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ANCHOR
GOLD AND
CURRENCY
TRUST
ANNUAL REPORT
DECEMBER 31, 1997
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ANCHOR GOLD AND CURRENCY TRUST
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Comparison of the Change in Value of a $10,000 Investment in the Anchor Gold &
Currency Trust and Gold Bullion and the XAU Index
[GRAPHIC OMITTED]
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ANCHOR GOLD AND CURRENCY TRUST
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CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
Assets:
Investments at quoted market value (cost $16,207,070 ;
see Schedule of Investments, Notes 1, 2, & 5)....... $13,278,331
Cash ................................................ 148,996
Dividends and interest receivable.................... 17,881
Other assets......................................... 1,809
-----------
Total assets..................................... 13,447,017
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Liabilities:
Accrued expenses and other liabilities (Note 3)...... 29,360
-----------
Total liabilities................................ 29,360
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Net Assets:
Capital stock (9,829,269 shares of no par value stock
authorized,amount paid in on 2,919,774 shares outstanding)
(Note 1)............................................ 19,148,443
Accumulated undistributed net investment income (Note 1) (852,234)
Accumulated realized loss from security transactions,
net (Note 1)......................................... (1,949,813)
Net unrealized depreciation in value of investments
(Note 2)............................................. (2,928,739)
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Net assets (equivalent to $4.60 per share, based on
2,919,774 capital shares outstanding).......... $13,417,657
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ANCHOR GOLD AND CURRENCY TRUST
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CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31, 1997
Income:
Dividends........................................... $ 73,639
Interest............................................ 300,192
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Total income..................................... 373,831
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Expenses:
Management fees (Note 3)............................ 149,063
Pricing and bookkeeping fees (Note 4)............... 21,722
Legal fees.......................................... 14,000
Audit and accounting fees........................... 13,000
Custodian fees...................................... 10,691
Transfer fees (Note 4).............................. 3,000
Trustees' fees and expenses......................... 3,000
Other expenses...................................... 8,592
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Total expenses................................... 223,068
Fees paid indirectly (Note 4)............... (4,660)
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Net expenses................................ 218,408
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Net investment income................................ 155,423
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Realized and unrealized loss on investments:
Realized loss on investments-net................... (1,742,176)
Decrease in net unrealized appreciation in investments (4,327,754)
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Net loss on investments.......................... (6,069,930)
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Net decrease in net assets resulting from operations. $(5,914,507)
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ANCHOR GOLD AND CURRENCY TRUST
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CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
1997 1996
------------------------------
From operations:
Net investment income (loss)............ $ 155,423 $ (142,863)
Realized (loss) gain on investments, net (1,742,176) 1,164,985
(Decrease) increase in net unrealized
appreciation in investments........... (4,327,754) 1,091,163
------------ ------------
Net (decrease) increase in
net assets resulting from operations.. (5,914,507) 2,113,285
------------ ------------
Distributions to shareholders:
From net investment income.............. (32,040) --
------------ ------------
Total distributions to shareholders.. (32,040) --
------------ ------------
From capital share transactions:
Number of Shares
1997 1996
--------------------
Proceeds from sale of
shares.............. -- -- -- --
Shares issued to
share-
holders in 31,982 --
distributions
reinvested.......... 6,998 --
Cost of shares
redeemed.............. (775,836) -- (3,753,107) --
---------- ---- ------------ ----------
Decrease in net
assets resulting
from capital (768,838) -- (3,721,125) --
share transactions..=========== ======== ------------ -------------
Net (decrease) increase in net assets.... (9,667,672) 2,113,285
Net assets:
Beginning of period.................... 23,085,329 20,972,044
============ ============
End of period (including undistributed
net investment income of ($852,234)
and ($886,682), respectively)...... $13,417,657 $23,085,329
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ANCHOR GOLD AND CURRENCY TRUST
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CONSOLIDATED SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout each period)
Year Ended December 31,
1997 1996 1995 1994 1993
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Investment income.... $0.08 $0.03 $0.04 $0.03 $0.02
Expenses, net........ 0.05 0.07 0.06 0.09 0.06
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Net investment income
(loss)............... 0.03 (0.04) (0.02) (0.06) (0.04)
Net realized and
unrealized
gain (loss) on
investments.......... (1.68) 0.61 0.11 (0.90) 2.16
Distributions to
shareholders:
From net investment
income............. (0.01) -- -- -- --
From net realized
gain on investments.. -- -- -- -- --
-----------------------------------------------
Net (decrease)
increase
in net asset value.. (1.66) 0.57 0.09 (0.96) 2.12
Net asset value:
Beginning of period.. 6.26 5.69 5.60 6.56 4.44
===============================================
End of period....... $4.60 $6.26 $5.69 $5.60 $6.56
===============================================
Ratio of expenses to
average net assets.. 1.12% 1.10% 1.10% 1.12% 1.13%
Ratio of net
investment income
(loss) to average
net assets........... 0.78% (0.60%) (0.47%) (0.68%) (0.76%)
Portfolio turnover... 0.24 0.18 0.17 0.32 0.35
Average commission
rate paid............ 0.0454 0.0389 0.0441 0.0475 0.0285
Number of shares out-
standing at end of
period............... 2,919,774 3,688,612 3,688,612 3,688,612 4,164,416
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ANCHOR GOLD AND CURRENCY TRUST
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CONSOLIDATED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
Value
Quantity (Note 1)
COMMON STOCKS -- 49.05%
Gold/Silver Mining Stocks
140,000 Aquiline Resources Incorporated................ $ 14,000
30,000 Barrick Gold Corporation....................... 556,890
100,000 Cambior Incorporated........................... 593,000
10,000 Canabrava Diamond Corporation.................. 15,700
90,000 Euro Nevada Mining Corporation Limited......... 1,205,100
64,200 Franco Nevada Mining Corporation............... 1,247,406
32,862 Freeport Mcmoran Copper & Gold Class A......... 501,145
60,000 Golden Star Resources Limited.................. 198,780
160,000 Guyanor Ressources SA.......................... 156,800
220,000 Miramar Mining Corporation..................... 422,400
15,000 Newmont Mining Corporation..................... 436,875
35,500 Normandy Mining Ltd. ADR....................... 350,385
184,200 Northern Orion Exploration Limited............. 198,936
10,000 Southwestern Gold Corporation.................. 30,700
159,900 Universal Gold Limited......................... 575,640
350,000 War Eagle Mining Company Incorporated.......... 77,000
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Total common stocks (cost $8,827,453).......... 6,580,757
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FOREIGN TIME DEPOSITS -- 19.52%
15,703,84French Franc, maturing 01/05/98, at 3.25%
(cost $2,627,252).................................... 2,619,401
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PRECIOUS METALS -- 9.04%
Bullion -- 7.97%
3,704 Ounces gold bullion............................ 1,069,741
Coins -- 1.07%
475 Canadian Maple Leafs........................... 143,117
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Total precious metals (cost $1,887,050)........ 1,212,858
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U.S. TREASURY BILLS -- 21.35%.
2,000,000Treasury Bill, 5.12% yield, maturing 2/05/98
(at cost)...................................... 1,975,260
900,000 Treasury Bill, 5.10% yield, maturing 3/19/98
(at cost)...................................... 890,055
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Total U.S. Treasury Bills (at cost)............ 2,865,315
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Total investments (cost $16,207,070)........... 13,278,331
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CASH & OTHER ASSETS, LESS LIABILITIES -- 1.04%.......... 139,326
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Total Net Assets............................... $13,417,657
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ANCHOR GOLD & CURRENCY TRUST
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Significant accounting policies:
Anchor Gold and Currency Trust, a Massachusetts business trust (the "Trust"),
is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, closed-end investment management company. The following is a
summary of significant accounting policies followed by the Trust which are in
conformity with those generally accepted in the investment company industry.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. A. Investment securities--
Security transactions are recorded
on the date the investments are purchased or sold. Each day, at noon,
securities traded on national security exchanges are valued at the last sale
price on the primary exchange on which they are listed, or if there has been
no sale by noon, at the current bid price. Other securities for which market
quotations are readily available are valued at the last known sales price,
or, if unavailable, the known current bid price which most nearly represents
current market value. Options are valued in the same manner. Foreign
currencies and foreign denominated securities are translated at current
market exchange rates as of noon. The gold bullion is valued each day at
noon based on the New York spot gold price. The gold coins are valued based
on valuations published in the Wall Street Journal. Temporary cash
investments are stated at cost, which approximates market value. Dividend
income is recorded on the ex-dividend date and interest income is recorded
on the accrual basis. Gains and losses from sales of investments are
calculated using the "identified cost" method for both financial reporting
and federal income tax purposes.
B. Income Taxes-- The Trust has elected to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute each year all of its taxable income to its shareholders. No
provision for federal income taxes is necessary since the Trust intends to
qualify for and elect the special tax treatment afforded a "regulated
investment company" under subchapter M of the Internal Revenue Code. Income
and capital gains distributions are determined in accordance with federal
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts
based on their federal tax basis treatment; temporary differences do not
require such reclassification. During the current fiscal year, permanent
differences, primarily due to foreign currency losses offset by net
investment income, resulted in a net decrease in undistributed net
investment income and a decrease in accumulated realized loss from security
transactions. This reclassification had no affect on net assets.
C. Capital Stock-- The Trust records the sales and redemptions
of its capital stock on trade date.
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ANCHOR GOLD AND CURRENCY TRUST
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(Continued)
D. Principles of Consolidation-- The consolidated statements include the
consolidated operations of Anchor Gold & Currency Limited of which the Trust
owns all outstanding shares. Intercompany receivables, payables and
transactions have been eliminated.
E. Foreign Currency-- Amounts denominated in or expected to settle in foreign
currencies are translated into United States dollars at rates reported by a
major Boston bank on the following basis:
A. Market value of investment securities, other assets and
liabilities at the 12:00 noon Eastern Time rate of exchange
at the balance sheet date.
B. Purchases and sales of investment securities, income and expenses at the
rate of exchange prevailing on the respective dates of such transactions (or
at an average rate if significant rate fluctuations have not occurred). The
Trust does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments. Reported net realized foreign exchange gains or losses arise
from sales and maturities of short term securities, sales of foreign
currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Trust's books, and the United States dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in the
exchange rate.
2. Tax basis of investments:
At December 31,1997, the total cost of investments for federal income tax
purposes was identical to the total cost on a financial reporting basis.
Aggregate gross unrealized appreciation in investments in which there was an
excess of market value over tax cost was $1,410,606. Aggregate gross
unrealized depreciation in investments in which there was an excess of tax
cost over market value was $4,339,345. Net unrealized depreciation in
investments at December 31,1997 was $2,928,739.
3. Investment advisory service agreements:
The investment advisory contract with Anchor Investment Management
Corporation (the "investment adviser") provides that the Trust will pay the
adviser a fee for investment advice based on 3/4 of 1% per annum of average
daily net assets. At December 31,1997, investment advisory fees of $8,888
were due and were included in "Accrued expenses and other liabilities" in the
accompanying Consolidated Statement of Assets and Liabilities. David Y.
Williams, a Trustee of the Trust, is President and a Director of the
Investment Adviser.
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4. Certain transactions:
Anchor Investment Management Corporation provides transfer agent services for
the Trust. Fees earned by Anchor Investment Management Corporation for
transfer agent services for the year ended December 31, 1997 were $3,000.
Certain officers and trustees of the Trust are directors and/or officers of
the investment adviser and distributor. Meeschaert & Co., Inc., the Trust's
distributor, received $28,106 in brokerage commissions during the year ended
December 31, 1997. Fees earned by Anchor Investment Management Corporation
for expenses related to daily pricing of the Trust shares and for bookkeeping
services for the year ended December 31, 1997 were $17,500. For the year
ended December 31, 1997 the total expense increase, as shown in the
consolidated statement of operations, is $4,660 as a result of an expense
offset arrangement with its custodian, Investors Bank & Trust Company. The
Trust could have invested the assets used by the custodian in an income
producing asset if it had not agreed to a reduction in fees under the expense
offset arrangement. In addition, the expense ratios in the Selected Per Share
Data and Ratios are based on the total expenses, which include amounts that
would have been paid in lieu of an expense offset arrangement
5. Purchases and sales:
Aggregate cost of purchases and the proceeds from sales and maturities on
investments for the year ended December 31, 1997 were:
Cost of securities acquired:
U.S. Government and investments backed by $
such securities........................... 12,567,716
Other investments....................... 221,246,741
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$
233,814,457
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Proceeds from sales and maturities:
U.S. Government and investments backed by $
such securities........................... 11,677,661
Other investments....................... 220,525,858
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$
232,203,519
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ANCHOR GOLD AND CURRENCY TRUST
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INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of Anchor Gold & Currency Trust:
We have audited the accompanying statement of assets and liabilities of Anchor
Gold & Currency Trust (a Massachusetts business trust), including the schedule
of investments, as of December 31, 1997, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the selected per share data and ratios for
each of the five years in the period then ended. These financial statements and
per share data and ratios are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and per
share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of Anchor Gold & Currency Trust as of December 31, 1997, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the selected per share data and
ratios for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
LIVINGSTON & HAYNES, P.C.
Wellesley, Massachusetts,
January 14, 1998.
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ANCHOR GOLD AND CURRENCY TRUST
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OFFICERS AND TRUSTEES
DAVID W.C. PUTNAM Chairman
Chairman, Board of Directors, F.L. Putnam and Trustee
Investment Management Corporation
President and Director, F.L. Putnam
Securities Company Incorporated
J. STEPHEN PUTNAM Vice President and
President, Robert Thomas Securities Treasurer
SPENCER H. LE MENAGER Secretary
President, Equity Inc. and Trustee
MAURICE A. DONAHUE Trustee
Director and Professor, Institute for
Governmental Services and
Walsh-Saltonstall Professor of Practical
Politics, University of Massachusetts
DAVID Y. WILLIAMS President
President and Director, Meeschaert & Co., and Trustee
Inc.,
President and Director, Anchor Investment
Management Corporation
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ANCHOR GOLD AND CURRENCY TRUST
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INVESTMENT ADVISER AND TRANSFER AGENT
Anchor Investment Management Corporation
579 Pleasant St., Suite 4, Paxton, Massachusetts 01612
(508) 831-1171
DISTRIBUTOR
Meeschaert & Co., Inc.
579 Pleasant St., Suite 4, Paxton, Massachusetts 01612
CUSTODIAN
Investors Bank & Trust Company
89 South Street, Boston, Massachusetts 02111
INDEPENDENT PUBLIC ACCOUNTANT
Livingston & Haynes, P.C.
40 Grove St., Wellesley, Massachusetts 02181
LEGAL COUNSEL
Yukevich, Blume, Marchetti & Zangrilli
One Gateway Center, Pittsburgh, Pennsylvania 15222
This report is not authorized for distribution to prospective investors in the
Trust unless preceded or accompanied by an effective prospectus which includes
information concerning the Trust's record or other pertinent information.
