Registration Nos. 33-4965; 811
4644
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 X
Pre-Effective Amendment No.
O Post-Effective Amendment No. 11
\R
X
and
REGISTRATION STATEMENT UNDER THE
X INVESTMENT COMPANY ACT OF
1940
Amendment No. 14 \R
X
(Check appropriate box or boxes)
ANCHOR INTERNATIONAL BOND
TRUST
(Exact Name of Registrant as Specified in Charter)
7022 Bennington Woods Drive
Pittsburgh, Pennsylvania 19237
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code:
(412) 6357610
It is proposed that this filing will become effective
(Check appropriate box)
Ximmediately upon filing pursuant to Paragraph (b) of
Rule 485 O on ____________________ pursuant to
Paragraph (b)
O 60 days after filing pursuant to Paragraph (a)
Oon (date) pursuant to Paragraph (a) of Rule (485
or 486)
Peter K. Blume, Esq.
Yukevich, Blume, Marchetti & Zangrilli,
P.C. One Gateway Center, Sixth
Floor
Pittsburgh, PA 15222
(Name and Address of Agent for Service)
The Registrant has previously
filed a declaration of indefinite
registration of its shares pursuant
to Rule 24f-2
under the
Investment Company Act of 1940.
The Registrant's Notice under Rule 24f-2
for the fiscal year ended December
31,
1995 will be
filed on or before June 30, 1996
1
ANCHOR INTERNATIONAL BOND TRUST
Cross Reference sheet Pursuant to Rule
495(a)
Part A
Form Item Cross
Reference
Item 1. Cover Page. Cover Page
Item 2. Synopsis. Shareholder
Transaction
Expenses; Annual
Trust
Operating Expenses
Item 3. Condensed Financial Information.
Statement
of Selected Per
Share Data.
Item 4. General Description of Registrant.Cover
Page; About the
Trust; Investment
Objective and
Policies;
Specialized
Investment
Techniques
Item 5. Management of the Trust.
(a)
Management --
Trustees
(b)
Manager
- -
- Investment Advisor
(c) Not
Applicable
(d) Other
Information
Custodian, Transfer
Agent and Dividend
Paying Agent
(e)
Management --
Expenses
(f)
Management -
Brokerage
Item 6. Capital Stock and Other Securities.
(a) About
the
Trust; Other
Information -
Capitalization
(b) Not
Applicable
(c) Not
Applicable
(d) Not
Applicable
(e) How
to
Purchase Shares;
Other Information
Shareholder Inquiries
(f) About
the
Trust; Services for
Shareholders
Distributions; Taxes
Item 7. Purchase of Securities Being Offered.
(a) How
to Purchase Shares
(b)
Determination of Net
Asset Value
(c) How
to Purchase Shares
(d) How
to Purchase Shares
(e)
Distribution of
Shares
Item 8. Redemption or Repurchase.
Redemption and
Repurchase of Shares
Item 9. Pending Legal Proceedings. Not
Applicable
Statement of
Additional
Part B Information
Cross
Reference
Form Item
Item 10. Cover Page. Cover Page
Item 11. Table of Contents. Table of
Contents
Item 12. General Information and History.
Not
Applicable
Item 13. Investment Objectives and Policies.
Additional
Information
Concerning
Investment Policies
and Risk
Considerations;
Investment
Restrictions
Item 14. Management of the Fund. Management
- -
- -
Officers and
Trustees Item 15. Control Persons and Principal
Holders
of Securities.
(a) Not
Applicable
(b) Not
Applicable
(c)
Management -Officers
and Trustees
Item 16. Investment Advisory and Other Services.
(a), (b) Management
- --
Investment Advisory
Contract
(c),(d),(e) Not Applicable
(f)
Distribution of
Shares
(g) Not
Applicable
(h) Other
Information
(i) Not
Applicable
Item 17. Brokerage Allocation. Portfolio
Security Transactions
Item 18. Capital Stock and Other Securities.
About the Trust
Item 19. Purchase Redemption and Pricing
of Securities Being Offered.
(a),(b) How to
Purchase Shares;
Determination of Net
Asset Value
(c) Not
Applicable
Item 20. Tax Status. Taxes
Item 21. Underwriters. Distribution of
Shares; How to
Purchase Shares
Item 22. Calculation of Performance Data.
Not
Applicable
Item 23. Financial Statements. Financial
Statements
Part C Other
Information
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of the
Registration Statement.
ANCHOR INTERNATIONAL BOND
TRUST
PROSPECTUS
DATED MAY 1, 1996
ANCHOR INVESTMENT MANAGEMENT
CORPORATION INVESTMENT
ADVISER
7022 BENNINGTON WOODS
DRIVE PITTSBURGH,
PENNSYLVANIA 15237
(412) 635-7610
Anchor International Bond Trust (the "Trust"), formerly
known as Meeschaert International Bond Trust, is a
diversified openend management investment company. Its
investments and affairs are managed, subject to the
supervision of its Trustees, by Anchor Investment Management
Corporation, formerly known as Meeschaert Investment
Management Corporation.
The investment objective of the Trust is to seek the highest
total investment return consistent with prudent risk. The
Trust expects to invest its assets primarily in debt
securities of foreign and domestic companies and of foreign
governments and agencies and the U. S. Government and its
agencies.
The Trust has adopted a Distribution Plan under Rule 12b-1
of the Investment Company Act of 1940, providing for
compensation to the Trust's Distributor in respect of sales
of Trust shares in the maximum amount of 5% of the sale
price (currently limited to .75 of 1% of the average daily
net assets for any fiscal year) and in addition may impose a
related contingent deferred sales charge, commencing at 4%
in the first calendar year and declining thereafter, in
connection with redemptions or repurchases made within four
calendar years of purchase of the shares redeemed or
repurchased. The Distribution Plan has not been made
effective pending review and approval of the Plan by the
Trust's shareholders. See "Distribution of Shares" herein
and in the Statement of Additional Information.
The address of the Trust and its Investment Adviser is 7022
Bennington Woods Drive, Pittsburgh, Pennsylvania 15237, and
its telephone number is (412) 635-7610.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus sets forth certain information about the
Trust which investors ought to know before investing, and it
should be retained for future reference. Additional facts
about the Trust are contained in a Statement of Additional
Information dated May 1, 1996 which has been filed with the
Securities and Exchange Commission. The Statement and the
Trust's Annual Report for 1995 are available without charge
by calling or by writing the Trust at the above telephone
number
or address. The Statement of Additional Information and
Annual Report are incorporated by reference in this
Prospectus. \R
TABLE OF TRUST FEES AND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchase
None Maximum Sales Load Imposed on
Reinvested Dividends
None
Deferred Sales Load (as a percentage of
original purchase price) (Note 1)
Year of Purchase
4.00%
Second Year
3.00%
Third Year
2.00%
Fourth Year
1.00%
Redemption Fees
None
Exchange Fees
None
ANNUAL TRUST OPERATING EXPENSES:
(AS A PERCENTAGE OF AVERAGE NET ASSETS) (NOTE 2)
Management Fees
0.75%
12b-1 Fees
None
Other Expenses 0.31%
\R
Total Trust Operating Expenses 1.06%
\R
EXAMPLE:
1 3 5
10 Year Years Years
Years
You would pay the following expenses $51
$58
on a $1,000 investment assuming (1) $54 \R \R
$129
\R
5% annual return and (2) redemption
at the end of each time period:
You would pay the following $11
$34
expenses on the same investment, \R $58 \R
$129
assuming no redemption:
\R
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in
understanding the various costs and expenses that an
investor in the Trust will bear, directly or indirectly.
This information should be read in conjunction with the
Trust's Annual Report, which contains a more complete
description of the various costs and expenses and is
incorporated by reference in this Prospectus.
Note 1. A contingent deferred sales charge may be imposed
upon certain redemptions of shares purchased after inception
of the Trust's Distribution Plan. See "Distribution of
Shares" in the Prospectus. The Trustees do not currently
impose the charge. Note 2. The Trustees have set an
aggregate limit on the amount of 12b-1 payments equal to .75
of 1% of the Trust's average daily assets for any fiscal
year. The Trustees do not currently impose the charge.
TABLE OF CONTENTS
TABLE OF TRUST FEES AND EXPENSES
2
ANNUAL TRUST OPERATING EXPENSES 2
SELECTED PER SHARE DATA AND RATIOS 4
ABOUT THE TRUST 5
INVESTMENT OBJECTIVE AND POLICIES 5
SPECIALIZED INVESTMENT TECHNIQUES AND RELATED RISKS 7
Option Transactions Involving Portfolio Securities and
Securities Indices 7
Options on Foreign Currencies 7
Financial Futures and Related Options 7
Lending of Portfolio Securities 7
Repurchase Agreements 8
Other Foreign Securities 8
Certain Investment Restrictions 9
MANAGEMENT 9
Trustees 9
Investment Adviser 9
Expenses 9
Brokerage 9
Management Discussion of Fund Performance 10
HOW TO PURCHASE SHARES
10
DISTRIBUTION OF SHARES
11
HOW TO EXCHANGE SECURITIES FOR TRUST SHARES
11
REDEMPTION AND REPURCHASE OF SHARES
12
DETERMINATION OF NET ASSET VALUE
13
SERVICES FOR SHAREHOLDERS
13
Open Accounts 13
Invest-By-Mail 13
DISTRIBUTIONS
14
TAXES
14
OTHER INFORMATION
14
Custodian, Transfer Agent and Dividend-Paying Agent 14
Shareholder Inquiries 15
APPLICATION FORM
16
SELECTED PER SHARE DATA AND RATIOS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD ENDED DECEMBER
31,)
The following information for the six years ended
December 31, 1995 has been examined by Livingston &
Haynes, P.C., independent accountants, and should be read in
conjunction with their report and the financial statements
and notes appearing in the Trust's Annual Report which are
incorporated by reference in this Prospectus. Each of the
three years ended December 31, 1989 was examined by Arthur
Andersen & Co., independent accountants. \R
Year Ended December 31,
1995 1994 1993 1992 1991 1990 1989 1988
1987 Investment $ $ $ $ $ $ $ $
$
income 0.89 0.19 0.55 0.59 0.74 0.84 0.48 0.76
0.87
Expenses 0.17 0.04 0.09 0.09 0.10 0.11 0.07 0.11
0.21
Net investment 0.72 0.15 0.46 0.50 0.64 0.73 0.41 0.65
0.66 income
Net realized
and unrealized 0.69 0.48 (0.4 (0.2 0.10 0.81 (0.0 (0.6
(0.9 gain 1) 3) 5) 9)
4)
(loss) on
investments
Distributions
to
shareholders:
From net (0.7 (0.4 (0.1 (0.3 (0.7 (0.7 (0.3 (0.6
(0.5
investment 3) 4) 3) 9) 5) 3) 8) 7)
1)
income
From net (1.0
(0.1
realized gains 4)
7)
on investments
Net increase 0.68 0.19 (0.0 (0.1 (0.0 (0.2 (0.0 (0.7
(0.9
(decrease) in 7) 2) 1) 3) 2) 1)
6)
net asset
value
Net asset
value:
Beginning of 8.07 7.88 7.95 8.07 8.08 8.31 8.33 9.04
10.0 year
0
End of year $ $ $ $ $ $ $ $
$
8.75 8.07 7.88 7.95 8.07 8.08 8.31 8.33
9.04 Total Return 0.75 3.33 9.16 18.5 4.31
(0.4
(2.5
17.5 7.99 % % % 8% % 4%))
7%)
2% %
Ratio of 1.06 1.09 1.06 1.05 1.11 1.06 1.19 1.00
1.63
expenses to % % % % % % % %
%
average net
assets
Ratio of net 4.40 3.90 5.78 6.14 6.77 6.69 6.47 5.93
5.13
investment % % % % % % % %
%
income to
average net
assets
Portfolio -- -- -- -- -- -- 0.54 1.22
3.31
turnover
Number of 3,20 2,34 2,15 2,12 2,28 2,53 3,33 852,
869,
shares 5,51 0,99 8,00 5,34 0,28 1,96 4,77 909
140
outstanding at 6 0 0 8 6 9 3
end of year
Per share data
and ratios
assuming no
waiver of
advisory fees:
Expenses $ $ $
0.11 0.14 0.18
Net investment $ $ $
income 0.63 0.70 0.58
Ratio of 1.14 1.25 1.65
expenses to % % %
average net
assets
Ratio of net 6.74 6.50 5.29
investment % % %
income to
average net
assets
ABOUT THE TRUST
The Anchor International Bond Trust, formerly known as
Meeschaert International Bond Trust, was established as an
unincorporated business trust under the laws of
Massachusetts by a Declaration of Trust dated April 10,
1986, as amended and restated September 3, 1986.
The capitalization of the Trust consists of an unlimited
number of shares of beneficial interest, without par value.
The Trust is authorized to issue two separate classes of
shares; one such class designated as "Common Shares" and the
other such class designated as "Class A Common Shares." On
December 23, 1987, all outstanding Class A Common Shares
were exchanged for Common Shares. The Trust does not
presently intend to issue any additional Class A Common
Shares. Both such classes of shares have the same
privileges, limitations and rights, except that dividends
and distributions upon Class A Common Shares were paid only
in additional Class A Common Shares and such Class A Common
Shares may, at the option of the shareholder, be exchanged
at any time for an equal number of Common Shares without any
additional investment by the shareholder and without any
additional charges being imposed by the Trust. The Class A
Common Shares were issued only to certain foreign
shareholders of the Trust. Issued shares are fully paid and
non-assessable and transferable on the books of the Trust.
The shares have no preemptive rights. The shares each have
one vote and proportionate liquidation rights.
The Trust may issue additional series of shares representing
separate funds of assets, when and as such funds are
established by the Trustees. All shares of the Trust (and
classes of shares) will have equal voting rights for
Trustees, but will generally vote separately or have
separate voting requirements on all other matters.
The Trust will normally not hold annual meetings of
shareholders to elect Trustees. If less than a majority of
the Trustees holding office have been elected by
shareholders, a meeting of shareholders will be called to
elect Trustees. Under the Declaration of Trust and the
Investment Company Act of 1940, the record holders of not
less than two-thirds of the outstanding shares of the Trust
may remove a Trustee by votes cast in person or by proxy at
a meeting called for the purpose or by a written declaration
filed with the Trust's custodian bank. Except as described
above, the Trustees will continue to hold office and may
appoint successor Trustees.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations
of the Trust. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of the Trust
and requires that notice of this disclaimer be given in each
agreement, obligation or instrument entered into or executed
by the Trust or a Trustee. The Declaration of Trust provides
for indemnification from the assets of the Trust for all
losses and expenses of any shareholder held personally
liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring a financial loss on account of his or
her liability as a shareholder of the Trust is limited to
circumstances in which the Trust itself would be unable to
meet its obligations. The possibility that these
circumstances would occur is remote. Upon payment of any
liability incurred by the Trust, the shareholder paying the
liability will be entitled to reimbursement from the general
assets of the Trust. The Trustees intend to conduct the
operations of the Trust to avoid, to the extent possible,
ultimate liability of
shareholders for liabilities of the Trust. INVESTMENT
OBJECTIVE AND POLICIES
The investment objective of the Trust is to seek the highest
total investment return, which includes both investment
income and capital gains, consistent with prudent risk (see
discussion of ratings of debt securities below).
NO ASSURANCE CAN BE GIVEN THAT THE TRUST WILL ACHIEVE ITS
INVESTMENT OBJECTIVE.
In seeking its investment objective, the Trust expects to
invest in debt obligations issued by domestic and foreign
corporations, and U. S. and foreign government obligations
issued or guaranteed by such governments or their agencies
or instrumentalities. Such debt obligations may be of short,
intermediate or long maturities. Since changes in prevailing
interest rates affect the market prices of debt instruments
inversely, generally the longer the maturity of the debt
instrument, the greater the risk of an adverse movement in
interest rates and a decline in the price of the instrument.
Domestic and foreign debt obligations purchased by the Trust
will include bonds and debentures convertible into equity
securities, such as common and preferred stocks. However,
such convertible securities and equity securities will be
limited to 40% of the Trust's total assets immediately after
purchase of any thereof. At least 65% of the Trust's total
assets will be invested in domestic and foreign bonds and
debentures, and the balance may be invested in other debt
instruments and equities. The Trust's investments both in
the United States and elsewhere may be expected to cover a
broad range of bonds, convertible debentures and equities
issued by companies in a variety of industries and by
governmental organizations. Return from debt instruments
comes from interest and possibly favorable market price
changes which could make it advantageous to sell an
instrument for a capital gain. Return from convertible
debentures is based on the same factors, but the market
price of such an instrument is directly affected by the
conversion price and the price of the equity security into
which it is convertible. Return from common and preferred
stocks may come from dividends or favorable market price
changes permitting sale for a capital gain. The Trust may
also hold cash or cash equivalents or certificates of
deposit in various currencies in anticipation of or as a
hedge against changes in currency values.
To the extent permitted by relevant provisions of the
Commodity Exchange Act, the Trust may also engage in option
transactions and financial futures transactions (as
described more fully herein and in the Statement of
Additional Information) in connection with implementing its
strategies, which transactions may involve options
securities, securities indices and currencies, and financial
futures contracts and options on financial futures contracts
relating to securities, securities indices and currencies.
While there are no prescribed limits on geographic asset
distribution and the Trust has the authority to invest in
any country in the world, it is expected that the Trust's
assets will be invested primarily in the United States and
Western European nations. The allocation of the Trust's
assets among the various securities markets of the world
will be determined by the Investment Adviser. In making the
allocation of assets among the securities markets, the
Investment Adviser will consider such factors as the
condition and growth potential of the various economies and
securities markets, currency and taxation considerations and
other pertinent financial, social, national and political
factors. Under certain adverse investment conditions, which
may be general or may relate only to nonUnited States
factors, the Trust may restrict the securities markets in
which its assets will be invested, and
may increase the proportion of assets invested in the United
States securities markets. Such investments would vary
depending upon the nature of the perceived adverse
conditions, and thus might range from U. S. Government
securities to common stocks. The Trust may also, as a
temporary defensive measure, increase its position to at
least 25% of its total assets in cash or cash equivalents
(in U. S. dollars or foreign currencies) and shortterm
securities including money market securities (such as
certificates of deposit, commercial paper and bankers'
acceptances) and repurchase agreements. Investment on an
international basis involves certain risks not involved in
domestic investments, including fluctuations in foreign
exchange rates, costs of currency conversion, currency
blockage, future political and economic developments, and
the possible imposition of exchange controls or other
foreign governmental laws or restrictions. Since the Trust
may often invest heavily in securities denominated or quoted
in currencies other than the U. S. dollar, changes in
foreign currency exchange rates will affect the value of
securities in the portfolio and the unrealized appreciation
or depreciation of investments. In addition, with respect
to certain foreign countries there is the possibility of
expropriation and nationalization of assets, confiscatory
taxation, political or social instability or diplomatic
developments which could affect investments in those
countries. Interest and dividends, and possibly other
amounts received by the Trust with respect to foreign
investments, may be subject to withholding and other taxes
at the source, depending upon the laws of the country in
which the investment is made.
With respect to the Trust's investments in the debt
securities of foreign corporations, it is the Trust's
intention to invest only in such securities which, at the
time of purchase, are determined by the Investment Adviser
to have a quality comparable to securities receiving
investment grade ratings (BBB by Standard & Poor's
Corporation or Fitch Investors Service, Inc. or Baa by
Moody's Investors Service, Inc.) or higher. Foreign
securities are generally purchased on foreign exchanges, if
they are listed. Other markets also exist overthe-counter.
There may be less publicly available information about a
foreign company than about a United States company, and
foreign companies may not be subject to uniform accounting,
auditing and financial reporting standards and requirements
comparable to those of United States companies. Foreign
securities markets, while growing in volume, have, for the
most part, substantially less volume than United States
markets, and securities of many foreign companies are less
liquid and their prices more volatile than securities of
comparable domestic companies. Brokerage commissions and
other transactions costs on foreign securities exchanges are
generally fixed and are higher than those in the United
States. There is generally less government supervision and
regulation of exchanges, brokers and issuers in foreign
countries than there is in the United States.
The Trust's investment objective may be changed without the
approval of the shareholders by vote of a majority of the
Trustees.
SPECIALIZED INVESTMENT TECHNIQUES AND RELATED RISKS
To achieve its investment objective, the Trust may use
certain specialized investment techniques, including
transactions in options on securities, securities indices
and currencies, and transactions in financial futures
contracts and related options, loans of portfolio securities
and transactions in repurchase agreements. While such
transactions are not limited, reference is made to
"Financial Futures and Related Options" and "Repurchase
Agreements" within for limitations applicable to those
activities. The Trust may also invest in
foreign convertible debt and equity securities. These
techniques involve certain risks, which are summarized below
and discussed in the Statement of Additional Information.
There can be no assurance that the Trust will attain its
investment objective.
OPTION TRANSACTIONS INVOLVING PORTFOLIO SECURITIES AND
SECURITIES INDICES
The Trust may write call option contracts or purchase put or
call options with respect to portfolio securities and with
respect to securities indices at such times as the
Investment Adviser determines to be appropriate. Call
options are written and put options are purchased solely as
covered options options with respect to securities which the
Trust owns -- and such options (which will generally
correspond to the securities represented by the index in the
case of index options) on domestic securities are generally
listed on a national securities exchange. Exchanges on which
such options currently are traded are the Chicago Board of
Options Exchange and the American, Pacific and Philadelphia
Stock Exchanges (the "Exchanges"). Options on foreign
securities and on some domestic securities may not be listed
on any domestic or foreign exchange. The Trust receives a
premium on the sale of an option, but gives up the
opportunity to profit from any increase in the price of the
security, or representative securities in the case of an
index option, above the exercise price of the option. There
can be no assurance that the Trust will always be able to
close out option positions at acceptable prices. The Trust
pays a premium upon the purchase of an option, which may be
lost if the option proves to be of no ultimate value.
OPTIONS ON FOREIGN CURRENCIES
The Trust may purchase put and call options on foreign
currencies. The Trust may purchase such options where
economically appropriate as a hedging technique to reduce
the risks in management of its portfolio, and to preserve
the Trust's net asset value, and not for speculative
purposes (i.e., not for profit), but may also purchase such
options in seeking positive results for its investment
objective.
The Trust's success in using such options depends, among
other things, on the Investment Adviser's ability to predict
the direction and volatility of price movements in the
options markets as well as the securities markets and on the
Investments Adviser's ability to select the proper type and
duration of options. Although the Investment Adviser has
prior experience in utilizing currency options, there can be
no assurance that this technique will produce its intended
results. It should be recognized that the price movements of
options in relation to currencies purchased by the Trust may
not correspond to the price movements of the Trust's
portfolio securities and may therefore cause the option
transactions to result in losses to the Trust.
FINANCIAL FUTURES AND RELATED OPTIONS
Financial futures contracts consist of interest rate futures
contracts, securities index futures contracts and currency
futures contracts. A financial futures contract obligates
the seller of the contract to deliver, and the purchaser to
take delivery of, the subject assets called for in the
contract at a specified future time and at a specified
price. An option on a futures contract gives the purchaser
the right to assume a position in the contract (a long
position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time
during the period of the option. The Trust may purchase and
sell financial futures contracts and put and call options on
financial futures contracts as a hedge against anticipated
changes in the market value of its portfolio securities or
securities which it
intends to purchase. Hedging is the initiation of a position
in the futures market which is intended as a temporary
substitute for the purchase or sale of the underlying
currency or securities in the cash market.
The Trust will engage in transactions in financial futures
contracts and related options only for hedging purposes and
not for speculation. In addition, the Trust will not
purchase or sell any financial futures contract or related
option if, immediately thereafter, the sum of the cash or
U.S. Treasury bills committed with respect to the Trust's
existing futures and related option positions and the
premiums paid for related options would exceed 5% of the
market value of the Trust's total assets. In instances
involving the purchase of financial futures contracts or
related options, cash or liquid assets equal to the market
value of the contracts (less any amounts previously
committed with respect to such contracts) will be deposited
in a segregated account with the Trust's custodian bank to
collateralize fully the position and thereby ensure that it
is not leveraged. The extent to which the Trust may enter
into financial futures contracts and related options may
also be limited by requirements of the Internal Revenue Code
for qualification as a regulated investment company.
Engaging in transactions in financial futures contracts
involves certain risks, such as the possibility that the
Trust's Investment Adviser could be incorrect in its
expectations as to the direction or extent of various
currency exchange or interest rate movements. There is also
the risk that a liquid secondary market may not exist. The
risk in purchasing an option on a futures contract is that
the Trust will lose the premium it paid. Also, there may be
circumstances when the purchase of an option on a financial
futures contract would result in a loss to the Trust while
the purchase or sale of the financial futures contract would
not have resulted in a loss.
LENDING OF PORTFOLIO SECURITIES
The Trust may seek to increase its income by lending
portfolio securities. Any such loan will be continuously
secured by collateral at least equal to the market value of
the security loaned. The Trust would have the right to call
a loan and obtain the securities loaned at any time on five
days notice. During existence of a loan, the Trust would
continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities loaned and
would also receive a fee, or the interest on investment of
the collateral, if any. The total value of the securities
loaned at any time will not be permitted to exceed 30% of
the Trust's total assets. As with other extensions of credit
there are risks of delay in recovery or even loss of rights
in the collateral should the borrower of the securities fail
financially. However, the loans would be made only to U. S.
domestic organizations deemed by the Trust's management to
be of good standing and when, in the judgment of the Trust's
management, the consideration to be earned justifies the
attendant risk.
REPURCHASE AGREEMENTS
A repurchase agreement is an agreement under which the Trust
acquires a money market instrument (a security issued by the
U.S. Government or any agency thereof, a bankers' acceptance
or a certificate of deposit) from a commercial bank, subject
to
resale to the seller at an agreed upon price and date
(normally the next business day). The resale price reflects
an agreed upon interest rate effective for the period the
instrument is held by the Trust and is unrelated to the
interest rate on the underlying instrument. The Trust will
effect repurchase agreements only with large well-capitalized
banks whose deposits are insured by the Federal Deposit
Insurance
Corporation and have capital and undivided surplus of at
least $200,000,000. The instrument acquired by the Trust in
these transactions (including accrued interest) must have a
total value in excess of the value of the repurchase
agreement and will be held by the Trust's custodian bank
until repurchased. The Trustees of the Trust will monitor the
Trust's repurchase agreement transactions on a continuous
basis and will require that the applicable collateral will be
retained by the Trust's custodian bank. No more than an
aggregate of 10% of the Trust's total assets, at the time of
investment, will be invested in repurchase agreements having
maturities longer than seven days and other investments
subject to legal or contractual restrictions on resale, or
which are not readily marketable. The use of repurchase
agreements involves certain risks. For example, if the seller
under a repurchase agreement defaults on its obligation to
repurchase the underlying instrument at a time when the value
of the instrument has declined, the Trust may incur a loss
upon its disposition. If the seller becomes insolvent and
subject to liquidation or reorganization under bankruptcy or
other laws, a bankruptcy court may determine that the
underlying instrument is collateral for a loan by the Trust
and therefore is subject to sale by the trustee in
bankruptcy. Finally, it is possible that the Trust may not be
able to substantiate its interest in the underlying
instrument. While the Trust's Trustees acknowledge these
risks, it is expected that they can be controlled through
careful monitoring procedures.
There can, of course, be no guarantee that the Trust's
investment objective will be achieved, due to the uncertainty
inherent in all investments.
OTHER FOREIGN SECURITIES
The Trust may make investments in convertible and equity
securities in a broad range of industries issued by foreign
companies, provided that they are limited, together with
similar U. S. investments, to not more that 40% of the
Trust's total assets immediately after the making of any such
investment, and it is expected that at least 65% of the
Trust's total assets will be invested in domestic and foreign
bonds and debentures. (See "Investment Objective and
Policies.") Investors should recognize that investing in
foreign companies involves certain of the same special
considerations applicable to investment in foreign debt
securities, including changes in currency rates and in
exchange control regulations, costs in connection with
conversions between various currencies and less publicly
available information about a foreign company than about a
domestic company.
CERTAIN INVESTMENT RESTRICTIONS
The practices described above with respect to options and
futures transactions and the lending of portfolio securities
are fundamental policies which may not be changed without
approval of the shareholders. These policies also provide,
among other things, that the Trust may not purchase any
securities if as a result such purchase would cause more than
10% of the total outstanding voting securities of the issuer
to be held by the Trust. Also, these policies provide that
no more than an aggregate of 10% of the Trust's total assets,
at the time of investment, will be invested in repurchase
agreements having maturities longer than seven days and other
investments subject to legal or contractual restrictions on
resale, or which are not
readily marketable.
MANAGEMENT
TRUSTEES
Under the terms of the Declaration of Trust establishing
the Trust, which is governed by the laws of The
Commonwealth of Massachusetts, the Trustees of the Trust
are ultimately
responsible for the management of its business and affairs.
The Statement of Additional Information contains backround
information regarding each Trustee and executive officer of
the Trust.
INVESTMENT ADVISER
The Investment Adviser, Anchor Investment Management
Corporation, formerly Meeschaert Investment Management
Corporation, manages the Trust's investments and affairs,
subject to the supervision of the Trust's Trustees. The
principal offices of both the Trust and the Investment
Adviser are located at 7022 Bennington Woods Drive,
Pittsburgh, Pennsylvania 15237.
The person who is primarily responsible for the day-to-day
management of the Trust's portfolio is Paul Jaspard, who is a
Vice President of the Investment Advisor. Mr Jaspard is
President of Global Equity Managers, S.A., an investment
advisory firm headquartered in Luxembourg. He has managed
other portfolios for the Meeschaert organization (as
hereafter defined) for more than eighteen years. He has been
in the investment counselling business for more than twenty
years, rendering advice to a wide variety of individual and
institutional clients.
For its services under its Investment Advisory Contract
with the Trust, the Investment Adviser receives a fee,
payable monthly, calculated at the rate of 3/4 of 1% per
annum of the average daily net assets of the Trust. This fee
is higher than that of most other investment companies. For
the fiscal year ended December 31, 1995 the Investment
Adviser received investment advisory fees of $202,988 for its
services to the Trust, which represented .75% of the Trust's
average net assets. \R
The Investment Adviser and Meeschaert & Co., Inc., the
Trust's underwriter (the "Distributor"), are affiliated
through common control with Societe D'Etudes et de Gestion
Financieres Meeschaert, S. A., one of France's largest
privately-owned investment management firms, which is
referred to as the "Meeschaert organization". The Meeschaert
organization was established in Roubaix, France in 1935 by
Emile C. Meeschaert, and presently manages, with full
discretion, an aggregate amount of approximately $1.5 billion
for about 8,000 individual (and institutional) customers with
$250 million in French mutual funds managed by the
organization.
EXPENSES
The Trust is responsible for all its expenses not assumed
by the Investment Adviser under the contract, including
without limitation, the fees and expenses of the custodian
and transfer agent; costs incurred in determining the Trust's
net asset value and keeping its books; the cost of share
certificates; membership dues in investment company
organizations; distribution and brokerage commissions and
fees; fees and expenses of registering its shares; expenses
of reports to shareholders, proxy statements and other
expenses of shareholders' meetings; insurance premiums;
printing and mailing expenses; interest, taxes and corporate
fees; legal and accounting expenses; and fees and expenses of
Trustees not affiliated with the Investment Adviser. The
Trust will also bear expenses incurred in connection with
litigation in which the Trust is a party and the legal
obligation the Trust may have to indemnify its officers and
Trustees with respect thereto.
For the fiscal year ended December 31, 1995, expenses borne
by the Trust amounted to $286,980 which represented 1.06% of
the Trust's average net assets. \R
BROKERAGE
Decisions to buy and sell portfolio securities for the Trust
are made pursuant to recommendations by the Investment
Adviser.
The Trust, through the Investment Adviser, seeks to execute
its portfolio security transactions on the most favorable
terms and in the most effective manner possible. To the
extent consistent with the policy of seeking best price and
execution, a portion of the Trust's portfolio transactions
may be executed through the Distributor, which is an
affiliate of the Investment Adviser. In the event that this
occurs, it will be on the basis of what management believes
to be current information as to rates which are generally
competitive with the rates available from other responsible
brokers and the lowest rates, if any, currently offered by
the Distributor. In selecting among broker dealer firms to
execute its portfolio transactions, the Trust, through the
Investment Adviser, may give consideration to those firms
which have sold or are selling shares of the Trust and who
furnish other services to the Trust or the Investment
Adviser.
For the year ended December 31, 1995 the Trust
paid no brokerage commissions. \R
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
During the past fiscal year, the investment policy of
the Trust continued to be limited to investments in European
currency instruments, namely German marks, Dutch guilders
and Swiss francs. Half of the assets were kept in short to
medium term bonds and half in very short term monetary
instruments. The
Trust benefited from the strength of the European currencies
vis-a-vis the US dollar. \R
The average annual total returns for a share of the Trust
were as follows for the period indicated:
17.52% for the one year period beginning on January
1,
1995 through December 31, 1995; \R
7.60% per annum during the five-year period beginning
on
January 1, 1991 through December 31,1995; and \R
6.28% per annum during the nine-year period
beginning
January 1, 1987 through December 31, 1995. \R
HOW TO PURCHASE SHARES
Shares of the Trust may be purchased from Meeschaert & Co.,
Inc., 7022 Bennington Woods Drive, Pittsburgh, Pennsylvania
15237, the Trust's principal underwriter (the "Distributor").
There is no sales charge or commission payable by the
investor. For new shareholders initiating accounts, the
minimum investment is $500, except for exchanges of
securities for Trust shares, where the minimum is $5,000 (see
"How to Exchange Securities for Trust Shares" below). There
is no minimum for shareholders purchasing additional shares
for deposit to existing accounts. An application for use in
making an initial investment in the Trust is included in the
back of this Prospectus. The applicable price will be the net
asset value next determined after the order is received by
the Distributor. (See "Determination of Net Asset Value".)
DISTRIBUTION OF SHARES
In addition to advisory fees and other expenses, the Trust
may pay for certain expenses pursuant to a distribution plan
(the "Plan") designed to meet the requirements of Rule 12b-1
under the Investment Company Act of 1940 ("Rule 12b-1"). The
Plan is of the type sometimes called a compensation plan.
The Plan provides that the Trust will pay the Distributor a
commission equal to up to 5% of the price paid to the Trust
for each sale, all or any part of which may be reallowed by
the Distributor to others (dealers) making such sales. To
the
extent that the distribution fee is not paid to such
dealers, the Distributor may use such fee for its expenses
of distribution of Trust shares. If such fee exceeds its
expenses, the Distributor may realize a profit from these
arrangements. An aggregate limit on the amount of all
payments pursuant to the Plan equal to .75 of 1% of the
Trust's average daily net assets for any fiscal year is
currently in effect. If, so long as the Plan is in effect,
the Distributor's reallowances to dealers and other expenses
exceed the (currently .75 of 1%) limit for any particular
year, it could
collect in any future year such amounts (which do not
include interest or other carrying charges) up to any amount
by which amounts paid to it under the Plan in that year are
less than the earlier year's limit. In such a case it might
receive amounts in excess of its then current expenses.
The Distributor's expenses are likely to be higher in the
early years of the Trust. The Plan has not been made
effective pending review and approval of the Plan by the
Trust's shareholders. Accordingly, for the fiscal year ended
December 31, 1995, the Trust paid no fees under the Plan to
the Distributor. \R
In conjunction with the Plan, a contingent deferred sales
charge may be imposed upon certain redemptions of shares
purchased after inception of the Plan. The charge in respect
of such redemptions made during the first four calendar
years following purchase of the shares is as follows: 4% in
the year of purchase; 3% in the second year; 2% in the third
year; and 1% in the fourth year. These charges are not
received by the Distributor and will not reduce amounts paid
to the Distributor under the Plan.
In 1992, the Securities and Exchange Commission approved
amendments to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (the "NASD"), of
which Meeschaert & Co., Inc. is a member. These amendments
became effective on July 1, 1993 and limit and otherwise
affect mutual fund sales charges, including asset-based
sales charges and contingent deferred sales charges under
Rule 12b-1. In the event that amendments to Rule 12b-1 under
the Investment Company Act of 1940 or the NASD's Rules of
Fair Practice are inconsistent with the Plan, the Trust's
Board of Trustees would consider various actions, including
proposing amendments to or causing the Plan to be
terminated.
Meeschaert & Co., Inc. serves as the Trust's principal
underwriter under a Distributor's Contract dated October 5,
1990.
HOW TO EXCHANGE SECURITIES FOR TRUST SHARES
When shares of the Trust are being offered, the Trust may
accept U.S. Government securities and U. S. Government
agency fixedincome securities acceptable to the Investment
Adviser in exchange for shares of the Trust at net asset
value. The minimum value of securities accepted for deposit
in any single transaction is $5,000. The Trust will value
accepted securities in the manner provided for valuing its
portfolio securities (see "Determination of Net Asset
Value"). Securities determined to be acceptable for the
Trust, in proper form for transfer to the Trust, should be
forwarded, together with a completed and signed letter of
transmittal in approved form (available from the
Distributor) to the Trust as follows:
Investors Bank & Trust Company
Financial Product Services Group:
Attn: Anchor International Bond Trust
1 Lincoln Plaza
Boston, Massachusetts 02205
An investor must forward all securities pursuant to a single
Letter of Transmittal or, in certain instances indicated in
the Instructions to the Letter of Transmittal, multiple
Letters of Transmittal attached and transmitted as a single
exchange. The Trust will only accept securities which are
delivered in proper form.
An investor will be required to represent, among other
things, that the securities forwarded are not subject to any
restrictions upon their sale by the Trust by reason of any
agreement or representation the investor has made in respect
thereof, or of his being in control of, controlled by or
under common control with the issuer thereof within the
meaning of Section 2(11) of the Securities Act of 1933 or
for any other reason. The Trust will not accept securities
for exchange if, in the opinion of its counsel, acceptance
would violate any federal or other law to which the Trust is
subject. Investors who are contemplating an exchange of
securities for shares of the Trust, or their
representatives, are advised to contact the Distributor to
determine whether the securities are acceptable to the Trust
before forwarding such securities. The Trust reserves the
right to reject any securities when it determines in its
sole discretion, that it is in the best interests of the
Trust to do so.
If securities presented for exchange are found to be in good
order only in part, the Trust may issue the appropriate
number of shares in accordance with the procedure described
below for such part and return the balance to the investor
or, at its option, may waive any or all irregularities to
the extent permissible under applicable law and issue shares
for all or a portion of such defective presentation. A
confirmation for shares of the Trust will be issued to an
investor after accepted securities presented by him have
cleared for transfer to the Trust. No certificates will be
issued unless requested by the investor.
By tendering securities, an investor agrees to accept the
determination of market value by the Trustees concurrently
with the determination of the Trust's net asset value per
share. The number of shares of the Trust to be issued to an
investor in exchange for securities shall be the value of
such accepted securities determined in the manner described
above divided by the net asset value per Trust share next
determined after the Trust's acceptance of such securities.
A gain or loss for federal tax purposes may be realized by
an investor in connection with the exchange of securities
for shares of the Trust, depending upon his tax cost basis
for the securities tendered for exchange. Each investor
should consult his tax adviser with respect to the
particular federal income tax consequences, as well as any
state and local tax consequences, of exchanging his
securities for Trust shares.
REDEMPTION AND REPURCHASE
OF SHARES
Any shareholder may require the Trust to redeem his shares.
In addition the Trust maintains a continuous offer to
repurchase its shares. If a shareholder used the services
of a broker in selling his shares in the over-the-counter
market, the broker may charge a reasonable fee for this
services. Redemptions and repurchases will be made in the
following manner:
1. Certificates for shares of the Trust may be mailed or
presented, duly endorsed, with signatures guaranteed in the
manner described below, with a written request that the
Trust redeem the shares, to the Trust's transfer agent at
7022 Bennington Woods Drive, Pittsburgh, Pennsylvania 15237.
If no certificate has been issued and shares are held in an
Open Account, a written request that the Trust redeem such
shares, with signatures guaranteed in the manner described
below, may be mailed or presented as described above. The
redemption price
will be the net asset value next determined after the
request and/or certificates are received.
2. A request for repurchase may be communicated to the Trust
by a shareholder through a broker. The repurchase price will
be the net asset value next determined after the request is
received by the Trust, provided that, if the broker receives
the request before noon and transmits it to the Trust before
1:00 p.m. Eastern Time the same day, the repurchase price
will be the net asset valued determined as of 12:00 noon
Eastern Time that day. If the broker receives the request
after noon, the repurchase price will be the next asset
value determined as of 12:00 noon Eastern Time the following
day. If an investor uses the services of a broker in having
his shares repurchased, the broker may charge a reasonable
fee for his services.
Payment for shares redeemed or repurchased will be delivered
within seven days after receipt of the shares, and/or
required documents, duly endorsed. The signature(s) on an
issued certificate must be guaranteed by a commercial bank
or trust company or by a member of the New York, American,
Pacific Coast, Boston or Chicago Stock Exchange. A signature
guarantee by a savings bank or savings and loan association
or notarization by a notary public is not acceptable.
In order to ensure proper authorization the transfer agent
may request additional documents such as, but not restricted
to, stock powers, trust instruments, certificates of
corporate authority and waiver of tax required in some
states from exchanging estates before exchanging shares.
The right of redemption may be suspended or the payment date
postponed when the New York Stock Exchange is closed for
other than customary weekend or holiday closings, or when
trading on the New York Stock Exchange is restricted, as
determined by the Securities and Exchange Commission; for
any period when an emergency as defined by the rules of the
Commission exists; or during any period when the Commission
has, by order, permitted such suspension. In case of a
suspension of the right of redemption, a shareholder who has
tendered a certificate for redemption or made a request for
repurchase through a broker may withdraw his request or
certificate or he will receive payment of the net asset
value determined next after the suspension has been
terminated.
A shareholder may receive more or less than he paid for his
shares, depending on the net asset value of the shares at
the time of redemption or repurchase.
DETERMINATION OF NET ASSET VALUE
The net asset value is determined by the Trust as of 12:00
noon Eastern Time on each business day on which the New York
Stock Exchange is open for trading or on any day that the
Trust is open, but the New York Stock Exchange is not open
for business if there occurs an event which might materially
affect the net asset value of the Trust's redeemable shares.
The manner of determination of the net asset value is
briefly as follows: Securities traded on a U. S. national
or other foreign securities exchange are valued at the last
sale price on the primary exchange on which they are listed,
or if there has been no sale that day, at the current bid
price. Other U. S. and foreign securities for which market
quotations are readily available are valued at the known
current bid price believed most nearly to represent current
market value. Other securities (including limited traded
securities) and all other assets of the Trust are valued at
fair market value as determined in good faith by the
Trustees of the Trust. Liabilities are deducted from the
total, and the resulting amount is divided by the number of
shares outstanding.
SERVICES FOR SHAREHOLDERS
OPEN ACCOUNTS
As a convenience to the shareholder, all shares of the Trust
registered in his name are automatically credited to an Open
Account maintained for him on the books of the Trust. All
shares acquired by the shareholder will be credited to his
Open Account and share certificates will not be issued
unless requested. Certificates representing fractional
shares will not be issued in any case. Certificates
previously acquired may be surrendered to the Trust's
transfer agent; the certificates will be cancelled and the
shares represented thereby will continue to be credited to
the Open Account of the shareholder.
Each time shares are credited to his Open Account, the
shareholder will receive a statement showing the details of
the transaction and the then current balance of shares owned
by him. Shortly after the end of each calendar year he will
also receive a complete annual statement of his Open Account
as well as information as to the federal tax status of
dividends and capital gain distributions, if any, paid by
the Trust during the year.
Shares credited to an Open Account are transferable upon
written instructions to the Trust's transfer agent and Class
A Common Shares may be exchanged for Common Shares without
charge as described under "Exchange of Class A Common Shares
for Common Shares".
INVEST-BY-MAIL
An Open Account provides a single and convenient way of
setting up a flexible investment program for the
accumulation of shares of the Trust. At any time when the
Trust is offering its shares the shareholder may send a
check (payable to the order of the Trust) to Investors Bank
& Trust Company, Financial Product Services Group, Attn:
Anchor International Bond Trust, 1 Lincoln Plaza, Boston,
Massachusetts 02205 (giving the full name or names of his
account). The check will be used to purchase additional
shares for his Open Account at the net asset value next
determined after the check is received. Any check not
payable to the order of the Trust will be returned.
The cost of administering Open Accounts for the benefit of
shareholders who participate in them will be borne by the
Trust as an expense of all its shareholders.
DISTRIBUTIONS
The Trust is authorized to issue two classes of shares (see
"About the Trust" above). With respect to the Class A Common
Shares, the Trust shall distribute any income dividends and
any capital gain distributions only in additional Class A
Common Shares. Class A Common Shares are intended to be
issued only to certain foreign shareholders.
With respect to the Common Shares, which are intended to be
issued to all other shareholders, the Trust currently
intends to distribute any such dividends and distributions
in additional Common Shares, or, at the option of the
shareholder, in cash. In accordance with his distribution
option, a shareholder of Common Shares may elect (1) to
receive both dividends and capital gain distributions in
additional Common Shares or (2) to receive dividends in cash
and capital gain distributions in additional Common Shares
or (3) to receive both dividends and capital gain
distributions in cash. A shareholder of Common Shares may
change his distribution option at any time by notifying the
Trust's transfer agent in writing. To be effective with
respect to a particular dividend or distribution, the new
distribution option must be received by the transfer agent
at least 30 days prior to the close of the fiscal year. All
accounts with a cash dividend option will be changed to
reinvest both dividends and capital gains automatically upon
determination by the Trust's transfer agent that the address
of record is
not current.
Dividends and capital gain distributions received in shares
will be received by the Trust's transfer agent, as agent for
the shareholder, and credited to his Open Account in full
and fractional shares computed at the record date closing
net asset
value.
TAXES
The Trust intends to qualify under Subchapter M of the
Internal Revenue Code as a regulated investment company and
to distribute substantially all investment income and
capital gains, if any, at least once every year so that, to
the extent of such distributions, the Trust will not be
subject to federal income taxes.
Shareholders will be subject to federal income taxes on
distributions made by the Trust whether they are received in
cash or additional Trust shares. Distributions of net
investment income and short-term capital gains, if any, will
be taxable to shareholders as ordinary income. Distributions
of long-term capital gains, if any, will be taxable to
shareholders as longterm capital gains, without regard to
how long a shareholder has held shares of the Trust.
Dividends paid by the Trust will generally not qualify for
the 70% dividends received deductions for corporations. The
Trust will notify shareholders each year of the amount of
dividends and distributions, including the amount of any
distribution of long-term capital gains.
The Trust's foreign investments may be subject to foreign
withholding taxes. The Trust will be entitled to claim a
deduction for such foreign withholding taxes for federal
income tax purposes. However, any such taxes will reduce the
income available for distribution to shareholders.
The Trust is required to withhold 20% of the dividends paid
with respect to any shareholder who fails to furnish the
Trust with a correct taxpayer identification number, who
underreported dividend or interest income, or who fails to
certify to the Trust that he or she is not subject to such
withholding. An individual's tax identification number is
his or her social security number.
The foregoing is a general and abbreviated summary of the
applicable provisions of the Internal Revenue Code and
Treasury regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code
sections and regulations. The Code and regulations are
subject to change by legislative or administrative actions.
OTHER INFORMATION
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-PAYING AGENT
All securities, cash and other assets of the Trust are
received, held in custody and delivered or distributed by
Investors Bank & Trust Company, Custodian, Financial Product
Services, 1 Lincoln Plaza, Boston, Massachusetts 02205,
provided that in cases where foreign securities must, as a
practical matter, be held abroad, the Trust's custodian bank
and the Trust will make appropriate arrangements so that
such securities may be legally so held abroad. The Trust's
custodian bank does not decide on purchases or sales of
portfolio securities or the making of distributions. Anchor
Investment Management Corporation, 7022 Bennington Woods
Drive, Pittsburgh, Pennsylvania 15237, serves as transfer
agent and dividend paying agent for the Trust.
SHAREHOLDER INQUIRIES
For further information about the Trust, investors should
call (412) 635-7610. Written inquiries should be addressed
to Anchor International Bond Trust, 7022 Bennington Woods
Drive, Pittsburgh, Pennsylvania 15237.
ANCHOR INTERNATIONAL BOND TRUST
(THE "TRUST")
MEESCHAERT & CO., INC. ("DISTRIBUTOR")
APPLICATION AND REGISTRATION
FORM1 SEND APPLICATION
TO
MEESCHAERT & CO., INC., 7022 BENNINGTON WOODS DRIVE,
PITTSBURGH, PENNSYLVANIA 15237
Date:
__________________ _
I. ACCOUNT REGISTRATION:
New: Social Security or Tax
Number___________________________________________________
(if two names below, circle which one has this
number.)
Existing: Account Number
__________________________________________________________
(from your latest statement
vital
for identification.)
Name(s)
_____________________________________________________________
__ __ ________________
(Type or print exactly as they are to appear
on the Trust's records.)
Street
_____________________________________________________________
__ __ __________________
City __________________________________________ State
______________________ Zip ___________
If address outside the U.S.A., please circle I (am) (am not)
a citizen of the U.S.A.
If registration requested in more than one name, shares will
be registered as "Joint Tenants with Rights of Survivorship"
unless otherwise instructed.
II. BASIS FOR OPENING NEW ACCOUNT:
A check for $_______________ payable to the Trust
attached. or
Shares _______________ recently purchased on
_________________________
(number) (date)
DISTRIBUTION OPTION: (exercisable only by holders of Common
Shares) Check only one. If none checked, option A will be
assigned.
A. Dividends and capital gains in additional full and
fractional shares credited to shareholder's account, no
certificates issued.
OR
B. Dividends in cash; capital gains in additional full
and fractional shares credited to shareholder's account; no
certificates issued.
OR
C. Dividends in cash; capital gains in cash.
(Certificates will be issued to shareholders requesting such
in writing from the Transfer Agent.)
III. INVEST-BY-MAIL SERVICE: FOR PERIODIC SHARE
ACCUMULATION (WHETHER OR NOT DIVIDENDS ARE RECEIVED IN
SHARES)
Please check if you wish to utilize the Trust's Invest-
By
Mail Service. This is a voluntary service involving no
extra charge to the shareholder, and it may be changed or
discontinued at any time.
IV. SHAREHOLDER'S SIGNATURE: Should be the same as name in
Account Registration.
__________________________________
_____________________________________
Signature Signature of Co-
Owner (if any)
(I have received a current prospectus of the trust and I
understand that my account will be covered by the
provisions on
the reverse side of this Application. I also understand that
I may terminate any of these services at any time.)
DEALER AUTHORIZATION:
(please print)
Representative
_________________________________
_____________________________________
Dealer's Name
(Representative's
Name)
_________________________________
_____________________________________
Home Office Address Telephone
Number(Representative's Number)
Branch Office:
_________________________________
_____________________________________
City State Zip Address
_________________________________
_____________________________________
Telephone Number Authorized Signature of
Dealer
City State Zip
ANCHOR INTERNATIONAL BOND TRUST
7022 BENNINGTON WOODS DRIVE
PITTSBURGH, PENNSYLVANIA
15237 (412) 635-7610
STATEMENT OF ADDITIONAL
INFORMATION Dated May 1,
1996
This Statement of Additional Information supplements
the information contained in the current Prospectus of
Anchor International Bond Trust (the "Trust") dated May 1,
1996 and should be read together with the Trust's
Prospectus and the financial statements contained in the
Trust's Annual Report for the year ended December 31,
1995. The Trust's Prospectus and Annual Report may be
obtained without charge by writing
or calling the Trust. The Trust's Annual Report is
incorporated by reference in this Statement of
Additional Information. \R
TABLE OF CONTENTS
ABOUT THE TRUST
3
INVESTMENT POLICIES AND RISK CONSIDERATIONS
3
Option Transactions 3
Index Options 4
Risks of Options on Indices 5
Options on Foreign Currencies 6
Risks of Foreign Currency Option Activities 6
Special Risks of Foreign Currency Options 7
Financial Futures Contracts and Related Options
8
Limitations on Futures Contracts and Related Options 9
Risks Relating to Futures Contracts and Related Options 9
PORTFOLIO TURNOVER
10
INVESTMENT RESTRICTIONS
11
MANAGEMENT
12
Officers and Trustees
12
Remuneration of Officer and Trustees
13
Investment Advisory Contract
13
Investment Adviser
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DETERMINATION OF NET ASSET VALUE
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DISTRIBUTION OF SHARES
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HOW TO PURCHASE SHARES
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REDEMPTION, EXCHANGE AND REPURCHASE OF SHARES
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DISTRIBUTIONS
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TAXES
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Tax Treatment of Options and Futures Transactions
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PORTFOLIO SECURITY TRANSACTIONS
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OTHER INFORMATION
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Custodian, Transfer Agent and Dividend-Paying Agent
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Independent Public Accountants
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Registration Statement
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FINANCIAL STATEMENTS
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ABOUT THE TRUST
The Anchor International Bond Trust (the "Trust"), formerly
known as Meeschaert International Bond Trust, was established
as a business trust under the laws of Massachusetts by a
Declaration of Trust dated April 10, 1986, as amended and
restated September 3, 1986.
The capitalization of the Trust consists of an unlimited
number of shares of beneficial interest, without par value.
The Trust is authorized to issue two separate classes of
shares, one such class designated as "Common Shares" and the
other such class designated as "Class A Common Shares." On
December 23, 1987, all outstanding Class A Common Shares were
exchanged for Common Shares. The Trust does not presently
intend to issue any more Class A Common Shares. Both such
classes of shares have the same privileges, limitations and
rights, except that dividends and distributions upon Class A
Common Shares were paid only in additional Class A Common
Shares and such Class A Common Shares
could, at the option of the shareholder, be exchanged at any
time for an equal number of Common Shares without any
additional investment by the shareholder and without any
additional charges being imposed by the Trust. The Class A
Common Shares were issued only to certain foreign
shareholders of the Trust. Issued shares are fully paid and
non-assessable and transferable on the books of the Trust.
The shares have no preemptive rights. The shares each have
one vote and proportionate liquidation rights.
The Trust may issue additional series of shares representing
separate funds of assets, when and as such funds are
established by the Trustees. All shares of the Trust (and
classes of shares) will have equal voting rights for
Trustees, but will generally vote separately or have separate
voting requirements on all other matters.
The Trust will normally not hold annual meetings of
shareholders to elect Trustees. If less than a majority of
the Trustees holding office have been elected by
shareholders, a meeting of shareholders will be called to
elect Trustees. Under the Declaration of Trust and the
Investment Company Act of 1940, the record holders of not
less than two-thirds of the outstanding shares of the Trust
may remove a Trustee by votes cast in person or by proxy at a
meeting called for the purpose or by a written declaration
filed with the Trust's custodian bank. Except as described
above, the Trustees will continue to hold office and may
appoint successor Trustees.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations
of the Trust. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of the Trust
and requires that notice of this disclaimer be given in each
agreement, obligation or instrument entered into or executed
by the Trust or a Trustee. The Declaration of Trust provides
for indemnification from the assets of the Trust for all
losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a
shareholder incurring a financial loss on account of his or
her liability as a shareholder of the Trust is limited to
circumstances in which the Trust itself would be unable to
meet its obligations. The possibility that these
circumstances would occur is remote. Upon payment of any
liability incurred by the Trust, the shareholder paying the
liability will be entitled to reimbursement from the general
assets of the Trust. The Trustees intend to conduct the
operations of the Trust to avoid, to the extent possible,
ultimate liability of shareholders for the liabilities of the
Trust.
INVESTMENT POLICIES AND RISK CONSIDERATIONS
The Trust's Prospectus contains a description of the
investment objective and policies of the Trust, including a
discussion of specialized techniques that the Trust may use
in order to achieve its investment objective and certain
risks related thereto. The following discussion is intended
to provide further information concerning investment
techniques and risk considerations which the Investment
Adviser believes to be of interest to investors.
OPTION TRANSACTIONS
A call option is a short-term contract (having a duration of
nine months or less) which gives the purchaser of the option,
in return for a premium paid, the right to buy, and the
writer the obligation to sell, the underlying security at the
exercise price at any time prior to the expiration of the
option, regardless of the market price of the security during
the option period. The premium paid to the writer is the
consideration for undertaking the obligations of the option
contract. The writer foregoes the opportunity to profit from
an increase in the market price of the underlying security
above
the exercise price except insofar as the premium represents
such a profit. Should the price of the security decline, on
the other hand, the premium represents an offset to such
loss. A call option on a securities index is similar to a
call option on an individual security, except that the value
of the option depends on the weighted value of the group of
securities comprising the index and all settlements are made
in cash.
If a call option expires on its stipulated expiration date or
if the Trust enters into a closing purchase transaction, the
Trust will realize a gain (or loss if the cost of a closing
purchase transaction exceeds the premium received when the
option was sold) without regard to any unrealized gain or
loss on the underlying security, and the liability related to
such option will be extinguished. If a call option is
exercised, the Trust will realize a gain or loss from the
sale of the underlying security and the proceeds of sale will
be increased by the premium originally received.
A put option gives the purchaser of the option the right to
sell, and the writer the obligation to buy, the underlying
security at the exercise price during the option period. Thus
the Trust may purchase a put option on an underlying security
owned by the Trust as a defensive technique in order to
protect against an anticipated decline in the value of the
security. For example, a put option may be purchased in order
to protect unrealized appreciation of a security where the
Investment Adviser deems it desirable to continue to hold the
security because of tax considerations. The premium paid for
the put option would reduce any capital gain when the
security is eventually sold.
As the foregoing suggests, the writing of call option
contracts and the purchasing of put options is a highly
specialized activity which involves investment techniques and
risks different from those ordinarily associated with
investment companies, but the limitations described in the
Trust's Prospectus tend to reduce such risks. The Investment
Adviser believes that the assets of the Trust can be
increased by realizing premiums on the writing of call
options and by the purchasing of put options on securities
held by the Trust. When a security is sold from the Trust's
portfolio, the Trust effects a closing call purchase or put
sale transaction so as to close out any existing option on
the security. A closing transaction may be made only on an
Exchange or other market which provides a secondary market
for an option with the same exercise price and expiration
date. There is no assurance that a liquid secondary market on
an Exchange or otherwise will exist for any particular
option, or at any particular time, and for some options, no
secondary market on an Exchange or otherwise may exist. If
the Trust is unable to effect a closing transaction, in the
case of a call option, the Trust will not be able to sell the
underlying security until the option expires or the Trust
delivers the underlying security upon exercise.
INDEX OPTIONS
A multiplier for an index option performs a function similar
to the unit of trading for an option on an individual
security. It determines the total dollar value per contract
of each point between the exercise price of the option and
the current level of the underlying index. A multiplier of
100 means that a onepoint difference will yield $100. Options
on different indices may have different multipliers.
Securities indices for which options are currently traded
include the Standard & Poor's 100 and 500 Composite Stock
Price Indices, Computer/Business Equipment Index, Major
Market Index, AMEX Market Value Index, Computer Technology
Index, Oil and Gas Index, NYSE Options Index, Gaming/Hotel
Index, Telephone Index, Transportation Index, Technology
Index, and Gold/Silver Index.
The Trust may write call options and purchase put and call
options on any other traded indices. Call options on
securities indices written by the Trust will be "covered" by
identifying the specific portfolio securities generally
represented by the index.
To secure the obligation to deliver the underlying securities
in the case of an index call option written by the Trust, the
Trust will be required to deposit qualified securities. A
"qualified security" is a security against which the Trust
has not written a call option and which has not been hedged
by the Trust by the sale of a financial futures contract. If
at the close of business on any day the market value of the
qualified securities falls below 100% of the current index
value times the multiplier times the number of contracts, the
Trust will deposit an amount of cash or liquid assets equal
in value to the difference. In addition, when the Trust
writes a call on an index which is "in-the-money" at the time
the call is written, the Trust will segregate with its
custodian bank cash or liquid assets equal in value to the
amount by which the call is "inthe-money" times the
multiplier times the number of contracts. Any amount
segregated may be applied to the Trust's obligation to
segregate additional amounts in the event that the market
value of the qualified securities falls below 100% of the
current index value times the multiplier times the number on
contracts.
The Trust may also purchase put and call options for a
premium. The Trust may sell a put or call option which it has
previously purchased prior to the sale of the underlying
security. Such a sale would result in a net gain or loss
depending on whether the amount received on the sale is more
or less than the premium and other transaction costs paid.
In connection with the Trust's qualifying as a regulated
investment company under the Internal Revenue Code, other
restrictions on the Trust's ability to enter into option
transactions may apply from time to time. See "Taxes -- Tax
Treatment of Options and Futures Transactions."
RISKS OF OPTIONS ON INDICES
Because the value of an index option depends upon movements
in the level of the index rather than the price of a
particular security, whether the Trust will realize a gain or
loss on the purchase or sale of an option on an index depends
upon movements in the level of prices in the market generally
or in an industry or market segment, rather than movements in
the price of an individual security. Accordingly, successful
use by the Trust of options on indices will be subject to the
Investment Adviser's ability to predict correctly movements
in the direction of the market generally or of a particular
industry. This requires different skills and techniques than
predicting changes in the price of individual securities.
Index prices may be distorted if trading of certain
securities included in the index is interrupted. Trading in
index options also may be interrupted in certain
circumstances, such as if trading were halted in a
substantial number of securities included in the index. If
this occurred, the Trust would not be able to close out
options which it has purchased or written and, if
restrictions on exercise were imposed, may be unable to
exercise an option it purchased, which could result in
substantial losses to the Trust. However, it is the Trust's
policy to purchase or write options only on indices which
include a sufficient number of securities so that the
likelihood of a trading halt in the index is minimized.
Because the exercise of an index option is settled in cash,
an index call writer cannot determine the amount of its
settlement obligation in advance and, unlike call writing on
portfolio securities, cannot provide in advance for its
potential settlement obligation by holding the underlying
securities.
Price movements in securities in the Trust's portfolio will
not correlate perfectly with movements in the level of the
index and, therefore, the Trust bears the risk that the price
of the securities held by the Trust may not increase as much
as the index. In this event, the Trust would bear a loss on
the call which would not be completely offset by movements in
the prices of the Trust's portfolio securities. It is also
possible that the index may rise when the Trust's portfolio
securities do not. If this occurred, the Trust would
experience a loss on the call which would not be offset by an
increase in the value of its portfolio and also might
experience a loss in its portfolio. Unless the Trust has
other liquid assets which are sufficient to satisfy the
exercise of a call on an index, the Trust will be required to
liquidate portfolio securities in order to satisfy the
exercise. Because an exercise must be settled within hours
after receiving the notice of exercise, if the Trust fails to
anticipate an exercise, it may have to borrow from a bank (in
amounts not exceeding 5% of the Trust's total assets) pending
settlement of the sale of securities in its portfolio and
would incur interest charges thereon.
When the Trust has written a call on an index, there is also
a risk that the market may decline between the time the Trust
has the call exercised against it, at a price which is fixed
as of the closing level of the index on the date of exercise,
and the time the Trust is able to sell securities in its
portfolio. As with options on portfolio securities, the Trust
will not learn that a call has been exercised until the day
following the exercise date but, unlike a call on a portfolio
security in settlement, the Trust may have to sell part of
its portfolio securities in order to make settlement in cash,
and the price of such securities might decline before they
could be sold. If the Trust exercises a put option on an
index which it has purchased before final determination of
the closing index value for that day, it runs the risk that
the level of the underlying index may change before closing.
If this change causes the exercised option to fall "out-of-
the-money," the Trust will be required to pay the difference
between the closing index value and the exercise price of the
option (multiplied by the applicable multiplier) to the
assigned writer. Although the Trust may be able to minimize
this risk by withholding exercise instructions until just
before the daily cutoff time or by selling rather than
exercising an option when the index level is close to the
exercise price, it may not be possible to eliminate this risk
entirely because the cutoff time for index options may be
earlier than those fixed for other types of options and may
occur before definitive closing index values are announced.
It should be recognized that the Trust pays brokerage
commissions in connection with the writing and purchasing of
options and effecting closing transactions, as well as for
purchases and sales of underlying securities. The writing of
options could result in significant increases in the Trust's
portfolio turnover rate, especially during periods when
market prices of the underlying securities appreciate.
OPTIONS ON FOREIGN CURRENCIES
A put option on a foreign currency is a short-term contract
(generally having a duration of nine months or less) which
gives the purchaser of the put option, in return for a
premium, the right to sell the underlying currency at a
specified price during the term of the option. A call option
on a foreign currency is a short-term contract which gives
the purchaser of the call option, in return for a premium,
the right to buy the underlying currency at a specified price
during the term of the option. The purchase of put and call
options on foreign currencies is analogous to the purchase of
puts and calls on stocks.
Options on foreign currencies are currently traded in the
United States on the Philadelphia Stock Exchange and the
Chicago Board Options Exchange. Such options are currently
traded on British pounds, Swiss francs, Japanese yen,
Deutsche marks and Canadian dollars. The Trust would use
foreign currency options to protect against the decline in
the value of portfolio securities resulting from changes in
foreign exchange rates, as the following examples illustrate:
1. In connection with the Trust's payment for securities of a
foreign issuer at some future date in a foreign currency, the
Trust may purchase call options on such foreign currency in
order to hedge against the risk that the value of the foreign
currency might rise against the U. S. dollar, thereby
increasing the cost of the currency and the transaction.
EXAMPLE: The Trust must pay for the purchase of securities of
a Swiss issuer in Swiss francs. If the Trust is concerned
that the price of Swiss francs might rise in price in terms
of the U. S. dollar from, for example, $.4780, it might
purchase Swiss franc June 48 call options for a premium of,
for example, .50 (i.e. $.050 per Swiss franc times 62,500
Swiss francs per contract, for a total premium of $312.50 --
plus transaction costs). This would establish a maximum cost
for Swiss francs and, hence, the maximum cost in U. S.
dollars for the Swiss securities. Thus, if Swiss francs
subsequently appreciated to $.4950 and the premium on Swiss
franc June 48 call options increased to, for example, $1.95
(for a total premium of $1,219.75) the Trust could sell the
option at a profit ($1,219.75 less the original premium paid
of $312.50 and transaction costs) to offset the increased
cost of acquiring Swiss francs. Alternatively, the Trust
could exercise the option contract. If the Swiss franc
remained below $.48, the Trust could let its calls expire
(losing its premium) and purchase the Swiss francs at a lower
price.
2. The Trust may purchase foreign currency options to protect
against a decline in the Trust's cash and short-term U. S.
government securities.
EXAMPLE: The Trust may have investments in cash and in short
term U. S. Government securities, e.g., U. S. Treasury bills
having maturities of less than one year. In order to hedge
against a possible decline in the value of the U. S. dollar,
the Trust might purchase Deutsche mark 40 calls. If the
Deutsche mark appreciates above $.40, the Trust could
exercise its option contract and stabilize the value of its
cash holdings and the underlying value of the U. S. Treasury
bills in its portfolio as a result of the improved exchange
rate between the Deutsche mark and the U. S. dollar.
As is the case with the other listed options, the
effectiveness of foreign currency options in carrying out the
Trust's objective will depend on the exercise price of the
option held and the extent to which the value of such option
will be affected by changes in the exchange rates of the
underlying currency. To terminate its rights in options which
it has purchased, the Trust would sell an option of the same
series in a closing sale transaction. A gain or loss, which
will be offset by a loss or gain on the U. S. dollar, will be
realized depending on whether the sale price of the option is
more or less than the cost to the Trust of establishing the
position. If the contemplated transaction is not completed,
the option may be allowed to expire (resulting, however, in
the loss of the option premium amount) or liquidated for any
remaining value.
Foreign currency options purchased for the Trust shall be
valued at the last sale price on the principal Exchange on
which such option is traded or, in the absence of a sale, the
mean between the last bid and offering prices. Options which
are not actively traded will be valued at the difference
between the option price and the current market price of the
underlying security, provided that the put price is higher
than such market price or the call price is lower than such
market price. In the event that a put price is lower than
the current market value of the underlying security, or a
call price is higher than the current market value of the
underlying security, then the option will be assigned no
value.
RISKS OF FOREIGN CURRENCY OPTION ACTIVITIES
Assuming that any decline in the value of the Trust's
portfolio is accompanied by a rise in the value of a foreign
currency in relation to the U. S. dollar the purchase of
options on the foreign currency may generate gains which
would partially offset such decline. However, if after the
Trust purchases an option, the value of the Trust's portfolio
moves in the opposite direction from that contemplated, the
Trust may experience losses to the extent of premiums it paid
in purchasing such options, and this will reduce any gains
the Trust would otherwise have. For this reason as well as
supply and demand imbalances and other market factors, the
price movements of options on foreign currencies purchased by
the Trust may not correspond to the price movements of the
Trust's portfolio securities and may cause the options
transactions to result in losses to the Trust.
Option positions on foreign currencies may be closed out only
on an Exchange or other market which provides a secondary
market for options of the same series. United States options
on foreign currencies are currently traded only on the
Philadelphia Stock Exchange and the Chicago Board Options
Exchange. Trading in options on foreign currencies may be
interrupted, for example, because of supply and demand
imbalances arising from a lack of either buyers or sellers.
In addition, trading may be suspended after the price of an
option has risen or fallen more than a specified maximum
amount. Exercise of foreign currency options also could be
restricted or delayed because of regulatory restrictions or
other factors. Trading on options on foreign currencies
commenced in December, 1982. The ability to establish and
close out positions in such options will be subject to the
development and maintenance of a liquid secondary market. It
is not certain that this market will continue. The Trust will
not purchase foreign currency options on any Exchange or
other market unless and until, in the Investment Adviser's
opinion, the market for such options has developed
sufficiently. Although it is intended that the Trust purchase
options only when there appears to be an active market in
such instruments, there can be no assurance that a liquid
market will exist at a time when the Trust seeks to close a
particular option position. Accordingly, the Trust may
experience losses as a result of its inability to close out
an options position.
SPECIAL RISKS OF FOREIGN CURRENCY OPTIONS
In addition to the risks described above, there are special
risks associated with foreign currency options, including the
following:
1. The value of foreign currency options is dependent upon
the value of foreign currencies relative to the U. S. dollar.
As a result, the prices of foreign currency options may vary
with changes in the value of either or both currencies. Thus,
fluctuations in the value of the U. S. dollar will affect
exchange rates and the value of foreign currency options,
even in the case of otherwise stable foreign currency.
Conversely, fluctuations in the value of a foreign currency
will affect exchange rates and the value of foreign currency
options even if the value of the U. S. dollar remains
relatively constant. Thus, careful consideration must be
given to factors affecting both the U. S. economy and the
economy of the foreign country issuing the foreign currency
underlying the option.
2. The value of any currency, including U. S. dollars and
foreign currencies, may be affected by a number of complex
factors applicable to the issuing country, such as the
prevailing monetary policy of that country, its money supply,
its trade deficit or surplus, its balance of payments,
interest rates, inflation rates and the extent or trend of
its economic growth. In addition, foreign countries may take
a variety of actions, such as increasing or decreasing the
money supply or purchasing or selling government obligations,
which may have an indirect but immediate effect on exchange
rates.
3. The exchange rates of foreign currencies (and therefore
the value of foreign currency options) could be significantly
affected, fixed or supported directly by government actions.
Such government intervention may increase risks to investors
since exchange rates may not be free to fluctuate in response
to other market forces.
4. Because foreign currency transactions occurring in the
interbank market involve substantially larger amounts than
those likely to be involved in the exercise of individual
foreign currency option contracts, investors who buy or write
foreign currency options may be disadvantaged by having to
deal in an odd lot market for the underlying foreign
currencies at prices that are less favorable than for round
lots. Because this price differential may be considerable, it
must be taken into account when assessing the profitability
of a transaction in foreign currency options.
5. There is no systematic reporting of last sale information
for foreign currencies. There is reasonable current,
representative bid and offer information available on the
floor of the exchange on which foreign currency options are
traded, in certain brokers' offices, in bank foreign currency
trading offices, and to others who wish to subscribe for this
information. There is, however, no regulatory requirement
that those quotations be firm or revised on a timely basis.
The absence of last sale information and the limited
availability of quotations to individual investors may make
it difficult for many investors to obtain timely, accurate
data about the state of the underlying market. In addition,
the quotation information that is available is representative
of very
large transactions in the interbank market and does not
reflect exchange rates for smaller transactions. Since the
relatively small amount of currency underlying a single
foreign currency option would be treated as an odd lot in the
interbank market (i.e., less than between $1 and $5 million),
available pricing information from that market may not
necessarily reflect prices pertinent to a single foreign
currency option contract and investors who buy or sell
foreign currency options covering amounts of less than $1 to
$5 million can expect to deal in the underlying market at
prices that are less favorable than for round lots.
6. Foreign governmental restrictions or taxes could result in
adverse changes in the cost of acquiring or disposing of
foreign currencies. If The Options Clearing Corporation
("OCC") determines that such restrictions or taxes would
prevent the orderly settlement of foreign currency option
exercises or impose undue burdens on parties to exercise
settlements, it has the authority to impose special exercise
settlement procedures, which could adversely affect the
Trust.
7. The interbank market in foreign currencies is a global,
aroundthe-clock market. Therefore, in contrast with the
exchange markets for stock options, the hours of trading for
foreign currency options do not conform to the hours during
which the underlying currencies are traded. (Trading hours
for foreign currency options can be obtained from a broker.)
To the extent that the options markets are closed while the
market for the underlying currencies remains open,
significant price and
rate movements may take place in the underlying markets that
cannot be reflected in the options markets. The possibility of
such movements should be taken into account in (a) relating
closing prices in the options and underlying markets, and (b)
determining whether to close out a short option position that
might be assigned in an exercise that takes place after the
options market is closed on the basis of underlying currency
price movements at a later hour.
8. Since settlement of foreign currency options must occur
within the country issuing that currency, investors, through
their brokers, must accept or make delivery of the underlying
foreign currency in conformity with any U. S. or foreign
restrictions or regulations regarding the maintenance of
foreign banking arrangements by U. S. residents and may be
required to pay any fees, taxes or charges associated with
such delivery which are assessed in the issuing country. Prior
to the placing of any assets with a foreign custodian in
connection with the settlement of foreign currency options,
the Board of Trustees of the Trust shall have determined that
maintaining such assets in a particular country or countries
is consistent with the best interests of the Trust and its
shareholders, and that maintaining such assets with a
particular foreign custodian is consistent with the best
interests of the Trust and its shareholders. The Trust shall
also have approved, as consistent with the best interests of
the Trust and its shareholders, a written contract between the
Trust and such foreign custodian that will maintain the
Trust's assets. The Board of Trustees shall also establish a
system to monitor such foreign custody arrangements and a
majority of the Board of Trustees, at least annually, shall
review and approve the continuance of such arrangements as
consistent with the best interests of the Trust and its
shareholders.
FINANCIAL FUTURES CONTRACTS AND RELATED OPTIONS
The Trust may use financial futures contracts and related
options to hedge against changes in currency exchange rates or
in the market value of its portfolio securities or securities
which it intends to purchase. Hedging is accomplished when an
investor takes a position in the futures market opposite to
his cash market position. There are two types of hedges --
long (or buying) and short (or selling) hedges. Historically,
prices in the futures market have tended to move in concert
with cash market prices, and prices in the futures market have
maintained a fairly predictable relationship to prices in the
cash market. Thus, a decline in the market value of securities
in the Trust's portfolio may be protected against to a
considerable extent by gains realized on futures contracts
sales. Similarly, it is possible to protect against an
increase in the market price of securities which the Trust may
wish to purchase in the future by purchasing futures
contracts.
The Trust may purchase or sell any financial futures contracts
which are traded on an exchange or board of trade or other
market. Financial futures contracts consist of interest rate
futures contracts, securities index futures contracts and
foreign currency contracts. A United States public market
presently exists in interest rate futures contracts, long-term
U. S. Treasury bonds, U. S. Treasury notes and three-month U.
S. Treasury bills. Securities index futures contracts are
currently traded with respect to the Standard & Poor's 500
Composite Stock Price Index and such other broad-based stock
market indices as the New York Stock Exchange Composite Stock
Index and the Value Line Composite Stock Price Index. A
clearing corporation associated with the exchange or board of
trade on which a financial futures contract trades assumes
responsibility for the completion of transactions and also
guarantees that open futures contracts will be performed.
Currency futures contracts are also traded on various
exchanges
or boards of trade.
In contrast to the situation where the Trust purchases or
sell a security, no security is delivered or received by the
Trust upon the purchase or sale of a financial futures
contract. Initially, the Trust will be required to deposit in
a segregated account with its custodian bank an amount of
cash or U. S. Treasury bills. This amount is known as initial
margin and is in the nature of a performance bond or good
faith deposit on the contract. The current initial margin
deposit on the contract is approximately 5% of the contract
amount. Brokers may establish deposit requirements higher
than this minimum. Subsequent payments, called variation
margin, will be made to and from the account on a daily basis
as the price of the futures contract fluctuates. This process
is known as marking to market.
The writer of an option on a futures contract is required to
deposit margin pursuant to requirements similar to those
applicable to futures contracts. Upon exercise of an option
on a futures contract, the delivery of the futures position
by the writer of the option to the holder of the option will
be accompanied by delivery of the accumulated balance in the
writer's margin account. This amount will be equal to the
amount by which the market price of the futures contract at
the time of exercise exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of the
option on the futures contract.
Although financial futures contracts by their terms call for
actual delivery or acceptance of currencies or securities, in
most cases the contracts are closed out before the settlement
date without the making or taking of delivery. Closing out
is accomplished by effecting an offsetting transaction. A
futures contract sale is closed out by effecting a futures
contract purchase for the same aggregate amount of securities
and the same delivery date. If the sale price exceeds the
offsetting purchase price, the seller immediately would be
paid the difference and would realize a gain. If the
offsetting purchase price exceeds the sale price, the seller
immediately would pay the difference and would realize a
loss. Similarly, a futures contract purchase is closed out by
effecting a futures contract sale for the same securities and
the same delivery date. If the offsetting sale price exceeds
the purchase price, the purchaser would realize a
gain, whereas if the purchase price exceeds the offsetting
sale price, the purchaser would realize a loss.
The Trust will pay commissions on financial futures contract
and related options transactions. These commissions may be
higher than those which would apply to purchases and sales of
securities directly.
LIMITATIONS ON FUTURES CONTRACTS AND RELATED OPTIONS
The Trust may not currently engage in transactions in
financial futures contracts or related options for
speculative purposes, but only as a hedge against anticipated
changes in exchange rates or the market value of its
portfolio securities or securities which it intends to
purchase. Also the Trust may not currently purchase or sell
financial futures contracts or related options if,
immediately thereafter, the sum of the amount of initial
margin deposits on the Trust's existing futures and related
option positions and the premiums paid for related options
would exceed 5% of the market value of the Trust's total
assets after taking into account unrealized profits and
losses on any such contracts. At the time of purchase of a
futures contract or an option on a futures contract, an
amount of cash, U. S. Government securities or other
appropriate high-grade debt obligations equal to the market
value of the futures contract minus the Trust's initial
margin deposit with respect thereto will be deposited in a
segregated account with the Trust's custodian bank to
collateralize fully the position and thereby ensure that it
is not leveraged.
The extent to which the Trust may enter into financial
futures contracts and related options also may be limited by
the requirements of the Internal Revenue Code of 1986 for
qualification as a regulated investment company. See "Taxes
Tax Treatment of Options and Futures Transactions."
RISKS RELATING TO FUTURES CONTRACTS AND RELATED OPTIONS
Positions in financial futures contracts and related options
may be closed out only on an exchange or other market which
provides a secondary market for such contracts or options.
The Trust will enter into futures or related option positions
only if there appears to be a liquid secondary market.
However, there can be no assurance that a liquid secondary
market will exist for any particular futures or related
option contract at any specific time. Thus, it may not be
possible to close out a futures or related option position.
In the case of a futures position, in the event of adverse
price movements, the Trust would continue to be required to
make daily margin payments. In this situation, if the Trust
has insufficient cash to meet daily margin requirements it
may have to sell portfolio assets at a time when it may be
disadvantageous to do so. In addition, the Trust may be
required to take or make delivery of the securities
underlying the futures contracts it holds. The inability to
close out futures positions also could have an adverse impact
on the Trust's ability to hedge its portfolio effectively.
There are several risks in connection with the use of futures
contracts as a hedging device. While hedging can provide
protection against an adverse movement in the market prices,
it can also preclude a hedger's opportunity to benefit from a
favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause the
Trust to incur additional brokerage commissions and may cause
an increase in the Trust's portfolio turnover rate.
The successful use of futures contracts and related options
also depends on the ability of the Trust's Investment Adviser
to forecast correctly the direction and extent or currency
exchange rate and market movements within a given time frame.
To the extent exchange rate and market prices remain stable
during the period a futures contract or option is held by the
Trust or such prices move in a direction opposite to that
anticipated, the Trust may realize a loss on the hedging
transaction which is not
offset by an increase in the value of its portfolio
securities. As a result, the Trust's total return for the
period may be less than if it had not engaged in the hedging
transaction. Utilization of futures contracts by the Trust
involves the risk of imperfect correlation in movements in
the price of futures contracts and movements in the price of
the currencies or securities which are being hedged. If the
price of the futures contract moves more or less than the
price of the currencies or securities being hedged, the Trust
will experience a gain or loss which will not be completely
offset by movements in the price of the securities. It is
possible that, where the Trust has sold futures contracts to
hedge its portfolio against decline in the market, the market
may advance and the value of securities held in the Trust's
portfolio (or related currencies) may decline. If this
occurred, the Trust would lose money on the futures contract
and would also experience a decline in value in its portfolio
securities. Where futures are purchased to hedge against a
possible increase in the prices of securities before the
Trust is able to invest its cash (or cash equivalents) in
securities (or options) in an orderly fashion, it is possible
that the market may decline;
if the Trust then determines not to invest in securities (or
options) at that time because of concern as to possible
further market decline or for other reasons, the Trust will
realize a loss on the futures that would not be offset by a
reduction in the price of securities purchased.
The market prices of futures contracts may be affected if
participants in the futures market elect to close out their
contracts through offsetting transactions rather than to meet
margin deposit requirements. In such case, distortions in
the normal relationship between the cash and futures markets
could result. Price distortions could also result if
investors in futures contracts opt to make or take delivery
of the underlying securities rather than to engage in closing
transactions due to the resultant reduction in the liquidity
of the futures market. In addition, due to the fact that,
from the point of view of speculators, the deposit
requirements in the futures markets are less onerous than
margin requirements in the cash market, increased
participation by speculators in the futures market could
cause temporary price distortions. Due to the possibility of
price distortions in the futures market and because of the
imperfect correlation between movements in the prices of
currencies and securities and movements in the prices of
futures contracts, a correct forecast of market trends may
still not result in a successful hedging transaction.
Compared to the purchase or sale of futures contracts, the
purchase of put or call options on futures contracts involves
less potential risk for the Trust because the maximum amount
at risk is the premium paid for the options plus transaction
costs. However, there may be circumstances when the purchase
of an option on a futures contract would result in a loss to
the Trust while the purchase or sale of the futures contract
would not have resulted in a loss, such as when there is no
movement in the price of the underlying securities.
The Trust also may be generally restricted in dealing with
options, futures contracts and related options because the
Trust intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code.
PORTFOLIO TURNOVER
Securities will generally be purchased for possible long-term
appreciation and not for short-term trading profits; however,
the rate of portfolio turnover is not a limiting factor when
the Investment Adviser deems changes appropriate. It is
anticipated that the Trust's annual portfolio turnover rate
will normally not exceed 50%. A rate of turnover of 100%
could occur, for example, if the value of the lesser of
purchases and sales of portfolio securities for a particular
year equaled the average monthly
value of portfolio securities owned during the year
(excluding short-term securities).
A high rate of portfolio turnover involves a correspondingly
greater amount of brokerage commissions and other costs which
must be borne directly by the Trust and thus indirectly by
its shareholders. It may also result in the realization of
larger amounts of short-term capital gains which are taxable
to shareholders as ordinary income.
The portfolio turnover rates for 1995, 1993, and 1992
were 0%, 0%, and 0%, respectively.\R
INVESTMENT RESTRICTIONS
The Trust has adopted the following investment restrictions
which are fundamental policies and cannot be changed without
approval by the holders of a majority of the outstanding
voting securities of the Trust (which in the Prospectus and
this Statement of Additional Information means the lesser of
either (i) a majority of the outstanding shares of the Trust
or (ii) 67% or more of the shares represented at a meeting if
more than 50% of such shares are present or represented by
proxy at the
meeting):
1. The Trust will not purchase any securities (other than
securities of the U.S. Government, its agencies, or
instrumentalities) if as a result more than 5% of the Trust's
total assets (taken at current value) would then be invested
in securities of a single issuer.
2. The Trust will not make loans except that the Trust may
(a) purchase a portion of an issue of publicly distributed
bonds, debentures, or similar debt securities (including so
called "repurchase agreements" whereby the Trust's cash is,
in effect, deposited on a secured basis with a bank for a
period and yields a return, provided, however, that no more
than an aggregate of 10% of the Trust's total assets,
immediately after such investment, will be invested in
repurchase agreements having maturities longer than seven
days and other investments subject to legal or contractual
restrictions on resale, or which are not readily marketable),
and (b) lend portfolio securities upon such conditions as may
be imposed from time to time by the Securities and Exchange
Commission, provided that the value of securities loaned at
any time may not exceed 30% of the Trust's total assets.
3. The Trust will not borrow in excess of 5% of its total
assets, taken at market or other fair value, at the time such
borrowing is made, and any such borrowing may be undertaken
only as a temporary measure for extraordinary or emergency
purposes; and the Trust may not pledge, mortgage, or
hypothecate its assets taken at market to an extent greater
than 15% of the Trust's gross assets taken at cost.
4. The Trust will not purchase any securities if such
purchase would cause more than 10% of the total outstanding
voting securities of such issuer (other than any wholly-owned
subsidiary of the Trust) to be held by the Trust.
5. The purchase or retention of the securities of any issue
is prohibited if the officers and Trustees of the Trust or
its investment adviser owning beneficially more than 1/2 of
1% of the securities of such issuer together own beneficially
more than 5% of the securities of such issuer.
6. The purchase of the securities of any other investment
company is prohibited, except that the Trust may make such a
purchase in the open market involving no commission or profit
to a sponsor or dealer (other than the customary broker's
commission), provided that not more than 10% of the Trust's
total assets (taken at market or other fair value) would be
invested in such securities and not more than 3% of the
voting stock of another investment company would be owned by
the Trust immediately after the making of any such
investment, and the Trust may make such a purchase as part of
a merger, consolidation or acquisition of assets.
7. The purchase of securities of companies with a record
(including that of their predecessors) of less than three
years' continuous operation is prohibited if such purchase
would cause the Trust's investments in such companies taken
at cost to exceed 5% of the total assets of the Trust taken
at current values, except that this restriction shall not
apply to any of the Trust's investments in any of its wholly-
owned subsidiaries.
8. The Trust will not participate in a joint venture or on a
joint and several basis in any securities trading account.
9. The Trust will not act as an underwriter of securities
issued by others, except to the extent it may be deemed such
in connection with the disposition of securities owned by it.
10. The Trust will not make short sales of securities unless
at all times when a short position is open, it owns an equal
amount of such securities or owns securities convertible into
or exchangeable for, without payment of any further
consideration, securities of the same issue as, and at least
equal in amount to, the securities sold short.
11. The Trust will not purchase securities on margin, but may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities.
12. The Trust will not invest in a company in any single
industry, if, immediately after such investment more than 25%
of the Trust's total assets would be invested in companies in
such industry.
13. The Trust will not make investments in real estate or in
direct interests in real estate.
14. The Trust will not write, purchase or sell puts, calls or
combinations thereof or take positions in commodities or
commodity futures contracts or related options except that
the Trust may (a) write covered call options with respect to
securities, securities indices and currencies and enter into
closing purchase or sale transactions with respect to such
written options, (b) purchase put or call options with
respect to securities, securities indices and currencies and
(c) engage in financial futures contracts and related options
transactions, all as described in the Prospectus and above
under "Investment Policies and Risk Considerations."
MANAGEMENT
OFFICERS AND TRUSTEES
The Trust's Officers and Trustees, their positions with the
Trust and their principal occupations are listed below.
Except as indicated, each individual has held the office
shown or other offices in the same company, other than the
Trust, for the last five years. Unless otherwise noted, the
business address of each Officer and Trustee is 7022
Bennington Woods Drive, Pittsburgh, Pennsylvania 15237, which
is also the address of the Trust's Investment Adviser, Anchor
Investment Management Corporation. Those Trustees who are
"interested persons" of the Trust or the Investment Adviser,
as defined in the Investment Company Act of 1940, by virtue
of their affiliation with either the Trust or the Investment
Adviser, are indicated by an asterisk (*).
Positions with Principal
Name and Address the Trust Occupation
DAVID W. C. PUTNAM Chairman Chairman and Trustee,
10 Langley Road and Trustee Anchor Capital
Accumulation
Trust,
Newton Centre, MA 02159 Anchor International
Bond
Trust, Anchor
Strategic Assets Trust,
Anchor Resource and Commodity Trust,and
Anchor
Gold and Currency Trust
(Investment
Companies); President and
Director, F. L. Putnam
Securities Company, Inc.; Chairman
and
Director, Boston Security Counsellors,
Inc.
(Investment Adviser); Chairman
and
Trustee, The Advest Advantage Investment
Trusts
(Investment Companies.)
SPENCER H. LE MENAGER Secretary and President,
Equity, Inc.; formerly
222 Wisconsin Avenue Trustee
P. O. Box 390 President, Howe, Barnes &
Johnson
Lake Forest, IL 60045 Inc. (securities
dealer).
^ ^ ^
MAURICE A. DONAHUE Trustee Director and
Professor, Institute for Governmental 50 Holy Family Road
Services and Walsh-Saltonstall Professor of Practical
Holyoke, MA 01040 Politics, University of
Massachusetts, Director Vanguard Savings
Bank Former Member ,
Massachusetts
House of Representatives, Former Member and
President, Massachusetts Senate. \R
DAVID Y. WILLIAMS* President and President and Director,
Anchor 7022 Bennington Woods Dr. Trustee Investment
Management Corporation;
Pittsburgh, PA 15237 President and
Director,
Meeschaert & Co., Inc.
(securities dealer).
J. STEPHEN PUTNAM Vice President President, Robert Thomas
880 Carillon Parkway and Treasurer Securities,
Inc. (securities
P.O. Box 12749 dealer) since June 1983;
Director
St. Petersburg, FL 33733 F. L. Putnam
Securities
Company,
Incorporated. Formerly,
President and Director,
EPB,
Inc.
and Vice President,
Burgess & Leith
Incorporated.
CHRISTOPHER Y. WILLIAMS Vice President Vice
President
and Secretary, Anchor
485 Cherry Court and Asst. Secretary Investment Management
Corporation;
Pittsburgh, PA 15237 Vice President and
Secretary, Meeschaert
& Co., Inc. (securities
dealer)
JOSEPH C. WILLIAMS Vice President Vice President and
Treasurer, Anchor
4594 Bucktail Dr. and Asst. Treasurer
Investment
Management Corporation;
Allison Park, PA 15101 \R Vice President and
Treasurer, Meeschaert
& Co., Inc. (securities
dealer)
The Officers and Trustees of the Trust as a group owned or
had beneficial interests in less than one percent (1%) of
those shares of the Trust outstanding on December 31, 1995.
\R
Messrs. Putnam, Le Menager, and Donahue, are the
Trustees who are not "interested persons" (as that term is
defined in the Investment Company Act of 1940) of the
Trust.\R
Mr. David W.C. Putnam and Mr. J. Stephen Putnam are brothers.
Mr. David Y. Williams is the father of Mr. Christopher Y.
Williams and Mr. Joseph C. Williams. Mr. Christopher Y.
Williams and Mr. Joseph C. Williams are brothers.
Mr. David W.C. Putnam and Mr. J. Stephen Putnam are
brothers. Mr. David Y. Williams is the father of Mr.
Christopher Y. Williams and Mr. Joseph C. Williams. Mr.
Christopher Y. Williams and Mr. Joseph C. Williams are
brothers.
The standing audit committee is composed of Messrs. Le
Menager and, Donahue. The Trust does not have a nominating or
compensation committee.\R
REMUNERATION OF OFFICER AND TRUSTEES
The Trust will not pay any remuneration to its Officers or
Trustees as such who are "interested persons" (as that term
is defined in the Investment Company Act of 1940) of the
Trust or of any investment adviser or distributor of the
Trust but will pay an annual fee not in excess of $1,000 to
each Trustee who is not such an "interested person".
INVESTMENT ADVISORY CONTRACT
The Trust engages Anchor Investment Management Corporation,
formerly Meeschaert Investment Management Corporation, as
Investment Adviser pursuant to an Investment Advisory
Contract dated November 14, 1990, which was approved at a
meeting of the shareholders on the same date and is
substantially identical to the prior agreement between the
Investment Advisor and Meeschaert International Bond Trust.
The Investment Adviser manages the investments and affairs of
the Trust, subject to the supervision of the Trust's Board of
Trustees. The Investment Adviser furnishes to the Trust
investment advice and assistance, administrative services,
office space, equipment and clerical personnel and investment
advisory, statistical and research facilities. The Trust is
responsible for all its expenses not assumed by the
Investment Adviser under the contract, including without
limitation, the fees and expenses of the custodian and
transfer agents, costs incurred in determining the Trust's
net asset value and keeping its books; the cost of share
certificates; membership dues in investment company
organizations; distribution and brokerage commissions and
fees; fees and expenses of registering its shares; expenses
of reports to shareholders, proxy statements and other
expenses of shareholders' meetings; insurance premiums,
printing and mailing expenses; interest, taxes and corporate
fees; legal and accounting expenses; and fees and expenses of
Trustees not affiliated with the Investment Adviser. The
Trust will also bear expenses incurred in connection with
litigation in which the Trust is a party and the legal
obligation the Trust may have to indemnify its Officers and
Trustees with respect thereto.
The Trust pays the
Investment Adviser, as compensation under the Investment
Advisory Contract, a monthly fee at the rate of 3/4 of 1% per
annum of the average daily net assets of the Trust. This fee
is higher than that paid by most other investment companies.
For the year ended December 31, 1990, the Investment Adviser
received for its services an investment advisory fee of
$126,710, and voluntarily elected to return advisory fees of
$44,000, which represented .56% and .19% of the Trust's
average net assets, respectively. For the year ended December
31, 1991, the Investment Adviser received for its services an
investment advisory fee of $139,110, and voluntarily elected
to return advisory fees of $4,650, which represented .72% and
.02% of the Trust's average net assets, respectively. For the
years ended December 31, 1993, 1994 and 1995, the Investment
Adviser received for its services an investment advisory fee
of $129,427, $ 135,610, and $202,988 respectively, which
represented .75% of the Trust's average net assets.\R
The Investment Advisory Contract which remained in effect
until November 14, 1995, has been extended by a vote of the
majority of the Trust's disinterested trustees to November
1996. In general, the investment advisory contract may be
extended from year to year thereafter if approved at least
annually (a) by the vote of a majority of the outstanding
shares of the Trust or by the Board of Trustees, and in
either case, (b) by vote of a majority of the Trustees of the
Trust who are not parties to the contract or "interested
persons" (as that term is defined in the Investment Company
Act of 1940) of any such party cast in person at a meeting
called for the purpose. Amendments to the contract require
similar approval by the shareholders and "disinterested"
Trustees. The contract is terminable at any time without
penalty by the Board of Trustees of the Trust or by vote of a
majority of the Trust's shares on 60 days' written notice or
by the Investment Adviser on 90 days' written notice. The
contract terminates automatically in the event of its
assignment (which includes the transfer of a controlling
block of the stock of the Investment Adviser).\R
INVESTMENT ADVISER
The Investment Adviser, Anchor Investment Management
Corporation, formerly Meeschaert Investment Management
Corporation, is located at 7022 Bennington Woods Drive,
Pittsburgh, Pennsylvania 15237. The Trust's principal offices
are also located at this address. The Investment Adviser and
Meeschaert & Co., Inc., the Trust's principal underwriter,
are affiliated through common control with Societe D'Etudes
et de Gestion Financieres Meeschaert, S.A., one of France's
largest privately-owned investment management firms, which is
referred to as the "Meeschaert organization". The Meeschaert
organization was established in Roubaix, France in 1935 by
Emile C. Meeschaert, and presently manages, with full
discretion, an aggregate amount of approximately $1.5 billion
for about 8,000 individual (and institutional) customers with
$250 million in French mutual funds managed by the
organization.
On September 7, 1983, Emile C. Meeschaert and David Y.
Williams purchased the Investment Adviser from F. L. Putnam
Securities Company Incorporated ("Putnam Securities"). (Mr.
Meeschaert and Mr. Williams purchased 95% and 5%,
respectively, of the capital stock of the Investment
Adviser's parent corporation, which was subsequently
dissolved.) Under the terms of the agreement of sale between
Putnam Securities and Messrs. Meeschaert and Williams, the
transition services of David W. C. Putnam, President and a
Trustee of the Trust, were furnished by Putnam Securities to
the Investment Adviser as an employee of the Investment
Adviser and the Trust for annual compensation payable by the
Investment Adviser to Putnam Securities under an arrangement
which continued in effect for five years. As of November 14,
1990, Luc E. Meeschaert purchased all of the outstanding
shares of the investment adviser previously owned by Emile C.
Meeschaert.
The Investment Adviser's Directors and Officers are as
follows: Luc E. Meeschaert, Chairman; his principal
occupation is being Chief Executive Officer of Societe
D'Etudes et de Gestion Financieres Meeschaert, S.A., 23 Rue
Druout, 75009, Paris, France.
David Y. Williams, President and Director; Mr. Williams is
also a Trustee of the Trust and President and a Director of
Meeschaert & Co., Inc., the Trust's Distributor.
Paul Jaspard, Vice President; his principal occupation is
being President of Global Equity Managers, S.A., P.O. Box
1543 26A, rue Albert-Premier, L-1015 Luxembourg (investment
adviser). Mr. Jaspard manages portfolios for the Meeschaert
organization.
DETERMINATION OF NET ASSET VALUE
The net asset value is determined by the Trust as of 12:00
noon Eastern Time on each business day on which the New York
Stock
Exchange is open for trading or on any day that the Trust is
open, but the New York Stock Exchange is not open for
business if there occurs an event which might materially
affect the net asset value of the Trust's redeemable shares.
The manner of determination of the net asset value is
briefly as follows: Securities trade on a United States
national or other foreign securities exchange are valued at
the last sale price on the primary exchange on which they
are listed, or if there has been no sale that day, at the
current bid price. Other United States and foreign
securities for which market quotations are readily available
are valued at the known current bid price believed most
nearly to represent current market value. Other securities
(including limited traded securities) and all other assets
of the Trust are valued at fair market value as determined
in good faith by the Trustees of the Trust. Liabilities are
deducted from the total, and the resulting amount is divided
by the number of shares outstanding.
DISTRIBUTION OF SHARES
Rule 12b-1 under the Investment Company Act of 1940 ("Rule
12b 1") permits investment companies to use their assets to
bear expenses of distributing their shares if they comply
with various conditions, including adoption of a distribution
plan (the "Plan") containing certain provisions set forth in
the Rule. On September 16, 1986, such a Plan was approved by
the Board of Trustees, including a majority of the Trustees
who are not "interested persons" of the Trust as defined in
the Investment Company Act of 1940 ("Independent Trustees")
and who have no direct or indirect financial interest in the
Plan or any agreement related thereto (the "Rule 12b-1
Trustees"). The Plan is of the type sometimes called a
compensation plan.
The Plan currently is not in effect, and will not be
implemented unless and until reapproved by the Trust's
shareholders and Board of Trustees. Accordingly, for the
year ended December 31, 1993, the Trust paid no fees under
the Plan to the Distributor.
In connection with the Plan, Trust shares are offered for
sale at net asset value, and the Trust may pay the
Distributor a commission equal to up to 5% of the price paid
to the Trust for each sale, all or any part of which may be
reallowed by the Distributor to others (dealers) making such
sales. To the extent that the distribution fee is not paid to
such dealers, the Distributor may use such fee for its
expenses of distribution of Trust shares. If such fee
exceeds its expenses, the Distributor may realize a profit
from these arrangements. The Plan provides for an aggregate
limit on the amount of all payments pursuant to the Plan
equal to .75 of 1% of the Trust's average daily net assets
for any fiscal year. If, so long as the Plan is in effect,
the Distributor's reallowances to dealers and other expenses
exceed the .75 of 1% limit in any particular year, it could
collect in any future year such amounts (which do not include
interest or other carrying charges) up to any amount by which
amounts paid to it under the Plan in that year are less than
the applicable limit for the prior year. In such a case it
might receive amounts in excess of its then current expenses.
Whether any expenditure under the Plan is subject to a state
expense limit will depend upon the nature of the expenditure
and the terms of the state law, regulation or order imposing
the limit. Any expenditure subject to such a limit will be
included in the Trust's total operating expenses for purposes
of determining compliance with the expense limit.
The Plan may be terminated at any time by vote of the Rule
12b1
Trustees, or by vote of a majority of the outstanding voting
shares of the Trust. Any change in the Plan that would
materially increase the distribution expenses of the Trust
provided for in the Plan requires shareholder approval;
otherwise the Plan may be amended by the Trustees, including
the Rule 12b-1 Trustees.
If and when the Plan is in effect, the selection and
nomination of candidates for Independent Trustees must be
committed to the discretion of the Independent Trustees.
The total amounts paid by the Trust under the foregoing
arrangements may not currently exceed the maximum limit
specified above, and the amounts and purposes of expenditures
under the Plan must be reported to the Rule 12b-1 Trustees
quarterly. The Rule 12b-1 Trustees may require or approve
changes in the implementation or operation of the Plan, and
may also require that total expenditures by the Trust under
the Plan be kept within limits lower than the maximum amount
currently permitted under the Plan as stated above or permit
a higher limit.
If the limit on expenditures is reached at any given time,
the Distributor intends, although it is not obligated to do
so, to continue to offer shares of the Trust and to continue
to pay others reallowances and maintenance fees. In such an
event, the Distributor intends that it will seek payment from
the Trust in the amount of its commissions (including
reallowances) and maintenance fees at such times when the
expenditures limit has not otherwise been reached. The Trust
will have no contractual obligation to pay any portion of
such amounts to the Distributor, and the amount, if any, and
the time and conditions under which the Trust might make such
payment as requested by the Distributor will be solely within
the discretion of the 12b-1 Trustees.
In conjunction with the Plan, a contingent deferred sales
charge may be imposed upon certain redemptions of shares
purchased after inception of the Plan. The charge in respect
of such redemptions made during the first four calendar years
following purchase of the shares will be as follows: 4% in
the year of purchase; 3% in the second year; 2% in the third
year; and 1% in the fourth year. These charges are not
received by the Distributor and will not reduce amounts paid
to the Distributor under the Plan.
The staff of the Securities and Exchange Commission is in the
process of conducting a review of Rule 12b-1 practices in the
investment company industry. This may result in interpretive,
regulatory, legislative or enforcement responses which could
affect the Trust's future implementation of the Plan. In
addition, the National Association of Securities Dealers,
Inc. (the "NASD"), of which Meeschaert & Co., Inc. is a
member, proposed amendments to its Rules of Fair Practice in
April 1990 that would limit and otherwise affect asset-based
sales charges under Rule 12b-1 and, in September 1990,
revised the proposed amendments. In 1992, the SEC approved
such amendments, effective as of July 7, 1993. To the extent
that such amendments to Rule 12b-1 under the Investment
Company Act of 1940 or the NASD's Rules of Fair Practice are
inconsistent with the Plan, the Trust's Board of Trustees
will consider various actions, including proposing amendments
to or causing the Plan to be terminated.
HOW TO PURCHASE SHARES
Shares of the Trust may be purchased from Meeschaert & Co.,
Inc., 7022 Bennington Woods Drive, Pittsburgh, Pennsylvania
15237, the Trust's principal underwriter (the "Distributor").
There is no sales charge or commission payable by the
investor. For new shareholders initiating accounts, the
minimum investment is $500, except for exchanges of
securities for Trust shares, where the minimum is $5,000 (See
"How to Exchange Securities for Trust Shares" in the
Prospectus). There is no minimum for shareholders making
additional investments to an
existing account.
An application for use in making an initial investment in the
Trust appears in the back of the Trust's Prospectus. The
method
for determining the applicable price is described in the
Prospectus under the Section entitled "How to Purchase
Shares". The Distributor sells shares to the public as agent
for the Trust and is the sole principal underwriter for the
Trust under a Distributor's Contract dated October 5, 1990,
the date on which the contract was adopted by the Board of
Trustees pursuant to the Distribution Plan described above
under "Distribution of Shares." The contract automatically
terminates upon assignment (which includes the transfer of a
controlling block of the stock of the Distributor) by either
party. The contract also provides that it will continue for
two years from its date and thereafter its continuation from
year to year will require approval by a majority of the
Trust's shares or by the Board of Trustees and, in addition
to such approval, the approval, by vote cast in person, at a
meeting called for the purpose, by a majority of the
Independent Trustees. Under the contract, the Distributor
pays expenses of sales literature, including copies of the
prospectus of any Trust delivered to investors, and the Trust
pays for its registration and registration of its shares
under the federal Securities and Investment Company Acts and
state securities acts and other expenses in which it has a
direct interest.
For the years ended December 31, 1995, December 31, 1994,
and December 31, 1993, the Distributor received no sales
commissions.\R
REDEMPTION, EXCHANGE AND REPURCHASE OF SHARES
Any shareholder will be able to require the Trust to redeem
his shares. In addition the Trust will maintain a continuous
offer to repurchase its shares. Also, any holder of Class A
Common Shares may exchange them for the same number of Common
Shares without charge. If a shareholder uses the services of
a broker in selling his shares in the over-the-counter
market, the broker may charge a reasonable fee for his
service. Redemptions, exchanges and repurchases will be made
in the following manner:
1. Certificates for shares of the Trust may be mailed or
presented, duly endorsed, with signatures guaranteed in the
manner described below, with a written request that the Trust
redeem or exchange the shares, to the Trust's transfer agent,
Anchor Investment Management Corporation, 7022 Bennington
Woods Drive, Pittsburgh, Pennsylvania 15237 or to the Trust.
If no certificate has been issued and shares are held in an
Open Account with the Trust's transfer agent, a written
request that the Trust redeem or exchange such shares,
accompanied by a separate assignment form (stock power), duly
endorsed, with signatures guaranteed in the manner described
below, may be mailed or presented as described above. The
redemption price will be the net asset value next determined
after the certificates and request are received. The Common
Shares issued in exchange will be the same number as the
Class A Common Shares surrendered for exchange.
2. A request for repurchase may be communicated to the Trust
by a shareholder through a broker. The repurchase price will
be the net asset value next determined after the request is
received by the Trust, provided that, if the broker receives
the request before noon and transmits it to the Trust before
1:00 p.m. Eastern Time the same day, the repurchase price
will be the net asset value determined as of 12:00 noon
Eastern Time that day. If the broker receives the request
after noon, the repurchase price will be the net asset value
determined as of 12:00 noon Eastern Time the following day.
If an investor uses the services of a broker in having his
shares repurchased, the
broker may charge a reasonable fee for his services.
Payment for shares redeemed or repurchased and Common Shares
issued in exchange will be delivered within seven days after
receipt of the shares, and/or required documents, duly
endorsed. The signature(s) on the certificate or separate
assignment form must be guaranteed by a commercial bank or
trust company or by a
member of the New York, American, Pacific Coast, Boston or
Chicago Stock Exchange. A signature guarantee by a savings
bank or savings and loan association or notarization by a
notary public is not acceptable.
In order to insure proper authorization the transfer agent
may request additional documents such as, but not restricted
to, stock powers, trust instruments, certificates of death,
appointments as executor, certificates of corporate authority
and waiver of tax required in some states from selling or
exchanging estates before redeeming, exchanging or reselling
shares.
Under unusual circumstances, when the Board of Trustees deems
it in the best interests of the Trust's shareholders, the
Trust may make payment for shares repurchased or redeemed in
whole or in part in securities or other assets of the Trust
taken at current values. If any such redemption in kind is to
be made, the Trust intends to make an election pursuant to
Rule 18(f)(1) under the Investment Company Act of 1940. This
will require the Trust to redeem with cash at a shareholder's
election in any case where the redemption involves less than
$250,000 (or 1% of the Trust's net assets at the beginning of
each ninety day period during which such redemptions are in
effect, if that amount is less than $250,000). Should payment
be made in securities, the redeeming shareholder may incur
brokerage costs in converting such securities to cash.
The right or redemption may be suspended or the payment date
postponed when the New York Stock Exchange is closed for
other than customary weekend or holiday closings, or when
trading on the New York Stock Exchange is restricted, as
determined by the Securities and Exchange Commission; for any
period when an emergency as defined by rules of the
Commission exists; or during any period when the Commission
has, by order, permitted such suspension. In case of a
suspension of the right of redemption, a shareholder who has
tendered a certificate for redemption or made a request for
redemption through a broker may withdraw his request or
certificate or he will receive payment of the net asset value
determined next after the suspension has been terminated.
A shareholder may receive more or less than he paid for his
shares, depending on the net asset value of the shares at the
time of redemption or repurchase.
DISTRIBUTIONS
The Trust is authorized to issue two classes of shares (See
"About the Trust" above). The Trust does not presently intend
to issue any more Class A Common Shares.
With respect to the Common Shares, the Trust distributes any
income dividends and capital gains distributions in
additional Common shares, or, at the option of the
shareholder, in cash. In accordance with his distribution
option, a shareholder of Common Shares may elect (1) to
receive both dividend and capital gain distributions in
additional Common Shares or (2) to receive dividends in cash
and capital gain distributions in additional Common Shares or
(3) to receive both dividends and capital gain distributions
in cash. A shareholder of Common Shares may change his
distribution option at any time by notifying the Transfer
Agent in writing. To be effective with respect to a
particular dividend or distribution, the new distribution
option must be received by the Transfer Agent at least 30
days prior to the close of the fiscal year. All
accounts with a cash dividend option will be changed to
reinvest both dividends and capital gains automatically upon
determination by the Trust's transfer agent that the address
of record for the account is not current. Dividends and
capital gain distributions received in shares will be
received by the Trust's transfer agent, as agent for the
shareholder, and credited to his Open Account in full and
fractional shares computed at the record date closing net
asset value.
Interest and dividends, and possible other amounts received
by the Trust in respect of foreign investments may be subject
to withholding and other taxes at the source, depending upon
the laws of the country in which the investment is made.
TAXES
The Trust intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue
Code, as subsequently amended or reenacted. In order to so
qualify, the Trust, must, among other things, (i) derive at
least 90% of its gross income from dividends, interest,
payments with respect to certain securities, loans and gains
from the sale of securities; (ii) derive less than 30% of its
gross income from gains from the sale or other disposition of
securities held for less than three months; (iii) distribute
at least 90% of its dividend, interest and certain other
taxable income each year; (iv) maintain at least 50% of the
value of its total assets in cash, cash items, U. S.
Government securities, securities of other regulated
investment companies, and other securities to the extent that
no more than 5% of its assets are invested in the securities
of one issuer and it owns no more than 10% of the value of
any issuer's voting securities, and (v) have no more than 25%
of its assets invested in the securities (other than those of
the U. S. Government or other regulated investment companies)
of any one issuer or of two or more issuers which the Trust
controls and which are engaged in the same, similar or
related trades and businesses. To the extent the Trust
qualifies for treatment as a regulated investment company,
the Trust will not be subject to Federal income tax on income
paid to its shareholders in the form of dividends or capital
gains distributions.
Dividends paid by the Trust will generally not qualify for
the 70% dividends-received deductions for corporations. The
Trust will notify shareholders each year of the amount of
dividends and distributions, including the amount of any
distribution of longterm capital gains.
The Trust will be subject to a nondeductible 4% excise tax to
the extent that it fails to distribute, with respect to each
calendar year, at least 98% of its ordinary income for such
calendar year and 98% of its capital gain net income for the
one-year period ending on October 31 of such calendar year.
In addition, to the extent that the Trust fails to distribute
100% of its ordinary and capital gain net income with respect
to any calendar year, the amount of such shortfall is subject
to such tax unless distributed in the following calendar
year. For a distribution to qualify as such with respect to a
calendar year under the foregoing rules, it must be declared
by the Trust before December 31 of the year and paid by the
Trust before the following February 1. Such distributions
will be taxable to shareholders in the year the distributions
are declared rather than the year in which the distributions
are received.
The Trust's foreign investments may be subject to foreign
withholding taxes. The Trust will be entitled to claim a
deduction for such foreign withholding taxes for federal
income tax purposes. However, any such taxes will reduce the
income available for distribution to shareholders.
Under the Interest and Dividend Compliance Act of 1983, the
Trust will be required to withhold and remit to the U. S.
Treasury, 20% of the dividends and proceeds of redemptions
paid
with respect to any shareholder who fails to furnish the
Trust with a correct taxpayer identification number, who
underreported dividends or interest income, or who fails to
certify that he or she is not subject to such withholding.
An individual's tax identification number is his or her
social security number.
TAX TREATMENT OF OPTIONS AND FUTURES TRANSACTIONS
In connection with its operations, the Trust may write and
purchase options. The tax consequences of transactions in
options will vary depending upon whether the option expires
or is
exercised, sold or closed. The Trust may also effect
transactions in financial futures contracts and related
options. The tax consequences of certain of these
transactions were changed or clarified by amendments made to
the Internal Revenue Code by the Deficit Reduction Act of
1984 (the "Act"). Although no final regulations have been
adopted under the Act, the following discussion reflects the
Trust's interpretation of applicable changes made by the Act.
The Trust will seek principally to purchase or write futures
contracts and options that will be classified as "regulated
futures contracts," "equity options," or "non equity
options," to the extent consistent with its investment
objective and opportunities which appear available.
"Regulated futures contracts" are contracts which are marked-
to-market under a daily cash flow system of the type used by
United States futures exchanges to determine the amount which
must be deposited (in the case of losses) and the amount
which may be withdrawn (in the case of gains) as a result of
price changes with respect to the contract during the day,
and which are traded on or subject to the rules of a
qualified board of trade or exchange. "Equity options" are
any options to buy or sell stock, or any option, the value of
which is determined directly or indirectly by reference to
any stock (or group of stocks) or stock index; equity options
do not include any options with respect to any group of
stocks or stock index if there is in effect a designation by
the Commodity Futures Trading Commission of a contract market
for a contract based on such group of stocks or index, or the
Secretary of the Treasury determines that such option meets
the requirements of law for such a designation. "Non equity
options" are any listed options which are not equity options.
Regulated futures contracts and non equity options, defined
as "Section 1256 Contracts" under the Act, are subject to a
marked to-market rule for federal income tax purposes. Under
this rule, each such contract and option held by the Trust at
the end of each fiscal year will be treated as sold for fair
market value on the last business day of such fiscal year. As
described below, the character of gain or loss resulting from
the sale, disposition, closing out, expiration or other
termination of such contracts and options will be treated as
long-term capital gain or loss to the extent of 60% thereof,
and as short-term capital gain or loss to the extent of 40%
thereof ("60/40 gain or loss"). Equity options, on the other
hand, are not subject to the markedto-market rule. The
character of gain or loss resulting from the sale,
disposition, closing out, expiration or other termination of
such equity options is not subject to the 60/40 gain or loss
rule.
The Trust will not realize gain or loss on the receipt or
payment of a premium. If a call option written by the Trust
expires without being exercised, the premium received will be
recognized by the Trust as a gain (60/40 for a non equity call
option or a short-term gain for an equity call option). If a
put option purchased by the Trust expires without being
exercised, the premium paid will be recognized by the Trust as
a loss (60/40 for a non equity put option or a short or long-
term loss for an equity put option, depending on the holding
period of the put); if, however, the Trust acquired the put
option on the same day it acquired property identified as
intended to be used in exercising such put, the premium paid
will be added to the basis of the underlying securities. If a
non equity or equity call option written by the Trust is
exercised (or a non equity or equity put option purchased by
the Trust is sold), the Trust will recognize short-term or
longterm capital gain or loss depending on the holding period
of the underlying securities. If a regulated futures
contract, non equity call option written by the Trust or non
equity put option purchased by the Trust is closed (i.e., the
Trust's obligations are terminated other than through exercise
or lapse), the Trust will recognize a 60/40 gain or loss. If
an equity call option written by the Trust is closed, the
Trust will recognize short-term capital gain or loss; if an
equity put option purchased by the Trust is closed, the Trust
will recognize long or short-term capital gain or loss,
depending on the holding period of the put option.
Section 1092 of the Internal Revenue Code, which applies to
certain straddles, may affect the taxation of the Trust's
transactions in options on portfolio securities and in
financial futures (and related options). As a result of rules
under that section, the Trust may be required to postpone
recognition of losses incurred in certain closing purchase
transactions until the year in which the other leg of the
straddle is closed. The Treasury Department has issued
temporary regulations on the holding period of straddles held
by regulated investment companies.
The Internal Revenue Service has ruled publicly that an
exchangetraded call option on a particular security is a
security for purpose of the 50% of assets diversification test
and that its issuer is the issuer of the underlying security,
not the writer of the option, for purposes of diversification
requirements. In contrast, the Internal Revenue Service has
ruled privately that the issuer of a broad-based financial
futures option such as a stock index futures contract (or an
option on such a contract) is the writer of the instrument and
not the issuers of the group of stocks or securities which
comprise the index. Accordingly, the Trust must treat such a
futures contract (or option on it) as issued by a single
issuer for purposes of meeting the diversification tests.
In other private rulings, the Internal Revenue Service has
addressed other tax issues arising from investments by
regulated investment companies in options and futures
contracts. In particular, the Internal Revenue Service has
stated in private rulings that the gains recognized as a
result of the deemed sale of certain options under the marked-
tomarket rule (which are treated as 60/40 gain) will not be
treated as gains from the sale or exchange of securities held
for less than three months, regardless of the actual holding
period prior to year end. The Internal Revenue Service also
has stated in private rulings that gains or losses with
respect to index futures contracts on securities (and related
options) are gains and losses from the sale or exchange of
securities.
The legislative history of the Tax Reform Act of 1986 provides
that income realized in connection with writing covered and
uncovered put and call options is intended by Congress to be
qualifying income for purposes of the 90% passive income test.
However, the requirement that less than 30% of the Trust's
gross income be derived from gains from the sale or other
disposition of securities held for less than three months will
restrict the Trust in its ability to write covered call
options on securities that it has held less than three months,
to write options that expire in less than three months, to
sell securities that have been held less than three months, to
effect closing purchase transactions with respect to options
that have been held less than three months, and to effect
closing purchase transactions with respect to options that
have been written less than three months prior to such
transactions. Consequently, in order to avoid realizing a
gain within the three-month period, the Trust may be required
to defer the closing out of an option beyond the time when it
might otherwise be advantageous to do so.
The Tax Reform Act of 1986 revises the rules concerning gains
from sales of assets held less than three months in the case
of a "designated hedge." In the case of a "designated hedge,"
recognized gains may be offset by unrecognized declines in
value of the other leg of the hedge during the period of the
hedge for purposes of determining whether gains from sales of
securities
held for less than three months equal or exceed 30% of gross
income. For example, if a fund sells a one-month call at $95
on stock it owns which is worth $100 for $4, the stock
declines in value to $94 and the option is not exercised, the
$4 of recognized gain on lapse of the option is offset by the
$6 decline in value of the stock and there is no net gain for
purposes of the three-month gains test. The $4 is recognized
under the usual rules for other purposes. The Conference
Committee Report on the 1986 Act established procedures for
identification of a "designated hedge" prior to issuance of
regulations on the topic.
There are unanswered questions in the area. In particular,
the Internal Revenue Service has declined to determine
whether any gain is derived from securities held less than
three months if a taxpayer buys a regulated futures contract
just prior to the end of its taxable year, has the contract
marked-to-market at year end, and then actually closes the
contract within three months of its initial purchase in the
following taxable year. Furthermore, since taxpayers other
than the taxpayer requesting a particular private ruling are
not entitled to rely on it, the Trust intends to keep its
activity in options at a low volume until the Internal
Revenue Service rules publicly, or the Treasury Department
issues final regulations, on open issues. If, in any taxable
year, the Trust fails to qualify as a regulated investment
company, the Trust would be taxed in the same manner as an
ordinary corporation and distributions to its shareholders
would not be deductible by the Trust in computing its taxable
income. In addition, in the event of such failure to qualify,
the Trust's distributions, to the extent derived from the
Trust's current or accumulated earnings and profits, would be
taxable to its shareholders as ordinary income dividends,
even if those dividends might otherwise have been considered
distributions of capital gains.
PORTFOLIO SECURITY TRANSACTIONS
Decisions to buy and sell portfolio securities for the Trust
are made pursuant to recommendations by Anchor Investment
Management Corporation, the Trust's Investment Adviser. The
Trust, through the Investment Adviser, seeks to execute
portfolio security transactions on the most favorable terms
and in the most effective manner possible. In seeking such
execution, the Investment Adviser will use its best judgment
in evaluating the terms of a transaction and will give
consideration to various relevant factors, including without
limitation the size and type of the transaction, the nature
and character of the markets for the security, the
confidentiality, speed and certainty of effective execution
required for the transaction, the reputation, experience and
financial condition of the broker-dealer and the quality of
services rendered by the broker-dealer in other transactions,
and the reasonableness of the brokerage commission, if any.
It is expected that on frequent occasions, there will be many
broker-dealer firms which will meet the foregoing criteria
for a particular transaction. In selecting among such firms,
the Trust, through the Investment Adviser, may give
consideration to those firms which have sold, or are selling,
shares of the Trust. In addition, the Investment Adviser may
allocate Trust brokerage business on the basis of brokerage
and research services and other information provided by
broker-dealer firms, which may involve the payment of
reasonable brokerage commissions in excess of those
chargeable by other brokerdealer firms for effecting the same
transactions. Such "brokerage and research services" may be
used for other of the Investment Adviser's advisory accounts
and all such services may not be used by the Investment
Adviser in managing the Trust. The term "brokerage and
research services" includes advice as to the value of
securities; the advisability of investing in, purchasing or
selling securities; the availability of securities, or
purchasers or sellers of securities; furnishing analyses and
reports concerning issuers, industries, securities, economic
factors and trends; portfolio strategy and the performance of
accounts; and effecting securities transactions, and
performing functions incidental thereto (such as clearance
and settlement).
The policy referred to above of considering sales of shares
of the Trust as one of the factors in the selection of broker
dealer firms to execute portfolio transactions, subject to
the requirement of seeking best execution, is specifically
permitted by a rule of the National Association of Securities
Dealers, Inc. The rule also provides, however, that no member
firm shall favor or disfavor the distribution of shares of
any particular fund or group of funds on the basis of
brokerage commissions received or expected by such firm from
any source. The Trust and one or more of the other investment
companies or accounts for which the Investment Adviser or its
affiliated render investment advisory services on occasion
may simultaneously be engaged in the purchase or sale of the
same security. In such event the transactions in such
security normally will be averaged as to price and allocated
as to amount among the several clients or accounts in a
manner deemed equitable to all. It is recognized that in some
cases this system could have a detrimental effect on the
price or volume of the security as far as the Trust is
concerned. In other cases, however, it is believed that the
ability to participate in volume transactions will produce
better executions for the Trust.
To the extent consistent with the policy of seeking best
price and execution, a portion of the Trust's portfolio
transactions may be executed through Meeschaert & Co., Inc.,
the Trust's principal underwriter and an affiliate of the
Investment Adviser. In the event that this occurs, it will be
on the basis of what management believes to be current
information as to rates which are generally competitive with
the rates available from other responsible brokers and the
lowest rates, if any, currently offered by Meeschaert & Co.,
Inc.
During 1995, 1994, and 1993, no commissions were paid to
broker-dealers by the Trust. During 1995 all of the purchases
and sales of Trust securities were executed on a net basis
without payment of brokerage commissions. Meeschaert & Co.,
Inc. received no compensation or other payment, either as
agent or principal, in these transactions.\R
OTHER INFORMATION
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-PAYING AGENT
All securities, cash and other assets of the Trust are
received, held in custody and delivered or distributed by
Investors Bank & Trust Company, Custodian, Financial Product
Services, 1 Lincoln Plaza, Boston, Massachusetts 02205,
provided that in cases where foreign securities must, as a
practical matter, be held abroad, the Trust's custodian bank
and the Trust will make appropriate arrangements so that such
securities may be legally so held abroad. The Trust's
custodian bank does not decide on purchases or sales of
portfolio securities or the making of distributions. Anchor
Investment Management Corporation, 7022 Bennington Woods
Drive, Pittsburgh, Pennsylvania 15237. serves as transfer
agent and dividend-paying agent for the Trust.
INDEPENDENT PUBLIC ACCOUNTANTS
For the fiscal year ending December 31, 1993, the Trust
employed Livingston & Haynes, P.C., Two Sun Life Park,
Wellesley Hills, Massachusetts 02181, to certify its
financial statements and to prepare its federal and state
income tax returns.
REGISTRATION STATEMENT
This Statement of Additional Information does not contain all
the information set forth in the Registration Statement and
the exhibits and schedules relating thereto, which the Trust
has filed with, and which are available at the Securities and
Exchange Commission, Washington, D.C., under the Securities
Act of 1933, as amended, and the Investment Company Act of
1940, as amended, to which reference is hereby made.
FINANCIAL STATEMENTS
The financial statements and related report of Livingston &
Haynes, P.C., independent public accountants, contained in
Anchor International Bond Trust's Annual Report to
shareholders for the year ended December 31, 1993, are hereby
incorporated by reference. A copy of the Trust's Annual
Report may be obtained without charge by writing to Anchor
Investment Management Corporation, 7022 Bennington Woods
Drive, Pittsburgh, Pennsylvania 15237, or by calling Anchor
Investment Management Corporation at (412) 635-7610.
Part C. Other Information.
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Selected Per Share Data and
Ratios for a share outstanding throughout each
period ended December 31, for the seven years
ended December 31, 1995 \R
Included in Part B:
Report of Independent Public Accountants*
Statement of Assets and Liabilities December
31,
1995* \R
Statement of Operations for the year ended
December 31, 1995* \R
Statement of Changes in Net Assets for the
years ended December 31, 1995
and December 31, 1994* \R
Schedule of Investments, December 31,
1995*
\R
Notes to Financial Statements*
* Included in Registrant's
annual report to shareholders for December 31,
1995 \R
a copy of which is included as Exhibit 12
and incorporated herein by reference thereto.
(b) Exhibits:
Exhibit 11. Consent of Independent Public Accountants.
Exhibit 12. Trust's Annual Reports to Shareholders,
December 31, 1995. \R
Exhibit 17. Power of Attorney, dated April 5, 1996. \R
Item 25. Persons controlled by or under common Control with
Registrant.
(a) No person controls the Registrant.
(b) The following table sets forth the name, address
and percentage of ownership at March 31, 1996, of each
person who then owned of record 5% or more of any class
of the Registrant's outstanding shares:
Name: Address: Percentage
Ownership:
Bank of New York PO Box 1066 99.46% \R
Wall Street Station
New York, NY 10268
At March 31, 1996, Officers and Trustees of the
Registrant as a group owned less than 1% of the outstanding
Common shares.
Item 26. Number of Holders of Securities.
The number of holders of record of securities of
the Registrant as of March 31, 1996 is as follows:
Title of Class:Number of Holders of Record:
Common Shares 8 \R
Class A Shares 0
Item 27. Indemnification.
No amendment. The information was filed in Item 27 of
Amendment No. 6
Item 28. Business and Other connections of Investment
Advisor.
The information in the Statement of Additional
Information under the caption of "Management-
Investment Adviser" is hereby incorporated herein by
this reference thereto.
Item 29. Principal Underwriters.
(a) The Distributor currently acts as distributor
for the following investment companies:
Anchor Strategic Assets Trust
S.E.C. file # 811-5963
Anchor Capital Accumulation Trust
S.E.C. file # 811-00972
Anchor Resource and Commodity Trust
S.E.C. file # 811-8706
(b) See the answer to Item 21 of Part B, which is
herein incorporated by this
reference thereto.
Item 30. Location of Accounts and Records.
Persons maintaining physical possession of
accounts, books, and other documents required to be
maintained by Section 31(a) of the Investment Company
Act of 1940 and rules promulgated thereunder include
Registrant's Secretary, David W.C. Putnam;
Registrant's Investment Advisor, Anchor Investment
Management Corporation; and Registrant's custodian,
Investors Bank & Trust company. The address of the
Secretary is 10 Langley Road, Suite 404, Newton
Centre, Massachusetts 02159; the address of the
investment adviser and the transfer agent and
dividend paying agent is 7022 Bennington Woods Drive,
Pittsburgh, Pennsylvania 15237; and the address of
the custodian is Financial Product Services, 1
Lincoln Plaza, Boston, Massachusetts 02205.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting on the
question of removal of a Trustee or Trustees when
requested in writing to do so by the holders of at
least 10% of the Registrant's outstanding shares of
common stock and, in connection with such meeting, to
comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to
shareholder communications.
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/x/ Pre-Effective Amendment No.
/ /
Post-Effective Amendment No. 11 \R
/x/ REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
/x/
Amendment No. 14 \R
/x/
________________________________________
ANCHOR INTERNATIONAL BOND TRUST
________________________________________
EXHIBITS
INDEX TO EXHIBITS
Exhibit Number Description of Exhibit
(1) Restated Declaration of Trust, as
amended. (Previously filed as Exhibit 1
to Amendment No. 2)
(2) By-Laws of the Registrant, as
amended. (Previously filed as Exhibit 2
to Amendment No. 2)
(3) Not applicable.
(4) Specimen Certificates representing
Common Shares and Class A Common Shares
of Beneficial Interest of the
Registrant. (Previously filed as Exhibit
4 to Amendment No. 3)
(5) Investment Advisory Agreement
between the Registrant and Anchor
Investment Management Corporation.
(Previously filed as Exhibit 5 to
Amendment No. 8) (6) Distributor's
Contract between the Registrant and
Meeschaert & Co., Inc. (Previously filed
as Exhibit 6 to Amendment No. 8)
(7) Not applicable.
(8) Custodian Agreement between the
Registrant and Investors Bank & Trust
Company. (Previously filed as Exhibit 8
to Amendment No. 3)
(9) Transfer Agency and Service
Agreement between the Registrant and
Anchor Investment Management
Corporation. (Previously filed as
Exhibit 9 to Amendment No. 7)
(10) Opinion and Consent of Counsel.
(11) Consent of Independent Public
Accountants.
(12) Trust's Annual Report to
Shareholders,
December 31, 1995. \R
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan of the
Registrant. (Previously filed as
Exhibit 15 to Amendment No. 1)
(16) Not applicable.
(17) Power of Attorney, dated April 5,
1996. \R
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant
certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to
Rule 485(b) and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Pittsburgh and the Commonwealth of Pennsylvania on the 29nd
day of April, 1996.
ANCHOR INTERNATIONAL BOND TRUST
By:
__________________________Da
vid Y. Williams,
President
Pursuant to the Securities Act of 1933, this Amendment
to this Registration Statement has been signed below
by the following persons in the capacities and on the date
indicated.
Signature Title Date
* President,
Secretary,
a
nd April 19, 1996
David W.C. Putnam Trustee (Principle Executive
Officer)
* Treasurer
(Principle
April 19, 1996
J. Stephen Putnam Financial Officer)
*
Trustee
April 19, 1996
Maurice A. Donahue
*
Trustee
April 19, 1996
David Y. Williams
*By:
Peter K. Blume
Attorney-in-Fact April 29,
1996
_______________________________
1This Application and Registration Form is designed for cash
purchases of Trust shares. The procedure for exchange
of securities for Trust shares is described in the
Trust Prospectus.
Wellesley Hills - Boston - Ware
Exhibit 11
Livingston & Haynes, P.C.
Certified Public Accountants
Two Sun Life Park
Wellesley Hills, MA 02181-5693
Tel: (617) 237-3339
Fax: (617) 237-3606
Member AICPA Division for CPA Firms
Private Companies Practice Section
SEC Practice Section
Public Accountants
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of
Anchor International Bond Trust on the amended Form N-lA
our report dated January 12, 1996, appearing in the
prospectus, which is part of such Registration Statement,
and to the reference to us under the captions, "Selected
Per Share Data and Ratios".
Livingston & Haynes P.C.
Wellesley Hills, Massachusetts April 25,1996
ANCHOR
INTERNATIONAL
BOND
TRUST
ANNUAL REPORT
DECEMBER 31, 1995
ASSETS:
Investments at quoted market value (cost
$25,189,016; $27,069,
see Schedule of Investments, Notes 1, 2, & 5) 501
Cash 368,278
Interest receivable 680,159
Other assets 442
Total assets 28,118,3
80
LIABILITIES:
Payable for capital shares redeemed 17,366
Accrued expenses and other liabilities (Note 52,904
3)
Total liabilities 70,270
NET ASSETS:
Capital stock (unlimited shares authorized at
$1.00 par value, 26,268,4
amount paid in on 3,205,516 shares 15
outstanding) (Note 1)
Accumulated undistributed net investment 87,160
income
Accumulated realized loss from security (187,950
transactions, net )
Net unrealized appreciation in value of 1,880,48
investments (Note 2) 5
Net assets (equivalent to $8.75 per share,
based on $28,048,
110
3,205,516 capital shares outstanding)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Anchor
International Bond Trust, hereby severally constitute David
W.C. Putnam, David Y. Williams, and Peter K. Blume, and each
of them singly, our true and lawful attorneys, with full
power to them and each of them singly to sign for us, and in
our names and in the capacity mentioned below, any and all
Registration Statements and/or Amendments to the
Registration Statements, filed with the Securities and
Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys to
any and all amendments to said Registration Statement, and
all additional Registration Statements and Amendments
thereto.
Witness our hands and common seal on the dates set
forth below*
Signature
Title Date
David W.C. Putnam
Chairman and Trustee April 19, 1995
David W.C. Putnam
J. Stephen Putnam
Treasurer (Principle April 19, 1995
J. Stephen Putnam
Financial Officer)
Spencer H. LeMenager
Secretary and Trustee April 19, 1995
Spencer H. LeMenager
Maurice A. Donahue
Trustee April 19,
1995
Maurice A. Donahue
David Y. Williams
President and Trustee April 19, 1995
David Y. Williams
* This Power of Attorney may be executed in several
counterparts, each of which shall be regarded as an original
and all of which taken together shall constitute one and the
same Power of Attorney, and any of the parties hereto may
execute this Power of Attorney by signing any such
counterpart.
