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SEMIANNUAL REPORT - MAY 31, 1997
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ANCHOR
PATHWAY
FUND
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DEAR ANCHOR PATHWAY INVESTOR:
We are pleased to report the results of the first half of fiscal
year 1997 -- the six months ended May 31 -- for the seven series
in the Anchor Pathway Fund, which serves as the underlying
investment vehicle for the American Pathway II Variable Annuity.
All of the series' stock funds gained considerable ground over
the period. Equity markets around the world continued their
extraordinary march upward, propelled by the combined forces of
mild inflation, low interest rates and sustained infusions of cash
from enthusiastic investors. In the U.S., a healthy economy and
strong productivity gains boosted corporate profits. At the same
time, a number of factors -- including global competition and a
drive toward efficiency -- kept a lid on inflationary pressures.
Stock markets soared, although not without some volatility. Equity
prices fell sharply in mid-March, only to rebound vigorously a
month later. After erasing gains made in the first half of the
period, the unmanaged Standard & Poor's 500 Composite Index set
new records, and produced a total return of 13.2% for the six
months.
If stock investors seemed optimistic at times, bond investors
tended to focus on the economy's half-empty glass. Concerns about
the pace of economic growth and the run-up in stocks in recent
years led the Federal Reserve Board to raise its target for the
federal funds rate in an attempt to keep inflationary threats in
check. (The federal funds rate is the rate banks charge each other
for overnight loans; it was increased to 5.5% from 5.25% in
March.) Although retail prices remained essentially flat
throughout the period, the Fed's move depressed bond prices, which
returned a scant 1.0% as measured by the Salomon Brothers Broad
Investment-Grade Index. That weakness was reflected in varying
degrees in the results of the series' bond funds.
Here are brief comments on the investment activities of each of
the series:
THE GROWTH SERIES rose 8.3% for the six months ended May 31, as
sustained economic growth translated into gains for many U.S.
corporations. Technology stocks, which had experienced sharp
declines in the previous year, rebounded strongly during the
period. Demand for personal computers helped sales of electronic
components, microprocessors and semiconductors, and a number of
the series' larger investments in these areas posted sizable
gains. They included Texas Instruments, which manufactures
computer chips; LSI Logic, which produces integrated circuits; and
the semiconductor giant Intel. Capital Research and Management
Company ("CRMC") believes the technology sector should continue to
grow as companies find new markets in which to sell their
products. Media businesses were strongly represented among our
largest holdings. Many of these, such as Time Warner, began to see
the benefits of recent consolidations, although Viacom declined
21%. Meanwhile, America Online, the world's largest provider of
online services, recovered from servicing difficulties to increase
a remarkable 56%. The series has substantial investments in a
number of other industries, including leisure and tourism,
manufacturing and health and personal care. In all, 87.3% of net
assets was held in equity-type securities, with the balance in
cash and equivalents.
THE INTERNATIONAL SERIES posted the series' largest gain for the
period, increasing 15.1%. Most major international markets
recorded positive results, with Japan a notable exception. In
Europe, a number of factors contributed to rising stock prices:
moderate inflation and falling interest rates; a broad focus on
corporate restructuring and other streamlining measures; and the
falling value of many currencies relative to the U.S. dollar,
which made the products of export-oriented companies more
competitive in world markets. With nearly half of net assets
invested in Europe, the series was well-positioned to take
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advantage of gains in those markets. Meanwhile, the Japanese
economy continued to struggle with an ongoing banking crisis and
faltering consumer confidence. Although prospects appear to be
improving, overall weakness and a steadily declining yen
translated into a 5% loss in the Japanese market for U.S.
investors. CRMC took the opportunity to make several large
investments in that country: Japanese stocks now account for 14.2%
of net assets, compared with 7.2% six months ago. Elsewhere, the
series benefited from its holdings in Latin America, where markets
were buoyed by an increasingly stable economic environment.
THE GROWTH-INCOME SERIES increased 11.0%. The series, which
emphasizes large, established U.S. companies, participated
strongly in a market run-up dominated by blue-chip stocks. Gains
were broad-based, with appreciation in virtually every sector. The
series also benefited from its substantial holdings in
pharmaceutical companies, such as Warner-Lambert and
Schering-Plough, which have been developing new products and
expanding their markets. Forest products firms began to shake off
their doldrums, as tighter inventories helped boost prices on
paper and pulp. Bowater, the largest producer of newsprint in the
U.S. rose 31%. Meanwhile, oil stocks lagged the market generally,
as weakness in crude oil and gas prices hurt many energy
companies. Given the continued growth in demand for energy,
however, CRMC believes long-term prospects continue to look
favorable for the sector. About 85.9% of the portfolio was
invested in equities, with the remainder in cash and equivalents.
On a cautionary note, while it is always gratifying to report
strong returns, CRMC reminds investors that the series' results in
recent years have been extraordinarily high by historical
measures. Consequently, CRMC would urge you not to extrapolate
future returns from these substantial gains.
THE ASSET ALLOCATION SERIES rose 7.5% for the six months. The
series is managed as though it constitutes the complete portfolio
of a prudent investor, with holdings in all three major classes of
financial assets. As of May 31, 63.6% of net assets was held in
equities, 27.8% in bonds and 8.6% in cash and equivalents. The
stock portion of the series, which is similar to a conservative
growth and income fund, concentrated on large, well-managed firms
in typically stable industries, such as banking, health care and
energy. Many posted above-average increases for the period as
companies took steps to become more efficient and increase
productivity. The overall health of the economy gave new strength
to consumer spending, benefiting retailers such as Circuit City
and Wal-Mart. On the fixed-income side, a lackluster bond market
restrained the series' results somewhat.
THE HIGH-YIELD BOND SERIES increased 5.4% during the six months.
Strong stock markets and record flows into lower rated, higher
risk bonds led to a rally in high-yield securities. The
equity-like characteristics of these bonds also made them less
vulnerable to rising interest rates. As a result, they provided
substantially higher returns than their investment-grade
counterparts. As mentioned six months ago, the health of the
high-yield market presents CRMC with the challenge of finding
attractive securities in which to invest. Prices have remained
relatively stable, while the quality and balance sheets of
companies continue to improve and defaults are very low. Building
the series' portfolio is a never-ending process, one which relies
on in-depth research to help uncover companies that the market
perceives as risky but which CRMC believes are likely to build
value over the long term. CRMC continues to maintain a fairly
large cash and equivalent position of 18.0% of net assets as we
search for appropriate issues for the series.
THE U.S. GOVERNMENT/AAA-RATED SECURITIES SERIES registered a
small gain of 0.2% as rising interest rates depressed bond prices.
During the six-month period, investor pessimism pushed up yields
on 10-year Treasury bonds from a low of 6.1% in December to a high
in April of 7.0%; home mortgage rates also rose. While
fixed-income securities are always vulnerable to interest rate
changes, CRMC has been taking a number of steps to
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help deflect the effects of further market declines on the series.
As of May 31, 1997, mortgage-backed securities accounted for 36.7%
of net assets, which generally pay higher rates to compensate for
their prepayment risk. As always, the series maintained its
conservative, quality-oriented approach, with 47% of net assets in
U.S. Treasury issues.
THE CASH MANAGEMENT SERIES provided a return of 2.4%. After
moving very little for some time, short-term rates inched upward
briefly in response to the Fed's pre-emptive strike against
inflation. The recent turbulence in U.S. stock and bond markets
serves as a good reminder of the valuable role money market funds
can play in a long-term investment portfolio. Managed for stable
value and a reasonable rate of return, the series can be an
important diversification tool. It can also be used as a base for
making regular investments into other funds. The series maintains
a high-quality orientation: Assets are concentrated in top-grade
commercial paper, and all of its money market securities carry the
highest credit rating from Standard & Poor's or Moody's Investor
Services.
Looking forward, a number of factors suggest that a favorable
economic environment could continue. Inflation remains low; a
global pledge to reduce government spending may continue to
bolster financial markets. Meanwhile, publicly traded companies
around the world are taking steps to become globally competitive
and improve their return on capital. However, the recent
stratospheric gains will not continue indefinitely. We would urge
investors to temper their expectations and maintain a long-term
view on their holdings.
As always, we appreciate your support and look forward to
reporting to you again following the close of the fiscal year on
November 30. In the meantime, CRMC will continue to scan the
economic and investment horizons and work hard to help you realize
your objectives.
Sincerely,
/s/ ELI BROAD
Eli Broad
Chairman and Chief Executive Officer,
Anchor National Life Insurance Company
July 15, 1997
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Performance figures quoted are for the Anchor Pathway Fund;
therefore, they are not net of the fees and charges associated
with the variable annuity. Past performance is no guarantee of
future results.
Investments in stocks and bonds are subject to risk, including
stock market and interest rate fluctuations. Investments in non-
U.S. stocks and bonds are subject to additional risks, including
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. Money market instruments generally offer
stability and income, but an investment in these securities is not
guaranteed by the U.S. government or any other entity.
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ANCHOR PATHWAY FUND
GROWTH SERIES INVESTMENT PORTFOLIO -- MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 86.7% SHARES (IN THOUSANDS)
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<S> <C> <C>
CAPITAL EQUIPMENT -- 27.8%
Data Processing & Reproduction -- 12.0%
3Com Corp.+.......................................................... 70,000 $ 3,395
Adobe Systems, Inc. ................................................. 155,000 6,917
Compuserve, Inc.+.................................................... 28,100 316
Computer Associates International, Inc. ............................. 135,000 7,391
Data General Corp.+.................................................. 200,000 4,275
Digital Equipment Corp.+............................................. 75,000 2,691
Mentor Graphics Corp.+............................................... 120,000 915
Oracle Systems Corp.+................................................ 640,000 29,840
Silicon Graphics, Inc.+.............................................. 739,500 13,958
Solectron Corp.+..................................................... 130,000 8,125
Structural Dynamics Research Corp.+.................................. 150,000 3,675
Sybase, Inc.+........................................................ 400,000 6,375
Tandem Computers, Inc.+.............................................. 250,000 3,563
Electrical & Electronics -- 1.1%
Ericsson (L.M.) Telecommunications Co., Class B ADR+................. 158,000 5,629
General Instrument Corp.+............................................ 69,300 1,680
Nokia Corp., Class A ADR............................................. 20,000 1,320
Electronic Components -- 13.8%
Adaptec, Inc.+....................................................... 220,000 8,085
Advanced Micro Devices, Inc.+........................................ 60,000 2,400
Analog Devices, Inc.+................................................ 486,666 13,018
Intel Corp. ......................................................... 145,600 22,816
LSI Logic Corp.+..................................................... 285,000 11,899
Microchip Technology, Inc.+.......................................... 40,000 1,420
Newbridge Networks Corp. ADR+........................................ 100,000 4,012
Park Electrochemical Corp. .......................................... 187,200 4,703
Rogers Corp.+........................................................ 109,200 3,604
SCI Systems, Inc.+................................................... 100,000 6,500
Texas Instruments, Inc. ............................................. 295,600 26,567
Energy Equipment -- 0.9%
Reading & Bates Corp.+............................................... 175,000 4,441
Schlumberger Ltd. ................................................... 20,000 2,382
---------
211,912
---------
CONSUMER GOODS -- 5.3%
Beverages & Tobacco -- 1.8%
PepsiCo, Inc. ....................................................... 80,000 2,940
Philip Morris Cos., Inc. ............................................ 240,000 10,560
Health & Personal Care -- 1.6%
Alpha Beta Technology, Inc.+......................................... 70,000 656
Forest Labs, Inc.+................................................... 81,000 3,422
Omnicare, Inc........................................................ 230,000 6,584
Pharmacia & Upjohn, Inc. ............................................ 58,000 2,008
</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
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<S> <C> <C>
CONSUMER GOODS (continued)
Recreation & Other Consumer Products -- 1.9%
Electronic Arts Inc.+................................................ 100,000 $ 3,200
Mattel, Inc. ........................................................ 370,308 11,063
---------
40,433
---------
ENERGY -- 1.0%
Energy Sources -- 1.0%
Murphy Oil Corp. .................................................... 80,000 3,710
Union Texas Petroleum Holdings, Inc. ................................ 200,000 4,025
---------
7,735
---------
FINANCE -- 4.1%
Banking -- 1.0%
Charter One Financial, Inc. ......................................... 73,500 3,445
Commerce Bancshares, Inc. ........................................... 38,686 1,693
Norwest Corp. ....................................................... 50,000 2,675
Financial Services -- 0.9%
Federal National Mortgage Association................................ 150,000 6,544
Insurance -- 2.2%
Everest Reinsurance Holdings, Inc. .................................. 40,000 1,360
EXEL Ltd. ........................................................... 130,000 5,752
Transatlantic Holdings, Inc. ........................................ 110,000 9,859
---------
31,328
---------
MATERIALS -- 2.5%
Agricultural Services -- 1.3%
Pioneer Hi-Bred International, Inc. ................................. 140,900 9,828
Chemicals -- 1.2%
Air Products & Chemicals, Inc. ...................................... 25,000 1,943
Valspar Corp. ....................................................... 250,000 7,000
---------
18,771
---------
SERVICES -- 41.9%
Broadcasting & Media -- 1.1%
Netscape Communications Corp.+....................................... 284,300 8,139
Broadcasting & Publishing -- 14.3%
Adelphia Communications Corp.+....................................... 205,000 1,179
BHC Communications, Inc., Class A+................................... 55,821 6,112
Cablevision Systems Corp., Class A+.................................. 70,000 2,284
Comcast Corp. Class A................................................ 360,000 6,255
Gaylord Entertainment Co., Class A................................... 180,000 4,005
News Corp., Ltd. ADR................................................. 680,000 12,070
Tele-Communications, Inc., Class A+.................................. 504,025 10,994
Tele-Communications TCI Group, Class A+.............................. 707,625 9,991
Time Warner, Inc. ................................................... 843,750 39,234
U.S. West Media Group+............................................... 110,000 2,186
Viacom, Inc., Class B+............................................... 515,000 15,289
Business & Public Services -- 13.3%
AccuStaff, Inc.+..................................................... 100,000 2,400
Air & Water Technologies Corp., Class A+............................. 54,800 260
America Online, Inc.+................................................ 566,500 31,299
Avery Dennison Corp. ................................................ 80,000 3,010
Columbia/HCA Healthcare Corp. ....................................... 263,125 9,637
CUC International, Inc.+............................................. 165,000 3,795
Ecolab, Inc. ........................................................ 100,000 4,163
</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Business & Public Services (continued)
Electronic Data Systems Corp. ....................................... 105,000 $ 3,924
Federal Express Corp.+............................................... 250,000 13,094
Manpower, Inc. ...................................................... 41,400 1,853
Oxford Health Plans, Inc.+........................................... 188,000 13,254
Pacificare Health Systems, Inc. ..................................... 9,777 733
Republic Industries, Inc.+........................................... 165,000 3,970
USA Waste Services, Inc.+............................................ 110,000 3,988
Waste Management Inc................................................. 191,912 6,093
Leisure & Tourism -- 6.9%
Carnival Corp., Class A.............................................. 50,000 1,900
Disney (Walt) Co. ................................................... 335,000 27,428
Harrah's Entertainment, Inc.+........................................ 160,000 2,980
HFS, Inc.+........................................................... 117,100 6,309
Host Marriott Corp.+................................................. 500,000 8,812
Marriott International, Inc. ........................................ 50,000 2,887
Mirage Resorts, Inc.+................................................ 100,000 2,388
Merchandising -- 3.0%
Barnes & Noble, Inc.+................................................ 204,400 8,508
Consolidated Stores Corp.+........................................... 137,500 5,259
HSN, Inc. ........................................................... 158,250 4,847
Limited, Inc. ....................................................... 96,500 1,954
Spiegel, Inc., Class A............................................... 366,600 2,429
Telecommunications -- 0.9%
AirTouch Communications, Inc.+....................................... 50,000 1,394
Ascend Communications, Inc.+......................................... 100,000 5,575
Transportation: Airlines -- 2.4%
AMR Corp.+........................................................... 70,000 6,956
Delta Air Lines, Inc. ............................................... 10,000 938
Southwest Airlines Co. .............................................. 405,000 10,429
---------
320,204
---------
OTHER COMMON STOCK -- 4.1%........................................... 31,410
---------
TOTAL COMMON STOCK (cost $427,647)................................... 661,793
---------
<CAPTION>
PREFERRED STOCK -- 0.6%
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
SERVICES -- 0.6%
Broadcasting & Publishing -- 0.6%
News Corp., Ltd. ADR (cost $2,314)................................... 340,000 5,015
---------
<CAPTION>
WARRANTS -- 0.0%+
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<S> <C> <C>
SERVICES -- 0.0%
Business & Public Services -- 0.0%
Stevens International, Inc. Class A 10/30/97 (cost $0)............... 311 0
---------
TOTAL INVESTMENT SECURITIES (cost $429,961) 666,808
---------
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 12.8% (IN THOUSANDS) (IN THOUSANDS)
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<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 9.3%
American Express Credit Corp. 5.56% due 6/18/97...................... $ 5,000 $ 4,987
CIT Group Holdings, Inc. 5.50% due 7/03/97........................... 6,300 6,269
Coca-Cola Co. 5.48% due 6/06/97...................................... 4,000 3,997
Deere (John) Capital Corp. 5.53% due 7/15/97......................... 14,500 14,402
Ford Motor Credit Co. 5.52% due 6/20/97.............................. 13,200 13,161
General Electric Capital Corp. 5.65% due 6/02/97..................... 1,950 1,950
Lucent Technologies, Inc. 5.52% due 7/08/97.......................... 1,000 994
National Rural Utilities Cooperative Finance Corp. 5.54% due
6/16/97............................................................ 3,500 3,492
PepsiCo, Inc. 5.50% due 6/16/97...................................... 11,900 11,873
Xerox Corp. 5.50% due 6/23/97........................................ 9,600 9,568
---------
TOTAL CORPORATE SHORT-TERM NOTES (cost $70,693)...................... 70,693
---------
FEDERAL AGENCY OBLIGATIONS -- 3.5%
Federal Home Loan Mortgage Discount Notes 5.46% due 6/13/97.......... 9,800 9,782
Federal National Mortgage Association Discount Notes 5.48% due
6/19/97............................................................ 3,600 3,590
Federal National Mortgage Association Discount Notes 5.53% due
7/21/97............................................................ 6,300 6,252
Federal National Mortgage Association Discount Notes 5.54% due
7/2/97............................................................. 7,315 7,280
---------
TOTAL FEDERAL AGENCY OBLIGATIONS (cost $26,904)...................... 26,904
---------
TOTAL SHORT-TERM SECURITIES (cost $97,597)........................... 97,597
---------
TOTAL INVESTMENTS --
(cost $527,558) 100.1% 764,405
Liabilities in excess of other assets -- (0.1) (897)
------ ---------
NET ASSETS -- 100.0% $ 763,508
====== =========
</TABLE>
-----------------------------
+ Non-income producing securities
ADR - American Depository Receipt
See Notes to Financial Statements
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ANCHOR PATHWAY FUND
INTERNATIONAL SERIES INVESTMENT PORTFOLIO -- MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
COMMON & PREFERRED STOCK -- 89.3% SHARES (IN THOUSANDS)
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
AUSTRALIA -- 3.0%
Coca-Cola Amatil Ltd.# (Consumer Goods)............................ 260,716 $ 3,018
Western Mining Corp. Holdings Ltd. ADR+ (Materials)................ 738,326 4,775
---------
7,793
---------
BERMUDA -- 0.1%
Mandarin Oriental (Services)....................................... 145,034 164
---------
BRAZIL -- 2.8%
Centrais Eletricas Brasileiras S/A-Eletrobras ADR (Capital
Equipment)....................................................... 183,000 4,577
Companhia Energetica De Sao Paulo ADR (Energy)..................... 85,000 1,428
Companhia Paranaense de Energia-Copel (Energy)..................... 85,411,000 1,261
---------
7,266
---------
CANADA -- 7.3%
Bank Nova Scotia Halifax (Finance)................................. 103,400 4,284
Four Seasons Hotels, Inc. (Services)............................... 14,700 383
Imasco Ltd. (Consumer Goods)....................................... 232,000 6,498
Northern Telecom Ltd. (Services)................................... 47,000 3,948
Royal Bank of Canada (Finance)..................................... 72,000 3,141
Teck Corp. Class B (Capital Equipment)............................. 40,000 886
---------
19,140
---------
FINLAND -- 0.5%
Nokia (AB) OY Corp. Series K (Multi-industry)...................... 20,000 1,307
---------
FRANCE -- 2.9%
Moet-Hennessy Louis Vuitton (Consumer Goods)....................... 8,500 2,058
Pathe+ (Services).................................................. 18,500 4,261
Total SA, Series B (Energy)........................................ 13,876 1,268
---------
7,587
---------
GERMANY -- 6.6%
Bayerische Motoren Werke AG (Consumer Goods)....................... 6,072 4,970
Bayerische Motoren Werke AG NV Preferred (Consumer Goods).......... 2,604 1,493
Mannesmann AG (Capital Equipment).................................. 6,300 2,558
Volkswagen AG (Consumer Goods)..................................... 12,500 8,075
---------
17,096
---------
HONG KONG -- 8.7%
Hong Kong Electric Holdings+ (Energy).............................. 1,032,000 3,716
Hong Kong Telecommunications Ltd. (Information Technology)......... 1,370,000 3,032
HSBC Holdings PLC (Finance)........................................ 154,800 4,695
Hutchison Whampoa Ltd. (Multi-industry)............................ 1,350,000 11,238
---------
22,681
---------
INDONESIA -- 0.8%
PT Indonesian Satellite Corp. ADR+ (Services)...................... 49,100 1,467
PT Indonesian Satellite Corp. alien shares (Services).............. 199,000 593
---------
2,060
---------
</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON & PREFERRED STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
IRELAND -- 0.8%
Independent Newspapers (Services).................................. 394,764 $ 2,099
---------
ITALY -- 4.4%
Seat SpA+ (Services)............................................... 240,000 46
Seat SpA+ (Services)............................................... 120,000 36
STET (Services).................................................... 120,000 606
STET Risp (Services)............................................... 240,000 942
Telecom Italia Mobile SpA (Services)............................... 3,346,050 9,814
Telecom Italia Mobile SpA-Savings Shares (Services)................ 64,800 113
---------
11,557
---------
JAPAN -- 14.2%
Amway Japan Ltd. ADR (Consumer Goods).............................. 36,000 716
Fuji Bank Ltd. (Finance)........................................... 320,000 4,122
Fujitsu Ltd. (Capital Equipment)................................... 200,000 2,463
Kawasaki Steel Corp. (Materials)................................... 580,000 1,703
Mitsubishi Corp. (Consumer Goods).................................. 65,000 765
Murata Manufacturing Co., Ltd. (Information Technology)............ 45,000 1,782
Sakura Bank Ltd. (Finance)......................................... 610,000 3,651
Sankyo Co., Ltd. (Consumer Goods).................................. 260,000 8,239
Sony Corp. (Consumer Goods)........................................ 22,000 1,853
Suzuki Motor Corp. (Consumer Goods)................................ 179,000 2,244
Tokyo Electron Ltd. (Information Technology)....................... 120,000 6,049
Toyota Motor Corp. (Consumer Goods)................................ 115,000 3,298
---------
36,885
---------
KOREA -- 0.8%
Korea Electric Power Corp. (Energy)................................ 39,000 1,203
Korea Electric Power Corp. ADR (Energy)............................ 26,000 471
Korea Mobile Telecommunications Corp. (Services)................... 360 222
Samsung Electronics* (Information Technology)...................... 1,080 106
---------
2,002
---------
LUXEMBOURG -- 0.9%
Safra Republic Holdings, Inc. (Finance)............................ 10,000 2,250
---------
MEXICO -- 2.4%
Cifra SA de CV (Consumer Goods).................................... 23,911 41
Cifra SA de CV-Series C+ (Consumer Goods).......................... 195,500 309
Grupo Financiero Banamex-Accival SA de CV-Series B+ (Finance)...... 324,000 701
Grupo Financiero Banamex-Accival SA de CV-Series L+ (Finance)...... 26,406 52
Grupo Televisa SA de CV ADR+ (Services)............................ 35,000 1,002
Telefonos de Mexico SA ADR (Services).............................. 95,200 4,225
---------
6,330
---------
NETHERLANDS -- 2.7%
Philips Electronics (Consumer Goods)............................... 76,000 4,155
Vereenigde Ned Uitgevers (Services)................................ 130,000 2,934
---------
7,089
---------
NEW ZEALAND -- 0.0%
Brierley Investment Ltd. (Multi-industry).......................... 2 0
Carter Holt Harvey Ltd. (Materials)................................ 1 0
---------
0
---------
SPAIN -- 4.2%
Telefonica de Espana SA (Services)................................. 310,000 8,942
Telefonica de Espana SA ADR (Services)............................. 24,000 2,097
---------
11,039
---------
</TABLE>
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<CAPTION>
VALUE
COMMON & PREFERRED STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SWEDEN -- 3.0%
Ericsson LM Telecommunications Co. Class B (Capital Equipment)..... 195,200 $ 6,850
Ericsson LM Telecommunications Co. Class B CV ADR (Capital
Equipment)....................................................... 3,500 17
Kinnevik-Series A (Finance)........................................ 23,900 635
Kinnevik-Series B (Finance)........................................ 15,000 410
---------
7,912
---------
SWITZERLAND -- 5.8%
Holderbank Financiere Glarus (Materials)........................... 3,886 3,408
Nestle SA (Consumer Goods)......................................... 1,250 1,553
Novartis AG (Consumer Goods)....................................... 7,454 10,104
---------
15,065
---------
UNITED KINGDOM -- 12.6%
Bank of Scotland (Finance)......................................... 930,500 6,008
British Aerospace PLC (Capital Equipment).......................... 140,000 2,847
Kingfisher PLC (Consumer Goods).................................... 225,000 2,626
Lloyds TSB Group PLC (Finance)..................................... 550,000 5,531
Rentokil Initial PLC (Multi-industry).............................. 900,000 3,460
Reuters Holdings PLC (Services).................................... 488,000 5,476
Scottish Power PLC (Energy)........................................ 132,240 829
Severn Trent PLC (Energy).......................................... 480,377 6,129
---------
32,906
---------
OTHER COMMON STOCK -- 4.8%......................................... 12,380
---------
TOTAL COMMON & PREFERRED STOCK (cost $177,240)..................... 232,608
---------
<CAPTION>
RIGHTS+ -- 0.0%
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
KOREA -- 0.0%
Samsung Electronics rights expiring 7/01/97* (cost $0)............. 1 51
---------
TOTAL INVESTMENT SECURITIES (cost $177,240) 232,659
---------
<CAPTION>
PRINCIPAL
AMOUNT
SHORT-TERM SECURITIES -- 10.3% (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 9.6%
Daimler Benz North America 5.56% due 7/07/97....................... $ 5,000 4,972
Deutsche Bank Financial, Inc. 5.52% due 7/07/97.................... 5,500 5,470
Exxon Imperial U.S., Inc. 5.52% due 6/03/97........................ 4,600 4,598
France Telecom 5.56% due 6/13/97................................... 5,000 4,991
Halifax Building Society 5.50% due 6/09/97......................... 3,000 2,996
Halifax Building Society 5.52% due 6/09/97......................... 1,900 1,898
---------
TOTAL CORPORATE SHORT-TERM NOTES (cost $24,925) 24,925
---------
</TABLE>
- ---------------------
10
<PAGE> 12
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES (continued) (IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
FEDERAL AGENCY OBLIGATIONS -- 0.7%
Federal National Mortgage Association Discount Notes 5.29% due
6/17/97.......................................................... $ 870 $ 868
Federal National Mortgage Association Discount Notes 5.40% due
6/23/97.......................................................... 1,000 997
---------
TOTAL FEDERAL AGENCY OBLIGATIONS (cost $1,865)..................... 1,865
---------
TOTAL SHORT-TERM SECURITIES (cost $26,790)......................... 26,790
---------
TOTAL INVESTMENTS --
(cost $204,030) 99.6% 259,449
Other assets less liabilities -- 0.4 913
------ ---------
NET ASSETS -- 100.0% $ 260,362
====== =========
</TABLE>
-----------------------------
# Resale restricted to qualified institutional buyers
+ Non-income producing securities
* Fair value determined by Trustees
ADR - American Depository Receipt
See Notes to Financial Statements
---------------------
11
<PAGE> 13
O
- ---------------------
ANCHOR PATHWAY FUND
GROWTH-INCOME SERIES INVESTMENT PORTFOLIO -- MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 85.8% SHARES (IN THOUSANDS)
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
CAPITAL EQUIPMENT -- 11.2%
Aerospace & Military Technology -- 1.7%
Boeing Co. .......................................................... 20,000 $ 2,105
General Motors Corp., Class H........................................ 85,000 4,685
Litton Industries, Inc.+............................................. 1,300 59
Raytheon Co. ........................................................ 25,000 1,194
Sundstrand Corp. .................................................... 130,000 6,467
United Technologies Corp. ........................................... 10,000 804
Data Processing & Reproduction -- 2.1%
Adobe Systems, Inc. ................................................. 40,000 1,785
Oracle Systems Corp.+................................................ 100,000 4,663
Silicon Graphics, Inc.+.............................................. 294,400 5,557
Xerox Corp. ......................................................... 110,000 7,452
Electrical & Electronics -- 1.2%
Ericsson (L.M.) Telecommunications Co., Class B ADR.................. 80,000 2,850
Nokia Corp., Class A ADR............................................. 120,000 7,920
Electronic Components -- 0.3%
Rockwell International Corp. ........................................ 47,000 3,032
Energy Equipment -- 1.0%
Schlumberger Ltd..................................................... 50,000 5,956
Western Atlas, Inc.+................................................. 50,000 3,388
Industrial Components -- 1.4%
Dana Corp. .......................................................... 50,000 1,806
Echlin, Inc. ........................................................ 40,000 1,335
Federal-Mogul Corp. ................................................. 80,000 2,330
Goodyear Tire & Rubber Co. .......................................... 80,000 4,680
ITT Industries, Inc.................................................. 25,000 619
New Holland NV+...................................................... 100,000 2,450
Machinery & Engineering -- 3.5%
Caterpillar, Inc. ................................................... 120,500 11,764
Crompton & Knowles Corp. ............................................ 120,000 2,805
Deere & Co. ......................................................... 190,000 9,713
Ingersoll-Rand Co. .................................................. 80,000 4,360
Parker-Hannifin Corp. ............................................... 75,000 3,947
---------
103,726
---------
CONSUMER GOODS -- 17.0%
Appliances & Household Durables -- 0.3%
York International Corp. ............................................ 64,800 3,143
Automotive -- 1.3%
Chrysler Corp........................................................ 100,000 3,175
Ford Motor Co. ...................................................... 110,000 4,125
Harley-Davidson, Inc. ............................................... 100,000 4,475
Beverages & Tobacco -- 3.2%
PepsiCo, Inc......................................................... 210,000 7,717
</TABLE>
- ---------------------
12
<PAGE> 14
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER GOODS (continued)
Beverages & Tobacco (continued)
Philip Morris Cos., Inc. ............................................ 255,000 $ 11,220
Seagram Co. Ltd. .................................................... 220,000 8,855
UST, Inc. ........................................................... 80,000 2,280
Food & Household Products -- 2.1%
CPC International, Inc. ............................................. 50,000 4,300
General Mills, Inc. ................................................. 45,000 2,846
Kellogg Co. ......................................................... 15,000 1,106
McCormick & Co., Inc................................................. 200,000 5,225
Unilever NV.......................................................... 30,000 5,813
Health & Personal Care -- 9.0%
American Home Products Corp. ........................................ 170,000 12,962
Columbia/HCA Healthcare Corp. ....................................... 100,000 3,662
Johnson & Johnson Co. ............................................... 60,000 3,592
Kimberly-Clark Corp. ................................................ 80,000 4,010
Merck & Co., Inc. ................................................... 105,000 9,437
Pacificare Health Systems, Inc., Class A............................. 38,500 2,888
Pfizer, Inc. ........................................................ 175,000 18,003
Schering-Plough Corp. ............................................... 160,000 14,520
Tambrands, Inc. ..................................................... 30,000 1,448
Warner-Lambert Co. .................................................. 120,000 12,090
Recreation & Other Consumer Products -- 0.7%
Eastman Kodak Co. ................................................... 60,000 4,973
Polaroid Corp. ...................................................... 30,000 1,530
Textiles & Apparel -- 0.4%
V.F. Corp. .......................................................... 45,000 3,516
---------
156,911
---------
ENERGY -- 9.9%
Energy Services -- 1.2%
Duke Power Co. ...................................................... 70,000 3,150
El Paso Natural Gas Co. ............................................. 3,255 193
GPU, Inc. ........................................................... 100,000 3,500
McDermott International Inc. ........................................ 150,000 4,162
Energy Sources -- 8.1%
Amoco Corp. ......................................................... 100,000 8,937
Ashland, Inc. ....................................................... 48,800 2,336
Atlantic Richfield Co. .............................................. 80,000 11,640
Exxon Corp. ......................................................... 60,000 3,555
Murphy Oil Corp. .................................................... 50,000 2,319
Pennzoil Co. ........................................................ 90,000 4,984
Phillips Petroleum Co. .............................................. 135,000 5,738
Repsol SA ADR........................................................ 50,000 2,106
Royal Dutch Petroleum Co. ADR........................................ 30,000 5,858
Texaco, Inc. ........................................................ 40,000 4,365
Total SA ADR......................................................... 96,338 4,395
Ultramar Diamond Shamrock Corp....................................... 283,100 9,342
Valero Energy Corp. ................................................. 260,000 9,295
Utilities: Electric, Gas & Water -- 0.6%
Consolidated Edison Co. of New York, Inc. ........................... 100,000 2,913
Union Electric Co. .................................................. 80,000 2,930
---------
91,718
---------
</TABLE>
---------------------
13
<PAGE> 15
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 11.1%
Banking -- 7.1%
Banc One Corp. ...................................................... 30,000 $ 1,298
Bank of New York, Inc. .............................................. 160,000 6,820
Bank Tokyo Mitsubishi, Ltd........................................... 100,000 1,788
BankAmerica Corp. ................................................... 65,000 7,597
Chase Manhattan Corp. ............................................... 35,000 3,307
Citicorp............................................................. 30,000 3,431
CoreStates Financial Corp. .......................................... 92,500 4,891
First Chicago Corp. ................................................. 50,000 2,962
First Union Corp. ................................................... 80,000 6,870
Hibernia Corp., Class A.............................................. 200,000 2,650
Huntington Bancshares, Inc. ......................................... 76,000 2,156
KeyCorp.............................................................. 85,000 4,622
Morgan (J.P.) & Co., Inc. ........................................... 30,000 3,225
Northern Trust Corp. ................................................ 40,000 1,965
Norwest Corp. ....................................................... 140,000 7,490
Sakura Bank Ltd. .................................................... 35,000 2,030
SunTrust Banks, Inc. ................................................ 50,000 2,669
Financial Services -- 0.7%
Associates First Capital Corp., Class A.............................. 5,000 236
Beneficial Corp. .................................................... 20,000 1,285
FINOVA Group, Inc. .................................................. 25,000 1,863
Household International, Inc. ....................................... 30,000 2,948
Insurance -- 3.3%
Allstate Corp. ...................................................... 100,000 7,363
Gallagher (Arthur J.) & Co. ......................................... 95,300 3,026
General Reinsurance Group............................................ 50,000 8,762
Liberty Corp. ....................................................... 75,000 2,981
SAFECO Corp. ........................................................ 130,000 5,655
St. Paul Cos., Inc. ................................................. 40,000 2,865
---------
102,755
---------
MATERIALS -- 12.5%
Agricultural Services -- 0.3%
Pioneer Hi-Bred International, Inc. ................................. 43,300 3,020
Chemicals -- 4.1%
Dow Chemical Co. .................................................... 65,000 5,419
du Pont (E.I.) de Nemours & Co. ..................................... 55,000 5,988
Great Lakes Chemical Corp. .......................................... 20,000 978
Lyondell Petrochemical Co. .......................................... 60,000 1,320
Mallinckrodt, Inc. .................................................. 130,900 4,892
Monsanto Co. ........................................................ 150,000 6,600
PPG Industries, Inc. ................................................ 50,000 2,906
Praxair, Inc. ....................................................... 100,000 5,263
Witco Corp. ......................................................... 120,000 4,440
Forest Products & Paper -- 4.8%
Bowater, Inc. ....................................................... 230,000 11,356
Georgia-Pacific Corp. ............................................... 65,000 5,736
International Paper Co. ............................................. 100,000 4,800
James River Corp. ................................................... 125,000 4,391
Rayonier, Inc. ...................................................... 92,500 3,966
Sonoco Products Co. ................................................. 75,000 2,184
Union Camp Corp. .................................................... 175,000 9,188
Westvaco Corp. ...................................................... 60,000 1,875
Weyerhaeuser Co. .................................................... 25,000 1,247
</TABLE>
- ---------------------
14
<PAGE> 16
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Metals & Minerals -- 3.3%
Aluminum Co. of America.............................................. 240,000 $ 17,670
Inco Ltd. ........................................................... 30,000 990
Norsk Hydro ASA ADR.................................................. 50,000 2,537
Potash Corp. Saskatchewan, Inc. ..................................... 110,000 9,034
---------
115,800
---------
MULTI-INDUSTRY -- 1.9%
Multi-Industry -- 1.9%
AlliedSignal, Inc. .................................................. 40,000 3,070
FMC Corp.+........................................................... 75,000 5,400
Tenneco Inc. ........................................................ 90,000 4,028
Textron, Inc. ....................................................... 40,000 4,740
---------
17,238
---------
SERVICES -- 21.7%
Broadcasting & Publishing -- 3.3%
Gannett Co., Inc. ................................................... 40,000 3,700
Media General Inc. .................................................. 75,800 2,317
New York Times Co., Class A.......................................... 5,700 263
News Corp. Ltd. ADR.................................................. 140,000 2,485
Scripps (E.W) Co., Class A........................................... 135,000 5,147
Tele-Communications, Inc., Class A................................... 217,500 4,744
Time Warner, Inc. ................................................... 100,000 4,650
U.S. West Inc. Media Group+.......................................... 46,800 930
Viacom, Inc., Class B................................................ 200,000 5,937
Business & Public Services -- 5.2%
3Com Corp.+.......................................................... 80,000 3,880
ACNielsen Corp.+..................................................... 45,000 759
Alexander & Baldwin, Inc. ........................................... 180,000 4,883
Browning-Ferris Industries, Inc. .................................... 255,800 8,377
Cognizant Corp.+..................................................... 143,500 5,310
Dun & Bradstreet Corp. .............................................. 50,000 1,306
Electronic Data Systems Corp. ....................................... 280,000 10,465
Manpower, Inc. ...................................................... 75,000 3,356
Pitney Bowes, Inc. .................................................. 30,000 2,108
Waste Management Inc. ............................................... 241,912 7,681
Leisure & Tourism -- 1.4%
Disney (Walt) Co. ................................................... 140,000 11,462
Host Marriott Corp.+................................................. 110,000 1,939
Merchandising -- 4.4%
Circuit City Stores, Inc. ........................................... 395,000 15,602
Federated Department Stores, Inc.+................................... 120,000 4,440
Gap, Inc............................................................. 100,000 3,425
Giant Foods, Inc., Class A........................................... 150,000 4,941
Penney (J.C.) Co., Inc. ............................................. 100,000 5,150
Wal-Mart Stores, Inc. ............................................... 250,000 7,438
Telecommunications -- 5.4%
AirTouch Communications, Inc.+....................................... 81,013 2,258
Ameritech Corp. ..................................................... 135,000 8,842
AT&T Corp. .......................................................... 470,000 17,331
MCI Communications Corp. ............................................ 180,000 6,908
SBC Communications, Inc. ............................................ 40,000 2,340
Telefonos de Mexico SA ADR........................................... 130,000 5,769
U.S. West Communications Group....................................... 171,800 6,292
</TABLE>
---------------------
15
<PAGE> 17
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Transportation: Airlines -- 0.7%
AMR Corp.+........................................................... 65,000 $ 6,459
Transportation: Rail & Road -- 1.3%
Norfolk Southern Corp. .............................................. 65,000 6,313
Union Pacific Corp. ................................................. 80,000 5,420
---------
200,627
---------
OTHER COMMON STOCK -- 0.5%........................................... 4,973
---------
TOTAL COMMON STOCK (cost $516,407)................................... 793,748
---------
PREFERRED STOCK -- 0.1%
--------------------------------------------------------------------------------------------------------
SERVICES -- 0.1%
Broadcasting & Publishing -- 0.1%
News Corp. Ltd. ADR (cost $1,044).................................... 80,000 1,180
---------
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS -- 0.3% (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
SERVICES -- 0.3%
Business & Public Services -- 0.3%
CUC International, Inc. 3.00% 2002 (cost $2,994)..................... $ 3,000 2,985
---------
TOTAL INVESTMENT SECURITIES (cost $520,445) 797,913
---------
SHORT-TERM SECURITIES -- 13.6%
--------------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 9.9%
General Electric Capital Corp. 5.65% due 6/02/97..................... 7,800 7,799
International Lease Finance Corp. 5.53% due 7/22/97.................. 8,800 8,731
International Lease Finance Corp. 5.56% due 8/21/97.................. 5,700 5,629
Lucent Technologies, Inc. 5.54% due 6/03/97.......................... 9,600 9,597
National Rural Utilities Cooperative Finance Corp. 5.52% due
6/27/97............................................................ 10,000 9,960
PepsiCo, Inc. 5.50% due 6/16/97...................................... 7,800 7,782
PepsiCo, Inc. 5.50% due 7/14/97...................................... 13,000 12,915
Procter & Gamble Co. 5.50% due 6/30/97............................... 4,000 3,982
Warner-Lambert Co. 5.50% due 6/25/97................................. 12,900 12,852
Xerox Corp. 5.50% due 6/23/97........................................ 11,900 11,860
---------
TOTAL CORPORATE SHORT-TERM NOTES (cost $91,107)...................... 91,107
---------
</TABLE>
- ---------------------
16
<PAGE> 18
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL AGENCY OBLIGATIONS -- 3.7%
Federal Home Loan Mortgage Discount Notes 5.46% due 6/13/97.......... $ 10,200 $ 10,181
Federal Home Loan Mortgage Discount Notes 5.53% due 8/12/97.......... 1,100 1,088
Federal National Mortgage Association Discount Notes 5.53% due
7/21/97............................................................ 6,200 6,153
Federal National Mortgage Association Discount Notes 5.54% due
6/24/97............................................................ 16,900 16,840
---------
TOTAL FEDERAL AGENCY OBLIGATIONS (cost $34,262)...................... 34,262
---------
TOTAL SHORT-TERM SECURITIES (cost $125,369).......................... 125,369
---------
TOTAL INVESTMENTS --
(cost $645,814) 99.8% 923,282
Other assets less liabilities -- 0.2 1,648
------ ---------
NET ASSETS -- 100.0% $ 924,930
====== =========
</TABLE>
-----------------------------
+ Non-income producing securities
ADR - American Depository Receipt
See Notes to Financial Statements
---------------------
17
<PAGE> 19
O
- ---------------------
ANCHOR PATHWAY FUND
ASSET ALLOCATION SERIES INVESTMENT PORTFOLIO -- MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 63.3% SHARES (IN THOUSANDS)
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
CAPITAL EQUIPMENT -- 9.6%
Aerospace & Military Technology -- 2.4%
Boeing Co. .......................................................... 12,520 $ 1,317
General Motors Corp., Class H........................................ 41,000 2,260
Data Processing & Reproduction -- 1.1%
International Business Machines Corp. ............................... 20,000 1,730
Electrical & Electronics -- 1.3%
Hubbell, Inc. ....................................................... 30,000 1,365
Nokia Corp., Class A ADR............................................. 10,000 660
Industrial Components -- 2.9%
Dana Corp. .......................................................... 35,000 1,264
Echlin, Inc. ........................................................ 15,000 501
Rockwell International Corp. ........................................ 40,400 2,606
Machinery & Engineering -- 1.9%
Crompton & Knowles Corp. ............................................ 60,000 1,402
Deere & Co. ......................................................... 30,000 1,534
---------
14,639
---------
CONSUMER GOODS -- 13.7%
Automotive -- 0.8%
General Motors Corp. ................................................ 20,000 1,145
Beverages & Tobacco -- 1.4%
PepsiCo, Inc. ....................................................... 60,000 2,205
Food & Household Products -- 1.3%
General Mills, Inc. ................................................. 20,000 1,265
McCormick & Co., Inc. ............................................... 30,000 784
Health & Personal Care -- 10.2%
American Home Products Corp. ........................................ 25,000 1,906
Gillette Co. ........................................................ 9,040 803
Kimberly-Clark Corp. ................................................ 20,000 1,003
Pfizer, Inc. ........................................................ 44,000 4,527
SmithKline Beecham PLC ADR........................................... 50,000 4,375
Tambrands, Inc. ..................................................... 20,000 965
Warner-Lambert Co. .................................................. 20,000 2,015
---------
20,993
---------
ENERGY -- 7.3%
Energy Sources -- 7.3%
Amoco Corp. ......................................................... 15,000 1,341
Atlantic Richfield Co. .............................................. 15,000 2,182
Chevron Corp. ....................................................... 30,000 2,100
Kerr-McGee Corp. .................................................... 25,000 1,619
Phillips Petroleum Co. .............................................. 35,000 1,487
</TABLE>
- ---------------------
18
<PAGE> 20
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY (continued)
Energy Sources (continued)
Royal Dutch Petroleum Co. ADR........................................ 6,000 $ 1,172
Ultramar Diamond Shamrock Corp.+..................................... 40,000 1,320
---------
11,221
---------
FINANCE -- 8.6%
Banking -- 6.0%
BankAmerica Corp. ................................................... 15,000 1,753
Citicorp. ........................................................... 20,000 2,287
CoreStates Financial Corp. .......................................... 20,000 1,058
Fleet Financial Group, Inc. ......................................... 25,000 1,528
KeyCorp. ............................................................ 15,000 816
NationsBank Corp. ................................................... 30,000 1,766
Insurance -- 2.6%
American General Corp. .............................................. 15,000 664
General Reinsurance Group............................................ 10,000 1,752
SAFECO Corp. ........................................................ 35,000 1,523
---------
13,147
---------
MATERIALS -- 9.1%
Chemicals -- 4.0%
Air Products & Chemicals, Inc. ...................................... 25,000 1,944
du Pont (E.I.) de Nemours & Co. ..................................... 15,000 1,633
Mallinckrodt, Inc. .................................................. 30,000 1,121
PPG Industries, Inc. ................................................ 25,000 1,453
Forest Products & Paper -- 3.9%
Georgia-Pacific Corp. ............................................... 30,000 2,647
Rayonier, Inc. ...................................................... 15,500 664
Union Camp Corp. .................................................... 20,000 1,050
Weyerhaeuser Co. .................................................... 32,600 1,626
Metals & Minerals -- 1.2%
Aluminum Co. of America.............................................. 25,000 1,841
---------
13,979
---------
MULTI-INDUSTRY -- 2.2%
Multi-Industry -- 2.2%
Tenneco, Inc. ....................................................... 35,000 1,566
Textron, Inc. ....................................................... 15,000 1,778
---------
3,344
---------
SERVICES -- 7.8%
Business & Public Services -- 0.5%
Alexander & Baldwin, Inc. ........................................... 30,000 814
Merchandising -- 4.2%
Circuit City Stores, Inc. ........................................... 10,000 395
Penney (J.C.), Inc. ................................................. 35,000 1,802
Wal-Mart Stores, Inc. ............................................... 80,000 2,380
Walgreen Co. ........................................................ 40,000 1,870
Telecommunications -- 0.5%
AT&T Corp. .......................................................... 20,000 738
</TABLE>
---------------------
19
<PAGE> 21
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Transportation: Rail & Road -- 2.6%
Norfolk Southern Corp. .............................................. 20,000 $ 1,943
Union Pacific Corp. ................................................. 30,000 2,032
---------
11,974
---------
OTHER COMMON STOCK -- 5.0%........................................... 7,630
---------
TOTAL COMMON STOCK (cost $67,318).................................... 96,927
---------
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCK -- 0.3%
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
SERVICES -- 0.3%
Broadcasting & Publishing -- 0.3%
American Radio Systems Corp.# (cost $512)............................ 5,119 540
--------------
<CAPTION>
PRINCIPAL
AMOUNT
BONDS & NOTES -- 27.1% (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES -- 0.7%
First Plus Home Loan Trust 6.95% 2015................................ $ 500 493
Green Tree Financial Corp. 7.25% 2005................................ 623 611
--------------
1,104
--------------
CONVERTIBLE BONDS -- 0.8%
Broadcasting & Publishing -- 0.4%
Time Warner Pass Through Asset Trust 6.10% 2001...................... 500 475
Time Warner, Inc. zero coupon 2013................................... 500 229
Telecommunications -- 0.4%
US West, Inc. zero coupon 2011....................................... 1,500 562
--------------
1,266
--------------
CORPORATE NONCONVERTIBLES -- 13.6%
Automotive -- 0.4%
General Motors Corp. 8.80% 2021...................................... 500 559
Broadcasting & Publishing -- 0.7%
Time Warner, Inc. 9.125% 2013........................................ 1,000 1,085
Chemicals -- 0.1%
Millenium America, Inc. 7.00% 2006................................... 250 240
Electrical & Electronics -- 0.3%
Hyundai Semiconductor 8.625% 2007.................................... 500 500
Finance -- 3.1%
Aetna Services, Inc. 6.97% 2036...................................... 500 501
Capital One Bank 7.35% 2000.......................................... 2,500 2,519
Chevy Chase Savings Bank 9.25% 2008.................................. 500 498
Irvine Property 7.46% 2006*.......................................... 500 478
Ocwen Financial Corp. 11.875% 2003................................... 250 268
Saul (B.F.) Real Estate Investment Trust, Class B 11.625% 2002....... 500 533
Financial Services -- 1.1%
Cei Citicorp Holdings S A 11.25% 2007#*.............................. 500 500
Central Fidelity Capital Trust I 6.825% 1997#(1)..................... 500 495
</TABLE>
- ---------------------
20
<PAGE> 22
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE NONCONVERTIBLES (continued)
Financial Services (continued)
Esat Holdings Ltd. 12.50% 2007#...................................... $ 500 $ 293
Pan Pacific Industrial Investment PLC zero coupon 2007#*............. 500 218
Wharf International Finance Ltd. 7.625% 2007#........................ 250 246
Forest Products & Paper -- 0.2%
Owens Illinois, Inc. 8.10% 2007...................................... 250 252
Health & Personal Care -- 0.3%
Revlon Worldwide Parent Corp. zero coupon 2001#...................... 600 403
Industrial -- 3.5%
Acme Metals, Inc. 12.50% 2002........................................ 500 545
Allegiance Corp. 7.00% 2026.......................................... 500 496
Container Corp. of America 9.75% 2003................................ 500 524
Dayton Hudson Corp. 8.50% 2022....................................... 500 502
Freeport McMoRan Copper & Gold 7.20% 2026............................ 500 490
Inco Ltd. 9.60% 2022................................................. 400 428
Omnipoint Corp. 11.625% 2006......................................... 250 221
Oryx Energy Co. 9.50% 1999........................................... 1,500 1,573
Oryx Energy Co. 10.00% 1999.......................................... 500 525
Telecommunications -- 1.6%
CenCall Communications Corp. zero coupon 2004@....................... 1,000 770
Comcast Cable Communications 8.50% 2027#............................. 500 521
Consorcio Ecuatoriano de Telecomunicaciones 14.00% 2002#*............ 250 262
Globo Communicacoes e Participacoes Ltda. Class B 10.50% 2006#....... 400 416
United States West Capital Funding, Inc. 6.95% 2037.................. 500 494
Transportation -- 2.3%
Airplanes Pass Through Trust, Class C 8.15% 2019*.................... 500 514
Continental Airlines Pass Through Trust 6.94% 2013................... 980 950
Delta Air Lines, Inc. 10.50% 2016.................................... 500 603
Jet Equipment Trust, Class B 7.83% 2012#............................. 480 489
United Airlines Pass Through Trust, Class A 7.87% 2019............... 500 483
USAir, Inc. Class A 6.76% 2008....................................... 481 462
--------------
20,856
--------------
MORTGAGE-RELATED SECURITIES -- 0.3%
IMC Home Equity Loan Trust, Class A 6.78% 2011....................... 500 498
--------------
NON-U.S. GOVERNMENT OBLIGATIONS -- 0.4%
Republic of Argentina 11.75% 2007#................................... 500 544
--------------
U.S. GOVERNMENT & AGENCIES -- 4.7%
Federal National Mortgage Association 6.53% 2006..................... 1,500 1,436
Federal National Mortgage Association 7.52% 2004..................... 2,000 2,003
Government National Mortgage Association 8.00% 2026.................. 1,399 1,423
Government National Mortgage Association 8.00% 2026.................. 1,546 1,573
Government National Mortgage Association 8.50% 2025.................. 733 760
--------------
7,195
--------------
</TABLE>
---------------------
21
<PAGE> 23
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES TREASURY -- 6.6%
10.75% Bonds 2003.................................................... $5,000 $ 6,019
3.38% Notes 1997(1).................................................. 2,000 1,965
7.25% Notes 2004..................................................... 2,000 2,071
----------
10,055
----------
TOTAL BONDS & NOTES (cost $41,371)................................... 41,518
----------
TOTAL INVESTMENT SECURITIES (cost $109,201).......................... 138,985
----------
SHORT-TERM SECURITIES -- 10.3%
--------------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 7.5%
American Express Credit Corp. 5.51% due 6/12/97...................... 3,900 3,894
Ford Motor Credit Co. 5.52% due 7/07/97.............................. 500 497
General Electric Capital Corp. 5.65% due 6/02/97..................... 1,160 1,160
National Rural Utilities Cooperative Finance Corp. 5.52% due
6/27/97............................................................ 2,000 1,992
Paccar Financial Corp. 5.48% due 6/24/97............................. 2,000 1,993
PepsiCo, Inc. 5.50% due 7/14/97...................................... 2,000 1,987
----------
TOTAL CORPORATE SHORT-TERM NOTES (cost $11,523)...................... 11,523
----------
FEDERAL AGENCY OBLIGATIONS -- 2.1%
Federal National Mortgage Association Discount Notes 5.48% due
6/19/97 (cost $3,191).............................................. 3,200 3,191
----------
UNITED STATES TREASURY -- 0.7%
8.75% Notes 10/15/97 (cost $1,070)................................... 1,000 1,012
----------
TOTAL SHORT-TERM SECURITIES (cost $15,784)........................... 15,726
----------
TOTAL INVESTMENTS --
(cost $124,985) 101.0% 154,711
Liabilities in excess of other assets -- (1.0) (1,506)
------ ----------
NET ASSETS -- 100.0% $ 153,205
===== ==========
</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 Depository Receipt
(1) Variable Rate Security; rate as of May 31, 1997
See Notes to Financial Statements
- ---------------------
22
<PAGE> 24
O
- ---------------------
ANCHOR PATHWAY FUND
HIGH-YIELD BOND SERIES INVESTMENT PORTFOLIO -- MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES -- 74.7% (IN THOUSANDS) (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 1.9%
Aerospace & Military Technology -- 0.8%
Derlan Manufacturing, Inc. 10.00% 2007#........................... $ 1,000 $ 1,019
Construction & Housing -- 1.1%
M.D.C. Holdings, Inc. 11.125% 2003................................ 400 432
McDermott, Inc. 9.375% 2002....................................... 500 512
Nortek, Inc. 9.25% 2007#.......................................... 325 328
---------
2,291
---------
CONSUMER GOODS -- 2.3%
Beverages & Tobacco -- 2.3%
Canandaigua Wine, Inc. 8.75% 2003................................. 1,000 1,000
Dr. Pepper/Seven Up Cos., Inc. 10.25% 2000........................ 1,750 1,811
---------
2,811
---------
ENERGY -- 8.7%
Energy Sources -- 4.7%
Abraxas Petroleum Corp. 11.50% 2004............................... 500 540
Benton Oil & Gas Co. 11.625% 2003................................. 500 543
Dual Drilling Co. 9.875% 2004..................................... 2,000 2,135
Forcenergy, Inc. 9.50% 2006....................................... 1,250 1,288
Kelley Oil & Gas Corp. 10.375% 2006............................... 750 776
Lomak Petroleum, Inc. 8.75% 2007.................................. 500 496
Utilities: Electric, Gas & Water -- 4.0%
California Energy, Inc. 10.25% 2004............................... 4,000 4,300
Globalstar L.P. 11.375% 2004#..................................... 500 506
---------
10,584
---------
FINANCE -- 1.6%
Financial Services -- 1.6%
Mesa Operating Co. 10.625% 2006................................... 1,700 1,900
---------
INDUSTRIAL & COMMERCIAL -- 1.3%
Industrial -- 1.3%
Consumers International, Inc. 10.25% 2005#........................ 500 531
Newsquest Capital PLC 11.50% 2006................................. 1,000 1,072
---------
1,603
---------
MATERIALS -- 10.5%
Chemicals -- 1.1%
Texas Petrochemicals Corp. 11.125% 2006........................... 1,250 1,325
Forest Products & Paper -- 5.2%
Anchor Glass Container Corp. 11.25% 2005#......................... 500 530
Container Corp. of America 9.75% 2003............................. 4,500 4,714
Pacific Lumber Co. 10.50% 2003.................................... 1,000 1,025
</TABLE>
---------------------
23
<PAGE> 25
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Metals & Minerals -- 4.2%
A.K. Steel Corp. 9.125% 2006...................................... $ 750 $ 765
A.K. Steel Corp. 10.75% 2004...................................... 500 542
Acme Metals, Inc. zero coupon 2004(1)............................. 1,750 1,907
Kaiser Aluminum & Chemical Corp. 12.75% 2003...................... 1,250 1,369
Ucar Global Enterprises, Inc. 12.00% 2005......................... 500 566
---------
12,743
---------
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.4%
Republic of Argentina 6.75% 1997.................................. 970 905
Republic of Argentina 11.375% 2017................................ 500 546
United Mexican States 11.375% 2016................................ 200 219
---------
1,670
---------
SERVICES -- 47.0%
Broadcasting & Publishing -- 10.2%
American Media Operations, Inc. 11.625% 2004...................... 1,750 1,877
Bell Cablemedia PLC zero coupon 2004(1)........................... 4,000 3,570
Cablevision Systems Corp. 9.875% 2013............................. 1,000 1,002
Chancellor Radio Broadcasting Co. 9.375% 2004..................... 1,500 1,522
Chancellor Radio Broadcasting Co. 12.50% 2004..................... 250 290
Comcast UK Cable Partners Ltd. zero coupon 2007(1)................ 2,000 1,485
Heartland Wireless Communication, Inc. 13.00% 2003*............... 500 155
International Cabletron 10.00% 2007#.............................. 500 502
Sun Media Corp. 9.50% 2007#....................................... 500 499
Viacom, Inc. 7.75% 2005........................................... 1,500 1,476
Business & Public Services -- 10.1%
Allied Waste North America Inc. 10.25% 2006#...................... 1,500 1,601
Integrated Health Services, Inc. 9.50% 2007#...................... 1,825 1,873
Mariner Health Group, Inc. 9.50% 2006............................. 385 398
Omnipoint Corp. 11.625% 2006...................................... 1,500 1,328
Paracelsus Healthcare Corp. 10.00% 2006........................... 1,750 1,741
Printpack, Inc. 10.625% 2006...................................... 500 527
Protection One Alarm Monitoring Corp. zero coupon 2005(1)......... 1,000 1,010
Regency Health Services, Inc. 9.875% 2002......................... 1,750 1,820
Tenet Healthcare Corp. 8.00% 2005................................. 1,000 1,001
Unison Healthcare Corp. 13.00% 2006#.............................. 650 511
Universal Health Services, Inc. 8.75% 2005........................ 500 519
Food Retail -- 1.6%
Foodmaker, Inc. 9.25% 1999........................................ 1,400 1,435
Foodmaker, Inc. 9.75% 2002........................................ 500 514
Leisure & Tourism -- 3.8%
AMF Group, Inc. Series B zero coupon 2006(1)...................... 1,000 690
Four Seasons Hotels, Inc. 9.125% 2000#............................ 1,000 1,031
Rio Hotel And Casino, Inc. 9.50% 2007............................. 750 765
Station Casinos, Inc. 9.625% 2003................................. 500 495
Sun International Limited 9.00% 2007.............................. 500 505
Wyndham Hotel Corp. 10.50% 2006................................... 1,000 1,100
Telecommunications -- 18.1%
Brooks Fiber Properties, Inc. 10.00% 2007#........................ 1,000 1,006
CCPR Services, Inc. 10.00% 2007#.................................. 500 490
Cellular Communications International, Inc. zero coupon 2000...... 2,250 1,671
Centennial Cellular Corp. 8.875% 2001............................. 3,000 2,977
Comcast Cellular Holdings, Inc. 9.50% 2007#....................... 2,000 2,003
Comunicacion Celular SA zero coupon 2003*(1)...................... 1,000 713
Consorcio Ecuatoriano de Telecomunicaciones 14.00% 2002#*......... 500 524
</TABLE>
- ---------------------
24
<PAGE> 26
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Telecommunications (continued)
Esat Holdings Ltd. zero coupon 2007(1)............................ $ 500 $ 293
International CableTel, Inc. zero coupon 2005(1).................. 750 566
McCaw International Limited zero coupon 2007(1)................... 1,000 496
MFS Communication zero coupon 2004(1)............................. 1,000 924
MobileMedia Communications, Inc. zero coupon 2003(1).............. 1,000 108
Multicanal Participacoes SA 12.625% 2004.......................... 1,000 1,133
Nextel Communications, Inc. zero coupon 2003(1)................... 1,000 860
Orion Network Systems, Inc. 11.25% 2007........................... 1,275 1,313
Pricellular Wireless Corp. zero coupon 2003(1).................... 1,000 933
Pricellular Wireless Corp. 14.00% 2001............................ 1,000 1,052
RBS Participacoes SA 11.00% 2007#*................................ 500 521
Rogers Cantel Mobile Communications, Inc. 11.13% 2002............. 500 521
Teleport Communications Group 9.88% 2006.......................... 500 530
Telewest Communications PLC zero coupon 2007(1)................... 1,000 695
Videotron Holdings PLC zero coupon 2004(1)........................ 3,000 2,677
Transportation: Airlines -- 3.2%
Continental Airlines, Inc. 9.50% 2001............................. 750 781
USAir, Inc. 9.63% 2003............................................ 1,250 1,287
USAir, Inc. 10.00% 2003........................................... 1,000 1,028
USAir, Inc. 10.38% 2013........................................... 750 799
---------
57,143
---------
TOTAL BONDS & NOTES (cost $87,038)................................ 90,745
---------
PREFERRED STOCK -- 3.7% SHARES
-----------------------------------------------------------------------------------------------------
SERVICES -- 3.7%
Broadcasting & Publishing -- 3.7%
American Radio Systems Corp.#..................................... 15,356 1,620
Chancellor Radio Broadcasting Co.#................................ 27,000 2,909
---------
TOTAL PREFERRED STOCK (cost $4,237)............................... 4,529
---------
<CAPTION>
WARRANTS -- 0.0%+
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 0.0%
Broadcasting & Publishing -- 0.0%
Heartland Wireless Communication, Inc.*........................... 3,000 0
Business & Public Services -- 0.0%
Protection One Alarm Monitoring Corp.*............................ 3,200 22
Telecommunications -- 0.0%
Comunicacion Celular SA 11/15/03#*................................ 1,000 7
Nextel Communications, Inc........................................ 500 0
---------
TOTAL WARRANTS (cost $42)......................................... 29
---------
</TABLE>
---------------------
25
<PAGE> 27
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT -- 3.0% (IN THOUSANDS) (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES TREASURY -- 3.0%
10.75% Bonds 2005................................................. $ 2,000 $ 2,508
8.00% Notes 2001.................................................. 1,000 1,053
---------
TOTAL U.S. GOVERNMENT (cost $3,611)............................... 3,561
---------
TOTAL INVESTMENT SECURITIES (cost $94,928)........................ 98,864
---------
SHORT-TERM SECURITIES -- 14.1%
-----------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 12.5%
Allied Supermarkets, Inc. 6.625% due 5/15/98...................... 721 716
American Express Credit Corp. 5.56% due 6/18/97................... 2,400 2,394
Ameritech Corp. 5.50% due 6/10/97................................. 600 599
Coca-Cola Co. 5.48% due 6/06/97................................... 2,000 1,998
General Electric Capital Corp. 5.65% due 6/02/97.................. 1,900 1,900
National Rural Utilities Cooperative Finance Corp. 5.54% due
6/16/97......................................................... 3,000 2,993
PepsiCo, Inc. 5.50% due 6/18/97................................... 3,000 2,992
Procter & Gamble Co. 5.50% due 6/30/97............................ 1,600 1,593
---------
TOTAL CORPORATE SHORT-TERM NOTES (cost $15,179)................... 15,185
---------
FEDERAL AGENCY OBLIGATIONS -- 1.6%
Federal Home Loan Bank Consolidated Discount Note 5.48% due
6/12/97 (cost $1,997)........................................... 2,000 1,997
---------
TOTAL SHORT-TERM SECURITIES (cost $17,176)........................ 17,182
---------
TOTAL INVESTMENTS --
(cost $112,104) 95.5% 116,046
Other assets less liabilities -- 4.5 5,430
------ ---------
NET ASSETS -- 100.0% $ 121,476
====== =========
</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
See Notes to Financial Statements
- ---------------------
26
<PAGE> 28
O
- ---------------------
ANCHOR PATHWAY FUND
U.S. GOVERNMENT/
AAA-RATED SECURITIES SERIES INVESTMENT PORTFOLIO -- MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES -- 84.8% (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
ASSET-BACKED SECURITIES -- 8.6%
EQCC Home Equity Loan Trust 6.95% 2012............................... $ 300 $ 301
Green Tree Financial Corp. 6.80% 2027................................ 1,000 987
Standard Credit Card Master Trust 8.88% 1999 Series 1991
Participation Certificates......................................... 4,500 4,625
UCFC Loan Trust 6.92% 2018........................................... 1,750 1,729
---------
7,642
---------
FEDERAL AGENCY OBLIGATIONS -- 24.3%++
Federal Home Loan Mortgage Corp. 6.50% 2009*......................... 2,000 1,903
Federal Home Loan Mortgage Corp. 9.00% 2021 - 2022................... 1,382 1,471
Federal Home Loan Mortgage Corp. 9.50% 2016.......................... 718 772
Federal Home Loan Mortgage Corp. 11.88% 2013*........................ 15 16
Federal Home Loan Mortgage Corp. 12.50% 2013*........................ 131 144
Federal National Mortgage Association 7.50% 2009..................... 1,409 1,427
Federal National Mortgage Association 7.70% 2004..................... 1,645 1,661
Federal National Mortgage Association 8.50% 2023..................... 1,724 1,802
Government National Mortgage Association 7.50% 2023.................. 1,256 1,258
Government National Mortgage Association 8.00% 2017.................. 1,565 1,614
Government National Mortgage Association 8.50% 2016 - 2026........... 3,463 3,603
Government National Mortgage Association 9.00% 2016 - 2017........... 714 764
Government National Mortgage Association 9.50% 2009 - 2017........... 4,490 4,815
Government National Mortgage Association 10.00% 2016................. 49 54
Government National Mortgage Association 10.50% 2016 - 2019.......... 232 255
Government National Mortgage Association 11.00% 2019................. 63 71
Government National Mortgage Association 11.50% 2010 - 2015.......... 16 17
---------
21,647
---------
MORTGAGE-RELATED SECURITIES -- 3.8%
Merrill Lynch Mortgage Investors, Inc. 6.85% 2025*................... 500 491
Morgan (J.P.) Commercial Mortgage Finance Corp. 7.35% 2010*.......... 1,000 1,009
Prudential Home Mortgage Corp. 7.50% 2022............................ 1,956 1,953
---------
3,453
---------
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.2%
Ontario Province Canada 15.25% 2012.................................. 1,000 1,080
---------
</TABLE>
---------------------
27
<PAGE> 29
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (continued) (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES TREASURY -- 46.9%
7.25% Bonds 2004..................................................... $ 4,000 $ 4,143
8.88% Bonds 2017..................................................... 10,200 12,258
10.38% Bonds 2012.................................................... 3,000 3,779
10.75% Bonds 2003.................................................... 14,000 16,853
12.00% Bonds 2013.................................................... 1,000 1,397
3.38% Notes 2007..................................................... 3,000 2,947
5.88% Notes 1999..................................................... 500 495
---------
41,872
---------
TOTAL INVESTMENT SECURITIES (cost $76,309)........................... 75,694
---------
SHORT-TERM SECURITIES -- 14.2%
--------------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 14.2%
American Express Credit Corp. 5.51% due 6/12/97...................... 1,500 1,498
Coca-Cola Co. 5.48% due 6/06/97...................................... 1,000 999
General Electric Capital Corp. 5.65% due 6/02/97..................... 2,580 2,580
International Bank for Reconstruction & Development 7.90% due
4/01/98............................................................ 3,000 3,047
PepsiCo, Inc. 5.50% due 7/14/97...................................... 2,000 1,987
Warner-Lambert Co. 5.50% due 6/25/97................................. 2,600 2,590
---------
TOTAL SHORT-TERM SECURITIES (cost $12,545)........................... 12,701
---------
TOTAL INVESTMENTS --
(cost $88,854) 99.0% 88,395
Other assets less liabilities -- 1.0 851
----- ---------
NET ASSETS -- 100.0% $ 89,246
=========
</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
See Notes to Financial Statements
- ---------------------
28
<PAGE> 30
O
- ---------------------
ANCHOR PATHWAY FUND
CASH MANAGEMENT SERIES INVESTMENT PORTFOLIO -- MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 101.1% (IN THOUSANDS) (IN THOUSANDS)
--------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 81.4%
Abbott Laboratories, Inc. 5.50% due 6/30/97.......................... $3,000 $ 2,987
American Express Credit Corp. 5.50% due 7/08/97...................... 790 786
American Express Credit Corp. 5.53% due 6/16/97...................... 2,000 1,995
Amoco Co. 5.50% due 6/05/97.......................................... 3,000 2,998
AT&T Corp. 5.50% due 6/02/97......................................... 3,000 2,999
Avco Financial Services, Inc. 5.53% due 7/21/97...................... 1,100 1,092
BellSouth Telecommunications, Inc. 5.50% due 6/24/97................. 3,400 3,388
Beneficial Corp. 5.54% due 7/02/97................................... 2,600 2,588
CIT Group Holdings, Inc. 5.56% due 6/17/97........................... 3,200 3,192
Coca-Cola Co. 5.47% due 6/25/97...................................... 1,300 1,295
Colgate Palmolive Co. 5.52% due 6/04/97.............................. 2,284 2,283
Deere (John) Capital Corp. 5.55% due 7/14/97......................... 3,000 2,980
du Pont (E.I.) de Nemours & Co. 5.52% due 7/10/97.................... 2,400 2,386
Electronic Data Systems Corp. 5.53% due 6/13/97...................... 3,000 2,994
Ford Motor Credit Co. 5.54% due 6/10/97.............................. 2,000 1,997
General Electric Capital Corp. 5.53% due 7/01/97..................... 3,000 2,986
General Mills, Inc. 5.51% due 7/10/97................................ 2,500 2,485
Heinz (H.J.) Co. 5.55% due 7/07/97................................... 2,100 2,088
IBM Credit Corp. 5.53% due 6/11/97................................... 2,000 1,997
International Lease Finance Corp. 5.55% due 6/25/97.................. 1,900 1,893
International Lease Finance Corp. 5.55% due 6/26/97.................. 1,200 1,195
Kellogg Co. 5.48% due 7/16/97........................................ 1,200 1,192
Lucent Technologies, Inc. 5.52% due 6/20/97.......................... 1,750 1,745
PepsiCo, Inc. 5.50% due 6/06/97...................................... 1,800 1,799
Pfizer, Inc. 5.50% due 6/17/97....................................... 1,000 998
President & Fellows Harvard 5.52% due 6/09/97........................ 2,700 2,697
Procter & Gamble Co. 5.47% due 6/30/97............................... 2,500 2,489
SBC Communications Capital Corp. 5.53% due 7/22/97................... 2,500 2,480
Student Loan Marketing Discount Note 5.42% due 6/18/97............... 1,800 1,795
Student Loan Marketing Share Term Note 5.29% due 6/03/97............. 5,000 5,000
Xerox Corp. 5.52% due 6/27/97........................................ 1,750 1,743
Yale University 5.55% due 6/16/97.................................... 860 858
--------
TOTAL CORPORATE SHORT-TERM NOTES (cost $71,400)...................... 71,400
--------
FEDERAL AGENCY OBLIGATIONS -- 19.7%
Federal Home Loan Bank Consolidated Discount Note 5.41% due
6/19/97............................................................ 1,100 1,097
Federal Home Loan Bank Consolidated Discount Note 5.42% due
7/24/97............................................................ 3,000 2,976
Federal Home Loan Bank Consolidated Discount Note 5.50% due
7/03/97............................................................ 2,900 2,886
Federal Home Loan Mortgage Discount Notes 5.40% due 6/12/97.......... 2,300 2,296
Federal Home Loan Mortgage Discount Notes 5.42% due 6/03/97.......... 3,256 3,255
Federal Home Loan Mortgage Discount Notes 5.43% due 6/30/97.......... 3,000 2,987
Federal National Mortgage Association Discount Notes 5.45% due
6/06/97............................................................ 1,750 1,749
--------
TOTAL FEDERAL AGENCY OBLIGATIONS (cost $17,246)...................... 17,246
--------
TOTAL SHORT-TERM SECURITIES (cost $88,646)........................... 88,646
--------
TOTAL INVESTMENTS --
(cost $88,646) 101.1% 88,646
Liabilities in excess of other assets -- (1.1) (986)
------ --------
NET ASSETS -- 100.0% $ 87,660
====== ========
</TABLE>
See Notes to Financial Statements
---------------------
29
<PAGE> 31
O
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997 (UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSET HIGH-YIELD
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION BOND
SERIES SERIES SERIES SERIES SERIES
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment securities at value*........ $666,808 $ 232,659 $ 797,913 $ 138,985 $ 98,864
Short-term securities*................. 97,597 26,790 125,369 15,726 17,182
Cash................................... 6 781 42 4 30
Foreign cash........................... -- 216 -- -- --
Receivables for --
Sales of investments................. 4,372 -- 5,418 205 4,026
Fund shares sold..................... 297 631 179 54 64
Dividends and accrued interest....... 199 924 2,017 888 1,838
Foreign currency contracts........... -- 1,154 -- -- --
Prepaid expenses....................... 7 2 8 1 1
--------------------------------------------------------------------------
769,286 263,157 930,946 155,863 122,005
--------------------------------------------------------------------------
LIABILITIES:
Payables for --
Purchases of investments............. 4,307 1,154 4,317 2,407 315
Fund shares redeemed................. 1,071 159 1,181 151 130
Advisory fees........................ 194 130 234 40 33
Management fees...................... 129 52 156 27 22
Foreign currency contracts........... -- 1,153 -- -- --
Other accrued expenses................. 77 147 128 33 29
--------------------------------------------------------------------------
5,778 2,795 6,016 2,658 529
--------------------------------------------------------------------------
NET ASSETS............................. $763,508 $ 260,362 $ 924,930 $ 153,205 $ 121,476
==========================================================================
Shares of beneficial interest
outstanding
(unlimited shares authorized)........ 19,927 15,729 28,040 10,181 9,251
Net asset value per share.............. $ 38.32 $ 16.55 $ 32.99 $ 15.05 $ 13.13
==========================================================================
COMPOSITION OF NET ASSETS:
Capital paid in........................ $425,376 $ 169,391 $ 565,480 $ 113,047 $ 111,253
Accumulated undistributed net
investment income.................... 1,985 1,695 8,896 2,711 5,606
Accumulated undististributed net
realized gain (loss) on investments,
futures, options, and foreign
currency............................. 99,300 33,865 73,086 7,721 675
Unrealized appreciation (depreciation)
on investments....................... 236,847 55,419 277,468 29,726 3,942
Unrealized foreign exchange loss on
other assets and liabilities......... -- (8) -- -- --
--------------------------------------------------------------------------
Net Assets......................... $763,508 $ 260,362 $ 924,930 $ 153,205 $ 121,476
==========================================================================
---------------
*Cost
Investment securities................ $429,961 $ 177,240 $ 520,445 $ 109,201 $ 94,928
==========================================================================
Short-term securities................ $97,597 $26,790 $125,369 $15,784 $17,176
==========================================================================
<CAPTION>
U.S.
GOVERNMENT/
AAA-RATED CASH
SECURITIES MANAGEMENT
SERIES SERIES
------------------------------------------------------------------------------
<S> <C<C> <C>
ASSETS:
Investment securities at value*........ $75,694 $ --
Short-term securities*................. 12,701 88,646
Cash................................... 7 59
Foreign cash........................... -- --
Receivables for --
Sales of investments................. -- --
Fund shares sold..................... 35 371
Dividends and accrued interest....... 928 59
Foreign currency contracts........... -- --
Prepaid expenses....................... 1 1
-----------------------
89,366 89,136
-----------------------
LIABILITIES:
Payables for --
Purchases of investments............. -- --
Fund shares redeemed................. 51 1,407
Advisory fees........................ 25 25
Management fees...................... 16 17
Foreign currency contracts........... -- --
Other accrued expenses................. 28 27
-----------------------
120 1,476
-----------------------
NET ASSETS............................. $89,246 $ 87,660
=======================
Shares of beneficial interest
outstanding
(unlimited shares authorized)........ 8,514 7,945
Net asset value per share.............. $ 10.48 $ 11.03
COMPOSITION OF NET ASSETS:
Capital paid in........................ $89,340 $ 85,551
Accumulated undistributed net
investment income.................... 3,423 2,109
Accumulated undististributed net
realized gain (loss) on investments,
futures, options, and foreign
currency............................. (3,058) --
Unrealized appreciation (depreciation)
on investments....................... (459) --
Unrealized foreign exchange loss on
other assets and liabilities......... -- --
-----------------------
Net Assets......................... $89,246 $ 87,660
=======================
---------------
*Cost
Investment securities................ $76,309 $ --
=======================
Short-term securities................ $12,545 $88,646
=======================
</TABLE>
See Notes to Financial Statements
- ---------------------
30
<PAGE> 32
O
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
(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>
NET INVESTMENT INCOME:
Income:
Interest............................. $ 2,122 $ 683 $ 3,113 $ 2,060 $ 5,960
Dividends*........................... 1,979 2,266 8,238 1,093 37
--------------------------------------------------------------------------
Total income.................. 4,101 2,949 11,351 3,153 5,997
--------------------------------------------------------------------------
Expenses:
Advisory fees........................ 1,168 731 1,356 233 203
Management fees...................... 779 292 904 155 135
Custodian fees....................... 108 200 123 33 28
Auditing and legal fees.............. 24 12 27 10 10
Reports to investors................. 16 5 20 3 2
Trustees' fees....................... 8 3 9 2 2
Other expenses....................... 7 4 9 3 3
--------------------------------------------------------------------------
Total expenses................ 2,110 1,247 2,448 439 383
--------------------------------------------------------------------------
Net investment income.................. 1,991 1,702 8,903 2,714 5,614
--------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on
investments.......................... 99,352 33,887 73,326 7,810 2,957
Net realized foreign exchange loss
on other assets and liabilities...... -- (16) -- -- --
Change in unrealized appreciation/
depreciation on investments.......... (42,361) (944) 11,816 277 (1,775)
Change in unrealized foreign exchange
loss on other assets and
liabilities.......................... -- (8) -- -- --
--------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments, foreign currency and
other assets and liabilities......... 56,991 32,919 85,142 8,087 1,182
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 58,982 $34,621 $94,045 $ 10,801 $ 6,796
==========================================================================
<CAPTION>
U.S.
GOVERNMENT/
AAA-RATED CASH
SECURITIES MANAGEMENT
SERIES SERIES
------------------------------------------------------------------------------------------
<S> <C<C> <C>
NET INVESTMENT INCOME:
Income:
Interest............................. $ 3,724 $ 2,375
Dividends*........................... -- --
------------------------
Total income.................. 3,724 2,375
------------------------
Expenses:
Advisory fees........................ 155 140
Management fees...................... 103 93
Custodian fees....................... 23 16
Auditing and legal fees.............. 9 8
Reports to investors................. 2 2
Trustees' fees....................... 1 1
Other expenses....................... 2 2
-----------------------
Total expenses................ 295 262
-----------------------
Net investment income.................. 3,429 2,113
-----------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on
investments.......................... (1,408) --
Net realized foreign exchange loss
on other assets and liabilities...... -- --
Change in unrealized appreciation/
depreciation on investments.......... (1,989) --
Change in unrealized foreign exchange
loss on other assets and
liabilities.......................... -- --
------------------------
Net realized and unrealized gain (loss)
on investments, foreign currency and
other assets and liabilities......... (3,397) --
------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 32 $ 2,113
========================
</TABLE>
- ---------------
* Net of foreign witholding taxes of $21; $254; $78 and $8 on Growth,
International, Growth-Income and Asset Allocation Series, respectively
See Notes to Financial Statements
---------------------
31
<PAGE> 33
O
- ---------------------
ANCHOR PATHWAY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
(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.................. $ 1,991 $ 1,702 $ 8,903 $ 2,714 $ 5,614 $ 3,429
Net realized gain (loss) on
investments.......................... 99,352 33,887 73,326 7,810 2,957 (1,408)
Net realized foreign exchange loss on
other assets and liabilities......... -- (16) -- -- -- --
Change in unrealized appreciation/
depreciation on investments.......... (42,361) (944) 11,816 277 (1,775) (1,989)
Change in unrealized foreign exchange
loss on other assets and
liabilities.......................... -- (8) -- -- -- --
----------------------------------------------------------------------------
Net increase in net assets resulting
from operations...................... 58,982 34,621 94,045 10,801 6,796 32
----------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income... (3,795) (3,950) (18,320) (5,690) (12,665) (8,435)
Distributions from net realized gains
on investments....................... (118,520) (17,640) (124,190) (14,930) -- --
----------------------------------------------------------------------------
Total dividends and distributions paid
to shareholders...................... (122,315) (21,590) (142,510) (20,620) (12,665) (8,435)
----------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............. 68,301 39,540 36,236 8,465 22,382 4,861
Proceeds from shares issued for
reinvestment of dividends and
distributions........................ 122,315 21,590 142,510 20,620 12,665 8,435
Cost of shares repurchased............. (176,939) (62,943) (124,707) (19,121) (39,039) (24,499)
----------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions......................... 13,677 (1,813) 54,039 9,964 (3,992) (11,203)
----------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS:.............................. (49,656) 11,218 5,574 145 (9,861) (19,606)
NET ASSETS:
Beginning of period.................... 813,164 249,144 919,356 153,060 131,337 108,852
----------------------------------------------------------------------------
End of period.......................... $ 763,508 $ 260,362 $ 924,930 $ 153,205 $ 121,476 $ 89,246
============================================================================
---------------
Undistributed net investment income.... $ 1,985 $ 1,695 $ 8,896 $ 2,711 $ 5,606 $ 3,423
============================================================================
Shares issued and repurchased:
Sold................................. 1,686 2,484 1,082 543 1,671 445
Issued in reinvestment of dividends
and distributions.................. 3,424 1,442 4,590 1,437 990 816
Repurchased.......................... (4,415) (3,960) (3,670) (1,230) (2,894) (2,208)
----------------------------------------------------------------------------
Net increase (decrease)................ 695 (34) 2,002 750 (233) (947)
============================================================================
<CAPTION>
CASH
MANAGEMENT
SERIES
----------------------------------------------------
<S> <C>
OPERATIONS:
Net investment income.................. $ 2,113
Net realized gain (loss) on
investments.......................... --
Net realized foreign exchange loss on
other assets and liabilities......... --
Change in unrealized appreciation/
depreciation on investments.......... --
Change in unrealized foreign exchange
loss on other assets and
liabilities.......................... --
-----------
Net increase in net assets resulting
from operations...................... 2,113
-----------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income... (4,852)
Distributions from net realized gains
on investments....................... --
-----------
Total dividends and distributions paid
to shareholders...................... (4,852)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............. 138,965
Proceeds from shares issued for
reinvestment of dividends and
distributions........................ 4,852
Cost of shares repurchased............. (142,654)
-----------
Net increase (decrease) in net assets
resulting from capital share
transactions......................... 1,163
-----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS:.............................. (1,576)
NET ASSETS:
Beginning of period.................... 89,236
-----------
End of period.......................... $ 87,660
===========
---------------
Undistributed net investment income.... $ 2,109
===========
Shares issued and repurchased:
Sold................................. 12,362
Issued in reinvestment of dividends
and distributions.................. 444
Repurchased.......................... (12,702)
-----------
Net increase (decrease)................ 104
===========
</TABLE>
See Notes to Financial Statements
- ---------------------
32
<PAGE> 34
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
===========================================================================
<CAPTION>
U.S.
GOVERNMENT/
AAA-RATED CASH
SECURITIES MANAGEMENT
SERIES SERIES
--------------------------------------------------------------------
<S> <C<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)
============================================================================
<CAPTION>
Undistributed net investment income.... $ 8,429 $ 4,848
=========================
<S> <C> <C>
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
---------------------
33
<PAGE> 35
O
- ---------------------
ANCHOR PATHWAY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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, other long-term debt securities, and
short-term securities with original or remaining maturities in excess of 60 days
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 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.
- ---------------------
34
<PAGE> 36
FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are maintained
in U.S. dollars. 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.
---------------------
35
<PAGE> 37
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 book purposes, (which approximates tax basis), including
short-term securities at May 31, 1997, were as follows (dollars in thousands):
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE NET
UNREALIZED UNREALIZED UNREALIZED COST OF CAPITAL LOSS
GAIN (LOSS) GAIN INVESTMENTS CARRYOVER*+
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------
Growth Series.................................... $ 265,897 $ (29,050) $ 236,847 $ 527,558 $ --
International Series............................. 60,331 (4,912) 55,419 204,030 --
Growth-Income Series............................. 282,973 (5,505) 277,468 645,814 --
Asset Allocation Series.......................... 30,299 (573) 29,726 124,985 --
High-Yield Bond Series**......................... 5,487 (1,545) 3,942 112,104 2,159,987
U.S. Government/AAA-Rated Securities Series...... 823 (1,282) (459) 88,854 1,649,041
Cash Management Series........................... -- -- -- 88,646 --
</TABLE>
* Expire 2003-2004
** Post 10/31/96 Capital Loss Deferral; High-Yield Bond Series $121,879
+ Net capital loss carryover reported as of November 30, 1996, which are
available to the extent provided in regulations to offset future capital
gains. To the extent that these carryovers are used to offset future capital
gains, it is probable that the gains so offset will not be distributed.
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.
- ---------------------
36
<PAGE> 38
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 six months ended
May 31, 1997, 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........ $113,769 $70,022 $ 169,816 $ 38,682 $36,019
Sales of portfolio securities............ 245,615 95,143 215,675 38,517 59,867
U.S. government securities included above
were as follows:
Purchases of U.S. government
securities............................. 1,245 -- -- 7,955 3,611
Sales of U.S. government securities...... -- -- -- 10,068 8,888
<CAPTION>
U.S.
GOVERNMENT/
AAA-RATED CASH
SECURITIES MANAGEMENT
SERIES SERIES
<S> <C> <C>
Purchases of portfolio securities........ $23,060 $ --
Sales of portfolio securities............ 38,691 --
U.S. government securities included above
were as follows:
Purchases of U.S. government
securities............................. 21,310 --
Sales of U.S. government securities...... 32,919 --
</TABLE>
---------------------
37
<PAGE> 39
O
- ---------------------
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
5/31/97* 42.28 0.10@ 2.89 2.99 (0.22) (6.73) 38.32 8.25
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
5/31/97* 15.81 0.11@ 2.12 2.23 (0.27) (1.22) 16.55 15.10
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
5/31/97* 35.31 0.33@ 3.20 3.53 (0.75) (5.10) 32.99 11.02
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
5/31/97* 16.23 0.28@ 0.82 1.10 (0.63) (1.65) 15.05 7.50
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
5/31/97* 13.85 0.59@ 0.12 0.71 (1.43) -- 13.13 5.38
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
5/31/97* 11.51 0.39@ (0.39) -- (1.03) -- 10.48 0.16
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
5/31/97* 11.38 0.27@ -- 0.27 (0.62) -- 11.03 2.43
<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>
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
5/31/97 763,508 0.55+ 0.52+ 16.52 0.0479
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
5/31/97 260,362 1.02+ 1.40+ 31.91 0.0036
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
5/31/97 924,930 0.55+ 1.98+ 15.23 0.0491
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
5/31/97 153,205 0.59+ 3.63+ 28.10 0.0508
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
5/31/97 121,476 0.59+ 8.69+ 30.94 N/A
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
5/31/97 89,246 0.61+ 7.06+ 26.07 N/A
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
5/31/97 87,660 0.60+ 4.85+ -- N/A
</TABLE>
- ---------------
@ Calculated based upon average shares outstanding
+ Annualized
# The average commission per share is derived by dividing the agency
commissions paid on equity securities trades by the number of
shares purchased or sold.
* Unaudited
** 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
- ---------------------
38
<PAGE> 40
O
- ---------------------
ANCHOR PATHWAY FUND
SHAREHOLDER INFORMATION (UNAUDITED)
SUPPLEMENTAL PROXY INFORMATION: A Special Meeting of the Shareholders of the
Anchor Pathway Fund was held on March 21, 1997. Each of the applicable Series
voted in favor of adopting the following proposals, therefore, the results are
aggregated for the Fund unless otherwise specified.
1. To elect a slate of five members to the Board of Trustees to hold office
until their successors are duly elected and qualified.
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C> <C>
-------------------------------
<CAPTION>
<S> <C> <C> <C>
Richard D. Barger......................................... 90,952,212 -- 1,940,316
James K. Hunt............................................. 91,105,619 -- 1,786,909
Norman J. Metcalfe........................................ 91,105,854 -- 1,786,674
Allan L. Sher............................................. 90,984,097 -- 1,908,432
William M. Wardlaw........................................ 91,041,080 -- 1,851,448
</TABLE>
2. To approve certain changes to its fundamental investment restrictions:
(a) Eliminating the Trusts' Fundamental Investment Restriction relating to
Investments in Illiquid Securities.
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
75,860,742 10,444,709 6,587,078
</TABLE>
(b) Eliminating the Trusts' Fundamental Investment Restrictions relating to
Pledging their assets.
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
74,859,722 11,299,629 6,733,177
</TABLE>
(c) Eliminating the Trusts' Fundamental Investment Restrictions relating to
Options Transactions.
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
76,465,772 9,615,702 6,811,053
</TABLE>
(d) Eliminating the Trusts' Fundamental Investment Restrictions relating to
Investments in Securities of other Investment Companies.
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
78,545,526 7,984,997 6,362,005
</TABLE>
(e) Eliminating the Trusts' Fundamental Investment Restrictions relating to
Investments in Companies for the purpose of Exercising Control. (Not
applicable to the Cash Management Series or the U.S. Government/AAA-Rated
Securities Series)
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
63,643,438 7,854,222 5,543,836
</TABLE>
(f) Eliminating the Trusts' Fundamental Investment Restrictions relating to
Underwriting of Securities Issued by Others. (Not applicable to the Cash
Management Series or the U.S. Government/AAA-Rated Securities Series)
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
63,018,114 8,300,280 5,723,101
</TABLE>
---------------------
39
<PAGE> 41
(g) Eliminating the Trusts' Fundamental Investment Restrictions relating to
Short Sales. (Not applicable to the Cash Management Series or the U.S.
Government/AAA-Rated Securities Series)
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
62,883,023 8,758,015 5,400,458
</TABLE>
(h) Amending the Trusts' Fundamental Investment Restrictions relating to
Making Loans. (Not applicable to the Cash Management Series or the U.S.
Government/AAA-Rated Securities Series)
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
62,994,410 8,630,638 5,416,447
</TABLE>
(i) Amending the Trusts' Fundamental Investment Restrictions relating to
Borrowing Money. (Not applicable to the Cash Management Series or the U.S.
Government/AAA-Rated Securities Series)
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
62,666,535 8,914,034 5,460,926
</TABLE>
3. To ratify the selection of independent accountants for its current fiscal
year.
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
<S> <C> <C>
---------------------------------------------
<CAPTION>
<S> <C> <C>
86,371,627 1,485,330 5,035,571
</TABLE>
- ---------------------
40
<PAGE> 42
--------------------
BULK RATE
U.S. POSTAGE
P A I D
SANTA ANA, CA
PERMIT NO. 15
--------------------
P-1064 (R 7/97)
