ANCHOR
CAPITAL
ACCUMULATION
TRUST
ANNUAL REPORT
DECEMBER 31, 1998
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ANCHOR CAPITAL ACCUMULATION TRUST
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Comparison of the Change in Value of a $10,000 Investment in the Anchor
Capital Accumulation Trust and the Standard & Poor's 500 Index
[GRAPHIC OMITTED]
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ANCHOR CAPITAL ACCUMULATION TRUST
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STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
Assets:
Investments at quoted market value (cost $2,964,990 ;
see Schedule of Investments, Notes 1, 2, & 5)................. $ 4,194,514
Cash ......................................................... 116,263
Dividends and interest receivable.............................. 2,753
Other assets................................................... 1,768
------------
Total assets.............................................. 4,315,298
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Liabilities:
Accrued expenses and other liabilities (Note 3 )............... 34,934
------------
Total liabilities......................................... 34,934
------------
Net Assets:
Capital stock (unlimited shares authorized at $1.00 par value,
amount paid in on 200,747 shares outstanding) (Note 1)........ 2,402,325
Accumulated undistributed net investment income (Note 1)....... 1,028,906
Accumulated realized loss from security transactions, net (Note 1) (380,391)
Net unrealized appreciation in value of investments (Note 2)... 1,229,524
------------
Net assets (equivalent to $21.32 per share, based on
200,747 capital shares outstanding)...................... $ 4,280,364
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ANCHOR CAPITAL ACCUMULATION TRUST
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STATEMENT OF OPERATIONS
DECEMBER 31, 1998
Income:
Dividends..................................................... $ 66,132
Interest...................................................... 67,377
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Total income.............................................. 133,509
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Expenses:
Management fees, net (Note 3)................................. 78,252
Pricing and bookkeeping fees (Note 4)......................... 15,000
Legal fees.................................................... 15,000
Audit and accounting fees..................................... 7,500
Transfer fees (Note 4)........................................ 6,000
Trustees' fees and expenses................................... 4,000
Custodian fees................................................ 3,212
Other expenses................................................ 5,565
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Total expenses............................................ 134,529
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Net investment loss............................................ (1,020)
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Realized and unrealized gain on investments:
Realized gain on investments-net............................. 5,239,438
Decrease in net unrealized appreciation in investments....... (3,974,056)
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Net gain on investments................................... 1,265,382
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Net increase in net assets resulting from operations........... $ 1,264,362
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ANCHOR CAPITAL ACCUMULATION TRUST
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STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
1998 1997
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From operations:
Net investment (loss) income.................... $ (1,020) $ 36,588
Realized gain on investments, net............... 5,239,438 352,026
(Decrease) increase in net unrealized
appreciation in investments.................... (3,974,056) 1,178,668
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Net increase in net assets resulting
from operations............................ 1,264,362 1,567,282
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Distributions to shareholders:
From net investment income
($0.07 per share in 1997)................... -- (33,607)
From net realized gain on investments
($11.61 per share in 1998 and $0.79 per share (5,249,366) (352,026)
in 1997).........................................
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Total distributions to shareholders......... (5,249,366) (385,633)
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From capital share transactions:
Number of Shares
1998 1997
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Proceeds from sale of
shares.................. 52,326 6,019 944,736 174,800
Shares issued to share-
holders in distributions
reinvested.............. 277,950 13,364 5,236,575 381,819
Cost of shares redeemed.. (590,780) (27,835) (11,225,631) (781,896)
-------- -------- ------------ ----------
Decrease in net
assets resulting from
capital (260,504) (8,452) (5,044,320) (225,277)
share transactions...... ========= ========= ------------ ----------
Net (decrease) increase in net assets............ (9,029,324) 956,372
Net assets:
Beginning of period............................ 13,309,688 12,353,316
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End of period (including undistributed
net investment income of $1,028,906 and
$1,029,940, respectively).................. $ 4,280,364 $ 13,309,688
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ANCHOR CAPITAL ACCUMULATION TRUST
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SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout each period)
Year Ended December 31,
1998 1997 1996 1995 1994
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Investment income........ $ (378.95) $ 0.59 $ 1.33 $ (1.17) $ 3.49
Expenses, net............ (381.86) 0.47 0.92 (0.64) 2.10
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Net investment income
(loss)................... 2.91 0.12 0.41 (0.53) 1.39
Net realized and
unrealized
gain (loss) on
investments.............. 1.16 3.30 3.06 4.32 (1.72)
Distributions to
shareholders:
From net investment
income................ -- (0.07) (0.13) (0.19) (0.23)
From net realized gain
on investments........ (11.61 ) (0.79) (0.09) (0.62) (0.04)
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Net increase (decrease)
in net asset value...... (7.54) 2.56 3.25 2.98 (0.60)
Net asset value:
Beginning of period..... 28.86 26.30 23.05 20.07 20.67
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End of period........... $ 21.32 $28.86 $26.30 $23.05 $20.07
=====================================================
Ratio of expenses to
average net assets...... 1.29% 1.15% 1.10% 1.11% 1.10%
Ratio of net investment
income to average net
assets................... (0.01)% 0.28% 0.49% 0.92% 0.73%
Portfolio turnover....... 0.49 0.04 0.21 0.40 0.63
Average commission rate
paid..................... 0.0654 0.0800 0.0650 0.0400 0.0606
Number of shares
outstanding at end
of period............... 200,747 461,251 469,703 539,341 392,246
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ANCHOR CAPITAL ACCUMULATION TRUST
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SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
Value
Quantity (Note 1)
COMMON STOCKS -- 78.34%
Banking Industry -- 3.59%
3,800 Bank of New York Company Incorporated....................$ 153,664
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Computer & Peripherals Industry -- 3.90%
1,800 Cisco Systems Incorporated*.............................. 166,950
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Computer Software & Services Industry -- 3.34%
1,800 Automatic Data Processing Incorporated*.................. 143,100
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Diversified Companies Industry -- 7.90%
90 Bershire Hathaway Class B*............................... 208,304
3,400 Service Corporation International*....................... 130,050
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338,354
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Drug Industry -- 4.08%
1,700 Amgen Incorporated....................................... 174,463
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Food Processing Industry -- 4.61%
5,096 Tootsie Roll Industries Incorporated..................... 197,154
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Food Wholesalers Industry -- 3.34%
5,200 Sysco Corporation........................................ 143,000
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Gold/Silver Mining Industry - 9.05%
12,000 Euro Nevada Mining Corporation........................... 195,000
10,000 Franco Nevada Mining Corporation......................... 192,200
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387,200
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Industrial Services Industry - 3.11%
4,000 Equifax Incorporated..................................... 133,000
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Insurance (Diversified) Industry -- 2.96%
1,300 American International Group Incorporated................ 126,790
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* Non income producing security
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ANCHOR CAPITAL ACCUMULATION TRUST
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SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(Continued)
Value
Quantity (Note 1)
Insurance (Life) Industry -- 3.78%
3,600 Aflac Incorporated....................................... 162,000
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Medical Services Industry -- 3.57%
2,000 IMS Health............................................... 152,626
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Medical Supplies Industry -- 9.79%
3,000 Abbott Laboratories...................................... 146,814
5,000 Stryker Corporation...................................... 272,500
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419,314
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Newspaper Industry -- 2.44%
3,000 New York Times Incorporated, Class A..................... 104,437
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Office Equipment & Supplies Industry -- 3.74%
3,700 Staples Incorporated*.................................... 160,025
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Retail Building Supply Industry -- 3.85%
2,700 Home Depot Incorporated.................................. 164,870
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Retail Store Industry -- 2.28%
4,000 Dollar General........................................... 97,752
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Semiconductor Industry -- 3.01%
1,500 Linear Technologies Corporation.......................... 128,625
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Total common stocks (cost $2,123,800).................... 3,353,324
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U.S. TREASURY BILLS -- 19.65%.......
$850,000 Treasury Bill, 4.59% yield, maturing 03/25/99 (at cost).. 841,190
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Total investments (cost $2,964,990)...................... 4,194,514
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CASH & OTHER ASSETS, LESS LIABILITIES -- 2.01%................... 85,850
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Total Net Assets........................................ $4,280,364
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* Non income producing security
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ANCHOR CAPITAL ACCUMULATION TRUST
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NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Significant accounting policies:
Anchor Capital Accumulation Trust, a Massachusetts business trust (the "Trust"),
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end investment management company. The following is a
summary of significant accounting policies followed by the Trust which are in
conformity with those generally accepted in the investment company industry.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Investment securities--
Security transactions are recorded on the date
the investments are purchased or sold. Each day, at noon, securities traded
on national security exchanges are valued at the last sale price on the
primary exchange on which they are listed, or if there has been no sale by
noon, at the current bid price. Other securities for which market
quotations are readily available are valued at the last known sales price,
or, if unavailable, the known current bid price which most nearly
represents current market value. Options are valued in the same manner.
Temporary cash investments are stated at cost, which approximates market
value. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Gains and losses from sales of
investments are calculated using the "identified cost" method for both
financial reporting and federal income tax purposes.
B.Income Taxes-- The Trust has elected to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute each year all of its taxable income to its shareholders. No
provision for federal income taxes is necessary since the Trust intends to
qualify for and elect the special tax treatment afforded a "regulated
investment company" under subchapter M of the Internal Revenue Code. Income
and capital gains distributions are determined in accordance with federal
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts
based on their federal tax basis treatment; temporary differences do not
require such reclassification.
C. Capital Stock-- The Trust records the sales and redemptions of its
capital stock on trade date.
2. Tax basis of investments:
At December 31, 1998, the total cost of investments for federal income tax
purposes was identical to the total cost on a financial reporting basis.
Aggregate gross unrealized appreciation in investments in which there was an
excess of market value over tax cost was $1,254,354. Aggregate gross
unrealized depreciation in investments in which there was an excess of tax
cost over market value was $24,830. Net unrealized appreciation in
investments at December 31, 1998 was $1,229,524.
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ANCHOR CAPITAL ACCUMULATION TRUST
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NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(Continued)
3. Investment advisory service agreements:
Pursuant to a shareholders meeting held on November 30, 1998, the
shareholders of Anchor Capital Accumulation Trust voted to enter into an
investment advisory agreement with Progressive Investment Management
Corporation, replacing Anchor Investment Management Corporation as the
Investment Adviser to the Trust. The investment advisory contract with
Progressive 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. The Trust paid an
advisory fee to Anchor Investment Management Corporation through November 30,
1998 based on 3/4 of 1% per annum of the average daily net assets. At
December 31, 1998, investment advisory fees of $2,444 were due and were
included in "Accrued expenses and other liabilities" in the accompanying
Statement of Assets and Liabilities.
4. Certain transactions:
Anchor Investment Management Corporation provides transfer agent services for
the Trust. Fees earned by Anchor Investment Management Corporation for
transfer agent services for the year ended December 31, 1998 were $6,000.
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 $32,153 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 $15,000.
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....................................... $ 10,917,792
Other investments................................ 4,453,773
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$ 15,371,565
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Proceeds from sales and maturities:
U.S. Government and investments backed by such
securities....................................... $ 10,768,868
Other investments................................ 14,548,547
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$ 25,317,415
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ANCHOR CAPITAL ACCUMULATION TRUST
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INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of Anchor Capital Accumulation Trust:
We have audited the accompanying statement of assets and liabilities of Anchor
Capital Accumulation Trust (a Massachusetts business trust), including the
schedule of investments, as of December 31, 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 Capital Accumulation 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.
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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
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ANCHOR CAPITAL ACCUMULATION TRUST
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INVESTMENT ADVISER
Progressive Investment Management Corporation
579 Pleasant St., Suite 4, Paxton, Massachusetts 01612
(508) 831-1171
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.
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