<PAGE> 1
As filed with the Securities and Exchange Commission on October 28, 1998
Registration No. 33-81476
- ------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 4
--------------------
ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
California 6311 86-0198983
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Number)
organization)
1 SunAmerica Center
Los Angeles, California 90067-6022
(310) 772-6000
(Address, including zip code, and telephone number,
including area code, or registrant's
principal executive offices)
Susan L. Harris, Esquire
Anchor National Life Insurance Company
1 SunAmerica Center
Los Angeles, California 90067-6022
(310) 772-6000
(Name, address, including zip code, and telephone number, including area code
of agent for service)
----------------------
Appropriate date of commencement of proposed sale to the public:
As soon as practicable after effectiveness of the Registration Statement
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [X]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
<PAGE> 2
CROSS REFERENCE SHEET
ANCHOR NATIONAL LIFE INSURANCE COMPANY
Cross Reference Sheet Pursuant to
Regulation S-K, Item 501(b)
<TABLE>
<CAPTION>
Form S-1 Item Number and Caption Heading in Prospectus
- -----------------------------------------------------------------------
<S> <C> <C>
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus............... Outside Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus.............. Inside Front Cover
3. Summary of Information, Risk
Factors and Ratio of Earnings
to Fixed Charges....................... Front Cover; Summary; Fixed
Account Options
4. Use of Proceeds........................ Description of the
Company, the Separate
Account and the General
Account; Fixed Account
Options; Purchases,
Withdrawals and Contract
Value
5. Determination of Offering Price........ Not Applicable
6. Dilution............................... Not Applicable
7. Selling Security Holders............... Not Applicable
8. Plan of Distribution................... Purchases, Withdrawals
and Contract Value
9. Description of Securities to be
Registered............................. Description of the
Contracts; Fixed
Account Options;
Contract Charges;
Income Phase
10. Interests of Named Experts
and Counsel............................ Not Applicable
11. Information with Respect to
the Registrant......................... Description of the
Company, the Separate
Account and the General
Account; Additional
Information about the
Company; Financial
Statements
12. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities........................ Not Applicable
</TABLE>
<PAGE> 3
- --------------------------------------------------------------------------------
VISTA CAPITAL ADVANTAGE
FLEXIBLE PAYMENT GROUP DEFERRED
ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
ISSUED BY
ANCHOR NATIONAL LIFE INSURANCE COMPANY
IN CONNECTION WITH
VARIABLE ANNUITY ACCOUNT TWO
<TABLE>
<S> <C>
CORRESPONDENCE ACCOMPANIED ALL OTHER CORRESPONDENCE,
BY PAYMENTS: ANNUITY SERVICE CENTER:
P.O. BOX 100330 P.O. BOX 54299
PASADENA, CALIFORNIA 91189-0001 LOS ANGELES, CALIFORNIA 90054-0299
TELEPHONE NUMBER: (800) 90-VISTA
</TABLE>
The contracts offered by this prospectus provide for accumulation of
contract values and payment of income benefits on a fixed and/or variable basis.
The contracts are available for both Qualified and Non-qualified plans (SEE
TAXES, PAGE 27).
Purchase Payments under the contracts may be allocated among the Variable
Portfolios of the separate account, and/or to one or more of the fixed account
options funded through Anchor National Life Insurance Company's (Anchor
National's) general account. Each of the six Variable Portfolios of the separate
account described in this prospectus is invested solely in the shares of one of
the following currently available Underlying Funds of Mutual Fund Variable
Annuity Trust:
<TABLE>
<S> <C>
- International Equity - Asset Allocation
- Capital Growth - U.S. Government Income
- Growth and Income - Money Market
</TABLE>
Additional Underlying Funds may be made available in the future.
The fixed account options pay fixed rates of interest declared by Anchor
National for specified guarantee periods from the dates amounts are allocated to
the fixed account. As of the date of this prospectus, one, three, five, seven
and ten year options were available in most states. Please contact Anchor
National or the financial representative from whom this prospectus was obtained
for information as to currently available guarantee options. Declared rates will
vary from time to time but will not be less than 3% per annum, and, once
established for a particular allocation, will not change during the course of
the guarantee period. However, withdrawals, transfers or annuitizations from the
one, three, five, seven and ten year fixed account options prior to the end of
the applicable guarantee period(s), will generally result in the imposition of a
market value adjustment (SEE FIXED ACCOUNT OPTIONS -- MARKET VALUE ADJUSTMENT
"MVA", PAGE 14).
This prospectus concisely sets forth the information a prospective investor
ought to know before investing. PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN
IT FOR YOUR FUTURE REFERENCE. You bear the complete investment risk for all
Purchase Payments allocated to the separate account. With respect to allocations
to the fixed account, you also bear the risk that amounts prematurely withdrawn,
transferred or taken as income payments from the general account prior to the
end of their respective guarantee periods could result in you receiving less
than the amount of Purchase Payments you invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC"), NOR HAS THE SEC PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE CONTRACTS OFFERED BY THIS PROSPECTUS INVOLVE RISK, INCLUDING LOSS OF
PRINCIPAL, AND ARE NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE CONTRACTS OFFERED BY THIS PROSPECTUS ARE NOT AVAILABLE IN ALL STATES.
This Prospectus is dated December 29, 1998.
<PAGE> 4
ADDITIONAL INFORMATION:
Anchor National has filed registration statements (the "registration
statements") with the SEC under the Securities Act of 1933, as amended, relating
to the contracts offered by this prospectus. This prospectus has been filed as a
part of the registration statements and does not contain all of the information
set forth in the registration statements and exhibits thereto, and reference is
hereby made to the registration statements and exhibits for further information
relating to Anchor National, the separate account, and the contracts. Anchor
National is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith files reports and other
information with the SEC. Such reports and other information filed by Anchor
National can be inspected and copied, and copies can be obtained at the public
reference facilities of the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at the regional offices in Chicago and New York. The
addresses of these regional offices are as follows: 500 West Madison Street,
Chicago, Illinois 60661, and 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material also can be obtained by mail from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
upon payment of the fees prescribed by the rules and regulations of the SEC at
prescribed rates.
A Statement of Additional Information ("SAI") about the variable portion of
the contracts has been filed with the SEC, as part of the registration
statements, and is incorporated herein by reference. The SAI is available
without charge upon written or oral request to Anchor National at its Annuity
Service Center at the address and telephone number given on the prior page. The
Table of Contents of the SAI dated December 29, 1998, appears on page 34 of this
prospectus.
2
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ITEM ----
<S> <C>
DEFINITIONS................................................. 4
SUMMARY..................................................... 5
FEE TABLES.................................................. 8
EXAMPLES.................................................... 9
CONDENSED FINANCIAL INFORMATION -- ACCUMULATION UNIT
VALUES.................................................... 10
PERFORMANCE DATA............................................ 10
DESCRIPTION OF ANCHOR NATIONAL, THE SEPARATE ACCOUNT AND THE
GENERAL ACCOUNT........................................... 11
Anchor National Life Insurance Company................. 11
Separate Account....................................... 12
General Account........................................ 12
VARIABLE PORTFOLIO OPTIONS.................................. 12
Voting Rights.......................................... 13
Substitution of Securities............................. 14
FIXED ACCOUNT OPTIONS....................................... 14
Allocations............................................ 14
Market Value Adjustment ("MVA")........................ 14
CONTRACT CHARGES............................................ 15
Insurance Charges...................................... 15
Withdrawal Charges..................................... 15
Investment Charges..................................... 15
Contract Maintenance Fee............................... 15
Transfer Fee........................................... 16
Premium Tax............................................ 16
Income Taxes........................................... 16
Reduction or Elimination of Charges and Expenses, and
Additional Amounts Credited........................... 16
Free Withdrawal Amount................................. 16
Nursing Home Waiver.................................... 17
DESCRIPTION OF THE CONTRACTS................................ 17
Summary................................................ 17
Ownership.............................................. 17
Annuitant.............................................. 17
Modification of the Contract........................... 17
Assignment............................................. 17
Death Benefit.......................................... 18
PURCHASES, WITHDRAWALS AND CONTRACT VALUE................... 19
Purchase Payments...................................... 19
Automatic Dollar Cost Averaging Program................ 19
Asset Allocation Rebalancing........................... 20
Principal Advantage Program............................ 20
Allocation of Purchase Payments........................ 21
Accumulation Units..................................... 21
Free Look.............................................. 22
Transfer During the Accumulation Phase................. 22
Distribution of Contracts.............................. 23
Withdrawals............................................ 23
Systematic Withdrawal Program.......................... 24
Minimum Contract Value................................. 24
INCOME PHASE................................................ 24
Annuity Date........................................... 24
Income Options......................................... 24
Transfers During the Income Phase...................... 26
Deferment of Payments.................................. 26
ADMINISTRATION.............................................. 26
TAXES....................................................... 27
Annuity Contracts in General........................... 27
Tax Treatment of Distributions -- Non-qualified
Contracts............................................. 27
Tax Treatment of Distributions -- Qualified
Contracts............................................. 28
Minimum Distributions.................................. 28
Diversification........................................ 28
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
ITEM ----
<S> <C>
ADDITIONAL INFORMATION ABOUT THE COMPANY.................... 29
Selected Consolidated Financial Data................... 29
PROPERTIES.................................................. 30
DIRECTORS AND EXECUTIVE OFFICERS............................ 30
EXECUTIVE COMPENSATION...................................... 31
Security Ownership of Certain Beneficial Owners and
Management............................................ 31
REGULATION.................................................. 32
CUSTODIAN................................................... 32
LEGAL PROCEEDINGS........................................... 33
REGISTRATION STATEMENTS..................................... 33
INDEPENDENT ACCOUNTANTS..................................... 33
ADDITIONAL INFORMATION ABOUT THE SEPARATE ACCOUNT........... 34
FINANCIAL STATEMENTS........................................ 34
APPENDIX A -- MARKET VALUE ADJUSTMENT ("MVA")............... A-1
APPENDIX B -- WITHDRAWALS AND WITHDRAWAL CHARGES............ B-1
APPENDIX C -- PREMIUM TAXES................................. C-1
</TABLE>
- --------------------------------------------------------------------------------
DEFINITIONS
- --------------------------------------------------------------------------------
The following terms, as used in this prospectus, have the indicated
meanings:
ACCUMULATION PHASE -- The period during which you invest money in your contract.
ACCUMULATION UNIT -- A unit of measurement which 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 income payments.
ANNUITY DATE -- The date on which income payments begin, as selected by you.
ANNUITY UNIT(S) -- A measurement we use to calculate the amount of income
payments you receive from the variable portion of your contract during the
Income Phase.
BENEFICIARY -- The person designated to receive any benefits under the contract
if you or the Annuitant dies.
INCOME PHASE -- The period during which we make income 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 pre-tax dollars. These
contracts are generally purchased under a pension plan, specially sponsored
program or IRA.
TRUST -- Mutual Fund Variable Annuity Trust, an open-end management investment
company.
UNDERLYING FUND(S) -- The underlying series of the Trust in which the Variable
Portfolios invest.
VARIABLE PORTFOLIO(S) -- The variable investment options available under the
contract. Each Variable Portfolio has its own investment objective and is
invested in the underlying investments of the Trust.
4
<PAGE> 7
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
This summary sets forth some of the more important points that you should
know and consider before purchasing the Vista Variable Annuity. The remainder of
the prospectus discusses the topics in more detail. We urge you to read it
carefully and retain it, and the prospectus for the Trust, for future reference.
WHAT IS AN ANNUITY CONTRACT?
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.
The Vista Variable Annuity is a contract between you and Anchor National
(the Company, Us, We). It is designed to help you invest on a tax deferred basis
and meet long-term financial goals, such as retirement funding.
Like most annuities, this 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 Variable Portfolios you
allocate money to and/or the interest rate earned on fixed account options.
During the Income Phase, you will receive income payments from your annuity.
Your payments may be fixed in dollar amount, may vary with investment
performance of the Variable Portfolios or be a combination of both. 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.
WHAT IS THE DIFFERENCE BETWEEN A VARIABLE ANNUITY AND A FIXED ANNUITY?
A fixed annuity earns interest at a fixed rate guaranteed by the insurance
company. A variable annuity typically provides a fixed account option but also
provides Variable Portfolios. The Variable Portfolios are similar to a mutual
fund, but are only available through the purchase of an annuity. Most
significantly, you as the contract owner bear the entire investment risk with
respect to any Purchase Payments allocated to the Variable Portfolios of an
annuity. This means that the value of your contract will go up and down,
depending on the performance of the Variable Portfolios.
Vista Variable Annuity is a variable annuity with five fixed account
options and six Variable Portfolios.
WHAT ARE THE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT?
You may allocate money to the following Variable Portfolios of the Trust:
<TABLE>
<S> <C>
- International Equity - Asset Allocation
- Capital Growth - U.S. Government Income
- Growth and Income - Money Market
</TABLE>
You may also allocate money to the fixed account options for periods of 1,
3, 5, 7 and 10 years. We call these time periods guarantee periods. Anchor
National guarantees the interest rate credited to money in a fixed account
option. The interest rate offered for different guarantee periods may differ
5
<PAGE> 8
from time to time, but we will never credit less than a 3% annual effective
rate. Additionally, if you allocate money to a fixed account option and withdraw
all or part of it prior to the end of the guarantee period, you may incur an
adjustment to the value of your contract called a market value adjustment (a
"MVA"). A MVA can decrease or increase the value of your contract.
During the Accumulation Phase, you may transfer among the Variable
Portfolios and/or the fixed account options. Fifteen free transfers are
permitted per contract year. After that, we assess a transfer fee. A MVA may
also apply in the case of a transfer from a fixed account option.
HOW MAY I ACCESS MY MONEY?
During the Accumulation Phase, earnings may be withdrawn at any time
without incurring a withdrawal charge. After the first contract year, your first
withdrawal each contract year will be free of a withdrawal charge if it does not
exceed the greater of: (1) earnings in your contract or (2) 10% of your Purchase
Payments still subject to a withdrawal charge which have been in your contract
for at least a year and not previously withdrawn. You will not get the benefit
of a free withdrawal amount upon a full surrender of your contract.
Withdrawals in excess of these limits may be assessed a withdrawal charge.
Generally, withdrawals may be made from your contract in the amount of $1,000 or
more. You may request withdrawals in writing or by establishing systematic
withdrawals. Under systematic withdrawals, the minimum withdrawal amount is
$250.
There are no withdrawal charges on that portion of your money invested for
seven years or more. Of course, upon a withdrawal you may have to pay income
tax. A 10% IRS penalty tax may also apply if you are under age 59 1/2.
Additionally, we do not assess withdrawal charges upon payment of a death
benefit or when you switch to the Income Phase.
CAN I EXAMINE THE CONTRACT?
You may cancel your contract within ten days of your receipt of the
contract (or longer if required by state law) by mailing it to our Annuity
Service Center. Your contract will be treated as void on the date we receive it
and we will refund an amount equal to the contract value (unless otherwise
required by state law). Its value may be more or less than the money you
initially invested.
WHAT ARE THE CHARGES AND DEDUCTIONS UNDER A CONTRACT?
Each year, we deduct a $30 contract maintenance fee from your contract. We
also deduct insurance charges which equal 1.40% annually of the average daily
value of your contract allocated to the Variable Portfolios. The insurance
charges include: mortality and expense risk, 1.25%, and distribution expense,
.15%.
As with other professionally managed investments, there are also investment
charges imposed on contracts with money allocated to the Variable Portfolios,
which are estimated to range from .55% to 1.11%.
If you take money out in excess of the amount allowed for in your contract,
you may be assessed a withdrawal charge which is a percentage of the Purchase
Payments you withdraw. The percentage declines with each year the money is in
the contract as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
YEAR 1 2 3 4 5 6 7 8+
- ---------------------------------------------------------------------------------------------
WITHDRAWAL
CHARGE 6% 6% 5% 5% 4% 3% 2% 0%
- ---------------------------------------------------------------------------------------------
</TABLE>
Each year, you are allowed to make 15 transfers without charge. After your
first 15 free transfers, a $25 transfer fee ($10 in Pennsylvania and Texas) will
apply to each subsequent transfer.
6
<PAGE> 9
In a limited number of states, you may also be assessed a state premium tax
of up to 3.5% depending upon the state.
WHAT IS THE DEATH BENEFIT UNDER THE CONTRACT?
If you die during the Accumulation Phase of your contract, your Beneficiary
will receive a death benefit.
If you were less than age 70 when your contract was issued, the death
benefit is the greater of:
1. the value of your contract at the time we receive satisfactory proof of
death; or
2. total Purchase Payments less any withdrawals (and any fees or charges
applicable to such withdrawals); or
3. the maximum anniversary value on any contract anniversary preceding your
death. 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) since that
contract anniversary.
If you were age 70 or older when your contract was issued, the death
benefit will equal the value of your contract at the time we receive
satisfactory proof of death.
WHAT ARE THE AVAILABLE INCOME OPTIONS UNDER THE CONTRACT?
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 years;
(4) payments for your lifetime, but for not less than 10 or 20 years; and
(5) payments for a specified period of 3 to 30 years.
You will also need to decide when your income payments begin and if you
want your income payments to fluctuate with investment performance or remain
constant. Once you begin receiving income payments, you cannot change your
income option.
If your contract is part of a Non-qualified retirement plan (one that is
established with after-tax dollars), payments during the Income Phase are
considered partly a return of your original investment. The "original
investment" part of each payment is not taxable as income. For contracts which
are part of a Qualified retirement plan using before-tax dollars, the entire
payment is taxable as income.
7
<PAGE> 10
- --------------------------------------------------------------------------------
FEE TABLES
- --------------------------------------------------------------------------------
OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE (AS A PERCENTAGE OF PURCHASE PAYMENTS):
<TABLE>
<CAPTION>
CONTRIBUTION YEAR
<S> <C>
One.................................................. 6%
Two.................................................. 6%
Three................................................ 5%
Four................................................. 5%
Five................................................. 4%
Six.................................................. 3%
Seven................................................ 2%
Eight and later...................................... 0%
ANNUAL CONTRACT ADMINISTRATION CHARGE....................... $30
TRANSFER FEE................................................ $25*
(no transfer fee applies to the first 15 transfers in a
contract year)
</TABLE>
- ---------------
* $10 in Texas and Pennsylvania.
- --------------------------------------------------------------------------------
ANNUAL SEPARATE ACCOUNT EXPENSES
(AS A PERCENTAGE OF DAILY NET ASSET VALUE)
<TABLE>
<S> <C>
MORTALITY RISK CHARGE....................................... 0.90%
EXPENSE RISK CHARGE......................................... 0.35%
DISTRIBUTION EXPENSE CHARGE................................. 0.15%
----
TOTAL EXPENSE CHARGE................................. 1.40%
====
</TABLE>
- ---------------
ANNUAL TRUST EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER REIMBURSEMENT OR WAIVER OF EXPENSES
FOR THE TRUST'S
FISCAL YEAR ENDED AUGUST 31, 1998):
(FEE AND EXPENSE INFORMATION TO BE PROVIDED BY AMENDMENT)
<TABLE>
<CAPTION>
ADVISORY FEE ADMINISTRATION FEE TOTAL ANNUAL
(AFTER WAIVER OF FEE) (AFTER WAIVER OF FEE) OTHER EXPENSES EXPENSES
--------------------- --------------------- -------------- ------------
<S> <C> <C> <C> <C>
International Equity............. 0.00% 0.00% [ ]% [ ]%
Capital Growth................... 0.00% 0.00% [ ]% [ ]%
Growth and Income................ 0.00% 0.00% [ ]% [ ]%
Asset Allocation................. 0.00% 0.00% [ ]% [ ]%
U.S. Government Income........... 0.00% 0.00% [ ]% [ ]%
Money Market..................... 0.00% 0.00% [ ]% [ ]%
</TABLE>
THE ABOVE EXPENSES WERE PROVIDED BY THE TRUST. THE COMPANY HAS NOT VERIFIED THE
ACCURACY OF THE INFORMATION.
8
<PAGE> 11
- --------------------------------------------------------------------------------
EXAMPLES
- --------------------------------------------------------------------------------
You would pay the following expenses on a $1,000 investment in each Variable
Portfolio, assuming 5% annual return on assets, and:
(a) surrendered or switched to the Income Phase of the contract at the
end of the applicable time period;
(b) the contract is not surrendered or in the Income Phase.
(Expense information to be provided by Amendment)
<TABLE>
<CAPTION>
TIME PERIODS
----------------------------------------
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
International Equity......................... (a) $ $ $ $
(b) $ $ $ $
Capital Growth............................... (a) $ $ $ $
(b) $ $ $ $
Growth and Income............................ (a) $ $ $ $
(b) $ $ $ $
Asset Allocation............................. (a) $ $ $ $
(b) $ $ $ $
U.S. Government Income....................... (a) $ $ $ $
(b) $ $ $ $
Money Market................................. (a) $ $ $ $
(b) $ $ $ $
</TABLE>
- ---------------
EXPLANATION OF FEE TABLES AND EXAMPLES
1. The purpose of the Fee Tables is to show you the various expenses you would
incur directly and indirectly by investing in the contract.
2. For the Underlying Funds the adviser, The Chase Manhattan Bank, has
voluntarily agreed to waive fees or reimburse certain expenses, to keep
annual operating expenses at the levels indicated under "Annual Trust
Expenses" on the prior page. The adviser also may voluntarily waive or
reimburse additional amounts to increase an Underlying Fund's investment
return. All waivers and/or reimbursements may be terminated at any time.
Furthermore, the adviser may recoup any waivers or reimbursements within two
years after such waivers or reimbursements are granted, provided that the
Underlying Fund is able to make such payment and remain in compliance with
the foregoing expense limitations.
3. Absent fee waivers or reimbursement of expenses by the adviser, you would
have incurred the following expenses during the last fiscal year:
International Equity %; Capital Growth %; Growth and Income %; Asset
Allocation %; U.S. Government Income %; and Money Market %.
4. The Examples assume that no transfer fees were imposed. Although premium
taxes may apply in certain states, they are not reflected in the Examples.
5. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
9
<PAGE> 12
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCEPTION TO FISCAL YEAR FISCAL YEAR
PORTFOLIOS 8/31/96 8/31/97 8/31/98
---------- ------------ ----------- -----------
<S> <C> <C> <C>
International Equity
Beginning AUV.................................... $ 10.81 $ 10.92 (to be
Ending AUV....................................... $ 10.92 $ 11.67 provided
Ending #AUs...................................... 87,008 133,652 by
Capital Growth Amendment)
Beginning AUV.................................... $ 11.82 $ 13.95
Ending AUV....................................... $ 13.95 $ 17.51
Ending #AUs...................................... 232,242 289,931
Growth and Income
Beginning AUV.................................... $ 11.40 $ 13.07
Ending AUV....................................... $ 13.07 $ 17.47
Ending #AUs...................................... 227,688 340,235
Asset Allocation
Beginning AUV.................................... 10.96 $ 12.00
Ending AUV....................................... $ 12.00 $ 14.49
Ending #AUs...................................... 40,986 76,458
U.S. Government Income
Beginning AUV.................................... $ 10.67 $ 10.79
Ending AUV....................................... $ 10.79 $ 11.50
Ending #AUs...................................... 22,094 37,216
Money Market
Beginning AUV.................................... $ 10.10 $ 10.47
Ending AUV....................................... $ 10.47 $ 10.84
Ending #AUs...................................... 13,593 163,778
</TABLE>
- ---------------
AUV -- Accumulation Unit Value
AU -- Accumulation Units
- --------------------------------------------------------------------------------
PERFORMANCE DATA
- --------------------------------------------------------------------------------
We advertise the Money Market Portfolio's "yield" and "effective yield."
Both figures are based on historical earnings and are not intended to indicate
future performance. The "yield" of the Money Market Portfolio refers to the net
income generated for a contract funded by an investment in the Money Market
Portfolio over a seven-day period. 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 Money Market 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 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.
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<PAGE> 13
In addition, the separate account may advertise "total return" data for its
other Variable Portfolios. Like the yield figures described above, total return
figures are based on historical data and are not intended to indicate future
performance. The "total return" 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 Variable 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 (assuming a
complete redemption of the contract at the end of the period). Recurring
contract charges are reflected in the total return figures in the same manner as
they are reflected in the yield data for contracts funded through the Money
Market Portfolio. 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.
The separate account may also advertise an annualized 30-day (or one month)
yield figure for Variable Portfolios other than the Money Market Portfolio.
These yield figures are based upon the actual performance of the Variable
Portfolio over a 30-day (or one month) period ending on a date specified in the
advertisement. Like the total return data described above, the 30-day (or one
month) yield data will reflect the effect of all recurring contract charges (but
will not reflect any withdrawal charges or premium taxes). The yield figure is
derived from net investment gain (or loss) over the period expressed as a
fraction of the investment's value at the end of the period.
More detailed information on the computation of advertised performance data
for the separate account is contained in the SAI.
- --------------------------------------------------------------------------------
DESCRIPTION OF ANCHOR NATIONAL, THE SEPARATE ACCOUNT
AND THE GENERAL ACCOUNT
- --------------------------------------------------------------------------------
ANCHOR NATIONAL LIFE INSURANCE COMPANY
Anchor National 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 90067-6022. We conduct life insurance and annuity
business in the District of Columbia and all states except New York. We are an
indirect wholly-owned subsidiary of SunAmerica Inc., a Maryland corporation.
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 Corp.,
Imperial Premium Finance, Inc., Resources Trust Company and five broker-dealers,
specialize in retirement savings and investment products and services. Business
focuses include fixed and variable annuities, mutual funds, premium finance,
broker-dealer services and trust administration services. As of September 30,
1998, Anchor National owned $[ ] billion in assets while SunAmerica Inc., the
Company's ultimate parent, together with its subsidiaries, held $[ ] billion of
assets, consisting of $[ ] billion of assets on its balance sheet, $[ ]
billion of assets managed in mutual funds and private accounts, and $[ ]
billion under custody in retirement trust accounts.
Anchor National may 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 Anchor National's
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. These ratings do not relate to the performance of the
Variable Portfolios.
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<PAGE> 14
SEPARATE ACCOUNT
Anchor National originally established Variable Annuity Account Two (the
"separate account") on May 24, 1994. 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 of 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.
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.
- --------------------------------------------------------------------------------
VARIABLE PORTFOLIO OPTIONS
- --------------------------------------------------------------------------------
The contract currently offers six variable investment Variable Portfolios.
These Variable Portfolios invest in shares of the Trust. These Variable
Portfolios operate similarly to a mutual fund but are only available through the
purchase of this annuity contract. The Underlying Funds are:
<TABLE>
<S> <C>
- INTERNATIONAL EQUITY - ASSET ALLOCATION
- CAPITAL GROWTH - U.S. GOVERNMENT INCOME
- GROWTH AND INCOME - MONEY MARKET
</TABLE>
The Chase Manhattan Bank ("Chase" or the "Adviser") acts as investment
adviser, administrator and custodian for the Trust. Chase Asset Management, Inc.
("CAM") is the investment subadviser to each of the Variable Portfolios except
the International Equity Portfolio. Chase Asset Management (London) Limited, an
English corporation ("CAM London") is the investment subadviser to the
International Equity Portfolio. As investment adviser to the Underlying Funds,
Chase makes investment decisions subject to policies set by the Board of
Trustees of the Trust. As administrator of the Underlying Funds, Chase provides
certain services including coordinating relationships with independent
contractors and agents; preparing and filing of certain documents; preparing
financial statements; arranging for the maintenance of books and records; and
providing office facilities. Certain of these services have been delegated to
Vista Fund Distributors, Inc. ("VFD") which serves as sub-administrator to the
Underlying Funds. As custodian for the Underlying Funds, Chase's
responsibilities include safeguarding and controlling the Underlying Funds' cash
and securities, handling the receipt and delivery of securities, determining
income and collecting interest on investments, maintaining books of original
entry and other required books and accounts, and calculating daily net asset
values.
The Underlying Funds' investment objectives follow [TO BE UPDATED
CONSISTENT WITH FUND PLAIN ENGLISH UPDATE]:
INTERNATIONAL EQUITY PORTFOLIO seeks to provide a total return on assets
from long-term growth of capital and from income principally through a broad
portfolio of marketable equity securities of established foreign companies
organized in countries other than the United States and foreign subsidiaries of
U.S. companies participating in foreign economies.
CAPITAL GROWTH PORTFOLIO seeks to provide long-term capital growth
primarily through diversified holdings (i.e., at least 80% of its assets under
normal circumstances) in common stocks. The Portfolio will seek to invest its
assets in stocks of issuers (including foreign issuers) with small to
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<PAGE> 15
medium capitalizations. The Adviser intends to utilize both quantitative and
fundamental research to identify undervalued stocks with a catalyst for positive
change. Dividend income, if any, is a consideration incidental to the
Portfolio's investment objective of growth of capital. This investment policy
involves the risks that the issues identified by the Adviser will not appreciate
or appreciate as significantly as projected.
GROWTH AND INCOME PORTFOLIO seeks to provide long-term capital appreciation
and to provide dividend income primarily through a broad portfolio (i.e., at
least 80% of its assets under normal circumstances) of common stocks. In
addition, the Portfolio may invest up to 20% of its total assets in convertible
securities. The Adviser intends to utilize both quantitative and fundamental
research to identify undervalued stocks with a catalyst for positive change. The
Adviser believes that the risk involved in seeking capital appreciation will be
moderated somewhat by the anticipated dividend returns on the stocks to be held
by the Portfolio.
ASSET ALLOCATION PORTFOLIO seeks to provide maximum total return through a
combination of long-term growth of capital and current income by investing in a
diversified portfolio of equity and debt securities, including common stocks,
convertible securities and government and corporate fixed-income obligations.
Under normal market conditions, between 35% - 70% of the Portfolio's total
assets will be invested in common stocks and other equity investments and at
least 25% of the Portfolio's assets will be invested in fixed-income senior
securities, defined for this purpose to include non-convertible corporate debt
securities and government obligations. The Adviser considers both the
opportunity for gain and the risk of loss in making investments, and may alter
the relative percentages of assets invested in equity and fixed income
securities from time to time, depending on the judgment of the Adviser as to
general market and economic conditions, trends and yields and interest rates and
changes in fiscal and monetary policies.
U.S. GOVERNMENT INCOME PORTFOLIO seeks to provide monthly dividends as well
as to protect the value of an investor's investment (i.e., to preserve
principal) by investing at least 65% of its assets in U.S. Treasury obligations,
obligations issued or guaranteed by U.S. government agencies or
instrumentalities if such are backed by the "full faith and credit" of the U.S.
Treasury, and securities issued or guaranteed as to principal or interest by the
U.S. government or by agencies or instrumentalities thereof. Neither the United
States nor any of its agencies insures or guarantees the market value of shares
of this Portfolio.
MONEY MARKET PORTFOLIO seeks to provide maximum current income consistent
with preservation of capital and maintenance of liquidity through investments in
U.S. dollar denominated commercial paper, obligations of foreign governments,
obligations issued or guaranteed by U.S. banks, securities issued by the U.S.
government, its agencies or its instrumentalities and repurchase agreement.
There is no assurance that the investment objective of any of the
Underlying Funds will be met. You bear the complete investment risk for Purchase
Payments allocated to a Portfolio. Contract Values will fluctuate in accordance
with the investment performance of the Portfolio(s). Additionally, contract fees
and charges reduce investment return.
YOU SHOULD READ THE PROSPECTUS FOR THE TRUST CAREFULLY. THE PROSPECTUS
CONTAINS DETAILED INFORMATION ABOUT THE UNDERLYING FUNDS, INCLUDING MORE
DETAILED INFORMATION ABOUT EACH UNDERLYING FUNDS' INVESTMENT OBJECTIVE AND RISK
FACTORS.
VOTING RIGHTS
Anchor National is the legal owner of the Trust's shares. However, when an
Underlying Fund 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. Should we determine that we
are no longer required to comply with these rules, we will vote the shares in
our own right.
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<PAGE> 16
SUBSTITUTION OF SECURITIES
If Underlying Funds become unavailable for investment, we may be required
to substitute shares of another Underlying Fund. We will seek prior approval of
the SEC and give you notice before substituting shares.
- --------------------------------------------------------------------------------
FIXED ACCOUNT OPTIONS
- --------------------------------------------------------------------------------
ALLOCATIONS
The contract also offers fixed account options for periods of 1, 3, 5, 7 or
10 years. We call these time periods guarantee periods. 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 interest rates offered for subsequent Purchase Payments and money already
in the fixed account options. In addition, different guarantee periods offer
different interest rates. Once established, the rates for specified payments do
not change during the specified period.
When a guarantee period ends, you may leave your money in the same
guarantee period. You may also reallocate your money to another fixed account
option or to the Variable Portfolios. 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 the 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 ("MVA")
If you take money out of the fixed account options before the end of the
guarantee period, we make an adjustment to your contract (the "MVA"). The MVA
reflects any difference in the interest rate environment between the time you
place your money in the fixed account 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 any MVA.
We calculate the MVA by doing a comparison between current rates and the
rate being credited to you in the fixed account 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 account options and the time you take it out, we credit a positive
adjustment to your contract. Conversely, if interest rates increase during the
same period, we post a negative adjustment to your contract.
Where the MVA is negative, we deduct the adjustment from any money
remaining in the fixed account option. If there is not enough money in the fixed
account option to meet the negative deduction, we deduct the remainder from your
withdrawal. Where the MVA is positive, we add the adjustment to your withdrawal
amount.
APPENDIX A shows how to calculate the MVA.
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<PAGE> 17
- --------------------------------------------------------------------------------
CONTRACT CHARGES
- --------------------------------------------------------------------------------
There are charges and expenses associated with your contract. These charges
and expenses reduce your investment return. We will not increase these fees and
charges under your contract. Some states may require that we charge less than
the amounts described below.
INSURANCE CHARGES
The amount of this charge is 1.40% annually, of the value of your contract
invested in the Variable Portfolios. We deduct the charge daily.
The insurance charge compensates us for the mortality and expense risks and
the costs of contract distribution we assume. If these charges do not cover all
expenses, we will pay the difference. Likewise, if these charges exceed our
expenses, we will keep the difference.
WITHDRAWAL CHARGES
The contract provides a free withdrawal amount every year. (SEE CONTRACT
CHARGES, FREE WITHDRAWAL AMOUNT, PAGE 16.) Additionally, earnings in your
contract may be withdrawn free of withdrawal charges. If you take money out in
excess of the free withdrawal amount, you may incur a withdrawal charge.
We apply a withdrawal charge against each Purchase Payment you put into the
contract. After a Purchase Payment has been in the contract for seven complete
years, no withdrawal charge applies. 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
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WITHDRAWAL CHARGE 6% 6% 5% 5% 4% 3% 2% 0%
- ------------------------------------------------------------------------------------------------------
</TABLE>
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. If you withdraw all of your contract value, applicable
withdrawal charges are deducted from the amount withdrawn.
We do not assess a withdrawal charge for money withdrawn to pay a death
benefit or to begin the Income Phase of your contract. Withdrawals made prior to
age 59 1/2 may result in a 10% IRS penalty tax. SEE TAXES, PAGE 27.
APPENDIX B provides more information on withdrawals and the withdrawal
charge.
INVESTMENT CHARGES
Charges are deducted from the Underlying Funds for the advisory and other
expenses of the Underlying Funds. THE FEE TABLES LOCATED AT PAGE 8 illustrate
these charges and expenses. For more detailed information on these investment
charges, refer to the attached prospectus for the Trust.
CONTRACT MAINTENANCE FEE
During the Accumulation Phase, we subtract a contract maintenance fee from
your account once per contract year. This charge compensates us for the cost of
contract administration. We deduct the $30 contract maintenance fee from your
account value on your contract anniversary. If you withdraw your entire contract
value, the fee is deducted from that withdrawal.
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<PAGE> 18
TRANSFER FEE
The contract currently provides for 15 free transfers between investment
options each contract year. After that, a charge of $25 applies to each
additional transfer in any one contract year ($10 in Pennsylvania and Texas).
SEE TRANSFERS DURING THE ACCUMULATION PHASE, PAGE 22.
PREMIUM TAX
Certain states charge us 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 begin the Income
Phase of 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 used 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.
We may make such a determination regarding sales to our employees, our
affiliates' employees and employees of currently contracted broker-dealers, our
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.
FREE WITHDRAWAL AMOUNT
Your contract provides for a free withdrawal amount. Purchase Payments that
are no longer subject to a withdrawal charge and not previously withdrawn, plus
earnings, may be withdrawn without penalty.
After the first full contract year, the contract provides for a free
withdrawal amount on your first withdrawal of the contract year. The free
withdrawal amount is the greater of (1) earnings in your contract and (2) 10% of
your total Purchase Payments invested for at least one year and not yet
withdrawn. Total Purchase Payments are equal to your total Purchase Payments
invested in the contract less any Purchase Payments withdrawn upon which a
surrender charge was paid and the amount of the surrender charge. Additionally,
once a Purchase Payment is no longer subject to withdrawal charges, it is no
longer included when determining total Purchase Payments.
Upon a full surrender of your contract, to the extent you previously
withdraw Purchase Payments free of a withdrawal charge under the free withdrawal
provision, we will recoup the full withdrawal charge on such amounts, as if that
money was still invested in the contract on the date of surrender.
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<PAGE> 19
We will waive the withdrawal charge upon payment of a death benefit. Where
legally permitted, the withdrawal charge may be eliminated when a contract is
issued to an officer, director or employee of the Company or its affiliates.
NURSING HOME WAIVER
If your contract was issued with the appropriate rider and you are confined
to a nursing home for 60 days or longer, we may waive the withdrawal charge
and/or the MVA on certain withdrawals prior to the Annuity Date (not available
in Texas). The waiver applies only to withdrawals made while you are in a
nursing home or within 90 days after you leave the nursing home. Your rider
prohibits use of this waiver during the first 90 days after purchase. In
addition, the confinement period for which you seek the waiver must begin after
you purchase your contract.
In order to use this waiver, you must submit with your withdrawal request,
the following documents: (1) a doctor's note recommending admittance to a
nursing home; (2) an admittance form which shows the type of facility you
entered; and (3) a bill from the nursing home which shows that you met the 60
day confinement requirement.
- --------------------------------------------------------------------------------
DESCRIPTION OF THE CONTRACTS
- --------------------------------------------------------------------------------
SUMMARY
This contract works in two stages, the Accumulation Phase and the Income
Phase. Your contract is in the Accumulation Phase while you make payments into
the contract. The Income Phase begins when you request that we begin making
payments to you out of the money accumulated in your contract.
OWNERSHIP
The Vista Variable Annuity is a Flexible Payment Group Deferred Annuity
Contract. Anchor National issues a group contract to a contract holder for the
benefit of the participants in the group. As a participant in the group, you
will receive a certificate which evidences your ownership. As used in this
prospectus, the term contract refers to your certificate. In some states, a
Flexible Payment Individual Modified Guaranteed and Variable Deferred Annuity
Contract is available instead. Such a contract is identical to the contract
described in this prospectus, with the exception that we issue it directly to
the owner.
ANNUITANT
The annuitant is the person on whose life we base income payments. You may
change the Annuitant at any time before the Annuity Date. You may also designate
a second person on whose life, together with the annuitant, income payments
depend. If the annuitant dies before the Annuity Date, you must notify us and
select a new annuitant.
MODIFICATION OF THE CONTRACT
Only the Company's President, a Vice President or Secretary may approve a
change or waive a provision of the contract. Any change or waiver must be in
writing. We reserve the right to modify the terms of the contract as necessary
to comply with changes in applicable law.
ASSIGNMENT
Contracts issued pursuant to Non-qualified plans that are not subject to
Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA") may be
assigned by the owner at any time during the lifetime of the Annuitant prior to
the Annuity Date. We will not be bound by any assignment until
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<PAGE> 20
written notice is received by us at our Annuity Service Center. We are not
responsible for the validity, tax or other legal consequences of any assignment.
An assignment will not affect any payments we may make or actions we may take
before we receive notice of the assignment.
If the contract is issued pursuant to a Qualified plan (or a Non-qualified
plan that is subject to Title 1 of ERISA), it may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed under
applicable law.
BECAUSE AN ASSIGNMENT MAY BE A TAXABLE EVENT, YOU SHOULD CONSULT A
COMPETENT TAX ADVISER SHOULD YOU WISH TO ASSIGN YOUR CONTRACT.
DEATH BENEFIT
If you die during the Accumulation Phase of your contract, we pay a death
benefit to your Beneficiary.
If you were less than age 70 when your contract was issued, the death
benefit is equal to the greater of:
1. the value of your contract at the time we receive satisfactory proof of
death; or
2. total Purchase Payments less any withdrawals (and any fees or charges
applicable to such withdrawals); or
3. the maximum anniversary value on any contract anniversary preceding your
death. 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) since that
contract anniversary.
If you were age 70 or older when your contract was issued, the death
benefit will equal the value of your contract at the time we receive
satisfactory proof of death.
We do not pay the death benefit if you die after you switch to the Income
Phase. However, if you die during the Income Phase, your Beneficiary receives
any remaining guaranteed income payments in accordance with the income option
you selected. (SEE INCOME PHASE, INCOME OPTIONS, PAGE 24.)
You name your Beneficiary. You may change the Beneficiary at any time,
unless you previously made an irrevocable Beneficiary designation.
We pay the death benefit when we receive satisfactory proof of death. We
consider the following satisfactory proof of death:
1. a certified copy of the death certificate; or
2. a certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
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 require additional proof before we pay the death benefit.
The death benefit payment must begin immediately upon receipt of all
necessary documents. In any event, the death benefit must be paid within 5 years
of the date of death unless the Beneficiary elects to have it payable in the
form of an income option. 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. Payments must begin within one year of the date
of your death. If a Beneficiary does not elect a specific form of pay out within
60 days of our receipt of proof of death, we pay a lump sum death benefit to the
Beneficiary.
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<PAGE> 21
If the Beneficiary is the spouse of a deceased owner, he or she can elect
to continue the contract at the then current value. If the Beneficiary/spouse
continues the contract, we do not pay a death benefit to him or her.
- --------------------------------------------------------------------------------
PURCHASES, WITHDRAWALS AND CONTRACT VALUE
- --------------------------------------------------------------------------------
PURCHASE PAYMENTS
A 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 your contract
is Qualified or Non-qualified for tax purposes. SEE TAXES, PAGE 27.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
MINIMUM
MINIMUM INITIAL SUBSEQUENT
PURCHASE PAYMENT PURCHASE PAYMENT
- --------------------------------------------------------------------
Qualified $2,000 $250
- --------------------------------------------------------------------
Non-Qualified $5,000 $250
- --------------------------------------------------------------------
</TABLE>
Prior Company approval is required to accept Purchase Payments greater than
$1,000,000. Also, the optional automatic payment plan allows you to make
subsequent Purchase Payments of as little as $100.00.
We may refuse any Purchase Payment. In general, Anchor National will not
issue a Qualified contract to anyone who is age 70 1/2 or older, unless it is
shown that the minimum distribution required by the IRS is being made. In
addition, we may not issue a contract to anyone over age 85.
AUTOMATIC DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging ("DCA") program allows you to invest gradually in
the Variable Portfolios. Under the program you systematically transfer a set
dollar amount or percentage of portfolio value from the Money Market Portfolio,
U.S. Government Income Portfolio or the 1-year fixed account option (source
accounts) to any other Variable Portfolio. Transfers may be monthly, quarterly,
semiannually or annually. You may change the frequency at any time by notifying
us in writing. The minimum transfer amount under the DCA program is $100,
regardless of the source account.
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.
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<PAGE> 22
EXAMPLE:
Assume that you want to gradually move $750 each quarter from the Money
Market Portfolio to the Growth and Income Portfolio over six quarters. You
set up dollar cost averaging and purchase Accumulation Units at the
following hypothetical values:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
ACCUMULATION UNITS
QUARTER UNIT VALUE 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>
In this example, 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.
ASSET ALLOCATION REBALANCING
Earnings in your contract may cause the percentage of your investment in
each investment option to differ from your original allocations. The automatic
asset rebalancing program addresses this situation. At your election, we
periodically rebalance your investments to return your allocations to their
original percentages.
Asset rebalancing may involve shifting a portion of your money out of an
investment option with a higher return into an investment option with a lower
return. You request quarterly, semiannual or annual rebalancing. Transfers made
as a result of rebalancing do not count against your 15 free transfers for the
contract year.
We reserve the right to modify, suspend or terminate this program at any
time.
EXAMPLE:
Assume that you want your initial Purchase Payment split between two
Variable Portfolios. You want 50% in the U.S. Government Income Portfolio
and 50% in the Capital Growth Portfolio. Over the next calendar quarter,
the U.S. Government Income Portfolio outperforms the Capital Growth
Portfolio. At the end of the calendar quarter, the U.S. Government Income
Portfolio now represents 60% of your holdings because it has increased in
value and the Capital Growth Portfolio represents 40% of your holdings. If
you had chosen quarterly rebalancing, on the last day of that quarter,
Anchor National would sell some of your units in the U.S. Government Income
Portfolio to bring its holdings back to 50% and use the money to buy more
units in the Capital Growth Portfolio to increase those holdings to 50%.
PRINCIPAL ADVANTAGE PROGRAM
The principal advantage program allows you to invest in one or more
Variable Portfolios without putting your principal at direct risk. The program
accomplishes this by allocating your investment strategically between the fixed
investment options and Variable Portfolios. You decide how much you want to
invest and approximately when you want a return of principal. Anchor National
calculates 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. The remaining principal is
invested in the Variable Portfolio(s) of your choice.
Anchor National reserves the right to modify, suspend or terminate this
program at any time.
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<PAGE> 23
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 7% interest rate, Anchor
National allocates $62,275 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 $37,725 may be allocated among the Variable Portfolios, as
determined by you, to provide opportunity for greater growth.
ALLOCATION OF PURCHASE PAYMENTS
We invest your Purchase Payments in the fixed and variable investment
options according to your instructions. If we receive a Purchase Payment without
allocation instructions, we invest the money according to your last allocation
instructions. SEE VARIABLE PORTFOLIO OPTIONS, PAGE 12 AND FIXED ACCOUNT OPTIONS,
PAGE 14.
In order to issue your contract, we must receive your completed
application, Purchase Payment allocation instructions and any other required
paperwork at our principal place of business. 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
When you allocate a Purchase Payment to the Variable Portfolios, we credit
your contract with Accumulation Units of the separate account. We determine the
number of Accumulation Units credited by dividing the Purchase Payment by the
Accumulation Unit value for the specific Variable Portfolio. The value of an
Accumulation Unit will go up and down based on the performance of the Variable
Portfolios.
We calculate the value of an Accumulation Unit each day that the New York
Stock Exchange ("NYSE") is open as follows:
1. We determine the total value of money invested in a particular Variable
Portfolio;
2. We subtract from that amount all applicable contract charges; and
3. We divide this amount by the number of outstanding Accumulation Units.
We determine the number of Accumulation Units credited to your contract by
dividing the Purchase Payment by the Accumulation Unit value for the specific
Variable Portfolio.
EXAMPLE:
We receive a $25,000 Purchase Payment from you on Wednesday. You allocate
the money to the Asset Allocation Portfolio. The value of an Accumulation
Unit for the Asset Allocation Portfolio is $11.10 when the NYSE closes on
Wednesday. Your Purchase Payment of $25,000 is then divided by $11.10 and
we credit your contract on Wednesday night with 2252.52 Accumulation Units
of the Asset Allocation Portfolio.
Performance of the Variable Portfolios and the charges and expenses under
your contract affect Accumulation Unit values. These factors cause the value of
your contract to go up and down.
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<PAGE> 24
FREE LOOK
You may cancel your contract within ten days after receiving it (or longer
if required by state law). Anchor National calls this a "free look." To cancel,
you must mail the contract along with your free look request to the Annuity
Service Center at P.O. Box 54299, Los Angeles, California 90054-0299. We will
refund the value of your contract on the day we receive your request. The amount
refunded to you may be more or less than the amount you originally invested.
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.
TRANSFER DURING THE ACCUMULATION PHASE
During the Accumulation Phase you may transfer funds between the Variable
Portfolios and/or the fixed account options. You must transfer at least $100. If
less than $100 will remain in any Variable Portfolio after a transfer, that
amount must be transferred as well.
You may request transfers of your account value between the Variable
Portfolios and/or the fixed account options in writing or by telephone. We
currently allow 15 free transfers per contract per year. A charge of $25 ($10 in
Pennsylvania and Texas) for each additional transfer in any contract year
applies after the first 15 transfers. Transfers resulting from your
participation in the DCA program count against your 15 free transfers per
contract year. However, transfers resulting from your participation in the
automatic asset rebalancing program do not count against your 15 free transfers.
We accept transfer requests by telephone unless you specify not to on your
contract application. Additionally, in the future you may be able to execute
transfers or other financial transactions over the internet. When receiving
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, Anchor National 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 any procedures, we may be liable for any
losses due to unauthorized or fraudulent instructions.
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 Funds; or
- The Underlying Funds inform us that they need to restrict the purchase or
redemption of the shares because of excessive trading or because a
specific transfer or group of transfers is deemed to have a detrimental
effect on share prices of affected Underlying Funds.
Where permitted by law, we may accept your authorization for a third party
to make transfers for you subject to certain 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 will 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 for you or appointed by 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 extra for providing these
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<PAGE> 25
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.
For information regarding transfers during the Income Phase, SEE INCOME
PHASE, TRANSFERS DURING THE INCOME PHASE, PAGE 26.
We reserve the right to modify, suspend, waive or terminate these transfer
provisions at any time.
DISTRIBUTION OF CONTRACTS
Registered representatives of broker-dealers sell the contract. Anchor
National pays commissions to these representatives for the sale of the
contracts. We do not expect the total commissions to exceed 6.5% 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.
Vista Fund Distributors, Inc. ("VFD"), located at 101 Park Avenue, New
York, New York, 10178, serves as distributor of the Contracts. VFD 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. VFD is not
affiliated with Anchor National or the Adviser to the Trust.
WITHDRAWALS
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 PHASE,
PAGE 24.)
Generally, we deduct a withdrawal charge applicable to any total or partial
withdrawal and a MVA against withdrawals from the 3, 5, 7 or 10 year fixed
account options. If you withdraw your entire contract value, a deduction for
premium taxes and the contract maintenance fee also occurs. (SEE CONTRACT
CHARGES, WITHDRAWAL CHARGE, PAGE 15.)
Under most circumstances, the partial withdrawal minimum is $1,000. We
require that the value left in any investment option be at least $100 after the
withdrawal. You must send a written withdrawal request. Unless you provide
different instructions, partial withdrawals will be made pro rata from each
Variable Portfolio and the fixed account option in which your contract is
invested.
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 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
Variable 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 account option. Such deferrals are limited to no longer than six months.
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<PAGE> 26
SYSTEMATIC WITHDRAWAL PROGRAM
During the Accumulation Phase, you may elect to receive periodic income
payments under the systematic withdrawal program. Under the program, you may
choose to take monthly, quarterly, semiannual or annual payments from your
contract. Electronic transfer of these funds to your bank account is available.
The minimum amount of each withdrawal is $250. There must be at least $100
remaining in each Variable Portfolio after a withdrawal from your contract at
all times. Withdrawals may be subject to a withdrawal change, a MVA and
taxation, and a 10% IRS penalty tax may apply if you are under age 59 1/2. 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. Anchor
National reserves 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 value to you.
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INCOME PHASE
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ANNUITY DATE
During the Income Phase, we use the money accumulated in your contract 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 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.
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, most Qualified contracts require you to take minimum
distributions after you reach age 70 1/2. (SEE TAXES, PAGE 27.)
INCOME OPTIONS
Currently, this contract offers five 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 based on 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 designate a new Annuitant.
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<PAGE> 27
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 SURVIVOR LIFE ANNUITY WITH 10 YEARS GUARANTEED
This option is similar to option 2 above, with an additional guarantee of
payments for at least 10 years. If the Annuitant and the survivor die before all
of the guaranteed income payments have been made, the remaining payments are
made to the Beneficiary under your contract.
OPTION 4 -- LIFE ANNUITY WITH 10 OR 20 YEARS GUARANTEED
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 3
to 30 years. If the Annuitant dies before all of the guaranteed income payments
are made, the remaining income payments will be made to the Beneficiary under
your contract.
Please read the SAI for a more detailed discussion of the income options.
You can choose income payments that are fixed, variable or both. If at the
date when income payments begin you are invested in the Variable Portfolios
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. Further, if
you are invested in both the fixed and variable investment options when payments
begin your payments will be fixed and variable. If income payments are fixed,
Anchor National guarantees the amount of each payment. If the income payments
are variable, the amount is not guaranteed.
We make income payments on a monthly, quarterly, semiannual or annual
basis. You instruct us to send you a check or to have the payments directly
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 income payments of less than $50 per payment, the
frequency of your payments may be decreased, state law allowing.
If you are invested in the Variable Portfolios after the Annuity Date your
income payments vary depending on four things:
- for life options, your age when payments begin, and;
- the value of your contract in the Variable Portfolios on the Annuity
Date, and;
- the 3.5% assumed investment rate used in the annuity table for the
contract, and;
- the performance of the Variable Portfolios in which you are invested
during the time you receive income payments.
If you are invested in both the fixed account options and the Variable
Portfolios after the Annuity Date, the allocation of funds between the fixed and
variable options also impacts the amount of your income payments.
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<PAGE> 28
TRANSFERS DURING THE INCOME PHASE
During the Income Phase, one transfer per month is permitted between the
Variable Portfolios. No other transfers are allowed during the Income Phase.
DEFERMENT OF PAYMENTS
We may defer making fixed income payments for up to six months, or less if
required by law. Interest is credited to you during the deferral period.
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ADMINISTRATION
- --------------------------------------------------------------------------------
We are responsible for the administrative servicing of your contract.
Please contact our Annuity Service Center at 1-800-90-VISTA, 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.
We rely significantly on computer systems and applications in our daily
operations. Many of our systems are not presently year 2000 compliant, which
means that because they have historically used only two digits to identify the
year in a date, they will fail to distinguish dates in the "2000s" from dates in
the "1900s." Anchor National's business, financial condition and results of
operations could be materially and adversely affected by the failure of our
systems and applications (and those operated by third parties interfacing with
our systems and applications) to properly operate or manage these dates.
Anchor National has a coordinated plan to repair or replace these
noncompliant systems and to obtain similar assurances from third parties
interfacing with our systems and applications. In fiscal 1997, the Company's
parent recorded a $15.0 million provision for estimated programming costs to
repair noncompliant systems, of which $6.2 million was allocated to us. We are
making expenditures which we expect will ultimately total $5.0 million to
replace certain other noncompliant systems. Total expenditures relating to the
repair of noncompliant systems will be capitalized by the Company's parent as
software costs and will be paid over future periods. Both phases of the project
are progressing according to plan and we expect to substantially complete them
by the end of calendar 1998. We will test both the repaired and replacement
systems during calendar 1999.
In addition, we distributed a year 2000 questionnaire to our significant
suppliers, distributors, financial institutions, lessors and others we do
business with to evaluate their year 2000 compliance plans and state of
readiness and to determine how our systems and applications may be affected by
their failure to solve their own year 2000 issues. To date, however, we have
only received preliminary feedback from such parties and have not independently
confirmed any information received from other parties with respect to the year
2000 issues. Therefore, we cannot assure that such other parties will complete
their year 2000 conversions in a timely fashion or will not suffer a year 2000
business disruption that may adversely affect our financial condition and
results of operations.
Because we expect to complete our year 2000 conversion prior to any
potential disruption to our business, we have not developed a comprehensive year
2000 contingency plan. Anchor National closely monitors the progression of its
plan for compliance, and if necessary, would devote additional resources to
assure the timely completion of its year 2000 plan. If we determine that our
business is at material risk of disruption due to the year 2000 issue or
anticipate that our year 2000 conversion will not be completed in a timely
fashion, we will work to enhance our contingency plans.
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The above statements are forward-looking. The costs of our year 2000
conversion, the date which we have set to complete such conversion and the
possible risks associated with the year 2000 issue are based on our current
estimates and are subject to various uncertainties that could cause actual
results to differ materially from our expectations. Such uncertainties include,
among others, our success in identifying systems and applications that are not
year 2000 compliant, the nature and amount of programming required to upgrade or
replace each of the affected systems and applications, the availability of
qualified personnel, consultants and other resources, and the success of the
year 2000 conversion efforts of others.
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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. 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 IRA, your contract is referred to as a
Non-qualified contract. A Non-qualified contract 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: 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 income 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) when paid 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.
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<PAGE> 30
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) when paid 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) experiences hardship (as defined in the IRC). 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.
DIVERSIFICATION
The IRC imposes certain diversification requirements on the underlying
investments for a variable annuity. We believe that each underlying Variable
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 Variable Portfolios. It is unknown to what extent
owners are permitted to select investments, to make transfers among Variable
Portfolios or the number and type of Variable 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 Portfolios. Due to the uncertainty in this area, we reserve
the right to modify the contract in an attempt to maintain favorable tax
treatment.
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ADDITIONAL INFORMATION ABOUT THE COMPANY
- --------------------------------------------------------------------------------
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data of Anchor National and
its subsidiaries should be read in conjunction with the consolidated financial
statements and notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations, both of which are included in
this prospectus. Certain items have been reclassified to conform to the current
year's presentation.
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PROPERTIES
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Anchor National leases its principal office at 1 SunAmerica Center, Los
Angeles, California. The Company, through an affiliate, also leases office space
in Torrance, California and in Woodland Hills, California. The Company's
broker-dealer and asset management subsidiaries lease offices in New York, New
York.
Anchor National believes that such properties, including the equipment
located therein, are suitable and adequate to meet the requirements of the
Company's businesses.
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DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The directors and principal officers of Anchor National as of December 23,
1998 are listed below, together with information as to their ages, dates of
election and principal business occupation during the last five years (if other
than their present business occupation).
<TABLE>
<CAPTION>
OTHER POSITIONS AND
YEAR OTHER BUSINESS
PRESENT ASSUMED EXPERIENCE WITHIN
NAME AGE POSITION(S) POSITION(S) LAST FIVE YEARS** FROM-TO
---- --- ----------- ----------- ------------------------- -------
<S> <C> <C> <C> <C> <C>
(TO BE PROVIDED BY AMENDMENT)
</TABLE>
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<PAGE> 33
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EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The executive officers of Anchor National also serve as employees of
SunAmerica Inc. or its affiliates. Anchor National does not pay any compensation
directly to the officers. However, a portion of certain officers' compensation
is allocated to Anchor National based on time devoted to his or her duties as an
executive officer of Anchor National.
The following table shows the cash compensation paid or earned, based on
these allocations, to the chief executive officer and top four executive
officers of Anchor National and to all executive officers as a group:
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR CAPACITIES IN ALLOCATED CASH
NUMBER IN GROUP WHICH SERVED COMPENSATION
--------------------- ------------- --------------
<S> <C> <C>
Eli Broad Chairman, Chief Executive $
Officer and President
Jay S. Wintrob Executive Vice President
James R. Belardi Senior Vice President
Jana W. Greer Senior Vice President
All Executive Officers as a Group(14) $
==========
</TABLE>
Directors who are also employees of SunAmerica Inc. receive no compensation
in addition to their compensation as employees of SunAmerica Inc. or its
affiliates.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No shares of Anchor National are owned by any executive officer or
director. Anchor National is an indirect wholly owned subsidiary of SunAmerica
Inc. Except for Mr. Broad, the percentage of shares of SunAmerica Inc.
beneficially owned by any director does not exceed one percent of the class
outstanding. At December 15, 1998, Mr. Broad was the beneficial owner of
shares of Common Stock ( % of the class outstanding) and
[ ] shares of Class B Common Stock ( % of the class outstanding).
Of the Common Stock, [ ] shares represent restricted shares granted
under the Company's employee stock plans as to which Mr. Broad has no investment
power; and [ ] shares represent employee stock options held by Mr.
Broad which are or will become exercisable on or before February 15, 1999 and as
to which he has no voting or investment power. Of the Class B Stock,
[ ] shares are held directly by Mr. Broad; and shares are
registered in the name of a corporation as to which Mr. Broad exercises sole
voting and dispositive powers. At December 15, 1998, all directors and officers
as a group beneficially owned shares of Common Stock (7.64% of the
class outstanding) and shares of Class B Common Stock (84.40% of the
class outstanding).
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REGULATION
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Anchor National is subject to regulation and supervision by the insurance
regulatory agencies of the states in which it is authorized to transact
business. State insurance laws establish supervisory agencies with broad
administrative and supervisory powers. Principal among these powers are granting
and revoking licenses to transact business, regulating marketing and other trade
practices, operating guaranty associations, licensing agents, approving policy
forms, regulating certain premium rates, regulating insurance holding company
systems, establishing reserve requirements, prescribing the form and content of
required financial statements and reports, performing financial, market conduct
and other examinations, determining the reasonableness and adequacy of statutory
capital and surplus, defining acceptable accounting principles, regulating the
type, valuation and amount of investments permitted, and limiting the amount of
dividends that can be paid and the size of transactions that can be consummated
without first obtaining regulatory approval.
During the last decade, the insurance regulatory framework has been placed
under increased scrutiny by various states, the federal government and the NAIC.
Various states have considered or enacted legislation that changes, and in many
cases increases, the states' authority to regulate insurance companies.
Legislation has been introduced from time to time in Congress that could result
in the federal government assuming some role in the regulation of insurance
companies or allowing combinations between insurance companies, banks and other
entities. In recent years, the NAIC has approved and recommended to the states
for adoption and implementation several regulatory initiatives designed to
reduce the risk of insurance company insolvencies and market conduct violations.
These initiatives include investment reserve requirements, risk-based capital
standards, codification of insurance accounting principles, new investment
standards and restrictions on an insurance company's ability to pay dividends to
its stockholders. The NAIC is also currently developing model laws relating to
product design and illustrations for annuity products. Current proposals are
still being debated and we are monitoring developments in this area and the
effects any changes would have on us.
SunAmerica Asset Management is registered with the SEC as a registered
investment advisor under the Investment Advisors Act of 1940. The mutual funds
that it markets are subject to regulation under the Investment Company Act of
1940. SunAmerica Asset Management and the mutual funds are subject to regulation
and examination by the SEC. In addition, variable annuities and the related
separate accounts of the Company are subject to regulation by the SEC under the
Securities Act of 1933 and the Investment Company Act of 1940.
Our broker-dealer subsidiary is subject to regulation and supervision by
the states in which it transacts business, as well as by the SEC and the
National Association of Securities Dealers ("NASD"). The NASD has broad
administrative and supervisory powers relative to all aspects of business and
may examine the subsidiary's business and accounts at any time.
- --------------------------------------------------------------------------------
CUSTODIAN
- --------------------------------------------------------------------------------
Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, serves as
the custodian of the assets of the separate account.
32
<PAGE> 35
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
REGISTRATION STATEMENTS
- --------------------------------------------------------------------------------
Anchor National is subject to the informational requirements of the
Securities and Exchange Act of 1934 (as amended). It files 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 contact 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
registrations statement and its 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 statement and its
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.
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
The financial statements of Anchor National as of September 30, 1998 and
1997 and for each of the three years in the period ended September 30, 1998
included in this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
33
<PAGE> 36
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
Additional information concerning the operations of the separate account is
contained in a Statement of Additional Information ("SAI"), which is available
without charge upon written request addressed to us at our Annuity Service
Center, P.O. Box 54299, Los Angeles, California 90054-0299 or by calling
(800)90-VISTA. The contents of the SAI are tabulated below.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Performance Data............................................ 3
Income Payments............................................. 5
Annuity Unit Values......................................... 5
Qualified Plans............................................. 10
Distribution of Contracts................................... 11
Financial Statements........................................ 12
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements of Anchor National which are included in this
prospectus should be considered only as bearing on the ability of the Company to
meet its obligations with respect to amounts allocated to the General Account
and with respect to the death benefit and the Company's assumption of the
mortality and expense risks and the risk that the withdrawal charge will be
insufficient to cover the cost of distributing the contracts. They should not be
considered as bearing on the investment performance of the Underlying Fund
shares held in the Variable Portfolios of the separate account. The value of the
interests of owners, participants, Annuitants, payees and Beneficiaries under
the variable portion of the contracts is affected primarily by the investment
results of the Underlying Funds.
34
<PAGE> 37
REPORT OF INDEPENDENT ACCOUNTANTS
[TO BE PROVIDED BY AMENDMENT]
35
<PAGE> 38
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEET
[TO BE PROVIDED BY AMENDMENT]
36
<PAGE> 39
APPENDIX A
MARKET VALUE ADJUSTMENT ("MVA")
The MVA 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 account
option, the greater the impact of changing interest rates. The impact of the MVA
can be either positive or negative, and is computed by multiplying the amount
withdrawn, transferred or annuitized by the following factor:
(N/12)
[(1+I/(1+J+0.005)] - 1
The MVA formula may differ in certain states
where:
I is the interest rate you are earning on the money invested in the
fixed account 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 account option (fractional years are
rounded up to the next full year); and
N is the number of full months remaining in the term you initially
agreed to leave your money in the fixed account option.
EXAMPLES OF THE MVA
The examples below assume the following:
(1) You made an initial Purchase Payment of $10,000 and allocated it to the
10-year fixed account option at a rate of 7.25%;
(2) You make a partial withdrawal of $4,000 when 2 1/2 years (30 months)
remain in the 10-year term you initially agreed to leave your money in
the fixed account option (N=30);
(3) The accumulated value attributable to the Purchase Payment on the date
of withdrawal is $16,632.69; and
(4) 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 seven full years. If a withdrawal charge applies, it is
deducted before the MVA. The MVA is assessed on the amount withdrawn less any
withdrawal charges.
POSITIVE ADJUSTMENT
Assume that on the date of withdrawal, the interest rate in effect for a new
Purchase Payments in the 3-year fixed account option is 6.25%.
(N/12)
The MVA factor is = [(1+I/(1+J+0.005)] - 1
(30/12)
= [(1.0725)/(1.0625+.005)] - 1
(2.5)
= (1.004684) - 1
= 1.011751 - 1
= + 0.011751
The requested withdrawal amount is multiplied by the MVA factor to determine the
MVA:
$4,000 x (+0.011751) = +$47.00
$47.00 represents the MVA that would be added to your withdrawal.
NEGATIVE ADJUSTMENT
Assume that on the date of withdrawal, the interest rate in effect for new
Purchase Payments in the 3-year fixed investment option (2 1/2 years rounded up
to the next full year) is 8.25%.
(N/12)
The MVA factor is = [(1+I)/(1+J+0.005)] - 1
(30/12)
= [(1.0725)/(1.0825+.005)] - 1
(2.5)
= (0.986207) - 1
= 0.965873 - 1
= - 0.034127
The requested withdrawal amount is multiplied by the MVA factor to determine the
MVA:
$4,000 X (- 0.034127) = -$136.51
$136.51 represents the MVA that will be deducted from the money remaining in the
10-year fixed account option.
A-1
<PAGE> 40
EXAMPLE OF FULL WITHDRAWAL WITH MVA AND WITHDRAWAL CHARGE
Assume the same facts as in Part 2, above, except that under assumption (2)
a complete withdrawal is requested with 4 1/2 years (54 months) remaining in the
guarantee period (i.e., N = 54). The guarantee amount on the date of withdrawal
is $14,515.97. As was the case with the Examples in Part 1, above, the earnings
may be withdrawn free of withdrawal charge, leaving the initial Purchase Payment
of $10,000 subject to the Charge. The applicable withdrawal charge is 3% or
$300.
EXAMPLE OF A POSITIVE MVA:
Assume that on the date of withdrawal the current interest rate for a
new guarantee period of 5 years is 6.25%:
N/12
The MVA factor = [(1 + I)/(1 + J + .005)] -1
(54/12)
= [(1.0725)/(1.0625 + .005)] -1
4.5
= (1.004684) -1
= 1.021251 -1
= +0.021251
The MVA is:
($14,515.97 - $300 - $30) X (+0.021251) = +$301.46
And the net amount available upon surrender is:
$14,515.97 - $300 + $301.46 - $30 = $14,487.43
EXAMPLE OF A NEGATIVE MVA:
Assume that on the date of withdrawal the current interest rate for a
new guarantee period of 5 years is 8.25%:
N/12
The MVA factor = [(1 + I)/(1 + J + .005)] -1
(54/12)
= [(1.0725)/(1.0825 + .005)] -1
4.5
= (0.986207) -1
= 0.939412 -1
= -0.060588
The withdrawal charge of $300 is applied first; the MVA factor is
applied against the remaining guarantee amount:
MVA = ($14,515.97 - $300 - $30) X (-0.060588) = -$859.50
The net amount available upon withdrawal is the guarantee amount
reduced by the withdrawal charge, the MVA and the contract administration
charge:
$14,515.97 - $300 - $859.50 - $30 = $13,326.47
A-2
<PAGE> 41
APPENDIX B
WITHDRAWALS AND WITHDRAWAL CHARGES
PART 1 -- SEPARATE ACCOUNT (THE MVA DOES NOT APPLY TO THE SEPARATE ACCOUNT)
These examples assume the following:
(1) The initial Purchase Payment was $10,000, allocated solely to one
Variable Portfolio;
(2) The date of full surrender or partial withdrawal occurs during the
3rd contribution year;
(3) The contract value at the time of surrender or withdrawal is
$12,000; and
(4) No other Purchase Payments or previous partial withdrawals have
been made.
EXAMPLE A -- FULL SURRENDER:
(1) Earnings in the Variable Portfolio ($12,000 - $10,000 = $2,000)
are not subject to the withdrawal charge.
(2) The balance of the full surrender ($12,000 - $2,000 = $10,000) is
subject to a 5% withdrawal charge applicable during the 3rd contribution
year.
(3) The amount of the withdrawal charge is .05 X $10,000 = $500.
(4) The contract administration charge is deducted from the full
surrender amount. The amount of the full surrender is
$12,000 - $500 - $30 = $11,470.
EXAMPLE B -- PARTIAL WITHDRAWAL (IN THE AMOUNT OF $3,000):
(1) For the same reasons as given in Steps 1 and 2 of Example A,
above, $2,000 can be withdrawn free of the withdrawal charge.
(2) Although 10% of the Purchase Payment is available without
imposition of a withdrawal charge (.10 X $10,000 = $1,000), this free
withdrawal amount is, like the withdrawal charge, applied first to
earnings. Since the earnings exceed the free withdrawal amount, only the
earnings can be withdrawn free of the scheduled withdrawal charge.
(3) The balance of the requested partial withdrawal
($3,000 - $2,000 = $1,000) is subject to the withdrawal charge applicable
during the 3rd contribution year (5%).
(4) The amount of the withdrawal charge is equal to the amount
required to complete the partial withdrawal ($3,000 - $2,000 = $1,000)
divided by (1 - .05) = 0.95, less the amount required to complete the
partial withdrawal.
withdrawal charge = ($1,000/0.95) - $1,000
= $52.63
In this example, in order for the owner to receive the amount requested
($3,000), a gross withdrawal of $3,052.63 must be processed with $52.63
representing the withdrawal charge calculated above.
Examples C and D assume the following:
(1) The initial Purchase Payment was $20,000, allocated solely to one
Variable Portfolio;
(2) The full surrender or partial withdrawal occurs during the 3rd
contribution year;
B-1
<PAGE> 42
(3) The owner's contract value at the time of surrender or withdrawal
is $21,500; and
(4) No other Purchase Payments or partial withdrawals have been made.
EXAMPLE C -- PARTIAL WITHDRAWAL (IN THE MAXIMUM AMOUNT AVAILABLE WITHOUT
WITHDRAWAL CHARGE):
(1) Earnings in the Variable Portfolio ($21,500 - $20,000 = $1,500)
are not subject to the withdrawal charge.
(2) An additional free withdrawal of 10% of the Purchase Payments less
earnings (.10 X $20,000 - $1,500 = $500) is also available free of the
withdrawal charge, so that
(3) The maximum partial withdrawal without withdrawal charge is the
sum of the earnings and the additional free withdrawal
($1,500 + $500 = $2,000).
EXAMPLE D -- FULL SURRENDER IMMEDIATELY FOLLOWING THE PARTIAL WITHDRAWAL IN
EXAMPLE C:
(1) The owner's contract value after the partial withdrawal in
Example C is $21,500 - $2,000 = $19,500.
(2) The Purchase Payment amount for calculating the withdrawal charge
is the original $20,000 (additional free withdrawal amounts do not reduce
the Purchase Payment amount for purposes of calculating the withdrawal
charge).
(3) The amount of the withdrawal charge is .05 X $20,000 = $1,000.
(4) The contract administration charge is deducted from the full
surrender amount. The amount of the full surrender is
$19,500 - $1,000 - $30 = $18,470.
B-2
<PAGE> 43
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 .50% 2.35%
- ------------------------------------------------------------------------
District of Columbia 2.25% 2.25%
- ------------------------------------------------------------------------
Kentucky 2% 2%
- ------------------------------------------------------------------------
Maine 0% 2%
- ------------------------------------------------------------------------
Nevada 0% 3.5%
- ------------------------------------------------------------------------
South Dakota 0% 1.25%
- ------------------------------------------------------------------------
West Virginia 1% 1%
- ------------------------------------------------------------------------
Wyoming 0% 1%
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
</TABLE>
C-1
<PAGE> 44
<TABLE>
<S> <C> <C>
==============================
- ------------------------------ Stamp
</TABLE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
ANNUITY SERVICE CENTER
P.O. BOX 54299
LOS ANGELES, CA 90054-0299
<PAGE> 45
Please forward a copy, without charge, of the Statement of Additional
Information concerning the Vista Capital Advantage issued by Anchor National
Life Insurance Company to:
(Please print or type and fill in all information.)
- ------------------------------------------------------------------------------
Name
- ------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------
City/State/Zip
- ------------------------------------------------------------------------------
Date: ________________________ Signed:
<PAGE> 46
PART II
-------
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution.
-------------------------------------------
Not Applicable
Item 14. Indemnification of Directors and Officers.
------------------------------------------
Not Applicable
Item 15. Recent Sales of Unregistered Securities.
----------------------------------------
Not Applicable
Item 16. Exhibits and Financial Statement Schedules.
-------------------------------------------
Exhibit No. Description
(1) Underwriting Agreement***
(2) Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession**
(3) (a) Articles of Incorporation***
(b) By-Laws***
(4) (a) Vista Capital Advantage
Fixed and Variable Contract***
(b) Application for Contract***
(5) Opinion of Counsel re: Legality***
(6) Opinion re Discount on Capital Shares**
(7) Opinion re Liquidation Preference**
(8) Opinion re Tax Matters**
(9) Voting Trust Agreement**
(10) Material Contracts**
(11) Statement re Computation of Per Share
Earnings**
(12) Statement re Computation of Ratios**
(14) Material Foreign Patents**
(15) Letter re Unaudited Financial Information**
(16) Letter re Change in Certifying Accountant**
(21) Subsidiaries of Registrant***
(23) (a) Consent of Independent Accountants****
(b) Consent of Attorney***
(24) Powers of Attorney***
(25) Statement of Eligibility of Trustee**
(26) Invitation for Competitive Bids**
(27) Financial Data Schedule****
(28) Information Reports Furnished to State
Insurance Regulatory Authority**
(29) Other Exhibits**
* Herewith
** Not Applicable
*** Previously Filed
**** To be filed by Amendment
<PAGE> 47
Item 17. Undertakings.
------------
The undersigned registrant, Anchor National Life Insurance
Company, hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment hereof) which,
individually or in the aggregate, represents a fundamental
change in the information in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
<PAGE> 48
SIGNATURES
Pursuant to the Securities Act of 1933, the Registrant has duly caused
this Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Los
Angeles, and the State of California, on this 28th day of October, 1998.
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: /s/ JAY S. WINTROB
-----------------------------------------
Jay S. Wintrob
Executive Vice President
Pursuant to the Securities Act of 1933, this Post-Effective Amendment to
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
ELI BROAD* President, Chief Executive
- --------------------- Officer, & Chairman of
Eli Broad Board
(Principal Executive Officer)
SCOTT L. ROBINSON* Senior Vice President &
- --------------------- Director
Scott L. Robinson (Principal Financial Officer)
N. SCOTT GILLIS* Senior Vice President &
- --------------------- Controller
N. Scott Gillis (Principal Accounting Officer)
JAMES R. BELARDI* Director
- ---------------------
James R. Belardi
JANA W. GREER* Director
- ---------------------
Jana W. Greer
JAMES W. ROWAN* Director
- ---------------------
James W. Rowan
JAY S. WINTROB* Director
- ---------------------
Jay S. Wintrob
/s/ SUSAN L. HARRIS Director October 28, 1998
- ---------------------
Susan L. Harris
PETER McMILLAN* Director
- ----------------------
Peter McMillan
*By: /s/ SUSAN L. HARRIS Attorney-in-Fact
--------------------
Susan L. Harris
Date: October 28, 1998
</TABLE>
<PAGE> 49
EXHIBIT INDEX
Number Description
- ------ -----------
