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. |_|
Post-Effective Amendment No. 47 |X|
and
REGISTRATION STATEMENT UNDER THE |X|
INVESTMENT COMPANY ACT OF 1940
Amendment No. 25 |X|
(Check appropriate box or boxes)
ANCHOR CAPITAL ACCUMULATION TRUST
(Exact Name of Registrant as Specified in Charter)
579 Pleasant St., Ste 4
Paxton, Massachusetts 01612
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (508) 831-1171
It is proposed that this filing will become effective
(Check appropriate box)
|X|immediately upon filing pursuant to Paragraph (b) of Rule 485
|_| on ____________________ pursuant to Paragraph (b) |_| 60 days after filing
pursuant to Paragraph (a)(1) |_| on _______ pursuant to Paragraph (a)(1) |_| 75
days after filing pursuant to paragraph (a)(2)
|_|on ________ pursuant to Paragraph (a)(2) of Rule 485 or 486
Peter K. Blume, Esq.
Thorpe, Reed & Armstrong
One Riverfront Center
Pittsburgh, PA 15222
(Name and Address of Agent for Service)
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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, 1997 will be
filed on or before June 30, 1998.
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Page 1 of 65 pages. Exhibit Index on page 48.
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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 Statement
Information of Selected Per Share
Data.
Item 3A. Financial Data Schedule.
Item 4. General Description of Cover Page; About the Trust;
Registrant 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 5A. Management's Discussion of Fund Performance.
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
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(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 Not Applicable
History
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
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(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 Not Applicable
Data
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.
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ANCHOR CAPITAL ACCUMULATION TRUST
PROSPECTUS
Dated May 1, 1998
Anchor Investment Management Corporation
Investment Adviser
579 Pleasant Street, Suite 4
Paxton, Massachusetts 01612
Anchor Capital Accumulation Trust (the "Trust"), formerly known as Meeschaert
Capital Accumulation Trust, is a diversified open-end 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, but not implemented, 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 579 Pleasant Street,
Suite 4, Paxton, Massachusetts 01612 and the telephone number is (508) 831-1171.
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.
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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, 1998, which has been filed with the Securities and Exchange
Commission. The Statement and the Trust's Annual Report for 1997
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.
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TABLE OF TRUST FEES AND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchase .. None
Maximum 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%
Maximum Sales Load Imposed on Reinvested
Dividends............................... None
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........................... 0.40%
Total Trust Operating Expenses........... 1.15%
EXAMPLE
1 Year 3 Years 5 Years 10 Years
You would pay the following
expenses on a $1,000 investment
assuming (1) 5% annual return and (2)
redemption at the end of each time
period: $52 $57 $63 $140
You would pay the following
expenses on the same investment,
assuming no redemption: $12 $37 $63 $140
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, and will not do so
without shareholders' approval of the Plan.
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TABLE OF CONTENTS
TABLE OF TRUST FEES AND EXPENSES:............................3
ANNUAL TRUST OPERATING EXPENSES..............................3
CONDENSED FINANCIAL INFORMATION & SELECTED PER SHARE DATA
AND RATIOS...................................................5
Financial Highlights......................................5
ABOUT THE TRUST..............................................6
INVESTMENT OBJECTIVE AND POLICIES............................6
SPECIALIZED INVESTMENT TECHNIQUES............................6
Foreign Securities........................................6
Option Transactions Involving Portfolio Securities and
Securities Indices........................................7
Options on Foreign Currencies.............................7
Financial Futures and Related Options.....................7
Lending of Portfolio Securities...........................8
Repurchase Agreements.....................................8
MANAGEMENT...................................................9
Trustees..................................................9
Investment Adviser........................................9
Expenses..................................................9
Brokerage................................................10
Management Discussion of Fund Performance................10
HOW TO PURCHASE SHARES......................................11
DISTRIBUTION OF SHARES......................................11
HOW TO EXCHANGE SECURITIES FOR TRUST SHARES.................12
REDEMPTION AND REPURCHASE OF SHARES.........................13
DETERMINATION OF NET ASSET VALUE............................14
SERVICES FOR SHAREHOLDERS...................................14
Open Accounts............................................14
Invest-By-Mail...........................................14
DISTRIBUTIONS...............................................14
TAXES.......................................................15
OTHER INFORMATION...........................................15
Custodian, Transfer Agent and Dividend-Paying Agent......15
Capitalization...........................................15
Shareholder Inquiries....................................16
APPLICATION FORM............................................17
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CONDENSED FINANCIAL INFORMATION AND SELECTED PER SHARE DATA AND RATIOS
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(for a share outstanding throughout each period ended December 31,)
The following information for the eight years ended December 31, 1997 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 two years ended December 31, 1989 was examined by
Arthur Andersen & Co., independent accountants.
Financial Highlights
Year Ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net Asset Value,
Beginning of year 26.30 23.05 20.07 20.67 23.40 24.47 21.79 21.75 23.71 25.46
Investment
income........ 0.59 1.33 (1.17) 3.49 0.05 0.29 0.79 1.63 2.70 1.28
Net investment
income (loss).. 0.12 0.41 (0.53) 1.39 0.02 0.12 0.57 1.34 2.32 1.00
Net realized
and unrealized
gain (loss) on
investments.... 3.30 3.06 4.32 (1.72) (0.47) 1.60 3.10 0.52 1.95 (0.43)
Total From
Investment
OPerations...... 3.42 3.47 3.79 (0.33) (0.45) 1.72 3.67 1.86 4.27 0.57
Distributions
to shareholders:
From netinvestment
income (loss)..(0.07)(0.13)(0.19) (0.23) (0.17)(0.31) -- (1.25) (2.17)(0.98)
From net realized
gains on
investments.....(0.79)(0.09)(0.62) (0.04)(2.11)(2.48)(0.99)(0.57)(4.06)(1.34)
Total
Distributions.. (0.86)(0.22)(0.81) (0.27)(2.28)(2.79)(0.99)(1.82)(6.23)(2.32)
Net increase
(decrease)in
net asset value..2.56 3.25 2.98 (0.60) (2.73) (1.07)2.68 0.04 (1.96) (1.75)
Net Asset Value,
End of Year.... 28.86 26.30 23.05 20.07 20.6 23.40 24.47 21.7 21.75 23.71
Total Return.... 13.04% 15.05% 18.91%(1.58%)(2.97%)7.15% 16.85% 8.56 18.05%2.24%
Ratios/Supplemental
Data
Net Assets, End
of period(in
Thousands) 13,309 12,353 12,432 7,874 14,512 15,057 22,550 19,652 22,606 36,467
Ratio of expenses
to average net
assets......... 1.15% 1.10%1.11% 1.10% 1.10%1.08% 1.01% 1.07%0.84% 1.03%
Ratio of net
investment income
to avareage net
assets......... 0.28% 0.49%0.92% 0.73% 0.65%0.73% 2.57% 4.98%5.05% 3.69%
Portfolio
turnover....... 0.21 0.21 0.40 0.63 0.84 0.74 0.50 1.00 0.83 2.49
Average commission
Rate Paid.......0.0400 0.065 0.0400 0.0606 0.056 0.0540 0.0319 0.04 -- --
Per share data and ratios assuming no
waiver of advisory fees:
Net investment
income........... $0.56 $1.26
Ratio of expenses
to average net
assets........... 1.03% 1.32%
Ratio of net
investment income
to average net
assets........... 2.55% 4.73%
* 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.
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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
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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.
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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 well-capitalized 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
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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 background 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
579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612.
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 Linden Investment Advisors, S.A., an
investment advisory firm headquartered in Belgium. He has managed other
portfolios for the Meeschaert Organization (as hereafter defined) for more than
nineteen years. He has been in the investment counseling 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, 1997, the Investment
Adviser received investment advisory fees of $96,272 for its services to the
Trust, which represented 0.75% of the Trust's average net assets.
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 privately-owned 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
12.
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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, 1997,
expenses borne by the Trust amounted to $148,051, which represented 1.15% of the
Trust's average net assets.
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 broker-dealer 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
From a low of 82% invested in stocks in March of 1997, the Trust went to a
91% equity investment level at the end of the year. A portion of the Trust's
investment was sold in Biochem Pharma, Incorporated, the Canadian biotechnology
company which discovered a prominent drug against AIDS. During the third
quarter, the fund took advantage of the consolidation in the technology sector
by buying into two leading companies, Cisco Systems and Parametric Technology,
which we consider to be good long term investments. The Trust's investment
strategy continued to focus on so called mid-capitalization growth stocks. These
mid-cap stocks underperformed the overall U.S. equity indices in 1997, causing
the Trust's performance to trail the performance of the general equity markets.
13.
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Comparison of the Change in Value of a $10,000 Investment in the Anchor
Capital Accumulation Trust and the Standard & Poor's 500 Index
[GRAPHIC OMITTED]
HOW TO PURCHASE SHARES
Shares of the Trust may be purchased from Meeschaert & Co., Inc., 579 Pleasant
Street, Suite 4, Paxton, Massachusetts 01612, 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
14.
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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, 1997, the Trust paid no fees under the Plan to
the Distributor.
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
Attn: Anchor Capital Accumulation Trust
200 Clarendon Street, 16th Floor, Mail Code ADM 27
Boston, Massachusetts 02116
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.
15.
<PAGE>
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 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612. 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.
16.
<PAGE>
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, 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612
(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
17.
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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 long-term 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%
dividends-received 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, 200 Clarendon St., 16th Floor, Mail Code ADM 27,
Boston, Massachusetts 02116 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, 579 Pleasant Street, Suite 4, Paxton, Massachusetts
01612, 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.
18.
<PAGE>
Shareholder Inquiries
For further information about the Trust, investors should call (508)
831-1171. Written inquiries should be addressed to Anchor Capital
Accumulation Trust, 579 Pleasant Street, Suite 4, Paxton, Massachusetts
01612.
19.
<PAGE>
ANCHOR CAPITAL ACCUMULATION TRUST
(the "Trust")
MEESCHAERT & CO., INC.
("Distributor")
APPLICATION AND REGISTRATION FORM1
Send Application to
Meeschaert & Co., Inc., 579 Pleasant Street, Suite 4, Paxton,
Massachusetts 01612
Date: ___________________
I. ACCOUNT REGISTRATION:
[GRAPHIC OMITTED] New: Social Security or Tax Number__________________
(if two names below, circle which one has this number.)
[GRAPHIC OMITTED] 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:
[GRAPHIC OMITTED] A check for $_______________ payable to the Trust
attached.
or
[GRAPHIC OMITTED] 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.
[GRAPHIC OMITTED] A. Dividends and capital gains in additional full
and fractional shares credited to shareholder's account, no certificates
issued.
OR
[GRAPHIC OMITTED] B. Dividends in cash; capital gains in additional
full and fractional shares credited to shareholder's account; no
certificates issued.
OR
[GRAPHIC OMITTED] C. Dividends in cash; capital gains in cash.
(Certificates will be issued to shareholders requesting such in writing
from the Transfer Agent.)
- -----------------------------------------------
1 This 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.
20.
<PAGE>
III. INVEST-BY-MAIL SERVICE: for periodic share accumulation (whether
or not dividends are received in shares)
[GRAPHIC OMITTED] 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 Authorized Signature City State Zip
Number of Dealer
21.
<PAGE>
ANCHOR CAPITAL ACCUMULATION TRUST
579 Pleasant Street, Suite 4
Paxton, Massachusetts 01612
(508) 831-1171
STATEMENT OF ADDITIONAL INFORMATION
Dated May 1, 1998
This Statement of Additional Information supplements the information contained
in the current Prospectus of Anchor Capital Accumulation Trust (the "Trust")
dated May 1, 1998, 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, 1997. 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.
22.
<PAGE>
TABLE OF CONTENTS
ABOUT THE TRUST..............................................3
ADDITIONAL INFORMATION CONCERNING INVESTMENT
POLICIES AND RISK CONSIDERATIONS.............................3
Risks of Investments in Foreign Securities.............4
Option Transactions....................................4
Index Options..........................................4
Risks of Options on Indices............................5
Options on Foreign Currencies..........................6
Risks of Foreign Currency Option Activities............7
Special Risks of Foreign Currency Options..............7
Financial Futures Contracts and Related Options........9
Limitations on Futures Contracts and Related Options...9
Risks Relating to Futures Contracts and Related
Options..............................................10
INVESTMENT RESTRICTIONS.....................................11
MANAGEMENT..................................................12
Officers and Trustees.................................12
Remuneration of Officers and Trustees.................13
Investment Advisory Contract..........................14
Investment Adviser....................................14
DETERMINATION OF NET ASSET VALUE............................15
DISTRIBUTION OF SHARES......................................15
HOW TO PURCHASE SHARES......................................16
REDEMPTION AND REPURCHASE OF SHARES.........................17
DISTRIBUTIONS...............................................17
TAXES.......................................................18
Tax Treatment of Options..............................18
PORTFOLIO SECURITY TRANSACTIONS.............................20
OTHER INFORMATION...........................................21
Custodian, Transfer Agent and Dividend-Paying Agent...21
Independent Public Accountants........................21
Registration Statement................................21
FINANCIAL STATEMENTS........................................21
23.
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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.
24.
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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
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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
one-point 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
"in-the-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
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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.
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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.
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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, around-the-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
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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.
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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
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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 wholly-owned 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.
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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 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612, 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
Newton Centre, MA 02159 Trust, 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.
and subsidiaries.
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SPENCER H. LE MENAGER Secretary and President, Equity, Inc.;
222 Wisconsin Avenue Trustee formerly President, Howe,
P.O. Box 390 Barnes & Johnson Inc.
Lake Forest, IL 60045 (securities dealer).
MAURICE A. DONAHUE Trustee Director and Professor,
50 Holy Family Road Institute for Governmental
Holyoke, MA 01040 Services and Walsh-Saltonstall
Professor of Practical
Politics, University of
Massachusetts, Director
Vanguard Savings Bank, Former
Member, Massachusetts House of
Representatives, Former Member
and President, Massachusetts
Senate.
DAVID Y. WILLIAMS* President and President and Director,
579 Pleasant St., Ste 4 Trustee Anchor Investment Management
Paxton, MA 01612 Corporation; 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; Director, F.L.Putnam
St. Petersburg, FL 33733 Securities Company, Inc.
Formerly, President and
Director, EPB, Inc. and Vice
President, Burgess & Leith
Incorporated.
CHRISTOPHER Y. WILLIAMS Vice President Vice President and Secretary,
579 Pleasant St., Ste 4 and Asst. Secretary Anchor Investment Management
Paxton, MA 01612 Corporation; Vice President
and Secretary, Meeschaert & Co.
Inc.(securities dealer);
President and Secretary,
Cardinal Investment Services,
Inc.
JOSEPH C. WILLIAMS Vice President Vice President and Treasurer,
579 Pleasant St., Ste 4 and Asst. Treasurer Anchor Investment Management
Paxton, MA 01612 Corporation; Vice President
and Treasurer, Meeschaert & Co.
Inc.(securities dealer); Vice
President and Treasurer,
Cardinal Investment Services,
Inc.
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, 1997.
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.
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. LeMenager and Donahue. The
Trust does not have a nominating or compensation committee.
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Remuneration of Officers and Trustees
The Trust does not and 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 does pay an annual fee of not more than $3,000 to
each Trustee who is not such an "interested person". The Trust did not
compensate any person, including directors, officers, or employees, in excess of
$60,000.00 during its most recent fiscal year.
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 $77,815,
$91,717 and $96,272 for services rendered in 1995, 1996 and 1997, respectively.
For the fiscal year ended December 31, 1991 the Investment Adviser voluntarily
elected to return advisory fees of $3,200 to the Trust.
The Investment Advisory Contract which remained in effect until November 14,
1997, has been extended by a vote of a majority of the Trust's disinterested
trustees to November 1998. 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).
Investment Adviser
The Investment Adviser, Anchor Investment Management Corporation, formerly
Meeschaert Investment Management Corporation, is located at 579 Pleasant Street,
Suite 4, Paxton, Massachusetts 01612. 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.
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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 Linden Investment Advisors, S.A. 67 Avenue
Terlinden, La Hulpe, Belgium B1310 (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, 1997, the Trust paid no fees under the Plan to
the Distributor.
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
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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 12b-1 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., 579 Pleasant
Street, Suite 4, Paxton, Massachusetts 01612, 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
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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, 1997, December 31, 1996 and December 31,
1995, the Distributor received no sales commissions.
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 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612. 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.
38.
<PAGE>
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 long-term 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 one-year 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.
39.
<PAGE>
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-to-market 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 short-term 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 exchange-traded 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
40.
<PAGE>
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 broker-dealer 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.
41.
<PAGE>
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 1997, 1996, and 1995, commissions paid to broker-dealers by the Trust
were $1,760, $8,725, and $11,093, respectively. During 1997, 1996, and 1995,
brokerage commissions of $1,760, $8,725, and $8,090, respectively, were paid by
the Trust to Meeschaert & Co., Inc. For the year ended December 31, 1997, the
percentage of total commissions paid to Meeschaert & Co., Inc. was 100.0%.
During 1997 the Trust's purchases and sales of securities, exclusive of United
States government securities and short-term notes, amounted to $776,415 and
$484,139, respectively. 100.0% of such purchases and sales involved the payment
of commissions with respect to transactions effected through Meeschaert & Co.,
Inc.
The portfolio turnover rates for 1997, 1996, 1995, and 1994, were 4%, 21%,
40%, and 63%, respectively.
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, 200 Clarendon Street, 16th
Floor, Boston, Massachusetts 02116 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, 579 Pleasant Street, Suite 4, Paxton,
Massachusetts 01612, serves as transfer agent and dividend-paying agent for the
Trust.
Independent Public Accountants
For the fiscal year ending December 31, 1997, the Trust employed Livingston &
Haynes, P.C., 40 Grove Street, Wellesley, 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, 1997, 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, 579
Pleasant Street, Suite 4, Paxton, Massachusetts 01612, or by calling Anchor
Investment Management Corporation at (508) 831-1171.
42
<PAGE>
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, 1996
Included in Part B:
Report of Independent Public Accountants* Statement of Assets
and Liabilities December 31,1997* Statement of Operations for
the year ended December 31, 1997* Statement of Changes in Net
Assets for the years ended December 31, 1997 and December 31,
1996* Schedule of Investments, December 31, 1997* Notes to
Financial Statements*
* Included in Registrant's annual report to shareholders for
December 31, 1997 a copy of which is included as Exhibit 12 and
incorporated herein by reference thereto.
(b) Exhibits:
Exhibit 11. Consent of Independent Public Accountants.
Exhibit 12. Trust's Annual Reports to Shareholders, December 31, 1997.
Exhibit 17. Power of Attorney, dated April 19, 1998 and Certified Resolutions.
Exhibit 27. Financial Data Schedule.
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, 1998, 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 78.84%
Wall Street Station
New York, NY 10268
Lazard Freres & Co. 120 Broadway
New York, NY 10271 6.86%
At March 31, 1998, officers and Trustees of the Registrant as a group owned
less than 1% of the outstanding Common shares.
43
<PAGE>
Item 26. Number of Holders of Securities.
The number of holders of record of securities of the Registrant as of
March 31, 1998 is as follows:
Title of Class:Number of Holders of Record:
Common Shares 464
Class A Shares 0
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 400, Newton Centre, Massachusetts 02159; the address of the
investment adviser and the transfer agent and dividend paying agent is
579 Pleasant St., Ste 4, Paxton, Massachusetts 01612; and the address of
the custodian is Financial Product Services, 200 Clarendon St., 16th
Floor, Boston, Massachusetts 02116.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
44
<PAGE>
(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.
45
<PAGE>
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 Paxton and the Commonwealth of Massachusetts on the 19th day of April, 1998.
ANCHOR CAPITAL ACCUMULATION TRUST
By: DAVID Y. WILLIAMS
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
DAVID W.C. PUTNAM Chairman and Trustee April 19, 1998
David W. C. Putnam
J. STEPHEN PUTNAM Treasurer (Principle April 19, 1998
J. Stephen Putnam Financial Officer)
MAURICE A. DONAHUE Trustee April 19, 1998
Maurice A. Donahue
SPENCER H. LEMENAGER Secretary and Trustee April 19, 1998
Spencer H. LeMenager
DAVID Y. WILLIAMS President and Trustee April 19, 1998
David Y. Williams
*By: PETER K. BLUME April 19, 1998
Peter K. Blume
Attorney-in-Fact
46
<PAGE>
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
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. 47 /x/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 /x/
Amendment No. 25 /x/
----------------------------------------
ANCHOR CAPITAL ACCUMULATION TRUST
----------------------------------------
EXHIBITS
47
<PAGE>
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) p.49 Consent of Independent Public Accountants.
(12) p.50 Trust's Annual Report to Shareholders, December 31,
1997.
(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) p.63 Power of Attorney, dated April 19, 1998 and Certified
Resolution.
(27) p.65 Financial Data Schedule.
48
<PAGE>
Livingston & Haynes, P.C.
Certified Public Accountants
40 Grove Street
Wellesley, MA 02181
(617) 237-3339
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-1A our report dated January 14, 1998,
appearing in the prospectus, which is part of such Registration Statement, and
to the reference to us under the captions, "Condensed Financial Information and
Selected Per Share Data and Ratios".
LIVINGSTON & HAYNES
Wellesley, Massachusetts
April 26, 1998
49
- ------------------------------------------------------------------
ANCHOR
CAPITAL
ACCUMULATION
TRUST
ANNUAL REPORT
DECEMBER 31, 1997
50.
<PAGE>
- ------------------------------------------------------------------
ANCHOR CAPITAL ACCUMULATION TRUST
- ------------------------------------------------------------------
Comparison of the Change in Value of a $10,000 Investment in the Anchor Capital
Accumulation Trust and the Standard & Poor's 500 Index
[GRAPHIC OMITTED]
<PAGE>
- ------------------------------------------------------------------
ANCHOR CAPITAL ACCUMULATION TRUST
- ------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
Assets:
Investments at quoted market value (cost $7,671,402 ;
see Schedule of Investments, Notes 1, 2, & 5)....... $12,874,982
Cash ................................................ 456,225
Dividends and interest receivable.................... 8,213
Other assets......................................... 1,769
-----------
Total assets..................................... 13,341,189
-----------
Liabilities:
Accrued expenses and other liabilities (Note 3 )..... 31,501
-----------
Total liabilities................................ 31,501
-----------
Net Assets:
Capital stock (unlimited shares authorized at $1.00 par
value, amount paid in on 461,251 shares outstanding)
(Note 1)............................................ 7,446,645
Accumulated undistributed net investment income
(Note 1)............................................ 1,029,940
Accumulated realized loss from security transactions,
net (Note 1)......................................... (370,477)
Net unrealized appreciation in value of investments
(Note 2)............................................. 5,203,580
----------
Net assets (equivalent to $28.86 per share, based
on 461,251 capital shares outstanding)............. $13,309,688
===========
<PAGE>
==================================================================
ANCHOR CAPITAL ACCUMULATION TRUST
==================================================================
STATEMENT OF OPERATIONS
DECEMBER 31, 1997
Income:
Dividends........................................... $ 99,319
Interest............................................ 79,221
-----------
Total income..................................... 178,540
-----------
Expenses:
Management fees, net (Note 3)....................... 96,272
Pricing and bookkeeping fees (Note 4)............... 18,500
Legal fees.......................................... 8,800
Audit and accounting fees........................... 6,700
Custodian fees...................................... 6,099
Trustees' fees and expenses......................... 3,000
Transfer fees (Note 4).............................. 3,000
Other expenses...................................... 5,680
-----------
Total expenses................................... 148,051
Fees paid indirectly (Note 4)............... (6,099)
-----------
Net expenses................................ 141,952
-----------
Net investment income................................ 36,588
-----------
Realized and unrealized gain on investments:
Realized gain on investments-net................... 352,026
Increase in net unrealized appreciation in investments 1,178,668
-----------
Net gain on investments.......................... 1,530,694
===========
Net increase in net assets resulting from operations. $1,567,282
===========
<PAGE>
==================================================================
ANCHOR CAPITAL ACCUMULATION TRUST
==================================================================
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
1997 1996
----------------------------
From operations:
Net investment income................... $ 36,588 $ 59,527
Realized gain on investments, net....... 352,026 302,080
Increase in net unrealized
appreciation in investments............ 1,178,668 1,322,968
----------- -----------
Net increase in net assets resulting
from operations..................... 1,567,282 1,684,575
------------ -----------
Distributions to shareholders:
From net investment income
($0.07 per share in 1997 and $0.13
per share in 1996)....................... (33,607) (59,676)
From net realized gain on investments
($0.79 per share in 1997 and $0.09
per share in 1996)................... (352,026) (42,766)
------------ -----------
Total distributions to shareholders.. (385,633) (102,442)
------------ -----------
From capital share transactions:
Number of Shares
1997 1996
--------- ---------
Proceeds from sale of
shares.............. 6,019 14,010 174,800 337,104
Shares issued to
share-
holders in
distributions
reinvested.......... 13,364 3,844 381,819 101,117
Cost of shares
redeemed.............. (27,835) (87,492) (781,896) (2,099,429)
--------- -------- --------- ------------
Decrease in net
assets resulting
from capital
share transactions.. (8,452) (69,638) (225,277) (1,661,208)
========= ========= ---------- -----------
Net increase (decrease) in net assets.... 956,372 (79,075)
Net assets:
Beginning of period.................... 12,353,316 12,432,391
============= ============
End of period (including undistributed
net investment income of $1,029,940 and
$1,026,944, respectively).......... $13,309,688 $12,353,316
============= ============
<PAGE>
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ANCHOR CAPITAL ACCUMULATION TRUST
==================================================================
SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout each period)
Year Ended December 31,
1997 1996 1995 1994 1993
-----------------------------------------------
Investment income.... $ 0.59 $ 1.33 $ (1.17) $ 3.49 $ 0.05
Expenses, net........ 0.47 0.92 (0.64) 2.10 0.03
----------------------------------------------
Net investment income
(loss)............... 0.12 0.41 (0.53) 1.39 0.02
Net realized and
unrealized
gain (loss) on
investments.......... 3.30 3.06 4.32 (1.72) (0.47)
Distributions to
shareholders:
From net investment
income............. (0.07) (0.13) (0.19) (0.23) (0.17)
From net realized
gain (0.79) (0.09) (0.62) (0.04) (2.11)
on investments..... ----------------------------------------------
Net increase
(decrease)
in net asset value.. 2.56 3.25 2.98 (0.60) (2.73)
Net asset value:
Beginning of period. 26.30 23.05 20.07 20.67 23.40
==============================================
End of period....... $28.86 $26.30 $23.05 $20.07 $20.67
==============================================
Ratio of expenses to
average net assets.. 1.15% 1.10% 1.11% 1.10% 1.10%
Ratio of net
investment in- 0.28% 0.49% 0.92% 0.73% 0.65%
come to average net
assets...............
Portfolio turnover... 0.04 0.21 0.40 0.63 0.84
Average commission
rate paid............ 0.0800 0.0650 0.0400 0.0606 0.0566
Number of shares out-
standing at end of
period............... 461,251 469,703 539,341 392,246 702,040
<PAGE>
==================================================================
ANCHOR CAPITAL ACCUMULATION TRUST
==================================================================
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
Value
Quantity (Note 1)
COMMON STOCKS -- 91.53%
Advertising Industry -- 3.37%
9,000 Interpublic Group Of Companies Incorporated.... $448,875
----------
Canadian Energy Industry -- 5.73%
15,000 Renaissance Energy Limited..................... 307,650
15,000 Talisman Energy Incorporated................... 455,100
----------
762,750
----------
Chemical (Diversified) Industry -- 3.87%
25,000 Pall Corporation............................... 515,618
----------
Coal/Alternate Energy Industry -- 3.29%
15,000 Calenergy Company Incorporated................. 437,820
----------
Computer & Peripherals Industry -- 6.94%
7,500 Cisco Systems Incorporated..................... 425,160
8,000 Hewlett Packard Company........................ 498,000
----------
923,160
----------
Computer Software & Services Industry -- 2.81%
8,000 Parametric Technology Corporation.............. 374,000
----------
Diversified Companies Industry -- 4.44%
16,000 Service Corporation International.............. 591,008
----------
Drug Industry -- 6.86%
11,000 Amgen Incorporated............................. 583,693
16,000 Biochem Pharma Incorporated.................... 330,000
----------
913,693
----------
Electrical Equipment Industry -- 5.09%
12,000 Emerson Electric Company....................... 677,256
----------
Food Processing Industry -- 6.78%
11,500 J.M. Smucker Class A........................... 271,687
9,936 Tootsie Roll Industries Incorporated........... 630,962
----------
902,649
----------
Food Wholesalers Industry -- 2.70%
8,000 Sysco Corporation.............................. 359,504
----------
<PAGE>
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ANCHOR CAPITAL ACCUMULATION TRUST
- ------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
(Continued)
Value
Quantity (Note 1)
Industrial Services Industry -- 5.34%
20,000 Equifax Incorporated........................... 710,000
----------
Insurance (Diversified) Industry -- 8.08%
9,000 American International Group Incorporated...... 979,875
2,000 Choicepoint, Incorprated ...................... 96,000
----------
1,075,875
----------
Insurance (Life) Industry -- 5.89%
15,375 Aflac Incorporated............................. 784,125
----------
Medical Supplies Industry -- 13.71%
12,000 Abbott Laboratories............................ 804,000
12,000 Fresenius Medical Care Incorporated............ 260,256
20,000 Stryker Corporation............................ 760,000
----------
1,824,256
----------
Office Equipment & Supplies Industry -- 2.97%
10,000 Wallace Computer Services Incorporated......... 395,000
----------
Oilfield Services/Equipment Industry -- 3.66%
6,000 Schlumberger Limited........................... 487,128
----------
Total common stocks (cost $6,979,137).......... 12,182,717
----------
U.S. TREASURY BILLS -- 5.20%..
$700,000 Treasury Bill, 5.10% yield, maturing 3/19/98 692,265
(at cost)......................................
----------
Total investments (cost $7,671,402)............ 12,874,982
----------
CASH & OTHER ASSETS, LESS LIABILITIES -- 3.27%.......... 434,706
----------
Total Net Assets............................... $13,309,688
==========
<PAGE>
==================================================================
ANCHOR CAPITAL ACCUMULATION TRUST
==================================================================
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Significant accounting policies:
Anchor Capital Accumulation Trust, a Massachusetts business trust (the
"Trust"), is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end investment management company. The following is a
summary of significant accounting policies followed by the Trust which are in
conformity with those generally accepted in the investment company industry.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Investment securities--
Security transactions are recorded
on the date the investments are purchased or sold. Each day, at noon,
securities traded on national security exchanges are valued at the last sale
price on the primary exchange on which they are listed, or if there has been
no sale by noon, at the current bid price. Other 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. Options are valued in the same manner. Temporary cash
investments are stated at cost, which approximates market value. Dividend
income is recorded on the ex-dividend date and interest income is recorded
on the accrual basis. Gains and losses from sales of investments are
calculated using the "identified cost" method for both financial reporting
and federal income tax purposes.
B. Income Taxes-- The Trust has elected to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute each year all of its taxable income to its shareholders. No
provision for federal income taxes is necessary since the Trust intends to
qualify for and elect the special tax treatment afforded a "regulated
investment company" under subchapter M of the Internal Revenue Code. Income
and capital gains distributions are determined in accordance with federal
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts
based on their federal tax basis treatment; temporary differences do not
require such reclassification.
C. Capital Stock-- The Trust records the sales and redemptions
of its capital stock on trade date.
2. Tax basis of investments:
At December 31, 1997, the total cost of investments for federal income tax
purposes was identical to the total cost on a financial reporting basis.
Aggregate gross unrealized appreciation in investments in which there was an
excess of market value over tax cost was $5,368,299. Aggregate gross
unrealized depreciation in investments in which there was an excess of tax
cost over market value was $164,719. Net unrealized appreciation in
investments at December 31, 1997 was $5,203,580.
<PAGE>
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ANCHOR CAPITAL ACCUMULATION TRUST
==================================================================
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(Continued)
3. Investment advisory service agreements:
The investment advisory contract with Anchor Investment Management
Corporation (the "investment adviser") provides that the Trust will pay the
adviser a fee for investment advice based on 3/4 of 1% per annum of average
daily net assets. At December 31, 1997, investment advisory fees of $8,922
were due and were included in "Accrued expenses and other liabilities" in the
accompanying Statement of Assets and Liabilities. David Y. Williams, a
Trustee of the Trust, is President and a Director of the Investment Adviser.
4. Certain transactions:
Anchor Investment Management Corporation provides transfer agent services for
the Trust. Fees earned by Anchor Investment Management Corporation for
transfer agent services for the year ended December 31, 1997 were $3,000.
Certain officers and trustees of the Trust are directors and/or officers of
the investment adviser and distributor. Meeschaert & Co., Inc., the Trust's
distributor, received $1,760 in brokerage commissions during the year ended
December 31, 1997. Fees earned by Anchor Investment Management Corporation
for expenses related to daily pricing of the Trust shares and for bookkeeping
services for the year ended December 31, 1997 were $18,500. For the year
ended December 31, 1997 the total expense increase, as shown in the statement
of operations, is $6,099 as a result of an expense offset arrangement with
its custodian, Investors Bank & Trust Company. The Trust could have invested
the assets used by the custodian in an income producing asset if it had not
agreed to a reduction in fees under the expense offset arrangement. In
addition, the expense ratios in the Selected Per Share Data and Ratios are
based on the total expenses, which include amounts that would have been paid
in lieu of an expense offset arrangement
5. Purchases and sales:
Aggregate cost of purchases and the proceeds from sales and maturities on
investments for the year ended December 31, 1997 were:
Cost of securities acquired:
U.S. Government and investments backed by
such securities........................... $ 6,290,958
Other investments....................... 776,415
=============
$ 7,067,373
=============
Proceeds from sales and maturities:
U.S. Government and investments backed by
such securities........................... $ 7,078,297
Other investments....................... 484,139
=============
$ 7,562,436
=============
<PAGE>
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ANCHOR CAPITAL ACCUMULATION TRUST
==================================================================
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of Anchor Capital
Accumulation Trust:
We have audited the accompanying statement of assets and liabilities of Anchor
Capital Accumulation Trust (a Massachusetts business trust), including the
schedule of investments, as of December 31, 1997, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the selected per share data
and ratios for each of the five years in the period then ended. These financial
statements and per share data and ratios are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and per share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of Anchor Capital Accumulation Trust as of December 31, 1997, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the selected per share
data and ratios for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
LIVINGSTON & HAYNES, P.C.
Wellesley, Massachusetts,
January 14, 1998.
<PAGE>
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ANCHOR CAPITAL ACCUMULATION TRUST
==================================================================
OFFICERS AND TRUSTEES
DAVID W.C. PUTNAM Chairman
Chairman, Board of Directors, F.L. Putnam and Trustee
Investment Management Corporation
President and Director, F.L. Putnam
Securities Company Incorporated
J. STEPHEN PUTNAM Vice President and
President, Robert Thomas Securities Treasurer
SPENCER H. LE MENAGER Secretary
President, Equity Inc. and Trustee
MAURICE A. DONAHUE Trustee
Director and Professor, Institute for
Governmental Services and
Walsh-Saltonstall Professor of Practical
Politics, University of Massachusetts
DAVID Y. WILLIAMS President
President and Director, Meeschaert & Co., and Trustee
Inc., President and Director, Anchor
Investment Management Corporation
<PAGE>
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ANCHOR CAPITAL ACCUMULATION TRUST
==================================================================
INVESTMENT ADVISER AND TRANSFER AGENT
Anchor Investment Management Corporation
579 Pleasant St., Suite 4, Paxton, Massachusetts 01612
(508) 831-1171
DISTRIBUTOR
Meeschaert & Co., Inc.
579 Pleasant St., Suite 4, Paxton, Massachusetts 01612
CUSTODIAN
Investors Bank & Trust Company
89 South Street, Boston, Massachusetts 02111
INDEPENDENT PUBLIC ACCOUNTANT
Livingston & Haynes, P.C.
40 Grove St., Wellesley, Massachusetts 02181
LEGAL COUNSEL
Yukevich, Blume, Marchetti & Zangrilli
One Gateway Center, Pittsburgh, Pennsylvania 15222
This report is not authorized for distribution to prospective investors in the
Trust unless preceded or accompanied by an effective prospectus which includes
information concerning the Trust's record or other pertinent information.
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
David W. C. Putnam Chairman and Trustee April 19, 1998
J. STEPHEN PUTNAM
J. Stephen Putnam Treasurer (Principle April 19, 1998
Financial Officer)
SPENCER H. LEMENAGER
Spencer H. LeMenager Secretary and Trustee April 19, 1998
MAURICE A.DONAHUE
Maurice A. Donahue Trustee April 19, 1998
DAVID Y. WILLIAMS
David Y. Williams President and Trustee April 19, 1998
* 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.
63
<PAGE>
CERTIFIED RESOLUTIONS
The undersigned, Christopher Y. Williams, Assistant Secretary of
Anchor Capital Accumulation Trust, DOES HEREBY CERTIFY that the following
resolutions were duly adopted by the Trustees of the Trust, and that such
resolutions have not been amended, modified or rescinded and remain in full
force and effect on the date hereof.
RESOLVED: That Peter K. Blume, Esquire, attorney for the
Trust, be and hereby is named and constituted agent
for service with respect to the aforesaid
Registration Statement to receive notices and
communication with respect to the 1993 Act and the
1940 Act, with all power consequent upon such
designation of and under the rules and regulations
of the Commission.
RESOLVED: That the signature of any officer of the Trust required
by law to be affixed to the Registration Statement, or
to any amendment thereof, may be affixed by said officer
personally or by an attorney-in-fact duly constituted in
writing by said officer to sign his name thereto.
IN WITNESS WHEREOF, I have executed this Certificate as of April 19,1998.
CHRISTOPHER Y. WILLIAMS
Christopher Y. Williams
64
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANCHOR CAPITAL ACCUMULATION TRUST DECEMBER 31, 1997 ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ANNUAL REPORT.
Item Item Description
Number
1997
3(a) Net asset value:
Beginning of year $26.30
3(a) Net investment income
(loss)........... 0.12
3(a) Net realized and
unrealized gain
(loss) on investments... 3.30
3(a) Distributions to
shareholders:
3(a) From net
investment income
(loss)........... (0.07)
3(a) From net realized
gains on investments .... (0.79)
------
3(a) Net asset value:
End of year.... $28.86
======
3(a) Ratio of expenses to
average net
assets........... 1.15%
65
</TABLE>
