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ANCHOR
INTERNATIONAL
BOND
TRUST
ANNUAL REPORT
DECEMBER 31, 1996
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets:
Investments at quoted market value (cost $24,841,134;
see Schedule of Investments, Notes 1, 2, & 5)....... $ 25,530,805
Cash ................................................ 162,967
Interest receivable.................................. 448,916
Other assets......................................... 442
-----------
Total assets..................................... 26,143,130
-----------
Liabilities:
Accrued expenses and other liabilities (Note 3)...... 38,423
-----------
Total liabilities................................ 38,423
-----------
Net Assets:
Capital stock (unlimited shares authorized at $1.00 par
value, amount paid in on 3,136,313 shares outstanding)
,(Note 1)............................................. 25,687,713
Accumulated undistributed net investment income...... 910,,814
Accumulated realized loss from security transactions, (1,183,491)
net
Net unrealized appreciation in value of investments
(Note 2)............................................. 689,671
===========
Net assets (equivalent to $8.32 per share, based on
3,163,313 capital shares outstanding)........... $26,104,707
===========
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Income:
Interest............................................ $ 1,095,882
-----------
Total income..................................... 1,095,882
-----------
Expenses:
Management fees, net (Note 3)....................... 193,677
Pricing and bookkeeping fees (Note 4)............... 22,000
Legal fees.......................................... 13,500
Audit and accounting fees........................... 23,000
Transfer fees (Note 4).............................. 5,000
Trustees' fees and expenses......................... 1,800
Custodian fees...................................... 7,200
Other expenses...................................... 6,051
-----------
Total expenses................................... 272,228
-----------
Net investment income................................ 823,654
-----------
Realized and unrealized loss on investments:
Realized loss on investments-net................... (995,541)
Decrease in net unrealized appreciation in investments (1,190,814)
-----------
Net loss on investments.......................... (2,186,355)
===========
Net decrease in net assets resulting from operations. $(1,362,701)
===========
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December
1996 31, 1995
--------------------------
From operations:
Net investment income................... $ 823,654 1,195,537
Realized (loss) gain on investments, net (995,541) 926,397
(Decrease) increase in net unrealized
appreciation in investments............ (1,190,814) 1,933,199
------------ -----------
Net (decrease) increase in net assets
resulting from operations................ (1,362,701) 4,055,133
------------ -----------
Distributions to shareholders:
From net investment income
($0.73 per share in 1995)............. -- (2,166,789)
------------ -----------
Total distributions to shareholders.. -- (2,166,789)
------------ -----------
From capital share transactions:
Number of Shares
1996 1995
--------- ---------
Proceeds from sale
of 178,697 903,873 1,531,714 7,818,146
shares............
Shares issued to
shareholders
in distributions
reinvested............ -- 249,056 -- 2,166,788
Cost of shares
redeemed.............. (247,900) (288,403) (2,112,416) (2,721,530)
--------- --------- ----------- -------------
(Decrease) increase
in net assets
resulting from
capital share
transactions........ (69,203) 864,526 (580,702 7,263,404
========= ========= ------------ -----------
Net (decrease) increase in net assets.... (1,943,403) 9,151,748
Net assets:
Beginning of period.................... 28,048,110 18,896,362
============ ===========
End of period (including undistributed
net investment income of $910,814 and
$87,160, respectively)................... $26,104,707 $28,048,110
============ ===========
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout each period)
Year Ended December 31,
1996 1995 1994 1993 1992
------------------------------------------------
Investment income.... $0.35 $0.89 $0.19 $0.55 $0.59
Expenses, net........ 0.09 0.17 0.04 0.08 0.09
--------- --------------------------------------
Net investment income. 0.26 0.72 0.15 0.47 0.50
Net realized and
unrealized (0.69) 0.69 0.48 (0.41) (0.23)
gain (loss) on
investments..........
Distributions to
shareholders:
From net investment
income............. -- (0.73) (0.44) (0.13) (0.39)
From net realized
gain on investments... -- -- -- -- --
--------- --------------------------------------
Net increase
(decrease) (0.43) 0.68 0.19 (0.07) (0.12)
in net asset value..
Net asset value:
Beginning of period. 8.75 8.07 7.88 7.95 8.07
========= ======================================
End of period....... $8.32 $8.75 $8.07 $7.88 $7.95
========= ======================================
Ratio of expenses to
average net assets.. 1.06% 1.06% 1.09% 1.06% 1.05%
Ratio of net
investment in-
come to average net
assets............... 3.19% 4.40% 3.90% 5.78% 6.14%
Portfolio turnover... -- -- -- -- --
Number of shares out-
standing at end of
period............... 3,136,313 3,205,516 2,340,990 2,158,000 2,125,348
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
Value
Quantity (Note 1)
FOREIGN BONDS -- 51.39%
German Mark -- 25.89%
1,550,000Bundesobl, 5.060%, due 05/21/01................ $1,015,250
2,000,000Bundesrepublik Deutscheland, 6 %, due 04/20/98. 1,327,000
1,500,000Deutsch Bundesbahn, 6.125%, due 01/30/97....... 964,500
2,000,000Deutsch Bundespost, 6.25%, due 10/01/03........ 1,334,600
3,000,000Deutschland, 7.125%, due 12/20/02.............. 2,115,900
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6,757,250
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Netherlands Guilders -- 22.44%
1,500,000ABN-AMRO Bank, 6.375%, due 04/21/00............ 893,400
2,000,000Bank Voor Nederlandse Gemeenten, 7.00%, due
03/10/03....................................... 1,252,200
1,000,000Nationale Nederlanden, 8.75%, due 02/11/97..... 580,500
2,000,000Nederland, 7.25%, due 10/01/04................. 1,282,400
2,000,000Nederlands, 6.50%, due 04/15/03................ 1,237,400
1,000,000Nederlandse Waterschapsbank, 6.625%, due
07/21/03....................................... 612,900
----------
5,858,800
----------
Swiss Francs -- 3.06%
500,000 General Electric Capital Corp., 5.25% due
02/02/99....................................... 394,150
500,000 Toyota Motor Credit Corp., 5.375%, due 02/14/01 405,550
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799,700
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Total foreign bonds (cost $12,751,841)......... 13,415,750
----------
FOREIGN CURRENCY -- 0.53%
213,750 Deutsche Marks................................. 137,142
----------
Total foreign currency (cost $137,227)......... 137,142
----------
FOREIGN TIME DEPOSITS -- 45.88%
4,938,954Deutsche Mark, maturing 01/02/97,
at 3.00%...................................... 3,168,833
6,565,607Deutsche Mark, maturing 01/03/97,
at 3.375%..................................... 4,212,493
5,182,379Netherland Guilder, maturing 01/03/97,
at 2.937% .................................... 2,995,415
2,142,896Swiss Francs, maturing 01/03/97,
at 3.50% ..................................... 1,601,172
----------
Total foreign time deposits (cost $11,952,066).... 11,977,913
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Total investments (cost $24,841,134)........... 25,530,805
----------
CASH & OTHER ASSETS, LESS LIABILITIES -- 2.20% 573,902
----------
Total Net Assets............................... $ 26,104,707
==========
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Continued)
1. Significant accounting policies:
Anchor International Bond 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, securities
traded in the foreign over-the-counter market are valued at the closing bid
price of the European markets; other investment securities traded on a
national securities exchange are valued at the last sales price as of 12:00
noon, 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.
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, 1996, 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 $869,559. Aggregate gross unrealized
depreciation in investments in which there was an excess of tax cost over
market value was $179,888. Net unrealized appreciation in investments at
December 31, 1996 was $689,671.
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, 1996, investment advisory fees of $16,614
were due which 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.
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, 1996 were $5,000.
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 no brokerage commissions during the year ended December
31, 1996. 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, 1996 were $22,000.
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Continued)
5. Purchases and sales:
Aggregate cost of purchases and the proceeds from sales and maturities on
investments for the year ended December 31, 1996 were:
Cost of securities acquired:
U.S. Government and investments backed by
such securities........................... $ --
Other investments....................... 519,328,239
=============
$519,328,239
=============
Proceeds from sales and maturities:
U.S. Government and investments backed by
such securities.......................... $ --
Other investments....................... 518,680,580
-------------
$518,680,580
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<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of Anchor International Bond
Trust:
We have audited the accompanying statement of assets and liabilities of Anchor
International Bond Trust (a Massachusetts business trust), including the
schedule of investments, as of December 31, 1996, 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, 1996 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 International Bond Trust as of December 31, 1996, 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 17, 1997.
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
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
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
INVESTMENT ADVISER AND TRANSFER AGENT
Anchor Investment Management Corporation
2717 Furlong Rd., Doylestown, Pennsylvania 18901
(215) 794-2980
DISTRIBUTOR
Meeschaert & Co., Inc.
2717 Furlong Rd., Doylestown, Pennsylvania 18901
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
