ANCHOR
RESOURCE
AND
COMMODITY
TRUST
ANNUAL REPORT
DECEMBER 31, 1998
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ANCHOR RESOURCE AND COMMODITY TRUST
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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]
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ANCHOR RESOURCE AND COMMODITY TRUST
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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
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ANCHOR RESOURCE AND COMMODITY TRUST
STATEMENT OF OPERATIONS
DECEMBER 31, 1998
Income:
Dividends..................................................... $ 78,398
Interest...................................................... 76,305
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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
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Total expenses............................................ 98,382
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Net investment income.......................................... 56,321
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Realized and unrealized loss on investments:
Realized loss on investments-net............................. (670,858)
Decrease in net unrealized appreciation in investments....... (1,092,930)
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Net loss on investments................................... (1,763,788)
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Net decrease in net assets resulting from operations........... $ (1,707,467)
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ANCHOR RESOURCE AND COMMODITY 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 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.......... -- --
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Total distributions to shareholders......... (70,599) --
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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
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ANCHOR RESOURCE AND COMMODITY TRUST
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SELECTED PER SHARE DATA AND RATIOS
Year Ended December 31,
1998 1997 1996 1995 1994
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Investment income........... $1.97 $0.22 $0.15 $0.89 $0.22
Expenses, net............... 1.25 0.13 0.09 0.32 2.20
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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........... -- -- -- -- --
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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
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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)%
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ANCHOR RESOURCE AND COMMODITY TRUST
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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
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Total common stocks (cost $383,400)...................... 41,900
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FOREIGN TIME DEPOSITS -- 95.79%
4,937,086 French Franc, maturing 01/04/99,
at 2.875% (cost $883,244)............................... 882,751
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Total investments (cost $1,266,644)...................... 924,651
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CASH & OTHER ASSETS, LESS LIABILITIES -- (0.34)%................... (3,116)
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Total Net Assets.........................................$ 921,535
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ANCHOR RESOURCE AND COMMODITY TRUST
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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.
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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.
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ANCHOR RESOURCE AND COMMODITY TRUST
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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
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$ 41,818,027
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Proceeds from sales and maturities:
U.S. Government and investments backed by such
securities....................................... $ 4,393,989
Other investments................................ 45,345,340
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$ 49,739,329
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ANCHOR RESOURCE AND COMMODITY TRUST
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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.
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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 RESOURCE AND COMMODITY TRUST
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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.
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