.S. Government securities, or other high-grade debt obligations readily
convertible into cash having an aggregate value at least equal to the amount of
such purchase commitments.
REPURCHASE AGREEMENTS: Each Fund may invest in repurchase agreement. In a
repurchase agreement, the Fund purchases a security and simultaneously commits
to resell that security to the seller at an agreed upon price on an agreed upon
date
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ICON Funds Prospectus
Page 14
within a number of days (usually not more than seven) from the date of purchase.
The resale price reflects the purchase price plus an agreed upon incremental
amount which is unrelated to the coupon rate or maturity of the purchased
security. A repurchase agreement involves the obligation of the seller to pay
the agreed upon price, which obligation is, in effect, secured by the value (at
least equal to the amount of the agreed upon resale price and marked to market
daily) of the underlying security. The Fund may engage in a repurchase agreement
with respect to any security in which it is authorized to invest. Any repurchase
transaction in which the Fund engages will require collateralization equal to at
least 102% of the Seller's obligation during the entire term of the repurchase
agreement. While it does not presently appear possible to eliminate all risks
from these transactions (particularly the possibility of a decline in the market
value of the underlying securities, as well as delays and costs to the Fund in
connection with bankruptcy proceedings), it is the Fund's current policy to
limit repurchase agreement transactions to those parties whose creditworthiness
has been reviewed and deemed satisfactory by the Advisor.
ILLIQUID AND RULE 144A SECURITIES: Each Fund may invest up to 15% of its net
assets in securities that are illiquid. Illiquid securities include securities
that have no readily available market quotations and cannot be disposed of
promptly (within seven days) in the normal course of business at a price at
which they are valued. Certain restricted securities that are not registered for
sale to the general public, but that can be resold to dealers or institutional
investors ("Rule 144A Securities"), may be purchased without regard to the
foregoing limitation of a liquid institutional trading market exists. The
liquidity of a Fund's investments in Rule 144A Securities could be impaired if
dealers or institutional investors become uninterested in purchasing these
securities. The Trust's Board of Trustees has delegated to Meridian, the
authority to determine the liquidity of Rule 144A Securities pursuant to
guidelines approved by the Board.
LOANS OF PORTFOLIO SECURITIES: Each Fund may make short and long term loans of
its portfolio securities. Under the lending policy authorized by the Board of
Trustees and implemented by Meridian in response to requests of broker-dealers
or institutional investors which Meridian deems qualified, the borrower must
agree to maintain collateral, in the form of cash or U.S. government
obligations, with the Fund on a daily mark-to-market basis in an amount at least
equal to 100% of the value of the loaned securities. The Fund will continue to
receive dividends or interest on the loaned securities in time to vote on any
matter which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral. A Fund will not lend securities with an aggregate market value of
more than one-third of the Fund's total net assets.
TYPES OF INVESTMENT RISK
CONCENTRATION RISK: The risk associated with non-diversified portfolios that the
entire sector or country will be negatively affected, resulting in losses
greater than a diversified portfolio would have experienced.
CORRELATION RISK: The risk that changes in the value of a hedging instrument
will not match those of the asset being hedged (hedging is the use of one
investment to offset the effects of another investment).
CREDIT RISK: The risk that the issuer of a security, or the counter party to a
contract, will default or otherwise become unable to honor a financial
obligation.
CURRENCY RISK: The risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may negatively affect an investment.
INFORMATION RISK: The risk that key information about a security or market is
inaccurate or unavailable.
INTEREST RATE RISK: The risk of market losses attributable to changes in
interest rates. With fixed-rate securities, a rise in interest rates typically
causes a fall in values, while a fall in rates typically causes a rise in
values.
LEVERAGE RISK: Associated with securities or practices (such as borrowing) that
multiply small index or market movements into large changes in value.
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Page 15
- -- HEDGED: When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position which the
fund also holds, any loss generated by the derivative should be substantially
offset by gains on the hedged investment, and vice versa. While hedging can
reduce or eliminate losses, it can also reduce or eliminate gains.
- -- SPECULATIVE: To the extent that a derivative is not used as a hedge, the fund
is directly exposed to the risks of that derivative. Gains or losses from
speculative positions in a derivative may be substantially greater than the
derivative's original cost.
LIQUIDITY RISK: The risk that certain securities may be difficult or impossible
to sell at the time and the price that the seller would like.
MANAGEMENT RISK: The risk that a strategy used by a fund's management may fail
to produce the intended result. Common to all mutual funds.
MARKET RISK: The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than it was worth at an earlier time. Market risk may affect a
single issuer, industry, sector of the economy or the market as a whole. Common
to all stocks and bonds and the mutual funds that invest in them.
NATURAL EVENT RISK: The risk of losses attributable to natural disasters, crop
failures and similar events.
OPPORTUNITY RISK: The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in other investments.
POLITICAL RISK: The risk of losses directly attributable to government or
political actions of any sort. These actions may range from changes in tax or
trade statutes to expropriation, governmental collapse and war.
VALUATION RISK: The risk that a fund has valued certain of its securities at a
higher price than it can sell them for.
FOREIGN INVESTMENT RISKS
There can be no assurance that each Fund's investment objective will be
attained. In addition, investing in securities of foreign companies generally
involves greater risks than investing in securities of domestic companies.
Investors should consider carefully the following special factors before
investing in a Fund.
CURRENCY RISK: The value of a Fund's foreign investments may be affected by
changes in currency exchange rates. The U.S. dollar value of a foreign security
generally decreases when the value of the U.S. dollar rises against the foreign
currency in which the security is denominated, and tends to increase when the
value of the U.S. dollar falls against such currency.
POLITICAL AND ECONOMIC RISK: The economies of many of the countries in which a
Fund may invest are not as developed as the United States economy and may be
subject to significantly different forces. Political or social instability,
expropriation or confiscatory taxation, and limitations on the removal of funds
or other assets could also adversely affect the value of a Fund's investments.
REGULATORY RISK: Foreign companies are generally not subject to the regulatory
controls imposed on United States issuers and, as a consequence, there is
generally less public information available about foreign securities than is
available about domestic securities. Foreign companies are not subject to
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies. Income from
foreign securities owned by a Fund may be reduced by withholding tax at the
source which would reduce dividend income payable to the Fund's shareholders.
MARKET RISK: The securities markets in many of the countries in which a Fund
invests will have substantially less trading volume than the major United States
markets. As a result, the securities of some foreign companies may be less
liquid and experience more price volatility than comparable domestic securities.
There is generally less government regulation and
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ICON Funds Prospectus
Page 16
supervision of foreign stock exchanges, brokers and issuers which may make it
difficult to enforce contractual obligations. Transaction costs in foreign
securities markets are likely to be higher, since brokerage commission rates in
foreign countries are likely to be higher than in the United States. Further,
the settlement period of securities transactions in foreign markets may be
longer than in domestic markets. These considerations generally are more of a
concern in developing countries. For example, the possibility of revolution and
the dependence on foreign economic assistance may be greater in these countries
than in developed countries. The management of the Funds seeks to mitigate the
risks associated with these considerations through diversification and active
professional management.
EMERGING MARKETS AND DEVELOPING COUNTRIES: Investors should also be aware that
the Funds may invest in companies located within emerging or developing
countries. Investments in emerging markets or developing countries involve
exposure to economic structures that are generally less diverse and mature and
to political systems which can be expected to have less stability than those of
more developed countries. Such countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
which trade only a small number of securities. Historical experience indicates
that emerging markets have been more volatile than the markets of more mature
economies; such markets have also from time to time provided higher rates of
return and greater risks to investors. The Advisor believes that these
characteristics of emerging markets can be expected to continue in the future.
In addition, throughout the countries commonly referred to as the Eastern Bloc,
the lack of a capital market structure or market-oriented economy and the
possible reversal of recent favorable economic, political and social events in
some of those countries present greater risks than those associated with more
developed, market-oriented Western European countries and markets.
SPECIAL CONSIDERATIONS
NON-DIVERSIFIED PORTFOLIO: The Funds are non-diversified portfolios, which means
that, with respect to 50% of its total assets, they may invest more than 5% of
its assets in obligations of one issuer. (A diversified portfolio may not invest
more than 5% of its assets in obligations of one issuer, with respect to 75% of
its total assets.) Since the Funds may invest a greater percentage of their
assets in securities of fewer issuers than a diversified portfolio, they may be
subject to greater investment and credit risks than a diversified portfolio.
FUNDAMENTAL POLICIES: The investment objectives of the Funds and certain of the
limitations set forth in the Statement of Additional Information ("SAI") as
fundamental policies may not be changed without the affirmative vote of the
majority of the outstanding shares of the Fund. Fundamental limitations set
forth in the SAI include, among other things, limiting borrowing to 33 1/3% for
temporary, extraordinary purposes; restricting short sales to situations where
the security is owned by the Fund; restricting the acquisition of more than 10%
of the voting securities of any one issuer; and limiting lending of Fund assets.
PORTFOLIO TURNOVER AND FUND ASSETS: Each Fund does not intend to purchase or
sell securities for short-term trading purposes. A Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
Meridian believes that market conditions, creditworthiness factors or general
economic conditions warrant such action. The portfolio turnover rate of each
Fund may exceed 100%. Further, investment advisors will be using the various
funds to accommodate their clients' needs. If the asset allocation or timing
models dictate, they may move significant funds in or out of a particular fund.
In this regard investors should be aware that a Fund may not have significant
assets at a time when money managers place their client funds in other sectors
which may expose remaining shareholders to higher expense ratios.
SHAREHOLDER RIGHTS: The Trust does not hold an annual meeting of shareholders.
When matters are submitted to shareholders for a vote, each shareholder is
entitled to one vote for each whole share he owns and fractional votes for
fractional shares he owns. All shares of the Fund have equal voting rights and
liquidation rights.
HOW TO INVEST IN THE FUND
Shares of the Fund are not available to the public, only through professional
advisers/fiduciaries. Shares of each Fund are sold on a continuous basis, and
you may invest any amount you choose as often as you wish, subject to a minimum
initial investment of $50,000 and minimum subsequent investments of $100. Shares
may also be purchased through a broker-
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ICON Funds Prospectus
Page 17
dealer or other financial institution authorized by the Fund's distributor, and
investors may be charged a fee for this service by said broker-dealer or
institution.
INITIAL PURCHASE BY MAIL: You may purchase shares of the Fund by completing and
signing the investment application form which accompanies this Prospectus and
mailing it in proper form, together with a check (subject to the above minimum
amounts) made payable to ICON Funds and sent to the address listed below. If you
prefer overnight delivery, use the overnight street address listed below.
U.S. MAIL: ICON Funds
Mutual Fund Services
Post Office Box 701
Milwaukee, Wisconsin 53201-0701
OVERNIGHT: ICON Funds
Mutual Fund Services - Third Floo
615 East Michigan Street
Milwaukee, Wisconsin 53202
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment. The beneficial owners' custodians
will agree to provide the Trust with the states in which the beneficial owners
reside at the time of purchasing shares so that the Trust will be able to comply
with appllicable state laws.
INITIAL PURCHASE BY WIRE: You may also purchase shares of each Fund by wiring
federal funds from your bank, which may charge you a fee for doing so. If the
money is to be wired, you must call the Transfer Agent at 1-800-........ to set
up your account and obtain an account number. You should be prepared to provide
the information on the application to the Transfer Agent. Then, you should
provide your bank with the following information for purposes of wiring your
investment:
Firstar Bank Milwaukee, N.A.
ABA # 0750-00022
Firstar Trust Company
Account 112-952-137
Attn.: ICON Funds
Account Name ............ (write in shareholder name) For
the Account # ........... (write in account number)
You are required to mail a signed application to the Custodian at the above
address in order to complete your initial wire purchase. Wire orders will be
accepted only on a day on which the Fund and the Custodian and Transfer Agent
are open for business. A wire purchase will not be considered made until the
wired money is received and the purchase is accepted by the Funds. Any delays
which may occur in wiring money, including delays which may occur in processing
by the banks, are not the responsibility of the Fund or the Transfer Agent.
There is presently no fee for the receipt of wired funds, but the right to
charge shareholders for this service is reserved by the Funds.
ADDITIONAL INVESTMENTS: Shareholders may add to their account at any time by
purchasing shares by mail or by wire according to the aforementioned wiring
instructions. Shareholders should notify the Transfer Agent at 1-800-...........
prior to sending their wire. The remittance form which is attached to a
shareholder's individual account statement should, if possible, accompany any
investment made through the mail. Every purchase request must include a
shareholder's account registration number in order to assure that funds are
credited properly.
AUTOMATIC INVESTMENT PLAN: You may make regular investments in the Funds with
the Automatic Investment Plan by completing the appropriate section of the
account application and attaching a voided personal check. Investments may be
made monthly to allow dollar-cost averaging by automatically deducting $50 or
more from your bank checking account. You may change the amount of your monthly
purchase at any time.
TAX SHELTERED RETIREMENT PLANS: Since the Funds are oriented to longer term
investments, shares of the Funds may be an appropriate investment medium for tax
sheltered retirement plans, including: individual retirement plans (IRAs);
simplified mployee pensions (SEPs); 401(k) plans; qualified corporate pension
and profit sharing plans (for employees); tax deferred investment plans (for
employees of public school systems and certain types of charitable
organizations); and other qualified retirement plans. You should contact your
adviser for the procedure to open an IRA or SEP plan, as well as more specific
information regarding these retirement plan options. Consultation with an
attorney or tax adviser regarding these plans is advisable.
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ICON Funds Prospectus
Page 18
OTHER PURCHASE INFORMATION: Dividends begin to accrue after you become a
shareholder. The Funds do not issue share certificates. All shares are held in
non-certificate form registered on the books of the Funds and the Fund's
Transfer Agent for the account of the shareholder. The rights to limit the
amount of purchases and to refuse to sell to any person are reserved by the
Fund. If your check or wire does not clear, you will be responsible for any loss
incurred by the Fund, and a fee of $20 will be charged . If you are already a
shareholder, the Fund can redeem shares from any identically registered account
in the Fund as reimbursement for any loss incurred. You may be prohibited or
restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after the
redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. A broker may charge a transaction fee
for the redemption. There is no charge for wire redemptions; however, the Fund
reserves the right to charge for this service. Any charges for wire redemptions
will be deducted from the shareholder's Fund account by redemption of shares.
REDEMPTIONS BY MAIL: You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
ICON Funds
c/o Firstar Trust Company
Post Office Box 701
Milwaukee, Wisconsin 53201
"Proper order" means your request for a redemption must include your letter of
instruction, including the Fund name, account number, account name(s), the
address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions in excess
of $25,000, the Fund requires that signatures be guaranteed by a bank or member
firm of a national securities exchange. Signature guarantees are for the
protection of shareholders. At the discretion of the Fund or Firstar Trust
Company, a shareholder, prior to redemption, may be required to furnish
additional legal documents to insure proper authorization.
REDEMPTIONS BY TELEPHONE: If an election is made on the investment application
(or subsequently in writing), you may redeem any part of your account in any
Fund by calling the Transfer Agent at 1-800-......... The Fund, the Transfer
Agent and the Custodian are not liable for following redemption or exchange
instructions communicated by telephone that they reasonably believe to be
genuine. However, if they do not employ reasonable procedures to confirm that
telephone instructions are genuine, they may be liable for any losses due to
unauthorized or fraudulent instructions. Procedures employed may include
recording telephone instructions and requiring a form of personal identification
from the caller.
The telephone redemption and exchange procedures may be terminated at any time
by the Fund or the Transfer Agent. During periods of extreme market activity it
is possible that shareholders may encounter some difficulty in telephoning the
Fund, although neither the Fund nor the Transfer Agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Fund by
telephone, you may request a redemption or exchange by mail.
SPECIAL REDEMPTION ARRANGEMENTS: Special arrangements may be made by
institutional investors or on behalf of accounts established by brokers,
advisers, banks or similar institutions to have redemption proceeds transferred
by wire to pre-established accounts upon telephone instructions. For further
information call the Trust at 1-800-............
ADDITIONAL INFORMATION: If you are not certain of the requirements for a
redemption please call the Transfer Agent at 1-800-............ Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to
- --------------------------------------------------------------------------------
ICON Funds Prospectus
Page 19
fifteen days. Also, when the New York Stock Exchange is closed (or when trading
is restricted) for any reason other than its customary weekend or holiday
closing or under any emergency circumstances, as determined by the Securities
and Exchange Commission, the Fund may suspend redemptions or postpone payment
dates.
Because the Fund incurs certain fixed costs in maintaining shareholder accounts,
the Fund reserves the right to require any shareholder to redeem all of his or
her shares in the Fund on 30 days' written notice if the value of his or her
shares in the Fund is less than $5,000 due to redemption, or such other minimum
amount as the Fund may determine from time to time. An involuntary redemption
constitutes a sale. You should consult your tax adviser concerning the tax
consequences of involuntary redemptions. A shareholder may increase the value of
his or her shares in the Fund to the minimum amount within the 30 day period.
Each share of the Fund is subject to redemption at any time if the Board of
Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
The Trust has the authority to redeem existing accounts and to refuse a
potential account the privilege of having an account in the Trust if the Trust
reasonably determines that the failure to so redeem, or to so prohibit, would
have a material adverse consequence to the Trust and its shareholders.
Excessive short-term trading has an adverse impact on effective portfolio
management as well as upon Fund expenses. The Trust has reserved the right to
refuse investments from shareholders who engage in short-term trading.
HOW TO MAKE EXCHANGES
Shares of a Fund may be exchanged for shares of any other Fund based on the
respective net asset values of each Fund involved. An exchange may be made by
following the redemption procedure described above under "How to Redeem Shares"
or if a telephone redemption has been elected, by calling the transfer agent at
1-800-.......... An exchange order is treated the same as a redemption followed
by a purchase and may result in a capital gain or loss for tax purposes.
SHARE PRICE CALCULATION
The value of an individual share in each Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of each Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ over-the-counter
market are valued at the last quoted sale price. Lacking a last sale price, a
security is valued at its last bid price except when, in Meridian's opinion, the
last bid price does not accurately reflect the current value of the security.
All other securities for which over-the-counter market quotations are readily
available are valued at their last bid price. When market quotations are not
readily available, when Meridian determines the last bid price does not
accurately reflect the current value or when restricted securities are being
valued, such securities are valued as determined in good faith by Meridian,
subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations, but may
be valued on the basis of prices furnished by a pricing service when Meridian
believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by Meridian,
subject to review of the Board of Trustees. Short-term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
- --------------------------------------------------------------------------------
ICON Funds Prospectus
Page 20
DIVIDENDS AND DISTRIBUTIONS
Each Fund intends to distribute substantially all of its net investment income
as dividends to its shareholders on an annual basis, and intends to distribute
its net long term capital gains and its net short-term capital gains at least
once a year.
Income dividends and capital gain distributions are automatically reinvested in
additional shares at the net asset value per share on the distribution date. An
election to receive a cash payment of dividends and/or capital gain
distributions may be made in the application to purchase shares or by separate
written notice to the Transfer Agent. Shareholders will receive a confirmation
statement reflecting the payment and reinvestment of dividends and summarizing
all other transactions. If cash payment is requested, a check normally will be
mailed within five business days after the payable date. If you withdraw your
entire account, all dividends accrued to the time of withdrawal, including the
day of withdrawal, will be paid at that time.
TAXES
Each Fund intends to qualify each year as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended. By so qualifying, each Fund will
not be subject to federal income taxes to the extent that it distributes
substantially all of its net investment income and any realized capital gains.
For federal income tax purposes, dividends paid by a Fund from ordinary income
are taxable to shareholders as ordinary income, but may be eligible in part for
the dividends received deduction for corporations. Pursuant to the Tax Reform
Act of 1986 (the "Tax Reform Act"), all distributions of net capital gains to
individuals are taxed at the same rate as ordinary income. All distributions
designated as being made from net realized long term capital gains are taxable
to shareholders as long term capital gains regardless of the holding period of
the shareholder.
FOREIGN INCOME TAXES: Investment income received by each Fund from sources
within foreign countries may be subject to foreign income taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries which entitle the Funds to a reduced rate of, or exemption from, taxes
on such income. It is impossible to determine the effective rate of foreign tax
in advance since the amount of a Fund's assets to be invested in various
countries is not known.
If more than 50% of the value of a Fund's total assets at the close of each
taxable year consists of the stock or securities of foreign corporations, the
Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant to
the Foreign Tax Election, shareholders will be required (i) to include in gross
income, even though not actually received, their respective pro-rata shares of
the foreign income taxes paid by the Fund that are attributable to any
distributions they receive; and (ii) either to deduct their pro-rata share of
foreign taxes in computing their taxable income, or to use it (subject to
various Code limitations) as a foreign tax credit against Federal income tax
(but not both). No deduction for foreign taxes may be claimed by a non-corporate
shareholder who does not itemize deductions or who is subject to alternative
minimum tax.
Generally, a credit for foreign taxes is subject to the limitation that it may
not exceed the shareholder's U.S. tax (determined without regard to the
availability of the credit) attributable to the shareholder's foreign source
taxable income. In determining the source and character of distributions
received from a Fund for this purpose, shareholders will be required to allocate
Fund distributions according to the source of the income realized by the Fund.
Each Fund's gains from the sale of stock and securities and certain currency
fluctuation gains and losses will generally be treated as derived from U.S.
sources. In addition, the limitation on the foreign tax credit is applied
separately to foreign source "passive" income, such as dividend income. Because
of these limitations, shareholders may be unable to claim a credit for the full
amount of their proportionate shares of the foreign income taxes paid by a Fund.
Each Fund will mail to each shareholder after the close of the calendar year a
statement setting forth the federal income tax status of distributions made
during the year. Dividends and capital gains distributions may also be subject
to state and local taxes. Shareholders are urged to consult their own tax
advisers regarding specific questions as to federal, state or local taxes and
the tax effect of distributions and withdrawals from each Fund.
- --------------------------------------------------------------------------------
ICON Funds Prospectus
Page 21
On the application or other appropriate form, the Funds will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Funds
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Funds may be fined $50 annually for each account for which
a certified taxpayer identification number is not provided. In the event that
such a fine is imposed with respect to a specific account in any year, the Funds
may make a corresponding charge against the account.
THE TRUST
ICON Funds (the "Trust") is an open-end management investment company,
consisting of numerous separate, non-diversified portfolios each of which has
its own investment objectives and policies. The portfolios are designed to serve
a wide range of investor needs.
The Trust was formed September 19, 1996 as a "business trust" under the laws of
the Commonwealth of Massachusetts. It is a "series" company which is authorized
to issue shares without par value in separate series of the same class. Shares
of numerous series have been authorized. The Board of Trustees of the Trust has
the power to create additional portfolios at any time without a vote of
shareholders of the Trust.
Under the Trust's Master Trust Agreement, no annual or regular meeting of
shareholders is required, although the Trustees may authorize special meetings
from time to time. Under the terms of the Master Trust Agreement, the Trustees
will be a self-perpetuating body and will continue their positions until they
resign, die or are removed by a written instrument signed by a least two-thirds
of the Trustees, by vote of shareholders holding not less than two- thirds of
the shares then outstanding of the Trust cast at any meeting called for that
purpose, or by a written declaration signed by shareholders holding not less
than two-thirds of the shares then outstanding.
On any matter submitted to shareholders, shares of each portfolio entitle their
holder to one vote per share, irrespective of the relative net asset values of
the portfolios' shares. On matters affecting an individual portfolio, a separate
vote of shareholders of the portfolio is required. Each portfolio's shares are
fully paid and non-assessable by the Trust, have no preemptive or subscription
rights, and are fully transferable, with no conversion rights.
MANAGEMENT OF THE FUNDS
TRUSTEES: The business affairs of each Fund are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers and select
the Trustees to serve as executive and audit committee members.
THE INVESTMENT ADVISOR: Meridian Investment Management Corporation, 12835 East
Arapahoe Road, Tower II, Englewood, Colorado 80112 under an investment advisory
agreement with the Trust dated October 9, 1996, furnishes investment advice to
the Trust and manages each Fund's investments. Meridian is a wholly-owned
subsidiary of Meridian Management & Research Corporation ("MM&R"). Michael J.
Hart and Dr. Craig T. Callahan each own 50% of MM&R. Meridian's sole business is
the management of growth-oriented portfolios and related services designed to
meet the investment needs of clients including individuals, pension and profit
sharing plans, foundations, endowments, public retirement systems and insurance
companies. For example, Meridian provides research/recommendations to make asset
allocation and industry/country allocations to Security Benefit Life for use in
managing a variable annuity separate account and related mutual fund. In
addition, it is co-sub-advisor with INVESCO Global Asset Management Limited of
three portfolios of the WRL Series Fund, Inc. Meridian's value-based investment
style utilizes fundamental procedures and quantitative tools developed
internally.
The Advisor provides to the Trust, and to each of the Funds within the Trust,
management and investment advisory services. The Advisor furnishes an investment
program for each of the Funds, determines, subject to the overall supervision
and review of the Board of Trustees of the Trust, what investments should be
purchased, sold and held, and makes changes on behalf of the Trust in the
investments of each of the Funds.
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ICON Funds Prospectus
Page 22
The investment decisions for each Fund are made by an investment committee of
Meridian, which is primarily responsible for the day-to-day management of each
Fund's portfolio. Dr. Craig T. Callahan is Chairman of the Investment Management
Committee. He directs Meridians investment research and analysis. Dr. Callahan
has been Chief Investment Officer for the Advisor and its predecessor since
1986.
For the services provided to ICON Funds, Meridian receives a monthly fee from
each Fund at an annual rate based on the fund's average daily net assets as
follows:
FUND ADVISORY FEE RATE
U.S. Equity Funds 1.00%
Foreign Equity Funds 1.00%
Fixed Income Fund 0.65%
The Advisor pays the expense of printing and mailing prospectuses and sales
materials used for promotional purposes.
The Advisor may, from its management fee, pay certain financial institutions
(which may include banks, securities dealers and other industry professionals) a
"servicing fee" for performing certain administrative servicing functions for
Fund shareholders to the extent these institutions are allowed to do so by
applicable statute, rule or regulation.
The Trust retains Meridian Clearing Corp. 12835 East Arapahoe Road, Tower II,
Englewood, Colorado 80112, a wholly- owned subsidiary of the Advisor, to act as
the principal distributor of the Fund's shares. Dr. Craig Thomas Callahan and
Michael Jon Hart, officers and principal shareholders of the Distributor and the
Advisor, are officers and trustees of the Trust. The Distributor provides its
services to the Trust for no additional or ongoing compensation. The Advisor is
responsible for payment of the Distributor.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to its obligation of seeking best
execution, Meridian may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions.
The Trust pays all other expenses for its operations and activities. Each of the
Funds of the Trust pays its allocable portion of these expenses. The expenses
borne by the Trust include the charges and expenses of any shareholder servicing
agents, custodian fees, legal and auditors' expenses, brokerage commissions for
portfolio transactions, the advisory fee, extraordinary expenses, expenses of
shareholder and trustee meetings, expenses for preparing, printing and mailing
proxy statements, reports and other communications to shareholders, and expenses
of registering and qualifying shares for sale, among others.
THE ADMINISTRATOR: The Trust retains AmeriPrime Financial Services, Inc. (the
Administrator") to manage the Trust's business affairs and provide the Trust
with administrative services, including all regulatory reporting and necessary
office equipment, personnel and facilities. The Administrator receives a monthly
fee from Meridian equal to an annual average rate of 0.05%, declining to 0.04%
for assets above $500 million. Employees of the Administrator act as officers of
the Trust and are reimbursed for expenses associated with attending Board
Meetings.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, each of the Funds may compare its performance, either
in terms of its yield, total return or its yield and total return, to that of
other mutual funds with similar investment objectives and to stock or other
indices. For example, a Fund may compare its performance to rankings prepared by
Lipper Analytical Services, Inc. ("Lipper"), a widely recognized independent
service which monitors the performance of mutual funds; to Morningstar's Mutual
Fund Values; to the Standard & Poor's 500 Composite Stock Price Index ("S&P
500"), an index of unmanaged groups of common stock; to the Morgan Stanley
Capital International Index European (Free) Portion; to the FT-SE Eurotrack 200
Index; or to the Consumer Price Index. Performance information and rankings as
reported in Changing Times, Business Week, Institutional Investor, the Wall
Street Journal, Mutual Fund Forecaster, No-Load Investor, Money Magazine,
Forbes, Fortune, Investor's Daily and Barron's magazine may also be used
- --------------------------------------------------------------------------------
ICON Funds Prospectus
Page 23
in comparing performance of the Funds. Performance comparisons shall not be
considered as representative of the future performance of any Fund.
A Fund's average annual total return is computed by determining the average
annual compounded rate of return for a specified period that, if applied to a
hypothetical $1,000 initial investment, would produce the redeemable value of
that investment at the end of the period, assuming reinvestment of all dividends
and distributions and with recognition of all recurring charges. A Fund may also
utilize a total return for differing periods computed in the same manner but
without annualizing the total return.
A Fund's "yield" refers to the income generated by an investment in the Fund
over a 30-day (or one month) period (which period will be stated in the
advertisement). Yield is computed by dividing the net investment income per
share earned during the most recent calendar month or 30-day period by the
maximum offering price per share on the last day of such period. This income is
then "annualized". That is, the amount of income generated by the investment
during that period is assumed to be generated each month over a 12-month period
and is shown as a percentage of the investment.
For purposes of the yield calculation, interest income is computed based on the
yield to maturity of each debt obligation and dividend income is computed based
upon the stated dividend rate of each security in the Fund's portfolio, and all
recurring charges are recognized.
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ICON Funds Prospectus
Page 24
ICON FUNDS
SHARES OF ELEVEN U.S. EQUITY FUNDS,
FIVE FOREIGN EQUITY FUNDS
AND A FIXED INCOME FUND
ARE SOLD AT NET ASSET VALUE
WITHOUT SALES COMMISSIONS, 12B-1 FEES OR REDEMPTIONS FEES
INVESTMENT ADVISOR
Meridian Investment Management Corporation.
12835 East Arapahoe Road, Tower II
Englewood, Colorado 80112
DISTRIBUTOR
Meridian Clearing Corp.
12835 East Arapahoe Road, Tower II
Englewood, Colorado 80112
CUSTODIAN AND TRANSFER AGENT
Firstar Trust Company, Inc
615 E. Michigan Street
Milwaukee, Wisconsin 53202
ADMINISTRATOR
AmeriPrime Financial Services, Inc.
1793 Kingswood Drive, Suite 200
Southlake, Texas 76092
AUDITOR
Price Waterhouse, LLP
9500 Seventeenth Street
Denver, Colorado 80202
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS BEING AUTHORIZED BY
THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE FUND TO SELL ITS
SHARES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN
SUCH STATE.
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ICON Funds Prospectus
Page 25
================================================================================
PART B
STATEMENT OF ADDITIONAL INFORMATION
================================================================================
ICON FUNDS
STATEMENT OF ADDITIONAL INFORMATION
ICON Basic Materials Fund
ICON Capital Goods Fund
ICON Consumer Cyclicals Fund
ICON Consumer Staples Fund
ICON Energy Fund
ICON Financial Services Fund
ICON Healthcare Fund
ICON Leisure Fund
ICON Technology Fund
ICON Telecommunication & Utilities Fund
ICON Transportation Fund
ICON North Asia Region Fund
ICON South Asia Region Fund
ICON North Europe Region Fund
ICON South Europe Region Fund
ICON Western Hemisphere Fund
ICON Short-Term Fixed Income Fund
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the appropriate Fund prospectus dated .............,
(the "prospectus"), which may be obtained by writing the Transfer Agent at
Mutual Funds Services, P.O. Box 701, Milwaukee, WI 53201-0701, or by calling
1-800-..........
- 1 -
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST.......................................................3
INVESTMENT RESTRICTIONS........................................................4
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS..........5
RISKS OF FOREIGN INVESTING....................................................10
PORTFOLIO TRANSACTIONS........................................................12
PORTFOLIO TURNOVER............................................................12
THE INVESTMENT ADVISOR........................................................13
TRUSTEES AND OFFICERS.........................................................14
DETERMINATION OF SHARE PRICE..................................................15
CALCULATION OF PERFORMANCE DATA...............................................15
TAX STATUS....................................................................16
ADMINISTRATIVE SERVICES.......................................................18
CUSTODIAN.....................................................................18
TRANSFER AGENT................................................................19
INDEPENDENT ACCOUNTANTS AND COUNSEL...........................................19
DISTRIBUTOR...................................................................19
FINANCIAL STATEMENTS..........................................................19
- 2 -
DESCRIPTION OF THE TRUST
ICON Funds (the "Trust") is an open-end management investment company
and is a voluntary association of the type known as a "business trust" organized
under the laws of the Commonwealth of Massachusetts. There are numerous series
within the Trust, each of which represents a separate non-diversified portfolio
of securities (collectively referred to herein as the "Portfolios" or "Funds"
and individually as a "Portfolio" or "Fund").
The assets received by the Trust from the issue or sale of shares of
each of the Funds, and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors, are separately allocated to such Fund.
They constitute the underlying assets of each Fund, are required to be
segregated on the books of accounts, and are to be charged with the expenses
with respect to such Fund. Any general expenses of the Trust, not readily
identifiable as belonging to a particular Fund, shall be allocated by or under
the direction of the Board of Trustees in such manner as the Board determines to
be fair and equitable.
Each share of each of the Funds represents an equal proportionate
interest in that Fund with each other share and is entitled to such dividends
and distributions, out of the income belonging to that Fund, as are declared by
the Board. Upon liquidation of the Trust, shareholders of each Fund are entitled
to share pro rata in the net assets belonging to the Fund available for
distribution.
The Trustees have exclusive power, without the requirement of
shareholder approval, to issue series of shares without par value, each series
representing interests in a separate portfolio, or divide the shares of any
portfolio into classes, each class having such different dividend, liquidation,
voting and other rights as the Trustees may determine, and may establish and
designate the specific classes of shares of each portfolio. Before establishing
a new class of shares in an existing portfolio, the Trustees must determine that
the establishment and designation of separate classes would not adversely affect
the rights of the holders of the initial or previously established and
designated class or classes.
As described under "The Trust" in the prospectus, under the Trust's
Master Trust Agreement, no annual or regular meeting of shareholders is
required. In addition, after the Trustees were initially elected by the
shareholders, the Trustees became a self-perpetuating body. Thus, there will
ordinarily be no shareholder meetings unless otherwise required by the
Investment Company Act of 1940 (the "1940 Act").
On any matter submitted to shareholders, the holder of each share is
entitled to one vote per share (with proportionate voting for fractional
shares). On matters affecting any individual Fund, a separate vote of that Fund
would be required. Shareholders of any Fund are not entitled to vote on any
matter which does not affect their Fund but which requires a separate vote of
another Fund.
Shares do not have cumulative voting rights, which means that in
situations in which shareholders elect Trustees, holders of more than 50% of the
shares voting for the election of Trustees can elect 100% of the Trust's
Trustees, and the holders of less than 50% of the shares voting for the election
of Trustees will not be able to elect any person as a Trustee.
Shares have no preemptive or subscription rights and are fully
transferable. There are no conversion rights.
Under Massachusetts law, the shareholders of the Trust could, under
certain circumstances, be held personally liable for the obligations of the
Trust. However, the Master Trust Agreement disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. The Master Trust Agreement provides for
indemnification out of the Trust's property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Trust itself would be unable
to meet its obligations.
- 3 -
INVESTMENT RESTRICTIONS
A Fund will not change any of the following investment restrictions
without the affirmative vote of a majority of the outstanding voting securities
of the Fund, which, as used herein, means the lesser of (i) 67% of the Fund's
outstanding shares present at a meeting at which more than 50% of the
outstanding shares of the Fund are represented either in person or by proxy, or
(ii) more than 50% of the Fund's outstanding shares.
A Fund may not
(1) Issue senior securities.
(2) Borrow money, except that the Fund may borrow not in excess of 33
1/3% of the total assets of the Fund from banks as a temporary
measure for extraordinary purposes.
(3) Underwrite the securities of other issuers.
(4) Purchase or sell real property (including limited partnership
interests, but excluding readily marketable interests in real
estate investment trusts or readily marketable securities or
companies which invest in real estate).
(5) Engage in the purchase or sale of commodities or commodity
contracts, except that the Funds may invest in financial and
currency futures contracts and related options for bona fide
hedging purposes and to provide exposure while attempting to
reduce transaction costs..
(6) Lend its assets, except that purchases of debt securities in
furtherance of the Fund's investment objectives will not
constitute lending of assets and except that the Fund may lend
portfolio securities with an aggregate market value of not more
than one-third of the Fund's total net assets.
(7) Purchase any security on margin, except that it may obtain such
short-term credits as are necessary for clearance of securities
transactions. This restriction does not apply to bona fide
hedging activity utilizing financial futures and related options.
(8) Make short sales in situations where the security is not owned by
a Fund.
(9) Acquire more than 10% of the voting securities of any one issuer.
(10) With respect to 50% of a Fund, invest more than 5% of the value
of its total assets in securities of any one issuer, except such
limitation shall not apply to obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities.
The following investment restrictions may be changed by the Board of Trustees
without a shareholder vote:
A Fund may not
(11) Invest in companies for the purpose of exercising control or
management.
(12) Hypothecate, pledge, or mortgage any of its assets, except to
secure loans as a temporary measure for extraordinary purposes
and except as may be required to collateralize letters of credit
to secure state surety bonds.
(13) Invest more than 15% of its total net assets in illiquid
securities.
(14) Invest in oil, gas or other mineral leases.
- 4 -
(15) In connection with bona fide hedging activities, invest more than
5% their assets as initial margin deposits or premiums for
futures contracts and provided that said Funds may enter into
futures contracts and option transactions only to the extent that
obligations under such contracts or transactions represent not
more than 100% of a Fund's assets.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage, resulting from a change in values of
portfolio securities or amount of net assets, will not be considered a violation
of any of the foregoing restrictions.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Funds may make and some of the techniques it may use, as
described in the Prospectus.
FORWARD COMMITMENTS AND REVERSE REPURCHASE AGREEMENTS. A Fund will
direct its Custodian to place cash or U.S. government obligations in a separate
account of the Fund in an amount equal to the commitments of the Funds to
purchase or repurchase securities as a result of its forward commitment or
reverse repurchase agreement obligations. With respect to forward commitments to
sell securities, the Fund will direct its Custodian to place the securities in a
separate account. A Fund will direct its Custodian to segregate such assets for
when, as and if issued commitments only when it determines that issuance of the
security is probable. When a separate account is maintained, the securities
deposited in the separate account will be valued daily at market for the purpose
of determining the adequacy of the securities in the account. To the extent
funds are in a separate account, they will not be available for new investment
or to meet redemptions.
Commitments to purchase securities on a when, as and if issued basis
will not be recognized in the portfolio of a Fund until the Advisor determines
that issuance of the security is probable. At such time, a Fund will record the
transaction and, in determining its net asset value, will reflect the value of
the security daily.
Securities purchased on a forward commitment basis and subject to
reverse repurchase agreements are subject to changes in market value based upon
the public's perception of the creditworthiness of the issuer and changes in the
level of interest rates (which will generally result in all of those securities
changing in value in the same way; I.E., all those securities experiencing
appreciation when interest rates decline and depreciation when interest rates
rise). Therefore, if in order to achieve a higher level of income, a Fund
remains substantially fully invested at the same time that it has purchased on a
forward commitment basis or entered into reverse repurchase transactions, there
will be a possibility that the market value of the Fund's assets will have
greater fluctuation.
LEVERAGING. Leveraging a Fund creates an opportunity for increased net
income but, at the same time, creates special risk considerations. For example,
leveraging may exaggerate changes in the net asset value of Fund shares and in
the yield on the Fund's portfolio. Although the principal of such borrowings
will be fixed, the Fund's assets may change in value during the time the
borrowing is outstanding. Leveraging will create interest expenses for the Fund
which can exceed the income from the assets retained. To the extent the income
derived from securities purchased with borrowed funds exceeds the interest the
Fund will have to pay, the Fund's net income will be greater than if leveraging
were not used. Conversely, if the income from the assets retained with borrowed
funds is not sufficient to cover the cost of leveraging, the net income of the
Fund will be less than if leveraging were not used, and therefore the amount
available for distribution to shareholders will be reduced.
PUT AND CALL OPTIONS. The Funds may purchase put and call options.
PURCHASING OPTIONS. By purchasing a put option, a Fund obtains the
right (but not the obligation) to sell the option's underlying instrument at a
fixed "strike" price. In return for this right, the Fund pays the current market
price for the option (known as the option premium). Options have various types
of underlying instruments, including specific securities, indices of securities
prices, and futures contracts. A Fund may terminate its position in a put option
it has purchased by allowing it to expire or by exercising the option. If the
option is allowed to expire, the Fund will lose the entire
- 5
premium it paid. If the Fund exercises the option, it completes the sale of the
underlying instrument at the "strike" price. A Fund also may terminate a put
option position by closing it out in the secondary market at its current price,
if a liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium paid,
plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's "strike"
price. A call buyer typically attempts to participate in potential price
increases of the underlying instrument with risk limited to the cost of the
option if security prices fall. At the same time, the buyer can expect to suffer
a loss if the underlying prices do not rise sufficiently to offset the cost of
the option.
WRITING OPTIONS. When a Fund writes a put option, it takes the opposite
side of the transaction from the option's purchaser. In return for receipt of
the premium, the Fund assumes the obligation to pay the "strike" price for the
option's underlying instrument if the other party to the option chooses to
exercise it. When writing an option on a futures contract the Fund will be
required to make margin payments for futures contracts. The Fund may seek to
terminate its position in a put option it writes before exercise by closing out
the option in the secondary market at its current price. If the secondary market
is not liquid for a put option the Fund has written, however, the Fund must
continue to be prepared to pay the "strike" price while the option is
outstanding, regardless of price changes, and must continue to segregate assets
to cover its position.
If the underlying prices rise, a put writer would generally expect to
profit. Although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, the writer also may
profit, because it should be able to close out the option at a lower price. If
the underlying prices fall, the put writer would expect to suffer a loss. This
loss should be less than the loss from purchasing the underlying instrument
directly, however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates a Fund to sell or deliver the option's
underlying instrument, in return for the "strike" price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if the underlying prices remain the same or fall. Through receipt of
the option premium, a call writer mitigates the effects of a price decline. At
the same time, because a call writer must be prepared to deliver the underlying
instrument in return for the "strike" price, even if its current value is
greater, a call writer gives up some ability to participate in the underlying
price increases.
COMBINED POSITIONS. A Fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, a Fund may purchase a put option and write a call option
on the same underlying instrument, in order to construct a combined position
whose risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at one
"strike" price and buying a call option at a lower price, in order to reduce the
risk of the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result in
higher transaction costs and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a Fund's current or anticipated
investments exactly. The Fund may invest in options and futures contracts based
on securities with different issuers, maturities, or other characteristics from
the securities in which it typically invests.
Options and futures prices also can diverge from the prices of their
underlying instruments or precious metals, even if the underlying instruments or
precious metals match the Fund's investment well. Options and futures prices are
affected by such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument or precious metal, and the
time remaining until expiration of the contract, which may not affect the
security or the precious metal prices the same way. Imperfect correlation also
may result from: differing levels of demand in the options and futures
- 6 -
markets and the securities or precious metal markets, structural differences in
how options and futures and securities or precious metal are traded, or
imposition of daily price fluctuation limits or trading halts. The Fund may
purchase or sell options and futures contracts with a greater or lesser value
than the securities or precious metal it wishes to hedge or intends to purchase
in order to attempt to compensate for differences in volatility between the
contract and the securities or precious metals, although this may not be
successful in all cases. If price changes in the Fund's options or futures
positions are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not offset by
gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading volume
and liquidity if their "strike" prices are not close to the underlying
instrument or precious metal's current price. In addition, exchanges may
establish daily price fluctuation limits for options and futures contracts, and
may halt trading if a contract's price moves upward or downward more than the
limit in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the Fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions, and
potentially could require the Fund to continue to hold a position until delivery
or expiration regardless of changes in its value. As a result, the Fund's access
to other assets held to cover its options or futures positions also could be
impaired. In addition, one of the requirements for qualification as a regulated
investment company for tax purposes in that less than 30% of the Fund's gross
income be derived from gains from the sale or other disposition of securities
held for less than three months. Accordingly, the Fund may be restricted in
effecting closing transactions within three months after entering into an option
or futures contract.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size, and
"strike" price, the terms of over-the-counter options I.E., options not traded
on exchanges ("OTC options"), generally are established through negotiation with
the other party to the option contract. While this type of arrangement allows a
Fund greater flexibility to tailor an option to its needs, OTC options generally
involve greater credit risk than exchange-traded options, which are guaranteed
by the clearing organization of the exchanges where they are traded. The risk of
illiquidity also is greater with OTC options, since these options generally can
be closed out only by negotiation with the other party to the option.
FOREIGN CURRENCY TRANSACTIONS. Investments in foreign companies usually
involve use of currencies of foreign countries. A Fund also may hold cash and
cash-equivalent investments in foreign currencies. The value of the Fund's
assets as measured in U.S. dollars will be affected by changes in currency
exchange rates and exchange control regulations. The Fund may, as appropriate
markets are developed, but is not required to, engage in currency transactions
including cash market purchases at the spot rates, forward currency contracts,
exchange listed currency futures, exchange listed and over-the-counter options
on currencies, and currency swaps for two purposes. One purpose is to settle
investment transactions. The other purpose is to try to minimize currency risks.
All currency transactions involve a cost. Although foreign exchange
dealers generally do not charge a fee, they do realize a profit based on the
difference (spread) between the prices at which they are buying and selling
various currencies. Commissions are paid on futures options and swaps
transactions, and options require the payment of a premium to the seller.
A forward contract involves a privately negotiated obligation to
purchase or sell at a price set at the time of the contract with delivery of the
currency generally required at an established future date. A futures contract is
a standardized contract for delivery of foreign currency traded on an organized
exchange that is generally settled in cash. An option gives the right to enter
into a contract. A swap is an agreement based on a nominal amount of money to
exchange the differences between currencies.
The Fund will generally use spot rates or forward contracts to settle a
security transaction or handle dividend and interest collection. When a Fund
enters into a contract for the purchase or sale of a security denominated in a
foreign currency or has been notified of a dividend or interest payment, it may
desire to lock in the price of the security or the amount of the payment in
dollars. By entering into a spot rate or forward contract, the Fund will be able
to protect itself against a
- 7 -
possible loss resulting from an adverse change in the relationship between
different currencies from the date the security is purchased or sold to the date
on which payment is made or received or when the dividend or interest is
actually received.
A Fund may use forward or futures contracts, options, or swaps when the
investment manager believes the currency of a particular foreign country may
suffer a substantial decline against another currency. For example, it may enter
into a currency transaction to sell, for a fixed amount of dollars, the amount
of foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. The precise matching
of the securities transactions and the value of securities involved generally
will not be possible. The projection of short-term currency market movements is
extremely difficult and successful execution of a short-term strategy is highly
uncertain.
A Fund may cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies in which a Fund has (or expects to have) portfolio
exposure.
A Fund may engage in proxy hedging. Proxy hedging is often used when
the currency to which a fund's portfolio is exposed is difficult to hedge. Proxy
hedging entails entering into a forward contract to sell a currency whose
changes in value are generally considered to be linked to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, and simultaneously buy U.S. dollars. The amount of
the contract would not exceed the value of the Fund's securities denominated in
linked securities.
A Fund will not enter into a currency transaction or maintain an
exposure as a result of the transaction when it would obligate a Fund to deliver
an amount of foreign currency in excess of the value of the Fund's portfolio
securities or other assets denominated in that currency. The Fund will designate
cash or securities in an amount equal to the value of the Fund's total assets
committed to consummating the transaction. If the value of the securities
declines, additional cash or securities will be designated on a daily basis so
that the value of the cash or securities will equal the amount of the Fund's
commitment.
On the settlement date of the currency transaction, a Fund may either
sell portfolio securities and make delivery of the foreign currency or retain
the securities and terminate its contractual obligation to deliver the foreign
currency by purchasing an offsetting position. It is impossible to forecast what
the market value of portfolio securities will be on the settlement date of a
currency transaction. Accordingly, it may be necessary for the Fund to buy
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the securities are less than the amount of
foreign currency the Fund is obligated to deliver and a decision is made to sell
the securities and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received on
the sale of the portfolio securities if its market value exceeds the amount of
foreign currency the Fund is obligated to deliver. The Fund will realize gains
or losses on currency transactions.
The Fund may also buy put options and write covered call options on
foreign currencies to try to minimize currency risks. The risk of buying an
option is the loss of premium. The risk of selling (writing) an option is that
the currency option will minimize the currency risk only up to the amount of the
premium, and then only if rates move in the expected direction. If this does not
occur, the option may be exercised and a Fund would be required to buy the
underlying currency at the loss which may not be offset by the amount of the
premium. Through the writing of options on foreign currencies, the Fund may also
be required to forego all or a portion of the benefits which might otherwise
have been obtained from favorable movements on exchange rates. All options
written on foreign currencies will be covered; that is, the Fund will own
securities denominated in the foreign currency, hold cash equal to its
obligations or have contracts that offset the options.
The Fund may construct a synthetic foreign currency investment,
sometimes called a structured note, by (a) purchasing a money market instrument
which is a note denominated in one currency, generally U.S. dollars, and (b)
concurrently entering into a forward contract to deliver a corresponding amount
of that currency in exchange for a different currency on a future date and at a
specified rate of exchange. Because the availability of a variety of highly
liquid short-term U.S. dollar market instruments, or notes, a synthetic money
market position utilizing such U.S. dollar instruments may offer greater
liquidity than direct investment in foreign currency.
- 8 -
SEGREGATED ASSETS AND COVERED POSITIONS. When purchasing a stock index
futures contract, selling an uncovered call option, or purchasing securities on
a when-issued or delayed delivery basis, a Fund will restrict cash, which may be
invested in repurchase obligations or liquid securities. When purchasing a stock
index futures contract, the amount of restricted cash or liquid securities, when
added to the amount deposited with the broker as margin, will be at least equal
to the market value of the futures contract and not less than the market price
at which the futures contract was established. When selling an uncovered call
option, the amount of restricted cash or liquid securities, when added to the
amount deposited with the broker as margin, will be at least equal to the value
of securities underlying the call option and not less than the strike price of
the call option. When purchasing securities on a when-issued or delayed delivery
basis, the amount of restricted cash or liquid securities will be at least equal
to the Fund's when-issued or delayed delivery commitments.
The restricted cash or liquid securities will either be identified as
being restricted in a Fund's accounting records or physically segregated in a
separate account at Firstar Trust Company, the Fund's custodian. For the purpose
of determining the adequacy of the liquid securities which have been restricted,
the securities will be valued at market or fair value. If the market or fair
value of such securities declines, additional cash or liquid securities will be
restricted on a daily basis so that the value of the restricted cash or liquid
securities, when added to the amount deposited with the broker as margin, equals
the amount of such commitments by a Fund.
Fund assets need not be segregated if a Fund "covers" the futures
contract or call option sold. For example, the Fund could cover a futures or
forward contract which it has sold short by owning the securities or currency
underlying the contract. A Fund may also cover this position by holding a call
option permitting the Fund to purchase the same futures or forward contract at a
price no higher than the price at which the sell position was established.
A Fund could cover a call option which it has sold by holding the same
currency or security (or, in the case of a stock index, a portfolio of stock
substantially replicating the movement of the index) underlying the call option.
The Fund may also cover by holding a separate call option of the same security
or stock index with a strike price no higher than the strike price of the call
option sold by the Fund. The Fund could cover a call option which it has sold on
a futures contract by entering into a long position in the same futures contract
at a price no higher than the strike price of the call option or by owning the
securities or currency underlying the futures contract. The Fund could also
cover a call option which it has sold by holding a separate call option
permitting it to purchase the same futures contract at a price no higher than
the strike price of the call option sold by the Fund.
ILLIQUID INVESTMENTS. Illiquid investments are investments that cannot
be sold or disposed of in the ordinary course of business at approximately the
prices at which they are valued. Under the supervision of the Board of Trustees,
the Advisor determines the liquidity of a Fund's investments and, through
reports from the Advisor, the Board monitors trading activity in illiquid
investments. In determining the liquidity of the Fund's investments, the Advisor
may consider various factors, including (i) the frequency of trades and
quotations, (ii) the number of dealers and prospective purchasers in the
marketplace, (iii) dealer undertakings to make a market, (iv) the nature of the
security (including any demand or tender features), and (v) the nature of the
marketplace for trades (including the ability to assign or offset the Fund's
rights and obligations relating to the investment). Investments currently
considered by the Trust to be illiquid include repurchase agreements not
entitling the holder to payments of principal and interest within seven days,
over-the-counter options, and restricted securities. However, with respect to
OTC options which the Fund writes, all or a portion of the value of the
underlying instrument may be illiquid depending on the assets held to cover the
option and the nature and terms of any agreement the Fund may have to close out
the option before expiration. In the absence of market quotations, illiquid
investments are priced at fair value as determined in good faith by the Advisor,
subject to review of the Board of Trustees. If, through a change in values, net
assets or other circumstances, the Fund were in a position where more than 15%
of its net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES. Restricted securities generally can be sold in
privately negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933, or in a registered public offering. Where the
registration is required, a Fund holding restricted securities may be obligated
to pay all or part of the registration expense and a considerable period may
elapse between the time it decides to seek registration and the time the Fund
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to seek
registration of the security.
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RISKS OF FOREIGN INVESTING
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of
non-U.S. companies may entail additional risks due to the potential political,
social and economic instability of certain countries and the risks of
expropriation, nationalization, confiscation or the imposition of restrictions
on foreign investment, convertibility of currencies into U.S. dollars and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation by any country, a Fund could lose its
entire investment in any such country.
RELIGIOUS, POLITICAL, AND ETHNIC INSTABILITY. Certain countries in
which a Fund may invest may have groups that advocate radical religious or
revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of the Fund's investment in
those countries. Instability may also result from, among other things: (i)
authoritarian governments or military involvement in political and economic
decision-making, including changes in government through extra-constitutional
means; (ii) popular unrest associated with demands for improved political,
economic and social conditions; and (iii) hostile relations with neighboring or
other countries. Such political, social and economic instability could disrupt
the principal financial markets in which the Fund invests and adversely affect
the value of the Fund's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Fund. These restrictions or
controls may at times limit or preclude investment in certain securities and may
increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. A Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL REGULATION.
Foreign companies are subject to accounting, auditing and financial standards
and requirements that differ, in some cases significantly, from those applicable
to U.S. companies. In particular, the assets, liabilities, and profits appearing
on the financial statements of such a company may not reflect its financial
position or results of operations in the way they would be reflected had such
financial statements been prepared in accordance with U.S. generally accepted
accounting principles. Most of the securities held by a Foreign Region Fund will
not be registered with the SEC or regulators of any foreign country, nor will
the issuers thereof be subject to the SEC's reporting requirements. Thus, there
will be less available information concerning most foreign issuers of securities
held by the Fund than is available concerning U.S. issuers. In instances where
the financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, the Advisor will take appropriate steps to
evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities in foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each international equity Fund under
normal circumstances will invest a substantial portion of its total assets in
the securities of foreign issuers which are denominated in foreign currencies,
the strength or weakness of the U.S. dollar against such foreign currencies will
account for a significant part of a Fund's investment performance. A decline in
the value of any particular currency against the U.S. dollar will cause a
decline in the U.S. dollar value of a Fund's holdings of securities and cash
denominated in such currency and, therefore, will cause an
- 10 -
overall decline in the Fund's net asset value and any net investment income and
capital gains derived from such securities to be distributed in U.S. dollars to
shareholders of the Fund. Moreover, if the value of the foreign currencies in
which the Fund receives its income declines relative to the U.S. dollar between
the receipt of the income and the making of Fund distributions, the Fund may be
required to liquidate securities in order to make distributions if the Fund has
insufficient cash in U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is
determined by several factors, including the supply and demand for particular
currencies, central bank efforts to support particular currencies, the relative
movement of interest rates and pace of business activity in the other countries
and the United States, and other economic and financial conditions affecting the
world economy.
Although each Fund values its assets daily in terms of U.S. dollars,
the Funds do not intend to convert their holdings of foreign currencies into
U.S. dollars on a daily basis. Each Fund will do so, from time to time, and
investors should be aware of the costs of currency conversion. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference ("spread") between the prices at which they buy and sell
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may
be less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities exchange transactions usually are subject to
fixed commissions, which generally are higher than negotiated commissions on
U.S. transactions. In addition, foreign securities exchange transactions may be
subject to difficulties associated with the settlement of such transactions.
Delays in settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. The Advisor will consider such difficulties when
determining the allocation of each Fund's assets, although the Advisor does not
believe that such difficulties will have a material adverse effect on the Funds'
portfolio trading activities.
The Funds may use foreign custodians, which may involve risks in
addition to those related to the use of U.S. custodians. Such risks include
uncertainties relating to: (i) determining and monitoring the financial
strength, reputation and standing of the foreign custodian; (ii) maintaining
appropriate safeguards to protect the Funds' investments, and (iii) obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. A Fund's net investment income from foreign issuers
may be subject to non-U.S. withholding taxes by the foreign issuer's country,
thereby reducing the Fund's net investment income or delaying the receipt of
income where those taxes may be recaptured.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the
securities of issuers domiciled in emerging markets, including the markets of
Latin America and certain Asian markets such as Taiwan, Malaysia and Indonesia,
may entail special risks relating to the potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment, convertibility of currencies
into U.S. dollars and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, a Fund
could lose its entire investment in any such country.
Emerging securities markets are substantially smaller, less developed,
less liquid and more volatile than the major securities markets. The limited
size of emerging securities markets and limited trading volume in issuers
compared to the volume of trading in U.S. securities could cause prices to be
erratic for reasons apart from factors that affect the quality of the
securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities in these markets. In
addition, securities traded in certain emerging markets may
- 11 -
be subject to risks due to the inexperience of financial intermediaries, a lack
of modern technology, the lack of a sufficient capital base to expand business
operations, and the possibility of permanent or temporary termination of
trading.
Settlement mechanisms in emerging securities markets may be less
efficient and less reliable than in more developed markets. In such emerging
securities markets there may be share registration and delivery delays or
failures.
Most Latin American countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
PORTFOLIO TRANSACTIONS
The Advisory Agreement between the Trust and the Advisor requires that
the Advisor, in executing portfolio transactions and selecting brokers or
dealers, seek the best overall terms available. In assessing the terms of a
transaction, consideration may be given to various factors, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer (for a specified
transaction and on a continuing basis), the reasonableness of the commission, if
any, and the brokerage and research services provided to the Trust and/or other
accounts over which the Advisor or an affiliate of the Advisor exercises
investment discretion. Under the Advisory Agreement, the Advisor is permitted,
in certain circumstances, to pay a higher commission than might otherwise be
obtained in order to acquire brokerage and research services. The Advisor must
determine in good faith, however, that such commission is reasonable in relation
to the value of the brokerage and research services provided -- viewed in terms
of that particular transaction or in terms of all the accounts over which
investment discretion is exercised. In such case, the Board of Trustees will
review the commissions paid by each Fund of the Trust to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits obtained. The advisory fee of the Advisor would not be reduced
by reason of its receipt of such brokerage and research services. To the extent
that research services of value are provided by broker/dealers through or with
whom the Trust places portfolio transactions the Advisor may be relieved of
expenses which it might otherwise bear.
The Trust may, in some instances, purchase securities that are not
listed on a national securities exchange or quoted on NASDAQ, but rather are
traded in the over-the-counter market. When the transactions are executed in the
over-the-counter market, it is intended generally to seek first to deal with the
primary market makers. However, the services of brokers will be utilized if it
is anticipated that the best overall terms can thereby be obtained. Purchases of
newly issued securities usually are placed with those dealers from which it
appears that the best price or execution will be obtained. Those dealers may be
acting as either agents or principals.
Brokerage fees paid by the Funds for the most recent fiscal years will,
in future periods, be included in the Trust's Statement of Additional
Information.
In seeking its primary investment objective of capital appreciation, a
Fund may expect that it generally will hold investments for at least six months.
However, if the Advisor concludes that economic, market or industry conditions
warrant major adjustments in any Fund's investment positions or if unusual
market conditions or developments dictate the taking of a temporary defensive
position in short-term money market instruments, changes may be made without
regard to the length of time an investment has been held, or whether a sale
results in profit or loss, or a purchase results in the reacquisition of an
investment which may have only recently been sold by the Fund.
PORTFOLIO TURNOVER
The Advisor buys and sells securities for the Funds to accomplish its
investment objectives. The Funds' investment policies may lead to frequent
changes in investments, particularly in periods of rapidly fluctuating interest
rates. The Funds' investments may also be traded to take advantage of perceived
short-term disparities in market values or yields among securities of comparable
quality and maturity. A change in the securities held by a Fund is known as
"portfolio turnover."
- 12 -
It is anticipated that portfolio turnover for each fund will be equal to or less
than 100%. However, the Funds are to be used by investment advisers allocating
client assets between various sectors or countries. If said advisers move client
assets in and out of a Fund, that Fund's portfolio turnover rate could be
significantly greater.
THE INVESTMENT ADVISOR
The Trust retains Meridian Investment Management Corporation, 12835
East Arapahoe Road, Tower II, Englewood, Colorado 80112 (the "Advisor") to
manage each Fund's investments. Meridian is a wholly-owned subsidiary of
Meridian Management & Research Corporation ("MM&R"). Michael J. Hart and Dr.
Craig T. Callahan each own 50% of MM&R, and may be deemed to control the Advisor
due to his ownership of its shares and their positions as officer and directors
of the Advisor. The Advisor is providing the minimum regulatory capital to the
Trust and will be its controlling shareholder until the number of shares sold to
others exceeds the number issued to the Advisor, which is anticipated shortly
after effective registration.
Under the terms of the Advisory Agreement, the Advisor manages the
Funds' investments subject to approval of the Board of Trustees. As compensation
for its management services, a Fund is obligated to pay the Advisor a fee
computed and accrued daily and paid monthly at an annual rate of 1.00% for the
ICON U.S. Equity Funds of the average daily net assets; 1.00% for the Icon
Foreign Equity Funds; 0.65% for the ICON Fixed Income Fund. The Advisor may
waive all or part of its fee, at any time, and at its sole discretion, but such
action shall not obligate the Advisor to waive any fees in the future. The Fund
is responsible for the payment of all expenses incurred in connection with the
organization and initial registration of shares of a Fund.
The Advisor retains the right to use the name "ICON" in connection with
another investment company or business enterprise with which the Advisor is or
may become associated. The Trust's right to use the name "ICON" automatically
ceases ninety days after termination of the Agreement and may be withdrawn by
the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of a Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Funds believes that there would be no material impact on the Funds or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Funds, no preference will be shown for such
securities.
The Board of Trustees (including a majority of the "disinterested
Trustees") and shareholder approval was recently given for the Advisory
Agreement through to and including October 1998. The Advisory Agreement provides
that it will continue initially for two years, and from year to year thereafter,
with respect to each Fund, as long as it is approved at least annually both (i)
by a vote of a majority of the outstanding voting securities of such Fund (as
defined in the 1940 Act) or by the Board of Trustees of the Trust, and (ii) by a
vote of a majority of the Trustees who are not parties to the Advisory Agreement
or "interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement may be
terminated on 60 days' written notice by either party and will terminate
automatically if it is assigned.
- 13 -
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, a defined in the
Investment Company Act of 1940, is indicated by an asterisk.
NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ------------------------ ------------ -----------------------------------------
MICHAEL J. HART * President President of Meridian Management &
Age: 49 and Trustee Research Corporation ("MM&R"), President
64 Glenmoor Drive of the Advisor, a wholly-owned subsidiary
Englewood, CO 80110 of MM&R, and President of Meridian
Clearing Corp.("MCC") a wholly-owned
subsidiary of the Advisor.
CRAIG T. CALLAHAN * Trustee Secretary and Treasurer of MM&R, Chief
Age: 45 Investment Officer of the Advisor, and
52 Glenmoor Way Vice President of MCC.
Englewood, CO 80110
R. MICHAEL SENTEL Trustee Attorney for U.S. Department of Education
Age: 48 since October 1996; owner of Sentel &
15663 Wedge Way Company, P.C. 1994 to present; Counsel
Morrison, CO 80465 (Section Chief) of Professional Liability
Section of FDIC's Litigation Division
from 1991 to 1994.
JAMES W. HIRE Trustee Principal of Hire & Associates since
Age: 48 1988.
1383 Solitude Lane
Evergreen, CO 80439
KENNETH D. TRUMPFHELLER Vice President of AmeriPrime Financial
Age: 38 President Services, Inc., the Administrator,
1793 Kingswood Drive and President of AmeriPrime Financial
Suite 200 Secretary Securities, Inc., and President & Trustee
Southlake, Texas 76092 of AmeriPrime Funds since 1995; Senior
Client Executive of SEI Financial
Services from 1984 to 1994.
KELLI D. SHOMAKER, CPA Treasurer Manager of Compliance of AmeriPrime
Age: 34 and Chief Financial Services, Inc., and Secretary
1793 Kingswood Drive Accounting and Treasurer of AmeriPrime Funds since
Suite 200 Officer 1995; Vice President, Chief Accounting
Southlake, Texas 76092 Officer, Treasurer and Controller of
United Services Advisers, Inc. and United
Services Insurance Funds from 1994 to
1995; Vice President, Chief Accounting
Officer, Treasurer, and Controller of
Accolade Funds and Pauze/Swanson United
Services Funds from 1993 to 1995;
Controller from 1987 to 1995 and Vice
President, Chief Accounting Officer and
Treasurer from 1990 to 1995 of United
Services Funds; Director of Security
Trust & Financial Company from 1993 to
1995.
ERIK L. JONSON, CPA Vice Chief Financial Officer of MM&R, owner of
Age: 47 President Erik L. Jonson, CPA from 1986 to 1996.
9465 W. Geddes Pl. and Chief
Littleton, CO 80112 Financial
Officer
- 14 -
The compensation to be paid to the Trustees of the Trust is set forth
in the following table:
PENSION OR
RETIREMENT ESTIMATED TOTAL
ACCRUED AS ANNUAL COMPENSATION
AGGREGATE PART OF BENEFITS FROM TRUST (THE
COMPENSATION FUND UPON TRUST IS NOT IN A
NAME FROM TRUST(1) EXPENSES RETIREMENT FUND COMPLEX) (1)
Michael J. Hart 0 0 0 0
Craig T. Callahan 0 0 0 0
R. Michael Sentel $8,000 0 0 $8,000
James W. Hire $8,000 0 0 $8,000
============= ========== ========== ================
$16,000 0 0 $16,000
- --------------------------
(1) Trustee fees are Trust expenses and each fund of the Trust pays a portion of
the Trustee fees. The compensation is estimated for the first full year of the
Trust ending September 30, 1997.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of a Fund is determined as of
4:00 p.m., Eastern time on each day the Funds are open for business and on any
other day on which there is sufficient trading in the Funds' securities to
materially affect the net asset value. The Funds are open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. For a description of the methods used to determine
the net asset value (share price), see "Share Price Calculation" in the
Prospectus.
CALCULATION OF PERFORMANCE DATAINVESTMENT PERFORMANCE
TOTAL RETURN
A Fund may advertise performance in terms of average annual total
return for 1, 5 and 10 year periods, or for such lesser periods as the Fund has
been in existence. Average annual total return is computed by finding the
average annual compounded rates of return over the periods that would equate the
initial amount invested to the ending redeemable value according to the
following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The calculation assumes all charges are deducted from the initial
$1,000 payment and assumes all dividends and distributions by the Fund are
reinvested at the price stated in the prospectus on the reinvestment dates
during the period, and includes all recurring fees that are charged to all
shareholder accounts.
A Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to
- 15 -
those of other investment companies or investment vehicles. The risks associated
with the Fund's investment objective, policies and techniques should also be
considered. At any time in the future, investment performance may be higher or
lower than past performance, and there can be no assurance that any performance
will continue.
YIELD
A Fund may also advertise performance in terms of a 30 day yield
quotation. The 30 day yield quotation is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period according to the following formula:
6
YIELD = 2[(A - B + 1) - 1]
-----
CD
Where: A = dividends and interest earned during the period
B = expenses accrued for the period (net of reimbursement)
C = the average daily number of shares outstanding during the
period that were entitled to receive dividends
D = the maximum offering price per share on the last day of the
period
NONSTANDARDIZED TOTAL RETURN
A Fund may provide the above described standard total return results
for a period which ends as of not earlier than the most recent calendar quarter
end and which begins either twelve months before or at the time of commencement
of the Fund's operations. In addition, the Fund may provide nonstandardized
total return results for differing periods, such as for the most recent six
months. Such nonstandardized total return is computed as otherwise described
under "Total Return" except that no analyzation is made.
TAX STATUS
TAXATION OF THE FUNDS -- IN GENERAL
As stated in its prospectus, each Fund intends to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). Accordingly, each Fund will not be liable for
federal income taxes on its taxable net investment income and capital gain net
income that are distributed to shareholders, provided that the Fund distributes
at least 90% of its net investment income and net short-term capital gain for
the taxable year.
To qualify as a regulated investment company, each Fund must, among
other things, (a) derive in each taxable year at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income derived with respect to its business of investing in such stock,
securities or currencies (the "90% test"); (b) derive in each taxable year less
than 30% of its gross income from the sale or other disposition of stock or
securities held less than three months (the "30% test"), and (c) satisfy certain
diversification requirements at the close of each quarter of the Fund's taxable
year.
The Code imposes a non-deductible 4% excise tax on a regulated
investment company that fails to distribute during each calendar year an amount
equal to the sum of (1) at least 98% of its ordinary income for the calendar
year, (2) at least 98% of its net capital gains for the twelve-month period
ending on October 31 of the calendar year and (3) any portion (not taxable to
the Fund) of the respective balance from the preceding calendar year. The Funds
intend to make such distributions as are necessary to avoid imposition of this
excise tax.
- 16 -
TAXATION OF THE FUNDS' INVESTMENTS
For federal income tax purposes, debt securities purchased by the Funds
may be treated as having original issue discount. Original issue discount
represents interest for federal income tax purposes and can generally be defined
as the excess of the stated redemption price at maturity of a debt obligation
over the issue price. Original issue discount is treated for federal income tax
purposes as earned by the Fund, whether or not any income is actually received,
and therefore, is subject to the distribution requirements of the Code.
Generally, the amount of original issue discount is determined on the basis of a
constant yield to maturity which takes into account the compounding of accrued
interest. Under Section 1286 of the Code, an investment in a stripped bond or
stripped coupon will result in original issue discount.
Debt securities may be purchased by a Fund at a discount which exceeds
the original issue price plus previously accrued original issue discount
remaining on the securities, if any, at the time the Fund purchases the
securities. This additional discount represents market discount for income tax
purposes. In the case of any debt security issued after July 18, 1984, having a
fixed maturity date of more than one year from the date of issue and having
market discount, the gain realized on disposition will be treated as interest
income for purposes of the 90% test to the extent it does not exceed the accrued
market discount on the security (unless the Fund elects to include such accrued
market discount in income in the tax year to which it is attributable).
Generally, market discount is accrued on a daily basis.
A Fund may be required to capitalize, rather than deduct currently,
part or all of any direct interest expense incurred to purchase or carry any
debt security having market discount unless the Fund makes the election to
include market discount currently. Because a Fund must take into account the
original issue discount for purposes of satisfying various requirements for
qualifying as a regulated investment company under Subchapter M of the Code, it
will be more difficult for the Fund to make the distributions to maintain such
status and to avoid the 4% excise tax described above. To the extent that a Fund
holds zero-coupon or deferred interest bonds in its portfolio or bonds paying
interest in the form of additional debt obligations, the Fund would recognize
income currently even though the Fund received no cash payment of interest, and
would need to raise cash to satisfy the obligations to distribute such income to
shareholders from sales of portfolio securities.
A Fund may purchase debt securities at a premium (I.E., at a purchase
price in excess of face amount). The premium may be amortized if the Fund so
elects. The amortized premium on taxable securities is allowed as a deduction,
and, for securities issued after September 27, 1985, must be amortized under an
economic accrual method. All shareholders will be notified annually regarding
the tax status of distributions received from a Fund.
TAXATION OF THE SHAREHOLDER
Taxable distributions generally are included in a shareholder's gross
income for the taxable year in which they are received. However, dividends
declared in October, November or December and made payable to shareholders of
record in such a month will be deemed to have been received on December 31, if a
Fund pays the dividends during the following January. To the extent that a
Fund's net investment income does not arise from dividends on domestic common or
preferred stock, the Funds' distributions will not qualify for the 70% corporate
dividends-received deduction.
Distributions by a Fund will result in a reduction in the fair market
value of the Fund's shares. Should a distribution reduce the fair market value
below a shareholder's cost basis, such distribution nevertheless would be
taxable to the shareholder as ordinary income or long-term capital gain, even
though, from an investment standpoint, it may constitute a partial return of
capital. In particular, investors should be careful to consider the tax
implications of buying shares of a Fund just prior to a distribution. The price
of such shares purchased at that time includes the amount of any forthcoming
distribution. Those investors purchasing the Fund's shares just prior to a
distribution may receive a return of investment upon distribution which will
nevertheless be taxable to them.
A shareholder of a Fund should be aware that a redemption of shares
(including any exchange into another Portfolio) is a taxable event and,
accordingly, a capital gain or loss may be recognized. If a shareholder of a
Fund receives a distribution taxable as long-term capital gain with respect to
shares of the Fund and redeems or exchanges shares before
- 17 -
he has held them for more than six months, any loss on the redemption or
exchange (not otherwise disallowed as attributable to an exempt-interest
dividend) will be treated as long-term capital loss to the extent of the long
term capital gain recognized.
FOREIGN INCOME TAXES
Investment income received by each Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Funds to a reduced rate of, or exemption from, taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amount of a Fund's assets to be invested in various countries is not known.
If more than 50% of the value of a Fund's total assets at the close of
each taxable year consists of the stock or securities of foreign corporations,
the Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant to
the Foreign Tax Election, shareholders will be required (i) to include in gross
income, even though not actually received, their respective pro-rata shares of
the foreign income taxes paid by the Fund that are attributable to any
distributions they receive; and (ii) either to deduct their pro-rata share of
foreign taxes in computing their taxable income, or to use it (subject to
various Code limitations) as a foreign tax credit against Federal income tax
(but not both). No deduction for foreign taxes may be claimed by a non-corporate
shareholder who does not itemize deductions or who is subject to alternative
minimum tax.
Generally, a credit for foreign taxes is subject to the limitation that
it may not exceed the shareholder's U.S. tax (determined without regard to the
availability of the credit) attributable to the shareholder's foreign source
taxable income. In determining the source and character of distributions
received from a Fund for this purpose, shareholders will be required to allocate
Fund distributions according to the source of the income realized by the Fund.
Each Fund's gains from the sale of stock and securities and certain currency
fluctuation gains and losses will generally be treated as derived from U.S.
sources. In addition, the limitation on the foreign tax credit is applied
separately to foreign source "passive" income, such as dividend income. Because
of these limitations, shareholders may be unable to claim a credit for the full
amount of their proportionate shares of the foreign income taxes paid by a Fund.
OTHER TAX CONSIDERATIONS
Distributions to shareholders may be subject to additional state, local
and non-U.S. taxes, depending on each shareholder's particular tax situation.
Shareholders subject to tax in certain states may be exempt from state income
tax on distributions made by a Fund to the extent such distributions are derived
from interest on direct obligations of the United States Government.
Shareholders are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in shares of a Fund.
ADMINISTRATIVE SERVICES
AmeriPrime Financial Services, Inc. ("Administrator") provides
day-to-day administrative services to the Trust. It provided the initial moneys
for organization of the Trust, acted as initial sole shareholder, and its
principal was the initial Trustee. As described in the Funds' Prospectus, the
Administrator will provide the Trust with office space, facilities and simple
business equipment, and will generally administer the Trust's business affairs
and provide the services of executive and clerical personnel for administering
the affairs of the Trust. It will compensate all personnel, officers and
Trustees of the Trust if such persons are employees of the Administrator or its
affiliates.
CUSTODIAN
Firstar Trust Company, Post Office Box 701, Milwaukee, Wisconsin 53201,
is Custodian of the Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
- 18 -
TRANSFER AGENT
Firstar Trust Company, Post Office Box 701, Milwaukee, Wisconsin 53201,
acts as the Funds' transfer agent and, in such capacity, maintains the records
of each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Funds' shares, acts as
dividend and distribution disbursing agent and performs other accounting and
shareholder service functions.
INDEPENDENT ACCOUNTANTS AND COUNSEL
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver,
Colorado 80202, has been selected as independent public accountants for the
Trust for the fiscal year ending September 30, 1997. Charles W. Lutter, Jr., 103
Canyon Oaks, San Antonio, Texas 78232, is legal counsel to the Trust.
DISTRIBUTOR
Meridian Clearing Corp. 12835 East Arapahoe Road, Tower II, Englewood,
Colorado 80112, is the exclusive agent for distribution of shares of the Funds.
The Distributor is obligated to sell the shares of the Funds on a best efforts
basis only against purchase orders for the shares. Shares of the Funds are
offered on a continuous basis.
FINANCIAL STATEMENTS
Audited initial seed capital financial capital financial statements
will be added to this Statement of Additional Information by Pre-Effective
Amendment to the Registration Statement.
================================================================================
PART C
OTHER INFORMATION
================================================================================
ICON SECTOR FUNDS
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
No financial highlights are in Part A until subsequent filing.
Audited financial statements with respect to seed capital to be filed
immediately before effective registration. Such statements will be included
in Part B of the Registration Statement.
(b) EXHIBITS
(1) (a) Master Trust Agreement dated September 19, 1996, is filed
herewith.
(b) Amendment No. 1 to Master Trust Agreement dated October 24, 1996
is filed herewith.
(2) By-Laws dated October 9, 1996 is filed herewith.
(3) Not Applicable
(4) Not Applicable
(5) Advisory Agreement between Registrant and Meridian Investment
Management Corporation dated October 9, 1996 is filed herewith.
(6) Distribution Agreement among Registrant, Meridian Investment
Management Corporation, and Meridian Clearing Corp. dated October 9,
1996 is filed herewith.
(7) Not Applicable.
(8) (a) Custodian Agreement between Registrant and Firstar Trust Company
is filed herewith.
(b) Form of Global Custody Agreement between Firstar Trust Company
and Chase Manhattan Bank is filed herewith.
(9) (a) Administrative Services Agreement between Registrant and
AmeriPrime Financial Services, Inc. dated October 9, 1996 is
filed herewith.
(b) Transfer Agent Agreement between Registrant and Firstar Trust
Company dated October 9, 1996 is filed herewith.
(c) Fund Accounting Servicing Agreement between Registrant and
Firstar Trust Company dated October 9, 1996 is filed herewith.
(10) Opinion and Consent of Lynch, Brewer, Hoffman & Sands, LLP, Attorneys
at Law, is filed herewith.
(11) Consent of independent public accountants - to be supplied with
opinion on seed capital by pre-effective amendment.
(12) Not Applicable
(13) Copy of Letter of Initial Stockholders - to be supplied with
pre-effective amendment
(14) Not Applicable
(15) None
(16) Schedule for Computation of Each Performance Quotation provided in
response to Item 22 found in Part B under the heading Calculation of
Performance Data.
(17) Financial Data Schedule - None
(18) Not Applicable
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
Information pertaining to persons controlled by or under common control
with Registrant is incorporated by reference to the Statement of Additional
Information contained in Part B of this Registration Statement at the
section entitled "Administrative Services" and "The Investment Advisor."
ITEM 26. NUMBER OF HOLDERS OF SECURITIES (AS OF OCTOBER 25, 1996)
TITLE OF SERIES NUMBER OF RECORD HOLDERS
ICON Basic Materials Fund 0
ICON Capital Goods Fund 0
ICON Consumer Cyclicals Fund 0
ICON Consumer Staples Fund 0
ICON Energy Fund 0
ICON Financial Services Fund 0
ICON Healthcare Fund 0
ICON Leisure Fund 0
ICON Technology Fund 0
ICON Telecommunication & Utilities Fund 0
ICON Transportation Fund 0
ICON Short-Term Fixed Income Fund 1
ICON North Asia Fund 0
ICON South Asia Fund 0
ICON North Europe Fund 0
ICON South Europe Fund 0
ICON Western Hemisphere Fund 0
ITEM 27. INDEMNIFICATION
Under Article VI of the Registrant's Master Trust Agreement, each of its
Trustees and officers or person serving in such capacity with another
entity at the request of the Registrant (a "Covered Person") shall be
indemnified (from the assets of the Sub- Trust or Sub-Trusts in question)
against all liabilities, including, but not limited to, amounts paid in
satisfaction of judgments, in compromises or as fines or penalties, and
expenses, including reasonable legal and accounting fees, incurred by the
Covered Person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal before any court or
administrative or legislative body, in which such Covered Person may be or
may have been involved as a party or otherwise or with which such person
may be or may have been threatened, while in office or thereafter, by
reason of being or having been such a Trustee or officer, director or
trustee, except with respect to any matter as to which it has been
determined that such Covered Person (i) did not act in good faith in the
reasonable belief that such Covered Person's action was in or not opposed
to the best interests of the Trust or (ii) had acted with wilful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office (either and
both of the conduct described in (i) and (ii) being referred to hereafter
as "Disabling Conduct"). A determination that the Covered Person is not
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that
the person to be indemnified was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding against a
Covered Person for insufficiency of evidence of Disabling Conduct, or (iii)
a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling Conduct by (a) a vote of
the majority of a quorum of Trustees who are neither "interested persons"
of the Trust as defined in Section 1(a)(19) of the 1940 Act nor parties to
the proceeding, or (b) as independent legal counsel in a written opinion.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Registrant's investment adviser and administrator is incorportated by
reference to the Prospectus and Statement of Additional Information
contained in Part A and Part B of this Registration Statement at the
sections entiled "Management of the Fund" in the Prospectus, and
"Investment Advisory Services" and "Administrative Services" Information
pertaining to business and other connections in the Statement of Additional
Information.
ITEM 29. PRINCIPAL UNDERWRITERS
Meridian Clearing Corp. is the Registrant's principal underwriter. Michael
J. Hart and Dr. Craig T. Callahan, 12835 East Arapahoe Road, Tower II,
Englewood, Colorado 80112, each own 50% of Meridian Management & Research
Corporation ("MM&R") which owns the Advisor which, in turn, owns, Meridian
Clearing Corp. Mr. Hart and Dr. Callahan are each a Trustee of the
Registrant.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder will be maintained by the Registrant at 1793 Kingswood Drive,
Suite 200, Southlake, Texas 76092 and/or by the Registrant's Custodian,
transfer and shareholder service agent, Firstar Trust Company, 615 East
Michigan Street, Milwaukee, Wisconsin 53202
ITEM 31. MANAGEMENT SERVICES NOT DISCUSSED IN PARTS A OR B
None.
ITEM 32. UNDERTAKINGS
(a) Not Applicable.
(b) The Registrant hereby undertakes to file a Post-Effective Amendment,
using financial statements which need not be certified, within four to
six months from the effective date of this registration.
(c) The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(d) Registrant undertakes to call a meeting of shareholders for purposes
of voting upon the question of removal of one or more Trustees when
requested in writing to do so by the holders of at least 10% of the
Trust's outstanding shares, and in connection with such meeting to
comply with the provisions of Section 16(c) of the Investment Company
Act of 1940 relating to shareholder communications.
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Englewood, State of Colorado, on the 9th day of
October, 1996.
ICON Funds
By: /s/ Michael J. Hart
-----------------------
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/Michael J. Hart
- --------------------------
Michael J. Hart President and Oct. 9, 1996
Trustee
/s/Craig T. Callahan
- --------------------------
Craig T. Callahan Trustee Oct. 9, 1996
/s/R. Michael Sentel
- --------------------------
R. Michael Sentel Trustee Oct. 9, 1996
/s/James W. Hire
- --------------------------
James W. Hire Trustee Oct. 9, 1996
/s/Kenneth D. Trumpfheller
- --------------------------
Kenneth D. Trumpfheller Vice President Oct. 9, 1996
and Secretary
/s/Kelli D. Shomaker
- --------------------------
Kelli D. Shomaker Treasurer and Oct. 9, 1996
Chief Accounting
Officer
/s/ Erik L. Johnson
- -----------------------
Erik L. Jonson Vice President Oct. 9, 1996
and Chief
Financial Officer
- --------------------------------------------------------------------------------
POWER OF ATTORNEY
We the undersigned officers and Trustees of ICON Funds (the "Trust"),
do hereby severally constitute and appoint Erik L. Jonson, Charles W. Lutter,
Jr. and Kenneth D. Trumpfheller, and each of them acting singularly, as our true
and lawful attorneys, with full powers to them and each of them to sign for us,
in our names in the capacities indicated below, any amendment to the
Registration Statement of the Trust on Form N-1A to be filed with the Securities
and Exchange Commission and to take such further action in respect thereto as
they, in their sole discretion, deem necessary to enable the Trust to comply
with the provisions of the Securities Act of 1933 and the Investment Company Act
of 1940 and all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by our said attorneys to any and all documents related to said amendment to the
Registration Statement.
IN WITNESS WHEREOF, we have hereunto set out hands on the dates
indicated below.
SIGNATURE TITLE DATE
/s/ Michael J. Hart
- --------------------------- PRESIDENT AND TRUSTEE OCTOBER 9, 1996
MICHAEL J. HART
/s/ Craig T. Callahan
- --------------------------- EXECUTIVE VICE PRESIDENT OCTOBER 9, 1996
CRAIG T. CALLAHAN AND TRUSTEE
/s/ R. Michael Sentel
- --------------------------- TRUSTEE OCTOBER 9, 1996
R. MICHAEL SENTEL
/s/ James W. Hire
- --------------------------- TRUSTEE OCTOBER 9, 1996
JAMES W. HIRE
/s/ Erik L. Jonson
- --------------------------- VICE PRESIDENT AND OCTOBER 9, 1996
ERIK L. JONSON CHIEF FINANCIAL OFFICER
/s/ Kenneth D. Trumpfheller
- --------------------------- VICE PRESIDENT AND OCTOBER 9, 1996
KENNETH D. TRUMPFHELLER SECRETARY
/s/ Kelli D. Shomaker
- --------------------------- TREASURER AND OCTOBER 9, 1996
KELLI D. SHOMAKER CHIEF ACCOUNTING OFFICER
ICON FUNDS
MASTER TRUST AGREEMENT
September 19, 1996
ICON FUNDS
MASTER TRUST AGREEMENT
Page
DECLARATIONS.................................................1
ARTICLE I. NAME AND DEFINITIONS
Section 1.1 Name and Principal Office....................................1
Section 1.2 Definitions..................................................1
(a) "By-Laws"................................................1
(b) "1940 Act"...............................................1
(c) "Commission".............................................1
(d) "Series".................................................1
(e) "Shareholder"............................................1
(f) "Shares".................................................1
(g) "Trust"..................................................1
(h) "Agreement"..............................................1
(i) "Trustees"...............................................2
(j) "Class"..................................................2
ARTICLE II. PURPOSE OF TRUST
ARTICLE III. THE TRUSTEES
Section 3.1 Appointment, Election, Removal, etc..........................2
(a) Initial Trustees.........................................2
(b) Number...................................................2
(c) Election ................................................2
(d) Term.....................................................2
(e) Vacancies................................................2
(f) Resignation..............................................2
(g) Removal..................................................3
(h) Effect of Death, Resignation, etc........................3
(i) No Accounting............................................3
Section 3.2 Powers of Trustees...........................................3
(a) Investments..............................................3
(b) Disposition of Assets....................................4
(c) Ownership Powers.........................................4
(d) Subscription.............................................4
(e) Form of Holding..........................................4
(f) Reorganization, etc......................................4
(g) Voting Trusts, etc.......................................4
(h) Compromise...............................................4
(i) Associations, etc........................................4
(j) Borrowing and Security...................................4
(k) Guarantees, etc..........................................4
(l) Insurance................................................4
(m) Vote Required, Place and Type of Meeting.................4
(n) Distribution Plans.......................................4
Section 3.3 Certain Contracts............................................5
Section 3.4 Trust Expenses ..............................................5
Section 3.5 Ownership of Assets of the Trust.............................5
ARTICLE IV SHARES/SUB-TRUSTS
Section 4.1 Description of Shares........................................5
Section 4.2 Establishment and Designation of Sub-Trust and Classes......6
Section 4.3 Rights and Preferences of Sub-Trusts.........................7
(a) Assets Belonging to Sub-Trusts...........................7
(b) Liabilities Belonging to Sub-Trusts......................7
(c) Determination of Treatment as Income and/or Capital......7
(d) Dividends................................................7
(e) Liquidation..............................................7
(f) Voting...................................................8
(g) Redemption by Shareholder................................8
(h) Redemption by Trust......................................8
(i) Net Asset Value..........................................8
(j) Transfer.................................................8
(k) Equality.................................................8
(l) Fractions................................................9
(m) Conversion Rights........................................9
(n) Class Differences........................................9
Section 4.4 Ownership of Shares..........................................9
Section 4.5 Investments in the Trust.....................................9
Section 4.6 No Preemptive Rights.........................................9
Section 4.7 Status of Shares and Limitation of Personal Liability........9
ARTICLE V SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers................................................9
Section 5.2 Meetings and Notice.........................................11
Section 5.3 Record Dates................................................11
Section 5.4 Quorum and Required Vote....................................11
Section 5.5 Action by Written Consent...................................11
Section 5.6 Inspection of Records.......................................11
Section 5.7 Additional Provisions.......................................11
Section 5.8 Shareholder Communications..................................11
ARTICLE VI LIMITATION OF LIABILITY - INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable, Notice..12
Section 6.2 Notice for Contracts........................................12
Section 6.3 Trustee's Good Faith Action; Expert Advice; No Bond ........12
Section 6.4 Indemnification of Shareholders.............................12
Section 6.5 Indemnification of Trustees, Officers, etc..................12
Section 6.6 Compromise Payment..........................................13
Section 6.7 Indemnification Not Exclusive, etc..........................13
Section 6.8 Liability of Third Persons Dealing with Trustees............13
ARTICLE VII MISCELLANEOUS
Section 7.1 Duration and Termination of Trust...........................13
Section 7.2 Reorganization..............................................14
Section 7.3 Amendments .................................................14
Section 7.4 Filing of Copies; References; Headings......................14
Section 7.5 Applicable Law..............................................15
Section 7.6 Resident Agent..............................................15
ICON FUNDS
MASTER TRUST AGREEMENT
This AGREEMENT AND DECLARATION OF TRUST (the "Agreement") is made at
Southlake, TX, the 19th day of September, 1996, by the Trustees named under this
Agreement, and by the holders of shares of beneficial interest to be issued as
provided under this Agreement as follows:
DECLARATIONS
WHEREAS this Trust has been created to conduct the business of an
investment company; and
WHEREAS this Trust is authorized to issue, in accordance with the
provisions of this Agreement, its shares of beneficial interest in separate
series, with each separate series to be a Sub-Trust described in this Agreement;
WHEREAS the Trustees have agreed to manage the property received by
them as trustees of a Massachusetts business trust in accordance with the
provisions in this Agreement.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may acquire (from time to time) as
Trustees under this Agreement IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust or Sub-Trusts created under
this Agreement as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 NAME AND PRINCIPAL OFFICE. This Trust shall be known as
ICON Funds and the Trustees will conduct the business of the Trust under that
name or any other name or names as they may from time to time determine. The
principal place of business of the Trust shall be 1793 Kingswood Drive, Suite
200, Southlake, TX 76092 or at such other location as the Trustees may from time
to time determine.
Section 1.2 DEFINITIONS. Unless otherwise specifically stated, the
following terms shall mean:
(a) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time.
(b) The "1940 Act" refers to the Investment Company Act of 1940 and
regulations thereunder, all as amended from time to time;
(c) The term "Commission" shall have the meaning given it in the 1940
Act;
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article IV, each of which Series
shall be a Sub-Trust of the Trust;
(e) "Shareholder" means a record owner of Shares;
(f) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the Trust (as the
context may require) shall be divided from time to time;
(g) The "Trust" refers to the ICON Funds business trust established by
this Agreement, as amended from time to time, inclusive of each and every
Sub-Trust established hereunder;
1
(h) "Agreement" shall mean this Agreement and Declaration of Trust as
amended or restated from time to time; and
(i) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article III; and (j) "Class" refers to any class of
Shares of any Series or Sub-Trust established and designated under or in
accordance with the provisions of Article IV.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to conduct the business of an investment
company, offering Shareholders of the Trust one or more investment programs; and
to engage in any business allowable under applicable law which the Trustees may
deem convenient or proper in furtherance of the Trust's business.
ARTICLE III
THE TRUSTEES
Section 3.1 APPOINTMENT, ELECTION, REMOVAL, ETC.
(a) Initial Trustees. Upon his execution of this Declaration of Trust
or a counterpart hereof or some other writing in which he accepts such
Trusteeship and agrees to the provisions hereof, Kenneth D. Trumpfheller, 1793
Kingswood Drive, Suite 200, Southlake, TX 76092 shall become Trustee of the
Trust and of each subtrust hereunder.
(b) Number. The Trustee(s) serving as such, whether named above or
hereafter appointed or elected, have the discretion to increase or decrease the
number of Trustees. No decrease in the number of Trustees may remove any Trustee
from office prior to the expiration of his term; however, a decrease in the
number of Trustees may coincide with the removal of a Trustee pursuant to
subsection (g) of this Section 3.1.
(c) Election. The Shareholders shall elect the Trustees of the Trust.
Subject to Section 16(a) of the 1940 Act, the Trustees may elect their own
successors and may, pursuant to Section 3.1(e), appoint Trustees to fill
vacancies.
(d) Term. Whether named above, appointed, or elected persuant to this
agreement, each Trustee shall serve as a Trustee of the Trust and each Sub-Trust
during the lifetime of the Trust and until its termination as hereinafter
provided or until such Trustee sooner dies, resigns, retires or is removed. The
Trustees may elect their own successors and may, pursuant to Section 3.1(f)
hereof, appoint Trustees to fill vacancies; provided that, immediately after
filling a vacancy, at least two-thirds of the Trustees then holding office shall
have been elected to such office by the Shareholders at an annual or special
meeting. If at any time less than a majority of the Trustees then holding office
were so elected, the Trustees shall forthwith cause to be held as promptly as
possible, and in any event within 60 days, a meeting of Shareholders for the
purpose of electing Trustees to fill any existing vacancies.
(e) Vacancies. Any vacancy resulting from death, resignation, removal
or any other means, including without limitation an increase in the number of
trustees by the other trustees, or any anticipated vacancy may (but need not
unless required by the 1940 Act) be filled by a majority of the remaining
Trustees. Subject to the provisions of Section 16(a) of the 1940 Act, the
remaining Trustees, in their sole discretion, may appoint in writing a Trustee
to fill a vacancy, and this appointment shall become effective upon the written
acceptance of such named person and his agreement to be bound by the provisions
of this Agreement. In the event of an appointment to fill an anticipated
vacancy, the appointment shall become effective at or after the date the
anticipated vacancy occurs. No further act is necessary for the Trust estate to
vest in the new Trustee once the appointment is effective.
2
(f) Resignation. A Trustee may resign as a trustee by delivering to the
Trustees or any Trust officer a signed written document to that effect. The
effective date of such resignation will be the later of date stated in the
document or, the date of delivery of the document to the Trust at its principal
offices.
(g) Removal. Any Trustee may be removed with or without cause at any
time either: (i) by a written document stating the effective date of the removal
and signed by at least two-thirds of the number of Trustees prior to such
removal; or (ii) by at least a two-thirds vote of the outstanding shares, with
such vote cast in person or by proxy at a meeting called for such purpose; or
(iii) by a written declaration signed by Shareholders owning at least two-thirds
of the outstanding shares and filed with the Trust's custodian.
(h) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of one or more of the Trustees shall not
terminate the Trust or any Sub-Trust or revoke or terminate any existing agency
or contract created or entered into pursuant to the terms of this Agreement.
(i) No Accounting. No persons or estate of such person who has ceased
acting as Trustee shall be required to make an accounting to the Trustees or
Shareholders unless required by the 1940 Act or justified by circumstances
calling for removal for cause.
Section 3.2 POWERS. The Trustees may, in accordance with this Trust
Agreement, carry on the business of the Trust and shall have all the powers
necessary to conduct such business to carry out the purpose of the Trust. The
Trustees' powers include, but are not limited to:
adopting By-Laws consistent with the Trust Agreement which specify
procedures for conducting the daily business affairs of the Trust,
including the power to amend and repeal the By-Laws to the extent that
the ByLaws do not reserve that right to the Shareholders;
establish Sub-Trusts, each such Sub-Trust to operate as a separate and
distinct investment medium and with separately defined investment
objectives and policies;
establish, from time to time in accordance with the provisions of
Section 4.1 hereof, classes of Shares of any Series or Sub-Trust or
divide the Shares of any Series or Sub-Trust into classes;
elect and remove officers and appoint and terminate agents and
consultants and hire and terminate employees, any one or more of the
foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing;
appoint from their own number, and terminate, any one or more
committees consisting of two or more Trustees, including without
implied limitation an executive committee, which may, when the Trustees
are not in session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may determine;
employ one or more Advisers, Administrators, Depositories and
Custodians and may authorize any Depository or Custodian to employ
subcustodians or agents and to deposit all or any part of such assets
in a system or systems for the central handling of securities and debt
instruments, retain transfer, dividend, accounting or Shareholder
servicing agents or any of the foregoing, provide for the distribution
of Shares by the Trust through one or more distributors, principal
underwriters or otherwise; and
in general, they may delegate to any officer of the Trust, to any
committee of the Trustees and to any employee, adviser, administrator,
distributor, depository, custodian, transfer and dividend disbursing
agent, or any other agent or consultant of the Trust such authority,
powers, functions and duties as they consider desirable or appropriate
for the conduct of the business and affairs of the Trust, including
authority to act in the name of the Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.
3
Without limiting the foregoing, the Trustees, on behalf of the Trust,
shall, in accordance with the 1940 Act or other applicable law, have the
authority:
(a) INVESTMENTS. To invest cash and other property, and to hold cash or
other property uninvested without regard to the custom of investments by
trustees;
(b) DISPOSITION OF ASSETS. To sell, exchange, lend, pledge, mortgage,
write options on and lease any or all of the assets of the Trust;
(c) OWNERSHIP POWERS. To vote, or give assent, or exercise any rights
of ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper;
(d) SUBSCRIPTION. To exercise powers and rights of subscription which
arise out of ownership of securities or debt instruments;
(e) FORM OF HOLDING. To hold any assets of the Trust in the name of the
Trust, Trustees, Sub-Trust, nominee or otherwise;
(f) REORGANIZATION, ETC. To consent to or participate in any plan for
the reorganization or consolidation of any corporation or issuer for which a
security or debt instrument is or was held in the Trust;
(g) VOTING TRUSTS, ETC. To join with other holders of any securities or
debt instruments in acting through a committee, depository, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to the other holders or a
representative thereof and to delegate to them such power and authority with
regard to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to pay such portion of the
expenses and compensation of such representative as the Trustees shall deem
proper;
(h) COMPROMISE. To compromise or arbitrate claims (or any matter in
controversy) in favor of or against the Trust or any Sub-Trust;
(i) ASSOCIATIONS, ETC. To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) BORROWING AND SECURITY. To borrow funds and to mortgage the assets
of the Trust to secure the obligations arising out of such borrowing;
(k) GUARANTEES, ETC. To make contracts of guaranty, endorse or
guarantee the payment of any obligations of any person; and to mortgage and
pledge any Trust property to secure any of or all such obligations;
(l) INSURANCE. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of the
Trust's business including, without limitation, liability insurance for the
benefit of the Shareholders, Trustees, officers, employees, agents, consultants,
investment advisors, managers, administrators, distributors, principal
underwriters or independent contractors (or any person connected therewith); and
(m) VOTE REQUIRED, PLACE AND TYPE OF MEETING. Except as otherwise
provided by the 1940 Act or other applicable law, this Agreement or the By-Laws,
any action to be taken by the Trustees on behalf of the Trust or any Sub-Trust
may be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Massachusetts, including any meeting held by means
of a conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other at the same time
and participation by such means shall constitute presence in person at a
4
meeting, or by written consents of a majority of the Trustees then in office (or
such larger or different number as may be required by the 1940 Act or other
applicable law); and
(n) DISTRIBUTION PLANS. To adopt on behalf of the Trust or any
Sub-Trust with respect to any class thereof a plan of distribution and related
agreements thereto pursuant to the terms of Rule 12b-1 and/or other provisions
of the 1940 Act and to make payments from the assets of the Trust or the
relevant Sub-Trust or Sub-Trusts pursuant to said Rule 12b-1 Plan.
Section 3.3 Certain Contracts. The Trustees may from time to time enter
into contracts with any type of organization or individual ("Contracting Party")
to provide services for the Trust. Any delegation of powers by the Trustees
shall not limit the generality of their powers and authority.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter or distributor or agent
of or for any Contracting Party, or of or for any parent or
affiliate of any contracting party or that the contracting party
or any parent or affiliate thereof is a Shareholder or has an
interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited
partnerships or other organizations, or have other business or
interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any
Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust, any Sub-Trust or its Shareholders, provided that in
the case of any relationship or interest referred to in the preceding clause (i)
on the part of any Trustee or officer of the Trust either (x) the material facts
as to such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (y) the material facts as to
such relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract involved
is specifically approved in good faith by vote of the shareholders, or (z) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by the Shareholders.
Section 3.4 TRUST EXPENSES. The Trustees are authorized to incur on
behalf of the Trust expenses which they deem necessary and proper to carry out
the business of the Trust. As an element of expenses, the Trustees are
authorized to determine, establish, and receive reasonable compensation for
their services as Trustees. The Trustees are authorized to pay all expenses from
either principal or income and may allocate expenses among the Sub-Trusts and/or
one or more classes of Shares thereof as the Trustees, in their discretion, deem
necessary and appropriate.
Section 3.5 OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the Trust
assets shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES/SUB-TRUSTS
Section 4.1 DESCRIPTION OF SHARES. The beneficial interest in the Trust
shall consist of one class of no-par Shares; however, the Trustees have
authority to divide the class of Shares into Series of Shares each of which
Series of Shares shall be a separate and distinct Sub-Trust of the Trust, as
they deem necessary or desirable. Each Sub-Trust of Shares established will be
deemed to be a separate Trust under Massachusetts General Laws Chapter 182. The
Trustees
5
shall have exclusive powers without Shareholder approval to establish any
Sub-Trust and to determine the relative rights and preferences between the
Shares of the separate Sub-Trusts as to right of redemption and the price, terms
and manner of redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund provisions,
conversion rights, and conditions under which the several Sub-Trusts shall have
separate voting rights or no voting rights.
In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue classes of Shares of any Sub-Trust
or divide the Shares of any Sub-Trust into classes, each class having such
difference dividend, liquidation, voting and other rights as the Trustees may
determine, and may establish and designate the specific classes of Shares of
each Sub-Trust. The fact that a Sub-Trust shall have initially been established
and designated without any specific establishment or designation or classes
(i.e., that all Shares of such Sub-Trust are initially of a single class), or
that a Sub-Trust shall have more than one established and designated class,
shall not limit the authority of the Trustees to establish and designate
separate classes, or one or more further classes, of said Sub-Trust without
approval of the holders of the initial class thereof, or previously established
and designated class or classes thereof, provided that the establishment and
designation of such further separate classes would not adversely affect the
rights of the holders of the initial or previously established and designated
class or classes.
The number of authorized Shares and the number of Shares of each
Sub-Trust or class thereof that may be issued is unlimited, and the Trustees may
issue Shares of any Sub-Trust or class thereof for such consideration and on
such terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.4). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Sub-Trust or class thereof into one or more Sub-Trusts or
classes thereof that may be established and designated from time to time. The
Trustees may hold as treasury Shares, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust or class thereof reacquired by the Trust.
The Trustees may, at any time, abolish a Sub-Trust if no Shares of that
Sub-Trust are outstanding. The Trustees may from time to time close the transfer
books or establish record dates and times for the purposes of determining the
holders of Shares entitled to be treated as such, to the extent provided or
referred to in Section 5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective upon the vote of a majority of the then Trustees
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Sub-Trust or class, or as otherwise provided
in such vote. At any time that there are no Shares outstanding of any particular
Sub-Trust or class previously established and designated the Trustees may by
vote of a majority of their number (or by an instrument executed by an officer
of the Trust pursuant to the vote of a majority of the Trustees) abolish that
Sub-Trust or class and the establishment and designation thereof. Each vote
referred to in this paragraph shall be implemented by preparation and filing of
an amendment to this Agreement.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust (including any classes thereof) of the Trust to the same
extent as if such person were not a Trustee, officer or other agent of the
Trust; and the Trust may issue and sell or cause to be issued and sold and may
purchase Shares of any Sub-Trust (including any classes thereof from any such
person or any such organization subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of Shares of
such Sub-Trust (including any classes thereof) generally.
Section 4.2 ESTABLISHMENT AND DESIGNATION OF SUB-TRUSTS. Without
limiting the Trustees' authority to establish further Sub-Trusts pursuant to
Section 4.1, the Trustees hereby establish the following sub-trusts:
ICON Basic Materials Fund ICON North Asia Regional Fund
ICON Capital Goods Fund ICON South Asia Regional Fund
ICON Consumer Cyclicals Fund ICON North Europe Regional Fund
ICON Consumer Staples Fund ICON South Europe Regional Fund
ICON Energy Fund ICON Western Hemisphere Fund
ICON Financial Services Fund
ICON Hospitality Fund ICON Short-Term Fixed Income Fund
ICON Leisure Fund
ICON Technology Fund
ICON Telecommunication & Utilities Fund
ICON Transportation Fund
Section 4.3 RIGHTS AND PREFERENCES OF SUB-TRUSTS. Unless otherwise
specified by the Trustees, the Sub-Trusts established above and all future
Sub-Trusts or any classes thereof have the following rights and preferences:
(a) ASSETS BELONGING TO SUB-TRUSTS. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust or any classes
thereof, all assets in which the consideration is invested, and proceeds from
the sale, exchange or liquidation thereof, all income earnings, profits and
proceeds from those assets and any items allocated to the Sub-Trust or class
thereof by the Trustees shall be held in trust by the Trustees for the benefit
of the Shareholders of that Sub-Trust or class thereof shall irrevocably belong
to that Sub-Trust (and be allocable to any classes thereof) and shall be
recorded on the books of account of the Trust as assets belonging to that
Sub-Trust. The Trustees may, in a manner they deem fair and equitable, allocate
among the Sub-Trusts any items which are not readily identifiable to any one
particular Sub-Trust (and allocable to any classes thereof). Each allocation
shall be binding upon the Shareholders of the Trust.
(b) LIABILITIES BELONGING TO SUB-TRUSTS. The liabilities belonging to a
Sub-Trust shall include all liabilities associated with the assets of that
particular Sub-Trust, all expenses and charges attributable to that Sub-Trust
and any general liabilities which are not readily identifiable and which the
Trustees may allocate in a manner they deem fair and equitable to that
Sub-Trust. In addition, the liabilities in respect of a particular class of
Shares of a particular Sub-Trust and all expenses, costs, charges and reserves
belonging to that class of Shares, and any general liabilities, expenses, costs,
charges or reserves of that particular Sub-Trust which are not readily
identifiable as belonging to any particular class of Shares of that Sub-Trust
shall be allocated and charged by the Trustees to and among any one or more of
the classes of Shares of that Sub-Trust established and designated from time to
time in such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable. Each allocation shall be binding upon the Shareholders
of the Trust. Only the assets of a particular Sub-Trust (including any classes
thereof) may be used to satisfy a creditor of that Sub-Trust.
(c) DETERMINATION OF TREATMENT AS INCOME AND/OR CAPITAL. Except as
otherwise provided by the 1940 Act, the Trustees shall have full discretion to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding upon the
Shareholders.
(d) DIVIDENDS. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereof may be paid with such frequency as the Trustees
may determine, which may be daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Sub-Trust or class, from such of the
income and capital gains, accrued or realized, from the assets belonging to that
Sub-Trust, or in the case of a class, belonging to that sub-trust and allocable
to that class, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Sub-Trust or class. All dividends and
distributions on Shares of a particular Sub-Trust or class thereof shall be
distributed pro rata to the holders of Shares of that Sub-Trust or class in
proportion to the number of Shares of that Sub-Trust held by such holders at the
date and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure the Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's purchase order and/or
payment have not been received by the time or
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times established by the Trustees under such program or procedure. Such
dividends and distributions may be made in cash or Shares of that Sub-Trust or
class or a combination thereof as determined by the Trustees or pursuant to any
program that the Trustees may have in effect at the time for the election by
each Shareholder of the mode of the making of such dividend or distribution to
that Shareholder. Any such dividend or distribution paid in Shares will be paid
at the net asset value thereof as determined in accordance with the subsection
(i) of Section 4.3.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(e) LIQUIDATION. A Sub-Trust or any class there may be liquidated after
such liquidation has been authorized by a majority vote of the Trustees then in
office and approved by a majority of the outstanding voting Shares of that
Sub-Trust or in the case of a class, belonging to that Sub-Trust and allocable
to that class, over the liabilities belonging to that Sub-Trust or class, as
defined in the 1940 Act. The Shareholders of that particular Sub-Trust or class
thereof shall receive the excess of assets in the Sub-Trust or class thereof
over the liabilities in the Sub-Trust on a pro rata basis.
(f) VOTING. On each matter submitted to a vote of the Shareholders,
each holder of a Share of each Sub-Trust or any class thereof shall be entitled
to one vote for each whole Share and for a proportionate fractional vote for
each fractional Share outstanding in his name on the books of the Trust and all
shares of each Sub-Trust or class thereof shall vote as a separate class, except
as to voting for Trustees and as otherwise required by the 1940 Act. As to any
matter which does not affect the interest of a particular Sub-Trust or class
thereof, only the holders of Shares of one or more of the affected Sub-Trusts or
classes thereof shall be entitled to vote.
(g) REDEMPTION BY SHAREHOLDER. Each Shareholder shall have the right to
tender all or part of his shares of the Sub-Trust or any class thereof for
redemption at such times as the By-Laws permit, but at least once weekly, with
the redemption price equal to the net asset value per Share as defined in this
section. The Trust shall make payment in cash unless in the Trustee's judgment
conditions exist which make payment in cash undesirable, in which case the Trust
may make payment wholly or partly in assets belonging to the Sub-Trust or class
thereof. The Trust may postpone payment of the redemption price and suspend the
Shareholder's right of redemption in appropriate circumstances, to the extent
permissible under the 1940 Act.
(h) REDEMPTION BY TRUST. The Trustees shall have the right to redeem
the Shares of the Trust and Sub-Trusts or classes thereof at the same redemption
price as if the Shareholder were redeeming the Shares. A redemption by the
Trustees shall occur if: (1) the Trustees determine in their sole discretion
that failure to redeem the Shares would result in material adverse consequences
to the Shareholders of any of the Sub-Trusts; or (2) the failure of a
Shareholder to maintain a minimum amount as set forth in the current prospectus
of the Trust (Sub-Trust). If the Trustees exercise their right of redemption,
the Shareholder shall have no further right except to receive payment of the
redemption price.
(i) NET ASSET VALUE. The net asset value per Share of any Sub-Trust
shall be (a) in the case of a Sub-Trust whose Shares are not divided into
classes, the quotient obtained by dividing the value of the net assets of that
Sub-Trust (being the value of the assets belonging to that Sub-Trust less the
liabilities belonging to that Sub-Trust) by the total number of Shares of that
Sub-Trust outstanding, and (b) in the case of a class of Shares of a Sub-Trust
whose Shares are divided into classes, the quotient obtained by dividing the
value of the assets of that Sub-Trust allocable to such class (less the
liabilities belonging to such class) by the total number of Shares of such class
outstanding. The net asset value shall be computed in accordance with the 1940
Act and regulations thereunder. In calculating the net asset value, methods and
procedures established by the Trustees shall be used.
The Trustees may determine to maintain the net asset value per Share of
any Sub-Trust at a designated constant dollar amount and in connection therewith
may adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Sub-Trust as dividends payable in
additional Shares of that Sub-Trust at the designated constant dollar amount and
for the handling of any losses attributable to that Sub-Trust. Such procedures
may provide that in the event of any loss each Shareholder shall be deemed to
have contributed to the capital of the Trust
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attributable to that Sub-Trust his pro rata portion of the total number of
Shares required to be canceled in order to permit the net asset value per Share
of that Sub-Trust to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Shareholder of the Trust shall be deemed
to have agreed, by his investment in any Sub-Trust with respect to which the
Trustees shall have adopted any such procedure, to make the contribution
referred to in the preceding sentence in the event of any such loss.
(j) TRANSFER. All Shares of each particular Sub-Trust or class thereof
shall be transferable, but transfers of Shares of a particular Sub-Trust or
class thereof will be recorded on the Share transfer records of the Trust
applicable to that Sub-Trust or class only at such times as Shareholders shall
have the right to require the Trust to redeem Shares of that Sub-Trust or class
and at such other times as may be permitted by the Trustees.
(k) EQUALITY. Except as provided herein or in the instrument
designating and establishing any class of Shares or any Sub-Trust, all Shares of
each particular Sub-Trust or class thereof shall represent an equal
proportionate interest in the assets belonging to that Sub-Trust, or in the case
of a class, belonging to that Sub-Trust and allocable to that class (subject to
the liabilities belonging to that Sub-Trust or class), and each Share of any
particular Sub-Trust or class shall be equal to each other Share of that
Sub-Trust or class; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (d) of this Section 4.3 that may exist
with respect to dividends and distributions on Shares of the same Sub-Trust or
class. The Trustees may from time to time divide or combine the Shares of any
particular Sub-Trust or class into a greater or lesser number of Shares of that
Sub-Trust or class without thereby changing the proportionate beneficial
interest in the assets of that Sub-Trust or class or in any way affecting the
rights of Shares of any other Sub-Trust or class.
(l) FRACTIONS. A fractional Share of a Sub-Trust or class
proportionately carries all the rights and obligations of a whole Share of the
Sub-Trust or class.
(m) CONVERSION RIGHTS. The Trustees shall have authority to establish
procedures pursuant to which a Shareholder of one Sub-Trust or class thereof may
exchange shares of that Sub-Trust for shares of another Sub-Trust or class
thereof.
(n) CLASS DIFFERENCES. The relative rights and preferences of the
classes of any Sub-Trust may differ in such other respects as the Trustees may
determine to be appropriate in their sole discretion, provided that such
differences are set forth in the resolutions adopted by the Trustees or the
instrument establishing and designating such classes and executed by a majority
of the Trustees (or by an instrument executed by an officer of the Trust
pursuant to a vote of a majority of the Trustees).
Section 4.4 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust and each class thereof. No certificates certifying the ownership of
Shares need be issued except as the Trustees determine. The Trustees may
establish such rules as they consider appropriate for the issuance of Share
certificates, use of facsimile signatures, transfer of Shares and similar
matters. The record books of the Trust shall be conclusive as to who are the
Shareholders and as to the number of Shares of each Sub-Trust and class thereof
held from time to time by each such Shareholder.
Section 4.5 INVESTMENTS IN THE TRUST. The Trustees shall have authority
to establish procedures and policies with respect to acceptance or rejection of
investments in the Trust and Sub-Trusts and to authorize other persons to accept
and reject orders for the purchase of Shares in accordance therewith.
Section 4.6 NO PREEMPTIVE RIGHTS. The Shares of the Trust or Sub-Trusts
have no preemptive rights.
Section 4.7 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder, by virtue of having become a Shareholder,
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto.
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The death of a Shareholder during the continuance of the Trust shall not operate
to terminate the Trust or any Sub-Trust thereof nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle the Shareholder
to any title in or to the whole or any part of the Trust property or right to
call for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind personally any Shareholder, nor, except as specifically provided
herein, to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 VOTING POWERS. The Shareholders shall only vote in the
following instances:
(i) election or removal of Trustees as provided herein;
(ii) approval of a contract for which the 1940 Act requires
Shareholder approval;
(iii) termination or reorganization of the Trust or any Sub-Trust if
required by Section 7.2;
(iv) amendment of the Trust Agreement if required by Section 7.3;
(v) determination of whether a derivative or class action suit should
be brought or pursued on behalf of the Trust or Sub-Trust or
class thereof as would the stockholders of a Massachusetts
business corporation, provided that the Shareholders of one
Sub-Trust or class thereof may not vote on an action on behalf of
another Sub-Trust or class thereof or one of its Shareholders;
and
(vi) such additional matters relating to the Trust as may be required
by the 1940 Act, this Agreement, the By-Laws or any registration
of the Trust with the Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or desirable.
There shall be no cumulative voting in Trustee elections.
Shares may be voted by proxy or in person. Shares held in the name of
two or more persons may be voted by proxy executed by one of the named persons
unless the Trust is notified to the contrary by written instructions, prior to
the execution of the proxy. A proxy purporting to be executed by or on behalf of
a Shareholder shall be presumed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall be on the challenger.
Until Shares are issued the Trustees may take any action required by
law, this Agreement or the By-Laws to be taken by Shareholders.
Proxies may be given orally or in writing or pursuant to any
computerized or mechanical data gathering process specifically approved by the
Trustees.
Section 5.2 MEETINGS AND NOTICE. No annual or regular meeting of
Shareholders is required; however, the Trustees may call meetings to take action
on matters which require Shareholder vote and for other matters which the
Trustees determine Shareholder vote is necessary or desirable.
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The Trustees shall give Shareholders written notice of any Shareholder
meeting by mailing such notice, postage prepaid, at least seven days before the
meeting date to each Shareholder at the Shareholder's address as it appears on
the records of the Trust. The notice shall state the purpose of the meeting.
Upon written request of Shareholders holding 10% or more of the then
outstanding Shares, the Trustees shall call a meeting to vote upon the removal
of a Trustee. If the Trustees do not call a Shareholder meeting within 30 days
after receipt of the written request, Shareholders holding 10% or more the then
outstanding Shares may call a meeting for that purpose giving notice and
following the procedures governing Trustee-called meetings, set forth in this
Agreement.
No notice is required for adjourned sessions which are held within a
reasonable time after the original meeting.
Section 5.3 RECORD DATES. For the purpose of determining Shareholders
entitled to vote or act at a meeting, to participate in a dividend or
distribution, or for the purpose of any other action, the Trustees may close the
transfer books for a period not exceeding 30 days (except at or in connection
with the termination of the Trust) as the Trustees may determine. Alternatively,
without closing the transfer books, the Trustees may fix a date and time not
more than 60 days prior to the date of any meeting of Shareholders or other
action as the date and time of record for the determination of Shareholders
entitled to vote at such meeting or to be treated as Shareholders of record for
purposes of such other action, and any Shareholder who was a Shareholder at the
date and time so fixed shall be entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes of
such other action, even though he has since that date and time disposed of his
Shares; and, no person becoming a Shareholder after that date and time shall be
so entitled to vote at such meeting or any adjournment thereof or to be treated
as a Shareholder of record for purposes of such other action.
Section 5.4 QUORUM AND REQUIRED VOTE. A quorum to conduct business
shall consist of a majority of the Shares entitled to vote at a Shareholder's
meeting. A lesser number is sufficient for adjournments.
Unless otherwise required by applicable law or this Agreement a
majority of the voted Shares at a meeting at which a quorum is present shall be
sufficient to transact business, and Trustees shall be elected by a plurality.
Section 5.5 ACTION BY WRITTEN CONSENT. Unless otherwise required by
applicable law, Shareholders may take action without a meeting if a majority of
the Shareholders entitled to vote on the action (or such greater percentage as
may be required by applicable law for such action) consent in writing to such
action and their consents are filed with the records of the Shareholder
meetings. Written Consents shall be treated as votes taken at a Shareholder
meeting.
Section 5.6 INSPECTION OF RECORDS. Shareholders may inspect the Trust's
records to the same extent permitted by Massachusetts Business Corporation Law
to the stockholders of a Massachusetts business corporation.
Section 5.7 ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 SHAREHOLDER COMMUNICATIONS. Whenever ten or more
Shareholders of record have been such for a least six months preceding the date
of application, and who hold in the aggregate either Shares having a net asset
value of at least $25,000 or at least 1% of the outstanding Shares, whichever is
less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a Shareholder meeting and accompanied by a form of communication and
request which they wish to transmit, the Trustees shall within five business
days after receipt of such application either (1) afford to such applicants
access to a list of the names and addresses of all Shareholders as recorded on
the books of the Trust or Sub-Trust, as applicable; or (2) inform such
applicants as to the approximate number of Shareholders of record, and the
approximate cost of mailing to them the proposed communication and form of
request.
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If the Trustees elect to follow the course specified in paragraph (2)
above the Trustees, upon the written request of such applicants, accompanied by
a tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record at their addresses as recorded on the books, unless within five business
days after such tender the Trustees shall mail to such applicants and file with
the Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Trustees to the effect that in
their opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in such violation of applicable law, and specifying the
basis of such opinion. The Trustees shall thereafter comply with the
requirements of the 1940 Act.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE, NOTICE.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this Agreement shall protect any Trustee or officer
against any liability to the Trust or the Shareholders to which such Trustee or
officer would otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee or of such officer.
Section 6.2 NOTICE FOR CONTRACTS. Every contract, instrument,
certificate or undertaking made or issued by the Trustees or by any officers or
officer shall give notice (a) that this Agreement is on file with the Secretary
of the Commonwealth of Massachusetts, (b) that the document was executed or made
on behalf of the Trust or by them as Trustees or as officers and not by them
individually, and (c) that the obligations of such instrument are not binding
upon any of them or the Shareholders individually, but are binding only upon the
assets and property of the Trust, or the particular Sub-Trust in question, as
the case may be. Omission of such notice shall not operate to bind any Trustee,
officer or Shareholder individually.
Section 6.3 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO BOND. The
exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his own wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law. Subject
to the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
adviser, administrator, distributor or principal underwriter, custodian or
transfer, dividend disbursing, Shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee; (b) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Agreement and their duties as
Trustees, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice; and (c) in discharging
their duties, the Trustees, when acting in good faith, shall be entitled to rely
upon the books of account of the Trust and upon written reports made to the
Trustees by any officer appointed by them, any independent public accountant,
and (with respect to the subject matter of the contract involved) any officer,
partner or responsible employee of a contracting party appointed by the Trustees
pursuant to Section 3.3. The Trustees, as such, shall not be required to give
any bond or other security for the performance of their duties.
Section 6.4 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or held
to be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other
12
reason, said Sub-Trust (upon proper and timely request by the Shareholder) shall
assume the defense against such charge and satisfy any judgment thereon, and the
Shareholder or former Shareholder (or his heirs, executors, administrators or
other legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets of
said Sub-Trust estate to be held harmless from and indemnified against all loss
and expense arising from such liability.
Section 6.5 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. The Trust shall
indemnify (from the assets of the Sub-Trust or class thereof or Sub-Trusts or
classes thereof in question) each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise [hereinafter referred to as a "Covered Person"]) against
all liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined in one of the manners described below,
that such Covered Person (i) did not act in good faith in the reasonable belief
that such Covered Person's action was in or not opposed to the best interests of
the Trust or (ii) had acted with wilful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such Covered
Person's office (either and both of the conduct described in (i) and (ii) being
referred to hereafter as "Disabling Conduct"). A determination that the Covered
Person is not entitled to indemnification due to Disabling Conduct may be made
by (i) a final decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of Disabling Conduct
by (a) a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in section 2(a)(19) of the 1940 Act nor parties
to the proceeding, or (b) an independent legal counsel in a written opinion.
Expenses, including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgements, in
compromise or as fines or penalties), may be paid from time to time in advance
of the final disposition of any such action, suit or proceeding, provided that
the Covered Person shall have undertaken to repay the amounts so paid to the
Sub-Trust in question if it is ultimately determined that indemnification of
such expenses is not authorized under this Article VI and (i) the Covered Person
shall have provided security for such undertaking, (ii) the Trust shall be
insured against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the disinterested Trustees who are not a party to the
proceeding, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe the Covered Party
ultimately will be found entitled to indemnification.
Section 6.6 COMPROMISE PAYMENT. Any compromise settlement shall be
indemnified only if approved: (a) by a majority of the disinterested Trustees
not a party to the proceeding; or (b) by a written opinion of an independent
legal counsel. If payment has been made pursuant to (a) or (b) and the recipient
is subsequently found to have engaged in bad faith, wilful misfeasance, gross
negligence or reckless disregard of duty, the Trust may recover such payment.
Section 6.7 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any covered person may be entitled. The
indemnification shall inure to the benefit of such person's heirs, executors and
administrators. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
Section 6.8 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
13
ARTICLE VII
MISCELLANEOUS
Section 7.1 DURATION AND TERMINATION OF TRUST. This Trust shall
continue for an unlimited period. The Trust may be terminated at any time by a
majority vote of the Trustees then in office and approved by a majority vote of
the outstanding voting shares as defined in 1940 Act, Shares of each Sub-Trust
or each class thereof voting separately by Sub-Trust or class thereof.
No modification of any Sub-Trust or class shall terminate the Trust.
In the event of termination, the Trustees shall pay all due and
anticipated expenses, and then liquidate the assets in a manner the Trustees
deem appropriate and distribute the proceeds according to the provisions of this
Agreement.
Section 7.2 REORGANIZATION. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Sub-Trusts, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Sub-Trust of the Trust, in exchange for cash, shares
or other securities (including, in the case of a transfer to another Sub-Trust
of the Trust, Shares of such other Sub-Trust) with such transfer either (1)
being made subject to, or with the assumption by the transferee of, the
liabilities belonging to each Sub-Trust the assets of which are so transferred,
or (2) not being made subject to, or not with the assumption of, such
liabilities; provided, however, that no assets belonging to any particular
Sub-Trust shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmation vote
of the holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Sub-Trust. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences among the various
Sub-Trusts and classes the assets belonging to which have been so transferred)
among the Shareholders of the Sub-Trust the assets belonging to which have been
so transferred; and if all of the assets of the Trust have been so transferred,
the Trust shall be terminated.
The Trust, or any one or more Sub-Trusts, may, either as the successor,
survivor, or non-survivor, (1) consolidate with one or more other trusts,
partnerships, associations or corporations organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States, to form a
new consolidated trust, partnership, association or corporation under the laws
of which any one of the constituent entities is organized, or (2) merge into one
or more other trusts, partnerships, associations or corporations organized under
the laws of the Commonwealth of Massachusetts or any other state of the United
States, or have one or more such trusts, partnerships, associations or
corporations merged into it, any such consolidation or merger to be upon such
terms and conditions as are specified in an agreement and plan of reorganization
entered into by the Trust, or one or more Sub-Trusts as the case may be, in
connection therewith. The terms "merge" or "merger" as used herein shall also
include the purchase or acquisition of any assets of any other trust,
partnership, association or corporation which is an investment company organized
under the laws of the Commonwealth of Massachusetts or any other state of the
United States. Any such consolidation or merger shall require the affirmative
vote of the holders of a majority of the outstanding voting Shares, as defined
in the 1940 Act, of each Sub-Trust affected thereby.
Section 7.3 AMENDMENTS. All rights granted to the Shareholders under
this Agreement are granted subject to the reservation of the right to amend this
Agreement as herein provided, except that no amendment shall repeal the
limitations on personal liability of any Shareholder or Trustee or repeal the
prohibition of assessment upon the Shareholders without the express consent of
each Shareholder or Trustee involved. Subject to the foregoing, the provisions
of this Agreement (whether or not related to the rights of Shareholders) may be
amended at any time, so long as such amendment does not adversely affect the
rights of any Shareholder with respect to which such amendment is or purports to
be applicable and so long as such amendment is not in contravention of
applicable law, including the 1940 Act, by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the Trust pursuant to the
vote of a majority of such Trustees). Any amendment to this Agreement that
adversely affects the rights of Shareholders
14
may be adopted at any time by an instrument in writing signed by a majority of
the then Trustees (or by an officer of the Trust pursuant to a vote of a
majority of such Trustees) when authorized to do so by the vote in accordance
with subsection (e) of Section 4.2 of Shareholders holding a majority of the
Shares entitled to vote. Subject to the foregoing, any such amendment shall be
effective as provided in the instrument containing the terms of such amendment
or, if there is no provision therein with respect to effectiveness, upon the
execution of such instrument and of a certificate (which may be a part of such
instrument) executed by a trustee or officer of the Trust to the effect that
such amendment has been duly adopted.
Section 7.4 FILING OF COPIES; REFERENCES; HEADINGS. This Agreement and
all amendments shall be maintained in Trust offices for Shareholder inspection.
A copy of this Agreement and all amendments shall be filed with the
appropriate governmental offices as required, including the Secretary of the
Commonwealth of Massachusetts and the Boston City Clerk. Failure to make any
such filing shall not impair the effectiveness of this instrument or any such
amendment.
Anyone dealing with the Trust may rely on a certificate by an officer
of the Trust as to whether or not any such amendments have been made, as to the
identities of the Trustees and officers, and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments.
As used in this Agreement the masculine gender shall include the
feminine and neuter genders. Headings are used for reference only and shall not
affect the meaning or construction of this Agreement. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
Any reference to this document shall include all amendments.
Section 7.5 APPLICABLE LAW. This Agreement is made in The Commonwealth
of Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth, including the
Massachusetts Business Corporation Law as the same may be amended from time to
time, to which reference is made with the intention that matters not
specifically covered herein or as to which an ambiguity may exist shall be
resolved as if the Trust were a business corporation organized in Massachusetts,
but the reference to said Business Corporation Law is not intended to give the
Trust, the Trustees, the Shareholders or any other person any right, power,
authority or responsibility available only to or in connection with an entity
organized in corporate form. The Trust shall be of the type referred to in
Section 1 of Chapter 182 of the Massachusetts General Laws and of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Section 7.6 RESIDENT AGENT. Mr. Edward S. Brewer, Jr., 101 Federal
Street, 22nd Floor, Boston, Massachusetts for the purposes of complying with the
laws of The Commonwealth of Massachusetts is hereby appointed as resident agent
for the Trust within the Commonwealth of Massachusetts; and hereby is designated
as its attorney in the Commonwealth of Massachusetts upon whom may be served any
notice, process or pleading in any action or proceeding against the Trust. and
the undersigned does hereby consent that any such action or proceeding against
the Trust may be commenced in any court of competent jurisdiction and proper
venue within the State so designated by services of process upon said resident
agent with the same effect as if the Trust had been served lawfully with
process. It is requested that a copy of any notice, process or pleadings served
be mailed to ICON Funds at 1793 Kingswood Drive, Suite 200, Southlake, TX 76092.
15
IN WITNESS WHEREOF, the undersigned have hereunto set their hand and
seals for themselves and their assigns, as of the date and year first above
written.
/s/ Kenneth D. Trumpfheller
-----------------------------------------
Kenneth D. Trumpfheller
STATE OF TEXAS )
) ss:
COUNTY OF TARRANT )
Before me, a Notary Public in and for said county and state, personally
appeared the above named Kenneth D. Trumpfheller, who acknowledged that he did
sign the foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 19th day of September, 1996.
/s/ S. Cherryhomes
------------------------------------
Notary Public
My Commission Expires: 07/27/00
--------
ICON FUNDS
AMENDMENT NO. 1 TO MASTER TRUST AGREEMENT
AMENDMENT No. 1 to the Master Trust Agreement of ICON Funds, dated
September 19, 1996, made at Southlake, Texas as of this October 21,1996 by the
Trustees hereunder.
WITNESSETH
WHEREAS, Section 7.3 of the ICON Master Trust Agreement dated September
19, 1996 (the "Agreement"), of ICON Funds (the "Trust") provides that the
Agreement may be amended at any time, so long as such amendment does not
adversely affect the rights of any shareholder with respect to which such
amendment is or purports to be applicable and so long as such amendment is not
in contravention of applicable law, including the Investment Company Act of
1940, by an instrument in writing, signed by an officer of the Trust pursuant to
a vote of a majority of the Trustees of the Trust; and
WHEREAS, a majority of the Trustees of the Trust desire to amend the
Agreement to change the names of ICON Hospitality Fund to ICON Leisure Fund,
ICON North Pacific Regional Fund to ICON North Region Asia Fund, ICON South
Pacific Regional Fund to ICON South Asia Region Fund, ICON North Europe Regional
Fund to ICON North Europe Region Fund, ICON South Europe Regional Fund to ICON
South Europe Region Fund.
WHEREAS, a majority of the Trustees of the Trust on October 21, 1996
have duly adopted the amendment to the Agreement shown below and authorized the
same to be filed with the Secretary of State of the Commonwealth of
Massachusetts;
NOW, THEREFORE,
The undersigned Kenneth D. Trumpfheller, the duly elected and serving
Vice President and Secretary of the Trust, pursuant to the authorization
described above, hereby amends Section 4.2 of the Master Trust Agreement, as
heretofore in effect, to read as follows:
Section 4.2 ESTABLISHMENT AND DESIGNATION OF SUB-TRUSTS. Without
limiting the Trustees' authority to establish further Sub-Trusts pursuant to
Section 4.1, the Trustees hereby establish the following sub- trusts:
ICON Basic Materials Fund ICON North Asia Region Fund
ICON Capital Goods Fund ICON South Asia Region Fund
ICON Consumer Cyclicals Fund ICON North Europe Region Fund
ICON Consumer Staples Fund ICON South Europe Region Fund
ICON Energy Fund ICON Western Hemisphere Fund
ICON Financial Services Fund
ICON Healthcare Fund ICON Short-Term Fixed Income Fund
ICON Leisure Fund
ICON Technology Fund
ICON Telecommunication & Utilities Fund
ICON Transportation Fund
WITNESS WHEREOF, my hand and seal this 24th day of October, 1996
/s/ Kenneth D. Trumpfheller
-----------------------------------------
Kenneth D. Trumpfheller
Vice President and Secretary
STATE OF TEXAS )
) ss:
COUNTY OF TARRANT )
Before me, a Notary Public in and for said county and state, personally
appeared the above named Kenneth D. Trumpfheller, who acknowledged that he did
sign the foregoing instrument in the capcity indicated and that the same is his
free act and deed on this 24th day of October, 1996.
/s/ Jacqueline L. Lavoie
-----------------------------------------
Notary Public
My Commission Expires: 05/18/99
--------
BY-LAWS
OF
ICON FUNDS
ARTICLE 1
AGREEMENT AND DECLARATION
OF TRUST AND PRINCIPAL OFFICES
1.1 AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject
to the Master Trust Agreement, as from time to time in effect (the "Declaration
of Trust"), of ICON Funds, a Massachusetts business trust established by the
Declaration of Trust (the "Trust").
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Secretary or an Assistant Secretary
or by the Trustees calling the meeting.
2.3 NOTICE. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least four days or by telegram/fax at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her.
2.4 QUORUM. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
2.5 PARTICIPATION BY TELEPHONE. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, including Vice
Presidents, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time may
in their discretion appoint. Any officer may be but need not be a Trustee or
shareholder. Any two or more offices may be held by the same person.
3.2 ELECTION. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees at a meeting held within the first four months
of the Trust's fiscal year. The meeting at which the officers are elected shall
be known as the annual meeting of Trustees. Other officers, if any, may be
elected or appointed by the Trustees at said meeting or at any other time.
Vacancies in any office may be filled at any time.
3.3 TENURE. The President, the Treasurer and the Secretary shall hold
office until the next annual meeting of the Trustees and until their respective
successors are chosen and qualified, or in each case until he or she sooner
dies, resigns, is removed or becomes disqualified. Each other officer shall hold
office and each agent shall retain authority at the pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him or her as if the Trust were organized as a
Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5. PRESIDENT. Unless the Trustees otherwise provide, the President
shall preside at all meetings of the shareholders and of the Trustees. The
President shall be the chief executive officer.
3.6 VICE PRESIDENT. The Vice President, or if there be more than one
Vice President, the Vice Presidents in the order determined by the Trustees (or
if there be no such determination, then in order of their election) shall in the
absence of the President or in the event of his inability or refusal to act,
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
Presidents shall perform such other duties and have such other powers as the
Board of Trustees may from time to time prescribe.
3.7 TREASURER. The Treasurer shall be the chief accounting officer of
the Trust, and shall, subject to the provisions of the Declaration of Trust and
to any arrangement made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be in charge of
the valuable papers, books of account and accounting records of the Trust, and
shall have such other duties and powers as may be designated from time to time
by the Trustees or by the President.
3.8 ASSISTANT TREASURER. The Assistant Treasurer, or if there shall be
more than one, the Assistant Treasurers in the order determined by the Trustees
(or if there be no such determination, then in the order of their election),
shall, in the absence of the Treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the Board of
Trustees may from time to time prescribe.
3.9 SECRETARY. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.10 ASSISTANT SECRETARY. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Trustees (or
if there be no determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Trustees may from
time to time prescribe.
3.11 RESIGNATIONS AND REMOVALS. Any Trustee or officer may resign at
any time by written instrument signed by him or her and delivered to the
President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal, or
any right to damages on account of such removal.
ARTICLE 4
COMMITTEES
4.1 GENERAL. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these ByLaws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its action to the Trustees.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect.
ARTICLE 5
REPORTS
5.1 GENERAL. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 GENERAL. The fiscal year of the Trust shall be fixed by resolution
of the Trustees.
ARTICLE 7
SEAL
7.1 GENERAL. The seal of the Trust shall consist of a flat-faced die
with the word Massachusetts, together with the name of the Trust and the year of
its organization cut or engraved thereon, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
8.1 GENERAL. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARE CERTIFICATES
9.1 SHARE CERTIFICATES. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates either in limited cases or to all shareholders. In that event, a
shareholder may receive a certificate stating the number of shares owned by him,
in such form as shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the president or a vice president and by the
treasurer or assistant treasurer. Such signatures may be facsimiles if the
certificate is signed by a transfer agent, or by a registrar, other than a
Trustees, officer or employee of the Trust. In case any officer who has signed
or whose facsimile signature has been placed on such certificate shall cease to
be such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he were such officer at the time of its issue.
9.2 LOSS OF CERTIFICATES. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder, and entitled to vote
thereon.
9.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of shares certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares of the Trust.
ARTICLE 10
DEALINGS WITH TRUSTEES AND OFFICERS
10.1 GENERAL. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may accept subscriptions to
shares or repurchase shares from any firm or company in which any Trustees,
officer or other agent of the Trust may have an interest.
ARTICLE 11
AMENDMENTS TO THE BY-LAWS
11.1 GENERAL These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
The foregoing By-Laws were adopted by the Board of Trustees on October
9, 1996.
Kenneth D. Trumpfheller
Secretary of the Trust
ICON FUNDS
ADVISORY AGREEMENT
AGREEMENT made as of October 9, 1996 between MERIDIAN INVESTMENT
MANAGEMENT CORPORATION, a corporation organized under the laws of the State of
Colorado and having its principal place of business in Englewood, Colorado (the
"Adviser"), and ICON FUNDS, a Massachusetts business trust having its principal
place of business in Southlake, TX (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment company Act of 1940
(the "1940 Act"); and
WHEREAS, the Adviser is engaged principally in the business of
rendering investment management services and is registered under the Investment
Advisers Act of 1940; and
WHEREAS, the Trust intends to initially offer shares in seventeen funds
[such series (the "Initial Funds") together with all other series subsequently
established by the Trust with respect to which the Trust desires to retain the
Adviser to render investment Advisory services hereunder the Adviser is willing
to do (collectively referred to as the "Funds")];
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF ADVISER.
(a) Initial Funds. The Trust hereby appoints the Adviser to act
as Adviser and Investment Adviser to each of the Initial Funds for the period
and on the terms herein set forth. The Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
(b) Additional Funds. In the event that the Trust establishes one
or more series of shares other than the Initial Funds with respect to which it
desires to retain the Adviser to render management and investment Advisory
services hereunder, it shall so notify the Adviser in writing, indicating the
Advisory fee which will be payable with respect to the additional series of
shares. If the Adviser is willing to render such services, it shall so notify
the Trust in writing, whereupon such series of shares shall become a Fund
hereunder.
2. DUTIES OF ADVISER.
The Adviser, at its own expense, shall furnish the following services
and facilities to the Trust:
(a) Investment Program. The Adviser will (i) furnish continuously an
investment program of each Fund, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Trust) what investments
shall be purchased, held sold or exchanged by each Fund and what portion, if
any, of the assets of each Fund shall be held uninvested, and (iii) make changes
on behalf of the Trust in the investments of each Fund.
(b) Office Space and Facilities. The Adviser shall furnish the Trust
office space in the offices of the Adviser, or in such other place or places as
may be agreed upon from time to time, and all necessary office facilities,
simple business equipment, supplies, utilities, and telephone service for
managing the investments of the Trust. These services are exclusive of the
necessary services and
1
records of any dividend disbursing agent, transfer agent, registrar or
custodian, and accounting and bookkeeping services to provided by the Trust's
transfer agent, record keeping service or custodian.
(c) Distribution Expenses. Except as may be provided in distribution
expense plans as contemplated by Rule 12b-1 under the 1940 Act, the Adviser
shall bear all sales, promotions or distribution expenses in connection with the
distribution of shares of any Fund and shall be the sole judge of the extent to
which sales or promotion expenses shall be incurred; provided however, that the
Adviser shall not be obligated to pay for any portion of the cost of
prospectuses or periodic reports provided to shareholders. Expenses incurred in
complying with laws regulating the issue or sale of securities shall not be
deemed to be sales, promotion or distribution expenses.
(d) Portfolio Transactions. The Adviser shall place all orders for the
purchase and sale of portfolio securities for the account of each Fund with
brokers or dealers selected by the Adviser, although the Trust will pay the
actual brokerage commissions on portfolio transactions in accordance with
Paragraph 3(c). In executing portfolio transactions and selecting brokers or
dealers, the Adviser will use its best efforts to seek on behalf of the Trust or
any Fund thereof the best overall terms available. In assessing the best overall
terms available for any transaction, the Adviser shall consider all factors it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer, and the reasonableness of the commission, if any (for the specific
transaction and on a continuing basis). In evaluating the best overall terms
available, and in selecting the broker or dealer to execute a particular
transaction, the Adviser may also consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to any Fund and/or other accounts over which the Adviser or an
affiliate of the Adviser exercises investment discretion. The Adviser is
authorized to pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for any fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Adviser determines
in good faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer, viewed in
terms of that particular transaction or in terms of all of the accounts over
which investment discretion is so exercised.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the Adviser as
set forth in Paragraph 2 above, the Trust assumes and shall pay all expenses for
all other Trust operations and activities and shall reimburse the Adviser for
any such expenses incurred by the Adviser. The expenses to be borne by the Trust
shall include, without limitation:
(a) The charges and expenses of any registrar, stock transfer or
dividend disbursing agent, custodian, or depository appointed by the Trust for
the safekeeping of its cash, portfolio securities and other property;
(b) The charges and expenses of auditors;
(c) Brokerage commissions for transactions in the portfolio securities
of the Trust;
(d) All taxes, including issuance and transfer taxes, and corporate
fees payable by the Trust to Federal, state or other governmental agencies;
(e) The cost of stock certificates (if any) representing shares of the
Trust;
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(f) Expenses involved in registering and maintaining registrations of
the Trust and of its shares with the Securities and Exchange Commission and
various states and other jurisdictions, including reimbursement of actual
expenses incurred by the Adviser in performing such functions for the Trust, and
including compensation of persons who are Adviser employees in proportion to the
relative time spent on such matters;
(g) All expenses of shareholders' and Trustees' meetings, including
meetings of committees, and of preparing, printing and mailing proxy statements,
quarterly reports, semi-annual reports, annual reports and other communications
to shareholders;
(h) All expenses of preparing and setting in type prospectuses, and
expenses of printing and mailing the same to shareholders [but not expenses of
printing and mailing of prospectuses and literature used for promotional
purposes in accordance with Paragraph 2(d) above];
(i) Compensation and travel expenses of Trustees who are not "interest
persons" within the meaning of the 1940 Act;
(j) The expense of furnishing, or causing to be furnished, to each
shareholder a statement of his account, including the expense of mailing;
(k) Charges and expenses of legal counsel and internal audit/compliance
personnel in connection with matters relating to the Trust, including, without
limitations, legal services rendered in connection with the
Trust's corporate and financial structure and relations with its shareholders,
issuance of Trust shares, and registration and qualification of securities under
Federal, state and other laws;
(l) The expenses of attendance at professional meetings of
organizations such as the Investment Company Institute, or Commerce Clearing
House by officers and Trustees of the Trust, and the membership or association
dues of such organizations;
(m) The cost and expense of maintaining the books and records of the
Trust, including general ledger accounting;
(n) The expense of obtaining and maintaining a fidelity bond as Section
17(g) of the 1940 Act;
(o) Interest payable on Trust borrowings; and
(p) Postage.
4. ADVISORY FEE.
(a) For the services and facilities to be provided to each of the Funds
by the Adviser as provided in Paragraph 2 hereof, the Trust shall pay the
Adviser a monthly fee with respect to each of the Funds as soon as practical
after the last day of each calendar month, which fee shall be paid at the rate
set forth below based upon the Monthly Average Net Assets [as defined in
subparagraph (c) below] of such Fund for such calendar month:
ADVISORY FEE SCHEDULE
MONTHLY
FUND FEE RATE
ICON Basic Materials Fund 1/12 of 1.00%
ICON Capital Goods Fund 1/12 of 1.00%
ICON Consumer Cyclicals Fund 1/12 of 1.00%
ICON Consumer Staples Fund 1/12 of 1.00%
ICON Energy Fund 1/12 of 1.00%
ICON Financial Services Fund 1/12 of 1.00%
ICON Healthcare Fund 1/12 of 1.00%
ICON Leisure Fund 1/12 of 1.00%
ICON Technology Fund 1/12 of 1.00%
ICON Telecommunication & Utilities Fund 1/12 of 1.00%
ICON Transportation Fund 1/12 of 1.00%
ICON North Asia Region Fund 1/12 of 1.00%
ICON South Asia Region Fund 1/12 of 1.00%
ICON North Europe Region Fund 1/12 of 1.00%
ICON South Europe Region Fund 1/12 of 1.00%
ICON Western Hemisphere Fund 1/12 of 1.00%
ICON Short-Term Fixed Income Fund 1/12 of 0.65%
(b) In the case of termination of this Agreement with respect to any
Fund during any calendar month, the fee with respect to such Fund for that month
shall be reduced proportionately based upon the number of calendar days during
which it is in effect and the fee shall be computed upon the average net assets
of such Fund for the business days which it is so in effect. (c) The "Monthly
Average Net Assets" of any Fund of the Trust for any calendar month shall be
equal to the quotient produced by dividing (i) the sum of the net assets of such
Fund, determined in accordance with procedures established from time to time by
or under the direction of the Board of Trustees of the Trust in accordance with
the Declaration of Trust of the Trust, as of the close of business on each day
during such month that such Fund was open for business, by (ii) the number of
such days.
5. EXPENSE LIMITATION.
The Adviser agrees that for any fiscal year of the Trust during which
the total of all expenses of the (including investment Advisory fees under this
agreement, but excluding interest, portfolio brokerage commissions and expenses,
taxes and extraordinary items) exceeds the lowest expense limitation imposed in
any state in which the Trust is then making sales of its shares or in which its
shares are then qualified for sale, the Adviser will reimburse the Trust for
such expenses not otherwise excluded from reimbursement by this Paragraph 5 to
the extent that they exceed such expense limitation.
6. RELATIONS WITH TRUST.
Subject to and in accordance with the Declaration of Trust and By-laws of
the Trust and the Articles of Incorporation and By-laws of the Adviser,
respectively, it is understood that Trustees, officers, agents and shareholders
of the Trust are or may be interested in the Adviser (or any successor thereof)
as directors, officers, or otherwise; that directors, officers, agents and
shareholders of the Adviser are or may be interested in the Trust as Trustees,
officers, shareholders, or otherwise; that the Adviser (or any such successor)
is or may be interested in the Trust as a shareholder or otherwise; and that the
effect of any such adverse interests shall be governed by said Declaration of
Trust, Articles of Incorporation and By-laws.
7. LIABILITY OF ADVISER AND OFFICERS AND TRUSTEES OF THE TRUST.
No provision of this Agreement shall be deemed to protect the Adviser
against any liability to the Trust or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under this Agreement. Nor shall any provision hereof be
deemed to protect any Trustee or officer of the Trust against any such liability
to which he might otherwise be subject by reason of any willful misfeasance, bad
faith or gross negligence in the performance of his duties or the reckless
disregard of his obligations and duties.
8. DURATION AND TERMINATION OF THIS AGREEMENTS.
(a) Duration. This Agreement shall become effective with respect to
each Initial Fund on the date hereof and, with respect to any additional Fund,
on the date of receipt by the Trust of notice from the Adviser in accordance
with Paragraph 1(b) hereof that the Manager is willing to serve as Adviser with
respect to such Fund. Unless terminated as herein provided, this Agreement shall
remain in full force and effect for a period of two years with respect to the
Initial Funds and, with respect to each additional Fund, until one year
following the date on which such Fund becomes a Fund hereunder, and shall
continue in full force and effect for period on one year thereafter with respect
to each Fund so long as such continuance with respect to any such Fund is
approved at least annually (i) by either the Trustees of the Trust or by vote of
a majority of the outstanding voting shares (as defined in the 1940 Act) of such
Fund, and (ii) in either event by the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or "interested persons" (as defined
in the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Any approval of this Agreement by the
holders of a majority of the outstanding shares (as defined in the 1940 Act) of
any Fund shall be effective to continue this Agreement with respect to any such
Fund notwithstanding (i) that this Agreement has not been approved by the
holders of a majority of the outstanding shares of any other Fund affected
thereby, and (ii) that this Agreement has not been approved by the vote of a
majority of the outstanding shares of the Trust, unless approval shall be
required by any other applicable law or otherwise.
(b) Termination. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Trustees of the Trust or by vote of a
majority of the outstanding shares (as defined in the 1940 Act), or by the
Adviser on sixty (60) days' written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
9. SERVICES NOT EXCLUSIVE.
The services of the Adviser to the Trust hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
10. LIMITATION OF LIABILITY.
(a) THE TRUST. The term "ICON Funds" means and refers to the Trustees
from time to time serving under the Master Trust Agreement of the Trust dated
September 19, 1996, as the same may subsequently thereto have been, or
subsequently hereto be amended. It is expressly agreed that the obligations of
the Trust hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally, but bind only
the assets and property of the Trust, as provided in the Master Trust Agreement
of the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees and shareholders of the Trust and signed by an authorized
officer of the Trust, acting as such, and neither such authorization by such
Trustees and shareholders nor such execution and delivery by such officer shall
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the assets and property
of the Trust as provided in its Master Trust Agreement.
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(b) THE ADVISER. It is expressly agreed that the oblations of the
Adviser hereunder shall not be binding upon any of the shareholders, nominees,
officers, agents or employees of the Adviser, personally, but bind only the
assets and property of the Adviser, respectively. The execution and delivery of
the Agreement have been authorized by the directors and officers of the Adviser
and signed by an authorized officer of the Adviser, acting as such, and neither
such authorization by such directors and officers nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the assets and property of the Adviser, respectively. This limitation
of liability shall not be deemed to protect the shareholders, nominees,
officers, agents or employees of the Adviser against any liability to the Trust
or its shareholders to which they might otherwise be subject by reason of any
willful misfeasance, bad faith or gross negligence in the performance of their
duties or the reckless disregard of their obligations and duties under this
Agreement.
11. INTERPRETATION.
This Agreement shall be governed by the laws of the State of Colorado.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
ICON FUNDS MERIDIAN INVESTMENT MANAGEMENT CORPORATION
By /s/ Michael J. Hart By /s/ Michael J. Hart
------------------- ---------------------------------
President President
Attest: Attest:
- --------------------------------- -----------------------------------
ICON FUNDS
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made as of the 9th day of
October, 1996 by and among ICON Funds (the "Fund"), a Massachusetts business
trust, Meridian Investment Management Corporation, Inc. (the "Adviser"), a
Colorado corporation, and Meridian Clearing Corp. (the "Distributor"), a
Colorado corporation.
WITNESSETH THAT:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and has registered its shares of common stock (the "Shares") under the
Securities Act of 1933, as amended (the "1933 Act") in one or more distinct
series of Shares (the "Portfolio" or "Portfolios");
WHEREAS, the Adviser has been appointed investment adviser to the Fund;
WHEREAS, the Distributor is a broker-dealer registered with the U.S.
Securities and Exchange Commission (the "SEC") and a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, the Fund, the Adviser and the Distributor desire to enter into
this Agreement pursuant to which the Distributor will provide distribution
services to the Portfolios of the Fund identified on Schedule A, as may be
amended from time to time, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Fund, the Adviser and the Distributor,
intending to be legally bound hereby, agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Fund hereby appoints the Distributor as
its exclusive agent for the distribution of the Shares, and the Distributor
hereby accepts such appointment under the terms of this Agreement. The Fund
shall not sell any Shares to any person except to fill orders for the Shares
received through the Distributor; provided, however, that the foregoing
exclusive right shall not apply: (i) to Shares issued or sold in connection with
the merger or consolidation of any other investment company with the Fund or the
acquisition by purchase or otherwise of all or substantially all of the assets
of any investment company or substantially all of the outstanding shares of any
such company by the Fund; (ii) to Shares which may be offered by the Fund to its
shareholders for reinvestment of cash distributed from capital gains or net
investment income of the Fund; or (iii) to Shares which may be issued to
shareholders of other funds who exercise any exchange privilege set forth in the
Fund's Prospectus. Notwithstanding any other provision hereof, the Fund may
terminate, suspend, or withdraw the offering of the Shares whenever, in its sole
discretion, it deems such action to be desirable, and the Distributor shall
process no further orders for Shares after it receives notice of such
termination, suspension or withdrawal.
1
2. FUND DOCUMENTS. The Fund has provided the Administrator with properly
certified or authenticated copies of the following Fund related documents in
effect on the date hereof: the Fund's organizational documents, including Master
Trust Agreement and By-Laws; the Fund's Registration Statement on Form N-1A,
including all exhibits thereto; the Fund's most current Prospectus and Statement
of Additional Information; and resolutions of the Fund's Board of Trustees
authorizing the appointment of the Distributor and approving this Agreement. The
Fund shall promptly provide to the Distributor copies, properly certified or
authenticated, of all amendments or supplements to the foregoing. The Fund shall
provide to the Distributor copies of all other information which the Distributor
may reasonably request for use in connection with the distribution of Shares,
including, but not limited to, a certified copy of all financial statements
prepared for the Fund by its independent public accountants. The Fund shall also
supply the Distributor with such number of copies of the current Prospectus,
Statement of Additional Information and shareholder reports as the Distributor
shall reasonably request.
3. DISTRIBUTION SERVICES. The Distributor shall sell and repurchase Shares
as set forth below, subject to the registration requirements of the 1933 Act and
the rules and regulations thereunder, and the laws governing the sale of
securities in the various states ("Blue Sky Laws"):
a. The Distributor, as agent for the Fund, shall sell Shares to the
public against orders therefor at the public offering price, which shall be
the net asset value of the Shares then in effect.
b. The net asset value of the Shares shall be determined in the manner
provided in the then current Prospectus and Statement of Additional
Information. The net asset value of the Shares shall be calculated by the
Fund or by another entity on behalf of the Fund. The Distributor shall have
no duty to inquire into or liability for the accuracy of the net asset
value per Share as calculated.
c. Upon receipt of purchase instructions, the Distributor shall
transmit such instructions to the Fund or its transfer agent for
registration of the Shares purchased.
d. The Distributor, in light of Fund policies, procedures and
disclosure documents, shall also have the right to take, as agent for the
Fund, all actions which, in the Distributor's judgment, are necessary to
effect the distribution of Shares.
e. Nothing in this Agreement shall prevent the Distributor or any
"affiliated person" from buying, selling or trading any securities for its
or their own account or for the accounts of others for whom it or they may
be acting; provided, however, that the Distributor expressly agrees that it
shall not for its own account purchase any Shares of the Fund except for
investment purposes and that it shall not for its own account sell any such
Shares except for redemption of such Shares by the Fund, and that it shall
not undertake activities which, in its judgment, would adversely affect the
performance of its obligations to the Fund under this Agreement.
f. The Distributor, as agent for the Fund, shall repurchase Shares at
such prices and upon such terms and conditions as shall be specified in the
Prospectus.
4. DISTRIBUTION SUPPORT SERVICES. In addition to the sale and repurchase of
Shares, the Distributor shall perform the distribution support services set
forth on Schedule B attached hereto, as may be amended from time to time. Such
distribution support services shall include: Review of sales and marketing
literature and submission to the NASD; NASD record keeping; and quarterly
reports to the Fund's Board of Directors. Such distribution support services may
also include: fulfillment services, including telemarketing,
2
printing, mailing and follow-up tracking of sales leads; and licensing Adviser
or Fund personnel as registered representatives of the Distributor and related
supervisory activities.
5. REASONABLE EFFORTS. The Distributor shall use all reasonable efforts in
connection with the distribution of Shares. The Distributor shall have no
obligation to sell any specific number of Shares and shall only sell Shares
against orders received therefor. The Fund shall retain the right to refuse at
any time to sell any of its Shares for any reason deemed adequate by it.
6. COMPLIANCE. In furtherance of the distribution services being provided
hereunder, the Distributor and the Fund agree as follows:
a. The Distributor shall comply with the Rules of Fair Practice of the
NASD and the securities laws of any jurisdiction in which it sells,
directly or indirectly, Shares.
b. The Distributor shall require each dealer with whom the Distributor
has a selling agreement to conform to the applicable provisions of the
Fund's most current Prospectus and Statement of Additional Information,
with respect to the public offering price of the Shares.
c. The Fund agrees to furnish to the Distributor sufficient copies of
any agreements, plans, communications with the public or other materials it
intends to use in connection with any sales of Shares in a timely manner in
order to allow the Distributor to review, approve and file such materials
with the appropriate regulatory authorities and obtain clearance for use.
The Fund agrees not to use any such materials until so filed and cleared
for use by appropriate authorities and the Distributor.
d. The Distributor, at its own expense, shall qualify as a broker or
dealer, or otherwise, under all applicable Federal or state laws required
to permit the sale of Shares in such states as shall be mutually agreed
upon by the parties; provided, however that the Distributor shall have no
obligation to register as a broker or dealer under the Blue Sky Laws of any
jurisdiction if it determines that registering or maintaining registration
in such jurisdiction would be uneconomical.
e. The Distributor shall not, in connection with any sale or
solicitation of a sale of the Shares, or make or authorize any
representative, service organization, broker or dealer to make, any
representations concerning the Shares except those contained in the Fund's
most current Prospectus covering the Shares and in communications with the
public or sales materials approved by the Distributor as information
supplemental to such Prospectus.
7. EXPENSES. Expenses shall be allocated as follows:
a. The Fund shall bear the following expenses: preparation, setting in
type, and printing of sufficient copies of the Prospectus and Statement of
Additional Information for distribution to existing shareholders;
preparation and printing of reports and other communications to existing
shareholders; distribution of copies of the Prospectus, Statement of
Additional Information and all other communications to existing
shareholders; registration of the Shares under the Federal securities laws;
qualification of the Shares for sale in the jurisdictions mutually agreed
upon by the Fund and the Distributor; transfer agent/shareholder servicing
agent services; supplying information, prices and other data to be
furnished by the Fund under this Agreement; any original issue taxes or
transfer taxes applicable to the sale or delivery of the Shares or
certificates therefor;
3
b. The Adviser shall pay all other expenses incident to the sale and
distribution of the Shares sold hereunder, including, without limitation:
printing and distributing copies of the Prospectus, Statement of Additional
Information and reports prepared for use in connection with the offering of
Shares for sale to the public; advertising in connection with such
offering, including public relations services, sales presentations, media
charges, preparation, printing and mailing of advertising and sales
literature; data processing necessary to support a distribution effort;
distribution and shareholder servicing activities of broker-dealers and
other financial institutions; filing fees required by regulatory
authorities for sales literature and advertising materials; any additional
out-of-pocket expenses incurred in connection with the foregoing and any
other costs of distribution.
8. COMPENSATION. For the distribution and distribution support services
provided by the Distributor pursuant to the terms of the Agreement, the Advisor
shall reimburse the Distributor for its out-of-pocket expenses related to the
performance of its duties hereunder, including, without limitation,
telecommunications charges, postage and delivery charges, record retention
costs, reproduction charges and traveling and lodging expenses incurred by
officers and employees of the Distributor. If this Agreement becomes effective
subsequent to the first day of the month or terminates before the last day of
the month, the Advisor shall pay to the Distributor a distribution fee that is
prorated for that part of the month in which this Agreement is in effect. All
rights of compensation and reimbursement under this Agreement for services
performed by the Distributor as of the termination date shall survive the
termination of this Agreement.
9. USE OF DISTRIBUTOR'S NAME. The Fund shall not use the name of the
Distributor or any of its affiliates in the Prospectus, Statement of Additional
Information, sales literature or other material relating to the Fund in a manner
not approved prior thereto in writing by the Distributor; provided, however,
that the Distributor shall approve all uses of its and its affiliates' names
that merely refer in accurate terms to their appointments or that are required
by the Securities and Exchange Commission (the "SEC") or any state securities
commission; and further provided, that in no event shall such approval be
unreasonably withheld.
10. USE OF FUND'S NAME. Neither the Distributor nor any of its affiliates
shall use the name of the Fund or material relating to the Fund on any forms
(including any checks, bank drafts or bank statements) for other than internal
use in a manner not approved prior thereto in writing by the Fund; provided,
however, that the Fund shall approve all uses of its name that merely refer in
accurate terms to the appointment of the Distributor hereunder or that are
required by the SEC or any state securities commission; and further provided,
that in no event shall such approval be unreasonably withheld.
11. LIABILITY OF DISTRIBUTOR. The duties of the Distributor shall be
limited to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Distributor hereunder. The Distributor may, in
connection with this Agreement employ agents or attorneys in fact, and shall not
be liable for any loss arising out of or in connection with its actions under
this Agreement, so long as it acts in good faith and with due diligence, and is
not negligent or guilty of any willful misfeasance, bad faith or gross
negligence, or reckless disregard of its obligations and duties under this
Agreement. As used in this Section 11 and in Section 12 (except the second
paragraph of Section 12), the term "Distributor" shall include directors,
officers, employees and other agents of the Distributor.
12. INDEMNIFICATION OF DISTRIBUTOR. Any director, officer, employee,
shareholder or agent of the Distributor who may be or become an officer,
Trustee, employee or agent of the Fund, shall be deemed,
4
when rendering services to the Fund or acting on any business of the Fund (other
than services or business in connection with the Distributor's duties
hereunder), to be rendering such services to or acting solely for the Fund and
not as a director, officer, employee, shareholder or agent, or one under the
control or direction of the Distributor, even though receiving a salary from the
Distributor.
The Fund agrees to indemnify and hold harmless the Distributor, and each
person, who controls the Distributor within the meaning of Section 15 of the
1933 Act, or Section 20 of the Securities Exchange Act of 1934, as amended
("1934 Act"), against any and all liabilities, losses, damages, claims and
expenses, joint or several (including, without limitation, reasonable attorneys'
fees and disbursements and investigation expenses incident thereto) to which
they, or any of them, may become subject under the 1933 Act, the 1934 Act, the
1940 Act or other Federal or state laws or regulations, at common law or
otherwise, insofar as such liabilities, losses, damages, claims and expenses (or
actions, suits or proceedings in respect thereof) arise out of or relate to any
untrue statement or alleged untrue statement of a material fact contained in a
Prospectus, Statement of Additional Information, supplement thereto, sales
literature or other written information prepared by the Fund and provided by the
Fund to the Distributor for the Distributor's use hereunder, or arise out of or
relate to any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Distributor (or any person controlling the Distributor) shall
not be entitled to indemnity hereunder for any liabilities, losses, damages,
claims or expenses (or actions, suits or proceedings in respect thereof)
resulting from (i) an untrue statement or omission or alleged untrue statement
or omission made in the Prospectus, Statement of Additional Information, or
supplement, sales or other literature, in reliance upon and in conformity with
information furnished in writing to the Fund by the Distributor specifically for
use therein or (ii) the Distributor's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties and obligations in the
performance of this Agreement.
The Distributor agrees to indemnify and hold harmless the Fund, and each
person who controls the Fund within the meaning of Section 15 of the 1933 Act,
or Section 20 of the 1934 Act, against any and all liabilities, losses, damages,
claims and expenses, joint or several (including, without limitation reasonable
attorneys' fees and disbursements and investigation expenses incident thereto)
to which they, or any of them, may become subject under the 1933 Act, the 1934
Act, the 1940 Act or other Federal or state laws, at common law or otherwise,
insofar as such liabilities, losses, damages, claims or expenses arise out of or
relate to any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or Statement of Additional Information or any
supplement thereto, sales literature or other written material, or arise out of
or relate to actions or oral representations of Distributor's associated persons
and to any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if based upon information furnished in writing to the Fund by the
Distributor specifically for use therein.
A party seeking indemnification hereunder (the "Indemnitee") shall give
prompt written notice to the party from whom indemnification is sought
("Indemnitor") of a written assertion or claim of any threatened or pending
legal proceeding which may be subject to indemnity under this Section; provided,
however, that failure to notify the Indemnitor of such written assertion or
claim shall not relieve the Indemnitor of any liability arising from this
Section. The Indemnitor shall be entitled, if it so elects, to assume the
defense of any suit brought to enforce a claim subject to this Agreement and
such defense shall be conducted by counsel chosen by the Indemnitor and
satisfactory to the Indemnitee; provided, however, that if the defendants
include both the Indemnitee and the Indemnitor, and the Indemnitee shall have
reasonably concluded that there may be one or more legal defenses available to
it which are different from or additional to those available to the Indemnitor
("conflict of interest"), the Indemnitor shall not have the right to elect to
defend such claim on behalf of the Indemnitee, and the Indemnitee shall have the
right to select separate counsel to defend such claim on behalf of the
Indemnitee. In the event that the Indemnitor elects to assume the defense of any
suit pursuant to the
5
preceding sentence and retains counsel satisfactory to the Indemnitee, the
Indemnitee shall bear the fees and expenses of additional counsel retained by it
except for reasonable investigation costs which shall be borne by the
Indemnitor. If the Indemnitor (i) does not elect to assume the defense of a
claim, (ii) elects to assume the defense of a claim but chooses counsel that is
not satisfactory to the Indemnitee or (iii) has no right to assume the defense
of a claim because of a conflict of interest, the Indemnitor shall advance or
reimburse the Indemnitee, at the election of the Indemnitee, reasonable fees and
disbursements of any counsel retained by Indemnitee, including reasonable
investigation costs.
13. ADVISER PERSONNEL. The Adviser agrees that only its employees who are
registered representatives of the Distributor ("dual employees") or registered
representatives of another NASD member firm shall offer or sell Shares of the
Portfolios. The Adviser further agrees that the activities of any such employees
as registered representatives of the Distributor shall be limited to offering
and selling Shares. If there are dual employees, one employee of the Adviser
shall register as a principal of the Distributor and assist the Distributor in
monitoring the marketing and sales activities of the dual employees. The Adviser
shall maintain errors and omissions and fidelity bond insurance policies
providing reasonable coverage for its employees activities and shall provide
copies of such policies to the Distributor. The Adviser shall indemnify and hold
harmless the Distributor against any and all liabilities, losses, damages,
claims and expenses (including reasonable attorneys' fees and disbursements and
investigation costs incident thereto) arising from or related to the Adviser's
employees' activities as registered representatives, including, without
limitation, any and all such liabilities, losses, damages, claims and expenses
arising from or related to the breach by such employees of any rules or
regulations of the NASD or SEC.
14. FORCE MAJEURE. The Distributor shall not be liable for any delays or
errors occurring by reason of circumstances not reasonably foreseeable and
beyond its control, including, but not limited, to acts of civil or military
authority, national emergencies, work stoppages, fire, flood, catastrophe, acts
of God, insurrection, war, riot or failure of communication or power supply. In
the event of equipment breakdowns which are beyond the reasonable control of the
Distributor and not primarily attributable to the failure of the Distributor to
reasonably maintain or provide for the maintenance of such equipment, the
Distributor shall, at no additional expense to the Fund, take reasonable steps
in good faith to minimize service interruptions, but shall have no liability
with respect thereto.
15. SCOPE OF DUTIES. The Distributor and the Fund shall regularly consult
with each other regarding the Distributor's performance of its obligations and
its compensation under the foregoing provisions. In connection therewith, the
Fund shall submit to the Distributor at a reasonable time in advance of filing
with the SEC copies of any amended or supplemented Registration Statement of the
Fund (including exhibits) under the 1940 Act and the 1933 Act, and at a
reasonable time in advance of their proposed use, copies of any amended or
supplemented forms relating to any plan, program or service offered by the Fund.
Any change in such materials that would require any change in the Distributor's
obligations under the foregoing provisions shall be subject to the Distributor's
approval. In the event that a change in such dcuments or in the procedures
contained therein increases the cost or burden to the Distributor of performing
its obligations hereunder, the Distributor shall be entitled to receive
reasonable compensation therefore.
16. DURATION. This Agreement shall become effective as of the date first
above written, and shall continue in force for two years from that date and
thereafter from year to year, provided continuance is approved at least annually
by (i) either the vote of a majority of the Trustees of the Fund, or by the vote
of a majority of the outstanding voting securities of each Portfolio, and (ii)
the vote of a majority of those Trustees of the Fund who are not interested
persons of the Fund, and who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on the approval.
6
17. TERMINATION. This Agreement shall terminate as follows:
a. This Agreement shall terminate automatically in the event of its
assignment.
b. This Agreement shall terminate upon the failure to approve the
continuance of the Agreement after the initial two year term as set forth
in Section 16 above.
c. This Agreement shall terminate at any time upon a vote of the
majority of the Trustees who are not interested persons of the Fund or by a
vote of the majority of the outstanding voting securities of each
Portfolio, upon not less than 60 days prior written notice to the
Distributor.
d. The Distributor may terminate this Agreement upon not less than 60
days prior written notice to the Fund.
Upon the termination of this Agreement, the Fund shall pay to the
Distributor such compensation and out-of-pocket expenses as may be payable for
the period prior to the effective date of such termination. In the event that
the Fund designates a successor to any of the Distributor's obligations
hereunder, the Distributor shall, at the expense and direction of the Fund,
transfer to such successor all relevant books, records and other data
established or maintained by the Distributor pursuant to the foregoing
provisions.
Sections 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 20, 21, 22, 23, 24, 25, 26
and 27 shall survive any termination of this Agreement.
18. AMENDMENT. The terms of this Agreement shall not be waived, altered,
modified, amended or supplemented in any manner whatsoever except by a written
instrument signed by the Distributor and the Fund and shall not become effective
unless its terms have been approved by the majority of the Trustees of the Fund
or by a "vote of majority of the outstanding voting securities" of each
Portfolio and by a majority of those Trustees who are not "interested persons"
of the Fund or any party to this Agreement.
19. NON-EXCLUSIVE SERVICES. The services of the Distributor rendered to the
Fund are not exclusive. The Distributor may render such services to any other
investment company.
20. DEFINITIONS. As used in this Agreement, the terms "vote of a majority
of the outstanding voting securities," "assignment," "interested person" and
"affiliated person" shall have the respective meanings specified in the 1940 Act
and the rules enacted thereunder as now in effect or hereafter amended.
21. CONFIDENTIALITY. The Distributor shall treat confidentially and as
proprietary information of the Fund all records and other information relating
to the Fund and prior, present or potential shareholders and shall not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except as may be required by
administrative or judicial tribunals or as requested by the Fund.
22. NOTICE. Any notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon delivery by hand or
upon receipt if sent by certified or registered mail (postage prepaid and return
receipt requested) or by a nationally recognized overnight courier service
(appropriately marked for overnight delivery) or upon transmission if sent by
telex or facsimile (with request for immediate confirmation of receipt in a
manner customary for communications of such respective type and with physical
7
delivery of the communication being made by one or the other means specified in
this Section 22 as promptly as practicable thereafter). Notices shall be
addressed as follows:
(a) if to the Fund: if to the Fund:
ICON Funds ICON Funds
12835 East Arapahoe Road, Tower II 1793 Kingswood Drive
7th Floor Suite 200
Englewood, CO 80112 Southlake, TX 76092
Attn: Michael J. Hart, President Attn: Kenneth D. Trumpfheller
(b) if to the Adviser:
Meridian Investment Management
12835 East Arapahoe Road, Tower II
7th Floor
Englewood, CO 80112
Attn: Michael J. Hart, President
(c) if to the Distributor:
Meridian Clearing Corp.
12835 East Arapahoe Road, Tower II
7th Floor
Englewood, CO 80112
Attn: Michael J. Hart, President
or to such other respective addresses as the parties shall designate by like
notice, provided that notice of a change of address shall be effective only upon
receipt thereof.
23. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
24. GOVERNING LAW. This Agreement shall be administered, construed and
enforced in accordance with the laws of the State of Colorado to the extent that
such laws are not preempted by the provisions of any law of the United States
heretofore or hereafter enacted, as the same may be amended from time to time.
25. ENTIRE AGREEMENT. This Agreement (including the Exhibits attached
hereto) contains the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes all prior written or oral
agreements and understandings with respect thereto.
26. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction. This Agreement may be executed in three counterparts,
each of which taken together shall constitute one and the same instrument.
27. LIMITATION OF LIABILITY. The term "ICON Funds" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the Fund
dated September 19, 1996, as the same may subsequently
8
thereto have been, or subsequently hereto be, amended. It is expressly agreed
that obligations of the Fund hereunder shall not be binding upon any Trustee,
Shareholder, nominees, officers, agents or employees of the Fund, personally,
but bind only the assets and property of the Fund, as provided in the Master
Trust Agreement. The execution and delivery of this Agreement have been
authorized by the Trustees and signed by an authorized officer of the Fund,
acting as such, and neither such authorization nor such execution and delivery
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the assets and property
of the Fund as provided in the Master Trust Agreement. The Master Trust
Agreement is on file with the Secretary of the Commonwealth of Massachusetts.
9
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
ICON FUNDS
By: /s/ Michael J. Hart
--------------------------------------
President & Trustee
MERIDIAN CLEARING CORP.
By: /s/ Michael J. Hart
--------------------------------------
MERIDIAN INVESTMENT MANAGEMENT CORPORATION
By: /s/ Michael J. Hart
--------------------------------------
10
SCHEDULE A
ICON FUNDS
Portfolios covered by Distribution Agreement:
ICON Basic Materials Fund ICON North Asia Region Fund
ICON Capital Goods Fund ICON South Asia Region Fund
ICON Consumer Cyclicals Fund ICON North Europe Region Fund
ICON Consumer Staples Fund ICON South Europe Region Fund
ICON Energy Fund ICON Western Hemisphere Fund
ICON Financial Services Fund
ICON Healthcare Fund
ICON Leisure Fund
ICON Technology Fund
ICON Telecommunication & Utilities Fund
ICON Transportation Fund
ICON Short-Term Fixed Income Fund
11
SCHEDULE B
ICON FUNDS
Distribution Support Services
1. Review and submit for approval all advertising and promotional materials.
2. Maintain all books and records required by the NASD.
3. Monitor Distribution Plan(s) and report to Board of Trustees.
4. Prepare quarterly reports to Board of Trustees relating to distribution
activities.
5. Subject to approval of Distributor, license personnel as registered
representatives of the Distributor.
6. Telemarketing services (additional fees to be negotiated).
7. Fund fulfillment services, including sampling prospective shareholders
inquiries and related mailings (additional fees to be negotiated).
12
CUSTODIAN AGREEMENT
THIS AGREEMENT made on October 9,1996, between Icon Funds, a
Massachusetts business that (hereinafter called the ("Funds"), and FIRSTAR TRUST
COMPANY, a corporation organized under the laws of the State of Wisconsin
(hereinafter called "Custodian"),
WHEREAS, the Funds desire that its securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Funds and Custodian agree as follows:
1. DEFINITIONS
The word "securities" as used herein includes stocks, shares,
bonds, debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or
direction or certification in writing signed in the name of the Funds by any two
of the President, a Vice President, the Secretary and the Treasurer of the
Funds, or any other persons duly authorized to sign by the Board of Trustees.
The word "Board" shall mean Board of Trustees of ICON Funds.
2. NAMES, TITLES, AND SIGNATURES OF THE FUNDS' OFFICERS
An officer of the Funds will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board of
Trustees, together with any changes which may occur from time to time.
ADDITIONAL SERIES. The ICON Funds is authorized to issue separate
classes of shares of beneficial interest representing interests in separate
investment portfolios. The parties intend that each portfolio established by the
trust, now or in the future, be covered by the terms and conditions of this
agreement. The portfolios currently covered by this Agreement are:
U.S. EQUITY FUNDS FOREIGN EQUITY FUNDS
Basic Materials Fund North Asia Region Fund
Capital Goods Fund South Asia Region Fund
Consumer Cyclicals Fund North Europe Region Fund
Consumer Staples Fund South Europe Region Fund
Energy Fund Western Hemisphere Region Fund
Financial Services Fund
Healthcare Fund
Leisure Fund FIXED INCOME FUNDS
Technology Fund
Telecommunication & Utilities Fund Short-Term Fixed Income Portfolio
3. RECEIPT AND DISBURSEMENT OF MONEY
A. Custodian shall open and maintain a separate account or
accounts in the name of the Funds, subject only to draft or order by Custodian
acting pursuant to the terms of this Agreement. Custodian shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Funds. Custodian shall make payments of cash to,
or for the account of, the Funds from such cash only:
(a) for the purchase of securities for the portfolio of the
Funds upon the delivery of such securities to Custodian,
registered in the name of the Funds or of the nominee of
Custodian referred to in Section 7 or in proper form for
transfer;
(b) for the purchase or redemption of shares of the common
stock of the Funds upon delivery thereof to Custodian, or
upon proper instructions from the ICON Funds;
(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without
limitation thereto, fees for legal, accounting, auditing
and custodian services and expenses for printing and
postage);
(d) for payments in connection with the conversion, exchange
or surrender of securities owned or subscribed to by the
Funds held by or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by
resolution of the Board of Trustees of the Funds.
Before making any such payment, Custodian shall receive (and may
rely upon) an officers' certificate requesting such payment and stating that it
is for a purpose permitted under the terms of items (a), (b), (c), or (d) of
this Subsection A, and also, in respect of item (e), upon receipt of an
officers' certificate specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to whom such payment
is to be made, provided, however, that an officers' certificate need not precede
the disbursement of cash for the purpose of purchasing a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Funds issues
appropriate oral or facsimile instructions to Custodian and an appropriate
officers' certificate is received by Custodian within two business days
thereafter.
B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by Custodian
for the account of the Funds.
C. Custodian shall, upon receipt of proper instructions, make
federal funds available to the Funds as of specified times agreed upon from time
to time by the Funds and the custodian in the amount of checks received in
payment for shares of the Funds which are deposited into the Funds' account.
4. SEGREGATED ACCOUNTS
Upon receipt of proper instructions, the Custodian shall
establish and maintain a segregated account(s) for and on behalf of each
portfolio, into which account(s) may be transferred cash and/or securities.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES
Custodian shall have sole power to release or deliver any
securities of the Funds held by it pursuant to this Agreement. Custodian agrees
to transfer, exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the Funds
upon receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or
otherwise become payable;
(c) for examination by any broker selling any such securities
in accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities
alone or other securities and cash whether pursuant to any
plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise;
(e) upon conversion of such securities pursuant to their terms
into other securities;
(f) upon exercise of subscription, purchase or other similar
rights represented by such securities;
(g) for the purpose of exchanging interim receipts or
temporary securities for definitive securities;
(h) for the purpose of redeeming in kind shares of common
stock of the Funds upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a),
(b), (d), (e), (f), and (g), securities or cash receivable in exchange therefore
shall be deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian
shall receive (and may rely upon) an officers' certificate requesting such
transfer, exchange or delivery, and stating that it is for a purpose permitted
under the terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this
Section 5 and also, in respect of item (i), upon receipt of an officers'
certificate specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made, provided, however, that an officers' certificate need
not precede any such transfer, exchange or delivery of a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Funds issues
appropriate oral or facsimile instructions to Custodian and an appropriate
officers' certificate is received by Custodian within two business days
thereafter.
6. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until Custodian receives an officers' certificate to
the contrary, Custodian shall: (a) present for payment all coupons and other
income items held by it for the account of the Funds, which call for payment
upon presentation and hold the cash received by it upon such payment for the
account of the Funds; (b) collect interest and cash dividends received, with
notice to the , for the account of the ; (c) hold for the account of the Funds
hereunder all stock dividends, rights and similar securities issued with respect
to any securities held by it hereunder; and (d) execute, as agent on behalf of
the , all necessary ownership certificates required by the Internal Revenue Code
or the Income Tax Regulations of the United States Treasury Department or under
the laws of any state now or hereafter in effect, inserting the Funds' name on
such certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so.
7. REGISTRATION OF SECURITIES
Except as otherwise directed by an officers' certificate,
Custodian shall register all securities, except such as are in bearer form, in
the name of a registered nominee of Custodian as defined in the Internal Revenue
Code and any Regulations of the Treasury Department issued hereunder or in any
provision of any subsequent federal tax law exempting such transaction from
liability for stock transfer taxes, and shall execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. Custodian shall use its best efforts
to the end that the specific securities held by it hereunder shall be at all
times identifiable in its records.
The Funds shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper form
for transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of the Funds and which may from
time to time be registered in the name of the Funds.
8. VOTING AND OTHER ACTION
Neither Custodian nor any nominee of Custodian shall vote any of
the securities held hereunder by or for the account of the Funds, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with relation to
such securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of the Funds), but without
indicating the manner in which such proxies are to be voted.
9. TRANSFER TAX AND OTHER DISBURSEMENTS
The Funds shall pay or reimburse Custodian from time to time for
any transfer taxes payable upon transfers of securities made hereunder, and for
all other necessary and proper disbursements and expenses made or incurred by
Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement as may
be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any state, to exempt from taxation any exemptible transfers and/or deliveries of
any such securities.
10. CONCERNING CUSTODIAN
Custodian shall be paid as compensation for its services pursuant
to this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such compensation
shall be as set forth in Exhibit A attached hereto. If the Fund elects to
terminate this Agreement prior to the first anniversary of this Agreement, the
Fund agrees to reimburse Agent for the difference between the standard fee
schedule and the discounted fee schedule agreed to between the parties.
Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution of the
Board, and may rely on the genuineness of any such document which it may in good
faith believe to have been validly executed.
The Funds agree to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or by its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the Funds for such
items.
In the event of any advance of cash for any purpose made by
Custodian resulting from orders or instructions of the Funds, or in the event
that Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the Funds shall be security therefore. It is
understood, however, that assets of one portfolio shall not be security for the
obligations of another portfolio.
Custodian agrees to indemnify and hold harmless Funds from all
charges, expenses, assessments, and claims/liabilities (including counsel fees)
incurred or assessed against it in connection with the performance of this
agreement, except such as may arise from the Funds' own negligent action,
negligent failure to act, or willful misconduct.
11. SUBCUSTODIANS
Custodian is hereby authorized to engage another bank or trust
company as a Subcustodian for all or any part of the Funds' assets, so long as
any such bank or trust company is a bank or trust company organized under the
laws of any state of the United States, having an aggregate capital, surplus and
undivided profit, as shown by its last published report, of not less than two
million dollars ($2,000,000) and provided further that, if the Custodian
utilizes the services of a Subcustodian, the Custodian shall remain fully liable
and responsible for any losses caused to the Funds by the Subcustodian as fully
as if the Custodian was directly responsible for any such losses under the terms
of the Custodian Agreement.
Notwithstanding anything contained herein, if the Funds requires
the Custodian to engage specific Subcustodians for the safekeeping and/or
clearing of assets, the Funds agree to indemnify and hold harmless Custodian
from all claims, expenses and liabilities incurred or assessed against it in
connection with the use of such Subcustodian in regard to the Funds' assets,
except as may arise from its own negligent action, negligent failure to act or
willful misconduct.
12. REPORTS BY CUSTODIAN
Custodian shall furnish the Funds periodically as agreed upon
with a statement summarizing all transactions and entries for the account of
Funds. Custodian shall furnish to the Funds, at the end of every month, a list
of the portfolio securities showing the aggregate cost of each issue. The books
and records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of auditors
employed by, the Funds.
13. TERMINATION OR ASSIGNMENT
This Agreement may be terminated upon ninety (90) day's written notice
given by one party to the other. Any notice required to be given by the parties
to each other under the terms of this Agreement shall be in writing, addressed
and delivered, or mailed to the principal place of business of the other party.
If to the agent, such notice should to be sent to Mutual Fund Services, 615 E.
Michigan Street, Milwaukee, Wisconsin 53202. If to the Funds, such notice should
be sent to:
Mr. Erik L. Jonson, CPA
Vice President and Chief Financial Officer
ICON Funds
c/o Meridian Management & Research Corp.
12835 E. Arapahoe Road, Tower II
Englewood, CO 80112
Mr. Kenneth D. Trumpfheller
Vice President and Secretary
ICON Funds
c/o AmeriPrime Financial
1793 Kingswood Drive, STE 200
Southlake, TX 76092
Mr. Charles W. Lutter, Jr.
Independent Legal Counsel
ICON Funds
103 Canyon Oaks
San Antonio, TX 78232.
Upon any termination of this Agreement, pending appointment of a
successor to Custodian or a vote of the shareholders of the Funds to dissolve or
to function without a custodian of its cash, securities and other property,
Custodian shall not deliver cash, securities or other property of the Funds to
the Funds, but may deliver them to a bank or trust company of its own selection,
having an aggregate capital, surplus and undivided profits, as shown by its last
published report of not less than two million dollars ($2,000,000) as a
Custodian for the Funds to be held under terms similar to those of this
Agreement, provided, however, that Custodian shall not be required to make any
such delivery or payment until full payment shall have been made by the Funds of
all liabilities constituting a charge on or against the properties then held by
Custodian or on or against Custodian, and until full payment shall have been
made to Custodian of all its fees, compensation, costs and expenses, subject to
the provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the
consent of the Funds, authorized or approved by a resolution of its Board of
Trustees.
14. DEPOSITS OF SECURITIES IN SECURITIES DEPOSITORIES
No provision of this Agreement shall be deemed to prevent the use
by Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board of Trustees of the Funds approves by resolution the
use of such central securities clearing agency or securities depository. FTC
agrees that all such records prepared or maintained by FTC relating to the
services to be performed by FTC hereunder are the property of the Funds and will
be preserved, maintained, and made available with such section and rules of the
Investment Company Act and will be promptly surrendered to the Funds on and in
accordance with its request.
15. RECORDS
To the extent that Custodian in any capacity prepares or
maintains any records required to be maintained and preserved by the Funds
pursuant to the provisions of the Investment Company Act of 1940, as amended, or
the rules and regulations promulgated thereunder, Custodian agrees to make any
such records available to the Funds upon request and to preserve such records
for the periods prescribed in Rule 31a-2 under the Investment Company Act of
1940, as amended.
16. MISCELLANEOUS
Every contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice (a) that
the ICON Funds Master Trust agreement is on file with the Secretary of the
Commonwealth of Massachusetts, (b) that the document was executed or made on
behalf of the Trust or by them as Trustees or as officers and not by them
individually, and (c) that the obligations of such instrument are not binding
upon any of them or the Shareholders individually, but are binding only upon the
assets and property of the Trust, or the particular Sub-Trust in question, as
the case may be. Omission of such notice shall not operate to bind any Trustee,
officer or Shareholder individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and their respective corporate seals to be affixed hereto as of
the date first above-written by their respective officers thereunto duly
authorized.
Executed in several counterparts, each of which is an original.
Attest: FIRSTAR TRUST COMPANY
/s/ Mary E. Klubunde By /s/ James C. Tyler
- -------------------------------- ---------------------
Assistant Secretary Vice President
Attest: ICON FUNDS
/s/ Erik L. Jonson By /s/ Michael J. Hart
- -------------------------------- ----------------------
Chief Financial Officer President
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective _______________, 1996, and is between THE
CHASE MANHATTAN BANK (the "Bank") and Firstar Trust Company (the "Customer").
1. CUSTOMER ACCOUNTS.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account") for
any and all stocks, shares, bonds, debentures, notes, mortgages or
other obligations for the payment of money, bullion, coin and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same or evidencing or
representing any other rights or interests therein and other similar
property whether certificated or uncertificated as may be received by
the Bank or its Subcustodian (as defined in Section 3) for the account
of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account") for
any and all cash in any currency received by the Bank or its
Subcustodian for the account of the Customer, which cash shall not be
subject to withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the same
class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.
Unless Instructions specifically require another location acceptable to the
Bank:
(a) Securities will be held in the country or other jurisdiction in which
the principal trading market for such Securities is located, where
such Securities are to be presented for payment or where such
Securities are acquired; and
(b) Cash will be credited to an account in a country or other jurisdiction
in which such cash may be legally deposited or is the legal currency
for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by the Bank and the Customer.
3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets in
the Accounts in accounts which the Bank has established with one or more of its
branches or Subcustodians. The Bank and Subcustodians are authorized to hold any
of the Securities in their account with any securities depository in which they
participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
4. USE OF SUBCUSTODIAN.
(a) The Bank will identify such Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets belonging to
other customers of the Bank in accounts identified on such
Subcustodian's books as special custody accounts for the exclusive
benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject only
to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be
subject only to the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets will not be subject
to any right, charge, security interest, lien or claim of any kind in
favor of such Subcustodian except for safe custody or administration,
and that the beneficial ownership of such assets will be freely
transferable without the payment of money or value other than for safe
custody or administration. The foregoing shall not apply to the extent
of any special agreement or arrangement made by the Customer with any
particular Subcustodian.
5. DEPOSIT ACCOUNT TRANSACTIONS.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information
required by the Bank.
(b) In the event that any payment to be made under this Section 5 exceeds
the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be
deemed a loan payable on demand, bearing interest at the rate
customarily charged by the Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at any
time prior to actual collection and reconciliation to the Deposit
Account, with interest, dividends, redemptions or any other amount
due, the Customer will promptly return any such amount upon oral or
written notification: (i) that such amount has not been received in
the ordinary course of business or (ii) that such amount was
incorrectly credited. If the Customer does not promptly return any
amount upon such notification, the Bank shall be entitled, upon oral
or written notification to the Customer, to reverse such credit by
debiting the Deposit Account for the amount previously credited. The
Bank or its Subcustodian shall have no duty or obligation to institute
legal proceedings, file a claim or a proof of claim in any insolvency
proceeding or take any other action with respect to the collection of
such amount, but may act for the Customer upon Instructions after
consultation with the Customer.
6. CUSTODY ACCOUNT TRANSACTIONS.
(a) Securities will be transferred, exchanged or delivered by the Bank or
its Subcustodian upon receipt by the Bank of Instructions which
include all information required by the Bank. Settlement and payment
for Securities received for, and delivery of Securities out of, the
Custody Account may be made in accordance with the customary or
established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to
any sale, exchange or purchase of Securities. Otherwise, such
transactions will be credited or debited to the Accounts on the date
cash or Securities are actually received by the Bank and reconciled to
the Account.
(i) The Bank may reverse credits or debits made to the Accounts in
its discretion if the related transaction fails to settle within
a reasonable period, determined by the Bank in its discretion,
after the contractual settlement date for the related
transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the
credits and debits of the particular transaction at any time.
7. ACTIONS OF THE BANK.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income
items which call for payment upon presentation, to the extent that the
Bank or Subcustodian is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of
Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or
any Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers
of Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to any Bank
statement within sixty (60) days of receipt, the Customer shall be deemed to
have approved such statement. In such event, or where the Customer has otherwise
approved any such statement, the Bank shall, to the extent permitted by law, be
released, relieved and discharged with respect to all matters set forth in such
statement or reasonably implied therefrom as though it had been settled by the
decree of a court of competent jurisdiction in an action where the Customer and
all persons having or claiming an interest in the Customer or the Customer's
Accounts were parties.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take any action under this Agreement.
8. CORPORATE ACTIONS; PROXIES.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase plans
and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received which
bears an expiration date, the Bank will endeavor to obtain Instructions from the
Customer or its Authorized Person, but if Instructions are not received in time
for the Bank to take timely action, or actual notice of such Corporate Action
was received too late to seek Instructions, the Bank is authorized to sell such
rights entitlement or fractional interest and to credit the Deposit Account with
the proceeds or take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing. Such
proxies shall be executed in the appropriate nominee name relating to Securities
in the Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer
Securities are involved, proxies will be delivered in accordance with
Instructions.
9. NOMINEES.
Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
10. AUTHORIZED PERSONS.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer under
this Agreement. Such persons shall continue to be Authorized Persons until such
time as the Bank receives Instructions from the Customer or its designated agent
that any such employee or agent is no longer an Authorized Person.
11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
12. STANDARD OF CARE; LIABILITIES.
(a) The Bank shall be responsible for the performance of only such duties
as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this
Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank
shall be liable to the Customer for any loss which shall occur as
the result of the failure of a Subcustodian to exercise
reasonable care with respect to the safekeeping of such Assets to
the same extent that the Bank would be liable to the Customer if
the Bank were holding such Assets in New York. In the event of
any loss to the Customer by reason of the failure of the Bank or
its Subcustodian to utilize reasonable care, the Bank shall be
liable to the Customer only to the extent of the Customer's
direct damages, to be determined based on the market value of the
property which is the subject of the loss at the date of
discovery of such loss and without reference to any special
conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission, default
or for the solvency of any broker or agent which it or a
Subcustodian appoints unless such appointment was made
negligently or in bad faith.
(iii)The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether
pursuant to Instructions or otherwise within the scope of this
Agreement if such act or omission was in good faith, without
negligence. In performing its obligations under this Agreement,
the Bank may rely on the genuineness of any document which it
believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from
any liability or loss resulting from the imposition or assessment
of any taxes or other governmental charges, and any related
expenses with respect to income from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice
of counsel (who may be counsel for the Customer) on all matters
and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii)Without limiting the foregoing, the Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or
2) investing or holding Assets in a particular country including,
but not limited to, losses resulting from nationalization,
expropriation or other governmental actions; regulation of the
banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent
the orderly execution of securities transactions or affect the
value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes
or work stoppages, acts of war or terrorism, insurrection,
revolution, nuclear fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have
no duty or responsibility to:
(i) question Instructions or make any suggestions to the Customer or
an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or
the retention of Securities;
(iii)advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any security
other than as provided in Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other
party to which Securities are delivered or payments are made
pursuant to this Agreement;
(v) review or reconcile trade confirmations received from brokers.
The Customer or its Authorized Persons (as defined in Section 10)
issuing Instructions shall bear any responsibility to review such
confirmations against Instructions issued to and statements
issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates
may have a material interest in a transaction, or circumstances are
such that the Bank may have a potential conflict of duty or interest
including the fact that the Bank or any of its affiliates may provide
brokerage services to other customers, act as financial advisor to the
issuer of Securities, act as a lender to the issuer of Securities, act
in the same transaction as agent for more than one customer, have a
material interest in the issue of Securities, or earn profits from any
of the activities listed herein.
13. FEES AND EXPENSES.
The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement.
14. MISCELLANEOUS.
(a) FOREIGN EXCHANGE TRANSACTIONS. To facilitate the administration of the
Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the
Customer or an Authorized Person for the Customer and may also provide
foreign exchange through its subsidiaries, affiliates or
Subcustodians. Instructions, including standing instructions, may be
issued with respect to such contracts but the Bank may establish rules
or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates
or Subcustodians enter into a foreign exchange contract related to
Accounts, the terms and conditions of the then current foreign
exchange contract of the Bank, its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement shall
apply to such transaction.
(b) CERTIFICATION OF RESIDENCY, ETC. The Customer certifies that it is a
resident of the United States and agrees to notify the Bank of any
changes in residency. The Bank may rely upon this certification or the
certification of such other facts as may be required to administer the
Bank's obligations under this Agreement. The Customer will indemnify
the Bank against all losses, liability, claims or demands arising
directly or indirectly from any such certifications.
(c) ACCESS TO RECORDS. The Bank shall allow the Customer's independent
public accountant reasonable access to the records of the Bank
relating to the Assets as is required in connection with their
examination of books and records pertaining to the Customer's affairs.
Subject to restrictions under applicable law, the Bank shall also
obtain an undertaking to permit the Customer's independent public
accountants reasonable access to the records of any Subcustodian which
has physical possession of any Assets as may be required in connection
with the examination of the Customer's books and records.
(d) GOVERNING LAW; SUCCESSORS AND ASSIGNS. This Agreement shall be
governed by the laws of the State of New York and shall not be
assignable by either party, but shall bind the successors in interest
of the Customer and the Bank.
(e) ENTIRE AGREEMENT; APPLICABLE RIDERS. Customer represents that the
Assets deposited in the Accounts are (Check one):
Employee Benefit Plan or other assets subject to the Employee
--- Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
--- Commission ("SEC") rules and regulations;
--- Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, and the following Rider(s) [Check applicable rider(s)]:
ERISA
---
X MUTUAL FUND
---
X SPECIAL TERMS AND CONDITIONS
---
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) SEVERABILITY. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on
the basis of any particular circumstances or in any jurisdiction, the
validity, legality and enforceability of such provision or provisions
under other circumstances or in other jurisdictions and of the
remaining provisions will not in any way be affected or impaired.
(g) WAIVER. Except as otherwise provided in this Agreement, no failure or
delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or
partial exercise of any power or right preclude any other or further
exercise, or the exercise of any other power or right. No waiver by a
party of any provision of this Agreement, or waiver of any breach or
default, is effective unless in writing and signed by the party
against whom the waiver is to be enforced.
(h) NOTICES. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be
required under this Agreement are to be sent to the parties at the
following addresses or such other addresses as may subsequently be
given to the other party in writing:
Bank: The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Investor Services
Customer: Firstar Trust Company
615 East Michigan Street
Milwaukee, Wisconsin 53202
Attention:
(i) TERMINATION. This Agreement may be terminated by the Customer or the
Bank by giving ninety (90) days written notice to the other, provided
that such notice to the Bank shall specify the names of the persons to
whom the Bank shall deliver the Assets in the Accounts. If notice of
termination is given by the Bank, the Customer shall, within ninety
(90) days following receipt of the notice, deliver to the Bank
Instructions specifying the names of the persons to whom the Bank
shall deliver the Assets. In either case the Bank will deliver the
Assets to the persons so specified, after deducting any amounts which
the Bank determines in good faith to be owed to it under Section 13.
If within ninety (90) days following receipt of a notice of
termination by the Bank, the Bank does not receive Instructions from
the Customer specifying the names of the persons to whom the Bank
shall deliver the Assets, the Bank, at its election, may deliver the
Assets to a bank or trust company doing business in the State of New
York to be held and disposed of pursuant to the provisions of this
Agreement, or to Authorized Persons, or may continue to hold the
Assets until Instructions are provided to the Bank.
CUSTOMER
By:___________________________________________
Vice President
THE CHASE MANHATTAN BANK
By:___________________________________________
Vice President
STATE OF )
: ss.
COUNTY OF )
On this _________ day of ___, 19__, before me personally came ____________, to
me known, who being by me duly sworn, did depose and say that he/she resides in
_______________ at _______________; ________ that he/she is __________ of
__________, the entity described in and which executed the foregoing instrument;
that he/she knows the seal of said entity, that the seal affixed to said
instrument is such seal, that it was so affixed by order of said entity, and
that he/she signed his/her name thereto by like order.
________________________________________
Sworn to before me this _____ day of __________, 19____.
________________________________
Notary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day ____ of __________, 19__, before me personally came ___________, to
me known, who being by me duly sworn, did depose and say that he resides in
_____________ at __________; that he is a Vice President of THE CHASE MANHATTAN
BANK, the corporation described in and which executed the foregoing instrument;
that he knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the Board
of Directors of said corporation, and that he signed his name thereto by like
order.
________________________________________
Sworn to before me this _____ day of __________, 19___.
________________________________
Notary
MUTUAL FUND RIDER TO GLOBAL CUSTODY AGREEMENT
BETWEEN THE CHASE MANHATTAN BANK AND
FIRSTAR TRUST COMPANY, EFFECTIVE _________, 1996
Customer represents that its' clients have represented to it that the
Assets being placed in the Bank's custody are subject to the Investment Company
Act of 1940 (the Act), as the same may be amended from time to time.
Except to the extent that the Bank has specifically agreed to comply with a
condition of a rule, regulation, interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall have advised and obtained its' clients consent to the
fact that its' clients shall be solely responsible to assure that the
maintenance of Assets under this Agreement complies with such rules,
regulations, interpretations or exemptive order promulgated by or under the
authority of the Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are further
defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in
Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution or
trust company incorporated or organized under the laws of a country
other than the United States that is regulated as such by that
country's government or an agency thereof and that has shareholders'
equity in excess of $200 million in U.S. currency (or a foreign
currency equivalent thereof), (ii) a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign currency equivalent
thereof)(iii) a banking institution or trust company incorporated or
organized under the laws of a country other than the United States or
a majority owned direct or indirect subsidiary of a qualified U.S.
bank or bank holding company that is incorporated or organized under
the laws of a country other than the United States which has such
other qualifications as shall be specified in Instructions and
approved by the Bank; or (iv) any other entity that shall have been so
qualified by exemptive order, rule or other appropriate action of the
SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the
laws of a country other than the United States, which operates (i) the
central system for handling securities or equivalent book-entries in
that country, or (ii) a transnational system for the central handling
of securities or equivalent book-entries.
The Customer represents that its' clients have represented to it that its'
clients Board of Directors has approved each of the Subcustodians listed in
Schedule A to this Agreement and the terms of the subcustody agreements between
the Bank and each Subcustodian, which are attached as Exhibits I through of
Schedule A, and further represents that its' clients have represented to it that
its' clients Board has determined that the use of each Subcustodian and the
terms of each subcustody agreement are consistent with the best interests of the
Fund(s) and its (their) shareholders. The Bank will supply the Customer and its'
clients with any amendment to Schedule A for approval. The Customer has supplied
or will obtain from its' clients and supply the Bank with certified copies of
its' clients Board of Directors resolution(s) with respect to the foregoing
prior to placing Assets with any Subcustodian so approved.
Section 11. INSTRUCTIONS.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is
to be made and Customer shall be solely responsible to assure that
Instructions are in accord with any limitations or restrictions applicable
to the Customer by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise become
payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a pledge
of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any
restrictions applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the
Bank, its Subcustodian or the Customer's transfer agent, such shares
to be purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer
agent of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement among
the Customer, the Bank and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released
only upon payment to the Bank of monies for the premium due and a
receipt for the Securities which are to be held in escrow. Upon
exercise of the option, or at expiration, the Bank will receive from
brokers the Securities previously deposited. The Bank will act
strictly in accordance with Instructions in the delivery of Securities
to be held in escrow and will have no responsibility or liability for
any such Securities which are not returned promptly when due other
than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
(n) For other proper purposes as may be specified in Instructions issued
by an officer of the Customer which shall include a statement of the
purpose for which the delivery or payment is to be made, the amount of
the payment or specific Securities to be delivered, the name of the
person or persons to whom delivery or payment is to be made, and a
certification that the purpose is a proper purpose under the
instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section 14(i).
SECTION 12. STANDARD OF CARE; LIABILITIES.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion, after
due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign
custodian and each eligible foreign securities depository holding the
Customer's Securities pursuant to this Agreement afford protection for
such Securities at least equal to that afforded by the Bank's
established procedures with respect to similar securities held by the
Bank and its securities depositories in New York.
SECTION 14. ACCESS TO RECORDS.
Add the following language to the end of Section 14(C):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under this
Agreement. The Bank shall endeavor to obtain and furnish the Customer with
such similar reports as it may reasonably request with respect to each
Subcustodian and securities depository holding the Customer's assets.
GLOBAL CUSTODY AGREEMENT
WITH FIRSTAR TRUST COMPANY
DATE ________, 1996
SPECIAL TERMS AND CONDITIONS RIDER
This agreement covers the following clients of Firstar Trust Company:
1) North Asia Region Fund
2) South Asia Region Fund
3) North Europe Region Fund
4) South Europe Region Fund
5) Western Hemisphere Fund
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT dated as of October 9, 1996, between ICON Funds (the
"Trust"), a Massachusetts business trust, and AmeriPrime Financial Services,
Inc. (the "Administrator"), a Texas corporation.
WHEREAS, the Trust has been organized to operate as an open-end
management investment company registered under the Investment Company Act of
1940 (the "Act"); and
WHEREAS, the Trust wishes to avail itself of the information, advice,
assistance and facilities of the Administrator to perform on behalf of the Trust
the services as hereinafter described; and
WHEREAS, the Administrator wishes to provide such services to the Trust
under the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and the Administrator agree as follows:
1. EMPLOYMENT. The Trust, being duly authorized, hereby employs the
Administrator to perform those services described in this Agreement. The
Administrator shall perform the obligations thereof upon the terms and
conditions hereinafter set forth. Any administrative services undertaken by the
Administrator pursuant to this Agreement, as well as any other activities
undertaken by the Administrator on behalf of the Trust pursuant hereto, shall at
all times be subject to any directives of the Board of Trustees of the Trust.
2. TRUST ADMINISTRATION. The Administrator shall give the Trust the
benefit of its best judgment, efforts and facilities in rendering its services
as administrator. The Administrator shall at all times conform to: (i) all
applicable provisions of the Act and any rules and regulations adopted
thereunder, (ii) the provisions of the Registration Statement of the Trust under
the Securities Act of 1933 and the Act as amended from time to time, (iii) the
provisions of the Agreement and Declaration of Trust and the By-Laws of the
Trust, and (iv) any other applicable provisions of state and federal law.
Subject to the direction and control of the Trust, the Administrator
shall supervise the Trust's business affairs not otherwise supervised by other
agents of the Trust. To the extent not otherwise the primary responsibility of,
or provided by, other parties under agreement with the Trust, the Administrator
shall supply (i) non-investment related statistical and research data, (ii)
internal regulatory compliance services, and (iii) executive and administrative
services. The Administrator shall supervise the preparation of (i) tax returns,
(ii) reports to shareholders of the Trust, (iii) reports to and filings with the
Securities and Exchange Commission, state securities commissions and Blue Sky
authorities including preliminary and definitive proxy materials and
post-effective amendments to the Trust's registration statement, and (iv)
necessary materials for meetings of the Trust's Board of Trustees. The
Administrator shall provide personnel to serve as officers of the Trust if so
elected by the Board of Trustees; provided, however, that the Trust shall
reimburse the Administrator for the expenses incurred by such personnel in
attending Board of Trustees' meetings and shareholders' meetings of the Trust.
Executive and administrative services include, but are not limited to, the
coordination of all third parties furnishing services to the Trust, review of
the books and records of the Trust maintained by such third parties, and the
review and submission to the officers of the Trust for their approval, of
invoices or other requests for payment of Trust expenses; and such other action
with respect to the Trust as may be necessary in the opinion of the
Administrator to perform its duties hereunder.
3. RECORD KEEPING AND OTHER INFORMATION. The Administrator shall
create and maintain all necessary records in accordance with all applicable
laws, rules and regulations, including but not limited to records required by
Section 31(a) of the Investment Company Act of 1940 and the rules thereunder, as
the same may be amended from time to time, pertaining to the various functions
performed by it and not otherwise created and maintained by another party
pursuant to contract with the Trust. Where applicable, such records shall be
maintained by the Administrator for the periods and in the places required by
Rule 31a-2 under the Investment Company Act of 1940.
4. AUDIT, INSPECTION AND VISITATION. The Administrator shall make
available to the Trust during regular business hours all records and other data
created and maintained pursuant to the foregoing provisions of this Agreement
for reasonable audit and inspection by the Trust or any regulatory agency having
authority over the Trust.
5. COMPENSATION. For the performance of the Administrator's obligations
under this Agreement, each series of the Trust shall pay the Administrator, on
the first business day following the end of each month, a fee as set out in the
fee schedule attached hereto as Exhibit A. In addition, the Trust shall
reimburse the Administrator for out of pocket expenses incured on behalf of the
Trust and for expenses related to Advinistrator personnel attending Trust
meetings. The Administrator shall not be required to reimburse the Trust or the
Trust's investment adviser for (or have deducted from its fees) any expenses in
excess of expense limitations imposed by certain state securities commissions
having jurisdiction over the Trust.
6. LIMITATION OF LIABILITY. Administrator may rely on information
reasonably believed by it to be accurate and reliable. Except as may otherwise
be required by the Act or the rules thereunder, neither Administrator nor its
shareholders, officers, directors, employees, agents, control persons or
affiliates of any thereof (collectively, the "Administrator's Employees") shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission in connection with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
Administrator under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Administrator under this
Agreement. Any person, even though also a director, officer, employee,
shareholder or agent of the Administrator, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the Administrator's duties hereunder),
to be rendering such services to or acting solely for the Trust and not as a
director, officer, employee, shareholder or agent, or one under the control or
direction of the Administrator, even though paid by it.
7. INDEMNIFICATION OF ADMINISTRATOR. Subject to and except as
otherwise provided in the Securities Act of 1933, as amended, and the Act, the
Trust shall indemnify Administrator and each of Administrator's Employees
(hereinafter collectively referred to as a "Covered Person") against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while serving as the administrator for the Trust or as one of
Administrator's Employees, or, thereafter, by reason of being or having been the
administrator for the Trust or one of Administrator's Employees, including but
not limited to liabilities arising due to any misrepresentation or misstatement
in the Trust's prospectus, other regulatory filings, and amendments thereto, or
in other documents originating from the Trust. In no case shall a Covered Person
be indemnified against any liability to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties of such Covered Person.
8. SERVICES FOR OTHERS. Nothing in this Agreement shall prevent the
Administrator or any affiliated person of the Administrator from providing
services for any other person, firm or corporation, including other investment
companies; provided, however, that the Administrator expressly represents that
it will undertake no activities which, in its judgment, will adversely affect
the performance of its obligations to the Trust under this Agreement.
9. COMPLIANCE WITH THE ACT. The parties hereto acknowledge and agree
that nothing contained herein shall be construed to require the Administrator to
perform any services for any series of the Trust which services could cause the
Administrator to be deemed an "investment adviser" of the Series within the
meaning of Section 2(a)(20) of the Act or to supersede or contravene the
Prospectus or Statement of Additional Information of any series of the Trust or
any provisions of the Act and the rules thereunder.
10. RENEWAL AND TERMINATION. This Agreement shall become effective on
the date first above written and shall remain in force for a period of three (3)
years from such date, and thereafter shall be renewed automatically for
successive three year terms, unless written notice not to renew is given by the
non-renewing party to the other party at least sixty days prior to the
expiration of the current term. In the event of a material breach of this
Agreement by either party, the non-breaching party shall notify the breaching
party in writing of such breach and upon receipt of such notice , the breaching
party shall have 45 days to remedy the breach or the nonbreaching party may
immediately terminate this Agreement. This agreement shall be approved at least
annually by the vote of a majority of the Trustees who are not interested
persons of the Trust or the Administrator, cast in person at a meeting called
for the purpose of voting on such approval and by a vote of the Board of
Trustees or of a majority of the Trust's outstanding voting securities. Upon the
termination of this Agreement, the Trust shall pay the Administrator such
compensation as may be payable for the period prior to the effective date of
such termination.
11. THE TRUST. The term "ICON Funds" means and refers to the Trustees
from time to time serving under the Trust's Agreement and Declaration of Trust
as the same may subsequently thereto have been, or subsequently hereto may be,
amended. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agent or employees of the Trust, personally, but bind only the trust property of
the Trust. The execution and delivery of this Agreement have been authorized by
the Trustees of the Trust and signed by an officer of the Trust, acting as such,
and neither such authorization by such Trustees nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the trust
property of the Trust.
12. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Massachusetts. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. Every contract, instrument, certificate or undertaking made or issued by
the Trustees or by any officers or officer shall give notice (a) that this
Agreement is on file with the Secretary of the Commonwealth of Massachusetts,
(b) that the document was executed or made on behalf of the Trust or by them as
Trustees or as officers and not by them individually, and (c) that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually, but are binding only upon the assets and property of
the Trust, or the particular Sub-Trust in question, as the case may be. Omission
of such notice shall not operate to bind any Trustee, officer or Shareholder
individually.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
ICON FUNDS
By: /s/ Miachael J. Hart
-------------------------------
Its: President
AMERIPRIME FINANCIAL SERVICES, INC.
By: /s/ Kenneth D. Trumpfheller
--------------------------------
Its: President
<PAGE>
EXHIBIT A
ADMINISTRATIVE SERVICES AGREEMENT
Monthly Fee Schedule
AVERAGE VALUE OF DAILY NET ASSETS ANNUAL RATE
Under Five Hundred Million Dollars 0.050%
Over Five Hundred Million Dollars 0.040%
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this 9th day of October, 1996,
by and between ICON Funds (hereinafter referred to as the "Funds") and Firstar
Trust Company, a corporation organized under the laws of the State of Wisconsin
(hereinafter referred to as the "Agent").
WHEREAS, the are open-ended management investment companies which are
registered under the Investment Company Act of 1940; and
WHEREAS, the Agent is a trust company and, among other things, is in the
business of administering transfer and dividend disbursing agent functions for
the benefit of its customers;
NOW, THEREFORE, the Funds and the Agent do mutually promise and agree as
follows:
1. TERMS OF APPOINTMENT; DUTIES OF THE AGENT
Subject to the terms and conditions set forth in this Agreement, the Funds
hereby employ and appoint the Agent to act as transfer agent and dividend
disbursing agent.
The Agent shall perform all of the customary services of a transfer agent
and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated shares
being held in the appropriate shareholder account;
C. Process redemption requests received in good order;
D. Pay monies;
E. Process transfers of shares in accordance with the shareowner's
instructions;
F. Process exchanges between funds within the same family of funds;
G. Issue and/or cancel certificates as instructed; replace lost, stolen
or destroyed certificates upon receipt of satisfactory indemnification
or surety bond;
H. Prepare and transmit payments for dividends and distributions declared
by the Funds;
I. Make changes to shareholder records, including, but not limited to,
address changes in plans (i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Funds and maintain, pursuant to
Securities Exchange Act of 1934 Rule 17ad-10(e), a record of the total
number of shares of the Funds which are authorized, issued and
outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail, receive
and tabulate proxies;
L. Mail shareholder reports and prospectuses to current shareholders;
M. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to dividends and
distributions for all shareholders;
N. Provide shareholder account information upon request and prepare and
mail confirmations and statements of account to shareholders for all
purchases, redemptions and other confirmable transactions as agreed
upon with the Funds; and
O. Provide a Blue Sky System which will enable the Funds to monitor the
total number of shares sold in each state. In addition, the Funds
shall identify to the Agent in writing those transactions and assets
to be treated as exempt from the Blue Sky reporting to the Funds for
each state. The responsibility of the Agent for the Funds' Blue Sky
state registration status is solely limited to the initial compliance
by the Funds and the reporting of such transactions to the Funds.
2. COMPENSATION
The Funds agree to pay the Agent for performance of the duties listed in
this Agreement; the fees and out-of-pocket expenses include, but are not limited
to the following: printing, postage, forms, stationery, record retention,
mailing, insertion, programming, labels, shareholder lists and proxy expenses.
If the Fund elects to terminate this Agreement prior to the first anniversary of
this Agreement, the Fund agrees to reimburse Agent for the difference between
the standard fee schedule and the discounted fee schedule agreed to between the
parties.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Funds and the Agent.
The Funds agree to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
3. REPRESENTATIONS OF AGENT
The Agent represents and warrants to the that:
A. It is a trust company duly organized, existing and in good standing
under the laws of Wisconsin;
B. It is a registered transfer agent under the Securities Exchange Act of
1934 as amended.
C. It is duly qualified to carry on its business in the state of
Wisconsin;
D. It is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize it to
enter and perform this Agreement; and
F. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
G. It will comply with all applicable requirements of the Securities Act
of 1933 and the Securities Exchange Act of 1934, as amended, the
Investment Company Act of 1940, as amended, and any laws, rules, and
regulations of governmental authorities having jurisdiction.
4. REPRESENTATIONS OF THE
The Funds represent and warrant to the Agent that:
A. The Funds are open-ended diversified investment companies under the
Investment Company Act of 1940;
B. The Funds are corporations or business trusts organized, existing, and
in good standing under the laws of Massachusetts;
C. The Funds are empowered under applicable laws and by their Declaration
of Trust and bylaws to enter into and perform this Agreement;
D. All necessary proceedings required by the Declaration of Trust have
been taken to authorize them to enter into and perform this Agreement;
E. The Funds will comply with all applicable requirements of the
Securities and Exchange Acts of 1933 and 1934, as amended, the
Investment Company Act of 1940, as amended, and any laws, rules and
regulations of governmental authorities having jurisdiction; and
F. A registration statement under the Securities Act of 1933 is currently
effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect
to all shares of the being offered for sale.
5. COVENANTS OF FUNDS AND AGENT
The Funds shall furnish the Agent a certified copy of the resolution of the
Board of Trustees of the Funds authorizing the appointment of the Agent and the
execution of this Agreement. The Funds shall provide to the Agent a copy of the
Declaration of Trust, bylaws of the , and all amendments.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the rules thereunder, the Agent agrees that all such records prepared or
maintained by the Agent relating to the services to be performed by the Agent
hereunder are the property of the Funds and will be preserved, maintained and
made available in accordance with such section and rules and will be surrendered
to the Funds on and in accordance with their request.
6. INDEMNIFICATION; REMEDIES UPON BREACH
The Agent shall exercise reasonable care in the performance of its duties
under this Agreement. The Agent shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with matters
to which this Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies beyond the Agent's
control, except a loss resulting from the Agent's refusal or failure to comply
with the terms of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement, the Fund shall indemnify
and hold harmless the Agent from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or without basis in fact or law)
of any and every nature (including reasonable attorneys' fees) which the Agent
may sustain or incur or which may be asserted against the Agent by any person
arising out of any action taken or omitted to be taken by it in performing the
services hereunder (i) in accordance with the foregoing standards, or (ii) in
reliance upon any written or oral instruction provided to the Agent by any duly
authorized officer of the Fund, such duly authorized officer to be included in a
list of authorized officers furnished to the Agent and as amended from time to
time in writing by resolution of the Board of Trustees of the Fund.
Further, the Fund will indemnify and hold the Agent harmless against any
and all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action, or suit as
a result of the negligence of the Fund or the principal underwriter (unless
contributed to by the Agent's breach of this Agreement or other Agreements
between the Fund and the Agent, or the Agent's own negligence or bad faith); or
as a result of the Agent acting upon telephone instructions relating to the
exchange or redemption of shares received by the Agent and reasonably believed
by the Agent under a standard of care customarily used in the industry to have
originated from the record owner of the subject shares; or as a result of acting
in reliance upon any genuine instrument or stock certificate signed,
countersigned, or executed by any person or persons authorized to sign,
countersign, or execute the same.
In the event of a mechanical breakdown or failure of communication or power
supplies beyond its control, the Agent shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond the Agent's control. The Agent will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from such a
breakdown at the expense of the Agent. The Agent agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing equipment
to the extent appropriate equipment is available. Representatives of the Fund
shall be entitled to inspect the Agent's premises and operating capabilities at
any time during regular business hours of the Agent, upon reasonable notice to
the Agent.
Regardless of the above, the Agent reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Fund may be asked to
indemnify or hold the Agent harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Agent will use all reasonable care to notify the
Fund promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against the Fund.
The Fund shall have the option to defend the Agent against any claim which may
be the subject of this indemnification. In the event that the Fund so elects, it
will so notify the Agent and thereupon the Fund shall take over complete defense
of the claim, and the Agent shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this section. The
Agent shall in no case confess any claim or make any compromise in any case in
which the Fund will be asked to indemnify the Agent except with the Fund's prior
written consent.
The Agent shall indemnify and hold the Fund harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which may be asserted against the Fund by any person arising
out of any action taken or omitted to be taken by the Agent as a result of the
Agent's refusal or failure to comply with the terms of this Agreement, its bad
faith, negligence, or willful misconduct.
7. CONFIDENTIALITY
The Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Funds and their
shareholders and shall not be disclosed to any other party, except after prior
notification to and approval in writing by the Funds, which approval shall not
be unreasonably withheld and may not be withheld where the Agent may be exposed
to civil or criminal contempt proceedings for failure to comply after being
requested to divulge such information by duly constituted authorities.
ADDITIONAL SERIES. The ICON Funds are authorized to issue separate classes
of shares of beneficial interest representing interests in separate investment
portfolios. The parties intend that each portfolio established by the trust, now
or in the future, be covered by the terms and conditions of this agreement. The
portfolios currently covered ty this Agreement are:
U.S. EQUITY FUNDS FOREIGN EQUITY FUNDS
Basic Materials Fund North Asia Region Fund
Capital Goods Fund South Asia Region Fund
Consumer Cyclicals Fund North Europe Region Fund
Consumer Staples Fund South Europe Region Fund
Energy Fund Western Hemisphere Region Fund
Financial Services Fund
Healthcare Fund
Leisure Fund FIXED INCOME FUNDS
Technology Fund
Telecommunication & Utilities Fund Short-Term Fixed Income Portfolio
Transportation Fund
8. RECORDS
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Funds but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act of 1940 as amended (the "Investment Company Act"),
and the rules thereunder. The Agent agrees that all such records prepared or
maintained by The Agent relating to the services to be performed by the Agent
hereunder are the property of the Funds and will be preserved, maintained, and
made available with such section and rules of the Investment Company Act and
will be promptly surrendered to the Funds on and in accordance with its request.
9. WISCONSIN LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the state of Wisconsin.
10. AMENDMENT, ASSIGNMENT, TERMINATION AND NOTICE
A. This Agreement may be amended by the mutual written consent of the
parties.
B. This Agreement may be terminated upon ninety (90) day's written notice
given by one party to the other.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of the
other party.
D. Any notice required to be given by the parties to each other under the
terms of this Agreement shall be in writing, addressed and delivered,
or mailed to the principal place of business of the other party. If to
the agent, such notice should to be sent to Mutual Fund Services, 615
E. Michigan Street, Milwaukee, Wisconsin 53202. If to the , such
notice should be sent to:
Mr. Erik L. Jonson, CPA
Vice President and Chief Financial Officer
ICON Funds
c/o Meridian Management & Research Corp.
12835 E. Arapahoe Road, Tower II
Englewood, CO 80112
Mr. Kenneth D. Trumpfheller
Vice President and Secretary
ICON Funds
c/o AmeriPrime Financial
1793 Kingswood Drive, STE 200
Southlake, TX 76092
Mr. Charles W. Lutter, Jr.
Independent Legal Counsel
ICON Funds
103 Canyon Oaks
San Antonio, TX 78232
E. In the event that the Funds give to the Agent their written intention
to terminate and appoint a successor transfer agent, the Agent agrees
to cooperate in the transfer of its duties and responsibilities to the
successor, including any and all relevant books, records and other
data established or maintained by the Agent under this Agreement.
F. Should the Funds exercise their right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
paid by the Funds.
11. MISCELLANEOUS
Every contract, instrument, certificate or undertaking made or issued by
the Trustees or by any officers or officer shall give notice (a) that the ICON
Funds Master Trust agreement is on file with the Secretary of the Commonwealth
of Massachusetts, (b) that the document was executed or made on behalf of the
Trust or by them as Trustees or as officers and not by them individually, and
(c) that the obligations of such instrument are not binding upon any of them or
the Shareholders individually, but are binding only upon the assets and property
of the Trust, or the particular Sub-Trust in question, as the case may be.
Omission of such notice shall not operate to bind any Trustee, officer or
Shareholder individually.
ICON Funds Firstar Trust Company
By: /s/ MICHAEL J. HART By: /s/ ROBERT J. KERN
------------------- --------------------------
President Vice President
Attest: /s/ Erik L. Jonson Attest: /s/ Andrea McVoy
- --------------------------- ------------------------
Chief Financial Officer Assistant Secretary
FUND ACCOUNTING SERVICING AGREEMENT
This contract between ICON Funds, a Massachusetts business trust, hereinafter
called the "Funds," and Firstar Trust Company, a Wisconsin corporation,
hereinafter called "FTC," is entered into on this 9th day of October, 1996.
WHEREAS, ICON Funds, is an open-ended management investment company
registered under the Investment Company Act of 1940; and
WHEREAS, Firstar Trust Company ("FTC") is in the business of providing,
among other things, mutual fund accounting services to investment companies;
NOW, THEREFORE, the parties do mutually promise and agree as follows:
1. SERVICES. FTC agrees to provide the following mutual fund
accounting services to the Funds:
A. PORTFOLIO ACCOUNTING SERVICES:
(1) Maintain portfolio records on a trade date +1 basis
using security trade information communicated from
the investment manager on a timely basis.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Trustees and apply
those prices to the portfolio positions. For those
securities where market quotations are not readily
available, the Board of Trustees shall approve, in
good faith, the method for determining the fair value
for such securities.
(3) Identify interest and dividend accrual balances as of
each valuation date and calculate gross earnings on
investments for the accounting period.
(4) Determine gain/loss on security sales and identify
them as to short-short, short- or long-term status;
account for periodic distributions of gains or losses
to shareholders and maintain undistributed gain or
loss balances as of each valuation date.
B. EXPENSE ACCRUAL AND PAYMENT SERVICES:
(1) For each valuation date, calculate the expense
accrual amounts as directed by the Funds as to
methodology, rate or dollar amount.
(2) Record payments for Fund expenses upon receipt of
written authorization from the Funds.
(3) Account for fund expenditures and maintain expense
accrual balances at the level of accounting detail,
as agreed upon by FTC and the Funds.
(4) Provide expense accrual and payment reporting.
C. FUND VALUATION AND FINANCIAL REPORTING SERVICES:
(1) Account for fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other fund
share activity as reported by the transfer agent on a
timely basis.
(2) Apply equalization accounting as directed by the
Funds.
(3) Determine net investment income (earnings) for the
Funds as of each valuation date. Account for periodic
distributions of earnings to shareholders and
maintain undistributed net investment income balances
as of each valuation date.
(4) Maintain a general ledger for the Funds in the form
as agreed upon.
(5) For each day the Funds are open as defined in the
prospectuses, determine the net asset value of the
according to the accounting policies and procedures
set forth in the prospectuses.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of
fund operation at such time as required by the nature
and characteristics of the Funds.
(7) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed
upon from time to time.
(8) Prepare monthly reports which document the adequacy
of accounting detail to support month-end ledger
balances.
D. TAX ACCOUNTING SERVICES:
(1) Maintain accounting records for the investment
portfolios of the Funds to support the tax reporting
required for IRS-defined regulated investment
companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using
the tax lot relief method designated by the Funds.
(4) Provide the necessary financial information to
support the taxable components of income and capital
gains distributions to the transfer agent to support
tax reporting to the shareholders.
E. COMPLIANCE CONTROL SERVICES:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the fund
accounting records available to ICON Funds, the
Securities and Exchange Commission, and the outside
auditors.
(2) Maintain accounting records according to the
Investment Company Act of 1940 and regulations
provided thereunder.
2. PRICING OF SECURITIES. For each valuation date, obtain prices
from a pricing source selected by FTC but approved by the Funds' Board and apply
those prices to the portfolio positions. For those securities where market
quotations are not readily available, the Funds' Board shall approve, in good
faith, the method for determining the fair value for such securities.
If the Funds desire to provide a price which varies from the
pricing source, the Funds shall promptly notify and supply FTC with the
valuation of any such security on each valuation date. All pricing changes made
by the Funds will be in writing and must specifically identify the securities to
be changed by CUSIP, name of security, new price or rate to be applied, and, if
applicable, the time period for which the new prices are effective.
3. CHANGES IN ACCOUNTING PROCEDURES. Any resolution passed by the
Board of Trustees that affects accounting practices and procedures under this
agreement shall be effective upon written receipt and acceptance by the FTC.
4. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC. FTC reserves the
right to make changes from time to time, as it deems advisable, relating to its
services, systems, programs, rules, operating schedules and equipment, so long
as such changes do not adversely affect the service provided to the Funds under
this Agreement.
5. COMPENSATION. FTC shall be compensated for providing the
services set forth in this Agreement in accordance with the Fee Schedule
attached hereto as Exhibit A and as mutually agreed upon and amended from time
to time. If the Fund elects to terminate this Agreement prior to the first
anniversary of this Agreement, the Fund agrees to reimburse Agent for the
difference between the standard fee schedule and the discounted fee schedule
agreed to between the parties.
6. PERFORMANCE OF SERVICE.
A. FTC shall exercise reasonable care in the performance of
its duties under this Agreement. FTC shall not be liable for any
error of judgment or mistake of law or for any loss suffered by
the Fund in connection with matters to which this Agreement
relates, including losses resulting from mechanical breakdowns or
the failure of communication or power supplies beyond FTC's
control, except a loss resulting from FTC's refusal or failure to
comply with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the performance
of its duties under this Agreement. Notwithstanding any other
provision of this Agreement, the Fund shall indemnify and hold
harmless FTC from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or without basis
in fact or law) of any and every nature (including reasonable
attorneys' fees) which FTC may sustain or incur or which may be
asserted against FTC by any person arising out of any action
taken or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing standards, or (ii)
in reliance upon any written or oral instruction provided to FTC
by any duly authorized officer of the Fund, such duly authorized
officer to be included in a list of authorized officers furnished
to FTC and as amended from time to time in writing by resolution
of the Board of Directors of the Fund.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FTC shall
take all reasonable steps to minimize service interruptions for
any period that such interruption continues beyond FTC's control.
FTC will make every reasonable effort to restore any lost or
damaged data and correct any errors resulting from such a
breakdown at the expense of FTC. FTC agrees that it shall, at all
times, have reasonable contingency plans with appropriate
parties, making reasonable provision for emergency use of
electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Fund shall be
entitled to inspect FTC's premises and operating capabilities at
any time during regular business hours of FTC, upon reasonable
notice to FTC.
Regardless of the above, FTC reserves the right to reprocess
and correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in
this section shall apply, it is understood that if in any case
the Fund may be asked to indemnify or hold FTC harmless, the Fund
shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further
understood that FTC will use all reasonable care to notify the
Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for
indemnification against the Fund. The Fund shall have the option
to defend FTC against any claim which may be the subject of this
indemnification. In the event that the Fund so elects, it will so
notify FTC and thereupon the Fund shall take over complete
defense of the claim, and FTC shall in such situation initiate no
further legal or other expenses for which it shall seek
indemnification under this section. FTC shall in no case confess
any claim or make any compromise in any case in which the Fund
will be asked to indemnify FTC except with the Fund's prior
written consent.
C. FTC shall indemnify and hold the Fund harmless from and
against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any
and every nature (including reasonable attorneys' fees) which may
be asserted against the Fund by any person arising out of any
action taken or omitted to be taken by FTC as a result of FTC's
refusal or failure to comply with the terms of this Agreement,
its bad faith, negligence, or willful misconduct.
7. RECORDS. FTC shall keep records relating to the services to be
performed hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Funds but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act of 1940 as amended (the "Investment Company Act"),
and the rules thereunder. FTC agrees that all such records prepared or
maintained by FTC relating to the services to be performed by FTC hereunder are
the property of the Funds and will be preserved, maintained, and made available
with such section and rules of the Investment Company Act and will be promptly
surrendered to the Funds on and in accordance with its request.
8. CONFIDENTIALITY. FTC shall handle in confidence all
information relating to the Funds' business, which is received by FTC during the
course of rendering any service hereunder.
9. DATA NECESSARY TO PERFORM SERVICES. The Funds or its agent,
which may be FTC, shall furnish to FTC the data necessary to perform the
services described herein at times and in such form as mutually agreed upon.
10. NOTIFICATION OF ERROR. The Funds will notify FTC of any
balancing or control error caused by FTC within three (3) business days after
receipt of any reports rendered by FTC to the , or within three (3) business
days after discovery of any error or omission not covered in the balancing or
control procedure, or within three (3) business days of receiving notice from
any shareholder.
11. ADDITIONAL SERIES. In the event that the ICON Funds
establishes one or more series of shares with respect to which it desires to
have FTC render accounting services, under the terms hereof, it shall so notify
FTC in writing, and if FTC agrees in writing to provide such services, such
series will be subject to the terms and conditions of this Agreement, and shall
be maintained and accounted for by FTC on a discrete basis. The portfolios
currently covered by this Agreement are:
U.S. EQUITY FUNDS FOREIGN EQUITY FUNDS
Basic Materials Fund North Asia Region Fund
Capital Goods Fund South Asia Region Fund
Consumer Cyclicals Fund North Europe Region Fund
Consumer Staples Fund South Europe Region Fund
Energy Fund Western Hemisphere Region Fund
Financial Services Fund
Healthcare Fund
Leisure Fund FIXED INCOME FUNDS
Technology Fund
Telecommunication & Utilities Fund Short-Term Fixed Income Portfolio
Transportation Fund
12. TERM OF AGREEMENT. This Agreement may be terminated by either
party upon giving ninety (90) days prior written notice to the other party or
such shorter period as is mutually agreed upon by the parties. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
13. DUTIES IN THE EVENT OF TERMINATION. In the event that in
connection with termination a Successor to any of FTC's duties or
responsibilities hereunder is designated by ICON Funds by written notice to FTC,
FTC will promptly, upon such termination and at the expense of ICON Funds,
transfer to such Successor all relevant books, records, correspondence and other
data established or maintained by FTC under this Agreement in a form reasonably
acceptable to ICON Funds (if such form differs from the form in which FTC has
maintained the same, ICON Funds shall pay any expenses associated with
transferring the same to such form), and will cooperate in the transfer of such
duties and responsibilities, including provision for assistance from FTC's
personnel in the establishment of books, records and other data by such
successor.
14. NOTICES. Notices of any kind to be given by either party to
the other party shall be in writing and shall be duly given if mailed or
delivered as follows: Notice to FTC shall be sent to Mutual Fund Services
located at 615 E. Michigan Street, Milwaukee, Wisconsin 53202, and notice to
Funds shall be sent to:
Mr. Erik L. Jonson, CPA
Vice President and Chief Financial Officer
ICON Funds
c/o Meridian Management & Research Corp.
12835 E. Arapahoe Road, Tower II
Englewood, CO 80112
Mr. Kenneth D. Trumpfheller
Vice President and Secretary
ICON Funds
c/o AmeriPrime Financial
1793 Kingswood Drive, STE 200
Southlake, TX 76092
Mr. Charles W. Lutter, Jr.
Independent Legal Counsel
ICON Funds
103 Canyon Oaks
San Antonio, TX 78232
15. CHOICE OF LAW. This Agreement shall be construed in
accordance with the laws of the State of Wisconsin.
16. MISCELLANEOUS. Every contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers or officer shall
give notice (a) that the ICON Funds Master Trust agreement is on file with the
Secretary of the Commonwealth of Massachusetts, (b) that the document was
executed or made on behalf of the Trust or by them as Trustees or as officers
and not by them individually, and (c) that the obligations of such instrument
are not binding upon any of them or the Shareholders individually, but are
binding only upon the assets and property of the Trust, or the particular
Sub-Trust in question, as the case may be. Omission of such notice shall not
operate to bind any Trustee, officer or Shareholder individually.
IN WITNESS WHEREOF, the due execution hereof on the date first
above written.
ATTEST: FIRSTAR TRUST COMPANY
/s/ Mary E. Klubunde By /s/ James C. Tyler
- ---------------------------------- ------------------
Assistant Secretary President
ATTEST: ICON FUNDS
/s/ Erik L. Jonson By /s/ Michael J. Hart
- ---------------------------------- -------------------------
Chief Financial Officer President
LYNCH, BREWER, HOFFMAN & SANDS, LLP
ATTORNEYS AT LAW
101 FEDERAL STREET, 22ND FLOOR
BOSTON, MASSACHUSETTS 02110-1800
------------------
Telephone (617) 951-0800
Fax (617) 951-0811
October 25, 1996
ICON FUNDS
1793 Kingswood Drive, Suite 200
Southlake, TX 76092
Ladies and Gentlemen:
As counsel to ICON FUNDS, a Massachusetts business trust (the "Trust"), we
have been asked to render our opinion with respect to the issuance of an
indefinite number of shares of beneficial interest in the Trust (the "Shares")
representing interests in ICON Basic Materials Fund, ICON Capital Goods Fund,
ICON Consumer Cyclicals Fund, ICON Consumer Staples Fund, ICON Energy Fund, ICON
Financial Services Fund, ICON Healthcare Fund, ICON Leisure Fund, ICON
Technology Fund, ICON Telecommunication & Utilities Fund, ICON Transportation
Fund, ICON North Asia Region Fund, ICON South Asia Region Fund, ICON North
Europe Region Fund, ICON South Europe Region Fund, ICON Western Hemisphere Fund
and ICON Short-Term Fixed Income Fund (collectively, the "Funds"), the shares of
such Fund(s) being a series of the Trust, as more fully described in the
Prospectus in the form contained in the Trust's Registration Statement on Form
N-1A, to which this opinion is an exhibit, to be filed with the Securities and
Exchange Commission.
We have examined the Master Trust Agreement of the Trust, dated September
19, 1996, as amended to the date hereof, and the Prospectus contained in such
Registration Statement, and such other documents, records and certificates as we
have deemed necessary for the purposes of this opinion. In rendering this
opinion, we have, with your approval, relied, as to all questions of fact
material to this opinion, upon certain certificates of public officials and of
your officers and assumed the genuineness of the signatures on, and the
authenticity of, all documents furnished to us, which facts we have not
independently verified.
Based upon the foregoing, we are of the opinion that the Shares, when
issued, delivered and paid for in accordance with the terms of the Master Trust
Agreement and the Prospectus will be legally issued, fully paid and
non-assessable by the Trust.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission.
Very truly yours,
/s/ Lynch, Brewer, Hoffman & Sands, LLP
LYNCH, BREWER, HOFFMAN & SANDS, LLP
38096.1
