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[LOGO]ICONFUNDS
Prospectus for the
ICON FUND
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Read this prospectus before investing and keep it on file for future reference.
This cover is not part of the prospectus.
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[LOGO]
PROSPECTUS
OCTOBER 2, 2000
ICON FUND
A U.S. EQUITY FUND
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has any commission
determined whether this prospectus is accurate or complete. It is a criminal
offense to state otherwise.
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TABLE OF CONTENTS
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SUMMARY OF PRINCIPAL INVESTMENT OBJECTIVES, STRATEGIES AND
RISKS..................................................... 3
HOW HAS THE FUND PERFORMED.................................. 7
FEES AND EXPENSES OF THE FUND............................... 7
MORE INFORMATION ABOUT THE FUND'S INVESTMENT OBJECTIVES,
PRINCIPAL STRATEGIES AND RISKS............................ 9
ADDITIONAL CONSIDERATIONS................................... 10
DISTRIBUTION ARRANGEMENTS................................... 11
ORGANIZATION AND MANAGEMENT OF THE FUNDS.................... 12
ABOUT YOUR ACCOUNT.......................................... 15
USEFUL INFORMATION ABOUT DISTRIBUTIONS AND TAXES............ 17
HOW TO INVEST IN THE FUND................................... 17
HOW TO REDEEM SHARES........................................ 19
HOW TO MAKE EXCHANGES....................................... 21
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SUMMARY OF PRINCIPAL INVESTMENT OBJECTIVES,
STRATEGIES AND RISKS
INVESTMENT OBJECTIVES
The investment objective of the ICON Fund is capital appreciation with a
secondary objective of capital preservation to provide long-term growth.
PRINCIPAL STRATEGIES
ICON Fund achieves its objective through investing primarily in the common
stock and securities convertible into common stock of U.S issuers. The focus of
the ICON Fund is industry rotation from a universe of 123 specific industries
categorized within 11 economic sectors.
The Fund's investment adviser believes the primary key to successful
investing in the U.S. stock market is directly tied to sector rotation. Our key
to successful sector performance is through timely industry rotation within each
sector. This means that the ICON Fund portfolio will change sectors from time to
time and that the portfolio, within each sector, will change industries from
time to time. While sectors and industries may change as new industries appear
or as industries consolidate, the sector and industries the portfolio manager
chooses from are listed below:
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NAME OF SECTOR INDUSTRIES WILL INCLUDE, BUT ARE
NOT LIMITED TO:
Materials Aluminum; Commodity Chemicals;
Construction Materials; Diversified
Chemicals; Diversified Metals &
Mining; Fertilizers & Agricultural
Chemicals; Forest Products; Gold;
Industrial Gases; Metal & Glass
Containers; Paper Packaging; Paper
Products; Precious Metals &
Minerals; Specialty Chemicals; and
Steel.
</TABLE>
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NAME OF SECTOR INDUSTRIES WILL INCLUDE, BUT ARE
NOT LIMITED TO:
Consumer Discretionary Advertising; Apparel & Accessories;
Apparel Retail; Auto Parts &
Equipment; Automobile
Manufacturers; Catalog Retail;
Computer & Electronics Retail;
Consumer Electronics; Department
Stores; Distributors; Footwear;
General Merchandise Stores; Home
Furnishings; Home Improvement
Retail; Homebuilding; Household
Appliances; Housewares &
Specialties; Internet Retail;
Motorcycle Manufactures;
Photographic Products; Specialty
Stores; Textiles; and Tires &
Rubber.
Energy Integrated Oil & Gas; Oil &
Gas Drilling; Oil & Gas Equipment &
Services; Oil & Gas Exploration &
Production; and Oil & Gas Refining
& Marketing.
Financial Banks; Consumer Finance;
Diversified Financial Services;
Insurance Brokers; Life & Health
Insurance; Multi-Line Insurance;
MultiSector Holdings; Property &
Casualty Insurance; Real Estate
Investment Trusts; Real Estate
Management & Development; and
Reinsurance.
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NAME OF SECTOR INDUSTRIES WILL INCLUDE, BUT ARE
NOT LIMITED TO:
Healthcare Biotechnology; Health Care
Distributors & Services; Health
Care Equipment; Health Care
Facilities; Health Care Supplies;
Managed Health Care; and
Pharmaceuticals.
Leisure and Consumer Staples Broadcasting/Cable; Casinos &
Gaming; Leisure Products; Hotels;
Publishing & Printing; Tobacco;
Agricultural Products; Brewers;
Distillers & Vintners; Drug Retail;
Food Distributors; Food Retail;
Household Products; Leisure
Facilities; Meat, Poultry & Fish;
Movies & Entertainment; Packaged
Foods; Personal Products; Soft
Drinks; Restaurants.
Information Technology Application Software; Computer
Hardware; Computer Storage &
Peripherals; Electronic Equipment &
Instruments; Internet Software &
Services; IT Consulting & Services;
Networking Equipment; Office
Electronics; Semiconductor
Equipment; Semiconductors; Systems
Software; and Telecommunications
Equipment.
Telecommunication & Utilities Electric Utilities; Gas Utilities;
Multi-Utilities; Water Utilities;
Alternative Carriers; Integrated
Telecommunications Services; and
Wireless Telecommunication
Services.
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NAME OF SECTOR INDUSTRIES WILL INCLUDE, BUT ARE
NOT LIMITED TO:
Industrials Aerospace & Defense; Air Freight &
Couriers; Airlines; Airport
Services; Building Products;
Commercial Printing; Construction &
Engineering; Construction & Farm
Machinery; Data Processing
Services; Diversified Commercial
Services; Electrical Components &
Equipment; Employment Services;
Environmental Services; Heavy
Electrical Equipment; Highways &
Railtracks; Industrial
Conglomerates; Industrial
Machinery; Marine; Marine Ports &
Services; Office Services &
Supplies; Railroads; Trading
Companies & Distributors; and
Trucking.
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The ICON Fund is managed using a value-based tactical allocation, sector
rotation approach. The portfolio manager for the ICON Fund strives to add value
by under-weighting and over-weighting industries within each sector. The
strategy focuses primarily on industries and companies comprising the
Standard & Poors SuperComposite 1500 Index, which have been divided into
industry groups or sectors as set forth in the table above. As a result, the
Fund primarily will select stocks from large-cap 500, mid-cap 400, and small-cap
600 indexes, and generally will have a minimum of 50-100 stocks for
diversification. The ICON Fund seeks to invest in high quality companies that
are "on sale". The portfolio manager attempts to produce above average returns
compared to a broad market index or benchmark.
The portfolio manager uses this value, bargain-hunting approach to identify
industries that are bargains. That is, most of the stocks in an industry have
fallen out of favor. They're cheap, and the portfolio manager believes that it
is important to invest in them.
Unlike the ICON Fund's portfolio managers, most sector rotation managers
perform "top down" investing. They try to predict the economy, predict what
Congress will do, predict what the Federal Reserve Bank will
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do, and they work their way down to what sectors in which to invest. The ICON
Fund's portfolio manager starts at the bottom. The manager identifies the
companies within industries based on its value approach; then determines which
sectors and industries are on sale; and simply buys them. In other words, it is
approached from bottom-up, where industries are acquired because they are
bargains.
PRINCIPAL RISKS
Please keep in mind that no Fund can guarantee that it will meet its
objective and that, as with any investment, you can lose money by investing in
the Fund. As with all equity funds, the share price can fall because of weakness
in the market as a whole, weakness in a particular industry, or weakness in
specific holdings. The Fund's investments in value stocks carry the risks that
the market will not recognize a stock's intrinsic value for a long time, or that
a stock believed to be undervalued may actually be appropriately priced. We
believe the two main risks of investing in the ICON Fund are market risk and
management risk .
* MARKET RISK: The risk that the market value of a security may move up or
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than it was worth at an earlier time. Small-cap and
mid-cap stocks are more vulnerable to these fluctuations than large cap stocks.
Market risk may affect a single issuer, industry, sector of the economy or the
market as a whole.
* MANAGEMENT RISK: The risk that a strategy used by a Fund's management may
fail to produce the intended result.
HOW HAS THE FUND PERFORMED
The ICON Fund commences operations on October 2, 2000. As a consequence, the
Fund does not have a performance history.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and
hold shares of the ICON Fund. THE TABLE DOES NOT REFLECT ANY ADDITIONAL FEES AN
INVESTOR WILL PAY TO THE PROFESSIONAL ADVISER/BROKER RESPONSIBLE FOR THE
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SHAREHOLDER'S PURCHASE OR SALE OF FUND SHARES. THOSE FEES SHOULD BE CONSIDERED
ALONG WITH FUND AND OTHER EXPENSES INCURRED BY THE SHAREHOLDER.
<TABLE>
<CAPTION>
SHAREHOLDER FEES ICON FUND ICON FUND
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) C SHARES I SHARES
<S> <C> <C>
Sales Charge (Load) Imposed on Purchases None None
Deferred Sales Charge (Load) None None
Redemption Fee None None
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES ICON FUND ICON FUND
(EXPENSES THAT ARE DEDUCTED FROM FUND C SHARES I SHARES
ASSETS) * *
Management Fees 0.75% 0.75%
Distribution and/or Service (12b-1) Fees
(a) 1.00% 0.25%
Other Expenses (b) 0.45% 0.45%
Total Fund Operating Expenses 2.20% 1.45%
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* Fund has not commenced operations. Estimated amounts expected for the first
fiscal year
(a) The ICON Fund has adopted a Rule 12b-1 plan which allows the Fund to pay
distribution and shareholder service fees for the sale and distribution of
its shares. As these fees are paid out of the Fund's assets on an on-going
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
(b) These expenses include custodian, transfer agency and administration fees
and other customary Fund expenses.
HYPOTHETICAL EXAMPLE
This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same.
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Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
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<CAPTION>
FUND 1 YEAR 3 YEARS
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ICON Fund -- C Shares * $223 $688
ICON Fund -- I Shares * $148 $459
</TABLE>
* Fund has not commenced operations.
MORE INFORMATION ABOUT THE FUND'S
INVESTMENT OBJECTIVES, PRINCIPAL STRATEGIES AND RISKS
ICON FUND
INVESTMENT OBJECTIVES
The ICON Fund seeks to achieve long-term capital appreciation with a
secondary objective of capital preservation to provide long-term growth through
investing primarily in equity securities. These securities include common stock
and securities convertible into common stock of U.S. issuers.
PRINCIPAL STRATEGIES
In purchasing common stocks, the portfolio will be tilted toward favored
industries and sectors without regard to benchmark or market capitalization
weightings. Currently, Standard and Poors has defined 115 industries within the
SuperComposite 1500 Index. This number may vary slightly through time as
industries drop out, appear or are merged. Under normal conditions, this
portfolio will be invested in stocks in only 20 to 35 of those industries.
Industries and sectors will be favored with the belief that market movements
generally have themes over periods ranging from approximately six months to a
couple of years. Industry exposure will change through time as stocks are sold
and purchased according to the adviser's system.
Sector and industry selection and weighting of industries within the Fund
are based on the attractiveness of an industry. The portfolio manager uses its
proprietary valuation model to analyze its universe of 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. The portfolio manager then groups stocks into their
representative industry classifications to determine those industries it deems
to be attractive relative to other industries.
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TEMPORARY DEFENSIVE POSITION: In seeking its primary investment objective
of capital appreciation, the 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. To the extent the Fund takes a defensive
position, it may not achieve its stated objective.
PRINCIPAL RISKS
As stated in the summary, we believe the two main risks of investing in the
ICON Fund are market risk and management risk.
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. Mid-cap stocks
are more vulnerable to these fluctuations than large cap stocks, and small-caps
are even more vulnerable. Market risk may affect a single issuer, industry,
sector of the economy or the market as a whole. This risk is common to all
stocks and bonds and the mutual funds that invest in them.
MANAGEMENT RISK: The risk that a strategy used by a Fund's management may
fail to produce the intended result. This risk is common to all mutual funds.
ADDITIONAL CONSIDERATIONS
CONCENTRATION POLICY: ICON Fund will not invest more than 25% of its assets
in any one industry except temporarily at times when the Fund is utilizing
temporary defensive strategies or when the portfolio is being restructured (that
is, when the Adviser is rotating/allocating assets among industries).
FUNDAMENTAL POLICIES: The investment objectives of the Fund, including its
concentration policy, 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
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ICON Funds Prospectus Page 10
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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.
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. On matters affecting only one class of
shares, the matters will only be submitted to the holders of shares of that
class for vote. On all other matters, all shares of the Fund have equal voting
rights and liquidation rights.
DISTRIBUTION ARRANGEMENTS
The ICON Fund has adopted of a plan of distribution pursuant to Rule 12b-1
under the Investment Company Act of 1940 for the two classes of shares in the
ICON Fund. The ICON Fund will accrue monies to pay distribution and/or service
fees to broker-dealers and other service providers daily at a rate based on a
percentage of assets for each class of shares, computed separately, in order to:
(a) make payments to the ICON Fund's Distributor and to securities dealers and
others in respect of the sale of shares of the respective class of the ICON
Fund;
(b) pay compensation to and expenses of personnel (including personnel of
organizations with which ICON Fund has entered into agreements related to
the distribution Plan) who engage in or support distribution of shares of
ICON Fund or who render shareholder support services not otherwise provided
by ICON Fund's transfer agent, administrator, or custodian, including but
not limited to, answering inquiries regarding ICON Fund, processing
shareholder transactions, providing personal services and/or the maintenance
of shareholder accounts, providing other shareholder liaison services,
responding to shareholder inquiries, providing information on shareholder
investments in ICON Fund, and providing such other shareholder services as
ICON Fund may reasonably request;
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(c) form and implement marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising;
(d) prepare, print and distribute sales literature;
(e) prepare, print and distribute prospectuses and statements of additional
information and reports of ICON Fund for recipients other than existing
shareholders of ICON Fund;
(f) obtain information, analyses and reports with respect to marketing and
promotional activities as ICON Fund may, from time to time, deem advisable.
ICON Fund assets may be utilized to pay for or reimburse expenditures in
connection with sales and promotional services related to the distribution of
it's shares, including personal services provided to prospective and existing
ICON Fund shareholders, provided the total amount expended pursuant to this Plan
does not exceed 0.25% of net assets on an annual basis.
ADDITIONAL AMOUNT FOR CLASS C SHARES. Fund assets attributable to Class C
shares in specific shareholder accounts will be utilized to cover fees paid to
broker-dealers and others for marketing, sales and promotional services related
to distribution of said shares in an amount not to exceed 0.75% of net assets on
an annual basis, for a total of 1.00%.
Because distribution related fees with respect to each class of shares are
paid out of ICON Fund's assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
ORGANIZATION AND MANAGEMENT OF THE FUNDS
HOW IS THE ICON FUND ORGANIZED?
The ICON Fund is a diversified "open-end management investment company" or
mutual fund. Mutual funds pool money from shareholders and invest it to try to
achieve specified objectives.
The ICON Fund is a subtrust or series of the ICON Funds which was formed on
September 19, 1996, as a "business trust" under the laws of the Commonwealth of
Massachusetts. ICON Funds is a "series" company which is authorized to issue
shares without par value in separate series of the
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same class. Shares of numerous series have been authorized. The Board of
Trustees has the power to create additional portfolios at any time without a
vote of shareholders. No annual or regular meeting of shareholders is required,
although the Trustees may authorize special meetings from time to time. On any
matter submitted to shareholders, shares of each portfolio entitle their holder
to one vote per share.
WHO RUNS THE FUNDS?
TRUSTEES
The business affairs of each Fund are governed by the Funds' Board of
Trustees. The Trustees meet regularly to establish and review policies, review
the Funds' investments, performance, expenses, contracts, and other business
affairs. The Trustees also elect the officers and select the Trustees to serve
as executive and audit committee members.
PORTFOLIO MANAGEMENT--THE INVESTMENT ADVISER
Meridian Investment Management Corporation, of 12835 East Arapahoe Road,
Tower II, Penthouse, Englewood, Colorado 80112, furnishes investment advice to
the Fund and manages each Fund's investments. As successor to an advisory
service established in 1986, Meridian was incorporated in Colorado in
April 1991. It is owned by Dr. Craig T. Callahan. Meridian's sole business is
the management and service of growth-oriented portfolios to meet the investment
needs of its clients. Meridian manages more than $450 million for clients which
include individuals, pension and profit sharing plans, foundations, endowments,
and public retirement systems. Meridian's value-based investment style utilizes
fundamental procedures and quantitative tools developed internally.
The investment decisions for the ICON Fund are made by the Advisor's
Investment Committee. The Investment Committee is primarily responsible for the
day-to-day management of the ICON Fund's portfolio. The Committee meets
regularly as well as when circumstances dictate. Quantitative data and
investment recommendations are presented by members of the research team and are
discussed by the Committee. Decisions concerning industries for the Fund are
agreed upon by the Committee. The portfolio managers are responsible for
selecting the securities in each industry. The analysts provide all of the data
necessary to make decisions at the portfolio manager and investment committee
level.
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Once an investment decision has been reached, trading instructions are executed
by the trading department.
Dr. Craig T. Callahan is Chairman of the Investment Committee and a
portfolio manager. He also directs Meridian's investment research and analysis.
Dr. Callahan has been Chief Investment Officer for the Advisor and its
predecessor since 1986. He previously obtained a Doctorate of Business
Administration (Finance) degree from Kent State University, and began his
investment career in 1979.
Dr. Nicholas G. Azari is a portfolio manager for Meridian and a member of
the Investment Committee. He joined Meridian in September 1999. He previously
obtained a PhD in Electrical Engineering from Cornell University. Dr. Azari
began his investment career in 1994 with IMPEX Trading Corp. as an assistant
portfolio manager and analyst. In 1997 he joined Cobank as senior quantitative
analyst.
THE MANAGEMENT FEE
For the services provided to the ICON Funds, Meridian receives a monthly
fee. The fee is calculated at an annual rate. It is based on the Fund's average
daily net assets. The fee for the ICON Fund is 0.75% of the average daily net
assets.
The Advisor pays the expense of printing and mailing prospectuses and sales
materials used for promotional purposes to the extent not covered by ICON Fund's
distribution plan. Subject to regulations and its obligation to seek best
execution, the Advisor may give consideration to sales of shares of the Fund as
a factor in selecting brokers and dealers to execute portfolio transactions.
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.
THE ADMINISTRATOR
ICON Funds retains Meridian as administrator to manage its business affairs
and provide administrative services. Some of these services include reporting to
regulators, such as the SEC, and providing necessary office equipment, personnel
and facilities. The Administrator receives a monthly fee from the Funds. The fee
is calculated at an average annual rate of
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0.05%, declining to 0.04% for net assets above $500 million. Some employees of
Meridian act as officers of ICON Funds.
THE DISTRIBUTOR
ICON Funds retains Meridian Clearing Corporation, an affiliate of the
Advisor, to act as the principal distributor of ICON Fund shares.
Craig T. Callahan and Erik L. Jonson are officers of the distributor and
officers of the ICON Fund. The ICON Fund has adopted a plan under Rule 12b-1
that allows the Fund to pay distribution and other fees for the distribution of
its shares and for services provided to shareholders.
The ICON Fund pays all other expenses for its operations and activities.
ICON Fund pays its allocable portion of ICON Funds' series level expenses. The
expenses borne by the ICON Fund 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.
ABOUT YOUR ACCOUNT
PRICING SHARES AND RECEIVING SALES PROCEEDS
Here are some procedures you should know when investing in the ICON Fund.
HOW AND WHEN SHARES ARE PRICED
The share price (also called the net asset value or NAV) for the ICON Fund
is calculated at the close of the New York Stock Exchange, normally 4 p.m.
Eastern time, each day the New York Stock Exchange is open for business. To
calculate the NAV, the ICON Fund's assets are valued and totaled, liabilities
are subtracted, and the balance, called net assets, is divided by the number of
shares outstanding. The net asset value per share of the ICON Fund will
fluctuate.
When ICON Fund calculates its share price, it values the securities held at
market value. Sometimes market quotes for some securities are not available or
are not representative of market value. Examples would be when events occur that
materially affect the value of a security at a time
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when the security is not trading or when the securities are illiquid. In that
case, securities may be valued in good faith at fair value, using consistently
applied procedures decided on by the Board of Trustees.
HOW YOUR PURCHASE, SALE OR EXCHANGE PRICE IS DETERMINED
If your request is received in "proper order" (as defined on p. 16) by our
Transfer Agent in correct form by 4 p.m. Eastern time, your transaction will be
priced at that day's NAV. If your request is received after 4 p.m. Eastern time,
it will be priced at the next day's NAV.
HOW YOU CAN RECEIVE THE PROCEEDS FROM A SALE
If your redemption request is received by our Transfer Agent in correct form
by 4 p.m. Eastern time, proceeds are sent within five business days. You may
receive redemption payments in the form of a check or federal wire transfer. If
you use a broker to redeem, the 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 in the future.
OTHER PURCHASE INFORMATION
Dividends begin to accrue after you become a shareholder. The ICON Fund does
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 ICON Fund. If your check or
wire does not clear, you will be responsible for any loss incurred by the ICON
Fund, and a fee of $20 will be charged. If you are already a shareholder, the
ICON Fund can redeem shares from any identically registered account in the ICON
Fund as reimbursement for any loss incurred. You may be prohibited or restricted
from making future purchases in the ICON Fund.
Excessive short-term trading has an adverse impact on effective portfolio
management as well as upon Fund expenses. ICON Funds have reserved the right to
refuse investments from shareholders who engage in short-term trading.
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USEFUL INFORMATION ABOUT DISTRIBUTIONS AND TAXES
DIVIDENDS, CAPITAL GAIN AND TAXES
UNITED STATES TAXES
Dividends and capital gain distributions are reinvested, without charge, in
additional fund shares, unless you select differently on your new account form.
The share price of the reinvestment will be the net asset value of the Fund
shares computed at the close of business on the date the dividend or
distribution is paid. The advantage of reinvesting distributions arises from you
receiving income dividends and capital gains distributions on a rising number of
shares. Dividends not reinvested are paid by check or wire to your financial
institution.
The Fund expects to distribute almost all of its net investment income, if
any, and any net realized capital gains, at least once each year. Each January,
the Fund will report to its shareholders the Federal tax status of dividends and
distributions paid or declared by the Fund during the preceding calendar year.
Dividends from taxable net investment income and distributions of net
short-term capital gains paid by the Fund are taxable to shareholders as
ordinary income. This occurs whether the dividend or distribution was received
in cash or reinvested in additional shares. Distributions of net capital gains
will be taxable to shareholders as long-term capital gains, whether paid in cash
or reinvested in additional shares, and regardless of the length of time the
investor has held his shares.
You should consult your own tax advisor about your particular situation. For
more information about other tax matters, see the SAI.
HOW TO INVEST IN THE FUND
Shares of ICON Fund are sold on a continuous basis. You may invest any
amount you choose as often as you wish. However, the minimum amount of an
initial investment in the ICON Fund is $1,000. Shares may also be purchased
through a broker-dealer or other financial institution authorized by the Fund's
distributor, and you may be charged a fee for this service by that broker-dealer
or institution.
INITIAL PURCHASE BY MAIL: You may purchase shares of the ICON Fund by
completing and signing the investment application form
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ICON Funds Prospectus Page 17
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which accompanies this Prospectus and mailing it in proper form, together with a
check (subject to the above minimum amounts) made payable to ICON Fund and sent
to the address listed below. If you prefer overnight delivery, use the overnight
street address listed below. Cash is not accepted.
<TABLE>
<S> <C>
U.S. MAIL: OVERNIGHT:
ICON Funds ICON Funds
Mutual Fund Services Mutual Fund Services - Third Floor
Post Office Box 701 615 East Michigan Street
Milwaukee, Wisconsin 53201-0701 Milwaukee, Wisconsin 53202
</TABLE>
Your purchase of shares of ICON Funds will be effected at the next share
price calculated after receipt of your investment. The beneficial owners'
custodians will agree to provide the Fund with the states in which the
beneficial owners reside at the time of purchasing shares so that the Fund can
comply with applicable state laws.
INITIAL PURCHASE BY WIRE: You may also purchase shares of the ICON 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 1-800-764-0442 for
wiring instructions. You should be prepared to provide the information on the
application to the Transfer Agent.
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, the Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received. Any delays which may occur in wiring money, including delays
which may occur in processing by the banks, are not the responsibility of the
ICON 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 ICON Funds.
ADDITIONAL INVESTMENTS: Shareholders may add to their account at any time
by purchasing shares by mail or by wire according to the above instructions.
Shareholders should notify the Transfer Agent at 1-800-764-0442 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.
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ICON Funds Prospectus Page 18
<PAGE>
AUTOMATIC INVESTMENT PLAN: You may make regular investments in the ICON
Fund 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 $100
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 ICON Fund is oriented to longer
term investments, shares of the Fund may be an appropriate investment for tax
sheltered retirement plans, including: individual retirement plans (IRAs);
simplified employee 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.
HOW TO REDEEM SHARES
REDEMPTIONS BY MAIL: You may redeem any part of your account in the ICON
Funds at no charge by mail. Your request should be addressed to:
ICON Funds
Mutual Fund Services
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 ICON Fund or Firstar Mutual
Fund Services, a shareholder, prior to redemption, may be required to furnish
additional legal documents to insure proper authorization.
-------------------------------------------------------------------
ICON Funds Prospectus Page 19
<PAGE>
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 the ICON Fund by calling the Transfer Agent at 1-800-764-0442. 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 1-800-764-0442.
ADDITIONAL INFORMATION: If you are not certain of the requirements for a
redemption, please call the Transfer Agent at 1-800-764-0442. 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 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 SEC, the Fund may suspend redemptions or postpone payment dates.
Because the ICON 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
-------------------------------------------------------------------
ICON Funds Prospectus Page 20
<PAGE>
the value of his or her shares in the Fund is less than $5,000 due to
redemption, or 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 to the minimum amount
within the 30 day period. Each share is subject to redemption at any time if the
Board of Trustees determines in its sole discretion that failure to redeem may
have materially adverse consequences to all or any of the shareholders of the
Fund.
ICON Fund has the authority to redeem existing accounts and to refuse a
potential account if the Fund reasonably determines that the failure to redeem,
or to prohibit, would have a material adverse consequence to the Fund and its
shareholders.
HOW TO MAKE EXCHANGES
Shares of the ICON Fund may be exchanged for shares of any other series of
ICON Funds 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 1-800-764-0442. The other ICON Funds are offered by a
separate prospectus, which should be received and read prior to investment. 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.
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ICON Funds Prospectus Page 21
<PAGE>
NOTICE OF PRIVACY POLICIES AND PROCEDURES
We collect non-public personal information about you from the following sources:
(i) information we receive from you on applications or other forms; and (ii)
information about your transactions with us.
Our policies prohibit disclosure of non-public personal information about its
present or former individual shareholders to anyone, EXCEPT as permitted or
required by law AND EXCEPT as necessary for entities providing services to us,
performing functions for us or maintaining records on our behalf, to perform the
applicable function.
All services provided to you and all records containing your non-public personal
information are through or at our service providers. These entities include our
transfer agent, administrative service provider and investment adviser.
Contracts with these entities prohibit them from disclosing non-public personal
information about you, require them to restrict access to the information to
those employees who need to know that information, and, require them to maintain
physical, electronic, and procedural safeguards that comply with federal
standards to guard your non-public personal information. We restrict access to
non-public personal information about you to the entities described above.
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ICON Funds Prospectus Page 22
<PAGE>
[LOGO]
Offered By This Prospectus:
ICON Fund, a U.S. Equity Fund
Offered By a Separate Prospectus:
<TABLE>
<S> <C>
U.S. EQUITY FUNDS INTERNATIONAL EQUITY FUNDS
ICON Materials Fund ICON Asia Region Fund
ICON Consumer Discretionary Fund ICON South Pacific Region Fund
ICON Energy Fund ICON North Europe Region Fund
ICON Financial Fund ICON South Europe Region Fund
ICON Healthcare Fund ICON Western Hemisphere Fund
ICON Leisure and Consumer Staples Fund
ICON Information Technology Fund FIXED INCOME FUND
ICON Telecommunications & Utilities Fund ICON Short-Term Fixed Income Fund
ICON Industrials Fund
</TABLE>
INVESTMENT ADVISER
Meridian Investment Management Corporation
ADMINISTRATOR
Meridian Investment Management Corporation
DISTRIBUTOR
Meridian Clearing Corporation
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
COUNSEL
Charles W. Lutter, Jr.
TRANSFER AGENT
Firstar Mutual Fund Services, LLC
CUSTODIAN
Firstar Bank Milwaukee
-------------------------------------------------------------------
ICON Funds Prospectus Page 23
<PAGE>
[LOGO]
FOR FURTHER INFORMATION
More information about the ICON Fund is available to you free of charge. The
Fund's Annual and Semi-Annual Reports contain the Fund's financial statements,
portfolio holdings, and historical performance. You will also find a discussion
of the market conditions and investment strategies that significantly affected
the Fund's performance in these reports. In addition, a Statement of Additional
Information (SAI) containing more detailed information about the ICON Funds and
their policies has been filed with the Securities and Exchange Commission and is
incorporated by reference as part of this Prospectus. You can request copies of
the Annual and Semi-Annual Reports and the SAI from the ICON Funds:
<TABLE>
<S> <C>
BY TELEPHONE Call 1-888-389-4266
BY MAIL ICON Funds
c/o Meridian Investment Management Corporation
12835 East Arapahoe Road, Tower II
Englewood, Colorado 80112
IN PERSON Meridian Investment Management Corporation
12835 East Arapahoe Road, Tower II
Englewood, Colorado 80112
ON THE INTERNET www.iconfunds.com or text-only
versions of fund documents can be
viewed or downloaded from the
Securities and Exchange Commission's
internet site at www.sec.gov
</TABLE>
<TABLE>
<S> <C>
BY MAIL, E-MAIL OR IN PERSON FROM THE Visit, write or e-mail:
SECURITIES AND EXCHANGE COMMISSION SEC's Public Reference Section
(YOU WILL PAY A COPYING FEE) Washington, D.C. 20549-6009
(202) 942-8090 For hours of
operation.
e-mail address: [email protected]
</TABLE>
ICON Funds' SEC File No. 811-07883
--------------------------------------------------------------------------------
ICON Funds Prospectus Page 24
<PAGE>
[LOGO]ICONFUNDS
FROM MERIDIAN INVESTMENT MANAGEMENT CORPORATION
12835 East Arapahoe Road
Tower II, Penthouse
Englewood, Colorado 80112
Telephone: (303) 790-1600
Toll-Free: (888) 389-4266
Facsimile: (303) 799-8768
E-Mail: [email protected]
--------------------------------------------------------------------------------
Distributed by
MERIDIAN CLEARING CORP.
12835 East Arapahoe Road
Tower II, Penthouse
Englewood, Colorado 80112
--------------------------------------------------------------------------------
For more information contact
FIRSTAR TRUST COMPANY
Toll-Free: (800) 764-0442
--------------------------------------------------------------------------------
This prospectus does not constitute an offering in any jurisdiction in which
such an offering may not lawfully be made. No person is authorized to make any
representations in connection with this offering, other than those contained in
this prospectus.
<PAGE>
[LOGO]
ICON FUNDS
OCTOBER 2, 2000
STATEMENT OF ADDITIONAL INFORMATION
ICON Fund
ICON Materials Fund (formerly ICON Basic
Materials Fund)
ICON Consumer Discretionary Fund (formerly
ICON Consumer Cyclicals Fund)
ICON Energy Fund
ICON Financial Fund (formerly ICON
Financial Services Fund)
ICON Healthcare Fund
ICON Leisure and Consumer Staples Fund
(formerly ICON Leisure Fund)
ICON Information Technology Fund (formerly
ICON Technology Fund)
ICON Telecommunication & Utilities Fund
ICON Industrials Fund (formerly ICON
Transportation Fund)
ICON Asia Region Fund
ICON South Pacific 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 relates to
the Prospectus for the ICON Funds listed above, dated October 2, 2000, for
ICON Fund, and January 20, 2000, for the other listed ICON Funds, as it may
be amended or supplemented from time to time. The SAI should be read in
conjunction with the Prospectus and Annual Reports, all of which may be
obtained by writing the Advisor at 12835 E. Arapahoe Road Tower II, PH,
Englewood, CO 80112 or by calling 1-888-389-4266.
ICON FUNDS Statement of Additional Information PAGE 1
<PAGE>
TABLE OF CONTENTS
THE ICON FUNDS 3
INVESTMENT POLICIES AND RESTRICTIONS 3
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
AND RISK CONSIDERATIONS 5
TEMPORARY DEFENSIVE POSITION 14
PORTFOLIO TURNOVER 15
TRUSTEES AND OFFICERS 15
PRINCIPAL SHAREHOLDERS 16
THE INVESTMENT ADVISOR 17
ADMINISTRATIVE SERVICES 18
CUSTODIAN 19
TRANSFER AGENT 19
INDEPENDENT ACCOUNTANTS AND COUNSEL 19
DISTRIBUTOR 19
PORTFOLIO TRANSACTIONS-BROKERAGE ALLOCATION 19
PURCHASE AND REDEMPTION OF SHARES 20
DETERMINATION OF SHARE OFFERING PRICE 21
TAX STATUS 21
OTHER TAX CONSIDERATIONS 22
CALCULATION OF PERFORMANCE DATA 24
Total Return 25
Yield 26
Non-standardized Total Return 26
ADDITIONAL INFORMATION ABOUT THE FUNDS 26
CODE OF ETHICS 27
FINANCIAL STATEMENTS 28
ICON FUNDS Statement of Additional Information PAGE 2
<PAGE>
THE ICON FUNDS
ICON Funds is an investment company registered with the Securities and
Exchange Commission ("SEC"). ICON Funds was organized as a "business trust"
under the laws of the Commonwealth of Massachusetts on September 19, 1996.
There are numerous series within the ICON Funds. Each series or mutual fund
represents a separate portfolio of securities.
INVESTMENT POLICIES AND RESTRICTIONS
The Prospectus describes the investment objective of each of the Funds and the
principal investment policies and strategies used to achieve that objective. It
also describes the principal risks of investing in each Fund.
This section contains supplemental information concerning the types of
securities and other instruments in which the Funds may invest, the investment
policies and portfolio strategies that the Funds may utilize and certain risks
attendant to those investments, policies and strategies.
Each Fund has adopted investment restrictions as fundamental policies. These
restrictions cannot be changed without approval by the holders of a majority of
the outstanding voting securities of the Fund. This 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.
No Fund may:
(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
ICON FUNDS Statement of Additional Information PAGE 3
<PAGE>
than one-third of the Fund's net assets.
(7) Purchase any security on margin, except that it may obtain
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)Invest more than 5% of the value of its total assets, with respect
to 50% of a Fund, 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:
No Fund may:
(11) Invest in companies for the purpose of exercising control of
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 net assets in illiquid securities.
(14) Invest in oil, gas or other mineral leases.
(15) In connection with bona fide hedging activities, invest more than
5% of its 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.
(16) Invest in shares issued by other investment companies except for
cash management purposes and as permitted under applicable laws
and regulations.
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 these restrictions.
ICON FUNDS Statement of Additional Information PAGE 4
<PAGE>
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.
EQUITY SECURITIES: Except for the Short-Term Fixed Income Fund, 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. This 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. TREASURY OBLIGATIONS: U.S. Treasury obligations consist of bills, notes,
and bonds issued by the U.S. Treasury as well as separately traded interest and
principal components parts of those obligations, known as Separately Traded
Registered Interest and Principal Securities ("STRIPS") that are transferable
through the federal book-entry system.
U.S. TREASURY STRIPS: U.S. Treasury STRIPS are sold as zero coupon securities,
which means that they are sold at a substantial discount and redeemed at face
value at their maturity date without interim cash payments of interest or
principal. This discount is accreted over the life of the security for both
accounting and tax purposes. Because of these features, those securities may be
subject to greater interest rate volatility than interest-paying investments.
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, 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.
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
ICON FUNDS Statement of Additional Information PAGE 5
<PAGE>
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: 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.
PURCHASING 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.
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
ICON FUNDS Statement of Additional Information PAGE 6
<PAGE>
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 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 PUT 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.
PURCHASING 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.
ICON FUNDS Statement of Additional Information PAGE 7
<PAGE>
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,
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.
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 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.
ICON FUNDS Statement of Additional Information PAGE 8
<PAGE>
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.
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.
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.
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.
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
ICON FUNDS Statement of Additional Information PAGE 9
<PAGE>
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.
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.
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.
FOREIGN SECURITIES: Each International Fund invests 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 dividends and interest from those securities, can
change significantly when foreign currencies strengthen or weaken relative to
the U.S. dollar. Foreign
ICON FUNDS Statement of Additional Information PAGE 10
<PAGE>
securities markets generally have less trading volume and less liquidity than
U.S. markets. Further, 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 those restrictions.
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
ICON FUNDS Statement of Additional Information PAGE 11
<PAGE>
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.
A 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 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 will not enter into a foreign 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 this manner does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of those securities decline. Furthermore, hedging transactions preclude
the opportunity for gain if the value of the hedging currency should rise.
Foreign 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.
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
ICON FUNDS Statement of Additional Information PAGE 12
<PAGE>
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.
A 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.
A 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.
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 those 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 market
value fluctuations. Each Fund maintains, in a segregated account, cash, U.S.
Government securities, or other high-grade portfolio securities readily
convertible into cash having an aggregate value at least equal to the amount of
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 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
ICON FUNDS Statement of Additional Information PAGE 13
<PAGE>
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 if 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 the Advisor, 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 the Advisor in response to requests of
broker-dealers or institutional investors which the Advisor 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 and will
require that proxies and other materials be provided 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 net assets.
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.
TEMPORARY DEFENSIVE POSITION
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.
ICON FUNDS Statement of Additional Information PAGE 14
<PAGE>
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." It is anticipated that portfolio turnover for each fund will
generally not exceed 100%. However, the Funds are to be used by other investment
advisers allocating client assets between various sectors or countries. If those
advisers move client assets in and out of a Fund, that Fund's portfolio turnover
rate could be significantly greater. Portfolio turnover rates for prior fiscal
periods are set forth in the "Financial Highlights" portion of the prospectus.
TRUSTEES AND OFFICERS
The Funds are supervised by a board of Trustees who are responsible for major
decisions about the Funds' policies and overall Fund oversight. The names of the
Trustees and executive officers of the Trust are shown below. Each Trustee who
is an "interested person" of the Trust, as defined in the Investment Company Act
of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Name, Age and Address Position Principal Occupation During Past 5 Years
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Craig T. Callahan * President and Trustee President of Meridian Management & Research Corporation,
Age: 49 (Since Inception) President and Chief Investment Officer of the Advisor, and
52 Glenmoor Way President of Meridian Clearing Corporation, the principal
Englewood, CO 80110 underwriter for the Funds.
-------------------------------------------------------------------------------------------------------------------------
R. Michael Sentel Trustee, Attorney for U.S. Department of Education since October
Age: 52 Audit Committee Member 1996; owner of Sentel & Company from 1994 to present;
15663 Wedge Way (Since Inception) Counsel (Section Chief) of Professional Liability Section
Morrison, CO 80465 of FDIC's Litigation Division from 1991 to 1994.
-------------------------------------------------------------------------------------------------------------------------
James W. Hire Trustee, Principal of Hire & Associates since 1988.
Age: 52 Audit Committee Member
5761 Harborage Drive (Since Inception)
Ft. Myers, FLA 33908
-------------------------------------------------------------------------------------------------------------------------
Glen F. Bergert Trustee, President, Venture Capital Management LLC
Age: 50 Audit Committee Member since 1997; Partner, KPMG Peat Marwick, LLP
1010 Brentwater Road (Since February 1999) from 1979 to 1997.
Camp Hill, PA 17011
-------------------------------------------------------------------------------------------------------------------------
Erik L. Jonson, CPA Vice President and Chief Financial Officer and Secretary of Meridian
Age: 50 Chief Financial Management & Research Corporation, owner of Erik L. Jonson,
9465 West Geddes Place Officer, Chief CPA from 1986 to 1996.
Littleton, CO 80112 Accounting Officer
-------------------------------------------------------------------------------------------------------------------------
ICON FUNDS Statement of Additional Information PAGE 15
<PAGE>
-------------------------------------------------------------------------------------------------------------------------
Deborah Zele Urtz Chief Compliance Chief Compliance Officer of the Advisor, Financial and
Age: 36 Officer and Operations Principal of Meridian Clearing Corporation, the
5928 E. Weaver Circle Secretary of principal underwriter of the Funds; 14 years experience in
Englewood, CO 80111 the Trust securities industry in operations and compliance.
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
The compensation paid to the Trustees of the Trust during the fiscal year ended
September 30, 1999, is set forth in the following table. Trustee fees are Trust
expenses and each fund of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Aggregate Pension or Retirement Estimated Annual Total Compensation from
Compensation from Accrued As Part of Fund Benefits Upon Trust (the Trust is not in
Name Trust Expenses Retirement a Fund Complex)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
-------------------------------------------------------------------------------------------------------------------------
Glen F. Bergert $6,000 $0 $0 $6,000
-------------------------------------------------------------------------------------------------------------------------
TOTAL $22,000 $0 $0 $22,000
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
PRINCIPAL SHAREHOLDERS
As of September 6, 2000, no person owned, beneficially or of record, more than
5% of the outstanding shares of any of the Funds except:
<TABLE>
<CAPTION>
<S><C>
Fund Amount owned
---------------------------------------------------
Charles Schwab & Co., Inc., ICON Energy Fund 12.45%
101 Montgomery Street ICON Financial Fund 15.12%
San Francisco, CA 94104 ICON Information Technology Fund 14.08%
(record owner) ICON Telecommunication &
Utilities Fund 7.90%
ICON Industrials Fund 5.57%
ICON Asia Region Fund 28.04%
ICON North Europe Region Fund 9.31%
ICON Short-Term Fixed Income Fund 6.79%
National Financial Services Corp. ICON Short-Term Fixed Income Fund 15.84%
P.O. Box 3908
Church Street Station
New York, NY 10008
(record owner)
Jack White & Company ICON Asia Region Fund 5.59%
9191 Towne Centre Drive, Suite 220
San Diego, California 92122
(record owner)
ICON FUNDS Statement of Additional Information PAGE 16
<PAGE>
Hunters Creek LLC ICON Short-Term Fixed Income Fund 15.80%
22463 Sunnydale Street
Saint Clair Shores, MI 48081
(record owner)
Resources Trust Corporation
P.O. Box 5900 ICON Materials Fund 92.68%
Denver, Colorado 80217 ICON Consumer Discretionary Fund 93.55%
(record owner) ICON Energy Fund 78.68%
ICON Financial Fund 81.46%
ICON Healthcare Fund 93.64%
ICON Leisure and Consumer Staples Fund 94.82%
ICON Information Technology Fund 79.42%
ICON Telecommunication &
Utilities Fund 88.63%
ICON Industrials Fund 90.41%
ICON Asia Region Fund 58.29%
ICON North Europe Region Fund 84.40%
ICON South Europe Region Fund 90.51%
ICON Short-Term Fixed Income Fund 51.77%
</TABLE>
These broker-dealers and/or trust company custodians hold the shares for the
benefit of their customers. The Trust is not aware of any person who
beneficially owns more than 5% of the outstanding shares of any of the Funds.
As of September 6, 2000, the officers and Trustees of the Trust, as a group,
owned less than 1% of the outstanding shares of any Fund.
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"). Prior to January 2, 1999, Michael J.
Hart and Dr. Craig T. Callahan each owned 50% of MM&R. Beginning January 2,
1999, Dr. Callahan became the sole owner of MM&R. He may be deemed to control
the Advisor due to his ownership of MM&R shares and his position as an officer
and director of the Advisor.
As shown in the table above, Mr. Jonson and Ms. Urtz hold positions with both
the Advisor, its affiliates, and the Funds, but have no ownership positions with
the Adviser or its affiliates.
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; and 0.75% for the ICON 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.
Below is a table which shows the advisory fees paid from inception.
ICON FUNDS Statement of Additional Information PAGE 17
<PAGE>
The Board of Trustees voted (including a majority of the "disinterested
Trustees") and shareholder approval was given for the Advisory Agreement through
October 1998. The 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 (i) by a vote of a majority of the outstanding
voting securities of such Fund (as defined in the 1940 Act) or (ii) by the Board
of Trustees of the Trust, and/or 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. As of the date of this SAI, the Advisory Agreement has been continued
through October 200 . The Advisory Agreement may be terminated on 60 days'
written notice by either party and will terminate automatically if assigned.
<TABLE>
1999 1998 1997
<S> <C> <C> <C>
ICON Materials $171,976 $ 13,982 $182,197
ICON Consumer Discretionary 582,809 43,472 45,054
ICON Energy 137,737 10,522 0
ICON Financial 104,440 15,535 72,579
ICON Healthcare 292,840 26,480 351,884
ICON Leisure and Consumer Staples 401,048 44,919 176,283
ICON Information Technology 669,756 51,084 180,491
ICON Telecommunication & Utilities 98,701 15,795 43,602
ICON Industrials 244,119 10,288 76,320
ICON Asia Region 291,576 26,616 256,135
ICON North Europe 310,516 34,112 220,106
ICON South Europe 81,112 8,689 89,704
ICON South Pacific 0 0 0
ICON Western Hemisphere 0 0 0
ICON Fund 0 0 0
Short-Term Fixed Income 30,268 3,059 533,769
</TABLE>
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 which was repealed in 1999 prohibited banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act was not been clearly
defined by the courts or appropriate regulatory agencies, management of a Fund
believes that the Glass-Steagall Act did 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.
ADMINISTRATIVE SERVICES
Under a separate written agreement, Meridian as ("Administrator") provides
day-to-day administrative services to the Trust. The Administrator provides the
Trust with office space, facilities and simple business equipment, and generally
administers the Trust's business affairs and provides the services of executive
and clerical personnel for administering the affairs of the Trust. Meridian
compensates all personnel, officers and Trustees of the Trust if such persons
are employees of the Administrator or its affiliates. From October 1996 until
April 1, 1998, the Funds had retained an administrator other than Meridian. In
April 1998, the Funds entered into a Co-Administration Agreement with Meridian
and the prior administrator. As of March 1, 1999, the Funds have retained
Meridian as the Administrator. Below is a table which shows the administration
fees paid from inception.
<TABLE>
-----------------------------------------------------------------------------------------------------
<S> <C>
Administrative Fee paid to prior administrator-Inception through 9-30-97 $ 125,701
-----------------------------------------------------------------------------------------------------
Administrative Fee paid to prior administrator 10-1-97 through 9-30-98 $ 182,127
-----------------------------------------------------------------------------------------------------
ICON FUNDS Statement of Additional Information PAGE 18
<PAGE>
------------------------------------------------------------------------------------------------------------------------
Administrative Fee paid to Meridian 10-1-97 through 9-30-98 $ 66,546
------------------------------------------------------------------------------------------------------------------------
Administrative Fee paid to prior co-administrator 10-1-98 through 2-28-99 $ 30,135
------------------------------------------------------------------------------------------------------------------------
Administrative Fee paid to Meridian as co-administrator and administrator 10-1-98 through 9-30-99 $ 141,461
------------------------------------------------------------------------------------------------------------------------
</TABLE>
CUSTODIAN
Firstar Bank Milwaukee, 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.
TRANSFER AGENT
Firstar Mutual Fund Services, LLC, 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
PricewaterhouseCoopers LLP 1670 Broadway, Suite 1000 Denver, Colorado 80202
has been selected as independent accountants for the Trust for the fiscal
year ending September 30, 2000. Charles W. Lutter, Jr., 103 Canyon Oaks, San
Antonio, Texas 78232, is legal counsel to the Trust.
DISTRIBUTOR
Meridian Clearing Corporation, 12835 E. Arapahoe Road, Tower II, Englewood,
Colorado 80112, an affiliate of the Advisor, 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. Shares of
all ICON Funds, except the ICON Fund, are no-load, no 12b-1
(distribution\shareholder service) fee. The Class C shares of the ICON Fund
carry a 1.00% 12b-1 fee and the Class I shares carry a 0.25% 12b-1 fee.
PORTFOLIO TRANSACTIONS - BROKERAGE ALLOCATION
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
ICON FUNDS Statement of Additional Information PAGE 19
<PAGE>
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.
The Funds purchase portfolio securities from broker-dealers in both principal
and agency transactions. When a dealer sells a security on a principal basis it
is compensated by the "markup" it includes in the price of the security. Listed
securities are generally traded on an agency basis and the broker receives a
commission for acting as agent. The aggregate dollar amount of brokerage fees
paid by the Funds for the most recent fiscal years are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
ICON Materials $91,777 $238,749 $224,797
ICON Consumer Discretionary 76,184 138,972 20,267
ICON Energy 25,661 69,414 0
ICON Financial 24,563 50,068 22,998
ICON Healthcare 100,929 121,805 211,695
ICON Leisure and Consumer Staples 128,109 98,876 88,637
ICON Information Technology 114,662 105,308 57,749
ICON Telecommunication & Utilities 24,532 121,874 16,438
ICON Industrials 26,200 14,011 29,534
ICON Asia Region 65,179 104,289 92,427
ICON North Europe 93,816 100,757 104,419
ICON South Europe 33,177 129,283 40,549
ICON South Pacific 0 0 0
ICON Western Hemisphere 0 0 0
ICON Fund 0 0 0
</TABLE>
PURCHASE AND REDEMPTION OF SHARES
There is no sales charge on the purchase of Fund shares. Shares may be purchased
by contacting the Transfer Agent at 1-800-764-0442 or simply complete the
application form enclosed with the Prospectus. Shares of any Funds may be
purchased at the net asset value per share next determined after receipt of the
purchase order. Investors may invest any amount as often as they wish; however,
the minimum investment in any one Fund is $1,000. Subject to the minimum
investment amount, shares may also be purchased by exchange.
ICON FUNDS Statement of Additional Information PAGE 20
<PAGE>
The Funds have authorized one or more brokers to accept purchase orders on the
Fund's behalf. Such brokers are authorized to designate other intermediaries to
accept purchase orders on the Funds' behalf. The Funds will be deemed to have
received a purchase order when an authorized broker or, if applicable, a
broker's authorized designee, accepts the order. A purchase order will be priced
at the Fund's Net Asset Value next calculated after the order has been accepted
by an authorized broker or the broker's authorized designee.
The Funds have also authorized one or more brokers to accept redemption orders
on the Funds' behalf. Such brokers are authorized to designate other
intermediaries to accept redemption orders on the Fund's behalf. The Fund will
be deemed to have received a redemption order when an authorized broker or, if
applicable, a broker's authorized designee, accepts the order. A redemption
order will be priced at the Fund's Net Asset Value next calculated after the
order has been accepted by an authorized broker or the broker's authorized
designee.
It is possible that in the future conditions may exist which would, in the
opinion of the Funds' Advisor, make it undesirable for the Fund to pay for
redeemed shares in cash. In such cases, the Advisor may authorize payment to be
made in portfolio securities or other property of the Fund. However, the Company
is obligated under the 1940 Act to redeem for cash all shares of the Fund
presented for redemption by any one shareholder having a value up to $250,000
(or 1% of the Fund's net assets if that is less) in any 90-day period.
Securities delivered in payment of redemptions are selected entirely by the
Advisor based on what is in the best interests of the Fund and its shareholders,
and are valued at the value assigned to them in computing the Fund's net asset
value per share. Shareholders receiving such securities are likely to incur
brokerage costs on their subsequent sales of the securities.
Other procedures for purchasing, selling (redeeming) and exchanging Fund shares
are described in the Prospectus.
DETERMINATION OF SHARE OFFERING 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. In the event markets close early (such as on the eve
of a holiday), net asset value per share will be determined as of such earlier
time. The Funds are open for business on every day except Saturdays, Sundays and
the following holidays: New Year's Day, Martin Luther King Jr. 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 "About Your Account" in the Prospectus.
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.
ICON FUNDS Statement of Additional Information PAGE 21
<PAGE>
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) 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 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.
TAXATION OF THE FUNDS' INVESTMENTS
The Fund's ability to make certain investments may be limited by provisions of
the Code that require inclusion of certain unrealized gains or losses in the
Fund's income for purposes of the 90% test, and the distribution requirements of
the Code, and by provisions of the Code that characterize certain income or loss
as ordinary income or loss rather than capital gain or loss. Such recognition,
characterization and time rules generally apply to investments in certain
forward currency contracts, foreign currencies and debt securities denominated
in foreign currencies.
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 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.
OTHER TAX CONSIDERATIONS
ICON FUNDS Statement of Additional Information PAGE 22
<PAGE>
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.
There is a possibility that a foreign country (e.g. China with exchange control
regulations) may restrict or limit the ability of the Fund to distribute net
investment income or the proceeds from the sale of its investments to its
shareholders. Those kind of restrictions or limitations could impact the Fund's
ability to meet the distribution requirements described above.
If the Fund owns shares in a foreign corporation that constitutes a "passive
foreign investment company" for U.S. Federal income tax purposes, and the Fund
does not elect to treat the foreign corporation as a "qualified electing fund"
within the meaning of the Code, the Fund may be subject to U.S. Federal income
tax on a portion of any "excess distribution" it receives from the foreign
corporation or any gain it derives from the disposition of those shares, even if
that income is distributed as a taxable dividend by the Fund to its U.S.
shareholders. The Fund may also be subject to additional tax in the nature of an
interest charge with respect to deferred taxes arising from those distributions
or gains. Any tax paid by the Fund as a result of its ownership of shares in a
"passive foreign investment company" will not give rise to any deduction or
credit to the Fund or any shareholder. If the Fund owns shares in a "passive
foreign investment company" and the Fund does elect to treat the foreign
corporation as a "qualified electing fund" under the Code, the Fund may be
required to include in its income each year a portion of the ordinary income and
net capital gains of the foreign corporation, even if this income is not
distributed to the Fund. This type of income would be subject to the
distribution requirements described above even if the Fund did not receive any
income to distribute.
CURRENCY FLUCTUATIONS - "SECTION 988" GAINS OR LOSSES
Under the IRS Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the Fund accrues interest or other
receivables, or accrues expenses or other liabilities denominated in a foreign
currency, and the time the Fund actually collects those receivables or pays
those liabilities, are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies or from the
disposition of debt securities denominated in a foreign currency attributable to
fluctuations in the value of the foreign currency between the date of
acquisition of the currency or security and the date of disposition also are
treated as ordinary gain or loss. These gains or losses, referred to under the
Code as "section 988" gains or losses, increase or decrease the amount of the
Fund's net investment income (which includes, among other things, dividends,
interest and net short-term capital gains in excess of net long-term capital
losses, net of expenses) available to be distributed to its shareholders as
ordinary income, rather than increasing or decreasing the amount of the Fund's
net capital gain. If section 988 losses exceed other net investment income
during a taxable year, any distributions made by the Fund could be
re-characterized as a return of capital to shareholders, rather than as an
ordinary dividend, reducing each shareholder's basis in his Fund shares. To the
extent that those distributions exceed those shareholder's basis, they will be
treated as a gain from the sale of shares. As discussed below, certain gains or
losses with respect to forward foreign currency contracts, over-the-counter
options or foreign currencies and certain options graded on foreign exchanges
will also be treated as section 988 gains or losses.
ICON FUNDS Statement of Additional Information PAGE 23
<PAGE>
Forward currency contracts and certain options entered into by the Fund may
create "straddles" for U.S. Federal income tax purposes and this may affect the
character of gains or losses realized by the Fund on forward currency contracts
or on the underlying securities and cause losses to be deferred. Transactions in
forward currency contracts may also result in the loss of the holding period of
underlying securities. The Fund may also be required to "mark-to-market" certain
positions in its portfolio (i.e., treat them as if they were sold at year end).
This could cause the Fund to recognize income without having the cash to meet
the distribution requirements.
FOREIGN TAXES
Income received by the Fund from sources within other countries in which the
issuers of securities purchased by the Fund are located, may be subject to
withholding and other taxes imposed by those countries.
If the Fund is liable for foreign income and withholding taxes that can be
treated as income taxes under U.S. Federal income tax principles, the Fund
expects to meet the requirements of the Code for "passing-through" to its
shareholders those foreign taxes paid. However, there can be no assurance that
the Fund will be able to do so. Under the Code, if more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of stocks or
securities of foreign corporations, the Fund will be eligible for an election
with the IRS to "pass-through" to the Fund's shareholders the amount of foreign
income and withholding taxes paid by the Fund. Pursuant to this election a
shareholder will be required to: (1) include in gross income (in addition to
taxable dividends actually received) his pro rata share of foreign taxes paid by
the Fund; (2) treat his pro rata share of foreign taxes as having been paid by
him; and (3) either deduct his pro rata share of foreign taxes in computing his
taxable income or use it as a foreign tax credit against his U.S. Federal income
taxes. No deduction for foreign taxes may be claimed by a shareholder who does
not itemize deductions. Each shareholder will be notified after the close of the
Fund's taxable year whether the foreign taxes paid by the Fund will
"pass-through" for that year and, if so, the notification will designate (a) the
shareholder's portion of the foreign taxes paid to each country; and (b) the
portion of dividends that represents income derived from sources within each
country.
The amount of foreign taxes for which a shareholder may claim a credit in any
year is subject to an overall limitation which is applied separately to "passive
income," which includes, among other types of income, dividends and interest.
However this limitation does not apply to individual shareholders to the extent
of limits established under the code.
The foregoing is only a general description of the foreign tax credit under
current law. Because applicability of the credit depends on the particular
circumstances of each shareholder, shareholders are advised to consult their own
tax advisers.
CALCULATION OF PERFORMANCE DATA
UNDERSTANDING PERFORMANCE INFORMATION
This section should help you understand the terms used to describe fund
performance. You will come across them in shareholder reports, advertisements,
promotional materials, and the media. Each of the Funds may compare its
performance to that of other mutual funds with similar investment objectives and
to stock or other indices. Past performance is not representative of future
performance.
ICON FUNDS Statement of Additional Information PAGE 24
<PAGE>
Total Return tells you how much an investment in a Fund has changed in value
over a given time period. It reflects any net increase or decrease in the share
price, and assumes that all dividends and capital gains (if any) paid during the
period were re-invested in additional shares.
Cumulative Total Return is the actual return of an investment for a specific
time period. A cumulative return does not reflect how much the value of the
investment may have fluctuated during the period.
Average Annual Return is hypothetical and should not be confused with actual
yearly results. An average annual total return reflects the hypothetical
annually compounded return that would have produced the same total return if the
Fund's performance had been constant over the entire period.
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:
<TABLE>
<S><C>
n
P(1+T) = 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.
</TABLE>
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.
Pursuant to Item 21 of Form N-1A the Trust is providing average annual Total
Returns for the active funds for the 1 year period ended September 30, 1999.
<TABLE>
<CAPTION>
---------------------------------------------------------------------
1999
Fund Average Annual
Total Return
---------------------------------------------------------------------
<S> <C>
ICON Materials Fund 11.65
---------------------------------------------------------------------
ICON Consumer Discretionary Fund 25.78
---------------------------------------------------------------------
ICON Energy Fund 27.28
---------------------------------------------------------------------
ICON Financial Fund 10.05
---------------------------------------------------------------------
ICON Healthcare Fund (5.34)
---------------------------------------------------------------------
ICON Leisure and Consumer Staples Fund 14.76
---------------------------------------------------------------------
ICON Information Technology Fund 119.53
---------------------------------------------------------------------
ICON Telecommunication & Utilities Fund 15.25
---------------------------------------------------------------------
ICON Industrials Fund 16.89
---------------------------------------------------------------------
ICON FUNDS Statement of Additional Information PAGE 25
<PAGE>
---------------------------------------------------------------------
ICON Asia Region Fund 78.49
---------------------------------------------------------------------
ICON North Europe Region Fund 12.78
---------------------------------------------------------------------
ICON South Europe Region Fund 6.41
---------------------------------------------------------------------
ICON Short-Term Fixed Income Fund 3.54
---------------------------------------------------------------------
</TABLE>
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 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
The yield for the 30-day period ended September 30, 1999 for the Short-Term
Fixed-Income Fund was 2.652985%.
NON-STANDARDIZED 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 non-standardized total
return results for differing periods, such as for the most recent six months.
Such non-standardized total return is computed as otherwise described under
"Total Return" except that no annualization is made.
ADDITIONAL INFORMATION REGARDING THE FUNDS
The assets received by the ICON Funds, 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.
ICON FUNDS Statement of Additional Information PAGE 26
<PAGE>
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 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.
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 or class of shares in a Fund, a separate vote of
that Fund or class 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.
CODE OF ETHICS
The Funds and Meridian have adopted a strict Code of Ethics that limits
directors, officers, investment personnel and other Meridian employees in
investing in securities for their own accounts. The Code complies in all
material respects with the Investment Company Act of 1940. The Code requires all
covered persons to conduct their personal securities transactions in a manner
which does not operate
ICON FUNDS Statement of Additional Information PAGE 27
<PAGE>
adversely to the interests of the Funds or the Advisor's other clients. With
certain exceptions, the Code of Ethics requires pre-clearance of personal
securities transactions and imposes restrictions and reporting requirements upon
such transactions. Among others, the code of ethics provides an exemption from
the pre-approval requirement for "de minimis" transactions or transactions
involving no more than $5,000. The Funds and Meridian carefully monitor
compliance with the Code of Ethics. The Code is available upon request by
calling 1-888-389-ICON or writing:
Meridian Investment Management Corporation
12835 East Arapahoe Road, Tower II - P.H.
Englewood, Colorado 80112
FINANCIAL STATEMENTS
(1) The audited financial highlights with respect to the active series of the
ICON Funds for the year ended September 30, 1999 and for the period from the
commencement of operations through September 30, 1997 and 1998, are found in
Part A of the Amended Registration Statement dated January 20, 2000.
SERIES COMMENCEMENT OF OPERATIONS
ICON Short-Term Fixed Income Fund February 7, 1997
ICON North Europe Region Fund February 18, 1997
ICON South Europe Region Fund February 20, 1997
ICON Healthcare Fund February 24, 1997
ICON Asia Region Fund February 25, 1997
ICON Information Technology Fund (formerly ICON Technology Fund)
February 19, 1997
ICON Materials Fund (formerly ICON Basic Materials Fund) May 5, 1997
ICON Leisure and Consumer Staples Fund (formerly ICON Leisure Fund)
May 9, 1997
ICON Industrials Fund (formerly ICON Transportation Fund) May 9, 1997
ICON Financial Fund (formerly ICON Financial Services Fund) July 1, 1997
ICON Consumer Discretionary Fund (formerly ICON Consumer Cyclicals Fund)
July 9, 1997
ICON Telecommunication & Utilities Fund July 9, 1997
At September 6, 2000, the following funds had not yet commenced operations:
ICON Fund, ICON South Pacific Region Fund, and ICON Western Hemisphere Fund.
The financial statements for the fiscal period ended September 30, 1999, are
hereby incorporated by reference from the Annual Report to Shareholders of
that date.
(2) The unaudited financial statements for the six months ended March 31,
2000, are hereby incorporated by reference from the Semi-Annual Report to
Shareholders of that date.
The reports have been delivered with this Statement of Additional
Information, unless previously provided. The Trust will promptly provide
another copy, free of charge, upon request to:
Meridian Investment Management Corporation
12835 East Arapahoe Road, Tower II - P.H.
Englewood, Colorado 80112
OR
call 1-888-389-ICON
ICON FUNDS Statement of Additional Information PAGE 28
