===================================
ANCHOR
INTERNATIONAL
BOND
TRUST
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SEMI-ANNUAL REPORT
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JUNE 30, 2003
(UNAUDITED)
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1
ANCHOR INTERNATIONAL BOND TRUST
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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
[OBJECT OMITTED]
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Anchor International Bond Trust
Average Annual Total Return
========================================================================
Six Months * 1 Year 5 Year 10 Year
0.18% 0.00% (4.17%) (1.26%)
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* Not annualized for the period from December 31, 2002 to June 30, 2003.
The chart and graph shown above do not reflect the deduction of taxes a
shareholder might pay on distributions or redemptions.
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ANCHOR INTERNATIONAL BOND TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2003
(Unaudited)
Assets:
Cash ...(see Schedule of Investments, Notes 1, 2 & 5) $ 2,550
Receivables.......................................... 10,960
-----------
Total assets..................................... 13,510
-----------
Liabilities:
Accrued expenses and other liabilities (Note 3 )..... 1
-----------
Total liabilities................................ 1
-----------
Net Assets:
Capital stock (unlimited shares authorized at $1.00 par
value,amount paid in on 2,422 shares outstanding)
(Note 1)........................................... 2,299,572
Distributable earnings (Notes 1 & 4)................. (2,286,063)
-----------
Net assets (equivalent to $5.58 per share, based on
2,422 capital shares outstanding)............... $ 13,509
===========
The accompanying notes are an integral part of these financial statements.
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ANCHOR INTERNATIONAL BOND TRUST
STATEMENT OF OPERATIONS
JUNE 30, 2003
(Unaudited)
Income:
Interest............................................ $ 7
-----------
Total income..................................... 7
Expenses:
Miscellaneous expenses.............................. 0
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Total expenses................................... 0
-----------
Net investment income................................ 7
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Realized and unrealized gain (loss) on investments:
Realized gain (loss) on investments-net........... --
Increase (decrease) in net unrealized appreciation
in investments.................................... --
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Net gain (loss) on investments................... --
-----------
Net increase in net assets resulting from operations. $ 7
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The accompanying notes are an integral part of these financial statements.
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ANCHOR INTERNATIONAL BOND TRUST
STATEMENTS OF CHANGES IN NET ASSETS
Six Months
Ended Year Ended
June 30, December
2003 31, 2002
---------------------------
From operations:
Net investment income (loss)............ $ 7 (4)
Realized loss on investments, net....... -- --
Decrease (increase) in net unrealized
appreciation in investments............ -- --
------------ ------------
Net increase (decrease) in net assets
resulting from operations........... 7 (4)
------------ ------------
Distributions to shareholders:
From net investment income ............. -- --
From net realized gain on investments... -- --
------------ ------------
Total distributions to shareholders.. -- --
------------ ------------
From capital share transactions:
Number of Shares
2003 2002
--------- ---------
Proceeds from sale of
shares.............. -- -- -- --
Shares issued to
shareholders in
distributions
reinvested............ -- -- -- --
Cost of shares
redeemed.............. 0 (875) (2) (4,891)
--------- --------- --------- -----------
Decrease in net assets
resulting from
capital share
transactions.......... -- (875) (2) (4,891)
========= ========= --------- -----------
Net increase (decrease) in net assets.... 5 (4,895)
Net assets:
Beginning of period.................... 13,504 18,399
------------ ------------
End of period (including undistributed
net investment income of $237,576 and
$237,569,respectively)................ $ 13,509 $ 13,504
============ ============
The accompanying notes are an integral part of these financial statements.
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ANCHOR INTERNATIONAL BOND TRUST
FINANCIAL HIGHLIGHTS
(for a share outstanding throughout each period)
Six Months
Ended Year Ended December 31,
June 30,2003
(Unaudited) 2002 2001 2000 1999
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Investment income..... $0.02 $(331.33)$(970.63) $(274.76)$(140.99)
Expenses, net......... 0.00 (357.34) (992.91) (353.01) (112.55)
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Net investment income. 0.02 26.01 22.28 78.25 (28.44)
Net realized and
unrealized
gain (loss) on
investments........... (0.01) (26.02) (22.31) (79.25) 27.44
Distributions to
shareholders:
From net investment
income............. -- -- -- -- --
From net realized
gain
on investments.... -- -- -- -- --
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Net increase
(decrease)
in net asset value... 0.01 (0.01) (0.03) (1.00) (1.00)
Net asset value:
Beginning of period.. 5.57 5.58 5.61 6.61 7.61
------------------------------------------------
End of period........ $5.58 $5.57 $5.58 $5.61 $6.61
================================================
Total Return.......... 0.18% (0.18%) (0.53%) (15.13%) (13.14%)
Ratio of expenses to
average net assets... 0.00% 0.31% 2.95% 8.04% 2.20%
Ratio of net
investment in-
come to average net
assets................ 0.10% (0.02%) (0.07%) (1.78%) 0.56%
Average commission
rate paid............. -- -- -- -- --
Number of shares out-
standing at end of
period................ 2,422 2,423 3,298 4,774 19,986
The accompanying notes are an integral part of these financial statements.
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ANCHOR INTERNATIONAL BOND TRUST
SCHEDULE OF INVESTMENTS
JUNE 30, 2003
(Unaudited)
Value
Quantity (Note 1)
CASH & OTHER ASSETS, LESS LIABILITIES - 100.00%.........$ 13,509
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Total Net Assets...............................$ 13,509
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The accompanying notes are an integral part of these financial statements.
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ANCHOR INTERNATIONAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(Unaudited)
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.
At a meeting of the Board of Trustees on December 18, 2000, after discussions
with the Trust's investment adviser, independent accountant, counsel and
administrator, the Board determined that the continued operation of the Trust
was not economically feasible under its current structure. After careful
consideration of various alternatives, the full Board concluded that the
conversion of the Trust to an income fund managed by F. L. Putnam Investment
Management Company was the alternative that was in the best interests of the
shareholders of the Trust. The Board then unanimously approved the plan to
convert the Trust to an income fund and directed that it be submitted to the
Trust's shareholders for consideration.
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.
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ANCHOR INTERNATIONAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(Unaudited)
(Continued)
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, there
were no permanent differences. No reclassification was necessary.
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 June 30, 2003, the Trust held no investments. As a result, there was no
aggregate gross unrealized appreciation in investments in which there was an
excess of market value over tax cost. There was no aggregate gross unrealized
depreciation in investments in which there was an excess of tax cost over
market value. Net unrealized depreciation in investments at June 30, 2003 was
$0.
3. Investment advisory service agreements:
At meetings of the Board of Trustees on December 13, 2001, and December 6,
2002, the Trustees voted to approve an interim investment advisory contract
between the Trust and F.L. Putnam Investment Management Company (the new
"investment adviser"). The interim investment advisory contract is identical
to the previous contract and 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.
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ANCHOR INTERNATIONAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(Unaudited)
(Continued)
At June 30, 2003, investment advisory fees of $0 were due and were included
in "Accrued expenses and other liabilities" in the accompanying Statement of
Assets and Liabilities. David W.C. Putnam, a Trustee of the Trust, is a
Director of the Investment Adviser.
4. Certain transactions:
Certain officers and trustees of the Trust are directors and/or officers of
the investment adviser and distributor. Wincanton Partners (formerly
Meeschaert & Co., Inc.), the Trust's distributor, received no brokerage
commissions during the six months ended June 30, 2003.
As of June 30, 2003, the components of distributable earnings on a tax basis
were as follows:
Accumulated undistributed net investment
income.................................... $ 237,576
Accumulated realized loss from securities
transactions.............................. (2,523,639)
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$(2,286,063)
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5. Purchases and sales:
Aggregate cost of purchases and the proceeds from sales and maturities on
investments for the six months ended June 30, 2003 were:
Cost of securities acquired:
U.S. Government and investments backed by
such securities.............................. $ 0
Other investments.......................... 0
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$ 0
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Proceeds from sales and maturities:
U.S. Government and investments backed by
such securities.............................. $ 0
Other investments.......................... 0
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$ 0
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ANCHOR INTERNATIONAL BOND TRUST
OFFICERS AND TRUSTEES
ERNIE BUTLER Trustee
President, I.E. Butler Securities
SPENCER H. LE MENAGER Trustee
President, Equity Inc.
DAVID W.C. PUTNAM Chairman
President, F.L. Putnam and Trustee
Securities Company, Incorporated
J. STEPHEN PUTNAM Vice President and
President, Robert Thomas Securities Treasurer
DAVID Y. WILLIAMS President, Secretary
President and Director, Wincanton and Trustee
Partners,
President and Director, Anchor Investment
Management Corporation
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ANCHOR INTERNATIONAL BOND TRUST
INVESTMENT ADVISER
F.L. Putnam Investment Management Company
20 Williams Street, Wellesley, Massachusetts 02481
(800) 344-3435
DISTRIBUTOR
Wincanton Partners
579 Pleasant Street, Suite 4, Paxton, Massachusetts 01612
ADMINISTRATOR AND TRANSFER AGENT
Cardinal Investment Services,Inc.
579 Pleasant Street, 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 Street, Suite 380, Wellesley, Massachusetts 02482
LEGAL COUNSEL
Thorp Reed & Armstrong
One Oxford Center, Pittsburgh, Pennsylvania 15219
This report is submitted for the general information of shareholders of the
Anchor International Bond Trust. It is not authorized for distribution to
prospective investors unless accompanied or preceded by an effective Prospectus
for the Trust. The Prospectus includes more complete information about
management fees and expenses. Please read the Prospectus carefully.
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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Information with respect to Disclosure Controls and Procedures
The Registrant's Chief Executive Officer and Chief Financial Officer, based on
their evaluation of the Registrant's disclosure controls and procedures as of
June 30, 2003, have concluded that such controls and procedures are adequately
designed to ensure that information required to be disclosed by the Registrant
in its reports that it files or submits under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the
time periods specified in the Security & Exchange Commission rules and forms,
including, without limitation, that such controls and procedures are designed to
ensure that such information is accumulated and communicated to the Registrant's
management, including the Chief Executive Officer and Chief Financial Officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
There were no significant changes in the Registrant's internal controls or in
other factors that could significantly affect these controls subsequent to
the date of the most recent evaluation, including that there has been no
corrective actions with regard to significant deficiencies and material
weaknesses.
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