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SEMIANNUAL REPORT - MAY 31, 1998
(ANCHOR NATIONAL LOGO)
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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
1998 -- 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.
Throughout the period, Asia's financial crisis continued to
dominate headlines. Extremely strong gains in most major world
markets were obscured as Asia staged a comeback from October's
precipitous declines. Investors mostly shrugged off concerns about
how Asia's troubles might affect global businesses. Instead, they
focused on more positive news: robust corporate earnings, a wave
of merger activity, rising consumer spending and a generally
favorable U.S. economic environment. The unmanaged Standard &
Poor's 500 Composite Index, which tracks the largest U.S. stocks,
returned 15.0% with dividends reinvested, while in Europe stock
prices surpassed even these impressive gains. U.S. bonds also did
well, benefiting from a "virtuous circle" of low inflation,
falling interest rates and increased investment. The unmanaged
Salomon Brothers Broad Investment-Grade Bond Index increased 4.2%
on a reinvested basis for the six-month period. Not surprisingly,
Asia was a glaring exception to the generally favorable market
news. An economic slowdown in virtually every nation continued to
depress currency values and sap financial markets. On a broader
scale, the region poses the biggest risk to a generally healthy
global economy; shrinking demand in Asia has already begun to
squeeze profits of some companies in the U.S. and Europe. In this
environment, all of the series' stock funds gained ground during
the six-month period.
Here are brief comments on the investment activities of each of
the series:
THE GROWTH SERIES, which invests primarily in U.S. stocks,
recorded a six-month gain of 12.4%. Capital Research and
Management Company ("CRMC") reports that once again, many of the
series' larger holdings did extremely well. This was particularly
true among the series' media investments, which constitute one of
the portfolio's biggest industry concentrations. Viacom, a major
holding, posted a 57.1% return. Other entertainment companies that
rose in price were Tele-Communications/Liberty Media, Time Warner
and Disney. One of the series' largest holdings, America Online,
increased an astonishing 120.7%. At the other end of the spectrum,
technology companies saw a bit of a slowdown due to shrinking
demand in Asia and an inventory "correction" working its way
through the industry. Among the stocks that suffered losses were
Oracle and Intel. In all, the series held 120 stocks in a broad
range of industries. About 94% of net assets was invested in
stocks. The remaining 6% was held in cash and equivalents as a
buying reserve.
THE INTERNATIONAL SERIES posted a 18.5% return for the period.
With nearly two-thirds of net assets invested in Europe, the
series was well-positioned to take advantage of the broad market
run-up in that region. CRMC notes that several factors were
responsible for the surge in stock prices: a wave of industry
consolidations; a strong U.S. dollar, which made European
manufacturers more competitive; and fiscal belt-tightening by
governments eager to qualify for monetary union. Nine of the
series' largest holdings are based in Europe. Among these
holdings, telecommunications-related issues -- Nokia, Telefonica
de Espana and Ericsson -- did particularly well. Meanwhile, Asian
markets continued to slide. Japan, still struggling with a banking
crisis, a weakening yen and stubborn economic problems, saw
equities decline 9% in U.S. dollar terms. Stocks in Hong Kong
dropped a steep 21%. CRMC notes that while investors were not
immune to losses in these markets, the series' Asian investments
were relatively small and tended to emphasize export-oriented
companies such as Mazda, which benefited from a strong U.S.
dollar.
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THE GROWTH-INCOME SERIES gained 12.3% in the six-month period.
The vigorous U.S. economy proved a boon for American businesses,
many of which saw their earnings -- and stock prices -- climb with
strengthening consumer demand. Jobs are plentiful, credit cheap
and the cost of goods relatively stable. This combination of good
news helped boost auto manufacturers Ford and Chrysler; retailer
giant Wal-Mart; and makers of recreational items such as
Harley-Davidson. Another successful area was pharmaceuticals.
Three large holdings -- Pfizer, Warner-Lambert and
Schering-Plough -- enjoyed substantial appreciation during the
period. Energy companies, on the other hand, were a
disappointment. CRMC indicates that most suffered setbacks which
were caused by falling oil prices. In all, of 169 stocks held over
the full six-month period, 120 rose in price and 49 declined.
Approximately 86% of the portfolio is held in equities, with the
balance in convertible bonds and short-term instruments as a
buying reserve.
THE ASSET ALLOCATION SERIES rose 8.9% for the six months. CRMC
manages the series as though it constitutes the complete U.S.
portfolio of a prudent investor, with holdings in all three major
asset classes. As of May 31, the series' composition reflected the
relative gains in each market: 61% of net assets was held in
equities, 31% in bonds and the remaining 8% in cash and
equivalents. The stock portion emphasizes large, well-managed
firms in historically stable industries such as healthcare, energy
and financial services. The latter, in particular, was caught up
in a wave of merger activity that reached a fever pitch during the
period. Motivated in part by a rising stock market, banks,
insurance companies and investment firms sought alliances to stay
competitive. Among them were Citicorp, which is merging with
Travelers, and BankAmerica, which announced plans to consolidate
with NationsBank. On the fixed-income side, the series is invested
in corporate bonds and U.S. Treasury securities. With interest
rates low, many of these instruments rose in price, contributing
to the series' results.
THE HIGH-YIELD BOND SERIES increased 5.6%, as demand for
lower-rated securities continued to grow during the six-month
reporting period. With interest rates at historically low levels,
investors have looked to these bonds -- typically rated Ba and BB
or below -- for higher yields than they would receive from
investment-grade or Treasury issues. At the same time, the robust
U.S. economy and a strong stock market have improved the balance
sheets of many debt issuers. That, in turn, has boosted the value
of their bonds. CRMC adds that in an expanding market crowded with
bonds offering similar yields, proprietary research is critical.
That's why CRMC pays close attention to company fundamentals, with
an eye toward capital appreciation in addition to yield. Because
CRMC selects securities on an issue-by-issue basis, the portfolio
is broadly diversified. Series holdings cut a broad swath across
sectors and geographic borders. For example, one of the series'
larger holdings is NTL, a British-American communications firm;
U.S.-based Chancellor Media, an operator of radio stations; and
COLT Telecom of the U.K, which provides telecommunications
services for corporate clients across Europe.
THE U.S. GOVERNMENT/AAA-RATED SECURITIES SERIES registered a
3.6% gain. CRMC believes the return reflects investor optimism
that, with inflation rates near their lowest levels in 30 years,
the Federal Reserve Board would not raise short-term interest
rates. CRMC finds that a so-called "flight to quality" from Asian
securities to the refuge of dollar-denominated government bonds
set off a rally that pushed yields on the benchmark 30-year U.S.
Treasury bond down to a January low of 5.7%. As of May 31, 37% of
net assets was held in U.S. Treasuries. The series also maintains
a large position in mortgage-backed securities. These bonds
typically pay a higher yield in exchange for prepayment risk, and
indeed, many mortgage holders took advantage of low interest rates
during the period to refinance their loans. CRMC spends
considerable time trying to minimize the
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2
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impact of unexpected changes in prepayment rates -- by buying
older, "seasoned" mortgages, which are less likely to be
refinanced, or investing in pools of adjustable-rate mortgages
that tend to be less volatile than their fixed-rate counterparts.
THE CASH MANAGEMENT SERIES provided a return of 2.5% for the
period. Convinced that the turbulence in Asia would help take some
steam out of a possibly overheating U.S. economy, the Federal
Reserve Board chose not to tighten credit. As a result, CRMC
notes, short-term rates remained relatively flat during the six
months, even as interest rates on longer-term bonds declined
sharply. One consequence of this convergence of long- and
short-term rates has been that money markets currently provide a
fairly high yield at significantly lower risk. More importantly,
of course, is the role this series can play in a long-term
investment portfolio. Managed for relatively stable value and a
reasonable rate of return, it can be an important diversification
tool, as well as a base for making regular investments into other
series. The series maintains a high-quality orientation by
concentrating assets in top-grade commercial paper, all of which
carry the highest credit rating from Standard & Poor's or Moody's.
With the exception of Asia, the past half-year has coincided
with yet another upsurge for financial markets, notes CRMC. While
it is always gratifying to report extraordinary results, CRMC
wants to remind investors that recent returns have been just
that -- out of the ordinary. These high rates of return cannot be
sustained indefinitely, and indeed, world markets experienced
sharp declines in June, after the close of the reporting period,
before recovering somewhat in July. CRMC would therefore urge you
to maintain realistic expectations as you work toward achieving
your long-term goals.
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, 1998
-----------------------------------------------
Performance figures quoted are for the Anchor Pathway Fund;
therefore, they are not net of the fees and charges associated
with the variable annuity. Those fees and charges, if shown, would
reduce the rate of return. 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, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 92.7% SHARES (IN THOUSANDS)
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<S> <C> <C>
CAPITAL EQUIPMENT -- 28.9%
Aerospace & Military Technology -- 0.4%
Gulfstream Aerospace Corp.+................................. 70,000 $ 2,975
Data Processing & Reproduction -- 7.6%
Adobe Systems, Inc.......................................... 155,000 6,190
Ascend Communications, Inc.+................................ 39,500 1,706
Compaq Computer Corp........................................ 262,500 7,170
Data General Corp.+......................................... 200,000 3,050
Digital Equipment Corp. +................................... 8,300 455
Mentor Graphics Corp. +..................................... 120,000 1,328
Microsoft Corp.+............................................ 45,000 3,817
Oracle Corp.+............................................... 705,000 16,656
Siebel Systems, Inc.+....................................... 1,032 23
Silicon Graphics, Inc.+..................................... 500,000 6,000
Solectron Corp.+............................................ 260,000 10,757
Structural Dynamics Research Corp.+......................... 150 3,797
Electrical & Electronics -- 2.2%
Ericsson (L.M.) Telecommunications Co., Class B ADR......... 354,000 9,868
General Instrument Corp.+................................... 143,900 3,427
Nokia Corp., Class A ADR.................................... 60,000 3,896
Electronic Components -- 16.9%
Adaptec, Inc.+.............................................. 310,000 4,708
ADC Telecommunications, Inc.+............................... 365,000 10,266
Advanced Micro Devices, Inc.+............................... 25,000 487
Altera Corp.+............................................... 255,000 8,574
Analog Devices, Inc.+....................................... 636,666 15,718
Bay Networks, Inc.+......................................... 75,000 2,077
Concord EFS, Inc.+.......................................... 180,000 5,737
Flextronics International Ltd.+............................. 70,000 2,775
Intel Corp.................................................. 336,200 24,017
LSI Logic Corp.+............................................ 320,000 6,820
Microchip Technology, Inc.+................................. 205,000 5,022
Micron Technology, Inc.+.................................... 157,100 3,702
Newbridge Networks Corp.+................................... 100,000 2,837
Park Electrochemical Corp................................... 187,200 4,446
Quantum Corp.+.............................................. 40,000 875
Rogers Corp.+............................................... 109,200 4,218
SCI Systems, Inc.+.......................................... 240,000 8,190
Texas Instruments, Inc. .................................... 421,000 21,629
Western Digital Corp.+...................................... 73,100 1,243
Xilinx, Inc.+............................................... 50,000 1,902
Electronic Instruments -- 0.8%
KLA-Tencor Corp.+........................................... 100,000 3,387
Security Dynamics Technologies, Inc.+....................... 135,000 2,852
</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
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<S> <C> <C>
CAPITAL EQUIPMENT (continued)
Energy Equipment -- 1.0%
Baker Hughes, Inc. ......................................... 50,000 $ 1,800
Schlumberger Ltd. .......................................... 40,000 3,123
Transocean Offshore, Inc. .................................. 40,000 1,973
Western Atlas, Inc.+........................................ 15,000 1,298
---------
230,791
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CONSUMER GOODS -- 4.4%
Beverages & Tobacco -- 0.9%
PepsiCo, Inc................................................ 40,000 1,632
Philip Morris Cos., Inc. ................................... 160,000 5,980
Food & Household Products -- 0.2%
Dole Food, Inc. ............................................ 40,000 1,847
Health & Personal Care -- 2.9%
Avon Products, Inc. ........................................ 15,000 1,227
BioChem Pharma, Inc.+....................................... 60,000 1,575
Dura Pharmaceuticals, Inc.+................................. 60,000 1,564
Forest Labs, Inc.+.......................................... 120,000 3,960
Omnicare, Inc. ............................................. 90,000 3,156
Pfizer, Inc. ............................................... 50,000 5,240
Pharmacia & Upjohn, Inc. ................................... 58,000 2,563
Warner-Lambert Co. ......................................... 60,000 3,829
Recreation & Other Consumer Products -- 0.2%
Hasbro, Inc. ............................................... 10,000 383
Midway Games, Inc.+......................................... 100,000 1,350
Textiles & Apparel -- 0.2%
Nike, Inc., Class B......................................... 35,000 1,610
---------
35,916
---------
ENERGY -- 2.4%
Energy Sources -- 2.4%
Murphy Oil Corp. ........................................... 80,000 4,025
Oryx Energy Co.+............................................ 200,000 4,663
Pogo Producing Co. ......................................... 36,500 935
Talisman Energy, Inc.+...................................... 40,000 1,085
Total SA ADR................................................ 20,000 1,246
Union Texas Petroleum Holdings, Inc. ....................... 275,000 7,563
---------
19,517
---------
FINANCE -- 5.3%
Banking -- 1.5%
Charter One Financial, Inc. ................................ 154,350 5,286
Norwest Corp. .............................................. 50,000 1,944
Washington Mutual, Inc. .................................... 65,000 4,591
Financial Services -- 1.7%
Capital One Financial Corp. ................................ 50,000 4,991
Federal National Mortgage Association....................... 150,000 8,981
Insurance -- 2.1%
Aetna, Inc. ................................................ 30,000 2,345
EXEL Ltd. .................................................. 130,000 9,782
Transatlantic Holdings, Inc. ............................... 60,000 4,489
---------
42,409
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</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS -- 1.6%
Chemicals -- 1.6%
Air Products & Chemicals, Inc. ............................. 50,000 $ 4,350
Monsanto Co. ............................................... 50,000 2,769
Valspar Corp. .............................................. 150,000 6,056
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13,175
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SERVICES -- 49.4%
Broadcasting & Publishing -- 21.3%
Adelphia Communications Corp.+.............................. 205,000 4,869
BHC Communications, Inc., Class A+.......................... 55,821 7,759
Cablevision Systems Corp., Class A+......................... 140,000 7,753
Comcast Corp., Class A...................................... 235,000 8,056
Cox Communications, Inc., Class A+.......................... 276,400 12,075
News Corp. Ltd. ADR......................................... 680,000 16,745
Tele-Communications, Inc., Series A+........................ 271,576 9,318
Tele-Communications Liberty Media Group, Inc., Series A+.... 643,537 21,237
Time Warner, Inc. .......................................... 563,750 43,867
USA Networks, Inc.+......................................... 356,500 8,734
Viacom, Inc., Class B+...................................... 550,000 30,250
Business & Public Services -- 15.4%
Allied Waste Industries, Inc.+.............................. 118,800 3,148
America Online, Inc.+....................................... 590,000 49,154
APAC TeleServices, Inc.+.................................... 69,900 636
Avery Dennison Corp. ....................................... 80,000 4,145
Cambridge Technology Partners, Inc.+........................ 125,000 6,270
Cendant Corp.+.............................................. 695,562 15,085
Columbia/HCA Healthcare Corp. .............................. 198,125 6,476
Ecolab, Inc. ............................................... 100,000 3,088
FDX Corp.+.................................................. 250,000 16,031
First Data Corp. ........................................... 100,000 3,325
Shared Medical Systems Corp. ............................... 58,000 4,219
TeleTech Holdings, Inc.+.................................... 40,000 540
Universal Health Services, Inc. ............................ 60,000 3,300
USA Waste Services, Inc.+................................... 80,000 3,775
Waste Management, Inc. ..................................... 141,912 4,612
Leisure & Tourism -- 5.3%
Carnival Corp., Class A..................................... 50,000 3,388
Disney (Walt) Co. .......................................... 185,000 20,928
Harrah's Entertainment, Inc.+............................... 160,000 4,000
Host Marriott Corp.+........................................ 200,000 3,850
King World Productions, Inc.+............................... 150,000 3,825
Mirage Resorts, Inc.+....................................... 300,000 6,244
Merchandising -- 2.6%
Barnes & Noble, Inc.+....................................... 110,000 3,726
Cardinal Health, Inc. ...................................... 37,000 3,298
Consolidated Stores+........................................ 190,000 7,256
Limited, Inc. .............................................. 96,500 3,209
Spiegel, Inc., Class A...................................... 366,600 1,947
Woolworth Corp.+............................................ 77,800 1,536
Telecommunications -- 1.9%
AirTouch Communications, Inc.+.............................. 50,000 2,381
LCI International, Inc.+.................................... 50,500 1,891
Tele-Communications TCI Ventures Group, Series A+........... 650,000 11,314
</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON STOCK (continued) SHARES (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Transportation: Airlines -- 2.9%
AMR Corp.+.................................................. 70,000 $ 10,776
Delta Air Lines, Inc. ...................................... 10,000 1,150
Southwest Airlines Co. ..................................... 412,500 11,008
---------
396,194
---------
OTHER COMMON STOCK -- 0.7%.................................. 5,232
---------
TOTAL COMMON STOCK (cost $442,975).......................... 743,234
---------
<CAPTION>
PREFERRED STOCK -- 0.9%
---------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 0.9%
Broadcasting & Publishing -- 0.9%
News Corp., Ltd. ADR (cost $2,313).......................... 340,000 7,288
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TOTAL INVESTMENT SECURITIES (cost $445,288)................. 750,522
---------
<CAPTION>
PRINCIPAL
AMOUNT
SHORT-TERM SECURITIES -- 5.2% (IN THOUSANDS)
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<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 5.2%
Amoco Corp. 5.45% due 6/2/98................................ $ 9,300 9,299
Coca-Cola Co. 5.48% due 7/2/98.............................. 11,500 11,446
du Pont (E.I.) de Nemours & Co. 5.41% due 6/3/98............ 9,600 9,597
du Pont (E.I.) de Nemours & Co. 5.48% due 6/16/98........... 4,300 4,290
Lucent Technologies, Inc. 5.46% due 7/21/98................. 7,100 7,046
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TOTAL SHORT-TERM SECURITIES (cost $41,678).................. 41,678
---------
TOTAL INVESTMENTS --
(cost $486,966) 98.8% 792,200
Other assets less liabilities -- 1.2 9,217
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NET ASSETS -- 100.0% $801,417
------ =========
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</TABLE>
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+ Non-income producing security
ADR - American Depository Receipt
See Notes to Financial Statements
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ANCHOR PATHWAY FUND
INTERNATIONAL SERIES INVESTMENT PORTFOLIO -- MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
COMMON & PREFERRED STOCK -- 89.4% SHARES (IN THOUSANDS)
<S> <C> <C>
-----------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
ARGENTINA -- 1.1%
Telefonica de Argentina SA ADR (Services)................... 75,400 $ 2,455
---------
AUSTRALIA -- 4.4%
Australia & New Zealand Bank Group (Finance)................ 550,000 3,906
Brambles Industries Ltd. (Services)......................... 100,000 2,029
Coca-Cola Amatil Ltd. (Consumer Goods)...................... 262,517 1,932
Westpac Banking Corp., Ltd. (Finance)....................... 300,000 1,982
---------
9,849
---------
BRAZIL -- 1.9%
Centrais Eletricas Brasileiras SA Electrobras ADR (Capital
Equipment)................................................ 183,000 3,262
Companhia Paranaense de Energia (Energy).................... 118,055,000 1,047
---------
4,309
---------
CANADA -- 6.0%
Bank of Nova Scotia (Finance)............................... 206,800 5,536
Imasco Ltd. (Multi-industry)................................ 82,000 1,517
Northern Telecom Ltd. (Capital Equipment)................... 94,000 6,016
Teck Corp., Class B (Materials)............................. 40,000 494
---------
13,563
---------
DENMARK -- 0.5%
Unidanmark AS (Finance)..................................... 13,000 1,050
---------
FINLAND -- 4.1%
Nokia AB OY, Series A (Capital Equipment)................... 80,000 5,266
Nokia AB OY, Series K (Capital Equipment)................... 40,000 2,596
UPM-Kymmene OY (Materials).................................. 48,000 1,392
---------
9,254
---------
FRANCE -- 5.5%
Canal Plus (Services)....................................... 13,500 2,450
Carrefour SA (Services)..................................... 4,300 2,628
Moet-Hennessy Louis Vuitton (Consumer Goods)................ 8,500 1,783
Peugeot SA (Consumer Goods)................................. 6,700 1,309
Total SA, Class B (Energy).................................. 33,876 4,207
---------
12,377
---------
GERMANY -- 8.2%
Bayerische Motoren Werke AG (Consumer Goods)................ 6,072 6,425
Bayerische Motoren Werke AG NV Preferred (Consumer Goods)... 2,604 1,809
Deutsche Bank AG (Finance).................................. 24,000 2,066
Mannesmann AG (Services).................................... 6,300 6,161
Volkswagen AG (Consumer Goods).............................. 2,500 2,027
---------
18,488
---------
HONG KONG -- 1.6%
Hutchison Whampoa Ltd. (Multi-industry)..................... 675,000 3,528
---------
</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON & PREFERRED STOCK (continued) SHARES (IN THOUSANDS)
-----------------------------------------------------------------------------------------------
<S> <C> <C>
ITALY -- 3.0%
Telecom Italia Mobile SpA RNC (Services).................... 64,800 $ 235
Telecom Italia Mobile SpA (Services)........................ 873,050 5,163
Telecom Italia SpA+ (Services).............................. 240,000 1,294
---------
6,692
---------
JAPAN -- 9.6%
Amway Japan Ltd. ADR (Services)............................. 36,000 227
Fujitsu Ltd. (Capital Equipment)............................ 180,000 2,067
Mazda Motor Corp.+ (Consumer Goods)......................... 645,000 2,161
Minebea Co., Ltd. (Capital Equipment)....................... 300,000 3,078
Nintendo Co., Ltd. (Consumer Goods)......................... 11,000 1,029
Nippon Telegraph & Telephone Corp. (Services)............... 630 5,186
Rohm Co., Ltd. (Capital Equipment).......................... 20,000 2,079
Shohkoh Fund & Co. (Finance)................................ 17,100 4,383
Suzuki Motor Corp. (Consumer Goods)......................... 179,000 1,459
---------
21,669
---------
KOREA -- 0.3%
Korea Mobile Telecommunications Corp. (Services)............ 370 167
LG Semiconductor Co.+ (Capital Equipment)................... 48,900 412
Samsung Electronics (Consumer Goods)........................ 1,097 42
---------
621
---------
LUXEMBOURG -- 1.3%
Safra Republic Holdings, Inc. (Finance)..................... 20,000 3,000
---------
MEXICO -- 3.8%
Cemex SA+ (Capital Equipment)............................... 560,000 2,314
Cifra SA de CV (Services)................................... 49,461 72
Cifra SA de CV, Series C (Services)......................... 195,500 275
Grupo Financiero Banamex+ (Finance)......................... 26,406 59
Grupo Televisa SA de CV GDR+ (Services)..................... 35,000 1,367
Telefonos de Mexico SA ADR (Services)....................... 95,200 4,516
---------
8,603
---------
NETHERLANDS -- 6.8%
ING NV (Finance)............................................ 90,000 6,180
Philips Electronics (Consumer Goods)........................ 50,000 4,751
Vereenigde Ned Uitgevers (Services)......................... 130,000 4,461
---------
15,392
---------
NORWAY -- 0.9%
Christiania Bank Og Kreditkasse (Finance)................... 460,000 1,972
---------
PHILIPPINES -- 1.5%
Ayala Land, Inc. (Finance).................................. 3,720,000 1,261
Philippine Long Distance Telephone Co. (Services)........... 40,000 1,023
Philippine Long Distance Telephone Co. ADR (Services)....... 40,000 1,015
---------
3,299
---------
SPAIN -- 3.5%
Telefonica de Espana SA (Services).......................... 98,181 4,386
Telefonica de Espana SA ADR+ (Services)..................... 26,181 3,521
---------
7,907
---------
</TABLE>
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<TABLE>
<CAPTION>
VALUE
COMMON & PREFERRED STOCK (continued) SHARES (IN THOUSANDS)
-----------------------------------------------------------------------------------------------
<S> <C> <C>
SWEDEN -- 4.6%
Astra AB, Class A (Consumer Goods).......................... 150,000 $ 3,015
Ericsson LM Telecommunications Co., Class B (Capital
Equipment)................................................ 190,400 5,430
Kinnevik, Series A (Multi-industry)......................... 23,900 884
Kinnevik, Series B (Multi-industry)......................... 15,000 548
Modern Times Group AB, Class A+ (Services).................. 23,900 267
Modern Times Group AB, Class B ADR+ (Services).............. 3,000 177
---------
10,321
---------
SWITZERLAND -- 4.0%
Nestle SA+ (Consumer Goods)................................. 1,250 2,677
Novartis AG (Consumer Goods)................................ 3,754 6,355
---------
9,032
---------
UNITED KINGDOM -- 12.3%
BOC Group PLC (Materials)................................... 150,000 2,376
Dixons Group PLC (Services)................................. 600,000 5,762
Kingfisher PLC (Services)................................... 53,700 952
Lloyds TSB Group PLC (Finance).............................. 295,000 4,286
Reckitt & Colman PLC (Consumer Goods)....................... 180,000 3,634
Rentokil Initial PLC (Services)............................. 900,000 6,280
Scottish Power PLC (Energy)................................. 132,240 1,194
Standard Chartered PLC (Finance)............................ 250,000 3,116
---------
27,600
---------
OTHER COMMON STOCK -- 4.5%.................................. 10,089
---------
TOTAL COMMON & PREFERRED STOCK (cost $154,288).............. 201,070
---------
RIGHTS -- 0.7%+
-----------------------------------------------------------------------------------------------
GERMANY -- 0.7%
Bayerische Motoren Werke 6/30/98............................ 1 1,285
Bayerische Motoren Werke 7/30/98............................ 1 362
---------
TOTAL RIGHTS (cost $610).................................... 1,647
---------
TOTAL INVESTMENT SECURITIES (cost $154,898)................. 202,717
---------
PRINCIPAL
AMOUNT
SHORT-TERM SECURITIES -- 9.6% (IN THOUSANDS)
-----------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 9.6%
Arco British Ltd. 5.52% due 6/18/98......................... $ 6,500 $ 6,483
General Electric Capital Corp. 5.65% due 6/1/98............. 4,100 4,100
International Lease Finance Corp. 5.47% due 6/22/98......... 1,200 1,196
International Lease Finance Corp. 5.48% due 8/17/98......... 5,000 4,942
Nestle Capital Corp. 5.47% due 7/9/98....................... 5,000 4,971
---------
TOTAL SHORT-TERM SECURITIES (cost $21,692).................. 21,692
---------
TOTAL INVESTMENTS --
(cost $176,590) 99.7% 224,409
Other assets less liabilities -- 0.3 642
------ ---------
NET ASSETS -- 100.0% $225,051
====== =========
</TABLE>
-----------------------------
+ Non-income producing security
ADR - American Depository Receipt
GDR - Global Depository Receipt
See Notes to Financial Statements
- ---------------------
10
<PAGE> 12
O
- ---------------------
ANCHOR PATHWAY FUND
GROWTH-INCOME SERIES INVESTMENT PORTFOLIO -- MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 85.9% SHARES (IN THOUSANDS)
<S> <C> <C>
---------------------------------------------------------------------------------------------
CAPITAL EQUIPMENT -- 15.9%
Aerospace & Military Technology -- 2.4%
Boeing Co. ................................................. 40,000 $ 1,905
General Motors Corp., Class H............................... 85,000 4,207
Raytheon Co., Class A....................................... 47,804 2,549
Raytheon Co., Class B....................................... 25,000 1,367
Sundstrand Corp. ........................................... 130,000 8,060
United Technologies Corp. .................................. 52,000 4,888
Data Processing & Reproduction -- 3.9%
3Com Corp.+................................................. 240,000 6,090
Adobe Systems, Inc. ........................................ 40,000 1,598
Hewlett-Packard Co. ........................................ 50,000 3,106
Microsoft Corp.+............................................ 30,000 2,544
Oracle Corp.+............................................... 410,000 9,686
Silicon Graphics, Inc.+..................................... 294,400 3,533
Xerox Corp. ................................................ 114,300 11,744
Electrical & Electronics -- 2.8%
Ericsson (L.M.) Telecommunications Co., Class B ADR......... 100,000 2,787
Nokia Corp., Class A ADR.................................... 180,000 11,689
Siemens AG.................................................. 80,000 5,165
York International Corp. ................................... 162,800 8,140
Electronic Components -- 1.1%
Corning, Inc. .............................................. 85,000 3,352
Intel Corp. ................................................ 30,000 2,143
Texas Instruments, Inc. .................................... 100,000 5,138
Energy Equipment -- 1.4%
Schlumberger Ltd. .......................................... 115,000 8,977
Western Atlas, Inc.+........................................ 55,900 4,839
Industrial Components -- 0.6%
Dana Corp. ................................................. 50,000 2,606
Eaton Corp. ................................................ 40,000 3,593
Machinery & Engineering -- 3.7%
Caterpillar, Inc. .......................................... 230,000 12,636
Crompton & Knowles Corp. ................................... 120,000 3,233
Deere & Co. ................................................ 190,000 9,856
Ingersoll-Rand Co. ......................................... 120,000 5,407
New Holland NV ............................................. 100,000 2,375
Parker-Hannifin Corp. ...................................... 60,000 2,464
---------
155,677
---------
CONSUMER GOODS -- 13.7%
Automotive -- 0.8%
Chrysler Corp. ............................................. 100,000 5,563
Ford Motor Co. ............................................. 40,200 2,085
</TABLE>
---------------------
11
<PAGE> 13
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (CONTINUED) SHARES (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER GOODS (continued)
Beverages & Tobacco -- 3.0%
Anheuser-Busch Cos., Inc. .................................. 70,000 $ 3,216
PepsiCo, Inc. .............................................. 110,000 4,489
Philip Morris Cos., Inc. ................................... 240,000 8,970
Seagram Co., Ltd. .......................................... 220,000 9,666
UST, Inc. .................................................. 100,000 2,663
Food & Household Products -- 1.1%
Bestfoods................................................... 50,000 2,822
General Mills, Inc. ........................................ 25,000 1,706
McCormick & Co., Inc. ...................................... 100,000 3,350
Unilever NV ................................................ 40,000 3,158
Health & Personal Care -- 7.4%
Astra AB ADR................................................ 200,000 4,050
Avon Products, Inc. ........................................ 74,900 6,128
DePuy, Inc. ................................................ 50,000 1,494
Glaxo Holdings PLC ADR...................................... 120,000 6,472
Guidant Corp. .............................................. 40,000 2,577
Johnson & Johnson Co. ...................................... 60,000 4,144
Kimberly-Clark Corp. ....................................... 110,000 5,452
Merck & Co., Inc. .......................................... 50,000 5,853
Pfizer, Inc. ............................................... 100,000 10,481
Schering-Plough Corp. ...................................... 121,400 10,160
Warner-Lambert Co. ......................................... 240,000 15,315
Recreation & Other Consumer Products -- 0.7%
Harley-Davidson, Inc. ...................................... 200,000 7,150
Textiles & Apparel -- 0.7%
Nike, Inc., Class B......................................... 50,000 2,300
V.F. Corp. ................................................. 90,000 4,787
---------
134,051
---------
ENERGY -- 9.9%
Energy Sources -- 7.2%
Amoco Corp. ................................................ 200,000 8,362
Ashland, Inc. .............................................. 48,800 2,434
Atlantic Richfield Co. ..................................... 135,000 10,648
Kerr-McGee Corp. ........................................... 50,000 3,163
Murphy Oil Corp. ........................................... 50,000 2,516
Noble Affiliates, Inc. ..................................... 100,000 3,906
Norsk Hydro ASA ADR......................................... 50,000 2,247
Oryx Energy Co.+............................................ 200,000 4,663
Pennzoil Co. ............................................... 37,100 2,145
Phillips Petroleum Co. ..................................... 60,000 3,004
Pioneer Natural Resources Co. .............................. 20,000 470
Texaco, Inc. ............................................... 130,000 7,507
Ultramar Diamond Shamrock Corp. ............................ 331,600 10,590
Valero Energy Corp. ........................................ 260,000 8,482
Utilities: Electric, Gas & Water -- 2.7%
Ameren Corp. ............................................... 100,000 3,913
DPL, Inc. .................................................. 270,000 4,658
Duke Energy Corp. .......................................... 120,000 6,915
GPU, Inc. .................................................. 100,000 3,850
TECO Energy, Inc. .......................................... 150,000 3,928
Williams Cos., Inc. ........................................ 104,400 3,386
---------
96,787
---------
</TABLE>
- ---------------------
12
<PAGE> 14
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (CONTINUED) SHARES (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 11.3%
Banking -- 7.9%
Banc One Corp. ............................................. 33,000 $ 1,819
Bank of New York Co., Inc. ................................. 160,000 9,780
Bank of Tokyo-Mitsubishi Ltd. ADR........................... 100,000 1,050
BankAmerica Corp. .......................................... 40,000 3,308
Chase Manhattan Corp. ...................................... 35,000 4,758
Citicorp.................................................... 18,500 2,759
First Union Corp. .......................................... 193,960 10,728
Huntington Bancshares, Inc. ................................ 83,600 2,738
KeyCorp. ................................................... 170,000 6,449
Marshall & Ilsley Corp. .................................... 125,300 6,766
Morgan (J.P.) & Co., Inc. .................................. 30,000 3,726
Regions Financial Corp. .................................... 125,000 5,141
Sakura Bank Ltd. ADR ....................................... 35,000 1,120
SunTrust Banks, Inc. ....................................... 50,000 3,950
Wells Fargo & Co. .......................................... 34,300 12,399
Financial Services -- 1.4%
Associates First Capital Corp., Class A..................... 15,536 1,162
Beneficial Corp. ........................................... 20,000 2,680
FINOVA Group, Inc. ......................................... 11,300 625
Household International, Inc. .............................. 70,000 9,472
Insurance -- 2.0%
Aetna, Inc. ................................................ 50,000 3,909
Allstate Corp. ............................................. 50,000 4,706
General Reinsurance Corp. .................................. 50,000 10,994
---------
110,039
---------
MATERIALS -- 9.3%
Chemicals -- 4.6%
Dow Chemical Co. ........................................... 30,000 2,906
du Pont (E.I.) de Nemours & Co. ............................ 94,200 7,254
Mallinckrodt, Inc. ......................................... 42,000 1,294
Millenium Chemicals, Inc. .................................. 91,300 2,887
Monsanto Co. ............................................... 220,000 12,183
PPG Industries, Inc. ....................................... 75,000 5,466
Praxair, Inc. .............................................. 168,800 8,324
Witco Corp. ................................................ 120,000 4,553
Forest Products & Paper -- 3.9%
Bowater, Inc. .............................................. 160,000 8,100
Fort James Corp. ........................................... 125,000 5,977
Georgia Pacific Timber Group................................ 65,000 1,532
Georgia Pacific Corp. ...................................... 65,000 4,172
International Paper Co. .................................... 100,000 4,600
Sonoco Products Co. ........................................ 82,500 2,882
Union Camp Corp. ........................................... 140,000 7,656
Westvaco Corp. ............................................. 60,000 1,710
Weyerhaeuser Co. ........................................... 25,000 1,270
Metals: Steel -- 0.2%
Allegheny Teldyne, Inc. .................................... 100,000 2,325
Metals & Minerals -- 0.6%
Aluminum Co. of America..................................... 85,000 5,897
---------
90,988
---------
</TABLE>
---------------------
13
<PAGE> 15
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (CONTINUED) SHARES (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
MULTI-INDUSTRY -- 1.3%
Multi-Industry -- 1.3%
AlliedSignal, Inc. ......................................... 80,000 $ 3,420
FMC Corp.+.................................................. 75,000 5,733
Textron, Inc. .............................................. 50,000 3,709
---------
12,862
---------
REAL ESTATE -- 0.4%
Real Estate Companies -- 0.4%
Meditrust Co. .............................................. 125,000 3,523
---------
SERVICES -- 21.3%
Broadcasting & Publishing -- 5.7%
Gannett, Inc. .............................................. 80,000 5,275
Harte Hanks Communications Co. ............................. 400,000 9,050
Houston Industries, Inc. ................................... 70,000 4,874
Liberty Media Group, Inc., Series A+........................ 326,250 10,766
Media General, Inc. ........................................ 75,800 3,487
News Corp., Ltd. ADR........................................ 140,000 3,448
Time Warner, Inc. .......................................... 100,000 7,781
Viacom, Inc., Class B+...................................... 200,000 11,000
Business & Public Services -- 4.7%
Alexander & Baldwin, Inc. .................................. 180,000 5,175
Avery Dennison Corp. ....................................... 100,000 5,181
Browning-Ferris Industries, Inc. ........................... 255,800 9,097
Electronic Data Systems Corp. .............................. 180,000 6,547
Hertz Corp., Class A........................................ 171,900 7,886
Ikon Office Solutions, Inc. ................................ 288,700 6,117
Pitney Bowes, Inc. ......................................... 60,000 2,820
Waste Management, Inc. ..................................... 110,000 3,575
Leisure & Tourism -- 1.6%
Disney (Walt) Co. .......................................... 140,000 15,837
Merchandising -- 3.7%
American Stores Co. ........................................ 60,000 1,496
Cardinal Health, Inc. ...................................... 22,600 2,014
Circuit City Stores, Inc. .................................. 225,000 9,535
Federated Department Stores, Inc.+.......................... 120,000 6,218
Lowe's Cos., Inc. .......................................... 50,000 3,959
Penney (J.C.), Inc. ........................................ 25,000 1,795
Wal-Mart Stores, Inc. ...................................... 200,000 11,038
Telecommunications -- 4.6%
AirTouch Communications, Inc.+.............................. 81,013 3,858
Ameritech Corp. ............................................ 220,000 9,336
AT&T Corp. ................................................. 275,000 16,741
SBC Communications, Inc. ................................... 80,000 3,110
Telefonos de Mexico SA ADR.................................. 60,000 2,846
U.S. West, Inc. Communications Group........................ 171,800 8,719
Transportation: Rail & Road -- 1.0%
Norfolk Southern Corp. ..................................... 195,000 6,106
Union Pacific Corp. ........................................ 80,000 3,870
---------
208,557
---------
OTHER COMMON STOCK -- 2.8%.................................. 27,288
---------
TOTAL COMMON STOCK (cost $545,740).......................... 839,772
---------
</TABLE>
- ---------------------
14
<PAGE> 16
<TABLE>
<CAPTION>
VALUE
PREFERRED STOCK -- 0.2% SHARES (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 0.2%
Broadcasting & Publishing -- 0.2%
News Corp., Ltd. ADR (cost $1,044).......................... 80,000 $ 1,715
---------
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS -- 0.7% (IN THOUSANDS)
---------------------------------------------------------------------------------------------
CONSUMER GOODS -- 0.4%
Health & Personal Care -- 0.4%
Sepacor, Inc. 6.25% 2005#................................... $ 3,650 4,220
---------
SERVICES -- 0.3%
Business & Public Services -- 0.3%
CUC International, Inc. 3.00% 2002#......................... 3,000 3,026
---------
TOTAL CONVERTIBLE BONDS (cost $6,679)....................... 7,246
---------
TOTAL INVESTMENT SECURITIES (cost $553,463)................. 848,733
---------
SHORT-TERM SECURITIES -- 11.1%
---------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 9.2%
American Express Credit Corp. 5.50% due 7/9/98.............. 4,500 4,474
American Express Credit Corp. 5.51% due 7/9/98.............. 8,000 7,953
Amoco Corp. 5.45% due 6/2/98................................ 10,400 10,398
Coca-Cola Co. 5.50% due 7/10/98............................. 13,000 12,923
du Pont (E.I.) de Nemours & Co. 5.47% due 6/18/98........... 6,500 6,483
du Pont (E.I.) de Nemours & Co. 5.48% due 6/16/98........... 4,000 3,991
Duke Power Co. 5.49% due 7/14/98............................ 8,300 8,246
Emerson Electric Co. 5.47% due 8/25/98...................... 13,400 13,227
Ford Motor Credit Co. 5.51% due 6/19/98..................... 10,000 9,972
Gannett, Inc. 5.48% due 6/1/98.............................. 11,900 11,900
---------
89,567
---------
FEDERAL AGENCY OBLIGATIONS -- 1.9%
Federal Home Loan Mortgage Discount Notes 5.42% due
6/24/98................................................... 2,000 1,993
Federal National Mortgage Association Discount Notes 5.42%
due 6/23/98............................................... 2,100 2,093
Federal National Mortgage Association Discount Notes 5.42%
due 6/26/98............................................... 14,880 14,824
---------
18,910
---------
TOTAL SHORT-TERM SECURITIES (cost $108,477)................. 108,477
---------
TOTAL INVESTMENTS --
(cost $661,940) 97.9% 957,210
Other assets less liabilities -- 2.1 20,137
------ ---------
NET ASSETS -- 100.0% $977,347
====== =========
</TABLE>
-----------------------------
+ Non-income producing security
# Resale restricted to qualified institutional buyers
ADR - American Depository Receipt
See Notes to Financial Statements
---------------------
15
<PAGE> 17
O
- ---------------------
ANCHOR PATHWAY FUND
ASSET ALLOCATION SERIES INVESTMENT PORTFOLIO -- MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
COMMON STOCK -- 60.2% SHARES (IN THOUSANDS)
<S> <C> <C>
---------------------------------------------------------------------------------------------
CAPITAL EQUIPMENT -- 10.6%
Aerospace & Military Technology -- 3.0%
Boeing Co. ................................................. 40,000 $ 1,905
Raytheon Co., Class A....................................... 24,333 1,297
Raytheon Co., Class B....................................... 25,000 1,367
Data Processing & Reproduction -- 1.6%
International Business Machines Corp. ...................... 20,000 2,347
Electrical & Electronics -- 1.7%
Nokia Corp., Class A ADR.................................... 20,000 1,299
York International Corp. ................................... 26,400 1,320
Electronic Components -- 1.1%
AMP, Inc. .................................................. 45,000 1,710
Industrial Components -- 2.2%
Dana Corp. ................................................. 35,000 1,825
Genuine Parts Co. .......................................... 45,000 1,527
Machinery & Engineering -- 1.0%
Deere & Co. ................................................ 30,000 1,556
---------
16,153
---------
CONSUMER GOODS -- 8.7%
Beverages & Tobacco -- 2.0%
PepsiCo, Inc................................................ 40,000 1,633
UST, Inc. .................................................. 55,000 1,464
Food & Household Products -- 1.4%
General Mills, Inc. ........................................ 30,000 2,047
Health & Personal Care -- 5.3%
Pfizer, Inc. ............................................... 40,000 4,193
SmithKline Beecham PLC ADR.................................. 30,000 1,614
Warner-Lambert Co. ......................................... 36,000 2,297
---------
13,248
---------
ENERGY -- 9.0%
Energy Sources -- 9.0%
Amoco Corp. ................................................ 30,000 1,254
Atlantic Richfield Co. ..................................... 20,000 1,578
Chevron Corp. .............................................. 20,000 1,597
Kerr-McGee Corp. ........................................... 30,000 1,897
Murphy Oil Corp. ........................................... 35,000 1,761
Oryx Energy Co.+............................................ 50,000 1,166
Phillips Petroleum Co. ..................................... 35,000 1,752
Royal Dutch Petroleum Co. ADR............................... 24,000 1,346
Ultramar Diamond Shamrock Corp.+............................ 40,000 1,278
---------
13,629
---------
</TABLE>
- ---------------------
16
<PAGE> 18
<TABLE>
<CAPTION>
VALUE
COMMON STOCK (CONTINUED) SHARES (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 9.7%
Banking -- 5.2%
BankAmerica Corp. .......................................... 30,000 $ 2,480
Citicorp. .................................................. 15,000 2,237
First Union Corp. .......................................... 32,400 1,792
KeyCorp. ................................................... 35,000 1,328
Insurance -- 4.5%
American General Corp. ..................................... 25,000 1,678
General Reinsurance Corp.+.................................. 13,000 2,858
St. Paul Cos., Inc. ........................................ 53,599 2,379
---------
14,752
---------
MATERIALS -- 8.4%
Chemicals -- 3.9%
Air Products & Chemicals, Inc............................... 25,000 2,175
PPG Industries, Inc. ....................................... 25,000 1,822
Praxair, Inc. .............................................. 40,000 1,972
Forest Products & Paper -- 4.1%
Georgia-Pacific Corp. ...................................... 30,000 1,926
Sonoco Products Co. ........................................ 38,300 1,338
Union Camp Corp. ........................................... 20,000 1,094
Weyerhaeuser Co. ........................................... 35,000 1,778
Metals & Minerals -- 0.4%
Aluminum Co. of America..................................... 8,000 555
---------
12,660
---------
MULTI-INDUSTRY -- 1.5%
Multi-Industry -- 1.5%
Textron, Inc................................................ 30,000 2,226
---------
SERVICES -- 8.7%
Business & Public Services -- 3.9%
Alexander & Baldwin, Inc.................................... 30,000 862
Avery Dennison Corp. ....................................... 30,000 1,554
Rentokil Initial PLC ADR.................................... 30,000 2,033
Reuters Group PLC ADR....................................... 21,700 1,486
Merchandising -- 3.8%
Penney (J.C.), Inc. ........................................ 25,000 1,795
Wal-Mart Stores, Inc. ...................................... 40,000 2,208
Walgreen Co. ............................................... 50,000 1,759
Telecommunications -- 0.0%
Nextel Communications, Inc., Class A+....................... 1,549 37
Transportation: Rail & Road -- 1.0%
Union Pacific Corp. ........................................ 30,000 1,451
---------
13,185
---------
OTHER COMMON STOCK -- 3.6%.................................. 5,514
---------
TOTAL COMMON STOCK (cost $61,664)........................... 91,367
---------
</TABLE>
---------------------
17
<PAGE> 19
<TABLE>
<CAPTION>
VALUE
PREFERRED STOCK -- 1.0% SHARES (IN THOUSANDS)
<S> <C> <C>
---------------------------------------------------------------------------------------------
FINANCE -- 0.2%
Banking -- 0.2%
NB Capital Corp., Series A*................................. 250 $ 261
---------
SERVICES -- 0.8%
Broadcasting & Publishing -- 0.8%
Adelphia Communications Corp., Series B..................... 5,000 595
American Radio Systems Corp., Series B...................... 5,264 606
---------
1,201
---------
TOTAL PREFERRED STOCK (cost $1,284)......................... 1,462
---------
<CAPTION>
PRINCIPAL
AMOUNT
BONDS & NOTES -- 31.1% (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS -- 0.1%
Broadcasting & Publishing -- 0.1%
Time Warner, Inc. zero coupon 2013.......................... $ 250 151
---------
CORPORATE BONDS -- 17.8%
Business Services -- 0.2%
Ziff Davis, Inc. 8.50% 2008................................. 250 252
Energy Sources -- 1.4%
Oryx Energy Co. 9.50% 1999.................................. 1,500 1,559
Oryx Energy Co. 10.00% 1999................................. 500 517
Entertainment Products -- 0.1%
V2 Music Holding zero coupon 2008*#@........................ 175 147
Finance -- 6.3%
Advanta Corp., Series D 6.57% 2000.......................... 1,325 1,272
Asset Backed Securities Investment Trust Series 1997-D,
Class A 6.79% 2003++*#.................................... 1,000 1,003
Barnett Capital I 8.06% 2026................................ 500 548
Capital One Bank 6.97% 2002................................. 2,250 2,290
Central Fidelity Capital Trust I, Series A 6.59% 2008(1).... 150 155
Chevy Chase Savings Bank 9.25% 2008......................... 500 513
First Plus Home Loan Trust, Series 1997-1, Class A6 6.95%
2015++.................................................... 500 510
Fuji Bank Investment LLC zero coupon 2049#@................. 250 216
IBJ Preferred Capital Co. LLC 8.79% 2049#(1)................ 500 443
IMC Home Equity Loan Trust, Series 1996-2, Class A2 6.78%
2011++.................................................... 97 97
Irvine Property 7.46% 2006*................................. 500 512
Morgan Stanley Capital I, Inc. 7.12% 2008*.................. 500 507
Ocwen Financial Corp. 11.88% 2003........................... 250 285
PDVSA Finance Ltd., Series D 7.40% 2016#(1)................. 250 253
Socgen Real Estate Co. LLC, Series A 7.64% 2049#(1)......... 500 504
Tokai Preferred Capital LLC, Series A 9.98% 2049#(1)........ 500 464
Industrial -- 5.1%
Allegiance Corp. 7.00% 2026................................. 500 537
Container Corp. of America 9.75% 2003....................... 500 538
Dayton Hudson Corp. 8.50% 2022.............................. 500 543
Esat Holdings Ltd. zero coupon 2007*@....................... 500 371
Freeport McMoRan Copper & Gold 7.20% 2026................... 500 413
Globo Comunicacoes Participacoes Ltd., Class B 10.50%
2006#..................................................... 400 394
Gruma SA de CV 7.63% 2007#.................................. 250 246
Hyundai Semiconductor 8.63% 2007*#.......................... 425 346
Inco Ltd. 9.60% 2022........................................ 400 447
Omnipoint Corp. 11.63% 2006................................. 250 268
Owens Illinois, Inc. 8.10% 2007............................. 250 265
Pan Pacific Industrial Investment PLC zero coupon 2007#..... 1,000 401
</TABLE>
- ---------------------
18
<PAGE> 20
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (CONTINUED) (IN THOUSANDS) (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (continued)
Industrial (continued)
Royal Caribbean Cruises Ltd. 7.00% 2007..................... $ 500 $ 508
Time Warner Pass Through Asset Trust 6.10% 2001#(1)......... 500 497
Time Warner, Inc. 9.13% 2013................................ 1,000 1,216
United Defense Industries, Inc. 8.75% 2007.................. 300 303
Wharf International Finance Ltd. 7.63% 2007................. 500 425
Telecommunications -- 2.3%
Cei Citicorp Holdings SA 11.25% 2007*#...................... 500 440
Clearnet Communications, Inc. zero coupon 2008@............. 1,000 412
Consorcio Ecuatoriano de Telecommunicaciones 14.00% 2002.... 250 249
Iridium Capital Corp., Series A 13.00% 2005#................ 250 269
Nextel Communications, Inc. zero coupon 2008#@.............. 1,500 947
Nextel International, Inc. zero coupon 2008#@............... 300 178
Qwest Communications International, Inc. zero coupon
2007@..................................................... 500 369
Tele-Communications, Inc. 9.25% 2023........................ 500 574
Transportation -- 2.4%
Airplanes Pass Through Trust, Class C 8.15% 2019++*......... 499 525
Continental Airlines Pass Through Trust 6.94% 2013++........ 961 993
Delta Air Lines, Inc. 10.50% 2016........................... 500 663
Jet Equipment Trust, Class B 7.83% 2012..................... 467 496
United Airlines Pass Through Trust, Series 1996, Class A2
7.87% 2019++.............................................. 500 532
USAir, Inc., Class A 6.76% 2008............................. 470 482
---------
26,894
---------
NON-U.S. GOVERNMENT OBLIGATIONS -- 0.3%
Republic of Argentina 11.75% 2007*#......................... 250 244
Republic of Argentina 9.70% 2027............................ 250 232
---------
476
---------
U.S. GOVERNMENT & AGENCIES -- 4.0%++
Federal National Mortgage Association 6.00% 2013............ 990 978
Federal National Mortgage Association 6.50% TBA............. 1,000 1,006
Federal National Mortgage Association 6.53% 2006............ 1,500 1,491
Federal National Mortgage Association 7.52% 2004............ 2,000 2,027
Government National Mortgage Association 8.50% 2027......... 611 645
---------
6,147
---------
UNITED STATES TREASURY -- 8.9%
7.50% Bonds 2016............................................ 3,000 3,539
10.75% Bonds 2003........................................... 4,000 4,871
3.63% Notes 2002............................................ 2,000 1,976
6.50% Notes 2002............................................ 1,000 1,031
7.25% Notes 2004............................................ 2,000 2,163
---------
13,580
---------
TOTAL BONDS & NOTES (cost $46,677).......................... 47,248
---------
</TABLE>
---------------------
19
<PAGE> 21
<TABLE>
<CAPTION>
VALUE
WARRANTS -- 0.0%+ SHARES (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 0.0%
Telecommunications -- 0.0%
Esat Holdings Ltd. 2/1/07*#................................. 500 $ 17
Iridium World Communications, Inc. 7/15/05#................. 250 49
---------
TOTAL WARRANTS (cost $15)................................... 66
---------
TOTAL INVESTMENT SECURITIES (cost $109,640)................. 140,143
---------
<CAPTION>
PRINCIPAL
AMOUNT
SHORT-TERM SECURITIES -- 8.7% (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 8.7%
Abbott Laboratories, Inc. 5.47% due 6/1/98.................. $ 1,900 1,900
Baltimore Gas & Electric Co. 5.51% due 6/9/98............... 1,500 1,498
Coca-Cola Co. 5.48% due 7/2/98.............................. 1,700 1,692
du Pont (E.I.) de Nemours & Co. 5.48% due 6/16/98........... 2,600 2,594
General Electric Capital Corp. 5.65% due 6/1/98............. 3,910 3,910
Motorola, Inc. 5.47% due 6/8/98............................. 1,700 1,698
---------
TOTAL SHORT-TERM SECURITIES (cost $13,292).................. 13,292
---------
TOTAL INVESTMENTS -- (cost $122,932) 101.0% 153,435
Liabilities in excess of other assets -- (1.0) (1,577)
------ ---------
NET ASSETS -- 100.0% $151,858
====== =========
</TABLE>
-----------------------------
+ Non-income producing security
++ 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 valued security; see Note 2
# Resale restricted to qualified institutional buyers
@ Represents a zero-coupon bond which will convert to an
interest-bearing security at a later date
TBA - Securities purchased on a forward commitment basis with an
approximate principal amount and no definitive maturity
date. The actual principal and maturity date will be
determined upon settlement.
(1) Variable rate security; rate as of May 31, 1998
See Notes to Financial Statements
- ---------------------
20
<PAGE> 22
O
- ---------------------
ANCHOR PATHWAY FUND
HIGH-YIELD BOND SERIES INVESTMENT PORTFOLIO -- MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES -- 88.8% (IN THOUSANDS) (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL EQUIPMENT -- 7.5%
Construction & Housing -- 0.9%
CSC Holdings, Inc. 9.88% 2013............................... $ 1,000 $ 1,092
Electronic Components -- 1.5%
Flextronics International Ltd. 8.75% 2007................... 1,750 1,765
Electronic Instruments -- 1.6%
Cellnet Data Systems, Inc. zero coupon 2007@................ 2,449 1,390
Global TeleSystems Ltd. 9.88% 2005.......................... 400 414
Industrial Components -- 3.5%
Breed Technologies, Inc. 9.25% 2008#........................ 2,500 2,500
Graham Packaging Co. 8.75% 2008#............................ 1,000 1,010
Impress Metal Packaging Holdings 9.88% 2007................. (DEM) 1,000 588
---------
8,759
---------
CONSUMER GOODS -- 5.1%
Appliances & Household Durables -- 1.8%
Home Products International, Inc. 9.63% 2008#............... 1,000 1,010
Lifestyle Furnishings International Ltd. 10.88% 2006........ 1,000 1,115
Beverages & Tobacco -- 0.9%
Canandaigua Wine, Inc. 8.75% 2003........................... 500 512
Standard Commercial Corp. 8.88% 2005........................ 500 496
Food & Household Products -- 0.4%
Favorite Brands International, Inc. 10.75% 2006#............ 500 509
Recreation & Other Consumer Products -- 0.9%
V2 Music Holdings PLC zero coupon 2008*#@(3)................ 2,000 1,030
Textiles & Apparel -- 1.1%
Tultex Corp. 10.63% 2005.................................... 1,250 1,291
---------
5,963
---------
CONSUMER SERVICES -- 1.6%
Retail -- 1.6%
Boyds Collection Ltd. 9.00% 2008#........................... 500 502
Kmart Corp. 9.78% 2020...................................... 250 279
Randalls Food Markets, Inc. 9.38% 2007...................... 1,000 1,050
---------
1,831
---------
ENERGY -- 5.5%
Energy Sources -- 5.5%
Benton Oil & Gas Co. 9.38% 2007............................. 500 490
Benton Oil & Gas Co. 11.63% 2003............................ 500 527
Doe Run Resources Corp. 11.25% 2005#........................ 1,500 1,541
Forcenergy, Inc. 8.50% 2007................................. 500 485
Forcenergy, Inc. 9.50% 2006................................. 1,250 1,294
Kelley Oil & Gas Corp., Series B 10.38% 2006................ 750 772
Kelley Oil & Gas Corp., Series C 10.38% 2006#............... 250 255
</TABLE>
---------------------
21
<PAGE> 23
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (CONTINUED) (IN THOUSANDS) (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY (continued)
Energy Sources (continued)
Lomak Petroleum, Inc. 8.75% 2007............................ $ 500 $ 508
Ocean Energy, Inc. 8.88% 2007............................... 500 523
---------
6,395
---------
FINANCE -- 2.8%
Financial Services -- 2.8%
Amresco, Inc. 9.88% 2005.................................... 750 769
DR Structured Finance Corp. 9.35% 2019*(1).................. 500 537
IBJ Preferred Capital Co. LLC 8.79% 2049#(1)................ 500 443
PTC International Finance BV zero coupon 2007@.............. 1,000 697
William Hill Finance PLC 10.63% 2008........................ 157 255
Wilshire Financial Services Group, Inc. 13.00% 2004......... 500 540
---------
3,241
---------
INDUSTRIAL & COMMERCIAL -- 2.6%
Industrial -- 2.6%
Comcast Cellular Holdings, Inc. 9.50% 2007.................. 1,500 1,545
Consumers International, Inc. 10.25% 2005#.................. 500 538
Newsquest Capital PLC 11.00% 2006........................... 900 1,012
---------
3,095
---------
MATERIALS -- 6.7%
Chemicals -- 1.2%
Key Plastics, Inc. 10.25% 2007.............................. 1,000 1,060
Texas Petrochemicals Corp. 11.13% 2006...................... 250 275
Forest Products & Paper -- 4.6%
Anchor Glass Container Corp. 9.88% 2008#.................... 750 750
Anchor Glass Container Corp. 11.25% 2005.................... 500 545
Container Corp. of America 9.75% 2003....................... 2,250 2,419
Container Corp. of America 11.25% 2004...................... 500 541
Paperboard Industries International, Inc. 8.38% 2007........ 1,100 1,112
Metals & Minerals -- 0.9%
Kaiser Aluminum & Chemical Corp. 12.75% 2003................ 1,000 1,069
---------
7,771
---------
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.1%
Republic of Argentina 11.38% 2017........................... 500 536
United Mexican States 11.38% 2016........................... 700 800
---------
1,336
---------
REAL ESTATE -- 1.1%
Real Estate Companies -- 0.7%
MDC Holdings, Inc. 8.38% 2008............................... 750 743
Real Estate Investment Trusts -- 0.4%
Felcor Suites Hotels, Inc. 7.38% 2004....................... 500 491
---------
1,234
---------
SERVICES -- 54.8%
Broadcasting & Publishing -- 15.3%
Adelphia Communications Corp. 8.38% 2008.................... 1,500 1,470
Century Communications Corp. zero coupon 2008............... 2,500 1,088
Chancellor Media Corp. 8.75% 2007........................... 1,000 1,028
Chancellor Media Corp. 9.38% 2004........................... 1,000 1,040
Chancellor Media Corp. 12.00% 2009*......................... 2,859 3,498
Comcast UK Cable Partners Ltd. zero coupon 2007@............ 2,000 1,645
Falcon Holdings Group LP 8.38% 2010#........................ 1,250 1,228
Fox Liberty Networks LLC 8.88% 2007......................... 250 253
</TABLE>
- ---------------------
22
<PAGE> 24
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (CONTINUED) (IN THOUSANDS) (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Broadcasting & Publishing (continued)
Gray Communications Systems, Inc. 10.63% 2006............... $ 1,500 $ 1,642
International CableTel, Inc. zero coupon 2005@.............. 750 638
Lenfest Communications, Inc. 8.25% 2008#.................... 1,000 1,010
Orion Network Systems, Inc. 11.25% 2007..................... 1,275 1,449
RBS Participacoes SA 11.00% 2007*#.......................... 500 490
Sun Media Corp. 9.50% 2007.................................. 975 1,038
Transwestern Publishing Co. 9.63% 2007...................... 250 259
Business & Public Services -- 11.7%
Allied Waste North America, Inc. 10.25% 2006................ 2,000 2,205
Integrated Health Services, Inc. 9.25% 2008................. 1,750 1,794
Integrated Health Services, Inc. 9.50% 2007................. 1,825 1,893
Mariner Health Group, Inc. 9.50% 2006....................... 385 412
Omnipoint Corp. 11.63% 2006................................. 1,125 1,204
Paracelsus Healthcare Corp. 10.00% 2006..................... 2,750 2,805
Printpack, Inc. 10.63% 2006................................. 500 535
Protection One Alarm Monitoring Corp. zero coupon 2005@..... 1,000 1,137
Teligent, Inc. 11.50% 2007.................................. 875 890
Tenet Healthcare Corp. 8.00% 2005........................... 500 515
Unison Healthcare Corp. 13.75% 2006*#(2).................... 650 260
Leisure & Tourism -- 3.2%
AMF Group, Inc. 10.88% 2006................................. 1,500 1,650
AMF Group, Inc. zero coupon 2006@........................... 155 126
Boyd Gaming Corp. 9.25% 2003................................ 500 526
Friendly Ice Cream Corp. 10.50% 2007........................ 625 666
Sun International Ltd. 9.00% 2007........................... 750 787
Telecommunications -- 23.6%
American Cellular Corp. 10.50% 2008#........................ 1,000 996
Cellular Communications of Puerto Rico, Inc. 10.00% 2007.... 500 504
Centennial Cellular Corp. 8.88% 2001........................ 2,500 2,606
Clearnet Communications, Inc. zero coupon 2008@............. 6,175 2,543
Clearnet Communications, Inc. zero coupon 2007@............. 1,000 456
COLT Telecom Group PLC 8.88% 2007*#......................... (DEM) 2,000 1,219
Comunicacion Celular SA zero coupon 2003*@.................. 1,000 775
Consorcio Ecuatoriano de Telecommunicaciones 14.00% 2002.... 500 499
Esat Holdings Ltd. zero coupon 2007*@....................... 500 371
Globalstar LP 11.38% 2004................................... 500 497
Hermes Europe Railtel BV 11.50% 2007........................ 500 568
Intermedia Communications, Inc. zero coupon 2007@........... 1,000 735
McCaw International Ltd. zero coupon 2007@.................. 1,000 662
Mobile Telecommunication Technologies Corp. 13.50% 2002..... 500 580
MobileMedia Communications, Inc. zero coupon 2003........... 1,000 200
Nextel Communications, Inc. zero coupon 2007@............... 1,000 665
Nextel Communications, Inc. zero coupon 2007@............... 2,750 1,774
Nextel Communications, Inc. zero coupon 2008#@.............. 2,250 1,420
Nextlink Communications, Inc. 9.00% 2008#................... 250 253
NTL, Inc. 9.50% 2008#....................................... 1,750 2,833
NTL, Inc. 10.00% 2007....................................... 500 535
Pricellular Wireless Corp. zero coupon 2001................. 1,000 1,097
Pricellular Wireless Corp. zero coupon 2003@................ 1,000 1,090
Qwest Communications International, Inc. zero coupon
2008#@.................................................... 1,500 1,057
Viatel, Inc. zero coupon 2008#@(3).......................... 1,000 595
Viatel, Inc. 11.15% 2008#(3)................................ (DEM) 500 292
Viatel, Inc. 11.25% 2008#(3)................................ 2,500 2,600
</TABLE>
---------------------
23
<PAGE> 25
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (CONTINUED) (IN THOUSANDS) (IN THOUSANDS)
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES (continued)
Broadcasting & Publishing (continued)
Transportation -- 1.0%
USAir, Inc. 9.63% 2003.................................................... $ 500 $ 541
USAir, Inc. 10.38% 2013................................................... 500 562
-----------
63,706
-----------
TOTAL BONDS & NOTES (cost $101,343)....................................... 103,331
-----------
<CAPTION>
U.S. GOVERNMENT AND AGENCIES -- 0.9%
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES TREASURY -- 0.9%
8.00% Notes 2001 (cost $1,061)............................................ 1,000 1,065
-----------
<CAPTION>
COMMON STOCK --0.0% SHARES
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES -- 0.0%
Telecommunications -- 0.0%
Nextel Communications, Inc., Class A+ (cost $25).......................... 1,549 37
-----------
PREFERRED STOCK -- 2.1%
------------------------------------------------------------------------------------------------------------
SERVICES -- 2.1%
Broadcasting & Publishing -- 2.1%
American Radio Systems Corp., Series B (cost $2,146)...................... 20,934 2,413
-----------
WARRANTS -- 0.3%+
------------------------------------------------------------------------------------------------------------
CAPITAL EQUIPMENT -- 0.1%
Electronic Instruments -- 0.1%
Cellnet Data Systems, Inc. 9/15/07#....................................... 1,000 32
-----------
SERVICES -- 0.2%
Broadcasting & Publishing -- 0.0%
Heartland Wireless Communication, Inc. 4/15/00*#.......................... 3,000 0
Orion Network Systems, Inc. 1/15/07*...................................... 1,275 21
Telecommunications -- 0.2%
Cellular Communications International, Inc. 8/15/03*...................... 2,250 79
Comunicacion Celular SA 11/15/03*......................................... 1,000 70
Esat Holdings Ltd. 2/01/07*............................................... 500 17
Globalstar Telecommunications 2/15/04#.................................... 500 68
McCaw International Ltd. 4/15/07.......................................... 1,000 4
Nextel Communications, Inc. 4/25/99*...................................... 500 4
-----------
263
-----------
TOTAL WARRANTS (cost $88)................................................. 295
-----------
TOTAL INVESTMENT SECURITIES (cost $104,663)............................... 107,141
-----------
</TABLE>
---------------------
24
<PAGE> 26
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 4.8% (IN THOUSANDS) (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 4.8%
du Pont (E.I.) de Nemours & Co. 5.48% due 6/16/98........... $ 2,000 $ 1,995
General Electric Capital Corp. 5.65% due 6/1/98............. 2,430 2,430
Motorola, Inc. 5.47% due 6/8/98............................. 1,100 1,099
---------
TOTAL SHORT-TERM SECURITIES (cost $5,524)................... 5,524
---------
TOTAL INVESTMENTS --
(cost $110,187) 96.9% 112,665
Other assets less liabilities -- 3.1 3,645
------ ---------
NET ASSETS -- 100.0% $116,310
------ =========
------
</TABLE>
-----------------------------
+ Non-income producing security
* Fair valued security; see Note 2
# Resale restricted to qualified institutional buyer
@ Represents a zero-coupon bond which will convert to an
interest-bearing security at a later date
(1) Variable rate security; rate as of May 31, 1998
(2) Bond in default
(3) Bond issued as a part of a unit which includes an equity
component
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
------------------------------------------------------------------
<TABLE>
<CAPTION>
GROSS UNREALIZED
CONTRACT IN DELIVERY APPRECIATION
TO DELIVER EXCHANGE FOR DATE (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------
DEM 944,000 USD 539,922 08/26/98 $ 8
-----
8
-----
</TABLE>
<TABLE>
<CAPTION>
GROSS UNREALIZED
DEPRECIATION
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------
DEM 1,045,000 USD 574,533 06/23/98 (12)
DEM 987,000 USD 536,401 07/02/98 (18)
DEM 500,000 USD.. 271,748... 07/07/98 (9)
-----
(39)
-----
Net Unrealized Depreciation... $(31)
=====
</TABLE>
-----------------------------
DEM - Deutsche Mark
USD - United States Dollar
See Notes to Financial Statements
---------------------
25
<PAGE> 27
O
- ---------------------
ANCHOR PATHWAY FUND
U.S. GOVERNMENT/
AAA-RATED SECURITIES SERIES INVESTMENT PORTFOLIO -- MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES -- 95.0% (IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
---------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 8.6%++
EQCC Home Equity Loan Trust, Series A, Class A2 6.95%
2012...................................................... $ 300 $ 301
Green Tree Financial Corp., Series 1995-9, Class A5 6.80%
2027...................................................... 1,000 1,015
Nomura Asset Securities, Series D, Class A 6.28% 2028....... 2,968 2,990
Structured Asset Securities Corp., Series 1998, Class RF
8.71% 2025#............................................... 1,983 2,116
---------
6,422
---------
DEVELOPMENTAL AUTHORITIES -- 6.0%
California Infrastructure Development, Series 1997-1, Class
A7 6.42% 2008++........................................... 2,000 2,043
Intermediate American Development Bank 8.88% 2009........... 2,000 2,448
---------
4,491
---------
FEDERAL AGENCY OBLIGATIONS -- 29.8%++
Federal Home Loan Mortgage Corp. 6.50% TBA.................. 1,000 996
Federal Home Loan Mortgage Corp. 6.50% 2009*................ 2,000 1,955
Federal Home Loan Mortgage Corp. 9.00% 2021-2022............ 869 926
Federal Home Loan Mortgage Corp. 9.50% 2016................. 507 543
Federal Home Loan Mortgage Corp. 11.88% 2013................ 11 13
Federal Home Loan Mortgage Corp. 12.50% 2013................ 99 111
Federal National Mortgage Association 6.85% 2026*........... 1,153 1,161
Federal National Mortgage Association 7.00% TBA............. 4,000 4,056
Federal National Mortgage Association 7.50% 2009............ 1,044 1,073
Government National Mortgage Association 6.50% TBA.......... 4,000 3,981
Government National Mortgage Association 8.00% 2017......... 1,286 1,354
Government National Mortgage Association 8.50% 2016-2022.... 1,357 1,440
Government National Mortgage Association 9.00% 2016-2017.... 643 695
Government National Mortgage Association 9.50% 2009-2017.... 3,477 3,756
Government National Mortgage Association 10.00% 2016........ 25 28
Government National Mortgage Association 10.50% 2016........ 125 138
Government National Mortgage Association 11.00% 2019........ 39 44
Government National Mortgage Association 11.50% 2010........ 12 14
---------
22,284
---------
MORTGAGE-RELATED SECURITIES -- 13.5%++
Asset Backed Securities Investment Trust, Series 1997-D,
Class A 6.79% 2003*#...................................... 750 753
DLJ Mortgage Acceptance Corp., Series 1996-CF2, Class A1B
7.29% 2021#............................................... 3,800 4,015
Merrill Lynch Mortgage Investors, Inc., Series 1995-C3,
Class A2 6.82% 2025*...................................... 500 509
Merrill Lynch Mortgage Investors, Inc., Series 1997-C1,
Class A1 6.95% 2029*...................................... 956 984
Morgan (J.P.) Commercial Mortgage Finance Corp., Series
1995-C1, Class A2 7.40% 2010*............................. 1,000 1,029
Mortgage Capital Funding Inc., Series 1998-MC1, Class A1
6.42% 2007*............................................... 1,492 1,511
Ocwen Residential MBS Corp., Series 1998-R1, Class AWAC
2.50% 2040#............................................... 1,300 1,308
---------
10,109
---------
</TABLE>
- ---------------------
26
<PAGE> 28
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
BONDS & NOTES (CONTINUED) (IN THOUSANDS) (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES TREASURY -- 37.1%
8.88% Bonds 2017............................................ $5,200 $ 6,967
10.75% Bonds 2003........................................... 5,150 6,272
12.00% Bonds 2013........................................... 1,000 1,474
5.88% Notes 2005............................................ 2,975 3,013
7.25% Notes 2004............................................ 6,750 7,300
7.50% Notes 2005............................................ 2,500 2,756
---------
27,782
---------
TOTAL INVESTMENT SECURITIES (cost $69,991).................. 71,088
---------
SHORT-TERM SECURITIES -- 20.0%
---------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 20.0%
American Express Credit Corp. 5.50% due 6/8/98.............. 2,800 2,797
Ameritech Corp. 5.50% due 6/24/98........................... 1,000 996
Coca-Cola Co. 5.50% due 7/10/98............................. 2,400 2,386
Gannett, Inc. 5.48% due 6/1/98.............................. 1,800 1,800
Heinz (H.J.) Co. 5.49% due 6/5/98........................... 3,000 2,998
Minnesota Mining & Manufacturing Co. 5.48% due 8/11/98...... 900 890
Procter & Gamble Co. 5.47% due 6/8/98....................... 1,100 1,099
Vermont American Corp. 5.49% due 6/18/98.................... 2,000 1,995
---------
TOTAL SHORT-TERM SECURITIES (cost $14,961).................. 14,961
---------
TOTAL INVESTMENTS --
(cost $84,952) 115.0% 86,049
Liabilities in excess of other assets -- (15.0) (11,215)
------ ---------
NET ASSETS -- 100.0% $ 74,834
====== =========
</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 valued security; see Note 2
# Resale restricted to qualified institutional buyers
TBA - Securities purchased on a forward commitment basis with an
approximate principal amount and no definitive maturity
date. The actual principal and maturity date will be
determined upon settlement.
See Notes to Financial Statements
---------------------
27
<PAGE> 29
O
- ---------------------
ANCHOR PATHWAY FUND
CASH MANAGEMENT SERIES INVESTMENT PORTFOLIO -- MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES -- 100.1% (IN THOUSANDS) (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER -- 71.7%
Abbott Laboratories, Inc. 5.47% due 6/1/98.................. $ 650 $ 650
AI Credit Corp. 5.49% due 6/1/98............................ 1,500 1,500
Albertson's, Inc. 5.50% due 6/5/98.......................... 1,500 1,499
American Express Credit Corp. 5.50% due 7/8/98.............. 1,400 1,392
Ameritech Corp. 5.50% due 6/23/98#.......................... 1,385 1,380
Amoco Corp. 5.45% due 7/9/98................................ 1,300 1,292
Atlantic Richfield Co. 5.50% due 6/5/98..................... 1,000 999
Baltimore Gas & Electric Co. 5.50% due 6/4/98............... 1,000 1,000
Bell Atlantic Financial Services 5.48% due 6/18/98.......... 1,500 1,496
Bell South Telecommunications, Inc. 5.48% due 6/23/98....... 1,000 997
Bestfoods 5.50% due 6/19/98................................. 3,000 2,992
Campbell Soup Co. 5.46% due 6/26/98......................... 2,700 2,690
Chevron Corp. 5.47% due 6/9/98.............................. 1,500 1,498
CIT Group Holdings, Inc. 5.50% due 6/9/98................... 1,000 999
Coca-Cola Co. 5.50% due 6/24/98............................. 1,700 1,694
Colgate-Palmolive Co. 5.47% due 6/11/98#.................... 1,500 1,498
Commercial Credit Co. 5.51% due 6/16/98..................... 2,000 1,995
Deere & Co. 5.50% due 6/15/98............................... 1,500 1,497
Duke Power Co. 5.49% due 6/10/98............................ 1,500 1,498
Electronic Data Systems Corp. 5.50% due 6/2/98.............. 1,100 1,100
Ford Motor Credit Co. 5.51% due 6/11/98..................... 1,500 1,498
Gannett, Inc. 5.48% due 6/2/98.............................. 1,000 1,000
General Electric Capital Services, Inc. 5.52% due 7/17/98... 2,000 1,986
General Mills, Inc. 5.48% due 6/4/98........................ 1,000 1,000
Gillette Co. 5.47% due 6/3/98............................... 1,800 1,799
Heinz (H.J.) Co. 5.48% due 6/3/98........................... 1,500 1,500
Hershey Foods Corp. 5.50% due 6/4/98........................ 1,750 1,749
IBM Credit Corp. 5.51% due 6/25/98.......................... 1,000 996
Minnesota Mining & Manufacturing Co. 5.47% due 6/9/98....... 1,000 999
Monsanto Co. 5.50% due 6/25/98.............................. 1,000 996
Pfizer, Inc. 5.48% due 6/17/98.............................. 1,200 1,197
Procter & Gamble Co. 5.48% due 6/12/98...................... 1,500 1,497
Sara Lee Corp. 5.48% due 6/11/98............................ 1,000 998
SBC Communications, Inc. 5.49% due 6/8/98#.................. 1,900 1,898
Shell Oil Co. 5.48% due 6/10/98............................. 1,750 1,748
St. Paul Cos., Inc. 5.50% due 6/29/98....................... 1,500 1,494
Vermont American Corp. 5.49% due 7/1/98#.................... 2,000 1,991
Xerox Corp. 5.47% due 6/26/98............................... 1,500 1,494
--------
TOTAL COMMERCIAL PAPER (cost: $55,506)...................... 55,506
--------
</TABLE>
- ---------------------
28
<PAGE> 30
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM SECURITIES (CONTINUED) (IN THOUSANDS) (IN THOUSANDS)
---------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL AGENCY OBLIGATIONS -- 28.4%
Federal Home Loan Bank Discount Notes 5.37% due 7/06/98..... $2,000 $ 1,990
Federal Home Loan Bank Discount Notes 5.38% due 7/06/98..... 2,500 2,487
Federal Home Loan Bank Discount Notes 5.39% due 6/24/98..... 3,200 3,189
Federal Home Loan Mortgage Discount Notes 5.40% due
6/12/98................................................... 3,100 3,095
Federal Home Loan Mortgage Discount Notes 5.40% due
6/19/98................................................... 1,900 1,895
Federal Home Loan Mortgage Discount Notes 5.40% due
7/10/98................................................... 2,600 2,585
Federal Home Loan Mortgage Discount Notes 5.41% due
7/07/98................................................... 650 646
Federal Home Loan Mortgage Discount Notes 5.43% due
7/14/98................................................... 1,500 1,490
Federal National Mortgage Association Discount Notes 5.40%
due 6/15/98............................................... 1,250 1,247
Federal National Mortgage Association Discount Notes 5.40%
due 7/02/98............................................... 1,600 1,593
Federal National Mortgage Association Discount Notes 5.42%
due 6/22/98............................................... 1,800 1,794
--------
TOTAL FEDERAL AGENCY OBLIGATIONS (cost $22,011)............. 22,011
--------
TOTAL SHORT-TERM SECURITIES (cost $77,517).................. 77,517
--------
TOTAL INVESTMENTS --
(cost $77,517) 100.1% 77,517
Liabilities in excess of other assets -- (0.1) (91)
------ --------
NET ASSETS -- 100.0% $77,426
====== ========
</TABLE>
# Resale restricted to qualified institutional buyers
See Notes to Financial Statements
---------------------
29
<PAGE> 31
O
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998 (UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<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>
ASSETS:
Investment securities, at value*.......... $750,522 $202,717 $848,733 $140,143 $107,141 $71,088
Short-term securities*.................... 41,678 21,692 108,477 13,292 5,524 14,961
Cash...................................... 98 51 171 6 8 42
Foreign cash.............................. -- 85 -- -- -- --
Receivables for --
Sales of investments.................... 11,442 341 21,874 -- 1,871 --
Fund shares sold........................ 321 42 273 214 566 232
Dividends and accrued interest.......... 170 668 1,855 851 1,981 585
Foreign currency contracts.............. -- 341 -- -- -- --
Prepaid expenses.......................... 18 5 21 3 3 2
Unrealized appreciation on forward foreign
currency contracts...................... -- -- -- -- 8 --
--------------------------------------------------------------------------------
804,249 225,942 981,404 154,509 117,102 86,910
--------------------------------------------------------------------------------
LIABILITIES:
Payables for --
Fund shares redeemed.................... 1,782 271 1,017 454 153 157
Purchases of investments................ 594 -- 2,511 2,091 508 11,851
Advisory fees........................... 219 117 258 41 31 21
Management fees......................... 146 47 172 27 21 14
Foreign currency contracts.............. -- 341 -- -- -- --
Other accrued expenses.................... 91 115 99 38 40 33
Unrealized depreciation on forward foreign
currency contracts...................... -- -- -- -- 39 --
--------------------------------------------------------------------------------
2,832 891 4,057 2,651 792 12,076
--------------------------------------------------------------------------------
NET ASSETS................................ $801,417 $225,051 $977,347 $151,858 $116,310 $74,834
================================================================================
Shares of beneficial interest outstanding
(unlimited shares authorized)........... 19,691 15,448 28,574 9,930 8,866 7,095
Net asset value per share................. $ 40.70 $ 14.57 $ 34.20 $ 15.29 $ 13.12 $ 10.55
================================================================================
COMPOSITION OF NET ASSETS:
Capital paid in........................... $407,461 $156,489 $577,500 $107,492 $105,155 $73,650
Accumulated undistributed net investment
income.................................. 1,020 1,070 8,535 2,721 5,339 2,408
Accumulated undististributed net realized
gain (loss) on investments, futures,
options and foreign currency............ 87,702 19,683 96,042 11,142 3,369 (2,321)
Unrealized appreciation on investments.... 305,234 47,819 295,270 30,503 2,478 1,097
Unrealized foreign exchange loss on other
assets and liablities................... -- (10) -- -- (31) --
--------------------------------------------------------------------------------
Net Assets............................ $801,417 $225,051 $977,347 $151,858 $116,310 $74,834
================================================================================
---------------
*Cost
Investment securities................... $445,288 $154,898 $553,463 $109,640 $104,663 $69,991
================================================================================
Short-term securities................... $ 41,678 $ 21,692 $108,477 $ 13,292 $ 5,524 $14,961
================================================================================
<CAPTION>
CASH
MANAGEMENT
SERIES
------------------------------------------ ----------
<S> <C>
ASSETS:
Investment securities, at value*.......... $ --
Short-term securities*.................... 77,517
Cash...................................... 98
Foreign cash.............................. --
Receivables for --
Sales of investments.................... --
Fund shares sold........................ 395
Dividends and accrued interest.......... --
Foreign currency contracts.............. --
Prepaid expenses.......................... 1
Unrealized appreciation on forward foreign
currency contracts...................... --
-------
78,011
-------
LIABILITIES:
Payables for --
Fund shares redeemed.................... 514
Purchases of investments................ --
Advisory fees........................... 20
Management fees......................... 13
Foreign currency contracts.............. --
Other accrued expenses.................... 38
Unrealized depreciation on forward foreign
currency contracts...................... --
-------
585
-------
NET ASSETS................................ $77,426
=======
Shares of beneficial interest outstanding
(unlimited shares authorized)........... 7,202
Net asset value per share................. $ 10.75
=======
COMPOSITION OF NET ASSETS:
Capital paid in........................... $75,922
Accumulated undistributed net investment
income.................................. 1,505
Accumulated undististributed net realized
gain (loss) on investments, futures,
options and foreign currency............ (1)
Unrealized appreciation on investments.... --
Unrealized foreign exchange loss on other
assets and liablities................... --
Net Assets............................ $77,426
-------
*Cost
Investment securities................... $ --
=======
Short-term securities................... $77,517
=======
</TABLE>
See Notes to Financial Statements
- ---------------------
30
<PAGE> 32
O
- ---------------------
ANCHOR PATHWAY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
U.S.
GOVERNMENT/
ASSET HIGH-YIELD AAA-RATED
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION BOND SECURITIES
SERIES SERIES SERIES SERIES SERIES SERIES
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest................................ $ 1,705 $ 841 $ 3,644 $ 2,089 $ 5,319 $2,725
Dividends*.............................. 1,570 2,161 7,551 1,094 405 --
-------------------------------------------------------------------------------
Total income 3,275 3,002 11,195 3,183 5,724 2,725
-------------------------------------------------------------------------------
Expenses:
Advisory fees........................... 1,257 675 1,487 241 188 127
Management fees......................... 838 270 991 161 125 85
Custodian fees.......................... 100 192 117 32 27 21
Reports to investors.................... 16 8 18 5 6 5
Auditing and legal fees................. 13 14 13 9 10 11
Trustees' fees.......................... 9 2 10 2 1 1
Other expenses.......................... 6 2 8 1 1 2
-------------------------------------------------------------------------------
Total expenses................... 2,239 1,163 2,644 451 358 252
-------------------------------------------------------------------------------
Net investment income..................... 1,036 1,839 8,551 2,732 5,366 2,473
-------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on investments.......... 87,998 19,598 96,071 11,160 3,347 1,007
Net realized foreign exchange gain
on other assets and liabilities......... -- 106 -- -- 35 --
Change in unrealized appreciation/
depreciation of investments............. 9,135 16,594 9,698 (555) (2,202) (719)
Change in unrealized foreign exchange
gain/loss on other assets and
liabilities............................. -- (253) -- -- (39) --
-------------------------------------------------------------------------------
Net realized and unrealized gain on
investments and foreign currencies...... 97,133 36,045 105,769 10,605 1,141 288
-------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.............................. $98,169 $37,884 $114,320 $13,337 $ 6,507 $2,761
===============================================================================
<CAPTION>
CASH
MANAGEMENT
SERIES
------------------------------------------ ----------
<S> <C>
NET INVESTMENT INCOME:
Income:
Interest................................ $1,722
Dividends*.............................. --
------
Total income 1,722
------
Expenses:
Advisory fees........................... 101
Management fees......................... 67
Custodian fees.......................... 16
Reports to investors.................... 7
Auditing and legal fees................. 10
Trustees' fees.......................... 1
Other expenses.......................... 1
------
Total expenses................... 203
------
Net investment income..................... 1,519
------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on investments.......... --
Net realized foreign exchange gain
on other assets and liabilities......... --
Change in unrealized appreciation/
depreciation of investments............. --
Change in unrealized foreign exchange
gain/loss on other assets and
liabilities............................. --
------
Net realized and unrealized gain on
investments and foreign currencies...... 0
------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.............................. $1,519
======
</TABLE>
- ---------------
* Net of foreign witholding taxes of $27; $246; $111 and $13 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, 1998 (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..................... $ 1,036 $ 1,839 $ 8,551 $ 2,732 $ 5,366 $ 2,473
Net realized gain on investments.......... 87,998 19,598 96,071 11,160 3,347 1,007
Net realized foreign exchange gain on
other assets and liabilities............ -- 106 -- -- 35 --
Change in unrealized appreciation/
depreciation of investments............. 9,135 16,594 9,698 (555) (2,202) (719)
Change in unrealized foreign exchange
gain/loss on other assets and
liabilities............................. -- (253) -- -- (39) --
---------------------------------------------------------------------------------
Net increase in net assets resulting from
operations.............................. 98,169 37,884 114,320 13,337 6,507 2,761
---------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income...... (3,495) (3,310) (17,480) (5,385) (11,180) (6,410)
Distributions from net realized gains on
investments............................. (148,000) (54,645) (166,343) (18,305) (2,570) --
---------------------------------------------------------------------------------
Total dividends and distributions paid to
shareholders............................ (151,495) (57,955) (183,823) (23,690) (13,750) (6,410)
---------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold................. 48,870 19,235 46,833 8,584 13,907 9,267
Proceeds from shares issued for
reinvestment of dividends and
distributions........................... 151,495 57,955 183,823 23,690 13,750 6,410
Cost of shares repurchased................ (146,852) (55,405) (134,238) (25,509) (22,774) (18,803)
---------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions............................ 53,513 21,785 96,418 6,765 4,883 (3,126)
---------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS... 187 1,714 26,915 (3,588) (2,360) (6,775)
NET ASSETS:
Beginning of period....................... 801,230 223,337 950,432 155,446 118,670 81,609
---------------------------------------------------------------------------------
End of period............................. $ 801,417 $225,051 $ 977,347 $151,858 $116,310 $ 74,834
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
---------------
Accumulated undistributed net investment
income.................................. $ 1,020 $ 1,070 $ 8,535 $ 2,721 $ 5,339 $ 2,408
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Shares issued and repurchased:
Sold.................................... 1,091 1,188 1,255 523 1,002 841
Issued in reinvestment of dividends and
distributions......................... 3,612 3,971 5,274 1,547 1,051 616
Repurchased............................. (3,295) (3,439) (3,624) (1,561) (1,634) (1,713)
---------------------------------------------------------------------------------
Net increase (decrease)................... 1,408 1,720 2,905 509 419 (256)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
<CAPTION>
CASH
MANAGEMENT
SERIES
------------------------------------------ ----------
<S> <C>
OPERATIONS:
Net investment income..................... $ 1,519
Net realized gain on investments.......... --
Net realized foreign exchange gain on
other assets and liabilities............ --
Change in unrealized appreciation/
depreciation of investments............. --
Change in unrealized foreign exchange
gain/loss on other assets and
liabilities............................. --
--------
Net increase in net assets resulting from
operations.............................. 1,519
--------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income...... (3,995)
Distributions from net realized gains on
investments............................. --
--------
Total dividends and distributions paid to
shareholders............................ (3,995)
--------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold................. 75,268
Proceeds from shares issued for
reinvestment of dividends and
distributions........................... 3,995
Cost of shares repurchased................ (68,587)
--------
Net increase (decrease) in net assets
resulting from capital share
transactions............................ 10,676
--------
TOTAL INCREASE (DECREASE) IN NET ASSETS... 8,200
NET ASSETS:
Beginning of period....................... 69,226
--------
End of period............................. $ 77,426
--------
--------
---------------
Accumulated undistributed net investment
income.................................. $ 1,505
--------
--------
Shares issued and repurchased:
Sold.................................... 6,825
Issued in reinvestment of dividends and
distributions......................... 375
Repurchased............................. (6,120)
--------
Net increase (decrease)................... 1,080
--------
--------
</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, 1997
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
U.S.
GOVERNMENT/
ASSET HIGH-YIELD AAA-RATED CASH
GROWTH INTERNATIONAL GROWTH-INCOME ALLOCATION BOND SECURITIES MANAGEMENT
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income............ $ 3,485 $ 2,486 $ 17,471 $ 5,381 $ 10,872 $ 6,330 $ 3,985
Net realized gain
(loss) on
investments....... 146,719 54,711 166,979 18,372 5,128 (1,673) (1)
Net realized foreign
exchange loss
on other assets
and
liabilities..... -- (19) (1) -- -- -- --
Change in unrealized
appreciation/
depreciation of
investments..... 16,891 (25,138) 19,920 1,609 (1,037) 286 --
Change in unrealized
foreign exchange
gain/loss on other
assets and
liabilities....... -- 243 -- -- 8 -- --
----------------------------------------------------------------------------------------------
Net increase in net
assets resulting
from
operations........ 167,095 32,283 204,369 25,362 14,971 4,943 3,984
----------------------------------------------------------------------------------------------
DIVIDENDS AND
DISTRIBUTIONS PAID
TO SHAREHOLDERS:
Dividends from net
investment
income............ (3,795) (3,950) (18,320) (5,690) (12,665) (8,435) (4,852)
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) (4,852)
----------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares
sold.............. 136,992 78,283 69,784 15,741 36,139 10,319 244,501
Proceeds from shares
issued for
reinvestment of
dividends and
distributions..... 122,315 21,590 142,510 20,620 12,665 8,435 4,852
Cost of shares
repurchased....... (316,021) (136,373) (243,077) (38,717) (63,777) (42,505) (268,495)
----------------------------------------------------------------------------------------------
Net decrease in net
assets resulting
from capital share
transactions...... (56,714) (36,500) (30,783) (2,356) (14,973) (23,751) (19,142)
----------------------------------------------------------------------------------------------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS............ (11,934) (25,807) 31,076 2,386 (12,667) (27,243) (20,010)
NET ASSETS:
Beginning of
period............ 813,164 249,144 919,356 153,060 131,337 108,852 89,236
----------------------------------------------------------------------------------------------
End of period....... $ 801,230 $ 223,337 $ 950,432 $155,446 $118,670 $ 81,609 $ 69,226
==============================================================================================
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulated
undistributed net
investment
income............ $ 3,479 $ 2,541 $ 17,464 $ 5,374 $ 11,153 $ 6,345 $ 3,981
==============================================================================================
Shares issued and
repurchased:
Sold.............. 3,275 4,723 2,012 994 2,669 949 21,803
Issued in
reinvestment of
dividends and
distributions... 3,424 1,442 4,590 1,438 990 816 444
Repurchased....... (7,648) (8,200) (6,971) (2,442) (4,696) (3,875) (23,966)
----------------------------------------------------------------------------------------------
Net decrease........ (949) (2,035) (369) (10) (1,037) (2,110) (1,719)
==============================================================================================
</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 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. If a security's price is available from more than one
foreign exchange the Fund uses the exchange that is the primary market for the
security. 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.
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 between the trade and settlement dates of securities
transactions, the difference between the amounts of interest, dividends, 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: Securities
transactions are recorded on a trade date basis. 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.
Funds 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
their relative net asset values or other appropriate allocation methods. 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. Net investment income/loss, net realized gain/loss, and net
assets are not affected.
For the year ended November 30, 1997, 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............................................... $1,037 $ -- $(1,037)
International Series........................................ (62) 62 --
Growth-Income Series........................................ (424) -- 424
Asset Allocation Series..................................... 4 (4) --
High-Yield Bond Series...................................... (289) 289 --
U.S. Government/AAA-Rated Securities Series................. (5) 21 (16)
Cash Management Series...................................... -- -- --
</TABLE>
3. OPERATING POLICIES:
FORWARD FOREIGN CURRENCY CONTRACTS: Certain series may enter into forward
foreign currency contracts ("forward contracts") to attempt to protect
securities and related receivables and payables against changes in future
foreign exchange rates. A forward contract is an agreement between two parties
to buy or sell currency at a set price on a future date. The market value of the
contract will fluctuate with changes in currency exchange rates. The contract is
marked-to-market daily using the forward rate and the change in market value is
recorded by the Fund as unrealized gain or loss. On settlement date, the Fund
records either realized gains or losses when the contract is closed equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. Risks may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms of
their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. Forward contracts involve elements of risk
in excess of the amount reflected in the Statement of Assets and Liabilities.
The Fund bears the risk of an unfavorable change in the foreign exchange rate
underlying the forward contract.
---------------------
35
<PAGE> 37
4. 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, 1998, 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........................................ $327,992 $(22,793) $305,199 $487,001 $ --
International Series................................. 58,467 (10,648) 47,819 176,590 --
Growth-Income Series................................. 309,547 (14,195) 295,352 661,858 --
Asset Allocation Series.............................. 31,454 (951) 30,503 122,932 --
High-Yield Bond Series............................... 4,111 (1,633) 2,478 110,187 --
U.S. Government/AAA-Rated Securities Series**........ 1,353 (105) 1,248 84,801 3,232
Cash Management Series............................... -- -- -- 77,517 1
</TABLE>
- ---------------
* Expire 2003-2005
** Post 10/31/97 Capital Loss Deferral: U.S. Government/AAA-Rated Securities
Series $73
+ Net capital loss carryover reported as of November 30, 1997, 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.
5. BUSINESS MANAGER AND INVESTMENT ADVISER: SunAmerica Asset Management Corp.
(the "Business Manager"), an indirect wholly owned subsidiary of Anchor National
Life Insurance Company, which is an indirect subsidiary of SunAmerica Inc.,
pursuant to a business management agreement, manages the business affairs and
the administration of the Fund. For providing 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.
6. 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, 1998, 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............ $ 95,275 $62,487 $142,379 $ 16,993 $49,845
Sales of portfolio securities................ 184,103 81,075 210,486 29,976 56,965
U.S. government securities excluded above
were as follows:
Purchases of U.S. government securities...... -- -- -- 13,024 --
Sales of U.S. government securities.......... -- -- -- 10,884 1,036
<CAPTION>
U.S.
GOVERNMENT/
AAA-RATED CASH
SECURITIES MANAGEMENT
SERIES SERIES
<S> <C> <C>
-------------------------------------------------------------------
Purchases of portfolio securities............ $14,377 $--
Sales of portfolio securities................ 8,356 --
U.S. government securities excluded above
were as follows:
Purchases of U.S. government securities...... 60,702 --
Sales of U.S. government securities.......... 65,716 --
</TABLE>
- ---------------------
36
<PAGE> 38
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
11/30/93 $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
11/30/97 42.28 0.18 8.30 8.48 (0.21) (6.73) 43.82 23.78
5/31/98* 43.82 0.05 5.65 5.70 (0.20) (8.62) 40.70 12.42
International Series
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
11/30/97 15.81 0.17 1.78 1.95 (0.27) (1.22) 16.27 13.15
5/31/98* 16.27 0.13 2.88 3.01 (0.27) (4.44) 14.57 18.46
Growth-Income Series
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
11/30/97 35.31 0.66 6.91 7.57 (0.75) (5.10) 37.03 24.62
5/31/98* 37.03 0.32 4.36 4.68 (0.71) (6.80) 34.20 12.28
Asset Allocation Series
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
11/30/97 16.23 0.55 2.00 2.55 (0.63) (1.65) 16.50 17.86
5/31/98* 16.50 0.28 1.20 1.48 (0.61) (2.08) 15.29 8.92
High-Yield Bond Series
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
11/30/97 13.85 1.19 0.44 1.63 (1.43) -- 14.05 12.76
5/31/98* 14.05 0.62 0.16 0.78 (1.39) (0.32) 13.12 5.55
U.S. Government/AAA-Rated Securities Series
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
11/30/97 11.51 0.76 (0.14) 0.62 (1.03) -- 11.10 6.09
5/31/98* 11.10 0.34 0.05 0.39 (0.94) -- 10.55 3.60
Cash Management Series
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
11/30/97 11.38 0.54 0.01 0.55 (0.62) -- 11.31 5.03
5/31/98* 11.31 0.26 0.01 0.27 (0.83) -- 10.75 2.47
<CAPTION>
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT
END OF EXPENSES INCOME PORTFOLIO AVERAGE
PERIOD PERIOD TO AVERAGE TO AVERAGE TURNOVER COMMISSION
ENDED (000'S) NET ASSETS NET ASSETS RATE PER SHARE#
- --------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth Series
11/30/93 $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
11/30/97 801,230 0.54 0.44 29.01 0.0477
5/31/98 801,417 0.54 0.25 12.36 0.0487
International Series
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
11/30/97 223,337 1.04 0.99 47.45 0.0043
5/31/98 225,051 1.04 1.64 32.00 0.0259
Growth-Income Series
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
11/30/97 950,432 0.54 1.88 30.06 0.0493
5/31/98 977,347 0.54 1.74 16.66 0.0502
Asset Allocation Series
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
11/30/97 155,446 0.59 3.49 39.14 0.0507
5/31/98 151,858 0.58 3.53 20.82 0.0514
High-Yield Bond Series
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
11/30/97 118,670 0.61 8.68 64.49 N/A
5/31/98 116,310 0.60 8.98 44.10 N/A
U.S. Government/AAA-Rated Securities Series
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
11/30/97 81,609 0.63 6.93 46.17 N/A
5/31/98 74,834 0.64 6.27 104.96 N/A
Cash Management Series
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
11/30/97 69,226 0.63 4.87 -- N/A
5/31/98 77,426 0.66 4.96 -- N/A
</TABLE>
- ---------------
@ Calculated based upon average shares outstanding
# 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. If such expenses had been included, total
return would have been lower for each period presented.
See Notes to Financial Statements
---------------------
37
<PAGE> 39
(SUNAMERICA LOGO)
Anchor National Life Insurance Company
1 SunAmerica Center
Los Angeles, California 90067-6022
--------------
BULK RATE
U.S. POSTAGE
P A I D
TOWNE, INC.
--------------
P-1064 (R 7/98)
