ANCHOR
INTERNATIONAL
BOND
TRUST
ANNUAL REPORT
DECEMBER 31, 1999
<PAGE>
ANCHOR INTERNATIONAL BOND TRUST
Comparison of the Change in Value of a $10,000 Investment in the
Anchor International Bond Trust and the Solomon Brothers World Govt. Bond Index
[GRAPHIC OMITTED]
===============================================================================
Anchor International Bond Trust
Average Annual Total Return
- -------------------------------------------------------------------------------
1 Year 5 Year 10 Year
(13.14)% (0.83)% 3.39%
===============================================================================
2.
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ANCHOR INTERNATIONAL BOND TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
Assets:
Investments at quoted market value (cost $167,817;
see Schedule of Investments, Notes 1, 2, & 5)................. $ 167,817
Cash ......................................................... 4,691
Interest receivable............................................ 737
Other assets................................................... 442
------------
Total assets.............................................. 173,687
------------
Liabilities:
Accrued expenses and other liabilities (Note 3 )............... 41,493
-------------
Total liabilities......................................... 41,493
-------------
Net Assets:
Capital stock (unlimited shares authorized at $1.00 par value,
amount paid in on 19,986 shares outstanding) (Note 1)......... 2,416,662
Accumulated undistributed net investment income (Note 1)....... (569,425)
Accumulated realized loss from security transactions, net (Note 1) (1,715,043)
Net unrealized depreciation in value of investments (Note 2)... 0
------------
Net assets (equivalent to $6.61 per share, based on
19,986 capital shares outstanding)....................... $ 132,194
============
The accompanying notes are an integral part of these financial statements.
3.
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ANCHOR INTERNATIONAL BOND TRUST
STATEMENT OF OPERATIONS
DECEMBER 31, 1999
Income:
Interest...................................................... $ 125,784
------------
Total income.............................................. 125,784
------------
Expenses:
Management fees, net (Note 3)................................. 34,054
Pricing and bookkeeping fees (Note 4)......................... 16,899
Audit and accounting fees..................................... 6,742
Legal fees.................................................... 6,502
Transfer fees (Note 4)........................................ 5,099
Custodian fees................................................ 1,798
Trustees' fees and expenses................................... 478
Reserve for liquidation (Note 4).............................. 26,598
Other expenses................................................ 2,247
------------
Total expenses............................................ 100,417
------------
Net investment income.......................................... 25,367
------------
Realized and unrealized gain (loss) on investments:
Realized loss on investments-net............................. (687,604)
Increase in net unrealized appreciation in investments....... 8,985
------------
Net loss on investments................................... (678,619)
------------
Net decrease in net assets resulting from operations........... $ (653,252)
============
The accompanying notes are an integral part of these financial statements.
4.
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ANCHOR INTERNATIONAL BOND TRUST
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
1999 1998
------------------------------
From operations:
Net investment income........................... $ 25,367 $ 481,839
Realized loss on investments, net............... (687,604) (570,371)
Increase in net unrealized
appreciation in investments.................... 8,985 966,416
-------------- -------------
Net (decrease) increase in net assets
Resulting from operations............. (653,252) 877,884
-------------- -------------
Distributions to shareholders:
From net investment income ($0.613 per share in
1998)......................................... -- (414,019)
From net realized gain on investments.......... -- --
-------------- -------------
Total distributions to shareholders......... -- (414,019)
-------------- -------------
From capital share transactions:
Number of Shares
1999 1998
---------- -----------
Proceeds from sale of
shares................... 7,485 -- 50,000 --
Shares issued to share-
holders in distributions
reinvested................ -- 54,399 -- 413,435
Cost of shares redeemed....(717,296) (1,894,102) (4,815,483) (14,492,078)
-------- ----------- ---------- -----------
Decrease in net assets
resulting from capital
share transactions...... (709,811) (1,839,703) (4,765,483) (14,078,643)
========== =========== ----------- -----------
Net decrease in net assets....................... (5,418,735) (13,614,778)
Net assets:
Beginning of period............................ 5,550,929 19,165,707
------------ -----------
End of period (including undistributed net
investment income of $(569,425 and
$(42,110 respectively......................... $ 132,194 $ 5,550,929
============== ============
The accompanying notes are an integral part of these financial statements.
5.
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ANCHOR INTERNATIONAL BOND TRUST
SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout each period)
Year Ended December 31,
1999 1998 1997 1996 1995
-----------------------------------------------------
Investment income.........$(140.99) $0.78 $0.42 $0.35 $0.89
Expenses, net............. (112.55) 0.21 0.11 0.09 0.17
----------- ---------- ---------- --------- -------
Net investment (loss) (28.44) 0.57 0.31 0.26 0.72
income...................
Net realized and
unrealized gain (loss) on
investments.............. 27.44 0.19 (1.17) (0.69) 0.69
Distributions to
shareholders:
From net investment
income................. -- (0.61) -- -- (0.73)
From net realized gain
on investments......... -- -- -- -- --
----------- ---------- ---------- --------- -------
Net (decrease) increase
in net asset value....... (1.00) 0.15 (0.86) (0.43) 0.68
Net asset value:
Beginning of period...... 7.61 7.46 8.32 8.75 8.07
---------- ----------- ---------- --------- -------
End of period............ $6.61 $7.61 $7.46 $8.32 $8.75
========== =========== ========== ========= =======
Total Return.............. (13.14%) 10.20% (10.34%) (4.91%) 17.52%
Ratio of expenses to
average net assets....... 2.20% 1.30% 1.11% 1.06% 1.06%
Ratio of net investment
income to average net
assets................... 0.56% 3.53% 3.16% 3.19% 4.40%
Number of shares out-
standing at end of
period................... 19,986 729,797 2,569,500 3,136,313 3,205,516
The accompanying notes are an integral part of these financial statements.
6.
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ANCHOR INTERNATIONAL BOND TRUST
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
Value
Quantity (Note 1)
-------- --------
UNITED STATES TREASURY BILLS - 126.95%
$170,000 Treasury Bill, 5.08% yield, maturing 03/02/00 (at cost) . $ 167,817
----------
Total investments (cost $167,817)........................ 167,817
------------
CASH & OTHER ASSETS, LESS LIABILITIES - (26.95)%................... (35,623)
-----------
Total Net Assets......................................... $ 132,194
===========
The accompanying notes are an integral part of these financial statements.
7.
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ANCHOR INTERNATIONAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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. 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.
8.
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ANCHOR INTERNATIONAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(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, 1999, 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 $0. Net unrealized depreciation in investments at December
31, 1999 was $0.
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, 1999, investment advisory fees of $81 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.
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ANCHOR INTERNATIONAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
4. Certain transactions:
The Trust has entered into an agreement with Cardinal Investment Services,
Inc. for transfer agent and dividend disbursing agent services. Annual fees
for these services are $5,099.
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, 1999 were $16,899.
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, 1999.
At a meeting of the Board of Trustees on December 3, 1999, the board approved
in form a Plan of Liquidation and Dissolution of the Trust. In approving the
Plan of Liquidation and Dissolution, the Board considered the impact of the
withdrawal of the Trust's largest shareholder on the asset base of the Trust
and the subsequent impact on the Trust's expense ratio. The Trustees approved
and ratified the creation of a reserve fund in the amount of $26,598 for the
purpose of satisfying any and all reasonable costs and expenses which may be
incurred by the Trust in liquidating its assets.
5. Purchases and sales:
Aggregate cost of purchases and the proceeds from sales and maturities on
investments for the year ended December 31, 1999 were:
Cost of securities acquired:
U.S. Government and investments backed by such
securities......................................... $ 167,817
Other investments.................................. 151,657,043
---------------
$ 151,824,860
===============
Proceeds from sales and maturities:
U.S. Government and investments backed by such
securities........................................ $ --
Other investments................................. 156,333,842
---------------
$ 156,333,842
===============
10.
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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, 1999, 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, 1999 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, 1999, 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 7, 2000
11.
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ANCHOR INTERNATIONAL BOND TRUST
OFFICERS AND TRUSTEES
ERNIE BUTLER Trustee
President, I.E. Butler Securities
SPENCER H. LEMENAGER Trustee
President, Equity Inc.
DAVID W.C. PUTNAM Chairman
President, F.L. Putnam and Trustee
Investment Management Company
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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ANCHOR INTERNATIONAL BOND TRUST
INVESTMENT ADVISER AND ADMINISTRATOR
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
TRANSFER AGENT
Cardinal Investment Services Inc.
579 Pleasant St., Suite 4, Paxton, Massachusetts 01612
(508) 831-1171
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street, Boston, Massachusetts 02116
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 in 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 records or other pertinent information.
13.
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