Registration Nos. 2-16931; 811
0972
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 X
Pre-Effective Amendment No.
O Post-Effective Amendment No. 45 \R
X
and
REGISTRATION STATEMENT UNDER THE
X INVESTMENT COMPANY ACT OF 1940
Amendment No. 23 \R
X (Check appropriate box or boxes)
ANCHOR CAPITAL ACCUMULATION TRUST
(Exact Name of Registrant as Specified in Charter)
7022 Bennington Woods Drive
Pittsburgh, Pennsylvania 15237
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code:
(412) 6357610
It is proposed that this filing will become effective
(Check appropriate box)
Ximmediately upon filing pursuant to Paragraph (b)
of Rule 485 O on ____________________ pursuant
to
Paragraph (b)
O 60 days after filing pursuant to Paragraph
(a)
Oon (date) pursuant to Paragraph (a) of Rule (485
or 486)
Peter K. Blume, Esq.
Yukevich, Blume, Marchetti & Zangrilli,
P.C. One Gateway Center, Sixth
Floor
Pittsburgh, PA 15222
(Name and Address of Agent for Service)
The Registrant has previously filed
a declaration of indefinite registration
of its shares pursuant to Rule 24f-2
under the Investment Company Act of 1940.
The Registrant's Notice under Rule 24f-2
for the fiscal year ended December 31,
1995 will be filed on or before June 30,
1996
1
ANCHOR CAPITAL ACCUMULATION TRUST
Cross Reference sheet Pursuant to Rule
495(a)
Part A
Form Item Cross
Reference
Item 1. Cover Page. Cover Page
Item 2. Synopsis. Shareholder
Transaction
Expenses; Annual
Trust Operating
Expenses
Item 3. Condensed Financial Information.
Statement
of Selected Per
Share Data.
Item 4. General Description of Registrant.Cover
Page; About the
Trust; Investment
Objective and
Policies;
Specialized
Investment
Techniques
Item 5. Management of the Trust.
(a)
Management
-- Trustees
(b)
Manager
- --
Investment Advisor
(c) Not
Applicable
(d) Other
Information -
Custodian, Transfer
Agent and Dividend
Paying Agent
(e)
Management
-- Expenses
(f)
Management
-- Brokerage
Item 6. Capital Stock and Other Securities.
(a) About
the
Trust; Other
Information -
Capitalization
(b) Not
Applicable
(c) Not
Applicable
(d) Not
Applicable
(e) How
to
Purchase Shares;
Other Information
Shareholder Inquiries
(f) About
the
Trust; Services for
Shareholders
Distributions; Taxes
Item 7. Purchase of Securities Being Offered.
(a) How to
Purchase Shares
(b)
Determination of Net
Asset Value
(c) How to
Purchase Shares
(d) How to
Purchase Shares
(e)
Distribution of
Shares
Item 8. Redemption or Repurchase.
Redemption
and Repurchase of
Shares
Item 9. Pending Legal Proceedings. Not
Applicable
Statement of
Additional Part B Information
Cross
Reference
Form Item
Item 10. Cover Page. Cover Page
Item 11. Table of Contents. Table of
Contents
Item 12. General Information and History.
Not
Applicable
Item 13. Investment Objectives and Policies.
Additional
Information
Concerning Investment
Policies and Risk
Considerations;
Investment
Restrictions
Item 14. Management of the Fund. Management
- --
Officers and Trustees
Item 15. Control Persons and Principal Holders
of Securities.
(a)
Not Applicable
(b)
Not Applicable
(c)
Management
-- Officers and
Trustees
Item 16. Investment Advisory and Other
Services.
(a), (b) Management
- --
Investment Advisory
Contract
(c),(d),(e) Not Applicable
(f)
Distribution of
Shares
(g) Not
Applicable
(h) Other
Information
(i) Not
Applicable
Item 17. Brokerage Allocation. Portfolio
Security Transactions
Item 18. Capital Stock and Other Securities.
About
the Trust
Item 19. Purchase Redemption and Pricing
of Securities Being Offered.
(a),(b) How to
Purchase
Shares; Determination
of Net Asset Value
(c) Not
Applicable
Item 20. Tax Status. Taxes
Item 21. Underwriters. Distribution of
Shares; How to
Purchase Shares
Item 22. Calculation of Performance Data.
Not
Applicable
Item 23. Financial Statements. Financial
Statements
Part C Other
Information
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of the
Registration Statement.
ANCHOR CAPITAL ACCUMULATION TRUST
PROSPECTUS
DATED MAY 1, 1996 \R
ANCHOR INVESTMENT MANAGEMENT CORPORATION
INVESTMENT ADVISER
7022 BENNINGTON WOODS DRIVE PITTSBURGH,
PENNSYLVANIA 15237
Anchor Capital Accumulation Trust (the "Trust"), formerly
known as Meeschaert Capital Accumulation Trust, is a
diversified openend management investment company. The
investment objective of the Trust is to obtain long-term
capital appreciation by investing in a diversified group of
securities selected on the basis of their investment values.
Investment policies are flexible and permit investments
primarily in common and preferred stocks, both domestic and
foreign. The Trust may write covered call options or
purchase covered put options on portfolio securities and
securities indices. The Trust may also purchase put and call
options on foreign currencies and sell options on foreign
currencies in closing sale transactions. In addition, the
Trust may lend portfolio securities and invest in repurchase
agreements.
The Trust has adopted a Distribution Plan under Rule 12b-1
of the Investment Company Act of 1940, providing for
compensation to the Trust's Distributor in respect of sales
of Trust shares in the maximum amount of 5% of the sale
price (currently limited to .75 of 1% of the average daily
net assets for any
fiscal year) and in addition may impose a related contingent
deferred sales charge, commencing at 4% in the first
calendar year and declining thereafter, in connection with
redemptions of purchases made within four calendar years of
purchase of the shares redeemed or repurchased. The
Distribution Plan has not been made effective pending review
and approval of the Plan by the Trust's shareholders. See
"Distribution of Shares" herein and in the Statement of
Additional Information.
The address of the Trust and it's Investment Adviser is 7022
Bennington Woods Drive, Pittsburgh, Pennsylvania 15237 and
the telephone number is (412) 635-7610.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus sets forth certain information about the
Trust which investors ought to know before investing, and it
should be retained for future reference. Additional facts
about the Trust are contained in a Statement of Additional
Information dated May 1, 1996, which has been filed with the
Securities and Exchange Commission. The Statement and the
Trust's Annual Report for 1995 are available without charge
by calling or by writing the Trust at the above telephone
number or address. The Statement of Additional Information
and Annual Report are incorporated by reference in this
Prospectus. \R
TABLE OF TRUST FEES AND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchase
None Maximum Sales Load Imposed on Reinvested
Dividends
None
Deferred Sales Load (as a percentage of
original purchase price) (Note 1)
Year of Purchase
4.00% Second Year
3.00% Third Year
2.00% Fourth Year
1.00%
Redemption Fees
None
Exchange Fees
None
ANNUAL TRUST OPERATING EXPENSES:
(AS A PERCENTAGE OF AVERAGE NET ASSETS) (NOTE 2)
Management Fees
0.75%
12b-1 Fees
None
Other Expenses 0.36%
\R
Total Trust Operating Expenses 1.11%
\R
EXAMPLE
1 Year 3 5
10
Years Years
Years
You would pay the following $51 $55 $61
expenses on a $1,000 investment
$135
assuming (1) 5% annual return and
\R
(2) redemption at the end of each
time period:
You would pay the following $11 $35 $61
expenses on the same investment,
$135
assuming no redemption:
\R
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in
understanding the various costs and expenses that an
investor in the Trust will bear, directly or indirectly.
This information should be read in conjunction with the
Trust's Annual Report, which contains a more complete
description of the various costs and expenses and is
incorporated by reference in this Prospectus.
Note 1. A contingent deferred sales charge may be imposed
upon certain redemptions of shares purchased after inception
of the Trust's Distribution Plan. See "Distribution of
Shares" in the Prospectus. The Trustees do not currently
impose the charge. Note 2. The Trustees have set an
aggregate limit on the amount of 12b-1 payments equal to .75
of 1% of the Trust's average daily assets for any fiscal
year. The Trustees do not currently impose the charge.
TABLE OF CONTENTS
TABLE OF TRUST FEES AND EXPENSES: 2
ANNUAL TRUST OPERATING EXPENSES 2
SELECTED PER SHARE DATA AND RATIOS 4
ABOUT THE TRUST 5
INVESTMENT OBJECTIVE AND POLICIES 5
SPECIALIZED INVESTMENT TECHNIQUES 5
Foreign Securities 5
Option Transactions Involving Portfolio Securities and
Securities Indices
6
Options on Foreign Currencies
6
Financial Futures and Related Options
6
Lending of Portfolio Securities
7
Repurchase Agreements
7
MANAGEMENT
8
Trustees
8
Investment Adviser
8
Expenses
9
Brokerage
9
Management Discussion of Fund Performance
9
HOW TO PURCHASE SHARES
10
DISTRIBUTION OF SHARES
10
HOW TO EXCHANGE SECURITIES FOR TRUST SHARES
11
REDEMPTION AND REPURCHASE OF SHARES
12
DETERMINATION OF NET ASSET VALUE
13
SERVICES FOR SHAREHOLDERS
13
Open Accounts
13
Invest-By-Mail
13
DISTRIBUTIONS
13
TAXES
14
OTHER INFORMATION
14
Custodian, Transfer Agent and Dividend-Paying Agent
14
Capitalization
14
Shareholder Inquiries
15
APPLICATION FORM
16
SELECTED PER SHARE DATA AND RATIOS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD ENDED DECEMBER 31,)
The following information for the six years ended December
31, 1995 has been examined by Livingston & Haynes, P.C.,
independent
accountants, and should be read in conjunction with their report and
the financial statements and notes appearing in the Trust's Annual
Report which are incorporated by reference in this Prospectus. Each
of the four years ended December 31, 1989 was examined by Arthur
Andersen & Co., independent accountants. \R
Year Ended December 31
1995 1994 1993 1992 1991 1990 1989 1988 1987
1986 Investment $ $ $ $ $ $ $ $ $ $
income (1.1 3.49 0.05 0.29 0.79 1.63 2.70 1.28 0.13
4.05
7)
Expenses (0.6 2.10 0.03 0.17 0.22 0.29 0.38 0.28 0.09
1.96
4)
Net investment (0.5 1.39 0.02 0.12 0.57 1.34 2.32 1.00 0.04
2.09
income (loss) 3)
Net realized and
unrealized gain 4.32 (1.7 (0.4 1.60 3.10 0.52 1.95 (0.4 (0.2
1.31 (loss) on 2) 7) 3) 4)
investments
Distributions to
shareholders:
From net
investment (0.1 (0.2 (0.1 (0.3 -- (1.2 (2.1 (0.9 (0.2
(0.7
income 9) 3) 7) 1) 5) 7) 8) 1)
6)
(loss)
From net
realized gains (0.6 (0.0 (2.1 (2.4 (0.9 (0.5 (4.0 (1.3
(1.8
on 2) 4) 1) 8) 9) 7) 6) 4)
5)
investments
Net increase
(decrease) in 2.98 (0.6 (2.7 (1.0 2.68 0.04 (1.9 (1.7 (0.4
0.79
net 0) 3) 7) 6) 5) 1)
asset value
Net asset value:
Beginning of 20.0 20.6 23.4 24.4 21.7 21.7 23.7 25.4 25.8
25.0
year 7 7 0 7 9 5 1 6 7
8
End of year $23. $20. $20. $23. $24. $21. $21. $23. $25.
$25.
05 07 67 40 47 79 75 71 46
87
Total Return 18.9 (1.5 (2.9 7.15 16.8 8.56 18.0 2.24 (0.7
13.4
1% 8%) 7%) % 5% % 5% % 5%)
8%
Ratio of
expenses to 1.11 1.10 1.10 1.08 1.01 1.07 0.84 1.03 1.48
1.45
average net % % % % % % % % %
%
assets
Ratio of net
investment 0.92 0.73 0.65 0.73 2.57 4.98 5.05 3.69 0.67
1.54
income % % % % % % % % %
%
to average net
assets
Portfolio 0.40 0.63 0.84 0.74 0.50 1.00 0.83 2.49 0.72
0.76
turnover
Number of shares
outstanding at 539, 392, 702, 643, 921, 902, 1,03 1,53 1,57
1,17
end of year 341 246 040 571 564 451 9,52 8,02 5,82
2,47
5 9 9
2
Per share data and ratios assuming no
waiver of advisory fees:
Expenses $ $
0.23 0.37
Net investment $ $
income 0.56
1.26
Ratio of
expenses to 1.03
1.32
average net % %
assets
Ratio of net
investment 2.55
4.73
income % %
to average net
assets
* Includes balancing effect of calculating per share amounts.
On December 20, 1985, the Trust succeeded to all the
assets and liabilities of Meeschaert Capital Accumulation Fund,
Inc. (See "About the Trust" below), for which the above
information was prepared.
Note 1. All per share numbers give retroactive effect
to stock
dividends.
Note 2. Investment income, operating expenses and net income
(loss) per share are computed based on the weighted average
shares outstanding throughout fiscal periods.
ABOUT THE TRUST
On December 20, l985 Anchor Capital Accumulation Trust,
formerly known as Meeschaert Capital Accumulation Trust,
acquired all of the assets, liabilities and operations of
Meeschaert Capital Accumulation Fund, Inc., a Massachusetts
corporation (the "Predecessor Fund"), pursuant to a
reorganization ( the "Reorganization") approved by the
shareholders of the Predecessor Fund at a meeting held on
October 26, l984. As a result of the Reorganization each
shareholder of the Predecessor Fund received an equal number
of shares of the Trust, having an equal net asset value, as
were held by the shareholder immediately prior to the
Reorganization. The investment objective, policies and
restrictions of the Trust following the Reorganization are
the same as those of the Predecessor Fund. The Predecessor
Fund was organized as a Massachusetts corporation on August
12, 1960 and it actively operated as a diversified, open-end
management investment company from May 2, l961 until December
20, l985, the effective date of the Reorganization. Anchor
Investment Management Corporation (formerly Meeschaert
Investment Management Corp.), the Investment Adviser of the
Trust, served as the Predecessor Fund's investment adviser
from June 6, l973 until the effective date of the
Reorganization.
The Trust is not required to hold annual shareholders'
meetings. However, special meetings of shareholders may be
called for purposes such as electing or removing Trustees,
changing fundamental investment policies, or approving an
investment advisory agreement.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Trust is to obtain long-term
appreciation of capital by investing primarily in a
diversified group of common and preferred stocks selected on
the basis of their investment values. In determining such
investment values the investment adviser will place primary
emphasis on the following financial characteristics; above-
average growth in earnings per share; strong balance sheet
with an emphasis on a low debt to equity ratio and adequate
working capital; a high return on invested capital with an
accompanying high capital reinvestment rate; and strong
product and market conditions relative to competition within
a company's industry group. The foregoing investment
objective is a fundamental policy, and may not be changed
without the vote of the holders of a majority of the Trust's
outstanding voting securities as defined in the Investment
Company Act of l940, which in this Prospectus means the
lesser of either (l) a majority of the outstanding shares of
the Trust or (2) 67% or more of the shares represented at a
meeting if the holders of more than 50% of such shares are
present or represented by proxy at the meeting.
The investment restrictions to which the Trust is subject are
fully described in the Statement of Additional Information.
Like the Trust's investment objective, the investment
restrictions are fundamental policies and may not be changed
without shareholder
approval.
SPECIALIZED INVESTMENT TECHNIQUES
To achieve its investment objective, the Trust may use
certain specialized investment techniques, including
transactions in options on securities, securities indices
and currencies, and transactions in financial futures
contracts and related options, loans of portfolio
securities, transactions in repurchase agreements, and
investment in foreign securities. These techniques may
involve certain risks, which are summarized below and are
discussed further in the Statement of Additional
Information. The practices described below are fundamental
policies.
THERE CAN BE NO ASSURANCE THAT THE TRUST WILL ATTAIN ITS
INVESTMENT OBJECTIVE.
FOREIGN SECURITIES
The Trust may make foreign investments with respect to 100%
of the Trust's total net assets. Investors should recognize
that the Trust's investments in foreign securities involve
special risks for the following reasons: (1) there may be
less public information available about foreign companies
than is available about United States companies; (2) foreign
companies are not generally subject to the uniform
accounting, auditing and financial reporting standards and
practices applicable to United States companies; (3) foreign
stock markets have less volume than the United States
markets, and the securities of some foreign companies are
less liquid and more volatile than the securities of
comparable United States companies; (4) there may be less
governmental regulation of stock exchanges, brokers, listed
companies and banks in foreign countries than in the United
States; (5) the Trust may incur fees on currency exchanges
when it changes investments from one country to another; (6)
the Trust's foreign investments could be affected by
expropriation, confiscatory taxation, nationalization of bank
deposits, establishment of exchange controls, political or
social instability, diplomatic developments or currency
blockage; (7) fluctuations in foreign exchange rates will
affect the value of the Trust's portfolio securities, the
value of dividends and interest earned, gains and losses
realized on the sale of securities, net investment income and
unrealized appreciation or depreciation of investments; (8)
payments may be withheld at the source; and (9) it may be
more difficult to obtain legal judgments abroad.
OPTION TRANSACTIONS INVOLVING PORTFOLIO SECURITIES AND
SECURITIES INDICES
The Trust may write call option contracts or purchase put or
call options with respect to portfolio securities and with
respect to securities indices at such times as the Investment
Adviser determines to be appropriate. Call options are
written and put options are purchased solely as covered
options -options with respect to securities which the Trust
owns -- and such options (which will generally correspond to
the securities represented by the index in the case of index
options) on domestic securities are generally listed on a
national securities exchange. The Trust will write or
purchase such options only where economically appropriate as
a hedging technique to reduce the risks in management of its
portfolio, and to preserve the Trust's net asset value, and
not for speculative purposes (i.e. not for profit). In no
event will the Trust purchase such options where the value of
the options, either singly or in the aggregate, would exceed
50% of the value of the Trust's assets at the time of
purchase. Exchanges on which such options currently are
traded are the Chicago Board Options Exchange and the
American, Pacific and Philadelphia Stock Exchanges (the
"Exchanges"). Options on foreign securities and on some
domestic securities may not be listed on any domestic or
foreign exchange. The Trust receives a premium on the sale of
an option, but gives up the opportunity to
profit from any increase in the price of the security, or
representative securities in the case of an index option,
above the exercise price of the option. There can be no
assurance that the Trust will always be able to close out
option positions at acceptable prices. The Trust pays a
premium upon the purchase of an option, which may be lost if
the option proves to be of no ultimate value. The Investment
Adviser believes that the Trust's assets may be increased by
realizing premiums from the writing of call options and the
purchasing of put options on securities held by the Trust.
There can be no assurance that the Trust will always be able
to close out option positions at acceptable prices.
OPTIONS ON FOREIGN CURRENCIES
The Trust may purchase put and call options on foreign
currencies and sell options on foreign currencies in closing
sale transactions with respect to 50% or less of the Trust's
net assets. The Trust may purchase options on foreign
currencies only where economically appropriate as a hedging
technique to reduce the risks in management of its portfolio,
and to preserve the Trust's net asset value, and not for
speculative purposes (i.e., not for profit).
The Trust's success in using hedging techniques depends,
among other things, on the Investment Adviser's ability to
predict the direction and volatility of price movements in
the options markets as well as the securities markets and on
the Investment Adviser's ability to select the proper type,
time and duration of hedges. Although the Investment Adviser
has prior experience in utilizing options on foreign
currencies for hedging purposes, there can be no assurance
that this technique will produce its intended results. It
should be recognized that the price movements of options on
foreign currencies purchased by the Trust may not correspond
to the price movements of the Trust's portfolio securities
and may therefore cause the option transactions to result in
losses to the Trust.
FINANCIAL FUTURES AND RELATED OPTIONS
The Trust may purchase and sell financial futures contracts
and put and call options on financial futures contracts as a
hedge against anticipated changes in the market value of its
portfolio securities or securities which it intends to
purchase. Hedging is the initiation of a position in the
futures market which is intended as a temporary substitute
for the purchase or sale of the underlying currency or
securities in the cash market. Financial futures contracts
consist of interest rate futures contracts, securities index
futures contracts and currency futures contracts. A financial
futures contract obligates the seller of the contract to
deliver, and the purchaser to take delivery of, the subject
assets called for in the contract at a specified future time
and at a specified price. An option on a futures contract
gives the purchaser the right to assume a position in the
contract (a long position if the option is a call and a short
position if the option is a put) at a specified exercise
price at any time during the period of the option.
The Trust will engage in transactions in financial futures
contracts and related options only for hedging purposes and
not for speculation. In addition, the Trust will not purchase
or sell any financial futures contract or related option if,
immediately thereafter, the sum of the cash or U.S. Treasury
bills committed with respect to the Trust's existing futures
and related option positions and the premiums paid for
related options would exceed 5% of the market value of the
Trust's total assets. In instances involving the purchase of
financial futures contracts or related options, cash or
liquid assets equal to the market value of the contracts
(less any amounts previously committed with respect to such
contracts) will be deposited in a segregated account with the
Trust's custodian bank to collateralize fully the position
and thereby ensure that it is not leveraged. The extent to
which
the Trust may enter into financial futures contracts and
related options may also be limited by requirements of the
Internal Revenue Code for qualification as a regulated
investment company. Engaging in transactions in financial
futures contracts involves certain risks, such as the
possibility that the Trust's Investment Adviser could be
incorrect in its expectations as to the direction or extent
of various currency exchange or interest rate movements.
There is also the risk that a liquid secondary market may not
exist. The risk in purchasing an option on a futures contract
is that the Trust will lose the premium it paid. Also, there
may be
circumstances when the purchase of an option on a financial
futures contract would result in a loss to the Trust while
the purchase or sale of the financial futures contract would
not have resulted in a loss.
LENDING OF PORTFOLIO SECURITIES
The Trust may seek to increase its income by lending
portfolio securities. Any such loan will be continuously
secured by collateral at least equal to the market value of
the security loaned. The Trust would have the right to call a
loan and obtain the securities loaned at any time on five
days notice. During the existence of a loan, the Trust would
continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities loaned and
would also receive a fee, or the interest on investment of
the collateral, if any. The total value of the securities
loaned at any time would not be permitted to exceed 30% of
the Trust's total assets. As with other extensions of credit
there are risks of delay in recovery or even loss of rights
in the collateral should the borrower of the securities fail
financially. However, the loans would be made only to U.S.
domestic organizations deemed by the Trust's management to be
of good standing and when, in the judgment of the Trust's
management, the consideration to be earned justifies the
attendant risk.
REPURCHASE AGREEMENTS
The Trust may engage in transactions in repurchase
agreements, which are agreements under which the Trust
acquires a money market instrument (a security issued by the
U. S. Government or any agency thereof, a bankers' acceptance
or a certificate of deposit) from a commercial bank, subject
to resale to the seller at an agreed upon price and date
(normally the next business day).
The resale price reflects an agreed upon interest rate
effective for the period the instrument is held by the Trust
and is unrelated to the interest rate on the underlying
instrument. The Trust will effect repurchase agreements only
with large wellcapitalized banks whose deposits are insured
by the Federal Deposit Insurance Corporation and have capital
and undivided surplus of at least $200,000,000. The
instrument acquired by the Trust in these transactions
(including accrued interest) must have a total value in
excess of the value of the repurchase agreement and will be
held by the Trust's custodian bank until repurchased. The
Trustees of the Trust will monitor the Trust's repurchase
agreement transactions on a continuous basis and will require
that the applicable collateral will be retained by the
Trust's custodian bank. No more than an aggregate of 10% of
the Trust's total assets, at the time of investment, will be
invested in repurchase agreements having maturities longer
than seven days and other investments subject to legal or
contractual restrictions on resale, or which are not readily
marketable. There is no limitation on the Trust's assets with
respect to investments in repurchase agreements having
maturities of less than seven days. Such investments would be
made for the purpose of maintaining temporary liquidity in
the Trust.
The use of repurchase agreements involves certain risks. For
example, if the seller under a repurchase agreement defaults
on its obligation to repurchase the underlying instrument at
a time when the value of the instrument has declined, the
Trust may incur a loss upon its disposition. If the seller
becomes insolvent and subject to liquidation or
reorganization under bankruptcy or other laws, a bankruptcy
court may determine that the underlying instrument is
collateral for a loan by the Trust and therefore is subject
to sale by the trustee in bankruptcy. Finally, it is possible
that the Trust may not be able to substantiate its interest
in the underlying instrument. While
the Trust's Trustees acknowledge these risks, it is expected
that they can be controlled through careful monitoring
procedures.
MANAGEMENT
TRUSTEES
Under the terms of the Declaration of Trust establishing the
Trust, which is governed by the laws of The Commonwealth of
Massachusetts, the Trustees of the Trust are ultimately
responsible for the management of its business and affairs.
The Statement of Additional Information contains backround
information regarding each Trustee and executive officer of
the Trust.
INVESTMENT ADVISER
The Investment Adviser, Anchor Investment Management
Corporation (formerly known as Meeschaert Investment
Management Corporation), manages the Trust's investments and
affairs, subject to the supervision of the Trustees. The
principal offices of both the Trust and the Investment
Adviser are located at 7022 Bennington Woods Drive,
Pittsburgh, Pennsylvania 15237.
The individual who is primarily responsible for the day-to-
day management of the Trust's portfolio is Paul Jaspard, who
is a Vice President of the Investment Advisor. Mr Jaspard is
President of Global Equity Managers, S.A. (formerly Jaspard &
Cie, S.A.), an investment advisory firm headquartered in
Luxembourg. He has managed other portfolios for the
Meeschaert Organization (as hereafter defined) for more than
eighteen years. He has been in the investment counselling
business for more than twenty years, rendering investment
advice to a wide variety of individual and institutional
clients.
For its services under its Investment Advisory Contract
with the Trust, which was approved by a majority vote of the
Trust's shareholders at a meeting held on November 14, 1990,
and is substantially identical to the prior agreement between
the Investment Adviser and Meeschaert Capital Accumulation
Trust, the Investment Adviser receives a fee, payable
monthly, calculated at 3/4 of 1% per annum of the average
daily net assets of the Trust. This fee is higher than that
of most other investment companies, many of which, however,
have a larger asset base than the Trust's. For the fiscal
year ended December 31, 1995, the Investment Adviser received
investment advisory fees of $77,815 for its services to the
Trust, which represented 0.75% of the Trust's average net
assets. \R
The Investment Adviser and Meeschaert & Co., Inc., the Trust's
principal underwriter (the "Distributor"), are affiliated
through common control with Societe D'Etudes et de Gestion
Financieres Meeschaert, S.A., one of France's largest
privatelyowned investment management firms, which is referred
to as the "Meeschaert organization". The Meeschaert
organization was established in Roubaix, France in l935 by
Emile C. Meeschaert, and presently manages, with full
discretion, an aggregate amount of approximately $l.5 billion
for about 8,000 individual and institutional customers with
$250 million in French mutual funds managed by the
organization.
EXPENSES
The Trust is responsible for all of its expenses not
assumed by the Investment Adviser under the Investment
Advisory Contract, including without limitation, the fees and
expenses of the custodian and transfer agent; costs incurred
in determining the
Trust's net asset value and keeping its books; the cost of
share certificates; membership dues in investment company
organizations; distribution and brokerage commissions and
fees; fees and expenses of registering its shares; expenses of
reports to shareholders; proxy statements and other expenses
of shareholders' meetings; insurance premiums; printing and
mailing expenses; interest, taxes and corporate fees; legal
and accounting expenses; and fees and expenses of Trustees
not affiliated with the Investment Adviser. The Trust will
also bear expenses incurred in connection with litigation in
which the Trust is a party and the legal obligation the Trust
may have to indemnify its Officers and Trustees with respect
thereto. For the fiscal year ended December 31, 1995,
expenses borne by the Trust amounted to $115,140, which
represented 1.11% of the Trust's average net assets. \R
BROKERAGE
Decisions to buy and sell portfolio securities for the Trust
are made pursuant to recommendations by the Investment
Adviser. The Trust, through the Investment Adviser, seeks to
execute its portfolio security transactions on the most
favorable terms and in the most effective manner possible. To
the extent consistent with the policy of seeking best price
and execution, a portion of the Trust's portfolio
transactions may be executed through the Distributor, which
is an affiliate of the Investment Adviser. In the event that
this occurs, it will be on the basis of what management
believes to be current information as to rates which are
generally competitive with the rates available from other
responsible brokers and the lowest rates, if any,
currently offered by the Distributor. In selecting among
brokerdealer firms to execute its portfolio transactions, the
Trust, through the Investment Adviser, may give consideration
to those firms which have sold, or are selling, shares of the
Trust.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
During most of the past fiscal year, the Trust has been
70% invested in medium size capitalization growth stocks, the
remaining assets being held in Treasury bills. It is the
belief of the investment advisor that the valuation of the
stock market is very high, hence the cash position. Despite
being very positive, the performance of the Trust lagged the
return of the major indexes. \R
The average annual total returns for a share of the Trust
were as follows for the period indicated:
18.91% for the one year period beginning on
January 1,
1995 through December 31, 1995;
7.29% per annum during the five-year period
beginning on
January 1, 1991 through December 31,1995; and
7.69% per annum during the ten-year period beginning
January 1,
1986 through December 31, 1995. \R
HOW TO PURCHASE SHARES
Shares of the Trust may be purchased from Meeschaert & Co.,
Inc., 7022 Bennington Woods Drive, Pittsburgh, Pennsylvania
15237, the Trust's principal underwriter (the "Distributor").
Prior to the Reorganization, the Distributor served as
principal underwriter to the Predecessor Fund. For new
shareholders initiating accounts, the minimum investment is
$500 except for exchanges of securities for Trust shares,
where the minimum is $5,000 (see "How to Exchange Securities
for Trust Shares" within). There is no minimum for
shareholders making additional investments to existing
accounts.
An application for use in making an initial investment in the
Trust appears in the back of this Prospectus. The applicable
price will be the net asset value next determined after the
order
is received by the Distributor. (See "Determination of Net
Asset Value").
DISTRIBUTION OF SHARES
In addition to advisory fees and other expenses, the Trust
may pay for certain expenses pursuant to a distribution plan
(the "Plan") designed to meet the requirements of Rule 12b-l
("Rule 12b-1") under the Investment Company Act of 1940. The
Plan is of the type sometimes called a compensation plan. The
Plan provides that the Trust will pay the Distributor a
commission equal to up to 5% of the price paid to the Trust
for each sale, all or any part of which may be reallowed by
the Distributor to others (dealers) making such sales. To the
extent that the distribution fee is not paid to such dealers,
the Distributor may use such fee for its expenses of
distribution of Trust shares. If such fee exceeds its
expenses, the Distributor may realize a profit from these
arrangements. An aggregate limit on the amount of all
payments pursuant to the Plan equal to .75 of 1% of the
Trust's average daily net assets for any fiscal year is
currently in effect. If, so long as the Plan is in effect,
the Distributor's reallowances to dealers and other expenses
exceed the (currently .75 of 1%) limit for any particular
year, it could collect in any future year such amounts (which
do not include interest or other carrying charges) up to any
amount by which amounts paid to it under the Plan in that
year are less than the earlier year's limit. In such a case
it might receive amounts in excess of its then current
expenses. The Distributor's expenses are likely to be higher
in the early years of the Trust. The Plan has not been made
effective pending review and approval of the Plan by the
Trust's shareholders.
Accordingly, for the fiscal year
ended December 31, 1995, the Trust paid no fees under the
Plan to the Distributor. \R
In conjunction with the Plan, but not as part of it, a
contingent deferred sales charge may be imposed upon certain
redemptions of shares purchased after inception of the Plan.
The charge in respect of such redemptions made during the
first four calendar years following purchase of the shares is
as follows: 4% in the year of purchase, 3% in the second
year; 2% in the third year; and 1% in the fourth year. These
charges are not received by the Distributor and will not
reduce amounts paid to the Distributor under the Plan.
In 1992, the Securities and Exchange Commission approved
amendments to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (the "NASD"), of
which Meeschaert & Co., Inc. is a member. These amendments
became effective on July 1, 1993 and limit and otherwise
affect mutual fund sales charges, including asset-based sales
charges and contingent deferred sales charges under Rule 12b-
1. In the event that amendments to Rule 12b-1 under the
Investment Company Act of 1940 or the NASD's Rules of Fair
Practice are inconsistent with the Plan, the Trust's Board of
Trustees would consider various actions, including proposing
amendments to or causing the Plan to be terminated.
Meeschaert & Co., Inc. serves as the Trust's principal
underwriter under a Distributor's Contract dated October 5,
1990, which is substantially identical to the prior
agreement.
HOW TO EXCHANGE SECURITIES FOR TRUST SHARES
The Trust will accept common or preferred stock of companies
acceptable to the Investment Adviser in exchange for shares
of the Trust at net asset value. The minimum value of
securities accepted for deposit is $5,000. The Trust will
value accepted securities in the manner provided for valuing
its portfolio securities (see "Determination of Net Asset
Value").
Securities determined to be acceptable for the Trust, in
proper form for transfer to the Trust, should be forwarded,
together with a completed and signed letter of transmittal in
approved form (available from the Distributor) to the Trust's
Custodian as
follows:
Investors Bank & Trust Company
Financial Product Services Group
Attn: Anchor Capital Accumulation Trust
1 Lincoln Plaza
Boston, Massachusetts 02111
An investor must forward all securities pursuant to a single
Letter of Transmittal or, in certain instances indicated in
the Instructions to the Letter of Transmittal, multiple
Letters of Transmittal attached and transmitted as a single
exchange. The Trust will only accept securities which are
delivered in proper form.
An investor will be required to represent, among other
things, that the securities forwarded are not subject to any
restrictions upon their sale by the Trust by reason of any
agreement or representation the investor has made in respect
thereof, or of his being in control of, controlled by or
under common control with the issuer thereof within the
meaning of Section 2(11) of the Securities Act of 1933 or for
any other reason. The Trust will not accept securities for
exchange if, in the opinion of its counsel, acceptance would
violate any federal or other law to which the Trust is
subject. The Trust reserves the right to reject securities
for any reason.
If securities presented for exchange are found to be in good
order only in part, the Trust may issue the appropriate
number of shares in accordance with the procedure described
below for such part and return the balance to the investor
or, at its option, may waive any or all irregularities to the
extent permissible under applicable law and issue shares for
all or a portion of such defective presentation. A
confirmation for shares of the Trust will be issued to an
investor after accepted securities presented by him have
cleared for transfer to the Trust. No certificates will be
issued unless requested by the investor. By tendering
securities, an investor agrees to accept the determination of
their market value determined concurrently with the
determination of the Trust's net asset value per share. The
number of shares of the Trust to be issued to an investor in
exchange for securities shall be the value of such accepted
securities determined in the manner described above, divided
by the net asset value per Trust share next determined after
the Trust's acceptance of such securities.
A gain or loss for federal tax purposes may be realized by
an investor in connection with the exchange of securities
for shares of the Trust, depending upon his tax cost basis
for the securities tendered for exchange. Each investor
should consult his advisor with respect to the particular
federal income tax consequence, as well as any state and
local tax consequences, of exchanging his securities for
Trust shares.
REDEMPTION AND REPURCHASE OF SHARES
Any shareholder may require the Trust to redeem his shares.
In addition, the Trust maintains a continuous offer to
repurchase its shares. If a shareholder uses the services of
a broker in selling his shares in the over-the-counter
market, the broker may charge a reasonable fee for his
services. Redemptions and repurchases will be made in the
following manner:
1. Certificates for shares may be mailed or presented,
duly
endorsed, with a written request that the Trust
redeem
the
shares, to the Trust's transfer agent at 7022 Bennington
Woods
Drive, Pittsburgh, Pennsylvania 15237. If no
certificate
has
been issued and shares are held in an Open Account a
written
request that the Trust redeem such shares with
signatures
guaranteed in the manner described below, may be mailed
or
presented as described above. The redemption price will be
the
net asset value next determined after the request
and/or
certificates are received.
2. A request for repurchase may be communicated to the
Trust
by
a shareholder through a broker. The repurchase price will
be
the net asset value next determined after the request
is
received by the Trust, provided that, if the broker
receives
the request before noon and transmits it to the Trust
before
1:00 P.M. Eastern Time the same day, the repurchase price
will
be the net asset value determined as of 12:00 noon Eastern
Time
that day. If the broker receives the request after noon,
the
repurchase price will be the net asset value determined
as
of
12:00 noon Eastern Time the following day. If an investor
uses
the services of a broker in having his shares repurchased,
the
broker may charge a reasonable fee for his services.
Payment for shares redeemed or repurchased will be made within
seven days after receipt of the shares, and/or required
documents, duly endorsed. The signature(s) on an issued
certificate must be guaranteed by a commercial bank or trust
company or by a member of the New York, American, Pacific,
Boston or Chicago Stock Exchange. A signature guarantee by a
savings bank or savings and loan association or notarization
by a notary public is not acceptable.
In order to ensure proper authorization the transfer agent
may request additional documents such as, but not restricted
to, stock powers, trust instruments, certificates of death,
appointments as executor, certificates of corporate authority
and waiver of tax required in some states from selling or
exchanging estates before redeeming shares.
The right of redemption may be suspended or the payment date
postponed when the New York Stock Exchange is closed for
other than customary weekend and holiday closings, or when
trading on the New York Stock Exchange is restricted, as
determined by the Securities and Exchange Commission; for any
period when an emergency as defined by rules of the
Commission has, by order, permitted such suspension. In case
of a suspension of the right of redemption, a shareholder who
has tendered a certificate for redemption through a broker
may withdraw his request or certificate or he will receive
payment of the net asset value determined next after the
suspension has been terminated.
A shareholder may receive more or less than he paid for
his shares, depending on the net asset value of the
shares at the time of redemption or repurchase.
DETERMINATION OF NET ASSET VALUE
The net asset value is determined by the Trust as of 12:00
noon Eastern Time on each business day in which the New York
Stock Exchange is open for trading or on any day that the
Trust is
open but the New York Stock Exchange is not open for business
if there occurs an event which might materially affect the
net asset value of the Trust's redeemable shares.
The manner of determination of the net asset value is briefly
as follows: Securities traded on a U.S. national or other
foreign securities exchange are valued at the last sale price
on the primary exchange on which they are listed, or if there
has been no sale that day, at the current bid price. Other
U.S. and foreign securities for which market quotations are
readily available are valued at the last known sales price,
or, if unavailable, the known current bid price believed to
most nearly represent current market value. Other securities
(including limited traded securities) and all other assets
are valued at market value as determined in good faith by the
Trustees of the Trust. Liabilities are deducted from the
total, and the resulting amount is divided by the number of
shares outstanding.
SERVICES FOR SHAREHOLDERS
OPEN ACCOUNTS
As a convenience to the shareholder, all shares of the Trust
registered in his name are automatically credited to an Open
Account maintained for him on the books of the Trust. All
shares acquired by the shareholder will be credited to his
Open Account and share certificates will not be issued unless
requested. Certificates representing fractional shares will
not be issued in any case. Certificates previously acquired
may be surrendered to the Trust's transfer agent; the
certificates will be canceled and the shares represented
thereby will continue to be credited to the Open Account of
the shareholder. Each time shares are credited to or
withdrawn from his Open Account, the shareholder will receive
a statement showing the details of the transaction and the
then current balance of shares owned by him. Shortly after
the end of each calendar year he will also receive a complete
annual statement of his Open Account as well as information
as to the Federal tax status of dividends and capital gain
distributions, if any, paid by the Trust during the year.
Shares credited to an Open Account are transferable upon
proper written instructions to the Trust's transfer agent and
may be redeemed or sold in the manner shown under "Redemption
and Repurchase of Shares".
INVEST-BY-MAIL
An Open Account provides a single and convenient way of
setting up a flexible investment program for the accumulation
of shares of the Trust. At any time the shareholder may send
a check (payable to the order of the Trust) to Anchor
Investment Management Corp. Shareholders Services, Attn:
Anchor Capital Accumulation Trust, 7022 Bennington Woods
Drive, Pittsburgh, Pennsylvania 15237 (giving the full name
or names of his account). The check will be used to purchase
additional shares for his Open Account at the net asset value
next determined after the check is received. Any check not
payable to the order of the Trust will be returned.
The cost of administering Open Accounts for the benefit of
shareholders who participate in them will be borne by the
Trust as an expense of all its shareholders.
DISTRIBUTIONS
The Trust is authorized to issue two classes of shares. (See
"Capitalization" below.) The Trust does not presently intend
to issue any more Class A Common Shares.
With respect to the Common Shares, the Trust currently
intends to distribute any such dividends in additional Common
Shares or, at the option of the shareholder, in cash. In
accordance with his distribution option, a shareholder of
Common Shares may elect (1) to receive both dividends and
capital gain distributions in additional Common Shares or (2)
to receive
dividends in cash and capital gain distributions in
additional Common Shares or (3) to receive both dividends and
capital gain distributions in cash. A shareholder of Common
Shares may change his distribution option at any time by
notifying the Trust's transfer agent in writing. To be
effective with respect to a particular dividend or
distribution, the new distribution option must be received by
the Trust's transfer agent at least 30 days prior to the
close of the fiscal year. All accounts with a cash dividend
option will be changed to reinvest both dividends and capital
gains automatically upon determination by the Trust's
transfer agent that the address of record is not current.
Dividends and capital gain distributions received in shares
will be received by the Trust's transfer agent, as agent for
the shareholder, and credited to his Open Account in full and
fractional shares computed at the record date closing net
asset value.
TAXES
The Trust intends to qualify under subchapter M of the
Internal Revenue Code as a Regulated Investment Company and
to distribute substantially all investment income and capital
gains, if any, for each year so that to the extent of such
distributions the
Trust will not be subject to federal income taxes.
Shareholders will be subject to federal income taxes on
distributions made by the Trust whether they are received in
cash or additional Trust shares. Distributions of net
investment income and short-term capital gains, if any, will
be taxable to shareholders as ordinary income. Distributions
of long term capital gains, if any, will be taxable to
shareholders as longterm capital gains, without regard to how
long a shareholder has held shares of the Trust. Dividends
paid by the Trust will generally not qualify for the 70%
dividendsreceived deduction for corporations. The Trust will
notify shareholders each year of the amount of dividends and
distributions, including the amount of any distributions of
long-term capital gains.
The Trust's foreign investments may be subject to foreign
withholding taxes for federal income tax purposes. However,
any such taxes will reduce the income available for
distribution to shareholders.
The Trust is required to withhold 20% of the dividends paid
with respect to any shareholder who fails to furnish the
Trust with a correct taxpayer identification number, who
underreported dividend or interest income, or who fails to
certify to the Trust that he is not subject to such
withholding. An individual's tax identification number is
his social security number.
OTHER INFORMATION
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-PAYING AGENT
All securities, cash and other assets of the Trust are
received, held in custody and delivered or distributed by
Investors Bank & Trust Company, Financial Product Services, 1
Lincoln Plaza, Boston, Massachusetts 02111 provided that in
cases where foreign securities must, as a practical matter,
be held abroad, the Trust's custodian bank and the Trust will
make appropriate arrangements so that such securities may be
legally held abroad. The Trust's custodian bank does not
decide on purchases or sales of portfolio securities or the
making of distributions. Anchor Investment Management
Corporation, 7022 Bennington Woods Drive, Pittsburgh,
Pennsylvania 15237, serves as transfer agent and dividend-
paying agent for the Trust.
CAPITALIZATION
The capitalization of the Trust consists of an unlimited
number of shares of beneficial interest, without par value.
The Trust is authorized to issue two separate classes of
shares, one such
class designated as "Common Shares" and the other such class
designated as "Class A Common Shares." Both such classes of
shares have the same privileges, limitations and rights,
except that dividends upon the Class A Common Shares shall be
paid only in additional Class A Common Shares and such Class
A Common may, at the election of the shareholder, be
exchanged at any time for an equal number of Common Shares.
On December 23, 1987, all outstanding Class A Common Shares
were exchanged for Common Shares. The Trust does not
presently intend to issue any additional Class A Common
Shares. Issued shares are fully paid and non assessable and
transferable on the books of the Trust. The shares have no
preemptive rights. The shares each have one vote and
proportionate liquidation rights.
SHAREHOLDER INQUIRIES
For further information about the Trust, investors should
call (412) 635-7610. Written inquiries should be addressed to
Anchor Capital Accumulation Trust, 7022 Bennington Woods
Drive, Pittsburgh, Pennsylvania 15237.
ANCHOR CAPITAL ACCUMULATION TRUST
(THE "TRUST")
MEESCHAERT & CO., INC. ("DISTRIBUTOR")
APPLICATION AND REGISTRATION
FORM1 SEND APPLICATION
TO
MEESCHAERT & CO., INC., 7022 BENNINGTON WOODS DRIVE,
PITTSBURGH, PENNSYLVANIA 15237
Date:
__________________ _
I. ACCOUNT REGISTRATION:
New: Social Security or Tax
Number___________________________________________________
(if two names below, circle which one has this
number.)
Existing: Account Number
__________________________________________________________
(from your latest statement
vital
for identification.)
Name(s)
_____________________________________________________________
__ __ _______________
(Type or print exactly as they are to appear
on the Trust's records.)
Street
_____________________________________________________________
__ __ _________________
City __________________________________________ State
______________________ Zip __________
If address outside the U.S.A., please circle I (am) (am not)
a citizen of the U.S.A.
If registration requested in more than one name, shares will
be registered as "Joint Tenants with Rights of Survivorship"
unless otherwise instructed.
II. BASIS FOR OPENING NEW ACCOUNT:
A check for $_______________ payable to the Trust
attached. or
Shares _______________ recently purchased on
_________________________
(number) (date)
DISTRIBUTION OPTION: (exercisable only by holders of Common
Shares) Check only one. If none checked, option A will be
assigned.
A. Dividends and capital gains in additional full and
fractional shares credited to shareholder's account, no
certificates issued.
OR
B. Dividends in cash; capital gains in additional full
and fractional shares credited to shareholder's account; no
certificates issued.
OR
C. Dividends in cash; capital gains in cash.
(Certificates will be issued to shareholders requesting such
in writing from the Transfer Agent.)
III. INVEST-BY-MAIL SERVICE: FOR PERIODIC SHARE
ACCUMULATION (WHETHER OR NOT DIVIDENDS ARE RECEIVED IN
SHARES)
Please check if you wish to utilize the Trust's Invest-
By Mail Service. This is a voluntary service involving no
extra charge to the shareholder, and it may be changed or
discontinued at any time.
IV. SHAREHOLDER'S SIGNATURE: Should be the same as name in
Account Registration.
__________________________________
_____________________________________
Signature Signature of Co-
Owner (if any)
(I have received a current prospectus of the Trust and I
understand that my account will be covered by the provisions
on
the reverse side of this Application. I also understand that
I may terminate any of these services at any time.)
DEALER AUTHORIZATION:
(please print)
Representative
_________________________________
_____________________________________
Dealer's Name
(Representative's
Name)
_________________________________
_____________________________________
Home Office Address Telephone
Number(Representative's Number)
Branch Office:
_________________________________
_____________________________________
City State Zip Address
_________________________________
_____________________________________
Telephone Number Authorized Signature of
Dealer
City State Zip
ANCHOR CAPITAL ACCUMULATION
TRUST
7022 Bennington Woods Drive
Pittsburgh, Pennsylvania
15237
(412) 635-7610
STATEMENT OF ADDITIONAL
INFORMATION
Dated May
1, 1996 \R
This Statement of Additional Information supplements
the information contained in the current Prospectus of
Anchor Capital Accumulation Trust (the "Trust") dated May
1, 1996, and should be read together with the Trust's
Prospectus and the financial statements contained in the
Trust's Annual Report for the year ended December 31, 1995.
The Trust's Prospectus and Annual Report
may be obtained without charge by writing or calling the
Trust. The Trust's Annual Report is incorporated by
reference in this Statement of Additional Information. \R
TABLE OF CONTENTS
ABOUT THE TRUST 3
ADDITIONAL INFORMATION CONCERNING INVESTMENT POLICIES AND
RISK CONSIDERATIONS
4
Risks of Investments in Foreign Securities 4
Option Transactions 4
Index Options 5
Risks of Options on Indices 5
Options on Foreign Currencies 6
Risks of Foreign Currency Option Activities 7
Special Risks of Foreign Currency Options 8
Financial Futures Contracts and Related Options 9
Limitations on Futures Contracts and Related Options 10
Risks Relating to Futures Contracts and Related Options10
INVESTMENT RESTRICTIONS 11
MANAGEMENT 13
Officers and Trustees 13
Remuneration of Officers and Trustees 14
Investment Advisory Contract 14
Investment Adviser 15
DETERMINATION OF NET ASSET VALUE 15
DISTRIBUTION OF SHARES 16
HOW TO PURCHASE SHARES 17
REDEMPTION AND REPURCHASE OF SHARES 17
DISTRIBUTIONS 18
TAXES 19
Tax Treatment of Options 19
PORTFOLIO SECURITY TRANSACTIONS 21
OTHER INFORMATION 22
Custodian, Transfer Agent and Dividend-Paying Agent 22
Independent Public Accountants 22
Registration Statement 22
FINANCIAL STATEMENTS 22
ABOUT THE TRUST
The Anchor Capital Accumulation Trust, formerly known as
Meeschaert Capital Accumulation Trust, was established as a
business trust under the laws of Massachusetts by a
Declaration of Trust dated October 17, 1984.
The capitalization of the Trust consists of an unlimited
number of shares of beneficial interest without par value.
The Trust is authorized to issue two separate classes of
shares, one such class designated as "Common Shares" and the
other such class designated as "Class A Common Shares." On
December 23, 1987, all outstanding Class A Common Shares were
exchanged for Common Shares. The Trust does not presently
intend to issue any more Class A Common Shares. Both such
classes of shares have the same privileges, limitations and
rights, except that dividends and distributions upon Class A
Common Shares were paid only in additional Class A Common
Shares and such Class A Common Shares could, at the option of
the shareholder, be exchanged at any time for an equal number
of Common Shares without any additional investment by the
shareholder and without any additional charges being imposed
by the Trust. The Class A Common Shares were issued only to
certain foreign shareholders of the Trust. Issued shares are
fully paid and nonassessable and transferable on the books of
the Trust. The shares have no preemptive rights. The shares
each have one vote and proportionate liquidation rights.
On December 20, 1985 the Trust acquired all of the assets,
liabilities and operations of Meeschaert Capital Accumulation
Fund, Inc., a Massachusetts corporation (the "Predecessor
Fund") pursuant to a reorganization (the "Reorganization")
approved by the shareholders of the Predecessor Fund at a
meeting held on October 26, 1984. As a result of the
Reorganization each
shareholder of the Predecessor Fund received an equal number
of shares of the Trust (certain non-U. S. shareholders
receiving Class A Common Shares), having an equal net asset
value, as were held by the shareholders immediately prior to
the Reorganization. The Predecessor Fund was organized as a
Massachusetts corporation on August 12, 1960 and it actively
operated as a diversified, open-end investment company from
May 21, 1961 until December 20, 1985, the effective date of
the Reorganization. Anchor Investment Management Corporation,
formerly known as Meeschaert Investment Management
Corporation, the Investment Adviser of the Trust, served as
the Predecessor Fund's investment adviser from June 6, 1973
until the effective date of the Reorganization. The
investment objective, policies and restrictions of the Trust
following the Reorganization are the same as those of the
Predecessor Fund.
In November, 1986, the gold and numismatic assets of the
Trust's wholly-owned subsidiary, Ter Bush & Putnam Investment
Company, Inc., a Maine corporation, were liquidated into the
Trust and were effectively contributed to the capital of a
newly organized closed-end management investment company, the
shares of which were concurrently distributed to the
shareholders of the Trust. The Trust subsequently sold the
silver assets of the subsidiary which had also been
liquidated into the Trust.
The Trust will normally not hold annual meetings of
shareholders to elect Trustees. If less than a majority of
the Trustees holding office have been elected by
shareholders, a meeting of shareholders will be called to
elect Trustees. Under the Declaration of Trust and the
Investment Company Act of 1940, the record holders of not
less than two-thirds of the outstanding shares of the Trust
may remove a Trustee by votes cast in person or by proxy at a
meeting called for the purpose or by a written declaration
filed with the Trust's custodian
bank. Except as described above, the Trustees will continue
to hold office and may appoint successor Trustees.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations
of the Trust. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of the Trust
and requires that notice of this disclaimer be given in each
agreement, obligation or instrument entered into or executed
by the Trust or a Trustee. The Declaration of Trust provides
for indemnification from the assets of the Trust for all
losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a
shareholder incurring a financial loss on account of his or
her liability as a shareholder of the Trust is limited to
circumstances in which the Trust itself would be unable to
meet its obligations. The possibility that these
circumstances would occur is remote. Upon payment of any
liability incurred by the Trust, the shareholder paying the
liability will be entitled to reimbursement from the general
assets of the Trust. The Trustees intend to conduct the
operations of the Trust to avoid, to the extent possible,
ultimate liability of shareholders for liabilities of the
Trust.
ADDITIONAL INFORMATION CONCERNING
INVESTMENT POLICIES AND RISK CONSIDERATIONS
The Trust's Prospectus contains a description of the
investment objectives and policies of the Trust, including a
discussion of specialized techniques that the Trust may use
in order to achieve its investment objectives and certain
risks related thereto. The following discussion is intended
to provide further information concerning investment
techniques and risk considerations which the Investment
Adviser believes to be of interest to investors.
RISKS OF INVESTMENTS IN FOREIGN SECURITIES
The Trust's investments in foreign securities involve special
risks for the following reasons:(1) there may be less public
information available about foreign companies than is
available about United States companies; (2) foreign
companies are not generally subject to the uniform
accounting, auditing and financial reporting standards and
practices applicable to United States companies; (3) foreign
stock markets have less volume than the United States
markets, and the securities of some foreign companies are
less liquid and more volatile than the securities of
comparable United States companies; (4) there may be less
governmental regulation of stock exchanges, brokers, listed
companies and banks in foreign countries than in the United
States; (5) the Trust may incur fees on currency exchanges
when it changes investments from one country to another; (6)
the Trust's foreign investments could be affected by
expropriation, confiscatory taxation, nationalization of bank
deposits, establishment of exchange controls, political or
social instability, diplomatic developments or currency
blockage; (7) fluctuations in foreign exchange rates will
affect the value of the Trust's portfolio securities, the
value of dividends and interest earned, gains and losses
realized on the sale of securities, net investment income and
unrealized appreciation or depreciation of investments; (8)
payments may be withheld at the source; and (9) it may be
more difficult to obtain legal judgments abroad.
OPTION TRANSACTIONS
A call option is a short-term contract (normally having a
duration of nine months or less) which gives the purchasers
of the option, in return for a premium paid, the right to
buy, and the writer the obligation to sell, the underlying
security at the exercise price at any time prior to the
expiration of the option, regardless of the market price of
the security during the option period. The premium paid to
the writer is the
consideration for undertaking the obligations of the option
contract. The writer foregoes the opportunity to profit from
an increase in the market price of the underlying security
above the exercise price except insofar as the premium
represents such a profit. Should the price of the security
decline, on the other hand, the premium represents an offset
to such loss. If a call option expires on its stipulated
expiration date or if the Trust enters into a closing
purchase transaction, the Trust will realize a gain (or a
loss if the cost of a closing purchase transaction exceeds
the premium received when the option was sold) without regard
to any unrealized gain or loss on the underlying security,
and the liability related to such options will be
extinguished. If a call option is exercised, the Trust will
realize a gain or loss from the sale of the underlying
security and the proceeds of sale will be increased by the
premium originally received.
A put option gives the purchaser of the option the right to
sell, and the writer the obligation to buy, the underlying
security at the exercise price during the option period. Thus
the Trust may purchase a put option on an underlying security
owned by the Trust as a defensive technique in order to
protect against an anticipated decline in the value of the
security. For example, a put option may be purchased in order
to protect unrealized appreciation of a security where the
Investment Adviser deems it desirable to continue to hold the
security because of tax considerations. The premium paid for
the put option would reduce any capital gain when the
security is eventually sold.
As the foregoing suggests, the writing of call option
contracts and the purchasing of put options is a highly
specialized activity which involves investment techniques and
risks different from those ordinarily associated with
investment companies, but the limitations described in the
Trust's Prospectus tend to reduce such risks. The Investment
Adviser believes that the assets of the Trust can be
increased by realizing premiums on the writing of call
options and by the purchasing of put options on securities
held by the Trust. When a security is sold from the Trust's
portfolio, the Trust effects a closing call purchase or put
sale transaction so as to close out any existing option on
the security. A closing transaction may be made only on an
exchange which provides a secondary market for an option with
the same exercise price and expiration date. There is no
assurance that a liquid secondary market on an exchange will
exist for any particular option, or at any particular time,
and for some options, no secondary market on an exchange may
exist. If the Trust is unable to effect a closing
transaction, in the case of a call option, the Trust will not
be able to sell the underlying security until the option
expires or the Trust delivers the underlying security upon
exercise.
It should be recognized that the Trust pays brokerage
commissions in connection with the writing and purchasing of
options and effecting closing transactions, as well as for
purchases and sales of underlying securities. The writing of
options could result in significant increases in the Trust's
portfolio turnover rate, especially during periods when
market prices of the underlying securities appreciate.
INDEX OPTIONS
A multiplier for an index option performs a function similar
to the unit of trading for an option on an individual
security. It determines the total dollar value per contract
of each point between the exercise price of the option and
the current level of the underlying index. A multiplier of
100 means that a onepoint difference will yield $100. Options
on different indices may have different multipliers.
Securities indices for which options are currently traded
include the Standard & Poor's 100 and 500 Composite Stock
Price Indices, Computer/Business Equipment Index, Major
Market Index, AMEX Market Value Index, Computer Technology
Index, Oil and Gas Index, NYSE Options Index, Gaming/Hotel
Index, Telephone Index, Transportation Index, Technology
Index, and Gold/Silver Index. The Trust may write call
options and purchase put and call options on any other traded
indices. Call options on securities indices written by the
Trust will be "covered" by identifying the specific portfolio
securities generally represented by the index. The Trust
would not engage in options on a particular stock index
unless more than 10% of the Trust's total assets are invested
in shares of stock represented by the index.
To secure the obligation to deliver the underlying securities
in the case of an index call option written by the Trust, the
Trust will be required to deposit qualified securities. A
"qualified security" is a security against which the Trust
has not written a call option and which has not been hedged
by the Trust by the sale of a financial futures contract. If
at the close of business on any day the market value of the
qualified securities falls below 100% of the current index
value times the multiplier times the number of contracts, the
Trust will deposit an amount of cash or liquid assets equal
in value to the difference. In addition, when the Trust
writes a call on an index which is "in-the-money" at the time
the call is written, the Trust will segregate with its
custodian bank cash or liquid assets equal in value to the
amount by which the call is "inthe-money" times the
multiplier times the number of contracts. Any amount
segregated may be applied to the Trust's obligation to
segregate additional amounts in the event that the market
value of the qualified securities falls below 100% of the
current index value times the multiplier times the number on
contracts.
The Trust may also purchase put and call options for a
premium. The Trust may sell a put or call option which it has
previously purchased prior to the sale of the underlying
security. Such a sale would result in a net gain or loss
depending on whether the amount received on the sale is more
or less than the premium and other transaction costs paid.
In connection with the Trust's qualifying as a regulated
investment company under the Internal Revenue Code, other
restrictions on the Trust's ability to enter into option
transactions may apply from time to time. See "Taxes -- Tax
Treatment of Options and Futures Transactions."
RISKS OF OPTIONS ON INDICES
Because the value of an index option depends upon movements
in the level of the index rather than the price of a
particular security, whether the Trust will realize a gain or
loss on the purchase or sale of an option on an index depends
upon movements in the level of prices in the market generally
or in an industry or market segment, rather than movements in
the price of an individual security. Accordingly, successful
use by the Trust of options on indices will be subject to the
Investment Adviser's ability to predict correctly movements
in the direction of the market generally or of a particular
industry. This requires different skills and techniques than
predicting changes in the price of individual securities.
Index prices may be distorted if trading of certain
securities included in the index is interrupted. Trading in
index options also may be interrupted in certain
circumstances, such as if trading were halted in a
substantial number of securities included in the index. If
this occurred, the Trust would not be able to close out
options which it has purchased or written and, if
restrictions on exercise were imposed, may be unable to
exercise an option it purchased, which could result in
substantial losses to the Trust. However, it is the Trust's
policy to purchase or write options only on indices which
include a sufficient number of securities so that the
likelihood of a trading halt in the index is minimized.
Because the exercise of an index option is settled in cash, an
index call writer cannot determine the amount of its
settlement obligation in advance and, unlike call writing on
portfolio securities, cannot provide in advance for its
potential settlement obligation by holding the underlying
securities. Price movements in securities in the Trust's
portfolio will not correlate perfectly with movements in the
level of the index and, therefore, the Trust bears the risk
that the price of the securities held by the Trust may not
increase as much as the index. In this event, the Trust would
bear a loss on the call which would not be completely offset
by movements in the prices of the Trust's portfolio
securities. It is also possible that the index may rise when
the Trust's portfolio securities do not. If this occurred, the
Trust would experience a loss on the call which would not be
offset by an increase in the value of its portfolio and also
might experience a loss in its portfolio. Unless the Trust has
other liquid assets which are sufficient to satisfy the
exercise of a call on an index, the Trust will be required to
liquidate portfolio securities in order to satisfy the
exercise. Because an exercise must be settled within hours
after receiving the notice of exercise, if the Trust fails to
anticipate an exercise, it may have to borrow from a bank (in
amounts not exceeding 5% of the Trust's total assets) pending
settlement of the sale of securities in its portfolio and
would incur interest charges thereon.
When the Trust has written a call on an index, there is also a
risk that the market may decline between the time the Trust
has the call exercised against it, at a price which is fixed
as of the closing level of the index on the date of exercise,
and the time the Trust is able to sell securities in its
portfolio. As with options on portfolio securities, the Trust
will not learn that a call has been exercised until the day
following the exercise date but, unlike a call on a portfolio
security in settlement, the Trust may have to sell part of its
portfolio securities in order to make settlement in cash, and
the price of such securities might decline before they could
be sold. If the Trust exercises a put option on an index which
it has purchased before final determination of the closing
index value for that day, it runs the risk that the level of
the underlying index may change before closing. If this change
causes the exercised option to fall "out-of-the-money," the
Trust will be required to pay the difference between the
closing index value and the exercise price of the option
(multiplied by the applicable multiplier) to the assigned
writer. Although the Trust may be able to minimize this risk
by withholding exercise instructions until just before the
daily cutoff time, or by selling rather than exercising an
option when the index level is close to the exercise price, it
may not be possible to eliminate this risk entirely because
the cutoff time for index options may be earlier than those
fixed for other types of options and may occur before
definitive closing index values are announced.
OPTIONS ON FOREIGN CURRENCIES
A put option on a foreign currency is a short-term contract
(generally having a duration of nine months or less) which
gives the purchaser of the put option, in return for a
premium, the right to sell the underlying currency at a
specified price during the term of the option. A call option
on a foreign currency is a short-term contract which gives the
purchaser of the call option, in return for a premium, the
right to buy the underlying currency at a specified price
during the term of the option. The purchase of put and call
options on foreign currencies is analogous to the purchase of
puts and calls on stocks.
Options on foreign currencies are currently traded in the
United States on the Philadelphia Stock Exchange and the
Chicago Board of Options Exchange. Such options are currently
traded on British pounds, Swiss francs, Japanese yen, Deutsche
marks and Canadian dollars. The Trust would use foreign
currency options to protect against the decline in the value
of portfolio securities resulting from changes in foreign
exchange rates, as the following examples illustrate:
1. In connection with the Trust's payment for securities of a
foreign issuer at some future date in a foreign currency, the
Trust may purchase call options on such foreign currency in
order to hedge against the risk that the value of the foreign
currency might rise against the U. S. dollar, thereby
increasing the cost of the currency and the transaction.
EXAMPLE: The Trust must pay for the purchase of securities of
a Swiss issuer in Swiss francs. If the Trust is concerned
that the price of Swiss francs might rise in price in terms of
the U. S. dollar from, for example, $.4780, it might purchase
Swiss franc June 48 call options for a premium of, for
example, .50 (i.e. $.005 per Swiss franc times 62,500 Swiss
francs per contract, for a total premium of $312.50 -- plus
transaction costs). This would establish a maximum cost for
Swiss francs and, hence, the maximum cost in U. S. dollars for
the Swiss securities. Thus, if Swiss francs subsequently
appreciated to $.4950 and the premium on Swiss franc June 48
call options increased to, for example, 1.95 (for a total
premium of $1,219.75) the Trust could sell the option at a
profit ($1,219.75 less the original premium paid of $312.50
and transaction costs) to offset the increased cost of
acquiring Swiss francs. Alternatively, the Trust could
exercise the option contract. If the Swiss franc remained
below $.48, the Trust could let its calls expire (losing its
premium) and purchase the Swiss francs at a lower price.
2. The Trust may purchase foreign currency options to protect
against a decline in the Trust's cash and short-term U. S.
government securities.
EXAMPLE: The Trust may have investments in cash and in short
term U.S. Government securities, e.g. U.S. Treasury bills
having maturities of less than one year. In order to hedge
against a possible decline in the value of the U.S. dollar,
the Trust might purchase Deutsche mark 40 calls. If the
Deutsche mark appreciates above $.40, then the Trust could
exercise its option contract and
stabilize the value of its cash holdings and the underlying
value of the U.S. Treasury bills in its portfolio as a result
of the improved exchange rate between the Deutsche mark and
the U.S. dollar.
As is the case with other listed options, the effectiveness of
foreign currency options in carrying out the Trust's objective
will depend on the exercise price of the option held and the
extent to which the value of such option will be affected by
changes in the exchange rates of the underlying currency. To
terminate its rights in options which it has purchased, the
Trust would sell an option of the same series in a closing
sale transaction. A gain or loss, which will be offset by a
loss or gain on the U.S. dollar, will be realized depending on
whether the sale price of the option is more or less than the
cost to the Trust of establishing the position. If the
contemplated transaction is not completed, the option may be
allowed to expire (resulting, however, in the loss of the
option premium amount) or liquidated for any remaining value.
Foreign currency options purchased for the Trust shall be
valued at the last sale price on the principal exchange on
which such option is traded or, in the absence of a sale, the
mean between the last bid and offering prices. Options which
are not actively traded will be valued at the difference
between the option price and the current market price of the
underlying security, provided that the put price is higher
than such market price or the call price is lower than such
market price. In the event that a put price is lower than the
current market value of the underlying security, or a call
price is higher than the current market value of the
underlying security, then the option will be assigned no
value.
RISKS OF FOREIGN CURRENCY OPTION ACTIVITIES
Assuming that any decline in the value of the Trust's
portfolio is accompanied by a rise in the value of a foreign
currency in relation to the U.S. dollar the purchase of
options on that foreign currency may generate gains which
would partially offset such decline. However, if after the
Trust purchases an option, the value of the Trust's portfolio
moves in the opposite direction from that contemplated, the
Trust may experience losses to the extent of premiums it paid
in purchasing such options, and this will reduce any gains the
Trust would otherwise have. For this reason as well as supply
and demand imbalances and other market factors, the price
movements of options on foreign currencies purchased by the
Trust may not correspond to the price movements of the Trust's
portfolio securities and may cause the options transactions to
result in losses to the Trust.
The Trust's success in using options on foreign currencies
depends, among other things, on the Investment Adviser's
ability to predict the direction and volatility of price
movements in the options markets as well as the securities
markets and on the Investment Adviser's ability to select the
proper type time and duration of options. Although the
Investment Adviser has prior experience in utilizing currency
options, there can be no assurance that this technique will
produce its intended results. It should be recognized that the
price movements of options relating to currencies purchased
by the Trust may not correspond to the price movements of the
Trust's portfolio securities and may therefore cause the
options transactions to result in losses to the Trust.
Option positions on foreign currencies may be closed out only
on an exchange or other market which provides a secondary
market for options of the same series. United States options
on foreign currencies are currently traded on the Philadelphia
Stock Exchange and the Chicago Board of Options Exchange.
Trading in options on foreign currencies may be interrupted,
for example, because of supply and demand imbalances arising
from a lack of either buyers or sellers. In addition, trading
may be suspended
after the price of an option has risen or fallen more than a
specified maximum amount. Exercise of foreign currency options
also could be restricted or delayed because of regulatory
restrictions or other factors. Trading on options on foreign
currencies commenced in December, 1982. The ability to
establish and close out positions in such options will be
subject to the development and maintenance of a liquid
secondary market. It is not certain that this market will
continue. The Trust will not purchase foreign currency options
on any exchange or other market unless and until, in the
Investment Adviser's opinion, the market for such options has
developed sufficiently. Although it is intended that the Trust
purchase options only when there appears to be an active
market in such instruments, there can be no assurance that a
liquid market will exist at a time when the Trust seeks to
close a particular option position. Accordingly, the Trust may
experience losses as a result of its inability to close out an
options position.
The Trust also may be generally restricted in the purchase and
sale of options because the Trust intends to qualify as a
regulated investment company under Subchapter M of the
Internal
Revenue Code. One of the requirements for such qualification
is that less than 30% of the Trust's gross income must be
derived from gains on securities held for less than three
months. Accordingly, the Trust will be restricted in the
purchasing of options on foreign currencies which expire in
less than three months, and in effecting closing purchase or
sale transactions with respect to put options on foreign
currencies which have been purchased less than three months
prior to such transactions. The Trust may also be restricted
in the purchasing of put options for the purpose of hedging
underlying foreign currencies because of the application of
the short sale holding period rules with respect to such
underlying hedged currencies. Thus, the extent to which the
Trust may engage in option transactions may be materially
limited by this 30% test and by the additional Code
requirement that at least 90% of the Trust's gross income be
derived from dividends, interest, and gains from the sale or
other disposition of securities, and other Code requirements.
SPECIAL RISKS OF FOREIGN CURRENCY OPTIONS
In addition to the risks described above, there are special
risks associated with foreign currency options, including the
following:
1. The value of foreign currency options is dependent upon the
value of foreign currencies relative to the U.S. dollar. As a
result, the prices of foreign currency options may vary with
changes in the value of either or both currencies. Thus,
fluctuations in the value of the U.S. dollar will affect
exchange rates and the value of foreign currency options, even
in the case of an otherwise stable foreign currency.
Conversely, fluctuations in the value of a foreign currency
will affect exchange rates and the value of foreign currency
options even if the value of the U.S. dollar remains
relatively constant. Thus, careful consideration must be
given to factors affecting both the U.S. economy and the
economy of the foreign country issuing the foreign currency
underlying the option. 2. The value of any currency, including
U.S. dollars and foreign currencies, may be affected by a
number of complex factors applicable to the issuing country,
such as the prevailing monetary policy of that country, its
money supply, its trade deficit or surplus, its balance of
payments, interest rates, inflation rates and the extent or
trend of its economic growth. In addition, foreign countries
may take a variety of actions, such as increasing or
decreasing the money supply or purchasing or selling
government obligations, which may have an indirect but
immediate effect on exchange rates.
3. The exchange rates of foreign currencies (and therefore the
value of foreign currency options) could be significantly
affected, fixed or supported directly or indirectly by
government actions. Such government intervention may increase
risks to investors since exchange rates may not be free to
fluctuate in response to other market forces.
4. Because foreign currency transactions occurring in the
interbank market involve substantially larger amounts than
those likely to be involved in the exercise of individual
foreign currency option contracts, investors who buy or write
foreign currency options may be disadvantaged by having to
deal in an odd lot market for the underlying foreign
currencies at prices that are less favorable than for round
lots. Because this price differential may be considerable, it
must be taken into account when assessing the profitability of
a transaction in foreign currency options.
5. There is no systematic reporting of last sale information
for foreign currencies. There is reasonably current,
representative bid and offer information available on the
floor of the exchange on which foreign currency options are
traded, in certain brokers' offices, in bank foreign currency
trading
offices, and to others who wish to subscribe for this
information. There is, however, no regulatory requirement that
those quotations be firm or revised on a timely basis. The
absence of last sale information and the limited availability
of quotations to individual investors may make it difficult
for many investors to obtain timely, accurate data about the
state of the underlying market. In addition, the quotation
information that is available is representative of very large
transactions in the interbank market and does not reflect
exchange rates for smaller transactions. Since the relatively
small amount of currency underlying a single foreign currency
option would be treated as an odd lot in the interbank market
(i.e., less than between $1 and $5 million), available pricing
information from that market may not necessarily reflect
prices pertinent to a single foreign currency option contract
and investors who buy or sell foreign currency options
covering amounts of less than $1 to $5 million can expect to
deal in the underlying market at prices that are less
favorable than for round lots.
6. Foreign governmental restrictions or taxes could result in
adverse changes in the cost of acquiring or disposing of
foreign currencies. If The Options Clearing Corporation
("OCC") determines that such restrictions or taxes would
prevent the orderly settlement of foreign currency option
exercises or impose undue burdens on parties to exercise
settlements, it has the authority to impose special exercise
settlement procedures, which could adversely affect the Trust.
7. The interbank market in foreign currencies is a global,
aroundthe-clock market. Therefore, in contrast with the
exchange markets for stock options, the hours of trading for
foreign currency options do not conform to the hours during
which the underlying currencies are traded. (Trading hours for
foreign currency options can be obtained from a broker.) To
the extent that the options markets are closed while the
market for the underlying currencies remains open, significant
price and rate movements may take place in the underlying
markets that cannot be reflected in the options markets. The
possibility of such movements should be taken into account in
(a) relating closing prices in the options and underlying
markets, and (b) determining whether to close out a short
option position that might be assigned in an exercise that
takes place after the options market is closed on the basis of
underlying currency price movements at a later hour.
8. Since settlement of foreign currency options must occur
within the country issuing that currency, investors, through
their brokers, must accept or make delivery of the underlying
foreign currency in conformity with any U.S. or foreign
restrictions or regulations regarding the maintenance of
foreign banking
arrangements by U.S. residents and may be required to pay any
fees, taxes or charges associated with such delivery which are
assessed in the issuing country. Prior to the placing of any
assets with a foreign custodian in connection with the
settlement of foreign currency options, the Trustees of the
Trust shall have determined that maintaining such assets in a
particular country or countries is consistent with the best
interests of the Trust and its shareholders, and that
maintaining such assets with a particular foreign custodian is
consistent with the best interests of the Trust and its
shareholders. The Trustees shall also have approved, as
consistent with the best interests of the Trust and its
shareholders, a written contract between the Trust and such
foreign custodian that will maintain the Trust's assets. The
Trustees shall also establish a system to monitor such foreign
custody arrangements and a majority of the Trustees, at least
annually, shall review and approve the continuance of such
arrangements as consistent with the best interests of the
Trust and its shareholders.
FINANCIAL FUTURES CONTRACTS AND RELATED OPTIONS
The Trust may use financial futures contracts and related
options to hedge against changes in currency exchange rates or
in the market value of its portfolio securities or securities
which it intends to purchase. Hedging is accomplished when an
investor takes a position in the futures market opposite to
his cash market position. There are two types of hedges --
long (or buying) and short (or selling) hedges. Historically,
prices in the futures market have tended to move in concert
with cash market prices, and prices in the futures market have
maintained a fairly predictable relationship to prices in the
cash market. Thus, a decline in the market value of securities
in the Trust's portfolio may be protected against to a
considerable extent by gains realized on futures contracts
sales. Similarly, it is possible to protect against an
increase in the market price of securities which the Trust may
wish to purchase in the future by purchasing futures
contracts.
The Trust may purchase or sell any financial futures contracts
which are traded on an exchange or board of trade or other
market. Financial futures contracts consist of interest rate
futures contracts, securities index futures contracts and
foreign currency contracts. A United States public market
presently exists in interest rate futures contracts on long-
term U. S. Treasury bonds, U. S. Treasury notes and three-
month U. S. Treasury bills. Securities index futures
contracts are currently traded with respect to the Standard &
Poor's 500 Composite Stock Price Index and such other broad-
based stock market indices as the New York Stock Exchange
Composite Stock Index and the Value Line Composite Stock Price
Index. A clearing corporation associated with the exchange or
board of trade on which a financial futures contract trades
assumes responsibility for the completion of transactions and
also guarantees that open futures contracts will be performed.
Currency futures contracts are also traded on various
exchanges or board of trade.
In contrast to the situation where the Trust purchases or
sells a security, no security is delivered or received by the
Trust upon the purchase or sale of a financial futures
contract. Initially, the Trust will be required to deposit in
a segregated account with its custodian bank an amount of cash
or U. S. Treasury bills. This amount is known as initial
margin and is in the nature of a performance bond or good
faith deposit on the contract. The current initial margin
deposit on the contract is approximately 5% of the contract
amount. Subsequent payments, called variation margin, will be
made to and from the account on a daily basis as the price of
the futures contract fluctuates. This process is known as
marking to market.
The writer of an option on a futures contract is required to
deposit margin pursuant to requirements similar to those
applicable to futures contracts. Upon exercise of an option on
a futures contract, the delivery of the futures position by
the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the
writer's margin account. This amount will be equal to the
amount by which the market price of the futures contract at
the time of exercise exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of the
option on the futures contract.
Although financial futures contracts by their terms call for
actual delivery or acceptance of currencies or securities, in
most cases the contracts are closed out before the settlement
date without the making or taking of delivery. Closing out is
accomplished by effecting an offsetting transaction. A futures
contract sale is closed out by effecting a futures contract
purchase for the same aggregate amount of securities and the
same delivery date. If the sale price exceeds the offsetting
purchase price, the seller immediately would be paid the
difference and would realize a gain. If the offsetting
purchase price exceeds the sale price, the seller immediately
would pay the difference and would realize a loss. Similarly,
a futures contract purchase is closed out by effecting a
futures contract sale for the same securities and the same
delivery date. If the offsetting sale price exceeds the
purchase price, the purchaser would realize a gain, whereas if
the purchase price exceeds the offsetting sale price, the
purchaser would realize a loss.
The Trust will pay commissions on financial futures contract
and related options transactions. These commissions may be
higher than those which would apply to purchases and sales of
securities directly.
LIMITATIONS ON FUTURES CONTRACTS AND RELATED OPTIONS
The Trust may not currently engage in transactions in
financial futures contracts or related options for speculative
purposes, but only as a hedge against anticipated changes in
exchange rates or the market value of its portfolio securities
or securities which it intends to purchase. Also the Trust may
not currently purchase or sell financial futures contracts or
related options if, immediately thereafter, the sum of the
amount of initial margin deposits on the Trust's existing
futures and related option positions and the premiums paid for
related options would exceed 5% of the market value of the
Trust's total assets after taking into account unrealized
profits and losses on any such contracts. At the time of
purchase of a futures contract or an option on a futures
contract, an amount of cash, U. S. Government securities or
other appropriate high-grade debt obligations equal to the
market value of the futures contract minus the Trust's initial
margin deposit with respect thereto will be deposited in a
segregated account with the Trust's custodian bank to
collateralize fully the position and thereby ensure that it is
not leveraged.
The extent to which the Trust may enter into financial futures
contracts and related options also may be limited by the
requirements of the Internal Revenue Code of 1986 for
qualification as a regulated investment company. See "Taxes
Tax Treatment of Options and Futures Transactions."
RISKS RELATING TO FUTURES CONTRACTS AND RELATED OPTIONS
Positions in financial futures contracts and related options
may be closed out only on an exchange or other market which
provides a secondary market for such contracts or options. The
Trust will enter into futures or related option positions only
if there appears to be a liquid secondary market. However,
there can be no assurance that a liquid secondary market will
exist for any particular futures or related option contract at
any specific time. Thus, it may not be possible to close out a
futures or related option position. In the case of a futures
position, in the event of adverse price movements, the Trust
would continue to
be required to make daily margin payments. In this situation,
if the Trust has insufficient cash to meet daily margin
requirements it may have to sell portfolio assets at a time
when it may be disadvantageous to do so. In addition, the
Trust may be required to take or make delivery of the
securities underlying the futures contracts it holds. The
inability to close out futures positions also could have an
adverse impact on the Trust's ability to hedge its portfolio
effectively.
There are several risks in connection with the use of futures
contracts as a hedging device. While hedging can provide
protection against an adverse movement in the market prices,
it can also preclude a hedger's opportunity to benefit from a
favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause the
Trust
to incur additional brokerage commissions and may cause an
increase in the Trust's portfolio turnover rate.
The successful use of futures contracts and related options
also depends on the ability of the Trust's Investment Adviser
to forecast correctly the direction and extent or currency
exchange rate and market movements within a given time frame.
To the extent exchange rate and market prices remain stable
during the period a futures contract or option is held by the
Trust or such prices move in a direction opposite to that
anticipated, the Trust may realize a loss on the hedging
transaction which is not offset by an increase in the value of
its portfolio securities. As a result, the Trust's total
return for the period may be less than if it had not engaged
in the hedging transaction. Utilization of futures contracts
by the Trust involves the risk of imperfect correlation in
movements in the price of futures contracts and movements in
the price of the currencies or securities which are being
hedged. If the price of the futures contract moves more or
less than the price of the currencies or securities being
hedged, the Trust will experience a gain or loss which will
not be completely offset by movements in the price of the
securities. It is possible that, where the Trust has sold
futures contracts to hedge its portfolio against decline in
the market, the market may advance and the value of securities
held in the Trust's portfolio (or related currencies) may
decline. If this occurred, the Trust would lose money on the
futures contract and would also experience a decline in value
in its portfolio securities. Where futures are purchased to
hedge against a possible increase in the prices of securities
before the Trust is able to invest its cash (or cash
equivalents) in securities (or options) in an orderly fashion,
it is possible that the market may decline; if the Trust then
determines not to invest in securities (or options) at that
time because of concern as to possible further market decline
or for other reasons, the Trust will realize a loss on the
futures that would not be offset by a reduction in the price
of securities purchased.
The market prices of futures contracts may be affected if
participants in the futures market elect to close out their
contracts through offsetting transactions rather than to meet
margin deposit requirements. In such case, distortions in the
normal relationship between the cash and futures markets could
result. Price distortions could also result if investors in
futures contracts opt to make or take delivery of the
underlying securities rather than to engage in closing
transactions due to the resultant reduction in the liquidity
of the futures market. In addition, due to the fact that, from
the point of view of speculators, the deposit requirements in
the futures markets are less onerous than margin requirements
in the cash market, increased participation by speculators in
the futures market could cause temporary price distortions.
Due to the possibility of price distortions in the futures
market and because of the imperfect correlation between
movements in the prices of currencies and securities and
movements in the prices of futures contracts, a correct
forecast of market trends may still not result in a successful
hedging transaction.
Compared to the purchase or sale of futures contracts, the
purchase of put or call options on futures contracts involves
less potential risk for the Trust because the maximum amount
at risk is the premium paid for the options plus transaction
costs. However, there may be circumstances when the purchase
of an option on a futures contract would result in a loss to
the Trust while the purchase or sale of the futures contract
would not have resulted in a loss, such as when there is no
movement in the price of the underlying securities.
The Trust also may be generally restricted in dealing with
options, futures contracts and related options because the
Trust
intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code.
INVESTMENT RESTRICTIONS
The Trust has adopted the following investment restrictions
which are fundamental policies and cannot be changed without
approval by the holders of a majority of the outstanding
voting securities of the Trust (which in this Statement of
Additional Information means the lesser of either (i) a
majority of the outstanding shares of the Trust or (ii) 67% or
more of the shares represented at a meeting if more than 50%
of such shares are present or represented by proxy at the
meeting):
1. The Trust will not purchase any securities (other than
securities of the U.S. Government, its agencies, or
instrumentalities and the securities of one or more domestic
or foreign wholly-owned subsidiaries of the Trust) if as a
result more than 5% of the Trust's total assets (taken at
current value) would then be invested in securities of a
single issuer. 2. The Trust will not act as underwriter of
securities, or invest in real estate, or in commodities or
commodity contracts, except
that the Trust may invest directly, or through one or more
whollyowned subsidiaries, in precious metals and in numismatic
items (including coins, tokens, paper money and other items
which have been used as money or a medium of exchange),
provided that immediately after any such investment not more
than 20% of the Trust's total assets (taken at market or other
fair value) in the aggregate will be invested directly or
indirectly in precious metals and numismatic items, and
further provided that immediately after any such investment
not more than 10% of the Trust's total assets (taken at market
or other fair value) in the aggregate will be invested
directly or indirectly in numismatic items. As a matter of
operating policy, the Trust does not intend to make such
investments, except that the Trust may (a) write covered call
options with respect to securities, securities indices and
currencies and enter into closing purchase or sale
transactions with respect to written options, (b) purchase put
or call options with respect to securities, securities indices
and currencies and (c) engage in financial and precious metals
futures contracts and related option transactions.
3. The Trust will not make loans except that the Trust may (a)
purchase a portion of an issue of publicly distributed bonds,
debentures, or similar debt securities (including so called
"repurchase agreements" whereby the Trust's cash is, in
effect, deposited on a secured basis with a bank or recognized
securities dealer for a brief period and yields a return), and
(b) lend portfolio securities upon such conditions as may be
imposed from time to time by the Securities and Exchange
Commission, provided that the value of securities loaned at
any time may not exceed 30% of the Trust's total assets.
4. The Trust will not borrow in excess of 5% of its total
assets, taken at market or other fair value, at the time such
borrowing is made, and any such borrowing (a) must be from a
bank and must be repaid in full before the Trust may make any
further investments and (b) may be undertaken only as a
temporary measure
for extraordinary or emergency purposes; and the Trust may
not pledge, mortgage, or hypothecate its assets taken at
market to an extent greater than 15% of the Trust's gross
assets taken at cost. (For the purpose of this restriction,
collateral arrangements with respect to the writing of
options, futures contracts, and collateral arrangements with
respect to initial and variation margin are not deemed to be
a pledge of assets, and neither such arrangements nor the
purchase and sale of options, futures, or related options are
deemed to be issuance of a senior security.
5. The Trust will not purchase any securities (other than the
securities of one or more domestic or foreign wholly-owned
subsidiaries) if as a result such purchase would cause more
than 10% of the total outstanding voting securities of such
issuer to be held by the Trust.
6. The purchase or retention of the securities of any issuer
is prohibited if the officers and Trustees of the Trust or
its investment adviser owning beneficially more than 1/2 of
1% of the securities of such issuer together own beneficially
more than 5% of the securities of such issuer.
7. The purchase of the securities of any other investment
company is prohibited, except that the Trust may make such a
purchase in the open market involving no commission or profit
to a sponsor or dealer (other than the customary broker's
commission), provided that not more than 5% of the Trust's
total assets (taken at market or other fair value) would be
invested in such securities immediately after the making of
any such investment, and the Trust may make such a purchase
as part of a merger, consolidation or acquisition of assets.
8. The purchase of securities of companies with a record
(including that of their predecessors) of less than three
years' continuous operation is prohibited if such purchase
would cause the Trust's investments in such companies taken
at cost to exceed 5% of the total assets of the Trust taken
at current values, except that this restriction shall not
apply to any of the Trust's investments in its wholly-owned
subsidiaries.
9. The Trust will not participate in a joint venture or on a
joint and several basis in any securities trading account.
10. The Trust will not act as distributor of securities
issued by it except through an underwriter, acting as
principal or agent, who may not be obligated to sell or take
up any specific amount of stock.
11. The Trust will not make short sales of securities unless
at all times when a short position is open, it owns an equal
amount of such securities or owns securities convertible into
or exchangeable for, without payment of any further
consideration, securities of the same issue as, and at least
equal in amount to, the securities sold short. Engaging in
futures transactions and related options will not be deemed a
short sale or maintenance of a short position in securities.
12. The Trust will not purchase shares on margin, but may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities. The payment
by the Trust of initial or variation margin in connection
with futures or related options transactions, if applicable,
shall not be considered the purchase of a security on margin.
With respect to the practices described above relating to
borrowing by the Trust (paragraph 4), investment by the Trust
in other investment companies (paragraph 7), investments by
the Trust in companies with a record of less than three
years' continuous operation (paragraph 8) and the making of
short sales of securities by the Trust (paragraph 11), the
Trust has not employed such practice within the last year,
and has no current intention of doing so in the foreseeable
future.
The Trust does not intend to invest in securities for which
there is a limited trading market, or which cannot be sold
without
registration or other action under federal or state
securities laws (commonly referred to as "Restricted
Securities").
MANAGEMENT
OFFICERS AND TRUSTEES
The Trust's Officers and Trustees, their positions with the
Trust and their principal occupations are listed below.
Except as indicated, each individual has held the office
shown or other offices in the same company or in Meeschaert
Capital
Accumulation Fund, Inc. (the "Predecessor Fund") for the last
five years. Unless otherwise noted, the business address of
each Officer and Trustee is 7022 Bennington Woods Drive,
Pittsburgh, Pennsylvania 15237, which is also the address of
the Trust's Investment Adviser, Anchor Investment Management
Corporation. Those Trustees who are "interested persons" of
the Trust or the Investment Adviser, as defined in the
Investment Company Act of 1940, by virtue of their
affiliation with either the Trust or the Investment Adviser,
are indicated by an asterisk(*).
Positions with Principal
Name and Address the Trust Occupation
DAVID W. C. PUTNAM Chairman Chairman and Trustee,
10 Langley Road and Trustee Anchor Capital
Accumulation
Trust,
Newton Centre, MA 02159 Anchor International
Bond
Trust, Anchor
Strategic Assets Trust,
Anchor Resource and Commodity
Trust,and
Anchor
Gold and Currency Trust
(Investment
Companies); President and
Director, F. L. Putnam
Securities Company, Inc.; Chairman
and
Director, Boston Security Counsellors,
Inc.
(Investment Adviser); Chairman
and
Trustee, The Advest Advantage Investment
Trusts
(Investment Companies.)
SPENCER H. LE MENAGER Secretary and President,
Equity, Inc.; formerly
222 Wisconsin Avenue Trustee
P. O. Box 390 President, Howe, Barnes &
Johnson
Lake Forest, IL 60045 Inc. (securities
dealer).
^ ^ ^
MAURICE A. DONAHUE Trustee Director and
Professor, Institute for Governmental 50 Holy Family Road
Services and Walsh-Saltonstall Professor of Practical
Holyoke, MA 01040 Politics, University of
Massachusetts, Director Vanguard Savings
Bank Former Member ,
Massachusetts
House of Representatives, Former Member and
President, Massachusetts Senate. \R
DAVID Y. WILLIAMS* President and President and Director,
Anchor 7022 Bennington Woods Dr. Trustee
Investment
Management Corporation;
Pittsburgh, PA 15237 President and
Director,
Meeschaert & Co., Inc.
(securities dealer).
J. STEPHEN PUTNAM Vice President President, Robert Thomas
880 Carillon Parkway and Treasurer
Securities,
Inc. (securities
P.O. Box 12749 dealer) since June 1983;
Director
St. Petersburg, FL 33733 F. L. Putnam
Securities
Company,
Incorporated. Formerly,
President and Director,
EPB,
Inc.
and Vice President,
Burgess & Leith
Incorporated.
CHRISTOPHER Y. WILLIAMS Vice President Vice
President
and Secretary, Anchor
485 Cherry Court and Asst. Secretary Investment Management
Corporation;
Pittsburgh, PA 15237 Vice President and
Secretary, Meeschaert
& Co., Inc. (securities
dealer)
JOSEPH C. WILLIAMS Vice President Vice President and
Treasurer, Anchor
4594 Bucktail Dr. and Asst. Treasurer
Investment
Management Corporation;
Allison Park, PA 15101 \R Vice President and
Treasurer, Meeschaert
& Co., Inc. (securities
dealer)
The Officers and Trustees of the Trust as a group owned
or had beneficial interests in less than one percent (1%) of
those shares of the Trust outstanding on December 31, 1995.
\R
Messrs. Putnam, Le Menager, and Donahue, are the Trustees
who are not "interested persons" (as that term is defined in
the Investment Company Act of 1940) of the Trust. \R
Mr. David W.C. Putnam and Mr. J. Stephen Putnam are brothers.
Mr. David Y. Williams is the father of Mr. Christopher Y.
Williams and Mr. Joseph C. Williams. Mr. Christopher Y.
Williams and Mr. Joseph C. Williams are brothers.
Mr. David W.C. Putnam and Mr. J. Stephen Putnam are
brothers. Mr. David Y. Williams is the father of Mr.
Christopher Y. Williams and Mr. Joseph C. Williams. Mr.
Christopher Y. Williams and Mr. Joseph C. Williams are
brothers.
The standing audit committee is composed of Messrs. Le
Menager and, Donahue. The Trust does not have a nominating
or compensation committee. \R
REMUNERATION OF OFFICERS AND TRUSTEES
The Trust will not pay any remuneration to its Officers or
Trustees as such who are "interested persons" (as that term
is defined in the Investment Company Act of 1940) of the
Trust or of any investment adviser or distributor of the
Trust but will pay an annual fee of not more than $3,000 to
each Trustee who is not such an "interested person".
INVESTMENT ADVISORY CONTRACT
The Trust engages Anchor Investment Management Corporation,
formerly known as Meeschaert Investment Management
Corporation, as Investment Adviser pursuant to an Investment
Advisory Contract dated November 14, 1990, which was
approved at a meeting of the shareholders on the same date
and is substantially identical to the prior agreement
between the Investment Adviser and Meeschaert Capital
Accumulation Trust. The Investment Adviser manages the
investments and affairs of the Trust, subject to the
supervision of the Trust's Board of
Trustees. The Investment Adviser furnishes to the Trust
investment advice and assistance, administrative services,
office space, equipment and clerical personnel and
investment advisory, statistical and research facilities.
The Trust is responsible for all its expenses not assumed by
the Investment Adviser under the contract, including without
limitation, the fees and expenses of the custodian and
transfer agent, costs incurred in determining the Trust's
net asset value and keeping its books; the cost of share
certificates; membership dues in investment company
organizations; distributions and brokerage commissions and
fees; fees and expenses of registering its shares; expenses
of reports to shareholders, proxy statements and other
expenses of shareholders' meetings; insurance premiums;
printing and mailing expenses; interest, taxes and corporate
fees; legal and accounting expenses; and fees and expenses
of Trustees not affiliated with the Investment Adviser. The
Trust will also bear expenses incurred in connection with
litigation in which the Trust is a party and the legal
obligation the Trust may have to indemnify its Officers and
Trustees with respect thereto.
The Trust pays the
Investment Adviser, as compensation under the Investment
Advisory Contract, a monthly fee of .0625% (equivalent to
3/4 of 1% annually) of the average daily net assets of the
Trust. This fee may be higher than that paid by other
investment companies. The Investment Adviser received fees
of $109,498, $93,230, and $77,815 for services rendered in
1993, 1994, and 1995, respectively. For the fiscal year
ended December 31, 1991 the Investment Adviser voluntarily
elected to return advisory fees of $3,200 to the Trust. \R
The Investment Advisory Contract which remained in
effect until November 14, 1995, has been extended by a vote
of a majority of the Trust's disinterested trustees to
November 1996. In general, the investment advisory contract
may be extended from year to year thereafter if approved at
least annually (a) by the vote of a majority of the
outstanding shares of the Trust or by the Board of Trustees,
and in either case, (b) by vote of a majority of the
Trustees of the Trust who are not parties to the contract or
"interested persons" (as that term is defined in the
Investment Company Act of 1940) of any such party cast in
person at a meeting called for the purpose. Amendments to
the contract require similar approval by the shareholders
and "disinterested" Trustees. The contract is terminable at
any time without penalty by the Board of Trustees of the
Trust or by vote of a majority of the Trust's shares on 60
days' written notice or by the Investment Adviser on 90
days' written notice. The contract terminates automatically
in the event of its assignment (which includes the transfer
of a controlling block of the stock of the Investment
Adviser). \R
INVESTMENT ADVISER
The Investment Adviser, Anchor Investment Management
Corporation, formerly Meeschaert Investment Management
Corporation, is located at 7022 Bennington Woods Drive,
Pittsburgh, Pennsylvania 15237. The Trust's principal
offices are also located at that address. The Investment
Adviser and Meeschaert & Co., Inc., the Trust's principal
underwriter, which also served as principal underwriter of
the Predecessor Fund, are affiliated through common control
with Societe D'Etudes et de Gestion Financieres Meeschaert,
S.A., one of France's largest privately-owned investment
management firms, which is referred to as the "Meeschaert
organization". The Meeschaert organization was established
in Roubaix, France in 1935 by Emile C. Meeschaert, and
presently manages, with full discretion, an aggregate amount
of approximately $1.5 billion for about 8,000 individual
(and institutional) customers with $250 million in French
mutual funds managed by the organization.
On September 7, 1983, Emile C. Meeschaert and David Y.
Williams purchased the Investment Adviser from F. L. Putnam
Securities Company Incorporated ("Putnam Securities"). (Mr.
Meeschaert and Mr. Williams purchased 95% and 5%,
respectively, of the capital stock of the Investment
Adviser's parent corporation, which was subsequently
dissolved.) Under the terms of the agreement of sale between
Putnam Securities and Messrs. Meeschaert and Williams, the
transition services of David W. C. Putnam, President and a
Trustee of the Trust, were furnished by Putnam Securities to
the Investment Adviser as an employee of the Investment
Adviser and the Trust for annual compensation payable by the
Investment Adviser to Putnam Securities under an arrangement
which continued in effect for five years. As of November 14,
1990, Luc E. Meeschaert purchased all of the outstanding
shares of the Investment Adviser previously owned by Emile
C. Meeschaert.
The Investment Adviser's Directors and Officers are as
follows: Luc E. Meeschaert, Chairman; his principal
occupation is being Chief Executive Officer of Societe
D'Etudes et de Gestion Financieres Meeschaert, S.A., 23 Rue
Druout, 75009, Paris, France.
David Y. Williams, President and Director; Mr. Williams is
also a Trustee of the Trust and President and a Director of
Meeschaert & Co., Inc., the Trust's Distributor.
Paul Jaspard, Vice President; his principal occupation is
being President of Global Equity Managers, S.A., P.O. Box
1543 26A, rue Albert-Premier, L-1015 Luxembourg (investment
adviser). Mr. Jaspard manages other portfolios for the
Meeschaert organization, and is primarily responsible for
the investment decisions of the Trust.
DETERMINATION OF NET ASSET VALUE
The net asset value is determined by the Trust as of 12:00
noon Eastern Time on each business day in which the New York
Stock Exchange is open for trading, or on any day that the
Trust is open, but the New York Stock Exchange is not open
for business if there occurs an event which might materially
affect the net asset value of the Trust's redeemable shares.
The manner of determination of the net asset value is
briefly as follows: Securities traded on a United States
national, or other foreign securities exchange are valued at
the last sale price on the primary exchange on which they
are listed, or if there has been no sale that day, at the
current bid price. Other United States and foreign
securities for which market quotations are readily available
are valued at the last known sales price, or, if
unavailable, the known current bid price which most nearly
represents current market value. Other securities (including
limited traded securities) and all other assets are valued
at market value as determined in good faith by the Trustees
of the Trust. Liabilities are deducted from the total, and
the resulting amount is divided by the number of shares
outstanding.
DISTRIBUTION OF SHARES
Rule 12b-1 under the Investment Company Act of 1940 ("Rule
12b 1") permits investment companies to use their assets to
bear expenses of distributing their shares if they comply
with various conditions, including adoption of a
distribution plan containing certain provisions set forth in
the Rule. At a meeting held on October 26, 1984, the
shareholders of the Predecessor Fund approved adoption by
the Trust of a distribution plan (the "Plan") substantially
the same as a distribution plan previously adopted by the
Predecessor Fund in 1983 and implemented on February 6,
1984. On December 20, 1985, the Plan described
hereinbelow was approved by the Predecessor Fund as the then
sole shareholder of the Trust and by the Board of Trustees,
including a majority of the Trustees who are not "interested
persons" of the Trust as defined in the Investment Company
Act of 1940 ("Independent Trustees") and the Trustees who
have no direct or indirect financial interest in the Plan or
any agreement related thereto (the "Rule 12b-1 Trustees").
The Plan is of the type
sometimes called a compensation plan.
The Plan currently is not in effect, and will not be
implemented unless and until reapproved by the Trust's
shareholders and Board of Trustees. Accordingly, for the
year ended December 31, 1995, the Trust paid no fees under
the Plan to the Distributor.\R
In connection with the Plan, Trust shares are offered for
sale at net asset value, and the Trust may pay the
Distributor a commission equal to up to 5% of the price paid
to the Trust for each sale, all or any part of which may be
reallowed by the Distributor to others (dealers) making such
sales. To the extent that the distribution fee is not paid
to such dealers, the Distributor may use such fee for its
expenses of Distribution of Trust shares. If such fee
exceeds its expenses, the Distributor may realize a profit
from these arrangements. The Plan provides for an aggregate
limit on the amount of all payments pursuant to the Plan
equal to .75 of 1% of the Trust's average daily net assets
for any fiscal year. If, so long as the Plan is in effect,
the Distributor's reallowances to dealers and other expenses
exceed the .75 of 1% limit in any particular year, it could
collect in any future year such amounts (which do not
include interest or other carrying charges) up to any amount
by which amounts paid to it under the Plan in that year are
less than the applicable limit for the prior year. In such a
case it might receive amounts in excess of its then current
expenses.
Whether any expenditure under the Plan is subject to a
state expense limit will depend upon the nature of the
expenditure and the terms of the state law, regulation or
order imposing the limit. Any expenditure subject to such a
limit will be included in the Trust's total operating
expenses for purposes of determining compliance with the
expense limit.
The Plan may be terminated at any time by vote of the Rule
12b1 Trustees, or by vote of a majority of the outstanding
voting shares of the Trust. Any change in the Plan that
would materially increase the distribution expenses of the
Trust provided for in the Plan requires shareholder
approval; otherwise the Plan may be amended by the Trustees,
including the Rule 12b-1 Trustees.
If and when the Plan is in effect, the selection and
nomination of candidates for Independent Trustees must be
committed to the discretion of the Independent Trustees.
The total amounts paid by the Trust under the foregoing
arrangements may not currently exceed the maximum limit
specified above, and the amounts and purposes of
expenditures under the Plan must be reported to the Rule 12b-
1 Trustees quarterly. The Rule 12b-1 Trustees may require or
approve changes in the implementation or operation of the
Plan, and may also require that total expenditures by the
Trust under the Plan be kept within limits lower than the
maximum amount currently permitted under the Plan as stated
above or permit a higher limit.
If the limit on expenditures is reached at any given time,
the Distributor intends, although it is not obligated to do
so, to continue to offer shares of the Trust and to continue
to pay others reallowances and maintenance fees. In such an
event, the Distributor intends that it will seek payment
from the Trust in the amount of its commissions (including
reallowances) and maintenance fees at such times when the
expenditures limit has not otherwise been reached. The Trust
will have no contractual obligation to pay any portion of
such amounts to
the Distributor, and the amount, if any, and the time and
conditions under which the Trust might make such payment as
requested by the Distributor will be solely within the
discretion of the 12b-1 Trustees.
In conjunction with the Plan, a contingent deferred sales
charge may be imposed upon certain redemptions of shares
purchased after inception of the Plan. The charge in respect
of such redemptions made during the first four calendar
years following purchase of the shares will be as follows:
4% in the year of purchase; 3% in
the second year; 2% in the third year; and 1% in the fourth
year. These charges are not received by the Distributor and
will not reduce amounts paid to the Distributor under the
Plan. The staff of the Securities and Exchange Commission is
in the process of conducting a review of Rule 12b-1
practices in the investment company industry. This may
result in interpretive, regulatory, legislative or
enforcement responses which could affect the Trust's future
implementation of the Plan.
In addition, the National Association of Securities Dealers,
Inc. (the "NASD"), of which Meeschaert & Co., Inc. is a
member, proposed amendments to its Rules of Fair Practice in
April 1990 that would limit and otherwise affect asset-based
sales charges under Rule 12b-1 and, in September 1990,
revised the proposed amendments. In 1992, the SEC approved
such amendments, effective as of July 7, 1993. To the extent
that such amendments to Rule 12b-1 under the Investment
Company Act of 1940 or the NASD's Rules of Fair Practice are
inconsistent with the Plan, the Trust's Board of Trustees
will consider various actions, including proposing
amendments to or causing the Plan to be terminated.
HOW TO PURCHASE SHARES
Shares of the Trust may be purchased from Meeschaert & Co.,
Inc., 7022 Bennington Woods Drive, Pittsburgh, Pennsylvania
15237, the Trust's principal underwriter (the
"Distributor"), which also served as the Predecessor Fund's
principal underwriter from December 1, 1983 until the
effective date of the Reorganization. There is no sales
charge or commission payable by the investor. For new
shareholders initiating accounts, the minimum investment is
$500, except for exchanges of securities for Trust shares,
where the minimum is $5,000. (See "How to Exchange
Securities for Trust Shares" in the prospectus). There is
no minimum for shareholders making additional investments to
existing accounts. An application for use in making an
initial investment in the Trust appears in the back of the
Trust's Prospectus. The method for determining the
applicable price is described in the Prospectus under the
Section entitled "How to Purchase Shares". The Distributor
sells shares to the public as agent for the Trust and is the
sole principal underwriter for the Trust under a
Distributor's Contract dated October 5, 1990, the date on
which the contract was adopted by the Board of Trustees
pursuant to the Distribution Plan described above under
"Distribution of Shares." The Distributor's Contract is
substantially the same as the Distributor's underwriting
agreement with the Predecessor Fund. The contract
automatically terminates upon assignment (which includes the
transfer of a controlling block of the stock of the
Distributor) by either party. The contract also provides
that its continuation from year to year will require
approval by a majority of the Trust's shares or by the Board
of Trustees and, in addition to such approval, the approval,
by vote cast in person, at a meeting called for the purpose,
by a majority of the Independent Trustees. Under the
contract, the Distributor pays expenses of sales literature,
including copies of the prospectus of any Trust delivered to
investors, and the Trust pays for its registration and
registration of its shares under the federal Securities and
Investment Company Acts and state securities acts and other
expenses in which it has a direct interest.
During the years ended December 31, 1995, December 31,
1994 and December 31, 1993, the Distributor received no
sales commissions.\R
REDEMPTION AND REPURCHASE OF SHARES
Any shareholder may require the Trust to redeem his shares.
In addition the Trust maintains a continuous offer to
repurchase its shares. If a shareholder uses the services of
a broker in selling his shares in the over-the-counter
market, the broker may charge a reasonable fee for his
service. Redemptions and repurchases will be made in the
following manner:
1. Certificates for shares may be mailed or presented, duly
endorsed, with a written request that the Trust redeem the
shares, to the Trust's transfer agent at 7022 Bennington
Woods Drive, Pittsburgh, Pennsylvania 15237. If no
certificate has been issued and shares are held in an Open
Account with the Trust's transfer agent, a written request
that the Trust redeem such shares, with signatures
guaranteed in the manner described below, may be mailed or
presented as described above. The redemption price will be
the net asset value next determined after the certificates
and/or request are received.
2. A request for repurchase may be communicated to the Trust
by a shareholder through a broker. The repurchase price
will be the net asset value next determined after the
request is received by the Trust, provided that, if the
broker receives the request before noon and transmits it to
the Trust before 1:00 p.m. Eastern Time the same day, the
repurchase price will be the net asset value determined as
of 12:00 noon Eastern Time that day. If the broker receives
the request after noon, the repurchase price will be the net
asset value determined as of 12:00 noon Eastern Time the
following day. If an investor uses the services of a broker
in having his shares repurchased, the broker may charge a
reasonable fee for his services.
Payment for shares redeemed or repurchased will be made
within seven days after receipt of the shares, and/or
required documents, duly endorsed. The signature(s) on the
certificate or request must be guaranteed by a commercial
bank or trust company or by a member of the New York,
American, Pacific Coast, Boston or Chicago Stock Exchange. A
signature guarantee by a savings bank or savings and loan
association or notarization by a notary public is not
acceptable.
In order to insure proper authorization, the transfer agent
may request additional documents, such as, but not
restricted to, stock powers, trust instruments, certificates
of death, appointments as executor, certificates of
corporate authority and waiver of tax required in some
states from selling or exchanging estates before redeeming
shares.
Under unusual circumstances, when the Board of Trustees
deems it in the best interests of the Trust's shareholders,
the Trust may make payment for shares repurchased or
redeemed in whole or in part in securities or other assets
of the Trust taken at current values. If any such redemption
in kind is to be made, the Trust intends to make an election
pursuant to Rule 18(f)(1) under the Investment Company Act
of 1940. This will require the Trust to redeem with cash as
a shareholder's election in any case where the redemption
involves less than $250,000 (or 1% of the Trust's net assets
at the beginning of each ninety day period during which such
redemptions are in effect, if that amount is less than
$250,000). Should payment be made in securities, the
redeeming shareholder may incur brokerage costs in
converting such securities to cash.
The right of redemption may be suspended or the payment date
postponed when the New York Stock Exchange is closed for
other than customary weekend or holiday closings, or when
trading on the New York Stock Exchange is restricted, as
determined by the
Securities and Exchange Commission; for any period when an
emergency as defined by rules of the Commission exists; or
during any period when the Commission has, by order,
permitted such suspension. In case of a suspension of the
right of redemption, a shareholder who has tendered a
certificate for redemption or made a request for redemption
through a broker may withdraw his request or certificate or
he will receive payment of the net asset value determined
next after the suspension has been terminated.
A shareholder may receive more or less than he paid for his
shares, depending on the net asset value of the shares at
the time of redemption or repurchase.
DISTRIBUTIONS
The Trust is authorized to issue two classes of shares (See
"About the Trust" above). The Trust does not presently
intend to issue any more Class A Common Shares.
With respect to the Common Shares, the Trust distributes any
income dividends and any capital gain distributions in
additional Common Shares, or, at the option of the
shareholder, in cash. In accordance with his distribution
option, a shareholder of Common Shares may elect (1) to
receive both dividends and capital gain distributions in
additional Common Shares or (2) to receive dividends in cash
and capital gain distributions in additional Common Shares
or (3) to receive both dividends and capital gain
distributions in cash. A Trust shareholder of Common Shares
may change his distribution option at any time by notifying
the transfer agent in writing. To be effective with respect
to a particular dividend or distribution, the new
distribution option must be received by the Trust's transfer
agent at least 30 days prior to the close of the fiscal
year. All accounts with a cash dividend option will be
changed to reinvest both dividends and capital gains
automatically upon determination by the Trust's transfer
agent that the address of record for the account is not
current. Dividends and capital gain distributions received
in shares will be received by the Trust's transfer agent, as
agent for the shareholder, and credited to his Open Account
in full and fractional shares computed at the record date
closing net asset value.
TAXES
The Trust intends to qualify each year as a regulated
investment company under Subchapter M of the Internal
Revenue Code, as subsequently amended or reenacted. In order
to so qualify, the Trust, must, among other things, (i)
derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities, loans
and gains from the sale of securities; (ii) derive less than
30% of its gross income from gains from the sale or other
disposition of securities held for less than three months;
(iii) distribute at least 90% of its dividend, interest and
certain other taxable income each year; (iv) maintain at
least 50% of the value of its total assets in cash, cash
items, U. S. Government securities, securities of other
regulated investment companies, and other securities to the
extent that no more than 5% of its assets are invested in
the securities of one issuer and it owns no more than 10% of
the value of any issuer's voting securities, and (v) have no
more than 25% of its assets invested in the securities
(other than those of the U. S. Government or other regulated
investment companies) of any one issuer or of two or more
issuers which the Trust controls and which are engaged in
the same, similar or related trades and businesses. To the
extent the Trust qualifies for treatment as a regulated
investment company, the Trust will not be subject to Federal
income tax on income paid to its shareholders in the form of
dividends or capital gains distributions.
Dividends paid by the Trust will generally not qualify for
the
70% dividends-received deductions for corporations. The
Trust will notify shareholders each year of the amount of
dividends and distributions, including the amount of any
distribution of longterm capital gains.
The Trust will be subject to a nondeductible 4% excise tax
to the extent that its fails to distribute, with respect to
each calendar year, at least 98% of its ordinary income for
such calendar year and 98% of its capital gain net income
for the oneyear period ending on October 31 of such calendar
year. In addition, to the extent that the Trust fails to
distribute 100% of its ordinary and capital gain net income
with respect to any calendar year, the amount of such
shortfall is subject to such tax unless distributed with
respect to the following calendar year. For a distribution
to qualify as such with respect to a calendar year under the
foregoing rules, it must be declared by the Trust before
December 31 of the year and paid by the Trust before the
following February 1. Such distributions will be taxable to
taxable shareholders in the year the distributions are
declared rather than the year in which the distributions are
received.
The Trust's foreign investments may be subject to foreign
withholding taxes. The Trust will be entitled to claim a
deduction for such foreign withholding taxes for federal
income tax purposes. However, any such taxes will reduce
the income available for distribution to shareholders.
Under the Interest and Dividend Compliance Act of 1983, the
Trust will be required to withhold and remit to the U. S.
Treasury 20% of the dividends and proceeds of redemptions
paid with respect to any shareholder who fails to furnish
the Trust with a correct taxpayer identification number, who
underreported dividends or interest income, or who fails to
certify that he or she is not subject to such withholding.
An individual's tax identification number is his or her
social security number.
TAX TREATMENT OF OPTIONS
In connection with its operations, the Trust may write and
purchase options. The tax consequences of transactions in
options will vary depending upon whether the option expires
or is exercised, sold or closed. The tax consequences of
certain of these transactions were changed or clarified by
amendments made to the Internal Revenue Code by the Deficit
Reduction Act of 1984 (the "Act"). Although no final
regulations have been adopted under the Act, the following
discussion reflects the Trust's interpretation of applicable
changes made by the Act. The Trust will seek principally to
purchase or write options that will be classified as "equity
options" or "non equity options," to the extent consistent
with its investment objective and opportunities which appear
available. "Equity options" are any options to buy or sell
stock, or any option, the value of which is determined
directly or indirectly by reference to any stock (or group
of stocks) or stock index; equity options do not include any
options with respect to any group of stocks or stock index
if there is in effect a designation by the Commodity Futures
Trading Commission of a contract market for a contract based
on such group of stocks or index, or the Secretary of the
Treasury determines that such option meets the requirements
of law for such a designation. "Non equity options" are any
listed options which are not equity options.
Non equity options, defined as "Section 1256 Contracts"
under the Act, are subject to a marked-to-market rule for
federal income tax purposes. Under this rule, each such
option held by the Trust at the end of each fiscal year will
be treated as sold for fair market value on the last
business day or such fiscal year. As described below, the
character of gain or loss resulting from the sale,
disposition, closing out, expiration
or other termination of such options will be treated as long
term capital gain or loss to the extent of 60% thereof, and
as short-term capital gain or loss to the extent of 40%
thereof ("60/40 gain or loss"). Equity options, on the other
hand, are not subject to the marked-tomarket rule. The
character of gain or loss resulting from the sale,
disposition, closing out, expiration or other termination of
such equity options is not subject to the 60/40 gain or loss
rule.
The Trust will not realize gain or loss on the receipt or
payment of a premium. If a call option written by the Trust
expires without being exercised, the premium received will
be recognized by the Trust as a gain (60/40 for a non equity
call option or short-term for an equity call option). If a
put option purchased by the Trust expires without being
exercised, the premium paid will be recognized by the Trust
as a loss (60/40 for a non equity
put option or short- or long-term for an equity put option,
depending on the holding period of the put); if, however,
the Trust acquired the put option on the same day it
acquired the property identified as intended to be used in
exercising such put, the premium paid will be added to the
basis of the underlying securities. If a non equity or
equity call option written by the Trust is exercised (or a
non equity or equity put option is purchased by the Trust is
sold), the Trust will recognize a short or long-term capital
gain or loss depending on the holding period of the
underlying securities. If a non equity call option written
by the Trust or non equity put option purchased by the Trust
is closed (i.e., the Trust's obligations are terminated
other than through exercise or lapse), the Trust will
recognize 60/40 gain or loss. If an equity call option
written by the Trust is closed, the Trust will recognize
shortterm capital gain or loss; if an equity put option
purchased by the Trust is closed, the Trust will recognize
long or short-term capital gain or loss, depending on the
holding period of the put option.
Section 1092 of the Internal Revenue Code, which applies to
certain straddles, may affect the taxation of the Trust's
transactions in options on portfolio securities. As a result
of rules under that section, the Trust may be required to
postpone recognition of losses incurred in certain closing
purchase transactions until the year in which the other leg
of the straddle is closed. The Treasury Department has
issued temporary regulations on the holding period of
straddles held by regulated investment companies.
The Internal Revenue Service has ruled publicly that an
exchangetraded call option on a particular security is a
security for purpose of the 50% of assets diversification
test and that its issuer is the issuer of the underlying
security, not the writer of the option, for purposes of
diversification requirements.
In other private rulings, the Internal Revenue Service has
addressed other tax issues arising from investments by
regulated investment companies in options. In particular,
the Internal Revenue Service has stated in private rulings
that the gains recognized as a result of the deemed sale or
certain options under the marked-to-market rule (which are
treated as 60/40 gain) will not be treated as gains from the
sale or exchange of securities held for less than three
months, regardless of the actual holding period prior to
year end.
The legislative history of the Tax Reform Act of 1986
provides that income realized in connection with writing
covered and uncovered put and call options is intended by
Congress to be qualifying income for purposes of the 90%
passive income test. However, the requirement that less than
30% of the Trust's gross income be derived from gains from
the sale or other disposition of securities held for less
than three months will
restrict the Trust in its ability to write covered call
options on securities that it has held less than three
months, to write options that expire in less than three
months, to sell securities that have been held less than
three months, to effect closing purchase transactions with
respect to options that have been held less than three
months, and to effect closing purchase transactions with
respect to options that have been written less than three
months prior to such transactions. Consequently, in order to
avoid realizing a gain within the three-month period, the
Trust may be required to defer the closing out of an option
beyond the time when it might otherwise be advantageous to do
so.
The Tax Reform Act of 1986 revises the rules concerning gains
from sales of assets held less than three months in the case
of a "designated hedge." In the case of a "designated hedge,"
recognized gains may be offset by unrecognized declines in
value of the other leg of the hedge during the period of the
hedge for purposes of determining whether gains from sales of
securities
held for less than three months equal or exceed 30% of gross
income. For example, if a fund sells a one-month call at $95
on stock it owns which is worth $100 for $4, the stock
declines in value to $94 and the option is not exercised, the
$4 of recognized gain on lapse of the option is offset by the
$6 decline in value of the stock and there is no net gain for
purposes of the three-month gains test. The $4 is recognized
under the usual rules for other purposes. The Conference
Committee Report on the 1986 Act established procedures for
identification of a "designated hedge" prior to issuance of
regulations on the topic.
There are unanswered questions in the area. In particular,
since taxpayers other than the taxpayer requesting a
particular private ruling are not entitled to rely on it, the
Trust intends to keep its activity in options at a low volume
until the Service rules publicly, or the Treasury Department
issues final regulations, on open issues.
If, in any taxable year, the Trust fails to qualify as a
regulated investment company, the Trust would be taxed in the
same manner as an ordinary corporation and distributions to
its shareholders would not be deductible by the Trust in
computing its taxable income. In addition, in the event of
such failure to qualify, the Trust's distributions, to the
extent derived from the Trust's current or accumulated
earnings and profits, would be taxable to its shareholders as
ordinary income dividends, even if those dividends might
otherwise have been considered distributions of capital
gains.
PORTFOLIO SECURITY TRANSACTIONS
Decisions to buy and sell portfolio securities for the Trust
are made pursuant to recommendations by Anchor Investment
Management Corporation, the Trust's Investment Adviser. The
Trust, through the Investment Adviser, seeks to execute
portfolio security transactions on the most favorable terms
and in the most effective manner possible. In seeking such
execution, the Investment Adviser will use its best judgment
in evaluating the terms of a transaction and will give
consideration to various relevant factors, including without
limitation the size and type of the transaction, the nature
and character of the markets for the security, the
confidentiality, speed and certainty of effective execution
required for the transaction, the reputation, experience and
financial condition of the broker-dealer and the quality of
services rendered by the broker-dealer in other transactions,
and the reasonableness of the brokerage commission, if any.
It is expected that on frequent occasions, there will be many
broker-dealer firms which will meet the foregoing criteria
for a particular transaction. In selecting among such firms,
the
Trust, through the Investment Adviser, may give consideration
to those firms which have sold, or are selling, shares of the
Trust. In addition, the Investment Adviser may allocate
Trust brokerage business on the basis of brokerage and
research services and other information provided by broker-
dealer firms, which may involve the payment of reasonable
brokerage commissions in excess of those chargeable by other
brokerdealer firms for effecting the same transactions. Such
"brokerage and research services" may be used for other of
the Investment Adviser's advisory accounts and all such
services may not be used by the Investment Adviser in
managing the Trust. The term "brokerage and research
services" includes service as to the value of securities; the
advisability of investing in, purchasing or selling
securities; the availability of securities, or purchasers or
sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors
and trends; portfolio strategy and the performance of
account; and effecting securities transactions, and
performing functions incidental thereto (such as clearance
and settlement).
The policy referred to above of considering sales or shares
of the Trust as one of the factors in the selection of broker
dealer firms to execute portfolio transactions, subject to
the requirement of seeking best execution, is specifically
permitted by a rule of the National Association of Securities
Dealers, Inc. The rule also provides, however, that no member
firm shall favor or disfavor the distribution of shares of
any particular fund or group of funds on the basis of
brokerage commissions received or expected by such firm from
any source. The Trust and one or more of the other investment
companies or accounts for which the Investment Adviser or its
affiliates render investment advisory services on occasion
may simultaneously be engaged in the purchase or sale of the
same security. In such event the transactions in such
security normally will be averaged as to price and allocated
as to amount among the several clients or accounts in a
manner deemed equitable to all. It is recognized that in
some cases this system could have a detrimental effect on the
price or volume of the security as far as the Trust is
concerned. In other cases, however, it is believed that the
ability to participate in volume transactions will produce
better executions for the Trust.
To the extent consistent with the policy of seeking best
price and execution, a portion of the Trust's portfolio
transactions may be executed through Meeschaert & Co., Inc.,
the Trust's principal underwriter and an affiliate of the
Investment Adviser. In the event that this occurs, it will be
on the basis of what management believes to be current
information as to rates which are generally competitive with
the rates available from other responsible brokers and the
lowest rates, if any, currently offered by Meeschaert & Co.,
Inc. The Board of Trustees has not considered whether or not
any portion of the brokerage commissions which may be
received by Meeschaert & Co., Inc. in respect of the Trust's
portfolio transactions should be required to be applied in
order to reduce advisory fees paid by the Trust. In any event
no such practice shall be required unless approved by the
vote of a majority of the Independent Trustees. Due to the
inception of fully negotiated brokerage commissions on May 1,
1975, the practicality and effectiveness of any such practice
in the future is highly doubtful. The Distributor will not,
as a principal, enter into any securities transactions with
the Trust.
During 1995, 1994, and 1993, commissions paid
to brokerdealers by the Trust were $11,093, $33,155, and
$42,255, respectively. During 1995, 1994, and 1993, brokerage
commissions of $ 8,090, $ 19,821, and $24,780, respectively,
were paid by the Trust to Meeschaert &
Co., Inc. For the year ended December 31, 1995, the
percentage of total commissions paid to Meeschaert & Co.,
Inc. was 72.9%. During 1995 the Trust's purchases and sales
of securities, exclusive of United States government
securities and short-term notes, amounted to $3,426,900 and
$3,143,345, respectively. 68.0% of such purchases and sales
involved the payment of commissions with respect to
transactions effected through Meeschaert & Co., Inc. Part of
the Trust's portfolio transactions in 1995 were executed on a
net basis without payment of brokerage commissions because
the Investment Adviser determined that better prices and
executions were available through this method. Meeschaert &
Co., Inc. received no compensation or other payment, either
as agent or principal, in these transactions.\R
The portfolio turnover rates for 1995, 1994, and 1993,
were 40%, 63%, and 84%, respectively. \R
OTHER INFORMATION
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-PAYING AGENT
All securities, cash and other assets of the Trust are
received, held in custody and delivered or distributed by
the Trust's custodian bank, Investors Bank & Trust Company,
Financial Product Services, 1 Lincoln Plaza, Boston,
Massachusetts 02205 provided
that in cases where foreign securities must, as a practical
matter, be held abroad, the Trust's custodian bank and the
Trust will make appropriate arrangements so that such
securities may be legally held abroad. The Trust's
custodian bank does not decide on purchases or sales of
portfolio securities or the making of distributions. Anchor
Investment Management Corporation, 7022 Bennington Woods
Drive, Pittsburgh, Pennsylvania 15237, serves as transfer
agent and dividend-paying agent for the Trust.
INDEPENDENT PUBLIC ACCOUNTANTS
For the fiscal year ending December 31, 1993, the Trust
employed Livingston & Haynes, P.C., Two Sun Life Park,
Wellesley Hills, Massachusetts 02181, to certify its
financial statements and to prepare its federal and state
income tax returns.
REGISTRATION STATEMENT
This Statement of Additional Information does not contain all
the information set forth in the Registration Statement and
the exhibits and schedules relating thereto, which the Trust
has filed with, and which are available at the Securities and
Exchange Commission, Washington, D.C., under the Securities
Act of 1933, as amended, and the Investment Company Act of
1940, as amended, to which reference is hereby made.
FINANCIAL STATEMENTS
The financial statements and related report of Livingston
& Haynes, P.C., independent public accountants, contained in
Anchor Capital Accumulation Trust's Annual Report to
shareholders for the year ended December 31, 1995, are hereby
incorporated by reference. A copy of the Trust's Annual
Report may be obtained without charge by writing to Anchor
Investment Management Corporation, 7022 Bennington Woods
Drive, Pittsburgh, Pennsylvania 15237, or by calling Anchor
Investment Management Corporation at (412) 635-7610. \R
Part C. Other Information.
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Selected Per Share Data and Ratios for a
share
outstanding throughout each period ended
December 31, for the ten years ended
December 31, 1995 \R
Included in Part B:
Report of Independent Public Accountants*
Statement of Assets and Liabilities
December
31,
1995* \R
Statement of Operations for the year ended
December 31, 1995* \R
Statement of Changes in Net Assets for the
years
ended December 31, 1995
and December 31, 1994* \R
Schedule of Investments, December 31, 1995*
\R
Notes to Financial Statements*
* Included in
Registrant's
annual report to shareholders for December
31, 1995
a copy of which is included as Exhibit 12
and incorporated herein by reference thereto. \R
(b) Exhibits:
Exhibit 11. Consent of Independent Public Accountants.
Exhibit 12. Trust's Annual Reports to Shareholders,
December 31, 1995. \R
Exhibit 17. Power of Attorney, dated April 5, 1996. \R
Item 25. Persons controlled by or under common Control with
Registrant.
(a) No person controls the Registrant.
(b) The following table sets forth the name, address
and percentage of ownership at March 31, 1996, of each
person who then owned of record 5% or more of any
class of the Registrant's outstanding shares:
Name: Address: Percentage
Ownership:
Bank of New York PO Box 1066 66.96%
Wall Street Station
New York, NY 10268
\R
At March 31, 1996, officers and Trustees of the Registrant
as a
group owned less than 1% of the outstanding Common shares.
Item 26. Number of Holders of Securities.
The number of holders of record of securities of the
Registrant as of March 31, 1996 is as follows:
Title of Class:Number of Holders of Record:
Common Shares 486
Class A Shares 0 \R
Item 27. Indemnification.
No amendment. The information was filed in Item 4 of
Amendment No. 4
Item 28. Business and Other connections of Investment
Advisor.
The information in the Statement of Additional
Information under the caption of "Management-
Investment Adviser" is hereby incorporated herein by
this reference thereto.
Item 29. Principal Underwriters.
(a) The Distributor currently acts as distributor
for the following investment companies:
Anchor Strategic Assets Trust
S.E.C. file # 811-5963
Anchor International Bond Trust
S.E.C. file # 811-4644
Anchor Resource and Commodity Trust
S.E.C. file # 811-8706
(b) See the answer to Item 21 of Part B, which is
herein incorporated by this
reference thereto.
Item 30. Location of Accounts and Records.
Persons maintaining physical possession of
accounts, books, and other documents required to be
maintained by Section 31(a) of the Investment Company
Act of 1940 and rules promulgated thereunder include
Registrant's Secretary, David W.C. Putnam;
Registrant's Investment Advisor, Anchor Investment
Management Corporation; and Registrant's custodian,
Investors Bank & Trust company. The address of the
Secretary is 10 Langley Road, Suite 404, Newton
Centre, Massachusetts 02159; the address of the
investment adviser and the transfer agent and dividend
paying agent is 7022 Bennington Woods Drive,
Pittsburgh, Pennsylvania 15237; and the address of the
custodian is Financial Product Services, 1 Lincoln
Plaza, Boston, Massachusetts 02205.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting on the question
of removal of a Trustee or Trustees when requested in
writing to do so by the holders of at least 10% of the
Registrant's outstanding shares of common stock and, in
connection with such meeting, to comply with the
provisions of Section 16(c) of the Investment Company
Act of 1940 relating to shareholder communications.
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/x/ Pre-Effective Amendment No.
/ / Post-Effective Amendment No. 45
/x/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
/x/
Amendment No. 23
/x/
________________________________________
ANCHOR CAPITAL ACCUMULATION TRUST
________________________________________
EXHIBITS
INDEX TO EXHIBITS
Exhibit Number Description of Exhibit
(1) Restated Declaration of Trust, as
amended. (Previously filed as Exhibit 1 to Amendment No. 10)
(2) By-Laws of the Registrant, as
amended. (Previously filed as Exhibit 2
to Amendment No. 10)
(3) Not applicable.
(4) Specimen Certificates representing
Common Shares and Class A Common Shares
of Beneficial Interest of the
Registrant. (Previously filed as Exhibit
4 to Amendment No. 10)
(5) Investment Advisory Agreement
between the Registrant and Anchor
Investment Management Corporation.
(Previously filed as Exhibit 5 to
Amendment No. 17)
(6) Distributor's Contract
between the Registrant and
Meeschaert & Co., Inc.
(Previously filed as Exhibit 6
to Amendment No. 17)
(7) Not applicable.
(8) Custodian Agreement between the
Registrant and Investors Bank & Trust
Company. (Previously filed as Exhibit 8
to Amendment No. 10)
(9) Transfer Agency and Service
Agreement between the Registrant and
Anchor Investment Management
Corporation. (Previously filed as
Exhibit 9 to
Amendment No. 16)
(10) Opinion and Consent of Counsel.
(Previously filed as Exhibit 10 to
Amendment No. 10)
(11) Consent of Independent Public
Accountants.
(12) Trust's Annual Report to
Shareholders, December 31, 1995.
(13) Not applicable. (14) Not
applicable.
(15) Distribution Plan of the Registrant. (Previously filed
as Exhibit 15 to Amendment No. 10)
(16) Not applicable.
(17) Power of Attorney, dated April 5,
1996.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant
certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to
Rule 485(b) and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Pittsburgh and the Commonwealth of Pennsylvania on the 29nd
day of April, 1996.
ANCHOR CAPITAL ACCUMULATION
TRUST
By:
______________________________
David Y. Williams,
President
Pursuant to the Securities Act of 1933, this Amendment to
this Registration Statement has been signed below by the
following persons in the capacities and on the date
indicated.
Signature Title Date
* President, Secretary, and April
19,
1996
David W.C. Putnam Trustee (Principle Executive Officer)
* Treasurer (Principle April 19,
1996
J. Stephen Putnam Financial Officer)
* Trustee April 19,
1996
Maurice A. Donahue
* Trustee April 19,
1996
David Y. Williams
*By:
Peter K. Blume
Attorney-in-Fact April 29,
1996
_______________________________
1This Application and Registration Form is designed for cash
purchases of Trust shares. The procedure for exchange
of securities for Trust shares is described in
the Trust Prospectus.
Wellesley Hills - Boston - Ware
Exhibit 11
Livingston & Haynes, P.C.
Certified Public Accountants
Two Sun Life Park
Wellesley Hills, MA 02181-5693
Tel: (617) 237-3339
Fax: (617) 237-3606
Member AICPA Division for CPA Firms
Private Companies Practice Section
SEC Practice Section
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of
Anchor Capital Accumulation Trust on the amended Form N-lA
our report dated January 12, 1996, appearing in the
prospectus, which is part of such Registration Statement,
and to the reference to us under the captions, "Selected Per
Share Data and Ratios".
Livingston & Haynes P.C.
Wellesley Hills, Massachusetts April 25,1996
ANCHOR
CAPITAL
ACCUMULATION
TRUST
ANNUAL REPORT
DECEMBER 31, 1995
ASSETS:
Investments at quoted market value (cost
$9,582,323; $12,284,
see Schedule of Investments, Notes 1, 2, & 5) 267
Cash 178,150
Dividends and interest receivable 2,166
Other assets 1,769
Total assets 12,466,3
52
LIABILITIES:
Payable for capital shares redeemed 6,138
Accrued expenses and other liabilities (Note 3 27,823
)
Total liabilities 33,961
NET ASSETS:
Capital stock (unlimited shares authorized at
$1.00 par value, 9,333,13
amount paid in on 539,341 shares outstanding) 0
(Note 1)
Accumulated undistributed net investment 1,027,09
income 4
Accumulated realized loss from security (629,777
transactions, net )
Net unrealized appreciation in value of 2,701,94
investments (Note 2) 4
Net assets (equivalent to $23.05 per share,
based on $12,432,
391
539,341 capital shares outstanding)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Anchor
Capital Accumulation Trust, hereby severally constitute
David W.C. Putnam, David Y. Williams, and Peter K. Blume,
and each of them singly, our true and lawful attorneys, with
full power to them and each of them singly to sign for us,
and in our names and in the capacity mentioned below, any
and all Registration Statements and/or Amendments to the
Registration Statements, filed with the Securities and
Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys to
any and all amendments to said Registration Statement, and
all additional Registration Statements and Amendments
thereto.
Witness our hands and common seal on the dates set
forth below*
Signature
Title Date
David W.C. Putnam
Chairman and Trustee April 19, 1995
David W.C. Putnam
J. Stephen Putnam
Treasurer (Principle April 19, 1995
J. Stephen Putnam
Financial Officer)
Spencer H. LeMenager
Secretary and Trustee April 19, 1995
Spencer H. LeMenager
Maurice A. Donahue
Trustee April 19,
1995
Maurice A. Donahue
David Y. Williams
President and Trustee April 19, 1995
David Y. Williams
* This Power of Attorney may be executed in several
counterparts, each of which shall be regarded as an original
and all of which taken together shall constitute one and the
same Power of Attorney, and any of the parties hereto may
execute this Power of Attorney by signing any such
counterpart.
