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DEAR ANCHOR PATHWAY INVESTOR:
We are pleased to report that Anchor Pathway Fund -- which
serves as the underlying investment vehicle for the American
Pathway Variable Annuity -- posted another year of solid gains.
Fiscal 1996, representing the 12 months ended November 30, marks
the second consecutive year of positive results for every series
in the fund. The following commentary on the economy in general
and the investment activities of each of the series has been
provided by Capital Research and Management Company (CRMC), the
investment adviser to the Anchor Pathway Fund.
ECONOMIC OVERVIEW
Financial markets around the world continued to advance as
investors surveying the global landscape were encouraged by
positive economic growth, mild inflation and favorable interest
rates. Stock and bond prices were further bolstered by high cash
flows into mutual funds, which by September of 1996 had already
exceeded the previous year's record inflow.
U.S. stocks showed particular strength as they continued their
astonishing march upward. On top of an already exuberant market,
equity prices over the 12-month period rose 27.9%, as measured
by Standard & Poor's 500 Composite Index. This year's climb is
notable for its concentrated intensity: nearly two-thirds of
that gain came in the final quarter of the year. As a cautionary
note, CRMC would add that this type of "froth" might suggest the
possibility of a correction in a market that has seen an
unprecedented 73 months without a correction of 10% or more.
Meanwhile, returns on bonds showed a more modest increase of
6.0%, as measured by the Salomon Brothers Broad Investment-Grade
Index, reflecting the uncertainty in the first half of the year
about the pace of economic growth in the U.S.
While CRMC continually monitors overall market levels, the
investment adviser's primary focus continues to be on finding
good values among individual securities, even in expensive
markets. Here are brief comments on the investment activities of
each series:
The GROWTH SERIES rose 14.0% for the 12 months ended November
30. A brief market dip from May through July, caused in part by
concerns about the direction of interest rates, produced severe
losses among many technology stocks held in the series. That
having been said, several sizable investments in this area
actually showed significant price gains over the period. These
included the series' largest holding, semiconductor giant Intel
Corp. (+108.4%), and Oracle Systems Corp. (+62.0%), a leading
developer of database software, which at 2.5% of net assets was
the series' fifth-largest holding. Results were also hampered
somewhat by media and entertainment stocks, which had a
disappointing 1996. This sector has made positive contributions
to the series in the past, and CRMC believes it can return to
winning form again soon. Areas of strength for the series
included retailers and leisure & tourism companies, many of
which benefited from an increase in consumer spending. At fiscal
year-end, 91.6% of the series' assets was invested in 118
companies, with the remaining 8.4% in cash and equivalents as a
buying reserve.
The INTERNATIONAL SERIES posted a gain of 20.0% for fiscal
1996, as optimism about global economic conditions prevailed. As
of November 30, every developed market in which the series was
invested finished on the plus side, measured in local currency.
(Measured in U.S. dollars, only Japan declined.) In Europe --
where more than half the series' assets is invested -- monetary
measures taken by many governments began at last to have their
desired effect and most markets posted impressive double-digit
gains.
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Elsewhere, Japan's slow recovery was accompanied by an uncertain
political environment and a steady decline in the yen. Stock
prices slid 4.4% in dollar terms; CRMC used this opportunity to
add significantly to the series' holdings in that country.
Although the series is still relatively underweighted in
Japanese stocks, they now account for 7.2% of net assets, up
from 6.6% a year ago. One of the series' largest industry
concentration is in telecommunications stocks, many of which
benefited from consumer demand for increasingly sophisticated
services. Several of these companies accounted for the series'
largest price gains over the 12-month period, including Telecom
Italia and its parent company STET, which increased 66.5% and
56.4%, respectively; Telefonica de Espana, which rose 59.0%; and
Telecomunicacoes Brasileiras (Telebras) increased 33.9%, for the
period it was held by the series.
The GROWTH-INCOME SERIES increased 21.9% for the year. The
series, which emphasizes established companies with the
potential for rising dividends, was well served by a market
surge driven in large part by blue chip stocks. Several of the
series' largest gainers were chemical companies that improved
profits by expanding product lines or tapping into new markets.
These included two of the series' holdings, Monsanto Co.
(+73.6%) and Praxair Inc. (+67.0%). In other areas, rising fuel
costs led to price gains for energy companies. The series also
benefited from its sizable investments in health care, banking
and insurance companies, many of which experienced substantial
increases during the year. As a cautionary measure, CRMC added
to its cash position during this last four-month market rise. As
of November 30, about 88.0% of net assets is invested in stocks,
with 12.0% in cash and other assets.
The ASSET ALLOCATION SERIES posted a gain of 19.3% for the
year. The series has the flexibility to participate in market
cycles in all three major asset classes, with holdings in
carefully selected, high-quality common stocks, bonds and money
market instruments. On November 30, the series held 63.1% in
stocks, 28.5% in bonds and 8.4% in cash and equivalents. The
equity portion, which is similar to a conservative growth and
income fund, concentrated on typically stable industries, such
as financial services and health care. Efforts to streamline
operations in these areas have translated into improved profits
for many companies, and a number of the series' largest
investments were also among the top gainers. These included
Citicorp (+54.4%), NationsBank Corp. (+45.2%), and
pharmaceutical concerns Warner-Lambert Co. (+60.2%) and Pfizer
Inc. (+54.5%). Together, these four investments account for more
than 6.0% of net assets. On the fixed-income side, declining
long-term interest rates in the second half of the year boosted
bond prices and made significant contributions to the series'
overall results.
The HIGH-YIELD BOND SERIES rose 14.0% for the year. The stock
market's continued strength created a favorable environment for
lower rated, higher risk bonds. High-yield securities provided
substantially higher returns than their investment-grade
counterparts over the period. In many cases, rising equity
prices and increased merger activity provided highly leveraged
companies with an infusion of capital. Their stronger financial
positions and healthy growth in turn boosted the credit quality
and value of their bonds. In a year which also set a record for
the number of new high-yield issues, the task of finding
promising, well-priced companies with good long-term prospects
became even more challenging. CRMC's analysts take a
research-intensive approach and continue to uncover attractive
investment opportunities around the world among diverse
industries such as telecommunications, forest products,
broadcasting and energy. At fiscal year-end, the series included
about 84.4% of assets in U.S. corporate bonds, 1.1% in non-U.S.
securities and 6.9% in U.S. Treasuries. About 7.5% was held in
the form of cash and equivalents.
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The U.S. GOVERNMENT/AAA-RATED SECURITIES SERIES rose 5.5%
through November 30, recovering ground lost early in the year.
Bond prices, which had dipped sharply amid speculation that the
Federal Reserve Board would take steps to temper economic
growth, rose again as interest rate hikes failed to materialize.
(Bond prices and interest rates generally move in opposite
directions.) Despite periods of dramatic fluctuations, yields on
10-year Treasury bonds ended the fiscal year only slightly
higher than where they began. The series is invested in
top-rated fixed-income obligations, the majority of which are
backed by the full faith and credit of the U.S. government for
the timely payment of principal and interest. During the year,
CRMC increased investments in mortgage-backed securities to
32.9%, which provided a yield advantage and good total return.
The series also held about 47.0% in Treasury issues, with the
balance in a combination of corporate and agency issues and
short-term instruments.
The CASH MANAGEMENT SERIES had a 4.9% return for the 12 months
ended November 30. The fiscal year began with a slight decline
in short-term interest rates, as the Federal Reserve Board
lowered the federal funds rates -- the rate that banks charge
each other for overnight loans -- in December and January. Rates
began inching upward in February, reflecting concern that the
economy might be overheating. The series maintains a
high-quality orientation by concentrating its assets in
top-grade commercial paper. All its money market securities
carry the highest rating from Standard & Poor's or Moody's. The
series offers an alternative to investors who wish to
temporarily reduce their stock or bond investments, or can be
used as a base for making regular investments into other series.
The seven series in the Anchor Pathway Fund offer you a wide
range of investment options to help you reach your long-term
financial goals. CRMC remains committed to helping you achieve
these goals by striving to find the best values that financial
markets have to offer.
We look forward to reporting to you again in six months.
Sincerely,
Eli Broad
Chairman, President and Chief Executive Officer,
Anchor National Life Insurance Company
January 15, 1997
-------------------------------
Performance figures quoted are for the Anchor Pathway Fund;
therefore, they are not net of the fees and charges associated
with the variable annuity.
Investments in stocks and bonds are subject to risk, including
stock market and interest rate fluctuations. Investments in
non-U.S. stocks and bonds are subject to additional risks,
including political and social instability, differing securities
regulations and accounting standards and limited public
information. High-yield bonds tend to be subject to greater
price swings than higher-rated bonds and, of course, payment of
interest and principal is not assured. Mortgage-backed
securities are subject to prepayment, which can result in
reinvestment of principal at lower yields. Money market
instruments generally offer stability and income, but an
investment in these securities, like investments in the other
series, is not guaranteed.
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ANCHOR PATHWAY FUND
GROWTH SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1996
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 90.9% SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 35.2%
Data Processing & Reproduction -- 10.2%
3Com Corp.+.......................................................... 50,000 $ 3,756
Adobe Systems, Inc. ................................................. 250,000 9,875
Autodesk, Inc. ...................................................... 50,000 1,400
Compuserve, Inc.+.................................................... 50,000 525
Danka Business Systems PLC ADR....................................... 25,000 1,050
Data General Corp.+.................................................. 100,000 1,463
Dell Computer Corp.+................................................. 13,600 1,382
Digital Equipment Corp.+............................................. 135,000 4,961
Mentor Graphics Corp.+............................................... 120,000 1,170
Oracle Systems Corp.+................................................ 412,500 20,213
Silicon Graphics, Inc.+.............................................. 539,500 10,723
Solectron Corp.+..................................................... 230,000 13,455
Structural Dynamics Research Corp.+.................................. 150,000 2,906
Sybase, Inc.+........................................................ 400,000 7,050
Tandem Computers, Inc.+.............................................. 250,000 3,406
Electrical & Electronics -- 1.1%
Ericsson (L.M.) Telephone Co., Class B ADR........................... 158,000 4,878
General Instrument Corp.+............................................ 144,300 3,193
Nokia Corp. ADR...................................................... 20,000 1,122
Electronic Components -- 21.8%
Adaptec, Inc.+....................................................... 420,000 15,645
Analog Devices, Inc.+................................................ 515,000 16,544
Bay Networks, Inc.+.................................................. 165,000 4,414
EMC Corp.+........................................................... 200,000 6,450
Intel Corp. ......................................................... 427,600 54,252
Linear Technology Corp. ............................................. 150,000 7,069
LSI Logic Corp.+..................................................... 305,000 9,188
Maxim Integrated Products, Inc.+..................................... 120,000 5,565
Microchip Technology, Inc.+.......................................... 75,000 3,581
National Semiconductor Corp.+........................................ 125,000 3,062
Newbridge Networks Corp. ADR+........................................ 100,000 2,975
Park Electrochemical Corp. .......................................... 187,200 4,259
Rogers Corp.+........................................................ 109,200 3,003
SCI Systems, Inc.+................................................... 127,600 6,731
Texas Instruments, Inc. ............................................. 345,600 22,032
Western Digital Corp.+............................................... 39,100 2,102
Xilinx, Inc.+........................................................ 230,000 10,091
Electronic Instruments -- 0.5%
Applied Materials, Inc.+............................................. 100,000 3,813
Energy Equipment -- 1.6%
Reading & Bates Corp.+............................................... 150,000 4,350
Schlumberger Ltd. ................................................... 79,500 8,268
---------
285,922
---------
CONSUMER GOODS -- 5.6%
Beverages & Tobacco -- 1.3%
PepsiCo, Inc. ....................................................... 80,000 2,390
Philip Morris Cos., Inc. ............................................ 80,000 8,250
</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER GOODS (continued)
Health & Personal Care -- 2.4%
Alpha Beta Technology, Inc.+......................................... 70,000 $ 647
Forest Labs, Inc.+................................................... 81,000 3,139
Genetics Institute, Inc.+............................................ 80,000 5,440
Omnicare, Inc. ...................................................... 230,000 7,015
Paragon Trade Brands, Inc.+.......................................... 45,000 1,249
Pharmacia & Upjohn, Inc. ............................................ 58,000 2,240
Recreation & Other Consumer Products -- 1.9%
Duracell International, Inc. ........................................ 25,000 1,666
Electronic Arts+..................................................... 15,300 491
Hasbro, Inc. ........................................................ 45,000 1,851
Mattel, Inc. ........................................................ 370,308 11,433
---------
45,811
---------
ENERGY -- 1.0%
Energy Sources -- 0.5%
Murphy Oil Corp. .................................................... 80,000 4,080
Utilities: Electric, Gas & Water -- 0.5%
Columbia Gas Systems, Inc. .......................................... 59,400 3,839
---------
7,919
---------
FINANCE -- 5.7%
Banking -- 1.4%
Charter One Financial, Inc. ......................................... 73,500 3,197
Commerce Bancshares, Inc. ........................................... 127,286 5,728
Norwest Corp. ....................................................... 50,000 2,338
Financial Services -- 0.9%
Federal National Mortgage Association................................ 180,000 7,425
Insurance -- 3.4%
Everest Reinsurance Holdings, Inc. .................................. 40,000 1,125
EXEL Ltd. ........................................................... 290,000 10,984
NAC Reinsurance Corp. ............................................... 55,000 2,007
Transatlantic Holdings, Inc. ........................................ 110,000 8,759
Trenwick Group, Inc. ................................................ 97,400 4,748
---------
46,311
---------
MATERIALS -- 2.9%
Agricultural Services -- 1.2%
Pioneer Hi-Bred International, Inc. ................................. 140,000 9,765
Chemicals -- 1.7%
Air Products & Chemicals, Inc. ...................................... 25,000 1,737
Great Lakes Chemical Corp. .......................................... 40,000 2,145
Valspar Corp. ....................................................... 170,000 9,754
---------
23,401
---------
SERVICES -- 39.7%
Broadcasting & Publishing -- 11.7%
Adelphia Communications Corp.+....................................... 205,000 1,358
BHC Communications, Inc., Class A+................................... 55,821 5,701
Cablevision Systems Corp., Class A+.................................. 70,000 2,109
Comcast Corp., Class A............................................... 127,500 2,135
Gaylord Entertainment Co., Class A................................... 240,000 5,130
Marvel Entertainment Group, Inc.+.................................... 44,600 123
News Corp., Ltd. ADR................................................. 680,000 14,450
Tele-Communications Liberty Media Group +............................ 282,881 7,072
Tele-Communications TCI Group, Series A+............................. 440,525 5,947
</TABLE>
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A-2
<PAGE> 6
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Broadcasting & Publishing (continued)
Time Warner, Inc. ................................................... 821,250 $ 33,466
U.S. West Media Group+............................................... 50,000 956
Viacom, Inc., Class B+............................................... 445,000 16,799
Business & Public Services -- 14.8%
ADT Ltd.+............................................................ 100,000 2,050
Air & Water Technologies Corp., Class A+............................. 165,000 1,021
America Online, Inc.+................................................ 551,500 19,509
Apria Healthcare Group, Inc.+........................................ 150,000 2,700
Avery Dennison Corp. ................................................ 90,000 6,356
Columbia/HCA Healthcare Corp. ....................................... 133,125 5,325
CUC International, Inc.+............................................. 165,000 4,352
Ecolab, Inc. ........................................................ 100,000 3,887
Electronic Data Systems Corp. ....................................... 175,000 8,466
Federal Express Corp.+............................................... 350,000 15,487
FHP International Corp.+............................................. 174,600 6,264
Loewen Group, Inc. .................................................. 50,000 2,019
Manpower, Inc. ...................................................... 41,400 1,351
Oxford Health Plans, Inc.+........................................... 276,000 16,008
Pacificare Health Systems, Inc., Class B+............................ 35,000 2,905
United Healthcare Corp. ............................................. 305,000 13,153
USA Waste Services, Inc.+............................................ 50,000 1,613
Value Health, Inc.+.................................................. 50,000 906
WMX Technologies, Inc. .............................................. 200,000 7,200
Leisure & Tourism -- 6.0%
Carnival Corp., Class A.............................................. 50,000 1,581
Disney (Walt) Co. ................................................... 400,000 29,500
Harrah's Entertainment, Inc.+........................................ 210,000 3,728
Host Marriott Corp.+................................................. 500,000 7,625
Marriott International, Inc. ........................................ 110,000 6,132
Merchandising -- 4.0%
Barnes & Noble, Inc.+................................................ 204,400 6,388
Circuit City Stores, Inc. ........................................... 270,000 9,011
Consolidated Stores Corp.+........................................... 99,100 3,667
Home Shopping Network, Inc.+......................................... 285,000 3,206
Limited, Inc. ....................................................... 50,000 900
Spiegel, Inc., Class A............................................... 366,600 3,162
Staples, Inc.+....................................................... 112,500 2,222
Wal-Mart Stores, Inc. ............................................... 150,000 3,825
Telecommunications -- 1.1%
AirTouch Communications, Inc.+....................................... 50,000 1,281
MCI Communications Corp. ............................................ 200,000 6,100
United States Cellular Corp.+........................................ 52,000 1,456
Transportation: Airlines -- 2.1%
AMR Corp.+........................................................... 70,000 6,387
Delta Air Lines, Inc. ............................................... 10,000 753
Southwest Airlines Co. .............................................. 405,000 10,024
---------
322,766
---------
OTHER COMMON STOCK -- 0.8%........................................... 6,881
---------
TOTAL COMMON STOCK (cost $463,354)................................... 739,011
---------
</TABLE>
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A-3
<PAGE> 7
<TABLE>
<CAPTION>
VALUE
PREFERRED STOCK -- 0.7% SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 0.7%
Broadcasting & Publishing -- 0.7%
News Corp., Ltd. ADR (cost $2,314)................................... 340,000 $ 5,865
---------
TOTAL INVESTMENT SECURITIES (cost $465,668).......................... 744,876
---------
<CAPTION>
PRINCIPAL
AMOUNT
SHORT-TERM SECURITIES -- 7.1% (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 7.1%
Associates Corp. of North America 5.38% due 12/2/96.................. $ 5,300 5,299
General Electric Capital Corp. 5.31% due 1/8/97...................... 9,560 9,506
General Electric Capital Corp. 5.31% due 1/9/97...................... 6,000 5,966
General Electric Capital Corp. 5.75% due 12/2/96..................... 3,280 3,279
Heinz (H.J.) Co. 5.25% due 12/12/96.................................. 5,800 5,791
Heinz (H.J.) Co. 5.25% due 12/30/96.................................. 10,600 10,555
Lucent Technologies, Inc. 5.24% due 12/18/96......................... 6,000 5,985
Lucent Technologies, Inc. 5.25% due 12/17/96......................... 11,700 11,673
---------
TOTAL SHORT-TERM SECURITIES (cost $58,054)........................... 58,054
---------
TOTAL INVESTMENTS --
(cost $523,722) 98.7% 802,930
Other assets less liabilities -- 1.3 10,234
----- ---------
NET ASSETS -- 100.0% $ 813,164
===== =========
</TABLE>
-----------------------------
+ Non-income producing securities
ADR - American Depositary Receipt
See Notes to Financial Statements
- ---------------------
A-4
<PAGE> 8
[TRIANGLE]
- ---------------------
ANCHOR PATHWAY FUND
INTERNATIONAL SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1996
<TABLE>
<CAPTION>
VALUE
COMMON STOCK, PREFERRED STOCK & WARRANTS -- 89.9% SHARES (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUSTRALIA -- 6.4%
Australia & New Zealand Bank Group (Finance)....................... 978,309 $ 6,426
Coca-Cola Amatil Ltd. (Consumer Goods)#............................ 260,716 2,945
News Corp., Ltd. Preferred ADR (Services).......................... 33,300 575
News Corp., Ltd. ADR (Services).................................... 66,600 1,415
Western Mining Corp. Holdings Ltd. ADR (Materials)................. 738,326 4,687
---------
16,048
---------
BERMUDA -- 0.8%
Mandarin Oriental (Services)....................................... 1,328,905 2,033
---------
CANADA -- 7.8%
Bank Nova Scotia Halifax (Finance)................................. 103,400 3,581
Four Seasons Hotels, Inc. (Services)............................... 14,700 307
Imasco Ltd. (Consumer Goods)....................................... 232,000 5,763
Northern Telecom Ltd. (Services)................................... 94,000 6,180
Royal Bank of Canada (Finance)..................................... 72,000 2,673
Teck Corp. Class B (Capital Equipment)............................. 40,000 946
---------
19,450
---------
FINLAND -- 3.1%
Nokia (AB) OY Corp. Series A (Multi-industry)...................... 117,000 6,491
Nokia (AB) OY Corp. Series K (Multi-industry)...................... 20,000 1,103
---------
7,594
---------
FRANCE -- 5.2%
L'Air Liquide (Materials).......................................... 15,400 2,456
Michelin SA registered (Capital Equipment)......................... 84,000 4,308
Moet-Hennessy Louis Vuitton (Consumer Goods)....................... 3,300 836
Pathe (Services)+.................................................. 18,500 4,321
Total SA, Series B (Energy)........................................ 13,876 1,109
---------
13,030
---------
GERMANY -- 4.9%
Bayerische Motoren Werke AG (Consumer Goods)....................... 6,072 3,936
Bayerische Motoren Werke AG NV Preferred (Consumer Goods).......... 2,604 1,192
Daimler-Benz AG (Consumer Goods)+.................................. 24,200 1,580
Mannesmann AG (Capital Equipment).................................. 13,300 5,547
---------
12,255
---------
HONG KONG -- 7.6%
Hong Kong Electric Holdings (Energy)............................... 1,032,000 3,310
HSBC Holdings PLC (Finance)........................................ 154,800 3,224
Hutchison Whampoa Ltd. (Multi-industry)............................ 1,350,000 10,432
Television Broadcasting Ltd. (Services)............................ 497,000 1,909
---------
18,875
---------
IRELAND -- 1.4%
Independent Newspapers (Services).................................. 394,764 2,024
Irish Life PLC (Finance)........................................... 303,633 1,404
---------
3,428
---------
</TABLE>
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A-5
<PAGE> 9
<TABLE>
<CAPTION>
VALUE
COMMON STOCK, PREFERRED STOCK & WARRANTS (continued) SHARES (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
ITALY -- 3.7%
STET (Services).................................................... 120,000 $ 510
STET Risp (Services)............................................... 240,000 738
Telecom Italia Mobile SPA (Services)............................... 3,346,050 7,869
Telecom Italia Mobile SPA-Savings Shares (Services)................ 64,800 86
Telecom Italia SpA Risp (Services)................................. 64,800 119
---------
9,322
---------
JAPAN -- 7.2%
Amway Japan Ltd. ADR (Consumer Goods).............................. 36,000 671
Banyu Pharm (Services)............................................. 105,000 1,346
Kawasaki Steel Corp. (Materials)................................... 580,000 1,818
Mitsubishi Corp. (Consumer Goods).................................. 65,000 753
Sankyo Co., Ltd. (Consumer Goods).................................. 260,000 6,962
Sony Corp. (Consumer Goods)........................................ 22,000 1,408
Suzuki Motor Corp. (Consumer Goods)................................ 179,000 1,870
Toyota Motor Corp. (Consumer Goods)................................ 115,000 3,140
---------
17,968
---------
KOREA -- 1.3%
Hanil Bank (Finance)............................................... 96,580 638
Korea Electric Power Corp. (Energy)................................ 39,000 1,247
Korea Electric Power Corp. ADR (Energy)............................ 26,000 458
Korea First Bank (Finance)+........................................ 105,000 608
Korea Mobile Telecommunications Corp. (Services)................... 350 354
---------
3,305
---------
LUXEMBOURG -- 0.6%
Safra Republic Holdings, Inc. (Finance)............................ 10,000 1,360
---------
MEXICO -- 1.9%
Cifra SA de Cv-Series C (Services)+................................ 195,500 270
Grupo Financiero Banamex-Accival SA de Cv-Series B (Finance)+...... 324,000 639
Grupo Financiero Banamex-Accival SA de Cv-Series L (Finance)+...... 26,406 48
Grupo Televisa SA de Cv ADR (Services)+............................ 35,000 954
Telefonos de Mexico SA ADR (Services).............................. 95,200 2,892
---------
4,803
---------
NETHERLANDS -- 5.7%
ABN Amro Holdings NV (Finance)..................................... 85,546 5,542
International Nederlanden Warrants 3/15/01 (Finance)+.............. 300,000 2,055
Koninklijke PTT Nederland NV (Services)............................ 20,000 749
Philips Electronics (Consumer Goods)............................... 76,000 3,072
Vereenigde Ned Uitgevers (Services)................................ 130,000 2,654
---------
14,072
---------
NEW ZEALAND -- 1.0%
Brierley Investment Ltd. (Multi-industry).......................... 2 0
Carter Holt Harvey Ltd. (Materials)................................ 1 0
Telecom Corp. of New Zealand (Services)............................ 405,280 2,136
Telecom Corp. of New Zealand ADR (Services)........................ 4,600 387
---------
2,523
---------
NORWAY -- 3.0%
Orkla AS (Multi-industry).......................................... 110,000 7,336
---------
SPAIN -- 3.7%
Banco de Santander ADR (Finance)................................... 1,500 82
Banco de Santander SA (Finance).................................... 55,500 3,008
Corporacion Mapfre SA (Finance)+................................... 1,312 67
Iberdrola SA (Energy).............................................. 142,000 1,639
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
VALUE
COMMON STOCK, PREFERRED STOCK & WARRANTS (continued) SHARES (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
SPAIN (continued)
Telefonica de Espana SA (Services)................................. 130,000 $ 2,850
Telefonica de Espana SA ADR (Services)............................. 24,000 1,584
---------
9,230
---------
SWEDEN -- 10.5%
Asea AB (Capital Equipment)........................................ 24,500 2,835
Asea AB-Series B (Capital Equipment)............................... 22,000 2,529
Astra AB-Series A (Services)....................................... 184,000 8,822
Ericsson LM Telephone Co. Class B (Capital Equipment).............. 195,200 6,017
Ericsson LM Telephone Co. Class B CV ADR (Capital Equipment)....... 3,500 15
Kinnevik-Series A (Finance)........................................ 23,900 648
Kinnevik-Series B (Finance)........................................ 15,000 420
Volvo AB-Series B (Consumer Goods)................................. 220,800 4,849
---------
26,135
---------
SWITZERLAND -- 6.3%
BBC Brown Boveri, Bearer (Capital Equipment)+...................... 2,363 2,957
Ciba-Geigy AG (Materials).......................................... 6,989 8,648
Holderbank Financiere Glarus (Materials)........................... 3,886 2,805
Nestle SA (Consumer Goods)......................................... 1,250 1,357
---------
15,767
---------
UNITED KINGDOM -- 7.1%
English China Clays (Materials).................................... 305,000 918
Pearson PLC (Multi-industry)....................................... 120,000 1,483
Rentokil Group PLC (Services)...................................... 450,000 3,283
Reuters Holdings PLC (Services).................................... 208,000 2,532
Scottish Power PLC (Energy)........................................ 132,240 749
Severn Trent PLC (Energy)+......................................... 473,000 5,201
Tesco PLC (Services)............................................... 408,616 2,335
Vodafone Group PLC (Services)...................................... 105,801 459
Vodafone Group PLC ADR (Services).................................. 18,000 779
---------
17,739
---------
OTHER COMMON STOCK -- 0.7%......................................... 1,780
---------
TOTAL COMMON STOCK, PREFERRED STOCK, & WARRANTS (cost $167,760).... 224,053
---------
<CAPTION>
PRINCIPAL
AMOUNT
(DENOMINATED IN
LOCAL CURRENCY)
BONDS & NOTES -- 0.1% (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
LUXEMBOURG -- 0.0%
Daimler Benz Capital 4.13% 2003.................................... 34 26
---------
FRANCE -- 0.1%
Michelin (cie Gle) 2.50% 2001...................................... 480 275
---------
TOTAL BONDS & NOTES (cost $231).................................... 301
---------
TOTAL INVESTMENT SECURITIES (cost $167,991)........................ 224,354
---------
<CAPTION>
SHORT-TERM SECURITIES -- 9.9%
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 9.9%
Barclays U.S. Funding 5.28% due 1/22/97............................ $ 2,200 2,183
Halifax Building Society 5.40% due 1/03/97......................... 6,200 6,170
Canadian T-Bills 5.27% due 12/12/96................................ 5,000 4,992
Sandoz Corp. 5.33% due 12/02/96.................................... 5,000 4,999
</TABLE>
---------------------
A-7
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES (continued) (IN THOUSANDS) (IN THOUSANDS)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES (continued)
Siemens Capital Corp. 5.24% due 12/05/96........................... $ 1,300 $ 1,299
Siemens Capital Corp. 5.26% due 1/24/97............................ 5,000 4,961
---------
24,604
---------
TOTAL SHORT-TERM SECURITIES (cost $24,604)......................... 24,604
---------
TOTAL INVESTMENTS --
(cost $192,595) 99.9% 248,958
Other assets less liabilities -- 0.1 186
----- ---------
NET ASSETS -- 100.0% $ 249,144
===== =========
</TABLE>
-----------------------------
# Resale restricted to qualified institutional buyers
+ Non-income producing securities
ADR - American Depositary Receipt
See Notes to Financial Statements
- ---------------------
A-8
<PAGE> 12
[TRIANGLE]
- ---------------------
ANCHOR PATHWAY FUND
GROWTH-INCOME SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1996
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 87.8% SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 12.0%
Aerospace & Military Technology -- 1.7%
Boeing Co. .......................................................... 20,000 $ 1,988
General Motors Corp., Class H........................................ 85,000 4,633
Litton Industries, Inc.+............................................. 40,000 1,870
Raytheon Co. ........................................................ 25,000 1,278
Sundstrand Corp. .................................................... 130,000 5,070
United Technologies Corp. ........................................... 5,000 701
Data Processing & Reproduction -- 1.7%
Adobe Systems, Inc. ................................................. 40,000 1,580
Silicon Graphics, Inc.+.............................................. 200,000 3,975
Xerox Corp. ......................................................... 210,000 10,316
Electrical & Electronics -- 1.3%
Ericsson (L.M.) Telephone Co., Class B ADR........................... 80,000 2,470
Lucent Technologies, Inc. ........................................... 44,028 2,256
Nokia Corp. ADR...................................................... 135,000 7,577
Electronic Components -- 1.3%
Linear Technology Corp. ............................................. 80,000 3,770
Texas Instruments, Inc. ............................................. 120,000 7,650
Energy Equipment -- 1.4%
Dresser Industries, Inc. ............................................ 80,000 2,620
Schlumberger Ltd. ................................................... 70,000 7,280
Western Atlas, Inc.+................................................. 45,000 3,173
Industrial Components -- 1.1%
Dana Corp. .......................................................... 50,000 1,556
Goodyear Tire & Rubber Co. .......................................... 80,000 3,880
ITT Industries, Inc. ................................................ 25,000 584
Rockwell International Corp. ........................................ 70,000 4,498
Machinery & Engineering -- 3.5%
Caterpillar, Inc. ................................................... 125,000 9,890
Crompton & Knowles Corp. ............................................ 120,000 2,205
Deere & Co. ......................................................... 190,000 8,479
Ingersoll-Rand Co. .................................................. 80,000 3,720
Parker-Hannifin Corp. ............................................... 185,000 7,516
---------
110,535
---------
CONSUMER GOODS -- 18.2%
Appliances & Household Durables -- 0.9%
Corning, Inc. ....................................................... 130,000 5,265
Philips Electronics NV ADR........................................... 75,000 3,038
Automotive -- 0.9%
Ford Motor Co. ...................................................... 130,000 4,257
General Motors Corp. ................................................ 70,000 4,034
Beverages & Tobacco -- 3.2%
Anheuser-Busch Cos., Inc. ........................................... 90,000 3,814
PepsiCo, Inc. ....................................................... 210,000 6,274
</TABLE>
---------------------
A-9
<PAGE> 13
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER GOODS (continued)
Beverages & Tobacco (continued)
Philip Morris Cos., Inc. ............................................ 105,000 $ 10,828
Seagram Co. Ltd. .................................................... 220,000 8,992
Food & Household Products -- 2.9%
Archer-Daniels-Midland Co. .......................................... 170,000 3,740
ConAgra, Inc. ....................................................... 40,000 2,125
CPC International, Inc. ............................................. 50,000 4,162
General Mills, Inc. ................................................. 45,000 2,858
Heinz (H.J.) Co. .................................................... 70,000 2,651
Kellogg Co. ......................................................... 13,800 937
McCormick & Co., Inc. ............................................... 200,000 4,925
Unilever N. V. ...................................................... 30,000 5,194
Health & Personal Care -- 8.0%
American Home Products Corp. ........................................ 170,000 10,922
Bristol-Myers Squibb Co. ............................................ 35,000 3,981
Johnson & Johnson Co. ............................................... 60,000 3,188
Kimberly-Clark Corp. ................................................ 40,000 3,910
Merck & Co., Inc. ................................................... 155,000 12,865
Pfizer, Inc. ........................................................ 175,000 15,684
Schering-Plough Corp. ............................................... 180,000 12,825
Tambrands, Inc. ..................................................... 30,000 1,283
Warner-Lambert Co. .................................................. 120,000 8,580
Recreation & Other Consumer Products -- 2.0%
American Greetings Corp., Class A.................................... 70,000 1,977
Duracell International, Inc. ........................................ 40,000 2,665
Eastman Kodak Co. ................................................... 60,000 4,860
Polaroid Corp. ...................................................... 145,000 6,181
Stanley Works........................................................ 80,000 2,360
Textiles & Apparel -- 0.3%
V.F. Corp. .......................................................... 45,000 3,054
---------
167,429
---------
ENERGY -- 8.6%
Energy Sources -- 7.5%
Amoco Corp. ......................................................... 115,000 8,927
Atlantic Richfield Co. .............................................. 60,000 8,347
Diamond Shamrock, Inc. .............................................. 160,000 5,200
Exxon Corp. ......................................................... 50,000 4,731
Pennzoil Co. ........................................................ 70,000 3,938
Phillips Petroleum Co. .............................................. 210,000 9,476
Royal Dutch Petroleum Co. ADR........................................ 30,000 5,096
Texaco, Inc. ........................................................ 40,000 3,965
Total SA ADR......................................................... 61,338 2,477
Union Pacific Resources Group, Inc. ................................. 67,755 2,024
Unocal Corp. ........................................................ 175,000 7,131
Valero Energy Corp. ................................................. 260,000 7,800
Utilities: Electric, Gas & Water -- 1.1%
Consolidated Edison Co. of New York, Inc. ........................... 100,000 2,900
Pacific Gas & Electric Co. .......................................... 150,000 3,619
Union Electric Co. .................................................. 80,000 3,180
---------
78,811
---------
FINANCE -- 12.2%
Banking -- 7.1%
Banc One Corp. ...................................................... 118,000 5,620
Bank of New York, Inc. .............................................. 160,000 5,740
</TABLE>
- ---------------------
A-10
<PAGE> 14
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Banking (continued)
BankAmerica Corp. ................................................... 65,000 $ 6,695
CoreStates Financial Corp. .......................................... 92,500 4,983
First Chicago Corp. ................................................. 50,000 2,938
First Union Corp. ................................................... 80,000 6,110
KeyCorp.............................................................. 100,000 5,237
Morgan (J.P.) & Co., Inc. ........................................... 30,000 2,831
National City Corp. ................................................. 70,000 3,246
Northern Trust Corp. ................................................ 20,000 1,453
Norwest Corp. ....................................................... 140,000 6,545
PNC Bank Corp. ...................................................... 202,000 7,979
SunTrust Banks, Inc. ................................................ 110,000 5,582
Financial Services -- 0.9%
American Express Co. ................................................ 50,000 2,612
Associates First Capital Corp., Class A.............................. 5,000 242
Beneficial Corp. .................................................... 20,000 1,243
FINOVA Group, Inc. .................................................. 25,000 1,650
Household International, Inc. ....................................... 30,000 2,842
Insurance -- 4.2%
Aetna, Inc. ......................................................... 50,000 3,606
Allstate Corp. ...................................................... 120,000 7,230
American General Corp. .............................................. 30,000 1,234
Gallagher (Arthur J.) & Co. ......................................... 95,300 2,931
General Reinsurance Group............................................ 40,000 6,750
Liberty Corp. ....................................................... 75,000 2,859
SAFECO Corp. ........................................................ 275,500 11,468
St. Paul Cos., Inc. ................................................. 40,000 2,355
---------
111,981
---------
MATERIALS -- 10.9%
Agricultural Services -- 0.2%
Pioneer Hi-Bred International, Inc. ................................. 30,000 2,092
Chemicals -- 3.5%
Dow Chemical Co. .................................................... 40,000 3,350
du Pont (E.I.) de Nemours & Co. ..................................... 55,000 5,184
Eastman Chemical Co. ................................................ 50,000 2,856
Great Lakes Chemical Corp. .......................................... 20,000 1,073
Lyondell Petrochemical Co. .......................................... 60,000 1,350
Mallinckrodt, Inc. .................................................. 90,900 4,000
Monsanto Co. ........................................................ 150,000 5,962
PPG Industries, Inc. ................................................ 60,000 3,675
Praxair, Inc. ....................................................... 100,000 4,862
Forest Products & Paper -- 4.2%
Bowater, Inc. ....................................................... 230,000 8,654
Georgia-Pacific Corp. ............................................... 65,000 4,729
International Paper Co. ............................................. 100,000 4,250
James River Corp. ................................................... 125,000 4,000
Rayonier, Inc. ...................................................... 92,500 3,584
Union Camp Corp. .................................................... 175,000 8,597
Westvaco Corp. ...................................................... 60,000 1,695
Weyerhaeuser Co. .................................................... 75,000 3,450
Metals & Minerals -- 3.0%
Alumax, Inc.+........................................................ 40,000 1,295
Aluminum Co. of America.............................................. 240,000 15,270
</TABLE>
---------------------
A-11
<PAGE> 15
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Metals & Minerals (continued)
Inco Ltd. ........................................................... 30,000 $ 1,046
Potash Corp. Saskatchewan, Inc. ..................................... 130,000 9,799
---------
100,773
---------
MULTI-INDUSTRY -- 1.7%
Multi-Industry -- 1.7%
AlliedSignal, Inc. .................................................. 40,000 2,930
Tenneco, Inc. ....................................................... 115,000 5,865
Textron, Inc. ....................................................... 75,000 7,153
---------
15,948
---------
SERVICES -- 22.0%
Broadcasting & Publishing -- 3.4%
Comcast Corp., Class A............................................... 23,173 388
Cox Communications, Inc., Class A+................................... 49,224 1,009
Gannett Co., Inc. ................................................... 40,000 3,140
New York Times Co., Class A.......................................... 50,000 1,869
News Corp. Ltd. ADR.................................................. 140,000 2,975
Scripps Co. (E.W.), Class A.......................................... 135,000 4,691
Tele-Communications Liberty Media Group+............................. 145,000 3,625
Time Warner, Inc. ................................................... 100,000 4,075
US West Inc. Media Group+............................................ 171,800 3,286
Viacom, Inc., Class B+............................................... 165,000 6,229
Business & Public Services -- 5.5%
ACNielsen Corp.+..................................................... 50,000 869
Alexander & Baldwin, Inc. ........................................... 180,000 4,770
Browning-Ferris Industries, Inc. .................................... 220,000 5,912
Cognizant Corp.+..................................................... 150,000 5,175
Dun & Bradstreet Corp. .............................................. 150,000 3,394
Ecolab, Inc. ........................................................ 50,000 1,944
Electronic Data Systems Corp. ....................................... 155,000 7,498
Federal Express Corp.+............................................... 60,000 2,655
Omnicom Group........................................................ 40,000 2,040
PacifiCare Health Systems, Inc., Class A+............................ 40,000 3,160
Pitney Bowes, Inc. .................................................. 30,000 1,770
WMX Technologies, Inc. .............................................. 310,000 11,160
Leisure & Tourism -- 1.3%
Disney (Walt) Co. ................................................... 140,000 10,325
Host Marriott Corp.+................................................. 110,000 1,678
Merchandising -- 3.6%
Circuit City Stores, Inc. ........................................... 182,000 6,074
Federated Department Stores, Inc.+................................... 100,000 3,412
Gap, Inc. ........................................................... 40,000 1,285
Giant Foods, Inc., Class A........................................... 100,000 3,375
May Department Stores Co. ........................................... 80,000 3,900
Mercantile Stores Co., Inc. ......................................... 60,000 3,015
Penney (J.C.) Co., Inc. ............................................. 50,000 2,688
Wal-Mart Stores, Inc. ............................................... 350,000 8,925
Telecommunications -- 5.1%
AirTouch Communications, Inc.+....................................... 81,013 2,076
Alltel Corp. ........................................................ 7,600 242
Ameritech Corp. ..................................................... 120,000 7,065
AT&T Corp. .......................................................... 470,000 18,447
MCI Communications Corp. ............................................ 260,000 7,930
SBC Communications, Inc. ............................................ 40,000 2,105
</TABLE>
- ---------------------
A-12
<PAGE> 16
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Telecommunications (continued)
Telefonos de Mexico SA ADR........................................... 130,000 $ 3,949
US West, Inc. Communications Group .................................. 171,800 5,369
Transportation: Airlines -- 0.7%
AMR Corp.+........................................................... 65,000 5,931
Transportation: Rail & Road -- 2.4%
Conrail, Inc. ....................................................... 114,822 11,166
Norfolk Southern Corp. .............................................. 65,000 5,850
Union Pacific Corp. ................................................. 80,000 4,660
---------
201,101
---------
OTHER COMMON STOCK -- 2.2%........................................... 20,553
---------
TOTAL COMMON STOCK (cost $541,816)................................... 807,131
---------
<CAPTION>
PREFERRED STOCK -- 0.1%
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 0.1%
Broadcasting & Publishing -- 0.1%
News Corp. Ltd. ADR (cost $1,044).................................... 80,000 1,380
---------
TOTAL INVESTMENT SECURITIES (cost $542,860).......................... 808,511
---------
<CAPTION>
PRINCIPAL
AMOUNT
SHORT-TERM SECURITIES -- 12.1% (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 10.4%
Associates Corp. of North America 5.38% due 12/2/96.................. $ 5,500 5,499
Associates Corp. of North America 5.95% due 12/2/96.................. 3,400 3,399
CIT Group Holdings, Inc. 5.24% due 12/17/96.......................... 11,700 11,673
CIT Group Holdings, Inc. 5.26% due 12/19/96.......................... 7,000 6,981
Coca-Cola Co. 5.23% due 12/5/96...................................... 10,500 10,494
Heinz (H.J.) Co. 5.24% due 12/4/96................................... 5,500 5,498
Heinz (H.J.) Co. 5.25% due 12/12/96.................................. 1,290 1,289
Heinz (H.J.) Co. 5.29% due 1/3/97.................................... 12,300 12,240
Lucent Technologies, Inc. 5.24% due 12/18/96......................... 9,000 8,978
Lucent Technologies, Inc. 5.25% due 12/13/96......................... 10,200 10,182
National Rural Utilities Cooperative Finance Corp. 5.28% due
1/22/97............................................................ 17,200 17,069
Penney (J.C.) Funding Corp. 5.31% due 12/4/96........................ 2,400 2,399
---------
TOTAL CORPORATE SHORT-TERM NOTES (cost $95,700)...................... 95,701
---------
</TABLE>
---------------------
A-13
<PAGE> 17
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL AGENCY OBLIGATIONS -- 1.7%
Federal National Mortgage Association 5.30% due 12/19/96............. $ 2,800 $ 2,793
Federal National Mortgage Association 5.34% due 12/19/96............. 10,000 9,973
Federal National Mortgage Association 5.22% due 12/12/96............. 2,600 2,596
---------
TOTAL FEDERAL AGENCY OBLIGATIONS (cost $15,362)...................... 15,362
---------
TOTAL SHORT-TERM SECURITIES (cost $111,062).......................... 111,063
---------
TOTAL INVESTMENTS --
(cost $653,922) 100.0% 919,574
Other assets less liabilities -- 0.0 (218)
----- ---------
NET ASSETS -- 100.0% $ 919,356
===== =========
</TABLE>
-----------------------------
+ Non-income producing securities
ADR - American Depositary Receipt
See Notes to Financial Statements
- ---------------------
A-14
<PAGE> 18
[TRIANGLE]
- ---------------------
ANCHOR PATHWAY FUND
ASSET ALLOCATION SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1996
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 63.1% SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 8.7%
Aerospace & Military Technology -- 2.1%
Boeing Co. .......................................................... 10,000 $ 994
General Motors Corp., Class H........................................ 41,000 2,235
Data Processing & Reproduction -- 0.2%
Adobe Systems, Inc. ................................................. 10,000 395
Electrical & Electronics -- 1.2%
Hubbell, Inc. ....................................................... 30,000 1,260
Nokia Corp. ADR...................................................... 10,000 561
Industrial Components -- 3.6%
Dana Corp. .......................................................... 35,000 1,090
Echlin, Inc. ........................................................ 15,000 504
Rockwell International Corp. ........................................ 60,000 3,855
Machinery & Engineering -- 1.6%
Crompton & Knowles Corp. ............................................ 60,000 1,102
Deere & Co. ......................................................... 30,000 1,339
---------
13,335
---------
CONSUMER GOODS -- 17.6%
Automotive -- 0.8%
General Motors Corp. ................................................ 20,000 1,152
Beverages & Tobacco -- 2.9%
PepsiCo, Inc. ....................................................... 80,000 2,390
Seagram Co., Ltd. ................................................... 50,000 2,044
Food & Household Products -- 2.8%
Archer-Daniels-Midland Co. .......................................... 52,500 1,155
General Mills, Inc. ................................................. 20,000 1,270
Heinz (H.J.) Co. .................................................... 30,000 1,136
McCormick & Co., Inc. ............................................... 30,000 739
Health & Personal Care -- 9.7%
American Home Products Corp. ........................................ 40,000 2,570
Bristol-Myers Squibb Co. ............................................ 15,000 1,706
Kimberly-Clark Corp. ................................................ 10,000 978
Pfizer, Inc. ........................................................ 44,000 3,943
Smithkline Beecham PLC ADR........................................... 50,000 3,444
Tambrands, Inc. ..................................................... 20,000 855
Warner-Lambert Co. .................................................. 20,000 1,430
Recreation & Other Consumer Products -- 1.4%
American Greetings Corp., Class A.................................... 30,000 848
Duracell International, Inc. ........................................ 10,000 666
Stanley Works........................................................ 20,000 590
---------
26,916
---------
ENERGY -- 7.5%
Energy Sources -- 7.5%
Amoco Corp. ......................................................... 15,000 1,164
Atlantic Richfield Co. .............................................. 15,000 2,087
Chevron Corp. ....................................................... 40,000 2,680
</TABLE>
---------------------
A-15
<PAGE> 19
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY (continued)
Energy Sources (continued)
Diamond Shamrock, Inc. .............................................. 20,000 $ 650
Kerr-McGee Corp. .................................................... 25,000 1,750
Phillips Petroleum Co. .............................................. 35,000 1,580
Royal Dutch Petroleum Co. ADR........................................ 6,000 1,019
Unocal Corp. ........................................................ 15,000 611
---------
11,541
---------
FINANCE -- 9.6%
Banking -- 7.2%
Citicorp............................................................. 20,000 2,185
CoreStates Financial Corp. .......................................... 20,000 1,077
First Union Corp. ................................................... 22,950 1,753
Fleet Financial Group, Inc. ......................................... 25,000 1,384
KeyCorp.............................................................. 15,000 786
NationsBank Corp. ................................................... 25,000 2,591
PNC Bank Corp. ...................................................... 30,000 1,185
Insurance -- 2.4%
American General Corp. .............................................. 15,000 617
General Reinsurance Group............................................ 10,000 1,687
SAFECO Corp. ........................................................ 35,000 1,457
---------
14,722
---------
MATERIALS -- 7.1%
Chemicals -- 3.2%
Air Products & Chemicals, Inc. ...................................... 20,000 1,390
du Pont (E.I.) de Nemours & Co. ..................................... 15,000 1,414
Mallinckrodt, Inc. .................................................. 20,000 880
PPG Industries, Inc. ................................................ 20,000 1,225
Forest Products & Paper -- 3.2%
Georgia-Pacific Corp. ............................................... 30,000 2,182
Rayonier, Inc. ...................................................... 15,500 601
Union Camp Corp. .................................................... 20,000 982
Weyerhaeuser Co. .................................................... 25,000 1,150
Metals & Minerals -- 0.7%
Aluminum Co. of America.............................................. 16,000 1,018
---------
10,842
---------
MULTI-INDUSTRY -- 2.1%
Multi-Industry -- 2.1%
Tenneco, Inc. ....................................................... 35,000 1,785
Textron, Inc. ....................................................... 15,000 1,431
---------
3,216
---------
SERVICES -- 10.5%
Business & Public Services -- 0.5%
Alexander & Baldwin, Inc. ........................................... 30,000 795
Merchandising -- 6.5%
Circuit City Stores, Inc. ........................................... 10,000 334
May Department Stores Co. ........................................... 30,000 1,463
Mercantile Stores Co., Inc. ......................................... 20,000 1,005
Penney (J.C.), Inc. ................................................. 35,000 1,881
Sears, Roebuck & Co. ................................................ 15,000 746
Wal-Mart Stores, Inc. ............................................... 80,000 2,040
Walgreen Co. ........................................................ 60,000 2,505
</TABLE>
- ---------------------
A-16
<PAGE> 20
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Telecommunications -- 0.3%
AT&T Corp. .......................................................... 10,000 $ 392
Transportation: Rail & Road -- 3.2%
Conrail, Inc. ....................................................... 19,137 1,861
Norfolk Southern Corp. .............................................. 20,000 1,800
Union Pacific Corp. ................................................. 20,000 1,165
---------
15,987
---------
TOTAL COMMON STOCK (cost $67,812).................................... 96,559
---------
PRINCIPAL
AMOUNT
BONDS & NOTES -- 28.5% (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 0.5%
Green Tree Financial Corp. 7.25% 2005................................ $ 715 713
---------
CONVERTIBLE BONDS -- 2.5%
Broadcasting & Publishing -- 1.6%
Turner Broadcasting Systems, Inc. zero coupon 2007#.................. 5,000 2,425
Industrial -- 0.6%
Hanson America, Inc. 2.39% 2001#..................................... 1,000 873
Telecommunications -- 0.3%
United States West, Inc. zero coupon 2011............................ 1,500 542
---------
3,840
---------
CORPORATE NONCONVERTIBLES -- 12.3%
Automotive -- 0.8%
General Motors Corp. 8.80% 2021...................................... 1,000 1,179
Broadcasting & Publishing -- 0.7%
Time Warner, Inc. 9.125% 2013........................................ 1,000 1,107
Finance -- 3.5%
Aetna Services, Inc. 6.97% 2036...................................... 500 519
Capital One Bank 7.35% 2000.......................................... 2,500 2,566
Chevy Chase Savings Bank 9.25% 2008.................................. 500 507
First Union Corp. 6.82% 2006......................................... 500 515
Irvine Property 7.46% 2006*.......................................... 500 489
Ocwen Financial Corp. 11.875% 2003................................... 250 267
Saul (B.F.) Real Estate Investment Trust 11.625% 2002................ 500 540
Industrial -- 4.9%
Acme Metals, Inc. 12.50% 2002........................................ 500 535
Allegiance Corp. 7.00% 2026.......................................... 500 517
CenCall Communications Corp. zero coupon 2004@....................... 1,000 665
Container Corp. of America 9.75% 2003................................ 500 521
Dayton Hudson Corp. 8.50% 2022....................................... 500 533
Freeport McMoRan Copper & Gold 7.20% 2026............................ 500 504
Inco Ltd. 9.60% 2022................................................. 400 448
Omnipoint Corp. 11.625% 2006#........................................ 250 263
Oryx Energy Co. 8.375% 2004.......................................... 500 528
Oryx Energy Co. 9.50% 1999........................................... 1,500 1,597
Oryx Energy Co. 10.00% 1999.......................................... 500 536
Philips Electronics NV 7.20% 2026.................................... 750 779
</TABLE>
---------------------
A-17
<PAGE> 21
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE NONCONVERTIBLES (continued)
Transportation -- 2.4%
Airplanes Pass Through Trust 8.15% 2019*............................. $ 500 $ 526
Continental Airlines Pass Through Trust 6.94% 2013................... 1,000 1,004
Delta Air Lines, Inc. 10.50% 2016.................................... 500 620
Jet Equipment Trust 7.83% 2012....................................... 486 515
United Airlines Pass Through Trust 7.87% 2018........................ 500 502
USAir, Inc. 6.76% 2008............................................... 487 485
---------
18,767
---------
U.S. GOVERNMENT & AGENCIES -- 7.4%
Federal National Mortgage Association 6.53% 2006..................... 4,000 3,898
Federal National Mortgage Association 7.52% 2004..................... 2,000 2,045
Government National Mortgage Association 7.50% 2026.................. 1,485 1,506
Government National Mortgage Association 8.00% 2026.................. 2,970 3,061
Government National Mortgage Association 8.50% 2025.................. 802 839
---------
11,349
---------
UNITED STATES TREASURY -- 5.7%
10.375% Bonds 2012................................................... 5,000 6,604
7.25% Notes 2004..................................................... 2,000 2,153
---------
8,757
---------
OTHER BONDS & NOTES -- 0.1%.......................................... 217
---------
TOTAL BONDS & NOTES (cost $42,898)................................... 43,643
---------
TOTAL INVESTMENT SECURITIES (cost $110,710).......................... 140,202
---------
<CAPTION>
SHORT-TERM SECURITIES -- 8.2%
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 7.5%
American Express Credit Corp. 5.25% due 12/6/96...................... 2,800 2,797
General Electric Capital Corp. 5.75% due 12/2/96..................... 2,340 2,339
Heinz (H.J.) Co. 5.24% due 12/4/96................................... 1,500 1,499
Heinz (H.J.) Co. 5.25% due 12/30/96.................................. 2,400 2,390
Lucent Technologies, Inc. 5.24% due 12/18/96......................... 2,500 2,495
---------
TOTAL CORPORATE SHORT-TERM NOTES (cost $11,521)...................... 11,520
---------
UNITED STATES TREASURY -- 0.7%
8.75% Notes due 10/15/97 (cost $1,070)............................... 1,000 1,028
---------
TOTAL SHORT-TERM SECURITIES (cost $12,591)........................... 12,548
---------
TOTAL INVESTMENTS --
(cost $123,301) 99.8% 152,750
Other assets less liabilities -- 0.2 310
------ ---------
NET ASSETS -- 100.0% $ 153,060
=========
======
</TABLE>
-----------------------------
+ Non-income producing securities
* Fair value determined by Trustees
# Resale restricted to qualified institutional buyers
@ 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-18
<PAGE> 22
[TRIANGLE]
- ---------------------
ANCHOR PATHWAY FUND
HIGH-YIELD BOND SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES -- 85.5% (IN THOUSANDS) (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 5.3%
Aerospace & Military Technology -- 3.3%
Coltec Industries 9.75% 1999...................................... $ 500 $ 537
Coltec Industries 9.75% 2000...................................... 3,500 3,789
Construction & Housing -- 0.4%
M.D.C. Holdings, Inc. 11.125% 2003................................ 500 505
Electrical & Electronics -- 1.6%
MagneTek, Inc. 10.75% 1998........................................ 2,000 2,060
---------
6,891
---------
CONSUMER GOODS -- 2.9%
Beverages & Tobacco -- 2.9%
Canandaigua Wine, Inc. 8.75% 2003#................................ 1,000 963
Dr. Pepper/Seven Up Cos., Inc. 10.25% 2000........................ 2,750 2,846
---------
3,809
---------
ENERGY -- 12.4%
Energy Sources -- 9.3%
Abraxas Petroleum Corp. 11.50% 2004............................... 500 516
Benton Oil & Gas Co. 11.625% 2003................................. 500 550
Dual Drilling Co. 9.875% 2004..................................... 2,000 2,160
Flores & Rucks, Inc. 13.50% 2004.................................. 1,500 1,774
Forcenergy, Inc. 9.50% 2006....................................... 1,000 1,041
Global Marine, Inc. 12.75% 1999................................... 2,000 2,150
Kelley Oil & Gas Corp. 10.375% 2006#.............................. 750 765
Triton Energy Corp. zero coupon 2000(1)........................... 1,500 1,556
Tuboscope Vetco International, Inc. 10.75% 2003................... 1,500 1,646
Utilities: Electric, Gas & Water -- 3.1%
California Energy, Inc. zero coupon 2004(1)....................... 4,000 4,140
---------
16,298
---------
FINANCE -- 0.8%
Financial Services -- 0.8%
Mesa Operating Co. 10.625% 2006................................... 1,000 1,080
---------
INDUSTRIAL & COMMERCIAL -- 2.0%
Industrial -- 2.0%
Ionica PLC 13.50% 2006#........................................... 500 527
Multicanal Participacoes SA 12.625% 2004#......................... 1,000 1,075
Newsquest Capital PLC 11.50% 2006#................................ 1,000 1,018
---------
2,620
---------
MATERIALS -- 11.3%
Chemicals -- 1.0%
Texas Petrochemical Corp. 11.125% 2006#........................... 1,250 1,337
Forest Products & Paper -- 7.1%
Container Corp. of America 9.75% 2003............................. 4,500 4,691
Fort Howard Corp. 8.25% 2002...................................... 500 501
</TABLE>
---------------------
A-19
<PAGE> 23
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Forest Products & Paper (continued)
Fort Howard Corp. 9.25% 2001...................................... $ 3,000 $ 3,128
Pacific Lumber Co. 10.50% 2003.................................... 1,000 1,001
Metals & Minerals -- 3.2%
A.K. Steel Corp. 10.75% 2004...................................... 500 536
Acme Metals, Inc. zero coupon 2004(1)............................. 1,750 1,768
Kaiser Aluminum & Chemical Corp. 12.75% 2003...................... 1,250 1,319
Ucar Global Enterprises, Inc. 12.00% 2005......................... 535 617
---------
14,898
---------
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.1%
Republic of Argentina 6.625% 2005(2).............................. 1,470 1,270
United Mexican States 11.375% 2016................................ 40 41
United Mexican States 11.50% 2026................................. 145 152
---------
1,463
---------
SERVICES -- 49.7%
Broadcasting & Publishing -- 12.3%
American Media Operations, Inc. 11.625% 2004...................... 1,750 1,868
Bell Cablemedia PLC zero coupon 2004(1)........................... 5,000 4,275
Cablevision Systems Corp. 9.875% 2013............................. 1,000 975
Chancellor Broadcasting Co. 9.375% 2004........................... 1,500 1,496
Chancellor Broadcasting Co. 12.50% 2004........................... 250 282
Comcast UK Cable Partners Ltd. zero coupon 2007(1)................ 2,000 1,365
Heartland Wireless Communication, Inc. 13.00% 2003*............... 500 515
Infinity Broadcasting Corp. 10.375% 2002.......................... 2,250 2,396
Univision Television Group, Inc. 11.75% 2001...................... 500 526
Viacom, Inc. 7.75% 2005........................................... 1,500 1,492
Young Broadcasting, Inc. 10.125% 2005............................. 1,000 1,005
Business & Public Services -- 6.3%
Integrated Health Services, Inc. 9.625% 2002...................... 2,000 2,045
Integrated Heatlh Services, Inc. 10.75% 2004...................... 500 529
Paracelsus Healthcare Corp. 10.00% 2006........................... 1,750 1,514
Protection One Alarm Monitoring Corp. zero coupon 2005(1)......... 1,000 910
Regency Health Services, Inc. 9.875% 2002......................... 1,750 1,767
Rykoff Sexton, Inc. 8.875% 2003................................... 500 471
Universal Health Services, Inc. 8.75% 2005........................ 1,000 1,029
Food Retail -- 4.2%
Allied Supermarkets, Inc. 6.625% 1998............................. 1,200 1,196
Foodmaker, Inc. 9.25% 1999........................................ 1,400 1,421
Foodmaker, Inc. 9.75% 2002........................................ 500 497
Penn Traffic Co. 9.625% 2005...................................... 500 270
Stater Brothers Holdings, Inc. 11.00% 2001........................ 2,000 2,140
Leisure & Tourism -- 2.0%
Four Seasons Hotels, Inc. 9.125% 2000#............................ 1,000 1,016
Station Casinos, Inc. 9.625% 2003................................. 500 487
Wyndham Hotel Corp. 10.50% 2006................................... 1,000 1,060
Merchandising -- 2.6%
AnnTaylor, Inc. 8.75% 2000........................................ 500 485
Barnes & Noble, Inc. 11.875% 2003................................. 1,000 1,093
Thrifty PayLess Holdings, Inc. 12.25% 2004........................ 1,625 1,901
Telecommunications -- 20.0%
Brooks Fiber Properties, Inc. zero coupon 2006(1)................. 2,750 1,801
Cellular Communications International, Inc. zero coupon 2000...... 2,250 1,530
Centennial Cellular Corp. 8.875% 2001............................. 3,000 2,880
Comunicacion Celular SA zero coupon 2003*......................... 1,000 653
</TABLE>
- ---------------------
A-20
<PAGE> 24
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Telecommunications (continued)
International CableTel, Inc. zero coupon 2005(1).................. $ 750 $ 534
MFS Communication zero coupon 2004................................ 7,000 6,055
MobileMedia Communications, Inc. zero coupon 2003................. 1,000 445
Nextel Communications, Inc. zero coupon 2003...................... 1,000 753
Omnipoint Corp. 11.625% 2006...................................... 1,500 1,579
Paging Network, Inc. 11.75% 2002.................................. 2,200 2,376
Pricellular Wireless Corp. zero coupon 2003....................... 1,000 843
Pricellular Wireless Corp. 14.00% 2001............................ 1,000 985
Rogers Cantel Mobile Communications, Inc. 11.125% 2002............ 500 527
Teleport Communications Group 9.875% 2006......................... 500 529
Videotron Holdings PLC zero coupon 2004........................... 5,500 4,730
Transportation: Airlines -- 2.3%
USAir, Inc. 9.625% 2003........................................... 500 508
USAir, Inc. 10.00% 2003........................................... 1,000 985
USAir, Inc. 10.375% 2013.......................................... 1,500 1,530
---------
65,269
---------
TOTAL BONDS & NOTES (cost $106,841)............................... 112,328
---------
WARRANTS -- 0.0%+ SHARES
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 0.0%
Broadcasting & Publishing -- 0.0%
Heartland Wireless Communication, Inc. 4/15/03*................... 3,000 6
Business & Public Services -- 0.0%
Protection One Alarm Monitoring Corp. 6/30/05*.................... 3,200 25
Telecommunications -- 0.0%
Comunicacion Celular SA 11/15/03#*................................ 1,000 6
Nextel Communications, Inc. 1/15/99............................... 500 0
---------
37
---------
TOTAL WARRANTS (cost $42)......................................... 37
---------
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AND AGENCIES -- 6.9% (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES TREASURY -- 6.9%
10.75% Bonds 2005................................................. $ 2,000 2,627
5.125% Notes 1998................................................. 6,500 6,442
---------
9,069
---------
TOTAL U.S. GOVERNMENT AND AGENCIES (cost $8,834).................. 9,069
---------
TOTAL INVESTMENT SECURITIES (cost $115,717)....................... 121,434
---------
</TABLE>
---------------------
A-21
<PAGE> 25
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 5.5% (IN THOUSANDS) (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 2.0%
Associates Corp. of North America 5.95% due 12/2/96 (cost
$2,660)......................................................... $ 2,660 $ 2,660
---------
FEDERAL AGENCY OBLIGATIONS -- 1.2%
Federal National Mortgage Association 5.30% due 12/19/96 (cost
$1,496)......................................................... 1,500 1,496
---------
MUNICIPAL BONDS -- 2.3%
Tennessee Valley Authority 5.21% due 12/3/96 (cost $2,999)........ 3,000 2,999
---------
TOTAL SHORT-TERM SECURITIES (cost $7,155)......................... 7,155
---------
TOTAL INVESTMENTS --
(cost $122,872) 97.9% 128,589
Other assets less liabilities -- 2.1 2,748
------ ---------
NET ASSETS -- 100.0% $ 131,337
=========
======
</TABLE>
-----------------------------
# Resale restricted to qualified institutional buyers
* Fair value determined by Trustees
+ Non-income producing securities
(1) Represents a zero-coupon bond which will convert to an
interest-bearing security at a later date
(2) Variable rate security -- the rate reflected is as of November
30, 1996
See Notes to Financial Statements
- ---------------------
A-22
<PAGE> 26
[TRIANGLE]
- ---------------------
ANCHOR PATHWAY FUND
U.S. GOVERNMENT/
AAA-RATED SECURITIES SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES -- 91.9% (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES -- 5.2%
Green Tree Financial Corp. 6.80% 2027................................ $ 1,000 $ 1,001
Standard Credit Card Master Trust 8.88% 1999 Series 1991
Participation Certificates......................................... 4,500 4,705
---------
5,706
---------
DEVELOPMENTAL AUTHORITIES -- 4.0%
International Bank for Reconstruction & Development 7.90% 1998....... 3,000 3,084
International Bank for Reconstruction & Development 14.90% 1997...... 1,200 1,252
---------
4,336
---------
FEDERAL AGENCY OBLIGATIONS -- 26.1%++
Federal Home Loan Mortgage Corp. 6.50% 2009*......................... 2,000 1,950
Federal Home Loan Mortgage Corp. 9.00% 2021 - 2022 1,439 1,537
Federal Home Loan Mortgage Corp. 9.50% 2016.......................... 753 816
Federal Home Loan Mortgage Corp. 11.88% 2013*........................ 16 18
Federal Home Loan Mortgage Corp. 12.50% 2013*........................ 142 160
Federal National Mortgage Association 2001 STRIPS(1)................. 5,000 4,992
Federal National Mortgage Association 7.50% 2009..................... 1,530 1,566
Federal National Mortgage Association 7.70% 2004..................... 1,645 1,702
Federal National Mortgage Association 8.50% 2023..................... 1,898 1,997
Government National Mortgage Association 7.50% 2023.................. 1,320 1,344
Government National Mortgage Association 8.00% 2017.................. 1,688 1,764
Government National Mortgage Association 8.50% 2016 - 2026........... 3,657 3,842
Government National Mortgage Association 9.00% 2016 - 2017........... 782 844
Government National Mortgage Association 9.50% 2009 - 2017........... 4,942 5,409
Government National Mortgage Association 10.00% 5/15/16.............. 50 55
Government National Mortgage Association 10.50% 2016 - 2019.......... 311 347
Government National Mortgage Association 11.00% 6/20/19.............. 70 80
Government National Mortgage Association 11.50% 2010 - 2015.......... 17 20
---------
28,443
---------
INDUSTRIALS -- 1.8%
Public Service Electric & Gas Co. 7.00% 2024......................... 2,000 1,930
---------
MORTGAGE-RELATED SECURITIES -- 6.8%
CMC Securities Corp. 6.50% 2008...................................... 2,801 2,685
EQCC Home Equity Loan Trust 6.95% 2012............................... 300 303
Merrill Lynch Mortgage Investors, Inc. 6.85% 2025*................... 500 505
Morgan (J.P.) Commercial Mortgage Finance Corp. 7.35% 2010*.......... 1,000 1,037
Prudential Home Mortgage Corp. 7.50% 2022............................ 2,815 2,820
---------
7,350
---------
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.0%
Ontario Province Canada 15.25% 2012.................................. 1,000 1,124
---------
</TABLE>
---------------------
A-23
<PAGE> 27
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES TREASURY -- 47.0%
5.88% Bonds 2004..................................................... $ 4,000 $ 3,981
7.25% Bonds 2004..................................................... 5,000 5,379
10.38% Bonds 2009.................................................... 4,500 5,688
10.38% Bonds 2012.................................................... 12,000 15,849
10.75% Bonds 2003.................................................... 1,750 2,194
8.88% Bonds 2017..................................................... 10,700 13,626
12.00% Bonds 2013.................................................... 3,000 4,404
---------
51,121
---------
TOTAL INVESTMENT SECURITIES (cost $98,480)........................... 100,010
---------
SHORT-TERM SECURITIES -- 6.7%
--------------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 6.7%
Associates Corp. of North America 5.38% due 12/2/96.................. 3,300 3,299
General Electric Capital Corp. 5.30% due 12/5/96..................... 4,000 3,998
---------
TOTAL SHORT-TERM SECURITIES (cost $7,297)............................ 7,297
---------
TOTAL INVESTMENTS --
(cost $105,777) 98.6% 107,307
Other assets less liabilities -- 1.4 1,545
------ ------ ---------
NET ASSETS -- 100.0% $ 108,852
====== =========
</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-24
<PAGE> 28
[TRIANGLE]
- ---------------------
ANCHOR PATHWAY FUND
CASH MANAGEMENT SERIES INVESTMENT PORTFOLIO -- NOVEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 101.0% (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 97.4%
Albertson's, Inc. 5.27% due 1/07/97.................................. $3,000 $ 2,984
American Express Credit Corp. 5.24% due 12/24/96..................... 3,000 2,990
American General Finance Corp. 5.23% due 12/04/96.................... 1,400 1,399
Ameritech Corp. 5.29% due 1/14/97.................................... 3,000 2,981
Baltimore Gas & Electric Co. 5.23% due 12/02/96...................... 3,300 3,299
BellSouth Telecommunications, Inc. 5.22% due 12/04/96................ 3,300 3,299
Beneficial Corp. 5.31% due 1/17/97................................... 2,900 2,880
CIT Group Holdings, Inc. 5.24% due 12/17/96.......................... 2,000 1,995
Coca-Cola Co. 5.22% due 12/03/96..................................... 2,400 2,399
Commercial Credit Co. 5.30% due 1/24/97.............................. 1,400 1,389
Deere (John) Capital Corp. 5.23% due 12/26/96........................ 2,600 2,591
Disney (Walt), Co. 5.26% due 1/09/97................................. 2,400 2,386
Lilly (Eli) & Co. 5.26% due 12/02/96................................. 2,700 2,700
Ford Motor Credit Co. 5.31% due 1/08/97.............................. 1,600 1,591
Ford Motor Credit Co. 5.32% due 1/10/97.............................. 600 596
Ford Motor Credit Co. 5.34% due 1/10/97.............................. 1,100 1,094
General Electric Capital Corp. 5.25% due 12/11/96.................... 1,900 1,897
General Electric Capital Corp. 5.25% due 12/20/96.................... 1,700 1,695
General Mills, Inc. 5.24% due 12/23/96............................... 1,925 1,919
Heinz (H.J.) Co. 5.25% due 12/16/96.................................. 2,000 1,996
IBM Credit Corp. 5.25% due 12/10/96.................................. 3,500 3,495
International Bank For Reconstruction & Development Dsc Note 5.22%
due 12/30/96....................................................... 1,300 1,294
International Lease Finance Corp. 5.25% due 12/05/96................. 1,200 1,199
Kellogg Co. 5.30% due 1/02/97........................................ 3,000 2,986
Lucent Technologies, Inc. 5.24% due 12/19/96......................... 3,000 2,992
Minnesota Mining & Manufacturing Co. 5.23% due 12/16/96.............. 3,500 3,492
Motorola, Inc. 5.23% due 12/09/96.................................... 100 100
Motorola, Inc. 5.24% due 12/19/96.................................... 2,000 1,995
National Rural Utilities Cooperative Finance Corp. 5.23% due
12/12/96........................................................... 2,000 1,997
Paccar Financial Corp. 5.26% due 12/19/96............................ 3,000 2,992
PepsiCo, Inc. 5.28% due 1/16/97...................................... 2,100 2,086
Pitney Bowes Credit Corp. 5.24% due 12/09/96......................... 3,700 3,696
President & Fellows Harvard 5.24% due 12/11/96....................... 2,700 2,696
Procter & Gamble Co. 5.27% due 1/15/97............................... 3,243 3,222
SAFECO Credit Co., Inc. 5.29% due 1/22/97............................ 3,000 2,977
Southwestern Bell Telephone Co. 5.22% due 12/06/96................... 3,300 3,298
Warner Lambert Co. 5.24% due 12/09/96................................ 2,300 2,297
--------
TOTAL CORPORATE SHORT-TERM NOTES (cost $86,894)...................... 86,894
--------
</TABLE>
---------------------
A-25
<PAGE> 29
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL AGENCY OBLIGATIONS -- 3.6%
Federal National Mortgage Association Discount Notes 5.22% due
12/12/96........................................................... $ 900 $ 899
Federal National Mortgage Association Discount Notes 5.23% due
12/16/96........................................................... 2,300 2,295
--------
TOTAL FEDERAL AGENCY OBLIGATIONS (cost $3,194)....................... 3,194
--------
TOTAL SHORT-TERM SECURITIES (cost $90,088)........................... 90,088
--------
TOTAL INVESTMENTS --
(cost $90,088) 101.0% 90,088
Liabilities in excess of other assets -- (1.0) (852)
------ --------
NET ASSETS -- 100.0% $ 89,236
========
======
</TABLE>
See Notes to Financial Statements
- ---------------------
A-26
<PAGE> 30
O
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF ASSETS AND LIABILITIES
FOR THE YEAR ENDED NOVEMBER 30, 1996
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSET
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION
SERIES SERIES SERIES SERIES
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at value*....... $744,876 $224,354 $808,511 $140,202
Short-term securities*................. 58,054 24,604 111,063 12,548
Money market accounts.................. 100 100 95 43
Cash................................... 27 1 -- 1
Foreign cash........................... -- 25 -- --
Receivables for --
Sales of investments................. 10,362 64 13 --
Dividends and accrued interest....... 245 417 1,833 906
Fund shares sold..................... 706 11 144 6
Foreign currency contracts........... -- 52 -- --
Prepaid expenses....................... 1 -- 1 --
-------------------------------------------------------------
814,371 249,628 921,660 153,706
-------------------------------------------------------------
LIABILITIES:
Payables for --
Fund shares redeemed................. 388 125 743 43
Purchases of investments............. 371 -- 1,048 500
Advisory fees........................ 194 120 222 39
Management fees...................... 130 48 148 26
Foreign currency contracts........... -- 51 -- --
Other accrued expenses................. 124 140 143 38
-------------------------------------------------------------
1,207 484 2,304 646
-------------------------------------------------------------
NET ASSETS............................. $813,164 $249,144 $919,356 $153,060
===================================================================================
Shares of beneficial interest
outstanding (unlimited shares
authorized).......................... 19,232 15,763 26,038 9,431
Net asset value per share.............. $ 42.28 $ 15.81 $ 35.31 $ 16.23
===================================================================================
COMPOSITION OF NET ASSETS:
Capital paid in........................ $411,699 $171,204 $511,441 $103,083
Accumulated undistributed net
investment income.................... 3,789 3,943 18,313 5,687
Accumulated undistributed net realized
gain (loss) on investments, futures,
options and foreign currency......... 118,468 17,634 123,950 14,841
Unrealized appreciation of
investments.......................... 279,208 56,363 265,652 29,449
-------------------------------------------------------------
Net Assets $813,164 $249,144 $919,356 $153,060
===================================================================================
<CAPTION>
U.S.
BOND SECURITIES MANAGEMENT
SERIES SERIES SERIES
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment securities, at value*....... $121,434 $100,010 $ --
Short-term securities*................. 7,155 7,297 90,088
Money market accounts.................. 101 102 101
Cash................................... 10 314 72
Foreign cash........................... -- -- --
Receivables for --
Sales of investments................. 557 -- --
Dividends and accrued interest....... 2,166 1,241 --
Fund shares sold..................... 18 8 53
Foreign currency contracts........... -- -- --
Prepaid expenses....................... -- -- --
131,441 108,972 90,314
LIABILITIES:
Payables for --
Fund shares redeemed................. 11 38 1,003
Purchases of investments............. -- -- --
Advisory fees........................ 34 28 25
Management fees...................... 23 19 17
Foreign currency contracts........... -- -- --
Other accrued expenses................. 36 35 33
104 120 1,078
NET ASSETS............................. $131,337 $108,852 $89,236
Shares of beneficial interest
outstanding (unlimited shares
authorized).......................... 9,484 9,461 7,841
Net asset value per share.............. $ 13.85 $ 11.51 $ 11.38
COMPOSITION OF NET ASSETS:
Capital paid in........................ $115,245 $100,543 $84,388
Accumulated undistributed net
investment income.................... 12,657 8,429 4,848
Accumulated undistributed net realized
gain (loss) on investments, futures,
options and foreign currency......... (2,282) (1,650) --
Unrealized appreciation of
investments.......................... 5,717 1,530 --
Net Assets $131,337 $108,852 $89,236
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C> <C>
*Costs
Investment Securities................ $465,668 $167,991 $542,860 $110,710
===================================================================================
Short-term Securities................ $58,054 $24,604 $111,062 $12,591
===================================================================================
<CAPTION>
*Costs
<S> <C<C> <C> <C>
Investment Securities................ $115,717 $98,480 --
Short-term Securities................ $7,155 $7,297 $90,088
</TABLE>
See Notes to Financial Statements
---------------------
A-27
<PAGE> 31
O
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSET HIGH-YIELD
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION BOND
SERIES SERIES SERIES SERIES SERIES
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Income:
Dividends*........................... $ 4,725 $ 4,318 $ 18,473 $ 2,500 $ --
Interest............................. 3,554 1,739 4,673 4,030 13,020
--------------------------------------------------------------------------
Total income.................. 8,279 6,057 23,146 6,530 13,020
--------------------------------------------------------------------------
Expenses:
Advisory fees........................ 2,478 1,412 2,672 472 421
Management fees...................... 1,653 564 1,781 314 281
Custodian fees....................... 236 389 252 64 61
Auditing and legal fees.............. 56 20 62 15 14
Reports to investors................. 18 5 17 4 3
Trustees' fees....................... 18 5 20 3 3
Other expenses....................... 24 3 21 1 1
--------------------------------------------------------------------------
Total expenses................ 4,483 2,398 4,825 873 784
--------------------------------------------------------------------------
Net investment income................ 3,796 3,659 18,321 5,657 12,236
--------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on investments....... 118,807 17,946 124,360 14,891 1,680
Net realized foreign exchange loss on
other assets and liabilities......... -- (15) -- -- --
Change in unrealized appreciation/
depreciation of investments.......... (22,910) 21,406 32,410 5,929 3,974
--------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments, foreign currency and
other assets and liabilities......... 95,897 39,337 156,770 20,820 5,654
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 99,693 $42,996 $ 175,091 $ 26,477 $ 17,890
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT/
AAA-RATED CASH
SECURITIES MANAGEMENT
SERIES SERIES
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET INVESTMENT INCOME:
Income:
Dividends*........................... $ -- $ --
Interest............................. 9,188 5,438
-----------------------
Total income.................. 9,188 5,438
-----------------------
Expenses:
Advisory fees........................ 380 318
Management fees...................... 253 212
Custodian fees....................... 59 36
Auditing and legal fees.............. 12 13
Reports to investors................. 2 2
Trustees' fees....................... 3 2
Other expenses....................... -- --
-----------------------
Total expenses................ 709 583
-----------------------
Net investment income................ 8,479 4,855
-----------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on investments....... 118 1
Net realized foreign exchange loss on
other assets and liabilities......... -- --
Change in unrealized appreciation/
depreciation of investments.......... (2,756) --
-----------------------
Net realized and unrealized gain (loss)
on investments, foreign currency and
other assets and liabilities......... (2,638) 1
-----------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 5,841 $ 4,856
=======================
</TABLE>
- ---------------
* Net of foreign withholding taxes of $38; $543; $147 and $17 on Growth,
International, Growth-Income and Asset Allocation Series, respectively
See Notes to Financial Statements
- ---------------------
A-28
<PAGE> 32
O
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED NOVEMBER 30, 1996
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
ASSET HIGH-YIELD
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION BOND
SERIES SERIES SERIES SERIES SERIES
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................. $ 3,796 $ 3,659 $ 18,321 $ 5,657 $ 12,236
Net realized gain on investments....... 118,807 17,946 124,360 14,891 1,680
Net realized foreign exchange loss on
other assets and liabilities......... -- (15) -- -- --
Change in unrealized appreciation/
depreciation of investments.......... (22,910) 21,406 32,410 5,929 3,974
---------------------------------------------------------------------------
Net increase in net assets resulting
from operations...................... 99,693 42,996 175,091 26,477 17,890
---------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income... (5,500) (7,250) (20,695) (5,985) (13,970)
Distributions from net realized gains
on investments....................... (120,665) (4,980) (55,955) (10,955) --
---------------------------------------------------------------------------
Total dividends and distributions paid
to shareholders...................... (126,165) (12,230) (76,650) (16,940) (13,970)
---------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............. 186,903 69,110 75,454 15,816 40,043
Proceeds from shares issued for
reinvestment of dividends and
distributions........................ 126,165 12,230 76,650 16,940 13,970
Cost of shares repurchased............. (370,707) (91,096) (213,332) (42,841) (73,186)
---------------------------------------------------------------------------
Net decrease in net assets resulting
from capital share transactions...... (57,639) (9,756) (61,228) (10,085) (19,173)
---------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................... (84,111) 21,010 37,213 (548) (15,253)
NET ASSETS:
Beginning of period.................... 897,275 228,134 882,143 153,608 146,590
---------------------------------------------------------------------------
End of period.......................... $ 813,164 $ 249,144 $ 919,356 $ 153,060 $ 131,337
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT/
AAA-RATED CASH
SECURITIES MANAGEMENT
SERIES SERIES
------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................. $ 8,479 $ 4,855
Net realized gain on investments....... 118 1
Net realized foreign exchange loss on
other assets and liabilities......... -- --
Change in unrealized appreciation/
depreciation of investments.......... (2,756) --
------------------------
Net increase in net assets resulting
from operations...................... 5,841 4,856
------------------------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income... (11,160) (7,520)
Distributions from net realized gains
on investments....................... -- (1)
------------------------
Total dividends and distributions paid
to shareholders...................... (11,160) (7,521)
------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............. 16,512 250,835
Proceeds from shares issued for
reinvestment of dividends and
distributions........................ 11,160 7,521
Cost of shares repurchased............. (48,439) (267,327)
------------------------
Net decrease in net assets resulting
from capital share transactions...... (20,767) (8,971)
------------------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................... (26,086) (11,636)
NET ASSETS:
Beginning of period.................... 134,938 100,872
------------------------
End of period.......................... $ 108,852 $ 89,236
========================
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C> <C> <C>
Undistributed net investment income.... $ 3,789 $ 3,943 $ 18,313 $ 5,687 $ 12,657
===========================================================================
Shares issued and repurchased:
Sold................................. 4,762 4,811 2,343 1,045 3,028
Issued in reinvestment of dividends
and distributions.................. 3,361 880 2,462 1,178 1,104
Repurchased.......................... (9,518) (6,335) (6,652) (2,849) (5,421)
---------------------------------------------------------------------------
Net decrease........................... (1,395) (644) (1,847) (626) (1,289)
===========================================================================
</TABLE>
<TABLE>
<S> <C> <C>
Undistributed net investment income.... $ 8,429 $ 4,848
Shares issued and repurchased:
Sold................................. 1,469 22,136
Issued in reinvestment of dividends
and distributions.................. 1,030 683
Repurchased.......................... (4,300) (23,640)
----------------------
Net decrease........................... $(1,801) (821)
======================
</TABLE>
See Notes to Financial Statements
---------------------
A-29
<PAGE> 33
O
- ---------------------
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
(loss) 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
=====================================================================================
</TABLE>
<TABLE>
<CAPTION>
CASH
MANAGEMENT
SERIES
--------------------------------------------------
<S> <C>
OPERATIONS:
Net investment income.................. $ 7,516
Net realized gain (loss) on
investments.......................... 1
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 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>
<CAPTION>
<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)
=====================================================================================
</TABLE>
<TABLE>
<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-30
<PAGE> 34
O
- ---------------------
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.
The investment objectives for each series are as follows:
The GROWTH SERIES seeks growth of capital by investing primarily in common
stocks or securities with common stock characteristics, such as convertible
preferred stocks, which demonstrate the potential for appreciation.
The INTERNATIONAL SERIES seeks long-term growth of capital by investing
primarily in securities of issuers domiciled outside the United States.
The GROWTH-INCOME SERIES seeks growth of capital and income by investing
primarily in common stocks or securities which demonstrate the potential for
appreciation and/or dividends.
The ASSET ALLOCATION SERIES seeks high total return (including income and
capital gains) consistent with preservation of capital over the long-term
through a diversified portfolio that can include common stocks and other
equity-type securities (such as convertible bonds and preferred stocks), bonds
and other intermediate and long-term fixed-income securities and money market
instruments (debt securities maturing in one year or less) in any combination.
The HIGH YIELD BOND SERIES seeks a high level of current income and secondarily
seeks capital appreciation by investing primarily in intermediate and long-term
corporate obligations, with emphasis on higher yielding, higher risk, lower
rated or unrated securities.
The U.S. GOVERNMENT/AAA-RATED SECURITIES SERIES seeks a high level of current
income consistent with prudent investment risk and preservation of capital by
investing primarily in a combination of securities guaranteed by the U.S.
Government and other debt securities rated AAA by Standard & Poor's Ratings
Services or Aaa by Moody's Investors Service, Inc. or that have not received a
rating but are determined to be of comparable quality by the investment adviser.
The CASH MANAGEMENT SERIES seeks high current yield while preserving capital by
investing in a diversified selection of high quality money market instruments.
2. SIGNIFICANT ACCOUNTING POLICIES: The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from these estimates.
The 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 or 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.
---------------------
A-31
<PAGE> 35
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.
Purchases and sales of portfolio securities are translated at the rate of
exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when earned or incurred.
The 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.
SECURITIES TRANSACTIONS, DIVIDENDS, INVESTMENT INCOME AND EXPENSES: As is
customary in the mutual fund industry, securities transactions are accounted for
on the first business day following the trade date. Interest income is accrued
daily except when collection is not expected. Dividend income is recorded on the
ex-dividend date except for certain dividends from foreign securities which are
recorded as soon as the 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. 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.
- ---------------------
A-32
<PAGE> 36
For the year ended November 30, 1996, 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................................................................ $(285) $ -- $ 285
International Series......................................................... (288) 288 --
Growth-Income Series......................................................... (164) -- 164
Asset Allocation Series...................................................... (38) 38 --
High-Yield Bond Series....................................................... (427) 427 --
U.S. Government/AAA-Rated Securities Series.................................. 42 (42) --
Cash Management Series....................................................... -- -- --
</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.
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for tax purposes, including short-term securities at November 30,
1996 were as follows (dollars in thousands):
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE NET CAPITAL CAPITAL
UNREALIZED UNREALIZED UNREALIZED COST OF LOSS LOSS
GAIN (LOSS) GAIN INVESTMENTS CARRYOVER* UTILIZED
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------
Growth Series.................................... $303,680 $(24,514) $279,166 $523,764 $ -- $ --
International Series............................. 63,471 (7,109) 56,362 192,596 -- --
Growth-Income Series............................. 273,501 (8,082) 265,419 654,155 -- --
Asset Allocation Series.......................... 29,586 (218) 29,368 123,382 -- --
High-Yield Bond Series........................... 6,806 (1,089) 5,717 122,872 2,159,987 245,197
U.S. Government/AAA-Rated Securities Series...... 2,521 (991) 1,530 105,777 1,649,041 --
Cash Management Series........................... -- -- -- 90,088 -- --
</TABLE>
* Expire 2003-2004
** Post 10/31/96 Capital Loss Deferral; High-Yield Bond Series $121,879
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.
---------------------
A-33
<PAGE> 37
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.
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, 1996, was as follows:
<TABLE>
<CAPTION>
ASSET
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION HIGH-YIELD
SERIES SERIES SERIES SERIES BOND SERIES
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases of portfolio securities........ $192,394 $ 92,019 $ 189,056 $ 56,692 $45,508
Sales of portfolio securities............ 313,937 117,795 331,619 78,078 66,071
U.S. government securities included above
were as follows:
Purchases of U.S. government
securities............................. -- -- -- 19,976 8,360
Sales of U.S. government securities...... -- -- -- 7,214 2,490
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT/
AAA-RATED CASH
SECURITIES MANAGEMENT
SERIES SERIES
-----------------------------
<S> <C> <C>
Purchases of portfolio securities........ $19,525 $ --
Sales of portfolio securities............ 41,213 --
U.S. government securities included above
were as follows:
Purchases of U.S. government
securities............................. 17,322 --
Sales of U.S. government securities...... 26,875 --
</TABLE>
- ---------------------
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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
11/30/92 $ 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
11/30/96 43.50 0.18@ 5.10 5.28 (0.28) (6.22) 42.28 14.02
International Series
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
11/30/96 13.90 0.22@ 2.46 2.68 (0.46) (0.31) 15.81 20.03
Growth-Income Series
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
11/30/96 31.64 0.67@ 5.87 6.54 (0.77) (2.10) 35.31 21.88
Asset Allocation Series
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
11/30/96 15.27 0.56@ 2.17 2.73 (0.63) (1.14) 16.23 19.34
High-Yield Bond Series
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
11/30/96 13.61 1.21@ 0.56 1.77 (1.53) -- 13.85 14.05
U.S. Government/AAA-Rated Securities Series
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
11/30/96 11.98 0.80@ (0.21) 0.59 (1.06) -- 11.51 5.49
Cash Management Series
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
11/30/96 11.65 0.55@ -- 0.55 (0.82) -- 11.38 4.94
</TABLE>
<TABLE>
<CAPTION>
NET RATIO OF NET
ASSETS RATIO OF INVESTMENT
END OF EXPENSES INCOME PORTFOLIO AVERAGE
PERIOD PERIOD TO AVERAGE TO AVERAGE TURNOVER COMMISSION
ENDED (000'S) NET ASSETS NET ASSETS RATE PER SHARE#
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth Series
11/30/92 $644,060 0.56% 0.88% 14.31% $ N/A
11/30/93 735,400 0.55 0.71 21.99 N/A
11/30/94 712,602 0.55 0.56 33.79 N/A
11/30/95 897,275 0.55 0.65 23.72 N/A
11/30/96 813,164 0.55 0.46 25.51 0.0561
International Series
11/30/92 $ 85,919 1.19% 1.88% 21.04% $ N/A
11/30/93 192,162 1.12 1.62 22.56 N/A
11/30/94 259,498 1.04 1.64 21.68 N/A
11/30/95 228,134 1.05 1.95 16.79 N/A
11/30/96 249,144 1.02 1.56 44.94 0.0196
Growth-Income Series
11/30/92 $777,448 0.56% 2.88% 18.81% $ N/A
11/30/93 862,716 0.55 2.60 29.22 N/A
11/30/94 765,971 0.55 2.54 32.97 N/A
11/30/95 882,143 0.55 2.52 18.81 N/A
11/30/96 919,356 0.55 2.07 23.72 0.0564
Asset Allocation Series
11/30/92 $134,100 0.63% 4.84% 21.86% $ N/A
11/30/93 166,555 0.60 4.70 22.66 N/A
11/30/94 142,678 0.59 4.47 48.53 N/A
11/30/95 153,608 0.59 4.04 53.58 N/A
11/30/96 153,060 0.58 3.74 40.97 0.0573
High-Yield Bond Series
11/30/92 $147,951 0.62% 9.40% 75.27% N/A
11/30/93 190,515 0.59 8.43 59.03 N/A
11/30/94 127,467 0.59 8.76 44.97 N/A
11/30/95 146,590 0.59 9.66 31.64 N/A
11/30/96 131,337 0.58 9.09 36.99 N/A
U.S. Government/AAA-Rated Securities Series
11/30/92 $230,798 0.59% 7.32% 47.58% N/A
11/30/93 228,569 0.58 7.19 9.14 N/A
11/30/94 149,368 0.58 7.42 16.95 N/A
11/30/95 134,938 0.59 7.49 43.43 N/A
11/30/96 108,852 0.59 7.03 17.12 N/A
Cash Management Series
11/30/92 $203,548 0.61% 3.21% --% N/A
11/30/93 192,384 0.58 2.59 -- N/A
11/30/94 186,396 0.57 3.52 -- N/A
11/30/95 100,872 0.58 5.32 -- N/A
11/30/96 89,236 0.58 4.81 -- N/A
</TABLE>
- ---------------
@ Calculated based upon average shares outstanding
# The average commission per share is derived by taking the agency commissions
paid on equity securities trades and dividing by the number of shares
purchased or sold.
** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company and First SunAmerica Life Insurance Company.
If such expenses had been included, total return would have been lower for
each period presented.
See Notes to Financial Statements
---------------------
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<PAGE> 39
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- ---------------------
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 Growth Series,
International Series, Growth-Income Series, Asset Allocation Series,
High-Yield Bond Series, U.S. Government/AAA-Rated Securities Series and Cash
Management Series (constituting the Anchor Pathway Fund, hereafter referred
to as the "Fund") at November 30, 1996, 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, 1996 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, 1997
- ---------------------
A-36
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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.
Growth Series
Growth Series S&P 500
------------- -------
11/86 10,000 10,000
11/87 9,566 9,524
11/88 11,661 11,744
11/89 17,337 15,368
11/90 15,854 14,817
11/91 20,094 17,839
11/92 24,373 21,145
11/93 28,822 23,277
11/94 29,781 23,512
11/95 41,077 32,221
11/96 46,837 41,207
GROWTH SERIES
AVERAGE ANNUAL TOTAL RETURN AS OF 11/30/96
------------------------------------------
1-year 14.02%
5-year 18.44%
10-year 16.70%
------------------------------------------
------------------------------------------------------------------
The graphs represent past performance, which is not indicative of
future results.
- ---------------------
A-37
<PAGE> 41
International Series
International MSCI EAFE
------------- ---------
5/90 10,000 10,000
11/90 9,680 9,483
11/91 10,221 10,310
11/92 10,253 9,508
11/93 13,063 11,852
11/94 14,130 13,646
11/95 15,710 14,724
11/96 18,855 16,504
INTERNATIONAL SERIES
AVERAGE ANNUAL TOTAL RETURN AS OF 11/30/96
------------------------------------------
1-year 20.03%
5-year 13.03%
10-year N/A
Since Inception (5/9/90) 10.14%
------------------------------------------
------------------------------------------------------------------
Growth-Income Series
Growth-Income S&P 500
------------- -------
11/86 10,000 10,000
11/87 9,141 9,524
11/88 11,196 11,744
11/89 14,884 15,368
11/90 13,758 14,817
11/91 16,666 17,839
11/92 19,337 21,145
11/93 21,722 23,277
11/94 22,158 23,512
11/95 29,575 32,221
11/96 36,051 41,207
GROWTH INCOME SERIES
AVERAGE ANNUAL TOTAL RETURN AS OF 11/30/96
------------------------------------------
1-year 21.88%
5-year 16.68%
10-year 13.68%
------------------------------------------
------------------------------------------------------------------
The graphs represent past performance, which is not indicative of
future results.
---------------------
A-38
<PAGE> 42
Asset Allocation Series
Asset Salomon Broad
Allocation S&P 500 Investment
Series Grade Bond
---------- -------- -------------
3/89 10,000 10,000 10,000
11/89 11,000 11,530 11,076
11/90 10,837 11,116 11,923
11/91 12,847 13,384 13,640
11/92 14,620 15,863 14,882
11/93 16,192 17,463 16,518
11/94 16,056 17,639 16,016
11/95 21,035 24,172 18,868
11/96 25,104 30,913 19,997
Asset Allocation Series
Average Annual Total Return as of 11/30/96
------------------------------------------
1-year 19.34%
5-year 14.34%
10-year N/A
Since Inception (3/31/89) 12.74%
------------------------------------------------------------------
High-Yield Bond Series
Salomon
High-Yield Salomon Broad Investment
Bond Series High-Yield Grade Bond
----------- ---------- ----------------
11/86 10,000 10,000 10,000
11/87 10,296 10,365 10,170
11/88 11,935 12,118 11,111
11/89 12,993 12,093 12,691
11/90 12,996 10,880 13,681
11/91 16,789 15,638 15,629
11/92 19,159 18,637 17,051
11/93 22,309 22,468 18,927
11/94 21,259 21,520 18,351
11/95 25,292 27,544 21,619
11/96 28,845 30,299 22,912
High-Yield Bond Series
Average Annual Total Return as of 11/30/96
------------------------------------------
1-year 14.05%
5-year 11.42%
10-year 11.18%
------------------------------------------------------------------
The graphs represent past performance, which is not indicative of
future results.
- ---------------------
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<PAGE> 43
U.S. Government/AAA-Rated Securities Series
U.S. Government/ Salomon Brothers
AAA-Rated Securities Treasury/Mortgage
-------------------- -----------------
11/86 10,000 10,000
11/87 9,683 10,173
11/88 10,661 11,069
11/89 11,906 12,649
11/90 12,751 13,668
11/91 14,484 15,571
11/92 15,912 16,945
11/93 17,920 18,718
11/94 17,173 18,182
11/95 19,912 21,297
11/96 21,006 22,558
U.S. GOVERNMENT/AAA-RATED SECURITIES SERIES
AVERAGE ANNUAL TOTAL RETURN AS OF 11/30/96
------------------------------------------
1-year 5.49%
5-year 7.71%
10-year 7.70%
------------------------------------------------------------------
The graphs represent past performance, which is not indicative of
future results.
---------------------
A-40
