<PAGE> 1
----------------------
DEAR ANCHOR PATHWAY INVESTOR:
We are pleased to report results for fiscal 1995 -- the 12
months ended November 30, 1995 -- for the seven series in the
Anchor Pathway Fund, which serves as the underlying investment
vehicle for the American Pathway II Variable Annuity. The
following commentary on the economy in general and the
investment activities of each of the series have been provided
by Capital Research and Management Company (CRMC), the
investment adviser to the Anchor Pathway Fund.
The latest fiscal year saw a remarkable turnaround in the U.S.
financial markets. An unusual alignment of economic
influences -- moderate but steady economic growth, a mild
inflationary environment, declining interest rates, and rising
corporate profits buoyed investor confidence and spurred major
advances in both stock and bond prices. The Dow Jones Industrial
Average continued its unprecedented climb, surging past the 5000
mark just nine months after reaching 4000 in February 1995. Bond
markets rallied as well, reversing their pattern from a year
earlier. Through it all, the Anchor Pathway Fund benefited from
the market's largesse. The value of each series appreciated in
fiscal 1995, most of them substantially. These gains, along with
positive cash flows into all of the series, significantly
increased the assets of the fund.
The year's results stand in marked contrast to those of fiscal
1994. As CRMC noted in last year's annual report, the Federal
Reserve was in the process of raising the federal funds rate
(the rate that banks charge each other for overnight loans).
Ultimately, the rate would increase from 3% to 6% in seven steps
over a 13-month period. This attempt to temper economic growth
and keep inflation low had its desired effect -- the U.S.
economy continued to grow, but at a modest pace. The economy's
perceived "soft landing" contributed significantly to the
strength of U.S. financial markets in 1995.
Washington pitched in with good news as well. Investor
confidence grew under the assumption that the new Republican
Congress would continue to slow the growth of federal spending,
and that a reduction in the capital gains tax rate could be
expected. As a cautionary note, CRMC believes that should the
budget impasse continue, securities markets could be affected
negatively.
THE GROWTH SERIES posted a 37.9% gain for the 12 months ended
November 30, 1995. Many U.S. corporations posted record earnings
over the period, due in part to productivity gains,
technological advances and a wave of restructurings across a
number of industries. At the same time, declining interest rates
lowered borrowing costs for businesses, encouraging them to
expand. Electronic technology was one of the strongest market
sectors over the period; it was also the series' largest area of
concentration. Among the series' top gainers were Adobe Systems,
a developer of desktop publishing products; LSI Logic, a leading
manufacturer of integrated circuits; and semiconductor giant
Intel. Media businesses were strongly represented among the
series' largest holdings, as well, with many of these companies
benefiting from merger activity. At the other end of the
spectrum, sluggish consumer spending caused several of the
series' specialty retailer holdings to suffer. Given the
strength of the technology sector, CRMC reduced some holdings in
that area during the last half of the year. This raised the
series' cash position slightly, which gives the adviser ample
buying reserve should the market experience a correction.
THE INTERNATIONAL SERIES posted a gain of 11.2% for fiscal
1995. U.S. financial markets found themselves a step ahead of
their non-U.S. counterparts, many of which were grappling with
the same economic uncertainties experienced here a year ago.
Measured in dollars, every major international market but
Switzerland lagged the United States. Stock prices in Europe,
the series' largest geographic concentration, were lackluster
for a variety of reasons (including higher interest rates), as
governments there attempted to keep inflation at bay. As always,
CRMC's analysts focused on the long-term prospects of individual
companies rather than the short-term movements of local markets.
Several of the series' largest holdings were also among the
greatest gainers: Orkla, a Norwegian marketer of consumer goods;
British hotelier Forte; and ABN AMRO, the Netherlands' largest
banking group. On balance, the series benefited from the
strength in European currencies, while elsewhere in the world
fluctuations in currency values had a relatively minor effect on
returns. In Japan, the series' relatively small weighting
offered some protection against a 2.9% decline in stock prices
there, caused by a stubborn recession and a
---------------------
1
<PAGE> 2
----------------------
burgeoning bank crisis. Despite a somewhat sluggish 12-month
period, international markets have done very well over longer
time periods, and CRMC believes that these markets will continue
to offer investors attractive opportunities for growth.
THE GROWTH-INCOME SERIES increased 33.5% for the year ended
November 30, 1995. Companies in interest-rate-sensitive
industries rebounded sharply in 1995. The series benefited from
large investments in the banking and insurance sectors, such as
Allstate and Citicorp. The series also had large concentrations
in health care, broadcasting and publishing, and
telecommunications, and many of the companies in those areas
appreciated considerably. With continuing cash flow in a robust
stock market, the series' net assets increased 15% in the last
12 months. CRMC used the opportunity to add to many current
holdings and purchase stocks of new companies, including several
in the forest products and energy sectors. All told, CRMC has
added 23 companies to the series portfolio of 194 stocks, and
eliminated 20 since the last report issued six months ago. The
series' invested position was slightly reduced at year end; it
now holds 10% of its assets in cash and equivalents as a buying
reserve.
THE ASSET ALLOCATION SERIES posted a gain of 31.0% for the
year ended November 30, 1995. The series provides an opportunity
to benefit from major market cycles, and this year it enjoyed
virtually the best of all possible worlds. The series' asset mix
on November 30 was 69% in equities, 22% in bonds and convertible
debentures, and the remainder in cash equivalents. The equity
portion of the fund, which is similar to a conservative growth
and income fund, concentrated on typically stable industries
such as health care, banking and energy, many of which
experienced substantial increases in the last year. Financial
services companies did particularly well -- in fact, several of
the series' most profitable holdings were banks involved in
recent merger activity, e.g. First Interstate Bancorp,
BankAmerica and First Fidelity Bancorporation. On the fixed
income side, declining longer-term interest rates boosted bond
prices and contributed significantly to the series' investment
results.
THE HIGH-YIELD BOND SERIES rose 19.0% as the rebound in debt
markets helped most of the series' holdings recover. High-yield
bonds occupy a unique position in the fixed-income universe,
says the adviser. Many of these issuers are young growth
companies that have not yet achieved a high level of financial
strength or stability. Others are mature companies that, for one
reason or another, do not meet investment-grade standards. As a
result, they offer higher yields than companies with more solid
balance sheets and higher cash flows. They are sensitive not
only to interest-rate swings, but also to the rise and fall of a
company's fortunes. In that regard, they share many
characteristics with stocks, so it was no surprise to CRMC that
the current strong stock market created attractive markets for
high-yield bonds as well. The adviser's ongoing research effort
has helped to uncover promising opportunities in those markets.
THE U.S. GOVERNMENT/AAA-RATED SECURITIES SERIES rose 16.0% for
fiscal 1995. The decline of longer-term interest rates and a
subsequent rise in bond prices meant that investors in the
series ended the fiscal period with a measure of capital
appreciation that enhanced their returns. Over the past 12
months, CRMC took several steps to take better advantage of the
recent bond market rally. First, the adviser increased the
series' U.S. Treasury holdings. These securities tend to do well
in an environment of declining yields because, unlike corporate
bonds or mortgage pass-through securities, they typically cannot
be paid off early. Second, CRMC increased the series' exposure
to the bond market by reducing the cash position in the latter
half of the year. While the adviser believes that the current
environment of moderate growth and low inflation should have
positive consequences for fixed-income issues for some time,
CRMC is monitoring developments as they arise. In the meantime,
the series continues to find attractive investment opportunities
among a variety of top-rated fixed-income obligations.
THE CASH MANAGEMENT SERIES had a 5.5% return for the 12-month
period ended November 30, 1995. Short-term interest rates and
money market yields continued to rise at the start of fiscal
1995. Since then, moderate economic growth, continued low
inflation and a slowdown in consumer spending led the Federal
Reserve to loosen its hold on short-term credit by cutting the
federal funds rate by a quarter of a percentage point twice in
the last six months -- once in July and again after the close of
the fiscal period. The series maintains a high-quality
orientation by investing only in money market instruments
carrying the highest credit rating from Standard & Poor's and
Moody's Investors Service, or those determined to be of
comparable quality. The
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2
<PAGE> 3
----------------------
series can be used as a suitable base from which regular
investments can be made into other series.
As we approach the end of the first month in a new year, the
economic prospects look bright. Of course, while years like the
one just past are always welcome, investors would do well to
remember that financial markets can -- and do -- move in both
directions. Regardless of market conditions, CRMC remains
committed to helping you achieve your long-term goals by
striving to uncover promising investment opportunities as they
arise. We look forward to reporting to you again at mid-year
1996.
Sincerely,
/s/ Eli Broad
Eli Broad
Chairman, President and Chief Executive Officer,
Anchor National Life Insurance Company
January 15, 1996
-------------------------------
Performance figures quoted are for the underlying fund (Anchor
Pathway Fund); therefore, they are not net of the fees and
charges associated with the American Pathway II Variable
Annuity. Past performance is no guarantee of future results.
Investments in stocks and bonds are subject to risks, including
stock and bond price fluctuations. Investments outside the U.S.
(especially those in developing countries) are subject to
additional risks, including currency fluctuations, political and
social instability, differing securities regulations and
accounting standards, limited public information, possible
changes in taxation and periods of illiquidity. High-yield bonds
tend to be subject to greater price swings and default risks
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. Money-market instruments offer stability and
income but, as with any investments, results are not guaranteed
by the U.S. government or any other entity.
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3
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- ------------------------------------------------------------------------
ANNUAL REPORT - NOVEMBER 30, 1995
-----------------------------------------------
ANCHOR
PATHWAY
FUND
<PAGE> 5
- ---------------------
ANCHOR PATHWAY FUND
GROWTH SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1995
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 85.7% SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 24.7%
Data Processing & Reproduction -- 9.0%
Adobe Systems, Inc. ............................................... 247,500 $ 16,737
Compuware Corp.+................................................... 220,000 4,510
Data General Corp.+................................................ 100,000 1,213
Digital Equipment Corp.+........................................... 50,000 2,944
International Business Machines Corp. ............................. 47,000 4,541
Mentor Graphics Corp.+............................................. 220,000 4,427
Oracle Systems Corp.+.............................................. 135,000 6,126
Silicon Graphics, Inc.+............................................ 620,000 22,630
Structural Dynamics Research Corp.+................................ 150,000 3,056
Sybase, Inc.+...................................................... 330,000 11,591
Tandem Computers, Inc.+............................................ 250,000 3,125
Electronic Components -- 12.2%
Analog Devices, Inc.+.............................................. 150,000 5,550
Ericsson (L.M.) Telephone Co., Class B ADR......................... 320,000 7,600
Intel Corp. ....................................................... 477,600 29,074
LSI Logic Corp.+................................................... 580,000 24,287
National Semiconductor Corp.+...................................... 50,000 1,069
Newbridge Networks Corp.+.......................................... 50,000 2,131
Park Electrochemical Corp. ........................................ 187,200 5,686
Rogers Corp.+...................................................... 109,200 2,648
SCI Systems, Inc.+................................................. 415,000 13,903
Texas Instruments, Inc. ........................................... 295,600 17,108
Electronic Instruments -- 2.6%
Applied Materials, Inc.+........................................... 472,000 22,951
Energy Equipment -- 0.7%
Schlumberger Ltd. ................................................. 105,000 6,668
Industrial Components -- 0.2%
Noble Affiliates, Inc. ............................................ 75,500 2,048
--------------
221,623
--------------
CONSUMER GOODS -- 6.0%
Appliances & Household Durables -- 0.5%
Mohawk Industries, Inc.+........................................... 270,000 4,793
Beverages & Tobacco -- 1.3%
PepsiCo, Inc. ..................................................... 80,000 4,420
Philip Morris Cos., Inc. .......................................... 80,000 7,020
Health & Personal Care -- 2.2%
Alpha Beta Technology, Inc.+....................................... 70,000 464
Bausch & Lomb, Inc. ............................................... 20,000 723
Forest Labs, Inc.+................................................. 121,000 5,142
Genetics Institute, Inc.+.......................................... 80,000 3,510
Omnicare, Inc. .................................................... 160,000 6,040
Paragon Trade Brands, Inc.+........................................ 19,500 407
Perrigo Co.+....................................................... 15,000 197
Pharmacia & Upjohn, Inc.+.......................................... 58,000 2,081
Tambrands, Inc. ................................................... 20,000 1,042
</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER GOODS (continued)
Recreation & Other Consumer Products -- 1.3%
Duracell International, Inc. ...................................... 38,500 $ 2,040
Hasbro, Inc. ...................................................... 45,000 1,373
Mattel, Inc. ...................................................... 296,247 8,295
Textiles & Apparel -- 0.7%
Fruit Of The Loom, Inc., Class A+.................................. 210,000 4,068
Phillips-Van Heusen Corp. ......................................... 210,000 2,179
--------------
53,794
--------------
ENERGY -- 0.7%
Energy Sources -- 0.7%
H S Resources, Inc.+............................................... 70,000 936
Murphy Oil Corp. .................................................. 80,000 3,150
Reading & Bates Corp.+............................................. 150,000 1,969
--------------
6,055
--------------
FINANCE -- 7.2%
Banking -- 2.9%
Banc One Corp. .................................................... 119,625 4,561
Charter One Financial, Inc. ....................................... 70,000 2,240
Commerce Bancshares, Inc. ......................................... 141,225 5,278
Huntington Bancshares, Inc. ....................................... 72,000 1,755
Mercantile Bancorp................................................. 232,500 10,666
Northern Trust Corp. .............................................. 40,000 2,090
Financial Services -- 0.7%
Federal National Mortgage Association.............................. 55,000 6,023
Insurance -- 3.6%
EXEL Ltd. ......................................................... 145,000 9,044
NAC Reinsurance Corp. ............................................. 120,000 3,960
NYMAGIC, Inc. ..................................................... 70,000 1,164
Progressive Corp., Ohio............................................ 75,000 3,338
TIG Holdings, Inc. ................................................ 115,000 3,105
Transatlantic Holdings, Inc. ...................................... 110,000 7,562
Trenwick Group, Inc. .............................................. 83,800 4,295
--------------
65,081
--------------
MATERIALS -- 2.5%
Chemicals -- 2.3%
Great Lakes Chemical Corp. ........................................ 95,000 6,757
Loctite Corp. ..................................................... 100,000 4,887
Lubrizol Corp. .................................................... 39,000 1,116
Valspar Corp. ..................................................... 170,000 6,949
Forest Products & Paper -- 0.1%
Rayonier, Inc. .................................................... 30,000 1,148
Metals -- 0.1%
Nucor Corp. ....................................................... 25,000 1,247
--------------
22,104
--------------
SERVICES -- 41.7%
Broadcasting & Publishing -- 15.0%
Adelphia Communications Corp.+ .................................... 205,000 1,538
BHC Communications, Inc., Class A+ ................................ 75,821 6,833
Cablevision Systems Corp., Class A+ ............................... 100,000 5,550
Capital Cities/ABC, Inc. .......................................... 123,000 15,206
Comcast Corp., Class A Special+ ................................... 207,500 4,098
Gaylord Entertainment Co., Class A................................. 225,000 5,681
</TABLE>
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A-2
<PAGE> 7
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Broadcasting & Publishing (continued)
Lin Television Corp. .............................................. 126,950 $ 3,650
New York Times Co. ................................................ 100,000 2,950
News Corp., Ltd. ADR............................................... 800,000 16,800
Tele-Communications Liberty Media Group+........................... 174,681 4,891
Tele-Communications TCI Group+..................................... 625,525 11,572
Time Warner, Inc. ................................................. 485,000 19,400
Turner Broadcasting Systems, Inc., Class B......................... 715,000 20,020
Viacom, Inc., Class B+............................................. 334,200 16,125
Business & Public Services -- 13.8%
ADT Ltd.+.......................................................... 400,000 5,600
Air & Water Technologies Corp., Class A+........................... 165,000 908
America Online, Inc.+.............................................. 194,600 7,954
Apria Healthcare Group Inc.+....................................... 100,000 3,025
Avery Dennison Corp. .............................................. 90,000 4,286
BHA Group, Inc., Class A........................................... 110,000 1,540
Columbia Healthcare Corp. ......................................... 88,750 4,582
CUC International, Inc.+........................................... 330,000 12,540
Ecolab, Inc. ...................................................... 100,000 2,875
Federal Express Corp.+............................................. 175,000 13,081
FHP International Corp.+........................................... 385,000 11,165
General Motors Corp., Class E...................................... 175,000 8,838
H & R Block, Inc. ................................................. 40,000 1,780
Oxford Health Plans, Inc.+......................................... 87,000 6,525
Pacificare Health Systems, Inc., Class B+.......................... 35,000 3,036
Pitney Bowes, Inc. ................................................ 65,000 2,909
U.S. HealthCare, Inc. ............................................. 40,000 1,820
United Healthcare Corp. ........................................... 255,000 16,033
Value Health, Inc.+ ............................................... 120,000 3,015
WMX Technologies, Inc. ............................................ 430,000 12,685
Leisure & Tourism -- 5.6%
Carnival Corp., Class A ADR........................................ 25,000 650
Circus Circus Enterprises, Inc.+................................... 120,000 3,330
Disney (Walt) Co. ................................................. 390,000 23,449
Harrah's Entertainment, Inc. ...................................... 195,000 4,851
Host Marriott Corp.+............................................... 280,000 3,605
Luby's Cafeterias, Inc. ........................................... 100,000 2,200
Marriott International, Inc. ...................................... 230,000 8,567
Mirage Resorts, Inc.+.............................................. 100,000 3,387
Promus Hotel Corp.+................................................ 28,700 635
Merchandising -- 2.6%
Barnes & Noble, Inc.+.............................................. 180,900 6,648
Circuit City Stores, Inc. ......................................... 20,000 580
Gap, Inc. ......................................................... 20,000 905
Home Shopping Network, Inc.+....................................... 260,000 2,437
Michaels Stores, Inc.+............................................. 60,000 990
Spiegel, Inc., Class A............................................. 366,600 3,299
Staples, Inc.+..................................................... 75,000 1,913
Toys R Us, Inc.+................................................... 70,000 1,628
Wal-Mart Stores, Inc. ............................................. 200,000 4,800
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Telecommunications -- 2.9%
AirTouch Communications, Inc.+..................................... 175,000 $ 5,097
Associated Group, Inc., Class A.................................... 25,000 450
Associated Group, Inc., Class B.................................... 25,000 450
Cellular Communications Puerto Rico, Inc.+......................... 25,000 669
MCI Communications Corp. .......................................... 385,000 10,299
United States Cellular Corp.+...................................... 52,000 1,820
Vanguard Cellular Systems, Inc.+................................... 316,000 7,149
Transportation: Airlines -- 1.8%
AMR Corp.+......................................................... 70,000 5,364
Delta Air Lines, Inc. ............................................. 10,000 776
Southwest Airlines Co. ............................................ 395,000 9,875
Transportation: Rail & Road -- 0.0%
Southern Pacific Rail Corp. ....................................... 15,573 372
--------------
374,706
--------------
OTHER COMMON STOCK -- 2.9%......................................... 25,668
--------------
TOTAL COMMON STOCK (cost: $473,095)................................ 769,031
--------------
<CAPTION>
PREFERRED STOCK -- 1.2%
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 1.2%
Broadcasting & Publishing -- 0.8%
News Corp. Ltd. ADR................................................ 400,000 7,550
Telecommunications -- 0.4%
Cellular Communications, Inc. Cv Preferred......................... 70,187 3,360
--------------
TOTAL PREFERRED STOCK (cost: $4,728)............................... 10,910
--------------
TOTAL INVESTMENT SECURITIES (cost: $477,823)....................... 779,941
--------------
</TABLE>
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<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 12.5% (IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 12.5%
Associates Corp. of North America 5.89% due 12/01/95 .............. $ 10,370 $ 10,370
Bell Atlantic Financial Services 5.71% due 12/08/95 ............... 12,000 11,987
Bell Atlantic Financial Services 5.71% due 12/12/95 ............... 4,500 4,492
CIT Group Holdings, Inc. 5.70% due 1/08/96 ........................ 4,000 3,976
CIT Group Holdings, Inc. 5.72% due 12/04/95 ....................... 13,160 13,154
Coca-Cola Co. 5.68% due 12/05/95 .................................. 5,100 5,097
Coca-Cola Co. 5.70% due 12/14/95 .................................. 10,800 10,777
Ford Motor Credit Co. 5.72% due 12/11/95 .......................... 14,000 13,978
Harvard University 5.70% due 12/15/95 ............................. 5,500 5,488
Heinz (H. J.) Co. 5.70% due 1/12/96 ............................... 5,000 4,967
Heinz (H. J.) Co. 5.72% due 12/13/95 .............................. 10,900 10,879
Kellogg Co. 5.68% due 12/15/95 .................................... 2,000 1,995
PepsiCo, Inc. 5.70% due 12/18/95 .................................. 15,000 14,960
----------
TOTAL SHORT-TERM SECURITIES (cost: $112,120)....................... 112,120
----------
TOTAL INVESTMENTS --
(cost: $589,943) 99.4% 892,061
Other assets less liabilities -- 0.6 5,214
------ ----------
NET ASSETS -- 100.0% $ 897,275
====== ==========
</TABLE>
-----------------------------
+ Non-income producing securities
ADR - American Depositary Receipt
See Notes to Financial Statements
---------------------
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ANCHOR PATHWAY FUND
INTERNATIONAL SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1995
<TABLE>
<CAPTION>
VALUE
COMMON STOCK, PREFERRED STOCK & WARRANTS -- 90.2% SHARES (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
ARGENTINA -- 0.6%
YPF Sociedad Anonima SA ADR (Energy)............................... 73,000 $ 1,423
--------------
AUSTRALIA -- 8.2%
Australia & New Zealand Bank Group (Finance)....................... 951,008 4,235
Coca-Cola Amatil Ltd. (Consumer Goods)#............................ 490,906 3,971
Gio Australia Holdings (Finance)................................... 653,043 1,459
John Fairfax Holdings (Services)................................... 260,000 525
Lend Lease Corp. Ltd. (Multi-industry)............................. 88,701 1,227
News Corp., Ltd. Preferred ADR (Services).......................... 33,300 628
News Corp., Ltd. ADR (Services).................................... 66,600 1,399
Orbital Engine Corp. (Capital Equipment)+.......................... 162,134 143
TNT Ltd. (Services)................................................ 531,823 742
TNT Ltd., Cv Preferred (Services).................................. 1,409,900 2,051
Western Mining Corp. Holdings Ltd. ADS (Materials)................. 100,000 670
Westpac Banking Corp. (Finance).................................... 331,757 1,374
Woolworths Ltd. (Consumer Goods)................................... 156,907 367
--------------
18,791
--------------
AUSTRIA -- 0.6%
Virginia Technologies AG (Capital Equipment)#...................... 11,700 1,350
--------------
BELGIUM -- 1.3%
Groupe Bruxelles Lambert SA NV (Multi-industry).................... 17,000 2,213
Petrofina SA (Consumer Staples).................................... 2,300 681
--------------
2,894
--------------
BERMUDA -- 0.6%
Mandarin Oriental (Services)....................................... 1,288,153 1,456
--------------
BRAZIL -- 0.6%
Centrais Eletricas Brasileira SA-Electrobras ADR (Energy).......... 38,000 535
CESP-Companhia Energetica de Sao Paulo (Energy).................... 1,440,000 34
CESP-Companhia Energetica de Sao Paulo ADR (Energy)................ 53,600 435
CESP-Companhia Energetica de Sao Paulo ADR (Energy)#............... 8,416 68
CESP-Companhia Energetica de Sao Paulo ADS (Energy)................ 30,000 243
--------------
1,315
--------------
CANADA -- 1.2%
Bank Montreal Quebec (Finance)..................................... 37,000 842
Magna International Class A (Capital Equipment).................... 10,000 435
Noranda, Inc. (Materials).......................................... 35,000 744
Teck Corp. Class B (Capital Equipment)............................. 40,000 765
--------------
2,786
--------------
DENMARK -- 1.6%
Tele Denmark Class B ADR (Capital Equipment)....................... 130,000 3,624
--------------
</TABLE>
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A-6
<PAGE> 11
<TABLE>
<CAPTION>
VALUE
COMMON STOCK, PREFERRED STOCK & WARRANTS (continued) SHARES (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINLAND -- 2.2%
Kansallis-Osake-Pankki (Finance)................................... 686,800 $ 575
Nokia (AB) Oy Corp. Series A (Multi-industry)...................... 32,000 1,756
Nokia (AB) Oy Corp. Series K (Multi-industry)...................... 20,000 1,102
Repola (Materials)................................................. 84,000 1,634
--------------
5,067
--------------
FRANCE -- 5.8%
Canal Plus (Services).............................................. 3,823 696
Cie de St. Gobain (Materials)...................................... 11,282 1,302
Eurotunnel/Euro SA (Services)+..................................... 115,200 168
Groupe Danone (Consumer Goods)..................................... 8,000 1,252
Moet-Hennessy Louis Vuitton (Consumer Goods)....................... 3,300 628
Michelin (cie Gle), Class B (Capital Equipment).................... 84,000 3,414
Peugeot SA (Consumer Goods)........................................ 20,000 2,585
Poliet (Materials)................................................. 4,404 355
Sidel (Capital Equipment).......................................... 6,600 2,076
Total SA, Series B (Energy)........................................ 13,571 835
--------------
13,311
--------------
GERMANY -- 3.9%
Bayerische Motoren Werke AG (Consumer Goods)....................... 6,072 3,270
Bayerische Motoren Werke AG NV Preferred (Consumer Goods).......... 2,604 971
Daimler-Benz AG (Consumer Goods)................................... 2,420 1,190
GEA AG NV Preferred (Capital Equipment)............................ 1,250 398
Mannesmann AG (Capital Equipment).................................. 6,300 2,029
Munchener Ruckvers (Finance)....................................... 500 921
Munchener Ruckvers Warrants (Finance)+............................. 125 13
--------------
8,792
--------------
HONG KONG -- 4.5%
Cathay Pacific Airways Ltd. (Services)............................. 900,000 1,344
China Light & Power Co., Ltd. (Energy)............................. 90,400 425
Hong Kong Electric Holdings (Energy)............................... 1,032,000 3,462
Hutchison Whampoa (Multi-industry)................................. 230,000 1,300
Johnson Electric Holdings Ltd. (Capital Equipment)................. 110,000 228
Sing Tao (Services)................................................ 689,200 356
Sun Hung Kai Properties Ltd. (Finance)............................. 100,000 805
Swire Pacific Ltd. Class A (Multi-industry)........................ 50,000 378
Television Broadcasting Ltd. (Services)............................ 497,000 1,876
--------------
10,174
--------------
INDONESIA -- 0.6%
Bank International Indonesia (Finance)............................. 350,000 1,119
P.T. Indonesian Satellite Corp. ADR (Services)..................... 5,900 202
--------------
1,321
--------------
IRELAND -- 1.0%
Independent Newspapers (Services).................................. 197,382 1,156
Irish Life PLC (Finance)........................................... 294,624 1,137
--------------
2,293
--------------
ISRAEL -- 0.2%
Scitex Corp. Ltd. (Services)....................................... 28,000 403
--------------
</TABLE>
---------------------
A-7
<PAGE> 12
<TABLE>
<CAPTION>
VALUE
COMMON STOCK, PREFERRED STOCK & WARRANTS (continued) SHARES (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
ITALY -- 2.2%
STET (Services).................................................... 120,000 $ 326
STET Risp (Services)............................................... 240,000 472
Telecom Italia Mobile SPA-Savings Shares (Services)................ 64,800 63
Telecom Italia Mobile SPA (Services)............................... 1,991,950 3,214
Telecom Italia SpA (Services)...................................... 666,850 907
Telecom Italia SpA Risp (Services)................................. 64,800 71
--------------
5,053
--------------
JAPAN -- 6.6%
Amway Japan Ltd. ADR (Consumer Goods).............................. 36,000 729
Banyu Pharm (Services)............................................. 118,000 1,345
Chain Store Okuwa (Services)....................................... 20,000 287
Hitachi Ltd. (Capital Equipment)................................... 28,000 284
Ito-Yokado Co. (Miscellaneous)..................................... 10,000 552
Itochu Corp. Ltd. (Services)....................................... 120,000 796
Mitsubishi Corp. (Consumer Goods).................................. 65,000 779
Nintendo Co., Ltd. (Consumer Goods)................................ 25,000 1,976
Nippon Telegraph & Telecommunications Corp. (Services)............. 131 1,073
Nippon Yusen (Services)............................................ 79,000 461
Sony Corp. (Consumer Goods)........................................ 22,000 1,168
Sumitomo Chemical Co., Ltd. (Materials)............................ 177,000 880
Suzuki Motor Corp. (Consumer Goods)................................ 179,000 1,988
Tokyo Broadcasting Systems (Services).............................. 27,000 451
Toyota Motor Corp. (Consumer Goods)................................ 115,000 2,272
--------------
15,041
--------------
KOREA -- 0.9%
Korea Electric Power Corp. (Energy)................................ 39,000 1,549
Korea Electric Power Corp. ADR (Energy)............................ 26,000 634
--------------
2,183
--------------
LUXEMBOURG -- 0.4%
Safra Republic Holdings, Inc. (Finance)............................ 10,000 885
--------------
MEXICO -- 2.2%
Cemex SA-Series A (Materials)...................................... 161,250 492
Cifra SA de Cv-Series C (Services)................................. 195,500 206
Grupo Financiero Banamex-Accival SA de Cv-Series B (Finance)....... 324,000 497
Grupo Financiero Banamex-Accival SA de Cv-Series L (Finance)....... 16,200 23
Grupo Televisa SA de Cv ADR (Services)............................. 35,000 757
Telefonos de Mexico SA ADR (Services).............................. 95,200 3,142
--------------
5,117
--------------
NETHERLANDS -- 6.5%
ABN Amro Holdings NV (Finance)..................................... 83,726 3,728
Akzo Nobel NV (Materials).......................................... 12,000 1,356
DSM NV (Materials)................................................. 15,919 1,268
Elsevier NV (Services)............................................. 80,000 1,092
International Nederlanden Warrants (Finance)+...................... 300,000 1,013
Koninklijke PTT Nederland NV (Services)............................ 20,000 713
Philips Electronics (Consumer Goods)............................... 16,000 629
PolyGram NV ADR (Consumer Goods)................................... 45,000 2,700
Vereenigde Ned Uitgevers (Services)................................ 13,000 1,835
Wolters Kluwer (Services).......................................... 6,267 529
--------------
14,863
--------------
</TABLE>
---------------------
A-8
<PAGE> 13
<TABLE>
<CAPTION>
VALUE
COMMON STOCK, PREFERRED STOCK & WARRANTS (continued) SHARES (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
NEW ZEALAND -- 4.5%
Brierley Investment Ltd. (Multi-industry).......................... 4,613,019 $ 3,494
Carter Holt Harvey Ltd. (Materials)................................ 240,197 507
Fletcher Challenge Ltd. (Materials)................................ 530,000 1,315
Fletcher Challenge Ltd. ADR (Materials)............................ 12,450 174
Fletcher Challenge Ltd.-Forests Division Shares (Materials)........ 75,200 106
Telecom Corp. of New Zealand (Services)#........................... 1,019,880 4,268
Telecom Corp. of New Zealand ADR (Services)#....................... 4,600 308
--------------
10,172
--------------
NORWAY -- 2.5%
Orkla AS (Consumer Goods).......................................... 110,000 5,613
--------------
PHILIPPINES -- 0.3%
Philippine Long Distance Cv Preferred Series III GDS (Services).... 10,000 540
Philippine National Bank (Finance)................................. 26,146 232
--------------
772
--------------
SINGAPORE -- 0.4%
Singapore Airlines Ltd. (Services)................................. 88,000 824
--------------
SPAIN -- 2.9%
Autopistas CESA (Services)......................................... 150,000 1,655
Banco de Santander ADR (Finance)................................... 1,500 69
Banco de Santander SA (Finance).................................... 23,500 1,096
Banco Popular Espanol (Finance).................................... 6,000 1,008
Corporacion Mapfre SA (Finance).................................... 11,615 654
Iberdrola SA (Energy).............................................. 142,000 1,198
Telefonica de Espana SA ADR (Services)............................. 24,000 996
--------------
6,676
--------------
SWEDEN -- 8.5%
AGA AB-Series B (Materials)........................................ 60,000 833
Asea AB-Series A (Capital Equipment)............................... 24,500 2,377
Asea AB-Series B (Capital Equipment)............................... 22,000 2,124
Astra AB-Series A (Services)....................................... 109,000 4,065
Atlas Copco AB-Series A (Capital Equipment)........................ 114,500 1,729
Electrolux AB-Series B (Consumer Goods)............................ 26,400 1,134
Ericsson LM Telephone Co. Class B Cv ADR (Capital Equipment)....... 3,500 11
Ericsson LM Telephone Co. Series B (Capital Equipment)............. 112,200 2,644
Kinnevik-Series A (Finance)........................................ 23,900 656
Kinnevik-Series B (Multi-industry)................................. 15,000 426
Sandvik AB-Class B (Capital Equipment)............................. 18,250 336
Svenska Handelsbanken, Series A (Finance).......................... 18,000 364
Svenska Handelsbanken, Series B (Finance).......................... 8,200 160
Volvo AB-Series B (Consumer Goods)................................. 125,000 2,593
--------------
19,452
--------------
SWITZERLAND -- 3.8%
BBC Brown Boveri, Bearer (Capital Equipment)....................... 2,363 2,714
Ciba-Geigy AG, Nominative Shares (Materials)....................... 2,035 1,814
Holderbank Financiere Glarus Warrants (Materials)+................. 18,960 19
Holderbank Financiere Glarus, Bearer (Materials)................... 3,792 2,826
Nestle SA (Consumer Goods)......................................... 1,250 1,332
--------------
8,705
--------------
</TABLE>
---------------------
A-9
<PAGE> 14
<TABLE>
<CAPTION>
VALUE
COMMON STOCK, PREFERRED STOCK & WARRANTS (continued) SHARES (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM -- 13.2%
British Airways ADR (Services)..................................... 15,000 $ 1,056
British Airways PLC (Services)..................................... 145,000 1,021
British Sky Broadcast Group PLC ADR (Services)+.................... 58,500 2,333
Cable & Wireless PLC (Services).................................... 125,104 869
Cadbury Schweppes (Consumer Goods)................................. 37,070 316
Cordiant PLC (Services)............................................ 440,997 614
English China Clays (Materials).................................... 305,000 1,534
Forte PLC (Services)............................................... 790,858 4,141
Hazlewood Foods PLC (Consumer Goods)............................... 300,000 468
News International PLC (Services).................................. 136,000 629
Pearson PLC (Multi-industry)....................................... 120,000 1,192
Pilkington PLC (Materials)......................................... 500,000 1,474
Rank Organisation PLC (Services)................................... 175,000 1,104
Reckitt & Colman (Consumer Goods).................................. 288,537 2,957
Reuters Holdings PLC (Services).................................... 208,000 1,963
Scottish Power PLC (Energy)........................................ 120,000 693
Securicor Group PLC NV (Services).................................. 38,000 541
Telewest Communications PLC ADR (Services)+........................ 71,000 1,811
Tesco PLC (Services)............................................... 408,616 1,795
Thorn EMI PLC (Consumer Goods)..................................... 104,950 2,502
Vodafone Group PLC (Services)...................................... 105,801 377
Vodafone Group PLC ADR (Services).................................. 18,000 650
--------------
30,040
--------------
UNITED STATES -- 0.2%
Partner Reinsurance Holdings Ltd. (Finance)........................ 13,600 360
--------------
OTHER COMMON STOCK -- 2.2%......................................... 5,103
--------------
TOTAL COMMON STOCK, PREFERRED STOCK, & WARRANT
(cost: $171,388)................................................. 205,859
--------------
<CAPTION>
PRINCIPAL
AMOUNT
(DENOMINATED IN
LOCAL CURRENCY)
RIGHTS -- 0.1%+ (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
GERMANY -- 0.0%
Munchener Ruckvers 12/01/95........................................ 1 56
--------------
UNITED KINGDOM -- 0.1%
Cordiant PLC 12/11/95.............................................. 441 202
--------------
TOTAL RIGHTS (cost: $0)............................................ 258
--------------
<CAPTION>
BONDS & NOTES -- 1.3%
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINLAND -- 0.3%
Kymmene Corp. 8.25% 2043........................................... 2,800 674
--------------
FRANCE -- 0.1%
Michelin (cie Gle) 2.50% 2001...................................... 480 256
--------------
HONG KONG -- 0.2%
Bangkok Bank Public Ltd. 3.25% 2004#............................... 500 503
--------------
</TABLE>
---------------------
A-10
<PAGE> 15
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(DENOMINATED IN
LOCAL CURRENCY) VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
NEW ZEALAND -- 0.7%
Brierley Investment Ltd. 9.00% 1998................................ 253 $ 180
New Zealand Government 9.00% 1996.................................. 2,000 1,319
--------------
1,499
--------------
TOTAL BONDS & NOTES (cost: $2,704)................................. 2,932
--------------
TOTAL INVESTMENT SECURITIES (cost: $174,092)....................... 209,049
--------------
<CAPTION>
SHORT-TERM SECURITIES -- 7.9%
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 7.9%
Associates Corp. of North America 5.89% due 12/01/95............... 2,900 2,900
Banque National De Paris 5.76% due 12/18/95........................ 5,000 5,000
Export Development Corp. 5.72% due 12/06/95........................ 5,000 4,996
Sandoz Corp. 5.72% due 12/13/95.................................... 5,000 4,991
--------------
TOTAL SHORT-TERM SECURITIES (cost: $17,887)........................ 17,887
--------------
TOTAL INVESTMENTS --
(cost: $191,979) 99.5% 226,936
Other assets less liabilities -- 0.5 1,198
------ --------------
NET ASSETS -- 100.0% $ 228,134
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
# Resale restricted to qualified institutional buyers
ADR - American Depositary Receipt
ADS - American Depositary Shares
<TABLE>
<CAPTION>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT NOVEMBER 30, 1995
<S> <C> <C> <C>
------------------------------------------------------------
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE DEPRECIATION
------------------------------------------------------------
<S> <C> <C> <C>
FRF 538 USD 110 12/29/95 (2)
</TABLE>
-----------------------------
FRF - French Franc
USD - United States Dollar
See Notes to Financial Statements
---------------------
A-11
<PAGE> 16
- ---------------------
ANCHOR PATHWAY FUND
GROWTH-INCOME SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1995
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 90.0% SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 12.1%
Aerospace & Military Technology -- 3.5%
Boeing Co. .......................................................... 170,000 $ 12,389
Coltec Industries, Inc.+............................................. 60,000 660
General Motors Corp., Class H........................................ 85,000 4,037
Litton Industries, Inc.+............................................. 91,000 4,084
Sundstrand Corp. .................................................... 95,000 6,151
United Technologies Corp. ........................................... 35,100 3,291
Data Processing & Reproduction -- 2.4%
Apple Computer, Inc. ................................................ 60,000 2,288
International Business Machines Corp. ............................... 60,000 5,797
Novell, Inc.+........................................................ 40,000 675
Xerox Corp. ......................................................... 90,000 12,341
Electrical & Electronics -- 0.4%
General Electric Co. ................................................ 50,000 3,363
Electronic Components -- 0.7%
Intel Corp. ......................................................... 50,000 3,044
Motorola, Inc. ...................................................... 40,000 2,450
Texas Instruments, Inc. ............................................. 20,000 1,157
Energy Equipment -- 0.9%
Cooper Industries, Inc. ............................................. 35,960 1,312
Schlumberger Ltd. ................................................... 70,000 4,445
Western Atlas, Inc.+................................................. 51,000 2,442
Industrial Components -- 1.6%
Dana Corp. .......................................................... 50,000 1,462
Goodyear Tire & Rubber Co. .......................................... 80,000 3,390
Johnson Controls, Inc. .............................................. 39,400 2,728
Rockwell International Corp. ........................................ 70,000 3,430
TRW, Inc. ........................................................... 40,000 2,995
Machinery & Engineering -- 2.6%
Caterpillar, Inc. ................................................... 125,000 7,672
Crompton + Knowles Corp. ............................................ 120,000 1,560
Deere & Co. ......................................................... 210,000 6,904
Ingersoll-Rand Co. .................................................. 80,000 3,070
Parker-Hannifin Corp. ............................................... 105,000 3,859
--------------
106,996
--------------
CONSUMER GOODS -- 17.9%
Appliances & Household Durables -- 0.5%
Corning, Inc. ....................................................... 100,000 3,013
LADD Furniture, Inc. ................................................ 112,333 1,502
Automotive -- 0.8%
Ford Motor Co. ...................................................... 120,000 3,390
General Motors Corp. ................................................ 70,000 3,395
</TABLE>
---------------------
A-12
<PAGE> 17
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER GOODS (continued)
Beverages & Tobacco -- 4.5%
American Brands, Inc. ............................................... 70,000 $ 2,923
Anheuser-Busch Cos., Inc. ........................................... 45,000 2,981
PepsiCo, Inc. ....................................................... 155,000 8,564
Philip Morris Cos., Inc. ............................................ 198,000 17,374
Seagrams Co., Ltd. .................................................. 220,000 8,030
Food & Household Products -- 1.5%
ConAgra, Inc. ....................................................... 90,000 3,589
CPC International, Inc. ............................................. 110,000 7,562
General Mills, Inc. ................................................. 45,000 2,481
Health & Personal Care -- 9.3%
Abbott Laboratories.................................................. 100,000 4,063
American Home Products Corp. ........................................ 85,000 7,756
Bausch & Lomb, Inc. ................................................. 20,200 730
Bristol-Myers Squibb Co. ............................................ 120,000 9,630
Johnson & Johnson Co. ............................................... 50,000 4,331
Kimberly-Clark Corp. ................................................ 21,500 1,653
Lilly (Eli) & Co. ................................................... 70,000 6,965
Merck & Co., Inc. ................................................... 257,500 15,933
Pfizer, Inc. ........................................................ 160,000 9,280
Pharmacia & Upjohn, Inc.+............................................ 116,000 4,161
Schering-Plough Corp. ............................................... 180,000 10,327
Tambrands, Inc. ..................................................... 30,000 1,564
Warner-Lambert Co. .................................................. 60,000 5,355
Recreation & Other Consumer Products -- 1.0%
American Greetings Corp., Class A.................................... 40,000 1,090
Eastman Kodak Co. ................................................... 60,000 4,080
Polaroid Corp. ...................................................... 30,000 1,384
Stanley Works........................................................ 40,000 2,025
Textiles & Apparel -- 0.3%
V.F. Corp. .......................................................... 45,000 2,340
--------------
157,471
--------------
ENERGY -- 6.8%
Energy Sources -- 5.4%
Amoco Corp. ......................................................... 105,000 7,114
Atlantic Richfield Co. .............................................. 10,000 1,084
Exxon Corp. ......................................................... 55,000 4,256
Murphy Oil Corp. .................................................... 42,600 1,677
Phillips Petroleum Co. .............................................. 260,000 8,645
Royal Dutch Petroleum Co. ADR........................................ 55,000 7,060
Texaco, Inc. ........................................................ 70,000 5,180
Tosco Corp. ......................................................... 60,000 2,287
Total SA ADR......................................................... 20,490 633
Unocal Corp. ........................................................ 160,000 4,300
Valero Energy Corp. ................................................. 215,000 5,563
Utilities: Electric, Gas & Water -- 1.4%
Consolidated Edison Co. of New York, Inc. ........................... 100,000 2,887
General Public Utilities Corp. ...................................... 40,000 1,265
Long Island Lighting Co. ............................................ 32,800 562
Pacific Gas & Electric Co. .......................................... 150,000 4,125
Union Electric Co. .................................................. 80,000 3,210
--------------
59,848
--------------
</TABLE>
---------------------
A-13
<PAGE> 18
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 12.0%
Banking -- 7.4%
Banc One Corp. ...................................................... 210,625 $ 8,030
Bank of New York, Inc. .............................................. 80,000 3,770
BankAmerica Corp. ................................................... 95,000 6,044
Bankers Trust New York Corp. ........................................ 30,000 1,946
Boatmen's Bancshares, Inc. .......................................... 100,000 3,875
Chase Manhattan Corp. ............................................... 60,000 3,653
Comerica, Inc. ...................................................... 75,000 2,803
CoreStates Financial Corp. .......................................... 80,000 3,100
First Fidelity Bancorp............................................... 60,000 4,403
First Interstate Bancorp............................................. 30,000 4,020
First Union Corp. ................................................... 65,000 3,551
KeyCorp.............................................................. 75,000 2,766
Morgan (J.P.) & Co., Inc. ........................................... 30,000 2,355
Northern Trust Corp. ................................................ 20,000 1,045
Norwest Corp. ....................................................... 20,000 660
PNC Bank Corp. ...................................................... 262,000 7,663
SunTrust Banks, Inc. ................................................ 80,000 5,460
Financial Services -- 0.6%
American Express Co. ................................................ 50,000 2,125
Beneficial Corp. .................................................... 20,000 1,015
Household International, Inc. ....................................... 40,000 2,500
Insurance -- 4.0%
Allstate Corp. ...................................................... 210,000 8,610
American General Corp. .............................................. 30,000 1,016
Cigna Corp. ......................................................... 35,000 3,850
Gallagher (Arthur J.) & Co. ......................................... 111,400 3,648
General Reinsurance Group............................................ 15,000 2,244
Liberty Corp. ....................................................... 75,000 2,485
SAFECO Corp. ........................................................ 140,000 9,940
St. Paul Cos., Inc. ................................................. 40,000 2,240
TIG Holdings, Inc. .................................................. 50,000 1,350
--------------
106,167
--------------
MATERIALS -- 10.4%
Building Materials -- 0.2%
TRINOVA Corp. ....................................................... 50,000 1,538
Chemicals -- 4.1%
Dow Chemical Co. .................................................... 78,000 5,528
du Pont (E.I.) de Nemours & Co. ..................................... 55,000 3,657
Eastman Chemical Co. ................................................ 120,000 7,875
Goodrich (B.F.) Co. ................................................. 40,000 2,805
Great Lakes Chemical Corp. .......................................... 20,000 1,423
Monsanto Co. ........................................................ 30,000 3,435
PPG Industries, Inc. ................................................ 60,000 2,722
Praxair, Inc. ....................................................... 310,000 9,029
</TABLE>
---------------------
A-14
<PAGE> 19
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Forest Products & Paper -- 3.3%
Federal Paper Board Co. ............................................. 60,000 $ 3,120
Georgia-Pacific Corp. ............................................... 35,000 2,721
International Paper Co. ............................................. 80,000 3,050
James River Corp. ................................................... 125,000 3,937
Rayonier, Inc. ...................................................... 92,500 3,538
Union Camp Corp. .................................................... 175,000 8,597
Westvaco Corp. ...................................................... 60,000 1,643
Weyerhaeuser Co. .................................................... 60,000 2,715
Metals & Minerals -- 2.8%
Alumax, Inc. ADR+.................................................... 20,000 665
Aluminum Co. of America.............................................. 200,000 11,700
Inco Ltd. ........................................................... 80,000 2,850
Phelps Dodge Corp. .................................................. 10,000 679
Potash Corp. of Saskatchewan, Inc. .................................. 130,000 8,986
--------------
92,213
--------------
MULTI-INDUSTRY -- 3.8%
Multi-Industry -- 3.8%
AlliedSignal, Inc. .................................................. 40,000 1,890
Hanson PLC ADR....................................................... 120,000 1,830
Harsco Corp. ........................................................ 130,000 7,670
Minnesota Mining & Manufacturing Co. ................................ 150,000 9,825
Tenneco, Inc. ....................................................... 130,000 6,240
Textron, Inc. ....................................................... 75,000 5,747
--------------
33,202
--------------
SERVICES -- 25.9%
Broadcasting & Publishing -- 6.3%
Capital Cities/ABC, Inc. ............................................ 20,000 2,473
Cox Communications, Inc.+............................................ 49,224 985
Gannett Co., Inc. ................................................... 60,000 3,660
New York Times Co. .................................................. 100,000 2,950
News Corp., Ltd. ADR................................................. 160,000 3,360
Scripps (E.W.) Co., Class A.......................................... 135,000 5,484
Tele-Communications Liberty Media Group+............................. 145,000 4,060
Tele-Communications TCI Group, Series A+............................. 580,000 10,730
Time Warner, Inc. ................................................... 250,000 10,000
Times Mirror Co., Series A .......................................... 56,056 1,822
Tribune Co. ......................................................... 60,000 3,870
U.S. West Media Group+............................................... 171,800 3,092
Viacom, Inc. Class B+................................................ 65,000 3,136
Business & Public Services -- 4.8%
Browning-Ferris Industries, Inc. .................................... 120,000 3,615
Dun & Bradstreet Corp. .............................................. 210,000 13,099
Ecolab, Inc. ........................................................ 50,000 1,438
Federal Express Corp.+............................................... 30,000 2,243
General Motors Corp., Class E........................................ 125,000 6,312
Omnicom Group........................................................ 20,000 1,335
Pitney Bowes, Inc. .................................................. 30,000 1,343
WMX Technologies, Inc. .............................................. 445,000 13,127
</TABLE>
---------------------
A-15
<PAGE> 20
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Leisure & Tourism -- 2.0%
Disney (Walt) Co. ................................................... 200,000 $ 12,025
Host Marriott Corp.+................................................. 110,000 1,416
Marriott International, Inc. ........................................ 100,000 3,725
Merchandising -- 2.6%
Gap, Inc. ........................................................... 20,000 905
Giant Foods, Inc. ................................................... 200,000 6,450
May Department Stores Co. ........................................... 80,000 3,490
Melville Corp. ...................................................... 25,000 778
Penney (J.C.), Inc. ................................................. 50,000 2,344
Wal-Mart Stores, Inc. ............................................... 289,000 6,936
Walgreen Co. ........................................................ 80,000 2,330
Telecommunications -- 7.0%
AirTouch Communications, Inc.+....................................... 81,013 2,360
Alltel Corp. ........................................................ 20,000 590
Ameritech Corp. ..................................................... 35,000 1,925
AT&T Corp. .......................................................... 330,000 21,780
MCI Communications Corp. ............................................ 380,000 10,165
Pacific Telesis Group................................................ 81,013 2,430
SBC Communications, Inc. ............................................ 40,000 2,160
Sprint Corp. ........................................................ 190,000 7,600
Telefonos de Mexico SA ADR........................................... 221,800 7,319
US West, Inc. ....................................................... 171,800 5,369
Transportation: Airlines -- 0.6%
AMR Corp.+........................................................... 65,000 4,981
Transportation: Rail & Road -- 2.6%
Conrail, Inc. ....................................................... 150,000 10,481
Norfolk Southern Corp. .............................................. 65,000 5,119
Union Pacific Corp. ................................................. 110,000 7,452
--------------
228,264
--------------
OTHER COMMON STOCK -- 1.1%........................................... 9,975
--------------
TOTAL COMMON STOCK (cost: $561,454).................................. 794,136
--------------
<CAPTION>
PREFERRED STOCK -- 0.3%
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Broadcasting & Publishing -- 0.3%
News Corp., Ltd. ADR................................................. 80,000 1,510
Times Mirror Co., Preferred Series B................................. 44,896 1,156
--------------
TOTAL PREFERRED STOCK (cost: $2,106)................................. 2,666
--------------
TOTAL INVESTMENT SECURITIES (cost: $563,560)......................... 796,802
--------------
</TABLE>
---------------------
A-16
<PAGE> 21
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 9.0% (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 6.2%
Ameritech Corp. 5.69% due 12/07/95................................... $ 2,500 $ 2,498
Associates Corp. of North America 5.89% due 12/01/95................. 13,100 13,100
CIT Group Holdings, Inc. 5.70% due 1/08/96........................... 14,000 13,916
Heinz (H. J.) Co. 5.70% due 1/12/96.................................. 3,000 2,980
Heinz (H. J.) Co. 5.72% due 12/13/95................................. 10,500 10,480
Penney (J.C.) Funding Corp. 5.68% due 1/17/96........................ 11,300 11,216
----------
TOTAL CORPORATE SHORT-TERM NOTES..................................... 54,190
----------
FEDERAL AGENCY OBLIGATIONS -- 2.8%
Federal Home Loan Bank Consolidated Discount Note 5.68%
due 12/26/95....................................................... 8,000 7,968
Federal Home Loan Mortgage Discount Note 5.68% due 12/20/95.......... 4,700 4,686
Federal National Mortgage Association Discount Note 5.67% due
12/14/95 .......................................................... 12,200 12,175
----------
TOTAL FEDERAL AGENCY OBLIGATIONS..................................... 24,829
----------
TOTAL SHORT-TERM SECURITIES (cost: $79,019).......................... 79,019
----------
TOTAL INVESTMENTS --
(cost: $642,579) 99.3% 875,821
Other assets less liabilities -- 0.7 6,322
----- ----------
NET ASSETS -- 100.0% $ 882,143
===== ==========
</TABLE>
-----------------------------
+ Non-income producing securities
ADR - American Depositary Receipt
See Notes to Financial Statements
---------------------
A-17
<PAGE> 22
- ---------------------
ANCHOR PATHWAY FUND
ASSET ALLOCATION SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1995
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 69.4% SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 10.6%
Aerospace & Military Technology -- 4.0%
Boeing Co. .......................................................... 30,000 $ 2,186
General Motors Corp., Class H........................................ 56,000 2,660
Northrop Grumman Corp. .............................................. 20,000 1,230
Data Processing & Reproduction -- 1.2%
Apple Computer, Inc. ................................................ 25,000 953
International Business Machines Corp. ............................... 10,000 966
Electrical & Electronics -- 0.8%
Hubbell, Inc. ....................................................... 21,000 1,284
Energy Equipment -- 1.0%
Cooper Industries, Inc. ............................................. 14,384 525
Schlumberger Ltd. ................................................... 15,000 953
Industrial Components -- 2.6%
Dana Corp. .......................................................... 35,000 1,024
Rockwell International Corp. ........................................ 60,000 2,940
Machinery & Engineering -- 1.0%
Crompton + Knowles Corp. ............................................ 40,000 520
Deere & Co. ......................................................... 30,000 986
--------------
16,227
--------------
CONSUMER GOODS -- 16.6%
Automotive -- 0.6%
General Motors Corp. ................................................ 20,000 970
Beverages & Tobacco -- 3.0%
PepsiCo, Inc. ....................................................... 50,000 2,763
Seagrams Co., Ltd. .................................................. 50,000 1,825
Food & Household Products -- 1.4%
Archer-Daniels-Midland Co. .......................................... 50,000 862
Heinz (H.J.) Co. .................................................... 30,000 956
Ralston Purina Co. .................................................. 5,000 320
Health & Personal Care -- 10.2%
Abbott Laboratories.................................................. 18,000 731
American Home Products Corp. ........................................ 30,000 2,737
Bausch & Lomb, Inc. ................................................. 20,000 723
Bristol-Myers Squibb Co. ............................................ 45,000 3,611
Kimberly-Clark Corp. ................................................ 10,000 769
Pfizer, Inc. ........................................................ 54,000 3,132
Smithkline Beecham PLC ADR........................................... 40,000 2,130
Tambrands, Inc. ..................................................... 20,000 1,042
Warner-Lambert Co. .................................................. 10,000 893
Recreation & Other Consumer Products -- 1.4%
American Greetings Corp., Class A.................................... 10,000 273
Eastman Kodak Co. ................................................... 20,000 1,360
Stanley Works........................................................ 10,000 506
--------------
25,603
--------------
</TABLE>
---------------------
A-18
<PAGE> 23
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY -- 6.5%
Energy Sources -- 6.5%
Amoco Corp. ......................................................... 15,000 $ 1,016
Anadarko Petroleum Corp. ............................................ 20,000 963
Atlantic Richfield Co. .............................................. 5,000 542
Chevron Corp. ....................................................... 40,000 1,975
Kerr-McGee Corp. .................................................... 25,000 1,447
Phillips Petroleum Co. .............................................. 50,000 1,662
Royal Dutch Petroleum Co. ADR........................................ 6,000 770
Texaco, Inc. ........................................................ 10,000 740
Unocal Corp. ........................................................ 30,000 806
--------------
9,921
--------------
FINANCE -- 14.9%
Banking -- 8.4%
BankAmerica Corp. ................................................... 10,000 636
Chase Manhattan Corp. ............................................... 10,000 609
Citicorp............................................................. 30,000 2,122
Comerica, Inc. ...................................................... 15,000 561
CoreStates Financial Corp. .......................................... 20,000 775
First Fidelity Bancorp............................................... 17,000 1,247
First Interstate Bancorp............................................. 20,000 2,680
Fleet Financial Group, Inc. ......................................... 25,000 1,044
KeyCorp.............................................................. 15,000 553
NationsBank Corp. ................................................... 25,000 1,784
PNC Bank Corp. ...................................................... 30,000 878
Insurance -- 6.5%
Allstate Corp. ...................................................... 43,905 1,800
AMBAC, Inc. ......................................................... 20,000 883
American General Corp. .............................................. 15,000 508
Cigna Corp. ......................................................... 40,000 4,400
SAFECO Corp. ........................................................ 33,000 2,343
--------------
22,823
--------------
MATERIALS -- 5.3%
Building Materials -- 0.5%
TRINOVA Corp. ....................................................... 25,000 769
Chemicals -- 1.8%
Eastman Chemical Co. ................................................ 15,000 984
Great Lakes Chemical Corp. .......................................... 10,000 711
Monsanto Co. ........................................................ 10,000 1,145
Forest Products & Paper -- 2.4%
Georgia-Pacific Corp. ............................................... 10,000 778
Rayonier, Inc. ...................................................... 25,500 975
Union Camp Corp. .................................................... 20,000 983
Weyerhaeuser Co. .................................................... 20,000 905
Metals & Minerals -- 0.6%
Aluminum Co. of America.............................................. 16,000 936
--------------
8,186
--------------
MULTI-INDUSTRY -- 4.0%
Multi-Industry -- 4.0%
Minnesota Mining & Manufacturing Co. ................................ 25,000 1,637
Tenneco, Inc. ....................................................... 30,000 1,440
Textron, Inc. ....................................................... 40,000 3,065
--------------
6,142
--------------
</TABLE>
---------------------
A-19
<PAGE> 24
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 10.4%
Business & Public Services -- 0.6%
H & R Block, Inc. ................................................... 20,000 $ 890
Merchandising -- 5.6%
Gap, Inc. ........................................................... 10,000 453
Hancock Fabrics, Inc. ............................................... 50,000 481
May Department Stores Co. ........................................... 30,000 1,309
Penney (J.C.), Inc. ................................................. 20,000 937
Sears Roebuck & Co. ................................................. 25,000 984
Wal-Mart Stores, Inc. ............................................... 100,000 2,400
Walgreen Co. ........................................................ 70,000 2,039
Telecommunications -- 1.2%
AT&T Corp. .......................................................... 10,000 660
Pacific Telesis Group................................................ 40,000 1,200
Transportation: Rail & Road -- 3.0%
Conrail, Inc. ....................................................... 25,000 1,747
Norfolk Southern Corp. .............................................. 20,000 1,575
Union Pacific Corp. ................................................. 20,000 1,355
--------------
16,030
--------------
OTHER COMMON STOCK -- 1.1%........................................... 1,663
--------------
TOTAL COMMON STOCK (cost: $84,171)................................... 106,595
--------------
<CAPTION>
PRINCIPAL
AMOUNT
BONDS & NOTES -- 20.2% (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE & NONCONVERTIBLES -- 14.1%
Automotive -- 0.8%
General Motors Corp. 8.80% 2021...................................... $ 1,000 1,203
Broadcasting & Publishing -- 1.4%
TCI Communications, Inc. 8.75% 2015.................................. 500 540
Tele-Communications, Inc. 9.25% 2023................................. 500 530
Time Warner, Inc. 9.13% 2013......................................... 1,000 1,106
Finance -- 3.1%
Ahmanson (H.F.) & Co. 9.88% 1999..................................... 1,000 1,129
Bankers Trust New York Corp. 8.25% 2005.............................. 500 552
Capital One Bank 6.61% 1999.......................................... 2,500 2,532
Saul (B.F.) Real Estate Investment Trust 11.63% 2002................. 500 505
Industrial -- 6.4%
Acme Metals, Inc. 12.50% 2002........................................ 500 491
CenCall Communications Corp. zero coupon 2004(1)..................... 1,000 538
Columbia Gas Systems, Inc. 7.05% 2007................................ 500 508
Container Corp. of America 9.75% 2003................................ 2,000 1,965
Inco Ltd. 9.60% 2022................................................. 400 452
Marvel Holdings, Inc. zero coupon 1998............................... 800 568
Oryx Energy Co. 9.50% 1999........................................... 1,500 1,606
Oryx Energy Co. 10.00% 1999.......................................... 500 540
Parker + Parsley Petroleum Co. 8.25% 2007............................ 500 533
Pohang Iron & Steel Ltd. 7.50% 2002.................................. 2,500 2,640
</TABLE>
---------------------
A-20
<PAGE> 25
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE & NONCONVERTIBLES (continued)
Transportation -- 2.4%
American Airlines 9.71% 2007......................................... $ 1,387 $ 1,587
Delta Air Lines, Inc. 10.50% 2016.................................... 500 616
Federal Express Corp. 7.53% 2006..................................... 944 986
Jet Equipment Trust 7.83% 2012#...................................... 500 525
--------------
21,652
--------------
NON-U.S. GOVERNMENT OBLIGATIONS -- 0.3%
Poland Republic 7.75% 2000#.......................................... 500 508
--------------
U.S. GOVERNMENT & AGENCIES -- 0.7%
Government National Mortgage Association 8.50% 2025.................. 954 996
--------------
UNITED STATES TREASURY -- 5.1%
10.38% Bonds 2009.................................................... 1,000 1,307
10.38% Bonds 2012.................................................... 4,000 5,456
8.75% Notes 1997..................................................... 1,000 1,059
--------------
7,822
--------------
TOTAL BONDS & NOTES (cost: $30,029).................................. 30,978
--------------
<CAPTION>
CONVERTIBLE BONDS -- 2.0%
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Broadcasting & Publishing -- 1.5%
Turner Broadcasting Systems, Inc. zero coupon 2007#.................. 5,000 2,263
--------------
Industrial -- 0.5%
Hanson America, Inc. 2.39% 2001#..................................... 1,000 824
--------------
TOTAL CONVERTIBLE BONDS (cost: $2,940)............................... 3,087
--------------
TOTAL INVESTMENT SECURITIES (cost: $117,140)......................... 140,660
--------------
<CAPTION>
SHORT-TERM SECURITIES -- 7.8%
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 6.4%
Associates Corp. of North America 5.89% due 12/01/95................. 2,900 2,900
Bell Atlantic Financial Services 5.72% due 12/19/95.................. 2,400 2,393
Ford Motor Credit Co. 5.72% due 12/11/95............................. 3,350 3,345
Motorola Credit Corp. 5.69% due 12/08/95............................. 1,200 1,199
--------------
TOTAL CORPORATE SHORT-TERM NOTES..................................... 9,837
--------------
FEDERAL AGENCY OBLIGATIONS -- 1.4%
Federal National Mortgage Association Discount Note 5.67% due
12/14/95........................................................... 2,200 2,195
--------------
TOTAL SHORT-TERM SECURITIES (cost: $12,032).......................... 12,032
--------------
TOTAL INVESTMENTS --
(cost: $129,172) 99.4% 152,692
Other assets less liabilities -- 0.6 916
------ --------------
NET ASSETS --
100.0% $ 153,608
====== =============
</TABLE>
-----------------------------
# Resale restricted to qualified institutional buyers
(1) Represents a zero-coupon bond which will convert to an
interest-bearing security at a later date
ADR - American Depositary Receipt
See Notes to Financial Statements
---------------------
A-21
<PAGE> 26
- ---------------------
ANCHOR PATHWAY FUND
HIGH-YIELD BOND SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES -- 89.8% (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 3.9%
Aerospace & Military Technology -- 3.5%
Coltec Industries 9.75% 1999......................................... $ 500 $ 512
Coltec Industries 9.75% 2000......................................... 4,500 4,624
Machinery & Engineering -- 0.4%
Exide Corp. 10.00% 2005.............................................. 500 538
--------------
5,674
--------------
CONSUMER GOODS -- 2.0%
Food & Household Products -- 2.0%
Dr. Pepper/Seven Up Cos., Inc. 10.25% 2000........................... 2,750 2,901
--------------
ENERGY -- 11.2%
Energy Sources -- 8.1%
Dual Drilling Co. 9.88% 2004......................................... 2,000 1,900
Flores & Rucks, Inc. 13.50% 2004..................................... 2,500 2,825
Global Marine, Inc. 12.75% 1999...................................... 2,000 2,210
TransTexas Gas Corp. 11.50% 2002..................................... 2,000 2,065
Triton Energy Corp. zero coupon 2000(1).............................. 1,500 1,391
Tuboscope Vetco International, Inc. 10.75% 2003...................... 1,500 1,478
Utilities: Electric, Gas & Water -- 3.1%
California Energy, Inc. zero coupon 2004(1).......................... 4,000 3,680
Midland Cogeneration, Series C-91 10.33% 2002........................ 402 418
Midland Cogeneration, Series C-94 10.33% 2002........................ 433 452
--------------
16,419
--------------
FINANCE -- 1.1%
Financial Services -- 1.1%
Indah Kiat International Finance Co. BV 11.88% 2002.................. 1,000 1,010
Tjiwi Kimia International Finance BV 13.25% 2001..................... 500 536
--------------
1,546
--------------
INDUSTRIAL & COMMERCIAL -- 3.2%
Industrial -- 3.2%
Magnetek, Inc. 10.75% 1998........................................... 2,500 2,600
Stater Brothers Holdings, Inc. 11.00% 2001........................... 2,000 2,020
--------------
4,620
--------------
MATERIALS -- 14.9%
Forest Products & Paper -- 11.1%
Container Corp. of America 9.75% 2003................................ 5,250 5,158
Fort Howard Corp. 8.25% 2002......................................... 500 485
Fort Howard Corp. 9.25% 2001......................................... 3,500 3,553
P T Indah Kiat Pulp & Paper 8.88% 2000#.............................. 1,500 1,395
Pacific Lumber Co. 10.50% 2003....................................... 1,000 940
Riverwood International Corp. 10.75% 2000............................ 3,000 3,210
Riverwood International Corp. 11.25% 2002............................ 500 536
Triangle Pacific Corp. 10.50% 2003................................... 1,000 1,040
</TABLE>
---------------------
A-22
<PAGE> 27
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Metals & Minerals -- 3.8%
A.K. Steel Corp. 10.75% 2004......................................... $ 2,000 $ 2,210
Acme Metals, Inc. zero coupon 2004(1)................................ 1,750 1,365
Kaiser Aluminum & Chemical Corp. 12.75% 2003......................... 1,250 1,369
Ucar Global Enterprises, Inc. 12.00% 2005............................ 535 607
--------------
21,868
--------------
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.9%
Federative Republic of Brazil 6.88% 1996(2).......................... 500 270
Republic of Argentina 6.81% 1996(2).................................. 2,500 1,631
Republic of Poland 3.75% 1996(2)..................................... 500 323
United Mexican States 6.25% 2019..................................... 1,000 615
--------------
2,839
--------------
SERVICES -- 51.6%
Advertising -- 1.5%
Neodata Services, Inc. zero coupon 2003(1)........................... 2,500 2,237
Broadcasting & Publishing -- 21.5%
American Media Operations, Inc. 11.63% 2004.......................... 1,250 1,269
Bell Cablemedia PLC zero coupon 2004(1).............................. 5,500 3,767
CenCall Communications Corp. zero coupon 2004(1)..................... 1,000 537
Centennial Cellular Corp. 8.88% 2001................................. 3,000 2,932
Century Communications Corp. 9.50% 2000.............................. 2,500 2,563
Comcast UK Cable Partners Ltd. zero coupon 2007(1)................... 1,500 855
Continental Cablevision, Inc. 8.63% 2003............................. 1,775 1,833
Continental Cablevision, Inc. 8.88% 2005............................. 1,000 1,040
Continental Cablevision, Inc. 10.63% 2002............................ 3,000 3,195
Heartland Wireless Communication, Inc. 13.00% 2003#.................. 500 567
Infinity Broadcasting Corp. 10.38% 2002.............................. 2,250 2,407
Mobilemedia Commerce zero coupon 2003(1)............................. 2,500 1,900
Nextel Communications, Inc. zero coupon 2003(1)...................... 2,500 1,506
Nextel Communications, Inc. zero coupon 2004(1)...................... 1,500 776
PanAmSat L.P. 9.75% 2000............................................. 1,480 1,554
Univision Television Group, Inc. 11.75% 2001......................... 500 543
Videotron Holdings PLC zero coupon 2004(1)........................... 5,500 3,699
Young Broadcasting, Inc. 10.13% 2005................................. 500 528
Business & Public Services -- 1.0%
Protection One Alarm Monitoring Corp. zero coupon 2005(1)*........... 1,000 800
Regency Health Services, Inc. 9.88% 2002............................. 750 737
Food Retail -- 5.6%
Allied Supermarkets, Inc. 6.63% 1998................................. 1,500 1,470
Foodmaker, Inc. 9.25% 1999........................................... 2,400 2,280
Foodmaker, Inc. 9.75% 2002........................................... 1,355 1,219
Marvel Holdings, Inc. zero coupon 1998............................... 2,250 1,598
Safeway Store Holdings, Inc. 10.00% 2002............................. 500 580
Star Market Co, Inc. 13.00% 2004..................................... 1,000 1,020
</TABLE>
---------------------
A-23
<PAGE> 28
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Leisure & Tourism -- 3.0%
Four Seasons Hotels, Inc. 9.13% 2000#................................ $ 1,000 $ 991
Harrah's Jazz Co. 14.25% 2001........................................ 500 140
Kloster Cruise Ltd. 13.00% 2003...................................... 1,500 1,245
Plitt Theatres, Inc. 10.88% 2004..................................... 1,750 1,584
Station Casinos, Inc. 9.63% 2003..................................... 500 485
Merchandising -- 4.2%
AnnTaylor, Inc. 8.75% 2000........................................... 500 423
Barnes & Noble, Inc. 11.88% 2003..................................... 1,750 1,951
Thrifty PayLess Holdings, Inc. 11.75% 2003........................... 1,000 1,078
Thrifty PayLess Holdings, Inc. 12.25% 2004........................... 2,500 2,669
Telecommunications -- 14.1%
Cellular Communications International, Inc. zero coupon 2000......... 2,250 1,297
Comunicacion Celular S A zero coupon 2003#(1)........................ 1,000 553
Dial Callable Communications, Inc. zero coupon 2004(1)............... 2,000 1,090
Horizon Cellular Telephone L.P. zero coupon 2000(1).................. 500 430
International CableTel, Inc. zero coupon 2005(1)..................... 750 457
MFS Communication zero coupon 2004(1)................................ 7,000 5,416
Paging Network, Inc. 11.75% 2002..................................... 2,200 2,425
Pricecellular Wireless Corp. zero coupon 2003(1)..................... 1,000 758
Pronet, Inc. 11.88% 2005............................................. 500 540
Rogers Cantel Mobile Communications, Inc. 10.75% 2001................ 6,318 6,650
Rogers Cantel Mobile Communications, Inc. 11.13% 2002................ 1,000 1,065
Transportation -- 0.7%
Viking Star Shipping, Inc. 9.63% 2003................................ 1,000 1,028
--------------
75,687
--------------
TOTAL BONDS & NOTES (cost: $129,981)................................. 131,554
--------------
<CAPTION>
WARRANTS -- 0.0%+ SHARES
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 0.0%
Business & Public Services -- 0.0%
Protection One Alarm Monitoring Corp.#*.............................. 3,200 18
Telecommunications -- 0.0%
Dial Page, Inc....................................................... 2,000 0
--------------
TOTAL WARRANTS (cost: $14)........................................... 18
--------------
<CAPTION>
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AND AGENCIES -- 2.0% (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES TREASURY -- 2.0%
5.13% Note 1998 (cost: $2,808)....................................... $ 3,000 2,974
--------------
TOTAL INVESTMENT SECURITIES (cost: $132,803)......................... 134,546
--------------
</TABLE>
---------------------
A-24
<PAGE> 29
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 6.2% (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 6.2%
Associates Corp. of North America 5.89% due 12/01/95................. $ 4,100 $ 4,100
Wal Mart Stores, Inc. 5.70% due 12/06/95............................. 5,000 4,996
--------------
TOTAL SHORT-TERM SECURITIES (cost: $9,096)........................... 9,096
--------------
TOTAL INVESTMENTS --
(cost: $141,899) 98.0% 143,642
Other assets less liabilities -- 2.0 2,948
------ --------------
NET ASSETS -- 100.0% $ 146,590
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
# Resale restricted to qualified institutional buyers
* Fair value determined by Trustees
(1) Represents a zero-coupon bond which will convert to an
interest-bearing security at later date
(2) Variable rate security -- the rate reflected is as of November
30, 1995, maturity date reflects next reset date.
See Notes to Financial Statements
---------------------
A-25
<PAGE> 30
- ---------------------
ANCHOR PATHWAY FUND
U.S. GOVERNMENT/
AAA-RATED SECURITIES SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES -- 95.8% (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES -- 8.1%
Green Tree Financial Corp. 6.80% 2027................................ $ 1,000 $ 1,004
MBNA Master Credit Card Trust 7.75% 1998............................. 5,000 5,075
Standard Credit Card Master Trust 8.88% 1999 -- Series 1991
Participation Certificates......................................... 4,500 4,823
--------------
10,902
--------------
DEVELOPMENTAL AUTHORITIES -- 6.9%
International American Development Bank 9.50% 1997................... 2,900 3,092
International Bank for Reconstruction & Development 7.90% 1998....... 3,000 3,148
International Bank for Reconstruction & Development 9.76% 1998....... 1,500 1,639
International Bank for Reconstruction & Development 14.90% 1997...... 1,200 1,355
--------------
9,234
--------------
FEDERAL AGENCY OBLIGATIONS -- 27.7%++
Federal Home Loan Mortgage Corp. 6.50% 2009*......................... 2,000 1,935
Federal Home Loan Mortgage Corp. 9.00% 2021-2022..................... 1,573 1,657
Federal Home Loan Mortgage Corp. 9.50% 2016.......................... 1,107 1,176
Federal Home Loan Mortgage Corp. 11.88% 2013*........................ 21 22
Federal Home Loan Mortgage Corp. 12.50% 2013*........................ 187 205
Federal National Mortgage Association zero coupon 2001 STRIPS(1)..... 5,000 4,731
Federal National Mortgage Association 7.50% 2009..................... 1,884 1,928
Federal National Mortgage Association zero coupon 2001 STRIPS(1)..... 5,000 4,701
Federal National Mortgage Association 7.70% 2004..................... 1,645 1,739
Federal National Mortgage Association 8.50% 2023..................... 2,367 2,474
Government National Mortgage Association 7.50% 2023.................. 1,499 1,530
Government National Mortgage Association 8.00% 2017.................. 2,287 2,387
Government National Mortgage Association 8.50% 2016-2025............. 4,506 4,708
Government National Mortgage Association 9.00% 2016-2017............. 927 984
Government National Mortgage Association 9.50% 2009-2017............. 6,091 6,630
Government National Mortgage Association 10.00% 2016................. 52 57
Government National Mortgage Association 10.50% 2016-2019............ 388 432
Government National Mortgage Association 11.00% 2019................. 90 101
Government National Mortgage Association 11.50% 2010-2015............ 20 23
--------------
37,420
--------------
INDUSTRIALS -- 0.6%
De Bartolo Capital Corp. Euronotes 8.00% 1996........................ 850 862
--------------
MISCELLANEOUS -- 2.9%
Columbia University Trustees NY 8.62% 2001........................... 1,500 1,674
Columbia University Trustees NY 8.65% 2003........................... 2,000 2,283
--------------
3,957
--------------
MORTGAGE-RELATED SECURITIES -- 6.1%
CMC Securities Corp. 6.50% 2008...................................... 2,801 2,695
Merrill Lynch Mortgage Investors, Inc. 6.85% 2015*................... 500 506
Morgan (J.P.) Commercial Mortgage Finance Corp. 7.35% 2010*.......... 1,000 1,059
Prudential Home Mortgage Corp. 7.50% 2022............................ 4,000 4,012
--------------
8,272
--------------
</TABLE>
---------------------
A-26
<PAGE> 31
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
NON-U.S. GOVERNMENT OBLIGATIONS -- 2.5%
Ontario Province Canada 15.25% 2012.................................. $ 1,000 $ 1,207
Ontario Province Canada 15.75% 2012.................................. 1,800 2,111
--------------
3,318
--------------
UNITED STATES TREASURY -- 41.0%
8.75% Bonds 2008..................................................... 2,000 2,355
8.88% Bonds 2017..................................................... 13,700 17,949
10.38% Bonds 2009.................................................... 4,500 5,882
10.38% Bonds 2012.................................................... 10,500 14,323
10.75% Bonds 2003.................................................... 3,750 4,880
11.25% Bonds 2015.................................................... 500 785
12.00% Bonds 2013.................................................... 6,000 9,118
--------------
55,292
--------------
TOTAL INVESTMENT SECURITIES (cost: $124,971)......................... 129,257
--------------
<CAPTION>
SHORT-TERM SECURITIES -- 0.7%
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 0.7%
Associates Corp. of North America 5.89% due 12/01/95 (cost: $906).... 906 906
--------------
TOTAL INVESTMENTS --
(cost: $125,877) 96.5% 130,163
Other assets less liabilities -- 3.5 4,775
------ --------------
NET ASSETS -- 100.0% $ 134,938
------ ==============
</TABLE>
-----------------------------
++ Pass-through securities are backed by a pool of mortgages or
other loans on which principal payments are periodically made.
Therefore, the effective maturity is shorter than stated
maturity.
* Fair value determined by Trustees
(1) Represents a zero-coupon bond which will convert to an
interest-bearing security at a later date
See Notes to Financial Statements
---------------------
A-27
<PAGE> 32
- ---------------------
ANCHOR PATHWAY FUND
CASH MANAGEMENT SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 101.7% (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 84.9%
Albertson's, Inc. 5.72% due 1/05/96.................................. $ 1,000 $ 994
Ameritech Corp. 5.69% due 12/07/95................................... 2,000 1,998
Anheuser - Busch Cos., Inc. 5.67% due 12/04/95....................... 2,700 2,699
Beneficial Corp. 5.70% due 12/07/95.................................. 3,300 3,297
CIT Group Holdings, Inc. 5.70% due 12/14/95.......................... 4,000 3,992
Coca-Cola Co. 5.66% due 12/15/95..................................... 3,500 3,492
Commercial Credit Co. 5.72% due 12/21/95............................. 4,400 4,386
Deere (John) Capital Corp. 5.70% due 1/11/96......................... 4,000 3,974
du Pont (E.I.) de Nemours & Co. 5.67% due 12/05/95................... 3,200 3,198
Emerson Electric Co. 5.65% due 12/12/95.............................. 4,000 3,993
Ford Motor Credit Co. 5.73% due 1/02/96.............................. 3,200 3,184
General Electric Capital Corp. 5.71% due 1/17/96..................... 3,100 3,077
Kimberly-Clark Corp. 5.68% due 12/22/95.............................. 4,000 3,987
McDonald's Corp. 5.69% due 12/11/95.................................. 2,800 2,796
Motorola, Inc. 5.69% due 12/05/95.................................... 4,000 3,998
Nordstrom Credit, Inc. 5.69% due 12/11/95............................ 4,200 4,193
Paccar Financial Corp. 5.71% due 12/08/95............................ 4,100 4,095
Penney (J.C.) Funding Corp. 5.70% due 12/06/95....................... 3,000 2,998
PepsiCo, Inc. 5.68% due 12/08/95..................................... 4,500 4,495
Raytheon Co. 5.70% due 12/04/95...................................... 1,900 1,899
Sara Lee Corp. 5.68% due 12/06/95.................................... 2,300 2,298
Sara Lee Corp. 5.68% due 12/29/95.................................... 1,000 996
Shell Oil Co. 5.69% due 12/13/95..................................... 4,000 3,992
Southwestern Bell Telephone Co. 5.68% due 12/04/95................... 2,400 2,399
Toys R Us, Inc. 5.70% due 12/01/95................................... 1,800 1,800
Weyerhaeuser Co. 5.72% due 1/02/96................................... 3,500 3,482
Xerox Corp. 5.67% due 1/08/96........................................ 4,000 3,976
--------------
TOTAL CORPORATE SHORT-TERM NOTES (cost: $85,688)..................... 85,688
--------------
FEDERAL AGENCY OBLIGATIONS -- 16.8%
Federal Farm Credit Bank Discount Note 5.65% due 12/18/95............ 2,300 2,294
Federal Home Loan Bank Consolidated Discount Note 5.66%
due 12/19/95....................................................... 3,100 3,091
Federal Home Loan Bank Consolidated Discount Note 5.68%
due 12/26/95....................................................... 3,300 3,287
Federal Home Loan Mortgage Discount Note 5.68% due 12/20/95.......... 3,700 3,689
Federal Home Loan Mortgage Discount Note 5.70% due 12/26/95.......... 3,200 3,187
Federal National Mortgage Association Discount Note 5.65%
due 12/28/95....................................................... 1,400 1,394
--------------
TOTAL FEDERAL AGENCY OBLIGATIONS (cost: $16,942)..................... 16,942
--------------
TOTAL SHORT-TERM SECURITIES (cost: $102,630)......................... 102,630
--------------
TOTAL INVESTMENTS --
(cost: $102,630) 101.7% 102,630
Liabilities in excess of other assets -- (1.7) (1,758)
------ --------------
NET ASSETS -- 100.0% $ 100,872
------ ==============
</TABLE>
See Notes to Financial Statements
---------------------
A-28
<PAGE> 33
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF ASSETS AND LIABILITIES
FOR THE YEAR ENDED NOVEMBER 30, 1995
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSET HIGH-YIELD
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION BOND
SERIES SERIES SERIES SERIES SERIES
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment securities at value*........ $779,941 $209,049 $ 796,802 $ 140,660 $ 134,546
Short-term securities*................. 112,120 17,887 79,019 12,032 9,096
Money market accounts.................. 90 121 113 108 166
Cash................................... 1,974 22 348 21 815
Foreign cash........................... -- 196 -- -- --
Receivables for--
Sales of investments................. 6,299 172 4,203 551 381
Dividends and accrued interest....... 323 832 2,223 888 2,598
Fund shares sold..................... 438 1,880 363 54 87
Foreign currency contracts........... -- 255 -- -- --
Prepaid expenses....................... 2 1 3 -- 1
-----------------------------------------------------------------------------
901,187 230,415 883,074 154,314 147,690
-----------------------------------------------------------------------------
LIABILITIES:
Payables for--
Purchases of investments............. 2,823 1,579 83 500 496
Fund shares redeemed................. 562 116 331 99 500
Advisory fees........................ 218 110 214 39 37
Management fees...................... 146 44 142 26 25
Foreign currency contracts........... -- 255 -- -- --
Other accrued expenses................. 163 175 161 42 42
Unrealized depreciation of foreign
currency contracts................... -- 2 -- -- --
-----------------------------------------------------------------------------
3,912 2,281 931 706 1,100
-----------------------------------------------------------------------------
NET ASSETS:............................ $897,275 $228,134 $ 882,143 $ 153,608 $ 146,590
=============================================================================
Shares of beneficial interest
outstanding (unlimited shares
authorized).......................... 20,627 16,407 27,885 10,057 10,773
Net asset value per share.............. $ 43.50 $ 13.90 $ 31.64 $ 15.27 $ 13.61
=============================================================================
COMPOSITION OF NET ASSETS:
Capital paid in........................ $469,053 $180,960 $ 572,505 $ 113,168 $ 134,418
Accumulated undistributed net
investment income.................... 5,493 7,246 20,687 5,977 13,964
Accumulated undistributed net realized
gain (loss) on investments, futures
contracts and options contracts...... 120,611 4,971 55,709 10,943 (3,535)
Unrealized appreciation on
investments.......................... 302,118 34,957 233,242 23,520 1,743
-----------------------------------------------------------------------------
Net Assets......................... $897,275 $228,134 $ 882,143 $ 153,608 $ 146,590
=============================================================================
<CAPTION>
U.S.
GOVERNMENT
AAA-RATED CASH
SECURITIES MANAGEMENT
SERIES SERIES
------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investment securities at value*........ $ 129,257 $ --
Short-term securities*................. 906 102,630
Money market accounts.................. 100 84
Cash................................... 1 1
Foreign cash........................... -- --
Receivables for--
Sales of investments................. 3,377 --
Dividends and accrued interest....... 1,459 --
Fund shares sold..................... 14 454
Foreign currency contracts........... -- --
Prepaid expenses....................... -- 1
----------------------------
135,114 103,170
----------------------------
LIABILITIES:
Payables for--
Purchases of investments............. -- --
Fund shares redeemed................. 77 2,209
Advisory fees........................ 35 32
Management fees...................... 23 21
Foreign currency contracts........... -- --
Other accrued expenses................. 41 36
Unrealized depreciation of foreign
currency contracts................... -- --
----------------------------
176 2,298
----------------------------
NET ASSETS:............................ $ 134,938 $ 100,872
============================
Shares of beneficial interest
outstanding (unlimited shares
authorized).......................... 11,262 8,662
Net asset value per share.............. $ 11.98 $ 11.65
============================
COMPOSITION OF NET ASSETS:
Capital paid in........................ $ 121,310 $ 93,359
Accumulated undistributed net
investment income.................... 11,152 7,513
Accumulated undistributed net realized
gain (loss) on investments, futures
contracts and options contracts...... (1,810) --
Unrealized appreciation on
investments.......................... 4,286 --
----------------------------
Net Assets......................... $ 134,938 $ 100,872
============================
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C> <C> <C>
* Cost
Investment Securities............... $477,823 $174,092 $ 563,560 $ 117,140 $ 132,803
===================================================================================
Short-term Securities............... $112,120 $ 17,887 $ 79,019 $ 12,032 $ 9,096
===================================================================================
<CAPTION>
* Cost
<S> <C> <C>
Investment Securities............... $ 124,971 $ --
------------------------------
Short-term Securities............... $ 906 $ 102,630
==============================
</TABLE>
See Notes to Financial Statements
---------------------
A-29
<PAGE> 34
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
U.S.
GOVERNMENT/
ASSET HIGH-YIELD AAA-RATED
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION BOND SECURITIES
SERIES SERIES SERIES SERIES SERIES SERIES
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Income:
Dividends*........................... $ 4,980 $ 5,326 $ 20,582 $ 3,073 $ -- $ --
Interest............................. 4,897 1,767 4,651 3,762 14,669 11,625
-------------------------------------------------------------------------------------
Total income.................. 9,877 7,093 25,233 6,835 14,669 11,625
-------------------------------------------------------------------------------------
Expenses:
Advisory fees........................ 2,484 1,419 2,478 461 447 449
Management fees...................... 1,656 567 1,652 307 298 300
Custodian fees....................... 265 461 267 78 75 75
Auditing and legal fees.............. 78 25 73 16 16 15
Reports to investors................. 30 6 28 5 5 5
Trustees' fees....................... 17 5 17 3 3 3
Other expenses....................... 23 6 25 5 4 5
-------------------------------------------------------------------------------------
Total expenses................ 4,553 2,489 4,540 875 848 852
-------------------------------------------------------------------------------------
Net investment income................ 5,324 4,604 20,693 5,960 13,821 10,773
-------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on
investments.......................... 120,927 7,678 55,815 11,006 (2,317) (1,413)
Net realized foreign exchange gain on
other assets and liabilities......... 174 (2) -- -- -- --
Change in unrealized appreciation/
depreciation of investments.......... 134,125 12,035 160,433 22,856 13,271 11,975
Change in unrealized foreign exchange
gain (loss) on other assets and
liabilities.......................... -- (9) -- -- -- --
-------------------------------------------------------------------------------------
Net realized and unrealized gain on
investments, foreign currency and
other assets and liabilities......... 255,226 19,702 216,248 33,862 10,954 10,562
-------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 260,550 $ 24,306 $ 236,941 $ 39,822 $ 24,775 $ 21,335
===================================================================================
<CAPTION>
CASH
MANAGEMENT
SERIES
-----------
<S> <C>
NET INVESTMENT INCOME:
Income:
Dividends*........................... $ --
Interest............................. 8,338
--------
Total income.................. 8,338
--------
Expenses:
Advisory fees........................ 442
Management fees...................... 295
Custodian fees....................... 57
Auditing and legal fees.............. 16
Reports to investors................. 3
Trustees' fees....................... 3
Other expenses....................... 6
--------
Total expenses................ 822
--------
Net investment income................ 7,516
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on
investments.......................... 1
Net realized foreign exchange gain on
other assets and liabilities......... --
Change in unrealized appreciation/
depreciation of investments.......... --
Change in unrealized foreign exchange
gain (loss) on other assets and
liabilities.......................... --
--------
Net realized and unrealized gain on
investments, foreign currency and
other assets and liabilities......... 1
--------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 7,517
========
</TABLE>
- ---------------
* Net of foreign withholding taxes of $28; $861; $121 and $8 on Growth,
International, Growth-Income and Asset Allocation Series, respectively.
See Notes to Financial Statements
---------------------
A-30
<PAGE> 35
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED NOVEMBER 30, 1995
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
U.S.
GOVERNMENT/
ASSET HIGH-YIELD AAA-RATED
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION BOND SECURITIES
SERIES SERIES SERIES SERIES SERIES SERIES
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................. $ 5,324 $ 4,604 $ 20,693 $ 5,960 $ 13,821 $ 10,773
Net realized gain (loss) on
investments.......................... 120,927 7,678 55,815 11,006 (2,317) (1,413)
Net realized foreign exchange gain on
other assets and liabilities......... 174 (2) -- -- -- --
Change in unrealized appreciation/
depreciation of investments.......... 134,125 12,035 160,433 22,856 13,271 11,975
Change in unrealized foreign exchange
gain (loss) on other assets and
liabilities.......................... -- (9) -- -- -- --
-------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations...................... 260,550 24,306 236,941 39,822 24,775 21,335
-------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income... (4,130) (4,020) (20,910) (7,070) (15,715) (14,600)
Distributions from net realized gains
on investments....................... (53,955) (8,900) (61,645) (3,970) (1,315) (730)
-------------------------------------------------------------------------------------
Total dividends and distributions paid
to shareholders...................... (58,085) (12,920) (82,555) (11,040) (17,030) (15,330)
-------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............. 264,548 86,003 84,337 15,947 66,944 33,236
Proceeds from shares issued for
reinvestment of dividends and
distributions........................ 58,085 12,920 82,555 11,040 17,030 15,330
Cost of shares repurchased............. (340,425) (141,673) (205,106) (44,839) (72,596) (69,001)
-------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions......................... (17,792) (42,750) (38,214) (17,852) 11,378 (20,435)
-------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................... 184,673 (31,364) 116,172 10,930 19,123 (14,430)
NET ASSETS:
Beginning of period.................... 712,602 259,498 765,971 142,678 127,467 149,368
-------------------------------------------------------------------------------------
End of period.......................... $ 897,275 $ 228,134 $ 882,143 $ 153,608 $ 146,590 $ 134,938
===================================================================================
<CAPTION>
CASH
MANAGEMENT
SERIES
----------
<S> <C>
OPERATIONS:
Net investment income.................. $ 7,516
Net realized gain (loss) on
investments.......................... 1
Net realized foreign exchange gain on
other assets and liabilities......... --
Change in unrealized appreciation/
depreciation of investments.......... --
Change in unrealized foreign exchange
gain (loss) on other assets and
liabilities.......................... --
---------
Net increase in net assets resulting
from operations...................... 7,517
---------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income... (6,355)
Distributions from net realized gains
on investments....................... (1)
---------
Total dividends and distributions paid
to shareholders...................... (6,356)
---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............. 320,102
Proceeds from shares issued for
reinvestment of dividends and
distributions........................ 6,356
Cost of shares repurchased............. (413,143)
---------
Net increase (decrease) in net assets
resulting from capital share
transactions......................... (86,685)
---------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................... (85,524)
NET ASSETS:
Beginning of period.................... 186,396
---------
End of period.......................... $ 100,872
=========
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Undistributed net investment income.... $ 5,493 $ 7,246 $ 20,687 $ 5,977 $ 13,964 $ 11,152
===================================================================================
Shares issued and repurchased:
Sold................................. 6,919 6,506 2,970 1,155 5,131 2,849
Issued in reinvestment of dividends
and distributions.................. 1,644 1,073 3,211 864 1,415 1,406
Repurchased.......................... (8,845) (10,739) (7,247) (3,268) (5,539) (5,944)
-------------------------------------------------------------------------------------
Net increase (decrease)................ (282) (3,160) (1,066) (1,249) 1,007 (1,689)
===================================================================================
<CAPTION>
<S> <C>
Undistributed net investment income.... $ 7,513
=========
Shares issued and repurchased:
Sold................................. 27,835
Issued in reinvestment of dividends
and distributions.................. 566
Repurchased.......................... (35,988)
---------
Net increase (decrease)................ (7,587)
=========
</TABLE>
See Notes to Financial Statements
---------------------
A-31
<PAGE> 36
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED NOVEMBER 30, 1994
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
U.S.
GOVERNMENT/
ASSET HIGH-YIELD AAA-RATED
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION BOND SECURITIES
SERIES SERIES SERIES SERIES SERIES SERIES
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................. $ 4,125 $ 4,121 $ 20,905 $ 7,058 $ 13,997 $ 13,948
Net realized gain on investments....... 53,538 8,885 62,736 3,965 1,530 1,272
Net realized foreign exchange gain
(loss) on other assets and
liabilities.......................... 1 (122) -- -- -- --
Change in unrealized appreciation/
depreciation of investments.......... (34,726) 1,677 (66,898) (12,165) (22,236) (23,321)
Change in unrealized foreign exchange
gain/loss on other assets and
liabilities.......................... -- 20 -- -- -- --
-------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............ 22,938 14,581 16,743 (1,142) (6,709) (8,101)
-------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income... (5,158) (2,114) (22,182) (7,396) (15,525) (17,308)
Distributions from net realized gain on
investments.......................... (55,961) (4,015) (45,504) (3,647) (5,104) (2,648)
-------------------------------------------------------------------------------------
Total dividends and distributions paid
to shareholders...................... (61,119) (6,129) (67,686) (11,043) (20,629) (19,956)
-------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............. 321,883 186,172 70,827 17,351 65,501 35,571
Proceeds from shares issued for
reinvestment of dividends and
distributions........................ 61,119 6,129 67,686 11,043 20,629 19,956
Cost of shares repurchased............. (367,619) (133,417) (184,315) (40,086) (121,840) (106,671)
-------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions......................... 15,383 58,884 (45,802) (11,692) (35,710) (51,144)
-------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................... (22,798) 67,336 (96,745) (23,877) (63,048) (79,201)
NET ASSETS:
Beginning of year...................... 735,400 192,162 862,716 166,555 190,515 228,569
-------------------------------------------------------------------------------------
End of year............................ $ 712,602 $ 259,498 $ 765,971 $ 142,678 $ 127,467 $ 149,368
=====================================================================================
<CAPTION>
CASH
MANAGEMENT
SERIES
----------
<S> <C>
OPERATIONS:
Net investment income.................. $ 6,352
Net realized gain on investments....... --
Net realized foreign exchange gain
(loss) on other assets and
liabilities.......................... --
Change in unrealized appreciation/
depreciation of investments.......... --
Change in unrealized foreign exchange
gain/loss on other assets and
liabilities.......................... --
---------
Net increase (decrease) in net assets
resulting from operations............ 6,352
---------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income... (4,276)
Distributions from net realized gain on
investments.......................... (1)
---------
Total dividends and distributions paid
to shareholders...................... (4,277)
---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............. 452,279
Proceeds from shares issued for
reinvestment of dividends and
distributions........................ 4,277
Cost of shares repurchased............. (464,619)
---------
Net increase (decrease) in net assets
resulting from capital share
transactions......................... (8,063)
---------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................... (5,988)
NET ASSETS:
Beginning of year...................... 192,384
---------
End of year............................ $ 186,396
=========
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Undistributed net investment income.... $ 4,125 $ 4,015 $ 20,904 $ 7,061 $ 15,708 $ 14,593
====================================================================================
Shares issued and repurchased:
Sold................................. 9,225 13,759 2,592 1,316 4,635 2,832
Issued in reinvestment of dividends
and distributions.................. 1,770 465 2,579 870 1,506 1,689
Repurchased.......................... (10,651) (9,939) (6,775) (3,075) (8,535) (8,703)
-------------------------------------------------------------------------------------
Net increase (decrease)................ 344 4,285 (1,604) (889) (2,394) (4,182)
=====================================================================================
<CAPTION>
<S> <C>
Undistributed net investment income.... $ 6,351
Shares issued and repurchased:
Sold................................. 39,918
Issued in reinvestment of dividends
and distributions.................. 383
Repurchased.......................... (40,923)
---------
Net increase (decrease)................ (622)
=========
</TABLE>
See Notes to Financial Statements
---------------------
A-32
<PAGE> 37
- ---------------------
ANCHOR PATHWAY FUND
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: Anchor Pathway Fund (the
"Fund") is an entity of the type commonly known as a Massachusetts Business
Trust. Its Agreement and Declaration of Trust permits the issuance of an
unlimited number of shares ($.01 par value per share) of beneficial interest in
seven separate series, with shares of each series representing an interest in a
separate portfolio of assets and operating as a distinct fund. The Fund is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. Shares of the Fund are
offered only to Variable Separate Accounts, a separate account of Anchor
National Life Insurance Company which offers annuity contracts.
In the opinion of management of the Fund, the accompanying financial
statements contain all normal and recurring adjustments necessary for the fair
presentation of the financial position of the Funds at November 30, 1995, and
the results of its operations, the changes in its net assets and financial
highlights for the periods then ended.
2. SIGNIFICANT ACCOUNTING POLICIES: Following is a summary of significant
accounting policies consistently followed by the Fund 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. 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. Short-term
securities with 60 days or less to maturity are amortized to maturity based on
their cost to the Fund if acquired within 60 days of maturity or, if already
held by the Fund on the 60th day, are amortized to maturity based on the value
determined on the 61st day. Securities for which quotations are not readily
available are valued at fair value as determined in good faith under the
direction of the Fund's Trustees.
FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at
published rates on the following basis:
(i) market value of investment securities, other assets and liabilities -- at
the prevailing rate of exchange at the valuation date.
(ii) purchases and sales of investment securities, income and expenses -- at
the rate of exchange prevailing on the respective dates of such transactions.
Assets and liabilities denominated in foreign currencies and commitments under
forward foreign currency 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.
The Fund 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. Similarly, the Fund 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 gains and losses on other assets and liabilities and
change in unrealized foreign exchange gains and losses 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 Fund'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.
---------------------
A-33
<PAGE> 38
SECURITIES TRANSACTIONS, DIVIDENDS, INVESTMENT INCOME AND EXPENSES: As is
customary in the mutual fund industry, securities transactions are accounted for
on the date the securities are purchased or sold. 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 Fund is informed after the ex-dividend date. The Fund
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 Fund are allocated among the series based upon
relative net assets. In all other respects, expenses are charged to each series
as incurred on a specific identification basis.
The Fund records dividends and distributions to its shareholders on the
ex-dividend date.
STATEMENT OF POSITION 93-2: In accordance with the requirements of Statement of
Position 93-2 Determination, Disclosure, and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distributions by Investment
Companies, permanent book-tax differences relating to shareholder distributions
have been reclassified to paid-in-capital. Accordingly, 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 were not affected by this change.
For the year ended November 30, 1995, the reclassification arising from
book/tax differences resulted in increases (decreases) to the components of net
assets as follows, (dollars in thousands):
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED PAID
NET REALIZED NET INVESTMENT IN
GAIN/LOSS INCOME/LOSS CAPITAL
--------------------------------------------
<S> <C> <C> <C>
Growth Series.............................................................. $ (434) $ 174 $ 260
International Series....................................................... (2,648) 2,647 1
Growth-Income Series....................................................... 172 -- (172)
Asset Allocation Series.................................................... (26) 26 --
High-Yield Bond Series..................................................... (150) 150 --
U.S. Government/AAA-Rated Securities Series................................ (387) 386 1
Cash Management Series..................................................... (1) 1 --
</TABLE>
3. FEDERAL INCOME TAXES: It is the Fund's policy to continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income, including any net
realized gain on investments, to its shareholders. Therefore, no federal tax
provision is required.
Capital losses incurred after October 31 within the taxable year are deemed to
arise on the first business day of the Funds' next taxable year. Accordingly,
U.S. Government/AAA-Rated Securities Series, High-Yield Bond Series and Cash
Management Series incurred and will elect to defer net capital losses of
$317,498, $1,130,613 and $172 to the taxable year ended November 30, 1996. To
the extent these losses are used to offset future gains, it is probable that the
gains so offset will not be distributed.
At November 30, 1995 U.S. Government/AAA-Rated Securities Series and High
Yield Bond Series had net capital loss carryforwards of $1,491,040 and
$2,405,184 which are available to the extent provided in regulations to offset
future capital gains and will expire in 2003. To the extent that these
carryforward losses are used to offset capital gains, it is probable that the
gains so offset will not be distributed.
---------------------
A-34
<PAGE> 39
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities, including short-term securities at November 30, 1995 were as follows
(dollars in thousands):
<TABLE>
<CAPTION>
UNREALIZED
AGGREGATE AGGREGATE GAIN
UNREALIZED UNREALIZED (LOSS) COST OF
GAIN (LOSS) NET INVESTMENTS
---------------------------------------------------
<S> <C> <C> <C> <C>
Growth Series...................................................... $321,568 $(19,450) $302,118 $589,196
International Series............................................... 47,129 (12,173) 34,956 191,980
Growth-Income Series............................................... 244,006 (11,387) 232,619 643,202
Asset Allocation Series............................................ 24,193 (673) 23,520 129,172
High-Yield Bond Series............................................. 4,272 (2,528) 1,744 141,898
U.S. Government/AAA-Rated Securities Series........................ 5,482 (923) 4,559 125,604
Cash Management Series............................................. -- -- -- 102,630
</TABLE>
4. BUSINESS MANAGER AND INVESTMENT ADVISER: Anchor Investment Adviser, Inc.
(the "Business Manager"), an indirect wholly owned subsidiary of Anchor National
Life Insurance Company, pursuant to a business management agreement, manages the
business affairs and the administration of the Fund. For these services, the
Business Manager receives a monthly fee which is accrued daily based on the
average net assets of each series of the Fund. Except for the International
Series, the business manager fee accrues at the annual rate of .24% on that
portion of each series' average daily net assets not exceeding $30,000,000 and
.20% on that portion of the series' average daily net assets in excess of
$30,000,000. The business manager fee for the International Series accrues at
the annual rate of .24% on the series' average daily net assets.
Advisory fees paid to Capital Research and Management Company (the "Investment
Adviser") are based on the net assets of each series at the following annual
rates: .36% on that portion of each series' (except for the International
Series) average daily net assets not exceeding $30,000,000 and .30% on that
portion of the series' average net assets in excess of $30,000,000. The advisory
fee for the International Series accrues at the annual rate of .66% on that
portion of the series' average daily net assets not exceeding $60,000,000 and
.58% on that portion of the series' average daily net assets in excess of
$60,000,000.
The Fund pays no salaries or compensation to any of its officers, all of whom
are officers or employees of SunAmerica Asset Management Corp., an affiliate of
the Business Manager, or SunAmerica Inc., the ultimate parent of the Business
Manager.
An annual fee of $13,000, plus expenses, is paid to each non-interested
Trustee for attendance at meetings of the Trustees. The interested Trustees
receive no remuneration from the Fund.
5. PURCHASES AND SALES OF SECURITIES: Information with respect to purchases and
sales of long-term securities (dollars in thousands) for the year ended November
30, 1995, was as follows:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT/
ASSET AAA-RATED CASH
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION HIGH-YIELD SECURITIES MANAGEMENT
SERIES SERIES SERIES SERIES BOND SERIES SERIES SERIES
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases of portfolio securities........ $175,329 $35,003 $ 139,301 $71,686 $46,187 $59,362 $ --
Sales of portfolio securities............ 288,504 67,649 248,677 95,368 41,465 75,409 --
U.S. government securities included above
were as follows:
Purchases of U.S. government
securities............................. -- -- -- 7,633 10,681 56,837 --
Sales of U.S. government securities...... 3,039 -- -- 7,544 11,086 55,853 --
</TABLE>
---------------------
A-35
<PAGE> 40
- ---------------------
ANCHOR PATHWAY FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
NET REALIZED TOTAL DIVIDENDS DIVIDENDS
NET ASSET NET & UNREALIZED FROM DECLARED FROM NET NET ASSET
VALUE INVEST- GAIN (LOSS) INVEST- FROM NET REALIZED VALUE
PERIOD BEGINNING MENT ON MENT INVESTMENT GAIN ON END OF TOTAL
ENDED OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INVESTMENTS PERIOD RETURN
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Series
11/30/91 $ 21.01 $ 0.37 $ 5.25 $ 5.62 $(0.77) $ (0.29) $ 25.57 26.80%
11/30/92 25.57 0.23 5.21 5.44 (0.01) (0.04) 30.96 21.29
11/30/93 30.96 0.24@ 5.32 5.56 (0.23) (0.53) 35.76 18.26
11/30/94 35.76 0.19@ 1.04 1.23 (0.25) (2.66) 34.08 3.33
11/30/95 34.08 0.25@ 12.02 12.27 (0.20) (2.65) 43.50 37.93
International Series
11/30/91 9.68 0.16 0.38 0.54 (0.09) -- 10.13 5.59
11/30/92 10.13 0.15 (0.12) 0.03 (0.14) (0.02) 10.00 0.31
11/30/93 10.00 0.18@ 2.54 2.72 (0.14) (0.01) 12.57 27.41
11/30/94 12.57 0.22@ 0.81 1.03 (0.12) (0.22) 13.26 8.17
11/30/95 13.26 0.26@ 1.11 1.37 (0.23) (0.50) 13.90 11.18
Growth-Income Series
11/30/91 20.71 0.73 3.62 4.35 (0.87) (0.40) 23.79 21.14
11/30/92 23.79 0.64 3.12 3.76 (0.72) (0.58) 26.25 16.02
11/30/93 26.25 0.71@ 2.44 3.15 (0.63) (0.54) 28.23 12.34
11/30/94 28.23 0.69@ (0.14) 0.55 (0.76) (1.56) 26.46 2.00
11/30/95 26.46 0.71@ 7.46 8.17 (0.76) (2.23) 31.64 33.47
Asset Allocation Series
11/30/91 10.62 0.56 1.32 1.88 (0.60) (0.02) 11.88 18.66
11/30/92 11.88 0.50 1.10 1.60 (0.53) (0.05) 12.90 13.80
11/30/93 12.90 0.63@ 0.72 1.35 (0.46) (0.13) 13.66 10.76
11/30/94 13.66 0.58@ (0.69) (0.11) (0.62) (0.31) 12.62 (0.84)
11/30/95 12.62 0.55@ 3.16 3.71 (0.68) (0.38) 15.27 31.01
High-Yield Bond Series
11/30/91 12.08 1.19 2.16 3.35 (1.52) -- 13.91 29.25
11/30/92 13.91 1.20 0.65 1.85 (1.16) -- 14.60 14.06
11/30/93 14.60 1.27@ 1.02 2.29 (1.22) -- 15.67 16.44
11/30/94 15.67 1.24@ (1.88) (0.64) (1.49) (0.49) 13.05 (4.70)
11/30/95 13.05 1.26@ 0.99 2.25 (1.56) (0.13) 13.61 18.97
U.S. Government/AAA-Rated Securities Series
11/30/91 11.78 0.74 0.78 1.52 (0.81) -- 12.49 13.59
11/30/92 12.49 0.85 0.31 1.16 (0.78) -- 12.87 9.84
11/30/93 12.87 0.95@ 0.61 1.56 (0.91) (0.18) 13.34 12.58
11/30/94 13.34 0.90@ (1.43) (0.53) (1.11) (0.17) 11.53 (4.17)
11/30/95 11.53 0.86@ 0.85 1.71 (1.20) (0.06) 11.98 15.95
Cash Management Series
11/30/91 11.78 0.60 0.07 0.67 (0.57) -- 11.88 5.85
11/30/92 11.88 0.40 (0.03) 0.37 (0.75) -- 11.50 3.26
11/30/93 11.50 0.29@ -- 0.29 (0.39) -- 11.40 2.57
11/30/94 11.40 0.40@ -- 0.40 (0.33) -- 11.47 3.56
11/30/95 11.47 0.61@ 0.01 0.62 (0.44) -- 11.65 5.53
<CAPTION>
NET RATIO OF NET
ASSETS RATIO OF INVESTMENT
END OF EXPENSES INCOME PORTFOLIO
PERIOD PERIOD TO AVERAGE TO AVERAGE TURNOVER
ENDED (000'S) NET ASSETS NET ASSETS RATE
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
11/30/91 $458,719 0.62% 1.51% 12.30%
11/30/92 644,060 0.56 0.88 14.31
11/30/93 735,400 0.55 0.71 21.99
11/30/94 712,602 0.55 0.56 33.79
11/30/95 897,275 0.55 0.65 23.72
11/30/91 50,654 1.40 2.20 14.30
11/30/92 85,919 1.19 1.88 21.04
11/30/93 192,162 1.12 1.62 22.56
11/30/94 259,498 1.04 1.64 21.68
11/30/95 228,134 1.05 1.95 16.79
11/30/91 584,668 0.59 3.45 21.20
11/30/92 777,448 0.56 2.88 18.81
11/30/93 862,716 0.55 2.60 29.22
11/30/94 765,971 0.55 2.54 32.97
11/30/95 882,143 0.55 2.52 18.81
11/30/91 78,271 0.77 5.50 16.50
11/30/92 134,100 0.63 4.84 21.86
11/30/93 166,555 0.60 4.70 22.66
11/30/94 142,678 0.59 4.47 48.53
11/30/95 153,608 0.59 4.04 53.58
11/30/91 117,714 0.69 10.51 24.40
11/30/92 147,951 0.62 9.40 75.27
11/30/93 190,515 0.59 8.43 59.03
11/30/94 127,467 0.59 8.76 44.97
11/30/95 146,590 0.59 9.66 31.64
11/30/91 192,330 0.66 7.96 30.90
11/30/92 230,798 0.59 7.32 47.58
11/30/93 228,569 0.58 7.19 9.14
11/30/94 149,368 0.58 7.42 16.95
11/30/95 134,938 0.59 7.49 43.43
11/30/91 197,942 0.64 5.59 --
11/30/92 203,548 0.61 3.21 --
11/30/93 192,384 0.58 2.59 --
11/30/94 186,396 0.57 3.52 --
11/30/95 100,872 0.58 5.32 --
</TABLE>
- ---------------
@ Calculated based upon average shares outstanding
See Notes to Financial Statements
---------------------
A-36
<PAGE> 41
- ---------------------
ANCHOR PATHWAY FUND
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholder of Anchor Pathway Fund
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolios, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Growth Series, the
International Series, the Growth-Income Series, the Asset Allocation Series, the
High-Yield Bond Series, the U.S. Government/AAA-Rated Securities Series and the
Cash Management Series (constituting the Anchor Pathway Fund, hereafter referred
to as the "Fund") at November 30, 1995, the results of each of their operations
for the year then ended, the changes in each of their net assets for each of the
two years in the period then ended and the financial highlights for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
January 15, 1996
---------------------
A-37
<PAGE> 42
Growth Series
<TABLE>
<CAPTION>
Growth Series S&P 500
-------------- -------
<S> <C> <C>
11/86 13,877 12,773
11/87 13,275 12,164
11/88 16,173 15,000
11/89 24,058 19,629
11/90 21,990 18,925
11/91 27,884 22,786
11/92 33,821 27,008
11/93 39,995 29,731
11/94 41,326 30,031
11/95 57,001 41,155
</TABLE>
Growth Series
Average Annual Total Return as of 11/30/95
1-year 37.93%
5-year 20.98%
10-year 19.01%
- ---------------------
COMPARISONS: PORTFOLIOS VS. INDEXES
The following graphs compare the performance of a $10,000
investment in certain of the Anchor Pathway Fund portfolios to a
$10,000 investment in a securities index. Each index has been
chosen by Capital Research and Management Company (CRMC), the
portfolios' money manager, as an appropriate comparison.
THESE GRAPHS COMPARE THE PERFORMANCE OF THE PORTFOLIOS AT THE
ANCHOR PATHWAY FUND LEVEL AND INCLUDE ALL FUND EXPENSES BUT NO
INSURANCE COMPANY EXPENSES AND NO CONTINGENT DEFERRED SALES
CHARGE. NO EXPENSES ARE DEDUCTED FROM THE PERFORMANCE OF THE
INDEXES AND ALL DIVIDENDS ARE ASSUMED TO BE REINVESTED.
------------------------------------------------------------------
The graphs represent past performance, which is not indicative of
future results.
---------------------
A-38
<PAGE> 43
International Series
<TABLE>
<CAPTION>
International
Series MSCI EAFE
------------- ---------
<S> <C> <C>
11/90 9,680 9,438
11/91 10,221 10,310
11/92 10,252 9,508
11/93 13,062 11,852
11/94 14,129 13,648
11/95 15,709 14,724
</TABLE>
International Series
Average Annual Total Return as of 11/30/95
1-year 11.18%
5-year 10.17%
10-year N/A
Since Inception (5/9/90) 8.43%
------------------------------------------------------------------
Growth-Income Series
<TABLE>
<CAPTION>
Growth-Income
Series S&P 500
------------- -------
<S> <C> <C>
11/86 13,210 12,773
11/87 12,075 12,164
11/88 14,791 15,000
11/89 19,663 19,629
11/90 18,175 18,925
11/91 22,018 22,786
11/92 25,546 27,008
11/93 28,697 29,731
11/94 29,273 30,031
11/95 39,071 41,155
</TABLE>
Growth-Income Series
Average Annual Total Return as of 11/30/95
1-year 33.47%
5-year 16.54%
10-year 14.60%
------------------------------------------------------------------
The graphs represent past performance, which is not indicative of
future results.
---------------------
A-39
<PAGE> 44
Asset Allocation Series
<TABLE>
<CAPTION>
Asset Salomon Broad
Allocation Investment
Series S&P 500 Grade Bond Index
---------- ------- ----------------
<S> <C> <C> <C>
11/89 11,000 11,530 11,078
11/90 10,827 11,116 11,926
11/91 12,847 13,384 13,642
11/92 14,619 15,863 14,884
11/93 16,192 17,463 16,522
11/94 16,056 17,639 16,020
11/95 21,035 24,172 18,873
</TABLE>
Asset Allocation Series
Average Annual Total Return as of 11/30/95
1-year 31.01%
5-year 14.21%
10-year N/A
Since Inception (3/31/89) 11.96%
------------------------------------------------------------------
High-Yield Bond Series
<TABLE>
<CAPTION> Salomon Broad
High-Yield Salomon Investment
Bond Series High Yield Grade Bond
----------- ---------- -------------
<S> <C> <C> <C>
11/86 12,264 11,940 11,852
11/87 12,628 12,375 12,053
11/88 14,637 14,469 13,169
11/89 15,935 14,439 15,042
11/90 15,939 12,991 16,191
11/91 20,601 18,671 18,524
11/92 23,497 22,252 20,210
11/93 27,359 26,826 22,433
11/94 26,073 25,694 21,751
11/95 31,018 32,887 25,623
</TABLE>
High-Yield Bond Series
Average Annual Total Return as of 11/30/95
1-year 18.97%
5-year 14.24%
10-year 11.99%
------------------------------------------------------------------
The graphs represent past performance, which is not indicative of
future results.
---------------------
A-40
<PAGE> 45
U.S. Government/AAA-Rated Securities Series
<TABLE>
<CAPTION>
U.S. Government/
AAA-Rated Salomon Brothers
Securities Treasury/ Mortgage
---------------- ------------------
<S> <C> <C>
11/86 12,001 11,820
11/87 11,620 12,025
11/88 12,782 13,084
11/89 14,289 14,952
11/90 15,310 16,157
11/91 17,391 18,405
11/92 19,103 20,029
11/93 21,506 22,125
11/94 20,609 21,492
11/95 23,897 25,174
</TABLE>
U.S. Government/AAA-Rated Securities Series
Average Annual Total Return as of 11/30/95
1-year 15.95%
5-year 9.31%
10-year 9.10%
------------------------------------------------------------------
The graphs represent past performance, which is not indicative of
future results.
---------------------
A-41
