<PAGE>
FILE NOS. 333-67685
811-07727
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
/X/
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 5 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
AMENDMENT NO. 9
(CHECK APPROPRIATE BOX OR BOXES)
------------------------
VARIABLE ANNUITY ACCOUNT FIVE
(PORTION RELATING TO THE SEASONS SELECT VARIABLE ANNUITY)
(Exact Name of Registrant)
ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)
1 SUNAMERICA CENTER
LOS ANGELES, CALIFORNIA 90067-6022
(Address of Depositor's Principal Offices) (Zip Code)
Depositor's Telephone Number, including Area Code
(310) 772-6000
CHRISTINE A. NIXON, ESQ.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
1 SUNAMERICA CENTER
LOS ANGELES, CALIFORNIA 90067-6022
(Name and Address of Agent for Service)
Approximate date of proposed public offering:
As soon as practicable after effectiveness of the Registration Statement.
Title of securities being registered:
Interests in a Separate Account under group and individual flexible payment
deferred annuity contracts.
It is prosposed that this filing will become effective:
-- immediately upon filing pursuant to paragraph (b) of Rule 485
to paragraph (b) of Rule 485
-- on ___________ pursuant to paragraph (b) of Rule 485
-- 60 days after filing pursuant to paragraph (a) of Rule 485
X on July 5, 2000 pursuant to paragraph (a) of Rule 485
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<PAGE>
VARIABLE ANNUITY ACCOUNT FIVE
CROSS REFERENCE SHEET
PART A -- PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER IN FORM N-4 CAPTION
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Cover Page........................................... Cover Page
2. Definitions.......................................... Glossary of Terms
3. Synopsis............................................. Profile; Fee Tables; Examples
4. Condensed Financial Information...................... Not Applicable
5. General Description of Registrant, Depositor and
Portfolio Companies................................. Investment Options; Other Information
6. Deductions........................................... Expenses
7. General Description of Variable Annuity Contracts.... The Seasons Select Variable Annuity; Income Options;
Purchasing a Seasons Select Variable Annuity; Access to
Your Money
8. Annuity Period....................................... Income Options
9. Death Benefit........................................ Death Benefit
10. Purchases and Contract Value......................... Purchasing a Seasons Select Variable Annuity; Access to Your
Money
11. Redemptions.......................................... Access to Your Money
12. Taxes................................................ Taxes
13. Legal Proceedings.................................... Other Information
14. Table of Contents of Statement of Additional
Information......................................... Other Information
</TABLE>
<PAGE>
PART B -- STATEMENT OF ADDITIONAL INFORMATION
Certain information required in part B of the Registration Statement has
been included within the prospectus forming part of this Registration Statement;
the following cross-references suffixed with a "P" are made by reference to the
captions in the Prospectus.
<TABLE>
<CAPTION>
ITEM NUMBER IN FORM N-4 CAPTION
- --------------------------------------------------- ------------------------------------------------
<C> <S> <C>
15. Cover Page................................... Cover Page
16. Table of Contents............................ Table of Contents
17. General Information and History.............. Other Information (P)
18. Services..................................... Expenses (P); Other Information (P)
19. Purchase of Securities Being Offered......... Purchasing a Seasons Select Variable Annuity (P)
20. Underwriters................................. Other Information (P); Distribution of
Contracts
21. Calculation of Performance Data.............. Performance (P); Performance Data
22. Annuity Payments............................. Income Options (P); Annuity Unit Value;
Annuity Payments
23. Financial Statements......................... Other Information (P)
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
[LOGO]
PROFILE
July 5, 2000
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS YOU SHOULD KNOW
AND CONSIDER BEFORE PURCHASING THE SEASONS SELECT VARIABLE ANNUITY. THE ANNUITY
IS MORE FULLY DESCRIBED IN THE PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY.
1. THE SEASONS SELECT VARIABLE ANNUITY
The Seasons Select Variable Annuity contract is a contract between you and
Anchor National Life Insurance Company. We designed Seasons Select to help you
save on a tax-deferred basis. Season Select provides a means to diversify your
investments among asset classes and managers as well as a variety of investment
styles to meet long-term financial goals, such as retirement funding. Tax
deferral means all your money, including the amount you would otherwise pay in
current income taxes, remains in your contract to generate more earnings. Your
money could grow faster than it would in a comparable taxable investment. Of
course, certain qualified contracts automatically provide tax deferral
regardless of whether they are funded with an annuity.
The Seasons Select Variable Annuity is designed as a long term retirement
investment and helps you meet these goals by offering variable investment
options. There are nine multimanaged portfolios called SELECT PORTFOLIOS and one
multi-managed FOCUSED PORTFOLIO representing a spectrum of investment styles. In
addition, there are four STRATEGIES which are managed by five different
professional investment managers. The value of any portion of your contract
allocated to the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS or STRATEGIES will
fluctuate up or down based on the performance of the PORTFOLIOS and STRATEGIES
you select. You may experience a loss of both principal and earnings. Five fixed
investment options, each for a different length of time and offering different
interest rates guaranteed by Anchor National, are also available. In addition,
the DCA fixed accounts offer fixed interest rates guaranteed by Anchor National
and are available under the contract strictly as source accounts for the Dollar
Cost Averaging program.
The SELECT PORTFOLIOS, FOCUSED PORTFOLIOS, STRATEGIES and fixed investment
options are designed to be used in concert in order to achieve your desired
investment goals. You may put money into any of the SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS, STRATEGIES and/or fixed investment options. You may transfer between
the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS, STRATEGIES and/or the fixed
investment options four times per year without charge.
Like most annuities, the contract has an Accumulation Phase and an Income Phase.
During the Accumulation Phase, you invest money in your contract. Your earnings
are based on the investment performance of the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) or STRATEGY(IES) to which your money is allocated and/or the
interest rate earned on the fixed investment options. You may withdraw money
from your contract during the Accumulation Phase. However, as with other
tax-deferred investments, you will pay taxes on earnings and untaxed
contributions when you withdraw them. An IRS tax penalty may apply if you make
withdrawals before age 59 1/2. During the Income Phase, you will receive
payments from your annuity. Your payments may be fixed in dollar amount, vary
with investment performance or be a combination of both, depending on where your
money is allocated. Among other factors, the amount of money you are able to
accumulate in your contract during the Accumulation Phase will determine the
amount of your payments during the Income Phase.
The Seasons Select Variable Annuity is available in all states except New York
and Oregon.
<PAGE>
2. INCOME OPTIONS
You can select from one of five income options:
(1) payments for your lifetime;
(2) payments for your lifetime and your survivor's lifetime;
(3) payments for your lifetime and your survivor's lifetime, but for not
less than 10 or 20 years;
(4) payments for your lifetime, but for not less than 10 or 20 years; and
(5) payments for a specified period of 5 to 30 years.
Other options may be available.
You will also need to decide if you want your payments to fluctuate with
investment performance or remain constant, and the date on which your payments
will begin. Once you begin receiving payments, you cannot change your income
option. If your contract is non-qualified, payments during the Income Phase are
considered partly a return of your original investment. The "original
investment" part of each payment is not taxable but any gain to your original
investment is currently taxable as ordinary income upon distribution. For
qualified contracts, the entire payment is currently taxable as ordinary income.
In addition to the above income options, you may also elect to take income
payments under the Income Protector program subject to the provisions thereof.
3. PURCHASING A SEASONS SELECT VARIABLE ANNUITY
You can buy a contract through your financial representative, who can also help
you complete the proper forms. For Non-Qualified contracts the minimum initial
investment is $5000. For Qualified contracts the minimum initial investment is
$2000. You can add $500 or more to your contract at any time during the
Accumulation Phase.
4. INVESTMENT OPTIONS
You can put your money into any one or more of the nine distinct SELECT
PORTFOLIOS, one FOCUSED PORTFOLIO, multi-manager variable investment STRATEGIES
and/or the seven fixed investment options. The fixed investment options offer
fixed rates of interest for specified lengths of time.
Each SELECT PORTFOLIO and each FOCUSED PORTFOLIO has a distinct investment
objective utilizing a disciplined investing style to achieve its objective. Each
SELECT PORTFOLIO and each FOCUSED PORTFOLIO invests in an underlying investment
portfolio. Except for the Cash Management portfolio[s], each underlying
portfolio is multi-managed by a team of three money managers specializing in the
distinct investment style.
The nine SELECT PORTFOLIOS and the respective managers are:
<TABLE>
<S> <C>
LARGE CAP GROWTH LARGE CAP COMPOSITE
BANKERS TRUST COMPANY BANKERS TRUST
("BANKERS TRUST") SUNAMERICA ASSET
GOLDMAN SACHS ASSET MANAGEMENT COMPANY
MANAGEMENT ("GOLDMAN ("SAAMCO")
SACHS") T. ROWE PRICE ASSOCIATES, INC.
JANUS CAPITAL CORPORATION("JANUS") ("T. ROWE PRICE")
LARGE CAP VALUE MID CAP GROWTH
BANKERS TRUST BANKERS TRUST
T. ROWE PRICE T. ROWE PRICE
WELLINGTON MANAGEMENT WELLINGTON
COMPANY LLP ("WELLINGTON")
MID CAP VALUE SMALL-CAP
BANKERS TRUST BANKERS TRUST
GOLDMAN SACHS LORD ABBETT
LORD ABBETT & CO. ("LORD ABBETT") SAAMCO
INTERNATIONAL EQUITY DIVERSIFIED FIXED INCOME
BANKERS TRUST BANKERS TRUST
GOLDMAN SACHS MANAGEMENT SAAMCO
INTERNATIONAL ("GOLDMAN WELLINGTON
SACHS INT'L")
LORD ABBETT
CASH MANAGEMENT
SAAMCO
</TABLE>
The FOCUSED PORTFOLIO and its manager is:
FOCUS GROWTH
FRED ALGER MANAGEMENT
JENNISON ASSOCIATES
MARISCO CAPITAL MANAGEMENT
Each STRATEGY has a different investment objective. The STRATEGY(IES) use an
asset allocation investment approach. Each STRATEGY invests in a combination of
underlying investment portfolios which in turn invest in a
<PAGE>
combination of stocks, bonds and cash, to achieve its investment objective. The
four investment STRATEGIES and their underlying investment portfolios are:
GROWTH STRATEGY
MODERATE GROWTH STRATEGY
- - ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO
PUTNAM INVESTMENT MANAGEMENT, INC.
- - STOCK PORTFOLIO
T. ROWE PRICE ASSOCIATES, INC.
- - MULTI-MANAGED MODERATE GROWTH PORTFOLIO
JANUS CAPITAL CORPORATION
SUNAMERICA ASSET MANAGEMENT CORP.
WELLINGTON MANAGEMENT COMPANY LLP
BALANCED GROWTH STRATEGY
- - ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO
PUTNAM INVESTMENT MANAGEMENT, INC.
- - STOCK PORTFOLIO
T. ROWE PRICE ASSOCIATES, INC.
- - MULTI-MANAGED INCOME/EQUITY PORTFOLIO
JANUS CAPITAL CORPORATION
SUNAMERICA ASSET MANAGEMENT CORP.
WELLINGTON MANAGEMENT COMPANY LLP
CONSERVATIVE GROWTH STRATEGY
- - ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO
PUTNAM INVESTMENT MANAGEMENT, INC.
- - STOCK PORTFOLIO
T. ROWE PRICE ASSOCIATES, INC.
- - MULTI-MANAGED INCOME PORTFOLIO
JANUS CAPITAL CORPORATION
SUNAMERICA ASSET MANAGEMENT CORP.
WELLINGTON MANAGEMENT COMPANY LLP
The percentage allocation which each STRATEGY invests in each underlying
portfolio is depicted on page 11 of the prospectus.
5. EXPENSES
Each year we deduct a $35 ($30 in North Dakota) contract administration fee on
your contract anniversary. We currently waive this fee if your contract value is
at least $50,000 on your contract anniversary.
We also deduct insurance charges. If you are age 80 or younger at the issue
date, the insurance charge amounts to 1.40% annually of the average daily value
of your contract allocated to the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S)
and/or STRATEGY(IES). If you are 81 years of age or older at the issue date, the
amount of the insurance charge is 1.52% annually of the average daily value of
your contract allocated to the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or
STRATEGY(IES). There are also investment charges and other expenses if you put
money into the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or STRATEGY(IES), which
are estimated to range from .85% to 1.30%. Investment charges may be more or
less than the percentages reflected here.
If you take your money out in excess of the "free withdrawal" amount allowed for
in your contract, we may assess a withdrawal charge that is a percentage of the
money you withdraw. The percentage declines with each year the purchase payment
is in the contract as follows:
<TABLE>
<S> <C> <C> <C>
Year 1........ 9% Year 6........ 5%
Year 2........ 8% Year 7........ 4%
Year 3........ 7% Year 8........ 3%
Year 4........ 6% Year 9........ 2%
Year 5........ 6% Year 10........ 0%
</TABLE>
Additionally, if you take money out of a multi-year fixed investment option
before the end of the selected period, we may assess an adjustment which could
increase or decrease the value of your money.
In some states you may also be assessed a state premium tax of up to 3.5%,
depending upon the state in which you reside.
If you transfer among the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S),
STRATEGY(IES) and/or fixed investment options more than fifteen (15) times per
year, we charge a $25 dollar transfer fee for each subsequent transfer ($10 in
Pennsylvania and Texas). If you enroll in the Income Protector program, we
charge 0.10% of your Income Benefit Base (as described in the prospectus) from
your contract value on each contract anniversary depending on the option you
select.
The following charts are designed to help you understand the charges in your
contract. THE COLUMN "TOTAL ANNUAL CHARGES" SHOWS THE TOTAL OF THE $35 CONTRACT
ADMINISTRATION CHARGE, THE 1.40% OR 1.52% INSURANCE CHARGES, WHICHEVER IS
APPLICABLE, AND THE INVESTMENT CHARGES FOR EACH SELECT PORTFOLIO, FOCUSED
PORTFOLIO AND STRATEGY. WE CONVERTED THE CONTRACT ADMINISTRATION CHARGE TO A
PERCENTAGE (.09%) USING AN ASSUMED CONTRACT SIZE OF $40,000. The actual impact
of this charge on your contract may differ from this percentage.
<PAGE>
If you are age 80 or younger at contract issue:
[TO BE UPDATED BY AMENDMENT]
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Annual
Insurance EXAMPLES
Related Total Annual Total Total Total
Charges Investment Annual Expenses Expenses
SELECT PORTFOLIOS Related Charges at end at end
Charges of of
1 YEAR 10 YEARS
---------------------------------------------------------------------------------------------------------------
Large-Cap Growth 1.49% (1.40% + .09%) 1.10% 2.59% $116 $293
Large-Cap Composite 1.49% (1.40% + .09%) 1.10 2.59 $116 $293
Large-Cap Value 1.49% (1.40% + .09%) 1.10 2.59 $116 $293
Mid-Cap Growth 1.49% (1.40% + .09%) 1.15 2.64 $117 $297
Mid-Cap Value 1.49% (1.40% + .09%) 1.15 2.64 $117 $297
Small-Cap 1.49% (1.40% + .09%) 1.15 2.64 $117 $297
International Equity 1.49% (1.40% + .09%) 1.30 2.79 $118 $312
Diversified Fixed Income 1.49% (1.40% + .09%) 1.00 2.49 $115 $283
Cash Management 1.49% (1.40% + .09%) .85 2.34 $114 $268
<CAPTION>
---------------------------------------------------------------------------------------------------------------
FOCUSED PORTFOLIOS
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Focus Growth
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
EXAMPLES
Total Annual Total Annual Total Total
Insurance Investment Total Expenses Expenses
Related Related Annual at end of at end of
Charges Charges(1) Charges 1 YEAR 10 YEARS
STRATEGIES
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
Growth 1.49% (1.40% + .09%) 1.17% 2.66% $97 $299
Moderate Growth 1.49% (1.40% + .09%) 1.16% 2.65% $97 $298
Balanced Growth 1.49% (1.40% + .09%) 1.15% 2.64% $97 $297
Conservative Growth 1.49% (1.40% + .09%) 1.10% 2.59% $96 $292
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Investment related charges for each STRATEGY are based upon the allocation
to the underlying investment portfolio after the quarterly rebalancing
described in the prospectus.
<PAGE>
If you are age 81 or older at contract issue:
[TO BE UPDATED BY AMENDMENT]
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Annual
Insurance EXAMPLES
Related Total Annual Total Total Total
Charges Investment Annual Expenses Expenses
SELECT PORTFOLIO(S) Related Charges at end at end
Charges of of
1 YEAR 10 YEARS
---------------------------------------------------------------------------------------------------------------
Large-Cap Growth 1.61% (1.52% + .09%) 1.10% 2.71% $117 $304
Large-Cap Composite 1.61% (1.52% + .09%) 1.10 2.71 $117 $304
Large-Cap Value 1.61% (1.52% + .09%) 1.10 2.71 $117 $304
Mid-Cap Growth 1.61% (1.52% + .09%) 1.15 2.76 $118 $309
Mid-Cap Value 1.61% (1.52% + .09%) 1.15 2.76 $118 $309
Small-Cap Portfolio 1.61% (1.52% + .09%) 1.15 2.76 $118 $309
International Equity 1.61% (1.52% + .09%) 1.30 2.91 $119 $323
Diversified Fixed Income 1.61% (1.52% + .09%) 1.00 2.61 $116 $295
Cash Management 1.61% (1.52% + .09%) .85 2.46 $115 $280
<CAPTION>
---------------------------------------------------------------------------------------------------------------
FOCUSED PORTFOLIOS
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Focus Growth
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
EXAMPLES
Total Annual Total Annual Total Total
Insurance Investment Total Expenses Expenses
Related Related Annual at end of at end of
Charges Charges(1) Charges 1 YEAR 10 YEARS
STRATEGY(IES)
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
Growth 1.61% (1.52% + .09%) 1.17% 2.78% $98 $311
Moderate Growth 1.61% (1.52% + .09%) 1.16% 2.77% $98 $310
Balanced Growth 1.61% (1.52% + .09%) 1.15% 2.76% $98 $309
Conservative Growth 1.61% (1.52% + .09%) 1.10% 2.71% $97 $304
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Investment related charges for each STRATEGY are based upon the allocation
to the underlying investment portfolio after the quarterly rebalancing
described in the prospectus.
The examples assume that you invested $1,000 in a SELECT PORTFOLIO, FOCUSED
PORTFOLIO or STRATEGY which earns 5% annually and that you withdrew your money
at the end of a 1 year period and at the end of a 10 year period. For year 1,
the total annual charges are assessed as well as the withdrawal charge. For year
10, the example reflects the total annual charges but there is no withdrawal
charge applicable. The annual investment-related expenses may vary. The amounts
shown here are estimates and reflect the waiver or reimbursement of expenses by
the investment adviser. No premium taxes are reflected. Please see the Fee
Tables in the prospectus for more detailed information regarding the fees and
expenses incurred under the contract.
6. TAXES
Unlike taxable investments where earnings are taxed in the year they are earned,
taxes on amounts earned in a non-qualified contract (one that is established
with after tax dollars) are deferred until they are withdrawn. In a qualified
contract (one that is established with before tax dollars) all amounts are
taxable when they are withdrawn.
When you begin taking distributions or withdrawals from your contract, earnings
are considered to be taken out first and will be taxed at your ordinary income
tax rate. You may be subject to a 10% IRS tax penalty for distributions or
withdrawals before age 59 1/2.
7. ACCESS TO YOUR MONEY
Withdrawals may be made from your contract in the amount of $1,000 or more.
<PAGE>
Your contract provides for a free withdrawal amount each year. A free withdrawal
amount is the portion of your account that we allow you to take out each year
without being charged a surrender penalty. However, upon a future full surrender
of your contract we will recoup any surrender charges which would have been due
if your free withdrawal had not been free.
To determine your free withdrawal amount and your surrender charge, we refer to
two special terms. These are penalty free earnings and the total invested
amount.
The penalty-free earnings portion of your contract is simply your account value
less your total invested amount. The total invested amount is the total of all
Purchase Payments you have made into the contract less portions of some prior
withdrawals you made.
During the first year after we issue your contract your free withdrawal amount
is the greater of:
1. Your penalty-free earnings; or
2. If you are participating in the Systematic Withdrawal program, a total of
10% of your total invested amount, less any withdrawals taken during the
contract year.
After the first contract year, you can take out the greater of the following
amounts each year:
1. Your penalty free earnings and any portion of your total invested amount no
longer subject to surrender charges; or
2. 10% of the portion of your total invested amount that has been in your
contract for at least one year, less any withdrawals taken during the
contract year.
If you withdraw your entire contract value you will not receive the benefit of
any free withdrawal amount. A separate withdrawal charge schedule applies to
each purchase payment. After a purchase payment has been in the contract for
nine full years, withdrawal charges no longer apply to that portion of the
money. Of course, upon withdrawal you may also have to pay income taxes and a
10% IRS tax penalty may apply. Neither withdrawal charges nor the 10% IRS tax
penalty are assessed when a death benefit is paid.
8. PERFORMANCE
The value of your annuity will fluctuate depending upon the investment
performance of the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or
STRATEGY(IES) you select. From time to time we may advertise a SELECT
PORTFOLIO'S, FOCUSED PORTFOLIO'S or STRATEGY'S total return. The total return
figures are based on historical data and are not intended to indicate future
performance.
Prior to the date of this prospectus Seasons Select was not available for sales.
Therefore, no performance information is presented here.
9. DEATH BENEFIT
If you, or, if there is a joint owner, either of the two, should die during the
Accumulation Phase, your Beneficiary will receive a death benefit.
If at the time we issued your contract, you were 80 years old or younger, the
death benefit is the greatest of:
(1) the value of your contract at the time we receive satisfactory proof of
death; or (2) total Purchase Payments less withdrawals (and any fees or charges
applicable to such withdrawals) in an amount proportionate to the amount by
which such withdrawals decreased contract values, compounded at a 4% annual
growth rate until the date of death (3% growth rate if 70 or older at the time
of contract issue); or (3) the value of your contract on the seventh contract
anniversary, plus any Purchase Payments and less withdrawals (and any fees or
charges applicable to such withdrawals) in an amount proportionate to the amount
by which such withdrawals decreased contract values, since the seventh contract
anniversary, all compounded at a 4% annual growth rate until the date of death
(3% growth rate if age 70 or older at the time of contract issue). (4) the
maximum anniversary value on any contract anniversary prior to your 81st
birthday. The anniversary value equals the value of your contract on a contract
anniversary plus any Purchase Payments and less any withdrawals (and any fees or
charges applicable to such withdrawals) in an amount proportionate to the amount
by which such withdrawals decreased contract values, since that contract
anniversary.
If at the time we issued your contract, you were 81 years old or older, the
death benefit is the greatest of: (1) the value of your contract at the time we
receive satisfactory proof of death, or (2) total Purchase Payments less
withdrawals (and any fees or charges applicable to such withdrawals) in an
amount proportionate to the amount by which such withdrawals decreased contract
values, compounded at 3% to date of death.
10. OTHER INFORMATION
OWNERSHIP: The contract is an allocated fixed and variable group annuity
contract. A group contract is issued to a contractholder, for the benefit of the
participants in the group. You, as an owner of a Seasons Select Variable
Annuity, are a participant in the group and will receive a certificate
evidencing your ownership. You, as the owner of a certificate, are entitled to
all the rights and privileges of ownership. As used in this Profile and the
prospectus, the term contract refers to your certificate. In some states an
individual fixed and variable annuity contract may be
<PAGE>
available instead, which is identical to the group contract described in this
Profile and the prospectus except that it is issued directly to the individual
owner.
FREE LOOK: You may cancel your contract within 10 days of receiving it (or
whatever period is required by your state) by mailing it to our Annuity Service
Center. Your contract will be treated as void on the date we receive it and we
will pay you an amount equal to the value of the money in the SELECT
PORTFOLIO(S), FOCUSED PORTFOLIO and/or STRATEGY(IES) plus any money you put into
the fixed investment options. Its value may be more or less than the money you
initially invested. Thus, the investment risk is borne by you during the free
look period.
SYSTEMATIC WITHDRAWAL PROGRAM: If selected by you, this program allows you to
receive either monthly, quarterly, semi-annual or annual checks during the
Accumulation Phase. Systematic withdrawals may also be electronically
transferred to your bank account. Of course, withdrawals during the Accumulation
Phase may be taxable and a 10% IRS tax penalty may apply if you are under age
59 1/2.
DOLLAR COST AVERAGING: If selected by you, this program allows you to invest
gradually into one or more of the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or
STRATEGY(IES).
PRINCIPAL ADVANTAGE PROGRAM: If selected by you, this program allows you to put
money in a fixed investment option and one or more SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) or STRATEGY(IES) and we will guarantee that the portion allocated
to the fixed investment option assuming that it remains invested in that option,
will grow to equal your principal investment.
AUTOMATIC PAYMENT PLAN: You can add to your contract directly from your bank
account with as little as $50 per month.
CONFIRMATIONS AND QUARTERLY STATEMENTS: During the accumulation phase, you will
receive confirmation of transactions within your contract. Transactions made
pursuant to contractual or systematic agreements, such as deduction of the
annual maintenance fee and dollar cost averaging, may be confirmed quarterly.
Purchase payments received through the automatic payment plan or a salary
reduction arrangement, may also be confirmed quarterly. For all other
transactions, we send confirmations immediately.
During the accumulation and income phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values.
11. INQUIRIES:
If you have questions about your contract or need to make changes, call your
financial representative or contact us at:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
800/445-SUN2
If money accompanies your correspondence, you should direct it to:
Anchor National Life Insurance Company
P.O. Box 100330
Pasadena, California 91189-0001
<PAGE>
[LOGO]
PROSPECTUS
July 5, 2000
ALLOCATED FIXED AND VARIABLE GROUP ANNUITY
issued by
VARIABLE ANNUITY ACCOUNT FIVE
and
ANCHOR NATIONAL LIFE INSURANCE COMPANY
The annuity contract has 21 investment choices - 7 fixed investment options
which offer interest rates guaranteed by Anchor National for different periods
of time, 9 variable investment SELECT PORTFOLIOS, 1 variable investment FOCUSED
PORTFOLIO and 4 variable investment STRATEGIES:
SELECT PORTFOLIOS
LARGE CAP GROWTH
LARGE CAP COMPOSITE
LARGE CAP VALUE
MID CAP GROWTH
MID CAP VALUE
SMALL CAP
INTERNATIONAL EQUITY
DIVERSIFIED FIXED INCOME
CASH MANAGEMENT
FOCUSED PORTFOLIOS
FOCUS GROWTH
STRATEGIES
GROWTH
MODERATE GROWTH
BALANCED GROWTH
CONSERVATIVE GROWTH
all of which invest in the underlying portfolios of
SEASONS SERIES TRUST
which is managed by:
SELECT PORTFOLIOS
BANKERS TRUST COMPANY
GOLDMAN SACHS ASSET MANAGEMENT
JANUS CAPITAL CORPORATION
LORD, ABBETT & COMPANY
SUNAMERICA ASSET MANAGEMENT COMPANY
T. ROWE PRICE ASSOCIATES, INC.
WELLINGTON MANAGEMENT COMPANY, LLP
STRATEGIES
PUTNAM INVESTMENT MANAGEMENT, INC.
T. ROWE PRICE ASSOCIATES, INC.
JANUS CAPITAL CORPORATION
SUNAMERICA ASSET MANAGEMENT COMPANY
WELLINGTON MANAGEMENT COMPANY, LLP
You can put your money into any one or all of the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S), STRATEGY(IES) and/or fixed investment options.
Please read this prospectus carefully before investing and keep it for your
future reference. It contains important information you should know about the
Seasons Select Variable Annuity.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information ("SAI") dated July 5, 2000. The
SAI has been filed with the Securities and Exchange Commission ("SEC") and can
be considered part of this prospectus.
The table of contents of the SAI appears on page 36 of this prospectus. For a
free copy of the SAI, call us at 800/445-SUN2 or write our Annuity Service
Center at, P.O. Box 54299, Los Angeles, California 90054-0299.
A registration statement has been filed with the SEC under the Securities Act of
1933 relating to the contract. This prospectus does not contain all the
information in the registration statement as permitted by SEC regulations. The
omitted information can be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
In addition, the SEC maintains a website (http://www.sec.gov) that contains the
SAI, materials incorporated by reference and other information filed
electronically with the SEC.
ANNUITIES INVOLVE RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL, AND ARE NOT A
DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THEY ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
Anchor National's Annual Report on Form 10-K for the year ended
December 31, 1999 are incorporated herein by reference.
All documents or reports filed by Anchor National under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") after the effective date of this prospectus are also incorporated by
reference. Statements contained in this prospectus and subsequently filed
documents which are incorporated by reference or deemed to be incorporated by
reference are deemed to modify or supersede documents incorporated herein by
reference.
Anchor National files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically pursuant
to EDGAR under CIK No. 0000006342.
Anchor National is subject to the informational requirements of the Securities
and Exchange Act of 1934 (as amended). We file reports and other information
with the SEC to meet those requirements. You can inspect and copy this
information at SEC public facilities at the following locations:
WASHINGTON, DISTRICT OF COLUMBIA
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
CHICAGO, ILLINOIS
500 West Madison Street
Chicago, IL 60661
NEW YORK, NEW YORK
7 World Trade Center, 13th Fl.
New York, NY 10048
To obtain copies by mail contract the Washington, D.C. location. After you pay
the fees as prescribed by the rules and regulations of the SEC, the required
documents are mailed.
Registration statements under the Securities Act of 1933, as amended, related to
the contracts offered by this prospectus are on file with the SEC. This
prospectus does not contain all of the information contained in the registration
statements and exhibits. For further information regarding the separate account,
Anchor National and its general account, the Variable Portfolios and the
contract, please refer to the registration statements and exhibits.
The SEC also maintains a website (http://www.sec.gov) that contains the SAI,
materials incorporated by reference and other information filed electronically
with the SEC by Anchor National.
Anchor National will provide without charge to each person to whom this
prospectus is delivered, upon written or oral request, a copy of the documents
incorporated by reference. Requests for these documents should be directed to
Anchor National's Annuity Service Center, as follows:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
Indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") is provided to Anchor National's officers, directors and controlling
persons. The SEC has advised that it believes such indemnification is against
public policy under the Act and unenforceable. If a claim for indemnification
against such liabilities (other than for Anchor National's payment of expenses
incurred or paid by its directors, officers or controlling persons in the
successful defense of any legal action) is asserted by a director, officer or
controlling person of Anchor National in connection with the securities
registered under this prospectus, Anchor National will submit to a court with
jurisdiction to determine whether the indemnification is against public policy
under the Act. Anchor National will be governed by final judgment of the issue.
However, if in the opinion of Anchor National's counsel this issue has been
determined by controlling precedent, Anchor National will not submit the issue
to a court for determination.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY.................................................... 3
FEE TABLES.................................................. 4
Owner Transaction Expenses.............................. 4
Annual Separate Account Expenses........................ 4
Income Protector Fee.................................... 4
Investment Portfolio Expenses........................... 5
Investment Portfolio Expenses by Strategy............... 5
Investment Portfolio Expenses for Strategy Underlying
Portfolios............................................. 5
EXAMPLES.................................................... 6
THE SEASONS SELECT VARIABLE ANNUITY......................... 8
PURCHASING A SEASONS SELECT VARIABLE ANNUITY................ 9
Allocation of Purchase Payments......................... 9
Accumulation Units...................................... 9
Free Look............................................... 10
INVESTMENT OPTIONS.......................................... 10
Variable Investment Options............................. 10
THE PORTFOLIO(S)...................................... 11
THE STRATEGIES........................................ 12
Market Value Adjustment................................. 15
Transfers During the Accumulation Phase................. 16
Dollar Cost Averaging................................... 17
Principal Advantage Program............................. 18
Voting Rights........................................... 19
Substitution............................................ 19
ACCESS TO YOUR MONEY........................................ 19
Free Withdrawal Provision............................... 19
Systematic Withdrawal Program........................... 21
Minimum Contract Value.................................. 21
Qualified Contract Owners............................... 21
DEATH BENEFIT............................................... 21
Death of the Annuitant.................................. 22
EXPENSES.................................................... 22
Insurance Charges....................................... 22
Withdrawal Charges...................................... 23
Investment Charges...................................... 23
Contract Maintenance Fee................................ 23
Transfer Fee............................................ 24
Premium Tax............................................. 24
Income Taxes............................................ 24
Reduction or Elimination of Charges and Expenses, and
Additional Amounts Credited............................ 24
INCOME OPTIONS.............................................. 24
Annuity Date............................................ 24
Income Options.......................................... 25
Allocation of Annuity Payments.......................... 26
Transfers During the Income Phase....................... 26
Deferment of Payments................................... 26
The Income Protector.................................... 27
TAXES....................................................... 29
Annuity Contracts in General............................ 29
Tax Treatment of Distributions--Non-qualified
Contracts.............................................. 30
Tax Treatment of Distributions--Qualified Contracts..... 30
Minimum Distributions................................... 30
Diversification......................................... 31
PERFORMANCE................................................. 31
OTHER INFORMATION........................................... 31
The Separate Account.................................... 32
Custodian............................................... 32
The General Account..................................... 32
Distribution of the Contract............................ 32
Administration.......................................... 33
Year 2000............................................... 33
Legal Proceedings....................................... 33
INDEPENDENT ACCOUNTANTS..................................... 33
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.... 34
APPENDIX A--CONDENSED FINANCIAL INFORMATION................. A-1
APPENDIX B--MARKET VALUE ADJUSTMENT......................... B-1
APPENDIX C--PREMIUM TAXES................................... C-1
</TABLE>
2
<PAGE>
GLOSSARY
We have capitalized some of the technical terms used in this prospectus. To help
you understand these terms, we define them in this glossary.
ACCUMULATION PHASE--The period during which you invest money in your contract.
ACCUMULATION UNITS--A measurement we use to calculate the value of the variable
portion of your contract during the Accumulation Phase.
ANNUITANT(S)--The person(s) on whose life (lives) we base annuity payments.
ANNUITY DATE--The date on which annuity payments are to begin, as selected by
you.
ANNUITY UNITS--A measurement we use to calculate the amount of annuity payments
you receive from the variable portion of your contract during the Income Phase.
BENEFICIARY(IES)--The person(s) designated to receive any benefits under the
contract if you or the Annuitant dies.
COMPANY--Anchor National Life Insurance Company ("Anchor National"), We, Us, the
issuer of this annuity contract.
INCOME PHASE--The period during which we make annuity payments to you.
IRS--The Internal Revenue Service.
NON-QUALIFIED (CONTRACT)--A contract purchased with after-tax dollars. In
general, these contracts are not under any pension plan, specially sponsored
program or individual retirement account ("IRA").
PURCHASE PAYMENTS--The money you give us to buy the contract, as well as any
additional money you give us to invest in the contract after you own it.
QUALIFIED (CONTRACT)--A contract purchased with pretax dollars. These contracts
are generally purchased under a pension plan, specially sponsored program or
individual retirement account ("IRA").
STRATEGY(IES)--A sub-account of Variable Annuity Account Five which provides for
the variable investment options available under the contract. Each STRATEGY has
its own investment objective and is invested in the underlying investment
porfolios of the Seasons Series Trust. This investment option allocates assets
to three out of six available portfolios, each of which is managed by a
different investment advisor.
PORTFOLIO(S)--A sub-account of Variable Annuity Account Five which provides for
the variable investment options available under the contract. Each PORTFOLIO has
a distinct investment objective and is invested in the underlying investment
portfolios of the Seasons Series Trust. This investment option allocates assets
to an underlying fund in which a portion of the assets is managed by three out
of seven advisors.
3
<PAGE>
SEASONS SELECT VARIABLE ANNUITY FEE TABLES
------------------------------------------------------------
OWNER TRANSACTION EXPENSES
Withdrawal Charge as a percentage of Purchase Payments:
<TABLE>
<S> <C> <C> <C>
Year 1.............. 9% Year 6.............. 5%
Year 2.............. 8% Year 7.............. 4%
Year 3.............. 7% Year 8.............. 3%
Year 4.............. 6% Year 9.............. 2%
Year 5.............. 6% Year 10............. 0%
</TABLE>
<TABLE>
<S> <C>
Contract Maintenance Charge........ $35 each year ($30 in North Dakota)
Transfer Fee....................... No charge for first 4 transfers each
year; thereafter, the fee is $25 per
transfer ($10 in
Pennsylvania and Texas)
</TABLE>
ANNUAL SEPARATE ACCOUNT EXPENSES
(as a percentage of daily net asset value)
If age 80 or younger at contract issue:
<TABLE>
<S> <C>
Mortality Risk Charge.................... 0.90%
Expense Risk Charge...................... 0.35%
Distribution Expense Charge.............. 0.15%
----
Total Separate Account Expenses.... 1.40%
</TABLE>
If age 81 or older at contract issue:
<TABLE>
<S> <C>
Mortality Risk Charge.................... 1.02%
Expense Risk Charge...................... 0.35%
Distribution Expense Charge.............. 0.15%
----
Total Separate Account Expenses.... 1.52%
</TABLE>
THE INCOME PROTECTOR FEE
(The Income Protector Program is optional and
if elected the fee is deducted annually from your contract value.)
<TABLE>
<S> <C>
Fee as a percentage of your Income
Benefit Base........................ 0.10%
</TABLE>
4
<PAGE>
INVESTMENT PORTFOLIO EXPENSES
OF PORTFOLIOS
(Estimated for the current fiscal year as a percentage of daily net asset value
of each investment portfolio)
[TO BE UPDATED BY AMENDMENT]
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEE EXPENSES EXPENSES
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------
SELECT PORTFOLIOS
- ---------------------------------------
Large Cap Growth .80% .30% 1.10%
Large Cap Composite .80% .30% 1.10%
Large Cap Value .80% .30% 1.10%
Mid Cap Growth .85% .30% 1.15%
Mid Cap Value .85% .30% 1.15%
Small Company .85% .30% 1.15%
International Equity 1.00% .30% 1.30%
Diversified Fixed Income .70% .30% 1.00%
Cash Management 55% .30% .85%
- ---------------------------------------------------------------------------------
FOCUSED PORTFOLIOS
- ---------------------------------------
Focus Growth
- ---------------------------------------------------------------------------------
</TABLE>
INVESTMENT PORTFOLIO EXPENSES BY STRATEGY
(based on the total annual expenses of the underlying investment portfolios
reflected below as of the fiscal year end of the
Trust ending March 31, 1999)
[TO BE UPDATED BY AMENDMENT]
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEE EXPENSES EXPENSES
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Growth .87% .30% 1.17%
Moderate Growth .85% .31% 1.16%
Balanced Growth .83% .32% 1.15%
Conservative Growth .80% .30% 1.10%
- --------------------------------------------------------------------------------
</TABLE>
IMPORTANT INFORMATION ABOUT PORTFOLIO EXPENSES IF INVESTED IN STRATEGY(IES):
The Investment Portfolio Expenses table set forth below identify the total
investment expenses charged by the underlying investment portfolios of Seasons
Series Trust. Each contractholder invested in a STRATEGY will incur only a
portion of the investment expense of those portfolios in which the STRATEGY
invests. The table above entitled "Investment Portfolio Expenses by STRATEGY"
shows an approximation of the total investment expenses a contractholder may
incur if invested in each respective STRATEGY, after the automatic quarterly
rebalancing of such STRATEGY as described on page 15. The actual investment
expenses incurred by contractholders within a STRATEGY will vary depending upon
the daily net asset value of each investment portfolio in which such STRATEGY is
invested.
INVESTMENT PORTFOLIO EXPENSES
FOR STRATEGY UNDERLYING PORTFOLIOS
(as a percentage of daily net asset value of each investment portfolio as of the
fiscal year end of the
Trust (March 31, 1999))
[TO BE UPDATED BY AMENDMENT]
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEE EXPENSES EXPENSES
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Stock .85% .25% 1.10%
Asset Allocation: Diversified
Growth .85% .36% 1.21%
Multi-Managed Growth .89% .30% 1.19%
Multi-Managed Moderate Growth .85% .31% 1.16%
Multi-Managed Income/Equity .81% .33% 1.14%
Multi-Managed Income .77% .29% 1.06%
- --------------------------------------------------------------------------------
</TABLE>
THE ABOVE INVESTMENT PORTFOLIO EXPENSES WERE PROVIDED BY SEASONS SERIES TRUST.
WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
5
<PAGE>
EXAMPLES
[TO BE UPDATED BY AMENDMENT]
You will pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets and:
(a) surrender of the contract at the end of the stated time period if you were
80 or younger at time of issue;
(b) surrender of the contract at the end of the stated time period if you were
age 81 or older at time of issue.
(c) If the contract is not surrendered or is annuitized and you were 80 or
younger at time of issue.*
(d) If the contract is not surrendered or is annuitized and you were 81 or
older at time of issue.*
<TABLE>
<CAPTION>
TIME PERIODS
SELECT PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Large Cap Growth (a) $116 (a) $151 (a) $198 (a) $293
(b) $117 (b) $154 (b) $204 (b) $304
(c) $26 (c) $ 81 (c) $138 (c) $293
(d) $27 (d) $ 84 (d) $144 (d) $304
Large Cap Composite (a) $116 (a) $151 (a) $198 (a) $293
(b) $117 (b) $154 (b) $204 (b) $304
(c) $26 (c) $ 81 (c) $138 (c) $293
(d) $27 (d) $ 84 (d) $144 (d) $304
Large Cap Value (a) $116 (a) $151 (a) $198 (a) $293
(b) $117 (b) $154 (b) $204 (b) $304
(c) $26 (c) $ 81 (c) $138 (c) $293
(d) $27 (d) $ 84 (d) $144 (d) $304
Mid Cap Growth (a) $117 (a) $152 (a) $200 (a) $297
(b) $118 (b) $156 (b) $206 (b) $309
(c) $27 (c) $ 82 (c) $140 (c) $297
(d) $28 (d) $ 86 (d) $146 (d) $309
Mid Cap Value (a) $117 (a) $152 (a) $200 (a) $297
(b) $118 (b) $156 (b) $206 (b) $309
(c) $27 (c) $ 82 (c) $140 (c) $297
(d) $28 (d) $ 86 (d) $146 (d) $309
Small Company (a) $117 (a) $152 (a) $200 (a) $297
(b) $118 (b) $156 (b) $206 (b) $309
(c) $27 (c) $ 82 (c) $140 (c) $297
(d) $28 (d) $ 86 (d) $146 (d) $309
International Equity (a) $118 (a) $157 (a) $207 (a) $312
(b) $119 (b) $160 (b) $213 (b) $323
(c) $28 (c) $ 87 (c) $147 (c) $312
(d) $29 (d) $ 90 (d) $153 (d) $323
Diversified Fixed Income (a) $115 (a) $148 (a) $193 (a) $283
(b) $116 (b) $151 (b) $199 (b) $295
(c) $25 (c) $ 78 (c) $133 (c) $283
(d) $26 (d) $ 81 (d) $139 (d) $295
Cash Management (a) $114 (a) $125 (a) $185 (a) $268
(b) $115 (b) $147 (b) $191 (b) $280
(c) $24 (c) $ 85 (c) $125 (c) $268
(d) $25 (d) $ 77 (d) $131 (d) $280
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<CAPTION>
FOCUSED PORTFOLIOS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Focus Growth
- ----------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
[TO BE UPDATED BY AMENDMENT]
<TABLE>
<CAPTION>
TIME PERIODS
STRATEGY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Growth (a) $97 (a) $143 (a) $181 (a) $299
(b) $98 (b) $146 (b) $187 (b) $311
(c) $27 (c) $ 83 (c) $141 (c) $299
(d) $28 (d) $ 86 (d) $147 (d) $311
Moderate Growth (a) $97 (a) $142 (a) $180 (a) $298
(b) $98 (b) $146 (b) $186 (b) $310
(c) $27 (c) $ 82 (c) $140 (c) $298
(d) $28 (d) $ 86 (d) $146 (d) $310
Balanced Growth (a) $97 (a) $142 (a) $180 (a) $297
(b) $98 (b) $146 (b) $186 (b) $309
(c) $27 (c) $ 82 (c) $140 (c) $297
(d) $28 (d) $ 86 (d) $146 (d) $309
Conservative Growth (a) $96 (a) $140 (a) $177 (a) $292
(b) $97 (b) $144 (b) $183 (b) $304
(c) $26 (c) $ 80 (c) $137 (c) $292
(d) $27 (d) $ 84 (d) $143 (d) $304
- ------------------------------------------------------------------------------------------
</TABLE>
* We do not currently charge a surrender charge upon annuitization, unless the
contract is annuitized under the Income Protector Program. We will assess any
applicable surrender charges upon annuitizations effected using the Income
Protector Program as if you had fully surrendered your contract.
EXPLANATION OF FEE TABLES AND EXAMPLES
1. The purpose of the Fee Tables is to show you the various expenses you will
incur directly and indirectly by investing in the contract. The example
reflects owner transaction expenses, separate account expenses and
investment portfolio expenses by SELECT PORTFOLIO, FOCUSED PORTFOLIO and
STRATEGY.
2. The Examples assume that no transfer fees were imposed. Premium taxes are
not reflected but may be applicable. Although premium taxes may apply in
certain states, they are not reflected in the Examples. In addition, these
examples do not reflect the fees associated with the Income Protector
Program.
3. For certain investment portfolios in which the SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS and STRATEGIES invest SunAmerica Asset Management has
voluntarily agreed to waive fees or reimburse expenses, if necessary, to
keep annual operating expenses at or below the following percentages of
each of the following Portfolios' average net assets: Multi-Managed Growth
Portfolio 1.29%, Multi-Managed Moderate Growth Portfolio 1.21%,
Multi-Managed Income/Equity Portfolio 1.14%, Multi-Managed Income
Portfolio 1.06%, Asset Allocation: Diversified Growth Portfolio 1.21%,
Stock Portfolio 1.21%, Large Cap Growth Portfolio 1.10%, Large Cap
Composite Portfolio 1.10%, Large Cap Value Portfolio 1.10%, Mid Cap Growth
Portfolio 1.15%, Mid Cap Value Portfolio 1.15%, Small Cap Portfolio 1.15%,
International Equity Portfolio 1.30%, Diversified Fixed Income Portfolio
1.00% and Cash Management Portfolio 0.85%. SunAmerica Asset Management
also may voluntarily waive or reimburse additional amounts to increase the
investment return to a Portfolio's investors. SunAmerica may terminate all
such waivers and/or reimbursements at any time. Further, any waivers or
reimbursements made by SunAmerica Asset Management with respect to a
Portfolio are subject to recoupment from that Portfolio within the
following two years, provided that the Portfolio is able to effect such
payment to SunAmerica Asset Management and remain in compliance with the
foregoing expense limitations. During the time period reflected in this
Fee Table, the adviser did not rely on any of these waiver and/or
reimbursement agreements.
4. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The historical accumulation unit values for the SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS and STRATEGY(IES) are contained in Appendix A--Condensed Financial
Information.
7
<PAGE>
THE SEASONS SELECT VARIABLE ANNUITY
- --------------------------------------------------------------------------------
An annuity is a contract between you and an insurance company. You are the owner
of the contract. The contract provides three main benefits:
- Tax Deferral: This means that you do not pay taxes on your earnings from
the annuity until you withdraw them.
- Death Benefit: If you die during the Accumulation Phase, the insurance
company pays a death benefit to your Beneficiary.
- Guaranteed Income: If elected, you receive a stream of income for your
lifetime, or another available period you select.
Tax-qualified retirement plans (e.g., IRAs, 401(k) or 403(b) plans) defer
payment of taxes on earnings until withdrawal. If you are considering funding a
tax-qualified retirement plan with an annuity, you should know that an annuity
does not provide any additional tax deferral treatment of earnings beyond the
treatment provided by the tax-qualified retirement plan itself. However,
annuities do provide other features and benefits which may be valuable to you.
You should fully discuss this decision with your financial advisor.
This annuity was developed to help you contribute to your retirement savings.
This annuity works in two stages, the Accumulation Phase and the Income Phase.
Your contract is in the Accumulation Phase during the period when you make
payments into the contract. The Income Phase begins when you request us to start
making payments to you out of the money accumulated in your contract.
The Contract is called a "variable" annuity because it allows you to invest in
variable investment portfolios which we call SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS and/or STRATEGIES. The SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and
STRATEGIES, are similar to mutual funds, in that they have specific investment
objectives and their performance varies. You can gain or lose money if you
invest in these SELECT PORTFOLIOS, FOCUSED PORTFOLIOS or STRATEGIES. The amount
of money you accumulate in your contract depends on the performance of the
SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or STRATEG(IES) in which you invest.
The Contract also offers several fixed account options for varying time periods.
Fixed account options earn interest at a rate set and guaranteed by Anchor
National. If you allocate money to the fixed account options, the amount of
money that accumulates in your Contract depends on the total interest credited
to the particular fixed account option(s) in which you are invested.
For more information on SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S), STRATEGY(IES)
and fixed account options available under this contract, SEE INVESTMENT OPTIONS
PAGE 10.
Anchor National Life Insurance Company (Anchor National, The Company, Us, We)
issues the Seasons Select Variable Annuity. When you purchase a Seasons Select
Variable Annuity, a contract exists between you and Anchor National. The Company
is a stock life insurance company organized under the laws of the state of
Arizona. Its principal place of business is 1 SunAmerica Center, Los Angeles,
California 90067. The Company conducts life insurance and annuity business in
the District of Columbia and all states except New York. Anchor National is an
indirect, wholly owned subsidiary of American International Group, Inc., a
Delaware corporation. Seasons Select may not currently be available in all
states.
This annuity is designed for investors whose personal circumstances allow for a
long-term investment time horizon, to assist in contributing to retirement
savings. As a function of the IRC you may be assessed a 10% federal tax penalty
on any withdrawal made prior to your reaching age 59 1/2. Additionally, this
contract provides that you will
8
<PAGE>
be charged a withdrawal charge on each purchase payment withdrawn if that
purchase payment has not been invested in this contract for at least 9 years.
Because of these potential penalties, you should fully discuss all of the
benefits and risks of this contract with your financial adviser prior to
purchase.
PURCHASING A SEASONS SELECT VARIABLE ANNUITY
- --------------------------------------------------------------------------------
An initial Purchase Payment is the money you give us to buy a contract. Any
additional money you give us to invest in the contract after purchase is a
subsequent Purchase Payment.
This chart shows the minimum initial and subsequent Purchase Payments permitted
under your contract. These amounts depend upon whether a contract is Qualified
or Non-Qualified for tax purposes.
<TABLE>
<CAPTION>
MINIMUM
MINIMUM INITIAL SUBSEQUENT
PURCHASE PAYMENT PURCHASE PAYMENT
---------------- ----------------
<S> <C> <C>
Qualified $2,000 $500
Non-Qualified $5,000 $500
</TABLE>
Prior Company approval is required to accept Purchase Payments greater than
$1,500,000. The Company reserves the right to refuse any Purchase Payment
including one which would cause the contact value or Purchase Payments to exceed
$1,500,000 at the time of the Purchase Payment. Also, the optional Automatic
Payment Plan allows you to make subsequent payments as small as $50.00. We may
refuse any Purchase Payment.
In general, we will not issue a Qualified contract to anyone who is age 70 1/2
or older, unless they certify to us that the minimum distribution required by
the IRS is being made. In addition we may not issue a contract to anyone over
age 90.
ALLOCATION OF PURCHASE PAYMENTS
We invest your Purchase Payments in the fixed accounts, SELECT PORTFOLIO(S),
FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) according to your instructions. If we
receive a Purchase Payment without allocation instructions, we will invest the
money according to your last allocation instructions. Purchase Payments are
applied to your contract based upon the value of the variable investment option
next determined after receipt of your money. SEE INVESTMENT OPTIONS PAGE 10.
In order to issue your contract, we must receive your completed application,
Purchase Payment allocation instructions and any other required paper work at
our Annuity Service Center. We allocate your initial purchase payment within two
days of receiving it. If we do not have complete information necessary to issue
your contract, we will contact you. If we do not have the information necessary
to issue your contract within 5 business days we will:
- Send your money back to you, or;
- Ask your permission to keep your money until we get the information
necessary to issue the contract.
ACCUMULATION UNITS
The value of the variable portion of your contract will go up or down depending
upon the investment performance of the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S)
or STRATEGY(IES) you select. In order to keep track of the value of your
contract, we use a unit of measure called an Accumulation Unit which works like
a share of a mutual fund. During the Income Phase, we call them Annuity Units.
9
<PAGE>
An Accumulation Unit value is determined each day that the New York Stock
Exchange ("NYSE") is open. We calculate an Accumulation Unit for each STRATEGY,
SELECT PORTFOLIO or FOCUSED PORTFOLIO after the NYSE closes each day. We do this
by:
1. determining the total value of money invested in a particular STRATEGY,
SELECT PORTFOLIO or FOCUSED PORTFOLIO;
2. subtracting from that amount any asset-based charges and any other
charges such as taxes we have deducted; and
3. dividing this amount by the number of outstanding Accumulation Units.
FREE LOOK
You may cancel your contract within ten days after receiving it (or longer if
required by state law). We call this a "free look." To cancel, you must mail the
contract along with your free look request to our Annuity Service Center at
P.O. Box 54299, Los Angeles, California 90054-0299. Unless otherwise required by
state law, you will receive back the value of the money allocated to the SELECT
PORTFOLIO(S), FOCUSED PORTFOLIO(S) or STRATEGY(IES) on the day we receive your
request plus any Purchase Payment in the fixed investment options. This value
may be more or less than the money you initially invested. Thus, the investment
risk is borne by you during the free look period.
Certain states require us to return your Purchase Payments upon a free look
request. Additionally, all contracts issued as an IRA require the full return of
Purchase Payments upon a free look. With respect to those contracts, we reserve
the right to put your money in the 1-year fixed investment option during the
free look period. If you cancel your contract during the free look period, we
return the greater of (1) your Purchase Payments, or (2) the value of your
contract. At the end of the free look period, we reallocate your money according
to your instructions.
INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
The contract offers variable investment options which we call SELECT
PORTFOLIO(S), FOCUSED PORTFOLIO(S) and STRATEGY(IES), and fixed investment
options. We designed the contract to meet your varying investment needs over
time. You can achieve this by using the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) and/or STRATEGY(IES) alone or in concert with the fixed investment
options. The SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and STRATEGY(IES) operate
similar to a mutual fund but are only available through the purchase of certain
variable annuities. A mixture of your investment in the SELECT PORTFOLIO(S),
FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) and fixed account options may lower
the risk associated with investing only in a variable investment option.
VARIABLE INVESTMENT OPTIONS
Each of the variable investment options of the contract invests in underlying
portfolios of Seasons Series Trust. SunAmerica Asset Management Company
("SAAMCo"), an affiliate of Anchor National, manages Seasons Series Trust.
SAAMCo has engaged sub-advisers to provide investment advice for certain of the
underlying investment portfolios.
YOU SHOULD READ THE PROSPECTUS FOR THE SEASONS SERIES TRUST CAREFULLY BEFORE
INVESTING. THE PROSPECTUS WHICH IS ATTACHED HERETO CONTAINS DETAILED INFORMATION
ABOUT THE UNDERLYING INVESTMENT PORTFOLIOS INCLUDING INVESTMENT OBJECTIVE AND
RISK FACTORS.
10
<PAGE>
THE PORTFOLIOS
The contract offers nine SELECT PORTFOLIOS, each with a distinct investment
objective, utilizing a disciplined investing style to achieve its objective.
Each SELECT PORTFOLIO invests in an underlying investment portfolio of the
Seasons Series Trust. Except for the Cash Management portfolio, each underlying
portfolio is multi-managed by a team of three money managers, one component of
the underlying portfolios is an unmanaged component that tracks a particular
target index or subset of an index. The other two components are actively
managed. The unmanaged component of each underlying portfolio is intended to
balance some of the risks associated with an actively traded portfolio.
The contract also currently offers one FOCUSED PORTFOLIO. Each multi-managed
FOCUSED PORTFOLIO offers you at least two different professional managers, one
of which may be SAAMCo, and each of which advises a separate portion of the
FOCUSED PORTFOLIO. Each manager actively selects a limited number of stocks that
represent their best ideas. This approach to investing results in a more
concentrated portfolio, which will be less diversified than the SELECT
PORTFOLIOS, and may be subject to greater market risks.
Each underlying PORTFOLIO and the respective managers are:
<TABLE>
<S> <C>
SELECT PORTFOLIOS LARGE-CAP COMPOSITE
LARGE-CAP GROWTH Bankers Trust
Bankers Trust Company ("Bankers Trust") SAAMCo
Goldman Sachs Assets Management ("Goldman Sachs) T. Rowe Price Associates, Inc. ("T. Rowe Price")
Janus Capital Corporation ("Janus")
LARGE-CAP VALUE MID-CAP GROWTH
Bankers Trust Bankers Trust
T. Rowe Price T. Rowe Price
Wellington Management Company, LLP ("Wellington") Wellington
MID-CAP VALUE SMALL-CAP
Bankers Trust Bankers Trust
Goldman Sachs Lord Abbett
Lord Abbett & Co. ("Lord Abbett") SAAMCo
INTERNATIONAL EQUITY DIVERSIFIED FIXED INCOME
Bankers Trust Bankers Trust
Goldman Sachs Asset Management International SAAMCo
Lord Abbett Wellington
CASH MANAGEMENT
SAAMCo
FOCUSED PORTFOLIO
FOCUS GROWTH
Fred Alger Management
Jennison Associates
Marisco Capital Management
</TABLE>
PORTFOLIO OPERATION
Each PORTFOLIO is designed to meet a distinct investment objective facilitated
by the management philosophy of three different money managers. Generally, an
equal portion of the Purchase Payments received for allocation to each PORTFOLIO
will be allocated among the three managers for that PORTFOLIO. Each quarter
SAAMCo will evaluate the asset allocation between the three managers of each
PORTFOLIO. If SAAMCo determines that the assets have become significantly
unequal in allocation among the managers, then the in-coming cash flows may be
redirected in an attempt to stabilize the allocations. Generally, existing
PORTFOLIO assets will not be rebalanced. However, we reserve the right to do so
in the event that it is deemed necessary and not adverse to the interests of
contract owners invested in the PORTFOLIO. Transfers made as a result of
rebalancing a PORTFOLIO are not considered a transfer under your contract.
11
<PAGE>
THE STRATEGIES
The contract offers four multi-manager variable investment STRATEGY(IES), each
with a different investment objective. We designed the STRATEGY(IES) utilizing
an asset allocation approach to meet your investment needs over time,
considering factors such as your age, goals and risk tolerance. However, each
STRATEGY is designed to achieve different levels of growth over time.
Each STRATEGY invests in three underlying investment portfolios of the Seasons
Series Trust. The allocation of money among these investment portfolios varies
depending on the objective of the STRATEGY.
The underlying investment portfolios of Seasons Series Trust in which the
STRATEGY(IES) invest include the Asset Allocation--Diversified Growth Portfolio,
the Stock Portfolio and the Multi-Managed Growth, Multi-Managed Moderate Growth,
Multi-Managed Income/Equity and Multi-Managed Income Portfolios (the "Multi-
Managed Portfolios").
The Asset Allocation: Diversified Growth Portfolio is managed by Putnam
Investment Management, Inc. The Stock Portfolio is managed by T. Rowe Price
Associates, Inc. All of the Multi-Managed Portfolios include the same three
basic investment components: a growth component managed by Janus Capital
Corporation, a balanced component managed by SAAMCo and a fixed income component
managed by Wellington Management Company, LLP. The Growth STRATEGY and the
Moderate Growth STRATEGY also have an aggressive growth component which SAAMCo
manages. The percentage that any one of these components represents in each
Multi-Managed Portfolio varies in accordance with the investment objective.
Each STRATEGY uses an investment approach based on asset allocation. This
approach is achieved by each STRATEGY investing in distinct percentages in three
specific underlying funds of the Seasons Series Trust. In turn, the underlying
funds invest in a combination of domestic and international stocks, bonds and
cash. Based on the percentage allocation to each specific underlying fund and
each underlying fund's investment approach, each STRATEGY initially has a
neutral asset allocation mix of stocks, bonds and cash. At the beginning of each
quarter a rebalancing occurs among the underlying funds to realign each STRATEGY
with its distinct percentage investment in the three underlying funds. This
rebalancing is designed to help maintain the neutral asset allocation mix for
each STRATEGY. The pie charts on the following pages demonstrate:
- the neutral asset allocation mix for each STRATEGY; and
- the percentage allocation in which each STRATEGY invests.
STRATEGY REBALANCING
Each STRATEGY is designed to meet its investment objective by allocating a
portion of your money to three different investment portfolios. In order to
maintain the mix of investment portfolios consistent with each STRATEGY's
objective, each STRATEGY within your contract is rebalanced each quarter. On the
first business day of each quarter (or as close to such date as is
administratively practicable) your money will be allocated among the various
investment portfolios according to the percentages set forth on the prior pages.
Additionally, within each Multi-Managed Portfolio, your money will be rebalanced
among the various components. We also reserve the right to rebalance any
STRATEGY more frequently if rebalancing is, deemed necessary and not adverse to
the interests of contract owners invested in such STRATEGY. Rebalancing a
STRATEGY may involve shifting a portion of assets out of underlying investment
portfolios with higher returns into underlying investment portfolios with
relatively lower returns. Transfers made as a result of rebalancing a STRATEGY
are not counted against your fifteen free transfers per year.
12
<PAGE>
GROWTH
GOAL: Long-term growth of capital, allocating its assets primarily to
stocks. This STRATEGY may be best suited for those with longer periods to
invest.
<TABLE>
<S> <C>
Stocks.............................. 80%
Bonds............................... 15%
Cash................................ 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED GROWTH PORTFOLIO 50%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 25%
Managed by T. Rowe Price Associates,
Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH
PORTFOLIO 25%
Managed by Putnam Investment
Management, Inc.
</TABLE>
MODERATE GROWTH
GOAL: Growth of capital through investments in equities, with a secondary
objective of conservation of principal by allocating more of its assets to bonds
than the Growth STRATEGY. This STRATEGY may be best suited for those nearing
retirement years but still earning income.
<TABLE>
<S> <C>
Stocks.............................. 70%
Bonds............................... 25%
Cash................................ 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED MODERATE GROWTH PORTFOLIO 55%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 20%
Managed by T. Rowe Price Associates,
Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH
PORTFOLIO 25%
Managed by Putnam Investment
Management, Inc.
</TABLE>
13
<PAGE>
BALANCED GROWTH
GOAL: Focuses on conservation of principal by investing in a more balanced
weighting of stocks and bonds, with a secondary objective of seeking a high
total return. This STRATEGY may be best suited for those approaching retirement
and with less tolerance for investment risk.
<TABLE>
<S> <C>
Stocks.............................. 55%
Bonds............................... 40%
Cash................................ 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED INCOME/EQUITY PORTFOLIO 55%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 20%
Managed by T. Rowe Price Associates,
Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH
PORTFOLIO 25%
Managed by Putnam Investment
Management, Inc.
</TABLE>
CONSERVATIVE GROWTH
GOAL: Capital preservation while maintaining some potential for growth over
the long term. This STRATEGY may be best suited for those with lower investment
risk tolerance.
<TABLE>
<S> <C>
Stocks.............................. 42%
Bonds............................... 53%
Cash................................ 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED INCOME PORTFOLIO 60%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 15%
Managed by T. Rowe Price Associates,
Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH
PORTFOLIO 25%
Managed by Putnam Investment
Management, Inc.
</TABLE>
14
<PAGE>
FIXED INVESTMENT OPTIONS
The contract also offers seven fixed investment options. Anchor National will
guarantee the interest rate earned on money you allocate to any of these fixed
investment options. We currently offer fixed investment options for periods of
one, three, five, seven and ten years, which we call guarantee periods. In
Maryland and Washington only the one year fixed account option is available. The
seven and ten year guarantee periods are not available in Oregon. Additionally,
we guarantee the interest rate for money allocated to the six-month DCA fixed
account and/ or the one year DCA fixed account (the "DCA fixed accounts") which
are available only in conjunction with the Dollar Cost Averaging Program. Please
see the section on the Dollar Cost Averaging Program on page 17 for additional
information about, including limitations on, the availability and operation of
the DCA fixed accounts. The DCA fixed accounts are only available for new
Purchase Payments.
All of these fixed account options pay interest at rates set and guaranteed by
Anchor National. Interest rates may differ from time to time and are set at our
sole discretion. We will never credit less than a 3% annual effective rate to
any of the fixed account options. The interest rate offered for new Purchase
Payments may differ from that offered for subsequent Purchase Payments and money
already in the fixed account options. In addition, different guarantee periods
offer different interest rates. Rates for specified payments are declared at the
beginning of the guarantee period and do not change during the specified period.
There are three scenarios in which you may put money into the fixed account
options. In each scenario your money may be credited a different rate of
interest as follows:
- INITIAL RATE: Rate credited to new Purchase Payments allocated to the
fixed account when you purchase your contract.
- CURRENT RATE: Rate credited to subsequent Purchase Payments allocated to
the fixed account.
- RENEWAL RATE: Rate credited to money transferred from a fixed account or
one of the STRATEGIES into a fixed account and to money remaining in a
fixed account after expiration of a guarantee period.
Each of these rates may differ from one and other. Although once declared the
applicable rate is guaranteed until the guarantee period expires.
The DCA fixed accounts also credit a fixed rate of interest. Interest is
credited to amounts allocated to the 1-year or 6-month DCA fixed account while
your investment is systematically transferred to the variable Portfolios. The
rates applicable to the DCA fixed accounts may differ from each other and/or the
other fixed account options but will never be less than an effective rate of 3%.
SEE DOLLAR COST AVERAGING ON PAGE 17 for more information.
When a guarantee period ends, you may leave your money in the same guarantee
period. You may also reallocate money to another fixed investment option (other
than the DCA fixed accounts) or to any of the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) or STRATEGY(IES). If you want to reallocate your money, you must
contact us within 30 days after the end of the current guarantee period and
instruct us how to reallocate your money. If we do not hear from you, we will
keep your money in the same guarantee period where it will earn the renewal
interest rate applicable at that time.
MARKET VALUE ADJUSTMENT
NOTE: THE FOLLOWING DISCUSSION APPLIES TO THE 3, 5, 7 OR 10 YEAR FIXED
INVESTMENT OPTIONS ONLY. THESE OPTIONS ARE NOT AVAILABLE IN ALL STATES. PLEASE
CONTACT YOUR FINANCIAL REPRESENTATIVE FOR MORE INFORMATION. THIS DISCUSSION DOES
NOT APPLY TO WITHDRAWALS TO PAY A DEATH BENEFIT OR CONTRACT FEES AND CHARGES.
15
<PAGE>
If you take money out of the 3, 5, 7 or 10 year fixed investment options before
the end of the guarantee period, we make an adjustment to your contract (the
"market value adjustment" or "MVA"). This market value adjustment reflects any
difference in the interest rate environment between the time you place your
money in the fixed investment option and the time when you withdraw that money.
This adjustment can increase or decrease your contract value. You have 30 days
after the end of each guarantee period to reallocate your funds without
incurring a market value adjustment.
We will not assess a market value adjustment against withdrawals made (1) to pay
a death benefit; (2) to pay contract fees and charges; or (3) to begin the
income phase of your contract on the latest annuity date.
We calculate the market value adjustment by doing a comparison between current
rates and the rate being credited to you in the fixed investment option. For the
current rate we use a rate being offered by us for a guarantee period that is
equal to the time remaining in the guarantee period from which you seek
withdrawal. If we are not currently offering a guarantee period for that period
of time, we determine an applicable rate by using a formula to arrive at a
number between the interest rates currently offered for the two closest periods
available.
Generally, if interest rates drop between the time you put your money into the
fixed investment options and the time you take it out, we credit a positive
adjustment to your contract. On the other hand, if interest rates increase
during the same period, we post a negative adjustment to your contract.
Where the market value adjustment is negative, we first deduct the adjustment
from any money remaining in the fixed investment option. If there is not enough
money in the fixed investment option to meet the negative deduction, we deduct
the remainder from your withdrawal. Where the market value adjustments is
positive, we add the adjustment to your withdrawal amount.
The one year fixed investment option and the DCA fixed accounts do not impose a
market value adjustment. These fixed investment options are not registered under
the Securities Act of 1933 and are not subject to the provisions of the
Investment Company Act of 1940.
Please see Appendix B for more information on how we calculate the market value
adjustment.
TRANSFERS DURING THE ACCUMULATION PHASE
Except as provided in the next sentence with respect to the DCA fixed accounts,
you can transfer money among the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S),
STRATEGY(IES) and the fixed investment options by written request or by
telephone. Although you may transfer money out of the DCA fixed accounts, you
may not transfer money into the DCA fixed account from any SELECT PORTFOLIO,
FOCUSED PORTFOLIO, STRATEGY or fixed investment option. You can make fifteen
(15) transfers every year without incurring a transfer charge. We measure a year
from the anniversary of the date we issued your contract. If you make more than
fifteen (15) transfers in a year, there is a $25 fee per transfer ($10 in
Pennsylvania and Texas). Additionally, transfers out of a 3, 5, 7 or 10 year
fixed investment option may be subject to a market value adjustment.
The minimum amount you can transfer is $500, or a lesser amount if you transfer
the entire balance from a SELECT PORTFOLIO, FOCUSED PORTFOLIO, STRATEGY or a
fixed investment option. Any money remaining in a SELECT PORTFOLIO, FOCUSED
PORTFOLIO, STRATEGY or fixed investment option after making a transfer must
equal at least $500. Your request for transfer must clearly state which
investment option(s) are involved and the amount you want to transfer. Please
see the section below on Dollar Cost Averaging for specific rules regarding the
DCA fixed accounts.
We will accept transfers by telephone unless you specify otherwise on your
contract application. Additionally, in the future you may be able to execute
transfers or other financial transactions over the internet. When receiving
16
<PAGE>
instructions over the telephone, we follow appropriate procedures to provide
reasonable assurance that the transactions executed are genuine. Thus, we are
not responsible for any claim, loss or expense from any error resulting from
instructions received over the telephone.
Upon implementation of internet account transfers we will have appropriate
procedures in place to provide reasonable assurance that the transactions
executed are genuine. Thus, we would not be responsible for any claim, loss or
expense from any error resulting from instructions received over the internet.
If we fail to follow our procedures we may be liable for any losses due to
unauthorized or fraudulent transactions.
For information regarding transfers during the Income Phase, SEE INCOME OPTIONS,
PAGE 24.
We may limit the number of transfers in any contract year or refuse any transfer
request for you or others invested in the contract if we believe that excessive
trading or a specific transfer request or group transfer requests may have a
detrimental effect on unit values or the share prices of the underlying
portfolios.
Where permitted by law, we may accept your authorization for a third party to
make transfers for you subject to our rules. We reserve the right to suspend or
cancel such acceptance at any time and will notify you accordingly.
Additionally, we may restrict the investment options available for transfers
during any period in which such third party acts for you. We notify such third
party beforehand regarding any restrictions. However, we will not enforce these
restrictions if we are satisfied that:
- such third party has been appointed by a court of competent jurisdiction
to act on your behalf; or
- such third party is a trustee/fiduciary appointed, by you or for you, to
act on your behalf for all your financial affairs.
We may provide administrative or other support services to independent third
parties you authorize to make transfers on your behalf. We do not currently
charge you extra for providing these support services. This includes, but is not
limited to, transfers between investment options in accordance with market
timing strategies. Such independent third parties may or may not be appointed
with us for the sale of annuities. However, WE DO NOT ENGAGE ANY THIRD PARTIES
TO OFFER INVESTMENT ALLOCATION SERVICES OF ANY TYPE. WE TAKE NO RESPONSIBILITY
FOR THE INVESTMENT ALLOCATION AND TRANSFERS TRANSACTED ON YOUR BEHALF BY SUCH
THIRD PARTIES OR FOR ANY INVESTMENT ALLOCATION RECOMMENDATIONS MADE BY SUCH
PARTIES.
We reserve the right to modify, suspend or terminate the transfer privileges at
any time.
DOLLAR COST AVERAGING
The Dollar Cost Averaging ("DCA") program allows you to invest gradually in the
variable investment options. Under the program you systematically transfer a set
dollar amount or percentage of any SELECT PORTFOLIO, FOCUSED PORTFOLIO and/or
STRATEGY or from the 1-year fixed account option (source accounts) to any other
SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY. Transfers may be monthly or
quarterly. You may change the frequency at any time by notifying us in writing.
We also offer the 6-month and a 1-year DCA fixed accounts exclusively to
facilitate this program. The DCA fixed accounts only accept new Purchase
Payments. You can not transfer money already in your contract into these
options. If you allocate a Purchase Payment into a DCA fixed account, we
transfer all your money allocated to that account into the SELECT PORTFOLIO(S),
FOCUSED PORTFOLIO(S) or STRATEGY(IES) you select over the selected 6-month or
1-year period. You cannot change the option or the frequency of transfers once
selected. The minimum transfer amount if you use the 1-year or 6-month DCA fixed
accounts to provide dollar cost averaging is $100.
17
<PAGE>
If allocated to the 6-month DCA fixed account, we transfer your money over a
maximum of 6 monthly transfers. We base the actual number of transfers on the
total amount allocated to the account. For example, if you allocate $500 to the
6-month DCA fixed account, we transfer your money over a period of five months,
so that each payment complies with the $100 per transfer minimum.
We determine the amount of the transfers from the 1-year DCA fixed account based
on
- the total amount of money allocated to the account, and
- the frequency of transfers selected.
For example, let's say you allocate $1,000 to the 1-year DCA account. You select
monthly transfers. We completely transfer all of your money to the selected
investment options over a period of ten months.
You may terminate your DCA program at any time. If money remains in the DCA
fixed account, we transfer the remaining money to the 1-year fixed investment
option, unless we receive different instructions from you.
Transfers under the DCA program count against your fifteen (15) free transfers
per year. However, transfers resulting from a termination of this program do not
count towards your fifteen (15) free transfers.
The DCA program is designed to lessen the impact of market fluctuations on your
investment. However, we cannot ensure that you will make a profit. When you
elect the DCA Program, you are continuously investing in securities regardless
of fluctuating price levels. You should consider your tolerance for investing
through periods of fluctuating price levels.
We reserve the right to modify, suspend or terminate this program at any time.
EXAMPLE:
Assume that you want to gradually move $750 each quarter from the Cash
Management Portfolio to the Mid-Cap Value SELECT PORTFOLIO over six
quarters. You set up dollar cost averaging and purchase Accumulation Units
at the following values:
<TABLE>
<CAPTION>
QUARTER ACCUMULATION UNIT UNITS PURCHASED
- ------- ----------------- ---------------
<S> <C> <C>
1 $ 7.50 100
2 $ 5.00 150
3 $10.00 75
4 $ 7.50 100
5 $ 5.00 150
6 $ 7.50 100
</TABLE>
You paid an average price of only $6.67 per Accumulation Unit over six
quarters, while the average market price actually was $7.08. By investing an
equal amount of money each month, you automatically buy more Accumulation
Units when the market price is low and fewer Accumulation Units when the
market price is high. This example is for illustrative purposes only.
PRINCIPAL ADVANTAGE PROGRAM
The Principal Advantage Program allows you to invest in one or more of the
SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or STRATEGY(IES) without putting your
principal at direct risk. The program accomplishes this by allocating your
investment strategically between the fixed investment options (other than the
DCA fixed accounts) and the SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY you
select. You
18
<PAGE>
decide how much you want to invest and approximately when you want a return of
principal. We calculate how much of your Purchase Payment needs to be allocated
to the particular fixed investment option to ensure that it grows to an amount
equal to your total principal invested under this program.
We reserve the right to modify, suspend or terminate this program at any time.
EXAMPLE:
Assume that you want to allocate a portion of your initial Purchase Payment
of $100,000 to the fixed investment option. You want the amount allocated to
the fixed investment option to grow to $100,000 in 7 years. If the 7-year
fixed investment option is offering a 5% interest rate, we will allocate
$71,069 to the 7-year fixed investment option to ensure that this amount
will grow to $100,000 at the end of the 7-year period. The remaining $28,931
may be allocated among the SELECT PORTFOLIO(S) or STRATEGY(IES), as
determined by you, to provide opportunity for greater growth.
VOTING RIGHTS
Anchor National is the legal owner of the Seasons Series Trust shares. However,
when an underlying portfolio solicits proxies in conjunction with a vote of
shareholders, we must obtain your instructions on how to vote those shares. We
vote all of the shares we own in proportion to your instructions. This includes
any shares we own on our own behalf. Should we determine that we are no longer
required to comply with these rules, we will vote the shares in our own right.
SUBSTITUTION
If any of the underlying portfolios become unavailable for investment, we may be
required to substitute shares of another investment portfolio. We will seek
prior approval of the SEC and give you notice before substituting shares.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
You can access money in your contract in two ways:
- by making a partial or total withdrawal, and/or;
- by receiving income payments during the Income Phase. SEE INCOME OPTIONS,
PAGE 24.
Generally, we deduct a withdrawal charge applicable to any total or partial
withdrawal and a market value adjustment if a withdrawal comes from the 3, 5, 7
or 10 year fixed investment options prior to the end of a guarantee period. If
you withdraw your entire contract value, we also deduct any applicable premium
taxes and a contract maintenance fee. SEE EXPENSES, PAGE 22. We calculate
charges due on a total withdrawal on the day after we receive your request and
other required paper work. We return your contract value less any applicable
fees and charges.
FREE WITHDRAWAL PROVISION
Your contract provides for a free withdrawal amount each year. A free withdrawal
amount is the portion of your account that we allow you to take out each year
without being charged a surrender penalty. However, upon a future full surrender
of your contract we will recoup any surrender charges which would have been due
if your prior free withdrawal(s) had not been free.
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<PAGE>
To determine your free withdrawal amount and your surrender charge, we refer to
two special terms. These are penalty free earnings and the total invested
amount.
The penalty-free earnings portion of your contract is simply your account value
less your total invested amount. The total invested amount is the total of all
Purchase Payments you have made into the contract less portions of some prior
withdrawals you made. The portions of prior withdrawals that reduce your total
invested amount are as follows:
1. Any free withdrawals in any year that were in excess of your penalty
free earnings and were based on the part of the Total Investment Amount
that was no longer subject to surrender charges at the time of the
withdrawal.
2. Any prior withdrawals of the Total Investment Amount on which you
already paid a surrender penalty, plus any surrender charge paid on such
a withdrawal.
When you make a withdrawal, we assume that it is taken from penalty-free
earnings first, then from the total invested amount on a first-in, first-out
basis. This means that you can also access your Purchase Payments which are no
longer subject to a surrender charge before those Purchase Payments which are
still subject to the surrender charge.
During the first year after we issue your contract your free withdrawal amount
is the greater of:
1. Your penalty-free earnings, or;
2. If you are participating in the Systematic Withdrawal program, a total
of 10% of your total invested amount less any withdrawals taken during
the contract year.
After the first contract year, you can take out the greater of the following
amounts each year:
1. Your penalty free earnings and any portion of your total invested amount
no longer subject to surrender charges, or;
2. 10% of the portion of your total invested amount that has been in your
contract for at least one year less any withdrawals taken during the
contract year.
Purchase payments, above and beyond the amount of your free withdrawal amount,
that are invested for less than 9 years and withdrawn will result in your paying
a penalty in the form of a surrender charge. The amount of the charge and how it
applies are discussed more fully below. You should consider, before purchasing
this contract, the effect this charge will have on your investment if you need
to withdraw more money than the free withdrawal amount. You should fully discuss
this decision with your financial advisor.
The minimum partial withdrawal amount is $1,000. We require that the value left
in any SELECT PORTFOLIO, FOCUSED PORTFOLIO, STRATEGY or fixed account be at
least $500 after the withdrawal. You must send a written withdrawal request.
Unless you provide us with different instructions, partial withdrawals will be
made in equal amounts from each SELECT PORTFOLIO, FOCUSED PORTFOLIO, STRATEGY
and the fixed investment option in which your contract is invested. Withdrawals
from fixed investment options prior to the end of the guarantee period may
result in a market value adjustment.
We may be required to suspend or postpone the payment of a withdrawal for any
period of time when: (1) the NYSE is closed (other than a customary weekend and
holiday closings); (2) trading with the NYSE is restricted; (3) an emergency
exists such that disposal of or determination of the value of shares of the
Portfolios is not reasonably practicable; (4) the SEC, by order, so permits for
the protection of contract owners.
Additionally, we reserve the right to defer payments for a withdrawal from a
fixed investment option. Such deferrals are limited to no longer than six
months.
20
<PAGE>
SYSTEMATIC WITHDRAWAL PROGRAM
If you elect, we use money in your contract to pay you monthly, quarterly,
semi-annual or annual payments during the Accumulation Phase. Electronic
transfer of these funds to your bank account is also available. The minimum
amount of each withdrawal is $250. There must be at least $500 remaining in your
contract at all times. Withdrawals may be taxable and a 10% IRS tax penalty may
apply if you are under age 59 1/2. Any withdrawals you make using this program
count against your free withdrawal amount as described above. Withdrawals in
excess of that amount may incur a withdrawal charge. There is no additional
charge for participating in this program.
The program is not available to everyone. Please check with our Annuity Service
Center, which can provide the necessary enrollment forms. We reserve the right
to modify, suspend or terminate this program at any time.
MINIMUM CONTRACT VALUE
Where permitted by state law, we may terminate your contract if both of the
following occur: (1) your contract is less than $500 as a result of withdrawals;
and (2) you have not made any Purchase Payments during the past three years. We
will provide you with sixty days written notice. At the end of the notice
period, we will distribute the contract's remaining value to you.
QUALIFIED CONTRACT OWNERS
Certain qualified plans restrict and/or prohibit your ability to withdraw money
from your contract. SEE TAXES, PAGE 30 for a more detailed explanation.
DEATH BENEFIT
- --------------------------------------------------------------------------------
If you die during the Accumulation Phase of your contract, we pay a death
benefit to your Beneficiary.
If at the time we issued your contract, you were 80 years old or younger, the
death benefit is the greatest of:
1. the value of your contract at the time we receive satisfactory proof of
death; or
2. total Purchase Payments less withdrawals (and any fees or charges
applicable to such withdrawals) in an amount proportionate to the amount
by which such withdrawals decreased contract values, compounded at a 4%
annual growth rate until the date of death (3% growth rate if 70 or older
at the time of contract issue); or
3. the value of your contract on the seventh contract anniversary, plus any
Purchase Payments and less withdrawals (and any fees or charges
applicable to such withdrawals) in an amount proportionate to the amount
by which such withdrawals decreased contract values, since the seventh
contract anniversary, all compounded at a 4% annual growth rate until the
date of death (3% growth rate if age 70 or older at the time of contract
issue); or
4. the maximum anniversary value on any contract anniversary prior to your
81st birthday. The anniversary value equals the value of your contract on
a contract anniversary plus any Purchase Payments and less any
withdrawals (and any fees or charges applicable to such withdrawals) in
an amount proportionate to the amount by which such withdrawals decreased
contract values, since that contract anniversary.
If at the time we issue your contract, you were 81 years old or older, the death
benefit is the greater of:
1. the value of your contract at the time we receive satisfactory proof of
death; or
21
<PAGE>
2. total Purchase Payments less withdrawals (and any fees or charges
applicable to such withdrawals) in an amount proportionate to the amount
by which such withdrawals decreased contract values, compounded at a 3%
annual growth rate until the date of death.
The death benefit is not paid after you switch to the Income Phase. If you die
during the Income Phase, your Beneficiary will receive any remaining guaranteed
income payments in accordance with the income option you choose. SEE INCOME
OPTIONS, PAGE 24.
You select the Beneficiary to receive any amounts payable on death. You may
change the Beneficiary at any time, unless you previously made an irrevocable
Beneficiary designation. A new Beneficiary designation is not effective until we
record the change.
The death benefit will be paid out when we receive adequate proof of death:
(1) a certified copy of a death certificate; (2) a certified copy of a decree of
court of competent jurisdiction as to the finding of death; (3) a written
statement by a medical doctor who attended the deceased at the time of death; or
(4) any other proof satisfactory to us. We may also require additional
documentation or proof in order for the death benefit to be paid.
The death benefit must begin payment immediately upon receipt of all necessary
documents and, in any event, must be paid within 5 years of the date of death.
The Beneficiary may, in the alternative, elect to have the death benefit payable
in the form of an annuity. If the Beneficiary elects an income option, it must
be paid over the Beneficiary's lifetime or for a period not extending beyond the
Beneficiary's life expectancy. Income payments must begin within one year of
your death. If the Beneficiary is the spouse of the owner, he or she can elect
to continue the contract at the then current value, rather than receive a death
benefit.
If the Beneficiary does not make a specific election as to how they want the
death benefit distributed within sixty days of our receipt of adequate proof of
death, it will be paid in a lump sum.
DEATH OF THE ANNUITANT
If the Annuitant dies before annuity payments begin, you can name a new
Annuitant. If no Annuitant is named within 30 days, you will become the
Annuitant. However, if the owner is a non-natural person (for example, a
corporation), then the death of the Annuitant will be treated as the death of
the owner, no new Annuitant may be named and the death benefit will be paid.
EXPENSES
- --------------------------------------------------------------------------------
There are charges and expenses associated with your contract. These charges and
expenses reduce your investment return. We will not increase the contract
maintenance fee or withdrawal charges under your contract. However the
investment charges under your contract may increase or decrease. Some states may
require that we charge less than the amounts described below.
INSURANCE CHARGES
If you are age 80 or younger when your contract is issued, the amount of this
charge is 1.40% annually of the value of your contract invested in the SELECT
PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or STRATEGY(IES). If you are are 81 or
older at the time of contract issue, the insurance charge is 1.52% annually of
the value of your contract invested in the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) and/or STRATEGY(IES).
22
<PAGE>
We deduct the charge daily, on a pro-rata basis, from the value of your contract
allocated to the SELECT PORTFOLIOS, FOCUSED PORTFOLIO(S) and/or STRATEGIES. The
insurance charge compensates us for the mortality and expense risks and the
costs of contract distribution assumed by Anchor National.
If these charges do not cover all of our expenses, we will pay the difference.
Likewise, if these charges exceed our expenses, we will keep the difference.
WITHDRAWAL CHARGES
During the Accumulation Phase you may make withdrawals from your contract.
However, a withdrawal charge may apply. We apply a withdrawal charge upon an
early withdrawal against each Purchase Payment you put into the contract. The
withdrawal charge equals a percentage of the Purchase Payment you take out of
the contract. The withdrawal charge percentage declines each year a purchase
payment is in the contract, as follows:
<TABLE>
<CAPTION>
YEAR 1 2 3 4 5 6 7 8 9 10
- --------------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Withdrawal Charge 9% 8% 7% 6% 6% 5% 4% 3% 2% 0%
</TABLE>
After a Purchase Payment has been in the contract for nine complete years, the
withdrawal charge no longer applies to that payment.
When calculating the withdrawal charge, we treat withdrawals as coming first
from the Purchase Payments that have been in your contract the longest. However,
for tax purposes, your withdrawals are considered earnings first, then Purchase
Payments.
Whenever possible, we deduct the withdrawal charge from the money remaining in
your contract from each of your investment options on a pro-rata basis. If you
withdraw all of your contract value, we deduct any applicable withdrawal charges
from the amount withdrawn.
The contract provides a free withdrawal amount every year. SEE ACCESS TO YOUR
MONEY PAGE 19.
We will not assess a withdrawal charge for money withdrawn to pay a death
benefit. We do not currently assess a withdrawal charge upon election to receive
income payments from your contract.
Withdrawals made prior to age 59 1/2 may result in tax penalties. SEE TAXES
PAGE 30.
INVESTMENT CHARGES
Charges are deducted from the assets of the investment portfolios underlying the
SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or STRATEGY(IES) for the advisory and
other expenses of the portfolios. THE FEE TABLE BEGINNING ON PAGE 4 ILLUSTRATES
THESE CHARGES AND EXPENSES. FOR MORE DETAILED INFORMATION ON THESE INVESTMENT
CHARGES, REFER TO THE PROSPECTUS FOR THE SEASONS SERIES TRUST, ATTACHED.
CONTRACT MAINTENANCE FEE
During the Accumulation Phase, we subtract a contract maintenance fee from your
account once per year. This charge compensates us for the cost of contract
administration. We will deduct the $35 ($30 in North Dakota) contract
maintenance fee on a pro-rata basis from your account value on your contract
anniversary. In the states of Oregon, Pennsylvania, Texas and Washington a
contract maintenance fee will be deducted pro-rata from the SELECT PORTFOLIOS,
FOCUSED PORTFOLIO(S) and/or STRATEGIES in which you are invested, only. If you
withdraw your entire contract value, we deduct the fee from that withdrawal.
If your contract value is $50,000 or more on your contract anniversary date, we
will waive the charge. This waiver is subject to change without notice.
23
<PAGE>
TRANSFER FEE
We currently permit fifteen free transfers between investment options, every
contract year. We charge you $25 for each transfer over fifteen in any one year
($10 in Pennsylvania and Texas). We deduct the transfer fee from the SELECT
PORTFOLIO(S), FOCUSED PORTFOLIO(S), STRATEGY and/or fixed investment option from
which you request the transfer. SEE INVESTMENT OPTIONS, PAGE 10.
INCOME PROTECTOR FEE
Please see page 27 of this prospectus for additional information regarding the
Income Protector Fee.
PREMIUM TAX
Certain states charge the Company a tax on the premiums you pay into the
contract. We deduct from your contract these premium tax charges. Currently we
deduct the charge for premium taxes when you take a full withdrawal or annuitize
the contract. In the future, we may assess this deduction at the time you put
Purchase Payment(s) into the contract or upon payment of a death benefit.
APPENDIX C provides more information about premium taxes.
INCOME TAXES
We do not currently deduct income taxes from your contract. We reserve the right
to do so in the future.
REDUCTION OR ELIMINATION OF CHARGES AND EXPENSES, AND ADDITIONAL AMOUNTS
CREDITED
Sometimes sales of the contracts to groups of similarly situated individuals may
lower our administrative and/or sales expenses. We reserve the right to reduce
or waive certain charges and expenses when this type of sale occurs. In
addition, we may also credit additional interest to policies sold to such
groups. We determine which groups are eligible for such treatment. Some of the
criteria we evaluate to make a determination are: size of the group; amount of
expected Purchase Payments; relationship existing between us and prospective
purchaser; nature of the purchase; length of time a group of contracts is
expected to remain active; purpose of the purchase and whether that purpose
increases the likelihood that our expenses will be reduced; and/or any other
factors that we believe indicate that administrative and/or sales expenses may
be reduced.
Anchor National may make such a determination regarding sales to its employees,
it affiliates' employees and employees of currently contracted broker-dealers;
its registered representatives and immediate family members of all of those
described.
We reserve the right to change or modify any such determination or the treatment
applied to a particular group, at any time.
INCOME OPTIONS
- --------------------------------------------------------------------------------
ANNUITY DATE
During the Income Phase, the money in your Contract is used to make regular
income payments to you. You may switch to the Income Phase any time after your
2nd contract anniversary. You select the month and year in which you want income
payments to begin. The first day of that month is the Annuity Date. You may
change your Annuity
24
<PAGE>
Date, so long as you do so at least seven days before the income payments are
scheduled to begin. Once you begin receiving income payments, you cannot change
your Income Option. Except as discussed under Option 5, once you begin receiving
income payments, you cannot otherwise access your money through a withdrawal or
surrender.
Income payments must begin on or before your 90th birthday or on your tenth
contract anniversary, whichever occurs later. If you do not choose an Annuity
Date, your income payments will automatically begin on this date. Certain states
may require your income payments to start earlier.
If the Annuity Date is past your 85th birthday, your contract could lose its
status as an annuity under Federal tax laws. This may cause you to incur adverse
tax consequences. In addition, certain Qualified contracts require you to take
minimum distributions after you reach age 70 1/2. SEE TAXES, PAGE 30.
INCOME OPTIONS
Currently, this Contract offers 5 Income Options. If you elect to receive income
payments but do not select an option, your income payments will be made in
accordance with option 4 for a period of 10 years. For income payments selected
for joint lives, we pay according to option 3.
We base our calculation of income payments on the life of the Annuitant and the
annuity rates set forth in your contract. As the contract owner, you may change
the Annuitant at any time prior to the Annuity Date. You must notify us if the
Annuitant dies before the Annuity Date and then designate a new Annuitant.
OPTION 1 - LIFE INCOME ANNUITY
This option provides income payments for the life of the Annuitant. Income
payments stop when the Annuitant dies.
OPTION 2 - JOINT AND SURVIVOR LIFE ANNUITY
This option provides income payments for the life of the Annuitant and for the
life of another designated person. Upon the death of either person, we will
continue to make income payments during the lifetime of the survivor. Income
payments stop whenever the survivor dies.
OPTION 3 - JOINT AND 100% SURVIVOR LIFE ANNUITY WITH 10 OR 20 YEAR PERIOD
CERTAIN
This option is similar to option 2 above, with an additional guarantee of
payments for at least 10 or 20 years. If the Annuitant and the Survivor die
before all of the payments have been made, the remaining payments are made to
the Beneficiary under your Contract.
OPTION 4 - LIFE ANNUITY WITH 10 OR 20 YEAR PERIOD CERTAIN
This option is similar to option 1 above. In addition, this option provides a
guarantee that income payments will be made for at least 10 or 20 years. You
select the number of years. If the Annuitant dies before all guaranteed income
payments are made, the remaining income payments go to the Beneficiary under
your Contract.
OPTION 5 - INCOME FOR A SPECIFIED PERIOD
This option provides income payments for a guaranteed period ranging from 5 to
30 years. If the Annuitant dies before all the guaranteed income payments are
made, the remaining income payments are made to the Beneficiary under your
contract. Additionally, if variable income payments are elected under this
option, you (or the
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<PAGE>
Beneficiary under the contract if the Annuitant dies prior to all guaranteed
payments being made) may redeem the contract value after the Annuity Date. The
amount available upon such redemption would be the discounted present value of
any remaining guaranteed payments.
The value of an Annuity Unit, regardless of the option chosen, takes into
account the Mortality and Expense Risk Charge. Since Option 5 does not contain
an element of mortality risk, no benefit is derived from this charge.
We make Income Payments on a monthly, quarterly, semi-annual or annual basis.
You instruct us to send you a check or to have the payments direct deposited
into your bank account. If state law allows, we distribute annuities with a
contract value of $5,000 or less in a lump sum. Also, if the selected income
option results in annuity payments of less than $50 per payment, we may decrease
the frequency of the payments, state law allowing.
ALLOCATION OF ANNUITY PAYMENTS
You can choose income payments that are fixed, variable or both. If payments are
fixed, Anchor National guarantees the amounts of each payment. If the payments
are variable, the amounts are not guaranteed. They will go up and/or down based
upon the performance of the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or
STRATEGY(IES) in which you invest.
FIXED OR VARIABLE INCOME PAYMENTS
You can choose income payments that are fixed, variable or both. If at the date
when income payments begin you are invested in the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) and/or STRATEGY(IES) only, your income payments will be variable.
If your money is only in fixed accounts at that time, your income payments will
be fixed in amount. If you are invested in both fixed and variable options at
the time you begin the Income Phase, a portion of your income payments will be
fixed and a portion will be variable.
INCOME PAYMENTS
Your income payments will vary if you are invested in the SELECT PORTFOLIO(S),
FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) after the Annuity date depending on
four things:
- for life options, your age when payments begin, and;
- the value of your contract in the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) and/or STRATEGY(IES) on the Annuity Date, and;
- the 3.5% assumed investment rate for variable income payments used in the
annuity table for the contract, and;
- the performance of the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or
STRATEGY(IES) in which you are invested during the time you receive income
payments.
If you are invested in both the fixed account options and the SELECT
PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) after the Annuity Date,
the allocation of funds between the fixed accounts and SELECT PORTFOLIO(S),
FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) also impacts the amount of your
annuity payments.
TRANSFERS DURING THE INCOME PHASE
During the Income Phase, one (1) transfer per month is permitted between the
SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and STRATEGY(IES). No other transfers
are allowed during the income phase.
26
<PAGE>
DEFERMENT OF PAYMENTS
We may defer making fixed payments for up to six months, or less if required by
law. Interest is credited to you during the deferral period.
Please read the Statement of Additional Information ("SAI") for a more detailed
discussion of the income options.
THE INCOME PROTECTOR
If you purchase your contract after July 5, 2000, you may elect the Income
Protector feature. The Income Protector feature provides a future "safety net"
which offers you the ability to receive a guaranteed fixed minimum retirement
income when you choose to begin receiving income payments. With the Income
Protector you can know the level of minimum income that will be available to you
upon annuitization, regardless of fluctuating market conditions. In order to
utilize the program, you must follow the provisions discussed below.
You are not required to use the Income Protector to receive income payments. The
general provisions of your contract provide other income options. However, we
will not refund fees paid for the Income Protector if you begin taking Income
Payments under the general provisions of your contract. YOU MAY NEVER NEED TO
RELY UPON INCOME PROTECTOR IF YOUR CONTRACT PERFORMS WITHIN A HISTORICALLY
ANTICIPATED RANGE. HOWEVER, PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Certain IRC restrictions on the income options available to qualified retirement
investors may have an impact on your ability to benefit from this feature.
Qualified investors should read NOTE TO QUALIFIED CONTRACT HOLDERS, below.
HOW DO WE DETERMINE THE AMOUNT OF YOUR MINIMUM GUARANTEED INCOME?
We base the amount of minimum retirement income available to you if you take
income payments using the Income Protector upon a calculation we call the Income
Benefit Base. At the time your enrollment in the Income Protector program
becomes effective, your Initial Income Benefit Base is equal to your contract
value. Your participation becomes effective on either the date of issue of the
contract (if the feature is elected at the time of application) or on the
contract anniversary following your enrollment in the program.
The Income Benefit Base is only a calculation. It does not represent a contract
value, nor does it guarantee performance of the SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS or STRATEGIES in which you invest.
Your Income Benefit Base increases if you make subsequent Purchase Payments and
decreases if you withdraw money from your contract. The exact Income Benefit
Base calculation is equal to (a) plus (b) minus (c) where:
(a) is equal to, for the first year of calculation, your contract value on
the date your participation became effective, and for each subsequent
year of calculation, the Income Benefit Base of your prior contract
anniversary, and;
(b) is equal to the sum of all subsequent Purchase Payments made into the
contract since the prior contract anniversary, and;
(c) is equal to all withdrawals and applicable fees, charges and any
negative MVA (but excluding administration fees, mortality and expense
charges and the fee for enrollment into the program) since the prior
contract anniversary, including premium taxes, in an amount proportionate
to the amount by which such withdrawals decreased your contract value.
27
<PAGE>
ENROLLING IN THE PROGRAM
If you decide that you want the protection offered by the Income Protector
Program, you must elect the option of your choice by completing the Income
Protector Election Form. You can not terminate your enrollment once elected.
ELECTING TO RECEIVE INCOME
In order to exercise the Income Protector feature, you may not begin the income
phase for at least nine years following the date your enrollment in the program
became effective. Further, you may begin taking income payments using the Income
Protector feature only within 30 days after the ninth or later contract
anniversary following the effective date of your enrollment in the Income
Protector program.
The contract anniversary prior to your election to begin receiving income
payments is your Income Benefit Date. We calculate your Income Benefit Base of
that date to use in determining your guaranteed minimum fixed retirement income.
To determine the minimum guaranteed retirement income available to you, we apply
your final Income Benefit Base to the annuity rates stated in your Income
Protector endorsement for the income option you select. You then choose if you
would like to receive the income annually, semi-annually, quarterly or monthly
for the time guaranteed under your selected income option. Your final Income
Benefit Base is equal to (a) minus (b) where:
(a) is you Income Benefit Base as of your Income Benefit Date, and;
(b) is any partial withdrawals of contract value and any charges applicable
to those withdrawals (including any negative MVA) and any withdrawal
charges otherwise applicable, calculated as if you fully surrender your
contract as of the Income Benefit Date, and any applicable premium taxes.
The income options available when using the income protector feature to receive
your retirement income are:
- Life Annuity with 10 years guaranteed, or
- Joint and 100% Survivor Life Annuity with 20 years guaranteed
At the time you elect to begin receiving income payments, we will calculate your
income payments using both your income benefit base and your contract value. We
will use the same income option for each calculation; however, the annuity
factors used to calculate your income under the Income Protector feature will be
different. You will receive whichever provides a greater stream of income. If
you elect to receive income payments using the Income Protector feature your
income payments will be fixed in amount.
NOTE TO QUALIFIED CONTRACT HOLDERS
Qualified contracts generally require that you select an income option that does
not exceed your life expectancy. That restriction, if it applies to you, may
limit the benefit of the Income Protector program. To utilize the Income
Protector, you must take income payments under one of the two income options
described above. If those income options exceed your life expectancy, you may be
prohibited from receiving your guaranteed fixed income under the program. If you
own a qualified contract to which this restriction applies and you elect the
Income Protector program, you may pay for this minimum guarantee and not be able
to realize the benefit.
Generally, for qualified contracts:
- for the Life Annuity with 10 years guaranteed, you must annuitize before
age 79, and;
- for the Joint and 100% Survivor Annuity with 20 years guaranteed, both
annuitants must be 70 or younger or one of the annuitants must be 65 or
younger upon annuitization. Other age combinations may be available.
28
<PAGE>
You may wish to consult your tax advisor for information concerning your
particular circumstances.
FEES ASSOCIATED WITH THE INCOME PROTECTOR PROGRAM
If you elect to participate in the Income Protector Program we deduct a fee
equal to 0.10% of your Income Benefit Base from your contract value on each
contract anniversary beginning with the contract anniversary following the
anniversary on which your enrollment in the program becomes effective. We will
deduct this charge from your contract value on every contract anniversary up to
and including your Income Benefit Date. Additionally, if you fully surrender
your contract prior to your contract anniversary, we will deduct the fee at the
time of surrender based on your Income Benefit Base as of the surrender date.
Once elected, the Income Protector Program and its corresponding charges may not
be terminated until full surrender or annuitization of the contract occurs.
HYPOTHETICAL EXAMPLE OF THE OPERATION OF THE INCOME PROTECTOR PROGRAM:
This table assumes a $100,000 initial investment in a non-qualified contract
with no further premiums, no withdrawals, and no premium taxes; and the election
of Income Protector at contract issue.
<TABLE>
<CAPTION>
ANNUAL INCOME IF YOU ANNUITIZE ON THE FOLLOWING CONTRACT ANNIVERSARIES:
IF AT ISSUE YOU ARE... 1-8 9 10 15 20
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Male, Age 60* N/A 6,480 6,672 7,716 8,832
- ----------------------------------------------------------------------------------------------------
Female, Age 60* N/A 5,700 5,880 6,900 8,112
- ----------------------------------------------------------------------------------------------------
M and F, Age 60** N/A 4,920 5,028 5,544 5,928
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Life Annuity with 10 Year Period Certain
** Joint and 100% Survivor Annuity with 20 Year Period Certain
The Income Protector Program is not available in California and may not be
available in other states. Check with your financial adviser for availability in
your state.
We reserve the right to modify, suspend or terminate the program at any time.
TAXES
- --------------------------------------------------------------------------------
NOTE: WE PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL DISCUSSION OF
THE SUBJECT. IT IS NOT TAX ADVICE. WE CAUTION YOU TO SEEK COMPETENT TAX ADVICE
ABOUT YOUR OWN CIRCUMSTANCES. WE DO NOT GUARANTEE THE TAX STATUS OF YOUR
ANNUITY. TAX LAWS CONSTANTLY CHANGE, THEREFORE WE CANNOT GUARANTEE THAT THE
INFORMATION CONTAINED HEREIN IS COMPLETE AND/OR ACCURATE.
ANNUITY CONTRACTS IN GENERAL
The Internal Revenue Code ("IRC") provides for special rules regarding the tax
treatment of annuity contracts. Generally, taxes on the earnings in your annuity
contract are deferred until you take the money out. Qualified retirement
investments automatically provide tax deferral regardless of whether the
underlying contract is an annuity. Different rules apply depending on how you
take the money out and whether your contract is Qualified or Non-qualified.
If you do not purchase your contract under a pension plan, a specially sponsored
employer program or an individual retirement account, your contract is referred
to as a Non-qualified contract. A Non-qualified contract
29
<PAGE>
receives different tax treatment than a Qualified contract. In general, your
cost basis in a Non-qualified contract is equal to the Purchase Payments you put
into the contract. You have already been taxed on the cost basis in your
contract.
If you purchase your contract under a pension plan, a specially sponsored
employer program or as an individual retirement account, your contract is
referred to as a Qualified contract. Examples of qualified plans are: Individual
Retirement Accounts ("IRAs"), Roth IRAs, Tax-Sheltered Annuities (referred to as
403(b) contracts), H.R. 10 Plans (referred to as Keogh Plans) and pension and
profit sharing plans, including 401(k) plans. Typically you have not paid any
tax on the Purchase Payments used to buy your contract and therefore, you have
no cost basis in your contract.
TAX TREATMENT OF DISTRIBUTIONS--NON-QUALIFIED CONTRACTS
If you make a withdrawal from a Non-qualified contract, the IRC treats such a
withdrawal as first coming from the earnings and then as coming from your
Purchase Payments. For annuity payments, any portion of each payment that is
considered a return of your Purchase Payment will not be taxed. Withdrawn
earnings are treated as income to you and are taxable. The IRC provides for a
10% penalty tax on any earnings that are withdrawn other than in conjunction
with the following circumstances: (1) after reaching age 59 1/2; (2) when paid
to your Beneficiary after you die; (3) after you become disabled (as defined in
the IRC); (4) in a series of substantially equal installments made for your life
or for the joint lives of you and you Beneficiary; (5) under an immediate
annuity; or (6) which come from Purchase Payments made prior to August 14, 1982.
TAX TREATMENT OF DISTRIBUTIONS--QUALIFIED CONTRACTS
Generally, you have not paid any taxes on the Purchase Payments used to buy a
Qualified contract. Any amount of money you take out as a withdrawal or as
income payments is taxable income. The IRC further provides for a 10% penalty
tax on any withdrawal or income payment paid to you other than in conjunction
with the following circumstances: (1) after reaching age 59 1/2; (2) when paid
to your Beneficiary after you die; (3) after you become disabled (as defined in
the IRC); (4) in a series of substantially equal installments made for your life
or for the joint lives of you and your Beneficiary; (5) to the extent such
withdrawals do not exceed limitations set by the IRC for amounts paid during the
taxable year for medical care; (6) to fund higher education expenses (as defined
in IRC); (7) to fund certain first-time home purchase expenses; and, except in
the case of an IRA; (8) when you separate from service after attaining age 55;
and (9) when paid to an alternate payee pursuant to a qualified domestic
relations order.
The IRC limits the withdrawal of Purchase Payments from certain Tax-Sheltered
Annuities. Withdrawals can only be made when an owner: (1) reaches age 59 1/2;
(2) leaves his or her job; (3) dies; (4) becomes disabled (as defined in the
IRC); or (5) in the case of hardship. In the case of hardship, the owner can
only withdraw Purchase Payments.
MINIMUM DISTRIBUTIONS
If you have a Qualified contract, distributions must begin by April 1 of the
calendar year following the later of (1) the calendar year in which you attain
age 70 1/2 or (2) the calendar year in which you retire. Failure to satisfy the
minimum distribution requirements may result in a tax penalty. You should
contact your tax advisor for more information.
We currently waive surrender charges and MVA on withdrawals taken to meet
minimum distribution requirements. Current operational practice is to provide a
free withdrawal of the greater of the contract's maximum penalty free amount or
the required minimum distribution amount for a particular contract (but not
both).
30
<PAGE>
DIVERSIFICATION
The IRC imposes certain diversification requirements on the underlying
investments for a variable annuity. We believe that the underlying Portfolios'
management monitors the variable Portfolios so as to comply with these
requirements. To be treated as a variable annuity for tax purposes, the
underlying investments must meet these requirements.
The diversification regulations do not provide guidance as to the circumstances
under which you, because of the degree of control you exercise over the
underlying investments, and not Anchor National, would be considered the owner
of the shares of the Portfolios. It is unknown to what extent owners are
permitted to select investments, to make transfers among Portfolios or the
number and type of Portfolios owners may select from. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However, if such guidance is considered not to be a
new position, it may be applied retroactively. This would mean you, as the owner
of the contract, could be treated as the owner of the underlying variable
investment Portfolios. Due to the uncertainty in this area, we reserve the right
to modify the contract in an attempt to maintain favorable tax treatment.
PERFORMANCE
- --------------------------------------------------------------------------------
From time to time we will advertise the performance of the SELECT PORTFOLIO(S),
FOCUSED PORTFOLIO(S) and/or STRATEGY(IES). Any such performance results are
based on historical earnings and are not intended to indicate future
performance.
We advertise the Cash Management SELECT PORTFOLIO's yield and effective yield.
In addition, the other SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and
STRATEGY(IES) advertise total return, gross yield and yield-to-maturity. These
figures represent past performance of the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) and STRATEGY(IES). These performance numbers do not indicate future
results.
We may show performance of each SELECT PORTFOLIO, FOCUSED PORTFOLIO(S) and/or
STRATEGY in comparison to various appropriate indexes and the performance of
other similar variable annuity products with similar objectives as reported by
such independent reporting services as Morningstar, Inc., Lipper Analytical
Services, Inc. and the Variable Annuity Research Data Service ("VARDS").
Please see the Statement of Additional Information for additional information
regarding the methods used to calculate performance data.
Anchor National may also advertise the rating and other information assigned to
it by independent industry ratings organizations. Some of those organizations
are A.M. Best Company ("A.M. Best"), Moody's Investor's Service ("Moody's"),
Standard & Poor's Insurance Rating Services ("S&P"), and Duff & Phelps. A.M.
Best's and Moody's ratings reflect their current opinion of our financial
strength and performance in comparison to others in the life and health
insurance industry. S&P's and Duff & Phelps' ratings measure the ability of an
insurance company to meet its obligations under insurance policies it issues.
These two ratings do not measure the insurer's ability to meet non-policy
obligations. Ratings in general do not relate to the performance of the variable
Portfolios.
OTHER INFORMATION
- --------------------------------------------------------------------------------
ANCHOR NATIONAL
Anchor National is a stock life insurance company originally organized under the
laws of the state of California in April, 1965. On January 1, 1996, Anchor
National redomesticated under the laws of the state of Arizona.
31
<PAGE>
Anchor National and its affiliates, SunAmerica Life Insurance Company, First
SunAmerica Life Insurance Company, CalAmerica Life Insurance Company, SunAmerica
National Life Insurance Company, SunAmerica Asset Management, Resources Trust
Company, and the SunAmerica Financial Network, Inc. (comprising six wholly owned
broker-dealers), specialize in retirement savings and investment products and
services. Business focuses include, fixed and variable annuities, mutual funds,
broker-dealer services and trust administration services.
THE SEPARATE ACCOUNT
Anchor National originally established a separate account, Variable Annuity
Account Five (the "Separate Account"), under Arizona law on July 8, 1996. The
Separate Account is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940, as amended.
Anchor National owns the assets in the Separate Account. However, the assets in
the Separate Account are not chargeable with liabilities arising out of any
other business conducted by Anchor National. Income gains and losses (realized
and unrealized) resulting from assets in the Separate Account are credited to or
charged against the Separate Account without regard to other income, gains or
losses of Anchor National.
CUSTODIAN
State Street Bank and Trust Company, 255 Franklin Street, Boston, Massachusetts
02110, serves as the custodian of the assets of the Separate Account. Anchor
National pays State Street Bank for services provided, based on a schedule of
fees.
THE GENERAL ACCOUNT
Money allocated to the fixed account options goes into Anchor National's general
account. The general account consists of all of Anchor National's assets other
than assets attributable to a separate account. All of the assets in the general
account are chargeable with the claims of any Anchor National contract holders
as well as all of its creditors. The general account funds are invested as
permitted under state insurance laws.
DISTRIBUTION OF THE CONTRACT
Registered representatives of broker-dealers sell the contract. We pay
commissions to these representatives for the sale of the contracts. We do not
expect the total commissions to exceed 7.5% of your Purchase Payments. We may
also pay a bonus to representatives for contracts which stay active for a
particular period of time, in addition to standard commissions. We do not deduct
commissions paid to registered representatives directly from your Purchase
Payments.
From time to time, we may pay or allow additional promotional incentives in the
form of cash or other compensation. We reserve the right to offer these
additional incentives only to certain broker-dealers that sell or are expected
to sell, certain minimum amounts of the contract, or other contracts offered by
us. Promotional incentives may change at any time.
SunAmerica Capital Services, Inc., 733 Third Avenue, 4th Floor, New York, New
York 10017 distributes the contracts. SunAmerica Capital Services is an
affiliate of Anchor National, and is a registered as a broker-dealer under the
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc.
No underwriting fees are paid in connection with the distribution of the
contracts.
32
<PAGE>
ADMINISTRATION
We are responsible for the administrative servicing of your contract. During the
accumulation phase, you will receive confirmation of transactions within your
contract. Transactions made pursuant to contractual or systematic agreements,
such as deduction of the annual maintenance fee and dollar cost averaging, may
be confirmed quarterly. Purchase payments received through the automatic payment
plan or a salary reduction arrangement, may also be confirmed quarterly. For all
other transactions, we send confirmations immediately.
During the accumulation and income phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values. Please
contact our Annuity Service Center at 1-800-445-SUN2, if you have any comment,
question or service request.
We send out transaction confirmations and quarterly statements. It is your
responsibility to review these documents carefully and notify us of any
inaccuracies immediately. We investigate all inquiries. To the extent that we
believe we made an error, we retroactively adjust your contract, provided you
notify us within 30 days of receiving the transaction confirmation or quarterly
statement. Any other adjustments we deem warranted are made as of the time we
receive notice of the error.
YEAR 2000
The year 2000 issue arose from computer programs written using two digits rather
than four digits to define the applicable year. This possibly could have cause a
failure of the information technology systems (IT systems) and other equipment
containing imbedded technology (non-IT systems) in the year 2000. The Company
implemented a plan to address the Year 2000 issue and to assess Year 2000 issues
relating to third parties with which the Company has critical relationships. The
Company's cost to make necessary repairs had no significant impact on its
results of operations. The Company has not experienced any business disruption
from the Year 2000 issue. Its IT and non-IT systems were compliant on January 1,
2000, and there have been no problems related to any third parties compliance.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Separate Account. Anchor
National and its subsidiaries engage in various kinds of routine litigation. In
management's opinion, these matters are not of material importance to their
respective total assets nor are they material with respect to the Separate
Account.
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
The consolidated financial statements of Anchor National Life Insurance Company
as of December 31, 1999, December 31, 1998, and September 30, 1998 and for the
year ended December 31, 1999, and for the three months ended December 31, 1998,
and for each of the two fiscal years in the period ended September 30, 1998, and
the financial statements of Variable Annuity Account Five (Portion Relating to
the SEASONS SELECT Variable Annuity), as of March 31, 1999 and for the period
from inception to March 31, 1999 are included in the Statement of Additional
Information and have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
33
<PAGE>
TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
Separate Account............................................ 3
General Account............................................. 4
Performance Data............................................ 4
Annuity Payments............................................ 5
Annuity Unit Values......................................... 5
Taxes....................................................... 8
Distribution of Contracts................................... 12
Financial Statements........................................ 13
</TABLE>
34
<PAGE>
APPENDIX A - CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
[TO BE UPDATED BY AMENDMENT]
<TABLE>
<CAPTION>
STRATEGIES INCEPTION TO 3/31/99
- ------------------------------------------------------------ ----------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------
Growth (Inception Date 3/4/99)
Beginning AUV............................................. (a) 15.05
(b) 0
End AUV................................................... (a) 15.89
(b) 0
Ending Number of AUs...................................... (a) 31,169
(b) 0
- --------------------------------------------------------------------------------------
Moderate Growth (Inception Date 3/3/99)
Beginning AUV............................................. (a) 14.25
(b) 0
End AUV................................................... (a) 15.09
(b) 0
Ending Number of AUs...................................... (a) 93,136
(b) 0
- --------------------------------------------------------------------------------------
Balanced Growth (Inception Date 3/5/99)
Beginning AUV............................................. (a) 13.80
(b) 0
End AUV................................................... (a) 14.05
(b) 0
Ending Number of AUs...................................... (a) 85,553
(b) 0
- --------------------------------------------------------------------------------------
Conservative Growth (Inception Date 3/5/99)
Beginning AUV............................................. (a) 13.03
(b) 13.25
End AUV................................................... (a) 13.21
(b) 13.21
Ending Number of AUs...................................... (a) 33,892
(b) 5,689
- --------------------------------------------------------------------------------------
</TABLE>
AUV-Accumulation Unit Value
AU-Accumulation Units
(a) Reflects age 80 or younger
(b) Reflects age 81 or older
A-1
<PAGE>
[TO BE UPDATED BY AMENDMENT]
<TABLE>
<CAPTION>
SELECT PORTFOLIOS INCEPTION TO 3/31/99
- ------------------------------------------------------------ ----------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------
Large Cap Growth (Inception Date 3/1/99)
Beginning AUV............................................. (a) 10.00
(b) 0
End AUV................................................... (a) 10.68
(b) 0
Ending Number of AUs...................................... (a) 85,647
(b) 0
- --------------------------------------------------------------------------------------
Large Cap Composite (Inception Date 3/1/99)
Beginning AUV............................................. (a) 10.00
(b) 0
End AUV................................................... (a) 10.41
(b) 0
Ending Number of AUs...................................... (a) 33,347
(b) 0
- --------------------------------------------------------------------------------------
Large Cap Value (Inception Date 3/1/99)
Beginning AUV............................................. (a) 10.00
(b) 0
End AUV................................................... (a) 10.32
(b) 0
Ending Number of AUs...................................... (a) 34,004
(b) 0
- --------------------------------------------------------------------------------------
Mid Cap Growth (Inception Date 3/1/99)
Beginning AUV............................................. (a) 10.00
(b) 0
End AUV................................................... (a) 10.62
(b) 0
Ending Number of AUs...................................... (a) 27,096
(b) 0
- --------------------------------------------------------------------------------------
Mid Cap Value (Inception Date 3/1/99)
Beginning AUV............................................. (a) 10.00
(b) 0
End AUV................................................... (a) 10.10
(b) 0
Ending Number of AUs...................................... (a) 11,278
(b) 0
- --------------------------------------------------------------------------------------
</TABLE>
AUV-Accumulation Unit Value
AU-Accumulation Units
(a) Reflects age 80 or younger
(b) Reflects age 81 or older
A-2
<PAGE>
<TABLE>
<CAPTION>
SELECT PORTFOLIOS INCEPTION TO 3/31/99
- ------------------------------------------------------------ ----------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------
Small Cap (Inception Date 3/1/99)
Beginning AUV............................................. (a) 10.00
(b) 0
End AUV................................................... (a) 10.35
(b) 0
Ending Number of AUs...................................... (a) 22,807
(b) 0
- --------------------------------------------------------------------------------------
International Equity (Inception Date 3/1/99)
Beginning AUV............................................. (a) 10.00
(b) 0
End AUV................................................... (a) 10.51
(b) 0
Ending Number of AUs...................................... (a) 23,961
(b) 0
- --------------------------------------------------------------------------------------
Diversified Fixed Income (Inception Date 3/10/99)
Beginning AUV............................................. (a) 10.00
(b) 0
End AUV................................................... (a) 10.02
(b) 0
Ending Number of AUs...................................... (a) 31,762
(b) 0
- --------------------------------------------------------------------------------------
Cash Management (Inception Date 3/26/99)
Beginning AUV............................................. (a) 10.00
(b) 0
End AUV................................................... (a) 10.00
(b) 0
Ending Number of AUs...................................... (a) 970
(b) 0
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOCUSED PORTFOLIOS
- ------------------------------------------------------------ ------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------
Focus Growth
- ----------------------------------------------------------------------------------
</TABLE>
AUV-Accumulation Unit Value
AU-Accumulation Units
(a) Reflects age 80 or younger
(b) Reflects age 81 or older
A-3
<PAGE>
APPENDIX B - MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------
The market value adjustment reflects the impact that changing interest rates
have on the value of money invested at a fixed interest rate. The longer the
period of time remaining in the term you initially agreed to leave your money in
the fixed investment option, the greater the impact of changing interest rates.
The impact of the market value adjustment can be either positive or negative,
and is computed by multiplying the amount withdrawn, transferred or annuitized
by the following factor:
[(1+I/(1+J+L)](to the power of N/12) - 1
THE MARKET VALUE ADJUSTMENT FORMULA
MAY DIFFER IN CERTAIN STATES
where:
I is the interest rate you are earning on the money invested in
the fixed investment option;
J is the interest rate then currently available for the period
of time equal to the number of years remaining in the term you initially agreed
to leave your money in the fixed investment option; and
L is equal to 0.005, except in Pennsylvania where it is equal to
zero and Florida where it is equal to .0025.
N is the number of full months remaining in the term you
initially agreed to leave your money in the fixed investment option.
EXAMPLES OF THE MARKET VALUE ADJUSTMENT
The examples below assume the following:
(1) You made an initial Purchase Payment of $10,000 and allocated it to the
10-year fixed investment option at a rate of 5%;
(2) You make a partial withdrawal of $4,000 when 1 year (12 months) remain
in the 10-year term you initially agreed to leave your money in the fixed
investment option (N=12); and
(3) You have not made any other transfers, additional Purchase Payments, or
withdrawals.
No withdrawal charges are reflected because your Purchase Payment has been in
the contract for nine full years. If a withdrawal charge applies, it is deducted
before the market value adjustment. The market value adjustment is assessed on
the amount withdrawn less any withdrawal charges.
NEGATIVE ADJUSTMENT
Assume that on the date of withdrawal, the interest rate in effect for new
Purchase Payments in the 1-year fixed investment option is 6%.
The market value adjustment factor is
= [(1+I)/(1+J+0.005)](to the power of N/12) - 1
= [(1.05)/(1.06+0.005)](to the power of 12/12) - 1
= (0.985915)(1) - 1
= 0.985915 - 1
= -0.014085
The requested withdrawal amount is multiplied by the market value adjustment
factor to determine the market value adjustment:
$4,000 X (-0.014085) = -$56.34
B-1
<PAGE>
$56.34 represents the market value adjustment that will be deducted from the
money remaining in the 10-year fixed investment option.
POSITIVE ADJUSTMENT
Assume that on the date of withdrawal, the interest rate in effect for a new
Purchase Payments in the 1-year fixed investment option is 4%.
The market value adjustment factor is
= [(1+I/(1+J+0.005)](N/12) - 1
= [(1.05)/(1.04+0.005)](12/12) - 1
= (1.004785)1 - 1
= 1.004785 - 1
= +0.004785
The requested withdrawal amount is multiplied by the market value adjustment
factor to determine the market value adjustment:
$4,000 x (+0.004785) = +$19.14
$19.14 represents the market value adjustment that would be added to your
withdrawal.
B-2
<PAGE>
APPENDIX C - PREMIUM TAXES
- --------------------------------------------------------------------------------
Premium taxes vary according to the state and are subject to change without
notice. In many states, there is no tax at all. Listed below are the current
premium tax rates in those states that assess a premium tax. For current
information, you should consult your tax adviser.
<TABLE>
<CAPTION>
QUALIFIED NON-QUALIFIED
STATE CONTRACT CONTRACT
- ----- --------- -------------
<S> <C> <C>
California.................................................. 0.50% 2.35%
Maine....................................................... 0% 2.0%
Nevada...................................................... 0% 3.5%
South Dakota................................................ 0% 1.25%
West Virginia............................................... 1.0% 1.0%
Wyoming..................................................... 0% 1.0%
</TABLE>
C-1
<PAGE>
Please forward a copy (without charge) of the Seasons Select Variable Annuity
Statement of Additional Information to:
(Please print or type and fill in all information.)
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City/State/Zip
- --------------------------------------------------------------------------------
Date: ___________________ Signed: _____________________________________________
Return to: Anchor National Life Insurance Company, Annuity Service Center,
P.O. Box 52499, Los Angeles, California 90054-0299
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FIXED AND VARIABLE GROUP DEFERRED ANNUITY CONTRACTS ISSUED BY
VARIABLE ANNUITY ACCOUNT FIVE
(PORTION RELATING TO THE SEASONS SELECT VARIABLE ANNUITY)
DEPOSITOR: ANCHOR NATIONAL LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus; it should be read
with the prospectus dated July 5, 2000, relating to the annuity contracts
described above, a copy of which may be obtained without charge by calling
800/445-SUN2 or by written request addressed to:
ANCHOR NATIONAL LIFE INSURANCE COMPANY
ANNUITY SERVICE CENTER
PO. BOX 54299
LOS ANGELES, CALIFORNIA 90054-0299
THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS JULY 5, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Separate Account............................................ 3
General Account............................................. 3
Performance Data............................................ 4
Annuity Payments............................................ 7
Annuity Unit Values......................................... 7
Taxes....................................................... 10
Distribution of Contracts................................... 14
Financial Statements........................................ 14
</TABLE>
2
<PAGE>
SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
Variable Annuity Account Five was originally established by Anchor National Life
Insurance Company (the "Company") on July 3, 1996 pursuant to the provisions of
Arizona law, as a segregated asset account of the Company. The separate account
meets the definition of a "separate account" under the federal securities laws
and is registered with the SEC as a unit investment trust under the Investment
Company Act of 1940. This registration does not involve supervision of the
management of the separate account or the Company by the SEC.
The assets of the separate account are the property of the Company. However, the
assets of the separate account, equal to its reserves and other contract
liabilities, are not chargeable with liabilities arising out of any other
business the Company may conduct.
Income, gains, and losses, whether or not realized, from assets allocated to the
separate account are credited to or charged against the separate account without
regard to other income, gains, or losses of the Company.
The separate account is divided into SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and
STRATEGIES, with the assets of each SELECT PORTFOLIO, FOCUSED PORTFOLIO and
STRATEGY invested in the shares of one or more underlying investment portfolios.
The Company does not guarantee the investment performance of the separate
account, its SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and STRATEGIES or the
underlying investment portfolios. Values allocated to the separate account and
the amount of variable annuity payments will vary with the values of shares of
the underlying investment portfolios, and are also reduced by insurance charges
and fees.
The basic objective of a variable annuity contract is to provide variable
annuity payments which will be to some degree responsive to changes in the
economic environment, including inflationary forces and changes in rates of
return available from various types of investments. The contract is designed to
seek to accomplish this objective by providing that variable annuity payments
will reflect the investment performance of the separate account with respect to
amounts allocated to it both before and after the Annuity Date. Since the
separate account is always fully invested in shares of the underlying investment
portfolios, its investment performance reflects the investment performance of
those entities. The values of such shares held by the separate account fluctuate
and are subject to the risks of changing economic conditions as well as the risk
inherent in the ability of the underlying funds' managements to make necessary
changes in their SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and STRATEGIES to
anticipate changes in economic conditions. Therefore, the owner bears the entire
investment risk that the basic objectives of the contract may not be realized,
and that the adverse effects of inflation may not be lessened. There can be no
assurance that the aggregate amount of variable annuity payments will equal or
exceed the Purchase Payments made with respect to a particular account for the
reasons described above, or because of the premature death of an Annuitant.
Another important feature of the contract related to its basic objective is the
Company's promise that the dollar amount of variable annuity payments made
during the lifetime of the Annuitant will not be adversely affected by the
actual mortality experience of the Company or the actual expenses incurred by
the Company in excess of expense deductions provided for in the contract
(although the Company does not guarantee the amounts of the variable annuity
payments).
GENERAL ACCOUNT
- --------------------------------------------------------------------------------
The General Account is made up of all of the general assets of the Company other
than those allocated to the separate account or any other segregated asset
account of the Company. A Purchase Payment may be allocated to the one, three,
five, seven or ten year fixed investment option and/or the one year or 6-month
DCA fixed
3
<PAGE>
account(s) available in connection with the general account, as elected by the
owner purchasing a contract. Assets supporting amounts allocated to a fixed
investment option become part of the Company's general account assets and are
available to fund the claims of all classes of customers of the Company, as well
as of its creditors. Accordingly, all of the Company's assets held in the
general account will be available to fund the Company's obligations under the
contracts as well as such other claims.
The Company will invest the assets of the general account in the manner chosen
by the Company and allowed by applicable state laws regarding the nature and
quality of investments that may be made by life insurance companies and the
percentage of their assets that may be committed to any particular type of
investment. In general, these laws permit investments, within specified limits
and subject to certain qualifications, in federal, state and municipal
obligations, corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments.
PERFORMANCE DATA
- --------------------------------------------------------------------------------
From time to time the separate account may advertise the Cash Management
Portfolio's "yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Cash Management Portfolio refers to the net income generated for
a contract funded by an investment in the Portfolio (which invests in shares of
the Cash Management Portfolio of Seasons Series Trust) over a seven-day period
(which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the
Portfolio is assumed to be reinvested at the end of each seven day period. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. Neither the yield nor the
effective yield takes into consideration the effect of any capital changes that
might have occurred during the seven day period, nor do they reflect the impact
of premium taxes or any withdrawal charges. The impact of other recurring
charges (including the mortality and expense risk charge, distribution expense
charge and contract maintenance fee) on both yield figures is, however,
reflected in them to the same extent it would affect the yield (or effective
yield) for a contract of average size.
The Separate Account may advertise "total return" data for its SELECT
PORTFOLIOS, FOCUSED PORTFOLIOS and STRATEGIES. Total return figures are based on
historical data and are not intended to indicate future performance. The "total
return" for a SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY is a computed rate
of return that, when compounded annually over a stated period of time and
applied to a hypothetical initial investment in a contract funded by that SELECT
PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY made at the beginning of the period,
will produce the same contract value at the end of the period that the
hypothetical investment would have produced over the same period (assuming a
complete redemption of the contract at the end of the period.) The effect of
applicable Withdrawal Charges due to the assumed redemption will be reflected in
the return figures, but may be omitted in additional return figures given for
comparison.
CASH MANAGEMENT PORTFOLIO
Inception of the Cash Management portfolio occurred on March 26, 1999, for
contracts issued to those under age 80 and on April 8, 1999, for contracts
issued to those over age 80. The annualized current yield and effective yield
for the Cash Management Portfolio for the seven day period ended March 31, 2000,
were as follows:
[TO BE UPDATED BY AMENDMENT]
<TABLE>
<CAPTION>
CURRENT YIELD EFFECTIVE YIELD
------------- ---------------
<S> <C> <C>
A. Issue Age Under 80..................................... 3.45 3.51
B. Issue Age Over 80...................................... 3.24 3.29
</TABLE>
4
<PAGE>
Current yield is computed by first determining the Base Period Return
attributable to a hypothetical contract having a balance of one Accumulation
Unit at the beginning of a 7 day period using the formula:
Base Period Return = (EV-SV-CMF)/(SV)
where:
SV = value of one Accumulation Unit at the start of a 7 day period
EV = value of one Accumulation Unit at the end of the 7 day period
CMF = an allocated portion of the $35 annual Contract Maintenance Fee,
prorated for 7 days
The change in the value of an Accumulation Unit during the 7 day period reflects
the income received minus any expenses accrued, during such 7 day period. The
Contract Maintenance Fee (CMF) is first allocated among the SELECT PORTFOLIOS,
FOCUSED PORTFOLIOS and/or STRATEGIES and the general account so that each SELECT
PORTFOLIO'S, FOCUSED PORTFOLIO'S and/or STRATEGY's allocated portion of the fee
is proportional to the percentage of the number of accounts that have money
allocated to that SELECT PORTFOLIO, FOCUSED PORTFOLIO and/or STRATEGY. The fee
is further reduced, for purposes of the yield computation, by multiplying it by
the ratio that the value of the hypothetical contract bears to the value of an
account of average size for contracts funded by the Cash Management Portfolio.
Finally, as is done with the other charges discussed above, the result is
multiplied by the fraction 7/365 to arrive at the portion attributable to the 7
day period.
The current yield is then obtained by annualizing the Base Period Return:
Current Yield = (Base Period Return) x (365/7)
OTHER PORTFOLIOS
The Portfolios of the separate account other than the Cash Management Portfolio
compute their performance data as "total return."
TOTAL RETURN FIGURES ARE BASED ON HISTORICAL DATA AND ARE NOT INTENDED TO
INDICATE FUTURE PERFORMANCE.
Total return for a Portfolio represents a single computed annual rate of return
that, when compounded annually over a specified time period (one, five, and ten
years, or since inception) and applied to a hypothetical initial investment in a
contract funded by that Portfolio made at the beginning of the period, will
produce the same contract value at the end of the period that the hypothetical
investment would have produced over the same period. The total rate of return
(T) is computed so that it satisfies the formula:
P (1 + T)n = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1,5 or 10 year period as of the end of the period
(or fractional portion thereof)
5
<PAGE>
The total return figures reflect the effect of both non-recurring and recurring
charges. The applicable Withdrawal Charge (if any) is deducted as of the end of
the period, to reflect the effect of the assumed complete redemption. Total
return figures are derived from historical data and are not intended to be a
projection of future performance. Variable Annuity Account Five also funds
another contract (Seasons) which has been in existence longer than the Seasons
Select Variable Annuity. The Strategies in Seasons Select are also available in
that other contract and have been since 4/15/97. Sales of Seasons Select began
on February 18, 1999. The one year and since inception numbers for the
strategies are based on Season's historical data (which is adjusted for the fees
and charges applicable to Seasons Select) and represent adjusted actual
performance of the separate account.
TOTAL ANNUAL RETURN FOR THE PERIOD ENDING MARCH 31, 2000 (RETURN WITH/WITHOUT
REDEMPTION) ISSUE AGE UNDER 80
[TO BE UPDATED]
<TABLE>
<CAPTION>
1 YEAR RETURN** SINCE FUND INCEPTION**
---------------------------------- ----------------------------------
STRATEGIES INCEPTION DATE W W/O W W/O
- ---------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Growth.................... 4/15/97 25.01 34.01 27.62 29.07
Moderate Growth........... 4/15/97 20.10 29.10 23.71 25.25
Balanced Growth........... 4/15/97 9.69 18.69 17.12 18.83
Conservative Growth....... 4/15/97 3.69 12.69 12.52 14.36
<CAPTION>
1 YEAR RETURN SINCE FUND INCEPTION
---------------------------------- ----------------------------------
SELECT PORTFOLIOS INCEPTION DATE W W/O W W/O
- ----------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Large Cap Growth.......... 3/1/99 30.86 39.86 37.56 44.73
Large Cap Composite....... 3/1/99 14.59 23.59 18.94 26.20
Large Cap Value........... 3/1/99 -4.94 4.06 -0.51 6.85
Mid Cap Growth............ 3/1/99 64.30 73.30 68.51 75.55
Mid Cap Value............. 3/1/99 -0.89 8.11 1.12 8.47
Small Cap................. 3/1/99 35.87 44.87 38.13 45.30
International Equity...... 3/1/99 20.41 29.41 25.58 32.80
Diversified Fixed
Income.................... 3/10/99 -9.23 -0.23 -7.60 -0.03
</TABLE>
<TABLE>
<CAPTION>
FOCUSED PORTFOLIOS
- ------------------
<S> <C> <C> <C> <C> <C>
Focus Growth..............
</TABLE>
TOTAL ANNUAL RETURN FOR THE PERIOD ENDING MARCH 31, 1999 (RETURN WITH/WITHOUT
REDEMPTION) ISSUE AGE OVER 80 [TO BE UPDATED]
<TABLE>
<CAPTION>
1 YEAR RETURN** SINCE FUND INCEPTION**
---------------------------------- ----------------------------------
STRATEGIES INCEPTION DATE W W/O W W/O
- ---------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Growth.................... 4/15/97 24.89 33.89 27.50 28.96
Moderate Growth........... 4/15/97 19.97 28.97 23.58 25.13
Balanced Growth........... 4/15/97 9.58 18.58 17.00 18.72
Conservative Growth....... 4/15/97 3.55 12.55 12.39 14.24
<CAPTION>
1 YEAR RETURN*** SINCE FUND INCEPTION***
---------------------------------- ----------------------------------
SELECT PORTFOLIOS INCEPTION DATE W W/O W W/O
- ----------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Large Cap Growth.......... 3/1/99 30.73 39.73 37.47 44.60
Large Cap Composite....... 3/1/99 14.47 23.47 18.84 26.08
Large Cap Value........... 3/1/99 -5.19 3.81 -0.76 6.60
Mid Cap Growth............ 3/1/99 64.14 73.14 68.42 75.40
Mid Cap Value............. 3/1/99 -1.00 8.00 1.01 8.36
Small Cap................. 3/1/99 35.74 44.74 38.03 45.16
International Equity...... 3/1/99 20.22 29.22 25.41 32.61
Diversified Fixed
Income.................... 3/10/99 -9.40 -0.40 -7.77 -0.20
</TABLE>
<TABLE>
<CAPTION>
FOCUSED PORTFOLIOS
- ------------------
<S> <C> <C> <C> <C> <C>
Focus Growth..............
</TABLE>
** These rates of return were calculated utilizing Seasons rates for the
related periods, adjusting for differences in fees.
*** These rates of return were calculated utilizing Seasons Select (under 80)
rates for the related periods, adjusting for differences in fees.
6
<PAGE>
ANNUITY PAYMENTS
- --------------------------------------------------------------------------------
INITIAL ANNUITY PAYMENT
The initial annuity payment is determined by taking the contract value, less any
premium tax, less any Market Value Adjustment that may apply in the case of a
premature annuitization of CERTAIN guarantee amounts, and then applying it to
the annuity table specified in the contract. Those tables are based on a set
amount per $1,000 of proceeds applied. The appropriate rate must be determined
by the sex (except where, as in the case of certain Qualified contracts and
other employer-sponsored retirement plans, such classification is not permitted)
and age of the Annuitant and designated second person, if any.
The dollars applied are then divided by 1,000 and the result multiplied by the
appropriate annuity factor appearing in the table to compute the amount of the
first monthly annuity payment. In the case of a variable annuity, that amount is
divided by the value of an Annuity Unit as of the Annuity Date to establish the
number of Annuity Units representing each variable annuity payment. The number
of Annuity Units determined for the first variable annuity payment remains
constant for the second and subsequent monthly variable annuity payments,
assuming that no reallocation of contract values is made.
SUBSEQUENT MONTHLY PAYMENTS
For a fixed annuity, the amount of the second and each subsequent monthly
annuity payment is the same as that determined above for the first monthly
payment.
The amount of the second and each subsequent monthly variable annuity payment is
determined by multiplying the number of Annuity Units, as determined in
connection with the determination of the initial monthly payment, above, by the
Annuity Unit Value as of the day preceding the date on which each annuity
payment is due.
INCOME PAYMENTS UNDER THE INCOME PROTECTOR FEATURE
If contract holders elect to begin Income Payments using the Income Protector
feature, the income benefit base is determined as described in the prospectus.
The initial monthly Income Payment is determined by applying the annuitization
factor specifically designated for use in conjunction with the Income Protector
Feature (either in the Contract or in the Endorsement) to the income benefit
base and then dividing by 1,000. The Income Benefit Base must be divided by
1,000 since the annuitization factors included in those tables are based on a
set amount per $1,000 of Income Benefit Base. The amount of the second and each
subsequent Income Payment is the same as the first monthly payment. The
appropriate rate must be determined by the gender (except where, as in the case
of certain Qualified contracts and other employer-sponsored retirement plans,
such classification is not permitted) and age of the Annuitant and designated
joint annuitant, if any, and the Income Option selected.
ANNUITY UNIT VALUES
- --------------------------------------------------------------------------------
The value of an Annuity Unit is determined independently for each SELECT
PORTFOLIO, FOCUSED PORTFOLIO and STRATEGY. The annuity tables contained in the
contract are based on a 3.5% per annum assumed investment rate. If the actual
net investment rate experienced by a SELECT PORTFOLIO, FOCUSED PORTFOLIO or
STRATEGY exceeds 3.5010, variable annuity payments derived from allocations to
that SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY will increase over time.
Conversely, if the actual rate is less than 3.5%, variable annuity payments will
decrease over time. If the net investment rate equals 3.5%, the
7
<PAGE>
variable annuity payments will remain constant. If a higher assumed investment
rate had been used, the initial monthly payment would be higher, but the actual
net investment rate would also have to be higher in order for annuity payments
to increase (or not to decrease).
The payee receives the value of a fixed number of Annuity Units each month. The
value of a fixed number of Annuity Units will reflect the investment performance
of the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and/or STRATEGIES elected, and the
amount of each annuity payment will vary accordingly.
For each SELECT PORTFOLIO, FOCUSED PORTFOLIO and/or STRATEGY, the value of an
Annuity Unit is determined by multiplying the Annuity Unit value for the
preceding month by the Net Investment Factor for the month for which the Annuity
Unit value is being calculated. The result is then multiplied by a second factor
which offsets the effect of the assumed net investment rate of 3.5% per annum
which is assumed in the annuity tables contained in the contract.
NET INVESTMENT FACTOR
The Net Investment Factor ("NIF") is an index applied to measure the net
investment performance of SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY from
one month to the next. The NIF may be greater or less than or equal to one;
therefore, the value of an Annuity Unit may increase, decrease or remain the
same.
The NIF for any SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY for a certain
month is determined by dividing (a) by (b) where:
(a) is the Accumulation Unit value of the SELECT PORTFOLIO, FOCUSED PORTFOLIO or
STRATEGY determined as of the end of that month, and
(b) is the Accumulation Unit value of the SELECT PORTFOLIO, FOCUSED PORTFOLIO or
STRATEGY determined as of the end of the preceding month.
The NIF for a SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY for a given month
is a measure of the net investment performance of the SELECT PORTFOLIO, FOCUSED
PORTFOLIO or STRATEGY from the end of the prior month to the end of the given
month. A NIF of 1.000 results from no change; a NIF greater than 1.000 results
from an increase; and a NIF less than 1.000 results from a decrease. The NIF is
increased (or decreased) in accordance with the increases (or decreases,
respectively) in the value of the shares of the underlying investment portfolios
in which the SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY invests; it is also
reduced by separate account asset charges.
ILLUSTRATIVE EXAMPLE
Assume that one share of a given SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY
had an Accumulation Unit value of $11.46 as of the close of the New York Stock
Exchange ("NYSE") on the last business day in September; that its Accumulation
Unit value had been $11.44 at the close of the NYSE on the last business day at
the end of the previous month. The NIF for the month of September is:
NIF = ($11.46/$11.44)
= 1.00174825
ILLUSTRATIVE EXAMPLE
The change in Annuity Unit value for a SELECT PORTFOLIO, FOCUSED PORTFOLIO or
STRATEGY from one month to the next is determined in part by multiplying the
Annuity Unit value at the prior month end by the NIF for that SELECT PORTFOLIO,
FOCUSED PORTFOLIO or STRATEGY for the new month. In addition, however, the
result of that computation must also be multiplied by an additional factor that
takes into account, and
8
<PAGE>
neutralizes, the assumed investment rate of 3.5 percent per annum upon which the
annuity payment tables are based. For example, if the net investment rate for a
SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY (reflected in the NIF) were
equal to the assumed investment rate, the variable annuity payments should
remain constant (i.e., the Annuity Unit value should not change). The monthly
factor that neutralizes the assumed investment rate of 3.5 percent per annum is:
1/[(1.035) ^ (1/12)] = 0.99713732
In the example given above, if the Annuity Unit value for the SELECT PORTFOLIO,
FOCUSED PORTFOLIO or STRATEGY was $10.103523 on the last business day in August,
the Annuity Unit value on the last business day in September would have been:
$10.103523 x 1.00174825 x 0.99713732 = $10.092213
To determine the initial payment, the initial annuity payment for variable
annuitization is calculated based on our mortality expectations and an assumed
interest rate (AIR) of 3.5%. Thus the initial variable annuity payment is the
same as the initial payment for a fixed interest payout annuity calculated at an
effective rate of 3.5%.
The Net Investment Factor (NIF) measures the performance of the funds that are
the basis for the amount of future annuity payments. This performance is
compared to the AIR, and if the growth in the NIF is the same as the AIR rate
the payment remains the same as the prior month. If the rate of growth of the
NIF is different than the AIR, then the payment is changed proportionately to
the ratio (1+NIF)/(1+AIR), calculated on a monthly basis. If the NIF is greater
than the AIR, then this proportion is greater than one and payments are
increased. If the NIF is less than the AIR, then this proportion is less than
one and payments are decreased.
VARIABLE ANNUITY PAYMENTS
ILLUSTRATIVE EXAMPLE
Assume that a male owner, P, owns a contract in connection with which P has
allocated all of his contract value to a single SELECT PORTFOLIO, FOCUSED
PORTFOLIO or STRATEGY. P is also the sole Annuitant and, at age 60, has elected
to annuitize his contract as a life annuity with 120 monthly payments
guaranteed. As of the last valuation preceding the Annuity Date, P's Account was
credited with 7543.2456 Accumulation Units each having a value of $15.432655,
(i.e., P's Account Value is equal to 7543.2456 x $15.432655 = $116,412.31).
Assume also that the Annuity Unit value for the SELECT PORTFOLIO, FOCUSED
PORTFOLIO or STRATEGY on that same date is $13.256932, and that the Annuity Unit
value on the day immediately prior to the second annuity payment date is
$13.327695.
P's first variable annuity payment is determined from the annuity rate tables in
P's contract, using the information assumed above. From the tables, which supply
monthly annuity payments for each $1,000 of applied contract value, P's first
variable annuity payment is determined by multiplying the monthly installment of
$5.42 (Option 4 tables, male Annuitant age 60 at the Annuity Date) by the result
of dividing P's account value by $1,000:
First Payment = $5.42 x ($116,412.31/$1,000) = $630.95
The number of P's Annuity Units (which will be fixed; i.e., it will not change
unless he transfers his Account to another Account) is also determined at this
time and is equal to the amount of the first variable annuity payment divided by
the value of an Annuity Unit on the day immediately prior to annuitization:
Annuity Units = $630.95/$13.256932 = 47.593968
9
<PAGE>
P's second variable annuity payment is determined by multiplying the number of
Annuity Units by the Annuity Unit value as of the day immediately prior to the
second payment due date:
Second Payment = 47.593968 x $13.327695 = $634.32
The third and subsequent variable annuity payments are computed in a manner
similar to the second variable annuity payment.
Note that the amount of the first variable annuity payment depends on the
contract value in the relevant SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY
on the Annuity Date and thus reflects the investment performance of the SELECT
PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY net of fees and charges during the
Accumulation Phase. The amount of that payment determines the number of Annuity
Units, which will remain constant during the Annuity Phase (assuming no
transfers from the SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY). The net
investment performance of the SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY
during the Annuity Phase is reflected in continuing changes during this phase in
the Annuity Unit value, which determines the amounts of the second and
subsequent variable annuity payments.
TAXES
- --------------------------------------------------------------------------------
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code") governs
taxation of annuities in general. A contract owner is not taxed on increases in
the value of a contract until distribution occurs, either in the form of a
non-annuity distribution or as annuity payments under the annuity payment option
elected. For a lump sum payment received as a total surrender (total
redemption), the recipient is taxed on the portion of the payment that exceeds
the cost basis of the contract. For a payment received as a withdrawal (partial
redemption), federal tax liability is determined on a last-in, first-out basis,
meaning taxable income is withdrawn before the cost basis of the contract is
withdrawn. For contracts issued in connection with Non-qualified plans, the cost
basis is generally the Purchase Payments, while for contracts issued in
connection with Qualified plans there may be no cost basis. The taxable portion
of the lump sum payment is taxed at ordinary income tax rates. Tax penalties may
also apply.
For annuity payments, the taxable portion is determined by a formula which
establishes the ratio that the cost basis of the contract bears to the total
value of annuity payments for the term of the annuity contract. The taxable
portion is taxed at ordinary income tax rates. Contract owners, Annuitants and
Beneficiaries under the contracts should seek competent financial advice about
the tax consequences of distributions under the retirement plan under which the
contracts are purchased.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the separate account is not a separate entity from the
Company and its operations form a part of the Company.
WITHHOLDING TAX ON DISTRIBUTIONS
The Code generally requires the Company (or, in some cases, a plan
administrator) to withhold tax on the taxable portion of any distribution or
withdrawal from a contract. For "eligible rollover distributions" from contracts
issued under certain types of Qualified plans, 20% of the distribution must be
withheld, unless the payee elects to have the distribution "rolled over" to
another eligible plan in a direct "trustee to trustee" transfer. This
requirement is mandatory and cannot be waived by the owner. Withholding on other
types of distributions can be waived.
An "eligible rollover distribution" is the estimated taxable portion of any
amount received by a covered employee from a plan qualified under Section 401(a)
or 403(a) of the Code, or from a tax-sheltered annuity qualified under
10
<PAGE>
Section 403(b) of the Code (other than (1) annuity payments for the life (or
life expectancy) of the employee, or joint lives (or joint life expectancies) of
the employee and his or her designated Beneficiary, or for a specified period of
ten years or more; and (2) distributions required to be made under the Code).
Failure to "rollover" the entire amount of an eligible rollover distribution
(including an amount equal to the 20% portion of the distribution that was
withheld) could have adverse tax consequences, including the imposition of a
penalty tax on premature withdrawals, described later in this section.
Withdrawals or distributions from a contract other than eligible rollover
distributions are also subject to withholding on the estimated taxable portion
of the distribution, but the owner may elect in such cases to waive the
withholding requirement. If not waived, withholding is imposed (1) for periodic
payments, at the rate that would be imposed if the payments were wages, or (2)
for other distributions, at the rate of 10%. If no withholding exemption
certificate is in effect for the payee, the rate under (1) above is computed by
treating the payee as a married individual claiming 3 withholding exemptions.
DIVERSIFICATION--SEPARATE ACCOUNT INVESTMENTS
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified, in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the contract as
an annuity contract would result in imposition of federal income tax to the
owner with respect to earnings allocable to the contract prior to the receipt of
payments under the contract. The Code contains a safe harbor provision which
provides that annuity contracts such as the contracts meet the diversification
requirements if, as of the close of each calendar quarter, the underlying assets
meet the diversification standards for a regulated investment company, and no
more than 55% of the total assets consist of cash, cash items, U.S. government
securities and securities of other regulated investment companies.
The Treasury Department has issued regulations which establish diversification
requirements for the investment portfolios underlying annuity variable contracts
such as the contracts. The regulations amplify the diversification requirements
for variable annuity contracts set forth in the Code and provide an alternative
to the safe harbor provision described above. Under the regulations an
investment portfolio will be deemed adequately diversified if (1) no more than
55% of the value of the total assets of the portfolio is represented by any one
investment; (2) no more than 70% of the value of the total assets of the
portfolio is represented by any two investments; (3) no more than 80% of the
value of the total assets of the portfolio is represented by any three
investments; and (4) no more than 90% of the value of the total assets of the
portfolio is represented by any four investments. For purposes of determining
whether or not the diversification standards imposed on the underlying assets of
variable contracts by Section 817(h) of the Code have been met, "each United
States government agency or instrumentality shall be treated as a separate
issuer."
MULTIPLE CONTRACTS
Multiple annuity contracts which are issued within a calendar year to the same
contract owner by one company or its affiliates are treated as one annuity
contract for purposes of determining the tax consequences of any distribution.
Such treatment may result in adverse tax consequences including more rapid
taxation of the distributed amounts from such multiple contracts. The Company
believes that Congress intended to affect the purchase of multiple deferred
annuity contracts which may have been purchased to avoid withdrawal income tax
treatment. Owners should consult a tax adviser prior to purchasing more than one
annuity contract in any calendar year.
11
<PAGE>
TAX TREATMENT OF ASSIGNMENTS
An assignment of a contract may have tax consequences, and may also be
prohibited by ERISA in some circumstances. Owners should therefore consult
competent legal advisers should they wish to assign their contracts.
PARTIAL 1035 EXCHANGES
Section 1035 of the Code provides that an annuity contract may be exchanged in a
tax-free transaction for another annuity contract. Historically, it was presumed
that only the exchange of an entire contract, as opposed to a partial exchange,
would be accorded tax-free status. In 1998 in CONWAY VS. COMMISSIONER, the Tax
Court held that the direct transfer of a portion of an annuity contract into
another annuity contract qualified as a non-taxable exchange. On November 22,
1999, the Internal Revenue Service filed an Action on Decision which indicated
that it acquiesced in the Tax Court decision in CONWAY. However, in its
acquiescence with the decision of the Tax Court, the Internal Revenue Service
stated that it will challenge transactions where taxpayers enter into a series
of partial exchanges and annuitizations as part of a design to avoid application
of the 10% premature distribution penalty or other limitations imposed on
annuity contracts under Section 72 of the Code. In the absence of further
guidance from the Internal Revenue Service it is unclear what specific types of
partial exchange designs and transactions will be challenged by the Internal
Revenue Service. Due to the uncertainty in this area owners should seek their
own tax advice.
QUALIFIED PLANS
The contracts offered by this prospectus are designed to be suitable for use
under various types of Qualified plans. Taxation of owners in each Qualified
plan varies with the type of plan and terms and conditions of each specific
plan. Owners, Annuitants and Beneficiaries are cautioned that benefits under a
Qualified plan may be subject to the terms and conditions of the plan,
regardless of the terms and conditions of the contracts issued pursuant to the
plan.
Following are general descriptions of the types of Qualified plans with which
the contracts may be used. Such descriptions are not exhaustive and are for
general information purposes only. The tax rules regarding Qualified plans are
very complex and will have differing applications depending on individual facts
and circumstances. Each purchaser should obtain competent tax advice prior to
purchasing a contract issued under a Qualified plan.
Contracts issued pursuant to Qualified plans include special provisions
restricting contract provisions that may otherwise be available and described in
this prospectus. Generally, contracts issued pursuant to Qualified plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified contracts.
(a) H.R. 10 PLANS
Section 401 of the Code permits self-employed individuals to establish Qualified
plans for themselves and their employees, commonly referred to as "H.R. 10" or
"Keogh" Plans. Contributions made to the plan for the benefit of the employees
will not be included in the gross income of the employees until distributed from
the plan. The tax consequences to owners may vary depending upon the particular
plan design. However, the Code places limitations and restrictions on all plans
on such items as: amounts of allowable contributions; form, manner and timing of
distributions; vesting and nonforfeitability of interests; nondiscrimination in
eligibility and participation; and the tax treatment of distributions,
withdrawals and surrenders. Purchasers of contracts for use with an H.R. 10 Plan
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
12
<PAGE>
(b) TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, education and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employee until the
employee receives distributions from the contract. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, non-discrimination and withdrawals. Any employee
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
(c) INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. Sales of contracts for use with IRAs are subject to special
requirements imposed by the Code, including the requirement that certain
informational disclosure be given to persons desiring to establish an IRA.
Purchasers of contracts to be qualified as IRAs should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
(d) ROTH IRA
Section 408A of the Code permits an individual to contribute to an individual
retirement program called a Roth IRA. Unlike contributions to a regular IRA
under Section 408(b) of the Code, contributions to a Roth IRA are not made on a
tax deferred basis, but distributions are tax-free if certain requirements are
satisfied. Like regular IRAs, Roth IRAs are subject to limitations on the amount
that may be contributed, those who may be eligible and the time when
distributions may commence without tax penalty. Certain persons may be eligible
to convert a regular IRA into a Roth IRA, and the resulting income tax may be
spread over four years if the conversion occurs before January 1, 1999. If and
when Contracts are made available for use with Roth IRAs they may be subject to
special requirements imposed by the Internal Revenue Service. Purchasers of the
Contracts for this purpose will be provided with such supplementary information
as may be required by the Internal Revenue Service or other appropriate agency.
(e) CORPORATE PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit corporate employers to establish
various types of retirement plans for employees. These retirement plans may
permit the purchase of the contracts to provide benefits under the plan.
Contributions to the plan for the benefit of employees will not be includible in
the gross income of the employee until distributed from the plan. The tax
consequences to owners may vary depending upon the particular plan design.
However, the Code places limitations on all plans on such items as amount of
allowable contributions; form, manner and timing of distributions; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Purchasers of contracts for use with corporate pension or profit
sharing plans should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
(f) DEFERRED COMPENSATION PLANS--SECTION 457
Under Section 457 of the Code, governmental and certain other tax-exempt
employers may establish, for the benefit of their employees, deferred
compensation plans which may invest, in annuity contracts. The Code, as in the
13
<PAGE>
case of Qualified plans, establishes limitations and restrictions on
eligibility, contributions and distributions. Under these plans, contributions
made for the benefit of the employees will not be includible in the employees'
gross income until distributed from the plan. However, under a 457 plan all the
plan assets shall remain solely the property of the employer, subject only to
the claims of the employer's general creditors until such time as made available
to an owner or a Beneficiary. As of January 1, 1999 all 457 plans of state and
local governments must hold assets and income in trust (or custodial accounts or
an annuity contract) for the exclusive benefit of participants and their
beneficiaries.
DISTRIBUTION OF CONTRACTS
- --------------------------------------------------------------------------------
The contracts are offered through SunAmerica Capital Services, Inc., located at
733 Third Avenue, 4th Floor, New York, New York 10017. SunAmerica Capital
Services, Inc. is registered as a broker-dealer under the Securities Exchange
Act of 1934, as amended, and is a member of the National Association of
Securities Dealers, Inc. The Company and SunAmerica Capital Services, Inc. are
each an indirect wholly owned subsidiary of SunAmerica Inc. No underwriting fees
are paid in connection with the distribution of the contracts. Contracts are
offered on a continuous basis.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited consolidated financial statements of the Company as of December 31,
1999, December 31, 1998 and September 30, 1998 and for the year ended December
31, 1999, and for the three months ended December 31, 1998, and for each of the
two fiscal years in the period ended September 30, 1998 are presented in this
Statement of Additional Information. Effective December 31, 1999, the Company
changed its fiscal year end from September 30, to December 31. The financial
statements of the Company should be considered only as bearing on the ability of
the Company to meet its obligation under the contracts. The financial statements
of Variable Annuity Account Five (Portion Relating to the SEASONS SELECT
Variable Annuity) as of March 31, 1999 and for the period from inception to
March 31, 1999 are incorporated by reference to Post-Effective Amendment No. 7
under the Securities Act of 1933 ("33 Act") and No. 3 under the Investment
Company Act of 1940 ("40 Act") to this Registration Statement file No. 333-67685
and 811-7727 filed on form N-4 on July 12, 1999. [TO BE UPDATED]
Documents incorporated by reference for filing purposes will still appear at the
end of this document when it is distributed upon request.
PricewaterhouseCoopers LLP, 400 South Hope Street, Los Angeles, California
90071, serves as the independent accountants for the Separate Account and the
Company. The financial statements referred to above have been so included in
reliance on the reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
14
<PAGE>
PART C -- OTHER INFORMATION
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The following financial statements are included in Part B of the
Registration Statement:
Audited Consolidated Financial Statements of Anchor National Life
Insurance Company as of December 31, 1999, December 31, 1998 and
September 30, 1998, and for the year ended December 31, 1999, and for the
three months ended December 31, 1998 and for each of the two fiscal years
in the period ended September 30, 1998.
Audited Financial Statements of Variable Annuity Account Five (Portion
Relating to the SEASON SELECT Variable Annuity) as of March 31, 1999
and for the period from inception to March 31, 1999.
[INCORPORATED BY REFERENCE] [TO BE UPDATED BY AMENDMENT]
(b) Exhibits
<TABLE>
<C> <S> <C>
(1) Resolutions Establishing Separate Account.................... ****
(2) Form of Custody Agreements................................... ****
(3) (a) Form of Distribution Contract............................ ****
(b) Form of Selling Agreement................................ ****
(4) (a) Seasons Select Variable Annuity Group Certificate........ +
(b) Seasons Select Individual Variable Annuity Contract...... +
(5) (a) Seasons Select Enrollment Form for Group Annuity
Certificate............................................ +
(b) Seasons Select Application for Individual Contract....... +
(6) Depositor -- Corporate Documents
(a) Certificate of Incorporation............................. ****
(b) By-Laws.................................................. ****
(7) Reinsurance Contract......................................... **
(8) Form of Seasons Series Trust Fund Participation Agreement.... ****
(9) Opinion and Consent of Counsel............................... ****
(10) Consent of Independent Accountants........................... *
(11) Financial Statements Omitted from Item 23.................... **
(12) Initial Capitalization Agreement............................. **
(13) Performance Computations..................................... ++
(14) Diagram and Listing of All Persons Directly or Indirectly
Controlled By or Under Common Control with Anchor National
Life Insurance Company, the Depositor of Registrant......... *
(15) Powers of Attorney........................................... ***
</TABLE>
- ------------------------
*Filed Herewith
**Not Applicable
***Filed in the Initial Registration Statement of Variable Annuity
Account Five (811-7727) and Anchor National Life Insurance Company
(333-67685) on November 20, 1998
****Filed in the Registration Statement of Variable Annuity Account Five
(811-7727) and Anchor National Life Insurance Company (333-08859),
Pre-Effective Amendment No. 1 on March 11, 1997
+Filed in the Registration Statement of Variable Annuity Account
Five (811-7727) and Anchor National Life Insurance Company
(333-08859), Pre-Effective Amendment Numbers 2 and 3 on July 27, 1998
++Filed on July 12, 1999, Post-Effective Amendment No. 2 under Securities
Act of 1933 (the 33 Act) and No. 6 under the Investment Company Act of
1940 (the 40 Act) to Registration Statement File No. 333-67685 and
811-07727.
II-1
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The officers and directors of Anchor National Life Insurance Company are listed
below. Their principal business address is 1 SunAmerica Center, Los Angeles,
California 90067-6022, unless otherwise noted.
<TABLE>
<CAPTION>
NAME POSITION
- --------------------------------------------------- ---------------------------------------------------
<S> <C>
Eli Broad Chairman, President and Chief Executive Officer
Jay S. Wintrob Director and Executive Vice President
Jana W. Greer Director and Senior Vice President
James R. Belardi Director and Senior Vice President
N. Scott Gillis Senior Vice President and Controller
Edwin R. Raquel Senior Vice President and Chief Actuary
Marc H. Gamsin Director and Senior Vice President
J. Franklin Grey Vice President
Edward P. Nolan* Vice President
Gregory M. Outcalt Senior Vice President and Controller
Scott H. Richland Vice President
David R. Bechtel Vice President and Treasurer
P. Daniel Demko, Jr. Vice President
Kevin J. Hart Vice President
Stewart R. Polakov Vice President
Lawrence M. Goldman Assistant Secretary
Christine A. Nixon Assistant Secretary
</TABLE>
- ------------------------
*88 Bradley Road, P.O. Box 4005, Woodbridge, Connecticut 06525
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR
REGISTRANT
The Registrant is a separate account of Anchor National Life Insurance
Company (Depositor). Depositor is a subsidiary of American International Inc.
("AIG"). For a complete listing and diagram of all persons directly or
indirectly controlled by or under common control with the Depositor or
Registrant, see Exhibit 14 of the Initial Registration Statement of Variable
Annuity Account Seven and Anchor National Life Insurance Company, (file Nos.
333-65965 and 811-09003) (N-4) and (333-65965) (S-1) filed herewith. As of
January 4, 1999, Anchor National became an indirect wholly-owned subsidiary
of American International Group, Inc. ("AIG"). An organizational chart for
AIG can be found in Form 10-K, SEC file number 001-08787 filed March 30, 2000.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of March 31, 2000, the number of contracts funded by Variable Annuity
Account Five (portion relating to the SEASONS SELECT Variable Annuity) of Anchor
National Life Insurance was 2,465; 1,059 of which were qualified contracts and
1,406 of which were non-qualified contracts.
ITEM 28. INDEMNIFICATION
None.
II-2
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITER
SunAmerica Capital Services, Inc. serves as distributor to the Registrant,
Variable Annuity Account Five, Presidential Variable Account One, FS Variable
Separte Account, Variable Annuity Account One, FS Variable Annuity Account
One, Variable Annuity Account Four and Variable Annuity Account Seven.
SunAmerica Capital Services, Inc. also serves as the underwriter to the
SunAmerica Income Funds, SunAmerica Equity Funds, SunAmerica Money Market
Funds, Inc., Stlye Select Series, Inc. and the SunAmerica Stategic Investment
Series, Inc., all issued by Sunamerica Asset Management Corp.
Its principal business address is 733 Third Avenue, 4th Floor, New York, New
York 10017. The following are the directors and officers of SunAmerica Capital
Services, Inc.
<TABLE>
<CAPTION>
NAME POSITION WITH DISTRIBUTOR
- --------------------------------------------------- ---------------------------------------------------
<S> <C>
Peter A. Harbeck Director
Robert M. Zakem Director, Executive Vice President, General Counsel &
Assistant Secretary
J. Steven Neamtz Director and President
Debbie Potash-Turner Controller
James Nickels Vice President
</TABLE>
<TABLE>
<CAPTION>
NET DISTRIBUTION COMPENSATION OR
DISCOUNTS AND REDEMPTION OR BROKERAGE
NAME OF DISTRIBUTOR COMMISSIONS ANNUITIZATION COMMISSIONS COMMISSIONS*
- ------------------------------------------------- ----------------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C>
SunAmerica Capital Services, Inc. None None None None
</TABLE>
- ------------------------
*Distribution fee is paid by Anchor National Life Insurance Company.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Anchor National Life Insurance Company, the Depositor for the Registrant, is
located at 1 SunAmerica Center, Los Angeles, California 90067-6022. SunAmerica
Capital Services, Inc., the distributor of the Contracts, is located at 733
Third Avenue, New York, New York 10017. Each maintains those accounts and
records required to be maintained by it pursuant to Section 31(a) of the
Investment Company Act and the rules promulgated thereunder.
II-3
<PAGE>
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02100, maintains certain accounts and records pursuant to the instructions of
the Registrant.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
Registrant undertakes to (1) file post-effective amendments to this Registration
Statement as frequently as is necessary to ensure that the audited financial
statements in the Registration Statement are never more than 16 months old for
so long as payments under the variable annuity Contracts may be accepted; (2)
include either (A) as part of any application to purchase a Contract offered by
the prospectus forming a part of the Registration Statement, a space that an
applicant can check to request a Statement of Additional Information, or (B) a
postcard or similar written communication affixed to or included in the
Prospectus that the Applicant can remove to send for a Statement of Additional
Information; and (3) deliver a Statement of Additional Information and any
financial statements required to be made available under this Form N-4 promptly
upon written or oral request.
ITEM 33. REPRESENTATION
a) The Company hereby represents that it is relying upon a No-Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
concerning the redeemability of Section 403(b) annuity Contracts (Commission
ref. IP-6-88) and that the following provisions have been complied with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including
the prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection
with the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment
alternatives available under the employer's Section 403(b) arrangement to
which the participant may elect to transfer his contract value.
b) REPRESENTATION PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF
1940: The Company represents that the fees and charges to be deducted under
the variable annuity contract described in the prospectus contained in this
registration statement are, in the aggregate, reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks
assumed in connection with the contract.
II-4
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the City of Los Angeles, and the State of California, on this
4th day of May, 2000.
VARIABLE ANNUITY ACCOUNT FIVE
(Registrant)
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ JAY S. WINTROB
-------------------------------------------
Jay S. Wintrob
EXECUTIVE VICE PRESIDENT
ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ JAY S. WINTROB
-------------------------------------------
Jay S. Wintrob
EXECUTIVE VICE PRESIDENT
II-5
<PAGE>
As required by the Securities Act of 1933, this the Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President, Chief Executive
ELI BROAD* Officer and Chairman of
- ------------------------------ the Board (Principal May 4, 2000
Eli Broad Executive Officer)
MARC H. GAMSIN* Senior Vice President and
- ------------------------------ Director (Principal
Marc H. Gamsin Financial Officer)
N. SCOTT GILLIS* Senior Vice President and
- ------------------------------ Director (Principal
N. Scott Gillis Accounting Officer)
JAMES R. BELARDI*
- ------------------------------ Director
James R. Belardi
JANA W. GREER*
- ------------------------------ Director
Jana W. Greer
GREGORY M. OUTCALT*
- ------------------------------ Senior Vice President and
Gregory M. Outcalt Controller
/s/ JAY S. WINTROB*
- ------------------------------ Director
Jay S. Wintrob
/s/ CHRISTINE A. NIXON
- ------------------------------ Attorney-in-Fact
Christine A. Nixon
</TABLE>
*Attorney-in-Fact
May 4, 2000
II-6
<PAGE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------
<S> <C>
(10) Consent of Independent Accountants
(14) Diagram and Listing of All Persons Directly or Indirectly
Controlled by or Under Common Control with Anchor National
Life Insurance Company, The Depositor or Registrant
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Registration Statement on Form N-4 for Variable
Annuity Account Five (Portion Relating to the SEASONS SELECT Variable
Annuity) of Anchor National Life Insurance Company of our report dated
January 31, 2000, relating to the financial statements of Anchor National
Life Insurance Company, and the incorporation by reference of our report
dated June 28, 1999, relating to the financial statements of Variable Annuity
Account Five (Portion Relating to the SEASONS SELECT Variable Annuity). We
also consent to the incorporation by reference of our report dated January
31, 2000 relating to the financial statements of Anchor National Life
Insurance Company and the incorporation by reference of our report dated June
28, 1999, relating to the financial statements of Variable Annuity Account
Five (Portion Relating to the SEASONS SELECT Variable Annuity), into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Financial Statements" in
such Statement of Additional Information and to the reference to us under the
heading "Independent Accountants" in such Prospectus.
PricewaterhouseCoopers LLP
Los Angeles, California
May 4, 2000
<PAGE>
American International Group, Inc. (a Delaware corporation) owns 100% of
SunAmerica Inc. (a Delaware corporation), which owns 100% of SunAmerica
Investments, Inc. (a Georgia corporation); Resources Trust Company (a Colorado
corporation), which owns 100% of Resources Consolidated Inc. (a Colorado
corporation); SunAmerica Life Insurance Company (an Arizona corporation); Anchor
Insurance Company (Hawaii), Ltd. (a Hawaii corporation); SA Investment Group,
Inc. (a California corporation); SunAmerica Affordable Housing Finance Corp. (a
Delaware corporation); Stanford Ranch, Inc. (a Delaware corporation), which owns
100% of Stanford Ranch, Inc. (a California corporation); Arrowhead SAHP Corp. (a
New Mexico corporation); Chelsea SAHP Corp. (a Florida corporation); Tierra
Vista SAHP Corp. (a Florida corporation); Westwood SAHP Corp. (a New Mexico
corporation); Westwood SAHP Corp. (a New Mexico corporation); Byrton SAHP Corp.
(a Delaware corporation); Churchill SAHP Corp. (a Delaware corporation);
Crossing SAHP Corp. (a Delaware corporation); Emerald SAHP Corp. (a Delaware
corporation); Forest SAHP Corp. (a Delaware corporation); Pleasant SAHP Corp. (a
Delaware corporation); Westlake SAHP Corp. (a Delaware corporation);
Williamsburg SAHP Corp. (a Delaware corporation); Willow SAHP Corp. (a Delaware
corporation); Prairie SAHP Corp. (a Delaware corporation); DIL/SAHP Corp. (a
Delaware corporation); Charleston Bay SAHP Corp. (a Delaware corporation);
SubGen NT Corp. (a Delaware corporation); Belvedere Ventures, Inc. (a Delaware
corporation); SunAmerica Capital Trust IV (a Delaware business trust);
SunAmerica Capital Trust V (a Delaware business trust); SunAmerica Capital
Trust VI (a Delaware business trust); AIG Investment Management, Inc. (a
Delaware corporation). In addition, SunAmerica Inc. owns 33% of New California
Life Holdings, Inc. (a Delaware corporation), which owns a 100% of Aurora
National Life Assurance Company (a California corporation); 85% of AMSUN Realty
Holdings (a California general partnership); 40% of Falcon Financial, LLC (a
Delaware limited liability company); and 93.74% of West Capital Financial
Services Corp. (a California corporation), which owns 100% of West Capital
Receivables Corporation (a California corporation) and 100% of WCFSC Special
Purpose Corporation II (a California corporation), which owns 100% of WCFSC
Special Purpose Corporation (a California corporation) and JOPCO Management
Services (a California corporation).
SunAmerica Investments, Inc. owns 100% of SunAmerica Retirement Markets, Inc. (a
Maryland corporation); SunAmerica Advertising, Inc. (a Georgia corporation);
Accelerated Capital Corp. (a Florida corporation); SunAmerica Louisiana
Properties, Inc. (a California corporation); SunAmerica Real Estate and Office
Administration (a California corporation); SunAmerica Affordable Housing
Partners, Inc. (a California corporation); Hampden I & II Corp. (a California
corporation); Sunport Holdings, Inc. (a California corporation); Sunport
Property Holdings, Inc. (a Florida corporation); SunAmerica Mortgages, Inc. (a
Delaware corporation); Sun Princeton II, Inc. (a California corporation), which
owns Sun Princeton I, Inc. (a California corporation); Houston Warehouse Corp.
(a California corporation); SunAmerica (Cayman) Insurance Company, Ltd. (a
Cayman Islands company); SLP Housing I LLC (a Nevada limited liability
company); SLP Housing II LLC (a Nevada limited liability company); SLP Housing
III LLC (a Nevada limited liability company); SunAmerica Financial Network, Inc.
(a Maryland corporation); SunMexico Holdings, Inc. (a Delaware corporation); Sun
Hechs, Inc. (a California corporation); SAI Investment Adviser, Inc. (a Delaware
corporation); Sun GP Corp. (a California corporation); Sun CRC, Inc. (a
California corporation); Sun-Dollar, Inc. (a California corporation); Sun PLA,
Inc. (a California corporation); Metrocorp, Inc. (a California corporation). In
addition, SunAmerica Investments, Inc. owns 95% of Travel Services Holdings, LLC
(a Delaware limited liability company), which owns 100% of SA Travel Services,
Inc. (a California corporation); 70% of Homes Systems Partners (a California
limited partnership), which owns 100% of Extraneous Holdings Corp. (a Delaware
corporation).
SunAmerica Financial Network, Inc. owns 100% of SunAmerica Securities, Inc. (a
Delaware corporation), which owns 50% of Anchor Insurance Services, Inc., (a
Hawaii corporation); SunAmerica Investment Services Corporation (a Georgia
corporation); Financial Service Corporation (a Georgia corporation), which owns
100% of FSC Corporation, which owns 100% FSC Securities Corporation (a Delaware
corporation), FSC Advisory Corporation (a Delaware corporation) and FSC Agency,
Inc. (a Georgia corporation). In addition, SunAmerica Financial Network, Inc.
owns 100% of The Financial Group, Inc. (a Georgia corporation), which owns 100%
of Keogler, Morgan & Co., Inc. (a Georgia corporation), Keogler Investment
Advisory, Inc. (a Georgia corporation); and Keogler Morgan Investments, Inc. (a
Georgia corporation); Advantage Capital Corporation (a New York corporation);
SunAmerica Advisory, Inc. (a Delaware corporation); Glencourt Investments, Inc.
(a California corporation), which owns 100% of
<PAGE>
Spelman & Co., Inc. (a California corporation), which owns 100% of Century
Investments Group Incorporation (an Oklahoma corporation); SSC Holding Company,
Inc. (a California corporation), which owns 100% of Sentra Securities
Corporation (a California corporation).
SunAmerica Life Insurance Company owns 100% of First SunAmerica Life Insurance
Company (a New York corporation); SunAmerica National Life Insurance Company (an
Arizona corporation); Anchor National Life Insurance Company (an Arizona
corporation); Export Leasing FSC, Inc. (a Virgin Islands company); SunAmerica
Virginia Properties, Inc. (a California corporation); and SAL Investment Group,
Inc. (a California corporation). In additional, SunAmerica Life Insurance
Company owns 85% of SunAmerica Realty Partners (a California corporation) and
88.75% of Sun Quorum LLC (a Delaware limited liability company).
Anchor National Life Insurance Company owns 100% of the following Massachusetts
business trusts: Anchor Pathway Fund, Anchor Series Trust, SunAmerica Series
Trust and Seasons Series Trust. In addition, Anchor National Life Insurance
Company owns 5% of Travel Services Holdings; 100% of Sam Holdings Corporation (a
California corporation), which owns 100% of Sun Royal Holdings Corporation (a
California corporation), which owns 100% of Royal Alliance Associates, Inc. (a
Delaware corporation), which owns 50% of Anchor Insurance Services, Inc. Sam
Holdings Corporation owns 100% of SunAmerica Asset Management Corp. (a Delaware
corporation), which owns 100% of SunAmerica Capital Services, Inc. (a Delaware
corporation); SunAmerica Capital Services (a Delaware corporation); SunAmerica
Fund Services, Inc. (a Delaware corporation); ANF Property Holdings, Inc. (a
California corporation); Capital Life Mortgage Corp. (a Delaware corporation);
and UG Corporation (a Georgia corporation).
