<PAGE>

   As filed with the Securities and Exchange Commission on October 16, 2001


--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               -----------------

                                  FORM 10-K/A
(Mark One)
[X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
   1934

   For the year ended December 31, 2000; or

[_]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
   OF 1934

   For the transition period from                 to

                         Commission File No. 001-13709

                               -----------------

                      ANWORTH MORTGAGE ASSET CORPORATION
            (Exact name of Registrant as specified in its charter)

                    Maryland                          52-2059785
         (State or Other Jurisdiction of           (I.R.S. Employer
         Incorporation or Organization)           Identification No.)

            1299 Ocean Avenue, #200, Santa Monica, California 90401
                   (Address of principal executive offices)

      Registrant's telephone number, including area code: (310) 394-0115

          Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
Title of each class                        Name of exchange on which registered
-------------------                        ------------------------------------
<S>                                     <C>
Common stock, par value $0.01 per share       American Stock Exchange
</TABLE>

                               -----------------

   Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.  Yes [X] No [_]

   Indicate by a check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Annual Report on Form
10-K or any amendment to this Annual Report on Form 10-K. [_]

   At March 21, 2001 the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $10,511,745, based on the closing price of
the common stock on the American Stock Exchange.

   As of March 21, 2001, 2,359,664 shares of Common Stock, $0.01 par value per
share were issued and outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

   Portions of the Registrant's definitive Proxy Statement which the Company
intends to issue within 120 days of the end of the fiscal year, are
incorporated by reference into Part III.

   The Registrant amends its Form 10-K for the period ended December 31, 2000
solely to revise data in Item 6 (Selected Financial Data) and Item 7
(Management's Discussion and Analysis of Financial Condition and Results of
Operations). Other than the aforementioned changes, all other information
included in the initial filing is unchanged.


--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

   The following selected financial data are derived from the audited financial
statements of the Company for the years ended December 31, 2000, December 31,
1999 and for the period from commencement of operations on March 17, 1998 to
December 31, 1998. The selected financial data should be read in conjunction
with the more detailed information contained in the Financial Statements and
Notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this Annual Report on Form
10-K.

For the years ended December 31, 2000, December 31, 1999 and the period from
     March 17, 1998 (commencement of operations) through December 31, 1998
                 Dollars in thousands (except per share data)

<TABLE>
<CAPTION>
                                                                           2000        1999        1998
                                                                        ----------  ----------  ----------
<S>                                                                     <C>         <C>         <C>
STATEMENT OF OPERATIONS DATA
   Days in period......................................................        366         365         290
   Interest and dividend income........................................ $   10,314  $    9,501  $    8,570
   Interest expense....................................................      8,674       7,892       7,378
   Net interest income.................................................      1,640       1,609       1,192
   General and administrative expenses (G&A expenses)..................        379         400         307
   Net income.......................................................... $    1,261  $    1,209  $      885
   Basic net income per average share.................................. $     0.54  $     0.53  $     0.38
   Diluted net income per average share................................ $     0.54  $     0.53  $     0.38
   Dividends declared per average share................................ $     0.40  $     0.53  $     0.37
   Weighted average common shares outstanding..........................  2,330,987   2,289,790   2,315,651
BALANCE SHEET DATA AT DECEMBER 31,
   Mortgage backed securities, net..................................... $  134,889  $  161,488  $  184,245
   Total assets........................................................    141,834     167,144     199,458
   Repurchase agreements...............................................    121,891     147,690     170,033
   Total liabilities...................................................    123,633     150,612     182,216
   Stockholders' equity................................................     18,201      16,532      17,242
   Number of common shares outstanding.................................  2,350,016   2,306,669   2,328,000
OTHER DATA
   Average earning assets.............................................. $  152,289  $  163,167  $  181,445
   Average borrowings..................................................    135,631     149,372     165,496
   Average equity(1)...................................................     19,154      18,931      19,060
   Yield on interest earning assets for the years ended December 31,
   2000 and December 31, 1999 and the period ended December 31,
   1998................................................................       6.77%       5.82%       5.94%
   Cost of funds on interest bearing liabilities for the years ended
   December 31, 2000 and December 31, 1999 and the period ended
   December 31, 1998...................................................       6.40%       5.28%       5.61%
ANNUALIZED FINANCIAL RATIOS(1)(2)
   Net interest margin (net interest income/average assets)............       1.08%       0.99%       0.83%
   G&A expenses as a percentage of average assets......................       0.25%       0.24%       0.21%
   G&A expenses as a percentage of average equity......................       1.98%       2.11%       2.02%
   Return on average assets............................................       0.83%       0.74%       0.61%
   Return on average equity............................................       6.58%       6.38%       5.84%
</TABLE>
--------
(1)Average equity excludes fair value adjustment for ARM securities

(2)Each ratio for 1998 has been computed by annualizing the results for the
   290-day period ended December 31, 1998


                                      1

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

   Certain statements contained in the following discussion are
"forward-looking statements" within the meaning of applicable federal
securities laws. Forward-looking statements which are based on various
assumptions (some of which are beyond the Company's control) may be identified
by reference to a future period or periods, or by the use of forward-looking
terminology, such as "may," "will," "intend," "should," "expect," "anticipate,"
"estimate" or "continue" or the negatives thereof or other comparable
terminology. Forward-looking statements included herein regarding the actual
results, performance and achievements of the Company are dependent on a number
of factors. The Company's actual results could differ materially from those
anticipated in such forward-looking statements as a result of certain factors,
including but not limited to, changes in interest rates, changes in yield
curve, changes in prepayment rates, the availability of mortgage-backed
securities for purchase, the availability of financing and, if available, the
terms of any such financing. The Company does not undertake, and specifically
disclaims any obligation, to publicly release the result of any revisions which
may be made to any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date of such
statements.

GENERAL

   The Company is a REIT formed in October 1997 to invest in mortgage assets,
including mortgage pass-through certificates, collateralized mortgage
obligations, mortgage loans and other securities representing interests in, or
obligations backed by, pools of mortgage loans which can be readily financed
and short-term investments.

   The Company's principal business objective is to generate net income for
distribution to stockholders from the spread between the interest income on its
Mortgage Assets and the costs of borrowing to finance its acquisition of
Mortgage Assets. The Company commenced operations on March 17, 1998 upon the
closing of its initial public offering which raised net proceeds of
$18,414,000. Since then the Company has deployed its capital and grown its
balance sheet through the acquisition of mortgage assets and the financing of
those assets in the credit markets. The financial statements included in this
Annual Report on Form 10-K should be read in light of this growth process and
are not necessarily representative of what they may be in the future.

   The Company will seek to generate growth in earnings and dividends per share
in a variety of ways, including through (i) issuing new Common Stock and
increasing the size of the balance sheet when opportunities in the market for
Mortgage Assets are likely to allow growth in earnings per share, (ii) seeking
to improve productivity by increasing the size of the balance sheet at a rate
faster than the rate of increase in operating expenses, (iii) continually
reviewing the mix of Mortgage Asset types on the balance sheet in an effort to
improve risk-adjusted returns, and (iv) attempting to improve the efficiency of
the Company's balance sheet structure through the issuance of uncollateralized
subordinated debt, preferred stock and other forms of capital, to the extent
management deems such issuances appropriate.

   The Company is organized for tax purposes as a REIT and therefore generally
passes through substantially all of its taxable earnings to stockholders
without paying federal or state income tax at the corporate level.

FINANCIAL CONDITION

   At December 31, 2000, the Company held total assets of $142 million,
consisting of $115 million of ARM securities, $20 million of fixed-rate
mortgage-backed securities, $1.9 million of REIT common and preferred stock and
$4.9 million of cash equivalents and other receivables. At December 31, 2000,
98% of the qualified real estate assets held by the Company were Primary
assets. Of the ARM securities owned by the Company, 84% were adjustable-rate
pass-through certificates which reset at least once a year. The remaining 16%
were new origination 3/1 and 5/1 hybrid ARMS. Hybrid ARM securities have an
initial interest rate that is fixed for a certain period, usually three to five
years, and then adjust annually for the remainder of the term of the loan.

                                      2

<PAGE>

   The following table presents a schedule of mortgage backed securities owned
at December 31, 2000, 1999 and 1998 classified by type of issuer.

MORTGAGE BACKED SECURITIES BY ISSUER

<TABLE>
<CAPTION>
               December 31, 2000   December 31, 1999   December 31, 1998
              ------------------  ------------------  ------------------
                          % of                % of                % of
              Carrying  Mortgage  Carrying  Mortgage  Carrying  Mortgage
               Value   Securities  Value   Securities  Value   Securities
              -------- ---------- -------- ---------- -------- ----------
                             (Dollar amounts in thousands)
<S>           <C>      <C>        <C>      <C>        <C>      <C>
   Agency....
   FNMA...... $110,415    81.9%   $131,758    81.8%   $138,935    76.3%
   FHLMC.....   23,957    17.8%     29,405    18.2%     43,237    23.7%
   Private...      517     0.4%          0     0.0%          0     0.0%

              --------   -----    --------   -----    --------   -----
              $134,889   100.0%   $161,163   100.0%   $182,172   100.0%

              ========   =====    ========   =====    ========   =====
</TABLE>

   The following table classifies the Company's portfolio of ARM securities by
type of interest rate index.

MORTGAGE ASSETS BY INDEX/FIXED

<TABLE>
<CAPTION>
                                     December 31, 2000   December 31, 1999   December 31, 1998
                                    ------------------  ------------------  ------------------
                                                % of                % of                % of
                                    Carrying  Mortgage  Carrying  Mortgage  Carrying  Mortgage
            Index/Fixed              Value   Securities  Value   Securities  Value   Securities
            -----------             -------- ---------- -------- ---------- -------- ----------
                                                   (Dollar amounts in thousands)
<S>                                 <C>      <C>        <C>      <C>        <C>      <C>
One-month LIBOR.................... $  1,249     0.9%
Six-month LIBOR....................    7,332     5.4%   $  9,330     5.8%   $ 14,656     8.0%
Six-month Certificate of Deposit...    3,692     2.7%      5,611     3.5%      8,461     4.6%
One-year Constant Maturity Treasury   97,491    72.3%    120,036    74.5%    142,459    78.2%
Cost of Funds Index................    4,713     3.5%      5,615     3.5%      6,545     3.6%
Fixed..............................   20,412    15.2%     20,570    12.7%     10,051     5.6%

                                    --------   -----    --------   -----    --------   -----
                                    $134,889   100.0%   $161,162   100.0%   $182,172   100.0%

                                    ========   =====    ========   =====    ========   =====
</TABLE>

   The Mortgage Assets portfolio had a weighted average coupon of 7.63%, 5.93%
and 6.85% at December 31, 2000, 1999 and 1998, respectively. The weighted
average three-month constant prepayment rate ("CPR") of the Company's MBS
portfolio was 16.8%, 14.7% and 31.1% as of December 31, 2000, 1999 and 1998,
respectively. At December 31, 2000, 1999 and 1998, respectively, the
unamortized net premium paid for the mortgage-backed securities was $2.7
million, $3.5 million and $4.6 million.

   The Company analyzes its mortgage-backed securities and the extent to which
prepayments impact the yield of the securities. When actual prepayments exceed
expectations, the Company amortizes the premiums paid on mortgage assets over a
shorter time period, resulting in a reduced yield to maturity on the Company's
mortgage assets. Conversely, if actual prepayments are less than the assumed
constant prepayment rate, the premium would be amortized over a longer time
period, resulting in a higher yield to maturity. The Company monitors its yield
expectations versus its actual prepayment experience on a monthly basis in
order to adjust the amortization of the net premium.

   The fair value of the Company's portfolio of ARM securities classified as
available-for-sale was $1.2 million less than the amortized cost of the
securities, resulting in a negative adjustment of 0.86% of the amortized cost
of the portfolio as of December 31, 2000. This price decline reflects the
possibility of increased future

                                      3

<PAGE>

   prepayments, which would have the effect of shortening the average life of
the Company's ARM securities and decreasing their yield and market value.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000

   For the year ended December 31, 2000, the Company's net income was
$1,261,000, or $0.54 per share (basic and diluted EPS), based on an average of
2,330,987 shares outstanding. Net interest income for the period totaled
$1,640,000. Net interest income is comprised of the interest income earned on
mortgage investments less interest expense from borrowings. During the year
ended December 31, 2000, the Company incurred general and administrative
expenses of $379,000, consisting operating expense of $211,000, a base
management fee of $167,000 and no incentive management fee.

   By comparison, the Company's net income was $1,209,000 for the year ended
December 31, 1999, the Company's first full year of operation. The primary
reason for the increase in the Company's profitability in 2000 over 1999 was
the continued slowing of prepayments of the Company's Mortgage Assets, a trend
which began in 1999.

   The Company's annual return on average equity was 6.58% for the year ended
December 31, 2000; this compares favorably to the 1999 figure of 6.38%. The
table below shows the annualized components of return on average equity.

ANNUALIZED COMPONENTS OF RETURN ON AVERAGE EQUITY/(1)/

<TABLE>
<CAPTION>
                                       Net Interest   G&A      Net
                                         Income/    Expense/ Income/
                                          Equity     Equity  Equity
                                       ------------ -------- -------
<S>                                    <C>          <C>      <C>
For the year ended December 31, 2000..     8.56%      1.98%   6.58%
For the year ended December 31, 1999..     8.49%      2.11%   6.38%
For the period ended December 31, 1998     7.86%      2.02%   5.84%
</TABLE>
--------
(1)Average equity excludes unrealized gain (loss) on available-for-sale
   securities.

   The following table shows the Company's average balances of cash equivalents
and mortgage assets, the annualized yields earned on each type of earning
assets, the yield on average earning assets and interest income.

<TABLE>
<CAPTION>
                                                                       Annualized
                                                                        Yield on
                                         Average                        Average   Annualized
                                        Amortized           Yield on   Amortized   Yield on  Dividend
                              Average    Cost of  Average    Average    Cost of    Average     and
                               Cash     Mortgage  Earning     Cash      Mortgage   Earning   Interest
                            Equivalents  Assets   Assets   Equivalents   Assets     Assets    Income
                            ----------- --------- -------- ----------- ---------- ---------- --------
                                                  (dollar amounts in thousands)
<S>                         <C>         <C>       <C>      <C>         <C>        <C>        <C>
For the year ended December
31, 2000...................   $2,122    $148,703  $152,289    5.88%       6.79%      6.77%   $10,314
For the year ended December
31, 1999...................   $6,452    $156,715  $163,167    4.99%       5.86%      5.82%   $ 9,501
For the period ended
December 31, 1998..........   $6,647    $174,798  $181,445    5.65%       6.04%      5.94%   $ 8,570
</TABLE>


                                      4

<PAGE>

   The table below shows the Company's average borrowed funds and annualized
average cost of funds as compared to average one- and average three-month
LIBOR.

<TABLE>
<CAPTION>
                                                                    Average
                                                                      One-
                                                                     month
                                                                     LIBOR     Average     Average
                                                                    Relative   Cost of     Cost of
                                                                       to       Funds       Funds
                                                    Average Average Average  Relative to Relative to
                          Average           Average  One-   Three-   Three-    Average     Average
                          Borrowed Interest Cost of  Month   Month   month    One-month  Three-month
                           Funds   Expense   Funds   LIBOR   LIBOR   LIBOR      LIBOR       LIBOR
                          -------- -------- ------- ------- ------- -------- ----------- -----------
                                                (dollar amounts in thousands)
<S>                       <C>      <C>      <C>     <C>     <C>     <C>      <C>         <C>
For the year ended Dec.
31, 2000................. $135,631  $8,674   6.40%   6.42%   6.54%   -0.12%     -0.02%      -0.14%
For the year ended Dec.
31, 1999................. $149,372  $7,892   5.28%   5.25%   5.42%   -0.17%     +0.03%      -0.14%
For the period ended Dec.
31, 1998................. $165,496  $7,378   5.61%   5.55%   5.54%   +0.01%     +0.06%      +0.07%
</TABLE>

   For the year ended December 31, 2000, the yield on the Company's total
assets, including the impact of the amortization of premiums and discounts, was
6.77%. For 1999 this figure was 5.82%. The Company's weighted average cost of
funds for the year ended December 31, 2000, was 6.40% versus 5.28% for the year
ended December 31, 1999.

   The Company pays the Manager an annual base management fee, generally based
on average net invested assets, as defined in the Management Agreement, payable
monthly in arrears as follows: 1.0% of the first $300 million of Average Net
Invested Assets, plus 0.8% of the portion above $300 million.

   In order for the Manager to earn an incentive fee, the rate of return on the
stockholders' investment, as defined in the Management Agreement, must exceed
the average ten-year U.S. Treasury rate during the quarter plus 1%. During the
year ended December 31, 2000, the Company's annualized return on common equity
was 6.58%. The ten-year U.S. Treasury rate for the corresponding period was
6.03%, which would dictate a 7.03% hurdle rate. As a result, the Manager earned
no incentive fee. In 1999 the Manager earned no incentive fee.

   Beginning in calendar year 1999, the quarterly Incentive Management
Compensation will be subject to annual reconciliation so that the Incentive
Management Compensation is based on the Manager's performance for a calendar
year rather than a quarter-by-quarter basis.

   The following table shows operating expenses as a percent of total assets:

ANNUALIZED OPERATING EXPENSE RATIOS

<TABLE>
<CAPTION>
                                              Management Fee
                                                 & Other      Performance    Total G&A
                                             Expenses/Average Fee/Average Expenses/Average
                                                  Assets        Assets         Assets
                                             ---------------- ----------- ----------------
<S>                                          <C>              <C>         <C>
   For the year ended December 31, 2000.....       0.25%         0.00%          0.25%
   For the year ended December 31, 1999.....       0.24%         0.00%          0.24%
   For the period ended December 31, 1998...       0.21%         0.00%          0.21%
</TABLE>

INTEREST RATE AGREEMENTS

   The Company has not entered into any interest rate agreements to date. As
part of its asset/liability management process, the Company may enter into
interest rate agreements such as interest rate caps, floors and swaps. These
agreements would be entered into to reduce interest rate risk and would be
designed to provide income and capital appreciation to the Company in the event
of certain changes in interest rates. The Company reviews the need for interest
rate agreements on a regular basis consistent with its capital investment
policy.

                                      5

<PAGE>

   The Company has not experienced credit losses on its portfolio of ARM
securities to date, but losses may be experienced in the future. At December
31, 2000, the Company had limited its exposure to credit losses on its
portfolio of ARM securities by purchasing primarily Agency Certificates, which,
although not rated, carry an implied "AAA" rating.

COMMON DIVIDEND

   As a REIT, the Company is required to declare dividends amounting to 85% of
each year's taxable income by the end of each calendar year and to have
declared dividends amounting to 95% of its taxable income for each year by the
time it files its applicable tax return and, therefore, generally passes
through substantially all of its earnings to stockholders without paying
federal income tax at the corporate level. Since the Company, as a REIT, pays
its dividends based on taxable earnings, the dividends may at times be more or
less than reported earnings.

   On January 19, 2000 the Company declared a dividend of $0.11 per share
payable on February 16, 2001 to holders of record as of February 2, 2001. In
total, the Company declared $1,191,182 in dividends for the year ended December
31, 2000 and $1,212,950 in dividends during the year ended December 31, 1999.
For the period ended December 31, 1998, $861,360 in dividends was distributed.

   The following table shows the quarterly dividends since inception.

<TABLE>
<CAPTION>
                                       Cash Dividends
                                          Declared
                                         Per Share
                                       --------------
<S>                                    <C>
First quarter ended March 31, 1998....     $0.00(partial period, 15 days)
Second quarter ended June 30, 1998....     $0.15
Third quarter ended September 30, 1998     $0.10
Fourth quarter ended December 31, 1998     $0.12
First quarter ended March 31, 1999....     $0.12
Second quarter ended June 30, 1999....     $0.13
Third quarter ended September 30, 1999     $0.14
Fourth quarter ended December 31, 1999     $0.14
First quarter ended March 31, 2000....     $0.15
Second quarter ended June 30, 2000....     $0.15
Third quarter ended September 30, 2000     $0.10
Fourth quarter ended December 31, 2000     $0.11(1)
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

   The Company's primary source of funds for the year ended December 31, 2000
consisted of reverse repurchase agreements, which totaled $122 million at
December 31, 2000. The Company's other significant source of funds for the
period ended December 31, 2000 consisted of payments of principal and interest
from its Mortgage Assets portfolio in the amount of $28.9 million. In the
future, the Company expects its primary sources of funds will consist of
borrowed funds under reverse repurchase agreement transactions with one to
twelve-month maturities and of monthly payments of principal and interest on
its ARM securities portfolio. The Company's liquid assets generally consist of
unpledged ARM assets, cash and cash equivalents.

   The borrowings incurred during the year ended December 31, 2000 had an
annual average interest cost during the period of 6.40%. As of December 31,
2000, all of the Company's reverse repurchase agreements were fixed-rate term
reverse repurchase agreements with original maturities that range from one
month to two months and an average maturity of 32 days. The Company has
borrowing arrangements with twelve different financial institutions and on
December 31, 2000, had borrowed funds under reverse repurchase agreements with
eight of

--------
(1)The fourth quarter of 2000 dividend was declared in January 2001 and paid in
   February 2001.

                                      6

<PAGE>

   these firms. Because the Company borrows money based on the fair value of
its ARM securities and because increases in short-term interest rates can
negatively impact the valuation of ARM securities, the Company's borrowing
ability could be limited and lenders may initiate margin calls in the event
short-term interest rates increase or the value of the Company's ARM securities
declines for other reasons. During the year ended December 31, 2000, the
Company had adequate cash flow, liquid assets and unpledged collateral with
which to meet its margin requirements during the period. Further, the Company
believes it will continue to have sufficient liquidity to meet its future cash
requirements from its primary sources of funds for the foreseeable future
without needing to sell assets.

   The Company uses "available-for-sale" treatment for its Mortgage-Backed
Securities. These assets are carried on the balance sheet at fair value rather
than historical amortized cost. Based upon such "available-for-sale" treatment,
the Company's equity base at December 31, 2000 was $18.2 million, or $7.74 per
share. If the Company had used historical amortized cost accounting, the
Company's equity base at December 31, 2000 would have been $19.4 million, or
$8.25 per share.

   With the Company's "available-for-sale" accounting treatment, unrealized
fluctuations in market values of assets do not impact financial reporting or
taxable income but rather are reflected on the balance sheet by changing the
carrying value of the asset and reflecting the change in stockholders' equity
under "Other comprehensive income, unrealized gain (loss) on available for sale
securities." By accounting for its assets in this manner, the Company hopes to
provide useful information to stockholders and creditors and to preserve
flexibility to sell assets in the future without having to change accounting
methods.

   As a result of this mark-to-market accounting treatment, the book value and
book value per share of the Company are likely to fluctuate far more than if
the Company used historical amortized cost accounting. As a result, comparisons
with companies that use historical cost accounting for some or all of their
balance sheet may be misleading.

   Unrealized changes in the fair value of Mortgage-Backed Securities have one
direct effect on the Company's potential earnings and dividends: positive
mark-to-market changes will increase the Company's equity base and allow the
Company to increase its borrowing capacity while negative changes will tend to
limit borrowing capacity under the Company's Capital Investment Policy. A very
large negative change in the net market value of the Company's Mortgage-Backed
Securities might impair the Company's liquidity position, requiring the Company
to sell assets with the likely result of realized losses upon sale. "Other
comprehensive income, unrealized gain (loss) on available for sale securities"
was $(1.2) million, or (0.86)% of the amortized cost of mortgage assets at
December 31, 2000.

EFFECTS OF INTEREST RATE CHANGES

   The Company has invested in adjustable-rate mortgage securities and fixed
rate mortgage securities. Adjustable-rate mortgage assets are typically subject
to periodic and lifetime interest rate caps that limit the amount an
adjustable-rate mortgage securities' interest rate can change during any given
period. Adjustable-rate mortgage securities are also typically subject to a
minimum interest rate payable. The Company borrowings will not be subject to
similar restrictions. Hence, in a period of increasing interest rates, interest
rates on its borrowings could increase without limitation by caps, while the
interest rates on its mortgage assets could be so limited. This problem would
be magnified to the extent the Company acquires mortgage assets that are not
fully indexed. Further, some adjustable-rate mortgage assets may be subject to
periodic payment caps that result in some portion of the interest being
deferred and added to the principal outstanding. This could result in receipt
by the Company of less cash income on its adjustable-rate mortgage assets than
is required to pay interest on the related borrowings. These factors could
lower the Company's net interest income or cause a net loss during periods of
rising interest rates, which would negatively impact the Company's liquidity
and its ability to make distributions to stockholders.

   Fixed rate mortgage securities pay a fixed rate of interest. Fixed rate
mortgage securities are not subject to the same types of limitations as
described above for adjustable rate mortgage securities but are subject to

                                      7

<PAGE>

   prepayment risk and are more price sensitive to changes in the general level
of interest rates than are adjustable rate mortgage securities.

   The Company intends to fund the purchase of a substantial portion of its
adjustable-rate mortgage securities with borrowings that may have interest
rates based on indices and repricing terms similar to, but of somewhat shorter
maturities than, the interest rate indices and repricing terms of the mortgage
assets. Thus, the Company anticipates that in most cases the interest rate
indices and repricing terms of its mortgage assets and its funding sources will
not be identical, thereby creating an interest rate mismatch between assets and
liabilities. During periods of changing interest rates, such interest rate
mismatches could negatively impact the Company's net income, dividend yield and
the market price of the Common Stock.

   Prepayments are the full or partial repayment of principal prior to the
original term to maturity of a mortgage loan and typically occur due to
refinancing of mortgage loans. Prepayment rates on mortgage securities vary
from time to time and may cause changes in the amount of the Company's net
interest income. Prepayments of adjustable-rate mortgage loans usually can be
expected to increase when mortgage interest rates fall below the then-current
interest rates on such loans and decrease when mortgage interest rates exceed
the then-current interest rate on such loans, although such effects are not
predictable. Prepayment experience also may be affected by the conditions in
the housing and financial markets, general economic conditions and the relative
interest rates on fixed-rate and adjustable-rate mortgage loans underlying
mortgage securities. The purchase prices of mortgage securities are generally
based upon assumptions regarding the expected amounts and rates of prepayments.
Where slow prepayment assumptions are made, the Company may pay a premium for
mortgage securities. To the extent such assumptions materially and adversely
differ from the actual amounts of prepayments, the Company would experience
losses. The total prepayment of any mortgage asset that had been purchased at a
premium by the Company would result in the immediate write-off of any remaining
capitalized premium amount and consequent reduction of the Company's net
interest income by such amount. Finally in the event that the Company is unable
to acquire new mortgage assets to replace the prepaid mortgage assets, its
financial condition, cash flows and results of operations could be materially
adversely affected.

OTHER MATTERS

   As of December 31, 2000, the Company calculates its Qualified REIT Assets,
as defined in the Code, to be greater than 90% of its total assets, as compared
to the Code requirement that at least 75% of its total assets must be Qualified
REIT Assets. The Company also calculates that greater than 98% of its 2000
revenue for the year ended December 31, 2000 qualifies for both the 75% source
of income test and the 95% source of income test under the REIT rules. The
Company also met all REIT requirements regarding the ownership of its common
stock and the distributions of its net income. Therefore, as of December 31,
2000, the Company believes that it will continue to qualify as a REIT under the
provisions of the Code.

   The Company at all times intends to conduct its business so as not to become
regulated as an investment company under the Investment Company Act. If the
Company were to become regulated as an investment company, then the Company's
use of leverage would be substantially reduced. The Investment Company Act
exempts entities that are Qualifying Interests. Under current interpretation of
the staff of the Securities and Exchange Commission, in order to qualify for
this exemption, the Company must maintain at least 55% of its assets directly
in Qualifying Interests. In addition, unless certain mortgage securities
represent all of the certificates issued with respect to an underlying pool of
mortgages, such mortgage securities may be treated as securities separate from
the underlying mortgage loans and, thus, may not be considered Qualifying
Interests for purposes of the 55% requirement. The Company calculates that it
is in compliance with this requirement.

INFLATION

   Virtually all of the Company's assets and liabilities are financial in
nature. As a result, interest rates and other factors drive the Company's
performance far more than does inflation. Changes in interest rates do not
necessarily correlate with inflation rates or changes in inflation rates. The
Company's financial statements are

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<PAGE>

prepared in accordance with generally accepted accounting principles (GAAP) and
the Company's dividends are determined by the Company's net income as
calculated for tax purposes; in each case, the Company's activities and balance
sheet are measured with reference to historical cost or fair market value
without considering inflation.

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<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized,

Dated: October 16, 2001
                                      ANWORTH MORTGAGE ASSET CORPORATION

                                          By:
                                            /s/ PAMELA J. WATSON
                                             __________________________________
                                            Pamela J. Watson,
                                            Chief Financial Officer

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