<PAGE> 1
ANCHOR
SERIES
TRUST
SEMIANNUAL
REPORT
JUNE 30, 1998
<PAGE> 2
- ---------------------
DEAR INVESTOR:
We are pleased to present our semiannual report for the Anchor
Series Trust, the underlying investment for the ICAP II Variable
Annuity from Anchor National Life Insurance Company and First
SunAmerica Life Insurance Company.
The following information is from Wellington Management
Company, LLP ("Wellington"), the investment subadviser for the
Anchor Series Trust. Wellington provides this material to give
you some insight into the markets over the past six months and
how conditions affected the performance of your underlying
investments.
FINANCIAL MARKETS
The U.S. equity markets were strong during the first half of
1998, with large-cap stocks (S&P 500 Index up 17.7%) generally
outperforming small-caps (Russell 2000 Index up 4.9%). Growth
stocks generally outperformed value stocks. Despite weakness
during the second quarter induced by the Asian crisis,
international stocks also posted strong returns for the first
half of the year. The MSCI All Country World Free (ex-U.S.)
Index was up 12.0% for the period. The U.S. bond market, as
measured by the bellwether Lehman Aggregate Index, posted a
respectable 3.9% return for the six months. International bond
markets, represented by the Salomon Brother's World Government
Non-U.S., Hedged Index returned 5.4% for the first half of the
year. On an unhedged basis the same Index returned 2.1% due to
the strength of the U.S. dollar during the period.
GLOBAL ECONOMIC OVERVIEW
The Asian crisis is being felt around the world. The U.S. is
experiencing sharp declines in exports to Asia, and the
beginnings of an import surge. The speed and magnitude of policy
response in Japan will be the critical factor affecting the
global economic landscape going forward. Europe is feeling the
Asian drag as well, but for the moment, strengthening domestic
demand on the Continent is providing more than an offset.
Falling global commodity prices are penalizing producer profits,
hurting some emerging economies (e.g., Chile and Russia) and
sending key currencies (Australian dollars and Canadian dollars)
lower.
We expect the U.S. economy will continue to be characterized
by healthy consumer demand, a widening trade gap and an eventual
deceleration in capital spending. We forecast Real GDP to grow
3.0% on average in 1998 and 2.5% in 1999 -- a slowing from
1997's 3.8% advance. The 1998 estimate reflects an upward
revision due to continued strength in consumer expenditures.
Weak commodity prices and falling import prices will put further
downward pressure on inflation. The corporate profits slowdown
is unfolding as expected, reflecting slower global growth and
pressure on margins. Federal Reserve policy is on hold for now,
with the next move likely to be lower, not higher short-term
interest rates.
Within this context, Wellington provides the following
investment comments for each of the twelve Anchor Series Trust
Portfolios for the six months ended June 30, 1998.
EQUITY PORTFOLIOS
The Growth and Income Portfolio seeks high current income and
long-term capital appreciation through investment in common
stocks. The portfolio benefited from its focus on
large-capitalization U.S. stocks during the first six months of
1998 providing investors with a 18.6% return, well ahead of the
Lipper category of Growth and Income variable annuity funds'
average return of 12.3%, and beating the S&P 500's return of
---------------------
1
<PAGE> 3
- ---------------------
17.7%. As of June 30, the portfolio's largest sector positions
were as follows: 19% in finance, 16% in information technology,
13% in healthcare, and 11% in consumer staples. The portfolio
was 93% invested in stocks of over $10 billion in market
capitalization.
The Growth Portfolio seeks capital appreciation through
investments in larger and medium-sized companies that have
records of above-average growth and continued prospects for
solid growth in the future. The portfolio invests in
high-quality companies across the range of market
capitalization. The Growth Portfolio provided a 17.7% return in
the first six months of 1998, ahead of the Lipper category of
Growth variable annuity funds which on average returned 16.2%
over this time period. The Growth Portfolio on a net basis
matched the S&P 500's gross level return. Major sector
concentrations as of June 30, 1998 were as follows: 22%
information technology, 20% in finance, 13% in healthcare and
10% in industrial & commercial. The portfolio was positioned
with 13% of assets invested in stocks which are below $2 billion
in market capitalization, 13% in stocks between $2 billion and
$10 billion, and 74% in stocks above $10 billion in market
capitalization.
The Capital Appreciation Portfolio seeks long-term capital
appreciation through investments in growth equity securities
that are widely diversified by industry and company. These
securities will generally consist of a great proportion of
smaller companies that may be newer and less seasoned, or that
represent new or changing industries. The Capital Appreciation
Portfolio provided investors with a 16.6% return for the first
six months of 1998, ahead of the Lipper category of Capital
Appreciation variable annuity funds' average return of 15.6%.
The portfolio's return is in line with its mandate of investing
across the market capitalization spectrum. The portfolio's major
investments at the end of June were in the following sectors:
28% in information technology, 19% in information &
entertainment, 13% in healthcare and 11% in consumer
discretionary. In terms of market capitalization, 32% was
invested in stocks of below $2 billion in market capitalization,
28% was between $2 and $5 billion, 5% was between $5 and $10
billion, and 35% was invested in stocks of above $10 billion
market capitalization.
The Foreign Securities Portfolio seeks long-term capital
appreciation through investment in a diversified portfolio of
equity securities issued by foreign companies and denominated in
foreign currencies. The Foreign Securities Portfolio provided
investors with a 14.3% return for the first six months of 1998,
below the Lipper category of International variable annuity
funds' average return of 16.3%, but ahead of the MSCI All
Country World Free (ex-U.S.) Index which returned 12.0%. An
overweight position in developed Europe, and underweight
positions in Japan, Hong Kong, Malaysia and emerging Asian
markets were generally additive to returns relative to the
benchmark. At the end of June, the portfolio's regional
allocation was: 70% in developed Europe, 11% in Japan, 5% in
developed Asia, 5% in emerging markets (primarily Latin
America), 1% in Canada and 8% in cash and cash equivalents.
The Natural Resources Portfolio seeks to outpace inflation
through investments in natural resource companies around the
world. While the portfolio's return of -3.6% for the first six
months of the year was disappointing, it was ahead of the Lipper
category of Natural Resource variable annuity funds' average
return of -6.2%. Hurt by stagnant or declining commodity prices
and slowing global economies, several global natural resources
sectors experienced negative returns for the six month period.
However, our analysis of capacity utilization, demand trends,
and current levels of investment in the natural resource sectors
leads us to conclude that recent trends are unsustainable. We
believe the underlying case for these important commodities is
positive over a long-term time-frame. The portfolio on June 30
was comprised of 40% energy stocks, 36% in metals and minerals
including
- ---------------------
2
<PAGE> 4
- ---------------------
fulfilling the prospectus requirement of 25% in gold related
stocks, 10% in real estate, 8% in forest products & paper, and
6% in cash and cash equivalents.
FIXED INCOME PORTFOLIOS
The Money Market Portfolio provided a 2.49% return, slightly
behind the 2.54% average return of the Lipper category of Money
Market variable annuity funds. We believe the economic factors
mentioned earlier will keep the central bank on hold. If
inflation continues to surprise on the low side of expectations,
the Fed may possibly have room to lower short term rates later
in the year. In this scenario, our strategy is to continue to
bias the portfolio's maturity on the long side and to lock in
high yields when the markets get fearful of Fed tightening. On
June 30, 1998 the portfolio had a weighted average maturity of
60 days and was comprised of 65% commercial paper, 18% bank
product cash equivalents and 17% floating rate notes.
The Government and Quality Bond Portfolio seeks to provide
relatively high current income, liquidity and security of
principal. The Government and Quality Bond Portfolio provided
investors with a 4.1% return for the six months ended June 30,
1998, outperforming the Lipper category of General U.S.
Government variable annuity funds which returned 3.7% on
average, and the Lehman Aggregate Index's gross level return of
3.9%. The portfolio at the end of June had an effective duration
of 4.8 years, compared to 4.6 years for the Lehman Aggregate.
Portfolio holdings were diversified by sectors as follows: 49%
in U.S. Government and Agency securities, 27% in mortgage-backed
securities, 21% in investment grade corporate bonds, 2% in asset
backed securities and 1% in cash equivalents.
The Fixed Income Portfolio seeks to generate a high level of
current income that is, at the same time, consistent with
preservation of principal through investments in corporate bonds
and U.S. government securities. For the six months ended June
30, 1998, the Fixed Income Portfolio returned 4.1%, slightly
ahead of the Lipper category of Corporate Debt A-Rated variable
annuity funds which returned 4.0% on average, and in line with
the Lehman Government/Corporate Index's gross level return of
4.2%. The portfolio was positioned at the end of June with an
effective duration of 5.6 years, compared to 5.4 years for the
Lehman Government/Corporate Index. In terms of sector exposure
the portfolio was invested as follows: 36% in U.S. Government
and Agency securities, 36% in investment grade corporate bonds,
15% in non-investment grade securities, 12% in mortgage-backed
securities, and 1% in cash and cash equivalents.
The High Yield Portfolio seeks to provide high current income
and capital appreciation by investing in corporate bonds rated
BBB/Baa or lower. The High Yield Portfolio provided investors
with a 4.1% return on a net basis for the first six months of
1998, below the Lehman High Yield Index gross level return of
4.5%, and the Lipper category of High Yield variable annuity
funds which returned 4.6% on average. In light of the Asian
crisis, the portfolio's performance has been negatively affected
recently by its small exposure to U.S. dollar denominated
emerging market credits. We have selectively added to certain of
these issuers even as they came under pressure because we
believe that long term, many of these issuers offer stronger
credit potential than lower rated, domestic high yield issuers.
This is consistent with our strategy of focusing on issuers that
we believe offer prospects for credit improvement. On June 30,
the portfolio's fixed income holdings were comprised of 1% Baa
and split rated securities, 15% Ba rated securities, 63% B rated
securities, and 21% below B or unrated securities. In terms of
corporate sector weightings the largest areas of investment were
17% in telecommunications, 9% in paper & packaging, 8% in energy
and 7% each in financial services and basic industries.
---------------------
3
<PAGE> 5
- ---------------------
The Target '98 Portfolio is structured to mature in November
of 1998. Given this approaching date the portfolio provided
investors with a return of 2.4% for the first six months of
1998. The portfolio's investment objective requires that the
portfolio be close to fully invested at all times. Our strategy
continues to focus on U.S. Treasury and Agency zero coupon bonds
and occasionally high quality corporate bonds.
BALANCED PORTFOLIOS
The Multi-Asset Portfolio seeks to provide investors with
long-term total investment return consistent with moderate
investment risk. The portfolio achieves this objective through a
weighting of approximately 60% in U.S. core equities and 40% in
U.S. investment grade bonds. The Multi-Asset Portfolio returned
14.6% for the first six months of 1998, outperforming the Lipper
category of Flexible variable annuity funds which returned 9.7%
on average for the period. Strong overall security selection and
asset allocation strategy were both beneficial to returns during
the first half of the year. The portfolio's effective asset
class exposure at the end of June was comprised of 61.4%
equities, 32.3% fixed-income securities, and 6.3% cash
equivalents.
The Strategic Multi-Asset Portfolio seeks to obtain high
long-term total investment return through investment in core
global stocks, aggressive stocks and global fixed income
securities including high yield securities. The Strategic
Multi-Asset Portfolio provided investors a 13.9% return for the
six months ended June 30, 1998. These results were well ahead of
the Lipper category of Global Flexible variable annuity funds'
average return of 9.2% for the same period, and in fact placed
the portfolio as the top ranked fund in this category for the
six month period. Strong overall security selection and asset
allocation strategy were also beneficial for this portfolio. The
portfolio's effective asset class exposure at the end of June
was as follows: 32.7% core global equities, 29.9% aggressive
equities, 29.0% global fixed income including high yield
securities and 8.4% cash equivalents.
This concludes the overview from Wellington Management
Company. We look forward to reporting to you once again in six
months' time, and we appreciate the confidence you place in us
with your retirement assets.
Sincerely,
/s/ ELI BROAD
--------------
Eli Broad
Chairman and Chief Executive Officer,
Anchor National Life Insurance Company
First SunAmerica Life Insurance Company
August 25, 1998
-------------------------------
Note: All performance figures quoted are for the Anchor Series
Trust. They do not reflect fees and charges associated with the
variable annuity. Past performance is no guarantee of future
results.
Investments in stocks and bonds are subject to risk, including
stock market and interest rate fluctuations. Investments in
non-U.S. stocks and bonds are subject to additional risks,
including fluctuations, political and social instability,
differing securities regulations and accounting standards and
limited public information. High-yield bonds tend to be subject
to greater price swings than higher-rated bonds and, of course,
payment of interest and principal is not assured. Mortgage-
backed securities are subject to prepayment, which can result in
reinvestment of principal at lower yields. Investments in
securities related to gold or other precious metals and minerals
are considered speculative and are impacted by a host of
worldwide economic, financial and political factors. Money
market instruments generally offer stability and income, but an
investment in these securities is not guaranteed by the U.S.
government or any other entity.
- ---------------------
4
<PAGE> 6
- ---------------------
ANCHOR SERIES TRUST
MONEY MARKET PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES -- 101.5% AMOUNT VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
BANK NOTES -- 17.0%
Bank Of Nova Scotia 5.83% due 10/02/98...................... $ 2,000,000 $ 1,999,156
Bank One Wisconsin 5.55% due 2/23/99........................ 1,000,000 999,623
Bankers Trust Co. 6.01% due 12/10/98........................ 2,000,000 2,000,085
Chase Manhattan Corp. 5.70% due 7/02/99..................... 1,000,000 999,330
Deutsche Bank AG 5.82% due 5/04/99.......................... 1,500,000 1,499,276
Regions Bank 5.77% due 5/21/99.............................. 1,500,000 1,499,617
Societe Generale 5.68% due 3/22/99.......................... 1,500,000 1,499,065
Svenska Handelsbanken 5.74% due 6/01/99..................... 1,500,000 1,499,077
------------
TOTAL BANK NOTES (cost $11,995,229)......................... 11,995,229
------------
COMMERCIAL PAPER -- 66.2%
AON Corp. 5.57% due 7/16/98................................. 2,500,000 2,494,198
Apreco, Inc. 5.54% due 7/24/98.............................. 2,200,000 2,192,213
Avon Capital Corp. 5.56% due 7/08/98........................ 2,500,000 2,497,297
Bear Stearns Cos., Inc. 5.53% due 7/23/98................... 2,300,000 2,292,227
BP Capital PLC 6.25% due 7/01/98............................ 1,455,000 1,455,000
Delaware Funding Corp. 5.57% due 7/15/98.................... 2,500,000 2,494,585
Diageo Capital PLC 5.55% due 7/31/98........................ 2,000,000 1,990,750
Fina Oil & Chemical Co. 5.53% due 7/21/98................... 2,000,000 1,993,856
Fleet Funding Corp. 5.56% due 7/16/98....................... 2,500,000 2,494,208
General Electric Capital Corp. 5.39% due 8/10/98............ 2,000,000 1,988,022
Goldman Sachs Group L.P. (The) 6.25% due 7/01/98............ 2,500,000 2,500,000
Greenwich Funding Corp. 5.58% due 7/15/98................... 2,500,000 2,494,575
GTE Funding, Inc. 5.52% due 7/09/98......................... 1,695,000 1,692,921
Merrill Lynch & Co., Inc. 5.54% due 7/31/98................. 2,000,000 1,990,767
Metlife Funding, Inc. 5.55% due 7/27/98..................... 2,000,000 1,991,983
Montana Blanc Capital Corp. 5.58% due 7/14/98............... 2,121,000 2,116,726
Morgan Stanley Group (Europe) PLC 5.51% due 7/17/98......... 1,695,000 1,690,849
Park Avenue Recreation Corp. 5.50% due 7/08/98.............. 2,000,000 1,997,861
Petrofina DE, Inc. 5.53% due 7/09/98........................ 2,400,000 2,397,051
Preferred Receivables Funding Corp. 5.57% due 8/13/98....... 2,000,000 1,986,694
Prudential Funding Corp. 5.39% due 8/19/98.................. 2,000,000 1,985,327
Zeneca Wilmington, Inc. 5.48% due 7/15/98................... 2,000,000 1,995,738
------------
TOTAL COMMERCIAL PAPER (cost $46,732,848)................... 46,732,848
------------
CORPORATE SHORT-TERM NOTES -- 2.8%
Peoples Security Life Insurance Co. 5.82% due 8/03/98(1)
(cost $2,000,000)......................................... 2,000,000 2,000,000
------------
MEDIUM TERM NOTES -- 1.4%
Morgan (J.P.) & Co., Inc. 5.75% due 3/10/99
(cost $1,000,000)......................................... 1,000,000 1,000,000
------------
</TABLE>
---------------------
5
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES (CONTINUED) AMOUNT VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCIES -- 14.1%
Student Loan Marketing Association 5.32% due 7/07/98(1)
(cost $10,000,000)........................................ $10,000,000 $10,000,000
------------
TOTAL INVESTMENTS --
(cost $71,728,077) 101.5% 71,728,077
Liabilities in excess of other assets -- (1.5) (1,088,819)
------ -----------
NET ASSETS -- 100.0% $70,639,258
====== ===========
</TABLE>
-----------------------------
(1) Variable rate security -- the rate reflected is as of June 30,
1998; maturity date reflects next reset date
See Notes to Financial Statements
- ---------------------
6
<PAGE> 8
- ---------------------
ANCHOR SERIES TRUST
FIXED INCOME PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 96.9% AMOUNT VALUE
---------------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE & MILITARY TECHNOLOGY -- 0.3%
Argo Tech Corp. 8.63% 2007.................................. $ 20,000 $ 20,300
K & F Industries, Inc. 9.25% 2007........................... 10,000 10,100
Moog, Inc., Class B 10.00% 2006............................. 25,000 26,750
------------
57,150
------------
AUTOMOTIVE -- 0.1%
Johnstown America Industries, Inc. 11.75% 2005.............. 20,000 22,225
------------
CABLE -- 1.0%
Rifkin Acquisitions Partners L.P. 11.13% 2006............... 10,000 11,000
Tele-Communications, Inc. 9.25% 2002........................ 150,000 165,348
------------
176,348
------------
CHEMICALS -- 0.3%
Huntsman Corp. 9.50% 2007*.................................. 15,000 15,000
Laroche Industries, Inc. 9.50% 2007......................... 10,000 9,750
Pioneer Americas Acquisition Corp. 9.25% 2007............... 10,000 9,825
Sovereign Specialty Chemicals 9.50% 2007.................... 10,000 10,250
Texas Petrochemicals Corp. 11.13% 2006...................... 15,000 16,350
------------
61,175
------------
COMMUNICATIONS & MEDIA -- 3.7%
Allbritton Communications Co. 8.88% 2008.................... 15,000 16,200
Century Communications Corp. zero coupon 2008+.............. 25,000 11,344
EchoStar DBS Corp. 12.50% 2002.............................. 10,000 11,225
Granite Broadcasting Corp. 8.88% 2008*...................... 15,000 15,112
Innova S. de R.L. 12.88% 2007............................... 20,000 20,300
Jacor Communications Co. 8.75% 2007......................... 10,000 10,400
Lin Holdings Corp. zero coupon 2008+*(1).................... 30,000 20,100
MobileMedia Corp. 9.38% 2007+(3)............................ 50,000 15,500
News America Holdings, Inc. 9.25% 2013...................... 300,000 364,872
Nextel Communications, Inc. zero coupon 2007+(1)............ 60,000 39,150
Sullivan Graphics, Inc. 12.75% 2005......................... 20,000 20,950
Viacom, Inc. 7.75% 2005..................................... 100,000 106,545
------------
651,698
------------
CONSUMER DISCRETIONARY -- 1.8%
Accuride Corp. 9.25% 2008*.................................. 10,000 10,025
Collins & Aikman Corp. 11.50% 2006.......................... 15,000 16,650
Ford Motor Co. 9.00% 2001................................... 250,000 271,115
LDM Technologies, Inc. 10.75% 2007.......................... 20,000 21,000
------------
318,790
------------
CONSUMER STAPLES -- 0.1%
Revlon Worldwide Parent Ciro zero coupon 2001+.............. 20,000 15,550
------------
</TABLE>
- ---------------------
7
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
---------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY -- 2.0%
Abraxas Petroleum Corp. 11.50% 2004......................... $ 10,000 $ 10,350
Costilla Energy, Inc. 10.25% 2006*.......................... 20,000 20,250
Cross Timbers Oil Co. 9.25% 2007............................ 20,000 20,600
Dailey International, Inc. 9.50% 2008....................... 10,000 9,825
Energy Corp. America, Class A 9.50% 2007.................... 20,000 19,550
Newfield Exploration Co., Class B 7.45% 2007................ 45,000 45,756
Petroleos Mexicanos 8.85% 2007.............................. 25,000 24,607
Plains Resources, Inc. 10.25% 2006.......................... 20,000 21,350
Tesoro Petroleum Corp. 9.00% 2008*.......................... 15,000 15,000
YPF Sociedad Anonima 8.00% 2004............................. 160,000 161,168
------------
348,456
------------
FINANCE -- 20.8%
Abbey National First Capital 8.20% 2004..................... 250,000 275,270
Amerus Capital I 8.85% 2027................................. 150,000 159,417
Amresco, Inc. 9.88% 2005.................................... 10,000 10,213
Banponce Financial Corp. 6.75% 2001......................... 300,000 304,491
Credit National 7.00% 2005.................................. 190,000 192,661
Dime Capital Trust I, Series A 9.33% 2027................... 150,000 175,689
Equitable Cos., Inc. 7.00% 2028............................. 180,000 183,895
Export-Import Bank Korea 6.38% 2006......................... 250,000 189,240
Japan Finance Corp. Municipal Enterprises 9.13% 2000........ 400,000 426,440
KFW International Finance, Inc. 9.13% 2001.................. 400,000 432,980
Ohio National Life Insurance Co. 8.50% 2026*................ 200,000 231,720
Olympic Financial Ltd. 11.50% 2007.......................... 10,000 10,100
Pindo Deli Finance Mauritius Ltd. 10.75% 2007............... 10,000 6,925
Security Benefit Life Co. 8.75% 2016........................ 200,000 229,208
Sun Canada Financial Co. 7.25% 2015*........................ 300,000 325,131
Tembec Finance Corp. 9.88% 2005............................. 20,000 21,100
United States Bancorp 7.50% 2026............................ 400,000 447,312
Western Financial Savings Bank 8.88% 2007................... 25,000 23,656
------------
3,645,448
------------
FOOD & LODGING -- 0.3%
Aurora Foods, Inc. 8.75% 2008*.............................. 5,000 5,056
Del Monte Foods Co. zero coupon 2007+*(1)................... 25,000 16,344
Engle Homes, Inc. 9.25% 2008................................ 15,000 14,700
Standard Pacific Corp. 8.50% 2007........................... 15,000 15,225
------------
51,325
------------
GAMING -- 0.2%
Argosy Gaming Co. 13.25% 2004............................... 10,000 11,225
Hollywood Casino, Inc. 12.75% 2003.......................... 15,000 16,425
------------
27,650
------------
HEALTHCARE -- 1.9%
Allegiance Corp. 7.00% 2026................................. 150,000 153,289
Owens & Minor, Inc. 10.88% 2006............................. 35,000 38,150
Tenet Healthcare Corp. 7.88% 2003........................... 120,000 122,100
Universal Hospital Services, Inc. 10.25% 2008*.............. 15,000 15,000
------------
328,539
------------
</TABLE>
- ---------------------
8
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
---------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL & COMMERCIAL -- 3.3%
Boise Cascade Office Products Co. 7.05% 2005................ $ 190,000 $ 192,071
Cincinnati Milacron, Inc. 7.88% 2000........................ 150,000 153,290
Clark Schwebel, Inc. 10.50% 2006............................ 10,000 11,063
Comcast Cable Communications Corp. 8.50% 2027............... 150,000 177,360
Grove Worldwide LLC 9.25% 2008*............................. 15,000 14,963
MTL, Inc. 10.00% 2006*...................................... 10,000 9,950
Neenah Corp. 11.13% 2007.................................... 10,000 10,900
Wesco Distributor, Inc. 9.13% 2008*......................... 15,000 14,831
------------
584,428
------------
INFORMATION TECHNOLOGY -- 0.5%
Advanced Micro Devices, Inc. 11.00% 2003.................... 25,000 26,375
Concentric Network Corp. Delaware 12.75% 2007............... 10,000 10,600
Decisionone Corp. 9.75% 2007................................ 10,000 9,563
Fairchild Semiconductor Corp. 10.13% 2007................... 15,000 15,450
Psinet, Inc. 10.00% 2005.................................... 15,000 15,337
Verio, Inc. 10.38% 2005*.................................... 10,000 10,250
------------
87,575
------------
METALS & MINERALS -- 0.5%
Acindar Industria Argentina de Aceros SA 11.25% 2004........ 10,000 10,025
Bayou Steel Corp. 9.50% 2008*............................... 15,000 14,850
Falcon Building Products, Inc. 9.50% 2007................... 15,000 14,700
Great Lakes Carbon Corp. 10.25% 2008*(4).................... 5,000 5,088
P&L Coal Holdings Corp. 9.63% 2008*......................... 35,000 35,962
------------
80,625
------------
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.9%
Republic of Argentina 11.00% 2006........................... 130,000 137,896
Republic of Colombia 7.25% 2004............................. 145,000 135,575
Republic of Lithuania 7.13% 2002*(2)........................ 70,000 67,725
------------
341,196
------------
PAPER PRODUCTS -- 0.5%
American Pad & Paper Co. 13.00% 2005........................ 17,000 17,085
Domtar, Inc. 9.50% 2016..................................... 10,000 10,892
Gaylord Container Corp. 9.38% 2007.......................... 10,000 9,625
Grupo International Durango SA de CV 12.63% 2003............ 15,000 15,975
Repap New Brunswick, Inc. 10.63% 2005....................... 25,000 25,250
Silgan Holdings Corp. 9.00% 2009............................ 10,000 10,350
------------
89,177
------------
REAL ESTATE -- 0.6%
Equity Office Properties Operating L.P. 6.38% 2003*......... 100,000 99,575
------------
RETAIL -- 1.4%
Duane Reade, Inc. 9.25% 2008................................ 10,000 10,125
Guitar Center Management Co., Inc. 11.00% 2006.............. 17,000 18,785
Penney (J.C.) Co., Inc. 7.40% 2037.......................... 200,000 223,054
------------
251,964
------------
</TABLE>
---------------------
9
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
---------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS -- 2.0%
American Mobile Satellite Corp. 12.25% 2008*(5)............. $ 5,000 $ 4,750
BTI Telecommunications Corp. 10.50% 2007.................... 15,000 15,075
E.Spire Communications, Inc. zero coupon 2006+(1)........... 20,000 15,700
Facilicom International, Inc. 10.50% 2008*.................. 10,000 9,950
GCI, Inc. 9.75% 2007........................................ 25,000 26,125
Globalstar L.P. 10.75% 2004................................. 20,000 19,000
GST Telecommunications, Inc. 12.75% 2007+................... 20,000 23,200
Intermedia Communications, Inc. 8.60% 2008*................. 10,000 10,100
Intermedia Communications, Inc. 8.88% 2007.................. 25,000 25,562
Iridium Operating LLC/ Iridium Capital 10.88% 2005.......... 5,000 4,956
Iridium Operating LLC/Iridium Capital 11.25% 2005........... 25,000 25,062
ITC Deltacom, Inc. 8.88% 2008............................... 10,000 10,200
IXC Communications, Inc. 9.00% 2008*........................ 20,000 19,950
KMC Telecommunications Holdings, Inc. zero coupon
2008*(1)(5)............................................... 50,000 30,125
Level 3 Communications, Inc. 9.13% 2008*.................... 25,000 24,313
Mcleodusa, Inc. 8.38% 2008*................................. 5,000 5,013
Nextlink Communications, Inc. zero coupon 2008*(1).......... 25,000 15,344
Paging Network, Inc. 10.13% 2007............................ 15,000 15,525
RSL Communications PLC 9.13% 2008*.......................... 20,000 19,400
Telecommunications Tech Co. LLC 9.75% 2008*................. 15,000 15,056
Viatel, Inc. 11.25% 2008*(5)................................ 18,000 18,900
------------
353,306
------------
U.S. GOVERNMENT & AGENCIES -- 47.4%
Federal Home Loan Mortgage Corp. 6.00% 2003................. 417,793 416,293
Federal Home Loan Participation 11.00% 2000................. 4,053 4,192
Government National Mortgage Association 7.00%
2012 - 2023............................................... 951,188 970,283
Government National Mortgage Association 7.50%
2022 - 2023............................................... 674,778 694,256
Government National Mortgage Association 10.00% 2000........ 14,401 14,828
Government National Mortgage Association 11.25% 1998........ 113 113
Government National Mortgage Association 13.25% 1999........ 781 830
United States Treasury Bonds 10.75% 2003.................... 200,000 241,782
United States Treasury Bonds 11.88% 2003.................... 630,000 811,913
United States Treasury Bonds 12.00% 2013.................... 3,475,000 5,152,243
------------
8,306,733
------------
UTILITIES -- 6.3%
Cleveland Electric Illuminating Co. 7.19% 2000.............. 160,000 162,450
Niagara Mohawk Power Corp. 5.88% 2002....................... 750,000 731,917
WorldCom, Inc. 7.55% 2004................................... 200,000 211,804
------------
1,106,171
------------
TOTAL BONDS & NOTES (cost $16,596,118)...................... $17,005,104
------------
PREFERRED STOCK -- 0.4% SHARES
---------------------------------------------------------------------------------------
COMMUNICATIONS & MEDIA -- 0.1%
Primedia, Inc. 8.63%*....................................... 145 14,355
------------
INDUSTRIAL & COMMERCIAL -- 0.2%
Fairfield Manufacturing, Inc. 11.25%(2)(4).................. 25 27,000
------------
MULTI-INDUSTRY -- 0.1%
Sinking Fund Holdings Group, Inc. convertible
13.75%*(2)(4)............................................. 2 17,550
------------
TOTAL PREFERRED STOCK (cost $58,288)........................ 58,905
------------
</TABLE>
- ---------------------
10
<PAGE> 12
<TABLE>
<CAPTION>
WARRANTS -- 0.0%+ WARRANTS VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY -- 0.0%
Concentric Network Corp. Delaware 12/15/07* (cost $0)....... 5 $ 650
-----------
TOTAL INVESTMENT SECURITIES (cost $16,654,406).............. 17,064,659
-----------
PRINCIPAL
REPURCHASE AGREEMENT -- 0.6% AMOUNT
- --------------------------------------------------------------------------------------
Joint Repurchase Agreement Account (Note 3) (cost
$105,000)................................................. $ 105,000 105,000
-----------
TOTAL INVESTMENTS -- (cost $16,759,406) 97.9% 17,169,659
Other assets less liabilities -- 2.1 373,825
-----------
NET ASSETS -- 100.0% $17,543,484
===== ===========
</TABLE>
- -----------------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
(1) Represents a zero-coupon bond which will convert to an
interest-bearing security at a later date
(2) Fair valued security; see Note 2
(3) Issuer of the security has filed for bankruptcy and interest
payments are in default
(4) PIK ("Payment-in-Kind") payment made with additional
securities in lieu of cash
(5) Consists of more than one class of securities traded together
as a unit, generally bonds with attached stocks or warrants
See Notes to Financial Statements
---------------------
11
<PAGE> 13
- ---------------------
ANCHOR SERIES TRUST
GOVERNMENT & QUALITY BOND
PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 97.9% AMOUNT VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 14.0%
Asset Securitization Corp. 7.49% 2027....................... $ 5,000,000 $ 5,334,350
CS First Boston Mortgage Securities Corp. 7.24% 2029........ 5,000,000 5,314,850
General Electric Capital Corp. 7.50% 2035................... 5,000,000 5,854,350
General Reinsurance Corp. 9.00% 2009........................ 5,000,000 6,095,500
Morgan (J.P.) & Co., Inc. 6.25% 2005........................ 5,000,000 4,945,700
Premier Auto Trust 5.77% 2002............................... 5,000,000 4,990,600
Stanford University 6.88% 2024.............................. 5,000,000 5,454,000
-------------
37,989,350
-------------
INDUSTRIAL & COMMERCIAL -- 2.2%
Postal Square L.P. 8.95% 2022............................... 4,730,700 6,020,478
-------------
RETAIL -- 1.9%
Wal-Mart Stores, Inc. 6.75% 2023............................ 5,000,000 5,227,550
-------------
TRANSPORTATION -- 4.1%
Federal Express Corp. 6.72% 2013............................ 5,000,000 5,000,000
United Parcel Service of America, Inc. 8.38% 2020........... 5,000,000 6,255,200
-------------
11,255,200
-------------
U.S. GOVERNMENT & AGENCIES -- 71.6%
Federal Home Loan Mortgage Corp. 6.00% 2008 - 2011.......... 7,686,959 7,660,979
Federal Home Loan Mortgage Corp. 6.50% 2011................. 10,998,319 11,122,050
Federal Home Loan Mortgage Corp. 7.00% 2010 - 2011.......... 14,617,777 14,936,354
Federal Home Loan Mortgage Corp. 14.75% 2010................ 117,772 141,730
Federal National Mortgage Association 6.35% 2003............ 25,000,000 24,980,500
Federal National Mortgage Association 7.00% 2010 - 2011..... 5,201,718 5,301,251
Government National Mortgage Association 6.50% 2023......... 7,449,213 7,432,899
Government National Mortgage Association 6.50% TBA.......... 5,000,000 4,989,050
Government National Mortgage Association 7.00%
2009 - 2012............................................... 8,509,741 8,706,621
Government National Mortgage Association 10.00%
2013 - 2017............................................... 1,784,850 1,935,347
Government National Mortgage Association 11.50% 2014........ 11,140 12,386
Government National Mortgage Association 12.00%
1999 - 2016............................................... 61,680 64,554
Government National Mortgage Association 12.75% 2014........ 78,023 89,896
Government National Mortgage Association 13.25%
1999 - 2014............................................... 18,758 21,515
Government National Mortgage Association 13.50% 2014........ 7,217 8,556
Government National Mortgage Association 13.75% 2014........ 1,396 1,609
United States Treasury Notes 5.63% 1999 - 2002.............. 65,000,000 65,199,750
United States Treasury Notes 6.13% 2007..................... 20,000,000 20,809,400
United States Treasury Notes 6.50% 2005..................... 20,000,000 21,109,400
-------------
194,523,847
-------------
</TABLE>
- ---------------------
12
<PAGE> 14
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES -- 4.1%
Hydro Quebec Electric 8.40% 2022............................ $ 5,000,000 $ 6,104,850
United States West Capital Funding, Inc. 6.38% 2008......... 5,000,000 4,970,900
-------------
11,075,750
-------------
TOTAL INVESTMENT SECURITIES (cost $261,346,162)............. 266,092,175
-------------
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT -- 3.9% AMOUNT VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
Joint Repurchase Agreement Account (Note 3) (cost
$10,530,000).............................................. 10,530,000 10,530,000
-------------
TOTAL INVESTMENTS --
(cost $271,876,162) 101.8% 276,622,175
Liabilities in excess of other assets -- (1.8) (4,885,224)
------ -------------
NET ASSETS -- 100.0% $271,736,951
====== =============
</TABLE>
-----------------------------
TBA -- Securities purchased on a forward commitment basis with an
approximate principal amount and no definitive maturity
date. The actual principal amount and maturity date will be
determined upon settlement.
See Notes to Financial Statements
---------------------
13
<PAGE> 15
- ---------------------
ANCHOR SERIES TRUST
HIGH YIELD PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 89.4% AMOUNT VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE & MILITARY TECHNOLOGY -- 3.1%
Argo Tech Corp. 8.63% 2007.................................. $ 150,000 $ 152,250
K & F Industries, Inc. 9.25% 2007........................... 150,000 151,500
Moog, Inc., Class B 10.00% 2006............................. 655,000 700,850
------------
1,004,600
------------
AUTOMOTIVE -- 2.5%
Federal Mogul Corp. 8.80% 2007.............................. 150,000 160,680
Johnstown America Industries, Inc. 11.75% 2005.............. 350,000 388,938
Key Plastics, Inc. 10.25% 2007.............................. 250,000 262,500
------------
812,118
------------
CABLE -- 1.4%
Frontiervision Holding L.P. zero coupon 2007+(1)............ 350,000 276,500
Rifkin Acquisitions Partners L.P. 11.13% 2006............... 150,000 165,000
------------
441,500
------------
CHEMICALS -- 4.6%
Buckeye Technologies, Inc. 8.00% 2010*...................... 465,000 468,487
Philipp Brothers Chemicals, Inc. 9.88% 2008*................ 270,000 272,025
Pioneer Americas Acquisition Corp. 9.25% 2007............... 250,000 245,625
Sovereign Specialty Chemicals 9.50% 2007.................... 500,000 512,500
------------
1,498,637
------------
COMMUNICATIONS & MEDIA -- 5.1%
Adelphia Communications Corp. 9.88% 2007.................... 150,000 162,375
Century Communications Corp. zero coupon 2008+.............. 350,000 158,812
Echostar Satellite Broadcasting Corp. zero coupon
2004+*(1)................................................. 150,000 137,813
Innova S. de R.L. 12.88% 2007............................... 250,000 253,750
MobileMedia Corp. 9.38% 2007+(3)............................ 250,000 77,500
Sullivan Graphics, Inc. 12.75% 2005......................... 100,000 104,750
Tevecap SA 12.63% 2004...................................... 250,000 217,500
Winstar Communications, Inc. zero coupon 2005(1)............ 650,000 539,500
------------
1,652,000
------------
CONSUMER DISCRETIONARY -- 1.2%
Accuride Corp. 9.25% 2008*.................................. 220,000 220,550
LDM Technologies, Inc. 10.75% 2007.......................... 150,000 157,500
------------
378,050
------------
CONSUMER STAPLES -- 1.5%
Chattem, Inc. 8.88% 2008*................................... 150,000 149,250
Westpoint Stevens, Inc. 7.88% 2008*......................... 345,000 344,138
------------
493,388
------------
ENERGY -- 6.8%
Abraxas Petroleum Corp. 11.50% 2004......................... 250,000 258,750
Costilla Energy, Inc. 10.25% 2006*.......................... 500,000 506,412
Cross Timbers Oil Co. 9.25% 2007............................ 150,000 154,500
Petroleos Mexicanos 8.85% 2007.............................. 250,000 246,073
Plains Resources, Inc. 10.25% 2006.......................... 500,000 533,750
Ram Energy, Inc. Delaware 11.50% 2008....................... 500,000 495,000
------------
2,194,485
------------
</TABLE>
- ---------------------
14
<PAGE> 16
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 9.0%
APP Finance (VII) Mauritius Ltd. convertible 3.50% 2003*.... $ 305,000 $ 242,475
Emergent Group, Inc. 10.75% 2004............................ 250,000 183,125
Guangdong Enterprises Holdings 8.88% 2007*.................. 250,000 217,843
Hawthorne Financial Corp. 12.50% 2004(2).................... 350,000 367,500
Olympic Financial Ltd. 11.50% 2007(5)....................... 350,000 347,375
Pindo Deli Finance Mauritius Ltd. 10.75% 2007............... 355,000 245,837
Resource America, Inc. 12.00% 2004.......................... 425,000 454,750
Tembec Finance Corp. 9.88% 2005............................. 250,000 263,750
Thai Farmers Bank Ltd. 8.25% 2016*.......................... 500,000 352,130
Western Financial Savings Bank 8.88% 2007................... 250,000 236,562
------------
2,911,347
------------
FOOD & LODGING -- 2.9%
Aurora Foods, Inc. 9.88% 2007............................... 65,000 68,413
Del Monte Foods Co. zero coupon 2007+*(1)................... 750,000 490,312
Hammons (John Q.) Hotels L.P. 8.88% 2004.................... 390,000 392,925
------------
951,650
------------
GAMING -- 1.9%
Fitzgeralds Gaming Corp. 12.25% 2004*....................... 250,000 242,500
Lady Luck Gaming Finance Corp. 11.88% 2001.................. 350,000 363,125
------------
605,625
------------
GROCERY -- 1.2%
Homeland Stores, Inc. 10.00% 2003+.......................... 250,000 235,625
Pathmark Stores, Inc. 11.63% 2002........................... 150,000 151,500
------------
387,125
------------
HEALTHCARE -- 3.4%
Columbia/HCA Healthcare Corp. 7.25% 2008.................... 250,000 242,382
Mediq, Inc. 11.00% 2008*.................................... 260,000 267,150
Pharmerica, Inc. 8.38% 2008*................................ 100,000 99,500
Universal Hospital Services, Inc. 10.25% 2008*.............. 500,000 500,000
------------
1,109,032
------------
INDUSTRIAL & COMMERCIAL -- 5.3%
Clark Schwebel, Inc. 10.50% 2006............................ 225,000 248,906
Globo Comunicacoes E Participating 10.50% 2006*............. 250,000 226,875
Neenah Corp. 11.13% 2007.................................... 350,000 381,500
TV Azteca SA de CV 10.50% 2007.............................. 250,000 250,625
Unicco Service Co./Unicco Finance Corp. 9.88% 2007.......... 250,000 252,500
Wesco Distributor, Inc. 9.13% 2008*......................... 350,000 346,063
------------
1,706,469
------------
INFORMATION & ENTERTAINMENT -- 0.2%
Net Sat Servicos Ltda. 12.75% 2004.......................... 55,000 52,424
------------
INFORMATION TECHNOLOGY -- 5.5%
Advanced Micro Devices, Inc. 11.00% 2003.................... 250,000 263,750
Concentric Network Corp. Delaware 12.75% 2007............... 130,000 137,800
Decision Holdings Corp. zero coupon 2008+(1)(5)............. 500,000 300,000
Psinet, Inc. 10.00% 2005.................................... 375,000 383,437
Samsung Electronics America, Inc. 9.75% 2003*............... 350,000 331,188
Verio, Inc. 10.38% 2005*.................................... 355,000 363,875
------------
1,780,050
------------
</TABLE>
---------------------
15
<PAGE> 17
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
METALS & MINERALS -- 6.1%
A.K. Steel Corp. 9.13% 2006................................. $ 100,000 $ 104,500
Acindar Industria Argentina de Aceros SA 11.25% 2004........ 250,000 250,625
Amtrol, Inc. 10.63% 2006.................................... 145,000 141,737
Bayou Steel Corp. 9.50% 2008*............................... 290,000 287,100
CSN Iron SA 9.13% 2007*..................................... 350,000 280,000
Nortek, Inc. 9.25% 2007..................................... 250,000 257,500
P&L Coal Holdings Corp. 8.88% 2008*......................... 160,000 164,600
Pohang Iron & Steel Ltd. 7.13% 2004......................... 250,000 200,827
Weirton Steel Corp. 11.38% 2004............................. 250,000 266,250
------------
1,953,139
------------
NON-U.S. GOVERNMENT OBLIGATIONS -- 2.5%
Federal Republic of Brazil 5.00% 2014(6)(7)................. 261,047 187,301
Republic of Argentina 11.38% 2017........................... 250,000 265,625
Republic of Korea 8.88% 2008................................ 250,000 225,970
Republic of Venezuela 9.25% 2027............................ 150,000 117,000
------------
795,896
------------
PAPER PRODUCTS -- 11.1%
American Pad & Paper Co. 13.00% 2005........................ 475,000 477,375
APP International Finance Co. 11.75% 2005................... 175,000 154,000
Aracruz Celulose SA 10.38% 2002*............................ 255,000 247,350
BWay Corp. 10.25% 2007...................................... 350,000 381,500
Calmar, Inc. Delaware 11.50% 2005........................... 350,000 403,375
Container Corp. of America 9.75% 2003....................... 250,000 268,750
Gaylord Container Corp. 9.38% 2007.......................... 350,000 336,875
Industrias Klabin Fabricadora de Papel e Celulosr SA 11.00%
2004...................................................... 350,000 339,500
Repap New Brunswick, Inc. 10.63% 2005....................... 350,000 353,500
Silgan Holdings Corp. 9.00% 2009............................ 500,000 517,500
Silgan Holdings Corp. 13.25% 2006(4)........................ 80,715 91,108
------------
3,570,833
------------
TELECOMMUNICATIONS -- 10.2%
American Mobile Satellite Corp. 12.25% 2008*(5)............. 70,000 66,500
BTI Telecommunications Corp. 10.50% 2007.................... 500,000 502,500
E.Spire Communications, Inc. zero coupon 2006+.............. 250,000 196,250
GST Telecommunications, Inc. 12.75% 2007+................... 100,000 116,000
Hyperion Telecommunications, Inc. 12.25% 2004............... 240,000 259,200
Intermedia Communications, Inc. 8.50% 2008.................. 150,000 150,375
Intermedia Communications, Inc. 8.60% 2008*................. 100,000 101,000
Iridium Operating LLC/ Iridium Capital 10.88% 2005.......... 90,000 89,212
Iridium Operating LLC/Iridium Capital 11.25% 2005........... 350,000 350,875
IXC Communications, Inc. 9.00% 2008*........................ 250,000 249,375
Mcleodusa, Inc. 9.25% 2007.................................. 100,000 104,000
MGC Communications, Inc. 13.00% 2004........................ 250,000 249,375
Philippine Long District Telephone Co. 7.85% 2007........... 300,000 260,445
Telecommunications Tech Co. LLC 9.75% 2008*................. 400,000 401,500
Viatel, Inc. zero coupon 2008*(1)(5)........................ 150,000 89,250
Viatel, Inc. 11.25% 2008*(5)................................ 100,000 105,000
------------
3,290,857
------------
TRANSPORTATION -- 1.4%
Cathay International Ltd. 13.00% 2008*...................... 250,000 222,468
Valujet, Inc. 10.25% 2001................................... 250,000 243,125
------------
465,593
------------
</TABLE>
- ---------------------
16
<PAGE> 18
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES -- 2.5%
GST Network Funding, Inc. zero coupon 2008*................. $ 885,000 $ 529,894
Korea Telecommunications 7.63% 2007......................... 350,000 273,042
------------
802,936
------------
TOTAL BONDS & NOTES (cost $29,215,290)...................... 28,857,754
------------
PREFERRED STOCK -- 5.4% SHARES
----------------------------------------------------------------------------------------
COMMUNICATIONS & MEDIA -- 0.6%
Granite Broadcasting Corp. 12.75%(4)........................ 170 194,347
------------
FINANCE -- 0.8%
Superior National Capital Trust I 10.75%(2)................. 250 267,500
------------
GAMING -- 0.3%
Fitzgerald Gaming Corp. 15.00%(2)........................... 3,000 99,000
------------
INDUSTRIAL & COMMERCIAL -- 1.2%
Fairfield Manufacturing, Inc. 11.25%(2)(4).................. 350 378,000
------------
INFORMATION TECHNOLOGY -- 0.5%
Concentric Network Corp. Delaware 13.50%*(4)................ 170 172,125
------------
MULTI-INDUSTRY -- 0.5%
Sinking Fund Holdings Group, Inc. convertible
13.75%*(2)(4)............................................. 17 149,175
------------
TELECOMMUNICATIONS -- 1.5%
IXC Communications, Inc. 6.75%*............................. 3,500 168,000
IXC Communications, Inc. 12.50%(4).......................... 266 308,409
------------
476,409
------------
TOTAL PREFERRED STOCK (cost $1,660,938)..................... $1,736,556
------------
WARRANTS -- 0.1%+ WARRANTS
----------------------------------------------------------------------------------------
COMMUNICATIONS & MEDIA -- 0.0%
Benedek Communications Corp. 7/01/07*(2).................... 2,000 4,000
------------
INFORMATION TECHNOLOGY -- 0.1%
Concentric Network Corp. Delaware 12/15/07*................. 130 16,900
------------
TELECOMMUNICATIONS -- 0.0%
MGC Communications, Inc. 10/01/04*.......................... 250 15,750
------------
TOTAL WARRANTS (cost $22,550)............................... 36,650
------------
TOTAL INVESTMENT SECURITIES (cost $30,898,778).............. 30,630,960
------------
</TABLE>
---------------------
17
<PAGE> 19
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT -- 2.6% AMOUNT VALUE
----------------------------------------------------------------------------------------
<S> <C> <C>
Joint Repurchase Agreement Account (Note 3) (cost
$825,000)................................................. $ 825,000 $ 825,000
------------
TOTAL INVESTMENTS --
(cost $31,723,778) 97.5% 31,455,960
Other assets less liabilities -- 2.5 791,493
------ ------------
NET ASSETS -- 100.0% $32,247,453
====== ============
</TABLE>
-----------------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
(1) Represents a zero-coupon bond which will convert to an
interest-bearing security at a later date
(2) Fair valued security; see Note 2
(3) Issuer of the security has filed for bankruptcy and interest
payments are in default
(4) PIK ("Payment-in-kind") payment made with additional security
in lieu of cash
(5) Consists of more than one class of securities traded together
as a unit, generally bonds with attached stocks or warrants
(6) Variable rate security; rate as of June 30, 1998
(7) A portion of the coupon interest is received in cash and a
portion is capitalized in the principal of the security
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
------------------------------------------------------------------
<TABLE>
<CAPTION>
CONTRACT IN DELIVERY GROSS UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
-------------------------------------------------------
<S> <C> <C> <C>
*CAD 125,400 USD 91,034 10/16/98 $ 5,654
*CAD 77,000 USD 54,088 10/16/98 1,661
-------
$ 7,315
=======
</TABLE>
<TABLE>
<CAPTION>
GROSS UNREALIZED
DEPRECIATION
-------------------------------------------------------
<S> <C> <C> <C>
*USD 141,065 CAD 202,400 10/16/98 $(3,257)
-------
Net Unrealized
Appreciation................ $ 4,058
=======
</TABLE>
* Represents open forward foreign currency contracts and
offsetting or partially offsetting open forward foreign currency
contracts that do not have additional market risk but have
continued counterparty settlement risk
CAD -- Canadian Dollar
USD -- United States Dollar
See Notes to Financial Statements
- ---------------------
18
<PAGE> 20
- ---------------------
ANCHOR SERIES TRUST
TARGET '98 PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 84.3% AMOUNT VALUE
<S> <C> <C>
--------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
U.S. GOVERNMENT & AGENCIES -- 84.3%
Federal Judiciary Office Building zero coupon 1998.......... $ 500,000 $ 496,875
Federal National Mortgage Association zero coupon 1998...... 700,000 695,688
Government Trust Certificates Series 3D zero coupon 1998.... 1,000,000 981,000
Government Trust Certificates Series T zero coupon 1998..... 1,600,000 1,569,600
Tennessee Valley Authority zero coupon 1998................. 500,000 489,640
Treasury Investment Growth Receipts zero coupon 1998........ 500,000 490,645
United States Treasury Note Strip Prior zero coupon 1998.... 200,000 196,106
-----------
TOTAL INVESTMENT SECURITIES (cost $4,880,664)............... 4,919,554
-----------
<CAPTION>
REPURCHASE AGREEMENT -- 16.1%
--------------------------------------------------------------------------------------
<S> <C> <C>
Joint Repurchase Agreement Account (Note 3)
(cost $940,000)........................................... 940,000 940,000
-----------
TOTAL INVESTMENTS --
(cost $5,820,664) 100.4% 5,859,554
Liabilities in excess of other
assets -- (0.4) (26,247)
------ -----------
NET ASSETS -- 100.0% $5,833,307
====== ===========
</TABLE>
-----------------------------
See Notes to Financial Statements
---------------------
19
<PAGE> 21
- ---------------------
ANCHOR SERIES TRUST
GROWTH AND INCOME
PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK -- 99.9% SHARES VALUE
<S> <C> <C>
---------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
CONSUMER DISCRETIONARY -- 7.1%
Retail -- 7.1%
CVS Corp. .................................................. 12,000 $ 467,250
Gap, Inc. .................................................. 18,000 1,109,250
May Department Stores Co. .................................. 12,000 786,000
Wal-Mart Stores, Inc. ...................................... 18,000 1,093,500
------------
3,456,000
------------
CONSUMER STAPLES -- 10.9%
Food, Beverage & Tobacco -- 6.5%
Anheuser-Busch Cos., Inc. .................................. 8,000 377,500
Coca-Cola Co. .............................................. 6,100 521,550
General Mills, Inc. ........................................ 3,200 218,800
Heinz (H.J.) Co. ........................................... 4,500 252,563
Nabisco Holdings Corp., Class A............................. 13,000 468,813
PepsiCo, Inc. .............................................. 13,500 556,031
Philip Morris Cos., Inc. ................................... 12,000 472,500
Sara Lee Corp. ............................................. 5,500 307,656
Household Products -- 4.4%
Gillette Co. ............................................... 10,000 566,875
Kimberly-Clark Corp. ....................................... 14,000 642,250
Procter & Gamble Co. ....................................... 10,000 910,625
------------
5,295,163
------------
ENERGY -- 8.3%
Energy Services -- 1.9%
Diamond Offshore Drilling, Inc. ............................ 5,400 216,000
Schlumberger Ltd. .......................................... 10,000 683,125
Energy Sources -- 6.4%
Amoco Corp. ................................................ 12,000 499,500
Chevron Corp. .............................................. 13,500 1,121,344
Exxon Corp. ................................................ 10,800 770,175
Royal Dutch Petroleum Co. ADR............................... 13,000 712,562
------------
4,002,706
------------
FINANCE -- 19.1%
Banks -- 7.1%
Citicorp.................................................... 5,000 746,250
First Union Corp. .......................................... 18,000 1,048,500
U.S. Bancorp................................................ 16,500 709,500
Wachovia Corp. ............................................. 11,000 929,500
Financial Services -- 4.2%
American Express Co. ....................................... 8,000 912,000
Federal National Mortgage Association....................... 14,000 850,500
Merrill Lynch & Co., Inc. .................................. 3,000 276,750
</TABLE>
- ---------------------
20
<PAGE> 22
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Insurance -- 7.8%
Ace Ltd. ................................................... 16,400 $ 639,600
Allstate Corp. ............................................. 6,500 595,156
American International Group, Inc. ......................... 6,000 876,000
Marsh & McLennan Cos., Inc. ................................ 12,000 725,250
Travelers Group, Inc. ...................................... 15,000 909,375
------------
9,218,381
------------
HEALTHCARE -- 13.0%
Drugs -- 10.6%
American Home Products Corp. ............................... 14,000 724,500
Bristol-Myers Squibb Co. ................................... 5,000 574,688
Johnson & Johnson Co. ...................................... 10,000 737,500
Merck & Co., Inc. .......................................... 2,600 347,750
Pfizer, Inc. ............................................... 9,000 978,187
Pharmacia & Upjohn, Inc. ................................... 14,000 645,750
Warner-Lambert Co. ......................................... 9,600 666,000
Zeneca Group PLC ADR........................................ 10,000 438,750
Health Services -- 0.7%
Columbia/HCA Healthcare Corp. .............................. 12,000 349,500
Medical Products -- 1.7%
Abbott Laboratories, Inc. .................................. 20,000 817,500
------------
6,280,125
------------
INDUSTRIAL & COMMERCIAL -- 8.2%
Aerospace & Military Technology -- 1.6%
Boeing Co. ................................................. 9,000 401,063
Lockheed Martin Corp. ...................................... 3,800 402,325
Electrical Equipment -- 3.8%
General Electric Co. ....................................... 20,000 1,820,000
Electronics -- 1.4%
Intel Corp. ................................................ 9,000 667,125
Machinery -- 0.6%
Deere & Co. ................................................ 5,600 296,100
Transportation -- 0.8%
Union Pacific Corp. ........................................ 9,000 397,125
------------
3,983,738
------------
INFORMATION & ENTERTAINMENT -- 7.7%
Broadcasting & Media -- 4.3%
Cox Communications, Inc., Class A+.......................... 6,000 290,625
Disney (Walt) Co. .......................................... 4,000 420,250
Gannett Co., Inc. .......................................... 14,300 1,016,194
Time Warner, Inc. .......................................... 3,800 324,662
Leisure & Tourism -- 3.4%
Delta Air Lines, Inc. ...................................... 4,000 517,000
McDonald's Corp. ........................................... 13,000 897,000
Mirage Resorts, Inc.+....................................... 11,000 234,438
------------
3,700,169
------------
INFORMATION TECHNOLOGY -- 15.8%
Communication Equipment -- 2.9%
Cisco Systems, Inc.+........................................ 10,000 920,625
Motorola, Inc. ............................................. 9,000 473,062
</TABLE>
---------------------
21
<PAGE> 23
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (continued)
Computers & Business Equipment -- 4.6%
EMC Corp.+.................................................. 14,500 $ 649,781
International Business Machines Corp. ...................... 7,400 849,613
Xerox Corp. ................................................ 7,000 711,375
Electronics -- 0.8%
AMP, Inc. .................................................. 6,000 206,250
Analog Devices, Inc.+....................................... 6,800 167,025
Software -- 7.5%
Automatic Data Processing, Inc. ............................ 10,000 728,750
BMC Software, Inc.+......................................... 7,000 363,562
Computer Sciences Corp.+.................................... 12,000 768,000
First Data Corp. ........................................... 7,000 233,188
Microsoft Corp.+............................................ 12,000 1,300,500
PeopleSoft, Inc.+........................................... 5,200 244,400
------------
7,616,131
------------
MATERIALS -- 1.3%
Chemicals -- 0.9%
du Pont (E.I.) de Nemours & Co. ............................ 6,000 447,750
Forest Products -- 0.4%
Crown, Cork & Seal, Inc. ................................... 4,000 190,000
------------
637,750
------------
UTILITIES -- 8.5%
Electric Utilities -- 1.7%
Duke Energy Corp. .......................................... 10,000 592,500
New England Electric Systems................................ 5,500 237,875
Gas & Pipeline Utilities -- 1.4%
National Fuel Gas Co. ...................................... 5,700 248,306
Peoples Energy Corp. ....................................... 11,000 424,875
Telephone -- 5.4%
Bell Atlantic Corp. ........................................ 11,000 501,875
BellSouth Corp. ............................................ 8,000 537,000
SBC Communications, Inc. ................................... 20,000 800,000
WorldCom, Inc.+............................................. 16,000 775,000
------------
4,117,431
------------
TOTAL INVESTMENT SECURITIES (cost $33,530,095).............. 48,307,594
------------
TOTAL INVESTMENTS --
(cost $33,530,095) 99.9% 48,307,594
Other assets less liabilities -- 0.1 26,941
------ ------------
NET ASSETS -- 100.0% $48,334,535
====== ============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipts
See Notes to Financial Statements
- ---------------------
22
<PAGE> 24
- ---------------------
ANCHOR SERIES TRUST
FOREIGN SECURITIES
PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK -- 90.7% SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C>
ARGENTINA -- 0.5%
Telefonica de Argentina SA ADR (Utilities).................. 5,000 $ 162,187
-----------
AUSTRALIA -- 3.9%
AMP Ltd. (Industrial & Commercial)+*........................ 23,907 280,481
Australia & New Zealand Banking Group Ltd. (Finance)........ 41,112 284,296
CSR Ltd. (Industrial & Commercial).......................... 46,476 134,441
News Corp., Ltd. (Information & Entertainment).............. 56,284 460,487
Pasminco Ltd. (Materials)................................... 116,053 88,609
Western Mining Corp., Ltd. (Materials)...................... 42,480 128,155
-----------
1,376,469
-----------
CANADA -- 1.0%
Canadian National Railway Co. (Industrial & Commercial)..... 2,900 154,062
Canadian Pacific Ltd. (Industrial & Commercial)............. 6,600 185,682
-----------
339,744
-----------
CHILE -- 0.3%
Compania de Telecomunicaciones de Chile SA ADR
(Utilities)............................................... 4,700 95,469
-----------
DENMARK -- 2.2%
Novo Nordisk A/S (Healthcare)............................... 2,640 364,324
Unidanmark A/S (Finance).................................... 4,730 425,524
-----------
789,848
-----------
FINLAND -- 2.0%
Metsa Serla Oy, Class B (Materials)......................... 16,710 161,580
Nokia AB Oy, Series A (Information Technology).............. 3,650 268,703
Nokia Corp., Class A ADR (Information Technology)........... 4,000 290,250
-----------
720,533
-----------
FRANCE -- 14.8%
Alcatel Alsthom (Information Technology).................... 2,860 582,341
Assurances Generales de France (Finance).................... 2,699 152,725
AXA-UAP (Finance)........................................... 4,020 452,156
Banque Nationale de Paris (Finance)......................... 7,291 595,755
Carrefour SA (Consumer Discretionary)....................... 130 82,249
Compagnie de St. Gobain (Materials)......................... 1,697 314,659
Compagnie Generale des Eaux (Utilities)..................... 3,810 813,588
Compagnie Generale des Etablissements Michelin, Class B
(Consumer Discretionary).................................. 7,690 443,920
Rhone-Poulenc SA (Healthcare)............................... 4,735 267,072
Societe Generale d'Enterprises SA (Finance)................. 2,983 620,214
Societe Nationale Elf Aquitaine SA (Energy)................. 3,890 546,918
Total SA, Class B (Energy).................................. 3,006 390,809
-----------
5,262,406
-----------
GERMANY -- 12.1%
Adidas-Salomon AG (Consumer Discretionary).................. 790 137,766
Bayer AG (Healthcare)....................................... 20,360 1,054,437
</TABLE>
---------------------
23
<PAGE> 25
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C>
GERMANY(continued)
Dresdner Bank AG (Finance).................................. 9,510 $ 514,140
Hoechst AG (Healthcare)..................................... 8,090 407,091
Karstadt AG (Consumer Discretionary)........................ 870 423,314
Manitoba AG (Industrial & Commercial)....................... 1,010 394,266
Mannesmann AG (Industrial & Commercial)..................... 4,700 483,434
Metallgesellschaft AG (Industrial & Commercial)............. 4,850 99,907
SAP AG (Information Technology)............................. 220 133,577
Siemens AG (Industrial & Commercial)........................ 3,810 232,705
VEBA AG (Utilities)......................................... 5,870 394,979
-----------
4,275,616
-----------
HONG KONG -- 0.7%
Cheung Kong Holdings Ltd. (Industrial & Commercial)......... 37,000 181,944
Hong Kong Telecommunications Ltd. (Utilities)............... 39,000 73,238
-----------
255,182
-----------
HUNGARY -- 0.0%
Matav RT ADR (Utilities).................................... 600 17,663
-----------
INDIA -- 0.1%
Ranbaxy Laboratories Ltd. (Healthcare)...................... 3,300 52,305
-----------
IRELAND -- 1.7%
Allied Irish Banks PLC (Finance)............................ 29,852 433,642
Jefferson Smurfit Group (Materials)......................... 55,078 164,615
-----------
598,257
-----------
ITALY -- 1.0%
Telecom Italia SpA (Utilities).............................. 46,600 343,189
-----------
JAPAN -- 11.9%
Advantest Corp. (Information Technology).................... 2,100 113,300
Dai Nippon Printing Co., Ltd. (Information &
Entertainment)............................................ 10,000 160,194
Daiwa Securities Co., Ltd. (Finance)........................ 60,000 259,058
Eisai Co., Ltd. (Healthcare)................................ 9,000 123,020
Fuji Machine Manufacturing Co. (Industrial & Commercial).... 8,000 212,917
Fuji Photo Film Co., Ltd. (Information & Entertainment)..... 11,000 384,248
Fujisawa Pharmaceutical Co. (Healthcare).................... 11,000 103,262
Jusco Co., Ltd. (Consumer Discretionary).................... 15,000 276,090
KAO Corp. (Consumer Staples)................................ 5,000 77,385
Mabuchi Motor Co., Ltd. (Industrial & Commercial)........... 3,000 190,931
Matsumotokiyoshi (Consumer Discretionary)................... 6,100 215,289
Matsushita Electric Industrial Co., Ltd. (Information
Technology)............................................... 16,000 258,046
Nippon Telegraph & Telephone Corp. (Utilities).............. 40 332,682
Olympus Optical Co. (Healthcare)............................ 25,000 218,052
Rohm Co., Ltd. (Information Technology)..................... 2,000 206,118
Sanwa Bank Ltd. (Finance)................................... 21,000 188,479
Shohkoh Fund & Co. (Finance)................................ 300 73,986
Sony Corp. (Information & Entertainment).................... 4,900 423,483
Square Co., Ltd. (Information Technology)................... 200 5,352
Toshiba Corp. (Information Technology)...................... 58,000 237,839
Uni Charm Corp. (Consumer Staples).......................... 4,600 170,999
-----------
4,230,730
-----------
MEXICO -- 1.7%
Coca Cola Femsa SA (Consumer Staples)....................... 51,400 88,551
Grupo Financiero Banamex-Accival SA de CV., Class B
(Finance)................................................. 42,900 83,551
Grupo Televisa SA de CV, Class A (Information &
Entertainment)............................................ 7,200 134,617
</TABLE>
- ---------------------
24
<PAGE> 26
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C>
MEXICO (continued)
Kimberly-Clark de Mexico SA de CV, Class A (Consumer
Staples).................................................. 43,000 $ 151,939
Telefonos de Mexico SA ADR (Utilities)...................... 3,200 153,800
-----------
612,458
-----------
NETHERLANDS -- 7.2%
Gucci Group NV-NY Registry Shares (Consumer
Discretionary)............................................ 2,500 132,500
Internationale Nederladen Groep NV (Finance)................ 8,709 570,675
KPN NV (Utilities).......................................... 5,210 200,685
Philips Electronics NV (Information Technology)............. 8,700 731,866
Royal Dutch Petroleum Co. ADR (Energy)...................... 3,400 186,362
TNT Post Group NV (Industrial & Commercial)+................ 5,210 133,277
Unilever NV PLC (Consumer Staples).......................... 7,700 611,379
-----------
2,566,744
-----------
NEW ZEALAND -- 0.5%
Telecommunications Corp. of New Zealand Ltd. ADR
(Utilities)............................................... 3,245 106,273
Telecommunications Corp. of New Zealand Ltd. IR
(Utilities)............................................... 8,000 17,151
Telecommunications Corp. of New Zealand Ltd. (Utilities).... 12,768 52,752
-----------
176,176
-----------
NORWAY -- 0.4%
Saga Petroleum ASA, Series A (Energy)....................... 9,200 141,640
-----------
PHILIPPINES -- 0.1%
Ayala Land, Inc. (Real Estate).............................. 84,000 24,173
-----------
PORTUGAL -- 0.1%
Manila Electric Co. (Utilities)............................. 17,000 44,844
-----------
RUSSIA -- 0.1%
Lukoil Holdings ADR (Energy)................................ 1,200 39,619
-----------
SINGAPORE -- 0.3%
Overseas Union Bank Ltd. alien shares (Finance)............. 56,000 122,967
-----------
SOUTH AFRICA -- 0.4%
De Beers Centenary AG (Materials)........................... 1,600 28,115
Liberty Life Association (Finance).......................... 2,434 47,449
South African Breweries (Consumer Staples).................. 2,500 51,433
-----------
126,997
-----------
SOUTH KOREA -- 0.3%
Pohang Iron & Steel Co., Ltd. ADR (Materials)............... 5,260 63,120
SK Telecom Co., Ltd ADR (Utilities)......................... 5,770 32,096
-----------
95,216
-----------
SPAIN -- 3.0%
Banco de Santander SA (Finance)............................. 7,000 179,165
Banco Popular Espanol SA (Finance).......................... 1,560 133,060
Endesa SA (Utilities)....................................... 14,100 308,481
Telefonica SA ADR (Utilities)............................... 3,154 438,603
-----------
1,059,309
-----------
SWEDEN -- 3.7%
Hennes & Mauritz AB, Class B (Consumer Discretionary)....... 4,000 255,266
Nordbanken AB (Finance)..................................... 53,050 389,095
Pharmacia & Upjohn, Inc. (Healthcare)....................... 4,060 186,813
</TABLE>
---------------------
25
<PAGE> 27
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C>
SWEDEN (continued)
ForeningsSparbanken AB, Class A (Finance)................... 2,900 $ 87,262
Volvo AB, Class B (Consumer Discretionary).................. 12,850 382,632
------------
1,301,068
------------
SWITZERLAND -- 4.4%
Compagnie Financiere Richemont AG (Consumer Staples)........ 70 91,758
CS Holding AG (Finance)..................................... 1,730 385,574
Holderbank Financiere Glarus AG (Materials)................. 470 599,023
Nestle SA (Consumer Staples)................................ 219 469,441
------------
1,545,796
------------
TAIWAN -- 0.2%
Taiwan Semiconductor Manufacturing Co., Ltd. (Information
Technology)+.............................................. 3,600 60,750
------------
THAILAND -- 0.1%
Bangkok Bank PLC alien shares (Finance)*.................... 15,000 18,483
Thai Farmers Bank alien shares (Finance).................... 10,900 9,622
------------
28,105
------------
UNITED KINGDOM -- 16.0%
B.A.T. Industries PLC (Consumer Staples).................... 28,800 288,524
Bass PLC (Consumer Staples)................................. 17,825 334,232
BOC Group PLC (Materials)................................... 9,028 123,080
British Petroleum Co. PLC (Energy).......................... 31,858 464,909
British Telecommunications PLC (Information Technology)..... 16,700 206,342
BTR PLC (Industrial & Commercial)........................... 19,537 55,456
Compass Group PLC (Information & Entertainment)............. 26,900 309,464
Cookson Group PLC (Information Technology).................. 4,907 16,878
Diageo PLC (Consumer Staples)............................... 30,836 365,557
Granada Group PLC (Information & Entertainment)............. 5,600 103,041
Great Universal Stores PLC (Consumer Discretionary)......... 20,700 273,046
HSBC Holdings PLC (Finance)................................. 14,600 353,963
Lloyds TSB Group Ltd. PLC (Finance)......................... 13,500 189,006
Marks & Spencer PLC (Consumer Discretionary)................ 9,800 89,260
Next PLC (Consumer Discretionary)........................... 10,100 86,849
PowerGen PLC (Utilities).................................... 20,662 285,655
Reckitt & Colman PLC (Consumer Staples)..................... 20,700 395,398
Royal & Sun Alliance Insurance Group PLC (Finance).......... 18,181 188,060
Royal Bank of Scotland Group PLC (Finance).................. 10,200 177,122
Siebe PLC (Industrial & Commercial)......................... 3,400 67,953
Smithkline Beecham PLC (Healthcare)......................... 48,270 589,563
Standard Chartered PLC (Finance)............................ 13,600 154,641
WPP Group PLC (Information & Entertainment)................. 39,400 258,375
Zeneca Group PLC (Healthcare)............................... 7,300 313,496
------------
5,689,870
------------
TOTAL COMMON STOCK (cost $27,602,914)....................... 32,155,330
------------
<CAPTION>
PREFERRED STOCK -- 3.2% SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C>
BRAZIL -- 1.4%
Banco Itau SA (Finance)..................................... 241,900 138,043
Companhia Brasileira de Distribuicao Grupo Pao de Acucar
(Consumer Staples)........................................ 1,578,900 35,495
Companhia Cervejaraia Brahma (Consumer Staples)............. 115,700 72,028
Companhia Energetica de Minas Gerais ADR (Utilities)........ 3,070,441 95,574
</TABLE>
- ---------------------
26
<PAGE> 28
<TABLE>
<CAPTION>
PREFERRED STOCK (CONTINUED) SHARES VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C>
BRAZIL (continued)
Petroleo Brasileiros SA (Energy)............................ 314,200 $ 58,409
Telecomunicacoes Brasileiras SA (Utilities)................. 1,076,100 117,049
-----------
516,598
-----------
GERMANY -- 1.8%
Henkel KGaA (Consumer Staples).............................. 2,820 279,115
Hornbach Holding AG (Consumer Discretionary)................ 1,400 128,088
ProSieben Media AG (Information & Entertainment)*........... 10 519
SAP AG (Information Technology)............................. 320 217,361
-----------
625,083
-----------
TOTAL PREFERRED STOCK (cost $1,114,357)..................... 1,141,681
-----------
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 0.0% AMOUNT
---------------------------------------------------------------------------------------------
<S> <C> <C>
BRAZIL -- 0.0%
Compania Vale do Rio Doce zero coupon 1999+(1) (cost $0).... $ 5,500 1
-----------
WARRANTS -- 0.0%+ WARRANTS
---------------------------------------------------------------------------------------------
FRANCE -- 0.0%
Allianz AG 6/15/00 (Finance)* (cost $0)..................... 159 924
-----------
RIGHTS -- 0.0% RIGHTS
---------------------------------------------------------------------------------------------
BRAZIL -- 0.0%
Telecomunicacoes de Sao Paulo SA 7/02/98 (cost $0).......... 16,515 264
-----------
TOTAL INVESTMENT SECURITIES (cost $28,717,271).............. 33,298,200
-----------
PRINCIPAL
SHORT-TERM SECURITIES -- 0.1% AMOUNT
---------------------------------------------------------------------------------------------
U.S. GOVERNMENT -- 0.1%
United States Treasury Bills 5.00% due 8/13/98 (cost
$49,701).................................................. $ 50,000 49,701
-----------
</TABLE>
---------------------
27
<PAGE> 29
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT -- 6.5% AMOUNT VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Joint Repurchase Agreement Account (Note 3)@
(cost $2,310,000)......................................... $2,310,000 $ 2,310,000
---------- -----------
TOTAL INVESTMENTS --
(cost $31,076,972) 100.5% 35,657,901
Liabilities in excess of other assets -- 0.5 (180,233)
--------- --------------
NET ASSETS -- 100.0% $35,477,668
========= ==============
</TABLE>
- -----------------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
ADR -- American Depository Receipt
IR -- Installment Receipt
(1) Fair valued security; See Note 2
@ The security or a portion thereof represents collateral for the
following open futures contracts:
OPEN FUTURES CONTRACTS
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION VALUE AT VALUE AS OF UNREALIZED
CONTRACTS DESCRIPTION DATE TRADE DATE JUNE 30, 1998 DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3 Short Topix Index Future -- Tokyo Stock Exchange March 1998 $255,353 $261,329 $(5,976)
=======
</TABLE>
See Notes to Financial Statements
- ---------------------
28
<PAGE> 30
- ---------------------
ANCHOR SERIES TRUST
GROWTH PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK -- 97.3% SHARES VALUE
-----------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
CONSUMER DISCRETIONARY -- 8.5%
Automotive -- 0.4%
Goodyear Tire & Rubber Co................................... 35,500 $ 2,287,531
Retail -- 8.1%
Barnes & Noble, Inc.+....................................... 69,000 2,583,188
CVS Corp.................................................... 126,002 4,906,203
Dayton Hudson Corp.......................................... 190,000 9,215,000
Ethan Allen Interiors, Inc. ................................ 32,000 1,598,000
Home Depot, Inc............................................. 129,000 10,715,062
Office Max, Inc.+........................................... 150,000 2,475,000
Petco Animal Supplies, Inc.+................................ 105,000 2,093,438
Staples, Inc.+.............................................. 103,400 2,992,137
Stein Mart, Inc.+........................................... 108,000 1,458,000
Wal-Mart Stores, Inc........................................ 160,000 9,720,000
-------------
50,043,559
-------------
CONSUMER STAPLES -- 7.7%
Food, Beverage & Tobacco -- 4.1%
Beringer Wine Estates Holdings, Inc., Class B+.............. 35,000 1,542,188
Coca-Cola Co................................................ 41,600 3,556,800
General Mills, Inc. ........................................ 45,000 3,076,875
PepsiCo, Inc................................................ 100,000 4,118,750
Philip Morris Cos., Inc..................................... 145,000 5,709,375
Sara Lee Corp. ............................................. 110,600 6,186,687
Household Products -- 3.6%
Bush Boake Allen, Inc.+..................................... 67,000 1,963,937
Estee Lauder Cos., Inc., Class A............................ 37,300 2,599,344
Gillette Co. ............................................... 64,000 3,628,000
Kimberly-Clark Corp. ....................................... 91,000 4,174,625
Procter & Gamble Co. ....................................... 98,000 8,924,125
-------------
45,480,706
-------------
ENERGY -- 4.5%
Energy Services -- 1.3%
Diamond Offshore Drilling, Inc.............................. 48,000 1,920,000
Schlumberger Ltd. .......................................... 80,000 5,465,000
Energy Sources -- 3.2%
Barrett Resources Corp.+.................................... 19,400 726,288
Chevron Corp. .............................................. 75,000 6,229,687
Exxon Corp.................................................. 77,400 5,519,587
Royal Dutch Petroleum Co. ADR............................... 122,700 6,725,494
-------------
26,586,056
-------------
</TABLE>
---------------------
29
<PAGE> 31
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 19.1%
Banks -- 6.6%
Associated Banc Corp........................................ 68,750 $ 2,586,719
Citicorp.................................................... 49,000 7,313,250
First Union Corp............................................ 150,000 8,737,500
Mercantile Bankshares Corp.................................. 73,000 2,541,312
NationsBank Corp............................................ 73,000 5,584,500
State Street Corp........................................... 55,700 3,871,150
U.S. Bancorp................................................ 130,000 5,590,000
Wilmington Trust Corp. ..................................... 50,000 3,043,750
Financial Services -- 5.5%
American Express Co. ....................................... 81,000 9,234,000
Associates First Capital Corp., Class A..................... 46,000 3,536,250
Federal National Mortgage Association....................... 130,000 7,897,500
Merrill Lynch & Co., Inc. .................................. 50,000 4,612,500
Morgan Stanley, Dean Witter, Discover & Co. ................ 81,600 7,456,200
Insurance -- 7.0%
Ace Ltd. ................................................... 171,000 6,669,000
Allstate Corp. ............................................. 54,100 4,953,531
American International Group, Inc. ......................... 68,250 9,964,500
Frontier Insurance Group, Inc. ............................. 122,100 2,754,881
Marsh & McLennan Cos., Inc. ................................ 62,250 3,762,235
Reinsurance Group America, Inc. ............................ 50,150 2,965,119
Travelers Group, Inc. ...................................... 165,000 10,003,125
-------------
113,077,022
-------------
HEALTHCARE -- 12.4%
Drugs -- 7.8%
American Home Products Corp. ............................... 73,000 3,777,750
Covance, Inc.+.............................................. 155,000 3,487,500
Genzyme Corp.+.............................................. 120,000 3,067,500
Johnson & Johnson Co. ...................................... 46,000 3,392,500
Merck & Co., Inc. .......................................... 38,000 5,082,500
Pfizer, Inc. ............................................... 90,000 9,781,875
Pharmacia & Upjohn, Inc. ................................... 142,000 6,549,750
Warner-Lambert Co. ......................................... 94,500 6,555,937
Zeneca Group PLC ADR........................................ 102,000 4,475,250
Health Services -- 2.2%
Columbia/HCA Healthcare Corp. .............................. 135,900 3,958,087
ServiceMaster Co. .......................................... 49,400 1,880,288
Shared Medical Systems Corp. ............................... 53,000 3,892,188
United Healthcare Corp. .................................... 53,800 3,416,300
Medical Products -- 2.4%
Abbott Laboratories, Inc. .................................. 180,000 7,357,500
Biomet, Inc. ............................................... 55,000 1,818,438
Life Technologies, Inc. .................................... 85,000 2,666,875
Perkin-Elmer Corp. ......................................... 37,900 2,356,906
-------------
73,517,144
-------------
INDUSTRIAL & COMMERCIAL -- 10.2%
Aerospace & Military Technology -- 1.6%
Boeing Co. ................................................. 100,000 4,456,250
General Motors Corp., Class H+.............................. 40,000 1,885,000
United Technologies Corp. .................................. 35,000 3,237,500
</TABLE>
- ---------------------
30
<PAGE> 32
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL & COMMERCIAL (continued)
Business Services -- 3.5%
Barnett, Inc.+ ............................................. 60,000 $ 1,215,000
Dames & Moore, Inc. ........................................ 105,000 1,351,875
G & K Services, Inc., Class A............................... 92,000 4,013,500
Hertz Corp., Class A........................................ 40,000 1,772,500
Ionics, Inc.+............................................... 65,000 2,396,875
Service Corp. International................................. 92,000 3,944,500
Tetra Tech, Inc.+........................................... 100,000 2,425,000
United States Rentals, Inc.+................................ 95,000 3,746,562
Electrical Equipment -- 3.0%
General Electric Co. ....................................... 165,000 15,015,000
Littelfuse, Inc.+........................................... 112,000 2,828,000
Machinery -- 0.5%
Donaldson Co., Inc. ........................................ 104,000 2,457,000
Paxar Corp.+................................................ 38,800 446,200
Multi-Industry -- 0.6%
Minnesota Mining & Manufacturing Co. ....................... 44,000 3,616,250
Transportation -- 1.0%
Air Express International Corp. ............................ 91,500 2,447,625
C.H. Robinson Worldwide, Inc. .............................. 55,000 1,368,125
Union Pacific Corp. ........................................ 43,000 1,897,375
-------------
60,520,137
-------------
INFORMATION & ENTERTAINMENT -- 8.3%
Broadcasting & Media -- 5.0%
ADVO, Inc.+................................................. 48,500 1,367,094
AirTouch Communications, Inc.+.............................. 67,200 3,927,000
CBS Corp.+.................................................. 80,200 2,546,350
Cox Communications, Inc., Class A+.......................... 120,000 5,812,500
Disney (Walt) Co. .......................................... 40,000 4,202,500
Gannett, Inc. .............................................. 110,000 7,816,875
Liberty Media Group, Inc., Series A+........................ 33,000 1,280,812
Time Warner, Inc. .......................................... 28,900 2,469,144
Entertainment Products -- 0.4%
Speedway Motorsports, Inc.+................................. 90,000 2,300,625
Leisure & Tourism -- 2.9%
Landry's Seafood Restaurants, Inc.+......................... 67,000 1,212,281
McDonald's Corp. ........................................... 98,000 6,762,000
Mirage Resorts, Inc.+....................................... 130,000 2,770,625
Southwest Airlines Co. ..................................... 223,500 6,621,188
-------------
49,088,994
-------------
INFORMATION TECHNOLOGY -- 21.5%
Communication Equipment -- 4.0%
3Com Corp.+................................................. 43,000 1,319,563
CIENA Corp.+................................................ 30,000 2,088,750
Cisco Systems, Inc.+........................................ 135,000 12,428,437
Lucent Technologies, Inc. .................................. 70,334 5,850,910
Motorola, Inc. ............................................. 40,000 2,102,500
Computers & Business Equipment -- 3.7%
Compaq Computer Corp.+...................................... 106,100 3,010,587
EMC Corp.+.................................................. 140,000 6,273,750
Hewlett-Packard Co. ........................................ 77,000 4,610,375
International Business Machines Corp. ...................... 69,100 7,933,544
</TABLE>
---------------------
31
<PAGE> 33
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (continued)
Electronics -- 2.9%
Analog Devices, Inc.+....................................... 139,100 $ 3,416,644
Applied Materials, Inc.+.................................... 72,000 2,124,000
Dallas Semiconductor Corp. ................................. 65,000 2,015,000
Intel Corp. ................................................ 94,800 7,027,050
Texas Instruments, Inc. .................................... 48,900 2,851,481
Software -- 10.9%
America Online, Inc.+....................................... 34,000 3,604,000
American Management Systems, Inc.+.......................... 85,000 2,544,688
Automatic Data Processing, Inc. ............................ 112,000 8,162,000
BISYS Group, Inc.+.......................................... 69,000 2,829,000
Cognos, Inc.+............................................... 135,000 3,596,484
Computer Sciences Corp.+.................................... 90,000 5,760,000
DST Systems, Inc.+.......................................... 67,000 3,752,000
First Data Corp............................................. 100,000 3,331,250
Microsoft Corp.+............................................ 129,000 13,980,375
PeopleSoft, Inc.+........................................... 92,000 4,324,000
Policy Management Systems Corp.+............................ 110,000 4,317,500
Sterling Software, Inc.+.................................... 155,000 4,582,187
Synopsys, Inc.+............................................. 55,000 2,516,250
Systems & Computer Technology Corp.+........................ 40,000 1,080,000
-------------
127,432,325
-------------
MATERIALS -- 1.6%
Chemicals -- 1.3%
du Pont (E.I.) de Nemours & Co.............................. 56,100 4,186,463
Minerals Technologies, Inc.................................. 70,000 3,561,250
Paper Products -- 0.3%
Bemis Co., Inc.............................................. 45,000 1,839,375
-------------
9,587,088
-------------
UTILITIES -- 3.5%
Gas & Pipeline Utilities -- 0.0%
MCN Corp.................................................... 15,000 373,125
Telephone -- 3.5%
Bell Atlantic Corp.......................................... 109,000 4,973,125
Century Telephone Enterprises, Inc.......................... 30,000 1,376,250
SBC Communications, Inc..................................... 196,800 7,872,000
WorldCom, Inc.+............................................. 130,000 6,296,875
-------------
20,891,375
-------------
TOTAL INVESTMENT SECURITIES (cost $353,648,862)............. 576,224,406
-------------
</TABLE>
- ---------------------
32
<PAGE> 34
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT -- 2.7% AMOUNT VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
Joint Repurchase Agreement Account (Note 3)
(cost $16,030,000)........................................ $16,030,000 $ 16,030,000
------------
TOTAL INVESTMENTS --
(cost $369,678,862) 100.0% 592,254,406
Liabilities in excess of other assets -- 0.0 (185,167)
---------- ------------
NET ASSETS -- 100.0% $592,069,239
========== ============
</TABLE>
-----------------------------
+ Non-income producing security
ADR -- American Depository Receipt
See Notes to Financial Statements
---------------------
33
<PAGE> 35
- ---------------------
ANCHOR SERIES TRUST
CAPITAL APPRECIATION
PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK -- 88.3% SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
CONSUMER DISCRETIONARY -- 9.9%
Apparel & Textiles -- 0.3%
Tefron Ltd.+................................................ 150,000 $ 3,300,000
Retail -- 9.6%
Barnes & Noble, Inc.+....................................... 375,000 14,039,062
Bed Bath & Beyond, Inc.+.................................... 400,000 20,725,000
Consolidated Stores Corp.+.................................. 285,000 10,331,250
Gadzooks, Inc.+............................................. 145,000 3,996,563
Gap, Inc.................................................... 425,000 26,190,625
Home Depot, Inc............................................. 195,000 16,197,187
Hot Topic, Inc.+............................................ 130,500 3,099,375
-------------
97,879,062
-------------
CONSUMER STAPLES -- 1.8%
Food, Beverage & Tobacco -- 1.4%
General Cigar Holdings, Inc., Class A+...................... 175,000 1,728,125
McCormick & Co., Inc........................................ 185,000 6,607,969
United Natural Foods, Inc.+................................. 191,500 5,457,750
Household Products -- 0.4%
Revlon, Inc., Class A+...................................... 78,000 4,007,250
-------------
17,801,094
-------------
ENERGY -- 3.2%
Energy Services -- 3.2%
ENSCO International, Inc. .................................. 500,000 8,687,500
Santa Fe International Corp. ............................... 150,900 4,564,725
Transocean Offshore, Inc. .................................. 425,000 18,912,500
-------------
32,164,725
-------------
FINANCE -- 8.3%
Financial Services -- 4.1%
Dain Rauscher Corp. ........................................ 115,000 6,296,250
Heller Financial, Inc., Class A+............................ 150,000 4,500,000
Legg Mason, Inc............................................. 186,666 10,744,962
McDonald & Co. Investments, Inc. ........................... 115,800 3,799,687
Merrill Lynch & Co., Inc. .................................. 110,000 10,147,500
Morgan Keegan, Inc. ........................................ 225,000 5,821,875
Insurance -- 4.2%
Ace Co., Ltd. ADR........................................... 750,000 29,250,000
Allstate Corp. ............................................. 75,000 6,867,187
Transatlantic Holdings, Inc. ............................... 67,500 5,218,594
-------------
82,646,055
-------------
</TABLE>
- ---------------------
34
<PAGE> 36
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE -- 11.1%
Drugs -- 7.2%
Agouron Pharmaceuticals, Inc.+.............................. 160,000 $ 4,850,000
Covance, Inc.+.............................................. 210,000 4,725,000
Genzyme Corp.+.............................................. 475,000 12,142,187
Gilead Sciences, Inc.+...................................... 145,000 4,649,063
Human Genome Sciences, Inc.+................................ 100,000 3,568,750
Immunex Corp.+.............................................. 140,000 9,275,000
Pharmacia & Upjohn, Inc..................................... 250,000 11,531,250
Warner-Lambert Co........................................... 140,000 9,712,500
Zeneca Group PLC ADR........................................ 240,000 10,530,000
Health Services -- 1.9%
Beverly Enterprises, Inc.+.................................. 84,100 1,161,631
Columbia/HCA Healthcare Corp................................ 280,000 8,155,000
IDX Systems Corp.+.......................................... 90,000 4,145,625
Magellan Health Services, Inc.+............................. 188,100 4,773,038
Vencor, Inc................................................. 78,100 566,225
Medical Products -- 2.0%
Biomet, Inc................................................. 125,000 4,132,813
Ocular Sciences, Inc.+...................................... 137,300 4,462,250
Perkin-Elmer Corp........................................... 120,000 7,462,500
Respironics, Inc.+.......................................... 250,150 3,892,959
-------------
109,735,791
-------------
INDUSTRIAL & COMMERCIAL -- 9.2%
Aerospace & Military Technology -- 1.5%
General Motors Corp., Class H+.............................. 75,000 3,534,375
Loral Space & Communications Corp.+......................... 240,000 6,780,000
Precision Castparts Corp.................................... 75,000 4,003,125
Business Services -- 4.2%
CellStar Corp.+............................................. 228,500 2,956,219
Comfort Systems USA, Inc.+.................................. 100,000 2,337,500
Cotelligent Group, Inc.+.................................... 125,000 2,921,875
Group Maintenance America Corp.+............................ 140,000 2,520,000
Iron Mountain, Inc.+........................................ 115,000 5,146,250
Republic Industries, Inc.+.................................. 220,700 5,517,500
Select Appointments Holdings PLC ADR........................ 300,000 8,850,000
Service Experts, Inc.+...................................... 130,000 4,485,000
SPR, Inc.+.................................................. 115,200 3,585,600
West TeleServices Corp.+.................................... 260,000 3,152,500
Electrical Equipment -- 2.4%
General Cable Corp.+........................................ 415,000 11,983,125
Honeywell, Inc.............................................. 140,000 11,698,750
Machinery -- 0.2%
Elsag Bailey Process Automation NV+......................... 100,000 2,406,250
Transportation -- 0.9%
Werner Enterprises, Inc..................................... 475,000 9,054,687
-------------
90,932,756
-------------
INFORMATION & ENTERTAINMENT -- 16.4%
Broadcasting & Media -- 15.3%
American Tower Systems Corp., Class A+...................... 150,000 3,740,625
CanWest Global Communications Corp.......................... 197,200 3,167,525
Capstar Broadcasting Corp., Class A+........................ 168,100 4,223,512
Central European Media Enterprises Ltd., Class A+........... 140,000 3,027,500
Chancellor Media Corp.+..................................... 70,000 3,475,938
</TABLE>
---------------------
35
<PAGE> 37
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT (continued)
Broadcasting & Media (continued)
Clear Channel Communications, Inc.+......................... 109,210 $ 11,917,541
EchoStar Communications Corp., Class A+..................... 162,400 3,907,750
Getty Images, Inc.+......................................... 220,000 4,895,000
Jacor Communications, Inc.+................................. 225,000 13,275,000
Lamar Advertising Co., Class A+............................. 325,000 11,659,375
LodgeNet Entertainment Corp.+............................... 181,100 1,833,638
Metro Networks, Inc.+....................................... 120,000 5,175,000
NTL, Inc.+.................................................. 96,200 5,146,700
Outdoor Systems, Inc.+...................................... 647,830 18,139,240
Scripps (E.W.) Co., Class A................................. 70,000 3,836,875
SFX Entertainment, Inc., Class A+........................... 110,000 5,046,250
Tele-Communications Liberty Media Group, Class A+........... 1,000,000 38,812,500
TMP Worldwide, Inc.+........................................ 100,000 3,487,500
Young Broadcasting, Inc., Class A+.......................... 100,000 6,500,000
Leisure & Tourism -- 1.1%
American Skiing Co.+........................................ 200,200 2,602,600
Papa John's International, Inc.+............................ 160,000 6,310,000
Virgin Express Holdings PLC ADR+............................ 175,000 2,264,062
-------------
162,444,131
-------------
INFORMATION TECHNOLOGY -- 24.5%
Communication Equipment -- 2.2%
3Com Corp.+................................................. 175,000 5,370,312
Alcatel Alsthom ADR......................................... 200,000 8,137,500
APT Satellite Holdings Ltd. ADR+............................ 35,300 311,081
Gilat Satellite Networks Ltd.+.............................. 125,000 4,179,688
NICE Systems Ltd. ADR+...................................... 100,000 3,750,000
Computers & Business Equipment -- 3.2%
EMC Corp.+.................................................. 650,000 29,128,125
Splash Technology Holdings, Inc.+........................... 140,000 2,406,250
Electronics -- 4.7%
Aavid Thermal Technologies, Inc.+........................... 130,000 3,802,500
Analog Devices, Inc.+....................................... 350,000 8,596,875
Flextronics International Ltd.+............................. 125,000 5,437,500
Galileo Technology Ltd.+.................................... 125,000 1,687,500
Philips Electronics NV-NY Shares ADR........................ 250,000 21,250,000
Xilinx, Inc.+............................................... 175,000 5,950,000
Software -- 14.1%
BA Merchants Services, Inc., Class A+....................... 150,000 3,028,125
BISYS Group, Inc.+.......................................... 360,000 14,760,000
BMC Software, Inc........................................... 340,000 17,658,750
Ceridian Corp.+............................................. 165,000 9,693,750
Computer Sciences Corp.+.................................... 380,000 24,320,000
Electronic Arts, Inc.+...................................... 275,000 14,850,000
First Data Corp............................................. 315,000 10,493,438
Omtool Ltd.+................................................ 180,000 1,372,500
Parametric Technology Corp.+................................ 350,000 9,493,750
PeopleSoft, Inc.+........................................... 180,000 8,460,000
Policy Management Systems Corp.+............................ 150,000 5,887,500
Sterling Software, Inc.+.................................... 680,000 20,102,500
Telecommunications -- 0.3%
Allegiance Telecommunications, Inc.+........................ 198,200 2,973,000
-------------
243,100,644
-------------
</TABLE>
- ---------------------
36
<PAGE> 38
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE -- 0.8%
Real Estate Companies -- 0.8%
Security Capital Group, Inc., Class B+...................... 315,000 $ 8,386,875
-------------
UTILITIES -- 3.1%
Telephone -- 3.1%
Hyperion Telecommunications, Inc., Class A.................. 124,300 1,949,956
ICG Communications, Inc.+................................... 120,000 4,387,500
Intermedia Communications, Inc.+............................ 339,400 14,233,588
WorldCom, Inc.+............................................. 200,000 9,687,500
-------------
30,258,544
-------------
TOTAL COMMON STOCK (cost $608,330,386)...................... 875,349,677
-------------
PREFERRED STOCK -- 0.9%
------------------------------------------------------------------------------------------
INFORMATION & ENTERTAINMENT -- 0.9%
Broadcasting & Media -- 0.9%
News Corp., Ltd. ADR (cost $4,691,342)...................... 300,000 8,475,000
-------------
TOTAL INVESTMENT SECURITIES (cost $613,021,728)............. 883,824,677
-------------
PRINCIPAL
REPURCHASE AGREEMENT -- 10.7% AMOUNT
------------------------------------------------------------------------------------------
Joint Repurchase Agreement Account (Note 3)
(cost $105,880,000)....................................... $105,880,000 105,880,000
-------------
TOTAL INVESTMENTS --
(cost $718,901,728) 99.9% 989,704,677
Other assets less liabilities -- 0.1 1,287,929
====== -------------
NET ASSETS -- 100.0% $990,992,606
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
See Notes to Financial Statements
---------------------
37
<PAGE> 39
- ---------------------
ANCHOR SERIES TRUST
NATURAL RESOURCES
PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK -- 92.5% SHARES VALUE
---------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY -- 40.3%
Energy Services -- 8.0%
Baker Hughes, Inc. ......................................... 36,000 $ 1,244,250
Cooper Cameron Corp.+....................................... 24,700 1,259,700
J. Ray McDermott SA+........................................ 5,500 228,250
R & B Falcon Corp.+......................................... 48,000 1,086,000
Energy Sources -- 32.3%
Alberta Energy Co., Ltd. ................................... 40,000 937,787
Anadarko Petroleum Corp. ................................... 10,000 671,875
Apex Silver Mines Ltd.+..................................... 17,500 169,531
Barrett Resources Corp.+.................................... 25,000 935,937
Chevron Corp. .............................................. 20,000 1,661,250
Enron Oil & Gas Co. ........................................ 44,350 898,088
Norsk Hydro ASA ADR......................................... 30,000 1,323,750
PanCanadian Petroleum Ltd. ................................. 60,000 892,936
Poco Petroleum Ltd.+........................................ 60,000 589,175
Pogo Producing Co. ......................................... 32,000 804,000
Talisman Energy, Inc.+...................................... 27,000 786,375
Total SA ADR................................................ 23,193 1,516,242
Ultramar Diamond Shamrock Corp. ............................ 20,200 637,563
Unocal Corp. ............................................... 14,020 501,215
USX-Marathon Group, Inc. ................................... 42,800 1,468,575
Vastar Resources, Inc. ..................................... 12,000 524,250
YPF Sociedad Anonima ADR.................................... 38,000 1,142,375
------------
19,279,124
------------
MATERIALS -- 41.8%
Metals & Minerals -- 36.3%
Alumax, Inc. ............................................... 8,785 407,404
Aluminum Co. of America..................................... 12,600 830,813
Ashanti Goldfields Co., Ltd. GDR............................ 142,083 1,154,424
Barrick Gold Corp. ......................................... 80,000 1,535,000
Billiton PLC*............................................... 406,400 824,458
Carbide/Graphite Group, Inc.+............................... 42,100 1,170,906
Companhia Vale do Rio Doce ADR.............................. 51,000 1,036,448
Cyprus Amax Minerals Co. ................................... 60,000 795,000
DeBeers Consolidated Mines Ltd. ADR......................... 35,000 612,500
EASCO, Inc. ................................................ 44,000 442,750
Freeport-McMoRan Copper & Gold, Inc., Class A............... 72,900 1,038,825
Freeport-McMoRan Copper & Gold, Inc., Class B............... 40,000 607,500
Newcrest Mining Ltd. ....................................... 225,953 277,715
Newmont Gold Co. ........................................... 22,600 557,938
Newmont Mining Corp. ....................................... 48,150 1,137,544
Normandy Mining Ltd. ....................................... 1,561,155 1,279,194
Phelps Dodge Corp. ......................................... 21,500 1,229,531
Rio Tinto PLC+.............................................. 30,083 339,050
Stillwater Mining Co.+...................................... 36,750 996,844
Titanium Metals Corp. ...................................... 49,300 1,087,681
</TABLE>
- ---------------------
38
<PAGE> 40
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
---------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Paper Products -- 5.5%
Weyerhaeuser Co. ........................................... 30,000 $ 1,385,625
Willamette Industries, Inc. ................................ 40,000 1,280,000
------------
20,027,150
------------
REAL ESTATE -- 10.4%
Real Estate Investment Trusts -- 10.4%
CarrAmerica Realty Corp. ................................... 35,300 1,001,638
Security Capital Pacific Trust.............................. 45,500 1,023,750
Spieker Properties, Inc. ................................... 25,500 988,125
Starwood Lodging Trust...................................... 21,200 1,024,225
Urban Shopping Centers, Inc. ............................... 29,400 926,100
------------
4,963,838
------------
TOTAL COMMON STOCK (cost $46,736,235)....................... 44,270,112
------------
<CAPTION>
WARRANTS -- 0.0%+ WARRANTS
---------------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE -- 0.0%
Real Estate Investment Trusts -- 0.0%
Security Capital Group, Inc., Class B 9/18/98 (cost
$18,682).................................................. 2,105 723
------------
TOTAL INVESTMENT SECURITIES (cost $46,754,917).............. 44,270,835
------------
PRINCIPAL
REPURCHASE AGREEMENT -- 6.4% AMOUNT
---------------------------------------------------------------------------------------
Joint Repurchase Agreement Account (Note 3) (cost
$3,060,000)............................................... $3,060,000 3,060,000
------------
TOTAL INVESTMENTS --
(cost $49,814,917) 98.9% 47,330,835
Other assets less liabilities -- 1.1 513,704
------ ------------
NET ASSETS -- 100.0% $47,844,539
====== ============
</TABLE>
-----------------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
See Notes to Financial Statements
---------------------
39
<PAGE> 41
- ---------------------
ANCHOR SERIES TRUST
MULTI-ASSET PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK -- 61.4% SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
CORE EQUITY -- 61.4%
Banks -- 5.0%
BankAmerica Corp. .......................................... 17,000 $ 1,469,437
Citicorp.................................................... 14,000 2,089,500
First Union Corp. .......................................... 34,400 2,003,800
U.S. Bancorp................................................ 42,000 1,806,000
Broadcasting & Media -- 3.7%
AirTouch Communications, Inc.+.............................. 10,000 584,375
America Online, Inc.+....................................... 10,200 1,081,200
CBS Corp.+.................................................. 11,000 349,250
Disney (Walt) Co. .......................................... 13,500 1,418,344
Gannett, Inc. .............................................. 30,000 2,131,875
Business Services -- 0.6%
Hertz Corp., Class A........................................ 20,000 886,250
Communication Equipment -- 2.1%
Cisco Systems, Inc.+........................................ 18,000 1,657,125
Lucent Technologies, Inc. .................................. 17,630 1,466,596
Computers & Business Equipment -- 3.5%
Compaq Computer Corp. ...................................... 13,600 385,900
EMC Corp.+.................................................. 32,900 1,474,331
International Business Machines Corp. ...................... 14,500 1,664,781
Xerox Corp. ................................................ 16,000 1,626,000
Drugs -- 5.8%
American Home Products Corp. ............................... 37,500 1,940,625
Johnson & Johnson Co. ...................................... 23,400 1,725,750
Merck & Co., Inc. .......................................... 13,000 1,738,750
Pfizer, Inc. ............................................... 17,200 1,869,425
Warner-Lambert Co. ......................................... 19,500 1,352,812
Electric Utilities -- 0.6%
Duke Energy Corp. .......................................... 14,900 882,825
Electrical Equipment -- 2.5%
General Electric Co. ....................................... 40,000 3,640,000
Electronics -- 1.8%
Analog Devices, Inc.+....................................... 36,200 889,163
Applied Materials, Inc.+.................................... 23,000 678,500
Intel Corp. ................................................ 16,000 1,186,000
Energy Services -- 0.9%
Schlumberger Ltd. .......................................... 20,600 1,407,238
Energy Sources -- 2.0%
Chevron Corp. .............................................. 15,000 1,245,938
Exxon Corp. ................................................ 23,400 1,668,712
</TABLE>
- ---------------------
40
<PAGE> 42
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
CORE EQUITY (continued)
Financial Services -- 4.0%
American Express Co. ....................................... 18,000 $ 2,052,000
Associates First Capital Corp., Class A..................... 5,000 384,375
Federal National Mortgage Association....................... 27,000 1,640,250
Merrill Lynch & Co., Inc. .................................. 20,000 1,845,000
Food, Beverage & Tobacco -- 2.5%
Coca-Cola Co. .............................................. 15,000 1,282,500
Nabisco Holdings Corp., Class A............................. 26,000 937,625
PepsiCo, Inc. .............................................. 37,800 1,556,887
Health Services -- 1.1%
Columbia/HCA Healthcare Corp. .............................. 35,000 1,019,375
Service Corp. International................................. 15,000 643,125
Household Products -- 3.6%
Estee Lauder Cos., Inc., Class A............................ 14,000 975,625
Gillette Co. ............................................... 24,000 1,360,500
Kimberly-Clark Corp. ....................................... 30,000 1,376,250
Procter & Gamble Co. ....................................... 18,000 1,639,125
Insurance -- 3.8%
American International Group, Inc. ......................... 13,100 1,912,600
Marsh & McLennan Cos., Inc. ................................ 33,000 1,994,438
Travelers Group, Inc. ...................................... 30,000 1,818,750
Leisure & Tourism -- 2.1%
McDonald's Corp. ........................................... 28,200 1,945,800
Mirage Resorts, Inc.+....................................... 31,600 673,475
Southwest Airlines Co. ..................................... 14,000 414,750
Medical Products -- 1.8%
Abbott Laboratories, Inc. .................................. 45,500 1,859,813
Perkin-Elmer Corp. ......................................... 14,000 870,625
Retail -- 5.2%
CVS Corp. .................................................. 42,000 1,635,375
Gap, Inc. .................................................. 30,900 1,904,212
Home Depot, Inc. ........................................... 20,700 1,719,394
Wal-Mart Stores, Inc. ...................................... 41,800 2,539,350
Software -- 4.9%
Automatic Data Processing, Inc. ............................ 18,600 1,355,475
Computer Sciences Corp.+.................................... 20,000 1,280,000
First Data Corp. ........................................... 33,200 1,105,975
Microsoft Corp.+............................................ 24,000 2,601,000
PeopleSoft, Inc.+........................................... 20,000 940,000
Telephone -- 2.7%
Bell Atlantic Corp. ........................................ 9,000 410,625
SBC Communications, Inc. ................................... 50,000 2,000,000
WorldCom, Inc.+............................................. 35,000 1,695,312
Transportation -- 1.2%
Federal Express Corp. ...................................... 1,000,000 1,000,000
Union Pacific Corp. ........................................ 19,000 838,375
-------------
TOTAL COMMON STOCK (cost $54,247,222)....................... 91,548,483
-------------
</TABLE>
---------------------
41
<PAGE> 43
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 32.3% AMOUNT VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
CORE BOND -- 32.3%
ASSET-BACKED SECURITIES -- 2.1%
Aesop Funding II LLC 6.22% 2001*............................ $ 1,000,000 $ 1,005,000
Chase Manhattan Auto Owner Trust 5.70% 2001................. 700,000 698,782
Honda Auto Receivables Trust 5.95% 2003..................... 712,403 712,944
IBM Credit Receivables Lease Asset Master Trust 4.55%
2000...................................................... 46,577 46,388
Nissan Auto Receivables Grantor 6.15% 2003.................. 702,807 704,782
ENERGY -- 0.9%
Husky Oil Ltd. 7.13% 2006................................... 1,000,000 1,033,570
Mobil Oil Corp. 9.17% 2000.................................. 319,875 329,004
FINANCE -- 5.1%
Bankers Trust New York Corp. 8.25% 2005..................... 1,000,000 1,105,628
First Financial Caribbean Corp. 7.84% 2006.................. 1,000,000 1,055,430
Fleet Mortgage Group, Inc. 6.50% 2000....................... 1,000,000 1,011,050
General Electric Capital Corp. 6.50% 2006................... 1,000,000 1,032,400
General Motors Acceptance Corp. 5.63% 2001.................. 1,000,000 992,820
Lumbermans Mutual Casualty Co. 9.15% 2026*.................. 1,000,000 1,204,850
Security Benefit Life Co. 8.75% 2016*....................... 1,000,000 1,146,040
INDUSTRIAL & COMMERCIAL -- 2.8%
BancTec, Inc. 7.50% 2008+*.................................. 1,000,000 1,004,110
Clear Channel Communications, Inc. 7.25% 2027............... 1,000,000 1,030,310
Cummins Engine Co., Inc. 6.25% 2003......................... 1,000,000 999,790
Northrop Grumman Corp. 8.63% 2004........................... 1,000,000 1,117,380
MORTGAGE-RELATED SECURITIES -- 2.3%
Asset Securitization Corp. 7.49% 2027....................... 1,000,000 1,066,870
CS First Boston Mortgage Securities Corp. 6.40% 2035........ 405,492 410,687
CS First Boston Mortgage Securities Corp. 7.24% 2029........ 1,000,000 1,062,970
Morgan Stanley Capital I, Inc. 6.25% 2007................... 830,990 840,405
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.4%
Quebec Province Canada 8.80% 2003........................... 1,000,000 1,104,380
Republic of Lithuania 7.13% 2002*(1)........................ 1,000,000 967,500
U.S. GOVERNMENT & AGENCIES -- 16.2%
Federal Home Loan Mortgage Corp. 6.50% 2010 - 2025.......... 5,144,449 5,183,972
Federal Home Loan Mortgage Corp. 8.50% 2001................. 635,530 637,053
Federal Home Loan Mortgage Corporation 6.50% 2028........... 3,230,152 3,221,043
Government National Mortgage Association 6.50% 2023......... 3,825,059 3,816,682
United States Treasury Notes 5.63% 2002..................... 5,000,000 5,021,850
United States Treasury Notes 6.13% 2007..................... 3,000,000 3,121,410
United States Treasury Notes 6.50% 2005..................... 3,000,000 3,166,410
UTILITIES -- 1.5%
Niagara Mohawk Power Corp. 5.88% 2002....................... 1,250,000 1,219,862
United States West Capital Funding, Inc. 6.38% 2008......... 1,000,000 994,180
-------------
TOTAL BONDS & NOTES (cost $47,125,884)...................... 48,065,552
-------------
TOTAL INVESTMENT SECURITIES (cost $101,373,105)............. 139,614,035
-------------
SHORT-TERM SECURITIES -- 0.5%
-----------------------------------------------------------------------------------------
U.S. GOVERNMENT -- 0.5%
United States Treasury Bills 5.10% due 9/3/98
(cost $768,152)........................................... 775,000 768,276
-------------
</TABLE>
- ---------------------
42
<PAGE> 44
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT -- 6.9% AMOUNT VALUE
-----------------------------------------------------------------------------------------
<S> <C> <C>
Joint Repurchase Agreement Account (Note 3)@
(cost $10,210,000)........................................ $10,210,000 $ 10,210,000
-------------
TOTAL INVESTMENTS --
(cost $112,351,257) 101.1% 150,592,311
Liabilities in excess of other assets -- (1.1) (1,657,269)
------ -------------
NET ASSETS -- 100.0% $148,935,042
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
(1) Fair valued security; see Note 2
@ The security or a portion thereof represents collateral for
the following open futures contracts:
OPEN FUTURES CONTRACTS
------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION VALUE AT VALUE AS OF UNREALIZED
CONTRACTS DESCRIPTION DATE TRADE DATE JUNE 30, 1998 APPRECIATION
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 Long U.S. Long Bond September 1998 $6,071,210 $6,179,690 $108,480
========
</TABLE>
See Notes to Financial Statements
---------------------
43
<PAGE> 45
- ---------------------
ANCHOR SERIES TRUST
STRATEGIC MULTI-ASSET
PORTFOLIO INVESTMENT PORTFOLIO -- JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK -- 61.7% SHARES VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL APPRECIATION -- 15.7%
Broadcasting & Media -- 3.6%
American Tower Systems Corp., Class A+...................... 8,000 $ 199,500
Chancellor Media Corp.+..................................... 1,000 49,656
Clear Channel Communications, Inc.+......................... 2,010 219,341
EchoStar Communications Corp., Class A+..................... 3,900 93,844
Getty Images, Inc.+......................................... 7,500 166,875
Jacor Communications, Inc.+................................. 2,500 147,500
Lamar Advertising Co.+...................................... 4,750 170,406
Liberty Media Group, Inc., Series A+........................ 8,000 310,500
Outdoor Systems, Inc.+...................................... 9,500 266,000
Scripps (E.W) Co., Class A.................................. 1,000 54,813
SFX Entertainment, Inc., Class A+........................... 4,000 183,500
TMP Worldwide, Inc.+........................................ 2,500 87,187
Business Services -- 1.4%
Comfort Systems USA, Inc.+.................................. 3,000 70,125
Cotelligent Group, Inc.+.................................... 6,000 140,250
Iron Mountain, Inc.+........................................ 900 40,275
Republic Industries, Inc.+.................................. 2,500 62,500
Select Appointments Holdings PLC ADR........................ 8,000 236,000
Service Experts, Inc.+...................................... 4,000 138,000
SPR, Inc.+.................................................. 2,800 87,150
Communication Equipment -- 0.2%
Gilat Satellite Networks Ltd.+.............................. 3,000 100,313
Computers & Business Equipment -- 0.4%
EMC Corp.+.................................................. 3,500 156,844
Splash Technology Holdings, Inc.+........................... 5,000 85,937
Drugs -- 1.5%
Agouron Pharmaceuticals, Inc.+.............................. 4,000 121,250
Genzyme Corp.+.............................................. 8,500 217,281
Gilead Sciences, Inc.+...................................... 2,300 80,156
Human Genome Sciences, Inc.+................................ 2,000 71,375
Pharmacia & Upjohn, Inc..................................... 3,000 138,375
Zeneca Group PLC ADR........................................ 3,500 153,563
Electrical Equipment -- 0.2%
General Cable Corp.+........................................ 4,250 122,719
Electronics -- 0.9%
Aavid Thermal Technologies, Inc.+........................... 5,000 146,250
Flextronics International Ltd.+............................. 3,500 152,250
Philips Electronics NV-NY Shares ADR........................ 2,000 170,000
Energy Services -- 0.6%
ENSCO International, Inc.................................... 6,000 104,250
Santa Fe International Corp................................. 2,000 60,500
Transocean Offshore, Inc.................................... 3,000 133,500
</TABLE>
- ---------------------
44
<PAGE> 46
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL APPRECIATION (continued)
Financial Services -- 0.5%
Dain Rauscher Corp.......................................... 2,000 $ 109,500
Legg Mason, Inc............................................. 1,933 111,268
Morgan Keegan, Inc.......................................... 2,400 62,100
Food, Beverage & Tobacco -- 0.3%
McCormick & Co., Inc........................................ 4,000 142,875
Insurance -- 0.7%
Ace Co., Ltd. ADR........................................... 9,500 370,500
Leisure & Tourism -- 0.3%
Papa John's International, Inc.+............................ 3,000 118,312
Virgin Express Holdings PLC ADR+............................ 4,500 58,219
Medical Products -- 0.1%
Ocular Sciences, Inc.+...................................... 2,500 81,250
Real Estate Companies -- 0.3%
Security Capital Group, Inc., Class B+...................... 5,500 146,438
Retail -- 1.6%
Bed Bath & Beyond, Inc.+.................................... 6,000 310,875
Consolidated Stores Corp.+.................................. 4,000 145,000
Gap, Inc.................................................... 4,000 246,500
Hot Topic, Inc.+............................................ 4,500 106,875
K & G Mens Center, Inc...................................... 3,100 70,137
Software -- 2.6%
BISYS Group, Inc.+.......................................... 5,000 205,000
BMC Software, Inc.+......................................... 6,000 311,625
Computer Sciences Corp.+.................................... 2,000 128,000
Electronic Arts, Inc.+...................................... 3,000 162,000
Mobius Management Systems, Inc.+............................ 2,700 40,500
Omtool Ltd.+................................................ 15,000 114,375
Parametric Technology Corp.+................................ 3,000 81,375
PeopleSoft, Inc.+........................................... 2,000 94,000
Policy Management Systems Corp.+............................ 3,000 117,750
Sterling Software, Inc.+.................................... 5,500 162,594
Telephone -- 0.2%
Intermedia Communications, Inc.+............................ 2,000 83,875
Transportation -- 0.3%
Werner Enterprises, Inc..................................... 7,500 142,969
------------
8,461,897
------------
CORE EQUITY -- 14.2%
Aerospace & Military Technology -- 0.7%
United Technologies Corp.................................... 3,800 351,500
Banks -- 1.2%
Chase Manhattan Corp........................................ 5,800 437,900
Citicorp.................................................... 1,500 223,875
Broadcasting & Media -- 0.6%
Gannett, Inc................................................ 4,250 302,016
Computers & Business Equipment -- 0.5%
Hewlett-Packard Co.......................................... 4,000 239,500
Drugs -- 0.5%
Pfizer, Inc................................................. 2,500 271,719
Ranbaxy Laboratories Ltd. GDR............................... 1,300 20,605
</TABLE>
---------------------
45
<PAGE> 47
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CORE EQUITY (continued)
Electronics -- 0.1%
Taiwan Semiconductor Manufacturing Co., Ltd. ADR+........... 3,300 $ 55,687
Financial Services -- 1.0%
Federal National Mortgage Association....................... 4,800 291,600
Merrill Lynch & Co., Inc. .................................. 2,800 258,300
Food, Beverage & Tobacco -- 0.7%
Heinz (H.J.) Co. ........................................... 6,400 359,200
Health Services -- 0.3%
Columbia/HCA Healthcare Corp. .............................. 5,800 168,925
Household Products -- 0.4%
Procter & Gamble Co. ....................................... 2,400 218,550
Insurance -- 1.2%
Marsh & McLennan Cos., Inc. ................................ 5,250 317,297
Travelers Group, Inc. ...................................... 5,000 303,125
Leisure & Tourism -- 0.7%
AMR Corp.+.................................................. 4,800 399,600
Machinery -- 0.5%
Deere & Co. ................................................ 5,000 264,375
Medical Products -- 0.5%
Abbott Laboratories, Inc. .................................. 7,000 286,125
Metals & Minerals -- 0.1%
Pohang Iron & Steel Co., Ltd. ADR........................... 4,000 48,000
Real Estate Investment Trusts -- 0.2%
Starwood Lodging Trust...................................... 2,000 96,625
Retail -- 1.7%
CVS Corp. .................................................. 1,800 70,087
Dollar General Corp. ....................................... 1,400 55,388
Gap, Inc. .................................................. 3,000 184,875
Home Depot, Inc. ........................................... 3,300 274,106
Wal-Mart Stores, Inc. ...................................... 5,800 352,350
Software -- 1.4%
Computer Sciences Corp.+.................................... 5,000 320,000
Microsoft Corp.+............................................ 4,000 433,500
Telephone -- 1.9%
Ameritech Corp. ............................................ 8,100 363,488
BellSouth Corp. ............................................ 4,800 322,200
SBC Communications, Inc. ................................... 8,900 356,000
------------
7,646,518
------------
GLOBAL CORE EQUITY -- 31.8%
ARGENTINA -- 0.2%
Telefonica de Argentina SA ADR (Utilities).................. 3,600 116,775
AUSTRALIA -- 1.5%
Australia & New Zealand Banking Group Ltd. (Finance)........ 38,000 262,776
CSR Ltd. (Industrial & Commercial).......................... 35,000 101,244
News Corp., Ltd. (Information & Entertainment).............. 41,467 339,262
Pasminco Ltd. (Materials)................................... 88,000 67,190
Western Mining Corp., Ltd. (Materials)+..................... 20,204 60,952
</TABLE>
- ---------------------
46
<PAGE> 48
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
GLOBAL CORE EQUITY (continued)
BRAZIL -- 0.4%
Petroleo Brasileiros SA (Energy)............................ 314,000 $ 58,372
Telecomunicacoes Brasileiras SA (Utilities)................. 1,664,400 181,040
CHILE -- 0.2%
Compania de Telecomunicaciones de Chile SA ADR
(Utilities)............................................... 4,700 95,469
DENMARK -- 1.2%
Novo Nordisk AS (Healthcare)................................ 2,250 310,503
Unidanmark AS (Finance)..................................... 3,950 355,353
FINLAND -- 0.9%
Metsa-Serla Oy, Class B (Materials)......................... 27,500 265,916
Nokia AB Oy, Series A (Information Technology).............. 1,950 143,554
Nokia Corp., Class A ADR (Information Technology)........... 800 58,050
FRANCE -- 4.6%
Alcatel Alsthom Compagnie (Information Technology).......... 1,420 289,134
AXA-UAP (Finance)........................................... 2,590 291,314
Banque Nationale de Paris (Finance)......................... 6,019 491,818
Compagnie de St. Gobain (Materials)......................... 1,281 237,524
Compagnie Generale des Eaux (Utilities)..................... 1,580 337,394
Societe Generale d'Enterprises SA (Finance)................. 2,050 426,229
Total SA, Class B (Energy).................................. 3,052 396,790
GERMANY -- 3.1%
Bayer AG (Healthcare)@...................................... 12,410 642,709
Dresdner Bank AG (Finance)@................................. 9,540 515,762
Manitoba AG (Industrial & Commercial)....................... 500 195,181
Mannesmann AG (Industrial & Commercial)..................... 3,320 341,490
HONG KONG -- 0.2%
Cheung Kong Holdings Ltd. (Industrial & Commercial)......... 17,000 83,596
IRELAND -- 0.6%
Allied Irish Banks PLC (Finance)............................ 21,486 312,114
ITALY -- 0.6%
Telecom Italia SpA (Utilities).............................. 40,500 298,265
JAPAN -- 4.8%
Advantest Corp. (Information Technology).................... 2,100 113,300
Daiwa Securities Co., Ltd. (Finance)........................ 38,000 164,070
Eisai Co., Ltd. (Healthcare)................................ 9,000 123,020
Fuji Photo Film Co., Ltd. (Information & Entertainment)..... 4,000 139,727
Jusco Co., Ltd. (Consumer Discretionary).................... 12,000 220,872
Mabuchi Motor Co., Ltd. (Industrial & Commercial)........... 3,500 222,753
Matsumotokiyoshi (Consumer Discretionary)................... 3,900 137,644
Matsushita Electric Industrial Co., Ltd. (Information
Technology)............................................... 10,000 161,279
Nippon Telegraph & Telephone Corp. (Utilities).............. 31 257,829
Rohm Co., Ltd. (Information Technology)..................... 2,000 206,118
Sanwa Bank Ltd. (Finance)................................... 21,000 188,479
Sony Corp. (Information & Entertainment).................... 3,900 337,058
Takashimaya Co. (Consumer Discretionary).................... 19,000 143,733
Toshiba Corp. (Information Technology)...................... 43,000 176,329
</TABLE>
---------------------
47
<PAGE> 49
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
GLOBAL CORE EQUITY (continued)
MEXICO -- 0.7%
Grupo Financiero Banamex-Accival SA de CV., Class B
(Finance)................................................. 48,200 $ 93,874
Grupo Televisa SA de CV, Class A (Information &
Entertainment)............................................ 9,300 173,880
Kimberly-Clark de Mexico SA de CV, Class A (Consumer
Staples).................................................. 32,000 113,071
NETHERLANDS -- 2.0%
Internationale Nederladen Group NV (Finance)................ 5,171 338,840
Philips Electronics NV (Information Technology)............. 4,300 361,727
Unilever NV PLC (Consumer Staples).......................... 4,600 365,239
NEW ZEALAND -- 0.0%
Telecommunications Corp. of New Zealand (Utilities)......... 5,600 12,005
NORWAY -- 0.1%
Saga Petroleum ASA, Series A (Energy)....................... 5,100 78,518
PHILIPPINES -- 0.1%
Manila Electric Co. (Utilities)............................. 11,500 30,336
SINGAPORE -- 0.2%
Overseas Union Bank Ltd. (Finance).......................... 38,000 83,442
SOUTH AFRICA -- 0.1%
De Beers Centenary AG (Materials)........................... 2,400 42,172
SPAIN -- 1.5%
Banco de Santander SA (Finance)............................. 7,800 199,641
Endesa SA (Utilities)....................................... 7,650 167,367
Telefonica SA ADR (Utilities)............................... 3,254 452,510
SWEDEN -- 1.8%
Hennes & Mauritz AB, Class B (Consumer Discretionary)....... 4,300 274,411
Nordbanken Holding AB (Finance)............................. 58,100 426,135
Sparbanken Sverige AB (Finance)............................. 2,100 63,189
Volvo AB, Class B (Consumer Staples)........................ 6,700 199,505
SWITZERLAND -- 1.7%
CS Holding AG (Finance)..................................... 940 209,503
Holderbank Financiere Glarus (Materials).................... 240 305,884
Nestle SA (Consumer Staples)................................ 196 420,138
UNITED KINGDOM -- 5.3%
Bass PLC (Consumer Discretionary)........................... 13,449 252,179
Billiton PLC (Materials).................................... 4,200 8,521
British Petroleum Co. PLC (Energy).......................... 166 2,422
BTR PLC (Industrial & Commercial)........................... 34,856 98,938
Compass Group (Information & Entertainment)................. 12,600 144,953
HSBC Holdings PLC (Finance)................................. 9,700 235,167
Lloyds TSB Group Ltd. PLC (Finance)......................... 7,200 100,803
PowerGen PLC (Utilities).................................... 11,445 158,228
Reckitt & Colman PLC (Consumer Staples)..................... 12,300 234,947
Royal & Sun Alliance Insurance Group PLC (Finance).......... 16,254 168,128
Royal Bank of Scotland Group PLC (Finance).................. 12,000 208,379
Smithkline Beecham PLC (Healthcare)......................... 35,933 438,880
</TABLE>
- ---------------------
48
<PAGE> 50
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED) SHARES VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
GLOBAL CORE EQUITY (continued)
UNITED KINGDOM (continued)
Standard Chartered PLC (Finance)............................ 10,600 $ 120,529
WPP Group PLC (Information & Entertainment)................. 29,000 190,175
Zeneca Group PLC (Healthcare)@.............................. 11,700 502,453
------------
17,144,076
------------
TOTAL COMMON STOCK (cost $26,093,572)....................... 33,252,491
------------
<CAPTION>
PREFERRED STOCK -- 0.9%
--------------------------------------------------------------------------------------------
<S> <C> <C>
BRAZIL -- 0.5%
Banks -- 0.2%
Banco Itau SA+.............................................. 232,300 132,565
Electric Utilities -- 0.2%
Companhia Energetica de Minas Gerais........................ 3,145,200 97,901
Retail -- 0.1%
Pao De Acucar-Companhia Iberica de Distribuicao............. 2,050,800 46,103
------------
276,569
------------
GERMANY -- 0.4%
Retail -- 0.4%
Hornbach Holding AG......................................... 2,300 210,430
------------
TOTAL PREFERRED STOCK (cost $455,706)....................... 486,999
------------
PRINCIPAL
BONDS & NOTES -- 29.0% AMOUNT
--------------------------------------------------------------------------------------------
CORE BOND -- 15.6%
AEROSPACE & MILITARY TECHNOLOGY -- 0.2%
K & F Industries, Inc. 9.25% 2007@.......................... $ 50,000 50,500
Moog, Inc. 10.00% 2006...................................... 70,000 74,900
AUTOMOTIVE -- 0.3%
Accuride Corp. 9.25% 2008*.................................. 65,000 65,163
Johnstown America Industries, Inc. 11.75% 2005@............. 85,000 94,456
CHEMICAL -- 0.3%
Laroche Indusrties, Inc. 9.50% 2007......................... 100,000 97,500
Sovereign Speciality Chemicals 9.50% 2007................... 50,000 51,250
COMMUNICATIONS & MEDIA -- 0.5%
Fox/Liberty Networks LLC zero coupon 2007+(2)............... 250,000 174,062
MCI Communications Corp. 7.13% 2000......................... 90,000 91,318
CONSUMER DISCRETIONARY -- 0.6%
Muzak L.P. 10.00% 2003...................................... 100,000 103,875
Revlon Worldwide Parent Ciro zero coupon 2001+.............. 175,000 136,063
Standard Pacific Corp. 8.50% 2007........................... 70,000 71,050
ENERGY -- 1.3%
Costilla Energy, Inc. 10.25% 2006*.......................... 130,000 131,625
P&L Coal Holdings Corp. 9.63% 2008*......................... 250,000 256,875
Phillips Petroleum Co. 9.18% 2021........................... 250,000 283,595
</TABLE>
---------------------
49
<PAGE> 51
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CORE BOND (continued)
FINANCE -- 0.7%
First Nationwide Parent Holdings 12.50% 2003................ $ 100,000 $ 113,500
Resource America, Inc. 12.00% 2004.......................... 100,000 107,000
Western Financial Savings Bank 8.88% 2007................... 150,000 141,937
FOOD & LODGING -- 0.2%
Aurora Foods, Inc. 8.75% 2008*.............................. 35,000 35,394
Aurora Foods, Inc. 9.88% 2007............................... 25,000 26,312
Del Monte Foods Co. zero coupon 2007+*(2)................... 100,000 65,375
GAMING -- 0.3%
Argosy Gaming Co. 13.25% 2004............................... 100,000 112,250
Hollywood Casino, Inc. 12.75% 2003.......................... 50,000 54,750
HEALTHCARE -- 0.2%
Universal Hospital Services, Inc. 10.25% 2008*.............. 100,000 100,000
HOUSING -- 0.2%
Engle Homes, Inc. 9.25% 2008................................ 130,000 127,400
INDUSTRIAL & COMMERCIAL -- 0.3%
Tesoro Petroleum Corp. 9.00% 2008*.......................... 110,000 110,000
Wesco Distributor, Inc. 9.13% 2008*......................... 70,000 69,213
INFORMATION TECHNOLOGY -- 0.6%
Advanced Micro Devices, Inc. 11.00% 2003.................... 100,000 105,500
Decision Holdings Corp. zero coupon 2008+*(2)............... 150,000 90,000
Psinet, Inc. 10.00% 2005.................................... 125,000 127,500
MATERIALS -- 0.4%
A.K. Steel Corp. 9.13% 2006................................. 95,000 99,275
Bayou Steel Corp. 9.50% 2008*............................... 105,000 103,950
MULTI-INDUSTRY -- 0.7%
Great Lakes Carbon Corp. 10.25% 2008........................ 35,000 35,612
Grove Worldwide LLC 9.25% 2008*............................. 50,000 49,875
MTL, Inc. 10.00% 2006*...................................... 100,000 99,500
Roller Bearing Company America, Inc. 9.63% 2007............. 100,000 101,500
Unicco Service Co./Unicco Finance Corp. 9.88% 2007.......... 100,000 101,000
PAPER PRODUCTS -- 1.0%
American Pad & Paper Co. 13.00% 2005........................ 135,000 135,844
Container Corp. of America 10.75% 2002...................... 125,000 136,250
Silgan Holdings Corp. 9.00% 2009............................ 250,000 258,750
TELECOMMUNICATIONS -- 2.5%
BTI Telecom Corp. 10.50% 2007............................... 135,000 135,675
GST Network Funding, Inc. zero coupon 2008+*(2)............. 105,000 62,869
GST Telecommunications, Inc. 12.75% 2007+................... 60,000 69,600
Intermedia Communications, Inc. 8.88% 2007.................. 185,000 189,162
Iridium Operating LLC/ Iridium Capital 10.88% 2005.......... 45,000 44,606
Iridium Operating LLC/Iridium Capital 11.25% 2005........... 100,000 100,250
IXC Communications, Inc. 9.00% 2008*@....................... 80,000 79,800
KMC Telecommunications Holdings, Inc. zero coupon
2008+*(2)(3).............................................. 330,000 198,825
Level 3 Commerce, Inc. 9.13% 2008*.......................... 110,000 106,975
Nextel Communications, Inc. zero coupon 2007+(2)............ 350,000 228,375
Telecommunications Tech Co. LLC 9.75% 2008*................. 140,000 140,525
</TABLE>
- ---------------------
50
<PAGE> 52
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
CORE BOND (continued)
U.S. GOVERNMENT & AGENCIES -- 5.1%
Federal National Mortgage Association 1.75% 2008............ JPY$ 40,000,000 $ 290,707
Federal National Mortgage Association 6.38% 2007............ AUD 410,000 262,288
Government National Mortgage Association 6.00% 2009......... 140,943 140,810
United States Treasury Bonds 6.25% 2023..................... 200,000 214,124
United States Treasury Notes 6.25% 2003@.................... 558,000 574,216
United States Treasury Notes 6.50% 2006..................... 500,000 530,935
United States Treasury Notes 6.63% 2007@.................... 500,000 537,030
United States Treasury Notes 7.88% 2004..................... 185,000 207,777
UTILITIES -- 0.2%
United States West Capital Funding, Inc. 6.38% 2008......... 100,000 99,418
------------
8,403,886
------------
GLOBAL CORE BOND -- 13.4%
ARGENTINA -- 0.8%
Acindar Industria Argentina de Aceros SA 11.25% 2004........ 55,000 55,137
Republic of Argentina 8.38% 2003............................ 150,000 149,625
Republic of Argentina 11.00% 2006........................... 100,000 106,074
Transportadora De Gas 10.25% 2001........................... 100,000 102,375
AUSTRALIA -- 1.0%
Australia Commonwealth 9.75% 2002........................... AUD 510,000 363,184
Australia Commonwealth 10.00% 2007.......................... AUD 200,000 163,350
BRAZIL -- 0.3%
Aracruz Celulose SA 10.38% 2002*............................ 100,000 97,000
CSN Iron SA 9.13% 2007*..................................... 100,000 80,000
CANADA -- 1.5%
British Columbia Province Canada 6.50% 2026................. 150,000 156,660
Canada Government 7.50% 2001................................ CAD 400,000 286,262
Canada Government 9.50% 2010................................ CAD 280,000 258,204
Microcell Telecommunications zero coupon 2007............... CAD 160,000 68,499
Repap New Brunswick, Inc. 9.00% 2004*....................... 60,000 60,600
COLOMBIA -- 0.2%
Republic of Colombia 9.75% 2008............................. GBP 65,000 107,513
DENMARK -- 2.3%
Kingdom of Denmark 9.00% 2000............................... DKK 6,700,000 1,074,224
Kingdom of Denmark 7.00% 2024............................... DKK 1,000,000 176,621
FRANCE -- 0.6%
Caisse D'Amortissement Dela Sociale 5.13% 2008.............. DEM 600,000 336,222
GERMANY -- 0.9%
Federal Republic of Germany 6.25% 2024...................... DEM 580,000 362,449
Federal Republic of Germany 6.88% 2005...................... DEM 190,000 118,955
INDONESIA -- 0.1%
Pindo Deli Finance Mauritius Ltd. 10.75% 2007............... 100,000 69,250
ITALY -- 0.9%
Republic of Italy 6.00% 2007@............................... ITL 815,000,000 491,913
JAPAN -- 0.4%
Nippon Telegraph & Telephone Co. 2.50% 2007................. JPY 25,000,000 190,976
</TABLE>
---------------------
51
<PAGE> 53
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (CONTINUED) AMOUNT VALUE
--------------------------------------------------------------------------------------------
<S> <C> <C>
GLOBAL CORE BOND (continued)
KOREA -- 0.2%
Korea Telecommunications 7.63% 2007......................... $ 150,000 $ 117,018
MEXICO -- 0.5%
Petroleos Mexicanos 8.85% 2007.............................. 250,000 246,072
NEW ZEALAND -- 1.3%
Government of New Zealand 10.00% 2002....................... NZD 1,185,000 677,512
SWEDEN -- 0.2%
Kingdom of Sweden 6.75% 2014................................ SEK 900,000 131,711
UNITED KINGDOM -- 2.2%
United Kingdom Treasury 7.75% 2006@......................... GBP 635,000 1,177,551
------------
7,224,957
------------
TOTAL BONDS & NOTES (cost $15,436,376)...................... 15,628,843
------------
TOTAL INVESTMENT SECURITIES (cost $42,585,654).............. 49,368,333
------------
<CAPTION>
SHORT-TERM SECURITIES -- 2.4%
--------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 1.2%
Bankers Trust Company Institutional 5.97% due 10/27/98...... 110,000 110,093
Ciesco L.P. 5.67% due 7/17/98............................... 200,000 199,507
Falcon Asset Securitization Corp. 5.60% due 7/27/98......... 180,000 179,272
Ford Motor Credit Co. 5.67% due 7/15/98..................... 150,000 149,676
------------
638,548
------------
U.S. GOVERNMENT -- 1.2%
United States Treasury Bills 5.10% due 9/3/98............... 625,000 619,575
------------
TOTAL SHORT-TERM SECURITIES (cost $1,260,940)............... 1,258,123
------------
REPURCHASE AGREEMENT -- 6.7%
--------------------------------------------------------------------------------------------
Joint Repurchase Agreement Account (Note 3)@ (cost
$3,625,000)............................................... 3,625,000 3,625,000
------------
TOTAL INVESTMENTS --
(cost $47,471,594) 100.7% 54,251,456
Liabilities in excess of other assets -- (0.7) (351,860)
------ ------------
NET ASSETS -- 100.0% $53,899,596
====== ============
</TABLE>
-----------------------------
+ Non-income producing securities
* Resale restricted to qualified buyers
ADR -- American Depository Receipts
GDR -- Global Depository Receipts
(1) Fair valued security; see Note 2
(2) Represents a zero-coupon bond which will convert to an
interest-bearing security at a later date
(3) Consists of more than one class of securities traded together
as a unit, generally bonds with attached stocks or warrants
- ---------------------
52
<PAGE> 54
@ The security or a portion thereof represents collateral for the
following open futures contracts:
OPEN FUTURES CONTRACTS
------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION VALUE AT VALUE AS OF APPRECIATION/
CONTRACTS DESCRIPTION DATE TRADE DATE JUNE 30, 1998 DEPRECIATION
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11 Long Hang Seng Index Futures -- Hong July 1998 $ 527,669 $ 611,852 $ 84,183
Kong Futures Exchange
11 Long Hang Seng Index Futures -- Hong September 1998 560,320 615,401 55,081
Kong Futures Exchange
10 Long IBEX 35 Plus Future -- Mercado de July 1998 637,861 657,653 19,792
Futures Financieros
8 Long Toronto 35 Index September 1998 1,096,564 1,103,223 6,659
Future -- Toronto Futures
Exchange
13 Long FTSE 100 Index Future -- London September 1998 1,304,954 1,277,787 (27,167)
International Futures Exchange
15 Long All ordinaries share price Stock September 1998 603,444 625,646 22,202
Index Future -- Sydney Futures
Exchange
2 Long U.S. Long Bond September 1998 243,104 247,180 4,076
8 Short S&P 500 Index -- International September 1998 2,254,140 2,286,000 (31,860)
Money Market
2 Short Topix Index Future -- Tokyo Stock September 1998 172,701 176,460 (3,759)
Exchange
--------
Net Unrealized Appreciation.................................................... $129,207
========
</TABLE>
---------------------
53
<PAGE> 55
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
------------------------------------------------------------------
<TABLE>
<CAPTION>
CONTRACT IN DELIVERY GROSS UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
-----------------------------------------------------------
<S> <C> <C> <C>
*AUD 820,000 USD 511,352 8/31/98 $ 1,952
*USD 231,692 AUD 394,000 8/31/98 13,069
*CAD 513,500 USD 354,138 8/31/98 4,754
CAD 381,000 USD 260,068 8/31/98 837
CAD 422,000 USD 287,466 8/31/98 338
CAD 91,200 USD 66,207 10/16/98 4,112
*DEM 490,000 USD 277,416 7/13/98 5,498
*DEM 200,000 USD 111,851 7/20/98 816
*DEM 100,000 USD 56,044 7/20/98 527
DEM 490,000 USD 276,254 7/20/98 4,218
DEM 290,000 USD 163,241 7/20/98 2,241
*DEM 376,000 USD 212,429 8/12/98 3,400
*DEM 1,562,000 USD 884,034 8/12/98 15,673
DEM 306,000 USD 171,333 8/12/98 1,218
DEM 400,000 USD 223,003 8/12/98 631
DEM 885,000 USD 494,369 8/20/98 2,148
*USD 221,417 DEM 400,000 8/31/98 1,196
*DEM 3,525,000 USD 2,003,171 8/31/98 41,399
DEM 2,000,000 USD 1,111,543 9/30/98 3,442
*DKK 1,433,000 USD 211,500 8/31/98 2,361
*GBP 140,000 USD 233,800 8/18/98 664
USD 201,004 GBP 124,000 9/01/98 5,329
USD 45,528 GBP 28,000 9/01/98 1,063
*USD 109,924 GRD 34,880,000 7/20/98 4,406
*USD 55,071 GRD 17,570,000 7/20/98 2,520
USD 493,699 JPY 66,995,000 8/31/98 4,819
USD 119,226 NZD 223,000 9/18/98 1,398
USD 1,065,148 NZD 2,180,000 12/14/98 57,674
USD 134,069 SEK 1,033,000 8/31/98 4,237
SEK 5,868,000 USD 738,708 9/30/98 265
--------
192,205
--------
</TABLE>
<TABLE>
<CAPTION>
GROSS UNREALIZED
DEPRECIATION
-----------------------------------------------------------
<S> <C> <C> <C>
AUD 847,000 USD 505,151 7/31/98 $(20,870)
USD 330,408 CAD 480,000 8/04/98 (3,967)
*USD 354,382 CAD 513,500 8/31/98 (4,998)
USD 600,252 CAD 880,000 9/30/98 (1,226)
CHF 1,900,000 USD 1,258,945 9/30/98 (7,135)
*USD 273,133 DEM 490,000 7/13/98 (1,214)
*USD 167,691 DEM 300,000 7/20/98 (1,139)
*USD 245,251 DEM 439,000 8/12/98 (1,198)
*USD 505,554 DEM 892,000 8/31/98 (9,129)
*USD 422,139 DEM 754,000 8/31/98 (2,515)
*USD 212,432 DKK 1,433,000 8/31/98 (3,293)
USD 975,387 FRF 5,885,000 9/30/98 (3,252)
*USD 247,174 GBP 150,000 8/18/98 (2,615)
USD 16,147 GBP 9,700 9/01/98 (6)
GBP 926,600 USD 1,510,358 9/01/98 (31,485)
GBP 8,000 USD 13,178 9/01/98 (134)
GBP 630,000 USD 1,042,461 9/30/98 (4,087)
*GRD 52,450,000 USD 171,050 7/20/98 (871)
USD 203,263 NZD 384,000 9/28/98 (4,594)
USD 533,120 NZD 980,000 9/18/98 (25,774)
USD 275,821 SEK 2,128,000 7/20/98 (8,806)
USD 162,951 SEK 1,261,000 7/20/98 (4,726)
--------
(143,034)
--------
Net Unrealized Appreciation.... $ 49,171
========
</TABLE>
<TABLE>
<S> <C> <C>
AUD -- Australian Dollar FRF -- French Franc JPY -- Japanese Yen
CAD -- Canadian Dollar GBP -- Pound Sterling NZD -- New Zealand Dollar
CHF -- Swiss Franc GRD -- Greek Drachma SEK -- Swedish Krona
DEM -- Deutsche Mark ITL -- Italian Lira USD -- United States Dollar
DKK -- Danish Krone
</TABLE>
See Notes to Financial Statements
- ---------------------
54
<PAGE> 56
(This page intentionally left blank)
---------------------
55
<PAGE> 57
- ---------------------
ANCHOR SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GOVERNMENT &
MONEY MARKET FIXED INCOME QUALITY BOND HIGH YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at value*............................ $ -- $17,064,659 $266,092,175 $30,630,960
Short-term securities*...................................... 71,728,077 -- -- --
Repurchase agreements (cost equals market).................. -- 105,000 10,530,000 825,000
Cash........................................................ -- 1,545 3,981 3,924
Foreign currency............................................ -- -- -- --
Receivables for --
Fund shares sold.......................................... 509,895 -- 642,431 151
Dividends and accrued interest............................ 263,870 351,454 2,610,787 693,579
Sales of investments...................................... -- 354,751 3,351,234 153,890
Variation margin on futures contracts..................... -- -- -- --
Foreign currency contracts................................ -- -- -- --
Prepaid expenses............................................ 18,170 8,284 41,551 8,776
Unrealized appreciation on forward foreign currency
contracts................................................. -- -- -- 7,315
--------------------------------------------------------
72,520,012 17,885,693 283,272,159 32,323,595
--------------------------------------------------------
LIABILITIES:
Payables for --
Purchases of investments.................................. 999,330 325,368 9,988,672 --
Fund shares redeemed...................................... 830,844 1,314 1,323,278 29,298
Management fees........................................... 31,596 9,020 136,531 19,548
Foreign currency contracts................................ -- -- -- --
Variation margin on futures contracts..................... -- -- -- --
Other accrued expenses...................................... 17,994 6,507 86,727 24,039
Due to custodian bank....................................... 990 -- -- --
Unrealized depreciation on forward foreign currency
contracts................................................. -- -- -- 3,257
--------------------------------------------------------
1,880,754 342,209 11,535,208 76,142
--------------------------------------------------------
NET ASSETS:................................................. $70,639,258 $17,543,484 $271,736,951 $32,247,453
========================================================
Shares of beneficial interest outstanding (unlimited shares
authorized)............................................... 70,639,258 1,268,370 18,701,821 3,699,502
Net asset value per share................................... $ 1.00 $ 13.83 $ 14.53 $ 8.72
========================================================
COMPOSITION OF NET ASSETS:
Capital paid in............................................. $70,639,258 $16,801,913 $242,829,648 $35,799,942
Accumulated undistributed net investment income............. 632 1,975,922 20,721,137 5,297,337
Accumulated undistributed net realized gain (loss) on
investments, futures contracts, options contracts and
foreign currency.......................................... (632) (1,644,604) 3,440,153 (8,586,066)
Unrealized appreciation (depreciation) of investments....... -- 410,253 4,746,013 (267,818)
Unrealized foreign exchange gain (loss) on other assets and
liabilities............................................... -- -- -- 4,058
Unrealized appreciation (depreciation) on futures
contracts................................................. -- -- -- --
--------------------------------------------------------
$70,639,258 $17,543,484 $271,736,951 $32,247,453
========================================================
---------------
*Cost
Investment securities...................................... $ -- $16,654,406 $261,346,162 $30,898,778
========================================================
Short-term securities...................................... $71,728,077 $ -- $ -- $ --
========================================================
</TABLE>
See Notes to Financial Statements
- ---------------------
56
<PAGE> 58
- ---------------------
<TABLE>
<CAPTION>
GROWTH AND FOREIGN CAPITAL NATURAL STRATEGIC
TARGET '98 INCOME SECURITIES GROWTH APPRECIATION RESOURCES MULTI-ASSET MULTI-ASSET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$4,919,554 $48,307,594 $33,298,200 $576,224,406 $883,824,677 $44,270,835 $139,614,035 $49,368,333
-- -- 49,701 -- -- -- 768,276 1,258,123
940,000 -- 2,310,000 16,030,000 105,880,000 3,060,000 10,210,000 3,625,000
440 -- 1,481 4,970 2,871 3,934 4,912 873
-- -- -- -- 40,650 28 -- 14,655
-- 26,700 6,658 411,081 1,630,117 600,820 5,585 15,927
153 47,459 157,524 322,976 297,962 46,308 525,536 403,296
-- 402,977 415,736 1,801,815 10,536,271 -- -- 731,079
-- -- -- -- -- -- 14,063 26,787
-- -- 813,000 -- -- -- -- 566,505
681 3,076 3,696 40,685 16,659 2,178 27,934 13,434
-- -- -- -- -- -- -- 192,205
---------------------------------------------------------------------------------------------------------------
5,860,828 48,787,806 37,055,996 594,835,933 1,002,229,207 47,984,103 151,170,341 56,216,217
---------------------------------------------------------------------------------------------------------------
-- 94,984 542,386 1,416,579 9,288,668 -- 1,000,000 966,920
18,191 16,378 150,631 920,195 1,289,075 95,844 1,046,366 538,599
3,032 27,565 25,830 327,214 479,613 29,005 121,528 44,179
-- -- 812,659 -- -- -- -- 567,795
-- -- 5,210 -- -- -- -- --
6,298 10,199 21,413 102,706 179,245 14,715 67,405 56,094
-- 304,145 20,199 -- -- -- -- --
-- -- -- -- -- -- -- 143,034
---------------------------------------------------------------------------------------------------------------
27,521 453,271 1,578,328 2,766,694 11,236,601 139,564 2,235,299 2,316,621
---------------------------------------------------------------------------------------------------------------
$5,833,307 $48,334,535 $35,477,668 $592,069,239 $990,992,606 $47,844,539 $148,935,042 $53,899,596
===============================================================================================================
514,772 2,378,759 2,721,956 18,602,358 26,390,454 3,443,141 9,613,885 4,194,314
$ 11.33 $ 20.32 $ 13.03 $ 31.83 $ 37.55 $ 13.90 $ 15.49 $ 12.85
===============================================================================================================
$5,231,244 $26,565,271 $27,918,176 $314,870,243 $604,961,275 $49,658,366 $ 72,333,029 $30,452,555
809,056 542,768 673,792 3,541,555 1,520,976 899,308 5,256,733 1,630,659
(245,883) 6,448,997 2,311,579 51,081,897 113,714,162 (226,141) 32,995,746 14,890,338
38,890 14,777,499 4,580,929 222,575,544 270,802,949 (2,484,082) 38,241,054 6,779,862
-- -- (832) -- (6,756) (2,912) -- 16,975
-- -- (5,976) -- -- -- 108,480 129,207
---------------------------------------------------------------------------------------------------------------
$5,833,307 $48,334,535 $35,477,668 $592,069,239 $990,992,606 $47,844,539 $148,935,042 $53,899,596
===============================================================================================================
$4,880,664 $33,530,095 $28,717,271 $353,648,862 $613,021,728 $46,754,917 $101,373,105 $42,585,654
===============================================================================================================
$ -- $ -- $ 49,701 $ -- $ -- $ -- $ 768,152 $ 1,260,940
===============================================================================================================
</TABLE>
---------------------
57
<PAGE> 59
- ---------------------
ANCHOR SERIES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GOVERNMENT &
MONEY MARKET FIXED INCOME QUALITY BOND HIGH YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest.................................................. $1,917,697 $686,354 $ 8,029,141 $ 1,725,515
Dividends................................................. -- 1,406 -- 33,037
--------------------------------------------------------
Total income*...................................... 1,917,697 687,760 8,029,141 1,758,552
--------------------------------------------------------
Expenses:
Investment management fees................................ 169,454 55,478 766,193 128,774
Custodian fees............................................ 9,955 20,815 61,540 27,150
Audit and tax consulting fees............................. 7,240 5,430 8,145 7,240
Reports to investors...................................... 3,620 905 9,955 1,810
Trustees' fees............................................ 2,939 192 7,823 1,330
Legal fees................................................ 1,810 905 3,620 --
Insurance expense......................................... 663 164 1,677 333
Other expenses............................................ 818 467 1,606 572
--------------------------------------------------------
Total expenses..................................... 196,499 84,356 860,559 167,209
--------------------------------------------------------
Net investment income....................................... 1,721,198 603,404 7,168,582 1,591,343
--------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain (loss) on investments..................... -- 50,642 3,987,627 899,985
Net realized foreign exchange gain (loss) on other assets
and liabilities........................................... -- -- -- --
Net realized gain (loss) on futures contracts and options
contracts................................................. -- -- -- --
Change in unrealized appreciation/depreciation of
investments............................................... -- 73,460 (1,126,785) (901,154)
Change in unrealized foreign exchange gain/loss on other
assets and liabilities.................................... -- -- -- 1,313
Change in unrealized appreciation/depreciation on futures
contracts................................................. -- -- -- --
--------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currencies........................................ -- 124,102 2,860,842 144
--------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $1,721,198 $727,506 $10,029,424 $ 1,591,487
========================================================
---------------
* Net of foreign withholding taxes on interest and dividends
of:....................................................... $ -- $ 14 $ -- $ --
========================================================
</TABLE>
See Notes to Financial Statements
- ---------------------
58
<PAGE> 60
<TABLE>
<CAPTION>
GROWTH AND FOREIGN CAPITAL NATURAL STRATEGIC
TARGET '98 INCOME SECURITIES GROWTH APPRECIATION RESOURCES MULTI-ASSET MULTI-ASSET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$254,046 $ 26,761 $ 34,642 $ 488,475 $ 1,798,108 $ 55,342 $ 1,924,556 $ 704,970
-- 325,985 454,633 2,578,056 2,308,252 471,094 500,051 276,263
-----------------------------------------------------------------------------------------------------------
254,046 352,746 489,275 3,066,531 4,106,360 526,436 2,424,607 981,233
-----------------------------------------------------------------------------------------------------------
20,202 166,178 161,755 1,910,623 2,821,199 188,396 740,797 269,837
9,955 13,575 83,260 68,780 121,270 19,910 35,295 103,170
6,335 7,240 4,525 17,195 26,245 7,240 6,335 7,240
-- -- 2,715 18,100 19,910 -- 8,145 3,620
442 815 1,274 13,967 21,478 1,398 4,222 2,352
905 -- -- 5,430 9,050 905 1,810 905
78 255 355 2,739 4,205 346 1,142 434
407 597 2,029 2,889 6,023 648 1,166 2,105
-----------------------------------------------------------------------------------------------------------
38,324 188,660 255,913 2,039,723 3,029,380 218,843 798,912 389,663
-----------------------------------------------------------------------------------------------------------
215,722 164,086 233,362 1,026,808 1,076,980 307,593 1,625,695 591,570
-----------------------------------------------------------------------------------------------------------
24,699 4,659,046 391,479 20,006,883 40,901,429 (632,838) 10,444,768 6,511,383
-- -- (10,403) -- (4,314) 145 -- 151,772
-- -- (19,730) -- -- -- (86,419) 595,655
(89,577) 3,293,701 4,301,017 67,504,258 94,666,515 (1,459,079) 8,262,289 (857,598)
-- -- 836 -- 788 (139) -- 35,961
-- -- (5,976) -- -- -- 66,630 57,414
-----------------------------------------------------------------------------------------------------------
(64,878) 7,952,747 4,657,223 87,511,141 135,564,418 (2,091,911) 18,687,268 6,494,587
-----------------------------------------------------------------------------------------------------------
$150,844 $8,116,833 $4,890,585 $88,537,949 $136,641,398 ($1,784,318) $20,312,963 $ 7,086,157
===========================================================================================================
$ -- $ 2,682 $ 67,587 $ 16,006 $ 120,338 $ 17,732 $ -- $ 34,469
===========================================================================================================
</TABLE>
---------------------
59
<PAGE> 61
- ---------------------
ANCHOR SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GOVERNMENT &
MONEY MARKET FIXED INCOME QUALITY HIGH YIELD
PORTFOLIO PORTFOLIO BOND PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................................... $ 1,721,198 $ 603,404 $ 7,168,582 $ 1,591,343
Net realized gain (loss) on investments.................... -- 50,642 3,987,627 899,985
Net realized foreign exchange gain (loss) on other
assets and liabilities................................... -- -- -- --
Net realized gain (loss) on futures contracts and
options contracts........................................ -- -- -- --
Change in unrealized appreciation/depreciation
of investments........................................... -- 73,460 (1,126,785) (901,154)
Change in unrealized foreign exchange gain/loss on other
assets and liabilities................................... -- -- -- 1,313
Change in unrealized appreciation/depreciation on futures
contracts................................................ -- -- -- --
------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations.......................................... 1,721,198 727,506 10,029,424 1,591,487
------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS PAID TO SHAREHOLDERS:
Dividends from net investment income....................... (1,721,198) -- -- --
------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold.................................. 89,158,128 1,078,011 85,717,224 7,300,109
Proceeds from shares issued for reinvestment of dividends
and distributions........................................ 1,404,368 -- -- --
Cost of shares repurchased................................. (89,727,419) (2,577,255) (58,632,644) (16,837,404)
------------------------------------------------------------
Net increase (decrease) in net assets resulting from
capital share transactions............................... 835,077 (1,499,244) 27,084,580 (9,537,295)
------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 835,077 (771,738) 37,114,004 (7,945,808)
------------------------------------------------------------
NET ASSETS:
Beginning of period........................................ 69,804,181 18,315,222 234,622,947 40,193,261
------------------------------------------------------------
End of period.............................................. $ 70,639,258 $17,543,484 $271,736,951 $ 32,247,453
============================================================
---------------
Accumulated undistributed net investment income............ $ 632 $ 1,975,922 $ 20,721,137 $ 5,297,337
============================================================
Shares issued and repurchased:
Sold....................................................... 89,158,128 79,266 6,014,303 845,358
Issued in reinvestment of dividends and distributions...... 1,404,368 -- -- --
Repurchased................................................ (89,727,419) (189,979) (4,115,598) (1,944,506)
------------------------------------------------------------
Net increase (decrease).................................... 835,077 (110,713) 1,898,705 (1,099,148)
============================================================
</TABLE>
See Notes to Financial Statements
- ---------------------
60
<PAGE> 62
<TABLE>
<CAPTION>
GROWTH AND FOREIGN CAPITAL NATURAL STRATEGIC
TARGET '98 INCOME SECURITIES GROWTH APPRECIATION RESOURCES MULTI-ASSET MULTI-ASSET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 215,722 $ 164,086 $ 233,362 $ 1,026,808 $ 1,076,980 $ 307,593 $ 1,625,695 $ 591,570
24,699 4,659,046 391,479 20,006,883 40,901,429 (632,838) 10,444,768 6,511,383
-- -- (10,403) -- (4,314) 145 -- 151,772
-- -- (19,730) -- -- -- (86,419) 595,655
(89,577) 3,293,701 4,301,017 67,504,258 94,666,515 (1,459,079) 8,262,289 (857,598)
-- -- 836 -- 788 (139) -- 35,961
-- -- (5,976) -- -- -- 66,630 57,414
---------------------------------------------------------------------------------------------------------------------
150,844 8,116,833 4,890,585 88,537,949 136,641,398 (1,784,318) 20,312,963 7,086,157
---------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------
60,142 7,629,278 8,872,184 111,117,422 309,500,620 12,238,846 5,661,720 1,078,657
-- -- -- -- -- -- -- --
(1,790,157) (11,828,236) (14,433,357) (93,114,392) (269,460,478) (12,663,921) (22,725,075) (7,554,368)
---------------------------------------------------------------------------------------------------------------------
(1,730,015) (4,198,958) (5,561,173) 18,003,030 40,040,142 (425,075) (17,063,355) (6,475,711)
---------------------------------------------------------------------------------------------------------------------
(1,579,171) 3,917,875 (670,588) 106,540,979 176,681,540 (2,209,393) 3,249,608 610,446
---------------------------------------------------------------------------------------------------------------------
7,412,478 44,416,660 36,148,256 485,528,260 814,311,066 50,053,932 145,685,434 53,289,150
---------------------------------------------------------------------------------------------------------------------
$ 5,833,307 $ 48,334,535 $ 35,477,668 $592,069,239 $ 990,992,606 $ 47,844,539 $148,935,042 $53,899,596
=====================================================================================================================
$ 809,056 $ 542,768 $ 673,792 $ 3,541,555 $ 1,520,976 $ 899,308 $ 5,256,733 $ 1,630,659
=====================================================================================================================
5,387 406,987 713,142 3,747,975 8,835,226 827,290 389,600 88,730
-- -- -- -- -- -- -- --
(160,035) (619,785) (1,161,538) (3,098,914) (7,723,114) (855,077) (1,550,249) (618,066)
---------------------------------------------------------------------------------------------------------------------
(154,648) (212,798) (448,396) 649,061 1,112,112 (27,787) (1,160,649) (529,336)
=====================================================================================================================
</TABLE>
---------------------
61
<PAGE> 63
- ---------------------
ANCHOR SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GOVERNMENT &
MONEY MARKET FIXED INCOME QUALITY BOND HIGH YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income..................................... $ 3,870,009 $ 1,360,950 $ 13,340,124 $ 3,587,998
Net realized gain (loss) on investments................... -- 2,846 (164,068) 1,614,047
Net realized foreign exchange gain (loss) on other assets
and liabilities......................................... -- -- -- --
Net realized gain on futures contracts.................... -- -- -- --
Change in unrealized appreciation/depreciation of
investments............................................. -- 379,729 6,917,378 (803,941)
Change in unrealized foreign exchange gain/loss on other
assets and liabilities.................................. -- -- -- 2,745
Change in unrealized appreciation/depreciation on futures
contracts............................................... -- -- -- --
-----------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations.............................................. 3,870,009 1,743,525 20,093,434 4,400,849
-----------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from capital gains.......................... -- -- (790,000) --
Dividends from net investment income...................... (3,870,009) (1,670,000) (13,980,000) (4,025,000)
-----------------------------------------------------------
Total dividends and distributions to shareholders......... (3,870,009) (1,670,000) (14,770,000) (4,025,000)
-----------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................................. 179,789,798 1,882,041 84,629,814 25,080,588
Proceeds from shares issued for reinvestment of dividends
and distributions....................................... 3,870,009 1,670,000 14,770,000 4,025,000
Cost of shares repurchased................................ (187,856,279) (8,053,346) (91,703,378) (34,974,896)
-----------------------------------------------------------
Net increase (decrease) in net assets resulting from
capital share transactions.............................. (4,196,472) (4,501,305) 7,696,436 (5,869,308)
-----------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS................... (4,196,472) (4,427,780) 13,019,870 (5,493,459)
NET ASSETS:
Beginning of period....................................... 74,000,653 22,743,002 221,603,077 45,686,720
-----------------------------------------------------------
End of period............................................. $ 69,804,181 $18,315,222 $234,622,947 $ 40,193,261
===========================================================
---------------
Accumulated undistributed net investment income........... $ 632 $ 1,372,518 $ 13,552,555 $ 3,705,994
===========================================================
Shares issued and repurchased:
Sold...................................................... 179,789,798 140,887 6,117,786 2,936,419
Issued in reinvestment of dividends and distributions..... 3,870,009 130,367 1,100,596 492,656
Repurchased............................................... (187,856,279) (601,742) (6,625,026) (4,080,564)
-----------------------------------------------------------
Net increase (decrease)................................... (4,196,472) (330,488) 593,356 (651,489)
===========================================================
</TABLE>
See Notes to Financial Statements
- ---------------------
62
<PAGE> 64
<TABLE>
<CAPTION>
GROWTH AND FOREIGN CAPITAL NATURAL STRATEGIC
TARGET '98 INCOME SECURITIES GROWTH APPRECIATION RESOURCES MULTI-ASSET MULTI-ASSET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 602,239 $ 385,947 $ 389,224 $ 2,540,107 $ 467,861 $ 601,049 $ 3,619,001 $ 1,027,396
(17,879) 1,874,021 1,955,084 31,187,271 71,694,746 417,576 22,517,840 7,616,407
-- -- (207,950) -- (3,171) (328) 58 (11,793)
-- -- 274,991 -- 1,527,540 -- 157,744 67,891
(137,546) 7,471,248 (2,293,078) 75,254,383 78,026,936 (5,760,825) 2,368,322 (1,149,205)
-- -- (14,202) -- (7,316) (2,530) 14 (19,409)
-- -- (28,021) -- (393,750) -- 41,850 71,793
----------------------------------------------------------------------------------------------------------------------
446,814 9,731,216 76,048 108,981,761 151,312,846 (4,745,058) 28,704,829 7,603,080
----------------------------------------------------------------------------------------------------------------------
-- (3,000) (3,775,000) (44,990,000) (63,555,000) (3,075,000) (20,195,000) (9,430,000)
(825,000) (865,000) (985,000) (3,085,000) (1,055,000) (535,000) (4,135,000) (1,270,000)
----------------------------------------------------------------------------------------------------------------------
(825,000) (868,000) (4,760,000) (48,075,000) (64,610,000) (3,610,000) (24,330,000) (10,700,000)
----------------------------------------------------------------------------------------------------------------------
488,918 17,209,143 14,889,890 172,256,188 594,961,738 33,911,861 15,771,917 5,143,306
825,000 868,000 4,760,000 48,075,000 64,610,000 3,610,000 24,330,000 10,700,000
(3,694,795) (15,988,972) (26,853,371) (162,312,016) (499,635,823) (24,442,072) (49,410,173) (17,201,470)
----------------------------------------------------------------------------------------------------------------------
(2,380,877) 2,088,171 (7,203,481) 58,019,172 159,935,915 13,079,789 (9,308,256) (1,358,164)
----------------------------------------------------------------------------------------------------------------------
(2,759,063) 10,951,387 (11,887,433) 118,925,933 246,638,761 4,724,731 (4,933,427) (4,455,084)
10,171,541 33,465,273 48,035,689 366,602,327 567,672,305 45,329,201 150,618,861 57,744,234
----------------------------------------------------------------------------------------------------------------------
$ 7,412,478 $ 44,416,660 $ 36,148,256 $ 485,528,260 $ 814,311,066 $ 50,053,932 $145,685,434 $53,289,150
======================================================================================================================
$ 593,334 $ 377,994 $ 440,430 $ 2,514,747 $ 443,996 $ 591,715 $ 3,631,038 $ 1,039,089
======================================================================================================================
41,786 1,098,773 1,175,585 6,579,872 19,642,838 2,040,810 1,110,108 410,357
75,619 53,713 389,844 1,855,461 2,046,563 215,909 1,886,047 960,503
(319,495) (1,023,740) (2,107,426) (6,287,471) (16,686,320) (1,473,329) (3,503,935) (1,380,080)
----------------------------------------------------------------------------------------------------------------------
(202,090) 128,746 (541,997) 2,147,862 5,003,081 783,390 (507,780) (9,220)
======================================================================================================================
</TABLE>
---------------------
63
<PAGE> 65
- ---------------------
ANCHOR SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION: Anchor Series Trust (the "Trust") was organized as a
business trust under the laws of the Commonwealth of Massachusetts on August 26,
1983. The Trust is registered under the Investment Company Act of 1940, as
amended, as an open-end diversified management investment company. Shares of the
portfolios are issued and redeemed only in connection with investments in and
payments under variable annuity contracts and variable life insurance policies
("Variable Contracts") of Anchor National Life Insurance Company, First
SunAmerica Life Insurance Company, Phoenix Mutual Life Insurance Company and
Presidential Life Insurance Company (the "Life Companies").
The investment objectives for each portfolio are as follows:
The MONEY MARKET PORTFOLIO seeks current income consistent with stability of
principal through investment in a diversified portfolio of money market
instruments maturing in 397 days or less.
The FIXED INCOME PORTFOLIO seeks a high level of current income consistent with
preservation of capital and invests primarily in investment grade, fixed income
securities.
The GOVERNMENT & QUALITY BOND PORTFOLIO seeks relatively high current income,
liquidity and security of principal.
The HIGH YIELD PORTFOLIO seeks to produce high current income and secondarily
seeks capital appreciation by investing in high-yielding, high-risk, income
producing corporate bonds.
The TARGET '98 PORTFOLIO seeks a predictable compounded investment return for
the specified time period, consistent with preservation of capital, by investing
primarily in zero coupon securities and current interest-bearing, investment
grade debt obligations which are issued by the U.S. Government, its agencies and
instrumentalities, and both domestic and foreign companies. These investments
will generally mature no later than November 15, 1998. (Note 9)
The GROWTH AND INCOME PORTFOLIO seeks to provide high current income and
long-term capital appreciation by investing primarily in securities that provide
the potential for growth and offer income, such as dividend-paying stocks and
securities convertible into common stock.
The FOREIGN SECURITIES PORTFOLIO seeks long-term capital appreciation through
investment primarily in equity securities issued by foreign companies.
The GROWTH PORTFOLIO seeks capital appreciation primarily through investments in
growth equity securities.
The CAPITAL APPRECIATION PORTFOLIO seeks long-term capital appreciation by
investing in growth equity securities which are widely diversified by industry
and company.
The NATURAL RESOURCES PORTFOLIO seeks a total return through investment
primarily in equity securities of U.S. or foreign companies which are expected
to provide favorable returns in periods of rising inflation.
The MULTI-ASSET PORTFOLIO seeks long-term total investment return consistent
with moderate investment risk by investing in equity securities, convertible
securities, investment grade fixed income securities and money market
securities.
The STRATEGIC MULTI-ASSET PORTFOLIO seeks high long-term total investment return
by investing in equity securities, aggressive growth equity securities,
international equity securities, investment grade bonds, high-yield, high-risk
bonds and money market instruments.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES: The preparation of financial
statements in accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
consistently followed by the Trust in the preparation of its financial
statements.
SECURITY VALUATIONS: Stocks are stated at value based upon closing sales prices
reported on recognized securities exchanges or, for listed securities having no
sales reported and for unlisted securities, upon last-reported bid prices.
Nonconvertible bonds, debentures, and other long-term debt securities are valued
at prices obtained for the day of valuation from a bond pricing service of a
major dealer in bonds when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, an over-the-counter
or exchange quotation at the mean of representative bid or asked prices may be
used. Securities traded primarily on securities exchanges outside the United
States are valued at the last sale price on such exchanges on the day of
valuation, or if there is no sale on the day of valuation, at the last reported
bid price. If a security's price is available from more than one foreign
exchange, a portfolio uses the exchange that is the primary market for the
security. Except for the Money Market Portfolio, short-term securities with
original or remaining maturities in excess of 60 days are valued at the mean of
their quoted bid and ask prices. Discounts or premiums on short-term securities
with 60 days or less to maturity are amortized to maturity. Discounts and
premiums are determined based upon the cost of the securities to the Trust if
acquired within 60 days of maturity or, if already held by the Trust on the 60th
day, are amortized to maturity based on the value determined on the 61st day.
- ---------------------
64
<PAGE> 66
Securities for which quotations are not readily available are valued at fair
value as determined in good faith under the direction of the Trust's Trustees.
For the Money Market Portfolio, securities are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a security
at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of any discount or premium.
FOREIGN CURRENCY TRANSLATION: The books and records of the Trust are maintained
in U.S. dollars.
Market values of investment securities are translated into U.S. dollars at the
prevailing rate of exchange on the valuation date.
Assets and liabilities denominated in foreign currencies and commitments under
forward foreign currency contracts ("forward contracts") are translated into
U.S. dollars at the mean of the quoted bid and asked prices of such currencies
against the U.S. dollar. Purchases and sales of portfolio securities are
translated at the rate of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated at rates of exchange prevailing when
earned or incurred.
The Trust does not isolate that portion of the results of operations arising
as a result of changes in the foreign exchange rates from the changes in the
market prices of securities held at fiscal year-end. The Trust does not isolate
the effect of changes in foreign exchange rates from the changes in the market
prices of portfolio securities sold during the year.
Realized foreign exchange gain (loss) on other assets and liabilities and
change in unrealized foreign exchange gain (loss) on other assets and
liabilities include realized foreign exchange gains and losses from currency
gains or losses realized between the trade and settlement dates of securities
transactions, the difference between the amounts of interest, dividends,
discount and foreign withholding taxes recorded on the Trust's books and the
U.S. dollar equivalent amounts actually received or paid and changes in the
unrealized foreign exchange gains and losses relating to other assets and
liabilities arising as a result of changes in the exchange rate.
SECURITIES TRANSACTIONS, DIVIDENDS, INVESTMENT INCOME AND EXPENSES: Securities
transactions are accounted for as of the trade date. Interest income is accrued
daily except when collection is not expected. Dividend income is recorded on the
ex-dividend date except for certain dividends from foreign securities which are
recorded as soon as the Trust is informed after the ex-dividend date. The Trust
does not amortize premiums or accrete discounts on fixed income securities,
other than short-term securities, except those original issue discounts for
which amortization is required for federal income tax purposes; gains and losses
realized upon the sale of such securities are based on their identified cost.
Portfolios which earn foreign income and capital gains may be subject to
foreign withholding taxes at various rates.
Common expenses incurred by the Trust are allocated among the portfolios based
upon relative net assets. In all other respects, expenses are charged to each
portfolio as incurred on a specific identification basis.
The Trust records dividends and distributions to its shareholders on the
ex-dividend date.
The amount of dividends and distributions from net investment income and net
realized capital gains are determined and presented in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains. To the extent distributions exceed current
and accumulated earnings and profits for federal income tax purposes, they are
reported as distributions of paid-in capital. Net investment income/loss, net
realized gain/loss, and net assets are not affected.
For the year ended December 31, 1997, the reclassification arising from
book/tax differences resulted in increases (decreases) to the components of net
assets as follows:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED ACCUMULATED
NET REALIZED UNDISTRIBUTED PAID
INVESTMENT NET REALIZED IN
INCOME/LOSS GAIN/LOSS CAPITAL
<S> <C> <C> <C>
---------------------------------------------
Money Market Portfolio...................................... $ (1,523) $ 1,523 $ --
Fixed Income Portfolio...................................... 20,464 352,074 (372,538)
Government & Quality Bond Portfolio......................... 235,493 (235,493) --
High Yield Portfolio........................................ 136,178 2,997,806 (3,133,984)
Target '98 Portfolio........................................ -- -- --
Growth and Income Portfolio................................. -- -- --
Foreign Securities Portfolio................................ 67,041 (67,041) --
Growth Portfolio............................................ -- -- --
Capital Appreciation Portfolio.............................. (3,171) 3,171 --
Natural Resources Portfolio................................. (328) 328 --
Multi-Asset Portfolio....................................... 27,298 (27,298) --
Strategic Multi-Asset Portfolio............................. 28,973 (28,973) --
</TABLE>
Reclassifications are primarily due to differing book and tax treatments for
foreign currency transactions, market discount, paydowns, and expiring capital
loss carryovers.
---------------------
65
<PAGE> 67
NOTE 3. OPERATING POLICIES:
REPURCHASE AGREEMENTS: The Trust's custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to assure that the value, including
accrued interest, is at least 102% of the repurchase price. In the event of
default of the obligation to repurchase, the Trust has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If the
seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Trust may be delayed or limited.
At June 30, 1998, the Fixed Income, Government & Quality Bond, High Yield,
Target '98, Foreign Securities, Growth, Capital Appreciation, Natural Resources,
Multi-Asset and Strategic Multi-Asset Portfolios had a 0.1%, 6.6%, 0.5%, 0.6%,
1.5%, 10.1%, 66.5%, 1.9%, 6.4% and 2.3%, respectively, undivided interest,
representing $105,000, $10,530,000, $825,000, $940,000, $2,310,000, $16,030,000,
$105,880,000, $3,060,000, $10,210,000 and $3,625,000, respectively, in principal
amount, in a joint repo with Swiss Bank, which is dated June 30, 1998, bears
interest at the rate of 5.85% per annum, has a principal amount of $159,210,000
and a repurchase price of $159,235,872, matures on July 1, 1998 and is
collateralized by $158,434,000 of U.S. Treasury Strips, which bear interest at a
rate of 5.875% per annum, mature September 30, 2002 and have an approximate
aggregate value of $162,405,585.
FORWARD FOREIGN CURRENCY CONTRACTS: Certain portfolios may enter into forward
contracts to attempt to protect securities and related receivables and payables
against changes in future foreign exchange rates. A forward contract is an
agreement between two parties to buy or sell currency at a set price on a future
date. The market value of the contract will fluctuate with changes in currency
exchange rates. The contract is marked-to-market daily using the forward rate
and the change in market value is recorded by the portfolio as unrealized gain
or loss. Upon settlement date, the portfolio records either realized gains or
losses when the contract is closed equal to the difference between the value of
the contract at the time it was opened and the value at the time it was closed.
Risks may arise upon entering into these contracts from the potential inability
of counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
Forward contracts involve elements of risk in excess of the amount reflected in
the Statement of Assets and Liabilities. A portfolio bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward contract.
FUTURES CONTRACTS: A futures contract is an agreement between two parties to
buy or sell a financial instrument at a set price on a future date. Upon
entering into such a contract the Trust is required to pledge to the broker an
amount of cash or U.S. government securities equal to the minimum "initial
margin" requirements of the exchange on which the futures contract is traded.
The contract amount reflects the extent of a portfolio's exposure in these
financial instruments. A portfolio's participation in the futures markets
involves certain risks, including imperfect correlation between movements in the
price of futures contracts and movements in the price of the securities hedged
or used for cover. The Trust's activities in futures contracts are conducted
through regulated exchanges which do not result in counterparty credit risks.
Pursuant to a contract the portfolios agree to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the contract. Such
receipts or payments are known as "variation margin" and are recorded by the
portfolios as unrealized appreciation or depreciation. When a contract is
closed, the portfolios record a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed.
NOTE 4. FEDERAL INCOME TAXES: It is each portfolio's policy to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable net income to shareholders.
Therefore, no federal income tax provision is required. Each portfolio is
considered a separate entity for tax purposes.
- ---------------------
66
<PAGE> 68
At June 30, 1998, the cost of investment securities for tax purposes,
including short-term securities and aggregate gross unrealized gain (loss) for
each portfolio were as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED GAIN (LOSS) COST OF CAPITAL LOSS
GAIN LOSS NET INVESTMENTS CARRYOVER EXPIRATION
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Money Market Portfolio................ $ -- $ -- $ -- $ 71,728,077 $ 632 2005
Fixed Income Portfolio................ 585,042 (174,789) 410,253 16,759,406 1,598,757 1998-2002
Government & Quality Bond Portfolio... 4,988,242 (242,229) 4,746,013 271,876,162 -- --*
High Yield Portfolio.................. 612,671 (880,489) (267,818) 31,723,778 9,486,051 1998-2003
Target '98 Portfolio.................. 38,890 -- 38,890 5,820,664 270,582 2002-2005
Growth and Income Portfolio........... 15,771,143 (993,644) 14,777,499 33,530,095 -- --***
Foreign Securities Portfolio.......... 5,860,346 (1,279,417) 4,580,929 31,076,972 -- --
Growth Portfolio...................... 227,549,761 (4,974,217) 222,575,544 369,678,862 -- --
Capital Appreciation Portfolio........ 302,189,526 (31,386,577) 270,802,949 718,901,728 -- --**
Natural Resources Portfolio........... 4,266,408 (6,750,490) (2,484,082) 49,814,917 -- --**
Multi-Asset Portfolio................. 40,036,775 (1,795,721) 38,241,054 112,351,257 -- --
Strategic Multi-Asset Portfolio....... 8,000,642 (1,220,780) 6,779,862 47,471,594 -- --**
</TABLE>
The Fixed Income and High Yield portfolios utilized capital loss carryovers of
$19,266 and $1,477,869, respectively, to partially offset the portfolios' net
taxable gains realized and recognized in the year ended December 31, 1997. In
addition $372,538 and $3,133,984, respectively, of prior year capital loss
carryover for the Fixed Income and High Yield portfolios expired as of December
31, 1997.
* Post 10/31 Capital Loss Deferrals: Government & Quality Bond $1,026,765 and
Foreign Securities $1,610,370.
** Post 10/31 Foreign Exchange Loss Deferrals: Foreign Securities $58,271,
Capital Appreciation $2,749, Natural Resources $16 and Strategic Multi-Asset
$2,841.
NOTE 5. INVESTMENT MANAGEMENT AGREEMENTS: The Trust has entered into an
Investment Advisory and Management Agreement (the "Management Agreement") with
SunAmerica Asset Management Corp. ("SAAMCo") with respect to each portfolio.
SAAMCo serves as manager for each of the portfolios. The Management Agreements
provide that SAAMCo shall act as investment adviser to the Trust; manage the
Trust's investments; administer its business affairs; furnish offices, necessary
facilities and equipment; provide clerical, bookkeeping and administrative
services; and permit any of its officers or employees to serve, without
compensation, as trustees or officers of the Trust, if duly elected to such
positions.
The Trust pays SAAMCo a monthly fee calculated daily at the following annual
percentages of each portfolio's average daily net assets:
<TABLE>
<CAPTION>
AVERAGE DAILY MANAGEMENT
PORTFOLIO NET ASSETS FEE
- -------------------------------------------------------
<S> <C> <C>
Money Market $0-$150 million .500%
> $150 million .475%
> $250 million .450%
> $500 million .425%
Government & Quality
Bond/ $0-$200 million .625%
Fixed Income > $200 million .575%
> $500 million .500%
High Yield $0-$250 million .700%
> $250 million .575%
> $500 million .500%
Target '98 $0-$100 million .625%
> $100 million .570%
> $250 million .525%
> $500 million .500%
Growth and Income $0-$100 million .700%
> $100 million .650%
> $250 million .600%
> $500 million .575%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE DAILY MANAGEMENT
PORTFOLIO NET ASSETS FEE
- -------------------------------------------------------
<S> <C> <C>
Foreign Securities $0-$100 million .900%
> $100 million .825%
> $250 million .750%
> $500 million .700%
Growth $0-$250 million .750%
> $250 million .675%
> $500 million .600%
Capital Appreciation $0-$100 million .750%
> $100 million .675%
> $250 million .625%
> $500 million .600%
Natural Resources > $0 .750%
Strategic Multi-Asset/ $0-$200 million 1.000%
Multi-Asset > $200 million .875%
> $500 million .800%
</TABLE>
--------------------
67
<PAGE> 69
SAAMCO has entered into Subadvisory Agreements (the "Subadvisory Agreement")
with Wellington Management Company ("WMC") to manage the investments of each
portfolio.
The portion of the investment advisory fees received by SAAMCo which are paid
to WMC are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY WMC
PORTFOLIO NET ASSETS ALLOCATION
- -------------------------------------------------------
<S> <C> <C>
Money Market $0-$500 million .075%
> $500 million .020%
Government & Quality
Bond/ $0-$ 50 million .225%
Fixed Income > $ 50 million .125%
> $100 million .100%
High Yield $0-$ 50 million .300%
> $ 50 million .225%
> $150 million .175%
> $500 million .150%
Target '98 $0-$ 50 million .225%
> $ 50 million .150%
> $100 million .100%
> $500 million .050%
Growth/ $0-$ 50 million .325%
Growth and Income > $ 50 million .225%
> $150 million .200%
> $500 million .150%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE DAILY WMC
PORTFOLIO NET ASSETS ALLOCATION
- -------------------------------------------------------
<S> <C> <C>
Foreign Securities $0-$ 50 million .400%
> $ 50 million .275%
> $150 million .200%
> $500 million .150%
Capital Appreciation $0-$ 50 million .375%
> $ 50 million .275%
> $150 million .200%
> $500 million .150%
Natural Resources $0-$ 50 million .350%
> $ 50 million .250%
> $150 million .200%
> $500 million .150%
Multi-Asset $0-$ 50 million .250%
> $ 50 million .175%
> $150 million .150%
Strategic Multi-Asset $0-$ 50 million .300%
> $ 50 million .200%
> $150 million .175%
> $500 million .150%
</TABLE>
For the six months ended June 30, 1998, SAAMCo received fees of $7,398,885
from the Trust, of which SAAMCo informed the Trust that $5,221,748 was retained
and $2,177,137 was allocated to WMC.
NOTE 6. SECURITIES TRANSACTIONS: The portfolios had the following purchases and
sales of long-term securities for the six months ended June 30, 1998:
<TABLE>
<CAPTION>
MONEY GOVERNMENT & GROWTH
MARKET FIXED INCOME QUALITY BOND HIGH YIELD TARGET '98 AND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
Purchases of portfolio securities
(excluding U.S. government
securities)....................... $ -- $ 1,578,136 $ 24,967,591 $25,137,156 $ -- $11,925,076
Sales of portfolio securities
(excluding U.S. government
securities)....................... -- 2,518,005 7,630,475 31,986,569 580,000 14,959,679
U.S. Government Securities excluded
above were as follows:
Purchases of U.S. government
securities........................ -- 1,239,070 279,311,915 -- -- --
Sales of U.S. government
securities........................ -- 1,089,577 240,038,279 -- 1,455,153 --
FOREIGN CAPITAL NATURAL STRATEGIC
SECURITIES GROWTH APPRECIATION RESOURCES MULTI-ASSET MULTI-ASSET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------
Purchases of portfolio securities
(excluding U.S. government
securities)....................... $ 22,487,534 $101,912,153 $220,984,339 $11,415,771 $ 15,948,132 $40,307,456
Sales of portfolio securities
(excluding U.S. government
securities)....................... 29,010,952 79,821,013 209,761,184 11,331,595 26,642,353 42,812,555
U.S. Government Securities excluded
above were as follows:
Purchases of U.S. government
securities........................ -- -- -- -- 39,044,174 1,495,930
Sales of U.S. government
securities........................ -- -- -- -- 34,142,448 4,701,105
</TABLE>
- ---------------------
68
<PAGE> 70
NOTE 7. TRANSACTIONS WITH AFFILIATES: The following Portfolio incurred
brokerage commissions with an affiliated broker:
<TABLE>
<CAPTION>
ADVANTAGE SUNAMERICA
CAPITAL CORP. SECURITIES, INC.
------------- ----------------
<S> <C> <C>
Growth Portfolio............................................ $2,244 $1,920
</TABLE>
NOTE 8. TRUSTEES RETIREMENT PLAN: The Trustees (and Directors) of the
SunAmerica Family of Mutual Funds have adopted the SunAmerica Disinterested
Trustees' and Directors' Retirement Plan (the "Retirement Plan") effective
January 1, 1993 for the unaffiliated Trustees. The Retirement Plan provides
generally that if an unaffiliated Trustee who has at least 10 years of
consecutive service as a Disinterested Trustee of any of the SunAmerica mutual
funds (an "Eligible Trustee") retires after reaching age 60 but before age 70 or
dies while a Trustee, such person will be eligible to receive a retirement or
death benefit from each SunAmerica mutual fund with respect to which he or she
is an Eligible Trustee. As of each birthday, prior to the 70th birthday, but in
no event for a period greater than 10 years, each Eligible Trustee will be
credited with an amount equal to 50% of his or her regular fees (excluding
committee fees) for services as a Disinterested Trustee of each SunAmerica
mutual fund for the calendar year in which such birthday occurs. In addition, an
amount equal to 8.5% of any amounts credited under the preceding clause during
prior years, is added to each Eligible Trustee's account until such Eligible
Trustee reaches his or her 70th birthday. An Eligible Trustee may receive
benefits payable under the Retirement Plan, at his or her election, either in
one lump sum or in up to fifteen annual installments. As of June 30, 1998, the
Trust had accrued $143,446 for the Retirement Plan, which is included in accrued
expenses on the Statement of Assets and Liabilities and for the six months ended
June 30, 1998, expensed $20,042 for the Retirement Plan, which is included in
Trustee fees and expenses on the Statement of Operations.
NOTE 9. SUBSEQUENT EVENTS: In January 1998, investors will be notified
regarding the forthcoming maturity and liquidation of the Target '98 Portfolio.
To facilitate an orderly liquidation, the shareholder will be requested to
provide instructions for the reallocation of investments by November 15, 1998.
Instructions not received by the aforementioned date will result in the
reallocation of the investment into the Money Market Portfolio.
---------------------
69
<PAGE> 71
- ---------------------
ANCHOR SERIES TRUST
FINANCIAL HIGHLIGHTS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET DIVIDENDS DIVIDENDS
REALIZED TOTAL DECLARED FROM NET NET
NET ASSET NET & UNREALIZED FROM FROM NET REALIZED NET ASSET ASSETS
VALUE INVEST- GAIN (LOSS) INVEST- INVEST- GAIN ON VALUE END OF
PERIOD BEGINNING MENT ON MENT MENT INVEST- END OF TOTAL PERIOD
ENDED OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME MENTS PERIOD RETURN** (000'S)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Portfolio
12/31/94 $ 1.00 $0.04 $ -- $ 0.04 $(0.04) $ -- $ 1.00 3.8% $126,004
12/31/95 1.00 0.05 -- 0.05 (0.05) -- 1.00 5.6 93,692
12/31/96 1.00 0.05 -- 0.05 (0.05) -- 1.00 5.0 74,001
12/31/97 1.00 0.05 -- 0.05 (0.05) -- 1.00 5.1 69,804
6/30/98# 1.00 0.03 -- 0.03 (0.03) -- 1.00 2.5 70,639
Fixed Income Portfolio
12/31/94 14.54 0.89 (1.36) (0.47) (1.17) -- 12.90 (3.2) 28,582
12/31/95 12.90 0.90 1.52 2.42 (1.16) -- 14.16 19.2 27,975
12/31/96 14.16 0.93 (0.64) 0.29 (1.15) -- 13.30 2.4 22,743
12/31/97 13.30 0.91 0.30 1.21 (1.23) -- 13.28 9.4 18,315
6/30/98# 13.28 0.46 0.09 0.55 -- -- 13.83 4.1 17,543
Government & Quality Bond Portfolio
12/31/94 14.22 0.86 (1.30) (0.44) (0.73) (0.19) 12.86 (3.1) 232,530
12/31/95 12.86 0.90 1.55 2.45 (1.08) -- 14.23 19.4 225,579
12/31/96 14.23 0.87 (0.50) 0.37 (0.90) (0.03) 13.67 2.9 221,603
12/31/97 13.67 0.84 0.42 1.26 (0.92) (0.05) 13.96 9.5 234,623
6/30/98# 13.96 0.41 0.16 0.57 -- -- 14.53 4.1 271,737
High Yield Portfolio
12/31/94 9.43 0.15 (0.56) (0.41) (1.15) -- 7.87 (4.5) 48,057
12/31/95 7.87 0.77 0.67 1.44 (0.98) -- 8.33 18.8 46,817
12/31/96 8.33 0.74 0.19 0.93 (0.88) -- 8.38 11.7 45,687
12/31/97 8.38 0.75 0.18 0.93 (0.93) -- 8.38 11.4 40,193
6/30/98# 8.38 0.37 (0.03) 0.34 -- -- 8.72 4.1 32,247
Target '98 Portfolio
12/31/94 13.94 0.83 (1.39) (0.56) (1.11) (0.07) 12.20 (4.1) 19,194
12/31/95 12.20 0.86 0.88 1.74 (1.30) -- 12.64 14.6 12,774
12/31/96 12.64 0.81 (0.37) 0.44 (1.41) -- 11.67 3.7 10,172
12/31/97 11.67 0.78 (0.19) 0.59 (1.19) -- 11.07 5.2 7,412
6/30/98# 11.07 0.37 (0.11) 0.26 -- -- 11.33 2.4 5,833
Growth and Income Portfolio
12/31/94 14.58 0.66 (1.96) (1.30) (0.52) (1.20) 11.56 (9.7) 34,995
12/31/95 11.56 0.61 1.29 1.90 (0.83) (0.62) 12.01 16.6 32,008
12/31/96++ 12.01 0.33 2.02 2.35 (0.77) -- 13.59 20.2 33,465
12/31/97 13.59 0.15 3.74 3.89 (0.34) -- 17.14 28.8 44,417
6/30/98# 17.14 0.06 3.12 3.18 -- -- 20.32 18.6 48,335
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME PORTFOLIO
TO AVERAGE TO AVERAGE TURNOVER
NET ASSETS NET ASSETS RATE
- ----------------------------------------------------------
<S> <C> <C> <C>
12/31/94 0.6% $3.8 --%
12/31/95 0.6 5.5 --
12/31/96 0.6 4.9 --
12/31/97 0.6 5.0 --
6/30/98 0.6+ 5.0+ --
12/31/94 0.8 6.5 56.5
12/31/95 0.8 6.5 76.7
12/31/96 0.8 6.8 77.9
12/31/97 0.9 6.9 58.0
6/30/98 1.0+ 6.8+ 16.2
12/31/94 0.7 6.4 117.6
12/31/95 0.7 6.5 135.2
12/31/96 0.7 6.3 106.7
12/31/97 0.7 6.1 75.7
6/30/98 0.7+ 5.8+ 106.0
12/31/94 0.9 9.0 97.9
12/31/95 0.9 9.2 68.1
12/31/96 0.9 8.8 58.0
12/31/97 0.9 8.8 101.4
6/30/98 0.9+ 8.7+ 71.4
12/31/94 0.8 6.5 9.2
12/31/95 0.9 6.7 38.6
12/31/96 0.9 6.5 --
12/31/97 1.0 6.8 --
6/30/98 1.2+ 6.7+ --
12/31/94 0.9 4.9 50.7
12/31/95 0.9 5.2 88.8
12/31/96 0.9 2.5 108.5
12/31/97 0.8 1.0 49.4
6/30/98 0.8+ 0.7+ 25.4
</TABLE>
- ---------------
* Selected data for a share of beneficial interest outstanding throughout each
period (calculated based upon average shares outstanding)
** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company, First SunAmerica Life Insurance Company,
Phoenix Mutual Life Insurance Company and Presidential Life Insurance
Company. If such expenses had been included, total return would have been
lower for each period presented.
++ Prior to March 1, 1996, the portfolio was invested primarily in convertible
debt securities. After that date, the portfolio primarily invests in common
stock.
# Unaudited
+ Annualized
- ---------------------
70
<PAGE> 72
- ---------------------
ANCHOR SERIES TRUST
FINANCIAL HIGHLIGHTS* -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET DIVIDENDS DIVIDENDS
REALIZED TOTAL DECLARED FROM NET NET
NET ASSET & UNREALIZED FROM FROM NET REALIZED NET ASSET ASSETS
VALUE NET GAIN (LOSS) INVEST- INVEST- GAIN ON VALUE END OF
PERIOD BEGINNING INVESTMENT ON MENT MENT INVEST- END OF TOTAL PERIOD
ENDED OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME MENTS PERIOD RETURN** (000'S)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Foreign Securities Portfolio
12/31/94 $10.93 $ 0.11 $(0.46) $(0.35) $(0.03) $ -- $10.55 (3.2)% $ 68,641
12/31/95 10.55 0.13 1.19 1.32 (0.05) (0.01) 11.81 12.6 53,609
12/31/96 11.81 0.15 1.19 1.34 (0.21) -- 12.94 11.5 48,036
12/31/97 12.94 0.11 (0.14) (0.03) (0.31) (1.20) 11.40 (1.0) 36,148
6/30/98# 11.40 0.08 1.55 1.63 -- -- 13.03 14.3 35,478
Growth Portfolio
12/31/94 22.32 0.05 (1.03) (0.98) (0.05) (3.11) 18.18 (4.7) 246,149
12/31/95 18.18 0.11 4.62 4.73 (0.05) (3.38) 19.48 26.3 307,857
12/31/96 19.48 0.20 4.57 4.77 (0.11) (0.95) 23.19 25.0 366,602
12/31/97 23.19 0.16 6.76 6.92 (0.20) (2.87) 27.04 30.4 485,528
6/30/98# 27.04 0.06 4.73 4.79 -- -- 31.83 17.7 592,069
Capital Appreciation Portfolio
12/31/94 20.28 (0.02) (0.71) (0.73) -- (2.04) 17.51 (3.8) 229,544
12/31/95 17.51 0.06 6.00 6.06 (0.15) (0.20) 23.22 34.6 356,218
12/31/96 23.22 0.06 5.73 5.79 (0.06) (0.95) 28.00 25.1 567,672
12/31/97 28.00 0.02 7.05 7.07 (0.05) (2.81) 32.21 25.4 814,311
6/30/98# 32.21 0.04 5.30 5.34 -- -- 37.55 16.6 990,993
Natural Resources Portfolio
12/31/94 13.33 0.23 (0.09) 0.14 (0.09) (0.09) 13.29 1.0 21,230
12/31/95 13.29 0.18 2.15 2.33 (0.21) (0.29) 15.12 17.5 28,941
12/31/96 15.12 0.22 1.89 2.11 (0.13) (0.23) 16.87 14.1 45,329
12/31/97 16.87 0.20 (1.49) (1.29) (0.17) (0.99) 14.42 (8.6) 50,054
6/30/98# 14.42 0.09 (0.61) (0.52) -- -- 13.90 (3.6) 47,845
Multi-Asset Portfolio
12/31/94 13.88 0.39 (0.60) (0.21) (0.47) (1.49) 11.71 (1.7) 164,159
12/31/95 11.71 0.40 2.47 2.87 (0.49) (1.05) 13.04 24.9 168,243
12/31/96 13.04 0.35 1.36 1.71 (0.49) (0.91) 13.35 13.9 150,619
12/31/97 13.35 0.34 2.36 2.70 (0.43) (2.10) 13.52 21.1 145,685
6/30/98# 13.52 0.16 1.81 1.97 -- -- 15.49 14.6 148,935
Strategic Multi-Asset Portfolio
12/31/94 14.06 0.24 (0.53) (0.29) (0.20) (2.28) 11.29 (2.6) 65,357
12/31/95 11.29 0.32 2.18 2.50 (0.23) (1.78) 11.78 22.8 64,026
12/31/96 11.78 0.25 1.41 1.66 (0.40) (0.84) 12.20 14.8 57,744
12/31/97 12.20 0.23 1.48 1.71 (0.31) (2.32) 11.28 14.3 53,289
6/30/98# 11.28 0.13 1.44 1.57 -- -- 12.85 13.9 53,900
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS) PORTFOLIO
TO AVERAGE TO AVERAGE TURNOVER
NET ASSETS NET ASSETS RATE
- ----------------------------------------------------------
<S> <C> <C> <C>
12/31/94 1.2% 1.0% 73.9%
12/31/95 1.2 1.2 33.0
12/31/96 1.4 1.2 74.3
12/31/97 1.4 0.9 79.9
6/30/98 1.4+ 1.3+ 64.0
12/31/94 0.8 0.2 74.8
12/31/95 0.9 0.6 92.1
12/31/96 0.8 0.9 51.7
12/31/97 0.8 0.6 32.2
6/30/98 0.8+ 0.4+ 15.0
12/31/94 0.8 (0.1) 64.0
12/31/95 0.8 0.3 60.1
12/31/96 0.8 0.2 69.2
12/31/97 0.7 0.1 60.1
6/30/98 0.7+ 0.2+ 25.3
12/31/94 1.0 1.7 36.0
12/31/95 1.0 1.3 32.0
12/31/96 0.9 1.3 52.5
12/31/97 0.9 1.2 27.9
6/30/98 0.9+ 1.2+ 23.4
12/31/94 1.1 3.0 82.5
12/31/95 1.1 3.2 85.9
12/31/96 1.1 2.6 64.1
12/31/97 1.1 2.4 56.5
6/30/98 1.1+ 2.2+ 38.4
12/31/94 1.3 1.8 63.7
12/31/95 1.3 2.7 36.9
12/31/96 1.4 2.0 51.3
12/31/97 1.4 1.8 59.7
6/30/98 1.4+ 2.2+ 85.9
</TABLE>
- ---------------
* Selected data for a share of beneficial interest outstanding throughout each
period (calculated based upon average shares outstanding)
** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company, First SunAmerica Life Insurance Company,
Phoenix Mutual Life Insurance Company and Presidential Life Insurance
Company. If such expenses had been included, total return would have been
lower for each period presented.
# Unaudited
+ Annualized
---------------------
71
<PAGE> 73
(LOGO)
1 SunAmerica Center
Los Angeles, California 90067-6022
----------------
/ /
/ BULK RATE /
/ /
/ U.S. POSTAGE /
/ PAID /
/ TOWNE, INC. /
/ /
----------------
A-1075 (R 8/98)
