ANCHOR INTERNATIONAL BOND TRUST
N-30D, 1998-08-28
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                                     ANCHOR
                                  INTERNATIONAL
                                      BOND
                                      TRUST



                               SEMI-ANNUAL REPORT
                                  JUNE 30, 1998

                                   (UNAUDITED)





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- --------------------------------------------------------------------------------
                         ANCHOR INTERNATIONAL BOND TRUST
- --------------------------------------------------------------------------------


                       STATEMENT OF ASSETS AND LIABILITIES
                                  JUNE 30, 1998
                                   (Unaudited)


Assets:
Investments at quoted market value (cost $18,712,924 ;
 see Schedule of Investments, Notes 1, 2, & 5).................    $17,833,871
Cash  .........................................................         14,343
Interest receivable............................................        370,299
Other assets...................................................            442
                                                                 --------------
     Total assets..............................................     18,218,955
                                                                 --------------

Liabilities:
Payable for capital shares redeemed............................         15,173
Accrued expenses and other liabilities (Note 3 )...............         25,785
                                                                 --------------
     Total liabilities.........................................         40,958
                                                                 --------------

Net Assets:
Capital stock (unlimited shares authorized at $1.00 par value,
 amount paid in on 2,408,598 shares outstanding) (Note 1)......     20,057,303
Accumulated undistributed net investment income (Note 1).......        300,308
Accumulated realized loss from security transactions, net (Note 1)  (1,300,561)
Net unrealized depreciation in value of investments (Note 2)...       (879,053)
                                                                 --------------
     Net assets (equivalent to $7.55 per share, based on
      2,408,598 capital shares outstanding)....................    $18,177,997
                                                                 ==============




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                         ANCHOR INTERNATIONAL BOND TRUST
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                             STATEMENT OF OPERATIONS
                                  JUNE 30, 1998
                                   (Unaudited)



Income:
 Interest......................................................   $    450,894
                                                                   ------------
     Total income..............................................        450,894
                                                                   ------------

Expenses:
 Management fees, net (Note 3).................................         69,485
 Pricing and bookkeeping fees (Note 4).........................         13,661
 Audit and accounting fees.....................................          8,498
 Legal fees....................................................          5,898
 Custodian fees................................................          2,513
 Transfer fees (Note 4)........................................          2,571
 Trustees' fees and expenses...................................          1,250
 Other expenses................................................          3,934
                                                                   ------------
     Total expenses............................................        107,810
                                                                   ------------

Net investment income..........................................        343,084
                                                                   ------------

Realized and unrealized loss on investments:
  Realized loss on investments-net.............................       (223,658)
  Decrease in net unrealized appreciation in investments.......          96,348
                                                                   ------------
     Net loss on investments...................................       (127,310)
                                                                   ============

Net decrease in net assets resulting from operations...........   $    215,774
                                                                   ============


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                         ANCHOR INTERNATIONAL BOND TRUST
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                       STATEMENTS OF CHANGES IN NET ASSETS




                                                 Six Months Ended
                                                  June 30, 1998    Year Ended
                                                   (Unaudited)    December 31,
                                                                      1997
                                               --------------------------------
From operations:
 Net investment income...........................  $   343,084     $   643,227

 Realized loss on investments, net...............     (223,658)     (1,490,229)
 Decrease in net unrealized
  appreciation in investments....................        96,348     (1,665,072)
                                                   --------------  ------------
     Net decrease in net assets resulting from          215,774     (2,512,074)
operations.......................................
                                                   --------------  ------------
Distributions to shareholders:
 From net investment income.....................       --              --
 From net realized gain on investments..........       --              --
                                                   --------------  ------------
     Total distributions to shareholders.........      --              --
                                                   --------------  ------------
From capital share transactions:

                                Number of Shares
                                    1998 1997
                            ---------- -----------
 Proceeds from sale of
   shares...................  --        108,473        --              856,741
 Shares issued to share-
  holders in distributions
  reinvested................  --          --           --              --
 Cost of shares redeemed....(160,902)  (675,286)    (1,203,484)     (5,283,667)
                           ----------  -----------   ==========     ===========
 Decrease in net assets
  resulting from capital
share                       (160,902)  (566,813)    (1,203,484)     (4,426,926)
  transactions..............
                            ========== =========== --------------  ------------

Net decrease in net assets.......................     (987,710)     (6,939,000)
Net assets:
  Beginning of period............................   19,165,707      26,104,707
                                                   ==============  ============
  End of period (including undistributed net
   investment income of $300,308 
   and $(42,776), respectively)                    $18,177,997     $19,165,707
                                                   =============   ============


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                         ANCHOR INTERNATIONAL BOND TRUST
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                       SELECTED   PER  SHARE  DATA  AND  RATIOS  
                 (for  a  share outstanding throughout each period)

                          Six Months
                             Ended
                           June 30,             Year Ended December 31,
                             1998
                          (Unaudited)    1997       1996        1995       1994
                          -----------------------------------------------------

Investment income......... $ 0.18     $  0.42      $0.35       $0.89      $0.19
Expenses, net.............   0.04        0.11       0.09        0.17       0.04
                          ------ ----------------------------------------------
Net investment income.....   0.14        0.31       0.26        0.72       0.15
Net realized and
unrealized                  (0.05)      (1.17)     (0.69)       0.69       0.48
 gain (loss) on
investments...............
Distributions to
shareholders:
  From net investment
   income.................  --          --         --          (0.73)     (0.44)
  From net realized gain
   on  investments........  --          --         --          --         --
                          ------  ------------  ---------- ----------- --------
Net increase (decrease)
 in net asset value.......   0.09       (0.86)     (0.43)       0.68       0.19
Net asset value:
 Beginning of period......   7.46        8.32       8.75        8.07       7.88
                          ======= =============  =========== =========  =======
 End of period............  $7.55       $7.46      $8.32       $8.75      $8.07
                          ======= =============  =========== =========  =======
Ratio of expenses to
 average net assets.......  1.15%       1.11%      1.06%       1.06%      1.09%
Ratio of net investment
 income to average net
 assets.................... 3.67%       3.16%      3.19%       4.40%      3.90%
Portfolio turnover........   --          --         --          --         --
Number of shares out-
 standing at end
 of period...........  2,408,598   2,569,500   3,136,313  3,205,516   2,340,990



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                         ANCHOR INTERNATIONAL BOND TRUST
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                             SCHEDULE OF INVESTMENTS
                                  JUNE 30, 1998
                                   (Unaudited)
                                                                      Value
  Quantity                                                           (Note 1)
 FOREIGN BONDS -- 46.46%
           German Mark -- 21.29%
 1,550,000 Bundesobl, 5.060%, due 05/21/01.......................... $ 868,310
 2,000,000 Deutsch Bundespost, 6.25%, due 10/01/03.................. 1,179,800
 3,000,000 Deutschland, 7.125%, due 12/20/02........................ 1,822,500
                                                                    -----------
                                                                     3,870,610
                                                                    -----------
           Netherlands Guilders -- 25.17%
 1,500,000 ABN-AMRO Bank, 6.375%, due 04/21/00......................   764,250
 2,000,000 Bank Voor Nederlandse Gemeenten, 7.00%, due 03/10/03..... 1,080,400
 2,000,000 Nederland, 7.25%, due 10/01/04........................... 1,125,200
 2,000,000 Nederlands, 6.50%, due 04/15/03.......................... 1,070,000
 1,000,000 Nederlandse Waterschapsbank, 6.625%, due 07/21/03........   534,700
                                                                    -----------
                                                                     4,574,550
                                                                    -----------
                                                                    -----------
           Total foreign bonds (cost $9,335,588).................... 8,445,160
                                                                    -----------


 U.S. GOVERNMENT BONDS -- 32.62%
 5,918,000 U.S. Treasury Note, maturing 02/15/06,
            at 5.625% (cost 5,915,737).............................. 5,929,244


 FOREIGN TIME DEPOSITS -- 19.03%
  432,271  British Pound Sterling, maturing 07/01/98,
            at 7.125%...............................................   721,893
 5,563,044 Netherland Guilder, maturing 07/01/98,
            at 3.25% ............................................... 2,737,574
                                                                    -----------
           Total foreign time deposits (cost $3,461,599)............ 3,459,467
                                                                    -----------

           Total investments (cost $18,712,924).....................17,833,871
                                                                    -----------
                                                                    -----------

 CASH & OTHER ASSETS, LESS LIABILITIES -- 1.89%.....................   344,126
                                                                    -----------

           Total Net Assets.........................................$18,177,997
                                                                    ===========


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                         ANCHOR INTERNATIONAL BOND TRUST
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                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998
                                   (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.  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.


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                         ANCHOR INTERNATIONAL BOND TRUST
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                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998
                                   (Unaudited)

                                   (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 June 30,  1998,  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 $13,507.  Aggregate gross unrealized
   depreciation  in  investments  in which  there was an excess of tax cost over
   market value was $892,560. Net unrealized depreciation in investments at June
   30, 1998was $879,053.
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 June 30, 1998,  investment advisory fees of $10,865 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.
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 six months ended June 30, 1998 were $2,571.
   Fees earned by Anchor Investment Management  Corporation for expenses related
   to daily pricing of the Trust shares and for bookkeeping services for the six
   months ended June 30, 1998 were $13,661.



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                         ANCHOR INTERNATIONAL BOND TRUST
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                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1998
                                   (Unaudited)

                                   (Continued)


5. Purchases and sales:
   Aggregate  cost of purchases  and the proceeds from sales and maturities on
   investments for the six months ended June 30, 1998 were:
     Cost of securities acquired:
       U.S. Government and investments backed by such                 
        securities......................................    $   9,866,343
       Other investments................................      164,003,339
                                                            ===============
                                                            $ 173,869,682
                                                            ===============
     Proceeds from sales and maturities:
       U.S. Government and investments backed by such       
     securities........................................     $  3,950,606
       Other investments................................     170,775,274
                                                            ===============
                                                            $174,725,880
                                                            ===============


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                         ANCHOR INTERNATIONAL BOND 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

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

DAVID Y. WILLIAMS                                     President
President and Director, Meeschaert & Co., Inc.,       and Trustee
President and Director, Anchor Investment
Management Corporation



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                         ANCHOR INTERNATIONAL BOND 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 02181

                                  LEGAL COUNSEL
                             Thorp Reed & Armstrong
              One Riverfront Center, Pittsburgh, Pennsylvania 15222






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