1933 Act File No. 33-82998
1940 Act File No. 811-8706
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. 5
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 6
(Check appropriate box or boxes)
ANCHOR RESOURCE AND COMMODITY TRUST
(Exact Name of Registrant as Specified in Charter)
579 Pleasant Street, Suite 4
Paxton, Massachusetts 01612
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (508) 831-1171
It is proposed that this filing will become effective:
(Check appropriate box)
___ immediately upon filing pursuant to paragraph (b) of Rule
485 X on May 1, 1999 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on ___________ pursuant to paragraph (a) of Rule 485
Peter K. Blume, Esq.
Thorp Reed & Armstrong
One Riverfront Center
Pittsburgh, PA 15222
(Name and Address of Agent for Service)
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PROSPECTUS
ANCHOR RESOURCE AND COMMODITY TRUST
The primary investment objective of the Trust is long-term growth of capital and
the protection of the purchasing power of its shareholders' capital. As a
secondary investment objective, the Trust will seek to generate current income
consistent with the preservation of shareholders' purchasing power.
The Trust's investments will vary depending upon whether the Investment Adviser
anticipates an inflationary or deflationary economic cycle.
Under normal circumstances, when the Investment Adviser expects an inflationary
cycle, the Trust will pursue its primary investment objective by investing at
least 65% of its total assets in equity securities of domestic and foreign
companies with substantial natural resource assets, natural resource or energy
related activities, or that provide equipment or services primarily devoted to
the natural resource or energy-related activities of such companies.
When the Investment Adviser expects a deflationary cycle, the Trust will invest
up to 90% of its total assets in U.S. or foreign government and government
agency fixed-income securities of sufficient maturities to realize its objective
of long-term capital appreciation.
The Trust is intended for investors who are willing to accept the risks of
investments in natural resource companies. Such investments involve certain
risks not assumed by other investment companies that do not emphasize
investments in particular industries or markets.
Trust Shares are not bank deposits, federally insured, or guaranteed, and may
lose value.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus.
Any representation to the contrary is a criminal offense.
CONTENTS
Risk/Return Summary
Fees and Expenses of the Trust
What are the Trust's Investment
Strategies?
What are the Principal Securities
in Which the Trust Invests?
What are the Specific Risks of
Investing in the Trust?
Management and Organization
Shareholder Information
Other Information
Financial Information
Application and Registration Form
PROSPECTUS DATED MAY 1, 1999
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RISK/RETURN SUMMARY
WHAT IS THE TRUST'S INVESTMENT OBJECTIVE?
The primary investment objective of the Trust is long-term growth of capital and
the protection of the purchasing power of its shareholders' capital. As a
secondary investment objective, the Trust will seek to generate current income
consistent with the preservation of shareholders' purchasing power. Protection
of the purchasing power of its shareholders' capital means that the Trust seeks
to protect generally shareholders' invested capital against erosion of the value
of the U.S. dollar through inflation.
What are the Trust's Main Investment Strategies?
Under normal circumstances, when, by reason of a rising rate of change in the
U.S. Consumer Price Index (CPI), rising interest rates, and/or a decline in the
value of the U.S. dollar, an inflationary cycle is expected, the Trust will
pursue its primary investment objectives by investing at least 65% of its total
assets in equity securities of domestic and foreign companies with substantial
natural resource assets, natural resource or energy-related activities, or that
provide equipment or services primarily devoted to the natural resource or
energy-related activities of such companies.
Natural resource or energy-related activities consist primarily of:
-exploring, mining, refining, processing, transporting, fabricating,
dealing in or owning natural resource assets, or engaging in
energy-related activities, including utilities;
-the generation of power from hydroelectric, geothermal, tidal, or
other naturally occurring sources or from natural resource
manufacturing by-products or refuse;
-the development of synthetic fuels;
-transportation of energy-producing sources such as coal, oil,
electricity, or nuclear fuels;
-the development and application of techniques and devices for
conservation or efficient use of energy; and
-the control of pollution related to energy industries and
waste disposal.
Natural resource assets consist of precious metals (e.g., gold, silver, and
platinum), ferrous and nonferrous metals (e.g., iron, aluminum, and copper),
strategic metals (e.g., uranium, and titanium), hydrocarbons (e.g., coal, oil,
and natural gas), timberland, developed and undeveloped real property and
agricultural commodities.
The Investment Adviser will identify companies that, in its opinion, have
substantial holdings of such natural resource assets so that when compared to
the company's capitalization, revenues, or operating profits, such assets are of
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enough magnitude that changes in the assets' economic value will affect the
market value of the company. The Investment Adviser also will seek to identify
companies which it believes are attractively priced relative to the intrinsic
value of the underlying natural resource assets or natural resource-related or
energy-related business or are especially well positioned to benefit during
particular portions of inflationary or deflationary cycles. The Trust's approach
of active investment management enables it to switch its emphasis among various
industry groups, depending upon the Investment Adviser's outlook with respect to
prevailing economic trends and developments affecting natural resource demand.
The Investment Adviser believes that, based upon past performance, the
securities of specific companies that hold different types of substantial
natural resource assets or engage in natural resource-related or energy-related
activities may move relatively independently of one another during different
stages of inflationary or deflationary cycles because of different degrees of
demand for, or market values of, their respective resource holdings or
resource-related or energy-related business during particular portions of such
cycles. For example, during the period 1976 to 1980, the prices of oil company
stocks increased relatively more than the price of coal company stocks when
compared to the performance of relevant stock market indices.
When, by reason of a declining rate of change in the U.S. Consumer Price Index
(CPI), declining interest rates, and/or an increase in the value of the U.S.
dollar, a deflationary cycle is anticipated, the Trust will invest up to 90% of
its total assets in U.S. or foreign government and government agency
fixed-income securities selected on the basis of sufficient maturities to
realize its objective of long-term capital appreciation consistent with
preservation of capital. During such periods, the Trust will hold the balance of
its assets in short-term U.S. or foreign denominated securities.
If, in the opinion of the Investment Adviser, there are periods when there is a
very small rate of change in the CPI, and other leading economic indicators,
such as interest rates and the value of the U.S. dollar, offer no clear evidence
of inflationary or deflationary trends, then, the Trust may depart from the
principal investment strategies discussed above by investing up to 100% of its
assets in cash or cash equivalents (in U.S. dollars and foreign currencies) and
high-quality short-term securities, including money market securities (such as
certificates of deposit, commercial paper and bankers' acceptances) and
repurchase agreements. The Trust may also do this to minimize potential losses
and maintain liquidity to meet shareholder redemptions during adverse market
conditions. Investing in such investments may cause the Trust to give up greater
investment returns while maintaining the safety of principal, (i.e., the
original amount invested by shareholders).
The Investment Adviser's determination as to whether the economy is inflationary
or deflationary will be made based upon constant study of numerous economic and
monetary factors. These factors will include, but not necessarily be limited to:
-actual and anticipated rates of change in the CPI over specified
periods of time;
-actual and anticipated changes and rates of changes in the U.S. dollar
in relation to other key currencies, e.g., the German mark, the British
pound and the Japanese yen;
-actual and anticipated changes, and rates of change, in short and
long-term interest rates and real interest rates, i.e., inflation
adjusted interest rates;
-actual and anticipated changes in the money supply; and
-actual and anticipated governmental fiscal and monetary policy.
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In addition, the Trust may invest up to 100% of its assets in
securities principally traded on foreign securities markets and in
securities of foreign issuers that are traded in U. S. securities
markets, including American Depository Receipts. The Trust may invest
in securities of foreign issuers of both developed and developing
countries and emerging markets. Developing countries are generally
defined as countries in the initial stages of their industrialization
cycles with low per capita income. All the risks of investing in
foreign securities are heightened by investing in developing countries.
The markets of developing countries have been more volatile than the
markets of developed countries with more mature economies. These
markets often have provided higher rates of return, and greater risks
to investors.
What are the Main Risks of Investing in the Trust?
An investment in the Trust is subject to risks, and it is possible to lose money
by investing in the Trust. Changes in the value of the Trust's portfolio may
result from general changes in the market or the economy. The primary factors
that may reduce the Trust's returns include:
The Investment Adviser may be incorrect in anticipating the onset and
termination of inflationary and deflationary economic cycles. This could
cause the Trust to be disproportionately invested in resource-related
equity securities during a deflationary cycle or in U.S. government
securities during an inflationary cycle.
Companies perceived by the Trust to be temporarily undervalued by the
stock market relative to the intrinsic value of their underlying natural
resource assets or natural resource-related business may turn out not to
be undervalued because the Trust's initial evaluation of the company was
mistaken.
Value Stocks fall out of favor with the stock market, or the market
continues indefinitely to undervalue the stocks in the Trust's portfolio.
The success of the Trust's investment program, including its method of
selecting equity securities, will also be dependent to a high degree on
the validity of the premise that the values of resource-related equity
securities will move in a different direction than the values of U.S.
government securities during period of inflation or deflation. If values
of both resource-related equity securities and U.S. government securities
move down during the same period of time, the value of the shareholder's
investment will decline rather than stabilize or increase, as anticipated,
regardless of whether the Trust is primarily invested in natural resource
or U.S. government securities.
The values of fixed income investments, including some of the debt
instruments in which the Trust invest, generally rise and fall in response
to changes in interest rates. Declining interest rates generally raise the
value of investments in debt instruments, while rising interest rates
generally lower the value of investments in debt instruments. Changes in
the values of the Trust's investments will affect the value of the Trust's
shares.
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If the value of resource-related equity securities and U.S. government
securities decrease during the same period of time, the value of a
shareholder's investment in the Trust will decrease.
Because the price of resource-related equity securities fluctuate in
response to stock market developments, the value of your investment in the
Trust will go up and down. These fluctuations could be a sustained trend
or a dramatic movement. The Trust's portfolio will reflect changes in
prices of individual portfolio assets or general changes in asset
valuations. Consequently, the Trust's share price may decline and you
could lose money.
Because the Trust will typically concentrate (invest 25% or more of its
total assets) in the global natural resource industries, the price of the
Trust's shares may be more volatile than that of investment companies that
do not concentrate their investments in such a manner.
Natural resource-related companies involve special
considerations, including the following:
1) The price of resource-related equity securities fluctuates in
response to market conditions for the particular natural resource
with which the issuer is involved. In addition, events occurring in
nature, inflationary pressures and politics can affect the overall
supply and demand of a natural resource and thereby the value of the
companies involved in such natural resource.
2) Historically, many natural resource companies have been subject
to significant costs associated with compliance with environmental
and other safety regulations and changes in the regulatory climate.
It is impossible to predict the direction, type or effect of any
future regulation.
3) Competition is intense for many natural resource companies. Many
of these companies may be adversely affected in the future and the
value of the securities issued by such companies may be subject to
increased share price volatility.
As a result of the foregoing, the value of the securities issued by
the companies in which the Trust invests may be subject to increased
share price volatility. The value of your investment in the Trust will
therefore go up and down. This means you could lose money over short or
even extended periods of time.
Some of the debt securities of foreign corporations in which the Trust
may invest will be determined by the Investment Adviser to have a
quality comparable to securities receiving investment grade ratings
("BBB" by Standard & Poor's or Fitch Investors Service, Inc. or "Baa"
by Moody's Investors Service, Inc.) or higher at the time of purchase.
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Securities rated "BBB" or "Baa," although considered to be investment
grade, have speculative characteristics.
Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United
States. Foreign financial markets may also have fewer investor
protections. Securities in foreign markets may also be subject to
taxation policies that reduce returns for U.S. investors. Due to these
risk factors, foreign securities may be more volatile and less liquid
than similar securities traded in the U.S.
In particular, investments in foreign securities are subject to the
following specific risks:
Country Risk. General securities market movements in any country
where the Trust has investments are likely to affect the value of
the securities the Trust owns which trade in that country. These
movements will affect the Trust's share price.
The political, economic and social structures of some countries in
which the Trust invests may be less stable and more volatile than
those in the U. S. The risks of investing in these countries include
the possibility of the imposition of exchange controls,
expropriation, restrictions on removal of currency or other assets,
nationalization of assets and punitive taxes.
The Trust's investments in developing or emerging markets are
subject to all of the risks of foreign investing generally, and have
additional heightened risks due to a lack of legal, business and
social frameworks to support securities markets. Developing
countries are generally defined as countries in the initial stages
of their industrialization cycles with low per capita income. The
markets of developing countries have been more volatile than the
markets of developed countries with more mature economies. These
markets often have provided higher rates of return, and greater
risks to investors.
Company Risk. Foreign companies are not subject to the
same accounting, auditing, and financial reporting
standards and practices as U. S. companies and their stocks
may not be as liquid as stocks of similar U.S. companies.
Foreign stock exchanges, brokers and companies generally
have less government supervision and regulation that in the
U.S. The Trust may have greater difficulty voting proxies,
exercising shareholder rights, pursuing legal remedies and
obtaining judgments with respect to foreign investments in
foreign courts than with respect to U.S. companies in U.S.
courts.
Currency. Many of the Trust's investments are denominated
in foreign currencies. Changes in foreign currency
exchange rates will affect the value of what the Trust owns
and the Trust's share price. Generally, when the U.S.
dollar rises in value against a foreign currency, an
investment denominated in that country's currency loses
value because that currency is worth fewer U.S. dollars.
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Euro. On January 1, 1999, the European Monetary Union introduced a
new single currency, the euro, which replaced the national currency
for participating member countries. The Trust's investments in
countries with currencies replaced by the euro, the investment
process, including trading, foreign exchange, payments, settlements,
cash accounts, custody and accounting will be affected.
Because this change to a single currency is new and untested, the
establishment of the euro may result in market volatility. Also, it
is not possible to predict the impact of the euro on the business or
financial condition of European issuers which the Trust may hold in
its portfolio, and their impact on the value of Trust shares. To the
extent the Trust holds non-U.S. dollar (euro or other) denominated
securities, it will still be exposed to currency risk due to
fluctuations in those currencies versus the U.S. dollar.
Debt securities are subject to credit risk, which is the possibility
that an issuer will default (the issuer fails to repay interest and
principal when due). If an issuer defaults, the Trust will lose money.
Debt securities are also subject to call risk, which is the
possibility that an issuer may redeem a fixed income security before
maturity ("call") at a price below its current market price. An
increase in the likelihood of a call may reduce the security's price.
Also, if a fixed income security is called, the Trust may have to
reinvest the proceeds in other debt securities with less favorable
returns based on then-current market conditions.
For a more detailed discussion of these and other risks, see "Specific Risks
of Investing in the Trust."
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Bar Chart and Performance Table
The bar chart and performance table below indicate the risks of investing in the
Trust. The chart shows the annual total returns of the Trust on a calendar year
basis for each of the past four years.
[GRAPHIC OMITTED]
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Anchor Resource and Commodity Trust as of the calendar
year-end for each of four years.
The total returns displayed for the Trust do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
were included, the returns shown would be lower.
Within the period shown in the chart, the Trust's highest quarterly return was
6.52% for the quarter ended December 31, 1996. Its lowest quarterly return was
(10.96%) for the quarter ended December 31, 1997.
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Average Annual Total Return
for the periods ended December 31, 1998
1 Year Life of
Trust(1)
- --------------------------------------------------
The Trust (14.99%) (0.86%)
Dow Jones Commodity Index (14.91%) (6.63%)
Index
(1) Initial Public Offering of shares was November 23, 1994.
The table shows the Trust's total returns averaged over a period of years as
compared to the Dow Jones Commodity Index, a broad-based market index.
The bar chart and the performance table provide you with historical performance
information so that you can analyze the potential fluctuations in the Trust's
returns and analyze the risks of investing in the Trust. Past results of the
Trust, however, do not necessarily indicate how the Trust will perform in the
future.
FEES AND EXPENSES OF THE TRUST
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Trust.
Shareholder Fees
(fees paid directly from your investment)
Maximum sales charge (load) imposed on
purchases (as a percentage of
offering price) None
Maximum deferred sales charge (load)
(as a percentage of offering price) None
Redemption fee (as a percentage
of amount redeemed) None
Exchange fee None
Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
Management fees 0.75%
Other expenses 0.75%
Total annual Fund operating expenses 1.50%
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Example
The following example is intended to help you compare the cost of investing in
the Trust with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Trust for the time periods
indicated. The example also assumes that your investment has a 5% return each
year and that the Trust's operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions your
costs would be:
Assuming redemption at Assuming no
the end of each period redemption
One Year $153 $153
Three Years: $474 $474
Five Years $818 $818
Ten Years $1,791 $1,791
WHAT ARE THE TRUST'S INVESTMENT STRATEGIES?
Historically, during periods of increasing inflation and during periods of
economic or monetary instability:
othe prices of resource-related equity securities have tended to increase as
rapidly or more rapidly than the rate of inflation; ocurrencies of countries not
involved in inflationary circumstances may increase in value relative to the
U.S. dollar; and ointerest rates have tended to increase, causing the market
value of debt instruments to decline.
Conversely, during periods of deflation (when inflationary forces are reversed):
othe price of high grade debt instruments has tended to increase while the value
of commodity and resource-related equity securities has tended to decline; and
oforeign currencies (relative to the U.S. dollar) may also decline in value at
such times.
Accordingly, the Investment Adviser will seek to anticipate oncoming
inflationary and deflationary economic cycles and will attempt to achieve the
Trust's investment objectives by following two distinct investment approaches
depending upon whether it perceives the economy as being in an inflationary or
deflationary environment, as follows:
1. Under normal circumstances, when the Investment Adviser expects an
inflationary cycle, the Trust will pursue its primary investment
objectives by investing at least 65% of its total assets in equity
securities of domestic and foreign companies with substantial natural
resource assets, natural resource or energy related activities, or that
provide equipment or services primarily devoted to the natural resource or
energy-related activities of such companies (Natural Resource Company).
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The Trust will consider a company to be such a Natural Resource Company
if, at the time the Trust acquires its securities, at least 50% of the
company's assets, capitalization, gross revenues or operating profits in
the most recent or current fiscal year are:
oinvolved in or result from (directly or indirectly through
subsidiaries) exploring, mining, refining, processing, transporting,
fabricating, dealing in or owning resource assets; or
oinvolved in or result from energy-related activities directly or
indirectly through subsidiaries, such as utilities.
Energy-related activities consist of those activities which relate to the
development and use of energy sources, such as:
-exploring, mining, refining, processing, transporting, fabricating,
dealing in or owning natural resource assets, or engaging in
energy-related activities, including utilities;
-the generation of power from hydroelectric, geothermal, tidal, or
other naturally occurring sources or from natural resource
manufacturing by-products or refuse;
-the development of synthetic fuels;
-transportation of energy-producing sources such as coal, oil,
electricity, or nuclear fuels;
-the development and application of techniques and devices for
conservation or efficient use of energy; and
-the control of pollution related to energy industries and
waste disposal.
Generally, a company will be considered to provide equipment or services
to such Natural Resource Companies if at least 50% of the company's assets
are invested in such Natural Resource Companies, or at least 50% of its
income is derived from providing equipment or services to such Natural
Resource Companies.
Examples of this kind of company are:
omanufacturers of mining or earth moving equipment
oproviders of seismology testing services; and,
oproviders of supplies and maintenance services to offshore
drilling sites.
Assets of the Trust not invested as described above will largely be
invested in debt instruments of the U.S. government and its agencies
having varied maturities or in repurchase agreements or loans of
securities.
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2. When, based on an analysis of numerous economic and monetary factors,
the Investment Adviser expects a deflationary cycle, the Trust will invest
up to 90% of its total assets in U.S. or foreign government and government
agency fixed-income securities of sufficiently long maturities which the
advisor believes would permit appreciation during a period of deflation to
realize its objective of long-term capital appreciation. During such
periods, the Trust will hold the balance of its assets in short-term U.S.
or foreign denominated securities.
It should be emphasized that the Investment Adviser will not apply a rigid,
mechanical determination in assessing whether the economy is in an inflationary
or disinflationary environment. Rather, its determination will be the result of
its subjective judgment of all factors it considers to be relevant.
When it is not discernable whether there is an inflationary or deflationary
economic environment, the Trust may depart from the principal investment
strategies discussed above by investing up to 100% of its assets in cash or cash
equivalents (in U.S. dollars and foreign currencies) and high-quality short-term
securities having minimum credit ratings of "AAA" by Standard & Poor's or Fitch
Investors Service, Inc. or "Aaa" by Moody's Investors Service, Inc., including
money market securities (such as certificates of deposit, commercial paper and
bankers' acceptances) and repurchase agreements.
Temporary Investments. The Trust may also make temporary investments to minimize
potential losses and maintain liquidity to meet shareholder redemptions during
adverse market conditions. Investing in temporary investments may cause the
Trust to give up greater investment returns while maintaining the safety of
principal, (i.e., the original amount invested by shareholders).
In addition, the Trust may invest up to 100% of its assets in securities
principally traded on foreign securities markets and in securities of foreign
issuers that are traded in U. S. securities markets, including American
Depository Receipts. The Trust may invest in securities of foreign issuers of
both developed and developing countries.
WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE TRUST INVESTS?
Inflationary Cycle:
Equity securities of domestic and foreign Natural Resource Companies with
substantial natural resource assets, natural resource or energy related
activities, or that provide equipment or services primarily devoted to the
natural resource or energy-related activities of such companies.
oEquity securities means common or preferred shares in a corporation,
whether or not transferable or denominated "stock," or similar security,
interests in a limited partnership, or warrants or rights other than
rights to convert, purchase, sell or subscribe to a share, security or
interest of a kind previously specified.
oConvertible securities means debentures or preferred stock that may be
exchanged by the owner for common or preferred stock, usually of the same
company, in accordance with the terms of the issue.
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Lending of Portfolio Securities: The Trust may seek to increase its income by
lending portfolio securities. Any loan will be continuously secured by
collateral at least equal to the market value of the security loaned. The total
value of the securities loaned at any time will not exceed 30% of the Trust's
total assets. The Trust will make loans only to U.S. entities which the Trust
deems to be creditworthy. In addition, in any loan transaction, the Trust will
have the right to call the loan and obtain the securities loaned at anytime on
five days' notice.
Repurchase Agreements: The Trust may engage in transactions in repurchase
agreements. These are agreements under which the Trust acquires a money market
instrument (such as a security issued by the U.S. government or one of its
agencies, 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 that the Trust holds the security and is not related to
the interest rate or the underlying instrument. The Trust may not invest more
than 10% of its assets in repurchase agreements having maturities longer than
seven days or other investments subject to legal or contractual restrictions on
resale or which are not readily marketable.
The Trust will enter into repurchase agreements only with banks whose deposits
are insured by the Federal Deposit Insurance Corporation and which have capital
and undivided surplus of at least $200,000,000. The Trust will require that the
repurchase agreements be secured by acceptable collateral.
Deflationary Cycle:
U.S. or foreign government and government agency fixed-income securities of
sufficient maturities to realize the Trust's objective of long-term capital
appreciation.
U.S. government securities include U.S. Treasury bills, notes and bonds and
obligations of agencies and instrumentalities of the U.S. government. Such
agencies include Federal Land Banks; Farmers Home Administration; Central
Bank of Cooperatives; Federal Intermediate Credit Banks; Federal Home Loan
Banks; and Federal National Mortgage Association.
Some obligations of the U.S. government agencies and instrumentalities, such as
Treasury bills and Government National Mortgage Association (GNMA) certificates,
are supported by the full faith and credit of the United States; others, such as
securities of Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the U.S. Treasury; still others, such as bonds issued by the
Federal National Mortgage Association, a private corporation, are supported only
by the credit of the instrumentality. These securities are not insured by the
U.S. government and there can be no assurance that the U.S. government will
support an instrumentality it sponsors.
Foreign government securities generally consist of fixed income securities
supported by national, state or provincial governments or similar political
subdivisions. Foreign government securities also include debt obligations of
supranational entities, such as international organizations designed or
supported by governmental entities to promote economic reconstruction or
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development, international banking institutions and related government agencies.
Examples of these include, but are not limited to, the International Bank for
Reconstruction and Development (the World Bank), the Asian Development Bank, the
European Investment Bank and the Inter-American Development Bank.
Foreign government securities also include fixed income securities of
"quasi-governmental agencies" which are either issued by entities that are owned
by a national, state or equivalent government or are obligations of a political
unit that are not backed by the national government's full faith and credit and
general taxing powers. Further, foreign government securities include mortgage-
related securities issued or guaranteed by national, state or provincial
governmental instrumentalities, including quasi-governmental agencies.
When neither an inflationary nor deflationary cycle is discernable, the Trust
may depart from the principal investment strategies discussed above by investing
up to 100% of its assets in cash or cash equivalents (in U.S. dollars and
foreign currencies) and high-quality short-term securities having minimum credit
ratings of "AAA" by Standard & Poor's or Fitch Investors Service, Inc. or "Aaa"
by Moody's Investors Service, Inc., including money market securities (such as
certificates of deposit, commercial paper and bankers' acceptances) and
repurchase agreements.
Temporary Investment Strategy: For temporary defensive purposes, the Trust may
invest in short-term U.S. government securities and other money market
instruments, cash or cash equivalents. Money market instruments include
high-grade commercial paper (promissory notes issued by corporations to finance
their short-term credit needs), negotiable certificates of deposit,
non-negotiable fixed time deposits, bankers' acceptances and repurchase
agreements.
WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE TRUST?
Industry Concentration
Because the Trust will typically concentrate (invest 25% or more of its total
assets) in the global natural resource industries, the price of the Trust's
shares may be more volatile than that of investment companies that do not
concentrate their investments in such a manner.
Investment Ratings
The debt securities of foreign corporations in which the Trust may invest will
be determined by the Investment Adviser to have a quality comparable to
securities receiving investment grade ratings ("BBB" by Standard & Poor's or
Fitch Investors Service, Inc. or "Baa" by Moody's Investors Service, Inc.) or
higher at the time of purchase.
Securities rated "BBB" or "Baa," although considered to be investment grade, may
have speculative characteristics in that changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity of the issuer to
make principal and interest payments than is the case for higher grade
securities, thereby increasing the risk of a decline in the value of the Trust's
assets.
Securities rated "BB" or "BA" or "B" are regarded as having greater
vulnerability to defaulting on interest and principal payments, thereby
increasing the risk to the Trust.
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Investment Strategy
The success of the Trust's investment program will be dependent to a high degree
on:
othe Investment Adviser's ability to anticipate the onset and termination
of inflationary and deflationary cycles. A failure to anticipate a
deflationary cycle could result in the Trust's assets being
disproportionately invested in natural resource-related companies, and
failure to predict an inflationary cycle could result in the Trust's
assets being disproportionately invested in U.S. government securities.
othe validity of the premise that the value of resource-related equity
securities will move in a different direction than the value of U.S.
government securities during periods of inflation or deflation. If the
value of both resource-related equity securities and U.S. government
securities move down during the same period of time, the value of the
shareholder's investment will decline rather than stabilize or increase,
as anticipated, regardless of whether the Trust is primarily invested in
resource-related equity securities or U.S. government securities.
Equity Securities
While stocks have historically outperformed other asset classes over the long
term, they tend to go up and down more dramatically over the shorter term. These
price movements may result from factors affecting individual companies, or
industries or the securities market or the economy as a whole. If the stocks the
Trust holds fluctuate in price, the value of an investment in the Trust will go
up and down. This means you could lose money over short or even extended periods
of time. Natural resource-related companies involve special considerations which
are discussed below.
The success of the Trust's investments in equity and debt securities will be
dependent to a high degree on the Investment Adviser's ability to anticipate the
onset and termination of inflationary and deflationary cycles. A failure to
anticipate a deflationary cycle could result in the Trust's assets being
disproportionately invested in resource-related equity securities. Conversely, a
failure to predict an inflationary cycle could result in the Trust's assets
being disproportionately invested in U.S. government securities.
The success of the Trust's investment program, including its method of selecting
equity securities, will also be dependent to a high degree on the validity of
the premise that the values of resource-related equity securities will move in a
different direction than the values of U.S. government securities during period
of inflation or deflation. If values of both resource-related equity securities
and U.S. government securities move down during the same period of time, the
value of the shareholder's investment will decline rather than stabilize or
increase, as anticipated, regardless of whether the Trust is primarily invested
in natural resource or U.S.
government securities.
Natural Resource-Related Companies
Because the Trust concentrates its assets in the global natural resource
industries, the price of the Trust's shares may be more volatile than that of
investment companies that do not concentrate their investments in such a manner.
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In addition, the value of the Trust's securities will fluctuate in response to
market conditions for the particular natural resource with which the issuer is
involved. The price of the commodity will fluctuate due to changes in worldwide
level of inventory, and changes, perceived or actual, in production and
consumption. The value of natural resources may fluctuate directly with respect
to various stages of the inflationary cycle and perceived inflationary trends
and is subject to the factors listed below, including national and international
politics.
The principal factors affecting the value of equity securities of natural
resource companies in which the Trust invests are:
ochanges in the market for the particular natural resource in which the
issuer is involved;
oevents occurring in nature, inflationary pressures and international
politics, which can effect the overall supply and demand of a natural
resource and thereby the value of the companies involved in such natural
resource; and
opolitical, environmental and other governmental regulation, which may be
greater for these industries than other industries in both the U.S.
and foreign countries.
The nature of the political, environmental and other governmental regulation
continues to evolve in both the U.S. and foreign countries. Changes in
governmental policies and the need for regulatory approvals may have a material
effect on the products and services of natural resource companies. For example,
the exploration, development and distribution of coal, oil and gas in the U. S.
are subject to significant federal and state regulation, which may effect rates
of return on such investments and the kinds of services that may be offered.
Many natural resource companies historically have been subject to significant
costs associated with compliance with environmental and other safety regulations
and changes in the regulatory climate. Such governmental regulations may also
hamper the development of new technologies, and it is impossible to predict the
direction, type or effect of any future regulation.
Competition is intense for many natural resource companies. As a result, many of
these companies may be adversely affected in the future and the value of the
securities issued by such companies may be subject to increased share price
volatility.
Convertible Securities
Convertible securities, including convertible bonds and preferred stock, are
convertible into common stock. Because of the conversion feature, the interest
or dividend rate on a convertible security is generally less than would be the
case than a security which is not convertible. The value of a convertible
security will be affected by both its stated interest or dividend rate and the
value of the underlying security. Its value will thus be affected by factors
that affect both debt securities (such as interest rates) and equity securities
(such as stock market movements generally). In addition, some convertible
securities, by their terms, permit the issuer to require the Trust to resell the
convertible security, which could occur at a time that is not favorable to the
Trust based on then-prevailing interest rates or equity values.
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Foreign Investing
During certain periods, the Trust may invest up to 100% of its assets in foreign
equity or debt securities. Foreign securities pose additional risks because
foreign economic or political conditions may be less favorable than those of the
United States. Foreign financial markets may also have fewer investor
protections. Securities in foreign markets may also be subject to taxation
policies that reduce returns for U.S. investors. Due to these risk factors,
foreign securities may be more volatile and less liquid than similar securities
traded in the U.S. In particular, investments in foreign securities are subject
to the following specific risks:
Country Risk. General securities market movements in any country will
likely affect the value of the securities the Trust owns which trade in
that country. These movements will affect the Trust's share price.
The political, economic and social structures of some countries in which
the Trust invests may be less stable and more volatile than those in the
U. S. The risks of investing in these countries include the possibility of
the imposition of exchange controls, expropriation, restrictions on
removal of currency or other assets, nationalization of assets and
punitive taxes.
The Trust's investments in developing or emerging markets are subject to
all of the risks of foreign investing generally, and have additional
heightened risks due to a lack of legal, business and social frameworks to
support securities markets. The Trust's investments in emerging markets
typically will not exceed ten percent (10%) of the Trust's total assets
Company Risk. Foreign companies are not subject to the same accounting,
auditing, and financial reporting standards and practices as U. S.
companies and their stocks may not be as liquid as stocks of similar U.S.
companies. Foreign stock exchanges, brokers and companies generally have
less government supervision and regulation than in the U.S. The Trust may
have greater difficulty voting proxies, exercising shareholder rights,
pursuing legal remedies and obtaining judgments with respect to foreign
investments in foreign courts than with respect to U.S.
companies in U.S. courts.
Currency. Many of the Trust's investments are denominated in
foreign currencies. Changes in foreign currency exchange rates
will affect the value of what the Trust owns and the Trust's
share price. Generally, when the U.S. dollar rises in value
against a foreign currency, an investment denominated in that
country's currency loses value because that currency is worth
fewer U.S. dollars.
Euro. On January 1, 1999, the European Monetary Union introduced a new
single currency, the euro, which replaced the national currency for
participating member countries. The Trust's investments in countries with
currencies replaced by the euro, the investment process, including
trading, foreign exchange, payments, settlements, cash accounts, custody
and accounting will be affected.
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Because this change to a single currency is new and untested, the
establishment of the euro may result in market volatility. Also, it is not
possible to predict the impact of the euro on the business or financial
condition of European issuers which the Trust may hold in its portfolio,
and their impact on the value of Trust shares. To the extent the Trust
holds non-U.S. dollar (euro or other) denominated securities, it will
still be exposed to currency risk due to fluctuations in those currencies
versus the U.S. dollar.
Fixed Income Securities
The values of fixed income investments, including some of the debt
instruments in which the Trust invests, rise and fall in response to
changes in interest rates. Declining interest rates raise the value of
debt instruments, while rising interest rates lower the value of debt
instruments. Debt instruments with longer maturities are usually subject
to a greater risk of an adverse movement in interest rates and a decline
in the price of the instruments. Changes in the values of the Trust's
investments will affect the value of the Trust's shares.
Call Risk. Traditional debt instruments typically pay a fixed rate of
interest until maturity, when the entire principal amount is due. An
issuer may redeem its debt securities before maturity at a price below its
current market price. An issuer may also prepay its debt instruments
voluntarily or as a result of a refinancing, or the instruments may be
prepaid as a result of a foreclosure. The Trust may have to invest
proceeds that it receives from prepayment on its investments in debt
securities with lower interest rates, higher credit risks or other less
favorable terms.
Credit Risk. Credit risk is the possibility that an issuer will
default (the issuer fails to pay interest and principal when due). If
an issuer defaults, the Trust will lose money
Many fixed income securities receive credit ratings from companies such as
Standard & Poor's and Moody's Investor Services. Fixed income securities
receive different credit ratings depending on the rating company's
assessment of the likelihood of default by the issuer. The lower the
rating of the fixed income security, the greater the credit risk.
Fixed income securities generally compensate for greater credit risk by
paying interest at a higher rate. The difference between the yield of the
security and the yield of a U.S. Treasury security with a comparable
maturity (the "spread") measures the additional interest received for
taking risk. Spreads may increase generally in response to adverse
economic or market conditions. A security's spread may also increase if
the security's rating is lowered, or the security is perceived to have an
increased credit risk. An increase in the spread will cause the price of
the security to decline.
Foreign fixed income securities pose additional risks because of fewer
investor protections, adverse tax policies, less public information
regarding issues, and more volatile political and economic conditions and
currency exchange rates.
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Loans of Portfolio Securities and Repurchase Agreements
If the Trust makes loans of portfolio securities or uses repurchase agreements,
there is a risk that the other party to the transaction may not be able to
fulfill its obligations to the Trust. In the event a default by the borrower in
a loan of portfolio securities, the Trust may not be able to recover its
securities. In the event of a default by the other party to a repurchase
agreement, the Trust may lose its interest in the underlying security.
Year 2000
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Trust.
While it is impossible to determine in advance all of the risks to the Trust,
the Trust could experience interruptions in basic financial and operational
functions. Trust shareholders could experience errors or disruptions in Trust
share transactions or Trust communications.
The Trust's service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.
Year 2000 problems could also increase the risks of the Trust's investments. To
assess the potential effect of the Year 2000 problem, the Investment Adviser is
reviewing information regarding the Year 2000 readiness of issuers of securities
that the Trust may purchase.
The financial impact of these issues for the Trust is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Trust.
MANAGEMENT AND ORGANIZATION
Trustees
Under the terms of the Declaration of Trust establishing the Trust, which is
governed by the laws of the Commonwealth of Massachusetts, the Trustees of the
Trust are ultimately responsible for the management of its business and affairs.
The Statement of Additional Information contains background information
regarding each Trustee and executive officer of the Trust.
Investment Adviser
The Investment Adviser, Anchor Investment Management Corporation (formerly known
as Meeschaert Investment Management Corporation), manages the Trust's
investments and affairs, subject to the supervision of the Trustees. Its
principal services to the Trust are managing the investment and reinvestment of
the Trust's assets and providing, either directly or through a
sub-administrator, various administrative services to the Trust, including the
provision of all necessary office facilities, equipment and personnel for
administering the business of the Trust. The Investment Adviser has been engaged
continuously in the investment management business, including the management of
investment company assets, since 1983. The principal offices of both the Trust
and the Investment Adviser are located at 579 Pleasant Street, Suite 4, Paxton,
Massachusetts 01612.
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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
Adviser. Mr. Jaspard is president of Linden Investment Advisors, S.A., an
investment advisory firm headquartered in Belgium. He has managed other
portfolios for the Meeschaert organization (described below) for more than
nineteen years. He has been in the investment counseling business for more than
twenty years, giving investment advice to a wide variety of individual and
institutional clients.
For its service under its Investment Advisory Contract with the Trust, the
Investment Adviser receives a fee, payable monthly, calculated at 0.75% 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, 1998,
the Investment Adviser received investment advisory fees of $49,052 for its
services to the Trust. The Investment Adviser may voluntarily waive a portion of
its fee or reimburse the Trust for certain operating expenses.
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. The Meeschaert organization was established in
Roubiax, France in 1935 by Emile C. Meeschaert, and presently manages, with full
discretion, approximately $1.5 billion (including $250 million in French mutual
funds) for about 8,000 individual and institutional customers.
SHAREHOLDER INFORMATION
Purchase of Shares
You may purchase Trust shares directly from the Distributor, Meeschaert & Co.,
Inc., 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612. An application
for your use in making an initial investment in the Trust is included in the
back of the Prospectus.
Investment Minimums
To establish a new account, the minimum investment is $500. There is no
minimum for shareholders who make additional investments to existing
accounts.
To exchange other securities for Trust shares, the minimum investment is
$5,000. See "EXCHANGES" below.
Share Price
The Trust's share price is its net asset value next determined after the
Distributor receives and accepts your order. The Trust calculates its net asset
value as of 12:00 noon Eastern Time on each day on which the New York Stock
Exchange is open for trading.
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In calculating net asset value, the Trust uses market prices of securities
traded on U.S. or foreign securities exchanges when available. The market price
of a security is equal to the last known sale price, or if there has been no
sale of the security, the known current bid price. If a particular security's
market price is not available, the Trust will determine the appropriate price
based on its "fair value." This means that the Trust may value such securities
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees. The market prices of all of the Trust's investments
are added together, liabilities of the trust are deducted from the total, and
the resulting amount is divided by the number of shares outstanding.
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its net asset value,
the Trust values foreign securities at the latest closing price on the exchange
on which they are traded immediately prior to the time when the net asset value
of the Trust is calculated. All assets and liabilities of the Trust denominated
in foreign currencies are valued in U.S. dollars based on the exchange rate last
quoted by a major bank prior to the time when the net asset value of the Trust
is calculated.
Exchanges of Shares
The Trust will accept common or preferred stock of companies acceptable to the
Investment Adviser in exchange for shares of the Trust. The minimum value of
securities accepted for deposit is $5,000. The Trust will value securities
accepted for exchange in the same manner provided for valuing its portfolio
securities (see "Share Price" above).
If the Trust, upon acceptance of securities for exchange of fund shares,
determines to sell these securities, the Trust will pay any liquidation costs
involved in disposing of these securities.
You should forward securities for exchange, in proper form for transfer to the
Trust, together with a completed and signed letter of transmittal in approved
form (available from the Distributor) to the Trust's custodian as follows:
Investors Bank & Trust Company
Financial Products Services Group
Attn: Anchor Resource and Commodity Trust
200 Clarendon Street, 16th Floor
Boston, Massachusetts 02116
Exchanges of shares must be done as follows:
1. You must forward all securities under a single Letter of Transmittal. In
certain instances indicated in the instructions to the Letter of
Transmittal, multiple Letters of Transmittal must be attached and
transmitted as a single exchange. The Trust may reject securities
presented for exchange for any reason, and will only accept securities
which are delivered in proper form.
2. If you wish to exchange securities for Trust shares, your securities must
not be subject to any restrictions that would affect their resale by the
Trust for any reason. The Trust will not accept securities for exchange
if, in the opinion of its counsel, acceptance would violate any federal or
other law affecting the Trust. The Trust may reject securities for any
reason.
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3. If you are contemplating an exchange of securities for Trust shares, you
or your representative should contact the Distributor before you forward
the securities so that the Distributor can determine in advance whether
the securities are acceptable to the Trust.
4. If the Trust finds that securities presented for exchange are in good
order only in part, the Trust may issue the appropriate number of Trust
shares for that part and return the balance to you. The Trust will issue a
confirmation for Trust shares to you after securities that it has accepted
for exchange have cleared for transfer to the Trust. Certificates will not
be issued unless you so request.
5. By tendering securities for exchange, you agree to accept the
determination of their market value that the Trust makes at the time it
determines the Trust's net asset value per share. The number of shares of
the Trust to be issued in exchange for other securities will be the value
of the accepted securities determined as described above, divided by the
net asset value per Trust share next determined after the Trust's
acceptance of the securities.
6. You may realize a gain for federal income tax purposes in connection with
your exchange of securities for Trust shares. You should consult your tax
advisor about the tax consequences of exchanging securities for Trust
shares.
Redemption and Repurchase of Shares
You may require the Trust to redeem your shares. The Trust also maintains a
continuous offer to repurchase its shares. Redemptions and repurchases will be
made in the following manner:
1. You may mail or present a written request that the Trust redeem your
shares to the Trust's transfer agent at 579 Pleasant Street, Suite 4,
Paxton, Massachusetts 01612. If you have share certificates, you should
properly endorse them and include them with your request. The redemption
price will be the net asset value next determined after the Trust receives
your request and/or certificates.
2. Your broker may present your request for repurchase to the Trust. The
repurchase price will be the net asset value next determined after the
Trust receives the request. If the broker receives the request before
12:00 p.m. Eastern Time 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 p.m. Eastern Time that day. If the broker
receives the request after 12:00 p.m., the repurchase price will be the
next asset value determined as of 12:00 p.m. Eastern Time the following
day. If you use a broker, the broker may charge a reasonable fee for his
services.
The Trust will pay you for shares that it redeems or repurchases within seven
days after it receives your shares, or other required documents, properly
endorsed. Your signature on an issued certificate must be guaranteed by a
commercial bank or trust company or by a member of the New York, American,
Pacific, Boston or Chicago Stock Exchange. The Trust will not accept a signature
guarantee by a savings bank or savings and loan association or notarization by a
notary public.
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To ensure proper authorization, the Trust's transfer agent may request
additional documents. These may include stock powers, trust instruments,
certificates of death, appointments as executor, certificates of corporate
authority or waiver of tax (required in some states from selling or exchanging
estates before redeeming shares).
There are no circumstances under which the Trust may redeem shares automatically
without action by the shareholder.
The right of redemption may be suspended or the payment date postponed at
certain times. These include days when the New York Stock Exchange is closed for
other than customary weekend and holiday closings, when trading on the New York
Stock Exchange is restricted, as determined by the Securities and Exchange
Commission, or 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 a suspension. In case of a suspension of the right of redemption, a
shareholder who has rendered a certificate for redemption through a broker may
withdraw his request or certificate. Otherwise, he will receive payment of the
net asset value determined next after the suspension has been terminated. You
may receive more or less than you paid for your shares, depending on the net
asset value of the shares at the time of redemption or repurchase.
Redemptions in Kind
Under unusual circumstances, when the Board of Trustees deems it in the best
interests of the Trust's shareholders, the Trust may pay for shares repurchased
or redeemed partly or entirely 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 90-day period
during which such redemptions are in effect, if that amount is less than
$250,000). If payment is made in securities, the redeeming shareholder may incur
brokerage costs in converting his securities to cash.
Services for Shareholders
Open Accounts: For your convenience, all shares of the Trust registered in your
name are automatically credited to an Open Account maintained for you on the
books of the Trust. All shares that you acquire will be credited to your Open
Account and share certificates will not be issued unless you so request.
Certificates representing fractional shares will not be issued in any case. You
may surrender certificates previously acquired to the Trust's transfer agent.
These certificates will be canceled and the shares so represented will continue
to be credited to your Open Account.
Each time shares are credited to or withdrawn from your Open Account, you will
receive a statement showing the details of the transaction and your then current
balance of shares. Shortly after the end of each calendar year you will also
receive a complete annual statement of your 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.
You may transfer shares credited to an Open Account upon proper written
instructions to the Trust's transfer agent. You may also redeem or sell shares
in the manner shown under the "Redemption and Repurchase of Shares."
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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.
You may purchase additional shares for your Open Account at any time by sending
a check (payable to the order of the Trust) to Anchor Investment Management
Corp. Shareholders Services, Attn: Anchor Resource and Commodity Trust, 579
Pleasant Street, Suite 4, Paxton, Massachusetts 01612 (giving the full name or
names of your account). The Trust will bear the cost of administering
shareholders' Open Accounts as an expense of all its shareholders.
Distributions
The Trust currently intends to distribute any income dividends and capital gains
distributions in additional Trust shares or, if you elect, in cash. You may
elect (1) to receive both dividends and capital gain distributions in additional
shares or (2) to receive dividends in cash and capital gain distributions in
additional shares or (3) to receive both dividends and capital gain
distributions in cash.
You may change your distribution option at any time by notifying the Trust's
transfer agent in writing. The new distribution option must be received by the
Trust's transfer agent at least 30 days prior to the close of the fiscal year.
If you have an account with a cash dividend option, and the Trust's transfer
agent discovers that your address of record is not current, your account will be
changed to reinvest both dividends and capital gains automatically.
Dividends and capital gain distributions received in shares will be made to the
Trust's transfer agent, as your agent, and credited to your Open Account in full
at the closing net asset value on the record date of the distributions.
Tax Consequences
Shareholders will be subject to federal income taxes on distributions made by
the Trust whether they are received in cash or additional Trust shares.
Distributions of net investment income and short-term capital gains, if any,
will be taxable to shareholders as ordinary income. Distributions of long-term
capital gains, if any, will be taxable to shareholders as long-term capital
gains, without regard to how long a shareholder has held shares of the Trust.
Dividends paid by the Trust will generally not qualify for the 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 under-reported 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 is his or her social security number.
Please consult your tax adviser for further information regarding your federal,
state, and local tax liability.
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OTHER INFORMATION
Custodian, Transfer Agent and Paying Agent
Investors Bank & Trust Company, Financial Product Services, 200 Clarendon
Street, 16th Floor, Boston, Massachusetts 02116 is the Trust's custodian bank.
The custodian bank receives and holds securities, cash and other assets of the
Trust and also makes distributions on behalf of the Trust. 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 legally be so held abroad. The Trust's custodian bank does not
decide on purchases or sales of portfolio securities or the making of
distributions. As of April 1, 1999, Cardinal Investment Services, Inc., 579
Pleasant Street, Suite 4, Paxton, Massachusetts 01612, succeeded Anchor
Investment Management Corporation, as the transfer agent and dividend-paying
agent for the Trust.
Capitalization
The capitalization of the Trust consists of an unlimited number of shares of
beneficial interest, without par value, designated Common Shares, which
participate equally in dividends and distributions. 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.
Additional Information
You can find more detailed information about the Trust, its investment
strategies and risks of investing in the Trust in the Statement of Additional
Information.
Shareholder Inquiries
For further information about the Trust, you may call the Trust collect at
(508)831-1171. You may address any written inquiries to Progressive Capital
Accumulation Trust, 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612.
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FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The following financial highlights will help you understand the Trust's
financial performance for its past five fiscal years. Some of the information is
presented on a per share basis. The total returns in the table represent the
rate an investor would have earned (or lost) on an investment in the Trust,
assuming reinvestment of all dividends and distributions.
This information has been audited by Livingston & Haynes, P. C., whose report,
along with the Trust's audited financial statements, is included in the Annual
Report.
Year ended December 31
-------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------
Net Asset Value,
Beginning of Year $9.83 $10.45 $9.31 $9.19 $11.17
- -------------------------------------------------------------------------------
Income From Investment
Operations:
Net Investment Income 0.72 0.09 0.06 0.57 (1.98)
Net realized and unrealized
gain (loss) on investments (2.09) (0.71) 1.08 0.13 --
- -------------------------------------------------------------------------------
Total income from investment
Operations (1.37) (0.62) 1.14 0.70 (1.98)
- -------------------------------------------------------------------------------
Less Distributions::
Dividends from net
investment Income (0.65) -- -- (0.58) --
Distributions from
capital gains -- -- -- -- --
gains
- -------------------------------------------------------------------------------
Total distributions (0.65) -- -- (0.58) --
Net Asset Value, End of Year $7.81 $9.83 $10.45 $9.31 $9.19
- -------------------------------------------------------------------------------
Total Return (14.99%) (5.93%) 12.24 7.63 (17.74)
- -------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of year
(in millions) $0.9 $10.6 $11.5 $7.2 $0.1
Ratio of expenses to
average net assets 1.50% 1.13% 1.10% 1.11% 20.87%
Ratio of net income to
average Net assets 0.86% 0.89% 0.85% 2.01% 18.88%
Portfolio turnover rate 49% 9% 20% 33% --
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ANCHOR RESOURCE AND COMMODITY TRUST
(the "Trust")
MEESCHAERT & CO., INC.
("Distributor")
APPLICATION AND REGISTRATION FORM1
Send Application to
Meeschaert & Co., Inc., 579 Pleasant Street, Suite 4, Paxton, Massachusetts
01612
Date:_____________
I. ACCOUNT REGISTRATION:
[GRAPHIC OMITTED] New: Social Security or Tax Number_____________________
(if two names below, circle which one has this number.)
[GRAPHIC OMITTED] Existing: Account Number ______________________________
(from your latest statement - vital for identification.)
Name(s)__________________________________________________________________
(Type or print exactly as they are to appear on the Trust's records.)
Street __________________________________________________________________
City ________________________ State ______________________ Zip __________
If address outside the U.S.A., please circle I (am) (am not) a citizen
of the U.S.A.
If registration requested in more than one name, shares will be registered as
"Joint Tenants with Rights of Survivorship" unless otherwise instructed.
II. BASIS FOR OPENING NEW ACCOUNT:
[GRAPHIC OMITTED] A check for $_______________ payable to the Trust attached.
or
[GRAPHIC OMITTED] Shares _______________ recently purchased on __________
(number) (date)
Distribution Option: (exercisable only by holders of Common Shares) Check
only one. If none checked, option A will be assigned.
[GRAPHIC OMITTED] A. Dividends and capital gains in additional full and
fractional shares credited to shareholder's account, no certificates issued.
OR
[GRAPHIC OMITTED] B. Dividends in cash; capital gains in additional full and
fractional shares credited to shareholder's account; no certificates issued.
OR
[GRAPHIC OMITTED] C. Dividends in cash; capital gains in cash.
(Certificates will be issued to shareholders requesting such in writing from
the Transfer Agent.)
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<PAGE>
III. INVEST-BY-MAIL SERVICE: for periodic share accumulation (whether or
not dividends are received in shares)
[GRAPHIC OMITTED] Please check if you wish to utilize the Trust's Invest-By-Mail
Service. This is a voluntary service involving no extra charge to the
shareholder, and it may be changed or discontinued at any time.
IV. SHAREHOLDER'S SIGNATURE: Should be the same as name in Account
Registration.
__________________________________ ________________________________________
Signature Signature of Co-Owner (if any)
(I have received a current prospectus of the Trust and I understand that my
account will be covered by the provisions on the reverse side of this
Application.I also understand that I may terminate any of these services at any
time.)
DEALER AUTHORIZATION:
(please print)
Representative
_________________________________ ______________________________________
Dealer's Name (Representative's Name)
_________________________________ ______________________________________
Home Office Address Telephone Number(Representative's Number)
Branch Office:
_________________________________ ______________________________________
City State Zip Address
_________________________________ ______________________________________
Authorized Signature of Dealer City State Zip
_________________________________
Telephone Number
29
<PAGE>
ANCHOR RESOURCE AND COMMODITY TRUST
For investors who want more information about the Trust, the following documents
are available free upon request:
Annual Reports: Additional information about the Trust's investments is
available in the Trust's annual report to shareholders. The Trust's annual
report includes a discussion of the market conditions and investment strategies
that significantly affected the Trust's performance during its last fiscal year.
Statement of Additional Information (SAI): The SAI provides more detailed
information and is incorporated into this Prospectus by reference.
You can get free copies of the Trust's annual reports and SAIs
by writing or calling the Trust collect at:
Anchor Resource and Commodity Trust
579 Pleasant Street, Suite 4
Paxton, Massachusetts 01612
Telephone (collect): (508) 831-1171
Fax: (508) 831-1191
You can also review the Trust's reports and SAIs at the Public Reference Room of
the Securities and Exchange Commission.
You can obtain copies from the Securities and Exchange Commission as follows:
For a fee, by writing to or calling the Commission's
Public Reference Room, Washington, D.C. 20549
Telephone: 1-800-SEC-0330
Free from the Commission's Internet website at
http://www.sec.gov.
Investment Company Act File No. 811-8706
30
<PAGE>
ANCHOR RESOURCE AND COMMODITY TRUST
579 Pleasant Street, Suite 4
Paxton, Massachusetts 01612
(508) 831-1171
STATEMENT OF ADDITIONAL INFORMATION
Dated May 1, 1999
This Statement of Additional Information (SAI) is not a prospectus but should be
read in conjunction with the current Prospectus of Anchor Resource and Commodity
Trust (the "Trust") dated May 1, 1999, and the financial statements contained in
the Trust's Annual Report for the year ended December 31, 1998. The Trust's
Annual Report is incorporated by reference in this SAI. You may obtain the
Trust's Prospectus and Annual Report without charge by writing or calling the
Trust collect at (508) 831-1171.
31
<PAGE>
TABLE OF CONTENTS
THE TRUST..................................................................B-1
INVESTMENT STRATEGIES AND RISKS............................................B-1
Investment Strategy..................................................B-1
Lending..............................................................B-3
Repurchase Agreements................................................B-3
Investment Risks.....................................................B-5
PORTFOLIO TURNOVER.........................................................B-5
INVESTMENT RESTRICTIONS....................................................B-6
MANAGEMENT OF THE TRUST....................................................B-8
Officers and Trustees................................................B-8
Compensation of Officers and Trustees...............................B-10
Principal Holders of Securities ....................................B-10
Investment Adviser..................................................B-10
Investment Advisory Contract........................................B-11
Administrator.......................................................B-12
Principal Underwriter...............................................B-12
CAPITALIZATION............................................................B-12
PURCHASE, REDEMPTION AND PRICING OF SHARES................................B-13
Purchase of Shares..................................................B-13
Determination of Net Asset Value....................................B-14
Redemption and Repurchase of Shares.................................B-14
Redemptions in Kind.................................................B-15
DISTRIBUTIONS ............................................................B-15
TAXES.....................................................................B-16
General.............................................................B-16
PORTFOLIO SECURITY TRANSACTIONS ..........................................B-17
OTHER INFORMATION.........................................................B-18
Custodian, Transfer Agent and Dividend-Paying Agent ................B-18
Independent Public Accountants .....................................B-18
Registration Statement .............................................B-18
FINANCIAL STATEMENTS......................................................B-18
32
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THE TRUST
Anchor Resource and Commodity Trust (Trust) is a diversified open-end management
investment company and was established as an unincorporated business trust under
the laws of Massachusetts by a Declaration of Trust dated September 22, 1989.
The Trustees amended the Declaration of Trust in 1990 to change the name of the
Trust from Meeschaert Equity Plus Trust to Anchor Equity Plus Trust and again in
1994 to change the name to Anchor Resource and Commodity Trust.
INVESTMENT STRATEGIES AND RISKS
The Trust's Prospectus describes the investment objectives and policies of the
Trust. The Prospectus also briefly describes specialized techniques that the
Trust may use in order to achieve its investment objectives. There can be no
assurance that the Trust will achieve its investment objectives. 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.
Investment Strategy
The Trust's investments will vary depending upon whether the Investment Adviser
anticipates an inflationary or deflationary economic cycle.
The Investment Adviser's determination as to whether the economy is inflationary
or deflationary will be made based upon constant study of numerous economic and
monetary factors. These factors will include, but not necessarily be limited to:
oactual and anticipated rates of change in the Consumer Price Index (CPI) over
specified periods of time; oactual and anticipated changes and rates of changes
in the U.S. dollar in relation to other key currencies, e.g., the German mark,
the British pound and the Japanese yen; oactual and anticipated changes, and
rates of change, in short and long-term interest rates and real interest rates,
i.e., inflation adjusted interest rates; oactual and anticipated changes in the
money supply; and oactual and anticipated governmental fiscal and monetary
policy.
The Investment Adviser believes that, based upon past performance, the
securities of specific companies that hold different types of substantial
resource assets or engage in natural resource-related or energy-related
activities may move relatively independently of one another during different
stages of inflationary or deflationary cycles because of different degrees of
demand for, or market values of, their respective natural resource holdings or
resource-related or energy-related business during particular portions of such
cycles. For example, during the period 1976 to 1980, the prices of oil company
stocks increased relatively more than the price of coal company stocks when
compared to the performance of relevant stock market indices.
The Investment Adviser will seek to identify companies which it believes are
attractively priced relative to the intrinsic value of the underlying resource
assets or resource-related or energy-related business or are especially well
positioned to benefit during particular portions of inflationary or deflationary
cycles. The Trust's approach of active investment management enables it to
switch its emphasis among various industry groups, depending upon the Investment
Adviser's outlook with respect to prevailing economic trends and developments
affecting natural resource demand.
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<PAGE>
Investment in U.S. and other government debt securities in anticipation of
deflationary periods is intended to preserve capital, while providing a
relatively secure income, and to provide an opportunity for capital appreciation
if interest rates decline in such deflationary periods.
U. S. government securities include Treasury bills, notes and bonds, which
differ in their interest rates, maturities, and times of issuance. Treasury
bills have maturities of one year or less. Treasury notes have maturities of
one to ten years, and Treasury bonds have maturities of greater than ten
years at the date of issuance. U.S. government securities also include
obligations of agencies and instrumentalities of the U.S. government.
Agencies and instrumentalities of the U.S. government include, but are not
limited to: Federal Land Banks; Farmers Home Administration; Central Bank of
Cooperatives; Federal Intermediate Credit Banks; Federal Home Loan Banks; and
Federal National Mortgage Association.
Some obligations of the U.S. government agencies and instrumentalities, such as
Treasury bills, government National Mortgage Association (GNMA) certificates,
are supported by the full faith and credit of the United States; others, such as
securities of Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the U.S. Treasury; still others, such as bonds issued by the
Federal National Mortgage Association, a private corporation, are supported only
by the credit of the instrumentality. These securities are not insured by the
U.S. government and there can be no assurance that the U.S. government will
support an instrumentality it sponsors. The Trust will invest in the securities
issued by such an instrumentality only when its Investment Adviser determines
that the credit risk with respect to the instrumentality does not make its
securities unsuitable investments.
Foreign securities are securities of issuers based outside the U.S. They are
primarily denominated in foreign currencies and are traded outside of the
U.S. In addition to the risks associated with U.S. securities of the same
type, investments in foreign securities involve risks relating to political,
social and economic developments abroad as well as risks resulting from the
differences between the regulations to which U.S. and foreign issuers and
markets are subject.
These risks may include expropriation, confiscatory taxation,
withholding taxes on dividends and interest, limitations on the use or
transfer of portfolio assets, and political or social instability.
Enforcing legal rights may be difficult, costly and slow in foreign
countries, and there may be special problems enforcing claims against
foreign governments. In addition, foreign companies may not be subject
to accounting standards or governmental supervision comparable to U.S.
companies, and there may be less public information about their
operations.
Foreign markets may be less liquid and more volatile than U.S. markets
and may offer less protection to investors such as the Trust. Equity
securities traded in certain foreign countries may trade at high
price-earnings multiples that are unsustainable.
Since foreign securities often trade in currencies other that the U.S.
dollar, changes in currency exchange rates will affect the Trust's net
asset value, the value of dividends and interest earned, and gains and
losses realized on the sale of securities. An increase in the U.S.
dollar relative to these other currencies will adversely affect the
value of the Trust.
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<PAGE>
The Trust may invest in issuers located in developing countries.
Developing countries are generally defined as countries in the
initial stages of their industrialization cycles with low per capita
income.
All the risks of investing in foreign securities are heightened by
investing in developing countries.
The markets of developing countries have been more volatile than
the markets of developed countries with more mature economies. These
markets often have provided higher rates of return, and greater
risks to investors.
If, in the opinion of the Investment Adviser, there are periods when there is a
very small rate of change in the Consumer Price Index, and other leading
economic indicators, such as interest rates and the value of the U.S. dollar,
offer no clear evidence of inflationary or deflationary trends, then, the Trust
may invest in short-term U.S. government securities and other money market
instruments, cash or cash equivalents. Money market instruments include
high-grade commercial paper (promissory notes issued by corporations to finance
their short-term credit needs), negotiable certificates of deposit,
non-negotiable fixed time deposits, bankers' acceptances and repurchase
agreements. Investments in commercial paper will be rated Prime-1 by Moody's
Investors Services, Inc. or "A-1" by Standard & Poor's corporation or "F-1" by
Fitch Investors Service, Inc., which are the highest ratings assigned by these
agencies. Money market instruments will be limited to U.S. dollar denominated
instruments which are rated in the top two categories by an independent
nationally recognized rating organization or, if not rated, are of comparable
quality as determined by the Trustees. Investments in bank instruments will be
in instruments which are issued by U.S. or foreign banks having capital and
undivided surplus at the time of investment of $200,000,000 or more and which
mature in one year or less from the date of acquisition.
Lending
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 upon five days' notice. During
the existence of a loan, the Trust would continue to receive the equivalent of
the interest or dividends paid by the issuer on the securities loaned and would
also receive a fee, or the interest on investment of the collateral, if any.
The total value of the securities loaned at any time 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 justified the attendant risk.
Repurchase Agreements
Repurchase Agreements are transactions in which the Trust buys a security from a
35
<PAGE>
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. 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 repurchasing agreements only with large well-capitalized
banks whose deposits are insured by the Federal Deposit Insurance Corporation
and which have the capital and undivided surplus of at least $200,000,000. The
instrument acquired by the Trust in these transactions (including accrued
interest) must have a total value in excess of the value of the repurchase
agreement and will be held by the Trust's custodian bank until repurchased.
The Trustees of the Trust will monitor the Trust's repurchase agreement
transactions on a continuous basis and will require that the applicable
collateral will be retained by the Trust's custodian bank. No more than an
aggregate of 10% of the Trust's total assets, at the time of investment, will be
invested in repurchase agreements having maturities longer than seven days and
other investments subject to legal or contractual restrictions on resale, or
which are not readily marketable. There is no limitation on the Trust's assets
with respect to investments in repurchase agreements having maturities of less
than seven days.
Investment Risks
Because of the following considerations, an investment in the Trust should not
be considered a complete investment program.
oInvestment Strategy
The success of the Trust's investment program will be dependent to a high degree
on the Investment Adviser's ability to anticipate the onset and termination of
inflationary and deflationary cycles. A failure to anticipate a deflationary
cycle could result in the Trust's assets being disproportionately invested in
natural resource-related equity securities. Conversely, a failure to predict an
inflationary cycle could result in the Trust's assets being disproportionately
invested in U.S. government securities.
The success of the Trust's investment program, including its method of selecting
equity securities, will also be dependent to a high degree on the validity of
the premise that the values of resource-related equity securities will move in a
different direction than the values of U.S. government securities during period
of inflation or deflation. If values of both resource-related equity securities
and U.S. government securities move down during the same period of time, the
value of the shareholder's investment will decline rather than stabilize or
increase, as anticipated, regardless of whether the Trust is primarily invested
in natural resource or U.S.
government securities.
oNatural Resource-Related Companies
The value of natural resources may fluctuate directly with respect to various
stages of the inflationary cycle and perceived inflationary trends and is
subject to numerous factors, including national and international politics. The
Trust's investments in companies are expected to be subject to irregular
fluctuations in earnings, because these companies are effected by changes in the
availability of money, the level of interest rates, and other factors.
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<PAGE>
oForeign Investments
Investment on an international basis involves certain risks not involved in
domestic investments, including fluctuations in foreign exchange rates, higher
foreign brokerage costs, costs of currency conversion, currency blockage,
different accounting standards, difficulty in obtaining foreign court judgments,
future political and economic developments, and the possible imposition of
exchange controls or other foreign governmental laws or restrictions. In
addition, the Trust may be unable to obtain accurate or complete information
regarding foreign companies and their securities.
Since the Trust may invest 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 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.
oRepurchase Agreements
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.
Prepayment Risks Associated with GNMA Certificates
GNMA certificates have yield and maturity characteristics corresponding to the
underlying mortgage loans. Thus, unlike U.S. Treasury bonds, which pay a fixed
rate of interest until maturity when the entire principal amount comes due,
payments on GNMA certificates include both interest and a partial prepayment of
principal. Additional prepayments of principal may result from the prepayment,
refinancing or foreclosure of the underlying mortgage loans. Although maturities
of the underlying mortgage loans range up to 30 years, such prepayments shorten
the effective maturities to approximately 12 years (based upon current
government statistics). GNMA certificates currently offer yields higher than
those available from other types of U.S. government securities, but because of
the prepayment feature may be less effective than other types of securities as a
means of "locking in" attractive long-term interest rates. This is caused by the
need to reinvest prepayments of principal generally and the possibility of
significant unscheduled prepayments resulting from declines in mortgage interest
rates. As a result, GNMA certificates may have less potential for capital
appreciation during periods of declining interest rates than other investments
of comparable maturities, while having a comparable risk of decline during
periods of rising interest rates.
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<PAGE>
There are certain other risks associated with GNMA certificates. Prepayments and
scheduled payments of principal will be reinvested at prevailing interest rates
which may be less than the rate of interest for the securities on which such
payments are made. When prevailing interest rates rise, the value of the GNMA
security may decrease as do other debt securities, but when prevailing interest
rates decline, the value of GNMA securities is not likely to rise on a
comparable basis with other debt securities because of the prepayment feature of
GNMA securities. If a GNMA certificate is purchased at a premium above principal
because its fixed rate of interest exceeds the prevailing level of yields, the
premium is not guaranteed and a decline in value to par may result in a loss of
the premium especially in the event of prepayments.
Portfolio Turnover
The Trust will generally purchase securities for possible long-term appreciation
and not for short-term trading profits. However, when the Investment Adviser
deems changes appropriate, it will not be limited by the rate of portfolio
turnover. 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).
If the Trust has a high rate of portfolio turnover, it will pay greater
brokerage commissions and other costs. The Trust must bear these increased costs
directly and thus its shareholders will bear them indirectly. There may also be
the realization of larger amounts of short-term capital gains which are taxable
to shareholders as ordinary income.
The portfolio turnover rates for the years 1998 and 1997 were 49% and 9%,
respectively.
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 or 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.
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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. The Trust has no current intention of pledging its assets.
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 issuer is prohibited if
the officers and Trustees of the Trust or its Investment Adviser owning
beneficially more than 1/2 of 1% of the securities of such issuer together own
beneficially more than 5% of the securities of such issuer.
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 asset (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. The Trust has no current intention of investing in other investment
companies.
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. The Trust has no current intention of selling
securities 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 make investments in real estate or indirect interests
in real estate.
13. The Trust will not issue senior securities.
14. The Trust will not invest in commodities or commodity contracts.
As a diversified investment company, the Trust is subject to the following
limitations as to 75% of its total assets: (a) the Trust may not invest more
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than 5% of its total assets in the securities of any one issuer, except
obligations of the U.S. government and its agencies and instrumentalities; (b)
the Trust may not own more than 10% of the outstanding voting securities of any
one issuer. These policies are fundamental policies and may not be changed
without shareholder approval.
For purposes of the above limitations: (i) all percentage limitations apply
immediately after a purchase or initial investment; and (ii) any subsequent
change in any applicable percentage resulting from market fluctuations or other
changes in total or net assets does not require elimination of any security from
the portfolio.
As a non-fundamental policy, the Trust presently does not intend to invest
directly in: (a) physical commodities or in other natural resource assets or
contracts related to natural resource assets; (b) option transactions involving
portfolio securities and securities indices; (c) options on foreign currencies;
(d) financial futures and related options. The Trust presently does not intend
to invest directly in natural resource assets or contracts related to natural
resource assets.
MANAGEMENT OF THE TRUST
Officers and Trustees
The Trustees of the Trust are responsible for managing the Trust's business
affairs and for exercising all the powers of the Trust, except those reserved to
the shareholders. The Trust's officers and Trustees, their positions with the
Trust and their principal occupations during the past five years are listed
below. Unless otherwise noted, the business address of each officer and Trustee
is 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612, which is also the
address of the Trust's Investment Adviser, Progressive Investment Management
Incorporated. An asterisk (*) indicates Trustees who are interested persons, as
defined in the Investment Company Act of 1940, of either the Trust or the
Investment Adviser.
Positions with Principal Occupation
Name, Address and Birth date the Trust During the Past 5 Years
- ---------------------------- --------- -----------------------
ERNEST BUTLER, Trustee President, I.E. Butler
Born June 17, 1928 Securities (securities
11809 Hinson Road, Suite 400 dealer); formerly Senior
Little Rock, AR 72212 Executive Vice President
Stephens, Inc.
(securities dealer)
(1982-February 1998).
SPENCER H. LEMENAGER, Trustee President, Equity, Inc.
Born January 25, 1938 (private investment
222 Wisconsin Avenue company)
P.O. Box 390
Lake Forest, IL 60045
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DAVID W. C. Chairman Chairman and Trustee,
PUTNAM, and Trustee Progressive Capital
Born October 8, 1939 Accumulation Trust
10 Langley Road (formerly Anchor Capital
Newton Centre, MA 02159 Accumulation Trust),
Anchor International Bond
Trust, Anchor Strategic
Assets Trust, Anchor
Resource and Commodity
Trust, and Anchor Gold and
Currency Trust (investment
companies); President and
Director, F. L. Putnam
Securities Company, Inc.
and subsidiaries
(investment advisor).
J. STEPHEN PUTNAM, Vice President and President, Robert Thomas
Born May 21, 1943 Treasurer Securities, Inc.
880 Carillon Parkway (securities dealer);
P.O. Box 12749 Director, F.L. Putnam
St. Petersburg, FL 33733 Securities Company, Inc.
(investment advisor)
DAVID Y. WILLIAMS2*, Trustee, President President and Director,
Born November 24, 1930 & Secretary Anchor Investment
579 Pleasant St., Suite 4 Management Corporation
Paxton, MA 01612 (investment adviser);
President and Director,
Meeschaert & Co., Inc.
(securities dealer);
Vice President,
Secretary and Treasurer,
Progressive Investment
Management,
Inc.(investment adviser)
CHRISTOPHER Y. WILLIAMS2, Vice President and Vice President and Asst.
Born December 12, 1964 Asst. Secretary Secretary, Progressive
579 Pleasant St., Suite 4 Investment Management
Paxton, MA 01612 Inc. (investment
adviser),; Vice
President and Secretary,
Anchor Investment
Management Corporation
(investment adviser);
Vice President and
Secretary, Meeschaert &
Co. Inc. (securities
dealer); President and
Secretary, Cardinal
Investment Services,
Inc. (financial
administrative services)
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JOSEPH C. Vice President and Vice President and Asst.
WILLIAMS2, Asst. Treasurer Treasurer, Progressive
Born January 13, 1971 Investment Management
579 Pleasant St., Suite 4 Inc. (investment
Paxton, MA 01612 adviser); Vice President
and Treasurer, Anchor
Investment Management
Corporation; Vice
President and Treasurer,
Meeschaert & Co. Inc.
(securities dealer);
Vice President and
Treasurer, Cardinal
Investment Services,
Inc. (financial
administrative services)
1. David W.C. Putnam and J. Stephen Putnam are brothers.
2. David Y. Williams is the father of Christopher Y. Williams and Joseph C.
Williams. Christopher Y. Williams and Joseph C. Williams are brothers.
The Officers and Trustees of the Trust as group owned less than one percent (1%)
of the Trust's shares outstanding on December 31, 1998.
Messrs. David Putnam, Ernest Butler and Spencer LeMenager are the Trustees
who are not interested persons (as defined in the Investment Company Act of
1940) of the Trust.
The standing audit committee is composed of Messrs. LeMenager and Butler.
The Trust does not have a nominating or compensation committee.
Compensation of Officers and Trustees
The Trust does not and will not pay any compensation to any of its officers or
Trustees who are interested persons (as defined in the Investment Company Act of
1940) of the Trust or of any investment adviser or distributor of the Trust. The
Trust pays an annual fee of up to $1,000 to each Trustee who is not an
interested person. The Trust did not pay any person, including directors,
officers, or employees, in excess of $60,000.00 during its most recent fiscal
year.
Principal Holders of Securities
As of the date of this SAI, Wendel & Co., c/o Bank of New York, P.O. Box 1066,
Wall Street Station, New York, New York, 10268 as an indirect nominee of Societe
D'Etudes et de Gestin Financieres Meeschaert, S.A. 23 Rue Drouot, 75009, Paris,
France, a privately owned corporation organized under the laws of France, held
of record 99.47% of the outstanding shares of the Trust.
Shareholders owning 25% or more of outstanding Trust shares may be in control
and be able to affect the outcome of certain matters presented for a vote of
shareholders.
Investment Adviser
The Investment Adviser, Anchor Investment Management Corporation (formerly
Meeschaert Investment Management Corporation), is located at 579 Pleasant
Street, Suite 4, Paxton, Massachusetts 01612.
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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. The Meeschaert organization was established in
Roubaix, France in 1935 by Emile C. Meeschaert. The Meeschaert organization
presently manages, with full discretion, an aggregate amount of approximately
$1.5 billion, including $250 million in French mutual funds, for about 8,000
individual and institutional customers.
On September 7, 1983, Emile C. Meeschaert and David Y. Williams purchased the
Investment Adviser from F. L. Putnam Securities Company Incorporated ("Putnam
Securities"). 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 - Mr. Meeschaert is 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 - Mr. Jaspard is President of Linden Investment
Advisors, S.A. 67 Avenue Terlinden, La Hulpe, Belgium B1310 (investment
adviser). Mr. Jaspard manages other portfolios for the Meeschaert
organization. He is primarily responsible for the investment decisions of
the Trust.
Christopher Y. Williams, Vice President and Assistant Secretary Mr. Williams is
also the Vice President and Assistant Secretary of the Trust and Vice President
and Secretary of the Distributor.
Joseph C. Williams, Vice President and Assistant Treasurer - Mr. Williams is
also the Vice President and Assistant Treasurer of the Trust and Vice President
and Treasurer of the Distributor.
Investment Advisory Contract
The Trust and the Investment Adviser entered into an Investment Advisory
Contract dated June 22, 1998 which was approved on such date by the Trust's
shareholders.
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. The Investment Adviser
also furnishes investment advisory, statistical and research facilities.
The Trust pays all its expenses not specifically assumed by the Investment
Adviser under the contract, including without limitation, the fees and expenses
of the Trust's custodian and transfer agent; costs incurred in determining the
Trust's net asset value and keeping its books; the cost of share certificates;
membership dues in investment company organizations; distributions and brokerage
commissions and fees; fees and expenses of registering its shares; expenses of
reports to shareholders, proxy statements and other expenses of shareholders';
meetings; insurance premiums; printing and mailing expenses; interest, taxes and
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corporate fees; legal and accounting expenses; and fees and expenses of Trustees
not affiliated with the Investment Adviser. The Trust will also bear any
expenses incurred in connection with litigation in which the Trust is a party
and the related legal obligation that the Trust may have to indemnify its
officers and trustees. For the fiscal year ended December 31, 1998, the Trust
paid expenses of $98,382, which represented 1.5% of the Trust's average net
assets.
The Trust pays the Investment Adviser, as compensation under the Investment
Advisory Contract, a monthly fee at the rate of 0.75% per annum of the average
daily net assets of the Trust. This fee may be higher than that paid by most
other investment companies. For the Investment Adviser's services to the Trust,
Trust paid the Investment Adviser fees of $63,710 in 1996, $90,466 in 1997 and
$49,052 in 1998. The Investment Adviser may voluntarily waive a portion of its
fee or reimburse the Trust for certain operating expenses.
The Investment Advisory Contract remains in effect until June 21, 2000. In
general, the contract may be extended from year to year upon its expiration 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 Trustees of the Trust or by vote of the holders 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 interest in the
Investment Adviser).
The Investment Advisory Contract provides that the Investment Advisor shall not
be liable to the Trust or its shareholders for anything other than willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties. The Investment Advisory Contract also provides that the
Investment Advisor and its officers, directors and employees may engage in other
business, devote time and attention to any other business whether of a similar
or dissimilar nature, and render investment advisory services to others.
Administrator
The Trust has entered into an administration agreement (the Administration
Agreement) with Anchor Investment Management Corporation (the Administrator),
579 Pleasant Street, Paxton, Massachusetts 01612. Under the Administration
Agreement, the Administrator is required generally to administer the Trust's
business. The Administrator's duties, which may be assigned to a
sub-administrator, include specifically the following. The Administrator
calculates the Trust's net asset value and prepares and files all registration
or other material required by federal and state laws for the registration or
other qualification of the Trust and its shares for sale to the public as
required by those laws. The Administrator also prepares and files or mails all
reports and statements that the Trust is required by federal and state laws to
file or send to all authorities and shareholders of the Trust. The Administrator
maintains contact with and coordinates the Trust's public accountants, legal
counsel, custodian, transfer and service agent and other service providers, all
of whose fees are paid independently by the Trust. The Administrator also
coordinates the Trust's portfolio transactions and cash management with the
Trust's custodian and receives, confirms and pays over to the Trust's custodian
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<PAGE>
the proceeds of sales by the Trust of its shares. The Administrator administers
and confirms to the Trust's transfer agent and shareholders the sales of Trust
shares and prepares and maintains on behalf of the Trust such records of the
Trust's business transactions as are not maintained by other service providers
to the Trust. The Administrator is also required, at its own expense, to furnish
office space, facilities, and equipment necessary for the administration of the
Trust. For its services under the Administration Agreement, the Administrator
receives a monthly fee at the annual rate of $14,500. The Trust paid the
administrator, Anchor Investment Management Corporation, fees of $6,000, $14,500
and $14,500 in 1996, 1997 and 1998 respectively, for its services to the Trust.
The Administration Agreement will remain in effect until terminated by either
party. The Administration Agreement may be terminated, without payment of
penalty, at any time upon mutual consent of the Trust and the Administrator or
by either party upon not more than 60 days' and not less than 30 days' written
notice to the other party.
The Administration Agreement also provides that the Administrator shall not be
liable to the Trust or its shareholders for anything other than willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties. The Administration Agreement also provides that the
Administrator and its officers, directors and employees may engage in other
business, devote time and attention to any other business whether of a similar
or dissimilar nature, and render investment advisory services to others.
Principal Underwriter
Meeschaert & Co., Inc. (the Distributor) is the principal underwriter of the
Trust's shares. The Distributor is located at 579 Pleasant Street, Suite 4,
Paxton, Massachusetts 01612. Several of the officers and directors of the
Distributor are also officers and Trustees of the Trust. See "MANAGEMENT OF
THE FUND - Officers and Trustees" above.
CAPITALIZATION
The capitalization of the Trust consists of an unlimited number of shares of
beneficial interest, without par value, designated as "common shares," which
participate equally in dividends and distributions. Issued shares are fully paid
and non-assessable and are 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 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. The Trust will, if requested by at least ten percent of the Trust's
outstanding shares, call a meeting for the purpose of voting on the removal of a
Trustee or 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. In connection with shareholder rights to remove
Trustees, the Trust will provide shareholders with certain assistance in
communicating with other shareholders. 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
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<PAGE>
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.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Purchase of Shares
Investors may purchase shares of the Trust from the Distributor at 579 Pleasant
Street, Suite 4, Paxton, Massachusetts 01612. Investors pay no sales charge or
commission upon investment. 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 "SHAREHOLDER INFORMATION -- Exchanges of
Shares" in the Prospectus). There is no minimum for shareholders making
additional investments to existing accounts.
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
November 23, 1994. The contract automatically terminates upon assignment (which
includes the transfer of a controlling interest in the Distributor) by either
party. The contract also provides that it may be continued from year to year
upon approval by a majority of the Trust's shares or by the Board of Trustees as
well as, 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 Trust's
Prospectus delivered to investors. The Trust pays for its registration and
registration of its shares under the federal Securities and Investment Company
Acts and state securities acts and other expenses in which it has a direct
interest.
During the years ended December 31, 1998, December 31,1997 and December 31,
1996, the Distributor received no sales commission from the Trust.
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Determination of Net Asset Value
The Trust's net asset value is determined as of 12:00 p.m. Eastern Time on each
business day on which the New York Stock Exchange is open for trading. The Trust
may determine net asset value on any day that the Trust is open, but the New
York Stock Exchange is not open for business if an event occurs which might
materially affect the net asset value.
The manner of determination of the net asset value is briefly as follows:
securities traded on a United States national, or other foreign securities
exchange are valued at the last sale price on the primary exchange on which they
are listed, or if there has been no sale that day, at the current bid price.
Other United States and foreign securities for which market quotations are
readily available are valued at the last known sales price, or, if unavailable,
the known current bid price which most nearly represents current market value.
Other securities (including limited trade securities) and all other assets are
valued at market value as determined in good faith by the Trustees of the Trust.
The market price of all the Trust's investments are added together, liabilities
are deducted from the total, and the resulting amount is divided by the number
of shares outstanding.
Each day investment securities traded on a national securities exchange are
valued at the noon sales price; securities traded in the over-the-counter market
are valued at the last sale price as of 12:00 p.m. Eastern Time. Gold bullion is
valued each day at 12:00 p.m. Eastern Time based on the New York spot gold
price. Gold coins, foreign currencies, and foreign denominated securities for
which market quotations are readily available are valued at the known bid prices
as of 12:00 p.m. Eastern Time. Temporary cash investments are stated at cost. In
the absence of a reliable market for a particular metal, security or currency,
an investment therein will be valued at fair value as determined in good faith
by the Trustees.
Redemption and Repurchase of Shares
Any shareholder may require the Trust to redeem his shares. The Trust also
maintains a continuous offer to repurchase its shares. If a shareholder uses the
services of a broker in selling his shares in the over-the-counter market, the
broker may charge a reasonable fee for his service. Redemptions and repurchases
will be made in the following manner:
1. A shareholder may mail or present a written request that the Trust redeem his
shares to the Trust's transfer agent, Anchor Investment Management Corporation,
at 579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612. If a shareholder
has share certificates, the investor should properly endorse them with
signatures guaranteed in the manner described below and include them with the
written request. The redemption price will be the net asset value next
determined after the Trust receives the request and, if applicable, the
certificates.
2. A shareholder's broker may present request for repurchase to the Trust. The
repurchase price will be the net asset value next determined after Trust
receives the request. If the broker receives the request before 12:00 p.m.
Eastern Time 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 p.m. Eastern Time that day. If the broker receives the request after 12:00
p.m. Eastern Time, the repurchase price will be the net asset value determined
as of 12:00 p.m. 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.
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The Trust will pay for shares redeemed or repurchased within seven days after it
receives the request and any required documents, properly endorsed. The
signature(s) on the share certificate or request must be guaranteed by a
commercial bank or trust company or by a member of the New York, American,
Pacific Coast, Boston or Chicago Stock Exchange. The Trust will not accept
signature guarantees by a savings bank, or savings and loan association or
notarization by a notary public.
To insure proper authorization, the Trust's transfer agent may request
additional documents, including stock powers, trust instruments, certificates of
death, appointments as executor, certificates of corporate authority or waiver
of tax forms (required in some states from selling or exchanging estates before
redeeming shares).
The right of redemption may be suspended or the payment date postponed at
certain times. These include days 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, or 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 a 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. Otherwise,
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.
Redemptions in Kind
Under unusual circumstances, when the Board of Trustees deems it in the best
interests of the Trust's shareholders, the Trust may pay for shares repurchased
or redeemed partly or entirely 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 90-day period
during which such redemptions are in effect, if that amount is less than
$250,000). If payment is made in securities, the redeeming shareholder may incur
brokerage costs in converting his securities to cash.
DISTRIBUTIONS
The Trust distributes any income dividends and any capital gain distributions in
additional Common Shares, or, at the option of the shareholder, in cash. In
accordance with his distribution option, a shareholder 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 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 Trust's transfer agent must receive the new distribution
option 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 if the Trust's transfer agent determines that the address of
record for the account is not current.
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Dividends and capital gain distributions received in shares will be made to the
Trust's transfer agent, as agent for the shareholder, and credited to the
shareholder's 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
General
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, do the following:
(i) derive at least 90% of its gross income from dividends, interest, payments
as 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 so 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
dividends-received deductions for corporations. The Trust will notify
shareholders each year of the amount of dividends and distributions, including
the amount of any distribution of long-term capital gains.
The Trust will be subject to a nondeductible 4% excise tax in any calendar year
to the extent that its fails to distribute at least 98% of its ordinary income
for that calendar year and 98% of its capital gain net income for the one-year
period ending on October 31 of that calendar year. In addition, to the extent
that the Trust fails to distribute 100% of its ordinary and capital gain net
income for any calendar year, the amount of the shortfall is subject to the
excise tax unless distributed for the following calendar year. For a
distribution to qualify as a distribution for a calendar year under the
foregoing rules, the Trust must declare it before December 31 of the year and
pay it before the following February 1. These distributions will be taxable to
taxable shareholders in the year the distributions are declared rather than the
year in which the distributions are received.
The Trust's foreign investments may be subject to foreign withholding taxes and
other taxes at the source. The Trust will be entitled to claim a deduction for
any foreign withholding taxes for federal income tax purposes. Any such taxes,
however, will reduce the income available for distribution to shareholders.
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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 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.
PORTFOLIO SECURITY TRANSACTIONS
Decisions to buy and sell portfolio securities for the Trust are made pursuant
to recommendations by 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. The Investment
Adviser uses its best judgment in evaluating the terms of a transaction and will
give consideration to various relevant factors, including 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.
The Trust expects that many broker-dealer firms will meet the foregoing criteria
for a particular transaction. In selecting among the firms, the Trust, through
the Investment Adviser, may give consideration to those firms which have sold,
or are selling, shares of the Trust. In addition, the Investment Adviser may
allocate Trust brokerage business on the basis of brokerage and research
services and other information provided by broker-dealer firms, which may
involve the payment of reasonable brokerage commissions in excess of those
chargeable by other broker-dealer firms for effecting the same transactions.
These brokerage and research services may be used for some of the Investment
Adviser's other advisory accounts. The Investment Adviser may not use all of
these services in managing the Trust. The term "brokerage and research services"
includes services 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; the furnishing of analyses and reports
concerning issuers, industries, securities, economic factors and trends;
portfolio strategy and the performance of account; and effecting securities
transactions and performing related functions (such as clearance and
settlement).
This policy of considering sales or shares of the Trust as one of the factors in
the selection of broker-dealer firms to execute portfolio transactions, subject
to the requirement of seeking best execution, is specifically permitted by a
rule of the National Association of Securities Dealers, Inc. The rule also
provides, however, that no member firm shall favor or disfavor the distribution
of shares of any particular fund or group of funds on the basis of brokerage
commissions received or expected by such firm from any source.
The Trust and one or more of the other investment companies or accounts for
which the Investment Adviser or its affiliates services may occasionally engage
in the purchase or sale of the same security at the same time. In this event,
the Investment Adviser will usually average the price and allocate the amount of
the security purchased or sold among the several clients or accounts in a manner
deemed equitable to all. In some cases this system could have a detrimental
effect on the price or volume of the security allocated to the Trust. In other
cases, however, the ability to participate in volume transactions may 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 the
Trust's Distributor, which is an affiliate of the Investment Adviser. If 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.
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During 1998, 1997 and 1996, the Trust paid commissions to broker-dealers of
$28,848, $9,315 and $10,228. During 1998, 1997 and 1996 the Trust paid brokerage
commissions of $17,563, $7,815 and $4,078 to the Distributor. For the year ended
December 31, 1998, the percentage of total commissions paid to the Distributor
was 60.88%. During 1998, the Trust's purchases and sales of securities,
exclusive of United States government securities and short-term notes, amounted
to $2,385,679 and $9,072,941, respectively. Of these transactions, $287,531 in
purchases and $7,617,829 in sales were effected through the Distributor.
The Trust's portfolio turnover rates were 49% for 1998 and 9% for 1997.
OTHER INFORMATION
Custodian, Transfer Agent and Dividend-Paying Agent
All securities, cash and other assets of the Trust are received, held in custody
and delivered or distributed by the Trust's custodian bank, Investors Bank &
Trust Company, Financial Products Services, 200 Clarendon Street, 16th Floor,
Boston, Massachusetts 02116. 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 foreign securities may be legally held
abroad. The Trust's custodian bank does not decide on purchases or sales of
portfolio securities or the making of distributions. As of April 1, 1999,
Cardinal Investment Services, Inc., 579 Pleasant Street, Suite 4, Paxton,
Massachusetts 01612, succeeded Anchor Investment Management Corporation as
transfer agent and dividend-paying agent for the Trust.
Independent Public Accountants
For the fiscal year ending December 31, 1998, the Trust employed Livingston &
Haynes, P.C., 40 Grove Street, Wellesley, Massachusetts 02181, to certify its
financial statements and to prepare its federal and state income tax returns.
Registration Statement
This Statement of Additional Information does not contain all the information
set forth in the Registration Statement and the exhibits and schedules relating
thereto, which the Trust has filed with, and which are available at the
Securities and Exchange commission, Washington, D.C., under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, to
which reference is hereby made.
FINANCIAL STATEMENTS
The financial statements and related report of Livingston & Haynes, P.C.,
independent public accountants, contained in Anchor Resource and Commodity
Trust's Annual Report to shareholders for the year ended December 31, 1998, are
hereby incorporated by reference. A copy of the Trust's Annual Report may be
obtained without charge by writing to Anchor Investment Management Corporation,
579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612, or by calling Anchor
Investment Management Corporation at (508) 831-1171.
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PART C. OTHER INFORMATION
Item 23. Exhibits
Exhibit Number Description of Exhibit
(1) Restated Declaration of Trust, as amended.
(Previously filed as Exhibit 1 to Amendment No. 1)
(2) By-Laws of the Registrant, as amended. (Previously
filed as Exhibit 2 to Amendment No. 1)
(3) Not applicable.
(4) Specimen Certificates representing Common Shares of
Beneficial Interest of the Registrant. (Previously
filed as Exhibit 4 to Amendment No. 1)
(5) p. 59 Investment Advisory Agreement between the
Registrant and Anchor Investment Management
Corporation.
(6) Distributor's Contract between the Registrant and
Meeschaert & Co., Inc. (Previously filed as Exhibit
6 to Amendment No. 2)
(7) Not applicable.
(8) Custodian Agreement between the Registrant and
Investors Bank & Trust Company. (Previously filed
as Exhibit 8 to Amendment No. 1)
(9) p. 62 Transfer Agency and Service Agreement between the
Registrant and Cardinal Investment Services,
Inc. (Previously filed as Exhibit 9 to
Amendment No. 1)
(10) Opinion and Consent of Counsel. (Previously filed
as Exhibit 10 to Amendment No. 1)
(11) p. 69 Consent of Independent Public Accountants.
(to be filed by Amendment prior to effectiveness)
(12) p. 70 Trust's Annual Report to Shareholders, December 31,
1998.
(to be filed by Amendment prior to effectiveness)
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan of the Registrant. (Previously
filed as Exhibit 15 to Amendment No. 1)
52
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(16) Not applicable.
(17) p. 86 Power of Attorney, dated March 22, 1999 and
Certified Resolutions.
(27) p. 88 Financial Data Schedule
Item 24. Persons Controlled by or Under Common Control with the Trust.
Not applicable.
Item 25. Indemnification.
No amendment. The information was filed in Item 27 of Amendment
No. 1.
Item 26. 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 reference thereto.
Item 27. Principal Underwriters.
(a) The Distributor currently acts as distributor for the following
investment companies:
Progressive Capital Accumulation Trust
(formerly, Anchor Capital Accumulation Trust)
S.E.C. file # 811-00972
Anchor International Bond Trust
S.E.C. file # 811-4644
Anchor Strategic Assets Trust
S.E.C. file # 811-5963
(b)
-------------------------------------------------------------------
Name and Principal Positions and Positions and the
Business Address Officers with Trust Offices
Underwriter
-------------------------------------------------------------------
-------------------------------------------------------------------
David Y. Williams President and President, Secretary
579 Pleasant Street, Director and Director
Suite 4
Paxton, MA 01612
-------------------------------------------------------------------
-------------------------------------------------------------------
Christopher Y. Williams Vice President and Vice President and
579 Pleasant Street, Secretary Assistant Secretary
Suite 4
Paxton, MA 01612
-------------------------------------------------------------------
-------------------------------------------------------------------
Joseph C. Williams Vice President and Vice President and
579 Pleasant Street, Treasurer Assistant Treasurer
Suite 4
Paxton, MA 01612
-------------------------------------------------------------------
53
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(c) Not applicable
Item 28 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 under that section include the Trust's
Secretary, David Y. Williams; Registrant's Investment Advisor, Anchor
Investment Management Corporation; and Registrant's custodian, Investors
Bank & Trust Company. The address of the Trust's Secretary is 579 Pleasant
Street, Suite 4, Paxton, Massachusetts 01612. The address of the
investment adviser and the transfer agent and dividend paying agent is 579
Pleasant St., Suite 4, Paxton, Massachusetts 01612. The address of the
custodian is c/o Financial Product Services, 200 Clarendon St., 16th
Floor, Boston, Massachusetts 02116.
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
54
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Trust certifies that it has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
duly authorized, in the City of Paxton and the Commonwealth of Massachusetts on
the 22 day of March, 1999.
ANCHOR RESOURCE AND COMMODITY TRUST
By: /s/ DAVID Y. WILLIAMS
David Y. Williams, President
Pursuant to the Securities Act of 1933, this Amendment to this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Signature Title Date
/s/DAVID W.C. PUTNAM* Chairman and Trustee March 22, 1999
David W. C. Putnam
/s/J. STEPHEN PUTNAM* Treasurer (Principal March 22, 1999
J. Stephen Putnam Financial Officer)
/s/SPENCER H. LEMENAGER* Trustee March 22, 1999
Spencer H. LeMenager
/s/DAVID Y. WILLIAMS* President, Secretary and March 22, 1999
David Y. Williams Trustee
/s/ ERNIE BUTLER* Trustee March 22, 1999
Ernie Butler
*By: PETER K. BLUME March 22, 1999
/s/ Peter K. Blume
Peter K. Blume
Attorney-in-Fact
55
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==============================================================================
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. 5 /x/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 /x/
Amendment No. 6 /x/
==============================================================================
ANCHOR RESOURCE AND COMMODITY TRUST
==============================================================================
56
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EXHIBITS
INDEX TO EXHIBITS
Exhibit Number Description of Exhibit
(1) Restated Declaration of Trust, as amended.
(Previously filed as Exhibit 1 to Amendment No. 1)
(2) By-Laws of the Registrant, as amended. (Previously
filed as Exhibit 2 to Amendment No. 1)
(3) Not applicable.
(4) Specimen Certificates representing Common Shares of
Beneficial Interest of the Registrant. (Previously
filed as Exhibit 4 to Amendment No. 1)
(5) p. 59 Investment Advisory Agreement between the
Registrant and Anchor Investment Management
Corporation.
(6) Distributor's Contract between the Registrant and
Meeschaert & Co., Inc. (Previously filed as Exhibit
6 to Amendment No. 2)
(7) Not applicable.
(8) Custodian Agreement between the Registrant and
Investors Bank & Trust Company. (Previously filed
as Exhibit 8 to Amendment No. 1)
(9) p. 62 Transfer Agency and Service Agreement between the
Registrant and Cardinal Investment Services,
Inc. (Previously filed as Exhibit 9 to
Amendment No. 1)
(10) Opinion and Consent of Counsel. (Previously filed
as Exhibit 10 to Amendment No. 1)
(11) p. 69 Consent of Independent Public Accountants.
(12) p. 70 Trust's Annual Report to Shareholders, December 31,
1998.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan of the Registrant. (Previously
filed as Exhibit 15 to Amendment No. 1)
57
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(16) Not applicable.
(17) p. 86 Power of Attorney, dated March 22, 1999 and
Certified Resolutions.
(27) p. 88 Financial Data Schedule
58
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INVESTMENT ADVISORY CONTRACT
AGREEMENT made this 22nd day of June, 1998 by and between ANCHOR RESOURCE
AND COMMODITY TRUST, a Massachusetts business trust (hereinafter called the
"Trust") and ANCHOR INVESTMENT MANAGEMENT COPR., an Massachusetts
corporation (hereinafter sometimes called the "Advisor").
W I T N E S S E T H :
WHEREAS, the Trust and the Advisor wish to enter into an agreement setting
forth the terms on which the Advisor will perform certain investment advisory
and management services for the Trust;
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Advisor agree as follows:
l. The Trust hereby employs the Advisor to manage the investment and
reinvestment of the assets of the Trust, subject to the supervision of the Board
of Trustees of the Trust, for the period and on the terms in this agreement set
forth. The Advisor hereby accepts such employment and agrees during such period,
at its own expense, to render the services and to assume the obligations herein
set forth, for the compensation herein provided. The Advisor shall for all
purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the Trust.
2. The Advisor, at its own expense, shall furnish or cause to be furnished
to the Trust office space in the offices of the Advisor or in such other place
as may be agreed upon from time to time, and arrange for all necessary office
facilities, equipment and personnel for managing the investments of the Trust,
and shall arrange, if desired by the Trust, for members of the Advisor's
organization to serve without salaries from the Trust as officers or agents of
the Trust. The Advisor assumes and shall pay or reimburse the Trust for: (l) the
compensation (if any) of the Trustees of the Trust who are affiliated persons of
the Advisor and of all officers of the Trust as such and (2) all expenses
incurred by the Advisor or by the Trust in connection with the management of the
investment and reinvestment of the assets of the Trust, other than those
specifically assumed by the Trust herein. Except as otherwise expressly provided
above, the Trust assumes and shall pay, (l) all charges and expenses of any
custodian or depository appointed by the Trust for the safekeeping of its cash,
securities and other property, (2) the charges and expenses of auditors and of
keeping the books of the Trust, (3) the charges and expenses of any transfer
agents and registrars appointed by the Trust, (4) the fees of all Trustees not
affiliated with the Advisor, (5) broader commissions and issue and transfer
taxes chargeable to the Trust in connection with securities transactions to
which the Trust is a party, (6) all taxes and corporate fees payable by the
Trust to federal, state or other governmental agencies, (7) the cost of stock
certificates representing shares of the Trust, (8) fees and expenses involved in
1
59
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registering and maintaining registrations of the Trust and of its shares with
the Securities and Exchange Commission and qualifying its shares under state or
other securities laws including the preparation and printing of prospectuses for
filing with said Commission and other authorities, (9) all expenses of
shareholders' and trustees' meetings and of preparing and printing reports to
shareholders, (l0) charges and expenses of legal counsel for the Trust in
connection with legal matters relating to the Trust, including without
limitation, legal services rendered in connection with the Trust's corporate
existence, corporate and financial structure and relations with its
shareholders, registrations and qualifications of securities under federal,
state and other laws, issues of securities and expenses which the Trust has
herein assumed, and (11) the charges of the Trust's administrator for providing
and coordinating the foregoing administrative services to the Trust.
The services of the Advisor to the Trust hereunder are not to be deemed
exclusive, and the Advisor shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
As compensation for the Advisor's services to the Trust, the Trust shall
pay to the Advisor a fee at the rate of 3/4 of 1% per annum of the average of
the daily aggregate net asset values of the Trust computed as of the close of
business of each business day.
Such compensation shall be payable in arrears at such intervals, not more
frequently than monthly and not less frequently than quarterly (except for an
additional fee), as the Board of Trustees of the Trust may from time to time
determine; provided that such compensation shall be paid proportionately for any
period ending with the termination of this agreement.
3. The Trust shall cause its books and accounts to be audited at least
once each year by a reputable, independent public accountant or organization of
public accountants who shall render a report to the Trust.
4. Subject to and in accordance with the Declaration of Trust of the Trust
and of the Advisor respectively, it is understood that the Trustees, officers,
agents and stockholders of the Trust are or may be interested in the Advisor (or
any successor thereof) as directors, officers or stockholders, or otherwise,
that directors, officers, agents and stockholders of the Advisor are or may be
interested in the Trust as Trustees, officers, stockholders or otherwise, that
the Advisor (or any such successor) is or may be interested in the Trust as
stockholder or otherwise and that the effect of any such adverse interests shall
be governed by said Declaration of Trust and the By-Laws.
5. No Trustee or shareholder of the Trust shall be personally liable under
this Agreement, all such liability being limited to the assets of the Trust.
6. The Advisor shall not be liable for any action taken, omitted or
suffered to be taken by it in its reasonable judgment, in good faith and
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement, or in accordance with (or in the absence
2
60
<PAGE>
of) specific directions or instructions from the Trust, provided, however, that
such acts or omissions shall not have resulted from the Advisor's willful
misfeasance, bad faith or gross negligence or reckless disregard by it of its
obligations and duties under this Agreement.
7. This Agreement shall continue in effect from the date hereof until June
21, 2000 and from year to year thereafter (a) if its continuance is specifically
approved on or before said date and at least annually thereafter by vote of a
majority of the outstanding voting securities of the Trust or by the Board of
Trustees of the Trust and (b) if the terms and any renewal of this Agreement
have been approved by the vote of a majority of the Trustees of the Trust, who
are not parties to this Agreement 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 of voting on such approval, provided, however,
that (1) this Agreement may at any time be terminated without the payment of any
penalty either by vote of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Trust, on not more than
sixty days' prior written notice to the Advisor, (2) this Agreement shall
immediately terminate in the event of its assignment (within the meaning of the
Investment Company Act of 1940) by either party to this Agreement, and (3) this
Agreement may be terminated by the Advisor on ninety days' prior written notice
to the Trust. Any notice under this Agreement shall be given in writing
addresses and delivered or mailed postpaid to the other party at any office of
such party.
This agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved by a vote of a majority of the outstanding voting securities of the
Trust. A "majority of the outstanding voting securities of the Trust" shall
have, for all purposes of this Agreement, the meaning provided therefore in said
Investment Company Act.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on the
day and year first above written.
ANCHOR RESOURCE AND COMMODITY TRUST
By: /s/ DAVID W.C. PUTNAM
Chairman
ANCHOR INVESTMENT MANAGEMENT CORP.
By: /s/ DAVID Y. WILLIAMS
President
3
61
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1ST day of April, 1999 by and between ANCHOR GOLD
AND CURRENCY TRUST, ANCHOR INTERNATIONAL BOND TRUST, ANCHOR STRATEGIC ASSETS
TRUST, AND ANCHOR RESOURCE AND COMMODITY TRUST (collectively the Anchor
"Trusts"), Massachusetts business trusts having their principal office and place
of business at 579 Pleasant Street, Suite 4, Paxton, MA 01612, and CARDINAL
INVESTMENT SERVICES, INC., an Illinois corporation having its principal office
and place of business at 579 Pleasant Street, Suite 4, Paxton, MA 01612
("Cardinal"),
W I T N E S S E T H:
WHEREAS, the Trusts desire to appoint Cardinal as transfer agent, dividend
disbursing agent and agent in connection with certain other activities, and
Cardinal desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1. Terms of Appointment; Duties of the Company
1.01 Subject to the terms and conditions set forth in this Agreement, the
Trusts hereby employ and appoint Cardinal to act as, and Cardinal agrees to act
as, transfer agent for each of the Trusts' authorized and issued shares of
beneficial interest without part value ("Shares"), dividend disbursing agent in
connection with any accumulation, open-account or similar plans provided to the
shareholders of the Trusts ("Shareholders") and set out in the prospectus and
statement of additional information of the Trusts corresponding to the date of
this Agreement.
1.02 Cardinal agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Trusts and Cardinal, Cardinal shall:
(i) receive for acceptance and processing, order for the purchase of
Shares, and promptly deliver payment and appropriate documentation therefor to
the custodian of the Trusts' authorized pursuant to the Trusts' governing
documents (the "Custodian");
(ii) pursuant to purchase orders or other appropriate instructions,
issue the appropriate number of Shares and hold such Shares in the appropriate
Shareholder account, and, if requested and properly authorized, issue
appropriate certificates therefor;
(iii) receive for acceptance and processing, redemption requests
and redemption directions, and deliver the appropriate documentation therefor
to the Custodian;
(iv) at the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or cause to be paid
over in the appropriate manner such monies as instructed by the redeeming
Shareholders;
(v) effect transfer of Shares by the registered owners thereof upon
receipt of appropriate documentation;
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(vi) prepare and transmit payments for dividends and distributions
declared by the Trusts; and
(vii) maintain records of account for and advise the Trusts and
their Shareholders as to the foregoing.
(b) In addition to and not in lieu of the services set forth in paragraph
(a) above, Cardinal shall perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to: (i) maintaining all Shareholder accounts, (ii) preparing Shareholder
meeting lists, (iii) mailing proxies, (iv) receiving and tabulating proxies, (v)
mailing of additional information to current Shareholders, (vi) withholding
taxes on U.S. residents and non-resident alien accounts where applicable, (vii)
preparing and filing U.S. Treasury Department Forms 1099 and other appropriate
forms required with respect to dividends and distributions by federal
authorities for all registered Shareholders, (viii) preparing and mailing
confirmation forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, (ix) preparing and mailing activity statements for Shareholders, and
(x) providing Shareholder account information. The Trusts shall provide Cardinal
with any information required in connection with the furnishing of the foregoing
services.
(c) Additionally, Cardinal shall:
(i) Utilize a system to identify all Share transactions which involve
purchase and redemption orders that are processed at a time other than the time
of the computation of net asset value per Share next computed after receipt of
such orders, and shall compute the net effect upon the Trust of such
transactions so identified on a daily and cumulative basis.
(ii) If on any day the cumulative net effect of such transactions
upon the Trusts are negative and exceeds a dollar amount equivalent to 1/2 of 1
cent per Share, Cardinal shall promptly make a payment to the Trusts in cash or
through the use of a credit, in the manner described in subparagraph (iv) below,
in such amount as may be necessary to reduce the negative cumulative net effect
to less than 1/2 of 1 cent per Share.
(iii) If on the last business day of any month the cumulative net
effect upon the Trusts (adjusted by the amount of all prior payments and credits
by Cardinal and the Trusts) are negative, the Trusts shall be entitled to a
reduction in the fee next payable under this Agreement by an equivalent amount,
except as provided in subparagraph (iv) below. If on the last business day in
any month the cumulative net effect upon the Trusts (adjusted by the amount of
all prior payments and credits by Cardinal and the Trusts) is positive, Cardinal
shall be entitled to recover certain past payments and reductions in fees, and
to credit against all future payments and fee reductions that may be required
under subparagraph (iv) below.
(iv) At the end of each month, any positive cumulative net effect
upon the Trusts shall be deemed to be a credit to Cardinal which shall first be
applied to permit Cardinal to recover any prior cash payments and fee reductions
made by it to the Trusts under subparagraphs (ii) and (iii) above during the
calendar year, by increasing the amount of the monthly fee under this Agreement
next payable in an amount equal to prior payments and fee reductions made by
Cardinal during such calendar year, but not exceeding the sum of that month's
63
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credit and credits arising in prior months during such calendar year to the
extent such prior credits have not previously been utilized as contemplated by
this subparagraph (iv). Any portion of a credit to Cardinal not so used by it
shall remain as a credit to be used as payment against the amount of future
negative cumulative net effect that would otherwise require a cash payment or
fee reduction to be made to the Trusts pursuant to paragraphs (ii) or (iii)
above (regardless of whether or not the credit or any portion thereof arose in
the same calendar year as that in which the negative cumulative net effects or
any portion thereof arose).
(v) Cardinal shall supply to the Trusts from time to time, as
mutually agreed upon, reports summarizing the transactions identified pursuant
to subparagraph (i) above, and the daily and cumulative net effect of such
transactions, and shall advise the Trusts at the end of each month of the net
cumulative effect at such time. Cardinal shall promptly advise the Trusts if at
any time the cumulative net effect exceeds a dollar amount equivalent to 1/2 of
1 cent per Share.
(vi) In the event that this Agreement is terminated for whatever
cause, or this Section 1.02(c) is terminated pursuant to subparagraph (vii)
below, the Trust shall promptly pay to Cardinal an amount in cash equal to the
amount by which the cumulative net effect upon the Trusts is positive or, if the
cumulative net effect upon the Trusts is negative, Cardinal shall promptly pay
to the Trusts an amount in cash equal to the amount of such cumulative net
effect.
(vii) This Section 1.02(c) may be terminated by Cardinal at any time
without cause, effective as of the close of business on the date written notice
(which may be by facsimile) is received by the Trusts.
(d) Procedures applicable to the services provided under this Agreement
may be established from time to time by agreement between the Trusts and
Cardinal.
Article 2. Fees and Expenses
2.01 For performance by Cardinal pursuant to this Agreement, the Trusts
agree to pay Cardinal monthly a fee at the annual rate of $20,000 as Transfer
Agent for the Trusts. Such fees and out-of-pocket expenses and advances
identified under Section 2.02 below may be changed from time to time subject to
mutual written agreement between the Trusts and Cardinal.
2.02 In addition to the fee paid under Section 2.01 above, the Trusts
agree to reimburse Cardinal for all out-of-pocket expenses or advances incurred
by Cardinal in performing its duties as Transfer Agent hereunder. In addition,
any other expenses incurred by Cardinal at the request or with the consent of
the Trusts will be reimbursed by the Trusts.
2.03 The Trusts agree to pay all fees and reimbursable expenses promptly.
Postage and cost of materials for mailing of dividends, proxies, Trust reports
and other mailings to all Shareholder accounts shall be advanced to Cardinal by
the Trusts in immediately available funds prior to the mailing date of such
materials.
Article 3. Representations and Warranties of Cardinal
Cardinal represents and warrants to the Trusts that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of State of Illinois.
3.02 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
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3.03 It is empowered under applicable laws and by its charter and bylaws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4. Representations and Warranties of the Trusts
The Trusts represent and warrant to Cardinal that:
4.01 They are unincorporated business trusts duly organized and existing
and in good standing under the laws of the Commonwealth of Massachusetts.
4.02 They are empowered under applicable laws and by its governing
documents to enter into and perform this Agreement.
4.03 All proceedings required by said governing documents have been taken
to authorize it to enter into and perform this Agreement.
4.04 They are investment companies registered under the Investment Company
Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made with respect to all
Shares of each of the Trusts being offered for sale; information to the contrary
will result in immediate notification to Cardinal.
Article 5. Indemnification
5.01 Cardinal shall not be responsible for, and the Trusts shall indemnify
and hold Cardinal harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising out of or
attributable to:
(a) all actions of Cardinal or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct;
(b) the Trusts' refusal or failure to comply with the terms of this
Agreement, or the Trusts' lack of good faith, negligence or willful misconduct,
or the breach of any representation or warranty of the Trusts hereunder;
(c) the reliance on or use by Cardinal or its agents or subcontractors of
information, records or documents which (i) are received by Cardinal or its
agents or subcontractors and furnished to it by or on behalf of the Trusts, and
(ii) have been prepared and/or maintained by the Trusts or any other person or
firm (other than the Company or its agents or subcontractors) on behalf of the
Trusts;
65
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(d) the reliance on, or the carrying out by Cardinal or its agents or
subcontractors of, any instructions or requests of the Trusts'
representatives; or
(e) the offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state, or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 Cardinal shall indemnify and hold the Trusts harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising out of or attributable to Cardinal's refusal or
failure to comply with the terms of this Agreement, or Cardinal's lack of good
faith, negligence or willful misconduct, or the breach of any representation or
warranty of Cardinal hereunder.
5.03 At any time Cardinal may apply to any officer of the Trusts for
instructions, and may consult with the Trusts' legal counsel with respect to any
matter arising in connection with the services to be performed by Cardinal under
this Agreement, and Cardinal and its agents or subcontractors shall not be
liable and shall be indemnified by the Trusts for any action taken or omitted by
it in reliance upon such instructions or upon the opinion of such counsel.
Cardinal, its agents and subcontractors shall be protected and indemnified in
acting upon any papers or documents furnished by or on behalf of the Trusts,
reasonably believed to be genuine and to have been signed by the proper person
or persons, or upon any instructions, information, data, records or documents
provided Cardinal or its agents or subcontractors by telephone, in person, or by
machine readable input, facsimile, CRT data entry or other similar means
authorized by the Trusts, and Cardinal, its agents and subcontractors shall not
be held to have notice of any change of authority of any person until receipt of
written notice thereof from the Trusts. Cardinal, its agents and subcontractors
shall also be protected and indemnified in recognizing Share certificates which
are reasonably believed to bear the proper manual or facsimile signatures of the
officers of the Trusts, and the proper countersignature of any former transfer
agent or registrar, or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
this Agreement because of acts of God, strikes, equipment or transmission
failure or damage reasonably beyond its control, or other causes reasonably
beyond its control, such party shall not be liable to the other for any damages
resulting from such failure to perform or otherwise from such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6. Covenants of the Trusts and Cardinal
6.01 The Trust shall promptly furnish to Cardinal the following:
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(a) a certified copy of the resolution of the Board of Trustees of the
Trusts authorizing the appointment of Cardinal and the execution and delivery of
this Agreement.
(b) A copy of the Declaration of Trust and Bylaws of the Trusts and all
amendments thereto.
6.02 Cardinal hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Trusts for safekeeping of Share
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 Cardinal shall keep records relating to the services to be performed
hereunder in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the rules and regulations promulgated thereunder, Cardinal agrees that all such
records prepared or maintained by Cardinal relating to the services to be
performed by Cardinal hereunder are the property of the Trusts and will be
preserved, maintained at the expense of the Trusts and made available in
accordance with such section, rules and regulations, and will be surrendered
promptly to the Trusts at its request.
6.04 Cardinal and the Trusts agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Trusts, Cardinal will endeavor to notify the Trusts
and to secure instructions from an authorized officer of the Trusts as to such
inspection. Cardinal reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person, unless
the Trusts' indemnify Cardinal to its reasonable satisfaction against such
liability.
Article 7. Termination of Agreement
7.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
7.02 Should the Trusts exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Trust. Additionally, Cardinal reserves the right to charge for any other
reasonable expenses associated with such termination, but not more than an
amount equivalent to the average of the most recent three (3) months' fees.
Article 8. Assignment
8.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
67
<PAGE>
Article 9. Amendment
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 10 Massachusetts Law to Apply
10.01 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 11 Merger of Agreement
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
Article 12. Limitation of Liability
12.01 A copy of the Declaration of Trust of each of the Trusts is on file
with the Secretary of State of The Commonwealth of Massachusetts and notice is
hereby given that this Agreement is executed on behalf of the Trustees of the
Trusts as trustees and not individually and that the obligations of this
Agreement are not binding upon the Trustees or holders of Shares individually
but are binding only upon the assets or property of the Trusts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ANCHOR TRUSTS
By:/S/ DAVID Y. WILLIAMS
President
CARDINAL INVESTMENT SERVICES, INC.
By:/S/ CHRISTOHER Y. WILLIAMS
President
68
<PAGE>
Livingston & Haynes, P.C.
Certified Public Accountants
40 Grove Street
Wellesley, MA 02181
(617) 237-3339
Member AICPA Division for CPA Firms
Private Companies Practice Section
SEC Practice Section
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Anchor Resource
and Commodity Trust on the amended Form N-1A our report dated January 19,1999,
appearing in the prospectus, which is part of such Registration Statement, and
to the reference to us under the captions, "Condensed Financial Information and
Selected Per Share Data and Ratios".
LIVINGSTON & HAYNES
Wellesley, Massachusetts
April 30, 1999
69
<PAGE>
ANCHOR
RESOURCE
AND
COMMODITY
TRUST
ANNUAL REPORT
DECEMBER 31, 1998
1
70
<PAGE>
- --------------------------------------------------------------------------------
ANCHOR RESOURCE AND COMMODITY TRUST
- --------------------------------------------------------------------------------
Comparison of the Change in Value of a $10,000 Investment in the Anchor
Resource and Commodity Trust and the Dow Commodity Index
[GRAPHIC OMITTED]
2
71
<PAGE>
- --------------------------------------------------------------------------------
ANCHOR RESOURCE AND COMMODITY TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
Assets:
Investments at quoted market value (cost $1,266,644;
see Schedule of Investments, Notes 1, 2, & 5)................. $ 924,651
Cash ......................................................... 9,040
Dividends and interest receivable.............................. 992
------------
Total assets.............................................. 934,683
------------
Liabilities:
Accrued expenses and other liabilities (Note 3 )............... 13,148
------------
Total liabilities......................................... 13,148
------------
Net Assets:
Capital stock (unlimited shares authorized at $1.00 par value,
amount paid in on 117,975 shares outstanding) (Note 1)........ 2,257,922
Accumulated undistributed net investment income (Note 1)....... 9,226
Accumulated realized loss from security transactions, net (Note 1) (1,003,620)
Net unrealized depreciation in value of investments (Note 2)... (341,993)
------------
Net assets (equivalent to $7.81 per share, based on
117,975 capital shares outstanding)...................... $ 921,535
============
3
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<PAGE>
ANCHOR RESOURCE AND COMMODITY TRUST
STATEMENT OF OPERATIONS
DECEMBER 31, 1998
Income:
Dividends..................................................... $ 78,398
Interest...................................................... 76,305
------------
Total income.............................................. 154,703
------------
Expenses:
Management fees, net (Note 3)................................. 49,052
Pricing and bookkeeping fees (Note 4)......................... 14,500
Legal fees.................................................... 14,000
Audit and accounting fees..................................... 6,500
Transfer fees (Note 4)........................................ 6,000
Trustees' fees and expenses................................... 3,600
Custodian fees................................................ 1,230
Other expenses................................................ 3,500
------------
Total expenses............................................ 98,382
------------
Net investment income.......................................... 56,321
------------
Realized and unrealized loss on investments:
Realized loss on investments-net............................. (670,858)
Decrease in net unrealized appreciation in investments....... (1,092,930)
------------
Net loss on investments................................... (1,763,788)
============
Net decrease in net assets resulting from operations........... $ (1,707,467)
============
4
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<PAGE>
================================================================================
ANCHOR RESOURCE AND COMMODITY TRUST
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
1998 1997
----------------------------
From operations:
Net investment income........................... $ 56,321 $ 108,043
Realized loss on investments, net............... (670,858) (135,336)
Decrease in net unrealized
appreciation in investments.................... (1,092,930) (749,780)
------------ ------------
Net decrease in net assets
resulting from operations............. (1,707,467) (777,073)
-------------- ------------
Distributions to shareholders:
From net investment income ($0.65 per share in (70,599) --
1998)
From net realized gain on investments.......... -- --
-------------- ------------
Total distributions to shareholders......... (70,599) --
-------------- ------------
From capital share transactions:
Number of Shares
1998 1997
---------- -----------
Proceeds from
sale of shares.......... 56,849 121,833 494,745 1,316,315
Shares issued to share-
holders in distributions
reinvested................ 9,026 -- 70,492 --
Cost of shares redeemed....(1,035,378)(141,349) (8,560,276) (1,416,537)
--------- --------- -------------- ------------
Decrease in net
assets resulting from
capital (969,503) (19,516) (7,995,039) (100,222)
share transactions........========= =========== -------------- ------------
Net decrease in net assets....................... (9,773,105) (877,295)
Net assets:
Beginning of period............................ 10,694,640 11,571,935
============ ============
End of period (including undistributed net
investment income of $9,226 and $9,172,
respectively).................................. $ 921,535 $ 10,694,640
============ ============
5
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<PAGE>
================================================================================
ANCHOR RESOURCE AND COMMODITY TRUST
================================================================================
SELECTED PER SHARE DATA AND RATIOS
Year Ended December 31,
1998 1997 1996 1995 1994
--------------------------------------------------
Investment income........... $1.97 $0.22 $0.15 $0.89 $0.22
Expenses, net............... 1.25 0.13 0.09 0.32 2.20
--------------------------------------------------
Net investment income (loss) 0.72 0.09 0.06 0.57 (1.98)
Net realized and unrealized
(loss) gain on investments (2.09) 0.71) 1.08 0.13 --
Distributions to
shareholders:
From net investment
income................. (0.65 ) -- -- (0.58) --
From net realized gain
on investments........... -- -- -- -- --
-------------------------------------------------
Net increase (decrease)
in net asset value......... (2.02) (0.62) 1.14 0.12 (1.98)
Net asset value:
Beginning of period........ 9.83 10.45 9.31 9.19 11.17
-------------------------------------------------
End of period.............. $7.81 $9.83 $10.45 $9.31 $9.19
=================================================
Ratio of expenses to
average net assets......... 1.50% 1.13% 1.10% 1.11% 20.12%
Ratio of net investment in-
come (loss) to average net 0.86% 0.89% 0.85% 2.01% (18.13)%
assets......................
Portfolio turnover.......... 0.49 0.09 0.20 0.33 --
Average commission rate paid 0.0633 0.0575 0.0752 0.0374 --
Number of shares out-
standing at end of period.. 117,975 1,087,478 1,106,994 782,903 12,000
Per share data and ratios
assuming
no waiver of advisory fees:
Expenses.................... -- -- -- -- $ 2.28
Net investment loss......... -- -- -- -- $ (2.06)
Ratio of expenses to
average net assets......... -- -- -- -- 20.87%
Ratio of net investment
loss to average net
assets..................... -- -- -- -- (18.88)%
6
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<PAGE>
================================================================================
ANCHOR RESOURCE AND COMMODITY TRUST
================================================================================
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
Value
Quantity (Note 1)
COMMON STOCKS -- 4.55%
Gold/Silver Mining Stocks -- 4.55%
40,000 Miramar Mining Corporation...............................$ 36,800
30,000 Northern Orion Exploration Limited....................... 5,100
-----------
Total common stocks (cost $383,400)...................... 41,900
-----------
FOREIGN TIME DEPOSITS -- 95.79%
4,937,086 French Franc, maturing 01/04/99,
at 2.875% (cost $883,244)............................... 882,751
-----------
Total investments (cost $1,266,644)...................... 924,651
-----------
CASH & OTHER ASSETS, LESS LIABILITIES -- (0.34)%................... (3,116)
-----------
Total Net Assets.........................................$ 921,535
===========
7
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<PAGE>
================================================================================
ANCHOR RESOURCE AND COMMODITY TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Significant accounting policies:
Anchor Resource and Commodity Trust (the "Trust"), a Massachusetts business
trust is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end investment management company. The following is a
summary of significant accounting policies followed by the Trust which are in
conformity with those generally accepted in the investment company industry.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Investment securities--
Security transactions are recorded on the date
the investments are purchased or sold. Each day, at noon, securities traded
on national security exchanges are valued at the last sale price on the
primary exchange on which they are listed, or if there has been no sale by
noon, at the current bid price. Other securities for which market
quotations are readily available are valued at the last known sales price,
or, if unavailable, the known current bid price which most nearly
represents current market value. Options are valued in the same manner.
Foreign currencies and foreign denominated securities are translated at
current market exchange rates as of noon. Temporary cash investments are
stated at cost, which approximates market value. Dividend income is
recorded on the ex-dividend date and interest income is recorded on the
accrual basis. Gains and losses from sales of investments are calculated
using the "identified cost" method for both financial reporting and federal
income tax purposes.
B.Income Taxes-- The Trust has elected to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute each year all of its taxable income to its shareholders. No
provision for federal income taxes is necessary since the Trust intends to
qualify for and elect the special tax treatment afforded a "regulated
investment company" under subchapter M of the Internal Revenue Code. Income
and capital gains distributions are determined in accordance with federal
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts
based on their federal tax basis treatment; temporary differences do not
require such reclassification. During the current fiscal year, permanent
differences, primarily due to foreign currency gains increasing net
investment income, resulted in a net increase in undistributed net
investment income and an increase in accumulated realized loss from
security transactions. This reclassification had no affect on net assets.
8
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<PAGE>
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ANCHOR RESOURCE AND COMMODITY TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(Continued)
C.Capital Stock-- The Trust records the sales and redemptions of its
capital stock on trade date.
D.Foreign Currency-- Amounts denominated in or expected to settle in foreign
currencies are translated into United States dollars at rates reported by a
major Boston bank on the following basis:
A. Market value of investment securities, other assets and liabilities at
the 12:00 noon Eastern Time rate of exchange at the balance sheet date.
B. Purchases and sales of investment securities, income and expenses at
the rate of exchange prevailing on the respective dates of such
transactions (or at an average rate if significant rate fluctuations have
not occurred).
The Trust does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments. Reported net realized foreign exchange gains or losses
arise from sales and maturities of short term securities, sales of foreign
currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Trust's books, and the United States dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in the
exchange rate.
2. Tax basis of investments:
At December 31, 1998, the total cost of investments for federal income tax
purposes was identical to the total cost on a financial reporting basis.
There was no aggregate gross unrealized appreciation in investments in which
there was an excess of market value over tax cost. Aggregate gross unrealized
depreciation in investments in which there was an excess of tax cost over
market value was $341,993. Net unrealized depreciation in investments at
December 31, 1998 was $341,993.
3. Investment advisory service agreements:
The investment advisory contract with Anchor Investment Management
Corporation (the "investment adviser") provides that the Trust will pay the
adviser a fee for investment advice based on 3/4 of 1% per annum of average
daily net assets. At December 31, 1998, investment advisory fees of $564 were
due and were included in "Accrued expenses and other liabilities" in the
accompanying Statement of Assets and Liabilities. David Y. Williams, a
Trustee of the Trust, is President and a Director of the Investment Adviser.
9
78
<PAGE>
================================================================================
ANCHOR RESOURCE AND COMMODITY TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(Continued)
4. Certain transactions:
Anchor Investment Management Corporation provides transfer agent services for
the Trust. Fees earned by Anchor Investment Management Corporation for
transfer agent services for year ended December 31, 1998 were $6,000. Certain
officers and trustees of the Trust are directors and/or officers of the
investment adviser and distributor. Meeschaert & Co., Inc., the Trust's
distributor, received $17,563 in brokerage commissions during the year ended
December 31, 1998. Fees earned by Anchor Investment Management Corporation
for expenses related to daily pricing of the Trust shares and for bookkeeping
services for the year ended December 31, 1998 were $14,500.
5. Purchases and sales:
Aggregate cost of purchases and the proceeds from sales and maturities on
investments for year ended December 31, 1998 were:
Cost of securities acquired:
U.S. Government and investments backed by such
securities....................................... $ 3,454,487
Other investments................................ 38,363,540
===============
$ 41,818,027
===============
Proceeds from sales and maturities:
U.S. Government and investments backed by such
securities....................................... $ 4,393,989
Other investments................................ 45,345,340
===============
$ 49,739,329
===============
10
79
<PAGE>
================================================================================
ANCHOR RESOURCE AND COMMODITY TRUST
================================================================================
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of Anchor Resource and Commodity Trust:
We have audited the accompanying statement of assets and liabilities of Anchor
Resource and Commodity Trust (a Massachusetts business trust), including the
schedule of investments, as of December 31, 1998, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the selected per share data
and ratios for each of the five years in the period then ended. These financial
statements and per share data and ratios are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and per share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of Anchor Resource and Commodity Trust as of December 31, 1998, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the selected per share
data and ratios for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
LIVINGSTON & HAYNES, P.C.
Wellesley, Massachusetts,
January 19, 1999.
11
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<PAGE>
================================================================================
ANCHOR RESOURCE AND COMMODITY TRUST
================================================================================
OFFICERS AND TRUSTEES
ERNIE BUTLER Trustee
President, I.E. Butler Securities
MAURICE A. DONAHUE Trustee
Director and Professor, Institute for Governmental
Services and Walsh-Saltonstall Professor of
Practical Politics, University of Massachusetts
SPENCER H. LE MENAGER Trustee
President, Equity Inc.
DAVID W.C. PUTNAM Chairman
Chairman, Board of Directors, F.L. Putnam and Trustee
Investment Management Corporation
President and Director, F.L. Putnam Securities
Company Incorporated
J. STEPHEN PUTNAM Vice President and
President, Robert Thomas Securities Treasurer
DAVID Y. WILLIAMS President, Secretary
President and Director, Meeschaert & Co., Inc., and Trustee
President and Director, Anchor Investment
Management Corporation
12
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13
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14
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15
84
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================================================================================
ANCHOR RESOURCE AND COMMODITY TRUST
================================================================================
INVESTMENT ADVISER, ADMINISTRATOR AND TRANSFER AGENT
Anchor Investment Management Corporation
579 Pleasant St., Suite 4, Paxton, Massachusetts 01612
(508) 831-1171
DISTRIBUTOR
Meeschaert & Co., Inc.
579 Pleasant St., Suite 4, Paxton, Massachusetts 01612
CUSTODIAN
Investors Bank & Trust Company
89 South Street, Boston, Massachusetts 02111
INDEPENDENT PUBLIC ACCOUNTANT
Livingston & Haynes, P.C.
40 Grove St., Wellesley, Massachusetts 02482
LEGAL COUNSEL
Thorp Reed & Armstrong
One Riverfront Center, Pittsburgh, Pennsylvania 15222
This report is not authorized for distribution to prospective investors in the
Trust unless preceded or accompanied by an effective prospectus which includes
information concerning the Trust's record or other pertinent information.
16
85
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Anchor Resource and
Commodity Trust, hereby severally constitute David WC 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
Signature Title Date
/s/DAVID W.C. PUTNAM
David W. C. Putnam Chairman and Trustee March 22, 1999
/s/J. STEPHEN PUTNAM
J. Stephen Putnam Treasurer (Principle March 22, 1999
Financial Officer)
/s/SPENCER H. LEMENAGER
Spencer H. LeMenager Trustee March 22, 1999
/s/ERNIE BUTLER
I. Ernie Butler Trustee March 22, 1999
/s/DAVID Y. WILLIAMS
David Y. Williams President, Secretary March 22, 1999
and Trustee
* 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.
86
<PAGE>
CERTIFIED RESOLUTIONS
The undersigned, Christopher Y. Williams, Assistant Secretary of
Anchor Resource and Commodity Trust, DOES HEREBY CERTIFY that the following
resolutions were duly adopted by the Trustees of the Trust, and that such
resolutions have not been amended, modified or rescinded and remain in full
force and effect on the date hereof.
RESOLVED: That Peter K. Blume, Esquire, attorney for the
Trust, be and hereby is named and constituted agent
for service with respect to the aforesaid
Registration Statement to receive notices and
communication with respect to the 1993 Act and the
1940 Act, with all power consequent upon such
designation of and under the rules and regulations
of the Commission.
RESOLVED: That the signature of any officer of the Trust required by law to
be affixed to the Registration Statement, or to any amendment
thereof, may be affixed by said officer personally or by an
attorney-in-fact duly constituted in writing by said officer to
sign his name thereto.
IN WITNESS WHEREOF, I have executed this Certificate as of March 22, 1999.
/s/CHRISTOPHER Y. WILLIAMS
Christopher Y. Williams, Asst. Sec.
87
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANCHOR RESOURCE AND COMMODITY TRUST DECEMBER 31, 1998 ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ANNUAL REPORT.
Item Item Description
Number
1998
3(a) Net asset value:
Beginning of year $9.83
3(a) Net investment income
(loss)........... 0.72
3(a) Net realized and
unrealized gain
(loss) on
investments....... (2.09)
3(a) Distributions to
shareholders:
3(a) From net
investment income
(loss)........... (0.65)
3(a) From net realized
gains on
investments...... --
3(a) Net asset value:
End of year.... $7.81
======
3(a) Ratio of expenses to
average net
assets........... 1.50%
88
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</TABLE>
