File No.:811-04640
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No.)
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ANCHOR GOLD AND CURRENCY TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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ANCHOR GOLD AND CURRENCY TRUST
579 PLEASANT STREET, SUITE 4
PAXTON, MASSACHUSETTS 01612
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, OCTOBER 18, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Anchor Gold and
Currency Trust (the "Fund") will be held at the offices of the Fund, 579
Pleasant Street, Suite 4, Paxton, Massachusetts 06012 on Monday, October 18,
1999, commencing at 2:00 p.m., eastern standard time.
The meeting is being held to consider and vote on the following matters as
described in the accompanying proxy statement (the "Proxy Statement") and such
other matters as may properly come before the meeting or any adjournments
thereof:
PROPOSALS
1. Approval or disapproval of a proposal to convert the Fund from a
closed-end investment company to an open-end investment company, which
proposal includes the following:
1(a) changing the Fund's subclassification from a closed-end investment
company to an open-end investment company, and amending and restating the
Fund's Declaration of Trust to provide for such conversion; and:
1(b) changing the Fund's fundamental investment policy relating to borrowing
to reflect its proposed new subclassification.
2. Ratification of the selection of Livingston & Haynes, P.C. as
independent public accountants for the fiscal year ending December 31,
1999.
The close of business on August 27, 1999 has been fixed as the record date
for the determination of the stockholders of the Fund entitled to notice of,
and to vote at, the meeting.
THE BOARD OF TRUSTEES OF THE FUND RECOMMENDS THAT YOU VOTE FOR ALL
PROPOSALS.
This notice and related proxy material are first being mailed on or about
October 4, 1999.
By order of the Board of Trustees,
/s/ David Y. Williams
SECRETARY OF THE FUND
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON AND WISH YOUR STOCK TO BE
VOTED, PLEASE COMPLETE, SIGN AND DATE THE PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IT IS
IMPORTANT THAT YOUR PROXY CARD BE RETURNED PROMPTLY IN ORDER TO AVOID THE
ADDITIONAL EXPENSE OF FURTHER SOLICITATION. IF YOU OWN YOUR SHARES THROUGH BANK
OR BROKERAGE ACCOUNTS, YOU SHOULD BRING PROOF OF YOUR OWNERSHIP IF YOU WISH TO
ATTEND THE MEETING.
Dated: September 23, 1999
Paxton, Massachusetts
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ANCHOR GOLD AND CURRENCY TRUST
579 PLEASANT STREET, SUITE 4
PAXTON, MASSACHUSETTS 01612
PROXY STATEMENT FOR THE
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, OCTOBER 18, 1999
This Proxy Statement is furnished in connection with a solicitation of proxies
by the Board of Trustees (the "Board") of Anchor Gold and Currency Trust (the
"Fund") for use at its Special Meeting of Stockholders to be held at the offices
of the Fund, 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612 on
Monday, October 18, 1999 at 2:00 p.m. and at any adjournments thereof (the
"Meeting").
A Notice of the Special Meeting of Stockholders and a proxy card (the "Proxy")
accompanies this Proxy Statement. Proxy solicitations will be made primarily by
mail, but solicitations may also be made by telephone, telegraph or personal
interviews conducted by officers or employees of the Fund. All costs of
solicitation, including (a) printing and mailing of this Proxy Statement and
accompanying material, (b) the reimbursement of brokerage firms and others for
their expenses in forwarding solicitation material to the beneficial owners of
the shares, and (c) supplementary solicitations to submit Proxies, will be borne
by the Fund. This Proxy Statement is expected to be mailed to stockholders on or
about October 4, 1999.
The Fund's Annual Report containing audited financial statements for the fiscal
year ending December 31, 1998 has previously been furnished to the stockholders
of the Fund. The report is not to be regarded as proxy-soliciting material.
If the enclosed Proxy is properly executed and returned in time to be voted at
the Meeting, the shares represented thereby will be voted in accordance with the
instructions marked on the Proxy. If no instructions are marked on the Proxy,
the Proxy will be voted FOR Proposal 1(a) (open-ending), FOR Proposal 1(b)
(changing the Fund's fundamental investment policy relating to borrowing and
investing in illiquid securities), FOR the ratification of the selection of
Livingston & Haynes, P.C. as independent public accountants for the Fund for the
fiscal year ending December 31, 1999, and in accordance with the judgment of the
persons appointed as proxies upon any other matter that may properly come before
the Meeting. Any shareholder giving a Proxy has the right to attend the Meeting
to vote his or her shares in person (thereby revoking any prior Proxy) and also
the right to revoke the Proxy at any time by written notice received by the Fund
prior to the time the Proxy is voted.
In the event that a quorum is present at the Meeting but sufficient votes to
approve any of the proposals are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of Proxies. Any such adjournment will require the affirmative vote of a majority
of those shares represented at the Meeting in person or by Proxy. If a quorum is
present, the persons named as proxies will vote those Proxies that they are
entitled to vote thereon in accordance with their best judgment in the interest
of the Fund. A shareholder vote may be taken on one or more of the proposals in
the Proxy Statement prior to any adjournment if sufficient votes have been
received and it is otherwise appropriate. A quorum of stockholders is
constituted by the presence in person or by proxy of the holders of a majority
of the outstanding shares of the Fund entitled to vote at the Meeting. For
purposes of determining the presence of a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted.
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Proposal 1(a) requires for approval the affirmative vote of 66 2/3% of the votes
entitled to be cast at the Meeting in person or by proxy. Proposal 1(b) requires
for approval the affirmative vote of a "majority of the outstanding voting
securities" of the Fund. The term "majority of the outstanding voting
securities" as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), and as used in this Proxy Statement, means: the affirmative vote of
the lesser of (1) 67% of the voting securities of the Fund present at the
meeting if more than 50% of the outstanding voting securities of the Fund are
present in person or by proxy or (2) more than 50% of the outstanding voting
securities of the Fund. Proposal 1(b) will be implemented only if Proposal 1(a)
is approved. Proposal 2 requires for approval the affirmative vote of a majority
of the votes cast at the Meeting in person or by proxy. Because abstentions and
broker non-votes are treated as shares present but which have not been voted,
any abstentions and broker non-votes would have the same effect as a vote
AGAINST Proposals 1(a) and 1(b) but would have no impact on Proposal 2. There
are no rights of appraisal or similar rights of dissenters with respect to any
matter to be voted upon at the Meeting.
The Fund has issued one class of shares of common stock, no par value (the
"Shares"). On the record date for the Meeting, August 27, 1999 (the "Record
Date"), 3,036,896 Shares of the Fund were issued and outstanding.
Each Share of the Fund is entitled to one vote each at the Fund's Meeting and
fractional Shares are entitled to proportionate shares of one vote.
In order that your Shares may be represented, you are requested to:
-- indicate your instructions on the Proxy;
-- date and sign the Proxy;
-- mail the Proxy promptly in the enclosed envelope;
-- allow sufficient time for the Proxy to be received before the
commencement of the Meeting on October 18, 1999.
PROPOSAL 1: CONVERSION TO AN OPEN-END INVESTMENT COMPANY
INTRODUCTION
The Board, at a meeting held on June 21, 1999, approved the conversion of the
Fund from a closed-end investment company to an open-end investment company.
This Proposal was approved after extensive deliberations by the Board regarding
a variety of alternative measures to address the extremely limited trading of
the Fund's Shares and the discount from net asset value at which the Shares
trade, both before and after the adjournment of the Board's Meeting in June. The
Fund, as an open-end fund, would allow stockholders to redeem their shares at
net asset value, less any applicable redemption fee.
BACKGROUND
The Fund commenced operations in late 1986.
The Fund's investment objective is long-term capital appreciation and
preservation of the purchasing power of shareholders' capital. The Fund seeks to
achieve its investment objective through a two-fold investment strategy: During
periods of actual or anticipated inflation the Trust, will invest, directly and
through one or more wholly owned subsidiaries, at least 65% of its total assets
in gold bullion, gold certificates, and silver bullion and other precious metals
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and numismatic items and in precious metals-backed or indexed securities, which
may be issued by either the U.S. or foreign issuers, including governments, and
in the equity or convertible securities of U.S. or foreign companies primarily
engaged in businesses related to precious metals. During such periods the Trust
will also hold up to 35% of its total assets in bank deposits, certificates of
deposit and other interests in foreign currencies. As part of this investment
strategy, the Trust may invest up to 95% of its assets in the securities of
companies which derive more than 50% of their revenues from the exploration,
mining, or processing of gold ore.
During periods of actual or anticipated deflation the Trust will invest up to
90% of its total assets in U.S. or foreign government and government agency
fixed-income securities.
Investment in precious metals and related securities in anticipation of
inflationary periods is intended not only to preserve capital in the projected
ensuing inflationary period, but also to provide opportunity for capital
appreciation of the precious metals and related investments during such
inflationary period.
Investment in U.S. and other government securities in anticipation of
deflationary periods is intended to preserve capital, while providing a
relatively secure income, and to provide an opportunity for capital appreciation
if interest rates decline in such deflationary period.
A closed-end structure, among other things, permits investment in less liquid
securities without regard to daily redemption activity and further permits a
portfolio to be fully invested. At the same time, however, shares of closed-end
investment companies frequently trade at a discount from their net asset value.
Information relating to the historical discount rates of the Fund is set forth
on page 7 below.
The Board has regularly monitored the Fund's discount from net asset value and
the continuing appropriateness of the Fund's closed-end structure. At the June
21, 1999 Board meeting, the Fund's investment adviser, Anchor Investment
Management Corporation ("Anchor"), presented for the Board's consideration
various alternatives to the Fund's current structure in order to (a) increase
the liquidity of shareholders' investments in the Fund, and (b) reduce or
eliminate the discount at which the Fund's shares trade and enhance shareholder
value. The Board explored in detail the possibility of merging the Fund into an
existing open-end fund, open-ending the Fund or undertaking an aggressive
buyback program.
After considering these various alternatives, the Board formally approved the
proposal to convert the Fund to open-end status. The Board reviewed information
presented to it, including information concerning the differences between
closed-end and open-end investment companies, the Fund's operations and
performance to date, and the possible effects of conversion on the Fund. The
Board was informed that the proposal to open-end the Fund would not involve a
change of management or investment style for the Fund. Anchor would continue as
the Fund's investment manager and the current portfolio management team would
continue to be responsible for day-to-day investment decisions. Also, there
would be no difference in the shareholder services offered by the Fund upon
conversion to an open-end investment company. The Board concluded that the
benefits of the right of redemption for stockholders, together with elimination
of the Fund's discount, could be expected to outweigh the potential drawbacks
(as described below) to stockholders resulting from open-ending the Fund. The
Board was informed that, following a conversion, stockholders would be able to
redeem their shares at net asset value, less any applicable redemption fees,
rather than sell their shares in the secondary market through broker-dealers at
a discount to net asset value. Stockholders permitted to receive redemptions
in-kind if any, will be subject to transaction costs associated with the
establishment of securities accounts and/or the liquidation of their in-kind
redemption proceeds. The Board was also informed that, while conversion to
open-end form was expected to result immediately in a reduction in size of the
Fund as a consequence of redemption requests, conversion would create the
possibility, which the Fund does not currently enjoy, to achieve the investment
benefits associated with greater asset size through continuous offerings of Fund
shares. There can be no assurances, however, that the Fund's net assets will not
be reduced substantially and permanently as a consequence of open-ending.
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During their deliberations, the Board expressed concern that massive redemptions
shortly following open-ending of the Fund could impose significant costs on the
remaining stockholders. The Fund could be forced to sell portfolio securities in
order to raise cash to meet redemption requests at less than optimum prices and
could incur taxable gains upon such sales. To accommodate stockholders who
desire an opportunity to liquidate their investment while protecting the
interests of stockholders who elect to stay in the Fund, the Board reserved the
right to impose a .50% redemption fee, payable to the Fund, to be assessed on
cash redemptions during the first year following the conversion of the Fund to
open-end status. After considering the potential drawbacks of conversion of the
Fund to open-end form, the Board determined that (i) the right of redemption of
the Fund's shares provided to stockholders, (ii) the elimination of the Fund's
discount as a result of such a conversion, and (iii) the ability to impose a
.50% redemption fee on cash redemptions and exchanges of shares, were sufficient
to outweigh such drawbacks, and that conversion to open-end for would be in the
best interest of the Fund. The Board also determined that any potential increase
in expenses that may occur as a result of open-ending is an acceptable increase,
given certain moderately higher operating costs of an open-end fund, the
additional services required to be provided to stockholders of such funds
generally and the opportunity for stockholders to recognize net asset value. As
a result, the Board unanimously resolved to submit to stockholders a proposal to
convert the Fund from a closed-end investment company to an open-end investment
company.
Stockholders of the Fund are being asked to consider the conversion of the Fund
from a closed-end to an open-end investment company and certain related matters
in connection with the conversion. If Proposal 1(a) is approved by the
stockholders, the Fund's sub-classification will be changed from a
non-diversified closed-end investment company to a non-diversified open-end
investment company. If Proposal 1(b) is approved by the stockholders, the Fund's
fundamental investment policy prohibiting the Fund from borrowing except for
temporary purposes or securities clearance will be relaxed to enable the Fund to
borrow to satisfy its potential increased cash needs as an open-end fund. The
Fund, however, would continue its existing policy of not making additional
investments when borrowings exceed 5% of its assets. Shares of the Fund will be
continuously offered to the public, subject to a registration statement becoming
effective under the Securities Act of 1933, as amended (the "Securities Act"),
and the 1940 Act. If Proposal 1(a) is approved, the Fund expects that the
conversion to open-end status will be effective within 90 days from the date
such approval is received. However, there is no assurance that the steps
required to open-end the Fund will be completed within this timeframe, and the
date when the conversion will be effective may be delayed.
If Proposal 1(a) is not approved, however, the Fund will remain a closed-end
investment company, and Proposal 1(b) will not be implemented even if approved.
Other factors considered by the Board in making its recommendation to convert
the Fund from a closed-end fund to an open-end fund are discussed below.
This Proxy Statement contains certain statements that may be deemed to be
"forward-looking statements" including, but not limited to, projected expenses
and expense ratios. Actual results could differ materially from those projected
in the forward-looking statements as a result of actual expenses varying from
estimates, changes in assumptions made and other factors.
COMPARISON BETWEEN CLOSED-END AND OPEN-END INVESTMENT COMPANIES
Generally, closed-end funds, such as the Fund, neither redeem their outstanding
stock nor engage in the continuous sale of new securities. Therefore, a
closed-end fund operates with a relatively fixed capitalization. Stockholders
who wish to buy or sell shares generally must do so through a broker-dealer, and
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pay or receive whatever price the market may bear. This price may be more or
less than the net asset value per share of the closed-end fund's shares. In
contrast, open-end funds issue redeemable securities entitling stockholders to
surrender those securities to the fund and receive in return their proportionate
share of the value of the fund's net assets (less any redemption fee charged by
the fund). Also, open-end funds generally issue new shares at the fund's net
asset value. The 1940 Act and its rules generally require open-end companies to
value their assets on each business day in order to determine the current net
asset value on the basis of which their shares may be redeemed by stockholders
or purchared by investors. Net asset values of most mutual funds are published
daily by the leading financial publications. It is anticipated that the net
asset value of the Fund would be published daily following its conversion to an
open-end investment company.
In addition to these structural distinctions between the two types of funds,
several other differences exist. These distinctions can give rise to advantages
and disadvantages to the Fund if, on the one hand, it remains a closed-end fund
or if, on the other hand, it converts to open-end status. The most significant
differences and their implications for the Fund which were considered by the
Board are discussed below.
DIFFERENCES BETWEEN OPEN-END AND CLOSED-END INVESTMENT COMPANIES
1. ELIMINATION OF DISCOUNT; REDEEMABILITY OF SHARES. If the Fund converts to
open-end status, stockholders will be able to realize the value of their shares
by redeeming their shares at the then current net asset value of the shares less
any applicable redemption fee, rather than at a discount from net asset value
(less any brokerage costs) of the type that has characterized the Fund's shares.
The Fund's average annual discount/premium by year computed as of the end of
each month was as follows:
CALENDAR YEAR MONTH END AVERAGES
DATE (AS OF DECEMBER 31) DISCOUNT/PREMIUM
----------------
1999 (January 1 - August 27) (0.025)%
1998 0.002 %
1997 0.964 %
1996 (0.585)%
1995 (1.125)%
1994 1.702 %
1993 (1.772)%
1992 (0.171)%
1991 (0.401)%
1990 (2.220)%
From January 1, 1989 to August 27, 1999, the Fund's shares have traded on the
Chicago Stock Exchange (the "CSE") at prices ranging from 1.70% above to
2.20% below net asset value.
Conversion to an open-end investment company will eliminate any discount and
will allow stockholders of the Fund to realize promptly net asset value of the
Fund's shares (subject to any redemption fee and the costs and potential time
delays associated with disposing of securities received in-kind). However, it
will also eliminate any possibility that the Fund's shares will trade at a
premium over net asset value. It will also eliminate any possibility that
stockholders could purchase additional shares at a discount.
Stockholders should note that if the proposal to convert the Fund to an open-end
investment company is approved by the stockholders, the discount may be reduced
prior to the date of conversion to the extent investors may purchase shares in
the open market in anticipation of the prospect of the Fund becoming an open-end
investment company.
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2. ABILITY TO RAISE NEW CAPITAL THROUGH THE CONTINUOUS OFFERING OF SHARES. A
closed-end fund is prohibited by the 1940 Act under most circumstances from
issuing shares at a discount to net asset value. Therefore, as long as the Fund
is trading at a discount to net asset value (and even if shares were to trade at
a small premium), it is not generally possible to raise new capital, except by
means of a rights offering. To the extent such rights are exercised at less than
net asset value, as is usually the case, it would have a dilutive effect on the
interests of non-participating stockholders. As an open-end investment company,
the Fund would be able to sell shares to the public at net asset value (plus, if
applicable, a sales load), which would enable it to offset the consequences of
redemption requests. In addition, the ability to raise new capital would allow
the Fund to achieve certain economies of scale and give the Fund additional
flexibility to invest assets in furtherance of its investment objective, since
with new cash flow the manager is able to reposition the portfolio or take
advantage of new opportunities without having to sell other securities. No
assurance can be given that the Fund can be successfully marketed in open-end
form.
The holders of shares of the Fund will continue to have one vote for each share
held on each matter submitted to a vote of stockholders if the Fund converts to
an open-end investment company, except that each class of shares will have
exclusive voting rights on any matter submitted to stockholders that relates
solely to its distribution arrangements and separate voting rights on any matter
submitted to stockholders in which the interests of one class differ from the
interests of any other class. As noted above, the Fund plans to offer only one
share class -- Common Shares -- upon conversion to open-end status.
3. PORTFOLIO MANAGEMENT. Because closed-end funds do not have to be concerned
about maintaining cash to be able to pay redemptions, and because closed-end
funds do not have inflows of new capital from offering new shares, such funds
generally may be more fully invested than open-end funds. In contrast, many
open-end funds maintain a buffer of cash and highly liquid assets to meet net
redemptions and must consider cash flow needs when making investment decisions.
Open-end funds face the possibility of having to liquidate portfolio securities
to meet redemption demands at a time when the portfolio manager believes that
the market price is low or otherwise wishes to retain the security. Closed-end
funds, therefore, may invest with less emphasis on liquidity, and this
consideration may contribute to disparities in investment performance between
open-end and closed-end funds.
The larger reserves of cash or cash equivalents required to operate as an
open-end investment company when net redemptions are anticipated could reduce
the Fund's investment flexibility and the scope of its investment opportunities.
The Fund's portfolio might have to be restructured by selling portfolio
securities to accommodate the need for larger reserves of cash or cash
equivalents than would otherwise be maintained. In connection with any such
restructuring, there may be an increase in transactional costs and portfolio
turnover and an adverse effect on investment return.
Anchor has advised the Fund's Board that it does not expect significant changes
in the Fund's investment strategies as a result of open-ending, and that the
Fund's current strategies do not rely on the closed-end format. The open-end
format would require management of cash flow for incoming and outgoing cash. It
is likely that this difference also may cause a sacrifice in total return
performance. However, Anchor handles cash flow management for other open-end
funds, and while cash flow adds a complexity to fund management, Anchor has
advised the Board that it normally should not disrupt portfolio strategy.
4. LIQUIDITY. An open-end investment company is subject to SEC requirements that
no more than 15% of its net assets may be invested in securities that are
illiquid. If the Fund is converted to an open-end fund, it will be restricted
from investing more than 15% of its net assets in illiquid securities which
include unlisted securities and other types of securities that cannot be readily
sold. The Fund does not currently seek to enhance its returns by making private
equity investments. As of June 30, 1999, the Fund held no illiquid securities in
its portfolio. Since the Fund already operates under a self-imposed liquidity
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restriction and has not sought to enhance its returns by making private equity
investments, the liquidity restrictions should have no effect on the investment
strategies of the Fund.
5. SENIOR SECURITIES AND BORROWINGS. The 1940 Act prohibits open-end mutual
funds from issuing "senior securities" representing indebtedness (i.e., bonds,
debentures, notes, and other similar securities), other then indebtedness to
banks where there is an asset coverage of at least 300% for all borrowings.
Closed-end investment companies, on the other hand, are permitted to issue
senior securities representing indebtedness to any lender if the 300% asset
coverage is met. In addition, closed-end investment companies may issue
preferred stock (subject to various limitations), whereas open-end investment
companies generally may not issue preferred stock. This ability to issue senior
securities may give closed-end investment companies more flexibility than mutual
funds in the "leveraging" of their stockholders' investments. To date, the Fund
has neither engaged in borrowing nor issued any senior securities. The Board
does not believe that the greater limitations on open-end mutual funds in this
respect will have any significant effect upon the Fund's operation.
The Board has approved an amendment of the Fund's investment restrictions that
would grant the Fund the maximum borrowing flexibility permitted for an open-end
fund under the 1940 Act. See Proposal 1(b) below for a more detailed discussion
of the proposed amendment.
6. EXPENSES; POTENTIAL NET REDEMPTIONS. As discussed above, conversion of the
Fund to open-end status could result in an eventual increase in the Fund's
expenses as a percentage of average net assets primarily because of potential
increased portfolio transaction expenses. If Proposal 1(a) is not adopted the
Fund will not bear these additional expenses.
Conversion to an open-end investment company could result in immediate
redemptions of Fund shares, which could be substantial, and, consequently,
result in a marked reduction in the size of the Fund. Conversion to an open-end
investment company may create an incentive for stockholders to capitalize on the
elimination of the Fund's historical discount by redeeming their shares. In
addition, market professionals and other investors who view closed-end funds as
arbitrage opportunities could have taken or could take sizable positions in
shares of the Fund prior to conversion for the purpose of profiting through
redemption immediately following an open-ending. This arbitrage phenomenon is
unlikely to occur with respect to the Fund because of the extremely limited
trading of the Fund's shares since its inception, but it could serve to increase
the percentage of Fund shares subject to redemption requests. Other closed-end
funds that have converted to open-end format have experienced redemptions that
exceed sales after conversion. The Fund bears the risk that such net redemptions
after conversion to open-end status could be substantial. A decrease in net
assets could result in less diversification or in smaller portfolio positions in
its investments, which could adversely affect total return performance. In
addition, as a result of any decrease in size resulting from redemptions, the
Fund could experience a further increase in its expense ratio. Anchor projects
that if the Fund's net assets decrease by 50% from the present size of
$11,154,000 due to redemption requests, for example, the Fund's expense ratio
would increase to approximately 2.12%. A higher expense ratio would lower the
Fund's total return performance. Further, if the Fund sells a significant amount
of a portfolio holding to satisfy redemption requests, such action could result
in a decline in value of the particular security and affect the value of the
Fund's remaining position in such security.
Massive redemptions shortly following open-ending could impose significant costs
on the remaining stockholders, including substantial sales of portfolio
securities in order to raise cash to meet redemption requests at potentially
less than optimum prices as well as possibly triggering the realization of
taxable gains upon such sales. To accommodate stockholders who desire an
opportunity to liquidate their investment while protecting the interests of
stockholders who elect to stay in the Fund, the Fund's Board reserved the right
to impose a fee of 0.50% on cash redemptions and exchanges of shares for the one
year period following the conversion to open-end status. Redemptions by
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exchanges will result in the recognition by the redeeming shareholder of gain or
loss for federal income tax purposes based upon the difference between the fair
market value of the securities received and the basis of the shares redeemed.
Significant net redemptions could cause the Fund to become too small to be
considered economically viable.
7. POTENTIAL TAX CONSEQUENCES. If the Fund experiences net redemptions after
converting to open-end form, the Fund would be required to sell portfolio
securities. If any of the Fund's portfolio securities that have appreciated in
value since purchased were to be sold, this would result in realization of
capital gains which would be distributed to stockholders. Such distributions
would be taxable to the non-redeeming stockholders who receive them.
Accordingly, the actions of redeeming stockholders may have adverse tax
consequences for the Fund and its remaining stockholders.
Distributed net short-term capital gains are taxable to recipient stockholders
as ordinary income and long-term capital gains are taxable as capital gains.
Even in the absence of conversion, unrealized capital appreciation may be
realized in the future. However, if there are redemptions due to the conversion,
the gains will be realized sooner than they would have been under the closed-end
format. A non-redeeming shareholder who receives a capital gain distribution
resulting from sales of portfolio investments necessitated by redemptions in
connection with the conversion will realize a smaller gain (or a larger loss)
upon a subsequent redemption of shares, as the Fund's distribution of such
capital gains will reduce the net asset value of the shareholder's shares.
The Fund intends to continue to qualify for treatment as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended, after conversion
to open-end status, so that it will continue to be relieved of federal income
tax on that part of its investment company taxable income and net capital gain
that it distributes to its stockholders.
8. VOTING RIGHTS. If Proposal 1(a) is approved, the Fund will not hold
annual stockholder meetings unless required under the 1940 Act.
The Fund would nevertheless be required to hold a meeting of stockholders when
shareholder approvals are necessary under the 1940 Act or Massachusetts law.
Under the 1940 Act, the Fund would be required to hold a stockholders meeting if
the number of directors elected by the stockholders were less than a majority of
the total number of directors, to fill vacancies if less than two-thirds of the
directors then holding office have been elected by the stockholders, if a change
were sought in the fundamental investment policies of the Fund, if a material
change were sought in the investment management agreement or in a distribution
plan adopted pursuant to Rule 12b-1 under the 1940 Act, or for certain other
matters. Massachusetts law requires the Secretary to call a special meeting of
stockholders when requested in writing to do so by the stockholders entitled to
cast at least 25% of all the votes entitled to be cast at the special meeting
upon payment by such stockholders of the cost of preparing and mailing the
notice of the meeting; provided, however, that, unless requested by stockholders
entitled to cast a majority of all the votes entitled to be cast at a special
meeting, a special meeting need not be called to consider any matter which is
substantially the same as a matter voted on at any special meeting of the
stockholders held during the proceeding twelve months. In addition, the Fund
will call a special meeting of stockholders to remove directors if requested by
stockholders entitled to cast 10% of the votes entitled to be cast at the
meeting.
9. DIVIDENDS. The Fund intends to continue to provide the opportunity for
stockholders to reinvest dividends and capital gains distributions into
additional shares of the Fund in open-end form. Effective upon conversion to an
open-end investment company, such reinvestment in shares would be made at net
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asset value, rather than, as is currently the case, at the lesser of market
value plus commissions or net asset value. As a result, stockholders would no
longer be able to reinvest distributions into additional shares of the Fund at a
discount to net asset value.
10. CSE LISTING. The Fund is currently listed on the Chicago Stock Exchange.
Conversion to an open-end fund would result in delisting of the Fund's shares,
an event that may be perceived by some as disadvantageous because some investors
may consider a listing on the Chicago Stock Exchange to be important.
11. BLUE SKY COSTS. Because the Fund is listed on the Chicago Stock Exchange,
the offering of its shares is not required to be registered under the securities
laws of most states. As an open-end investment company, the Fund would be
required to qualify its shares for sale in a limited number of states at an
approximate cost of $5,000.
COMPARATIVE INVESTMENT STRATEGIES AND RISKS
The Fund's investment objectives and strategies will remain the same upon its
conversion to open-end status, except that upon conversion, the Fund's
fundamental investment policy relating to borrowings would be amended as
described in Proposal 1(b) below to grant the Fund the maximum borrowing
flexibility permitted for an open-end investment company under the 1940 Act.
COMPARATIVE EXPENSE INFORMATION
The expenses of the Fund before and after open-ending are not expected to be
materially different, although the expense ratio could increase if the Fund's
net assets decrease after conversion.
1. FEE TABLE. Set forth below is a comparison of the Fund's annual operating
expenses and stockholder transaction expenses as of December 31, 1998 as a
closed-end fund and those expenses that would apply to current stockholders
holding Common Class shares of the Fund upon conversion assuming no change in
the net assets of the Fund.
ASSUMING CONVERSION TO OPEN-END STATUS
ANNUAL FUND OPERATING EXPENSES
(CLOSED-END) (OPEN-END) (1/)
SHAREHOLDER FEES: (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load)
Imposed on Purchases (as a % of offering price). None None
Maximum Deferred Sales Charge (Load) (as a % of
redemption proceeds)............................ None None
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends/Distributions... None None
Redemption Fee (as % of amount redeemed, if
applicable)..................................... None .50%(2/)
Exchange Fee.................................... None None
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(CLOSED-END) (OPEN-END) (1/)
ANNUAL FUND OPERATING EXPENSES:(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Advisory Fee.................................... 0.75% 0.75%
Other Expenses.................................. 0.52% 0.52%
Total Annual Fund Operating
Expenses........................................ 1.27% 1.27%
Expense Reimbursement........................... 0 0
Net Annual Fund Operating Expenses.............. 1.27% 1.27%
(1/) Estimated for the Fund's current fiscal year ending December 31, 1999,
based on the proposed fee schedule for open-end operations and expenses incurred
by the Fund during its most recent fiscal year and assuming no change in the
Fund's aggregate net assets. As reflected above under "Expenses; Potential Net
Redemptions," significant redemptions from the Fund would result in an increase
of expenses.
(2/) A .50% redemption fee, which is retained by the Fund, may be imposed on all
cash redemptions of Common Shares for the one year period following conversion.
Set forth below are examples which show the expenses that an investor in the
Fund would pay on a $10,000 investment if the Fund remained closed-end compared
to those expenses which an investor would incur if the Fund were converted to an
open-end format, assuming a 5% annual return, based upon the expense ratios set
forth above.
ANCHOR GOLD AND CURRENCY TRUST AS OF DECEMBER 31, 1998 (CLOSED-END FORM):
Fees and expenses if you sold shares after:
1 Year $129
3 Years $403
5 Years $697
10 Years $1534
PRO FORMA EXPENSE RATIOS OF ANCHOR GOLD AND CURRENCY TRUST AS OF DECEMBER 31,
1999 (OPEN-END FORM):
Fees and expenses if you sold shares after:
1 Year $180*
3 Years $403
5 Years $697
10 Years $1534
* reflects the .50% redemption fee applicable in the first year after
conversion.
The examples are not an illustration of past or future investment results and
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown.
2. OPERATING FEES AND SERVICE PROVIDERS. As an open-end fund, the Fund should
incur substantially identical transfer agency, accounting and administration
costs to those it incurs as a closed-end fund. As discussed above, Anchor would
continue to serve as investment adviser to the Fund, Cardinal Investment
Services, Inc. would continue to serve as transfer agent, Meeschaert & Company
would continue to serve as distributor, and Investors Bank & Trust Company would
remain as the Fund's custodian.
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<PAGE>
3. REDEMPTION FEES. To accommodate stockholders who desire an opportunity to
liquidate their investment while protecting the interests of stockholders who
elect to stay in the Fund, the Fund may impose a redemption fee of .50%, payable
to the Fund, on cash redemptions and exchanges of all Shares during the one year
period following the conversion to open-end status. The Board of Trustees
of the Fund will impose this redemption fee if the Board determines that the
fee is necessary (a) to discourage short-term trading and to restrict the
ability of short-term traders to cause the Fund and its non-redeeming share-
holders to bear undue transaction and other expenses caused by the redemption
of others, or (b) to offset any material increase in the administrative and
transaction expenses incurred by the Fund and non-redeeming stockholders
because of a high percentage of redemption requests during the first year of
open-end operations.
4. REDEMPTIONS IN-KIND. Upon conversion, the Fund may afford stockholders the
option to receive the proceeds of redemptions in excess of $250,000 in-kind
without the imposition of any redemption fee, if the Board deems it in the best
interests of the Fund. A redemption in-kind would be effected by a distribution
of portfolio securities in lieu of cash. The Fund would value such securities at
the same value used to determine net asset value and would distribute securities
pro rata unless such pro rata distribution is impracticable in which case
securities will be distributed in a manner deemed to be fair and equitable by
the Board of Directors. Such in-kind redemptions would result in the redeeming
shareholder recognizing gain or loss for federal income tax purposes.
Stockholders receiving securities and selling them could receive less than the
redemption value of such securities and will further incur certain transaction
costs related to transfer and delivery of the securities to the stockholders
from the Fund (generally, certain custody and transfer-related expenses), which
will be deducted from the redemption proceeds. Such stockholders will also incur
transaction costs upon the disposition of the securities redeemed. Such a
redemption would not be as liquid as a redemption entirely in cash. If any such
redemption in kind is to be made, the Fund intends to make an election pursuant
to Rule 18(f)(1) under the 1940 Act. This will require the Fund to redeem with
cash at a shareholder's election in any case where the redemption involves less
than $250,000.
CONVERSION TO AN OPEN-END INVESTMENT COMPANY
(a) CHANGING THE FUND'S SUB-CLASSIFICATION AND AMENDING AND RESTATING THE
FUND'S ARTICLES OF INCORPORATION
CHANGING THE FUND'S SUB-CLASSIFICATION
The conversion of the Fund to an open-end investment company will be
accomplished, subject to shareholder approval, by: (i) the filing of an Amended
and Restated Declaration of Trust (the "Amended Declaration") with the Secretary
of State of the Commonwealth of Massachusetts to amend and restate the Fund's
Declaration of Trust, and (ii) changing the Fund's sub-classification under the
1940 Act from a closed-end investment company to an open-end investment company.
In addition, since shares of an open-end investment company are offered to the
public on a continuous basis, the Fund intends to enter into a Distribution
Agreement with Meeschaert & Co., Inc., the same distributor that acts as such
for the Anchor funds on a no-load basis, pursuant to which such distributor will
use appropriate efforts to solicit orders for the sale of the Fund's Common
Class shares. Although the Fund has no current intention of doing so, it may in
the future propose that a Rule 12b-1 plan be established to assist in the
distribution of the Fund's shares in open-end form subject to the requisite
approval of the Board of Directors and the stockholders. Under such a plan, the
Fund would use a specified percentage of its assets, typically ranging from .25%
to 1.00% to assist in the marketing of Fund shares. A registration statement for
the Fund under the Securities Act and the 1940 Act covering the offering of the
shares of the Fund will be filed as well as appropriate state securities law
notices.
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<PAGE>
Certain costs, many of which will be nonrecurring, will be incurred in
connection with the conversion from a closed-end to an open-end investment
company, including costs associated with the seeking of necessary regulatory
clearances, the preparation of a registration statement, including a prospectus
and statement of additional information as required by federal securities laws
(including printing and mailing costs), the costs of preparing this Proxy
Statement, transfer agent fees relating to the conversion, and legal fees and
accounting fees related to the foregoing. Anchor estimates that these additional
costs, which will be paid by the Fund, will be approximately $65,000. Anchor
anticipates that substantially all of these costs will be incurred prior to the
effective date of the conversion.
The Fund believes that neither the Fund nor its stockholders will realize any
gain or loss for federal income tax purposes as a result of the Fund's
conversion. However, the portfolio activity that may be necessitated by
widespread redemption requests following conversion possibly could result in the
realization of capital gains by the Fund which would be distributed to the
non-redeeming stockholders. Also, stockholders will recognize a gain or loss if
they later redeem their shares to the extent that redemption proceeds are
greater or less than the respective adjusted tax bases of their redeemed shares.
Payment for any such redemption normally will be made within one day after
receipt of a proper request for redemption, in accordance with redemption
procedures that will be specified in the Fund's Prospectus. The Fund may suspend
the right of redemption or postpone the payment dates under certain
extraordinary circumstances in accordance with the rules of the SEC.
AMENDING AND RESTATING THE FUND'S DECLARATION OF TRUST
CONVERSION. If the proposed conversion to open-end status is approved, the
conversion of the Fund to an open-end investment company will be accomplished by
amending and restating the Fund's Declaration of Trust to authorize the issuance
of redeemable securities at net asset value, subject to any applicable
redemption fees, and to provide that the Fund's outstanding common stock will be
redeemable at the option of the stockholders. In connection with such amendments
to the Declaration of Trust, the Board will make any necessary conforming
changes to the Bylaws of the Fund. A copy of the proposed Amended and Restated
Declaration of Trust is attached hereto as Exhibit A.
REDEMPTION FEES. The proposed Amended and Restated Declaration of Trust also
provides the Board with the authority to impose a fee upon redemptions of the
Fund's shares.
AGGRESSIVE BUY-BACK PROGRAM
If Proposal 1(a) is not approved, the Fund has committed to engage in an
enhanced and aggressive repurchase program of the Fund's shares whenever those
shares trade at more than a nominal discount to net asset value. Shares would be
repurchased in open market transactions at prevailing market prices from time to
time in a manner consistent with the Fund continuing to seek its investment
objective. Repurchasing the Fund's shares at a discount would seek to enhance
shareholder value since it would provide liquidity to those stockholders who
elect to sell their shares and would increase the net asset value of the shares
held by those who wish to retain their investment in the Fund. In accordance
with its fiduciary duties to the Fund, the Board would direct management to
report repurchase activity to the Board periodically. While the Board currently
believes that a share repurchase program would be appropriate, there can be no
assurance that the repurchases would reduce the level of discount at which the
Fund's shares currently trade. Further, if such an aggressive repurchase program
were to continue indefinitely, it is possible that the Fund might become so
small as to be untenable in closed-end form, in which case the Fund may need to
be liquidated. Also, an extended repurchase program requiring cash in excess of
the Fund's normal cash levels would require liquidation of portfolio holdings
which could result in adverse tax consequences for stockholders. Finally, if the
repurchase program resulted in a significant reduction to the Fund's assets it
is possible that the Fund's expense ratio could increase.
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<PAGE>
The Fund's proposed repurchase program would be conducted in compliance with the
limitations set forth in Rule 10b-18 under the Securities Exchange Act of 1934.
These limitations generally provide that (i) all purchases be conducted through
only one broker or dealer on a single day; (ii) purchases be made only during
specified time periods and at specified prices; and (iii) purchases satisfy
certain volume requirements. These limitations may adversely affect the ability
of the Fund to purchase shares at the times or in the amounts that the Fund
would otherwise do under the share repurchase program.
VOTE REQUIRED
Approval of Proposal 1(a) requires the affirmative vote of 66 2/3% of the votes
entitled to be cast at the meeting.
THE BOARD OF TRUSTEES, INCLUDING THE "NON-INTERESTED" DIRECTORS, RECOMMENDS THAT
THE STOCKHOLDERS APPROVE THE CONVERSION OF THE FUND TO AN OPEN-END INVESTMENT
COMPANY AND THE RELATED CHANGES IN THE FUND'S DECLARATION OF TRUST.
(b) AMENDING THE FUND'S FUNDAMENTAL INVESTMENT POLICY RELATING TO BORROWINGS
The Fund has a current fundamental policy which limits permissible borrowings to
5% (taken at the lower of cost or current value) of its total assets (not
including the amount borrowed) in temporary or emergency purposes or for the
clearance of transactions. The Board recommends that stockholders approve a
modification to this policy, as permitted under the 1940 Act, which in effect
would allow the Fund (i) to borrow from banks and enter into various borrowing
devices, such as reverse repurchase agreements and dollar rolls, for temporary
or emergency purposes, such as meeting redemption requests, provided that any
borrowings by the Fund may not exceed 33 1/3% of total assets, and (ii) to
pledge its assets to the extent necessary to secure permitted borrowings. This
change is consistent with current SEC pronouncements and the investment policies
of other mutual funds advised by Anchor. The Fund would continue its existing
policy of not making additional investments when borrowings exceed 5% of its
assets.
If approved by stockholders, the fundamental investment policy relating to
borrowings would be amended to read in its entirety as follows:
"The Fund may not issue senior securities, borrow money or pledge its assets,
except that the Fund may borrow money as permitted under the 1940 Act, as may be
amended from time to time, and may also pledge its assets to secure such
borrowings. For the purposes of this investment restriction, collateral
arrangements with respect to the entry into currency transactions, the writing
of options or the purchase or sale of futures contracts or options on futures
contracts are not deemed a pledge of assets or the issuance of a senior
security."
If Proposal 1(a) is not approved, Proposal 1(b) will not be implemented even if
approved by stockholders.
VOTE REQUIRED
Approval of Proposal 1(b) requires the affirmative vote of the holders of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act).
YOUR FUND'S DIRECTORS RECOMMEND THAT STOCKHOLDERS APPROVE THE CHANGE TO THE
FUND'S FUNDAMENTAL INVESTMENT POLICY RELATING TO BORROWING.
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<PAGE>
PROPOSAL 2: RATIFICATION OR REJECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The second proposal to be submitted at the Meeting will be the ratification or
rejection of the selection by the Board of Livingston & Haynes, P.C. as
independent public accountants of the Fund for the present fiscal year ending
December 31, 1999 (irrespective of whether Proposal 1(a) is approved or
disapproved). At meetings held on June 21, 1999 and September 13, 1999, the
Board of Directors of the Fund, including those directors who are not
"interested persons" of the Fund, approved the selection of Livingston & Haynes,
P.C. as independent public accountants for the fiscal year ending December 31,
1999. Livingston & Haynes, P.C. has been independent public accountants for the
Fund since the commencement of operations of the Fund, and has informed the Fund
that it has no material direct or indirect financial interest in the Fund. A
representative of Livingston & Haynes, P.C. will be available at the Meeting and
will have the opportunity to make a statement if the representative so desires
and will be available to respond to appropriate questions.
VOTE REQUIRED
Proposal 2 requires for approval the affirmative vote of a majority of the votes
cast at the Meeting in person or by proxy. Because abstentions and broker
non-votes are not treated as shares voted, any abstentions and broker non-votes
would have no impact on such proposal.
THE BOARD OF DIRECTORS, INCLUDING THE "NON-INTERESTED" DIRECTORS, RECOMMENDS
THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF LIVINGSTON & HAYNES,
P.C. AS INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER MATTERS WHICH MAY COME BEFORE THE MEETINGS;
STOCKHOLDER PROPOSALS
The Fund is not aware of any matters that will be presented for action at the
Meeting other than the matters set forth herein. Should any other matters
requiring a vote of stockholders arise, the proxy card will confer upon the
person or persons entitled to vote the shares represented by such proxy the
discretionary authority to vote the shares as to any such other matters in
accordance with their best judgment in the interest of the Fund.
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY OR PROXIES
AND RETURN SUCH PROXY OR PROXIES IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
ADDITIONAL INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of August 27, the record date, there were 3,036,896 shares of the Trust
issued and outstanding. All shares of the Trust have equal voting rights, and
the holders of shares are entitled to one vote for each share (and a fractional
vote for a fractional share) held of record at the close of business on the
record date. Each Trustee and 5% shareholder named, and all Trustees and
officers as a group, have sole voting power and sole investment power with
respect to the shares shown. Information with respect to beneficial ownership by
16
<PAGE>
such shareholders is based upon information furnished by each shareholder. As of
August 27, 1999, the number of shares beneficially owned by each 5% shareholder,
Trustee, and officer, and by the Trustees and officers as a group, was as
follows:
Trustees and Officers Number of Shares % of Outstanding Shares
--------------------- ---------------- -----------------------
Ernie Butler (1) 0 *
Spencer H. LeMenager (1) 109 *
David W. C. Putnam (1) 0 *
J. Stephen Putnam (1) 113 *
David Y. Williams (1)(2) 578 *
Christopher Y. Williams (1) 0 *
Joseph C. Williams (1) 0 *
All Trustees and Officers as 800 *
a group
Cede & Co. 3,032,059 99.84
55 Water Street, 2SS
New York, NY 10041
* An asterisk indicates that such shareholder is beneficial owner of less than
1% of the Trust's shares.
(1) The address of each Trustee, and officer is c/o Christopher Williams, 579
Pleasant Street, Suite 4, Paxton, Massachusetts 01612.
(2)Interested person as defined in the Investment Company Act of 1940, as
amended, because of his affiliation with the Trust's Investment Adviser and
Distributor.
REPORTS TO STOCKHOLDERS
The Fund sent unaudited semi-annual and audited annual reports to its
stockholders, including a list of investments held. The Fund's Annual Report
for the year ended December 31, 1998, and its Semi-Annual Report dated June 30,
1999, have been filed with the Securities and Exchange Commission, are
incorporated herein by reference, and are included with this proxy statement.
By Order of the Board of Trustees,
David Y. Williams, President and
Secretary
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PROXY
ANCHOR GOLD AND CURRENCY TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Special Meeting of Stockholders - October 18, 1999
The undersigned hereby appoints David W. C. Putnam, Christopher Y. Williams, and
Peter K. Blume, and each of them, the proxies of the undersigned, with power of
substitution to each of them to vote all shares of Anchor Gold and Currency
Trust which the undersigned is entitled to vote at the Special Meeting of
Stockholders of Anchor Gold and Currency Trust to be held on October 18, 1999 at
2 p.m., at 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612, and at any
adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1(a), 1(b) AND 2.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" PROPOSALS 1(a), 1(b) AND 2.
1(a) Proposal to change the Fund's FOR [__] AGAINST [__] ABSTAIN [__]
subclassification from a closed-end
investment company to an open-end
investment company; and to amend and
restate the Fund's Declaration of
Trust to provide for such conversion.
1(b) Proposal to change the Fund's FOR [__] AGAINST [__] ABSTAIN [__]
fundamental investment policy relating
to borrowing to reflect its proposed new
subclassification as an open-end
investment company.
2 To ratify the selection of FOR [__] AGAINST [__] ABSTAIN [__]
Livingston & Haynes, P.C. as
independent public accountants of the
Fund for the fiscal year ending
December 31, 1999.
In their discretion on any other FOR [__] AGAINST [__] ABSTAIN [__]
business which may properly come
before the meeting or any
adjournments thereof.
Please sign EXACTLY as your name or names
appear at left. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
--------------------------------------
(Signature of Stockholder)
--------------------------------------
(Signature of joint owner, if any)
Date ________________________, 1999
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
EXHIBIT A
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
ANCHOR GOLD AND CURRENCY TRUST
DECLARATION OF TRUST of Anchor Gold and Currency Trust made this
___nd day of ______________, 1999, by the persons named at the foot of this
Declaration of Trust, as trustees (such individuals, so long as they shall
continue in office in accordance with the provisions of this Declaration of
Trust, and all other individuals who may hereafter be duly elected or appointed,
qualified and serving as trustees in accordance with the provisions hereof,
being hereinafter called 'Trustees"), for the purpose of enabling the Trustees
to hold and manage the Trust estate and to carry on business as hereinafter
provided:
THE TRUSTEES hereby declare that all money and property contributed
to the trust established hereby shall be held and managed in trust for the
benefit of the holders from time to time of the shares of beneficial interest
issued hereunder and subject to the provisions hereof, to wit:
ARTICLE I.
NAME AND DEFINITIONS
Section 1.1 Name and Location. The name of the trust established
hereby (the 'Trust") is the "Anchor Gold and Currency Trust" and so far as may
be practicable the Trustees shall conduct the Trust's activities, execute all
documents and sue or be sued under that name, which name (and the word 'Trust"
wherever herein used) shall refer to the Trustees as trustees, and not as
individuals, or personally, and shall not refer to the officers, agents,
employees or Shareholders of the Trust. If the Trustees determine that the
Trust's use of such name is not advisable or if the Trust is required to
discontinue the use of such name pursuant to Section 11.7 hereof, then subject
to that section the Trustees may adopt such other name for the Trust as they
deem proper and the Trust may hold its property and conduct its activities under
such other name.
The principle office of the Trust shall be at 579 Pleasant Street,
Suite 4, Paxton, Massachusetts 01612, unless and until it is changed by the
Trustees as they may do with such branch offices or places of business as the
Trustees may establish.
Section 1.2 Definition. Wherever they are used herein, the
following have the respective meanings assigned to them below:
(a) The terms "Affiliated Person" "Commission" have
the meanings assigned to them in the 1940 Act.
(b) "By-Laws" means the By-Laws referred to in
Section 3.11 hereof, as amended and in effect from time to time.
(c) "Declaration" means this Declaration of Trust,
as amended and in effect from time to time. Reference in this Declaration of
Trust to "Declaration,"hereof," "herein," "hereby," and "hereunder" shall be
deemed to refer to this Declaration rather than the article or section in which
such words appear.
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(d) "Distributor" means the party, other than the
Trust, to the agreement described in Section 4.2 hereof.
(e) "Fundamental Policies" means the investment
policies and restrictions which are set forth in the Prospectus or the Statement
of Additional Information of the Trust and are designated therein as fundamental
policies.
(f) "Investment Adviser" means the party, other
than the Trust, to the a described in Section 4.1 hereof.
(g) "Majority Shareholder Vote," as used with
respect to the election of any Trustee at a meeting of Shareholders, means the
vote for the election of such Trustee of a plurality of all outstanding Shares
of the Trust represented in person or by proxy and entitled to vote thereon,
provided that a quorum (as determined in accordance with the By-Laws) is
present, and as used with respect to any other action required or permitted to
be taken by Shareholders, means the vote for such action of the holders of that
majority of all outstanding Shares of the Trust which consists of: (i) a
majority of all Shares represented in person or by proxy and entitled to vote on
such action at the meeting of Shareholders at which such action is to be taken,
provided that a quorum (as determined in accordance with the By-Laws) is
present; or (ii) if such action is to be taken by written consent of
Shareholders, a majority of all Shares issued and outstanding and entitled to
vote on such action; provided, that (iii) as used with respect to any action
requiring the affirmative vote of "a majority of the outstanding voting
securities" of the Trust, as the quoted phrase is defined in the 1940 Act,
"Majority Shareholder Vote" means the vote for such action at a meeting of
Shareholders of the smallest majority of all outstanding Shares of the Trust
entitled to vote on such action which satisfies such 1940 Act voting
requirement.
(h) "1940 Act" means the provisions of the
Investment Company Act of 1940 and the rules and regulations thereunder as
amended from time to time and any order or orders thereunder which may from time
to time be applicable to the Trust.
(i) "Person" means and includes individuals,
corporations, partnerships, trusts, associations, joint ventures and other
entities, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
(j) "Prospectus" means the prospectus which
constitutes part of the Registration Statement of the Trust under the Securities
Act of 1933, as such prospectus may be amended or supplemented from time to
time.
(k) "Shareholder" means a record holder of
outstanding Shares.
(l) "Shareholder Servicing Agent" means the party
other than the Trust, to the agreement described in Section 4.3 hereof.
(m) "Shares" means the units of interest into which
the beneficial interest in the Trust shall be divided from time to time, and
includes fractions of Shares as well as whole Shares.
(n) "Statement of Additional Information" means the
statement of additional information which constitutes part of the Registration
Statement of the Trust under the Securities Act of 1933, as such statement of
additional information may be amended or supplemented from time to time.
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(o) "Trust" means the trust established hereby by
whatever name it may then be known.
(p) "Trust Property" means any and all assets and
property, real or personal, tangible or intangible, which is owned or held by or
for the account of the Trust or the Trustees.
(q) "Trustees" means the individuals who have
signed this Declaration, so long as they shall continue in office in accordance
with the provisions hereof, and all other individuals who may from time to time
be duly elected or appointed, qualified and serving as Trustees in accordance
with the provisions hereof, and reference herein to a Trustee or the Trustees
shall refer to such individual or individuals in their capacity as trustees
hereunder.
ARTICLE II.
TRUSTEES
Section 2.1 Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
not be less than three (3) nor more than nine (9).
Section 2.2 Election or Appointment and Term. The initial Trustees
shall be the individuals signing this Declaration in that capacity. Thereafter,
subject to Section 16(a) of the 1940 Act, the Trustees may elect themselves or
their successors at such regular intervals, if any, as they deem proper, and may
appoint Trustees to fill vacancies as provided in Section 2.4 hereof; provided,
that Trustees shall be elected by a Majority Shareholder Vote and at such time
or times as the Trustees shall determine that such action is required under
Section 16(a) of 1940 Act or, if not so required, that such action is advisable.
The election or appointment of any Trustee by the Trustees or the Shareholders
shall not become effective until - the individual so elected or appointed shall
have agreed in writing to accept such election or appointment and to be bound by
the terms of this Declaration. Subject to Section 2.3 hereof, the Trustees shall
have the power to set and alter the terms of office of the Trustees, and they
may at any time lengthen or shorten their own terms or make their terms of
unlimited duration; provided, that the term of office of any incumbent Trustee
shall continue until terminated as provided in Section 2.4 hereof, or, if not so
terminated until the election of such Trustee's successor in office has become
effective in accordance with this Section 2.2.
Section 2.3 Resignation and Removal. Any Trustee may resign his
trust (with-out need for prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees, and such resignation
shall be effective upon such delivery or at any later date according to the
terms of the instrument. Any of the Trustees may be removed by the action of
two-thirds of the remaining Trustees; provided, that if the removal of one or
more Trustees would have the effect of reducing the number of remaining Trustees
below the minimum number prescribed by Section 2.1 hereof, then subject to
Section 16(a) of the 1940 Act, at the time of the removal of such Trustee or
Trustees, the remaining Trustees shall elect or appoint a number of additional
Trustees at least sufficient to increase the number of Trustees holding office
to the minimum number prescribed by Section 2.1 hereof. Upon the resignation or
removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute
and deliver such documents as the remaining Trustees shall require for the
purpose of conveying to the Trust or the remaining Trustees any Trust Property
held in his name. Upon the incapacity or death of any Trustee, his legal
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representative shall execute and deliver on his behalf such documents as the
remaining Trustees shall require as provided in the preceding sentence. However,
the execution and delivery of such documents by a former Trustee or his legal
representative shall not be requisite to the vesting of title to the Trust
Property in the remaining Trustees as provided in Section 3.3 hereof.
Section 2.4 Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of such Trustee's death,
resignation, removal, bankruptcy, adjudicated incompetence or other incapacity
to perform the duties of the office of Trustee. No such vacancy shall operate to
annul this Declaration or to revoke any existing agency created pursuant to the
terms of this Declaration. In the case of an existing vacancy, including a
vacancy exiting by reason of an increase in the number of Trustees, subject to
the provisions of Section 16(a) of the 1940 Act, the remaining Trustees, or, if
only one Trustee shall then remain in office, the sole remaining Trustee, shall
appoint such individual to fill such vacancy as they or he, in their or his
discretion, shall see fit. An appointment of a Trustee may be made in
anticipation of a vacancy to occur at a later date by reason of retirement or
resignation of a Trustee or an increase in the number of Trustees; provided,
that such appointment shall not become effective prior to such retirement or
resignation or such increase in the number of Trustees. Whenever a vacancy in
number of Trustees shall occur, until such vacancy is filled as provided in this
Section 2.4, the Trustees in office, regardless of their number, shall have all
the powers granted to the Trustees and shall discharge all the duties imposed
upon the Trustees and shall discharge all the duties imposed upon the Trustees
by this Declaration. A written instrument certifying the existence of such
vacancy signed by a majority of the Trustees shall be conclusive evidence of the
existence of such vacancy.
ARTICLE III.
POWERS OF TRUSTEES
Section 3.1 General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without The Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees. The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2 Business and Investments. The Trustees shall have
the power with respect to the Trust:
(a) to conduct, operate and carry on the business
of an open-end investment company under the 1940 Act, either directly or through
one or more wholly owned subsidiaries, and, in connection therewith:
(i) to subscribe for, purchase or otherwise
acquire and invest and reinvest in, to hold for investment or otherwise, to
sell, transfer, assign, negotiate, ex-change, lend or otherwise dispose of, and
to turn to account or realize upon and generally deal in and with (a) securities
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(which term, "securities," shall include without limitation any and all bills,
notes, bonds, debentures or other obligations or evidences of indebtedness,
certificates of deposit, bankers acceptances, commercial paper, repurchase
agreements or other money market instruments; stocks, shares or other equity
ownership interest; and warrants, options or other instruments representing
rights to subscribe for, purchase, receive or otherwise acquire or to sell,
transfer, assign or otherwise dispose of, and scrip, certificates, receipts or
other instruments evidencing any ownership rights or interests in, any of the
foregoing), "when issued" and "delayed delivery" contracts for securities,
issued, guaranteed or sponsored by any governments, political subdivisions or
governmental authorities, agencies or instrumentalities, by any individuals,
firms, companies, corporations, syndicates, associations or trusts, or by any
other organizations or entities whatsoever, irrespective of their forms or the
names by which they may be described, whether or not they be organized and
operated for profit, and whether they be domestic or foreign with respect to The
Commonwealth of Massachusetts or the United States of American, and options or
other instruments entered into on a national securities exchange relating to
foreign currencies (b) precious metals and other minerals, contracts to purchase
and sell, and other interests of every nature and kind in, such metals or
minerals and (c) rare coins and other numismatic items; and
(ii) to acquire and become the owner of or
interested in any securities by delivering or issuing in exchange or payment
therefore, in any lawful manner, any of the Trust Property belonging to the
Trust or any Shares of the Trust; and
(iii) to exercise while the owner of any
securities or interests therein any and all of the rights, powers and privileges
or ownership of such securities or interests, including without limitation any
and all voting rights and rights of assent, consent or dissent pertaining
thereto, and to do any and all acts and things for the preservation, protection,
improvement and enhancement in value thereof.
The Trustees shall not be limited to investing in securities
maturing before the possible termination of the Trust, nor shall the Trustees be
limited by any law limiting the investments which may be made by fiduciaries;
and
(b) to conduct, operate and carry on any other lawful business
and engage in any other lawful business activity which the Trustees, in their
sole and absolute discretion, consider to be (i) incidental to the business of
the Trust as an investment company, (ii) conducive to or expedient for the
benefit or protection of the Trust, or (iii) calculated in any other manner to
promote the interests of the Trust or the Shareholders of the Trust.
Section 3.3 Legal Title. Legal title to all the Trust Property shall
be vested in the Trustees as joint tenants, except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person as nominee, on such terms as the Trustees may determine, provided
that the interest of the Trust therein is appropriately protected. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
termination of the term of office of a Trustee as provided in Section 2.2 or 2.4
hereof, such Trustee shall automatically cease to have any right, title or
interest in any of the Trust Property, and the right, title and interest of such
Trustee in the Trust Property shall vest automatically in the remaining
Trustees. Such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered as provided in Section
2.3 hereof.
Section 3.4 Issuance and Repurchase of Securities. The Trustees
shall have the power to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in
Shares of the Trust, and, subject to Article VII, VIII and IX hereof, to apply
to any such repurchase, redemption, retirement, cancellation or acquisition of
Shares of the Trust, any funds or other assets of the Trust, whether
constituting capital or surplus or otherwise, to the full extent now or
hereafter permitted by applicable law.
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Section 3.5 Borrowing Money; Lending Trust Assets. Subject to any
applicable Fundamental Policies of the Trust or any applicable provision of the
By-Laws, the Trustees shall have power to borrow money or otherwise obtain
credit and to secure the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Trust, to endorse, guarantee, or undertake the
performance of any obligation, contract or engagement of any other Person and to
lend Trust Property.
Section 3.6 Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such committee or
committees as they may from time to time appoint from among their own number or
to such officers, employees or agents of the Trust as they may from time to time
designate the doing of such things and the execution of such instruments either
in the name of the Trust or the names of the Trustees or otherwise as the
Trustees may deem expedient.
Section 3.7 Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
Section 3.8 Expenses. The Trustees shall have the power to incur and
pay any expenses which, in the opinion of the Trustees, are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees
of the Trust.
Section 3.9 Litigation. The Trustees shall have the power to engage
in and to prosecute, defend, compromise, abandon, or adjust, by arbitration or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust or the Trust Property, and, out of the Trust Property, to
pay or to satisfy any debts, claims or expenses incurred in connection
therewith, including those of litigation, and such power shall include without
limitation the power of the Trustees or any appropriate committee thereof, in
the exercise of their or its good faith business judgment, consenting to dismiss
any action, suit, proceeding, dispute, claim, or demand, derivative or
otherwise, brought by any person, including a Shareholder in such Shareholder's
own name or in the name of the Trust, whether or not the Trust or any of the
Trustees may be named individually therein or the subject matter arises by
reason of business for or on behalf of the Trust.
Section 3.10 Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, subject to and in accordance with
Sections 2.3 and 2.4 hereof; elect and remove at will such officers and appoint
and terminate such agents or employees as they consider appropriate; and appoint
from their own number and terminate at will any one or more committees which may
exercise some or all of the power and authority of the Trustees as the Trustees
may determine; (d) purchase, and pay for out of Trust Property, insurance
policies insuring the Trust Property, and, to the extent permitted by law and
not inconsistent with any applicable provision of this Declaration or the
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By-Laws, insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, distributors, selected dealers or independent contractors
of the Trust against all claims arising by reason of holding any such position
or by reason of any action taken or omitted to be taken by any such Person in
such capacity, whether or not constituting negligence, or whether or not the
Trust would have the power to indemnify such Person against such liability; (e)
establish pension, profit sharing, Share purchase, and other retirement,
incentive and benefit plans for any Trustees, officers, employees and agents of
the Trust; (f) indemnify any person with whom the Trust has dealings, including
the Shareholders, Trustees, officers, employees, agents, investment advisers,
distributors, selected dealers and independent contractors of the Trust, to such
extent permitted by law and not inconsistent with any applicable provision of
the By-Laws as the Trustees shall determine; (g) guarantee indebtedness or
contractual obligations of others; (h) determine and change the fiscal year of
the Trust and the method by which its accounts shall be kept; and (i) adopt a
seal for the Trust, but the absence of such seal shall not impair the validity
of any instrument executed on behalf of the Trust.
Section 3.11 Manner of Acting; By-Laws. Except as otherwise provided
herein, in the By-Laws or in any applicable provision of law, any action to be
taken by the Trustees may be taken by a majority of the Trustees present at a
meeting of Trustees (a quorum being present), including any meeting held by
means of a conference telephone circuit or similar communications equipment by
means of which all persons participating in the meeting can hear each other, or
by written consent or consents of all the Trustees. The Trustees shall adopt
By-Laws not inconsistent with this Declaration to provide for the conduct of the
business of the Trust and may amend or repeal such By-Laws to the extent such
power is not reserved to the Shareholders by express provision of such By-Laws.
ARTICLE IV.
INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN
AND SHAREHOLDER SERVICING AGENT
Section 4.1 Investment Adviser. The Trustees may in their discretion
from time to time enter into an investment advisory or management agreement
whereby the Investment Adviser which is the other party to such contract shall
undertake to furnish the Trust such management, investment advisory or
supervisory, administrative, accounting, legal, statistical and research
facilities and services, and such other facilities and services, if any, as the
Trustees shall from time to time consider desirable, all upon such terms and
conditions as the Trustees may in their discretion determine to be not
inconsistent with this Declaration, the applicable provisions of the 1940 Act
and any applicable provisions of the By-Laws of the Trust. Any such advisory or
management agreement and any amendment thereto shall be subject to approval by a
Majority Shareholder Vote at a meeting of the Shareholders of the Trust.
Notwithstanding any provisions of this Declaration, the Trustees may authorize
the Investment Adviser (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales, loans or
exchanges of portfolio securities of the Trust on behalf of the Trustees or may
authorize any officer or employee of the Trust or any Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of the
Investment Adviser (and all without further action by the Trustees). Any such
purchases, sales, loans and exchanges shall be deemed to have been authorized by
all of the Trustees. The Trustees may, in their sole discretion, call a meeting
of Shareholders in order to submit to a vote of Shareholders at such meeting the
approval of continuance of any such investment advisory or management agreement.
Section 4.2 Distributor. The Trustees may in their discretion from
time to time enter into an agreement providing for the sale of Shares to net the
Trust not less than the net asset value per Share (as described in Article VIII
hereof) and pursuant to which the Trust may appoint the other party to such
agreement as its sales agent for the distribution of such Shares. The agreement
shall contain such terms and conditions as the Trustees may in their discretion
determine to be not inconsistent with this Declaration, the applicable
provisions of the 1940 Act and any applicable provisions of the By-Laws of the
Trust.
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Section 4.3 Shareholder Servicing Agent. The Trustees may in their
discretion from time to time enter into a shareholder servicing agreement
whereby the other party to such agreement shall undertake to furnish transfer
agency, shareholder and dividend disbursing services to the Trust and its
Shareholders. The agreement shall contain such terms and conditions as the
Trustees may in their discretion determine to be not inconsistent with this
Declaration and any applicable provisions of the 1940 Act and the By-Laws of the
Trust.
Section 4.4 Custodian. The Trustees may appoint a bank or trust
company having an aggregate capital, surplus and undivided profits (as shown in
its last published report) of at least two million dollars ($2,000,000), or such
higher amount as may be required by the 1940 Act, as custodian of the securities
and cash of the Trust. The agreement shall contain such terms and conditions as
the Trustees in their discretion determine to be not inconsistent with this
Declaration, the applicable provisions of the 1940 Act and any applicable
provisions of the By-Laws of the Trust.
Section 4.5 Parties to Agreements. The Trustees may enter into any
agreement of the character described in Section 4.1, 4.2, 4.3 or 4.4 of this
Article IV and into any other agreement although one or more of the Trustees or
officers of the Trust may be an officer, director, trustee, shareholder or
member of, or otherwise interested in, any other party to the agreement, and no
such agreement shall be invalidated or rendered voidable by reason of the
existence of any such relationship; nor shall any Person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of said agreement or accountable for any
profit realized directly or indirectly therefrom. The same Person or an
Affiliated Person of any Person may be the other party to two or more of the
agreements entered into pursuant to Sections 4.1,4.2,4.3 or 4.4 above or
otherwise, and any individual may be financially interested in or otherwise
affiliated with any Person who is party to any of the agreements mentioned in
this Section 4.5.
ARTICLE V.
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHER
Section 5.1 No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. Subject to Section 5.4 hereof, no Trustee, officer, employee or agent of
the Trust shall be subject to any personal liability whatsoever to any Person,
other than the Trust or its Shareholders, in connection with Trust Property or
the affairs of the Trust, and all such Persons shall look solely to the Trust
Property for satisfaction of claims of any nature arising in connection with the
affairs of the Trust. If any Shareholder, Trustee, officer, employee or agent,
as such, of the Trust is made a party to any suit or proceeding to enforce any
such liability, he shall not, on account thereof, be held to any personal
liability. The Trust shall indemnify and hold each Shareholder harmless from and
against all claims and liabilities to which such Shareholder may become subject
by reason of his being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability. The rights accruing to a
Shareholder under this Section 5.1 shall not exclude any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Section 5.2 Non-Liability of Trustees, etc. Subject to Section 5.4
hereof, no Trustee, officer, employee or agent of the Trust shall be liable to
the Trust or to any Shareholder, Trustee, officer, employee or agent of the
Trust for any action or failure to act (including without limitation the failure
to compel in any way any former or acting Trustee to redress any breach of
trust).
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Section 5.3 Indemnification.
(a) Subject to Section 5.4 hereof, the Trustees
shall provide for indemnification by the Trust of every Person who is, or has
been, a Trustee, officer, employee or agent of the Trust against all liability
and against all expenses reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee, officer, employee or
agent and against amounts paid or incurred by him in the settlement thereof, in
such manner, to such extent and subject to such conditions and limitations as
the Trustees may provide from time to time in the By-Laws.
(b) The words "claim," "action. "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal, or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
Section 5.4 No Protection Against Certain 1940 Act Liabilities.
Nothing contained in Sections 5.1, 5.2 or 5.3 hereof or in any provision of the
By-Laws described in Section 5.3 hereof shall protect any Trustee or officer of
the Trust from any liability to the Trust or its Shareholders for which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Nothing contained in Sections 5.1, 5.2 or 5.3 hereof or in any agreement
of the character described in Section 4.1 or 4.2 hereof shall protect any
Investment Adviser to the Trust or Distributor of its Shares against any
liability to the Trust or its Shareholders to which he or it would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his or its duties to the Trust, or by reason of his or its
reckless disregard of his or its obligations and duties under the agreement
pursuant to which he or it serves as Investment Adviser to the Trust or
Distributor of its Shares.
Section 5.5 No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
Section 5.6 No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser, lender or other Person dealing with the Trustees or with any
officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every contract, undertaking, instrument,
certificate, Share of obligation or other security of the Trust, and every other
act or thing whatsoever executed in connection with the Trust, shall be
conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under this Declaration or in their capacity
as officers, employees or agents of the Trust. Every written agreement,
contract, instrument, undertaking, certificate, Share or other security of the
Trust executed, made or issued by the Trustees shall recite that the same is
executed, made or issued by them not individually, but as Trustees under this
Declaration, and that the obligations created or evidenced thereby are not
binding upon any of the Trustees or Shareholders individually, but bind only the
Trust Property, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees or Shareholders individually.
Section 5.7 Reliance on experts, etc. Each Trustee, officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
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Shareholder Servicing Agent, selected dealers, accountants, appraisers or other
experts or consultants selected with reasonable care by the Trustees, officers
or employees of the Trust, regardless of whether such counsel or expert may also
be a Trustee.
ARTICLE VI.
SHARES OF BENEFICIAL INTEREST
Section 6.1 Beneficial Interest. The interest of the Trust shall be
divided into transferable units to be called Shares of Beneficial Interest,
without par value. The number of such Shares of Beneficial Interest authorized
hereunder is unlimited. Each Share shall represent an equal proportionate share
in the net assets of the Trust. The Trustees may divide or combine the Shares
into a greater or lesser number of Shares without thereby changing the
proportionate interests in the assets of the Trust. All Shares issued hereunder
including, without limitation, Shares issued in connection with a dividend in
Shares or a division of Shares, shall be fully paid and nonassessable. The
Shares shall consist of and be issuable as Common Shares and have the
privileges, limitations and rights set forth for and/or applicable to shares of
Beneficial Interest in this Article VI of the Trust.
Section 6.2 Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business hereinbefore
described shall be vested exclusively in the Trustees, and the Shareholders
shall have no interest therein other than the beneficial interest conferred by
their Shares, and they shall have no right to call for any partition or division
of any property, profits, rights or interests of the Trust nor can they be
called upon to assume any losses of the Trust or suffer an assessment of any
kind by virtue of their ownership of Shares. The Shares shall be personal
property giving only the rights specifically set forth in this Declaration.
Shares shall not entitle any holder thereof to preference, preemptive,
appraisal, conversion or exchange rights, except as the Trustees may determine.
Section 6.3 Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the Trustees and
each Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 6.4 Issuance of Shares. The Trustees in their discretion
may, from time to time without vote of the Shareholders, issue Shares in
addition to the then issued and outstanding Shares and Shares held in the
Treasury, to such party or parties and for consideration in such amount not less
than the greater of the par value and the net asset value per Share (determined
as set forth in Article VIII hereof) and of such type, including cash or
property, at such time or times and on such terms as the Trustees may deem
fitting, and may in such manner acquire other assets (including the acquisition
of assets subject to, and in connection with, the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares. Contributions to the Trust may be accepted for, and Shares
shall be redeemed as, whole Shares and fractions of a Share as described in the
Prospectus or the Statement of Additional Information.
Section 6.5 Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.2 hereof and the
removal of Trustees to the extent provided in Section 16(c) of the 1940 Act,
(ii) with respect to approval or termination in accordance with the 1940 Act of
any investment advisory or management agreement described in Section 4.1 hereof,
(iii) with respect to termination of the Trust as provided in Section 9.2
hereof, (iv) with respect to any amendment of this Declaration to the extent and
as provided in Section 9.3 hereof, (v) with respect to any merger, consolidation
or sale of assets as provided in Section 9.4 hereof, (vi) with respect to
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incorporation of the Trust to the extent and as provided in Section 9.5 hereof,
(vii) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought to maintained derivatively or as a class action on behalf
of the Trust or the Shareholders, and (viii) with respect to such additional
matters relating to the Trust as may be required by this Declaration, the
By-Laws or any undertaking filed by the Trust with the Commission (or any
successor agency) or with any state, or as to which the Trustees in their
discretion shall determine such Shareholder vote to be required by law or
otherwise to be necessary, appropriate or advisable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote, except
that Shares held in the treasury of the Trust as of the record date, as
determined in accordance with the By-Laws, shall not be voted. The Trustees
shall cause each matter required or permitted to be voted upon at a meeting or
by written consent of Shareholders to be submitted to a vote of outstanding
Shares entitled to vote thereon; provided, that there shall be no cumulative
voting of Shares in any election of Trustees. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration or the By-Laws to be taken by Shareholders.
The By-Laws may include further provisions relating to Shareholders' votes and
meetings and related matters.
ARTICLE VII.
REDEMPTIONS
Section 7.1 Redemptions. Each Shareholder shall have the right, at
such times as may be permitted by the Trust, to require the Trust to redeem all
or any part of his Shares, upon and subject to the terms and conditions provided
in this Article VII. The Trust shall, upon application of or pursuant to
authorization from any Shareholder, redeem from such Shareholder outstanding
Shares for an amount per Share determined by the Trustees in accordance with the
1ss.40 Act; provided, that (a) such amount per Share shall not exceed the cash
equivalent of the proportionate interest of each Share or in the Trust Property
at the time of the redemption, and (b) if so authorized by the Trustees, the
Trust may, at any time and from time to time, charge fees for effecting such
redemption, at such rates as the Trustees may establish, if and to the extent
permitted under the 1940 Act, and may, at any time and from time to time,
pursuant to the 1940 Act, suspend such right of redemption. Redemption and
suspension and resumption of redemption of Shares shall be effected in
accordance with the procedures, and payment for Shares redeemed shall be made in
the manner, set forth in the Prospectus or the Statement of Additional
Information.
Section 7.2 Redemption of Shares for Tax Purposes; Disclosure of
Holding. If the Trustees shall, at any time and in good faith, be of the opinion
that direct or indirect ownership of Shares of the Trust has or may become
concentrated in any Person to an extent which would disqualify the Trust as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power by lot or other means deemed equitable by them (i) to call
for redemption from any such Person a number, or principal amount, of Shares of
the Trust sufficient, in the opinion of the Trustees, to maintain or bring the
direct or indirect ownership of Shares of the Trust into conformity with the
requirements for such qualification, and (ii) to refuse to transfer or issue
Shares of the Trust to any Person whose acquisition of the Shares of the Trust
would, in the opinion of the Trustees, result in such disqualification. The
redemption shall be effected at a redemption price determined in accordance with
Section 7.1 hereof.
The holders of Shares of the Trust shall upon demand disclose to the
Trustees in writing such information with respect to direct and indirect
ownership of Shares of the Trust as the Trustees deem necessary to comply with
the provisions of the Internal Revenue Code, or to comply with the requirements
of any other authority.
11
<PAGE>
Section 7.3 Redemptions to Reimburse Trust for Loss on Nonpayment
for Shares or for Other Charges. The Trustees shall have the power to redeem
Shares owned by any Shareholder to the extent necessary (i) to reimburse the
Trust for any loss it has sustained by reason of the failure of such Shareholder
to make full payment for Shares purchased by such Shareholder, or (ii) to
collect any charge relating to a transaction effected for the benefit of such
Shareholder which is applicable to Shares as provided in the Prospectus. Any
such redemption shall be effected at the redemption price determined in
accordance with Section 7.1. hereof.
Section 7.4 Payment for Redeemed Shares in Kind. Subject to any
applicable provisions of the 1940 Act, payment for any Shares redeemed pursuant
to Section 7.1 or 7.2 hereof may, at the option of the Trustees or such officer
or officers of the Trust as they may authorize for the purpose, be made in cash
or in kind, or partially in cash and partially in kind, and, in case of full or
partial payment in kind, the Trustees or such authorized officer or officers
shall have absolute discretion to determine the securities or other assets of
the Trust and the amount thereof to be distributed in kind. For such purpose,
the value of any securities or other non-cash assets delivered in payment for
Shares redeemed shall be determined in the same manner as the value of such
securities or other non-cash assets are determined in accordance with Section
8.1 hereof for purposes of determining the net asset value per Share applicable
to such Shares, as of the same time that the net asset value per Share
applicable to such Shares is determined.
Section 7.5 Repurchase of Shares by Agreement with Shareholder. The
Trust may repurchase its Shares from any Shareholder directly or through an
agent designated by it for the purpose, by agreement with such Shareholder, at a
price not exceeding the redemption price of such Shares determined pursuant to
Section 7.1 hereof.
ARTICLE VIII.
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DIVIDENDS AND DISTRIBUTIONS
Section 8.1 Net Asset Value. Subject to the applicable provisions of
the 1940 Act, the Trustees shall have the power and duty to cause the net asset
value per Share of the Trust to be determined in such manner, with such
frequency and at such specific time of day as shall be set forth in or
prescribed by the Trustees in accordance with the By-Laws. The Trustees may
delegate the power and duty to determine the net asset value per Share to one or
more of their number, or to one or more officers of the Trust, or to any
Investment Adviser, custodian, Shareholder Servicing Agent, or other agent
appointed for the purpose by the Trust.
Section 8.2 Net Income. Subject to any applicable provisions of the
1940 Act, the Trustees shall have the power and duty to cause the net income of
the Trust to be determined on an accrual basis with the same frequency and at
the same time of day as the net asset value per Share of the Trust is determined
in accordance with Section 8.1 hereof. The Trustees shall have full discretion,
to the extent not inconsistent with the 1940 Act, to determine whether any cash
or property of the Trust shall be treated as income or as principal and whether
any item of expense shall be charged to the income or the principal account, and
their determination made in good faith shall be conclusive upon the
Share-holders. In the case of stock dividends received, the Trustees shall have
full discretion to determine, in the light of the particular circumstances, how
much, if any, of the value thereof shall be treated as income, and the balance,
if any, shall be treated as principal.
Section 8.3 Dividends and Distributions. The Trustees shall have the
power to declare and pay ratably to the Shareholders, as dividends or
distributions on their Shares, such proportion of the net income, capital gains,
surplus (including paid-in surplus), capital or assets of the Trust as the
Trustees may deem proper. Dividends and distributions on Shares of the Trust may
12
<PAGE>
be paid with such frequency (which may be daily or at such other intervals as
shall be specified in a standing resolution or resolutions adopted by the
Trustees) and may be paid in cash or other property, or in additional Shares, in
such manner, at such times, and on such terms as the Trustees shall determine.
Dividends and distributions may be paid to the Shareholders of record at the
time of declaring the dividend or distribution or to the Shareholders of record
at such later date as the Trustees shall determine. The Trustees may always
retain from the net income of the Trust such amount as they may deem necessary
to pay debts or expenses or to meet obligations of the Trust or as they may deem
desirable to use in the conduct of the affairs or to retain for future
requirements of the business of the Trust.
Inasmuch as the computation of net income and gains for Federal
income tax purposes may vary from the computation thereof on the books of the
Trust, the foregoing provisions of this Section 8.3 shall be interpreted to give
the Trustees the power in their discretion to distribute for any fiscal year as
income dividends and as capital gains distributions, respectively, additional
amounts sufficient to enable the Trust to avoid or reduce liability for taxes.
Section 8.4 Power to Modify Foregoing Procedures. Notwithstanding
any of the foregoing provisions of this Article VIII, the Trustees may
prescribe, in their absolute discretion, such other bases and times for
determining the net asset value per Share of outstanding Shares, the net income
of the Trust, or for the declaration and payment of dividends and distributions,
as they may deem necessary or desirable to enable the Trust to comply with any
provision of the 1940 Act, including without limitation any rule or regulation
adopted pursuant to Section 22 of the 1940 Act by the Commission.
ARTICLE IX.
DURATION: TERMINATION OF TRUST:
AMENDMENT: MERGERS, ETC,
Section 9.1 Duration. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
Section 9.2 Termination of Trust.
(a) The Trust may be terminated upon the
recommendation of a majority of the Trustees, subject to approval by the
affirmative vote of "a majority of the outstanding voting securities" of the
Trust, as the quoted phrase is defined in the 1940 Act, taken by Majority
Shareholder Vote at a meeting of Shareholders. Upon the termination of the
Trust:
(i) The Trust shall carry on no business
except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up
the affairs of the Trust and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust shall have been wound
up, including the power to fulfill or discharge the contracts of the Trust,
collect its assets, sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining Trust Property to one or more
persons at public or private sale for consideration which may consist in whole
or in part of cash, securities or other property of any kind, discharge or pay
its liabilities, and to do all other acts appropriate to liquidate its business;
provided, that any sale, conveyance, assignment, exchange, transfer or other
disposition of all or substantially all the Trust Property shall require
Shareholder approval in accordance with Section 9.4 hereof.
13
<PAGE>
(iii) After paying or adequately providing for
the payment of all liabilities, and upon receipt of such releases, indemnities
and refunding agreements, as they deem necessary for their protection, the
Trustees may distribute the remain-ing Trust Property, in cash or in kind or
partly each, among the Shareholders according to their respective rights and
interests.
(b) After termination of the Trust and distribution
to the Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust an instrument in writing setting forth
the fact of such termination, and the Trustees shall thereupon be discharged
from all further liabilities and duties hereunder, and the rights and interests
of all Shareholders shall thereupon cease.
Section 9.3 Amendment Procedures.
(a) This Declaration may be amended by a vote or
written consent of the Trustees, subject to and upon approval of such amendment
by a Majority Shareholder Vote. The Trustees may amend this Declaration without
such Shareholder approval to change the name of the Trust, to supply any
omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, or, if they deem it necessary, to conform this
Declaration to the requirements of applicable federal laws or regulations or the
requirements of the regulated investment company provisions of the Internal
Revenue Code, or to eliminate or reduce any federal, state or local taxes which
are or may be payable by the Trust or the Shareholders, but the Trustees shall
not be liable for failing to do so.
(b) No amendment may be made under this Section 9.3
which would change any rights with respect to any Shares of the Trust by
reducing the amount payable thereon upon liquidation of the Trust or by
diminishing or eliminating any voting rights pertaining thereto, except with the
vote or written consent of the holders of two-thirds of the Shares outstanding
and entitled to vote. Nothing contained in this Declaration shall permit the
amendment of this Declaration to impair the exemption from personal liability of
the Shareholders, Trustees, officers, employees and agents of the Trust or to
permit assessments upon Shareholders.
(c) A certificate signed by a majority of the
Trustees or by the Secretary or any Assistant Secretary of the Trust, setting
forth an amendment and reciting that it was duly adopted by the Shareholders or
by the Trustees aforesaid or a copy of the Declaration, as amended, and executed
by a majority of the Trustees or certified by the Secretary or any Assistant
Secretary of the Trust, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Section 9.4 Merger, Consolidation and Sale of Assets. The Trust may
merge into or consolidate with any other corporation, association, trust or
other organization or may sell, lease or exchange all or substantially all of
the Trust Property, including its good Will, upon such terms and conditions and
for such consideration when as authorized by vote or written consent of the
Trustees and approved by the affirmative vote of not less than two-thirds of the
Shares outstanding and entitled to vote, or by an instrument or instruments in
writing without a meeting consented to by the holders of not less than
two-thirds of such Shares, and by the vote or written consent of the holders of
two-thirds of the Shares of each of the Series of Shares; provided, however,
that, if such merger, consolidation, sale, lease or exchange is recommended by
the Trustees, a Majority Shareholder Vote shall be sufficient authorization.
Section 9.5 Incorporation. Subject to approval by a Majority
Shareholder Vote, the Trustees may cause to be organized or assist in organizing
a corporation or corporations under the laws of any jurisdiction or any other
trust, partnership, association, or other organization to take over all of the
Trust Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the Trust
14
<PAGE>
Property to any such corporation, trust, partnership, association or
organization in ex-change for the shares or securities thereof or otherwise, and
to lend money to subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Trust holds or is about to acquire shares or any other
interest. The Trustees may also cause a merger or consolidation between the
Trust or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organization or entities.
ARTICLE X.
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders
of each Series a written financial report meeting the requirements of the 1940
Act. Shareholders shall be entitled to inspect the books and records of the
Trust at the discretion of the Trustees.
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Filing. This Declaration and any amendment hereto shall
be filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of the Commonwealth of
Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Each amendment so filed shall be accompanied by a
certificate signed and acknowledged by a Trustee or by the Secretary or any
Assistant Secretary of the Trust stating that such action was duly taken in a
manner provided herein, and unless such amendment or such certificate sets forth
some later time for the effectiveness of such amendment, such amendment shall be
effective upon its filing with the Secretary of the Commonwealth of
Massachusetts. A restated Declaration, integrating into a single instrument all
of the provisions of this Declaration which are then in effect and operative,
may be executed from time to time by a Trustee duly authorized to execute such a
restatement by a majority of the Trustees and shall, upon filing with the
Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration and the various amendments thereto.
Section 11.2 Resident Agent. To the extent required, the Trustees
shall have power to appoint a resident agent for the Trust in the Commonwealth
of Massachusetts, and from time to time to replace the resident agent so
appointed.
Section 11.3 Governing Law. This Declaration is executed by the
Trustees with reference to the laws of the Commonwealth of Massachusetts, and
the rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to the laws of said
Commonwealth.
Section 11.4 Counterparts. The Declaration maybe simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counter-parts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
15
<PAGE>
Section 11.5 Reliance by Third Parties. Any certificate executed by
an individual who, according to the records of the Trust, appears to be a
Trustee hereunder, or Secretary or Assistant Secretary to the Trust, certifying
to: (a) the number or identity of Trustees or Shareholders, (b) the due
authorization of the execution of any instrument or wiring, (c) the form of any
vote passed at a meeting of Trustees or Shareholders, (d) the fact that the
number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (e) the form
of any By-Laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees and their successors.
Section 11.6 Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are
severable, and if the Trustees shall determine, with the advice of counsel, that
any of such provisions-in conflict with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code or with other applicable laws
and regulations, the conflicting provisions shall be deemed superseded by such
law or regulation to the extent necessary to eliminate such conflict; provided,
however, that such determination shall not affect any of the remaining
provisions of this Declaration or render invalid or improper any action taken or
omitted prior to such determination.
(b) If any provision of this Declaration shall be
held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall pertain only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument
this ___ day of ________________, 1999.
_________________________ ___________________________
as Trustee as Trustee
and not individually and not individually
16
<PAGE>
ANCHOR
GOLD & CURRENCY
TRUST
-----------------------------------------
SEMI-ANNUAL REPORT
-----------------------------------------
JUNE 30, 1999
(UNAUDITED)
1
<PAGE>
- --------------------------------------------------------------------------------
ANCHOR GOLD AND CURRENCY TRUST
- --------------------------------------------------------------------------------
Comparison of the Change in Value of a $10,000 Investment in the Anchor Gold
& Currency Trust and Gold Bullion and the XAU Index
[GRAPHIC OMITTED]
----------------------------------------------
Anchor Gold & Currency Trust
Average Annual Total Return
----------------------------------------------
Six Months* 1 Year 5 Year 10 Year
(13.37%) (15.29%) (8.46%) (2.34%)
----------------------------------------------
*Not Annualized for the period from December 31, 1998 to June 30, 1999.
2
<PAGE>
- --------------------------------------------------------------------------------
ANCHOR GOLD AND CURRENCY TRUST
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(Unaudited)
Assets:
Investments at quoted market value (cost $14,075,568;
see Schedule of Investments, Notes 1, 2, & 5)................. $ 10,624,056
Cash ......................................................... 426,614
Dividends and interest receivable.............................. 5,789
Other assets................................................... 1,809
------------
Total assets.............................................. 11,058,268
------------
Liabilities:
Accrued expenses and other liabilities (Note 3)................ 25,841
------------
Total liabilities......................................... 25,841
------------
Net Assets:
Capital stock (9,829,269 shares of no par value stock authorized,
amount paid in on 3,036,896 shares outstanding) (Note 1)...... 19,632,947
Accumulated undistributed net investment income (Note 1)....... (785,292)
Accumulated realized loss from security transactions, net (Note 1) (4,363,716)
Net unrealized depreciation in value of investments (Note 2).. (3,451,512)
------------
Net assets (equivalent to $3.63 per share, based on
3,036,896 capital shares outstanding).................... $ 11,032,427
============
3
<PAGE>
================================================================================
ANCHOR GOLD AND CURRENCY TRUST
================================================================================
CONSOLIDATED STATEMENT OF OPERATIONS
JUNE 30, 1999
(Unaudited)
Income:
Dividends..................................................... $ 10,981
Interest...................................................... 129,036
------------
Total income.............................................. 140,017
------------
Expenses:
Management fees (Note 3)...................................... 43,838
Pricing and bookkeeping fees (Note 4)......................... 8,742
Custodian fees................................................ 6,029
Trustees' fees and expenses................................... 5,967
Audit and accounting fees..................................... 3,740
Legal fees.................................................... 3,665
Transfer fees (Note 4)........................................ 498
Other expenses................................................ 1,733
------------
Total expenses............................................ 74,212
------------
Net investment income.......................................... 65,805
------------
Realized and unrealized loss on investments:
Realized loss on investments-net............................. (1,330,154)
Decrease in net unrealized appreciation in investments....... (437,428)
------------
Net loss on investments................................... (1,767,582)
============
Net decrease in net assets resulting from operations........... $ (1,701,777)
============
4
<PAGE>
================================================================================
ANCHOR GOLD AND CURRENCY TRUST
================================================================================
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
------------------------------------
From operations:
Net investment income........................... $ 65,805 $ 159,000
Realized loss on investments, net............... (1,330,154) (654,950)
Decrease in net unrealized
appreciation in investments................... (437,428) (85,345)
-------------- -------------
Net decrease in
net assets resulting from operations.......... (1,701,777) (581,295)
-------------- -------------
Distributions to shareholders:
From net investment income ($0.20 per share in
1998).......................................... -- (586,664)
-------------- -------------
Total distributions to shareholders......... -- (586,664)
-------------- -------------
From capital share transactions:
Number of Shares
1999 1998
-----------------------
Proceeds from sale of
shares.................. -- -- -- --
Shares issued to share-
holders in distributions
reinvested.............. -- 132,619 -- 555,675
Cost of shares redeemed.. -- (15,497) -- (71,169)
---------- ---------- ============= ============
Increase (decrease) in net
assets resulting from
capital
share transactions...... -- 117,122 -- 484,506
========== ========== ------------- ------------
Net decrease in net assets....................... (1,701,777) (683,453)
Net assets:
Beginning of period............................ 12,734,204 13,417,657
============== =============
End of period (including undistributed
net investment income of $(785,292)
and $(851,097), respectively).............. $ 11,032,427 $ 12,734,204
============== =============
5
<PAGE>
================================================================================
ANCHOR GOLD AND CURRENCY TRUST
================================================================================
CONSOLIDATED SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout each period)
Six Months
Ended
June 30, Year Ended December 31,
1999
(Unaudited) 1998 1997 1996 1995
-----------------------------------------------------
Investment income........ $ (0.60) $(0.19) $0.08 $0.03 $0.04
Expenses, net............ (0.32) (0.09) 0.05 0.07 0.06
-----------------------------------------------------
Net investment income
(loss)................... (0.28) (0.10) 0.03 (0.04) (0.02)
Net realized and
unrealized
gain (loss) on
investments............. (0.28) (0.11) (1.68) 0.61 0.11
Distributions to
shareholders:
From net investment
income................ -- (0.20) (0.01) -- --
From net realized gain
on investments...... -- -- -- -- --
-----------------------------------------------------
Net (decrease) increase
in net asset value...... (0.56) (0.41) (1.66) 0.57 0.09
Net asset value:
Beginning of period..... 4.19 4.60 6.26 5.69 5.60
=====================================================
End of period........... $3.63 $4.19 $4.60 $6.26 $5.69
=====================================================
Total Return*............ (13.37%) (4.57%) (26.36%) (10.02%) 1.61%
Ratio of expenses to
average net assets...... 1.26% 1.27% 1.12% 1.10% 1.10%
Ratio of net investment
income
(loss) to average net
assets.................. 1.11% 1.20% 0.78% (0.60%) (0.47%)
Portfolio turnover....... 0.01 0.53 0.24 0.18 0.17
Average commission rate
paid..................... 0.0200 0.0403 0.0454 0.0389 0.0441
Number of shares out-
standing at end of
period.................. 3,036,896 3,036,896 2,919,774 3,688,612 3,688,612
*Not Annualized for the six months ended June 30, 1999.
6
<PAGE>
================================================================================
ANCHOR GOLD AND CURRENCY TRUST
================================================================================
CONSOLIDATED SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(Unaudited)
Value
Quantity (Note 1)
COMMON STOCKS -- 19.27%
Gold/Silver Mining Stocks
140,000 Aquiline Resources Incorporated..........................$ 11,200
10,000 Canabrava Diamond Corporation............................ 4,500
45,000 Euro Nevada Mining Corporation Limited................... 534,600
30,000 Franco Nevada Mining Corporation......................... 467,400
40,000 Golden Star Resources Limited............................ 30,000
210,000 Guyanor Resources SA*.................................... 65,100
300,000 Miramar Mining Corporation............................... 183,000
30,000 Normandy Mining Ltd. ADR................................. 208,800
247,200 Northern Orion Exploration Limited*...................... 42,024
10,000 Southwestern Gold Corporation............................ 23,100
165,900 Universal Gold Limited*.................................. 542,493
350,000 War Eagle Mining Company Incorporated.................... 14,000
-----------
Total common stocks (cost $5,525,640).................... 2,126,217
-----------
FOREIGN TIME DEPOSITS -- 77.03%
5,270,151 Euro Time Deposit, maturing 07/08/99, at 2.500% ......... 5,433,526
2,972,176 Euro Time Deposit, maturing 07/16/99, at 2.450% ......... 3,064,313
-----------
Total foreign time deposits (cost $8,549,928)............ 8,497,839
-----------
Total investments (cost $14,075,568)..................... 10,624,056
-----------
CASH & OTHER ASSETS, LESS LIABILITIES -- 3.70%..................... 408,371
===========
Total Net Assets.........................................$11,032,427
===========
* Non income producing security
7
<PAGE>
================================================================================
ANCHOR GOLD AND CURRENCY TRUST
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
1. Significant accounting policies:
Anchor Gold and Currency Trust, a Massachusetts business trust (the "Trust"),
is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, closed-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.
Foreign currencies and foreign denominated securities are translated at
current market exchange rates as of noon. Gold bullion is valued each day
at noon based on the New York spot gold price. 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. During the current fiscal year, permanent
differences, primarily due to foreign currency gains increasing net
investment income, resulted in a net increase in undistributed net
investment income and a increase in accumulated realized loss from security
transactions. This reclassification had no affect on net assets.
C. Capital Stock-- The Trust records the sales and redemptions of its
capital stock on trade date.
8
<PAGE>
================================================================================
ANCHOR GOLD AND CURRENCY TRUST
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
(Continued)
D.Principles of Consolidation-- The consolidated statements include the
consolidated operations of Anchor Gold & Currency Limited of which the
Trust owns all outstanding shares. Intercompany receivables, payables and
transactions have been eliminated.
E.Foreign Currency-- Amounts denominated in or expected to settle in foreign
currencies are translated into United States dollars at rates reported by a
major Boston bank on the following basis:
1. Market value of investment securities, other assets and liabilities at
the 12:00 noon Eastern Time rate of exchange at the balance sheet date.
2. Purchases and sales of investment securities, income and expenses at
the rate of exchange prevailing on the respective dates of such
transactions (or at an average rate if significant rate fluctuations have
not occurred). The Trust does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments. Reported net realized foreign exchange gains
or losses arise from sales and maturities of short term securities, sales
of foreign currencies, currency gains or losses realized between the trade
and settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Trust's books, and the United States dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in the
exchange rate.
2. Tax basis of investments:
At June 30, 1999, 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 $497,321. Aggregate gross unrealized
depreciation in investments in which there was an excess of tax cost over
market value was $3,948,833. Net unrealized depreciation in investments at
June 30, 1999 was $3,451,512.
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 June 30, 1999, investment advisory fees of $7,516 were
due and were included in "Accrued expenses and other liabilities" in the
accompanying Consolidated Statement of Assets and Liabilities. David Y.
Williams, a Trustee of the Trust, is President and a Director of the
Investment Adviser.
9
<PAGE>
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
(Continued)
4. Certain transactions:
The Trust has entered into an agreement with Cardinal Investment Services,
Inc. for transfer agent and dividend disbursing agent services. Annual
fees for these services are $12,000.
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 $120 in brokerage commissions during the six months
ended June 30, 1999. Fees earned by Anchor Investment Management Corporation
for expenses related to daily pricing of the Trust shares and for bookkeeping
services for the six months ended June 30, 1999 were $8,743.
5. Purchases and sales:
Aggregate cost of purchases and the proceeds from sales and maturities on
investments for the six months ended June 30, 1999 were:
Cost of securities acquired:
U.S. Government and investments backed by such
securities....................................... $ --
Other investments................................ 99,557,961
===============
$ 99,557,961
===============
Proceeds from sales and maturities:
U.S. Government and investments backed by such
securities......................................... $ --
Other investments................................ 99,443,953
===============
$ 99,443,953
===============
10
<PAGE>
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
OFFICERS AND TRUSTEES
ERNIE BUTLER Trustee
President, I.E. Butler Securities
SPENCER H. LE MENAGER Trustee
President, Equity Inc.
DAVID W.C. PUTNAM Chairman
President, F.L. Putnam and Trustee
Investment Management Company
J. STEPHEN PUTNAM Vice President and
President, Robert Thomas Securities Treasurer
DAVID Y. WILLIAMS President, Secretary
President and Director, Meeschaert & Co., Inc., and Trustee
President and Director, Anchor Investment
Management Corporation
11
<PAGE>
================================================================================
ANCHOR GOLD AND CURRENCY TRUST
================================================================================
INVESTMENT ADVISER AND ADMINISTRATOR
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
TRANSFER AGENT
Cardinal Investment Services Inc.
579 Pleasant St., Suite 4, Paxton, Massachusetts 01612
(508) 831-1171
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street, Boston, Massachusetts 02116
INDEPENDENT PUBLIC ACCOUNTANT
Livingston & Haynes, P.C.
40 Grove St., Wellesley, Massachusetts 02482
LEGAL COUNSEL
Thorp Reed & Armstrong
One Riverfront 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.
12
<PAGE>
ANCHOR
GOLD AND
CURRENCY
TRUST
ANNUAL REPORT
DECEMBER 31, 1998
1
<PAGE>
- --------------------------------------------------------------------------------
ANCHOR GOLD AND CURRENCY TRUST
- --------------------------------------------------------------------------------
Comparison of the Change in Value of a $10,000 Investment in the Anchor Gold
& Currency Trust and Gold Bullion and the XAU Index
[GRAPHIC OMITTED]
2
<PAGE>
- --------------------------------------------------------------------------------
ANCHOR GOLD AND CURRENCY TRUST
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
Assets:
Investments at quoted market value (cost $15,291,714;
see Schedule of Investments, Notes 1, 2, & 5)................. $ 12,277,630
Cash ......................................................... 508,332
Dividends and interest receivable.............................. 10,964
Other assets................................................... 1,809
------------
Total assets.............................................. 12,798,735
------------
Liabilities:
Accrued expenses and other liabilities (Note 3)................ 64,531
------------
Total liabilities......................................... 64,531
------------
Net Assets:
Capital stock (9,829,269 shares of no par value stock authorized,
amount paid in on 3,036,896 shares outstanding) (Note 1)...... 19,632,947
Accumulated undistributed net investment income (Note 1)....... (851,097)
Accumulated realized loss from security transactions, net (Note 1) (3,033,562)
Net unrealized depreciation in value of investments (Note 2).. (3,014,084)
------------
Net assets (equivalent to $4.19 per share, based on
3,036,896 capital shares outstanding).................... $ 12,734,204
=============
3
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31, 1998
Income:
Dividends..................................................... $ 48,587
Interest......................................................
278,664
------------
Total income.............................................. 327,251
------------
Expenses:
Management fees (Note 3)...................................... 98,895
Pricing and bookkeeping fees (Note 4)......................... 20,230
Legal fees.................................................... 14,000
Audit and accounting fees..................................... 9,500
Transfer fees (Note 4)........................................ 6,500
Custodian fees................................................ 4,803
Trustees' fees and expenses................................... 4,000
Printing expense.............................................. 1,600
Chicago Stock Exchange listing fees........................... 1,250
Other expenses................................................ 7,473
------------
Total expenses............................................ 168,251
------------
Net investment income.......................................... 159,000
------------
Realized and unrealized loss on investments:
Realized loss on investments-net............................. (654,950)
Decrease in net unrealized appreciation in investments....... (85,345)
------------
Net loss on investments................................... (740,295)
------------
Net decrease in net assets resulting from operations........... $ (581,295)
============
4
<PAGE>
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
1998 1997
------------------------------
From operations:
Net investment income........................... $ 159,000 $ 155,423
Realized loss on investments, net............... (654,950) (1,742,176)
Decrease in net unrealized
appreciation in investments................... (85,345) (4,327,754)
-------------- -------------
Net decrease in
net assets resulting from operations.......... (581,295) (5,914,507)
-------------- -------------
Distributions to shareholders:
From net investment income
($0.20 per share in 1998 and $0.01 per share in (586,664) (32,040)
1997)
-------------- -------------
Total distributions to shareholders......... (586,664) (32,040)
-------------- -------------
From capital share transactions:
Number of Shares
1998 1997
-----------------------
Proceeds from sale of
shares.................. -- -- -- --
Shares issued to share-
holders in distributions
reinvested.............. 132,619 6,998 555,675 31,982
Cost of shares redeemed.. (15,497) (775,836) (71,169) (3,753,107)
--------- --------- ----------- ------------
Increase (decrease) in net
assets resulting from
capital
share transactions...... 117,122 (768,838) 484,506 (3,721,125)
======== ========== ----------- ------------
Net decrease in net assets....................... (683,453) (9,667,672)
Net assets:
Beginning of period............................ 13,417,657 23,085,329
============ ============
End of period (including undistributed
net investment income of ($851,097)
and ($852,234), respectively).............. $12,734,204 13,417,657
============ ============
5
<PAGE>
================================================================================
ANCHOR GOLD AND CURRENCY TRUST
================================================================================
CONSOLIDATED SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout each period)
Year Ended December 31,
1998 1997 1996 1995 1994
-----------------------------------------------------
Investment income........ $(0.19) $0.08 $0.03 $0.04 $0.03
Expenses, net............ (0.09) 0.05 0.07 0.06 0.09
-----------------------------------------------------
Net investment income (0.10) 0.03 (0.04) (0.02) (0.06)
(loss)...................
Net realized and
unrealized
gain (loss) on
investments.............. (0.11) (1.68) 0.61 0.11 (0.90)
Distributions to
shareholders:
From net investment
income................ (0.20) (0.01) -- -- --
From net realized gain
on investments...... -- -- -- -- --
-----------------------------------------------------
Net (decrease) increase
in net asset value...... (0.41) (1.66) 0.57 0.09 (0.96)
Net asset value:
Beginning of period..... 4.60 6.26 5.69 5.60 6.56
=====================================================
End of period........... $4.19 $4.60 $6.26 $5.69 $5.60
=====================================================
Ratio of expenses to
average net assets...... 1.27% 1.12% 1.10% 1.10% 1.12%
Ratio of net investment
income
(loss) to average net
assets................... 1.20% 0.78% (0.60%) (0.47%) (0.68%)
Portfolio turnover....... 0.53 0.24 0.18 0.17 0.32
Average commission rate
paid..................... 0.0403 0.0454 0.0389 0.0441 0.0475
Number of shares
outstanding at end of
period.................. 3,036,896 2,919,774 3,688,612 3,688,612 3,688,612
6
<PAGE>
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
Value
Quantity (Note 1)
COMMON STOCKS -- 21.03%
Gold/Silver Mining Stocks
140,000 Aquiline Resources Incorporated..........................$ 5,600
10,000 Canabrava Diamond Corporation............................ 4,800
45,000 Euro Nevada Mining Corporation Limited................... 731,250
30,000 Franco Nevada Mining Corporation......................... 576,600
40,000 Golden Star Resources Limited............................ 40,000
210,000 Guyanor Resources SA*.................................... 75,600
300,000 Miramar Mining Corporation............................... 276,000
30,000 Normandy Mining Ltd. ADR................................. 279,600
247,200 Northern Orion Exploration Limited*...................... 42,024
10,000 Southwestern Gold Corporation............................ 39,200
159,900 Universal Gold Limited*.................................. 578,838
350,000 War Eagle Mining Company Incorporated.................... 28,000
-----------
Total common stocks (cost $5,506,020).................... 2,677,512
-----------
FOREIGN TIME DEPOSITS -- 74.83%
34,073,332 French Franc, maturing 01/04/99, at 2.875%
(cost $6,095,719)....................................... 6,092,312
19,220,114 French Franc, maturing 01/15/99, at 3.150%
(cost $3,428,868)...................................... 3,436,556
-----------
Total foreign time deposits (cost $9,524,587)............ 9,528,868
-----------
GOLD OPTIONS -- 0.56%
15,000 Gold Bullion March 1999 300 Call......................... 45,000
15,000 Gold Bullion April 1999 310 Call....................... 26,250
-----------
Total gold options (cost $261,107)....................... 71,250
-----------
Total investments (cost $15,291,714)..................... 12,277,630
-----------
CASH & OTHER ASSETS, LESS LIABILITIES -- 3.58%..................... 456,574
===========
Total Net Assets........................................$12,734,204
===========
* Non income producing security
7
<PAGE>
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
15
1. Significant accounting policies:
Anchor Gold and Currency Trust, a Massachusetts business trust (the "Trust"),
is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, closed-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.
Foreign currencies and foreign denominated securities are translated at
current market exchange rates as of noon. Gold bullion is valued each day
at noon based on the New York spot gold price. Gold coins are valued based
on valuations published in the Wall Street Journal. 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. During the current fiscal year, permanent
differences, primarily due to foreign currency gains increasing net
investment income, resulted in a net increase in undistributed net
investment income and a increase in accumulated realized loss from security
transactions. This reclassification had no affect on net assets.
C. Capital Stock-- The Trust records the sales and redemptions of its
capital stock on trade date.
8
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
(Continued)
D.Principles of Consolidation-- The consolidated statements include the
consolidated operations of Anchor Gold & Currency Limited of which the
Trust owns all outstanding shares. Intercompany receivables, payables and
transactions have been eliminated.
E.Foreign Currency-- Amounts denominated in or expected to settle in foreign
currencies are translated into United States dollars at rates reported by a
major Boston bank on the following basis:
A. Market value of investment securities, other assets and liabilities
at the 12:00 noon Eastern Time rate of exchange at the balance sheet date.
B. Purchases and sales of investment securities, income and expenses at
the rate of exchange prevailing on the respective dates of such
transactions (or at an average rate if significant rate fluctuations have
not occurred). The Trust does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments. Reported net realized foreign exchange gains
or losses arise from sales and maturities of short term securities, sales
of foreign currencies, currency gains or losses realized between the trade
and settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Trust's books, and the United States dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in the
exchange rate.
2. Tax basis of investments:
At December 31, 1998, 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 $810,860. Aggregate gross unrealized
depreciation in investments in which there was an excess of tax cost over
market value was $3,824,944. Net unrealized depreciation in investments at
December 31, 1998 was $3,014,084.
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, 1998, investment advisory fees of $7,535
were due and were included in "Accrued expenses and other liabilities" in the
accompanying Consolidated Statement of Assets and Liabilities. David Y.
Williams, a Trustee of the Trust, is President and a Director of the
Investment Adviser.
9
<PAGE>
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
(Continued)
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, 1998 were $6,500.
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 $32,480 in brokerage commissions during the year ended
December 31, 1998. 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, 1998 were $16,000.
5. Purchases and sales:
Aggregate cost of purchases and the proceeds from sales and maturities on
investments for the year ended December 31, 1998 were:
Cost of securities acquired:
U.S. Government and investments backed by such
securities....................................... $ 14,653,982
Other investments................................ 102,550,784
===============
$ 117,204,766
===============
Proceeds from sales and maturities:
U.S. Government and investments backed by such
securities....................................... $ 17,519,297
Other investments................................ 99,945,876
===============
$ 117,465,173
===============
10
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of Anchor Gold & Currency Trust:
We have audited the accompanying statement of assets and liabilities of Anchor
Gold & Currency Trust (a Massachusetts business trust), including the schedule
of investments, as of December 31, 1998, 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, 1998 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 Gold & Currency Trust as of December 31, 1998, 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 19, 1999.
11
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
OFFICERS AND TRUSTEES
MAURICE A. DONAHUE Trustee
Director and Professor, Institute for Governmental
Services and Walsh-Saltonstall Professor of
Practical Politics, University of Massachusetts
SPENCER H. LE MENAGER Trustee
President, Equity Inc.
ERNIE BUTLER Trustee
President, I.E. Butler Securities
MAURICE A. DONAHUE Trustee
Director and Professor, Institute for Governmental
Services and Walsh-Saltonstall Professor of
Practical Politics, University of Massachusetts
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
DAVID Y. WILLIAMS President, Secretary
President and Director, Meeschaert & Co., Inc., and Trustee
President and Director, Anchor Investment
Management Corporation
12
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13
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14
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15
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ANCHOR GOLD AND CURRENCY TRUST
================================================================================
INVESTMENT ADVISER, ADMINISTRATOR 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 02482
LEGAL COUNSEL
Thorp Reed & Armstrong
One Riverfront 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.
16
<PAGE>
